3 – 1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Process Strategy 3

3 – 2 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Process Strategy Decisions Figure 3.1 –Major Decisions for Effective Processes D1. Process Structure Customer-contract position (services) Product-process position (manufacturing) Layout D3. Resource Flexibility Specialized Enlarged D2. Customer Involvement Low involvement High involvement Effective Process Design Strategy for Change Process reengineering Process improvement D4. Capital Intensity Low automation High automation

3 – 3 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Service Process Structuring Front office Hybrid office Back office Less customer contact and customization Less processes divergence and more line flows (1)(2)(3) High interaction withSome interaction withLow interaction with customers, highlycustomers, standardcustomers, standardized customized serviceservices with some optionsservices Process Characteristics (1) Flexible flows with Individual processes (2) Flexible flows with some dominant paths, with some exceptions to how work performed (3) Line flows, routine work same with all customers Figure 3.2 – Customer-Contact Matrix for Service Processes

3 – 4 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Product-Process Matrix Continuous process Job process Line process Large batch process Small batch process (1)(2)(3)(4) Low-volumeMultiple products with low Few majorHigh volume, high products, made to moderate volume products,standardization, to customer highercommodity ordervolumeproducts Process Characteristics (1) Customized process, with flexible and unique sequence of tasks (2) Disconnected line flows, moderately complex work (3) Connected line, highly repetitive work (4) Continuous flows Less complexity, less divergence, and more line flows Less customization and higher volume Batch processes Figure 3.3 – Product-Process Matrix for Processes

3 – 5 A: A Flexible Flow Layout Foundry Milling machines LathesGrinding PaintingDrills Office Welding Forging A job shop has a flexible-flow layout.

3 – 6 B: Line Flow Layout Station 1Station 2Station 3Station 4 A production line has a line-flow layout.

3 – 7 Machine 1 Machine 2 Machine 3 Machine 4 Machine 5 Materials in Finished goods out One Worker, Multiple Machines

3 – 8 Before Group Technology Drilling DD DD Grinding GG GG GG Milling MM MM MM Assembly AA AA Lathing Receiving and shipping L LL LL LL L Jumbled flows in a job shop without GT cells

3 – 9 Applied Group Technology Line flows in a job shop with three GT cells Cell 3 LM G G Cell 1 Cell 2 Assembly area A A L M D L L M Shipping D Receiving G

3 – 10 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Break-Even Analysis Process 2: Special-purpose equipment Process 1: General-purpose equipment Break-even quantity Total cost (dollars) Units per year (Q) F2F2 F1F1 Figure 3.7 – Relationship Between Process Costs and Product Volume

3 – 11 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Decision Patterns for Services Front office Hybrid office Back office Low customer-contact process Less complexity, less divergence, more line flows Less customer involvement Less resource flexibility Capital intensity varies with volume High customer-contact process More complexity, more divergence, more flexible flows More customer involvement More resource flexibility Capital intensity varies with volume Figure 3.8 – Decision Patterns for Service Processes LowHigh Customer contact and customization Major process decisions

3 – 12 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Decision Patterns for Manufacturing Competitive PrioritiesProcess Choice Competitive PrioritiesProduction and Inventory Strategy (b) Links with Production and Inventory Strategy Top-quality, on-time delivery, and flexibility Job process or small batch process (a) Links with Process Choice Low-cost operations, consistent quality, and delivery speed Large batch, line, or continuous flow process Top-quality, on-time delivery, and flexibility Make-to-orderDelivery speed and varietyAssemble-to-order Low-cost operation and delivery speed Make-to-stock Figure 3.9 –Links of Competitive Priorities with Manufacturing Strategy

3 – 13 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Decision Patterns for Manufacturing Continuous process Job process Line process Large batch process Small batch process Batch processes Figure 3.10 – Decision Patterns for Manufacturing Processes Major process decisions LowHigh Volume High-Volume, make-to-stock process Less process divergence and more line flows Less customer involvement Less resource flexibility More capital intensity Low-Volume, make-to-order process More process divergence and more flexible flows More customer involvement More resource flexibility Less capital intensity