Process Strategy Topics: Process choice

3,520 views

Published on

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
3,520
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
105
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide
  • We have looked previously at the three types of process. This slide introduces the differences in technology appropriate to the different process strategies.
  • Process Strategy Topics: Process choice

    1. 1. Process Strategy <ul><li>Topics: </li></ul><ul><li>Process choice </li></ul><ul><li>Mass customization </li></ul><ul><li>Service process design </li></ul><ul><li>Process technology </li></ul>
    2. 2. Could you try to produce all Honda Accords in a custom-car shop? <ul><li>Yes </li></ul><ul><li>No </li></ul>5 4 3 2 1
    3. 3. Could you try to produce custom racing cars on a traditional assembly line? <ul><li>Yes </li></ul><ul><li>No </li></ul>5 4 3 2 1
    4. 4. Should you do either of these? A =Honda Accords in custom car shop B =custom race car on traditional assembly line <ul><li>Yes for A, no for B </li></ul><ul><li>No for A, yes for B </li></ul><ul><li>Yes for both </li></ul><ul><li>No for both </li></ul>Why or why not? 5 4 3 2 1
    5. 5. Process Strategy <ul><li>Process must: </li></ul><ul><li>meet customer requirements & product specs </li></ul><ul><li>operate within cost and other constraints </li></ul><ul><li>Long-term effect on </li></ul><ul><ul><li>efficiency </li></ul></ul><ul><ul><li>flexibility </li></ul></ul><ul><ul><li>cost </li></ul></ul><ul><ul><li>quality </li></ul></ul>Inputs Transformation Outputs
    6. 6. Process Strategy <ul><li>What affects the process strategy selected? </li></ul><ul><ul><li>variety of products </li></ul></ul><ul><ul><li>volume of production </li></ul></ul><ul><ul><li>technology </li></ul></ul>Volume Variety Technology
    7. 7. King Sooper’s Bakery Custom cakes Pastries Bread Product High (custom cakes) Moderate Very low (slight change in ingredients) Product variety Low 250-1,200 cakes /day Moderate <1,000 units/batch Very high 7,000 loaves/hr or 14,000 loaves/batch Volume Job shop Batch Continuous Flow
    8. 8. King Sooper’s Bakery High Moderate Low or none Process flexibility General purpose Moderate “ Specialized” Equipment Very little Manual mat’l handling Fixed automation Automated mat’l handling Automation Relatively easy and not very expensive Focus on people Done in smaller increments Moderate difficulty and expense Focus on equipment & labor (but neither highly sophisticated) Done in moderate increments Very difficult and expensive since fixed automation Focus on equipment Done in large increments Capacity change Highly skilled Moderate skills Limited skills Skills requirement Job shop Batch Continuous Flow
    9. 9. Product - Process Matrix Product Variety Bread line Low variety Moderate variety Pastry line Moderately high variety Cake dept High variety Very high volume High volume Moderate volume Low volume Volume per Product (Run)
    10. 10. Product - Process Matrix Product Variety Mass customization Product focus Low variety Repetitive Moderate variety Batch Moderately high variety Process focus High variety Very high volume High volume Moderate volume Low volume Volume per Product (Run)
    11. 11. Product - Process Matrix Product Variety Beer Paper Low variety Big Macs Motorcycles Moderate variety B&J ice cream Bakery Moderately high variety Wedding invitation High variety Very high volume High volume Moderate volume Low volume Volume per Product (Run)
    12. 12. Product - Process Matrix Product Variety Wedding invitation technology Beer Paper Low variety Big Macs Motorcycles Moderate variety B&J ice cream Bakery Moderately high variety Wedding invitation High variety Very high volume High volume Moderate volume Low volume Volume per Product (Run)
    13. 13. One Extreme <ul><li>Process focus </li></ul><ul><li>Repetitive </li></ul><ul><li>Product focus </li></ul><ul><li>Low volume, high variety </li></ul><ul><li>Focus? </li></ul><ul><li>Organized by process or activity – group like machines or activities </li></ul><ul><li>General purpose equipment </li></ul><ul><li>High labor requirement, broadly skilled labor </li></ul><ul><li>High inventory levels </li></ul><ul><li>Make to order </li></ul><ul><li>Slow, jumbled movement </li></ul><ul><li>Very low utilization </li></ul><ul><li>Low fixed cost, high variable cost </li></ul>ER Lab X-ray Surgery Maternity
    14. 14. One Extreme <ul><li>Process focus </li></ul><ul><li>Repetitive </li></ul><ul><li>Product focus </li></ul><ul><li>Low volume, high variety </li></ul><ul><li>Focus? </li></ul><ul><li>Organized by process or activity – group like machines or activities </li></ul><ul><li>General purpose equipment </li></ul><ul><li>High labor requirement, broadly skilled labor </li></ul><ul><li>High inventory levels </li></ul><ul><li>Make to order </li></ul><ul><li>Slow, jumbled movement </li></ul><ul><li>Very low utilization </li></ul><ul><li>Low fixed cost, high variable cost </li></ul>Drill presses Sanding Lathes Grinders Welding
    15. 15. The Other Extreme <ul><li>Process focus </li></ul><ul><li>Repetitive </li></ul><ul><li>Product focus </li></ul><ul><li>Very high volume, very low variety </li></ul><ul><li>Focus? </li></ul><ul><li>Organized based on product </li></ul><ul><li>Specialized equipment (fixed automation) </li></ul><ul><li>Low labor requirement, less skill required </li></ul><ul><li>Low inventory levels </li></ul><ul><li>Make to stock based on forecast </li></ul><ul><li>Fast, linear movement </li></ul><ul><li>Very high utilization </li></ul><ul><li>High fixed cost, low variable cost </li></ul>Machine A Machine C Machine B Machine D Machine E
    16. 16. In Between <ul><li>Process focus </li></ul><ul><li>Repetitive </li></ul><ul><li>Product focus </li></ul><ul><li>High volume, moderate variety </li></ul><ul><li>Focus? </li></ul><ul><li>Organized by product and process </li></ul><ul><li>Specialized equipment (flexible automation) </li></ul><ul><li>Low labor requirement, low to high skill required </li></ul><ul><li>Low inventory levels (JIT) </li></ul><ul><li>Make to frequent forecast </li></ul><ul><li>Relatively fast, linear </li></ul><ul><li>Moderate to high utilization </li></ul><ul><li>High fixed cost, low variable cost </li></ul>Task A Task D Task C Task F Task E Task H Task G Task B
    17. 17. Cost Perspective on Process Choice $ fixed cost total cost variable costs Volume A General-purpose equipment Highly skilled labor High material handling
    18. 18. Cost Perspective on Process Choice variable costs $ fixed cost total cost Volume B Flexible automation Moderate skill requirements Moderate material handling
    19. 19. Cost Perspective on Process Choice $ fixed cost variable costs total cost Volume C Fixed automation Low skill requirements Low material handling
    20. 20. Cost Perspective on Process Choice $ Volume A B C variable costs $ fixed cost total cost $ fixed cost variable costs total cost $ fixed cost total cost variable costs Volume Volume Volume A B C
    21. 21. Cost Perspective on Process Choice $ Volume A B C variable costs $ fixed cost total cost $ fixed cost variable costs total cost $ fixed cost total cost variable costs Volume Volume Volume A B C
    22. 22. In-class example <ul><li>Making decisions about new business that you are opening. One important decision is what type of process to use. Choices: </li></ul><ul><ul><li>General-purpose equipment, manual material handling, higher labor content, higher skills required; costs = $30,000 fixed and $40/unit (labor and manual material handling) </li></ul></ul><ul><ul><li>Flexible automation, moderate manual material handling, moderate labor content, moderate skills required; costs = $300,000 fixed and $22/unit (labor and manual material handling) </li></ul></ul><ul><ul><li>Fixed automation, automated material handling, low labor content, few skills required; costs = $1,140,000 fixed and $8/unit (labor and manual material handling) </li></ul></ul><ul><li>Answer the following: </li></ul><ul><ul><li>What are the “cross-over” points? </li></ul></ul><ul><ul><li>What do you recommend if you have forecasted demand at 40,000 units </li></ul></ul>
    23. 23. Cost Perspective on Process Choice $ Volume A B C variable costs $ fixed cost total cost $ fixed cost variable costs total cost $ fixed cost total cost variable costs Volume Volume Volume A B C A: TC=30,000+40x B: TC=300,000+22x C: TC=1,140,000+8x
    24. 24. Cost Perspective on Process Choice $ Volume A B C variable costs $ fixed cost total cost $ fixed cost variable costs total cost $ fixed cost total cost variable costs Volume Volume Volume A B C A: TC=30,000+40x B: TC=300,000+22x C: TC=1,140,000+8x 15,000 60,000
    25. 25. Mass Customization <ul><li>“ manufacturers are using technology to mix the characteristics of these processes [continuous flow and job shop] with the objective of gaining the cost advantage associated with continuous flow processes and the product variety of job shops” </li></ul>
    26. 26. Mass Customization <ul><li>“ manufacturers are using technology to mix the characteristics of these processes with the objective of gaining the cost advantage associated with continuous flow processes and the product variety of job shops” </li></ul>
    27. 27. What facilitates Mass Customization <ul><li>Use of technology for rapid data transfer (ordering, scheduling) </li></ul><ul><li>Use of technology for rapid throughput (e.g., CNC machines) </li></ul><ul><li>Modular design </li></ul><ul><li>Make-to-order (lean or JIT) or delay customization </li></ul><ul><li>Tight linkage between sales, production and logistics within an organization </li></ul><ul><li>Tight supply chain relationships (suppliers, carriers) </li></ul>Levi’s NikeID Dell
    28. 28. Results of Mass Customization <ul><li>Make-to-order rather than make-to-stock </li></ul><ul><ul><li>Don’t need to rely on forecasts </li></ul></ul><ul><ul><li>Reduced inventory levels </li></ul></ul>
    29. 29. Designing for Services <ul><li>What makes services different? </li></ul><ul><li>Customer involvement </li></ul><ul><ul><li>Higher labor content </li></ul></ul><ul><ul><li>Greater customization </li></ul></ul><ul><ul><li>Designing process with customer in mind </li></ul></ul><ul><li>What might be done? </li></ul><ul><ul><li>Training and focus on HR </li></ul></ul><ul><ul><li>Pay attention to layout </li></ul></ul><ul><ul><li>Limit choices (more standard offerings) </li></ul></ul><ul><ul><li>Automate where possible </li></ul></ul><ul><ul><li>Self-service </li></ul></ul>
    30. 30. Technology General purpose equipment Fixed automation Flexible Automation
    31. 31. Production Process & Technology Alternatives # Different Products or Parts Flexible Manufacturing System Low High Volume of Products or Parts Low High Demo CIM General Purpose, NC, CNC Dedicated Automation
    32. 32. Technology General purpose equipment Fixed automation Flexible Automation CNC machines Robots ASRS AGV FMS CIM AIS

    ×