Supply Chain Management 13th Edition Chapter 7

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Operations Management: Sustainability

and Supply Chain Management

Thirteenth Edition, Global Edition

Chapter 7

Process Strategies

Outline (1 of 2)

•Global Company Profile: Harley-Davidson

•Four Process Strategies

•Selection of Equipment

•Process Analysis and Design

•Special Considerations for Service Process Strategies

Outline (2 of 2)

•Production Technology

•Technology in Services

•Process Redesign

Harley-Davidson

•The only major U.S. motorcycle company

•Emphasizes quality and lean manufacturing

•Materials as Needed (MA N) system

•Many variations possible

•Tightly scheduled repetitive production

Process Flow Diagram

Learning Objectives

When you complete this chapter you should be able to:

7.1 Describe four process strategies

7.2 Compute crossover points for different processes

7.3 Use the tools of process analysis

7.4 Describe customer interaction in service processes

7.5 Identify recent advances in production technology

Process Strategy

The objective is to create a process to produce offerings that meet

customer requirements within cost and other managerial

constraints

Process Strategies (1 of 2)

•How to produce a product or provide a service that

–Meets or exceeds customer requirements

–Meets cost and managerial goals

•Has long-term effects on

–Efficiency and production flexibility

–Costs and quality

Process, Volume, and Variety

Figure 7.1

Process Strategies (2 of 2)

Four basic strategies

1. Process focus

2. Repetitive focus

3. Product focus

4. Mass customization

Within these basic strategies, there are many ways they

may be implemented

Process Focus (1 of 2)

•Facilities are organized around specific activities or

processes

•General purpose equipment and skilled personnel

•High degree of product flexibility

•Typically high variable costs and low equipment utilization

•Product flows may vary considerably, making planning and

scheduling a challenge

Process Focus (2 of 2)

Figure 7.2(a)

Repetitive Focus (1 of 2)

•Facilities often organized as assembly lines

•Characterized by modules with parts and assemblies made

previously

•Modules may be combined for many output options

•Less flexibility than process-focused facilities but more

efficient

Repetitive Focus (2 of 2)

Figure 7.2(b)

Product Focus (1 of 2)

•Facilities are organized by product

•High volume but low variety of products

•Long, continuous production runs enable efficient

processes

•Typically high fixed cost but low variable cost

•Generally less skilled labor

Product Focus (2 of 2)

Figure 7.2(c)

Mass Customization (1 of 4)

•The rapid, low-cost

production of goods and

services to satisfy

increasingly unique

customer desires

•Combines the flexibility of a

process focus with the

efficiency of a product focus

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

“Target” Time-Function Map

Figure 7.4(b)

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

Mass Customization (2 of 4)

Figure 7.2(d)

Mass Customization (3 of 4)

Table 7.1 Mass Customization Provides More Choices Than

Ever

Mass Customization (4 of 4)

•Imaginative product design

•Flexible process design

•Tightly controlled inventory management

•Tight schedules

•Responsive partners in the supply chain

Comparison of Processes (1 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

1. Small quantity

and large variety of

products

1. Long runs, a

standardized product

from modules

1. Large quantity and

small variety of

products

1. Large quantity and

large variety of

products

2. Broadly skilled

operators

2. Moderately trained

employees

2. Less broadly

skilled operators

2. Flexible operators

Comparison of Processes (2 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

3. Instructions for

each job

3. Few changes in

the instructions

3. Standardized job

instructions

3. Custom orders

requiring many job

instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value of

the product

Comparison of Processes (3 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

5. Finished goods

are made to order

and not stored

5. Finished goods

are made to frequent

forecasts

5. Finished goods

are made to a

forecast and stored

5. Finished goods are

build-to-order (BTO)

6. Scheduling is

complex

6. Scheduling is

routine

6. Scheduling is

routine

6. Sophisticated

scheduling

accommodates

custom orders

Comparison of Processes (4 of 4)

Table 7.2 Comparison of the Characteristics of Four Types

of Processes

PROCESS FOCUS

(LOW-VOLUME,

HIGH-VARIETY; e.g.,

ARNOLD PALMER

HOSPITAL)

REPETITIVE FOCUS

(MODULAR; e.g.,

HARLEY-DAVIDSON)

PRODUCT FOCUS

(HIGH-VOLUME,

LOW-VARIETY; e.g.,

FRITO-LAY)

MASS

CUSTOMIZATION

(HIGH-VOLUME, HIGH-

VARIETY; e.g.,

DELL COMPUTER)

7. Fixed costs are

low and variable

costs high

7. Fixed costs are

dependent on

flexibility of the

facility

7. Fixed costs are

high and variable

costs low

7. Fixed costs tend to

be high and variable

costs low

Crossover Chart Example (1 of 2)

•Evaluate three different accounting software products

•Calculate crossover points between software A and B and

between software B and C

Blank TOTAL FIXED COST

DOLLARS REQUIRED PER

ACCOUNTING REPORT

Software A $200,000 $60

Software B $300,000 $25

Software C $400,000 $10

Crossover Chart Example (2 of 2)

•Software A is most economical from 0 to 2,857 reports

•Software B is most economical from 2,857 to 6,666 reports

Crossover Charts

Figure 7.3

Focused Processes

•Focus brings efficiency

•Focus on depth of product line rather than breadth

•Focus can be

–Customers

–Products

–Service

–Technology

Selection of Equipment

•Decisions can be complex as alternate methods may be

available

•Important factors may be

–Cost

–Cash flow

–Market stability

–Quality

–Capacity

–Flexibility

Flexibility

•Flexibility is the ability to

respond with little penalty in

time, cost, or customer

value

•May be a competitive

advantage

•May be difficult and

expensive

•Without it, change may

mean starting over

Process Analysis and Design (1 of 3)

•Is the process designed to achieve a competitive

advantage?

•Does the process eliminate steps that do not add value?

•Does the process maximize customer value?

•Will the process win orders?

Process Analysis and Design (2 of 3)

•Flowchart

–Shows the movement of materials

–Harley-Davidson flowchart

•Time-Function Mapping

–Shows flows and time frame

“Baseline” Time-Function Map

Figure 7.4(a)

“Target” Time-Function Map

Figure 7.4(b)

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Bar codes and R F I D

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

Process Chart

Figure 7.5

Process Analysis and Design (3 of 3)

•Value-Stream Mapping (V SM)

–Where value is added in the entire production process,

including the supply chain

–Extends from the customer back to the suppliers

Value-Stream Mapping (1 of 3)

1. Begin with symbols for customer, supplier, and

production to ensure the big picture

2. Enter customer order requirements

3. Calculate the daily production requirements

4. Enter the outbound shipping requirements and delivery

frequency

5. Determine inbound shipping method and delivery

frequency

Value-Stream Mapping (2 of 3)

1. Add the process steps (i.e., machine, assemble) in

sequence, left to right

2. Add communication methods, add their frequency, and

show the direction with arrows

3. Add inventory quantities between every step of the

entire flow

4. Determine total working time (value-added time) and

delay (non-value-added time)

Value-Stream Mapping (3 of 3)

Figure 7.6

Service Blueprinting

•Focuses on the customer and provider interaction

•Defines three levels of interaction

•Each level has different management issues

•Identifies potential failure points

Service Blueprint (1 of 2)

Figure 7.7

Service Blueprint (2 of 2)

Figure 7.7

Special Considerations for Service

Process Strategies

•Some interaction with customer is necessary, but this often

affects performance adversely

•The better these interactions are accommodated in the

process design, the more efficient and effective the

process

•Find the right combination of cost and customer interaction

Service Process Matrix (1 of 3)

Figure 7.8

Service Process Matrix (2 of 3)

Mass Service and

Professional Service

•Labor involvement is high

•Focus on human resources

•Selection and training highly

important

•Personalized services

Service Process Matrix (3 of 3)

Service Factory and Service

Shop

•Automation of standardized

services

•Restricted offerings

•Low labor intensity responds

well to process technology

and scheduling

•Tight control required to

maintain standards

Improving Service Productivity (1 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Separation Structuring service so

customers must go where

the service is offered

Bank customers go to a

manager to open a new

account, to loan officers

for loans, and to tellers

for deposits

Self-service Self-service so customers

examine, compare, and

evaluate at their own

pace

Supermarkets and

department stores

Internet ordering

Postponement Customizing at delivery Customizing vans at

delivery rather than at

production

Focus Restricting the offerings Limited-menu restaurant

Improving Service Productivity (2 of 2)

Table 7.3 Techniques for Improving Service Productivity

STRATEGY TECHNIQUE EXAMPLE

Modules Modular selection of

service

Modular production

Investment and insurance

selection

Prepackaged food

modules in restaurants

Automation Separating services that

may lend themselves to

some type of automation

Automatic teller machines

Ordering via an app

Scheduling Precise personnel

scheduling

Scheduling airline ticket-

counter personnel at 15-

minute intervals

Training Clarifying the service

options

Explaining how to avoid

problems

Investment counselor,

funeral directors

After-sale maintenance

personnel

Production Technology

1. Machine technology

2. Automatic identification systems (AIS s)

3. Process control

4. Vision systems

5. Robots

6. Automated storage and retrieval systems (ASRSs)

7. Automated guided vehicles (AGVs)

8. Flexible manufacturing systems (F MSs)

9. Computer-integrated manufacturing (CIM)

Machine Technology

•Increased precision, productivity,

and flexibility

•Reduced environmental impact

•Additive manufacturing

produces products by adding

material, not removing it

•Supports innovative product

design, minimal custom tooling

required, minimal assembly time,

low inventory, and reduced time

to market

Computer numerical

control (C NC)

Automatic Identification Systems

(AI Ss) and RFID

•Improved data acquisition

•Reduced data entry errors

•Increased speed

•Increased scope of process

automation

Vision Systems

•Particular aid to inspection

•Consistently accurate

•Never bored

•Modest cost

•Superior to individuals performing the same tasks

Robots

•Perform monotonous or

dangerous tasks

•Perform tasks requiring

significant strength or

endurance

•Generally enhanced

consistency and accuracy

Automated Storage and Retrieval

Systems (AS RSs)

•Automated placement and

withdrawal of parts and

products

•Reduced errors and labor

•Particularly useful in

inventory and test areas of

manufacturing firms

Automated Guided Vehicle (AG Vs)

•Electronically guided and controlled carts

•Used for movement of products and/or individuals

Flexible Manufacturing Systems (F

MSs)

•Computer controls both the workstation and the material

handling equipment

•Enhanced flexibility and reduced waste

•Can economically produce low volume but high variety

•Reduced changeover time and increased utilization

•Stringent communication requirement between

components

Computer-Integrated Manufacturing

(CI M) (1 of 2)

•Extend flexible manufacturing

–Backward to engineering and inventory control

–Forward into warehousing and shipping

–Can also include financial and customer service areas

–Reducing the distinction between low-volume/high-

variety, and high-volume/low-variety production

Computer-Integrated Manufacturing

(CI M) (2 of 2)

Figure 7.9

Technology in Services (1 of 3)

Table 7.4 Examples of Technology’s Impact on Services

SERVICE INDUSTRY EXAMPLE

Financial Services

Debit cards, electronic funds transfer, ATMs,

Internet stock trading, online banking via cell

phone, Apple pay

Education

Online newspapers and journals, interactive

assignments via WebCT, Blackboard, and

smartphones

Utilities and government

Automated one-person garbage trucks, optical mail

scanners, flood-warning systems, meters that allow

homeowners to control energy usage and costs

Restaurants and foods

Wireless orders from waiters to kitchen, robot

butchering, transponders on cars that track sales at

drive-throughs

Technology in Services (2 of 3)

Table 7.4 Examples of Technology’s Impact on Services

SERVICE INDUSTRY EXAMPLE

Communications Interactive TV, e-books via Kindle, speech

recognition

Hotels Electronic check-in/check-out, electronic key/lock

systems, mobile Web bookings

Wholesale/retail trade Point-of-sale (POS) terminals, e-commerce,

electronic communication between store and

supplier, bar-coded data, RFID, self-checkout, pay

via facial recognition

Transportation Automatic toll booths, satellite-directed navigation

systems, Wi-Fi in automobiles

Technology in Services (3 of 3)

Table 7.4 Examples of Technology’s Impact on Services

SERVICE INDUSTRY EXAMPLE

Health care Online patient-monitoring systems, online medical

information systems, robotic surgery, artificial

intelligence for medical diagnoses

Airlines Ticketless travel, scheduling, Internet purchases,

boarding passes downloaded as two-dimensional

bar codes on smart phones

Process Redesign

•The fundamental rethinking of business processes to bring

about dramatic improvements in performance

•Relies on reevaluating the purpose of the process and

questioning both the purpose and the underlying

assumptions

•Requires reexamination of the basic process and its

objectives

•Focuses on activities that cross functional lines

•Any process is a candidate for redesign

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