Process Design
Dr. R K Singh
MDI, Gurgaon
1
Lecture Outline
Process Planning
Process Analysis
Process Innovation
Technology Decisions
6-2
Process Planning
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
6-3
Process Strategy
Vertical integration
extent to which firm will produce inputs and control
outputs of each stage of production process
Capital intensity
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
6-4
Outsourcing
Cost Speed
Capacity Reliability
Quality Expertise
6-5
Sourcing Continuum
6-6
Production Systems
Source: Adapted from Robert Hayes and Steven Wheelwright, Restoring the
Competitive Edge Competing through Manufacturing (New York, John Wiley & Sons,
1984), p. 209.
Process Selection
Projects
one-of-a-kind production of a product to customer
order
Batch production
processes many different jobs at the same time in
groups or batches
Mass production
produces large volumes of a standard product for a
mass market
Continuous production
used for very-high volume commodity products
6-8
Planning Premises in Process
Design
Three generic planning premises are in use
in operations management;
Make-to-Stock: more amenable for systems with
fewer product varieties and high production
volume as in the case of continuous and
streamlined flow systems
Assemble-to-order: useful for intermittent flow
systems catering to the mid-volume mid-variety
situations
Make-to-order: organisations typically belong to
manufacturer of high product variety (jumbled
flow process systems) use this planning
methodology 9
Types of Processes
PROJECT BATCH MASS CONT.
Made-to- Made-to-
Type of
Unique order stock Commodity
product
(customized) (standardized )
One-at-a- Few
Type of Mass Mass
customer time individual
market market
customers
Product
demand Infrequent Fluctuates Stable Very stable
Source: Adapted from R. Chase, N. Aquilano, and R. Jacobs, Operations Management for Competitive
Advantage (New York:McGraw-Hill, 2001), p. 210
Types of Processes (cont.)
PROJECT BATCH MASS CONT.
Varied General- Special- Highly
Equipment
purpose purpose automated
Primary Mixing,
type of Specialized
Fabrication Assembly treating,
work contracts
refining
Experts, Limited
Worker Wide range Equipment
skills crafts- range of
of skills monitors
persons skills
6-11
Types of Processes (cont.)
PROJECT BATCH MASS CONT.
Custom work, Efficiency, Highly efficient,
Advantages latest Flexibility, speed, large capacity,
technology
low cost ease of control
Capital
Non-repetitive, Costly, slow, Difficult to change,
Dis- investment;
small customer difficult to far-reaching errors,
advantages lack of
base, expensive manage limited variety
responsiveness
Machine shops, Automobiles,
Construction, print shops, televisions, Paint, chemicals,
Examples shipbuilding,
bakeries, computers, foodstuffs
spacecraft
education fast food
6-12
Process Analysis
• systematic examination of all aspects of process to improve
operation
Building a flowchart
Determine objectives
Define process boundaries
Define units of flow
Choose type of chart
Observe process and collect data
Map out process
Validate chart
6-13
Process Flowcharts
look at manufacture of product or
delivery of service from broad
perspective
Incorporate
nonproductive activities (inspection,
transportation, delay, storage)
productive activities (operations)
6-14
Simple Value Chain Flowchart
Copyright 2009 John 6-15
Wiley & Sons, Inc.
Process Plans
Set of documents that detail
manufacturing and service delivery
specifications
assembly charts
operations sheets
quality-control check-sheets
Copyright 2009 John 6-16
Wiley & Sons, Inc.
Process Flowchart Symbols
Operations
Inspection
Transportation
Delay
Storage
6-17
Process Flowchart of Apple Processing
6-18
Continuous Improvement
A process mapping exercise
Provides vital clues for improvement
Enables organisations to segregate value added activities from
non-value added
Concentrate efforts on eliminating non-value added activities
Business Process Reengineering (BPR) enables organisations to
fundamentally rethink and redesign their business processes.
Irrespective of the exact methodology used for a BPR exercise
they adopt a three-step approach: Understand – Simplify –
Automate.
Activity Based Management is a useful management tool to
channelise continuous improvement efforts in an organisation.
While the cost view in ABM links the cost incidences to various
activities and points to areas that require improvement, the
process view shows how exactly the improvement could be made.
19
Implementing BPR
A three-step methodology
Understand Simplify the
Automate
the existing Process by
the Process
Process eliminating NVA
Tools used in each step
Process Mapping NVA Analysis EDI
Brainstorming “Should-be” ERP
“As-is” analysis analysis Internet tools
20
Process Innovation
Continuous improvement
refines the breakthrough
Breakthrough
Improvement
Total redesign Continuous improvement activities
of a process for peak; time to reengineer process
breakthrough
improvements
6-21
From Function to Process
Product Development
Manufacturing
Purchasing
Accounting
Sales Order Fulfillment
Supply Chain Management
Customer Service
Function Process
6-22
Principles for Redesigning
Processes
Remove waste, simplify, and consolidate similar
activities
Link processes to create value
Capture information digitally at the source and
propagate it through process
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
Copyright 2009 John 6-23
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Techniques for Generating
Innovative Ideas
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
Try inverse brainstorming
what would increase cost
what would displease the customer
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Technology Decisions
Financial justification of technology
Purchase cost
Operating Costs
Annual Savings
Revenue Enhancement
Replacement Analysis
Risk and Uncertainty
6-25
Process Selection with
Break-Even Analysis
examines cost trade-offs associated with demand
volume
Cost
Fixed costs
constant regardless of the number of units 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
Process Selection with
Break-Even Analysis (cont.)
Total cost = fixed cost + total variable
cost
TC = cf + vcv
Total revenue = volume x price
TR = vp
Profit = total revenue - total cost
Z = TR – TC = vp - (cf + vcv)
Process Selection with
Break-Even Analysis (cont.)
TR = TC
vp = cf + vcv
vp - vcv = cf
v(p - cv) = cf
cf
v= p - cv
Solving for Break-Even Point (Volume)
Break-Even Analysis: Example
Fixed cost = cf = $2,000
Variable cost = cv = $5 per raft
Price = p = $10 per raft
Break-even point is
cf 2000
v=p-c = = 400 rafts
v 10 - 5
Break-Even Analysis: Graph
Dollars
$3,000 — Total cost
line
$2,000 —
$1,000 —
Total revenue
line
400 Units
Break-even point
Process Selection
Process A Process B
$2,000 + $5v = $10,000 + $3v
$2v = $8,000
v = 4,000 rafts
Below or equal to 4,000, choose A
Above or equal to 4,000, choose B
6-31
Components of e-Manufacturing
Copyright 2009 John 6-32
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A Technology Primer
Product Technology
Computer-aided Creates and communicates designs
design (CAD) electronically
Group Classifies designs into families for easy
technology (GT) retrieval and modification
Computer-aided Tests functionality of CAD designs
engineering electronically
(CAE)
Collaborative Facilitates electronic communication and
product exchange of information among designers
commerce and suppliers
(CPC)
Copyright 2009 John 6-33
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A Technology Primer (cont.)
Product Technology
Product data Keeps track of design specs and revisions
management
(PDM) for the life of the product
Product life Integrates decisions of those involved in
cycle product development, manufacturing, sales,
management customer service, recycling, and disposal
(PLM)
Defines products “configured” by customers
Product
configuration who have selected among various options,
usually from a Web site
Copyright 2009 John 6-34
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A Technology Primer (cont.)
Process Technology
Standard for Set standards for communication among
exchange of different CAD vendors; translates CAD data
product model into requirements for automated inspection
data (STEP) and manufacture
Computer-aided Electronic link between automated design
design and (CAD) and automated manufacture (CAM)
manufacture
(CAD/CAM)
Computer aided Generates process plans based on
process (CAPP) database of similar requirements
E-procurement Electronic purchasing of items from e-
marketplaces, auctions, or company
websites
Copyright 2009 John 6-35
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A Technology Primer (cont.)
Manufacturing Technology
Computer Machines controlled by software code to perform a
numerically variety of operations with the help of automated
control (CNC) tool changers; also collects processing information
and quality data
Flexible A collection of CNC machines connected by an
manufacturing automated material handling system to produce a
system (FMS)
wide variety of parts
Manipulators that can be programmed to perform
Robots
repetitive tasks; more consistent than workers but
less flexible
Conveyors
Fixed-path material handling; moves items along a
belt or overhead chain; “reads” packages and
diverts them to different directions; can be very fast
Copyright 2009 John 6-36
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A Technology Primer (cont.)
Manufacturing Technology
Automatic guided A driverless truck that moves material along a
vehicle (AGV) specified path; directed by wire or tape embedded
in floor or by radio frequencies; very flexible
Automated storage An automated warehouse—some 26 stores high—
and retrieval in which items are placed in a carousel-type
system (ASRS) storage system and retrieved by fast-moving
stacker cranes; controlled by computer
Process Control Continuous monitoring of automated equipment;
makes real-time decisions on ongoing operation,
Computer- maintenance, and quality
integrated Automated manufacturing systems integrated
manufacturing through computer technology; also called e-
(CIM)
manufacturing
Copyright 2009 John 6-37
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A Technology Primer (cont.)
Information Technology
Business – to – Electronic transactions between businesses
Business (B2B) usually over the Internet
Business – to – Electronic transactions between businesses and
Consumer their customers usually over the Internet
(B2C) A global information system of computer networks
Internet that facilitates communication and data transfer
Communication networks internal to an
Intranet organization; can be password (i.e., firewall)
protected sites on the Internet
Intranets connected to the Internet for shared
access with select suppliers, customers, and
Extranet trading partners
Copyright 2009 John 6-38
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A Technology Primer (cont.)
Information Technology
Bar Codes A series of vertical lines printed on most packages that
identifies item and other information when read by a
Radio Frequency scanner
Identification tags
(RFID) An integrated circuit embedded in a tag that can send
and receive information; a twenty-first century bar code
Electronic data with read/write capabilities
interchange (EDI) A computer-to-computer exchange of business
documents over a proprietary network; very expensive
Extensive markup and inflexible
language (XML)
A programming language that enables computer – to -
Enterprise resource computer communication over the Internet by tagging
planning (ERP) data before its is sent
Software for managing basic requirements of an
enterprise, including sales & marketing, finance and
accounting, production & materials management, and
human resources
Copyright 2009 John 6-39
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A Technology Primer (cont.)
Information Technology
Software for managing flow of goods and information
Supply chain among a network of suppliers, manufacturers and
management distributors
(SCM)
Software for managing interactions with customers and
Customer compiling and analyzing customer data
relationship An information system that helps managers make
management decisions; includes a quantitative modeling component
(CRM)
and an interactive component for what-if analysis
Decision support A computer system that uses an expert knowledge base
systems (DSS) to diagnose or solve a problem
A field of study that attempts to replicate elements of
Expert systems human thought in computer processes; includes expert
(ES) systems, genetic algorithms, neural networks, and fuzzy
logic
Artificial
intelligence (AI)
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Thank you
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