Facilities Planning - Unit 02
Transformation Systems and Process Selection
1
Hierarchy of Facility Planning
Facility
Location
Facility
Planning
Facility
Design
Source for Figure: Tompkins and White,
Facilities Planning, 2nd edition, Wiley
Structural Design
Layout
Design
Handling System
Design
2
Transformation Systems and Process Selection - 2
Facility Design
Sequential Approach vs. Integrated Approach
Product
Design
Process
Design
Facility
Layout
Material
Handling
System
Design
Production
Planning
Sequential Approach
3
Transformation Systems and Process Selection - 3
Facility Design
Sequential Approach vs. Integrated Approach
Integrated Approach:
Concurrent Engineering
Impressive results in cost, quality,
productivity, sales, customer
satisfaction, delivery time, inventory
levels, space + handling
requirements, building size, etc.
Terms of product, process, scheduling
and facility design planners work with
marketing, purchasing, etc. Personnel
address the design process in an
integrated way.
Process
Design
Layout Design
+
Material Handling
System Design
Product
Design
Schedule
Design
4
Transformation Systems and Process Selection - 4
Transformation Process and
Productivity Model
The main objective of transformation processes is
production of output goods and services
Input
Enterprise
Output
Productivity improvements focus is on activities for
creating, implementing and improving processes that
transform inputs to outputs
5
Transformation Systems and Process Selection - 5
Transformation System Design and
Layout Analysis
 Transformation system design considers alternative
transformation forms and selects best one given
characteristics of desired outputs.
 Layout analysis seeks to maximize the efficiency or
effectiveness of operations.
6
Transformation Systems and Process Selection - 6
Transformation System Design
7
Transformation Systems and Process Selection - 7
Transformation System Design
Fender’s Custom Shop








computer controlled routers and lathes shape guitar bodies and
necks
also have Neck Duplicator
necks and bodies hand and machine sanded
detailed inlay work done with Hegner precision scroll saw
paint and finishing operations in special room where air is recirculated 10 times/minute
buffed
hung up and seasoned for two weeks
final assembly by actual musicians
8
Transformation Systems and Process Selection - 8
Transformation System Design
IBM’s Charlotte, NC Plant
 Assembly line produces 27
significantly different products
 Products include hand-held barcode scanners, portable medical
computers, fiber-optic
connectors, and satellite
communications devices
 “Kits” of parts delivered to
workers
 Computer screen displays
assembly instructions
9
Transformation Systems and Process Selection - 9
Transformation System Design
Rickard Associates
 Produces magazines and marketing materials
 Only two of editorial production company’s
employees work at headquarters in NJ
 Art director works in AZ
 Editors are located in FL, GA, MI, and D.C.
 Freelancers even more scattered
 Internet used to coordinate work
10
Transformation Systems and Process Selection - 10
Transformation System Design
Martin Marietta Aerospace Plant
 Originally set up as job shop with numerous
functional departments
 High WIP levels
 Long lead times
 long travel distances
 departmental barriers inhibited communication
 Plant subsequently arranged into three focused
factories
11
Transformation Systems and Process Selection - 11
Transformation System Design
Martin Marietta Aerospace Plant - continued
 Each focused factory completed entire electronic
assembly for particular application
 Each focused factory treated as separate business
enterprise
 Factory manager assigned to each focused factory
12
Transformation Systems and Process Selection - 12
Transformation System Design
Martin Marietta Aerospace Plant - continued
 Within focused factories part families identified
based on technology and processes
 Standard routings identified for each part family
 Improvements
 seven months of consecutive production with
no scrap
 50% reduction in WIP
 21% reduction in lead times
 90% reduction in overtime
13
Transformation Systems and Process Selection - 13
Transformation System Design
Types of Process Strategies
 Process strategies that follow a continuum
 Within a given facility, several strategies may be used
 These strategies are often classified as:
Process Focused
(intermittent process)
Repetitive Focus
(assembly line)
Product Focused
(continuous process)
Process Continuum
High variety, low volume
Low utilization (5% - 25%)
General-purpose equipment
Modular
Flexible equipment
Low variety, high volume
High utilization (70% - 90%)
Specialized equipment
14
Transformation Systems and Process Selection - 14
Transformation Systems Design
 Fender Custom Shop is job shop
 Rickard Associates is job shop and is also a virtual
organization
 Martin Marietta converted from a job shop to focused
factories
 IBM uses a flow shop
15
Transformation Systems and Process Selection - 15
Process-Focused Strategy
 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

16
Transformation Systems and Process Selection - 16
Process-Focused Strategy
17
Transformation Systems and Process Selection - 17
Process-Focused Strategy - Examples
18
Transformation Systems and Process Selection - 18
Process-Focused Strategy
 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%)
19
Transformation Systems and Process Selection - 19
Repetitive-Focused Strategy
 Facilities often organized by assembly lines
 Characterized by modules

Parts & assemblies made previously
 Modules combined for many output options
 Other names
Assembly line
 Production line

20
Transformation Systems and Process Selection - 20
Repetitive Focused Strategy
21
Transformation Systems and Process Selection - 21
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 lowvolume, high-variety model
22
Transformation Systems and Process Selection - 22
Repetitive-Focused Strategy - Examples
McDonald’s
over 95 billion served
23
Transformation Systems and Process Selection - 23
Repetitive-Focused Strategy - Examples
24
Transformation Systems and Process Selection - 24
Product-Focused Strategy
 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
25
Transformation Systems and Process Selection - 25
Product-Focused Strategy
26
Transformation Systems and Process Selection - 26
Product-Focused Strategy - Examples
Soft Drinks (Continuous, then Discrete)
Light Bulbs (Discrete)
Mass Flu Shots
(Discrete)
Paper (Continuous)
27
Transformation Systems and Process Selection - 27
Product-Focused Strategy - Examples
Flow Diagram of
Steelmaking Process
at NUCOR
28
Transformation Systems and Process Selection - 28
Product-Focused Strategy
 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
29
Transformation Systems and Process Selection - 29
Process Strategies – Mass Customization
 Using technology and imagination to rapidly massproduce products that cater to sundry 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.
30
Transformation Systems and Process Selection - 30
Process Strategies – Mass Customization
Repetitive Focus
Modular design
Flexible equipment
Modular techniques
Mass Customization
Effective scheduling
techniques
Process-focused
High variety, low volume
Low utilization (5% - 20%)
General purpose equipment
Rapid throughput
techniques
Product-focused
Low variety, high volume
High utilization (70% - 80%)
Specialized equipment
31
Transformation Systems and Process Selection - 31
Process Strategies
Mass Customization Example – Dell Computer Company
“How can we make the process of buying a computer better?”





Sell custom-build PCs directly to consumer
Integrate the Web into every aspect of its business
Operate with six days inventory
Build computers rapidly, at low cost, and only when ordered
Focus research on software designed to make installation
and configuration of its PCs fast and simple
32
Transformation Systems and Process Selection - 32
Process Choice vs. Volume and Variety
Volume and
Variety of
Products
Low Volume High
Variety Process
(Intermittent)
Repetitive
Process
(Modular)
High Volume
Low Variety
Process
(Continuous)
One or very few
Projects
Mass
units per lot
Customization
Very small runs, high
Job Shops
variety
Modest runs, modest
Disconnected
variety
Repetitive
Long runs, modest
Connected
Poor Strategy
variations
Repetitive
(High variable costs)
Very long runs,
Continuous
changes in attributes
Equipment utilization
5%-25%
20%-75%
70%-80%
33
Transformation Systems and Process Selection - 33
Process Strategies: Comparison – Page 1
Process Focus
(Low volume,
High variety)
Repetitive Focus
(Modular)
Product focus
(High-volume,
low-variety)
Mass Customization
(High-volume, highvariety
Small quantity,
large variety of
products
Long runs,
standardized
product, 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
Broadly skilled
operators
Modestly trained
employees
Operators less
broadly skilled
Flexible operators
trained for
customization
34
Transformation Systems and Process Selection - 34
Process Strategies: Comparison – Page 2
Process Focus
Repetitive Focus
Product focus
Mass Customization
Many instructions
because of change
in jobs
Reduced training Few work
and number of job orders and job
instructions
instructions
Custom orders
require many
instructions
Raw material high
relative to product
value
JIT techniques
used
Raw material
low relative to
product value
Raw material low
relative to product
value
WIP high relative to
output
JIT techniques
used
WIP low relative WIP driven down by
to output
JIT, kanban, lean
production
35
Transformation Systems and Process Selection - 35
Process Strategies: Comparison – Page 3
Process Focus
Units move
slowly thru
plant
Repetitive Focus
Movement
measured in hours
& days
Product focus
Mass Customization
Units move
swiftly thru
facility
Goods move swiftly
thru facility
Finished goods Finished goods
made to order, made to frequent
not stored
forecasts
Finished goods
made to forecast,
then stored
Finished goods
made to order
Fixed costs
low, variable
costs high
Fixed costs high,
variable costs
low
Fixed costs high;
variable costs must
be low
Fixed costs
dependent on
flexibility of
facilities
36
Transformation Systems and Process Selection - 36
Process Strategies: Comparison – Page 4
Process Focus
Repetitive Focus
Product focus
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
Because of high
fixed costs, cost
dependent on
utilization of
capacity
High fixed costs and
dynamic variable
costs
Costing, done by Costs usually
job, is estimated known based on
prior to doing job experience
but only known
after doing job
Mass Customization
37
Transformation Systems and Process Selection - 37
Process Strategies
Production Volume vs. Process Type Summarized
Production Volume
Low
Job Shop
Process
Type
High
Appliance
repair
Emergency
room
Very High
Not
feasible
Commercial
bakery
Classroom
lecture
Batch
Automotive
assembly
Repetitive
Continuous
(flow)
Moderate
Not
feasible
Oil refinery
Water
purification
38
Transformation Systems and Process Selection - 38
Process Strategies
Process Dimension vs. Process Dimension Summarized
Dimension
Process
Type
Job variety
Process
flexibility
Unit cost
Volume of
output
Job Shop
Very High
Very High
Very High
Very Low
Batch
Moderate
Moderate
Moderate
Moderate
Repetitive
Low
Low
Low
High
Continuous
(flow)
Very Low
Very Low
Very Low
Very Low
39
Transformation Systems and Process Selection - 39
Process Strategies
Questions for Process Analysis and Design
 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?
40
Transformation Systems and Process Selection - 40
Process Strategies
Factors Affecting Process Alternatives
 Production flexibility
 Product volume
 Product variety
 Technology
 Cost
 Human resources
 Quality
 Reliability
These factors can
effect the number of
alternatives!
41
Transformation Systems and Process Selection - 41
Process Selection and System Design
Forecasting
Capacity
Planning
Product and
Service Design
Technological
Change
Facilities and
Equipment
Layout
Process
Selection
Work
Design
Capacity is significantly impacted by process selection and facility layout.
42
Transformation Systems and Process Selection - 42