Copyright 2013 John Wiley & Sons, Inc. Chapter 2 Processes Planning and Design

2-2 Overview

2-3 Louis Vuitton Needs to produce exclusive products in volume –While maintaining high quality Historically used a job shop Currently uses many robots Also uses cellular manufacturing

2-4 IBM’s Charlotte, NC Plant Assembly line produces 27 significantly different products Uses only 40 workers Products include hand-held bar-code scanners, portable medical computers, fiber-optic connectors, and satellite communications devices “Kits” of parts delivered to workers Computer screen displays assembly instructions

2-5 Rickard Associates Produces magazines and marketing materials Pioneer in using the virtual organization Only two of editorial production company’s employees work at headquarters in New Jersey Art director works in Arizona Editors are located in Florida, Georgia, Michigan, and the District of Columbia Freelancers even more scattered Internet and AOL used to coordinate work

2-6 Martin Marietta Has a manufacturing facility in Denver Originally set up as job shop with numerous functional departments –High WIP levels –Long lead times –Long travel distances –Departmental barriers inhibited communication Plant subsequently arranged into three focused factories

2-7 Martin Marietta (Continued) Each focused factory completed entire electronic assembly for particular application Each focused factory treated as separate business enterprise Factory manager assigned to each focused factory “NFL draft” used to select worker teams

2-8 Martin Marietta (Continued) Within focused factories part families identified based on technology and processes Standard routings identified for each part family Improvements –Seven months of consecutive production with no scrap –A 50 percent reduction in WIP –A 21 percent reduction in lead times –A 90 percent reduction in overtime

2-9 Variety of Transformation Systems Louis Vuitton factory has primarily a cellular production process Rickard Associates is job shop and is also a virtual organization Martin Marietta converted from a job shop to focused factories IBM uses a flow shop

2-10 Forms of Transformation Systems Transformation system design considers alternative transformation forms and selects best one given characteristics of desired outputs. Layout analysis seeks to maximize the efficiency or effectiveness of operations.

2-11 Five Basic Forms of Transformation Systems 1.Continuous process 2.Flow shop 3.Job shop 4.Cellular 5.Project Slide on each of these

2-12 Continuous Process Highly standardized products in large volumes Often these products have become commodities Typically these processes operate 24 hours/day seven days/week Objective is to spread fixed cost over as large a volume as possible

2-13 Continuous Process (Continued) Starting and stopping a continuous process can be prohibitively expensive Highly automated and specialized equipment used Layout follows the processing stages Output rate controlled through equipment capacity and flow mixture rates

2-14 Continuous Process (Continued) Low labor requirements Often one primary input Initial setup of equipment and procedures very complex

2-15 Flow Shop Similar to continuous process except discrete product is produced Heavily automated special purpose equipment High volume - low variety Both services and products can use flow shop form of processing

2-16 A Generalized Flow Shop Operation Figure 2.1

2-17 Advantages of the Flow Shop Low unit cost –Specialized high volume equipment –Bulk purchasing –Lower labor rates –Low in-process inventories Less skilled operators used Fewer supervisors are needed Simplified managerial control

2-18 Disadvantages of Flow Shop Variety of output difficult to obtain Difficult to change rate of output Minor design changes may require substantial changes to the equipment Worker boredom and absenteeism Work not very challenging Vulnerable to equipment breakdowns

2-19 Disadvantages of Flow Shop (Continued) Line balanced to slowest element Large support staff required Planning, design, and installation very complex task Difficult to dispose of or modify special purpose equipment

2-20 Layout of the Flow Shop Objective is to assign tasks to groups The work assigned to each group should take about the same amount of time to complete Final assembly operations with more labor input often subdivided easier Paced versus unpaced lines

2-21 Balancing the Production Line Needs tasks, times, and precedence information Used to construct a precedence diagram Intent is to find a cycle time in which each workstation can complete it tasks –Also known as takt time Tasks are grouped for each workstation Efficiency is computed Will see using an example

2-22 Line Balancing Formulas

2-23 Tasks in Credit Application Processing Table 2.1

2-24 Precedence Diagram for Credit Applications Figure 2.2

2-25 Line Balancing Data Company operates one shift per day Company works eight hours per shift Company wishes to process 1,200 applications per day

2-26 Cycle Time and N T Calculations

2-27 Station Task Assignment Table 2.2

2-28 Station Assignments Figure 2.3

2-29 Job Shop Each output, or small batch of outputs is processed differently High variety - low volume Considerable amount of transport of staff, material, or recipients Large variations in system flow times Equipment and staff grouped based on function

2-30 A Generalized Job Shop Operation Figure 2.4

2-31 Advantages of the Job Shop Flexibility to respond to individual demands Less expensive general purpose equipment used Maintenance and installation of general purpose equipment easier General purpose equipment easier to modify and therefore less susceptible to becoming obsolete

2-32 Advantages of the Job Shop (Continued) Dangerous activities can be segregated from other operations Higher skilled work leading to pride of workmanship Experience and expertise concentrated Pace of work not dictated by moving line Less vulnerable to equipment breakdowns

2-33 Disadvantages of the Job Shop General purpose equipment is slower Higher direct labor cost High WIP inventories High material handling costs Management control very difficult

2-34 Layout of the Job Shop Layout is one of the most crucial elements affecting efficiency for a job shop The layout problem is complex –Mainly due to variety of outputs Layout based on how important (or unimportant) it is to have two workstations near each other

2-35 Directly Specified Closeness Preferences Table 2.3

2-36 Closeness Preferences Layout (a) Initial and (b) Final Figure 2.5

2-37 Cost-Volume-Distance Model Desirability of closeness based on movement cost Objective is to minimize the cost of moves Total cost is calculated by the equation below Useful for a first draft of the layout

2-38 Cellular Production Combines flexibility of job shop with low costs and short response times of flow shop Based on group technology First identify part families Then form machine cells to produce part families

2-39 Conversion of a Job Shop Layout to a Cellular Layout Figure 2.7

2-40 Organization of Miscellaneous Parts into Families Figure 2.8

2-41 Advantages of Cellular Production Reduced machine setup times Increased capacity Economical to produce in smaller batch sizes Smaller batch sizes result in less WIP Less WIP leads to shorter lead times Shorter lead times increase forecast accuracy and provide a competitive advantage

2-42 Advantages of Cellular Production (Continued) Parts produced in one cell Capitalize on benefits of using worker teams Minimal cost to move from job shop to cellular production (e.g. EHC) Can move from cellular production to “mini-plants”

2-43 Disadvantages of Cellular Production Volumes too low to justify highly efficient high volume equipment Vulnerable to equipment breakdowns Balancing work across cells Does not offer the same high degree of customization as the job shop

2-44 Cellular Layout Teams of workers and equipment to produce families of outputs Workers cross-trained Nominal cells versus physical cells. Remainder cell Cell formation methods –production flow analysis

2-45 Methods of Cell Formation With production flow analysis (PFA) families are determined by evaluating resource requirements Outputs needing same resources are grouped into a family Then cluster resources to make that family Essence of PFA is to determine the resource- output matrix and use to identify outputs with common resource requirements

2-46 Original Machine-Part Matrix Table 2.5

2-47 Reordered Matrix Table 2.6

2-48 General Guidelines for Reordering The Matrix by PFA Incompatible resources should be in separate cells Each output should be produced in only one cell Any investment in duplicate resources should be minimized The cells should be limited to a reasonable size

2-49 Project Operations Large scale Finite duration Non-repetitive Multiple interdependent activities Offers extremely short reaction times

2-50 Selection of a Transformation System The five systems are simplified extremes of what is observed in practice –Few firms use one of the five forms in a pure sense –Most use a hybrid Services are typically job shops –Recent focus on mass production of service Problem is to decide what processing form is best for the organization long term

2-51 Considerations of Volume and Variety High volume indicate automated mass production High variety implies use of skilled labor and general purpose equipment Make-to-stock versus make-to-order

2-52 Effect of Output Characteristics on Transformation Systems Figure 2.9

2-53 Product and Process Life Cycles In R&D stage, product made in small volumes At peak of life cycle, demand may justify high volume special purpose equipment System should evolve as market evolves Whether an organization moves with a product through its life cycle depends on the organization’s focus

2-54 Selection of Transformation System by Stage of Life Cycle Figure 2.10

2-55 Service Processes Often implemented with little development or pretesting Need to consider amount of customer contact Customers may not arrive at smooth and even increments Including customer in service process provides opportunities to improve service

2-56 The Service Matrix Figure 2.12

2-57 Service Gaps It is useful to inspect the service design for gaps between customer needs and what provider is offering This allows provider to control quality, productivity, cost, and performance Can help identify a competitive advantage

2-58 Service Guarantees 1.Must be meaningful to the customer 2.Must be unconditional 3.Must be easy to communicate and easy to understand 4.Must be easy to use