Operations Management
HRM-306
Chapter-04
❖Process Strategy:
Process strategy which specifies the pattern of decision made in managing
processes so that they will achieve their competitive priorities.
• A process involves the use of an
organization's resources to provide
something of value.
Major process decisions include:
• Process Structure
• Customer Involvement
• Resource flexibility
• Capital Intensity
❖ When does a company make process improvement decision?
• A Gap between competitive priorities and competitive capabilities.
• A new or substantially modified service or product is being offered.
• Quality must be improved
• Competitive priorities have changed.
• Demand for a service or product is changing
AAQC DCTC NS
• Current performance is inadequate
• The cost or availability of inputs has changed
• Competitor are gaining by using a new process
• New technology is available
• Someone has a better idea.
❖ Principles of Process Decision:
Three principles concerning process decision are as below:
1. Successful process decision is to make choice that fits the situation and makes sense
together. They should not work for cross- purpose. One process optimizes the
expenses of other process. A more effective process is one that matches key process
characteristics and has a close strategic fit.
2. It focusses on individual process. They are the building blocks that eventually create
the firm’s whole value chain. The cumulative effect of the process should have an
impact on customer satisfaction and competitive advantage.
3. Management must pay particular attention to the interfaces between processes,
when processes in the value chain are performed internally or by outside suppliers.
Having to deal with these interfaces underscores the need for cross-function
coordination.
❖ Major Process Decisions:
Process
Structure
Customer Resource
involvement flexibility
Capital intensity
Strategy for
change
Effective
process
design
❖Customer contact:
• The extent to which the customer is present, is actively involved, and receives personal
attention during the service process.
• Customer can be a significant part of the process itself.
❖What is the dimension of Customer Contact?
1. Physical presence
2. What is being processed
3. Contact intensity
4. Personal attention
5. Method of delivery
❖ Customer contact Matrix
Less customer contact & customization
Service Package
Process (1) (2) (3)
High interaction with Some interaction with Low interaction with
characteristics customers, highly customized customer, standard service customer, standardized
service with some options service
(1)
Flexible flows, complex work
with many expectations Front office
(2)
Flexible flows with some
dominant paths, moderate
Hybrid office
job complexity with some
exceptions
(3)Line flows, routine
work, easily understood Back office
by employees
Service Process Structuring in the
financial service industry:
Back office
Front office Hybrid office Production of monthly client
Sale of financial services to Creation of quarterly performance fund balance report
municipalities report
• Data obtained electronically
• Research customer finance • Data obtained electronically • Report run using
• Work with customer to • Report calculated using standardized process
understand customer needs standardized process • Result checked for
• Make customized presentation • Report reviewed using “reasonableness” using
to customer addressing specific standardized diagnostic systems well-established policies.
customer needs • Manager provides written • Hard copies and electronic
• Involve specialized staff offering analysis and recommendations files forwarded to analysts
variety of services in response to individual • Process repeated monthly
• Continuing relationship with employee performance with little variation.
customer, reaction to changing • Manager meets with employee
customer needs. to discuss performance