Operations Management

Module 2

Process Analysis Selection and Design

 Learning Outcomes
Students would be able to do / answer the following:
 List and Describe the types of Production Systems
and Processes.
 Draw Flowcharts for production system, use them
for analysis of processes and their performance.
 List and Describe Classifications of Production
Systems.
 Compare the merits/demerits of different types of
Production Systems and Process Layouts.
 Select a Production system using a Process-
Product matrix.
 Describe the following with examples:Service
Characteristics, Service System Design Matrix,
Service Blue Printing and Fail-Safing.
 List and Explain the other factors to be considered
in selecting production systems and layouts.
 Transformation

Resources

OUTPUT should be Greater in value than the INPUT

to the CUSTOMER.
➢ Activities in a Process affect each other .
➢ important to consider the simultaneous performance of
a number of activities
➢ A good way to start analysing is through a diagram
known as FLOWCHART showing:

Task or Operations Decision

Points

Storage Areas
Or Queues Flows of Material or
(Waiting Lines) Customers
Example: Process Flow Chart

No,
Continue…
Material Defects
Received Inspect
found?
from Material for
Supplier Defects

Yes

Return to
Supplier for
Credit
One way of categorisation is :

SINGLE STAGE
Car
Manufacturer
When a process is
viewed as a black
box
MULTI STAGE
Stage 1 Stage 2
Parts Parts Stage 3 CAR
Manufacturer Purchase Assembly

Note: The distinction is only a method used to indicate that multiple

activities have been pulled together for analysis purpose.
STAGE: Used to indicate that multiple activities have been pulled
together for analysis purpose.
BUFFER: Buffering refers to a storage area between stages where
output of a stage is placed prior to being used in a downstream
stage.
BLOCKING: Occurs when a stage must stop because there is no place
to deposit the item just completed.
STARVING: Occurs when the activities in a stage must stop because
there is no work.
CONSTRAINT: The slowest stage or the weakest link that limits the
maximum output.
BOTTLENECK: A resource whose capacity or maximum output is less
than the demand placed on it.
PACING: Movement of items through a process is coordinated through a
timing mechanism. Most processes are not paced, but assembly
lines usually are paced.
Make To Order: A process that is activated only in response to an
actual order.
Make To Stock: A process that produces standard products that
are stored in finished goods inventory. The
product is delivered quickly to the customer from
the finished goods inventory.
Hybrid: Combines features of both the above. Typically a generic
product is made and stocked at some point in the process. These
generic units are customised in a final process to meet actual
orders.
Operation time = Setup Time + Run Time
Throughput Time = Average time for a unit to move through
the system.
Cycle Time = Average time per unit of output
Throughput Rate = 1 / Cycle Time
Efficiency = Actual output / Standard output
Productivity = Output / Input
Utilisation = Time Activated / Time Available

Little’s Law:
Average Work in Process
Throughput time = ------------------------------------
Throughput Rate
 Indica Car Inner Rear Door Part Manufacture
(Pressed Sheet Metal Part)
Example: In the process shown below,
a) What is the cycle time?
b) What is the Utilisation of each stage and the system
as a whole?
c) If the FG storage capacity is only 100 units how frequently
do you need to empty this bin?
Sheets Blank Draw Pierce Holes Re-strike Stack
2mm thick Trim Final Shape in bin
RM FG
Stage 1 Stage 2 Stage 3 Stage 4

5 /min 3 / min 4 /min 6 / min

a) Which is the bottleneck? c) Which are the buffers?
b) Which stations starve ? d) What is the time for pacing this line?
 A
( Make to Stock)

Customer
Places order

Raw Finished
Material Cook Assemble Goods Deliver
 B
(Hybrid Process)

Assemble
Custom

Custom
Raw WIP Customer
Cook or Deliver
Material Places Standard?
order

Standard

Finished
Assemble Good

“Have it your way” : Custom or Standard

 C
(Make to Order)
Customer
Places
order

Raw
Material Cook Assemble Deliver

Used In
Chili Soup

The Process takes place in full view of the customer.

This gives the perception of a high quality custom product
 D

P12 Made for You Customer

Places order

Raw
Material WIP
Cook Assemble Deliver

The process makes use of the latest cooking technologies.

A very quick response process of 59 seconds! Fresh,
delivered quickly, to exact specifications. However, this
may not be fast enough!
Practice Case Problem
 Refer to the ‘Kristen’s Cookie’ case in
study folder and discussion in class on
the questions and its solutions.
 WHY SHOULD THROUGHPUT TIME BE
REDUCED ?

➢The longer a customer waits greater the chances of

switching to other vendors.

➢The longer a material waits in inventory, higher the

investment cost, finance charges and space cost.

➢The longer a process takes greater the labour cost

associated with it. Therefore, it is important to reduce the
‘Throughput Time’.
 HOW TO REDUCE CYCLE TIME ?

➢Perform activities in parallel.

A parallel approach can reduce time as much as up to
80% and can produce better results.
➢Change the sequence of activities.
Many a times documents and products travel back and
forth during processing. Substantial saving can be
effected by changing these.
➢Reduce interruptions.
Relatively large time intervals between each activity
may result in missing deadlines.
Ex: Purchase orders are made only every other day.
There could be possibilities of missing out resulting
in loss of time.
Process Selection and Design Issues
Process Selection and Design Issues are determined
by several factors such as the type of
Production System
Production System may be classified based on,
 Type of Output
 Type of Flow
 Type of Specification – Standardised /
Customised

OR, simply put these may be,

 Volume

 Variety

 Flow
 Classification of Production System
BASIS CLASSIFICATION EXAMPLE

Consumer Goods-
Furniture, TV, Radio.
Producer Goods-
Products Lathe, Milling etc.
Type of Output
Services
Transportation, health,
entertainment,
banking services,
education system.
 Classification of Production System
BASIS CLASSIFICATION EXAMPLE

Projects Construction of bridge,

dam, roads

Job Shop Hospital, auto repair, furniture

Batch Shop
Making High volume TV,
Auto Factory.
Type of Flow
Assembly Shop Making High volume TV,
Auto Factory.

Continuous Process Postal services,

telephone company,
power corporation,
oil refinery,
chemical plant
 Classification of Production System
BASIS CLASSIFICATION EXAMPLE

Customised Medical care, legal service.

Type of
Specification
under Service
Type

Standardised Insurance, wholesale stores.

 Few High
Low Multiple Major Volume,
Volume, Products, Products, High
One of a Low Higher Standard-
Kind Volume Volume ization
I. Commercial Flexibility (High)
Job Printer Unit Cost (High)
Shop French Restaurant
These are
the major
II. Heavy stages of
Batch Equipment product and
process life
III. cycles
Automobile
Assembly
Assembly
Line Burger King
IV.
Sugar
Continuous Refinery Flexibility (Low)
Flow Unit Cost (Low)

Process-Product Matrix
 Types of Processes

Depending on the products to be manufactured, their quantities and

process requirements ( Volume, Variety, Flow ) we may adopt any of
the following strategies for their manufacture and decide on the
plant layout accordingly as follows:

1. Process Layout – similar machines and services are located

together

2. Product Layout – machines and auxiliary services located as per

the process sequence of the product manufacture.
 Product – Process Strategy

3. Group layout (combination layout) – combines the advantages

of both process and product layout. May not be
suitable for all situations, if product mix is
completely dissimilar.

4. Fixed position layout – static product layout or fixing the

positions dictated by the physical characteristics
of the product.
Ex: Ship building.

Note:
Each has advantages, limitations and use. Therefore the
strategy to be adopted would depend on these.
 A machine shop as an example of Process Focused System

Truck bay
Truck Mills Automats Shipping
Grinders
Bay Receiving

Planers

Inspection
Raw Materials
storage Finished
Drills
Goods
Storage Example:
Assembly
Lathes

Advantages Limitations
Machines better utilised Material handling cost higher
A high degree of flexibility in terms PPC more involved
of task allocation Throughput time longer
Lower Investment Large amounts of in-process
Psychologically more interesting and inventory will result
satisfying Space and capital tied up with
to the operators due to diversity WIP
Higher grades of skill required
A composite part example of a Product Focused System
Part A
Receiving Planning Drilling Milling Inspection Assembly Dispatch
&
Inspection

Lathe Milling Drilling Inspection

Part B Example:
Advantages Limitations

Flow of product smooth and logical in
flow lines
Lesser in process inventory
Lesser throughput time
Breakdown of one machine may cause
line stoppage
Change in product design may require
major alteration

Material handling cost minimum Line output is decided by bottleneck

machine
Less operator skill required
Higher investments necessary
Simpler PPC

Less space occupied by work in transit

Does Product or Process Layout
decide Make to Stock or To Order?
 There could be reasons other than the type of
production system adopted such as:
a) Design flexibility b) Inventory carrying risks
c) Quality control aspects etc.
 The choice between a to-order or to –stock
does not depend on whether a product or
process focused system has been adopted.
Example: We may think that as the auto
industry is product focused this would be
definitely to stock. It is generally not so. Every
vehicle is made to order based on the desired
options given by the customer.
Type of Prodn. Finished goods Inventory policy
System To stock To order

Construction equipment
Office copiers
Product Focused Buses, trucks
TV Sets
Experimental chemicals
Calculators
Textiles
Gasoline Wire and cable
Electronic components
Cameras
Process Focused Machine Tools
Medical
Instruments Nuclear Pressure Vessels

Test equipment Electronic components

Spare Parts Space shuttle

Some steel Ships

Products
Construction Projects
Molded plastic
parts
How does the Production
Strategy depend on the market?
 Each product develops through its life cycle
stages - Introduction, Growth, Maturity,
Decline
 The obvious linkage is the volume of
production required at the particular stage
 But, in addition, cost-price-competitive
positioning requirements play an important
role.
Ex: The results of cost reduction through a
product focused system can indeed be the
basis of an aggressive price positioning (due to
the downward sloping nature of the demand
curve).
 Decision is Dependent on the Stage of Product Life Cycle

Pocket
Calculators,
Sugar, gasoline,
Digital Fast food, service,
Watches Colour TV
Product
Very Large Product Focused, Black
Sales Screen TV
Focused, To stock, and white
To stock, (continuous) TV
(Batch)
Process
Focused,
To order,
(Batch)
Process
Focused,
To order,
(Job Shop)

Growth Maturity Decline

Introduction

Stage of Development

Typical Product Life Cycle Curve for the Introduction

Growth, Maturity, and Decline in the Sales of Products
Product-process strategy can even
depend on other products
 Companies today commonly have an
assortment of products competing in different
markets.
 For example, a company manufacturing colour
TVs, hand calculators, and digital watches
require the following main activities:
a) Product specific components
b) Integrated circuits
c) Housing
d) Acoustical components
e) Assembly
Decision depends on the whole set of products if resources
can be shared to get a competitive advantage.
 Interdependent Product Lines
Colour TV Hand calculators Digital watches

Product specific 5% 15% Value

Components 15% Addition
as % of
Total value
addition
45%
Integrated 50% 40%
Circuits

Cases and
15%
10% 20%
Housings Plastic
Plastic Metal

Acoustical 10% 5%
Components

25% 25% 20%

Assembly

Manufacturing activity structure for a company with Three Products

Observe the Interdependence
 IC circuits are required in all three and has
high value addition. So, this may call for a
product based manufacturing when considered
together. We can enhance cost
competitiveness by adopting this approach.
 The product specific components are
independent of each other and may require
only process based systems
 Addition or deletion of products would require
taking an overall view rather than only the
product being added or deleted.
Service Process Design Issues
 General Service Characteristics
 Service Strategy: Focus & Advantage
 Service-System Design Matrix
 Service Blueprinting
 Service Fail-safing
 Characteristics of a Well-Designed
Service Delivery System
Service Strategy: Focus and Advantage
Performance Priorities
 Treatment of the customer
 Speed and convenience of service
delivery
 Price
 Variety
 Quality of the tangible goods
 Unique skills that constitute the service
offering
 Service-System Design Matrix
Degree of customer/server contact
Buffered Permeable Reactive
High core (none) system (some) system (much) Low
Face-to-face
total
customization
Face-to-face
Degree of loose specs
Production
Face-to-face
Customisation tight specs Efficiency
& Sales Phone
&
Internet & Contact
Opportunity on-site Quality Control
Mail contact technology

Low High
Example of Service Blueprinting
Standard Brush Apply Collect
execution time Buff
shoes polish payment
2 minutes
30 30 45 15
secs secs secs secs
Total acceptable
execution time
Wrong
5 minutes
color wax
Clean Fail
shoes point Materials
Seen by
(e.g., polish, cloth)
customer 45
secs

Line of Not seen by

visibility customer but Select and
necessary to purchase
performance supplies
Characteristics of a Well-Designed
Service System
1. Each element of the service system is
consistent with the operating focus of the
firm

2. It is user-friendly

3. It is robust

4. It is structured so that consistent

performance by its people and systems is
easily maintained
End of Module (Acknowledgement)

 The concepts and ideas presented in the slides are

based on concepts and ideas in the books mentioned
in your sessions plan and material freely available on
the internet, journals and other sources. These have
been put together for teaching, easy understanding
and study purposes only. The concepts or ideas do
not belong to the undersigned.
 These slides are meant as a guide and revision notes
only and are not sufficient.
 Therefore, Reading from Books is a MUST
- Thank you -
 Prof. Pintoo Shome