PROCESS STRATEGY

Group members Iqbal Aslam MES-10-06 Sana Rasheed MES-10-10 Usman Niazi MES-10-24

B.Z.U. SUB CAMPUS SAHIWAL

Chapter 4 Process Strategy

Process Strategy Chapter 4

DUKE POWER
      

Duke power is a true pioneer of the enterprise process. Identify Five core processes Developing market strategies Maintaining customers Providing reliability and integrity Delivering products and services Calculating and collecting revenues

DUKE POWER
  

Then they meet goals set by process owners. Improvement continue to be made Customer service center now is available 24 hours a day An electronic billing and payment service was launched in 2003 The U.S.Environmental Protection Agency recognized it with the 2004 Clean Air Excellence Award.

Process Strategy


Process strategy is the pattern of decisions made in managing processes so that they will achieve their competitive priorities. A process involves the use of an organizations resources to provide something of value.

Process strategy

Process strategy across the organization



The customer operations unit at Duke Power had five core processes that cut across boundaries between its four regions. Calculate and collect revenue process, is closely aligned with accounting Deliver products and services process, is closely aligned with operation

Process strategy across the organization



Developing market strategies process, and maintain customers process, closely aligned with marketing. Providing reliability and integrity process, with quality assurance.

Process Strategy


Major process decisions include: Process Structure Customer Involvement Resource Flexibility Capital Intensity

Process structure


 

A process decision that determines how processes are designed relative to the kinds of resources needed. How resources are partitioned between them, and their key characteristics. In services business focus on customer contact position. In manufacturing business focus on product process position.

Customer involvement resource flexibility

   

The ways in which customers becomes part of the process and the extent of their participation. Low involvement High involvement The ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions. Specialized Enlarged

 

Capital intensity


 

The mix of equipment and human skills in a process. Low automation High automation These four decision are used in different ways to achieve effective processes.

Major Decisions for Effective Process Design

Process Structures in Services



A good process strategy for a service process depends first and foremost on the type and amount of customer contact. Customer contact is the extent to which the customer is present, is actively involved, and receives personal attention during the process.

Process Structures in Services

High Contact Present People Active, visible Personal Face-to-face

Dimension Physical presence What is processed Contact intensity Personal attention Method of delivery

Low Contact Absent Possessions Passive, out of sight Impersonal Regular mail

Customer-Contact Matrix for Service Processes



Process complexity: The number and intricacy of the steps required to perform the process. Process divergence: the extent to which the process is highly customized with considerable latitude as to how it is performed.

Customer-Contact Matrix for Service Processes



Flexible Flow: the customers, materials, or information move in diverse ways, with the path of one customer or job often crisscrossing the path that the next one will take. Line Flow: The customers, materials, or information move linearly from one operation to the next, according to a fixed sequence.

Customer-Contact Matrix for Service Processes

Less Customer Contact and Customization
Less Complexity, Less Divergence, More Line Flows

Service Package
(1) Process Characteristics (1)
Flexible flows, complex work with many exceptions
High interaction with customers, highly customized service

(2)
Some interaction with customers, standard services with some options

(3)
Low interaction with customers, standardized services

Front office

(2)
Flexible flows with some dominant paths, moderate job complexity with some exceptions

Hybrid office

(3)
Line flows, routine work easily understood by employees

Back office

Front office


A process with high customer contact where the service provider interacts directly with the internal or external customer.

Hybrid office


A process with moderate levels of customer contact and standard services with some options available. Meeting with employees, Evaluating employees performance on quarterly basis.

Back office


A process with low customer contact and little service customization.

Product process matrix



Sarah has just opened her first small bicycle shop. All of her bikes are custom designed and built for clients, which is a very lengthy and expensive process. she makes and sells one bike at a time, operating a low volume job shop. Sarah's products are very well made, and business starts to improve as more customers place orders for her custom bikes. But Sarah doesn't change her process. She continues to build and sell one bike at a time, and her reputation suffers because there's such a long waiting list.

Product process matrix



She still builds bikes as if there's a low-volume demand although, in reality, she now has a highvolume business. If Sarah doesn't change her process, she might ultimately go out of business, or at least lose customers who don't want to wait for a bike. However, if she looks at the ProductProcess Matrix, she'll realize that she needs to hire staff and set up an assembly line to handle the higher volume of orders.

Job process


A process with the flexibility needed to produce a wide variety of products in significant quantities, with considerable complexity and divergence in the steps performed. Example: Sarah creates custom-made products from start to finish.

Batch process


A process that differs from the job process with respect to volume, variety, and quality. Example: In Sarah's bike shop, she could attach the wheels onto 10 bikes that will all be built to the same specification. Then she can attach the pedals, brakes, and so on.

Line process


A process that lies between the batch and continuous processes on the continuum; volumes are high and product are standardized, which allows resources to be organized around particular products. Example: Sarah sets up a production line to assemble bikes. One person attaches wheels to each frame as it passes, then it goes to someone else to add pedals, and so on. The production line is stopped and adjusted periodically so that a different model can be made.

Continuous flow process



The extreme end of high-volume standardized production and rigid line flows, with production not starting and stopping for long time intervals. Example: operates 24 hours per day

Product-Process Matrix for Processes

Less Customization and Higher Volume Product Design
(1) (2) LowLow -volume Multiple products with low products, made to moderate volume to customer order (3) (4) Few major High volume, high products standardization, higher Continuous Flow volume

Less Complexity, Less Divergence, More Line Flows

Process Characteristics (1) Complex and highly customized process, unique sequence of tasks

Job process Small batch process Large batch process Line process Continuous process

(2) Disconnected line flows, moderately complex work

(3) Connected line, , highly repetitive work (4) Continuous flows

07 Pearson Education

Production and Inventory Strategies



Make-to-order strategy: A strategy used by manufactures that make products to customer specifications in low volume. Example: Such as assembling a Dell computer to customer order

Production and Inventory Strategies



Assemble-to-order strategy: A strategy for producing a wide variety of products from relatively few assemblies and components after the customer orders are received. Example: For example, a jewelry maker can stock beads and other supplies needed to make handcrafted jewelry, but still deliver unique jewelry using what he has in stock.

Production and Inventory Strategies



Make-to-stock strategy: A strategy that involves holding items in stock for immediate delivery, thereby minimizing customer delivery times. Example: leather jackets manufactured and make to stock all over the year and reach the demand in winter season.

Production and Inventory Strategies



Mass production: A term sometimes used in the popular press for a line process that uses the make-to-stock strategy. Example: Such as fuel, chemicals, making of a car, food products.

Links of Competitive Priorities with Manufacturing Strategy

2007 Pearson Education

Customer Involvement


The ways in which customers becomes part of the process and the extent of their participation. It is especially for many service process, particularly if customer contact is (or should be) high.

Customer Involvement Good or Bad?

Improved Competitive Capabilities: More customer involvement can mean better quality, faster delivery, greater flexibility, and even lower cost. Customers can come face-to-face with the service providers, where they can ask questions, make special requests on the spot and provide additional information.

Customer Involvement Good or Bad?

  

However customer involvement can be disruptive and make the process less efficient. Greater interpersonal skills are required. Quality measurement becomes more difficult. Emerging Technologies: Companies can now engage in an active dialogue with customers and make them partners in creating value.

Resource Flexibility


Flexible workforce: A workforce whose members are capable of doing many tasks, either at their own workstations or as they move from one workstation to another. Worker flexibility can be one of the best ways to achieve reliable customer service and alleviate capacity bottlenecks. This comes at a cost, requiring greater skills and thus more training and education. Flexible equipment: Low volumes mean that process designers should select flexible, general-purpose equipment.

Relationship between Process Costs and Product Volume

Total cost (dollars)

Process 2: SpecialSpecial-purpose equipment BreakBreak-even quantity Process 1: GeneralGeneral-purpose equipment Units per year

F2 F1

Capital Intensity
Capital Intensity is the mix of equipment and human skills in the process; the greater the relative cost of equipment, the greater is the capital intensity. Automation is a system, process, or piece of equipment that is self-acting and self-regulating. Fixed automation is a manufacturing process that produces one type of part or product in a fixed sequence of simple operations. Flexible (or programmable) automation is a manufacturing process that can be changed easily to handle various products.

Economies of Scope


Economies of scope are economies that reflect the ability to produce multiple products more cheaply in combination than separately. With economies of scope, the often conflicting competitive priorities of customization and low price become more compatible. Taking advantage of economies of scope requires that a family of parts or products have enough collective volume to fully utilize equipment.

Decision Patterns for Service Processes

Major process decisions
High customer-contact process More complexity, more divergence, more flexible flows More customer involvement More resource flexibility Capital intensity varies with volume. Low customer-contact process Less complexity, less divergence, more line flows Less customer involvement Less resource flexibility Capital intensity varies with volume. .

Front office

Hybrid office

Back office

Low

High

Decision Patterns for Manufacturing Processes

Major process decisions
Low-Volume, make-to-order process More complexity, more divergence, more flexible flows More customer involvement More resource flexibility Less capital intensity High-Volume, make-to-stock process Less complexity, less divergence, more line flows Less customer involvement Less resource flexibility More capital intensity
Job process Small batch process Large batch process Line process Continuous process

Low

High

Focus by Process Segment



A facilitys process often can neither be characterized nor actually designed for one set of competitive priorities and one process choice. At a services facility, some parts of the process might seem like a front office and other parts like a back office.

Focus by Process Segment



Plants within plants (PWPs) are different operations within a facility with individualized competitive priorities, processes, and workforces under the same roof. The advantage of PWPs are fewer layers of management, greater ability to rely on team problem solving, and shorter lines of communication between departments.

Focused factories


Focused factories are the result of a firms splitting large plants that produce all the companys products into several specialized smaller plants. Hewlett-Packard, S.C. Johnson and Sons, Japans Ricoh and Mitsubishi and Britains Imperial Chemical Industries PLC are some of the firms that created focused factories.

Strategies for Change



    

Process Reengineering: is a fundamental rethinking and radical redesign of processes to improve performance dramatically in terms of cost, quality, service, and speed. Critical Processes Strong Leadership Cross-Functional Teams Information Technology Process Analysis

Strategies for Change



Process improvement: is the systematic study of the activities and flows of each process to improve it. Its purpose is to learn the numbers understand the process, and dig out the details. Once a process is really understood, it can be improved.

Process Strategy