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Operations management
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Process Strategy – Process Selection / Process Strategy, Four Process Strategies and their Comparison, Process Analysis and Design, Production Technology
Facilities Location. Factors governing plant location. Steps in location selection.
Plant Lay Out. Objectives of plant layout. Principles of good layout. Types of layout. Tools and techniques for layout analysis. Line Balancing, Transportation Model
Chapter – IV: Facilities ManagementChapter – IV: Facilities Management
• Process Strategy• Facilities Location• Plant Layout
Chapter – IV: Facilities ManagementChapter – IV: Facilities Management
• Process Strategy• Facilities Location• Plant Layout
Process Strategy / Process Selection and Types of Process Strategies
Process-Focused (Job Shop): Low Volume, High Variety
Product-Focused (Batch Production) – High Volume, Low Variety
Repetitive Focus (Assembly Line) – High Volume, Standardized
Continuous Focus – V. High Volume, Highly Standardized
A Process (or transformation) strategy / Selection is an organization’s approach to transforming resources into goods and services. It is deciding on the way production of goods or
services will be organized.
Objective of Process Strategy is to build to Production Processs that meets customer requirements and producer specifications
within the cost and managerial constraints.
The Four Strategies
Process-Focused (Job Shop)
Planning
DrillingDrilling
Shaping
TurningTurning
1111 5555 7777
3333
2222
1111 6666
3333
6666
4444
2222Job AJob AJob AJob A
Job BJob B
4444 5555
Customized Woodwork ShopCustomized Woodwork Shop
Cutting Sanding FinishingAssembly
Process-Focused OR Job - Shop
Processes (conversions) are arranged based on the type of process, i.e., similar processes are grouped together
Products / services (jobs) move from department (process group) to department based on that particular job’s processing requirements
Also called “Job Shop” or “Intermittent Production”
Examples Auto body repair – Welding, Denting, Lathe, Grinding, Drilling, Wheel
Balancing, Wheel alignment, Washing, Painting………etc. Custom woodworking shop, Empty cylinder manufacturing company,
Bottling Companies etc. Hospitals, Restaurants
Characteristics and Advantages Low Volume and High Variety High product flexibility Lower initial investment level High variable costs and extremely
low utilization of facilities.
Disadvantages Higher labor-skill requirements More worker training More supervision More complex production planning and
controlling
Product-Focused (Batch Production)
PurchasedPurchased
Components,Components,SubassembliesSubassemblies
2222
3311
44
1
77
66
55
ComponentsComponents Subassembly.Subassembly.
AssembliesAssemblies
Product/Material FlowProduct/Material Flow
Production OperationProduction Operation
Assem
blies
Assem
blies
Raw MaterialRaw Material ComponentsComponents
Components
Subassembly.
Subassembly.
Raw MaterialRaw Material
Fin. GoodsFin. Goods
OperationProduct A
Product B
1111 2222 3333
Process Technologies – Product Focused – BATCH PRODUCTION
Light Bulbs (Discrete)Paper (Continuous)
Soft Drinks (Continuous, then
Discrete)
Product-Focused OR Batch Processing
Facilities are organized around products Processes (conversions) are arranged based on the sequence of operations
required to produce a product or provide a service Also called “Production Line” or “Continuous Processes” Two general forms
Discrete unit – Movie Theaters, Airlines, Transport systems, dishwashers, TV Programs, cars, cafeteria, canned corn, paper, Bakeries,
Process (Continuous) – petrochemicals, paper, glass, beer, bolts
Characteristics and Advantages Medium to High – Volume and Low variety High Fixed Cost and Low Variable Costs Lower labor-skill requirements Reduced worker training Standardization and effective quality control Reduced supervision Ease of planning and controlling production
Disadvantages Higher initial investment
level Relatively low product
flexibility
Repetitive Focus OR Assembly Line
This falls between Product and Process focuses. Repetitive processes use modules. Modules are parts or components previously
prepared, often in a continuous process. More Higher volumes of more standardized goods or services are needed,
repetitive processing issued. Standardized output needs only slight flexibility of equipment, low skill of workers. Repetitive Focus is the classic “Assembly Line” production system. Examples
Automobiles, Television Sets, Pencils, Computers, Automatic Carwash, Fast – Food firms, etc.
Characteristics and Advantages More High Volume and Medium
Variety Cost of manufacturing is very low Product cost if also low
Disadvantages High initial cost Lot of cost is involved to bring more
variety More supervision and maintenance
Process Technologies – CONTINUOUS FLOW PRODUCTION
CONTINUOUS FLOW PRODUCTION - Suitable for producing a continuous flow of products.
Manufactured product is in continuous quantities i.e., the product is not a discrete object. Moreover, for such processes, the volume of production is generally very high, while the product variation is relatively low.
These systems have almost NO variety in output and hence NO need for equipment flexibility.
Examples: Oil Refineries, Iron and Steel Plants, Cement and Chemical Plants.
*** Refer “Operations Management – by William J. Stevenson Page No: 227 - 237
Comparison of Processes
Rapid changeover on flexible equipment
Special purpose equipment
Special equipment aids in use of assembly line
General purpose equipment
Large quantity, large variety of products
Large quantity, small variety of products
Long runs, standardized product made from modules
Small quantity, large variety of products
Mass Customization
(High-volume, high-variety)
Product Focus
(High-volume, low-variety)
Repetitive Focus(Modular)
(Low-volume, high-variety)
Process Focus
(Low-volume, low-variety)
Parts, work processes fall into one standard class. Handful of assembly types
Parts, work processes and assembly fall into one standard way
Parts, work processes and assembly fall into few similar modules/groups
Product parts, work processes and assembly are unique
Product Life Cycle Vs. Process Life Cycle
Process Life Cycle Stages
1. Low Volume and Low
Standardization
2. Rapid Growth, Low Volume,
Multiple products
3. Maturity, Few Major Products,
High Volume
4. Commodity, High Volume,
High Standardization or products
1. JOB SHOP (PROCESS)
2. BATCH PRODUCTION
(PRODUCT)
3. ASSEMBLY LINE
PRODUCTION (REPETITIVE)
4. CONTINUOUS FLOW
PRODUCTION
A
B
C
D
Product A – Commercial Printer Product B – Heavy Machinery
Product C – Automobile Assembly Product D – Sugar Mill
Product Life Cycle Stages
PROCESS ANALYSIS AND DESIGN
Is the process designed to achieve competitive advantage? – Differentiation, Response, Cost
Non-Value added steps are eliminated? Is customer value maximized as per the requirement of customer? Will the process be an Order Winner?
Factors considered while Analyzing and Designing a Process
Tools for Process Analysis and Design
Process Flow Diagrams – Schematic or drawing of the movement of material, product or people.
Time – Function Mapping: Process flow diagram with the addition of time. Also called as “Process Mapping”
Process Charts
Accounting
PRINTING DEPT
COLLATING DEPT
GLUING, BINDING, STAPLING, LABELING
POLYWRAP DEPT
SHIPPING
Vendors
Receiving
Warehouse
Purchasing
PREPRESS DEPT
Process Flow Diagram
Customer
Customer sales representative
Information flowInformation flowMaterial flowMaterial flow
Time-Function MappingTime-Function Mapping
CustomerCustomer
SalesSales
Production Production controlcontrol
Plant APlant A
WarehouseWarehouse
Plant BPlant B
TransportTransport MoveMove
Receive Receive productproduct
ExtrudeExtrude
WaitWait
MoveMove
WaitWait
PrintPrint
WaitWait
Order Order productproduct
Process Process orderorder
WaitWait
12 days12 days 13 days13 days 1 day1 day 4 days4 days 1 day1 day 10 days10 days 1 day1 day 0 day0 day 1 day1 day
52 days52 daysFigure 7.7Figure 7.7
PRODUCTION TECHNOLOGY
Machine Technology Automatic Identification Systems (AISs) and RFID Process Control Vision Systems Robots Automated Storage and Retrieval Systems (ASRSs) Automated Guided Vehicles (AGVs) Flexible Manufacturing Systems (FMSs) Computer – Integrated Manufacturing (CIM)
Nine areas of Production Technology
Importance of Location
Location greatly affects , Fixed and Variable Costs of the company and its operations Overall Risk and Profitability of the company Opportunities for the companies – Tax benefits, Wages minimization,
Reduction in raw material costs and rentals etc.
Location decisions are infrequent and they are Strategic Decisions
Strategies related to location Continuation of operations in the existing facility Expansion of the existing facility (Expansion) Maintaining current sites while adding another facility elsewhere
(Geographical Expansion) Closing the existing facilities and moving down to another location
(Relocation) Sell of the facilities to other companies (Divestment)
Importance of Location
Type of Business Primary Strategy Secondary Strategy
Industrial Location Minimization of costs Innovation and Creativity
Retail and Professional Service Maximizing Revenue Increasing Brand Value and
Reach
Warehouse Location Cost and Speed of delivery Availability of good transportation network
All the other businesses Combination of several factors
Location decision often depends on type of business
Importance of Location
Location decision often depends on type of business
Facility Location Planning
Environment and
Community
Govt. Policies
Basic Amenities
Proximity to Sub-
contractors
Proximity to
Markets
Good Transpor
tationAvailabil
ity of Power
Proximity to Raw
Material
Easy Availability of Land and
Labor
Low constructio
n costs
Importance of Location
Critical Success Factors (CSFs) for Global Location
Country Decision Region / Community Decision Site Decision
Political risks, government rules, attitude, incentives Corporate desires Site size and cost
Cultural and economic issues Attractiveness of region (Culture, Taxes, Climate etc)
Air, Rail, Highway, Waterway Systems
Location of markets Labor Availability, Costs, Attitude toward unions Zoning Restrictions
Labor Talent, attitude, productivity, costs Cost and availability of utilities Proximity of services / supplies
needed
Availability of supplies, communication, energy
Environmental regulations and state and town Environmental impact issues
Exchange rates and currency risk Government incentives and fiscal policies
Proximity to raw materials and customers
Land / Construction Costs
Methods of Evaluating Location Alternatives
Method
Factor – Rating Method √
Location Break – Even Analysis √
Center of Gravity Method X
Transportation Model √
Geographic Information Systems √
Strategic Importance of Layout Decisions
Layout is concerned with the arrangement of all facilities inside the plant
Objective of layout strategy: Develop an effective and efficient layout that will meet the firm’s
competitive requirements.
What to achieve from Layout design? 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
Types of Layout
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Work-cell layout
7. Product-oriented layout
Retail LayoutRetail Layout
• Objective is to maximize profitability per square foot of floor space
• Sales and profitability vary directly with customer exposure
1. Locate high-draw items around the periphery of the store
2. Use prominent locations for high-impulse and high-margin items3. Distribute power items to both sides of an aisle and disperse them to increase viewing
of other items
4. Use end-aisle locations
5. Convey mission of store through careful positioning of lead-off department
Ideas for Supermarket Layout
• Manufacturers pay fees to retailers to get the retailers to display (slot) their product
• Contributing factors
• Limited shelf space
• An increasing number of new products
• Better information about sales through POS data collection
• Closer control of inventory
Retail Slotting
Warehousing and Storage LayoutsWarehousing and Storage Layouts
• Objective is to optimize trade-offs between handling costs and costs associated with warehouse space
• Maximize the total “cube” of the warehouse – utilize its full volume while maintaining low material handling costs
• All costs associated with the transaction
• Incoming transport
• Storage
• Finding and moving material
• Outgoing transport
• Equipment, people, material, supervision, insurance, depreciation
• Minimize damage and spoilage
Material Handling Costs
• Use of Automated Storage and Retrieval Systems (ASRS)
• Cross Docking - Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse• Requires tight scheduling and accurate shipments, bar code or RFID identification used
for advanced shipment notification as materials are unloaded
Typical layouts in Warehouse
Warehousing and Storage LayoutsWarehousing and Storage Layouts
• Random Stockings: Typically requires automatic identification systems (AISs) and effective information systems
• Random assignment of stocking locations allows more efficient use of space
• Key tasks
• Maintain list of open locations
• Maintain accurate records
• Sequence items to minimize travel, pick time
• Combine picking orders
• Assign classes of items to particular areas
• Customizing:
• Value-added activities performed at the warehouse
• Enable low cost and rapid response strategies
• Assembly of components
• Loading software and Repairs
• Customized labeling and packaging
Typical Layouts in Warehouses
Shipping and receiving docks
Office
Cu
sto
miz
atio
n
Conveyor
Storage racks
Staging
Warehouse LayoutWarehouse Layout
Traditional Layout
Warehouse LayoutWarehouse Layout
Cross-Docking LayoutCross-Docking Layout
Shipping and receiving docks
Offi
ce
Shipping and receiving docks
FIXED POSITION LAYOUTFIXED POSITION LAYOUT
• Project remains in one place and workers and equipment come to that one work area.
• Examples: Aircraft manufacturing, Thermal Plants, Refineries, Ship building, Flyovers etc.
• Limited space at site
• Different materials required at different stages of the project
• Volume of materials needed is dynamic
Critical Factors to be considered
• Completion of major work offsite and assemble later at the actual site.
• Examples: Ship building, Construction of Flyovers, Some model houses etc.
Recent trends in Fixed Layout Strategies
PROCESS ORIENTED LAYOUT – JOB SHOPPROCESS ORIENTED LAYOUT – JOB SHOP
• Handles wide variety of products or services and is of Low-Volume typically.
• Most efficient when handling different requirements or when handling customers, patients, or clients with different needs.
• Departments and Work Centers are arranged so as to minimize costs of material handling.
• What like machines to be combined together
• How to decide the sequence and schedule the activities?
• How much flexibility can be added to the system?
• Cost Minimization and Arrangement of departments / work centers
Critical Factors to be considered
• Usage of CRAFT (Computerized Relative Allocation of Facilities Technique)
• Usage of ALDEP (Automated Layout Design Program )
• Usage of CORELAP (Computerized Relationship Layout Planning)
• Usage of FF (Factory Flow)
Recent trends in Process Oriented Layouts
Surgery
Radiology
ER Room
ER Beds Pharmacy
Emergency room admissions
Billing/exit
Laboratories
Process-Oriented Layout
Patient A - broken leg
Patient B - Erratic heart pacemaker
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
Repetitive and Product – Oriented Layout
Some Product-Oriented Layouts
Fabrication line Builds components on a series of machines Machine-paced Require mechanical or engineering changes to balance
Assembly line Puts fabricated parts together at a series of workstations Paced by work tasks Balanced by moving tasks
Both types of lines must be balanced so that the time to perform the work at each station is the same
Product-Oriented Layouts
1. Low variable cost per unit2. Low material handling costs3. Reduced work-in-process inventories4. Easier training and supervision5. Rapid throughput
Advantages
1. High volume is required2. Work stoppage at any point ties up the whole operation3. Lack of flexibility in product or production rates
Disadvantages
Assembly-Line Balancing
Objective is to minimize the imbalance between machines or personnel while meeting required output
Starts with the precedence relationships1. Determine cycle time
2. Calculate theoretical minimum number of workstations
3. Balance the line by assigning specific tasks to workstations