1. Process Strategy and Capacity Planning

2. Introduction What: Making process and capacity decisions
Where: Produce goods and services
Why: Long term effects on company

3. Process Focus Complete jobs on demand Low volume High variety
“Job shop”
Products move between processes
High flexibility

4. Repetitive Focus Modules Assemble Modules into finished products
More structure
Less flexibility
Some customizing

5. Product Focus Produce one product High volume Low variety
Continuous process

6. Mass Customization Focus
Individualized goods and services
What customer wants when they want it
Volume of product focus with flexibility of process focus

7. Comparing Process Choices
Repetitive
Product
Mass Cust
Quantity/
Variety
Small / Large
Long runs, some options
Large / Small
Large / Large
Equipment
General
Special
Flexible
People/Training
Skilled
Modest Train
Less skilled
Job Instructions
Many
Some
Few
Raw Materials
Large
JIT
Small
Work in Process
High
Low
Speed
Slow
Medium
Fast
Finished Goods
To order
To forecast
Scheduling
Complex
Forecast
Simple
Costs
Low fixed
High fixed
Costing
Hard
Easy

8. Process Analysis Tools
Designed to achieve competitive advantage?
Eliminate steps that do not add value?
Maximize customer value?
Win orders?

9. Flow Diagram Information flow Material flow Customer Purchasing
Shipping
Customer
Customer sales representative
take order
Prepress Department
(Prepare printing plates and negatives)
Printing Department
Collating Department
Gluing, binding, stapling, labeling
Polywrap Department
Purchasing
(order inks, paper, other supplies)
Vendors
Receiving
Warehousing
(ink, paper, etc.)
Accounting
Information flow
Material flow

10. Time-Function Mapping
Order Product
Receive product
Customer
Process Order
Sales
Production control
Order
Wait
Order
Plant A
Print
Product
WIP
Warehouse
Wait
Wait
Wait
Product
WIP
Plant B
Extrude
WIP
WIP
Product
Transport
Move
Move
12 days
13 days
1 day
4 days
1 day
10 days
1 day
9 days
1 day

11. Process Charts SUBJECT: Request tool purchase Dist (ft) Time (min)
Symbol
Description
lðo D Ñ
Write order
¡ðo w
On desk 75 è o
To buyer
¡ðn
Examine
¡ = Operation; ð = Transport; o = Inspect; D = Delay; Ñ = Storage

12. Service Blueprinting

13. Process Design for Services
Mass Service
Professional Service
Service Factory
Service Shop
Commercial
Banking
General purpose law firms
Fine dining restaurants
Hospitals
Airlines
Full-service stockbroker
Retailing
Personal banking
Boutiques
Law clinics
Fast food restaurants
Warehouse and catalog stores
No frills airlines
Limited service stockbroker
For-profit hospitals
Degree of Interaction and Customization
Degree of Labor Intensity
Low High
High Low

14. Process Design for Services
Layout
Human Resources
Technology

15. Process Reengineering
Design of Process based on initial assumptions
Assumptions change!
Rethink and redesign
Flexibility

16. Capacity Planning
Design Capacity = maximum theoretical output of system
Effective Capacity = Capacity expected in current operation
Utilization = Actual Output / Design Capacity
Efficiency = Actual Output / Effective Capacity

17. Capacity Planning
Anticipated Production = Design Capacity x Effective Capacity x Efficiency

18. Capacity Expansion Expected Demand New Capacity Demand Time in Years
Capacity leads demand with an incremental expansion

19. Capacity Expansion Expected Demand New Capacity Demand Time in Years
Capacity leads demand with a one-step expansion

20. Capacity Expansion Expected Demand New Capacity Demand Time in Years
Capacity lags demand with an incremental expansion

21. Attempts to have an average capacity, with an incremental expansion
Capacity Expansion
Expected Demand
Time in Years
Demand
New Capacity
Attempts to have an average capacity, with an incremental expansion

22. Approaches to Capacity Expansion
May need to manage demand through:
Staffing changes
Adjusting equipment and processes
Increasing throughput

23. Break-even Analysis Fixed Costs Variable Costs Contribution
Revenue Function
Crossover Chart
Net Present Value

24. Operations Technology

25. Design Technology Internet Intranet CAD DFMA 3-D Object Modelling STEP
CAM
Virtual Reality

26. Production Technology
Numerical Control
Process Control
Vision Systems
Robots
Automated Storage and Retrieval Systems
Automated Guided Vehicle
Flexible Manufacturing System
Computer Integrated Manufacturing

27. Information Technology
Transaction Processing System
Automatic Identification System
Management Information System
Artificial Intelligence
Expert System
Fuzzy Logic
Neural Network

28. Information Technology
Enterprise Resource Planning (ERP)
Automate and integrate processes
Share common data
SAP, JD Edwards, BAAN, PeopleSoft