Process Design and Choice Decisions

Process Design

• Process design influences operational costs, customer service, and sustainability
• Choosing and designing processes that work well together is crucial for an effective value chain
• It is becoming imperative for companies to consider the environmental impact of processes

Process Choice Decisions

• Production is typically in response to customer orders or in anticipation of demand
• This leads to three types of goods and services: Custom, Option-oriented, and Standard

Custom Goods and Services

• Usually one-of-a-kind or in small quantities
• Meet specific customer requirements
• Examples include ships, websites, weddings, and surgery
• Production occurs on demand, resulting in longer wait times for customers since design and creation occur after the order

Option or Assemble-to-Order Goods and Services

• Configurations use standardized parts or subassemblies from a limited set
• Dell computers, Subway sandwiches, and travel agent services are examples
• Customers choose the configuration.
• Unique technical specifications or requirements are not generally accommodated

Standard or Make-to-Stock Goods and Services

• Made as a fixed design, without customer options
• Appliances, shoes, sporting goods, credit cards, online courses and bus services are examples
• Production anticipates customer demand and stocked in inventory
• Items are usually available, but specific colors or sizes can sometimes be unavailable

Manufacturing Systems

• Terms like make-to-order, assemble-to-order, and make-to-stock are used to describe the type of systems

Four Principal Types of Processes

• Projects, Job Shops, Flow Shops and Continuous Flow

Projects

• Large-scale and customized
• Consist of smaller, coordinated tasks to be completed on time
• Examples include legal defense, construction, and software development
• Projects can be used for custom goods and services and standard products such as market homes built from a standard design

Job Shop Processes

• Organized around specific types of general-purpose equipment
• Customizable is key for the customer
• Wide variety of goods and services produced in small quantities
• Used for custom or option-type products
• Customer orders processed in batches
• Different orders can require different sequences of processing steps and movement in different work areas

Flow Shop Processes

• Organized around a fixed sequence of activities, like an assembly line, for a limited range of similar items
• Assembly lines are a common example of flow shop
• High-volume, option-oriented, and standard goods and services are produced
• flow shops makes automobiles, appliances, checking account statements, and hospital laboratory work
• Tend to use productive, specialized equipment and computer software

Continuous Flow Processes

• Create highly standardized goods and services around the clock in high volumes
• Automated car washes, paper mills, paint factories, and electronic security systems are examples
• The sequence of work tasks is rigid
• Specialized, automated equipment is used
• There is often computer control with minimal human oversight

Product Life Cycle

• Characterized by growth, maturity, and decline over time
• Understanding product life cycles is important because processes and value chains must evolve as goods and services change
• Consists of introduction, growth, maturity, and decline
• Has significant implications for process design and choices
• New products with low sales volume may start in job shops
• If sales grow, a flow shop process might become more efficient

Product-Process Matrix

• Aligns process choice with the characteristics of a manufactured good
• The best match between product type and process type occurs along the diagonal of the matrix
• Moving down the diagonal, the emphasis shifts from low volume/high flexibility to higher volume/standardization
• If characteristics do not match well, competitive priorities may not be achieved

Strategy

• Companies can differentiate themselves by intentionally positioning themselves off the diagonal of the product-process matrix
• To be successful they must carefully monitor the market and operational efficiency

Service-Positioning Matrix

• Unlike product-process matrix, it does not transfer well to service businesses
• Volume and process relationships are not the same
• To handle increased volume, service business increases the number of stores, banks, and hotels, but they do not change their processes

Pathway

• A unique route through a service system
• Pathways can be customer or provider-driven, depending on the control level
• Pathways can be physical, procedural (telephone) or virtual (internet search)

Customer Routed Services

• Allow customers freedom to choose pathways that best suit their needs
• Customers decide their path with minimal management guidance
• E.g., Internet searches for a product or visiting a park

Provider-Routed Services

• These services limit customers to a small number of pre-defined pathways

Features Required

• Solid understanding of features to delight customers
• Education about pathway options

Service-Encounter Sequence

• Assists all process steps and service encounters to complete a service transaction
• Depends on:
  • Customer discretion and decision-making power
  • Repeatability of the service-encounter activity sequence

Degree of Repeatability of the service-encounter activity sequence

• The more unique the service, the less repeatability
• High repeatability encourages standardization and efficiency
• Low repeatability encourages flexibility but results in higher costs

Process Design

• The goal is to combine equipment, labor, software, and work methods to meet customer requirements
• Process design impacts cost, flexibility, and output quality
• Work can be examined at four levels: Task, Activity, Process, and Value Chain

Process Analysis and Improvement

• Many activities involve redesigning to improve performance
• Management strategies focus on:
  • Increasing revenue through efficiency
  • Improving agility and flexibility
  • Reducing defects to improves sales quality
  • Decreasing costs
  • Reducing process flow time
  • Lowering carbon footprint

Process & value stream maps

• Form the basis for improvement activities

Analytical Questions

• Are steps in logical sequence?
• Do all steps add value?
• Does imbalance exist?
• What skills, equipment required?
• Where might errors occur?
• Where to measure performance?
• What customer interaction is needed?
• What is the process impact on sustainability?

Process Reengineering

• When processes are complex, it is easier to redesign from scratch
• Reengineering is the radical rethinking of business processes for dramatic improvements

Facility and Work Design

• Facility and work design is the arrangement of physical facilities
• Layout studies are needed when:
  • New facility construction
  • Significant change in demand
  • New products or services are introduced
  • Any new processes, equipment etc

Objectives of Layout Studies

• To minimize materials handling delays and customer movement
• To maintain flexibility
• To make effective use of labor
• To encourage employee morale and satisfaction
• To minimize energy use and impact on the environment
• To ensure appropriate housekeeping and maintenance
• To enhance sales in manufacturing and service settings

Layout Requirements

• A good layout supports the ability of operations to accomplish its mission

Four Major Layout Patterns

• Product Layout, Process Layout, Cellular Layout, Fixed-Position Layout

Product Layout

• Arrangement by sequence of operations during production/delivery
• Supports smooth flow where goods/services move from one process stage to the next

Advantages of product layout

• Higher output rates
• Less material handling
• Lower work-in-process inventories
• Simple planning and control systems
• Higher labor and equipment utilization

Disadvantages of product layout

• Breakdown of one piece of equipment can shut down the process
• Change in product design may require major layout changes
• Less flexible and more expensive to change
• May need specialized equipment
• The location may create job dissatisfaction

Process Layout

• Functional grouping of equipment or activities that do similar work
• Provides more flexibility than product layouts
• Requires a lower cost of investment in equipment

Cellular Layout

• Design based on self-contained equipment groups for a particular set of goods or services
• Facilitates processing of families of parts with similar processing requirements
• This method of classifying parts is called group technology

Fixed-Position Layout

• Consolidates resources in one physical location
• "Project" classification
• Major hardware/software installation, concerts, sporting events
• High level of planning and control is required

Facility Layout in Service Organizations

• Service organizations use product, process, cellular, and fixed-position layouts
• Trade-off concern specialization versus flexibility
• Must consider: volume of demand, range of service types, degree of personalization, employee skills, and costs.
• Organizations needing to provide wide service variety use a process layout
• Those providing standardized services tend to use product layouts
• Layout design requires integrating servicescape and process design

Designing Process Layouts

• Involves arranging departments relative to each other
• One approach focuses on the cost of moving materials or customer inconvenience and is widely used in manufacturing
  • Work centers with a large number of moves should be located close to each other
  • Starts with initial layout, data on historical/forecasted volume, and materials-handling costs
  • Centroid of each department is used to compute distances and costs
• Another approach is used when it is difficult to obtain data on costs or volumes and is useful in service applications
  • Constructs a preference table indicating the importance of two departments being close

"Closeness Ratings" Follows

Absolutely necessary, Ordinary closeness okay, Especially important, Unimportant, Undesirable

Workplace

• Focuses on workstations and the job performed by the workforce

Workplace Design

• A well-designed workplace maximizes work efficiency and effectiveness

Key Questions for Workplace Design

• Who will use workplace?
• How will the work performed?
• What technology is needed?
• What must the employees be able to see?
• What must the employee be able to hear?
• What environmental and safety issues need to be addressed?

Job Design

• Tasks the individual performs

Job Design Involves

• Determining specific tasks, responsibilities, work environment, and methods to meet goals of the operations

Objectives that need to be satisfied

• Meet the firm's competitive priorities
• Make the job safe, satisfying, and motivating for the worker

Job Enlargement

• Giving more variety to a worker - horizontal expansion of the job

Job Enrichment

• Giving the worker more responsibility - vertical expansion of job duties
• An effective approach is to use teams

Project Management

• A temporary and customized initiative with smaller tasks
• Tasks are coordinated and completed on time and within budget
• Value-creation process
• Involve activities in the value chain
• Market research, construction are a few examples

Projects are used on an infrequent basis

• Implementing strategies, value chain design etc
• Preparation of annual reports is one example

Systematic management

• Requires organizing
• Ensures efficient use of organization's resources
• Cuts across organizational boundaries
• Project Management is important for sustainability
• Coordinate the multiple project disciplines for sustainability

The Scope of Project Management

• Projects go through stages from start to completion

Project Management stages

• Define
• Plan
• Organize
• Control
• Close

Project Managers & Team Members

• Project Managers have lots of responsibilities such as building the team, providing the resources and aligning them strategically
• Several principles for project managers include:
  • Managing Individually
  • Reinforcement
  • Communicate
  • Build consensus
  • Empower

Factors for Successful Projects

• Goals and objectives for the project need to be defined
• Channels of communication
• Top management should provide direction

Project Management Involves Factors

• Time
• Costs
• Resources

Plan, Schedule and Control

• Various techniques

Project Definition

• Identify completed and sequence of tasks

Resource Planning

• Each activity, personnel needs, money etc

Project Scheduling

• Time schedule for activity and completion

Project Control

• Determining progress and developing plans in meeting schedule

First Step

• Define objectives and deliverables

Deliverables

• New software
• Implementation
• Training

Activities

• Consume time and resources

Immediate predecessors

• Before any active may start

Work Breakdown Structure

• A series of deliverables expected for the project

Project Network Includes

• Circles or nodes of activities
• A set of arrows called arcs that are related to the activities

Activity-On-Node (AON)

• Presentation format of choice

Resource Planning

• Includes cost development estimates by manager and historical data
• Cost control is extremely important

Project Scheduling

• Includes Critical Path Method or CPM

CPM

• Approached to scheduling and controlling project activities
• Critical Path or Longest Takes the Longest time with project completion
• CPM assumes the following:
  • Sequence of Workflow
  • Independent activities assumed
  • Time is estimated
  • Activities continue uninterrupted

Critical Path

• If on the critical path , it MUST be completed.

Project Controls

• Manager monitors performance

Gantt Chart

• Useful for schedule creation

CPM Benefits

• Abalility Consider Shortening

Crashing a Project

• Reduce the total time to meed a Revised Date
• You mush Evaluated the trade off
• Crash Time the shortest time you can realistically completed

Contributors v Impediments

Well-Defined V Ill defined Team work V Poor relationship