Manufacturing Process and Project Management

• These study notes cover manufacturing, exports, competitiveness, operations strategy, service strategy, and waiting lines.

Manufacturing, Exports, and Competitiveness

• Manufacturing's contribution to total GDP is decreasing in many countries
• It remains crucial because:
• Drives most of a country's exports
• Has more stable pricing than commodities
• Supports modern services like logistics, IT, and finance
• Supports higher paying jobs, skilled labor and innovation
• leads to technological breakthroughs and R&D growth
• A strong correlation exists between exports and GDP growth.
• Diversification and economies of scale are essential for sustainable economic performance.
• Complex global supply chains create logistical and strategic challenges.
• Export success depends on innovation, skilled labor, and efficient logistics
• Low-cost alone is insufficient, infrastructure, technology, and strategic management matter

Virtuous Cycle of Competitiveness

• Operations Management impacts Technology (processes and products) which leads to better Productivity
• Productivity drives Manufacturing which drives successful Exports - this increases GDP, which benefits Services
• GDP then Supports innovation, technology transfer, and exports

Global Competitiveness Pillars

• Factors are divided into:
• Enabling Environment (Institutions, Infrastructure, ICT adoption, Macroeconomic stability)
• Human Capital (Health, Skills)
• Markets (Product Market, Labor Market, Financial System, Market Size)
• Innovation Ecosystem (Business Dynamism, Innovation Capability)

Exporting Products vs. Exporting Services

• Products
• Physical goods with high standardization
• Require shipping and logistics
• Easier to scale
• Services
• Intangible, real-time needed, and require customization.
• Face legal barriers and scaling is harder
• Require skilled labor

Operations Strategy - Boeing

• Operations strategies are defined by company objectives.
• Order Qualifiers (OQs) and Order Winners (OWs) are defined by the final customers.
• Over time, Order Winners tend to become Order Qualifiers.
• Structure strategies in manufacturing and services can be expensive
• They should be preceded by corporate objectives and marketing strategies.
• The true mission of a manufacturing firm is not to build products but to get profit in a sustainable way satisfying its customers.

Spectrum of Manufacturing Processes

• Includes Project, Job Shop, Batch Flow, Line Flow, and Continuous Flow organized per the Process-product matrix
• Project:
• Development of a new product, infrastructure, etc
• Characterized by uncertainty about activities duration, outsourcing, and coordination.
• Key points: planning and control of activities
• Job Shop:
• Plastic molding, Machine shops
• Flexible process many different products, functional layout
• Materials flow and WIP is discontinuous
• Key points: Routing and bottlenecks
• Batch Flow:
• Chemical and pharmaceutical industries or metal manufacturing
• Batch production of a given size, functional layout, and greater standardization
• Key Points: Batch size/set-up times, Routing, WIP, processing time
• Line Flow:
• Automotive, computers, or domestic appliances
• Product layout, product moves quickly between stations
• More flexible and less automated than CF
• Key points: Line balancing
• Continuous Flow:
• Basic industries such as oil, iron, aluminum, and food processing
• Product layout, product moves continuously, capital intensive, and automation
• Key points: High productivity to compete in price

Key Differences Between Layouts

• Functional Layout:
• High flexibility
• Slower efficiency
• High work-in-process
• Seen in custom workshops
• Product Layout:
• Low flexibility
• Faster efficiency
• Low work-in-process
• Seen in car assemblies

Work-in-Process (WIP)

• There is little to no WIP in continuous processes and high levels in job shops.

Service Strategy

• In services, production and consumption occur simultaneously.
• Evaluation is strongly based on customer consumption
• Communication and attitude of providers and customers are key
• It is better to consider service and manufacturing operations within a given firm.
• Going downstream is a strategy to be closer to customers
• Balancing offer and demand is a challenge

Service vs Manufacturing

• The spectrum goes from Pure Products (alumina, cars) to Service-intensive products (fast food) to Pure Services (professional).

Services Characteristics

• Customer is co-producer.
• Centered in the human factor- difficult to standardize.
• Service quality is an experience.
• Reduced visibility, IT is key
• Usually, inventories are not visible (but they are key).

Service Matrix by Schmenner

• Categorizes service types based on labor intensity and degree of interaction/customization:
• Service Factory (Airlines, Hotels, Recreation)
• Service Shop (Hospitals, Repair services)
• Mass Service (Retailing, Wholesaling, Schools)
• Professional Service (Physicians, Lawyers, Consultants)
• Each type has different management challenges and structural considerations.

Key Structural Elements When Designing a Service

• Delivery system (Front and Back Office, customer participation).
• Facilities design (Size, aesthetics, layout).
• Location (Customer demographics, single or multiple sites, site characteristics).
• Capacity planning (Managing queues, number of servers, accommodating average or peak demand).
• Key Managerial elements, service culture, motivation, selection and training, employee empowerment.

Service Quality

• Includes continuous Monitoring, measurement, methods, expectations vs perceptions, service guarantee, altering demand and controlliing supply
• Information: gathering and transforming into useful information

These elements lead to managing the Offer vs Demand

Managing Offer (Supply)

• More personnel in peak periods
• Flexibility and multi-functionality of staff
• Assigning more functions to customers.
• Sharing installed capacity ("win-win").

Managing Demand:

• Price : "Happy hours", night and off-peak calls,
• Creation of added value in services.
• Yield management
• Known As Revenue Management

Waiting Lines Theory

• Used in service centers, phone calls, airports, machine repairs, computer tasks, inventory processes
• Includes consideration of Basic Elements of a Queueing System, Psychology of Waiting Lines, Quantitative Approach
• Includes basic configuration of a queueing systems with Population of potential customers, Queue, Server, Customers already served.
• Includes Cost anlaysis of waiting vs having a queue
• Indicates operating optimal point in the process

Queuing System Elements

• Distribution for arrivals and service times.
• Queueing facilities design (series, parallel, network).
• Service discipline (FIFO, LIFO, SIRO).
• Line size, Arrivals source, Customer behavior, and Server behavior .

Examples of Waiting Lines with Finite Capacity

• Facilities with limited capacity, small areas for attending customers, mechanical garages, facilities attending large volume units
• Call centers and medical visitors with limited time

Key Performance Indicators for a Queue

• Pn = Probability (or time percentage) that there are n customers in the system
• L = Mean number of customers in the system
• W = Mean wait in the system
• Lₚ = Mean number of customers in the queue
• Wₚ = Mean wait in the queue, s = number of servers

Queuing Psychology

• Unoccupied time feels longer than occupied time
• Pre-process waits feel longer than in-process waits
• Anxiety makes waits seem longer
• Uncertain waits are longer than known, finite waits
• Unexplained waits are longer than explained waits
• Unfair waits are longer than equitable waits
• The more valuable the service, the longer one will wait
• Solo waiting feels longer than group waiting

Midterm Note - Key takeaway is

• Waiting lines are necessary (cannot design facilities for peak hours). Includes Quantative approach, Simulations, Qualatative approach, use of Techonolgy

Service Quality Dimensions

• Tangibility: Physical characteristics.

• Reliability: Adequate and constant performance.

• Responsiveness: Willingness to solve.

• Assurance: Competence, credibility.

• Empathy: Putting oneself in the customer's shoes.

The Service Quality Gap Model

• Highlights potential gaps between customer expectations and actual service delivery.

  1. Listening Gap: Between expected service and managerial perception.

• Causes: Inadequate marketing research, lack of upward communication, insufficient relationship focus.

  2. Standards Gap: Between the managerial perception and what is specified.

• Causes: Poor service design, absence of customer-driven standards, inappropriate physical evidence.

  3. Performance Gap: Between the delivered service and what is specified.

• Causes: Deficiencies in HR policies, failure to match supply and demand, problems with service intermediaries.

  4. Communication Gap: Between the delivered service and what is communicated to the customer.

• Causes: Lack of integrated marketing communications, ineffective management of expectations, inadequate horizontal communications, overpromising.

  5. Customer Gap: Between expected and perceived service.

• Causes: The other four gaps.

  6. Performance – Importance Matrix: Useful approach to fix which attributes need attention.

• A key attribute = Quality/Price ratio. Check top/bottom performers to help fix.

Questions cover manufacturing processes like project-based, continuous flow, and layouts. Also addresses process capacity, bottlenecks, cycle time, and task management. Touches on project management techniques like critical path analysis.