irwin/mcgraw-hill the mcgraw-hill companies, inc. 2004 1 process selection chapter 4

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PROCESS SELECTIONPROCESS SELECTION

Chapter 4Chapter 4

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OutlineOutline

Process SelectionProcess Selection

Service Process DesignService Process Design

Choice of TechnologyChoice of Technology

Process-Flow AnalysisProcess-Flow Analysis

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Process SelectionProcess Selection

Product-Flow CharacteristicsProduct-Flow Characteristics

Classification by Type of Customer OrderClassification by Type of Customer Order

Process Selection DecisionsProcess Selection Decisions

Product-Process StrategyProduct-Process Strategy

Mass-customizationMass-customization

Cross Functional Decision MakingCross Functional Decision Making

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Product-Flow CharacteristicsProduct-Flow Characteristics

Types of Product FlowTypes of Product Flow– Line FlowLine Flow– Batch FlowBatch Flow– Project FlowProject Flow

Characteristics of Flows (see Table 4.1)Characteristics of Flows (see Table 4.1)

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Line FlowLine Flow

WS 1 WS 2 WS 3

WS Task or work station

Product flow

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Batch FlowBatch Flow

WS 1 WS 3 WS 5

WS Task or work station Product flows

WS 2 WS 4

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Project FlowProject Flow

Start

1 3

Task Task or activity Precedence relationship

2 4

End

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Classification by Type of Classification by Type of Customer OrderCustomer Order

Make to Stock (MTS)Make to Stock (MTS)

Make to Order (MTO)Make to Order (MTO)

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Make to Stock (MTS)Make to Stock (MTS)

AdvantagesAdvantages

DisadvantageDisadvantage

Key performance measuresKey performance measures

Information flow (see Figure 4.4)Information flow (see Figure 4.4)

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Make to Order (MTO)Make to Order (MTO)

AdvantagesAdvantages

DisadvantageDisadvantage

Key performance measuresKey performance measures

Information flow (see Figure 4.4)Information flow (see Figure 4.4)

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MTS and MTO ComparisonMTS and MTO Comparison

Characteristics Make-to-Stock Make-to-OrderProduct Producer-specified

Low varietyInexpensive

Customer-specifiedHigh varietyExpensive

Objectives Balance inventory,capacity, and service

Manage delivery leadtimes and capacity

Main operationsproblems

ForecastingPlanning productionControl of invenntory

Delivery promisesDelivery time

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Information-flow ComparisonMake-to-Stock (Figure 4-4)

ForecastedOrders

Sales(Shipm ents)

AccountsReceivable

GeneralLedger

Cost ofSales

Labor

Master Schedule

Bill of Materials

ProductionSchedule

Purchasing

InventoryControl

AccountsPayable

Production

M AKE-TO -STO CK

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Information-flow ComparisonMake-to-Order (Figure 4-4)

ActualO rders

Sales(Shipm ents)

AccountsReceiv able

GeneralLedger

Cost ofSales

Labor

Master Schedule

Bill of Materials

ProductionSchedule

Purchasing

AccountsPayable

Production

M AKE-TO -O RDER

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Process Selection DecisionsProcess Selection Decisions

Process characteristics matrixProcess characteristics matrix

Factors affecting process choiceFactors affecting process choice

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Process Characteristics MatrixProcess Characteristics Matrix (Table 4.3)(Table 4.3)

Characteristics Make-to-StockMake-to-OrderAssemble-to-Order

Line Flow

Oil refineryFlour millingCanneryCafeteria

Automobile assemblylineTelephone companyElectric utility

Batch Flow

Machine shopFast foodGlassware factoryFurniture

Machine shopRestaurantHospitalCustom jewelry

Project

Speculation homesCommercial painting

BuildingsMoviesShipsPortraits

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Factors Affecting Process Factors Affecting Process ChoiceChoice

Market conditions and competitionMarket conditions and competition

Capital requirementsCapital requirements

Labor supply and costLabor supply and cost

Management skillsManagement skills

Materials supply and costMaterials supply and cost

State of technologyState of technology

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Product-Process StrategyProduct-Process Strategy

Product-Process Matrix (see Figure 4-5)Product-Process Matrix (see Figure 4-5)

Product Life Cycle (PLC) stagesProduct Life Cycle (PLC) stages

Process Life Cycle stagesProcess Life Cycle stages

Modified Product-Process Matrix (see Modified Product-Process Matrix (see Figure 4-6)Figure 4-6)

Cross functional decision making and Cross functional decision making and product-process strategyproduct-process strategy

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Product Life Cycle StagesProduct Life Cycle Stages

Low volume-low standardization, one of a Low volume-low standardization, one of a kindkind

Multiple products, low volumeMultiple products, low volumeFew major products, higher volumeFew major products, higher volumeHigh volume-high standardization, High volume-high standardization,

commodity productcommodity product

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Process Life Cycle StagesProcess Life Cycle Stages

Jumbled flow (job shop)Jumbled flow (job shop)Disconnected line flow (batch)Disconnected line flow (batch)Connected line flow (assembly line)Connected line flow (assembly line)Continuous flowContinuous flow

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PRODUCT-PROCESS MATRIX (Figure 4.5)

ILow volume-low standardization, oneof a kind

CommercialPrinter

HeavyEquipment

Automobileassembly

SugarRefinery

IIMultiple products,low volume

IIIFew major productshigher volume

IIIHigh volume-highstandardization,commodity products

PRODUCT STRUCTURE (Product Life Cycle)P

RO

CES

S S

TR

UC

TU

RE (

Pro

cess L

ife C

ycle

)

IJumbled flow(job shop)

IIDisconnectedline flow(batch)

IIIConnectedline flow(assemblyline)

IVContinuousflow NONE

NONE

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ILow volume-low standardization, one of a kind

IIMultiple products,low volume

IIIFew major productshigher volume

IIIHigh volume-highstandardization,commodity products

MODIFIED PRODUCT-PROCESS MATRIX (Figure 4.6)PRODUCT STRUCTURE (Product Life Cycle)

PR

OC

ES

S S

TR

UC

TU

RE (

Pro

cess L

ife C

ycle

)

IJumbled flow(job shop)

IIDisconnectedline flow(batch)

IIIConnectedline flow(assemblyline)

IVContinuousflow NONE

NONECommercial

printer

HeavyEquipment

Automobileassembly

SugarRefinery

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Mass CustomizationMass Customization

DefinitionDefinition

Economies of scaleEconomies of scale

Economies of scopeEconomies of scope

Mass customization of serviceMass customization of service

Modular productionModular production

PostponementPostponement