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1. Chapter 7 Managing the Transformation
Process

2. Investment in
Technology
Process
Technology
Product
Technology
Process Choice
Layout
The Relationship Between Process Choice and Layout

3. “Since 1996, manufacturing employment in China itself
has actually fallen by an estimated 25 percent. That’s over
30,000,000 fewer Chinese workers in that sector, even
while output soared by 70 percent.
It’s not that American workers
[AND Japanese workers] are being replaced by Chinese
workers. It’s that both American and Chinese workers are
being made more efficient [replaced] by automation.”
Source: Erik Brynjolfsson and Andrew McAfee, (2014) The Second Machine Age:
Work, Progress, and Prosperity in a time of Brilliant Technologies
Technology and Employment

4. Fortune (2017) added insights in the following:
One robot replaced 2,400 human-hours a year that were
used to pack a single part. ….Automation and
programming will be the future of American
manufacturing.” For unskilled workers, that’s bad news. A
2016 World Economic Forum survey estimated 1.6 million
manufacturing and production jobs will be lost globally
due to automation between 2015 and 2020
Technology and Employment

5. It is vital to avoid
“Technophilia” (Bessant) –
the love of technology for
its own sake!

6. 2 Traps to Avoid
• Technophilia “Throwing Money” at the Problem
e.g. GM’s $60-80 Billion ’80s - early 1990s… and
beyond – where is GM today??
• Not Investing – A False Accounting Issue

7. Toyota is completely overhauling the Georgetown factory’s assembly lines to be able to
build 11 vehicles of all sizes and shapes and pivot among them quickly as customer
preferences shift, Antis says. The Japanese company has invested $1.3 billion and spent a
year gut-rehabbing the plant, department by department, on weekends and holidays, to
install new technology and operating methods on almost every job. For the first time since
the Camry’s introduction 35 years ago, Toyota redesigned the car from the ground up, with
100 percent new parts…..(Toyota ) is installing lasers that will weld metal parts in 0.3
seconds, compared with 2.0 seconds for the current Camry, allowing for quadruple the
number of welds on each car without slowing the assembly line. That change, along with
the addition of a double-wishbone rear suspension system, has given the car a firmer ride.
The company also installed stamping machines that use massive electricity jolts to heat
sheets of steel so they won’t splinter while being molded into the subtle, less generic
shapes Camry designers wanted to give the car.
Costs of investments can be huge as
BusinessWeek (2017) noted with Toyota:

8. Investment decisions are critical and must be made with the aim of
equipping the firm or the plant to be more competitive in the market.
Furthermore, wrong process choice decisions may severely reduce the
company’s capability to satisfy customer demands in particular markets.
Process choice and technology are both vital because key competitive
factors for customers including cost, delivery speed and flexibility, can
be enhanced by their combination.
If appropriate investment is made in technology and process choice , the
resultant capacity and capability should become a central part of the
firm’s competitive weaponry.
Process and Product
Technology

9. Remember the Operations Strategy Issue:

10. Remember the Operations Strategy Issue
cont:

11. Before spending a single
cent it is vital to understand:
The 4 Types of Layout in
Manufacturing and Services

12. Fixed Position Layout
Product
Operators perform processes
on the 'fixed' product. There
may be more than one
operation performed on the
product at the same time. Each
operation adds to the product
until it is completed.

13. Process Layout in a Functional Approach:
‘Random' movement takes place as products are moved according to process
requirements. There is no ‘flow' as such – each product will have its particular
process requirements and will move to each machine group as and when required
Movement of product (manufacturing) or persons (services)

14. Product Layout

15. Improving Layouts by Moving to the Cellular
Manufacturing Concept

16. Process Layout in a
Product Family Cell
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Group 1 Group 2 Group 3 Group 4

17. Project
Job
Batch
Line
Continuous Process
The 5 Types of Process Choice:

18. Project Job Batch Line Continuous Process
Increase in Volume – typically competing on cost via
scale economies
Increase in Variety – typically competing on capabilities of scope
The Key Distinction of Volume and Variety Outputs from
Process Choice

19. Process Choice in Products and Services

20. Period
Production
Production
Task Volume
Level
Finished
Product
Made
Range
1950-1970s
(Line processes)
1980s on
(hybrid
systems -
FMS)
Narrow
Wide
Achieve supposed
economies of scale
by large production
runs of limited range
Meet specific customer
including cost, delivery,
range and flexibility
Very high
As required
- volume
and variety
To stock
(just in case)
For Customer
requirements
only
(Just in Time)
The Changes to Process Choice & Layout

21. 1. Investment in automation is for general purpose process
technology rather than product specific investment.
2. Many different products are run throughout the plant and
materials handling has to be modified and adjusted to suit many
different products and types.
3. Detailed planning will evolve around sequencing requirements
for each product, capacities for each work centre and order
priorities: because of this scheduling is relatively complicated, in
comparison to repetitive 'line' manufacture.
Key Characteristics of Job Processes

22. The process-focused Project Shop
Characteristics
1. “Unique” products with certain complexity (boats, aircrafts,
trains, motorways…)
2. The production process is managed like a project
3. Makes a one-of-a-kind product (volume = 1)
4. Uses general purpose equipment
5. Has informal relationships with many vendors
6. Very little vertical integration
7. Flexible layout often with factors of production moving to job

23. The Job Shop
A process structure suited for low volume production of a great variety of non-
standard products (highly customized products).
Custom or workshop: Low specialized operations carried out by the same worker
or group of workers that follow up the whole process for the order.
Batch: More specialized operations carried out by different workers or
group of workers (need for more specialization and standardization).
Characteristics
1. Makes many products in small volume
2. Uses general purpose equipment, grouped by the same function in Work
Centres
3. Has informal relationships with vendors
4. Very little vertical integration
5. Departmentalized layout with chaotic flow

24. Key Characteristics of
Batch Processes
1. Automation, especially for lower volumes of batch manufacturing, tends to be general
purpose, rather than dedicated to a particular product whose volume does not demand
product-specific investment in automation.
2. Scheduling is complicated and has to be completely reviewed on a regular, on-going
basis - this applies to new products, 'one-off's that may be required, together with
relatively high volume, standard products: all of these types will need to be scheduled.
3. Operators have to be able to perform a number of functions - this is obviously true of
'job' type processes. In batch, though, this flexibility is crucial in that it will allow
operators to move to various workstations as required.
4. Where automation is being used, set-up time should be short: the ideal set up times is
quick enough to accommodate run lengths of just one unit, switching over to other
models and volumes as, and when, required.

25. The Large Batch (Cell, Flow Shop or
Hybrid Shop)
A process structure that produces a variety of standard
products at relatively low volumes. This variety of standard
products has a similar sequence of operations:
The equipment is laid out in line, instead of grouped by
the same function.
After completing one batch, equipment adjustments for the
next one are made and the next batch produced.
Characteristics
1.Makes several families of products in moderate volume
2.Uses general purpose equipment often customized
3.Little vertical integration
4.Similar product follows the same path, produced in batches
to reduce the impact of setup time.
5.Hybrid layout with flow lines

26. A process structure designed to make discrete parts. Parts are moved
through a set of specially designed workstations at a controlled
rate.
Characteristics
1.Makes few products in large volume
2.Uses specialized high-volume equipment
3.Has formal relationships with vendors
4.May use vertical integration
5.Product-based layout with linear flow
Assembly Line

27. Key Characteristics of Line Processes
1. Process times should be fast - which is critical in order to satisfy delivery speed
requirements
2.There should be simplification in production planning and control and the tasks
themselves should also be simplified for each workstation.
3. There should be small amounts of work in process: in fact, work in process (which, in
accounting terms, can be viewed as an asset) is a liability to the company which can ruin
cash-flow and stifle quick response to market requirements
4. Materials handling between stations should be placed as closely as possible to each
other.
5. Materials flow and control are critical: Just-in Time lends itself most noticeably to 'line'
or very high volume batch production. Stock-outs have to be avoided although, at the
same time, excess stock is a waste and a liability, rather than an asset (materials can be
viewed as an asset on the balance sheet which is misleading and alien to world class
manufacturing.

28. Key Characteristics Of Continuous Process
1. The volume of a product is very high and the process is
dedicated to making, typically, only one product.
2. Huge investment in dedicated plant is often required.
3. Much automation tends to be evident and labour input is one of
'policing' rather than being highly skilled as an integral input to
the overall process.

29. Continuous Flow
An often automated structure that converts raw materials into
finished products in one continuous process.
• Same operations are made in the same equipment to make
the same product, reducing waiting time.
• Objectives:
• Improvement of material flow and operations.
• Workers specialization:
• Increasing speed and added value.

30. Process Choice Type of Layout
Project Fixed
Job Process
Batch Process/Product (see note 1below)
Line Product
Continuous Product (see note 2 below)
Process
Notes:
1. The link between Batch and the type of layout would depend upon volume and
variety - in low volume/high variety Batch, Process layouts would be used; in high
volume/low variety Batch, Product layouts would be appropriate
2. Continuous process differs from line due to the fact that a line process can be
stopped at a particular stage and the product will be at that stage of production; in
Continuous process, stopping the process is an exception and is very costly (e.g.
shutting down a blast furnace).
The Link Between Process Choice and Layout

31. Process
Type
Process Characteristics
Project Highly flexible – individualised output results in high unit costs; mobile and
flexible staff required; quality determined by individual customer requirements.
Jobbing Significant flexibility required though the volume is generally higher than when
compared to projects. Some repetition in the system and many more common
elements to the process than occur with projects. High unit costs relative to
higher volume processes, but low set-up costs.
Batch Some flexibility to handle differences between batches still required, requiring
some investment in set-up for each batch. Higher levels of specialisation
required in both people and machines.
Line Highly specialised people and machines allow high rates of throughput and low
unit costs. Limited flexibility usually associated with this process. Quality
levels consistent.
Continuous
Process
Usually non-discrete products produced over a significant period of time. Very
high levels of investment required and limited possibility for flexibility due to
highly dedicated processes. Commonly highly automated.

32. Key Headings Linking Process Choice and Layout
Process Choice/Type of layout
Line/high vol. Batch
Product Layout
Job/low vol. Batch
Process Layout
Key Headings
Product Design
Product Demand
Scheduling
Maintenance
Worker Skill
Throughput Time
Unit Cost
Major Concern
‘Standard’
Relatively Stable
Relatively Easy
Absolutely Vital
Generally Semi-Skilled
Short
Low
Line Balancing
Specialized
Erratic And Uncertain
Difficult
Important
Generally Highly-Skilled
Long
High
Department Layout

33. Process Choice and
Production/Operations Tasks
Dominant
Utilization
Process
Technology
Process
Flexibility
Project Job Batch Line Continuous
Process
Plant
Essentially
Labour
Labour Plant
General
Purpose
Universal Dedicated Very
Dedicated
High High Low Inflexible

34. The Link Between Process Choice and Marketing Strategy
Project Job Batch Line Continuous Process
The firm sells a wide variety
Of products or designs and there
is the perception of customisation
for each customer. Order sizes
are small or ‘one –off’. New
products are required on an on-
going basis and the firm ‘sells’ its
capability of design and
innovation.
The firm sells a narrow range
of ‘standard’ products but in
high volume. New product
introductions are difficult
because the plant is dedicated
around specific products
Batch has to be managed by initially mapping products according to ‘job’ or ‘line'
characteristics and then focusing the plant to support these cells of manufacture

35. The Importance of Pre-qualifying criteria.
Project Job Batch Line Continuous
Process
Order-winning Delivery Delivery  Price Price
Criteria Quality Quality
Design Design
capabilitycapability
Qualifying Price Price  Delivery Delivery
Criteria Quality quality
Design design
capability capability
Pre-Qualifying
Criteria
Experience, reputation, and other intangible
factors are key here. The importance and
strength of the buyer-supplier relationship
over time may also be a deciding factor.

36. Craft
Job transformation processes
link to craft manufacturing –
high variety, low volume with
general purpose technology
Mass
Line transformation processes link to mass
production – high volume, low variety with
dedicated product technology
The current era of mass customisation and strategic
manufacturing demands high volume, high variety and a
whole range of simultaneous customer requirements.
This requires a combination of technology investment
and skills capabilities to deal with greater number and
range customer demands.
V
A
R
I
E
T
Y
VOLUME
The Manufacturing Eras and Their Impact
on Process Choice

37. Fabrication
Design
Fabrication
Assembly
Design
Fabrication
Design
Distribution
Assembly
Distribution
Fabrication
Assembly
Distribution
Design
Fabrication
Assembly
Distribution
Design
Assembly
Distribution
Standardisation Customisation
Pure
Standardisation
Segmented
Standardisation
Customized
Standardisation
Tailored
Customisation
Pure
Customisation
From ‘pure standardisation’ to ‘pure customisation’ - adapted from
Lampel and Mintzberg.

38. Process Choice
& Layout
© Professor
Steve Brown
Brown and Bessant (IJOPM 2003, p708) explain:
“……there seems to be no firm agreement as to the definitions for, and
major differences between, the paradigms of mass customisation and
agile manufacturing. For example, Feitzinger and Lee (1997) in their
discussion on mass customisation also include “Agile Supply
Networks” as a necessary factor. In addition, Da Silveira et al (2001)
mention agile manufacturing as a feature within their summary on the
literature on mass customisation. We suggest that although it might be
important to understand both we add that agile manufacturing and mass
customisation are not mutually exclusive paradigms. Instead, we argue
that mass customisation is best viewed as a powerful example of a
firm’s ability to be agile.”
Customisation and Agility

39. Bessant et al (2001) offer an emerging model of agile manufacturing
capabilities, consisting of four, key, interlinked parameters: The four major
dimensions of the reference model are:
“Agile Strategy - involving the processes for understanding the firm’s
situation within its sector, committing to agile strategy, aligning it to a fast
moving market, and communicating and deploying it effectively.
Agile Processes - the provision of the actual facilities and processes to
allow agile functioning of the organization
Agile Linkages - intensively working with and learning from others outside
the company, especially customers and suppliers.
Agile People - developing a flexible and multi-skilled workforce, creating
a culture that allows initiative, creativity and supportiveness to thrive
throughout the organization”.
Customisation and Agility

40. Mass Customization
• ‘MC’ presents a paradox to traditional manufacturing
practices i.e. custom, craft, mass..
• Claims to offer unique products in a mass produced, low
cost, high volume environment
– See: Pine (1993); Pine et al. (1995); Duray (2002)
• Enablers: flexible manufacturing systems, micro-
electronics, software, modularization of product
architecture
• Barriers: customization is not ‘free’: trade-off remains
between customization, costs, & delivery

41. Volume
Time
Intro Growth Maturity Saturation Decline
Low
Volume
Batch
High
Volume
Batch
High
Volume
Batch or
Line
High
Volume
Batch or
Line
Low
Volume
Batch
The Change Of Process Choice in a Product Life Cycle

42. Process Choice & Layout
© Professor Steve Brown
The Change Of Process Choice in a Product Life Cycle

43. Key Points
Process technology is a requirement in order to
meet the demands of the needs of markets. In
order to meet these needs, technology can be
used for rapid changeover and set up times,
volume and variety mixes, delivery speed and
reliability requirements and for ensuring process
quality. However, technology must not be seen
as a replacement for human resource capability.

44. Key Points
Vast amounts of investment have been made in
some plants with little competitive advantage
being gained as a result. However, when
appropriate investment is made it should allow
the firm to operate at world-class levels,
provided that it used to meet the needs of the
markets in which the firm is competing.

45. Key Points
A process choice will indicate what a
firm can and cannot do. Process choice
may significantly influence what the
company sells and what it is able to
offer.

46. Key Points
The basic types of layout are:
Fixed,
Process,
Hybrid (cell) and
Product

47. Key Points
The five basic types of process choice are:
Project,
Job,
Batch,
Line, and
Continuous Process.

48. Key Points
Layout and Process choice are of major strategic
importance to manufacturing and services
operations. The options to choose from are also
essentially similar - it's not an infinite variety but
a small number of options and switching between
one to the other is by no means cost free - so
there is an important strategic objective to align
the transformation process with market
requirements and to understand the implications
of changing.