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Operations Management: Chapter 7 - Process Strategy
Operations Management: Chapter 7 - Process Strategy
Management
Chapter 7 –
Process Strategy
Technology in Services
Process Redesign
Ethics and Environmentally
Friendly Processes
Customer sales
Purchasing
representative
Raw Modules
materials combined
and for many
module output
inputs options
Few
modules
Figure 7.3
© 2008 Prentice Hall, Inc. 7 – 18
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
© 2008 Prentice Hall, Inc. 7 – 19
Product Focus
Continuous Work Flow
Output
variations
Few in size,
inputs shape,
and
packaging
B
C Electric
Ladle of molten steel furnace
H G
I
Mass Customization
Effective Rapid
scheduling throughput
techniques techniques
Process-Focused Product-Focused
High variety, low volume Low variety, high volume
Low utilization (5% to 25%) High utilization (70% to 90%)
General-purpose equipment Specialized equipment
Table 7.2
© 2008 Prentice Hall, Inc. 7 – 25
Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus Customization
(High-volume,
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)
Table 7.2
© 2008 Prentice Hall, Inc. 7 – 26
Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus Customization
(High-volume,
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)
Table 7.2
© 2008 Prentice Hall, Inc. 7 – 27
Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus Customization
(High-volume,
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)
Table 7.2
© 2008 Prentice Hall, Inc. 7 – 28
Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus Customization
(High-volume,
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)
Table 7.2
© 2008 Prentice Hall, Inc. 7 – 29
Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus Customization
(High-volume,
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)
Table 7.2
© 2008 Prentice Hall, Inc. 7 – 30
Crossover Charts
Variable
costs
Variable Variable
$ costs $ costs $
Fixed costs Fixed costs
Fixed costs
Low volume, high variety Repetitive High volume, low variety
Process A Process B Process C
t
os
$
t
c
os
tal st
l co
lc
To Tot a
ta
To
400,000
300,000
200,000
Fixed cost Fixed cost Fixed cost
Process A Process B Process C
Figure 7.6 (2,857) V1 V2 (6,666) Volume
© 2008 Prentice Hall, Inc. 7 – 31
Focused Processes
Focus brings efficiency
Focus on depth of product line
rather than breadth
Focus can be
Customers
Products
Service
Technology
Process
Sales order
Production Wait
control
Plant A Print
Plant B Extrude
Process
Sales order
Production
control Wait
Warehouse Wait
Transport Move
Figure 7.8
© 2008 Prentice Hall, Inc. 7 – 37
Process Chart
Figure 7.9
© 2008 Prentice Hall, Inc. 7 – 38
Service Blueprint
F
Customer pays bill
Determine Notify
Warm greeting specifics customer
and obtain No and recommend
service request an alternative F
Standard provider
request Can
Level service be F
#2 done and does No
Direct customer customer
to waiting room approve? Notify
customer the
car is ready
F F F
Yes Yes
Perform
Level required work
#3
F
Prepare invoice
Figure 7.10 F
© 2008 Prentice Hall, Inc. 7 – 40
Process Analysis Tools
Flowcharts provide a view of the
big picture
Time-function mapping adds rigor
and a time element
Value-stream analysis extends to
customers and suppliers
Process charts show detail
Service blueprint focuses on
customer interaction
© 2008 Prentice Hall, Inc. 7 – 41
Service Process Matrix
Degree of Customization
Low High
Mass Service Professional Service
Private
banking
Commercial
banking
High General-
Full-service purpose law firms
stockbroker
Degree of Labor
Boutiques
Retailing
No-frills
Figure 7.11 airlines
© 2008 Prentice Hall, Inc. 7 – 42
Service Process Matrix
Mass Service and Professional Service
Labor involvement is high
Selection and training highly important
Focus on human resources
Personalized services
Service Factory and Service Shop
Automation of standardized services
Low labor intensity responds well to
process technology and scheduling
Tight control required to maintain
standards
© 2008 Prentice Hall, Inc. 7 – 43
Improving Service
Productivity
Strategy Technique Example
Separation Structure service so Bank customers go to
customers must go a manager to open a
where service is new account, to loan
offered officers for loans, and
to tellers for deposits
Table 7.3
© 2008 Prentice Hall, Inc. 7 – 44
Improving Service
Productivity
Strategy Technique Example
Postponement Customizing at Customizing vans at
delivery delivery rather than at
production
Table 7.3
© 2008 Prentice Hall, Inc. 7 – 45
Improving Service
Productivity
Strategy Technique Example
Automation Separating services Automatic teller
that may lend machines
themselves to
automation
Figure 7.12