3 – 1Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Process StrategyProcess Strategy3

3 – 2Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Process Strategy DecisionsProcess Strategy Decisions

Figure 3.1 – Major Decisions for Effective Processes

D1. Process Structure• Customer-contract position

(services)• Product-process position

(manufacturing)• Layout

D3. Resource Flexibility• Specialized• Enlarged

D2. Customer Involvement• Low involvement• High involvement

Effective Process Design

Strategy for Change• Process reengineering• Process improvement

D4. Capital Intensity• Low automation• High automation

3 – 3Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Service Process StructuringService Process Structuring

Front office

Hybrid office

Back office

Less customer contact and customization

Les

s p

roce

sses

div

erg

ence

an

d m

ore

lin

e f

low

s

(1) (2) (3)High interaction with Some interaction with Low interaction withcustomers, highly customers, standard customers, standardizedcustomized service services with some options services

ProcessCharacteristics

(1)Flexible flows withIndividual processes

(2)Flexible flows withsome dominantpaths, withsome exceptions to how work performed

(3)Line flows, routinework same with all customers

Figure 3.2 – Customer-Contact Matrix for Service Processes

3 – 4Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Product-Process MatrixProduct-Process Matrix

Continuousprocess

Jobprocess

Lineprocess

Large batchprocess

Small batchprocess

(1) (2) (3) (4)Low-volume Multiple products with low Few major High volume, highproducts, made to moderate volume products, standardization,to customer higher commodity order volume products

ProcessCharacteristics

(1)Customized process, with flexible and unique sequence of tasks

(2)Disconnected line flows, moderately complex work

(3)Connected line, highly repetitive work

(4)Continuous flows

Le

ss

co

mp

lex

ity

, le

ss

div

erg

en

ce

, a

nd

mo

re l

ine

flo

ws

Less customization and higher volume

Batch processes

Figure 3.3 – Product-Process Matrix for Processes

3 – 5

A: A Flexible Flow LayoutA: A Flexible Flow Layout

FoundryMilling

machines

LathesGrinding

Painting Drills

Office

Welding

Forging

A job shop has a flexible-flow layout.

3 – 6

B: Line Flow LayoutB: Line Flow Layout

Station 1 Station 2 Station 3 Station 4

A production line has a line-flow layout.

3 – 7

Machine 1

Machine 2

Machine 3

Machine 4Machine

5

Materials in

Finished goods out

One Worker, One Worker, Multiple Machines Multiple Machines

3 – 8

Before Group TechnologyBefore Group Technology

Drilling

D D

D D

Grinding

G G

G G

G G

Milling

M M

M M

M M

Assembly

A A

A A

Lathing

Receiving and shipping

L

L L

L L

L L

L

Jumbled flows in a job shop without GT cellsJumbled flows in a job shop without GT cells

3 – 9

Applied Group TechnologyApplied Group TechnologyLine flows in a job shop with three GT cells Line flows in a job shop with three GT cells

Cell 3

L M G G

Cell 1 Cell 2

Assembly area

A A

L M DL

L MShipping

D

Receiving

G

3 – 10Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Break-Even AnalysisBreak-Even Analysis

Process 2: Special-purpose equipment

Process 1: General-purpose equipment

Break-even quantity

To

tal c

ost

(d

olla

rs)

Units per year (Q)

F2

F1

Figure 3.7 – Relationship Between Process Costs and Product Volume

3 – 11Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Decision Patterns for ServicesDecision Patterns for Services

Front office

Hybrid office

Back office

Low customer-contact process

• Less complexity, less divergence, more line flows

• Less customer involvement• Less resource flexibility• Capital intensity varies with

volume

High customer-contact process

• More complexity, more divergence, more flexible flows

• More customer involvement• More resource flexibility• Capital intensity varies with

volume

Figure 3.8 – Decision Patterns for Service Processes

LowHighCustomer contact and customization

Maj

or

pro

ces

s d

ecis

ion

s

3 – 12Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Decision Patterns for ManufacturingDecision Patterns for Manufacturing

Competitive Priorities Process Choice

Competitive Priorities Production and Inventory Strategy

(b) Links with Production and Inventory Strategy

Top-quality, on-time delivery, and flexibility

Job process or small batch process

(a) Links with Process Choice

Low-cost operations, consistent quality, and delivery speed

Large batch, line, or continuous flow process

Top-quality, on-time delivery, and flexibility Make-to-order

Delivery speed and variety Assemble-to-order

Low-cost operation and delivery speed Make-to-stock

Figure 3.9 – Links of Competitive Priorities with Manufacturing Strategy

3 – 13Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Decision Patterns for ManufacturingDecision Patterns for Manufacturing

Continuousprocess

Jobprocess

Lineprocess

Large batchprocess

Small batchprocess

Batch processes

Figure 3.10 – Decision Patterns for Manufacturing Processes

Ma

jor

pro

ce

ss

d

ec

isio

ns

Low HighVolume

High-Volume, make-to-stock process

• Less process divergence and more line flows

• Less customer involvement• Less resource flexibility• More capital intensity

Low-Volume, make-to-order process

• More process divergence and more flexible flows

• More customer involvement• More resource flexibility• Less capital intensity