CH 7 - Process Strategies PDF

Operations Management: Sustainability
and Supply Chain Management Outline (1 of 2)

Thirteenth Edition, Global Edition
• Global Company Profile: Harley-Davidson
• Four Process Strategies
• Selection of Equipment
Chapter 7
Process Strategies • Process Analysis and Design
• Special Considerations for Service Process Strategies
Copyright © 2020 Pearson Education Ltd. All Rights Reserved. Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Outline (2 of 2) Harley-Davidson
• Production Technology • The only major U.S. motorcycle company
• Technology in Services • Emphasizes quality and lean manufacturing
• Process Redesign • Materials as Needed (MAN) system
• Many variations possible
• Tightly scheduled repetitive production
Process Flow Diagram Learning Objectives
When you complete this chapter you should be able to:
7.1 Describe four process strategies
7.2 Compute crossover points for different processes
7.3 Use the tools of process analysis
7.4 Describe customer interaction in service processes
7.5 Identify recent advances in production technology
Process Strategy Process Strategies (1 of 2)

The objective is to create a process to produce offerings • How to produce a product or provide a service that
that meet customer requirements within cost and other – Meets or exceeds customer requirements
managerial constraints
– Meets cost and managerial goals
• Has long-term effects on
– Efficiency and production flexibility
– Costs and quality
Process, Volume, and Variety Process Strategies (2 of 2)
Figure 7.1 Four basic strategies
1. Process focus
2. Repetitive focus
3. Product focus
4. Mass customization
Within these basic strategies, there are many ways they
may be implemented
Process Focus (2 of 2)
Process Focus (1 of 2) Figure 7.2(a)
• Facilities are organized around specific activities or

processes
• General purpose equipment and skilled personnel
• High degree of product flexibility
• Typically high variable costs and low equipment utilization
• Product flows may vary considerably, making planning and
scheduling a challenge
Repetitive Focus (2 of 2)
Repetitive Focus (1 of 2) Figure 7.2(b)
• 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
Product Focus (2 of 2)
Product Focus (1 of 2) Figure 7.2(c)
• 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
Mass Customization (2 of 4)
Mass Customization (1 of 4) Figure 7.2(d)
• The rapid, low-cost

production of goods and
services to satisfy
increasingly unique
customer desires
• Combines the flexibility of a
process focus with the
efficiency of a product focus
Mass Customization (3 of 4) Mass Customization (4 of 4)

Table 7.1 Mass Customization Provides More Choices Than
• Imaginative product design
Ever
• Flexible process design
• Tightly controlled inventory management
• Tight schedules
• Responsive partners in the supply chain
Comparison of Processes (1 of 4) Comparison of Processes (2 of 4)
Table 7.2 Comparison of the Characteristics of Four Types Table 7.2 Comparison of the Characteristics of Four Types
of Processes of Processes
PROCESS PROCESS
FOCUS PRODUCT MASS FOCUS PRODUCT MASS
(LOW-VOLUME, REPETITIVE FOCUS CUSTOMIZATION (LOW-VOLUME, REPETITIVE FOCUS CUSTOMIZATION
HIGH-VARIETY; FOCUS (HIGH-VOLUME, (HIGH-VOLUME, HIGH-VARIETY; FOCUS (HIGH-VOLUME, (HIGH-VOLUME,
e.g., ARNOLD (MODULAR; e.g., LOW-VARIETY; HIGH-VARIETY; e.g., ARNOLD (MODULAR; e.g., LOW-VARIETY; HIGH-VARIETY;
PALMER HARLEY-DAVIDS e.g., e.g., PALMER HARLEY-DAVIDS e.g., e.g.,
HOSPITAL) ON) FRITO-LAY) DELL COMPUTER) HOSPITAL) ON) FRITO-LAY) DELL COMPUTER)
1. Small quantity 1. Long runs, a 1. Large quantity 1. Large quantity 3. Instructions for 3. Few changes in 3. Standardized 3. Custom orders
and large standardized and small variety and large variety each job the instructions job instructions requiring many job
variety of product from of products of products instructions
products modules
4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory
relative to the
2. Broadly skilled 2. Moderately 2. Less broadly 2. Flexible operators
value of the
operators trained skilled operators product
employees
Comparison of Processes (3 of 4)
Table 7.2 Comparison of the Characteristics of Four Types Comparison of Processes (4 of 4)
of Processes
Table 7.2 Comparison of the Characteristics of Four Types
PROCESS of Processes
FOCUS PRODUCT MASS
(LOW-VOLUME, REPETITIVE FOCUS CUSTOMIZATION
HIGH-VARIETY; FOCUS (HIGH-VOLUME, (HIGH-VOLUME,
PROCESS
e.g., ARNOLD (MODULAR; e.g., LOW-VARIETY; HIGH-VARIETY; PRODUCT MASS
FOCUS
PALMER HARLEY-DAVIDS e.g., e.g., REPETITIVE FOCUS CUSTOMIZATION
(LOW-VOLUME,
HOSPITAL) ON) FRITO-LAY) DELL COMPUTER) FOCUS (HIGH-VOLUME, (HIGH-VOLUME,
HIGH-VARIETY;
e.g., ARNOLD (MODULAR; e.g., LOW-VARIETY; HIGH-VARIETY;
5. Finished 5. Finished goods 5. Finished goods 5. Finished goods PALMER HARLEY-DAVIDS e.g., e.g.,
goods are are made to are made to a are build-to-order HOSPITAL) ON) FRITO-LAY) DELL COMPUTER)
made to order frequent forecast and (BTO)
and not stored forecasts stored
7. Fixed costs 7. Fixed costs are 7. Fixed costs are 7. Fixed costs tend
are low and dependent on high and to be high and
variable costs flexibility of the variable costs variable costs low
6. Scheduling is 6. Scheduling is 6. Scheduling is 6. Sophisticated
high facility low
complex routine routine scheduling
accommodates
custom orders
Crossover Chart Example (1 of 2) Crossover Chart Example (2 of 2)
• Evaluate three different accounting software products
• Calculate crossover points between software A and B and
between software B and C
DOLLARS REQUIRED PER • Software A is most economical from 0 to 2,857 reports

Blank TOTAL FIXED COST ACCOUNTING REPORT
Software A $200,000 $60
Software B $300,000 $25
Software C $400,000 $10
• Software B is most economical from 2,857 to 6,666 reports
Crossover Charts
Figure 7.3 Focused Processes
• Focus brings efficiency
• Focus on depth of product line rather than breadth
• Focus can be
– Customers
– Products
– Service
– Technology
Selection of Equipment Flexibility
• Decisions can be complex as alternate methods may be • Flexibility is the ability to
available respond with little penalty in
time, cost, or customer
• Important factors may be value
– Cost – Quality
• May be a competitive
– Cash flow – Capacity advantage
– Market stability – Flexibility
• May be difficult and
expensive
• Without it, change may
mean starting over
Process Analysis and Design (1 of 3) Process Analysis and Design (2 of 3)

• Is the process designed to achieve a competitive • Flowchart
advantage? – Shows the movement of materials
• Does the process eliminate steps that do not add value? – Harley-Davidson flowchart
• Does the process maximize customer value? • Time-Function Mapping
– Shows flows and time frame
• Will the process win orders?
"Baseline" Time-Function Map "Target" Time-Function Map
Figure 7.4(a) Figure 7.4(b)
Process Chart
Figure 7.5 Process Analysis and Design (3 of 3)
• Value-Stream Mapping (V SM)
– Where value is added in the entire production process,
including the supply chain
– Extends from the customer back to the suppliers
Value-Stream Mapping (1 of 3) Value-Stream Mapping (2 of 3)
1. Begin with symbols for customer, supplier, and 6. Add the process steps (i.e., machine, assemble) in
production to ensure the big picture sequence, left to right
2. Enter customer order requirements 7. Add communication methods, add their frequency, and
show the direction with arrows
3. Calculate the daily production requirements
8. Add inventory quantities between every step of the entire
4. Enter the outbound shipping requirements and delivery flow
frequency
9. Determine total working time (value-added time) and
5. Determine inbound shipping method and delivery delay (non-value-added time)
frequency
Value-Stream Mapping (3 of 3)
Figure 7.6 Service Blueprinting
• Focuses on the customer and provider interaction
• Defines three levels of interaction
• Each level has different management issues
• Identifies potential failure points
Service Blueprint (1 of 2) Service Blueprint (2 of 2)
Figure 7.7 Figure 7.7
Special Considerations for Service Service Process Matrix (1 of 3)

Process Strategies Figure 7.8
• Some interaction with customer is necessary, but this often

affects performance adversely
• The better these interactions are accommodated in the
process design, the more efficient and effective the
process
• Find the right combination of cost and customer interaction
Service Process Matrix (2 of 3) Service Process Matrix (3 of 3)
Mass Service and Service Factory and Service
Professional Service Shop
• Labor involvement is high • Automation of standardized
services
• Focus on human resources
• Restricted offerings
• Selection and training highly
important • Low labor intensity
responds well to process
• Personalized services technology and scheduling
• Tight control required to
maintain standards
Improving Service Productivity (1 of 2) Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity Table 7.3 Techniques for Improving Service Productivity
STRATEGY TECHNIQUE EXAMPLE STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so Bank customers go to a Modules Modular selection of Investment and insurance
customers must go where manager to open a new service selection
the service is offered account, to loan officers Modular production Prepackaged food
for loans, and to tellers modules in restaurants
for deposits
Self-service Self-service so customers Supermarkets and Automation Separating services that Automatic teller machines
examine, compare, and department stores may lend themselves to Ordering via an app
evaluate at their own Internet ordering some type of automation
pace Scheduling Precise personnel Scheduling airline
Postponement Customizing at delivery Customizing vans at scheduling ticket-counter personnel
delivery rather than at at 15-minute intervals
production Training Clarifying the service Investment counselor,
Focus Restricting the offerings Limited-menu restaurant options funeral directors
Explaining how to avoid After-sale maintenance
problems personnel
Production Technology Machine Technology
1. Machine technology • Increased precision, productivity,
and flexibility
2. Automatic identification systems (AISs)
• Reduced environmental impact
3. Process control
• Additive manufacturing Comp
4. Vision systems produces products by adding uter
material, not removing it contro numerical
5. Robots l (CNC
)
6. Automated storage and retrieval systems (ASRSs) • Supports innovative product
design, minimal custom tooling
7. Automated guided vehicles (AGVs) required, minimal assembly time,
8. Flexible manufacturing systems (FMSs) low inventory, and reduced time
to market
9. Computer-integrated manufacturing (CIM)
Automatic Identification Systems

(AISs) and RFID Process Control
• Improved data acquisition • Real-time monitoring and
control of processes
• Reduced data entry errors
– Sensors collect data
• Increased speed – Devices read data on
• Increased scope of process periodic basis
automation – Measurements translated
into digital signals, then
sent to a computer
– Computer programs
Bar codes and RFID analyze the data
– Resulting output may
take numerous forms
Vision Systems Robots
• Particular aid to inspection • Perform monotonous or
dangerous tasks
• Consistently accurate
• Perform tasks requiring
• Never bored significant strength or
• Modest cost endurance
• Superior to individuals performing the same tasks • Generally enhanced
consistency and accuracy
Automated Storage and Retrieval

Systems (ASRSs) Automated Guided Vehicle (AGVs)
• Automated placement and • Electronically guided and controlled carts
withdrawal of parts and
products • Used for movement of products and/or individuals
• Reduced errors and labor

• Particularly useful in
inventory and test areas of
manufacturing firms
Flexible Manufacturing Systems Computer-Integrated Manufacturing
(FMSs) (CIM) (1 of 2)
• Computer controls both the workstation and the material • Extend flexible manufacturing
handling equipment – Backward to engineering and inventory control
• Enhanced flexibility and reduced waste – Forward into warehousing and shipping
• Can economically produce low volume but high variety – Can also include financial and customer service areas
– Reducing the distinction between
• Reduced changeover time and increased utilization low-volume/high-variety, and high-volume/low-variety
• Stringent communication requirement between production
components
Computer-Integrated Manufacturing
(CIM) (2 of 2) Technology in Services (1 of 3)
Figure 7.9 Table 7.4 Examples of Technology's Impact on Services
SERVICE INDUSTRY EXAMPLE
Debit cards, electronic funds transfer, ATMs,
Financial Services Internet stock trading, online banking via cell
phone, Apple pay
Online newspapers and journals, interactive
Education assignments via WebCT, Blackboard, and
smartphones
Automated one-person garbage trucks, optical mail
Utilities and government scanners, flood-warning systems, meters that allow
homeowners to control energy usage and costs
Wireless orders from waiters to kitchen, robot
Restaurants and foods butchering, transponders on cars that track sales at
drive-throughs
Technology in Services (2 of 3) Technology in Services (3 of 3)
Table 7.4 Examples of Technology's Impact on Services Table 7.4 Examples of Technology's Impact on Services
SERVICE INDUSTRY EXAMPLE SERVICE INDUSTRY EXAMPLE
Communications Interactive TV, e-books via Kindle, speech Health care Online patient-monitoring systems, online medical
recognition information systems, robotic surgery, artificial
intelligence for medical diagnoses
Hotels Electronic check-in/check-out, electronic key/lock
systems, mobile Web bookings Airlines Ticketless travel, scheduling, Internet purchases,
boarding passes downloaded as two-dimensional
Wholesale/retail trade Point-of-sale (POS) terminals, e-commerce, bar codes on smart phones
electronic communication between store and
supplier, bar-coded data, RFID, self-checkout, pay
via facial recognition
Transportation Automatic toll booths, satellite-directed navigation
systems, Wi-Fi in automobiles
Process Redesign Copyright

• The fundamental rethinking of business processes to bring
about dramatic improvements in performance This work is protected by United States copyright laws and is
provided solely for the use of instructors in teaching their
• Relies on reevaluating the purpose of the process and courses and assessing student learning. Dissemination or sale of
questioning both the purpose and the underlying any part of this work (including on the World Wide Web) will
destroy the integrity of the work and is not permitted. The work
assumptions and materials from it should never be made available to students
except by instructors using the accompanying text in their
• Requires reexamination of the basic process and its classes. All recipients of this work are expected to abide by these
objectives restrictions and to honor the intended pedagogical purposes and
the needs of other instructors who rely on these materials.
• Focuses on activities that cross functional lines
• Any process is a candidate for redesign

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Operations Management: Sustainability

and Supply Chain Management Outline (1 of 2)

Process Strategy Process Strategies (1 of 2)

• Facilities are organized around specific activities or

• Facilities often organized as assembly lines

• Facilities are organized by product

• The rapid, low-cost

Mass Customization (3 of 4) Mass Customization (4 of 4)

DOLLARS REQUIRED PER • Software A is most economical from 0 to 2,857 reports

• Software B is most economical from 2,857 to 6,666 reports

Process Analysis and Design (1 of 3) Process Analysis and Design (2 of 3)

Special Considerations for Service Service Process Matrix (1 of 3)

• Some interaction with customer is necessary, but this often

Improving Service Productivity (1 of 2) Improving Service Productivity (2 of 2)

STRATEGY TECHNIQUE EXAMPLE STRATEGY TECHNIQUE EXAMPLE

Automatic Identification Systems

Automated Storage and Retrieval

• Reduced errors and labor

Process Redesign Copyright

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