April 16 SP

2 CHAPTER 8 Process Selection affects the outcome – in production or sports:

3 What is Process Selection? Series of decisions that includes technical/engineering issues and volume/scale issues Technical/engineering: basic methods that produce a good or service Scale: how many or how much to produce; how many to serve at a time Trade off analysis between capacity and costs

4 Why process selection is critical Dell – from make/assemble to order in Texas to make/assemble to stock off shore Does this work? Break even analysis may depend on process costs Which process gives the lowest costs – assumption?

The Point of Indifference Comparing Two Processes What is it? Who cares? How do you calculate it? 5

Comparing Two Processes Process A Fixed = $2000 Variable = $5/item Process B Fixed = $11000 Variable = $2/item

Fixed A + (Var A )x = Fixed B + (Var B )x x = 11, x 3x = 9000 X = 3000 So what? Comparing the Processes

8 Trade off analysis Customer demanded quantity drives the trade off analysis and decision process Example: → retail stocks at Christmas 2008 and 2009 season - goal save money by stocking less → At what point do you lose sales due to lower stockage levels?

9 Process Design/Selection/Capacity Have to be simultaneous operations – some texts suggest sequential steps Decision process has to be customer based → what should it be? → how many should be produced/how many are we capable of producing? → how should it be produced?

10 Process Strategy - Defines Capital intensity Process flexibility Vertical integration Customer involvement

11 Goal of Process Design Reduce lead time for product to the customer Is it best to be the first to market and establish the market? Or, be the follower and let someone else do the R&D/design/risk?

12 Problems with Managing Large, Unfocused Operations Growing facilities add more levels of management and make coordination and control difficult. New products are added to the facility as customers demand greater product variety. Hidden overhead costs increase as managers add staff to deal with increased complexity.

13 Process Planning Make-or-buy decisions Process selection Specific equipment selection Process plans Process analysis

14 Make-or-Buy Decisions 1. Cost 2. Capacity 3. Quality 4. Speed 5. Reliability 6. Expertise What about Proprietary Information? Barrier to Make-or-Buy?

15 Source: Aberdeen Research, “Low-Cost Country Sourcing Success Strategies: Maximizing and Sustaining the Next Big Supply Savings Opportunity,” Jun 2005

16 Process Plans Blueprints Bill of material Flat or multiple layers - part or assembly Assembly chart / product structure diagram Operations process chart - list of operations involved in assembly Routing sheet - sequence of events

17 Process Analysis The systematic examination of all aspects of a process to improve its operation The systematic examination of all aspects of a process to improve its operation Faster Faster More efficient More efficient Less costly Less costly More responsive More responsive Basic tools Basic tools Process flowchart Process flowchart Process diagrams Process diagrams Process maps Process maps

18 Operations Process Chart Part nameCrevice Tool Part No UsageHand-Vac Assembly No.520 Oper. No.DescriptionDept.Machine/ToolsTime 10Pour in plastic bits041Injection molding2 min 20Insert mold041#0762 min 30Check settings041113, 67, min & start machine 40Collect parts & lay flat051Plastics finishing10 min 50Remove & clean mold042Parts washer15 min 60Break off rough edges051Plastics finishing10 min

19 Process Analysis – What processes feed other processes?

20 Process Flowchart

21 Principles for Redesigning Processes Walk the Process! Remove waste, simplify, consolidate Link processes to create value Let the swiftest and most capable execute Capture information digitally, data mine, and use information to improve operations

22 Principles for Redesigning Processes Provide visibility through information about process status Fit the process with sensors and feedback loops Add analytic capabilities Connect, collect and create knowledge around the process Personalize the process

23 Techniques for Generating Innovative Ideas Vary entry point to a problem Draw analogies Change your perspective Use attribute brainstorming

24 RFID Active Tags Always on Battery powered Can be read from up to 300 ft US Army Savi Tags Passive Tags Small Must be activated May be turned off England California Rolex

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27 Robotics Programmable manipulators Follow specified path Better than humans with respect to Hostile environments Long hours Consistency Adoption has been slowed by ineffective integration and adaptation of systems Welding at Harley Davidson Plant Questions?

Facilities

Objectives of Facility Layout Eliminate waste or redundant movement Facilitate the entry, exit, and placement of material, products, or people Incorporate safety and security measures Promote product and service quality Encourage proper maintenance activities Provide a visual control of operations or activities Provide flexibility to adapt to changing conditions Increase capacity

Objectives of Facility Layout Minimize material handling costs Utilize space efficiently Utilize labor efficiently Eliminate bottlenecks Facilitate communication and interaction between workers, between workers and their supervisors, or between workers and customers Reduce manufacturing cycle time or customer service time

Process Layout Machines grouped by process they perform Product Layout Linear arrangement of workstations to produce a specific product Fixed Position Layout Used in projects where the product cannot be moved Basic Types of Layouts

Manufacturing Process Layout L L L L L L L L L L M M M M D D D D D D D D G G G G G G A AA Receiving and Shipping Assembly Painting Department Lathe Department Milling Department Drilling Department Grinding Department P P

A Product Layout In Out

Fixed-Position Layouts Typical of projects Equipment, workers, materials, other resources brought to the site Highly skilled labor Often low fixed Typically high variable costs

Designing Process Layouts Minimize material handling costs Block Diagramming Minimize nonadjacent loads Use when quantitative data is available Relationship Diagramming Based on location preference between areas Use when quantitative data is not available

Block Diagramming Create load summary chart Calculate composite (two way) movements Develop trial layouts minimizing number of nonadjacent loads

Block Diagrams (a) Initial block diagram

Block Diagrams (a) Initial block diagram(b) Final block diagram

Relationship Diagramming (Murther’s Grid) Used when quantitative data is not available Muther’s grid displays preferences Denote location preferences with weighted lines

Relationship Diagramming Example Production Offices Stockroom Shipping and receiving Locker room Toolroom

Relationship Diagramming Example A A A O O O O O U U U U E X I Production Offices Stockroom Shipping and receiving Locker room Toolroom AAbsolutely necessary EEspecially important IImportant OOkay UUnimportant XUndesirable

Relationship Diagramming Example A A A O O O O O U U U U E X I Production Offices Stockroom Shipping and receiving Locker room Toolroom AAbsolutely necessary EEspecially important IImportant OOkay UUnimportant XUndesirable

Relationship Diagramming Example Production Offices Stockroom Shipping and receiving Locker room Toolroom 1Absolutely necessary 2Especially important 3Important 4Okay 5Unimportant 6Undesirable

Service Layouts Usually process layouts due to customers needs Minimize flow of customers or paperwork Retailing tries to maximize customer exposure to products Computer programs consider shelf space, demand, profitability Layouts must be aesthetically pleasing

Designing Product Layouts Product layouts or assembly lines Develop precedence diagram of tasks Jobs divided into work elements Assign work elements to workstations Try to balance the amount work of each workstation

Line Balancing Precedence diagram Network showing order of tasks and restrictions (constraints) on their performance Cycle time Maximum time product spends at any one workstation

Hybrid Layouts Cellular layouts Group machines into machining cells Flexible manufacturing systems Automated machining & material handling systems Mixed-model assembly lines Produce variety of models on one line

Cellular Layouts 1.Identify families of parts with similar flow paths 2.Group machines into cells based on part families 3.Arrange cells so material movement is minimized 4.Locate large shared machines at point of use

Advantages Of Cellular Layouts Reduced material handling and transit time Reduced setup time Reduced work-in-process inventory Better use of human resources Easier to control - visibility Easier to automate

Disadvantages Of Cellular Layouts Inadequate part families Poorly balanced cells Expanded training and scheduling of workers Increased capital investment

Manufacturing Cell Key: S= Saw L= Lathe HM= Horizontal milling machine VM= Vertical milling machine G= Grinder Paths of three workers moving within cell Material movement In Out Worker 1 Worker 2 Worker 3 Direction of part movement within cell S L HM VM G L Final inspection Finished part

Mixed Model Assembly Lines Produce multiple models in any order on one assembly line Harley, Opel Issues in mixed model lines Line balancing U-shaped line Flexible workforce Model sequencing

Facility Location Models

Types Of Facilities Heavy manufacturing Auto plants, steel mills, chemical plants Light industry Small components mfg, assembly Warehouse & distribution centers Retail & service

Factors in Heavy Manufacturing Location Construction costs Land costs Raw material and finished goods shipment modes Proximity to raw materials Utilities Labor availability

Factors in Light Industry Location Construction costs Land costs Easily accessible geographic region Education & training capabilities

Factors in Warehouse Location Transportation costs Proximity to markets (Customers)

Warehouse Size Considerations Customer service level layout # of products (Stock Keeping Units - SKUs) customer base size of products racks/shelving demand variability MHE requirements/aisle size regulations - CAL OSHA - earthquake; safety; fire

Factors in Retail Location Proximity to customers Proximity to customers Ease of customer entry and exit Ease of customer entry and exit Location is everything Location is everything

Global Location Factors Government stability Government regulations Political and economic systems Economic stability and growth Exchange rates Culture Climate Export import regulations, duties and tariffs Raw material availability Number and proximity of suppliers Transportation and distribution system Labor cost and education Available technology Commercial travel Technical expertise Cross-border trade regulations Group trade agreements

Regional Location Factors Labor (availability, education, cost and unions) Proximity of customers Number of customers Construction/leasing costs Land costs Modes and quality of transportation Transportation costs Incentive packages Governmental regulations Environmental regulations Raw material availability Commercial travel Climate Infrastructure Quality of life

Regional Location Factors Community government Local business regulations Government services Business climate Community services Taxes Availability of sites Financial Services Community inducements Proximity of suppliers Education system

Site Location Factors Customer base Construction/ leasing cost Land cost Site size Transportation Utilities Zoning restrictions Traffic Safety/security Competition Area business climate Income level

Location Incentives Tax credits Wal-Mart in Wyandotte Relaxed government regulation Job training Infrastructure improvement Money

Locate facility at center of geographic area Based on weight and distance traveled Establish grid-map of area Identify coordinates and weights shipped for each location Center-of-Gravity Technique