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PROCESS SELECTION

PROCESS SELECTION. Chapter 4. Chapter Outline. Product-Flow Characteristics Classification by Type of Customer Order Process Selection Decisions Product-Process Strategy Focused Operations Mass-customization Cross Functional Decision Making. Product-Flow Characteristics.

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PROCESS SELECTION

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  1. PROCESS SELECTION Chapter 4

  2. Chapter Outline • Product-Flow Characteristics • Classification by Type of Customer Order • Process Selection Decisions • Product-Process Strategy • Focused Operations • Mass-customization • Cross Functional Decision Making

  3. Product-Flow Characteristics • Types of Product Flow • Line Flow • Batch Flow • Project Flow • Characteristics of Flows (see Table 4.1)

  4. Line Flow(metal bracket, see fig. 4.1) cut drill bend paint Task or work station Product flow

  5. Batch Flow(three metal brackets, see fig. 4.2) Bend Paint Batch A Cut Batch B Batch C Drill Product flows Task or work station

  6. Classification by Type of Customer Order • Make to Stock (MTS) • Make to Order (MTO) • Assemble to Order (ATO)

  7. Make to Stock (MTS) • Produce finished goods; customer buys from inventory • Advantage: smooth production • Disadvantage: inventory • Key performance measures (next slide)

  8. MTS Performance Measures • Service level (orders filled when requested) • Inventory turnover (sales/avg. inventory) • Back order fill rate • Inventory accuracy • Time to replenish • Others, such as shrinkage rate

  9. Make to Order (MTO) • Start production when customer orders. • Advantage: no finished goods inventory • Disadvantage: intermittent production • Key performance measures • Lead time • Orders completed on time (or late) • Quality measures

  10. Assemble to Order (ATO) • Make parts and subassemblies; finish when customer places order. • Advantages: less inventory, faster service • Disadvantage: some WIP inventory • Key performance measures • speed of service • inventory levels • quality of product and service

  11. MTS and MTO Comparison

  12. Make-to-Stock (Figure 4-3) Forecast orders customer Production Customer Order Product Product Finished Goods Inventory

  13. Make-to-Order (Figure 4-3) customer Customer Order Product Production

  14. Assemble-to-Order (Figure 4-3) Forecast orders customer Production of Subassemblies Customer order Subassembly Product Inventory of Subassemblies Assembly of the Order

  15. Process Selection Decisions • Process characteristics matrix • Factors affecting process choice

  16. Process Characteristics Matrix(Table 4.3)

  17. Factors Affecting Process Choice • Market conditions and competition • Capital requirements • Labor supply and cost • State of technology

  18. 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.

  19. Product Life Cycle Stages • Low volume-low standardization, one of a kind • Multiple products, low volume • Few major products, higher volume • High volume-high standardization, commodity product

  20. Process Life Cycle Stages • Jumbled flow (job shop) • Disconnected line flow (batch) • Connected line flow (assembly line) • Continuous flow

  21. I Jumbled flow (job shop) II Disconnected line flow (batch) III Connected line flow (assembly line) IV Continuous flow PRODUCT-PROCESS MATRIX (Figure 4.4) PRODUCT STRUCTURE (Product Life Cycle) I Low volume-low standardization, one of a kind II Multiple products, low volume III Few major products higher volume III High volume-high standardization, commodity products NONE Commercial Printer Heavy Equipment Automobile assembly PROCESS STRUCTURE (Process Life Cycle) NONE Sugar Refinery

  22. 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.

  23. Types of Focus • Product focus • Process type • Technology • Volume of sales • Make-to-stock and make-to-order • New products and mature products

  24. Mass Customization • 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.

  25. Forms of Mass Customization • Mass-customized services (e.g. Hertz) • Modular production & ATO (e.g. Dell) • Fast changeover (e.g. Motorola) • Postponement (e.g. Hewlett-Packard)

  26. Cross-Functional Decision Makingor, 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

  27. Summary • Product-Flow Characteristics • Classification by Type of Customer Order • Process Selection Decisions • Product-Process Strategy • Focused Operations • Mass-customization • Cross Functional Decision Making

  28. End of Chapter Four

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