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Process Strategy and Capacity Planning

Process Strategy and Capacity Planning. Introduction. What: Making process and capacity decisions Where: Produce goods and services Why: Long term effects on company. Process Focus. Complete jobs on demand Low volume High variety “Job shop” Products move between processes

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Process Strategy and Capacity Planning

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  1. Process Strategy and Capacity Planning

  2. Introduction • What: Making process and capacity decisions • Where: Produce goods and services • Why: Long term effects on company

  3. Process Focus • Complete jobs on demand • Low volume • High variety • “Job shop” • Products move between processes • High flexibility

  4. Repetitive Focus • Modules • Assemble Modules into finished products • More structure • Less flexibility • Some customizing

  5. Product Focus • Produce one product • High volume • Low variety • Continuous process

  6. Mass Customization Focus • Individualized goods and services • What customer wants when they want it • Volume of product focus with flexibility of process focus

  7. Comparing Process Choices

  8. Process Analysis Tools • Designed to achieve competitive advantage? • Eliminate steps that do not add value? • Maximize customer value? • Win orders?

  9. Customer Purchasing (order inks, paper, other supplies) Customer sales representative take order Vendors Prepress Department (Prepare printing plates and negatives) Receiving Accounting Printing Department Warehousing (ink, paper, etc.) Gluing, binding, stapling, labeling Collating Department Information flow Material flow Polywrap Department Shipping Flow Diagram

  10. Time-Function Mapping Receive product Order Product Customer Process Order Sales Productioncontrol Order Wait Order Print Plant A Product WIP Wait Wait Wait Warehouse Product WIP Plant B Extrude Product WIP WIP Transport Move Move 12 days 13 days 1 day 4 days 1 day 10 days 9 days 1 day 1 day

  11. SUBJECT: Request tool purchase Dist (ft) Time (min) Symbol Description Ñ Write order D lðo Ñ On desk ¡ðo w Ñ 75 To buyer D ¡ o è Ñ Examine D ¡ðn ¡ = Operation; ð = Transport; o = Inspect; D = Delay; Ñ = Storage Process Charts

  12. Service Blueprinting

  13. Low High Mass Service Professional Service Personal banking Commercial Banking General purpose law firms Full-service stockbroker Boutiques Retailing High Low Degree of Labor Intensity Service Factory Service Shop Law clinics Limited service stockbroker For-profit hospitals Fine dining restaurants Fast food restaurants Warehouse and catalog stores Hospitals Airlines No frills airlines Degree of Interaction and Customization Process Design for Services

  14. Process Design for Services • Layout • Human Resources • Technology

  15. Process Reengineering • Design of Process based on initial assumptions • Assumptions change! • Rethink and redesign • Flexibility

  16. Capacity Planning • Design Capacity = maximum theoretical output of system • Effective Capacity = Capacity expected in current operation • Utilization = Actual Output / Design Capacity • Efficiency = Actual Output / Effective Capacity

  17. Capacity Planning • Anticipated Production = Design Capacity x Effective Capacity x Efficiency

  18. Expected Demand New Capacity Demand Time in Years Capacity leads demand with an incremental expansion Capacity Expansion

  19. Expected Demand New Capacity Demand Time in Years Capacity leads demand with a one-step expansion Capacity Expansion

  20. Expected Demand New Capacity Demand Time in Years Capacity lags demand with an incremental expansion Capacity Expansion

  21. Expected Demand New Capacity Demand Time in Years Attempts to have an average capacity, with an incremental expansion Capacity Expansion

  22. Approaches to Capacity Expansion • May need to manage demand through: • Staffing changes • Adjusting equipment and processes • Increasing throughput

  23. Fixed Costs Variable Costs Contribution Revenue Function Crossover Chart Net Present Value Break-even Analysis

  24. Operations Technology

  25. Design Technology • Internet • Intranet • CAD • DFMA • 3-D Object Modelling • STEP • CAM • Virtual Reality

  26. Production Technology • Numerical Control • Process Control • Vision Systems • Robots • Automated Storage and Retrieval Systems • Automated Guided Vehicle • Flexible Manufacturing System • Computer Integrated Manufacturing

  27. Information Technology • Transaction Processing System • Automatic Identification System • Management Information System • Artificial Intelligence • Expert System • Fuzzy Logic • Neural Network

  28. Information Technology • Enterprise Resource Planning (ERP) • Automate and integrate processes • Share common data • SAP, JD Edwards, BAAN, PeopleSoft

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