1. 7 Process Strategy and Sustainability
PowerPoint presentation to accompany
Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e
PowerPoint slides by Jeff Heyl
© 2011 Pearson Education, Inc. publishing as Prentice Hall

2. Process Strategies
The objective of a process strategy is to build a production process that meets customer requirements and product specifications within cost and other managerial constraints
© 2011 Pearson Education, Inc. publishing as Prentice Hall

3. Process, Volume, and Variety
Low Volume
Repetitive Process
High Volume
Volume
Figure 7.1
High Variety
one or few units per run,
(allows customization)
Process Focus
projects, job shops (machine, print, hospitals, restaurants)
Arnold Palmer Hospital
Mass Customization
(difficult to achieve, but huge rewards)
Dell Computer
Changes in Modules
modest runs, standardized modules
Repetitive
(autos, motorcycles, home appliances)
Harley-Davidson
Changes in Attributes (such as grade, quality, size, thickness, etc.)
long runs only
Product Focus
(commercial baked goods, steel, glass, beer)
Frito-Lay
Poor Strategy (Both fixed and variable costs are high)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

4. Process Strategies Four basic strategies Process focus
Repetitive focus
Product focus
Mass customization
Within these basic strategies there are many ways they may be implemented
© 2011 Pearson Education, Inc. publishing as Prentice Hall

5. Process Focus
Facilities are organized around specific activities or processes
General purpose equipment and skilled personnel
High degree of product flexibility
Typically high costs and low equipment utilization
Product flows may vary considerably making planning and scheduling a challenge
© 2011 Pearson Education, Inc. publishing as Prentice Hall

6. Process Focus (low volume, high variety, intermittent processes)
Many inputs
(surgeries, sick patients, baby deliveries, emergencies)
Many different outputs (uniquely treated patients)
Many departments and many routings
(low volume, high variety, intermittent processes)
Arnold Palmer Hospital
Figure 7.2(a)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

7. Repetitive Focus Facilities often organized as assembly lines
Characterized by modules with parts and assemblies made previously
Modules may be combined for many output options
Less flexibility than process-focused facilities but more efficient
© 2011 Pearson Education, Inc. publishing as Prentice Hall

8. Repetitive Focus (modular) Harley Davidson
Raw materials and module inputs
Modules combined for many
Output options
(many combinations of motorcycles)
Few modules
(multiple engine models, wheel modules)
(modular)
Harley Davidson
Figure 7.2(b)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

9. Product Focus Facilities are organized by product
High volume but low variety of products
Long, continuous production runs enable efficient processes
Typically high fixed cost but low variable cost
Generally less skilled labor
© 2011 Pearson Education, Inc. publishing as Prentice Hall

10. Product Focus (low-volume, high variety, continuous process) Frito-Lay
Few Inputs
(corn, potatoes, water, seasoning)
Output variations in size, shape, and packaging
(3-oz, 5-oz, 24-oz package labeled for each material)
(low-volume, high variety, continuous process)
Frito-Lay
Figure 7.2(c)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

11. Hot mill for finishing, cooling, and coiling
Product Focus
Scrap steel
Ladle of molten steel
Electric furnace A B C
Continuous caster
Continuous cast steel sheared into 24-ton slabs
Hot tunnel furnace ft
Hot mill for finishing, cooling, and coiling D E F G H I
Nucor Steel Plant
© 2011 Pearson Education, Inc. publishing as Prentice Hall

12. Mass Customization
The rapid, low-cost production of goods and service to satisfy increasingly unique customer desires
Combines the flexibility of a process focus with the efficiency of a product focus
© 2011 Pearson Education, Inc. publishing as Prentice Hall

13. Mass Customization (high-volume, high-variety) Dell Computer
Many parts and component inputs
Many output versions
(custom PCs and notebooks)
Many modules
(chips, hard drives, software, cases)
(high-volume, high-variety)
Dell Computer
Figure 7.2(d)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

14. Mass Customization Repetitive Focus Mass Customization Process-Focused
Flexible people and equipment
Figure 7.3
Modular techniques
Accommodating Product and Process Design
Responsive Supply Chains
Mass Customization
Rapid throughput techniques
Effective scheduling techniques
Process-Focused
High variety, low volume
Low utilization (5% to 25%)
General-purpose equipment
Product-Focused
Low variety, high volume
High utilization (70% to 90%)
Specialized equipment
© 2011 Pearson Education, Inc. publishing as Prentice Hall

15. Mass Customization Imaginative and fast product design
Rapid process design
Tightly controlled inventory management
Tight schedules
Responsive supply chain partners
© 2011 Pearson Education, Inc. publishing as Prentice Hall

16. 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 and large variety of products are produced
Long runs, usually a standardized product with options, produced from modules
Large quantity and small variety of products are produced
Large quantity and large variety of products are produced
Equipment used is general purpose
Special equipment aids in use of an assembly line
Equipment used is special purpose
Rapid changeover on flexible equipment
Table 7.2
© 2011 Pearson Education, Inc. publishing as Prentice Hall

17. 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
There are many job instructions because each job changes
Repetitive operations reduce training and changes in job instructions
Work orders and job instructions are few because they are standardized
Custom orders require many job instructions
Table 7.2
© 2011 Pearson Education, Inc. publishing as Prentice Hall

18. 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 relative to the value of the product
JIT procurement techniques are used
Raw material inventories are low relative to the value of the product
Work-in-process is high compared to output
JIT inventory techniques are used
Work-in-process inventory is low compared to output
Work-in-process inventory driven down by JIT, kanban, lean production
Table 7.2
© 2011 Pearson Education, Inc. publishing as Prentice Hall

19. 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 facility
Assembly is measured in hours and days
Swift movement of units through the facility is typical
Goods move swiftly through the facility
Finished goods are usually made to order and not stored
Finished goods made to frequent forecast
Finished goods are usually made to forecast and stored
Finished goods are often build-to-order (BTO)
Table 7.2
© 2011 Pearson Education, Inc. publishing as Prentice Hall

20. 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, concerned with trade-offs between inventory, capacity, and customer service
Scheduling is based on building various models from a variety of modules to forecasts
Scheduling is relatively simple, concerned with establishing output rate sufficient to meet forecasts
Sophisticated scheduling is required to accommodate custom orders
Fixed costs tend to be low and variable costs high
Fixed costs dependent on flexibility of the facility
Fixed costs tend to be high and variable costs low
Fixed costs tend to be high, variable costs must be low
Table 7.2
© 2011 Pearson Education, Inc. publishing as Prentice Hall

21. Low volume, high variety High volume, low variety
Crossover Charts
Fixed costs
Variable costs $
Low volume, high variety
Process A
Fixed costs
Variable costs $
Repetitive
Process B
Fixed costs
Variable costs $
High volume, low variety
Process C
Total cost
Total cost
Total cost
400,000
300,000
200,000
Volume $ V2
(6,666) V1
(2,857)
Fixed cost Process C
Fixed cost Process B
Fixed cost Process A
Figure 7.4
© 2011 Pearson Education, Inc. publishing as Prentice Hall

22. Changing Processes Difficult and expensive May mean starting over
Process strategy determines transformation strategy for an extended period
Important to get it right
© 2011 Pearson Education, Inc. publishing as Prentice Hall

23. © 2011 Pearson Education, Inc. publishing as Prentice Hall

24. © 2011 Pearson Education, Inc. publishing as Prentice Hall

25. Process Analysis and Design
Is the process designed to achieve a competitive advantage?
Does the process eliminate steps that do not add value?
Does the process maximize customer value?
Will the process win orders?
© 2011 Pearson Education, Inc. publishing as Prentice Hall

26. Process Analysis and Design
Flow Charts - Shows the movement of materials
Time-Function Mapping - Shows flows and time frame
© 2011 Pearson Education, Inc. publishing as Prentice Hall

27. “Baseline” Time-Function Map
Customer
Sales
Production control
Plant A
Warehouse
Plant B
Transport
Order product
Process order
Wait
Order
Move
Receive product
Product
Print
Wait
Order
WIP
Extrude
Wait
WIP
Product
Move
Wait
WIP
12 days
13 days
1 day
4 days
10 days
0 day
52 days
Figure 7.5
© 2011 Pearson Education, Inc. publishing as Prentice Hall

28. “Target” Time-Function Map
Customer
Sales
Production control
Plant
Warehouse
Transport
Order product
Process order
Wait
Order
Move
Receive product
Product
Extrude
Wait
Print
Order
WIP
Product
1 day
2 days
6 days
Figure 7.5
© 2011 Pearson Education, Inc. publishing as Prentice Hall

29. Process Analysis and Design
Flow Charts - 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
© 2011 Pearson Education, Inc. publishing as Prentice Hall

30. Value-Stream Mapping Figure 7.6
© 2011 Pearson Education, Inc. publishing as Prentice Hall

31. Process Chart
Figure 7.7
© 2011 Pearson Education, Inc. publishing as Prentice Hall

32. Service Blueprint Figure 7.8 Personal Greeting Service Diagnosis
Perform Service
Friendly Close
Customer arrives for service.
(3 min)
Warm greeting and obtain service request.
(10 sec) F
Level #1
Notify customer the car is ready.
(3 min)
Customer departs
Customer pays bill.
(4 min) F
Perform required work.
(varies)
Prepare invoice. No
Notify customer and recommend an alternative provider.
(7min)
Standard request.
(3 min)
Determine specifics.
(5 min) No
Can service be done and does customer approve?
Yes F
Level #2
Direct customer to waiting room. F
Yes F
Level #3
Figure 7.8
© 2011 Pearson Education, Inc. publishing as Prentice Hall

33. Service Process Matrix
Service Factory
Service Shop
Degree of Customization
Low
High
Degree of Labor
Mass Service
Professional Service
Commercial banking
Private banking
Digital orthodontics
Traditional orthodontics
General-
purpose law firms
Law clinics
Full-service stockbroker
Limited-service stockbroker
Retailing
Boutiques
Warehouse and catalog stores
Specialized hospitals
Hospitals
Fast-food restaurants
Fine-dining restaurants
Airlines
No-frills airlines
Figure 7.9
© 2011 Pearson Education, Inc. publishing as Prentice Hall

34. Improving Service Productivity
Strategy
Technique
Example
Separation
Structure service so customers must go where the 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 7.3
© 2011 Pearson Education, Inc. publishing as Prentice Hall

35. Improving Service Productivity
Strategy
Technique
Example
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
Table 7.3
© 2011 Pearson Education, Inc. publishing as Prentice Hall

36. Improving Service Productivity
Strategy
Technique
Example
Automation
Separating services that may lend themselves to some type of 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
Table 7.3
© 2011 Pearson Education, Inc. publishing as Prentice Hall

37. Equipment and Technology
Often complex decisions
Possible competitive advantage
Flexibility
Stable processes
May allow enlarging the scope of the processes
© 2011 Pearson Education, Inc. publishing as Prentice Hall

38. 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)
© 2011 Pearson Education, Inc. publishing as Prentice Hall

39. Machine Technology Increased precision Increased productivity
Increased flexibility
Improved environmental impact
Reduced changeover time
Decreased size
Reduced power requirements
© 2011 Pearson Education, Inc. publishing as Prentice Hall

40. Automatic Identification Systems (AISs)
Improved data acquisition
Reduced data entry errors
Increased speed
Increased scope of process automation
Example – Bar codes and RFID
© 2011 Pearson Education, Inc. publishing as Prentice Hall

41. Process Control Real-time monitoring and control of processes
Sensors collect data
Devices read data on periodic basis
Measurements translated into digital signals then sent to a computer
Computer programs analyze the data
Resulting output may take numerous forms
© 2011 Pearson Education, Inc. publishing as Prentice Hall

42. Vision Systems Particular aid to inspection Consistently accurate
Never bored
Modest cost
Superior to individuals performing the same tasks
© 2011 Pearson Education, Inc. publishing as Prentice Hall

43. Robots Perform monotonous or dangerous tasks
Perform tasks requiring significant strength or endurance
Generally enhanced consistency and accuracy
© 2011 Pearson Education, Inc. publishing as Prentice Hall

44. 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
© 2011 Pearson Education, Inc. publishing as Prentice Hall

45. Automated Guided Vehicle (AGVs)
Electronically guided and controlled carts
Used for movement of products and/or individuals
© 2011 Pearson Education, Inc. publishing as Prentice Hall

46. 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
© 2011 Pearson Education, Inc. publishing as Prentice Hall

47. 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
© 2011 Pearson Education, Inc. publishing as Prentice Hall

48. Computer-Integrated Manufacturing (CIM)
Figure 7.10
© 2011 Pearson Education, Inc. publishing as Prentice Hall

49. Sustainability Sustainability in production processes Resources
Recycling
Regulations
Reputation
© 2011 Pearson Education, Inc. publishing as Prentice Hall

50. Sustainability Resources Recycling Operations is primary user
Reducing use is win-win
Recycling
Burn, bury, or reuse waste
Recycling begins at design
© 2011 Pearson Education, Inc. publishing as Prentice Hall

51. Sustainability Regulations Reputation
Laws affect transportation, waste, and noise
Increasing regulatory pressure
Reputation
Leadership may be rewarded
Bad reputation can have negative consequences
© 2011 Pearson Education, Inc. publishing as Prentice Hall