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7 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall
7 Process Strategy
and Sustainability
PowerPoint presentation to accompany
Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e
PowerPoint slides by Jeff Heyl
7 - 2© 2011 Pearson Education, Inc. publishing as Prentice Hall
Outline
 Global Company Profile: Harley-
Davidson
 Four Process Strategies
 Process Focus
 Repetitive Focus
 Product Focus
 Mass Customization Focus
 Comparison of Process Choices
7 - 3© 2011 Pearson Education, Inc. publishing as Prentice Hall
Outline – Continued
 Process Analysis and Design
 Flow Charts
 Time-Function Mapping
 Value-Stream Mapping
 Process Charts
 Service Blueprinting
7 - 4© 2011 Pearson Education, Inc. publishing as Prentice Hall
Outline – Continued
 Special Consideration for Service
Process Design
 Customer Interaction and Process
Design
 More Opportunities to Improve
Service Processes
 Selection of Equipment and
Technology
7 - 5© 2011 Pearson Education, Inc. publishing as Prentice Hall
Outline – Continued
 Production Technology
 Machine Technology
 Automatic Identification Systems
(AISs) and RFID
 Process Control
 Vision Systems
 Robots
7 - 6© 2011 Pearson Education, Inc. publishing as Prentice Hall
Outline – Continued
 Production Technology (cont.)
 Automated Storage and Retrieval
Systems (ASRSs)
 Automated Guided Vehicles (AGVs)
 Flexible Manufacturing Systems
(FMSs)
 Computer-Integrated Manufacturing
(CIM)
7 - 7© 2011 Pearson Education, Inc. publishing as Prentice Hall
Outline – Continued
 Technology in Services
 Process Redesign
 Sustainability
7 - 8© 2011 Pearson Education, Inc. publishing as Prentice Hall
Learning Objectives
When you complete this chapter you
should be able to:
1. Describe four production processes
2. Compute crossover points for
different processes
3. Use the tools of process analysis
7 - 9© 2011 Pearson Education, Inc. publishing as Prentice Hall
Learning Objectives
When you complete this chapter you
should be able to:
4. Describe customer interaction in
process design
5. Identify recent advances in
production technology
6. Discuss the 4 Rs of sustainability
7 - 10© 2011 Pearson Education, Inc. publishing as Prentice Hall
Harley-Davidson
Repetitive manufacturing works
 The leading U.S. motorcycle company
 Emphasizes quality and lean
manufacturing
 Materials as Needed system
 Many variations possible
 Tightly scheduled repetitive
production line
7 - 11© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Flow Diagram
THE ASSEMBLY LINE
TESTING
28 tests
Oil tank work cell
Shocks and forks
Handlebars
Fender work cell
Air cleaners
Fluids and mufflers
Fuel tank work cell
Wheel work cell
Roller testing
Incoming parts
From Milwaukee
on a JIT arrival
schedule
Engines and
transmissions
Frame tube
bending
Frame-building
work cells
Frame
machining
Hot-paint
frame painting
Crating
7 - 12© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Strategies
The objective of a process strategy is
to build a production process that
meets customer requirements and
product specifications within cost
and other managerial constraints
7 - 13© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
VolumeFigure 7.1
7 - 14© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Strategies
 How to produce a product or
provide a service that
 Meets or exceeds customer
requirements
 Meets cost and managerial goals
 Has long term effects on
 Efficiency and production flexibility
 Costs and quality
7 - 15© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 16© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 17© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 18© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 19© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 20© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 21© 2011 Pearson Education, Inc. publishing as Prentice Hall
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)
(low-volume, high variety,
continuous process)
Frito-Lay
7 - 22© 2011 Pearson Education, Inc. publishing as Prentice Hall
Product Focus
Nucor Steel Plant
Continuouscaster
Continuous cast steel
sheared into 24-ton slabs
Hot tunnel furnace - 300 ft
Hot mill for finishing, cooling, and coiling
D
E F
GH
I
Scrap
steel
Ladle of molten steel
Electric
furnace
A
B
C
7 - 23© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 24© 2011 Pearson Education, Inc. publishing as Prentice Hall
Mass Customization
Table 7.1
Vehicle models 140 286
Vehicle types 18 1,212
Bicycle types 8 211,000
Software titles 0 400,000
Web sites 0 162,000,000
Movie releases per year 267 765
New book titles 40,530 300,000
Houston TV channels 5 185
Breakfast cereals 160 340
Items (SKUs) in 14,000 150,000
supermarkets
LCD TVs 0 102
Number of Choices
Item 1970s 21st Century
7 - 25© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 26© 2011 Pearson Education, Inc. publishing as Prentice Hall
Mass Customization
Mass Customization
Effective
scheduling
techniques
Rapid
throughput
techniques
Repetitive Focus
Flexible people
and equipment
Process-Focused
High variety, low volume
Low utilization (5% to 25%)
General-purpose equipment
Product-Focused
Low variety, high volume
High utilization (70% to 90%)
Specialized equipment
Figure 7.3
Modular
techniques
Accommodating
Product and
Process Design
Responsive
Supply Chains
7 - 27© 2011 Pearson Education, Inc. publishing as Prentice Hall
Mass Customization
 Imaginative and fast product
design
 Rapid process design
 Tightly controlled inventory
management
 Tight schedules
 Responsive supply chain partners
7 - 28© 2011 Pearson Education, Inc. publishing as Prentice Hall
Comparison 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
are produced
1. Long runs,
usually a
standardized
product with
options,
produced
from
modules
1. Large
quantity and
small variety
of products
are
produced
1. Large quantity
and large
variety of
products are
produced
2. Equipment
used is
general
purpose
2. Special
equipment
aids in use of
an assembly
line
2. Equipment
used is
special
purpose
2. Rapid
changeover on
flexible
equipment
Table 7.2
7 - 29© 2011 Pearson Education, Inc. publishing as Prentice Hall
Comparison of Processes
Process Focus
(low-volume,
high-variety)
Repetitive
Focus
(modular)
Product Focus
(high-volume,
low-variety)
Mass
Customization
(high-volume,
high-variety)
3. Operators
are broadly
skilled
3. Employees
are modestly
trained
3. Operators
are less
broadly
skilled
3. Flexible
operators are
trained for the
necessary
customization
4. There are
many job
instructions
because
each job
changes
4. Repetitive
operations
reduce
training and
changes in
job
instructions
4. Work orders
and job
instructions
are few
because they
are
standardized
4. Custom
orders require
many job
instructions
Table 7.2
7 - 30© 2011 Pearson Education, Inc. publishing as Prentice Hall
Comparison of Processes
Process Focus
(low-volume,
high-variety)
Repetitive
Focus
(modular)
Product Focus
(high-volume,
low-variety)
Mass
Customization
(high-volume,
high-variety)
5. Raw-material
inventories
high relative
to the value
of the
product
5. JIT
procurement
techniques
are used
5. Raw material
inventories
are low
relative to the
value of the
product
5. Raw
material
inventories
are low
relative to
the value
of the
product
6. Work-in-
process is
high
compared to
output
6. JIT inventory
techniques
are used
6. Work-in-
process
inventory is
low
compared to
output
6. Work-in-
process
inventory
driven down
by JIT,
kanban, lean
production
Table 7.2
7 - 31© 2011 Pearson Education, Inc. publishing as Prentice Hall
Comparison of Processes
Process Focus
(low-volume,
high-variety)
Repetitive
Focus
(modular)
Product Focus
(high-volume,
low-variety)
Mass
Customization
(high-volume,
high-variety)
7. Units move
slowly
through the
facility
7. Assembly is
measured in
hours and
days
7. Swift
movement of
units through
the facility is
typical
7. Goods move
swiftly
through the
facility
8. Finished
goods are
usually made
to order and
not stored
8. Finished
goods made
to frequent
forecast
8. Finished
goods are
usually made
to forecast
and stored
8. Finished
goods are
often build-
to-order
(BTO)
Table 7.2
7 - 32© 2011 Pearson Education, Inc. publishing as Prentice Hall
Comparison of Processes
Process Focus
(low-volume,
high-variety)
Repetitive
Focus
(modular)
Product Focus
(high-volume,
low-variety)
Mass
Customization
(high-volume,
high-variety)
9. Scheduling
is complex,
concerned
with trade-
offs between
inventory,
capacity, and
customer
service
9. Scheduling
is based on
building
various
models from
a variety of
modules to
forecasts
9. Scheduling
is relatively
simple,
concerned
with
establishing
output rate
sufficient to
meet
forecasts
9. Sophisticated
scheduling is
required to
accommodate
custom orders
10. Fixed costs
tend to be
low and
variable
costs high
10. Fixed costs
dependent
on flexibility
of the
facility
10. Fixed costs
tend to be
high and
variable
costs low
10. Fixed costs
tend to be
high, variable
costs must be
low
Table 7.2
7 - 33© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
V1(2,857) V2
(6,666)
400,000
300,000
200,000
Volume
$
Figure 7.4
7 - 34© 2011 Pearson Education, Inc. publishing as Prentice Hall
Focused Processes
 Focus brings efficiency
 Focus on depth of product line
rather than breadth
 Focus can be
 Customers
 Products
 Service
 Technology
7 - 35© 2011 Pearson Education, Inc. publishing as Prentice Hall
Changing Processes
 Difficult and expensive
 May mean starting over
 Process strategy determines
transformation strategy for an
extended period
 Important to get it right
7 - 36© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Analysis and
Design
 Is the process designed to achieve a
competitive advantage?
 Does the process eliminate steps that
do not add value?
 Does the process maximize customer
value?
 Will the process win orders?
7 - 37© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Analysis and
Design
 Flow Charts - Shows the movement of
materials
 Time-Function Mapping - Shows flows and
time frame
7 - 38© 2011 Pearson Education, Inc. publishing as Prentice Hall
“Baseline” Time-Function Map
Customer
Sales
Production
control
Plant A
Warehouse
Plant B
Transport
12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day
52 days
Figure 7.5
Move
Receive
product
Product
Product
Extrude
Wait
WIP
Product
Move
WaitWIP
WIP
Print
Wait
Order
WIP
Order
product
Process
order
Wait
Order
7 - 39© 2011 Pearson Education, Inc. publishing as Prentice Hall
“Target” Time-Function Map
Customer
Sales
Production
control
Plant
Warehouse
Transport
1 day 2 days 1 day 1 day 1 day
6 days
Figure 7.5
Move
Receive
product
Product
Product
Extrude
Wait
Print
Order
WIP
Product
Order
product
Process
order
Wait
Order
7 - 40© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 41© 2011 Pearson Education, Inc. publishing as Prentice Hall
Value-Stream Mapping
Figure 7.6
7 - 42© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Chart
Figure 7.7
7 - 43© 2011 Pearson Education, Inc. publishing as Prentice Hall
Service Blueprinting
 Focuses on the customer and
provider interaction
 Defines three levels of interaction
 Each level has different
management issues
 Identifies potential failure points
7 - 44© 2011 Pearson Education, Inc. publishing as Prentice Hall
Service Blueprint
Personal Greeting Service Diagnosis Perform Service Friendly 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
Yes
F
Standard
request.
(3 min)
Determine
specifics.
(5 min)
No
Can
service be
done and does
customer
approve?
(5 min)
7 - 45© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Analysis Tools
 Flowcharts provide a view of the
big picture
 Time-function mapping adds rigor
and a time element
 Value-stream analysis extends to
customers and suppliers
 Process charts show detail
 Service blueprint focuses on
customer interaction
7 - 46© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 47© 2011 Pearson Education, Inc. publishing as Prentice Hall
Service Factory Service Shop
Degree of Customization
Low High
DegreeofLabor
Low
High
Mass Service Professional Service
Service Process Matrix
Commercial
banking
Private
banking
General-
purpose law firms
Law clinics
Specialized
hospitals
Hospitals
Full-service
stockbroker
Limited-service
stockbroker
Retailing
Boutiques
Warehouse and
catalog stores
Fast-food
restaurants
Fine-dining
restaurants
Airlines
No-frills
airlines
Figure 7.9
Digital
orthodontics
Traditional
orthodontics
7 - 48© 2011 Pearson Education, Inc. publishing as Prentice Hall
Service Process Matrix
 Labor involvement is high
 Selection and training highly
important
 Focus on human resources
 Personalized services
Mass Service and Professional Service
7 - 49© 2011 Pearson Education, Inc. publishing as Prentice Hall
Service Process Matrix
Service Factory and Service Shop
 Automation of standardized
services
 Low labor intensity responds well
to process technology and
scheduling
 Tight control required to maintain
standards
7 - 50© 2011 Pearson Education, Inc. publishing as Prentice Hall
Improving Service
Productivity
Strategy Technique Example
Separation Structure 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-service Self-service so
customers examine,
compare, and
evaluate at their own
pace
Supermarkets and
department stores
Internet ordering
Table 7.3
7 - 51© 2011 Pearson Education, Inc. publishing as Prentice Hall
Strategy Technique Example
Postponement Customizing at
delivery
Customizing vans at
delivery rather than at
production
Focus Restricting the
offerings
Limited-menu
restaurant
Modules Modular selection of
service
Modular production
Investment and
insurance selection
Prepackaged food
modules in
restaurants
Improving Service
Productivity
Table 7.3
7 - 52© 2011 Pearson Education, Inc. publishing as Prentice Hall
Strategy Technique Example
Automation Separating services
that may lend
themselves to some
type of automation
Automatic teller
machines
Scheduling Precise personnel
scheduling
Scheduling ticket
counter personnel at
15-minute intervals at
airlines
Training Clarifying the service
options
Explaining how to
avoid problems
Investment counselor,
funeral directors
After-sale maintenance
personnel
Improving Service
Productivity
Table 7.3
7 - 53© 2011 Pearson Education, Inc. publishing as Prentice Hall
Improving Service
Processes
 Layout
 Product exposure, customer
education, product enhancement
 Human Resources
 Recruiting and training
 Impact of flexibility
7 - 54© 2011 Pearson Education, Inc. publishing as Prentice Hall
Equipment and Technology
 Often complex decisions
 Possible competitive advantage
 Flexibility
 Stable processes
 May allow enlarging the scope of
the processes
7 - 55© 2011 Pearson Education, Inc. publishing as Prentice Hall
Production Technology
 Machine technology
 Automatic identification
systems (AISs)
 Process control
 Vision system
 Robot
 Automated storage and retrieval systems
(ASRSs)
 Automated guided vehicles (AGVs)
 Flexible manufacturing systems (FMSs)
 Computer-integrated manufacturing (CIM)
7 - 56© 2011 Pearson Education, Inc. publishing as Prentice Hall
Machine Technology
 Increased precision
 Increased productivity
 Increased flexibility
 Improved environmental impact
 Reduced changeover time
 Decreased size
 Reduced power requirements
7 - 57© 2011 Pearson Education, Inc. publishing as Prentice Hall
Automatic Identification
Systems (AISs)
 Improved data acquisition
 Reduced data entry errors
 Increased speed
 Increased scope
of process
automation
Example – Bar codes and RFID
7 - 58© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 59© 2011 Pearson Education, Inc. publishing as Prentice Hall
Vision Systems
 Particular aid to inspection
 Consistently
accurate
 Never bored
 Modest cost
 Superior to
individuals performing the same
tasks
7 - 60© 2011 Pearson Education, Inc. publishing as Prentice Hall
Robots
 Perform monotonous or dangerous
tasks
 Perform tasks
requiring significant
strength or
endurance
 Generally enhanced
consistency and
accuracy
7 - 61© 2011 Pearson Education, Inc. publishing as Prentice Hall
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
7 - 62© 2011 Pearson Education, Inc. publishing as Prentice Hall
Automated Guided Vehicle
(AGVs)
 Electronically guided and
controlled carts
 Used for movement of products
and/or individuals
7 - 63© 2011 Pearson Education, Inc. publishing as Prentice Hall
Flexible Manufacturing
Systems (FMSs)
 Computer controls both the workstation
and the material handling equipment
 Enhance flexibility and reduced waste
 Can economically produce low volume at
high quality
 Reduced changeover time and increased
utilization
 Stringent communication requirement
between components
7 - 64© 2011 Pearson Education, Inc. publishing as Prentice Hall
Computer-Integrated
Manufacturing (CIM)
 Extension of flexible manufacturing
systems
 Backwards to engineering and inventory
control
 Forward into warehousing and shipping
 Can also include financial and customer
service areas
 Reducing the distinction between low-
volume/high-variety, and high-
volume/low-variety production
7 - 65© 2011 Pearson Education, Inc. publishing as Prentice Hall
Computer-
Integrated
Manufacturing
(CIM)
Figure 7.10
7 - 66© 2011 Pearson Education, Inc. publishing as Prentice Hall
Technology in Services
Service Industry Example
Financial
Services
Debit cards, electronic funds transfer, ATMs,
Internet stock trading, on-line banking via
cell phone
Education Electronic bulletin boards, on-line journals,
WebCT, Blackboard and smart phones
Utilities and
government
Automated one-man garbage trucks, optical
mail and bomb scanners, flood warning
systems, meters allowing homeowners to
control energy usage and costs
Restaurants and
foods
Wireless orders from waiters to kitchen,
robot butchering, transponders on cars that
track sales at drive-throughs
Communications Interactive TV, ebooks via Kindle 2
Table 7.4
7 - 67© 2011 Pearson Education, Inc. publishing as Prentice Hall
Technology in Services
Service Industry Example
Hotels Electronic check-in/check-out, electronic
key/lock system, mobile web booking
Wholesale/retail
trade
ATM-like kiosks, point-of-sale (POS)
terminals, e-commerce, electronic
communication between store and supplier,
bar coded data, RFID
Transportation Automatic toll booths, satellite-directed
navigation systems, WiFi in automobile
Health care Online patient-monitoring, online medical
information systems, robotic surgery
Airlines Ticketless travel, scheduling, Internet
purchases, boarding passes two-
dimensional bar codes on smart phones
Table 7.4
7 - 68© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Redesign
 The fundamental rethinking 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
functional lines
 Any process is a candidate for redesign
7 - 69© 2011 Pearson Education, Inc. publishing as Prentice Hall
Sustainability
 Sustainability in production
processes
1. Resources
2. Recycling
3. Regulations
4. Reputation
7 - 70© 2011 Pearson Education, Inc. publishing as Prentice Hall
Sustainability
 Resources
 Operations is primary user
 Reducing use is win-win
 Recycling
 Burn, bury, or reuse waste
 Recycling begins at design
7 - 71© 2011 Pearson Education, Inc. publishing as Prentice Hall
Sustainability
 Regulations
 Laws affect transportation,
waste, and noise
 Increasing regulatory pressure
 Reputation
 Leadership may be rewarded
 Bad reputation can have
negative consequences
7 - 72© 2011 Pearson Education, Inc. publishing as Prentice Hall
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior written permission of the publisher.
Printed in the United States of America.

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Heizer om10 ch07

  • 1. 7 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 Process Strategy and Sustainability PowerPoint presentation to accompany Heizer and Render Operations Management, 10e Principles of Operations Management, 8e PowerPoint slides by Jeff Heyl
  • 2. 7 - 2© 2011 Pearson Education, Inc. publishing as Prentice Hall Outline  Global Company Profile: Harley- Davidson  Four Process Strategies  Process Focus  Repetitive Focus  Product Focus  Mass Customization Focus  Comparison of Process Choices
  • 3. 7 - 3© 2011 Pearson Education, Inc. publishing as Prentice Hall Outline – Continued  Process Analysis and Design  Flow Charts  Time-Function Mapping  Value-Stream Mapping  Process Charts  Service Blueprinting
  • 4. 7 - 4© 2011 Pearson Education, Inc. publishing as Prentice Hall Outline – Continued  Special Consideration for Service Process Design  Customer Interaction and Process Design  More Opportunities to Improve Service Processes  Selection of Equipment and Technology
  • 5. 7 - 5© 2011 Pearson Education, Inc. publishing as Prentice Hall Outline – Continued  Production Technology  Machine Technology  Automatic Identification Systems (AISs) and RFID  Process Control  Vision Systems  Robots
  • 6. 7 - 6© 2011 Pearson Education, Inc. publishing as Prentice Hall Outline – Continued  Production Technology (cont.)  Automated Storage and Retrieval Systems (ASRSs)  Automated Guided Vehicles (AGVs)  Flexible Manufacturing Systems (FMSs)  Computer-Integrated Manufacturing (CIM)
  • 7. 7 - 7© 2011 Pearson Education, Inc. publishing as Prentice Hall Outline – Continued  Technology in Services  Process Redesign  Sustainability
  • 8. 7 - 8© 2011 Pearson Education, Inc. publishing as Prentice Hall Learning Objectives When you complete this chapter you should be able to: 1. Describe four production processes 2. Compute crossover points for different processes 3. Use the tools of process analysis
  • 9. 7 - 9© 2011 Pearson Education, Inc. publishing as Prentice Hall Learning Objectives When you complete this chapter you should be able to: 4. Describe customer interaction in process design 5. Identify recent advances in production technology 6. Discuss the 4 Rs of sustainability
  • 10. 7 - 10© 2011 Pearson Education, Inc. publishing as Prentice Hall Harley-Davidson Repetitive manufacturing works  The leading U.S. motorcycle company  Emphasizes quality and lean manufacturing  Materials as Needed system  Many variations possible  Tightly scheduled repetitive production line
  • 11. 7 - 11© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Flow Diagram THE ASSEMBLY LINE TESTING 28 tests Oil tank work cell Shocks and forks Handlebars Fender work cell Air cleaners Fluids and mufflers Fuel tank work cell Wheel work cell Roller testing Incoming parts From Milwaukee on a JIT arrival schedule Engines and transmissions Frame tube bending Frame-building work cells Frame machining Hot-paint frame painting Crating
  • 12. 7 - 12© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Strategies The objective of a process strategy is to build a production process that meets customer requirements and product specifications within cost and other managerial constraints
  • 13. 7 - 13© 2011 Pearson Education, Inc. publishing as Prentice Hall 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 VolumeFigure 7.1
  • 14. 7 - 14© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Strategies  How to produce a product or provide a service that  Meets or exceeds customer requirements  Meets cost and managerial goals  Has long term effects on  Efficiency and production flexibility  Costs and quality
  • 15. 7 - 15© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 16. 7 - 16© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 17. 7 - 17© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 18. 7 - 18© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 19. 7 - 19© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 20. 7 - 20© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 21. 7 - 21© 2011 Pearson Education, Inc. publishing as Prentice Hall 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) (low-volume, high variety, continuous process) Frito-Lay
  • 22. 7 - 22© 2011 Pearson Education, Inc. publishing as Prentice Hall Product Focus Nucor Steel Plant Continuouscaster Continuous cast steel sheared into 24-ton slabs Hot tunnel furnace - 300 ft Hot mill for finishing, cooling, and coiling D E F GH I Scrap steel Ladle of molten steel Electric furnace A B C
  • 23. 7 - 23© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 24. 7 - 24© 2011 Pearson Education, Inc. publishing as Prentice Hall Mass Customization Table 7.1 Vehicle models 140 286 Vehicle types 18 1,212 Bicycle types 8 211,000 Software titles 0 400,000 Web sites 0 162,000,000 Movie releases per year 267 765 New book titles 40,530 300,000 Houston TV channels 5 185 Breakfast cereals 160 340 Items (SKUs) in 14,000 150,000 supermarkets LCD TVs 0 102 Number of Choices Item 1970s 21st Century
  • 25. 7 - 25© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 26. 7 - 26© 2011 Pearson Education, Inc. publishing as Prentice Hall Mass Customization Mass Customization Effective scheduling techniques Rapid throughput techniques Repetitive Focus Flexible people and equipment Process-Focused High variety, low volume Low utilization (5% to 25%) General-purpose equipment Product-Focused Low variety, high volume High utilization (70% to 90%) Specialized equipment Figure 7.3 Modular techniques Accommodating Product and Process Design Responsive Supply Chains
  • 27. 7 - 27© 2011 Pearson Education, Inc. publishing as Prentice Hall Mass Customization  Imaginative and fast product design  Rapid process design  Tightly controlled inventory management  Tight schedules  Responsive supply chain partners
  • 28. 7 - 28© 2011 Pearson Education, Inc. publishing as Prentice Hall Comparison 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 are produced 1. Long runs, usually a standardized product with options, produced from modules 1. Large quantity and small variety of products are produced 1. Large quantity and large variety of products are produced 2. Equipment used is general purpose 2. Special equipment aids in use of an assembly line 2. Equipment used is special purpose 2. Rapid changeover on flexible equipment Table 7.2
  • 29. 7 - 29© 2011 Pearson Education, Inc. publishing as Prentice Hall Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) 3. Operators are broadly skilled 3. Employees are modestly trained 3. Operators are less broadly skilled 3. Flexible operators are trained for the necessary customization 4. There are many job instructions because each job changes 4. Repetitive operations reduce training and changes in job instructions 4. Work orders and job instructions are few because they are standardized 4. Custom orders require many job instructions Table 7.2
  • 30. 7 - 30© 2011 Pearson Education, Inc. publishing as Prentice Hall Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) 5. Raw-material inventories high relative to the value of the product 5. JIT procurement techniques are used 5. Raw material inventories are low relative to the value of the product 5. Raw material inventories are low relative to the value of the product 6. Work-in- process is high compared to output 6. JIT inventory techniques are used 6. Work-in- process inventory is low compared to output 6. Work-in- process inventory driven down by JIT, kanban, lean production Table 7.2
  • 31. 7 - 31© 2011 Pearson Education, Inc. publishing as Prentice Hall Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) 7. Units move slowly through the facility 7. Assembly is measured in hours and days 7. Swift movement of units through the facility is typical 7. Goods move swiftly through the facility 8. Finished goods are usually made to order and not stored 8. Finished goods made to frequent forecast 8. Finished goods are usually made to forecast and stored 8. Finished goods are often build- to-order (BTO) Table 7.2
  • 32. 7 - 32© 2011 Pearson Education, Inc. publishing as Prentice Hall Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) 9. Scheduling is complex, concerned with trade- offs between inventory, capacity, and customer service 9. Scheduling is based on building various models from a variety of modules to forecasts 9. Scheduling is relatively simple, concerned with establishing output rate sufficient to meet forecasts 9. Sophisticated scheduling is required to accommodate custom orders 10. Fixed costs tend to be low and variable costs high 10. Fixed costs dependent on flexibility of the facility 10. Fixed costs tend to be high and variable costs low 10. Fixed costs tend to be high, variable costs must be low Table 7.2
  • 33. 7 - 33© 2011 Pearson Education, Inc. publishing as Prentice Hall 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 V1(2,857) V2 (6,666) 400,000 300,000 200,000 Volume $ Figure 7.4
  • 34. 7 - 34© 2011 Pearson Education, Inc. publishing as Prentice Hall Focused Processes  Focus brings efficiency  Focus on depth of product line rather than breadth  Focus can be  Customers  Products  Service  Technology
  • 35. 7 - 35© 2011 Pearson Education, Inc. publishing as Prentice Hall Changing Processes  Difficult and expensive  May mean starting over  Process strategy determines transformation strategy for an extended period  Important to get it right
  • 36. 7 - 36© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Analysis and Design  Is the process designed to achieve a competitive advantage?  Does the process eliminate steps that do not add value?  Does the process maximize customer value?  Will the process win orders?
  • 37. 7 - 37© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Analysis and Design  Flow Charts - Shows the movement of materials  Time-Function Mapping - Shows flows and time frame
  • 38. 7 - 38© 2011 Pearson Education, Inc. publishing as Prentice Hall “Baseline” Time-Function Map Customer Sales Production control Plant A Warehouse Plant B Transport 12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day 52 days Figure 7.5 Move Receive product Product Product Extrude Wait WIP Product Move WaitWIP WIP Print Wait Order WIP Order product Process order Wait Order
  • 39. 7 - 39© 2011 Pearson Education, Inc. publishing as Prentice Hall “Target” Time-Function Map Customer Sales Production control Plant Warehouse Transport 1 day 2 days 1 day 1 day 1 day 6 days Figure 7.5 Move Receive product Product Product Extrude Wait Print Order WIP Product Order product Process order Wait Order
  • 40. 7 - 40© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 41. 7 - 41© 2011 Pearson Education, Inc. publishing as Prentice Hall Value-Stream Mapping Figure 7.6
  • 42. 7 - 42© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Chart Figure 7.7
  • 43. 7 - 43© 2011 Pearson Education, Inc. publishing as Prentice Hall Service Blueprinting  Focuses on the customer and provider interaction  Defines three levels of interaction  Each level has different management issues  Identifies potential failure points
  • 44. 7 - 44© 2011 Pearson Education, Inc. publishing as Prentice Hall Service Blueprint Personal Greeting Service Diagnosis Perform Service Friendly 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 Yes F Standard request. (3 min) Determine specifics. (5 min) No Can service be done and does customer approve? (5 min)
  • 45. 7 - 45© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Analysis Tools  Flowcharts provide a view of the big picture  Time-function mapping adds rigor and a time element  Value-stream analysis extends to customers and suppliers  Process charts show detail  Service blueprint focuses on customer interaction
  • 46. 7 - 46© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 47. 7 - 47© 2011 Pearson Education, Inc. publishing as Prentice Hall Service Factory Service Shop Degree of Customization Low High DegreeofLabor Low High Mass Service Professional Service Service Process Matrix Commercial banking Private banking General- purpose law firms Law clinics Specialized hospitals Hospitals Full-service stockbroker Limited-service stockbroker Retailing Boutiques Warehouse and catalog stores Fast-food restaurants Fine-dining restaurants Airlines No-frills airlines Figure 7.9 Digital orthodontics Traditional orthodontics
  • 48. 7 - 48© 2011 Pearson Education, Inc. publishing as Prentice Hall Service Process Matrix  Labor involvement is high  Selection and training highly important  Focus on human resources  Personalized services Mass Service and Professional Service
  • 49. 7 - 49© 2011 Pearson Education, Inc. publishing as Prentice Hall Service Process Matrix Service Factory and Service Shop  Automation of standardized services  Low labor intensity responds well to process technology and scheduling  Tight control required to maintain standards
  • 50. 7 - 50© 2011 Pearson Education, Inc. publishing as Prentice Hall Improving Service Productivity Strategy Technique Example Separation Structure 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-service Self-service so customers examine, compare, and evaluate at their own pace Supermarkets and department stores Internet ordering Table 7.3
  • 51. 7 - 51© 2011 Pearson Education, Inc. publishing as Prentice Hall Strategy Technique Example Postponement Customizing at delivery Customizing vans at delivery rather than at production Focus Restricting the offerings Limited-menu restaurant Modules Modular selection of service Modular production Investment and insurance selection Prepackaged food modules in restaurants Improving Service Productivity Table 7.3
  • 52. 7 - 52© 2011 Pearson Education, Inc. publishing as Prentice Hall Strategy Technique Example Automation Separating services that may lend themselves to some type of automation Automatic teller machines Scheduling Precise personnel scheduling Scheduling ticket counter personnel at 15-minute intervals at airlines Training Clarifying the service options Explaining how to avoid problems Investment counselor, funeral directors After-sale maintenance personnel Improving Service Productivity Table 7.3
  • 53. 7 - 53© 2011 Pearson Education, Inc. publishing as Prentice Hall Improving Service Processes  Layout  Product exposure, customer education, product enhancement  Human Resources  Recruiting and training  Impact of flexibility
  • 54. 7 - 54© 2011 Pearson Education, Inc. publishing as Prentice Hall Equipment and Technology  Often complex decisions  Possible competitive advantage  Flexibility  Stable processes  May allow enlarging the scope of the processes
  • 55. 7 - 55© 2011 Pearson Education, Inc. publishing as Prentice Hall Production Technology  Machine technology  Automatic identification systems (AISs)  Process control  Vision system  Robot  Automated storage and retrieval systems (ASRSs)  Automated guided vehicles (AGVs)  Flexible manufacturing systems (FMSs)  Computer-integrated manufacturing (CIM)
  • 56. 7 - 56© 2011 Pearson Education, Inc. publishing as Prentice Hall Machine Technology  Increased precision  Increased productivity  Increased flexibility  Improved environmental impact  Reduced changeover time  Decreased size  Reduced power requirements
  • 57. 7 - 57© 2011 Pearson Education, Inc. publishing as Prentice Hall Automatic Identification Systems (AISs)  Improved data acquisition  Reduced data entry errors  Increased speed  Increased scope of process automation Example – Bar codes and RFID
  • 58. 7 - 58© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 59. 7 - 59© 2011 Pearson Education, Inc. publishing as Prentice Hall Vision Systems  Particular aid to inspection  Consistently accurate  Never bored  Modest cost  Superior to individuals performing the same tasks
  • 60. 7 - 60© 2011 Pearson Education, Inc. publishing as Prentice Hall Robots  Perform monotonous or dangerous tasks  Perform tasks requiring significant strength or endurance  Generally enhanced consistency and accuracy
  • 61. 7 - 61© 2011 Pearson Education, Inc. publishing as Prentice Hall 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
  • 62. 7 - 62© 2011 Pearson Education, Inc. publishing as Prentice Hall Automated Guided Vehicle (AGVs)  Electronically guided and controlled carts  Used for movement of products and/or individuals
  • 63. 7 - 63© 2011 Pearson Education, Inc. publishing as Prentice Hall Flexible Manufacturing Systems (FMSs)  Computer controls both the workstation and the material handling equipment  Enhance flexibility and reduced waste  Can economically produce low volume at high quality  Reduced changeover time and increased utilization  Stringent communication requirement between components
  • 64. 7 - 64© 2011 Pearson Education, Inc. publishing as Prentice Hall Computer-Integrated Manufacturing (CIM)  Extension of flexible manufacturing systems  Backwards to engineering and inventory control  Forward into warehousing and shipping  Can also include financial and customer service areas  Reducing the distinction between low- volume/high-variety, and high- volume/low-variety production
  • 65. 7 - 65© 2011 Pearson Education, Inc. publishing as Prentice Hall Computer- Integrated Manufacturing (CIM) Figure 7.10
  • 66. 7 - 66© 2011 Pearson Education, Inc. publishing as Prentice Hall Technology in Services Service Industry Example Financial Services Debit cards, electronic funds transfer, ATMs, Internet stock trading, on-line banking via cell phone Education Electronic bulletin boards, on-line journals, WebCT, Blackboard and smart phones Utilities and government Automated one-man garbage trucks, optical mail and bomb scanners, flood warning systems, meters allowing homeowners to control energy usage and costs Restaurants and foods Wireless orders from waiters to kitchen, robot butchering, transponders on cars that track sales at drive-throughs Communications Interactive TV, ebooks via Kindle 2 Table 7.4
  • 67. 7 - 67© 2011 Pearson Education, Inc. publishing as Prentice Hall Technology in Services Service Industry Example Hotels Electronic check-in/check-out, electronic key/lock system, mobile web booking Wholesale/retail trade ATM-like kiosks, point-of-sale (POS) terminals, e-commerce, electronic communication between store and supplier, bar coded data, RFID Transportation Automatic toll booths, satellite-directed navigation systems, WiFi in automobile Health care Online patient-monitoring, online medical information systems, robotic surgery Airlines Ticketless travel, scheduling, Internet purchases, boarding passes two- dimensional bar codes on smart phones Table 7.4
  • 68. 7 - 68© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Redesign  The fundamental rethinking 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 functional lines  Any process is a candidate for redesign
  • 69. 7 - 69© 2011 Pearson Education, Inc. publishing as Prentice Hall Sustainability  Sustainability in production processes 1. Resources 2. Recycling 3. Regulations 4. Reputation
  • 70. 7 - 70© 2011 Pearson Education, Inc. publishing as Prentice Hall Sustainability  Resources  Operations is primary user  Reducing use is win-win  Recycling  Burn, bury, or reuse waste  Recycling begins at design
  • 71. 7 - 71© 2011 Pearson Education, Inc. publishing as Prentice Hall Sustainability  Regulations  Laws affect transportation, waste, and noise  Increasing regulatory pressure  Reputation  Leadership may be rewarded  Bad reputation can have negative consequences
  • 72. 7 - 72© 2011 Pearson Education, Inc. publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.