Chapter 7:
Process Strategy
Presented by:
Dr. Sweta Rani Biswal
Chapter plan
LO S7.1 Describe four process strategies
LO S7.2 Compute crossover points for different processes
LO S7.3 Use the tools of process analysis
LO S7.4 Describe customer interaction in service processes
LO S7.5 Identify recent advances in production technology
Four Process Strategies
A process strategy is an organization’s approach to transforming resources into goods
and services.
The objective is to create a process that can produce offerings that meet customer
requirements within cost and other managerial constraints. The process selected will
have a long-term effect on efficiency and flexibility of production, as well as on cost
and quality of the goods produced.
Virtually every good or service is made by using some variation of one of four process strategies:
(1) process focus,
(2) repetitive focus,
(3) product focus, and
(4) mass customization.
The relationship of these four strategies to volume and variety is shown in Figure 7.1.
example: Arnold Palmer Hospital of a process-focused firm,
Harley-Davidson as a repetitive producer,
Frito-Lay as a product-focused operation,
Dell as a mass customizer
Four Process Strategies
Comparison of the Characteristics of Four Types of
Processes
Process Analysis and Design
For analyzing and designing processes,
◆ Is the process designed to achieve competitive advantage in terms of differentiation,
response, or low cost?
◆ Does the process eliminate steps that do not add value?
◆ Does the process maximize customer value as perceived by the customer?
◆ Will the process win orders?
Process analysis and design not only addresses these issues, but also related OM
issues such as throughput, cost, and quality. Process is key.
The following tools help us understand the complexities of process design and redesign.
1. flowcharts,
2. time-function mapping,
3. process charts,
4. Value stream mapping, and
5. service blueprinting
Service process matrix
Service process matrix
In the upper sections (quadrants) of mass service and professional service, where labor content is high, we
expect the manager to focus extensively on human resources. This is often done with personalized services,
requiring high labor involvement and therefore significant personnel selection and training issues. This is
particularly true in the professional service quadrant.
The quadrants with low customization tend to (1) standardize or restrict some offerings, as do fast-food
restaurants, (2) automate, as have airlines with ticket vending machines, or (3) remove some services, such as seat
assignments, as has Southwest Airlines. Offloading some aspect of the service through automation may require
innovations in process design. Such is the case with airline ticket vending, self-checkout at Home Depot, and bank
ATMs. This move to standardization and automation may also require changes in other areas, such as added
capital expenditure and new OM skills for the purchase and maintenance of equipment. A reduction in a
customization capability will require added strength in other areas.
Because customer feedback is lower in the quadrants with low customization, tight control may be required to
maintain quality standards.
Operations with low labor intensity may lend themselves particularly well to innovations in process technology
and scheduling.
Production Technology
Advances in technology that enhance production and productivity are changing how
things are designed, made, and serviced around the world.
nine areas of technology:
(1) machine technology,
(2) automatic identification systems (AIS),
(3) process control,
(4) vision systems,
(5) robots,
(6) automated storage and retrieval systems (ASRSs),
(7) automated guided vehicles (AGVs),
(8) flexible manufacturing systems (FMSs), and
(9) computer-integrated manufacturing (CIM).
Then consider the implications when they are combined and linked globally in a seamless
chain that can immediately respond to changing consumer demands, supplier dynamics,
and producer innovations.
Machine Technology
Much of the world’s machinery performs operations by removing material, performing operations such as
cutting, drilling, boring, and milling. This technology is undergoing tremendous progress in both precision and
control. Such machinery is often five times more productive than that of previous generations while being
smaller and using less power.
Computer intelligence often controls this new machinery, allowing more complex and precise items to be made
faster. Such machinery, with its own computer and memory, is referred to as having computer numerical
controls (CNC).
Electronic controls increase speed by cutting changeover time, reducing waste (because of fewer mistakes), and
enhancing flexibility. Example: Advanced versions of such technology are used on Pratt & Whitney’s turbine
blade plant in Connecticut. The machinery has improved the loading and alignment task so much that Pratt has
cut the total time for the grinding process of a turbine blade from 10 days to 2 hours. The new machinery has
also contributed to process improvements that mean the blades now travel just 1,800 feet in the plant, down from
8,100 feet, cutting throughput time from 22 days to 7 days.
Machine Technology
New advances in machinery suggest that rather than removing material as has traditionally been done, adding
material may in many cases be more efficient. Additive manufacturing or, as it is commonly called, 3D
printing, is frequently used for design testing, prototypes, and custom products. The production of physical
items by adding layer upon layer, much in the same way an inkjet printer lays down ink.
The technology continues to advance and now supports innovative product design (variety and complexity),
minimal custom tooling (little tooling is needed), minimal assembly (integrated assemblies can be “printed”), low
inventory (make-to-order systems), and reduced time to market.
As a result, additive manufacturing is being increasingly used to enhance production efficiency for high-volume
products. In addition, production processes using numerous materials including plastics, ceramics, and even a
paste of living cells are being developed.
The convergence of software advances, computer technology, worldwide communication, and 3D printing seems
to be putting us on the cusp of true mass customization. We can expect personalized mass markets via additive
manufacturing to bring enormous changes to operations.
Automatic Identification Systems (AISs) and RFID
A system for transforming data into electronic form, for example, bar codes is known
as AISs.
New equipment, from numerically controlled manufacturing machinery to ATMs, is
controlled by digital electronic signals. Electrons are a great vehicle for transmitting
information, but they have a major limitation—most OM data does not start out in bits
and bytes. Therefore, operations managers must get the data into an electronic form.
Making data digital is done via computer keyboards, bar codes, radio frequencies,
optical characters, and so forth. These automatic identification systems (AISs) help us
move data into electronic form, where it is easily manipulated.
Because of its decreasing cost and increasing pervasiveness, radio frequency
identification (RFID) warrants special note.
RFID is integrated circuitry with its own tiny antennas that use radio waves to send
signals a limited range—usually a matter of yards. These RFID tags provide unique
identification that enables the tracking and monitoring of parts, pallets, people, and
pets—virtually everything that moves. RFID requires no line of sight between tag and
reader
Flexible Manufacturing Systems (FMSs)
When a central computer provides instructions to each workstation and to the material handling
equipment such as robots, ASRSs, and AGVs (as just noted), the system is known as an automated
work cell or, more commonly, a flexible manufacturing system (FMS).
An FMS is flexible because both the material-handling devices and the machines themselves are
controlled by easily changed electronic signals (computer programs).
Operators simply load new programs, as necessary, to produce different products. The result is a
system that can economically produce low volume but high variety.
For example, the Lockheed Martin facility, near Dallas, efficiently builds one-of-a-kind spare
parts for military aircraft. The costs associated with changeover and low utilization have been
reduced substantially.
FMSs bridge the gap between product-focused and process-focused facilities.
Computer-Integrated Manufacturing (CIM)
Flexible manufacturing systems can be extended backward electronically into the
engineering and inventory control departments and forward to the warehousing and
shipping departments. In this way, computer-aided design (CAD) generates the
necessary electronic instructions to run a numerically controlled machine.
In a computer-integrated manufacturing environment, a design change initiated at a
CAD terminal can result in that change being made in the part produced on the shop
floor in a matter of minutes.
When this capability is integrated with inventory control, warehousing, and shipping as
a part of a flexible manufacturing system, the entire system is called computer-
integrated manufacturing (CIM);