Chapter 7 process strategy production and operation and management

Christine A. Cayanan 1
CHRISTINE A.
CAYANAN
9/5/2014 Production and Operation Management

CHAPTER 7
Process
Strategy
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Christine A. Cayanan 2

What is Process Selection?
Christine A. Cayanan 9/5/2014
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Process Selection :
 It refers to deciding on the way production of goods or
services will be organized.
 It has a major implications for capacity planning, layout
of facilities and design of work systems.
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Christine A. Cayanan

Commercial Video Clip on Process
Strategy
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There are 2 Aspects of Process
Strategy
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2 Aspects of Process Strategy
 Capital Intensity- is the mix of equipment and labor that will
be used by the organization.
 Process Flexibility- the degree to which the system can be
adjusted to changes in processing requirements due to such
factors as changes in product or service design, changes in
volume processed and changes in technology.
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TECHNOLOGY
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TECHNOLOGY
 Technological Innovation- refers to the discovery and
development of new or improved products, services, or
processes for producing or providing them.
 Technology- refers to application of scientific discoveries to
the development and improvement of goods and services, or
processes that produce or provide them.
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There are 3 kinds of
Technology
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3 Kinds of Technology
1. Product and Service Technology- it is the discovery
and development of new products and services.
- This is done mainly by researchers and engineers,
who use the scientific approach to develop new
knowledge and translate that into commercial
applications.
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Product and Service Technology
Video
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2. Process Technology- includes methods, procedures,
and equipment used to produce goods and provide
services.
- Involves not only the processes within an organization, it
also extends to supply chain processes.
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3. Information Technology (IT)- is the science and use of
computers and other electronic equipment to store,
process, and send information.
- This includes electronic data processing , the use of bar codes
and radio frequency tags to identify, track goods, devices
used to obtain point of sale information, e-commerce, e-mail
and more.
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Information Technology Video
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Technology as a Competitive
Advantage
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Examples of technological advances
are:
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1. Cell phones
2.Wireless computing
3. Emails
4. Digital cameras
5. Satellite radio

PROCESS SELECTION
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PROCESS SELECTION
 There are 3 primary questions bear on process selection:
1. How much variety of products will the system need to
handle?
2. What degree of equipment flexibility will be needed?
3. What is the expected volume of output?
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3 BASIC STRATEGIES
 Process focus
 Product focus
 Repetitive focus
Continuum
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PROCESS FOCUS
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Process – Focused Strategy
 -an organization's approach to
transforming resources into goods and
services
 -objective is to create a process that can
produce products that meets customer
requirements within cost and other
managerial constraints
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Process-Focused Strategy
Examples
Bank
© 1995 Corel Corp.
Hospital
Machine
Shop © 1995 Corel Corp.
© 1995
Corel
Corp.
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TYPES OF PROCESS FOCUS
1. JOB SHOP
2. BATCH
3. REPETITIVE/ASSEMBLY
4. CONTINUOUS
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1. JOB SHOP
 A JOB SHOP usually operates on a relatively small
scale. It is used when a low volume of high-variety goods
or services will be needed.
 Processing is intermittent ; work includes small jobs,
each with somewhat different processing requirements.
 Finished goods are usually made to order.
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Examples:
 Restaurants, Hospitals, machine shops
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2. BATCH
 It is used when a moderate volume of goods or
services is desired, and it can handle a
moderate variety in products or services.
 Example: Bakeries, which
make bread, cakes or
cookie in batches.
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Batch Process Video
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3. REPETITIVE
 When higher volumes of more standardized
goods or services are needed, repetitive
processing is used.
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Examples: (Repetitive)
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Repetitive Process Video
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4. CONTINUOUS
 When a very high volume of non-discrete ,
highly standardized output is desired,
a continuous system is used.
 Example: Oil Refinery
performs a continues process.
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Continuous Process Video
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PRODUCT AND SERVICE
PROFILING
 This can be used to avoid any inconsistencies
by identifying the key product or service
dimensions and in selecting appropriate
processes.
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AUTOMATION
 Machinery that has sensing and control
devices that enable it to operate automatically.
Example: EZ tag, ATM
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3 kinds of Automation
 Fixed Automation
 Programmable Automation
 Computer-aided manufacturing (CAM)
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1. Fixed Automation
 Is the most rigid of the 3 types. It uses a high
cost, specialized equipment for fixed sequence
of operations.
 Advantage: low cost and high volume
 Limitation: minimal variety and high cost of
making major changes in either product or
process.
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2. Programmable automation
 It involves the use of high-cost, general
purpose equipment controlled by a computer
program that provides both the sequence of
operations and specific details about each
operation.
 Example: robots are applications of
programmable automation
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 Computer –aided manufacturing (CAM)-refers
to the use of computers in process control,
ranging from robots to automated quality control,
• Numerically controlled (N/C) machines –are
programmed to follow a set of processing
instructions based on the mathematical
relationships that tells the machine the details of
operations to be performed.
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3. Flexible Automation
 Evolved from programmable automation . It
uses equipment that is more customized than
that of programmable automation.
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Automation Video
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FACILITIES LAYOUT
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LAYOUT
 This refers to the configuration of department ,
work centers and equipment with particular
emphasis on movement of work through the
system.
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Most common reasons for redesign of
layouts:
 Inefficient operations
E.g., high cost , bottlenecks, accidents or
safety hazards, changes in the design of
products and services, introduction of new
products or services.
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Objective of layout design
 To facilitate a smooth flow of work,
material, and information through
the system.
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Supporting objectives involves
the ff:
1. To facilitate attainment of product or service quality.
2. To use workers and space efficiently
3. To avoid bottlenecks
4. To minimize material handling costs
5. To eliminate unnecessary movements of workers or
materials
6. To minimize production time or customer service
time
7. To design for safety.
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PRODUCT – FOCUSED
STRATEGY
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Product-Focused Strategy
 Facilities are organized by product
 High volume, low variety products
 Where found
 Discrete unit manufacturing
 Continuous process manufacturing
 Other names
 Line flow production
 Continuous production 9/5/2014
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Product-Focused Strategy
 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
 Usually higher capital investment
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© 1995 Corel Corp.
Light Bulbs
(Discrete)
Paper
© 1984-1994 T/Maker Co.
© 1995 Corel
Corp.
Soft Drinks
(Continuous,
then Discrete)
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REPETITIVE FOCUSED
STRATEGY
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Repetitive Focused
Strategy
 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
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Repetitive Focused Strategy -
Considerations
 More structured than process-focused, less structured
than product focused
 Enables quasi-customization
 Using modules, it enjoys economic advantage of
continuous process, and custom advantage of low-volume,
high-variety model
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Repetitive-Focused Strategy -
Examples
Clothes
Dryer
© 1995 Corel Corp.
© 1995 Corel Corp.
Fast
Food
McDonald’s
over 95 billion served
© 1984-1994 T/Maker Co.
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Product Layouts
 Are used to achieve a smooth and rapid flow
of large volumes of goods or customers
through a system.
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Process Layout (functional)
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Dept. A
Dept. B
Dept. C
Dept. D
Dept. E
Dept. F

Production Line
 Standardized layout arranged according to a
fixed sequence of production tasks
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Production Line (flow line)
Begin Work flow End
Raw Materials Finished line
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Station
1
Station
2
Station
a
Station
b

Assembly line
 Standardized layout arranged according to a
fixed sequence of assembly tasks
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Tray Dessert Salads Main
Course
Beverage Cashier

TOOLS FOR PROCESS DESIGN
Flow Diagrams
Process Charts
Time-Function/Process Mapping
Service Blueprinting
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Flow Diagram
Custome
Crustomer
sales
representative
take order
Prepress
Department
(Prepare printing
plates and
Printninegg atives)
Department
Shippin
g
Collating
Departme
nt
Gluing, binding,
stapling,
labeling
Polywrap
Departme
nt
Purchasing
(order inks,
paper, other
supplies)
Vendor
s
Receivin
g
Warehousing
(ink, paper,
etc.)
Accountin
g
Information flow
Material flow
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Process Chart
Example
SUBJECT: Request tool purchase
Dist (ft) Time (min) Symbol Description
D Write order
D On desk
75 D To buyer
D Examine
 = Operation;  = Transport;  =
Inspect;
D = Delay;  = Storage
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7-63
Service Blueprint for Service at Ten
Minute Lube, Inc.

7-64
Attaining Lean Production
 Focus on inventory reduction
 Build systems that help employees
 Reduce space requirements
 Develop close relationships with suppliers
 Educate suppliers
 Eliminate all but value-added activities
 Develop the workforce
 Make jobs more challenging
 Set sights on perfection!

Techniques for Improving Service
Productivity
Strategy Technique
 Separation
 Self-service
 Postponement
 Focus
 Structure service to
customers must go where
service is offered
 Self-service to customers
examine, compare and
evaluate at their own pace
 Customizing at delivery
 Restricting the offerings
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Techniques for Improving Service
Productivity - Continued
 Modules
 Automation
 Scheduling
 Training
 Modular selection of service.
Modular production
 Separating services that lend
themselves to automation
 Precise personnel scheduling
 Clarifying the service options
 Explaining problems
 Improving employee flexibility
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7-67
More Opportunities to Improve
Service Processes
 Layout
 Human Resources
 Technology

End of Powerpoint Presentation
Thank you!!!
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Chapter 7 process strategy production and operation and management

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