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77 Process Strategy and SustainabilityProcess Strategy and Sustainability
PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8ePrinciples of Operations Management, 8e
PowerPoint slides by Jeff Heyl
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Process StrategiesProcess Strategies
The objective of a process strategy is The objective of a process strategy is to build a production process that to build a production process that meets customer requirements and meets customer requirements and product specifications within cost product specifications within cost and other managerial constraintsand other managerial constraints
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Process, Volume, and VarietyProcess, Volume, and Variety
Process Focusprojects, 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 Varietyone or few units per run,(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
Poor Strategy (Both fixed and variable costs
are high)
Low Volume
Repetitive Process
High Volume
VolumeFigure 7.1
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Process StrategiesProcess Strategies
Four basic strategies
1. Process focus
2. Repetitive focus
3. Product focus
4. Mass customization
Within these basic strategies there are Within these basic strategies there are many ways they may be implementedmany ways they may be implemented
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Process FocusProcess 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
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Manufacturing Process Manufacturing Process LayoutLayout
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
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Process FocusProcess 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
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Repetitive FocusRepetitive 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
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Raw materialsor customer
Finished
item
Station 2
Station 2
Station 3
Station 3
Station 4
Station 4
Material and/or labor
Station 1
Material and/or labor
Material and/or labor
Material and/or labor
Used for Repetitive or Continuous Processing
Product Product FocusFocus
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• Product layout sets up production equipment along a product-flow line, and the work in process moves along this line past workstations.
• Efficiently produces large numbers of similar items.
Product Layout
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Product FocusProduct 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
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Product FocusProduct FocusNucor Steel Plant
Co
nti
nu
ou
s ca
ster
Continuous cast steel sheared into 24-ton slabs
Hot tunnel furnace - 300 ft
Hot mill for finishing, cooling, and coiling
D
E F
GHI
Scrap steel
Ladle of molten steelElectric furnace
A
BC
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Mass CustomizationMass 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
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Mass CustomizationMass Customization
Table 7.1
Vehicle models 140 286Vehicle types 18 1,212Bicycle types 8 211,000Software titles 0 400,000Web sites 0 162,000,000Movie releases per year 267 765New book titles 40,530 300,000Houston TV channels 5 185Breakfast cereals 160 340Items (SKUs) in 14,000 150,000 supermarketsLCD TVs 0 102
Number of Choices
Item 1970s 21st Century
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Mass Mass CustomizationCustomization
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
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Requirements to Achive Requirements to Achive Mass Mass CustomizationCustomization/Build-to-Order/Build-to-Order
Mass Customization
Effective scheduling techniques
Rapid throughput techniques
Repetitive FocusFlexible people
and equipment (CIM)
Process-FocusedHigh variety, low volume
Low utilization (5% to 25%)General-purpose equipment
Product-FocusedLow variety, high volume
High utilization (70% to 90%)Specialized equipment
Figure 7.3
Modular techniques
Fast Product and Process Design
CADResponsive
Supply ChainsERP
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• Description
• Type of process
• Product
• Demand
• Volume
• Equipment
• Description
• Type of process
• Product
• Demand
• Volume
• Equipment
Sequential arrangement of activities
Continuous, mass production, mainly assembly
Standardized, made to stock
Stable
High Special purpose
Process
Comparison of ProductComparison of Productand Process Layoutsand Process Layouts
Functional grouping of activities
Intermittent, job shop, batch production, mainly fabrication
Varied, made to order
Fluctuating
Low General purposee
Product
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• Workers
• Inventory
• Material handling
• Aisles
• Scheduling
• Goal
• Advantage
• Workers
• Inventory
• Material handling
• Aisles
• Scheduling
• Goal
• Advantage
Limited skills Low in-process, high
finished goods
Fixed path (conveyor) Narrow Line balancing
Equalize work at each station
Efficiency
Process
Comparison of ProductComparison of Productand Process Layoutsand Process Layouts
Varied skills High in-process, low
finished goods
Variable path (forklift) Wide Dynamic
Minimize material handling cost
Flexibility
Product
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Comparison of Three Processes Comparison of Three Processes Using Using Crossover ChartsCrossover Charts
Fixed costs
Variable costs
$
High volume, low varietyProcess C
Fixed costs
Variable costs$
RepetitiveProcess B
Fixed costs
Variable costs$
Low volume, high varietyProcess A
Fixed cost Process A
Fixed cost Process B
Fixed cost Process C
Tota
l cos
t
Total cost
Total cost
V1(2,857) V2
(6,666)
400,000
300,000
200,000
Volume
$
Figure 7.4
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Focused ProcessesFocused Processes
Focus brings
Less overhead costs
Less complexity
More efficiency
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Focused ProcessesFocused Processes
Focus can be on:
•Customers (Hotel owners: dishwashers)
•Products (Caterpillar)
•Service (Children hospital)
•Technology (SAP: software)
•Quality (Rolls-Royce)
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Analyzing and Designing Analyzing and Designing ProcessesProcesses
Design the process to achieve a competitive advantage
Analyze the process to eliminate the steps that do not add value
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Tools Used for Tools Used for Process Process Analysis and DesignAnalysis 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
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Flow Chart
Operator takes phoneorder.
Orders waitto be pickedup.
Supervisorinspectsorders.
Order isfulfilled.
Order waitsfor sales rep.
Is ordercomplete?
Yes
No
Orders aremoved tosupervisor’sin-box.
Orderswait forsupervisor.
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““Baseline” Time-Function MapBaseline” Time-Function MapCustomer
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 daysFigure 7.5
Move
Receive product
Pro
du
ct
Pro
du
ct
Extrude
Wait
WIP
Pro
du
ct
Move
WaitW
IP WIP
Print
Wait
Ord
er
WIP
Order product
Process order
Wait
Ord
er
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““Target” Time-Function MapTarget” Time-Function Map
Customer
Sales
Production control
Plant
Warehouse
Transport
1 day 2 days 1 day 1 day 1 day
6 daysFigure 7.5
Move
Receive product
Pro
du
ct
Pro
du
ct
Extrude
Wait
PrintOrd
er
WIP
Pro
du
ct
Order product
Process order
Wait
Ord
er
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Value-Stream MappingValue-Stream Mapping
Figure 7.6
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Process ChartProcess Charts (Allow us to s (Allow us to focus on value-added activities)focus on value-added activities)
Figure 7.7
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Service BlueprintingService Blueprinting
Helps to identify potential failure points in customer and service provider interaction
Defines three levels of interaction
Level 1: Activities under the control of the customer
Level 2: Interaction between the customer and service provider
Level 3: Activities performed invisibly to the customer
Each level has different management issues
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Service BlueprintService BlueprintPoka-Yoke (level 1): Put a bell in driveway so that Poka-Yoke (level 1): Put a bell in driveway so that
customer will be noticedcustomer will be noticedPersonal Greeting Service Diagnosis Perform Service Friendly Close
Level#3
Level#1
Level#2
Figure 7.8
No
Notifycustomer
and recommendan 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
FYes
FYes
F
Standard request.(3 min)
Determine specifics.
(5 min)No
Canservice be
done and does customer approve?
(5 min)
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Improving Service Improving Service ProductivityProductivity
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
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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
Investment and insurance selection, cell phone billing
Improving Service Improving Service ProductivityProductivity
Table 7.3
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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, wedding organizer
After-sale maintenance personnel
Improving Service Improving Service ProductivityProductivity
Table 7.3
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Technologies to Improve Technologies to Improve Production and ProductivityProduction and Productivity
CNC Machinery
Automatic identification systems (AISs), RFIS
Vision system - inspection
(video camera & computers)
Robots
Automated storage and retrieval systems (ASRSs)
Automated guided vehicles (AGVs)
Flexible manufacturing systems (FMSs)
Computer-integrated manufacturing (CIM)
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CNC MachineryCNC Machinery
Increased precision
Increased productivity
Increased flexibility
Reduced changeover time
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CNC MachineryCNC Machinery
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Automatic Identification Automatic Identification Systems (AISs)Systems (AISs)
Improved data acquisition
Reduced data entry errors
Increased speed
Increased scope of process automation
Example – Bar codes and RFIDExample – Bar codes and RFID
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Vision SystemsVision Systems Particular aid to inspection
Consistently accurate
Never bored
Modest cost
Superior to individuals performing the same tasks
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RobotsRobots
Perform monotonous or dangerous tasks
Perform tasks requiring significant strength or endurance
Generally enhanced consistency and accuracy
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Automated Storage and Automated Storage and Retrieval Systems (ASRSs)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
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Illustrated concept of a Illustrated concept of a high-rise AS/RS warehousehigh-rise AS/RS warehouse
AS/RS High-Rise Warehouse
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Automated Guided Vehicle Automated Guided Vehicle (AGVs)(AGVs)
Electronically guided and controlled carts
Used for movement of products and/or individuals
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Automated Guided Vehicle Automated Guided Vehicle (AGVs)(AGVs)
Electronically guided and controlled carts
Used for movement of products and/or individuals
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Flexible Manufacturing Flexible Manufacturing Systems (FMSs)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
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7 - 47Manufacturing, Engineering & Technology, Fifth Edition, by Serope Kalpakjian and Steven R. Schmid.ISBN 0-13-148965-8. © 2006 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
Flexible Manufacturing Flexible Manufacturing SystemSystem
A schematic illustration of a flexible manufacturing system showing machining centers, a measuring and inspection station. And automated guided vehicles. Source: After J. T. Black.
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Computer-Integrated Computer-Integrated Manufacturing (CIM)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
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Computer-Computer-Integrated Integrated
Manufacturing Manufacturing (CIM)(CIM)
Figure 7.10
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SustainabilitySustainability ( (Four RsFour Rs))
Sustainability in production processes
1. Resources
2. Recycling
3. Regulations
4. Reputation
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SustainabilitySustainability
Resources
- doing laundry atnight to reduce electricity costs (hotels)
Recycling
BMW uses recycled plastics
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SustainabilitySustainability
Reputation
- Frito-Lay built a plant powered by solar energy in California and advertised this in its products
Regulations
- Cars with higher CO2 emissions pay higher taxes