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Chapter 6 Notes.docx

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Global Management Studies
GMS 401
Kirk Bailey

Chapter 6: Process Design and Facility Layout Process Design Processes convert inputs into outputs; they are at the core of operations management. But the impact of processes goes beyond operations management: they affect the entire organization and its ability to achieve its mission Process design determines the form and function of how production of goods or services is to occur o Process design occurs as a matter of course when new products are being designed or existing products are redesigned. o However, process design and redesign also occurs due to technological changes in equipment and methods improvement. It has major implications for: o Layout of facilities o Equipment o Design of work systems o Process design occurs when: o New products are being designed o Existing products are being redesigned. o Make or buy Many manufacturing firms have the equipment and skilled trades which will allow them to make almost anything. First step in process design is to consider whether to make or buy some or all of a product or a segment of the production process. o If a decision is made to buy a part/ product or a segment of the production process, this eliminates the need to produce the part/product or perform that segment of production process Make-or-buy decisions are often strategic, based on existing or desired core capabilities. Other factors include available capacity, quality, whether demand is steady or temporary, the secrecy of technology, and cost. Factors favouring Make: o Small quantity of an item of their own design o Product secrecy (competitors would have most of he same suppliers) o Available capacity in plant o Keep workers employed during a sales downturn o Outside vendors cant meet quality requirements o Factors favouring buy o Supplier expertise o Patented item-supplier holds patent. o Costcheaper to buy. o Lack of available capacity. o Buyer firm lacks expertise. There are 4 basic types of processes: Job shop: A manufacturing facility that generates a variety of products in relatively low numbers and in batch lots. The process is intermittent o work shifts from one small job to the next, each with somewhat different requirements. High flexibility of equipment and skilled workers are important characteristics of a job shop. Job shops typically move on to different jobs (possibly with different customers) when each job is completed. By the nature of this type of manufacturing operation, job shops are usually specialized in skill and processes. A manufacturing example of a job shop is a tool and die shop that is able to produce one-of-a-kind tools and dies (a die is a metal mould used to form a part under a press, e.g., to make a coin). A service example is the emergency ward of a hospital, which is able to process a variety of injuries and diseases. The managerial challenge in a job shop is to schedule the jobs so that the due dates are met and the resources are utilized as much as possible. See example #1 on page 166 in the S&H text. Batch process Batch process is used when a moderate volume/quantity and variety of goods or services is desired. The equipment need not be as flexible as in a job shop, but process is still irregular. The skill level of workers doesnt need to be as high as in a job shop because there is less variety in the jobs. Examples of batch process include small bakeries, which make bread, cakes, or cookies in batches; movie theatres, which show movies to groups (batches) of people; and airlines, which carry planeloads (batches) of people from airport to airport. The managerial challenge in a batch process is scheduling batches in order to meet planned production and demand while utilizing the resources at a high level. o Capacity issues and technology management are more important than in job shops. Repetitive process: Repetitive process: when higher quantities of more standardized goods or services are needed is used The standardized output means only slight flexibility of equip- ment is needed. Skill of workers is generally low. Examples of this type of process include production lines and assembly lines. o In fact, this type of process is sometimes referred to as assembly line. A production line is a sequence of machines/workstations that perform operations on a part/product. o An assembly line is a production line where parts are added to a product sequentially. The line can be either machine-paced (same speed) or worker-paced (variable speed). Familiar products made by this type of process include automobiles, television sets, and computers. An example of repetitive service is an automatic carwash. Other examples of repetitive service include cafeteria lines and ticket collectors at sports events and concerts. The managerial challenges in a production/assembly line are capacity balance, technology management, quality, and materials management. In special circumstances, manufacturing can be increased or decreased to adjust to changing market conditions, but in general, repetitive manufacturing is very fast and highly efficient. Continuous Manufacturing: Continuous process: When a very high volume of highly standardized output is desired There is almost no variety in output o No need for equipment flexibility o Without interruption As in assembly lines, workers are generally low skilled. Product is usually also continuous, i.e., it cannot be counted. Examples of products made using continuous process include steel, paper, sugar, flour, and salt. Continuous services include utilities and the Internet. The managerial challenges in a continuous process are the same as in an assembly line, but because of faster speed of production, greater care is required for automated control of the flow, and start and stop of production are more challenging. Some common continuous processes are the following: o Oil refining o Fertilizers o Pulp and paper o Blast furnace (iron) Automation: Using machinery/ equipment with sensing and control devices that enable it to operate automatically Figure out by how much? o Can range from factories that are completely automated to a single automated operation Advantages of automation Low variabilityquality, once achieved, is repeatable o It is difficult for a human to perform a task in exactly the same way, rapidly, and on a repetitive basis In a production setting, variability is detrimental to quality and to meeting schedules Automated machines do not get bored or distracted or get injured Do they go out on strike File labour grievances Can work in environments that may be hazardous to human beingsDisadvantages to automation Can be very costly To purchase and maintain Technology is expensive; usually it requires high volumes of output to offset high initial costs Needs high volumes of output to justify the expense. Much less flexible than human labour Once automated, a process may be difficult and expensive to change Some automation may lead to sabotage by workers---- feeling that their job may be next to be automated. o Can have an adverse effect on morale and productivity Employees are frequently a firms best customersas you automate their jobs, you lose them as customers. A strategy necessary for competitiveness. o Example of using automation for competitiveness is the gigantic automated papermaking machines that automatically sense the thickness of paper and adjust to run at speeds of more than 60 km per hour. Decision makers must carefully examine the issue of whether to automate or the degree to automate o Clearly understand all the consequences. Careful planning - necessary to successfully integrate automation into a production system o Can lead to major problems o GM invested heavily in automation in the 1980s only to find its costs increasing while flexibility and productivity took a nosedive. Its market had shrunk while it was increasing its capacity! Moreover, automation has important implications not only for cost and flexibility, but also for the fit with overall strategic priorities. 3 kinds of automation 1. Fixed Automation: A process using mechanized machinery to perform fixed and repetitive operations in order to produce a high volume of similar parts. o Most rigid of the three types o Coined by the Ford Motor Company in the early 1900s o Foundation of mass production in the auto industry o Uses high-cost, specialized equipment for a fixed sequence of operations o Advantage Low unit cost a
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