PowerPoint Presentation To Accompany Heizer,
Process Strategy7PowerPoint presentation to accompanyHeizer, Render, MunsonOperations Management, Twelfth EditionPrinciples of Operations Management, Tenth EditionPowerPoint slides by Jeff HeylCopyright 2017 Pearson Education, Inc.7-1
Process Flow DiagramFrame tubebendingFrame-buildingwork cellsFramemachiningHot-paintframe paintingTHE ASSEMBLY LINETESTING28 testsIncoming partsAir cleanersOil tank work cellFluids and mufflersShocks and forksFuel tank work cellHandlebarsWheel work cellFender work cellEngines andtransmissionsArrive on a JITschedule from a10-station workcell inMilwaukeeRoller testingCratingCopyright 2017 Pearson Education, Inc.7-2
Process StrategyThe objective is to create a processto produce offerings that meetcustomer requirements within costand other managerial constraintsCopyright 2017 Pearson Education, Inc.7-3
Process Strategies How to produce a product or provide aservice that Meets or exceeds customer requirements Meets cost and managerial goalsHas long term effects on Efficiency and production flexibility Costs and qualityCopyright 2017 Pearson Education, Inc.7-4
Process, Volume, and VarietyVolumeFigure 7.1Variety (flexibility)LowVolumeHigh Varietyone or few unitsper run,(allowscustomization)Changes inModulesmodest runs,standardizedmodulesChanges inAttributes (such asgrade, quality, size,thickness, etc.)long runs onlyRepetitiveProcessProcess Focusprojects, job shops(machine, print,hospitals,restaurants)Arnold PalmerHospitalHighVolumeMass Customization(difficult to achieve, buthuge rewards)Dell ComputerRepetitive(autos, motorcycles,home appliances)Harley-DavidsonPoor Strategy(Both fixed andvariable costsare high)Copyright 2017 Pearson Education, Inc.Product Focus(commercial baked goods,steel, glass, beer)Frito-Lay7-5
Process StrategiesFour basic strategies1. Process focus2. Repetitive focus3. Product focus4. Mass customizationWithin these basic strategies there aremany ways they may be implementedCopyright 2017 Pearson Education, Inc.7-6
Process Focus Facilities are organized around specificactivities or processes General purpose equipment and skilledpersonnel High degree of product flexibility Typically high costs and low equipmentutilization Product flows may vary considerablymaking planning and scheduling achallengeCopyright 2017 Pearson Education, Inc.7-7
Process Focus(low-volume, high-variety,intermittent processes)Many inputs(surgeries, sick patients,baby deliveries, emergencies)Many departments andmany routingsArnold Palmer HospitalFigure 7.2(a)Copyright 2017 Pearson Education, Inc.Many different outputs(uniquely treated patients)7-8
Repetitive Focus Facilities often organized as assemblylines Characterized by modules with parts andassemblies made previously Modules may be combined for manyoutput options Less flexibility than process-focusedfacilities but more efficientCopyright 2017 Pearson Education, Inc.7-9
RepetitiveFocusRaw materials andmodule inputs(multiple engine models,wheel modules)Fewmodules(modular)Harley DavidsonFigure 7.2(b)Copyright 2017 Pearson Education, Inc.Modules combined for manyOutput options(many combinations of motorcycles)7 - 10
Product Focus Facilities are organized by product High volume but low variety ofproducts Long, continuous production runsenable efficient processes Typically high fixed cost but lowvariable cost Generally less skilled laborCopyright 2017 Pearson Education, Inc.7 - 11
Product FocusFew inputs(corn, potatoes, water,seasoning)(high-volume, low-variety,continuous process)Frito-LayFigure 7.2(c)Copyright 2017 Pearson Education, Inc.Output variations in size,shape, and packaging(3-oz, 5-oz, 24-oz packagelabeled for each material)7 - 12
Mass Customization The rapid, low-cost production ofgoods and service to satisfyincreasingly unique customer desires Combines theflexibility of aprocess focuswith the efficiencyof a product focusCopyright 2017 Pearson Education, Inc.7 - 13
MassCustomizationMany parts andcomponent inputs(chips, hard drives,software, cases)Many modules(high-volume, high-variety)Dell ComputerFigure 7.2(b)Copyright 2017 Pearson Education, Inc.Many output versions(custom PCs and notebooks)7 - 14
Mass CustomizationTABLE 7.1Mass Customization Provides More Choices Than EverNUMBER OF CHOICESITEM1970s21ST CENTURYVehicle styles181,212Bicycle types8211,000iPhone mobile game apps01,200,000Web sites0634,000,000267155140,530300,000 518516034014,000150,0000102Movie releases per yearNew book titlesHouston TV channelsBreakfast cerealsItems (SKUs) in supermarketsHigh-definition TVsCopyright 2017 Pearson Education, Inc.7 - 15
Mass Customization Imaginative product design Flexible process design Tightly controlled inventorymanagement Tight schedules Responsive partners in the supplychainCopyright 2017 Pearson Education, Inc.7 - 16
Comparison of ProcessesTABLE 7.2Comparison of the Characteristics of Four Types of ProcessesPROCESS FOCUS(LOW-VOLUME,HIGH-VARIETYARNOLD ASSCUSTOMIZATION(HIGH-VOLUME,HIGH-VARIETYDELL COMPUTER)1. Small quantityand largevariety ofproducts1. Long runs, astandardizedproduct frommodules1. Largequantity andsmall varietyof products1. Large quantityand largevariety ofproducts2. Broadlyskilledoperators2. Moderatelytrainedemployees2. Less broadlyskilledoperators2. FlexibleoperatorsCopyright 2017 Pearson Education, Inc.7 - 17
Comparison of ProcessesTABLE 7.2Comparison of the Characteristics of Four Types of ProcessesPROCESS FOCUS(LOW-VOLUME,HIGH-VARIETYARNOLD ASSCUSTOMIZATION(HIGH-VOLUME,HIGH-VARIETYDELL COMPUTER)3. Instructionsfor each job3. Few changesin theinstructions3. Standardizedjobinstructions3. Custom ordersrequiring manyjob instructions4. Highinventory4. Low inventory4. Lowinventory4. Low inventoryrelative to thevalue of theproductCopyright 2017 Pearson Education, Inc.7 - 18
Comparison of ProcessesTABLE 7.2Comparison of the Characteristics of Four Types of ProcessesPROCESS FOCUS(LOW-VOLUME,HIGH-VARIETYARNOLD ASSCUSTOMIZATION(HIGH-VOLUME,HIGH-VARIETYDELL COMPUTER)5. Finishedgoods aremade to orderand notstored5. Finishedgoods aremade tofrequentforecasts5. Finishedgoods aremade to aforecast andstored5. Finished goodsare build-toorder (BTO)6. Scheduling iscomplex6. Scheduling isroutine6. Scheduling isroutine6. Sophisticatedschedulingaccommodatescustom ordersCopyright 2017 Pearson Education, Inc.7 - 19
Comparison of ProcessesTABLE 7.2Comparison of the Characteristics of Four Types of ProcessesPROCESS FOCUS(LOW-VOLUME,HIGH-VARIETYARNOLD . Fixed costsare low andvariable costshigh7. Fixed costsare dependenton flexibility ofthe facility7. Fixed costsare high andvariable costslowCopyright 2017 Pearson Education, Inc.MASSCUSTOMIZATION(HIGH-VOLUME,HIGH-VARIETYDELL COMPUTER)7. Fixed coststend to be highand variablecosts low7 - 20
Crossover Chart Example Evaluate three different accounting softwareproducts Calculate crossover points between software Aand B and between software B and CTOTAL FIXED COSTDOLLARS REQUIRED PERACCOUNTING REPORTSoftware A 200,000 60Software B 300,000 25Software C 400,000 10Copyright 2017 Pearson Education, Inc.7 - 21
Crossover Chart Example( )( )200,000 60 V1 300,000 25 V135V1 100,000V1 2,857 Software A is most economical from 0 to 2,857 reports( )( )300,000 25 V2 400,000 10 V215V2 100,000V2 6,666 Software B is most economical from 2,857 to6,666 reportsCopyright 2017 Pearson Education, Inc.7 - 22
Crossover ChartsVariablecosts Variablecosts Fixed costsFixed costsFixed costsLow volume, high varietyProcess AVariablecostsRepetitiveProcess BHigh volume, low varietyProcess C 400,000300,000200,000Fixed costProcess AFigure 7.3(2,857)V1Copyright 2017 Pearson Education, Inc.V2 (6,666)Fixed costProcess BFixed costProcess CVolume7 - 23
Focused Processes Focus brings efficiencyFocus on depth of product linerather than breadthFocus can be Customers Products Service TechnologyCopyright 2017 Pearson Education, Inc.7 - 24
Selection of Equipment Decisions can be complex as alternatemethods may be available Important factors may be Cost Quality Cash flow Capacity Market stability FlexibilityCopyright 2017 Pearson Education, Inc.7 - 25
Flexibility Flexibility is the ability to respondwith little penalty in time, cost, orcustomer value May be a competitive advantage May be difficult and expensive Without it, change may mean startingoverCopyright 2017 Pearson Education, Inc.7 - 26
Process Analysis and Design Is the process designed to achieve acompetitive advantage? Does the process eliminate stepsthat do not add value? Does the process maximizecustomer value? Will the process win orders?Copyright 2017 Pearson Education, Inc.7 - 27
Process Analysis and Design Flowchart Shows the movement of materials Harley-Davidson flowchartTime-Function Mapping Shows flows and time frameCopyright 2017 Pearson Education, Inc.7 - 28
"Baseline" Time-Function MapPrintWaitWIPWarehousePlant BWaitExtrudeWaitProductWIPPlant merMoveTransport12 days13 days1 dayFigure 7.4(a)Copyright 2017 Pearson Education, Inc.4 days1 day 10 daysMove1 day9 day1 day52 days7 - 29
"Target" Time-Function useTransport1 day2 days1 dayWaitProductOrderproductOrderCustomerMove1 day1 day6 daysFigure 7.4(b)Copyright 2017 Pearson Education, Inc.7 - 30
Process ChartFigure 7.5Copyright 2017 Pearson Education, Inc.7 - 31
Process Analysis and Design Value-Stream Mapping (VSM) Where value is added in the entireproduction process, including the supplychain Extends from the customer back to thesuppliersCopyright 2017 Pearson Education, Inc.7 - 32
Value-Stream Mapping1. Begin with symbols for customer, supplier,and production to ensure the big picture2. Enter customer order requirements3. Calculate the daily productionrequirements4. Enter the outbound shipping requirementsand delivery frequency5. Determine inbound shipping method anddelivery frequencyCopyright 2017 Pearson Education, Inc.7 - 33
Value-Stream Mapping6. Add the process steps (i.e., machine,assemble) in sequence, left to right7. Add communication methods, add theirfrequency, and show the direction witharrows8. Add inventory quantities between Ievery step of the entire flow9. Determine total working time (value-addedtime) and delay (non-value-added time)Copyright 2017 Pearson Education, Inc.7 - 34
Value-Stream MappingFigure 7.6Copyright 2017 Pearson Education, Inc.7 - 35
Service Blueprinting Focuses on the customer and providerinteraction Defines three levels of interaction Each level has different managementissues Identifies potential failure pointsCopyright 2017 Pearson Education, Inc.7 - 36
Service BlueprintPersonal GreetingLevel#1Perform ServiceService DiagnosisCustomer arrivesfor service.(3 min)Friendly CloseCustomer departsFWarm greetingand obtainservice request.(10 sec)Level#2NoStandardrequest.(3 min)Direct customerto waiting room.FDeterminespecifics.(5 min)Canservice bedone and doescustomerapprove?(5 min)FFYesYesLevel#3Notifycustomerand recommendan alternativeprovider.(7 min)Customer pays bill.(4 min)FFNotifycustomer thecar is ready.(3 min)NoFPerformrequired work.(varies)FPrepare invoice.(3 min)Figure 7.7Copyright 2017 Pearson Education, Inc.7 - 37
Special Considerations forService Process Design Some interaction with customer isnecessary, but this often affectsperformance adversely The better these interactions areaccommodated in the process design, themore efficient and effective the process Find the right combination of cost andcustomer interactionCopyright 2017 Pearson Education, Inc.7 - 38
Service Process MatrixDegree of CustomizationFigure 7.8HighLowMass ServiceProfessional cialbankingHighDegree of LaborFull-servicestockbrokerGeneralpurpose law firmsDigitizedorthodonticsBoutiquesRetailingLaw clinicsService Service FactoryLowWarehouse andcatalog spitalsAirlinesNo-frillsairlinesCopyright 2017 Pearson Education, Inc.7 - 39
Service Process MatrixMass Service and Professional Service Labor involvement is high Focus on human resources Selection and training highlyimportantDegree of CustomizationHighLow Mass ServicePersonalized servicesProfessional cialbankingHighDegree of e lawfirmsDigitalorthodonticsRetailingLowLaw clinicsService FactoryService Warehouse andFast-foodFine-diningcatalog illsairlinesCopyright 2017 Pearson Education, Inc.7 - 40
Service Process MatrixService Factory and Service Shop Automation of standardized services Restricted offerings Low labor intensity responds well toprocess technology andschedulingDegree of CustomizationHighLowMass ServiceProfessional cialbankingTight control required tomaintain standardsFull-servicestockbrokerBoutiquesDegree of Labor Generalpurpose lawfirmsHighDigitalorthodonticsRetailingService FactoryLimited-servicestockbrokerLowWarehouse andcatalog storesLaw clinicsFast-foodrestaurantsService italsAirlinesNo-frillsairlinesCopyright 2017 Pearson Education, Inc.7 - 41
Improving ServiceProductivityTABLE 7.3Techniques for Improving Service cturing service socustomers must go wherethe service is offeredSelf-servicePostponementSelf-service so customersexamine, compare, andevaluate at their own paceCustomizing at deliveryFocusRestricting the offeringsBank customers go to amanager to open a newaccount, to loan officers forloans, and to tellers fordepositsSupermarkets anddepartment storesInternet orderingCustomizing vans at deliveryrather than at productionLimited-menu restaurantCopyright 2017 Pearson Education, Inc.7 - 42
Improving ServiceProductivityTABLE 7.3Techniques for Improving Service ProductivitySTRATEGYTECHNIQUEEXAMPLEModulesModular selection ofserviceModular productionAutomationSeparating services thatmay lend themselves tosome type of automationPrecise personnelschedulingInvestment and insuranceselectionPrepackaged food modulesin restaurantsAutomatic teller machinesSchedulingTrainingClarifying the serviceoptionsExplaining how to avoidproblemsCopyright 2017 Pearson Education, Inc.Scheduling ticket counterpersonnel at 15-minuteintervals at airlinesInvestment counselor,funeral directorsAfter-sale maintenancepersonnel7 - 43
Production Technology1. Machine technology2. Automatic identification systems (AISs)3. Process control4. Vision systems5. Robots6. Automated storage and retrieval systems (ASRSs)7. Automated guided vehicles (AGVs)8. Flexible manufacturing systems (FMSs)9. Computer-integrated manufacturing (CIM)Copyright 2017 Pearson Education, Inc.7 - 44
Machine Technology Increased precision,productivity, andflexibility Reduced environmental impact Additive manufacturing producesproducts by adding material, notremoving it Supports innovative product design,minimal custom tooling required, minimalassembly time, low inventory, andreduced time to marketCopyright 2017 Pearson Education, Inc.7 - 45
Automatic IdentificationSystems (AISs) and RFID Improved data acquisition Reduced data entry errors Increased speed Increased scopeof processautomationBar codes and RFIDCopyright 2017 Pearson Education, Inc.7 - 46
Process Control Real-time monitoring and control ofprocesses Sensors collect data Devices read dataon periodic basis Measurements translated into digitalsignals then sent to a computer Computer programs analyze the data Resulting output may take numerousformsCopyright 2017 Pearson Education, Inc.7 - 47
Vision Systems Particular aid to inspection Consistently accurate Never bored Modest cost Superior to individuals performing thesame tasksCopyright 2017 Pearson Education, Inc.7 - 48
Robots Perform monotonous or dangeroustasks Perform tasksrequiring significantstrength orendurance Generally enhancedconsistency andaccuracyCopyright 2017 Pearson Education, Inc.7 - 49
Automated Storage andRetrieval Systems (ASRSs) Automated placementand withdrawal of partsand products Reduced errors andlabor Particularly useful in inventory andtest areas of manufacturing firmsCopyright 2017 Pearson Education, Inc.7 - 50
Automated Guided Vehicle(AGVs) Electronically guidedand controlled carts Used for movementof products and/orindividualsCopyright 2017 Pearson Education, Inc.7 - 51
Flexible ManufacturingSystems (FMSs) Computer controls both the workstation andthe material handling equipment Enhance flexibility and reduced waste Can economically produce low volume buthigh variety Reduced changeover time and increasedutilization Stringent communication requirement betweencomponentsCopyright 2017 Pearson Education, Inc.7 - 52
Computer-IntegratedManufacturing (CIM) Extend flexible manufacturing Backward to engineering and inventorycontrol Forward into warehousing and shipping Can also include financial and customerservice areas Reducing the distinction between lowvolume/high-variety, and highvolume/low-variety productionCopyright 2017 Pearson Education, Inc.7 - 53
ComputerIntegratedManufacturing(CIM)Figure 7.9Copyright 2017 Pearson Education, Inc.7 - 54
Technology in ServicesTABLE 7.4Examples of Technology's Impact on ServicesSERVICE INDUSTRYEXAMPLEFinancial ServicesDebit cards, electronic funds transfer, ATMs,Internet stock trading, online banking via cellphoneEducationOnline newspapers and journals, interactiveassignments via WebCT, Blackboard, andsmartphonesUtilities and governmentAutomated one-person garbage trucks, opticalmail scanners, flood-warning systems, metersthat allow homeowners to control energy usageand costsRestaurants and foodsWireless orders from waiters to kitchen, robotbutchering, transponders on cars that tracksales at drive-throughsCommunicationsInteractive TV, e-books via KindleCopyright 2017 Pearson Education, Inc.7 - 55
Technology in ServicesTABLE 7.4Examples of Technology’s Impact on ServicesSERVICE INDUSTRYEXAMPLEHotelsElectronic check-in/check-out, electronickey/lock systems, mobile Web bookingsWholesale/retail tradePoint-of-sale (POS) terminals, e-commerce,electronic communication between store andsupplier, bar-coded data, RFIDTransportationAutomatic toll booths, satellite-directednavigation systems, Wi-Fi in automobilesHealth careOnline patient-monitoring systems, onlinemedical information systems, robotic surgeryAirlinesTicketless travel, scheduling, Internetpurchases, boarding passes downloaded astwo-dimensional bar codes on smart phonesCopyright 2017 Pearson Education, Inc.7 - 56
Process Redesign The fundamental rethinking of businessprocesses to bring about dramaticimprovements in performance Relies on reevaluating the purpose of theprocess and questioning both the purposeand the underlying assumptions Requires reexamination of the basic processand its objectives Focuses on activities that cross functionallines Any process is a candidate for redesignCopyright 2017 Pearson Education, Inc.7 - 57
All rights reserved. No part of this publication may be reproduced, stored in aretrieval system, or transmitted, in any form or by any means, electronic,mechanical, photocopying, recording, or otherwise, without the prior writtenpermission of the publisher.Printed in the United States of America.Copyright 2017 Pearson Education, Inc.7 - 58
Title: Heizer/Render 12e Author: Jeff Heyl Subject: Chapte
Title: Heizer/Render 12e Author: Jeff Heyl Subject: Chapter 6 - Managing Quality Created Date: 11/9/2016 9:17:42 PM
2008 Prentice Hall, Inc. 8 – 1 Operations Management Chapter 8 – Location Strategies PowerPoint presentation to accompany Heizer/Render Principles of .
Title: Heizer/Render 12e Author: Jeff Heyl Subject: Chapter 9 - Layout Strategies Created Date: 11/9/2016 9:23:08 PM
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