1. 7 Process Strategy and Sustainability
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2. Process Strategies
The objective of a process strategy is to build a production process that meets customer requirements and product specifications within cost and other managerial constraints
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3. Process Strategies How to produce a product or provide a service that
Meets or exceeds customer requirements
Meets cost and managerial goals
Has long term effects on
Efficiency and production flexibility
Costs and quality
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4. Process Strategies Four basic strategies Process focus
Batch production
Product focus
- Continuous flow
- Discrete flow
4. Mass customization
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5. Process, Volume, and Variety
Low Volume
Repetitive Process
High Volume
Volume
Figure 7.1
High Variety
one or few units per run,
(allows customization)
Process Focus (JOBSHOP Production)
Mass Customization
(difficult to achieve, but huge rewards)
Dell Computer
Changes in Modules
modest runs, standardized modules
Batch Production
Changes in Attributes (such as grade, quality, size, thickness, etc.)
long runs only
Product Focus
(Mass Production)
Continuous Flow
Discrete Flow
Poor Strategy (Both fixed and variable costs are high)
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6. Characteristics of Process Types
Dimension
Job Shop
Batch
Discrete Flow
Continuous
Flow
Job variety
Very High
Moderate
Low
Very low
Process flexibility
Unit cost
Volume of output
Very Low
High
Very high

7. Process Focus
Facilities are organized around specific activities or processes
General purpose equipment and skilled personnel
High degree of product flexibility
Typically high costs and low equipment utilization
Product flows may vary considerably making planning and scheduling a challenge
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8. Process Focus (Service)
Many inputs
(surgeries, sick patients, baby deliveries, emergencies)
Many different outputs (uniquely treated patients)
Many departments and many routings
(low volume, high variety, intermittent processes)
Arnold Palmer Hospital
Figure 7.2(a)
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9. Process Focus allows a flexible flow between stations (Manufacturing)
Gear
cutting
Mill
Drill
Lathes
Grind
Heat
treat
Assembly
111
333
222
444
1111
2222
3333
44444
333333
22222

10. Repetitive Focus Facilities often organized as assembly lines
Characterized by modules with parts and assemblies made previously
Modules may be combined for many output options
Less flexibility than process-focused facilities but more efficient
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11. Repetitive Focus (modular) Harley Davidson
Raw materials and module inputs
Modules combined for many
Output options
(many combinations of motorcycles)
Few modules
(multiple engine models, wheel modules)
(modular)
Harley Davidson
Figure 7.2(b)
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12. Product Focus Facilities are organized by product
High volume but low variety of products
Long, continuous production runs enable efficient processes
Typically high fixed cost but low variable cost
Generally less skilled labor
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13. Product Focus Raw materials Finished item or customer
Station 1
Station 2
Station 3
Station 4
Finished item
Material
and/or labor
Material
and/or labor
Material
and/or labor
Material
and/or labor
Used for Repetitive or Continuous Processing

14. Product Focus (low-volume, high variety, continuous process) Frito-Lay
Few Inputs
(corn, potatoes, water, seasoning)
Output variations in size, shape, and packaging
(3-oz, 5-oz, 24-oz package labeled for each material)
(low-volume, high variety, continuous process)
Frito-Lay
Figure 7.2(c)
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15. Hot mill for finishing, cooling, and coiling
Product Focus
Scrap steel
Ladle of molten steel
Electric furnace A B C
Continuous caster
Continuous cast steel sheared into 24-ton slabs
Hot tunnel furnace ft
Hot mill for finishing, cooling, and coiling D E F G H I
Nucor Steel Plant
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16. Mass Customization
The fast, low-cost production of goods and services to satisfy increasingly unique customer desires
Combines the flexibility of a process focus with the efficiency of a product focus by using automated manufacturing technologies
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17. Mass Customization Number of Choices Item 1970s 21st Century
Vehicle models
Vehicle types 18 1,212
Bicycle types ,000
Software titles 0 400,000
Web sites ,000,000
Movie releases per year
New book titles 40, ,000
Houston TV channels 5 185
Breakfast cereals
Items (SKUs) in 14, ,000
supermarkets
LCD TVs
Number of Choices
Item 1970s 21st Century
Table 7.1
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18. Mass Customization (high-volume, high-variety) Dell Computer
Many parts and component inputs
Many output versions
(custom PCs and notebooks)
Many modules
(chips, hard drives, software, cases)
(high-volume, high-variety)
Dell Computer
Figure 7.2(d)
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19. Requirements to Achieve Mass Customization
Repetitive Focus
Flexible people and equipment
Figure 7.3
Modular techniques
Accommodating Product and Process Design
Responsive Supply Chains
Mass Customization
Rapid throughput techniques
Effective scheduling techniques
Process-Focused
High variety, low volume
Low utilization (5% to 25%)
General-purpose equipment
Product-Focused
Low variety, high volume
High utilization (70% to 90%)
Specialized equipment
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20. Mass Customization/Built-to-Order
Imaginative and fast product design (CAD)
Flexible process design (FMS)
Tightly controlled inventory management (ERP)
Tight schedules to deliver the products on-time
Responsive and collabarative supply chain partners
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21. Comparison of Process Types
Process Focus
(low-volume, high-variety)
Repetitive Focus
(modular)
Product Focus
(high-volume, low-variety)
Mass Customization
(high-volume, high-variety)
Small quantity and large variety of products are produced
Long runs, usually a standardized product with options, produced from modules
Large quantity and small variety of products are produced
Large quantity and large variety of products are produced
Equipment used is general purpose
Special equipment aids in use of an assembly line
Equipment used is special purpose
Rapid changeover on flexible equipment
Table 7.2
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22. Comparison of Processes
Process Focus
(low-volume, high-variety)
Repetitive Focus
(modular)
Product Focus
(high-volume, low-variety)
Mass Customization
(high-volume, high-variety)
Operators are broadly skilled
Employees are modestly trained
Operators are less broadly skilled
Flexible operators are trained for the necessary customization
There are many job instructions because each job changes
Repetitive operations reduce training and changes in job instructions
Work orders and job instructions are few because they are standardized
Custom orders require many job instructions
Table 7.2
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23. Comparison of Processes
Process Focus
(low-volume, high-variety)
Repetitive Focus
(modular)
Product Focus
(high-volume, low-variety)
Mass Customization
(high-volume, high-variety)
Raw-material inventories high relative to the value of the product
JIT procurement techniques are used
Raw material inventories are low relative to the value of the product
Work-in-process is high compared to output
JIT inventory techniques are used
Work-in-process inventory is low compared to output
Work-in-process inventory driven down by JIT, kanban, lean production
Table 7.2
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24. Comparison of Processes
Process Focus
(low-volume, high-variety)
Repetitive Focus
(modular)
Product Focus
(high-volume, low-variety)
Mass Customization
(high-volume, high-variety)
Units move slowly through the facility
Assembly is measured in hours and days
Swift movement of units through the facility is typical
Goods move swiftly through the facility
Finished goods are usually made to order and not stored
Finished goods made to forecast
Finished goods are usually made to forecast and stored
Finished goods are often build-to-order (BTO)
Table 7.2
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25. Comparison of Processes
Process Focus
(low-volume, high-variety)
Repetitive Focus
(modular)
Product Focus
(high-volume, low-variety)
Mass Customization
(high-volume, high-variety)
Scheduling is complex, concerned with trade-offs between inventory, capacity, and customer service
Scheduling is based on building various models from a variety of modules to forecasts
Scheduling is relatively simple, concerned with establishing output rate sufficient to meet forecasts
Sophisticated scheduling is required to accommodate custom orders
Fixed costs tend to be low and variable costs high
Fixed costs dependent on flexibility of the facility
Fixed costs tend to be high and variable costs low
Fixed costs tend to be high, variable costs must be low
Table 7.2
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26. Comparing Cost of Process Types Using Crossover Charts
Three Accounting Software Products
Total Fixed Cost
Dollars Required per Accounting Report
Software A
$200000
$60
Software B
$300000
$25
Software C
$400000
$10
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27. Comparing Cost of Process Types Using Crossover Charts
Fixed costs
Variable costs ($60) $
Low volume, high variety
Process A
Fixed costs
Variable costs($25) $
Repetitive
Process B
Fixed costs
Variable ($10) costs $
High volume, low variety
Process C
Total cost
Total cost
Total cost
400,000
300,000
200,000
Volume $ V2
(6,666) V1
(2,857)
Fixed cost Process C
Fixed cost Process B
Fixed cost Process A
Figure 7.4
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28. Focused Processes Focus can be Customers Products Service Technology
Quality
Focus brings
Less overhead costs
Less complexity
More efficiency
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29. Changing Processes Difficult and expensive May mean starting over
Process strategy determines transformation strategy for an extended period
Important to get it right
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30. Questions to Ask When Analyzing and Designing Processes
Is the process designed to achieve a competitive advantage?
Does the process eliminate steps that do not add value?
Does the process maximize customer value?
Will the process win orders?
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31. Five Tools That Help to Understand Processes
Flow Charts - Shows the movement of materials, product or people
Time-Function Mapping - Shows flows and time frame
Value-Stream Mapping - Shows flows and time and value added in the entire production process including the supply chain
Process Charts - Uses symbols to show key activities and helps to focus on value-added activities
Service Blueprinting - focuses on customer/provider interaction
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32. Process strategies
MGT 301
Flow Charts
One of the fundamental graphical tools for process analysis and design
Typically depicts activities sequentially from left to right
Can help to identify, loops, multiple alternative paths, decision points etc.
Symbols to use in flow charting
Operation
Transportation of a
physical item
Storage
Inspection
Transportation of
information
Delay
Ch 7

33. Illustration of a Sample Flow Chart
Operator
takes phone
order.
Orders wait
to be picked
up.
Supervisor
inspects
orders.
Order is
fulfilled.
Order waits
for sales rep.
Is order
complete?
Yes No
Orders are
moved to
supervisor’s
in-box.
Orders
wait for
supervisor.

35. “Current” Time-Function Map
Customer
Sales
Production control
Plant A
Warehouse
Plant B
Transport
Order product
Process order
Wait
Order
Move
Receive product
Product
Print
Wait
Order
WIP
Extrude
Wait
WIP
Product
Move
Wait
WIP
12 days
13 days
1 day
4 days
10 days
0 day
52 days
Figure 7.5
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36. “Target” Time-Function Map
Customer
Sales
Production control
Plant
Warehouse
Transport
Order product
Process order
Wait
Order
Move
Receive product
Product
Extrude
Wait
Print
Order
WIP
Product
1 day
2 days
6 days
Figure 7.5
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37. Value-Stream Mapping Figure 7.6
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38. Process Chart
Figure 7.7
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39. Service Blueprinting
Focuses on the customer and service provider interaction
Defines three levels of interaction
Each level has different management issues
Identifies potential failure points
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40. Service Blueprint Defines three levels of interaction
Process strategies
MGT 301
Service Blueprint
Defines three levels of interaction
Activities under the control of the customer
Interaction between the customer and service provider
Activities performed invisibly to the customer
Ch 7

41. Service Blueprint Figure 7.8 Personal Greeting Service Diagnosis
Perform Service
Friendly Close
Customer arrives for service.
(3 min)
Warm greeting and obtain service request.
(10 sec) F
Level #1
Notify customer the car is ready.
(3 min)
Customer departs
Customer pays bill.
(4 min) F
Perform required work.
(varies)
Prepare invoice. No
Notify customer and recommend an alternative provider.
(7min)
Standard request.
(3 min)
Determine specifics.
(5 min) No
Can service be done and does customer approve?
Yes F
Level #2
Direct customer to waiting room. F
Yes F
Level #3
Figure 7.8
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42. Special Considerations for Service Process Design
Some interaction with customer is necessary, but this often affects performance adversely
The better these interactions are accommodated in the process design, the more efficient and effective the process
Find the right combination of cost and customer interaction
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43. Service Process Matrix
Service Factory
Service Shop
Degree of Customization
Low
High
Degree of Labor
Mass Service
Professional Service
Commercial banking
Private banking
Digital orthodontics
Traditional orthodontics
General-
purpose law firms
Law clinics
Full-service stockbroker
Limited-service stockbroker
Retailing
Boutiques
Warehouse and catalog stores
Specialized hospitals
Hospitals
Fast-food restaurants
Fine-dining restaurants
Airlines
No-frills airlines
Figure 7.9
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44. Service Process Matrix
Mass Service and Professional Service
Labor involvement is high
Selection and training highly important
Focus on human resources
Personalized services
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45. Service Process Matrix
Service Factory and Service Shop
Automation of standardized services
Low labor intensity responds well to process technology and scheduling
Tight control required to maintain standards
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46. Improving Service Productivity
Strategy
Technique
Example
Separation
Structure service so customers must go where the service is offered
Bank customers go to a manager to open a new account, to loan officers for loans, and to tellers for deposits
Self-service
Self-service so customers examine, compare, and evaluate at their own pace
Supermarkets and department stores
Internet ordering
Table 7.3
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47. Improving Service Productivity
Strategy
Technique
Example
Postponement
Customizing at delivery
Customizing vans at delivery rather than at production
Focus
Restricting the offerings
Limited-menu restaurant
Modules
Modular selection of service
Modular production
Investment and insurance selection
Prepackaged food modules in restaurants
Table 7.3
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48. Improving Service Productivity
Strategy
Technique
Example
Automation
Separating services that may lend themselves to some type of automation
Automatic teller machines
Scheduling
Precise personnel scheduling
Scheduling ticket counter personnel at 15-minute intervals at airlines
Training
Clarifying the service options
Explaining how to avoid problems
Investment counselor, funeral directors
After-sale maintenance personnel
Table 7.3
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49. Improving Service Processes
Layout
Product exposure (restaurants, banks, grocery stores)
Human Resources
Recruiting and training
Cross-trained employees for flexibility
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50. Technologies to Improve Production and Productivity
Machine technology
Automatic identification systems (AISs)
Process control
Vision system
Robots
Automated storage and retrieval systems (ASRSs)
Automated guided vehicles (AGVs)
Flexible manufacturing systems (FMSs)
Computer-integrated manufacturing (CIM)
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51. Machine Technology Using Computer Numerical Control (CNC)
Machinery (Machinery with its own computer
and memory) for:
Increased precision
Increased productivity
Increased flexibility
Improved environmental impact
Reduced changeover time
Reduced power requirements
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52. Automatic Identification Systems (AISs)
Improved data acquisition
Reduced data entry errors
Increased speed
Increased scope of process automation
Example – Bar codes and RFID
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53. Process Control Real-time monitoring and control of processes by using
Information Technology
Sensors collect data
Devices read data on periodic basis
Measurements translated into digital signals then sent to a computer
Computer programs analyze the data
Resulting output may take numerous forms
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54. Vision Systems Particular aid to automated inspection
Consistently accurate
Never bored
Modest cost
Superior to individuals performing the same tasks
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55. Robots Perform monotonous or dangerous tasks
Perform tasks requiring significant strength or endurance
Generally enhanced consistency and accuracy
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56. Automated Storage and Retrieval Systems (ASRSs)
Automated placement and withdrawal of parts and products
Reduced errors and labor
Particularly useful in inventory and test areas of manufacturing firms
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57. Illustrated concept of a high-rise AS/RS warehouse
AS/RS High-Rise Warehouse

58. Automated Guided Vehicle (AGVs)
Electronically guided and controlled carts
Used for movement of products and/or individuals
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59. Flexible Manufacturing Systems (FMSs)
Computer controls both the workstation and the material handling equipment
Enhance flexibility and reduced waste
Can economically produce low volume at high quality
Reduced changeover time and increased utilization
Stringent communication requirement between components
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60. Flexible Manufacturing System
A schematic illustration of a flexible manufacturing system showing machining centers, a measuring and inspection station. And automated guided vehicles. Source: After J. T. Black.
Manufacturing, Engineering & Technology, Fifth Edition, by Serope Kalpakjian and Steven R. Schmid.
ISBN © 2006 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

61. General View of Flexible Manufacturing System
A general view of a flexible manufacturing system in a plant showing several machining centers and automated guided vehicles moving along the white line in the aisle. Source: Courtesy of Cincinnati Miacron, Inc.
Manufacturing, Engineering & Technology, Fifth Edition, by Serope Kalpakjian and Steven R. Schmid.
ISBN © 2006 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.

62. Computer-Integrated Manufacturing (CIM)
Extension of flexible manufacturing systems
Backwards to engineering and inventory control
Forward into warehousing and shipping
Can also include financial and customer service areas
Reducing the distinction between low-volume/high-variety, and high-volume/low-variety production
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63. Computer-Integrated Manufacturing (CIM)
Figure 7.10
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64. Process Redesign
The fundamental rethinking of business processes to bring about dramatic improvements in performance
Relies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptions
Requires reexamination of the basic process and its objectives
Focuses on activities that cross functional lines
Any process is a candidate for redesign
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65. Sustainability in Production Processes (Four Rs)
Resources used by production processes
Recycling of production material and components
Regulations that apply
Reputation of the company
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66. Sustainability Resources Recycling Operations is primary user
Reducing use is win-win
Recycling
Burn, bury, or reuse waste
Recycling begins at design
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67. Sustainability Regulations Reputation
Laws affect transportation, waste, and noise
Increasing regulatory pressure
Reputation
Leadership may be rewarded
Bad reputation can have negative consequences
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