Process A collection of tasks, connected by flows of goods and information, that transforms various inputs into more valuable outputs Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-8 8

Process Flow Diagram Tasks are rectangles Flows are arrows Inventory is inverted triangle Decision point is diamond © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-8 8

Process Flow Diagram May show non-value added steps Process improvement Capacity calculations © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-8 8

Production Process Flow Diagram Customer Purchasing (order inks, paper, other supplies) Customer sales representative take order Vendors Prepress Department (Prepare printing plates and negatives) Accounting Receiving Warehousing (ink, paper, etc.) Printing Department Collating Department Gluing, binding, stapling, labeling The most important point illustrated by this slide is that process design entails both material flow and information flow. Information flow Material flow Polywrap Department Shipping

Process Strategies Involve determining how to produce a product or provide a service Objective Meet or exceed customer requirements Meet cost & managerial goals Has long-run effects Product & volume flexibility Costs & quality © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-8 8

Types of Process Strategies Process strategies that follow a continuum Within a given facility, several strategies may be used These strategies are often classified as: Process-Focused Repetitive-Focused Product-Focused Continuum This slide can be used to begin discussion of two points: - one seldom employs a pure process strategy (process, repetitive, or product) - but rather a strategy which has elements of each of the pure strategies - i.e., practical strategies lie along a continuum. - one seldom employs only a single strategy.

Process-Focused Strategy Job Shop Facilities are organized by process Similar processes are together Example: All drill presses are together Low volume, high variety products ‘Jumbled’ flow Operation Product A Product B 1 2 3 Other names Intermittent process Job shop © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-11 11

Process-Focused Strategy Examples Hospital © 1995 Corel Corp. Machine Shop © 1995 Corel Corp. Bank © 1995 Corel Corp. © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-12 12

Process Focused Strategy -Pros & Cons Advantages Greater product flexibility More general purpose equipment Lower initial capital investment Disadvantages More highly trained personnel More difficult production planning & control Low equipment utilization (5% to 25%) © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-13 13

Batch Strategy Facilities often organized in a line Product is made in batches Allows for many output options Examples: beer, soup, paint, medicines AKA Disconnected repetitive © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-14 14

Batch Strategy - Considerations Allows for greater variety of product Gains some cost efficiencies More structured than process-focused, less structured than repetitive Capacity is set by size of batch process © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-15 15

Repetitive Focused Strategy Facilities often organized by assembly lines Characterized by modules Parts & assemblies made previously Modules combined for many output options Other names Assembly line Production line Flow shop © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-14 14

Repetitive-Focused Strategy - Examples Fast Food McDonald’s over 95 billion served © 1984-1994 T/Maker Co. Clothes Dryer © 1995 Corel Corp. Truck © 1995 Corel Corp. © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-16 16

Repetitive Focused Strategy - Considerations More structured than process-focused, less structured than product focused Enables quasi-customization Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model Less variety Change in volume difficult © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-15 15

Product-Focused Strategy Facilities are organized by product High volume, low variety products Where found Continuous process manufacturing Commodities Operation Products A & B 1 2 3 Other names Line flow production Continuous production © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-17 17

Product-Focused Examples © 1995 Corel Corp. Soft Drinks (Continuous, then Discrete) © 1995 Corel Corp. Light Bulbs (Discrete) Paper (Continuous) © 1984-1994 T/Maker Co. Mass Flu Shots (Discrete) © 1995 Corel Corp. © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-19 19

Product-Focused Strategy Pros & Cons Advantages Lower variable cost per unit Lower but more specialized labor skills Easier production planning and control Higher equipment utilization (70% to 90%) Disadvantages Lower product flexibility More specialized equipment Usually higher capital investment © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-18 18

Product-Process Examples Auto industry Prototype to high volume manufacturing Food prep Dream Dinners example for batch © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-15 15

Product-Process Examples Auto industry Prototype to high volume manufacturing Food prep Dream Dinners example for batch © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-15 15

Product-Process Examples Auto industry Prototype to high volume manufacturing Food prep Dream Dinners example for batch © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-15 15

End

Fit of Process, Volume, and Variety Low-Volume (Intermittent) Repetitive Process (Modular) High-Volume (Continuous) Process focus projects, job shops,(machine, print, carpentry) Standard Register Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. High Variety One or few units per run, high variety (allows customization) Changes in modules Modest runs, standardized modules Repetitive (autos, motorcycles) Harley Davidson Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only It may be most useful to begin discussion of this slide with the repetitive process since most student seem to have a concept of an assembly line. Once the repetitive process is introduced, one can then view changing one of the parameters, volume or length of run, and argue the need for process- or product-focus systems. Once the three types of processes have been introduced, it is probably useful to discuss precisely why the low-volume/long run, and high-volume/short run options are poor choices. Poor strategy (Variable costs are high) Product focus (commercial baked goods, steel, glass) Nucor Steel

Volume and Variety of Products Low Volume High Repetitive High Volume Variety of Variety Process Process Low Variety Products (Intermittent) (Modular) Process (Continous) One or very few Projects Poor Strategy (Fixed costs and cost changing to other products are high) units per lot Very small runs, high Job Shops variety Modest runs, modest Disconnected variety Repetitive Batch Long runs, modest Poor Strategy (High variable costs) Connected variations Repetitive Very long runs, Continuous Changes in attributes Equipment utilization 5%-25% 20%-75% 70%-80% © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 7-24 24

Work Cells Used when volume warrants a special arrangement of equipment Take people and machines ordinarily dispersed Arrange in a small group to focus on production of single product or group of related products

Work Cells A temporary assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facility Example: job shop with rearranged machinery and personnel to produce 30 unique control panels

Work Cells — Some Advantages Reduced work-in-process inventory Less floor space required Reduced raw material and finished goods inventories required Reduced direct labor costs Heightened sense of employee participation Increased utilization of equipment machinery Reduced investment in machinery and equipment Note: Green & Sadowski report increased capital investment and lower machine utilization TM 10 - 10