Technology & Operations

Management

Process Strategies
 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
 Process Strategies
Four basic strategies
 Process focus
 Repetitive focus
 Product focus
 Mass customization

Within these basic strategies there are

many ways they may be implemented
 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
Process Focused Strategy - Examples

Hospital
Print jobs
Carpentry jobs
Machine Machine jobs
Shop Banks
 Process Focus
Job Shop

Many departments and

many routings
Many
Many variety
inputs of
outputs
 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
 Repetitive-Focused Strategy - Examples

Have most of the Fast

products which have
semi continuous Food
processes McDonald’s
McDonald’s
over 95 billion served
over 95 billion served

Automobiles
Food
stuffs
Motorbikes
Cycles
Washing
machines
 Repetitive Focus
Automobile Assembly Line

Raw Modules
materials combined
and for many
module output
inputs options

Few
modules
 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
 Product-Focused Strategy - Examples

Commercial baked
goods
Steel manufacturing
Glass manufacturing
Paper and board making

Paper (Continuous)
 Product Focus
Continuous Work Flow

Output
variations
Few in size,
inputs shape,
and
packaging
 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
 Mass Customization
Repetitive Focus
Flexible people
and equipment
Supportive
supply Modular techniques
chains

Mass Customization
Effective Rapid
scheduling throughput
techniques techniques

Process-Focused Product-Focused
High variety, low volume Low variety, high volume
Low utilization (5% to 25%) High utilization (70% to 90%)
General-purpose equipment Specialized equipment
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Small Long runs, Large Large

quantity, standardized quantity, small quantity, large
large variety product made variety of variety of
of products from modules products products

General Special Special Rapid

purpose equipment purpose changeover
equipment aids in use of equipment on flexible
assembly line equipment
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Operators are Employees Operators are Flexible

broadly are modestly less broadly operators are
skilled trained skilled trained for the
necessary
customization

Many job Repetition Few work Custom

instructions reduces orders and job orders require
as each job training and instructions many job
changes changes in job because jobs instructions
instructions standardized
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Raw material JIT Raw material Raw material

inventories procurement inventories inventories
high techniques are low are low
used

Work-in- JIT inventory Work-in- Work-in-

process is techniques process process
high used inventory is inventory
low driven down
by JIT, lean
production
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Units move Movement is Swift Goods move

slowly measured in movement of swiftly
through the hours and unit through through the
plant days the facility is facility
typical

Finished Finished Finished Finished

goods made goods made goods made goods often
to order to frequent to forecast build-to-order
forecast and stored (BTO)
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Scheduling is Scheduling Relatively Sophisticated

complex, based on simple scheduling
trade-offs building scheduling, required to
between various establishing accommodate
inventory, models from output rate to custom orders
availability, a variety of meet forecasts
customer modules to
service forecasts
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Fixed costs Fixed costs Fixed costs Fixed costs

low, variable dependent on high, variable high, variable
costs high flexibility of costs low costs must be
the facility low

Costing Costs usually High fixed High fixed

estimated known due to costs mean costs and
before job, extensive costs dynamic
known only experience dependent on variable costs
after the job utilization of make costing
capacity a challenge
 Changing Processes

 Difficult and expensive

 May mean starting over
 Process strategy determines
transformation strategy for an
extended period
 Important to get it right
Equipment and Technology

 Often complex decisions

 Possible competitive advantage
 Flexibility
 Stable processes
 May allow enlarging the scope of the
processes
 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)
 Machine Technology
 Increased precision
 Increased productivity
 Increased flexibility
 Improved environmental impact
 Reduced changeover time
 Decreased size
 Reduced power requirements
 Technology in Services
Service Industry Example
Financial Debit cards, electronic funds transfer, ATMs,
Services Internet stock trading
Education Electronic bulletin boards, on-line journals,
WebCT and Blackboard
Utilities and Automated one-man garbage trucks, optical
government mail and bomb scanners, flood warning
systems
Restaurants and Wireless orders from waiters to kitchen,
foods robot butchering, transponders on cars that
track sales at drive-throughs
Communications Electronic publishing, interactive TV
 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
Ethics and Environmentally
Friendly Processes
Reduce the negative impact on the
environment
 Encourage recycling
 Efficient use of resources
 Reduction of waste by-products
 Use less harmful ingredients
 Use less energy
 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?
 Process Analysis and
Design
► Flowcharts
► Shows the movement of materials
► Harley-Davidson flowchart
► Time-Function Mapping
► Shows flows and time frame
 “Baseline” Time-Function Map
Order Receive
Customer product product

Process
Sales order
Order

Production Wait
control

Product
Order

Plant A Print

Product
WIP

Warehouse Wait Wait Wait

Product
WIP
WIP
Plant B Extrude
WIP

Transport Move Move

12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day

52 days
 “Target” Time-Function Map
Order Receive
Customer product product

Process
Sales order

Product
Order

Production
control Wait
Order

WIP
Plant Print Extrude

Product
Warehouse Wait

Product
Transport Move

1 day 2 days 1 day 1 day 1 day

6 days
 Process Analysis and
Design
► Value-Stream Mapping
► Where value is added in the entire
production process, including the
supply chain
► Extends from the customer back to the
suppliers
 Value-Stream Mapping
1. Begin with symbols for customer,
supplier, and production to ensure the
big picture
2. Enter customer order requirements
3. Calculate the daily production
requirements
4. Enter the outbound shipping
requirements and delivery frequency
5. Determine inbound shipping method
and delivery frequency
 Value-Stream Mapping
6. Add the process steps (i.e., machine,
assemble) in sequence, left to right
7. Add communication methods, add their
frequency, and show the direction with
arrows
8. Add inventory quantities (shown with I
) between every step of the entire
flow
9. Determine total working time (value-
added time) and delay (non-value-
added time)
Value-Stream Mapping