1. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-1 Operations Management Process Strategy and Capacity Planning Chapter 7

2. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-2 Learning Objectives When you complete this chapter, you should be able to :  Identify or Define :  Process focus  Repetitive focus  Product focus  Process reengineering  Service process issues

3. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-3 Fit of Process, Volume, and Variety Process focus projects, job shops,(machine, print, carpentry) Standard Register Repetitive (autos, motorcycles) Harley Davidson Product focus (commercial baked goods, steel, glass) Nucor Steel High Variety One or few units per run, high variety (allows customization) Changes in modules Modest runs, standardized modules Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. Poor strategy (Variable costs are high) Low-Volume (Intermittent) Repetitive Process (Modular) High-Volume (Continuous)

4. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-4 Production Process Flow Diagram Shipping Customer Customer sales representative take order Prepress Department (Prepare printing plates and negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Purchasing (order inks, paper, other supplies) Vendors Receiving Warehousing (ink, paper, etc.) Accounting Information flow Material flow

5. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-5 Types of Process Strategies Continuum  Process strategies that follow a continuum  Within a given facility, several strategies may be used  These strategies are often classified as: Repetitive- Focused Product-FocusedProcess-Focused

6. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-6 Process-Focused Strategy  Facilities are organized by process  Similar processes are together  Example: All drill presses are together  Low volume, high variety products  ‘Jumbled’ flow Operation Product A Product B 112233  Other names  Intermittent process  Job shop

7. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-7 Figure 7A

8. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-8 Process-Focused Strategy Examples Bank © 1995 Corel Corp. Machine Shop © 1995 Corel Corp. Hospital © 1995 Corel Corp.

9. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-9 Process Focused Strategy - Pros & Cons  Advantages  Greater product flexibility  More general purpose equipment  Lower initial capital investment  Disadvantages  More highly trained personnel  More difficult production planning & control  Low equipment utilization (5% to 25%)

10. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-10 Repetitive Focused Strategy  Facilities often organized by assembly lines  Characterized by modules  Parts & assemblies made previously  Modules combined for many output options  Other names  Assembly line  Production line

11. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-11 Figure 7B

12. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-12 Repetitive Focused Strategy - Considerations  More structured than process-focused, less structured than product focused  Enables quasi-customization  Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, high- variety model

13. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-13 Repetitive-Focused Strategy - Examples Truck © 1995 Corel Corp. Clothes Dryer © 1995 Corel Corp. Fast Food McDonald’s over 95 billion served © 1984-1994 T/Maker Co.

14. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-14 Figure 7.3

15. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-15 Product-Focused Strategy  Facilities are organized by product  High volume, low variety products  Where found  Discrete unit manufacturing  Continuous process manufacturing Operation Products A & B 1 1 2 2 3 3  Other names  Line flow production  Continuous production

16. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-16 Figure 7C

17. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-17 Product-Focused Strategy Pros & Cons  Advantages  Lower variable cost per unit  Lower but more specialized labor skills  Easier production planning and control  Higher equipment utilization (70% to 90%)  Disadvantages  Lower product flexibility  More specialized equipment  Usually higher capital investment

18. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-18 Product-Focused Examples © 1995 Corel Corp. Light Bulbs (Discrete) Paper (Continuous) © 1984-1994 T/Maker Co. © 1995 Corel Corp. Soft Drinks (Continuous, then Discrete) Mass Flu Shots (Discrete) © 1995 Corel Corp.

19. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-19 Figure 7.4

20. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-20 Table 7.1 Process FocusRepetitive FocusProduct Focus 1. Product: Small quantity, large variety 1. Product: Long runs, usually standardized 1. Product: Large quantities, small variety 2. Equipment: General purpose 2. Equipment: Special; assembly line 2. Equipment: Special-purpose 3. Operators broadly skilled 3. Employees modestly trained 3. Operators less broadly skilled 4. Many job instructions 4. Repetitive operations4. Few work orders and job instructions; standardization

21. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-21 Process Continuum Process Focused (intermittent process) Repetitive Focus (assembly line) Product Focused (continuous process) Continuum High variety, low volume Low utilization (5% - 25%) General-purpose equipment Low variety, high volume High utilization (70% - 90%) Specialized equipment Modular Flexible equipment

22. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-22 Mass Customization  Using technology and imagination to rapidly mass-produce products that cater to sundry unique customer desires.  Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant.

23. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-23 Mass Customization - More Choices Than Ever

24. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-24 Questions for Process Analysis and Design  Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost?  Does the process eliminate steps that do not add value?  Does the process maximize customer value as perceived by the customer?  Will the process win orders?

25. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-25 Tools for Process Design  Flow Diagrams  Process Charts  Time-Function/Process Mapping  Service Blueprinting

26. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-26 Time Function Map Customer Sales Production control Plant A Warehouse Plant B Transport Order Product Process Order Print Extrude Receive product Wait Move Wait Move Order WIP Product 12 days1 day 13 days4 days10 days9 days

27. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-27 Process Chart Example

28. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 7-28 Process Reengineering  The fundamental rethinking and radical redesign 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 boundaries