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4.C. Repetitive Focus & 4.D. Product Focus
(Marta Alarcón, Jorge Moreno & Pablo Díaz)
4.3. Repetitive Focus
What are the main characteristics of Repetitive Focus?
- Facilities often organized as assembly lines
- Characterized by modules with parts and assemblies made previously
- Modules may be combined for many output options
- Less flexibility than process-focused facilities but more efficient
It is a product-oriented process that uses modules (parts of components previously prepared in a continuous process. This type of production (with modules) allows more customizing than a product-focused facility. Modules are assembled to get a quasi-custom product. This way the company obtains both the economic advantages of the continuous model (where many of the modules are prepared) and the custom advantage of the low-volume high-variety model.
4.4. Product Focus
- What are Product Focus main characteristics?
1) Facilities are organized by product
2) High volume but low variety of products
3) Long, continuous production runs enable efficient processes
4) Typically high fixed cost but low variable cost
5) Generally less skilled labor
For example Frito-Lay’s family products are produced at a product-focused facility. At Frito-Lay, corn, potatoes, water and seasoning are the relatively few inputs but outputs (like Cheetos, Ruffles, Tostitos and Fritos) vary in seasoning and packaging within the product family.
A product-focused facility produces high volume and low variety.
4.B. Process Focus
(Marta Alarcón, Jorge Moreno & Pablo Díaz)
- What is process focus strategy?
A production facility organized around processes to facilitate low-volume high-variety productions.
All operations are grouped according to the type of process. In a factory these process might be departments devoted to welding, grinding and painting. In an office the process might be account payable, sales and payroll. Such facilities are process focused in terms of equipment, layout and supervision. They provide a high degree of product flexibility as product moves between processes. Each process is designed to provide a high variety of activities and handle frequent changes. Consequently they are also called intermittent process.
The system is also called ‘job shop´ as the product moves from one department to another in small batches that are determine by the customer’s order.
It is usually used to produce small quantity of different items on general purpose machineries
- What are Process strategy main Characteristics?
- 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
Some examples of the process focused are a hospital, a machine shop and a bank.
We are going to explain Arnold Palmer Hospital, which is a clear example of Process Focused.
Imagine a diverse group of patients entering Arnold Palmer Hospital, a process-focused facility, to be routed to specialized departments, treated in a distinct way, and then exiting as uniquely cared for individuals.
To conclude, as each process, process focused supposes some positive aspects for the company and some negatives ones:
- Positive aspects implementing the process focused:
-Greater product flexibility
-More general propose equipment
-Lower initial capital investment
- Negative aspects of implementing the process focused:
-More highly trained personal
-More difficult production planning and control
-Low equipment utilization (5%)
-Requires more time if the system operates on one or more processes at a time
-High Variable costs
4.1. Process Strategy
(Marta Alarcón, Jorge Moreno & Pablo Díaz)
A process (or transformation) strategy is an organization’s approach to transforming resources into goods and services.
The objective of a process strategy is to build a production process that meets customer requirements and product specification within cost and other managerial constraints.
The process selected will have a long term effect on efficiency and flexibility of production as well as on cost and quality of the goods produced. Therefore the limitations of a process strategy are at the time of the process decision.
In understanding Process strategy there are three principles that are particularly important:
- The key to successful process decisions is to make choices that fit the situation. They should not work at cross-purposes, with one process optimized at the expense of other processes. A more effective process is one that matches key process characteristics and has a close strategic fit.
- Individual processes are the building blocks that eventually create the firm’s whole supply chain.
- Management must pay close attention to all interfaces between processes in the supply chain, whether they are performed internally or externally.
It can be utilized to guide a variety of process decisions, operations strategy, and your business’ ability to obtain the resources necessary to support them.
A process involves the use of an organization’s resources to provide something of value.
Major process decisions include:
- Process Structure determines how processes are designed relative to the kinds of resources needed, how resources are partitioned between them, and their key characteristics.
- Customer Involvement refers to the ways in which customers become part of the process and the extent of their participation.
It is Manager’s job to assess whether the advantages outweigh disadvantages, judging them in terms of the competitive priorities and customer satisfaction. Customer involvement is not always the best option as there are disadvantages commonly associated with it. For example, allowing customers to play an active role in a service process can be disruptive thereby making the process less efficient.
Quality measurement also becomes more difficult to manage.
Additionally, customer involvement in processes can also mean greater expenses for your business as you will require employees with greater interpersonal skills and possibly consider revising your facility layout. However, despite these possible disadvantages, the advantages of a more customer-focused Customer involvement process might increase the net value to your customer. Some customers seek active participation in and control over the service process, particularly if they will enjoy savings in both price and time. More customer involvement can mean better quality, faster delivery, greater flexibility, and even lower cost.
- Resource flexibility is the ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions.
We consider resource flexibility mainly at two levels:
- Workforce
One of the decisions and operations manager has to make is whether or not to have a flexible workforce, that is, employees that are capable of doing many tasks.
The type of workforce you require is also dependent on the need for volume flexibility. For example, when conditions allow for a smooth, stead rate of output, the likely choice is a permanent workforce that expects regular full-time employment.
Alternatively, if the process is subject to hourly, daily, or seasonal peaks and valleys in demand, the use of part-time or temporary employees to supplement a smaller core of full-time employees may be the best solution
- Equipment
When a firm’s product or service has a short life cycle and a high degree of customization, low production volumes mean that a firm should select flexible, inexpensive, general-purpose equipment. When volumes are low, the low fixed cost more than offsets the higher variable unit cost associated with this type of equipment. Conversely, specialized, higher-cost equipment is the best choice when volumes are high and customization is low. Its advantage is low variable unit cost
- Capital intensity is the mix of equipment and human skills in a process.
It is calculated: total assets of a company/sales of the company.
A higher capital intensity ratio for a company means that the company needs more assets than a company with lower ratio to generate equal amount of sales. A high capital intensity ratio may due to lower utilization of the company’s assets or it may be because the company’s business is more capital intensive and less labor intensive (for example, because it is automated). However, for companies in the same industry and following similar business model and production processes, the company with lower capital intensity is better because it generates more revenue using less assets.
There are four process strategies:
- Process Focus
- Repetitive Focus
- Product Focus
- Mass Customization
1.D. The historical evolution of OM
(Álvaro Terry, Felisa del Viejo, María Gonzalez & Pablo Díaz)
In the last century, operations management has experienced more changes than any other functional area of business and is the most important factor in competitiveness. This is a chronology of major themes that have changed the scope and direction of operations management:
FOCUS ON EFFICIENCY
OM has it roots in the Industrial Revolution that occurred during the late 18th and early 19th centuries in England. Until that time, goods had been produced without the aid of mechanical equipment. During the Industrial revolution many Continue reading →
1.E. (Alternative) Organizing to produce goods and services.
(Álvaro Terry, Felisa del Viejo, María González & Pablo Díaz)
Goods
Goods are tangible goods that can be inventoried in inventory before they are needed. There are two types of goods, durable and non durable.
• Durable goods tend to have a long useful life. It is expected to last at least three years.
• Non-durable, consumed in a short time or that have useful lives of less than
three years
Essential Characteristics of Goods
• Tangible product.
• Consistent inputs and outputs.
• Production separate from consumption.
• Can be inventoried.
o Low customer interaction
Service vs Goods
Service
Service organizations produce intangible products
Continue reading →
1.C. What operations managers do?
(Álvaro Terry, Felisa del Viejo & Maria Gonzalez)
An Operation Manager is a senior-level employee who oversees the production of goods and/or providing of services. Their aim is to ensure that the organization is running as smoothly and efficiently as possible and that the goods and/or services produce meet client or customer needs.
The duties of an Operations Management vary from organization to organization, but generally include: monitoring existing processes and analyzing their effectiveness; creating strategies to improve productivity and efficiency; manage quality assurance programs; and supervising, hiring, and training employees.
As a summary of the paragraph above; we can said that Operations Managers are Continue reading →
1.B. Why study OM?
(Álvaro Terry, Felisa del Viejo & María González)
OM is an integrative body of knowledge; whose skills are needed in industries as diverse health care, education, telecommunications, lodging, food, service, banking, consulting and manufacturing.
1. OM is one of three major functions (marketing, finance, and operations) of any organization and we study how people organize themselves for productive enterprise.
Describing the three basic functions of a firm:
- Marketing – generates demand
- Production/operations – creates the product
- Finance/accounting – tracks how well the organization is doing, pays bills, collects the money
2. We want to know how goods and services are produced.
3. To understand what operations managers do.
4. It provides a major opportunity for an organization to improve its profitability and enhance its service to society.
3.A. Product Decision, 3.B. Generating New Products & 3.C. Product Development
Chapter 3. Product Design
(Janiek Weijen, Shira Daliah Goldberg and Pablo Díaz)
3.A. Design of goods and services
The basis for an organization’s existence and success is the good or service they provide. Most of the company’s focus on a few products to maximize their success (ex: Honda and its engine), but because most products have a limited and predictable life cycle, the company still needs to think about designing’ developing and taking to the market of new products. One product strategy is to build a particular competence in customizing an established family of goods (ex: Dell). This approach allows the customer to choose product variations while reinforcing the organisation’s strenghts (ex. Dell). The term ‘product’ mostly refers to tangible goods but it can also refer to offerings from a service company. An effective product strategy links product decisions with investments , market share and product life cycle and defines the breadth of the product line. Product strategy focus on developing an competitive advantage.
Product decision = the selection, definition and design of product.
Regal Marine Product Strategy
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2.A. Global Strategies & 2.B. A global view of operations
(Loreto Corrales & Marta Sánchez)
2.1. Global Strategies.
In developing ‘global strategy’, it is useful to distinguish between three forms of international expansion that arise from a company’s resources, capabilities and current international position. ‘Global Strategy’ is a concept that covers three strategic business areas that are designed to enable an organization to achieve its goals of international expansion. These business areas are:
- International Strategies
- Multinational Strategies
- Global Strategies
If the company is still mainly focused on its home markets Continue reading →