1. The Process View of the Organization
Chapter 1 & 2
The Process View of the Organization

2. Operations & the Process View: What is a Process?
Chapter 1
Operations & the Process View: What is a Process?
Architectures
Customer interface
Competency

3. The Product-Process Matrix
Low Volume
(unique)
Medium Volume
(high variety)
High Volume
(lower variety)
Very high volume
(standardized)
Utilization of fixed capital
generally too low
Unit variable costs
generally too high
Surgery
Exec. Shirt
Toshiba
Toyota
National
Cranberry
Manzana Insurance
Job Shop
Batch Process
Worker-paced
line
Machine-paced
Continuous
process
Jumbled Flow.
Process segments
loosely linked.
Disconnected Line
Flow/Jumbled Flow
but a dominant flow
exists.
Categorizes processes into one of five clusters
Similar processes tend to have similar problems
There exists a long-term drift from the upper left to the lower right
Connected Line
Flow (assembly line)
Continuous, automated,
rigid line flow.
Process segments tightly
linked.

4. The Matrix: Reloaded Process Flexibility Opportunity Costs
Chapter 2
The Matrix: Reloaded
Process
Flexibility
Jumbled Flow.
Process segments
loosely linked.
Disconnected Line
Flow/Jumbled Flow
but a dominant flow
exists.
JOB SHOP
(Commercial Printer,
Architecture firm)
BATCH
(Baking,
Instruction)
LINE FLOWS
(Auto Assembly,
Loan Application)
CONTINUOUS
FLOW
(Oil Refinery)
Product
Variety
Low
Low Standardization
One of a kind
Low Volume
Many Products
Few Major Products
High volume
High Standardization
Commodity Products
Connected Line
Flow (assembly line)
Continuous, automated,
rigid line flow.
Process segments tightly
linked.
Opportunity
Costs
Out-of-pocket
High

5. Focus and the Frontier In the health-care sector
Chapter 2
Focus and the Frontier In the health-care sector
Cost efficiency
Responsiveness
World-class
Emergency Room
(non-emergency)
Hospital
One general
facility
operations
frontier
Operational tradeoffs – balance responsiveness w/efficiency
Tools to identify & eliminate inefficiencies
Evaluate designs prior to implementation
Develop appropriate capabilities iaw your strategy

6. Processes: how to describe them?
Inputs and Outputs
Flow Unit
Process flow chart (activities and buffers)
Resources
Activity 2
Activity 3
Finished Units
Pass Inspection
Rework
Fail Inspection
Raw Material
Inventories
Activity 1
Activities
Flow unit = 1 guitar
flow

7. Inventory, Rate, and Time
Flow Time
Flow Rate
Who cares about it?
Economic impact - Air travel – Retailing – Emergency Room – Iron Ore - Pacemakers
Causes: Rigidity & Variability
Types Pipeline, Seasonal, Cycle, Decoupling/Buffer, Safety

8. Little’s law: It’s more powerful than you think...
What it is: Inventory (I) = Flow Rate (R) * Flow Time (T)
Examples:
Indirect measurement of flow time
Inventory turns: compute right from financial data
Rate: 5000kg/week
Inventory: 2500kg
Rate: 1500 customers/day
Inventory: 25 customers
Burger King:
Out of the three fundamental performance measures (I,R,T), two can be chosen by management, the other is GIVEN by nature
Hold throughput constant: Reducing inventory = reducing flow time

9. Inventory Turns in Retailing : Link to Inventory Costs
Retailer A
Retailer B
Inventory Cost Computation
Example:
Annual inventory costs=30%
Inventory turns=6
Per unit Inventory costs=

10. Measuring Your Process
Chapter 1
Measuring Your Process
Operational Measures
Flow time
Inventory / turns
Fill rate
Scrap rate
% shipped on time
Financial Measures
Absolute measures:
revenues, costs, operating income, net income
Net Present Value (NPV)
Relative measures:
ROI, ROE
ROA
Survival measure:
cash flow

11. Measurement Models Balanced Scorecard Organization
Balanced Scorecard Discussion
Baldrige National Quality Program

12. Balanced Scorecard

13. Baldrige Criteria & Balanced Scorecard
Malcolm Baldrige
Balanced Scorecard
Leadership
Learning & Growth Perspective
Human Resource Capital
Learning & Growth Perspective
Business Results
Financial Perspective
Process Management
Internal Process Perspective
Strategic Planning
Strategy Map
Customer Focus
Stakeholder / Customer Perspective