6 Process design

INTRODUCTION
Key questions
In Chapter 1 we described how all operations consist of a
❯ What is process design? collection of processes (though these processes may be called
❯ What should be the objectives of ‘units’ or ‘departments’) that interconnect with each other
process design? to form an internal network. Each process acts as a smaller
version of the whole operation of which they form a part, and
❯ How do volume and variety transformed resources flow between them. We also defined
affect process design?
a process as ‘an arrangement of resources and activities
❯ How are processes designed in that transform inputs into outputs that satisfy (internal or
detail? external) customer needs’. They are the ‘building blocks’ of
all operations, and as such they play a vital role in how well
operations operate. This is why process design is so important.
Unless its individual processes are well designed, an operation
as a whole will not perform as well as it could. And operations
managers are at the forefront of how processes are designed.
In fact all operations managers are designers. When they
purchase or rearrange the position of a piece of equipment,
or when they change the way of working within a process,
it is a design decision because it affects the physical shape
and nature of their processes, as well as its performance. This
chapter examines the design of processes. Figure 6.1 shows
where this topic fits within the overall model of operations
management.

Topic covered in Direct

this chapter

Operations Develop
Design Design
management

Process Layout
design and flow Deliver

Process People in
technology operations

Figure 6.1 This chapter examines process design

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 called the ‘Shouldice method’, that all its surgeons fol-
low strictly. Pre-surgery, Shouldice sends surveys to its
patients asking for information that helps ensure that the
patients are good candidates for the treatment Shouldice
offers (this further helps reduce variability in process
time). Shouldice requires patients to be at an accept-
able weight appropriate to their height. Prospective
patients who are overweight must lose weight. Patients
enter the hospital the day before surgery and are given
a briefing about the procedures to be followed the next
day. The night before the operation is also intended as
an opportunity for patients to come to know each other
– Shouldice encourages patients to work together to
promote recovery. The hospital schedules the surgeries
in such a way that variability in the arrivals of custom-
ers is virtually non-existent. This means that Shouldice
can operate in a routine and regular manner. This means
that it can keep nearly all its beds full without creating
customer waits. The procedure most commonly used
at Shouldice involves sewing muscle layers together in
an overlapping manner, a technique that is said to be
particularly reliable. After discharge, Shouldice sends out
an email newsletter to all of its patients that includes a
questionnaire for Shouldice's post-operative follow-up
programme, which shows that fewer than 1 per cent of
patients have a recurrence after hernia repair. The ques-
tionnaire also helps the hospital to refine the knowledge
that keeps its procedures reliable. So, by reducing the
variability in its operations (‘operations’ in both senses
of the word) the hospital has designed a set of processes
that can both be highly utilized and reduce customer
waiting time.

SUMMARY ANSWERS TO KEY QUESTIONS

❯ What is process design?

● Design is the activity which shapes the physical form and purpose of both products and
services and the processes that produce them.
● The design activity is more likely to be successful if the complementary activities of product
or service design and process design are coordinated.

❯ What should be the objectives of process design?

● The overall purpose of process design is to meet the needs of customers through achieving
appropriate levels of quality, speed, dependability, flexibility and cost.
● The design activity must also take account of environmental issues. These include exam-
ination of the source and suitability of materials, the sources and quantities of energy
consumed, the amount and type of waste material, the life of the product itself, and the
end-of-life state of the product.

❯ How do volume and variety affect process design?

● The overall nature of any process is strongly influenced by the volume and variety of what it
has to process.
● The concept of process types summarizes how volume and variety affect overall process
design.
● In manufacturing, these process types are (in order of increasing volume and decreasing
variety) project, jobbing, batch, mass and continuous processes. In service operations,
although there is less consensus on the terminology, the terms often used (again in order of
increasing volume and decreasing variety) are professional services, service shops and mass
services.

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 ❯ How are processes designed in detail?

● Processes are designed initially by breaking them down into their individual activities.
Often common symbols are used to represent types of activity. The sequence of activities in
a process is then indicated by the sequence of symbols representing activities. This is called
‘process mapping’. Alternative process designs can be compared using process maps and
improved processes considered in terms of their operations performance objectives.
● Process performance in terms of throughput time, work-in-progress and cycle time is
related by a formula known as Little’s law: throughput time equals work-in-progress multi-
plied by cycle time.
● Variability has a significant effect on the performance of processes, particularly the relation-
ship between waiting time and utilization.

CASE STUDY
The Action Response Applications
Processing Unit (ARAPU)

Introduction
Action Response is a London-based charity dedicated to
providing fast responses to critical situations through-
out the world. It was founded by Susan N'tini, its Chief
Executive, to provide relatively short-term aid for small
projects until it could obtain funding from larger donors.

Source: Shutterstock.com: Phovoir

The charity receives requests for cash aid usually from
an intermediary charity and looks to process the request
quickly, providing funds where and when they are needed.
‘Give a man a fish and you feed him today, teach him to
fish and you feed him for life; it’s an old saying and it makes
sense but, and this is where Action Response comes in, he
might starve while he’s training to catch fish.’ (Susan N'tini)
Nevertheless, Susan does have some worries. She faces
two issues in particular. First, she is receiving complaints
that funds are not getting through quickly enough. Second,
the costs of running the operation are starting to spiral. She
explains: ‘We are becoming a victim of our own success. We
have striven to provide greater accessibility to our funds; people
can access application forms via the internet, by post and by
phone. But we are in danger of losing what we stand for. It is
taking longer to get the money to where it is needed and our
costs are going up. We are in danger of failing on one of our
key objectives: to minimize the proportion of our turnover that
is spent on administration. At the same time we always need to
be aware of the risk of bad publicity through making the wrong
decisions. If we don't check applications thoroughly, funds may
go to the “wrong” place and if the newspapers gets hold of the
story we would run a real risk of losing the goodwill, and there-
fore the funds, from our many supporters.’
Susan held regular meetings with key stakeholders. One
charity that handled a large number of applications for
people in Nigeria told her of frequent complaints about
the delays over the processing of the applications. A sec-
ond charity representative complained that when he tele-
phoned to find out the status of an application, the ARAPU
staff did not seem to know where it was or how long it
might be before it was complete. Furthermore he felt that
this lack of information was eroding his relationship with
his own clients, some of whom were losing faith in him as a
result: ‘trust is so important in the relationship’, he explained.
Some of Susan’s colleagues, while broadly agreeing with
her anxieties over the organization’s responsiveness and effi-
ciency, took a slightly different perspective. ‘One of the really
good things about Action Response is that we are more flexible
than most charities. If there is a need and if they need support
until one of the larger charities can step in, then we will always
consider a request for aid. I would not like to see any move
towards high process efficiency harming our ability to be open-
minded and consider requests that might seem a little unusual
at first.’ ( Jacqueline Horton, Applications Assessor)

212 PART TWO DESIGNING THE OPERATION

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 Others saw the charity as performing an important coun-
selling role. ‘Remember that we have gained a lot of experi-
ence in this kind of short-term aid. We are often the first people
that are in a position to advise on how to apply for larger and
longer term funding. If we developed this aspect of our work we
would again be fulfilling a need that is not adequately supplied
at the moment.’ (Stephen Nyquist, Applications Assessor)
The Action Response Applications
Processing Unit (ARAPU)
Potential aid recipients, or the intermediary charities repre-
senting them, apply for funds using a standard form. These
forms can be downloaded from the Internet or requested
via a special help line. Sometimes the application will
come directly from an individual community leader but
more usually it will come via an intermediary charity that
can help the applicant to complete the form. The applica-
tion is sent to ARAPU, usually by fax or post (some were
submitted online, but few communities have this facility).
ARAPU employs seven applications assessors with sup-
port staff who are responsible for data entry, coding, filing
and ‘completing’ (staff who prepare payment, or explain why
no aid can be given). In addition, a board of non-paid trustees
meets every Thursday, to approve the assessors’ decisions.
The unit’s IT system maintained records of all transactions,
providing an update on the number of applications received,
approved, declined, and payments allocated. These reports
identified that the unit received about 300 new applications
per week and responded to about the same number (the
unit operates a 35-hour week). But while the unit’s financial
targets were being met, the trend indicated that cost per
application was increasing. The target for the turnaround of
an application, from receipt of application to response, was
20 days, and although this was not measured formally, it was
generally assumed that turnaround time was longer than
this. Accuracy had never been an issue as all files were thor-
oughly assessed to ensure that all the relevant data was col-
lected before the applications were processed. Productivity
seemed high and there was always plenty of work waiting for
processing at each section, with the exception that the ‘com-
pleters’ were sometimes waiting for work to come from the
committee on a Thursday. Susan had conducted an inspec-
tion of all sections’ in-trays that had revealed a rather shock-
ing total of about 2,000 files waiting within the process, not
counting those waiting for further information.
Processing applications
The processing of applications is a lengthy procedure requir-
ing careful examination by applications assessors trained to
make well-founded assessments in line with the charity’s
guidelines and values. Incoming applications are opened by
one of the four ‘receipt’ clerks who check that all the neces-
sary forms have been included in the application; the receipt
clerks take about 10 minutes per application. These are then
sent to the coding staff, in batches, twice a day. The five cod-
ing clerks allocate a unique identifier to each application and
M06_SLAC8678_08_SE_C06.indd 213
key the information on the application into the system. The
coding stage takes about 20 minutes for each application.
Files are then sent to the senior applications assessor’s sec-
retary’s desk. As assessors become available, the secretary
provides the next job in the line to the assessor.
About 100 of the cases seen by the assessors each week
are put aside after only 10 minutes of ‘scanning’ because the
information is ambiguous, so further information is needed.
The assessor returns these files to the secretaries, who write
to the applicant (usually via the intermediate charity) request-
ing additional information, and return the file to the ‘receipt’
clerks who ‘store’ the file until the further information even-
tually arrives (usually between one and eight weeks). When it
does arrive, the file enters the process and progresses through
the same stages again. Of the applications that require no fur-
ther information, around half (150) are accepted and half (150)
declined. On average, those applications that were not ‘recy-
cled’ took around 60 minutes to assess.
All the applications, whether approved or declined, are
stored prior to ratification. Every Thursday the Committee of
Trustees meets formally to approve the applications asses-
sors’ decisions. The committee’s role is to sample the deci-
sions to ensure that the guidelines of the charity are upheld.
In addition the committee will review any particularly unu-
sual cases highlighted by the applications assessors. Once
approved by the committee, the files are then taken to the
completion officers. There are three ‘decline’ officers whose
main responsibility is to compile a suitable response to the
applicant, pointing out why the application failed and offer-
ing, if possible, to provide helpful advice. An experienced
declines officer takes about 30 minutes to finalize the file and
write a suitable letter. Successful files are passed to the four
‘payment’ officers where again the file is completed, letters
(mainly standard letters) are created and payment instruc-
tions are given to the bank. This usually takes around 50 min-
utes, including dealing with any queries from the bank about
payment details. Finally the paperwork itself is sent, with the
rest of the file, to two ‘dispatch’ clerks who complete the doc-
uments and mail them to the applicant. The dispatch activity
takes, on average, 10 minutes for each application.
The feeling among the staff was generally good. When
Susan consulted the team members, they said their work
was clear and routine, but their life was made difficult by
charities that rang in expecting them to be able to tell them
the status of an application they had submitted. It could
take staff hours, sometimes days, to find any individual file.
Indeed two of the ‘receipt’ clerks now were working almost
full-time on this activity. They also said that charities fre-
quently complained that decision making seemed slow.
QUESTIONS
1 What objectives should the ARAPU process be trying
to achieve?
2 What is the main problem with the current ARAPU
processes?
3 How could the ARAPU process be improved?
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