Process (Definition of)
Process: Any part of an organization that takes inputs and transforms them into outputs

Process Flowcharting (definition of)
• Process flowcharting is the use of a diagram to present the major elements of a process
• The basic elements can include tasks or operations, flows of materials or customers, decision points and storage areas or queues
• It is an ideal methodology by which to begin analyzing a process

Flowchart Symbols (1 of 2)
Tasks or operations Examples: Giving an admission ticket to a customer, installing an engine in a car, etc.
Decision Points Examples: How much change should be offered to a customer, which tool should be used, etc.

Flowchart Symbols (2 of 2)
Storage areas or queues
Examples: Sheds, lines of people waiting for a service, etc.
Flows of materials or customers
Examples: Customers moving to a seat, mechanic getting a tool, etc.

Example 2: Flowchart for Inspection
Process
Material
Received from
Supplier
Inspect
Material for
Defects Defects found?
No ,
Continue…
Yes
Return to
Supplier for
Credit

Process Terminology (1 of 2)
Single-stage Process
Stage 1
Multi-stage Process
Stage 1 Stage 2 Stage 3

Process Terminology (2 of 2)
A buffer refers to a storage area between stages where the output of a stage is placed prior to being used in a downstream stage.
Allows stages to operate independently
Multi-stage Process with Buffer
Buffer
Stage 1 Stage 2

Process Planning
 Process selection
 Make-or-buy decisions
 Specific equipment selection
 Process plans
 Process analysis

Process Selection
 Process Selection: Deciding on the way production of goods or services will be organized
 Process selection can involve substantial investment in
 Equipment
 Layout of facilities

• Capacity planning
• Layout of facilities
• Equipment
• Design of work systems
To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved.

Factors that Affect Process
Decisions
 Required Variety,
 Required Volume (how many)
 Required Flexibility (degree of)

Process Strategy
 Overall approach to produce goods and services
 Defines:
 Capital intensity
 Process flexibility
 Vertical integration
 Customer involvement

Process Selection and System
Design
Forecasting
Capacity
Planning
Facilities and
Equipment
Product and
Service Design
Layout
Technological
Change
Process
Selection Work
Design

From Function to Process
Function
Product Development
Order Fulfillment
Supply Chain Management
Customer Service
Process

Process Selection
• Variety
– How much
• Flexibility
– What degree
• Volume
– Expected output
Job Shop
Batch
Repetitive
Continuous

Types of Processes
(Process Flow Structures)
 Projects
 Job shop
 Batch production
 Mass production
 Continuous flow production

Types of Processes (1 of 2)
Determine how to produce a product or provide a service
 Projects (nonroutine jobs)
 Job shop
Small scale (e.g. copy center making a single copy of a student term paper)
 Batch
Moderate volume (e.g. copy center making 10,000 copies of an ad piece for a business)

Types of Processes (2 of 2)
 Repetitive- Mass production/assembly
High volumes of standardized goods or services
(e.g. Automobile manufacturer)
 Continuous Flow Line
Very high volumes of non-discrete goods (eg.
Petroleum manufacturer)

Product and Service Processes
Process
Type
Job Shop Ineffective Appliance repair
Emergency room
Batch Commercial baking
Classroom
Lecture
Repetitive Automotive assembly
Automatic carwash
Continuous
(flow)
Ineffective Steel
Production
Water purification

Process-Focused Strategy Examples
© 1995 Corel Corp.
Machine
Shop
Hospital
© 1995
Corel
Corp.
Bank
© 1995 Corel Corp.

Repetitive-Focused Strategy - Examples
© 1995 Corel Corp.
Clothes
Dryer
Truck
McDonald’s over 95 billion served
Fast
Food
© 1984-1994 T/Maker Co.
© 1995 Corel Corp.

Product-Focused Examples
Paper (Continuous)
© 1984-1994 T/Maker Co.

Product – Process Matrix
Dimension Job shop
Job variety Very High
Process flexibility
Very High
Unit cost
Volume of output
Very High
Very Low
Batch
Moderate
Moderate
Moderate
Low
Repetitive
Low
Low
Low
High
Continuous
Very low
Very low
Very low
Very High

Process Selection with Break-even
Analysis
 A standard approach to choosing among alternative processes or equipment
 Model seek to determine the point in units produced (and sold) where we will start making profit on the process or equipment
 Model seeks to determine the point in units produced (and sold) where total revenue and total cost are equal

Process Selection with
Break-Even Analysis
Total cost = fixed cost + total variable cost
TC = c f
+ vc v
Total revenue = volume x price
TR = vp
Profit = total revenue - total cost
Z = TR - TC
= vp - ( c f
+ vc v
) c f
= fixed cost v = volume (i.e., number of units produced and sold) c v
= variable cost per unit p = price per unit

Solving for
Break-Even Volume
TR = TC vp = c f vp vc v
= c f v ( p - c v
) = c f
+ vc v v = c f p c v

Break-Even Analysis: Example 1
Fixed cost = c f
Variable cost = c v
= $2,000
= $5 per raft
Price = p = $10 per raft
The break-even point is v = c f p c v
2000
= = 400 rafts
10 - 5

Break-Even Analysis: Example 1
$3,000
—
$2,000 —
$1,000
—
Total cost line
Total revenue line
400
Break-even point
Units

Break-Even Analysis: Example 2
Choosing Between Two Processes
Process A Process B
$ 2,000 + $5 v = $10,000 + $2 v
$3 v = $8,000 v = 2,667 rafts
Below 2,667, choose A
Above 2,667, choose B

Break-Even Analysis: Example 2
Choosing Between Two Processes
$20,000 — Total cost of process A
Total cost of process B $15,000 —
$10,000
—
$5,000
—
Choose process A
Choose process B
|
1000
|
2000
|
3000
|
4000 Units
Point of indifference = 2,667 Units

$
Choosing Between Three Processes
Fixed cost Variable cost
$ $
$
400,000
300,000
200,000
Process A Process B Process C
V
1
(2,857) V
2
(6,666)
Fixed cost –
Process A
Volume
Fixed cost –
Process B
Fixed cost –
Process C

Make-or-Buy Decisions
1.
Cost
2. Available Capacity
3. Quality Considerations
4. Speed
5. Reliability
6. Expertise
7. Nature of Demand
Make?
Buy?

Specific Equipment Selection
1. Purchase cost
2. Operating cost
3. Annual savings
4. Revenue enhancement
5. Replacement analysis
6. Risk and uncertainty
7. Piecemeal analysis
8. Breakeven analysis

Transition From Product Design to
Process Design:
Product and Production Documents

Product Documents
• Engineering drawings
– Shows dimensions, tolerances, & materials
– Shows codes for Group Technology
• Assembly drawing
-- Shows exploded view of product
• Bill of Material
– Lists components, quantities & where used
– Shows product structure

Engineering Drawings - Show
Dimensions, Tolerances, etc.

Head
Assembly Drawing
Neck
End
Cap
Handle

Bill of Material Example
Bill of Material
P/N: 1000 Name: Bicycle
P/N Desc Qty Units Level
1001 Handle Bars 1 Each 1
1002 Frame Assy 1 Each 1
1003
1004
Wheels
Frame
2
1
Each
Each
2
2

Assembly Chart (Gozinto Chart)
Bottom bun
Beef patty
Salt
Cheese
Lettuce
Sauce
Onions
Middle bun
Beef patty
Salt
Cheese
Lettuce
Sauce
Onions
Pickles
Sesame seed top bun
Wrapper
SA
SA
First-layer assembly
Second-layer assembly
Completed Big Mac

Assembly Drawing and Assembly
Chart

Process Analysis
 The systematic examination of all aspects of a process to improve its operation to make it:
 Faster
 More efficient
 Less costly
 More responsive
 Basic tools
 Process flowchart
 Process diagrams
 Process maps

Process Flowchart Symbols
Operations
Inspection
Transportation
Delay
Storage

Process Flowchart: Example 1
SUBJECT: Request tool purchase
Dist (ft) Time (min) Symbol
75
Description
 D

Write order

D

On desk
 D

To buyer
 D

Examine
 = Operation;  = Transport;  = Inspect;
D = Delay;  = Storage

Process Flow Chart: Example 2: Hamburger Assembly
Dist.
(Ft)
1.5
Time
(Mins)
-
.05
Chart
Symbols
 
 
Process Description
Meat Patty in Storage
Transfer to Broiler
1.0
.5
.5
3.5
2.50
.05
.05
.15
.10
.20
.05
3.15
 
 
 
 
 
 
 
 
Broiler
Visual Inspection
Transfer to Rack
Temporary Storage
Obtain Buns, Lettuce, etc.
Assemble Order
Place in Finish Rack
TOTALS
(2.50+.20)/3.15=85.7%

Process Flowchart: Example 3
Date: 9-30-02
Analyst: TLR
Location: Graves Mountain
Process: Apple Sauce
Description of process
3
4
5
1
2
6
7
8
9
10
11
Page 1 0f 3
Unload apples from truck
Move to inspection station
Weigh, inspect, sort
Move to storage
Wait until needed
Move to peeler
Apples peeled and cored
Soak in water until needed
Place in conveyor
Move to mixing area
Weigh, inspect, sort
Total
20
30
360
15
20
5
30
480
100 ft
50
20
20 ft ft ft
190 ft

Techniques for Improving Service
Productivity (1 of 2)
Strategy Technique
• Separation
• Self-service
• Structure service so customers must go where service is offered
• Self-service so customers examine, compare and evaluate at their own pace
• Postponement
• Customizing at delivery
• Focus
• Restricting the offerings

Techniques for Improving Service
Productivity (2 of 2)
• Modules
• Automation
• Scheduling
• Training
• Modular selection of service.
Modular production
• Separating services that lend themselves to automation
• Precise personnel scheduling
• Clarifying the service options
• Explaining problems
• Improving employee flexibility

More Opportunities to Improve
Service Processes
 Methods
 Layout
 Human Resource
 Technology

Technologies

Technology
 Technology: The application of scientific discoveries to the development and improvement of products and services and operations processes.
 Technology innovation: The discovery and development of new or improved products, services, or processes for producing or providing them.

Kinds of Technology
 Operations management is primarily concerned with three kinds of technology:
 Product and service technology
 Process technology
 Information technology
 All three have a major impact on:
 Costs
 Productivity
 Competitiveness

Technology as a Competitive
Advantage
Innovations in
 Products and services
 Cell phones
 PDAs
 Wireless computing
 Processing technology
 Increasing productivity
 Increasing quality
 Lowering costs
 Eases flexibility

Technology Acquisition
 Technology can have benefits but …
 Technology risks include:
 What technology will and will not do
 Technical issues
 Economic issues
 Initial costs, space, cash flow, maintenance
 Consultants and/or skilled employees
 Integration cost, time resources
 Training, safety, job loss

Advantages Created by
HighTechnology
Advantages:
 Increased precision
 Increased productivity
 Increased flexibility, increased product variety
 Decreased cost (labor, material, inventory, transportation and quality costs)
 Improved product features and quality
 Decreased pollution
 Decreased size
 Decreased power requirements.

Information Technology
 Management Information Systems (MIS)
 Move large amounts of data
 Decision Support Systems (DSS)
 Add decision making support
 Expert System
 Recommend decision based on expert knowledge

Enterprise Software
 Collect, analyze, and make decisions based on data
 ERP - Enterprise Resource Planning
 Managing wide range of processes
 Human resources, materials management, supply chains, accounting, finance, manufacturing, sales force automation, customer service, customer order entry
 Finding hidden patterns through data mining

Advanced Communications
 Electronic data interchange (EDI)
 Internet, extranets
 Wireless communications
 Teleconferencing & telecommuting
 Bar coding, RFT
 Virtual reality

Process Technology: Automation
 Machinery that has sensing and control devices that enables it to operate
- Fixed automation
- Programmable automation

Manufacturing Hardware Technology
 Numerically controlled (NC) machines
 Controlled by punched tape
 Computer numerical controlled (CNC)
 Controlled by attached computer
 Direct numerical control (DNC)
 Several NC machines controlled by single computer
 Robotics
 Flexible manufacturing systems (FMS)
 Includes automated material handling

Production Process &
Technology Alternatives
# Different Products or Parts
High
General Purpose, NC,
CNC
CIM
Flexible
Manufacturing
System
Dedicated
Automation
Low
Low
Volume of Products or Parts
High

Flexible Manufacturing Systems
(FMS)
 Programmable machine tools
 Controlled by common computer network
 Combines flexibility with efficiency
 Reduces setup & queue times

Flexible Manufacturing System
CNC
Machine Finished goods
Computer control room
Automatic tool changer
CNC
Machine
Pallet
Terminal
Parts

Manufacturing Software Technology
 Computer Aided Design and Computer Aided
Manufacturing (CAD/CAM)
 Computer Integrated Manufacturing (CIM)

CAM refers to the use of specialized computer programs to direct and control manufacturing equipment. When CAD information is translated into instructions for computer aided manufacturing, CAM, the result of these two technologies is known as CAD/CAM