The manufacturing process is of converting of inputs into outputs and adding value to the products. It is the most important part of production/operation function and the appropriate process selection involves getting the desired output and quality while maintaining cost efficiency.
This is why appropriate process selection is such a vital strategy decision. Once a process is selected and implemented, it is difficult to change it due to the obvious cost implication. The choice of process would depend on various factors, but the two basic objectives are of paramount importance, viz., meeting specifications requirement and achieving the cost effectiveness.
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The factors that affect the process selection are discussed in the following:
1. Volume and Variety:
If the degree of repetitiveness is high, then a continuous production process is indicated to ensure the higher output volume at a higher speed. However, organizations that produce a wide variety of items would require multi-skilled workers, general- purpose machines and complex production planning and control systems. Here, a job-shop type (intermittent) or a batch type of production is more suitable.
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2. Capacity of the Plant:
The choice between a job-shop type and mass production also depend upon the projected sales or output volume. Fixed costs are high in the continuous process, and variable costs are high for job-shop type process.
3. Flexibility:
Flexibility allows an organization to satisfy varied needs of the customer. When the flexibility of production is high, then the process needs to be an intermittent manufacturing process.
4. Lead Time:
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Faster deliveries, to a great extent allow an organization to remain a market leader, whereas, delays eventually cause decrease in the market share. To ensure adherence to delivery schedules, batch production process would be selected where there is a variety of products, and where there is uniformity there would be a mass production.
5. Economy of Scale:
It is important to have an optimum utilization of machine and manpower to achieve cost efficiency in the production process. This is an aspect that has to be considered while selecting a manufacturing process.
6. Environment:
Environmental issues are increasingly being considered, while selecting a manufacturing process. To take an example, plastic moulded butts are replacing wooden rifle butts, and cold swaging process is in use for metal forming as it is more environments friendly.
No single criterion is sufficient to decide the process selection. Various manufacturing process will be discussed later in detail.
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In addition to the above factors, organizations may also use cost-benefit analysis and break-even analysis to choose a given process.
Under cost-benefit analysis, the cost estimates are prepared for each of the alternative processes and the least cost alternative is chosen. The following costs are considered:
i. Cost of materials
ii. Cost of unavoidable rejection (UAR)
iii. Cost of scrap arising
iv. Tooling cost
v. Processing cost