Operations Management

Process Management
 Process selection
Why are process decisions strategically
important ?

When are process decisions required?

 Process selection
1. Outsourcing decision (make or buy)
Following may need to be considered.
• Cost
• Quality
• Speed
• Strategic reasons
2. Choice of technology
3. Choice of the process/mfg approach
 Process selection
Process types
1. Project
2. Job
3. Batch
4. Line
5. Continuous
 Process selection
Project
• Specific start and end
• Unique
• Extremely high customization
• Extremely low volumes
• Highly complex
• High level of skills and specialization
 Process selection
Job
– High customization
– Low volumes
– Less complex
– Lower level of specialization
– Requires skilled people
 Process selection
Batch
– Narrow range of products
– Intermediate volumes
– Process needs to be reset when shifting from
one batch to another
– Level of skills less than that for job
 Process selection
Line
– High volumes
– Standardized product
– No need for set ups
– Low level skills required
 Process selection
Continuous
– Extremely high volumes
– Extreme standardization
– Operated round the clock 24x 7
– Hardly any manual inputs
 Product – Process Matrix
Process Extreme No
Type customization customization
Project Constructing a
house
Job Shop Appliance
repair
Emergency
room
Batch Commercial
bakery
Classroom
Lecture
Repetitive Automotive
assembly
(line)
Automatic
carwash
Continuous Oil refinery
Water
(flow) 11 purification
 Make-to-Stock (MTS)

• Produce finished goods; customer buys

from inventory
• Advantage
• smooth production and small lead times
• Disadvantage
• inventory
 Make-to-Order (MTO)
• Start production after customer orders

• Advantage
• No finished goods inventory
• Disadvantage
• Intermittent production and lead times may
be high
Hybrid Process/ Assemble-to-
Order (ATO)
• Produce parts and subassemblies; final
assembly when customer places order

• Advantage
• Less inventory, faster service

• Disadvantage
• Some WIP inventory
 Mass Customization

 The rapid, low-cost production of

goods and service to satisfy
increasingly unique customer
desires
 Combines the
flexibility of a
process focus
with the efficiency
of a product focus
 Flow time and Cycle time
Flow time
Time spent by a unit in the system before
being converted into finished product.
Cycle time
Time which elapses between two finished
product units coming out of the system.
Lead time
Time elapsed between placing order and
receiving the product or service.
 Little’s Law
Little’s Law states that

WIP = Arrival (or departure rate) x Time

spent in the system
Application
No. of customers in the system = Arrival rate
of customers x Time spent by a customer in
the system
L =λXw
 Process improvement
Process improvement is the systematic
study of activities and flows of each
process in order to improve it.
1. Flow diagrams
2. Process charts
3. Worker machine chart
4. Value stream mapping
5. Business Process Re-engineering (BPR)
6. Five Why’s
7. DMAIC (Six Sigma)
 Flow chart
Frame tube Frame-building Frame Hot-paint
bending work cells machining frame painting
THE ASSEMBLY LINE
TESTING
Engines and
Incoming parts transmissions
28 tests
From Milwaukee
on a JIT arrival
schedule
Air cleaners Oil tank work cell

Mufflers Shocks and forks

Fuel tank work cell Handlebars

Wheel work cell Fender work cell

Crating
Roller testing

Figure 7.3
Process Chart

Figure 7.9
 Worker Machine Chart
Worker Machine Chart illustrates the amount
of time a worker and machine are working or
idle.
Gang process chart illustrates a team of
workers interacting with an equipment.
 Value Stream Mapping

A Value Stream is the set of all actions

(both value added and non value
added) required to bring a specific
product or service from raw material
through to the customer.
 Value Stream Mapping

• Follow a “product” or “service” from

beginning to end, and draw a visual
representation of every process in the
material & information flow

• Then, draw (using icons) a “future state”

map of how value should flow
• Basis for lean processes
 Business Process
Re-engineering
Business Process Re-engineering
Completely new way to doing things
“Clean slate” approach. Different from
continuous improvement
Rethink old processes
Example: implementation of an ERP
system
 Simulation Modeling
• Simulation models can be used to study
the performance of the process under
different conditions/inputs.
• Specially useful when process keeps
changing, product keeps varying, arrival
rates are changing.
 5 Why’s Analysis
A process improvement technique used
to identify the root cause of a problem.
•Problem: There was an increase in customer
complaints regarding damaged products.
1."Why did this happen?" Because packaging was
not sufficient enough to protect the products.
2."Why was the packaging not sufficient enough to
protect the products?" Because the team testing
packaging did not test past a certain level of stress.
3."Why did the team not test the packaging
further?" Because current standard processes
indicated that the testing indicated was sufficient.
 5 Why’s Analysis
4. “Why did the current standard process indicate that
this testing was sufficient?" Because this process
was created for a previous product, and not this
current product that is coming back damaged.

5. "Why wasn’t there a new process for the new

product?" Because the project template for
launching new products doesn’t include stress testing
the new packaging.
 DMAIC
• Define
– Process
– Problem
– CTQs
• Measure the current process/ define the KPIs
• Analyze the process / reasons for poor performance
• Improve the process
• Control
- Monitor the process
- Standardize
- Document the process