1.4 Process Types (Discrete, Continuous, Manufacturing, Service) & Value Analysis/Engineering

1.4 Process Types & Value Analysis/Engineering

The NCEES specification lists process types (discrete versus continuous, manufacturing, service) and value analysis and engineering as separate Systems Engineering topics. Both are about matching a design to its purpose. The first matches the production system to the product's volume and variety; the second matches a product's cost to the functions the customer actually pays for.

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1. Discrete vs. Continuous Processes

Many plants are hybrids: a brewery brews continuously or in large batches but fills discrete bottles. Batch chemical processes sit between the two, making a fixed quantity per run.

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2. Manufacturing Process Types and the Product–Process Matrix

Hayes and Wheelwright's product–process matrix pairs product structure (low volume and high variety through high volume and standard) with process structure:

Moving down the matrix lowers unit cost and raises fixed cost, while flexibility falls. Firms that sit far off the diagonal (for example, a dedicated line making custom one-off products) usually have a cost or flexibility problem.

Order-Fulfillment Strategies

• Make-to-stock (MTS): finished goods are forecast and stocked; service depends on inventory.
• Assemble-to-order (ATO): components are stocked and final assembly waits for an order.
• Make-to-order (MTO): production starts when the order arrives.
• Engineer-to-order (ETO): design starts when the order arrives.

The customer order decoupling point is where forecast-driven work ends and order-driven work begins. Moving it upstream cuts inventory but lengthens lead time.

Crossover Analysis Between Process Types

If process 1 has fixed cost $F_1$ and variable cost $v_1$, and process 2 has $F_2 > F_1$ and $v_2 < v_1$, the two cost the same at:

$Q^* = \frac{F_2 - F_1}{v_1 - v_2}$

Example: A job shop setup costs $50,000 per year with a variable cost of $40 per unit. A dedicated assembly line costs $400,000 per year with a variable cost of $12 per unit. The crossover is $Q^* = 350{,}000 / 28 = 12{,}500$ units per year. Below that volume the job shop is cheaper; above it the line is cheaper.

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3. Service Process Types

Services differ from manufacturing because the customer is often present, output cannot be stored, and demand varies by the hour. Schmenner's service process matrix classifies services by labor intensity and by the degree of customer interaction and customization:

Chase's customer contact model separates high-contact "front office" work, which must be designed around the customer's presence and timing, from low-contact "back office" work, which can be run like a factory with batching and standard times. For modeling, services lean heavily on queueing and staffing models, because capacity that goes unused in an hour cannot be stored for the next.

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4. Value Analysis and Value Engineering

Value analysis began with Lawrence Miles at General Electric in the 1940s, when material shortages forced engineers to ask what each part actually had to do. Value engineering (VE) applies the same method during design, and value analysis (VA) applies it to existing products. Both aim to provide the required functions at the lowest life cycle cost without reducing performance, reliability, quality, or safety. U.S. federal agencies are required to use VE on suitable projects (41 U.S.C. 1711 and OMB Circular A-131).

$\text{Value} = \frac{\text{Function}}{\text{Cost}} \qquad \text{Value index} = \frac{\text{Worth}}{\text{Cost}}$

Function Analysis

• Define every function with an active verb plus a measurable noun: "support load," "transmit torque," "contain fluid." Avoid vague verbs such as "provide."
• Separate basic functions, the reason the item exists, from secondary functions that support the basic function or result from the chosen design.
• Assign a worth to each function: the lowest cost of any way to perform it.
• Functions with a value index far below 1.0 (cost much higher than worth) are the targets.

FAST (Function Analysis System Technique) diagrams arrange functions left to right. Reading to the right answers "How is this function performed?"; reading to the left answers "Why is it performed?" Scope lines mark the boundaries of the study, and the main left-to-right path is the critical path of functions.

The SAVE International Job Plan

SAVE International's Value Methodology Standard defines a structured job plan:

1. Preparation: pick the scope, team, and data.
2. Information: understand the project, its costs, and its constraints.
3. Function analysis: define functions, build the FAST diagram, and compute cost-to-worth ratios.
4. Creative: brainstorm alternative ways to perform the functions, without judging them yet.
5. Evaluation: screen and rank ideas against criteria.
6. Development: turn the best ideas into proposals with costs and risks.
7. Presentation: present recommendations to decision makers.
8. Implementation: carry out and track the approved changes.

The six phases from Information through Presentation form the VE workshop itself.

Worked Example: Function Cost Analysis

A sheet-metal bracket assembly costs $12.00. The team allocates cost to functions and estimates worth:

"Support load" has the lowest value index, so the creative phase focuses there. One idea is a single stamped part with a formed rib in place of three welded pieces. Note that VE does not simply cut cost: a cheaper bracket that fails the load requirement removes a basic function and is not a value improvement.