Operations Management

Chapter - 5

Process Selection and Facility LayoutNiranjan Sapkota

CAB

Product Design Product design defines a product’s characteristics of:

AppearanceMaterialsQualityCost DimensionsTolerancesPerformance standards

Process Selection – the development of the process necessary to produce the designed product.

Need of New Product/

technology

Productivity

Cost effectivenessChanging customer preferences

Competition

Product/Service Design

Product/service design directly affects:• Product/service quality• Production/delivery cost• Customer satisfaction

Ideas of New

Product

Research and Development

Competitor Customer

Marketing

Top Management Sales

Operation Manager

Keeping firm’s Production facility Up to date

Design and developmentOf firms products andfacilities

Entire process has to be Designed from the sketch(new company or entirely New product)

Modification of the present Facility and process(for the operating firm)

Research for the Product

Pure Research Applied Research

Totally new research for new conceptual product Needs huge money Concepts gathered from research institutes, universities

Translation of the concepts to Products in terms of man, machine, Material, method and information Applicable in the following process

The design of new products The redesign of existing product The identification of new uses for existing product The improvement of packaging of existing product

Interaction of Research

Pureresearch

Applied research

Product configura

tionPilot run

Market Research

Production process

Product Life Cycle

The study of pattern and process od product life cycle helps in determining facilitiesLabor, capital and management system needed in each stage

Operation issues in product life cycle

Introduction Growth Maturity Decline

Product variety Different varieties

Increasing Standardization

Emergence of dominant design

Commodity characteristics

Product volume

Low volume Increasing volume

High volume High volume

Industry structure

Small competitors

Fallout andConsolidation

Few large companies

Survivors

Form of competition

Product varieties Product quality and availability

Dependability And price

Price

Product Development Process

Need identification Feasibility study Advance design Detailed engineering and development Process design and development Product evaluation and improvement Product use and support

Need identification

• Starts with identification of customer need

• Should satisfy customer needs, requirements and expectation

• Pure research and applied research is used

Product planning(feasibility study)

Preliminary activitiesMarket analysisAlternative concepts of productOperations requirementsDesign criteria and prioritiesLogistic requirements for producing, distributing and maintaining the product in the market.

Conceptual design Shape Size Retail price Product

reliability Product

function

Advance Design

Product concept or design concept from feasibility concept examined technically

Concerned with developing and evaluating the design alternatives if necessary

Product Development and Engineering Analyze experiments and collect data for product

development The developed product should meet the following

objectivesFunctionalityReliability Maintainability Manufacturing

Computer analysis, simulations can be used for multiple tests Design of product with required drawing, working prototype associated with required documents is developed

Process design and developments

Prepare plans for material acquisitionProductions Warehousing Transportation Distribution

Production planning, controlling and HR system also developed

Production evaluation and improvements

Product performance in the market Short falls and difficulties in the production Result of other researches

Product use and support

Customer needs and expectations can be enhanced by

Educating the people on the application of the product

Provide warranty, repair and after sale service Improve the design of product as required

Tools to Improve Speed to Market

• Computer-Aided Design/Computer-Aided Manufacturing (CAD/CAM)– Engineers, using CAD/CAM, can generate many

views of parts, rotate images, magnify views, and check for interference between parts

– Part designs can be stored in a data base for use on other products

– When it is time for manufacturing, the product design is retrieved, translated into a language that production machinery understands, and then the production system can be automatically set up.

Tools to Improve Speed to Market

• Simultaneous(Concurrent)Engineering

Economic and TechnicalFeasibility Studies

Product/Service Ideas

Production Process DesignProduct/Service Design

Produce and MarketNew Product/Service

ContinuousInteraction

Improving the Designof Existing Products/Services

• Focus is improving performance, quality, and cost• Objective is maintaining or improving market

share of maturing products/services• Little changes can be significant• Small, steady (continuous) improvements can

add up to huge long-term improvements• Value analysis is practiced, meaning design

features are examined in terms of their cost/benefit (value).

Designing for Ease of Production

• Ease of Production (Manufacturability)– Specifications - Precise information about the

characteristics of the product– Tolerances - Minimum & maximum limits on a

dimension that allows the item to function as designed

– Standardization - Reduce variety among a group of products or parts

– Simplification - Reduce or eliminate the complexity of a part or product

Designing for Quality Crucial element of product design is its impact on

quality Quality is determined by the customer’s

perception of the degree of excellence of the product/service’s characteristics

conformance to specification Value Fitness for use Support Psychological impression

Atmosphere image or aesthetics

Designing and Developing New Services

Three general dimensions of service design are:• Degree of Standardization of the Service

– Custom-fashioned for particular customers or basically the same for all customers?

• Degree of Customer Contact in Delivering the Service– High level of contact (dress boutique) or low level

(fast-food restaurant)?• Mix of Physical Goods and Intangible Services

– Mix dominated by physical goods (tailor’s shop) or by intangible services (university)?

Designing and Developing New Services

• Differences Between New Service and New Product Development

– Unless services are dominated by physical goods, their development usually does not require engineering, testing, and prototype building.

– Because many service businesses involve intangible services, market sensing tends to be more by surveys rather than by market tests and demonstrations.

ProcessPlanning and Design

Major Factors Affecting Process Designs

Nature of product/service demand Degree of vertical integration Production flexibility Degree of automation Product/Service quality

Nature of Product/Service Demand Production processes must have adequate

capacity to produce the volume of the products/services that customers need.

Provisions must be made for expanding or contracting capacity to keep pace with demand patterns.

Some types of processes are more easily expanded and contracted than others.

Product/service price affects demand, so pricing decisions and the choice of processes must be synchronized.

Degree of Vertical Integration Vertical integration is the amount of the

production and distribution chain that is brought under the ownership of a company.

This determines how many production processes need to be planned and designed.

Decision of integration is based on cost, availability of capital, quality, technological capability, and more.

Strategic outsourcing (lower degree of integration) is the outsourcing of processes in order to react quicker to changes in customer needs, competitor actions, and technology.

Production Flexibility

Product flexibility -- ability of the production (or delivery) system to quickly change from producing (delivering) one product (or service) to another.

Volume flexibility -- ability to quickly increase or reduce the volume of product( or service) produced (or delivered).

Degree of Automation

Advantages of automation Improves product quality Improves product flexibility Reduces labor and related costs

Disadvantages of automationEquipment can be very expensiveIntegration into existing operations can be difficult

Product/Service Quality

Old viewpoint – high-quality products must be made in small quantities by expert craftsmen

New viewpoint – high-quality products can be mass-produced using automated machinery

Automated machinery can produce products of incredible uniformity

The choice of design of production processes is affected by the need for superior quality.

Process Flow Structure Project structure, where a single project is planned with a fixed end date,

such as building a house

Job shop structure, where each flow will be similar but slightly different, such as poster printing

A batch process, where each flow produces a batch of identical products, such as baking

An assembly line structure, where the flow produces a continuous supply of fixed goods, such as a car assembly line

Continuous flow structure, where a continuous supply of finished goods is produced, such as in an oil refinery

factors differentiating the different process structures

The flow – are there a large number of paths which activities can take, or is there only one possible sequence of activities.

Flexibility – will changing the output of the process, in terms of volume and products, alter the performance and / or cost of the process

Range of products – can the process produce lots of different products, or is it designed to only produce one specific product.

Capital investment – does the process require investments in expensive specialist equipment or can it use general equipment that the firm may already own or can rent

Variable costs – how high is the cost of producing each unit

Labour requirements – how much labour input is required, and how skilled must the laborers be

Volume – can the process produce lots of products, or will it only create a few, or possibly one, end product

Project Structure/technology Production of unique nature of

products like building, bridge, dam, roads etc.

Product cant be standardized and transported from one place to other

Requires specialized technology with high flexibility.

Skilled manpower Production of unique nature of

product to meet customer demand.

Job shop structure Small batches of different types of products in different sets

or sequences Variety of custom designed products in small volumes Production is generally to meet the order s of customers

rather than for stock. Less certainty in the nature , specification and quality of

goods to be produced.. Difficult to make planning of resources , scheduling of

operation and controlling activities. Standardization of raw material, process , products and other

facilities is difficult.

A batch process Improved form of job shop technology in the aspect of

standardization of products Suitable when business has relatively stable line of products Production is in periodical batches either to meet customer

order or for stock. Less difficult for planning , controlling and scheduling

production process compared to job shop technology. Eg. Electronic device manufacturing

Assembly line process

When products are relatively stable, high volume with limited variety assembly line technology is suitable

Specialized equipment, skilled manpower, and management systems are used and developed.

Production of limited range and high volume of products. Less flexible compared to job shop and batch technology. Eg. TV, Motorcycle

Continuous flow Process When products are highly standardized and large volumes are

produced for stock , continuous flow technology is used Uses standardized materials, machines, and equipment in

continuous flow to produce high volume of standardized products .

It is capital intensive technology Eg . Soap, noodles

Process life cycle

Job shop Batch Assembly continuous

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Startup Growth Maturity commodity

Designing of service & service process Technology

Meaning and nature of service Service are experienced not consumed Requires high customer contact Requires effective management of staffs, marketing and

operation Service cant be inventoried

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Service business and internal service

Service Business: management of organization whose basic objective is to interact with customers to render services. Facility based: business where customer must visit the service facility to get service from organization Field based: concerned with providing service in the customer’s location and environment

Internal service: refers to services to other departments of the same organization. Therefore customers of internal service are other departments. Eg. Accounting, marketing, maintenance, research and development…

Designing of service

Identification of target marketwho are the customers? where is its market? What do customers want?

Service conceptHow our service fulfills customer needs? What are service types? How it is different from others?

Service strategyWhat is service policy? What are the priorities? what are the service packages and focus of service?

Service delivery systemWhat are the actual processes? What are the systems and facilities? Who are employees and what should be their skills and ability?

Service Process Technology

Depends on two main factors.. Customer contact

during designing or customizing of service. Eg. Building a new building

during creating or consuming of service. Eg. Hair styling

Labor vs Capital intensiveness Teaching, nursing etc are labor intensive where training

and development of employees vital for quality service 24 hour ATM/ vendor machines are capital intensive

On the basis of customer contact and labor intensiveness service process technology can be divided into four categories..

Quasi manufacturing process technology Mass service process technology Custom shop service technology Professional service process technology

Quasi- Manufacturing Process Technology

Requires low customer contact and capital intensive technology to render the service.

Offers rigid and standardized service with reliable delivery schedule.

Eg. Post Office, Telebanking

Mass service process technology

Labor intensive technology. Rigid in nature providing standardized service

to the customer. This technology requires training and

development and schedules of human resource for providing quality and effective service

Gg. Teaching, live Entertainment programs

Custom shop service technology

Provides customized service. Highly professional staffs and capital intensive

technology for providing service. Flexible but require high capital investment Eg. Hospitals, Chartered travel services

Professional service process Technology

Professional staffs provide customized service to customer through intensive interaction.

Professionals are governed by professional ethics, norms, organizational rules

Professional skills are highly flexible relating to customer need.

Eg. Legal counseling, medical diagnosis.

Service Process Technology

Quasi manufacturing technology Postal service Check processing Automated warehousing

Professional service Legal counseling Medical diagnosis Tutoring

Mass service technology Teaching Live entertainment Cafeteria

Custom shop technology Charter travel service Long distance telephone

service Medical treatment

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Low customer contact High customer contact

Rigid process technology Flexible process technology

Research Topics

Service automation Flexible manufacturing system Computer integrated manufacturing

Layout Planning

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What is Facility Layout

Location or arrangement of everything within

& around buildings

Determines long-run efficiency of operations

Helps achieve a strategy that supports

differentiation, low cost or quick response

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Strategic Importance of LayoutProper layout enables: Higher utilization of space, equipment and people

Improved flow of information, materials, or people

Improved employee morale and safer working

conditions

Improved customer/client interaction

Flexibility to change--use small, movable or modular

equipment; etc

Inefficient operations

For Example:

High CostBottlenecks

Changes in the designof products or services

The introduction of newproducts or services

Accidents

Safety hazards

The Need for Layout Decisions

Changes inenvironmentalor other legalrequirements

Changes in volume ofoutput or mix of

products

Changes in methodsand equipment

Morale problems

The Need for Layout Design (Cont’d)