©The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin

Chapter 4

Processes: Turning Resources into

Capabilities

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Learning Objectives

• Describe the functions and importance of concurrent engineering for product and service design.

• Describe the service system design matrix and understand the relationships between sales opportunities, customer contact, and process efficiency.

• Describe the quality function deployment processes.• Describe the component matrices in the house of quality.• Use the house of quality to structure quality function deployment.• Differentiate between lean production, value stream mapping, Six

Sigma, business process analysis, reengineering, and poka-yoke.• Construct a process flow chart.• Construct a service blueprint.

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Process Definition

• A process is a collection of tasks and activities that together, and only together, transform inputs to outputs. Processes are organizing structures for resources, which provide the bridge between resources and capabilities.

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Process Decisions and Process Choice

• Process decisions range from strategic to tactical• Many require long-term investments• All affect the firm’s ability to compete

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General Layout Alternatives

• Product-oriented layout• Process-oriented layout• Cellular layout

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General Layout Decisions

• The product-oriented layout– Provides resources in a fixed sequence

– Matches the sequence of steps required to produce a product or service

– Common in high-volume manufacturing

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Product Oriented Layout

AdvantagesEfficient production of standardized goods and servicesHigh processing speedLow cost per unit

DisadvantagesLack of flexibility or customizationEmployee boredom/ dissatisfactionQuality problems

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Process Oriented Layout

• Process-oriented Layout– Organized by function– Processing steps can be completed in any sequence– Products or customers can take any “route” necessary.

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Process Oriented Layout

Advantages Flexibility and customization

DisadvantagesHigher cost per unitHigher skilled, high cost employeesTransport/wait time between departments Less consistency

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Cellular Layouts

• Cellular layouts– A compromise of product and process layouts

– Create “families” of products with similar process requirements

– A “cell” contains all resources needed for family

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Cellular Layouts

AdvantagesFlexibility greater than a product-oriented layoutLess costly than a process-oriented layout

Less material transport/waitFewer changeovers

DisadvantagesDuplication of resources

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Choices for Manufacturers: The Product/Process Matrix

Process Types• Project – Unique, one-of-a-kind, products or customers.

Generally large in size (building a bridge, installing a software system, implementing a major improvement effort)

• Job Shop – Predominantly manufacturing, high customization and flexibility, but higher volume than project.

• Batch Production – Groups of identical products or customers processed together through one step and then moved together to the next step. More limited product variety, higher production volume.

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Process Types (continued)• Assembly Line – Narrowly defined processes, made up

of equipment with limited flexibility. Much higher volume. Still the possibility of some flexibility.

• Continuous Flow (Repetitive)– Equipment and workstations dedicated to a single thing. Very high volume. Very low flexibility. Best chance for automation.

Choices for Manufacturers:The Product/Process Matrix

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Process flow selection and theProduct Process Matrix

Tend to be product-oriented

Can be either

Tend to be process-oriented

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• Manufacturers match output to demand in different ways

• Make-to-stock (MTS)– Process activated to meet expected or forecast demand– Customer orders are served from target stocking level– Shorter lead time for stocked items

• MUCH longer for out of stock items• Risk of obsolescence, shrink, etc.

• Make-to-order (MTO)– Process activated in response to an actual order

• May be either standard or custom product

– WIP and finished goods inventory kept to a minimum– Tends to have longer response time

Other Process Choices: Demand Linkage

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Other Process Choices: Demand Linkage

• Assemble-to-order (ATO)– Partially manufactured and held in unfinished state

– Customer order dictates final configuration

– Quicker response than MTO; More flexible than MTS

4-17Exhibit 4.7 Service System Design Matrix

Choices for Service Providers:The Service System Design Matrix

• Customer contact & sales opportunity versus efficiency.

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Linking Customer Needs to Product/Process Attributes - Quality Function Deployment (QFD)

• Process design is as important as product design

• Products and/or services must meet customer needs

• Processes must meet product and/or service needs

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Quality Function Deployment: Phase 1 Example

• Phase 1: Product Planning– Translating customer wants and needs into technical design

parameters that can guide development of products and services.

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The relationships between the WHATs and the HOWs

WHAT customers want

HOW it can be achieved, in measurable technicalterms

The relationships among the HOWs

Performance Goals for the HOWS

The “House of Quality” Supports QFD by providing a structured framework for linking customer to

product and process

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Relative importance of the WHATs

Performance on WHAT’s relative to competitors

Performance goals achieved by competitors

Relative importance of performance goal to delivery of customer wants

The “House of Quality” links to competitors

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WHATS

HOWS

Relationshipsbetween WHATsand HOWS

Relationships amongHOWS

Goals for HOWS

Phase 1 House of Quality

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Quick delivery is most important to customers

Phase 1 House of Quality (continued)

It is also somethingMary is very goodat.

It is measured inminutes

The goal is < 20 minutes

AND…It can affect howhot a pizza is when it arrives

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The House of Quality

• The “House” is used repetitively to drive customer requirements closer to the product and process design.– “Hows” from prior phase become “Whats” of current phase

Phase 2Part Deployment

Phase 3Process Planning

Phase 4Production Planning

Phase 1 Product Planning

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Phase 2 House of Quality (continued)

• Phase 2: Part Deployment

–Technical design parameters provide information to guide the development of the components of the product or service.

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• Phase 3: Process Planning– Based on component characteristics, processes are designed.

– Specifying process requirements• Specific decisions on resource allocation and configuration• Prioritizing process requirements• Analyzing competitive offerings

Phase 3 House of Quality

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The House of Quality

• Phase 4: Production Planning– Process requirements are used to design a system that will control the process

and make sure it continues to meet expectations.

• The result is a discernable and measurable link between– The “wants” of the customer and the design of the product or service

Phase 2Part Deployment

Phase 3Process Planning

Phase 4Production Planning

Phase 1 Product Planning

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New Product and New Service Development

• Design for manufacture and assembly (DFMA)– Product and process engineers consult to ensure that the product

can be produced easily and at low cost

• Design for logistics (DFL)– Product design considers costs associated with transportation

• Design for environment (DFE)– Product design includes environmental concerns such as the

manufacturing process, packaging issues, disposal, refurbishing, and recycling

• Concurrent engineering– The ultimate in integrating process design and new product or

service design

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A Closer Look at Concurrent Engineering

• Performing product and service development engineering functions in tandem to reduce time and improve communication.

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Process Improvement Tools

• Process Maps– A visual model

of a process

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Process Improvement Tools (continued)

• Value Stream Mapping– A common “lean systems” tool

– Examines entire value stream for waste

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Process Improvement Tools (continued)

• Service Blueprints

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• Business Process Analysis– Focus on processes that cross functional boundaries and

transitions between departments

– Identified nonvalue-adding activities

Other Process Improvement Tools

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• Reengineering– Clean slate

– Focus on behind-the-scenes activities

– High use of technology

– High rate of use in the service sector

Other Process Improvement Tools

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• Process selection– Identify potential areas for improvement based on need and likelihood of success

• Description of current process– Using process flow diagram techniques, describe, precisely, the current process

• Process improvement– Identify new ways to accomplish the process goals– Technology is often used as a catalyst for improvement

• “Technology-enabled reengineering”

• Process verification– Identify problems with the proposed changes and ensure that they can be eliminated

• Implementing and monitoring– Make the changes and monitor the results for effectiveness

Reengineering steps

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Other Process Improvement Tools

• Poka-Yoke– Mistake-proofing products and services

– Preventing errors, reducing costs and improving quality

– Design to prevent doing it any but the correct way• McDonald’s wrapping of burger

• Car won’t start unless transmission is in “Park”

• “Deadman switch” on lawn mower

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Broad Improvement Frameworks

• Lean Systems– Organization-wide waste elimination

– Evolved from JIT

– Covered extensively in Chapter 13

• Six Sigma– Structured quality improvement process

– Training intensive

– Elimination of variability is focus

– Covered Extensively in Chapter 6