Product design and process selection

Product Design And Process Selection

1. What is Product Design?

2. What are the most common steps in defining product design?

3. What objectives should process design have?

4. What is Process Selection?

5. Categories and types of process selection?

Nigel Slack Alistair Brandon-Jones Robert Johnston

Seventh Edition

OpeRAtiONS MANAgeMeNt

Seventh Edition

OpeRAtiONS MANAgeMeNt Nigel Slack Alistair Brandon-Jones Robert Johnston

www.pearson-books.com

Seventh EditionO

peRA tiO

N S M

A N

A g

eM eN

t Slack Brandon-Jones Johnston

Operations management is important, exciting, challenging … and everywhere you look!

• Important, because it enables organizations to provide services and products that we all need

• Exciting, because it is central to constant changes in customer preference, networks of supply and demand, and developments in technology

• Challenging, because solutions must be must be financially sound, resource-efficient, as well as environmentally and socially responsible

• And everywhere, because in our daily lives, whether at work or at home, we all experience and manage processes and operations.

Operations Management focuses on the sustainable and socially responsible imperatives of operations management, using over 120 cases and illustrations of real-life operations around the world, including Apple, Médecins Sans Frontières, Amazon, Ecover, Dyson, Disneyland Paris, Google, The North Face, and many more.

use with

Front cover image: © Lewis Mulatero/Getty Images

Join over 10 million students benefiting from pearson MyLabs.

This title can be supported by MyOMLab, an online homework and tutorial system designed to test and build your understanding. MyOMLab provides a personalized approach, with instant feedback and numerous additional resources to support your learning.

A student access code card may have been included with this textbook at a reduced cost. If you do not have an access code, you can buy access to MyOMLab and the eText – an online version of the book – online at www.myomlab.com.

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Welcome to OPERATIONS MANAGEMENT

Operations Management – it’s important, it’s exciting, it’s challenging, and everywhere you look!

Important, because it’s concerned with creating all of the products and services upon which we depend. Exciting, because it’s at the centre of so many of the changes affecting the world of business. Challenging, because the solutions that we fi nd need to work globally and responsibly within society and the environment. And everywhere, because every service and product that you use – the cereal you eat at breakfast, the chair you sit on, and the radio station you listen to while you eat – is the result of an operation or process.

Our aim in writing Operations Management is to give you a comprehensive understanding of the issues and techniques of operations management, and to help you get a great fi nal result in your course. Here’s how you might make the most of the text:

● Get ahead with the latest developments – from the up-to-the-minute Operations in practice features in every chapter to the focus on corporate social responsibility in the fi nal chapter – these put you at the cutting edge .

● Use the Worked examples and Problems and applications to improve your use of key quantitative and qualitative techniques, and work your way to better grades in your assignments and exams .

● Follow up on the recommended readings at the end of each chapter. They’re specially selected to enhance your learning and give you an edge in your course work.

And in particular, look out for the references to MyOMLab in the text, and log on to www.myomlab.com * where you can

● check and reinforce your understanding of key concepts using self-assessment questions, video clips and more;

● practise your problem-solving with feedback, guided solutions and an almost limitless supply of questions!

We want Operations Management to give you what you need: a comprehensive view of the subject, an ambition to put that into practice, and – of course – success in your studies. So, read on and good luck!

Nigel Slack Alistair Brandon-Jones

Robert Johnston

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OPERATIONS MANAGEMENT Seventh edition

Nigel Slack Alistair Brandon-Jones Robert Johnston

A01_SLAC6208_07_SE_FM.indd 3 15/04/13 1:55 PM

Pearson Education Limited Edinburgh Gate Harlow CM20 2JE United Kingdom Tel: +44 (0)1279 623623 Fax: +44 (0)1279 431059 Web: www.pearson.com/uk

First published under the Pitman Publishing imprint 1995 Second edition (Pitman Publishing) 1998 Third edition 2001 Fourth edition 2004 Fifth edition 2007 Sixth edition 2010 Seventh edition 2013

© Nigel Slack, Stuart Chambers, Christine Harland, Alan Harrison, Robert Johnston 1995, 1998 © Nigel Slack, Stuart Chambers, Robert Johnston 2001, 2004, 2007, 2010 © Nigel Slack, Alistair Brandon-Jones, Robert Johnston 2013

The rights of Nigel Slack, Alistair Brandon-Jones and Robert Johnston to be identified as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

The print publication is protected by copyright. Prior to any prohibited reproduction, storage in a retrieval system, distribution or transmission in any form or by any means, electronic, mechanical, recording or otherwise, permission should be obtained from the publisher or, where applicable, a licence permitting restricted copying in the United Kingdom should be obtained from the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.

The ePublication is protected by copyright and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased, or as strictly permitted by applicable copyright law. Any unauthorised distribution or use of this text may be a direct infringement of the author’s and the publishers’ rights and those responsible may be liable in law accordingly.

All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners.

Pearson Education is not responsible for the content of third-party internet sites.

ISBN: 978-0-273-77620-8 (print) 978-0-273-77628-4 (PDF) 978-0-273-77621-5 (eText)

British Library Cataloguing-in-Publication Data A catalogue record for the print edition is available from the British Library

Library of Congress Cataloging-in-Publication Data A catalog record for the print edition is available from the Library of Congress

10 9 8 7 6 5 4 3 2 1 17 16 15 14 13

Print edition typeset in 9.25/12 by Charter ITC Std by 75 Print edition printed and bound in Italy by L.E.G.O. S.p.A

NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION

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v

Guide to ‘operations in practice’, examples, short cases and case studies xii

Making the most of this book and MyOMLab xvi

Preface xx

To the Instructor . . . xxii

To the Student . . . xxiii

Ten steps to getting a better grade in operations management xxiv

About the authors xxv

Acknowledgements xxvi

Part One INTRODUCTION 3

1 Operations management 4

2 Operations performance 36

3 Operations strategy 68

Part Two DESIGN 95

4 Process design 96

5 Innovation and design in services and products 125

6 Supply network design 152 Supplement to Chapter 6 – Forecasting 183

7 Layout and flow 191

8 Process technology 223

9 People, jobs and organization 251 Supplement to Chapter 9 – Work study 279

Part Three DELIVER – PLANNING AND CONTROLLING OPERATIONS 287

10 The nature of planning and control 288

11 Capacity management 322 Supplement to Chapter 11 – Analytical

queuing models 361

12 Inventory management 368

13 Supply chain management 404

14 Enterprise resource planning (ERP) 439 Supplement to Chapter 14 – Materials

requirements planning (MRP) 456

15 Lean synchronization 464

16 Project management 495

17 Quality management 534 Supplement to Chapter 17 – Statistical

process control (SPC) 562

Part Four IMPROVEMENT 577

18 Operations improvement 578

19 Risk management 610

20 Organizing for improvement 640

Part Five CORPORATE SOCIAL RESPONSIBILITY 671

21 Operations and corporate social responsibility (CSR) 672

Notes on chapters 693 Glossary 700 Index 713

Brief contents

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Why is flexibility important? 52 Why is cost important? 55 Trade-offs between performance objectives 60

Summary answers to key questions 62 Case study: Operations objectives at the

Penang Mutiara 64 Problems and applications 65 Selected further reading 66 Useful websites 67

Chapter 3 Operations strategy 68 Introduction 68

What is strategy and what is operations strategy? 70 The ‘top-down’ and ‘bottom-up’ perspectives 73 The market requirements and operations resources

perspectives 77 How can an operations strategy be put together? 86

Summary answers to key questions 89 Case study: Long Ridge Gliding Club 91 Problems and applications 92 Selected further reading 93 Useful websites 93

Contents

Guide to ‘operations in practice’, examples, short cases and case studies xii

Making the most of this book and MyOMLab xvi

Preface xx

To the Instructor . . . xxii

To the Student . . . xxiii

Ten steps to getting a better grade in operations management xxiv

About the authors xxv

Acknowledgements xxvi

Part One

Part Two

INTRODUCTION 3

Chapter 1 Operations management 4 Introduction 4

What is operations management? 6 Operations management is important in all

types of organization 8 The input–transformation–output process 13 The process hierarchy 18 Operations processes have different characteristics 23 What do operations managers do? 26

Summary answers to key questions 30 Case study: Design house partnerships at Concept

Design Services 31 Problems and applications 34 Selected further reading 34 Useful websites 35

Chapter 2 Operations performance 36 Introduction 36

Operations performance is vital for any organization 38

Why is quality important? 46 Why is speed important? 47 Why is dependability important? 49

DESIGN 95

Chapter 4 Process design 96 Introduction 96

What is process design? 97 What objectives should process design have? 98 Process types – the volume–variety effect

on process design 101 Detailed process design 109

Summary answers to key questions 120 Case study: The Action Response Applications

Processing Unit (ARAPU) 121 Problems and applications 123 Selected further reading 124 Useful websites 124

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Chapter 5 Innovation and design in services and products 125 Introduction 125

How does innovation impact on design? 127 Why is good design so important? 130 The stages of design – from concept

to specification 131 What are the benefits of interactive design? 141

Summary answers to key questions 147 Case study: Chatsworth – the adventure

playground decision 148 Problems and applications 150 Selected further reading 150 Useful websites 151

Chapter 6 Supply network design 152 Introduction 152

The supply network perspective 153 Configuring the supply network 155 Where should an operation be located? 160 Long-term capacity management 168 Break-even analysis of capacity expansion 174

Summary answers to key questions 175 Case study: Disneyland Resort Paris (abridged) 176 Problems and applications 180 Selected further reading 182 Useful websites 182

Supplement to Chapter 6 Forecasting 183 Introduction 183

Forecasting – knowing the options 183 In essence forecasting is simple 184 Approaches to forecasting 185 Selected further reading 190

Chapter 7 Layout and flow 191 Introduction 191

What is layout? 193 The basic layout types 193 What type of layout should an operation choose? 200 How should each basic layout type be

designed in detail? 204

Summary answers to key questions 217 Case study: North West Constructive Bank (abridged) 218 Problems and applications 220 Selected further reading 222 Useful websites 222

Chapter 8 Process technology 223 Introduction 223

Operations management and process technology 225

What do operations managers need to know about process technology? 225

How are process technologies evaluated? 237 How are process technologies implemented? 242

Summary answers to key questions 246 Case study: Rochem Ltd 247 Problems and applications 249 Selected further reading 249 Useful websites 250

Chapter 9 People, jobs and organization 251 Introduction 251

People in operations 253 Human resource strategy 253 Organization design 256 Job design 259 Allocate work time 271

Summary answers to key questions 273 Case study: Service Adhesives try again 274 Problems and applications 276 Selected further reading 277 Useful websites 277

Supplement to Chapter 9 Work study 279 Introduction 279

Method study in job design 279 Work measurement in job design 282

Part Three

DELIVER – PLANNING AND CONTROLLING OPERATIONS 287

Chapter 10 The nature of planning and control 288 Introduction 288

What is planning and control? 290 The effect of supply and demand on

planning and control 293 Planning and control activities 299 Controlling operations is not always routine 314

Summary answers to key questions 316

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Case study: subText Studios, Singapore (abridged) 317

Problems and applications 320 Selected further reading 321 Useful websites 321

Chapter 11 Capacity management 322 Introduction 322

What is capacity management? 324 How is capacity measured? 326 Coping with demand fluctuation 334 How can operations plan their capacity level? 343 How is capacity planning a queuing problem? 348

Summary answers to key questions 353 Case study: Blackberry Hill Farm 354 Problems and applications 358 Selected further reading 360 Useful websites 360

Supplement to Chapter 11 Analytical Queuing Models 361 Introduction 361

Notation 361 Variability 361 Incorporating Little’s law 363 Types of queuing system 363

Chapter 12 Inventory management 368 Introduction 368

What is inventory? 370 Why should there be any inventory? 372 How much to order – the volume decision 376 When to place an order – the timing decision 388 How can inventory be controlled? 392

Summary answers to key questions 398 Case study: supplies4medics.com 400 Problems and applications 401 Selected further reading 402 Useful websites 402

Chapter 13 Supply chain management 404 Introduction 404

What is supply chain management? 406 The activities of supply chain management 409 Single- and multi-sourcing 413

Relationships between operations in a supply chain 419

How do supply chains behave in practice? 424 How can supply chains be improved? 426

Summary answers to key questions 433 Case study: Supplying fast fashion 434 Problems and applications 437 Selected further reading 438 Useful websites 438

Chapter 14 Enterprise resource planning (ERP) 439 Introduction 439

What is ERP? 440 How did ERP develop? 441 Implementation of ERP systems 449

Summary answers to key questions 451 Case study: Psycho Sports Ltd 452 Problems and applications 454 Selected further reading 455 Useful websites 455

Supplement to Chapter 14 Materials requirements planning (MRP) 456 Introduction 456

Master production schedule 456 The bill of materials (BOM) 458 Inventory records 459 The MRP netting process 459 MRP capacity checks 461

Summary 463

Chapter 15 Lean synchronization 464 Introduction 464

What is lean synchronization? 465 How does lean synchronization

eliminate waste? 471 Lean synchronization applied throughout

the supply network 484 Lean synchronization compared with

other approaches 486

Summary answers to key questions 489 Case study: The National Tax Service (NTS) 490 Problems and applications 492 Selected further reading 493 Useful websites 494

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Chapter 16 Project management 495 Introduction 495

What is project management? 497 How are projects planned and controlled? 500 What is network planning? 514

Summary answers to key questions 526 Case study: United Photonics Malaysia Sdn Bhd 527 Problems and applications 531 Selected further reading 532 Useful websites 533

Chapter 17 Quality management 534 Introduction 534

What is quality and why is it so important? 536 How can quality problems be diagnosed? 540 Conformance to specification 541 Achieving conformance to specification 541 Total quality management (TQM) 548

Summary answers to key questions 556 Case study: Turnround at the Preston plant 557 Problems and applications 559 Selected further reading 560 Useful websites 560

Supplement to Chapter 17 Statistical process control (SPC) 562 Introduction 562

Control charts 562 Variation in process quality 563 Control charts for attributes 568 Control chart for variables 569 Process control, learning and knowledge 573

Summary 574 Selected further reading 574 Useful websites 574

The key elements of operations improvement 584

The broad approaches to managing improvement 588

What techniques can be used for improvement? 598

Summary answers to key questions 603 Case study: GCR Insurance 605 Problems and applications 608 Selected further reading 609 Useful websites 609

Chapter 19 Risk management 610 Introduction 610

What is risk management? 612 Assessing the potential causes of and

risks from failure 613 Preventing failure 624 How can operations mitigate the effects

of failure? 631 How can operations recover from the

effects of failure? 632

Summary answers to key questions 635 Case study: Slagelse Industrial

Services (SIS) 636 Problems and applications 638 Selected further reading 638 Useful websites 639

Chapter 20 Organizing for improvement 640 Introduction 640

Why the improvement effort needs organizing 642

Linking improvements to strategy 643 What information is needed

for improvement? 645 What should be improvement priorities? 652 How can organizational culture affect

improvement? 657 Key implementation issues 659

Summary answers to key questions 664 Case study: Re-inventing Singapore’s

libraries 666 Problems and applications 667 Selected further reading 668 Useful websites 668

Part Four

IMPROVEMENT 577

Chapter 18 Operations improvement 578 Introduction 578

Why is improvement so important in operations management? 580

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Part Five

CORPORATE SOCIAL RESPONSIBILITY 671

Chapter 21 Operations and corporate social responsibility (CSR) 672 Introduction 672

What is corporate social responsibility? 674 The wider view of corporate social responsibility 679

How can operations managers analyse CSR issues? 686

Summary answers to key questions 689 Case study: CSR as it is presented 690 Problems and applications 691 Selected further reading 691 Useful websites 691

Notes on chapters 693

Glossary 700

Index 713

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Guide to ‘operations in practice’, examples, short cases and case studies

Chapter Location Company/example Region Sector/activity Company size

Chapter 1 Operations management

p. 5 IKEA Global Retail Large p. 11 Torchbox UK Web design Small p. 12 MSF Global Charity Large p. 15 First Direct UK Banking Large p. 18 Pret A Manger Europe/USA Retail Medium p. 24 Formule 1 Europe Hospitality Large p. 25 Anantara Bangkok Riverside

Resort & Spa Thailand Hospitality Medium

p. 28 To be a great operations manager you need to . . .

General General N/A

p. 31 Concept Design Services UK Design/manufactur- ing/distribution

Medium

Chapter 2 Operations performance

p. 37 A tale of two terminals UK Airport Medium p. 44 Patagonia, a B Corp Global Garment

manufacturing Large

p. 49 Organically good quality UK Agricultural Small p. 50 When speed means life or

death General Health care Medium

p. 51 How UPS maintains its dependability

Global Distribution Large

p. 53 566 quadrillion individual muesli mixes

German Web retail Small

p. 56 Everyday low prices at Aldi Europe Retail Large p. 57 Can cost cutting go too far? China Manufacturing Large p. 64 The Penang Mutiara Malaysia Hospitality Medium

Chapter 3 Operations strategy

p. 69 Flextronix and Ryanair Europe MSC/airline Large p. 76 Apple’s retail operations

strategy Global Retail Large

p. 83 Amazon, so what exactly is your core competence?

Global Web retail Large

p. 85 Apple’s supply operations strategy

Global Manufacturing Large

p. 89 Sometimes any plan is better than no plan

European Military Large

p. 91 Long Ridge Gliding Club UK Sport Small

Chapter 4 Process design

p. 97 Fast-food drive-throughs USA Quick service restaurant Large p. 101 Ecover’s ethical operation

design Belgium/ France

Manufacturing Large

p. 109 Space4 housing processes UK Construction Medium p. 119 Heathrow delays caused by

capacity utilization UK Airport Large

p. 121 The Action Response Appli- cations Processing Unit

UK Charity Small

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Chapter Location Company/example Region Sector/activity Company size

Chapter 5 Innovation and design in services and products

p. 126 Innovative design from Dyson Global Design/manufacturing Large p. 129 The sad tale of Kodak and its

digital camera Global Manufacturing Large

p. 133 Square watermelons! Global Agriculture/retail Large p. 136 Daniel Hersheson Blow Dry

Bar UK Hairdresser Small

p. 138 Customizing for kids UK Media Small p. 144 The troubled history of the

Airbus A380 Global Aerospace Large

p. 148 Chatsworth UK Tourism Medium

Chapter 6 Supply network design

p. 153 Dell Global Computer manufacturing

Large

p. 159 HTC Taiwan Design/telecoms Large p. 162 Tata Nano India Car manufacturing Large p. 164 Counting clusters Global Various Various p. 170 Economies of scale in heart

surgery and shipping Various Health care/shipping Medium/Large

p. 176 Disneyland Resort Paris France Entertainment Large

Chapter 7 Layout and flow

p. 192 Tesco UK Retail Large p. 195 ‘Factory flow’ helps surgery

productivity UK Health care Medium

p. 199 Apple’s shop-within-a-shop in Harrods

UK Retail Large

p. 201 Cadbury’s UK Entertainment/ manufacturing

Large

p. 204 The transparent factory Germany Manufacturing Large p. 218 North West Constructive

Bank UK Financial services Medium

Chapter 8 Process technology

p. 224 I, Robot All Various Various p. 228 Customers are not always

human Netherlands Agriculture Medium

p. 229 QB House Asia Hairdressing Medium p. 244 Who’s in the cockpit? All Airlines Large p. 247 Rochem Ltd UK Food processing Medium

Chapter 9 People, jobs and organization

p. 252 W.L. Gore Global Manufacturing Large p. 255 Google Global Internet Large p. 266 McDonald’s UK Restaurants Large p. 268 Lloyds TSB UK Banking Large p. 274 Service Adhesives Europe Manufacturing Large

Chapter 10 The nature of planning and control

p. 289 BMW dealership UK Service and repair Medium p. 293 Air France Global Airline Large p. 297 Taxi App replaces dispatch-

ing office Germany Software development Medium

p. 302 Can airline passengers be sequenced?

Global Airlines Large

p. 304 The hospital triage system All Health care Large p. 309 Chicken salad sandwich –

part one All Food processing Large

p. 317 subText Studios Singapore CGI Small

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Chapter Location Company/example Region Sector/activity Company size

Chapter 11 Capacity management

p. 323 Amazon’s ‘Cyber Monday’ UK Web retailing Large p. 328 Raining on their parade Global Various Various p. 334 The London Eye UK Tourism Medium p. 335 Panettone Italy Manufacturing Medium p. 339 Annualized hours help

Lowaters to retain its core team

UK Horticulture Small

p. 342 Getting the message All Design Large p. 354 Blackberry Hill Farm UK Tourism Small

Chapter 12 Inventory planning and control

p. 369 UK’s National Blood Service UK Health care Large p. 378 Mountains of grit UK Local government Medium p. 386 Howard Smith Paper Group UK Distribution service Large p. 400 supplies4medics.com Belgium Distribution Medium

Chapter 13 Supply chain management

p. 405 Ocado UK Web retail Large p. 412 The North Face Global Manufacturing Large p. 417 Levi Strauss Global Garment design/

retailing Large

p. 418 TDG Europe Logistics services Large p. 430 Seven-Eleven Japan Japan Retail Large p. 432 Tsunami disrupts Japan’s

global supply chains Japan/ global

Various Large

p. 434 Supplying fast fashion: H&M, Benetton and Zara

Global Design/manufactur- ing/distribution/retail

Large

Chapter 14 Enterprise resource planning

p. 440 Butcher’s Pet Care UK Pet food Medium p. 443 SAP and its partners Global Various Various p. 444 Chicken salad sandwich –

part two All Food processing Large

p. 447 SAP at Rolls-Royce Global Aerospace Large p. 449 Waste management USA Waste disposal Large p. 452 Psycho Sports All Manufacturing Small