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Chapter
2 Process Strategy and Analysis
1. Processes are everywhere, in all functional areas of the enterprise.
2. Managers must see to it that processes in all departments are adding as much customer value
as possible.
3. Three important principles concerning process strategy
a.
b.
c.
4.
5. Four common process decisions
a.
b.
c.
d.
1. Process Structure in Services
1. Describe the nature of service processes (dimensions of customer contact)
2. Dimensions of customer contact
a. Physical presence
b. What is processed
c. Contact intensity
d. Personal attention
e. The method of delivery used in contact
3. Elements of customer-contact matrix (fitting service process with customer contact)
a. Customer contact and customization
b. Process divergence, and flow
4. Service process structuring (three process structures forming a continuum)
a. Front office:
b. Hybrid office:
c. Back office:
2. Process Structure in Manufacturing
Manufacturing processes convert materials into goods that have a physical form.
1. Elements of product-process matrix (how manufacturing processes relate to volume)
a.
b.
c.
2. Manufacturing process structuring (four process choices, forming a continuum)
a. Job process:
b. Batch process:
c. Line process:
d. Continuous flow process:
3. Production and Inventories
a. Design-to-Order Strategy
b. Make-to-order strategy
c. Assemble-to-order strategy
d. Make-to-stock strategy
4. Layout
a. Layout:
b. Operation:
3. Process Strategy Decisions
1. Customer Involvement
a. Possible advantages
b. Possible disadvantages
c. Emerging technologies
2. Resource Flexibility: managers must account for process divergence and diverse
process flows.
a. Workforce
b. Equipment
c. Application 2.1: Break-Even Analysis in Process Choice
BBC is deciding whether to weld bicycle frames manually or to purchase a welding robot.
If welded manually, investment costs for equipment are only $10,000. The per-unit cost of
manually welding a bicycle frame is $50.00 per frame. On the other hand, a robot capable
of performing the same work costs $400,000. Robot operating costs including support labor
are $20.00 per frame. At what volume would BBC be indifferent to these alternative
methods?
If welded
manually
(Make)
If welded by
robot
(Buy)
Fixed costs
$10,000
$400,000
Variable costs
$50
$20
mb
bm
cc
FF
Q−
−
=
=
3. Capital Intensity: is the mix of equipment and human skills in the process; the greater the
relative cost of equipment, the greater is the capital intensity.
a. Automating manufacturing processes
• Advantage:
• Disadvantages:
b. Automating service processes
c. Economies of Scope: Requires a family of products having enough collective volume to
utilize equipment fully
4. Strategic Fit
The process strategist should understand how the four major process decisions tie together.
1. Decision patterns for service processes
a. Process structure
b. Customer involvement
c. Resource flexibility
d. Capital intensity
2. Decision patterns for manufacturing processes
a. Process choice
b. Customer involvement
c. Resource flexibility
d. Capital intensity
3. Gaining focus
5. Strategies for Change
1. Process reengineering
2. Process improvement
3. Process Analysis
a. Six Sigma Process Improvement Model: employees must be trained in the “whys” and
the “how-tos” of process performance and what it means to customers, both internal and
external
• Define:
• Measure:
• Analyze:
• Improve:
• Control:
6. Defining, Measuring, and Analyzing the Process
1. Flowcharts
a. Swim Lane Flowcharts
b. Service blueprints
2. Work Measurement techniques
a. Time study methods
b. Elemental standard data approach
c. Predetermined data approach
d. Work sampling method
e. Learning curve analysis
3. Process Charts
a. Purpose
b. Possible categories
c. Estimate the annual cost of the entire process.
4. Data analysis tools
a. Checklists
b. Histograms and bar charts
c. Pareto charts
Example 2.2
d. Scatter diagrams
e. Cause-and-effect diagram
Example 2.3
f. Graphs
5. Data snooping
6. Simulation
7. Redesigning and Managing Process Improvements
1. Generating ideas: questioning and brainstorming
ask six questions about each step in the process
• What is being done?
• When is it being done?
• Who is doing it?
• Where is it being done?
• How is it being done?
• How well does it do on the various metrics of importance?
2. Benchmarking
a. Types
• Competitive
• Functional
• Internal
3. Implementing: Seven mistakes to avoid:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
