Operations Management (opm530) -c5 Process & Layout

Operations Management Process Strategies and Layout Strategies Chapter 5 Prepared by : Shatina Saad

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Outline ♦ FOUR PROCESS STRATEGIES ♦ PROCESS ANALYSIS AND DESIGN ♦ SERVICE PROCESS DESIGN ♦ SELECTION OF EQUIPMENT AND TECHNOLOGY ♦ PRODUCTION TECHNOLOGY ♦ TECHNOLOGY IN SERVICES ♦ ENVIRONMENTALLY FRIENDLY PROCESSES ♦Prepared PROCESS REENGINEERING by : Shatina Saad 5-2

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Learning Objectives

When you complete this chapter, you should be able to : Identify or Define: ♦ ♦ ♦ ♦ ♦ ♦

Process focus Repetitive focus Product focus Process reengineering Service process issues Environmental issues

Describe or Explain: Process analysis ♦ Service design ♦ Green manufacturing ♦ Production technology Prepared by : Shatina Saad ♦

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Fit of Process, Volume, and Variety Repetitive Process (Modular)

Low-Volume (Intermittent)

Process focus High Variety projects, job One or few units shops,(machine, per run, high print, carpentry) variety Standard (allows Changes in modules Register customization)

Modest runs, standardized modules Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only

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Poor strategy

High-Volume (Continuous)

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

Repetitive Co. (autos, motorcycles) Harley Davidson Product focus (commercial baked goods, steel, glass) Nucor Steel 5-4

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Process Strategies ♦ Involve determining how to produce a product or provide a service ♦ Objective ♦ ♦

Meet or exceed customer requirements Meet cost & managerial goals

♦ Has long-run effects ♦ ♦

Product & volume flexibility Costs & quality

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Types of Process Strategies

♦ Process strategies that follow a continuum ♦ Within a given facility, several strategies may be used ♦ ProcessThese strategies are often classified as: RepetitiveProductFocused

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Focused

Continuu 5-6 m

Focused

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Process-Focused Strategy ♦ Facilities are organized by process ♦ Similar processes are together ♦

Example: All drill presses are together

♦ Low volume, high variety products Product Operati A ♦ ‘Jumbled’ flow ♦ Other names on

Intermittent process ♦ Job shop ♦

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1

Product B

2

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Process Focus

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Process Focused Strategy Pros & Cons ♦ Advantages − Greater product flexibility − More general purpose equipment − Lower initial capital investment

♦ Disadvantages − High variable costs − More highly trained personnel − More difficult production planning & control − Low equipment utilization (5% to 25%) Prepared by : Shatina Saad

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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 Focus

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Repetitive Focused Strategy Considerations

♦ More structured than processfocused, less structured than product focused ♦ Enables quasi-customization ♦ Using modules, it enjoys economic advantage of continuous process, and custom advantage of lowvolume, high-variety model Prepared by : Shatina Saad

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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 ♦

Products A & B 1 2 3 Operatio n

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Product Focus

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Product-Focused Strategy Pros & Cons ♦ 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 Prepared by : Shatina Saad

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Process Continuum Process Focused (intermittent process)

Repetitive Focus (assembly line)

Product Focused (continuous process)

Continuum

High variety, low volume Modular Low variety, high volume Low utilization (5% - 25%) Flexible High utilization (70% - 90%) eneral-purpose equipmentequipment Specialized equipment

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Process Strategies Repetitive Focus Modular design Flexible equipment Modular techniques Mass Customization

Effective scheduling techniques Process-focused High volume variety, low Low utilization 20%) (5% General purpose Preparedequipment by : Shatina Saad

Rapid throughput techniques Product-focused Low variety, volume high High utilization - 80%) (70% Specialized equipment

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Mass Customization ♦ Using technology and imagination to rapidly mass-produce products that cater to sundry unique customer desires. ♦ Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant. Prepared by : Shatina Saad

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Volume and Variety of Products Volume and Low Volume HighRepetitive High Volume Variety of Variety Process Process Low Variety Products (Intermittent) (Modular) Process (Continuous) One or very few Projects Mass units per lot Very small runs, high Job Shops Customizat variety ion Modest runs, modest Disconnected variety Repetitive Long runs, modest Connected Poor variations Repetitive Strategy Very long runs, Continuous (High changes in attributes variable Equipment utilization5%-25% 20%-75% 70%-80% costs) Prepared by : Shatina Saad

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A Comparison (1) Process Focus (Low volume, High variety)

Product focus (Highvolume, lowvariety) 1. Small Long runs, Large quantity, large standardized quantity, variety of product, small variety products from of products modules 2. General Special Special purpose equipment purpose equipment aids in use equipment of assembly line Prepared by : Shatina Saad

Repetitive Focus (Modular)

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Mass Customizat ion (Highvolume, high-variety Large quantity, large variety of products Rapid changeover on flexible equipment OPM 533

A Comparison (2) Process Focus 3 Broadly skilled operators

Repetitive Focus Modestly trained employees

Product focus

Mass Customizatio n Flexible operators trained for customization Custom orders require many instructions

Operators less broadly skilled 4 Many Reduced Few work instructions training and orders and because of number of job change in jobs job instructions instructions 5 Raw JIT Raw Raw material material high techniques material low relative to relative to used low relative product value product value to product OPM 533 Prepared by : Shatina Saad 5-21value

A Comparison (3) Process Focus 6 WIP high relative to output

Repetitive Focus

Product focus

JIT techniques WIP low used relative to output

7 Units move Movement slowly thru measured in plant hours & days

Units move swiftly thru facility

8 Finished goods made to order, not stored

Finished goods made to forecast, then stored

Finished goods made to frequent forecasts

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Mass Customiza tion WIP driven down by JIT, kanban, lean production Goods move swiftly thru facility Finished goods made to order

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A Comparison (4) Process Focus 9 Scheduling complex and concerned with trade-off between inventory, capacity, and customer service 10 Fixed costs low, variable costs high

Repetitive Focus Scheduling based on building models from a variety of forecasts

Fixed costs dependent on flexibility of facilities

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Product focus

Mass Customizati on Scheduling Scheduling relatively sophisticated simple, to concerns accommodat establishing e sufficient customizatio rate of output n to meet forecasts Fixed costs Fixed costs high, variable high; variable costs low costs must be low 5-23

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A Comparison (5) Process Focus

Repetitive Focus

Product focus

11 Costing, done by job, is estimated prior to doing job but only known after doing job

Costs usually known based on experience

Because of high fixed costs, cost dependent on utilization of capacity

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Mass Customizati on High fixed costs and dynamic variable costs

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Questions for Process Analysis and Design ♦ Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost? ♦ Does the process eliminate steps that do not add value? ♦ Does the process maximize customer value as perceived by the customer? ♦ Will the process 5-25 win orders? Prepared by : Shatina Saad

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Tools for Process Design

♦ Flow Diagrams ♦ Process Charts ♦ Time-Function/Process Mapping ♦ Work Flow Analysis

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Production Process Flow Diagram Custom er Customer sales representati ve take order Prepress Department (Prepare printing plates and negatives) Printing Department

Purchasing (order inks, paper, other supplies) Vendo rs Receivi ng Warehousing (ink, paper, etc.)

Accounti ng

Collating Departm ent

Information flow Material flow

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Gluing, binding, stapling, labeling Polywrap Departm ent Shippi ng OPM 533

Process Chart Example SUBJECT: Request tool purchase Dist (ft)

Time (min)

Symbol

Description

D ∇ Write order  D∇ On desk  ➨ D ∇ To buyer

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 D ∇ Examine  = Operation;  = Transport;  = Inspect; D = Delay; ∇ = Storage Prepared by : Shatina Saad

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Time Function Map (Target) Sales

Process Order Wait Order

Productio n control

Receive product

Plant

Print

WIP

Product

Order Product

Order

Customer

Extrude

Wait Product

Warehouse

Transport

1 day

2 days

1 day

1 day

Move

1 day

6 days Prepared by : Shatina Saad

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Work Flow Analysis - Four Phases ♦ Request from a customer or an offer to provide services by a performer ♦ Negotiation, allowing the customer and the performer to agree on how the work should be done and what will constitute customer satisfaction ♦ Performance of the assignment and completion ♦ Acceptance, closing the 5-30 transaction provided the customer Prepared by : Shatina Saad

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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! 5-31 Prepared by : Shatina Saad

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Customer Interaction and Process Strategy Low

High

Mass Service

Full-service stockbroker

General purpose law firms

Boutiques

Retailing

Service Factory Limited service stockbroker

Law clinics

Fast food restaurants

Service Shop For-profit hospitals Fine dining restaurants

Airlines

Hospitals

Low

Warehouse and catalog stores No frills airlines

High

Personal banking

Commercial Banking

Degree of Labor Intensity

Professional Service

Degree of Interaction and Customization Prepared by : Shatina Saad

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Techniques for Improving Service Productivity Strate gy ♦ Separation

♦ Self-service

♦ Postponement ♦ Focus Prepared by : Shatina Saad

Techniq ue service so ♦ Structure customers must go where service is offered ♦ Self-service so customers examine, compare and evaluate at their own pace ♦ Customizing at delivery 5-33

♦ Restricting the

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Techniques for Improving Service Productivity Continued ♦ Modules ♦ Automation ♦ Scheduling ♦ Training

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♦ Modular selection of service. Modular production ♦ Separating services that lend themselves to automation ♦ Precise personnel scheduling ♦ Clarifying the service options OPM 533 ♦5-34 Explaining problems

Outline ♦ THE STRATEGIC IMPORTANCE OF LAYOUT DECISIONS ♦ TYPES OF LAYOUT ♦ Fixed-position

layout ♦ Process-oriented layout ♦ Office layout ♦ Retail layout ♦ Warehousing and storage layouts ♦ Repetitive and product-oriented layout Prepared by : Shatina Saad

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Learning Objectives When you complete this chapter, you should be able to : Identify or Define: ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦

Fixed-position layout Process-oriented layout Work cells Focused work center Office layout Retail layout Warehouse layout Product-oriented layout Assembly-line factory

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Learning Objectives When you complete this chapter, you should be able to : Describe or explain: ♦ ♦

How to achieve a good layout for the process facility How to balance production flow in a repetitive or product-oriented facility

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What is Facility Layout ♦ Location or arrangement of everything within & around buildings ♦ Objectives are to maximize ♦ Customer

satisfaction ♦ Utilization of space, equipment, & people ♦ Efficient flow of information, material, & people ♦ Employee morale & safety Prepared by : Shatina Saad

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Objectives of the Layout Strategy ♦To develop an economical layout which will meet the requirements of : ♦ ♦ ♦ ♦

product design and volume (product strategy) process equipment and capacity (process strategy) quality of work life (human resource strategy) building and site constraints (location strategy)

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Strategic Importance of Layout Proper layout enables:

♦ 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 Prepared by : Shatina Saad

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Six Types of Layout Strategies

1. Fixed-position layout ♦

large bulky projects such as ships and buildings

2. Process-oriented layout ♦

deals with low-volume, high-variety production (“job shop”, intermittent production)

3. Office layout ♦

positions workers, their equipment, and spaces/ offices to provide for movement of information

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Six Types of Layout Strategies – cont’

4. Retail/service layout ♦

allocates shelf space and responds to customer behavior

5. Warehouse layout ♦

addresses trade-offs between space and material handling

6. Product-oriented layout ♦

seeks the best personnel and machine use in repetitive or continuous production

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Requirements of a Good Layout ✓ an understanding of capacity and ✓ ✓ ✓ ✓

space requirements selection of appropriate material handling equipment decisions regarding environment and aesthetics identification and understanding of the requirements for information flow identification of the cost of moving between the various work areas

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Constraints on Layout Objectives

♦ Product design & volume ♦ Process equipment & capacity ♦ Quality of work life ♦ Building and site

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Areas of Concern in Layout Strategy Communicati on Service Areas Warehous ing

Material Attributes Layout Strategy

Material Flow

Safety

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Work Cell

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1. Fixed-Position Layout

♦ Design is for stationary project ♦ Workers and equipment come to site ♦ Complicating factors:♦

There is limited space at virtually all sites

♦

At different stages in the construction process, different materials are needed – therefore, different items become critical as the project develops The volume of materials needed is dynamic

♦

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2. Process-Oriented Layout

♦ Design places departments with large flows of material or people together ♦ Department areas having similar processes located in close proximity ♦

e.g., All x-ray machines in same area

♦ Used with process-focused processes

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Steps in Developing a Process-Oriented Layout 1. Construct a “from-to matrix” 2. Determine space requirements for each department 3. Develop an initial schematic diagram 4. Determine the cost of this layout 5. By trial-and-error (or more sophisticated means), try to improve the initial layout 6. Prepare a detailed plan that evaluates factors in addition to transportation cost Prepared by : Shatina Saad

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a) Cellular Layout Work Cells

♦ Special case of product-oriented layout in what is ordinarily a process-oriented facility ♦ Consists of different machines brought together to make a product ♦ Temporary arrangement only ♦ Example: Assembly line set up to produce 3000 identical parts in a job shop Prepared by : Shatina Saad

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Improving Layouts by Moving to the Work Cell Concept

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Work Cells - Some Advantages Reduced work-in-process inventory

♦ ♦ Less floor space required ♦ Reduced raw material and finished goods inventories required ♦ Reduced direct labor costs ♦ Heightened sense of employee participation ♦ Increased utilization of equipment machinery ♦ Reduced investment in machinery and equipment Prepared by : Shatina Saad

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Work Cell Advantages

Inventory Floor space Direct labor costs

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Equipment utilization Employee participation Quality 5-52

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Work Cell Floor Plan Saws

Tool Room Prepared by : Shatina Saad

Drills

Office

Work Cell

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Requirements for Cellular Production ♦ Identification of families of products group technology codes ♦ High level of training and flexibility on the part of the employees ♦ Either staff support or flexible, imaginative employees to establish the work cells initially ♦ Test (poka-yoke) at each station in the cell Prepared by : Shatina Saad

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Work Cells, Focused Work Centers and the Focused Factory Work Cell

A temporary assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facility Example: job shop with rearranged machinery and personnel to produce 30 unique control panels

Focused Work A permanent assembly-line-oriented arrangement of machines and personnel Center in what is ordinarily a process-oriented facility Example: manufacturing of pipe brackets at a shipyard Focused FactoryA permanent facility to produce a product or component in a productoriented Example:facility a plant to produce window mechanisms for automobiles Prepared by : Shatina Saad

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3. Office Layout ♦ Design positions people, equipment, & offices for maximum information flow ♦ Arranged by process or product ♦

Example: Payroll dept. is by process

♦ Relationship chart used ♦ Examples ♦ ♦

Insurance company Software company

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© 1995 Corel Corp.

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Office Relationship Shart 1 President 2 Chief Technology Officer 3 Engineer’s Area 4 Secretary 5 Office entrance 7 Equipment cabinet 8 Photocopy equipment 9 Storage room 9 Storage room Prepared by : Shatina Saad

O

U A A I I O I I I IU A I O E U A O O U X E U A EO O U O XI U A E E 5-57

Va Closenes l. s A Absolutel y necessar E Especiall y y I

important Important

O

Ordinary OK Unimport

U X

ant Not desirable OPM 533

4. Retail/Service Layout

♦ Design maximizes product exposure to customers ♦ Decision variables ♦ ♦

Store flow pattern Allocation of (shelf) space to products

♦ Types ♦ ♦

V ideo

Grid design Free-flow design

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Retail Layouts Some Rules of Thumb ♦ Locate high-draw items around the periphery of the store ♦ Use prominent locations such as the first or last aisle for high-impulse and high margin items ♦ Remove crossover aisles that allow customers the opportunity to move between aisles ♦ Distribute what are known in the trade as “power items” (items that may dominate a shopping trip) to both sides of an aisle, and disperse them to increase the viewing of other items ♦ Use end aisle locations because they have a very high exposure rate Prepared by : Shatina Saad

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Retail Store Shelf Space Planogram

SUAVE

SUAVE

VO-5

PERT

VO-5

PERT

PERT VO-5

VO-5 VO-5

PERT

5 facings

PERT

♦ Computerized tool for shelf-space management ♦ Generated from store’s scanner data on sales ♦ Often supplied by manufacturer ♦ Example: P&G

2 ft. Prepared by : Shatina Saad

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A Good Service Layout (Servicescape) Considers ♦ Ambient conditions - background characteristics such as lighting, sound, smell, and temperature. ♦ Spatial layout and functionality - which involve customer circulation path planning ♦ Signs, Symbols, and Artifacts characteristics of building design that carry social significance Prepared by : Shatina Saad

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5. Warehouse Layout ♦ Design balances space (cube) utilization & handling cost ♦ Similar to process layout ♦ Items moved between dock & various storage areas ♦ Optimum layout depends on ♦ Variety

of items stored ♦ Number of items picked

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a) Cross Docking

♦ Transferring goods ♦ ♦

from incoming trucks at receiving docks to outgoing trucks at shipping docks

♦ Avoids placing goods into storage ♦ Requires suppliers provide effective addressing (bar codes) and packaging that provides for rapid transhipment Prepared by : Shatina Saad

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Incoming

Outgoing

© 1984-1994 T/Maker Co. © 1995 Corel Corp.

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♦ ♦ ♦ ♦ ♦

b) Random Stocking Systems Often:

Maintain a list of “open” locations Maintain accurate records of existing inventory and its locations Sequence items on orders to minimize travel time required to pick orders Combine orders to reduce picking time Assign certain items or classes of items, such as high usage items, to particular warehouse areas so that distance traveled is minimized

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6. Product-Oriented Layout

♦ Facility organized around product ♦ Design minimizes line imbalance ♦

Delay between work stations

♦ Types: Fabrication line; assembly line ♦ Requirements:♦ ♦ ♦ ♦

Standardized product High production volume Stable production quantities Uniform quality of raw materials & components

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Product-Oriented Layout - Assumptions ♦ ♦ ♦

♦

Volume is adequate for high equipment utilization Product demand is stable enough to justify high investment in specialized equipment Product is standardized or approaching a phase of its life cycle that justifies investment in specialized equipment Supplies of raw materials and components are adequate and of uniform quality to ensure they will work with specialized equipment

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Product-Oriented Layout Types Fabrication Line ♦ ♦ ♦ ♦ ♦

Builds components Uses series of machines Repetitive process Machine paced Balanced by physical redesign

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Assembly Line ♦ Assembles fabricated parts ♦ Uses workstation ♦ Repetitive process ♦ Paced by tasks ♦ Balanced by moving tasks

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Product-Oriented Layout Advantages ♦ Lower variable cost per unit ♦ Lower material handling costs ♦ Lower work-in-process inventories ♦ Easier training & supervision ♦ Rapid throughput

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Product-Oriented Layout Disadvantages ♦ Higher capital investment ♦ Special equipment ♦ Any work stoppage stops whole process ♦ Lack of flexibility ♦ Volume ♦ Product Prepared by : Shatina Saad

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Assembly Line Balancing

♦ Analysis of production lines ♦ Nearly equally divides work between workstations while meeting required output ♦ Objectives ♦ ♦

Maximize efficiency Minimize number of work stations

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Assembly Line Balancing The General Procedure ♦ Determine cycle time by taking the demand (or production rate) per day and dividing it into the productive time available per day ♦ Calculate the theoretical minimum number of work stations by dividing total task time by cycle time ♦ Perform the line balance and assign specific assembly tasks to each work station Prepared by : Shatina Saad

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1. 2. 3. 4. 5. 6. 7. 8.

Assembly Line Balancing Steps

Determine tasks (operations) Determine sequence Draw precedence diagram Estimate task times Calculate cycle time Calculate number of work stations Assign tasks Calculate efficiency

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Assembly Line Balancing Equations Cycle time

Production time = available Demand per day Σ Task times

Minimum number = of work stations Efficiency

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Cycle time

=

Σ Task times (Actual * (Cycle time) number of work stations) 5-73

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Layout Heuristics for Assigning Tasks in Assembly Line Balancing

♦ ♦ ♦ ♦ ♦

Longest task time - choose task with longest operation time Most following tasks - choose task with largest number of following tasks Ranked positional weight - choose task where the sum of the times for each following task is longest Shortest task time - choose task with shortest operation time Least number of following tasks - choose task with fewest subsequent tasks

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