Introduction:
“A process is a sequence of activities that is intended to create a certain result, such as a
physical good, a service or information (Collier, Evans). It is how work creates value for
customers (AT&T).”
“A work process is a related group of tasks that together create a result of value for the
customer. These tasks are what people do to turn resource inputs into goods or services for
customers – the tasks are viewed as part of a group rather than in isolation; everyone must
share a common goal; the focus is what is accomplished, not on activities; processes serve
customers, and their perspectives are what really count.” (Michael Hammer)
I. Key Business Processes
1. Value-creation processes
- Focused on primary goods or services such as assembling a car or providing home
financing
2. Support processes
- Examples are purchasing materials and supplies, managing inventory, installation,
customer support, technology acquisition, and research and development
3. General management processes
- This includes accounting and information systems, human resource management,
and marketing
Processes are the building blocks for the creation of goods and services, are vital to many
activities in operations management supported by total quality management. The support
processes and the general management processes support the value-creation processes in
order to provide/deliver the customers’ wants and needs for the customers to enjoy the
perceived benefits of these goods or services.
Activity: Form a group with 7 members. Think of an example of value-creation process and
show how the 3 business processes are interrelated through the different tasks in
manufacturing the goods or in providing the services. Identify the Customer Benefit Package
that goes with the product you create.
What is a customer benefit package (CBP)? – It is a clearly defined set of tangible (goods) or
intangible (service) features that the customer recognizes, pays for, uses, or experiences. It
consists of a primary good or service, coupled with peripheral goods and/or services, and
sometimes variants.
Primary good or service – it is the “core” offering that attracts customers and responds to their
basic needs.
Peripheral goods or services – are those that are not essential to the primary good or service,
but enhance it.
II. Process Classification (Types of Process)
1. Projects
2. Job shop processes
3. Flow-shop processes
4. Continuous flow processes
TO DO: Be sure you can identify the characteristics of each process classification and be able
to give an example. Determine the type of process used in products that you use or consume.
Process design
The goal of process design is to create the right combination of equipment, work methods, and
environment to produce and deliver goods and services that satisfy both internal and external
customer requirements. Process design can have a significant impact on cost (profitability),
flexibility (the ability to produce the right types and amounts of products as customer demand
or preferences change), and the quality of the output.
Four levels of work:
1. Task
2. Activity
3. Process
4. Value chain
Question: What are the major activities in designing a goods-producing or service-providing
process?
III. Measuring Process Performance
Measurement – it is the act of quantifying the performance criteria (metrics) of
organizational units, processes, goods and services, people and other business activities. It
provides an objective basis for making decisions.
Good measures provide a “scorecard” for performance, help identify performance gaps and
make accomplishments visible to the workforce, the stock market and other stakeholders.
Performance measures can be classified into several key categories:
- Financial
- Safety
- Quality
- Time
- Flexibility
- Innovation and Learning
Question: What are being measured (performance measures) in every category in terms of
the operational-level?
Productivity – it is the ratio of output of a process to the input
quantity of output
Productivity =
quntity of input