C5 process & layout

Operations Management Process Strategies and Layout Strategies Chapter 5 5- OPM 533

Process Strategies Involve determining how to produce a product or provide a service Objective Meet or exceed customer requirements Meet cost & managerial goals Has long-run effects Efficiency and flexibility of production Costs & quality of the goods produced 5- OPM 533

Types of Process Strategies 5- OPM 533 Four types of process strategies: Process Focus Repetitive Focus Product Focus Mass Customization

Process-Focused Strategy 5- OPM 533 Facilities are organized by process Similar processes are together Example: All drill presses are together Low volume, high variety products ‘ Jumbled’ flow Other names Intermittent process Job shop Operation Product A Product B 1 2 3

Process Focused Strategy - Pros & Cons Advantages Greater product flexibility More general purpose equipment Lower initial capital investment Disadvantages High variable costs More highly trained personnel More difficult production planning & control Low equipment utilization (5% to 25%) Prepared by : Shatina Saad 5- OPM 533

Repetitive Focused Strategy A product oriented production process that uses modules. Facilities often organized by assembly lines Characterized by modules Parts & components of a product previously prepared Modules combined for many output options Widely used in the assembly of automobiles and household appliances. Other names Assembly line Production line 5- OPM 533

Repetitive Focused Strategy - Considerations More structured than process-focused, less structured than product focused Enables quasi-customization Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model 5- OPM 533

Product-Focused Strategy 5- OPM 533 Facilities are organized by product High volume, low variety products Where found Discrete unit manufacturing Continuous process manufacturing Other names Line flow production Continuous production Operation Products A & B 1 2 3

Product-Focused Strategy Pros & Cons Advantages Lower variable cost per unit Lower but more specialized labor skills Easier production planning and control Higher equipment utilization (70% to 90%) Disadvantages Lower product flexibility More specialized equipment Usually higher capital investment 5- OPM 533

Mass Customization Rapid, low-cost production of goods and services that cater to constantly changing unique customer desires. Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant. 5- OPM 533

Process Strategies 5- OPM 533 Rapid throughput techniques Mass Customization Modular techniques Repetitive Focus Modular design Flexible equipment Product-focused Low variety, high volume High utilization (70% - 80%) Specialized equipment Process-focused High variety, low volume Low utilization (5% - 20%) General purpose equipment Effective scheduling techniques

A Comparison (1) 5- OPM 533 Process Focus (Low volume, High variety) Repetitive Focus (Modular) Product focus (High-volume, low-variety) Mass Customization (High-volume, high-variety 1. Small quantity, large variety of products Long runs, standardized product, from modules Large quantity, small variety of products Large quantity, large variety of products 2. General purpose equipment Special equipment aids in use of assembly line Special purpose equipment Rapid changeover on flexible equipment

A Comparison (2) 5- OPM 533 Process Focus Repetitive Focus Product focus Mass Customization 3 Broadly skilled operators Modestly trained employees Operators less broadly skilled Flexible operators trained for customization 4 Many instructions because of change in jobs Reduced training and number of job instructions Few work orders and job instructions Custom orders require many instructions 5 Raw material high relative to product value JIT techniques used Raw material low relative to product value Raw material low relative to product value

A Comparison (3) 5- OPM 533 Process Focus Repetitive Focus Product focus Mass Customization 6 WIP high relative to output JIT techniques used WIP low relative to output WIP driven down by JIT, kanban, lean production 7 Units move slowly thru plant Movement measured in hours & days Units move swiftly thru facility Goods move swiftly thru facility 8 Finished goods made to order, not stored Finished goods made to frequent forecasts Finished goods made to forecast, then stored Finished goods made to order

A Comparison (4) 5- OPM 533 Process Focus Repetitive Focus Product focus Mass Customization 9 Scheduling complex and concerned with trade-off between inventory, capacity, and customer service Scheduling based on building models from a variety of forecasts Scheduling relatively simple, concerns establishing sufficient rate of output to meet forecasts Scheduling sophisticated to accommodate customization 10 Fixed costs low, variable costs high Fixed costs dependent on flexibility of facilities Fixed costs high, variable costs low Fixed costs high; variable costs must be low

A Comparison (5) 5- OPM 533 Process Focus Repetitive Focus Product focus Mass Customization 11 Costing, done by job, is estimated prior to doing job but only known after doing job Costs usually known based on experience Because of high fixed costs, cost dependent on utilization of capacity High fixed costs and dynamic variable costs

Process Analysis and Design Questions to be asked when analyzing and designing process to transform resources into goods and services Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost? Does the process eliminate steps that do not add value? Does the process maximize customer value as perceived by the customer? Will the process win orders? 5- OPM 533

Tools for Process Design Flow Diagrams – A drawing used to analyze movement of people or material. Time-Function Mapping – A flow diagram but with time added on horizontal axis. It indicates the activities and flow direction with time on the horizontal axis. Allows users to identify and eliminate waste. Value-Stream Mapping – takes an expanded look at where value is added (and not added) in the entire production process, including the supply chain. Helps managers to understand how to add value in the flow of material and information through the production process. 5- OPM 533

Tools for Process Design 5. Process Charts – chart using symbols, time and distance to provide an objective and structured way to analyze and record the activities that make up a process. Allow us to focus on value added activities. 6. Service Blueprinting – A process analysis technique that focuses on customer and the provider’s interaction with the customer. 5- OPM 533

Production Process Flow Diagram 5- OPM 533 Shipping Customer Customer sales representative take order Prepress Department (Prepare printing plates and negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Purchasing (order inks, paper, other supplies) Vendors Receiving Warehousing (ink, paper, etc.) Accounting Information flow Material flow

Process Chart Example 5- OPM 533 SUBJECT: Request tool purchase Dist (ft) Time (min) Symbol Description  D  Write order  D   On desk 75    D  To buyer  D  Examine  = Operation;  = Transport;  = Inspect; D = Delay;  = Storage

Time Function Map (Target) 5- OPM 533 1 day 1 day 1 day 1 day 2 days Customer Sales Production control Plant Warehouse Transport Order Product Process Order Print Extrude Receive product Wait Wait Move Order Order Product Product WIP 6 days

Service Process Design Service by nature requires some interaction and customization. Manager must design the process to accommodate the customers unique desires. The more the process design can meet the customers requirements, the more effective and efficient the process will be.

Techniques for Improving Service Productivity Strategy Technique Example Separation Structure service so customers must go where service is offered Bank customers go to a manager to open a new account, to loan officers for loans, and to tellers for deposits Self-service Self-service so customers examine, compare, and evaluate at their own pace Supermarkets and department stores, internet ordering

Improving Service Productivity Strategy Technique Example Postponement Customizing at delivery Customizing vans at delivery rather than at production Focus Restricting the offerings Limited-menu restaurant Modules Modular selection of service, modular production Investment and insurance selection, prepackaged food modules in restaurants

Improving Service Productivity Strategy Technique Example Automation Precise personnel scheduling Automatic teller machines Scheduling Precise personnel scheduling Scheduling ticket counter personnel at 15-minute intervals at airlines Training Clarifying the service options, explaining how to avoid problems Investment counselor, funeral directors, after-sale maintenance personnel

Improving Service Processes Layout Product exposure, customer education, product enhancement Human Resources Recruiting and training Impact of flexibility

What is Facility Layout Location or arrangement of everything within & around buildings Objectives are to maximize Customer satisfaction Utilization of space, equipment, & people Efficient flow of information, material, & people Employee morale & safety 5- OPM 533

Objectives of the Layout Strategy To develop an economical layout which will meet the requirements of : product design and volume (product strategy) process equipment and capacity (process strategy) quality of work life (human resource strategy) building and site constraints (location strategy) 5- OPM 533

Strategic Importance of Layout Proper layout enables: Higher utilization of space, equipment,and people Improved flow of information, materials, or people Improved employee morale and safer working conditions Improved customer/client interaction Flexibility 5- OPM 533

Seven Types of Layout Strategies 1. Office layout positions workers, their equipment, and spaces/ offices to provide for movement of information 2. Retail/service layout allocates shelf space and responds to customer behavior 3. Warehouse layout addresses trade-offs between space and material handling 5- OPM 533

Seven Types of Layout Strategies 4. Fixed-position layout large bulky projects such as ships and buildings 5. Process-oriented layout deals with low-volume, high-variety production (“job shop”, intermittent production) 6. Work-cell layout positions workers, their equipment, and spaces/ offices to provide for movement of information 7. Product-oriented layout seeks the best personnel and machine use in repetitive or continuous production 5- OPM 533

Requirements of a Good Layout an understanding of capacity and space requirements selection of appropriate material handling equipment decisions regarding environment and aesthetics identification and understanding of the requirements for information flow identification of the cost of moving between the various work areas 5- OPM 533

1. Office Layout 5- OPM 533 Design positions people, equipment, & offices for maximum information flow Arranged by process or product Example: Payroll dept. is by process Relationship chart used Examples Insurance company Software company © 1995 Corel Corp.

2. Retail/Service Layout 5- OPM 533 Design maximizes product exposure to customers Decision variables Store flow pattern Allocation of (shelf) space to products Types Grid design Free-flow design Video

Retail Layouts - Some Rules of Thumb Locate high-draw items around the periphery of the store Use prominent locations such as the first or last aisle for high-impulse and high margin items Remove crossover aisles that allow customers the opportunity to move between aisles Distribute what are known in the trade as “power items” (items that may dominate a shopping trip) to both sides of an aisle, and disperse them to increase the viewing of other items Use end aisle locations because they have a very high exposure rate 5- OPM 533

A Good Service Layout (Servicescape) Considers Ambient conditions - background characteristics such as lighting, sound, smell, and temperature. Spatial layout and functionality - which involve customer circulation path planning Signs, Symbols, and Artifacts - characteristics of building design that carry social significance 5- OPM 533

3. Warehouse Layout 5- OPM 533 Design balances space (cube) utilization & handling cost Similar to process layout Items moved between dock & various storage areas Optimum layout depends on Variety of items stored Number of items picked

4. Fixed-Position Layout Design is for stationary project Workers and equipment come to site Complicating factors:- There is limited space at virtually all sites At different stages in the construction process, different materials are needed – therefore, different items become critical as the project develops The volume of materials needed is dynamic 5- OPM 533

5. Process-Oriented Layout Design places departments with large flows of material or people together Department areas having similar processes located in close proximity e.g., All x-ray machines in same area Used with process-focused processes 5- OPM 533

6. Work-Cell Layout Special case of product-oriented layout - in what is ordinarily a process-oriented facility Consists of different machines brought together to make a product Temporary arrangement only Example: Assembly line set up to produce 3000 identical parts in a job shop 5- OPM 533

Improving Layouts by Moving to the Work Cell Concept 5- OPM 533

Work Cells - Some Advantages Reduced work-in-process inventory Less floor space required Reduced raw material and finished goods inventories required Reduced direct labor costs Heightened sense of employee participation Increased utilization of equipment machinery Reduced investment in machinery and equipment 5- OPM 533

Work Cell Floor Plan 5- OPM 533 Office Tool Room Work Cell Saws Drills

7. Product-Oriented Layout Facility organized around product Design minimizes line imbalance Delay between work stations Types: Fabrication line; assembly line Requirements:- Standardized product High production volume Stable production quantities Uniform quality of raw materials & components 5- OPM 533

Product-Oriented Layout - Assumptions Volume is adequate for high equipment utilization Product demand is stable enough to justify high investment in specialized equipment Product is standardized or approaching a phase of its life cycle that justifies investment in specialized equipment Supplies of raw materials and components are adequate and of uniform quality to ensure they will work with specialized equipment 5- OPM 533

Product-Oriented Layout Types 5- OPM 533 Assembles fabricated parts Uses workstation Repetitive process Paced by tasks Balanced by moving tasks Builds components Uses series of machines Repetitive process Machine paced Balanced by physical redesign Fabrication Line Assembly Line

Product-Oriented Layout Advantages 5- OPM 533 Lower variable cost per unit Lower material handling costs Lower work-in-process inventories Easier training & supervision Rapid throughput

Product-Oriented Layout Disadvantages 5- OPM 533 Higher capital investment Special equipment Any work stoppage stops whole process Lack of flexibility Volume Product

Assembly Line Balancing Analysis of production lines Nearly equally divides work between workstations while meeting required output Objectives Maximize efficiency Minimize number of work stations 5- OPM 533

Assembly Line Balancing The General Procedure Determine cycle time by taking the demand (or production rate) per day and dividing it into the productive time available per day Calculate the theoretical minimum number of work stations by dividing total task time by cycle time Perform the line balance and assign specific assembly tasks to each work station 5- OPM 533

Assembly Line Balancing Steps 1. Determine tasks (operations) 2. Determine sequence 3. Draw precedence diagram 4. Estimate task times 5. Calculate cycle time 6. Calculate number of work stations 7. Assign tasks 8. Calculate efficiency 5- OPM 533

Assembly Line Balancing Equations 5- OPM 533 Cycle time = Production time available Demand per day Minimum number of work stations  Task times Cycle time Efficiency = =  Task times * (Cycle time) (Actual number of work stations)

Layout Heuristics for Assigning Tasks in Assembly Line Balancing Longest task time - choose task with longest operation time Most following tasks - choose task with largest number of following tasks Ranked positional weight - choose task where the sum of the times for each following task is longest Shortest task time - choose task with shortest operation time Least number of following tasks - choose task with fewest subsequent tasks 5- OPM 533

Copier Example (longest task time approach) This means that tasks B and E cannot be done until task A has been completed Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66

Copier Example Figure 9.13 Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66 I G F C D H B E A 10 11 12 5 4 3 7 11 3

Copier Example 480 available mins per day 40 units required I G F C D H B E A 10 11 12 5 4 3 7 11 3 Figure 9.13 Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66 Cycle time = Production time available per day Units required per day = 480 / 40 = 12 minutes per unit Minimum number of workstations = ∑ Time for task i Cycle time n i = 1 = 66 / 12 = 5.5 or 6 stations

Copier Example Figure 9.14 480 available mins per day 40 units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66 I G F H C D B E A 10 11 12 5 4 3 7 11 3 Station 1 Station 2 Station 3 Station 5 Station 4 Station 6

Copier Example Performance Task Must Follow Time Task Listed Task (minutes) Below A 10 — B 11 A C 5 B D 4 B E 12 A F 3 C, D G 7 F H 11 E I 3 G, H Total time 66 480 available mins per day 40 units required Cycle time = 12 mins Minimum workstations = 5.5 or 6 Efficiency = ∑ Task times (actual number of workstations) x (largest cycle time) = 66 minutes / (6 stations) x (12 minutes) = 91.7%

C5 process & layout

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