Process Strategy and Sustainability

© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 1

77 Process Strategy and SustainabilityProcess Strategy and Sustainability

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OutlineOutline

Global Company Profile: Harley-Davidson

Four Process Strategies Process Focus

Repetitive Focus

Product Focus

Mass Customization Focus

Comparison of Process Choices


Outline – ContinuedOutline – Continued

Process Analysis and Design Flow Charts

Time-Function Mapping

Value-Stream Mapping

Process Charts

Service Blueprinting



Special Consideration for Service Process Design Customer Interaction and Process

Design

More Opportunities to Improve Service Processes

Selection of Equipment and Technology



Production Technology Machine Technology

Automatic Identification Systems (AISs) and RFID

Process Control

Vision Systems

Robots



Production Technology (cont.) Automated Storage and Retrieval

Systems (ASRSs)

Automated Guided Vehicles (AGVs)

Flexible Manufacturing Systems (FMSs)

Computer-Integrated Manufacturing (CIM)



Technology in Services

Process Redesign

Sustainability


Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:

1. Describe four production processes

2. Compute crossover points for different processes

3. Use the tools of process analysis


Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:

4. Describe customer interaction in process design

5. Identify recent advances in production technology

6. Discuss the 4 Rs of sustainability


Harley-DavidsonHarley-Davidson

Repetitive manufacturing worksRepetitive manufacturing works

The leading U.S. motorcycle company

Emphasizes quality and lean manufacturing

Materials as Needed system

Many variations possible

Tightly scheduled repetitive production line


Process Flow DiagramProcess Flow Diagram

THE ASSEMBLY LINETESTING28 tests

Oil tank work cell

Shocks and forks

Handlebars

Fender work cell

Air cleaners

Fluids and mufflers

Fuel tank work cell

Wheel work cell

Roller testing

Incoming parts

From Milwaukee on a JIT arrival schedule

Engines and transmissions

Frame tube bending

Frame-building work cells

Frame machining

Hot-paint frame painting

Crating


Process StrategiesProcess Strategies

The objective of a process strategy is The objective of a process strategy is to build a production process that to build a production process that meets customer requirements and meets customer requirements and product specifications within cost product specifications within cost and other managerial constraintsand other managerial constraints


Process, Volume, and VarietyProcess, Volume, and Variety

Process Focusprojects, 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 Varietyone or few units per run,(allows customization)

Changes in Modulesmodest 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

VolumeFigure 7.1



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



Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies there are Within these basic strategies there are many ways they may be implementedmany ways they may be implemented


Process FocusProcess 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


Process FocusProcess 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


Repetitive FocusRepetitive 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


Repetitive Repetitive FocusFocus

Raw materials and module inputs

Modules combined for manyOutput options

(many combinations of motorcycles)

Few modules

(multiple engine models, wheel modules)

Figure 7.2(b)

(modular)

Harley Davidson


Product FocusProduct 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


Product FocusProduct Focus Few Inputs

(corn, potatoes, water, seasoning)

Output variations in size, shape, and packaging

(3-oz, 5-oz, 24-oz package labeled for each material)

Figure 7.2(c)

(low-volume, high variety, continuous process)

Frito-Lay


Product FocusProduct FocusNucor Steel Plant

Co

nti

nu

ou

s ca

ster

Continuous cast steel sheared into 24-ton slabs

Hot tunnel furnace - 300 ft

Hot mill for finishing, cooling, and coiling

D

E F

GHI

Scrap steel

Ladle of molten steelElectric furnace

A

BC


Mass CustomizationMass 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



Table 7.1

Vehicle models 140 286Vehicle types 18 1,212Bicycle types 8 211,000Software titles 0 400,000Web sites 0 162,000,000Movie releases per year 267 765New book titles 40,530 300,000Houston TV channels 5 185Breakfast cereals 160 340Items (SKUs) in 14,000 150,000 supermarketsLCD TVs 0 102

Number of Choices

Item 1970s 21st Century


Mass Mass CustomizationCustomization

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



Mass Customization

Effective scheduling techniques

Rapid throughput techniques

Repetitive FocusFlexible peopleand equipment

Process-FocusedHigh variety, low volume

Low utilization (5% to 25%)General-purpose equipment

Product-FocusedLow variety, high volume

High utilization (70% to 90%)Specialized equipment

Figure 7.3

Modular techniques

Accommodating Product and

Process DesignResponsive

Supply Chains



Imaginative and fast product design

Rapid process design

Tightly controlled inventory management

Tight schedules

Responsive supply chain partners


Comparison of ProcessesComparison 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




Repetitive Focus

(modular)



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




Repetitive Focus

(modular)



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




Repetitive Focus

(modular)



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




Repetitive Focus

(modular)



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


Crossover ChartsCrossover Charts

Fixed costs

Variable costs

$

High volume, low varietyProcess C

Fixed costs

Variable costs$

RepetitiveProcess B

Fixed costs

Variable costs$

Low volume, high varietyProcess A

Fixed cost Process A

Fixed cost Process B

Fixed cost Process C

Tota

l cos

t

Total cost

Total cost

V1(2,857) V2

(6,666)

400,000

300,000

200,000

Volume

$

Figure 7.4


Focused ProcessesFocused Processes

Focus brings efficiency

Focus on depth of product line rather than breadth

Focus can be Customers

Products

Service

Technology


Changing ProcessesChanging Processes

Difficult and expensive

May mean starting over

Process strategy determines transformation strategy for an extended period

Important to get it right


Process Analysis and Process Analysis and DesignDesign

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?



Flow Charts - Shows the movement of materials

Time-Function Mapping - Shows flows and time frame


““Baseline” Time-Function MapBaseline” Time-Function MapCustomer

Sales

Production control

Plant A

Warehouse

Plant B

Transport

12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day

52 daysFigure 7.5

Move

Receive product

Pro

du

ct

Pro

du

ct

Extrude

Wait

WIP

Pro

du

ct

Move

WaitW

IP WIP

Print

Wait

Ord

er

WIP

Order product

Process order

Wait

Ord

er


““Target” Time-Function MapTarget” Time-Function Map

Customer

Sales

Production control

Plant

Warehouse

Transport

1 day 2 days 1 day 1 day 1 day

6 daysFigure 7.5

Move

Receive product

Pro

du

ct

Pro

du

ct

Extrude

Wait

PrintOrd

er

WIP

Pro

du

ct

Order product

Process order

Wait

Ord

er



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


Value-Stream MappingValue-Stream Mapping

Figure 7.6


Process ChartProcess Chart

Figure 7.7


Service BlueprintingService Blueprinting

Focuses on the customer and provider interaction

Defines three levels of interaction

Each level has different management issues

Identifies potential failure points


Service BlueprintService BlueprintPersonal Greeting Service Diagnosis Perform Service Friendly Close

Level#3

Level#1

Level#2

Figure 7.8

No

Notifycustomer

and recommendan 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

FYes

FYes

F

Standard request.(3 min)

Determine specifics.

(5 min)No

Canservice be

done and does customer approve?

(5 min)


Process Analysis ToolsProcess Analysis Tools Flowcharts provide a view of the

big picture

Time-function mapping adds rigor and a time element

Value-stream analysis extends to customers and suppliers

Process charts show detail

Service blueprint focuses on customer interaction


Special Considerations for Special Considerations for Service Process DesignService 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


Service Factory Service Shop

Degree of CustomizationLow High

Deg

ree

of

Lab

or

Low

High

Mass Service Professional Service

Service Process MatrixService Process Matrix

Commercial banking

Private banking

General-purpose law firms

Law clinicsSpecialized 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



Labor involvement is high

Selection and training highly important

Focus on human resources

Personalized services

Mass Service and Professional ServiceMass Service and Professional Service



Service Factory and Service ShopService Factory and Service Shop

Automation of standardized services

Low labor intensity responds well to process technology and scheduling

Tight control required to maintain standards


Improving Service Improving Service ProductivityProductivity

Strategy Technique Example

Separation Structure service so customers must go where the 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



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



Automation Separating services that may lend themselves to some type of 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 Improving Service ProcessesProcesses

Layout Product exposure, customer

education, product enhancement

Human Resources Recruiting and training

Impact of flexibility


Equipment and TechnologyEquipment and Technology

Often complex decisions

Possible competitive advantage Flexibility

Stable processes

May allow enlarging the scope of the processes


Production TechnologyProduction 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)


Machine TechnologyMachine Technology

Increased precision

Increased productivity

Increased flexibility

Improved environmental impact

Reduced changeover time

Decreased size

Reduced power requirements


Automatic Identification Automatic Identification Systems (AISs)Systems (AISs)

Improved data acquisition

Reduced data entry errors

Increased speed

Increased scope of process automation

Example – Bar codes and RFIDExample – Bar codes and RFID


Process ControlProcess Control Real-time monitoring and control of

processes Sensors collect data

Devices read data on periodic basis

Measurements translated into digital signals then sent to a computer

Computer programs analyze the data

Resulting output may take numerous forms


Vision SystemsVision Systems Particular aid to inspection

Consistently accurate

Never bored

Modest cost

Superior to individuals performing the same tasks


RobotsRobots

Perform monotonous or dangerous tasks

Perform tasks requiring significant strength or endurance

Generally enhanced consistency and accuracy


Automated Storage and Automated Storage and Retrieval Systems (ASRSs)Retrieval Systems (ASRSs)

Automated placement and withdrawal of parts and products

Reduced errors and labor

Particularly useful in inventory and test areas of manufacturing firms


Automated Guided Vehicle Automated Guided Vehicle (AGVs)(AGVs)

Electronically guided and controlled carts

Used for movement of products and/or individuals


Flexible Manufacturing Flexible Manufacturing Systems (FMSs)Systems (FMSs)

Computer controls both the workstation and the material handling equipment

Enhance flexibility and reduced waste

Can economically produce low volume at high quality

Reduced changeover time and increased utilization

Stringent communication requirement between components


Computer-Integrated Computer-Integrated Manufacturing (CIM)Manufacturing (CIM)

Extension of flexible manufacturing systems Backwards to engineering and inventory

control

Forward into warehousing and shipping

Can also include financial and customer service areas

Reducing the distinction between low-volume/high-variety, and high-volume/low-variety production


Computer-Computer-Integrated Integrated

Manufacturing Manufacturing (CIM)(CIM)

Figure 7.10


Technology in ServicesTechnology in ServicesService 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

Communications Interactive TV, ebooks via Kindle 2

Table 7.4


Technology in ServicesTechnology in ServicesService 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

Transportation Automatic 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


Process RedesignProcess Redesign 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


SustainabilitySustainability

Sustainability in production processes

1. Resources

2. Recycling

3. Regulations

4. Reputation



Resources Operations is primary user

Reducing use is win-win

Recycling Burn, bury, or reuse waste

Recycling begins at design



Regulations Laws affect transportation,

waste, and noise

Increasing regulatory pressure

Reputation Leadership may be rewarded

Bad reputation can have negative consequences


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Process Strategy and Sustainability

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