Process Strategy

7 and Sustainability

PowerPoint presentation to accompany

Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e

PowerPoint slides by Jeff Heyl

© 2011 Pearson Education, Inc. publishing as Prentice Hall 7-1

 Process Strategies
The objective of a process strategy is
to build a production process that
meets customer requirements and
product specifications within cost
and other managerial constraints

 Has long term effects on

 Efficiency and production flexibility
 Costs and quality

© 2011 Pearson Education, Inc. publishing as Prentice Hall 7-2

 Process, Volume, and Variety
Figure 7.1 Volume
Low Repetitive High
Volume Process Volume

Process Focus Mass Customization

projects, job shops (difficult to achieve,
(machine, print, but huge rewards)
hospitals, restaurants) Dell Computer
Variety 

Arnold Palmer
Hospital

Repetitive
(autos, motorcycles,
home appliances)
Harley-Davidson
Product Focus
Poor Strategy (commercial
(Both fixed and baked goods,
variable costs steel, glass, beer)
are high) Frito-Lay
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7-3
 Process Strategies
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

© 2011 Pearson Education, Inc. publishing as Prentice Hall 7-4

 Process Focus
(low volume, high variety, intermittent
processes)
 Facilities are organized around specific
activities or processes (by function)
 General purpose equipment and skilled
personnel
 High degree of product variety
 Typically high costs and low equipment
utilization
 Product flows may vary considerably
making planning and scheduling a
challenge
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7-5
 Product Focus

 Facilities are organized by product

 High volume but low variety of
products
 Long, same continuous production
runs enable efficient processes
 Typically high fixed cost but low
variable cost
 Generally less skilled but cross
trained labor
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7-6
 Repetitive Focus
(Module production)
 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

© 2011 Pearson Education, Inc. publishing as Prentice Hall 7-7

 Mass Customization
 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
Inventory management through JIT helps the
implementation of Mass Customization
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7-8
 Mass Customization
Number of Choices
Item 1970s 21st Century
Vehicle models 140 286
Vehicle types 18 1,212
Bicycle types 8 211,000
Software titles 0 400,000
Web sites 0 162,000,000
Movie releases per year 267 765
New book titles 40,530 300,000
Houston TV channels 5 185
Breakfast cereals 160 340
Items (SKUs) in 14,000 150,000
supermarkets
LCD TVs 0 102

Table 7.1
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7-9
 Process Analysis and
Design
 Value-Stream Mapping - Shows flows and
time and value added beyond the
immediate organization
 Process Charts - Uses symbols to show
key activities
 Service Blueprinting - focuses on
customer/provider interaction

© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 10

 Value-Stream Mapping

Figure 7.6

© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 11

 Service Blueprint
Personal Greeting Service Diagnosis Perform Service Friendly Close

Level Customer arrives

for service. Customer departs
#1
(3 min)

F
Determine Notify Customer pays bill.
specifics. customer (4 min)
Warm greeting (5 min)
and obtain No and recommend
an alternative
F
service request.
(10 sec) provider.
Standard Can F
Level request. (7min)
service be
#2 (3 min) done and does Notify
Direct customer customer No customer the
to waiting room. approve? car is ready.
(5 min) (3 min)

F F F F
Yes Yes
Perform
Level required work. F Prepare invoice.
#3 (varies) (3 min)

Figure 7.8
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 12
 Service Blueprinting

 Focuses on the customer and

provider interaction
 Defines three levels of interaction
 Each level has different
management issues
 Identifies potential failure points

© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 13

 Service Process Matrix
Degree of Customization Quality
Low High
Competition
Mass Service Professional Service
Private
banking
Commercial
banking
High General-
purpose law firms
Automation
Degree of Labor

Service Factory Law clinics Service Shop

Online,
ATM
Fast-food Fine-dining
Low restaurants restaurants

Airlines

Price
No-frills
Competition airlines
Figure 7.9
© 2011 Pearson Education, Inc. publishing as Prentice Hall Standardization 7 - 14
 Improving Service
Productivity
Strategy Technique Example
Postponement Customizing at Customizing vans at
delivery delivery rather than at
production
Focus Restricting the Limited-menu
offerings restaurant
Modules Modular selection of Investment and
service insurance selection
Modular production Prepackaged food
modules in
restaurants

Table 7.3
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 15
 Improving Service
Productivity
Strategy Technique Example
Separation Structure service so Bank customers go to
customers must go a manager to open a
where the service is new account, to loan
offered officers for loans, and
to tellers for deposits
Self-service Self-service so Supermarkets and
customers examine, department stores
compare, and Internet ordering
evaluate at their own
pace

Table 7.3
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 16
 Improving Service
Productivity
Strategy Technique Example
Automation Separating services Automatic teller
that may lend machines
themselves to some
type of automation
Scheduling Precise personnel Scheduling ticket
scheduling counter personnel at
15-minute intervals at
airlines
Training Clarifying the service Investment counselor,
options funeral directors
Explaining how to After-sale maintenance
avoid problems personnel
Table 7.3
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 17
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