Classifications of Operations Systems

Classifications of Operations Systems

Volume / Flexibility Service – Process Matrix

Continuous, Automatedand rigid flow; process segments tightly linked

Product - Process Matrix

Project

Job Shop

Batch Flow

Line Flow

Line Flow

Continuous Flow

Very Jumbled Flow; process segments loosely linked

Jumbled flow, but a dominant flow exists

Line Flow Worker paced

Machine paced

Process Pattern

Challenges toManagement

One of a kind orfew

Low Volumes,many products

High Volumes,Several majorproducts

Very high Volumes,standardproduct

Challenges toManagement

Scheduling; materials Handling;shifting bottlenecks

Worker motivation; balance;maintaining enough flexibility

Capital expenses for big chunk capacity;technological change Materials management;vertical integration

Bidding;delivery;Product design flexibility

PriceQuality (ProductDifferentiation);Flexibility inoutput volumes

Opportunity Costs

Out-of-pocket costs

Product Mix

Volume / Flexibility

Projects- oil rig construction

- development of a computer software package

- overhaul of an airliner

Job shop- Low volume, low standardisation – one of a kind, custom design, general purpose equipment, high margins, jumbled flow, estimating costs, estimating delivery times, order tracing and expediting

- tool room

- tailor

- operation theatre

Volume / Flexibilty (contd.)

Continuous- High volume, specialised equipment, high capital investment, high standardisation, commodity, vertical integration, long runs, economies of scale, timing expansion and technological changes

- nuts and bolts

- cement, sugar, petroleum

- photographic films

Volume / Flexibilty (contd.)

Batch

- Standardised designs, back-up suppliers, finished or intermediate goods inventory, systematising diverse elements, SPC, developing standards, large complex operations

- aero-engines

- mining equipment

- pumps, compressors

- mail collection

Disconnected line flow or Connected line flow

Volume / Flexibilty (contd.)

The Service – Process Matrix (Schmenner)- Two Axes:

- Degree of Labour Intensity; ratio of labour cost to value of plant and equipment

Electric utilities : 14.21Communications : 5.31Amusement parks : 2.49Hospitals : 1.63Banking : 1.20Hotels : 1.01Retail trade : 0.62Business services : 0.42

Volume / Flexibilty (contd.)

The Service – Process Matrix (Schmenner)

- Two Axes:

- Degree of Interaction and Customisation

Interaction : Degree to which the customer can intervene in the process (e.g. restaurant), is not duration of contact (e.g. lectures)

Customisation : Degree to which the service provided is tailored to the needs of the

customers

The Service – Process Matrix

Degree of Interaction & Customisation

Low High

Service FactoryAirlinesHotelsResorts

Service ShopHospitalsAuto Repairs

Mass ServiceRetailingSchoolsCommercial Banking

ProfessionalDoctorsLawyersAccountants

Degree of Labour Intensity

Low

High

The Service – Process Matrix (contd)

Low Labour Intensity- Capital decisions – Capacity, Technology and Timing

- Managing demand to avoid peaks and to promote off peaks

- Scheduling service delivery

The Service – Process Matrix (contd)

High Labour Intensity

- Hiring, training, welfare

- Methods development and control

- Scheduling workforce

The Service – Process Matrix (contd)

Low Interaction & Customisation

- Marketing

- Making service “warm”

- Attention to physical surroundings

- Managing fairly rigid hierarchy

The Service – Process Matrix (contd)

High Interaction & Customisation

- Fighting expenses increases

- Reacting to customer interventions in process

- Gaining employee loyalty

- Managing flat hierarchy- Loose subordinate / superior relationship

- Managing advancement of people

The Service – Process Matrix (contd)

Help companies assess their competitive stance and means by which they provide their services

Possibility to move across (the diagonal)?(e.g. banking and retailing becoming more automated, restaurants with more standardised menus, professional service firms to specialise; pursuit is for controls and reduced costs)

Assignment

Attempt to categorise the operations system of your own organisation, or others with which you are familiar

How would it plan to move across (the diagonal)? What would be the implications vis-à-vis the organisation’s structure, systems and processes?