Chapter 3: Process Planning and Design 1

Chapter 3
Process Planning and Design
Chapter 3: Process Planning and Design
Process Planning and Design

Chapter 2 identified the critical factors in providing value to the customer. This chapter discusses the selection and design of the transformation process that can deliver those factorslow cost, high quality, enhanced functionality, speed, and so onin an efficient and effective manner.
Chapter 3: Process Planning and Design 2
Introduction

Fender's Custom Shop Assembly line at IBM's plant in Charlotte, North Carolina Rickard Associates, an editorial production company Martin Marietta's aerospace electronics manufacturing facility in Denver, Colorado Nynex
Examples
Examples illustrate several transformation systems. The Fender Custom Shop is a job shop that has specialized departments for routing, lathe operations, inlaying, paint and finishing, and final assembly. Because work is organized by the task performed, Rickard Associates is also a job shop - even though the work is not performed in one location. Companies like Rickard that rely on information technology to bring separated workers together are referred to as virtual organizations. Martin Marietta converted into focused factories. And assembly lines like the one IBM uses are referred to as flow shops.
Fenders Custom Shop
Customers include Eric Clapton, John Deacon (Queen), David Gilmour, Yngwie Malmsteen and Stevie Ray Vaughn Production Steps: computer controlled routers and lathes shape guitar bodies and necks also have Neck Duplicator necks and bodies hand and machine sanded
Fenders Custom Shop

continued
detailed inlay work done with Hegner precision scroll saw paint and finishing operations in special room where air is re-circulated 10 times/minute buffed hung up and seasoned for two weeks final assembly by actual musicians
IBMs Charlotte, NC Plant
Assembly line produces 27 significantly different products Products include hand-held bar-code scanners, portable medical computers, fiberoptic connectors, and satellite communications devices Kits of parts delivered to workers Computer screen displays assembly instructions
Rickard Associates
Produces magazines and marketing materials Only two of editorial production companys employees work at headquarters in NJ Art director works in AZ Editors are located in FL, GA, MI, and D.C. Freelancers even more scattered Internet and AOL used to coordinate work
Martin Marietta Aerospace Plant
Originally set up as job shop with numerous functional departments

high WIP levels long lead times long travel distances departmental barriers inhibited communication
Plant subsequently arranged into three focused factories

Martin Marietta continued
Each focused factory completed entire electronic assembly for particular application Each focused factory treated as separate business enterprise Factory manager assigned to each focused factory NFL draft used to select worker teams
Martin Marietta continued

Within focused factories part families identified based on technology and processes Standard routings identified for each part family Improvements
seven months of consecutive production with no scrap 50% reduction in WIP 21% reduction in lead times 90% reduction in overtime
Nynex
Analyzed company in terms of four core processes

customer operations customer support customer contact customer provisioning
12
Nynex continued
Obtained services of Boston Consulting Group Visited 152 companies to document best practices Estimated savings are $1.5 to $1.7 billion
13
Variety of Transformation Systems
Fender Custom Shop is job shop Rickard Associates is job shop and is also a virtual organization Martin Marietta converted from a job shop to focused factories IBM uses a flow shop
14
Transformation System Design and Layout Analysis
Transformation system design considers alternative transformation forms and selects best one given characteristics of desired outputs. Layout analysis seeks to maximize the efficiency or effectiveness of operations.
15
Forms of Transformation Systems

Continuous Process
16
Continuous Process
Highly standardized products in large volumes Often these products have become commodities Typically these processes operate 24 hours/day seven days/week Objective is to spread fixed cost over as large a volume as possible
Continuous Process continued
Starting and stopping a continuous process can be prohibitively expensive Highly automated and specialized equipment used Layout follows the processing stages Output rate controlled through equipment capacity and flow mixture rates
Continuous Process continued
Low labor requirements Often one primary input Initial setup of equipment and procedures very complex

Flow Shop
20
Flow Shop
Similar to continuous process except discrete product is produced Heavily automated special purpose equipment High volume - low variety Both services and products can use flow shop form of processing
A Generalized Flow Shop Operation
22
Advantages of the Flow Shop
Low unit cost
specialized high volume equipment bulk purchasing lower labor rates low in-process inventories simplified managerial control
23
Disadvantages of Flow Shop
Variety of output difficult to obtain Difficult to change rate of output Minor design changes may require substantial changes to the equipment Worker boredom and absenteeism Work not very challenging Vulnerable to equipment breakdowns
Disadvantages of Flow Shop continued
Line balanced to slowest element Large support staff required Planning, design, and installation very complex task Difficult to dispose of or modify special purpose equipment
25
Flow Shop Layout
Objective is to assign tasks to groups The work assigned to each group should take about the same amount of time to complete Final assembly operations with more labor input often subdivided easier Paced versus unpaced lines
Line Balancing
available work time Cycle time demand

number of theoretical workstations, N T task times / cycle time
output total task time efficiency = input ( N A stations) cycle time

Line Balancing Example

Task Time Required Precedes A 2.2 min. B, C, D B 3.4 E C 1.7 E D 4.1 F E 2.7 F F 3.3 G G 2.6 -Chapter 3: Process Planning and Design 28
Line Balancing Example

continued
Company operates one shift per day Available time per shift is 450 minutes Demand is 100 units/day
29
Precedence Diagram
B E A C
D
G
30
Calculations
cycle time = 450/75 = 6 minutes/part NT = 20/6 = 3.33 = 4 stations
31
Task Assignment
Time Station Avail. 1 6.0 3.8 0.4 2 6.0 1.9 0.2 Elig. Tasks A C,D C,D C E Will Task Idle Fit? Assign. Time A B -D C -0.2
32
B,C,D B,C -C,D C --
0.4
Task Assignment continued

Time Elig. Station Avail. Tasks 3 6.0 3.3 4 6.0 E F G Will Fit? E F G Task Idle Assign. Time E F G 0.0 3.4
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Line Balancing Solution

Station 3
Station 1 B E A C Station 2 D
Station 4 F G
34
Efficiency
efficiency = 20/(4*6) = 83.3%
35
Precedence Graph for Credit Applications
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Stations Assignments for Credit Application
37

Job Shop
38
Job Shop
High variety - low volume Equipment and staff grouped based on function Each output processed differently
39
A Generalized Job Shop Operation
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Advantages of the Job Shop

Flexibility to respond to individual demands Less expensive general purpose equipment used Maintenance and installation of general purpose equipment easier General purpose equipment easier to modify and therefore less susceptible to becoming obsolete
Advantages of the Job Shop

continued
Dangerous activities can be segregated from other operations Higher skilled work leading to pride of workmanship Experience and expertise concentrated Pace of work not dictated by moving line Less vulnerable to equipment breakdowns
Disadvantages of the Job Shop
General purpose equipment is slower Higher direct labor cost High WIP inventories High material handling costs Management control very difficult
43
Directly Specified Closeness Preferences
A = absolutely necessary E = especially important I = important O = ordinary closeness OK U = unimportant X = undesirable
44
Cost-Volume-Distance Model
TC =
C
i =1 j=1
ij
V Dij ij
45
Office Layout
46

Cellular Production
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The Cell Form
Combines flexibility of job shop with low costs and short response times of flow shop Based on group technology First identify part families Then form machine cells to produce part families
Conversion of a Job Shop Layout to a Cellular Layout
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Organization of Miscellaneous Parts into Families
50
Advantages of Cellular Production
Reduced machine setup times
increased capacity economical to produce in smaller batch sizes smaller batch sizes result in less WIP less WIP leads to shorter lead times shorter lead times increase forecast accuracy and provide a competitive advantage
Advantages of Cellular Production continued
Parts produced in one cell Capitalize on benefits of using worker teams Minimal cost to move from job shop to cellular production (e.g. EHC) Can move from cellular production to mini-plants
Disadvantages of Cellular Production
Volumes too low to justify highly efficient high volume equipment Vulnerable to equipment breakdowns Balancing work across cells Does not offer the same high degree of customization as the job shop
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Cellular Layout
Teams of workers and equipment to produce families of outputs Workers cross-trained Nominal cells versus physical cells. Remainder cell Cell formation methods
production flow analysis

Original Machine-Component Matrix

A B C D E 1 1 2 3 1 4 5 1 1 1 1 1 1
1 1
1 1
Reordered Machine-Component Matrix

A C E B D 1 1 3 1 5 1 2 4 1 1 1 1 1 1 1 1 1
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Project Operations
57
Project Operations

Large scale Finite duration Nonrepetitive Multiple interdependent activities Offers extremely short reaction times
Selection of the Process
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Volume/Variety Considerations
High volume indicate automated mass production High variety implies use of skilled labor and general purpose equipment Make-to-stock versus make-to-order
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Effect of Output Characteristics on Transformation Systems
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Product/Process Life Cycles
In R&D stage, product made in small volumes At peak of life cycle, demand may justify high volume special purpose equipment System should evolve as market evolves Whether an organization moves with a product through its life cycle depends on the organizations focus
Selection of Transformation System by Stage of Life Cycle
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Service Processes

Often implemented with little development or pretesting Need to consider amount of customer contact Customers may not arrive at smooth and even increments Including customer in service process provides opportunities to improve service
New Transformational Technologies and Reengineering
65
Information Technology
World Wide Web
Federal Express

Web server set up in late 1994 By 1996 12,000 customers using service each day to access package-tracking database provides higher customer service saves FedEx $2 million per year
Intranets
Information Technology continued

Decision support systems Artificial intelligence Expert systems
67
The Office of the Future

Focus of 1980s was on improving individual productivity Focus 1990s is enhancing way teams work together Groupware

communications (e-mail) collaboration (access to shared data) coordination (jointly accomplishing activities)
Manufacturing Technologies
Numerical Control (NC)

computer numerical control direct numerical control
Robotics Flexible Manufacturing Systems (FMS)
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Business Process Design (Reengineering)
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Division of Labor Concept
Work broken down into its simplest most basic tasks
Performing same task facilitates attaining greater skill No time lost switching to another task Workers well positioned to improve tools and techniques
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Division of Labor Concept

continued
Division of labor concept not challenged until recently despite dramatic changes in technology Quality, innovation, service, and value more important than cost, growth, and control
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Process
Set of activities that taken together produce a result of value to the customer Organizing on basis of processes
Eliminate delays and errors when work is handed off Capture information once and at source When people closest to process perform work, there is little need for management overhead
Business Process Design (BPD)

The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance
Hammer, M. and Stanton, S. The Reengineering Revolution, Harper Business, 1995.

Radical
Profoundly change the way work performed Not concerned with making superficial changes Get to root Get rid of old Reinventing, not improving
Redesign
BPD is about designing how work is done Smart, capable, well trained, highly motivated employees mean little if the way work is performed is poorly designed
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Process

All organizations perform processes Customers not interested in individual activities but rather overall results Few of them are organized on the basis of processes Thus, processes tend to go unmanaged Team approach one way this addressed
Dramatic
Quantum leaps in performance, not marginal or incremental improvements Breakthroughs in performance
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IBM Credit Example
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IBM Credit Example continued
Order logged by 1 of 14 people in conference room Carted upstairs to credit department Information entered into computer to check borrowers creditworthiness Results written on piece of paper
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Business practices department modified standard loan covenant in response to customer requests Used its own computer system Pricer keyed data into PC to determine appropriate interest rate Administrator converted to quote letter and Fedexed to field sales rep.
Average time to process a request was 6 days Could take as long as 2 weeks Actual processing time 90 minutes Deal Structurer

Turnaround time 4 hours Number of deals processed increased 100 times with small reduction in head count
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Chapter 3: Process Planning and Design 1

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Chapter 3

Process Planning and Design

Chapter 3: Process Planning and Design

Process Planning and Design

Fenders Custom Shop

Fenders Custom Shop

IBMs Charlotte, NC Plant

Chapter 3: Process Planning and Design

Martin Marietta Aerospace Plant

Originally set up as job shop with numerous functional departments

Plant subsequently arranged into three focused factories

Martin Marietta continued

Martin Marietta continued

Analyzed company in terms of four core processes

customer operations customer support customer contact customer provisioning

Chapter 3: Process Planning and Design

Chapter 3: Process Planning and Design

Variety of Transformation Systems

Chapter 3: Process Planning and Design

Transformation System Design and Layout Analysis

Chapter 3: Process Planning and Design

Forms of Transformation Systems

Chapter 3: Process Planning and Design

Continuous Process continued

Continuous Process continued

Forms of Transformation Systems

Chapter 3: Process Planning and Design

A Generalized Flow Shop Operation

Chapter 3: Process Planning and Design

Advantages of the Flow Shop

Low unit cost

Chapter 3: Process Planning and Design

Disadvantages of Flow Shop

Disadvantages of Flow Shop continued

Chapter 3: Process Planning and Design

Flow Shop Layout

available work time Cycle time demand

output total task time efficiency = input ( N A stations) cycle time

Line Balancing Example

Line Balancing Example

Chapter 3: Process Planning and Design

Chapter 3: Process Planning and Design

B,C,D B,C -C,D C --

Chapter 3: Process Planning and Design

Task Assignment continued

Chapter 3: Process Planning and Design

Line Balancing Solution

Chapter 3: Process Planning and Design

Precedence Graph for Credit Applications

Chapter 3: Process Planning and Design

Stations Assignments for Credit Application

Chapter 3: Process Planning and Design

Forms of Transformation Systems

Chapter 3: Process Planning and Design

Chapter 3: Process Planning and Design

A Generalized Job Shop Operation

Chapter 3: Process Planning and Design

Advantages of the Job Shop

Advantages of the Job Shop

Disadvantages of the Job Shop

Chapter 3: Process Planning and Design

Directly Specified Closeness Preferences