1. 7 - 1© 2014 Pearson Education Process Design PowerPoint presentation to accompany Heizer and Render Operations Management, Global Edition, Eleventh Edition Principles of Operations Management, Global Edition, Ninth Edition PowerPoint slides by Jeff Heyl 7 © 2014 Pearson Education

2. 7 - 2© 2014 Pearson Education OUTLINE ▶ Four Process Strategies ▶ Using Crossover Charts for Process Selection ▶ Tools for Process Analysis and Design ▶ Key Issues in Service Process Design ▶ Technologies to Improve Production and Productivity

3. 7 - 3© 2014 Pearson Education Process Strategy The objective is to create a process to produce products that meets customer requirements within cost and other managerial constraints

4. 7 - 4© 2014 Pearson Education Process, Volume, and Variety Process Focus projects, job shops (machine, print, hospitals, restaurants) Arnold Palmer Hospital Repetitive (autos, motorcycles, home appliances) Harley-Davidson Product Focus (commercial baked goods, steel, glass, beer) Frito-Lay High Variety one or few units per run, (allows customization) Changes in Modules modest runs, standardized modules Changes in Attributes (such as grade, quality, size, thickness, etc.) long runs only Mass Customization (difficult to achieve, but huge rewards) Dell Computer Poor Strategy (Both fixed and variable costs are high) Low Volume Repetitive Process High Volume Volume Figure 7.1

5. 7 - 5© 2014 Pearson Education Process Strategies Four basic strategies 1.Process focus 2.Repetitive focus 3.Product focus 4.Mass customization Within these basic strategies there are many ways they may be implemented

6. 7 - 6© 2014 Pearson Education Manufacturing Process Layout L L L L L L L L L L M M M M D D D D D D D D G G G G G G A AA Receiving and Shipping Assembly Painting Department Lathe Department Milling Department Drilling Department Grinding Department P P

7. 7 - 7© 2014 Pearson Education Process Focus Many inputs (surgeries, sick patients, baby deliveries, emergencies) Many different outputs (uniquely treated patients) Many departments and many routings Figure 7.2(a) (low-volume, high-variety, intermittent processes) Arnold Palmer Hospital

8. 7 - 8© 2014 Pearson Education Process Focus ► Facilities are organized around specific activities or processes ► General purpose equipment and skilled personnel ► High degree of product flexibility ► Typically high costs and low equipment utilization ► Product flows may vary considerably making planning and scheduling a challenge

9. 7 - 9© 2014 Pearson Education Repetitive Focus ► Facilities often organized as assembly lines ► Characterized by modules with parts and assemblies made previously ► Modules may be combined for many output options ► Less flexibility than process-focused facilities but more efficient

10. 7 - 10© 2014 Pearson Education Repetitive Focus Raw materials and module inputs Modules combined for many Output options (many combinations of motorcycles) Few modules (multiple engine models, wheel modules) Figure 7.2(b) (modular) Harley Davidson

11. 7 - 11© 2014 Pearson Education Raw materials or customer Finished item Station 2 Station 2 Station 3 Station 3 Station 4 Station 4 Material and/or labor Station 1 Material and/or labor Material and/or labor Material and/or labor Repetitive Manufacturing Repetitive Focus

12. 7 - 12© 2014 Pearson Education Product Focus Few Inputs (corn, potatoes, water, seasoning) Output variations in size, shape, and packaging (3-oz, 5-oz, 24-oz package labeled for each material) Figure 7.2(c) (high-volume, low-variety, continuous process) Frito-Lay

13. 7 - 13© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall Product Focus Nucor Steel Plant 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 Scrap steel Ladle of molten steel Electric furnace A B C

14. 7 - 14© 2014 Pearson Education Product Focus ► Facilities are organized by product ► High volume but low variety of products ► Long, continuous production runs enable efficient processes ► Typically high fixed cost but low variable cost ► Generally less skilled labor

15. 7 - 15© 2014 Pearson Education Mass Customization ► The rapid, low-cost production of goods and service to satisfy increasingly unique customer desires ► Combines the flexibility of a process focus with the efficiency of a product focus

16. 7 - 16© 2014 Pearson Education Mass Customization Many parts and component inputs Many output versions (custom PCs and notebooks) Many modules (chips, hard drives, software, cases) Figure 7.2(d) (high-volume, high-variety) Dell Computer

17. 7 - 17© 2014 Pearson Education Mass Customization TABLE 7.1Mass Customization Provides More Choices Than Ever NUMBER OF CHOICES ITEM1970s21ST CENTURY Vehicle styles181,212 Bicycle types8211,000 Software titles0400,000 Web sites0255,000,000 Movie releases per year267744 New book titles40,530300,000 Houston TV channels5185 Breakfast cereals160340 Items (SKUs) in supermarkets14,000150,000 LCD TVs0102

18. 7 - 18© 2014 Pearson Education Comparison of Processes TABLE 7.2Comparison of the Characteristics of Four Types of Processes PROCESS FOCUS (LOW-VOLUME, HIGH-VARIETY) REPETITIVE FOCUS (MODULAR) PRODUCT FOCUS (HIGH-VOLUME, LOW-VARIETY) MASS CUSTOMIZATION (HIGH-VOLUME, HIGH-VARIETY) 1.Small quantity and large variety of products 1.Long runs, usually a standardized product from modules 1.Large quantity and small variety of products 1.Large quantity and large variety of products 2.Broadly skilled operators 2.Moderately trained employees 2.Less broadly skilled operators 2.Flexible operators

19. 7 - 19© 2014 Pearson Education Comparison of Processes TABLE 7.2Comparison of the Characteristics of Four Types of Processes PROCESS FOCUS (LOW-VOLUME, HIGH-VARIETY) REPETITIVE FOCUS (MODULAR) PRODUCT FOCUS (HIGH-VOLUME, LOW-VARIETY) MASS CUSTOMIZATION (HIGH-VOLUME, HIGH-VARIETY) 3.Instructions for each job 3.Few changes in the instructions 3.Standardized job instructions 3.Custom orders requiring many job instructions 4.High inventory 4.Low inventory 4.Low inventory relative to the value of the product

20. 7 - 20© 2014 Pearson Education Comparison of Processes TABLE 7.2Comparison of the Characteristics of Four Types of Processes PROCESS FOCUS (LOW-VOLUME, HIGH-VARIETY) REPETITIVE FOCUS (MODULAR) PRODUCT FOCUS (HIGH-VOLUME, LOW-VARIETY) MASS CUSTOMIZATION (HIGH-VOLUME, HIGH-VARIETY) 5.Finished goods are made to order and not stored 5.Finished goods are made to frequent forecasts 5.Finished goods are made to a forecast and stored 5.Finished goods are build-to- order (BTO) 6.Scheduling is complex 6.Scheduling is routine 6.Sophisticated scheduling accommodates custom orders

21. 7 - 21© 2014 Pearson Education Comparison of Processes TABLE 7.2Comparison of the Characteristics of Four Types of Processes PROCESS FOCUS (LOW-VOLUME, HIGH-VARIETY) REPETITIVE FOCUS (MODULAR) PRODUCT FOCUS (HIGH-VOLUME, LOW-VARIETY) MASS CUSTOMIZATION (HIGH-VOLUME, HIGH-VARIETY) 7.Fixed costs are low and variable costs high 7.Fixed costs are dependent on flexibility of the facility 7.Fixed costs are high and variable costs low 7.Fixed costs tend to be high and variable costs low

22. 7 - 22© 2014 Pearson Education Crossover Chart Example ▶ Evaluate three different accounting software products ▶ Calculate crossover points between software A and B and between software B and C TOTAL FIXED COST DOLLARS REQUIRED PER ACCOUNTING REPORT Software A$200,000$60 Software B$300,000$25 Software C$400,000$10

23. 7 - 23© 2014 Pearson Education Crossover Chart Example ► Software A is most economical from 0 to 2,857 reports ► Software B is most economical from 2,857 to 6,666 reports

24. 7 - 24© 2014 Pearson Education Crossover Charts Fixed costs Variable costs $ High volume, low variety Process C Fixed costs Variable costs $ Repetitive Process B Fixed costs Variable costs $ Low volume, high variety Process A Fixed cost Process A Fixed cost Process B Fixed cost Process C Total process A costs Total process B costs Total process C costs V1V1 (2,857) V2V2 (6,666) 400,000 300,000 200,000 Volume $ Figure 7.3

25. 7 - 25© 2014 Pearson Education Focused Processes  Focus brings Less overhead costs Less complexity More efficiency Focus can be on: ▶ Customers (Hotel owners: dishwashers) ▶ Products (Caterpillar) ▶ Service (Children hospital) ▶ Technology (SAP: software)

26. 7 - 26© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall Analyzing and Designing Processes  Design the process to achieve a competitive advantage  Analyze the process to eliminate the steps that do not add value

27. 7 - 27© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall Tools Used for Process Analysis and Design  Flow Charts - Shows the movement of materials  Time-Function Mapping - Shows flows and time frame  Value-Stream Mapping - Shows flows and time and value added beyond the immediate organization  Process Charts - Uses symbols to show key activities  Service Blueprinting - focuses on customer/provider interaction

28. 7 - 28© 2014 Pearson Education Flow Chart Operator takes phone order. Orders wait to be picked up. Supervisor inspects orders. Order is fulfilled. Order waits for sales rep. Is order complete? Yes No Orders are moved to supervisor’s in-box. Orders wait for supervisor.

29. 7 - 29© 2014 Pearson Education “Baseline” Time-Function Map Customer Sales Production control Plant A Warehouse Plant B Transport 12 days13 days1 day4 days1 day10 days1 day0 day1 day 52 days Figure 7.4(a) Move Receive product Product Extrude Wait WIP Product Move Wait WIP Print Wait Order WIP Order product Process order Wait Order

30. 7 - 30© 2014 Pearson Education “Target” Time-Function Map Customer Sales Production control Plant Warehouse Transport 1 day2 days1 day 6 days Figure 7.4(b) Move Receive product Product Extrude Wait Print Order WIP Product Order product Process order Wait Order

31. 7 - 31© 2014 Pearson Education Value-Stream Mapping Figure 7.5

32. 7 - 32© 2014 Pearson Education Process Chart Figure 7.6

33. 7 - 33© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall Service Blueprinting  Helps to identify potential failure points in customer and service provider interaction  Defines three levels of interaction Level 1: Activities under the control of the customer Level 2: Interaction between the customer and service provider Level 3: Activities performed invisibly to the customer  Each level has different management issues

34. 7 - 34© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall Service Blueprint Poka-Yoke (level 1): Put a bell in driveway so that customer will be noticed Personal GreetingService DiagnosisPerform ServiceFriendly Close Level #3 Level #1 Level #2 Figure 7.8 No Notify customer and recommend an alternative provider. (7min) Customer arrives for service. (3 min) Warm greeting and obtain service request. (10 sec) F Direct customer to waiting room. F Notify customer the car is ready. (3 min) Customer departs Customer pays bill. (4 min) F F Perform required work. (varies) Prepare invoice. (3 min) F F Yes F F Standard request. (3 min) Determine specifics. (5 min) No Can service be done and does customer approve? (5 min)

35. 7 - 35© 2014 Pearson Education Special Considerations for Service Process Design ► Some interaction with customer is necessary, but this often affects performance adversely ► The better these interactions are accommodated in the process design, the more efficient and effective the process ► Find the right combination of cost and customer interaction

36. 7 - 36© 2014 Pearson Education Improving Service Productivity TABLE 7.3Techniques for Improving Service Productivity STRATEGYTECHNIQUEEXAMPLE SeparationStructuring service so customers must go where the service is offered Bank customers go to a manager to open a new account, to loan officers for loans, and to tellers for deposits Self-serviceSelf-service so customers examine, compare, and evaluate at their own pace Supermarkets and department stores PostponementCustomizing at deliveryCustomizing vans at delivery rather than at production FocusRestricting the offeringsLimited-menu restaurant

37. 7 - 37© 2014 Pearson Education Improving Service Productivity TABLE 7.3Techniques for Improving Service Productivity STRATEGYTECHNIQUEEXAMPLE ModulesModular selection of service Modular production Investment and insurance selection Prepackaged food modules in restaurants AutomationSeparating services that may lend themselves to some type of automation Automatic teller machines SchedulingPrecise personnel scheduling Scheduling ticket counter personnel at 15-minute intervals at airlines TrainingClarifying the service options Explaining how to avoid problems Investment counselor, funeral directors After-sale maintenance personnel

38. 7 - 38© 2014 Pearson Education Technologies to Improve Production and Productivity 1.CNC Machinery 2.Automatic identification systems (AISs) Bar Codes and RFID 3.Vision system for process control and inspection, (video camera & computers) 4.Robots 5.Automated storage and retrieval systems (ASRSs) 6.Automated guided vehicles (AGVs) 7.Flexible manufacturing systems (FMSs) 8.Computer-integrated manufacturing (CIM)

39. 7 - 39© 2014 Pearson Education CNC Machinery © 2011 Pearson Education, Inc. publishing as Prentice Hall

40. 7 - 40© 2014 Pearson Education Vision Systems for Process Control ► Real-time monitoring and control of processes ► Sensors collect data ► Devices read data on periodic basis ► Measurements translated into digital signals then sent to a computer ► Computer programs analyze the data ► Resulting output may take numerous forms

41. 7 - 41© 2014 Pearson Education Robots ► Perform monotonous or dangerous tasks ► Perform tasks requiring significant strength or endurance ► Generally enhanced consistency and accuracy

42. 7 - 42© 2014 Pearson Education Automated Storage and Retrieval Systems (ASRSs) ► Automated placement and withdrawal of parts and products ► Reduced errors and labor ► Particularly useful in inventory and test areas of manufacturing firms

43. 7 - 43© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall

44. 7 - 44© 2014 Pearson Education Automated Guided Vehicle (AGVs) ► Electronically guided and controlled carts ► Used for movement of products and/or individuals

45. 7 - 45© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall

46. 7 - 46© 2014 Pearson Education Manufacturing, Engineering & Technology, Fifth Edition, by Serope Kalpakjian and Steven R. Schmid. ISBN 0-13-148965-8. © 2006 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved. Flexible Manufacturing System A schematic illustration of a flexible manufacturing system showing machining centers, a measuring and inspection station. And automated guided vehicles. Source: After J. T. Black.

47. 7 - 47© 2014 Pearson Education Computer- Integrated Manufacturing (CIM) Figure 7.9 ASRS and AGVs