PRODUCTION SYSTEMS AND OPERATIONS MANAGEMENT
- ©1998 Joseph Martinich. All rights reserved.
None of these materials can be stored,
transmitted or reproduced by any means
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otherwise) without the written permission of Joseph
Martinich. These materials may be used by
students in classes taught by Professor
Martinich at University of Missouri - St. Louis.
Process Selection
- Most products can be made in a variety of ways
- Bread can be made by large volume producer
- Specialized process with large capacity specialized
equipment
- Workers and equipment arranged by activity: mixing,
kneading, baking, etc.
- Very efficient at making large volume of product, but
inflexible process
- Bread made by small bakery
- Flexible process with general purpose equipment and
layout
- Workers must be multi-skilled; able to perform all steps
necessary for many products (bread, cakes, pies,
donuts)
- Process not efficient for making large volumes, but is
able to make wide variety of products, including new
products, well.
- The efficiency and production cycle time will depend on
- Overall process structure
- Technologies used
- Detailed design and spatial configuration of the process
- Organization and design of work/jobs
- The best process structure and technologies to use will depend on
- Variety of products to be made
- Including order type (made-to-order vs. made-to-stock)
- Expected scale of operations - volume and pattern of demand
- Physical characteristics of the product and processing
required (e.g., making paper, distilling gasoline, or growing
crystal silicon)
Classification of Production Process Structures
1. Flow Processes
- Continuous Flow
- Repetitive or Discrete Flow
- Disconnected or Batch Flow
2. Job-Shop Processes
3. Cellular Processes
4. Project Processes
- The overall production system can be made up of sub-systems with
different structure types
- Example: Auto manufacturer uses:
- Project process to design new products
- Cellular and job-shop processes to make components
- Repetitive flow process to assemble autos
Flow Processes
- All products require essentially the same operations performed in
the same sequence
- Process is structured according to the sequence of activities or
"flow" of activities that must be performed
- Structure
- Process is decomposed into processing tasks or activities or
operations
- The tasks are assigned to units called work-stations
- The work-stations are arranged sequentially
- Because all products undergo same processing at each WS the
equipment, tooling, material handling, and jobs can be specialized
- This can often make the work at individual WSs simpler and
reduces the skill needed at individual WSs
- Continuous Flow Processes
- Processing involves continuous transformation (paper, steel,
beverage container filling)
- Frequently the product in continuous motion
- Frequently, but not always, the products are physically
continuous (e.g., paper, gasoline).
- Processing steps tightly interconnected and perfectly
synchronized
- Typically product(s) cannot be stopped between
processing stages without ruining the product
- Processing must usually follow strict specifications (amounts
mixed, time of blending, temperature of baking/drying, speed
of filling)
- Repetitive/Discrete Flow Processes
- Similar to Continuous, but
- Typically product made or customers served in discrete
units (automobiles assembled, CD players assembled,
voters at polling station).
- Units processed and transferred between stages one at a
time
- Transformation occurs through discrete set of
tasks at each WS; between WSs transformation
typically does not occur.
- WSs are tightly connected and synchronized;
system is designed to have all WSs operating
simultaneously, but processing usually can stop at
WSs without ruining product (entire process may
have to stop though)
- Little or no set-up of equipment at WSs between
units of product (each successive unit is identical
or similar to preceding one).
- Disconnected or Batch Flow Processes
- Products processed at each WS and transferred among WSs
in batches (hundreds, thousands, etc.). Products are similar in
their general nature/structure, but there may be substantial
differences in their details (e.g., book publishing, folding
carton manufacturing, metal parts stamping, student
orientation program).
- WSs are disconnected. Processing can occur at one WS while
other WSs are not operating.
- Between processing of batches (products) WSs may undergo
substantial set-up.
- Characteristics of Flow Processes
Continuous Flow |
Repetitive Flow |
Batch Flow |
Few Products |
Few Products |
Moderate # Products |
Large Volume |
Large Volume |
Moderate Volume |
Little/no Flexibility |
Little/no Flexibility |
Moderate Flexibility |
Advantages/Benefits
1. Specialization of Equipment
- Same processing is performed on each product, so
specialized equipment can perform narrow range of tasks
efficiently
2. Specialization of Labor
- Limited number of tasks assigned to each work-station, so
workers typically need less skill and training to perform
them.
3. Simple Product Flow and Material Handling
- All products move through the process in the same sequence
at a steady pace. Highly efficient, but inflexible, material
handling methods can be used, such as conveyors, pipes, and
gravity slides.
4. Work-in-Process Inventories are Small
- With continuous and repetitive flow processes work is
synchronized so materials do not wait between work-stations.
5. Space Utilization is Efficient
- Material Handling methods require minimal space
- Little in-process inventories between work-stations
6. Easier to Achieve Quality Conformance
- Products are similar so workers know what the quality
requirements are and how to achieve them
- Few change-overs
- Repetition improves skill
7. Production Scheduling and Coordinating is Easier
- Few work orders; few products
- Usually made-to-stock
- Sequencing of jobs and coordinating of equipment and
workers is minimal; work-stations do not have to be
scheduled separately - entire process can be scheduled as one
unit
8. Easier to Monitor Costs
- Narrow range of products that all use the same equipment
and workers makes it easy to identify the cost "drivers"
Disadvantages
1. Little Production Flexibility
- Very difficult, expensive, and time-consuming to change the
flow of products. Makes product modification and new
product introduction difficult.
- Does not accommodate volume changes well.
2. Large Initial Cost
- Normally requires large initial investment in specialized
equipment and design and synchronization of process
3. Worker Dissatisfaction
- Unless well designed, repetitive and specialized nature of the
work assigned to workers can generate boredom and lack of
satisfaction, which can lead to absenteeism, low efficiency,
mistakes, and quality problems.
- This can be overcome through good job design and
worker organization. Through cross-training, job
rotation, and team organization the benefits of
repetition can be obtained without the monotony.
4. System Vulnerability
- Extremely vulnerable to unplanned work stoppages due to
machine breakdowns or quality problems. Becuase the
system is tightly connected, if one part of the system stops,
the entire system must usually stop within seconds or
minutes.
Job-Shop Processes
- If a company must make a wide variety of goods or provide a wide
variety of services, within the same production system, a flow
process is usually too inflexible
- Designed to produce a wide variety of products, each requiring its
own set of tasks. Products produced in small or moderate volume;
demand pattern may be erratic.
- Key characteristic is its flexibility
- Structure
- Job-Shop Process divides operations into work centers
(or departments), where the equipment and workers in
the work center are devoted to performing a specific
type of task, such as drilling, painting, selling slacks,
opening new accounts.
- Products or customers can move among the work
centers in any sequence (jumbled flow)
Advantages/Benefits
1. Flexibility
2. Low initial cost
3. Work is more diverse and interesting
4. Less vulnerable
- Disconnected nature of the process means that individual
work-centers can keep operating when other WCs are
stopped.
Disadvantages
1. General purpose equipment is less efficient
2. Greater employee skill needed
3. Less efficient (but more flexible) material handling
4. Large in-process inventories
5. Large space requirements
6. Quality conformance is difficult
- Each product is different, and may be one-time runs. Difficult
to understand quality standards and how to achieve them for
each product.
7. Difficult to schedule
- Each WC and work-station within WCs must be scheduled,
and coordinated with other WCs.
8. Difficult to assign costs to products accurately
- Each product uses different resources in different amounts
Hybrid or Cellular Processes
- Motivated by desire to obtain the efficiencies of tightly connected
flow processes while maintaining the flexibility of job-shop
processes (pushing toward the ideal system)
- A combination of flow and job-shop process
- Based upon the "group technology" concept; exploit similarities of
products
- Structure
- Contains work-cells that are mini-production lines (called
"flow cells") or closely connected job-shops (called "group
cells"); jobs with same tasks in sequence can be run in
work-cell very efficiently.
- Cells typically make entire components, sub-assemblies, or
products
- Smaller job-shop operations are maintained to provide full
flexibility
Advantages Relative to Job-Shop Process
Reported benefits from 32 companies implementing Cellular Manufacturing
Benefit Mean Percentage Improvement
Reduction in material handling 39.3
Reduction in set-up time 32.0
Reduction in throughput time 45.6
Reduction in work-in-process inventories 41.4
Reduction in finished inventories 29.2
Reduction in space needs 31.0
Increase in equipment utilization 23.3
Reduction in number of fixtures 33.1
Reduction in pieces of equipment
required to manufacture cell 19.5
parts
Reduction in labor cost 26.2
Improvement in labor satisfaction 34.4
Improvement in part quality 29.6
From "Cellular Manufacturing in the U.S. Industry:A Survey of Users," by Urban Wemmerlov
and Nancy L. Hyer, International Journal of Production Research, 27, 1989, pp. 1511-1530.
Disadvantages
- Requires considerable amount of work and expertise to
characterize and classify products, and then design and implement
the work cells and remaining job-shop processes
- Cellular production is moving to service operations
- Health care: Hospitals are breaking up traditional
departments and creating teams/service cells who treat
patients. Patient stays with one cell and computerized record
for patient stays with cells, instead of having files spread over
several departments.
- Financial Institutions: Banks using cells/teams to process
loans, rather than having each step done by separate
department. Same thing being done by insurance companies
to process claims.
Project Processes
- Used to make one-of-a-kind products (e.g., buildings, highways,
consulting projects, product development, software development)
- Typically large-scale products that require a variety of human and
material resources that must be coordinated
- Scheduling and coordination are the big issues. Often resources
must be shared with other projects or production of other products.
- Addressed later as separate topic
Modern Production Technologies
1. Group Technology
2. Process Automation
- Numerically controlled machines
- Computer controlled machines
- Machining Centers
- Robots
- CAD/CAM
- Flexible Manufacturing Systems
- CIM
3. Information Systems
- Bar-Coding and Optical Scanning
- Enterprise-wide Software
- Electronic Data Interchange (EDI)
Selecting and Evaluating Production Processes and Technology
1. Product/Process Matrix
2. Cross-Over Analysis
3. Present-Value Analysis
4. Multi-dimensional Scoring (Decision Analysis)
Product/Process Matrix
- Visual tool to help match product mix with production process
structure
- PP matrix can be used at the company, division, or product line
level.
- The horizontal dimension measures the product dimensions of
production volume, number of products or product varieties, and
degree of product standardization.
- The vertical dimension represents the range of process structures,
which implicitly specify the process dimensions of
interconnectedness, specialization/flexibility, automation, and
throughput volume.
- Want product/process coordinate to be near the diagonal - this
represents a good match. Points off the diagonal indicate the the
process structure may not match the product mix and
characteristics
- Note: A product may be made using different process structures at
different times during its life-cycle
- Newer products may be made in a flexible job-shop (lower
volume, and need to modify design)
- Large volume mature products may have flow process
devoted to them
- Strategic benefits of PP Matrix
- Forces organization to view its marketing and operations
strategy in a unified way.
- If company or division's position is off the diagonal, it
highlights a possible inconsistency of strategy. For
example, if a company is trying to compete on cost, but
is using a job-shop process, this may be inconsistent.
- Helps companies identify competitive advantages and seek
position on matrix
- Helps company make decisions regarding technological
choices and product choices; where would a new product fit
within the production system?
Cross-Over Analysis
- We derive a cost function (cost as a function of output rate) for
each production process structure or technology
- At low rates of output, the alternative with the smallest fixed cost
will typically be the least cost option. But at higher output rates,
alternatives with smaller per unit variable costs may be better.
- The best alternative depends upon the expected output rate,
and the need for flexibility
- A cross-over point is an output level at which two options produce
the same total cost (i.e., the cost function for one option "crosses
over" the cost function for another option).
- Example:
- Repetitive Process: $25,000,000 + 16 x
- Job-Shop with FMS: $13,000,000 + 20 x
- Low-tech Job-shop: $5,500,000 + 25 x
- $5,500,000 + 25 x = $13,000,000 + 20 x =>
$5 x = $7,500,000 => x = 1,500,000
- $13,000,000 + 20 x = $25,000,000 + 16 x =>
$4 x = $12,000,000 => x = 3,000,000
- For volume between 0 and 1,500,000 per year, the
third option is lowest cost.
- For expected annual volume between 1,500,000
and 3,000,000 the second option is least cost.
- For volume above 3,000,000/yr, the first is least
cost.
Present Value (Time Value of Money)
- PV and IRR methods are often used poorly
- These often ignore the most important benefits:
retaining markets, penetrating new markets
- PV and IRR have historically supported only
investments that reduce cost of making existing
products; value of flexibility, quality, responsiveness
are frequently ignored
- EDI, FMS would never be justified with these methods
unless the value of revenue retention and gain are
included
- Quote about enterprise software from BW:
"[There] is a realization among corporations that
they need the type of software that SAP sells just
to stay competitive."
- Key issue is to look at long-term benefits, and to use the
correct baseline for computing expected cash flows.
- Comparison should be between cash flows that will
occur with the new technology versus what it will be
without the new technology NOT versus what the cash
flow is now.
- Analysis must take into account revenue benefits
of retaining sales and new sales resulting from
better quality, responsiveness, and new products.
Multi-dimensional Utility (Scoring)
- Make list of important factors in choosing a technology or
process alternative
- Weight the importance of each factor
- Rate each alternative with respect to each factor (0-10 or 0-100)
- Compute weighted score for each alternative.
URL: http://www.umsl.edu/~jmartini/pomnotes/webprocessstruct.htm
Page Owner: Joseph Martinich (Joseph.Martinich@umsl.edu)
Last Modified: September 25, 1998