CHAPTER THREE

Design of the Operation System

3.1 Product and service design

What Is Design?

Design is the process of structuring of components parts /activities of products so that as a unit it can
provide value for the customer. Product is designed in terms of size, color, shape, content and other
related dimensions. Design greatly affects operation by specifying the products that will be made and it
is the prerequisite for operations to occur. Who is responsible for developing design? It is generally true
that design decision is not the sole responsibility of operations department. What to produce rather is an
interactive decision of: marketing, purchasing, finance, engineering, etc. and involves active
participations of customers, suppliers, creditors, government agencies and other stakeholders.

For example, the financial division must raise capital and prepare budgets for research and development
of new products and processes as well as for the other large expenditures that may be necessary. The
legal department must review warranty information and assess potential product liability during the
product design process. The purchasing department must interact with the engineering groups to
determine what materials are required to produce the products so that appropriate vendors are selected.
All these activities require good communication and coordination from initial product design stage
through the introduction of the product in to the market.

Generally, new product decisions affect not only the production system, but other functional units in the
organization as well. Through close cooperation between operations, marketing and other functions, the
design can be integrated with dimensions regarding process, quality, capacity and inventory. Design
should be developed by considering many dimensions.

New product development is a crucial part of business. New products serve to provide growth
opportunities and a competitive advantage for the firm. Operations are greatly affected by new product
introduction.

Through close cooperation between operations, marketing, and other functions, the product design can
be integrated with decisions regarding process, quality, capacity, and inventory. Product design is
prerequisite for production, along with a forecast of production volume.

Objectives of Product and Service Design

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  To bring new or revised products and services to the market as quickly as possible
 To design products and/or services that have customer appeal
 To increase the level of customer satisfaction
 To increase quality and reduce costs

Sometimes product or service design is actually redesign. This, too, occurs for a number of reasons such
as customer complaints, accidents or injuries, excessive warranty claims, or low demand. The desire to
achieve cost reductions in labor or materials can also be a motivating factor.

What Does Product and Service Design Do?

The various activities and responsibilities of product and service design include the following

(Functional interactions are shown in parentheses):

1. Translate customer wants and needs into product and service requirements. (Marketing, operations)

2. Refine existing products and services. (Marketing)

3. Develop new products and/or services. (Marketing, operations)

4. Formulate quality goals. (Marketing, operations)

5. Formulate cost targets. (Accounting, finance, operations)

6. Construct and test prototypes. (Operations, marketing, engineering)

7. Document specifications.

8. Translate product and service specifications into process specifications. (Engineering,

Operations)

Product and service design involves or affects nearly every functional area of an organization.

However, marketing and operations have major involvement.

Trends in product and service design

Over the last few years, the designing of products and services has increased emphasis on a number of
aspects of design. Among them are the following.

For the design process to occur, a business must have idea for new or improved designs. These come
from a variety of sources, most obviously the customer. Marketing can tap this source of ideas in a
number of ways, such as the use of focuses groups, surveys, and analyses of buying patterns.
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Some organizations have research and development departments that also generate ideas for new or
improved products and services.

Competitors are another important source of ideas. By studying competitor’s products or services, and
how the competitor operates (E.g., pricing policies, return policies, warranties), an organization can
learn a great deal about achieving design improvements. Beyond that, some companies buy a
competitor’s newly designed product the moment it appears on the market. Using a procedure called
reverse engineering; they carefully dismantle and inspect the product. This may uncover product
improvements that can be incorporated in their own product. Sometimes reverse engineering can lead to
a product that is superior to the one being examined; that is designers conceive an improved design,
which enables them to “leapfrog” the competition by quickly introducing an improved version of a
competitor’s product within a short time.

New-product Development Process

The new product development process consists of the following steps.

1. Idea Generation-ideas for new products can arise from a variety of sources within and external
sources to the firm. There are two principal sources for generating ideas:

 User needs, and

 Technological developments.

Manufacturers are always trying to develop new products that meet the needs of consumers, e.g.
development of small cars. Identification of market needs can lead to the development of new
technologies and products to meet those needs. Innovations can replace products based on older
technologies. Research and development (Rand D) plays an important role in developing new products
and advancing technology.

2. Screening- The purpose of screening is to eliminate ideas that do not appear to have a high potential
for success and thus avoid expensive development costs. Three major criteria are used in initial
screening;

 Product development-technical and operational feasibility

 Market criteria- current market and potential to grow
 Financial feasibility-Contribution to overall profitability and cash flow

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Before a new product idea is put into preliminary design, it should be subjected to analysis organized
around these three tests. The purpose of screening is not to reach a conclusive decision to produce and
market the product. After initial development, more extensive analysis may be conducted through test
markets and pilot operations before a final decision is made to introduce the product.

To assist in product analysis, several methods have been developed. One is a checklist scoring method
that involves developing a list of factors along with a weight for each. If the total score is above a certain
minimum level, the new product idea may be selected for further development. Alternatively, the
method may be used to rank products in priority order for selection.

Screening by check list: by this formula the weights have been multiplied by the product characteristic
scores and added. See the following example.

Screening by Checklist

Each rating in the table is valued as follows: poor =1, fair=2, good=3, good=4, excellent=5

The total weight in the example can be evaluated as follows:

(0.15 x 2)(0.1 x 4)(0.2 x 3)(0.1 x 1)(0.1 x 4)(.15 x 2)(0.2 x 4) 2.9

A new product idea may also be subjected to standard financial analysis by computing an approximate
return on investment; cash flows must be estimated for investments, revenues, and costs for future
product sales.

3. Preliminary product design-This process is concerned with developing the best design for the new
product idea. Preliminary product design must specify the product completely. At the end of the product

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design phase, the firm has a set of product specifications and engineering drawing (or computer images)
specified in sufficient detail that production prototypes can be built and tested.

4. Prototype testing-A model is tested for its physical properties or use under actual operating
conditions. Such testing is important in uncovering any problems and correcting them prior to full-scale
production.

5. Final product design-because of prototype testing certain changes may be incorporated into the final
design. Drawings and specifications for the product are developed. If the changes are made, the product
may be tested further to ensure final product performance.

3.2. FACTORS IMPACTING PRODUCT DESIGN

A. Product life Cycle

Many new products go through a product life cycle in terms of demand. In the last stage of a life cycle,
some firms adopt a defensive research posture whereby they attempt to prolong the useful life of a
product or service by improving its reliability, reducing costs of producing it(and, hence, the
price),redesigning it, or changing the packaging.

B. Manufacturing Design

The term design for manufacturing (DFM) is also used to indicate the designing of products that are
compatible with an organization’s capabilities. A related concept in manufacturing is design for
assembly (DFA). A good design must take into account not only how a product will be fabricated, but
also how it will be assembled. Design for assembly focuses on reducing the number of parts in an
assembly, as well as the assembly methods and sequence that will be employed.

When we think of product design, we generally first think of how to please the customer. However, we
also need to consider how easy or difficult it is to manufacture the product. Otherwise, we might have a
great idea that is difficult or too costly to manufacture. Design for manufacture (DFM) is a series of
guidelines that we should follow to produce a product easily and profitably. DFM guidelines focus on
two issues:

1. Design simplification means reducing the number of parts and features of the product whenever
possible. A simpler product is easier to make, costs less, and gives us higher quality.

2. Design standardization refers to the use of common and interchangeable parts. By using
interchangeable parts, we can make a greater variety of products with less inventory and significantly

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lower cost and provide greater flexibility. An example of the benefits of applying these rules. We can
see the progression in the design of a toolbox using the DFM approach. All of the pictures show a
toolbox. However, the first design shown requires 20 parts. Through simplification and use of modular
design the number of parts required has been reduced to. It would certainly be much easier to make the
product with 2 parts versus 20 parts. This means fewer chances for error, better quality, and lower costs
due to shorter assembly time.

C. Remanufacturing refers to removing some of the components of old products and reusing them in
new products. The original manufacturer or another company can do this. Among the products that have
remanufactured components are automobiles, printers, copier’s cameras, computers, and telephones.

D. Robust Design (Taguchi’s method)

Some products will perform as designed only within a narrow range of conditions, while other products
will perform as designed over a much broader range of conditions. The more robust a product, the less
likely it will fail due to a change in the environment in which it is used or in which it is performed.

E. Computer-Aided Design (CAD)

Computers are increasingly used for product design. The designer can modify an existing design or
create a new one by means of a light pen, keyboard, a joystick, or a similar device. Once the design is
entered in to the computer, the designer can maneuver it on the screen. It can be rotated to provide the
designer with different perspectives. The designer can obtain a printed version of the completed design
and file it electronically, making it accessible to people in the firm who need this information (e.g..,
marketing).A major benefit of CAD is the increased productivity of designers.

F. Product Variety

The issue of product variety must be considered from both marketing and an operations point of view.
From marketing point of view, the advantage of a large number of product varieties does not be more
profitable. From an operations point of view, high product variety is seen as leading to higher cost,
greater complexity, and more difficulty in specializing equipment and people.

The ideal operations situation is often seen as a few high volume products with stabilized production
configurations. Operations managers often prefer less product variety. There is an optimum amount of
product variety, which results in maximum profits. Both too little and too much product variety will lead
to low profits.

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G. Modular Design

Modular design makes it possible to have relatively high product variety and low component variety at
the same time. The basic idea is to develop a series of basic product components, or modules that can be
assembled into a large number of different products. To the customer, it appears there are a great
number of different products. To operations, there are only a limited number of basic components and
processes.

Modular design offers a fundamental way to change product design thinking. Instead of designing each
product separately, the company designs products around standard component modules and standard
processes. Common modules should be developed that can serve more than one product line, and
unnecessary product frills should be eliminated. This approach will still allow for a great deal of product
varieties but the number of unnecessary product variations will be reduced.

H. Value Analysis

There is a need to improve the products and services we produce in order to stay competitive. Value
analysis (or value engineering)-is a method for improving the usefulness of a product without increasing
its cost or reducing the cost without reducing the usefulness of the product. It can result in great cost
savings or a better product for the customer, or both. Value is defined as the ratio of usefulness to cost.
Cost is an absolute term and measures the amount of resources used to produce the product. Usefulness,
on the other hand, is a relative term describing the functionality that the customer ascribes to the
product.

Service Operations Design

Service industries include banking, finance, insurance, transportation and communications etc. Service
is the dominant economic force in the industrialized world today, and growth projections indicate this
trend will continue. Yet, service production receives far too little emphasis in operations Management
courses and business course in general.

Service is an intangible product, which is produced and consumed simultaneously. Therefore, service
never exists, only the results of the service can be observed. If you get a haircut, the effect is obvious,
but the service itself was produced and consumed at the same time.

Simultaneous production and consumption is a critical aspect of service, because it implies that the
customer must be in the production system while production takes place the simultaneity of production
and consumption indicate that service cannot be stored or transported; it must be produced at the point
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of consumption. For operations, this means that capacity must be located at or near the customer’s
location and that; the service cannot be produced now and placed into inventory for later consumption.

Service consists of acts and interactions that involve social contacts. The interaction between the
producer and customer at the time of production is a critical attribute of service. There are professional
services such as medicine, law, education, and architecture; and Capital-intensive service; such as
airlines, electric utilities; Mass services such as retailing, wholesale, and fast food. Designing services is
challenging because they often have unique characteristics

Generally design of the service is the specifications of how the service should be delivered. Shostack
suggest that “blueprint” for services be developed that specify in detail the steps involved in service
delivery. These blue prints can be then the basis for job descriptions, employees training programs and
performance measurement. A service blue print is a visual diagram –usually a flow chart-that depicts all
of the activities in the service delivery process. As a design tools, they enable management to study and
analyze services prior to their actual implementation.

The process of designing a service blueprint involves several steps:

 -Identifying the sequence of steps: first it is necessary to map out the sequence of steps that
comprise the serve activity. By identifying all operations in the service activity, one can
determine what inputs are required and how each operation should be best performed.
 -Isolating fail points: once the process is specified, the designer can determine where the system
might fail. Design for prevention of failure can then be made.
 -Establishing time frames: standard time for each activity can be established and costs can then
be estimated. Research shows that a customer will tolerate few minutes before lowering his or
her assessment of service quality.
 -Analyzing profitability: by identifying the costs for materials , overheads, and customer
services along with forecasts of demand the profitability of the service can be determined; then
‘what if’ scenarios can be conducted to analyze the sensitivity of profits to changes in costs or
pricing structures.

A service blueprint also can be used to redesign the system in order to improve over all services.

Example of service blue print for cashing checks in the bank

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Differences between manufacturing and service

1. Products are generally tangible. Service is intangible. Consequently; service design focuses more on
intangible factors than does product design
2. Services are often and received at the same time e.g. hair cut or cars wash. Because of this there is
less latitude in finding and correcting errors before the customer has a chance to discover them.
Consequently, training, process design and customer relations are particularly important.
3. The product can be demonstrated before purchase, while in services, the product does not exist before
purchase
4. Production precedes consumption while in services, production and consumption are
simultaneous
5. Production and consumption can be spatially separated, whereas in services, production and
consumption must occur in the same location
6. Some services have low barriers to entry and exit. This places additional burden on service design to
continually be aware of what competitors are offering.
7. Location is often important in service design. Hence, design of services and choice of location are
often closely linked. The objective of service organizations mostly focuses on maximizing revenue
while manufacturing organizations on reducing cost. Due to this fact, services should be located at the
place where, more customers are located and manufacturing industries should be located near raw
material or input areas.

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 3.3. Process selection

Process selection decisions determine the type of productive process to be used and the appropriate span
of the process. Generally, process selection refers to the way an organization chooses to produce its
goods or proved its services. Essentially, process selection requires a thorough understanding of
materials and their properties, existing technology, and the desired property of the final product. For
example cutting speed depends on the type of materials being cut and the cutting tools (technology)
itself. Moreover, marketing factors such as volume demand and product quality are also important
factors that influence process selection.

Process selection has major implication for capacity planning, lay out of facility, equipment’s and design
of work systems. Process selection occurs when new products or services are being planned. However it
will also occur periodically due to technological or demand changes. Before selecting the process,
consider the buying alternatives.

Forms of Transformation Process

The transformation process that converts inputs into outputs with added value is the core element in the
operations function. The selection of the process is therefore a strategic decision for most organizations.

The transformation process, therefore, has to be so selected that it can provide the desired product
attributes and at the same time remains cost-effective.

This can be best achieved by taking a strategic view of the production/operations function and by
integrating the operations function including process selection while formulating the corporate strategy
of the firm.

Process selection is actually a generic decision and in practice this refers to the selection of sub-
processes and sub-sub-processes depending on the type of output that is produced. A product then,
following the design of the product, this can be broken down into sub-assemblies and sub-sub-
assemblies till we reach an elemental level of components which cannot be broken down further. Now,
for each of such components we have to decide whether to produce it ourselves or to buy from outside.

If it has to be produced by us, then the process selection decisions concern the technology to be used, the
sequence of operations to be performed, including in process storage and transportation from one work
center to another, equipment required for the transformation, staffing, the detailed work place layout,
design of special tools, jigs and fixtures and so on. If the product requires an assembling of components

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and sub-assemblies, then the assembly process has also to be selected and designed appropriately. In
fact, there may be no best way to produce a product or service; rather it may always be possible to
improve both the output and the process selected to produce it.

Establishing the Volume and the Variety

One of the major considerations for process selection knows where we want to be our organization on
the volume/variety continuum. The volume/variety continuum can be conceived of as an imaginary
straight line, one end of which refers to very high product variety implying each product to be different
from each other, consequently having very low volume viz., only one of each product. As we shall see
later in this unit, such high variety requires the use of highly skilled labor, general purpose machines and
in general, detailed and complex operations, planning and control systems.

The other end of the continuum refers to very low product variety implying a single standard product
that is produced in very high volumes. Such a combination enables us to use highly automated, mass
production processes using special purpose machines and simple production planning and control
systems.

Produce-to-stock or Produce-to-order

A related consideration for process selection is whether the product is to be produced and stocked in our
warehouses to be sold as and when the demand occurs, or is to be produced only on receipt of an order
from the customer. It is a related consideration because, usually standard products with less variety are
produced in batches and as sales proceed, we draw the products from the inventory. When the inventory
level -touches a predetermined minimum level, a fresh batch of the product is produced and such a cycle
goes on. In this system, goods are produced in anticipation of sales orders and the customer gets
immediate delivery and does not have to wait. However, such a system can work only with inventorial
products and the shorter the shelf life of a product, the higher the risks undertaken by the producer. For
example, newspapers have a very short shelf life and so the risks of overproducing as well as under
producing are high.

When we produce-to-order, the production process starts after receiving the sales order in quantities
dictated by each sales order. All custom-made products are produced-to-order since the exact
specifications are known only after receipt of the order. In such a system the customer has to wait while
his products are being produced and so the longer the lead time for production, the longer the waiting
period.

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Services, by their very nature, cannot be inventoried and so services have to be. produced to order. The
transformation process in such a system has to be so selected and designed that the waiting time for a
customer is not excessive.

Finally, we can have a combination of both these systems as well. For example, where a large number of
options are provided on the product, the components and sub-assemblies might be produced to stock
whereas the final assembly is carried out on order. In restaurants, food is semi-cooked in batches i.e.
produced to stock and the final dish is prepared on receipt of a customer order i.e. produced-to-order

Types of Processes

When you look at different types of companies, ranging from a small coffee shop to IBM, it may seem
like there are hundreds of different types of processes. Some locations are small, like your local
Starbuck’s, and some are very large, like a Ford Motor Company plant. Some produce standardized
“off-the-shelf” products, like Pepperidge Farm’s frozen chocolate cake, and some work with customers
to customize their product, like a gourmet bakery that makes cakes to order. Though there seem to be
large differences between the processes of companies, many companies have certain processing
characteristics in common. In this section we will divide these processes into groups with similar
characteristics, allowing us to understand problems inherent with each type of process. All processes can
be grouped into two broad categories: intermittent operations and repetitive operations. These two
categories differ in almost every way. Once we understand these differences, we can easily identify
organizations based on the category of process they use.

I. INTERMITTENT FLOW PROCESSES

When the output variety is large, each output takes a different route through the organization, uses
different inputs, requires different operations and takes a different amount of time and also sequence, the
intermittent form of processing is often used. In this system, each output, or small group of similar
outputs (referred to as a batch or a lot), follows a different processing route through the facility, from
one location to another. The facilities are organized around similar operations functions. For' example,
in an engineering organization there is a foundry, a machine shop, a press shop, a tool room, a paint
shop and so on. In a hospital, there is a blood bank, an X-Ray department, a pathological laboratory and
so on. The flow through these departments depends on the exact needs of a patient. The intermittent
process is especially suited for service organizations because each service is often customized and so
each one requires a different set of operations in a different sequence.

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Characteristics of the Intermittent Form

Flexibility

When an organization wants to produce a variety of outputs using common facilities, it wants to have
flexibility in its operations. This is achieved by employing general purpose machines and equipment as
well as having staff with a wide range of skills. The facilities are laid out in accordance with the general
flow and for specific outputs, there may be a lot of movement as well as backtracking depending on the
sequence of operations required. Not only the processing, even the inputs required for different outputs
could be quite different.

Even if the final product does not have excessive variety, e.g. in manufacturing of typewriters, the
intermittent form is still used for the manufacture of components. This is because a large number of
components are assembled into a typewriter and the same facilities could be used in making many
different components in batches. One batch of 1000 pinions could be produced this week and the next
batch may have to be produced only after one month. By splitting into batches in this manner, large
number-of different components can be produced on a common set of machines. All this is possible
because the intermittent form of processing is flexible.

Around Standard Operations

The transformation processes are organized around standard operations in the intermittent form. In a
bank, this would result in departments like cash, advances, deposits, savings bank accounts and so on.
Any customer, who wants to deposit or withdraw cash, has to go to the cash department for this purpose.

In such a scheme, each functional group is a specialized group and performs all tasks connected with
that specialization. That is why the workers need to have a width of skills so that they can perform a
range of tasks-of course within the specialization. A machine operator in a grinding shop will not be
producing the same output every day and thus besides skills in operating different types of grinding
machines needs the ability to read and interest blueprints and perhaps also the ability to `set up' grinding
machines to perform different jobs.

The amount of specialization achieved by organizing around standard operations enables the
organization to solve complex and specialized problems. Thus, a difficult grinding job is more likely to
be carried out by an organization having a grinding shop than by another having project operations or
even continuous flow processing where grinding operations are also being performed.

Material Handling and In-process Inventory

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As the grouping of facilities is around standard operations, the partly processed output is to be
transported from one standard operation to another. The amount of material handling for an output or a
batch of output depends on the number of standard operations to be performed and also the distance
between the locations where the operations are performed. For all the outputs of the organization,
therefore, the amount of material handling would depend on the output mix and the layout of different,
facilities. A great deal of effort is made to design the facilities layout so that the material handling is
reduced for a targeted output mix.

Again, as the same facilities are being used for the processing of many outputs, the flow of materials
through the facilities is not smooth, but interrupted. After one operation, the partly processed output or
batch of outputs may have to wait if the facilities required for the next operation are busy on the
processing of another output on batch.

Such material is referred to as work-in-process and the consequent in-process inventory is typical in
intermittent flow processing.

Difficulty in Management of Resources

Since each output or batch of outputs is different, the planning and control of the operations function is
very difficult under intermittent flow processing. Elaborate planning and control procedures are used so
that the movement of each output or batch of outputs can be tracked and all the inputs required for a
particular output or batch be made available in time. The planning and control becomes more difficult in
the absence of accurate time standards as the outputs may not be repetitive.

Advantages of the Intermittent Form

In transformation processes, there is always a trade-off between flexibility of operations and the
efficiency of use of resources. Intermittent transformation processes are chosen whenever flexibility is
considered more important than mere efficiency.

Variety at Low Cost

The intermittent form of processing is appropriate when we want to respond to demands of small
volume and high variety. The primary advantage of this form of processing is, therefore, the ability to
produce a wide variety of outputs at a reasonable cost.

The choice of machines \and equipment, the skill of the staff, the layout of the facilities and 'all related
decisions emphasize the need to have flexible operations which are also not very costly. In intermittent

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flow processing, general purpose machines are generally used as these are cheaper than special purpose
machines, since they are in greater demand and generally available from more suppliers. Also, they are
easier and cheaper to maintain and dispose of thus reducing the cost of obsolescence. Because of the
diversity. in outputs, all the equipment does not have hundred per cent utilization. The cost of unutilized
equipment is low, as the equipment is simple general purpose and not very costly.

High Capacity Utilization

As facilities are grouped around standard operations, all the outputs requiring a particular operation will
have to be sent to the section carrying out that operation. Thus, there will be high capacity utilization for
equipment grouped around that operation. The cost involved in providing-special environmental
conditions for some operations e.g. Air conditioning, dehumidifying, Dust proofing etc. is also
minimized as all such equipment is physically close to each other-when the organization is laid out for
intermittent form of processing.

Disadvantages of the Intermittent Form

The intermittent form will not remain the best form of processing if the volumes for some outputs
become high. The in-process inventories could become excessively high and the operations planning and
control could get out of hand necessitating the use of expediters.

More Costly for High Volumes

The initial cost for general purpose machines, which are mostly used in intermittent processing, is low.
But they are usually slower than special purpose machines and also give lower quality of outputs. The
skilled operators are paid more than the semi-skilled or the unskilled, the end result being that although
the fixed costs are lower for general purpose machines, the variable costs per unit of output are higher
for low output volumes, therefore, the general purpose equipment could be the cheapest as well.
However, as output volumes rise, the advantage in terms of a lower fixed cost is more than compensated
by a higher component of variable cost and thus the special purpose machines may offer the least cost
alternative.

Complex Operations Planning and Control

As mentioned earlier, the planning and control of operations is very complex for the intermittent form.
When the number of jobs on the ship floor rises to high, levels, it becomes almost impossible to keep
track of individual jobs. Over and above the paperwork involved, "expediters" are employed to reorder
priorities and stack down specific jobs.
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The requirement of each output being different, in the absence of such detailed planning and control
there may be production bottlenecks on some facilities whereas resources may remain idle at some other
facilities.

It is, easy to see that there may be a host of reasons causing such idling of resources-e.g., machine
breakdown, raw material non-availability, delay in a previous operation, absent worker, non-availability
of tools etc. etc. It is the job of operations planning and control to ensure that all the inputs required for a
particular operation are made available when the operation is planned.

Large In-process Inventory

Intermittent processing would always have some in-process Inventory. However, as the variety of
outputs and the scale of operations increase, the in-process inventory becomes larger. On top of it, there
will be a fast build-up of in-process inventory if there is any laxity in the operations planning and control
function. This increases the space requirement of operations and also disturbs the appearance of the
operations area at times making it even unsafe.

The material handling equipment used in intermittent operations is generally mobile and is more
expensive than the fixed position handling equipment like chutes and conveyor belts. It also requires
more space for movement thus adding to the space requirement.

II. CONTINUOUS FLOW PROCESSES

As distinct from intermittent flow processes, all outputs are treated alike in this form of processing and
the workflow is thus relatively continuous. The production process is therefore geared to produce one
output, perhaps with some options added on. The variety is small and volumes are high thus making it
worthwhile to focus the transformation process on the output. This would mean arranging the facilities
in the sequence in which they are required for the output, using high speed special purpose machines,
laying out the facilities to minimize the movement of materials and designing the production system so
that there are no bottlenecks as well as no idle time for any of the resources.

Characteristics of Continuous Processes

The continuous process form is characterized by relatively standardized outputs and consequently fixed
inputs, fixed sequence of operations and also fixed processing time. As the variation from one output to
another is very small, the transformation process is selected and designed to maximize the efficiency of
the resources and in the process flexibility of operations is sacrificed.

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 I. High Volumes

If an organization is planning to produce only a small variety of outputs and in high volumes, it will find
the continuous processing form a very attractive proposition. Because of high volumes, one can choose
those production facilities which are special purpose and perhaps custom-built so that the initial costs
are high, but they can produce the output at a low variable cost. The higher the volumes the further these
tradeoffs shift towards higher fixed costs and lower variable costs. This is because the variable costs are
low and the high fixed costs are spread over a high volume of output thus making the continuous
processing form the least cost processing form for high volumes.

II. Easier Planning and Control

As all outputs follow the same path from one operation to the next, there is no need to keep track of each
output for planning and control purposes. In other words, all operations being standardized with standard
operation times and no waiting between operations, if the time when processing starts for an output is
known, all subsequent operations including the final completion of the output can be predicted quite
closely.

This implies that there is virtually no in-process inventory since there is any waiting between operations.
Also, as the transformation process is designed especially for this output the amount of movement
between operations is minimal. Further, as volumes are high, special purpose fixed position material
handling equipment like chutes, conveyors etc. which have low space requirements and operate at low
variable costs can be used.

III. Linear Workflow

All the facilities are arranged in the sequence in which they are required for the production of outputs.
The material therefore moves from one facility to another or from one location to another with no
backtracking at all. That is why product organizations of this form are often called flow shops.

Advantages of the Continuous Form

The continuous form of processing requires a great deal of effort while designing. But once
implemented, it offers much simplicity in its operation.

Low Unit Cost

The main advantage offered by continuous process operations is the low per unit cost of production. As
discussed earlier, this is achieved by selecting equipment which provides low variable costs of operation

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perhaps at high initial costs which are distributed over large production volumes. Further cost saving is
possible due to bulk purchasing of materials, efficient facility utilization, low in-process inventories and
lower material handling costs.

Lower Operator Skills

The machines used in continuous processes are generally special purpose and so their operation is
simpler, with few setups required. The operator skills required are therefore lower which improves the
availability of workers with requisite skills and also gives rise to lower labor costs.

However, the special purpose machines are more complex in their design and functions and so are more
difficult to maintain. Thus, higher maintenance skills are required and since the experience of working
on any of these machines is limited, the time taken for diagnosis and repair is longer. Similarly, spare
parts availability itself could be difficult for special purpose machines.

Simpler Managerial Control

As the workflow is streamlined in the continuous form, the planning and control of production is much
simpler. With standardized operations and operation times, the predictability of operations is higher.
This implies that the performance on meeting delivery dates is better.

In fact, while operating an interrupted processing system, if one of the outputs establishes a high growth
in volume, it may be worthwhile exploring the possibility of setting up a production line for this output.
Although the component parts are produced using interrupted processing, the final assembly is carried
out on an assembly line for many products.

Disadvantages of the Continuous Form

Although the continuous form of processing offers a low cost alternative when volume of production is
high and the variety low, there are some disadvantages in organizing the production in this form.

Difficult to Adapt

As the whole production process is designed for a particular. Output, any change in the output
characteristics is difficult to obtain. Because of this, important changes in product design are often not
made, which can affect the competitive strength of the organization. Each production or assembly line is
designed, for a particular rate of production.

Sometimes, it is difficult even to change the rate of output. This causes serious difficulty when the
demand for the output increases or decreases.
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Balancing the Line

The work content at each of the work stations should be exactly equal to avoid bottlenecks and idling of
resources. However, if it is not possible to exactly equalize the work content, the output rate is governed
by the slowest work station which implies that workers at all other work stations are less busy. This
remains a sore point among the workers.

Low Worker Morale

A worker's task is highly repetitive in the continuous form of processing and for high output rate
production lines the task may also be very insignificant and unchallenging. This dehumanizing aspect of
the workers' role causes boredom, monotony and very soon starts affecting the morale of workers. '

High Initial Cost

The special purpose machines and equipment used in continuous form of processing have very high
initial cost. It is also costly to service and maintain. Also, such special purpose equipment is very
susceptible to obsolescence and it is not easy to find a buyer for such equipment or to modify these for
other uses.

Repetitive operations can be divided into line processes and continuous processes.

A. Line processes

Line processes are designed to produce a large volume of a standardized product for mass production.
They are also known as flow shops, flow lines, or assembly lines. With line processes the product that is
produced is made in high volume with little or no customization. Think of a typical assembly line that
produces everything from cars, computers, television sets, shoes, candy bars, even food items.

B. Continuous processes

Continuous processes operate continually to produce a very high volume of a fully standardized product.
Examples include oil refineries, water treatment plants, and certain paint facilities. The products
produced by continuous processes are usually in continual rather than discrete units, such as liquid or
gas. They usually have a single input and a limited number of outputs. Also, these facilities are usually
highly capital intensive and automated. Note that both project and batch processes have low product
volumes and offer customization. The difference is in the volume and degree of customization. Project
processes are more extreme cases of intermittent operations compared to batch processes. Also, note that
both line and continuous processes primarily produce large volumes of standardized products. Again,

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the difference is in the volume and degree of standardization. Continuous processes are more extreme
cases of high volume and product standardization than are line processes.

III.4. DESIGNING PROCESSES

Now that we know about different types of processes, let’s look at a technique that can help with process
design.

Process flow analysis is a technique used for evaluating a process in terms of the sequence of steps
from inputs to outputs with the goal of improving its design. One of the most important tools in process
flow analysis is a process flowchart. A process flowchart is used for viewing the sequence of steps
involved in producing the product, and the flow of the product through the process. It is useful for seeing
the totality of the operation and for identifying potential problem areas. There is no exact format for
designing a flowchart. The flowchart can be very simple or highly detailed. The typical symbols used in
a flowchart are arrows to represent flows, triangles to represent decision points, inverted triangles to
represent storage of goods, and rectangles as tasks.

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