SCM 414 Exam 2

Process

is a series of independent tasks that transforms an input into output to provide value for the organization.

Examples:
1.Honda transforms steel, rubber, and plastic into cars

2.McDonald's transforms meat, potatoes, and sauces into ready-to-eat food

Critical Operations Decisions

Choosing the RIGHT processes and DESIGNING them to work effectively with each other

What factors should determine how we structure a process?

-Cost
-Quality
-Volume
-Flexibility
-Product variety
-Customization
-Customer Service

Approaches to Production (Goods or Services)

•Production in response to customer orders or demand

•Production in anticipation of customer orders or demand

•Leads to 3 types of goods and services
- Custom
- Option-oriented
- Standard

Process Type:Custom

Produced in response to customer demand

-Make-to-order
-Design-to-order
-engineer-to-order

Output:
-Unique, customized
-One of a kind
-Low volume

Examples:
-Custom Home
-Designing a video game
-weddings

Process:
•Unique sequencing -> varies by project
•High complexity
•Employees and equipment flexibility
•Activities outsourced to specialists
•High level customer involvement

Process Types: Option

Produced in anticipation of and in response to customer demand

-Assemble-to-order

Output:
•Moderate volume and variety
•Customization around limited options

Examples:
•Bakery
•Dell Computers
•Subway sandwiches
•Travel Agents

Process:
•Dominant flow patterns
•Some common inputs
•Setup time (between batches) can be high
•Moderately flexible employees/equipment

Process Types: Standard

Produced in anticipation of customer demand

-make-to-stock

Output:
•Commodities with high volume
•Little variety

Examples:
•Aluminum cans
•Laundry detergent
•Gasoline

Process:
•Products follow sequence
•Operations often run 24/7, continuous
•Line stoppages are very costly
•Highly specialized equipment
•Low-skilled operators

Product-Process Matrix

-Project

Flow Shop:
-Job Shop
-Batch
-Repetitive

-Continuous

Project:

custom, smaller tasks, may be unique to the project, may differ from project to project

-high-skilled labor

Job Shop

Customization, but standard processes are used, standard equipment and tasks

-Many different routings to the processes and equipment - each job may be different
-Hair salon
-Surgery
-High-skilled labor

Batch

-Goods/Service flow in batches from task to task
-Bakery
-Some customer work
-Higher volume

Repetitive

-High volume
-Consistent tasks, similar sequencing
-Hospital lab, computer assembly

Flow Shop

Another way to define: Job shop, batching, and repetitive flow

Continuous

-Standard process, rigid, little flexibility, no customization
-Highly automated
-Minimal human intervention required

Process Types: Mass Customization

-Assemble-to-order
-make-to-stock

Output:
-Customized products
-High volume
-Medium variety

Example:
-Dell personal computers
-Jostens Class Rings

Process:
•Continuous or repetitive processes
•Components standardized
•High inventory levels for components
•Process flexibility on assembly
•Customization options specified
•Flexible manuf systems to quick change between products

Engineer to order

•unique, customized products

•Engineering activities need to be added to product lead time
•Upon receipt of a customer order, the order engineering requirements and specifications are not known in detail
•There is a substantial amount of design and engineering analysis required

Examples:
Power Plant boiler
Office furniture

Make to order

•similar design, customized during production

•Products/services that are made to customer's specs but only after an order is received
•Product/service is customized

Examples:
Custom built home
tailor made suit

Assemble to order

•produced from standard components and modules

•Standard components are produced in anticipation of demand
•Once an order is received, components can be combined in different ways to accommodate different customer specs
•Some customization
•Delivery time shorter than make-to-order

Examples:
computers
omelet

Make to stock

•goods made and held in inventory in advance of customer

•Each unit is produced or assembled by going through same series of operations in same order

Examples:
Mcdonalds food
retail items

What are the competitive priorities

-Cost, Quality, Time, Flexibility, Innovation

Efficient Supply Chains

•Supply predictable, stable
•Demand predictable, stable
•Focus on efficiency at the lowest possible cost
•Maintain high resource utilization
•Automation
•Mass production
•Minimize inventory
•Centralization
•Shorten lead time as long as it doesn't increase cost
•Select primarily for cost, quality, and dependable lead-times
•Reliable, on-time
•High volume

Responsive Supply Chains

•Supply predictable
•Demand unpredictable
•Respond to rapidly changing consumer tastes
•Common Components
•Postponement
•Mass Customization
•Deploy significant buffer stocks of parts or finished goods
•Invest aggressively in ways to reduce lead time
•Select primarily for speed, flexibility, and quality
•High product variety
•Configuration closer to customer
•Rapid product introduction

Agile supply chains

•Supply unpredictable
•Demand unpredictable
•Focus on customer satisfaction over product life-cycle
•Build-to-order
•Use capacity to protect against disruptions
•Postponement
•Inventory pooling
•Fast, flexible, on-time
•Close Relationships
•Joint product development
•Low volume
•Configured at delivery
•Reconfigurable during life-cycle

Risk-hedging supply chains

•Supply unpredictable
•Demand predictable
•Protect against supply disruptions
•Redundant capacity
•Redundancy
•Inventory buffers and stockpiles
•Flexible distribution networks
•Multi-sourcing
•Select on quality, availability, lead-time
•Reduce SC complexity
•Risk-Sharing
•R&D Collaboration

Process Structure in Services

1.Customer Contact
-The extent to which the customer is actively involved and receives personal attention during the service process

2.Customization
-Service level: highly customized to standardized

3.Co-Production
-What role will the customer play

4.Process Divergence
-The extent to which the process is highly customized with considerable latitude as to how its tasks are performed

5.Flow
-How the work progresses through the sequence of steps

Levels of Process Design

Tasks: Specific unit of work required to create an output

Activity: Group of tasks needed to create and deliver an intermediate or final output

Process: Sequence of activity

Value Chain: Network of processes

Process Analysis

-Looks at the tasks and activities in more detail
-To identify inefficient tasks
-To spot possible opportunities to improve effectiveness
-To understand where value can be added

Process Mapping

•Document how inputs become outputs
•Essential for developing process improvement ideas

Process Flow Charts

Holding (Triangle):
-Raw materials
-work in process
-finished goods inventory

Processing step (Rectangle)

Decision Point (Diamond)

Capacity

•When measured as time, it is the amount of time available to produce the output of a process measured in time per unit of time

•Minutes available/hour (min/hour)
•Hours available/day (hours/day)

Cycle Time

•The amount of time to complete a task (measured as time/unit)

-Average, min, max

Flow Time

•The time to get 1 unit through all tasks in a processes (measured as time/unit)

Throughput

•The time to get 1 unit through all tasks in a processes (measured as time/unit)

-output rate
-average number of units completed per unit time
-measured in units/ time

Bottleneck

•The process stage with the longest cycle time
•Limits the throughput of the entire process

•Increase capacity of bottleneck to increase the throughput of the process as a whole
-Additional workers
-Cross-train workers
-More/faster equipment

Work in Process (WIP)

Average number of units in system over a time interval. Measured as units

Buffering

Keep some inventory between stages

Starving

stoppage of activity because of lack of material

Blocking

Stoppage of flow because there is not storage place

Utilization

•Fraction of time a workstation or individual is busy over the long run

•Labor Utilization:

useful time (namely, time actually working on a product or delivering a service) spent by workers as a percentage of the total time for which they are available (and being paid)

•Machine Utilization:

amount of time machines are used as a percentage of time available

Facility Layout

-Efficiency and effectiveness
•Vision and goals of the organization
•Land availability
•Space requirements
•Flexibility
•Security
•Aesthetic factors
•The community and environment

Layout Types: Product

Equipment is located according to progressive steps required to produce product/service

• Standard products/services produced using same process
• Workload balancing techniques

Advantages:
•Low unit costs (economies of scale)
•High utilization
•Specialized equipment

Disadvantages:
•Low mix flexibility
•Not robust against disruptions
•High capital investment
•Repetitive work for staff

Layout Types: Fixed Position

Product remains stationary at one location

• Equipment, materials, and labor moved to product
• Resource location analysis

Advantages:
•Very high product & mix flexibility
•Product/customer stationary
•High task variety for staff

Disadvantages:
•Very high unit costs
•Scheduling space & activities is complex

Layout Types: Functional (Process)

Operations performed in common, functional areas regardless of product being produced

• Travel between areas is based required functions for product
• Flow charts and relationship charts

Advantages:
•High product & mix flexibility
•Robust against disruption
•Easy to supervise

Disadvantages:
•Low utilization
•Can have very high WIP
•Complex flows and scheduling

Layout Types: Cellular

Labor & machines grouped in cells according to families of parts with similar processing requirements

• Combination of process and product layout
• Product flow analysis

Advantages:
•Good compromise between process and product layouts
•Fast throughput
•Group work can lead to motivation for workers

Disadvantages:
•Can be costly to rearrange existing layout
•Can result in extra equipment
•High space requirements

Line Balancing

-Balance work between stations to maximize output
-With the desired output rate (production goal)

How to line balance

•Collect cycle time for each task in process

•Precedence relationships among tasks
-Know the relationship between each task
-Know how the tasks should be sequenced
•Know the desired output rate

•Grouping tasks: longest operating time rule
-Identify the task with the longest cycle time
-Group all other tasks so that the processing time of the grouped tasks is ≤ the longest cycle time

Scheduling

•Better scheduling results in better service
•Data driven -> turns information into work to be done
-applies to all aspects of a value chain

•Requires a high degree of analysis and judgment
-No single right way to do scheduling
-Requires logical mindset: ability to juggle multiple requirements and constraints to determine the optimal schedule
•Requires a deep understanding of People, Processes, and Systems

People (Scheduling)

-Operational knowledge of capabilities, strengths/weaknesses
-Potential bottlenecks of workforce
-How these might impact a given schedule

Processes

-Process analysis: how things are done, order of tasks, cycle times, capacity, throughput, impact of quality

Systems

-Super-user capabilities to utilize ERP tools to gather forecasts and order data to produce working schedules

Competencies of a valuable scheduler

•Discerning, independent, data-driven thinker
•Quick learner; apply lessons learned
•Good memory
•Able to "connect the dots" between different functions and impact of requests/upsets
•Process Mindset; readily knows the flow of Ops
•Accountable, hi degree of ownership to decisions
-customer-focused

Scheduling and sequencing

- Assignment of start and completion times to particular jobs, people, or equipment

-Determination of the order in which jobs or tasks are processd

Staff Scheduling

•Attempts to match available personnel with the needs of the organization by:
-Accurately forecasting demand
-Translating the forecast into the quantity and timing of work to be done
-Determining the staffing required to perform the work by time period

challenges:
-Vacation, days off
-Full-time vs part-time mix
•Developing a work schedule that maximizes service and minimizes costs

Appointments

•Reservation of service time and capacity
•Help maximize the use of time-dependent service capacity and reduce the risk of no-shows
•Reduce the cost of providing services as the service providers are idle less each workday

Designing appointment systems

-Determining the appointment time interval
-Determining workday length and time off duty
-Deciding how to handle overbooking
-Developing customer appointment rules that maximize customer satisfaction

Sequencing

•Sequencing the way work is done -> necessary when the product/service uses a common resource

-Machine: a plan for other processes so that the common machine is never idle
-Customer service representative: Call center routing of calls or an appointment process
-Delivery Truck: efficient routing

Vehicle routing and scheduling

•Common process in distribution systems
•Vehicle routing problems

Optimization: Complete enumeration of all possible routes to find the best route plan -> LP model
-Shorted total delivery time or shortest distance
-Helps reduce operating costs and greenhouse gas emissions

Constraints:
Vehicle capacity
Drivers working hours

Benihana Concept

Good food, entertainment, moderate price, quick meal, great space utilization

Food costs 30%-35%
Beverage costs 20%

well trained, Japanese chefs

Body Scans and Bottlenecks Case

Current process for CT scans was long and had bottle necks

Exploit the constraint:
-Technologist take 4 minutes of work from the nurse
-Process capacity per scanner would grow

Improvements:
1.Facility reconfiguration & low-tech improvements
2.IV placement & greater labor specialization
3.Greater resource use & parallel processes