Transformation Systems and Process Selection

1
Facilities Planning - Unit 02Transformation
Systems and Process Selection
2
Hierarchy of Facility Planning
Source for Figure Tompkins and White, Facilities
Planning, 2nd edition, Wiley
3
Facility DesignSequential Approach vs.
Integrated Approach
Material Handling System Design
Sequential Approach
4
Facility DesignSequential Approach vs.
Integrated Approach
Integrated Approach Impressive results in cost,
quality, productivity, sales, customer
satisfaction, delivery time, inventory levels,
space handling requirements, building size, etc.
Concurrent Engineering Terms of product, process,
scheduling and facility design planners work with
marketing, purchasing, etc. Personnel address the
design process in an integrated way.
5
Transformation Process and Productivity Model
The main objective of transformation processes is
production of output goods and services
Productivity improvements focus is on activities
for creating, implementing and improving
processes that transform inputs to outputs
6
Transformation System Design and Layout Analysis

• Transformation system 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.

7
Transformation System Design
8
Transformation System DesignFenders Custom Shop

• computer controlled routers and lathes shape
  guitar bodies and necks
• also have Neck Duplicator
• necks and bodies hand and machine sanded
• detailed inlay work done with Hegner precision
  scroll saw
• paint and finishing operations in special room
  where air is re-circulated 10 times/minute
• buffed
• hung up and seasoned for two weeks
• final assembly by actual musicians

9
Transformation System DesignIBMs Charlotte, NC
Plant

• Assembly line produces 27 significantly different
  products
• Products include hand-held bar-code scanners,
  portable medical computers, fiber-optic
  connectors, and satellite communications devices
• Kits of parts delivered to workers
• Computer screen displays assembly instructions

10
Transformation System DesignRickard Associates

• Produces magazines and marketing materials
• Only two of editorial production companys
  employees work at headquarters in NJ
• Art director works in AZ
• Editors are located in FL, GA, MI, and D.C.
• Freelancers even more scattered
• Internet used to coordinate work

11
Transformation System DesignMartin Marietta
Aerospace Plant

• Originally set up as job shop with numerous
  functional departments
• High WIP levels
• Long lead times
• long travel distances
• departmental barriers inhibited communication
• Plant subsequently arranged into three focused
  factories

12
Transformation System DesignMartin Marietta
Aerospace Plant - continued

• Each focused factory completed entire electronic
  assembly for particular application
• Each focused factory treated as separate business
  enterprise
• Factory manager assigned to each focused factory

13
Transformation System DesignMartin Marietta
Aerospace Plant - continued

• Within focused factories part families identified
  based on technology and processes
• Standard routings identified for each part family
• Improvements
• seven months of consecutive production with no
  scrap
• 50 reduction in WIP
• 21 reduction in lead times
• 90 reduction in overtime

14
Transformation System DesignTypes of Process
Strategies

• Process strategies that follow a continuum
• Within a given facility, several strategies may
  be used
• These strategies are often classified as

Process Focused (intermittent process)
Repetitive Focus (assembly line)
Product Focused (continuous process)
Process Continuum
High variety, low volume Low utilization (5 -
25) General-purpose equipment
Low variety, high volume High utilization (70 -
90) Specialized equipment
Modular Flexible equipment
15
Transformation Systems Design

• Fender Custom Shop is job shop
• Rickard Associates is job shop and is also a
  virtual organization
• Martin Marietta converted from a job shop to
  focused factories
• IBM uses a flow shop

16
Process-Focused Strategy

• Facilities are organized by process
• Similar processes are together
• Example All drill presses are together
• Low volume, high variety products
• Jumbled flow
• Other names
• Intermittent process
• Job shop

17
Process-Focused Strategy
18
Process-Focused Strategy - Examples
19
Process-Focused Strategy

• Advantages
• Greater product flexibility
• More general purpose equipment
• Lower initial capital investment
• Disadvantages
• High variable costs
• More highly trained personnel
• More difficult production planning control
• Low equipment utilization (5 to 25)

20
Repetitive-Focused Strategy

• Facilities often organized by assembly lines
• Characterized by modules
• Parts assemblies made previously
• Modules combined for many output options
• Other names
• Assembly line
• Production line

21
Repetitive Focused Strategy
22
Repetitive Focused StrategyConsiderations

• More structured than process-focused, less
  structured than product focused
• Enables quasi-customization
• Using modules, it enjoys economic advantage of
  continuous process, and custom advantage of
  low-volume, high-variety model

23
Repetitive-Focused Strategy - Examples
24
Repetitive-Focused Strategy - Examples
25
Product-Focused Strategy

• Facilities are organized by product
• High volume, low variety products
• Where found
• Discrete unit manufacturing
• Continuous process manufacturing
• Other names
• Line flow production
• Continuous production

26
Product-Focused Strategy
27
Product-Focused Strategy - Examples
Soft Drinks (Continuous, then Discrete)
Light Bulbs (Discrete)
Mass Flu Shots (Discrete)
Paper (Continuous)
28
Flow Diagram of Steelmaking Process at NUCOR
Product-Focused Strategy - Examples
29
Product-Focused Strategy

• Advantages
• Lower variable cost per unit
• Lower but more specialized labor skills
• Easier production planning and control
• Higher equipment utilization (70 to 90)
• Disadvantages
• Lower product flexibility
• More specialized equipment
• Usually higher capital investment

30
Process Strategies Mass Customization

• Using technology and imagination to rapidly
  mass-produce products that cater to sundry unique
  customer desires.
• Under mass customization the three process models
  become so flexible that distinctions between them
  blur, making variety and volume issues less
  significant.

31
Process Strategies Mass Customization
Repetitive Focus Modular design Flexible equipment
Modular techniques
Mass Customization
Rapid throughput techniques
Effective scheduling techniques
Product-focused Low variety, high volume High
utilization (70 - 80) Specialized equipment
Process-focused High variety, low volume Low
utilization (5 - 20) General purpose equipment
32
Process StrategiesMass Customization Example
Dell Computer Company
How can we make the process of buying a
computer better?

• Sell custom-build PCs directly to consumer
• Integrate the Web into every aspect of its
  business
• Operate with six days inventory
• Build computers rapidly, at low cost, and only
  when ordered
• Focus research on software designed to make
  installation and configuration of its PCs fast
  and simple

33
Process Choice vs. Volume and Variety
34
Process Strategies Comparison Page 1
Process Focus (Low volume, High variety) Repetitive Focus (Modular) Product focus (High-volume, low-variety) Mass Customization (High-volume, high-variety
Small quantity, large variety of products Long runs, standardized product, from modules Large quantity, small variety of products Large quantity, large variety of products
General purpose equipment Special equipment aids in use of assembly line Special purpose equipment Rapid changeover on flexible equipment
Broadly skilled operators Modestly trained employees Operators less broadly skilled Flexible operators trained for customization
35
Process Strategies Comparison Page 2
Process Focus Repetitive Focus Product focus Mass Customization
Many instructions because of change in jobs Reduced training and number of job instructions Few work orders and job instructions Custom orders require many instructions
Raw material high relative to product value JIT techniques used Raw material low relative to product value Raw material low relative to product value
WIP high relative to output JIT techniques used WIP low relative to output WIP driven down by JIT, kanban, lean production
36
Process Strategies Comparison Page 3
Process Focus Repetitive Focus Product focus Mass Customization
Units move slowly thru plant Movement measured in hours days Units move swiftly thru facility Goods move swiftly thru facility
Finished goods made to order, not stored Finished goods made to frequent forecasts Finished goods made to forecast, then stored Finished goods made to order
Fixed costs low, variable costs high Fixed costs dependent on flexibility of facilities Fixed costs high, variable costs low Fixed costs high variable costs must be low
37
Process Strategies Comparison Page 4
Process Focus Repetitive Focus Product focus Mass Customization
Scheduling complex and concerned with trade-off between inventory, capacity, and customer service Scheduling based on building models from a variety of forecasts Scheduling relatively simple, concerns establishing sufficient rate of output to meet forecasts Scheduling sophisticated to accommodate customization
Costing, done by job, is estimated prior to doing job but only known after doing job Costs usually known based on experience Because of high fixed costs, cost dependent on utilization of capacity High fixed costs and dynamic variable costs
38
Process StrategiesProduction Volume vs. Process
Type Summarized
Production Volume Production Volume Production Volume Production Volume
Low Moderate High Very High
Process Type Job Shop Appliance repairEmergency room Not feasible
Process Type Batch Commercialbakery Classroomlecture
Process Type Repetitive Automotiveassembly
Process Type Continuous(flow) Notfeasible Oil refineryWater purification
39
Process StrategiesProcess Dimension vs. Process
Dimension Summarized
Dimension Dimension Dimension Dimension
Job variety Process flexibility Unit cost Volume of output
Process Type Job Shop Very High Very High Very High Very Low
Process Type Batch Moderate Moderate Moderate Moderate
Process Type Repetitive Low Low Low High
Process Type Continuous(flow) Very Low Very Low Very Low Very Low
40
Process StrategiesQuestions for Process Analysis
and Design

• Is the process designed to achieve competitive
  advantage in terms of differentiation, response,
  or low cost?
• Does the process eliminate steps that do not add
  value?
• Does the process maximize customer value as
  perceived by the customer?
• Will the process win orders?

41
Process StrategiesFactors Affecting Process
Alternatives
These factors can effect the number of
alternatives!

• Production flexibility
• Product volume
• Product variety
• Technology
• Cost
• Human resources
• Quality
• Reliability

42
Process Selection and System Design
Facilities andEquipment
Forecasting
CapacityPlanning
Layout
Product andService Design
ProcessSelection
WorkDesign
TechnologicalChange
Capacity is significantly impacted by process
selection and facility layout.