1. Process Choice and Layout Decisions in Manufacturing and Services Chapter 7

2. Chapter Objectives Be able to:
Describe the five classic types of manufacturing processes.
Discuss how different manufacturing and service process choices support different market requirements.
Explain how different processes can be linked together via the supply chain.
Describe the critical role of customization in manufacturing, including the degree and point of customization, and upstream versus downstream activities.
Discuss the three dimensions that differentiate services from one another and explain the different managerial challenges driven by these dimensions.
Create and interpret a service blueprint.
Position a service on a conceptual model and explain the underlying managerial challenges.
Develop a product-based layout using line balancing and calculate basic performance measures for the line.
Develop a functional layout based on total distance traveled.

3. Manufacturing Processes
Engineering and business perspectives
Classic manufacturing processes
Choosing between classic types
The role of customization

4. Engineering and Business Perspectives

5. Solid Wood Seat for a Kitchen Chair:
Process A
Saddle Machine
Shaper Machine
Sander A
Sander B
Inspection
Setup Time: 6 hours
Time/Seat min.
Yield Rate: 92%
Process B
5-Axis Router
----
Sander A
Sander B
Inspection
Setup Time: 10 min.
Time / Seat: 3.5 min.
Yield Rate: 99%
Bliven Furniture Company example in textbook

6. Classic Engineering Viewpoint
Four Transformation Processes
Conversion  Fabrication  Assembly
Testing
“Advances in Engineering increase and improve the alternatives available”

7. Example: Making Windows
Conversion
Fabrication
Assembly
Raw lumber
Molten glass
Frame wood
Window panes
Assembled
Windows

8. Business View What conversion steps must be done?
What are the production volumes like?
How similar are the various products we make (can we standardize)?
If the product is customized, how late in the process does it occur?

9. Classic Manufacturing Processes

10. Process Types (in order of decreasing volume)
Continuous Flow
Production Line
Batch (High Volume)
Batch (Low Volume)
Job Shop
Project

11. Continuous Flow Large production volumes High level of automation
Basic material passed along, converted as it moves
Usually cannot be broken into discrete units
Usually very high fixed costs, inflexible
Oil refinery, fiber formation, public utilities, automotive manufacturing

12. Production Line
High-volume production of standard products or “design window”
Processes arranged by product flow
Often “paced” (‘takt’ time discussed later)
Highly efficient, but not too flexible

13. Batch I Somewhere in between job shop and line processes
Moderate volumes, multiple products
Production occurs in “batches”
Can manufacturing, carton makers, advertising mailers, etc.

14. Batch II
Layout is a cross between that found in a line and that found in a job shop:
Group Technology

15. Some Examples of Batch Manufacturing
Numerical control (NC) machines
Automated processing of entire batch
Machining center - multiple NC machines
Flexible manufacturing systems (FMS)
Dedicated to families of parts
NC and automated handling
Group technology
Similar in concept to FMS, but not as much automation

16. Job Shop Low volume, one-of-a-kind products
Job shops sell their capability
Highly flexible equipment, skilled workers
Equipment arranged by function

17. Project Used when a product is: Resources moved to where needed
one-of-a-kind
too large to be moved
Resources moved to where needed
Equipment, people, etc. are highly flexible
Finite duration, often with deadline
Construction projects, equipment installation

18. Mixing Together the Process Types  Hybrid Process
Spindles
ASSEMBLY
LINE for
putting together
final product
Arms and
Legs
Chair manufacturing process
BATCH for
fabricating
parts ...
Seats

19. Choosing Between Classic Types
The product-process matrix
Product and process life cycles

20. Comparing Process Types...
Job Shop
Batch
Line
Volume
Very Low
High
Variety
Very High
Low
Skills
Broad
Limited
Advantage
Flexibility
Price and Delivery

21. Product – Process Matrix
One of a Kind Low Volume
Multiple Products Moderate Volumes
Few Major Products
High Volume
Commodity Products
Job Shop
Batch
Line
Very Poor Fit
Very Poor Fit

22. Life-Cycle Planning Framework

23. Introduction Stage Availability key to market success but:
No reliable movement history
Unreliable forecasts
Small shipments
Erratic orders

24. Life-Cycle Planning Framework
High
product
availability
Flexibility
to handle
variation

25. Growth Stage Sales somewhat more predictable Higher volumes
Performance emphasis?...
Capacity planning and timing
Growth management
More accurate forecasting
Selection of long-term supply chain partners

26. Life-Cycle Planning Framework
Availability
Achieve break-
even volumes
as soon as
possible
Less need
for flexibility

27. Maturity Stage Intense competition around more standardized products
Frequent price and service adjustments
Implications . . .
Emphasis on managing, reducing costs
More careful attention to inventory strategy
Accurate forecasting

28. Life-Cycle Planning Framework
More selective,
targeted efforts
Value-added
service

29. Decline Stage (Obsolescence)
Product close-out or restricted distribution
Lowest cost / differentiated performance not as critical anymore
Priorities?
Careful management of inventory
Closing on remaining product versions with highest demand
Conversion of unused capacity to other, newer products where practical
Retraining of personnel for other work, if available

30. Life-Cycle Planning Framework
Centralized
inventory
Speed

31. Implications
What happens to process choices as companies follow products through their life cycles?
What happens to process choices when companies support products at various stages of the life cycle?

32. The Role of Customization

33. What is “Customization”?
An operations-centric view: “Customization occurs when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities”

34. Customization Point Model I
Definitions:
ETO – engineer to order
MTO – make to order
ATO – assemble-to-order
MTS – make to stock
Upstream: before the customization point, “off-line” activities
Downstream: after the customization point, “on-line” activities

35. Make-to-Order Windows
Off-line Activities
Design
Buy Materials
Fabricate parts
Assemble
Ship windows
On-Line Activities
Lead times?
Customizability?
Price?
What type of manufacturing?
Sell windows

36. Customization Point Model II
Manufacturing Systems Design
Upstream
Downstream
Performance objectives
Technology Investment
Organization structure
Job differentiation
Integration
Discretion
Efficiency
Productivity, consistency
Mechanistic
High
Formal
Low
Responsiveness
Flexibility
Organic
Informal

37. Difficulty versus Customization

38. An Operations-Centric View
Customization becomes relevant to operations and supply chain managers when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities
Job Difficulty
Job Routineness
Operations and
Supply Chain Design
Customization

39. “Mass customization” at Japan’s National Bicycle Co.
2-WEEK LEAD TIME

40. Law of Variability
The earlier customization is introduced in the supply chain, the greater the random variability of the process and the lower its productivity

41. Services What makes them distinctive? High-contact versus low-contact
Front room versus back room
Service Blueprinting

42. Services . . . Process and “product” are inseparable
Marketing and sales often tightly integrated
Customer often part of the process
Performance metrics can be harder to define
Nevertheless:
Focus and process choices / trade-offs still apply

43. Degree of Customer Contact
Low Contact
“off-line”
Can locate for efficiency
Can smooth out the workload
Check clearing, mail sorting
High Contact
“on-line”
Can locate for easy access
Flexibility to respond to customers
Harder to manage
Hospitals, food service

44. Classifying Services “Front Room” versus “Back Room”
Front room – what the customer can see
Managed for flexibility and customer service
Customer lobbies, bank teller, receptionist
Back room – what the customer does not see
Managed for efficiency and
productivity
Package sorting, car repair, blood test analysis, accounting department

45. What is it? What is the performance objective?
Restaurant kitchen
Software help desk
Kinko’s copy center
Airline reservations
Jet maintenance
Class discussion exercise

46. Designing Services Selecting a service focus
Like manufacturing processes, different services have strengths and weaknesses
Key is to design a service process that meets the needs of targeted customers
The “service package”

47. Service Blueprinting Processes Customer actions Onstage activities
Backstage activities
Support
Separations
Line of interaction
Line of visibility
Line of internal interaction

48. Service Blueprint Template (Note similarity to ‘swim lane’ in Chapter 3?)

49. A Cubical Model of Services (Three Dimensions)
Nature of the Service Package
Primarily Physical Activities
(Airline, trucking firm)
Primarily Intangible Activities
(Law firm, software developer)
Degree of Customization
Lower Customization
(Quick-change oil shop)
Higher Customization
(Full-service car repair shop)
Degree of Customer Contact
Lower Contact
(Mail sorting)
Higher Contact
(Physical therapist)
Table 7.3 in textbook
Primarily physical: Greater emphasis on managing physical assets
Primarily intangible: Greater emphasis on managing people and knowledge assets
Lower customization: Greater emphasis on closely controlling the process and improving productivity
Higher customization: Greater emphasis on being flexible and responsive to customer needs
Lower contact: Service layout, location, and hours will be based more on cost and productivity concerns
Higher contact: Service layout, location, and hours must be designed with customer convenience in mind.

50. Community Hospital
Public Hospital

51. Birthing Center
Public Hospital

52. Layout Decision Models
Product-based layout
Usually best for a line operation
Cycle time a primary measure
Functional layout
Usually best for a job shop
Distance between steps a measure
Cellular layout
Usually best for batch processes

53. Product-Based Layout Line Balancing Improve ‘Takt’ time:
Use minimum number of workstations
Reduce idle time
Reduce setup time
Reduce unnecessary movement
Identify ‘bottlenecks’

54. Process Layout Steps
Identify all steps, their relationships, and times required.
Draw a precedence diagram
Determine takt time (time available divided by desired output rate)
Determine minimum number of workstations required (total process time divided by takt time)
Assign tasks to workstations according to precedence and total time for each to not exceed takt time.
Evaluate solution for times per workstation, % idle time, and efficiency delay (100% - % idle time)

55. Precedence Diagram Example (with workstation task assignments)
From text, page 198

56. Functional Layout Improvement
Minimize the total distance traveled
Determine distances between functional units
Determine numbers of interactions between units
Multiply distances times respective number of interactions
Revise original layout for minimum total distance after first locating functions best for process material flows
Minimize information flow for decisions
Use electronic data interchange (EDI) to allow more flexibility for accomplishing A and B

57. Case Study in Manufacturing and Service Processes
Loganville Window Treatments