1. 10/16/2010
Process Strategy
7 and Sustainability Global Company Profile: Harley-
Outline
Davidson
Four Process Strategies
PowerPoint presentation to accompany Process Focus
Heizer and Render
Operations Management, 10e Repetitive Focus
Principles of Operations Management, 8e
Product Focus
PowerPoint slides by Jeff Heyl
Mass Customization Focus
Comparison of Process Choices
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Outline – Continued Outline – Continued
Special Consideration for Service
Process Analysis and Design
Process Design
Flow Charts
Customer Interaction and Process
Time Function
Time-Function Mapping Design
Value-Stream Mapping More Opportunities to Improve
Process Charts Service Processes
Service Blueprinting Selection of Equipment and
Technology
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Outline – Continued Outline – Continued
Production Technology Production Technology (cont.)
Machine Technology Automated Storage and Retrieval
Automatic Identification Systems Systems (ASRSs)
(AISs) d
(AIS ) and RFID Automated G id d Vehicles (AGVs)
A t t d Guided V hi l (AGV )
Process Control Flexible Manufacturing Systems
Vision Systems (FMSs)
Robots Computer-Integrated Manufacturing
(CIM)
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2. 10/16/2010
Outline – Continued Learning Objectives
When you complete this chapter you
should be able to:
Technology in Services
Process Redesign 1. Describe four production processes
Sustainability
S t i bilit 2. Compute crossover points for
different processes
3. Use the tools of process analysis
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Learning Objectives Harley-
Harley-Davidson
When you complete this chapter you
should be able to: Repetitive manufacturing works
The leading U.S. motorcycle company
4. Describe customer interaction in Emphasizes quality and lean
process design manufacturing
5. Identify recent advances in Materials as Needed system
production technology
Many variations possible
6. Discuss the 4 Rs of sustainability
Tightly scheduled repetitive
production line
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Process Flow Diagram Process Strategies
Frame tube Frame-building Frame Hot-paint
bending work cells machining frame painting
THE ASSEMBLY LINE
TESTING
28 tests
Incoming parts
Engines and
transmissions
The objective of a process strategy is
From Milwaukee
on a JIT arrival
to build a production process that
Air cleaners Oil tank work cell schedule meets customer requirements and
Fluids and mufflers Shocks and forks product specifications within cost
Fuel tank work cell Handlebars and other managerial constraints
Wheel work cell Fender work cell
Roller testing
Crating
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3. 10/16/2010
Process, Volume, and Variety Process Strategies
Figure 7.1 Volume
Low Repetitive High
Volume Process Volume
How to produce a product or
High Variety
one or few Process Focus
projects, job shops
Mass Customization
(difficult to achieve,
provide a service that
units per run,
(allows (machine, print, but huge rewards)
customization) hospitals, restaurants) Dell Computer Meets or exceeds customer
Arnold Palmer
Hospital requirements
Changes in
Modules
modest runs,
Meets cost and managerial goals
Repetitive
standardized (autos, motorcycles,
modules home appliances) Has long term effects on
Changes in Harley-Davidson
Attributes Product Focus Efficiency and production flexibility
(such as grade, (commercial
Poor Strategy
quality, size,
thickness, etc.) (Both fixed and baked goods, Costs and quality
variable costs steel, glass, beer)
long runs only Frito-Lay
are high)
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Process Strategies Process Focus
Four basic strategies Facilities are organized around specific
activities or processes
1. Process focus General purpose equipment and skilled
2. Repetitive focus personnel
3. Product focus High degree of product flexibility
Typically high costs and low equipment
4. Mass customization utilization
Within these basic strategies there are Product flows may vary considerably
making planning and scheduling a
many ways they may be implemented challenge
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Process Focus Many inputs
(surgeries, sick patients,
baby deliveries, emergencies) Repetitive Focus
Facilities often organized as
assembly lines
Characterized by modules with parts
(low volume, high variety,
and assemblies made previously
Many departments and
intermittent processes) many routings Modules may be combined for many
Arnold Palmer Hospital
output options
Less flexibility than process-focused
facilities but more efficient
Figure 7.2(a) Many different outputs
(uniquely treated patients)
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4. 10/16/2010
Raw materials and
Repetitive module inputs
(multiple engine models, Product Focus
Focus wheel modules)
Facilities are organized by product
High volume but low variety of
Few
products
modules
Long, continuous production runs
L ti d ti
(modular)
enable efficient processes
Harley Davidson Typically high fixed cost but low
variable cost
Figure 7.2(b) Modules combined for many
Generally less skilled labor
Output options
(many combinations of motorcycles)
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Product Focus Few Inputs
(corn, potatoes, water, Product Focus
seasoning)
D A Scrap
Nucor Steel Plant steel
tinuous caster
B
C Electric
Ladle of molten steel furnace
Continuous cast steel
Cont
sheared into 24-ton slabs
(low-volume, high variety, Hot tunnel furnace - 300 ft
continuous process) E F
Frito-Lay
Hot mill for finishing, cooling, and coiling
H G
Output variations in size,
I
Figure 7.2(c) shape, and packaging
(3-oz, 5-oz, 24-oz package
labeled for each material)
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Mass Customization Mass Customization
Number of Choices
The rapid, low-cost production of
Item 1970s 21st Century
goods and service to satisfy Vehicle models 140 286
increasingly unique customer Vehicle types 18 1,212
desires Bicycle types 8 211,000
Software titles 0 400,000
Combines the Web sites 0 162,000,000
Movie releases per year 267 765
flexibility of a New book titles 40,530 300,000
process focus Houston TV channels 5 185
Breakfast cereals 160 340
with the efficiency Items (SKUs) in 14,000 150,000
of a product focus supermarkets
LCD TVs 0 102
Table 7.1
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5. 10/16/2010
Mass Many parts and
component inputs
Mass Customization
(chips, hard drives,
Customization software, cases)
Repetitive Focus
Figure 7.3 Flexible people
and equipment
Modular
techniques
Accommodating
Product and Responsive
Process Design Supply Chains
Mass Customization
Many modules
Rapid
(high-volume, high-variety) throughput
Effective techniques
Dell Computer scheduling
techniques
Process-Focused Product-Focused
High variety, low volume Low variety, high volume
Figure 7.2(d) Low utilization (5% to 25%) High utilization (70% to 90%)
Many output versions General-purpose equipment Specialized equipment
(custom PCs and notebooks)
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Mass Customization Comparison of Processes
Mass
Process Focus Repetitive Product Focus Customization
Imaginative and fast product (low-volume, Focus (high-volume, (high-volume,
high-variety) (modular) low-variety) high-variety)
design
1. Small 1. Long runs, 1. Large 1. Large quantity
Rapid process design quantity and
large variety
usually a
standardized
quantity and
small variety
and large
variety of
of products product with of products products are
Tightly controlled inventory are produced options,
produced
are
produced
produced
management from
modules
Tight schedules 2. Equipment
used is
2. Special
equipment
2. Equipment
used is
2. Rapid
changeover on
general aids in use of special flexible
Responsive supply chain partners purpose an assembly
line
purpose equipment
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Comparison of Processes Comparison of Processes
Mass Mass
Process Focus Repetitive Product Focus Customization Process Focus Repetitive Product Focus Customization
(low-volume, Focus (high-volume, (high-volume, (low-volume, Focus (high-volume, (high-volume,
high-variety) (modular) low-variety) high-variety) high-variety) (modular) low-variety) high-variety)
3. Operators 3. Employees 3. Operators 3. Flexible 5. Raw-material 5. JIT 5. Raw material 5. Raw
are broadly are modestly are less operators are inventories procurement inventories material
skilled trained broadly trained for the high relative techniques are low inventories
skilled necessary to the value are used relative to the are low
customization of the value of the relative to
product product the value
4. There are 4. Repetitive 4. Work orders 4. Custom of the
many job operations and job orders require product
instructions reduce instructions many job
because training and are few instructions 6. Work-in- 6. JIT inventory 6. Work-in- 6. Work-in-
each job changes in because they process is techniques process process
changes job are high are used inventory is inventory
instructions standardized compared to low driven down
output compared to by JIT,
output kanban, lean
production
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6. 10/16/2010
Comparison of Processes Comparison of Processes
Mass Mass
Process Focus Repetitive Product Focus Customization Process Focus Repetitive Product Focus Customization
(low-volume, Focus (high-volume, (high-volume, (low-volume, Focus (high-volume, (high-volume,
high-variety) (modular) low-variety) high-variety) high-variety) (modular) low-variety) high-variety)
7. Units move 7. Assembly is 7. Swift 7. Goods move 9. Scheduling 9. Scheduling 9. Scheduling 9. Sophisticated
slowly measured in movement of swiftly is complex, is based on is relatively scheduling is
through the hours and units through through the concerned building simple, required to
facility days the facility is facility with trade
trade- various concerned accommodate
typical offs between models from with custom orders
inventory, a variety of establishing
8. Finished 8. Finished 8. Finished 8. Finished capacity, and modules to output rate
goods are goods made goods are goods are customer forecasts sufficient to
usually made to frequent usually made often build- service meet
to order and forecast to forecast to-order forecasts
not stored and stored (BTO)
10. Fixed costs 10. Fixed costs 10. Fixed costs 10. Fixed costs
tend to be dependent tend to be tend to be
low and on flexibility high and high, variable
variable of the variable costs must be
costs high facility costs low low
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Crossover Charts Focused Processes
Variable
costs
$
Variable
costs $
Variable
costs $ Focus brings efficiency
Fixed costs
Fixed costs Fixed costs Focus on depth of product line
Low volume, high variety Repetitive High volume, low variety
rather than breadth
Process A Process B Process C
Focus can be
F b
$
Customers
400,000 Products
300,000
200,000 Service
Fixed cost Fixed cost Fixed cost
Process A Process B Process C Technology
Figure 7.4 (2,857) V1 V2 (6,666) Volume
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Changing Processes Process Analysis and
Design
Difficult and expensive Is the process designed to achieve a
May mean starting over competitive advantage?
Process strategy determines
P t t d t i Does the process eliminate steps that
do not add value?
transformation strategy for an
extended period Does the process maximize customer
value?
Important to get it right
Will the process win orders?
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7. 10/16/2010
Process Analysis and “Baseline” Time-Function Map
Time-
Design Customer
Order
product
Receive
product
Process
Sales order
Flow Charts - Shows the movement of
Order
materials Production
control
Wait
Product
Time Function
Time-Function Mapping - Shows flows and
der
Plant
Pl t A
Ord
Print
Pi t
time frame
Product
WIP
Warehouse Wait Wait Wait
Product
WIP
WIP
WIP
Plant B Extrude
Transport Move Move
12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day
Figure 7.5
52 days
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“Target” Time-Function Map
Time- Process Analysis and
Customer
Order Receive
Design
product product
Flow Charts - Shows the movement of
Sales
Process
order
materials
Time-Function Mapping - Shows flows and
Product
Order
Production
Wait
control time frame
Order
r
WIP
Plant Print Extrude Value-Stream Mapping - Shows flows and
time and value added beyond the
Product
Warehouse Wait immediate organization
Process Charts - Uses symbols to show
Product
Transport Move
key activities
1 day 2 days 1 day 1 day 1 day
6 days Service Blueprinting - focuses on
Figure 7.5
customer/provider interaction
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Value-
Value-Stream Mapping Process Chart
Figure 7.6
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Figure -7.7
7 42
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8. 10/16/2010
Service Blueprint
Service Blueprinting Personal Greeting Service Diagnosis Perform Service Friendly Close
Level Customer arrives
for service. Customer departs
#1
(3 min)
Focuses on the customer and
F
provider interaction Determine
specifics.
Notify Customer pays bill.
(4 min)
Warm greeting customer
(5 min)
No and recommend
Defines three levels of interaction and obtain
service request.
(10 sec)
an alternative
provider.
F
Standard Can F
Level request. (7min)
Each level has different #2
Direct customer
(3 min)
service be
done and does
customer No
Notify
customer the
management issues to waiting room. approve?
(5 min)
car is ready.
(3 min)
Identifies potential failure points F F F F
Yes Yes
Perform
Level required work. F Prepare invoice.
#3 (varies) (3 min)
Figure 7.8
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Process Analysis Tools Special Considerations for
Flowcharts provide a view of the Service Process Design
big picture
Some interaction with customer is
Time-function mapping adds rigor necessary, but this often affects
and a time element performance adversely
Value-stream analysis extends to The better these interactions are
customers and suppliers accommodated in the process design,
the more efficient and effective the
Process charts show detail process
Service blueprint focuses on Find the right combination of cost and
customer interaction customer interaction
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Service Process Matrix Service Process Matrix
Degree of Customization
Low High
Mass Service Professional Service
Traditional
Private
banking orthodontics Mass Service and Professional Service
Commercial
banking
High
Full-service
General-
purpose law firms Labor involvement is high
stockbroker
Selection and training highly
g g y
bor
Digital
Boutiques
Degree of Lab
orthodontics
Retailing important
Service Factory Law clinics Service Shop
Limited-service Specialized Focus on human resources
stockbroker hospitals
Warehouse and
catalog stores
Fast-food Fine-dining
restaurants Hospitals
Personalized services
Low restaurants
Airlines
No-frills
airlines
Figure 7.9
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9. 10/16/2010
Service Process Matrix Improving Service
Productivity
Service Factory and Service Shop Strategy Technique Example
Automation of standardized Separation Structure service so Bank customers go to
customers must go a manager to open a
services where the service is new account, to loan
offered
ff d officers for loans, and
ffi f l d
Low labor intensity responds well to tellers for deposits
to process technology and Self-service Self-service so Supermarkets and
scheduling customers examine, department stores
compare, and Internet ordering
Tight control required to maintain evaluate at their own
standards pace
Table 7.3
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Improving Service Improving Service
Productivity Productivity
Strategy Technique Example
Strategy Technique Example
Postponement Customizing at Customizing vans at Automation Separating services Automatic teller
delivery delivery rather than at that may lend machines
production themselves to some
type o auto at o
of automation
Focus Restricting the Limited-menu Scheduling Precise personnel Scheduling ticket
offerings restaurant scheduling counter personnel at
Modules Modular selection of Investment and 15-minute intervals at
service insurance selection airlines
Modular production Prepackaged food Training Clarifying the service Investment counselor,
modules in options funeral directors
restaurants Explaining how to After-sale maintenance
avoid problems personnel
Table 7.3 Table 7.3
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Improving Service Equipment and Technology
Processes
Often complex decisions
Layout
Possible competitive advantage
Product exposure, customer
education, product enhancement Flexibility
Human Resources Stable processes
Recruiting and training May allow enlarging the scope of
the processes
Impact of flexibility
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10. 10/16/2010
Production Technology Machine Technology
Machine technology
Automatic identification
Increased precision
systems (AISs) Increased productivity
Process control
Vision system
Increased flexibility
Robot Improved environmental impact
Automated storage and retrieval systems Reduced changeover time
(ASRSs)
Automated guided vehicles (AGVs) Decreased size
Flexible manufacturing systems (FMSs) Reduced power requirements
Computer-integrated manufacturing (CIM)
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Automatic Identification Process Control
Systems (AISs) Real-time monitoring and control of
processes
Improved data acquisition Sensors collect data
Reduced data entry errors Devices read data
on periodic basis
Increased speed
Measurements translated into digital
Increased scope signals then sent to a computer
of process
Computer programs analyze the data
automation
Resulting output may take numerous
forms
Example – Bar codes and RFID
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Vision Systems Robots
Particular aid to inspection Perform monotonous or dangerous
Consistently tasks
accurate Perform tasks
Never bored requiring significant
strength or
Modest cost endurance
Superior to Generally enhanced
individuals performing the same consistency and
tasks accuracy
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11. 10/16/2010
Automated Storage and Automated Guided Vehicle
Retrieval Systems (ASRSs) (AGVs)
Automated placement and Electronically guided and
withdrawal of parts and products controlled carts
Reduced errors and labor Used for movement of products
Particularly useful in inventory and and/or individuals
test areas of manufacturing firms
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Flexible Manufacturing Computer-
Computer-Integrated
Systems (FMSs) Manufacturing (CIM)
Computer controls both the workstation Extension of flexible manufacturing
and the material handling equipment systems
Enhance flexibility and reduced waste Backwards to engineering and inventory
control
Can economically produce low volume at
Forward into warehousing and shipping
high quality
Can also include financial and customer
Reduced changeover time and increased service areas
utilization
Reducing the distinction between low-
Stringent communication requirement volume/high-variety, and high-
between components volume/low-variety production
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Computer-
Computer- Technology in Services
Integrated
Service Industry Example
Manufacturing
(CIM) Financial Debit cards, electronic funds transfer, ATMs,
Services Internet stock trading, on-line banking via
cell phone
Education Electronic bulletin boards, on-line journals,
WebCT,
WebCT Blackboard and smart phones
Utilities and Automated one-man garbage trucks, optical
government mail and bomb scanners, flood warning
systems, meters allowing homeowners to
control energy usage and costs
Restaurants and Wireless orders from waiters to kitchen,
foods robot butchering, transponders on cars that
track sales at drive-throughs
Figure 7.10 Communications Interactive TV, ebooks via Kindle 2
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