1. OPERATIONS MANAGEMENT MMS I By Suresh Dadlani Mobile:
October3,2010

3. PRODUCT PROCESSES OPERATION MANAGEMENT HR FACILITIES MATERIALS LAYOUT
SCHEDULING
PLANNING

4. Operations Management Product Definition Process
Product: The end result of the manufacturing process to be offered to the market place to satisfy a need or a want.

5. Objectives
Define product design and its strategic impact on organization
Describe steps to develop a product design
Using break-even analysis as a tool in selecting between product alternatives
Identity production process differences and their characteristics
Describe the steps used in process design selection
Understand how to use a process flow chart
Understand current technology advancements and how they impact process design
Understand issues impacting the design of service operations
October3,2010

6. Product & Service Design
Product design must support the business strategy
Product design defines a product’s characteristics
- Appearance, materials, dimensions, tolerances,
performance standards
Service industries must define both the service and concept
- Physical elements, aesthetic & psychological benefits
e.g. promptness, friendliness, ambiance
Product and service design must match the needs and preferences of the targeted customer group
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7. Product & Service Design Steps
Step 1 - Idea Development
- Someone thinks of a need and a product/service design to satisfy it
e.g. customers, marketing, engineering, competitors,
benchmarking, reverse engineering
Step 2 - Product Screening
- Every business needs a formal/structured evaluation process
e.g. fit with facility and labor skills, size of market, contribution margin,
break-even analysis, return on sales
Step 3 – Preliminary Design and Testing
- Technical specifications are developed, prototypes built, testing starts
Step 4 – Final Design
- Final design based on test results, facility, equipment, material, & labor
skills defined, suppliers identified
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8. Designing Services Service Characteristics Pure services
Quasi-Manufacturing
Mixed services
Service Package
The physical goods
The sensual benefits
The psychological benefits
Differing designs
Substitute technology for people
Get customer involved
High customer attention
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9. Design/Process Highlights
Product and process design must support business and operation strategy
Product steps include idea generation, product screening, preliminary design and testing, and final design
Break-even analysis is a tool used to screen processes
Process designs range from project to batch to line to continuous
Product design and process selection decisions are linked
Process flow charts can be a useful tool in process re-design
Product and process design can be significantly enhanced by proper application of new technology
Designing service processes produce intangible products with more customer contact
October3,2010

10. Product design and process selection
Benchmarking
Idea development
Technology push
Marketing pull
Product screening
Marketing criteria
Financial criteria
Operational criteria
Preliminary design and testing
Prototyping
Trial marketing
Final design
Reverse
Engineering
Concurrent
Engineering
Value
Engineering
Breakeven
Analysis
Remanufacturing

11. Break-Even Analysis: Graphical Approach
Compute quantity of goods that must be sold to break-even
Compute total revenue at an assumed selling price
Compute fixed cost and variable cost for several quantities
Plot the total revenue line and the total cost line
Intersection is break-even
Sensitivity analysis can be done to examine changes in all of the assumptions made
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12. Breakeven Analysis
Fixed cost
Variable cost
Total cost
Revenue
Cost
Used to determine volume needed to cover total costs
Often first step in product development process
Assumes linear costs
Volume

13. Breakeven Example
A firm is considering marketing a new toothbrush. The firm expects to sell each toothbrush for Rs The per brush cost of material, labor and overhead equals Rs The required investment in plant and equipment is Rs.50,000.
How many brushes must be sold for the firm to breakeven?
If only 65,000 brushes are expected to sell, what must the variable costs be in order to allow the firm to breakeven?

14. Other Factors Impacting Design
Need to Design for Manufacturing – DFM
Minimize parts
Design parts for multiply applications
Use modular design
Avoid tools
Simplify operations
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15. The product life cycle Sales Profit
Every product and service follows a life cycle that spans:
Planning
Introduction
Growth
Maturity
Decline
Healthy companies manage their product and service offerings to insure a balanced portfolio
Sales
Dollars
Profit
Plan Intro Growth Mat Dec

16. Factor In Product Life Cycle
Consider product
life cycle stages
Introduction
Growth
Maturity
Decline
Facility & process investment depends on life cycle
© 2005 Wiley

17. Another Design factor-Organization
Old “over-the –wall” sequential design process should not be used
Each function did its work and passed it to the next function
Replace with a Concurrent Engineering process
All functions form a design team working together to develop specifications, involve customers early, solve potential problems, reduce costs, & shorten time to market
October3,2010

18. CE decision-making example

19. Concurrent Engineering
Concurrent engineering can be defined as the simultaneous development of project design functions, with open and interactive communication existing among all team members for the purposes of reducing time to market, decreasing cost, and improving quality and reliability.

20. Process Selection Process selection is based on five considerations
Type of process; range from intermittent to continuous
Degree of vertical integration
Flexibility of resources
Mix between capital & human resources
Degree of customer contact
Process types can be:
Project Process
Batch Process
Line Process
Continuous Process
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21. Underlying Process Relationship Between Volume and Standardization
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22. Differences between Intermittent and Continuous Operations
© 2005 Wiley

23. Volume and Process Choice-Summary
Low Volume typically means
Project or Batch processes
Less vertical integration
More resource flexibility
Less capital intensity
Higher skilled labor
More customer involvement
More customized products
Make or assemble to order strategy
High Volume typically means
Line/continuous processes
More vertical integration
Less resource flexibility
More capital intensity
More specialized labor
Little to no customer involvement
Standardized products
Make to stock strategy
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24. Positioning Strategies and the Product / Process Matrix
Process Focus
Job Shop
Large Batch
Flow Pattern
Assembly Line
Product Focus
Product Volume

25. The process-focused Project Shop
Characteristics
Makes a one-of-a-kind product (volume = 1)
Uses general purpose equipment
Has informal relationships with many vendors
Very little vertical integration
Flexible layout often with factors of production moving to job

26. The Job Shop Characteristics Makes many products in small volume
Uses general purpose equipment
Has informal relationships with vendors
Very little vertical integration
Departmentalized layout with chaotic flow

27. (Cell, Flow or Hybrid Shop)
The Large Batch
(Cell, Flow or Hybrid Shop)
Characteristics
Makes several families of products in moderate volume
Uses general purpose equipment often fixtured
Little vertical integration
Hybrid layout with flow lines

28. The Assembly Line Characteristics Makes few products in large volume
Uses specialized high-volume equipment
Has formal relationships with vendors
May use vertical integration
Product-based layout with linear flow

29. Process Decisions Flexibility
More resource flexibility & More customer involvement
Flow Pattern
More vertical integration & More capital intensity
Efficiency
Product Volume

30. Technology and the Product/Process Matrix
Greater need for flexibility
Jumbled
Dominant
Line
Process Choice
Greater need for efficiency
Technology decisions tend to be long-term in nature and greatly influence which products and services a firm is capable of providing to its customers profitably.
Low Medium High
Product Volume

31. Managing the balance between efficiency and flexibility to optimize customer service performance: Product and Service Strategy
Raw
Materials
Finished
Goods
Prepare
Ingredients
Assemble
Menu Items
Make to stock
Raw
Materials
Work In
Process
Prepare
Ingredients
Assemble
Menu Items
Assemble to order
Raw
Materials
Prepare
Ingredients
Assemble
Menu Items
Make to order

32. Process Design Tools
Process flow analysis is a tool used to analyze and document the sequence of steps within a total process. Usually first step in Process Reengineering.
Process Re-engineering is a structured approach used when major business changes are required as a result of:
Major new products
Quality improvement needed
Better competitors
Inadequate performance
© 2005 Wiley

33. Facility Layout and Process Choice
© 2005 Wiley

34. Process Performance Metrics
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35. Linking Design & Process Selection
Organizational Decisions appropriate for different types of operations
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36. Intermittent VS. Repetitive Layouts
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37. Product and Service Strategy Options
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38. Process Decisions-Vertical Integration & Make or Buy
Vertical integration refers to the degree a firm chooses to do processes itself- raw material to sales
Backward Integration means moving closer to primary operations
Forward Integration means moving closer to customers
A firm’s Make-or-Buy choices should be based on the following considerations:
Strategic impact
Available capacity
Expertise
Quality considerations
Speed
Cost (fixed cost + variable cost)make = Cost (fixed cost + Variable cost)buy
Business are trending toward less backward integration, more outsourcing
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39. Manufacturing Technology Decisions
Simplify first then apply appropriate technology
Information Technology: ERP etc.
Automation
Automated Material Handling:
Automated guided vehicles (AGV)
Automated storage & retrieval systems (AS/RS)
Computer-Aided Design (CAD) software
Robotics & Numerically-Controlled (NC) equipment
Flexible Manufacturing Systems (FMS)
Computer-Integrated Manufacturing (CIM)
October3,2010

40. Designing for the Customer
Value Analysis/Value Engineering (VA/VE)
Achieve equivalent or better performance at a lower cost while maintaining all functional requirements defined by the customer.
1. Does the item have any design features that are not necessary?
2. Can two or more parts be combined into one?
3. How can we cut down the weight?
4. Are there nonstandard parts that can be eliminated? 8

41. Manufacturing Systems
Depend on the type of Plant in which we have to Operate
Factors determining place of Production Planning & Control in an Organization are:
> Type of Production
- Quantity of Finished Products
- Regularity of manufacture
> Size of Plant
> Type of Industry

42. Manufacturing Systems Types of Production
Broadly eight types, Grouped under three Heads
> Job Production
> Batch Production
> Continuous Production

43. Manufacturing Systems Types of Production JOB PRODUCTION
To meet specific customer requirements
Quantity is small, usually “one off” or “several off”
Special Projects, Models, Prototypes
Large Turbo Generators, Large Engines, Boilers, Ship Building

44. Manufacturing Systems Types of Production JOB PRODUCTION
Types of Job Production
> Small numbers produced once
> Small numbers produced intermittently when needed
> Small number produced periodically, at known intervals

45. Manufacturing Systems Types of Production JOB PRODUCTION
Important Points related to Job Production:
- When produced once only, little scope of improvements in production techniques – intricate method studies, special tools, Jigs & Fixtures.
- For repeat requirements – Tools, Gauges and other items, considered carefully, as these affect Production time and hence the costs.
- Repeat orders may not require elaborate repeat planning and hence helps lowering costs due to;
> Simplified Production Control
> Familiarity for dispatchers & Expediters with Designs
> Can take pre-emptive actions on anticipated difficulties
> Scheduling is simpler, master scheduling for repeat orders at regular intervals
> Possible to balance Production time and Plant Capacity

46. Manufacturing Systems Types of Production JOB PRODUCTION
Non repetitive Job Productions – most common
Hence:
> Scheduling is based on assessment/estimates of Production times
> Estimates are based on judgment and often on then rule of thumb and hence experience and skills of estimator plays key role
> Requires frequent reviews to take into account realities affecting deliveries and costs.
> As output depends on plant capacities and estimated times of jobs, it has possibilities of resulting in queues of jobs for execution and hence could affect deliveries, costs, productivity and quality due to changing schedules to meet priorities
> Longer the queue , more important is to explore the ways
- To increase plant capacity
- To review Sales Policy
- To judiciously discriminate order execution

47. Manufacturing Systems Types of Production Batch Production
To manufacture a number of identical items, either to meet a specific order or to satisfy continuous demand.
When production of a batch is terminated, the plant and equipment are available for the production of similar or other products.
Policies regarding tooling, fixtures and other aids depend on quantities involved – Batch.

48. Manufacturing Systems Types of Production Batch Production
Types of Batch Production :
- Batch produced once
- Batch produced repeatedly at regular intervals- need based
- Batch produced periodically at known intervals

49. Manufacturing Systems Types of Production Batch Production
Highlights/Features:
- Planning & Control depend on quantities – simpler with higher volumes.
- Size of the batch and Scheduling for production are critical issues.
Considerations for optimal Batch size:
- Set up costs
- Inventory Controls/Management
- Plant Capacity
- Delivery requirements of batches of different products.

50. Manufacturing Systems Types of Production Batch Production
Other Considerations for Batch sizes:
- Governed by external orders, batch to suit Customers’ requirements
- Plant act as Vendor in some cases
- If for internal requirements, scheduling and batch size decisions are relatively simpler.
Batch sizes:
- Determines lengths of production run
- Affects Production schedule
- Affects batch size consideration of other Products
- Facilities are designed as a mix of Special Purpose and/or flexible

51. Manufacturing Systems Types of Production Continuous Production
Specialized manufacture of identical articles on which equipment is fully engaged.
Associated with large quantities/high demand products
Whereas in Job & Batch, Rate of Production exceeds Rate of demand, Continuous production is justified only when its Rate of Production can be sustained by the market
Full advantage of repetitive operations comes in;
- Design of production auxiliary aids like special tools, jigs & fixtures, Feeders, Material handling system, inspection devices, weighing systems etc.

52. Manufacturing Systems Types of Production Continuous Production
Types of Continuous Production Systems:
- Mass Production
- Flow Production
Difference being mainly on the kind of Product and its relation to the Plant.

53. Manufacturing Systems Types of Production Continuous Production
Mass Production:
- Large number of identical articles
- Though use of advanced mechanization & tooling, the equipment need not be exclusively designed for the Product.
- Plant & Equipment are flexible to produce other Products involving same/similar production processes.
- Possibilities of discontinuance of certain Product lines & to change to another article, without excessive modifications in plant layout, except changes in tooling etc.
Examples of facilities in Mass Production:
- Mechanised press shop
- Moulding facilities
- Automats
- Finishing shops

54. Manufacturing Systems Types of Production Continuous Production
Flow Production :
- The plant, equipment, layout are primarily designed to manufacture specific Product.
- Limited flexibility in selection of Products with minor modifications in layouts or designs of models.
- Most efficient in design
- Less prone to human errors
Examples :
- Automobiles
- Engines
- Household items
- Chemical Plants

55. Manufacturing Systems Types of Production Continuous Production
Flow Production – Critical/Important features:
- Switch over to different kind of Product requires extensive tooling, changes in layout and equipment policy
- Production planning & Control is far simpler
- Extensive efforts, use of best skills and experience for detailed planning before start of production, but once started scheduling and Control is simple
- Output is constrained by:
> Production Capacity
> Production targets ( Sales requirements)

56. Manufacturing Systems Types of Production
Constraints in maintaining particular type of Production System:
- Uneven production rates , mismatch in production rates of different items
- Inventory Controls
- Product life cycle changes
- Machine reliability
- Design changes
- Competition

57. Manufacturing Systems Size of Plants
Larger the plant, more complicated are activites
Issues relate to :
- Planning ( Centalised/Decentralised)
- Coordination between departments, high risks of lack of coordination
- Man management
Centralisation helps in :
- Methods planning
- Standardisation & Simplification of Products & Materials
- Purchasing & Storing of materials
- Superior coordination
- Possibilities for better utilisation of facilities and past experience.
- Better inventory management
- Less risks of damages and obsolescence
- No empire building of satellites and hence better effectiveness

58. Manufacturing Systems Size of Plants
Too much of Centralisation may result in:
- Cumbersome planning & control
- Detached from reality
- Slow to react
- inefficiency in the system

59. Manufacturing Systems Type of industry
It is the field in which plant specializes
Classified into several ways:
- Availability of kind of labor in different geographical locations
- Demand of different skills
- Investment policies
- Materials, Processes or end products
Division on the basis of materials used is not common, as usually most industries use variety of materials
Classification by end Products is logical, as covers materials , methods and skills.
- Complicated due to large number of Products & Plant involved with multiple Products
Simpler method for classification is by process
- Material Fabrication
- Chemical Process etc.

60. Manufacturing Systems Type of industry
Usually labeled according to the main activities, e.g.,
- Vehicles and accessories
- Leather and leather goods
- Textiles
- Chemicals
- Metal manufacture/processing
- FMCG, Food, drinks etc
- Pharmaceuticals

61. Manufacturing Systems To summarize
With very few exceptions, no industry is confined to one type of production process.
Batch production at some or the other stages recurs in all the industries and statistically accounts for over 60% of the sample.
Batch production is more complex than Continuous Production for Production Planning & Control.
Continuous Production carries highest risks together with highest efficiencies.
Job production requires highest skills but provides lower efficiencies.
Plant utilization is the highest in Continuous Production followed by the Batch Production with lowest for Job Production
The best flexibility in operation lies in Batch Production process and lowest with Continuous Process.
Highest skills requirements for Job Process and generally lower in Continuous.
High level of specialised skills required in setting up Continuous process plant, as
- Mistakes costs recurring losses
- Expensive to correct
Capacity Planning and increasing capacity for Batch Process is quicker, including though sub contracting.

62. Manufacturing Systems Food for thought
Continuing with the Case of Tata Motors in hand, please decide on which MAKE or BUY decision and in case of MAKE which manufacturing process will you follow for;
Assembly line of the vehicles
Engines
Gear box
Dashboard
Wind screen
Horn
Battery
Music system
Gear and Accelerator pedals
Steering lever hand grip
And reasoning for the same.

63. Manufacturing Systems Food for thought
Will you maintain the decision for ever or will you have review based on some factors/milestones in future.
What major factors will you consider on going against the Buy decisions, for some of the items, where though Making may be more expensive than Buying.
Each Group to submit their recommendations in one page today at 1240pm, with R. Nos written in the sheet
The Group to present the approach, strategy with logical reasons next week. Each group will have 10 min to present incl discussion, Q&A and this will mean 10 marks for the internal out of 40 for the Semester.