Process Strategy

7
PowerPoint presentation to accompany
Heizer and Render
Operations Management, Eleventh Edition
Principles of Operations Management, Ninth Edition

PowerPoint slides by Jeff Heyl

© 2014
© 2014
Pearson
Pearson
Education,
Education,
[Link]. 7-1
 Process Flow Diagram
Frame tube Frame-building Frame Hot-paint
bending work cells machining frame painting
THE ASSEMBLY LINE
TESTING Engines and
Incoming parts transmissions
28 tests
Arrive on a JIT
schedule from a
Air cleaners Oil tank work cell 10-station work
cell in
Milwaukee
Fluids and mufflers Shocks and forks

Fuel tank work cell Handlebars

Wheel work cell Fender work cell

Roller testing
Crating

© 2014 Pearson Education, Inc. 7-2

 Process Strategy

The objective is to create a process

to produce products that meets
customer requirements within cost
and other managerial constraints

© 2014 Pearson Education, Inc. 7-3

 Process Strategies
► 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

© 2014 Pearson Education, Inc. 7-4

 Process, Volume, and Variety
Figure 7.1 Volume
Low Repetitive High
Volume Process Volume
High Variety
one or few units Process Focus Mass Customization
per run, projects, job shops (difficult to achieve, but
(allows (machine, print, huge rewards)
customization) hospitals, restaurants) Dell Computer
Arnold Palmer Hospital

Changes in
Modules
modest runs, Repetitive
standardized (autos, motorcycles,
modules home appliances)
Harley-Davidson
Changes in
Attributes (such
as grade, quality, Poor Strategy Product Focus
size, thickness, (Both fixed and (commercial baked goods,
etc.) variable costs steel, glass, beer)
long runs only are high) Frito-Lay
© 2014 Pearson Education, Inc. 7-5
 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
© 2014 Pearson Education, Inc. 7-6
 Process 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
© 2014 Pearson Education, Inc. 7-7
 Many inputs
Process Focus (surgeries, sick patients,
baby deliveries, emergencies)

(low-volume, high-variety,
Many departments and
intermittent processes) many routings
Arnold Palmer Hospital

Figure 7.2(a) Many different outputs

(uniquely treated patients)
© 2014 Pearson Education, Inc. 7-8
 Repetitive 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

© 2014 Pearson Education, Inc. 7-9

 Raw materials and
Repetitive module inputs
(multiple engine models,

Focus wheel modules)

Few
modules

(modular)
Harley Davidson

Figure 7.2(b) Modules combined for many

Output options
© 2014 Pearson Education, Inc.
(many combinations of motorcycles)
7 - 10
 Product 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
© 2014 Pearson Education, Inc. 7 - 11
 Few Inputs
Product Focus (corn, potatoes, water,
seasoning)

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

Output variations in size,

Figure 7.2(c) shape, and packaging
(3-oz, 5-oz, 24-oz package
labeled for each material)
© 2014 Pearson Education, Inc. 7 - 12
 Mass 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

© 2014 Pearson Education, Inc. 7 - 13

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

Many modules
(high-volume, high-variety)
Dell Computer

Figure 7.2(d)
Many output versions
(custom PCs and notebooks)
© 2014 Pearson Education, Inc. 7 - 14
 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?

© 2014 Pearson Education, Inc. 7 - 15

 Selection of Equipment
▶ Decisions can be complex as alternate
methods may be available
▶ Important factors may be
► Cost ► Quality
► Cash flow ► Capacity
► Market stability ► Flexibility

© 2014 Pearson Education, Inc. 7 - 16

 Equipment and Technology

► Possible competitive advantage

► Flexibility may be a competitive
advantage
► May be difficult and expensive and
may require starting over
► Important to get it right

© 2014 Pearson Education, Inc. 7 - 17

 Production Technology
1. Machine technology
2. Automatic identification systems (AISs) and RFID
3. Process control
4. Vision systems
5. Robots
6. Automated storage and retrieval systems (ASRSs)
7. Automated guided vehicles (AGVs)
8. Flexible manufacturing systems (FMSs)
9. Computer-integrated manufacturing (CIM)

© 2014 Pearson Education, Inc. 7 - 18

 Improving Service
Productivity
TABLE 7.3 Techniques for Improving Service Productivity
STRATEGY TECHNIQUE EXAMPLE
Separation Structuring service so Bank customers go to a
customers must go where manager to open a new
the service is offered account, to loan officers for
loans, and to tellers for
deposits
Self-service Self-service so customers Supermarkets and
examine, compare, and department stores
evaluate at their own pace
Postponement Customizing at delivery Customizing vans at delivery
rather than at production
Focus Restricting the offerings Limited-menu restaurant

© 2014 Pearson Education, Inc. 7 - 19

 Improving Service
Productivity
TABLE 7.3 Techniques for Improving Service Productivity
STRATEGY TECHNIQUE EXAMPLE
Modules Modular selection of Investment and insurance
service selection
Modular production Prepackaged food modules
in restaurants
Automation Separating services that Automatic teller machines
may lend themselves to
some type of automation
Scheduling Precise personnel Scheduling ticket counter
scheduling personnel at 15-minute
intervals at airlines
Training Clarifying the service Investment counselor,
options funeral directors
Explaining how to avoid After-sale maintenance
problems personnel
© 2014 Pearson Education, Inc. 7 - 20
 Process Analysis and Design

► Flowcharts
► Shows the movement of materials
► Harley-Davidson flowchart
► Time-Function Mapping
► Shows flows and time frame

© 2014 Pearson Education, Inc. 7 - 21

 Lean
► The objective of lean is to eliminate
waste
► What is waste?
► Anything not necessary to produce the
product or service

© 2014 Pearson Education, Inc. 7 - 22

 Lean – Forms of Waste
▶ Confusion
▶ Motion/Conveyance
▶ Waiting
▶ Overprocessing
▶ Inventory
▶ Defects
▶ Overproduction
▶ (different forms of Waste, this one is for
healthcare)
© 2014 Pearson Education, Inc. 7 - 23
 Value Stream Maps
▶ Diagram that represents a process
▶ Can be “current-state”
▶ Or “desired-state”
▶ Diagrams include
▶ Ways how the process gets requested
▶ Steps in completing the process
▶ Data describing the process and wait times
▶ Problem areas, solutions, extra detail
© 2014 Pearson Education, Inc. 7 - 24
 Value Stream Mapping
▶ Activities surrounding the creation of
VSMs
▶ Should be collaborative, accessible
▶ Four Steps
▶ Understand current state
▶ Design future state
▶ Plan implementation
▶ Assess results

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 VSM Symbols

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 Current State VSM

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 Future State VSM

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