Lecture 3 - Process Management

Question 1

What is meant by “Process Strategy”?

Answer 1

How to produce a product or service that meets or exceeds customer requirements, costs or managerial goals.

Question 2

What are the 4 basic strategies of “Process Strategy”?

Answer 2

1. Process Focus
2. Repetitive Focus
3. Product Focus
4. Mass Customization

Question 3

What are the 7 characteristics of “Process Focus”?

Answer 3

1. Products - SMALL quantity and a LARGE variety
2. Operators - Broadly Skilled
3. Instructions - For each job
4. Inventory - HIGH
5. Finished Goods - Made to order and NOT to store
6. Scheduling - Is complex
7. Costs - FC are LOW and VC are HIGH

Arnold Palmer Hospital

Question 4

What are the 7 characteristics of “Repetitive Focus”?

Answer 4

1. Products - Long runs, a standardized product from modules
2. Operators - Moderately trained employees
3. Instructions - Few Changes
4. Inventory - LOW
5. Finished Goods - Made to frequent forecasts
6. Scheduling - Is a routine
7. Costs - FC are dependent on the flexibility of the facility

Harley-Davidson

Question 5

What are the 7 characteristics of “Product Focus”?

Answer 5

1. Products - LARGE quantity and SMALL variety
2. Operators - Less broadly skilled
3. Instructions - Standardized job instructions
4. Inventory - LOW
5. Finished Goods - Are made to a forecast and stored
6. Scheduling - Is a routine
7. Costs - FC are HIGH and VC are LOW

Frito-Lay

Question 6

What are the 7 characteristics of “Mass Customization”?

Answer 6

1. Products - LARGE quantity and LARGE variety
2. Operators - Flexible
3. Instructions - Customized orders that require many job instructions
4. Inventory - LOW relative to the value of the product
5. Finished Goods - Are Build-to-Order (BTO)
6. Scheduling - Sophisticated scheduling that accommodates custom orders
7. Costs - FC tend to be HIGH and VC are LOW

Dell Computers

Question 7

What is meant by “Linking Manufacturing Processes”?

Answer 7

The idea here is that we use different kinds of Process Strategies to produce a product. Can go from Repetitive Focus to Mass Customization for instance, depending on which part of the product that should be produced.

Question 8

In terms of Process Strategy, what is meant by “Flexibility”?

Answer 8

Flexibility is the ability to respond with little penalty in time, cost or customer value.

Question 9

What is meant by “Process Analysis and Design (PAD)”, what are the 4 different methods suggested and how does each of the work?

Answer 9

PAD is about what can we do/ look at in the process in order to make the process shorter or more efficent.

1. Flowchart - Is a picture of each step of the process presented in a sequential order.
2. Time-Function Mapping - Time-Function Mapping is a process in a flow diagram with time added on the horizontal axis.
3. Value-stream Mapping - is a lean-management method for analyzing the current state and designing a future state for the series of events that take a product or service from the beginning of the specific process until it reaches the customer.
4. Service Blueprint - A service blueprint is a diagram that visualizes the relationships between different service components

(Definitions taken from different sources)

Question 10

What are the 8 different methods for “Improving Service Productivity?”

Answer 10

1. Separation
2. Self-service
3. Postponement
4. Focus
5. Modules
6. Automation
7. Scheduling
8. Training

SSP-F-MAST

(taken from slide 27-28)

Question 11

What is meant by “Capacity”?

Answer 11

1. The THROUGHPUT, or the numbers of units a facility can hold, receive or store, or produce in period of time.
2. Determines the FC and if Demand meets produced Supply.

Question 12

Capacity Management can be divided into a long-term and short-term perspective, which ones and what do they mean?

Answer 12

1. LT: Capacity Planning - Economies of scale, timing and sizing strategies, and has a systematic approach.
2. ST: Constraint Management - Theory of Constraints, management of BOTTLENECKS, Product mixed decisions based on Bottleneck, line process constraints.

Question 13

What is “Utilization” and how is it calculated?

Answer 13

Utilization - Is the percent of design capacity actually achieved. How we take use of our input when making our output. Wants this to be as high as possible.

Formula: {Average Output Rate / Maximum Capacity Rate} * 100%.

Question 14

What is meant by “Design Capacity” and “Effective Capacity”?

Answer 14

Design Capacity: This is the maximum theoretical output of the system.

Effective Capacity: This is the capacity a firm expects to achieve given current operating constraints.

Question 15

In terms of Capacity, what is meant by “Efficiency”?

Answer 15

This is the percent of effective capacity actually achieved.

Efficiency = Actual output / effective capacity.

Question 16

In terms of Efficiency, what could happen as the organization becomes larger?

Answer 16

“The larger an organization becomes the more the opportunities for inefficiency opens up” - slide. 36

Question 17

What is meant by a “Capacity Cushion (CC)”?

Answer 17

The amount of reserve capacity a process uses to handle a sudden increase in demand or temporary losses of production capacity.

Formula: CC = 100% - Average Utilization Rate

Question 18

In terms of “Capacity Timing and Size” we have mentioned 2 strategies, what’s their name and what do they highlight?

Answer 18

1) Expansionist Strategy: Based on forecasts we exepct and increased demand in the future leading to new capacity being added now to be ready to meet this demand in the future.
2) Wait-and-see Strategy: Here, you want to wait a little bit closer to when the demand is expected to change. Why this is the case is because creating new capacity can be expensive for many firms and this passive approach enables them to get a clearer picture of the future at the cost of losing time of preparations.

Question 19

In terms of “Theory of Constraints”, what is meant by the following:

1) Throughput time -
2) Cycle time -
3) Takt time -

Answer 19

1) Throughput time - Is the time it takes for a product to go through production from start to end, with no lead time.
2) Cycle time - determines the capacity of a process in sense of how much of a unit/or how many units can be processed during the cycle of a part of the process or the entire process.
3) Takt time - Is the maximum time within which all operations should be completed as to meet the demand.

Question 20

What is meant by “Theory of Constraints”?

Answer 20

Theory of Constraints is about a systematic management approach that focuses on actively managing those constraints that impede a firm’s progress towards its goal. Handling bottlenecks.

Question 21

What are the 7 key principles of “Theory of Constraints”?

Answer 21

1. Focus on balancing flow instead of capacity
2. Maximising the output and efficiency of every resource may not maximize the throughput for the entire system.
3. An hour lost on at a bottleneck, due to constraints, is an hour lost for the entire process.
4. Inventory is only needed in front of bottlenecks and in front of assembly and shipping points.
5. Bottleneck flows = Market demand
6. Activating a non-bottleneck resource is NOT the same as utilizing a bottleneck resource.
7. Every capital investment must consider the impact on the overall throughput, inventory and operating expenses.

Question 22

What is meant by the “Drum-Buffer-Rope”-system?

Answer 22

A planning and control system that regulates the flow of work-in-process materials at the Bottleneck or Constrained Capacity Resource (CCR) in a productive system.

Drum = Bottleneck sets the beat of the process.  
Buffer = The time of early flows into the bottleneck, protection against disturbance of the flow.
Rope = The Bottleneck controls the timing of the release of material in the throughput.