Make or Buy Decisions, Business Process Re-engineering & Operations Management

Posted on Apr 29, 2024 in Economy

Make or Buy Decisions

A crucial management policy where companies decide whether to manufacture products in-house or purchase them from external suppliers. Cost analysis, production volume, and available resources influence this decision.

Factors Influencing Make or Buy Decisions

  • Production Volume
  • Cost Analysis
  • Manpower Availability
  • Product Quality
  • Patents and Legal Restrictions

Business Process Re-engineering (BPR)

The act of fundamentally rethinking and redesigning business processes to achieve significant improvements in efficiency, quality, and cost.

Factors Affecting the Need for BPR

  • Competition
  • Technological Advancements
  • Declining Profitability

Stages in BPR

  1. Developing Process Vision and Objectives
  2. Understanding Existing Processes
  3. Defining Processes for Re-engineering
  4. Identifying IT Levers
  5. Implementation and Monitoring

Operations Management

Encompasses activities like organizing work, selecting processes, arranging layouts, and managing inventory to ensure efficient production and delivery of goods and services.

Operations Strategy

Sets the overall direction for decision-making within the operations function, aligning it with the company’s long-term competitive strategy.

Types of Operations Strategy

  1. Differentiation Strategy: Creating unique products or services.
  2. Cost Leadership Strategy: Producing at the lowest cost.
  3. Focus Strategy: Concentrating on a specific market segment.

Production Planning and Control

Break-Even Analysis

Determines the production volume at which total revenue equals total costs.

Process Planning

The systematic determination of methods for manufacturing products economically and competitively.

Steps in Process Planning

  1. Study Component Drawings
  2. List Surfaces to be Machined
  3. Combine Surfaces into Operations
  4. Determine Work Centers and Tools
  5. Determine Speeds and Feeds
  6. Estimate Operation Time
  7. Calculate Total Job Time
  8. Document Process Sheet

Plant Layout

The arrangement of physical facilities to optimize workflow and efficiency.

Group Technology

Identifies parts with similar characteristics and groups them into families for efficient processing.

Production Systems

Intermittent Production

Manufacturing goods based on customer orders rather than for stock.

Types of Intermittent Production

  • Job Production: Customized products in small quantities.
  • Batch Production: Limited number of identical products.
  • Project Production: Complex sets of activities with a specific timeline and budget.

Continuous Production

Production process flows continuously, typically for high-volume, standardized products.

Types of Continuous Production

  • Mass Production: Large quantities of identical products.
  • Flow Production: Continuous flow of materials through a fixed sequence of operations.
  • Assembly Line: Sequential addition of parts to create a finished product.
  • Cellular Production: Grouping machines and workers into cells to produce part families.

Computerized Layout Design Techniques

CRAFT (Computerized Relative Allocation of Facilities Technique)

An algorithm that iteratively improves layout by interchanging departments to minimize handling costs.

ALDEP (Automated Layout Design Program)

Builds a layout by successively placing departments based on relationships and closeness ratings.

CORELAP (Computerized Relationship Layout Planning)

Based on Muther’s Systematic Layout Planning, it uses relationship charts and weighted ratings to determine department placement.