Process Selection - Essay

• The presentation discusses Process Selection in the context of BA 240 – Operations Management at the University of the Philippines Cebu, School of Management.

Learning Objectives

• Identify the five types of product-flow processes, referencing Schroeder & Goldstein (2016) or Zani & Khir (2018).
• Describe the types of order fulfillment processes.
• Explain how to make process selection decisions using the process-product matrix.

Product-Flow Processes (Schroeder & Goldstein, 2016)

• Continuous Process: Highly standardized, high-volume production with continuous flow and low flexibility, typically involving liquids or semi-solids like in oil refineries.
• Assembly Line: Linear sequence of operations for mass production of discrete products with high efficiency and low flexibility, exemplified by automobile manufacturing on a conveyor system.
• Batch Flow: Production in batches using general-purpose equipment, allowing for more variety than assembly lines, such as furniture making with multiple design options.
• Job Shop: Custom orders using general-purpose equipment, highly flexible but costly, useful for custom-made machine components or sheet metal parts.
• Project: Unique or creative products at a stationary worksite, involving complex scheduling and high customization, such as building construction or aircraft assembly.

Types of Process Strategies (Zani & Khir, 2018) and (Schroeder & Goldstein, 2016)

• Product Focus Strategy: Is a continuous or line flow production with highly standardized and high-volume output. The process continuously produces stuff typically with liquids or semi-solids, for example oil refinery processing.
• Process Focus Strategy: This is a Job shop with custom orders using general purpose equipment. Specialized batch processes make products to order, for example custom made machine components.
• Repetitive Focus Strategy: Is an assembly line involving linear operations with mass production of discrete products with high efficiency and limited flexibility, for example Automobile manufacturing.
• Mass Customization Strategy: Can be achieved through either continuous process/line flow production or job shop approaches.

Importance of Identifying Process Types

• Identifying process strategies or product-flow processes is crucial for operations managers to achieve competitive advantages.
• Process strategy is key for resource utilization and transforming inputs to outputs, determining efficiency and effectiveness.
• Process selection determines the type of production process, influencing product volume and customization level, for example automobiles use assembly line, wine production uses batch processing, tailor shops use job shops.
• Services may have customer or information flow instead of product flow.

Knowledge Check, Product-Flow Game

• Identify the product-flow type.

Examples of Continuous Process

• San Miguel Beer and Ligo Sardines are produced in high volume with continuous fermentation/bottling or automated canning/sealing processes.

Examples of Assembly Line

• Toyota Vios cars follow a structured assembly line process.

Examples of Batch Flow

• Red Ribbon Custom Cakes are produced in batches based on customer demand for variety.

Examples of Project

• Boeing 747 aircraft assembly is complex and requires coordination

Product-Flow Characteristics

• Continuous and Assembly Line: Large, sequenced, standardized, high volume.
• Batch and Job Shop: Batch, jumbled, High variety, customizable, medium to low volume.
• Project: Single unit, none, very high customization, unique, single unit.

Labor Characteristics

• Continuous and Assembly Line: Low operator skill and repetitive task type with medium pay.
• Batch and Job Shop: High operator skill with nonroutine tasks and high pay.
• Project: High operator skill with nonroutine tasks and high pay.

Capital Characteristics

• Continuous and Assembly Line: High Investment, low inventory
• Batch and Job Shop: Medium investment and High inventory
• Project: Medium investment and Little inventory

Measurement of Process Efficiency

• Efficiency can be measured using Throughput Ratio (TR).

Throughput Ratio (TR) formula

• TR = (Total Processing Time for the Job / Total Time in Operations) x 100%

TR in Process Types

• Batch & Job Shop:TR is 10% to 40%, meaning much time is spent waiting.
• Continuous & Assembly Line: TR is 90% to 100%, with minimal waiting time.
• TR represents the proportion of time when value is actively added; thus, Higher TR means more efficient operations.

Approaches of Order Fulfillment (Shroeder & Goldstein, 2016)

• Make-to-Stock (MTS): Products manufactured in anticipation of demand, with high inventory, fast delivery, and critical demand forecasting.
• Make-to-Order (MTO): Products made only after an order is received, enabling high customization but longer lead times and lower inventory costs.
• Assemble-to-Order (ATO): Hybrid approach producing subassemblies in advance; it facilitates faster fulfillment and moderate customization.

Order Penetration Point

• The point in the supply chain where the product becomes customer-specific.
• (determines)
• Final assembly is Completed
• Fabrication is done before final assembly
• Before fabrication or ordering materials from suppliers

Customization Level

• None.
• Limited
• High

Lead Time in relation to Customization Level

• Short
• Moderate
• Long

Why product flow and order fulfillment strategies

• These dimensions are used to construct the six-cell matrix combining product-flow and order fulfillment approaches for market efficiency.

Product-Process Matrix

• Represents strategic choices between product and process dimensions, informing decisions like product choice strategy.
• The framework illustrates a dynamic relationship between product life cycle and process choice.
• Products start as unique offerings and eventually become standardized goods.
• Processes shift from project based to continuous production processes as demand arises.

Strategic Positioning

• The matrix diagonal represents the ideal balance between product variety and process efficiency.
• Process choices provide competitive advantages by aligning with business strategy.
• A mismatch can cause inefficiencies, and new markets may demand new investment.