Process%20Planning%20and%20Design

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Chapter 3

• Process Planning and Design

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Process Planning and Design

• Chapter 2 identified the critical factors in
  providing value to the customer. This chapter
  discusses the selection and design of the
  transformation process that can deliver those
  factorslow cost, high quality, enhanced
  functionality, speed, and so onin an efficient
  and effective manner.

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Introduction

• Fender's Custom Shop
• Assembly line at IBM's plant in Charlotte, North
  Carolina
• Rickard Associates, an editorial production
  company
• Martin Marietta's aerospace electronics
  manufacturing facility in Denver, Colorado
• Nynex

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Examples

• Examples illustrate several transformation
  systems. The Fender Custom Shop is a job shop
  that has specialized departments for routing,
  lathe operations, inlaying, paint and finishing,
  and final assembly. Because work is organized by
  the task performed, Rickard Associates is also a
  job shop - even though the work is not performed
  in one location. Companies like Rickard that
  rely on information technology to bring separated
  workers together are referred to as virtual
  organizations. Martin Marietta converted into
  focused factories. And assembly lines like the
  one IBM uses are referred to as flow shops.

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Fenders Custom Shop

• Customers include Eric Clapton, John Deacon
  (Queen), David Gilmour, Yngwie Malmsteen and
  Stevie Ray Vaughn
• Production Steps
• computer controlled routers and lathes shape
  guitar bodies and necks
• also have Neck Duplicator
• necks and bodies hand and machine sanded

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Fenders Custom Shop continued

• detailed inlay work done with Hegner precision
  scroll saw
• paint and finishing operations in special room
  where air is re-circulated 10 times/minute
• buffed
• hung up and seasoned for two weeks
• final assembly by actual musicians

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IBMs Charlotte, NC Plant

• Assembly line produces 27 significantly different
  products
• Products include hand-held bar-code scanners,
  portable medical computers, fiber-optic
  connectors, and satellite communications devices
• Kits of parts delivered to workers
• Computer screen displays assembly instructions

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Rickard Associates

• Produces magazines and marketing materials
• Only two of editorial production companys
  employees work at headquarters in NJ
• Art director works in AZ
• Editors are located in FL, GA, MI, and D.C.
• Freelancers even more scattered
• Internet and AOL used to coordinate work

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Martin Marietta Aerospace Plant

• Originally set up as job shop with numerous
  functional departments
• high WIP levels
• long lead times
• long travel distances
• departmental barriers inhibited communication
• Plant subsequently arranged into three focused
  factories

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Martin Marietta continued

• Each focused factory completed entire electronic
  assembly for particular application
• Each focused factory treated as separate business
  enterprise
• Factory manager assigned to each focused factory
• NFL draft used to select worker teams

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Martin Marietta continued

• Within focused factories part families identified
  based on technology and processes
• Standard routings identified for each part family
• Improvements
• seven months of consecutive production with no
  scrap
• 50 reduction in WIP
• 21 reduction in lead times
• 90 reduction in overtime

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Nynex

• Analyzed company in terms of four core processes
• customer operations
• customer support
• customer contact
• customer provisioning

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Nynex continued

• Obtained services of Boston Consulting Group
• Visited 152 companies to document best practices
• Estimated savings are 1.5 to 1.7 billion

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Variety of Transformation Systems

• Fender Custom Shop is job shop
• Rickard Associates is job shop and is also a
  virtual organization
• Martin Marietta converted from a job shop to
  focused factories
• IBM uses a flow shop

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Transformation System Design and Layout Analysis

• Transformation system design considers
  alternative transformation forms and selects best
  one given characteristics of desired outputs.
• Layout analysis seeks to maximize the efficiency
  or effectiveness of operations.

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Forms of Transformation Systems

• Continuous Process

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Continuous Process

• Highly standardized products in large volumes
• Often these products have become commodities
• Typically these processes operate 24 hours/day
  seven days/week
• Objective is to spread fixed cost over as large a
  volume as possible

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Continuous Process continued

• Starting and stopping a continuous process can be
  prohibitively expensive
• Highly automated and specialized equipment used
• Layout follows the processing stages
• Output rate controlled through equipment capacity
  and flow mixture rates

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Continuous Process continued

• Low labor requirements
• Often one primary input
• Initial setup of equipment and procedures very
  complex

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Forms of Transformation Systems

• Flow Shop

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Flow Shop

• Similar to continuous process except discrete
  product is produced
• Heavily automated special purpose equipment
• High volume - low variety
• Both services and products can use flow shop form
  of processing

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A Generalized Flow Shop Operation
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Advantages of the Flow Shop

• Low unit cost
• specialized high volume equipment
• bulk purchasing
• lower labor rates
• low in-process inventories
• simplified managerial control

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Disadvantages of Flow Shop

• Variety of output difficult to obtain
• Difficult to change rate of output
• Minor design changes may require substantial
  changes to the equipment
• Worker boredom and absenteeism
• Work not very challenging
• Vulnerable to equipment breakdowns

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Disadvantages of Flow Shop continued

• Line balanced to slowest element
• Large support staff required
• Planning, design, and installation very complex
  task
• Difficult to dispose of or modify special purpose
  equipment

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Flow Shop Layout

• Objective is to assign tasks to groups
• The work assigned to each group should take about
  the same amount of time to complete
• Final assembly operations with more labor input
  often subdivided easier
• Paced versus unpaced lines

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Line Balancing
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Line Balancing Example
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Line Balancing Example continued

• Company operates one shift per day
• Available time per shift is 450 minutes
• Demand is 100 units/day

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Precedence Diagram
B
E
A
C
D
F
G
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Calculations

• cycle time 450/75 6 minutes/part
• NT 20/6 3.33 4 stations

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Task Assignment
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Task Assignment continued
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Line Balancing Solution
Station 3
B
Station 1
E
A
C
Station 2
Station 4
D
F
G
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Efficiency

• efficiency 20/(46) 83.3

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Precedence Graph for Credit Applications
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Stations Assignments for Credit Application
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Forms of Transformation Systems

• Job Shop

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Job Shop

• High variety - low volume
• Equipment and staff grouped based on function
• Each output processed differently

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A Generalized Job Shop Operation
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Advantages of the Job Shop

• Flexibility to respond to individual demands
• Less expensive general purpose equipment used
• Maintenance and installation of general purpose
  equipment easier
• General purpose equipment easier to modify and
  therefore less susceptible to becoming obsolete

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Advantages of the Job Shop continued

• Dangerous activities can be segregated from other
  operations
• Higher skilled work leading to pride of
  workmanship
• Experience and expertise concentrated
• Pace of work not dictated by moving line
• Less vulnerable to equipment breakdowns

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Disadvantages of the Job Shop

• General purpose equipment is slower
• Higher direct labor cost
• High WIP inventories
• High material handling costs
• Management control very difficult

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Directly Specified Closeness Preferences

• A absolutely necessary
• E especially important
• I important
• O ordinary closeness OK
• U unimportant
• X undesirable

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Cost-Volume-Distance Model
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Office Layout
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Forms of Transformation Systems

• Cellular Production

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The Cell Form

• Combines flexibility of job shop with low costs
  and short response times of flow shop
• Based on group technology
• First identify part families
• Then form machine cells to produce part families

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Conversion of a Job Shop Layout to a Cellular
Layout
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Organization of Miscellaneous Parts into Families
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Advantages of Cellular Production

• Reduced machine setup times
• increased capacity
• economical to produce in smaller batch sizes
• smaller batch sizes result in less WIP
• less WIP leads to shorter lead times
• shorter lead times increase forecast accuracy and
  provide a competitive advantage

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Advantages of Cellular Production continued

• Parts produced in one cell
• Capitalize on benefits of using worker teams
• Minimal cost to move from job shop to cellular
  production (e.g. EHC)
• Can move from cellular production to mini-plants

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Disadvantages of Cellular Production

• Volumes too low to justify highly efficient high
  volume equipment
• Vulnerable to equipment breakdowns
• Balancing work across cells
• Does not offer the same high degree of
  customization as the job shop

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Cellular Layout

• Teams of workers and equipment to produce
  families of outputs
• Workers cross-trained
• Nominal cells versus physical cells.
• Remainder cell
• Cell formation methods
• production flow analysis

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Original Machine-Component Matrix
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Reordered Machine-Component Matrix
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Forms of Transformation Systems

• Project Operations

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Project Operations

• Large scale
• Finite duration
• Nonrepetitive
• Multiple interdependent activities
• Offers extremely short reaction times

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Selection of the Process
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Volume/Variety Considerations

• High volume indicate automated mass production
• High variety implies use of skilled labor and
  general purpose equipment
• Make-to-stock versus make-to-order

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Effect of Output Characteristics on
Transformation Systems
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Product/Process Life Cycles

• In RD stage, product made in small volumes
• At peak of life cycle, demand may justify high
  volume special purpose equipment
• System should evolve as market evolves
• Whether an organization moves with a product
  through its life cycle depends on the
  organizations focus

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Selection of Transformation System by Stage of
Life Cycle
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Service Processes

• Often implemented with little development or
  pretesting
• Need to consider amount of customer contact
• Customers may not arrive at smooth and even
  increments
• Including customer in service process provides
  opportunities to improve service

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New Transformational Technologies and
Reengineering
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Information Technology

• World Wide Web
• Federal Express
• Web server set up in late 1994
• By 1996 12,000 customers using service each day
  to access package-tracking database
• provides higher customer service
• saves FedEx 2 million per year
• Intranets

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Information Technology continued

• Decision support systems
• Artificial intelligence
• Expert systems

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The Office of the Future

• Focus of 1980s was on improving individual
  productivity
• Focus 1990s is enhancing way teams work together
• Groupware
• communications (e-mail)
• collaboration (access to shared data)
• coordination (jointly accomplishing activities)

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Manufacturing Technologies

• Numerical Control (NC)
• computer numerical control
• direct numerical control
• Robotics
• Flexible Manufacturing Systems (FMS)

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Business Process Design (Reengineering)
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Division of Labor Concept

• Work broken down into its simplest most basic
  tasks
• Performing same task facilitates attaining
  greater skill
• No time lost switching to another task
• Workers well positioned to improve tools and
  techniques

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Division of Labor Concept continued

• Division of labor concept not challenged until
  recently despite dramatic changes in technology
• Quality, innovation, service, and value more
  important than cost, growth, and control

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Process

• Set of activities that taken together produce a
  result of value to the customer
• Organizing on basis of processes
• Eliminate delays and errors when work is handed
  off
• Capture information once and at source
• When people closest to process perform work,
  there is little need for management overhead

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Business Process Design (BPD)

• The fundamental rethinking and radical redesign
  of business processes to bring about dramatic
  improvements in performance
• Hammer, M. and Stanton, S. The Reengineering
  Revolution, Harper Business, 1995.

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Radical

• Profoundly change the way work performed
• Not concerned with making superficial changes
• Get to root
• Get rid of old
• Reinventing, not improving

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Redesign

• BPD is about designing how work is done
• Smart, capable, well trained, highly motivated
  employees mean little if the way work is
  performed is poorly designed

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Process

• All organizations perform processes
• Customers not interested in individual activities
  but rather overall results
• Few of them are organized on the basis of
  processes
• Thus, processes tend to go unmanaged
• Team approach one way this addressed

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Dramatic

• Quantum leaps in performance, not marginal or
  incremental improvements
• Breakthroughs in performance

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IBM Credit Example
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IBM Credit Example continued

• Order logged by 1 of 14 people in conference room
• Carted upstairs to credit department
• Information entered into computer to check
  borrowers creditworthiness
• Results written on piece of paper

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IBM Credit Example continued

• Business practices department modified standard
  loan covenant in response to customer requests
• Used its own computer system
• Pricer keyed data into PC to determine
  appropriate interest rate
• Administrator converted to quote letter and
  Fedexed to field sales rep.

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IBM Credit Example continued

• Average time to process a request was 6 days
• Could take as long as 2 weeks
• Actual processing time 90 minutes
• Deal Structurer
• Turnaround time 4 hours
• Number of deals processed increased 100 times
  with small reduction in head count

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