LECTURE 10
LSM733-PRODUCTION
OPERATIONS MANAGEMENT
By: OSMAN BIN SAIF
1
Summary of Last Session
 Tools of TQM
 Check Sheets
 Scatter Diagrams
 Cause-and-Effect Diagrams
 Pareto Charts
 Flowcharts
 Histograms
 Statistical Process Control (SPC)
2
Summary of Last Session (Contd.)
 The Role of Inspection
 When and Where to Inspect
 Source Inspection
 Service Industry Inspection
 Inspection of Attributes versus
Variables
 TQM in Services
3
Summary of Last Session (Contd.)
 Tools for Generating Ideas
Check sheets
Scatter diagrams
Cause-and-effect diagrams
 Tools to Organize the Data
Pareto charts
Flowcharts
 Tools for Identifying Problems
Histogram
Statistical process control chart
4
Agenda for this session

Four Process Strategies
 Process Focus
 Repetitive Focus
 Product Focus
 Mass Customization Focus
 Comparison of Process Choices

Process Analysis and Design
 Flow Diagrams
 Time-Function Mapping
 Value-Stream Mapping
 Process Charts
 Service Blueprinting
5
Agenda for this session (Contd.)

Service Process Design
 Customer Interaction and Process Design
 More Opportunities to Improve Service Processes

Selection of Equipment and Technology

Production Technology
 Machine Technology
 Automatic Identification Systems (AISs) and RFID
 Process Control
 Vision Systems
 Robots
6
Agenda for this session (Contd.)
 Production Technology (cont.)
 Automated Storage and Retrieval Systems (ASRSs)
 Automated Guided Vehicles (AGVs)
 Flexible Manufacturing Systems (FMSs)
 Computer-Integrated Manufacturing (CIM)
 Technology in Services
 Process Redesign
 Ethics and Environmentally Friendly Processes
7
Comparison of Processes
Process
Focus
Repetitive
Focus
Product Focus
Mass
Customization
(Low volume,
high variety)
(Modular)
(High-volume,
low-variety)
Small
quantity, large
variety of
products
Long runs,
standardized
product made
from modules
Large
quantity, small
variety of
products
Large
quantity, large
variety of
products
General
purpose
equipment
Special
equipment
aids in use of
assembly line
Special
purpose
equipment
Rapid
changeover
on flexible
equipment
(High-volume,
high-variety)
Table 7.2
8
Comparison of Processes
Process
Focus
Repetitive
Focus
(Low volume,
high variety)
(Modular)
Product Focus
(High-volume,
low-variety)
Mass
Customization
(High-volume,
high-variety)
Operators are
broadly
skilled
Employees
are modestly
trained
Operators are
less broadly
skilled
Flexible
operators are
trained for the
necessary
customization
Many job
instructions
as each job
changes
Repetition
reduces
training and
changes in job
instructions
Few work
orders and job
instructions
because jobs
standardized
Custom
orders require
many job
instructions
Table 7.2
9
Comparison of Processes
Process
Focus
Repetitive
Focus
(Low volume,
high variety)
(Modular)
Product Focus
(High-volume,
low-variety)
Mass
Customization
(High-volume,
high-variety)
Raw material
inventories
high
JIT
procurement
techniques
used
Raw material
inventories
are low
Raw material
inventories
are low
Work-inprocess is
high
JIT inventory
techniques
used
Work-inprocess
inventory is
low
Work-inprocess
inventory
driven down
by JIT, lean
production
Table 7.2
10
Comparison of Processes
Process
Focus
Repetitive
Focus
(Low volume,
high variety)
(Modular)
Product Focus
(High-volume,
low-variety)
Mass
Customization
(High-volume,
high-variety)
Units move
slowly
through the
plant
Movement is
measured in
hours and
days
Swift
movement of
unit through
the facility is
typical
Goods move
swiftly
through the
facility
Finished
goods made
to order
Finished
goods made
to frequent
forecast
Finished
goods made
to forecast
and stored
Finished
goods often
build-to-order
(BTO)
Table 7.2
11
Comparison of Processes
Process
Focus
Repetitive
Focus
(Low volume,
high variety)
(Modular)
Scheduling is
complex,
trade-offs
between
inventory,
availability,
customer
service
Scheduling
based on
building
various
models from
a variety of
modules to
forecasts
Product Focus
(High-volume,
low-variety)
Relatively
simple
scheduling,
establishing
output rate to
meet forecasts
Mass
Customization
(High-volume,
high-variety)
Sophisticated
scheduling
required to
accommodate
custom orders
Table 7.2
12
Comparison of Processes
Process
Focus
Repetitive
Focus
(Low volume,
high variety)
(Modular)
Product Focus
(High-volume,
low-variety)
Mass
Customization
(High-volume,
high-variety)
Fixed costs
low, variable
costs high
Fixed costs
dependent on
flexibility of
the facility
Fixed costs
high, variable
costs low
Fixed costs
high, variable
costs must be
low
Costing
estimated
before job,
known only
after the job
Costs usually
known due to
extensive
experience
High fixed
costs mean
costs
dependent on
utilization of
capacity
High fixed
costs and
dynamic
variable costs
make costing
a challenge
Table 7.2
13
Crossover Charts
Variable
costs
Variable
costs
$
Variable
costs
$
$
Fixed costs
Fixed costs
Fixed costs
Repetitive
Process B
Low volume, high variety
Process A
High volume, low variety
Process C
$
400,000
300,000
200,000
Fixed cost
Process A
Figure 7.6
(2,857)
V1
V2
(6,666)
Fixed cost
Process B
Fixed cost
Process C
Volume
14
Focused Processes
 Focus brings efficiency
 Focus on depth of product line rather
than breadth
 Focus can be




Customers
Products
Service
Technology
15
Changing Processes
 Difficult and expensive
 May mean starting over
 Process strategy determines
transformation strategy for an
extended period
 Important to get it right
16
Process Analysis and Design
 Flow Diagrams - Shows the movement of
materials
 Time-Function Mapping - Shows flows and time
frame
 Value-Stream Mapping - Shows flows and time
and value added beyond the immediate
organization
 Process Charts - Uses symbols to show key
activities
 Service Blueprinting - focuses on
customer/provider interaction
17
“Baseline” Time-Function Map
Customer
Order
product
Sales
Process
order
Production
control
Receive
product
Wait
Plant A
Print
Warehouse
Wait
Wait
Extrude
Plant B
Move
Transport
Figure 7.7
Wait
12 days
13 days
1 day
4 days
1 day
52 days
Move
10 days
1 day
0 day
1 day
18
“Target” Time-Function Map
Customer
Order
product
Sales
Process
order
Production
control
Receive
product
Wait
Plant
Print
Extrude
Warehouse
Wait
Transport
Move
1 day
2 days
1 day
1 day
1 day
6 days
Figure 7.7
19
Value-Stream Mapping
Figure207.8
Process Chart
Figure 7.9
Service Blueprint
 Focuses on the customer and provider
interaction
 Defines three levels of interaction
 Each level has different management
issues
 Identifies potential failure points
22
Service Blueprint
Personal Greeting
Level
#1
Service Diagnosis
Perform Service
Customer arrives for
service
Customer departs
F
Warm greeting and
obtain service
request
Determine
specifics
No
Standard
request
Level
#2
Direct customer to
waiting room
F
Level
#3
Friendly Close
Can
service be
done and does
customer
approve?
F
F
Yes
Yes
Notify
customer
and recommend
an alternative
provider
Customer pays bill
F
F
No
Notify
customer the
car is ready
Perform required
work
F
Prepare invoice
Figure 7.10
F
23
Process Analysis Tools
 Flowcharts provide a view of the big
picture
 Time-function mapping adds rigor and a
time element
 Value-stream analysis extends to
customers and suppliers
 Process charts show detail
 Service blueprint focuses on customer
interaction
Service Process Matrix
Degree of Customization
High
Low
Mass Service
Professional Service
Private
banking
Degree of Labor
High
Commercial
banking
Full-service
stockbroker
Generalpurpose law firms
Boutiques
Retailing
Service Factory
Law clinics
Limited-service
stockbroker
Low
Warehouse and
catalog stores
Fast-food
restaurants
Service Shop
Specialized
hospitals
Fine-dining
restaurants
Hospitals
Airlines
Figure 7.11
No-frills
airlines
25
Service Process Matrix
Mass Service and Professional Service
 Labor involvement is high
 Selection and training highly important
 Focus on human resources
 Personalized services
Service Factory and Service Shop
 Automation of standardized services
 Low labor intensity responds well to process
technology and scheduling
 Tight control required to maintain standards
26
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
Table 7.3
27
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
Table 7.3
28
Improving Service Productivity
Strategy
Technique
Example
Automation
Separating services
that may lend
themselves to
automation
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, aftersale maintenance
personnel
Table 7.3
29
Improving Service Processes
 Layout
 Product exposure, customer education,
product enhancement
 Human Resources
 Recruiting and training
 Impact of flexibility
30
Equipment and Technology
 Often complex decisions
 Possible competitive advantage
 Flexibility
 Stable processes
 May allow enlarging the scope of the
processes
31
Production Technology









Machine technology
Automatic identification
systems (AISs)
Process control
Vision system
Robot
Automated storage and retrieval systems (ASRSs)
Automated guided vehicles (AGVs)
Flexible manufacturing systems (FMSs)
Computer-integrated manufacturing (CIM)
32
Machine Technology
 Increased precision
 Increased productivity
 Increased flexibility
 Improved environmental impact
 Reduced changeover time
 Decreased size
 Reduced power requirements
33
Automatic Identification Systems
(AISs)
 Improved data acquisition
 Reduced data entry errors
 Increased speed
 Increased scope
of process
automation
Example – Bar codes and RFID
34
Process Control
 Increased process stability
 Increased process precision
 Real-time provision of information for
process evaluation
 Data available in many forms
35
Process Control Software
36
Vision Systems
 Particular aid to inspection
 Consistently accurate
 Never bored
 Modest cost
 Superior to individuals performing the
same tasks
37
Robots
 Perform monotonous or dangerous tasks
 Perform tasks requiring significant
strength or endurance
 Generally enhanced consistency and
accuracy
38
Automated Storage and Retrieval
Systems (ASRSs)
 Automated placement and withdrawal of
parts and products
 Reduced errors and labor
 Particularly useful in inventory and test
areas of manufacturing firms
39
Automated Guided Vehicle (AGVs)
 Electronically guided and controlled carts
 Used for movement of products and/or
individuals
40
Flexible Manufacturing Systems
(FMSs)
 Computer controls both the workstation and the
material handling equipment
 Enhance flexibility and reduced waste
 Can economically produce low volume at high
quality
 Reduced changeover time and increased
utilization
 Stringent communication requirement between
components
41
Computer-Integrated Manufacturing
(CIM)
 Extension of flexible manufacturing systems
 Backwards to engineering and inventory control
 Forward into warehousing and shipping
 Can also include financial and customer service areas
 Reducing the distinction between lowvolume/high-variety, and high-volume/lowvariety production
42
ComputerIntegrated
Manufacturing
(CIM)
Figure 7.12
43
Technology in Services
Service Industry
Example
Financial
Services
Debit cards, electronic funds transfer, ATMs,
Internet stock trading
Education
Electronic bulletin boards, on-line journals,
WebCT and Blackboard
Utilities and
government
Automated one-man garbage trucks, optical
mail and bomb scanners, flood warning
systems
Restaurants and
foods
Wireless orders from waiters to kitchen,
robot butchering, transponders on cars that
track sales at drive-throughs
Communications Electronic publishing, interactive TV
Table 7.4
44
Technology in Services
Service Industry
Example
Hotels
Electronic check-in/check-out, electronic
key/lock system
Wholesale/retail
trade
ATM-like kiosks, point-of-sale (POS)
terminals, e-commerce, electronic
communication between store and supplier,
bar coded data
Transportation
Automatic toll booths, satellite-directed
navigation systems
Health care
Online patient-monitoring, online medical
information systems, robotic surgery
Airlines
Ticketless travel, scheduling, Internet
purchases
Table 7.4
45
Process Redesign
 The fundamental rethinking of business
processes to bring about dramatic
improvements in performance
 Relies on reevaluating the purpose of the
process and questioning both the purpose and
the underlying assumptions
 Requires reexamination of the basic process and
its objectives
 Focuses on activities that cross functional lines
 Any process is a candidate for redesign
46
Ethics and Environmentally
Friendly Processes
Reduce the negative impact on the
environment
 Encourage recycling
 Efficient use of resources
 Reduction of waste by-products
 Use less harmful ingredients
 Use less energy
47
Summary of this session

Four Process Strategies
 Process Focus
 Repetitive Focus
 Product Focus
 Mass Customization Focus
 Comparison of Process Choices

Process Analysis and Design
 Flow Diagrams
 Time-Function Mapping
 Value-Stream Mapping
 Process Charts
 Service Blueprinting
48
Summary of this session (Contd.)

Service Process Design
 Customer Interaction and Process Design
 More Opportunities to Improve Service Processes

Selection of Equipment and Technology

Production Technology
 Machine Technology
 Automatic Identification Systems (AISs) and RFID
 Process Control
 Vision Systems
 Robots
49
Summary of this session (Contd.)
 Production Technology (cont.)
 Automated Storage and Retrieval Systems (ASRSs)
 Automated Guided Vehicles (AGVs)
 Flexible Manufacturing Systems (FMSs)
 Computer-Integrated Manufacturing (CIM)
 Technology in Services
 Process Redesign
 Ethics and Environmentally Friendly Processes
50
THANK YOU
51