Process Strategy

This week we will be discussing process strategy within an organization. Let’s first define
process strategy: Specifies the pattern of decisions made in managing processes so that the
process will achieve their competitive priorities.

What are competitive priorities? They are the priorities that the organization focuses on to win
business, gain market share, take customers from competitors, etc.

Operations managers have many decisions to make when considering process strategy. First,
determine if your organization is producing goods or delivering services. This is typically
obvious. Next, decide how to utilize your resources based on organizational priorities. Also,
determine the level of customer contact to be managed. Also to be considered is the amount
of capital, or buildings/infrastructure/equipment, required.

There are 4 different types of processes to be considered when designing a process and
deciding on process strategy:

 Job Process
 Batch Process
 Line Process
 Continuous Flow

Let’s take a closer look at each of these. A job process, or job shop, is usually a make-to-order,
low volume, highly flexible type of operation with skilled labor. In this situation, resources are
usually aligned by process or department.

The batch process is similar to the job process where resources are still aligned by process or
department, however in this situation materials typically move between departments in small
batches, as opposed to one order or piece at a time. Here we usually see medium volume, that
is a small number of the same product ordered vs. just one.

In a line process, operations are typically grouped by product, not process. A good example of
a line process is an assembly line. Think about an automobile assembly line. Each subsequent
operation is different than the last, and those different work cells are right next to each other.
A continuous process goes beyond line process, by not having “work cells” at all. Here the
product runs, or the service is delivered, without stoppage. This type of process is meant for
high volume, highly standardized product. A good example is the manufacture of soda, paper,
and foam.

Process strategy requires thought and execution on the placement of things required to get the
job done. This is called “layout”, and entails the most effective placement of all work items,
including but not limited to:

 Materials & supplies

 Equipment
 People
 Storage
 Lanes / aisles
 Offices
 Shipping / receiving docks
 Etc.

As an operations manager, you’ll want to ensure that you layout your operation efficiently,
meaning that you should put items required for the job within reach, whenever possible.

Now let’s discuss other process strategies, namely:

 Customer involvement
 Resource flexibility
 Capital intensity
 Overall strategic fit

Customer involvement is a measure of how much (or how little) you want the customer involved in your
operation, engaging the employees doing the work and their managers. Typically in a manufacturing
operation, customer involvement is very low, whereas in the delivery of services customer involvement
is very high.

Resource flexibility is a measure of how flexible your employees are, how multi-skilled they are, how
cross-trained they are, and how accepting of change they are. A flexible workforce is an asset when
your company operates in job-shop or batch format, however expect to pay a bit more for those flexible
skills.
Capital intensity is a measure of how much (or how little) buildings/infrastructure/equipment is required
for your operation. In general, manufacturing companies are highly capital intensive. Many service
providers are also capital intensive, for instance a large hotel chain or casino. Often times, service
providers are low capital intensive. Think of your local carpenter or plumber, using their knowledge to
solve your problems.

In summary, an operations manager’s job is to provide the correct, most efficient process strategy and
facility layout in order to keep customers happy and coming back.