process stratergy
TRANSCRIPT
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Process Strategy
Chapter7
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What is a process strategy?
A process strategy is an organizations
approach to transforms resources into
goods and services.
The objective of a process strategy is to
find a way to produce goods and services
that meet customers requirements and
product specifications within cost andother managerial constraints.
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Process Strategies
How to produce a product or providea service that
Meets or exceeds customerrequirements
Meets cost and managerial goals
Has long term effects on Efficiency and production flexibility
Costs and quality
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Dell Computer Company
How can we make the process ofbuying a computer better?
Sell custom-built PCs directly to consumer
Build computers rapidly, at low cost, andonly when ordered
Integrate the Web into every aspect of its
business Focus research on software designed to
make installation and configuration of itsPCs fast and simple
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Process Strategies
Virtually every good or service is made byusing some variation of one of four processstrategies:
1. process focus2. repetitive focus
3. product focus
4. mass customization
Within these basic strategies there are manyways they may be implemented
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Process, Volume, and Variety
Process Focusprojects, job shops
(machine, print,
carpentry)Standard Register
Repetitive(autos, motorcycles)
Harley Davidson
Product Focus(commercialbaked goods,steel, glass)Nucor Steel
High Varietyone or fewunits per run,high variety(allowscustomization)
Changes inModulesmodest runs,standardized
modulesChanges inAttributes(such as grade,quality, size,thickness, etc.)
long runs only
Mass Customization(difficult to achieve,but huge rewards)
Dell Computer Co.
Poor Strategy(Both fixed andvariable costs
are high)
LowVolume
RepetitiveProcess
HighVolume
VolumeFigure 7.1
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Process Focus
Facilities are organized around specificactivities 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 achallenge
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Accounting
PRINTING DEPT
COLLATINGDEPT GLUING, BINDING,STAPLING, LABELING
POLYWRAP DEPT
SHIPPING
Vendors
Receiving
Warehouse
Purchasing
PREPRESS DEPT
Process Flow DiagramCustomer
Customer salesrepresentative
Information flowMaterial flow
Figure 7.2
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Process Focus
Manyinputs
Highvariety
ofoutputs
Print Shop
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Repetitive Focus
Rawmaterials
andmodule
inputs
Modulescombinedfor manyoutput
options
Fewmodules
Automobile Assembly Line
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Process Flow Diagram
THE ASSEMBLY LINETESTING28 tests
Oil tank work cell
Shocks and forks
Handlebars
Fender work cell
Air cleaners
Fluids and mufflers
Fuel tank work cell
Wheel work cell
Roller testing
Incoming parts
From Milwaukeeon a J IT arrival
schedule
Engines andtransmissions
Frame tubebending
Frame-buildingwork cells
Framemachining
Hot-paintframe painting
Crating
Figure 7.3
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Process, Volume, and Variety
Process Focusprojects, job shops
(machine, print,
carpentry)Standard Register
Repetitive(autos, motorcycles)
Harley Davidson
Product Focus(commercialbaked goods,steel, glass)Nucor Steel
High Varietyone or fewunits per run,high variety
(allowscustomization)
Changes inModulesmodest runs,standardized
modulesChanges inAttributes(such as grade,quality, size,thickness, etc.)long runs only
Mass Customization(difficult to achieve,but huge rewards)
Dell Computer Co.
Poor Strategy(Both fixed andvariable costs
are high)
LowVolume
RepetitiveProcess
HighVolume
VolumeFigure 7.1
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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 lowvariable cost
Generally less skilled labor
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Product Focus
Manyinputs
Outputvariationin size,shape,
and
packaging
Bottling Plant
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Product Focus
Nucor Steel Plant
Continuouscaster
Continuous cast steelsheared into 24-ton slabs
Hot tunnel furnace - 300 ft
Hot mill for finishing, cooling, and coiling
D
E F
GHI
Scrapsteel
Ladle of molten steel
Electric
furnace
A
BC
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Process, Volume, and Variety
Process Focusprojects, job shops
(machine, print,
carpentry)Standard Register
Repetitive(autos, motorcycles)
Harley Davidson
Product Focus(commercialbaked goods,steel, glass)Nucor Steel
High Varietyone or fewunits per run,high variety
(allowscustomization)
Changes inModulesmodest runs,standardized
modulesChanges inAttributes(such as grade,quality, size,thickness, etc.)long runs only
Mass Customization(difficult to achieve,but huge rewards)
Dell Computer Co.
Poor Strategy(Both fixed andvariable costs
are high)
LowVolume
RepetitiveProcess
HighVolume
VolumeFigure 7.1
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Mass Customization
The rapid, low-cost production ofgoods and service to satisfy
increasingly unique customerdesires
Combines the flexibility of aprocess focus with the efficiencyof a product focus
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Mass Customization
Modular techniques
Mass Customization
Effectiveschedulingtechniques
Rapidthroughputtechniques
Repetitive FocusModular design
Flexible equipment
Process-FocusedHigh variety, low volume
Low utilization (5% to 25%)General-purpose equipment
Product-FocusedLow variety, high volume
High utilization (70% to 90%)Specialized equipment
Figure 7.5
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Comparison of Processes
Process Focus
(Job shop)
(Low volume,
high variety)
Repetitive
Focus(Harley-
Davidson
(Modular)
Product Focus
(Paper-beer)
(High-volume,
low-variety)
Mass
Customization
(Dell Computer)
(High-volume,
high-variety)
Small quantity,
large variety of
products
Long runs,
standardized
product made
from modules
Large quantity,
small variety of
products
Large quantity,
large variety of
products
General
purpose
equipment
Special
equipment aids
in use of
assembly line
Special
purpose
equipment
Rapid
changeover on
flexible
equipment
Table 7.2
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Comparison of Processes
Process Focus
(Job shop)
(Low volume,
high variety)
Repetitive
Focus (Harley-
Davidson
(Modular)
Product Focus
(Paper-beer)
(High-volume,
low-variety)
Mass
Customization
(Dell Computer)
(High-volume,
high-variety)
Units move
slowly through
the plant
Movement is
measured in
hours and days
Swift
movement of
unit through the
facility is typical
Goods move
swiftly through
the facility
Finished goods
made to order
Finished goods
made to
frequent
forecast
Finished goods
made to
forecast and
stored
Finished goods
often made to
order
Table 7.2
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Comparison of Processes
Process Focus
(Job shop)
(Low volume,
high variety)
Repetitive
Focus(Harley-
Davidson
(Modular)
Product Focus
(Paper-beer)
(High-volume,
low-variety)
Mass
Customization
(Dell Computer)
(High-volume,
high-variety)
Scheduling is
complex,
trade-offs
between
inventory,availability,
customer
service
Scheduling
based on
building
various models
from modulesto forecasts
Relatively
simple
scheduling,
establishing
output rate tomeet forecasts
Sophisticated
scheduling
required to
accommodate
custom orders
Table 7.2
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Comparison of Processes
Process Focus
(Job shop)
(Low volume,
high variety)
Repetitive
Focus(Harley-
Davidson
(Modular)
Product Focus
(Paper-beer)
(High-volume,
low-variety)
Mass
Customization
(Dell Computer)
(High-volume,
high-variety)
Fixed costs
low, variable
costs high
Fixed costs
dependent on
flexibility of the
facility
Fixed costs
high, variable
costs low
Fixed costs
high, variable
costs must be
low
Costing
estimated
before job, not
known until
after job is
complete
Costs usually
known due to
extensive
experience
High fixed costs
mean costs
dependent on
utilization of
capacity
High fixed costs
and dynamic
variable costs
make costing a
challenge
Table 7.2
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Crossover Charts
Fixed costs
Variablecosts
$
High volume, low varietyProcess C
Fixed costs
Variablecosts$
RepetitiveProcess B
Fixed costs
Variablecosts$
Low volume, high varietyProcess A
Fixed costProcess A
Fixed costProcess B
Fixed costProcess C
V1(2,857) V2(6,666)
400,000300,000
200,000
Volume
$
Figure 7.6
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Process Analysis and Design
Flow Diagrams - Shows the movementof materials
Time-Function Mapping - Shows flows
and time frame Value Stream Mapping - Shows flows
and time and value added beyond theimmediate organization
Process Charts - Uses symbols to showkey activities
Service Blueprinting - focuses on
customer/provider interaction
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Time-Function Mapping (Before processimprovement at American National Can Company)
Customer
Sales
Productioncontrol
Plant A
Warehouse
Plant B
Transport Move
Receiveproduct
Extrude
Wait
Move
Wait
Print
Wait
Orderproduct
Processorder
Wait
12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day
52 daysFigure 7.7
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Time-Function Mapping (After processimprovement at American National Can Company)
Customer
Sales
Production
control
Plant
Warehouse
Transport Move
Receiveproduct
Extrude
Wait
Print
Orderproduct
Processorder
Wait
1 day 2 days 1 day 1 day 1 day
6 days
Figure 7.7
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Process Chart
Figure 7.8
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Service Blueprint
Focuses on the customer andprovider interaction
Defines three levels of interaction
Each level has differentmanagement issues
Identifies potential failure points
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Service Blueprint
Personal Greeting Service Diagnosis Perform Service Friendly Close
Customer arrivesfor service
Warm greeting
and obtainservice request
Direct customerto waiting room Notify
customer thecar is ready
Customer departs
Customer pays bill
Performrequired work
Prepare invoice
YesYes
Level#3
Level#1
Level#2
Potential failure point
Figure 7.9
No
Notifycustomer
and recommendan alternative
providerStandardrequest
Determinespecifics
No
Canservice be
done and doescustomerapprove?
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Service Factory Service Shop
Degree of Customization
Low High
De
greeofLabor
Low
High
Mass Service Professional Service
Service Process Matrix
Commercialbanking
Privatebanking
General-purpose law firms
Law clinics
Specializedhospitals
Hospitals
Full-servicestockbroker
Limited-service
stockbroker
Retailing
Boutiques
Warehouse andcatalog stores
Fast foodrestaurants
Fine-diningrestaurants
Airlines
No frillsairlines
Figure 7.10
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Improving Service Productivity
Strategy Technique Example
Separation Structure service so
customers must gowhere service is offered
Bank customers go to a
manager to open a newaccount, to loan officers
for loans, and to tellers
for deposits
Self-service Self-service so
customers examine,compare, and evaluate
at their own pace
Supermarkets and
department stores,internet ordering
Table 7.3
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Strategy Technique Example
Postponement Customizing at delivery Customizing vans at
delivery rather than atproduction
Focus Restricting the offerings Limited-menu
restaurant
Modules Modular selection ofservice, modular
production
Investment andinsurance selection,
prepackaged food
modules in restaurants
Improving Service Productivity
Table 7.3
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Strategy Technique Example
Automation Precise personnel
scheduling
Automatic teller
machines
Scheduling Precise personnelscheduling
Scheduling ticket
counter personnel at
15-minute intervals at
airlines
Training Clarifying the serviceoptions, explaining howto avoid problems
Investment counselor,
funeral directors, after-
sale maintenance
personnel
Improving Service Productivity
Table 7.3
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Equipment and Technology
Often complex decisions
Possible competitive advantage
Flexibility
Stable processes
May allow enlarging the scope of theprocesses
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Improving Service Processes
Layout
Product exposure, customereducation, product enhancement
Human Resources
Recruiting and training
Impact of flexibility
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Production Technology
Machine technology
Automatic identification systems (AIS)
Process control
Vision system
Robot
Automated storage and retrieval systems
(ASRS) Flexible manufacturing systems (FMS)
Computer-integrated manufacturing (CIM)
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Machine Technology
Increased precision
Increased productivity
Increased flexibility
Improved environmental impact
Reduced changeover time
Decreased size
Reduced power requirements
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Automatic Identification
Systems (AIS):These systems help us move
data into electronic form, whereby it is easily manipulated.
Improved data acquisition
Reduced data entry errors
Increased speed
Increased scope of process
automation Example: Radio frequency
identification for tracking
everything!
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Process Control: Use of Information Technology tomonitor and control a physical process.
Increased process stability
Increased process precision
Real-time provision of informationfor process evaluation
Data available in many forms
Example: Sensors, ComputerPrograms read file and analyze thedata.
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Process Control Software: controlsthe flow of sugars and fruits into a juice mixer.
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Robots
Perform monotonous or dangeroustasks
Perform tasks requiring significantstrength or endurance
Generally enhanced consistency
and accuracy
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Robotic
Surgery
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Automated Storage andRetrieval Systems (ASRS)
Provide for the automated placement andwithdrawal of parts and products
Reduced errors and labor
Particularly useful in inventory and testareas of manufacturing firms
Such systems are commonly used indistribution facilities of retailers such asWal-Mart.
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Automated Guided Vehicle
(AGV)
Electronically guided and controlled
carts Used for movement of products
and/or individuals
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Flexible ManufacturingSystems (FMS)
Computer controls both the workstationand the material handling equipment
Enhance flexibility and reduced waste Can economically produce low volume at
high quality
Reduced changeover time and increased
utilization Stringent communication requirement
between components
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Computer Integrated
Manufacturing (CIM) Extension of flexible manufacturing
systems
Backwards to engineering and inventorycontrol
Forward into warehousing and shipping
Can also include financial and customerservice areas
Reducing the distinction between low-volume/high-variety, and high-volume/low-variety production
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Computer Integrated
Manufacturing (CIM)Top management decides to make a product
OM runs theproductionprocess
Computer-
aided design(CAD) designsthe product
Computer-aidedmanufacturing(CAM)
Robots putthe producttogether
Automated storage andretrieval system (ASRS)and automated guided
vehicles (AGVs)
ManagementInformation
System
FMS
CIM
Figure 7.11
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Technology in Services
Service Industry Example
Financial Services Debit cards, electronic funds transfer, ATMs,
Internet stock trading
Education Electronic bulletin boards, on-line journals
Utilities andgovernment
Automated one-man garbage trucks, opticalmail and bomb scanners, flood warningsystems
Restaurants and
foods
Wireless orders from waiters to kitchen, robot
butchering, transponders on cars that tracksales at drive-throughs
Communications Electronic publishing, interactive TV
Table 7.4
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Technology in Services
Service Industry Example
Hotels Electronic check-in/check-out, electronic
key/lock system
Wholesale/retail
trade
Point-of-sale terminals, e-commerce, electronic
communication between store and supplier, barcoded data
Transportation Automatic toll booths, satellite-directednavigation systems
Health care Online patient-monitoring, online medicalinformation systems, robotic surgery
Airlines Ticketless travel, scheduling, Internet
purchases