mgt3303 michel leseure process management mgt3303
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MGT3303Michel Leseure
Toyota Production System
Manufacturer TGW (Things gone wrong)
in First Eight Months per 100 cars
Chrysler 285
GM 256
Ford 214
Japanese (avg)
132
Toyota 55
Notion of Process Capital
MGT3303Michel Leseure
Process Design
• Process design is about preparing production– A process is a sequence of steps
performed for a given purpose. – More simply stated, process is what you
do. The process integrates people, tools and procedures together
– More or less integrated with the product design stage: this integration is a key challenge!
MGT3303Michel Leseure
Overview of Process Management
ProcessC apita l
P rocess S tra tegy
Process D esign/Selection
Technology M anagem ent
P rocess Analysis/R e-engineering
Process V is ib ility
P rocessesProcedures
R outines
PR O C ESS M A N A G EM EN T
MGT3303Michel Leseure
Process Strategy• Process volume & Standardisation• Capital Intensity
– The extent to which the selected process is mainly dependent on capital investment (machinery, fixed assets, automation) or not
• Process flexibility– The ease with which employees and equipment can handle a
wide variety of products, output levels, duties, and functions
• Vertical integration– The degree to which a firm will handle the whole supply chain
process or only a certain stage of the supply chain (e.g. assembly)
• Customer involvement
MGT3303Michel Leseure
Process Volume & Standardisation
Source: Adapted from Robert Hay and Steven Wheelwright, Restoring Competitive Edge: Competing through Manufacturing (New York: John Wiley & Sons, 1984).
MGT3303Michel Leseure
Capital Intensity
• Process Selection with Break-Even Analysis– For a single process,
• find the breakeven point
– Among several processes,• find the point of indifference
MGT3303Michel Leseure
Break-Even Analysis
cf = fixed costv = volumecv = variable cost per unitp =price per unit
Total cost = total fixed cost + total variable costTC = cf + vcv
Total revenue = volume x price TR = vp
Total profit = total revenue - total cost Z = TR - TC = vp - (cf + vcv)
where,
MGT3303Michel Leseure
Solving For Break-Even Point
TR = TC
vp = (cf + vcv)
vp - vcv = cf
v(p - cv) = cf
v =
cf
p - cv
MGT3303Michel Leseure
Break-Even Example
Fixed cost cf = $2,000Variable cost cv = $5 per raftPrice p = $10 per raft
v = =
= 400 rafts
cf
p - cv 200010 - 5
MGT3303Michel Leseure
© 1998 by Prentice-Hall IncRussell/Taylor Oper Mgt 2/e
Break-Even Graph
$0
$1,000
$2,000
$3,000
$4,000
$5,000
400Units
Do
llar
s TC
TR
Break even point
MGT3303Michel Leseure
Choosing Between Two Processes
• Find volume where – Cost of process A = Cost of process
B
• Above point of indifference, choose process with lowest variable cost
• Below point of indifference, choose process with lowest fixed cost
MGT3303Michel Leseure
Point Of Indifference
$3v = $8,000
v = 2,667 rafts
$2,000 + $5v = $10,000 + $2v
Process A Process B
Below 2,667 rafts, choose AAbove 2,667 rafts, choose B
MGT3303Michel Leseure
Graphical Solution to Process Selection
$0
$5,000
$10,000
$15,000
$20,000
$25,000
0 1000 2000 3000 4000
Units
Dolla
rs
A
B
MGT3303Michel Leseure
Process Flexibility
• Product flexibility: – the ability to introduce a new product whilst incurring only
a minor reconfiguration of plant and equipment.
• Mix flexibility: – the ability to simultaneously produce two different
versions of a product, or two different products.
• Volume flexibility: – the ability to process simultaneously on the same
production line large and low volume series without any major cost differences.
• Delivery flexibility: – the ability to change scheduled delivery times when
needed without generating too many delays and too many costs.
MGT3303Michel Leseure
Process Flexibility
• Investment in process flexibility challenge the volume/standardisation trade-off
• Allows firms to operate away from the diagonal of the product process matrix
MGT3303Michel Leseure
Make-Or-Buy Decisions
1. Cost
2. Capacity
3. Quality
4. Speed
5. Reliability
6. Expertise
MGT3303Michel Leseure
Process Design/Selection
• Process selection
• Specific equipment selection
• Process plans
• Process analysis
MGT3303Michel Leseure
Documents for Process Plans
• Blueprints - Drawings of product design• Bill of Materials - List of materials and parts• Assembly Diagram - Drawing of how parts are
combined to form final product• Assembly Chart (Product Structure Diagram)
Top down view of product components• Operations Process Chart - detailed list of
operations to make product• Routing Sheet - ordered list of m/c’s
MGT3303Michel Leseure
Product Structure Diagram(Assembly Chart)
Packaged Hand-Vac
Hand-VacUpholstery
toolCrevice
toolPackage
Dusting tool
Forward housing
assembly
Rear housing
assembly
Screw and lock washer
assembly
MGT3303Michel Leseure
Product Diagram
Make base
Make feet (4)
Make stem
Cut cable
Purchasebulb holder
Assemble base and feet(sub-assembly 1)
Inspect for mis-wiring
Assemble cable,stem and bulbholder(sub-assembly 2)
Purchaseshade
Make retainingring
Assemble sub-assemblies1&2 (sub-assembly 3)
Assemble lamp(final assembly)
Finalinspection
Cable
Stem
Bulbholder
Retainingring
Shade
Base
Feet
MGT3303Michel Leseure
Operations Process Chart
Part name Table leg
Part no. 2410
Usage Table
Assembly No. 437
Oper No. Description Dept. Machine Time Tools
10 Saw to rough length 041
20 Plane to size 043
30 Saw to finished length 041
40 Measure dimensions 051
50 Sand 052
MGT3303Michel Leseure
Process Flowcharts
Ste
p
Ope
ratio
nT
rans
port
Insp
ect
Del
ay
Sto
rage
Dis
tanc
e(f
eet)
Tim
e(m
in)Description
ofprocess
1
2
3
4
5
6
7
8
9
10
11
Unload apples from truck
Move to inspection station
Weigh, inspect, sort
Move to storage
Wait until needed
Move to peeler
Apples peeled and cored
Soak in water until needed
Place in conveyor
Move to mixing area
Weigh, inspect, sort
TotalPage 1 0f 3 480
30
5
20
15
360
30
20
190 ft
20 ft
20 ft
50 ft
100 ft
Date: 9-30-00
Analyst: TLR
Location: Graves Mountain
Process: Apple Sauce
MGT3303Michel Leseure
Process Analysis
• Continuous improvement– Basic tool - process flowchart,
process analysis– Incremental, continuous pressure
to improve• Reengineering
– Basic tool - process map– Radical redesign approach
MGT3303Michel Leseure
The Reengineering Process
Customer requirements data
Strategicdirectives
Goals & specifications
for process performance
Detailed process map
Pilot study of new design
Full-scale implementation
Benchmark data
DesignPrinciples
Key PerformanceMeasures
Baseline Data
Innovative Ideas
Model Validation
High levelprocess map
MGT3303Michel Leseure
High-level Process Map
Input OutputPerformance
Goal
Subprocess Subprocess
Subprocess Subprocess
MGT3303Michel Leseure
Design Principles For Reengineering
1. Organize around outcomes, not tasks
2. Capture information once, at the source
3. Centralize resources with info. tech.
4. Link parallel subprocesses
5. Design to do work right the first time
6. Remove complexity
7. Identify information & technology levers
MGT3303Michel Leseure
Techniques For Generating Innovative Ideas
• Vary entry point to a problem
• Draw analogies
• Change your perspective
• Try inverse brainstorming
• Chain forward as far as possible
• Use attribute brainstorming
MGT3303Michel Leseure
Automated Material Handling
• Conveyors
• Robots
• Automated guided vehicle systems
(AGVS)
• Automated storage & retrieval systems (ASRS)
MGT3303Michel Leseure
Flexible Manufacturing Systems (FMS)
• Programmable machine tools
• Controlled by common computer network
• Combines flexibility with efficiency
• Reduces setup & queue times
Flexible Manufacturing System
PartsFinished
goods
Load Unload
Computercontrolroom
Terminal
Tools
Conveyor
Pallet
CNCMachine
MGT3303Michel Leseure
Robots
• Programmable manipulators that follow specified paths
• Better than humans for – hostile environments– long hours– consistency
MGT3303Michel Leseure
Components Of CIM
CIM
Productdesign
Manuf
Processplanning
Systemsmgmt
RoboticsFMSNC/CNC/
DNCCells
& centersAutomatedinspection
AGV,ASRS
JIT/kanban
DSS/ES/AI
LAN, TOP,satellites
TQM
Bar codes,EDI
MRP
GTCAECADIGES,PDES
DFM
Cellularmanuf
MAP,STEP
CAD/CAM
CAPP
MGT3303Michel Leseure
Adoption Of Technology
• Technology Readiness• Need well-designed products & efficient processes
• Technology Design• Know what to automate
• Technology Selection• Choose the right level
• Technology Integration• Have a strategy for incremental automation