Chapter 2
Processes Planning and Design
Copyright 2013 John Wiley & Sons, Inc.
Overview
2-2
Forms of Transformation
Systems
• Transformation system design considers
alternative transformation forms and
selects best one given characteristics of
desired outputs.
• Layout analysis seeks to maximize the
efficiency or effectiveness of operations.
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Layout Decisions
•
•
Facility layout: the process of determining placement of
departments, workgroups within departments,
workstations, machines, and stock-holding points within a
facility
This process requires the following inputs:
1.
2.
3.
4.
5.
Specification of the objectives used to evaluate the design
Estimates of product or service demand
Processing requirements
Space requirements for the elements
Space availability within the facility
8-4
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General Layout Alternatives
• Product-oriented layout
• Process-oriented layout
• Cellular layout
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General Layout Decisions
• The product-oriented layout
– Provides resources in a fixed sequence
– Matches the sequence of steps required to produce
a product or service
– Common in high-volume manufacturing
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Product Oriented Layout
Advantages
Efficient production of
standardized goods and
services
High processing speed
Low cost per unit
Disadvantages
Lack of flexibility or
customization
Employee boredom/
dissatisfaction
Quality problems
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Process Oriented Layout
• Process-oriented Layout
– Organized by function
– Processing steps can be completed in any sequence
– Products or customers can take any “route” necessary.
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Process Oriented Layout
Advantages
Flexibility
and customization
Disadvantages
Higher cost per unit
Higher skilled, high cost employees
Transport/wait time between departments
Less consistency
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Cellular Layouts
• Cellular layouts
– A compromise of product and process layouts
– Create “families” of products with similar process requirements
– A “cell” contains all resources needed for family
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Cellular Layout
• Teams of workers and equipment to
produce families of outputs
• Workers cross-trained
• Nominal cells versus physical cells.
• Remainder cell
• Cell formation methods
– production flow analysis
2-11
Cellular Production
• Combines flexibility of job shop with
low costs and short response times of
flow shop
• Based on group technology
• First identify part families
• Then form machine cells to produce part
families
2-12
Conversion of a Job Shop Layout
to a Cellular Layout
Figure 2.7
2-13
Organization of Miscellaneous
Parts into Families
Figure 2.8
2-14
Advantages of Cellular
Production
•
•
•
•
•
•
Reduced machine setup times
Increased capacity
Economical to produce in smaller batch sizes
Smaller batch sizes result in less WIP
Less WIP leads to shorter lead times
Shorter lead times increase forecast accuracy
and provide a competitive advantage
2-15
Advantages of Cellular
Production
(Continued)
• Parts produced in one cell
• Capitalize on benefits of using worker
teams
• Minimal cost to move from job shop to
cellular production (e.g. EHC)
• Can move from cellular production to
“mini-plants”
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Disadvantages of Cellular
Production
• Volumes too low to justify highly
efficient high volume equipment
• Vulnerable to equipment breakdowns
• Balancing work across cells
• Does not offer the same high degree of
customization as the job shop
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Process Types
• Project – Unique, one-of-a-kind, products or
customers. Generally large in size (building a
bridge, installing a software system,
implementing a major improvement effort)
• Job Shop – Predominantly manufacturing, high
customization and flexibility, but higher volume
than project.
• Batch Production – Groups of identical
products or customers processed together
through one step and then moved together to the
next step. More limited product variety, higher
production volume.
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Job Shop
• Each output, or small batch of outputs is
processed differently
• High variety - low volume
• Considerable amount of transport of
staff, material, or recipients
• Large variations in system flow times
• Equipment and staff grouped based on
function
2-19
A Generalized Job Shop
Operation
Figure 2.4
2-20
Advantages of the Job Shop
• Flexibility to respond to individual demands
• Less expensive general purpose equipment
used
• Maintenance and installation of general
purpose equipment easier
• General purpose equipment easier to modify
and therefore less susceptible to becoming
obsolete
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Advantages of the Job Shop
(Continued)
• Dangerous activities can be segregated from
other operations
• Higher skilled work leading to pride of
workmanship
• Experience and expertise concentrated
• Pace of work not dictated by moving line
• Less vulnerable to equipment breakdowns
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Disadvantages of the Job Shop
•
•
•
•
•
General purpose equipment is slower
Higher direct labor cost
High WIP inventories
High material handling costs
Management control very difficult
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Process Types (continued)
• Assembly Line (FLOW SHOP) – Narrowly
defined processes, made up of equipment with
limited flexibility. Much higher volume. Still
the possibility of some flexibility.
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Flow Shop
• Similar to continuous process except
discrete product is produced
• Heavily automated special purpose
equipment
• High volume - low variety
• Both services and products can use flow
shop form of processing
2-25
A Generalized Flow Shop
Operation
Figure 2.1
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Advantages of the Flow Shop
• Low unit cost
–
–
–
–
Specialized high volume equipment
Bulk purchasing
Lower labor rates
Low in-process inventories
• Less skilled operators used
• Fewer supervisors are needed
• Simplified managerial control
2-27
Disadvantages of Flow Shop
• Variety of output difficult to obtain
• Difficult to change rate of output
• Minor design changes may require
substantial changes to the equipment
• Worker boredom and absenteeism
• Work not very challenging
• Vulnerable to equipment breakdowns
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Disadvantages of Flow Shop
(Continued)
• Line balanced to slowest element
• Large support staff required
• Planning, design, and installation very
complex task
• Difficult to dispose of or modify special
purpose equipment
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Process Types (continued)
• Continuous Flow (Repetitive)– Equipment
and workstations dedicated to a single thing.
Very high volume. Very low flexibility. Best
chance for automation.
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Continuous Process
• Highly standardized products in large
volumes
• Often these products have become
commodities
• Typically these processes operate 24
hours/day seven days/week
• Objective is to spread fixed cost over as
large a volume as possible
2-31
Continuous Process (Continued)
• Starting and stopping a continuous
process can be prohibitively expensive
• Highly automated and specialized
equipment used
• Layout follows the processing stages
• Output rate controlled through
equipment capacity and flow mixture
rates
2-32
Continuous Process (Continued)
• Low labor requirements
• Often one primary input
• Initial setup of equipment and
procedures very complex
2-33
Process flow selection and the
Product Process Matrix
Tend to be processoriented
Can be either
Tend to be productoriented
4-34
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Product–Process Matrix: Framework Describing
Layout Strategies
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Considerations of Volume and
Variety
• High volume indicate automated mass
production
• High variety implies use of skilled labor
and general purpose equipment
• Make-to-stock versus make-to-order
2-36
Demand Linkages
• Manufacturers match output to demand in different ways
• Make-to-order (MTO)
– Process activated in response to an actual order
• May be either standard or custom product
– WIP and finished goods inventory kept to a minimum
– Tends to have longer response time
• Make-to-stock (MTS)
– Process activated to meet expected or forecast demand
– Customer orders are served from target stocking level
– Shorter lead time for stocked items
• MUCH longer for out of stock items
• Risk of obsolescence, shrink, etc.
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Types of Firms
Make-to-Stock
• Serve customers from finished goods inventory
Assemble-to-Order
• Combine a number of preassembled modules to meet a customer’s
specifications
Make-to-Order
• Make the customer’s product from raw materials, parts, and components
Engineer-to-Order
• Work with the customer to design and then make the product
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Make-to-Stock
• Examples of products include the following:
– Televisions
– Clothing
– Packaged food products
• Essential issue in satisfying customers is to balance the
level of inventory against the level of customer service.
– Easy with unlimited inventory, but inventory costs money
– Trade-off between the costs of inventory and level of customer
service must be made.
• Use lean manufacturing to achieve higher service levels for
a given inventory investment.
7-6
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Assemble-to-Order
• A primary task is to define a customer’s order in terms of
alternative components because these are carried in
inventory.
– An example is the way Dell Computer makes their desktop
computers.
• One capability required is a design that enables as much
flexibility as possible in combining components.
• There are significant advantages from moving the customer
order decoupling point from finished goods to components.
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Make-to-Order/Engineer-to-Order
• Boeing’s process for making commercial
aircraft is an example.
• Customer order decoupling point could be in
either raw materials at the manufacturing site
or the supplier inventory.
• Depending on how similar the products are, it
might not even be possible to preorder parts.
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Choices for Service Providers:
The Service System Design Matrix
• Customer contact & sales opportunity versus efficiency.
Exhibit 4.7 Service System Design Matrix
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Effect of Output Characteristics
on Transformation Systems
Figure 2.9
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The Nature of Services
• The customer is the focal point of all decisions
and actions.
• The organization exists to serve the customer.
• Operations is responsible for service systems.
• Operations is also responsible for managing
the work of the service workforce.
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The Service Triangle
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Service Package
1. Supporting facility
–
The physical resources that must be in place before a service can
be offered
2. Facilitating goods
–
The material purchased by the buyer or the items provided to the
customer
3. Information
–
Data provided by the customer
4. Explicit services
–
Benefits that are observable by the senses
5. Implicit services
–
Psychological benefits the customer may sense only vaguely
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Service Processes
• Often implemented with little development or
pretesting
• Need to consider amount of customer contact
• Customers may not arrive at smooth and even
increments
• Including customer in service process provides
opportunities to improve service
2-47
The Service Matrix
Figure 2.12
2-48
Service-System Design Matrix
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Service Gaps
• It is useful to inspect the service design
for gaps between customer needs and
what provider is offering
• This allows provider to control quality,
productivity, cost, and performance
• Can help identify a competitive
advantage
2-50
Service Guarantees
1. Must be meaningful to the customer
2. Must be unconditional
3. Must be easy to communicate and easy
to understand
4. Must be easy to use
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