CH 03

Chapter 3
Process Planning and Design
Chapter 3: Process Planning and Design 1

Process Planning and Design
Chapter 2 identified the critical factors in
providing value to the customer. This
chapter discusses the selection and
design of the transformation process that
can deliver those factorslow cost, high
quality, enhanced functionality, speed,
and so onin an efficient and effective
manner.
Introduction
Fender's Custom Shop
Assembly line at IBM's plant in Charlotte,
North Carolina
Rickard Associates, an editorial production
company
Martin Marietta's aerospace electronics
manufacturing facility in Denver, Colorado
Nynex

Examples
Examples illustrate several transformation systems.
The Fender Custom Shop is a job shop that has
specialized departments for routing, lathe operations,
inlaying, paint and finishing, and final assembly.
Because work is organized by the task performed,
Rickard Associates is also a job shop - even
though the work is not performed in one location.
Companies like Rickard that rely on information
technology to bring separated workers together are
referred to as virtual organizations. Martin Marietta
converted into focused factories. And assembly
lines like the one IBM uses are referred to as flow
shops.
Fenders Custom Shop
Customers include Eric Clapton, John Deacon
(Queen), David Gilmour, Yngwie Malmsteen
and Stevie Ray Vaughn
Production Steps:
computer controlled routers and lathes
shape guitar bodies and necks
also have Neck Duplicator
necks and bodies hand and machine

sanded
Fenders Custom Shop
continued
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

IBMs 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
Rickard 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 and AOL used to coordinate work

Martin 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
Martin Marietta 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
NFL draft used to select worker teams
Martin Marietta 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

Nynex
Analyzed company in terms of four core
processes
customer operations
customer support
customer contact
customer provisioning

Nynex continued
Obtained services of Boston Consulting
Group
Visited 152 companies to document best
practices
Estimated savings are $1.5 to $1.7
billion

Variety of Transformation Systems
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

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.

Forms of Transformation
Systems
Continuous Process

Continuous Process
Highly standardized products in large

volumes
Often these products have become
commodities
Typically these processes operate 24
hours/day seven days/week
Objective is to spread fixed cost over as
large a volume as possible
Continuous Process continued
Starting and stopping a continuous

process can be prohibitively expensive
Highly automated and specialized
equipment used
Layout follows the processing stages
Output rate controlled through
equipment capacity and flow mixture
rates
Continuous Process continued
Low labor
requirements
Often one primary
input
Initial setup of
equipment and
procedures very
complex
Systems
Flow Shop

Flow Shop
Similar to continuous process except

discrete product is produced
Heavily automated special purpose
equipment
High volume - low variety
Both services and products can use flow
shop form of processing

A Generalized Flow Shop Operation

Advantages of the Flow Shop
Low unit cost

specialized high volume equipment
bulk purchasing
lower labor rates
low in-process inventories
simplified managerial control

Disadvantages of Flow Shop
Variety of output difficult to obtain

Difficult to change rate of output
Minor design changes may require
substantial changes to the equipment
Worker boredom and absenteeism
Work not very challenging
Vulnerable to equipment breakdowns
Disadvantages of Flow Shop continued
Line balanced to slowest element

Large support staff required
Planning, design, and installation very
complex task
Difficult to dispose of or modify special
purpose equipment

Flow Shop Layout
Objective is to assign tasks to groups

The work assigned to each group should
take about the same amount of time to
complete
Final assembly operations with more
labor input often subdivided easier
Paced versus unpaced lines

Line Balancing
available work time

Cycle time
demand
number of theoretical workstations, N T task times / cycle time
output total task time

efficiency =
input ( N A stations) cycle time

Line Balancing Example
Task Time Required Precedes

A 2.2 min. B, C, D
B 3.4 E
C 1.7 E
D 4.1 F
E 2.7 F
F 3.3 G
G 2.6 --

Line Balancing Example
continued
Company operates one shift per day

Available time per shift is 450 minutes
Demand is 100 units/day

Precedence Diagram
A C
D F G

Calculations
cycle time = 450/75 = 6 minutes/part
NT = 20/6 = 3.33 = 4 stations

Task Assignment
Time Elig. Will Task Idle

Station Avail. Tasks Fit? Assign. Time
1 6.0 A A
3.8 B,C,D B,C B
0.4 C,D -- -- 0.4
2 6.0 C,D C,D D
1.9 C C C
0.2 E -- -- 0.2
Task Assignment continued
Time Elig. Will Task Idle

Station Avail. Tasks Fit? Assign. Time
3 6.0 E E E
3.3 F F F 0.0
4 6.0 G G G 3.4

Line Balancing Solution
Station 3
Station 1 B
A C
Station 2
Station 4
D F G

Efficiency
efficiency = 20/(4*6) = 83.3%

Precedence Graph for Credit
Applications

Stations Assignments for Credit
Application

Systems
Job Shop

Job Shop
High variety - low volume

Equipment and staff grouped based on
function
Each output processed differently

A Generalized Job Shop Operation

Advantages of the Job Shop
Flexibility to respond to individual

demands
Less expensive general purpose
equipment used
Maintenance and installation of general
purpose equipment easier
General purpose equipment easier to
modify and therefore less susceptible to
becoming obsolete
Advantages of the Job Shop
continued
Dangerous activities can be segregated

from other operations
Higher skilled work leading to pride of
workmanship
Experience and expertise concentrated
Pace of work not dictated by moving line
Less vulnerable to equipment
breakdowns
Disadvantages of the Job
Shop
General purpose equipment is slower
Higher direct labor cost
High WIP inventories
High material handling costs
Management control very difficult

Directly Specified Closeness
Preferences
A = absolutely necessary
E = especially important
I = important
O = ordinary closeness OK
U = unimportant
X = undesirable

Cost-Volume-Distance Model
N N
TC = C
i =1 j=1
ij Vij D ij

Office Layout

Systems
Cellular Production

The Cell Form
Combines flexibility of job shop with low

costs and short response times of flow
shop
Based on group technology
First identify part families
Then form machine cells to produce part
families

Conversion of a Job Shop Layout to a
Cellular Layout

Organization of Miscellaneous Parts
into Families

Advantages of Cellular Production
Reduced machine setup times

increased capacity
economical to produce in smaller batch
sizes
smaller batch sizes result in less WIP
less WIP leads to shorter lead times
shorter lead times increase forecast
accuracy and provide a competitive
advantage
Advantages of Cellular Production
continued
Parts produced in one cell

Capitalize on benefits of using worker
teams
Minimal cost to move from job shop to
cellular production (e.g. EHC)
Can move from cellular production to
mini-plants

Disadvantages of Cellular Production
Volumes too low to justify highly efficient

high volume equipment
Vulnerable to equipment breakdowns
Balancing work across cells
Does not offer the same high degree of
customization as the job shop

Cellular Layout
Teams of workers and equipment to
produce families of outputs
Workers cross-trained
Nominal cells versus physical cells.
Remainder cell
Cell formation methods
production flow analysis

Original Machine-Component Matrix
A B C D E
1 1 1 1
2 1 1
3 1 1 1
4 1 1
5 1 1

Reordered Machine-Component
Matrix
A C E B D
1 1 1 1
3 1 1 1
5 1 1
2 1 1
4 1 1

Systems
Project Operations

Project Operations
Large scale
Finite duration
Nonrepetitive
Multiple
interdependent
activities
Offers extremely
short reaction times

Selection of the Process

Volume/Variety Considerations
High volume indicate automated mass

production
High variety implies use of skilled labor
and general purpose equipment
Make-to-stock versus make-to-order

Effect of Output Characteristics on
Transformation Systems

Product/Process Life Cycles
In R&D stage, product made in small
volumes
At peak of life cycle, demand may justify
high volume special purpose equipment
System should evolve as market evolves
Whether an organization moves with a
product through its life cycle depends on
the organizations focus
Selection of Transformation System by
Stage of Life Cycle

Service Processes
Often implemented with little
development or pretesting
Need to consider amount of customer
contact
Customers may not arrive at smooth and
even increments
Including customer in service process
provides opportunities to improve
service
New Transformational Technologies
and Reengineering

Information Technology
World Wide Web
Federal Express
Web server set up in late 1994
By 1996 12,000 customers using service each
day to access package-tracking database
provides higher customer service
saves FedEx $2 million per year
Intranets

Information Technology
continued
Decision support systems
Artificial intelligence
Expert systems

The Office of the Future
Focus of 1980s was on improving
individual productivity
Focus 1990s is enhancing way teams
work together
Groupware
communications (e-mail)
collaboration (access to shared data)
coordination (jointly accomplishing
activities)
Manufacturing Technologies
Numerical Control (NC)
computer numerical control
direct numerical control
Robotics
Flexible Manufacturing Systems (FMS)

Business Process Design
(Reengineering)

Division of Labor Concept
Work broken down into its simplest most
basic tasks
Performing same task facilitates attaining
greater skill
No time lost switching to another task
Workers well positioned to improve tools
and techniques

Division of Labor Concept
continued
Division of labor concept not challenged

until recently despite dramatic changes
in technology
Quality, innovation, service, and value
more important than cost, growth, and
control

Process
Set of activities that taken together
produce a result of value to the customer
Organizing on basis of processes
Eliminate delays and errors when work is
handed off
Capture information once and at source
When people closest to process perform
work, there is little need for management
overhead
Business Process Design
(BPD)
The fundamental rethinking and radical
redesign of business processes to
bring about dramatic improvements in
performance
Hammer, M. and Stanton, S. The Reengineering Revolution, Harper

Business, 1995.

Radical
Profoundly change the way work
performed
Not concerned with making superficial
changes
Get to root
Get rid of old
Reinventing, not improving

Redesign
BPD is about designing how work is
done
Smart, capable, well trained, highly
motivated employees mean little if the
way work is performed is poorly
designed

Process
All organizations perform processes
Customers not interested in individual
activities but rather overall results
Few of them are organized on the basis
of processes
Thus, processes tend to go unmanaged
Team approach one way this addressed

Dramatic
Quantum leaps in performance, not
marginal or incremental improvements
Breakthroughs in performance

IBM Credit Example

IBM Credit Example continued
Order logged by 1 of 14 people in
conference room
Carted upstairs to credit department
Information entered into computer to
check borrowers creditworthiness
Results written on piece of paper

Business practices department modified
standard loan covenant in response to
customer requests
Used its own computer system
Pricer keyed data into PC to determine
appropriate interest rate
Administrator converted to quote letter
and Fedexed to field sales rep.
Average time to process a request was 6
days
Could take as long as 2 weeks
Actual processing time 90 minutes
Deal Structurer
Turnaround time 4 hours
Number of deals processed increased 100
times with small reduction in head count
Chapter 3: Process Planning and 83
Design

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Chapter 3

Process Planning and Design

Chapter 3: Process Planning and Design 1

Chapter 3: Process Planning and Design 3

necks and bodies hand and machine

detailed inlay work done with Hegner

Chapter 3: Process Planning and Design 6

Assembly line produces 27 significantly

Produces magazines and marketing materials

Chapter 3: Process Planning and Design 8

Each focused factory completed entire

Chapter 3: Process Planning and Design 11

Chapter 3: Process Planning and Design 12

Chapter 3: Process Planning and Design 13

Fender Custom Shop is job shop

Chapter 3: Process Planning and Design 14

Chapter 3: Process Planning and Design 15

Chapter 3: Process Planning and Design 16

Highly standardized products in large

Starting and stopping a continuous

Chapter 3: Process Planning and Design 20

Similar to continuous process except

Chapter 3: Process Planning and Design 21

Chapter 3: Process Planning and Design 22

Low unit cost

Chapter 3: Process Planning and Design 23

Variety of output difficult to obtain

Line balanced to slowest element

Chapter 3: Process Planning and Design 25

Objective is to assign tasks to groups

Chapter 3: Process Planning and Design 26

available work time

number of theoretical workstations, N T task times / cycle time

output total task time

Chapter 3: Process Planning and Design 27

Task Time Required Precedes

Chapter 3: Process Planning and Design 28

Company operates one shift per day

Chapter 3: Process Planning and Design 29

Chapter 3: Process Planning and Design 30

cycle time = 450/75 = 6 minutes/part

NT = 20/6 = 3.33 = 4 stations

Chapter 3: Process Planning and Design 31

Time Elig. Will Task Idle

Time Elig. Will Task Idle

Chapter 3: Process Planning and Design 33

Chapter 3: Process Planning and Design 34

efficiency = 20/(4*6) = 83.3%

Chapter 3: Process Planning and Design 35

Chapter 3: Process Planning and Design 36

Chapter 3: Process Planning and Design 37

Chapter 3: Process Planning and Design 38

High variety - low volume

Chapter 3: Process Planning and Design 39

Chapter 3: Process Planning and Design 40

Flexibility to respond to individual

Dangerous activities can be segregated

Chapter 3: Process Planning and Design 43

Chapter 3: Process Planning and Design 44

Chapter 3: Process Planning and Design 45

Chapter 3: Process Planning and Design 46

Chapter 3: Process Planning and Design 47

Combines flexibility of job shop with low