Chapter 4 Processes and Technologies

2000 by Prentice-Hall, Inc2 Process Strategy  Overall approach to producing goods and services  Defines:  Capital intensity  Process flexibility  Vertical integration  Customer involvement

2000 by Prentice-Hall, Inc3 From Function to Process Manufacturing Accounting Sales Purchasing Product Development Order Fulfillment Supply Chain Management Customer Service FunctionProcess Figure 4.1

2000 by Prentice-Hall, Inc4 Types of Processes  Projects  Batch production  Mass production  Continuous production

2000 by Prentice-Hall, Inc5 PROJECT BATCHMASS CONTINUOUS Product UniqueMade to order Made to stock Commodity CustomerOne-at-a-timeFew individualsMass marketMass market DemandInfrequentFluctuatesStableVery stable VolumeVery lowLow to medHighVery high No. of differentInfiniteMany, variedFewVery low products products SystemLong-termDiscrete, jobRepetitive, Process industry assembly lines EquipmentVariedGeneral-purposeSpecial-purposeHighly automated Type of workContractsFabricationAssemblyMix, treat, refine SkillsExperts,Wide rangeLimited rangeEquipment craftspeopleof skillsof skillsmonitors AdvantagesCustom work,Flexibility,Efficiency,Highly efficient technologyqualityspeed, low costlarge capacity Dis-Nonrepetitive,Costly, slow,Capital investment,Difficult to advantagessmall customerdifficult tolack of change advantagessmall customerdifficult tolack of change base, expensivemanageresponsiveness ExampleConstruction,Machine shops, Autos, TV’s,Paint, chemicals, shipbuildingprinting, bakeryfast foodfood Types of Processes Table 4.1

2000 by Prentice-Hall, Inc6 Process Selection with Break-Even Analysis c f = fixed cost v = volume (i.e., number of units produced and sold) c v = variable cost per unit p = price per unit Total cost= fixed cost + total variable cost TC= c f + vc v Total revenue=volume x price TR= vp Profit= total revenue - total cost Z=TR - TC = vp - ( c f + vc v )

2000 by Prentice-Hall, Inc7 Process Planning  Make-or-buy decisions  Process selection  Specific equipment selection  Process plans  Process analysis

2000 by Prentice-Hall, Inc8 Make-or-Buy Decisions 1. Cost 2. Capacity 3. Quality 4. Speed 5. Reliability 6. Expertise Make? Buy?

2000 by Prentice-Hall, Inc9 Specific Equipment Selection 1.Purchase cost 2.Operating cost 3.Annual savings 4.Revenue enhancement 5.Replacement analysis 6.Risk and uncertainty 7.Piecemeal analysis

2000 by Prentice-Hall, Inc10 Process Plans  Blueprints  Bill of material  Assembly chart / product structure diagram  Operations process chart  Routing sheet

2000 by Prentice-Hall, Inc11 Process Plans Figure 4.2 Bottom bun Beef patty SaltCheeseLettuceSauceOnions Middle bun Beef patty SaltCheeseLettuceSauceOnionsPickles Sesame seed top bun WrapperSA SA First-layer assembly Second-layer assembly Completed Big Mac

2000 by Prentice-Hall, Inc12 Operations Process Chart Part nameCrevice Tool Part No UsageHand-Vac Assembly No.520 Oper. No.DescriptionDept.Machine/ToolsTime 10Pour in plastic bits041Injection molding2 min 20Insert mold041#0762 min 30Check settings041113, 67, min & start machine 40Collect parts & lay flat051Plastics finishing10 min 50Remove & clean mold042Parts washer15 min 60Break off rough edges051Plastics finishing10 min Figure 4.3

2000 by Prentice-Hall, Inc13 Process Analysis  The systematic examination of all aspects of a process to improve its operation  Faster  More efficient  Less costly  More responsive  Basic tools  Process flowchart  Process diagrams  Process maps

2000 by Prentice-Hall, Inc14 Process Flowchart SymbolsOperationsInspection Transportation Delay Storage

2000 by Prentice-Hall, Inc15 Process Flowchart Figure 4.4

2000 by Prentice-Hall, Inc16 Process Diagram Reserve Storage Quality Assurance Back to Vendor UPS Parcel Post Next-Day UPS Mono- gramming Embroid- ering Hemming Gift Boxing Receiving Active Bins PickingPacking Shipping Figure 4.5

2000 by Prentice-Hall, Inc17 Process Map Figure 4.6 Place order Drink Eat salad or soup Eat dinner Receives check Gives payment to waiter Collect change, leave tip Fill in tip amount Give order to waiter Prepare dinner order Prepare soup or salad order Give order to waiter Is order complete? Give soup or salad order to chef Give dinner order to chef Get drinks for customer Deliver salad or soup order to customer Deliver dinner to customer Deliver check to customer Receive payment for meal Cash or Credit? Bring change to customer Run credit card through Return credit slip to customer Collect tip Y N Credit Cash CustomerWaiterSalad ChefDinner Chef

2000 by Prentice-Hall, Inc18 Continuous Improvement and Breakthroughs Breakthrough Improvement Continuous improvement refines the breakthrough Continuous improvement activities peak; time to reengineer process Figure 4.9

2000 by Prentice-Hall, Inc19 Process Reengineering Model validation Key performance measures Detailed process map Pilot study of new design Full-scale implementation Innovative ideas Design principle s High-level process map Customer requirements data Strategic directive Baseline analysis Benchmark data Goals & specifications for process performance Figure 4.10

2000 by Prentice-Hall, Inc20 Principles for Redesigning Processes 1. Remove waste, simplify, consolidate 2. Link processes to create value 3. Let the swiftest and most capable execute 4. Flex the process 5. Capture information digitally and propagate Table 4.2

2000 by Prentice-Hall, Inc21 Principles for Redesigning Processes 6. Provide visibility through information about process status 7. Fit the process with sensors and feedback loops 8. Add analytic capabilities 9. Connect, collect and create knowledge around the process 10. Personalize the process Table 4.2

2000 by Prentice-Hall, Inc22 Techniques for Generating Innovative Ideas  Vary entry point to a problem  Draw analogies  Change your perspective  Try inverse brainstorming  Chain forward as far as possible  Use attribute brainstorming Table 4.3

2000 by Prentice-Hall, Inc23 e-Manufacturing  Real-time sharing of data with trading partners and customers to drive collaborative decisions  CAD - uses software to create & modify designs  GT- classifies designs to benefit from prior experience  STEP - sets standards for communication  CAPP - creates processing instructions for CAM  CAM - uses programmable automation in manufacturing