Slides for Chapter 7. The Relationship Between Process Choice and Layout. Investment in Technology. Product Technology. Process Technology. Process Choice. Layout.
Investment in Technology
The physical layout and the transformation process that an organisation employs are critical factors for strategic operations management:
the love of technology for its own sake!
e.g. GM’s $60-80 Billion ’80s - early 1990s… and beyond – where is GM today??
Keller (2001: Collision) Tells How Inappropriate Investment Was Made At General Motors:
"While Smith provided the money for automation and supported it completely, he clearly didn't understand it - nor did his engineering staff who encouraged him. With its 260 gleaming new robots for welding, assembling, and painting cars; its fifty automated guided vehicles to deliver parts to the assembly line; and a complement of cameras and computers to monitor, inspect, and control the process, the plant put star's in Smith's eyes. He believed it held the promise of a new era of efficiency and quality and would eventually become a model for all assembly plants. What it became was a nightmare of inefficiency, producing poor-quality vehicles despite the heroic efforts of workers to correct mistakes before they were shipped to dealers" (p169)
The 4 Types of Layout in Manufacturing and Services
Movement of product (manufacturing) or persons (services)
‘Random' movement takes place as products are moved according to process requirements. There is no ‘flow' as such – each product will have its particular process requirements and will move to each machine group as and when required
Walk inside Autoliv's 350,000-square-foot facility today, and you feel like you've stepped inside a clock. You can almost hear the ticking. Eighty-eight compact, U-shaped production cells have replaced assembly lines on the main floor. Each consists of a group of workstations staffed by a handful of employees. A screw is tightened, the finished piece scanned and registered in inventory, and then it's handed off to the next associate, who tags it and drops it into a box to be picked up and shipped. There are cells for driver airbags, passenger airbags, and side-curtain airbags, whose sales have grown 50% annually during the past three years.
“ Elite Factories” Fortune; 6th September, 2004.
Product Family Cell
The Key Distinction of Volume and Variety Outputs from Process Choice
economies of scale
by large production
runs of limited range
(just in case)
Meet specific customer
including cost, delivery,
range and flexibility
(hybrid systems - FMS)
(Just in Time)
1. Investment in automation is for general purpose process technology rather than product specific investment.
2. Many different products are run throughout the plant and materials handling has to be modified and adjusted to suit many different products and types.
3. Detailed planning will evolve around sequencing requirements for each product, capacities for each work centre and order priorities: because of this scheduling is relatively complicated, in comparison to repetitive 'line' manufacture.
1. Automation, especially for lower volumes of batch manufacturing, tends to be general purpose, rather than dedicated to a particular product whose volume does not demand product-specific investment in automation.
2. Scheduling is complicated and has to be completely reviewed on a regular, on-going basis - this applies to new products, 'one-off's that may be required, together with relatively high volume, standard products: all of these types will need to be scheduled.
3. Operators have to be able to perform a number of functions - this is obviously true of 'job' type processes. In batch, though, this flexibility is crucial in that it will allow operators to move to various workstations as required.
4. Where automation is being used, set-up time should be short: the ideal set up times is quick enough to accommodate run lengths of just one unit, switching over to other models and volumes as, and when, required.
1. Process times should be fast - which is critical in order to satisfy delivery speed requirements
2.There should be simplification in production planning and control and the tasks themselves should also be simplified for each workstation.
3. There should be small amounts of work in process: in fact, work in process (which, in accounting terms, can be viewed as an asset) is a liability to the company which can ruin cash-flow and stifle quick response to market requirements
4. Materials handling between stations should be placed as closely as possible to each other.
5. Materials flow and control are critical: Just-in Time lends itself most noticeably to 'line' or very high volume batch production. Stock-outs have to be avoided although, at the same time, excess stock is a waste and a liability, rather than an asset (materials can be viewed as an asset on the balance sheet which is misleading and alien to world class manufacturing.
1. The volume of a product is very high and the process is dedicated to making, typically, only one product.
2. Huge investment in dedicated plant is often required.
3. Much automation tends to be evident and labour input is one of 'policing' rather than being highly skilled as an integral input to the overall process.
Highly flexible – individualised output results in high unit costs; mobile and flexible staff required; quality determined by individual customer requirements.
Significant flexibility required though the volume is generally higher than when compared to projects. Some repetition in the system and many more common elements to the process than occur with projects. High unit costs relative to higher volume processes, but low set-up costs.
Some flexibility to handle differences between batches still required, requiring some investment in set-up for each batch. Higher levels of specialisation required in both people and machines.
Highly specialised people and machines allow high rates of throughput and low unit costs. Limited flexibility usually associated with this process. Quality levels consistent.
Usually non-discrete products produced over a significant period oftime. Very high levels of investment required and limited possibility for flexibility due to highly dedicated processes. Commonly highly automated.
Process Choice/Type of layout
Line/high vol. Batch
Job/low vol. Batch
Erratic And Uncertain
Line Continuous Process
The firm sells a wide variety
Of products or designs and there is the perception of customisation for each customer. Order sizes are small or ‘one –off’. New products are required on an on-going basis and the firm ‘sells’ its capability of design and innovation.
The firm sells a narrow range of ‘standard’ products but in high volume. New product introductions are difficult because the plant is dedicated around specific products
Batch has to be managed by initially mapping products according to ‘job’ or ‘line' characteristics and then focusing the plant to support these cells of manufacture
Design Designcapability capability
Design designcapability capability
Experience, reputation, and other intangible factors are key here. The importance and strength of the buyer-supplier relationship over time may also be a deciding factor.
Job transformation processes link to craft manufacturing – high variety, low volume with general purpose technology
The current era of mass customisation and strategic manufacturing demands high volume, high variety and a whole range of simultaneous customer requirements. This requires a combination of technology investment and skills capabilities to deal with greater number and range customer demands.
Line transformation processes link to mass production – high volume, low variety with dedicated product technology
From ‘pure standardisation’ to ‘pure customisation’
- adapted from Lampel and Mintzberg, (1996)
Brown and Bessant (IJOPM 2003, p708) explain:
“……there seems to be no firm agreement as to the definitions for, and major differences between, the paradigms of mass customisation and agile manufacturing. For example, Feitzinger and Lee (1997) in their discussion on mass customisation also include“Agile Supply Networks” as a necessary factor. In addition, Da Silveira et al (2001) mention agile manufacturing as a feature within their summary on the literature on mass customisation. We suggest that although it might be important to understand both we add that agile manufacturing and mass customisation are not mutually exclusive paradigms. Instead, we argue that mass customisation is best viewed as a powerful example of a firm’s ability to be agile.”
Bessant et al (2001) offer an emerging model of agile manufacturing capabilities, consisting of four, key, interlinked parameters: The four major dimensions of the reference model are:
“Agile Strategy - involving the processes for understanding the firm’s situation within its sector, committing to agile strategy, aligning it to a fast moving market, and communicating and deploying it effectively.
Agile Processes - the provision of the actual facilities and processes to allow agile functioning of the organization
Agile Linkages - intensively working with and learning from others outside the company, especially customers and suppliers.
Agile People - developing a flexible and multi-skilled workforce, creating a culture that allows initiative, creativity and supportiveness to thrive throughout the organization”.