Chapter 7: Process Strategy and Sustainability

Global Company Profile: Harley-Davidson Four Process Strategies Summary Global Company Profile: Harley-Davidson Four Process Strategies Process Focus Repetitive Focus Product Focus Mass Customization Focus Comparison of Process Choices

Process Analysis and Design Outline Process Analysis and Design Flow Charts Time-Function Mapping Value-Stream Mapping Process Charts Service Blueprinting

Special Consideration for Service Process Design Outline – Continued Special Consideration for Service Process Design Customer Interaction and Process Design More Opportunities to Improve Service Processes Selection of Equipment and Technology

Production Technology Outline – Continued Production Technology Machine Technology Automatic Identification Systems (AISs) and RFID Process Control Vision Systems Robots

Production Technology (cont.) Outline – Continued Production Technology (cont.) Automated Storage and Retrieval Systems (ASRSs) Automated Guided Vehicles (AGVs) Flexible Manufacturing Systems (FMSs) Computer-Integrated Manufacturing (CIM)

Technology in Services Outline – Continued Technology in Services

Four basic strategies Process focus Repetitive focus Product focus Process Strategies Four basic strategies Process focus Repetitive focus Product focus Mass customization Within these basic strategies there are many ways they may be implemented

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

Process Focus (low volume, high variety, intermittent processes) Many inputs (surgeries, sick patients, baby deliveries, emergencies) Many different outputs (uniquely treated patients) Many departments and many routings (low volume, high variety, intermittent processes) Arnold Palmer Hospital Figure 7.2(a)

Facilities often organized as assembly lines 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

Repetitive Focus (modular) Harley Davidson Raw materials and module inputs Modules combined for many Output options (many combinations of motorcycles) Few modules (multiple engine models, wheel modules) (modular) Harley Davidson Figure 7.2(b)

Facilities are organized by product 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

Product Focus (low-variety, high volume, continuous process) Frito-Lay Few Inputs (corn, potatoes, water, seasoning) Output variations in size, shape, and packaging (3-oz, 5-oz, 24-oz package labeled for each material) (low-variety, high volume, continuous process) Frito-Lay Figure 7.2(c)

Hot mill for finishing, cooling, and coiling Product Focus Scrap steel Ladle of molten steel Electric furnace A B C Continuous caster Continuous cast steel sheared into 24-ton slabs Hot tunnel furnace - 300 ft Hot mill for finishing, cooling, and coiling D E F G H I Nucor Steel Plant

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

Mass Customization Number of Choices Item 1970s 21st Century Vehicle models 140 286 Vehicle types 18 1,212 Bicycle types 8 211,000 Software titles 0 400,000 Web sites 0 162,000,000 Movie releases per year 267 765 New book titles 40,530 300,000 Houston TV channels 5 185 Breakfast cereals 160 340 Items (SKUs) in 14,000 150,000 supermarkets LCD TVs 0 102 Number of Choices Item 1970s 21st Century Table 7.1

Mass Customization (high-volume, high-variety) Dell Computer Many parts and component inputs Many output versions (custom PCs and notebooks) Many modules (chips, hard drives, software, cases) (high-volume, high-variety) Dell Computer Figure 7.2(d)

Mass Customization Repetitive Focus Mass Customization Process-Focused Flexible people and equipment Figure 7.3 Modular techniques Accommodating Product and Process Design Responsive Supply Chains Mass Customization Rapid throughput techniques Effective scheduling techniques Process-Focused High variety, low volume Low utilization (5% to 25%) General-purpose equipment Product-Focused Low variety, high volume High utilization (70% to 90%) Specialized equipment

Imaginative and fast product design Rapid process design Mass Customization Imaginative and fast product design Rapid process design Tightly controlled inventory management Tight schedules Responsive supply chain partners

Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) Small quantity and large variety of products are produced Long runs, usually a standardized product with options, produced from modules Large quantity and small variety of products are produced Large quantity and large variety of products are produced Equipment used is general purpose Special equipment aids in use of an assembly line Equipment used is special purpose Rapid changeover on flexible equipment Table 7.2

Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) Operators are broadly skilled Employees are modestly trained Operators are less broadly skilled Flexible operators are trained for the necessary customization There are many job instructions because each job changes Repetitive operations reduce training and changes in job instructions Work orders and job instructions are few because they are standardized Custom orders require many job instructions Table 7.2

Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) Raw-material inventories high relative to the value of the product JIT procurement techniques are used Raw material inventories are low relative to the value of the product Work-in-process is high compared to output JIT inventory techniques are used Work-in-process inventory is low compared to output Work-in-process inventory driven down by JIT, kanban, lean production Table 7.2

Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) Units move slowly through the facility Assembly is measured in hours and days Swift movement of units through the facility is typical Goods move swiftly through the facility Finished goods are usually made to order and not stored Finished goods made to frequent forecast Finished goods are usually made to forecast and stored Finished goods are often build-to-order (BTO) Table 7.2

Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) Scheduling is complex, concerned with trade-offs between inventory, capacity, and customer service Scheduling is based on building various models from a variety of modules to forecasts Scheduling is relatively simple, concerned with establishing output rate sufficient to meet forecasts Sophisticated scheduling is required to accommodate custom orders Fixed costs tend to be low and variable costs high Fixed costs dependent on flexibility of the facility Fixed costs tend to be high and variable costs low Fixed costs tend to be high, variable costs must be low Table 7.2

Global Company Profile: Harley-Davidson Four Process Strategies Summary Global Company Profile: Harley-Davidson Four Process Strategies Process Focus Repetitive Focus Product Focus Mass Customization Focus Comparison of Process Choices