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Operations Operations ManagementManagement
Process Strategy andProcess Strategy and Capacity Planning Capacity Planning
Chapter 7Chapter 7
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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
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Fit of Process, Volume, and VarietyFit of Process, Volume, and Variety
Process focusprojects, job shops,
(machine, print, carpentry)
Standard RegisterRepetitive
(autos, motorcycles)Harley Davidson
Product 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
(Variable costs are high)
Low-Volume(Intermittent)
Repetitive Process(Modular)
High-Volume(Continuous)
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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
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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
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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
11 22 33 Other names
Intermittent process Job shop
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Figure 7AFigure 7A
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Process-Focused Strategy ExamplesProcess-Focused Strategy Examples
Bank
© 1995 Corel Corp.
Machine Shop© 1995 Corel Corp.
Hospital© 1995 Corel Corp.
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Process Focused Strategy -Process Focused Strategy - Pros & Cons 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%)
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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
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Figure 7BFigure 7B
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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
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Repetitive-Focused Strategy - Repetitive-Focused Strategy - ExamplesExamples
Truck
© 1995 Corel Corp.
Clothes Dryer
© 1995 Corel Corp.
Fast Food
McDonald’sover 95 billion served
© 1984-1994 T/Maker Co.
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Figure 7.3Figure 7.3
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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
1 2 3
Other names Line flow production Continuous production
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Figure 7CFigure 7C
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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
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Product-Focused ExamplesProduct-Focused Examples
© 1995 Corel Corp.
Light Bulbs (Discrete)
Paper (Continuous)© 1984-1994 T/Maker Co.
© 1995 Corel Corp.
Soft Drinks (Continuous, then Discrete)
Mass Flu Shots (Discrete)
© 1995 Corel Corp.
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Figure 7.4Figure 7.4
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Table 7.1Table 7.1
Process Focus Repetitive Focus Product Focus1. Product: Smallquantity, largevariety
1. Product: Long runs,usually standardized
1. Product: Largequantities, smallvariety
2. Equipment:General purpose
2. Equipment: Special;assembly line
2. Equipment:Special-purpose
3. Operators broadlyskilled
3. Employees modestlytrained
3. Operators lessbroadly skilled
4. Many jobinstructions
4. Repetitive operations 4. Few work orders andjob instructions;standardization
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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
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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.
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Mass Customization - More Mass Customization - More Choices Than EverChoices Than Ever
Item Early 1970s
Late1990s
Vehicle models 140 260Vehicle styles 18 1,212Bicycle types 8 19Software titles 0 380,000Web sites 0 9,865,982Movie releases 267 458New book titles 40,530 77,446Houston TV channels 5 851Breakfast cereals 160 340Items in supermartkets 14,000 20,000
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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?
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Tools for Process DesignTools for Process Design
Flow Diagrams Process Charts Time-Function/Process Mapping Service Blueprinting
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Time Function MapTime Function Map
Customer
Sales
Production control
Plant A
Warehouse
Plant B
Transport
Order Product
Process Order
Extrude
Receive product
Wait
Move
Wait Wait Wait
Move
Orde
r
Orde
r
WIP
WIP
WIP W
IP
Prod
uct
Prod
uct
Prod
uct
12 days 1 day 1 day 1 day 1 day13 days 4 days 10 days 9 days
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SUBJECT: Request tool purchase
Dist (ft) Time (min) Symbol Description
D Write order On desk
75 D To buyer D Examine
= Operation; = Transport; = Inspect; D = Delay; = Storage
Process Chart ExampleProcess Chart Example
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Process ReengineeringProcess 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