Ch07

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Ch07

  1. 1. Process Choice and LayoutDecisions in Manufacturing and Services
  2. 2. Manufacturing Processes • Engineering and business perspectives • Classic manufacturing processes • Choosing between classic types • The role of customization©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 2 Management — Bozarth & Handfield
  3. 3. Engineering and Business Perspectives©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 10, Slide 3 Management — Bozarth & Handfield
  4. 4. Solid Wood Seat for a Kitchen Chair:Process A Process B• Saddle Machine • 5-Axis Router• Shaper Machine • ----• Sander A • Sander A• Sander B • Sander B• Inspection • InspectionSetup Time: 6 hours Setup Time: 10 min.Time/Seat 1.1 min. Time / Seat: 3.5 min.Yield Rate: 92% Yield Rate: 99%©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 4 Management — Bozarth & Handfield
  5. 5. Classic Engineering Viewpoint Four Transformation Processes Conversion  Fabrication  Assembly Testing “Advances in Engineering increase and improve the alternatives available”©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 5 Management — Bozarth & Handfield
  6. 6. Example: Making Windows Conversion Fabrication Assembly• Raw lumber • Frame wood Assembled• Molten glass • Window panes Windows©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 6 Management — Bozarth & Handfield
  7. 7. Business View • What conversion steps must be done? • What are the production volumes like? • How similar are the various products we make (can we standardize)? • If the product is customized, how late in the process does it occur?©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 7 Management — Bozarth & Handfield
  8. 8. Classic Manufacturing Processes©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 10, Slide 8 Management — Bozarth & Handfield
  9. 9. Process Types (in order of decreasing volume) • Continuous Flow • Production Line • Batch (High Volume) • Batch (Low Volume) • Job Shop • Project©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 9 Management — Bozarth & Handfield
  10. 10. Continuous Flow • Large production volumes • High level of automation • Basic material passed along, converted as it moves • Usually very high fixed costs, inflexible Oil refinery, fiber formation, public utilities, automotive manufacturing©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 10 Management — Bozarth & Handfield
  11. 11. Production LineHigh-volume production of standard products or “design window” • Processes arranged by product flow • Often “paced” • Highly efficient, but not too flexible©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 11 Management — Bozarth & Handfield
  12. 12. Batch I • Somewhere in between job shop and line processes • Moderate volumes, multiple products • Production occurs in “batches” Can manufacturing, carton makers, advertising mailers, etc.©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 12 Management — Bozarth & Handfield
  13. 13. Batch IILayout is a cross between that found in aline and that found in a job shop: Group Technology©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 13 Management — Bozarth & Handfield
  14. 14. Some Examples of Batch Manufacturing • Numerical control (NC) machines – Automated processing of entire batch – Machining center - multiple NC machines • Flexible manufacturing systems (FMS) – Dedicated to families of parts – NC and automated handling • Group technology – Similar in concept to FMS, but not as much automation©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 14 Management — Bozarth & Handfield
  15. 15. Job Shop • Low volume, one-of-a-kind products • Job shops sell their capability • Highly flexible equipment, skilled workers • Equipment arranged by function©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 15 Management — Bozarth & Handfield
  16. 16. Project • Used when a product is: – one-of-a-kind – too large to be moved • Resources moved to where needed • Equipment, people, etc. are highly flexible • Finite duration, often with deadline Building projects, equipment installation©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 16 Management — Bozarth & Handfield
  17. 17. Mixing Together the Process Types ... Spindles ASSEMBLY LINE for putting together Arms and final product Legs BATCH for fabricating Seats parts ...©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 17 Management — Bozarth & Handfield
  18. 18. Choosing Between Classic Types • The product-process matrix • Product and process life cycles©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 10, Slide 18 Management — Bozarth & Handfield
  19. 19. Comparing Process Types... Job Shop Batch LineVolume Very Low HighVariety Very High LowSkills Broad LimitedAdvantage Flexibility Price and Delivery©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 19 Management — Bozarth & Handfield
  20. 20. Product – Process Matrix One of a Kind Multiple Few Major Commodity Low Volume Products Products Products Moderate High Volume VolumesJob Shop Very Poor FitBatch Very Poor FitLine©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 20 Management — Bozarth & Handfield
  21. 21. Life-Cycle Planning Framework Introduction Growth Maturity Decline Stage Stage Stage Stage Total Market Sales Time©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 21 Management — Bozarth & Handfield
  22. 22. Introduction Stage Availability key to market success but: • No reliable movement history • Unreliable forecasts • Small shipments • Erratic orders©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 22 Management — Bozarth & Handfield
  23. 23. Life-Cycle Planning Framework Introduction Growth Maturity Decline Stage Stage Stage Stage •High product availability Total •Flexibility Market to handle Sales variation Time©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 23 Management — Bozarth & Handfield
  24. 24. Growth Stage • Sales somewhat more predictable • Higher volumes • Performance emphasis?...©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 24 Management — Bozarth & Handfield
  25. 25. Life-Cycle Planning Framework Introduction Growth Maturity Decline Stage Stage Stage Stage •Availability •Achieve break- even volumes as soon as Total possible Market Sales Less need for flexibility Time©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 25 Management — Bozarth & Handfield
  26. 26. Maturity Stage • Intense competition around more standardized products • Frequent price and service adjustments • Implications . . .©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 26 Management — Bozarth & Handfield
  27. 27. Life-Cycle Planning Framework Introduction Growth Maturity Decline Stage Stage Stage Stage More selective, Total targeted efforts Market Sales Value-added service Time©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 27 Management — Bozarth & Handfield
  28. 28. Decline Stage (Obsolescence) • Product close-out or restricted distribution • Lowest cost / differentiated performance not as critical anymore • Priorities?©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 28 Management — Bozarth & Handfield
  29. 29. Life-Cycle Planning Framework Introduction Growth Maturity Decline Stage Stage Stage Stage • Centralized inventory • Speed Total Market Sales Time©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 29 Management — Bozarth & Handfield
  30. 30. Implications • What happens as companies follow products through their life cycles? • What happens when companies support products at various stages of the life cycle?©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 30 Management — Bozarth & Handfield
  31. 31. The Role of Customization©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 10, Slide 31 Management — Bozarth & Handfield
  32. 32. What is ―Customization‖? An operations-centric view: “Customization occurs when a customer‟s unique requirements directly affect the timing and nature of operations and supply chain activities”©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 32 Management — Bozarth & Handfield
  33. 33. Make-to-Order WindowsOff-line Activities On-Line Activities• Design • Lead times?• Buy Materials • Customizability?• Fabricate parts • Price?• Assemble • What type of manufacturing?• Ship windows • Sell windows©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 33 Management — Bozarth & Handfield
  34. 34. Fully Customized WindowsOff-line Activities On-Line Activities• Lead times? • Sell Windows• Customizability? • Design• Price? • Buy Materials• What type of • Fabricate parts manufacturing? • Assemble • Ship windows©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 34 Management — Bozarth & Handfield
  35. 35. Customization Point Model I ETO MTO ATO MTS SOURCING ASSEMBLY/ DESIGN FABRICATION DISTRIBUTION MATERIALS FINISHING Definitions: ETO – engineer to order MTO – make to order ATO – assemble-to-order MTS – make to stock Upstream: before the customization point, “off-line” activities Downstream: after the customization point, “on-line” activities©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 35 Management — Bozarth & Handfield
  36. 36. Customization Point Model II Manufacturing Upstream Downstream Systems DesignPerformance objectives Efficiency ResponsivenessTechnology Investment Productivity, consistency FlexibilityOrganization structure Mechanistic OrganicJob differentiation High LowIntegration Formal InformalDiscretion Low High©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 36 Management — Bozarth & Handfield
  37. 37. Difficulty versus Customization MANUFACTURING VIEW LOWER DIFFICULTY HIGHER DIFFICULTY BASEBALL CAP WITH BASEBALL CAP WITH ARKANSAS RAZORBACKSHIGHER CUSTOMIZATION SCHOOL NAME ON IT LOGO AND SCHOOL (MTO) COLORS ON IT (ETO) MARKETING VIEW PLAIN BASEBALL CAP IN PLAIN BASEBALL CAPLOWER CUSTOMIZATION (MTS) DIFFERENT COLORS (ATO)©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 37 Management — Bozarth & Handfield
  38. 38. An Operations-Centric ViewCustomization becomes relevant to operations and supply chain managers when a customer‟s unique requirements directly affect the timing and nature of operations and supply chain activities Job Difficulty Operations andCustomization Supply Chain Design Job Routineness©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 38 Management — Bozarth & Handfield
  39. 39. “Mass customization” at Japan‟s National Bicycle Co. TUBE CUTTING CAM Marketing FRONT ASSEMBLY ORDER DATA INCLUDING CAM CUSTOMER’S CAD MEASUREMENTS REAR ASSEMBLY AND OPTIONS CAM 2-WEEK LEAD TIME 3-D MEASUREMENT Quality Assurance ASSEMBLY PAINTING COMPUTER INSTRUCTIONS©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 39 Management — Bozarth & Handfield
  40. 40. Services • What makes them distinctive? • High-contact versus low-contact • Front room versus back room • A Model of Service Design • Service Blueprinting©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 40 Management — Bozarth & Handfield
  41. 41. Services . . . • Process and “product” are inseparable • Marketing and sales often tightly integrated • Customer often part of the process • Performance metrics can be harder to define • Nevertheless: – Focus and process choices / trade-offs still apply©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 41 Management — Bozarth & Handfield
  42. 42. Degree of Customer Contact Low Contact High Contact • “off-line” • “on-line” • Can locate for • Can locate for efficiency easy access • Can smooth out • Flexibility to the workload respond to Check clearing, mail customers sorting • Harder to manage Hospitals, food service©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 42 Management — Bozarth & Handfield
  43. 43. Classifying Services “Front Room” versus “Back Room” Front room – what the Back room – what the customer can see customer does not see Managed for flexibility Managed for efficiency and and customer service Productivity Customer lobbies, Package sorting, car bank teller, repair, blood test analysis, receptionist accounting department©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 43 Management — Bozarth & Handfield
  44. 44. What is it? What is the performance objective? • Restaurant kitchen • Software help desk • Kinko‟s copy center • Airline reservations • Jet maintenance©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 44 Management — Bozarth & Handfield
  45. 45. Designing Services• Selecting a service focus – Like manufacturing processes, different services have strengths and weaknesses• Key is to design a service process that meets the needs of targeted customers• The “service package”©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 45 Management — Bozarth & Handfield
  46. 46. A Cubical Model of Services (Three Dimensions)Nature of the Service Primarily Physical Primarily IntangiblePackage Activities Activities (Airline, trucking firm) (Law firm, software developer)Degree of Customization Lower Customization Higher Customization (Quick-change oil shop) (Full-service car repair shop)Degree of Customer Lower Contact Higher ContactContact (Mail sorting) (Physical therapist)©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 46 Management — Bozarth & Handfield
  47. 47. Community Hospital PHYSICAL Public Hospital SERVICE PACKAGE HIGH CONTACT INTANGIBLE LOW LOW HIGH CUSTOMIZATION©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 47 Management — Bozarth & Handfield
  48. 48. Birthing Center PHYSICAL Public Hospital SERVICE PACKAGE HIGH CONTACT INTANGIBLE LOW LOW HIGH CUSTOMIZATION©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 48 Management — Bozarth & Handfield
  49. 49. Layout Decision Models • Product-based layout – Usually best for a line operation – Cycle time a primary measure • Functional layout – Usually best for a job shop – Distance between steps a measure • Cellular layout – Usually best for batch processes©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 49 Management — Bozarth & Handfield
  50. 50. Product-Based Layout Line Balancing • Improve „Takt‟ time: – Reduce idle time – Reduce setup time – Reduce unnecessary movement – Identify „bottlenecks‟ available production time Takt time required output rate©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 50 Management — Bozarth & Handfield
  51. 51. Functional Layout A. Minimize the total distance traveled B. Minimize information flow for decisions C. Use electronic data interchange (EDI) to allow more flexibility for accomplishing A and B©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Chapter 7, Slide 51 Management — Bozarth & Handfield

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