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Report
Process Choice and Layout
Decisions in Manufacturing and
Services
Chapter 3
Manufacturing Process Decisions
 Consider the impact of people, facilities and
physical layouts, and information systems
working together.
 Consider the effect of the manufacturing
processes on the overall business strategy.
 Consider the impact of many different types of
manufacturing processes working together.
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Selecting a Manufacturing Process
 What are the physical requirements of the company’s
product?
 How similar to one another are the products the
company makes?
 What are the company’s production volumes?
 Where in the value chain does customization take
place (if at all)?
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1. What are the strategic decision
factors for process requirements?
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General Layout Alternatives
 Product-oriented layout
 Process-oriented layout
 Cellular layout
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General Layout Decisions
• The product-oriented layout
– Provides resources in a fixed sequence
– Matches the sequence of steps required to produce a
product or service
– Common in high-volume manufacturing
Product Oriented Layout
Advantages
Efficient production of
standardized goods and services
High processing speed
Low cost per unit
Disadvantages
Lack of flexibility or
customization
Employee boredom/
dissatisfaction
Quality problems
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Process Oriented Layout
• Process-oriented Layout
– Organized by function
– Processing steps can be completed in any sequence
– Products or customers can take any “route” necessary.
Process Oriented Layout
Advantages
Flexibility
and customization
Disadvantages
Higher cost per unit
Higher skilled, high cost employees
Transport/wait time between departments
Less consistency
Cellular Layouts
• Cellular layouts
– A compromise of product and process layouts
– Create “families” of products with similar process requirements
– A “cell” contains all resources needed for family
Cellular Layouts
Advantages
Flexibility greater than a
product-oriented layout
Less costly than a processoriented layout
Less material transport/wait
Fewer changeovers
Disadvantages
Duplication of resources
Impact of Volume Requirements
 Project – Unique, one-of-a-kind, products or
customers. Generally large in size (building a bridge,
installing a software system, implementing a major
improvement effort)
 Job Shop – Predominantly manufacturing, high
customization and flexibility, but higher volume than
project.
 Batch Production – Groups of identical products or
customers processed together through one step and then
moved together to the next step. More limited product
variety, higher production volume.
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Process Types (continued)
 Assembly Line – Narrowly defined processes,
made up of equipment with limited flexibility.
Much higher volume. Still the possibility of some
flexibility.
 Continuous Flow (Repetitive)– Equipment and
workstations dedicated to a single thing. Very
high volume. Very low flexibility. Best chance
for automation.
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Process flow selection and the
Product Process Matrix
Tend to be
processoriented
Can be either
Tend to be
productoriented
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Demand Linkages
 Manufacturers match output to demand in different ways
 Make-to-order (MTO)
 Process activated in response to an actual order
• May be either standard or custom product
 WIP and finished goods inventory kept to a minimum
 Tends to have longer response time
 Make-to-stock (MTS)
 Process activated to meet expected or forecast demand
 Customer orders are served from target stocking level
 Shorter lead time for stocked items
• MUCH longer for out of stock items
• Risk of obsolescence, shrink, etc.
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Demand Linkages (Continued)
 Assemble-to-order (ATO)
 Partially manufactured and held in unfinished state
 Customer order dictates final configuration
 Quicker response than MTO; More flexible than MTS
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Demand Linkages
 Engineer-to-order (ETO) – Products that are designed and
produced from the start to meet unusual customer needs or
requirements.
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Choices for Service Providers:
The Service System Design Matrix
• Customer contact & sales opportunity versus efficiency.
Exhibit 4.7 Service System Design Matrix
The Product-Process Matrix
Based on R. Hayes and S. Wheelwright, Restoring Our Competitive Edge: Competing through Manufacturing (New York: Wiley, 1984)
Figure 3.5
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Customization in the Supply Chain
Figure 3.6
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Law of Variability
The greater the random variability either
demanded of the process or inherent in the
process itself or in the items processed, the less
productive the process is.
© Schmenner and Swink (1998)
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Customization in the Supply Chain
 When customization occurs early in the
supply chain:
 Flexibility in response to unique customer needs
will be greater.
 Lead times to the customer will tend to be longer.
 Products will tend to be more costly.
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Customization in the Supply Chain
 When customization occurs late in the
supply chain:
 Flexibility in response to unique customer needs
will be limited.
 Lead times to the customer will tend to be shorter.
 Products will tend to be less costly.
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2. What are the three dimensions
of service manufacturing
processes?
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How different services are
organized and managed
 The service package
 The degree of customization
 The level of customer contact
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The service package
 Includes all value-added physical and
intangible activities that a service
organization provides to the customer.
 The greater the emphasis on physical activities, the more
attention will be directed to capital expenditures, material
costs, and other tangible assets.
 The greater the emphasis on intangible activities, the more
critical are the training and retention of skilled employees
and the development of the firm’s knowledge assets.
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Service customization
 Ranges from highly customized to
standardized.
 As the degree of customization increases, the
service package becomes less predictable and more
variable.
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Customer contact
 Differs from customization – relates to the
importance of front-room or back-room
operations.
 Front Room – The physical or virtual point where
the customer interfaces directly with the service
organization.
 Back Room – The part of a service operation that
is completed without direct customer contact.
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Front Room vs. Back Room
 Front room – what the
customer can see
 Back room – what the
customer does not see
 Managed for flexibility and
customer service
 Managed for efficiency and
productivity
Customer lobbies, bank teller,
receptionist
Package sorting, car repair,
blood test analysis, accounting
department
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Managerial Challenges
in Service Environments
Table 3.2
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3. Define service blueprinting.
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Service Blueprinting
 Service Blueprinting - A specialized form of
business process mapping that lays out the
service process from the viewpoint of the
customer and parses out the organization’s
service actions based on:
 The extent to which an action involves direct
interaction with the customer.
 Whether an action takes place as a direct response
to a customer’s needs.
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Service Blueprinting
Processes
 Customer actions
 Onstage activities
 Backstage activities
 Support
Separations
 Line of interaction
 Line of visibility
 Line of internal
interaction
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Service Blueprints
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4. What are the four layers of
service blueprinting?
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Service Blueprinting Template
Figure 3.9
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5. Define design capacity and
protective capacity.
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Design vs. Protective Capacity
 Design Capacity is the capacity a facility is
designed to accommodate on an ongoing basis.
 Protective Capacity is a layer of capacity
above that which is absolutely required to meet
known demand.
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