©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 1 Manufacturing Processes Engineering and business perspectives Classic manufacturing processes Choosing between classic types The role of customization

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 10, Slide 2 Engineering and Business Perspectives

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 3 Solid Wood Seat for a Kitchen Chair: Process A Saddle Machine Shaper Machine Sander A Sander B Inspection Setup Time: 6 hours Time/Seat 1.1 min. Yield Rate: 92% Process B 5-Axis Router ---- Sander A Sander B Inspection Setup Time: 10 min. Time / Seat: 3.5 min. Yield Rate: 99%

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 4 Classic Engineering Viewpoint u Four Transformation Processes Conversion  Fabrication  Assembly Testing “Advances in Engineering increase and improve the alternatives available”

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 5 Example: Making Windows Raw lumber Molten glass Frame wood Window panes Assembled Windows ConversionFabricationAssembly

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 6 Business View What conversion steps must be done? What are the production volumes like? How similar are the various products we make (can we standardize)? If the product is customized, how late in the process does it occur?

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 10, Slide 7 2.Classic Manufacturing Processes

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 8 Process Types (in order of decreasing volume) Continuous Flow Production Line (Flow Line) Batch (High Volume) Batch (Low Volume) Job Shop Project

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 9 Continuous Flow Large production volumes High level of automation Basic material passed along, converted as it moves Usually very high fixed costs, inflexible Oil refinery, fiber formation, public utilities

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 10 Production Line High-volume production of standard products or “design window” Processes arranged by product flow Often “paced” Highly efficient, but not too flexible

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 11 Batch I Somewhere in between job shop and line processes Moderate volumes, multiple products Production occurs in “batches” Can manufacturing, carton makers, advertising mailers, etc.

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 12 Batch II Layout is a cross between that found in a line and that found in a job shop: Group Technology

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 13 Some Examples of Batch Manufacturing Numerical control (NC) machines –Automated processing of entire batch –Machining center - multiple NC machines Flexible manufacturing systems (FMS) –Dedicated to families of parts –NC and automated handling Group technology –Similar in concept to FMS, but not as much automation

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 14 Job Shop Low volume, one-of-a-kind products Job shops sell their capability Highly flexible equipment, skilled workers Equipment arranged by function

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 15 Project Used when a product is: –one-of-a-kind –too large to be moved Resources moved to where needed Equipment, people, etc. are highly flexible Finite duration, often with deadline Building projects, equipment installation

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 16 Mixing Together the Process Types... Spindles Arms and Legs Seats BATCH for fabricating parts... ASSEMBLY LINE for putting together final product

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 10, Slide 17 Choosing Between Classic Types The product-process matrix Product and process life cycles

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 18 Comparing Process Types... Job ShopBatchLine VolumeVery LowHigh VarietyVery HighLow SkillsBroadLimited AdvantageFlexibilityPrice and Delivery

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 19 Product – Process Matrix One of a Kind Low Volume Multiple Products Moderate Volumes Few Major Products High Volume Commodity Products Job Shop Batch Line Very Poor Fit

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 20 Life-Cycle Planning Framework

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 21 Introduction Stage Availability key to market success but: No reliable movement history Unreliable forecasts Small shipments Erratic orders

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 22 Life-Cycle Planning Framework High product availability Flexibility to handle variation

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 23 Growth Stage Sales somewhat more predictable Higher volumes Performance emphasis?...

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 24 Life-Cycle Planning Framework Availability Achieve break- even volumes as soon as possible Less need for flexibility

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 25 Maturity Stage Intense competition around more standardized products Frequent price and service adjustments Implications...

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 26 Life-Cycle Planning Framework More selective, targeted efforts Value-added service

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 27 Decline Stage (Obsolescence) Product close-out or restricted distribution Lowest cost / differentiated performance not as critical anymore Priorities?

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 28 Life-Cycle Planning Framework Centralized inventory Speed

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 29 Implications What happens as companies follow products through their life cycles? What happens when companies support products at various stages of the life cycle?

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 10, Slide 30 The Role of Customization

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 31 What is “Customization”? An operations-centric view: “Customization occurs when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities”

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 32 Customization Point Model I Definitions: ETO – engineer to order MTO – make to order ATO – assemble-to-order MTS – make to stock Upstream: before the customization point, “off-line” activities Downstream: after the customization point, “on-line” activities

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 33 Customization Point Model II Manufacturing Systems Design UpstreamDownstream Performance objectives Technology Investment Organization structure Job differentiation Integration Discretion Efficiency Productivity, consistency Mechanistic High Formal Low Responsiveness Flexibility Organic Low Informal High

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 34 Difficulty versus Customization

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 35 Customization Job Difficulty Job Routineness Operations and Supply Chain Design An Operations-Centric View Customization becomes relevant to operations and supply chain managers when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 36 “Mass customization” at Japan’s National Bicycle Co. 2-WEEK LEAD TIME

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 37 Services What makes them distinctive? High-contact versus low-contact Front room versus back room A Model of Service Design Service Blueprinting

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 38 Services... Process and “product” are inseparable Marketing and sales often tightly integrated Customer often part of the process Performance metrics can be harder to define Nevertheless: –Focus and process choices / trade-offs still apply

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 39 Degree of Customer Contact Low Contact “off-line” Can locate for efficiency Can smooth out the workload Check clearing, mail sorting High Contact “on-line” Can locate for easy access Flexibility to respond to customers Harder to manage Hospitals, food service

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 40 Classifying Services “Front Room” versus “Back Room” Back room – what the customer does not see Managed for efficiency and Productivity Package sorting, car repair, blood test analysis, accounting department Front room – what the customer can see Managed for flexibility and customer service Customer lobbies, bank teller, receptionist

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 41 Designing Services Selecting a service focus –Like manufacturing processes, different services have strengths and weaknesses Key is to design a service process that meets the needs of targeted customers The “service package”

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 42 A Cubical Model of Services (Three Dimensions) Nature of the Service Package Primarily Physical Activities (Airline, trucking firm) Primarily Intangible Activities (Law firm, software developer) Degree of CustomizationLower Customization (Quick-change oil shop) Higher Customization (Full-service car repair shop) Degree of Customer Contact Lower Contact (Mail sorting) Higher Contact (Physical therapist)

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 43 Community Hospital Public Hospital

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 44 Birthing Center Public Hospital

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 45 Layout Decision Models Product-based layout –Usually best for a line operation –Cycle time a primary measure Functional (Process-based) layout –Usually best for a job shop –Distance between steps a measure Cellular layout –Usually best for batch processes

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 46 Product-Based Layout Line Balancing Improve ‘Takt’ time: –Reduce idle time –Reduce setup time –Reduce unnecessary movement –Identify ‘bottlenecks’ We’ll use problem 6 on page 200 to illustrate line balancing.

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 47 Functional (Process-based) Layout A.Minimize the total distance traveled B.Minimize information flow for decisions C.Use electronic data interchange (EDI) to allow more flexibility for accomplishing A and B