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In this chapter we will discuss: Product-flow characteristics, approaches to order fulfillment, product-process strategy, focused operations, mass customization, environmental concerns, cross-functional decision making.
INTRODUCTION to Operations Management Chapter 4, Process Selection 5e, Schroeder McGrawHill/Irwin Copyright © 2011 by The McGrawHill Companies, Inc. All rights reserved Chapter Outline ProductFlow Characteristics Approaches to Order Fulfillment ProductProcess Strategy Focused Operations Mass Customization Environmental Concerns CrossFunctional Decision Making 42 Product-Flow Characteristics Types of Product Flow – – – – – Continuous process Assembly line Batch Job shop Project 43 Product-Flow Characteristics Continuous Process Process industries (beer, paper, oil, etc.) Highly standardized and automated High volumes of production Commodity products Low cost is the ‘order winner’ Flexibility limited 44 Product-Flow Characteristics Assembly Line Flow Linear sequence of operations Discrete products (autos, appliances, etc.) Highvolume, standardized products Inflexibility in product and volume Very efficient Large capital investment 45 Assembly Line Flow (metal bracket, see Fig 4.1) cut drill bend paint Task or work station Product flow 46 Product-Flow Characteristics Batch Flow Production of batches or lots Batches flow from one work center to another Low volume products Many different types of products Flow is jumbled and intermittent Flexible labor and equipment 47 Batch Flow (three metal brackets, see Fig 4.2) Bend Paint Cut Batch A Batch B Batch C Drill Task or work station Product flows 48 Product-Flow Characteristics Job Shop Production of small batches or lots Orders are customized for particular customer orders Low volume products Many different types of products Flow is jumbled and intermittent Flexible labor and equipment 49 Product-Flow Characteristics Project Production of customized single products Labor and materials brought to site Planning, scheduling challenges Unique (one of a kind) products Little automation Flexible labor and equipment 410 Order Penetration Point (Figure 4.4) MTO MTO ATO MTS ∇∇ ∇ Supplier Fabrication Assembly ∇ Distribution 420 Process Selection Decisions Process characteristics matrix – – MTS vs. MTO/ATO Continuous/discrete, batch & project Factors affecting process choice – – – – Market conditions Capital requirements Availability and cost of labor State of technology 421 Process Characteristics Matrix MaketoOrder ATO Characteristics MaketoStock Continuous and Assembly Line Flow Auto Assembly Line Oil refinery Cannery Cafeteria Batch and Job Shop Machine shop Fast food Glassware factory Costume Jewelry Machine shop Restaurant Hospital Custom jewelry Speculation homes Commercial painting Noncommissioned art Buildings Movies Ships Project (Table 4.3) Auto assembly line Dell Computers Motorola Pager Fast Food 422 Product-Process Strategy Strategy must consider not only the product or service, but also how to produce it As many industries move through their product life cycles, they also move through a process life cycle, e.g., the traditional bread bakery vs. the modern automated bakery 423 Product Life Cycle Stages 1. Unique, one of a kind 2. Low volume, low standardization 3. Low volume, multiple products 4. Higher volume, few major products 5. High volume, high standardization, commodity 424 Process Life Cycle Stages 1. Project 2. Job shop 3. Batch 4. Assembly line 5. Continuous 425 PRODUCTPROCESS MATRIX (Figure 4.5) Unique, one of a kind product Project Low volume, Higher volume Multiple few major products products High volume, high standardization, commodity Building J obShop Printing NONE Heavy Equipment Batch Auto assembly Assembly line Continuous Low volume, low standardization NONE Sugar Refinery 426 Focused Operations Company may have products or services with different volumes and levels of standardization Mixing them in the same operation can cause significant problems Focus involves separating different products or services in the same facility into PWPs 427 Types of Focus Product focus Process type Technology Volume of sales Maketostock and maketoorder New products and mature products 428 Mass Customization A strategy to provide products in lot sizes of one in high volume Possible because of flexible manufacturing Based on economies of scope instead of economies of scale, i.e., a high variety of products from a single process 429 Forms of Mass Customization Modular production & ATO (e.g. Dell) Fast changeover (e.g. Motorola) Postponement of options (e.g. Hewlett Packard) 430 Environmental Concerns Technologies for Pollution Prevention Technologies for Pollution Control Infrastructure Systems and Practices Other concerns – Recycling outputs – Recycling inputs – Remanufacturing 431 Cross-Functional Decision Making or, who has a stake in process choice? Marketing wants fast response to customer demand Finance must find the funds to configure the process HR must provide the properly skilled workers IT must serve different data requirements Accounting must be flexible in setting performance measures 432 Summary ProductFlow Characteristics Approaches to Order Fulfillment ProductProcess Strategy Focused Operations Mass Customization Environmental Concerns CrossFunctional Decision Making 433 End of Chapter Four 434 ... 410 Approaches to Order Fulfillment Make? ?to? ?Stock (MTS) Make? ?to? ?Order (MTO) Assemble? ?to? ?Order (ATO) 411 Make -to- Stock (MTS) Produce finished goods; customer buys from inventory Advantage: smooth production... (Figure 4.4) MTO MTO ATO MTS ∇∇ ∇ Supplier Fabrication Assembly ∇ Distribution 420 Process Selection Decisions Process? ?characteristics matrix – – MTS vs. MTO/ATO Continuous/discrete, batch & project... Quality measures 414 Assemble -to- Order (ATO) Produce parts and subassemblies; finish when customer places order Advantages: less inventory, faster service Disadvantage: some WIP inventory Key performance measures