process choice and layout decisions in manufacturing and services chapter 7

Process Choice and Layout Decisions in Manufacturing and Services

Chapter 7

2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036

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


Manufacturing ProcessesEngineering and business perspectivesClassic manufacturing processesChoosing between classic typesThe role of customization


Engineering and Business Perspectives


Solid Wood Seat for a Kitchen Chair:Process ASaddle MachineShaper MachineSander ASander BInspection

Setup Time: 6 hoursTime/Seat 1.1 min.Yield Rate: 92%Process B5-Axis Router----Sander ASander BInspection

Setup Time: 10 min.Time / Seat: 3.5 min.Yield Rate: 99%


Classic Engineering ViewpointFour Transformation ProcessesConversion Fabrication AssemblyTestingAdvances in Engineering increase and improve the alternatives available


Example: Making Windows Raw lumber Molten glass Frame wood Window panesAssembledWindowsConversionFabricationAssembly


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


Classic Manufacturing Processes


Process Types(in order of decreasing volume)Continuous FlowProduction LineBatch (High Volume)Batch (Low Volume)Job ShopProject


Continuous FlowLarge production volumesHigh level of automationBasic material passed along, converted as it movesUsually cannot be broken into discrete unitsUsually very high fixed costs, inflexibleOil refinery, fiber formation, public utilities, automotive manufacturing


Production LineHigh-volume production of standard products or design window Processes arranged by product flow Often paced (takt time discussed later) Highly efficient, but not too flexible


Batch ISomewhere in between job shop and line processesModerate volumes, multiple productsProduction occurs in batchesCan manufacturing, carton makers, advertising mailers, etc.


Batch IILayout is a cross between that found in a line and that found in a job shop:Group Technology


Some Examples of Batch ManufacturingNumerical control (NC) machinesAutomated processing of entire batchMachining center - multiple NC machinesFlexible manufacturing systems (FMS)Dedicated to families of partsNC and automated handlingGroup technologySimilar in concept to FMS, but not as much automation


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


ProjectUsed when a product is:one-of-a-kindtoo large to be movedResources moved to where neededEquipment, people, etc. are highly flexibleFinite duration, often with deadlineConstruction projects, equipment installation


Mixing Together the Process Types Hybrid Process SpindlesArms andLegsSeatsBATCH forfabricatingparts ...ASSEMBLYLINE forputting togetherfinal product


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


Comparing Process Types...


Product Process MatrixVery Poor FitVery Poor Fit


Life-Cycle Planning Framework


IntroductoryStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

IntroductionStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

Introduction StageAvailability key to market successbut:No reliable movement historyUnreliable forecastsSmall shipmentsErratic orders


Life-Cycle Planning FrameworkHigh product availability

Flexibility to handle variation


IntroductoryStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

IntroductionStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

Growth StageSales somewhat more predictableHigher volumesPerformance emphasis?...


Life-Cycle Planning FrameworkAvailabilityAchieve break- even volumes as soon as possible

Less need for flexibility


IntroductoryStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

IntroductionStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

Maturity StageIntense competition around more standardized productsFrequent price and service adjustmentsImplications . . .


Life-Cycle Planning FrameworkMore selective,targeted efforts

Value-addedservice


IntroductoryStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

IntroductionStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

Decline Stage(Obsolescence) Product close-out or restricted distributionLowest cost / differentiated performance not as critical anymorePriorities?


Life-Cycle Planning Framework

Centralized inventory Speed


IntroductoryStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

IntroductionStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

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


The Role of Customization


What is Customization?An operations-centric view:Customization occurs when a customers unique requirements directly affect the timing and nature of operations and supply chain activities


Customization Point Model IDefinitions:ETO engineer to orderMTO make to orderATO assemble-to-orderMTS make to stockUpstream: before the customization point, off-line activitiesDownstream: after the customization point, on-line activities


DESIGN

SOURCING MATERIALS

FABRICATION

ASSEMBLY/FINISHING

DISTRIBUTION

ETO

MTO

MTS

ATO

Make-to-Order WindowsOff-line ActivitiesDesignBuy MaterialsFabricate partsAssemble

Ship windowsOn-Line ActivitiesLead times?Customizability?Price?What type of manufacturing?Sell windows


Customization Point Model II


Difficulty versus Customization


BASEBALL CAP WITH SCHOOL NAME ON IT(MTO)

BASEBALL CAP WITH ARKANSAS RAZORBACKS LOGO AND SCHOOL COLORS ON IT(ETO)

PLAIN BASEBALL CAP(MTS)

PLAIN BASEBALL CAP IN DIFFERENT COLORS(ATO)

LOWER DIFFICULTY

HIGHER DIFFICULTY

MANUFACTURING VIEW

MARKETING VIEW

LOWER CUSTOMIZATION

HIGHER CUSTOMIZATION

An Operations-Centric ViewCustomization becomes relevant to operations and supply chain managers when a customers unique requirements directly affect the timing and nature of operations and supply chain activitiesCustomization Job Difficulty

Job RoutinenessOperations andSupply Chain Design


Mass customization atJapans National Bicycle Co.2-WEEK LEAD TIME


Manufacturing

Quality Assurance

Marketing

CAM

CAM

CAM

ORDER DATA INCLUDING CUSTOMERS MEASUREMENTS AND OPTIONS

CAD

TUBE CUTTING

FRONT ASSEMBLY

REAR ASSEMBLY

3-D MEASUREMENT

COMPUTER INSTRUCTIONS

PAINTING

ASSEMBLY

Law of VariabilityThe earlier customization is introduced in the supply chain, the greater the random variability of the process and the lower its productivity


ServicesWhat makes them distinctive?High-contact versus low-contactFront room versus back roomService Blueprinting


Services . . .Process and product are inseparableMarketing and sales often tightly integratedCustomer often part of the processPerformance metrics can be harder to defineNevertheless:Focus and process choices / trade-offs still apply


Degree of Customer ContactLow Contactoff-lineCan locate for efficiencyCan smooth out the workload Check clearing, mail sortingHigh Contacton-lineCan locate for easy accessFlexibility to respond to customersHarder to manage Hospitals, food service


Classifying ServicesFront Room versus Back RoomBack room what the customer does not see

Managed for efficiency andproductivity

Package sorting, car repair, blood test analysis, accounting departmentFront room what the customer can see

Managed for flexibility and customer service

Customer lobbies, bank teller, receptionist


What is it?What is the performance objective?Restaurant kitchenSoftware help deskKinkos copy centerAirline reservationsJet maintenance


Designing ServicesSelecting a service focusLike manufacturing processes, different services have strengths and weaknessesKey is to design a service process that meets the needs of targeted customersThe service package


Service BlueprintingProcessesCustomer actionsOnstage activitiesBackstage activitiesSupportSeparationsLine of interactionLine of visibilityLine of internal interaction


Service Blueprint Template(Note similarity to swim lane in Chapter 3?)


A Cubical Model of Services(Three Dimensions)


Community HospitalPublic Hospital


text

CONTACT

SERVICE PACKAGE

CUSTOMIZATION

HIGH

HIGH

LOW

LOW

PHYSICAL

INTANGIBLE

Birthing CenterPublic Hospital


text

CONTACT

SERVICE PACKAGE

CUSTOMIZATION

HIGH

HIGH

LOW

LOW

PHYSICAL

INTANGIBLE

Layout Decision ModelsProduct-based layoutUsually best for a line operationCycle time a primary measureFunctional layoutUsually best for a job shopDistance between steps a measureCellular layoutUsually best for batch processes


Product-Based LayoutLine BalancingImprove Takt time:Use minimum number of workstationsReduce idle timeReduce setup timeReduce unnecessary movementIdentify bottlenecks


Process Layout StepsIdentify all steps, their relationships, and times required.Draw a precedence diagramDetermine takt time (time available divided by desired output rate)Determine minimum number of workstations required (total process time divided by takt time)Assign tasks to workstations according to precedence and total time for each to not exceed takt time.Evaluate solution for times per workstation, % idle time, and efficiency delay (100% - % idle time)


Precedence Diagram Example(with workstation task assignments)


Functional Layout ImprovementMinimize the total distance traveledDetermine distances between functional unitsDetermine numbers of interactions between unitsMultiply distances times respective number of interactionsRevise original layout for minimum total distance after first locating functions best for process material flowsMinimize information flow for decisionsUse electronic data interchange (EDI) to allow more flexibility for accomplishing A and B


Case Study in Manufacturing and Service ProcessesLoganville Window Treatments


Bliven Furniture Company example in textbookChair manufacturing processCapacity planning and timingGrowth managementMore accurate forecastingSelection of long-term supply chain partnersEmphasis on managing, reducing costsMore careful attention to inventory strategyAccurate forecastingCareful management of inventoryClosing on remaining product versions with highest demandConversion of unused capacity to other, newer products where practicalRetraining of personnel for other work, if availableClass discussion exerciseTable 7.3 in textbookPrimarily physical: Greater emphasis on managing physical assetsPrimarily intangible: Greater emphasis on managing people and knowledge assetsLower customization: Greater emphasis on closely controlling the process and improving productivityHigher customization: Greater emphasis on being flexible and responsive to customer needsLower contact: Service layout, location, and hours will be based more on cost and productivity concernsHigher contact: Service layout, location, and hours must be designed with customer convenience in mind.

From text, page 198

process choice and layout decisions in manufacturing and services chapter 7

Documents

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pearson prentice hall

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process b5axis router