MGT613 - Production / Operations Management - Lecture Handout 18

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PROCESS SELECTION

Process Selection plays an important part in over all design of production and operations management systems. Process Selection allows an organization to offer a safe and reliable product and service through pragmatic design and effective capacity planning. With the help of process selection we can understand the different types of processing including manual, rigid, and flexible as well as various automated approaches to processing. Process selection allows an operations
manager to better understand the need for management of technology. Together with capacity planning it helps an organization to develop different approaches to meet the irregular demand pattern of the customers.

Introduction and Meaning

Process Selection refers to the way an organization chooses to produce its good or services. It takes into account selection of technology, capacity planning, layout of facilities, and design of work systems. Process selection is a natural extension after selection of new products and services.

An organizations process strategy would include

  1. Make or Buy Decisions. The extent to which an organization will produce goods or provide in house as opposed to relying on an outside organization to produce or provide them.
  2. Capital Intensity. The mix of equipment and labor will be used by the government.
  3. Process Flexibility: The degree to which the system can be adjusted to changes in processing requirements due to such factors as changes in product or service design, changes in volume processed, and changes in technology.

Reasons to (Produce in-House or Outsource) Make or Buy

There are 6 reasons which are available to us in order to decide whether to develop a competence in house or hire an outside competent organization to supply that product, service or particular expertise. The latter requires that the outsourcer to be honest, ethical, competent. It also requires that outsourcing contract should be flexible yet pragmatic and carry proper levels of services.

  • Available capacity if an organization has the equipment, necessary skills and time, it often makes sense to produce an item or perform a service in house. The additional costs would be relatively small compared with those required to buy items or subcontract them.
  • Expertise. If a firm lacks the expertise to do a job satisfactorily, buying might be a reasonable alternative.
  • Quality considerations. Firms that specialize can usually offer higher quality than an organization can attain itself. Conversely, special quality requirements or the ability to closely monitor quality may cause an organization to perform a job itself.
  • Nature of demand. When demand for an item is high and steady, the organization is often better off doing the work itself. However, wide fluctuations in demand or small orders are usually better handled by specialists, who are able to combine orders from multiple sources, which results in higher volume and tend to offset individual buyer fluctuation.
  • Cost. Any cost savings achieved from buying or making must be weighed against the preceding factors. Cost savings might come from the item itself or from transportation cost savings. If there are fixed costs associated with making an item that cannot be reallocated if the item is purchased, that has to be recognized in cost analysis.
  • Risk. Outsourcing or buying the services carries risk; often companies retain flexibility by carrying out certain critical activities in house and repetitive menial activities through outsourcing.

Types of Operation

The degree of standardization and the volume of output of a product or service influence the way production is organized. Output can range from high volume, highly standardized, to low volume, highly customized.

  1. Continuous Processing.
    1. Repetitive Processing.
  2. Intermittent Processing.
    1. Batch Processing
    2. Job Shop.
  3. Automation
    1. Computer Aided Manufacturing
    2. Numerically Controlled Machines
    3. Robot
    4. Manufacturing Cell.
    5. Flexible Manufacturing System.

Continuous and Semi Continuous Operations

  1. A system that produces highly uniform products or continuous services, often performed by machines.
    1. Processing of chemicals, photographic film, newsprint and oil products
  2. Repetitive Processing. A production system that renders one or a few highly standardized products or services.
    1. Automobiles, televisions, computers ,calculators, cameras and video equipments

Intermittent Processing

  1. A system that produces lower volumes of items or services with a greater variety of processing requirements.
    1. Processing of chemicals, photographic film, newsprint and oil products
  2. Batch Processing. A system used to produce moderate volumes of similar items.
    1. Paint, ice cream, canned vegetables
    2. Magazines, newspapers, textbooks and user manuals.
  3. Job Shop. A system that renders unit or small lot production or service with varying specifications according to customer needs

Automation.

Machinery that has sensing and controlling devices that enables it to operate automatically.

  1. Computer Aided manufacturing the use of computers in process control.
  2. Numerically Controlled Machines that perform operations by following mathematical processing instructions
  3. Robot a machine that consists of a mechanical arm, a power supply and a controller.

Flexible Automation

  1. Manufacturing Cell. One or a few N/C machines that produce a variety of parts.
  2. Flexible Manufacturing System. A group of machines designed to handle intermittent processing requirements and produce a variety of similar products.
    1. Designed to handle Intermittent processes
    2. Offers reduce labor costs and consistent quality.
    3. Higher Flexibility as compared to hard automation
  3. Disadvantage.
    1. Requires longer time for planning and development
    2. Can handle only narrow range of parts variety.

Computer Integrated Manufacturing

  1. Manufacturing Cell. One or a few N/C machines that produce a variety of parts.
  2. Flexible Manufacturing System. A group of machines designed to handle intermittent processing requirements and produce a variety of similar products.
    1. Designed to handle Intermittent processes
    2. Offers reduce labor costs and consistent quality.
    3. Higher Flexibility as compared to hard automation
  3. Disadvantage.
    1. Requires longer time for planning and development
    2. Can handle only narrow range of parts variety.

Operations Strategy with respect to Process Selection

Operations strategy has the quality of being fine tuned whenever we discuss a new idea, process selection is no different, and we can formulate a process selection based operations strategy as follows.

  1. Hire and Promote Managers who have both Technical and Managerial Skills. As engineers fail in managerial decisions and managers end up relying on engineers who create WHITE ELEPHANTS.
  2. Flexibility as a competitive strategy to be incorporated at all levels.
  3. Judicious use of Automation as unnecessary Automation causes increase in cost and a subsequent increase in product and inventory.