PRODUCTS PLANNING AND PROCESS SELECTION - II Prepared by Şevkinaz Gümüşoğlu using different references about POM&QM Process selection decisions are related with products and services planning. If we want to select efficient process we need right process strategies. Thesee strategies effect our facilities layout decisions. Copyright 2006 John Wiley & Sons, Inc. 5-2 The objective of a process strategy is to build a production process that meets customer requirements and product specifications within cost and other managerial constraints © 2011 Pearson Education, Inc. publishing as Prentice Hall PROCESS STRATEGIES Frame tube bending Frame-building work cells Frame machining Hot-paint frame painting THE ASSEMBLY LINE TESTING 28 tests Incoming parts Air cleaners Oil tank work cell Fluids and mufflers Shocks and forks Fuel tank work cell Handlebars Wheel work cell Fender work cell © 2011 Pearson Education, Inc. publishing as Prentice Hall PROCESS FLOW DIAGRAM Engines and transmissions From Milwaukee on a JIT arrival schedule Roller testing Crating Copyright 2006 John Wiley & Sons, Inc. 5-5 HOW CAN WE ACHIEVE THESE STRATEGIES? Determine some properties about product & services design Determine some inputs about these properties Determine some operations about these parts, material & work-in-process Apply all of these information for our process. Design the best process for our objective 5-6 DESIGN PROCESS Product design defines appearance of product sets standards for performance specifies which materials are to be used determines dimensions and tolerances Service design specifies offering the costumers; what physical items, sensual benefits, and psychological benefits from service defines environment in which service will take place DESIGN PROCESS matches product or service characteristics with customer requirements ensures that customer requirements are met in the simplest and least costly manner reduces time required to design a new product or service minimizes revisions necessary to make a design workable Copyright 2006 John Wiley & Sons, Inc. « Effective Design» can provide a competitive edge DESIGN PROCESS Idea generation Performance specifications Form design Customers R&D Marketing Competitors Revising and testing prototypes Production design Functional design New product or service launch Final design & process plans Design specifications Copyright 2006 John Wiley & Sons, Inc. Suppliers Product or service concept Feasibility study Manufacturing or delivery specifications Pilot product run and final tests 5-9 © 2011 Pearson Education, Inc. publishing as Prentice Hall PROCESS, VOLUME, AND VARIETY Volume Figure 7.1 Low Volume High Variety one or few units per run, (allows customization) Changes in Modules modest runs, standardized modules Changes in Attributes (such as grade, quality, size, thickness, etc.) long runs only Repetitive Process Process Focus projects, job shops (machine, print, hospitals, restaurants) Izmir Kent Hospital High Volume Mass Customization (difficult to achieve, but huge rewards) Dell Computer Repetitive (autos, motorcycles, home appliances) Harley-Davidson Poor Strategy (Both fixed and variable costs are high) Product Focus (commercial baked goods, steel, glass, beer) Frito-Lay PROCESSES AND TECHNOLOGY PROCESS SELECTION REFERS TO STRATEGIC DECISION FOLLOWS: AND IT CAN BE CATEGORIZED AS Converting process: For examples iron core convert the metal sheet. Fabrication process: Changing raw materials into some specific form. For example, making sheet metal into a car fender or foming gold into a crown for a tooth. Assembly process: assembling a fender to a car,putting toothpaste tubes into a box , or fastening a dental crown in somebody’s mouth. Testing process: This is not strictly speaking a fundemental process, but it is so widely mentioned as a standalone major activity for completeness. The process flow structure refers how the factory organizes material flow using one or more of process tecnologies. Major process flow structures as; (Hayes & Wheelwright) Project production flow one-at-a-time production of a product to customer order Batch production flow (job shop) systems process many different jobs at the same time in groups (or batches) Mass production flow (assembly line) large volumes of a standard product for a mass market Continuous production flow used for very high volume commodity products TYPES OF PRODUCTION/OPERATIONS PROCESSES Effective production/operations process is essential to the company’s continuing success. Not only there are numerous types of production, there are also many ways of classifying or grouping them for descriptive purposes. Classifying production/operations processes by their characteristics can provide valuable insights into how they should be managed. In general, the processes by which goods and services are produced can be categorised in two traditional ways. Firstly, we can identify continuous, repetitive, intermittent and job shop production process. Job shop (jumbled flow ,Bath production). A wide variety of customized products are made by a highly skilled workforce using general-purpose equipment. These processes are referred to as jumbledflow processes because there are many possible routings through the process. Examples: Home renovating firm, stereo repair shop, gourmet restaurant. Intermittent (batch) flow. A mixture of generalpurpose and special-purpose equipment is used to produce small to large batches of products. Examples: clothing and book manufacturers, winery, caterer. Repetitive flow (mass production). The product or products are processed in lots, each item of production passing through the same sequence of operations, i.e. several standardized products follow a predetermined flow through sequentially dependent work centers. Workers typically are assigned to a narrow range of tasks and work with highly specialised equipment. Examples: automobile and computer assembly lines, insurance home office. Continuous flow (flow shop). Commodity like products flow continuously through a linear process. This type of process will theoretically run for 24 hrs/day, 7 days/week and 52 weeks/year and, whilst this is often the objective, it is rarely achieved. Examples: chemical, oil, and sugar refineries, power and light utilities. These four categories represent points on continuum of process organisations. Processes that fall within a particular category share many characteristics that fundamentally influence how a process should be managed. The second and similar classification divides production processes into; Process,Jobbing Mass, Batch Production. Process Production. Processes that operate continually to produce a very high volume of a standard product are termed “Processes”. This type of process involves the continuous production of a commodity , often by chemical rather than mechanical means, such as oil and gas. Extra examples of a continuous processes oil refinery, electricity production and steel making. Jobbing Production (Project Type Production). Processes that produce high-variety and low-volume products are termed “jobbing”.Although strictly consisting of the manufacture of different products in unit quantities (in practice corresponds to the intermittent process mentioned above). This type of production assumes a oneof-a-kind production output, such as a new building or developing a new software application. The equipment are typically designed for flexibility and often general purpose, meaning it can be used for many different production requirements Mass Production. Is conceptually similar to process production, except that discrete items such as motorcars and domestic appliances are usually involved. A single or a very small range of similar items is produced in very large numbers. In other words, processes that produce high-volume and lowvariety products are termed line or mass processes. Because of the high volumes of product it is costeffective to use specialised labour and equipment. Batch Production. Processes that produce products of medium variety and medium volume are termed “batch processes”. Occurs where the number of discrete items to be manufactured in a period is insufficient to enable mass production to be used. Similar items are manufactured together in batches. In other words, batch processes cover a relatively wide range of volume and variety combination. Products are grouped into batches . © 2011 Pearson Education, Inc. publishing as Prentice Hall MASS CUSTOMIZATION Repetitive Focus Flexible people and equipment Figure 7.3 Accommodating Product and Process Design Modular techniques Responsive Supply Chains Mass Customization Effective scheduling techniques Rapid throughput techniques Process-Focused Product-Focused High variety, low volume Low utilization (5% to 25%) General-purpose equipment Low variety, high volume High utilization (70% to 90%) Specialized equipment Number of Choices Item 1970s 21st Century Vehicle models Vehicle types Bicycle types Software titles Web sites Movie releases per year New book titles Houston TV channels Breakfast cereals Items in supermarket LCD TVs 140 18 8 0 0 267 40,530 5 160 14,000 0 286 1,212 211,000 400,000 162,000,000 765 300,000 185 340 150,000 102 Table 7.1 © 2011 Pearson Education, Inc. publishing as Prentice Hall MASS CUSTOMIZATION Many modules (high-volume, high-variety) Dell Computer Many output versions (custom PCs and notebooks) © 2011 Pearson Education, Inc. publishing as Prentice Hall MASS CUSTOMIZATION Many parts and component inputs (chips, hard drives, software, cases) PRODUCT-PROCESS MATRIX Source: Adapted from Robert Hayes and Steven Wheelwright, Restoring the Competitive Edge: Competing Through Manufacturing (New York: John Wiley & Sons, 1984), p. 209 Continuous Production A paper manufacturer produces a continuous sheet paper from wood pulp slurry, which is mixed, pressed, dried, and wound onto reels. Copyright 2006 John Wiley & Sons, Inc. Mass Production Here in a clean room a worker performs quality checks on a computer assembly line. Batch Production At Guitars bindings on the guitar frame are installed by hand and are wrapped with a cloth webbing until glue is dried. Piano, Tom Ford, Haute-couture, Dior Project Construction of the aircraft carrier was a huge project that took almost 10 years to complete. Spacecraft, bridge, barrage 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 7.4 (2,857) V1 V2 (6,666) Fixed cost Process B Fixed cost Process C Volume © 2011 Pearson Education, Inc. publishing as Prentice Hall CROSSOVER CHARTS SERVICE STRATEGY: PROCESSES AND TECHNOLOGY service highly customized and very labor intensive Service shop customized and labor intensive Mass service less customized and less labor intensive Service Factory least customized and least labor intensive Copyright 2006 John Wiley & Sons, Inc. Professional SERVICE-PROCESS MATRIX Copyright 2006 John Wiley & Sons, Inc. Source: Adapted from Roger Schmenner, “How Can Service Businesses Survive and Prosper?” Sloan Management Review 27(3):29 Degree of Customization High Low Mass Service Professional Service Traditional orthodontics Private banking Commercial banking High Degree of Labor Full-service stockbroker Generalpurpose law firms Digital orthodontics Boutiques Retailing Law clinics Service Shop Specialized Limited-service hospitals stockbroker Service Factory Low Warehouse and catalog stores Airlines No-frills airlines Figure 7.9 Fast-food restaurants Fine-dining restaurants Hospitals © 2011 Pearson Education, Inc. publishing as Prentice Hall SERVICE PROCESS MATRIX Service Factory Mass Service Copyright 2006 John Wiley & Sons, Inc. Electricity is a commodity available continuously to customers. A retail store provides a standard array of products from which customers may choose. Service Shop Although a lecture may be prepared in advance, its delivery is affected by students in each class. YUSEM, TSE, English Akademy, etc. Professional Service A doctor provides personal service to each patient based on extensive training in medicine. Dentist, Consultant, 2-26 Advisor, etc. Desired service experience Service Concept Service Package Targeted customer Sensual benefits Psychological benefits Performance Specifications Customer requirements SERVICE DESIGN PROCESS Customer expectations Service Provider Design Specifications Customer Activities Facility Provider skills Cost and time estimates Delivery Specifications Schedule Deliverables Service Location Copyright 2006 John Wiley & Sons, Inc. Physical items IDEA GENERATION SOURCES Company’s own R&D department Customer complaints or suggestions Marketing research Suppliers Salespersons in the field Factory workers New technological developments Competitors FEASIBILITY STUDY Market analysis Economic analysis Technical/strategic analysis Performance specifications Copyright 2006 John Wiley & Sons, Inc. FINAL DESIGN AND PROCESS PLANS Final design Process plans workable instructions necessary equipment and tooling component sourcing recommendations job descriptions and procedures computer programs for automated machines Copyright 2006 John Wiley & Sons, Inc. detailed drawings and specifications for new product or service REDUCING TIME-TO-MARKET Establish multifunctional design teams Make design decisions concurrently rather than sequentially Design for manufacture and assembly Use technology in the design process Engage in collaborative design Copyright 2006 John Wiley & Sons, Inc. DESIGN TEAM AND CONCURRENT ENGINEERING DESIGN Improves quality of early design decisions Involves suppliers Incorporates production process Uses a price-minus system Scheduling and management can be complex as tasks are done in parallel Copyright 2006 John Wiley & Sons, Inc. A new approach to design that involves simultaneous design of products and processes by design teams DESIGN FOR MANUFACTURE AND ASSEMBLY (DFMA) Design for manufacture Design for assembly a set of procedures for: Copyright 2006 John Wiley & Sons, Inc. design a product for easy and economical production reducing number of parts in an assembly evaluating methods of assembly determining an assembly sequence DFM GUIDELINES Minimize number of parts and subassemblies Use standard parts when possible and repeatable, well-understood processes Design parts for many uses, and modules that can be combined in different ways Design for ease of assembly, minimal handling, and proper presentation TECHNOLOGY IN THE DESIGN PROCESS Computer Aided Design (CAD) assists in creation, modification, and analysis of a design includes computer-aided engineering (CAE) tests and analyzes designs on computer screen computer-aided manufacturing (CAM) ultimate design-to-manufacture connection Copyright 2006 John Wiley & Sons, Inc. IMPROVING QUALITY OF DESIGN designs to prevent failures and ensure value Design for environment Measure design quality Use quality function deployment Design for robustness Copyright 2006 John Wiley & Sons, Inc. Review DESIGN REVIEW Failure mode and effects analysis (FMEA) Fault tree analysis (FTA) a systematic method of analyzing product failures a visual method for analyzing interrelationships among failures Value analysis (VA) helps eliminate unnecessary features and functions Copyright 2006 John Wiley & Sons, Inc. FMEA for Potato Chips Failure Mode Cause of Failure Effect of Failure Corrective Action low moisture content expired shelf life poor packaging tastes bad won’t crunch thrown out lost sales add moisture cure longer better package seal shorter shelf life Broken too thin too brittle rough handling rough use poor packaging can’t dip poor display injures mouth chocking perceived as old lost sales change recipe change process change packaging Too Salty outdated receipt process not in control uneven distribution of salt eat less drink more health hazard lost sales experiment with recipe experiment with process introduce low salt version Copyright 2006 John Wiley & Sons, Inc. Stale FAULT TREE ANALYSIS (FTA) Copyright 2006 John Wiley & Sons, Inc. VALUE ANALYSIS (VA), VALUE ENGINEERING a less costly method? with less costly tooling? with less costly material? Can it be made cheaper, better, or faster by someone else? Copyright 2006 John Wiley & Sons, Inc. VA was invented in 1947 by sales engineer Lawrence D. Miles in General Electric. It was used in 1957 in England by USA Consultant firm. This approaches analyses; Can we do without it? Does it do more than is required? Does it cost more than it is worth? Can something else do a better job? Can it be made by DESIGN FOR ENVIRONMENT Design for environment designing a product from material that can be recycled design from recycled material design for ease of repair minimize packaging minimize material and energy used during manufacture, consumption and disposal Extended producer responsibility holds companies responsible for their product even after its useful life Copyright 2006 John Wiley & Sons, Inc. DESIGN FOR ENVIRONMENT (CONT.) Copyright 2006 John Wiley & Sons, Inc. •DESIGN FOR ROBUSTNESS Robust product Robust design Controllable factors Uncontrollable factors Six sigma Taguchi Function Lean Production Copyright 2006 John Wiley & Sons, Inc. The other advance topics are; Stanford Design Thinking Process Video http://www.youtube.com/watch?v=JZH70qhmEso Airplane Model Production Process: http://www.youtube.com/watch?v=fmcfKl89DcA Copyright 2006 John Wiley & Sons, Inc. Aircraft Manufacturing Process: http://www.youtube.com/watch?v=puJx6aq5i_w CAPACITY PLANNING Establishes overall level of productive resources Affects leadtime responsiveness, cost & competitiveness Determines when and how much to increase capacity © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e CAPACITY UTILIZATION Measures actual output rate 100% Utilizatio n capacity Measures effectiveness Use either effective or design capacity in denominator Copyright 2006 John Wiley & Sons, Inc. how much of the available capacity is actually being used: 5-46 EXAMPLES OF COMPUTING CAPACITY UTILIZATION 1. Example: A bakery’s design capacity is 30 custom cakes per day. Currently the bakery is producing 28 cakes per day. What is the bakery’s capacity utilization relative to both design and effective capacity? Design capacity: Maximum output rate under ideal conditions A bakery can make 30 custom cakes per day when pushed at holiday time Effective capacity: Maximum output rate under normal (realistic) conditions On the average this bakery can make 20 custom cakes per day SOLUTION: Utilizatio n effective Utilizatio n design actual output 28 (100%) (100%) 140% effective capacity 20 actual output 28 (100%) (100%) 93% design capacity 30 The current utilization is only slightly below its design capacity and considerably above its effective capacity The bakery can only operate at this level for a short period of time 2. Example: Your company has 4 machines which are staffed by 2 eight hours shifts 6 days a week. Lately information has shown that there are about 20 per week in which machines are not in use due to breakdowns. Calculate your companies machine utilization. SOLUTION: Capacity = (# of shifts) x (# of hours a day) x (# of machines) x (# of days a week) Utilization = Hours available – hours down x 100 Hours available Utilization = Hours worked x 100 Hours available First step, the company’s machine hour capacity? Capacity = (# of shifts) x (# of hours a day) x (# of machines) x (# of days a week) Capacity = (2 shifts) x (8 hours a day) x (4 machines) x (6 days a week) Capacity = 384 machine hours Second Step: Utilization = Hours available – hours down x 100 Hours available Utilization = (384 machine hours) – (20 hours down) x 100 384 machine hours Utilization = 364 machine hours x 100 = .9479 x 100 384 machine hours Utilization = 94.79 % 3. EXAMPLE: During one week of production, a plant produced 83 units of a product. Its historic highest or best utilization recorded was 120 units per week. What is this plant’s capacity utilization rate? CAPACITY EXPANSION Volume & certainty of anticipated demand Strategic objectives for growth Costs of expansion & operation Incremental or one-step expansion © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e CAPACITY EXPANSION STRATEGIES Capacity lead strategy Units Capacity Capacity lag strategy Units Demand Capacity Demand Time Time Average capacity strategy Units Incremental vs. one-step expansion Units Capacity One-step expansion Demand Time © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Incremental expansion Demand Time Average cost per unit BEST OPERATING LEVELS WITH ECONOMIES & DISECONOMIES OF SCALE 250 room hotel Best operating level 500 room hotel 1000 room hotel Best operating level Best operating level Diseconomies of scale Economies of scale © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e STRATEGIES FOR MEETING DEMAND 1. Use inventory to absorb fluctuations in demand (level production) 2. Hire and fire workers to match demand (chase demand) 3. Maintain resources for high demand levels 4. Increase or decrease working hours (over & undertime) 5. Subcontract work to other firms 6. Use part-time workers 7. Provide the service or product at a later time period (backordering) © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e AGGREGATE PRODUCTION PLANNING (APP) Matches market demand to company resources Plans production 6 months to 12 months in advance Expresses demand, resources, and capacity in general terms Develops a strategy for economically meeting demand Establishes a companywide game plan for allocating resources © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e INPUTS AND OUTPUTS TO AGGREGATE PRODUCTION PLANNING Capacity Constraints Demand Forecasts Size of Workforce © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Strategic Objectives Aggregate Production Planning Production per month (in units or $) Inventory Levels Company Policies Financial Constraints Units or dollars subcontracted, backordered, or lost STRATEGY DETAILS Subcontracting - useful if supplier meets quality & time requirements Part-time workers - feasible for unskilled jobs or if labor pool exists Backordering - only works if customer is willing to wait for product/services © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e LEVEL PRODUCTION Demand Production Units Time © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e CHASE DEMAND Demand Units Production Time © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e CAPACITY FLEXIBILITY Flexible plants Flexible processes Flexible workers EXAMPLE OF A DECISION TREE PROBLEM A glass factory specializing in crystal is experiencing a substantial backlog, and the firm's management is considering three courses of action: A) Arrange for subcontracting, B) Construct new facilities. C) Do nothing (no change) The correct choice depends largely upon demand, which may be low, medium, or high. By consensus, management estimates the respective demand probabilities as .10, .50, and .40. EXAMPLE OF A DECISION TREE PROBLEM: THE PAYOFF TABLE The management also estimates the profits when choosing from the three alternatives (A, B, and C) under the differing probable levels of demand. These costs, in thousands of dollars are presented in the table below: A B C 0.1 Low 10 -120 20 0.5 Medium 50 25 40 0.4 High 90 200 60 EXAMPLE OF A DECISION TREE PROBLEM: STEP 1. WE START BY DRAWING THE THREE DECISIONS A B C EXAMPLE OF DECISION TREE PROBLEM: STEP 2. ADD OUR POSSIBLE STATES OF NATURE, PROBABILITIES, AND PAYOFFS High demand (.4) Medium demand (.5) Low demand (.1) A High demand (.4) B Medium demand (.5) Low demand (.1) $90k $50k $10k $200k $25k -$120k C High demand (.4) Medium demand (.5) Low demand (.1) $60k $40k $20k EXAMPLE OF DECISION TREE PROBLEM: STEP 3. DETERMINE THE EXPECTED VALUE OF EACH DECISION High demand (.4) Medium demand (.5) $62k Low demand (.1) A EVA=.4(90)+.5(50)+.1(10)=$62k $90k $50k $10k EXAMPLE OF DECISION TREE PROBLEM: STEP 4. MAKE DECISION High demand (.4) Medium demand (.5) $62k A B $80.5k Low demand (.1) High demand (.4) Medium demand (.5) Low demand (.1) $90k $50k $10k $200k $25k -$120k C High demand (.4) $46k Medium demand (.5) Low demand (.1) $60k $40k $20k Alternative B generates the greatest expected profit, so our choice is B or to construct a new facility. THANKS!!!