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1OM, Ch. 7 Process Selection, Design, and Analysis
2009 South-Western, a part of Cengage Learning
PROCESS SELECTION,
DESIGN, AND ANALYSIS
CHAPTER 7
DAVID A. COLLIER
AND
JAMES R. EVANS
OM
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2OM, Ch. 7 Process Selection, Design, and Analysis
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Three Types of Goods and Services
1. Custom, ormake-to-order, goods andservicesare generally produced and deliveredas one-of-a-kind or in small quantities, and are
designed to meet specific customersspecifications.
Examples include ships, weddings, certain
jewelry, estate plans, buildings, andsurgery.
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Three Types of Goods and Services
2. Option,or assemble-to-order, goods andservicesare configurations of standard parts,subassemblies, or services that can be selected
by customers from a limited set.
Examples are Dell computers, Subwaysandwiches, machine tools, and travel agent
services.
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Three Types of Goods and Services
3. Standard, ormake-to-stock, goods andservicesare made according to a fixed design,and the customer has no options from which to
choose.
Examples: appliances, shoes, sportinggoods, credit cards, online Web-based
courses, and bus service.
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Four Types of Processes
1. Projectsare large-scale, customized initiativesthat consist of many smaller tasks and activitiesthat must be coordinated and completed to
finish on time and within budget.
Characteristics: one-of-a-kind, large scale,complex, resources brought to site; wide variationin specs and tasks.
Examples of projects: legal defense preparation,construction, customer jewelry, consulting, andsoftware development.
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2009 South-Western, a part of Cengage Learning
Four Types of Processes
2. Job shop processesare organized aroundparticular types of general-purpose equipment thatare flexible and capable of customizing work for
individual customers. Characteristics: Significant setup and/or
changeover time, batching, low to moderate volume,many routes, many different products, high work-
force skills, and customized to customers specs. Examples: Many small manufacturing companies
are set up as job shops, as are hospitals, legalservices, and some restaurants.
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Four Types of Processes
3. Flow shop processesare organized arounda fixed sequence of activities and processsteps, such as an assembly line, to produce a
limited variety of similar goods or services.
Characteristics: Little or no setup time,dedicated to small range of goods or
services that are similar, similar sequenceof process steps, moderate to highvolume.
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Four Types of Processes3. Flowshops continued
An assembly line is a common example of
a flow shop process. Many option-orientedand standard goods and services areproduced in flow-shop settings.
Examples: automobiles, appliances,insurance policies, checking accountstatements, and hospital laboratory work.
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OM, Ch. 7 Process Selection, Design, and Analysis
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Four Types of Processes
4. Acontinuous flow processcreates highly standardizedgoods or services, usually around the clock in very highvolumes.
Characteristics: not made from discrete parts, veryhigh volumes in a fixed processing sequence, highinvestment in system, 24-hour/7-day continuousoperation, automated, dedicated to a small range of
goods or services. Examples: chemical, gasoline, paint, toy, steel
factories; electronic funds transfer, credit cardauthorizations, and automated car wash.
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OM, Ch. 7 Process Selection, Design, and Analysis
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Product-Process
Matrix
Exhibit 7.2
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OM, Ch. 7 Process Selection, Design, and Analysis
2009 South-Western, a part of Cengage Learning
Process Choice in Services
Apathwayis a unique route through a servicesystem. Pathways can be customer- orprovider-driven, depending on the level of
control that the service firm wants to ensure.
Theservice encounter activity sequenceconsists of all the process steps and associated
service encounters necessary to complete aservice transaction and fulfill customers wantsand needs.
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Service Positioning Matrix
Customer-routed servicesare those that offercustomers broad freedom to select the pathways thatare best suited for their immediate needs and wants,
from many possible pathways through the servicedelivery system.
The customer decides what path to take through theservice delivery system with only minimal guidancefrom management.
Examples include searching the Internet, museums,health clubs, and amusement parks.
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Service Positioning Matrix
Provider-routed servicesconstrain customersto follow a very small number of possible andpredefined pathways through the service system.
A newspaper dispenser is an extreme example ofa service system design with only one pathway,thus allowing a single service encounter activity
sequence.
Logging on to your secure online bank account isprovider-routed.
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Exhibit 7.3
Source: Adapted from D. A. Collier
and S. M. Meyer, A ServicePositioning Matrix,International
Journal of Production and
Operations Management, 18, no. 12,
1998, pp. 11231244.Also see D. A.
Collier and S. Meyer, An Empirical
Comparison of Service Matrices,
International Journal of Operations
and Production Management, 2000
(no. 56), pp. 705729.
The Service Positioning Matrix
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The hierarchy of workis defined as:
(1) Task(2) Activity(3) Process
(4) Value Chain
Ataskis a specific unit of work required to create anoutput. An example is drilling a hole in a steel part orcompleting an invoice.
Anactivityis a group of tasks (sometimes called a
workstation) needed to create and deliver an intermediateor final output. Workstations might be a position on anassembly line, a manufacturing cell, or an office cubicle.
Value chainandprocesshave been previously defined.
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Aprocess map (flowchart)describes the sequence of all
process activities and tasks necessary to create and deliver adesired output or outcome.
A process map can include the flow of goods, people,information, or other entities, as well as decisions that must
be made and tasks that are performed.
Process maps document how work either is, or should be,accomplished, and how the transformation process createsvalue.
Process maps delineate the boundaries of a process. Aprocess boundaryis the beginning or end of a process.
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Aprocess flowchart is the basis for value stream
mapping, service blueprinting, and service maps.
Service blueprintsadd a line of visibility thatseparates the back and front office (rooms) as
shown in Exhibit 7.5.
Many names are used for the analysis anddevelopment of process flowcharts, so dont let
corporate fads and buzzwords confuse youthebasics of process analysis dont change, just thebuzzwords and consultants sales pitch!
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Automobile Repair
Flowchart
Exhibit 7.5
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Value Stream Mapping
Thevalue streamrefers to all value-added activitiesinvolved in designing, producing, and deliveringgoods and services to customers.
A value stream map (VSM) shows the process flowsin a manner similar to a traditional process flowchartor service blueprint.
Traditional flowcharting, service blueprinting, andvalue stream mapping all try to analyze wait andprocess times, bottleneck work stations, process
throughput, and so on.
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Value Stream Mapping
However, the difference between VSM and theseother flowcharting and analysis approaches lies inthat value stream maps highlight value-added
versus non-value-added activities, and includecosts associated with work activities for both value-and non-value added activities.
That is, VSM tries to include the economics of the
process on the flowcharts.
There are many formats for VSM.
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Examples ofnon-value-added activities include:
transferring materials between two nonadjacentworkstations
overproducing
waiting for service or work to do not doing work correctly the first time
requiring multiple approvals for a low cost electronictransaction
Eliminating non-value-added activities in a processdesign is one of the most important responsibilities ofoperations managers.
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1. Define the purpose and objectives of the process.
2. Create a detailed process or value stream map thatdescribes how the process is currently performed.
3. Evaluate alternative process designs. Identify anddefine appropriate performance measures for theprocess.
4. Select the appropriate equipment and technology.
5. Develop an implementation plan to introduce thenew or revised process design.
Chapter 7 Steps to Analyze a Process
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Process Analysis and Improvement
Few processes are designed from scratch. Manyprocess design activities involve redesigning an existingprocess to improve performance. Managementstrategies to improve process designs usually focus onone or more of the following:
Increasing revenue by improving process efficiencyin creating goods and services and delivery of the
customer benefit package. Increasing agility by improving flexibility and
response to changes in demand and customerexpectations.
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Process Analysis and Improvement (continued)
Increasing product and/or service quality by reducingdefects, mistakes, failures, or service upsets.
Decreasing costs through better technology or
elimination of non-value-added activities.
Decreasing process flow time by reducing waiting timeor speeding up movement through the process andvalue chain.
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Reengineering and Creative Destruction
Reengineeringhas been defined as thefundamental rethinking and radical redesignof business processes to achieve dramatic
improvements in critical, contemporarymeasures of performance, such as cost,quality, service, and speed.
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Process Design and Resource Utilization
Utilizationis the fraction of time a workstationor individual is busy over the long run.
Understanding resource utilization is animportant aspect of process design andimprovement.
Utilization (U) = Resources Demanded [7.1]Resource Availability
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The average number of entities completed per unit
timethe output ratefrom a process is calledthroughput.
Throughput might be measured as parts per day,transactions per minute, or customers per hour,depending on the context.
Abottleneckis the work activity that effectivelylimits throughput of the entire process.
Wheres the bottleneck work activity in Exhibit 7.11?
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Exhibit 7.11 Simplified Restaurant Fulfillment Process
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Littles Law is a simple formula that explains the relationship
among flow time (T), throughput (R) and work-in-process (WIP).
WORK-IN-PROCESS = THROUGHPUT FLOW TIME
or
WIP = R T [7.3]
Flow time, orcycle time, is the average time it takes tocomplete one cycle of a process.
Littles Law provides a simple way of evaluating average
process performance. If we know any two of the three variables, we can compute
the third using Little's Law.
Chapter 7 Littles Law