Chapter 4 Process design Source: Joe Schwarz, www.joyrides.com

Process design Process design Operations strategy Supply network design Layout and flow Operations management Design Improvement Process technology Job design Planning and control Product/service design

Nature and purpose of the design activity Products, services and the processes which produce them all have to be designed Decisions taken during the design of a product or service will have an impact on the decisions taken during the design of the process which produces those products or services, and vice versa

Designing the product or service Design of products / services and design of processes are interrelated and should be treated together Products and services should be designed in such a way that they can be created effectively Designing the product or service Processes should be designed so they can create all products and services which the operation is likely to introduce Designing the process Product / service design has an impact on the process design and vice versa

Design of the Product Design of the Process Design of the Service Design of the Process In manufacturing operations overlapping the activities of product and process design is beneficial In most service operations the overlap between service and process design is implicit in the nature of service

Process mapping symbols derived from ‘Scientific Management’ Delay (a wait, e.g. for materials) Operation (an activity that directly adds value) Inspection (a check of some sort) Transport (a movement of something) Storage (deliberate storage, as opposed to a delay) Process mapping symbols derived from ‘Scientific Management’ Decision (exercising discretion) Process mapping symbols derived from Systems Analysis Direction of flow Input or output from the process Activity Beginning or end of the process

Designing processes There are different ‘process types’ Process types are defined by the volume and variety of ‘items’ they process Process types go by different names depending on whether they produce products or services

Manufacturing process types Process tasks Process flow Diverse/ complex Repeated/ divided Intermittent Continuous Project High Jobbing Batch Variety Mass Contin-uous Low Low Volume High

Project processes One-off, complex, large-scale ‘products’ with high work content Specially made, every one ‘customized’ Defined start and finish: time, quality and cost objectives Many different skills have to be coordinated

A project process with a small part of the process map that would describe the whole process

Jobbing processes Very small quantities: ‘one-offs’, or only a few required Specially made: high variety, low repetition, ‘strangers’, every one ‘customized’ Skill requirements are usually very broad Skilled jobber, or team, completes whole product

Preparing photolithography materials on a jobbing basis with a typical process map

Batch processes Higher volumes and lower variety than for jobbing Standard products, repeating demand. But can make specials Specialized, narrower skills Set-ups (changeovers) at each stage of production

A batch process in a kitchen together with an illustrative process map

Mass (line) processes Higher volumes than batch Standard, repeat products (‘runners’) Low and/or narrow skills No set-ups, or almost instantaneous ones

A mass process – a packing process

Continuous processes Extremely high volumes and low variety: often single product Standard, repeat products (‘runners’) Highly capital-intensive and automated Few changeovers required Difficult and expensive to start and stop the process

Part of a continuous process and a typical process map

Service process types Process tasks Process flow High Diverse/ complex Repeated/ divided Intermittent Continuous High Professional service Service shop Variety Mass service Low Low Volume High

A professional service – Consultants planning how best to help their client

A service shop – This health club offers some variety within a standard set of facilities and processes

A mass service – This call centre can handle a very high volume of customer enquiries because it standardizes its process Source: Royal Bank of Scotland Group

Deviating from the ‘natural’ diagonal on the product–process matrix has consequences for cost and flexibility Project Jobbing Batch Mass Continuous Manufacturing operations process types Volume Professional service Service shop Mass Service operations process types Variety The ‘natural’ line of fit of process to volume/variety characteristics None More process flexibility than is needed so high cost Less process flexibility than is needed so high cost None 9

Old process, new product New process, new product Deviating from the ‘natural’ diagonal on the product–process matrix has consequences for cost and flexibility None Variety Volume Old process Old process, new product New process, new product 9

Flow (layout), technology and job design are all influenced by process positioning None Variety Volume Flow Technology Jobs Little / general Specialist Varied / high discretion Routine / low discretion Custom furniture maker Unorganized Predictable Machine tool maker Automobile factory Petro- chemical refinery 9

Flow (layout), technology and job design are all influenced by process positioning None Variety Volume Flow Technology Jobs Unorganized Little / general Varied / high discretion Investment banking Customer service branch Bank call centre Credit card processing Routine / low discretion Predictable Specialist 9

Process mapping symbols derived from ‘Scientific Management’ Delay (a wait, e.g. for materials) Operation (an activity that directly adds value) Inspection (a check of some sort) Transport (a movement of something) Storage (deliberate storage, as opposed to a delay) Process mapping symbols derived from ‘Scientific Management’ Decision (exercising discretion) Process mapping symbols derived from Systems Analysis Direction of flow Input or output from the process Activity Beginning or end of the process

Customized sandwich – old process Raw materials Stored sandwiches Move to outlets Stored sandwiches Take payment Assembly Customer request Sell Standard sandwich process

Customized sandwich – old process Raw materials Take payment Customer request Assembly

The operation of making and selling customized sandwiches Outline process of making and selling customized sandwiches Prepare Assemble as required Take payment Sandwich materials and customers Customers ‘assembled’ to sandwiches Bread and base filling Stored ‘bases’ Fillings Assemble whole sandwich Customer request Use standard ‘base’? Assemble from standard ‘base’ No Yes Detailed process of assembling customized sandwiches

Customized sandwich – new process Assemble whole sandwich Assembly of ‘sandwich bases’ Customer request Use standard ‘base’? No Yes Take payment Fillings Bread and base filling Stored ‘bases’ Assemble from standard ‘base’

Flow process charts for processing expense reports at Intel before and after improving the process Send to accounts receivable Reports to batch control Reports filed Confirm payment Report arrives Stamp and date report Send cash to receipt desk Wait for processing Check expenses report Check employee record Check advance payment Send to account payable Attach payment voucher Collect retorts into batch Check against rules Batch control number Check payment voucher Log report Batch to audit desk Wait for batching Batch of reports logged Copy of reports to filing Description of activity Totals 8 1 2 4 5 6 7 9 10 3 18 11 12 14 15 16 17 19 20 13 26 22 23 24 25 21 Payment voucher to keying Reports to batch control Reports filed Payment voucher to keying Confirm payment Report arrives Stamp and date report Check expenses report Wait for processing Check reports and vouchers Attach payment voucher Collect retorts into batch Batch control number Batch to audit desk Wait for batching Copy of reports to filing Description of activity Totals 8 1 2 4 5 6 7 9 10 3 11 12 14 15 13

Little’s law (a really quite useful law) Throughput (TH) = Work in process (WIP) × Cycle time (CT) Cycle time = 2 minutes WIP = 10 Throughput time = ? Throughput time = 10 × 2 minutes = 20 minutes

Little’s law (a really quite useful law) Throughput (TH) = Work in process (WIP) × Cycle time (CT) 500 exam scripts need to be marked in 5 days (working 7 hours a day). It takes 1 hour to mark a script. How many markers are needed? Throughput time = 5 days × 7 hours = 35 hours 35 hours = 500 scripts × Cycle time Cycle time = 35 hours 500 scripts = 0.07 hours Number of markers = Work content = 1 hour = 14.29 Cycle time 0.07

Throughput efficiency Throughput efficiency is the work content of whatever is being processed as a percentage of its throughput time Throughput efficiency = Work content Throughput time × 100

Arrival frequency (demand) X 5–15 mins Arrival frequency (demand) Processing time Utilization < 100% Q > 0 Arrival frequency (demand) X Utilization = 100 % Q = infinity 9 mins X Utilization = 50 % Q = 0 20 mins X 10 mins Utilization = 100 % Q = 0 30 mins 10 mins Processing time Utilization = 33.33 % Q = 0 High High utilization but long throughput times Low utilization but short throughput times Reduce process variability Process throughput time (or inventory) Average length of queue X X Low X 20% 40% 60% 80% 100% Capacity utilization

The relationship between process utilization and number of units waiting to be processed for variable arrival and activity times High utilization but long waiting time Average number of units waiting to be processed Decreasing variability Average number of units waiting to be processed Reduction in process variability X Short waiting time but low utilization Z Y 10 20 30 40 50 60 70 80 90 100 10 20 30 40 50 60 70 80 90 100 Utilization Utilization (a) Decreasing variability allows higher utilization without long waiting times (b) Managing process capacity and/or variability

Key Terms Test Throughput time The time for a unit to move through a process. Utilization The ratio of the actual output from a process or facility to its design capacity. Life cycle analysis A technique that analyzes all the production inputs, the life cycle use of a product and its final disposal in terms of total energy used and wastes emitted.

Key Terms Test Process types Terms that are used to describe a particular general approach to managing processes. In manufacturing these are generally held to be project, jobbing, batch, mass and continuous processes; in services they are held to be professional services, service shops and mass services. Project processes Processes that deal with discrete, usually highly customized, products. Jobbing processes Processes that deal with high variety and low volumes, although there may be some repetition of flow and activities.

Key Terms Test Batch processes Processes that treat batches of products together, and where each batch has its own process route. Continuous processes Processes that are high volume and low variety; usually products made on continuous processes are produced in an endless flow, such as petrochemicals or electricity. Professional services Service processes that are devoted to producing knowledge-based or advice-based services, usually involving high customer contact and high customization. Examples include management consultants, lawyers, architects, etc.

Key Terms Test Service shops Service processes that are positioned between professional services and mass services, usually with medium levels of volume and customization. Mass services Service processes that have a high number of transactions, often involving limited customization, for example mass transportation services, call centres, etc. Product–process matrix A model derived by Hayes and Wheelwright that demonstrates the natural fit between volume and variety of products and services produced by an operation on one hand, and the process type used to produce products and services on the other.

Key Terms Test Process mapping Describing processes in terms of how the activities within the process relate to each other (may also be called process blueprinting or process analysis). Process mapping symbols The symbols that are used to classify different types of activity, usually derived either from scientific management or from information systems flowcharting. High-level process mapping An aggregated process map that shows broad activities rather than detailed activities (sometimes called an outline process map).

Key Terms Test Work content The total amount of work required to produce a unit of output, usually measured in standard times. Throughput time The time for a unit to move through a process. Cycle time The average time between units of output emerging from a process.

Key Terms Test Work-in-process The number of units within a process waiting to be processed further (also called work-in-progress). Little’s Law The mathematical relationship between throughput time, work-in-process and cycle time: Throughput time = work-in-process × cycle time