Chapter 7
Process Selection, Design,
and Improvement
MGMT 300
DR. XUEMEI SU
1
OUTLINE
 Describe the four types of processes
 Explain the product-process matrix
 Explain the service-positioning matrix
 Describe how to apply process and value stream mapping for process design
 Explain mistake proofing in process and product design
 Explain how to improve process design using process and value stream maps.
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Major Types of Goods and Service
Custom or make-to-order
• Produced and delivered as one-of-a-kind or in small quantities
• Designed to meet specific customers’ specifications
Option or assemble-to-order
• Configurations of standard parts, subassemblies, or services that can
be selected by customers from a limited set
Standard or make-to-stock
• Made according to a fixed design, and the customer has no options
from which to choose
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Question:
Subway’s sandwich process is best described as?
a) custom or make-to-order
b) option or assemble-to-order
c) standard or make-to-stock
d) a value (supply) chain
Answer:
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Types of Processes
Projects
• Large-scale, customized initiatives that consist of smaller tasks and
activities that must be coordinated and completed to finish on time and
within budget.
Job Shop
• Organized around particular types of general-purpose equipment that are
flexible and capable of customizing work for individual customers.
Flow Shop
• Organized around a fixed sequence of activities and process steps, such as
an assembly line, to produce a limited variety of similar goods or services.
Continuous Flow
• Creates highly standardized goods or services, around the clock in very
high volumes.
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Characteristics of Different Process Types
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Question:
An accounting firm specializing in standard EZ tax returns filed online with a similar
sequence of steps is best described as what type of process?
a) Project
b) Job shop
c) Flow shop
d) Continuous flow
Answer:
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Product Life Cycle
 A characterization of product growth, maturity, and decline over time.
 Four phases:




Introduction
Growth
Maturity
Decline and turnaround
 A product’s life cycle has important implications in terms of process design and
choice.
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The Product-Process Matrix
 Alignment of process choice with the characteristics of the manufactured good
 Appropriate match between type of product and type of process occurs along the
diagonal in the product-process matrix.
 As one moves down the diagonal, the emphasis on both product and process
structure shifts from low volume and high flexibility to higher volume and more
standardization.
 If product and process characteristics are not well matched, the firm will be unable
to achieve its competitive priorities effectively.
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The Product-Process Matrix
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The Service-Positioning Matrix
 The product-process matrix does not transfer well to service businesses and processes
as the relationship between volume and process is not found in many service
businesses.
 Similar to the product-process matrix
 Nature of the customer’s desired service encounter activity sequence should lead to
appropriate service system design and that superior performance results by staying
along the diagonal of the matrix
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The Service-Positioning Matrix
 Pathway: a unique route through a service system.
 Customer-routed services: offer customers broad freedom to select the pathways that
are best suited for their immediate needs and wants from many possible pathways
through the service delivery system.
 Provider-routed services: constrain customers to follow a very small number of
possible and predefined pathways through the service system.
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The Service-Positioning Matrix
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Question:
Using the service-positioning matrix, a limited number of customer pathways and highly
repeatable service encounter activity sequences would best relate to?
a) being below the diagonal
b) continuous flow processes
c) customer-routed services
d) provider-routed services
Answer:
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Process Design
 The goal of process design is to create the right combination of equipment, labor, software,
work methods, and environment to produce and deliver goods and services that satisfy both
internal and external customer requirements.
 Process design can have a significant impact on cost (and hence profitability), flexibility
(the ability to produce the right types and amount of products as customer demand or
preferences change), and the quality of the output.
 Four levels:
 Task
 Activity
 Process
 Value Chain
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Level of Process Design
Task
• Specific unit of work required to create an output
Activity
• Group of tasks needed to create and deliver an
immediate or final output
Process
• Group of activities
Value chain
• Network of processes
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The Hierarchy of Work and Cascading Flowcharts for Antacid Tablets
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Activities of Designing a Goods-producing
or Service-providing Process
 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
 Identify and define appropriate performance measures for the process
 Select the appropriate equipment and technology
 Develop an implementation plan to introduce the new or revised process design
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Process and Value Stream Mapping
 A Process Map (flowchart) describes the sequence of all process activities and tasks
necessary to create and deliver a desired output or outcome.
 A Process Boundary is the beginning or end of a process.
 The Value Stream refers to all value-added activities involved in designing, producing,
and delivering goods and services to customers.
 A Value Stream Map (VSM) shows the process flows in a matter similar to an ordinary
process map, but highlights value-added versus non-value-added activities, and
include costs associated with work activities for both value- and non-value-added
activities.
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Process Map for a Restaurant
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Value Stream Map for a Restaurant
 Chef’s value of time = $30 per hour
 Oven operating cost = $10 per hour
 Precooking order waiting = $5 per hour
 Postcooking order waiting = $60 per hour
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Mistake-Proofing Processes
Poka-yoke (POH-kah YOH-kay) is an approach for mistake-proofing processes using
automatic devices or simple methods to avoid human error. Poka-yoke is focused on two
aspects:
• prediction, or recognizing that a defect is about to occur and providing a warning
and
• detection, or recognizing that a defect has occurred and stopping the process.
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Process Analysis and Improvement
 Process design activities involve redesigning an existing process to improve
performance.
 Strategies to improve process designs usually focus on increasing revenue, agility, and
product and/or service quality, and decreasing costs, process flow time, and the carbon
footprint.
 Reengineering is defined as fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary measures of
performance.
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KEY TERMS
Custom or make-to-order,
Option or assemble-to-order,
Standard or make-to-stock,
Projects
Job shop processes
Flow shop processes
Continuous flow processes
Product-process matrix
Pathway
Customer-routed services
Provider-routed services
Task
Activity
Process
Process map (Flowchart)
Process boundary
Value stream mapping
Reengineering