Operations Management

1. Operations Management Chapter 7 – Process Strategy PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e © 2006 Prentice Hall, Inc.

2. Volume Low Volume Repetitive Process High Volume Process, Volume, and Variety Figure 7.1 High Customization Process Focus projects, job shops (machine, print, carpentry) Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. Medium Customization Repetitive (autos, motorcycles) Harley Davidson Product Focus (commercial baked goods, steel, glass) Nucor Steel Low Customization

3. 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

4. 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

5. 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

6. Comparison of Processes Table 7.2

7. Comparison of Processes Table 7.2

8. Comparison of Processes Table 7.2

9. Comparison of Processes Table 7.2

10. Comparison of Processes Table 7.2

11. Comparison of Processes Table 7.2

12. 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

13. Number of Choices Early 21st Item Early 1970s Century Vehicle models 140 260 Vehicle types 18 1,212 Bicycle types 8 19 Software titles 0 300,000 Web sites 0 46,412,165 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 Mass Customization Table 7.1

14. Changing Processes • Difficult and expensive • May mean starting over • Important to get it right

15. Process Analysis Tools • Flowcharts provide a view of the big picture • Process diagrams show detail • Service blueprint focuses on customer interaction

16. Service Blueprint • Focuses on the customer and provider interaction • Defines three levels of interaction • Each level has different management issues • Identifies potential failure points

17. Personal Greeting Service Diagnosis Perform Service Friendly Close Level #1 Customer arrives for service Customer departs Customer pays bill Notifycustomerand recommendan alternativeprovider Determine specifics Warm greeting and obtain service request No Standard request Canservice bedone and does customer approve? Level #2 No Direct customer to waiting room Notify customer the car is ready Perform required work Yes Yes Prepare invoice Potential failure point Service Blueprint Level #3 Figure 7.9