Ch03

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Process Design Process Design StrategiesStrategies

Chapter 3Chapter 3


Effective Process Design

Major Decisions for Major Decisions for Effective Process DesignEffective Process Design

Vertical Integration• In-house• Outsource

Capital Intensity• Low automation• High automation

Customer Involvement• Low involvement• High involvement

Resource Flexibility• Specialized• Enlarged

Process Structure• Customer-contact

position (services)• Product-process

position (manufacturing)

Strategy for Change• Process

Reengineering• Process

Improvement

Figure 3.1Figure 3.1


Different Dimensions of Customer Different Dimensions of Customer Contact in Service ProcessesContact in Service Processes


Present Physical presence Absent

People What is processed Possessions

Active, visible Contact intensity Passive, out of sight

Personal Personal attention Impersonal

Face to face Method of delivery Regular mail

High ContactHigh Contact DimensionDimension Low ContactLow Contact



Customer-Contact Model for Customer-Contact Model for ProcessesProcesses

Front office

Hybrid office

Back office

(1)(1) (2)(2) (3)(3)High interaction withHigh interaction with Some interaction withSome interaction with Low interaction withLow interaction withcustomers, highlycustomers, highly customers, standardcustomers, standard customers, standardizedcustomers, standardizedcustomized servicecustomized service services with some optionsservices with some options servicesservices

ProcessProcessCharacteristicsCharacteristics

(1)(1)Jumbled flows,Jumbled flows,complex work withcomplex work withmany exceptionsmany exceptions

(2)(2)Flexible flows withFlexible flows withsome dominantsome dominantpaths, moderate jobpaths, moderate jobcomplexity withcomplexity withsome exceptionssome exceptions

(3)(3)Line flows, routineLine flows, routinework easilywork easilyunderstood byunderstood byemployeesemployees

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Less Customer Contact and CustomizationLess Customer Contact and Customization

Service PackageService Package


Service Process Structures in Service Process Structures in the Financial Services Industrythe Financial Services Industry

Hybrid OfficeCreation of quarterlyperformance report

• Data obtained electronically

• Report calculated using standardized process

• Report reviewed using standardized diagnostic systems

• Manager provides written analysis and recommendations in response to individual employee performance

• Manager meets with employee to discuss performance

Back OfficeProduction of

monthly client fund balanced report

• Data obtained electronically

• Report run using standardized process

• Results checked for “reasonableness” using well-established policies

• Hard copies and electronic files forwarded to analysts

• Process repeated monthly with little variation


Front OfficeSale of financial

services

• Research customer finances

• Work with customer to understand customer needs

• Make customized presentation to customer addressing specific customer needs

• Involve specialized staff offering variety of services

• Continuing relationship with customer, reaction to changing customer needs


Process Repositioning at a RestaurantProcess Repositioning at a RestaurantHigher Complexity/DivergenceHigher Complexity/Divergence Current ProcessCurrent Process Lower Complexity/DivergenceLower Complexity/Divergence


Specific table selection Take reservations No reservations

Recite menu, describe entrees and specials

Seat guests, give menus

Self-seating, menu on blackboard

Assortment of hot breads and hors d’oeuvres

Serve water and bread

Eliminate

Maitre d’ takes personally at table

Individually prepared at table

Expand to 20 choices; add flaming dishes, bone fish at table, prepare sauces at table

Expand to 12 choices

Add exotic coffees, liqueurs

Take orders

Salad (4 choices)

Entrée (15 choices)

Dessert (6 choices)

Beverage (6 choices)

Customer fills out form

Already prepared, no choice

Limit to 4 choices

Sundae bar, self-service

Coffee, tea, milk only

Separate course services, sherbet between courses; hand grind pepper

Serve ordersServe salad and entrée together, bill and beverage together

Choice of payment, including house accounts; serve mints

Collect payment Cash only, pay when leaving



Product-Process Matrix for ProcessesProduct-Process Matrix for Processes

(1)(1) (2)(2) (3)(3) (4)(4) (5)(5)One of a kindOne of a kind Low volume,Low volume, MultipleMultiple Few majorFew major High volumeHigh volumeproducts, madeproducts, made lowlow productsproducts products,products, highhighto customer to customer standardizationstandardization moderate moderate higherhigher standardization,standardization,orderorder volumevolume volumevolume commoditycommodity

productsproducts

ProcessProcessCharacteristicsCharacteristics

(1)(1)Complex and Complex and highly customized highly customized process, unique process, unique sequence of taskssequence of tasks

(2)(2)Jumbled flows, Jumbled flows, complex work with complex work with many exceptionsmany exceptions

(3)(3)Disconnected line Disconnected line flows, moderately flows, moderately complex workcomplex work

(4)(4)Connected line, Connected line, routine workroutine work

(5)(5)Continuous Continuous flows, highly flows, highly repetitive workrepetitive workL

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Less Customization and Higher VolumeLess Customization and Higher Volume

Product DesignProduct Design

Continuousprocess

Projectprocess

Lineprocess

Batchprocess

Jobprocess


Automobile Assembly Automobile Assembly ProcessProcess

A: Front-end body-to-chassis assembly

H: Hood attachmentF: Fluid fillingS: Start-up testing

A SH F

Midsized

6 cylinderMidsized 6 cylinder

Compact 4 cylinderCompact

4 cylinder



The Big PictureThe Big PictureKing Soopers BakeryKing Soopers Bakery


The Big PictureThe Big PictureKing Soopers BakeryKing Soopers Bakery7000

loaves/hr

1000 pastries/hr

50 cakes/hr

Bread line

Pastry line

Cake line

High Low



Vertical IntegrationVertical Integration

KingSoopers

In-houseIn-houseprocessesprocesses

BackwardBackwardintegrationintegration

Raw materials(eggs, flour, sugar)

ForwardForwardintegrationintegration

Customers(grocery stores)



Costs and VolumeCosts and Volume

FF22

FF11


Process 1:Process 1:General-purposeGeneral-purposeequipment equipment

Process 2:Process 2:Special-purposeSpecial-purposeequipmentequipment

Break-even Break-even quantityquantity

Units per year (Q)Units per year (Q)

To

tal

cost

(d

oll

ars)

To

tal

cost

(d

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ars)


Decision Patterns for Service Decision Patterns for Service ProcessesProcesses

High ContactHigh Contact Customer ContactCustomer Contact Low ContactLow Contact


1. Process Structure

Back office Low complexity, low divergence, and line flows

Front officeHigh complexity, high divergence, and jumbled flows

Varies Varies5. Capital intensity

High Low4. Resource flexibility

Varies Varies3. Vertical integration

High Low2. Customer involvement


Decision Patterns for Decision Patterns for Manufacturing ProcessesManufacturing Processes

High VolumeHigh Volume Customer ContactCustomer Contact Low VolumeLow Volume


1. Process Structure

Project or job process High complexity, high divergence, and diverse flows

Line or continuous processLow complexity, low divergence, and line flows

High Low5. Capital intensity

Low High4. Resource flexibility

High Low3. Vertical integration

Low High2. Customer involvement


Custom Molds Plant LayoutCustom Molds Plant Layout

Dock Dock

Lunch room

Cut and trim

Receiving rawmaterials inventory

Dry mix

Assembly

Wet mix

Offices

Packing and shippingfinished goods

inventory

Testing andinspection

Injection machines

Mold fabrication


Ch03

Business

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