Volume and variety of products volume and variety of

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Volume and Variety of Products Volume and Variety of Products Low Volume High Variety Process (Intermittent) Repetitive Process (Modular) High Volume Low Variety Process (Continuous) One or very few units per lot Projects Very small runs, high variety Job Shops Modest runs, modest variety Disconnected Repetitive Long runs, modest variations Connected Repetitive Very long runs, changes in attributes Continuous Equipment utilization 5%-25% 20%-75% 70%-80% Poor Strategy (High variable costs) Mass Customization
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73-35 Mass Customization Mass Customization Using technology and imagination to rapidly mass- produce products that cater to sundry unique customer desires. Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant.
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73-36 Mass Customization - More Choices Than Mass Customization - More Choices Than even even Early 21 st Century Item Early 1970s Vehicle models 140 260 Vehicle styles 18 1,212 Bicycle types 8 19 Software titles 0 300,000 Web sites 0 30,727,296 Movie releases 267 458 New book titles 40,530 77,446 Houston TV channels 5 185 Breakfast cereals 160 340 Item SKUs in supermarkets 14,000 150,000 Number of Choices
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73-37 Process Strategies Process Strategies Rapid throughput techniques Mass Customization Modular techniques Repetitive Focus Modular design Flexible equipment Product-focused Low variety, high volume High utilization (70% - 80%) Specialized equipment Process-focused High variety, low volume Low utilization (5% - 20%) General purpose equipment Effective scheduling techniques
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73-38 Questions for Process Analysis and Questions for Process Analysis and Design Design Is the process designed to achieve competitive advantage in terms of differentiation, response, or low cost? Does the process eliminate steps that do not add value? Does the process maximize customer value as perceived by the customer? Will the process win orders?
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73-39 Crossover Charts Crossover Charts $ $ $ Fixed cost Variable cost Fixed cost – Process A Fixed cost – Process B Fixed cost – Process C 200,000 300,000 400,000 $ Total process C costs To t al p ro ces s A costs Process A Process B Process C V 1 (2,857) V 2 (6,666) Volume Total process B costs
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73-40 Tools for Process Design Tools for Process Design Flow Diagrams Process Charts Time-Function/Process Mapping Work Flow Analysis
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73-41 Production Process Flow Diagram Production Process Flow Diagram Shipping Customer Customer sales representative take order Prepress Department (Prepare printing plates and negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Purchasing (order inks, paper, other supplies) Vendors Receiving Warehousing (ink, paper, etc.) Accounting Information flow Material flow
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73-42 Time Function Map Time Function Map (Baseline) (Baseline) Customer Sales Production control Plant A Warehouse Plant B Transport Order Product Process Order Print Extrude Receive product Wait Move Wait Wait Wait Move Order Order WIP WIP WIP WIP Product Product Product 12 days 1 day 1 day 1 day 1 day 13 days 4 days 10 days 9 days 52 days
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73-43 Time Function Map Time Function Map (Target) (Target) 1 day 1 day 1 day 1 day 2 days Customer Sales Production control Plant
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