Process Strategy
Overview
 Process
strategies
 Service process design
 Process Analysis And Design
 Flow
charts
 Service system mapping
 Time-Function Mapping
 Value Stream Mapping
 Process Charts
 Service Blueprinting
Announcements
We
will not cover all of
chapter 7.
We
will concentrate on
pp. 254-270
Process, Volume, and Variety
Volume
Low
Volume
High Variety
High
Volume
Process Focus
job shops
(machine, print,
carpentry)
Standard Register
Mass
Customization
Dell
Repetitive
(autos,
motorcycles)
Harley Davidson
Low Variety
Poor Strategy
(Both fixed and
variable costs
are high)
Product Focus
(commercial
baked goods,
steel, glass)
Nucor Steel
Comparison of process strategies
Project
Flow
Flexibility
Variety
Capital investment
Variable cost
Labor content
Labor skill
Volume
Job-shop Batch
Asembly
Continuous
Process Strategies

A continuum

Within a given facility, several or blend of
strategies may be used

These strategies are often classified as:
Process-Focused
Job Shop
RepetitiveFocused
Product-Focused
Batch Continuum Assembly
Continuous
Process-Focused Strategy Examples
© 1995 Corel Corp.
Machine
Shop
Process-Focused Strategy
 Job
shop
 Facilities are organized by process
 Similar processes are together

Example: All drill presses are together
 Low
volume, high variety products
 ‘Jumbled’ flow
Product A
Operation
1
Product B
2
3
Process Focused Strategy -Characteristics
Positives
Greater
product flexibility
More general purpose equipment
Lower initial capital investment
Negatives
More
highly trained personnel
More difficult production planning
& control
Low equipment utilization (5% to
25%)
Repetitive-Focused Strategy - Examples
Fast
Food
Clothes
Dryer
McDonald’s
over 95 billion served
Truck
© 1995 Corel Corp.
© 1984-1994 T/Maker Co.
© 1995 Corel Corp.
Repetitive Focused Strategy
Assembly
line / Production
line
Facilities often organized by
assembly lines
Characterized by modules
 Parts
& assemblies made
previously
Modules
combined for many
output options
Repetitive Focused Strategy - Characteristics
 More
structured than processfocused, less structured than
product focused
 Enables
 Using
quasi-customization
modules, it enjoys economic
advantage of continuous process,
and custom advantage of lowvolume, high-variety model
Assembly process
Frame tube
bending
Frame-building
work cells
Frame
machining
Hot-paint
frame painting
THE ASSEMBLY LINE
TESTING
28 tests
Incoming parts
Air cleaners
Oil tank work cell
Fluids and mufflers
Shocks and forks
Fuel tank work cell
Handlebars
Wheel work cell
Fender work cell
Engines and
transmissions
From Milwaukee
on a JIT arrival
schedule
Roller testing
Crating
Figure 7.3
Product-Focused Examples
Soft Drinks
(Continuous,
then Discrete)
© 1995 Corel
Corp.
Light Bulbs
(Discrete)
© 1995 Corel Corp.
© 1984-1994 T/Maker Co.
Paper (Continuous)
Nucor Steel Plant – continuous process
D
Continuous caster
Nucor Steel Plant
C
Scrap
steel
A
B
Ladle of molten steel
Continuous cast steel
sheared into 24-ton slabs
Hot tunnel furnace - 300 ft
E
F
Hot mill for finishing, cooling, and coiling
H
I
G
Electric
furnace
Product-Focused Strategy
 Continuous
production
 Facilities are organized by product
 High volume, low variety products
 Where found
Discrete unit manufacturing
 Continuous process manufacturing

Products A & B
1
2
Operation
3
Product-Focused Strategy - Characteristics
 Positive
 Lower
variable cost per unit
 Lower but more specialized labor skills
 Easier production planning and control
 Higher equipment utilization (70% to
90%)
 Negative
 Lower
product flexibility
 More specialized equipment
 Usually higher capital investment
Process Design
Variety of Products
High
Customization at high
Volume
Process -focused
Job Shops
(Print shop, emergency
room , machine shop,
fine dining
Mass Customization
(Dell Computer’s PC)
Repetitive (modular)
focus
Assembly line
Moderate
(Cars, appliances, TVs,
fast -food restaurants)
Product -focused
Continuous
(steel, beer, paper, bread)
Low
Low
Moderate
Volume
High
Comparison of process strategies
Project
Job-shop Batch
Assembly Continuous
Flow
None
Continuous
Flexibility
High
Low
Variety
High
Low
Capital investment
Low
High
Variable cost
High
Low
Labor content
High
Low
Labor skill
High
Low
Volume
Low
High
Mass Customization
 Using
technology and imagination
to rapidly mass-produce products
that cater to sundry unique
customer desires.
 Under
mass customization the
three process models become so
flexible that distinctions between
them blur, making variety and
volume issues less significant.
Mass Customization - More
Choices Than even
Item
Vehicle models
Vehicle styles
Bicycle types
Software titles
Web sites
Movie releases
New book titles
Houston TV channels
Breakfast cereals
Items in supermartkets
Early
1970s
Late
1990s
140
18
8
0
0
267
40,530
5
160
14,000
260
1,212
19
380,000
9,865,982
458
77,446
851
340
20,000
Service Process Matrix
Degree of Customization
High
Low
Mass Service
Professional Service
Private
banking
Commercial
banking
Degree of Labor
High
Full-service
stockbroker
Generalpurpose law firms
Boutiques
Retailing
Service Factory
Law clinics
Service
Specialized
Limited-service
hospitals
stockbroker
Low
Warehouse and
catalog stores
Fast food
restaurants
Airlines
No frills
airlines
Fine-dining
restaurants
Shop
Hospitals
Service Process Matrix
Degree of Customization
Low
Mass Service
Degree of Labor
High
Professional Service
Retailing
Doctors
Wholesaling
Lawyers
Schools
Accountants
Commercial banking
Architects
Service Factory
Low
High
Service Shop
Airlines
Hospitals
Trucking
Auto repair
Hotels
Other repair services
Degree of Labor
Service Process Matrix
Degree of Customization
High
Low
High
Low
Mass
Service
Professional
Service
Service
Factory
Service
Shop
Challengers for Managers in
High labor intensity services:
•Hiring, training
•Methods development
•Employee welfare
•Scheduling workforces
•Control of far-flung locations
•Managing growth
Degree of Labor
Service Process Matrix
Degree of Customization
High
Low
High
Low
Mass
Service
Professional
Service
Service
Factory
Service
Shop
Challengers for Managers in
Highly customized services:
• Fighting cost increase
• Maintaining quality
• Reacting to consumer
intervention in process
• Managing flat hierarch with
loose subordinates/superior
relationships
• Gaining employee loyalty
Degree of Labor
Service Process Matrix
Degree of Customization
High
Low
High
Low
Mass
Service
Professional
Service
Service
Factory
Service
Shop
Challengers for Managers in
low labor services:
• Capital decisions
• Technological advances
• Managing demand to avoid
• Scheduling service delivery
Degree of Labor
Service Process Matrix
Degree of Customization
High
Low
High
Low
Mass
Service
Professional
Service
Service
Factory
Service
Shop
Challengers for Managers in
Low customization
services:
• Marketing
• Making service ‘warm’
• Attention to physical
surroundings
• Managing fairly rigid hierarchy
wit need for standard
operating procedures
To summarize:
 Products
 Job-shop
process
 Batch/assembly process
 Continuous/line process
 Mass customization
 Services
 Service
Factory
 Service Shop
 Mass service
 Professional service
What is a Business Process?
Traditional Process definition in OM literature
A process specifies the transformation of inputs to outputs
Inputs
Process
Outputs
The transformation model of a process
Different types of transformations
• Physical (Ex. raw material  finished product)
• Locational (Ex. flying from Denver to L.A.)
• Transactional (Ex. depositing money in a bank)
• Informational (Ex. accounting data  financial statement)
What is a Business Process?
A more comprehensive process definition
A business process is a network of connected activities
and buffers with well defined boundaries and
precedence relationships, which utilize resources to
transform inputs into outputs with the purpose of
satisfying customer requirements
Resources
Process
Suppliers
Inputs
Outputs
Customers
Illustration: Process Types and Hierarchies
CEO
Marketing
Operations
Accounting
Buying a TV
commercial
Order Request
Individual process
Production planning
Vertical process
Order Fulfilled
Horizontal process
Understanding the Existing Process
• Questions to answer
 What is the existing process doing?
 How well does it perform?
 What are the critical issues that impact the
process performance?
• Important to understand the process but do
not overanalyze it in order to avoid
“analysis paralysis”
– Becoming so familiar with the process it is
impossible to think of new ways of doing it
Understanding the Existing Process
1.Describe the process architecture
 Inputs/outputs
 Flow units
 Resources
 Network activities and buffers
 Information system
2.Identify the process owner/stakeholders
3.Understand the customer
Describe the process architecture
Inputs and Outputs
• Identify the process boundaries  easy
to identify the Input consumed from the
environment in order to produce the
desired Output
• Process inputs and outputs can be
– Tangible (Ex. raw material, cash,
products, customers)
– Intangible (Ex. Information, time,
energy, services)
Describe the process architecture
Flow units
• A flow unit is a transient entity or a job
that proceeds through the network of
activities and buffers and exits the
process as a finished output
• Typically, the identity of a flow unit
changes across the process
• Examples of common flow units:
materials, orders, files, documents,
customers, products, cash, transactions…
Describe the process architecture
Transformational activities
• The work performed on a job moving
through a process can be divided into an
ordered sequence of activities
• The buffers represent storage or waiting
points where the job waits before moving
to the next activity (queues, waiting rooms,
etc.)
• Different types of jobs  different paths
through the network
Describe the process architecture
Resources
• Tangible assets utilized to perform
activities in a process
• Can be divided into:
• Capital assets – real estate, machinery,
equipment, IT systems…
• Labor – people and their knowledge
and skills
• Resources are utilized while inputs are
consumed
Describe the process architecture
Information structure
• Specifies the information required for
making decisions and performing
activities in a process
• Limited information availability is a
common cause for process
inefficiencies Airport Buzz Group
– Information enables coordination!
The 5w2h framework – use to describe a process
Classification
5w2h
questions
Description
People
Who?
Who is performing the activity?
Why is this person doing it?
Could/Should someone else perform the activity?
Subject
matter
What?
What is being done in this activity?
Can the activity in question be eliminated?
Sequence
When?
When is the best time to perform this activity?
Does it have to be done at a certain time?
Location
Where?
Where is this activity carried out?
Does it have to be done at this location?
Purpose
Why?
Why is this activity needed?
Clarify its purpose.
Method
How?
How is the activity carried out?
Cost
How much? How much does it currently cost?
Process Analysis Tools
 Flowcharts provide a view of the big
picture
 Time-function mapping adds rigor and a
time element
 Value stream analysis extends to
customers and suppliers
 Process charts show detail
 Service blueprint focuses on customer
interaction
Flow Charts

One of the fundamental graphical tools for
process analysis and design



Typically depicts activities sequentially from left to right
Can help to identify, loops, multiple alternative paths,
decision points etc.
Symbols to use in flow charting
Operation
Storage
Transportation of a
physical item
Inspection
Delay
Transportation of
information
Illustration of a Sample Flow Chart
Order waits
for sales rep.
Operator
takes phone
order.
Orders wait
to be picked
up.
Orders
wait for
supervisor.
No
Is order
complete?
Orders are
moved to
supervisor’s
in-box.
Supervisor
inspects
orders.
Yes
Order is
fulfilled.
Existing claims process for auto glass
1.
2.
3.
4.
5.
Client notifies a local agent that she wishes to file a claim. She is given a
claims form and is told to obtain a cost estimate from a local glass vendor.
When the claims form is completed the local agent verifies the information
and forwards the claim to a regional processing center.
The processing center logs the date and time of the claim’s arrival. The data
is entered into a computer-based system (for record keeping only) by a clerk.
The claim is then placed in a hard copy file and passed on to a claims
representative.
a) If the claims representative is satisfied with the claim it is passed along to
several others in the processing chain and eventually a check is issued and
sent to the client.
b) If there are problems with the claim the representative mails it back to the
client for necessary corrections.
When the client receives the check she can go to the local glass vendor and
replace the glass.
Flow Chart of Auto glass insurance claims process
10. Attach
Form
4. Is Claim
Form
correct?
11. Mail to
customer
11
9. Problems
with Claim?
10
9
4
1
3
2
1. Client notifies
local agent and
is given Claim
Form
3. Agent verifies
accuracy of
Claim Form
2. Client obtains
estimate and
completes
Claim Form
5
6
7
6. Processing enters
date, time and
contents into
computer and creates
hardcopy
5. Form forwarded
to Regional
Processing Center
8
8. Routed to a
Claims Rep.
7. Routed to a
Claims Rep.
12
13
14
13. Issue check
to customer
12. Route to
Accounts Payable
15
15. Have
glass repaired
at local
vendor
14. Mail check
to customer
Service System Mapping (I)
 An
extension of traditional flowcharting
 Documents
the role played by the customer in
the service delivery process
A
combination of service blue printing and
traditional flowcharting
 Build
consistent perceptions of customer’s
experience with core processes
 Identify
all points of contact between the
process and its customers
 Identify
opportunities within the process
Service System Mapping
 SSM Horizontal Bands
 The purpose is to organize activities
according to the people or “players in the
process. – Who does what?
 An
1.
2.
3.
4.
5.
SSM typically consists of 5 bands
Customer band – end user
Frontline or distribution channel band
Back-room activity band
Centralized support or information systems
band
Vendor or supplier band
SSM Journal Paper Submissions
1.
2.
3.
4.
5.
6.
7.
Authors send manuscripts to
the Journal Editorial Office
(JEO).
JEO sends a letter of
acknowledgement and sends
manuscript to editor-in-chief
(EIC)
EIC selects associate editor
(AE) to handle manuscript
and notifies JEO
JEO sends manuscript to AI
AE reads manuscript and
selects 2 referees. AE
notifies JEO.
JEO sends copies to
referees
Referees review and send
reports to JEO.
8.
9.
10.
11.
12.
13.
14.
15.
JEO forwards reports to AE
AE reads reports and
decides reject, accept,
revise. Decision sent to
JEO.
If rejected, JEO sends letter
to authors.
If accepted, JEO forward
manuscript to production.
JEO notifies authors and
EIC.
If revise, JEO forwards
reports to authors.
Authors revise and resubmit
to JEO.
JEO sends resubmit to AE
AE decides accept or 2nd
review
SSM Journal Paper Submissions
Author
1
13
Acknowledge
JEO
EIC
AE
2
Revision
4
6
8
10
14
Accepted
Further
reviewing
3
5
9
15
Accepted
Referees
7
Production
Time-Function Mapping or Process Mapping
Customer
Order
product
Sales
Process
order
Production
control
Receive
product
Wait
Plant A
Print
Warehouse
Wait
Wait
Extrude
Plant B
Move
Transport
Figure 7.7
Wait
12 days
13 days
1 day
4 days 1 day 10 days
52 days
Move
1 day
0 day
1 day
Time-Function Mapping or Process Mapping
Customer
Order
product
Sales
Process
order
Production
control
Receive
product
Wait
Plant
Print
Extrude
Warehouse
Wait
Transport
Move
1 day
Figure 7.7
2 days
1 day
6 days
1 day
1 day
Process chart symbols
Process chart: Requisition for petty cash
IBM Credit Process Flow
Field sales personnel called in requests for financing to a group of 14
people.
2. The person taking the call logged information on a piece of paper.
3. The paper was taken upstairs to the credit department
4. A specialist:
1.
a)
b)
5.
Entered the information into a computer system
Did a credit check
The results of the credit check were:
a)
b)
Written on a piece of paper
Sent to the business practices department
Standard loan contracts were modified to meet customer requirements
7. The request was
6.
a)
b)
8.
Sent to a ‘pricer’
‘Pricer’ determined interest rate
The interest rate was
a)
b)
Written on a piece of paper
Sent to a clerical group
A quote was developed
10. The quote was sent to filed sales via FedEx
9.
IBM Credit Process Activity Chart
Description
Time
Value code
[V/N/C]
1
Field sales personnel call in
requests
120
V
2
Agent logs info on paper
3
N
10
N
1,440
N
10
C
60
N
10
N
No.
3
4
5
6
7
8
9
10
11
Paper taken to Credit
Department
Specialist enters info in
computer
Specialist does a credit
check
Results written on piece of
paper
Paper sent to Business
Practices Department
Loan contracts modified to
meet requirements
Request sent to Pricer
Pricer determines interest
rate
Pricer writes interest rate
on piece of paper
Symbol
Symbols
Operation
Inspection
Storage
Delay
20
V
10
N
320
C
2
N
12
Paper sent to clerical group
10
N
13
Quote is developed by clerks
15
V
14
Quote sent to Field Sales
10
N
Transportation
Service Blueprint
 Focuses on the customer and
provider interaction
 Defines three levels of
interaction
 Each level has different
management issues
 Identifies potential failure
points
Service Blueprint
 Defines three levels of
interaction
 Activities under the control
of the customer
 Interaction between the
customer and service
provider
 Activities performed
invisibly to the customer
Service Blueprint
Personal Greeting
Level
#1
Service Diagnosis
Perform Service
Customer arrives
for service
Warm greeting
and obtain
service request
Customer departs
Determine
specifics
No
Standard
request
Level
#2
Friendly Close
Direct customer
to waiting room
Can
service be
done and does
customer
approve?
Yes
Level
#3
Potential failure point
Yes
Notify
customer
and recommend
an alternative
provider
Customer pays bill
No
Notify
customer the
car is ready
Perform
required work
Prepare invoice