Process Choice and Layout Decisions in Manufacturing and Services Chapter 7

1. Process Choice and Layout Decisions in Manufacturing and ServicesChapter 7

2. Chapter Objectives Be able to: • Describe the five classic types of manufacturing processes. • Discuss how different manufacturing and service process choices support different market requirements. • Explain how different processes can be linked together via the supply chain. • Describe the critical role of customization in manufacturing, including the degree and point of customization, and upstream versus downstream activities. • Discuss the three dimensions that differentiate services from one another and explain the different managerial challenges driven by these dimensions. • Create and interpret a service blueprint. • Position a service on a conceptual model and explain the underlying managerial challenges. • Develop a product-based layout using line balancing and calculate basic performance measures for the line. • Develop a functional layout based on total distance traveled.

3. Manufacturing Processes • Engineering and business perspectives • Classic manufacturing processes • Choosing between classic types • The role of customization

4. Engineering and Business Perspectives

5. Process A Saddle Machine Shaper Machine Sander A Sander B Inspection Setup Time: 6 hours Time/Seat 1.1 min. Yield Rate: 92% Process B 5-Axis Router ---- Sander A Sander B Inspection Setup Time: 10 min. Time / Seat: 3.5 min. Yield Rate: 99% Solid Wood Seat for a Kitchen Chair:

6. Classic Engineering Viewpoint • Four Transformation Processes Conversion  Fabrication Assembly Testing “Advances in Engineering increase and improve the alternatives available”

7. Example: Making Windows Conversion Fabrication Assembly • Raw lumber • Molten glass • Frame wood • Window panes Assembled Windows

8. Business View • What conversion steps must be done? • What are the production volumes like? • How similar are the various products we make (can we standardize)? • If the product is customized, how late in the process does it occur?

9. Classic Manufacturing Processes

10. Process Types(in order of decreasing volume) • Continuous Flow • Production Line • Batch (High Volume) • Batch (Low Volume) • Job Shop • Project

11. Continuous Flow • Large production volumes • High level of automation • Basic material passed along, converted as it moves • Usually cannot be broken into discrete units • Usually very high fixed costs, inflexible Oil refinery, fiber formation, public utilities, automotive manufacturing

12. Production Line High-volume production of standard products or “design window” • Processes arranged by product flow • Often “paced” (‘takt’ time discussed later) • Highly efficient, but not too flexible

13. Batch I • Somewhere in between job shop and line processes • Moderate volumes, multiple products • Production occurs in “batches” • Can manufacturing, carton makers, advertising mailers, etc.

14. Batch II Layout is a cross between that found in a line and that found in a job shop: Group Technology

15. Some Examples of Batch Manufacturing • Numerical control (NC) machines • Automated processing of entire batch • Machining center - multiple NC machines • Flexible manufacturing systems (FMS) • Dedicated to families of parts • NC and automated handling • Group technology • Similar in concept to FMS, but not as much automation

16. Job Shop • Low volume, one-of-a-kind products • Job shops sell their capability • Highly flexible equipment, skilled workers • Equipment arranged by function

17. Project • Used when a product is: • one-of-a-kind • too large to be moved • Resources moved to where needed • Equipment, people, etc. are highly flexible • Finite duration, often with deadline Construction projects, equipment installation

18. Mixing Together the Process Types  Hybrid Process Spindles ASSEMBLY LINEfor putting together final product Arms and Legs BATCH for fabricating parts ... Seats

19. Choosing BetweenClassic Types The product-process matrix Product and process life cycles

20. Comparing Process Types...

21. Product – Process Matrix Very Poor Fit Very Poor Fit

22. Life-Cycle Planning Framework

23. Introduction Stage Availability key to market success but: • No reliable movement history • Unreliable forecasts • Small shipments • Erratic orders

24. Life-Cycle Planning Framework • High • product • availability • Flexibility • to handle • variation

25. Growth Stage • Sales somewhat more predictable • Higher volumes • Performance emphasis?...

26. Life-Cycle Planning Framework • Availability • Achieve break- • even volumes • as soon as • possible • Less need • for flexibility

27. Maturity Stage • Intense competition around more standardized products • Frequent price and service adjustments • Implications . . .

28. Life-Cycle Planning Framework More selective, targeted efforts Value-added service

29. Decline Stage(Obsolescence) • Product close-out or restricted distribution • Lowest cost / differentiated performance not as critical anymore • Priorities?

30. Life-Cycle Planning Framework • Centralized • inventory • Speed

31. Implications • What happens to process choices as companies follow products through their life cycles? • What happens to process choices when companies support products at various stages of the life cycle?

32. The Role of Customization

33. What is “Customization”? An operations-centric view: “Customization occurs when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities”

34. Customization Point Model I Definitions: ETO – engineer to order MTO – make to order ATO – assemble-to-order MTS – make to stock Upstream: before the customization point, “off-line” activities Downstream: after the customization point, “on-line” activities

35. Off-line Activities Design Buy Materials Fabricate parts Assemble Ship windows On-Line Activities Lead times? Customizability? Price? What type of manufacturing? Sell windows Make-to-Order Windows

36. Customization Point Model II

37. Difficulty versus Customization

38. An Operations-Centric View Customization becomes relevant to operations and supply chain managers when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities Job Difficulty Job Routineness Operations and Supply Chain Design Customization

39. “Mass customization” atJapan’s National Bicycle Co. 2-WEEK LEAD TIME

40. Law of Variability The earlier customization is introduced in the supply chain, the greater the random variability of the process and the lower its productivity

41. Services • What makes them distinctive? • High-contact versus low-contact • Front room versus back room • Service Blueprinting

42. Services . . . • Process and “product” are inseparable • Marketing and sales often tightly integrated • Customer often part of the process • Performance metrics can be harder to define • Nevertheless: • Focus and process choices / trade-offs still apply

43. Low Contact “off-line” Can locate for efficiency Can smooth out the workload Check clearing, mail sorting High Contact “on-line” Can locate for easy access Flexibility to respond to customers Harder to manage Hospitals, food service Degree of Customer Contact

44. Classifying Services “Front Room”versus“Back Room” Front room – what the customer can see Managed for flexibility and customer service Customer lobbies, bank teller, receptionist Back room – what the customer does not see Managed for efficiency and productivity Package sorting, car repair, blood test analysis, accounting department

45. What is it?What is the performance objective? • Restaurant kitchen • Software help desk • Kinko’s copy center • Airline reservations • Jet maintenance

46. Designing Services • Selecting a service focus • Like manufacturing processes, different services have strengths and weaknesses • Key is to design a service process that meets the needs of targeted customers • The “service package”

47. Processes Customer actions Onstage activities Backstage activities Support Separations Line of interaction Line of visibility Line of internal interaction Service Blueprinting

48. Service Blueprint Template(Note similarity to ‘swim lane’ in Chapter 3?)

49. A Cubical Model of Services(Three Dimensions)

50. Community Hospital Public Hospital