ops management lecture 4 process design & strategy
DESCRIPTION
Ops Management Lecture 4TRANSCRIPT
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Chapter four
Process design, strategy, and management
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Learning objectives
• Define a process
• Explain the reasons for process selection and why it is a strategic issue
• Discuss the influence that process selection will have on the organisation’s performance
• Discuss the major process types
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Learning objectives • Identify and explain the automation of processes• Discuss the reasons why technology must be
managed• Discuss why it will become necessary to
redesign processes• List and discuss the returns and weaknesses of
process layout• Discuss and compute line balancing• Explain process reengineering• Explain industrial engineering.
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4.1 Introduction• Process:
– Methodology– Utilised on a continuous basis– Result in creation of good/service– Delivered to customer– Make a profit
• Add maximum value at minimum cost.
- The “How” of the production of a good or service
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4.2 Understanding processes
• Each process used crosses organisational borders
• E.g. KOO
• Process thinking: examines the diversified system as unified
• Must take into account user requirements
• Users must understand the process
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4.2 Understanding processes• Six characteristics:
1. accurate definition of the good/service
2. customer needs must be understood
3. all possible suppliers identified
4. correct process must be defined
5. process must be mistake proofed
6. continuous feedback must be carried out.
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4.2 Understanding processes• Six characteristics:
1. accurate definition of the good/service Boundaries of process
2. customer needs must be understood
3. all possible suppliers identified
4. correct process must be defined How process will perform
5. process must be mistake proofed
6. continuous feedback must be carried out. How to remain efficient
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4.3 Strategic process decisions
Remember:- EVERY PROCESS UTILISED BY AN ORGANISATION UTILISES SCARCE RESOURCES!
•How will the process provide the envisaged output? Must be of value
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4.3 Strategic process decisionsRemember:- EVERY PROCESS UTILISED BY AN ORGANISATION UTILISES SCARCE
RESOURCES!
• Exact match to setting – aim to fulfil major process characteristics and be as closely related to strategic match as possible
• Part of process foundation – that is it becomes part of the organisations supply chain
• Close working relationship between the processes in the supply chain. Seamless interface
• Include subcontracting.
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4.3 Strategic process decisions
Figure 4.1
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4.4 Process structures for manufacturing
Process designer must ask the following:-
•What is the amount of variability in the good or service produced?
•What is the degree of flexibility required from labour and equipment?
•What are the quantities of goods and services to be produced?
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4.4 Process structures for manufacturing
• Four key process types:-
- Job process
- Batch process
- Line process
- Continuous flow process
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JOB PROCESS
- Highly adaptable/customised
- Scale of operation small
- Structured around particular events
- Extensive diversity of products
- Small quantities
- Must have a customer order – do not make for stock
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BATCH PROCESS
Most common type of process used in industry
Small to large batches Intermittent Highly flexible Labour skill level than for job process Limited range of products
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LINE PROCESS
• Repetitive process or assembly line• One type of product in a straight line• Modular production• Large quantities of production• High utilisation of standard parts• Structured around a specific product• Make for stock
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LINE PROCESS
Show Rolls Royce Video
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CONTINUOUS FLOW PROCESS
Product focused process Very high volumes Very limited flexibility loss of production
time Variable levels of labour skill required Only one product at one time Very high capital investment
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CONTINUOUS FLOW PROCESS
Show Coca Cola Video
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4.5 Strategies for manufacturing processes
Make to order strategy•Low volume•Customer specified•Job or batch process•Strategy is to satisfy unique desire of customer•High level of customisation•Highly multifaceted processes are utilised
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4.5 Strategies for manufacturing processes
Assemble to order strategySmall number of components large diversity of products
Manufacture to order not for stock
Main requirement lead time as short as possible
Batch or assembly line process
Components batch process, assembly line process
Requires high volumes of standard products
High inventory of materials
Eg: Plascon/Dulux paint shop
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4.5 Strategies for manufacturing processes
Make to stock strategy
•Large inventories of final stock
•Anticipate customer orders
•Demand can be predicted fairly accurately
•Highly standardised products
•Continuous flow process
•E.g. FMCG
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4.6 Process structures for service
Three major process types for service industry
•Professional service processes
•Service shop processes
•Mass service process
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PROFESSIONAL SERVICE PROCESSES
Large variety of services Low volumes Highly customised Focussed on people rather than equipment E.g attorney’s office
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SERVICE SHOP PROCESSES
High customer participation High adaptation High volumes of customers Fair amount of customer interaction required Front and back office Front office staff fairly skilled Back office staff more skilled Highly standardised service E.g. High Street banks
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MASS SERVICE PROCESSES
Large numbers of clients Very little customisation Utilises machinery and equipment to produce
service Most tasks completed back office Front office staff have limited skills Back office staff more skilled E.g. Supermarkets
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4.7 Process performance measurement
Design SpecificationProcess must consistently perform to specificationProcess performance measurement establishes to what extent process is performing to specificationAppropriate measurements must be developedMeasurements most often used:-
Benchmarking Process Performance Ratios
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BENCHMARKING
Compare against other organisations achievements
Industry leader identified Industry leaders process analysed to
show where improvements in own system are required
Requires co-operation across the industry
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PROCESS PERFORMANCE RATIOS
Process performance ratios:• Productivity• Efficiency• Run time• Operations time• Throughput.
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PRODUCTIVITY
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EFFICIENCY
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RUN TIME
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OPERATIONS TIME
OPERATIONS TIME = RUNTIME + SET UP TIME
Compare to available time
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THROUGHPUT
THROUGHPUT = ACTUAL NUMBER OF PRODUCTS PRODUCED
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4.8 Business process reengineering [BPR]
• Improve methods
• Streamlining
• Hammer popularised BPR in 1990’s
• Debate: BPR & TQM
• Development of the BPR methodology (please read section 4.8.1, p 106)
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BPR VS TQMBPR TQM
Fundamental radical redesign of process
Process of incremental change
Short time scale Longer timescale
Immediately measurable Longer to see results
Customer is centre piece to organisation
Customer is centre piece to organisation
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4.9 Industrial engineering
• Industrial engineering is mainly concerned with the:– investigation, – redesign, – and implementation of processes,
performance standards, work methods, and related issues
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4.9 Industrial engineering
• Examples:– Bonus schemes (parameters)– Profit sharing (guidelines)– Ergonomics– Method analysis– Setting labour standards.
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Summary
• Process defined
• Process as a strategic issue
• Structures & strategies – manufacturing
• Structures – services
• Process performance measurement
• BPR
• Industrial engineering.
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FOR NEXT SESSION• Read p114 – 136• Define and briefly discuss a process• List the 6 characteristics of a process• List three production strategies and discuss one
of them• Briefly discuss the service shop process concept• List and discuss possible performance ratios
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Group Exercise• Case study page 109