Types of Processes

The Four Vs

Volume of demand

How many the organisation makes

Service vs. Mass Production
Variety in operations

The ability to adapt the transformation process to meet needs
of the customer

Taxi vs. Train
Variation in demand

Adapting to changing demand
Visibility of transformation

How much of the operations functions are visible to the
customer

Some operations have mixed high/low visibility
eg Restaurant Front and Kitchen

A Typology of Operations
Low

Volume

High

High

Variety

Low

High

Variation
in Demand

Low

High

Visibility

Low

Types of Process Designs

Product-Focused
Process-Focused
Hybrid/Group Technology/Cellular
Manufacturing
Project Form

Product-Flow Characteristics
Manufacturing Processes

Product Focused

Continuous

Repetitive

Production

Production
(Also known as
mass or discrete
production)

Process Focused

Intermittent
Production
Batch Shop

Intermittent
Production
Job Shop

Project Form

The Most Important Conflict

Volume vs Variety
Project

Job

Unique
aspect to
each
product

Batch

Mass

Continuous

Made to
order

Made
to stock

Commodity

Product

Unique

Volume

Only One

Very low
to low

Low to
med

High

Very high

Variety

Infinite

Very high
to high

Medium
to high

Low

Very low

Project
Job
Batch

Variety

High

Process Types - Products

Mass

Low

Continuous
Low

Volume

High

Product-Focused

Processes (conversions) are arranged based on

the sequence of operations required to produce
a product or provide a service
Continuous Production
Also called Production Line or Assembly
Line
Two general forms
Discrete unit automobiles, dishwashers

Process (Continuous) petrochemicals, paper

Product-Focused
Raw Material

Components

Raw Material

Co
m
po
n.

Su
ba
ss
em
.

Assemblies
3

Components

Product/Material
Flow
1
Production Operation

Subassem.
Purchased
6

Components,
Subassemblies

Fin. Goods

As
se
mb
lie
s

22

Product-Focused

Advantages
Lower labor-skill requirements

Reduced worker training

Reduced supervision

Ease of planning and controlling production

Disadvantages
Higher initial investment level

Relatively low product flexibility

Process-Focused

Processes (conversions) are arranged based on

the type of process, i.e., similar processes are
grouped together
Products/services (jobs) move from department
(process group) to department based on that
particular jobs processing requirements
Intermittent Production
Also called Job Shop or Batch Shop
Examples
Auto body repair

Custom woodworking shop

Process-Focused
Custom Woodworking Shop
Cutting Planing Shaping Assembly Sanding Finishing
11
Job A
Job B
11

22

55

66

55

66

33

22

44

33
44

Drilling Turning

77

Process-Focused

Advantages
High product flexibility

Lower initial investment level

Disadvantages
Higher labor-skill requirements

More worker training

More supervision

More complex production planning and controlling

Group Technology/Cellular
Manufacturing

Group Technology
Each part produced receives a multi-digit code that
describes the physical characteristics of the part.

Parts with similar characteristics are grouped into
part families

Parts in a part family are typically made on the same
machines with similar tooling

Group Technology/Cellular
Manufacturing

Cellular Manufacturing
Some part families (those requiring significant batch
sizes) can be assigned to manufacturing cells.

The organization of the shop floor into cells is
referred to as cellular manufacturing.

Flow of parts within cells tend to be more like
product-focused systems

Group Technology/Cellular
Manufacturing

Advantages (relative to a job shop)

Process changeovers simplified

Variability of tasks reduced (less training needed)

More direct routes through the system

Quality control is improved

Production planning and control simpler

Automation simpler

Group Technology/Cellular
Manufacturing

Disadvantages
Duplication of equipment

Under-utilization of facilities

Processing of items that do not fit into a family may
be inefficient

Group Technology/Cellular
Manufacturing

Candidates for GT/CM are job shops having:

A degree of parts standardization

Moderate batch sizes

Capital Requirements

The amount of capital required tends to differ for

each type of production process
Generally, the capital required is greatest for productfocused, dedicated systems
Generally, the capital required is lowest for processfocused, job shops
The amount of capital available and the cost of capital
are important considerations

Economic Analysis

Cost Functions of Processing Alternatives

Fixed Costs

Annual cost

when production volume is zero

Initial cost of buildings, equipment, and other fixed assets

Variable Costs

Costs that vary with production volumes

Labor, material, and variable overhead

Cost Functions of Processing

Alternatives
Annual Cost of Production ($000)
op
h
S
b
o
J

2,000

Line
y
l
b
m
e
s
s
Autom. A

1,500
1,000
500

Job
Shop
Preferred
100,000

Cellular
Manufacturing
Preferred

uf.
n
a
rM
a
l
u
l
Cel

Automated
Assembly Line
Preferred

Units
Produced
Per Year
250,000

Product-Process Matrix

Classification by
Type of Customer Order

Make

to Stock (MTS)

Assemble

Make

to Order (ATO)

to Order (MTO)

Engineer

to Order (ETO)

Production Processes

Production processes
are used to make any
manufactured item.

Step 1 Source the

parts needed
Step 2 Make the
product
Step 3 Deliver the
product

Production Processes

Product Delivery Strategies

High
Mass
Customization

Product Variety

Engineer-to-Order

Make-to-Order

Assemble-to-Order

Make-to-Stock
Low

Product Volume

High

26

Make to Stock (MTS)

Produce finished goods; customer buys from

inventory

Advantages: smooth production

Disadvantages: inventory

Make to Order (MTO)

Start production when customer orders.

Advantages: no inventory

Disadvantages: intermittent production

Assemble to Order (ATO)

Make parts and subassemblies; finish when

customer orders.

Advantages: less inventory; faster service

Disadvantages: some inventory

Engineer to Order (ETO)

Start to design when customer orders.

Advantages: no inventory; flexibility

Disadvantages: long lead time

Process Design in Services

Some of the factors important in process design

for products are also important in services:
Degree of customer contact

Nature (level and pattern) of customer demand

Degree of vertical integration

Production flexibility

Degree of automation

Service quality

Service-System Design Matrix

Degree of customer/server contact
High

Buffered
core (none)

Permeable
system (some)

Reactive
system (much)

Low

Face-to-face
total
customization
Face-to-face
loose specs

Sales
Opportunity

Face-to-face
tight specs

Mail contact

Low

Internet &
on-site
technology

Production
Efficiency

Phone
Contact

High

Characteristics of Workers, Operations,

and Innovations Relative to the Degree
of Customer/Server Contact

Process Design in Services

Three schemes for producing and delivering

services
Quasi-Manufacturing

Customer-as-Participant

Customer-as-Product

Process Design in Services

Quasi-Manufacturing
Physical goods are dominant over intangible service

Production of goods takes place along a production
line

Operations can be highly automated

Almost no customer interaction

Little regard for customer relations

Example banks checking encoding operation

Process Design in Services

Customer-as-Participant
Physical goods may be a significant part of the
service

Services may be either standardized or custom

High degree of customer involvement in the process

Examples: ATM, self-service gas station

Process Design in Services

Customer-as-Product
Service is provided through personal attention to the
customer

Customized service on the customer

High degree of customer contact

There is a perception of high quality

Customer becomes the central focus of the process
design

Examples: medical clinic, hair salon