Operations
Management
Process Strategy
Chapter 7
7-1
Outline
Four Process Strategies.

Process Focus.

Repetitive Focus.

Product Focus.

Mass Customization Focus.
Service Process Design.
Process Reengineering.
7-2
Process Strategy
 How to produce a product or provide a
service.
 Objective:

Meet or exceed customer requirements.

Achieve competitive advantage.
 Has long-run effects:

Product & volume flexibility.

Costs & quality .
7-3
Four Process Strategies
 Four process strategies:

1. Process focused.

2. Product focused.

3. Repetitive focused.

4. Mass customization.

Summary: Table 7-2.
 Several strategies may be used within one facility.
 Process strategies follow a continuum.
7-4
Fit of Process, Volume, and Variety
High Volume
Low Volume
PROCESS FOCUS
Small production runs (job shops, printing)
High Variety
MASS
CUSTOMIZATION
(Dell Computer)
(allows customization)
REPETITIVE FOCUS
(autos, motorcycles)
Low Variety
Long production runs
(standardization)
PRODUCT FOCUS
(steel, chemicals)
POOR STRATEGY
7-5
1. Process Focus Examples
Hospital
Machine
Shop
7-6
Bank
Process Focus
 Facilities organized by process.

Similar processes or equipment grouped together.
(Example: All drill presses are together.)
 Low volume, high variety products.

75% of all global products.
 Products follow many different paths.
 Other names:

Intermittent process.

Job shop.
7-7
1
2
3
4
Process Focus - Pros & Cons
 Advantages:
Greater product flexibility.
 More general purpose equipment.
 Lower initial capital investment.

 Disadvantages:




High variable cost per unit.
More highly trained personnel.
More difficult production planning & control.
Low equipment utilization (5% to 25%).
7-8
2. Product Focus Examples
Soft Drinks
(Continuous,
then Discrete)
Light Bulbs
(Discrete)
.
Paper (Continuous)
7-9
Product Focus
 Facilities organized by product.
 High volume, low variety products.
 Long, continuous production runs.

Discrete unit manufacturing.

Continuous process manufacturing.
 Other names:

Line flow production.

Continuous production.
1
7-10
2
3
4
Product Focus: Steel Plant
7-11
Product Focus - Pros & Cons
 Advantages:

Lower variable cost per unit.

Lower but more specialized labor skills.

Easier production planning and control.

Higher equipment utilization (70% to 90%).
 Disadvantages:

Lower product flexibility.

More specialized equipment.

Higher capital investment.
7-12
3. Repetitive Focus - Examples
Fast
Food
Clothes
Dryer
McDonald’s
over 95 billion served
Truck
7-13
Repetitive Focus
 Facilities often organized by assembly lines.
 Characterized by modules.

Parts & assemblies made previously.
 Modules combined for many output options.
 Other names:

Assembly line.

Production line.
7-14
Repetitive Focus - Harley Davidson
7-15
Repetitive Focus - Considerations
More structured than process focus, less
structured than product focus.
Enables quasi-customization.
Has advantages and disadvantages of
process focus and product focus.
7-16
Process Continuum
Process Focused
(intermittent process)
Repetitive
Focus
(assembly line)
Product Focused
(continuous
process)
Continuum
High variety, low volume
Low utilization (5% - 25%)
General-purpose equipment
Modular
Flexible
equipment
7-17
Low variety, high volume
High utilization (70% - 90%)
Specialized equipment
Increasing Product Variety
Early
1970s
Item
Vehicle models
Vehicle styles
Software titles
Web sites
Movie releases
New book titles
TV channels
Breakfast cereals
Items in supermarkets
Early
2000s
140
260
18
1,212
0
300,000
0 >30,000,000
267
458
40,530
77,446
>300
5
160
340
150,000
14,000
7-18
4. Mass Customization
Rapid, low-cost production to fulfill unique
customer desires.
Distinctions between process, repetitive and
product focus blur, making variety and
volume issues less significant.
Very hard to achieve!
7-19
Mass Customization at Dell
Computer Company
Sells custom-built PCs directly to consumer.
Builds computers rapidly, at low cost, and only
when ordered.
Operates with six days inventory.
Integrates the Web into every aspect of business.
Research focus on software to make installation
and configuration of PCs fast and simple.
7-20
Process Analysis and Design
Process should:
 Be designed to achieve competitive advantage:
 Differentiation.
 Response.
 Low cost.
 Eliminate steps that do not add value.
 Maximize value, as perceived by the customer.
7-21
Tools for Process Design
Flow Diagrams - Figures 7.2, 7.3, 7.4
Process Charts - Figure 7.8
Time-Function/Process Mapping - Figure 7.7
Service Blueprint - Figure 7.9
7-22
Process Design for Services
 Consider customization and labor intensity.
 Degree of customization.

High: Focus on specialization (equipment, training, etc.).

Low: Focus on standardization and automation.
 Degree of labor intensity.

High: Focus on personalization & human resources
(selection, training, etc.)

Low: Use technology and automation.
7-23
Process Design for Services
Degree of Customization
Degree of Labor Intensity
High
Low
Low
Mass Service
High
Professional Service
Personal
banking
Commercial
Banking
General purpose
law firms
Boutiques
Retailing
Service Factory
Warehouse and
catalog stores
Law clinics
Service Shop
Fine dining
restaurants
Fast food
restaurants
Vending
machines
7-24
Improving Service Productivity Table 7.3
 Separation: Different services in different places.
 Self-service: Customers serve themselves.
 Postponement: Customize at delivery.
 Focus: Restrict offerings.
 Automation: Automate where appropriate.
 Scheduling: Precise personnel scheduling.
7-25
Technology - Automation
 Production.

CNC (Computer Numerical Control), Robots and FMS
(Flexible Manufacturing Systems).
 Automatic Identification.

Bar coding and RFID (Radio Frequency IDentification).
 Warehousing.

ASRS (Automated Storage and Retrieval) and AGVs
(Automated Guided Vehicles).
 Integration – CIM (computer integrated manufacturing)
7-26
Process Reengineering
Fundamental rethinking and radical redesign
of business processes.

To produce dramatic improvements in performance.
Re-examine the basic process and its
objectives:

Re-evaluate the purpose of the process.

Question underlying assumptions.
Focus on activities that cross boundaries.
7-27