OM Session 3

Operations Management
Session 3
Indian Institute of Management

Lucknow
The meaning of ‘Process’
 “ A collection of equipment, methods, people,

and systems used together to produce the
products/ services required”
 A broader interpretation than merely being

based on physical material (Conversion,
Fabrication, Assembly, Inspection, Testing etc.)
 It often runs across multiple work-areas,

departments, or other organisational entities
10/11/2023 OM I - Prof. Samir K Srivastava 2
Managerial Assessment of Processes
 Mechanics
 Economics
 Flow, Capacity and Bottlenecks
 Quality
 Uncertainties
 Flexibility/ Specialization
 Pre-requisites and Constraints

Factors Influencing Process Choices
 Volume: Average quantity of the products produced in a
manufacturing system
◼ Low volume: Turnkey project management firms such as L&T and BHEL
◼ High volume: Consumer non-durable and FMCG sector firms, Automobile,
Chemical Processing
◼ Mid-volume: Consumer durables, white goods and several industrial products
 Variety: Number of alternative products and variants of each product
that is offered by a manufacturing system
◼ Variety of product offerings is likely to introduce variety at various processes in
the system; alternative production resources, materials, and skill of workers
 Flow: Indicates the nature and intensity of activities involved in
conversion of components and material from raw material stage to
finished goods stage

Range of process technology choices
 Manual
 Mechanized
 Automated
◼ Fixed/ Hard automation
◼ Flexible/ Programmable automation

Process Strategies
• How to produce a product or provide a

service that
• Meets or exceeds customer requirements
• Meets cost and managerial goals
• Have long term effects on

• Efficiency and production flexibility
• Costs and quality

Basic Process Strategies
1. Process focus
2. Repetitive focus
3. Product focus
4. Mass customization
These basic strategies may be implemented in

many combinations
Process Focus
• Facilities are organized around specific activities or

processes
• General purpose equipment and skilled personnel
• High degree of product flexibility
• Typically high costs and low equipment utilization
• Product flows may vary considerably making

planning and scheduling a challenge
…Process Focus
Many inputs
(surgeries, sick patients,
baby deliveries, emergencies)
(low-volume, high-variety,
intermittent processes) Many departments and many routings
Arnold Palmer Hospital
Figure 7.2(a) Many different outputs

(uniquely treated patients)

Repetitive Focus
• Facilities often organized as assembly lines
• Characterized by modules with parts and

assemblies made previously
• Modules may be combined for many o/p options
• Less flexibility than process-focused facilities

but more efficient

Harley Davidson
Automobile Assembly Line
Raw Modules
materials combined
and for many
module output
inputs options
Few
modules

Process Flow Diagram (Harley Davidson)
Frame tube Frame-building Frame Hot-paint

bending work cells machining frame painting
THE ASSEMBLY LINE
TESTING Engines and
28 tests Incoming parts transmissions
From Milwaukee
on a JIT arrival
Air cleaners Oil tank work cell schedule
Fluids and mufflers Shocks and forks
Fuel tank work cell Handlebars
Wheel work cell Fender work cell

Roller testing
Crating

Product Focus
• Facilities are organized by product
• High volume but low variety of products
• Long, continuous production runs enable

efficient processes
• Typically high fixed cost but low variable cost
• Generally less skilled labour

…Product Focus
Few inputs
(corn, potatoes, water, seasoning)
(high-volume, low-
variety, continuous
process)
Frito-Lay
Output variations in size, shape,
Figure 7.2(c) and packaging
(3-oz, 5-oz, 24-oz package labeled
for each material)
…Product Focus (Nucor Steel)
D A Scrap
Nucor Steel Plant steel
Continuous caster
B
C Electric
Ladle of molten steel furnace
Continuous cast steel sheared

into 24-ton slabs
Hot tunnel furnace - 300 ft
E F
Hot mill for finishing, cooling, and coiling
H G
I

Mass Customization/ Personalization
The rapid, low-cost

production of goods and
services to satisfy
increasingly unique
customer requirements
Combines the flexibility of a process focus with the
efficiency of a product focus

Mass Customization
Many parts and component inputs
(chips, hard drives, software, cases)
Many modules
(high-volume, high-
variety)
Dell Computer
Figure 7.2(d)
Many output versions

10/11/2023 (custom PCs and notebooks)
OM I - Prof. Samir K Srivastava 18
Achieving Mass Customization
Repetitive Focus
Modular design
Flexible equipment
Modular techniques
Mass Customization
Effective Rapid
scheduling throughput
techniques techniques
Process-Focused Product-Focused
High variety, low volume Low variety, high volume
Low utilization (5% to 25%) High utilization (70% to 90%)
General-purpose equipment Specialized equipment

3D Printing Opportunities
 Economic production of complex products
 No tooling or fixture – Low setup cost
Source: http://www.gereports.com/post/116402870270/the-faa-cleared-the-first-3d-printed-part-to-fly/
3D Printing Opportunities
 Economic production of complex products
 No tooling or fixture – Low setup cost
 Different performance based on the material choice and part
design or structure at micro level
Toyota – Car Seat with Bionic

Design , Microlattice: lightest metal,
weight 7kg, down from 25kg, extraordinary mechanical
heat capacity 14.5J/K, from properties 21
35.4J/K Source: Boeing
10/11/2023 OM I - Prof. Samir K Srivastava
Applications
 Aerospace
 Defence
 Automotive
 Commercial Products
 Medical https://3dprint.com/12933/3d-printed-
castle-complete/
http://mx3d.com/projects/bridge/
 Education
 Architecture Prosthetic, hearing and dental
applications
Amrita Institute of Medical Sciences
 Consumer Products (AIMS) has been utilizing 3D printed aids
for paediatric cardiac surgeries
 Entertainment BEIJING, July 19,2016 (Xinhua) -- Chinese doctors set a new record in a
spinal operation to replace five vertebrae with 3D-printed replicas.
 Future Applications Source: http://en.people.cn/n3/2016/0720/c90000-9088372.html
http://www.chloerutzerveld.com/edib http://www.explainingthefuture.com/
le-growth-2014 bioprinting.html

Changing Process Strategy?
As process strategy determines transformation

strategy for an extended period
• Changing it is difficult and expensive
• May mean starting all over again
• Important to get it right

Relationship between volume and variety
Volume
Figure 7.1 Low Repetitive High
Volume Process Volume
High Variety
one or few units Process Focus Mass Customization
per run, high projects, job shops (difficult to achieve, but
variety (machine, print, huge rewards)
(allows carpentry) Dell Computer Co.
customization) Standard Register
Changes in
Modules
modest runs,
standardized Repetitive
modules (autos, motorcycles)
Harley Davidson
Changes in
Attributes (such as Product Focus
grade, quality, (commercial baked
size, thickness, Poor Strategy (Both goods, steel, glass)
etc.) fixed and variable Nucor Steel
long runs only costs are high)

Comparison of Processes
Process Repetitive Product Focus Mass

Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)
Small Long runs, Large Large

quantity, standardized quantity, small quantity, large
large variety product made variety of variety of
of products from modules products products
General Special Special Rapid

purpose equipment purpose changeover
equipment aids in use of equipment on flexible
assembly line equipment

…Comparison of Processes
Process Repetitive Product Mass

Focus Focus Focus Customization
(Low volume, (Modular) (High- (High-volume,
high variety) volume, low- high-variety)
variety)
Operators are Employees Operators Flexible

broadly are modestly are less operators are
skilled trained broadly trained for the
skilled necessary
customization
Many job Repetition Few work Custom orders

instructions reduces orders and require many
as each job training and job job
changes changes in instructions instructions
job because jobs
instructions standardized


variety)
Raw material JIT Raw material Raw material

inventories procurement inventories inventories are
high techniques are low low
used
Work-in- JIT inventory Work-in- Work-in-

process is techniques process process
high used inventory is inventory
low driven down
by JIT, lean
production

variety)
Units move Movement is Swift Goods move

slowly measured in movement of swiftly through
through the hours and unit through the facility
plant days the facility is
typical
Finished Finished Finished Finished

goods made goods made goods made goods often
to order to frequent to forecast made to order
forecast and stored

Process Focus Repetitive Product Mass
Focus Focus Customization
(Low volume,
high variety) (Modular) (High- (High-volume,
volume, high-variety)
low-variety)
Scheduling is Scheduling Relatively Sophisticated

complex, trade- based on simple scheduling
offs between building scheduling, required to
inventory, various establishing accommodate
availability, models from output rate custom orders
customer modules to to meet
service forecasts forecasts

(Low volume, (Modular) (High-volume, (High-volume,
high variety) low-variety) high-variety)
Fixed costs Fixed costs Fixed costs Fixed costs

low, variable dependent on high, variable high, variable
costs high flexibility of costs low costs must be
the facility low
Costing Costs usually High fixed High fixed

estimated known due to costs mean costs and
before job, extensive costs dynamic
not known experience dependent on variable costs
until after job utilization of make costing
is complete capacity a challenge

Simple Task
Beyond classroom task:

Go through the Video of iPhone Aftermarket Glass Lens Production Factory China
https://www.youtube.com/watch?v=vwEir9GI9fE

Flows in Operations Systems
 Process characteristics are largely determined by

the flow of products in the operating system
 Three types of flows occur in operating systems:

◼ Continuous
◼ Intermittent
◼ Jumbled

Continuous Flow System
 Characterised by a streamlined flow of products in the

operating system
 Conversion process begins with input of raw material at
one end, progresses through the system in an orderly
fashion to finally become finished goods at the final stage
 Production process is sequential and the required
resources are organised in stages
◼ Examples:
⚫ Several chemical processing industries such as manufacture of
petrochemicals, steel, pharmaceutical, cement and glass
⚫ In a discrete manufacturing industry high volume production of very few
varieties (such as electrical bulbs or spark plugs)
An example of continuous process industry
Logs and chips Crushing of Processing of

of wood stored logs and chips the wood
Preparatory
Drying the Refining the Cleaning &

wood pulp Wood pulp Bleaching
Pulp making
Stretching Cutting
Paper rolling Final packing
Paper Manufacturing
Process Design for Mass Production Systems
Pre manufacturing Activities
Product A Product B Product C
Machining Machining Machining
Fabrication Fabrication Fabrication
Assembly Assembly Assembly
Testing Testing Testing
Dedicated & Decentralised Manufacturing Support

Product A Machine
1
Machine
2
Machine
3
... Machine
m

Intermittent Flow System
 Characterised by mid-volume, mid-variety
products/services
 Increases the flow complexities
 Flow and capacity balancing are difficult but important
◼ Process industries use batch production methods
◼ Discrete industries use alternative methods of designing
layout issues
 Capacity Estimation is hard
 Production Planning & Control is complex

Process Design for Intermittent Flow in
Discrete Manufacturing
Pre-manufacturing activities
Gear Shafts Other

Components rotating parts
Housings
Prismatic
Sheet Components
Metal parts
Assembly & Test Assembly & Test Assembly & Test

Product A Product B Product C
Dedicated Manufacturing Support for the products

Jumbled Flow System
 Occurs on account of non-standard and complex flow patterns
characteristic in certain systems
◼ Highly customised items
◼ Customer orders for one or a few products
 Examples
◼ Turnkey project executor such as BHEL or L&T
◼ Customised manufacturing systems such as PCB fabricators,
sheet metal fabricators, tool room operators, printing and

publishing, etc.
 Operational complexity arising out of jumbled flow is high
 Discrete manufacturing with Jumbled flow uses a Job Shop
structure

Process flow in Job Shops
Machine Machine
1 3
Job 1
Machine
6
Job 3
Machine
4
Machine Machine
2 7
Job 2
Machine
5

…Jumbled Flow System
 Complex issue is capacity management
◼ Considerable time is lost due to repeated setup of processes
 Due to jumbled flow, crisscrossing of jobs in the system

results in poor visibility
◼ Problems are often hidden and build up of work in process
inventory takes place
 Cost accounting and estimation systems are crucial as

there is a constant need to quote for specific customer
orders
The Product Process Matrix
 Authored by Hayes & Wheelwright, HBS

(1979) to help matching the process type with
the product-market characteristics
 “Just as the product and market pass through a

series of major stages, so does/ should the
process used in the manufacture of the product

Product – Process Matrix
Low Volume High Volume
Multiple Products Few Major Products
Low Standardisation High Standardisation
Low Volume Higher Volume
One of a kind Commodity Products
Jumbled
Flow
Satellite Launch None
Vehicle
(Job Shop)
Disconnected
Line Flow Machine Tools
(Batch)
Connected Line
Auto electric
Flow (Assembly parts
Line)
Continuous
Flow Polyethylene
None
Source: Adapted from Hayes, R.H. and Wheelright, S.C., (1979), “Link manufacturing process and product life cycles”,
Harvard Business Review, 57 (1), 133 – 140.

Planning Premises in Process Design
 Three generic planning premises are in use in
operations management:
◼ Make-to-Stock: more amenable for systems with
fewer product varieties and high production volume
as in the case of continuous and streamlined flow
systems
◼ Assemble-to-order: useful for intermittent flow
systems catering to the mid-volume mid-variety
situations
◼ Make-to-order: organisations typically belong to
manufacturer of high product variety (jumbled flow
process systems) use this planning methodology

Complexity of Operations Management
More stages
in Production
Jumbled Flow
Intermittent Flow
Continuous Flow

Process Design Issues in Service Systems
 Customer contact signifies
◼ the extent to which customer participates in the preparation and
consumption of service
◼ the nature and intensity of interaction that the customer has with
the entities and service personnel
◼ the level of exposure that the customer has of the various facets of
the service system while the customer is receiving the service
 Degree of complexity refers to the steps and sequences in the
process measured by the number and intricacy of the steps
 Degree of divergence indicates the executional latitude or
variability of these steps and sequences
 All the three influence the service process design

Service Process Matrix
Mass Service and Professional Service
• Labour involvement is high
• Selection and training highly important
• Focus on human resources
• Personalized services
Service Factory and Service Shop

• Automation of standardized services
• Low labour intensity responds well to process
technology and scheduling
• Tight control required to maintain standards
Service Process Matrix
Degree of interaction/customisation
Low High
Degree of labour intensity
Mass Service Professional Service

Private Traditional
Commercial orthodontics
High Banking
Banking
Stockbroker Law firms
Full service
Boutiques Digitised
Retailing orthodontics
Low Service Factory Service Shop

Law Clinics
Stockbroker
Limited service
Warehouse and Fine dining
Catalog stores restaurants
Fast food
restaurants
Source: Adapted from Schmenner, R.G. (1986), “How can service business survive and prosper?”, Sloan
Management Review, Spring 1986, 21 – 32.
Summary
 Volume, variety and flow exert significant influence on process
design in organizations.
 Process industries and mass production systems generally have a
streamlined flow of products.
 Mid-volume and mid-variety manufacturing systems have
intermittent flow. Capacity estimation is difficult in such systems
compared to a continuous flow systems.
 Capacity estimation and scheduling of jobs are quite difficult in
jumble flow systems. Therefore operations management
complexity is the highest here.
 A process – product matrix depicts the relationship between
process flow characteristics and volume of production.
 Customer contact, degree of diversity and degree of complexity
impact process design in service systems
Linear flows are being replaced by star-shaped flows
Source: Michael Valentin, 2019


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Operations Management

Indian Institute of Management

 “ A collection of equipment, methods, people,

 A broader interpretation than merely being

 It often runs across multiple work-areas,

10/11/2023 OM I - Prof. Samir K Srivastava 3

10/11/2023 OM I - Prof. Samir K Srivastava 5

10/11/2023 OM I - Prof. Samir K Srivastava 6

• How to produce a product or provide a

• Have long term effects on

10/11/2023 OM I - Prof. Samir K Srivastava 7

These basic strategies may be implemented in

• Facilities are organized around specific activities or

• General purpose equipment and skilled personnel

• High degree of product flexibility

• Typically high costs and low equipment utilization

• Product flows may vary considerably making

Arnold Palmer Hospital

Figure 7.2(a) Many different outputs

10/11/2023 OM I - Prof. Samir K Srivastava 10

• Facilities often organized as assembly lines

• Characterized by modules with parts and

• Modules may be combined for many o/p options

• Less flexibility than process-focused facilities

10/11/2023 OM I - Prof. Samir K Srivastava 11

Automobile Assembly Line

10/11/2023 OM I - Prof. Samir K Srivastava 12

Frame tube Frame-building Frame Hot-paint

Fluids and mufflers Shocks and forks

Fuel tank work cell Handlebars

Wheel work cell Fender work cell

10/11/2023 OM I - Prof. Samir K Srivastava 13

• Facilities are organized by product

• High volume but low variety of products

• Long, continuous production runs enable

• Typically high fixed cost but low variable cost

• Generally less skilled labour

Continuous cast steel sheared

Hot mill for finishing, cooling, and coiling

10/11/2023 OM I - Prof. Samir K Srivastava 16

The rapid, low-cost

Combines the flexibility of a process focus with the

efficiency of a product focus

10/11/2023 OM I - Prof. Samir K Srivastava 17

Many output versions

10/11/2023 OM I - Prof. Samir K Srivastava 19

Toyota – Car Seat with Bionic

 Future Applications Source: http://en.people.cn/n3/2016/0720/c90000-9088372.html

10/11/2023 OM I - Prof. Samir K Srivastava 22

As process strategy determines transformation

• Changing it is difficult and expensive

• May mean starting all over again

• Important to get it right

10/11/2023 OM I - Prof. Samir K Srivastava 23

10/11/2023 OM I - Prof. Samir K Srivastava 24

Process Repetitive Product Focus Mass

Small Long runs, Large Large

General Special Special Rapid