Process selection

Operations Management

Chapter - 5
Process Selection and Facility Layout
Niranjan Sapkota

CAB

Product Design
 Product design defines a product’s characteristics of:
 Appearance
 Materials
 Quality
 Cost
 Dimensions
 Tolerances
 Performance standards

 Process Selection – the development of the process necessary to
produce the designed product.

Changing customer Cost effectiveness
preferences

Need of New
Product/
technology

Productivity
Competition

Product/Service Design
Product/service design directly affects:
• Product/service quality
• Production/delivery cost
• Customer satisfaction

Customer Competitor

Ideas of
Top Management New Sales
Product

Marketing Research and Development

Keeping firm’s Production Design and development
facility Up to date Of firms products and
facilities

Modification of the present Entire process has to be
Facility and process Designed from the sketch
(for the operating firm) Operation Manager (new company or entirely
New product)

Research for the Product

Pure Research Applied Research

 Totally new research for new  Translation of the concepts to
conceptual product Products in terms of man, machine,
 Needs huge money Material, method and information
 Concepts gathered from research  Applicable in the following process
institutes, universities  The design of new products
 The redesign of existing product
 The identification of new uses for
existing product
 The improvement of packaging of
existing product

Interaction of Research

Market Research

Product
Pure Applied
configura Pilot run
research research
tion

Production process

Product Life Cycle

The study of pattern and process od product life cycle helps in determining facilities
Labor, capital and management system needed in each stage

Operation issues in product life cycle
Introduction Growth Maturity Decline

Product variety Different Increasing Emergence of Commodity
varieties Standardization dominant characteristics
design

Product Low volume Increasing High volume High volume
volume volume

Industry Small Fallout and Few large Survivors
structure competitors Consolidation companies

Form of Product varieties Product quality Dependability Price
competition and availability And price

Product Development Process
 Need identification
 Feasibility study
 Advance design
 Detailed engineering and development
 Process design and development
 Product evaluation and improvement
 Product use and support

Need identification
• Starts with identification
of customer need
• Should satisfy customer
needs, requirements and
expectation
• Pure research and applied
research is used

Product planning(feasibility study)

Preliminary
activities
Market analysis Conceptual
Alternative concepts of design
product  Shape
Operations requirements  Size
Design criteria and  Retail price
priorities  Product
Logistic requirements for reliability
producing, distributing  Product
and function
maintaining the product in
the market.

Advance Design
 Product concept or design concept from
feasibility concept examined technically
 Concerned with developing and evaluating the
design alternatives if necessary

Product Development and Engineering
 Analyze experiments and collect data for product
development
 The developed product should meet the following
objectives
 Functionality
 Reliability
 Maintainability
 Manufacturing
 Computer analysis, simulations can be used for
multiple tests
 Design of product with required drawing, working
prototype associated with required documents is
developed

Process design and developments
 Prepare plans for
material acquisition
Productions
Warehousing
Transportation
Distribution
 Production planning, controlling and HR
system also developed

Production evaluation and
improvements
 Product performance in the market
 Short falls and difficulties in the production
 Result of other researches

Product use and support
Customer needs and expectations can be
enhanced by
 Educating the people on the application of the
product
 Provide warranty, repair and after sale service
 Improve the design of product as required

Tools to Improve Speed to Market
• Computer-Aided Design/Computer-Aided
Manufacturing (CAD/CAM)
– Engineers, using CAD/CAM, can generate many
views of parts, rotate images, magnify views, and
check for interference between parts
– Part designs can be stored in a data base for use
on other products
– When it is time for manufacturing, the product
design is retrieved, translated into a language that
production machinery understands, and then the
production system can be automatically set up.

Tools to Improve Speed to Market
Product/
• Simultaneous Service Ideas
(Concurrent) Continuous
Engineering Economic and Technical Interaction
Feasibility Studies

Product/Service Design Production Process Design

Produce and Market
New Product/Service

Improving the Design
of Existing Products/Services
• Focus is improving performance, quality, and cost
• Objective is maintaining or improving market
share of maturing products/services
• Little changes can be significant
• Small, steady (continuous) improvements can add
up to huge long-term improvements
• Value analysis is practiced, meaning design
features are examined in terms of their
cost/benefit (value).

Designing for Ease of Production
• Ease of Production (Manufacturability)
– Specifications - Precise information about the
characteristics of the product
– Tolerances - Minimum & maximum limits on a
dimension that allows the item to function as
designed
– Standardization - Reduce variety among a group of
products or parts
– Simplification - Reduce or eliminate the complexity
of a part or product

Designing for Quality
 Crucial element of product design is its impact on
quality
 Quality is determined by the customer’s
perception of the degree of excellence of the
product/service’s characteristics
 conformance to specification
Value
Fitness for use
Support
Psychological impression
 Atmosphere image or aesthetics

Designing and Developing New
Services
Three general dimensions of service design are:
• Degree of Standardization of the Service
– Custom-fashioned for particular customers or
basically the same for all customers?
• Degree of Customer Contact in Delivering the
Service
– High level of contact (dress boutique) or low level
(fast-food restaurant)?
• Mix of Physical Goods and Intangible Services
– Mix dominated by physical goods (tailor’s shop) or
by intangible services (university)?

Designing and Developing New
Services
• Differences Between New Service and New
Product Development

– Unless services are dominated by physical goods, their
development usually does not require
engineering, testing, and prototype building.

– Because many service businesses involve intangible
services, market sensing tends to be more by surveys
rather than by market tests and demonstrations.

Major Factors Affecting Process
Designs

 Nature of product/service demand
 Degree of vertical integration
 Production flexibility
 Degree of automation
 Product/Service quality

Nature of Product/Service Demand
 Production processes must have adequate
capacity to produce the volume of the
products/services that customers need.
 Provisions must be made for expanding or
contracting capacity to keep pace with
demand patterns.
 Some types of processes are more easily
expanded and contracted than others.
 Product/service price affects demand, so
pricing decisions and the choice of processes
must be synchronized.

Degree of Vertical Integration
 Vertical integration is the amount of the
production and distribution chain that is
brought under the ownership of a company.
 This determines how many production
processes need to be planned and designed.
 Decision of integration is based on
cost, availability of
capital, quality, technological capability, and
more.
 Strategic outsourcing (lower degree of
integration) is the outsourcing of processes in
order to react quicker to changes in customer
needs, competitor actions, and technology.

Production Flexibility
 Product flexibility -- ability of the production
(or delivery) system to quickly change from
producing (delivering) one product (or service)
to another.
 Volume flexibility -- ability to quickly increase
or reduce the volume of product( or service)
produced (or delivered).

Degree of Automation
 Advantages of automation
 Improves product quality
 Improves product flexibility
 Reduces labor and related costs
 Disadvantages of automation
Equipment can be very expensive
Integration into existing operations can be difficult

Product/Service Quality
 Old viewpoint – high-quality products must be
made in small quantities by expert craftsmen
 New viewpoint – high-quality products can be
mass-produced using automated machinery
 Automated machinery can produce products
of incredible uniformity
 The choice of design of production processes
is affected by the need for superior quality.

Process Flow Structure
 Project structure, where a single project is planned with a fixed end date,
such as building a house

 Job shop structure, where each flow will be similar but slightly different,
such as poster printing

 A batch process, where each flow produces a batch of identical products,
such as baking

 An assembly line structure, where the flow produces a continuous
supply of fixed goods, such as a car assembly line

 Continuous flow structure, where a continuous supply of finished goods
is produced, such as in an oil refinery

factors differentiating the different
process structures
 The flow – are there a large number of paths which
activities can take, or is there only one possible sequence
of activities.
 Flexibility – will changing the output of the process, in
terms of volume and products, alter the performance and / or
cost of the process
 Range of products – can the process produce lots of
different products, or is it designed to only produce one
specific product.

 Capital investment – does the process require
investments in expensive specialist equipment or can it use
general equipment that the firm may already own or can rent
 Variable costs – how high is the cost of producing each unit
 Labour requirements – how much labour input is
required, and how skilled must the laborers be
 Volume – can the process produce lots of products, or will it
only create a few, or possibly one, end product

Project Structure/technology
 Production of unique nature of
products like
building, bridge, dam, roads etc.
 Product cant be standardized and
transported from one place to other
 Requires specialized technology
with high flexibility.
 Skilled manpower
 Production of unique nature of
product to meet customer demand.

Job shop structure
 Small batches of different types of products in different sets
or sequences
 Variety of custom designed products in small volumes
 Production is generally to meet the order s of customers
rather than for stock.
 Less certainty in the nature , specification and quality of
goods to be produced..
 Difficult to make planning of resources , scheduling of
operation and controlling activities.
 Standardization of raw material, process , products and other
facilities is difficult.

A batch process
 Improved form of job shop technology in the aspect of
standardization of products
 Suitable when business has relatively stable line of products
 Production is in periodical batches either to meet customer
order or for stock.
 Less difficult for planning , controlling and scheduling
production process compared to job shop technology.
 Eg. Electronic device manufacturing

Assembly line process
 When products are relatively stable, high volume with limited
variety assembly line technology is suitable
 Specialized equipment, skilled manpower, and management
systems are used and developed.
 Production of limited range and high volume of products.
 Less flexible compared to job shop and batch technology.
 Eg. TV, Motorcycle

Continuous flow Process
 When products are highly standardized and large volumes are
produced for stock , continuous flow technology is used
 Uses standardized materials, machines, and equipment in
continuous flow to produce high volume of standardized
products .
 It is capital intensive technology
 Eg . Soap, noodles

Process life cycle
Manufacturing cost per unit

Job shop Batch Assembly continuous

Startup Growth Maturity commodity

Designing of service & service process
Technology
Meaning and nature of service
 Service are experienced not consumed
 Requires high customer contact
 Requires effective management of staffs, marketing and
operation
 Service cant be inventoried

Product dominance Service dominance

salt

Neck tie

car

Fast food

Air travel

theatre

nursing

Teaching

Service business and internal service
Service Business: management of organization whose
basic objective is to interact with customers to render services.
Facility based: business where customer must visit the
service facility to get service from organization
Field based: concerned with providing service in the
customer’s location and environment
Internal service: refers to services to other departments of
the same organization. Therefore customers of internal service
are other departments. Eg.
Accounting, marketing, maintenance, research and
development…

Designing of service
 Identification of target market
who are the customers? where is its market? What do customers
want?
 Service concept
How our service fulfills customer needs? What are service types? How
it is different from others?
 Service strategy
What is service policy? What are the priorities? what are the service
packages and focus of service?
 Service delivery system
What are the actual processes? What are the systems and facilities?
Who are employees and what should be their skills and ability?

Service Process Technology
Depends on two main factors..
 Customer contact
during designing or customizing of service. Eg. Building
a new building
during creating or consuming of service. Eg. Hair styling
 Labor vs Capital intensiveness
 Teaching, nursing etc are labor intensive where training
and development of employees vital for quality service
 24 hour ATM/ vendor machines are capital intensive

On the basis of customer contact and labor intensiveness service
process technology can be divided into four categories..

 Quasi manufacturing process technology
 Mass service process technology
 Custom shop service technology
 Professional service process technology

Quasi- Manufacturing Process
Technology
 Requires low customer contact and capital
intensive technology to render the service.
 Offers rigid and standardized service with
reliable delivery schedule.
 Eg. Post Office, Telebanking

Mass service process technology
 Labor intensive technology.
 Rigid in nature providing standardized service
to the customer.
 This technology requires training and
development and schedules of human
resource for providing quality and effective
service
 Gg. Teaching, live Entertainment programs

Custom shop service technology
 Provides customized service.
 Highly professional staffs and capital intensive
technology for providing service.
 Flexible but require high capital investment
 Eg. Hospitals, Chartered travel services

Professional service process
Technology
 Professional staffs provide customized service
to customer through intensive interaction.
 Professionals are governed by professional
ethics, norms, organizational rules
 Professional skills are highly flexible relating to
customer need.
 Eg. Legal counseling, medical diagnosis.

Service Process Technology

Low customer contact High customer contact
Quasi manufacturing Custom shop technology
 Charter travel service
intensive

technology
Capital

 Postal service  Long distance telephone
 Check processing service
 Automated warehousing  Medical treatment

Mass service technology Professional service
intensive

 Teaching  Legal counseling
Labor

 Live entertainment  Medical diagnosis
 Cafeteria  Tutoring

Rigid process technology Flexible process technology

Research Topics
 Service automation
 Flexible manufacturing system
 Computer integrated manufacturing

What is Facility Layout
 Location or arrangement of everything within
& around buildings
 Determines long-run efficiency of operations
 Helps achieve a strategy that supports
differentiation, low cost or quick response

55

Strategic Importance of Layout
Proper layout enables:
 Higher utilization of space, equipment and people
 Improved flow of information, materials, or people
 Improved employee morale and safer working
conditions
 Improved customer/client interaction
 Flexibility to change--use small, movable or modular
equipment; etc
56

The Need for Layout Decisions
Inefficient operations
For Example: Changes in the design
High Cost of products or services
Bottlenecks

Accidents
The introduction of new
products or services

Safety hazards

The Need for Layout Design (Cont’d)
Changes in
environmental Changes in volume of
or other legal output or mix of
requirements products

Morale problems
Changes in methods
and equipment

Process selection

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