Process Planning
Process Analysis
Process Innovation
Technology Decisions
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Processes and Technology6-1Chapter 6Lecture OutlineProcess PlanningProcess AnalysisProcess InnovationTechnology DecisionsCopyright 2011 John Wiley & Sons, Inc.6-2Process PlanningProcessGroup of related tasks with specific inputs & outputsProcess designtasks to be done & how they are coordinated among functions, people, & organizationsProcess strategyan organization’s overall approach for physically producing goods and servicesProcess planningconverts designs into workable instructions for manufacture or deliveryCopyright 2011 John Wiley & Sons, Inc.6-3Process StrategyVertical integrationextent to which firm will produce inputs and control outputs of each stage of production processCapital intensitymix of capital (i.e., equipment, automation) and labor resources used in production processProcess flexibilityease with which resources can be adjusted in response to changes in demand, technology, products or services, and resource availabilityCustomer involvementrole of customer in production processCopyright 2011 John Wiley & Sons, Inc.6-4OutsourcingCostCapacityQuality SpeedReliabilityExpertiseCopyright 2011 John Wiley & Sons, Inc.6-5Process SelectionProjectsone-of-a-kind production of a product to customer orderBatch productionprocess many different jobs at the same time in groups or batchesMass productionproduce large volumes of a standard product for a mass marketContinuous productionused for very-high volume commodity productsCopyright 2011 John Wiley & Sons, Inc.6-6Sourcing ContinuumCopyright 2011 John Wiley & Sons, Inc.6-7Product-Process MatrixCopyright 2011 John Wiley & Sons, Inc.6-8Types of ProcessesType of productUniqueCopyright 2011 John Wiley & Sons, Inc.6-9PROJECTBATCHMade-to- order(customized)Type of customerOne-at-a-timeFew individualcustomersMASSMade-to- stock(standardized )MassmarketCONT.Commodity MassmarketProduct demandInfrequentFluctuatesStableVery stableTypes of ProcessesDemand volumeVery lowCopyright 2011 John Wiley & Sons, Inc.6-10PROJECTBATCHLow to mediumNo. of different productsInfinite varietyMany, variedMASSHighFewCONT.Very highVery fewProduction systemLong-term projectDiscrete, job shopsRepetitive, assembly linesContinuous, process industriesTypes of ProcessesEquipmentVariedCopyright 2011 John Wiley & Sons, Inc.6-11PROJECTBATCHGeneral-purposePrimary type of workSpecialized contractsFabricationMASSSpecial-purposeAssemblyCONT.Highly automatedMixing, treating, refiningWorker skillsExperts, crafts-personsWide range of skillsLimited range of skillsEquipment monitorsTypes of ProcessesAdvantagesCustom work, latest technologyCopyright 2011 John Wiley & Sons, Inc.6-12PROJECTBATCHFlexibility, qualityDis-advantagesNon-repetitive, small customer base, expensiveCostly, slow,difficult tomanageMASSEfficiency,speed, low costCapitalinvestment;lack of responsiveness CONT.Highly efficient, large capacity,ease of controlDifficult to change,far-reaching errors,limited varietyExamplesConstruction, shipbuilding, spacecraftMachine shops,print shops, bakeries, educationAutomobiles,televisions,computers,fast foodPaint, chemicals, foodstuffsProcess Selection With Break-Even AnalysisStudy cost trade-offs based on demand volumeCostFixed costsconstant regardless of the number of units producedVariable costsvary with the volume of units producedRevenueprice at which an item is soldCopyright 2011 John Wiley & Sons, Inc.6-13Process Selection With Break-Even AnalysisTotal revenueprice times volume soldProfitdifference between total revenue and total costCopyright 2011 John Wiley & Sons, Inc.6-14Process Selection With Break-Even AnalysisCopyright 2011 John Wiley & Sons, Inc.6-15Total cost = fixed cost + total variable costTC = cf + vcvTotal revenue = volume x priceTR = vpProfit = total revenue - total costZ = TR – TC = vp - (cf + vcv)cf = fixed costV = volume (i.e., number of units produced and sold)cv = variable cost per unitp = price per unitProcess Selection With Break-Even AnalysisCopyright 2011 John Wiley & Sons, Inc.6-16Solving for Break-Even Point (Volume) TR = TC vp = cf + vcv vp - vcv = cf v(p - cv) = cf v =cfp - cvBreak-Even AnalysisCopyright 2011 John Wiley & Sons, Inc.6-17 Fixed cost = cf = $2,000 Variable cost = cv = $50 per unit Price = p = $100 per unitBreak-even point isv = = = 40 unitscfp - cv2000100 - 50Break-Even Analysis: GraphCopyright 2011 John Wiley & Sons, Inc.6-18Total cost lineTotal revenue lineBreak-even point40 Units$3,000 —$2,000 —$1,000 —DollarsProcess Selection – Multiple ProcessesCopyright 2011 John Wiley & Sons, Inc.6-19Below or equal to 400, choose AAbove or equal to 400, choose B $2,000 + $50v = $10,000 + $30v $20v = $8,000 v = 400 units Process A Process BBreak-Even Analysis: GraphCopyright 2011 John Wiley & Sons, Inc.6-20Process PlansSet of documents that detail manufacturing and service delivery specificationsassembly chartsoperations sheetsquality-control check-sheetsCopyright 2011 John Wiley & Sons, Inc.6-216-22Assembly ChartCopyright 2011 John Wiley & Sons, Inc.Operations Sheet for Plastic PartCopyright 2011 John Wiley & Sons, Inc.6-23Part name Crevice ToolPart No. 52074Usage Hand-VacAssembly No. 520 Oper. No. Description Dept. Machine/Tools Time 10 Pour in plastic bits 041 Injection molding 2 min 20 Insert mold 041 #076 2 min 30 Check settings 041 113, 67, 650 20 min & start machine 40 Collect parts & lay flat 051 Plastics finishing 10 min 50 Remove & clean mold 042 Parts washer 15 min 60 Break off rough edges 051 Plastics finishing 10 minProcess AnalysisSystematic study of all aspects of a processmake it fastermore efficientless costlymore responsiveBasic toolsprocess flowchartsdiagramsmapsCopyright 2011 John Wiley & Sons, Inc.6-24Flow Charts in Microsoft VisioCopyright 2011 John Wiley & Sons, Inc.6-25Building a FlowchartDetermine objectivesDefine process boundariesDefine units of flowChoose type of chartObserve process and collect dataMap out processValidate chartCopyright 2011 John Wiley & Sons, Inc.6-26Process FlowchartsLook at manufacture of product or delivery of service from broad perspectiveIncorporatenonproductive activities (inspection, transportation, delay, storage)productive activities (operations)Copyright 2011 John Wiley & Sons, Inc.6-27Copyright 2011 John Wiley & Sons, Inc.6-28Process Flowchart SymbolsOperationInspectionTransportationDelayStorageCopyright 2011 John Wiley & Sons, Inc.6-29Process Flowchart of Apple ProcessingFlowcharts in ExcelCopyright 2011 John Wiley & Sons, Inc.6-30Process Map or Swimlane Chart of Restaurant ServiceCopyright 2011 John Wiley & Sons, Inc.6-31Simple Value Chain FlowchartCopyright 2011 John Wiley & Sons, Inc.6-32Process InnovationTotal redesign of a process for breakthrough improvementsCopyright 2011 John Wiley & Sons, Inc.6-33Breakthrough ImprovementContinuous improvement refines the breakthroughContinuous improvement activities peak; time to reengineer processFrom Function to ProcessCopyright 2011 John Wiley & Sons, Inc.6-34ManufacturingAccountingSalesPurchasingProduct DevelopmentOrder FulfillmentSupply Chain ManagementCustomer ServiceFunctionProcessProcess InnovationCopyright 2011 John Wiley & Sons, Inc.6-35StrategicDirectivesGoals for Process PerformancePilot Studyof New DesignDetailedProcess MapHigh - levelProcess mapGoalsMet?InnovativeIdeasDesignPrinciplesModelValidationCustomerRequirementsKeyPerformanceMeasuresFull Scale ImplementationBaseline DataBenchmarkDataNoYesHigh-Level Process MapCopyright 2011 John Wiley & Sons, Inc.6-36Principles for Redesigning ProcessesRemove waste, simplify, and consolidate similar activitiesLink processes to create valueLet the swiftest and most capable enterprise execute the processFlex process for any time, any place, any wayCapture information digitally at the source and propagate it through processCopyright 2011 John Wiley & Sons, Inc.6-37Principles for Redesigning ProcessesProvide visibility through fresher and richer information about process statusFit process with sensors and feedback loops that can prompt actionAdd analytic capabilities to the processConnect, collect, and create knowledge around process through all who touch itPersonalize process with preferences and habits of participantsCopyright 2011 John Wiley & Sons, Inc.6-38Techniques for Generating Innovative IdeasVary the entry point to a problemin trying to untangle fishing lines, it’s best to start from the fish, not the polesDraw analogiesa previous solution to an old problem might workChange your perspectivethink like a customerbring in persons who have no knowledge of processCopyright 2011 John Wiley & Sons, Inc.6-39Techniques for Generating Innovative IdeasTry inverse brainstormingwhat would increase costwhat would displease the customerChain forward as far as possibleif I solve this problem, what is the next problemUse attribute brainstorminghow would this process operate if. . . our workers were mobile and flexiblethere were no monetary constraintswe had perfect knowledgeCopyright 2011 John Wiley & Sons, Inc.6-40Technology DecisionsFinancial justification of technologyPurchase costIncludes add-ons to make technology workOperating CostsVisualize how the technology will be usedAnnual SavingsBetter quality and efficiency save moneyRevenue EnhancementNew technology can enhance revenurCopyright 2011 John Wiley & Sons, Inc.6-41Technology DecisionsFinancial justification of technologyReplacement AnalysisWhen to upgrade to new technology depends on competitive environmentRisk and UncertaintyIt is risky to invest and risky to Piecemeal AnalysisMake sure new and existing technology are compatibleCopyright 2011 John Wiley & Sons, Inc.6-42Components of e-ManufacturingCopyright 2011 John Wiley & Sons, Inc.6-43Product TechnologyComputer-aided design (CAD)Creates and communicates designs electronicallyGroup technology (GT)Classifies designs into families for easy retrieval and modificationComputer-aided engineering (CAE)Tests functionality of CAD designs electronicallyCollaborative product commerce (CPC)Facilitates electronic communication and exchange of information among designers and suppliersCopyright 2011 John Wiley & Sons, Inc.6-44Product TechnologyProduct data management (PDM)Keeps track of design specs and revisions for the life of the productProduct life cycle management (PLM)Integrates decisions of those involved in product development, manufacturing, sales, customer service, recycling, and disposalProduct configurationDefines products “configured” by customers who have selected among various options, usually from a Web siteCopyright 2011 John Wiley & Sons, Inc.6-45Process TechnologyStandard for exchange of product model data (STEP)Set standards for communication among different CAD vendors; translates CAD data into requirements for automated inspection and manufactureComputer-aided design and manufacture (CAD/CAM)Electronic link between automated design (CAD) and automated manufacture (CAM)Computer aided process (CAPP)Generates process plans based on database of similar requirementsE-procurementElectronic purchasing of items from e-marketplaces, auctions, or company websitesCopyright 2011 John Wiley & Sons, Inc.6-46Manufacturing TechnologyComputer numerically control (CNC)Machines controlled by software to perform a range of operations with the help of automated tool changers; collects processing information and quality dataFlexible manufacturing system (FMS)A collection of CNC machines connected by an automated material handling system to produce a wide variety of partsRobotsProgrammable manipulators that can perform repetitive tasks; more consistent than workers but less flexibleConveyorsFixed-path material handling; move items along a belt or chain; “reads” package labels and diverts them to correct destinationCopyright 2011 John Wiley & Sons, Inc.6-47Manufacturing TechnologyAutomatic guided vehicle (AGV)Driverless trucks that move material along a specified path; directed by wire or tape embedded in floor or by radio frequenciesAutomated storage and retrieval system (ASRS)An automated warehouse; items placed in a storage system and retrieved by fast-moving stacker cranes; controlled by computerProcess ControlContinuous monitoring of automated equipment; makes real-time decisions on ongoing operation, maintenance, and qualityComputer-integrated manufacturing (CIM)Automated manufacturing systems integrated through computer technology; also called e-manufacturingCopyright 2011 John Wiley & Sons, Inc.6-48Information TechnologyBusiness – to –Business (B2B)E-transactions between businesses usually via the InternetBusiness – to –Consumer (B2C)E-transactions between businesses and their customers usually via the InternetInternetA global information system of computer networks that facilitates communication and data transferIntranetCommunication networks internal to an organization; can also be password (i.e., firewall) protected sites on the InternetCopyright 2011 John Wiley & Sons, Inc.6-49Information TechnologyExtranetIntranets connected to the Internet for shared access with select suppliers, customers, and trading partnersBar CodesSeries of vertical lines printed on packages that identify item and other informationRadio Frequency Identification tags (RFID) Integrated circuit embedded in a tag; can send and receive information; a “twenty-first century bar code” with read/write capabilitiesElectronic data interchange (EDI) Computer-to-computer exchange of business documents over a proprietary network; very expensive and inflexibleCopyright 2011 John Wiley & Sons, Inc.6-50Information TechnologyExtensible markup language (XML) A markup language that facilitates computer–to–computer communication over the Internet by tagging data before its is sent Enterprise resource planning (ERP) Software for managing key functions of an enterprise, including sales, marketing, finance, accounting, production, materials management & human resourcesSupply chain management (SCM)Software to manage flow of goods and information among a network of suppliers, manufacturers and distributorsCustomer relationship management (CRM)Software to manage interactions with customers; compiling and analyzing customer dataCopyright 2011 John Wiley & Sons, Inc.6-51Information Technology Decision support systems (DSS)Information system to help managers make decisions; includes quantitative modeling components and interactive components for what-if analysisExpert systems (ES)A computer system that uses the knowledge of experts to diagnose or solve a problemArtificial intelligence (AI)Field of study replicating elements of human thought and natural processes in software; includes expert systems, genetic algorithms, neural networks, and fuzzy logicCopyright 2011 John Wiley & Sons, Inc.6-52Copyright 2011 John Wiley & Sons, Inc.6-53Copyright 2011 John Wiley & Sons, Inc.All rights reserved. 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