Process Strategy & Analysis

Students should be able to:

1. Use the customer contact model and the product- process matrix to assess the proper positioning

of a firm’s operations.

2. Apply the steps in the systematic approach to process analysis.

3. Flowchart a business process and assess its weaknesses.

Customer Involvement• Low involvement• High involvement

Resource Flexibility• Specialized• Generalized

Process Structure

• Customer-contact position (services)• Product-process position (manufacturing)

Vertical Integration• In-house• Outsource

Capital Intensity• Low automation• High automation

Strategy for Change

• Process Reengineering• Process Improvement

Effective Process Design

Major Decisions for Effective Process Design

Figure 3.3Figure 3.3

Customer-Contact Model for Processes

Front office

Hybrid office

Back office

(1)(1) (2)(2) (3)(3)High interaction withHigh interaction with Some interaction withSome interaction with Low interaction withLow interaction withcustomers, highlycustomers, highly customers, standardcustomers, standard customers, standardizedcustomers, standardizedcustomized servicecustomized service services with some optionsservices with some options servicesservices

ProcessProcessCharacteristicsCharacteristics

(1)(1)Jumbled flows,Jumbled flows,complex work withcomplex work withmany exceptionsmany exceptions

(2)(2)Flexible flows withFlexible flows withsome dominantsome dominantpaths, moderate jobpaths, moderate jobcomplexity withcomplexity withsome exceptionssome exceptions

(3)(3)Line flows, routineLine flows, routinework easilywork easilyunderstood byunderstood byemployeesemployees

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Less Customer Contact and CustomizationLess Customer Contact and Customization

Service PackageService Package

Embedding Strategy Into Service Processes

Competitive Priorities Process Choice

Top quality; customization

Low-cost operation; consistentquality; on-time delivery

Front office

Back office

The common denominator for decisions on service processes is customer contact.

Figure 3.6Figure 3.6

Product-Process Matrix for Processes

(1)(1) (2)(2) (3)(3) (4)(4) (5)(5)One of a kindOne of a kind Low volume,Low volume, MultipleMultiple Few majorFew major High volumeHigh volumeproducts, madeproducts, made lowlow productsproducts products,products, highhighto customer to customer standardizationstandardization moderate moderate higherhigher standardization,standardization,orderorder volumevolume volumevolume commoditycommodity

productsproducts

ProcessProcessCharacteristicsCharacteristics

(1)(1)Complex and Complex and highly customized highly customized process, unique process, unique sequence of taskssequence of tasks

(2)(2)Jumbled flows, Jumbled flows, complex work with complex work with many exceptionsmany exceptions

(3)(3)Disconnected line Disconnected line flows, moderately flows, moderately complex workcomplex work

(4)(4)Connected line, Connected line, routine workroutine work

(5)(5)Continuous Continuous flows, highly flows, highly repetitive workrepetitive workL

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Less Customization and Higher VolumeLess Customization and Higher Volume

Product DesignProduct Design

Continuousprocess

Projectprocess

Lineprocess

Batchprocess

Jobprocess

Embedding Strategy Into Manufacturing Processes

Competitive Priorities Process Choice

Top quality; on-timedelivery; flexibility

Low-cost operations; consistent quality;delivery speed

Job process

Batch, line, continuous

The common denominator for decisions on manufacturing processes is volume.

Top quality, on timedelivery; flexibility

Competitive Priorities Production and Inventory

Make-to-order

Delivery speed; variety Assemble-to-order

Low-cost operations;delivery speed

Make-to-stock

A Systematic Approach to Process Analysis

Identify Opportunity

1

DefineScope

2

DocumentProcess

3

Evaluate Performance

4

RedesignProcess

5

ImplementChanges

6

Custom Molds Process Analysis

1. Identify the Opportunity (gaps, strategic fit)

2. Define the Scope (boundaries of analysis)

3. Document the Processes (flowcharts)

4. Evaluate the Performance (metrics, measures)

5. Redesign the Process (decisions, actions)

6. Implement the Changes (projects)

How to Draw a Flowchart

1. Describe the process to be charted.

2. Start with a “trigger” event.

3. Note each successive action concisely and clearly.

4. Go with the main flow; put additional detail in other charts.

5. Make cross references to supporting information.

6. Follow the process to a useful conclusion; identify a “target” point.

ReceiveOrder

DesignSpecifications

Mold Fabrication

Inspection/Testing on Injection Machine

Purchasing Scheduling

Acceptable? Cleaning/Polishing

Packing/Shipping

Design Review

Purchasing Dry Mix Wet Mix Holding Tank

Injection Machines

Cut & Trim

Need Assembly?

Assembly

Mold Fabrication Process

Parts Manufacturing Process

No

Yes

No

Yes

Questions?

ContactCustomer

No

Yes

Receive Order

Plant Layout for Custom Molds, Inc.

Seven Mistakes to Avoid

• Not connecting to strategic issues.• Not involving the right people in the right way.• Not giving the design teams a clear charter and

then holding them accountable.• Not satisfied unless fundamental reengineering

changes are made.• Not considering the impact on people.• Not giving attention to implementation• Not creating the infrastructure for continuous

process improvement.