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Process Choice and Layout Decisions in Manufacturing and
Services
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 2
Manufacturing Processes
• Engineering and business perspectives
• Classic manufacturing processes• Choosing between classic types• The role of customization
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 10, Slide 3
Engineering and Business Perspectives
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 4
Solid Wood Seat for a Kitchen Chair:
Process A• Saddle Machine• Shaper Machine• Sander A• Sander B• Inspection
Setup Time: 6 hours
Time/Seat 1.1 min.
Yield Rate: 92%
Process B• 5-Axis Router• ----• Sander A• Sander B• Inspection
Setup Time: 10 min.
Time / Seat: 3.5 min.
Yield Rate: 99%
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 5
Classic Engineering Viewpoint
Four Transformation Processes
Conversion Fabrication Assembly
Testing
“Advances in Engineering increase and improve the alternatives available”
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 6
Example: Making Windows
• Raw lumber• Molten glass
• Frame wood• Window panes
AssembledWindows
Conversion Fabrication Assembly
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 7
Business View
• What conversion steps must be done?
• What are the production volumes like?
• How similar are the various products we make (can we standardize)?
• If the product is customized, how late in the process does it occur?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 10, Slide 8
Classic Manufacturing Processes
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 9
Process Types(in order of decreasing volume)
• Continuous Flow• Production Line• Batch (High Volume)• Batch (Low Volume)• Job Shop• Project
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 10
Continuous Flow
• Large production volumes• High level of automation• Basic material passed along,
converted as it moves• Usually very high fixed costs,
inflexible
Oil refinery, fiber formation, public utilities, automotive manufacturing
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 11
Production Line
High-volume production of standard products or “design window”
• Processes arranged by product flow• Often “paced”• Highly efficient, but not too flexible
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 12
Batch I
• Somewhere in between job shop and line processes
• Moderate volumes, multiple products
• Production occurs in “batches”
Can manufacturing, carton makers, advertising mailers, etc.
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 13
Batch II
Layout is a cross between that found in a line and that found in a job shop:
Group Technology
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 14
Some Examples of Batch Manufacturing
• Numerical control (NC) machines– Automated processing of entire batch– Machining center - multiple NC machines
• Flexible manufacturing systems (FMS)– Dedicated to families of parts– NC and automated handling
• Group technology– Similar in concept to FMS, but not as much
automation
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 15
Job Shop
• Low volume, one-of-a-kind products• Job shops sell their capability
• Highly flexible equipment, skilled workers• Equipment arranged by function
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 16
Project
• Used when a product is:– one-of-a-kind– too large to be moved
• Resources moved to where needed• Equipment, people, etc. are highly
flexible• Finite duration, often with deadlineBuilding projects, equipment installation
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 17
Mixing Together the Process Types ...
Spindles
Arms andLegs
SeatsBATCH forfabricatingparts ...
ASSEMBLYLINE forputting togetherfinal product
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 10, Slide 18
Choosing BetweenClassic Types
• The product-process matrix
• Product and process life cycles
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 19
Comparing Process Types...
Job Shop Batch Line
Volume Very Low High
Variety Very High Low
Skills Broad Limited
Advantage Flexibility Price and Delivery
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 20
Product – Process Matrix
One of a Kind Low Volume
Multiple Products Moderate Volumes
Few Major ProductsHigh Volume
Commodity Products
Job Shop
Batch
LineVery Poor Fit
Very Poor Fit
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 21
Life-Cycle Planning Framework
IntroductionStage
GrowthStage
MaturityStage
Decline Stage
TotalMarketSales
Time
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 22
Introduction Stage
Availability key to market success
but:• No reliable movement history• Unreliable forecasts• Small shipments• Erratic orders
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 23
Life-Cycle Planning Framework
IntroductionStage
GrowthStage
MaturityStage
Decline Stage
TotalMarketSales
Time
• High product availability
• Flexibility to handle variation
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 24
Growth Stage
• Sales somewhat more predictable• Higher volumes
• Performance emphasis?...
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 25
Life-Cycle Planning Framework
IntroductionStage
GrowthStage
MaturityStage
Decline Stage
TotalMarketSales
Time
• Availability• Achieve break- even volumes as soon as possible
Less need for flexibility
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 26
Maturity Stage
• Intense competition around more standardized products
• Frequent price and service adjustments
• Implications . . .
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 27
Life-Cycle Planning Framework
IntroductionStage
GrowthStage
MaturityStage
Decline Stage
TotalMarketSales
Time
More selective,targeted efforts
Value-addedservice
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 28
Decline Stage(Obsolescence)
• Product close-out or restricted distribution
• Lowest cost / differentiated performance not as critical anymore
• Priorities?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 29
Life-Cycle Planning Framework
IntroductionStage
GrowthStage
MaturityStage
Decline Stage
TotalMarketSales
Time
• Centralized inventory• Speed
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 30
Implications
• What happens as companies follow products through their life cycles?
• What happens when companies support products at various stages of the life cycle?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 10, Slide 31
The Role of Customization
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 32
What is “Customization”?
An operations-centric view:
“Customization occurs when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities”
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 33
Make-to-Order Windows
Off-line Activities• Design• Buy Materials• Fabricate parts• Assemble
• Ship windows
On-Line Activities• Lead times?• Customizability?• Price?• What type of manufacturing?• Sell windows
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 34
Fully Customized Windows
Off-line Activities• Lead times?• Customizability?• Price?• What type of manufacturing?
On-Line Activities• Sell Windows• Design• Buy Materials• Fabricate parts• Assemble• Ship windows
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 35
Customization Point Model I
DESIGNSOURCINGMATERIALS
FABRICATIONASSEMBLY/FINISHING
DISTRIBUTION
ETO MTO MTSATO
Definitions:
ETO – engineer to order
MTO – make to order
ATO – assemble-to-order
MTS – make to stock
Upstream: before the customization point, “off-line” activities
Downstream: after the customization point, “on-line” activities
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 36
Customization Point Model II
Manufacturing Systems Design
Upstream Downstream
Performance objectivesTechnology InvestmentOrganization structureJob differentiationIntegrationDiscretion
EfficiencyProductivity, consistencyMechanisticHighFormalLow
ResponsivenessFlexibilityOrganicLowInformalHigh
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 37
Difficulty versus Customization
BASEBALL CAP WITHSCHOOL NAME ON IT
(MTO)
BASEBALL CAP WITHARKANSAS RAZORBACKS
LOGO AND SCHOOLCOLORS ON IT
(ETO)
PLAIN BASEBALL CAP(MTS)
PLAIN BASEBALL CAP INDIFFERENT COLORS
(ATO)
LOWER DIFFICULTY HIGHER DIFFICULTY
MANUFACTURING VIEW
MARKETING VIEW
LOWER CUSTOMIZATION
HIGHER CUSTOMIZATION
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 38
Customization
Job Difficulty
Job Routineness
Operations andSupply Chain Design
An Operations-Centric View
Customization becomes relevant to operations and supply chain managers when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 39
“Mass customization” atJapan’s National Bicycle Co.
CAM
CAM
CAM
TUBE CUTTING
FRONT ASSEMBLY
REAR ASSEMBLY
3-D MEASUREMENT
Quality Assurance
Marketing
ORDER DATAINCLUDING
CUSTOMER’SMEASUREMENTS
AND OPTIONS
CAD
COMPUTERINSTRUCTIONS
PAINTINGASSEMBLY
2-WEEK LEAD TIME
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 40
Services
• What makes them distinctive?• High-contact versus low-contact
• Front room versus back room• A Model of Service Design• Service Blueprinting
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 41
Services . . .
• Process and “product” are inseparable• Marketing and sales often tightly integrated• Customer often part of the process• Performance metrics can be harder to
define• Nevertheless:
– Focus and process choices / trade-offs still apply
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 42
Degree of Customer Contact
Low Contact• “off-line”• Can locate for
efficiency• Can smooth out
the workload Check clearing,
mail sorting
High Contact• “on-line”• Can locate for
easy access• Flexibility to
respond to customers
• Harder to manage
Hospitals, food service
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 43
Classifying Services
“Front Room” versus “Back Room”
Back room – what the customer does not see
Managed for efficiency andProductivity
Package sorting, car repair, blood test analysis, accounting department
Front room – what the customer can see
Managed for flexibility and customer service
Customer lobbies, bank teller, receptionist
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 44
What is it?What is the performance objective?
• Restaurant kitchen• Software help desk• Kinko’s copy center• Airline reservations• Jet maintenance
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 45
Designing Services• Selecting a service focus
– Like manufacturing processes, different services have strengths and weaknesses
• Key is to design a service process that meets the needs of targeted customers
• The “service package”
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 46
A Cubical Model of Services(Three Dimensions)
Nature of the Service Package
Primarily Physical Activities(Airline, trucking firm)
Primarily Intangible Activities(Law firm, software developer)
Degree of Customization Lower Customization(Quick-change oil shop)
Higher Customization(Full-service car repair shop)
Degree of Customer Contact
Lower Contact(Mail sorting)
Higher Contact(Physical therapist)
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 47
Community Hospital
CONTACT
SERVICEPACKAGE
CUSTOMIZATION
HIGH
HIGH
LOWLOW
PHYSICAL
INTANGIBLE
Public Hospital
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 48
Birthing Center
CONTACT
SERVICEPACKAGE
CUSTOMIZATION
HIGH
HIGH
LOWLOW
PHYSICAL
INTANGIBLE
Public Hospital
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 49
Layout Decision Models
• Product-based layout– Usually best for a line operation– Cycle time a primary measure
• Functional layout– Usually best for a job shop– Distance between steps a measure
• Cellular layout– Usually best for batch processes
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 50
Product-Based Layout
Line Balancing• Improve ‘Takt’ time:
– Reduce idle time– Reduce setup time– Reduce unnecessary movement– Identify ‘bottlenecks’
rateoutputrequiredtimeproductionavailable
timeTakt
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield
Chapter 7, Slide 51
Functional Layout
A. Minimize the total distance traveled
B. Minimize information flow for decisions
C. Use electronic data interchange (EDI) to allow more flexibility for accomplishing A and B
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