Process Design
Process Design
MANAGEMENT
#5 Proces s D es ign
OUTLINE
• Four Process Strategies
• Selection of Equipment
• Process Analysis and Design
• Special Considerations for Service Process Design
• Production Technology
• Technology in Services
• Process Redesign
• Database Management Systems
• Data Warehouse and Big Data Analytics
• Data and Text Mining
• Business Intelligence
• Electronic Records Management
Frame tube Frame-building Frame Hot-paint
PROCESS bending work cells machining frame painting
FLOW
THE ASSEMBLY LINE
TESTING Engines and
Incoming parts transmissions
28 tests
Repetitive
Changes in (autos, motorcycles, home
Modules appliances)
modest runs, Harley-Davidson
standardized
modules
(low-volume, high-variety,
Many departments and
intermittent processes) many routings
Arnold Palmer Hospital
Few
modules
(modular)
Harley Davidson
(high-volume, low-variety,
continuous process)
Frito-Lay
Many modules
(high-volume, high-variety)
Dell Computer
( ) ( )
200,000 + 60 V1 = 300,000 + 25 V1 ( ) ( )
300,000 + 25 V2 = 400,000 + 10 V2
35V1 = 100,000 15V2 = 100,000
V1 = 2,857 V2 = 6,666
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To
400,000
300,000
200,000
Fixed cost Fixed cost Fixed cost
Process A Process B Process C
8
80%
1 2 3 4 5 6 7 11
9 10
20%
"Baseline" Time-Function Map
Order Receive
Customer
product product
Process
Sales order
Order
Production Wait
control
Product
Order
Plant A Print
Product
WIP
Warehouse Wait Wait Wait
Product
WIP
WIP
Plant B Extrude
WIP
Transport Move Move
Process
Sales order
Product
Order
Production
control Wait
WIP
Order
Plant Print Extrude
Product
Warehouse Wait
Product
Transport Move
F
Determine Notify Customer pays bill.
specifics. (4 min)
customer
Warm greeting and (5 min)
and recommend
obtain service No
request.
an alternative F
(10 sec) provider.
(7 min)
Standard F
Level Can
request.
service be
#2 (3 min)
done and does
customer approve? Notify customer
Direct customer to No the car is ready.
(5 min)
waiting room. (3 min)
F F F F
Yes Yes
Perform required
Level work. F Prepare invoice.
#3 (varies) (3 min)
SPECIAL CONSIDERATIONS FOR
SERVICE PROCESS DESIGN
• Some interaction with customer is necessary, but this often affects
performance adversely (law of diminishing returns)
• 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
Degree of Customization
Low High
Mass Service Professional Service
SERVICE Private
banking
Traditional
orthodontics
PROCESS Commercial
banking
General-
MATRIX
High
Full-service purpose law firms
stockbroker
Degree of Labor
Digitized
Boutiques orthodontics
Retailing
No-frills
airlines
SERVICE PROCESS MATRIX
Mass Service and Professional Service Service Factory and Service Shop
• Labor involvement is high • Automation of standardized services
• Focus on human resources • Restricted offerings
• Selection and training highly important • Low labor intensity responds well to
process technology and
• Personalized services scheduling
Degree of Customization
• Tight control required to Degree of Customization
maintain standards
Low High Low High
Degree of Labor
orthodontics
Degree of Labor
orthodontics
Retailing Retailing
Airlines Airlines
No-frills No-frills
airlines airlines
TECHNIQUES FOR IMPROVING SERVICE
PRODUCTIVITY
STRATEGY TECHNIQUE EXAMPLE
Bank customers go to a manager to open a
Structuring service so customers must
Separation new account, to loan officers for loans, and to
go where the service is offered
tellers for deposits
Self-service so customers examine,
Supermarkets and department stores
Self-service compare, and evaluate at their own
Internet ordering
pace
Customizing vans at delivery rather than at
Postponement Customizing at delivery
production
Focus Restricting the offerings Limited-menu restaurant
Modular selection of service Investment and insurance selection
Modules
Modular production Prepackaged food modules in restaurants
Separating services that may lend
Automation Automatic teller machines
themselves to some type of automation
Scheduling ticket counter personnel at 15-
Scheduling Precise personnel scheduling
minute intervals at airlines
Clarifying the service options Investment counselor, funeral directors
Training
Explaining how to avoid problems After-sale maintenance personnel
PRODUCTION TECHNOLOGY
1. Machine technology
2. Automatic identification systems (AISs)
3. Process control
4. Vision systems
5. Robots
6. Automated storage and retrieval systems (ASRSs)
7. Automated guided vehicles (AGVs)
8. Flexible manufacturing systems (FMSs)
9. Computer-integrated manufacturing (CIM)
PRODUCTION TECHNOLOGY
1. Machine technology 3. Process control
• Increased precision, • Real-time monitoring and control of
productivity, and processes
flexibility • Sensors collect data
• Reduced environmental impact • Devices read data
on periodic basis
• Additive manufacturing produces • Measurements translated into digital signals then
products by adding material, not sent to a computer
removing it • Computer programs analyze the data
• Supports innovative product design, • Resulting output may take numerous forms
minimal custom tooling required, minimal
assembly time, low inventory, and reduced 4. Vision systems
time to market • Particular aid to inspection
2. Automatic identification systems (AISs) • Consistently accurate
• Improved data acquisition • Never bored
• Reduced data entry errors • Modest cost
• Increased speed • Superior to individuals performing the
same tasks
• Increased scope of process automation
TECHNOLOGY
5. Robots 8. Flexible manufacturing systems (FMSs)
• Perform monotonous or dangerous tasks • Computer controls both the workstation and the
• Perform tasks material handling equipment
requiring significant • Enhance flexibility and reduced waste
strength or • Can economically produce low volume but high
endurance variety
• Generally enhanced • Reduced changeover time and increased
consistency and utilization
accuracy
• Stringent communication requirement between
6. Automated storage and retrieval systems components
(ASRSs)
• Automated placement 9. Computer-integrated manufacturing (CIM)
and withdrawal of parts • Extend flexible manufacturing
and products • Backward to engineering and inventory control
• Reduced errors and • Forward into warehousing and shipping
labor • Can also include financial and customer service areas
• Particularly useful in inventory and test areas of • Reducing the distinction between low-volume/high-variety,
manufacturing firms and high-volume/low-variety production
DBMSs (mid-2014)
• Oracle’s MySQL
• Microsoft’s SQL Server
• PostgreSQL
• IBM’s DB2
• Teradata Database.
DATABASE MANAGEMENT SYSTEMS
Online Transaction Processing (OLTP)
• Designed to manage transaction data, which are volatile & break down complex information
into simpler data tables to strike a balance between transaction-processing efficiency and
query efficiency.
• Cannot be optimized for data mining
Online Analytics Processing (OLAP)
• A means of organizing large business databases.
• Divided into one or more cubes that fit the way business is conducted.
Centralized Database Architecture
• Better control of data quality.
• Better IT security.
Distributed Database Architecture
• Allow both local and remote access.
• Use client/server architecture to process requests.
DATABASE MANAGEMENT SYSTEMS
Garbage In, Garbage Out
Dirty Data
• Lacks integrity/validation and reduces user trust.
• Incomplete, out of context, outdated, inaccurate, inaccessible, or overwhelming.
Cost to Cost to
Cost of Poor Lost
Prevent Correct
Quality Data Business
Errors Errors
DATABASE MANAGEMENT SYSTEMS
Principle of Diminishing Data Value
• The value of data diminishes as they age.
• Blind spots (lack of data availability) of 30 days or longer inhibit peak performance.
• Global financial services institutions rely on near-real-time data for peak performance.
Operating Margin
• A measure of the percent of a company’s revenue left over after paying variable costs: wages,
raw materials, etc.
• Increased margins mean earning more per dollar of sales.
• The higher the operating margin, the better.
DATA WAREHOUSE AND BIG DATA
ANALYTICS
TORTURE DATA LONG ENOUGH AND IT WILL CONFESS . . .