Lessons 7 to 9: Process & layout i.

Strategy

Operations
Management
 Aim of a process strategy

Process: Is any part of an organization that

takes inputs and transforms them into outputs

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 (such as
quality, efficiency, flexibility…)
 Major decisions for effective processes
• According to Krajewski and Ritzman (1999):
1. Process choice (how resources are organized to
implement the flow strategy)
2. Vertical integration
3. Customer involvement
4. Resource flexibility Project, job, batch, line, continuous
Process Structure
5. Capital intensity • Product-process position
(manufacturing)
• Layout
Customer Involvement Resource Flexibility
• Low involvement • Specialized
Make-to-order • High involvement • Enlarged

Assemble-to-order Capital Intensity

• Low automation
• High automation
Make-to-stock

Strategy for Change

• Process reengineering Effective Process
Design
• Process improvement
 Product-process matrix
It brings together: Volume, Product customization, Process characteristics
Less Customization and Higher Volume

Product Design
(1) (2) (3) (4) (5)
One of a kind Low volume, Multiple Few major High volume
products, made low products products, high
to customer standardization moderate higher standardization,
Flexibility (High) Process order volume volume commodity
Characteristics products
Unit Cost (High)
(1)
Less Complexity, Less Divergence, More Line Flows

Complex and highly

customized process, Project
unique sequence of
tasks
process

(2)
Jumbled flows,
complex work with Job
many exceptions process

(3)
Disconnected line
flows, moderately Batch
complex work process
(4)
Connected line,
routine work Line
process
(5)
Continuous
flows, highly
repetitive work Continuous
process
Flexibility (Low)
Unit Cost (Low)
Source: J.G. Monks Operations Management, Adapted from Robert Hay
and Steven Wheelwright, Restoring Competitive Edge: Competing
through Manufacturing (New York: John Wiley & Sons, 1984).
OM in action: Process strategy
Source: Krajewski and Ritzman, Operations Management (1999)
 Types of process strategies

According to Heizer & Render:

Four basic strategies (there are many ways they may be

implemented):

1. Process focus
2. Repetitive focus
3. Product focus
4. Mass customization
 Volume and variety based strategy
Low High
Volume Volume
Volume
Variety

High Variety
one or few Projects Process Mass Customization
units per run,
Job shops
Focus (difficult to achieve,
(allows but huge rewards)
customization) (machine, print, Dell Computer
hospitals, restaurants)
Arnold Palmer Hospital
Changes in
Modules Repetitive
modest runs, (autos, motorcycles,
standardized home appliances) Product
modules Harley-Davidson
Focus
Changes in
Attributes Assembly (commercial
(such as grade, line baked goods,
quality, size, steel, glass, beer)
thickness, etc.) Frito-Lay
long runs only Continuous process
– Project process
• Process that focuses on making one-of-a-kind
products.
– Intermittent process
• Process that produces products in small lot sizes (e.g.,
job and batch operations).
– Line-flow process
• Continuous process that produces high volume,
highly standardized products (e.g., assembly-line and
continuous operations).
Source: J.G. Monks Operations Management

Intermittent vs Continuous
(Focus Function) (Focus Flow)
Production systems
 Facility Layout
. Facility layout can be defined as the process by which the
physical arrangement of human and capital resources,
related to the flow of materials are determined, including
placement of departments, workstations, machines, and
stock-holding points.

Fixed-position (project) layout

Process-oriented layout (job-shop, functional layout)
Product-oriented layout (flow-shop layout, line layout)
Work-cell layout
Strategy: 1. Process focus (job process)

 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
 Low volume, high variety, intermittent processes
 Many inputs, many different outputs
 Strategy: 1b. Project process
 A project process lies at the high-customization, low-
volume end of the process-choice continuum.
 The sequence of operations and the process involved
in each one are unique to each process, creating one-
of-a-kind products or services made specifically to
customer order
 Firms with project processes sell themselves on the
basis of their capabilities rather than on specific
products.
 Projects tend to be complex, take a long time and be
large
 Close coordination
 Resources are assembled (at particular stages) and
then released
 Flexible flow strategy, work flows defined each new
project
 Fixed position layout

 Product remains in one place

 Workers and equipment come to site
Similar operations are performed in a
 Addresses the layout requirements of
common or functional area, regardless of
large, bulky
projects
the product such
in which as ships
the parts and buildings
are used.
Equipment/operations are located
ut) according to the progressive steps required
to make the product.
gy Groups of dissimilar machines are brought
together in a work cell to perform tasks on a
family of products that share common
interests.
The product, because of its size and/or
weight, remains in one location and
processes are brought to it.
 Process-oriented layout
(process layout, functional layout)

 Like machines and equipment are grouped together

 Flexible and capable of handling a wide variety of
products or services
 Scheduling can be difficult and setup, material
handling, and labor costs can be high
 Low utilization (5-25%) Grinding Forging Lathes

Painting Welding Drills

Milling
Office machines Foundry

Layout Type
Process Similar operations are performed in a
common or functional area, regardless of
the product in which the parts are used.
 Process-oriented layout
(process layout, functional layout)

Deals with low-volume, high-

variety production (also called job
shop or intermittent production)
 Strategy: 2. Repetitive focus

 Facilities may be organized as assembly lines

 Characterized by modules with parts and assemblies
made previously. Modules may be combined for many
output options (customization)
 Modules give the economic advantage of a
continuous process and the advantage of making
many outputs with not many inputs
 Less flexibility than process-focused facilities but
more efficient
Strategy: repetitive focus

(modular) Automobile
Harley Davidson Assembly
Line
 Strategy: 2’. Batch process
 Differs from the job process with respect to volume,
variety and quantity: higher volumes; narrower range
of products; variety is achieved more through an
assemble-to-order strategy than the job process’s
make-to-order; production lots are handled in larger
quantities or batches than they are with job
processes.
 A batch of one product is processed and then
production is switched to the next one.
 Intermediate flow strategy. Average or moderate
volume and variety too great to devote resources to
each product. Jumbled flow pattern, with no standard
sequence of operations through the facility. Some
segments of the process have a line flow.
 Strategy: 3. product focus/line process

 Facilities are organized by product

 High volume but low variety of products (addition
of standard options to the main product).
 Long or continuous production runs enable
efficient processes
 Typically high fixed cost but low variable cost
 Generally less skilled labor
 Line flow strategy (or intermediate flow strategy
when mass customization or assemble-to-order are
pursued).
 High utilization (70-90%)
 Easier scheduling
 Low flexibility and specialized equipment
 Strategy: product focus Few Inputs
(corn, potatoes, water,
seasoning)

(low-volume, high variety,

Automobile continuous process)
Assembly
Frito-Lay
Line

Output variations in size,

shape, and packaging
 Strategy: 3b. Continuous process
 The extreme end of high-volume, standardized production
with rigid line flows.
 Usually one primary material moves without stopping through
the facility.
 The process is often capital intensive and opearted round the
clock to maximize utilization
 Fit perfectly a line flow strategy
Scrap
Continuous caster Nucor Steel Plant steel

Electric
Ladle of molten steel furnace

Continuous cast steel

sheared into 24-ton slabs
Hot tunnel furnace - 300 ft

Hot mill for finishing, cooling, and coiling

 Repetitive and product layout/line layout

Layout Type
Organized around products or families of similar high-volume,
Process
low-variety products.Similar
Seeksoperations
the bestare performed
personnel in amachine
and
common
utilizations in repetitive or functional
or continuous area, regardless of
productions
the product in which the parts are used.
Product Equipment/operations are located
(Flow-shop layout) according to the progressive steps required
to make the product.
Group Technology Groups of dissimilar machines are brought
1.(GT) or Cellular
Volume together
is adequate in a equipment
for high work cell to perform tasks on a
utilization
family of products that share common
2. Product demand interests.
is stable enough to justify high
investment in specialized equipment
Fixed-Position The product, because of its size and/or
3. Product is standardized or approaching
weight, remains a phase
in one location andof life
cycle that justifies investment
processes are brought to it.
4. Supplies of raw materials and components are adequate
and of uniform quality
 Repetitive and product layout/line layout

Advantages
1. Low variable cost per unit
2. Low material handling costs
3. Reduced work-in-process inventories
4. Easier training and supervision
5. Rapid throughput Layout of a production line

Disadvantages
1. High volume is required
2. Work stoppage at any point ties up the
whole operation
3. Lack of flexibility in product or production
rates
 Strategy: 4. Mass customization
The rapid, low-cost production of goods and service to
satisfy increasingly unique customer desires
Combines the flexibility of a process focus with the (high-volume, high-variety)
efficiency of a product focus Dell Computer

Many parts and

component inputs
Repetitive Focus (chips, hard drives,
Flexible people software, cases)
and equipment
Modular
Accommodating techniques
Responsive
Product and
Supply Chains
Process Design
Mass Customization

Rapid Many modules

Effective throughput
scheduling techniques
techniques

Process-Focused
High variety, low volume
Low utilization (5% to 25%)
General-purpose equipment
Product-Focused
Low variety, high volume
High utilization (70% to 90%)
Specialized equipment
Many output versions
(custom PCs and notebooks)
 “Mass customization” at
Japan’s National Bicycle Co.
TUBE CUTTING

CAM

Marketing FRONT ASSEMBLY

ORDER DATA
INCLUDING CAM
CUSTOMER’S CAD
MEASUREMENTS
REAR ASSEMBLY
AND OPTIONS

CAM

2-WEEK LEAD TIME 3-D MEASUREMENT

Quality Assurance

ASSEMBLY PAINTING COMPUTER

INSTRUCTIONS
 Alternative strategies and hybrid layouts

5. (Group Technology) cells:

Cellular manufacturing
Layout Type
Process Similar operations are performed in a
common or functional area, regardless of
One-Worker,
the product in whichMultiple-Machines (OWMM) Cell
the parts are used.
Product
Work Equipment/operations
cell layout: Arranges machinery and are located to focus
equipment
on (Flow-shop
productionlayout) according
of a single to or
product thegroup
progressive stepsproducts
of related required
to make the product.
Group Technology Groups of dissimilar machines are brought
(GT) or Cellular together in a work cell to perform tasks on a
family of products that share common
interests.
Fixed-Position The product, because of its size and/or
 Alternative strategies and hybrid layouts
 People and machines are organized in cells that
focus on single products or product groups (group
technology identifies products that have similar
characteristics).
 Cells can be reconfigured as designs or volume
changes
Current layout - straight
lines make it hard to balance
tasks because work may not
be divided evenly ENTRADA

1 2 3 44

1 2
5
5 6
Improved layout - in U 8
shaped work cell, with
cross-trained work. 9 6
Cells may reduce employee
movement and space 10
requirements while 4
3 11
enhancing communication, 7
7
SALIDA

reducing the number of 11

workers, and facilitating 10 9 8
inspection
 Alternative strategies and hybrid layouts
Advantages of cell manufacturing:
1. Reduced work-in-process inventory
2. Less floor space required
3. Reduced raw material and finished goods
inventory
4. Reduced direct labor
5. Heightened sense of employee participation
6. Increased use of equipment and machinery
7. Reduced investment in machinery and equipment

Requirements:
1. Identification of families of products
2. A high level of training, flexibility and empowerment
of employees
3. Being self-contained, with its own equipment and
resources
4. Quality at each station in the cell
 Alternative strategies and hybrid layouts
6. Flexible Manufacturing System (FMS)
Computer controls both the workstation and the material handling
equipment
Enhance flexibility and reduced waste
Can economically produce low volume at high quality
Reduced changeover time and increased utilization
Computer-Integrated Manufacturing (CIM) (Extension of FMS)