process choice and layout decisions in manufacturing and services

Process Choice and Layout Decisions in Manufacturing and

Services

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

Chapter 7, Slide 2

Chapter Objectives

Be 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.


Chapter 7, Slide 3

Manufacturing Processes

• Engineering and business perspectives

• Classic manufacturing processes

• Choosing between classic types

• The role of customization

Engineering and Business Perspectives


Chapter 7, Slide 5

Solid Wood Seat for a Kitchen Chair:

Process A• Saddle Machine• Shaper Machine• Sander A• Sander B• Inspection

Setup Time: 6 hours

Time/Seat 1.1 min.

Yield Rate: 92%

Process B• 5-Axis Router• ----• Sander A• Sander B• Inspection

Setup Time: 10 min.

Time / Seat: 3.5 min.

Yield Rate: 99%


Chapter 7, Slide 6

Classic Engineering Viewpoint

Four Transformation Processes

Conversion Fabrication Assembly

Testing

“Advances in Engineering increase and improve the alternatives available”


Chapter 7, Slide 7

Example: Making Windows

• Raw lumber• Molten glass

• Frame wood• Window panes

AssembledWindows

Conversion Fabrication Assembly


Chapter 7, Slide 8

Business View

• What 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


Chapter 7, Slide 10

Process Types(in order of decreasing volume)

• Continuous Flow

• Production Line

• Batch (High Volume)

• Batch (Low Volume)

• Job Shop

• Project


Chapter 7, Slide 11

Continuous Flow

• Large production volumes• High level of automation• Basic material passed along,

converted as it moves• Usually cannot be broken into discrete

units• Usually very high fixed costs, inflexible

Oil refinery, fiber formation, public utilities, automotive manufacturing


Chapter 7, Slide 12

Production Line

High-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


Chapter 7, Slide 13

Batch I

• Somewhere in between job shop and line processes

• Moderate volumes, multiple products

• Production occurs in “batches”

Can manufacturing, carton makers, advertising mailers, etc.


Chapter 7, Slide 14

Batch II

Layout is a cross between that found in a line and that found in a job shop:

Group Technology


Chapter 7, Slide 15

Some Examples of Batch Manufacturing

• Numerical control (NC) machines– Automated processing of entire batch– Machining center - multiple NC machines

• Flexible manufacturing systems (FMS)– Dedicated to families of parts– NC and automated handling

• Group technology– Similar in concept to FMS, but not as much

automation


Chapter 7, Slide 16

Job Shop

• Low volume, one-of-a-kind products• Job shops sell their capability

• Highly flexible equipment, skilled workers• Equipment arranged by function


Chapter 7, Slide 17

Project

• Used when a product is:– one-of-a-kind– too large to be moved

• Resources moved to where needed

• Equipment, people, etc. are highly flexible

• Finite duration, often with deadlineConstruction projects, equipment installation


Chapter 7, Slide 18

Mixing Together the Process Types Hybrid Process

Spindles

Arms andLegs

SeatsBATCH forfabricatingparts ...

ASSEMBLYLINE forputting togetherfinal product

Choosing BetweenClassic Types

• The product-process matrix

• Product and process life cycles


Chapter 7, Slide 20

Comparing Process Types...

Job Shop Batch Line

Volume Very Low High

Variety Very High Low

Skills Broad Limited

Advantage Flexibility Price and Delivery


Chapter 7, Slide 21

Product – Process Matrix

One of a Kind Low Volume

Multiple Products Moderate Volumes

Few Major Products

High Volume

Commodity Products

Job Shop

Batch

Line Very Poor Fit

Very Poor Fit


Chapter 7, Slide 22

Life-Cycle Planning Framework

IntroductionStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time


Chapter 7, Slide 23

Introduction Stage

Availability key to market success

but:• No reliable movement history• Unreliable forecasts• Small shipments• Erratic orders


Chapter 7, Slide 24


IntroductionStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

•High product availability

•Flexibility to handle variation


Chapter 7, Slide 25

Growth Stage

• Sales somewhat more predictable

• Higher volumes

• Performance emphasis?...


Chapter 7, Slide 26


IntroductionStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

•Availability•Achieve break- even volumes as soon as possible

Less need for flexibility


Chapter 7, Slide 27

Maturity Stage

• Intense competition around more standardized products

• Frequent price and service adjustments

• Implications . . .


Chapter 7, Slide 28


IntroductionStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

More selective,targeted efforts

Value-addedservice


Chapter 7, Slide 29

Decline Stage(Obsolescence)

• Product close-out or restricted distribution

• Lowest cost / differentiated performance not as critical anymore

• Priorities?


Chapter 7, Slide 30


IntroductionStage

GrowthStage

MaturityStage

Decline Stage

TotalMarketSales

Time

• Centralized inventory• Speed


Chapter 7, Slide 31

Implications

• What 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


Chapter 7, Slide 33

What is “Customization”?

An operations-centric view:

“Customization occurs when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities”


Chapter 7, Slide 34

Customization Point Model I

DESIGNSOURCINGMATERIALS

FABRICATIONASSEMBLY/FINISHING

DISTRIBUTION

ETO MTO MTSATO

Definitions:

ETO – engineer to order

MTO – make to order

ATO – assemble-to-order

MTS – make to stock

Upstream: before the customization point, “off-line” activities

Downstream: after the customization point, “on-line” activities


Chapter 7, Slide 35

Make-to-Order Windows

Off-line Activities• Design• Buy Materials• Fabricate parts• Assemble

• Ship windows

On-Line Activities• Lead times?• Customizability?• Price?• What type of

manufacturing?• Sell windows


Chapter 7, Slide 36

Customization Point Model II

Manufacturing Systems Design

Upstream Downstream

Performance objectives

Technology Investment

Organization structure

Job differentiation

Integration

Discretion

Efficiency

Productivity, consistency

Mechanistic

High

Formal

Low

Responsiveness

Flexibility

Organic

Low

Informal

High


Chapter 7, Slide 37

Difficulty versus Customization

BASEBALL CAP WITHSCHOOL NAME ON IT

(MTO)

BASEBALL CAP WITHARKANSAS RAZORBACKS

LOGO AND SCHOOLCOLORS ON IT

(ETO)

PLAIN BASEBALL CAP(MTS)

PLAIN BASEBALL CAP INDIFFERENT COLORS

(ATO)

LOWER DIFFICULTY HIGHER DIFFICULTY

MANUFACTURING VIEW

MARKETING VIEW

LOWER CUSTOMIZATION

HIGHER CUSTOMIZATION


Chapter 7, Slide 38

Customization

Job Difficulty

Job Routineness

Operations andSupply Chain Design

An Operations-Centric View

Customization becomes relevant to operations and supply chain managers when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities


Chapter 7, Slide 39

“Mass customization” atJapan’s National Bicycle Co.

CAM

CAM

CAM

TUBE CUTTING

FRONT ASSEMBLY

REAR ASSEMBLY

3-D MEASUREMENT

Quality Assurance

Marketing

ORDER DATAINCLUDING

CUSTOMER’SMEASUREMENTS

AND OPTIONS

CAD

COMPUTERINSTRUCTIONS

PAINTINGASSEMBLY

2-WEEK LEAD TIME

Law of Variability

The earlier customization is introduced in the supply chain, the greater the

random variability of the process and the lower its productivity


Chapter 7, Slide 41

Services

• What makes them distinctive?

• High-contact versus low-contact

• Front room versus back room

• Service Blueprinting


Chapter 7, Slide 42

Services . . .

• Process and “product” are inseparable• Marketing and sales often tightly integrated• Customer often part of the process• Performance metrics can be harder to define• Nevertheless:

– Focus and process choices / trade-offs still apply


Chapter 7, Slide 43

Degree of Customer Contact

Low Contact• “off-line”• Can locate for

efficiency• Can smooth out the

workload

Check clearing, mail sorting

High Contact• “on-line”• Can locate for easy

access• Flexibility to respond

to customers• Harder to manage

Hospitals, food service


Chapter 7, Slide 44

Classifying Services

“Front Room” versus “Back Room”

Back room – what the customer does not see

Managed for efficiency andproductivity

Package sorting, car repair, blood test analysis, accounting department

Front room – what the customer can see

Managed for flexibility and customer service

Customer lobbies, bank teller, receptionist


Chapter 7, Slide 45

What is it?What is the performance objective?

• Restaurant kitchen

• Software help desk

• Kinko’s copy center

• Airline reservations

• Jet maintenance


Chapter 7, Slide 46

Designing Services• Selecting a service focus

– Like manufacturing processes, different services have strengths and weaknesses

• Key is to design a service process that meets the needs of targeted customers

• The “service package”


Chapter 7, Slide 47

Service Blueprinting

Processes• Customer actions• Onstage activities• Backstage activities• Support

Separations• Line of interaction• Line of visibility• Line of internal

interaction


Chapter 7, Slide 48

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


Chapter 7, Slide 49

A Cubical Model of Services(Three Dimensions)

Nature of the Service Package

Primarily Physical Activities

(Airline, trucking firm)

Primarily Intangible Activities

(Law firm, software developer)

Degree of Customization Lower Customization

(Quick-change oil shop)

Higher Customization

(Full-service car repair shop)

Degree of Customer Contact

Lower Contact

(Mail sorting)

Higher Contact

(Physical therapist)


Chapter 7, Slide 50

Community Hospital

CONTACT

SERVICEPACKAGE

CUSTOMIZATION

HIGH

HIGH

LOWLOW

PHYSICAL

INTANGIBLE

Public Hospital


Chapter 7, Slide 51

Birthing Center

CONTACT

SERVICEPACKAGE

CUSTOMIZATION

HIGH

HIGH

LOWLOW

PHYSICAL

INTANGIBLE

Public Hospital


Chapter 7, Slide 52

Layout Decision Models

• Product-based layout– Usually best for a line operation– Cycle time a primary measure

• Functional layout– Usually best for a job shop– Distance between steps a measure

• Cellular layout– Usually best for batch processes


Chapter 7, Slide 53

Product-Based Layout

Line Balancing• Improve ‘Takt’ time:

– Use minimum number of workstations– Reduce idle time– Reduce setup time– Reduce unnecessary movement– Identify ‘bottlenecks’

rateoutputrequiredtimeproductionavailable

timeTakt


Chapter 7, Slide 54

Process Layout Steps

1) Identify all steps, their relationships, and times required.

2) Draw a precedence diagram3) Determine takt time (time available divided by

desired output rate)4) Determine minimum number of workstations

required (total process time divided by takt time)5) Assign tasks to workstations according to

precedence and total time for each to not exceed takt time.

6) Evaluate solution for times per workstation, % idle time, and efficiency delay (100% - % idle time)


Chapter 7, Slide 55

Precedence Diagram Example(with workstation task assignments)


Chapter 7, Slide 56

Functional Layout Improvement

A. Minimize the total distance traveled Determine distances between functional units Determine numbers of interactions between units Multiply distances times respective number of

interactions Revise original layout for minimum total distance

after first locating functions best for process material flows

B. Minimize information flow for decisionsC. Use electronic data interchange (EDI) to allow

more flexibility for accomplishing A and B

Case Study in Manufacturing and Service Processes

Loganville Window Treatments

process choice and layout decisions in manufacturing and services

Documents

services slide

supply chain management

role of customization

pearson prentice hall

alternatives available

different manufacturing

different processes

process b