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Chapter 1 & 2 The Process View of the Organization.

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Presentation on theme: "Chapter 1 & 2 The Process View of the Organization."— Presentation transcript:

1 Chapter 1 & 2 The Process View of the Organization

2 2 Operations & the Process View: What is a Process?

3 Job Shop Batch Process Worker-paced line Machine-paced line Continuous process 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 The Product-Process Matrix Jumbled Flow. Process segments loosely linked. Connected Line Flow (assembly line) Continuous, automated, rigid line flow. Process segments tightly linked. Disconnected Line Flow/Jumbled Flow but a dominant flow exists.

4 4 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 Costs High Low High The Matrix: Reloaded

5 5 Focus and the Frontier In the health-care sector Cost efficiency Responsiveness World-class Emergency Room World-class (non-emergency) Hospital One general facility operations frontier

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

7 Inventory Flow Time Flow Rate Inventory, Rate, and Time

8 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 Little’s law: It’s more powerful than you think... Burger King:

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

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

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

12 12 Balanced Scorecard

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


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