Process Selection unit 5

Process Selection and Design

Inputs:
Product/Service Information
Production System Information
Operations Strategy
Process Selection & Design:
Process-Type Selection
Vertical Integration Studies
Process/Product Studies
Equipment Studies
Production Procedures Studies
Facilities Studies

Outputs:
Process Technology
Facilities
Personnel Estimates

Process Selection and System

Design
Forecasting

Capacity
Planning

Product and
Service Design

Technological
Change

Facilities and
Equipment

Layout
Process
Selection

Work
Design

he process-focused Project Shop

Characteristics

Unique products with certain complexity (boats, aircrafts, ships,

hotels, bridges, sports stadiums)

The production process is managed like a project

Makes a one-of-a-kind product (volume = 1)

Uses general purpose equipment

Has informal relationships with many vendors

Very little vertical integration

Flexible layout often with factors of production moving to job

The Job Shop

A process structure suited for low volume production of a great variety
of non-standard products (highly customized products).
Custom or workshop: Low specialized operations carried out by the
same worker or group of workers that follow up the whole process
for the order.
Batch: More specialized operations carried out by different
workers or group of workers (need for more specialization
and standardization).
Characteristics
1. Makes many products in small volume
2. Uses general purpose equipment, grouped by the same function in
Work Centres
3. Has informal relationships with vendors
4. Very little vertical integration
5. Departmentalized layout with chaotic flow

The Large Batch (Cell,

Flow Shop or Hybrid Shop)
A process structure that produces a variety of
standard products at relatively low volumes.
This variety of standard products has a similar
sequence of operations:
The equipment is laid out in line, instead of
grouped by the same function.
After completing one batch, equipment
adjustments for the next one are made and
the next batch produced.
Characteristics
1.Makes several families of products in
moderate volume
2.Uses general purpose equipment often
customized
3.Little vertical integration
4.Similar product follows the same path,
produced in batches to reduce the impact of
setup time.
5.Hybrid layout with flow lines

Assembly Line
A process structure designed to make discrete parts. Parts
are moved through a set of specially designed
workstations at a controlled rate.
Characteristics
1.Makes few products in large volume
2.Uses specialized high-volume equipment
3.Has formal relationships with vendors
4.May use vertical integration
5.Product-based layout with linear flow

Continuous Flow

An often automated structure that converts

raw materials into finished products in one
continuous process.
Same operations are made in the same equipment
to make the same product, reducing waiting time.
Objectives:
Improvement of material flow and operations.
Workers specialization:
Increasing speed and added value.

Types of Processes

Flexibility and Costs

By Projects
Job Shop
Flow Shop
Assembly Line
Continuous

Flexibility
Variable Cost
Unit Cost

Fixed Cost

Process Strategy in the

industry
Manufacturing Process Life Cycle
Processes go through different phases as products
do.

Interdependency between Product and

Process Life Cycles:
Process Life Cycle: Affects manufacturing costs,
quality and production volumes, which affects
sales volumes.
Product Life Cycle: Influences the type of
manufacturing process that can be economically
and financially justified.

Process Strategy in the

industry
These
Theseare
are

Product-Process Matrix

I.
Job
Shop
II.
Batch
III.
Assembly
Line
IV.
Continuous
Flow

High
Few
Low
Multiple Major Volume,
Volume, Products, Products, High
One of a
Low
Higher StandardKind
Volume Volume ization
Aircraft, Ship
Construction

the
themajor
major
stages
stagesof
of
product
product
and
and
process
process
life
lifecycles
cycles

Flexibility (High)
Unit Cost (High)

Heavy
Equipment
Automobile
Assembly
Burger King

Flexibility (Low)
Unit Cost (Low)
Cement, Sugar
Refinery

Underlying Process Relationship Between

Volume and Standardization Continuum

Differences between Intermittent

and Continuous Operations
Decision

Intermittent Operation

Continuous Operation

Product variety

Great

Small

Degree of standardization

Low

High

Organization of resources

Grouped by Function

Line flow

Path of products

Varied, depends on product

Line flow

Factor driving production

Customer orders

Forecast of demand

Critical resource

Labor

Capital

Type of equipment

General purpose

Specialized

Degree of automation

Low

High

Throughput time

Longer

Shorter

Work-in-process inventory

More

Less
2007 Wiley

Major Factors Affecting Process

Selection

Degree of Vertical
Integration
Vertical integration is the amount of the
production and distribution chain that is
brought under the ownership of a company.
This determines how many production
processes need to be planned and designed.
Decision of integration is based on cost,
availability of capital, quality, technological
capability, and more.

Strategic outsourcing (lower degree of integration) is

the outsourcing of processes in order to react quicker
to changes in customer needs, competitor actions,
and technology. Outsourcing is interesting when a
resource consumption is low, and its efficient
management has a certain economy of scale.

Production Flexibility

A production process is more flexible when their

equipment and human resources are able to
manage a wider variety of products, outputs,
responsibilities and functions, at a reasonable cost
and time frame.

Product flexibility -- ability of the production

(or delivery) system to quickly change from
producing (delivering) one product (or
service) to another.
Volume flexibility -- ability to quickly
increase or reduce the volume of
product( or service) produced (or delivered).

Degree of Automation

Advantages of automation

Improves product quality

Improves product flexibility
Reduces labor and related costs

Disadvantages of automation
Equipment can be very expensive
Integration into existing operations can be difficult

Factors affecting Process

Selection
Capital Investment
Combination of equipment and human resources
at the manufacturing process.
The new manufacturing technologies provide a
wide variety of available options:
As the mechanical and/or automated operations
increase, more capital is required.
Most of the available options require a high capital
investment, which create a high risk in case our sales
volumes (and therefore our production volumes) are
lower than the expected.

Factors affecting Process

Selection
Nature of the demand

Manufacturing processes have to have the necessary capacity to

support the demand of products and services that the company is
going to offer.
Seasonality, tendency and other characteristics of the demand are
going to affect the capacity required over the time.
Some processes are able to expand and contract more easily than others.
The final selection of processes will be affected by the estimated
demand.

Price:
If its high, consumers will tend to buy less and vice versa.
To fix the price, the company has to take into account factors like
advertising costs, sales force, financial conditions, services provided to
the customer, specific designs, inventory and delivery policy, quality,
etc., at the same time than the costs related to manufacturing.
It should be coordination between product price and process selection,
due to the competitive advantages provided by the different types of
processes

Factors affecting Process

Design
Quality of the product or service
Quality is a competitive advantage in the current
business environment.
The level of quality to be offered will affect directly the
selection of the production process.
The level required is directly related to the level of automation
of the process, since the automatic equipment manufactures
products with a high and consistent uniformity.

Customer participation
Services that require higher contact with the customer
generally need less capital investment and have more
flexibility.
Customer presence normally affects the process
efficiency in a negative way, which increases cost.

Factors affecting Process

Design
The Learning effect

Working
hours per
unit

The working hours required per unit of product represent a

decreasing function of the number of cumulative production
units.

Production volume

This reduction of working hours (and therefore cost) are

based on the gain of experience in design of products and
services, automation and capital investment, as well as
changes in methods and experience of the working force.
Companies competing in price try to have high
manufacturing volumes to take advantage of the learning
effect, and therefore have a lower cost.

Designing Process Flow

Process design tools include

Process flow analysis
Process flowchart

Design considerations include

Make-to-stock strategy
Assemble-to-order strategy
Make-to-order strategy

2007 Wiley

Process Design Tools

Process flow analysis

is a tool used to analyze
and document the
sequence of steps within
a total process. Usually
first step in Process
Reengineering.

Process Reengineering is a
structured approach
used when major
business changes are
required as a result of:
Major new products
Quality improvement
needed
Better competitors
Inadequate
performance

2007 Wiley

Facility Layout and Process

Choice

2007 Wiley

Process Documentation using Flowcharts

Shampoo directions
Example: Any problems
1. Lather
with the following
Basic flowchart symbolsset of directions? 2. Rinse
3. Repeat
Begin or end
Information
input

Begin shampoo

Operation

Information
output

Question
yes/no?

Information
on bottle

Wet hair with

warm water

Lather shampoo
into hair

Select bottle

Rinse hair with

warm water

No
Shampoo?
Yes

No

Hair
clean?

Yes

End shampoo

Process Flow Diagram (PFD)

A process flow diagram is a mapping of the specific processes that
raw materials, parts, and subassemblies follow as they move
through a plant.
Builds on the concept of flowcharting.
A more constrained version of the operation symbol used in flowcharting
1. Requires a resource
Activity
2. Resource has a capacity constrain
3. Adds value
Flow
1. Arrow indicates the flow of jobs
2. Multiple flow units (types of jobs) possible
Buffer or inventory location
1. Normally does not have a capacity
Buffer 2. Multiple units possible

Trees
RM

Debark

Stems
WIP

Scan

Acceptable

Saw

Grind

Acceptable
Lumber
FG

Chips
FG

Single Object Process Chart

Assembly Process Chart

Assembly charts

Disassembly charts

Action Decision Flow Diagram

How Are Services Different from

Manufacturing

Services are different from manufacturing

as they;
Produce intangible products
Involve a high degree of customer contact

Type of service is classified according to

degree of customer contact

Process Selection in
Services

Some of the factors important in process

design for products are also important in
services:

Level of customer contact

Nature (level and pattern) of customer demand
Servicing flexibility
Degree of automation
Service quality

Process Design in Services

Three schemes for producing and delivering

services
Low degree of customer contact - QuasiManufacturing
Medium degree of Customer contact mixed
service
High degree of customer contact Pure service
Customer -as-Participant
Customer-as-Product

Process Design in Services

Quasi-Manufacturing

Physical goods are dominant over intangible

service
Production of goods takes place along a
production line
Operations can be highly automated
Little customer interaction
Little regard for customer relations
Example Restaurants, deliverable software

Process Design in Services

Customer-as-Participant
Physical goods may be a significant part of the
service
Services may be either standardized or custom
High degree of customer involvement in the
process
Examples: ATM, self-service gas station

Process Design in Services

Customer-as-Product

Through personal attention to the customer

Customized service on the customer
High degree of customer contact
There is a perception of high quality
Customer becomes the central focus of the
process design
Examples: Hospital care, medical clinic, hair
salon

8-36

OBJECTIVES
Service Strategy: Focus &
Advantage
Service-System Design Matrix
Service Blueprinting
Service Fail-safing
Characteristics of a Well-Designed
Service Delivery System

8-37

Service Businesses

A service business is the management of

organizations whose primary business requires
interaction with the customer to produce the
service
Facilities-based services: Where the
customer must go to the service facility
Hospitals, Schools/colleges, ATMs

Field-based services: Where the production

and consumption of the service takes place
in the customers environment loan melas,
census count, water/electricity supply.

8-38

The Customer Centered View

AAphilosophical
philosophicalview
viewthat
that
suggests
suggeststhe
theorganization
organization
exists
existsto
toserve
servethe
the
customer,
customer,and
andthe
the
systems
systemsand
andthe
the
employees
employeesexist
existto
to
facilitate
facilitatethe
theprocess
processof
of
service.
service.
The
Systems

The Service
Strategy

The
Customer
The
People

8-39

Service-System Design Matrix

Degree of customer/server contact

High

Buffered
core (none)

Permeable
system (some)

Face-to-face
loose specs

Sales
Opportunity
Phone
Internet & Contact
on-site
Mail contacttechnology

Low

Reactive
system (much)

Face-to-face
tight specs

Low

Face-to-face
total
customization

Production
Efficiency

High

8-40

Characteristics of Workers, Operations, and Innovations

Relative to the Degree of Customer/Service Contact

8-41

Example of Service Blueprinting Line of interaction, line of

visibility, front office, back office

Standard
execution time
2 minutes

Brush
shoes
30
secs

Total acceptable
execution time
5 minutes
Seen by
customer

Line of
visibility

Not seen by
customer but
necessary to
performance

Clean
shoes
45
secs

Apply
polish
30
secs

Fail
point

Buff

Collect
payment

45
secs

15
secs

Wrong
color wax
Materials
(e.g., polish, cloth)

Select and
purchase
supplies

8-42

Service Fail-safing
Poka-Yokes (A Proactive Approach)

Keeping a
mistake from
becoming a
service defect
How can we
fail-safe the
three Ts?

Task

Treatment

Tangibles

8-43

Three Contrasting Service Designs

The production line approach

(ex. McDonalds)

The self-service approach (ex.

automatic teller machines)

The personal attention

approach (ex. Ritz-Carlton
Hotel Company)

8-44

Characteristics of a Well-Designed Service System

1. Each element of the service

system is consistent with the
operating focus of the firm
2. It is user-friendly
3. It is robust
4. It is structured so that
consistent performance by its
people and systems is easily
maintained

8-45

Characteristics of a Well-Designed Service System (Continued)

5. It provides effective links

between the back office and the
front office so that nothing falls
between the cracks
6. It manages the evidence of
service quality in such a way
that customers see the value of
the service provided
7. It is cost-effective

8-46

Applying Behavioral Science to Service Encounters

1.

The front-end and back-end of the

encounter are not created equal

2.

Segment the pleasure, combine the

pain

3.

Let the customer control the process

4.

Pay attention to norms and rituals

5.

People are easier to blame than

systems

6.

Let the punishment fit the crime in

service recovery

8-47

Service Guarantees as Design Drivers

Recent research suggests:

Any guarantee is better than no
guarantee
Involve the customer as well as
employees in the design
Avoid complexity or legalistic
language
Do not quibble or wriggle when a
customer invokes a guarantee
Make it clear that you are happy for
customers to invoke the guarantee