LSM733-PRODUCTION OPERATIONS MANAGEMENT By: OSMAN BIN SAIF LECTURE 10 1

 Tools of TQM  Check Sheets  Scatter Diagrams  Cause-and-Effect Diagrams  Pareto Charts  Flowcharts  Histograms  Statistical Process Control (SPC) Summary of Last Session 2

 The Role of Inspection  When and Where to Inspect  Source Inspection  Service Industry Inspection  Inspection of Attributes versus Variables  TQM in Services Summary of Last Session (Contd.) 3

 Tools for Generating Ideas  Check sheets  Scatter diagrams  Cause-and-effect diagrams  Tools to Organize the Data  Pareto charts  Flowcharts  Tools for Identifying Problems  Histogram  Statistical process control chart Summary of Last Session (Contd.) 4

 Four Process Strategies  Process Focus  Repetitive Focus  Product Focus  Mass Customization Focus  Comparison of Process Choices  Process Analysis and Design  Flow Diagrams  Time-Function Mapping  Value-Stream Mapping  Process Charts  Service Blueprinting Agenda for this session 5

 Service Process Design  Customer Interaction and Process Design  More Opportunities to Improve Service Processes  Selection of Equipment and Technology  Production Technology  Machine Technology  Automatic Identification Systems (AISs) and RFID  Process Control  Vision Systems  Robots Agenda for this session (Contd.) 6

 Production Technology (cont.)  Automated Storage and Retrieval Systems (ASRSs)  Automated Guided Vehicles (AGVs)  Flexible Manufacturing Systems (FMSs)  Computer-Integrated Manufacturing (CIM)  Technology in Services  Process Redesign  Ethics and Environmentally Friendly Processes Agenda for this session (Contd.) 7

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, large variety of products Long runs, standardized product made from modules Large quantity, small variety of products Large quantity, large variety of products General purpose equipment Special equipment aids in use of assembly line Special purpose equipment Rapid changeover on flexible equipment Table 7.2 8

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 Many job instructions as each job changes Repetition reduces training and changes in job instructions Few work orders and job instructions because jobs standardized Custom orders require many job instructions Table 7.2 9

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 JIT procurement techniques used Raw material inventories are low Work-in- process is high JIT inventory techniques used Work-in- process inventory is low Work-in- process inventory driven down by JIT, lean production Table

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 plant Movement is measured in hours and days Swift movement of unit through the facility is typical Goods move swiftly through the facility Finished goods made to order Finished goods made to frequent forecast Finished goods made to forecast and stored Finished goods often build-to-order (BTO) Table

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, trade-offs between inventory, availability, customer service Scheduling based on building various models from a variety of modules to forecasts Relatively simple scheduling, establishing output rate to meet forecasts Sophisticated scheduling required to accommodate custom orders Table

Comparison of Processes Process Focus (Low volume, high variety) Repetitive Focus (Modular) Product Focus (High-volume, low-variety) Mass Customization (High-volume, high-variety) Fixed costs low, variable costs high Fixed costs dependent on flexibility of the facility Fixed costs high, variable costs low Fixed costs high, variable costs must be low Costing estimated before job, known only after the job Costs usually known due to extensive experience High fixed costs mean costs dependent on utilization of capacity High fixed costs and dynamic variable costs make costing a challenge Table

Crossover Charts Fixed costs Variable costs $ High volume, low variety Process C Fixed costs Variable costs $ Repetitive Process B Fixed costs Variable costs $ Low volume, high variety Process A Fixed cost Process A Fixed cost Process B Fixed cost Process C Total cost V1V1V1V1 (2,857) V2V2V2V2 (6,666) 400,000300,000200,000 Volume$ Figure

Focused Processes  Focus brings efficiency  Focus on depth of product line rather than breadth  Focus can be  Customers  Products  Service  Technology 15

Changing Processes  Difficult and expensive  May mean starting over  Process strategy determines transformation strategy for an extended period  Important to get it right 16

Process Analysis and Design  Flow Diagrams - 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 17

“Baseline” Time-Function Map Customer Sales Production control Plant A Warehouse Plant B Transport Move Receive product Extrude Wait Move Wait Print Wait Order product Process order Wait 12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day 52 days Figure

“Target” Time-Function Map Customer Sales Production control Plant Warehouse Transport Move Receive product Extrude Wait Print Order product Process order Wait 1 day 2 days 1 day 6 days Figure

Value-Stream Mapping Figure

Process Chart Figure 7.9

Service Blueprint  Focuses on the customer and provider interaction  Defines three levels of interaction  Each level has different management issues  Identifies potential failure points 22

Notify customer the car is ready Customer departs Customer pays bill F F Service Blueprint Personal GreetingService DiagnosisPerform ServiceFriendly CloseLevel#3Level#1 Level#2 Figure 7.10 No Notify customer and recommend an alternative provider Customer arrives for service Warm greeting and obtain service request F Direct customer to waiting room F Perform required work Prepare invoiceYesYes F F Standard request Determine specificsNo Can service be done and does customer approve? FF 23

Process Analysis Tools  Flowcharts provide a view of the big picture  Time-function mapping adds rigor and a time element  Value-stream analysis extends to customers and suppliers  Process charts show detail  Service blueprint focuses on customer interaction

Service Factory Service Shop Degree of Customization Low High Degree of Labor Low High Mass Service Professional Service Service Process Matrix Commercial banking Private banking General- purpose law firms Law clinics Specialized hospitals Hospitals Full-service stockbroker Limited-service stockbroker Retailing Boutiques Warehouse and catalog stores Fast-food restaurants Fine-dining restaurants Airlines No-frills airlines Figure

Service Process Matrix  Labor involvement is high  Selection and training highly important  Focus on human resources  Personalized services Mass Service and Professional Service Service Factory and Service Shop  Automation of standardized services  Low labor intensity responds well to process technology and scheduling  Tight control required to maintain standards 26

Improving Service Productivity StrategyTechniqueExample Separation Structure service so customers must go where 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

StrategyTechniqueExample Postponement Customizing at delivery Customizing vans at delivery rather than at production Focus Restricting the offerings Limited-menu restaurant Modules Modular selection of service, modular production Investment and insurance selection, prepackaged food modules in restaurants Improving Service Productivity Table

StrategyTechniqueExample Automation Separating services that may lend themselves to 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, funeral directors, after- sale maintenance personnel Improving Service Productivity Table

Improving Service Processes  Layout  Product exposure, customer education, product enhancement  Human Resources  Recruiting and training  Impact of flexibility 30

Equipment and Technology  Often complex decisions  Possible competitive advantage  Flexibility  Stable processes  May allow enlarging the scope of the processes 31

Production Technology  Machine technology  Automatic identification systems (AISs)  Process control  Vision system  Robot  Automated storage and retrieval systems (ASRSs)  Automated guided vehicles (AGVs)  Flexible manufacturing systems (FMSs)  Computer-integrated manufacturing (CIM) 32

Machine Technology  Increased precision  Increased productivity  Increased flexibility  Improved environmental impact  Reduced changeover time  Decreased size  Reduced power requirements 33

Automatic Identification Systems (AISs)  Improved data acquisition  Reduced data entry errors  Increased speed  Increased scope of process automation Example – Bar codes and RFID 34

Process Control  Increased process stability  Increased process precision  Real-time provision of information for process evaluation  Data available in many forms 35

Process Control Software 36

Vision Systems  Particular aid to inspection  Consistently accurate  Never bored  Modest cost  Superior to individuals performing the same tasks 37

Robots  Perform monotonous or dangerous tasks  Perform tasks requiring significant strength or endurance  Generally enhanced consistency and accuracy 38

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 39

Automated Guided Vehicle (AGVs)  Electronically guided and controlled carts  Used for movement of products and/or individuals 40

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 41

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 low- volume/high-variety, and high-volume/low- variety production 42

Computer- Integrated Manufacturing (CIM) Figure

Technology in Services Service Industry Example Financial Services Debit cards, electronic funds transfer, ATMs, Internet stock trading Education Electronic bulletin boards, on-line journals, WebCT and Blackboard Utilities and government Automated one-man garbage trucks, optical mail and bomb scanners, flood warning systems Restaurants and foods Wireless orders from waiters to kitchen, robot butchering, transponders on cars that track sales at drive-throughs Communications Electronic publishing, interactive TV Table

Technology in Services Service Industry Example Hotels Electronic check-in/check-out, electronic key/lock system Wholesale/retail trade ATM-like kiosks, point-of-sale (POS) terminals, e-commerce, electronic communication between store and supplier, bar coded data Transportation Automatic toll booths, satellite-directed navigation systems Health care Online patient-monitoring, online medical information systems, robotic surgery Airlines Ticketless travel, scheduling, Internet purchases Table

Process Redesign  The fundamental rethinking of business processes to bring about dramatic improvements in performance  Relies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptions  Requires reexamination of the basic process and its objectives  Focuses on activities that cross functional lines  Any process is a candidate for redesign 46

Ethics and Environmentally Friendly Processes  Encourage recycling  Efficient use of resources  Reduction of waste by-products  Use less harmful ingredients  Use less energy Reduce the negative impact on the environment 47

 Four Process Strategies  Process Focus  Repetitive Focus  Product Focus  Mass Customization Focus  Comparison of Process Choices  Process Analysis and Design  Flow Diagrams  Time-Function Mapping  Value-Stream Mapping  Process Charts  Service Blueprinting Summary of this session 48

 Service Process Design  Customer Interaction and Process Design  More Opportunities to Improve Service Processes  Selection of Equipment and Technology  Production Technology  Machine Technology  Automatic Identification Systems (AISs) and RFID  Process Control  Vision Systems  Robots Summary of this session (Contd.) 49

 Production Technology (cont.)  Automated Storage and Retrieval Systems (ASRSs)  Automated Guided Vehicles (AGVs)  Flexible Manufacturing Systems (FMSs)  Computer-Integrated Manufacturing (CIM)  Technology in Services  Process Redesign  Ethics and Environmentally Friendly Processes Summary of this session (Contd.) 50

THANK YOU 51