CHAPTER 5
Manufacturing and
Service Process
Structures
McGraw-Hill/Irwin
Copyright © 2014 McGraw-Hill Higher Education. All rights reserved.
Learning Objectives
LO5-1 Compare and contrast the process structures
LO5-2 Compare and contrast the goals and
challenges associated manufacturing and
service processes
LO5-3 Describe how and why each of the operations
layouts is designed
LO5-4 Analyze a product layout using line balancing
LO5-5 Explain how technology is used in the supply
chain
LO5-6 Use indifference analysis in process selection
decisions
5–2
1
Process Design at Noodles & Co.
quick
fresh
high
quality
LO5‐1
5–3
Product-Process Matrix
Figure 5-1
LO5‐1
5–4
2
Comparison of Process Types:
Project
Output
•
•
Example
• Custom home
• Designing a video game
Process
•
•
•
•
Unique sequencing
High complexity
Employees and equipment flexibility
Activities outsourced to specialists
LO5‐1
5–5
Comparison of Process Types:
Job Shop
Output
LO5‐1
•
Example
• Auto repair
• Beauty salon
• Copy shop
Process
•
•
•
•
•
High variety of inputs and process flows
Job sequencing is challenging
High work-in-process inventory
Highly skilled, flexible workers
General-purpose equipment
5–6
3
Comparison of Process Types:
Batch
Output
Example
Process
•
• Bakery
• Automotive parts
• Cinema
•
•
•
•
Dominant flow patterns
Some common inputs
Setup time can be high
Moderately flexible employees and
equipment
LO5‐1
5–7
Comparison of Process Types:
Repetitive Process
Output
LO5‐1
•
Example
• Appliances
• Automobiles
• Buffet restaurant
Process
• All products follow the same sequence
• Standard methods and materials are used
• Low-skilled workers specialize in
completing a limited number of activities
5–8
4
Comparison of Process Types:
Continuous Process
Output
•
Example
• Aluminum cans
• Laundry detergent
• Gasoline
Process
•
•
•
•
•
LO5‐1
Products follow sequence
Operations often run 24/7
Line stoppages are very costly
Highly specialized equipment
Low-skilled operators
5–9
Activity
Companies focusing on different competitive
priorities can use different process structures for
the same type of product. One example is
clothing—off-the-rack compared to custom
tailored. Identify a product and competitors who
are using different competitive priorities. What
position on the product-process matrix would you
expect for each?
LO5‐1
5–10
5
Process Structure and Market
Orientation
• ________________________: unique,
customized products
• ________________________: similar
design, customized during production
• ________________________: produced
from standard components and modules
• ________________________: goods
made and held in inventory in advance of
customer orders
LO5‐1
5–11
Service Process Matrix
LO5‐2
5–12
6
Activity
Think of the last service you purchased:
• What category was it?
• What changes can you suggest to move
it to another category?
• What could be the advantages of the
changes?
LO5‐2
5–13
Service Blueprinting
• _________________: all actions done by
customers during service delivery
• _________________: employee actions in the
face-to-face encounter
• _________________: behind the scenes activities
• _________________: activities necessary for the
service, done by employees without direct
customer contact
• _________________: tangibles the customers see
or collect from the organization
LO5‐2
5–14
7
Service Blueprinting
LO5‐2
5–15
Operations Layout
• _____________: product
cannot be moved during
production
• _____________: groups
together similar resources
• _____________:
resources arranged by
regularly occurring
sequence of activities
LO5‐3
5–16
8
Line Balancing in Product Layouts
Used to assign individual tasks to work areas for
a desired output rate
1. Determine precedence relationships
2. Calculate Takt time 
available production time per day
output needed per day
3. Determine minimum number of work stations
4. Determine efficiency
LO5‐4
5–17
Line Balancing: Example
LO5‐4
5–18
9
Supply Chain Technologies
Decisions Support
• Computing power and data management
Processing
• Material and data processing
Communications
• Greater connectivity
Integrative
• Combine all other capabilities
LO5‐5
5–19
Supply Chain Technologies
LO5‐5
5–20
10
Indifference Analysis: Example
A pizza company has variable costs (VC) of $3.00 per
pizza, and fixed costs (FC) of $30,000 per year. The
average selling price is $8.00 per pizza. With a new
process, fixed costs would increase to $42,000 per
year but variable costs decrease to $2.00 per pizza.
What should they do?
LO5‐6
5–21
Manufacturing/Service Process
Summary
1. Product-process matrix classifies processes based on
volume and variety
2. Service are categorized by customization and
labor/capital intensity
3. Services processes can be front or back office
4. Layouts should fit with processes used
5. Process automation and technology affects costs and
capabilities
5–22
11