Operations
Management
Chapter 7 –
Process Strategy
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e
© 2006
Prentice
Hall, Inc. Hall, Inc.
©
2006
Prentice
7–1
Outline
 Global Company Profile: Dell
Computer Co.
 Four Process Strategies
 Process Analysis And Design
 Service Process Design
 Selection Of Equipment And
Technology
 Process Redesign
© 2006 Prentice Hall, Inc.
7–2
Dell Computer Company
“How can we make the process of
buying a computer better?”
 Sell custom-built PCs directly to consumer
 Build computers rapidly, at low cost, and
only when ordered
 Integrate the Web into every aspect of its
business
 Focus research on software designed to
make installation and configuration of its
PCs fast and simple
© 2006 Prentice Hall, Inc.
7–3
Process
 A process includes all machine
activities, computer processing, human
actions, transportation, storage and
decisions that are taken from the time a
task is authorized by a customer and the
time when the product or finished
service is delivered to the client.
© 2006 Prentice Hall, Inc.
7–4
Types of Processes
Output
volume
High
High-Low
(III)
Mass
production
High-High
(IV)
Mass
custom.
Low
Low-Low
(I)
Job shop
Low-High
(II)
Modular
production
Low
High
Output
variety
 Most ideas can be implemented in any of
the four processes
© 2006 Prentice Hall, Inc.
7–5
Breakfast Factory Process
Type I: Job Shop (Mobile Unit)
Menu
Production process

Coffee w/o milk

Pre-boiled eggs

Toast w/o eggs

Pre-brewed coffee

Bread w/o eggs

Pre-packaged
Type II: Modular Production
Menu
Production process

Coffee w/o milk

Toast assembled to order

10 Toast types


10 Coffee brands
Coffee brand is made to
order
© 2006 Prentice Hall, Inc.
7–6
Breakfast Factory Process
Type III: Mass Production
Menu

Coffee w/o milk

Toast w/o eggs

Bread w/o eggs
Production process

Continuous making of toast,
coffee and eggs

Automated transportation
Type IV: Mass Customization Production
Menu
Production process

2 Toast types

Continuous brewing of coffee

3 Coffee brands

Pre-packaged toast

10 Coffee flavors

Pre-brewed coffee is flavored
to order
© 2006 Prentice Hall, Inc.
7–7
Process Strategies
Four basic strategies
 Process focus
(form of job shop process)
 Repetitive focus
(also called modular process)
 Product focus
(also called mass production process)
 Mass customization
(modified form of product focus process)
© 2006 Prentice Hall, Inc.
7–8
Process Flow Diagram
Customer
Purchasing
Customer sales
representative
Vendors
PREPRESS DEPT
Accounting
Receiving
PRINTING DEPT
Warehouse
COLLATING
DEPT
Information flow
Material flow
GLUING, BINDING,
STAPLING, LABELING
POLYWRAP DEPT
SHIPPING
© 2006 Prentice Hall, Inc.
Figure 7.2
7–9
Process Focus
 Facilities are organized around specific
activities or processes
 General purpose equipment and skilled
personnel
 High degree of product flexibility
 Typically high costs and low equipment
utilization
 Product flows may vary considerably
making planning and scheduling a
challenge
© 2006 Prentice Hall, Inc.
7 – 10
Repetitive Focus
 Facilities often organized as
assembly lines
 Characterized by modules with parts
and assemblies made previously
 Modules may be combined for many
output options
 Less flexibility than process-focused
facilities but more efficient
© 2006 Prentice Hall, Inc.
7 – 11
Process Flow Diagram
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
Engines and
transmissions
From Milwaukee
on a JIT arrival
schedule
Roller testing
Crating
Figure 7.3
© 2006 Prentice Hall, Inc.
7 – 12
Product Focus
 Facilities are organized by product
 High volume but low variety of
products
 Long, continuous production runs
enable efficient processes
 Typically high fixed cost but low
variable cost
 Generally less skilled labor
© 2006 Prentice Hall, Inc.
7 – 13
Product Focus
D
Continuous caster
Nucor Steel Plant
C
Scrap
steel
A
B
Ladle of molten steel
Electric
furnace
Continuous cast steel
sheared into 24-ton slabs
Hot tunnel furnace - 300 ft
E
F
Hot mill for finishing, cooling, and coiling
H
G
I
© 2006 Prentice Hall, Inc.
7 – 14
Comparison of Processes
Process
Focus
Repetitive
Focus
(Modular)
(Low-volume,
high-variety)
Product Focus
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
(Low-volume,
low-variety)
Product parts,
work processes
and assembly
are unique
© 2006 Prentice Hall, Inc.
Parts, work
processes and
assembly fall into
few similar
modules/groups
(High-volume,
low-variety)
Parts, work
processes and
assembly fall into
one standard way
Mass
Customization
(High-volume,
high-variety)
Parts, work
processes fall
into one standard
class. Handful of
assembly types
7 – 15
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
© 2006 Prentice Hall, Inc.
7 – 16
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
© 2006 Prentice Hall, Inc.
7 – 17
Time-Function Mapping
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 10 days
Move
1 day
0 day
1 day
52 days
© 2006 Prentice Hall, Inc.
7 – 18
Process Chart
Figure 7.8
© 2006 Prentice Hall, Inc.
7 – 19
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
© 2006 Prentice Hall, Inc.
7 – 20
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
© 2006 Prentice Hall, Inc.
7 – 21
Crossover Charts
Variable
costs
Variable
costs
$
Variable
costs
$
$
Fixed costs
Fixed costs
Fixed costs
Low volume, high variety
Process A
Repetitive
Process B
High volume, low variety
Process C
$
400,000
300,000
200,000
Fixed cost
Process A
Figure 7.6
© 2006 Prentice Hall, Inc.
(2,857)
V1
V2 (6,666)
Fixed cost
Process B
Fixed cost
Process C
Volume
7 – 22