Understanding the Operations Management.Ppt

This format provides a clear and concise summary.

1. 7-1
Operations Operations
ManagementManagement
Process Strategy Process Strategy
Chapter 7Chapter 7

2. 7-2
OutlineOutline
Four Process Strategies.
Process Focus.
Repetitive Focus.
Product Focus.
Mass Customization Focus.
Service Process Design.
Process Reengineering.

3. 7-3
Process StrategyProcess Strategy
How to produce a product or provide a
service.
Objective:
Meet or exceed customer requirements.
Achieve competitive advantage.
Has long-run effects:
Product & volume flexibility.
Costs & quality .

4. 7-4
Four Process StrategiesFour Process Strategies
Four process strategies:
1. Process focused.
2. Product focused.
3. Repetitive focused.
4. Mass customization.
Summary: Table 7-2.
Several strategies may be used within one facility.
Process strategies follow a continuum.

5. 7-5
Fit of Process, Volume, and VarietyFit of Process, Volume, and Variety
PROCESS FOCUS
(job shops, printing)
REPETITIVE FOCUS
(autos, motorcycles)
PRODUCT FOCUS
(steel, chemicals)
High Variety
Small production runs
(allows customization)
Low Variety
Long production runs
(standardization)
MASS
CUSTOMIZATION
(Dell Computer)
POOR STRATEGY
Low Volume High Volume

6. 7-6
1. Process Focus Examples1. Process Focus Examples
Bank
Machine
Shop
Hospital

7. 7-7
Process FocusProcess Focus
Facilities organized by process.
Similar processes or equipment grouped together.
(Example: All drill presses are together.)
Low volume, high variety products.
75% of all global products.
Products follow many different paths.
Other names:
Intermittent process.
Job shop.
1
3 4
2

8. 7-8
Process Focus - Pros & ConsProcess Focus - Pros & Cons
Advantages:
Greater product flexibility.
More general purpose equipment.
Lower initial capital investment.
Disadvantages:
High variable cost per unit.
More highly trained personnel.
More difficult production planning & control.
Low equipment utilization (5% to 25%).

9. 7-9
2. Product Focus Examples2. Product Focus Examples
Light Bulbs
(Discrete)
Paper (Continuous)
.
Soft Drinks
(Continuous,
then Discrete)

10. 7-10
Product FocusProduct Focus
Facilities organized by product.
High volume, low variety products.
Long, continuous production runs.
Discrete unit manufacturing.
Continuous process manufacturing.
Other names:
Line flow production.
Continuous production.
1 2 3 4

11. 7-11
Product Focus: Steel PlantProduct Focus: Steel Plant

12. 7-12
Product Focus - Pros & ConsProduct Focus - Pros & Cons
Advantages:
Lower variable cost per unit.
Lower but more specialized labor skills.
Easier production planning and control.
Higher equipment utilization (70% to 90%).
Disadvantages:
Lower product flexibility.
More specialized equipment.
Higher capital investment.

13. 7-13
3. Repetitive Focus - Examples3. Repetitive Focus - Examples
Truck
Clothes
Dryer
Fast
Food
McDonald’s
over 95 billion served

14. 7-14
Repetitive FocusRepetitive Focus
Facilities often organized by assembly lines.
Characterized by modules.
Parts & assemblies made previously.
Modules combined for many output options.
Other names:
Assembly line.
Production line.

15. 7-15
Repetitive Focus - Harley DavidsonRepetitive Focus - Harley Davidson

16. 7-16
Repetitive Focus - ConsiderationsRepetitive Focus - Considerations
More structured than process focus, less
structured than product focus.
Enables quasi-customization.
Has advantages and disadvantages of
process focus and product focus.

17. 7-17
Process ContinuumProcess Continuum
Process Focused
(intermittent process)
Repetitive
Focus
(assembly line)
Product Focused
(continuous
process)
Continuum
High variety, low volume
Low utilization (5% - 25%)
General-purpose equipment
Low variety, high volume
High utilization (70% - 90%)
Specialized equipment
Modular
Flexible
equipment

18. 7-18
Increasing Product VarietyIncreasing Product Variety
Item
Early
1970s
Early
2000s
Vehicle models 140 260
Vehicle styles 18 1,212
Software titles 0 300,000
Web sites 0>30,000,000
Movie releases 267 458
New book titles 40,530 77,446
TV channels 5 >300
Breakfast cereals 160 340
Items in supermarkets 14,000150,000

19. 7-19
4. Mass Customization4. Mass Customization
Rapid, low-cost production to fulfill unique
customer desires.
Distinctions between process, repetitive and
product focus blur, making variety and
volume issues less significant.
Very hard to achieve!

20. 7-20
Mass Customization at Dell Mass Customization at Dell
Computer CompanyComputer Company
Sells custom-built PCs directly to consumer.
Builds computers rapidly, at low cost, and only
when ordered.
Operates with six days inventory.
Integrates the Web into every aspect of business.
Research focus on software to make installation
and configuration of PCs fast and simple.

21. 7-21
Process Analysis and DesignProcess Analysis and Design
Process should:
Be designed to achieve competitive advantage:
Differentiation.
Response.
Low cost.
Eliminate steps that do not add value.
Maximize value, as perceived by the customer.

22. 7-22
Tools for Process DesignTools for Process Design
Flow Diagrams - Figures 7.2, 7.3, 7.4
Process Charts - Figure 7.8
Time-Function/Process Mapping - Figure 7.7
Service Blueprint - Figure 7.9

23. 7-23
Process Design for ServicesProcess Design for Services
Consider customization and labor intensity.
Degree of customization.
High: Focus on specialization (equipment, training,
etc.).
Low: Focus on standardization and automation.
Degree of labor intensity.
High: Focus on personalization & human resources
(selection, training, etc.)
Low: Use technology and automation.

24. 7-24
Process Design for ServicesProcess Design for Services
Mass Service Professional Service
Service Factory Service Shop
Commercial
Banking
General purpose
law firms
Fine dining
restaurants
Retailing
Personal
banking
Boutiques
Degree of Customization
D
e
g
r
e
e
o
f
L
a
b
o
r
In
t
e
n
s
it
y
Low High
L
o
w
H
ig
h
Law clinics
Warehouse and
catalog stores
Fast food
restaurants
Vending
machines

25. 7-25
Improving Service Productivity - Improving Service Productivity -
Table 7.3Table 7.3
Separation: Different services in different places.
Self-service: Customers serve themselves.
Postponement: Customize at delivery.
Focus: Restrict offerings.
Automation: Automate where appropriate.
Scheduling: Precise personnel scheduling.

26. 7-26
Technology - AutomationTechnology - Automation
Production.
CNC (Computer Numerical Control), Robots and FMS
(Flexible Manufacturing Systems).
Automatic Identification.
Bar coding and RFID (Radio Frequency IDentification).
Warehousing.
ASRS (Automated Storage and Retrieval) and AGVs
(Automated Guided Vehicles).
Integration – CIM (computer integrated manufacturing)

27. 7-27
Process ReengineeringProcess Reengineering
Fundamental rethinking and radical redesign
of business processes.
To produce dramatic improvements in performance.
Re-examine the basic process and its
objectives:
Re-evaluate the purpose of the process.
Question underlying assumptions.
Focus on activities that cross boundaries.