Process Planning, Analysis, and Reengineering Kusdhianto Setiawan, SE, Siv.Øk Department of Management Faculty of Economics Gadjah Mada University

Types of Process Chase,Aquilano,Jacobs: Conversion Conversion Fabrication Fabrication Assembly Assembly Testing Testing Process Flows: Job shop Job shop Batch Batch Assembly Line Assembly Line Continuous Flow Continuous Flow Russel & Taylor III: Projects Projects Batch Production Batch Production Mass Production Mass Production Continuous Production Continuous Production

Process Selection with Break-Even Analysis Compute Break Even of Process A Compute Break Even of Process A Compute Break Even of Process B Compute Break Even of Process B Find Indifference Point between two or more processes (i.e. between process A and B) Find Indifference Point between two or more processes (i.e. between process A and B)

Process Planning Make-or-buy Decision The make-or-buy decision rests on an evaluation of the following factors: Purchase Cost. Capacity. Companies that are operating at less than full capacity usually make components rather than buy them, especially if maintaining a level work force is important. Quality. In general, it is easier to control the quality of items produced in your own factory. Speed. Sometimes components are purchased because a supplier can provide goods sooner than the manufacturer. Reliability. Suppliers need to be reliable in both the quality and the timing of what they supply. Expertise. Companies that are especially good at making or designing certain items may want to keep control over their production.

Process Planning Specific Equipment Selection Capital Budgeting: Purchase cost. Operating costs. Cost of direct labor & indirect labor (e.g., for programming, setups, material handling, or training), cost of power and utilities, supplies, tooling, property taxes and insurance, and maintenance cost. Annual savings. less material and less machine time or fewer repairs to reduce downtime, fewer inspections and less scrap and rework. Revenue enhancement. It is difficult to predict, increase in productivity? Replacement analysis. The decision to replace old equipment with state-of-the-art equipment depends in large measure on the competitive environment. A hidden cost in replacement analysis is the opportunity cost of not investing in new equipment when upcoming technology will make the equipment obsolete. Risk and uncertainty. Equipment capabilities, length of life, and operating cost may be uncertain. Financial analysts tend to assign higher hurdle rates (i.e., required rates of return) to technology investments, making it difficult to gain approval for them. Piecemeal analysis. the proposal and evaluation of equipment purchases in a piecemeal fashion resulting in pieces of technology that don't fit into the existing system and fail to deliver the expected returns.

Process Planning Process Plans Process Plans Blueprints: Blueprints: Detailed drawings of product design; A bill of material: A bill of material: A list of the materials and parts that go into a product; An assembly diagram: An assembly diagram: An illustration showing how various parts combine to form the final product, as given in Figure 6.1;Figure 6.1 An assembly chart or product structure diagram: An assembly chart or product structure diagram: A schematic diagram that shows the relationship of each component part to its parent assembly, the grouping of parts that make up a subassembly, and the overall sequence of assembly, as given in Figure 6.2;Figure 6.2 An operations process chart: An operations process chart: A list of operations to be performed in fabricating a part, along with the time required to complete each operation, special tools, fixtures, and gauges needed, and how the machine is to be set up and operated as given in Figure 6.3; andFigure 6.3 A routing sheet: A routing sheet: An ordered list of machines or workstations which shows where a part is to be sent for its next operation.

Process Analysis Process Flowcharts (figure 6.4) Process Flowcharts (figure 6.4) Process diagrams detail each step of a process in simple graphic form. Process diagrams detail each step of a process in simple graphic form. A process map is a collection of process diagrams arranged in a hierarchy. A process map is a collection of process diagrams arranged in a hierarchy. Part of the firm's success is the process focus of its products. SAP starts with solution maps for specific industries like chemical, pharmaceuticals, banking or health care; then asks customers to build process blueprints that are used to customize the software system to their company. Process blueprints provide a common mode of communication and can be used to streamline processes before they are automated. Part of the firm's success is the process focus of its products. SAP starts with solution maps for specific industries like chemical, pharmaceuticals, banking or health care; then asks customers to build process blueprints that are used to customize the software system to their company. Process blueprints provide a common mode of communication and can be used to streamline processes before they are automated.

Process Reengineering Reengineering: Total redesign of a process Reengineering: Total redesign of a process The Reengineering Process (Figure 6.9): The Reengineering Process (Figure 6.9): Goals and Specifications for process performance Goals and Specifications for process performance High-level Process Map; contains only the essential building blocks of a process High-level Process Map; contains only the essential building blocks of a process Detailed Process Map Detailed Process Map Pilot Study Pilot Study Implementation Implementation

Technology Decisions Information Technology Management Information Systems. Management Information Systems. A system specifically designed to channel large quantities and numerous types of information through an organization. Data are collected, organized, processed, and made conveniently accessible to the manager to assist in making decisions and carrying out routine functions. Decision Support Systems. Decision Support Systems. An information system with which a manager interacts through an iterative process to reach a decision. A DSS frequently integrates a quantitative model within its framework. Figure 6.11Figure 6.11 Expert Systems. Expert Systems. It recommends a decision based on expert knowledge. Including a knowledge base, which contains an expert's knowledge on a particular type of problem, and a mechanism for reasoning that allows inferences to be made from the knowledge base. “Computerized Consultant” Artificial Intelligence. Artificial Intelligence. AI attempts to replicate human thought processes with computers to diagnose and solve problems. Expert systems can be viewed as one type of artificial intelligence. Others: neural networks, genetic algorithms, and fuzzy logic.

Information Technology (con’t) Information Technology (con’t) Enterprise Software Enterprise Software Advanced Communications Advanced Communications EDI, EFT, TCP/IP EDI, EFT, TCP/IP Manufacturing Technology Manufacturing Technology Numerically Controlled (NC) Machine, Computer Numerical Controlled (CNC) Machine, Direct Numerical Controlled (DNC) Machine Numerically Controlled (NC) Machine, Computer Numerical Controlled (CNC) Machine, Direct Numerical Controlled (DNC) Machine Automated Material Handling Automated Material Handling Automated Storage & Retrival System (ASRS) Automated Storage & Retrival System (ASRS) Flexible Manufacturing System (FMS), Figure 6.12 Flexible Manufacturing System (FMS), Figure 6.12 Robotics Robotics Computer-Integrated Manufacturing (CIM) Computer-Integrated Manufacturing (CIM) CAM, Group Technology (GT); grouping of parts into families CAM, Group Technology (GT); grouping of parts into families Technology Decisions