Heizer Omce ch07

Heizer, Render, Griffin
Operations Management
Canadian Edition
Slides adapted for Canada by Mats Gerschman
Chapter 7: Process Strategy and

Sustainability
Copyright © 2014 Pearson Canada Inc. 7-1

Outline
 Global Company Profile: Harley-
Davidson
 Four Process Strategies
 Process Analysis and Design
 Special Consideration for Service
Process Design
 Selection of Equipment and
Technology
 Production Technology

Outline – Continued
 Technology in Services
 Process Redesign
 Sustainability

Learning Objectives
When you complete this chapter you
should be able to:
1. Describe four production processes
2. Compute crossover points for different
processes
3. Use the tools of process analysis
4. Describe customer interaction in
process design
5. Identify recent advances in production
technology
6. Discuss the 4 Rs of sustainability
Harley-Davidson
Repetitive manufacturing works
 The leading U.S. motorcycle company
 Emphasizes quality and lean
manufacturing
 Materials as Needed (MAN) system
 Many variations possible
 Tightly scheduled repetitive production
line

Process Flow Diagram
Frame tube Frame-building Frame Hot-paint
bending work cells machining frame painting
THE ASSEMBLY LINE
TESTING Engines and
Incoming parts transmissions
28 tests
From Milwaukee
on a JIT arrival
Air cleaners Oil tank work cell schedule
Fluids and mufflers Shocks and forks
Fuel tank work cell Handlebars
Wheel work cell Fender work cell

Roller testing
Crating

Process Strategies
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

Process, Volume, and Variety
Figure 7.1

Process Strategies
 How to produce a product or
provide a service that
 Meets or exceeds customer
requirements
 Meets cost and managerial goals
 Has long-term effects on
 Efficiency and production flexibility
 Costs and quality

Process Strategies
Four basic strategies
1. Process focus
2. Repetitive focus
3. Product focus
4. Mass customization
Within these basic strategies there are

many ways they may be implemented
Copyright © 2014 Pearson Canada Inc. 7 - 10

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
Process Focus
QuickTime™ and a
decompressor
are needed to see this picture.
Figure 7.2(a)

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

Repetitive Focus
QuickTime™ and a
decompressor
Figure 7.2(b)

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 labour

Product Focus
QuickTime™ and a
decompressor
Figure 7.2(c)

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 efficiency
of a product focus

Mass Customization
Table 7.1

Mass Customization
QuickTime™ and a
decompressor
Figure 7.2(d)

Mass Customization
Figure 7.3

Mass Customization
 Imaginative and fast product

design
 Rapid process design
 Tightly controlled inventory
management
 Tight schedules
 Responsive supply chain partners

Comparison of Processes
Mass
Process Focus Repetitive Product Focus Customization
(low-volume, Focus (high-volume, (high-volume,
high-variety) (modular) low-variety) high-variety)
1. Small 1. Long runs, 1. Large 1. Large quantity

quantity and usually a quantity and and large
large variety standardized small variety variety of
of products product with of products products are
are produced options, are produced
produced produced
from
modules
2. Equipment 2. Special 2. Equipment 2. Rapid

used is equipment used is changeover on
general aids in use of special flexible
purpose an assembly purpose equipment
line
Copyright © 2014 Pearson Canada Inc.

Table 7.2 7 - 22
Mass
3. Operators 3. Employees 3. Operators 3. Flexible

are broadly are modestly are less operators are
skilled trained broadly trained for the
skilled necessary
customization
4. There are 4. Repetitive 4. Work orders 4. Custom

many job operations and job orders require
instructions reduce instructions many job
because training and are few instructions
each job changes in because they
changes job are
instructions standardized

Table 7.2 7 - 23
Mass
5. Raw-material 5. JIT 5. Raw material 5. Raw

inventories procurement inventories material
high relative techniques are low inventories
to the value are used relative to the are low
of the value of the relative to
product product the value
of the
product
6. Work-in- 6. JIT inventory 6. Work-in- 6. Work-in-

process is techniques process process
high are used inventory is inventory
compared to low driven down
output compared to by JIT,
output kanban, lean
production

Table 7.2 7 - 24
Mass
7. Units move 7. Assembly is 7. Swift 7. Goods move

slowly measured in movement of swiftly
through the hours and units through through the
facility days the facility is facility
typical
8. Finished 8. Finished 8. Finished 8. Finished

goods are goods made goods are goods are
usually made to frequent usually made often build-
to order and forecast to forecast to-order
not stored and stored (BTO)

Table 7.2 7 - 25
Mass
9. Scheduling 9. Scheduling 9. Scheduling 9. Sophisticated

is complex, is based on is relatively scheduling is
concerned building simple, required to
with trade- various concerned accommodate
offs between models from with custom orders
inventory, a variety of establishing
capacity, and modules to output rate
customer forecasts sufficient to
service meet
forecasts
10. Fixed costs 10. Fixed costs 10. Fixed costs 10. Fixed costs
tend to be dependent tend to be tend to be
low and on flexibility high and high, variable
variable of the variable costs must be
costs high facility costs low low

Table 7.2 7 - 26
Crossover Charts
Variable
costs
Variable Variable
$ costs $ costs $
Fixed costs Fixed costs
Fixed costs
Low volume, high variety Repetitive High volume, low variety
Process A Process B Process C
400 000
300 000
200 000
Fixed cost Fixed cost Fixed cost
Process A Process B Process C
Figure 7.4 (2,857) V1 V2 (6,666) Volume
Focused Processes
 Focus brings efficiency
 Focus on depth of product line
rather than breadth
 Focus can be
 Customers
 Products
 Service
 Technology

Changing Processes
 Difficult and expensive

 May mean starting over
 Process strategy determines
transformation strategy for an
extended period
 Important to get it right

Process Analysis and Design
 Is the process designed to achieve a

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

 Flow Charts - Shows the movement of

materials
 Time-Function Mapping - Shows flows and
time frame

“Baseline” Time-Function Map
Order Receive
Customer product product
Process
Sales order
Order
Production Wait
control
Product
Order
Plant A Print
Product
WIP
Warehouse Wait Wait Wait
Product
WIP
WIP
WIP
Plant B Extrude
Transport Move Move
12 days 13 days 1 day 4 days 1 day 10 days 1 day 9 days 1 day

Figure 7.5
52 days
“Target” Time-Function Map
Order Receive
Customer product product
Process
Sales order
Product
Order
Production
control Wait
Order
WIP
Plant Print Extrude
Product
Warehouse Wait
Product
Transport Move
1 day 2 days 1 day 1 day 1 day

6 days
Figure 7.5

 Flow Charts - 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
Value-Stream Mapping
Figure 7.6
Process Chart
Figure 7.7

Service Blueprinting
 Focuses on the customer and

provider interaction
 Defines three levels of interaction
 Each level has different
management issues
 Identifies potential failure points

Service Blueprint
Figure 7.8

Process Analysis Tools
 Flowcharts provide a view of the
big picture
 Time-function mapping adds
rigour and a time element
 Value-stream analysis extends to
customers and suppliers
 Process charts show detail
 Service blueprint focuses on
customer interaction
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
Figure 7.9
Mass Service and Professional Service

 Labour involvement is high
 Selection and training highly
important
 Focus on human resources
 Personalized services

Service Factory and Service Shop

 Automation of standardized
services
 Low labour intensity responds well
to process technology and
scheduling
 Tight control required to maintain
standards

Improving Service
Productivity
Strategy Technique Example
Separation Structure service so Bank customers go to
customers must go a manager to open a
where the service is new account, to loan
offered officers for loans, and
to tellers for deposits
Self-service Self-service so Supermarkets and
customers examine, department stores
compare, and Internet ordering
evaluate at their own
pace
Table 7.3
Improving Service
Productivity
Postponement Customizing at Customizing vans at
delivery delivery rather than at
production
Focus Restricting the Limited-menu
offerings restaurant
Modules Modular selection of Investment and
service insurance selection
Modular production Prepackaged food
modules in
restaurants
Table 7.3
Improving Service
Productivity
Automation Separating services Automatic teller
that may lend machines
themselves to some
type of automation
Scheduling Precise personnel Scheduling ticket
scheduling counter personnel at
15-minute intervals at
airlines
Training Clarifying the service Investment counsellor,
options funeral directors
Explaining how to After-sale maintenance
avoid problems personnel
Table 7.3
Improving Service Processes
 Layout
 Product exposure, customer
education, product enhancement
 Human Resources
 Recruiting and training
 Impact of flexibility

Equipment and Technology
 Often complex decisions

 Possible competitive advantage
 Flexibility
 Stable processes
 May allow enlarging the scope of
the processes

Production Technology
 Machine technology
 Automatic identification systems (AISs) and RFID
 Process control
 Vision system
 Robots
 Automated storage and retrieval systems
(ASRSs)
 Automated guided vehicles (AGVs)
 Flexible manufacturing systems (FMSs)
 Computer-integrated manufacturing (CIM)

Machine Technology
 Increased precision
 Increased productivity
 Increased flexibility
 Improved environmental impact
 Reduced changeover time
 Decreased size
 Reduced power requirements

Automatic Identification
Systems (AISs)
 Improved data acquisition
 Reduced data entry errors
 Increased speed
 Increased scope of process
automation
Example – Bar codes and RFID

Process Control
 Real-time monitoring and control of
processes
 Sensors collect data
 Devices read data on periodic basis
 Measurements translated into digital
signals then sent to a computer
 Computer programs analyze the data
 Resulting output may take numerous
forms

Vision Systems
 Particular aid to inspection
 Consistently accurate
 Never bored
 Modest cost
 Superior to individuals performing
the same tasks

Robots
 Perform monotonous or dangerous
tasks
 Perform tasks requiring significant
strength or endurance
 Generally enhanced consistency
and accuracy

Automated Storage and
Retrieval Systems (ASRSs)
 Automated placement and

withdrawal of parts and products
 Reduced errors and labour
 Particularly useful in inventory and
test areas of manufacturing firms

Automated Guided Vehicle
(AGVs)
 Electronically guided and
controlled carts
 Used for movement of products
and/or individuals

Flexible Manufacturing
Systems (FMSs)
 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
 Stringent communication requirement
between components
Computer-Integrated
Manufacturing (CIM)
 Extension of flexible manufacturing
systems
 Backwards to engineering and inventory
control
 Forward into warehousing and shipping
 Can also include financial and customer
service areas
 Reducing the distinction between low-
volume/high-variety, and high-
volume/low-variety production
Computer-Integrated Manufacturing (CIM)
Figure 7.10

Technology in Services
Copyright © 2014 Pearson Canada Inc. Table 7.4 7 - 60

Process Redesign
 Rethink business processes to
dramatically improve performance
 Reevaluate purpose of process
 Question both purpose and underlying
assumptions
 Reexamine basic process and its
objectives
 Focus on activities that cross functional
lines
 Any process is a candidate for redesign
Sustainability
 Sustainability in production
processes
1. Resources
2. Recycle
3. Regulations
4. Reputation

Sustainability
 Resources
 Operations is primary user
 Reducing use is win-win
 Recycle
 Burn, bury, or reuse waste
 Recycling begins at design

Sustainability
 Regulations
 Laws affect transportation, waste,
and noise
 Increasing regulatory pressure
 Reputation
 Leadership may be rewarded
 Bad reputation can have negative
consequences

Summary
 Process strategy is a competitive
weapon
 Production processes are selected to
meet product and volume requirements
 Necessary quality, flexibility, and cost
structure has to be matched with
output requirements
 Employee empowerment helps the
design of equipment and processes
 Lean production techniques used

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Heizer, Render, Griffin

Chapter 7: Process Strategy and

Copyright © 2014 Pearson Canada Inc. 7-1

Copyright © 2014 Pearson Canada Inc. 7-2

Copyright © 2014 Pearson Canada Inc. 7-3

Copyright © 2014 Pearson Canada Inc. 7-5

Fluids and mufflers Shocks and forks

Fuel tank work cell Handlebars

Wheel work cell Fender work cell

Copyright © 2014 Pearson Canada Inc. 7-6

The objective of a process strategy is

Copyright © 2014 Pearson Canada Inc. 7-7

Copyright © 2014 Pearson Canada Inc. 7-8

Copyright © 2014 Pearson Canada Inc. 7-9

Within these basic strategies there are

Copyright © 2014 Pearson Canada Inc. 7 - 10

Copyright © 2014 Pearson Canada Inc. 7 - 12

Copyright © 2014 Pearson Canada Inc. 7 - 13

Copyright © 2014 Pearson Canada Inc. 7 - 14

Copyright © 2014 Pearson Canada Inc. 7 - 15

Copyright © 2014 Pearson Canada Inc. 7 - 16

Copyright © 2014 Pearson Canada Inc. 7 - 17

Copyright © 2014 Pearson Canada Inc. 7 - 18

Copyright © 2014 Pearson Canada Inc. 7 - 19

Copyright © 2014 Pearson Canada Inc. 7 - 20

 Imaginative and fast product

Copyright © 2014 Pearson Canada Inc. 7 - 21

1. Small 1. Long runs, 1. Large 1. Large quantity

2. Equipment 2. Special 2. Equipment 2. Rapid

Copyright © 2014 Pearson Canada Inc.

3. Operators 3. Employees 3. Operators 3. Flexible

4. There are 4. Repetitive 4. Work orders 4. Custom

Copyright © 2014 Pearson Canada Inc.

5. Raw-material 5. JIT 5. Raw material 5. Raw

6. Work-in- 6. JIT inventory 6. Work-in- 6. Work-in-

Copyright © 2014 Pearson Canada Inc.

7. Units move 7. Assembly is 7. Swift 7. Goods move

8. Finished 8. Finished 8. Finished 8. Finished

Copyright © 2014 Pearson Canada Inc.

9. Scheduling 9. Scheduling 9. Scheduling 9. Sophisticated

Copyright © 2014 Pearson Canada Inc.

Copyright © 2014 Pearson Canada Inc. 7 - 28

 Difficult and expensive

Copyright © 2014 Pearson Canada Inc. 7 - 29

 Is the process designed to achieve a

Copyright © 2014 Pearson Canada Inc. 7 - 30

 Flow Charts - Shows the movement of

Copyright © 2014 Pearson Canada Inc. 7 - 31

Warehouse Wait Wait Wait

Transport Move Move

12 days 13 days 1 day 4 days 1 day 10 days 1 day 9 days 1 day

1 day 2 days 1 day 1 day 1 day

Copyright © 2014 Pearson Canada Inc. 7 - 33

Copyright © 2014 Pearson Canada Inc. 7 - 36

 Focuses on the customer and

Copyright © 2014 Pearson Canada Inc. 7 - 37

Copyright © 2014 Pearson Canada Inc. 7 - 38

Copyright © 2014 Pearson Canada Inc. 7 - 40

Mass Service and Professional Service

Copyright © 2014 Pearson Canada Inc. 7 - 42

Service Factory and Service Shop

Copyright © 2014 Pearson Canada Inc. 7 - 43

Copyright © 2014 Pearson Canada Inc. 7 - 47