Operations Management (OPM530) -C5 Process & Layout

Prepared by : Shatina Saad 5-1 OPM 533

Operations Operations ManagementManagement

Process Strategies and Process Strategies and Layout StrategiesLayout Strategies

Chapter 5Chapter 5


OutlineOutline

FOUR PROCESS STRATEGIES PROCESS ANALYSIS AND DESIGN SERVICE PROCESS DESIGN SELECTION OF EQUIPMENT AND TECHNOLOGY PRODUCTION TECHNOLOGY TECHNOLOGY IN SERVICES ENVIRONMENTALLY FRIENDLY PROCESSES PROCESS REENGINEERING


Learning ObjectivesLearning ObjectivesWhen you complete this chapter, you should be able to :

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

Describe or Explain: Process analysis Service design Green manufacturing Production technology


Fit of Process, Volume, and VarietyFit of Process, Volume, and Variety

Process focusprojects, job shops,

(machine, print, carpentry)

Standard Register

Repetitive(autos, motorcycles)

Harley DavidsonProduct focus

(commercial baked goods, steel, glass)

Nucor Steel

High VarietyOne or few units per run, high variety(allows customization)

Changes in modulesModest runs, standardized modules

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

Mass Customization

(difficult to achieve, but huge rewards)

Dell Computer Co.

Poor strategy

Low-Volume(Intermittent)

Repetitive Process(Modular)

High-Volume(Continuous)


Process StrategiesProcess Strategies Involve determining how to produce a product or

provide a service Objective

Meet or exceed customer requirements Meet cost & managerial goals

Has long-run effects Product & volume flexibility Costs & quality


Types of Process StrategiesTypes of Process Strategies

ContinuumContinuum

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

Repetitive-Focused

Product-FocusedProcess-Focused


Process-Focused StrategyProcess-Focused Strategy Facilities are organized by process Similar processes are together

Example: All drill presses are together

Low volume, high variety products ‘Jumbled’ flow

OperationProduct A

Product B

1111 2222 3333 Other names

Intermittent process Job shop


Process FocusProcess Focus


Process Focused Strategy -Process Focused Strategy - Pros & Cons Pros & Cons

Advantages Greater product flexibility More general purpose equipment Lower initial capital investment

Disadvantages High variable costs More highly trained personnel More difficult production planning & control Low equipment utilization (5% to 25%)


Repetitive Focused StrategyRepetitive 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


Repetitive FocusRepetitive Focus


Repetitive Focused Strategy -Repetitive Focused Strategy -ConsiderationsConsiderations

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


Product-Focused StrategyProduct-Focused Strategy Facilities are organized by product High volume, low variety products Where found

Discrete unit manufacturing Continuous process manufacturing

Operation

Products A & B

11 22 33

Other names Line flow production Continuous production


Product FocusProduct Focus


Product-Focused StrategyProduct-Focused Strategy Pros & Cons 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


Process ContinuumProcess Continuum

Process Focused(intermittent process)

Repetitive Focus(assembly line)

Product Focused (continuous process)

Continuum

High variety, low volumeLow utilization (5% - 25%)

General-purpose equipment

Low variety, high volumeHigh utilization (70% - 90%)

Specialized equipment

ModularFlexible equipment


Process StrategiesProcess Strategies

Rapid throughput techniques

Mass Customization

Modular techniques

Repetitive FocusModular design

Flexible equipment

Product-focusedLow variety, high volume

High utilization (70% - 80%)Specialized equipment

Process-focusedHigh variety, low volume

Low utilization (5% - 20%)General purpose equipment

Effective scheduling techniques


Mass CustomizationMass 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.


Volume and Variety of ProductsVolume and Variety of Products

Volume andVariety ofProducts

Low Volume HighVariety Process

(Intermittent)

RepetitiveProcess

(Modular)

High VolumeLow Variety

Process(Continuous)

One or very fewunits per lot

Projects

Very small runs, highvariety

Job Shops

Modest runs, modestvariety

DisconnectedRepetitive

Long runs, modestvariations

ConnectedRepetitive

Very long runs,changes inattributes

Continuous

Equipment utilization 5%-25% 20%-75% 70%-80%

Poor Strategy(High variable

costs)

Mass Customization


A Comparison (1)A Comparison (1)Process Focus

(Low volume, High variety)

Repetitive Focus

(Modular)Product focus

(High-volume, low-variety)

Mass Customization

(High-volume, high-variety

1. Small quantity, large variety of products

Long runs, standardized product, from modules

Large quantity, small variety of products

Large quantity, large variety of products

2. General purpose equipment

Special equipment aids in use of assembly line

Special purpose equipment

Rapid changeover on flexible equipment


A Comparison (2)A Comparison (2)Process Focus Repetitive Focus Product focus Mass

Customization

3 Broadly skilled operators

Modestly trained employees

Operators less broadly skilled

Flexible operators trained for customization

4 Many instructions because of change in jobs

Reduced training and number of job instructions

Few work orders and job instructions

Custom orders require many instructions

5 Raw material high relative to product value

JIT techniques used

Raw material low relative to product value

Raw material low relative to product value



Customization

6 WIP high relative to output

JIT techniques used

WIP low relative to output

WIP driven down by JIT, kanban, lean production

7 Units move slowly thru plant

Movement measured in hours & days

Units move swiftly thru facility

Goods move swiftly thru facility

8 Finished goods made to order, not stored

Finished goods made to frequent forecasts

Finished goods made to forecast, then stored

Finished goods made to order



Customization

9 Scheduling complex and concerned with trade-off between inventory, capacity, and customer service

Scheduling based on building models from a variety of forecasts

Scheduling relatively simple, concerns establishing sufficient rate of output to meet forecasts

Scheduling sophisticated to accommodate customization

10 Fixed costs low, variable costs high

Fixed costs dependent on flexibility of facilities

Fixed costs high, variable costs low

Fixed costs high; variable costs must be low



Customization

11 Costing, done by job, is estimated prior to doing job but only known after doing job

Costs usually known based on experience

Because of high fixed costs, cost dependent on utilization of capacity

High fixed costs and dynamic variable costs


Questions for Process Analysis Questions for Process Analysis and Designand 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?


Tools for Process DesignTools for Process Design

Flow Diagrams Process Charts Time-Function/Process Mapping Work Flow Analysis


Production Process Flow DiagramProduction Process Flow Diagram

Shipping

Customer

Customer sales representative

take order

Prepress Department(Prepare printing plates

and negatives)

Printing Department

Collating Department

Gluing, binding, stapling, labeling

Polywrap Department

Purchasing(order inks, paper,

other supplies)

Vendors

Receiving

Warehousing(ink, paper, etc.)

Accounting

Information flowMaterial flow


SUBJECT: Request tool purchase

Dist (ft) Time (min) Symbol Description

D Write order

D On desk

75 D To buyer

D Examine

= Operation; = Transport; = Inspect; D = Delay; = Storage

Process Chart ExampleProcess Chart Example


Time Function MapTime Function Map(Target)(Target)

1 day 1 day 1 day1 day 2 days

Customer

Sales

Production control

Plant

Warehouse

Transport

Order Product

Process Order

Print Extrude

Receive product

Wait

Wait

Move

Ord

er

Ord

er

Prod

uct

Prod

uct

WIP

6 days


Work Flow Analysis - Four PhasesWork Flow Analysis - Four Phases Request from a customer or an offer to provide

services by a performer Negotiation, allowing the customer and the

performer to agree on how the work should be done and what will constitute customer satisfaction

Performance of the assignment and completion Acceptance, closing the transaction provided the

customer expresses satisfaction and agrees that the conditions were met.


Attaining Lean ProductionAttaining Lean Production Focus on inventory reduction Build systems that help employees Reduce space requirements Develop close relationships with suppliers Educate suppliers Eliminate all but value-added activities Develop the workforce Make jobs more challenging Set sights on perfection!


Customer Interaction and Process Customer Interaction and Process StrategyStrategy

Mass Service Professional Service

Service Factory Service Shop

Commercial Banking

General purpose law firms

Fine dining restaurants Hospitals

Airlines

Full-service stockbroker

Retailing

Personal banking

Boutiques

Law clinics

Fast food restaurants

Warehouse and catalog stores

No frills airlines

Limited service stockbroker

For-profit hospitals

Degree of Interaction and Customization

Deg

ree

of L

abor

Inte

nsity

Low High

High Low


Techniques for Improving Service Techniques for Improving Service ProductivityProductivity

Separation

Self-service

Postponement Focus

Structure service so customers must go where service is offered

Self-service so customers examine, compare and evaluate at their own pace

Customizing at delivery

Restricting the offerings

Strategy Technique


Techniques for Improving Service Techniques for Improving Service Productivity - ContinuedProductivity - Continued

Modules

Automation

Scheduling Training

Modular selection of service. Modular production

Separating services that lend themselves to automation

Precise personnel scheduling Clarifying the service options Explaining problems Improving employee flexibility


OutlineOutline THE STRATEGIC IMPORTANCE OF LAYOUT

DECISIONS TYPES OF LAYOUT

Fixed-position layout Process-oriented layout Office layout Retail layout Warehousing and storage layouts Repetitive and product-oriented layout


Learning ObjectivesLearning ObjectivesWhen you complete this chapter, you should be able to :Identify or Define:

Fixed-position layout Process-oriented layout Work cells Focused work center Office layout Retail layout Warehouse layout Product-oriented layout Assembly-line factory


Learning ObjectivesLearning ObjectivesWhen you complete this chapter, you should be

able to :

Describe or explain: How to achieve a good layout for the process

facility How to balance production flow in a repetitive or

product-oriented facility


What is Facility LayoutWhat is Facility Layout Location or arrangement of everything

within & around buildings Objectives are to maximize

Customer satisfaction Utilization of space, equipment, & people Efficient flow of information, material, &

people Employee morale & safety


Objectives of the Layout StrategyObjectives of the Layout Strategy To develop an economical layout

which will meet the requirements of : product design and volume (product

strategy) process equipment and capacity

(process strategy) quality of work life (human resource

strategy) building and site constraints (location

strategy)


Strategic Importance of LayoutStrategic Importance of LayoutProper layout enables: Higher utilization of space,

equipment,and people Improved flow of information,

materials, or people Improved employee morale and safer

working conditions Improved customer/client interaction Flexibility


Six Types of Layout StrategiesSix Types of Layout Strategies

1.Fixed-position layout large bulky projects such as ships and buildings

2.Process-oriented layout deals with low-volume, high-variety production

(“job shop”, intermittent production)

3.Office layout positions workers, their equipment, and spaces/

offices to provide for movement of information


Six Types of Layout Strategies – cont’Six Types of Layout Strategies – cont’

4.Retail/service layout allocates shelf space and responds to customer

behavior

5.Warehouse layout addresses trade-offs between space and material

handling

6.Product-oriented layout seeks the best personnel and machine use in

repetitive or continuous production


Requirements of a Good LayoutRequirements of a Good Layout an understanding of capacity and

space requirements selection of appropriate material

handling equipment decisions regarding environment and

aesthetics identification and understanding of

the requirements for information flow identification of the cost of moving

between the various work areas


Constraints on Layout ObjectivesConstraints on Layout Objectives Product design & volume Process equipment & capacity Quality of work life Building and site


Areas of Concern in Layout Areas of Concern in Layout StrategyStrategy

LayoutStrategy

MaterialFlow

Communication

WorkCell

Safety

MaterialAttributes

Warehousing

ServiceAreas


1.1. Fixed-Position LayoutFixed-Position Layout Design is for stationary project Workers and equipment come to site Complicating factors:-

There is limited space at virtually all sites At different stages in the construction

process, different materials are needed – therefore, different items become critical as the project develops

The volume of materials needed is dynamic


2.2. Process-Oriented LayoutProcess-Oriented Layout Design places departments with large

flows of material or people together Department areas having similar

processes located in close proximity e.g., All x-ray machines in same area

Used with process-focused processes


Steps in Developing aSteps in Developing a Process-Oriented Layout Process-Oriented Layout

1. Construct a “from-to matrix”2. Determine space requirements for each

department3. Develop an initial schematic diagram4. Determine the cost of this layout5. By trial-and-error (or more

sophisticated means), try to improve the initial layout

6. Prepare a detailed plan that evaluates factors in addition to transportation cost


a)a) Cellular Layout - Work CellsCellular Layout - Work Cells Special case of product-oriented layout -

in what is ordinarily a process-oriented facility

Consists of different machines brought together to make a product

Temporary arrangement only Example: Assembly line set up to

produce 3000 identical parts in a job shop


Improving Layouts by Moving to the Work Improving Layouts by Moving to the Work Cell ConceptCell Concept


Work Cells - Some AdvantagesWork Cells - Some Advantages Reduced work-in-process inventory Less floor space required Reduced raw material and finished goods

inventories required Reduced direct labor costs Heightened sense of employee participation Increased utilization of equipment machinery Reduced investment in machinery and

equipment


Work Cell AdvantagesWork Cell Advantages

InventoryFloor space

Direct labor costs

Equipment utilizationEmployee participation

Quality


Work Cell Floor PlanWork Cell Floor Plan

OfficeOffice

Tool RoomTool RoomWork CellWork Cell

SawsSaws DrillsDrills


Requirements for Cellular Requirements for Cellular ProductionProduction

Identification of families of products - group technology codes

High level of training and flexibility on the part of the employees

Either staff support or flexible, imaginative employees to establish the work cells initially

Test (poka-yoke) at each station in the cell


Work Cells, Focused Work Centers and Work Cells, Focused Work Centers and the Focused Factorythe Focused Factory

Work CellA temporary assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facilityExample: job shop with rearranged machinery and personnel to produce 30 unique control panels

Focused WorkCenter

A permanent assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facilityExample: manufacturing of pipe brackets at a shipyard

Focused Factory A permanent facility to produce a product or component in a product-oriented facilityExample: a plant to produce window mechanisms for automobiles


3.3. Office LayoutOffice Layout Design positions people, equipment,

& offices for maximum information flow

Arranged by process or product Example: Payroll dept. is by process

Relationship chart used Examples

Insurance company Software company

© 1995 Corel Corp.


Office Relationship ShartOffice Relationship Shart

1 President

2 Chief Technology Officer

3 Engineer’s Area

4 Secretary

5 Office entrance

7 Equipment cabinet

8 Photocopy equipment

9 Storage room

9 Storage room

U

I

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A

U

O

E

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O

A

O

A

X

O

U

E

A

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U

A

I

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E

A

X

U

U

O

OU

O

Val. Closeness

A Absolutely necessary

E Especially important

I Important

O Ordinary OK

U Unimportant

X Not desirable


4.4. Retail/Service LayoutRetail/Service Layout Design maximizes product exposure to

customers Decision variables

Store flow pattern Allocation of (shelf) space to products

Types Grid design Free-flow design

Video


Retail Layouts - Retail Layouts - Some Rules of ThumbSome Rules of Thumb

Locate high-draw items around the periphery of the store

Use prominent locations such as the first or last aisle for high-impulse and high margin items

Remove crossover aisles that allow customers the opportunity to move between aisles

Distribute what are known in the trade as “power items” (items that may dominate a shopping trip) to both sides of an aisle, and disperse them to increase the viewing of other items

Use end aisle locations because they have a very high exposure rate


Retail Store Shelf Space PlanogramRetail Store Shelf Space Planogram

Computerized tool for shelf-space management

Generated from store’s scanner data on sales

Often supplied by manufacturer Example: P&G

2 ft2 ft..

55 facingsfacings

VO

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VO

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VO

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SU

AV

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A Good Service Layout A Good Service Layout (Servicescape) Considers(Servicescape) Considers

Ambient conditions - background characteristics such as lighting, sound, smell, and temperature.

Spatial layout and functionality - which involve customer circulation path planning

Signs, Symbols, and Artifacts - characteristics of building design that carry social significance


5.5. Warehouse LayoutWarehouse Layout Design balances space (cube)

utilization & handling cost Similar to process layout Items moved between dock

& various storage areas Optimum layout depends on

Variety of items stored Number of items picked


a)a) Cross DockingCross Docking Transferring goods

from incoming trucks at receiving docks

to outgoing trucks at shipping docks

Avoids placing goods into storage

Requires suppliers provide effective addressing (bar codes) and packaging that provides for rapid transhipment

In-In-comingcoming

OutgoingOutgoing

© 1984-1994 T/Maker Co.© 1995 Corel Corp.


b)b) Random Stocking Systems Often:Random Stocking Systems Often: Maintain a list of “open” locations Maintain accurate records of existing

inventory and its locations Sequence items on orders to minimize

travel time required to pick orders Combine orders to reduce picking time Assign certain items or classes of

items, such as high usage items, to particular warehouse areas so that distance traveled is minimized


6.6. Product-Oriented LayoutProduct-Oriented Layout Facility organized around product Design minimizes line imbalance

Delay between work stations Types: Fabrication line; assembly line Requirements:-

Standardized product High production volume Stable production quantities Uniform quality of raw materials &

components


Product-Oriented Layout - Product-Oriented Layout - AssumptionsAssumptions

Volume is adequate for high equipment utilization

Product demand is stable enough to justify high investment in specialized equipment

Product is standardized or approaching a phase of its life cycle that justifies investment in specialized equipment

Supplies of raw materials and components are adequate and of uniform quality to ensure they will work with specialized equipment


Product-Oriented Layout TypesProduct-Oriented Layout Types

Assembles fabricated parts

Uses workstation Repetitive process Paced by tasks Balanced by moving tasks

Builds components Uses series of machines Repetitive process Machine paced Balanced by physical

redesign

Fabrication Line Assembly Line


Product-Oriented Layout Product-Oriented Layout AdvantagesAdvantages

Lower variable cost per unit Lower material handling costs Lower work-in-process

inventories Easier training & supervision Rapid throughput


Product-Oriented Layout Product-Oriented Layout DisadvantagesDisadvantages Higher capital investment

Special equipment Any work stoppage stops

whole process Lack of flexibility

Volume Product


Assembly Line BalancingAssembly Line Balancing Analysis of production lines Nearly equally divides work between

workstations while meeting required output

Objectives Maximize efficiency Minimize number of

work stations


Assembly Line BalancingAssembly Line BalancingThe General ProcedureThe General Procedure

Determine cycle time by taking the demand (or production rate) per day and dividing it into the productive time available per day

Calculate the theoretical minimum number of work stations by dividing total task time by cycle time

Perform the line balance and assign specific assembly tasks to each work station


Assembly Line Balancing StepsAssembly Line Balancing Steps

1. Determine tasks (operations)2. Determine sequence3. Draw precedence diagram4. Estimate task times5. Calculate cycle time 6. Calculate number of work stations7. Assign tasks 8. Calculate efficiency


Assembly Line Balancing EquationsAssembly Line Balancing Equations

Cycle time = Production time available

Demand per day

Minimum number of work stations

Task times

Cycle time

Efficiency =

=

Task times

* (Cycle time)(Actual number of work stations)


Layout Heuristics for Assigning Tasks in Layout Heuristics for Assigning Tasks in Assembly Line BalancingAssembly Line Balancing

a) Longest task time - choose task with longest operation time

b) Most following tasks - choose task with largest number of following tasks

c) Ranked positional weight - choose task where the sum of the times for each following task is longest

d) Shortest task time - choose task with shortest operation time

e) Least number of following tasks - choose task with fewest subsequent tasks

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Operations Management (OPM530) -C5 Process & Layout

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