PROCESS DESIGN

How to “Make”?

Text Chapter 6 (partly)

Sample Processes ..
 THE MEANING OF ‘PROCESS’
• A broader (hybrid) interpretation comprising
physical, functional, logical .. processes

• “ A collection of (linked) activities, with

equipment, methods and people used together to
convert the inputs to the products/ service
outputs required”.

• Often run across multiple work-areas/

departments/ other organisational entities
BALANCING PROCESS PERSPECTIVES

• Technical (Specialist’s) Perspectives

– Mechanics/ Transformations

• (Operations) Managerial Perspectives

– Economics
– Flow and Capacity
– Yield and Quality
– Uncertainties
– Pre-requisites and Constraints
PROCESS CHOICE

Text Chapter 6 contd.

 IN PERSPECTIVE
“Without manufacturing, one day we’ll all be
selling hamburgers to each other”
– David Glass, Wal-Mart CEO 1988-2000
 RANGE OF FULFILMENT CHOICES

–?
• Make to Order
–?
• Make to Stock
RANGE OF TECHNOLOGY CHOICES

• Manual • General Purpose

• Mechanized • Special Purpose

• Automated
– Fixed/ Hard automation
– Flexible/ Programmable
automation
 On Technology & Automation
"Automate, Emigrate, Or Evaporate."
– Common slogan in US business

"Technology is dominated by two types of people:

Those who understand what they don't manage, and
Those who manage what they don't understand."
– Putt's Law
 GENERIC PROCESS TYPES
• Job Shop (Jumbled Flow):
For making a wide variety of products, each
requiring varying processing, in low volumes

• Batch Production (Disconnected Flow):

A process structure for producing a moderate
variety of products, with somewhat similar
processing, in medium volumes (batches)
•

• Refer Table 6.1 in text

 … Generic Process Types
• Production Line (Connected Flow):
For making identical products using dedicated
workstations at a controlled flow rate

• Continuous Flow:
An often automated process structure that
converts raw materials into finished
undifferentiated products with continuous
processing and movement
The Product Process Matrix
 THE PRODUCT PROCESS MATRIX

• Authored by Hayes & Wheelwright (HBS) to

help matching the process type with the
product-market characteristics

• “Just as the product and market pass through a

series of major stages, so does/ should the
process used in the manufacture of the product”

• Refer Figure 6.2 in text (not quite identical)

 Few High
The Product Low Multiple Major Volume, Refer
Process Figure 6.2
Volume, Products, Products, High
Matrix
One of a Low Higher Standard-
Kind Volume Volume ization
I. Custom Machinery Flexibility (High)
(Special furniture) Inefficient Unit Cost (High)
Job
Shop
Discussion
II. Medium Issues:
Batch Equipment/ Choice of
Processed foods position;
III. (Cookies) Dynamics of
Automobile/ movement;
Assembly
Sandwich Assembly Hybrid
Line (Ford, Burger King) approaches
IV.
Sugar/ Oil
Continuous Wasteful Refinery (IFFCO) Flexibility (Low)
Flow Unit Cost (Low)
Snapshots from Dell
 Meanwhile, Craft Production Lives on ..
• Aston Martin has made about 80,000 cars over
the past 100-odd years.
• They average just a few custom automobiles per
day, with total build time 200 hours across steps.
• Skilled panel beaters make the aluminum body
panels by pounding sheets of aluminum with
wooden mallets.
• “Lord of Battles”, Dehradun, supplies
armour and weapons for some of the
world’s most popular films and TV shows,
including Game of Thrones, Hobbit,
Assassin’s Creed etc.
• “ .. All articles are hand-made—just as
they used to be in medieval times. This
lends an air of authenticity .. lacking in
machine-made replicas.” – Capt. Saurabh
Mittal
• Similar: Windlass Steelcraft, Dehradun
PRODUCT/ PROCESS DECISIONS

Business
Environment

Evaluation
Resource & Selection &
- Technical
Technology Downstream
- Economic
Base Decisions
- Financial

Costs &
Financial
Scenarios
 Comparing Processes using Basic
Economic Analysis

Refer Cost-Volume Analysis in Capacity Chapter

Ch. 5 (p.206-209)
 Process Economic Analysis Data
Buy Manual Semi-Auto High-Auto

Fixed cost 0 25 50 100

(‘000)

Operating 250 150 100 50

cost per unit

Total Cost = Fixed Cost + Operating Cost per unit X Volume

Revenue per unit: 300
What would be the preferred process at different volumes?
 Process Economic Analysis
Comparing Processes using Break-Even Analysis
Buy
400000 Manual
350000
Semi-auto
Cost/Revenue

300000
250000 High-auto
200000 Revenue
150000
100000
50000
0
0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 00 00 00
1 2 3 4 5 6 7 8 9 10 11 12
Volume

Original Excel sheet also available in course folder