Page 98 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes The first stage in this case is called a bottleneck because it limits the capacity of the process. This
assumes no variability in the cycle time. With the relatively low 67 per cent utilization on the
first, second, variability would have little impact on the performance of this system.
Often activities, stages, and even entire processes are operated in parallel. For example, operating
two identical forging presses in parallel would theoretically double the capacity of forging
connecting rods. In many machine shops, multiple activities are carried out at the same time.
These units are called machining centers. When analyzing a system with parallel activities or
stages, it is important to understand the context. In the case where parallel processes represent
alternatives it should be clearly indicated by a decision box.

Typology of Processes

There are many ways in which processes can be categorized. They can be categorized on the
basis of their orientation, e.g., market orientation or manufacturing processes; they may also be
categorized on the basis of the production methodology or customer involvement. Given below
are the various categorizations of processes that are commonly used:

Processes by Market Orientation

Processes can also be categorized on the basis of four market orientations:
1. Make to Stock (MTS): The goods usually are standard, mature products with few product
customization options. As a general rule, 'make to stock' products compete primarily on
the basis of cost and availability.

Example: Such products include most retail goods such as breakfast cereals, milk, shirts,
jeans, and office desks.
The Consumer Electronics Group of ECIL manufactures colour and black and white
televisions that are also 'make to stock' items.
2. Assemble to Order (ATO): 'Assemble to order' products are standard items that are assembled
from in-stock subassemblies. This allows customers to specify a wide range of options.

Example: Many camera dealers can 'assemble' any configuration of a single lens reflex
camera from a basic body. The customer specifies the exact type of lens desired, or the viewing
system, etc.
In marketing, this approach is referred to as postponement. Successful sellers of 'assemble
to order' products must keep their assembly lead times as short as possible. The
Communication Systems Group (CSG) of ECIL manufactures two-way wireless
communication sets (HF, VHF, UHF); microwave instruments and components; various
kinds of antennae including microwave antennae for satellite communications, fax
equipment, SPC Telex equipment, frequency modulated antennae, analog/digital
microwave communication systems, and air traffic control equipment. These are basically
'assemble to order' types of products.
3. Make to Order (MTO): Make to order products are made from previously engineered
designs, but are made only after an order has been received. 'Make to order' products are
used when a standard product is: too costly to stock, has too uncertain demand, or will
deteriorate if stocked on a shelf.

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