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Chapter 4

Chapter 4. Processes and Technologies. Process Strategy. Overall approach to producing goods and services Defines: Capital intensity Process flexibility Vertical integration Customer involvement. Product Development. Order Fulfillment. Purchasing. Manufacturing. Accounting. Sales.

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Chapter 4

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  1. Chapter 4 Processes and Technologies

  2. Process Strategy • Overall approach to producing goods and services • Defines: • Capital intensity • Process flexibility • Vertical integration • Customer involvement 2000 by Prentice-Hall, Inc

  3. Product Development Order Fulfillment Purchasing Manufacturing Accounting Sales Supply Chain Management Customer Service Function Process From Function to Process Figure 4.1 2000 by Prentice-Hall, Inc

  4. Types of Processes • Projects • Batch production • Mass production • Continuous production 2000 by Prentice-Hall, Inc

  5. Types of Processes PROJECT BATCH MASS CONTINUOUS Product Unique Made to order Made to stock Commodity Customer One-at-a-time Few individuals Mass market Mass market Demand Infrequent Fluctuates Stable Very stable Volume Very low Low to med High Very high No. of different Infinite Many, varied Few Very low products System Long-term Discrete, job Repetitive, Process industry assembly lines Equipment Varied General-purpose Special-purpose Highly automated Type of work Contracts Fabrication Assembly Mix, treat, refine Skills Experts, Wide range Limited range Equipment craftspeople of skills of skills monitors Advantages Custom work, Flexibility, Efficiency, Highly efficient technology quality speed, low cost large capacity Dis- Nonrepetitive, Costly, slow, Capital investment, Difficult to advantages small customer difficult to lack of change base, expensive manage responsiveness Example Construction, Machine shops, Autos, TV’s, Paint, chemicals, shipbuilding printing, bakery fast food food 2000 by Prentice-Hall, Inc Table 4.1

  6. Process Selection with Break-Even Analysis Total cost = fixed cost + total variable cost TC = cf + vcv Total revenue = volume x price TR = vp Profit = total revenue - total cost Z = TR - TC = vp - (cf + vcv) cf = fixed cost v = volume (i.e., number of units produced and sold) cv = variable cost per unit p = price per unit 2000 by Prentice-Hall, Inc

  7. Process Planning • Make-or-buy decisions • Process selection • Specific equipment selection • Process plans • Process analysis 2000 by Prentice-Hall, Inc

  8. Make? Buy? Make-or-Buy Decisions 1. Cost 2. Capacity 3. Quality 4. Speed 5. Reliability 6. Expertise 2000 by Prentice-Hall, Inc

  9. Specific Equipment Selection Purchase cost Operating cost Annual savings Revenue enhancement Replacement analysis Risk and uncertainty Piecemeal analysis 2000 by Prentice-Hall, Inc

  10. Process Plans • Blueprints • Bill of material • Assembly chart /product structure diagram • Operations process chart • Routing sheet 2000 by Prentice-Hall, Inc

  11. Bottom bun Beef patty Salt Cheese Lettuce Sauce Onions Middle bun Beef patty Salt Cheese Lettuce Sauce Onions Pickles Sesame seed top bun Wrapper SA First-layer assembly SA Second-layer assembly Completed Big Mac Process Plans Figure 4.2 2000 by Prentice-Hall, Inc

  12. Part name Crevice Tool Part No. 52074 Usage Hand-Vac Assembly No. 520 Oper. No. Description Dept. Machine/Tools Time 10 Pour in plastic bits 041 Injection molding 2 min 20 Insert mold 041 #076 2 min 30 Check settings 041 113, 67, 650 20 min & start machine 40 Collect parts & lay flat 051 Plastics finishing 10 min 50 Remove & clean mold 042 Parts washer 15 min 60 Break off rough edges 051 Plastics finishing 10 min Operations Process Chart 2000 by Prentice-Hall, Inc Figure 4.3

  13. Process Analysis • The systematic examination of all aspects of a process to improve its operation • Faster • More efficient • Less costly • More responsive • Basic tools • Process flowchart • Process diagrams • Process maps 2000 by Prentice-Hall, Inc

  14. Operations Inspection Transportation Delay Storage Process Flowchart Symbols 2000 by Prentice-Hall, Inc

  15. Date: 9-30-02 Location: Graves Mountain Analyst: TLR Process: Apple Sauce Step Operation Transport Inspect Delay Storage Description of process Distance (feet) Time (min) 1 Unload apples from truck 20 2 Move to inspection station 100 ft 3 Weigh, inspect, sort 30 4 Move to storage 50 ft 5 360 Wait until needed Move to peeler 6 20 ft 7 Apples peeled and cored 15 8 Soak in water until needed 20 9 5 Place in conveyor 10 Move to mixing area 20 ft 11 30 Weigh, inspect, sort Page 1 0f 3 Total 480 190 ft Process Flowchart Figure 4.4 2000 by Prentice-Hall, Inc

  16. UPS Active Bins Parcel Post Picking Packing Receiving Shipping Reserve Storage Mono-gramming Next-Day UPS Embroid-ering Quality Assurance Back to Vendor Hemming Gift Boxing Process Diagram Figure 4.5 2000 by Prentice-Hall, Inc

  17. Is order complete? Customer Waiter Salad Chef Dinner Chef Prepare soup or salad order Give soup or salad order to chef N Prepare dinner order Give dinner order to chef Y Place order Get drinks for customer Give order to waiter Deliver salad or soup order to customer Drink Give order to waiter Eat salad or soup Deliver dinner to customer Eat dinner Deliver check to customer Receives check Receive payment for meal Gives payment to waiter Cash or Credit? Credit Cash Collect change, leave tip Bring change to customer Run credit card through Fill in tip amount Return credit slip to customer Collect tip Process Map Figure 4.6 2000 by Prentice-Hall, Inc

  18. Continuous improvement refines the breakthrough Breakthrough Improvement Continuous improvement activities peak; time to reengineer process Continuous Improvement and Breakthroughs Figure 4.9 2000 by Prentice-Hall, Inc

  19. Strategic directive Customer requirements data Benchmark data Goals & specifications for process performance Baseline analysis Design principles High-level process map Innovative ideas Detailed process map Model validation Key performance measures Pilot study of new design Full-scale implementation Process Reengineering Figure 4.10 2000 by Prentice-Hall, Inc

  20. Principles for Redesigning Processes • Remove waste, simplify, consolidate • Link processes to create value • Let the swiftest and most capable execute • Flex the process • Capture information digitally and propagate Table 4.2 2000 by Prentice-Hall, Inc

  21. Principles for Redesigning Processes • Provide visibility through information about process status • Fit the process with sensors and feedback loops • Add analytic capabilities • Connect, collect and create knowledge around the process • Personalize the process Table 4.2 2000 by Prentice-Hall, Inc

  22. Techniques for Generating Innovative Ideas • Vary entry point to a problem • Draw analogies • Change your perspective • Try inverse brainstorming • Chain forward as far as possible • Use attribute brainstorming Table 4.3 2000 by Prentice-Hall, Inc

  23. e-Manufacturing • Real-time sharing of data with trading partners and customers to drive collaborative decisions • CAD -uses software to create & modify designs • GT-classifies designs to benefit from prior experience • STEP - sets standards for communication • CAPP - creates processing instructions for CAM • CAM -uses programmable automation in manufacturing 2000 by Prentice-Hall, Inc

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