Operations

Management
Process Strategies and
Layout Strategies
Chapter 7
Prepared by : Shatina Saad OPM 530
7-1
 Outline
 FOUR PROCESS STRATEGIES
 PROCESS ANALYSIS AND DESIGN
 SERVICE PROCESS DESIGN
 SELECTION OF EQUIPMENT AND TECHNOLOGY
 PRODUCTION TECHNOLOGY
 TECHNOLOGY IN SERVICES
 ENVIRONMENTALLY FRIENDLY PROCESSES
 PROCESS REENGINEERING

Prepared by : Shatina Saad OPM 530

7-2
 Learning Objectives
When you complete this chapter, you should be able to :
Identify or Define:
 Process focus
 Repetitive focus
 Product focus
 Process reengineering
 Service process issues
 Environmental issues
Describe or Explain:
 Process analysis
 Service design
 Green manufacturing
 Production technology
Prepared by : Shatina Saad OPM 530
7-3
 Fit of Process, Volume, and Variety
Low-Volume Repetitive Process High-Volume
(Intermittent) (Modular) (Continuous)

Process focus Mass

High Variety projects, job Customization
One or few units per run, shops,(machine, print,
high variety (difficult to achieve,
carpentry) but huge rewards)
(allows customization)
Standard Register Dell Computer Co.
Changes in modules
Modest runs, standardized Repetitive
modules (autos, motorcycles)
Harley Davidson
Changes in attributes Poor strategy Product focus
(such as grade, quality, (commercial baked
size, thickness, etc.)
goods, steel, glass)
Long runs only
Nucor Steel

Prepared by : Shatina Saad OPM 530

7-4
 Process Strategies
 Involve determining how to produce a product or
provide a service
 Objective
 Meet or exceed customer requirements
 Meet cost & managerial goals
 Has long-run effects
 Product & volume flexibility
 Costs & quality

Prepared by : Shatina Saad OPM 530

7-5
 Types of Process Strategies
 Process strategies that follow a continuum
 Within a given facility, several strategies may be used
 These strategies are often classified as:

Process-Focused Repetitive- Product-Focused

Focused

Continuum
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7-6
 Process-Focused Strategy
 Facilities are organized by process
 Similar processes are together
 Example: All drill presses are together
 Low volume, high variety products
 ‘Jumbled’ flow
Product A
Operation
 Other names
1 2 3
 Intermittent process
 Job shop
Product B
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7-7
 Process Focus

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7-8
 Process Focused Strategy -
Pros & Cons
 Advantages
 Greater product flexibility
 More general purpose equipment
 Lower initial capital investment
 Disadvantages
 High variable costs
 More highly trained personnel
 More difficult production planning & control
 Low equipment utilization (5% to 25%)

Prepared by : Shatina Saad OPM 530

7-9
 Repetitive Focused Strategy
 Facilities often organized by assembly lines
 Characterized by modules
 Parts & assemblies made previously
 Modules combined for many output options
 Other names
 Assembly line
 Production line

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7-10
 Repetitive Focus

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7-11
 Repetitive Focused Strategy -
Considerations
 More structured than process-focused, less
structured than product focused
 Enables quasi-customization
 Using modules, it enjoys economic advantage of
continuous process, and custom advantage of
low-volume, high-variety model

Prepared by : Shatina Saad OPM 530

7-12
 Product-Focused Strategy
 Facilities are organized by product
 High volume, low variety products
 Where found
 Discrete unit manufacturing
 Continuous process manufacturing

 Other names Products A & B

 Line flow production
 Continuous production 1 2 3
Operation

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7-13
 Product Focus

Prepared by : Shatina Saad OPM 530

7-14
 Product-Focused Strategy
Pros & Cons
 Advantages
 Lower variable cost per unit
 Lower but more specialized labor skills
 Easier production planning and control
 Higher equipment utilization (70% to 90%)
 Disadvantages
 Lower product flexibility
 More specialized equipment
 Usually higher capital investment

Prepared by : Shatina Saad OPM 530

7-15
 Process Continuum

Process Focused Repetitive Focus Product Focused

(intermittent process) (assembly line) (continuous process)

Continuum

High variety, low volume Modular Low variety, high volume

Low utilization (5% - 25%) Flexible equipment High utilization (70% - 90%)
General-purpose equipment Specialized equipment

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7-16
 Process Strategies
Repetitive Focus
Modular design
Flexible equipment
Modular techniques

Mass Customization

Effective scheduling Rapid throughput

techniques techniques
Process-focused Product-focused
High variety, low volume Low variety, high volume
Low utilization (5% - 20%) High utilization (70% - 80%)
General purpose equipment Specialized equipment
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7-17
 Mass Customization
 Using technology and imagination to rapidly
mass-produce products that cater to sundry
unique customer desires.
 Under mass customization the three process
models become so flexible that distinctions
between them blur, making variety and volume
issues less significant.

Prepared by : Shatina Saad OPM 530

7-18
 Volume and Variety of Products
Volume and Low Volume High Repetitive High Volume
Variety of Variety Process Process Low Variety
Products (Intermittent) (Modular) Process
(Continuous)
One or very few Projects
units per lot Mass
Very small runs, high Job Shops Customization
variety
Modest runs, modest Disconnected
variety Repetitive
Long runs, modest Poor Strategy Connected
variations Repetitive
(High variable
Very long runs, Continuous
changes in costs)
attributes
Equipment utilization 5%-25% 20%-75% 70%-80%
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7-19
 A Comparison (1)
Process Focus Repetitive Focus Product focus Mass
(Low volume, High (Modular) (High-volume, Customization
variety) low-variety) (High-volume,
high-variety

1. Small quantity, Long runs, Large quantity, Large quantity,

large variety of standardized small variety of large variety of
products product, from products products
modules

2. General purpose Special Special purpose Rapid

equipment equipment aids in equipment changeover on
use of assembly flexible equipment
line

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7-20
 A Comparison (2)
Process Focus Repetitive Focus Product focus Mass
Customization

3 Broadly skilled Modestly trained Operators less Flexible operators

operators employees broadly skilled trained for
customization

4 Many instructions Reduced training Few work Custom orders

because of change and number of job orders and job require many
in jobs instructions instructions instructions

5 Raw material JIT techniques Raw material Raw material low

high relative to used low relative to relative to product
product value product value value

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 A Comparison (3)
Process Focus Repetitive Focus Product focus Mass
Customization

6 WIP high relative JIT techniques WIP low relative to WIP driven
to output used output down by JIT,
kanban, lean
production

7 Units move Movement Units move swiftly Goods move

slowly thru plant measured in hours thru facility swiftly thru
& days facility

8 Finished goods Finished goods Finished goods Finished goods

made to order, not made to frequent made to forecast, made to order
stored forecasts then stored
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7-22
 A Comparison (4)
Process Focus Repetitive Focus Product focus Mass
Customization
9 Scheduling Scheduling based Scheduling Scheduling
complex and on building models relatively simple, sophisticated to
concerned with from a variety of concerns accommodate
trade-off between forecasts establishing customization
inventory, capacity, sufficient rate of
and customer output to meet
service forecasts

10 Fixed costs low, Fixed costs Fixed costs high, Fixed costs high;
variable costs high dependent on variable costs low variable costs
flexibility of must be low
facilities

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 A Comparison (5)
Process Focus Repetitive Focus Product focus Mass
Customization

11 Costing, done Costs usually Because of high High fixed costs

by job, is known based on fixed costs, cost and dynamic
estimated prior to experience dependent on variable costs
doing job but only utilization of
known after doing capacity
job

Prepared by : Shatina Saad OPM 530

7-24
 Questions for Process Analysis
and Design
 Is the process designed to achieve competitive
advantage in terms of differentiation, response, or
low cost?
 Does the process eliminate steps that do not add
value?
 Does the process maximize customer value as
perceived by the customer?
 Will the process win orders?

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7-25
 Tools for Process Design
 Flow Diagrams
 Process Charts
 Time-Function/Process Mapping
 Work Flow Analysis

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7-26
Production Process Flow Diagram
Customer
Purchasing Customer sales
(order inks, paper, representative
other supplies) take order

Vendors Prepress Department

(Prepare printing plates
Accounting Receiving and negatives)

Warehousing Printing Department

(ink, paper, etc.)

Collating Gluing, binding,

Department stapling, labeling

Information flow Polywrap

Department
Material flow
Shipping

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7-27
 Process Chart Example
SUBJECT: Request tool purchase
Dist (ft) Time (min) Symbol Description
 D  Write order
 D On desk
75   D  To buyer
 D  Examine
 = Operation;  = Transport;  = Inspect;
D = Delay;  = Storage

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7-28
 Time Function Map
(Target)
Customer Order Receive
Product product

Process
Sales Order
Order

Production Wait
control
Order

WIP

Product
Plant Print Extrude

Warehouse Wait

Product
Transport Move

1 day 2 days 1 day 1 day 1 day

6 days

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7-29
Work Flow Analysis - Four Phases
 Request from a customer or an offer to provide
services by a performer
 Negotiation, allowing the customer and the
performer to agree on how the work should be
done and what will constitute customer
satisfaction
 Performance of the assignment and completion
 Acceptance, closing the transaction provided the
customer expresses satisfaction and agrees that
the conditions were met.
Prepared by : Shatina Saad OPM 530
7-30
 Attaining Lean Production
 Focus on inventory reduction
 Build systems that help employees
 Reduce space requirements
 Develop close relationships with suppliers
 Educate suppliers
 Eliminate all but value-added activities
 Develop the workforce
 Make jobs more challenging
 Set sights on perfection!

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 Customer Interaction and Process
Strategy Low High
Mass Service Professional Service
Commercial Personal banking
Banking

High
General purpose law
Full-service firms
Degree of Labor Intensity

stockbroker

Retailing Boutiques

Service Factory Service Shop

Law clinics
Limited service For-profit
stockbroker hospitals

Low
Warehouse and Fast food Fine dining
Hospitals
catalog stores restaurants restaurants
Airlines
No frills airlines

Degree of Interaction and Customization

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7-32
 Techniques for Improving Service
Productivity
Strategy Technique
 Separation  Structure service so customers
must go where service is
offered
 Self-service  Self-service so customers
examine, compare and
evaluate at their own pace
 Postponement  Customizing at delivery
 Focus  Restricting the offerings

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Techniques for Improving Service
Productivity - Continued
 Modules  Modular selection of service.
Modular production
 Automation  Separating services that lend
themselves to automation
 Scheduling  Precise personnel scheduling
 Training  Clarifying the service options
 Explaining problems
 Improving employee flexibility

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 Outline
 THE STRATEGIC IMPORTANCE OF LAYOUT
DECISIONS
 TYPES OF LAYOUT
 Fixed-position layout
 Process-oriented layout
 Office layout
 Retail layout
 Warehousing and storage layouts
 Repetitive and product-oriented layout

Prepared by : Shatina Saad OPM 530

7-35
 Learning Objectives
When you complete this chapter, you should be
able to :
Identify or Define:
 Fixed-position layout
 Process-oriented layout
 Work cells
 Focused work center
 Office layout
 Retail layout
 Warehouse layout
 Product-oriented layout
 Assembly-line factory
Prepared by : Shatina Saad OPM 530
7-36
 Learning Objectives
When you complete this chapter, you should be
able to :
Describe or explain:
 How to achieve a good layout for the process
facility
 How to balance production flow in a repetitive or
product-oriented facility

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7-37
 What is Facility Layout
Location or arrangement of everything
within & around buildings
Objectives are to maximize
 Customer satisfaction
 Utilization of space, equipment, & people
 Efficient flow of information, material, &
people
 Employee morale & safety

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7-38
 Objectives of the Layout Strategy
To develop an economical layout
which will meet the requirements of :
 product design and volume (product
strategy)
 process equipment and capacity
(process strategy)
 quality of work life (human resource
strategy)
 building and site constraints (location
strategy)
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7-39
 Strategic Importance of Layout
Proper layout enables:
 Higher utilization of space,
equipment,and people
 Improved flow of information,
materials, or people
 Improved employee morale and safer
working conditions
 Improved customer/client interaction
 Flexibility

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7-40
 Six Types of Layout Strategies
1. Fixed-position layout
 large bulky projects such as ships and buildings

2. Process-oriented layout
 deals with low-volume, high-variety production
(“job shop”, intermittent production)

3. Office layout
 positions workers, their equipment, and spaces/
offices to provide for movement of information

Prepared by : Shatina Saad OPM 530

7-41
 Six Types of Layout Strategies – cont’
4. Retail/service layout
 allocates shelf space and responds to customer
behavior

5. Warehouse layout
 addresses trade-offs between space and material
handling

6. Product-oriented layout
 seeks the best personnel and machine use in
repetitive or continuous production

Prepared by : Shatina Saad OPM 530

7-42
 Requirements of a Good Layout
 an understanding of capacity and
space requirements
 selection of appropriate material
handling equipment
 decisions regarding environment and
aesthetics
 identification and understanding of
the requirements for information flow
 identification of the cost of moving
between the various work areas
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7-43
 Constraints on Layout Objectives
Product design & volume
Process equipment & capacity
Quality of work life
Building and site

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7-44
 Areas of Concern in Layout
Strategy
Communication

Service Material
Areas Attributes
Layout
Work
Warehousing Strategy
Cell

Material
Safety
Flow

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7-45
 1. Fixed-Position Layout
 Design is for stationary project
 Workers and equipment come to site
 Complicating factors:-
 There is limited space at virtually all sites
 At different stages in the construction
process, different materials are needed –
therefore, different items become critical as
the project develops
 The volume of materials needed is dynamic

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7-46
 2. Process-Oriented Layout
 Design places departments with large
flows of material or people together
 Department areas having similar
processes located in close proximity
 e.g., All x-ray machines in same area
 Used with process-focused processes

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7-47
 Steps in Developing a
Process-Oriented Layout
1. Construct a “from-to matrix”
2. Determine space requirements for each
department
3. Develop an initial schematic diagram
4. Determine the cost of this layout
5. By trial-and-error (or more
sophisticated means), try to improve
the initial layout
6. Prepare a detailed plan that evaluates
factors in addition to transportation cost
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7-48
 a) Cellular Layout - Work Cells
 Special case of product-oriented layout -
in what is ordinarily a process-oriented
facility
 Consists of different machines brought
together to make a product
 Temporary arrangement only
 Example: Assembly line set up to
produce 3000 identical parts in a job
shop

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7-49
 Improving Layouts by Moving to the Work
Cell Concept

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7-50
 Work Cells - Some Advantages
 Reduced work-in-process inventory
 Less floor space required
 Reduced raw material and finished goods
inventories required
 Reduced direct labor costs
 Heightened sense of employee participation
 Increased utilization of equipment machinery
 Reduced investment in machinery and
equipment

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7-51
 Work Cell Advantages

Inventory Equipment utilization

Floor space Employee
Direct labor costs participation
Quality

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7-52
 Work Cell Floor Plan

Saws Drills Office

Work Cell
Tool Room

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7-53
 Requirements for Cellular
Production
 Identification of families of products -
group technology codes
 High level of training and flexibility on
the part of the employees
 Either staff support or flexible,
imaginative employees to establish the
work cells initially
 Test (poka-yoke) at each station in the
cell

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 Work Cells, Focused Work Centers and the
Focused Factory
A temporary assembly-line-oriented arrangement of
Work Cell machines and personnel in what is ordinarily a process-
oriented facility
Example: job shop with rearranged machinery and
personnel to produce 30 unique control panels

Focused Work A permanent assembly-line-oriented arrangement of

machines and personnel in what is ordinarily a process-
Center oriented facility
Example: manufacturing of pipe brackets at a shipyard

Focused Factory A permanent facility to produce a product or component in

a product-oriented facility
Example: a plant to produce window mechanisms for
automobiles
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7-55
 3. Office Layout
 Design positions people, equipment,
& offices for maximum information
flow
 Arranged by process or product
 Example: Payroll dept. is by process
 Relationship chart used
 Examples
 Insurance company
 Software company

Prepared by : Shatina Saad OPM 530

© 1995
Corel Corp.
 Office Relationship Shart
1 President
O Val. Closeness
2 Chief Technology Officer U
A A A Absolutely
3 Engineer’s Area I I necessary
O I I
4 Secretary I U I E Especially
A I O O important
5 Office entrance A E U O
X E E U I Important
7 Equipment cabinet U A O
O U I O Ordinary OK
8 Photocopy equipment O X U Unimportant
U A
9 Storage room E X Not desirable
E
9 Storage room
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 4. Retail/Service Layout
 Design maximizes product exposure to
customers
 Decision variables
 Store flow pattern
 Allocation of (shelf) space to products
 Types
 Grid design Vid
 Free-flow design eo

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 Retail Layouts -
Some Rules of Thumb
 Locate high-draw items around the periphery of
the store
 Use prominent locations such as the first or last
aisle for high-impulse and high margin items
 Remove crossover aisles that allow customers the
opportunity to move between aisles
 Distribute what are known in the trade as “power
items” (items that may dominate a shopping trip)
to both sides of an aisle, and disperse them to
increase the viewing of other items
 Use end aisle locations because they have a very
high exposure rate
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7-59
 Retail Store Shelf Space Planogram
 Computerized tool 5
for shelf-space facings

PERT
PERT
PERT

PERT
PERT
management
 Generated from
store’s scanner
data on sales
 Often supplied by

VO-5

VO-5

VO-5

SUAVE
SUAVE
VO-5
VO-5
manufacturer
 Example: P&G

2 ft.
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7-60
 A Good Service Layout
(Servicescape) Considers
 Ambient conditions - background
characteristics such as lighting, sound,
smell, and temperature.
 Spatial layout and functionality - which
involve customer circulation path planning
 Signs, Symbols, and Artifacts -
characteristics of building design that carry
social significance

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 5. Warehouse Layout
 Design balances space (cube)
utilization & handling cost
 Similar to process layout
 Items moved between dock
& various storage areas
 Optimum layout depends on
 Variety
of items stored
 Number of items picked

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 a) Cross Docking
 Transferring goods
 from incoming trucks at
receiving docks
 to outgoing trucks at In-
shipping docks coming

 Avoids placing goods

Outgoing

into storage
 Requires suppliers
provide effective
addressing (bar codes)
and packaging that
provides for rapid
transhipment
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b) Random Stocking Systems Often:
 Maintain a list of “open” locations
 Maintain accurate records of existing
inventory and its locations
 Sequence items on orders to minimize
travel time required to pick orders
 Combine orders to reduce picking time
 Assign certain items or classes of
items, such as high usage items, to
particular warehouse areas so that
distance traveled is minimized
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 6. Product-Oriented Layout
 Facility organized around product
 Design minimizes line imbalance
 Delay between work stations
 Types: Fabrication line; assembly line
 Requirements:-
 Standardized product
 High production volume
 Stable production quantities
 Uniform quality of raw materials &
components

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7-65
 Product-Oriented Layout -
Assumptions
 Volume is adequate for high equipment
utilization
 Product demand is stable enough to justify
high investment in specialized equipment
 Product is standardized or approaching a
phase of its life cycle that justifies investment
in specialized equipment
 Supplies of raw materials and components
are adequate and of uniform quality to ensure
they will work with specialized equipment

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 Product-Oriented Layout Types
Fabrication Line Assembly Line
 Builds components  Assembles fabricated
 Uses series of machines parts
 Repetitive process  Uses workstation
 Machine paced  Repetitive process
 Balanced by physical  Paced by tasks
redesign  Balanced by moving tasks

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 Product-Oriented Layout
Advantages
 Lower variable cost per unit
 Lower material handling costs
 Lower work-in-process
inventories
 Easier training & supervision
 Rapid throughput

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 Product-Oriented Layout
Disadvantages
 Higher capital investment
 Special equipment
 Any work stoppage stops
whole process
 Lack of flexibility
 Volume
 Product

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7-69
 Assembly Line Balancing
 Analysis of production lines
 Nearly equally divides work between
workstations while meeting required
output
 Objectives
 Maximize efficiency
 Minimize number of
work stations

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 Assembly Line Balancing
The General Procedure
 Determine cycle time by taking the
demand (or production rate) per day and
dividing it into the productive time
available per day
 Calculate the theoretical minimum
number of work stations by dividing total
task time by cycle time
 Perform the line balance and assign
specific assembly tasks to each work
station
Prepared by : Shatina Saad OPM 530
7-71
 Assembly Line Balancing Steps
1. Determine tasks (operations)
2. Determine sequence
3. Draw precedence diagram
4. Estimate task times
5. Calculate cycle time
6. Calculate number of work stations
7. Assign tasks
8. Calculate efficiency

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7-72
Assembly Line Balancing Equations
Production time available
Cycle time =
Demand per day

Minimum  Task times

number of =
work stations Cycle time

 Task times
Efficiency =
(Actual number
* (Cycle time)
of work stations)

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7-73
 Layout Heuristics for Assigning Tasks in
Assembly Line Balancing
a) Longest task time - choose task with longest
operation time
b) Most following tasks - choose task with largest
number of following tasks
c) Ranked positional weight - choose task where
the sum of the times for each following task is
longest
d) Shortest task time - choose task with shortest
operation time
e) Least number of following tasks - choose task
with fewest subsequent tasks

Prepared by : Shatina Saad OPM 530

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