Operations

Management

Process Strategies and

Layout Strategies
Chapter 5
Prepared by : Shatina Saad OPM 533
5-1
 Outline
♦ FOUR PROCESS STRATEGIES
♦ PROCESS ANALYSIS AND DESIGN
♦ SERVICE PROCESS DESIGN
♦ SELECTION OF EQUIPMENT AND
TECHNOLOGY
♦ PRODUCTION TECHNOLOGY
♦ TECHNOLOGY IN SERVICES
♦ ENVIRONMENTALLY FRIENDLY
PROCESSES
♦Prepared
PROCESSby : Shatina Saad
REENGINEERING OPM 533
5-2
 Learning Objectives
When you complete this chapter, you
should be able to :
Identify or Define:
♦ Process focus
♦ Repetitive focus
♦ Product focus
♦ Process reengineering
♦ Service process issues
♦ Environmental issues
Describe or Explain:
♦ Process analysis
♦ Service design
♦ Green manufacturing
♦ Production technology
Prepared by : Shatina Saad OPM 533
5-3
 Fit of Process, Volume,
and Variety Low-Volume Repetitive High-Volume
(Intermittent) Process (Continuous)
(Modular)

Process focus Mass

High Variety projects, job Customization
One or few units shops,(machine,
per run, high (difficult to
print, carpentry) achieve, but
variety huge rewards)
(allows Standard
Changes in modules Register Dell Computer
customization) Repetitive Co.
Modest runs,
standardized (autos, motorcycles)
modules Harley Davidson
Changes in Poor Product focus
attributes (such strategy (commercial
as grade,
baked goods,
quality, size,
thickness, etc.)
steel, glass)
Long runs only Nucor Steel
Prepared by : Shatina Saad OPM 533
5-4
 Process Strategies
♦ Involve determining how to produce
a product or provide a service
♦ Objective
♦ Meet or exceed customer requirements
♦ Meet cost & managerial goals
♦ Has long-run effects
♦ Product & volume flexibility
♦ Costs & quality

Prepared by : Shatina Saad OPM 533

5-5
 Types of Process
Strategies
♦ Process strategies that follow a
continuum
♦ Within a given facility, several
strategies may be used
♦ Process-
These strategies are often classified
Repetitive- as:
Product-
Focused Focused Focused

Continuu
Prepared by : Shatina Saad
m
5-6 OPM 533
 Process-Focused
Strategy
♦ Facilities are organized by
process
♦ Similar processes are together
♦ Example: All drill presses are together
♦ Low volume, high variety
products
Product
♦ ‘Jumbled’ flow
♦ Other names
Operati A
on 1 2 3
♦ Intermittent process
♦ Job shop
Product
Prepared by : Shatina Saad
B OPM 533
5-7
 Process Focus

Prepared by : Shatina Saad OPM 533

5-8
 Process Focused
Strategy -
Pros
♦ Advantages
& Cons
− 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%)
Prepared by : Shatina Saad OPM 533
5-9
 Repetitive Focused
Strategy
♦ Facilities often organized by
assembly lines
♦ Characterized by modules
♦ Parts & assemblies made previously
♦ Modules combined for many output
options
♦ Other names
♦ Assembly line
♦ Production line

Prepared by : Shatina Saad OPM 533

5-10
 Repetitive Focus

Prepared by : Shatina Saad OPM 533

5-11
 Repetitive Focused
Strategy -
Considerations
♦ More structured than process-
focused, less structured than
product focused
♦ Enables quasi-customization
♦ Using modules, it enjoys economic
advantage of continuous process,
and custom advantage of low-
volume, high-variety model

Prepared by : Shatina Saad OPM 533

5-12
 Product-Focused
Strategy
♦ Facilities are organized by product
♦ High volume, low variety products
♦ Where found
♦ Discrete unit manufacturing
♦ Continuous process manufacturing

♦ Other names Products A &

♦ Line flow production B
♦ Continuous production 1 2 3
Operatio
n
Prepared by : Shatina Saad OPM 533
5-13
 Product Focus

Prepared by : Shatina Saad OPM 533

5-14
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

Prepared by : Shatina Saad OPM 533

5-15
 Process Continuum

Process Focused Repetitive Product

(intermittent process) Focus Focused
(assembly (continuous
line) process)

Continuum

High variety, low volume Modular Low variety, high volume

Low utilization (5% - 25%) Flexible High utilization (70% - 90%)
eneral-purpose equipmentequipment Specialized equipment

Prepared by : Shatina Saad OPM 533

5-16
 Process Strategies
Repetitive Focus
Modular design
Flexible equipment
Modular
techniques
Mass
Customization
Effective Rapid
scheduling throughput
techniques techniques
Process-focused Product-focused
High volumevariety, low Low variety,
volume high
Low utilization High utilization
- 80%) (70%
20%) (5% -
General purpose Specialized
equipment
Preparedequipment
by : Shatina Saad OPM 533
5-17
 Mass Customization
♦ Using technology and imagination
to rapidly mass-produce products
that cater to sundry unique
customer desires.
♦ Under mass customization the three
process models become so flexible
that distinctions between them blur,
making variety and volume issues
less significant.

Prepared by : Shatina Saad OPM 533

5-18
 Volume and Variety of
Products
Volume and Low Volume HighRepetitive High Volume
Variety of Variety Process Process Low Variety
Products (Intermittent) (Modular) Process
(Continuous)
One or very few Projects
units per lot Mass
Very small runs, high Job Shops Customizat
variety
Modest runs, modest Disconnected ion
variety Repetitive
Long runs, modest Poor Connected
variations Repetitive
Strategy
Very long runs, Continuous
changes in (High
attributes variable
Equipment utilization5%-25%
costs) 20%-75% 70%-80%
Prepared by : Shatina Saad OPM 533
5-19
 A Comparison (1)
Process Repetitive
Product Mass
Focus Focus
focus Customizat
(Low volume, (Modular)
(High- ion
High variety) volume, low- (High-
variety) volume,
1. Small Long runs, Large high-variety
Large
quantity, large standardized quantity, quantity,
variety of product, small variety large variety
products from of products of products
modules
2. General Special Special Rapid
purpose equipment purpose changeover
equipment aids in use equipment on flexible
of assembly equipment
line
Prepared by : Shatina Saad OPM 533
5-20
 A Comparison (2)
Process Repetitive Product Mass
Focus Focus focus Customizatio
n
3 Broadly Modestly Operators Flexible
skilled trained less operators
operators employees broadly trained for
skilled customization
4 Many Reduced Few work Custom orders
instructions training and orders and require many
because of number of job instructions
change in jobs job instructions
5 Raw instructions
JIT Raw Raw material
material high techniques material low relative to
relative to used low relative product value
product value to product
Prepared by : Shatina Saad
5-21value OPM 533
 A Comparison (3)
Process Repetitive Product Mass
Focus Focus focus Customiza
tion
6 WIP high JIT techniques WIP low WIP driven
relative to used relative to down by JIT,
output output kanban,
lean
production
7 Units move Movement Units move Goods
slowly thru measured in swiftly thru move
plant hours & days facility swiftly thru
facility
8 Finished Finished Finished Finished
goods made goods made goods made goods
to order, not to frequent to forecast, made to
stored forecasts then stored order
Prepared by : Shatina Saad OPM 533
5-22
 A Comparison (4)
Process Repetitive Product Mass
Focus Focus focus Customizati
on
9 Scheduling Scheduling Scheduling Scheduling
complex and based on relatively sophisticated
concerned building simple, to
with trade-off models from concerns accommodat
between a variety of establishing e
inventory, forecasts sufficient customizatio
capacity, and rate of output n
customer to meet
service
10 Fixed Fixed costs forecasts
Fixed costs Fixed costs
costs low, dependent high, variable high; variable
variable on flexibility costs low costs must
costs high of facilities be low

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 A Comparison (5)
Process Repetitive Product Mass
Focus Focus focus Customizati
on
11 Costing, Costs usually Because of High fixed
done by job, known based high fixed costs and
is estimated on costs, cost dynamic
prior to doing experience dependent variable
job but only on utilization costs
known after of capacity
doing job

Prepared by : Shatina Saad OPM 533

5-24
 Questions for Process
Analysis and Design
♦ 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 5-25
win orders?
Prepared by : Shatina Saad OPM 533
 Tools for Process
Design
♦ Flow Diagrams
♦ Process Charts
♦ Time-Function/Process Mapping
♦ Work Flow Analysis

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5-26
 Production Process
Flow Diagram
Custom
er
Purchasing Customer
(order inks, sales
paper, other representati
supplies) ve
Vendo take order
Prepress
rs Department
Accounti Receivi (Prepare printing
ng ng plates and
negatives)
Warehousing Printing
(ink, paper, Department
etc.)
Collating Gluing,
Departm binding,
ent stapling,
labeling
Polywrap
Information flow
Departm
Material flow ent
Shippi
ng
Prepared by : Shatina Saad OPM 533
5-27
 Process Chart Example
SUBJECT: Request tool purchase
Dist (ft) Time (min) Symbol Description
D ∇ Write order
 D∇ On desk
75  ➨ D ∇ To buyer
 D ∇ Examine
 = Operation;  = Transport;  =
Inspect;
D = Delay; ∇ = Storage
Prepared by : Shatina Saad OPM 533
5-28
 Time Function Map
(Target)
Customer Order Receive
Product product

Process
Sales Order
Order

Productio Wait
n control
Order

Product
Print WIP Extrude
Plant

Warehouse Wait

Product
Transport Move

1 day 2 days 1 day 1 day 1 day

6 days

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5-29
Work Flow Analysis - Four
Phases
♦ Request from a customer or an
offer to provide services by a
performer
♦ Negotiation, allowing the
customer and the performer to
agree on how the work should be
done and what will constitute
customer satisfaction
♦ Performance of the assignment
and completion
♦ Acceptance, closing the
Prepared by : Shatina Saad
5-30 OPM 533

transaction provided the customer

 Attaining Lean
Production
♦ Focus on inventory reduction
♦ Build systems that help employees
♦ Reduce space requirements
♦ Develop close relationships with
suppliers
♦ Educate suppliers
♦ Eliminate all but value-added
activities
♦ Develop the workforce
♦ Make jobs more challenging
♦ Set sights on perfection!
Prepared by : Shatina Saad
5-31 OPM 533
 Customer Interaction and
Process Strategy
Low High
Mass Service Professional Service

High
Commercial Personal
Banking banking
Degree of Labor Intensity

General purpose
Full-service law firms
stockbroker

Retailing Boutiques

Service Factory Service Shop

Law clinics
Limited service For-profit
stockbroker hospitals

Warehouse and Fast food Fine dining

Hospitals

Low
catalog stores restaurants restaurants
Airlines
No frills
airlines

Degree of Interaction and Customization

Prepared by : Shatina Saad OPM 533
5-32
Techniques for Improving
Service Productivity
Strate Techniq
gy
♦ Separation ue service so
♦ Structure
customers must go
where service is
♦ Self-service offered
♦ Self-service so
customers examine,
♦ Postponement compare and evaluate
at their own pace
♦ Customizing at
♦ Focus
delivery
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5-33
♦ Restricting the
Techniques for Improving
Service Productivity -
Continued
♦ Modules ♦ Modular selection of
service. Modular
♦ Automation production
♦ Separating services
♦ Scheduling that lend themselves to
♦ Training automation
♦ Precise personnel
scheduling
♦ Clarifying the service
options
Prepared by : Shatina Saad
♦5-34
Explaining problems OPM 533
 Outline
♦ THE STRATEGIC IMPORTANCE OF
LAYOUT DECISIONS
♦ TYPES OF LAYOUT
♦ Fixed-positionlayout
♦ Process-oriented layout
♦ Office layout
♦ Retail layout
♦ Warehousing and storage layouts
♦ Repetitive and product-oriented
layout
Prepared by : Shatina Saad OPM 533
5-35
 Learning Objectives
When you complete this chapter,
you should be able to :
Identify or Define:
♦ Fixed-position layout
♦ Process-oriented layout
♦ Work cells
♦ Focused work center
♦ Office layout
♦ Retail layout
♦ Warehouse layout
♦ Product-oriented layout
♦ Assembly-line factory
Prepared by : Shatina Saad OPM 533
5-36
 Learning Objectives
When you complete this chapter,
you should be able to :
Describe or explain:
♦ How to achieve a good layout for
the process facility
♦ How to balance production flow in
a repetitive or product-oriented
facility

Prepared by : Shatina Saad OPM 533

5-37
 What is Facility Layout
♦ Location or arrangement of everything
within & around buildings
♦ Objectives are to maximize
♦ Customer satisfaction
♦ Utilization of space, equipment, & people
♦ Efficient flow of information, material, &
people
♦ Employee morale & safety

Prepared by : Shatina Saad OPM 533

5-38
Objectives of the Layout
Strategy
♦To develop an economical layout
which will meet the requirements of :
♦ product design and volume (product
strategy)
♦ process equipment and capacity
(process strategy)
♦ quality of work life (human resource
strategy)
♦ building and site constraints (location
strategy)
Prepared by : Shatina Saad OPM 533
5-39
Strategic Importance of
Layout
Proper layout enables:
♦ Higher utilization of space,
equipment,and people
♦ Improved flow of information,
materials, or people
♦ Improved employee morale and safer
working conditions
♦ Improved customer/client interaction
♦ Flexibility

Prepared by : Shatina Saad OPM 533

5-40
 Six Types of Layout
Strategies
1. Fixed-position layout
♦ large bulky projects such as ships and buildings

2. Process-oriented layout
♦ deals with low-volume, high-variety production
(“job shop”, intermittent production)

3. Office layout
♦ positions workers, their equipment, and spaces/
offices to provide for movement of information

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5-41
 Six Types of Layout
Strategies – cont’
4. Retail/service layout
♦ allocates shelf space and responds to customer
behavior

5. Warehouse layout
♦ addresses trade-offs between space and material
handling

6. Product-oriented layout
♦ seeks the best personnel and machine use in
repetitive or continuous production

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5-42
 Requirements of a
Good Layout
✓ an understanding of capacity and
space requirements
✓ selection of appropriate material
handling equipment
✓ decisions regarding environment and
aesthetics
✓ identification and understanding of
the requirements for information flow
✓ identification of the cost of moving
between the various work areas
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5-43
 Constraints on Layout
Objectives
♦ Product design & volume
♦ Process equipment & capacity
♦ Quality of work life
♦ Building and site

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5-44
 Areas of Concern in
Layout Strategy
Communicati
on
Service Material
Areas Attributes
Layout
Warehous Work
Strategy
ing Cell

Material
Safety
Flow

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5-45
 1. Fixed-Position
Layout
♦ Design is for stationary project
♦ Workers and equipment come to site
♦ Complicating factors:-
♦ There is limited space at virtually all sites
♦ At different stages in the construction
process, different materials are needed –
therefore, different items become critical as
the project develops
♦ The volume of materials needed is dynamic

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5-46
 2. Process-Oriented
Layout
♦ Design places departments with large
flows of material or people together
♦ Department areas having similar
processes located in close proximity
♦ e.g., All x-ray machines in same area
♦ Used with process-focused processes

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5-47
 Steps in Developing a
Process-Oriented
Layout
1. Construct a “from-to matrix”
2. Determine space requirements for each
department
3. Develop an initial schematic diagram
4. Determine the cost of this layout
5. By trial-and-error (or more
sophisticated means), try to improve
the initial layout
6. Prepare a detailed plan that evaluates
factors in addition to transportation cost
Prepared by : Shatina Saad OPM 533
5-48
 a) Cellular Layout -
Work Cells
♦ Special case of product-oriented layout -
in what is ordinarily a process-oriented
facility
♦ Consists of different machines brought
together to make a product
♦ Temporary arrangement only
♦ Example: Assembly line set up to
produce 3000 identical parts in a job
shop
Prepared by : Shatina Saad OPM 533
5-49
Improving Layouts by Moving
to the Work Cell Concept

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5-50
 Work Cells - Some
Advantages
♦ Reduced work-in-process inventory
♦ Less floor space required
♦ Reduced raw material and finished goods
inventories required
♦ Reduced direct labor costs
♦ Heightened sense of employee participation
♦ Increased utilization of equipment machinery
♦ Reduced investment in machinery and
equipment

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5-51
 Work Cell Advantages

Inventory Equipment
Floor space utilization
Direct labor Employee
costs participation
Quality

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5-52
 Work Cell Floor Plan

Saws Drills Office

Work Cell
Tool
Room

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5-53
 Requirements for
Cellular Production
♦ Identification of families of products -
group technology codes
♦ High level of training and flexibility on
the part of the employees
♦ Either staff support or flexible,
imaginative employees to establish the
work cells initially
♦ Test (poka-yoke) at each station in the
cell

Prepared by : Shatina Saad OPM 533

5-54
 Work Cells, Focused Work
Centers and the Focused
Factory
A temporary assembly-line-oriented
Work Cell arrangement of machines and personnel
in what is ordinarily a process-oriented
facility
Example: job shop with rearranged
machinery and personnel to produce 30
unique control panels

Focused Work A permanent assembly-line-oriented

arrangement of machines and personnel
Center in what is ordinarily a process-oriented
facility
Example: manufacturing of pipe
brackets at a shipyard
Focused FactoryA permanent facility to produce a
product or component in a product-
oriented
Example:facility
a plant to produce window
mechanisms for automobiles
Prepared by : Shatina Saad OPM 533
5-55
 3. Office Layout
♦ Design positions people, equipment,
& offices for maximum information
flow
♦ Arranged by process or product
♦ Example: Payroll dept. is by process
♦ Relationship chart used
♦ Examples
♦ Insurance company
♦ Software company

Prepared by : Shatina Saad OPM 533

5-56
© 1995
Corel Corp.
 Office Relationship
Shart
1 President
O Va Closenes
2 Chief Technology U
A A l.
A s
Absolutel
Officer
3 Engineer’s Area I I y
O I necessar
4 Secretary I I IU E Especiall
A I O y
y
5 Office entrance A E U
O O important
X E U I Important
7 Equipment U A EO O Ordinary
cabinet O U
8 Photocopy O XI U OK
Unimport
equipment U A ant
9 Storage room E X Not
E desirable
9 Storage room
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5-57
 4. Retail/Service
Layout
♦ Design maximizes product exposure to
customers
♦ Decision variables
♦ Store flow pattern
♦ Allocation of (shelf) space to products
♦ Types
♦ Grid design V
♦ Free-flow design ideo

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5-58
 Retail Layouts -
Some Rules of Thumb
♦ Locate high-draw items around the periphery of
the store
♦ Use prominent locations such as the first or last
aisle for high-impulse and high margin items
♦ Remove crossover aisles that allow customers the
opportunity to move between aisles
♦ Distribute what are known in the trade as “power
items” (items that may dominate a shopping trip)
to both sides of an aisle, and disperse them to
increase the viewing of other items
♦ Use end aisle locations because they have a very
high exposure rate
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5-59
 Retail Store Shelf Space
Planogram
♦ Computerized tool 5
for shelf-space facings

PERT
PERT
PERT

PERT
PERT
management
♦ Generated from
store’s scanner
data on sales
♦ Often supplied by

VO-5
VO-5

VO-5

SUAVE
SUAVE
VO-5
VO-5
manufacturer
♦ Example: P&G

2 ft.
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5-60
 A Good Service Layout
(Servicescape) Considers
♦ Ambient conditions - background
characteristics such as lighting, sound,
smell, and temperature.
♦ Spatial layout and functionality - which
involve customer circulation path planning
♦ Signs, Symbols, and Artifacts -
characteristics of building design that carry
social significance

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 5. Warehouse Layout
♦ Design balances space (cube)
utilization & handling cost
♦ Similar to process layout
♦ Items moved between dock
& various storage areas
♦ Optimum layout depends on
♦ Variety
of items stored
♦ Number of items picked

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5-62
 a) Cross Docking
♦ Transferring goods
♦ from incoming trucks at
receiving docks
♦ to outgoing trucks at In-
shipping docks coming
Outgoing
♦ Avoids placing goods
into storage
♦ Requires suppliers
provide effective
addressing (bar codes)
and packaging that
provides for rapid
transhipment © 1995 Corel Corp.
© 1984-1994 T/Maker Co.

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5-63
 b) Random Stocking
Systems Often:
♦ Maintain a list of “open” locations
♦ Maintain accurate records of existing
inventory and its locations
♦ Sequence items on orders to minimize
travel time required to pick orders
♦ Combine orders to reduce picking time
♦ Assign certain items or classes of
items, such as high usage items, to
particular warehouse areas so that
distance traveled is minimized
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5-64
 6. Product-Oriented
Layout
♦ Facility organized around product
♦ Design minimizes line imbalance
♦ Delay between work stations
♦ Types: Fabrication line; assembly line
♦ Requirements:-
♦ Standardized product
♦ High production volume
♦ Stable production quantities
♦ Uniform quality of raw materials &
components

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5-65
Product-Oriented Layout
- Assumptions
♦ Volume is adequate for high equipment
utilization
♦ Product demand is stable enough to justify
high investment in specialized equipment
♦ Product is standardized or approaching a
phase of its life cycle that justifies investment
in specialized equipment
♦ Supplies of raw materials and components
are adequate and of uniform quality to ensure
they will work with specialized equipment

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5-66
 Product-Oriented
Layout Types
Fabrication Line Assembly Line
♦ Builds components ♦ Assembles fabricated
♦ Uses series of machines parts
♦ Repetitive process ♦ Uses workstation
♦ Machine paced ♦ Repetitive process
♦ Balanced by physical ♦ Paced by tasks
redesign ♦ Balanced by moving tasks

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5-67
Product-Oriented Layout
Advantages
♦ Lower variable cost per unit
♦ Lower material handling costs
♦ Lower work-in-process
inventories
♦ Easier training & supervision
♦ Rapid throughput

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5-68
Product-Oriented Layout
Disadvantages
♦ Higher capital investment
♦ Special equipment
♦ Any work stoppage stops
whole process
♦ Lack of flexibility
♦ Volume
♦ Product

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5-69
 Assembly Line
Balancing
♦ Analysis of production lines
♦ Nearly equally divides work between
workstations while meeting required
output
♦ Objectives
♦ Maximize efficiency
♦ Minimize number of
work stations

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5-70
 Assembly Line Balancing
The General Procedure
♦ Determine cycle time by taking the
demand (or production rate) per day and
dividing it into the productive time
available per day
♦ Calculate the theoretical minimum
number of work stations by dividing total
task time by cycle time
♦ Perform the line balance and assign
specific assembly tasks to each work
station
Prepared by : Shatina Saad OPM 533
5-71
 Assembly Line
Balancing Steps
1. Determine tasks (operations)
2. Determine sequence
3. Draw precedence diagram
4. Estimate task times
5. Calculate cycle time
6. Calculate number of work stations
7. Assign tasks
8. Calculate efficiency

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5-72
Assembly Line Balancing
Equations
Production time
Cycle time = available
Demand per day

Minimum Σ Task times

number =
of work Cycle time
stations

Σ Task times
Efficiency =
(Actual
* (Cycle time)
number of
work
stations)
Prepared by : Shatina Saad OPM 533
5-73
Layout Heuristics for Assigning
Tasks in Assembly Line
Balancing
♦ Longest task time - choose task with longest
operation time
♦ Most following tasks - choose task with largest
number of following tasks
♦ Ranked positional weight - choose task
where the sum of the times for each following
task is longest
♦ Shortest task time - choose task with shortest
operation time
♦ Least number of following tasks - choose task
with fewest subsequent tasks

Prepared by : Shatina Saad OPM 533

5-74