PROCESS DESIGN

Process Strategy The pattern of decisions made in managing processes so that they will achieve their competitive priorities A process involves the use of an organization’s resources to provide something of value Guides a variety of process decisions, and in turn, is guided by operations strategy

Process Strategy (contd.) Major process decisions include: Process Structure Customer Involvement Resource Flexibility Capital Intensity

Major Decisions for Effective Process Design

Major Process Decisions (contd.) Process Structure: Determines how processes are designed relative to the kinds of resources needed, how resources are partitioned between them, and their key characteristics Customer Involvement: Refers to the ways in which customers become part of the process and the extent of their participation

Major Process Decisions (contd.) Resource flexibility: The ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions Capital intensity: The mix of equipment and human skills in a process

Process Structure In Services An effective service process strategy in one situation can be a poor choice in another Strategy chosen for a fast food restaurant may not work for a five-star restaurant, where customers seek leisurely dining experience A good process strategy for a service process depends first and foremost on the type and amount of customer contact

Process Structure In Services (contd.) Customer contact is the extent to which the customer is present, is actively involved, and receives personal attention during the service process At this stage, customer’s perceptions about the quality of the service provided are shaped

Process Structure In Services (contd.) Present Physical presence Absent High Contact Dimension Low Contact © 2007 Pearson Education People What is processed Possessions Active, visible Contact intensity Passive, out of sight Personal Personal attention Impersonal Face-to-face Method of delivery Regular mail

Customer Contact And Process Elements Active Contact: The customer is very much part of the creation of the service and affects the service process itself Passive Contact: The customer is not involved in tailoring the process to meet special needs or in how the process is performed

Customer Contact And Process Elements (contd.) Process Complexity: The number and intricacy (complication) of the steps required to perform the process Process Divergence: The extent to which the process is highly customized with considerable latitude as to how it is performed

Customer Contact And Process Elements (contd.) Flexible Flow: The customers, materials or information move in diverse ways, with the path of one customer or job often crisscrossing the path that the next one takes Line Flow: The customers, materials or information move linearly from one operation to the next, according to a fixed sequence

Customer-Contact Matrix For Service Processes Less Customer Contact and Customization Service Package Front office Hybrid office Back office (1) (2) (3) High interaction with Some interaction with Low interaction with customers, highly customers, standard customers, standardized customized service services with some options services Process Characteristics (1) Flexible flows, complex work with many exceptions (2) Flexible flows with some dominant paths, moderate job complexity with some exceptions (3) Line flows, routine work easily understood by employees Less Complexity, Less Divergence, More Line Flows

Process Structure In Manufacturing Since products differ from services, a different view on process structure is needed Product-Process Matrix Synchronizes the product to be manufactured with the manufacturing process itself Volume Product customization Process characteristics

Product-Process Matrix (1) (2) (3) (4) Low-volume Multiple products with low Few major High volume, high products, made to moderate volume to customer order Process Characteristics (1) Customized process, with flexible and unique sequence of tasks (2) Disconnected line flows, moderately complex work (3) Connected line, highly repetitive work (4) Continuous flows Less complexity, less divergence, and more line flows Less customization and higher volume products, higher vol standardization, commodity products Job process Batch processes Small batch process Large batch process Line process Continuous process

Product-Process Matrix (contd.) A good strategy for a manufacturing process first and foremost depends upon the volume For many manufacturing processes, high product customization means lower volumes Process Choice: The way of structuring the process by organizing resources around the process or products

Product-Process Matrix (contd.) Job Process: A process with the flexibility needed to produce a wide variety of products in significant quantities Batch Process: A process that differs from the job process with respect to volume, variety and quantity

Product-Process Matrix (contd.) Line Process: A process in which the volumes are high and the products are standardized allowing resources to be organized around particular products Continuous Flow Process: The extreme end of high volume standardized production and rigid line flows, with production not starting and stopping for long time intervals

Production And Inventory Strategies Make-to-Order Strategy Assemble-to-Order Strategy Postponement Make-to-Stock Strategy

New Service/Product Development Process Design Service/Product not profitable Need to rethink the new offering/production process Analysis Development Post-launch review Full Launch

New Service/Product Development Process (contd.) Competitive priorities help managers develop products and services that customers want Development of new products/services is vital to the long- term survival of the firm New may either mean introducing a brand new concept or implementing major changes to the existing products/services

I. Design Stage Critical stage as it links the creation of new services/products to the corporate strategy of the firm The corporate strategy specifies the long-term objectives of the firm Ideas for new offerings are proposed and screened for feasibility and market worthiness

I. Design Stage (contd.) The ideas specify: how the customer connects with the service or manufacturing firm; the benefits and outcomes for the customer; and the value of the service/product The proposals also specify how the new offering will be delivered

II. Analysis Stage Involves critical review of the new offering and how it will be produced to make sure that: it fits the corporate strategy; is compatible with regulatory standards; presents an acceptable market risk; and satisfies the needs of the intended customers The resource requirements for the new offering must be examined

II. Analysis Stage (contd.) The firm must examine the need to acquire additional resources or expand the supply chain by forming strategic partnership with other firms If the analysis reveals that the new offering has a good market potential and the firm has the capability, the authorization is given to proceed to the development stage

III. Development Stage Required competitive priorities are used as inputs to the design of the processes that will be involved in delivering the new offering Each activity is designed to meet its required competitive priorities as well as to add value After process designing, the market program can be designed Finally, personnel are trained and pilot runs are conducted

Concurrent Engineering Used in order to avoid costly mismatches between the design of a new offering and the capability of the processes Brings product engineers, process engineers, marketers, buyers, information specialists, quality specialists and suppliers together to design a product and the processes that will meet customer expectations

IV. Full Launch Stage Involves coordination of many internal processes as well as those both upstream and downstream in the supply chain Promotion for the new offering starts Briefing to sales personnel is done Distribution process is activated Withdrawal of old products/services Post-launch review (inputs from customers)

Quality Function Deployment As described by Dr. Yoki Akao, QFD is a method to: transform user demands into design quality; deploy the functions forming quality; deploy methods for achieving the design quality into subsystems and component parts, and ultimately to specific elements of the manufacturing process

QFD (contd.) Refers to both: determining what will satisfy the customer; and translating those customer desires into the target design The idea is to capture a rich understanding of customer wants and to identify alternative process solutions

QFD (contd.) Used early in the design process to help determine what will satisfy the customer and where to deploy quality efforts A process for determining customer requirements (customer “wants”) and translating them into the attributes (the “hows”) that each functional area can understand and act on

House Of Quality One of the tools of QFD A graphic technique for defining the relationship between customer desires and the product (or service) By defining this relationship, operations managers can build products and processes with features desired by customers Defining this relationship is the first step in building a world-class production system

Steps To Building House Of Quality Identify customer wants (what do prospective customers want in this product?) Identify how the good/service will satisfy customer wants (identify specific product characteristics, features, or attributes and show how they will satisfy customer wants) Relate customer wants to product hows (building matrix)

Steps (contd.) Identify relationships between the firm’s hows (how do our hows tie together?) Develop importance ratings Evaluate competing products (how well do competing products meet customer wants?) Determine the desirable technical attributes, your performance, and the competitor’s performance against these attributes

House of Quality Example You’ve been assigned temporarily to a QFD team. The goal of the team is to develop a new camera design. Build a House of Quality. © 1984-1994 T/Maker Co.

House Of Quality (contd.)