Session 3 – Process Strategy and Analysis

2/9/2018

Operations Management

One of the fist decisions a manager makes indesigning well functioning process is tochoose a process type that best achieves thecompetitive priorities for that process

One of the fist decisions a manager makes indesigning well functioning process is tochoose a process type that best achieves thecompetitive priorities for that process

Opening remarks …….

Session 3 – Leaning outcome

• Understand the key decisions to be considered whendesigning effective processes in operations.

• Understand the process structures in manufacturingand services.

• Explain the product-process matrix in manufacturingand customer – contact matrix in services.

• Explain the major process strategy decisions and theirimplications for operations

Session 3 - Coverage

1. A Model for an effective process design

2. Different process types in manufacturing andservices

3. Process analysis tools

4. Process Improvements and Reengineeringmethods

What is a Process?

Is any part of anorganization whichtakes a set of inputresources which arethen used to transformsomething into outputsof products or services.

What is process design?

• The process design is a conceptual exercise.• The ‘design’ is to conceive the looks, arrangement, and

workings of something before it is created.• It is important to understand the design objectives when

the process design is done.• The most common way of doing this is by positioning it

according to its volume and variety characteristics

Selection of a process

• Selection of process in an strategic decision and it hasa long term effect on operations decisions.

• The selection of effective process has an greaterimpact on the competitive advantages of theorganization.

• Strategies for designing a process is different whetherprocess is for product or service

Key concepts related to the designing of a process• Process Structure: The process type relative to the type of resources

needed, how resources are allocated and their key characteristics.• Layout : The physical arrangement of operations• Customer Involvement : The degree of involvement of customer in

the process• Resource Flexibility : How much the skills available in the

organization can handle a wide variety of products, duties, andfunctions.

• Capacity Intensity: The mix of equipment and human skills in aprocess

• Process Analysis : The documentation and detailed understanding ofhow work is performed and how it can be redesigned.

Major decisions for effective process designProcess Structure

• Product-process position(Manufacturing)

• Customer-contact position(Services)

Layout DesignCustomer Involvement

• Low involvement• High Involvement

Resource Flexibility• Specialized• Enlarged

Capital intensity• Low Automation• High Automation

Strategies for Change• Process Reengineering• Process Improvement

EffectiveProcessDesign

Major types of processing in operations

Manufacturing process types Service process types1. Project processes 1. Professional services2. Jobbing processes 2. Service shop3. Batch processes 3. Mass service4. Mass processes5. Continuous processes

Process types - the volume - variety effect on process design

Manufacturing Processes

• One-off, complex, large-scale‘products’ with high work content

• Specially made, every one‘customized’

• Defined start and finish: time,quality and cost objectives

• Many different skills have tobe coordinated

1. Project Processes• low volume and high variety is

one the characteristic of aproject processes

• Deals with low volumes andvery high variety.

• Specially made, low repetition,every one ‘customized’

• Skill requirements are usuallyvery broad

• Skilled jobber, or team,completes whole product

2. Jobbing Processes

• Higher volumes and lowervariety than for jobbing

• Standard products,repeating demand. But canmake specials

• Specialized, narrower skills

• Set-ups (changeovers) ateach stage of production

3. Batch processes

4. Mass (Assembly line) processes

• Higher volumes and narrow variety

• Standard, repeat products(‘runners’)

• No set-ups, or almostinstantaneous ones

• Low and/or narrow skills

• Extremely high volumesand low variety: oftensingle product

• Standard, repeat products(‘runners’)

• Highly capital-intensiveand automated

• Few changeovers required

• Difficult and expensive tostart and stop the process

5. Continuous processes

ContinuousProcess

Assemblyline Process

Product-Process Matrix

2-18

Customization and Volume

Dive

rgen

ce a

nd Li

ne fl

ow

Low Volume, Productsmade to customerorder

Multiple products; Lowto moderate volume

Few Majorproducts; HighVolume

High Volume, HighStandardizationproducts

Flexible andunique sequenceof tasks

Disconnected lineflows, moderatelyrepetitive workConnected lineflows, highlyrepetitive work

Continuous flows

FocusCharacteristics

BatchProcess

Jobbingprocess

Projectprocess

Services Processes

Classification of Services

Low contact services

High contact services

1. Professional services• High variety with low volume• High - customer contact service and

customers spend a considerable time in theservice process.

• Provides high levels of customization and,meets individual customer needs.

• A great deal of staff time is spent in thefront office and contact staff are givenconsiderable discretion in servicingcustomers.

• Professional services are people-basedrather than equipment-based; emphasis isplaced on the process (how the service isdelivered) rather than the ‘product’ (what isdelivered).

• Professional services includemanagement consultants,lawyers’ practices, architects,doctors’ surgeries, auditors,health and safety inspectors andsome computer field serviceoperations.

2. Service shops

• This process is characterized by levels ofcustomer contact, customization, volumesof customers and staff discretion.

• Includes back and front office activities: Forexample, an equipment hire and salesorganization may have a range of productsdisplayed in front-office outlets, while back-office operations look after purchasing andadministration.

• Service shops include banks, high- street shops, holiday tour operators, carrental companies, schools, most restaurants, hotels and travel agents.

3. Mass services• This process has low volume and high

variety• Many customer transactions• limited contact time and little customization.• Services may be equipment- based and

‘product’-oriented, with most value addedin the back office and relatively littlejudgment applied by front-office staff.

• Staff are likely to have a closely defineddivision of labour and to follow setprocedures.

Mass services include supermarkets, a national rail network, anairport, telecommunications services, libraries, televisionstations, the police service and the enquiry desk at a utility.

Mass services• Mass services have many customer transactions• limited contact time and little customization.• Services may be equipment- based and ‘product’-

oriented, with most value added in the backoffice and relatively little judgment applied byfront-office staff.

• Staff are likely to have a closely defined divisionof labour and to follow set procedures.

• Mass services include supermarkets, a nationalrail network, an airport, telecommunicationsservices, libraries, television stations, the policeservice and the enquiry desk at a utility.

Strategies for Process Change

There are two different but complementary methodsfor process design and change

1. Process Improvements2. Process Reengineering

Strategies for Process Change

The systematic study of the activities and flows of eachprocess to improve it. Usually process improvementgoes on, whether or not process is reengineered.

1. Process Improvements

Strategies for Process Change

2. Process Reengineering

• The fundamental rethinking and radical redesign ofprocesses to improve the performance in terms ofcost, Speed, Flexibility, dependability and quality.

• Process Reengineering is about reinventing theprocesses rather than incremental improvements.

The impact of strategic performance objectives on process designobjectives and performance.