OPSM 301 Operations Management Spring 2012 Class 3:Process Types Evrim Didem Güneş

TODAY Shouldice discussion-wrap-up Process types Product-Process matrix

Classification of Processes by process architecture Project Job Shop Batch Line flow Continuous Flow Job Shop Process-focused Flow Shop Product-focused

Organization of Production Processes Project: the product remains in a fixed location Manufacturing equipment is moved to the product Job shop (Workcenter): similar equipment or functions are grouped together Assembly line: work processes are arranged according to the progressive steps by which the product is made Continuous process: assembly line, only the flow is continuous such as with liquids 11

Project Layout One of a kind products are produced Making of a Boeing

The Job shop similar equipment or functions are grouped together High variety, low volume production Routing matrix based upon flow of parts

Job-Shop Process Examples (Also called process focused) Bank © 1995 Corel Corp. Machine Shop Hospital

Process Focused Strategy - 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%)

Assembly Line-Flow Line (Mass Production) work processes are arranged according to the progressive steps by which the product is made Low cost, high volume production Low variety Ford Model T, first moving assembly line, 1913 BMW precision line

The Flow Line Process Product Layout Discrete Parts Rigid Flow Pattern Product Mix of Standard Products

Product Layout Product #1735B Start Production Drill Lathe Press #1 Packaging Machine #2 Drill Press #2 Paint Machine Finish Production

Product-Focused Strategy 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

Matching Process Choice with Strategy: Product-Process Matrix Flexibility Jumbled Flow. Process segments loosely linked. Disconnected Line Flow/Jumbled Flow but a dominant flow exists. JOB SHOP (Commercial Printer, Architecture firm) BATCH (Heavy Equipment, Auto Repari) LINE FLOWS (Auto Assembly, Car lubrication shop) CONTINUOUS FLOW (Oil Refinery) Product Variety Low Low Standardization One of a kind Low Volume Many Products Few Major Products High volume High Standardization Commodity Products Connected Line Flow (assembly line) Continuous, automated, rigid line flow. Process segments tightly linked. Opportunity Costs Out-of-pocket High

Making of a Boeing Ford Model T BMW precision line Nissan GT-R How it’s made:Bread How paper is made

Positioning Inventory in the Supply Chain

Production Processes Terms Lead time: the time needed to respond to a customer order Customer order decoupling point: where inventory is positioned to allow entities in the supply chain to operate independently

Types of Firms Make-to-stock firms: Firms that serve customers from finished goods inventory Assemble-to-order firms: firms that combine a number of preassembled modules to meet a customer’s specifications Make-to-order firms: that make the customer’s product from raw materials, parts, and components Engineer-to-order firm: firm that will work with the customer to design and then make the product

Make to Stock Examples of products Televisions Clothing Packaged food products Essential issue in satisfying customers is to balance the level of inventory against the level of customer service Easy with unlimited inventory but inventory costs money Trade-off between the costs of inventory and level of customer service must be made Use lean manufacturing to achieve higher service levels for a given inventory investment

Assemble-to-Order A primary task is to define a customer’s order in terms of alternative components since these are carried in inventory An example is the way Dell Computer makes their desktop computers One capability required is a design that enables as much flexibility as possible in combining components There are significant advantages from moving the customer order decoupling point from finished goods to components

Make-to-Order and Engineer-to-Order Boeing’s process for making commercial aircraft is an example Customer order decoupling point could be in either raw materials at the manufacturing site or the supplier inventory Depending on how similar the products are it might not even be possible to pre-order parts

Assignment 1 (individual) Due Next Tuesday 21 February Read the Thicketwood Ltd. Case What are the main products of Thicketwood Ltd? Identify the four product attributes for the product. Explain each attribute with facts from the case. Which process type is used to produce Thicketwood products? Is it appropriate for this product? Why, why not? Support your argument with facts from the case.

Next Time Business Process Flows Chapter 3