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Chapter 3
Processes and
Technologies
POINTS TO PONDER
Professional Tip # 3:
Business lunch is not for lunch.
(Decide what you want before you get there!)
Someday is not the day of the week.
(Be realistic!)
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From Function to Process
Product Development
Manufacturing
Purchasing
Accounting
Order Fulfillment
Sales
Supply Chain Management
Customer Service
Function Process
Figure 4.1 3
PROCESS
Process
The activity that CONVERTS inputs into
outputs.
TRANSFORMATION OUTPUTS
INPUTS PROCESS
It constitutes the organization’s competitive edge.
It affects entire organization and its ability to
achieve its goals.
It reflects the way the organization chooses to be
in the marketplace.
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Process
SUPPLY CHAIN
A
INPUTS:
RESOURCES B
AVAILABLE TO OUTPUTS
ACTIVITIES
THE
ORGANIZATION C
N
A GROUP OF ACTIVITIES (USUALLY REPITITIVE) THAT USE AN
ORGANIZATION’S RESOURCES TO PROVIDE SOMETHING OF
VALUE
• They underlie all activities throughout the organization
• They are nested within other processes along an
organization’s supply chain
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Linking with other Decisions
Process Planning and Layout
Analysis
Process design considers alternative
transformation forms and selects best one
given characteristics of desired outputs.
Layout analysis seeks to maximize the
efficiency or effectiveness of operations.
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Volume/Variety Considerations –
Operations Strategy
High volume indicate automated mass
production
High variety implies use of skilled labor and
general purpose equipment
Make-to-stock versus make-to-order
Assemble-to-order
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Process Planning & Strategy
Process planning is determined by an
organization’s process strategy.
Process strategy: Overall approach to
producing goods and services
Process planning defines:
Capital intensity
Process flexibility
Vertical integration
Customer involvement
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Common Manufacturing Processes
Manufacturing Processes
A manufacturing process converts unfinished
or semi-finished materials to finished
products often using a machine tool.
A machine tool is an assembly of related
mechanisms on a frame or bed that together
produce the desired result.
An operation is a distinct action performed to
produce a desired result or effect (relationship
between: I-P-O).
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Common Manufacturing
Processes
A. Forming Processes
Casting Forming objects by putting liquid viscous
material into a prepared mold or form.
Bending The process by which bars, rods, wire, tubing,
and sheet metal are bent into shapes.
Rolling The process by which metal is squeezed between
two revolving rolls.
Extrusion Forming metal (often aluminum) or plastics out
through specially formed discs.
Forging Forming of metal (usually hot) by individual and
intermittent applications of pressure, instead of
by applying continuous pressure as in rolling.
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Common Manufacturing
Process
B. Machining Processes
Boring Enlarging of a hole that has previously
been drilled
Drilling Producing a hole by forcing a rotating
drill against it
Milling Progressive removal of small
increments of metal from the work-
piece as it is fed slowly to a cutter
rotating at high speed
Turning Producing an external cylindrical
surface through the relative action
between a rotating workpiece and
longitudinally fed, single- point cutting
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tool
Machine Tools
Machine Tools
Machine tools are an example of conventional,
general purpose equipment
They can produce many different shapes and
sizes of outputs by changing the tool used to cut
the material
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Skills and Flexibility
Skilled machinist often used their experience
to make the decision during the machining
process. It is a tedious and time consuming
process
The flexibility requires that the operator know
how to…………….
set up machine
select and install proper material
determine the depth of cut
set the correct speed
stop the machine when required process
has been completed
determine tool wear
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Numerically controlled
(NC) machines
They operations of the machines are
numerically controlled by instructions on a
punched tape.
Developed by MIT in 1950’s
With the NC machines, operators do not have to
determine machine settings, but must still select
and install tools and monitoring tool wears and
etc.
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Computer Numerical controlled
(CNC) machines
Controlled by attached computer
They are NC machines controlled by software instructions in the
memory of a computer
The NC machine tools are equipped with a screen and keyboard for
editing NC programs at the machine
This facilitates the access, editing, and loading of operating
instructions and collection of processing information and the control
of processing quality.
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Direct Numerical Control (DNC)
machines
Several NC machines controlled by single
computer
DNC machine tools can be of different types and
can be programmed to carry out different tasks.
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Flexible Manufacturing Systems
(FMS)
Flexible Manufacturing Systems
(FMS)
Several NC machines controlled by single computer
and aligned with material handling system.
Programmable machine tools
Controlled by common computer network
Combines flexibility with efficiency
Reduces setup & queue times
Includes automated material handling
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Flexible Manufacturing
System
CNC
Machine Finished
goods
Computer
control
room
Terminal
Pallet
Parts
CNC
Machine
Automatic
tool changer
Figure 4.13
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Automated Material Handling System
Automated Material
Handling System
Conveyors
Automated guided
vehicle (AGV)
Automated storage
& retrieval system
(ASRS)
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Robotics
Programmable manipulators
Follow specified path
Better than humans with
respect to
Hostile environments
Long hours
Consistency
Adoption has been slowed by
ineffective integration and
adaptation of systems
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e-Manufacturing
e-Manufacturing
Real-time sharing of data with trading
partners and customers to drive
collaborative decisions
CAD - uses software to create & modify
designs
GT- classifies designs to benefit from prior
experience
STEP - sets standards for communication
CAPP - creates processing instructions for
CAM
CAM - uses programmable automation in
manufacturing 29
Components of e-Manufacturing
Product Product
CAD GT CAE CPC PDM life cycle Definition
B2B, B2C
Products
Bar codes, STEP
RFT, EDI
ERP CAD/CAM
Information
Technology eM Processes
SCM, CRM CAPP
Sourcing &
DSS/ES/AI e-procurement
Manufacture
Internet, Intranet,
extranet,
satellites
CNC AGV, Process Cells Multiple factory
FMS Robotics
machines ASRS control and centers sites & suppliers
Figure 4.14 30
Types of Processes
Types of Processes
Processes can be classified into
Projects A non-routine production for an individual
customer with unique set of objectives to be
accomplished in a limited time frame. (e.g.
Construction of a building, planning a concert,
building an aero-plane,…)
Batch Production Processes items in small group or batches -
intermittent. (e.g. Furniture making, machine
shops, …)
Mass production Produces large volumes of a standard product
for a mass market. (e.g. automobiles,
televisions, …).
Continuous process Use to produce very high volume commodity
products, the system is highly automated and
running continuously for 24 hours per day.
(e.g. Steel making, paper, foodstuffs, …)
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1. Projects
A non-routine production for an individual customer with unique
set of objectives to be accomplished in a limited time frame.
e.g. construction of a building, planning a concert, building
an aero plane, etc.…
Characteristics:
Intermittent
Few customers with high involvement
Very flexible process (due to different design in different projects)
Concern on Engr. Changing Orders (due to long duration of work,
changes in customer preferences, in technology, in design and
process)
Work in teams
Close customer contact
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2. Batch Production
Processes items in small group or batches - intermittent.
(e.g. Furniture making, machine shops, …)
Characteristics :
Works are not continuous - Intermittent
Moderate volume of goods or services
Flexibility in machines and manpower is needed
Most involved fabrication (machining)
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3. Mass Production
Produces large volumes of a standard product for a mass
market.
(e.g. automobiles, televisions, …).
Characteristics :
Continuous and highly repetitive
Demand is stable
Volume of order is high
Product is standard
Capital intensive with specialized equipment (only slight
flexibility)
Low labor utility
Assembly lines
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4. Continuous Process
Use to produce very high volume commodity products, the
system is highly automated and running continuously for 24
hours per day.
(e.g. Steel making, paper, sugar, foodstuffs, …)
Characteristics :
High volume of standardized products or services
Highly standardized goods or services (no variety in output)
Need no flexibility in equipment
Low skill workers
Very high capital investment
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Types of Processes - Summary
PROJECT BATCH MASS CONTINUOUS
Product Unique Made to order Made to stock Commodity
Customer One-at-a-time Few individuals Mass market Mass market
Demand Infrequent Fluctuates Stable Very stable
Volume Very low Low to med High Very high
No. of different Infinite Many, varied Few Very low
products
System Long-term Discrete, job Repetitive, Process industry
assembly lines
Equipment Varied General-purpose Special-purpose Highly automated
Type of work Contracts Fabrication Assembly Mix, treat, refine
Skills Experts, Wide range Limited range Equipment
craftspeople of skills of skills monitors
Advantages Custom work, Flexibility, Efficiency, Highly efficient
technology quality speed, low cost large capacity
Dis- Nonrepetitive, Costly, slow, Capital investment, Difficult to
advantages small customer difficult to lack of change
base, expensive manage responsiveness
Example Construction, Machine shops, Autos, TV’s, Paint, chemicals,
shipbuilding printing, bakery fast food food
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Table 4.1
Process Selection
Process Selection with:
1. Break-Even Analysis
Total cost = fixed cost + total variable cost
TC = cf + vcv
Total revenue = volume x price
TR = vp
Profit = total revenue - total cost
Z = TR - TC
= vp - (cf + vcv)
cf = fixed cost
v = volume (i.e., number of units produced and sold)
cv = variable cost per unit
p = price per unit
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Solving for
Break-Even Volume
TR = TC
vp = cf + vcv
vp - vcv = cf
v(p - cv) = cf
cf
v= p-c
v
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Break-Even Analysis
Fixed cost = cf = $2,000
Variable cost = cv = $5 per raft
Price = p = $10 per raft
The break-even point is
cf 2000
v= p-c = = 400 rafts
v 10 - 5
Example 4.1
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Break-Even Analysis
Fixed cost = cf = $2,000
Variable cost = cv = $5 per raft
$3,000 — Price = p = $10 per raft
$2,000 —
The break-even point is
$1,000 — cf 2000
cv = 10 - 5 = 400 rafts
v = p - revenue
Total
line
Units
Example 4.1
42
Break-Even Analysis
Fixed cost = cf = $2,000
Variable cost = cv = $5 per raft
Total
$3,000 — Price = p = $10 per raft
cost
line
$2,000 —
The break-even point is
$1,000 — cf 2000
cv = 10 - 5 = 400 rafts
v = p - revenue
Total
line
Units
Example 4.1
43
Break-Even Analysis
Fixed cost = cf = $2,000
Variable cost = cv = $5 per raft
Total
$3,000 — Price = p = $10 per raft
cost
line
$2,000 —
The break-even point is
$1,000 — cf 2000
cv = 10 - 5 = 400 rafts
v = p - revenue
Total
line
400 Units
Break-even point
Example 4.1
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Choosing Between Two Processes
Process A Process B
$2,000 + $5v = $10,000 + $2v
$3v = $8,000
v = 2,667 rafts
Below 2,667, choose A
Above 2,667, choose B
Example 4.2
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Choosing Between Two Processes
$20,000 — Total cost of
process A
$15,000 —
$10,000 —
$5,000 —
| | | |
1000 2000 3000 4000 Units
Example 4.2
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Choosing Between Two Processes
$20,000 — Total cost of
process A
$15,000 — Total cost of
process B
$10,000 —
$5,000 —
| | | |
1000 2000 3000 4000 Units
Example 4.2
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Choosing Between Two Processes
$20,000 — Total cost of
process A
$15,000 — Total cost of
process B
$10,000 —
$5,000 — Choose
process A
| | | |
1000 2000 3000 4000 Units
Example 4.2
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Choosing Between Two Processes
$20,000 — Total cost of
process A
$15,000 — Total cost of
process B
$10,000 —
$5,000 — Choose Choose
process A process B
| | | |
1000 2000 3000 4000 Units
Point of indifference = 2,667 Units
Example 4.2
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Point of Indifference
Volume where cost of A = cost of B
Rule for choosing process:
Above point of indifference
choose process with
lowest variable cost
Below point of indifference
choose process with
lowest fixed cost
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Process Selection with:
Strategy
2. Flow continuum between two
All of the processes lie in a
extreme focuses - Product focus and Process Focus
Process focus Product Focus
Equipment and workforce are The equipment and workforce are
grouped by the function they group by the product or service to be
perform produced
Equipment is general purpose Equipment is special purpose
Workers have multiple skills Workers have few skills
Volume is low Volume is high
Routings vary from one order to Single routing, material may be
the next moved by conveyor
Flow pattern is jumbled The facility can produce a high
volume of just few products
The facility can produce a wide
range of products
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Process
HIGH Selection with:
PROJECT
3. Customization
Versus
CUSTOMIZATION
BATCH
Standardization
MASS Strategy
PRODUCTION
CONTINUOUS
PROCESS
LOW LOW STANDARDIZATION HIGH
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Process Planning
Process Planning
Make-or-buy decisions
Process selection
Specific equipment selection
Process plans
Process analysis
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Make-or-Buy Decisions
Factors affected decision making
process: Make?
1. Cost Buy?
2. Capacity
3. Quality
4. Speed
5. Reliability
6. Expertise
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Specific Equipment Selection
Issues to consider:
1. Purchase cost
2. Operating cost
3. Annual savings
4. Revenue
enhancement
5. Replacement analysis
6. Risk and uncertainty
7. Piecemeal analysis
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Process Plans
Process plan includes:
Blueprints- detailed drawings of product design
A bill of material- A list of the materials and parts that go into a product
An assembly diagram: an illustration showing how various parts combine to
form the final product
Assembly chart/ product structure diagram- A schematic diagram that shows
the relationship of each component part to its parent assembly
Operations process chart- A list of the operations to be performed in
fabricating a part along with the time required to complete each operation,
special tools, and machine needed for the operations
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Process Plans
Bottom bun
Beef patty SA
Salt
Cheese
Lettuce
First-layer assembly
Sauce
Onions
Middle bun
Beef patty
SA
Salt
Cheese
Lettuce
Second-layer assembly
Sauce
Onions
Pickles
Sesame seed top bun
Wrapper
Completed Big Mac Figure 4.2
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Product Structure Diagram
Packaged
Hand-Vac
Upholstery Crevice Dusting
Hand-Vac Package
tool tool tool
Forward Screw Rear
housing & lock housing
assembly assembly
washer assembly
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Operations Process Chart
Part name Crevice Tool
Part No. 52074
Usage Hand-Vac
Assembly No. 520
Oper. No. Description Dept. Machine/Tools Time
10 Pour in plastic bits 041 Injection molding 2 min
20 Insert mold 041 #076 2 min
30 Check settings 041 113, 67, 650 20 min
& start machine
40 Collect parts & lay flat 051 Plastics finishing 10 min
50 Remove & clean mold 042 Parts washer 15 min
60 Break off rough edges 051 Plastics finishing 10 min
60
Figure 4.3
Process Analysis
The systematic examination of all aspects
of a process to improve its operation. The
objective is to make a process:
Faster
More efficient
Less costly
More responsive
Basic tools
Process flowchart
Process diagrams
Process maps
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Process Flowchart Symbols
Operations
Inspection
Transportation
Delay
Storage
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Process Flowchart
Date: 9-30-02 Location: Graves Mountain
Analyst: TLR Process: Apple Sauce
Distance
Operation
Transport
Storage
Description
Inspect
(feet)
(min)
Time
Delay
Step
of
process
1 Unload apples from truck 20
2 Move to inspection station 100 ft
3 Weigh, inspect, sort 30
4 Move to storage 50 ft
5 Wait until needed 360
6 Move to peeler 20 ft
7 Apples peeled and cored 15
8 Soak in water until needed 20
9 Place in conveyor 5
10 Move to mixing area 20 ft
11 Weigh, inspect, sort 30
Page 1 0f 3 Total 480 190 ft Figure 4.4
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Process Diagram
UPS
Active Parcel
Receiving Picking Packing Shipping
Bins Post
Reserve Mono- Next-Day
Storage gramming UPS
Embroid-
Quality
ering
Assurance
Back to
Vendor
Hemming
Gift
Boxing
Figure 4.5
64
Process Map
Customer Waiter Salad Chef Dinner Chef
N
Is order
Place order complete?
Y
Give soup or salad order to chef Prepare soup or
salad order
Give dinner order to chef Prepare dinner
order
Drink Get drinks for customer
Eat salad or Give order
soup Deliver salad or soup order to customer
to waiter
Deliver dinner to customer Give order
Eat dinner to waiter
Receives check Deliver check to customer
Gives payment
to waiter Receive payment for meal
Credit
Cash or
Credit?
Cash
Collect change,
leave tip Bring change to customer
Run credit card through
Fill in tip
amount Return credit slip to customer
Figure 4.6
Collect tip
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Process Improvement
Continuous Improvement and Breakthroughs
Continuous improvement
refines the breakthrough
Breakthrough
Improvement
Continuous improvement activities
peak; time to reengineer process
Figure 4.9 67
Steps For Process
Improvement
DEFINE & DOCUMENT FOLLOW PROCESS
ESTABLISH MEASURE
PROCESS
IDENTIFY & IMPLEMENT MEASURE
IMPROVEMENT PERFORMANCE
68
Process Reengineering
Customer
Strategic
requirements
directive
data
Benchmark Goals & specifications Baseline
data for process performance analysis
Design High-level Innovative
principle process map ideas
s
Key
Detailed Model
performance
process map validation
measures
Pilot study of
new design
Full-scale implementation
Figure 4.10 69
High-Level Process Map
Subprocess Subprocess
Input Output
Performance
Goal
Subprocess Subprocess
Figure 4.11 70
Principles for Redesigning Processes
1. Remove waste, simplify, consolidate
2. Link processes to create value
3. Let the swiftest and most capable execute
4. Flex the process
5. Capture information digitally and propagate
Table 4.2
71
Principles for Redesigning Processes
6. Provide visibility through information about
process status
7. Fit the process with sensors and feedback
loops
8. Add analytic capabilities
9. Connect, collect and create knowledge around
the process
10. Personalize the process
Table 4.2
72
Process Technology
Information Technology
Management Information Systems (MIS)
Move large amounts of data
Decision Support Systems (DSS)
Add decision making support
Expert System
Recommend decision based on expert
knowledge
74
Decision Support System
Management
Personnel
Accounting
Computer Information: Production
system: reports,
Data
data model
processing results Marketing
Distribution
Other areas
75
Decision Support System
Management
Management Information
Personnel
System
Accounting
Computer Information: Production
system: reports,
Data
data model
processing results Marketing
Distribution
Other areas
76
Decision Support System
Decision Support System
Management
Management Information
Personnel
System
Accounting
Computer Information: Production
system: reports,
Data Decisions
data model
processing results Marketing
Distribution
Other areas
Quantitative
Figure 4.12 techniques What-if? analysis
77
Advanced Communications
Electronic data interchange (EDI)
Internet, extranets
Wireless communications
Teleconferencing &
telecommuting
Bar coding, RFT
Virtual reality
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