Operations

Management
Chapter 7
Process Strategy
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e

2006
2006 Prentice
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 Process, Volume, and Variety
Figure 7.1 Volume
Low Repetitive High
Volume Process Volume
High
Customization Process Focus Mass Customization
projects, job shops (difficult to achieve,
(machine, print, but huge rewards)
carpentry) Dell Computer Co.

Medium Repetitive
Customizatio (autos, motorcycles)
n Harley Davidson

Product Focus
(commercial
Low baked goods,
Customization steel, glass)
Nucor Steel
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 Process Focus
Facilities are organized around specific
activities or processes
General purpose equipment and skilled
personnel
High degree of product flexibility
Typically high costs and low equipment
utilization
Product flows may vary considerably
making planning and scheduling a
challenge
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 Repetitive Focus

Facilities often organized as

assembly lines
Characterized by modules with parts
and assemblies made previously
Modules may be combined for many
output options
Less flexibility than process-focused
facilities but more efficient
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 Product Focus
Facilities are organized by product
High volume but low variety of
products
Long, continuous production runs
enable efficient processes
Typically high fixed cost but low
variable cost
Generally less skilled labor
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 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Small Long runs, Large Large

quantity, large standardized quantity, small quantity, large
variety of product made variety of variety of
products from modules products products

General Special Special Rapid

purpose equipment purpose changeover
equipment aids in use of equipment on flexible
assembly line equipment

Table 7.2
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 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Operators are Employees Operators are Flexible

broadly are modestly less broadly operators are
skilled trained skilled trained for the
necessary
customization

Many job Repetition Few work Custom

instructions reduces orders and job orders require
as each job training and instructions many job
changes changes in job because jobs instructions
instructions standardized

Table 7.2
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 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Raw material JIT Raw material Raw material

inventories procurement inventories inventories
high techniques are low are low
used

Work-in- JIT inventory Work-in- Work-in-

process is techniques process process
high used inventory is inventory
low driven down
by JIT, lean
production

Table 7.2
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 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Units move Movement is Swift Goods move

slowly measured in movement of swiftly
through the hours and unit through through the
plant days the facility is facility
typical

Finished Finished Finished Finished

goods made goods made goods made goods often
to order to frequent to forecast made to order
forecast and stored

Table 7.2
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 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Scheduling is Scheduling Relatively Sophisticated

complex, based on simple scheduling
trade-offs building scheduling, required to
between various establishing accommodate
inventory, models from output rate to custom orders
availability, modules to meet forecasts
customer forecasts
service

Table 7.2
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 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Fixed costs Fixed costs Fixed costs Fixed costs

low, variable dependent on high, variable high, variable
costs high flexibility of costs low costs must be
the facility low

Costing Costs usually High fixed High fixed

estimated known due to costs mean costs and
before job, extensive costs dynamic
not known experience dependent on variable costs
until after job utilization of make costing
is complete capacity a challenge

Table 7.2
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 Mass Customization

The rapid, low-cost production of

goods and service to satisfy
increasingly unique customer
desires
Combines the flexibility of a
process focus with the efficiency
of a product focus

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 Mass Customization
Table 7.1 Number of Choices
Early 21st
Item Early 1970s Century
Vehicle models 140 260
Vehicle types 18 1,212
Bicycle types 8 19
Software titles 0 300,000
Web sites 0 46,412,165
Movie releases 267 458
New book titles 40,530 77,446
Houston TV channels 5 185
Breakfast cereals 160 340
Items (SKUs) in 14,000 150,000
supermarkets
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 Changing Processes

Difficult and expensive

May mean starting over
Important to get it right

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 Process Analysis Tools
Flowcharts provide a view of the
big picture
Process diagrams show detail
Service blueprint focuses on
customer interaction

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 Service Blueprint

Focuses on the customer and

provider interaction
Defines three levels of interaction
Each level has different
management issues
Identifies potential failure points

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 Service Blueprint
Personal Greeting Service Diagnosis Perform Service Friendly Close
Level Customer arrives
#1 for service Customer departs

Customer pays bill

Determine Notify
Warm greeting specifics customer
and obtain No and recommend
service request an alternative
Standard provider
request Can
Level service be
#2 done and does No
Direct customer customer
to waiting room approve? Notify
customer the
car is ready

Yes Yes
Perform
Level required work
#3

Potential failure point

Prepare invoice

Figure 7.9
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