Process Design
Resource Flexibility
- A flexible workforce can often require higher skills and more training and education - Worker flexibility can help achieve reliable customer service and alleviate bottlenecks - Resource flexibility helps absorb changes in workloads - The type of workforce may be adjusted using full-time or part-time workers - The volume of business may affect the type of equipment used - Break-even analysis can be used to determine at what volumes changes in equipment should be made
Sipoc Diagram
- A high level process map that can be used to identify and map all the relevant elements of a process before a process improvement or re-engineering exercise. -Suppliers of the process -Inputs to the process -Process that is under review -Outputs of the process, and -Customers that receive the outputs of this process - Use the SIPOC Diagram when the team is not clear about the inputs, specifications, customers' requirements and actual requirements of the process.
Frugal Innovation
- reduce the complexity - Reduce cost of a good and its production removing nonessential features from a durable good - discovers new business models - reconfigures value chains, and redesigns products to serve users who face extreme affordability constraints, in a scalable and sustainable manner - Provide functional solutions through few resources for the many who have little means.
Vertical Integration
ex: ABC buying Disney, Pepsi acquiring Pizza Hut - Do not outsource if supplier decides your product specification - Try to protect your product using strong intellectual property rights
Process Charts
- An organized way to document all the activities performed by a person or group - Activities are typically organized into five categories 1. Operation, Circle Symbol 2. Transportation, Right Arrow Symbol 3. Inspection, Square Symbol 4. Delay, Half Circle (right side only) Symbol 5. Storage, Upside Down Triangle Symbol - The annual cost of an entire process can be estimated - It is the product of 1. Time in hours to perform the process each time 2. Variable costs per hour 3. Number of times the process is performed each year Annual Labor Cost ='s 1 * 2 * 3
Capital Intensity
- Automation is one way to address the mix of capital and labor - Automated manufacturing processes substitute capital equipment for labor - Typically require high volumes and costs are high - Automation might not align with a company's competitive priorities - Fixed automation produces one type of part or product in a fixed sequence - Typically requires large investments and is relatively inflexible - Flexible automation can be changed to handle various products - Industrial robots are classic examples of flexible automation - Capital equipment may be used to automate service processes - Investment can be justified by cost reduction and increased task divergence through expanded customer choice - May impact customer contact - May be used in both front and back-office operations - Economies of scope reflect the ability to produce multiple products more inexpensively in combination than separately - Applies to manufacturing and services - Requires sufficient collective volume
Product-Process Matrix
- For manufacturing organization it brings together 1. Volume 2. Product customization 3. Process characteristics - Process choices include job, batch, line, and continuous flow processes - Production and inventory strategies include make-to-order, assemble-to-order, and make-to-stock
Advantages of Customer Involvement
- Increased net value to the consumer - can mean better quality, faster delivery, greater flexibility at lower cost - may reduce product, shipping, and inventory - may help coordinate across supply chain - process may be revised to accommodate the customer's role
Postponement
- Number of lots in the stages prior to the 'differentiation point' gets reduced. - Postpone product manufacturing and packaging decisions as late as possible. Manufacture a generic product and delay about a specific product as close to customer as possible. - Benefits - Reduced demand uncertainty, Higher service levels, Reduced inventory costs.
Design for Supply Chain or Design for Logistics (DFL)
- Take supply chain costs into account when designing product and manufacturing processes Strategies 1. Modularity and Component Commonality 2. Postponement Result - Reduced inventory costs.
Strategic Fit
- The process chosen should reflect the desired competitive priorities - The process structure has a major impact on customer involvement, resource flexibility, and capital intensity
Time Measurement
- Time is required estimate costs Performance measurement Negotiation - Incentive system 1) Group 2) Individual - When productivity goes up, output grows. So fixed cost is spread over more units. Variable cost is also reduced. - To quote delivery dates - Capacity planning
Work Measurement Techniques
- Used to estimate the average time each step in a process would take 1) Time study method 2) Elemental standard data approach 3) Predetermined data approach 4) Work sampling method -Learning curve analysis is appropriate for new products or processes
Disadvantages of Customer Involvement
- can be disruptive - managing time and volume can be challenging - quality measurement can be difficult - requires interpersonal skills - layouts may have to be revised - multiple locations may be necessary
Four Basic Process Decisions
1. Process Structure 2. Customer Involvement 3. Resource Flexibility 4. Capital Intensity
Learning Curve Analysis
Uses 1. Manpower planning and scheduling 2. Negotiated purchasing 3. Pricing new products 4. Budgeting, purchasing, and inventory planning 5. Capacity Planning Cautions & Criticisms 1. Learning rates may differ from organization to organization 2. Projections based on learning curves should be viewed as approximations 3. Estimates based the first unit should be checked for valid times 4. At some point the curve might level off or even tip upward 5. Some improvements may be more apparent than real 6. For the most part, the concept does not apply to mass production
