8. • Process
• a group of related tasks with specific inputs and outputs
Process design
• what tasks need to be done and how they are
•
coordinated among functions, people, and
organizations
Process strategy
• an organization's overall approach for physically
producing goods and services
Process planning
• converts designs into workable instructions for
manufacture or delivery
•
•
6-278
Process Planning
9. • Vertical integration
• extent to which firm will produce inputs and control outputs
each stage of production process
Capital intensity
of
•
• mix of capital (i.e., equipment, automation) and labor
resources used in production process
Process flexibility
• ease with which resources can be adjusted in response to
changes in demand, technology, products or services, and
resource availability
Customer involvement
• role of customer in production process
•
•
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Process Strategy
10. PROJECT BATCH MASS CONT.
individual
Source:Adapted from R. Chase, N. Aquilano, and R. Jacobs, Operations Management for Competitive
Advantage (New York:McGraw-Hill, 2001), p. 210
6-284
Type of
product
Unique
Made-to-
order
(customized)
Made-to-
stock
(standardized )
Commodity
Type of
customer
Product
demand
One-at-a-
time
Infrequent
Mass
market
Mass
market
Very stable
Few
customers
Fluctuates Stable
Types of Processes
11. Types of Processes (cont.)
PROJECT BATCH MASS CONT.
assembly
Source:Adapted from R. Chase, N. Aquilano, and R. Jacobs, Operations Management for Competitive
Advantage (New York:McGraw-Hill, 2001), p. 210
6-285
Demand
volume
Very low Low to
medium
High Very high
No. of
different
products
Production
system
Infinite
variety
Long-term
project
Few Very few
Continuous,
process
industries
Many, varied
Discrete, job
shops
Repetitive,
lines
Types of Processes (
12. Types of Processes (cont.)
PROJECT BATCH MASS CONT.
automated
refining
range of
Source:Adapted from R. Chase, N. Aquilano, and R. Jacobs, Operations Management for Competitive
Advantage (New York:McGraw-Hill, 2001), p. 210
6-286
Equipment Varied General-
purpose
Special-
purpose
Highly
Primary
type of
work
Worker
skills
Specialized
contracts
Experts,
crafts-
persons
Assembly
Mixing,
treating,
Equipment
monitors
Fabrication
Wide range
of skills
Limited
skills
Types of Processes (
13. Types of Processes (cont.)
PROJECT BATCH MASS CONT.
large capacity,
atest technolog
far-reaching errors,
televisions,
shipbuilding,
fast food
Source:Adapted from R. Chase, N. Aquilano, and R. Jacobs, Operations Management for Competitive Advantage (New
York:McGraw-Hill, 2001), p. 210
6-287
Advantages l
Custom work,
y
Flexibility,
quality
Efficiency,
speed,
low cost
Highly efficient,
ease of control
Dis-
advantages
Examples
Non-repetitive,
small customer
base, expensive
Construction,
spacecraft
Costly, slow,
difficult to
manage
Capital
investment;
lack of
responsiveness
Difficult to change,
limited variety
Paint, chemicals,
foodstuffs
Machine shops,
print shops,
bakeries,
education
Automobiles,
computers,
Types of Processes (
14. Process Selection with
•
•
examines cost trade-offs associated with
Cost
• Fixed costs
• constant regardless of the number of units
demand volume
produced
• Variable costs
• vary with the volume of units produced
Revenue
• price at which an item is sold
Total revenue
• is price times volume sold
Profit
• difference between total revenue and
•
•
•
total cost
6-288
Process Selection wit
Break-Even Analysis
15. Process Selection with
(cont.)
T
otal cost = fixed cost + total variable
TC = cf + vcv
cost
T
otal revenue = volume x price
TR = vp
Profit = total revenue - total cost
Z = TR – TC = vp - (cf + vcv)
6-289
Process Selection wit
Break-Even Analysis
16. Process Selection with
Break-Even Analysis (cont.)
vp = cf + vcv
cf
Solving for Break-Even Point (Volume)
6-290
TR = TC
vp - vcv = cf
v(p - cv) = cf
v = p - cv
Process Selection wi
Break-Even Analysi
17. Break-Even Analysis: Example
Fixed cost
Variable cost
Price
=
=
=
cf = $2,000
cv = $5 per raft
p = $10 per raft
v = = = 400 rafts
6-291
Break-even point is
cf 2000
p - cv 10 - 5
Break-Even Analysis
19. Process A
$2,000 + $5v
Process B
$10,000 + $3v
=
$2v
v
=
=
$8,000
4,000 rafts
Below or equal to 4,000, choose A
B
Above or equal to 4,000, choose
6-294
Process Selection
20. •Building a flowchart
• Determine objectives
• Define process boundaries
• Define units of flow
• Choose type of chart
• Observe process and
• Map out process
• Validate chart
collect data
6-297
Process Analysis
21. •look at manufacture of product or delivery
of service from broad perspective
•Incorporate
• nonproductive activities (inspection,
transportation, delay, storage)
• productive activities (operations)
6-298
Process Flowcharts
25. of a process for
6-303
Continuous improvement
refines the breakthrough
Breakthrough
Improvement
Continuous improvement activities
peak; time to reengineer process
T
otal redesign
breakthrough
improvements
Process Innovation
26. Principles for Redesigning
• Remove waste, simplify, and consolidate
similar activities
• Link processes to create value
• Let the swiftest and most capable enterprise
execute the process
• Flex process for any time, any place, any way
• Capture information digitally at the source and
propagate it through process
6-307
Principles for Redesi
Processes
27. Principles for Redesigning
• Provide visibility through fresher and richer
information about process status
• Fit process with sensors and feedback loops
that can prompt action
• Add analytic capabilities to process
• Connect, collect, and create knowledge around
process through all who touch it
• Personalize process with preferences and
habits of participants
6-308
Principles for Redesi
Processes (cont.)
28. Techniques for Generating
• Vary the entry point to a problem
• in trying to untangle fishing lines, it's best
from the fish, not the poles
to start
• Draw analogies
• a previous solution to an old problem might work
• Change your perspective
• think like a customer
• bring in persons who have no knowledge of
process
6-309
Techniques for Generat
Innovative Ideas
29. Techniques for Generating
• Try inverse brainstorming
• what would increase cost
• what would displease the customer
• Chain forward as far as possible
• if I solve this problem, what is the next
• Use attribute brainstorming
• how would this process operate if. . .
• our workers were mobile and flexible
• there were no monetary constraints
• we had perfect knowledge
problem
6-310
Techniques for Generat
Innovative Ideas (cont.)
30. • Computer-aided
design (CAD)
• Group technology
(GT)
• Computer-aided
engineering (CAE)
• Collaborative
product commerce
(CPC)
A Technology Primer
Product Technology
electronically
electronically
exchange of information among designers
6-313
• Computer-aided
design (CAD)
• Group technology
• Creates and communicates designs
• Classifies designs into families for easy
(GT)
• Computer-aided
engineering (CAE)
• Collaborative
product commerce
(CPC)
retrieval and modification
• T
ests functionality of CAD designs
• Facilitates electronic communication and
and suppliers
A Technology Prime
31. • Product data
management
(PDM)
• Product life cycle
management
(PLM)
• Product
configuration
A Technology Primer (cont.)
Product Technology
for the life of the product
customer service, recycling, and disposal
(PLM)
who have selected among various options,
6-314
• Product data
management
(PDM)
• Keeps track of design specs and revisions
• Integrates decisions of those involved in
• Product life cycle
management
• Product
configuration
product development, manufacturing, sales,
• Defines products “configured” by customers
usually from a Web site
A Technology Prime
32. • Standard for
exchange of
product model data
(STEP)
• Computer-aided
design and
manufacture
(CAD/CAM)
• Computer aided
process (CAPP)
• E-procurement
A Technology Primer (cont.)
Process Technology
different CAD vendors; translates CAD data
(CAD) and automated manufacture (CAM)
manufacture
database of similar requirements
marketplaces, auctions, or company
6-315
• Standard for
exchange of
product model data
• Set standards for communication among
into requirements for automated inspection
(STEP)
• Computer-aided
design and
(CAD/CAM)
• Computer aided
process (CAPP)
• E-procurement
and manufacture
• Electronic link between automated design
• Generates process plans based on
• Electronic purchasing of items from e-
websites
A Technology Prime
33. • Computer
numerically control
(CNC)
• Flexible
manufacturing
system (FMS)
• Robots
• Conveyors
A Technology Primer (cont.)
Manufacturing Technology
variety of operations with the help of automated
automated material handling system to produce a
less flexible
belt or overhead chain; “reads” packages and
6-316
• Computer
numerically control
(CNC)
• Machines controlled by software code to perform a
tool changers; also collects processing information
and quality data
• Flexible
manufacturing
system (FMS)
• Robots
• Conveyors
• A collection of CNC machines connected by an
wide variety of parts
• Manipulators that can be programmed to perform
repetitive tasks; more consistent than workers but
• Fixed-path material handling; moves items along a
diverts them to different directions; can be very fast
A Technology Prime
34. • Automatic guided
vehicle (AGV)
• Automated storage
and retrieval system
(ASRS)
• Process Control
• Computer-integrated
manufacturing (CIM)
A Technology Primer (cont.)
Manufacturing Technology
specified path; directed by wire or tape embedded
• Automated storage
maintenance, and quality
manufacturing
6-317
• Automatic guided
vehicle (AGV)
• A driverless truck that moves material along a
in floor or by radio frequencies; very flexible
• An automated warehouse—some 26 stores high—
and retrieval system
(ASRS)
• Process Control
• Computer-integrated
manufacturing (CIM)
in which items are placed in a carousel-type
storage system and retrieved by fast-moving
stacker cranes; controlled by computer
• Continuous monitoring of automated equipment;
makes real-time decisions on ongoing operation,
• Automated manufacturing systems integrated
through computer technology; also called e-
A Technology Prime
35. • Business – to –
Business (B2B)
• Business – to –
Consumer (B2C)
• Internet
• Intranet
• Extranet
A Technology Primer (cont.)
Information Technology
Consumer (B2C)
organization; can be password (i.e., firewall)
access with select suppliers, customers, and
6-318
• Business – to –
Business (B2B)
• Business – to –
• Electronic transactions between businesses
usually over the Internet
• Electronic transactions between businesses and
their customers usually over the Internet
• Internet
• Intranet
• Extranet
• A global information system of computer networks
that facilitates communication and data transfer
• Communication networks internal to an
protected sites on the Internet
• Intranets connected to the Internet for shared
trading partners
A Technology Prime
36. • Bar Codes
• Radio Frequency
Identification tags
(RFID)
• Electronic data
interchange (EDI)
• Extensive markup
language (XML)
• Enterprise
resource planning
(ERP)
A Technology Primer (cont.)
Information Technology
identifies item and other information when read by a
• An integrated circuit embedded in a tag that can send
(RFID)
and inflexible
data before its is sent
human resources
resource planning
6-319
• Bar Codes
• Radio Frequency
Identification tags
• A series of vertical lines printed on most packages that
scanner
and receive information; a twenty-first century bar code
• Electronic data
interchange (EDI)
• Extensive markup
language (XML)
• Enterprise
(ERP)
with read/write capabilities
• A computer-to-computer exchange of business
documents over a proprietary network; very expensive
• A programming language that enables computer – to -
computer communication over the Internet by tagging
• Software for managing basic requirements of an
enterprise, including sales & marketing, finance and
accounting, production & materials management, and
A Technology Prime
37. • Supply chain
management (SCM)
• Customer relationship
management (CRM)
• Decision support
systems (DSS)
• Expert systems (ES)
• Artificial intelligence
(AI)
A Technology Primer (cont.)
Information Technology
distributors
compiling and analyzing customer data
and an interactive component for what-if analysis
• A field of study that attempts to replicate elements of
systems, genetic algorithms, neural networks, and fuzzy
6-320
• Supply chain
management (SCM)
• Customer relationship
• Software for managing flow of goods and information
among a network of suppliers, manufacturers and
• Software for managing interactions with customers and
management (CRM)
• Decision support
systems (DSS)
• Expert systems (ES)
• Artificial intelligence
(AI)
• An information system that helps managers make
decisions; includes a quantitative modeling component
• A computer system that uses an expert knowledge base
to diagnose or solve a problem
human thought in computer processes; includes expert
logic
A Technology Prime
