LESSON 8

( Process Design/Advanced Operations Technologies)

OVERVIEW

Before good products can be provided to customers, they must be designed and
built. We will look at the range of process organizations, which include equipment
and people, and then look at the relationship between product and process life
cycles. Then we will look at the impact of advanced technologies on process life
cycles, looking in particular at two new process phenomena. These are economies
of integration/mass customization and fast-response process capability. We will
also look at the problem of investment in advanced technology. Finally, we will
look at designing services and at advances in this field.

KEYNOTES/OUTLINE

Process Design: An Overview

Process: A process transforms selected resources into defined end products.

This transformation involves a series of discrete tasks or activities performed by an
integrated set of people and equipment.

Process Design: That is the task of selecting and arranging the equipment
required for transformation process and integrating the workforce and other
resources with the equipment.

The characteristics of the goods or services to be produced by the process

make one type of process technology and organization more suitable than another.
Some questions to ask when designing the process are:

 What goods and services constitute the portfolio? What are the timing
and level of expected demand? How frequently will changes be made to
product designs?

 What tasks have to be performed for each product? How much do these
tasks vary from one product to the next? In what order must they be
performed? How long will each one take? How frequently will each task
be performed?
  At which points should the customer be involved? How much influence
will the customer have over the task performed? What are the target
costs and acceptable quality levels for each type of product?

Process Technology and Organizations

The Continuum of Process Organizations:

A Job Shop – is used for small volumes of a wide variety of customized products.
Support staff are small, workers are highly skilled, and general-purpose equipment
is arranged in a process. A process layout is one which similar items of equipment
(such as lathes and sewing machines) or activities (such as accounting and field
service) are placed together in work centers. There is no set of flow of work;
inventories therefore build up in front of machines in a seemingly random manner.
Bottlenecks – a piece of equipment or a group of workers whose capacity is less
than that of any other element in the shop – may move because of the changing
nature of jobs. Bottlenecks may be difficult to eliminate because of cost, time, or
lack of resources. Scheduling individual jobs is difficult.

Intermittent-flow processes – are used for large batches. Narrower product lines
and larger batches sizes makes scheduling easier than in a job shop. Workers are
highly skilled and flexible. Equipment is laid out either in a process layout or in a
group technology (cellular) layout. A cellular layout is one in which the
equipment required to produce specific set of parts is grouped together.

Parts can be grouped into families according to design (i.e. , by shapes and sizes)
or by manufacturing characteristics that requires the same processing steps,
materials, tooling, set up procedure, and /or labor skills. These families reduce set-
up times and allow inventories to be reduced because of the increased speed
through the cell.

Repetitive-flow processes – are used for only a few standardized products that are
made in volume. The assembly line is the classic example. Special-purpose
equipment is used, arranged sequentially and in balance. This is called a product
layout. A product layout is one in which the equipment required to produce a
specific product is grouped together and arranged sequentially on the basis of that
product’s routing.
The workforce tends to be large in numbers, with each worker being specialized.
Communication tends to be formal, from top down and along the process. A large
support staff is common. Work rates can be varied either by changing the way
tasks are grouped at work centers or by replacing the whole process. Both options
are time-consuming and expensive. Line balancing aims at achieving the desired
production rate at the greatest amount of efficiency – the least worker idle time.

The line-balancing procedure consists of the following steps:

 Define the tasks to be performed and obtain accurate time estimates for
each task. Identify the precedence relationship among the tasks.

 Specify the required daily output level. Calculate the cycle time that
corresponds to the required daily output level (divide the available time
by the daily output level)

 Calculate the minimum number of work centers needed for the desired
output rate.

 Develop an initial layout by assigning tasks to work centers. This will be

limited by the availability of labor skills and the facility layout.

 Evaluate the current layout, using overall inefficiencies and the disparity
of idle times at work centers as criteria.

 If possible, improve the layout by either modifying it or using another

method to generate a new layout.

Continuous-flow processes – are suitable for commodity like processes; often this
is a chemical process rather than a mechanical process. A process-oriented
workforce is supplemented by a large support staff. Direct labor content of each
product is low, and the specialized equipment used is even more expensive and
inflexible than that used in repetitive-flow shops.

Fixed-position layout – is where equipment and people are brought to a site as

required, with the job itself not moving. Building construction and surgical
operations are examples. Coordinating the movement of people, equipment and
materials on a congested site is a principal management role.
The link between Product and Process Life Cycles: The product-process
matrix (Lesson 1) suggests that as the product progresses through its life cycle, the
process that best fits the needs of the firm also matures. The progress is from job
shop through to repetitive manufacturing or continuous flow. The dynamic model
of product-process innovation also shows a shifting emphasis in innovation.
This model has three phases:

Fluid, in which there are high levels of product innovation during the
product’s early life.

Transitional, where a dominant design for the product has occurred and the
rate of product innovation drops off. Higher levels of product innovation occur.
Equipment is developed specifically for the product, and the firm looks to
efficiency and large-volume production.

Specific, where product and process innovation is incremental toward the

end of the product’s life. The competitive emphasis is on cost reduction. The cost
of change is high because of the cost of changes to equipment.

THE IMPLICATIONS OF THE TWO MODELS ARE AS FOLLOWS:

 Product and process life cycles are closely related.

 The type of process suitable for a product depends on the product’s
current life cycle stage.
 An economies of scope strategy (i.e., strategy based on producing a wide
range of products) should be followed when competitive emphasis is on
product variety and innovation. Note that economies of scope exist when
the total cost of producing a given quantity of two or more products in
one facility is lower than or equal to the total cost of producing the same
quantity of those products in a set of facilities each of which is dedicated
to a single product.
 As the product matures, a strategy based on economies of scale should
be pursued. Typically, the firm lowers its unit costs by mass-producing
large volumes of standardized products, using specialized equipment.
The competitive emphasis shifts to process innovations that lower
product costs.
  Firms can realize economies of scale or economies of scope, but not both.
Thus, process decisions involve strategic trade-offs between the benefits
of scope and scale economies, that is, between 1.) flexibility and quality
and 2.) dependability and cost.

The Impact of Advanced Technology on Process Life Cycles: Flexible

manufacturing systems (FMSs) can produce a variety of customized products or a
large volume of low-cost products. Advanced technology has overcome the
incompatibility between economies of scale and scope.

 By allowing the specialization that has been built physically into a piece
of equipment to be built into its computer software instead.

 By eliminating operating learning curve effects. The computer software

can perform its operation perfectly every time.

 By drastically reducing the time needed to switch over from one batch to
another. This theoretically reduces the economic batch size to just one
unit.

ECONOMIES OF INTEGRATION refers to the simultaneous presence of both

economies of scale and economies of scope. To achieve economies of integration,
the firm must possess FMS, must be flexible, and must strategically align activities
within the firm and along its value chain. This allows firms to pursue a strategy of
mass customization.

MASS CUSTOMIZATION is the mass production of customized goods and

services. Mass customization creates a value gap by having commodity purchasers
focus on value, not price.

FAST-RESPONSE PROCESS CAPABILITY (FRPC) is the ability of a process to

1.) produce a number of products, both at once and over time and 2.) allow product
testing, R & D, preventive maintenance, and other activities to be conducted
without disrupting regular production.