7

Process Strategy
and Sustainability

PowerPoint presentation to accompany

Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e
PowerPoint slides by Jeff Heyl

2011 Pearson Education, Inc. publishing as Prentice Hall

7-1

Process Strategies
The objective of a process strategy is
to build a production process that
meets customer requirements and
product specifications within cost
and other managerial constraints

2011 Pearson Education, Inc. publishing as Prentice Hall

7-2

Process, Volume, and Variety

Volume

Figure 7.1

Low
Volume
High Variety
one or few
units per run,
(allows
customization)
Changes in
Modules
modest runs,
standardized
modules
Changes in
Attributes
(such as grade,
quality, size,
thickness, etc.)
long runs only

Repetitive
Process

Process Focus
projects, job shops
(machine, print,
hospitals, restaurants)
Arnold Palmer
Hospital

High
Volume
Mass Customization
(difficult to achieve,
but huge rewards)
Dell Computer

Repetitive
(autos, motorcycles,
home appliances)
Harley-Davidson
Poor Strategy
(Both fixed and
variable costs
are high)

2011 Pearson Education, Inc. publishing as Prentice Hall

Product Focus
(commercial
baked goods,
steel, glass, beer)
Frito-Lay
7-3

Process Strategies
Four basic strategies
1. Process focus
2. Repetitive focus
3. Product focus
4. Mass customization
Within these basic strategies there are
many ways they may be implemented
2011 Pearson Education, Inc. publishing as Prentice Hall

7-4

Process Focus
Facilities are organized around specific
activities or processes
General purpose equipment and skilled
personnel
High degree of product flexibility
Typically high costs and low equipment
utilization
Product flows may vary considerably
making planning and scheduling a
challenge
2011 Pearson Education, Inc. publishing as Prentice Hall

7-5

Manufacturing Process
Layout
Lathe Department

Milling
Department

Drilling Department

Grinding
Department
Receiving and
Shipping

Painting Department

Assembly
7-6

Process Focus

(low volume, high variety,

intermittent processes)

Many inputs
(surgeries, sick patients,
baby deliveries, emergencies)

Many departments and

many routings

Arnold Palmer Hospital

Figure 7.2(a)

2011 Pearson Education, Inc. publishing as Prentice Hall

Many different outputs

(uniquely treated patients)
7-7

Repetitive Focus
Facilities often organized as
assembly lines
Characterized by modules with parts
and assemblies made previously
Modules may be combined for many
output options
Less flexibility than process-focused
facilities but more efficient
2011 Pearson Education, Inc. publishing as Prentice Hall

7-8

Product Focus
Raw
materials
or customer

Station
1

Station
Station
22

Station
Station
33

Material

Material

Material

Material

and/or
labor

and/or
labor

and/or
labor

and/or
labor

Station
Station
44

Finish
ed
item

Used for Repetitive or Continuous Processing

7-9

t
u
o
y
a
L
t
Produc
Product layout sets up production equipment
along a product-flow line, and the work in
process moves along this line past
workstations.
Efficiently produces large numbers of similar
items.

7 - 10

Product Focus
Facilities are organized by product
High volume but low variety of
products
Long, continuous production runs
enable efficient processes
Typically high fixed cost but low
variable cost
Generally less skilled labor
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 11

Product Focus
D

Continuous caster

Scrap
steel

Nucor Steel Plant

B
Ladle of molten steel

Continuous cast steel

sheared into 24-ton slabs
Hot tunnel furnace - 300 ft

Electric
furnace

Hot mill for finishing, cooling, and coiling

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 12

Mass Customization
The rapid, low-cost production of
goods and service to satisfy
increasingly unique customer
desires
Combines the
flexibility of a
process focus
with the efficiency
of a product focus
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 13

Mass Customization
Item
Vehicle models
Vehicle types
Bicycle types
Software titles
Web sites
Movie releases per year
New book titles
Houston TV channels
Breakfast cereals
Items (SKUs) in
supermarkets
LCD TVs

Number of Choices
1970s
21st Century
140
18
8
0
0
267
40,530
5
160
14,000

286
1,212
211,000
400,000
162,000,000
765
300,000
185
340
150,000

102
Table 7.1

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 14

Mass
Customization

Many parts and

component inputs
(chips, hard drives,
software, cases)

Many modules

(high-volume, high-variety)

Dell Computer
Figure 7.2(d)

2011 Pearson Education, Inc. publishing as Prentice Hall

Many output versions

(custom PCs and notebooks)
7 - 15

Requirements to Achive Mass

Customization/Build-to-Order
Repetitive Focus

Figure 7.3

Fast Product and

Process Design
CAD

Flexible people
and equipment (CIM)
Modular
techniques

Mass Customization

Effective
scheduling
techniques

Process-Focused

High variety, low volume

Low utilization (5% to 25%)
General-purpose equipment
2011 Pearson Education, Inc. publishing as Prentice Hall

Responsive
Supply Chains
ERP
Rapid
throughput
techniques

Product-Focused

Low variety, high volume

High utilization (70% to 90%)
Specialized equipment
7 - 16

Comparison of Product
and Process Layouts
Product

Process

Description
Description

Sequential
arrangement of
activities

Functional
grouping of
activities

Type
Type of
of process
process

Continuous, mass
production, mainly
assembly

Product
Product

Demand
Demand
Volume
Volume

Standardized, made
to stock
Stable

Intermittent, job
shop, batch
production, mainly
fabrication
Varied, made to
order
Fluctuating

Equipment
Equipment

High
Special purpose

Low
General purposee
7 - 17

Comparison of Product
and Process Layouts
Product

Workers
Workers
Inventory
Inventory

Material
Material handling
handling
Aisles
Aisles

Scheduling
Scheduling

Goal
Goal

Advantage
Advantage

Process

Limited skills
Low in-process, high
finished goods

Fixed path (conveyor)

Narrow
Line balancing

Equalize work at each

station

Minimize material
handling cost

Efficiency

Flexibility

Varied skills
High in-process, low
finished goods
Variable path (forklift)
Wide
Dynamic

7 - 18

Comparison of Three Processes

Using Crossover Charts
Variable
costs
Variable
costs

Variable
costs

$
Fixed costs

Fixed costs

Fixed costs

Repetitive
Process B

Low volume, high variety

Process A

To
ta

lc

os

lc
a
t
To

t
os

High volume, low variety

Process C

t
cos
l
a
t
To

400,000
300,000
200,000
Fixed cost
Process A

Figure 7.4

(2,857)

V1

V2

(6,666)

2011 Pearson Education, Inc. publishing as Prentice Hall

Fixed cost
Process B

Fixed cost
Process C

Volume
7 - 19

Focused Processes
Focus brings
Less overhead costs
Less complexity
More efficiency

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 20

Focused Processes
Focus can be on:
Customers (Hotel owners: dishwashers)
Products (Caterpillar)
Service (Children hospital)
Technology (SAP: software)
Quality (Rolls-Royce)

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 21

Analyzing and Designing

Processes
Design the process to achieve
a competitive advantage
Analyze the process to
eliminate the steps that do not
add value

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 22

Tools Used for Process

Analysis and Design
Flow Charts - Shows the movement of materials
Time-Function Mapping - Shows flows and time
frame
Value-Stream Mapping - Shows flows and time
and value added beyond the immediate
organization
Process Charts - Uses symbols to show key
activities
Service Blueprinting - focuses on
customer/provider interaction
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 23

Flow Chart
Order waits
for sales rep.
Operator
takes phone
order.

Orders wait
to be picked
up.

Orders
wait for
supervisor.

No

Is order
complete?
Orders are
moved to
supervisors
in-box.

Supervisor
inspects
orders.

Yes
Order is
fulfilled.
7 - 24

Baseline Time-Function Map

Print

Wait

WIP

Warehouse

Plant B

Extrude

Wait

Move

Transport

Figure 7.5

Wait

Product

WIP

Plant A

Product

Wait
Order

Production
control

Product

Process
order

WIP

Sales

Receive
product

WIP

Order
product

Order

Customer

12 days

13 days

1 day

2011 Pearson Education, Inc. publishing as Prentice Hall

4 days

1 day 10 days

Move
1 day

0 day

1 day

52 days
7 - 25

Target Time-Function Map

Process
order
Wait
Order

Production
control

Product

Sales

Receive
product

Print

Extrude
Product

Plant

WIP

Warehouse

Transport
1 day

2 days

1 day
6 days

Wait
Product

Order
product

Order

Customer

Move

1 day

1 day

Figure 7.5
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 26

Value-Stream Mapping

Figure 7.6
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 27

Process Charts (Allow us to

focus on value-added activities)

2011 Pearson Education, Inc. publishing as Prentice Hall

Figure
7.7
7 - 28

Service Blueprinting
Helps to identify potential failure points
in customer and service provider
interaction
Defines three levels of interaction
Level 1: Activities under the control of
the customer
Level 2: Interaction between the
customer and service provider
Level 3: Activities performed invisibly to
the customer
Each level has different management
issues

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 29

Service Blueprint
Poka-Yoke (level 1): Put a bell in driveway so that
customer will be noticed
Personal Greeting
Level
#1

Service Diagnosis

Perform Service

Customer arrives
for service.
(3 min)

Friendly Close

Customer departs

F
Warm greeting
and obtain
service request.
(10 sec)

Level
#2

No
Standard
request.
(3 min)

Direct customer
to waiting room.

Determine
specifics.
(5 min)

Can
service be
done and does
customer
approve?
(5 min)

Yes

Yes

Level
#3

Notify
customer
and recommend
an alternative
provider.
(7min)

Customer pays bill.

(4 min)

F
F
Notify
customer the
car is ready.
(3 min)

No

F
Perform
required work.
(varies)

Prepare invoice.
(3 min)

Figure 7.8
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 30

Improving Service
Productivity
Strategy

Technique

Example

Separation

Structure service so
customers must go
where the service is
offered

Bank customers go to
a manager to open a
new account, to loan
officers for loans, and
to tellers for deposits

Self-service

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

Supermarkets and
department stores
Internet ordering

Table 7.3
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 31

Improving Service
Productivity
Strategy

Technique

Example

Postponement

Customizing at
delivery

Customizing vans at
delivery rather than at
production

Focus

Restricting the
offerings

Limited-menu
restaurant

Modules

Modular selection of
service

Investment and
insurance selection,
cell phone billing

Table 7.3
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 32

Improving Service
Productivity
Strategy

Technique

Example

Automation

Separating services
that may lend
themselves to some
type of automation

Automatic teller
machines

Scheduling

Precise personnel
scheduling

Scheduling ticket
counter personnel at
15-minute intervals at
airlines

Training

Clarifying the service

options
Explaining how to
avoid problems

Investment counselor,
wedding organizer
After-sale maintenance
personnel
Table 7.3

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 33

Technologies to Improve
Production and Productivity

CNC Machinery
Automatic identification
systems (AISs), RFIS
Vision system - inspection
(video camera & computers)
Robots

Automated storage and retrieval systems

(ASRSs)
Automated guided vehicles (AGVs)
Flexible manufacturing systems (FMSs)
Computer-integrated manufacturing (CIM)
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 34

CNC Machinery
Increased precision
Increased productivity
Increased flexibility
Reduced changeover time

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 35

CNC Machinery

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 36

Automatic Identification
Systems (AISs)
Improved data acquisition
Reduced data entry errors
Increased speed
Increased scope
of process
automation
Example Bar codes and RFID
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 37

Vision Systems
Particular aid to inspection
Consistently
accurate
Never bored
Modest cost
Superior to
individuals performing the same
tasks
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 38

Robots
Perform monotonous or dangerous
tasks
Perform tasks
requiring significant
strength or
endurance
Generally enhanced
consistency and
accuracy
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 39

Automated Storage and

Retrieval Systems (ASRSs)
Automated placement and
withdrawal of parts and products
Reduced errors and labor
Particularly useful in inventory and
test areas of manufacturing firms

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 40

 2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 41

Illustrated concept of a
high-rise AS/RS warehouse

AS/RS High-Rise Warehouse

7 - 42

Automated Guided Vehicle

(AGVs)
Electronically guided and
controlled carts
Used for movement of products
and/or individuals

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 43

Automated Guided Vehicle

(AGVs)
Electronically guided and
controlled carts
Used for movement of products
and/or individuals

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 44

 2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 45

Flexible Manufacturing
Systems (FMSs)
Computer controls both the workstation
and the material handling equipment
Enhance flexibility and reduced waste
Can economically produce low volume at
high quality
Reduced changeover time and increased
utilization
Stringent communication requirement
between components
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 46

Flexible Manufacturing
System

A schematic illustration of a flexible manufacturing system showing machining

centers, a measuring and inspection station. And automated guided vehicles.
Source: After J. T. Black.
Manufacturing, Engineering & Technology, Fifth Edition, by
Serope Kalpakjian and Steven R. Schmid.

7 - 47

Computer-Integrated
Manufacturing (CIM)
Extension of flexible manufacturing
systems
Backwards to engineering and inventory
control
Forward into warehousing and shipping
Can also include financial and customer
service areas

Reducing the distinction between lowvolume/high-variety, and highvolume/low-variety production

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 48

ComputerIntegrated
Manufacturing
(CIM)

Figure 7.10
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 49

Sustainability (Four Rs)

Sustainability in production
processes
1. Resources
2. Recycling
3. Regulations
4. Reputation

2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 50

Sustainability
Resources
- doing laundry atnight to
reduce electricity costs
(hotels)
Recycling
BMW uses recycled
plastics
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 51

Sustainability
Reputation
- Frito-Lay built a plant
powered by solar energy in
California and advertised this in
its products
Regulations
- Cars with higher CO2
emissions pay higher taxes
2011 Pearson Education, Inc. publishing as Prentice Hall

7 - 52