Process Choice and Layout Decisions in Manufacturing and Services Chapter 7

Chapter Objectives Be able to: Describe the five classic types of manufacturing processes. Discuss how different manufacturing and service process choices support different market requirements. Explain how different processes can be linked together via the supply chain. Describe the critical role of customization in manufacturing, including the degree and point of customization, and upstream versus downstream activities. Discuss the three dimensions that differentiate services from one another and explain the different managerial challenges driven by these dimensions. Create and interpret a service blueprint. Position a service on a conceptual model and explain the underlying managerial challenges. Develop a product-based layout using line balancing and calculate basic performance measures for the line. Develop a functional layout based on total distance traveled.

Manufacturing Processes Engineering and business perspectives Classic manufacturing processes Choosing between classic types The role of customization

Engineering and Business Perspectives

Solid Wood Seat for a Kitchen Chair: Process A Saddle Machine Shaper Machine Sander A Sander B Inspection Setup Time: 6 hours Time/Seat 1.1 min. Yield Rate: 92% Process B 5-Axis Router ---- Sander A Sander B Inspection Setup Time: 10 min. Time / Seat: 3.5 min. Yield Rate: 99% Bliven Furniture Company example in textbook

Classic Engineering Viewpoint Four Transformation Processes Conversion  Fabrication  Assembly Testing “Advances in Engineering increase and improve the alternatives available”

Example: Making Windows Conversion Fabrication Assembly Raw lumber Molten glass Frame wood Window panes Assembled Windows

Business View What conversion steps must be done? What are the production volumes like? How similar are the various products we make (can we standardize)? If the product is customized, how late in the process does it occur?

Classic Manufacturing Processes

Process Types (in order of decreasing volume) Continuous Flow Production Line Batch (High Volume) Batch (Low Volume) Job Shop Project

Continuous Flow Large production volumes High level of automation Basic material passed along, converted as it moves Usually cannot be broken into discrete units Usually very high fixed costs, inflexible Oil refinery, fiber formation, public utilities, automotive manufacturing

Production Line High-volume production of standard products or “design window” Processes arranged by product flow Often “paced” (‘takt’ time discussed later) Highly efficient, but not too flexible

Batch I Somewhere in between job shop and line processes Moderate volumes, multiple products Production occurs in “batches” Can manufacturing, carton makers, advertising mailers, etc.

Batch II Layout is a cross between that found in a line and that found in a job shop: Group Technology

Some Examples of Batch Manufacturing Numerical control (NC) machines Automated processing of entire batch Machining center - multiple NC machines Flexible manufacturing systems (FMS) Dedicated to families of parts NC and automated handling Group technology Similar in concept to FMS, but not as much automation

Job Shop Low volume, one-of-a-kind products Job shops sell their capability Highly flexible equipment, skilled workers Equipment arranged by function

Project Used when a product is: Resources moved to where needed one-of-a-kind too large to be moved Resources moved to where needed Equipment, people, etc. are highly flexible Finite duration, often with deadline Construction projects, equipment installation

Mixing Together the Process Types  Hybrid Process Spindles ASSEMBLY LINE for putting together final product Arms and Legs Chair manufacturing process BATCH for fabricating parts ... Seats

Choosing Between Classic Types The product-process matrix Product and process life cycles

Comparing Process Types... Job Shop Batch Line Volume Very Low High Variety Very High Low Skills Broad Limited Advantage Flexibility Price and Delivery

Product – Process Matrix One of a Kind Low Volume Multiple Products Moderate Volumes Few Major Products High Volume Commodity Products Job Shop Batch Line Very Poor Fit Very Poor Fit

Life-Cycle Planning Framework

Introduction Stage Availability key to market success but: No reliable movement history Unreliable forecasts Small shipments Erratic orders

Life-Cycle Planning Framework High product availability Flexibility to handle variation

Growth Stage Sales somewhat more predictable Higher volumes Performance emphasis?... Capacity planning and timing Growth management More accurate forecasting Selection of long-term supply chain partners

Life-Cycle Planning Framework Availability Achieve break- even volumes as soon as possible Less need for flexibility

Maturity Stage Intense competition around more standardized products Frequent price and service adjustments Implications . . . Emphasis on managing, reducing costs More careful attention to inventory strategy Accurate forecasting

Life-Cycle Planning Framework More selective, targeted efforts Value-added service

Decline Stage (Obsolescence) Product close-out or restricted distribution Lowest cost / differentiated performance not as critical anymore Priorities? Careful management of inventory Closing on remaining product versions with highest demand Conversion of unused capacity to other, newer products where practical Retraining of personnel for other work, if available

Life-Cycle Planning Framework Centralized inventory Speed

Implications What happens to process choices as companies follow products through their life cycles? What happens to process choices when companies support products at various stages of the life cycle?

The Role of Customization

What is “Customization”? An operations-centric view: “Customization occurs when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities”

Customization Point Model I Definitions: ETO – engineer to order MTO – make to order ATO – assemble-to-order MTS – make to stock Upstream: before the customization point, “off-line” activities Downstream: after the customization point, “on-line” activities

Make-to-Order Windows Off-line Activities Design Buy Materials Fabricate parts Assemble Ship windows On-Line Activities Lead times? Customizability? Price? What type of manufacturing? Sell windows

Customization Point Model II Manufacturing Systems Design Upstream Downstream Performance objectives Technology Investment Organization structure Job differentiation Integration Discretion Efficiency Productivity, consistency Mechanistic High Formal Low Responsiveness Flexibility Organic Informal

Difficulty versus Customization

An Operations-Centric View Customization becomes relevant to operations and supply chain managers when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities Job Difficulty Job Routineness Operations and Supply Chain Design Customization

“Mass customization” at Japan’s National Bicycle Co. 2-WEEK LEAD TIME

Law of Variability The earlier customization is introduced in the supply chain, the greater the random variability of the process and the lower its productivity

Services What makes them distinctive? High-contact versus low-contact Front room versus back room Service Blueprinting

Services . . . Process and “product” are inseparable Marketing and sales often tightly integrated Customer often part of the process Performance metrics can be harder to define Nevertheless: Focus and process choices / trade-offs still apply

Degree of Customer Contact Low Contact “off-line” Can locate for efficiency Can smooth out the workload Check clearing, mail sorting High Contact “on-line” Can locate for easy access Flexibility to respond to customers Harder to manage Hospitals, food service

Classifying Services “Front Room” versus “Back Room” Front room – what the customer can see Managed for flexibility and customer service Customer lobbies, bank teller, receptionist Back room – what the customer does not see Managed for efficiency and productivity Package sorting, car repair, blood test analysis, accounting department

What is it? What is the performance objective? Restaurant kitchen Software help desk Kinko’s copy center Airline reservations Jet maintenance Class discussion exercise

Designing Services Selecting a service focus Like manufacturing processes, different services have strengths and weaknesses Key is to design a service process that meets the needs of targeted customers The “service package”

Service Blueprinting Processes Customer actions Onstage activities Backstage activities Support Separations Line of interaction Line of visibility Line of internal interaction

Service Blueprint Template (Note similarity to ‘swim lane’ in Chapter 3?)

A Cubical Model of Services (Three Dimensions) Nature of the Service Package Primarily Physical Activities (Airline, trucking firm) Primarily Intangible Activities (Law firm, software developer) Degree of Customization Lower Customization (Quick-change oil shop) Higher Customization (Full-service car repair shop) Degree of Customer Contact Lower Contact (Mail sorting) Higher Contact (Physical therapist) Table 7.3 in textbook Primarily physical: Greater emphasis on managing physical assets Primarily intangible: Greater emphasis on managing people and knowledge assets Lower customization: Greater emphasis on closely controlling the process and improving productivity Higher customization: Greater emphasis on being flexible and responsive to customer needs Lower contact: Service layout, location, and hours will be based more on cost and productivity concerns Higher contact: Service layout, location, and hours must be designed with customer convenience in mind.

Community Hospital Public Hospital

Birthing Center Public Hospital

Layout Decision Models Product-based layout Usually best for a line operation Cycle time a primary measure Functional layout Usually best for a job shop Distance between steps a measure Cellular layout Usually best for batch processes

Product-Based Layout Line Balancing Improve ‘Takt’ time: Use minimum number of workstations Reduce idle time Reduce setup time Reduce unnecessary movement Identify ‘bottlenecks’

Process Layout Steps Identify all steps, their relationships, and times required. Draw a precedence diagram Determine takt time (time available divided by desired output rate) Determine minimum number of workstations required (total process time divided by takt time) Assign tasks to workstations according to precedence and total time for each to not exceed takt time. Evaluate solution for times per workstation, % idle time, and efficiency delay (100% - % idle time)

Precedence Diagram Example (with workstation task assignments) From text, page 198

Functional Layout Improvement Minimize the total distance traveled Determine distances between functional units Determine numbers of interactions between units Multiply distances times respective number of interactions Revise original layout for minimum total distance after first locating functions best for process material flows Minimize information flow for decisions Use electronic data interchange (EDI) to allow more flexibility for accomplishing A and B

Case Study in Manufacturing and Service Processes Loganville Window Treatments