OPERATION SYSTEM DESIGN and PLANNING

OPERATION SYSTEM DESIGN and

PLANNING

Operation System Design The Integration of Product and Service Delivery With the Facilities and Process Technologies Over the Life Cycle of the Operations System , Which Permits Production of Goods and Service at Desired Quality, Volumes, and Cost

The Integration of Product and Service Delivery With the Facilities and Process Technologies Over the Life Cycle of the Operations System , Which Permits Production of Goods and Service at Desired Quality, Volumes, and Cost

Framework Marketing Strategy Capacity Strategy Organization Design Operation System Design OS Life Cycle OS Characteristics Process Technology Diffusion

Marketing Strategy Capacity Strategy

Organization Design

Operation System Life Cycle 1. Birth of the Operation System 2. Product/Service Design and Process Technology Selection 3. Design of Operation System 4. Star up of the Operation System 5. Growth of Volume 6. Stable State 7. Decline and Renewal of the System

1. Birth of the Operation System

2. Product/Service Design and Process Technology Selection

3. Design of Operation System

4. Star up of the Operation System

5. Growth of Volume

6. Stable State

7. Decline and Renewal of the System

Product/Service Start-up Growth Stable Decline Volume Low Increasing High Declining Variety Unique Inc.Standard Emergence High Standard Dom. Design Process Technology Organization Project Small Batch Line flow Line flow Job shop Assembly Assembly I nnovation High Medium Medium Low Integration Low Medium Medium High I ndustry Structure Small Consolidation Few large Survivor competitor and fallout competitor Competitive Flexibility Quality and Price(cost) Price(cost) Priority Flexibility Delivery Product/Service and Process Technology Life Cycles

Operation System 1. Classical Project Job Shop Flow Shop 2. Emerging Variable Production Line Manufacturing Cells FMS CIM

1. Classical

Project

Job Shop

Flow Shop

2. Emerging

Variable Production Line

Manufacturing Cells

FMS

CIM

Equipment and Physical Layout Characteristics Project Job Shop Flow Shop Size of Facility Varies Small Large Process Flow Circumference Num, Pattern Rigid Equipment General General Specialized Capital Ints. Varies Low High Capital Add. Incremental Small Large Chunk Speed of Process Varies Slow Fast Control Worker Worker & Process Design Tech. Change Slow Average Fast

Project Job Shop Flow Shop

Size of Facility Varies Small Large

Process Flow Circumference Num, Pattern Rigid

Equipment General General Specialized

Capital Ints. Varies Low High

Capital Add. Incremental Small Large Chunk

Speed of Process Varies Slow Fast

Control Worker Worker & Process Design

Tech. Change Slow Average Fast

Direct Labor and Work Force Characteristics Project Job Shop Flow Shop Labor value added High Average Very Low Job content scope Large Average Small Skill level High Average Low Wage rate High Average Low Worker training V. High High Low

Project Job Shop Flow Shop

Labor value added High Average Very Low

Job content scope Large Average Small

Skill level High Average Low

Wage rate High Average Low

Worker training V. High High Low

Material and Information Control Characteristics Project Job Shop Flow Shop Material Requirement Varies Unpredictable Predictable Vertical Integration None Limited Back&Forwd Inv. Raw Material None Small Large WIP Large Large Small Finished Goods None Small High QC Responsibility D. Labor D. labor QC Specialist Prod/Serv, Information V. High High Low Scheduling Uncertain Changes Inflexible

Project Job Shop Flow Shop

Material Requirement Varies Unpredictable Predictable

Vertical Integration None Limited Back&Forwd

Inv. Raw Material None Small Large

WIP Large Large Small

Finished Goods None Small High

QC Responsibility D. Labor D. labor QC Specialist

Prod/Serv, Information V. High High Low

Scheduling Uncertain Changes Inflexible

Process Management Characteristic Project Job Shop Flow Shop Challenges Estimating Lab.Utilization Avoid Downtime Sequencing Debottlenecking Time Expansion Pacing Learning Curve Cost Minimizing Tools PERT/ Load Chart Line Balancing CPM Optimization

Project Job Shop Flow Shop

Challenges Estimating Lab.Utilization Avoid Downtime

Sequencing Debottlenecking Time Expansion

Pacing Learning Curve Cost Minimizing

Tools PERT/ Load Chart Line Balancing

CPM Optimization

Variable Production Line Dedicated High Volume Lines That Are Reconfigured to Permit Some Process Variation and Thus Several Different Products or Service

Dedicated High Volume Lines That Are Reconfigured to Permit Some Process Variation and Thus Several Different Products or Service

Manufacturing Cell (MC) Dedicated Subset of Manufacturing System Designed to Process Part Families or Product Group Economies of Set-up Employee Learning Reduced WIP Shorter Throughput Time Improved Responsiveness to Customer

Dedicated Subset of Manufacturing System Designed to Process Part Families or Product Group

Economies of Set-up

Employee Learning

Reduced WIP

Shorter Throughput Time

Improved Responsiveness to Customer

Flexible Manufacturing System (FMS) Integrates and Enhances the Flexibility of Manufacturing Cell Through the Use of Centralized Control Systems Flexibility Approaching Job Shop With Material Handling Capability of a Flow Lines

Integrates and Enhances the Flexibility of Manufacturing Cell Through the Use of Centralized Control Systems

Flexibility Approaching Job Shop With Material Handling Capability of a Flow Lines

Computer Integrated Manufacturing (CIM) Application of a computer system to link several separated information systems and technologies at different functional level Simplify, Automate and Integrate

Application of a computer system to link several separated information systems and technologies at different functional level

Simplify, Automate and Integrate

Stage Toward A CIM Batch/Lot Process MRPII/SPC JIT &MC Focused factory Stable Flow FMS CAD/CAM Robotics AMH/GT CIM Information System Integration Traditional Mfg. Variable Line Stage 3 Stage 1 Stage 2 Stage 4 To CIM Process Technology Process Control System

Operation Flexibility Ability to Respond the Changes in Customer Requirements Product/Service Process Technology *Volume * Changeover *Mix * Scheduling *Modification * Innovation

Ability to Respond the Changes in Customer Requirements

Product/Service Process Technology

*Volume * Changeover

*Mix * Scheduling

*Modification * Innovation

Product/Service Flexibility Volume Ability to respond quickly to changes in the amount of particular product or service that is required Mix Ability to react quickly to changes in mix or proportion of products of a product family that are produced Modification Ability to incorporate changes in product characteristics and to develop and produce newly designed product

Volume

Ability to respond quickly to changes in the amount of particular product or service that is required

Mix

Ability to react quickly to changes in mix or proportion of products of a product family that are produced

Modification

Ability to incorporate changes in product characteristics and to develop and produce newly designed product

Process Flexibility Allows the operation manager to deploy or re-deploy resources in response to variations in products/services, availability of resources, or process technology 1. Changeover Flexibility 2. Scheduling Flexibility 3. Innovation Flexibility

Allows the operation manager to deploy or

re-deploy resources in response to variations in products/services, availability of resources, or process technology

1. Changeover Flexibility

2. Scheduling Flexibility

3. Innovation Flexibility

Process Flexibility Changeover Flexibility Ability to respond rapidly to different production set-ups required for various products Scheduling Flexibility Ability to vary the routing, sequence, or production lot-sizes to accommodate required production volume Innovation Flexibility Ability to define and implement new technologies in production processes with minimal disruption

Changeover Flexibility

Ability to respond rapidly to different production set-ups required for various products

Scheduling Flexibility

Ability to vary the routing, sequence, or production

lot-sizes to accommodate required production volume

Innovation Flexibility

Ability to define and implement new technologies in production processes with minimal disruption

Characteristics of Process Flexibility Type of Flexibility Respond To Subcategories Changeover Product/service Product/service volume ( market driven) Product/service range Product/service mix Product/service modification Scheduling Availability of Material resources Equipment (resources driven) Labor Innovation Product/service Process Technology Process Technology Process Control or Information Technology (technology driven)

Type of Flexibility Respond To Subcategories

Changeover Product/service Product/service volume

( market driven) Product/service range

Product/service mix

Product/service

modification

Scheduling Availability of Material

resources Equipment

(resources driven) Labor

Innovation Product/service Process Technology

Process Technology Process Control

or Information Technology

(technology driven)

Product/Service -Process Technology Continuum

Focus A Clear and sharply defined set of products, technologies, volumes and markets Process Focus Product/Service Focus

A Clear and sharply defined set of products, technologies, volumes and markets

Process Focus

Product/Service Focus

Product/Service -Process Technology Diffusion Process Product/Service Volume Technology Low High Project Job Shop Disconnected Line Connected Line Continuous Enhanced Standardization (Right lateral Movement) Flexible Processes (Upward Movement) Enhanced Process Flow( Downward Movement) Modular Structure/ Variable Processing Line (Left lateral Movement )

Process Product/Service Volume

Technology Low High

Operation System Decision Making Position Major Technology Choice Equipment Selection & Specification and Layout Design Operation Planning

Position

Major Technology Choice

Equipment Selection & Specification

and

Layout Design

Operation Planning

Position 1. Competitive Positioning on the Product/Service-Process Technology Continuum 2. Definition of the Position on the Continuum 3. Identification of the Direction and Momentum of Movement Which Are Projected a. Right Lateral Movement b. Left Lateral Movement c. Upward Movement d. Downward Movement

1. Competitive Positioning on the Product/Service-Process Technology Continuum

2. Definition of the Position on the Continuum

3. Identification of the Direction and Momentum of Movement Which Are Projected

a. Right Lateral Movement

b. Left Lateral Movement

c. Upward Movement

d. Downward Movement

Major Technology Choice Selecting the Process Technology of the Manufacturing or Service Operation, using: Classification Of Manufacturing Processes Classification Of Service Processes Selecting the Supporting Information System

Selecting the Process Technology of the Manufacturing or Service Operation, using:

Classification Of Manufacturing Processes

Classification Of Service Processes

Selecting the Supporting Information System

Classification Of Manufacturing Processes 1. Processes for Changing Physical Properties 2. Processes for Changing the Shape of Material 3. Processes for Machining Parts to a Fixed Dimension 4. Processes for Obtaining a Surface Finish 5. Processes for Joining Parts or Materials

1. Processes for Changing Physical Properties

2. Processes for Changing the Shape of Material

3. Processes for Machining Parts to a Fixed Dimension

4. Processes for Obtaining a Surface Finish

5. Processes for Joining Parts or Materials

Classification Of Service Processes 1. Process for relocating goods 2. Process for storing goods 3. Process for exchanging items 4. Process for physical transformation 5. Process for physiological transformation 6. Process for information transformation

1. Process for relocating goods

2. Process for storing goods

3. Process for exchanging items

4. Process for physical transformation

5. Process for physiological transformation

6. Process for information transformation

Equipment Selection & Specification And Layout Design Selecting Equipment to be used, a. General-purpose or Specialized Equipment b. Material Handling System Allocating Available Facilities (Layout Design)

Selecting Equipment to be used,

a. General-purpose or Specialized Equipment

b. Material Handling System

Allocating Available Facilities

(Layout Design)

Equipment Selection Alternatives General Purpose Specialized Cost Low High Operator skill&control High , more control Low, less control Output rate Low-human pace High-machine pace Setup time Lower-problem pre- High-problem ran- dictable &controllable dom & highly tech. Maintenance Cost Low-lower skill req’ed High Product/service Based on human High-based on Quality control machine accuracy WIP High Low Absolescence Slower High

General Purpose Specialized

Cost Low High

Operator skill&control High , more control Low, less control

Output rate Low-human pace High-machine pace

Setup time Lower-problem pre- High-problem ran-

dictable &controllable dom & highly tech.

Maintenance Cost Low-lower skill req’ed High

Product/service Based on human High-based on

Quality control machine accuracy

WIP High Low

Absolescence Slower High

Material Handling 1. Increasing Speed and Precision 2. Maximizing the Use of Space and Equipment 3. Increasing Safety and Working Condition 4. Reducing Damage 5. Increasing Control

1. Increasing Speed and Precision

2. Maximizing the Use of Space and Equipment

3. Increasing Safety and Working Condition

4. Reducing Damage

5. Increasing Control

Principles of Material Handling 1 . Minimize the Number of Material Moves 2. Maximize the Unit Load Handled 3. Maximized Safety of Material Handling Equipment 4. Simplify the Material Handling Process 5. Maximize Pace Utilization 6. Integrate Storage and Handling System 7. Integrate Materials and Information Flows 8. Minimize Human Effort 9. Design for Improved Operability, Reliability, Maintainability and Flexibility

1 . Minimize the Number of Material Moves

2. Maximize the Unit Load Handled

3. Maximized Safety of Material Handling Equipment

4. Simplify the Material Handling Process

5. Maximize Pace Utilization

6. Integrate Storage and Handling System

7. Integrate Materials and Information Flows

8. Minimize Human Effort

9. Design for Improved Operability, Reliability, Maintainability and Flexibility

Types of Layout A. Traditional Layout 1. Fix Position Layout 2. Process Layout 3. Product Layout B. Automated Layout 4. Cellular Layout 5. Modular Layout

A. Traditional Layout

1. Fix Position Layout

2. Process Layout

3. Product Layout

B. Automated Layout

4. Cellular Layout

5. Modular Layout

Operation Planning Creating Schedule Assessing That Schedule Through the Appropriate Capacity Evaluation Method

Creating Schedule

Assessing That Schedule Through the Appropriate Capacity Evaluation Method

OPERATION PLANNING

Vertical Linkages Corporate Strategy Business Strategy Functional Strategy Operation/Production Management

Corporate Strategy

Business Strategy

Functional Strategy

Operation/Production Management

Operation Planning Cycle Sales Target Operation Target Operation Schedule Material Machine Worker Operation Plan Shop Floor Operation Evaluation

Sales Target

Operation Target

Operation Schedule

Material Machine Worker

Operation Plan

Shop Floor Operation

Evaluation

Operation Planning System Input : Sales Target Output : Operation Schedule Method: Traditional, MRP or JIT Performance Criteria: QCDFS

Input : Sales Target

Output : Operation Schedule

Method: Traditional, MRP or JIT

Performance Criteria: QCDFS

Performance Criteria Quality Cost Delivery Flexibility Safety

Quality

Cost

Delivery

Flexibility

Safety

Example of Operation Objective Quality This Year 5 Next Year Competitor Customer Satisfaction 75 % 85 % 75 % Scrap and Reject 15 % 5 % 10 % Warranty ( % COGS) 1 % 0.5 % 1% Cost COGM ( % COGS ) 55 % 45 % 50% ITO 41 x 52 x 50 x

Quality

This Year 5 Next Year Competitor

Customer Satisfaction 75 % 85 % 75 %

Scrap and Reject 15 % 5 % 10 %

Warranty ( % COGS) 1 % 0.5 % 1%

Cost

COGM ( % COGS ) 55 % 45 % 50%

ITO 41 x 52 x 50 x

Example of Operation Objective Delivery This Year 5 Next Year Competitor Fill Rate 90% 95% 95% Lead Time (week) 3 1 1 Flexibility Time to Introduce New Product 10 month 6 month 8 month Time to Change Over Capacity 3 month 3 month 3 month

Delivery

This Year 5 Next Year Competitor

Fill Rate 90% 95% 95%

Lead Time (week) 3 1 1

Flexibility

Time to Introduce New Product 10 month 6 month 8 month

Time to Change Over Capacity 3 month 3 month 3 month

Operation Planning Method Traditional MRP JIT

Traditional MRP JIT

Traditional Push Method Statistical and Optimization Partial Approach Flexible

Push Method

Statistical and Optimization

Partial Approach

Flexible

MRP Pull Method Time Phasing Logical Approach Integrated Approach Information Based

Pull Method

Time Phasing

Logical Approach

Integrated Approach

Information Based

JIT Pull Method Time Phasing Elimination Waste Approach Integrated Approach Cultural Based

Pull Method

Time Phasing

Elimination Waste Approach

Integrated Approach

Cultural Based