Process selection


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Process selection

  1. 1. Operations Management Chapter - 5Process Selection and Facility Layout Niranjan Sapkota CAB
  2. 2. Product Design Product design defines a product’s characteristics of:  Appearance  Materials  Quality  Cost  Dimensions  Tolerances  Performance standards Process Selection – the development of the process necessary to produce the designed product.
  3. 3. Changing customer Cost effectiveness preferences Need of New Product/ technology Productivity Competition
  4. 4. Product/Service DesignProduct/service design directly affects:• Product/service quality• Production/delivery cost• Customer satisfaction
  5. 5. Customer Competitor Ideas ofTop Management New Sales Product Marketing Research and Development
  6. 6. Keeping firm’s Production Design and developmentfacility Up to date Of firms products and facilitiesModification of the present Entire process has to beFacility and process Designed from the sketch(for the operating firm) Operation Manager (new company or entirely New product)
  7. 7. Research for the Product Pure Research Applied Research Totally new research for new  Translation of the concepts to conceptual product Products in terms of man, machine, Needs huge money Material, method and information Concepts gathered from research  Applicable in the following process institutes, universities  The design of new products  The redesign of existing product  The identification of new uses for existing product  The improvement of packaging of existing product
  8. 8. Interaction of Research Market Research Product Pure Applied configura Pilot runresearch research tion Production process
  9. 9. Product Life CycleThe study of pattern and process od product life cycle helps in determining facilities Labor, capital and management system needed in each stage
  10. 10. Operation issues in product life cycle Introduction Growth Maturity DeclineProduct variety Different Increasing Emergence of Commodity varieties Standardization dominant characteristics designProduct Low volume Increasing High volume High volumevolume volumeIndustry Small Fallout and Few large Survivorsstructure competitors Consolidation companiesForm of Product varieties Product quality Dependability Pricecompetition and availability And price
  11. 11. Product Development Process Need identification Feasibility study Advance design Detailed engineering and development Process design and development Product evaluation and improvement Product use and support
  12. 12. Need identification• Starts with identification of customer need• Should satisfy customer needs, requirements and expectation• Pure research and applied research is used
  13. 13. Product planning(feasibility study)PreliminaryactivitiesMarket analysis ConceptualAlternative concepts of designproduct  ShapeOperations requirements  SizeDesign criteria and  Retail pricepriorities  ProductLogistic requirements for reliability producing, distributing  Productand function maintaining the product in the market.
  14. 14. Advance Design Product concept or design concept from feasibility concept examined technically Concerned with developing and evaluating the design alternatives if necessary
  15. 15. Product Development and Engineering Analyze experiments and collect data for product development The developed product should meet the following objectives  Functionality  Reliability  Maintainability  Manufacturing Computer analysis, simulations can be used for multiple tests Design of product with required drawing, working prototype associated with required documents is developed
  16. 16. Process design and developments Prepare plans for material acquisition Productions Warehousing Transportation Distribution Production planning, controlling and HR system also developed
  17. 17. Production evaluation and improvements Product performance in the market Short falls and difficulties in the production Result of other researches
  18. 18. Product use and support Customer needs and expectations can be enhanced by Educating the people on the application of the product Provide warranty, repair and after sale service Improve the design of product as required
  19. 19. Tools to Improve Speed to Market• Computer-Aided Design/Computer-Aided Manufacturing (CAD/CAM) – Engineers, using CAD/CAM, can generate many views of parts, rotate images, magnify views, and check for interference between parts – Part designs can be stored in a data base for use on other products – When it is time for manufacturing, the product design is retrieved, translated into a language that production machinery understands, and then the production system can be automatically set up.
  20. 20. Tools to Improve Speed to Market Product/• Simultaneous Service Ideas (Concurrent) Continuous Engineering Economic and Technical Interaction Feasibility Studies Product/Service Design Production Process Design Produce and Market New Product/Service
  21. 21. Improving the Design of Existing Products/Services• Focus is improving performance, quality, and cost• Objective is maintaining or improving market share of maturing products/services• Little changes can be significant• Small, steady (continuous) improvements can add up to huge long-term improvements• Value analysis is practiced, meaning design features are examined in terms of their cost/benefit (value).
  22. 22. Designing for Ease of Production• Ease of Production (Manufacturability) – Specifications - Precise information about the characteristics of the product – Tolerances - Minimum & maximum limits on a dimension that allows the item to function as designed – Standardization - Reduce variety among a group of products or parts – Simplification - Reduce or eliminate the complexity of a part or product
  23. 23. Designing for Quality Crucial element of product design is its impact on quality Quality is determined by the customer’s perception of the degree of excellence of the product/service’s characteristics  conformance to specification Value Fitness for use Support Psychological impression  Atmosphere image or aesthetics
  24. 24. Designing and Developing New ServicesThree general dimensions of service design are:• Degree of Standardization of the Service – Custom-fashioned for particular customers or basically the same for all customers?• Degree of Customer Contact in Delivering the Service – High level of contact (dress boutique) or low level (fast-food restaurant)?• Mix of Physical Goods and Intangible Services – Mix dominated by physical goods (tailor’s shop) or by intangible services (university)?
  25. 25. Designing and Developing New Services• Differences Between New Service and New Product Development – Unless services are dominated by physical goods, their development usually does not require engineering, testing, and prototype building. – Because many service businesses involve intangible services, market sensing tends to be more by surveys rather than by market tests and demonstrations.
  26. 26. ProcessPlanning and Design
  27. 27. Major Factors Affecting Process Designs Nature of product/service demand Degree of vertical integration Production flexibility Degree of automation Product/Service quality
  28. 28. Nature of Product/Service Demand Production processes must have adequate capacity to produce the volume of the products/services that customers need. Provisions must be made for expanding or contracting capacity to keep pace with demand patterns. Some types of processes are more easily expanded and contracted than others. Product/service price affects demand, so pricing decisions and the choice of processes must be synchronized.
  29. 29. Degree of Vertical Integration Vertical integration is the amount of the production and distribution chain that is brought under the ownership of a company. This determines how many production processes need to be planned and designed. Decision of integration is based on cost, availability of capital, quality, technological capability, and more. Strategic outsourcing (lower degree of integration) is the outsourcing of processes in order to react quicker to changes in customer needs, competitor actions, and technology.
  30. 30. Production Flexibility Product flexibility -- ability of the production (or delivery) system to quickly change from producing (delivering) one product (or service) to another. Volume flexibility -- ability to quickly increase or reduce the volume of product( or service) produced (or delivered).
  31. 31. Degree of Automation Advantages of automation  Improves product quality  Improves product flexibility  Reduces labor and related costs Disadvantages of automation Equipment can be very expensive Integration into existing operations can be difficult
  32. 32. Product/Service Quality Old viewpoint – high-quality products must be made in small quantities by expert craftsmen New viewpoint – high-quality products can be mass-produced using automated machinery Automated machinery can produce products of incredible uniformity The choice of design of production processes is affected by the need for superior quality.
  33. 33. Process Flow Structure Project structure, where a single project is planned with a fixed end date, such as building a house Job shop structure, where each flow will be similar but slightly different, such as poster printing A batch process, where each flow produces a batch of identical products, such as baking An assembly line structure, where the flow produces a continuous supply of fixed goods, such as a car assembly line Continuous flow structure, where a continuous supply of finished goods is produced, such as in an oil refinery
  34. 34. factors differentiating the different process structures The flow – are there a large number of paths which activities can take, or is there only one possible sequence of activities. Flexibility – will changing the output of the process, in terms of volume and products, alter the performance and / or cost of the process Range of products – can the process produce lots of different products, or is it designed to only produce one specific product.
  35. 35.  Capital investment – does the process require investments in expensive specialist equipment or can it use general equipment that the firm may already own or can rent Variable costs – how high is the cost of producing each unit Labour requirements – how much labour input is required, and how skilled must the laborers be Volume – can the process produce lots of products, or will it only create a few, or possibly one, end product
  36. 36. Project Structure/technology Production of unique nature of products like building, bridge, dam, roads etc. Product cant be standardized and transported from one place to other Requires specialized technology with high flexibility. Skilled manpower Production of unique nature of product to meet customer demand.
  37. 37. Job shop structure Small batches of different types of products in different sets or sequences Variety of custom designed products in small volumes Production is generally to meet the order s of customers rather than for stock. Less certainty in the nature , specification and quality of goods to be produced.. Difficult to make planning of resources , scheduling of operation and controlling activities. Standardization of raw material, process , products and other facilities is difficult.
  38. 38. A batch process Improved form of job shop technology in the aspect of standardization of products Suitable when business has relatively stable line of products Production is in periodical batches either to meet customer order or for stock. Less difficult for planning , controlling and scheduling production process compared to job shop technology. Eg. Electronic device manufacturing
  39. 39. Assembly line process When products are relatively stable, high volume with limited variety assembly line technology is suitable Specialized equipment, skilled manpower, and management systems are used and developed. Production of limited range and high volume of products. Less flexible compared to job shop and batch technology. Eg. TV, Motorcycle
  40. 40. Continuous flow Process When products are highly standardized and large volumes are produced for stock , continuous flow technology is used Uses standardized materials, machines, and equipment in continuous flow to produce high volume of standardized products . It is capital intensive technology Eg . Soap, noodles
  41. 41. Process life cycleManufacturing cost per unit Job shop Batch Assembly continuous Startup Growth Maturity commodity
  42. 42. Designing of service & service process TechnologyMeaning and nature of service  Service are experienced not consumed  Requires high customer contact  Requires effective management of staffs, marketing and operation  Service cant be inventoried
  43. 43. Product dominance Service dominance salt Neck tie car Fast food Air travel theatre nursing Teaching
  44. 44. Service business and internal serviceService Business: management of organization whosebasic objective is to interact with customers to render services. Facility based: business where customer must visit theservice facility to get service from organization Field based: concerned with providing service in thecustomer’s location and environmentInternal service: refers to services to other departments ofthe same organization. Therefore customers of internal serviceare other departments. Eg.Accounting, marketing, maintenance, research anddevelopment…
  45. 45. Designing of service Identification of target marketwho are the customers? where is its market? What do customerswant? Service conceptHow our service fulfills customer needs? What are service types? Howit is different from others? Service strategyWhat is service policy? What are the priorities? what are the servicepackages and focus of service? Service delivery systemWhat are the actual processes? What are the systems and facilities?Who are employees and what should be their skills and ability?
  46. 46. Service Process TechnologyDepends on two main factors.. Customer contact during designing or customizing of service. Eg. Building a new building during creating or consuming of service. Eg. Hair styling Labor vs Capital intensiveness  Teaching, nursing etc are labor intensive where training and development of employees vital for quality service  24 hour ATM/ vendor machines are capital intensive
  47. 47. On the basis of customer contact and labor intensiveness service process technology can be divided into four categories..  Quasi manufacturing process technology  Mass service process technology  Custom shop service technology  Professional service process technology
  48. 48. Quasi- Manufacturing Process Technology Requires low customer contact and capital intensive technology to render the service. Offers rigid and standardized service with reliable delivery schedule. Eg. Post Office, Telebanking
  49. 49. Mass service process technology Labor intensive technology. Rigid in nature providing standardized service to the customer. This technology requires training and development and schedules of human resource for providing quality and effective service Gg. Teaching, live Entertainment programs
  50. 50. Custom shop service technology Provides customized service. Highly professional staffs and capital intensive technology for providing service. Flexible but require high capital investment Eg. Hospitals, Chartered travel services
  51. 51. Professional service process Technology Professional staffs provide customized service to customer through intensive interaction. Professionals are governed by professional ethics, norms, organizational rules Professional skills are highly flexible relating to customer need. Eg. Legal counseling, medical diagnosis.
  52. 52. Service Process Technology Low customer contact High customer contact Quasi manufacturing Custom shop technology  Charter travel service intensive technology Capital  Postal service  Long distance telephone  Check processing service  Automated warehousing  Medical treatment Mass service technology Professional serviceintensive  Teaching  Legal counselingLabor  Live entertainment  Medical diagnosis  Cafeteria  Tutoring Rigid process technology Flexible process technology
  53. 53. Research Topics Service automation Flexible manufacturing system Computer integrated manufacturing
  54. 54. Layout Planning
  55. 55. What is Facility Layout Location or arrangement of everything within & around buildings Determines long-run efficiency of operations Helps achieve a strategy that supports differentiation, low cost or quick response 55
  56. 56. Strategic Importance of LayoutProper layout enables: Higher utilization of space, equipment and people Improved flow of information, materials, or people Improved employee morale and safer working conditions Improved customer/client interaction Flexibility to change--use small, movable or modular equipment; etc 56
  57. 57. The Need for Layout DecisionsInefficient operationsFor Example: Changes in the designHigh Cost of products or servicesBottlenecks AccidentsThe introduction of newproducts or services Safety hazards
  58. 58. The Need for Layout Design (Cont’d) Changes in environmental Changes in volume of or other legal output or mix of requirements products Morale problems Changes in methods and equipment