1. Operations Management Process Strategy Chapter 7

2. Outline Four Process Strategies. Service Process Design.
Process Focus.
Repetitive Focus.
Product Focus.
Mass Customization Focus.
Service Process Design.
Process Reengineering.

3. Process Strategy How to produce a product or provide a service.
Objective:
Meet or exceed customer requirements.
Achieve competitive advantage.
Has long-run effects:
Product & volume flexibility.
Costs & quality .
This slide can be used to introduce the concept of trade-off in process design.

4. Four Process Strategies
1. Process focused.
2. Product focused.
3. Repetitive focused.
4. Mass customization.
Summary: Table 7-2.
Several strategies may be used within one facility.
Process strategies follow a continuum.
This slide can be used to begin discussion of two points:
- one seldom employs a pure process strategy (process, repetitive, or product) - but rather a strategy which has elements of each of the pure strategies - i.e., practical strategies lie along a continuum.
- one seldom employs only a single strategy.

5. Fit of Process, Volume, and Variety
Low Volume
High Volume
High Variety
Small production runs
(allows customization)
PROCESS FOCUS
(job shops, printing)
MASS CUSTOMIZATION (Dell Computer)
REPETITIVE FOCUS
(autos, motorcycles)
It may be most useful to begin discussion of this slide with the repetitive process since most student seem to have a concept of an assembly line. Once the repetitive process is introduced, one can then view changing one of the parameters, volume or length of run, and argue the need for process- or product-focus systems.
Once the three types of processes have been introduced, it is probably useful to discuss precisely why the low-volume/long run, and high-volume/short run options are poor choices.
Low Variety
Long production runs (standardization)
PRODUCT FOCUS
(steel, chemicals)
POOR STRATEGY

6. 1. Process Focus Examples
Hospital
Machine Shop
Bank

7. Process Focus Facilities organized by process.
Similar processes or equipment grouped together. (Example: All drill presses are together.)
Low volume, high variety products.
75% of all global products.
Products follow many different paths.
Other names:
Intermittent process.
Job shop. 1 3 4 2
You can use this slide to introduce a discussion of process-focused strategy. Examples are suggested in the following slide or may be requested of students.

8. Process Focus - Pros & Cons
Advantages:
Greater product flexibility.
More general purpose equipment.
Lower initial capital investment.
Disadvantages:
High variable cost per unit.
More highly trained personnel.
More difficult production planning & control.
Low equipment utilization (5% to 25%).
Select one of the examples you have presented of process-focused strategy, and ask students to identify the sources of advantage and disadvantage.

9. 2. Product Focus Examples
Soft Drinks (Continuous, then Discrete)
Paper (Continuous) .
Light Bulbs (Discrete)
Some examples of products produced using a product-focused strategy.

10. Product Focus Facilities organized by product.
High volume, low variety products.
Long, continuous production runs.
Discrete unit manufacturing.
Continuous process manufacturing.
Other names:
Line flow production.
Continuous production.
You can use this slide to begin a discussion of product-focused strategy. The following slide outlines some advantages/disadvantages of this approach. 1 2 3 4

11. Product Focus: Steel Plant

12. Product Focus - Pros & Cons
Advantages:
Lower variable cost per unit.
Lower but more specialized labor skills.
Easier production planning and control.
Higher equipment utilization (70% to 90%).
Disadvantages:
Lower product flexibility.
More specialized equipment.
Higher capital investment.

13. 3. Repetitive Focus - Examples
Fast Food
McDonald’s over 95 billion served
Clothes Dryer
Truck
At this point, you might compare in more detail, McDonalds (which uses a batch system) with Wendy’s (which, at least at high volumes, perhaps more closely resembles a simple assembly line).

14. Repetitive Focus Facilities often organized by assembly lines.
Characterized by modules.
Parts & assemblies made previously.
Modules combined for many output options.
Other names:
Assembly line.
Production line.
You can use this slide to begin your discussion of repetitive strategies; the next suggests additional characteristics; the slide following that, some examples.

15. Repetitive Focus - Harley Davidson

16. Repetitive Focus - Considerations
More structured than process focus, less structured than product focus.
Enables quasi-customization.
Has advantages and disadvantages of process focus and product focus.

17. Process Continuum Product Focused (continuous process) Process Focused
(intermittent process)
Repetitive Focus
(assembly line)
Product Focused (continuous process)
Continuum
High variety, low volume
Low utilization (5% - 25%)
General-purpose equipment
Low variety, high volume
High utilization (70% - 90%)
Specialized equipment
Another slide which may be used to summarize differences between the process strategies.
Modular
Flexible equipment

18. Increasing Product Variety
Early
Early
Item
1970s
2000s
Vehicle models
140
260
Vehicle styles 18
1,212
Software titles
300,000
Web sites
>30,000,000
Movie releases
267
458
New book titles
40,530
77,446
TV channels 5
>300
Breakfast cereals
160
340
Items in
supermarkets
14,000
150,000

19. 4. Mass Customization
Rapid, low-cost production to fulfill unique customer desires.
Distinctions between process, repetitive and product focus blur, making variety and volume issues less significant.
Very hard to achieve!
Once students understand what mass customization is, they should be asked to consider whether such an approach will move from an “option” at present, to a “necessity” in the future.

20. Mass Customization at Dell Computer Company
Sells custom-built PCs directly to consumer.
Builds computers rapidly, at low cost, and only when ordered.
Operates with six days inventory.
Integrates the Web into every aspect of business.
Research focus on software to make installation and configuration of PCs fast and simple.
Discussion of NUCOR should center around the difference between their product-oriented process and an integrated facility. The next slide highlights some of the differences.

21. Process Analysis and Design
Process should:
Be designed to achieve competitive advantage:
Differentiation.
Response.
Low cost.
Eliminate steps that do not add value.
Maximize value, as perceived by the customer.
You might use this slide to frame a discussion on process evaluation. Once you have discussed the questions posed on the slide, you might ask students to suggest additional questions or “tests” by which one might evaluate the “quality” of a process.

22. Tools for Process Design
Flow Diagrams - Figures 7.2, 7.3, 7.4
Process Charts - Figure 7.8
Time-Function/Process Mapping - Figure 7.7
Service Blueprint - Figure 7.9
This slide introduces tools for process design.
While examples of flow diagrams and process charts have arisen earlier in the presentation, they are repeated in the next two slides.

23. Process Design for Services
Consider customization and labor intensity.
Degree of customization.
High: Focus on specialization (equipment, training, etc.).
Low: Focus on standardization and automation.
Degree of labor intensity.
High: Focus on personalization & human resources (selection, training, etc.)
Low: Use technology and automation.
This slide introduces tools for process design.
While examples of flow diagrams and process charts have arisen earlier in the presentation, they are repeated in the next two slides.

24. Process Design for Services
Degree of Customization
Low High
Mass Service
Professional Service
Commercial
Banking
Personal banking
General purpose law firms
Boutiques
Retailing
Low High
Degree of Labor Intensity
Service Factory
Service Shop
Law clinics
Fine dining restaurants
Warehouse and catalog stores
This slide can be used to introduce the design of service processes, or to frame a discussion of the impact of customer interaction on the design of process in general.
Here it is probably useful to ask that students define the nature of the customer interaction represented in each quadrant, and identify ways in which the process must be modified in light of these interactions.
Fast food restaurants
Vending machines

25. Improving Service Productivity - Table 7.3
Separation: Different services in different places.
Self-service: Customers serve themselves.
Postponement: Customize at delivery.
Focus: Restrict offerings.
Automation: Automate where appropriate.
Scheduling: Precise personnel scheduling.
Students should be asked to suggest examples of companies/products employing the techniques listed on this and the next two slides.

26. Technology - Automation
Production.
CNC (Computer Numerical Control), Robots and FMS (Flexible Manufacturing Systems).
Automatic Identification.
Bar coding and RFID (Radio Frequency IDentification).
Warehousing.
ASRS (Automated Storage and Retrieval) and AGVs (Automated Guided Vehicles).
Integration – CIM (computer integrated manufacturing)
This slide merits discussion. While Process Reengineering has the potential to significantly improve both efficiency and effectiveness of an organization’s processes, its actual implementation often results in failure.
Some of the points to be made:
- process reengineering, if successful, will result in significant change in process, responsibilities, patterns of communication, and other organization staples.
- process reengineering cannot be implemented top down - the workers actually performing the process should be the ones to redesign it.
- process reengineering requires that fundamental questions (e.g., “Why are we doing this?” and “Why are we doing this this way?”) must be asked and answered.

27. Process Reengineering
Fundamental rethinking and radical redesign of business processes.
To produce dramatic improvements in performance.
Re-examine the basic process and its objectives:
Re-evaluate the purpose of the process.
Question underlying assumptions.
Focus on activities that cross boundaries.
This slide merits discussion. While Process Reengineering has the potential to significantly improve both efficiency and effectiveness of an organization’s processes, its actual implementation often results in failure.
Some of the points to be made:
- process reengineering, if successful, will result in significant change in process, responsibilities, patterns of communication, and other organization staples.
- process reengineering cannot be implemented top down - the workers actually performing the process should be the ones to redesign it.
- process reengineering requires that fundamental questions (e.g., “Why are we doing this?” and “Why are we doing this this way?”) must be asked and answered.