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Operations Management Process Strategy and Capacity Planning Chapter 7. Learning Objectives. When you complete this chapter, you should be able to : Identify or Define : Process focus Repetitive focus Product focus Process reengineering Service process issues. Repetitive Process

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operations management process strategy and capacity planning chapter 7
Operations ManagementProcess Strategy and Capacity PlanningChapter 7

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

learning objectives
Learning Objectives

When you complete this chapter, you should be able to :

  • Identify or Define:
    • Process focus
    • Repetitive focus
    • Product focus
    • Process reengineering
    • Service process issues

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

fit of process volume and variety

Repetitive Process

(Modular)

Low-Volume

(Intermittent)

High-Volume

(Continuous)

Fit of Process, Volume, and Variety

Process focus

projects, job shops,(machine, print, carpentry)

Standard Register

Mass Customization

(difficult to achieve, but huge rewards)

Dell Computer Co.

High Variety

One or few units per run, high variety

(allows customization)

Changes in modules

Modest runs, standardized modules

Repetitive

(autos, motorcycles)

Harley Davidson

Changes in attributes (such as grade, quality, size, thickness, etc.)

Long runs only

Poor strategy

(Variable costs are high)

Product focus

(commercial baked goods, steel, glass)

Nucor Steel

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

production process flow diagram
Production Process Flow Diagram

Customer

Purchasing

(order inks, paper, other supplies)

Customer sales representative

take order

Vendors

Prepress Department

(Prepare printing plates and negatives)

Receiving

Accounting

Printing Department

Warehousing

(ink, paper, etc.)

Gluing, binding, stapling, labeling

Collating Department

Information flow

Material flow

Polywrap Department

Shipping

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

types of process strategies

Continuum

Types of Process Strategies
  • Process strategies that follow a continuum
  • Within a given facility, several strategies may be used
  • These strategies are often classified as:

Process-Focused

Repetitive-Focused

Product-Focused

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

process focused strategy

Product A

Operation

1

2

3

Product B

Process-Focused Strategy
  • Facilities are organized by process
  • Similar processes are together
    • Example: All drill presses are together
  • Low volume, high variety products
  • ‘Jumbled’ flow
  • Other names
    • Intermittent process
    • Job shop

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

figure 7a
Figure 7A

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

process focused strategy examples

Bank

© 1995 Corel Corp.

Hospital

Machine Shop

© 1995 Corel Corp.

© 1995 Corel Corp.

Process-Focused Strategy Examples

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

process focused strategy pros cons
Process Focused Strategy - Pros & Cons
  • Advantages
    • Greater product flexibility
    • More general purpose equipment
    • Lower initial capital investment
  • Disadvantages
    • More highly trained personnel
    • More difficult production planning & control
    • Low equipment utilization (5% to 25%)

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

repetitive focused strategy
Repetitive Focused Strategy
  • Facilities often organized by assembly lines
  • Characterized by modules
    • Parts & assemblies made previously
  • Modules combined for many output options
  • Other names
    • Assembly line
    • Production line

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

figure 7b
Figure 7B

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

repetitive focused strategy considerations
Repetitive Focused Strategy -Considerations
  • More structured than process-focused, less structured than product focused
  • Enables quasi-customization
  • Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

repetitive focused strategy examples

Fast Food

Clothes Dryer

McDonald’sover 95 billion served

Truck

© 1995 Corel Corp.

© 1984-1994 T/Maker Co.

© 1995 Corel Corp.

Repetitive-Focused Strategy - Examples

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

figure 7 3
Figure 7.3

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

product focused strategy

Products A & B

1

2

3

Operation

Product-Focused Strategy
  • Facilities are organized by product
  • High volume, low variety products
  • Where found
    • Discrete unit manufacturing
    • Continuous process manufacturing
  • Other names
    • Line flow production
    • Continuous production

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

figure 7c
Figure 7C

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

product focused strategy pros cons
Product-Focused Strategy Pros & Cons
  • Advantages
    • Lower variable cost per unit
    • Lower but more specialized labor skills
    • Easier production planning and control
    • Higher equipment utilization (70% to 90%)
  • Disadvantages
    • Lower product flexibility
    • More specialized equipment
    • Usually higher capital investment

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

product focused examples

Soft Drinks (Continuous, then Discrete)

Light Bulbs (Discrete)

© 1995 Corel Corp.

© 1995 Corel Corp.

Mass Flu Shots (Discrete)

© 1984-1994 T/Maker Co.

Paper (Continuous)

© 1995 Corel Corp.

Product-Focused Examples

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

figure 7 4
Figure 7.4

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

table 7 1

Process Focus

Repetitive Focus

Product Focus

1. Product: Small

1. Product: Long runs,

1. Product: Large

quantity, large

usually standardized

quantities, small

variety

variety

2. Equipment:

2. Equipment: Special;

2. Equipment:

General purpose

assembly line

Special-purpose

3. Operators broadly

3. Employees modestly

3. Operators less

skilled

trained

broadly skilled

4. Many job

4. Repetitive operations

4. Few work orders and

instructions

job instructions;

standardization

Table 7.1

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

process continuum
Process Continuum

Product Focused (continuous process)

Process Focused

(intermittent process)

Repetitive Focus

(assembly line)

Continuum

Low variety, high volume

High utilization (70% - 90%)

Specialized equipment

High variety, low volume

Low utilization (5% - 25%)

General-purpose equipment

Modular

Flexible equipment

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

mass customization
Mass Customization
  • Using technology and imagination to rapidly mass-produce products that cater to sundry unique customer desires.
  • Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant.

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

mass customization more choices than ever
Mass Customization - More Choices Than Ever

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

questions for process analysis and design
Questions for Process Analysis and Design
  • Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost?
  • Does the process eliminate steps that do not add value?
  • Does the process maximize customer value as perceived by the customer?
  • Will the process win orders?

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

tools for process design
Tools for Process Design
  • Flow Diagrams
  • Process Charts
  • Time-Function/Process Mapping
  • Service Blueprinting

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

time function map
Time Function Map

Receive product

Order Product

Customer

Process Order

Sales

Order

Productioncontrol

Wait

Order

Print

Plant A

Product

WIP

Wait

Wait

Wait

Warehouse

Product

WIP

Plant B

Extrude

Product

WIP

WIP

Transport

Move

Move

12 days

13 days

1 day

4 days

1 day

10 days

9 days

1 day

1 day

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

process chart example

SUBJECT: Request tool purchase

Dist (ft)

Time (min)

Symbol

Description

Ñ

Write order

D

lðo

Ñ

On desk

¡ðo

w

Ñ

75

To buyer

D

¡

o

è

Ñ

Examine

D

¡ðn

¡ = Operation; ð = Transport; o = Inspect; D = Delay; Ñ = Storage

Process Chart Example

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

process reengineering
Process Reengineering
  • The fundamental rethinking and radical redesign 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 boundaries

© 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458