Modern Approaches to Production & Operations Management

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    ` To help the Companies appreciate the role of OM& translate his strategic plans into viableprocesses.

    ` To identify strategic areas of operational conflict.` To identify impediments for growth and generate

    ideas of how to solve them.` To create a general understanding for successful

    management of operations to fill in the role of theCompany as (general) manager.

    ` To help companies draw up his OperationsGrowth Plan

    2

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    Marketing

    Management

    Human

    Resources

    Management

    Strategic

    Management

    Financial

    Management

    Ope

    rations

    Management

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    Operations Management (OM) is concerned

    with the transformation process to create

    output out of resources being put in.

    4

    Input OutputTransform

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    Operation

    Input resources Transformation

    process

    Outputs

    Department store Goods for sale

    Staff sales

    Registers, Customers

    Display goods

    Give sales advice

    Sell goods

    Customers and goods

    assembled together

    Dentist Dental surgeons

    Dental equipment

    Nurses, Patients

    Check and treat teeth

    Give preventative advice

    Patients with healthy teeth

    and gums

    Printer Printers and designers

    Printing presses

    Paper and ink

    Design

    Print

    Bind

    Designed and printed

    material

    Police Police officers

    Computer systems

    Information, Public

    Prevent crime

    Solve crime

    Apprehend criminals

    Lawful society

    Public with feeling of

    security

    Fruit juicemanufacturer

    Fruit, PansBottles, Staff

    Fruit preparationJuice production

    Fruit juicesUseful waste

    Call centre Customers with questions

    Building

    Telephone lines

    Computers, Staff

    Direct questions to the right

    person

    Answer questions

    Store questions

    Informed customers

    Satisfied customers

    Restaurant Hungry customers

    Food and beveragesTables, Staff

    Take orders

    Prepare and serve mealsEating & Washing

    Endulged customers

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    ` People

    ` Plants (location and means)

    ` Processes` Parts (materials)

    ` Planning & Control

    6

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    ` Strategicx Mission

    x Generic strategy

    x Industry success factors

    x Distinctive competency

    ` Marketingx Products and Markets (existing and new)

    x

    Annual sales increasex Rate of customization

    7

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    ` Too much direct involvement in daily operations.` Wanting to take in every type of customer.` No real or very weak connection between

    strategic & marketing identity and operations.` No comprehensive control of operations.` No or poor MIS present.` Reactive instead of proactive throughout the

    organisation.

    ` Struggling to make their organization moreeffective and efficient.

    8

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    GR

    OWTH

    StraegicImplications

    OperationsImpediments

    for Growth

    StrategicCapacityPlan

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    ` Step 1: List your most important strategic and

    marketing objectives

    ` Step 2: PMCs and their most important operations

    performance objectives (OPO)

    ` Step 3: Evaluate the impact of each OPO

    ` Step 4: Identify areas of conflict

    ` Step 5: How to deal with these conflicts?

    ` What are the main issues coming out of this?

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    a) Market

    b) Products

    c) Present volume

    d) % of total volume

    e) Growth rate

    1. Speed

    2. Quality

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    `Quality

    ` Dependability` Speed

    ` Flexibility

    ` Cost

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    Strategic decisions

    Producing large batches with low variety or

    cheap materials decrease costsCost

    Smaller batches of different products with

    lots of variety increase the choice ofcustomers

    Flexibility

    Performance monitoring systems and strict

    processes give reliable outputDependability

    Few products in the pipeline, many products

    in stock and prioritisation of urgent orders

    increase speed

    Speed

    Low quality fluctuation demands qualitymachines and processes and increased

    testing

    Quality

    Performa

    nceobjectives

    MarketCom

    petitiveness

    Resource Usage

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    Detailed

    Demand

    Network

    Design

    Location

    Process &

    Lay out

    CODP

    S

    trategic

    C

    apacity

    Plan

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    ` List per group of products (ideally, based onproduction characteristics)

    ` Take in any seasonal effects

    ` Distinguish betweenx Existing products

    x New products (procured)

    x New products (newly developed)

    ` Make three scenarios: worst, expected, best

    ` Be reasonable and increase reliability

    15

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    ` Mapping the network

    ` To what extent is each member capable of

    following the demand?

    ` To what extent is each member able to perform inline with your OPOs?

    ` See questions in par. 3.3.3.

    ` Where to improve?

    ` Vertical integration?

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    Supply chain management

    Materials management

    Logistics

    Physical distribution managementPurchasing & supply management

    The

    Operation

    Second-tier

    suppliers

    First-tier

    suppliers

    First-tier

    customers

    Second-tier

    customers

    Supply side Demand side

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    ` Impact on distance, speed, service, depend.,

    etc.

    ` High-intensity contact systemx Near customer

    x Multiple sites if necessary

    ` Low-intensity contact systemx Minimising costs

    x

    Near sources of raw material or labourx Logistical optimization

    ` Using:x Centre of Gravity Method

    x Factor weighing system

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    ` Identify the Process type: how unique is each

    products/service and in what kind of process are

    they being made?

    Manufacturingx Project / Jobbing / Batch / Mass / Continuous flow

    Service firms

    x Professional service / Service shops / Mass service

    Variety and volume is leading

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    The facilities layout decision procedure

    Volume andvariety

    Process type

    Basic layout type

    Decision 1Decision 1

    Decision 2Decision 2

    Detailed design

    of layout

    Decision 3Decision 3

    Strategicperformance

    objectives

    Project processJobbing processBatch processMass processContinuous process

    Fixed position layoutProcess layoutCell layoutProduct layout

    The physical position of all

    transforming resources

    Flow of transformed resources

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    Variety

    Process types in manufacturing

    High

    Low

    VolumeLow High

    Project

    Jobbing

    Batch

    Mass

    Continuous

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    Variety

    Process types in manufacturing

    High

    Low

    VolumeLow High

    Project Process customized P/S devoted resources ill defined activities complex process

    long time period well defined start & end

    Construction WorkShipbuildingInstalling Computer SystemMovie Production Companies

    Building Mass Rapid Transportation SystemDrilling Oil Wells

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    Variety

    Process types in manufacturing

    High

    Low

    VolumeLow High

    Jobbing ProcessMore products; smalleritemsSharing of resources Low degree of repetition Fewer unpredictablecircumstances

    Specialist Toolmakers

    Furniture RestorersTickets Printer Social Events

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    Variety

    Process types in manufacturing

    High

    Low

    VolumeLow High

    Batch Process More products in one batch Repetitive with large batches Can be used over wide range Different process routes

    Machine Tool MakersComponent Parts ProductionProduction of most ClothingProduction of Gourmet Frozen Food

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    Variety

    Process types in manufacturing

    High

    Low

    VolumeLow High

    Mass Process High volume/low variety Discrete products Repetitive Large predictability

    Automobile PlantConsumer Durables MfgFood Processes (pizzas)Beer Bottling

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    Variety

    Process types in manufacturing

    High

    Low

    VolumeLow High

    Continuous Process Long production periods Liquid flow processing

    Capital intensive technologies Highly predictable flow

    Petrochemical RefineriesEdible Oil ProcessingSteel MakingPaper MakingElectricity UtilitiesBeer Brewing

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    Variety

    Process types in service operations

    High

    Low

    VolumeLow High

    Professional Services

    Service Shops

    Mass Services

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    Variety

    Process types in service operations

    High

    Low

    VolumeLow High

    Professional Services High customer contact High customization Highly adaptable Value adding in front-office People based High ratio of staff to customers Emphasis on process (how)

    Management ConsultantsLawyers PracticesArchitectsA

    uditorsH&S InspectorsComputer Field Service Operations

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    Variety

    Process types in service operations

    High

    Low

    VolumeLow High

    Service Shops Services by mix of front/back office People & Equipment based Product/Process emphasis

    BankingHigh Street ShopsTour OperatorsCar Rental CosSchoolsTravelAgents

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    Variety

    Process types in service operations

    High

    Low

    VolumeLow High

    Mass Services Limited Customer Contact Time Little customization Equipment based Product oriented (what) Value adding in back-office Division of labor/mainly non-prof.

    SupermarketsNational Rail NetworkAirportTelecomLibrary

    Television StationPolice Service

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    The nature of the basic layout types

    Basic layouttypes

    Manufacturingprocess types

    Serviceprocess types

    Fixedposition layout

    Project processes

    Process layout

    Cell layout

    Product layout

    Jobbing processes

    Batch processes

    Mass processes

    Continuous processes

    Professionalservices

    Service shops

    Mass services

    Project processes

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    GENERAL LAYOUT TYPES

    jDifferent layouts present different

    managerial challenges

    jDifferent layouts present different

    opportunities to satisfy customers unmet

    needs

    jA strategic perspective is required to make

    the right layout choices

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    GENERAL LAYOUT TYPES:

    FIXED-POSITION LAYOUTS

    j Value-adding resources travel to the

    customer or need

    film a movie on location; build a house

    jSpecialized experts can be brought in

    jDisadvantages:

    lack of efficiency

    difficulty in scheduling

    potential for cost overruns and quality

    problems

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    Volume-variety characteristics

    Low VOLUME High

    Low

    VARIETY

    Low

    Fixedposition layout Vulnerable layout to planningand control disruptions

    Motorway ConstructionOpen-heart SurgeryHigh-Class Service RestaurantNuclear Power Station

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    GENERAL LAYOUT TYPES:

    PROCES LAYOUTS

    jResources grouped according to function

    materials can be routed through processes in

    any order furniture factory; hospital

    jHighly customized product-service bundles

    jDisadvantages: less efficient

    slower response time

    complex managerial environment

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    Volume-variety characteristics

    Low VOLUME High

    Low

    VARIETY

    Low

    Process layout Transforming resources

    dominate layout Similar processes are located

    together

    HospitalMachining of Parts for EnginesSupermarket

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    GENERAL LAYOUT TYPES:

    CELL LAYOUTS

    jGeneral-purpose resources dedicated to a

    particular group of products or services

    each cell is a pseudo product layout

    exercise circuit in health club

    jProvide a mixture of the advantages/

    disadvantages of process and productlayouts, depending on how they are run

    more efficient than process layouts

    more flexible than product layouts

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    Volume-variety characteristics

    Low VOLUME High

    Low

    VARIETY

    Low

    Cell layoutTransformed resources arepre-selected for group of activitiesProduct or process layoutTo reduce complexity in processlayout

    Computer Component MfgLunch products areain SupermarketMaternity area in Hospital

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    Volume-variety characteristics

    Low VOLUME High

    Low

    VARIETY

    Low

    Product (line) layout

    Locating transforming resourcesentirely for transformed resources

    AutomobileAssembly

    Mass-Immunization ProgramSelf-service CafeteriaPacking Lines

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    Volume-variety characteristics

    Low VOLUME High

    High

    VARIETY

    Low

    Fixedposition layout

    Process layout

    Cell layout

    Product layout

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    CONSIDERATIONS THAT DRIVE

    LAYOUT DECISIONS

    jReduce unnecessary activities

    jPrevent damage to inventory

    jEnhance communication among individuals,

    groups, or departments

    jPrevent rework

    jDiscourage dysfunctional communication

    jProvide privacy

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    CONSIDERATIONS THAT DRIVE

    LAYOUT DECISIONS

    jProvide for safety

    jProvide for security of resourcesjEnhance labor skills and functional

    excellence

    jEnhance the quality of work lifejProvide for customer involvement

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    Advantages and disadvantages

    Fixedpositionlayout

    Processlayout

    Celllayout

    Productlayout

    Disadvantages

    Advantages

    Very high productand mix flexibility.

    Product/customernot moved.

    High variety oftasks for staff.

    Very high unitcosts.

    Scheduling spaceand activities canbe difficult.

    High product andmix flexibility.

    Relatively robustin the case ofdisruptions.

    Easy to supervize.

    Low utilization.

    Can have veryhigh WIP.

    Complex flow.

    Can give goodcompromise.

    Fast throughput.

    Group work canresult in goodmotivation.

    Can be costly torearrange existing

    layout.

    Can need moreplant.

    Low unit costs forhigh volume.

    Opportunities forspecialization ofequipment.

    Can have low mixflexibility.

    Not very robust todisruption.

    Work can be veryrepetitive.

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    Detailed design techniques

    Fixed position - resource location analysis.

    Process layout - flow charts and relationship charts.

    Cell layout - product flow analysis.

    Product layout - assembly line balancing techniques.

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    The Supporting Facility

    jCreating the Right Environment

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    Objectives

    jMinimize material handling costs

    jEfficient space, labor utilization

    j

    Reduce manufacturing lead timejEliminate wasted movements

    j Improve quality

    jFacilitate communicationsjProvide flexibility

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    The need for layout decisions

    Inefficient operations

    For Example:

    High Cost

    Bottlenecks

    Changes in the designof products or services

    The introduction of new

    products or services

    Accidents

    Safety hazards

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    The need for layout decisions

    Changes inenvironmentalor other legal

    requirements

    Changes in volume of

    output or mix ofproducts

    Changes in processand equipment

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    Process layout

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    Product layout

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    Learning Objectivesj Discuss the impact of the servicescape on the

    behavior of customers and employees.

    j Describe the critical facility design features.

    j Identify the bottleneck operation in a product

    layout and rebalance for increased capacity.

    j Use operations sequence analysis to minimize

    flow-distance in a process layout.

    j Prepare a process flowchart.

    j Recommend facility design features to remove

    anxiety of disorientation.

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    Servicescapes

    Designing Physical Surroundings to Affect

    Employee and Customer Behavior

    jAmbient Conditions: background

    characteristics such as noise level, music,

    lighting, temperature, and scent.

    jSpatial Layout and Functionality: reception

    area, circulation paths of employees andcustomers, and focal points.

    jSigns, Symbols, and Artifacts: selection,

    orientation, location, and size of objects.

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    Typology of Servicescapes

    Who Performs in

    Servicescape

    Physical Complexity of the Servicescape

    Elaborate Lean

    Self-service

    (customer only)

    Golf course

    Water slide park

    Post office kiosk

    E-commerce

    Interpersonal

    (both)

    Luxury hotel

    Airline terminal

    Budget hotel

    Bus station

    Remote service(employee only) Research labL.L. Bean TelemarketingOnline tech support

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    Facility Design ConsiderationsjNature and Objectives of Service

    Organization

    jLand Availability and Space

    Requirements

    jFlexibility

    jAesthetic Factors

    jThe Community and Environment

    P d t L t

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    Product Layout

    Line-balancing Problem

    jAutomobile Drivers License Office

    Review Payment Violations Eye Test Photograph Issue

    In Out1

    24015

    2120

    30

    360

    60

    490

    40

    5180

    20

    6120

    30

    Activity

    numbers Flow rateper hour

    Timein seconds

    A t bil D i Li

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    Automobile Drivers License

    Office (Improved Layout)

    1,465

    55

    360

    60

    360

    60

    1,465

    55

    6120

    30

    5180

    20

    2120

    30

    In

    In

    Out

    P L t

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    Process Layout

    Relative Location Problem

    jOcean World Theme Park Daily Flows

    10

    0

    6

    60

    10

    7 5

    0

    6020

    43

    6

    6201

    7

    010

    15

    2

    8

    3

    10

    15

    8820

    630

    15030

    8104012

    6

    8

    530

    10

    10

    A B C D E F A B C D E F

    A

    B

    C

    D

    E

    F

    Netflow

    Flow matrix Triangularized matrix

    Description of attractions: A=killer whale, B=sea lions, C=dolphins, D=water skiing,E=aquarium, F=water rides.

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    Process Flow Charting Symbols

    Category Symbol Description

    Operation An operation performed by the server off-line or customers

    self-service. A possible service failure point.

    Customer An occasion when server and customer interact. An

    contact opportunity to influence customer service perceptions.

    Travel The movement of customers, servers, or information

    between operations.

    Delay D Delay resulting in a queue and a need for waiting space for

    customers.Inspection An activity by customer or server to measure service quality.

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    Credit Card Processing (Before)

    Distance Time Activity

    Customer requests check

    30 ft. 0.5 min. D Server walks

    0.5 min. D Server prepares check

    30 ft. 0.5 min. D Server walks

    0.25 min. D Server presents check

    30 ft. 0.5 min. D Server walks0.5 min. D Customer inspects, puts card out

    30 ft. 0.5 min. D Server returns to table

    0.25 min D Server picks up card

    30 ft. 0.5 min. D Server walks to process

    0.5 min D Server fills out slip

    0.5 min. D Server processes slip

    1.0 min. D Server obtains preauthorization

    30 ft. 0.5 min. D Server walks0.25 min. D Server presents slip

    30 ft. 0.5 min. D Server walks

    0.5 min. D Customer signs (leaves)

    30 ft. 0.5 min. D Server walks

    0.25 min. D Server picks up slip

    30 ft. 0.5 min. D (Customer leaves) Server walks

    Total time: Server:9 min. (270 ft.) Customer: 7.75 min.

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    Credit Card Processing (After)

    Distance Time Activity

    Customer requests check

    30 ft. 0.5 min. D Server walks

    0.5 min. D Server prepares check

    0.5 min. D Server fills out slip

    30 ft. 0.5 min. D Server walks

    0.25 min. D Server presents check and slip

    30 ft. 0.5 min. D Server returns to table

    0.5 min D Customer inspects, puts card out, signs slip

    30 ft. 0.5 min. D Server returns to table

    0.25 min D Server picks up card and slip

    30 ft. 0.5 min. D Server walks

    0.5 min. D Server processes slip an card

    1.0 min. D Server obtains authorization30 ft. 0.5 min. D Server walks

    0.25 min. D Server presents card and receipt

    30 ft. 0.5 min. D Server walks

    D Customer leaves

    Total time: Server: 7.5 min. (210 ft.) Customer: 6.75 min.

    En ironmental Orientation

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    Environmental Orientation

    Considerations

    jNeed for spatial cues to orient visitors

    jFormula facilities draw on previous

    experiencejEntrance atrium allows visitors to gain a

    quick orientation and observe others for

    behavioral cues

    jOrientation aids and signage such as You

    Are Here maps reduce anxiety

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    Topics for Discussion

    j Compare the attention to aesthetics in waiting

    rooms that you have visited. How did the

    different environments affect your mood?

    j Give an example of a servicescape that supportsthe service concept and another that detracts.

    Explain the success or failure in terms of the

    servicescape dimensions

    j Based on your work experience, contrast a

    supportive servicescape with a poor one in terms

    of job satisfaction and productivity.

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    GENERAL LAYOUT TYPES:

    PRODUCT LAYOUTS

    jValue-adding resources arranged in order inwhich materials/customers must flow

    resources dedicated solely to one product

    typically used in mass production

    jAllows production and material-handling

    tasks to be automated

    jLarge quantities at low costjLack of flexibility

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    None

    NoneProject

    Jobbing

    Batch

    Mass

    Continuous

    Professional

    service

    Mass

    service

    Service

    shop

    Manufacturingoperationsflow types

    Serviceoperationsflow types

    volume

    variety

    Morepro

    cessflexibility

    than

    neede

    dsohighcosts

    Lessprocess

    flexibility

    than

    neededso

    highcosts

    The natural line of fit of flow to

    volume/variety characteristics

    high

    lowhigh

    low

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    Basic Layout Advantages Disadvantages

    Fixed-

    position

    Very high mix & product flexibility

    Product or customer not moved or

    disturbed

    High variety of tasks for staff

    Very high unit costs

    Scheduling of space & activities can be

    hard

    Can be much moving of plant and staff

    Process High mix and product flexibility

    Relatively robust if in the case of

    disruptions

    Relative easy supervision of equipment

    or plant

    Low facility utilization

    Can have very high work-in-progress or

    customer queuing

    Complex flow can be difficult to control

    Cell Can give a good compromise between

    cost and flexibility for relatively high-

    variety operations

    Fast throughput

    Group work may improve motivation

    Can be costly to rearrange existing

    layout

    Can need more plant and equipment

    Can give lower plant utilization

    Product Low unit costs for high volume

    Gives opportunities for specialization of

    equipment

    Materials or customer movement is

    convenient

    Can have low mix flexibility

    Not very robust in case of disruption

    Work can be very repetitive

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    ` Detailed mapping to understand the process ofcreation

    x All essential process steps

    x Duration of each step

    x

    Necessary resources (including labour)` Improving the process

    ` Deciding on the position of the CODPx Speed / time to delivery

    x Control and dependability

    x Variety/flexibility

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    Decision

    Operation

    (activity that

    adds value)

    Transport

    (a movement

    of something)

    Delay

    (a wait e.g.

    for materials)

    Deliberate

    storage

    (as opposed

    to delay)

    Inspection

    (a check of

    some sort)

    Direction of

    flow

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    Job

    preperation PackingCutting Assembling

    Activities initiated by own

    orientation / inventory fill up

    Activities initiated by a

    specific customer order

    Intermediate

    Products

    Customer OrderDecoupling Point

    Up-stream Down-stream

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    ` Only one CODP in each production flow.

    ` After the CODP there is no more inventory

    ` Before the CODP there is only inventory for

    economic reasons` More CODP means splitting of production system

    72

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    ` Translate process map to capacity map ofeach step on average output (not absolutemaximum)

    ` Compare to the demand scenarios

    ` Identify possible conflicts in time

    ` Be aware of bottlenecks, capacity-restrainedresources, and non-bottlenecks

    ` Draw up a capacity increase plan` Check on the strategic timeframe

    73

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    ` Translate process map to capacity map ofeach step on average output (not absolutemaximum)

    ` Compare to the demand scenarios

    ` Identify possible conflicts in time

    ` Be aware of bottlenecks, capacity-restrainedresources, and non-bottlenecks

    ` Draw up a capacity increase plan` Check on the strategic timeframe

    74

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    ` By formulating operational policies to manage

    expectations.

    ` By eliminating mistakes through formatting the

    intake.

    ` By communicating a reliable delivery date by

    using planning buckets.

    `

    By linking sales orders to production orders tomonitor timely delivery.

    75

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    ` By adapting procurement policies to the

    logistical and financial risks involved.

    ` By improving the process of ordering goods

    and services.

    ` By improving the process of receiving goods

    and services.

    `

    By better managing the interaction with thesuppliers.

    76

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    ` By creating a structured warehouse.

    ` By controlling your inventory.

    `

    By monitoring the validity of your forecast.` By improving your replenishment warning

    system.

    77

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    ` By optimising the existing production process

    through:x Balancing the capacity utilization

    x Planning & controlling capacity

    x Have standard flexibility

    x Have good registration of production data

    x Have a QC-system in place

    x

    Carry out preventive maintenance` By timely increasing production capacity.

    78

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    79

    What is Lean production?What is Lean production?

    systematic elimination of the 7 types of waste:

    Overproduction

    Waiting Transportation Inventory Motion over-processing, defective products

    The japanese call it Muda (engl.waste)

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    802/18/2012 80

    Management philosophy Pull system though the plant

    WHAT IT IS

    Employee participation Industrial engineering/basics

    Continuing improvement

    Total quality control

    Small lot sizes

    WHAT IT REQUIRES

    Attacks waste Exposes problems and bottlenecks

    Achieves streamlined production

    WHAT IT DOES

    Stable environment

    WHAT IT ASSUMES

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    81

    Work in

    process

    queues

    (banks)

    Changeorders

    Engineering design

    redundancies

    Vendor

    delinquencies

    Scrap

    Design

    backlogs

    Machine

    downtime

    Decision

    backlogs

    Inspection

    backlogs

    Paperwork

    backlog

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    ` Not using the capacity efficiently

    ` Producing wrong goods or services or amounts

    ` Fluctuating quality and or too much waste

    `

    Having too much inventory in the system

    82

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    ` Better organise

    ` Better control

    ` Make it more reliable

    `

    Increase output` Make it more flexible

    ` Anticipate future growth

    83

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    ` 1) Waste from overproduction

    ` (2) Waste of waiting time

    ` (3) Transportation waste

    ` (4) Inventory waste

    ` (5) Processing waste

    ` (6) Waste of motion` (7) Waste from product defects

    84

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    ` Planning and controlling capacity

    ` Standard flexibility

    ` Production administration

    `

    Quality control system` Preventive maintenance

    ` Balancing capacity utilisation

    85

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    Time frame Aim Content

    Strategic

    planning

    Years Long term Products,

    markets, prod

    measures

    Yearly planning Year , month Coordinationtargets sales and

    production

    Amounts to selland produce

    Capacity and

    order planning

    Week, day Coordination

    prod. phases and

    Order plan,

    capacity plan

    Detailedplanning

    Day, hour Starting eachphase in prod

    Sequencing workand orders

    86

    Primaryprocess

    Hour, minute produce Orders parts andproducts

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    ` Malfunction of machines

    ` Illness of employees

    ` Late deliveries of supplies

    `

    Mistakes made in planning` Unexpected fluctuation in demand

    ` Rush order from the customers

    87

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    ` Planning activities Operating time

    Non-productive time

    Tool change time-SMED

    Amounts of raw material used Amounts of disposal

    Quality results

    ` Check planned, released and ready

    ` Automation of admin activities.` Link customer order to specific batch

    88

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    ` Be adequate to represent what on the shop floor

    ` Not too many

    ` Be linked to the shop floor

    `

    Be very clear` Be controllable by the shop floor workers

    ` Be clear what level of fine or bad

    ` Be visible to the employees

    89

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    Opo Performanceindicator

    Lowest level Highest level

    1. Quality 1.Defect rate 2 per 100 1 per 100

    2. Dependability On-hour delivery 85 % More than 95 %

    3.Speed Cycle time

    4. Costs Cost of raw

    material

    90

    5. Flexibility Rush orders

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    ` By use general order picking principles.

    ` By have some form of route planning.

    ` By timely adding distribution capacity.

    91

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    ` Preparing deliveries in a structured way

    ` Wishes of the customers in delivery process

    ` Delivering right goods at the right quantities

    without damages

    ` Delivering efficiency customers, routes and

    capcities

    ` Tracking and tracing delivery of goods and

    services` Quality of the distribution process

    ` Increase distribution capacity

    92

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    ` By assessing and eliminating hazards.

    ` By improving housekeeping.

    ` By improving work organization.

    ` By improving personal protection.

    ` By developing contingency plans.

    93

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    ` Improving housekeeping

    ` Improving work organisation

    ` Improve personal protection

    `

    Contingency planning` Assessing and eliminating hazards

    94

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    ` Designing your mgmt info system (MIS)

    ` Get automated to a certain extent

    ` Know the pitfalls

    95

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    ` Reduction of labour

    ` Real time information

    ` Reduced reaction time

    `

    Integrate information flow between departments-finance, marketing purchasing production

    ` Formatting to reduce mistakes

    96

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    Level Operations Financial HRM Strategic

    CEO -6 months

    forecast

    Total sales Average

    hours

    New product

    development

    Head of sales -3 months

    forecast

    Sales budget Hours worked

    per week

    New

    machines

    Head of

    production

    Forecast one

    month

    Production

    budget

    Hours worked

    per employee

    New

    machines

    Head of

    finance

    Cost of raw

    material

    Cash flow Workers

    throughput

    Purchasing

    new machines

    97

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    Type 1 Type 2 Type 3 type4

    Description Simple

    Basic

    No

    customization

    Complex

    Part

    customization

    Very complex

    and wide

    varieties

    Highestcustomization

    Develop

    totally new

    software

    Hardware Stand alone

    computers

    No network

    Network

    software

    Need

    separate

    server5-10 users

    Network

    software

    Needs heavy

    server

    Infinite users

    Can network

    or stand alone

    Very

    expensive to

    stand alone

    98

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    Suitable for Small scaleusersSimpleprocessSmallcompanies

    Large scaleIntegratedprocessSmall tomediumsized

    companies

    Almost alltypes ofcompaniesNeedintegration

    Very uniqueprocess thatdo not matchtype 3

    Reliability Reliable Fairly reliable In the initial

    phase will

    cause

    difficultiesResolve after

    some time

    Uncertain

    Will probably

    take long but

    bug free

    99

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    Price 500 to 5000 10,000 to200,000 US$

    Over 150,000 Very veryexpensiveerp

    ERP not possible Somepossibility

    Yes Possible

    Example Davilex ExactNavison

    Axapta

    SAP 4th generationcomputer

    10

    0

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    1) Strategic objectives

    2) Marketing objectives

    3) Product-Market combinations and their most

    important Op. Perform. Objectives4) Impact of each OPO on the network, location,

    production system

    5) Areas of conflict between OPO and possible

    solutions6) Detailed capacity plan

    10

    1

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    7) Evaluation of the network

    8) Process & layout within the system

    9) The production process mapped in detail

    10) Detailed capacity plan for next 3-5 years

    11) Identified impediments for growth

    12) Improvements on:1) Order intake 5) Distribution

    2) Procurement 6) Safety & Health

    3) Storage & Inventory 7) Info & Automation4) Production

    10

    2

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    ` I am now able to have an aerial view of operationalissues.

    ` Now I know where to start from to manage mybusiness operations.

    ` I had no clear understanding of how OM links withall other organisational functions, but its now a talk ofthe past.

    ` I now know the real areas an Op.mngr should workon.

    ` I am now equipped to use inventory as a tool tomake working capital sweat even more.

    10

    3

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    GRO

    WTH

    StraegicImplications

    OperationsImpedimentsfor Growth

    Strategic

    CapacityPlan

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    Any Questions?