Process and Capacity Design - Term Paper Example

Executive Summary The objectives of a business are typically expressed in terms of profitability and market share. Maximizing profit involves maximizing the appeal of the product or services to the customer while minimizing cost. One of the ways of achieving the business objective in an operations management perspective is through a process strategy under the process and capacity design area. Processes consist of all the operations needed to make a product. Process and capacity design creates the best process for a particular product that will be produced, with ease and economically, at an optimum number of units. It aims at meeting customer requirements and achieving competitive advantage for an organization. It directly impacts productivity, flexibility, costs, quality and other areas in the operations. This paper describes the process strategies with different features such as process focus, repetitive focus, product focus, and mass customization focus. It provides the different benefits as well as constraints in using such focus strategies. The paper also explains the importance of process analysis and design including its impact on an organization. The different tools and techniques in analyzing and designing processes are summarized in the paper. This paper also illustrates the different production technologies available in an industry. Manufacturers can use several levels of technology from mechanized to robots and automated factories. Four Process Strategies Process Focus Process focused strategy employs job shops or jobbing process. It makes small numbers of a wide variety of products. This process strategy usually makes products for specific customer orders where there are limited or no stocks of finished goods. The overall workload varies depending on the organization’s capacity at acquiring job orders. Process focused strategy make a narrow range of products but with a lot of variety. Each operation creates high degree of product flexibility with skilled personnel working on general-purpose equipments. Each product made uses different mix of resources and its utilization is low thus low capital costs but high unit costs. Product mixes and jumbled work flows may create difficulty in scheduling and keeping track of work. (Rowbotham, Galloway, & Azhashemi, 2007) Examples of manufacturing organizations utilizing product focused strategy are makers of specialized vehicles, printers, customized furniture makers and machine shops. Figure 1. Manufacture of Water Storage Systems at Holmgren Engineering (Hill, 2005) Repetitive Focus Repetitive focused strategy is employed by facilities organized by assembly lines or production lines that make a large number of a standard product. It is characterized by modules with parts and assemblies made previously. There is a little variety in the product except small changes to the basic model during finishing stage. It is less flexible than process focused strategy but more efficient. However, capital costs are generally high but unit costs are low. Mass production, a repetitive process, allows specialized equipments with units moving down a line from one operation to the next. As the product does not change, there are no disruptions to the process and few problems with control. Once the process is set-up, it needs a small workforce to keep it going especially when the process is completely automated. Examples of organizations utilizing this strategy are makers of cars, computers, consumer electronics, domestic appliances, and developing photographs. Figure below illustrates a repetitive process. Figure 2. Repetitive focus process strategy at Harley Davidson (Heizer & Render) Product Focus Product focused strategy makes use of facilities that are organized by products. It is typically employed for continuous processes that produce very high volume of a single product. The process works continuously with a product emerging as a flow without any interruptions. This process strategy uses highly specialized equipment that can be capital intensive. However, high utilization gives low unit costs. Product focused strategy in a continuous process needs a very small workforce and are often automated. Examples are steel manufacturers, petrol refineries, breweries, sugar refineries and television broadcasts. Figure 3. Continuous process at Nucor Steel Plant (Heizer & Render) Mass Customization Focus Mass customization combines the flexibility of a process focus strategy with the efficiency of a product focus strategy and modular design of a repetitive focus strategy. It is a rapid, low-cost production of goods and services that utilizes effective scheduling techniques, rapid throughput techniques and modular techniques. The mass customization focused strategy normally employs a batching process with larger batches of similar products are made on the same equipment. It makes more units in each run with any units not needed for current orders are put into stock of finished goods. The savings from loner production runs cover the cost of storing finished goods. Batch processes are used for medium volume of products that utilizes some specialized equipments and skilled people. Products have less variety thus using almost the same equipment. This makes one product for a certain time and then switches to another product, providing higher utilization. Examples are pharmaceutical manufacturers, clothing manufacturers and bottling plants. Process Analysis and Design Process analysis and design is an effective method for choosing the best type of process applicable to an organization. Its goals are to achieve competitive advantage, add value and maximize customer importance. Decisions about the process can have long term effects on profits, production, costs, flexibility and performance. The design of the process considers many factors like overall demand, variability, product life cycle, quality and financial resource. (Chase, Jacobs, & Aquilano, 2005) There are different approaches and tools in product analysis and design. The table below summarizes the most common ways. Tools and Techniques Description Flow diagrams Shows the movement of materials Time-function mapping Shows flows and time frame Value stream mapping Shows flows and time and value added beyond the intermediate organization Process charts Uses symbols to show key activities Service blueprinting Focuses on customer-provider interaction Service Process Design Service processes may be categorized into professional service, service shops, mass service and service factory. Designing of service process considers the degree of customization, labor intensity and volume of service. Professional services are highly customized personal services such as those offered by doctors, lawyers, consultants and architects. Service shops are higher volume services that involve a lot of personal contact with low customization such as hospitals, fine dining restaurants, and car rentals. Mass services give higher volume of a more general service with less customer involvement such as commercial banking, retailing, and boutiques. Service factories have little customer involvement and offer large volumes of standard services such as fast food restaurants, vending machines, and post offices. (Johnston, 2005) Production Technology Machine Technology Machine technologies have the advantages of producing high volumes of uniform products at low unit costs. However, it has the disadvantages of high capital costs and inflexibility. Machine technology still needs people to do some of the operations and deal with problems. Humans may slow down a process, add variability to the quality and increase unit costs. Automatic Identification Systems (AIS) and Radio Frequency Identification (RFID) AIS and RFID are used to identify and track products using radio waves with the help of tags incorporated in the product. They have significant value in inventory, transportation and logistics management by reducing inventory inaccuracies, minimizing labor costs, and simplifying business processes. WalMart and Boeing companies are currently using RFID in their inventory systems. (Waters, 2002) Process Control Systems Process control systems include supervisory control and data acquisition (SCADA), distributed control sytem (DBC), and programmable logic controllers (PLC). They are typically used to control continuous or batch processes such as oil refining, petrochemicals, power generations, steelmaking and cement production. (Waters, 2002) Vision System Vision systems applies computer vision to manufacturing which utilizes digital cameras, smart cameras, and image processing software to perform visual inspection along the assembly line. It is widely used in semiconductor fabrication to inspect silicon wafers, processor chips, resistors and capacitors. (Rowbotham, Galloway, & Azhashemi, 2007) Robots Robots are machines that are guided by computers to do tasks of their own. The tasks are normally repetitive, dull, or dangerous for human workers. Large industries employ factory robots in order to increase productivity, accuracy and endurance. These industrial robots are stationary machines that have programmable arms to do a variety of tasks. These industries include car production, steel manufacturing, packaging, electronics, and research laboratories. (Chase, Jacobs, & Aquilano, 2005) Automated Storage and Retrieval Systems (ASRS) ASRS is a method for automatically placing and retrieving loads from storage locations. The system travel between fixed storage shelves where they can leave or retrieve a requested load. The system is usually utilized in a warehousing system such as library or palletized depot. (Waters, 2002) Automated Guided Vehicles (AGV) AGVs are mobile robots that utilize markers, wires or visions to follow a path. In industries, AGVs are used to move materials around the facility or warehouse. They are employed for repetitive movements, regular deliveries, or on-time deliveries. AGVs provide material flow efficiency as well as material tracking accuracy. (Waters, 2002) Flexible Manufacturing Systems (FMS) FMS is an automated production that combines computers that control pieces of equipments such as computerized numerically controlled (CNC) machines and robots. A number of separate machines are under the control of a central computer that coordinates the operation and finds the best timetables for doing work. FMS allows continuous and consistent works which produces high output, high quality and high utilization. (Waters, 2002) Computer-Integrated Manufacturing Systems (CIM) CIM is viewed as an extension of FMS which includes functions such as product design, process control, procurement, costing and logistics aside from the actual production. CIM would take the design for a product and then have a completely automated process for making and delivering the final product. The integration of the related functions creates a fully automated manufacturing process or automated factory. (Waters, 2002) Technology in Services Service organizations get the same benefits from technology and automation as manufacturers. Service intensive companies reduce their variability of service in order to design very efficient automated processes. Developments in service technology automatically serve customers such as automated banking machines. They handle customer’s materials such as baggage-handling equipments in airports. Or they process information such as customer reward cards. (Johnston, 2005) Process Redesign The idea of process redesign came from concept of business process re-engineering which was first proposed by Michael Hammer. It is described as a fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance such as costs, quality, service and speed (Hammer, 1990). Process redesign is a technique that involves analyzing the company’s central processes and reassembling them in a more efficient fashion (Hindle, 2003). Process redesign focuses on activities that cross boundaries. It evaluates the basic processes in a system and aligns its value to the whole business objective. Redesigning involves questioning underlying assumptions in the process and identifying its main purpose. Conclusion Decisions regarding the process and capacity can truly impact the ability of an organization to meet future demands of the products and services; can definitely affect operating costs; and can justly involve large amounts of investment and other resources. Process and capacity design plays a strategic role in operations management. Managers must consider the different factors that influence their decision and choices in designing processes. These factors include the stability of demand, competitiveness, flexibility, variability and rate of technological changes in equipment and product design. With advancements in technology, organizations should choose the level of technology that best fits their process and not the highest level that is available. This can be achieved through the effective execution of process and capacity design. References Chase, R., Jacobs, F., & Aquilano, N. (2005). Operations Management for Competitive Advantage (11th ed.). New York: McGraw-Hill Companies. Hammer, M. (1990, July-August). Reengineering Work: Dont Automate, Obliterate. Harvard Business Review . Heizer, & Render. Principles of Operation Management (6th ed.). Hill, T. (2005). Operations Management (2nd ed.). Palgrave Macmillan. Hindle, T. (2003). Guide to Management Ideas. London: Profile Books Ltd. Johnston, R. e. (2005). Service Operations Management. New Jersey: Prentice Hall. Rowbotham, F., Galloway, L., & Azhashemi, M. (2007). Operations Management in Context (2nd ed.). Oxford: Elsevier Ltd. Waters, D. (2002). Operations Management: Producing Goods and Services. New Jersey: Prentice Hall. Read More