CHAPTER 7 digitalization in modern manufacturing

processes.
The provided document is a chapter from the book
"Operations Management: Sustainability and Supply This chapter provides a comprehensive overview of
Chain Management Fourteenth Edition" by Pearson process strategies, their implementation, and the role
Education, focusing on Chapter 7: Process Strategies. of technology in modern production processes,
Here is a summary of the key points covered in the offering valuable insights into operations management
chapter: practices.

 Process Strategies: The chapter discusses the Process strategies refer to an organization's approach
importance of an organization's approach to to converting resources into goods and services to
transforming resources into goods and meet customer requirements efficiently within cost
services to meet customer requirements and managerial constraints. They are crucial for
within cost and managerial constraints. It aligning production processes with customer needs
outlines four basic process strategies: process and organizational goals.
focus, repetitive focus, product focus, and
The four basic process strategies are process focus,
mass customization1.
repetitive focus, product focus, and mass
 Process Focus: This strategy involves customization. Process focus organizes facilities
organizing facilities around specific activities around specific activities, repetitive focus uses
or processes, using general-purpose assembly lines, product focus organizes by product,
equipment, and skilled personnel. It offers and mass customization combines flexibility with
high product flexibility but may have high efficiency.
variable costs and low equipment utilization1.
Process focus involves high product flexibility but high
 Repetitive Focus: Facilities are often organized variable costs, repetitive focus is less flexible but more
as assembly lines, with modules for efficient efficient, product focus focuses on high volume but
production. This strategy is less flexible than low variety, and mass customization aims for rapid,
process focus but more efficient1. low-cost production to meet unique customer desires.

 Product Focus: Facilities are organized by Mass customization requires imaginative product
product, focusing on high volume but low design, flexible process design, controlled inventory
variety of products. Long production runs management, digitized communication, and
enable efficient processes with high fixed responsive supply chain partners to effectively satisfy
costs but low variable costs1. unique customer demands.

 Mass Customization: This strategy aims at Refer to Table 7.1 for a detailed comparison of the
rapid, low-cost production to meet unique characteristics of process focus, repetitive focus,
customer desires, combining the flexibility of product focus, and mass customization in terms of
process focus with the efficiency of product various factors like product quantity, job instructions,
focus1. inventory, scheduling, and cost structure.

 Tools for Process Analysis and Design: The Flexibility in operations management refers to the
chapter introduces various tools like ability to adapt quickly and efficiently to changes
flowcharts, time-function mapping, process without significant time, cost, or customer value
charts, value-stream mapping, and service penalties. It can be a competitive advantage, enabling
blueprinting to analyze and design processes organizations to respond effectively to dynamic
effectively1. market conditions.

 Production Technology: It discusses the future Tools like flowcharts, time-function mapping, process
of operations management tied to data charts, value-stream mapping, and service
collection, technology advancements like blueprinting are used for process analysis and design.
machine technology, automatic identification Flowcharts show movement, time-function mapping
systems, robots, and flexible manufacturing adds time to flowcharts, process charts analyze
systems, emphasizing the importance of movement, value-stream mapping identifies value in
the supply chain, and service blueprinting focuses on Process Analysis and Design Tools
customer interactions.
The chapter covers several tools for analyzing and
Production technology plays a vital role in modern designing processes1:
operations management, with advancements like
 Flowcharts: Show the movement of people or
machine technology, automatic identification systems,
materials1
robots, and flexible manufacturing systems enhancing
precision, productivity, and flexibility in production  Time-function mapping: Adds time to a
processes. flowchart to identify delays1
Automatic Identification Systems (AIS) and Radio  Process charts: Use symbols to analyze
Frequency Identification (RFID) systems improve data movement of people or materials1
acquisition, reduce errors, increase speed, and
enhance process automation through technologies  Value-stream mapping: Expands time-
like barcodes and RFID for efficient tracking and function mapping to identify where value is
management. added in the entire supply chain1

Vision systems offer consistently accurate inspection,  Service blueprinting: Focuses on the customer
cost-effectiveness, and superior performance interaction and identifies potential failure
compared to manual inspection tasks, making them points1
valuable tools in operations management for ensuring Special Considerations for Services
quality and accuracy in production processes.
The chapter notes that service processes require some
Four Process Strategies interaction with customers, which can adversely affect
The chapter outlines four basic process strategies performance1. The service process matrix categorizes
companies can employ1: services based on customer contact and
customization1:
1. Process focus: Facilities are organized around
specific activities or processes, using general  Mass services and professional services: Have
purpose equipment and skilled high labor involvement and focus on human
personnel1. This provides a high degree of resources1
product flexibility but typically has high  Service factories and service shops: Automate
variable costs and low equipment utilization1. standardized services with restricted offerings
2. Repetitive focus: Facilities are often organized and low labor intensity1
as assembly lines, characterized by modules Techniques for improving service productivity include
with parts and assemblies made separation, self-service, postponement, focus,
previously1. This is less flexible than process- modules, automation, scheduling, and training1.
focused facilities but more efficient1.
Production Technology Trends
3. Product focus: Facilities are organized by
product, enabling long, continuous production The chapter discusses how operations management is
runs for high volume but low variety increasingly tied to collecting data from critical points
products1. This is typically high fixed cost but using digital sensors, coding, and computing
low variable cost1. embedded in machinery and processes1. Key
technologies include1:
4. Mass customization: Combines the flexibility
of a process focus with the efficiency of a  Machine technology like CNC and additive
product focus to enable rapid, low-cost manufacturing
production of goods and services to satisfy  Automatic identification systems like barcodes
unique customer desires1. Key enablers and RFID
include imaginative product design, flexible
processes, tight inventory control, digitized  Process control systems for real-time
communication, and responsive supply chain monitoring and adjustment
partners1.
 Vision systems for inspection
  Robots for monotonous, dangerous or  Various methods are discussed for evaluating
strength-requiring tasks location alternatives, such as the factor-rating
method, locational cost-volume analysis, the
 Automated storage and retrieval systems
center-of-gravity method, and understanding
 Automated guided vehicles the differences between service and
industrial-sector location analysis.
 Flexible manufacturing systems with
computer control Ease of Doing Business Ranking

 Computer-integrated manufacturing  The document provides a table ranking 190

extending flexibility across the value chain countries based on the ease of doing business,
showcasing New Zealand, Singapore, and
The chapter provides examples of how these Hong Kong as top-ranking countries, while
technologies are transforming service industries like Somalia ranks lowest.
financial services, education, utilities and
government1.In summary, this chapter provides a Other Factors Influencing Location Decisions
comprehensive overview of process strategies,
 It explores additional factors like labor
analysis tools, service considerations, and production
productivity, exchange rates, political risks,
technology trends in operations management. It
proximity to markets and suppliers, corruption
emphasizes the strategic importance of process
rankings in selected countries, and the
decisions and highlights the opportunities to gain
concept of clustering companies based on
competitive advantage through effective process
industry and location.
design and technology.
Factor-Rating Method and Locational Cost-Volume
Analysis
CHAPTER 8
 The factor-rating method is explained as a
The document "Operations Management: popular tool for location analysis, involving
Sustainability and Supply Chain Management assigning weights to factors, scoring locations,
Fourteenth Edition Chapter 8 Location Strategies" and making recommendations based on total
delves into the strategic importance of location scores. Locational cost-volume analysis is
decisions in operations management, focusing on detailed as an economic comparison of
factors influencing these decisions, methods for location alternatives to determine the lowest
evaluating location alternatives, and the significance total cost for expected production volume.
of location in providing competitive advantages. Here
Center-of-Gravity Method and Transportation Model
is a comprehensive reviewer based on the key points
covered in the document:Global Company Profile:  The center-of-gravity method is discussed as a
FedEx tool to minimize distribution costs by
considering market locations, volume of goods
 The chapter starts by highlighting FedEx's
shipped, and shipping costs. The
central hub concept, emphasizing how
transportation model is highlighted for
strategic location decisions enable efficient
minimizing total production and shipping
service to more locations with fewer aircraft,
costs through linear programming.
matching flights with package loads, and
reducing mishandling and delays in transit. Service Location Strategy and Techniques

Factors Affecting Location Decisions  The chapter delves into major determinants of
volume and revenue in service locations,
 The document outlines seven major factors
contrasts location strategies between service
influencing location decisions, including
and goods-producing organizations, and
political risks, cultural and economic issues,
discusses techniques like regression models,
market locations, labor talent and costs,
factor-rating methods, and geographic
availability of supplies and communications,
information systems in site selection.
exchange rates, and currency risks.
Chapter 9
Methods of Evaluating Location Alternatives
The chapter emphasizes the strategic importance of The chapter provides a detailed example of arranging
layout decisions in operations management. The six departments in a process-oriented layout to
objective is to develop an effective and efficient layout minimize material handling costs1. It also discusses
that meets the firm's competitive requirements1. Key the use of Muther's grid for prioritizing relationships
considerations include space utilization, flow of between departments and computer software for
materials and information, employee morale, visualizing and optimizing layouts1.
customer interaction, and flexibility1.Seven main
Chapter 11
types of layouts are covered:
The Strategic Importance of Supply Chains
1. Office layout: Positions workers, equipment
and spaces to facilitate collaboration1. Trends The chapter emphasizes the strategic importance of
include increased flexibility from IT and supply chain management in operations. The objective
dynamic space needs1. is to structure the supply chain to maximize its
competitive advantage and benefits to the ultimate
2. Retail layout: Allocates display space to
consumer1. Key points include:
maximize profitability per square
foot1. Strategies include locating high-draw  Supply chains encompass all activities from
items around the periphery, using prominent raw materials to satisfied customers, including
locations for high-margin items, distributing suppliers, manufacturers, distributors,
power items to both sides of aisles, using end- retailers, and customers1.
aisle locations, and conveying the store's
mission through lead-off departments1.  Purchases make up a large portion of sales
dollars, so managing supplier relationships is
3. Warehouse layout: Addresses trade-offs critical1.
between storage space and material handling
costs1. Techniques like automated storage and  Effective supply chain management can
retrieval systems (ASRS), cross-docking, and improve innovation, speed design, and reduce
random stocking can improve efficiency1. costs1.

4. Fixed-position layout: Used for large, bulky  Supply chain costs vary by industry, ranging
projects like ships and buildings where the from 35% of sales in restaurants to 79% in the
product remains in one place while workers petroleum industry1.
and equipment come to the site1. An Sourcing Strategies
alternative is to complete as much as possible
off-site in a product-oriented facility1. The chapter covers six main sourcing strategies
companies can employ:
5. Process-oriented layout: Groups similar
equipment together to handle a variety of 1. Many suppliers: Commonly used for
products, but can have high setup, material commodity products, with purchasing based
handling and labor costs1. Arranging work on price1. Suppliers are responsible for
centers to minimize material handling costs is technology, expertise, forecasting, cost,
key1. quality, and delivery1.

6. Work-cell layout: Arranges machinery to focus 2. Few suppliers: Buyer forms long-term
on a single product or family, requiring relationships to create value through
identification of product families and cross- economies of scale and learning curve
training of teams1. improvements1. Suppliers are more willing to
participate in JIT programs and contribute
7. Product-oriented layout: Seeks the best design expertise1.
personnel and machine utilization for
repetitive, high-volume, low-variety 3. Vertical integration: Developing the ability to
products1. Fabrication and assembly lines produce goods or services previously
must be carefully balanced to equalize work at purchased, either forward towards the
each station1. customer or backward towards
suppliers1. Can improve cost, quality, delivery,
and inventory but requires capital and skills1.
 4. Joint ventures: Formal collaboration to forecasting and replenishment (CPFR), blanket
enhance skills, secure supply, and reduce orders, standardization, and postponement1
costs, while avoiding diluting brand or
 Leveraging technologies like electronic
conceding competitive advantage1.
ordering, omnichannel strategies, drop
5. Keiretsu networks: Developed in Japan, these shipping, blockchain, digitalization and the
represent a middle ground between few Internet-of-Things (IoT) for improved visibility
suppliers and vertical integration, with and real-time decision making1
suppliers becoming part of the company
Building the Supply Base
coalition1.
The chapter covers the process of building an effective
6. Virtual companies: Rely on a variety of short-
supply base:
and long-term supplier relationships to
provide services on demand, enabling lean 1. Supplier evaluation: Finding potential
performance, low capital investment, suppliers, determining their likelihood of
flexibility, and speed1. becoming good suppliers, and supplier
certification through qualification, education,
Supply Chain Risk
and certification1
The chapter emphasizes that increased reliance on
2. Supplier development: Integrating suppliers
supply chains means more risk, compounded by
into the system by specifying quality
globalization and logistical complexity1. Key risks
requirements, product specs, schedules,
include supplier failure, quality issues, outsourcing,
delivery, procurement policies, training,
logistics delays, information loss, political instability,
engineering help, and information transfer
economic fluctuations, natural disasters, and
procedures1
theft1. Mitigation tactics include:
3. Negotiation: Using cost-based, market-based,
 Using multiple suppliers and effective
or competitive bidding price models1
contracts with penalties1
4. Contracting: To share risks, benefits, and
 Careful supplier selection, training,
create incentives1
certification, and monitoring1
5. Centralized purchasing: To leverage volume,
 Redundant transportation modes and
develop specialized staff and supplier
warehouses1
relationships, maintain professional control,
 Secure IT systems and training of supply chain and promote standardization1
partners1
6. Electronic procurement: To speed purchasing,
 Political risk insurance and cross-country reduce costs, and integrate the supply chain
diversification1 through online catalogs, exchanges, and
auctions1
 Alternate sourcing and insurance against
natural catastrophes1 Logistics Management

Managing the Integrated Supply Chain The chapter discusses logistics management, with the
objective of obtaining efficient operations through the
The chapter discusses challenges and opportunities in
integration of all material acquisition, movement, and
managing the integrated supply chain:
storage activities1. Key points include:
 Issues like the bullwhip effect, where order
 Logistics is a frequent candidate for
fluctuations increase at each step of the
outsourcing to gain competitive advantage
supply chain1
through reduced costs and improved
 Opportunities such as sharing accurate "pull" customer service1.
data, reducing lot sizes, single stage
 Shipping methods include trucking, railroads,
replenishment control, vendor managed
airfreight, waterways, pipelines, and
inventory (VMI), collaborative planning,
multimodal combinations1. Faster shipping is
 generally more expensive than slower
shipping1.

 Warehousing may provide functions like

consolidation, break-bulk, cross-docking,
postponement, and channel assembly1.

 Third-party logistics (3PL) providers can

reduce inventory, costs, and improve delivery
reliability and speed1.

In summary, this chapter provides a comprehensive

overview of the key concepts in supply chain
management, emphasizing its strategic importance,
sourcing strategies, risk management, integration,
supplier management, and logistics. It highlights the
opportunities to gain competitive advantage through
effective supply chain management.