Operations Management Module 1: Process Analysis PDF

# Operations Management ## Module 1: Process Analysis ### Sessions: 3rd – 4th Dr. Neelkanth Chandrakant Dhone - Fellow of National Institute of Industrial Engineering (NITIE).Mumbai. - B.E (Mechanical), M.B.A(Marketing/Operations) - UGC.NET-2010 (Management) - Faculty(Productions & Operations Ma...

# Operations Management ## Module 1: Process Analysis ### Sessions: 3rd – 4th Dr. Neelkanth Chandrakant Dhone - Fellow of National Institute of Industrial Engineering (NITIE).Mumbai. - B.E (Mechanical), M.B.A(Marketing/Operations) - UGC.NET-2010 (Management) - Faculty(Productions & Operations Management) - Indian Institute of Management-Nagpur Strictly for the internal circulations only ## Session Plan - Process Strategies - Crossover Chart Example - Focused Processes - Selection of Equipment - Process Analysis and Design - Special Conditions for Service Process Design - Production Technology - Technology in Services - Process Redesign ## 1. Process Strategies > 'The objective is to create a process to produce offerings that meet customer requirements within cost and other managerial constraints' - **How to produce a product or provide a service that:** - Meets or exceeds customer requirements - Meets cost & managerial goals - **Has long term effects on:** - Efficiency & production flexibility - Costs & quality ## 1.2 Process Strategies Four basic strategies: 1. Process Focus 2. Repetitive Focus 3. Product Focus 4. Mass Customization > Within these basic strategies, there are many ways they may be implemented ## 1.2.1 Process Focus - Facilities are organized around specific activities or processes - General purpose equipment & skilled personnel - High degree of product flexibility - Typically, high costs & low equipment utilization - Product flows may vary considerably, making planning & scheduling a challenge. - **Image:** An image of a hospital operating room with three doctors operating on a patient. - **Diagram:** An image diagram that shows many inputs at the top, a square in the middle with multiple black circles. The circles are connected by lines representing the workflow. There are also many outputs at the bottom. - **Summary:** The image shows many inputs, many departments and many routings to create a uniquely treated patient as an output. ## 1.2.2 Repetitive Focus - Facilities often organized as 'assembly lines' - Characterized by modules with parts and assemblies made previously - Modules may be combined for many output options - Less flexibility than process-focused facilities but more efficient - **Diagram:** An image diagram that has many inputs at the top, a funnel that merges the inputs to a few modules, and the modules are then merged to many outputs. - **Summary:** The diagram presents a process with multiple raw materials and module inputs. It simplifies them into few modules and then combines them into many output options. ## 1.2.3 Product Focus - Facilities are organized by product - High volume but low variety of products - Long, continuous production runs enable efficient processes - Typically, high fixed cost but low variable cost - Generally, less skilled labor - Also, called as 'Continuous Processes' (non-stop production) - Example: Paper manufacturing, Sugar Manufacturing, Oil processing units - **Diagram:** An image diagram that has many inputs at the top, a large column with many branching lines to many outputs at the bottom. - **Summary:** The diagram presents a process with multiple inputs that are merged to a single column then are branched into various outputs. The outputs have variants in size, shape, and packaging. ## 1.2.4 Mass Customization - Each customer is different - The rapid production of goods & services to satisfy increasingly unique customer desires - Combines the flexibility of a process focus with the efficiency of a product focus. - **Image:** A woman holding a clear, rigid, customized acrylic teeth aligner in her hand. - **Diagram:** An image diagram that has many inputs at the top, a funnel that merges the inputs into many modules, and the modules are branched into many outputs. - **Summary:** The diagram presents a process with many inputs and many modules that are merged into many output versions. ## 1.2.4 Mass Customization - **Table:** A table compares the 1970s and the 21st century choices for customer demand - | Item | Number of Choices | Number of Choices | - |---|---|---| - | Vehicle Styles | 18 | 1,212 | - | Bicycle Types | 8 | 211,000 | - | iPhone Mobile Game Apps | 0 | 1,200,000 | - | Web Sites | 0 | 634,000,000 | - | Movie Releases per Year | 267 | 1551 | - | New Book Titles | 40,530 | 300,000+ | - | TV Channels | 5 | 185 | - | High-Definition TVs | 0 | 102 | ## 1.3 Comparison of Processes - **Table:** A comparison of the Characteristics of Four Types of Processes - | Process Focus | Repetitive Focus | Product Focus | Mass Customization | ---|:---:|:---:|:---:|:---:| - | Small Quantity & Large Variety of Products | Long Runs, a Standardized Product from Modules | Large Quantity & Small Variety of Products | Large Quantity & Large Variety of Products | - | Broadly Skilled Operators | Moderately Trained Employees | Less Broadly Skilled Operators | Flexible Operators | - | Fixed Costs Low & Variable Costs High | Fixed Costs Depend on Flexibility of Facility | Fixed Costs High & Variable Costs Low | Fixed Costs Tend to Be High & Variable Costs Low | - | High Inventory | Low Inventory | Low Inventory | Low Inventory Relative to the Value of the Product | - | Finished Goods Made to Order & Not Stored | Finished Goods Made from Frequent Forecasts | Finished Goods Made to a Forecast & Stored | Finished Goods are Build-to-Order (BTO) | - | Scheduling is Complex | Scheduling is Routine | Scheduling is Routine | Sophisticated Scheduling Accommodates Custom Orders | ## 2. Crossover Chart Example > 'A chart of cost at the possible volume for more than one process' - Evaluate three different accounting software products - Calculate crossover points between Software A & B, and between B & C | Software | Total Fixed Cost | Dollars Required Per Accounting Report | |:---:|:---:|:---:| | A | $200,000 | $60 | | B | $300,000 | $25 | | C | $400,000 | $10 | ## 3. Focused Processes - Focus brings efficiency - Focus on the depth of the product line - Focus can be: - Customers - Products - Service - Technology ## 4. Selection of Equipment - Decisions can be complex as alternate methods may be available - Important factors may be: - Cost - Quality - Cash flow - Capacity - Market stability - Flexibility - **Illustration:** An image of a high-quality MRI machine. ## 5. Process Analysis & Design - Is the process designed to achieve a competitive advantage? - Does the process eliminate steps that do not add value? - Does the process maximize customer value? - Will the process win orders? ## 5.1 Process Analysis & Design Tools - **Flowchart:** - Shows the movement of materials - Harley-Davidson flowchart - **Time-Function Mapping:** - Shows flows & time frame - Baseline/Target time - **Diagram:** An image of a Harley-Davidson motorcycle assembly line. - **Diagram:** A time-function mapping diagram that shows customer order, sales order, production, control, plant A, warehouse, and transport stages of a production process. ## 5.2(A) "Baseline" Time-Function Map - **Diagram:** An image diagram shows the stages and time for a production process. - **Summary:** The diagram shows a baseline process with various activities and their corresponding time. ## 5.2(B) "Target" Time-Function Map - **Diagram:** An image diagram shows the stages and time for a production process. - **Summary:** The diagram presents a target process with a shorter time frame for various production activities. It shows "print," "extrude," and "wait" activities with estimated time frames. ## 5.3 Process Chart - **Table:** A process chart that shows the stages and their time for a hamburger assembly process. - **Summary:** The table presents a Process Chart with a value-added time of 85.7%. The symbol key is provided for the table. ## 5.4 Service Blueprinting - Defines three levels of interaction - Focuses on the customer & provider interaction - Each level, has different management issues - Identifies potential failure points ## 5.4 Service Blueprint - **Diagram:** An image diagram that shows a service blueprint with different stages and their corresponding time for customer interaction. - **Summary:** The diagram depicts a service blueprint with three levels of interaction that includes Personal Greeting, Service Diagnosis, Perform Service, and Friendly Close, each with its associated time. ## 6. Special Considerations for Service Process Design - Good interaction with customers is necessary - The better these interactions are accommodated in the process design, the more efficient and effective the process. - Find the right combination of cost & customer interaction ## 6.1 Service Process Matrix - **Diagram:** An image diagram that shows a service process matrix. - **Summary:** The diagram depicts a service process matrix with the categories: Service Factory, Service Shop, Mass Service and Professional Service. ## 6.2 Service Process Matrix - **Diagram:** An image diagram that shows a service process matrix. - **Summary:** The diagram presents a service process matrix with the categories: Service Factory, Service Shop, Mass Service, and Professional Service. ## 6.2 Service Process Matrix - **Diagram:** An image diagram that shows a service process matrix. - **Summary:** The diagram provides a service process matrix with the categories: Service Factory, Service Shop, Mass Service and Professional Service. ## 6.3 Improving Service Productivity - **Table:** A table that presents various techniques for service productivity enhancement. - | Strategy | Technique | Example | - |---|---|---| - | Separation | Structuring Service So Customers Must Go Where the Service Is Offered | Bank Customers Go to a Manager to Open a New Account, to Loan Officers for Loans, and to Tellers for Deposits | - | Self-Service | Self-Service So Customers Examine, Compare, and Evaluate at Their Own Pace | Supermarkets & Department Stores, Internet Ordering | - | Postponement | Customizing at Delivery | Customizing Vans at Delivery Rather Than at Production | - | Focus | Restricting the Offerings| Limited-Menu Restaurant | - | Modules | Modular Selection of Service | Investment & Insurance Selection | - | Automation | Separating Services That May Lend Themselves to Some Type of Automation | Automatic Teller Machines | - | Scheduling | Precise Personnel Scheduling | Scheduling Ticket Counter Personnel at 15-Minute Intervals at Airlines | - | Training | Explaining How to Avoid Problems | After-Sale Maintenance Personnel| ## 7. Production Technology - Machine Technology - Automatic Identification Systems (AISs) - Process Control - Vision Systems - Robots - Automated Storage & Retrieval Systems (ASRSs) - Automated Guided Vehicles (AGVs) - Flexible Manufacturing Systems (FMSs) - Computer-Integrated Manufacturing (CIM) ## 7.1 Machine Technology - Increased productivity, & flexibility - Computer numerical control (CNC) - Reduced environmental impact - Additive manufacturing produces products by adding material, not removing it. - Supports innovative product design, minimal custom tooling required, minimal assembly time, low inventory & reduced time to market ## 7.2 Automatic Identification Systems (AISs) & RFID - Improved data acquisition - Reduced data entry errors - Increased speed - Increased scope of process automation - **Image:** An image that shows two people standing by a checkout counter. One person is reading a barcode on a shopping cart. - **Summary:** The image depicts a scenario of using barcodes and RFID in the context of checkout operations. ## 7.3 Process Control - Real-time monitoring & control of processes - Sensors collect data - Devices read data on a periodic basis - Measurements translated into digital signals then sent to a computer - Computer programs analyze the data - Resulting output may take numerous forms ## 7.4 Vision Systems - Particular aid to inspection - Consistently accurate - Modest cost - Superior to individuals performing the same tasks - **Image:** An image of ophthalmologic examination with a machine and a doctor. - **Summary:** The image showcases the use of vision systems in the context of ophthalmologic examination. ## 7.5 Robots - Perform monotonous or dangerous tasks - Perform tasks requiring significant strength or endurance - Generally, enhanced consistency & accuracy - **Image:** An image of an orange colored robot arm in an industrial setting. - **Summary:** The image showcases a robot arm involved in an industrial context, highlighting its role in repetitive tasks. ## 7.6 Automated Storage & Retrieval Systems (ASRSs) - Automated placement & withdrawal of parts & products - Reduced errors & labor - Particularly useful in inventory and test areas of manufacturing firms ## 7.7 Automated Guided Vehicle (AGVs) - Electronically guided & controlled carts - Used for the movement of products and/or individuals - **Image:** An image of a person operating a moving cart in a hospital setting. - **Summary:** The image showcases the use of Automated Guided Vehicles (AGVs) in a transportation context. ## 7.8 Flexible Manufacturing Systems (FMS) - Computer controls both the workstation & the material handling equipment - Enhance flexibility & reduced waste - Can economically produce low volume but wide variety - Reduced changeover time & increased utilization - Stringent communication requirement between components ## 7.9 Computer-Integrated Manufacturing (CIM) - Extend flexible manufacturing - Backward to engineering & inventory control - Forward into warehousing & shipping - Can also include financial & customer service areas - Reducing the distinction between low-volume/high-variety & high-volume/low-variety production. - **Diagram:** An image diagram shows computer-integrated manufacturing (CIM) systems. - **Summary:** The diagram presents a model of CIM systems with different stages like Computer-Aided Design (CAD), Order Management (OM), and Computer-Aided Manufacturing (CAM) involved in producing a product. ## 8. Technology in Services - **Table:** Examples of Technology's Impact on Services - | Service Industry | Example | - |---|---| - | Financial Services | Debit Cards, Electronic Funds Transfer, ATMs, Internet Stock Trading, Online Banking via Cell Phone | - | Education | Online Newspapers & Journals, Interactive Assignments via WebCT, Blackboard, and Smartphones | - | Utilities & Government | Automated One-Person Garbage Trucks, Flood-Warning Systems, Meters That Allow Homeowners To Control Energy Usage & Costs | - | Restaurants & Foods | Wireless Orders From Waiters To Kitchen, Transponders on Cars That Track Sales at Drive-Throughs | - | Communications | Interactive TV, E-books via Kindle | - | Hotels | Electronic Check-In/Check-Out, Electronic Key/Lock Systems, Mobile Web Bookings | - | Wholesale/Retail Trade | Electronic Communication Between Store & Supplier, Bar-Coded Data, RFID | - | Transportation | Automatic Toll Booths, Satellite-Directed Navigation Systems, Wi-Fi in Automobiles | - | Health Care | Online Patient-Monitoring Systems, Online Medical Information Systems, Robotic Surgery | - | Airlines | Ticketless Travel, Scheduling, Internet Purchases, Boarding Passes | ## 9. Process Redesign > 'The fundamental rethinking of business processes to bring about dramatic improvements in performance. - Relies on re-evaluating the purpose of the process & questioning both the purpose and the underlying assumptions - Requires re-examination of the basic process & its objectives - Focuses on activities that cross-functional lines - **Image:** A Thank You message.