Chapter 7 : Process Strategy Contents:

Four Process Strategies

Selection of Equipment and Technology Production Technology

Contents - Continued

Process Focus Repetitive Focus Product Focus Mass Customization Focus Comparison of Process Choices Flow Diagrams Time-Function Mapping Process Charts Service Blueprinting

Process Analysis and Design

Service Process Design

Customer Interaction and Process Design More Opportunities to Improve Service Processes
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Technology in Services Process Reengineering Environmentally Friendly Processes

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Machine Technology Automatic Identification System (AIS) Process Control Vision Systems Robots Automated Storage and Retrieval System (ASRS) Automated Guided Vehicle (AGV) Flexible Manufacturing System (FMS) Computer-Integrated Manufacturing (CIM)

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Process Strategies
Process Strategy : Organizations approach to transform resources into goods and services. Objective

Four Types of Process Strategies

Within a given facility, several strategies may be used to produce goods or service. These four strategies are often classified as:
1. Process-Focused 2. Repetitive-Focused 3. Product-Focused 4. Mass customization
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Meet or exceed customer requirements Meet cost & managerial goals efficiency & production flexibility, costs & quality of products
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Has long-run effects on

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Fit of Process, Volume, and Variety

Low-Volume (Intermittent) Repetitive Process (Modular) High-Volume (Continuous)

Process-Focused Strategy
Facilities are organized by process Similar processes are together

High Variety One or few units per run, high variety (allows customization) Changes in modules Modest runs, standardized modules Low Variety Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only
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Process focus projects, job shops,(machine, print, carpentry) Standard Register Repetitive (autos, motorcycles) Harley Davidson

Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co.

Example: All drill presses are together

Low volume, high variety products Other names

Intermittent process Job shop

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Operation 1 1

Product A 2 2 3 3

Poor strategy (Variable costs are high)

Product focus (light bulbs, steel, glass) Nucor Steel

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Product B
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Process-Focused Strategy Examples

Process Focused Strategy Pros & Cons

Advantages

Bank Hospital Machine Shop

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Greater product flexibility More general purpose equipment Lower initial capital investment (Fixed cost) More highly trained personnel More difficult production planning & control Low equipment utilization (5% to 25%)
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Disadvantages

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Repetitive Focused Strategy

Product-oriented process that uses modules (inbetween process & product focus)

Facilities often organized by classic assembly lines Characterized by modules

Parts & assemblies made previously

Modules combined for many output options Other names

Assembly line Production line

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Repetitive Focused Strategy Considerations

More structured than process-focused, less structured than product focused Enables quasi-customization Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, highvariety model
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Repetitive-Focused Strategy Examples

Clothes Dryer
McDonalds McDonalds over 95 billion served
over 95 billion served

Fast Food

Truck
.

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Product-Focused Strategy
Product-Focused (or continuous process ) facilities are organized by product High volume, low variety products Production:
Discrete unit manufacturing (e.g., lightbulbs) Continuous process manufacturing (e.g., rolls of paper)

Product-Focused Strategy Pros & Cons

Advantages

Lower variable cost per unit Lower but more specialized labor skills Easier production planning and control Higher equipment utilization (70% to 90%) Lower product flexibility More specialized equipment Usually higher capital investment (Fixed cost)
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Other names
Line flow production Continuous production

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Products A & B 1 2 2 1 Operation

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Disadvantages

3 3

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Product-Focused Examples
Soft Drinks (Continuous, then Discrete)

Mass Customization
Using technology and imagination to rapidly mass-produce products that cater to unique customer desires, but keeping the cost low. Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant.
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Light Bulbs (Discrete)

Paper (Continuous)

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Figure 7.5, P-261

Repetitive Focus Assembly line Modular Design Flexible equipment Mass Customization Process focus Intermittent process
Scheduling techniques Rapid throughput Modular techniques

Crossover Chart (p(p-263)

cost
Product focus
Process A: low volume, high variety Process B: Repetitive Process C: High volume, low variety
t ce ro -P ss A

ta To

os lc

ss B roce st - P C rocess os t - P Total c l co Tota

High variety, low volume Low utilization (5%-25%) general purpose equipment

Continuous Process Low variety, high volume High utilization (70%-90%) Specialized equipment
Process A Process B

Fixed cost - Process C Fixed cost - Process B Fixed cost - Process A

For comparison of characteristics of four types of processes, see Table 7.2, PP-262. 2006 7-17
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Process C

Lowest cost process

volume
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Process Analysis and Design

Is the process designed to achieve competitive advantage in terms of differentiation, response, and low cost? Does the process eliminate steps that do not add value? Does the process maximize customer value as perceived by the customer? Will the process win orders?
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Tools for Process Design

Flow Diagrams Time-Function/Process Mapping Process Charts Service Blueprinting

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Production Process Flow Diagram

Customer Purchasing (order inks, paper, other supplies) Vendors Accounting Receiving Warehousing (ink, paper, etc.) Customer sales representative take order Prepress Department (Prepare printing plates and negatives) Printing Department Collating Department Gluing, binding, stapling, labeling Polywrap Department Shipping
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Time Function Map

Customer Sales Production control Plant A Warehouse Plant B Transport
12 days 13 days 1 day 4 days

Order Product Process Order

Order

Receive product

Wait
Order

Print
WIP

Wait

Wait
WIP

Product

Wait
Product

Information flow Material flow

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WIP

WIP

Extrude

Move
1 day 10 days 1 day 9 days

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Product

Move

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Process Chart Example

SUBJECT: Request tool purchase Dist (ft) Time (min) Symbol Description D Write order On desk 75 D To buyer D Examine = Operation; = Transport; = Inspect; D = Delay; = Storage
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More Opportunities to Improve Service Processes

Layout: Good layout provides opportunity for winning orders Human Resources: Because of customer interaction,
skilled labor force is important

SERVICE PROCESS DESIGN:

Technology: Rapid reaction can be made due to business

environment and other change

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Techniques for Improving Service Productivity

(Table: 7.3, PP-270)

Techniques for Improving Service Productivity continued

Modules Automation Scheduling Training
Modular selection of service. Modular production Separating services that lend themselves to automation Precise personnel scheduling Clarifying the service options Explaining problems

Strategy
Separation Self-service

Technique
Structure service so customers must go where service is offered Self-service so customers examine, compare and evaluate at their own pace Customizing at delivery Restricting the offerings
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Postponement Focus
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Improving employee flexibility

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Selection of Equipment and Technology

Selection decision will influence:
Production flexibility

Production Technology
1. Machine technology 2. Automatic identification systems (AIS) 3. Process control 4. Vision system 5. Robot 6. Automated storage and retrieval systems (ASRS) 7. Automated Guided Vehicles (AGV) 8. Flexible manufacturing systems (FMS) 9. Computer-integrated manufacturing (CIM)
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Product volume Product variety

Cost Quality Capacity

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1. Machine Technology
Increased precision Increased productivity Increased flexibility Decreased pollution Decreased size Decreased power requirements
CNC: Computer Numerical Control.
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2. Automatic Identification Systems (AIS)

Improved data acquisition Increased scope of process automation
RFID: Radio Frequency Identification Toll Both (using transponders)

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3. Process Control
Increased process stability Increased process precision Real-time provision of information for process evaluation Multi-mode information presentation

4. Vision Systems
Particular aid to inspection (e.g., French fries) Consistently accurate Never bored Modest cost Superior to individuals performing the same tasks

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5. Robots
Perform monotonous, or dangerous tasks, or those requiring significant strength or endurance Enhanced consistency, accuracy, speed strength, power when substituted for human effort
e.g., Welding done by robots in automobile industry

6. Automated Storage and Retrieval Systems (ASRS)

Automated placement and withdrawal of parts and products in a warehouse Particularly useful in inventory and test areas of manufacturing firms

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7. Automated Guided Vehicle (AGV)

Electronically controlled movement to move parts and equipment, deliver meals in hospitals & jails.

8. Flexible Manufacturing Systems (FMS)

(automated work cell)

Computer controls both the workstation and the material handling equipment Computer control enhance flexibility Can economically produce low volume but high variety Reduced costs of changeover and low utilization Stringent communication requirement between components within it
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9. Computer Integrated Manufacturing (CIM)

Extension of flexible manufacturing systems
Backwards to engineering and inventory control Forward into warehousing and shipping Can also include financial and customer service areas

Computer Integrated Manufacturing (FIG(FIG-7.11)

Reducing the distinction between lowvolume/high-variety, and high-volume/lowvariety production Heavy reliance on information technology
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Process Reengineering
The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance Relies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptions Requires reexamination of the basic process and its objectives Focuses on activities that cross boundaries
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Showing Sensitivity to the Environment

Make products recyclable Use recycled materials Use less harmful ingredients Use light components Use less energy Use less materials
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