DBPA 240

PRINCIPLES OF OPERATION
MANAGEMENT
CHAPTER 6:
PROCESS STRATEGIES AND CAPACITY PLANNING
 LEARNING OUTCOMES

What is Four Process Strategy

Process Analysis and Design

Services Process Design

Process Reengineering
 Process Strategies
 How to produce a product or provide a service that
i. Meets or exceeds customer requirements
ii. Meets cost and managerial goals

 Has long term effects on

i. Efficiency and production flexibility
ii. Costs and quality
 Process Strategies
Four basic strategies:
 Process focus
 Repetitive focus
 Product focus
 Mass customization

Within these basic strategies there are many ways they may be implemented
 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
 Process Focus
Machine Shop

Many inputs High variety

of outputs
 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
 Repetitive Focus
Automobile Assembly Line

Raw materials and

module inputs Modules combined
for many output
options
 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
 Product Focus
Fast Food

Many inputs Output variation in

size, shape, and
packaging
 Mass Customization Focus

 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
Mass Customization Focus
Effective scheduling techniques
Process-Focused
 High variety, low volume
 Low utilization (5% to 25%)
 General-purpose equipment

Modular techniques
Mass Customization
Repetitive Focus
 Modular design
 Flexible equipment
Rapid throughput techniques
Product-Focused
 Low variety, high volume
 High utilization (70% to 90%)
 Specialized equipment
Mass Customization Focus

Item Early 1970s Early 21’st Century

Vehicle Models 140 260

Vehicles Types 18 1212

Software Titles 0 300,000

Websites 0 46,412,165

Movie Releases 267 458

Book Releases 40,530 77,456

 Comparison of Focuses

Process Focus Repetitive Focus Product Focus Mass Customization

Focus
Small quantity, large Long runs, standardized Large quantity, small Large quantity, large
variety of products product made from variety of products variety of products
modules

General purpose Special equipment aids Special purpose Rapid changeover on

equipment in use of assembly line equipment flexible equipment

Operators are broadly Employees are modestly Operators are less Flexible operators are
skilled trained broadly skilled trained for the
necessary
customization

Many job instructions as Repetition reduces Few work orders and Custom orders require
each job changes training and changes in job instructions many job instructions
job instructions because jobs
standardized
 Comparison of Focuses
Process Focus Repetitive Focus Product Focus Mass Customization
Focus
Units move slowly Movement is measured Swift movement of unit Goods move swiftly
through the plant in hours and days through the facility is through the facility
typical

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

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

Costing estimated Costs usually known High fixed costs mean High fixed costs and
before job, not known due to extensive costs dependent on dynamic variable costs
until after job is experience utilization of capacity make costing a
complete challenge
 Process Analysis and Design

 Flow Diagrams - Shows the movement of materials

 Time-Function Mapping - Shows flows and time frame
 Process Charts - Uses symbols to show key activities
 Service Blueprinting - focuses on customer/provider interaction
 Process Analysis and Design

 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
 Flow diagram
Customer

Information flow Purchasing Customer sales

representative
Material flow

Vendors
PREPRESS DEPT

Accounting Receiving

PRINTING DEPT
Warehouse

COLLATING GLUING, BINDING,

DEPT STAPLING,
LABELING

POLYWRAP DEPT

SHIPPING
 Time – function Mapping
Customer Order Receive
product product

Sales Process
order

Production
control Wait

Plant A Print

Warehouse Wait Wait Wait

Plant B Extrude

Transport Move Move

12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day

52 days
Process Chart
 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 Blueprinting
Personal Greeting Service Diagnosis Perform Service Friendly Close

Level Customer arrives

#1 for service Customer departs

Determine Notify Customer pays bill

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

Yes Yes
Perform
Level required work
#3

Potential failure point

Prepare invoice
 Service Process Design
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
 Service Process Design
Degree of Customization
Low High
Mass Service Professional Service
Private
banking
Commercial
banking
High General-
purpose law firms
Degree of Labor

Full-service
stockbroker
Boutiques
Retailing

Service Factory Law clinics Service Shop

Limited-service Specialized
stockbroker hospitals
Warehouse and
Low catalog stores
Fast food Fine-dining
restaurants Hospitals
restaurants
Airlines

No frills
airlines
 Service Process Design
Strategy Technique Example
Separation Structure service so customers Bank customers go to a manager
must go where service is offered to open a new account, to loan
officers for loans, and to tellers
for deposits

Self-service Self-service so customers Supermarkets and department

examine, compare, and evaluate stores, internet ordering
at their own pace

Postponement Customizing at delivery Customizing vans at delivery

rather than at production

Focus Restricting the offerings Limited-menu restaurant

Modules Modular selection of service, Investment and insurance

modular production selection, prepackaged food
modules in restaurants
 Service Process Design

Strategy Technique Example

Postponement Customizing at delivery Customizing vans at delivery
rather than at production

Focus Restricting the offerings Limited-menu restaurant

Modules Modular selection of service, Investment and insurance

modular production selection, prepackaged food
modules in restaurants
 Process Reengineering

 The fundamental rethinking of business processes to bring

about dramatic improvements in performance
 Relies on reevaluating the purpose of the process and
questioning both the purpose and the underlying
assumptions
 Requires reexamination of the basic process and its
objectives
 Focuses on activities that cross functional lines
 Any process is a candidate for redesign