7

OPMG 310 Spring 2012

Process Strategy

7-1

Outline
Four Process Strategies
Process Focus Repetitive Focus Product Focus Mass Customization Focus Comparison of Process Choices

7-2

Outline Continued
Process Analysis and Design
Special Consideration for Service Process Design Selection of Equipment and Technology Production Technology

7-3

Harley-Davidson
Repetitive 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
2011 Pearson Education, Inc. publishing as Prentice Hall 7-4

Process Flow Diagram

Frame tube bending
TESTING 28 tests

Frame-building work cells

Frame machining THE ASSEMBLY LINE

Incoming parts

Hot-paint frame painting Engines and transmissions

From Milwaukee on a JIT arrival schedule

Air cleaners Fluids and mufflers Fuel tank work cell Wheel work cell Roller testing

Oil tank work cell Shocks and forks Handlebars Fender work cell

Crating

7-5

Process, Volume, and Variety

Figure 7.1

Low Volume 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 Process Focus projects, job shops (machine, print, hospitals, restaurants) Arnold Palmer Hospital

Volume Repetitive Process

High Volume Mass Customization (difficult to achieve, but huge rewards) Dell Computer

Repetitive (autos, motorcycles, home appliances) Harley-Davidson Poor Strategy (Both fixed and variable costs are high) Product Focus (commercial baked goods, steel, glass, beer) Frito-Lay
7-6

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
7-7

Process Focus

Many inputs (surgeries, sick patients, baby deliveries, emergencies)

(low volume, high variety, intermittent processes) Arnold Palmer Hospital

Many departments and many routings

Figure 7.2(a)

Many different outputs (uniquely treated patients)

7-8

Repetitive Focus

Raw materials and module inputs (multiple engine models, wheel modules)

Few modules

(modular) Harley Davidson

Figure 7.2(b)

Modules combined for many Output options (many combinations of motorcycles)

7-9

Product Focus

Few Inputs (corn, potatoes, water, seasoning)

(low-volume, high variety, continuous process) Frito-Lay

Figure 7.2(c)

Output variations in size, shape, and packaging (3-oz, 5-oz, 24-oz package labeled for each material)
7 - 10

Product Focus
D

Nucor Steel Plant

Scrap steel

Continuous caster

B
Ladle of molten steel

Electric furnace

Continuous cast steel sheared into 24-ton slabs Hot tunnel furnace - 300 ft

Hot mill for finishing, cooling, and coiling

H I

7 - 11

Mass Customization

Many parts and component inputs (chips, hard drives, software, cases)

Many modules

(high-volume, high-variety) Dell Computer

Figure 7.2(d)

Many output versions (custom PCs and notebooks)

7 - 12

Mass Customization
Imaginative and fast product design Rapid process design Tightly controlled inventory management Tight schedules Responsive supply chain partners
7 - 13

Crossover Charts
Variable costs

Variable costs Fixed costs

Low volume, high variety Process A

Variable costs Fixed costs

Repetitive Process B
st co al ost ot tal c T To

$
Fixed costs
High volume, low variety Process C

400,000 300,000 200,000

Fixed cost Process A Fixed cost Process B Fixed cost Process C

Figure 7.4

(2,857)

V1

To ta lc os t

V2

(6,666)

Volume
7 - 14

Focused Processes
Focus brings efficiency Focus on depth of product line rather than breadth Focus can be
Customers Products Service Technology
7 - 15

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?

7 - 16

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
7 - 17

Value-Stream Mapping

7 - 18

Service Blueprint
Personal Greeting Level #1
Customer arrives for service. (3 min)

Service Diagnosis

Perform Service

Friendly Close

Customer departs

F
Warm greeting and obtain service request. (10 sec) Determine specifics. (5 min) Notify customer and recommend an alternative provider. (7min) No Customer pays bill. (4 min)

No Standard request. (3 min)

F F
Notify customer the car is ready. (3 min)

Level #2
Direct customer to waiting room.

Can service be done and does customer approve? (5 min)

F Level #3

F
Yes

F
Yes Perform required work. (varies) Prepare invoice. (3 min)

7 - 19

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
7 - 20

Service Process Matrix

Degree of Customization Low Mass Service
Commercial banking Private banking

High Professional Service

Traditional orthodontics

High Degree of Labor

Full-service stockbroker Boutiques Retailing

Generalpurpose law firms Digital orthodontics

Service Factory
Warehouse and catalog stores

Law clinics Service Shop Specialized Limited-service hospitals stockbroker Fast-food restaurants Fine-dining restaurants Hospitals

Low

Airlines No-frills airlines

Figure 7.9
7 - 21

Improving Service Processes

Layout
Product exposure, customer education, product enhancement

Human Resources
Recruiting and training Impact of flexibility

7 - 22

Equipment and Technology

Often complex decisions Possible competitive advantage
Flexibility Stable processes

May allow enlarging the scope of the processes

7 - 23

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)
7 - 24

Machine Technology
Increased precision Increased productivity Increased flexibility Improved environmental impact Reduced changeover time Decreased size Reduced power requirements
7 - 25

9
OPMG 310 Fall 2011

Layout Strategies

9 - 26

Outline
The Strategic Importance of Layout Decisions Types of Layout Office Layout Retail Layout
Servicescapes

Warehousing and Storage Layouts

Cross-Docking Customizing
9 - 27

Outline Continued
Fixed-Position Layout Process-Oriented Layout
Computer Software for ProcessOriented Layouts Work Cells Requirements of Work Cells Staffing and Balancing Work Cells The Focused Work Center and the Focused Factory
9 - 28

Layout Design Considerations

Higher utilization of space, equipment, and people Improved flow of information, materials, or people Improved employee morale and safer working conditions Improved customer/client interaction Flexibility
9 - 29

Types of Layout
1. Office layout 2. Retail layout 3. Warehouse layout 4. Fixed-position layout 5. Process-oriented layout 6. Work-cell layout 7. Product-oriented layout
9 - 30

Supermarket Retail Layout

Objective is to maximize profitability per square foot of floor space Sales and profitability vary directly with customer exposure

9 - 31

Store Layout

Figure 9.2
9 - 32

Retail Slotting
Manufacturers pay fees to retailers to get the retailers to display (slot) their product Contributing factors
Limited shelf space An increasing number of new products Better information about sales through POS data collection Closer control of inventory
9 - 33

Warehousing and Storage Layouts

Objective is to optimize trade-offs between handling costs and costs associated with warehouse space Maximize the total cube of the warehouse utilize its full volume while maintaining low material handling costs
9 - 34

Warehousing and Storage Layouts

Warehouse density tends to vary inversely with the number of different items stored Automated Storage and Retrieval Systems (ASRSs) can significantly improve warehouse productivity by an estimated 500% Dock location is a key design element
9 - 35

Cross-Docking
Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse Requires tight scheduling and accurate shipments, bar code or RFID identification used for advanced shipment notification as materials are unloaded
9 - 36

Customizing
Value-added activities performed at the warehouse Enable low cost and rapid response strategies
Assembly of components Loading software Repairs Customized labeling and packaging
9 - 37

Warehouse Layout
Traditional Layout
Storage racks Customization

Conveyor Staging Shipping and receiving docks

9 - 38

Office

Warehouse Layout
Cross-Docking Layout
Shipping and receiving docks

Shipping and receiving docks

Office
9 - 39

Fixed-Position Layout
Product remains in one place Workers and equipment come to site Complicating factors
Limited space at site Different materials required at different stages of the project Volume of materials needed is dynamic
9 - 40

Alternative Strategy
As much of the project as possible is completed off-site in a productoriented facility This can significantly improve efficiency but is only possible when multiple similar units need to be created
9 - 41

Process-Oriented Layout
Like machines and equipment are grouped together Flexible and capable of handling a wide variety of products or services Scheduling can be difficult and setup, material handling, and labor costs can be high
9 - 42

Process-Oriented Layout
ER triage room Surgery Patient A - broken leg Emergency room admissions Patient B - erratic heart pacemaker Laboratories

Radiology

ER Beds

Pharmacy

Billing/exit

Figure 9.3
9 - 43

Work Cells
Reorganizes people and machines into groups to focus on single products or product groups Group technology identifies products that have similar characteristics for particular cells Volume must justify cells Cells can be reconfigured as designs or volume changes
9 - 44

Advantages of Work Cells

1. Reduced work-in-process inventory 2. Less floor space required 3. Reduced raw material and finished goods inventory 4. Reduced direct labor 5. Heightened sense of employee participation 6. Increased use of equipment and machinery 7. Reduced investment in machinery and equipment
9 - 45

Requirements of Work Cells

1. Identification of families of products 2. A high level of training, flexibility and empowerment of employees 3. Being self-contained, with its own equipment and resources 4. Test (poka-yoke) at each station in the cell
9 - 46

Improving Layouts Using Work Cells

Current layout - straight lines make it hard to balance tasks because work may not be divided evenly

Improved layout - in U shape, workers have better access. Four cross-trained workers were reduced.

U-shaped line may reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection
Figure 9.10 (b)
9 - 47

Focused Work Center and Focused Factory

Focused Work Center
Identify a large family of similar products that have a large and stable demand Moves production from a general-purpose, process-oriented facility to a large work cell

Focused Factory
A focused work cell in a separate facility May be focused by product line, layout, quality, new product introduction, flexibility, or other requirements
9 - 48

Repetitive and ProductOriented Layout

Organized around products or families of similar high-volume, low-variety products
1. Volume is adequate for high equipment utilization 2. Product demand is stable enough to justify high investment in specialized equipment 3. Product is standardized or approaching a phase of life cycle that justifies investment 4. Supplies of raw materials and components are adequate and of uniform quality
9 - 49

Product-Oriented Layouts
Fabrication line Builds components on a series of machines Machine-paced Require mechanical or engineering changes to balance Assembly line Puts fabricated parts together at a series of workstations Paced by work tasks Balanced by moving tasks Both types of lines must be balanced so that the time to perform the work at each station is the same
9 - 50

McDonalds Assembly Line

Figure 9.12
9 - 51

Disassembly Lines
Disassembly is being considered in new product designs Green issues and recycling standards are important consideration Automotive disassembly is the 16th largest industry in the US
9 - 52

Assembly-Line Balancing
Objective is to minimize the imbalance between machines or personnel while meeting required output Starts with the precedence relationships
Determine cycle time Calculate theoretical minimum number of workstations Balance the line by assigning specific tasks to workstations
9 - 53

Product Focused Layouts: Line Balancing

Since the flow is repetitive line balancing is critical
Line Balancing is the process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements.
Why is line balancing important? 1. It allows us to use labor and equipment more efficiently. 2. To avoid fairness issues that arise when one workstation must work harder than another.
9 - 54

Cycle Time
Cycle time is the maximum time allowed at each workstation to complete its set of tasks.
Note: Cycle time also establishes the output rate of a line

9 - 55

Wing Component Example

Being wants to develop a precedence diagram for an electrostatic wing component that requires a total assembly time of 66 minutes. Boeing determines that there are 480 productive minutes of work available each day. Furthermore, the production schedule requires that 40 units of the wing component be completed from the assembly line each day. Boeing want to group the tasks into workstations.

Performance Time Task (minutes) A 10 B 11 C 5 D 4 E 12 F 3 G 7 H 11 I 3 Total time 66

Task Must Follow Task Listed Below A B B A C, D F E G, H

This means that tasks B and E cannot be done until task A has been completed

9 - 56

Wing Component Example

Performance Time Task (minutes) A 10 B 11 C 5 D 4 E 12 F 3 G 7 H 11 I 3 Total time 66 Task Must Follow Task Listed Below A B B A C, D F E G, H

5 10 11

C
4

B
12

F
11

G
3

H Figure 9.13
9 - 57

Wing Component Example

Performance Time Task (minutes) A 10 B 11 C 5 D 4 E 12 F 3 G 7 H 11 I 3 Total time 66 Task Must Follow Task Listed Below 480 available mins per day 40 units required

workstations

A Production time B available per day Cycle time = Units required per day B A = 480 / 40 5 C, D = 12 minutes per unit C F 10 11 3 7 n E i B G = Minimum A i1Time for taskF G, H 4 number of = Cycle time
12

11

= 66 / 12 E H = 5.5 or 6 stations
Figure 9.13
9 - 58

WingLine-Balancing Heuristics Component Example

1. Longest task time Choose the available task with 480 the longest Performance Task Must Follow task time available mins per day Time Task Listed 2. (minutes) Choose the available task with Task Most following tasks Below 40 units required the largest number of A 10 following tasks Cycle time = 12 mins B 11 A Minimum C 3. Ranked5positional B Choose the available task for 5.5 or 6 workstations = which the sum of its task time D weight 4 B and the following task times is E 12 A longest the 5 F 3 C, D C G 4. Shortest task time 7 F Choose the available task with 7 10 11 3 the shortest task time H 11 E A B G F I 3 G, H 4 3 5. Least number of Choose the available task with Total time 66 tasks D following the least number of following I 12 11 tasks E H
Table 9.4 Figure 9.13
9 - 59

Workstation
1 2 3 4 5 6

Eligible Task (positional weight)

A (66) None B (33), E (26) None H(14), C (18), D (17) H(14), D (17) H(14), F(13) G(10), H(14) None G(10) I(3)

Assign (Task time)

A (10) B (11)

Time Remaining
2

Station Idle Time

2

1 1 0 7 3 0 1 5 2 5 3
F

E (26), C (18), D (17) E (12) C (5) D(4) F(3) H (11) G(7) I(3)

0 1 2

Assigning Tasks to Workstations: Cycle Time: 12 minutes per workstation Rule: Ranked Positional weight

10
A

11
B

7
G

4
D

3
I

12
E

11
H
9 - 60

Wing Component Example

Performance Time Task (minutes) A 10 B 11 Station C 5 2 D 4 11 E 10 12 B F A 3 G 7 H 11 I 3 12 Station Total time 66 E 1
Station 3

Task Must Follow Task Listed Below

480 available mins per day 40 units required

Cycle time = 12 mins A Minimum 5 B workstations = 5.5 or 6 C B 3 7 A F G C, D 4 3 F D E Station 3 I Station 4 G, H 11 H

Station 5 Station 6 6 Station

Figure 9.14
9 - 61

Wing Component Example

Performance Time Task (minutes) Task Must Follow Task Listed Below 480 available mins per day 40 units required Cycle time = 12 mins Minimum workstations = 5.5 or 6

A 10 B 11 A C 5 B Task times Efficiency = 4 D B (Actual number of workstations) x (Largest cycle time) E 12 A F 3 C, D = 66 minutes / (6 stations) x (12 minutes) G 7 F = 91.7% H 11 E I G, H Percentage of3 Idle Time (i.e. Balance Delay) = 100% - Efficiency = 8.3% Total time 66 Idle Time per Cycle = Time allocated per unit Time needed per unit = (cycle time)(# of stations) - Task times = (12 min)(6 stations) 66 9 - 62 = 6 min

Another Example
Dr. Lori Baker, operations manager at Nesa Electronics, prides herself on excellent assembly-line balancing. She has been told that the firm needs to complete 96 instruments per 24-hour day. The assembly-line activities are:

a) Draw a precedence diagram. b) If the daily (24-hour) production rate is 96 units, what is the highest allowable cycle time in order to meet the required production rate? c) If the cycle time after allowances is given as 10 minutes, what is the daily (24-hour) production rate? d) With a 10-minute cycle time, what is the theoretical minimum number of workstations with which the line can be balanced? e) With a 10-minute cycle time and six workstations, what is the efficiency? f) What is the total idle time per cycle with a 10-minute cycle time and six workstations? g) What is the best work station assignment you can make without exceeding a

Solution