Operations Management and TQM

Chapter 7: Process Strategy

What is the objective of Product Strategy?

- Create a process to produce offerings that meet customer requirements within the cost and other managerial
constraints.

Process Strategy

How to produce a product or provide a service that:

o Meets or exceeds customer requirements.

o Meets costs and managerial goals.

Has a long-term effect on:

o Efficiency and production flexibility.

o Cost and quality.

Process Focus

A production facility organized around processes to facilitate a low-volume, high variety of production. It is also called
intermittent process or "Job Shop".

o Facilities are organized around specific activities or processes.

o General purpose equipment and skilled personnel.
o High degree of product flexibility.
o High cost and low equipment utilization.
o Product flows may vary considerably when planning and scheduling a challenge.

Repetitive Focus

Product-oriented process that uses modules. Modules refer to parts or components of a product previously prepared,
often in a continuous process.

o Facilities often organized as assembly lines.

o Characterized by modules with parts and assemblies made previously.
o Modules may be combined for many outputs options.
o Less flexibility than process-focused facilities but more efficient.

Product Focus

A facility organized around products; a product-oriented, high volume, low variety process.

o Facilities are organized by product.

o High volume but low variety of products.
o Long, continuous production runs enable efficient process.
o Typically, high fixed cost but low variable cost.
o Generally, less skilled labor.

Mass Customization

- The rapid, low-cost production of goods and services to satisfy increasing unique customer desires.
 - Combines the flexibility of a process focus with the efficiency of a product focus.

Built-to-order (BTO)
Making Mass Customization Works

o Product design must be imaginative.

o Process design must be flexible and able to accommodate changes in both design and technology.
o Inventory management requires tight control.
o Tight schedules that track orders and material from design through delivery.
o Responsive partners in the supply chain can yield effective collaboration.

Crossover Analysis

- An approach to choosing among alternative processes or equipment.

- At any given volume, only one process will have the lowest cost.

Selection of Equipment

- Process Strategy requires decision of equipment and technology.

- Decisions can be complex as alternate methods may be available.
- Very crucial in preparing the process strategy.

Factors to be considered:

o Cost o Quality
o Cash Flow o Capacity
o Market Stability o Flexibility

Process Analysis and Design

When designing and analyzing process we need to ask these questions:

o Is the process designed to achieve a competitive advantage?

o Does the process eliminate steps that do not add value?
o Does the process maximize customer value?
o Will the process win orders?

Flowchart

o Shows the movement of materials.

o Harley-Davidson Flowchart.

Time-Function Mapping or Process

o Shows flows and time frame.

o Nodes indicate activities.
o Arrow indicates flow direction.
o Time on horizontal axis.
o Can analyze waste, e.g. extra steps, duplication, delay.

Process Chart

o Use symbols, time distance to analyze record activities through make up a process.
o Focus on value-ad steps and try to eliminate or change non-value-added steps.
Value-Stream Mapping

1. Begin with symbols for customer, supplier, and production to ensure the big picture.
2. Enter customer order requirements.
3. Calculate the daily production requirements.
4. Enter the outbound shipping requirements and delivery frequency.
5. Determine inbound shipping method and delivery frequency.
6. Add the process steps (i.e., machine, assemble) in sequence, left to right.
7. Add communication methods, add their frequency, and show the direction with.
8. Add inventory quantities (shown with A between every step of the entire flow).
9.

Service Blueprinting

- Products with high service contents require different technique.

- Service blueprinting focuses on the customer and provider interaction.
- Defines three levels of interaction - customer control, service provider interaction, service provider control
(away from customer).
- Each level has different management issues.
- Identifies potential failure points.

Special Considerations for Service

Process Design

- Some interaction with customer is necessary, but this often affects performance adversely.
- The better these interactions are accommodated in the process design, the more efficient and effective the
process.
- Find the right combination of cost and customer interaction.

Service Process Matrix

Mass Service and Professional Service

o Labor involvement is high.

o Focus on human resources.
o Selection and training highly important.
o Personalized services.

Service Factor and Service Shop

o Automation of standardized services.

o Restricted offerings.
o Low labor intensity responds well to process technology and scheduling.
o Tight control required to maintain standards.

Production Technology

- Advances in technology that enhance production and productivity are changing how things are designed,
made, and serviced around the world.

Nine Areas of Technological Advancement in Production:

1. Machine Strategy
o Computer Numerical Control (CNC) - Machinery with its own computer and memory.
 o Additive manufacturing commonly called 3D printing) - The production of physical items by adding
layer upon layer, much in the same way an inkjet printer lays down ink.
2. Automatic Identification Systems (AIS)
A system for transforming data into electronic form:
o Barcodes
o Radio Frequency Identification (RFID) - A wireless system in which integrated circuits with antennas
send radio waves.
o Reduced Data Errors
o Increased Speed
o Increase Scope of Process Automation
3. Process Control
The use of information technology to monitor and control a physical process. Process control systems operate
in a number of ways, but the following are typical:
o Sensors collect data, which is read on some periodic basis, perhaps once a minute or second.
o Measurements are translated into digital signals, which are transmitted to a computer.
o Computer programs read the file and analyze the data.
o The resulting output may take numerous forms. These include messages on computer consoles or
printers, signals to motors to change valve settings, warning lights or horns, or statistical process control
charts.
4. Vision Systems
o Combine video cameras and computer technology and are often used in inspection roles.
o Vision systems are;
- Consistently accurate,
- Do not become bored, and
- Modest cost.
5. Robots
Mechanical devices that use electronic impulses to activate motors and switches. Has the ability to;
o Hold;
o Move; and
o Perhaps "grab" items.
6. Automated Storage and Retrieval Systems (ASRSs)
o Provide for the automatic placement and withdrawal of parts and products into and from designated
places in a warehouse.
7. Automated Guided Vehicles (AGVs)
o Electronically guided and controlled carts used in manufacturing and warehousing to move parts and
equipment.
8. Flexible Manufacturing Systems (FMSs)
o A system that uses electronic signals from a centralized computer to automate production and material
flow.
o FMSs bridge the gap between product-focused and process-focused facilities.
o Electronically guided and controlled carts.
o Used for movement of products and/or individuals.
9. Computer-Integrated Manufacturing (CIM)
o Generates the necessary electronic instructions to run a numerically controlled machine.
o Includes computer-aided design (CAD), computer-aided manufacturing (CAM), flexible manufacturing
systems (FMSs), automated storage and retrieval systems (ASRSs), automated guided vehicles (AGVs),
and robots to provide an integrated and flexible manufacturing process.

Technology in Services
 o Advances in technology in the manufacturing sector, so we also find dramatic changes in the service sector.
These range from;
o Electronic diagnostic equipment at auto repair shops;
o Blood- and urine-testing equipment in hospitals; and
o Retinal security scanners at airports.

Process Redesign

o The fundamental rethinking of business processes to bring about dramatic improvements in performance.
o Effective process redesign works only if the basic process and its objectives are reexamined.
o Process redesign also focuses on those activities that cross functional lines.