Chapter 3
Process Planning and Design
Chapter 3: Process Planning and Design
1
Process Planning and Design
Chapter 2 identified the critical factors in
providing value to the customer. This
chapter discusses the selection and
design of the transformation process that
can deliver those factors—low cost, high
quality, enhanced functionality, speed,
and so on—in an efficient and effective
manner.
Chapter 3: Process Planning and Design
2
Introduction
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Fender's Custom Shop
Assembly line at IBM's plant in Charlotte,
North Carolina
Rickard Associates, an editorial production
company
Martin Marietta's aerospace electronics
manufacturing facility in Denver, Colorado
Nynex
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3
Examples

Examples illustrate several transformation systems.
The Fender Custom Shop is a job shop that has
specialized departments for routing, lathe operations,
inlaying, paint and finishing, and final assembly.
Because work is organized by the task performed,
Rickard Associates is also a job shop - even
though the work is not performed in one location.
Companies like Rickard that rely on information
technology to bring separated workers together are
referred to as virtual organizations. Martin Marietta
converted into focused factories. And assembly
lines like the one IBM uses are referred to as flow
shops.
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Fender’s Custom Shop
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Customers include Eric Clapton, John Deacon
(Queen), David Gilmour, Yngwie Malmsteen
and Stevie Ray Vaughn
Production Steps:
 computer controlled routers and lathes
shape guitar bodies and necks
 also have Neck Duplicator
 necks and bodies hand and machine
sanded
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Fender’s Custom Shop
continued
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detailed inlay work done with Hegner
precision scroll saw
paint and finishing operations in special
room where air is re-circulated 10
times/minute
buffed
hung up and seasoned for two weeks
final assembly by actual musicians
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IBM’s Charlotte, NC Plant
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Assembly line produces 27 significantly
different products
Products include hand-held bar-code
scanners, portable medical computers, fiberoptic connectors, and satellite communications
devices
“Kits” of parts delivered to workers
Computer screen displays assembly
instructions
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Rickard Associates
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Produces magazines and marketing materials
Only two of editorial production company’s
employees work at headquarters in NJ
Art director works in AZ
Editors are located in FL, GA, MI, and D.C.
Freelancers even more scattered
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Internet and AOL used to coordinate work
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Chapter 3: Process Planning and Design
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Martin Marietta Aerospace
Plant
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Originally set up as job shop with
numerous functional departments
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high WIP levels
long lead times
long travel distances
departmental barriers inhibited
communication
Plant subsequently arranged into three
focused factories
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Martin Marietta continued
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Each focused factory completed entire
electronic assembly for particular
application
Each focused factory treated as
separate business enterprise
Factory manager assigned to each
focused factory
“NFL draft” used to select worker teams
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10
Martin Marietta continued
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Within focused factories part families identified
based on technology and processes
Standard routings identified for each part
family
Improvements
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seven months of consecutive production with no
scrap
50% reduction in WIP
21% reduction in lead times
90% reduction in overtime
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Nynex
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Analyzed company in terms of four core
processes
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customer operations
customer support
customer contact
customer provisioning
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Nynex continued
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Obtained services of Boston Consulting
Group
Visited 152 companies to document best
practices
Estimated savings are $1.5 to $1.7
billion
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Variety of Transformation Systems
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Fender Custom Shop is job shop
Rickard Associates is job shop and is
also a virtual organization
Martin Marietta converted from a job
shop to focused factories
IBM uses a flow shop
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Transformation System Design and
Layout Analysis
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Transformation system design considers
alternative transformation forms and
selects best one given characteristics of
desired outputs.
Layout analysis seeks to maximize the
efficiency or effectiveness of operations.
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15
Forms of Transformation
Systems
Continuous Process
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16
Continuous Process
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Highly standardized products in large
volumes
Often these products have become
commodities
Typically these processes operate 24
hours/day seven days/week
Objective is to spread fixed cost over as
large a volume as possible
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Continuous Process continued
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Starting and stopping a continuous
process can be prohibitively expensive
Highly automated and specialized
equipment used
Layout follows the processing stages
Output rate controlled through
equipment capacity and flow mixture
rates
Chapter 3: Process Planning and Design
18
Continuous Process continued
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Low labor
requirements
Often one primary
input
Initial setup of
equipment and
procedures very
complex
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Forms of Transformation
Systems
Flow Shop
Chapter 3: Process Planning and Design
20
Flow Shop
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Similar to continuous process except
discrete product is produced
Heavily automated special purpose
equipment
High volume - low variety
Both services and products can use flow
shop form of processing
Chapter 3: Process Planning and Design
21
A Generalized Flow Shop Operation
Chapter 3: Process Planning and Design
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Advantages of the Flow Shop
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Low unit cost
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specialized high volume equipment
bulk purchasing
lower labor rates
low in-process inventories
simplified managerial control
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Disadvantages of Flow Shop
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Variety of output difficult to obtain
Difficult to change rate of output
Minor design changes may require
substantial changes to the equipment
Worker boredom and absenteeism
Work not very challenging
Vulnerable to equipment breakdowns
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Disadvantages of Flow Shop continued
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Line balanced to slowest element
Large support staff required
Planning, design, and installation very
complex task
Difficult to dispose of or modify special
purpose equipment
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Flow Shop Layout
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Objective is to assign tasks to groups
The work assigned to each group should
take about the same amount of time to
complete
Final assembly operations with more
labor input often subdivided easier
Paced versus unpaced lines
Chapter 3: Process Planning and Design
26
Line Balancing
available work time
Cycle time 
demand
number of theoretical workstations, N T   task times / cycle time
output
total task time
efficiency =

input ( N A stations)  cycle time
Chapter 3: Process Planning and Design
27
Line Balancing Example
Task Time Required Precedes
A
2.2 min.
B, C, D
B
3.4
E
C
1.7
E
D
4.1
F
E
2.7
F
F
3.3
G
G
2.6
-Chapter 3: Process Planning and Design
28
Line Balancing Example
continued
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Company operates one shift per day
Available time per shift is 450 minutes
Demand is 100 units/day
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Precedence Diagram
B
E
A
C
D
Chapter 3: Process Planning and Design
F
G
30
Calculations
cycle time = 450/75 = 6 minutes/part
NT = 20/6 = 3.33 = 4 stations
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Task Assignment
Time
Station Avail.
1
6.0
3.8
2
Elig.
Tasks
A
Will Task
Idle
Fit? Assign. Time
A
B,C,D B,C
B
0.4
C,D
--
--
6.0
C,D
C,D
D
1.9
C
C
C
0.2
E
--
--
Chapter 3: Process Planning and Design
0.4
0.2
32
Task Assignment continued
Time Elig.
Station Avail. Tasks
3
4
Will
Fit?
Task
Idle
Assign. Time
6.0
E
E
E
3.3
F
F
F
0.0
6.0
G
G
G
3.4
Chapter 3: Process Planning and Design
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Line Balancing Solution
Station 3
Station 1
B
E
A
C
Station 2
D
Chapter 3: Process Planning and Design
Station 4
F
G
34
Efficiency
efficiency = 20/(4*6) = 83.3%
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Precedence Graph for Credit
Applications
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Stations Assignments for Credit
Application
Chapter 3: Process Planning and Design
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Forms of Transformation
Systems
Job Shop
Chapter 3: Process Planning and Design
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Job Shop
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High variety - low volume
Equipment and staff grouped based on
function
Each output processed differently
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A Generalized Job Shop Operation
Chapter 3: Process Planning and Design
40
Advantages of the Job Shop
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Flexibility to respond to individual
demands
Less expensive general purpose
equipment used
Maintenance and installation of general
purpose equipment easier
General purpose equipment easier to
modify and therefore less susceptible to
becoming obsolete
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Advantages of the Job Shop
continued
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Dangerous activities can be segregated
from other operations
Higher skilled work leading to pride of
workmanship
Experience and expertise concentrated
Pace of work not dictated by moving line
Less vulnerable to equipment
breakdowns
Chapter 3: Process Planning and Design
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Disadvantages of the Job
Shop
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General purpose equipment is slower
Higher direct labor cost
High WIP inventories
High material handling costs
Management control very difficult
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Directly Specified Closeness
Preferences
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A = absolutely necessary
E = especially important
I = important
O = ordinary closeness OK
U = unimportant
X = undesirable
Chapter 3: Process Planning and Design
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Cost-Volume-Distance Model
N
TC =
N
 C
i =1
ij
Vij D ij
j=1
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Office Layout
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Forms of Transformation
Systems
Cellular Production
Chapter 3: Process Planning and Design
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The Cell Form
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Combines flexibility of job shop with low
costs and short response times of flow
shop
Based on group technology
First identify part families
Then form machine cells to produce part
families
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Conversion of a Job Shop Layout to a
Cellular Layout
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Organization of Miscellaneous Parts
into Families
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Advantages of Cellular Production
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Reduced machine setup times
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increased capacity
economical to produce in smaller batch
sizes
smaller batch sizes result in less WIP
less WIP leads to shorter lead times
shorter lead times increase forecast
accuracy and provide a competitive
advantage
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Advantages of Cellular Production
continued
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Parts produced in one cell
Capitalize on benefits of using worker
teams
Minimal cost to move from job shop to
cellular production (e.g. EHC)
Can move from cellular production to
“mini-plants”
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Disadvantages of Cellular Production
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Volumes too low to justify highly efficient
high volume equipment
Vulnerable to equipment breakdowns
Balancing work across cells
Does not offer the same high degree of
customization as the job shop
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Cellular Layout
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Teams of workers and equipment to
produce families of outputs
Workers cross-trained
Nominal cells versus physical cells.
Remainder cell
Cell formation methods
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production flow analysis
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Original Machine-Component Matrix
A B C D E
1 1
2
1
1
3 1
4
5 1
1
1
1
1
1
1
1
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Reordered Machine-Component
Matrix
A C E B D
1 1
1 1
3 1
1 1
5 1
1
2
1
1
4
1
1
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Forms of Transformation
Systems
Project Operations
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Project Operations
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Large scale
Finite duration
Nonrepetitive
Multiple
interdependent
activities
Offers extremely
short reaction times
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Selection of the Process
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Volume/Variety Considerations
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High volume indicate automated mass
production
High variety implies use of skilled labor
and general purpose equipment
Make-to-stock versus make-to-order
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Effect of Output Characteristics on
Transformation Systems
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Product/Process Life Cycles
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In R&D stage, product made in small
volumes
At peak of life cycle, demand may justify
high volume special purpose equipment
System should evolve as market evolves
Whether an organization moves with a
product through its life cycle depends on
the organization’s focus
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Selection of Transformation System by
Stage of Life Cycle
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Service Processes
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Often implemented with little
development or pretesting
Need to consider amount of customer
contact
Customers may not arrive at smooth and
even increments
Including customer in service process
provides opportunities to improve
service
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New Transformational Technologies
and Reengineering
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Information Technology
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World Wide Web
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Federal Express
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Web server set up in late 1994
By 1996 12,000 customers using service each
day to access package-tracking database
provides higher customer service
saves FedEx $2 million per year
Intranets
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Information Technology
continued
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Decision support systems
Artificial intelligence
Expert systems
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The Office of the Future
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Focus of 1980s was on improving
individual productivity
Focus 1990s is enhancing way teams
work together
Groupware
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communications (e-mail)
collaboration (access to shared data)
coordination (jointly accomplishing
activities)
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Manufacturing Technologies
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Numerical Control (NC)
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computer numerical control
direct numerical control
Robotics
Flexible Manufacturing Systems (FMS)
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Business Process Design
(Reengineering)
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Division of Labor Concept
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Work broken down into its simplest most
basic tasks
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Performing same task facilitates attaining
greater skill
No time lost switching to another task
Workers well positioned to improve tools
and techniques
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Division of Labor Concept
continued
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Division of labor concept not challenged
until recently despite dramatic changes
in technology
Quality, innovation, service, and value
more important than cost, growth, and
control
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Process
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Set of activities that taken together
produce a result of value to the customer
Organizing on basis of processes
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Eliminate delays and errors when work is
handed off
Capture information once and at source
When people closest to process perform
work, there is little need for management
overhead
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Business Process Design
(BPD)
The fundamental rethinking and radical
redesign of business processes to
bring about dramatic improvements in
performance
Hammer, M. and Stanton, S. The Reengineering Revolution, Harper
Business, 1995.
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Radical
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Profoundly change the way work
performed
Not concerned with making superficial
changes
Get to root
Get rid of old
Reinventing, not improving
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Redesign
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BPD is about designing how work is
done
Smart, capable, well trained, highly
motivated employees mean little if the
way work is performed is poorly
designed
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76
Process
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All organizations perform processes
Customers not interested in individual
activities but rather overall results
Few of them are organized on the basis
of processes
Thus, processes tend to go unmanaged
Team approach one way this addressed
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Dramatic
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Quantum leaps in performance, not
marginal or incremental improvements
Breakthroughs in performance
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IBM Credit Example
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IBM Credit Example continued
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Order logged by 1 of 14 people in
conference room
Carted upstairs to credit department
Information entered into computer to
check borrower’s creditworthiness
Results written on piece of paper
Chapter 3: Process Planning and Design
80
IBM Credit Example continued
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Business practices department modified
standard loan covenant in response to
customer requests
Used its own computer system
Pricer keyed data into PC to determine
appropriate interest rate
Administrator converted to quote letter
and Fedexed to field sales rep.
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IBM Credit Example continued
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Average time to process a request was 6
days
Could take as long as 2 weeks
Actual processing time 90 minutes
Deal Structurer
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Turnaround time 4 hours
Number of deals processed increased 100
times with small reduction in head count
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Chapter 3: Process Planning and
Design
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