Choices Affecting Operations Structure


Manufacturing Operations Strategy

·         Focus:  Competitive Strategies

o   Cost

o   Flexibility

o   Quality

o   Delivery

·         4 Dimensions

o   Levels of Operations

o   Management Function

o   Critical Resources

o   Decision Focus


Product Decisions

·         Process-Focused

o   Wide range, customized products

o   Low volumes

o   Job shop

o   Less complex/capital intense technologies needed

·         Product- or Service-Focused Strategy

o   Narrow range, standardized products

o   High Volumes

o   Similar routings through process

o   Multiple lines/routings throughout factory

o   Flow shop

·         Customer Focus

o   Understand customers wants, needs, and not needs

o   Surveys, focus groups, open houses, hotlines, ratings, etc….


*The distinction between batch and repetitive manufacturers is subtle…many plants display attributes of both*


Operations Strategy Choices

·         Structure decisions

o   Organizational design:  which and where organizations are created in a company

o   Capacity strategies

o   Facilities strategy

o   Technology

·         Infrastructure decisions

o   Organizations design:  what and how relationships between departments exist

o   Workforce involvement

o   Operations systems configuration


Product Range

·         What NICHES does a product family serve??


Product Profiling

·         Focuses the degree of fit between the deployment choices of the firm and the current and expected volumes/varieties of products in each market niche.


Product Service

·         Stages

1.       Birth of delivery system

2.       Design/process technology selection

3.       Design of delivery system

4.       Start up of delivery system

5.       Growth of volume

6.       Stable state

7.       Decline and renewal of the system


Product Life Cycle

1.       Introduction

2.       Growth:  volume increase, variety decreases

3.       Maturity:  product variety is small and stable

4.       Decline:  New features and options, product extensions, variety increases, volume reduced, price is key competitive variable


*Batch production – higher volumes and smaller varieties than job shops

*Repetitive production – very high volumes with limited variety



Structural Decisions

·         Made infrequently

·         Made by top management

·         Examples

o   Organizational design

§  Simple

·         Small

·         Less than four levels

·         Little formalization

·         Low complexity

·         Centralized authority

§  Functional

·         Larger organizations

·         Defined staff functions

·         Requires functional specialists

·         Less centralization

·         Higher formality

§  Divisional

·         Self-contained business units

·         Different products or servies

·         Differing level of process

·         Different locations

·         Decentralized authority

·         Possibly redundant

§  Conglomerate

·         Little dependency between groups within

·         Receives resources from and returns revenue to the conglomerate

·         Independent groups

·         Distribution of risk

·         High complexity

§  Hybrid

·         Integrated functional designs

·         Duality of responsibility

·         Decentralization

·         Very low level of formality

·         High complexity

o   Capacity design

§  Lead strategy:  added in anticipation of increased demand

§  Lag strategy:  added only after demand increases are well known

§  Tracking strategy:  added in small increments to follow demand patterns closely

§  Chase Method:  maintains stable inventory levels while varying production rate

§  Level Method:  maintains stable production rate while varying inventory levels

o   Facilities strategy

§  Size

·         Scope – number of items

·         Scale – total annual volume

·         *Vertical integration – average number of process steps carried in facility

§  Location

§  Focus/layout

·         Plant Focus… 3 forms:

1.       Product focus:  plant produces a single product line

2.       Process focus:  plant concentrates on single process

3.       Order-winner focus:  concentrates on providing output exhibiting a certain order-winning feature

·         Layout Types

o   Fixed position:  e.g. shipbuilding, construction, oil drilling

o   Process/functional (job shop):  e.g. machine shops, hospitals, universities, supermarkets, mechanics…. JIT does not like

o   Product layout:  workstations arranged in order in which product is manufactured

o   Cellular layout:  C-shaped or U-shaped production lines

o   Group Technology:  indentifies the physical similarity of parts and establishes their effective production

§  Number of facilities

o   Technology

One Comment (+add yours?)

  1. Rhonda Holland
    Feb 02, 2015 @ 01:28:30

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