1. Processes and Technologies

2. Process (Definition of)
Process: Any part of an organization that takes inputs and transforms them into outputs

3. Process Flowcharting (definition of)
Process flowcharting is the use of a diagram to present the major elements of a process
The basic elements can include tasks or operations, flows of materials or customers, decision points and storage areas or queues
It is an ideal methodology by which to begin analyzing a process

4. Flowchart Symbols (1 of 2)
Tasks or operations
Examples: Giving an admission ticket to a customer, installing an engine in a car, etc.
Decision Points
Examples: How much change should be offered to a customer, which tool should be used, etc.

5. Flowchart Symbols (2 of 2)
Storage areas or queues
Examples: Sheds, lines of people waiting for a service, etc.
Flows of materials or customers
Examples: Customers moving to a seat, mechanic getting a tool, etc.

6. Example 2: Flowchart for Inspection Process
Material Received from Supplier
No, Continue…
Inspect Material for Defects
Defects found?
Yes
Return to Supplier for Credit

7. Process Terminology (1 of 2)
Single-stage Process
Stage 1
Stage 1
Stage 2
Stage 3
Multi-stage Process 4

8. Process Terminology (2 of 2)
A buffer refers to a storage area between stages where the output of a stage is placed prior to being used in a downstream stage. Allows stages to operate independently
Stage 1
Stage 2
Buffer
Multi-stage Process with Buffer 4

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

10. Process Selection
Process Selection: Deciding on the way production of goods or services will be organized
Process selection can involve substantial investment in
Equipment
Layout of facilities

11. Major Implications of Process Selection
Capacity planning
Layout of facilities
Equipment
Design of work systems

12. Factors that Affect Process Decisions
Required Variety,
Required Volume (how many)
Required Flexibility (degree of)

13. Process Strategy Overall approach to produce goods and services
Defines:
Capital intensity
Process flexibility
Vertical integration
Customer involvement

14. Process Selection and System Design
Forecasting
Product and Service Design
Technological Change
Capacity Planning
Process Selection
Facilities and Equipment
Layout
Work Design

15. From Function to Process
Manufacturing
Accounting
Sales
Purchasing
Product Development
Order Fulfillment
Supply Chain Management
Customer Service
Function
Process

16. Process Selection Variety How much Flexibility What degree Volume
Batch
Variety
How much
Flexibility
What degree
Volume
Expected output
Job Shop
Repetitive
Continuous

17. Types of Processes (Process Flow Structures)
Projects
Job shop
Batch production
Mass production
Continuous flow production

18. Types of Processes (1 of 2)
Determine how to produce a product or provide a service
Projects (nonroutine jobs)
Job shop
Small scale (e.g. copy center making a single copy of a student term paper)
Batch
Moderate volume (e.g. copy center making 10,000 copies of an ad piece for a business)

19. Types of Processes (2 of 2)
Repetitive- Mass production/assembly
High volumes of standardized goods or services (e.g. Automobile manufacturer)
Continuous Flow Line
Very high volumes of non-discrete goods (eg. Petroleum manufacturer)

20. Product and Service Processes
Process Type
Job Shop
Appliance repair Emergency room
Ineffective
Batch
Commercial baking Classroom Lecture
Repetitive
Automotive assembly Automatic carwash
Continuous (flow)
Steel Production Water purification

21. Process-Focused Strategy Examples
Bank
© 1995 Corel Corp.
Machine Shop
Hospital

22. Repetitive-Focused Strategy - Examples
Truck
© 1995 Corel Corp.
Clothes Dryer
Fast Food
McDonald’s over 95 billion served
© T/Maker Co.

23. Product-Focused Examples
Paper (Continuous)
© T/Maker Co.

24. Product – Process Matrix
Dimension
Job shop
Batch
Repetitive
Continuous
Job variety
Very High
Moderate
Low
Very low
Process flexibility
Unit cost
Volume of output
Very Low
High

25. Process Selection with Break-even Analysis
A standard approach to choosing among alternative processes or equipment
Model seek to determine the point in units produced (and sold) where we will start making profit on the process or equipment
Model seeks to determine the point in units produced (and sold) where total revenue and total cost are equal

26. Process Selection with Break-Even Analysis
Total cost = fixed cost + total variable cost
TC = cf + vcv
Total revenue = volume x price
TR = vp
Profit = total revenue - total cost
Z = TR - TC
= vp - (cf + vcv)
cf = fixed cost
v = volume (i.e., number of units produced and sold)
cv = variable cost per unit
p = price per unit

27. Solving for Break-Even Volume
TR = TC
vp = cf + vcv
vp - vcv = cf
v(p - cv) = cf
v = cf
p - cv

28. Break-Even Analysis: Example 1
Fixed cost = cf = $2,000
Variable cost = cv = $5 per raft
Price = p = $10 per raft
The break-even point is
v = = = 400 rafts cf
p - cv
2000
10 - 5

29. Break-Even Analysis: Example 1
Total cost line
Total revenue line
Break-even point
400 Units
$3,000 —
$2,000 —
$1,000 —

30. Break-Even Analysis: Example 2 Choosing Between Two Processes
$2,000 + $5v = $10,000 + $2v
$3v = $8,000
v = 2,667 rafts
Process A Process B
Below 2,667, choose A
Above 2,667, choose B

31. Break-Even Analysis: Example 2 Choosing Between Two Processes
| | | |
Units
$20,000 —
$15,000 —
$10,000 —
$5,000 —
Total cost of process A
Total cost of process B
Choose process A
Choose process B
Point of indifference = 2,667 Units

32. Choosing Between Three Processes$
Fixed cost
Variable cost
Fixed cost – Process A
Fixed cost – Process B
Fixed cost – Process C
200,000
300,000
400,000
Total process C costs
Total process A costs
Process A
Process B
Process C
V1(2,857)
V2 (6,666)
Volume
Total process B costs

33. Make-or-Buy Decisions
1. Cost
2. Available Capacity
3. Quality Considerations
4. Speed
5. Reliability
Expertise
Nature of Demand

34. Specific Equipment Selection
Purchase cost
Operating cost
Annual savings
Revenue enhancement
Replacement analysis
Risk and uncertainty
Piecemeal analysis
Breakeven analysis

35. Transition From Product Design to Process Design: Product and Production Documents

36. Product Documents Engineering drawings
Shows dimensions, tolerances, & materials
Shows codes for Group Technology
Assembly drawing
-- Shows exploded view of product
Bill of Material
Lists components, quantities & where used
Shows product structure

37. Engineering Drawings - Show Dimensions, Tolerances, etc.

38. Assembly Drawing
Head
Neck
End Cap
Handle

39. Bill of Material Example

40. Assembly Chart (Gozinto Chart)
Bottom bun
Beef patty
Salt
Cheese
Lettuce
Sauce
Onions
Middle bun
Pickles
Sesame seed top bun
Wrapper SA
First-layer assembly
Second-layer assembly
Completed Big Mac

41. Assembly Drawing and Assembly Chart

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

43. Process Flowchart Symbols
Operations
Inspection
Transportation
Delay
Storage

44. Process Flowchart: Example 1
SUBJECT: Request tool purchase
Dist (ft)
Time (min)
Symbol
Description
lðo D Ñ
Write order
¡ðo
On desk 75 è o
To buyer
¡ðn
Examine
¡ = Operation; ð = Transport; o = Inspect; D = Delay; Ñ = Storage

45. Process Flow Chart: Example 2: Hamburger Assembly
Dist. (Ft)
Time (Mins)
Chart Symbols
Process Description -
Meat Patty in Storage
1.5
.05
Transfer to Broiler
2.50
Broiler
Visual Inspection
1.0
Transfer to Rack
.15
Temporary Storage .5
.10
Obtain Buns, Lettuce, etc.
.20
Assemble Order
Place in Finish Rack
3.5
3.15
TOTALS
Value-added time = Operation time/Total time = ( )/3.15=85.7%
ðⅮ

46. Process Flowchart: Example 3
Operation
Transport
Inspect
Step
Delay
Storage
Distance
(feet)
Time
(min)
Description of
process 1 2 3 4 5 6 7 8 9 10 11
Unload apples from truck
Move to inspection station
Weigh, inspect, sort
Move to storage
Wait until needed
Move to peeler
Apples peeled and cored
Soak in water until needed
Place in conveyor
Move to mixing area
Total
Page 1 0f 3
480 30 20 15
360
190 ft
20 ft
50 ft
100 ft
Date:
Analyst: TLR
Location: Graves Mountain
Process: Apple Sauce

47. Service Process Design

48. Techniques for Improving Service Productivity (1 of 2)
Strategy
Technique
Separation
Self-service
Postponement
Focus
Structure service so customers must go where service is offered
Self-service so customers examine, compare and evaluate at their own pace
Customizing at delivery
Restricting the offerings

49. Techniques for Improving Service Productivity (2 of 2)
Modules
Automation
Scheduling
Training
Modular selection of service. Modular production
Separating services that lend themselves to automation
Precise personnel scheduling
Clarifying the service options
Explaining problems
Improving employee flexibility

50. More Opportunities to Improve Service Processes
Methods
Layout
Human Resource
Technology

51. Technologies

52. Technology
Technology: The application of scientific discoveries to the development and improvement of products and services and operations processes.
Technology innovation: The discovery and development of new or improved products, services, or processes for producing or providing them.

53. Kinds of Technology
Operations management is primarily concerned with three kinds of technology:
Product and service technology
Process technology
Information technology
All three have a major impact on:
Costs
Productivity
Competitiveness

54. Technology as a Competitive Advantage
Innovations in
Products and services
Cell phones
PDAs
Wireless computing
Processing technology
Increasing productivity
Increasing quality
Lowering costs
Eases flexibility

55. Technology Acquisition
Technology can have benefits but …
Technology risks include:
What technology will and will not do
Technical issues
Economic issues
Initial costs, space, cash flow, maintenance
Consultants and/or skilled employees
Integration cost, time resources
Training, safety, job loss

56. Advantages Created by HighTechnology
Increased precision
Increased productivity
Increased flexibility, increased product variety
Decreased cost (labor, material, inventory, transportation and quality costs)
Improved product features and quality
Decreased pollution
Decreased size
Decreased power requirements.

57. Information Technology
Management Information Systems (MIS)
Move large amounts of data
Decision Support Systems (DSS)
Add decision making support
Expert System
Recommend decision based on expert knowledge

58. Enterprise Software Collect, analyze, and make decisions based on data
ERP - Enterprise Resource Planning
Managing wide range of processes
Human resources, materials management, supply chains, accounting, finance, manufacturing, sales force automation, customer service, customer order entry
Finding hidden patterns through data mining

59. Advanced Communications
Electronic data interchange (EDI)
Internet, extranets
Wireless communications
Teleconferencing & telecommuting
Bar coding, RFT
Virtual reality

60. Process Technology: Automation
Machinery that has sensing and control devices that enables it to operate
- Fixed automation
- Programmable automation

61. Manufacturing Hardware Technology
Numerically controlled (NC) machines
Controlled by punched tape
Computer numerical controlled (CNC)
Controlled by attached computer
Direct numerical control (DNC)
Several NC machines controlled by single computer
Robotics
Flexible manufacturing systems (FMS)
Includes automated material handling

62. Production Process & Technology Alternatives
# Different Products or Parts
High
General Purpose, NC, CNC
CIM
Flexible
Manufacturing System
Dedicated
Automation
Low
Low
High
Volume of Products or Parts

63. Flexible Manufacturing Systems (FMS)
Programmable machine tools
Controlled by common computer network
Combines flexibility with efficiency
Reduces setup & queue times

64. Flexible Manufacturing System
Parts
Finished
goods
Computer
control
room
Terminal
CNC Machine
Pallet
Automatic tool changer

65. Manufacturing Software Technology
Computer Aided Design and Computer Aided Manufacturing (CAD/CAM)
Computer Integrated Manufacturing (CIM)

66. CAM refers to the use of specialized computer programs to direct and control manufacturing equipment. When CAD information is translated into instructions for computer aided manufacturing, CAM, the result of these two technologies is known as CAD/CAM