operations module final document in class[1]
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NATIONAL UNIVERSITY OF SCIENCE AND
TECHNOLOGY
EXECUTIVE MBA Stage II
OPERATIONS MANAGEMENT MODULE
Prepared by
Marvellous SIBANDA CE, BSc (hons) Mech Eng, MEng, MBA,MIMechE, MZwe, ACIS
February 2010
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COURSE OUTLINE
Page
SECTION I: OPERATIONS STRATEGY AND DESIGNING OPERATIONS
SYSTEMS
Chapter 1 Introduction to Operations Management 7
1.1Historical Development of Operations Management
71.2 Definition of Operations Management 7
1.3 Key issues in Managing Operations 8
Chapter 2 Operations Strategy 10
2.1 Wickham Skinners contribution 10
2.2 Operations Strategy options 11
2.3 Order winning and Order qualifier13
2.4 Tools for Analyzing or Formulating Operations strategy14
Chapter 3 Designing Products
23
Chapter 4 Designing manufacturing processes
28
Chapter 5 Facility location and layout 36
SECTION II: MANAGING AND CONTROLLING OPERATIONS
Chapter 6 Operations planning, scheduling and control
45
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Chapter 7 Managing Capacity
48
Chapter 8 Managing Quality
50 8.1What is Quality?
50
8.2Organizing for quality
51
8.3Quality gurus
54
Chapter 9 Managing Inventory
57 9.1 Introduction57
9.2 Replenishing Inventory
57
9.3 Inventory Management Models 58
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COURSE OUTLINE
Aims
The aim of any industrial, service, public sector or retail operation is todeliver goods and/or services of a quality, quantity, cost and availability thatsatisfies the customers needs while at the same time making effective andefficient use of resources. This can only be achieved by giving attention tothe design of operations systems and the subsequent competent planningand control of these operations. This course will introduce the fundamentalprinciples of the subject of Operations Management and their application. Itis intended to assist in the management of firms (industrial, service, publicsector or retail) at the micro level of the economy.
Content and structure
The purpose of this module is to explore what constitutes world classoperations management. The module will therefore cover top managementissues such as strategies. To this will be added understanding and practice ofkey operational techniques which enable delivery of these strategies. Thelearning process is facilitated through course module reading, lecturepresentations, mini-case studies and group presentations.
Topics to be covered are:
1. Introduction to Operations Management2. Operations Strategies3. Designing Products4. Designing of Manufacturing Processes5. Facility Location and Layout6. Operations Planning and Control7. Capacity Management8. Inventory and Materials Management9. Quality Management
It is expected that students will have read all the relevant module sectionsbefore each lecture. This will enhance the effectiveness of discussions duringlectures. Exercises, mini-case studies and some miscellaneous material willbe issued.
Learning Objectives
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1. To stimulate an awareness of the characteristics of operation systems andthe variousapproaches that can be adopted in their design.2. To equip individuals with an appreciation of techniques and technologiesavailable for the
control of operations.3. To provide an insight to both conventional quality control and modernapproaches to qualitymanagement based upon the principles contributed by quality gurus.
By the end of the course, students should be able to use those frameworksand techniques presented to develop strategies, design, plan and controlmanufacturing and service operations.
TeachingTeaching media will be a series of lectures supplemented by participative
discussions, case studies, analysis of scenarios and small group exercises. Allparticipants, when requested, should prepare individual notes on a case orexercise before discussion, in class.
AssessmentThe students will be assessed through coursework and a formal written
examination.
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LECTURE PROGRAMME
DAY SESSION TOPIC/ACTIVITY
1 am Introduction to Operations Management
pm Operations Strategy
2 am Operations Strategy (continued)
Case Study I
pm Designing Products
3 am Designing Manufacturing Processes
pm Facility location and layout
Case Study II
4 am Facility location and layout
pm Operations Planning and control
5 am Operations Scheduling
pm Project planning
Case Study III
6 am Managing Quality
pm Managing Capacity
7 am Managing Inventory
pm Factory Visit
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SECTION I: OPERATIONS STRATEGY AND DESIGNING
OPERATIONS SYSTEMS
CHAPTER 1: INTRODUCTION TO OPERATIONS MANAGEMENT
Learning Outcomes
At the end of this chapter, students should be able to;
Understand how the current operations system developed.
Understand what the function or purpose of an operations system is.
Know the basic operations management objectives.
Know the main problem areas in operations management.
The industrial revolution, which began in England in the 1700s, involved the
replacement of human effort with machine power and the development of
the factory concept.
1.1 Historical Development of Operations Management
Table1.1 Historical Evolution of Operations Management.
Date Key Concept Output
Disciple
1800 Industrial Revolution Factory
Management
1900 Scientific Management Mass ProductionProduction Management
& low product variety
1940 Operations research
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1960 Computers/Advanced Mass Production Operations
Management
manufacturing & high product variety
Source: Adapted from MBA module, University of Birmingham(2005)
1.2 Definition of Operations Management
An Operations manager manages an operations system.
Definition 1: An operations system is a configuration of resources
combined for the provision of goods and/or services.
Definition 2: An operations system is a system that transforms or
converts raw materials into finished goods or services
Operations Management is concerned with the design and operation of
systems that produce goods or services. It is made up of inputs
(Materials, Manpower, Machines), which are configured and combined in
a way that produces goods or services required by customers.
Operations Management Objectives
There are two key objectives which govern the activities of an operations
manager.
(a)Customer Service- the first objective is to utilize resources for the
satisfaction of the customer. This is the prime reason why they are
customers to the organization.
(b) Resource utilization- given unlimited resources any system, howeverbadly managed, may still provide adequate customer service.
An operations system must provide customer service simultaneously
with achievement of efficient operation, i.e., efficient use of resources.
Either inefficient use of resources or inadequate customer service is
sufficient to cause commercial failure of an organization.
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Operations management is also concerned with how well an
organizations resources are being utilized.
Objectives conflict- since operations management is concernedwith the achievement of both satisfactory customer service and
resource utilization, there is need to balance achievement of
both objectives. An improvement in one normally results in the
deterioration of the other. It is from this conflict that most of
Operations Managers problems derive.
1.3 Key issues in Operations Management
Problem Areas
Design and Planning Involvement in design/specification of goods or
services
Design/Specification of process systems
Location of Operations facilities
Layout of Operations facilities and material handling
Determination of capacity/capability
Design of work or jobs
Operation and Control Planning and scheduling of activities
Control and planning of inventories
Control of quality
Practice Questions
1. What are the key objectives of an Operations System?
2. What are the typical challenges that an Operations Manager
has to deal with?
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CHAPTER 2 : OPERATIONS STRATEGY
Learning Outcomes
At the end of this chapter, students should be able to;
Understand how Operations Strategy originated.
Know the Strategy options available.
Know the Performance objectives required to achieve given
strategies.
Identify tools or approaches that can be used to analyze or
develop strategies.
2.1 Wickham skinners contribution
regarded as pioneer of manufacturing strategy concept
claimed that the term manufacturing strategy was first used at
Harvard Business School in the late 1940s. During that time, words
manufacturing and strategy were seen as contradicting each
other. The belief was that Finance and Marketing gave an organizationits competitive advantage while manufacturing simply produced goods
as cheaply and as fast as possible.
In his famous article, Manufacturing Missing Link in Corporate
Strategy , which was published in the Harvard Business Review
(1969), he argued that;
o Manufacturing should be linked to corporate objectives and
marketing strategies
o Links between manufacturing effectiveness and corporate
success go far beyond ensuring high throughput and low cost, it
should include quality, product and process forms, service and
delivery.
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o He was very critical of conventional methods of operations
management which were based on principles of scientific
management and rarely neutral.
o He concluded that manufacturing can either be a competitive
weapon or a milestone for a company
o By adopting a strategic approach to managing operations, the
organization could gain a competitive edge over competitors
o If not managed correctly, operations can impede corporate
success.
These methods focused on improving efficiencies through motion and time
studies while adopting a top-down and market-oriented approach.
2.2 Operations Strategy Options
According to Nigel Slack (2001), Operations strategies available can be
described by the relevant importance of;
i. Price
ii. The characteristics of the product
iii. The degree of customer service offered
These three elements are generally accepted as repeatedly different ways in
which companies operations can compete. An operations manager would
need to establish competitive performance objectives which can contribute
to these three generic strategies.
2.2.1 Five competitive performance objectives
For operations to give an organisation competitive advantage, it has to excel
in some or all of the following performance objectives.
(a) Quality Advantage this results from making products that match
customers expectations or design specifications. This can be referred
to as MAKING IT RIGHT.
(b)Cost Advantage this results from making products cheaper than
competition. This can be referred to as MAKING IT CHEAP.
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(c)Response Advantage this result from taking less time to make and
supply the product, compared to competitors. This can be referred to
as MAKING IT FAST.
(d)Dependable Advantage this results from being able to accurately
estimate delivery dates and meeting them. This can be referred to asMAKING IT ON TIME
(e)Flexibility Advantage this results from being able to adapt/change,
either because the needs of customers changed or because of changes
in production processes, or because of changes in the supply of
resources. This entails being able to change quickly and cheaply. This
can be referred to as CHANGING WHAT IS MADE.
2.2.2. Competing on Price
Organisations opting for this strategy must be prepared to watch or offer
lower prices for comparable products and/or services. Prices lower than
competitors require lower unit costs, so a cost advantage is required. This
can be achieved through improved productivity or efficiencies. On the other
hand, unit cost is also affected by quality performance. An operation with
good quality will spend less time, effort and money correcting its mistakes.
This results in reduced unit cost.
2.2.3. Competing on Product Characteristics
Organisations competing on product characteristics have quality and
flexibility as the most prominent objectives. Where an organization chooses
to compete on technical specification or performance of its products, it
therefore has to stay ahead of competition. This implies that the operations
systems should have the necessary flexibility to interface with product
designers and manufacturing engineers, so that new or improved products
are introduced quickly or on time. On the other hand, the operations quality
performance is equally important. This prevents a common scenario where
good product design is rendered ineffective through poor quality
manufacture.
2.2.4. Competing on Customer Service
Organisations competing on customer service could realize it through
different activities,
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Supplying a product which satisfies customers
Customers receiving technical advice that solves their problems.
Shorter and dependable delivery times compared to competition
Supplying back-up service
This strategy option emphasizes on quality, response and dependability as
the most prominent objectives.
2.2.5. Linking strategy options to competitive performance
objectives
Table 2.1: Linking strategies to objectives
Price Product CustomerServiceQuality Advantage *** *** ***Cost Advantage *** ** **Response Advantage ** * ***DependabilityAdvantage
** * ***
Flexibility Advantage ** *** **
Key: Most prominent ***
Secondary prominence **
Low prominence *
Looking at Table 2.1, we can deduce that different ways of competing
require different attribute from the operations system. This is a way of
setting out priorities on implementing competitive performance objectives.
So less prominent objectives should not be totally neglected.
2.2.6. Operations overview
Figure 2.1 Strategies, Objectives and Associated Tasks
Price
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Product Competitive
Strategy
Customer Service
Quality
CostCompetitive
Performance Objectives
Response
Dependability
Flexibility
Technology
People
Systems
Manufacturing Tasks
Capacity
Organisation Interface
2.3. Order winning and order qualifiers
2.3.1 Order Qualifiers
These parameters get the product into the market place or onto the
customers shopping list. They do not, in themselves, win orders but
provide an opportunity to be considered. However, failure to provide
qualifier factors at the appropriate level will lead to loss of orders. In
this case one needs only to match what competitors are offering.
2.3.2 Order Winners
These are factors that will cause customers to choose ones products
over those supplied by competitors.
Qualifiers are not less important than order-winners, they are
different. Both are essential.
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Order winners and qualifiers are time and market specific;
they will be different from market to market and from time to
time.
2.4 Tools for analyzing or formulating operations strategy
2.4.1 The Work of Hayes and Wheelwright
In 1984, Robert Hayes and Steven Wheelwright published a book
entitled Restoring Our Competitive Edge: Competing Through
Manufacturing. This book attempted to provide guidelines for
senior executives wishing to compete through manufacturing
and so achieve levels of corporate effectiveness comparable to
the best in the world. These are contained in their framework
for analyzing manufacturing effectiveness. The framework
presents four stages in the process of improving manufacturing
effectiveness in global markets. As well as being descriptive and
explanatory, the framework is intended to provide guidance to
managers when attempting to change their manufacturing
strategies and operations. The stages identified in the
framework are as follows:
Stage 1 Minimise manufacturings negative potential
internally neutral.
Senior managers view the manufacturing function as
neutral, that is to say, it is incapable of influencing
competitiveness success. The emphasis here is to
minimize any negative influence that manufacturing
may have upon corporate and market developments.
Stage 2: Achieve parity with competitors externally
neutral
Senior managers see manufacturing as importantonly in so much as it matches the effectiveness and
efficiency of competitors in the same industry. Here
the emphasis is upon following industry practices in
managing the workforce, avoiding large step
innovations in product or process technologies, and
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viewing economies of scale and efficiency as the
most important factors in production.
Stage 3: Provide credible support to the business strategy
internally supportive
Senior managers expect manufacturing to support
and strengthen the companys competitive position.
They see the contribution of manufacturing as
deriving from and dictated by corporate objectives.
They ensure decisions made in manufacturing are
consistent with corporate and marketing strategies,
that strategy is translated in terms meaningful to
manufacturing personnel, and are proactive in
developing longer term manufacturing strategies at
the functional and factory levels.
Stage 4: Pursue a manufacturing-based competitive
advantage externally supportive
This is where senior executives see manufacturing
capabilities as a significant influence upon overall
competitiveness. So manufacturing strategy is not
merely determined by internal corporate and
marketing strategies, but allows manufacturing
executives to have a meaningful role in contributingto the development of the company and its
strategies as a whole. In some cases this will result
with the realization that manufacturing is the key
competitive weapon within the organization.
Managers can identify which stage their companies are at, in this
framework and therefore identify changes that need to be made
within the organization to progress to the next stage.
2.4.2 Schonberger and World Class Manufacturing
In the mid-1980s the term World Class Manufacturing (WCM)
began being used to describe the operations of the most
successful companies. Foremost amongst those authors
spreading this term was Richard Schonberger. Firstly ,
Schonberger had attempted to reveal that Japanese excellence
in manufacturing was not culturally bound and gave some insight
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into the methods adopted by Japanese companies. Picking up
on his theme of blending Total Quality Control and Just-In-Time
management approaches, Schonberger then attempted to show
how companies could achieve world-class status . Schonbergers
work has been criticized as being highly prescriptive and not
providing adequate framework for the analysis of production
operations to enable the development of manufacturing
strategies in given situations. However, World Class
Manufacturing as a concept has found favour and caught on
widely amongst practitioners as a goal to be attained. In this
respect, the following provides useful definitions of that WCM
status means:
1. Becoming the best competitor
Being better than any other company in your industry inat least one aspect of manufacturing.
2. Growing faster and being more profitable than
competitors
3. Hiring and retaining the best people
Having workers and managers who are so skilled and
effective that other companies are continually seeking
to attract them away from your company.
4. Developing an excellent engineering staff
5. Responding quickly and decisively to market changes
Being more flexible than ones competitors in
responding to market shifts or price changes, and
getting new products into the market faster than they
can.
6. Practising simultaneous or concurrent engineering:
Being able to develop products and processes in parallel
and so cutting time to market down below that of
competitors.
7. Continually improving facilities, systems and people
skills
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The emphasis on continual improvement is probably the
ultimate test of a world class organization.
It is acknowledged that the various contributions to theliterature reviewed above have raised the profile of
operations within organizations and have highlighted the
importance of operations in the achievement of corporate
objectives. However, most of this work tends to be largely
promotional and highly prescriptive without providing any
meaningful structure of the detailed analysis of operations
decision making. Two approaches to the analysis and
formulation of operations strategy have recently been
produced, however, which seek to provide practical
guidelines in the development of strategies for production.They are Hills Framework and the Cambridge Groups
methodology.
2.4.3 Hills Framework for Analyzing Manufacturing
Strategy
The Hill Framework relates well to the previous attempts of
Ray Wild who had considered the role of operations in
business policy and set up a policy framework, a feature of
which was the interaction of the operations managementfunction with the external environment at all levels (Wild,
1980).
Hill bases his framework upon the following premise:
The need for strategic difference in production/operations
is, therefore, a prerequisite on which to build a sound and
successful business. To accomplish this it is necessary for
business to recognize relevant issues at two levels:
1. How to develop relevant production and operations
functional inputs to the corporate strategy debate.
2. To be aware of the different approaches at the
operational level within operations management so that
appropriate consideration can be given to alternatives.
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Hill summarizes his arguments and discussion within his
framework for reflecting production/operations strategy
issues in corporate decisions. This framework is
reproduced in Figure 2.1. Fundamental to the frameworkis an understanding of how products win orders in the
market place, step three in his framework. As shown in
the diagram, these include price, quality, delivery, service,
responsiveness to change, and technical performance. In
turn, it is argued that the mix of these comes from two
major sources, originating from the customer or market as
reflected in corporate strategies on the one hand, or
generated from the inherent features of the production
system on the other (as indicated by the arrows on the
diagram). The manufacturing organization must identify
the order-winning criteria for its products; i.e. the correct
balance between the factors detailed above, and then
reflect these in corporate objectives, market strategy and
production systems design. The five steps in the
framework are defined as:
1. Define corporate objectives.
2. Determine marketing strategies to meet these
objectives.
3. Assess how different products/services win orders
against competitors.
4. Establish the most appropriate mode to manufacture
these sets of products or provide these sets of services-
process choice.
5. Provide the infrastructure required to support the
production/operations process.
Figure2.1 Hills Framework
Step 3
Step 1 Step 2
HOW DOPRODUCTS MANUFACTURING
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WIN ORDERSIN OPERATIONS STRATEGY
THE MARKET Step 4 Step 5
Price
Quality
CORPORATE MARKETING Delivery PROCESSINFRASTRUCTURE
OBJECTIVES STRATEGY Service CHOICEResponsiveness to
Change
Technical
Performance
Source: Source: T Hill, Manufacturing Strategy: Text and Cases, 2nd edn,
Basingstoke, Macmillan now Palgrave Macmillan (2000
Hill sees nothing unique about this process which he says
essentially comprises the classical steps in corporate planning.
However, he regards the current situation as one where
corporate decision makers see only the first three as an
interactive process with feedback loops at each stage of
development. Process choice and infrastructure, the production
systems design issues, are simply seen as linear and
deterministic by most senior executives. It is argued that
operations strategy (i.e, steps 4 and 5) should also interact in an
interactive manner with the first three steps: that operations
manager should enter the corporate debate. Also he sees
operations facilities as possibly providing areas of advantage
which are frequently overlooked in strategic formulation, hence
the arrow from steps 4 and 5 back to step 3. This notion fits well
with the view of operations as a competitive weapon and the
concept of competing through manufacturing. The Hill
Framework demonstrates how market and competitive decisions
are, and should be linked with decisions on production systemsdesign. Moreover, it explores the relationship from the bottom
up and illustrates how excellence in operations can provide
order-winning characteristics for products and services which
may not have been recognized as winners by corporate decision
makers and marketing managers. The framework can be used in
two ways. It can firstly be utilized for the assessment and
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evaluation of the effectiveness of operations in relation to
corporate objectives and product markets. Secondly, it serves as
a guide for developing new, market focused strategies and
systems in operations. As such, it represents a significant
contribution to the study of operations strategy and process
decision.
Hill argues the need for strategic difference in operations as
well as in marketing strategy. This recognizes that different
parts of the operations system serving different customers or
markets should be operated separately. This necessitates
distinctive process and infrastructure choices to initiate a high
degree of market-focus. Second is the need to link marketing
and operations in order that their strategies interrelate and
complement one another. Thirdly, there is the need to identify
and distinguish between order-qualifiers and order-winners.
Qualifying criteria are those that get a companys product into
the market place or on to customers shortlists and keep them
there, while order-winning criteria give the product superiority
and thereby competitive edge over the offerings of competing
organizations. To be successful, therefore, companies should
seek to convert order-qualifying criteria that merely get them
recognized as a component supplier of manufactured goods into
order-winners so that their products are more attractive to
customers than those of their competitors.
2.4.4 A methodology for developing operations strategy
has been devised at Cambridge University and has
been widely publicized by the UK Department of
Industry (DTI) under its Enterprise Initiative. The
methodology provides guidelines for practitioners in
developing their objectives for manufacturing. The
framework of the methodology is shown in Figure
2.2. It covers such issues as determining market
requirements, competitor threats, performance ofexisting systems, and how to combine all these into a
comprehensive and meaningful blueprint for
production. A key feature of the methodology is
that, through the use of worksheets which the user
completes, it not only performs an analysis of the
market and competitive environment within which an
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organisation operates, but also conducts an audit of
existing operations, facilities and competencies. In
this way, it looks for areas in which system
performance may be improved and to better align
operations to the market needs.
The methodology involves three main phases. Stage one
involves generating basic data on product families which
indicates the importance of the family to the business and the
strength within current markets. The competitive criteria for
each family are then determined (e.g., price, delivery
performance, etc) and the organisations current performance
against these criteria is assessed. Finally, potential areas of
product profitability and vulnerability within the business are
identified.
Stage Two involves an assessment of current operations strategy
and analyses this in nine areas, namely:
Facilities: the manufacturing factories, including number,
size, location and focus
Capacity: the maximum output for each factory.
Span of process: the degree of vertical integration
Processes: the transformation activities and the way they
are organized
Human Resources: the people-related factors.
Quality: the means of assuring product, processes and
people operate to specification
Control policies: the operations planning/control guidelines
and philosophies of manufacture.
Suppliers: Relations and methods to ensure delivery of
input materials.
New products: The mechanisms and processes for
managing new product introduction.
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Figure 2.2: DTI/Cambridge Group Methodology for the
Development of Manufacturing Strategy
STAGE ONE; UNDERSTANDING THE MAKET POSITION
DETERMINE WHAT THEMARKET WANTS
RECORD HOW THESYSTEMS PERFORMS
IDENTIFYOPPORTUNITIESAND THREATS
STAGE TWO: ASSESS MANUFACTURING OPERATION
EVALUATE THE EXISITINGMANUFACTURING SYSTEM
STATE THREE: DEVELOP NEW STRATEGY
DETERMINE WHAT IMPROVEMENTSNEED TO BE MADE
REVISE MANUFACTURINGSTRATEGY
Source: MBA module, University of Birmingham(2005)
Stage three involves using the results of the analyses conducted
in Stages One and Two and developing a new operations
strategy linking manufacturing activities with corporate strategy
and market needs. The processes in this strategy formulation
are identified as:
1. Select the most important product families, based upon
assessments of the relative contributions to profits, growth
potential or market share or overall market size, and current
strength within markets.
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2. Taking each family in turn, compare the market competitive
criteria with the achieved performance.
3. Identify the operations policies which contribute to any
mismatch between the competitive criteria and the actual
performance.
4. Identify the weaknesses of the policies.
5. Consider opportunities and threats.
6. Identify possible actions and strategic choices.
7. Repeat for other families
In summary, the DTI/Cambridge Group methodology is a means
of linking operations systems choices with corporate andmarketing strategy. The originators suggest that the
methodology can be used in two main ways, both for auditing
existing operations activities in order to identify current
strengths and weaknesses, and as a framework for reviewing
operations strategy and developing a new one if need be. As
such, it not only provides a useful insight into the process of
operations strategy formulation, but also suggests a practical
approach by which organizations might arrive at appropriate
strategies for production and market-focused systems
development.
Practice Questions
1. What strategy options are available to an Operations Manager?
2. How would you use Hills Framework to analyse an organizations
strategy?
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CHAPTER 3: DESIGNING PRODUCTS
Learning Outcomes
At the end of this chapter, students should be able to;
Know how to manage product design process
Identify typical considerations when designing a product.
3.1 Managing the Design Process
In the development of new products a number of key
organizational issues must be addressed, particularly with
respect to the marketing, design and manufacturing interfaces.
This causes considerable problems that frequently need to be
overcome in the management of product introduction
programme. A dichotomy exists when people from different
functional backgrounds are brought together on product
development programme. Production managers seek order,
stability and standardization, whereas Design and Marketing see
the need for change and frequent adaptation to customer needs.
A simple, but typical design process for a new product is shown
in Figure 3.1 whereby customer or market needs are determined,
then converted into a product specification which leads onto the
design and development of the product and, eventually, its
manufacture. However, once in manufacture, the market must
continue to be evaluated, hence the circular interactions of
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future redesigns and product developments. So, despite the
diagram being simple in concept, underpinning it is a great deal
of complexity that needs to be effectively managed and
controlled.
Important components in the management of product design
frequently include:
The Product Specification
Detailing the exact type of product to be designed, the
technical expectations, styling, operational needs, cost
constraints, etc.
The Project Brief
Giving wider terms of reference concerning project
costs, time scales, project management reporting, etc.
The Solution
Evolving a design solution can involve brainstorming,
sketches, the use of CAD, canvassing customers on
alternative design options: the imaginative part of
product design.
Product Development
The testing, prototyping, experimentation, and
continual improvement of emergent designs.
Legal Aspects
Design management requires a detailed consideration
of the legal aspects of design including product liability
and patent laws.
3.2 Simultaneous or Concurrent Design Engineering
A key issue in the product design process is the management of
the interface between the design and operations function. All
too frequently these work in isolation, with product design
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engineers designing the product from the marketing
departments specification and then passing this on to the
manufacturing and process engineers who will incorporate into
existing systems or develop new processes as appropriate. This
approach, sequential engineering, can often be very time
consuming with a high number of design iterations between the
design and production functions. Simultaneous engineering
(also known as concurrent engineering), however, involves the
parallel development of products, processes and production
organization. This, it is argued, can not only drastically cut time
to market for new products but may also develop a right first
time (quality by design) attitude in the product design process.
3.3 Design for Operations/Manufacture
It is necessary to distinguish between product design activity forwhich there is no existing production systems and those
situations where the new product needs to be capable of being
produced within processes. In the former situation, the product
designer has considerable degrees of freedom, whereas
designing to suit an existing system can constrain the designers
creativity. In the majority of design cases this constraint needs
to be acknowledged: here the need to design products
compatible with existing systems (commonly known as design
for manufacture-DFM) becomes a key issue. When designingproducts for operations, consideration needs to be taken of the
type of facilities and processes available, handling and storage,
existing skills, the policy concerning sub-contraction, the fit with
the current product mix, current suppliers and existing materials,
machine utilization and quality standards, etc.
For maximum product efficiency, the critical requirements of
compatibility must be satisfied. However, a word of warning:
production compatibility is only one dimension in product
decisions. Should design be constrained in all circumstancesusing design for manufacture concepts? And what about the
important issues of satisfying customer needs and the need to
encourage design creativity? Too much compatibility can lead to
uncompetitive products and a failure to invest in new process
technology. Despite the attractions of design for manufacture,
including that of variety reduction, it can inhibit long-term
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development of an organization with a reluctance to follow
market trends or to diversify.
3.4 Product Redesign and Value Analysis
Design should not stop with the launch of a product/service. Itshould continue through the life cycle in the form of reviews and
redesign. Redesign could be prompted by a change in market
needs, or may occur in a structured manner with timed reviews.
Product and service redesigns should not be left to evolve in an
adhoc fashion, occurring only at crisis points. Rather, they
should be a planned and proactive, not a reactive, activity. Good
product design is a major determinant of high quality and
economical products and services. A team-based approach,
focusing on improving design, therefore seems appropriate
which involves participation and involvement from the teammembers from a range of functional backgrounds. Value
analysis (VA) is such an approach. VA is an analytical technique
that purports to examine all the cost components of a product or
service in relation to all its functional and quality elements.
The objective is to reduce the direct cost of the product/service
whilst maintaining or improving its value to the customer. The
essence of VA is that it uses a multi-disciplinary team whose
members come from different functions and specialization within
the organization. VA operates by identifying value features or
specific functions of the product (economic, technical, aesthetic,
ergonomic and environmental), examining alternative ways of
achieving these, and choosing the way that entails least cost
coupled with maximum satisfaction for the customer. The VA
team tackles the project by progressing through five stages of
product redesign analysis: familiarization, speculation,
evaluation, recommendation and implementation.
Familiarisation
All team members should become fully familiar with the
product/service under analysis and its components and so
need to consult drawings, specifications, cost breakdowns
and see the physical parts and their construction. The
team can draw on the expertise of its individual members
whereby the accountant might collate and explain the
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significance of the cost information, the designer can
illuminate upon the original design concept, the
manufacturing engineer can detail the steps in the
manufacturing process, the marketing representative can
give informed opinions upon customer perceptions and the
value features of the product, and so on. All the
information gathered should be recorded for use in the
next four stages of the VA exercise.
Speculation
This is the most creative stage of the VA process, but
should nevertheless be conducted in a structured way.
The VA team takes each component of the product/service
in turn and subjects it to critical examination. A checklist
should be used to include such questions as Can weeliminate it?, Can we use alternative materials?, Can
we use an alternative supplier?and Can we manufacture
it/provide the service in a different way?. Brainstorming
techniques may well be employed to generate a wide
range of uninhibited suggestions for each component,
although the team should follow up any seemingly
productive ideas to analyse their effect on the rest of the
product/service and its overall cost and value. A smaller
number of feasible or desirable changes will result fromthis.
Evaluation
At this stage the team evaluates the design changes
emerging from the Speculation Stage in more detail. The
total effect of each alteration should be examined. When,
and only when an alteration adds value for no additional
cost, or maintains value at lower cost, will that change be
forwarded for recommendation.
Recommendation
Normally the team will produce a report containing their
recommendations and then formally present these to
senior decision makers within the organization. This allows
for discussion and clarification of the recommended
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changes and those areas in which the existing product or
service design could be improved. Decisions need to be
taken which, in the opinion of the senior managers, will
maximize design improvement, maximize cost savings or,
more likely, a balance of each.
Implementation
The team should be in some way involved in following
through and implementing those changes that have been
sanctioned and then finish their analysis by calculating the
degree to which the anticipated cost savings and increased
value to the customer have been realized in practice.
VA is a technique applied to the improvement of existing
products and services. However, once its concepts have beenused and appreciated by team members, these can be extended
to the design ofnew products and services. Value Engineering
(VE) is the term used for the application of value analysis
techniques to the design stages of new products/services. The
ultimate purpose of VE is to secure improved performances for
new products and services at the minimal cost. By virtue of its
approach, it also seeks to develop a right-first-time approach in
the design of products and services.
Practice Questions
1. What are the typical stages involved in product design?
2. Why is it important to consider how a product will be
manufactured while still designing?
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CHAPTER 4: DESIGNING MANUFACTURING PROCESSES
Learning Outcomes
At the end of this chapter, students should be able to;
Identify the available options of designing manufacturing system.
Know the advantages and disadvantages of the different options of
designing manufacturing systems.
Production and service operations cover a wide range of different
situations. One could say that each operations system has its own
distinctive features and so generalization to develop any form of
systems design theory is impossible. However, there exists a need todevelop a rationale for classifying systems so that each case is not
treated as separate and unique. Consequently, an approach has been
developed which identifies common features as a means of classifying
operations systems. The parameters shaping systems design have
been identified as human resources (i.e., the organization of work),
physical facilities (the layout and arrangement of facilities) and
demand (its level and pattern). This, in turn, has enabled the
development of generalized approaches in their design, planning and
control.
The parameters of human resources, physical facilities and demand
have given the rise to the widely agreed categorizations of job,
batch and flow for conventional operations systems. These
categories are summarized in Table 3.1 and will the characteristics and
features of each will now be described in turn (see summary in Table
3.2).
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Table 3.1: Categorisation of Production Systems Design
Parameter Job Batch Flow
WorkOrganisation
ProductOriented
ProcessOriented
Task Oriented
Facilities Layout Fixed Position Functional Product
(Sequential)
Nature andLevel ofDemand
Low and/orUnique
Medium and/orIntermittent
High and/orContinuous
Table 3.2: Features of Conventional Production Systems
Type Advantages Deficiencies
Job Flexibility (product)Low fixed costJob enlargementSimple Planning
Low resource utilizationLong set-up timesDuplicationHigh training needs
Batch Flexibility (routing)Specialisation (tasks
and supervision)Isolation of processesPriority changes
High work-in-progress(WIP)
Frequent set-upsExtensive movementLong throughput times
Flow Few set-upsLow WIPMinimum movement
Human problems(recruitment, staffturnover, monotony,
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Low skillHigh specializationEasily automated
absenteeism, etc.)Physical problems (highcapital, cost, inflexibilityfor product andsequence, reliability,
etc.)
3.2.1 Job Systems
A job system is appropriate where demand is low or unique (one-
offs) and incorporates facilities layout by fixed position, where
resources and materials come to a single location and products are
then manufactured complete. The work design here is thus product
oriented, meaning that the job content of people within the system
centres upon the manufacture of the product in a make-complete
sense.Job systems demand operators with a wide range of skills and
adaptability to cope with the wide range of tasks demanded of them.
Thus there is ample scope for job enlargement in work design.
Additionally, planning activities are simple, with all materials and
resources coming to one point of use and being made complete.
However, job-type work designs demand a highly skilled workforce, so
training needs and costs tend to be high. Where volumes increase, the
only way that job systems can cope is through duplication of existing
facilities with subsequent low resource utilization. Thus, despite theattractions for operator work design in job environments, other types
of systems usually need to be adopted for higher demand situations.
3.2.2 Batch Systems
The second category of system is that of batch. A batch system
possesses a functional layout whereby similar machines or processes
are grouped together and materials move between those processes in
the manufacture of individual products. Batch systems are used in
medium or intermittent demand situations or where production rates
exceed the rates of demand. The main justification for moving from a
job to a batch is the increased utilization of resources at individual
facility locations.
The work design within batch systems is process oriented, with jobs
directed to the functional area within which the operator is working. A
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major argument for the use of batching is that it offers a high degree
of specialization, both in terms of operating tasks and supervision.
Batch systems have a number of deficiencies, however. These include
the tendency to hold high work-in-progress due to the queuing
inherent in the system, frequent set-ups as processes change from oneproduct or service type to another, extensive movement of materials
and/or people through the process, and generally long throughput
times.
3.2.3 Flow Systems
The final type of conventional system in the classification is the flow(or line) system. Flow systems are used for situations where demand
is high or continuous and the rate of production matches that of
demand. Processes are laid out in sequence and work organization is
task oriented, with operators performing a confined task or restricted
number of tasks on a repetitive cycle.
Much has been written in criticism of flow systems, but the logic
underpinning the system is that the high specialization and balancing
of the line enables products to be produced quickly and efficiently with
a minimal number of set-ups and materials movement. In terms ofwork design, the benefits frequently quoted include the ability to use
low skilled labour, economies of scale through a high specialization of
tasks and, more recently, the ease of automation of the simple and
repetitive tasks performed.
Flow systems have been seen to experience many human problems
when in operation through monotony and boredom at work. As a
result of these specific difficulties in operating, flow systems have
included line-pacing for workers, recruitment, high staff turnover and
absenteeism, poor quality through a lack of commitment, and a high
incidence of industrial relations problems developing.
Table 3.3 Selected business implications of process choice
Typical characteristics of process choice
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AspectsProject Jobbing,
Unit orone off
Batch Line Continuousprocessing
PRODUCTSANDMARKETS
Type ofProduct
Special/smallrange ofstandards
Special Standard Standard
Product range Wide Wide Narrow:standardproducts
Verynarrow:standardproducts
Customerorder size Small Small Large Very large
Level of productchangerequired
High High Low andwithinagreedoptions
None
Rate of newproductintroductions
High High Low Very low
What does acompany sell?
Capability Capability Products Products
How are orderswon?
Orderwinners
Deliveryspeed/uniquedesigncapability
Deliveryspeed/uniquedesigncapability
Price Price
Qualifiers Price /deliveryreliability/quality
Price/deliveryreliability/quality
Quality/deliveryreliability
Quality/design/Deliveryreliability
Quality/designDelivery/reliability
MANUFACTURINGNature of theprocesstechnology
Orientatedtowardsgeneralpurpose
Universal Dedicated Highlydedicated
Processflexibility
High High Low Inflexible
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ProductionVolumes
Low Low High Very High
Dominantutilization
Mixed Labour Plant
Changes inCapacity Incremental Incremental SteppedChanges
KeyManufacturingtask
To meetspecification/deliveryschedules
To meetspecification/delivery dates
Low costproduction
Low costproduction
INVESTMENTAND COSTLevel of investment
Low/High Low High Very High
Level of inventory
Components/raw material As required As
required/lowOftenmedium
Planned withbufferstocks/low
Plannedwith bufferstock
Work inProgress
High1 High1 low low Low
Finished goods Low Low High2 High3
Percent of total costsDirect labour Low High Low Very Low
Directmaterials
High Low High Very high
Site/plantoverheads
Low Low
INFRASTRUCTUREAppropriateorganisational
Control Decentralised/ centralized
Decentralised Centralised Centralised
Style Entrepreneuri
al
Entrepreneuri
al
Bureaucratic Bureaucrati
cMost importantproductionmanagementperspective
Technology Technology Business/people
Technology
Level of specialistsupport to
High Low High Very high
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manufacturing
1This would depend upon stage payment arrangements.2 However, many businesses here only make against customer schedules, or on receipt if acustomer order.3 The finished goods inventory i.e. for instance, oil refining is stored in the post-processing
stages of distribution and at the point of sale.Source: T Hill,Manufacturing Strategy: Text and Cases, 2nd edn, Basingstoke,
Macmillan now Palgrave Macmillan (2000), p118-119
Batch You can group the products being produced e.g. where the product
must be kept in order to mature. Most commonly used process type but
difficult to control.
Mass production/ Assembly line/ flow line Derives name from car assembly
systems
The other 3 are called discontinuous/ discrete processes and the last is
continuous. Continuous mainly for products that are difficult to separate
e.g. oil, electricity
Table 3.4 Characteristics of manufacturing processes
Typical characteristics of process choice1
Some relevantproduct/market,manufacturing andinfrastructure aspectsfor this community
Jobbing,unit one-off
Batch Line
PRODUCTS AND
MARKETSProduct range
Wide Narrow
Customer order size Small Large
Frequency of changeProduct
Schedule
Many
Many
FewFew
Order winners Delivery
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speed / uniquecapability
Price
MANUFACTURINGProcess technologies
Flexibility
Time
Volumes
Ability to cope with change
Product
Schedule
Set-ups Number
Expense
Manufacturings key task
Generalpurpose
Flexible
Long
Low
High
High
Many
Inexpensive
Meet deliveryrequirements
Dedicated
Inflexible
Short
High
Low
Low
Few
Expensive
Cost reduction
INFRASTRUCTUREOrganisational control
Style
Decentralised
Informal
Centralised
Bureaucratic
Source: T Hill,Manufacturing Strategy: Text and Cases, 2nd edn, Basingstoke,
Macmillan now Palgrave Macmillan (2000), p150-151
Practice Questions
1. In what situation would it be appropriate to use a jobbing system?
2. What are the characteristics of a continuous or process system?
Line balancing: Everyone/ every machine must have the same amount of
work. In an unbalanced line there is no smooth flow either one machine is
producing at a faster rate that what the receiving can process.
According to the Japanese waste should be avoided (overproduction is waste,
unnecessary movement of product without adding value, variance
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CHAPTER 5: FACILITY LOCATION AND LAYOUT
Learning Outcomes
At the end of this chapter, students should be able to;
Identify key considerations that affect the selection of a location.
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Understand the role of facility layout.
Know how to design a detailed layout.
5.1 Facility Location
Choosing a location for an operations facility is a significant decision
because, once it has been built, organizations maybe committed indefinitely
to the site. Examples of these facilities include hospitals, universities, retail
outlets, warehouses or manufacturing plants. As such, much time and effort
should be put into identifying and assessing key factors that have a bearing
on this decision, since the size and binding nature of this kind of investment
makes relocation difficult to justify. The main objective that must be used to
select one location over the other, is to secure the best net gains for theorganization. This objective can be segmented into the following aspects:
fixed cost factors like development costs to prepare the facility for use
now and in the future, and the fixed cost of doing business in a
particular country or area.
variable cost factors arising from operating or trading when producing
or providing goods and/services to customers. Distance and
transportation to customers and suppliers or proximity to key
resources or accessibility will affect these costs. Other variable costsare labour costs and energy costs. E.g. locating in lower labour cost
areas has given many organizations significant competitive advantage.
revenue factors like the impact on sales revenue that a location is able
to make, e.g., proximity to key markets or how a location can facilitate
offering of better service to customers.
subjective factors like individual preferences, attitudes of present
employees, industrial disputes, absenteeism, labour turnover.
5.1.1 General factors influencing location
These factors should be considered before one looks at the specific issues
about a location.
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Existing location as organizations grow , there may be a need to
select a suitable new location; however, the cost of relocating the
existing business can be prohibitive. The existing location may have
been selected because of its proximity to key resources or simply
because it was near the founders residence. The significance of these
factors may have changed with time.
Politically based constraints countries may ask multinational
companies and other organizations to build facilities for value addition
rather than importing finished products or exporting raw materials.
This is one reason why Japanese car makers have plants in the USA
and Europe.
Technology developments while physical proximity to customers and
raw materials remains an important factor, its significance can be
diluted by advances in technology and electronic communication.
New countries opening up opportunities may arise from countries
that were closed to investors due to political positions or other
unfavourable conditions like war. So being close to new markets, low
labour costs and opportunities to take over struggling, existing
operations, has influenced a number of location decisions.
5.1.2 Factors influencing location in a continent, region, country,area or city
These are specific factors that affect the choice of a location
Well-developed infrastructure access to reliable road and rail
transport systems will be high on an organizations list of
requirements, especially those handling high volumes. Other key
requirements would be reliable communication systems, power
supplies and water supplies.
Proximity to key markets it is an accepted principle that goods and
services be produced as close to the market as possible. However,
developments in technology have limited this benefit to certain types
of products where there will be gains in lower distribution costs and
shorter distances to preserve aspects like product freshness.
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Hospitable business environment business climate is a key
consideration. Issues like free trade environment, opportunities to
create wealth, enabling environment are important in attracting
investors.
Availability of key skills being able to find suitable and sufficientlevels of skills is fundamental.
5.1.3 Site specific factors
These are normally considered as the final stage of site evaluation.
adequate parking space
low rental costs and taxes
suitability of existing space with respect to intended use
room for future expansion
high traffic volumes may be a plus as long as it does not affect
accessibility
convenient entry and exit to major roads or closeness to public
transport pick-up points
proximity to competition
5.1.4 Location Techniques
Site availability is based on opportunistic factors and cost reduction
incentives like government grants and favourable tax rates. It is possible to
also do a quantitative analysis as a tool that helps identify an optimal
location. The most commonly used approaches are weighted-factor method,
centre of gravity method and transportation method or algorithm.
5.1.4.1 Weighted-factor method this method is applied to a limited
number of sites. The organization uses its experience to isolate factors that
are important for sales revenue, as an example. These factors are given a
rating or score of how prevalent they are per given site. The typical rating
used is 0 -10. The higher the score, the more prevalent a factor is to the site.
The second key parameter reflects the weighted importance of the factor to
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the overall location decision. The total weighting of all factors must add to
100%. The product of the weight of the factor and the score is calculated and
added for each site. The site with the highest total is the optimum one.
5.1.4.2 Centre of gravity method this method seeks to strike a balance
between a set of variances concerned. An example could be selecting alocation to build a warehouse that will supply stocks to five stores located in
different areas of a town. The centre of gravity will identify the lowest
distribution cost for the new warehouse. This is done by first developing a
site map which shows where all the stores are located. Then a reference grid
is superimposed on this map, so that we can have coordinates to the shops
or distance to the shops from a reference point. Then a table showing the
number of trips to the respective sites per given period, like a week, is also
generated. The centre of gravity is obtained by calculating X and Y means,
using the formula below:
where Xi = site location on the X axis of the reference
grid
Ai = weekly delivery trips to each store
where Yi= site location on the Y axis of the reference grid
Ai=weekly delivery trips to each store
5.1.4.3 Transportation algorithm It is clear from discussions above thatmany other factors other than transport costs are likely to affect theselection of a location. However, minimization of transportation costs may beone of the significant factors being considered. It is commonly used to selecta warehouse relative to key markets or a manufacturing plant relative to itskey resources and customers. This will be achieved by following the followingobjective;
where L=Total transport cost to and from the facility to be located
Ti=Transport cost per unit distance per unit quantity for movingbetween the facility and
existing location .
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Qi=Quantity to be transported between facility and existing location .
Di=Distance between facility and existing location I for n locations
If we consider the movements between facility and supplier or customer tobe in rectangular form, we can use Cartesian co-ordinates to represent
distances Di as:
where xi and yi indicate existing location of a supplier or customer I, andx and y give the
location of the facility. Hence:
We then need to develop a procedure to identify value for x and y which
minimize L.
5.2 Facility Layout. - Arrangement
A number of techniques exist for establishing various systems configuration
of resources. The key consideration in designing functional layouts (as used
in batch manufacture) is the need to reduce total distance incurred in
material movement and optimize production flow. For flow manufacturing,
the important thing is line balancing, so as to ensure that no operator is
unduly over-or-under-loaded. Other considerations are:
Throughput time and cost minimization by reducing movement,
handling and inefficiencies. Throughput time is the time to complete
the processing.
Supervision and control simplified by better layouts
Enables flexibility
Maximizes output
Attention to human and organizational issues
Quality of product or service maintained.
5.2.1 Facility layout objectives
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The overall objective of a facility layout is to develop an arrangement of
processes and related equipment, work areas, systems, storage areas and
people needed to provide a service or make a product so that these
resources can operate at peak efficiency and effectiveness. This can be
segmented into the following three objectives.
5.2.2 Minimize cost of movement - Most operations have physical flow of
material, equipment or people. The extent and cost of these flows will be
affected by the way the resources in the facility are configured. In
manufacturing plants, the movement of raw materials, semi-processed
products, finished products and people, depends on where the required
resources are positioned. The movement of customers in a retail store, hotel
or restaurant will be influenced by the layout of the facility. A good layout
will reduce distance moved by material, products or people and time
consumed. This results in a cost saving by the organization.
5.2.3 Eliminate congestion and delay The objective of most operations
is to add to the value of inputs. This is achieved by processing or
transforming inputs into finished products. When material is delayed or
stored in-between processing stages, no value is added. Therefore storage of
work-in-progress does not add value to the products. A poor layout can
cause an operation to generate a lot of work-in-progress and processing
delays. Please note: The extent of work-in-progress can also be affected by
effectiveness of scheduling and nature of operations. Time spent by
customers waiting in the system does not generate revenue. So the objectiveof avoiding congestion and delay will result in intensive use of facilities and
more efficient use of capacity.
5.2.4 Maximize utilization of space, facilities and labour The cost of
factory space, office or warehouse space is high. Wasted space can be
eliminated by a good layout. This will also reduce idle time and cut down on
investments in plant and support services. A good layout also facilitates
effective operation, maintenance, service and supervision and enables better
utilization of resources.
Basic Types of Layouts
There are three basic types of layouts in manufacturing plants fixed
position, process or functional and product or service. Each one has its own
characteristics and is appropriate to some form of manufacturing, depending
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on the output rate and range of products made. Some organizations try to
improve levels of effectiveness and efficiency of basic layouts by mixing
elements to form hybrids like Cellular and Transfer line layouts.
Figure: Types of layout used in different operations
Service delivery system LAYOUT TYPE Manufacturing process
Non repeat Fixed position ProjectProcess or functional Jobbing
BatchRepeat Low volume
High volumeProduct or service Line
Continuous processingSource T Hill, Operations Management, 2nd edn, Palgrave, p.225
Fixed position
The product remains stationary as material, labour and equipment movesaround as and when required by the product being made. This is common for
civil engineering projects and huge products which would be difficult to move
once completed, like ships or aircrafts. Historically a large proportion of
production was done using this layout, however nowadays its relatively
uncommon.
Process or Functional layout
All operations or activities of a similar nature are grouped together in the
same department or section of the plant. This is suitable for operations
where small quantities of a large product range are being manufactured e.g.
jobbing. This layout permits flexibility in production. While this is an
advantage, it can also cause problems. Process layouts normally operate
with high levels of work-in-progress and throughput time is high. The cost of
material handling is very high and scheduling operations is very complicated.
The advantages of this layout are:
similar skills are grouped together which allows for skills to beenhanced, cohesion and experience transferred
utilization of processes, skilled manpower and equipment is improved
since it can be accessed from one area.
wide range of products and services can be provided
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delivery system can handle many customer requirements at the same
time.
Examples of layout processes include the following;
many batch manufacturing plants
hospitals the functions are laid out based on functionality (operating
theatre, reception area, X-ray are, consulting rooms
printing company activities like design, plate preparation, ink
laboratory, printing and post printing tasks are done in separate areas
or departments.
supermarkets layout is based on similar merchandise (e.g. soft
drinks, bakery products)
Product or Service layout
This layout is appropriate for production of a small range of products in large
quantities. Ideally only one standardized product is involved and it is
processed continuously. Resources are arranged according to the needs of
the product and in a sequence dictated by the processing steps involved in
making that product. These layout are relatively inflexible , they require high
volumes of demand to ensure a high utilization of equipment. A mixture ofskills often occurs resulting in difficulties in payment and supervision. On the
other hand the work done is highly rationalized, so demand for specialized
skills is low. Minimum floor space is required and work-in-progress is
minimized while throughput is high. Requirements for handling materials are
relatively low and facility utilization is high.
Cellular or Group layout
This is a hybrid form which provides a type of product layout arrangement
for manufacturing of similar items. Its used a way of achieving some
benefits of product layout in batch manufacture of products. Based on the
process/ functional layout but instead of say a drilling section, there is a cell/
group that has all the products processes.
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Transfer line layout
For high volume products the hybrid process is known as a transfer line. This
is a hybrid between flow line and continuous processes. The process layout is
product oriented, with the basic flow line process enhanced by the inclusion
of automated systems, which transfers material between automatic stations.This is done to simulate continuous processes and reduce delays between
processing stations. Transfer lines are fully automated while assembly lines
(flow lines) are not. The processes occur while the product is moving e.g.
drilling occurs while the product is moving to the cutting section therefore
the product does not sit at a station for processing. Product layout Mass
production and Continuous process, Functional layout Batch and Jobbing
processes. Balancing loss A restriction due to machine configuration or
layout e.g. when product accumulates at a certain process in the flow line.
Detailed design of layouts
After selecting a basic layout, the next step is to design a detailed layout
i. Detailed design in fixed position layout
Location is determined on the basis of the movement of the
transforming resources
The objective is to achieve a layout for the operation which allows
transforming resources to maximize their contribution to the
transforming process.
ii. Detailed design in process layout
this is a very complex process
the prime objective is to minimize the costs of the operation which
is associated with the flow of transformed resources e.g. minimize
the need to transport components
Retailers or supermarkets may layout their operations to maximize
revenue.
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Average work station time, . This figure is always less than
cycle time, so
Balancing loss(%)= .
The objective of line balancing is to
minimize idle time
minimize number of work stations
distribute balancing loss evenly between stations
Methods for line balancing
Several methods have been developed for line balancing and their aim
is to get optimum solutions. These methods are heuristic and the
common ones are by Kilbridge and Wester, Arcus, Helgerson and
Birnie. (A heuristic method provides a good but not necessarily the
best solution. In reality most operations management decisions are
heuristic or more colloquially, rules of thumb)
Practice Questions
1. What are the key factors to be considered when selecting
location?
2. What are the characteristics of a good layout?
Balancing line Product layout
Effectiveness Process layout
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SECTION II: MANAGING AND CONTROLLING OPERATIONS SYSTEMS
CHAPTER 6 OPERATIONS PLANNING , SCHEDULING AND CONTROL
Learning Outcomes
At the end of this chapter, students should be able to;
Identify the activities involved in operational planning.
Know the objectives of scheduling, project planning and control.
Plan acceptable performance measure at a future date. One method of
planning assumes things are predictive due to relative stability and can use
history e.g. trend analysis. The second method assumes that you create the
future -
6.1. Operational Planning
It is concerned with the determination, acquisition and arrangement of all
facilities necessary for future operations. It is a pre-operating activity, which
determines resources required to produce goods/services and generates a
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schedule which shows how and when these products will be produced.
Typical steps are as follows:
o Estimation or measurement of demand
o
Aggregate Capacity Planning develops a medium to long termstatement of capacity requirements in aggregate terms, i.e., a
plan indicating the amount of resources required to satisfy total
expected demand, period-by-period.
o Master Operations Schedule is developed from aggregate
capacity plan. It is a breakdown of the aggregate plan showing
when major operations required for each expected item of
demand are to be undertaken. It is time-phased and identifies
major resource categories and individual orders.
o Rough-cut capacity planning involves the analysis of the MOS in
order to identify time phased capacity requirements
o Detailed Operations Schedule or Production plan has a time
horizon which is less than that of MOS
6.1.2 Scheduling
Detailed Operations Schedules can be produced by a process called Activity
scheduling. A schedule or production plan would be a series of tasks set
against a given timeframe. It is necessary to define two terms relevant to thescheduling task. Firstly, loading or production load is the immediate work
for a process and is usually regarded as having a shorter timescale(minutes
or hours) as opposed to a schedule which uses days or weeks. This term is
also used as machine loading. The second one is sequence, which is the
order in which tasks or orders are to be performed, and is often used in a
schedule. So scheduling involves deciding the sequence of tasks or orders
based on some prioritization rule or guide. Some common priority
sequencing rules are
First come, First serve
Shortest processing time, first (SPT)
Earliest Due date, first (EDD)
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There are some specific operations cases where a number of heuristic
algorithms can be used. The most commonly used one is the Johnston
algorithm, which results in minimum total processing time when loading any
number of jobs on two machines or stations. (A heuristic method provides a
good but not necessarily the best solution. In reality, most operations
management decisions are heuristic or more colloquially, rules of thumb)
Johnsons algorithm
i. Find the shortest processing time on operation 1 and 2
ii. If shortest time on 1, place that job first; if on 2, place last
iii. Apply steps 1 and 2 to remaining jobs
iv. In the event of a tie , priority goes to the shortest time on the non
tied operation
6.1.3 Project Planning or Scheduling
Any project management activity looks at the three key performance issues,
namely; cost, quality and completion time. This section helps in ensuring
that the project is completed within a planned timeframe.
It involves the detailed allocation of resources to the various activities. It
uses tools like Gantt Charts and network analysis tools like, Critical Path
Method(CPM) or Project Evaluation Review Technique(PERT). The six steps in
network analysis using CPM or PERT are:
i. Define the project and its significant activities and tasks
ii. Develop relationships among activities and decide upon their
order/precedence
iii. Draw the network diagram
iv. Assign time/cost estimates to activities
v. Compute the longest path through the network the critical path
vi. Use the network to schedule and control project activities
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6.1.4 Operations Control
Operations control is concerned with the implementation of a predetermined
operations plan or policy and the control of all aspects of operations in linewith such plan.
Practice Questions
1. What is the significance of operational planning and scheduling?
2. What is the objective of the control activity?
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CHAPTER 7: MANAGING CAPACITY
Learning Outcomes
At the end of this chapter, students should be able to;
Define Capacity.
Know how to match demand to capacity.
7.1 What is Capacity?
Capacity of an organization is a measure of the usable resources available to
the system and having the wrong capacity level affects either customer
service or resource utilization. Capacity comprises the resources to serve
customers, process information or make products and is a mixture of people,
systems, equipment and facilities needed to meet service or productrequirements.
There are several definitions of capacity which facilitate the expression of
how much and how well the operation is producing.
Capacity is the rate of output that can be achieved from a
transformation process
Design capacity is the quantity that an organization would like toproduce under circumstances for which the system is designed to
handle.
Maximum capacity is the highest output that can be achieved
Capacity utilization is the extent to which a firm uses its capacity. It is
normally measured as a percentage of designed or installed capacity
7.1.1 Matching Capacity to Demand
The major task in this area of operations is to reduce the difference between
capacity and demand. This can be done by either managing demand,
managing capacity or a combination of both.
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7.1.2 Managing Demand
Demand is inherently variable and the organization can select from a
number of alternatives, in order to better meet the needs of the business
and its customers.
a. Changing the pattern of demand
Altering price levels to differentiate peak and off-peak periods
Advertising to stimulate demand in periods of low demand
Complementary services or products. This involves using
facilities for alternative demand during off-peak periods, e.g.,
increasing the usage of hotels for conferences when demand
for accommodation is low.
b. Scheduling
Reservations and appointments. This involves pre-selling slots
and once taken, demand will be moved into future slots or
alternative systems within the same organization
Fixed service schedules are often used to enhance the effective
use of capacity. All forms of public transport use fixed schedules
to manage demand.
Educating customers to use capacity during less congested
periods and avoid inconvenience.
7.1.3 Managing Capacity
Capacity changes that require significant financial resources and are more of
a permanent nature, tend to be considered under long term plans. Here we
look at short term capacity changes.
Short term adjustments. These can be through overtime or hiring
temporary staff or increasing the number of shifts worked.
Flexible capacity involves multi-skilling staff who can then be allocated
duties based on demand. Staggering working hours can also be used
to increase capacity during certain periods of the day
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Using technology with higher processing capacity or availability, e.g.,
ATMs used by banks
Subcontracting
Practice Questions
1. What is the role of capacity management in an organization?
2. How does scheduling help manage capacity?
CHAPTER 8: MANAGING QUALITY
Learning Outcomes
At the end of this chapter, students should be able to;
Define quality.
Understand how desired quality can be achieved.
Know the contributions made by Quality gurus.
8.1 What Is Quality?
Quality can be a confusing concept, partly because different
people view quality in relation to different criteria, normally
based on their personal roles in the production-marketing chain.It is therefore important to understand the various perspectives
from which quality is viewed in order to fully appreciate the role
it plays in the many parts of a business organization. Garvin
(Evans and Lindsay, 1999) summarized five views or
perspectives to defining quality:
a. Judgmental or transcendental criteria
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Quality is synonymous with superiority or excellence
Quality is neither in the mind nor matter, but a third
identity independent of the two
Walter Shewhart defined it as the goodness of a product
In this sense quality is both absolute and universally
recognizable, a mark of uncompromising standards and
high achievement. As such, it cannot be precisely
defined you just know it when you see it.
b. Product-based criteri