Process Management MGT 3303 Michel Leseure Toyota Production

Process Management MGT 3303 Michel Leseure

Toyota Production System Manufacturer TGW (Things gone wrong) in First Eight Months per 100 cars Chrysler 285 GM 256 Ford 214 Japanese (avg) Toyota 132 55 Notion of Process Capital MGT 3303 Michel Leseure

Process Design • Process design is about preparing production – A process is a sequence of steps performed for a given purpose. – More simply stated, process is what you do. The process integrates people, tools and procedures together – More or less integrated with the product design stage: this integration is a key challenge! MGT 3303 Michel Leseure

Process Example MGT 3303 Michel Leseure

Overview of Process Management MGT 3303 Michel Leseure

Process Strategy • Process volume & Standardisation • Capital Intensity – The extent to which the selected process is mainly dependent on capital investment (machinery, fixed assets, automation) or not • Process flexibility – The ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions • Vertical integration – The degree to which a firm will handle the whole supply chain process or only a certain stage of the supply chain (e. g. assembly) • Customer involvement MGT 3303 Michel Leseure

Process Volume & Standardisation Source: Adapted from Robert Hay and Steven Wheelwright, Restoring Competitive Edge: Competing through Manufacturing (New York: John Wiley & Sons, 1984). MGT 3303 Michel Leseure

Capital Intensity • Process Selection with Break-Even Analysis – For a single process, • find the breakeven point – Among several processes, • find the point of indifference MGT 3303 Michel Leseure

Break-Even Analysis Total cost = total fixed cost + total variable cost TC = cf + vcv Total revenue = volume x price TR = vp Total profit = total revenue - total cost Z = TR - TC = vp - (cf + vcv) where, cf = fixed cost v = volume cv = variable cost per unit p =price per unit MGT 3303 Michel Leseure

Solving For Break-Even Point TR = TC vp = (cf + vcv) vp - vcv = cf v(p - cv) = cf v = cf p - cv MGT 3303 Michel Leseure

Break-Even Example Fixed cost Variable cost Price cf = $2, 000 cv = $5 per raft p = $10 per raft cf v = = 2000 p - cv 10 - 5 = 400 rafts MGT 3303 Michel Leseure

Break-Even Graph $5, 000 Dollars $4, 000 $3, 000 $2, 000 TC TR $1, 000 $0 Units 400 Break even point © 1998 by Prentice-Hall Inc Russell/Taylor Oper Mgt 2/e MGT 3303 Michel Leseure

Choosing Between Two Processes • Find volume where – Cost of process A = Cost of process B • Above point of indifference, choose process with lowest variable cost • Below point of indifference, choose process with lowest fixed cost MGT 3303 Michel Leseure

Point Of Indifference Process A Process B $2, 000 + $5 v = $10, 000 + $2 v $3 v = $8, 000 v = 2, 667 rafts Below 2, 667 rafts, choose A Above 2, 667 rafts, choose B MGT 3303 Michel Leseure

Graphical Solution to Process Selection B A MGT 3303 Michel Leseure

Process Flexibility • Product flexibility: – the ability to introduce a new product whilst incurring only a minor reconfiguration of plant and equipment. • Mix flexibility: – the ability to simultaneously produce two different versions of a product, or two different products. • Volume flexibility: – the ability to process simultaneously on the same production line large and low volume series without any major cost differences. • Delivery flexibility: – the ability to change scheduled delivery times when needed without generating too many delays and too many costs. MGT 3303 Michel Leseure

Process Flexibility • Investment in process flexibility challenge the volume/standardisation trade-off • Allows firms to operate away from the diagonal of the product process matrix MGT 3303 Michel Leseure

Make-Or-Buy Decisions 1. Cost 2. Capacity 3. Quality 4. Speed 5. Reliability 6. Expertise MGT 3303 Michel Leseure

Process Design/Selection • Process selection • Specific equipment selection • Process plans • Process analysis MGT 3303 Michel Leseure

Documents for Process Plans • Blueprints - Drawings of product design • Bill of Materials - List of materials and parts • Assembly Diagram - Drawing of how parts are combined to form final product • Assembly Chart (Product Structure Diagram) Top down view of product components • Operations Process Chart - detailed list of operations to make product • Routing Sheet - ordered list of m/c’s MGT 3303 Michel Leseure

Product Structure Diagram (Assembly Chart) Packaged Hand-Vac Upholstery tool Crevice tool Forward housing assembly Hand-Vac Dusting tool Screw and lock washer assembly Rear housing assembly Package MGT 3303 Michel Leseure

Retaining ring Cable Bulb holder Make base Assemble base and feet (sub-assembly 1) Make feet (4) Assemble sub-assemblies 1&2 (sub-assembly 3) Shade Stem Product Diagram Make stem Inspect for mis-wiring Base Cut cable Purchase bulb holder Feet Final inspection Purchase shade Assemble lamp (final assembly) Assemble cable, Make retaining stem and bulb ring holder (sub-assembly 2) MGT 3303 Michel Leseure

Operations Process Chart Part name Part no. 2410 Usage Table Assembly No. Table leg 437 Oper No. Description Dept. 10 Saw to rough length 041 20 Plane to size 043 30 Saw to finished length 40 Measure dimensions 50 Sand 052 Machine Time Tools 041 051 MGT 3303 Michel Leseure

Process Flowchart Symbols Operations Inspection Transportation Delay Storage MGT 3303 Michel Leseure

Process Flowcharts MGT 3303 Michel Leseure

Process Analysis • Continuous improvement – Basic tool - process flowchart, process analysis – Incremental, continuous pressure to improve • Reengineering – Basic tool - process map – Radical redesign approach MGT 3303 Michel Leseure

The Reengineering Process Strategic directives Benchmark data Design Principles Key Performance Measures Customer requirements data Goals & specifications for process performance Baseline Data High level process map Innovative Ideas Detailed process map Model Validation Pilot study of new design Full-scale implementation MGT 3303 Michel Leseure

High-level Process Map Input Subprocess Output Performance Goal MGT 3303 Michel Leseure

Design Principles For Reengineering 1. Organize around outcomes, not tasks 2. Capture information once, at the source 3. Centralize resources with info. tech. 4. Link parallel subprocesses 5. Design to do work right the first time 6. Remove complexity 7. Identify information & technology levers MGT 3303 Michel Leseure

Techniques For Generating Innovative Ideas • Vary entry point to a problem • Draw analogies • Change your perspective • Try inverse brainstorming • Chain forward as far as possible • Use attribute brainstorming MGT 3303 Michel Leseure

Technology Management MGT 3303 Michel Leseure

Automated Material Handling • Conveyors • Robots • Automated guided vehicle systems (AGVS) • Automated storage & retrieval systems (ASRS) MGT 3303 Michel Leseure

Flexible Manufacturing Systems (FMS) • Programmable machine tools • Controlled by common computer network • Combines flexibility with efficiency • Reduces setup & queue times MGT 3303 Michel Leseure

Flexible Manufacturing System Computer control room Tools Conveyor Pallet CNC Machine Load Parts Unload Terminal Finished goods

Robots • Programmable manipulators that follow specified paths • Better than humans for – – – hostile environments long hours consistency MGT 3303 Michel Leseure

Components Of CIM CAD CAE TQM JIT/ kanban DSS/ES/ AI LAN, TOP, satellites NC/CNC/ DNC DFM Product design Bar codes, EDI MRP GT Systems mgmt Manuf FMS Robotics CAD/CAM Process planning CIM AGV, ASRS IGES, PDES CAPP Cellular manuf MAP, STEP Automated Cells inspection & centers MGT 3303 Michel Leseure

Adoption Of Technology • Technology Readiness • Need well-designed products & efficient processes • Technology Design • Know what to automate • Technology Selection • Choose the right level • Technology Integration • Have a strategy for incremental automation MGT 3303 Michel Leseure

Suggested Homework • Problem 4. 1, 4 -2, 4 -3, 4 -4, 4 -5, 4 -6 p. 153 • Yellow Plates Process Mapping exercise MGT 3303 Michel Leseure