1. Business Process
A logically related sets of tasks or activities geared toward some business outcome.
1. Primary (value-added)
2. Support
3. Developmental
Primary value-added, work directly related to what the customer pays for.
Support: Purchasing, maintenance, transportation to point-of-sale, moving and tracking material between value-added steps, administration, etc.
Developmental: Design, assessment, and marketing efforts to provide new services or products.
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

2. Versus the “functional” Perspective
Developing new products (Chapter 5)
Evaluating suppliers (Chapter 9)
Developing sales & operations plans (Chapter 11)
Suppliers Purchasing Engineering Operations Finance Marketing Customers

3. Relationship Map

4. A Detailed Process Map

5. Mapping Symbols Start or finishing point
Step or activity in the process
Decision point (typically requires a “yes” or “no”)
Input or output (typically data or materials
Document created
Delay
Inspection
Move activity
Typical, but others may be used as appropriate

6. Improving Business Processes: Guidelines
Attack each delay
What causes it?
How long is it?
How could we reduce its impact?
Examine each decision point
Is this a real decision or just a checking activity?
If the latter, can we automate or eliminate it?
Review differences between value-added and other activities. Good place to point out that unnecessary movement between value-added steps requires often requires tracking, counting, and storing of inventories.
Decision points do not add value, take time
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

7. More Guidelines Look for loops Process steps Why is this loop here?
Would we need to loop if we didn’t have any failures in quality, planning, etc?
Process steps
What is the value of this activity, relative to its cost?
Is this a necessary activity (support or developmental?), or something else?
Loops take time, do not add value. Work to eliminate them, particularly if they occur frequently.
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

8. Process Measures
Productivity
Efficiency
Cycle Time
Benchmarking

9. Productivity Measures
Outputs
Inputs
Productivity =
Partial, Multifactor, and Total measures of productivity

10. Machine + Direct Labor Hours Total Nightly Sales ($)
Examples
Batteries Produced
Machine + Direct Labor Hours
Total Nightly Sales ($)
Total Nightly Costs
Direct Labor Hours
Single factor
productivity ratio:
Multifactor:
Total:

11. Efficiency
A comparison of a company’s actual performance to some standard
Usually expressed as a percentage
Standard is an estimate of what should be produced based on studies or historical results
Efficiency = 100%(actual/standard)
Here the actual and standard values represent output or output rate.
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

12. Cycle Time
The total time required to complete a process from start to finish.
The percent of cycle time spent on
value-added activities is a measure of
process effectiveness.
Called “takt” time in Germany. Can be considered as the “pulse” or “heartbeat” of the process.
Throughput is controlled by the cycle time, but is also affected by how many units can be processed together.
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

13. Cycle Time Drivers Causes that increase cycle time are: Waiting times
Unneeded steps
Rework
Unnecessary controls or testing
Outmoded technology
Lack of information or training

14. Benchmarking
A comparison of a company’s performance to the performance of:
Other firms in its industry (strategic)
Firms identified as “world-class” (process)

15. Classic Mfg. Process Types (in order of decreasing volume)
Continuous Flow
Production Line (Flow Line)
Batch (High Volume)
Batch (Low Volume)
Job Shop
Project

16. Continuous Flow Large production volumes High level of automation
Basic material passed along, converted as it moves
Usually very high fixed costs, inflexible
Oil refinery, fiber formation, public utilities
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

17. Production Line aka Flow Line and Repetitive Manufacturing
High-volume production of standard products or “design window”
Processes arranged by product flow
Often “paced”
Highly efficient, but not too flexible

18. Batch I Somewhere in between job shop and line processes
Moderate volumes, multiple products
Production occurs in “batches”
Garment manufacturing, carton makers, etc.

19. Batch II
Layout is a cross between that found in a line and that found in a job shop:
Group Technology

20. Job Shop Low volume, one-of-a-kind products
Job shops sell their capability
Highly flexible equipment, skilled workers
Equipment arranged by function

21. Project Used when a product is: Resources moved to where needed
one-of-a-kind
too large to be moved
Resources moved to where needed
Equipment, people, etc. are highly flexible
Finite duration, often with deadline
Building projects, equipment installation
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

22. Mixing Together the Process Types ...
Spindles
ASSEMBLY
LINE for
putting together
final product
Arms and
Legs
Chair manufacturing process
BATCH for
fabricating
parts ...
Seats
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

23. Comparing Process Types...
Job Shop
Batch
Line
Volume
Very Low
High
Variety
Very High
Low
Skills
Broad
Limited
Advantage
Flexibility
Price and Delivery

24. Product – Process Matrix
One of a Kind Low Volume
Multiple Products Moderate Volumes
Few Major Products
High Volume
Commodity Products
Job Shop
Batch
Line
Very Poor Fit
Very Poor Fit

25. Life-Cycle Planning Framework
Centralized
inventory
Speed
Availability
Achieve break-
even volumes
as soon as
possible
Less need
for flexibility
High
product
availability
Flexibility
to handle
variation
More selective,
targeted efforts
Value-added
service

26. What is “Customization”?
“Customization occurs when a customer’s unique requirements directly affect the timing and nature of operations and supply chain activities”

27. Customization Point Model
Definitions:
ETO – engineer to order
MTO – make to order
ATO – assemble-to-order
MTS – make to stock

28. Layout Decision Models
Product-based layout
Usually best for a line operation
Cycle time a primary measure
Functional (Process-based) layout
Usually best for a job shop
Distance between steps a measure
Cellular layout
Usually best for batch processes