opsm 301 operations management class 3: process selection koç university zeynep aksin...

OPSM 301 Operations Management

Class 3:

Process selection

Koç University

Zeynep Aksinzaksin@ku.edu.tr

Process Selection Video

Back to Shouldice wrap-upfrom last class

Classification of Processesby process architecture

Project

Job Shop

Batch

Line flow

Continuous Flow

Job Shop

Process-focused

Flow Shop

Product-focused

ProcessFlexibility

Jumbled Flow.Process segmentsloosely linked.

Disconnected LineFlow/Jumbled Flowbut a dominant flowexists.

JOB SHOP

(Commercial Printer,Architecture firm)

BATCH

(Heavy Equipment,Auto Repari)

LINE FLOWS

(Auto Assembly,Car lubrication shop)

CONTINUOUSFLOW

(Oil Refinery)

ProductVariety

LowLow Standardization

One of a kindLow Volume

Many ProductsFew Major Products

High volume

High StandardizationCommodity Products

Connected LineFlow (assembly line)

Continuous, automated,rigid line flow.Process segments tightlylinked.

Oppor

tunity

Costs

Out-of

-poc

ket

Costs

High

Low

High

Matching Process Choice with Strategy:Product-Process Matrix

Organization of Production Processes

Project: the product remains in a fixed location– Manufacturing equipment is moved to the product

Job shop (Workcenter): similar equipment or functions are grouped together

Assembly line: work processes are arranged according to the progressive steps by which the product is made

Continuous process: assembly line, only the flow is continuous such as with liquids

Project LayoutOne of a kind products are produced

The Job Shop Process

Process Layout One of a Kind Build

– (To Customer Order)

Absence of Rigid Flow Pattern Usually High Product Mix

The Job shopsimilar equipment or functions are grouped together

• High variety, low volume productionHigh variety, low volume production

Routing matrix based upon flow of partsRouting matrix based upon flow of parts

Process Layout

Lathe#Lathe#11

Lathe#Lathe#22

Lathe#Lathe#33

LatheLathe#4#4

Product #1735B: Start of Production

Drill Drill Press Press #1#1

Drill Drill Press Press #2#2

Paint Paint MachineMachine

Packaging Packaging Machine #1Machine #1

Packaging Packaging Machine #2Machine #2

Finish

Production

11

Job-Shop Process Examples (Also called process focused)

Bank

© 1995 Corel Corp.

Machine Shop© 1995 Corel Corp.

Hospital© 1995 Corel Corp.

Process Focused Strategy - Pros & Cons

Advantages– Greater product flexibility– More general purpose equipment– Lower initial capital investment

Disadvantages– High variable costs– More highly trained personnel– More difficult production planning & control– Low equipment utilization (5% to 25%)

The Flow Line Process

Product Layout Discrete Parts Rigid Flow Pattern Product Mix of Standard Products

Product Layout

Product #1735B

LatheLatheStart

Production

Drill Drill Press #2Press #2 Paint MachinePaint Machine

Drill Drill Press #1Press #1

Packaging Machine #2Packaging Machine #2

Finish Production

Product-Focused Strategy Pros & Cons

Advantages– Lower variable cost per unit– Lower but more specialized labor skills– Easier production planning and control– Higher equipment utilization (70% to 90%)

Disadvantages– Lower product flexibility– More specialized equipment– Usually higher capital investment

Positioning Inventory in the Supply Chain

SU

PP

LIE

R

CL

IEN

T

Make-to-Stock

Assemble-to-Order

Make-to-Order

Engineer-to-Order

Raw Material Components Semifinished Finished

Forecast Order

Production Processes Terms

Lead time: the time needed to respond to a customer order

Customer order decoupling point: where inventory is positioned to allow entities in the supply chain to operate independently

Types of Firms

Make-to-stock firms: Firms that serve customers from finished goods inventory

Assemble-to-order firms: firms that combine a number of preassembled modules to meet a customer’s specifications

Make-to-order firms: that make the customer’s product from raw materials, parts, and components

Engineer-to-order firm: firm that will work with the customer to design and then make the product

Make to Stock

Examples of products– Televisions– Clothing– Packaged food products

Essential issue in satisfying customers is to balance the level of inventory against the level of customer service – Easy with unlimited inventory but inventory costs money– Trade-off between the costs of inventory and level of

customer service must be made

Assemble-to-Order

A primary task is to define a customer’s order in terms of alternative components since these are carried in inventory– An example is the way Dell Computer makes their desktop

computers

One capability required is a design that enables as much flexibility as possible in combining components

There are significant advantages from moving the customer order decoupling point from finished goods to components

Make-to-Order and Engineer-to-Order

Boeing’s process for making commercial aircraft is an example

Customer order decoupling point could be in either raw materials at the manufacturing site or the supplier inventory

Depending on how similar the products are it might not even be possible to pre-order parts

Assignment 1 from Universal Pulp and Paper case-individual assignment

Read the Universal Pulp and Paper (UPP) case from the course pack (available at the photocopy center)

What are the main products of UPP? Identify the four product attributes for each product

type. Explain each attribute with facts from the case Which process type is appropriate for each product

type? Support your argument with facts from the case and process attributes you need for each product type.