Operations Management Process Strategy

1. Operations ManagementProcess Strategy

2. Process Strategies • Involves determining how to produce a good or provide a service within constraints • Objective • Meet or exceed customer requirements • Meet cost & managerial goals • Has long-run effects • Production efficiency • Product & volume flexibility • Cost & quality

3. Fit of Process, Volume, and Variety Repetitive Process (Modular) Low-Volume (Intermittent) High-Volume (Continuous) Process focus projects, job shop, (print, carpentry) Standard Register High Variety One or few units per run, high variety (allows customization) Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co., Levis Jeans Repetitive (autos, motorcycles) Harley Davidson Changes in modules Modest runs, standardized modules Product focus (commercial baked goods, steel, glass) Steel, Cement Low Variety; Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only

4. Product A Operation 1 2 3 Product B Process-Focused Strategy • Facilities are organized by process • Similar processes are together • Example: All drill presses are together • Low volume, high variety products • ‘Jumbled’ flow • Other names • Job shop

5. Process-Focused Example Custom Woodworking Shop Cutting Planing Shaping Assembly Sanding Finishing 1 2 6 7 5 3 Job A 2 Drilling Turning 4 Job B 3 6 1 4 5

6. Process Focus - Pros & Cons • Advantages • Greater product flexibility • More general purpose equipment – equipments not dedicated to one product • Disadvantages • High production cost per unit • More difficult production planning & control • Low equipment utilization (5% to 25%)

7. Process-Focus Examples Bank Hospital Machine Shop

8. Repetitive Focused Strategy • Facilities often organized by assembly lines • Characterized by modules • Parts & assemblies made in modules • Modules combined for many output options • Other names • Assembly line • Production line • E.g. auto-manufacturing, pc’s, house-hold appliances, etc

9. Assembly Line Example Raw Material Components 4 2 Subassem. Components. Assemblies Fin. Goods 1 3 5 7 Raw Material Components Subassem. Product/Material Flow Production Operation

10. Repetitive Focus - Considerations • Product focused process that uses modules • More structured than process-focused, less structured than product focused • Enables semi-customization • Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, moderately high-variety model

11. McDonald’sover 95 billion served Repetitive Focus - Examples Fast Food Clothes Dryer Truck

12. Repetitive Focus

13. Product-Focused Strategy • Facilities are organized by product • High volume, low variety • Conversion or further processing of undifferentiated materials such as petroleum, chemicals, or beer • Follows a predetermined sequence of steps, but flow is continuous rather than discrete – highly standardized • Other names • Line flow production • Continuous production

14. Production Process at NUCOR Steel

15. Product Focus - Pros & Cons • Advantages • Lower production 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

16. Product-Focused Examples Soft Drinks (Continuous, then Discrete) Paper (Continuous)

17. Mass Customization • Using technology and imagination to rapidly mass-produce products that cater to 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