Lessons 7 to 9: Process & layout i.

Strategy
Operations

Management
The objective of a process strategy is to build a
production process that meets customer
requirements and product specifications within
cost and other managerial constraints (such as
quality, efficiency, flexibility)
Process: Is any part of an organization that
takes inputs and transforms them into outputs
Aim of a process strategy
According to Krajewski and Ritzman (1999):
1. Process choice (how resources are organized to
implement the flow strategy)
2. Vertical integration
3. Customer involvement
4. Resource flexibility
5. Capital intensity
Major decisions for effective processes
Process Structure
Product-process position
(manufacturing)
Layout
Resource Flexibility
Specialized
Enlarged
Customer Involvement
Low involvement
High involvement
Effective Process
Design
Strategy for Change
Process reengineering
Process improvement
Capital Intensity
Low automation
High automation
Make-to-order
Assemble-to-order
Make-to-stock
Project, job, batch, line, continuous
It brings together: Volume, Product customization, Process characteristics
Product-process matrix
(1) (2) (3) (4) (5)
One of a kind Low volume, Multiple Few major High volume
products, made low products products, high
to customer standardization moderate higher standardization,
order volume volume commodity
products
Process
Characteristics
(1)
Complex and highly
customized process,
unique sequence of
tasks
(2)
J umbled flows,
complex work with
many exceptions
(3)
Disconnected line
flows, moderately
complex work
(4)
Connected line,
routine work
(5)
Continuous
flows, highly
repetitive work
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Less Customization and Higher Volume
Product Design
Continuous
process
Project
process
Line
process
Batch
process
J ob
process
Flexibility (High)
Unit Cost (High)
Flexibility (Low)
Unit Cost (Low)
Source: J .G. Monks Operations Management, Adapted from Robert Hay
and Steven Wheelwright, Restoring Competitive Edge: Competing
through Manufacturing (New York: J ohn Wiley & Sons, 1984).
OM in action: Process strategy
Source: Krajewski and Ritzman, Operations Management (1999)
According to Heizer & Render:

Four basic strategies (there are many ways they may be
implemented):

1. Process focus
2. Repetitive focus
3. Product focus
4. Mass customization
Types of process strategies
Projects

J ob shops
(machine, print,
hospitals, restaurants)
Arnold Palmer Hospital
Repetitive
(autos, motorcycles,
home appliances)
Harley-Davidson
(commercial
baked goods,
steel, glass, beer)
Frito-Lay
High Variety
one or few
units per run,
(allows
customization)
Changes in
Modules
modest runs,
standardized
modules
Changes in
Attributes
(such as grade,
quality, size,
thickness, etc.)
long runs only
Mass Customization
(difficult to achieve,
but huge rewards)
Dell Computer
Low
Volume
High
Volume
Volume

Assembly
line

Continuous process
Variety
Process
Focus
Product
Focus
Volume and variety based strategy
Intermittent vs Continuous
(Focus Function) (Focus Flow)
Productionsystems
Project process
Process that focuses on making one-of-a-kind
products.
Intermittent process
Process that produces products in small lot sizes (e.g.,
job and batch operations).
Line-flow process
Continuous process that produces high volume,
highly standardized products (e.g., assembly-line and
continuous operations).
Source: J .G. Monks Operations Management
Fixed-position (project) layout
Process-oriented layout (job-shop, functional layout)
Product-oriented layout (flow-shop layout, line layout)
Work-cell layout

Facility Layout
. Facility layout can be defined as the process by which the
physical arrangement of human and capital resources,
related to the flow of materials are determined, including
placement of departments, workstations, machines, and
stock-holding points.
Facilities are organized around specific activities
or processes
General purpose equipment and skilled personnel
High degree of product flexibility
Typically high costs and low equipment utilization
Product flows may vary considerably making
planning and scheduling a challenge
Low volume, high variety, intermittent processes
Many inputs, many different outputs
Strategy: 1. Process focus (job process)
A project process lies at the high-customization, low-
volume end of the process-choice continuum.
The sequence of operations and the process involved
in each one are unique to each process, creating one-
of-a-kind products or services made specifically to
customer order
Firms with project processes sell themselves on the
basis of their capabilities rather than on specific
products.
Projects tend to be complex, take a long time and be
large
Close coordination
Resources are assembled (at particular stages) and
then released
Flexible flow strategy, work flows defined each new
project
Strategy: 1b. Project process
Product remains in one place
Workers and equipment come to site
Addresses the layout requirements of large, bulky
projects such as ships and buildings

Layout Type
Process Similar operations are performed in a
common or functional area, regardless of
the product in which the parts are used.
Product
(Flow-shop layout)
Equipment/operations are located
according to the progressive steps required
to make the product.
Group Technology
(GT) or Cellular
Groups of dissimilar machines are brought
together in a work cell to perform tasks on a
family of products that share common
interests.
Fixed-Position The product, because of its size and/or
weight, remains in one location and
processes are brought to it.

Fixed position layout
Like machines and equipment are grouped together
Flexible and capable of handling a wide variety of
products or services
Scheduling can be difficult and setup, material
handling, and labor costs can be high
Low utilization (5-25%)
Process-oriented layout
(process layout, functional layout)
Layout Type
Process Similar operations are performed in a
common or functional area, regardless of
the product in which the parts are used.
Product
(Flow-shop layout)
Equipment/operations are located
according to the progressive steps required
to make the product.
Group Technology
(GT) or Cellular
Groups of dissimilar machines are brought
together in a work cell to perform tasks on a
family of products that share common
interests.
Fixed-Position The product, because of its size and/or
weight, remains in one location and
processes are brought to it.

Foundry
Milling
machines
Lathes Grinding
Painting Drills
Office
Welding
Forging
Deals with low-volume, high-
variety production (also called job
shop or intermittent production)
Process-oriented layout
(process layout, functional layout)
Facilities may be organized as assembly lines
Characterized by modules with parts and assemblies
made previously. Modules may be combined for many
output options (customization)
Modules give the economic advantage of a
continuous process and the advantage of making
many outputs with not many inputs
Less flexibility than process-focused facilities but
more efficient
Strategy: 2. Repetitive focus
(modular)
Harley Davidson
Automobile
Assembly
Line
Strategy: repetitive focus
Differs from the job process with respect to volume,
variety and quantity: higher volumes; narrower range
of products; variety is achieved more through an
assemble-to-order strategy than the job processs
make-to-order; production lots are handled in larger
quantities or batches than they are with job
processes.
A batch of one product is processed and then
production is switched to the next one.
Intermediate flow strategy. Average or moderate
volume and variety too great to devote resources to
each product. Jumbled flow pattern, with no standard
sequence of operations through the facility. Some
segments of the process have a line flow.


Strategy: 2. Batch process
Facilities are organized by product
High volume but low variety of products (addition
of standard options to the main product).
Long or continuous production runs enable
efficient processes
Typically high fixed cost but low variable cost
Generally less skilled labor
Line flow strategy (or intermediate flow strategy
when mass customization or assemble-to-order are
pursued).
High utilization (70-90%)
Easier scheduling
Low flexibility and specialized equipment
Strategy: 3. product focus/line process
Few Inputs
(corn, potatoes, water,
seasoning)
Output variations in size,
shape, and packaging
(low-volume, high variety,
continuous process)
Frito-Lay
Strategy: product focus
Automobile
Assembly
Line
Nucor Steel Plant
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Continuous cast steel
sheared into 24-ton slabs
Hot tunnel furnace - 300 ft
Hot mill for finishing, cooling, and coiling
Scrap
steel
Ladle of molten steel
Electric
furnace
Strategy: 3b. Continuous process
The extreme end of high-volume, standardized production
with rigid line flows.
Usually one primary material moves without stopping through
the facility.
The process is often capital intensive and opearted round the
clock to maximize utilization
Fit perfectly a line flow strategy
1. Volume is adequate for high equipment utilization
2. Product demand is stable enough to justify high
investment in specialized equipment
3. Product is standardized or approaching a phase of life
cycle that justifies investment
4. Supplies of raw materials and components are adequate
and of uniform quality
Organized around products or families of similar high-volume,
low-variety products. Seeks the best personnel and machine
utilizations in repetitive or continuous productions
Layout Type
Process Similar operations are performed in a
common or functional area, regardless of
the product in which the parts are used.
Product
(Flow-shop layout)
Equipment/operations are located
according to the progressive steps required
to make the product.
Group Technology
(GT) or Cellular
Groups of dissimilar machines are brought
together in a work cell to perform tasks on a
family of products that share common
interests.
Fixed-Position The product, because of its size and/or
weight, remains in one location and
processes are brought to it.

Repetitive and product layout/line layout
1. Low variable cost per unit
2. Low material handling costs
3. Reduced work-in-process inventories
4. Easier training and supervision
5. Rapid throughput
Advantages
1. High volume is required
2. Work stoppage at any point ties up the
whole operation
3. Lack of flexibility in product or production
rates
Disadvantages
Repetitive and product layout/line layout
Layout of a production line
The rapid, low-cost production of goods and service to
satisfy increasingly unique customer desires
Combines the flexibility of a process focus with the
efficiency of a product focus
Strategy: 4. Mass customization
Many parts and
component inputs
Many output versions
(custom PCs and notebooks)
Many modules
(chips, hard drives,
software, cases)
(high-volume, high-variety)
Dell Computer
Mass Customization
Effective
scheduling
techniques
Rapid
throughput
techniques
Repetitive Focus
Flexible people
and equipment
Process-Focused
High variety, low volume
Low utilization (5% to 25%)
General-purpose equipment
Product-Focused
Low variety, high volume
High utilization (70% to 90%)
Specialized equipment
Modular
techniques
Accommodating
Product and
Process Design
Responsive
Supply Chains
Mass customization at
Japans National Bicycle Co.
CAM
CAM
CAM
TUBE CUTTING
FRONT ASSEMBLY
REAR ASSEMBLY
3-D MEASUREMENT
Quality Assurance
Marketing
ORDER DATA
INCLUDING
CUSTOMERS
MEASUREMENTS
AND OPTIONS
CAD
COMPUTER
INSTRUCTIONS
PAINTING ASSEMBLY
2-WEEK LEAD TIME
One-Worker, Multiple-Machines (OWMM) Cell
Work cell layout: Arranges machinery and equipment to focus
on production of a single product or group of related products

Layout Type
Process Similar operations are performed in a
common or functional area, regardless of
the product in which the parts are used.
Product
(Flow-shop layout)
Equipment/operations are located
according to the progressive steps required
to make the product.
Group Technology
(GT) or Cellular
Groups of dissimilar machines are brought
together in a work cell to perform tasks on a
family of products that share common
interests.
Fixed-Position The product, because of its size and/or
weight, remains in one location and
processes are brought to it.

Alternative strategies and hybrid layouts
5. (Group Technology) cells:
Cellular manufacturing
People and machines are organized in cells that
focus on single products or product groups (group
technology identifies products that have similar
characteristics).
Cells can be reconfigured as designs or volume
changes
Alternative strategies and hybrid layouts
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Current layout - straight
lines make it hard to balance
tasks because work may not
be divided evenly
Improved layout - in U
shaped work cell, with
cross-trained work.
Cells may reduce employee
movement and space
requirements while
enhancing communication,
reducing the number of
workers, and facilitating
inspection
Alternative strategies and hybrid layouts
Advantages of cell manufacturing:
1. Reduced work-in-process inventory
2. Less floor space required
3. Reduced raw material and finished goods
inventory
4. Reduced direct labor
5. Heightened sense of employee participation
6. Increased use of equipment and machinery
7. Reduced investment in machinery and equipment
Requirements:
1. Identification of families of products
2. A high level of training, flexibility and empowerment
of employees
3. Being self-contained, with its own equipment and
resources
4. Quality at each station in the cell
6. Flexible Manufacturing System (FMS)
Alternative strategies and hybrid layouts
Computer controls both the workstation and the material handling
equipment
Enhance flexibility and reduced waste
Can economically produce low volume at high quality
Reduced changeover time and increased utilization
Computer-Integrated Manufacturing (CIM) (Extension of FMS)