Business operating management

Yuzhi Zhao

OM6_Collier_Evans_Ch07.pptx

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Process Selection, Design, and Analysis

COLLIER/EVANS

Operations + Supply Chain Management

LEARNING OUTCOMES, Part 1

Describe the four types of processes used to produce goods and services

Explain the logic and use of the product-process matrix

Explain the logic and use of the service-positioning matrix

OM6 | CH7

LEARNING OUTCOMES, Part 2

Describe how to apply process and value stream mapping for process design

Explain how to improve process designs and analyze process maps

Describe how to compute resource utilization and apply Little’s Law

OM6 | CH7

Types of Goods and Services

LO 7-1

OM6 | CH7

Types of Goods and Services Producing Processes, Part 1

LO 7-1

OM6 | CH7

Types of Goods and Services Producing Processes, Part 2

LO 7-1

OM6 | CH7

Product Life Cycle

LO 7-1

Characterization of product growth, maturity, and decline over time

Depends on process design and choice

Phases

Introduction

Growth

Maturity

Decline and turnaround

OM6 | CH7

Product-Process Matrix, Part 1

LO 7-2

Model that describes the alignment of process choice with characteristics of the manufactured good

Appropriate match between the type of product and process is achieved along the diagonal in the product-process matrix

OM6 | CH7

Positioning Strategy

LO 7-2

Consciously positioning a business off the diagonal of the product-process matrix

Helps a company stand out from its competitors

Advanced manufacturing technologies enables companies to produce lower volumes of products in greater varieties at lower costs

Allows for mass-customization strategies and capabilities

Helps companies achieve success even when they are positioned off the diagonal

OM6 | CH7

Exhibit 7.2

Product-Process Matrix, Part 2

LO 7-2

OM6 | CH1

Pathway

LO 7-3

Unique route through a service system

Customer-routed services: Offer customers the freedom to select pathways that are best suited for their immediate needs and wants

Customers can choose a path from the many available service-delivery system options

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

OM6 | CH7

Service-Positioning Matrix (SPM)

LO 7-3

Roughly analogous to the product-process matrix for manufacturing

Helps management design a service system that best meets the technical and behavioral needs of customers

Superior performance results by staying along the diagonal of the matrix

OM6 | CH7

Service-Encounter Activity Sequence, Part 1

LO 7-3

Describes an organization’s position along the horizontal axis of the SPM

Consists of all the process steps and associated service encounters that are necessary to:

Complete a service transaction

Fulfill a customer’s wants and needs

OM6 | CH7

Service-Encounter Activity Sequence, Part 2

LO 7-3

Depends on:

Degree of customer discretion, freedom, and decision-making power in selecting the service-encounter activity sequence

Degree of repeatability of the service-encounter activity sequence

OM6 | CH7

Exhibit 7.3

Service-Positioning Matrix

LO 7-3

OM6 | CH1

Process Design

LO 7-4

Helps create the right combination of equipment, labor, software, work methods, and environment to:

Produce and deliver goods and services that satisfy internal and external customer requirements

Impacts:

Cost

Flexibility

Quality of the output

OM6 | CH7

Levels of Process Design

LO 7-4

OM6 | CH7

Designing a Goods-Producing or Service-Providing Process, Part 1

LO 7-4

Steps involved

Define the purpose and objectives of the process

Create a detailed process or value stream map that describes how the process is currently performed

Evaluate alternative process designs

OM6 | CH7

Designing a Goods-Producing or Service-Providing Process, Part 2

LO 7-4

Identify and define appropriate performance measures for the process

Select appropriate equipment and technology

Develop an implementation plan to introduce a new or revised process design

OM6 | CH7

Process Map (Flowchart), Part 1

LO 7-4

Describes the sequence of all process activities and tasks necessary to create and deliver a desired output or outcome

Delineates process boundaries

Process boundary: Beginning or end of a process that helps:

Obtain management support

Assign process ownership

OM6 | CH7

Process Map (Flowchart), Part 2

LO 7-4

Identify where performance measures should be taken

Identify key interfaces with customers

Service blueprints or service maps

Highlight the points of contact with the customer

Depict a line of customer visibility between the back office and the front office

OM6 | CH7

Value Stream

LO 7-4

Value-added activities involved in designing, producing, and delivering goods and services to customers

Value stream map (VSM)

Highlights value-added versus non-value-added activities

Includes costs associated with work activities for both value- and non-value-added activities

OM6 | CH7

Process Analysis and Improvement, Part 1

LO 7-5

Strategies to improve process designs focus on:

Increasing revenue, agility, and product and/or service quality

Decreasing costs, process flow time, and carbon footprint

OM6 | CH7

Process Analysis and Improvement, Part 2

LO 7-5

Reengineering: Fundamental rethinking and radical redesign of business processes

Helps achieve improvements in critical and contemporary measures of performance such as cost, quality, service, and speed

OM6 | CH7

Utilization

LO 7-6

Fraction of time a workstation or individual is busy over the long run

Achieving a 100 percent utilization for a process design is difficult

OM6 | CH7

Throughput

LO 7-6

Average number of entities completed per unit time (or output rate) from a process

Measured as parts per day, transactions per minute, or customers per hour

OM6 | CH7

Bottleneck

LO 7-6

Work activity that effectively limits the throughput of an entire process

Identifying and breaking process bottlenecks is an important part of process design and improvement

Increases the speed of a process

Reduces waiting and work-in-process inventory

Uses resources more efficiently

OM6 | CH7

Little’s Law

LO 7-6

Flow time or cycle time: Average time taken to complete one cycle of a process

Explains the relationship between:

Flow time (T)

Throughput (R)

Work-in-process (WIP)

Work-in-process = Throughput × Flow time

OM6 | CH7

KEY TERMS, Part 1

Custom or make-to-order, goods and services

Option or assemble-to-order, goods and services

Standard or make-to-stock, goods and services

Projects

Job shop processes

Flow shop processes

Continuous flow processes

Product life cycle

Product-process matrix

Pathway

Customer-routed services

Provider-routed services

OM6 | CH7

KEY TERMS, Part 2

Service-encounter activity sequence

Task

Activity

Process

Value chain

Process map (Flowchart)

Process boundary

Value stream

Reengineering

Utilization

Throughput

Bottleneck

Flow time (cycle time)

OM6 | CH7

SUMMARY

Goods and services can be custom-based, option-based, or standard-based

Product life cycle has important implications in terms of process design and choice

Product-process matrix is similar to service-positioning matrix

Process design activities involve redesigning an existing process to improve performance

OM6 | CH7

4LTR Press

OM6 | CH7