1. Copyright 2006 John Wiley & Sons, Inc. Beni Asllani University of Tennessee at Chattanooga Processes, Technology, and Capacity Operations Management - 5 th Edition Chapter 6, Part 1 Roberta Russell & Bernard W. Taylor, III

2. Copyright 2006 John Wiley & Sons, Inc.6-2 Process Selection - Manufacturing   Projects one-of-a-kind production of a product to customer order   Batch production systems process many different jobs through the system in groups or batches   Mass production produces large volumes of a standard product for a mass market   Continuous production used for very-high volume commodity products   See pages 40-44, 223-227, and Table 6.1

3. Copyright 2006 John Wiley & Sons, Inc.6-3 Product-Process Matrix (2)  For traditional manufacturing processes, high flexibility results in high unit costs  It is not cost-effective to use mass production or continuous processes for low-volume products  Newer processes (Just-in-time and flexible manufacturing systems reduce the cost penalty for product variety)

4. Copyright 2006 John Wiley & Sons, Inc.6-4 Service Strategy: Processes and Technology  Professional Service highly customized and very labor intensive highly customized and very labor intensive  Service Shop customized and labor intensive customized and labor intensive  Mass Service less customized and less labor intensive less customized and less labor intensive  Service Factory least customized and least labor intensive least customized and least labor intensive

5. Copyright 2006 John Wiley & Sons, Inc.6-5 Process Analysis   Process flowcharts (also called process charts) Symbolic representation of processes Incorporate nonproductive activities (inspection, transportation, delay, storage) productive activities (operations)  See Figures 6.4, 6.5, 6.6

6. Copyright 2006 John Wiley & Sons, Inc.6-6 Flow Chart and Process Chart Symbols  Oval – People or goods enter or exit the process.  Rectangle – used for an operation – a step that adds value. At least 1 arrow in. Only one arrow out.  Triangle pointing down - inventory

7. Copyright 2006 John Wiley & Sons, Inc.6-7 Flow Chart and Process Chart Symbols (2)  Diamond – used for a decision – must have at least 2 possible outcomes. For each outcome, there must be one arrow from the symbol. Each arrow is labeled with its outcome.  See Figures 6.4-6.10

8. Copyright 2006 John Wiley & Sons, Inc.6-8 Principles for Redesigning Processes   Remove waste, simplify, and consolidate similar activities   Link processes to create value   Let the swiftest and most capable enterprise execute the process   Flex process for any time, any place, any way   Capture information digitally at the source and propagate it through process

9. Copyright 2006 John Wiley & Sons, Inc.6-9 Principles for Redesigning Processes (cont.)   Provide visibility through fresher and richer information about process status   Fit process with sensors and feedback loops that can prompt action   Add analytic capabilities to process   Connect, collect, and create knowledge around process through all who touch it   Personalize process with preferences and habits of participants   See Figures 6.7-6.10

10. Copyright 2006 John Wiley & Sons, Inc.6-10 Make-or-Buy Decisions  Compare your capabilities with those of potential suppliers Cost Cost Capacity Capacity Quality Quality Speed Speed Dependable delivery and reliability Dependable delivery and reliability Design expertise Design expertise Production expertise Production expertise

11. Copyright 2006 John Wiley & Sons, Inc.6-11 Make-or-Buy Decisions (2)  Do not outsource a core competency  Be cautious about revealing proprietary technology  Build long-term, mutually beneficial relationships with suppliers

12. Copyright 2006 John Wiley & Sons, Inc.6-12 Sourcing Continuum Source: Adapted from Robert Hayes, Gary Pisano, David Upton, and Steven Wheelwright, Operations Strategy and Technology: Pursuing the Competitive Edge (Hoboken, NJ: 2005), p. 120 Arms-Length Relationship (short-term contract or single purchasing decision) Vertical Integration (100% ownership) Joint Venture (equity partner) Strategic Alliance (long-term supplier contract; collaborative relationship)