4.

2 PROCESS DESIGN AND INNOVATION

Process industries are characterized by:
Example: ExxonMobil - Petrochemical Project in China
1. High production speed, short throughput time: ExxonMobil is investing in a major
petrochemical project at the Dayawan Petrochemical Industrial Park in China. This project
includes a flexible feed steam cracker with a capacity of 1.6 million tons per year for
polyethylene (PE) and polypropylene (PP). The production operates continuously at high speed to
meet growing domestic demand, especially in packaging and automotive industries.
2. Rigid process control: The petrochemical production process requires strict control, particularly
for flammable and explosive materials like naphtha and ethylene. ExxonMobil employs advanced
technology and rigorous quality control systems to ensure safety and efficiency throughout
production.
3. High capital investment: This project is part of ExxonMobil’s multi-billion-dollar investment
strategy in the petrochemical industry. Due to its large scale and the need for cutting-edge
technology, the project demands significant capital to establish advanced production facilities.
4. Clear determination of capacity, one routing for all products: The plant is designed to produce
polyethylene and polypropylene on a single production line, primarily serving the Chinese
domestic market with a unified process that maximizes capacity.
5. Limited volume flexibility: Similar to other process industries, this petrochemical plant has
limited flexibility in adjusting production volumes, as switching between products requires
complex adjustments to the process.
6. Low added value: The main products from this plant are polymers, used as raw materials in
many other industries. While their market demand is high, the added value of these raw materials
is relatively low.
This project helps ExxonMobil continue to expand and strengthen its presence in the petrochemical
industry, meeting the rapidly growing demand in China and the Asia-Pacific region. The company is also
committed to investing in advanced technologies and developing more environmentally efficient
products. This project not only reflects all the characteristics of the process industry but also exemplifies
ExxonMobil's strategy for process innovation to reduce costs, optimize production, and enhance its
competitive edge globally
ICIS Explore
Exxon Mobil Corporation
Hydrocarbon Processing
Cascade Strategy
The relationship between product and process innovation:
1. Process innovation to reduce costs or improve quality:
 Example: Amazon
Amazon has heavily invested in process innovation, particularly by automating its warehouses
 using Kiva robots. These robots help move products faster, increasing sorting and shipping
speeds, thereby reducing reliance on human labor. This not only cuts operational costs but also
significantly improves the customer experience with faster and more accurate deliveries(
2. Prioritizing product innovation in highly competitive markets:
 Example: The mobile phone industry
In highly competitive markets such as the smartphone industry, Apple consistently focuses on
product innovation to attract customers. Every year, Apple releases new versions of the iPhone
with enhanced features, technology, and performance, helping it maintain a leading position in the
market. Product innovation is a key factor in differentiating Apple from its competitors(
3. Process innovation to achieve cost advantages:
 Example: Walmart
Walmart is well-known for optimizing its supply chain through process innovations. It employs
automated warehouse management systems and utilizes data analytics methods to manage
inventory efficiently. This enables Walmart to maintain low prices in the market, giving it a
competitive edge over other retailers. Process innovations help Walmart not only cut costs but
also increase operational efficiency(
Summary
The examples above clearly demonstrate how leading companies such as Amazon, Apple, and Walmart
utilize both process innovation and product innovation to gain competitive advantages, reduce costs,
and improve product quality. Innovation in production processes and operations is a critical factor in
shaping these companies' long-term growth strategies.

4.3 INNOVATION IN THE MANAGEMENT OF THE OPERATIONS PROCESS

Triggers for innovation:
Gap Analysis
 Example: Starbucks
Starbucks uses Gap Analysis to continuously improve customer satisfaction by identifying
discrepancies between customer expectations and actual service delivery. For example, the
company found a gap between customer expectations for faster service and actual wait times
during peak hours. To address this, Starbucks introduced mobile ordering, which allows
customers to place their orders ahead of time and reduce wait times. This move helped bridge the
gap between customer expectations and service performance.
 Source: Starbucks has been frequently cited for its strategic use of customer feedback to improve
service delivery and customer experience in various business reports.
Quality Circles and Process Improvement Teams
 Example: Toyota Toyota is one of the pioneers in using Quality Circles through its Kaizen
philosophy. Workers in Toyota factories form small voluntary teams that regularly meet to discuss
and identify ways to improve their work processes. These quality circles are integral to Toyota's
continuous improvement system and have led to significant gains in productivity and quality
 control. Ideas generated by these teams are frequently implemented on the production floor,
reducing waste and enhancing efficiency.
 Source: Toyota’s use of quality circles has been well-documented in studies of its production
system, often referred to as the Toyota Production System (TPS).

Total Quality Management (TQM):

 Example: Toyota Motor Company
Toyota successfully implemented Total Quality Management (TQM) through its renowned Toyota
Production System (TPS). The company focuses on continuous improvement (Kaizen) involving every
employee, from top management to factory workers. Toyota integrates quality into each stage of
production using systems like Andon for error detection and Kanban for efficient material management.
Their Just-In-Time (JIT) system minimizes waste and optimizes inventory costs, while maintaining high
product quality and meeting customer expectations.
These principles have helped Toyota achieve continuous improvement and long-term success in the
automotive industry
Quality Function Deployment (QFD) - "House of Quality"
 Example: Ford Motor Company
o Application: Ford used QFD in the development of its Ford Fiesta to capture the voice of
customers and align it with engineering specifications. Through the House of Quality,
Ford was able to translate customer needs (such as fuel efficiency, safety, and
affordability) into specific design and technical features. This approach helped Ford
achieve better customer satisfaction by focusing on key design elements that mattered
most to consumers.
o Source: Ford's quality management practices have been widely discussed in automotive
industry case studies.
ISO 9000 Approach
 Example: Siemens AG
o Application: Siemens, a global technology company, has implemented the ISO 9001
certification to standardize its quality management systems across all its business units.
Siemens uses ISO 9000 standards to ensure that its products and services meet customer
expectations consistently. The certification also helps Siemens demonstrate its
commitment to quality improvement and process optimization to both customers and
partners.
o Source: Siemens has detailed its commitment to ISO standards on its official site and
within reports on its global operations.
EFQM Excellence Model
 Example: Bosch Group
o Application: Bosch, one of the world’s leading suppliers of technology and services, has
adopted the EFQM Excellence Model to drive continuous improvement across its
business units. Bosch uses the model for self-assessment, regularly reviewing its
performance in areas such as customer satisfaction, employee engagement, and societal
impact. The EFQM framework allows Bosch to align its business strategies with best
practices in quality management, helping the company maintain its competitive edge.
o Source: Bosch’s use of the EFQM model has been documented in several European
business excellence reports and quality management articles.