Process Selection - Multiple Choice

Product-Flow Processes

• Also called process strategies.
• Five Types:
  • Continuous Process
  • Assembly Line
  • Batch Flow
  • Job Shop
  • Project

Continuous Process

• Highly standardized with high-volume production.
• Continuous flow with low flexibility.
• Output is continuously produced, usually liquids or semi-solids.
• Example: oil refinery processing crude oil into gasoline & lubricants.

Assembly Line

• Linear sequence of operations.
• Mass production of discrete products.
• High efficiency with low flexibility.
• Discrete products move sequentially.
• Example: automobile manufacturing on a conveyor system.

Batch Flow

• Production in batches using general-purpose equipment
• Has more variety than assembly line
• Products are made in groups or lots, allowing variety.
• Example: Furniture production with multiple design options.

Job Shop

• Custom orders using general-purpose equipment.
• Highly flexible but costly.
• Products are made to order, usually in small lot sizes.
• Example: custom-made machine components or sheet metal parts.

Project

• Unique or creative products assembled at stationary worksite.
• Complex scheduling and high customization.
• Materials and labor come to the site for one-of-a-kind or large-scale items.
• Example: building construction or aircraft assembly at a fixed location.

Types of Process Strategies

• Product Focus Strategy is same as Continuous Process / Line Flow Production.
• Process Focus Strategy is same as Job Shop.
• Repetitive Focus Strategy is same as Assembly Line.
• Mass Customization Strategy include both Continuous Process / Line Flow Production and Job Shop.

Importance of Identifying Process Strategies

• Process strategy is a key decision for managing processes and gaining competitive advantages.
• Concerns the ability of an organization to use resources to produce outputs.
• It determines the efficiency and effectiveness of an organization in producing outputs.

Process Selection Decisions

• Determine the type of process used to make a product or service.
• Auto manufacturing uses assembly lines, winemaking uses batch processing, tailor shops use job shops
• Considerations include product volume, standardization, and customization.
• Services may not have product flow but may have customer or information flow.

Throughput Ratio (TR)

• Measures process efficiency.
• Calculated as (Total processing time for the job / Total time in operations) x 100%.
• Batch & Job Shop: TR is 10-40% meaning most time is spent waiting.
• Continuous & Assembly-Line: TR is 90-100%, indicating minimal waiting time.
• It represents the portion of time when value is actively added to the job.
• Higher TR means more efficient operations with less waiting time.

Approaches to Order Fulfillment

• Make-to-Stock (MTS)
• Make-to-Order (MTO)
• Assemble-to-Order (ATO)

Make-to-Stock (MTS)

• Products manufactured in advance and kept in inventory.
• Fulfills customer demand immediately.
• Standardized products, high inventory, fast delivery, critical demand forecasting.
• Examples: retail stores that sell pre-made diamond rings, canned food, consumer electronics, Coca-Cola, Nestle products

Make-to-Order (MTO)

• Products are made only after an order is placed to the customer to allow for high customization.
• Significant Customization, longer lead times, production starts after order, lower inventory costs.
• Examples: custom furniture, tailored suits, personalized jewelry, Rolex custom watches, Tesla custom electric cars

Assemble-to-Order (ATO)

• Hybrid approach produces subassemblies in advance but completes final assembly after customer order.
• Moderate customization, reduced lead time, maintains subassembly inventory, faster than MTO fulfillment.
• Examples: Subway sandwiches, customizable laptops, cars with configurable features, Dell customizable laptops

Order Penetration Point

• (determines) Make-to-Stock (MTS) After final assembly is completed
• (determines) Make-to-Order (MTO) After fabrication and before final assembly
• (determines) Assemble-to-Order (ATO) Before fabrication or before ordering materials from suppliers

Product-Process Strategy

• Product-Process Matrix links product and process choices.
• These connections often lead to a one product choice strategy that needs cross-functional cooperation between marketing and operations.

Concept of the Matrix

• Describes dynamics between product life cycle and process choice.
• Products evolve from low-volume, unique to high-volume, standardized.
• Processes shift from project-based to continuous production as demand increases.

Product and Process Evolutions:

• Products start as one-of-a-kind, and transition to mass production as demand grows.
• Automobiles came from job shops, but mass were later produced through assembly lines
• Electronics are often created in batches, and assembly-line process can be justified with demand
• The matrix represents the ideal match between product variety and process efficiency for strategic positioning
• Low-volume, high-variety products suit best with project or job shop production
• High-volume, standardized products are suited best with assembly-line or continuous processes