OPERATIONS MANAGEMENT

Chapter 3: Processes and technology

Process selection types and flow structures

Product process matrix

By:
Dr. Pallawi Baldeo Sangode
What is a production system?
Manufacturing subsystem that includes all functions required to design
and produce a manufactured product
• Input
• Transformation
• Output
Types of Production/ Flow Structures
• Project Production
• Job Production
• Batch Production
• Flow Production, Line Production, or Mass Production
• Mass Customization
Flow Production or Line Production
(Mass Production)
• Used when individual products move through one stage of production to next when the product is
ready.
• The product is standardized and any deviation in quality etc. is detected at the spot.
• Continuous flow of material, assembly lines, conveyor belts
• Less WIP, Mechanized material handling
• Low skilled labor
• Short manufacturing cycle time
• Easy supervision
• Less manufacturing costs.
• Layout?
• Eg: Plastics goods, hardware, assembly shops of automobiles, Refrigerators, fans, domestic appliances
The emphasis in mass production is on keeping manufacturing costs low by
producing uniform products using repetitive and standardized processes.

https://www.youtube.com/watch?v=sYfcRwMA_k8
Batch Production
• Products are made in separate groups with each group going through
the complete process together

• work is of repetitive nature within batch.

• Short runs
• Large WIP
• Flexibility of production schedules
Examples: Pharmaceuticals, paints, Chemicals, ready made garments,
biscuit and confectionery, processing claims in a large insurance
company
 Job Production

• Producing a few units of a product specifically designed for the

customer.
• Small production runs
• Made to customer’s specifications
• Discontinuous flow of materials
• Highly skilled labor
• Large WIP
Eg: Ship building, dam construction, bridge building, book printing, Wedding
cakes, row houses
 Project Production
• Where a single assignment of complex nature is undertaken for completion
within a given period and within the estimated expenditure.
• Special and non-standardized
• Definite beginning and definite end
• Non-uniform requirement of resources
• High cost overruns
• Scheduling and controlling
• Machines used? Type of labour?

• https://www.youtube.com/watch?v=GVCR0uZLIkU
 Mass Customization
• Combines job production with mass production to customize products to
suit individuals.
• Uniform standardized production to a point, then unique features added
to each product
• Production of personalized or custom-tailored goods or services to meet
consumers' diverse needs at near mass production prices.
• Use computerization, internet, product modularization, and lean
production.

• Examples: Dell computers, automobile assembly, Tract homes

 Examples

• Furniture manufacturer, uses mass customization to

produce couches and chairs to customer specifications
within 30 days. The basic frames in the furniture are
the same, but automated cutting machinery precuts the
color and type of leather ordered by each customer.
Using mass-production techniques, they are then
added to each frame.

• Dell are available in different RAM sizes, hard disk

capacities and the outer finish to provide users exactly
what they are looking for. Mass customization is also
known as “build to order” or “made to order”.

• Burger King makes the burgers the way you like them.
The following would be examples of
goods produced by mass production
except:
a. Custom cowboy boots
b. Ford F 150 trucks
c. Coca Cola bottles
d. Light bulbs
What types of production system following
items would require?
• Household appliances
• Construction of airport
• Haircut
• Bakeries
• Steel Manufacturing plant
• Sugar Manufacturing plant
• Chemicals
• Textiles
• ERP software for a company
Summary
Mass Customization
Job Batch Flow/Line/Mass

Main Feature Single one-off items Group of identical

products pass through
Mass production of standardized
products
Flow production with many
standardized components but
each stage together customized differences too

Essential Highly skilled workforce Labor and machines

must be flexible to switch
Specialized, often expensive,
capital equipment – but can be
Many common components
Flexible and multi-skilled
Requirement to making batches of other
designs
very efficient
High steady demand for
workers
Flexible equipment – often
s standardized product CAM to allow for variations in
the product

Main Able to undertake specialist

projects or jobs, often with high
Some economies of
scale
Low unit costs due to constant
working of machines, high labor
Combines low unit costs with
flexibility to meet customers’
Advantages value added Faster production with productivity and economies of individual requirements
High levels of worker lower unit costs than job scale
motivation production JIT stock management easier to
Some flexibility in design apply than with other methods
of product in each batch

Main High unit production costs

Time consuming
High levels of stocks at
each production stage
Inflexible – often very difficult
and time consuming to switch
Expensive product redesign
may be needed to allow key
Limitations Wide range of tools and Unit costs likely to be
higher than with flow
from one type of product to
another
components to be switched to
allow variety
equipment needed
production Expensive to set up flow-line Expensive flexible capital
machinery and each section equipment needed
needs to be carefully
synchronized
Product Process Matrix
Product Process Matrix
 Operations Management – Planning Premises
(Manufacturing strategies)
• Once a company decides to produce a given product or offer a
particular service, company should decide if product or service is
to be the following amongst the four generic planning premises
that are in use in operations management:
• Make-to-Stock (MTS)
• Make-to-Order (MTO)
• Assemble-to-Order (ATO)
• Engineer-to-Order (ETO)
Based on the stage at which customer engages with the supplier

For Internal Circulation and Academic Purpose Only

Make-to-Stock (MTS)

Customer
Order

Assemble/
Design Procure Manufactur Stock as Pack and
e Inventory ship

Customer
Lead Time
Make-to-Stock (MTS)

Make to stock (MTS) is a traditional production strategy that is used by

businesses to match production and inventory with consumer demand
forecasts.
• Products produced for immediate sale or delivery in anticipation of demand.
• Product is standardized.
• Produced in large volumes.
• Instant or short delivery time.
• Each unit is produced or assembled by going through same series of
operations in same order.
• PUSH Manufacturing strategy

For Internal Circulation and Academic Purpose Only

Examples
• Fast Moving Consumer Goods
• Toothpaste
• Candy
• Fashion products
• Shoes
• Apparels
• OEMs
• Spare parts
• Components
• Services
• Standard Vacation Packages
ADVANTAGES
1. Even production over a given time period
2. Reduce product lead time.
3. No problem of stock out of a product.
4. No overproduction.

DISADVANTAGES
5. Depends on accurate demand forecast.
6. Inaccurate forecasts will lead to losses due to excessive
inventory.
7. Stock outs.
8. Need higher flexibility to adjust to suddenly changing market
needs.
9. Challenging for companies that have cyclic sales or
seasonality
For Internal Circulation and Academic Purpose Only
 Make-to-Order (MTO)

Customer Order

Stock
Assemble/
standard Final Pack and
Design Procure manufactur
parts as Assemble ship
e
inventory

<------------------- Customer Lead Time ---------->

PULL Manufacturing strategy

 Make-to-Order (MTO)
• Products/services that are made to customer’s specs but only after an order is received.
• Product/service is customized
ADVANTAGES
1. System is highly flexible.
2. Specialization/ Customization in products.
3. Higher customer satisfaction.
4. No Extra Inventory.(RM , FG)
5. Less Waiting time
DISADVANTAGES
6. Production planning depends on the whims of the client
7. Risk of inefficiency and wastage.
8. No Extra Inventory.
9. More waiting time.
10. Loss of customer.
11. Dependency on the supplier
MTO - Example
• Examples
Custom built home or office building
Tailor made suit
Commercial airplane
Wedding cake
Professional services (law case, prescriptions, some medical procedures,
etc.)
Hair styling
MTO or MTS??
Long lead time
Large inventory
High customization
More wastage
Accurate forecast
High level of system flexibility
Effect of cyclic variations
MTO or MTS??
• Furniture
• Books
• Soap
• Refrigerator
• Restaurant food
• House renovation
• Temple Construction
Assemble-to-Order (ATO)
Customer Order

Stock
standard
Design Procure Assemble componen Final Pack and
ts as assemble ship
inventory

<--Customer Lead Time->

Assemble-to-Order (ATO)
• Standard components are produced in anticipation of demand.
• Once an order is received, components can be combined in different ways to accommodate different
customer specs.
• Some customization
• Some Standardization
• Delivery time shorter than make-to-order.
• Hybrid of MTO and MTS
• Examples
 Computers (Dell)
 Standard vacation packages
 Cars built to customer’s specs
 Restaurant food

For Internal Circulation and Academic Purpose Only

Engineer to order
• Engineer to order is a type of manufacturing process in which a product is
designed, engineered and finished after an order has been received.
• Industrial manufacturing processes where the products are complex and
costly
• Adoption of
• Concurrent engineering
• Integrated product team
• Lean product development methodologies
• Critical path methodology