Operations Management with TQM

AUP 1st Semester AY 2019-2020

RIP

Chapter 7
PROCESS SELECTION, DESIGN, AND ANALYSIS

PROCESS CHOICE DECISIONS

Firms generally produce either in response to customer orders and demand or in anticipation of them.

Three Major Types of Goods and Services

Custom, or make-to-order, goods and services are generally produced and delivered as one of a kind or in small
quantities, and are designed to meet specific customers’ specifications.

Option, or assemble-to-order, goods and services are configurations of standard parts, subassemblies, or services that
can be selected by customers from a limited set.

Standard, or make-to-stock, goods and services are made according to a fixed design, and the customer has no
options from which to choose.

Types of Processes
Projects are large-scale, customized initiatives that consist of many smaller tasks and activities that must be coordinated
and completed to finish on time and within budget.

Job shop processes are organized around particular types of general-purpose equipment that are flexible and capable of
customizing work for individual customers.

Flow shop processes are organized around a fixed sequence of activities and process steps, such as an assembly line to
produce a limited variety of similar goods or services.

Continuous flow processes create highly standardized goods or services, usually around the clock in very high volumes.

Types of Characteristics Goods and Services Type of Product

Process Examples

PROJECT One of a kind Space shuttle, cruise ships, Custom or Make-to-Order

small business tax service,
consulting

Large scale, complex Dams, bridges, skycrapers

Resources brought to the site Skyscrapers, weddings,

consulting

Wide variation in specifications or tasks Custom jewelry, surgery, Web

pages

JOB SHOP Significant setup and/or change over time Automobile engines, auto
body repair, major legal cases

Low to moderate volume Machine tools, beauty salons

Batching (small to large jobs) Orders from small customers,

mortgages, tourist tour
groups

Many process routes with some repetitive Shoes, hospital care,

steps commercial loans

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 Operations Management with TQM
AUP 1st Semester AY 2019-2020
RIP

Types of Characteristics Goods and Services Type of Product

Process Examples

Customized design to customer’s Commercial and Web-based

specifications printing

Many different products Heavy equipment, financial

services

High workforce skills Legal services, consulting

FLOW SHOP Little or no setup or changeover time Insurance policies Option or Assemble-to-Order

Dedicated to a small range of goods or Cafeterias, airline frequent

services that are highly similar flyer programs

Similar sequence of process steps Refrigerators, stock trades

Moderate to high volumes Toys, furniture, lawnmakers

CONTINUOUS Very high volumes in a fixed processing Gasoline, paint, memory Standardized or Make-to-
FLOW sequence chips, check posting Stock

Not made from discrete parts Grain, chemicals

High investment in equipment and facility Steel, paper, power-

generating facilities

Dedicated to a small range of goods or Automated car wash

services

Automated movement of goods or Credit card authorizations,

information between process steps electric utilities

24-hour/7-day continuous operation Steel, electronic funds

transfer, broadcasting

Product Life Cycle

This is a characterization of product growth, maturity, and decline over time. It is important to understand product life cycles
because when goods and services change and mature, so must the processes and value chains that create and deliver them.

The traditional product life cycle (PLC) generally consists of four phases:
1. Introduction
2. Growth
3. Maturity
4. Decline and turnaround

THE PRODUCT-PROCESS MATRIX

The product-process matrix is a model that describes the alignment of process choice with the characteristics of the
manufactured good.

THE SERVICE-POSITIONING MATRIX

A pathway is a unique route through a service system.

Customer-routed services are those that offer customers broad freedom to select the pathways that are best suited for their
immediate needs and wants from many possible pathways through the service delivery system.

Provider-routed services constrain customers to follow a very small number of possible and predefined pathways through
the service system.

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The service-encounter activity sequence consists all the process steps and associated service encounters necessary to
complete a service transaction and fulfill a customer’s wants and needs.

PROCESS DESIGN
The goal of process design is to create the right combination of equipment, labor, software, work methods, and environment
to produce and deliver goods and services that satisfy both internal and external customer requirements.

Four Hierarchichal Levels

1. Task - specific unit of work required to create an output
2. Activity - group of tasks needed to create and deliver an intermediate or final output
3. Process
4. Value Chain

Process and Value Stream Mapping

What is the process intended to accomplish?

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Designing goods-producing or service-providing process requires six major activities:

1. Define the purpose and objectives of the process.
2. Create a detailed process or value stream map that describes how the process is currently performed.
3. Evaluate alternative process designs. That is, create process or value stream maps that describe how the process can best
achieve customer and organizational objectives.
4. Identify and define appropriate performance measures for the process.
5. Select the appropriate equipment and technology.
6. Develop an implementation plan to introduce the new or revised process design.

A process map (flowchart) describes the sequence of all process activities and tasks necessary to create and deliver a desired
output or outcome.

A process boundary is the beginning or end of a process.

The value stream refers to all value-added activities involved in designing, producing, and delivering goods and services to
customers.

PROCESS ANALYSIS AND IMPROVEMENT

Many process design activities involve redesigning an existing process to improve performance. Management strategies to
improve process designs usually focus on one or more of the following:
increasing revenue by improving process efficiency in creating goods and services and delivery of the customer benefit
package;
increasing agility by improving flexibility and response to changes in demand and customer expectations;
increasing product and/or service quality by reducing defects, mistakes, failures, or service upsets;
decreasing costs through better technology or elimination of non value-added activities;
decreasing process flow time by reducing waiting time or speeding up movement through the process and value chain;
and

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decreasing the carbon footprint of the task, activity, process, and/or value chain.

Typical Question that need to be evaluated during process analysis include:

Are the steps in the process arranged in logical sequence?
Do all steps add value? Can some steps be eliminated, and should others be added in order to improve quality or
operational performance? Can some be combined? Should some be reordered?
Are capacities of each step in balance; that is, do bottlenecks exist for which customers will incur excessive waiting time?
What skills, equipment, and tools are required at each step of the process? Should some steps be automated?
At which points in the system (sometimes called process fail points) might errors occur that would result in customer
dissatisfaction, and how might these errors be corrected?
At which point or points in the process should performance be measured? What are appropriate measures?
Where interaction with the customer occurs, what procedures, behaviors, and guidelines should employees follow that
will present a positive image?
What is the impact of the process on sustainability? Can we quantify the carbon footprint of the current process?

Reengineering has been defined as “the fundamental rethinking and radical design of business processes to achieve dramatic
improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed.

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