Process design and strategy presentation.ppt

Process Strategy and Sustainability

1. 7 -1© 2011 Pearson Education, Inc. publishing as Prentice Hall
7
Process Strategy
and Sustainability
PowerPoint presentation to accompany
Heizerand Render
Operations Management, 10e
Principles of Operations Management, 8e
Rener L Malagapo

2. 7 -2
Four Process Strategies
Process Focus
Repetitive Focus
Product Focus
Mass Customization Focus
Comparison of Process Choices
Crossover Charts
Process Analysis and Design
Flow Charts
Time-Function Mapping
Value-Stream Mapping
Process Charts
Service Blueprinting
Outline
© 2011 Pearson Education, Inc. publishing as Prentice Hall

3. 7 -3
Special Considerations for Service Process Design
Customer Interaction and Process Design/Service Process
Matrix
Mass Service
Professional Service
Service Factory
Service Shop
Techniques in Improving Service Productivity
Improving Service Processes
Layout
Human Resources
Equipment and Technology
Process Redesign
Sustainability
Outline
© 2011 Pearson Education, Inc. publishing as Prentice Hall

4. 7 -4© 2011 Pearson Education, Inc. publishing as Prentice Hall
7
Process Strategy
and Sustainability
PowerPoint presentation to accompany
Heizerand Render
Operations Management, 10e
Principles of Operations Management, 8e
Rener L Malagapo

5. 7 -5© 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

6. 7 -6© 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

7. 7 -7© 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

8. 7 -8© 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

9. 7 -9© 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

10. 7 -10© 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

11. 7 -11© 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

12. 7 -12© 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

13. 7 -13© 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

14. 7 -14© 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
GH
I
Scrap
steel
Ladle of molten steel
Electric
furnace
A
B
C

15. 7 -15© 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

16. 7 -16© 2011 Pearson Education, Inc. publishing as Prentice Hall
Mass Customization
Table 7.1
Vehicle models 140 286
Vehicle types 18 1,212
Bicycle types 8 211,000
Software titles 0 400,000
Web sites 0 162,000,000
Movie releases per year 267 765
New book titles 40,530 300,000
Houston TV channels 5 185
Breakfast cereals 160 340
Items (SKUs) in 14,000 150,000
supermarkets
LCD TVs 0 102
Number of Choices
Item 1970s 21
st
Century

17. 7 -17© 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

18. 7 -18© 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

19. 7 -19© 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

20. 7 -20© 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
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

21. 7 -21© 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

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)
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

23. 7 -23© 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
V
1
(2,857) V
2
(6,666)
400,000
300,000
200,000
Volume
$
Figure 7.4

24. 7 -24© 2011 Pearson Education, Inc. publishing as Prentice Hall
Changing Processes
Difficult and expensive
May mean starting over
Process strategy determines
transformation strategy for an
extended period
Important to get it right

25. 7 -25© 2011 Pearson Education, Inc. publishing as Prentice Hall
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?

26. 7 -26© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Analysis and
Design
Flow Charts -Shows the movement of
materials
Time-Function Mapping -Shows flows and
time frame

27. 7 -27© 2011 Pearson Education, Inc. publishing as Prentice Hall
“Baseline” Time-Function Map
Customer
Sales
Production
control
Plant A
Warehouse
Plant B
Transport
12 days13 days1 day4 days1 day10 days1 day 0 day 1 day
52 days
Figure 7.5
Move
Receive
product
Product
Product
Extrude
Wait
WIP
Product
Move
Wait
WIP
WIP
Print
Wait
Order
WIP
Order
product
Process
order
Wait
Order

28. 7 -28© 2011 Pearson Education, Inc. publishing as Prentice Hall
“Target” Time-Function Map
Customer
Sales
Production
control
Plant
Warehouse
Transport
1 day 2 days 1 day 1 day 1 day
6 days
Figure 7.5
Move
Receive
product
Product
Product
Extrude
Wait
Print
Order
WIP
Product
Order
product
Process
order
Wait
Order

29. 7 -29© 2011 Pearson Education, Inc. publishing as Prentice Hall
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

30. 7 -30© 2011 Pearson Education, Inc. publishing as Prentice Hall
Value-Stream Mapping
Figure 7.6

31. 7 -31© 2011 Pearson Education, Inc. publishing as Prentice Hall
Process Chart
Figure 7.7

32. 7 -32© 2011 Pearson Education, Inc. publishing as Prentice Hall
Service Blueprinting
Focuses on the customer and
provider interaction
Defines three levels of interaction
Each level has different
management issues
Identifies potential failure points

33. 7 -33© 2011 Pearson Education, Inc. publishing as Prentice Hall
Service Blueprint
Personal Greeting Service Diagnosis Perform Service Friendly Close
Level
#3
Level
#1
Level
#2
Figure 7.8
No
Notify
customer
and recommend
an alternative
provider.
(7min)
Customer arrives
for service.
(3 min)
Warm greeting
and obtain
service request.
(10 sec)
F
Direct customer
to waiting room.
F
Notify
customer the
car is ready.
(3 min)
Customer departs
Customer pays bill.
(4 min)
F
F
Perform
required work.
(varies)
Prepare invoice.
(3 min)
F
F
Yes
F
Yes
F
Standard
request.
(3 min)
Determine
specifics.
(5 min)
No
Can
service be
done and does
customer
approve?
(5 min)

34. 7 -34© 2011 Pearson Education, Inc. publishing as Prentice Hall
Special Considerations for
Service Process Design
Some interaction with customer is
necessary, but this often affects
performance adversely
The better these interactions are
accommodated in the process design,
the more efficient and effective the
process
Find the right combination of cost and
customer interaction

35. 7 -35© 2011 Pearson Education, Inc. publishing as Prentice Hall
Service Factory Service Shop
Degree of Customization
Low High
Degree of Labor
Low
High
Mass Service Professional Service
Service Process Matrix
Commercial
banking
Private
banking
General-
purpose law firms
Law clinics
Specialized
hospitals
Hospitals
Full-service
stockbroker
Limited-service
stockbroker
Retailing
Boutiques
Warehouse and
catalog stores
Fast-food
restaurants
Fine-dining
restaurants
Airlines
No-frills
airlines
Figure 7.9
Digital
orthodontics
Traditional
orthodontics

36. 7 -36
Labor involvement is high
Selection and training highly
important
Focus on human resources
Personalized services
Mass Service and Professional Service
Service Process Matrix

37. 7 -37
Service Factory and Service Shop
Automation of standardized
services
Low labor intensity responds well to
process technology and scheduling
Tight control required to maintain
standards
Service Process Matrix

38. 7 -38
Strategy Technique Example
Separation Structure service so
customers must go
where 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
Improving Service
Productivity

39. 7 -39
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
Improving Service
Productivity

40. 7 -40
Strategy Technique Example
Automation Separating services
that may lend
themselves to
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
Improving Service
Productivity

41. 7 -41
Layout
Product exposure, customer
education, product
enhancement
Human Resources
Recruiting and Training
Impact of flexibility
Improving Service
Processes

42. 7 -42
Often complex decisions
Possible competitive advantage
Flexibility
Stable processes
May allow enlarging the scope of the
processes
Equipment and Technology

43. 7 -43© 2011 Pearson Education, Inc. publishing as Prentice Hall
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)

44. 7 -44© 2011 Pearson Education, Inc. publishing as Prentice Hall
Technology in Services
Service Industry Example
Financial
Services
Debit cards, electronic funds transfer, ATMs,
Internet stock trading, on-line banking via
cell phone
Education Electronic bulletin boards, on-line journals,
WebCT, Blackboard and smart phones
Utilities and
government
Automated one-man garbage trucks, optical
mail and bomb scanners, flood warning
systems, meters allowing homeowners to
control energy usage and costs
Restaurants and
foods
Wireless orders from waiters to kitchen,
robot butchering, transponders on cars that
track sales at drive-throughs
CommunicationsInteractive TV, ebooks via Kindle 2
Table 7.4

45. 7 -45© 2011 Pearson Education, Inc. publishing as Prentice Hall
Technology in Services
Service Industry Example
Hotels Electronic check-in/check-out, electronic
key/lock system, mobile web booking
Wholesale/retail
trade
ATM-like kiosks, point-of-sale (POS)
terminals, e-commerce, electronic
communication between store and supplier,
bar coded data, RFID
TransportationAutomatic toll booths, satellite-directed
navigation systems, WiFi in automobile
Health care Online patient-monitoring, online medical
information systems, robotic surgery
Airlines Ticketless travel, scheduling, Internet
purchases, boarding passes two-
dimensional bar codes on smart phones
Table 7.4

46. 7 -46
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
Process Redesign

47. 7 -47© 2011 Pearson Education, Inc. publishing as Prentice Hall
Sustainability
Sustainability in production process
1.Resources
2.Recycling
3.Regulations
4.Reputation

48. 7 -48
References and Sources
•Operations Management 10
th
Edition
by Jay Heizer and Barry Render
•Other Sources:
–Nissan Factory Life-How Cars are Built
–process design -Garment industry
–Chalmers Automotive The Chalmers Process
–Operations Management Lecture
Sobey School of Business, St. Mary’s University
© 2011 Pearson Education, Inc. publishing as Prentice Hall

49. 7 -49© 2011 Pearson Education, Inc. publishing as Prentice Hall
END OF PRESENTATION