Ops management lecture 4 process design & strategy

Chapter four
Process design,
strategy, and
management

Learning objectives
• Define a process
• Explain the reasons for process selection
and why it is a strategic issue
• Discuss the influence that process
selection will have on the organisation’s
performance
• Discuss the major process types

Learning objectives
• Identify and explain the automation of processes
• Discuss the reasons why technology must be
managed
• Discuss why it will become necessary to
redesign processes
• List and discuss the returns and weaknesses of
process layout
• Discuss and compute line balancing
• Explain process reengineering
• Explain industrial engineering.

4.1 Introduction
• Process:
– Methodology
– Utilised on a continuous basis
– Result in creation of good/service
– Delivered to customer
– Make a profit
• Add maximum value at minimum cost.
- The “How” of the production of a good or
service

4.2 Understanding processes
• Each process used crosses organisational
borders
• E.g. KOO
• Process thinking: examines the diversified
system as unified
• Must take into account user requirements
• Users must understand the process

• Six characteristics:
1. accurate definition of the good/service
2. customer needs must be understood
3. all possible suppliers identified
4. correct process must be defined
5. process must be mistake proofed
6. continuous feedback must be carried out.

• Six characteristics:
– accurate definition of the good/service Boundaries of process
– customer needs must be understood
– all possible suppliers identified

4. correct process must be defined How process will perform
6. process must be mistake proofed

6. continuous feedback must be carried out. How to remain efficient

4.3 Strategic process decisions
Remember:- EVERY PROCESS UTILISED BY AN ORGANISATION UTILISES SCARCE
RESOURCES!

•How will the process provide the envisaged
output? Must be of value

Remember:- EVERY PROCESS UTILISED BY AN ORGANISATION UTILISES SCARCE
RESOURCES!

• Exact match to setting – aim to fulfil major process
characteristics and be as closely related to strategic
match as possible
• Part of process foundation – that is it becomes part of
the organisations supply chain
• Close working relationship between the processes in
the supply chain. Seamless interface
• Include subcontracting.


Figure 4.1

4.4 Process structures for
manufacturing
Process designer must ask the following:-
•What is the amount of variability in the good
or service produced?
•What is the degree of flexibility required
from labour and equipment?
•What are the quantities of goods and
services to be produced?

4.4 Process structures for
manufacturing
• Four key process types:-
- Job process
- Batch process
- Line process
- Continuous flow process

JOB PROCESS
- Highly adaptable/customised
- Scale of operation small
- Structured around particular events
- Extensive diversity of products
- Small quantities
- Must have a customer order – do
not make for stock

BATCH PROCESS

 Most common type of process used in
industry
 Small to large batches
 Intermittent
 Highly flexible
 Labour skill level than for job process
 Limited range of products

LINE PROCESS

• Repetitive process or assembly line
• One type of product in a straight line
• Modular production
• Large quantities of production
• High utilisation of standard parts
• Structured around a specific product
• Make for stock

LINE PROCESS

Show Rolls Royce Video

CONTINUOUS FLOW PROCESS

 Product focused process
 Very high volumes
 Very limited flexibility loss of production
time
 Variable levels of labour skill required
 Only one product at one time
 Very high capital investment

CONTINUOUS FLOW PROCESS

Show Coca Cola Video

4.5 Strategies for manufacturing
processes
Make to order strategy
•Low volume
•Customer specified
•Job or batch process
•Strategy is to satisfy unique desire of customer
•High level of customisation
•Highly multifaceted processes are utilised

processes
Assemble to order strategy
Small number of components large diversity of products
Manufacture to order not for stock
Main requirement lead time as short as possible
Batch or assembly line process
Components batch process, assembly line process
Requires high volumes of standard products
High inventory of materials
Eg: Plascon/Dulux paint shop

processes
Make to stock strategy
•Large inventories of final stock
•Anticipate customer orders
•Demand can be predicted fairly accurately
•Highly standardised products
•Continuous flow process
•E.g. FMCG

4.6 Process structures for service

Three major process types for
service industry

•Professional service processes
•Service shop processes
•Mass service process

PROFESSIONAL SERVICE
PROCESSES
 Large variety of services
 Low volumes
 Highly customised
 Focussed on people rather than equipment
 E.g attorney’s office

SERVICE SHOP PROCESSES
 High customer participation
 High adaptation
 High volumes of customers
 Fair amount of customer interaction required
 Front and back office
 Front office staff fairly skilled
 Back office staff more skilled
 Highly standardised service
 E.g. High Street banks

MASS SERVICE PROCESSES

 Large numbers of clients
 Very little customisation
 Utilises machinery and equipment to produce
service
 Most tasks completed back office
 Front office staff have limited skills
 Back office staff more skilled
 E.g. Supermarkets

4.7 Process performance
measurement
Design Specification
Process must consistently perform to
specification
Process performance measurement establishes
to what extent process is performing to
specification
Appropriate measurements must be developed
Measurements most often used:-
 Benchmarking
 Process Performance Ratios

BENCHMARKING

 Compare against other organisations
achievements
 Industry leader identified
 Industry leaders process analysed to
show where improvements in own
system are required
 Requires co-operation across the
industry

PROCESS PERFORMANCE
RATIOS
Process performance ratios:
• Productivity
• Efficiency
• Run time
• Operations time
• Throughput.

OPERATIONS TIME

OPERATIONS TIME = RUNTIME + SET UP TIME

Compare to available time

THROUGHPUT

THROUGHPUT = ACTUAL NUMBER OF PRODUCTS PRODUCED

4.8 Business process
reengineering [BPR]
• Improve methods
• Streamlining
• Hammer popularised BPR in 1990’s
• Debate: BPR & TQM
• Development of the BPR methodology
(please read section 4.8.1, p 106)

BPR VS TQM
BPR TQM

Fundamental radical Process of incremental
redesign of process change

Short time scale Longer timescale

Immediately measurable Longer to see results

Customer is centre piece Customer is centre piece
to organisation to organisation

4.9 Industrial engineering

• Industrial engineering is mainly concerned
with the:
– investigation,
– redesign,
– and implementation of processes,
performance standards, work methods, and
related issues

4.9 Industrial engineering

• Examples:
– Bonus schemes (parameters)
– Profit sharing (guidelines)
– Ergonomics
– Method analysis
– Setting labour standards.

Summary
• Process defined
• Process as a strategic issue
• Structures & strategies – manufacturing
• Structures – services
• Process performance measurement
• BPR
• Industrial engineering.

FOR NEXT SESSION
• Read p114 – 136
• Define and briefly discuss a process
• List the 6 characteristics of a process
• List three production strategies and discuss one
of them
• Briefly discuss the service shop process concept
• List and discuss possible performance ratios

Group Exercise
• Case study page 109

Ops management lecture 4 process design & strategy

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Ops management lecture 4 process design & strategy