Heizer 07

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Heizer 07

  1. 1. Operations Management Chapter 7 – Process Strategy PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 7e Operations Management, 9e© 2008 Prentice Hall, Inc. 7–1
  2. 2. Outline  Global Company Profile: Dell Computer Corp.  Four Process Strategies  Process Focus  Repetitive Focus  Product Focus  Mass Customization Focus  Comparison of Process Choices© 2008 Prentice Hall, Inc. 7–2
  3. 3. Outline – Continued  Process Analysis and Design  Flow Diagrams  Time-Function Mapping  Value-Stream Mapping  Process Charts  Service Blueprinting© 2008 Prentice Hall, Inc. 7–3
  4. 4. Outline – Continued  Service Process Design  Customer Interaction and Process Design  More Opportunities to Improve Service Processes  Selection of Equipment and Technology© 2008 Prentice Hall, Inc. 7–4
  5. 5. Outline – Continued  Production Technology  Machine Technology  Automatic Identification Systems (AISs) and RFID  Process Control  Vision Systems  Robots© 2008 Prentice Hall, Inc. 7–5
  6. 6. Outline – Continued  Production Technology (cont.)  Automated Storage and Retrieval Systems (ASRSs)  Automated Guided Vehicles (AGVs)  Flexible Manufacturing Systems (FMSs)  Computer-Integrated Manufacturing (CIM)© 2008 Prentice Hall, Inc. 7–6
  7. 7. Outline – Continued  Technology in Services  Process Redesign  Ethics and Environmentally Friendly Processes© 2008 Prentice Hall, Inc. 7–7
  8. 8. Learning Objectives When you complete this chapter you should be able to: 1. Describe four production processes 2. Compute crossover points for different processes 3. Use the tools of process analysis 4. Describe customer interaction in process design 5. Identify recent advances in production technology© 2008 Prentice Hall, Inc. 7–8
  9. 9. Dell Computer Company Mass customization provides a competitive advantage  Sell custom-built PCs directly to consumer  Lean production processes and good product design allow responsiveness  Integrate the Web into every aspect of its business  Focus research on software designed to make installation and configuration of its PCs fast and simple© 2008 Prentice Hall, Inc. 7–9
  10. 10. Process, Volume, and Variety Figure 7.1 Volume Low Repetitive High Volume Process Volume High Variety one or few Process Focus Mass Customization units per run, projects, job shops (difficult to achieve, high variety (machine, print, but huge rewards) (allows carpentry) Dell Computer customization) Standard Register Changes in Modules modest runs, standardized Repetitive modules (autos, motorcycles) Harley-Davidson Changes in Attributes Product Focus (such as grade, (commercial quality, size, Poor Strategy baked goods, thickness, etc.) (Both fixed and steel, glass) long runs only variable costs Nucor Steel are high)© 2008 Prentice Hall, Inc. 7 – 10
  11. 11. 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© 2008 Prentice Hall, Inc. 7 – 11
  12. 12. 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© 2008 Prentice Hall, Inc. 7 – 12
  13. 13. 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© 2008 Prentice Hall, Inc. 7 – 13
  14. 14. Process Focus Job Shop Many departments and many routings Many Many variety inputs of outputs© 2008 Prentice Hall, Inc. 7 – 14
  15. 15. Process Flow Diagram Customer Customer sales Purchasing representative Vendors PREPRESS DEPT Accounting Receiving PRINTING DEPT Warehouse COLLATING GLUING, BINDING, DEPT STAPLING, LABELING Information flow POLYWRAP DEPT Material flow SHIPPING Customer Figure 7.2© 2008 Prentice Hall, Inc. 7 – 15
  16. 16. 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© 2008 Prentice Hall, Inc. 7 – 16
  17. 17. Repetitive Focus Automobile Assembly Line Raw Modules materials combined and for many module output inputs options Few modules© 2008 Prentice Hall, Inc. 7 – 17
  18. 18. Process Flow Diagram Frame tube Frame-building Frame Hot-paint bending work cells machining frame painting THE ASSEMBLY LINE TESTING Engines and Incoming parts transmissions 28 tests From Milwaukee on a JIT arrival Air cleaners Oil tank work cell schedule Fluids and mufflers Shocks and forks Fuel tank work cell Handlebars Wheel work cell Fender work cell Roller testing Crating Figure 7.3© 2008 Prentice Hall, Inc. 7 – 18
  19. 19. 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© 2008 Prentice Hall, Inc. 7 – 19
  20. 20. Product Focus Continuous Work Flow Output variations Few in size, inputs shape, and packaging© 2008 Prentice Hall, Inc. 7 – 20
  21. 21. Product Focus D A Scrap Nucor Steel Plant steel Continuous caster B C Electric Ladle of molten steel furnace Continuous cast steel sheared into 24-ton slabs Hot tunnel furnace - 300 ft E F Hot mill for finishing, cooling, and coiling H G I© 2008 Prentice Hall, Inc. 7 – 21
  22. 22. 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© 2008 Prentice Hall, Inc. 7 – 22
  23. 23. Mass Customization Table 7.1 Number of Choices Item 1970s 21st Century Vehicle models 140 286 Vehicle types 18 1,212 Bicycle types 8 19 Software titles 0 400,000 Web sites 0 98,116,993 Movie releases 267 458 New book titles 40,530 77,446 Houston TV channels 5 185 Breakfast cereals 160 340 Items (SKUs) in 14,000 150,000 supermarkets LCD TVs 0 102© 2008 Prentice Hall, Inc. 7 – 23
  24. 24. Mass Customization Figure 7.5 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© 2008 Prentice Hall, Inc. 7 – 24
  25. 25. Comparison of Processes Process Repetitive Product Focus Mass Focus Focus Customization (High-volume, (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 Table 7.2© 2008 Prentice Hall, Inc. 7 – 25
  26. 26. Comparison of Processes Process Repetitive Product Focus Mass Focus Focus Customization (High-volume, (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 Table 7.2© 2008 Prentice Hall, Inc. 7 – 26
  27. 27. Comparison of Processes Process Repetitive Product Focus Mass Focus Focus Customization (High-volume, (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 Table 7.2© 2008 Prentice Hall, Inc. 7 – 27
  28. 28. Comparison of Processes Process Repetitive Product Focus Mass Focus Focus Customization (High-volume, (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) Table 7.2© 2008 Prentice Hall, Inc. 7 – 28
  29. 29. Comparison of Processes Process Repetitive Product Focus Mass Focus Focus Customization (High-volume, (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 Table 7.2© 2008 Prentice Hall, Inc. 7 – 29
  30. 30. Comparison of Processes Process Repetitive Product Focus Mass Focus Focus Customization (High-volume, (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 Table 7.2© 2008 Prentice Hall, Inc. 7 – 30
  31. 31. Crossover Charts Variable costs Variable Variable $ costs $ costs $ Fixed costs Fixed costs Fixed costs Low volume, high variety Repetitive High volume, low variety Process A Process B Process C st $ co t os t tal cos lc To Total ta To 400,000 300,000 200,000 Fixed cost Fixed cost Fixed cost Process A Process B Process C Figure 7.6 (2,857) V1 V2 (6,666) Volume© 2008 Prentice Hall, Inc. 7 – 31
  32. 32. Focused Processes  Focus brings efficiency  Focus on depth of product line rather than breadth  Focus can be  Customers  Products  Service  Technology© 2008 Prentice Hall, Inc. 7 – 32
  33. 33. Changing Processes  Difficult and expensive  May mean starting over  Process strategy determines transformation strategy for an extended period  Important to get it right© 2008 Prentice Hall, Inc. 7 – 33
  34. 34. Process Analysis and Design  Flow Diagrams - Shows the movement of materials  Time-Function Mapping - Shows flows and time frame  Value-Stream Mapping - Shows flows and time and value added beyond the immediate organization  Process Charts - Uses symbols to show key activities  Service Blueprinting - focuses on customer/provider interaction© 2008 Prentice Hall, Inc. 7 – 34
  35. 35. “Baseline” Time-Function Map Order Receive Customer product product Process Sales order Production Wait control Plant A Print Warehouse Wait Wait Wait Plant B Extrude Transport Move Move 12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day Figure 7.7 52 days© 2008 Prentice Hall, Inc. 7 – 35
  36. 36. “Target” Time-Function Map Order Receive Customer product product Process Sales order Production control Wait Plant Print Extrude Warehouse Wait Transport Move 1 day 2 days 1 day 1 day 1 day 6 days Figure 7.7© 2008 Prentice Hall, Inc. 7 – 36
  37. 37. Value-Stream Mapping Figure 7.8© 2008 Prentice Hall, Inc. 7 – 37
  38. 38. Process Chart Figure 7.9© 2008 Prentice Hall, Inc. 7 – 38
  39. 39. Service Blueprint  Focuses on the customer and provider interaction  Defines three levels of interaction  Each level has different management issues  Identifies potential failure points© 2008 Prentice Hall, Inc. 7 – 39
  40. 40. Service Blueprint Personal Greeting Service Diagnosis Perform Service Friendly Close Level Customer arrives #1 for service Customer departs F Customer pays bill Determine Notify Warm greeting specifics customer and obtain No and recommend service request an alternative F Standard provider request Can Level service be F #2 done and does No Direct customer customer to waiting room approve? Notify customer the car is ready F F F Yes Yes Perform Level required work #3 F Prepare invoice Figure 7.10 F© 2008 Prentice Hall, Inc. 7 – 40
  41. 41. Process Analysis Tools  Flowcharts provide a view of the big picture  Time-function mapping adds rigor and a time element  Value-stream analysis extends to customers and suppliers  Process charts show detail  Service blueprint focuses on customer interaction© 2008 Prentice Hall, Inc. 7 – 41
  42. 42. Service Process Matrix Degree of Customization Low High Mass Service Professional Service Private banking Commercial banking High General- Full-service purpose law firms stockbroker Degree of Labor Boutiques Retailing Service Factory Law clinics Service Shop Limited-service Specialized stockbroker hospitals Warehouse and Fast-food Fine-dining catalog stores restaurants Hospitals Low restaurants Airlines No-frills Figure 7.11 airlines© 2008 Prentice Hall, Inc. 7 – 42
  43. 43. Service Process Matrix Mass Service and Professional Service  Labor involvement is high  Selection and training highly important  Focus on human resources  Personalized services Service Factory and Service Shop  Automation of standardized services  Low labor intensity responds well to process technology and scheduling  Tight control required to maintain standards© 2008 Prentice Hall, Inc. 7 – 43
  44. 44. Improving Service Productivity Strategy Technique Example Separation Structure service so Bank customers go to customers must go a manager to open a where service is new account, to loan offered officers for loans, and to tellers for deposits Self-service Self-service so Supermarkets and customers examine, department stores, compare, and Internet ordering evaluate at their own pace Table 7.3© 2008 Prentice Hall, Inc. 7 – 44
  45. 45. Improving Service Productivity Strategy Technique Example Postponement Customizing at Customizing vans at delivery delivery rather than at production Focus Restricting the Limited-menu offerings restaurant Modules Modular selection of Investment and service, modular insurance selection, production prepackaged food modules in restaurants Table 7.3© 2008 Prentice Hall, Inc. 7 – 45
  46. 46. Improving Service Productivity Strategy Technique Example Automation Separating services Automatic teller that may lend machines themselves to automation Scheduling Precise personnel Scheduling ticket scheduling counter personnel at 15-minute intervals at airlines Training Clarifying the service Investment counselor, options, explaining funeral directors, after- how to avoid sale maintenance problems personnel Table 7.3© 2008 Prentice Hall, Inc. 7 – 46
  47. 47. Improving Service Processes  Layout  Product exposure, customer education, product enhancement  Human Resources  Recruiting and training  Impact of flexibility© 2008 Prentice Hall, Inc. 7 – 47
  48. 48. Equipment and Technology  Often complex decisions  Possible competitive advantage  Flexibility  Stable processes  May allow enlarging the scope of the processes© 2008 Prentice Hall, Inc. 7 – 48
  49. 49. 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)© 2008 Prentice Hall, Inc. 7 – 49
  50. 50. Machine Technology  Increased precision  Increased productivity  Increased flexibility  Improved environmental impact  Reduced changeover time  Decreased size  Reduced power requirements© 2008 Prentice Hall, Inc. 7 – 50
  51. 51. Automatic Identification Systems (AISs)  Improved data acquisition  Reduced data entry errors  Increased speed  Increased scope of process automation Example – Bar codes and RFID© 2008 Prentice Hall, Inc. 7 – 51
  52. 52. Process Control  Increased process stability  Increased process precision  Real-time provision of information for process evaluation  Data available in many forms© 2008 Prentice Hall, Inc. 7 – 52
  53. 53. Process Control Software© 2008 Prentice Hall, Inc. 7 – 53
  54. 54. Vision Systems  Particular aid to inspection  Consistently accurate  Never bored  Modest cost  Superior to individuals performing the same tasks© 2008 Prentice Hall, Inc. 7 – 54
  55. 55. Robots  Perform monotonous or dangerous tasks  Perform tasks requiring significant strength or endurance  Generally enhanced consistency and accuracy© 2008 Prentice Hall, Inc. 7 – 55
  56. 56. Automated Storage and Retrieval Systems (ASRSs)  Automated placement and withdrawal of parts and products  Reduced errors and labor  Particularly useful in inventory and test areas of manufacturing firms© 2008 Prentice Hall, Inc. 7 – 56
  57. 57. Automated Guided Vehicle (AGVs)  Electronically guided and controlled carts  Used for movement of products and/or individuals© 2008 Prentice Hall, Inc. 7 – 57
  58. 58. Flexible Manufacturing Systems (FMSs)  Computer controls both the workstation and the material handling equipment  Enhance flexibility and reduced waste  Can economically produce low volume at high quality  Reduced changeover time and increased utilization  Stringent communication requirement between components© 2008 Prentice Hall, Inc. 7 – 58
  59. 59. Computer-Integrated Manufacturing (CIM)  Extension of flexible manufacturing systems  Backwards to engineering and inventory control  Forward into warehousing and shipping  Can also include financial and customer service areas  Reducing the distinction between low- volume/high-variety, and high- volume/low-variety production© 2008 Prentice Hall, Inc. 7 – 59
  60. 60. Computer- Integrated Manufacturing (CIM) Figure 7.12© 2008 Prentice Hall, Inc. 7 – 60
  61. 61. Technology in Services Service Industry Example Financial Debit cards, electronic funds transfer, Services ATMs, 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© 2008 Prentice Hall, Inc. Table 7.4 7 – 61
  62. 62. Technology in Services Service Industry Example Hotels Electronic check-in/check-out, electronic key/lock system Wholesale/retail ATM-like kiosks, point-of-sale (POS) trade terminals, e-commerce, electronic communication between store and supplier, bar coded data Transportation Automatic toll booths, satellite-directed navigation systems Health care Online patient-monitoring, online medical information systems, robotic surgery Airlines Ticketless travel, scheduling, Internet purchases© 2008 Prentice Hall, Inc. Table 7.4 7 – 62
  63. 63. 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© 2008 Prentice Hall, Inc. 7 – 63
  64. 64. 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© 2008 Prentice Hall, Inc. 7 – 64

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