Operations Management Chapter 7 – Process Strategy PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e © 2006 Prentice Hall, Inc.

Process, Volume, and Variety Low Volume Repetitive Process High Volume Volume Figure 7.1 High Variety one or few units per run, high variety (allows customization) Process Focus projects, job shops (machine, print, carpentry) Standard Register Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. 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 Product Focus (commercial baked goods, steel, glass) Nucor Steel Poor Strategy (Both fixed and variable costs are high)

Customer sales representative GLUING, BINDING, STAPLING, LABELING Process Flow Diagram Customer Customer sales representative Purchasing PREPRESS DEPT Vendors Receiving Warehouse Accounting PRINTING DEPT COLLATING DEPT GLUING, BINDING, STAPLING, LABELING POLYWRAP DEPT SHIPPING Information flow Material flow Figure 7.2

Process Strategies Four basic strategies Process focus Repetitive focus Product focus Mass customization Within these basic strategies there are many ways they may be implemented

High variety of outputs Process Focus Print Shop Many inputs High variety of outputs

Repetitive Focus Automobile Assembly Line Raw materials and module inputs Modules combined for many output options Few modules

Frame-building work cells Engines and transmissions Process Flow Diagram Frame tube bending Frame-building work cells Frame machining Hot-paint frame painting THE ASSEMBLY LINE TESTING 28 tests Oil tank work cell Shocks and forks Handlebars Fender work cell Air cleaners Fluids and mufflers Fuel tank work cell Wheel work cell Roller testing Incoming parts From Milwaukee on a JIT arrival schedule Engines and transmissions Crating Figure 7.3

Output variation in size, shape, and packaging Product Focus Bottling Plant Output variation in size, shape, and packaging Many inputs

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 - 300 ft Hot mill for finishing, cooling, and coiling D E F G H I Nucor Steel Plant

Effective scheduling techniques Rapid throughput techniques Mass Customization Repetitive Focus Modular design Flexible equipment Figure 7.5 Modular techniques Mass Customization Effective scheduling techniques Rapid throughput 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

Low volume, high variety High volume, low variety Crossover Charts Fixed costs Variable costs $ Low volume, high variety Process A Fixed costs Variable costs $ Repetitive Process B Fixed costs Variable 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 7.6

Time-Function Mapping Customer Sales Production control Plant A Warehouse Plant B Transport Order product Process order Wait Move Receive product Print Wait Move Wait Extrude Wait 12 days 13 days 1 day 4 days 10 days 0 day 52 days Figure 7.7

Time-Function Mapping Customer Sales Production control Plant Warehouse Transport Order product Process order Wait Move Receive product Extrude Wait Print 1 day 2 days 6 days Figure 7.7

Process Chart Figure 7.8

Service Blueprint Figure 7.9 Personal Greeting Service Diagnosis Perform Service Friendly Close Level #1 Customer arrives for service Warm greeting and obtain service request Notify customer the car is ready Customer departs Customer pays bill No Notify customer and recommend an alternative provider Standard request Determine specifics No Can service be done and does customer approve? Level #2 Direct customer to waiting room Perform required work Prepare invoice Yes Level #3 Potential failure point Figure 7.9

Service Process Matrix Service Factory Service Shop Degree of Customization Low High Degree of Labor Mass Service Professional Service Commercial banking Private banking 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 7.10

Process Control Software

Robotic Surgery

Ethics and Environmentally Friendly Processes Reduce the negative impact on the environment Encourage recycling Efficient use of resources Reduction of waste by-products Use less harmful ingredients Use less energy