1. Process Choice and Layout Decisions in Manufacturing and Services

2. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 2 Manufacturing Processes Engineering and business perspectives Classic manufacturing processes Choosing between classic types The role of customization

3. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 10, Slide 3 Engineering and Business Perspectives

4. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 4 Solid Wood Seat for a Kitchen Chair: Process A Saddle Machine Shaper Machine Sander A Sander B Inspection Setup Time: 6 hours Time/Seat 1.1 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%

5. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 5 Classic Engineering Viewpoint u Four Transformation Processes Conversion  Fabrication  Assembly Testing “Advances in Engineering increase and improve the alternatives available”

6. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 6 Example: Making Windows Raw lumber Molten glass Frame wood Window panes Assembled Windows ConversionFabricationAssembly

7. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 7 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?

8. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 10, Slide 8 Classic Manufacturing Processes

9. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 9 Process Types (in order of decreasing volume) Continuous Flow Production Line Batch (High Volume) Batch (Low Volume) Job Shop Project

10. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 10 Continuous Flow Large production volumes High level of automation Basic material passed along, converted as it moves Usually very high fixed costs, inflexible Oil refinery, fiber formation, public utilities, automotive manufacturing

11. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 11 Production Line High-volume production of standard products or “design window” Processes arranged by product flow Often “paced” Highly efficient, but not too flexible

12. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 12 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.

13. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 13 Batch II Layout is a cross between that found in a line and that found in a job shop: Group Technology

14. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 14 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

15. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 15 Job Shop Low volume, one-of-a-kind products Job shops sell their capability Highly flexible equipment, skilled workers Equipment arranged by function

16. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 16 Project Used when a product is: –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 Building projects, equipment installation

17. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 17 Mixing Together the Process Types... Spindles Arms and Legs Seats BATCH for fabricating parts... ASSEMBLY LINE for putting together final product

18. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 10, Slide 18 Choosing Between Classic Types The product-process matrix Product and process life cycles

19. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 19 Comparing Process Types... Job ShopBatchLine VolumeVery LowHigh VarietyVery HighLow SkillsBroadLimited AdvantageFlexibilityPrice and Delivery

20. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 20 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

21. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 21 Life-Cycle Planning Framework

22. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 22 Introduction Stage Availability key to market success but: No reliable movement history Unreliable forecasts Small shipments Erratic orders

23. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 23 Life-Cycle Planning Framework High product availability Flexibility to handle variation

24. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 24 Growth Stage Sales somewhat more predictable Higher volumes Performance emphasis?...

25. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 25 Life-Cycle Planning Framework Availability Achieve break- even volumes as soon as possible Less need for flexibility

26. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 26 Maturity Stage Intense competition around more standardized products Frequent price and service adjustments Implications...

27. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 27 Life-Cycle Planning Framework More selective, targeted efforts Value-added service

28. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 28 Decline Stage (Obsolescence) Product close-out or restricted distribution Lowest cost / differentiated performance not as critical anymore Priorities?

29. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 29 Life-Cycle Planning Framework Centralized inventory Speed

30. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 30 Implications What happens as companies follow products through their life cycles? What happens when companies support products at various stages of the life cycle?

31. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 10, Slide 31 The Role of Customization

32. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 32 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”

33. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 33 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

34. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 34 Fully Customized Windows Off-line Activities Lead times? Customizability? Price? What type of manufacturing? On-Line Activities Sell Windows Design Buy Materials Fabricate parts Assemble Ship windows

35. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 35 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

36. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 36 Customization Point Model II Manufacturing Systems Design UpstreamDownstream Performance objectives Technology Investment Organization structure Job differentiation Integration Discretion Efficiency Productivity, consistency Mechanistic High Formal Low Responsiveness Flexibility Organic Low Informal High

37. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 37 Difficulty versus Customization

38. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 38 Customization Job Difficulty Job Routineness Operations and Supply Chain Design 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

39. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 39 “Mass customization” at Japan’s National Bicycle Co. 2-WEEK LEAD TIME

40. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 40 Services What makes them distinctive? High-contact versus low-contact Front room versus back room A Model of Service Design Service Blueprinting

41. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 41 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

42. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 42 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

43. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 43 Classifying Services “Front Room” versus “Back Room” Back room – what the customer does not see Managed for efficiency and Productivity Package sorting, car repair, blood test analysis, accounting department Front room – what the customer can see Managed for flexibility and customer service Customer lobbies, bank teller, receptionist

44. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 44 What is it? What is the performance objective? Restaurant kitchen Software help desk Kinko’s copy center Airline reservations Jet maintenance

45. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 45 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”

46. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 46 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 CustomizationLower Customization (Quick-change oil shop) Higher Customization (Full-service car repair shop) Degree of Customer Contact Lower Contact (Mail sorting) Higher Contact (Physical therapist)

47. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 47 Community Hospital Public Hospital

48. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 48 Birthing Center Public Hospital

49. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 49 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

50. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 50 Product-Based Layout Line Balancing Improve ‘Takt’ time: –Reduce idle time –Reduce setup time –Reduce unnecessary movement –Identify ‘bottlenecks’

51. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 7, Slide 51 Functional Layout A.Minimize the total distance traveled B.Minimize information flow for decisions C.Use electronic data interchange (EDI) to allow more flexibility for accomplishing A and B