paglialunga mgt314 chapter 7

PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render)

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 074587-1

Operations Operations ManagementManagement

Process Strategy andProcess Strategy and Capacity Planning Capacity Planning

Chapter 7Chapter 7



Learning ObjectivesLearning ObjectivesWhen you complete this chapter, you should

be able to : Identify or Define:

Process focus Repetitive focus Product focus Process reengineering Service process issues



Fit of Process, Volume, and VarietyFit of Process, Volume, and Variety

Process focusprojects, job shops,

(machine, print, carpentry)

Standard RegisterRepetitive

(autos, motorcycles)Harley Davidson

Product focus(commercial baked goods, steel, glass)

Nucor Steel

High VarietyOne or few units per run, high variety(allows customization)

Changes in modulesModest 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 Co.

Poor strategy

(Variable costs are high)

Low-Volume(Intermittent)

Repetitive Process(Modular)

High-Volume(Continuous)



Production Process Flow DiagramProduction Process Flow Diagram

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 flowMaterial flow



Types of Process StrategiesTypes of Process Strategies

ContinuumContinuum

Process strategies that follow a continuum Within a given facility, several strategies may be

used These strategies are often classified as:

Repetitive-Focused

Product-FocusedProcess-Focused



Process-Focused StrategyProcess-Focused Strategy

Facilities are organized by process Similar processes are together

Example: All drill presses are together Low volume, high variety products ‘Jumbled’ flow

OperationProduct A

Product B

11 22 33 Other names

Intermittent process Job shop



Figure 7AFigure 7A



Process-Focused Strategy ExamplesProcess-Focused Strategy Examples

Bank

© 1995 Corel Corp.

Machine Shop© 1995 Corel Corp.

Hospital© 1995 Corel Corp.



Process Focused Strategy -Process Focused Strategy - Pros & Cons Pros & Cons

Advantages Greater product flexibility More general purpose equipment Lower initial capital investment

Disadvantages More highly trained personnel More difficult production planning & control Low equipment utilization (5% to 25%)



Repetitive Focused StrategyRepetitive Focused Strategy

Facilities often organized by assembly lines Characterized by modules

Parts & assemblies made previously Modules combined for many output options Other names

Assembly line Production line



Figure 7BFigure 7B



Repetitive Focused Strategy -Repetitive Focused Strategy -ConsiderationsConsiderations

More structured than process-focused, less structured than product focused

Enables quasi-customization Using modules, it enjoys economic

advantage of continuous process, and custom advantage of low-volume, high-variety model



Repetitive-Focused Strategy - Repetitive-Focused Strategy - ExamplesExamples

Truck

© 1995 Corel Corp.

Clothes Dryer

© 1995 Corel Corp.

Fast Food

McDonald’sover 95 billion served

© 1984-1994 T/Maker Co.



Figure 7.3Figure 7.3



Product-Focused StrategyProduct-Focused Strategy

Facilities are organized by product High volume, low variety products Where found

Discrete unit manufacturing Continuous process manufacturing

Operation

Products A & B

1 2 3

Other names Line flow production Continuous production



Figure 7CFigure 7C



Product-Focused StrategyProduct-Focused Strategy Pros & Cons Pros & Cons

Advantages Lower variable cost per unit Lower but more specialized labor skills Easier production planning and control Higher equipment utilization (70% to 90%)

Disadvantages Lower product flexibility More specialized equipment Usually higher capital investment



Product-Focused ExamplesProduct-Focused Examples

© 1995 Corel Corp.

Light Bulbs (Discrete)

Paper (Continuous)© 1984-1994 T/Maker Co.

© 1995 Corel Corp.

Soft Drinks (Continuous, then Discrete)

Mass Flu Shots (Discrete)

© 1995 Corel Corp.



Figure 7.4Figure 7.4



Table 7.1Table 7.1

Process Focus Repetitive Focus Product Focus1. Product: Smallquantity, largevariety

1. Product: Long runs,usually standardized

1. Product: Largequantities, smallvariety

2. Equipment:General purpose

2. Equipment: Special;assembly line

2. Equipment:Special-purpose

3. Operators broadlyskilled

3. Employees modestlytrained

3. Operators lessbroadly skilled

4. Many jobinstructions

4. Repetitive operations 4. Few work orders andjob instructions;standardization



Process ContinuumProcess Continuum

Process Focused(intermittent process)

Repetitive Focus

(assembly line)

Product Focused (continuous process)

Continuum

High variety, low volumeLow utilization (5% - 25%)

General-purpose equipment

Low variety, high volumeHigh utilization (70% - 90%)

Specialized equipment

ModularFlexible equipment



Mass CustomizationMass Customization

Using technology and imagination to rapidly mass-produce products that cater to sundry unique customer desires.

Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant.



Mass Customization - More Mass Customization - More Choices Than EverChoices Than Ever

Item Early 1970s

Late1990s

Vehicle models 140 260Vehicle styles 18 1,212Bicycle types 8 19Software titles 0 380,000Web sites 0 9,865,982Movie releases 267 458New book titles 40,530 77,446Houston TV channels 5 851Breakfast cereals 160 340Items in supermartkets 14,000 20,000



Questions for Process Analysis Questions for Process Analysis and Designand Design

Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost?

Does the process eliminate steps that do not add value?

Does the process maximize customer value as perceived by the customer?

Will the process win orders?



Tools for Process DesignTools for Process Design

Flow Diagrams Process Charts Time-Function/Process Mapping Service Blueprinting



Time Function MapTime Function Map

Customer

Sales

Production control

Plant A

Warehouse

Plant B

Transport

Order Product

Process Order

Print

Extrude

Receive product

Wait

Move

Wait Wait Wait

Move

Orde

r

Orde

r

WIP

WIP

WIP W

IP

Prod

uct

Prod

uct

Prod

uct

12 days 1 day 1 day 1 day 1 day13 days 4 days 10 days 9 days



SUBJECT: Request tool purchase

Dist (ft) Time (min) Symbol Description

D Write order On desk

75 D To buyer D Examine

= Operation; = Transport; = Inspect; D = Delay; = Storage

Process Chart ExampleProcess Chart Example



Process ReengineeringProcess Reengineering The fundamental rethinking and radical

redesign of business processes to bring about dramatic improvements in performance

Relies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptions

Requires reexamination of the basic process and its objectives

Focuses on activities that cross boundaries

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