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OPERATIONS MANAGEMENT -1

Term 2, B2016-18, Oct-Dec 2016

Hayes and Wheelwright Framework

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Chapter Outline

Product-Flow Characteristics

Approaches to Order Fulfillment

Product-Process Strategy

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Product-Flow Characteristics

Types of Product Flow


Continuous process
Assembly line
Batch
Job shop
Project

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Product - Flow Characteristics
Continuous Process
Process industries (beer, paper, oil, etc.)

Highly standardized and automated

High volumes of production

Commodity products

Low cost is the order winner

Flexibility limited

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Product-Flow Characteristics
Assembly Line Flow
Linear sequence of operations

Discrete products (autos, appliances, etc.)

High-volume, standardized products

Inflexibility in product and volume

Very efficient

Large capital investment

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Assembly Line Flow
(metal bracket, see Fig. 4.1)

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Product-Flow Characteristics
Batch Flow

Production of batches or lots

Batches flow from one work center to another

Low volume products

Many different types of products

Flow is jumbled and intermittent

Flexible labor and equipment

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Batch Flow
(three metal brackets, see Fig. 4.2)

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Product-Flow Characteristics
Job Shop
Production of small batches or lots

Orders are customized for particular customer orders

Low volume products

Many different types of products

Flow is jumbled and intermittent

Flexible labor and equipment

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Approaches to Order Fulfillment

Make-to-Stock (MTS)

Make-to-Order (MTO)

Assemble-to-Order (ATO)

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Make-to-Stock (MTS)

Produce finished goods; customer buys from inventory

Advantage: smooth production

Disadvantage: inventory

Key performance measures (next slide)

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
MTS Performance Measures

Service level (orders filled when requested)

Inventory turnover (sales/avg. inventory)

Back order fill rate

Inventory accuracy

Time to replenish

Others, such as shrinkage rate

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Make-to-Order (MTO)

Start production after customer orders

Advantage: no finished goods inventory

Disadvantage: intermittent production

Key performance measures


Lead time

Orders completed on time (or late)

Quality measures

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Assemble-to-Order (ATO)

Produce parts and subassemblies; finish when customer places order

Advantages: less inventory, faster service

Disadvantage: some WIP inventory

Key performance measures


Speed of service

Inventory levels

Quality of product and service

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
MTS and MTO
Comparison

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Order Penetration Point

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Process Selection Decisions

Process characteristics matrix

MTS vs. MTO/ATO

Continuous/discrete, batch & project

Factors affecting process choice

Market conditions

Capital requirements

Availability and cost of labor

State of technology

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Process Characteristics Matrix (Table 4.3)
Make-to-Order
Characteristics Make-to-Stock
ATO
Auto Assembly Line Auto assembly line
Continuous and Oil refinery Dell Computers
Assembly Cannery Motorola Pager
Line Flow Cafeteria Fast Food
Machine shop Machine shop
Fast food Restaurant
Batch and Job Shop Glassware factory Hospital
Costume Jewelry Custom jewelry
Speculation homes Buildings
Commercial painting Movies
Project Noncommissioned art Ships

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Product-Process Strategy

Strategy must consider not only the product or service, but


also how to produce it.

As many industries move through their product life cycles,


they also move through a process life cycle, e.g., the
traditional bread bakery vs. the modern automated bakery.

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Product Life Cycle Stages

1. Unique, one of a kind 1. Project

2. Low volume, low standardization 2. Job shop

3. Low volume, multiple products 3. Batch

4. Higher volume, few major products 4. Assembly line

5. High volume, high standardization, 5. Continuous

commodity

Session 09 product and Process Matrix


OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi
Session 09 product and Process Matrix
OPM 1 Term 2, B2016-18, Oct-Dec 2016 Prof. Kedar P. Joshi