Process Design and Analysis

Repetitive Manufacturing Works at

Harley Davidson

• Since Harley-Davidson’s founding in Milwaukee in 1903, it has competed with hundreds

of manufacturers, foreign and domestic. The competition has been tough. Recent
competitive battles have been with the Japanese, and earlier battles were with the German,
English, and Italian manufacturers. But after over 110 years, Harley is the only major U.S.
motorcycle company. The company now has five U.S. facilities and an assembly plant in
Brazil. The Sportster powertrain is manufactured in Wauwatosa, Wisconsin, and the
sidecars, saddlebags, windshields, and other specialty items are produced in Tomahawk,
Wisconsin. The Touring and Softail bikes are assembled in York, Pennsylvania, while the
Sportster models, Dyna models, and VRSC models of motorcycles are produced in Kansas
City, Missouri.
• As a part of management’s lean manufacturing effort, Harley groups production of parts
that require similar processes together. The result is work cells. Using the latest technology,
work cells perform in one location all the operations necessary for production of a specific
module.
 Wheel assembly modules are prepared in a work cell for JIT delivery For manufacturers like Harley-Davidson, which produces a large number
to the assembly line. of end products from a relatively small number of options, modular bills
of material provide an effective solution.

Engines are assembled in Memomonee Falls, Wisconsin, and placed in their own
protective containers for shipment to the York facility. Upon arrival in York, engines are It all comes together on the line. Any employee who spots a problem has the authority to stop the line until
placed on an overhead conveyor for movement directly to the assembly line. the problem in corrected. The multicolored “andon” light above the line signals the severity of the problem.
• Each day the York facility produces up to 600 heavy-duty factory-custom
motorcycles. Bikes are assembled with different engine displacements,
multiple wheel options, colors, and accessories. The result is a huge
number of variations in the motorcycles available, which allows customers
to individualize their purchase. (See www.Harley-Davidson.com for an
example of modular customization.)
• The Harley-Davidson production system works because high-quality
modules are brought together on a tightly scheduled repetitive production
line.
Example: Flowcharts
▶ Paper-making process
Example: Flowcharts
▶ Bread-making process
 Four Processes Strategy
• A major decision for an operations manager is finding the best way to produce so
as not to waste our planet’s resources. Let’s look at ways to help managers design
Process strategy a process for achieving this goal.
An organization’s approach
to transforming resources • A process strategy is an organization’s approach to transforming resources into
into goods and services.
goods and services. The objective is to create a process that can produce offerings
that meet customer requirements within cost and other managerial constraints.
The process selected will have a long-term effect on efficiency and flexibility of
production, as well as on cost and quality of the goods produced.
• Virtually every good or service is made by using some variation of one of four
process strategies:

(1) process focus, (2) repetitive focus, (3) product focus, and (4) mass
customization.
 1. Process Focus

• The vast majority of global production is devoted to making

Process focus
low-volume, high-variety products in places called “job
A production facility organized
around processes to facilitate low-
shops.” Such facilities are organized around specific
volume, high-variety production.
activities or processes.
• In a factory, these processes might be departments devoted to
welding, grinding, and painting. In an office, the processes
might be accounts payable, sales, and payroll.
• In a restaurant, they might be bar, grill, and bakery. Such
facilities are process focused in terms of equipment, layout,
and supervision.
• They provide a high degree of product flexibility as products
move between the specialized processes. Each process is
designed to perform a variety of activities and handle
frequent changes. Consequently, they are also called
intermittent processes.
2. Repetitive Focus
•Repetitive processes, as we saw in the Global Company Profile on Harley-
Davidson, use modules. Modules are parts or components previously prepared,
often in a product-focused (continuous) process.
•The repetitive process is the classic assembly line. Widely used in the assembly
Modules
of virtually all automobiles and household appliances, it has more structure and Parts or components of
a product previously
consequently less flexibility than a process-focused facility. prepared, often in a
continuous process.
Repetitive process
•Fast-food firms are another example of a repetitive process using modules. This A product-oriented
production process
type of production allows more customizing than a product-focused facility; that uses modules.

modules (for example, meat, cheese, sauce, tomatoes, onions) are assembled to
get a quasi-custom product, a cheeseburger. In this manner, the firm obtains both
the economic advantages of the product-focused model (where many of the
modules are prepared) and the custom advantage of the low-volume, high-variety
model.
3. Product Focus

•High-volume, low-variety processes are product focused. The facilities are organized around
products. They are also called continuous processes because they have very long, continuous Product focus
A facility organized around
production runs. Products such as glass, paper, tin sheets, lightbulbs, beer, and potato chips are products; a product-
oriented, high-volume, low-
variety process.
made via a continuous process.
•Some products, such as lightbulbs, are discrete; others, such as rolls of paper, are made in a
continuous flow.
•An organization producing the same lightbulb or hot dog bun day after day can organize around
a product. Such an organization has an inherent ability to set standards and maintain a given
quality, as opposed to an organization that is producing unique products every day, such as a
print shop or general-purpose hospital.
•For example, Frito-Lay's family of products is also produced in a product-focused facility. At
Frito-Lay, corn, potatoes, water, and seasoning are the relatively few inputs, but outputs (like
Cheetos, Ruffles, Tostitos, and Fritos) vary in seasoning and packaging within the product
family.
•A product-focused facility produces high volume and low variety. The specialized nature of
the facility requires high fixed cost, but low variable costs reward high facility utilization.
4. Mass Customization

•Our increasingly wealthy and sophisticated world demands individualized goods and
services. A peek at the rich variety of goods and services that operations managers are called
on to supply is shown in Table.

Mass customization
Rapid, low-cost production
that caters to constantly
changing unique customer
desires.
• The explosion of variety has taken place in automobiles, movies, breakfast cereals, and thousands of
other areas.
• Mass customization is the rapid, low-cost production of goods and services that fulfill increasingly
unique customer desires. But mass customization is not just about variety; it is about making
precisely what the customer wants when the customer wants it economically.
• Mass customization brings us the variety of products traditionally provided by low-volume
manufacture (a process focus) at the cost of standardized high-volume (product-focused) production.
However, achieving mass customization is a challenge that requires sophisticated operational
capabilities. Building agile processes that rapidly and inexpensively produce custom products requires
a limited product line and modular design. The link between sales, design, production, supply chain,
and logistics must be tight.
• Dell Computer has demonstrated that the payoff for mass customization can be substantial. More
traditional manufacturers include Toyota, which recently announced delivery of custom-ordered cars in
5 days. Similarly, electronic controls allow designers in the textile industry to rapidly revamp their lines
and respond to changes.
• The service industry is also moving toward mass customization. For instance, not very many years ago,
most people had the same telephone service. Now, not only is the phone service full of options, from
caller ID to voice mail, but contemporary phones are hardly phones. They may also be part camera,
computer, game player, GPS, and Web browser.
 Making Mass Customization Work
Mass customization suggests a high-volume system in which products
are built-to-order. Build-to-order (BTO) means producing to customer Build-to-order (BTO)
Produce to customer
order rather than to a
orders, not forecasts. But high-volume build-to-order is difficult. Some forecast.

major challenges are:

• Product design must be imaginative. Successful build-to-order
designs include a limited product line and modules. Ping Inc., a
premier golf club manufacturer, uses different combinations of club Postponement
heads, grips, shafts, and angles to make 20,000 variations of its golf The delay of any modifications
or customization to a product
as long as possible in the
clubs. production process.

• Process design must be flexible and able to accommodate changes in

both design and technology. For instance, postponement allows for
customization late in the production process. Toyota installs unique
interior modules very late in production for its popular Scion, a
process also typical with customized vans.
• Inventory management requires tight control. To be successful with
build-to-order, a firm must avoid being stuck with unpopular or
obsolete components. With virtually no raw material, Dell puts custom
computers together in less than a day.
• Tight schedules that track orders and material from design through
delivery are another requirement of mass customization. Align
Technology, a well-known name in orthodontics, figured out how to
achieve competitive advantage by delivering custom-made clear plastic
aligners within 3 weeks of the first visit to the dentist’s office (see the
OM in Action box “Mass Customization for Straight Teeth”).
• Responsive partners in the supply chain can yield effective
collaboration. Forecasting, inventory management, and ordering for
JCPenney shirts are all handled for the retailer by its supplier in Hong
Kong.
Align Technology of Santa Clara, California, wants to straighten The clear aligners take the
your teeth with a clear plastic removable aligner. The place of the traditional “wire
company is a mass customizer for orthodontic treatments. and brackets.” Align calls the
Each patient is very custom, requiring a truly unique product; product “complex to make,
no two patients are alike. Based on dental impressions, X-rays, easy to use.” With good OM,
and photos taken at the dentist’s office and sent to Align mass customization works,
headquarters, the firm builds a precise 3-D computer model even for a very complex, very
and file of the patient’s mouth. This digitized file is then sent individualized product, such as
to Costa Rica, where technicians develop a comprehensive teeth aligners.
treatment plan, which is then returned to the dentist for
approval. After approval, data from the virtual models and
treatment plan are used to program 3-D printers to form
molds. The molds are then shipped to Juarez, Mexico, where a
series of customized teeth aligners—usually about 19 pairs— Sources: BusinessWeek (April 30, 2012); Laura Rock Kopezak and M. Eric
are made. The time required for this process: about 3 weeks Johnson, “Aligning the Supply Chain,” Case #6-0024, Dartmouth College,
from start to finish. 2006; and www.invisalign.com.
Mass customization begins with the order. And at
restaurants from California to Boston, the order now starts
with an iPad. Stacked Restaurants lets customers choose
ingredients for their sandwiches using an iPad on the table.
Diners also get a great photo of the menu item (which
stimulates sales), a list of ingredients and nutritional
information (a plus for those with allergies or watching
their diet), and an opportunity to build their own meal
(mass customization).
Some restaurants, in addition to having the enticing
photo of the meal, find that they can add a description
and photo of just what a medium-rare steak looks like.
They can further enrich the dining experience by adding a
“recipe” tab or “history" tab with descriptions of the
item’s origins and tradition. Steakhouses, a chain in San
Francisco, Atlanta, and Chicago, finds the tabs great for its
lengthy wine lists. Others program the system to
remember the guest’s meal preferences. And some
customers love the
ability to order immediately, scan
coupons, and swipe credit cards at the
table. The instantaneous placement of
the order to the kitchen is a significant
advantage for those restaurants
pursuing a response strategy.
Using iPads means developing a
new process. iPads are not cheap, but
they are accurate and
fast, with lots of options. Restaurants using the new process
find customer retention, frequency of visits, and average check
size all increasing.
Sources: New York Times (June 21, 2014) and USA Today (February 16, 2011) and
(July 25, 2012).
 Process Comparison
•The characteristics of the four processes may provide a strategic
advantage. For instance, unit costs will be less in the product
(continuous) or repetitive case when high volume (and high
utilization) exists.
•However, a low-volume differentiated product is likely to be
produced more economically under process focus. And mass
customization requires exceptional competence in product and process
design, scheduling, supply chain, and inventory management. Proper
evaluation and selection of process strategies are critical.
 Crossover Chart Example
The comparison of processes can be further enhanced by looking at the point where
the total cost of the process's changes.

▶ Evaluate three different accounting software products

▶ Calculate crossover points between software A and B and
between software B and C
DOLLARS REQUIRED PER
TOTAL FIXED COST ACCOUNTING REPORT
Software A $200,000 $60
Software B $300,000 $25
Software C $400,000 $10
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

ts
ts

s
s

co
co

sA
B
ss
$ e

es
ro c sts

oc
p co
t al sC

pr
To pro ce s
al
l
t Tota
To

400,000
300,000
200,000
Fixed cost Fixed cost Fixed cost
Process A Process B Process C

(2,857) V1 V2 (6,666) Volume

Continue…

 Software A is most economical from 0 to 2,857 reports

 Software B is most economical from 2,857 to

6,666 reports
 Process Analysis and Design
When analyzing and designing processes, we ask questions such as the following:

• Is the process designed to achieve competitive advantage in terms of differentiation,

response, or low cost

• Does the process eliminate steps that do not add value?

• Does the process maximize customer value as perceived by the customer?

• Will the process win orders?

The following tools help us understand the complexities of process design and redesign.
We now look at: flowcharts, time-function mapping, process charts, value-stream
mapping, and service blueprinting.
1. Flowchart

•The first tool is the flowchart, which is a

schematic or drawing of the movement of
material, product, or people. For instance, the
flowchart in the Global Company Profile for this
chapter shows the assembly processes for Harley-
Davidson. Such charts can help understanding,
analysis, and communication of a process.
2. Time-Function Mapping

•A second tool for process analysis and design is a

modified flowchart with time added on the horizontal axis.
Such charts are sometimes called time-function mapping,
or process mapping. With time-function mapping, nodes
indicate the activities, and the arrows indicate the flow
direction, with time on the horizontal axis. This type of
analysis allows users to identify and eliminate waste such
as extra steps, duplication, and delay.
Reduced time from 52 days to 6 days
3. Process Charts
•The third tool is the process chart. Process charts use symbols, time,
and distance to provide an objective and structured way to analyze
and record the activities that make up a process. They allow us to
focus on value-added activities.
For instance, the process chart shown in previous Figure,
which includes the present method of hamburger assembly
at a fast-food restaurant, includes a value-added line to
help us distinguish between value-added activities and
waste. Identifying all value-added operations (as opposed
to inspection, storage, delay, and transportation, which add
no value) allows us to determine the percent of value added
to total activities. We can see from the computation
(previous Figure) that the percentage of value added in this
case is 85.7%.
4. Value-Stream Mapping

•A variation of time-function mapping is value-stream

mapping (VSM); however, value-stream mapping takes an
expanded look at where value is added (and not added) in
the entire production process, including the supply chain.
As with time-function mapping, the idea is to start with the
customer and understand the production process, but
value-stream mapping extends the analysis back to
suppliers.
5. Service Blueprinting

•Products with a high service content may warrant

use of yet a fifth process technique. Service
blueprinting is a process analysis technique that
focuses on the customer and the provider’s
interaction with the customer.
 Personal Greeting Service Diagnosis Perform Service Friendly Close

Level Customer arrives for

service. Customer departs
#1
(3 min)

F
Determine Notify Customer pays bill.
specifics. (4 min)
customer
Warm greeting and (5 min)
obtain service No and recommend
request. an alternative F
(10 sec) provider.
Standard Can (7 min) F
Level request. service be
#2 (3 min) done and does
customer Notify customer
Direct customer to No the car is ready.
waiting room. approve?
(5 min) (3 min)

F F F F
Yes Yes
Perform required
Level work. F Prepare invoice.
#3 (varies) (3 min)
 Special Considerations for Service Process Design

• Interaction with the customer often

affects process performance adversely.
But a service, by its very nature,
implies that some interaction and
customization is needed. Recognizing
that the customer’s unique desires tend
to play havoc with a process, the more
the manager designs the process to
accommodate these special
requirements, the more effective and
efficient the process will be. The trick
is to find the right combination
Rochester Manufacturing Corporation (RMC) is considering
moving some of its production from traditional numerically
con- trolled machines to a flexible manufacturing system
(FMS). Its computer numerical control machines have been
operating in a high-variety, low-volume manner. Machine
utilization, as near as it can determine, is hovering around
10%. The machine tool sales people and a consulting firm
want to put the machines together in an FMS. They believe
that a $3 million expenditure on machinery and the transfer
machines will handle about 30% of RMC’s work. There will,
of course, be transition and startup costs in addition to this.
The firm has not yet entered all its parts into a
comprehensive group technology system, but believes that
the 30% is a good estimate of products suitable for the FMS.
This 30% should fit very nicely into a “family.” A reduction,
because of higher utilization, should take place in the
number of pieces of machinery. The firm should be able to
go from 15 to about 4 machines, and personnel should go
from 15 to perhaps as low as 3. Similarly, floor space
reduction will go from 20,000 square feet to about 6,000.
Throughput of orders should also improve with processing of
this family of parts in 1 to 2 days rather than 7 to 10.
Inventory reduction is estimated to yield a one-time
$750,000 savings, and annual labor savings should be in the
neighborhood of $300,000.
Although the projections all look very positive, an analysis
of the project’s return on investment showed it to be between
10% and 15% per year. The company has traditionally had an
expectation that projects should yield well over 15% and
have payback periods of substantially less than 5 years.
Discussion Questions
1. As a production manager for RMC, what do you
recommend? Why?
2. Prepare a case by a conservative plant manager for
maintaining the status quo until the returns are more
obvious.
3. Prepare the case for an optimistic sales manager that you
should move ahead with the FMS now.
1) An operations task performed at Hard Rock Café is:
A) borrowing funds to build a new restaurant.
B) advertising changes in the restaurant menu.
C) calculating restaurant profit and loss.
D) preparing employee schedules.
E) all of the above.
Answer: D

2) Which of the following would NOT be an operations function in a commercial bank?

A) auditing
B) teller scheduling
C) maintenance
D) collection
E) check clearing
Answer: A

3) Which of the following tasks within an airline company are related to operations?
A) crew scheduling
B) international monetary exchange
C) sales
D) advertising
E) accounts payable
Answer: A
4) An operations manager is NOT likely to be involved in:
A) the design of goods and services to satisfy customers' wants and needs.
B) the quality of goods and services to satisfy customers' wants and needs.
C) the identification of customers' wants and needs.
D) work scheduling to meet the due dates promised to customers.
E) maintenance schedules.
Answer: C

5) Which of the following is NOT a strategic operations management decision?

A) maintenance
B) price
C) layout design
D) quality
E) Inventory
Answer: B

6) A product-focused process is commonly used to produce:

A) high-volume, high-variety products.
B) low-volume, high-variety products.
C) high-volume, low-variety products.
D) low-variety products at either high- or low-volume.
E) high-volume products of either high- or low-variety.
Answer: C
7) Which one of the following products is most likely made in a job shop environment?
A) rolls of newsprint
B) custom furniture
C) television sets
D) cigarettes
E) canned vegetables
Answer: B

8) Which of the following products is likely to be assembled on a repetitive process line?

A) automobiles
B) custom personal computers
C) custom cakes
D) steel
E) beer
Answer: A

9) Fortis Hospital generally uses which focus?

A) process
B) repetitive
C) product
D) mass customization
E) A and D
Answer: A