April 16

SP 22012

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CHAPTER 8 CHAPTER 8

Process Selection affects the outcome – in production or sports:

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What is Process Selection?

• Series of decisions that includes technical/engineering issues and volume/scale issues

• Technical/engineering: basic methods that produce a good or service

• Scale: how many or how much to produce; how many to serve at a time

• Trade off analysis between capacity and costs

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Why process selection is critical

• Dell – from make/assemble to order in Texas to make/assemble to stock off shore

• Does this work?• Break even analysis may depend on process

costs• Which process gives the lowest costs –

assumption?

The Point of IndifferenceComparing Two Processes

• What is it? • Who cares? • How do you calculate it?

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Comparing Two Processes

• Process A• Fixed = $2000• Variable = $5/item

• Process B• Fixed = $11000• Variable = $2/item

FixedA + (VarA)x = FixedB + (VarB)x

2000 + 5x = 11,000 + 2x

3x = 9000

X = 3000

So what?

Comparing the Processes

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Trade off analysis

• Customer demanded quantity drives the trade off analysis and decision process

• Example:→ retail stocks at Christmas 2008 and 2009 season - goal save money by stocking less→ At what point do you lose sales due to lower stockage levels?

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Process Design/Selection/Capacity

• Have to be simultaneous operations – some texts suggest sequential steps

• Decision process has to be customer based → what should it be? → how many should be produced/how many

are we capable of producing? → how should it be produced?

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Process Strategy - Defines

• Capital intensity• Process flexibility• Vertical integration• Customer involvement

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Goal of Process Design

• Reduce lead time for product to the customer• Is it best to be the first to market and establish

the market?• Or, be the follower and let someone else do

the R&D/design/risk?

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Problems with Managing Large, Unfocused Operations

Problems with Managing Large, Unfocused Operations

• Growing facilities add more levels of management and make coordination and control difficult.

• New products are added to the facility as customers demand greater product variety.

• Hidden overhead costs increase as managers add staff to deal with increased complexity.

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Process Planning

Make-or-buy decisions Process selection Specific equipment selection Process plans Process analysis

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Make-or-Buy Decisions

1. Cost2. Capacity3. Quality4. Speed5. Reliability6. Expertise

What about

Proprietary Information?

Barrier to Make-or-Buy?

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Rationale for Off Shore to Low Country Source

94.00%

37.00%

27.00%23.00% 22.00% 21.00% 20.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

$ Savings procuredgoods

Penetration to newmarket

inventory redux inc customer service access newtechnology

reduced cycle time log cost reductions

Source: Aberdeen Research, “Low-Cost Country Sourcing Success Strategies: Maximizing and Sustaining the Next Big Supply Savings Opportunity,” Jun 2005

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Process Plans Blueprints Bill of material Flat or multiple layers -

part or assembly Assembly chart /

product structure diagram Operations process chart - list of

operations involved in assembly Routing sheet - sequence of events

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Process Analysis

The systematic examination of all aspects The systematic examination of all aspects of a process to improve its operationof a process to improve its operation FasterFaster More efficientMore efficient Less costlyLess costly More responsiveMore responsive

Basic toolsBasic tools Process flowchartProcess flowchart Process diagramsProcess diagrams Process mapsProcess maps

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Operations Process Chart

Part name Crevice Tool

Part No. 52074

Usage Hand-Vac

Assembly No. 520

Oper. No. Description Dept. Machine/Tools Time

10 Pour in plastic bits 041 Injection molding 2 min

20 Insert mold 041 #076 2 min

30 Check settings 041 113, 67, 650 20 min& start machine

40 Collect parts & lay flat 051 Plastics finishing 10 min

50 Remove & clean mold 042 Parts washer 15 min

60 Break off rough edges 051 Plastics finishing 10 min

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Process Analysis – What processes feed other processes?

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Process Flowchart

Ste

p

Op

erat

ion

Tra

nsp

ort

Insp

ect

Del

ay

Sto

rag

e

Dis

tan

ce(f

eet)

Tim

e(m

in)Description

ofprocess

1

2

3

4

5

6

7

8

9

10

11

Unload apples from truck

Move to inspection station

Weigh, inspect, sort

Move to storage

Wait until needed

Move to peeler

Apples peeled and cored

Soak in water until needed

Place in conveyor

Move to mixing area

Weigh, inspect, sort

TotalPage 1 0f 3 480

30

5

20

15

360

30

20

190 ft

20 ft

20 ft

50 ft

100 ft

Date: 9-30-02Analyst: TLR

Location: Graves MountainProcess: Apple Sauce

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Principles for Redesigning Processes

• Walk the Process!• Remove waste, simplify, consolidate• Link processes to create value• Let the swiftest and most capable

execute• Capture information digitally, data mine,

and use information to improve operations

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Principles for Redesigning Processes

• Provide visibility through information about process status

• Fit the process with sensors and feedback loops

• Add analytic capabilities• Connect, collect and create knowledge

around the process• Personalize the process

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Techniques for Generating Innovative Ideas

Vary entry point to a problem Draw analogies Change your perspective Use attribute brainstorming

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RFID

• Active Tags• Always on • Battery powered• Can be read from up to

300 ft• US Army • Savi Tags

• Passive Tags• Small• Must be activated• May be turned off• England• California• Rolex

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26

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Robotics Programmable manipulators Follow specified path Better than humans with respect to

Hostile environments Long hoursConsistency

Adoption has been slowed by ineffective integration and adaptation of systems

Welding at Harley Davidson Plant

Questions?

FacilitiesFacilities

Objectives of Facility Layout Eliminate waste or redundant movement Facilitate the entry, exit, and placement of

material, products, or people Incorporate safety and security measures Promote product and service quality Encourage proper maintenance activities Provide a visual control of operations or

activities Provide flexibility to adapt to changing

conditions Increase capacity

Objectives of Facility Layout Minimize material handling costs Utilize space efficiently Utilize labor efficiently Eliminate bottlenecks Facilitate communication and interaction

between workers, between workers and their supervisors, or between workers and customers

Reduce manufacturing cycle time or customer service time

Process Layout Machines grouped by process they perform

Product Layout Linear arrangement of workstations to produce a

specific product Fixed Position Layout

Used in projects where the product cannot be moved

Basic Types of Layouts

Manufacturing Process Layout

L

L

L

L

L

L

L

L

L

LM

M

M

M

D

D

D

D

D

D

D

D

G

G

G

G

G

G

A A AReceiving andShipping Assembly

Painting Department

Lathe DepartmentMilling Department Drilling Department

Grinding Department

P

P

A Product Layout

In

Out

Fixed-Position Layouts

Typical of projectsEquipment, workers, materials, other

resources brought to the siteHighly skilled laborOften low fixed Typically high variable costs

Designing Process Layouts

Minimize material handling costs Block Diagramming

Minimize nonadjacent loads Use when quantitative data

is available Relationship Diagramming

Based on location preference between areas Use when quantitative data is not available

Block Diagramming

Create load summary chartCalculate composite (two way)

movementsDevelop trial layouts minimizing number

of nonadjacent loads

Block Diagrams

3

2

5

1 4

(a) Initial block diagram

Block Diagrams

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3

4

53

2

5

1 4

(a) Initial block diagram (b) Final block diagram

Relationship Diagramming(Murther’s Grid)

Used when quantitative data is not available

Muther’s grid displays preferences

Denote location preferences with weighted lines

Relationship Diagramming Example

ProductionProduction

OfficesOffices

StockroomStockroom

Shipping and Shipping and receivingreceiving

Locker roomLocker room

ToolroomToolroom

Relationship Diagramming Example

AA AA

AA OO

OO

OOOO

OO

UU

UU UU

UU

EEXX

II

ProductionProduction

OfficesOffices

StockroomStockroom

Shipping and Shipping and receivingreceiving

Locker roomLocker room

ToolroomToolroom

A Absolutely necessaryE Especially importantIImportantO OkayUUnimportantXUndesirable

Relationship Diagramming Example

AA A

A O

OO

OOOO

OO

UU

UU UU

UU

EXX

I

ProductionProduction

OfficesOffices

StockroomStockroom

Shipping and Shipping and receivingreceiving

Locker roomLocker room

ToolroomToolroom

A Absolutely necessaryE Especially importantIImportantO OkayUUnimportantXUndesirable

Relationship Diagramming Example

11 11

11 44

44

6644

44

55

55 55

55

2266

33

ProductionProduction

OfficesOffices

StockroomStockroom

Shipping and Shipping and receivingreceiving

Locker roomLocker room

ToolroomToolroom

11 Absolutely Absolutely necessarynecessary22 Especially Especially importantimportant33 ImportantImportant44 OkayOkay55 UnimportantUnimportant66 UndesirableUndesirable

Service LayoutsUsually process layouts due to customers

needsMinimize flow of customers or paperworkRetailing tries to maximize customer exposure

to productsComputer programs consider shelf space,

demand, profitabilityLayouts must be aesthetically pleasing

Designing Product LayoutsProduct layouts or assembly linesDevelop precedence diagram of tasks Jobs divided into work elementsAssign work elements to workstationsTry to balance the amount work of each

workstation

Line BalancingPrecedence diagram

Network showing order of tasks and restrictions (constraints) on their performance

Cycle time Maximum time product spends at any

one workstation

Hybrid Layouts

Cellular layouts Group machines into machining cells

Flexible manufacturing systems Automated machining & material handling

systemsMixed-model assembly lines

Produce variety of models on one line

Cellular Layouts

1. Identify families of parts with similar flow paths

2. Group machines into cells based on part families

3. Arrange cells so material movement is minimized

4. Locate large shared machines at point of use

Advantages Of Cellular Layouts

Reduced material handling and transit time Reduced setup time Reduced work-in-process inventory Better use of human resources Easier to control - visibility Easier to automate

Disadvantages Of Cellular Layouts

Inadequate part familiesPoorly balanced cellsExpanded training and scheduling

of workers Increased capital investment

Manufacturing Cell

Key:Key:

SS = Saw= SawLL = Lathe= LatheHMHM = Horizontal milling machine= Horizontal milling machineVMVM = Vertical milling machine= Vertical milling machineGG = Grinder= Grinder

Paths of three Paths of three workers moving workers moving within cellwithin cell

Material Material movementmovement

InIn OutOutWorker 1Worker 1

Worker 2Worker 2

Worker 3Worker 3

Dire

ction

of p

art m

ovem

ent w

ithin

cel

lD

irecti

on o

f par

t mov

emen

t with

in c

ell

S

L

HM

VM

G

VM

L

Final inspection

Finished part

Mixed Model Assembly Lines

Produce multiple models in any order on one assembly line

Harley, Opel Issues in mixed model lines

Line balancing U-shaped line Flexible workforce Model sequencing

Facility Location Facility Location ModelsModels

Types Of Facilities

Heavy manufacturing

Auto plants, steel mills, chemical plants Light industry

Small components mfg, assembly Warehouse & distribution centers Retail & service

Factors in Heavy Manufacturing Location

Construction costs Land costs Raw material and finished goods shipment modes Proximity to raw materials Utilities Labor availability

Factors in Light Industry Location

Construction costs Land costs Easily accessible

geographic region Education & training capabilities

Factors in Warehouse Location

Transportation costs Proximity to markets (Customers)

Warehouse Size Considerations

• Customer service level• layout• # of products (Stock Keeping Units - SKUs)• customer base• size of products• racks/shelving• demand variability• MHE requirements/aisle size• regulations - CAL OSHA - earthquake; safety; fire

Factors in Retail Location

Proximity to customersProximity to customers Ease of customer entry and exitEase of customer entry and exit Location is everythingLocation is everything

Global Location Factors

Government stability Government regulations Political and economic systems Economic stability and growth Exchange rates Culture Climate Export import regulations,

duties and tariffs

Raw material availability Number and proximity of

suppliers Transportation and

distribution system Labor cost and education Available technology Commercial travel Technical expertise Cross-border trade regulations Group trade agreements

Regional Location Factors Labor (availability,

education, cost and unions)

Proximity of customers Number of customers Construction/leasing

costs Land costs Modes and quality of

transportation Transportation costs

Incentive packages Governmental

regulations Environmental

regulations Raw material availability Commercial travel Climate Infrastructure Quality of life

Regional Location Factors Community government Local business regulations Government services Business climate Community services Taxes

Availability of sites Financial Services Community inducements Proximity of suppliers Education system

Site Location Factors

Customer baseConstruction/ leasing

cost Land costSite sizeTransportationUtilities

Zoning restrictionsTrafficSafety/securityCompetitionArea business climate Income level

Location Incentives

Tax credits Wal-Mart in Wyandotte Relaxed government regulation Job training Infrastructure improvement Money

Locate facility at center of geographic area Based on weight and distance traveled Establish grid-map of area Identify coordinates

and weights shipped for each location

Center-of-Gravity Technique