1. 7 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 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

2. 7 - 2© 2011 Pearson Education, Inc. publishing as Prentice Hall Outline  Global Company Profile: Harley- Davidson  Four Process Strategies  Process Focus  Repetitive Focus  Product Focus  Mass Customization Focus  Comparison of Process Choices

3. 7 - 3© 2011 Pearson Education, Inc. publishing as Prentice Hall Learning Objectives When you complete this chapter you should be able to: 1.Describe four production processes 2.Compute crossover points for different processes 3.Use the tools of process analysis

4. 7 - 4© 2011 Pearson Education, Inc. publishing as Prentice Hall Harley-Davidson Repetitive manufacturing works  The leading U.S. motorcycle company  Emphasizes quality and lean manufacturing  Materials as Needed system  Many variations possible  Tightly scheduled repetitive production line

5. 7 - 5© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Flow Diagram THE ASSEMBLY LINE TESTING 28 tests Oil tank work cell Shocks and forks Handlebars Fender work cell Air cleaners Fluids and mufflers Fuel tank work cell Wheel work cell Roller testing Incoming parts From Milwaukee on a JIT arrival schedule Engines and transmissionsFrame tube bending Frame-building work cells Frame machining Hot-paint frame painting Crating

6. 7 - 6© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

7. 7 - 7© 2011 Pearson Education, Inc. publishing as Prentice Hall Process, Volume, and Variety Process Focus projects, job shops (machine, print, hospitals, restaurants) Arnold Palmer Hospital Repetitive (autos, motorcycles, home appliances) Harley-Davidson Product Focus (commercial baked goods, steel, glass, beer) Frito-Lay High Variety one or few units per run, (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 Poor Strategy (Both fixed and variable costs are high) Low Volume Repetitive Process High Volume Volume Figure 7.1

8. 7 - 8© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Strategies  How to produce a product or provide a service that  Meets or exceeds customer requirements  Meets cost and managerial goals  Has long term effects on  Efficiency and production flexibility  Costs and quality

9. 7 - 9© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Strategies Four basic strategies 1.Process focus 2.Repetitive focus 3.Product focus 4.Mass customization Within these basic strategies there are many ways they may be implemented

10. 7 - 10© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

11. 7 - 11© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Focus Many inputs (surgeries, sick patients, baby deliveries, emergencies) Many different outputs (uniquely treated patients) Many departments and many routings Figure 7.2(a) (low volume, high variety, intermittent processes) Arnold Palmer Hospital

12. 7 - 12© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

13. 7 - 13© 2011 Pearson Education, Inc. publishing as Prentice Hall Repetitive Focus Raw materials and module inputs Modules combined for many Output options (many combinations of motorcycles) Few modules (multiple engine models, wheel modules) Figure 7.2(b) (modular) Harley Davidson

14. 7 - 14© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

15. 7 - 15© 2011 Pearson Education, Inc. publishing as Prentice Hall Product Focus Few Inputs (corn, potatoes, water, seasoning) Output variations in size, shape, and packaging (3-oz, 5-oz, 24-oz package labeled for each material) Figure 7.2(c) (low-volume, high variety, continuous process) Frito-Lay

16. 7 - 16© 2011 Pearson Education, Inc. publishing as Prentice Hall Product Focus Nucor Steel Plant Continuous caster Continuous cast steel sheared into 24-ton slabs Hot tunnel furnace - 300 ft Hot mill for finishing, cooling, and coiling D E F G H I Scrap steel Ladle of molten steel Electric furnace A B C

17. 7 - 17© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

18. 7 - 18© 2011 Pearson Education, Inc. publishing as Prentice Hall Mass Customization Table 7.1 Vehicle models140286 Vehicle types181,212 Bicycle types8211,000 Software titles0400,000 Web sites0162,000,000 Movie releases per year267765 New book titles40,530300,000 Houston TV channels5185 Breakfast cereals160340 Items (SKUs) in 14,000150,000 supermarkets LCD TVs0102 Number of Choices Item1970s21 st Century

19. 7 - 19© 2011 Pearson Education, Inc. publishing as Prentice Hall Mass Customization Many parts and component inputs Many output versions (custom PCs and notebooks) Many modules (chips, hard drives, software, cases) Figure 7.2(d) (high-volume, high-variety) Dell Computer

20. 7 - 20© 2011 Pearson Education, Inc. publishing as Prentice Hall Mass Customization Effective scheduling techniques Rapid throughput techniques Repetitive Focus Flexible people and equipment 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 Figure 7.3 Modular techniques Accommodating Product and Process Design Responsive Supply Chains

21. 7 - 21© 2011 Pearson Education, Inc. publishing as Prentice Hall Mass Customization  Imaginative and fast product design  Rapid process design  Tightly controlled inventory management  Tight schedules  Responsive supply chain partners

22. 7 - 22© 2011 Pearson Education, Inc. publishing as Prentice Hall Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) 1.Small quantity and large variety of products are produced 1.Long runs, usually a standardized product with options, produced from modules 1.Large quantity and small variety of products are produced 1.Large quantity and large variety of products are produced 2.Equipment used is general purpose 2.Special equipment aids in use of an assembly line 2.Equipment used is special purpose 2.Rapid changeover on flexible equipment Table 7.2

23. 7 - 23© 2011 Pearson Education, Inc. publishing as Prentice Hall Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) 3.Operators are broadly skilled 3.Employees are modestly trained 3.Operators are less broadly skilled 3.Flexible operators are trained for the necessary customization 4.There are many job instructions because each job changes 4.Repetitive operations reduce training and changes in job instructions 4.Work orders and job instructions are few because they are standardized 4.Custom orders require many job instructions Table 7.2

24. 7 - 24© 2011 Pearson Education, Inc. publishing as Prentice Hall Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) 5.Raw-material inventories high relative to the value of the product 5.JIT procurement techniques are used 5.Raw material inventories are low relative to the value of the product 6.Work-in- process is high compared to output 6.JIT inventory techniques are used 6.Work-in- process inventory is low compared to output 6.Work-in- process inventory driven down by JIT, kanban, lean production Table 7.2

25. 7 - 25© 2011 Pearson Education, Inc. publishing as Prentice Hall Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) 7.Units move slowly through the facility 7.Assembly is measured in hours and days 7.Swift movement of units through the facility is typical 7.Goods move swiftly through the facility 8.Finished goods are usually made to order and not stored 8.Finished goods made to frequent forecast 8.Finished goods are usually made to forecast and stored 8.Finished goods are often build- to-order (BTO) Table 7.2

26. 7 - 26© 2011 Pearson Education, Inc. publishing as Prentice Hall Comparison of Processes Process Focus (low-volume, high-variety) Repetitive Focus (modular) Product Focus (high-volume, low-variety) Mass Customization (high-volume, high-variety) 9.Scheduling is complex, concerned with trade- offs between inventory, capacity, and customer service 9.Scheduling is based on building various models from a variety of modules to forecasts 9.Scheduling is relatively simple, concerned with establishing output rate sufficient to meet forecasts 9.Sophisticated scheduling is required to accommodate custom orders 10.Fixed costs tend to be low and variable costs high 10.Fixed costs dependent on flexibility of the facility 10.Fixed costs tend to be high and variable costs low 10.Fixed costs tend to be high, variable costs must be low Table 7.2

27. 7 - 27© 2011 Pearson Education, Inc. publishing as Prentice Hall 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 V1V1 (2,857) V2V2 (6,666) 400,000 300,000 200,000 Volume $ Figure 7.4

28. 7 - 28© 2011 Pearson Education, Inc. publishing as Prentice Hall Focused Processes  Focus brings efficiency  Focus on depth of product line rather than breadth  Focus can be  Customers  Products  Service  Technology

29. 7 - 29© 2011 Pearson Education, Inc. publishing as Prentice Hall Process Chart Figure 7.7

30. 7 - 30© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

31. 7 - 31© 2011 Pearson Education, Inc. publishing as Prentice Hall 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

32. 7 - 32© 2011 Pearson Education, Inc. publishing as Prentice Hall Sustainability  Sustainability in production processes 1.Resources 2.Recycling 3.Regulations 4.Reputation

33. 7 - 33© 2011 Pearson Education, Inc. publishing as Prentice Hall Sustainability  Resources  Operations is primary user  Reducing use is win-win  Recycling  Burn, bury, or reuse waste  Recycling begins at design

34. 7 - 34© 2011 Pearson Education, Inc. publishing as Prentice Hall Sustainability  Regulations  Laws affect transportation, waste, and noise  Increasing regulatory pressure  Reputation  Leadership may be rewarded  Bad reputation can have negative consequences