Page 99 - DMGT501_OPERATIONS_MANAGEMENT

Unit 4: Process Selection and Facility Layout

Notes
Example: Goods made using the 'Make to order' products market orientation are:
commercial airplanes, prescription glasses, etc.
The lead time depends on whether or not the firm can and will stock raw materials in
anticipation of orders. The company saves by not having to commit resources in production
until a firm order is received. ECIL manufactures the CYBER series of mainframes, MEDHA,
which are 'make to order' products.

4. Engineer to Order (ETO): This market orientation is used to make unique products that
have not been previously engineered. Extensive customization to suit the customer's need
is possible, but only if the customer is willing to wait for this addition stage in the value
creation process.

Example: ETO products include: specialized industrial equipment, hand-built furniture,
etc.
A producer of ETO products must wait for customers to place orders before beginning any
activity. As a result, the customer bears the entire cost of the total product delivery lead
time. In other words, the external lead time often exactly equals the total product delivery
lead time. The Control Systems, Communications and Computer Groups of ECIL make
products that are 'engineered to order'.

Processes as Production Systems

A production system refers to how an organization organizes material flow using different
process technologies. There are five major types of production systems that have been generally
identified. They are:
1. Project: These are generally one-off projects. It is based on extensive customization that is
suited to the customer's need. Many construction projects, project management contracts,
shipbuilding and civil engineering projects fall in this category.

Example: Larson and Toubro's main business is executing projects. Much of the work is
carried out at site rather than in a factory. All equipment, tools, materials, labour, etc., are placed
at the site itself. Infosys sends its teams to the customer's facilities to install, test, and customize
its software.
2. Job Shop: Job shop production is characterized by processing of small batches of a large
number of different products, most of which require a different set or sequence of processing
steps. Production equipment is mostly general purpose to meet specific customer orders.
Highly skilled labour is needed to handle the processes, as the variety and product range
are generally very high.

Commercial printing firms, machine shops, and die, jigs and fixture making, etc., are
examples of this type of structure.

Example: Thomson Press operates on the basis of specific customer orders; Tools and
Equipment makes jigs and fixtures as per the design and requirements of its clientele. Tata
Consultancy Services (TCS) produce different types of software, based and customized to each
client's requirements.

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