Ops management lecture 4 process design & strategy
Chapter fourProcess design, strategy, and management
Learning objectives• Define a process• Explain the reasons for process selection and why it is a strategic issue• Discuss the influence that process selection will have on the organisation’s performance• Discuss the major process types
Learning objectives• Identify and explain the automation of processes• Discuss the reasons why technology must be managed• Discuss why it will become necessary to redesign processes• List and discuss the returns and weaknesses of process layout• Discuss and compute line balancing• Explain process reengineering• Explain industrial engineering.
4.1 Introduction• Process: – Methodology – Utilised on a continuous basis – Result in creation of good/service – Delivered to customer – Make a profit • Add maximum value at minimum cost. - The “How” of the production of a good or service
4.2 Understanding processes• Each process used crosses organisational borders• E.g. KOO• Process thinking: examines the diversified system as unified• Must take into account user requirements• Users must understand the process
4.2 Understanding processes• Six characteristics: 1. accurate definition of the good/service 2. customer needs must be understood 3. all possible suppliers identified 4. correct process must be defined 5. process must be mistake proofed 6. continuous feedback must be carried out.
4.2 Understanding processes• Six characteristics: – accurate definition of the good/service Boundaries of process – customer needs must be understood – all possible suppliers identified 4. correct process must be defined How process will perform 6. process must be mistake proofed 6. continuous feedback must be carried out. How to remain efficient
4.3 Strategic process decisions Remember:- EVERY PROCESS UTILISED BY AN ORGANISATION UTILISES SCARCE RESOURCES!•How will the process provide the envisagedoutput? Must be of value
4.3 Strategic process decisionsRemember:- EVERY PROCESS UTILISED BY AN ORGANISATION UTILISES SCARCE RESOURCES!• Exact match to setting – aim to fulfil major process characteristics and be as closely related to strategic match as possible• Part of process foundation – that is it becomes part of the organisations supply chain• Close working relationship between the processes in the supply chain. Seamless interface• Include subcontracting.
4.4 Process structures for manufacturingProcess designer must ask the following:-•What is the amount of variability in the goodor service produced?•What is the degree of flexibility requiredfrom labour and equipment?•What are the quantities of goods andservices to be produced?
4.4 Process structures for manufacturing• Four key process types:- - Job process - Batch process - Line process - Continuous flow process
JOB PROCESS- Highly adaptable/customised- Scale of operation small- Structured around particular events- Extensive diversity of products- Small quantities- Must have a customer order – do not make for stock
BATCH PROCESS Most common type of process used in industry Small to large batches Intermittent Highly flexible Labour skill level than for job process Limited range of products
LINE PROCESS• Repetitive process or assembly line• One type of product in a straight line• Modular production• Large quantities of production• High utilisation of standard parts• Structured around a specific product• Make for stock
CONTINUOUS FLOW PROCESS Product focused process Very high volumes Very limited flexibility loss of production time Variable levels of labour skill required Only one product at one time Very high capital investment
4.5 Strategies for manufacturing processesMake to order strategy•Low volume•Customer specified•Job or batch process•Strategy is to satisfy unique desire of customer•High level of customisation•Highly multifaceted processes are utilised
4.5 Strategies for manufacturing processesAssemble to order strategySmall number of components large diversity of productsManufacture to order not for stockMain requirement lead time as short as possibleBatch or assembly line processComponents batch process, assembly line processRequires high volumes of standard productsHigh inventory of materialsEg: Plascon/Dulux paint shop
4.5 Strategies for manufacturing processesMake to stock strategy•Large inventories of final stock•Anticipate customer orders•Demand can be predicted fairly accurately•Highly standardised products•Continuous flow process•E.g. FMCG
4.6 Process structures for serviceThree major process types forservice industry•Professional service processes•Service shop processes•Mass service process
PROFESSIONAL SERVICE PROCESSES Large variety of services Low volumes Highly customised Focussed on people rather than equipment E.g attorney’s office
SERVICE SHOP PROCESSES High customer participation High adaptation High volumes of customers Fair amount of customer interaction required Front and back office Front office staff fairly skilled Back office staff more skilled Highly standardised service E.g. High Street banks
MASS SERVICE PROCESSES Large numbers of clients Very little customisation Utilises machinery and equipment to produce service Most tasks completed back office Front office staff have limited skills Back office staff more skilled E.g. Supermarkets
4.7 Process performance measurementDesign SpecificationProcess must consistently perform tospecificationProcess performance measurement establishesto what extent process is performing tospecificationAppropriate measurements must be developedMeasurements most often used:- Benchmarking Process Performance Ratios
BENCHMARKING Compare against other organisations achievements Industry leader identified Industry leaders process analysed to show where improvements in own system are required Requires co-operation across the industry
PROCESS PERFORMANCE RATIOS Process performance ratios: • Productivity • Efficiency • Run time • Operations time • Throughput.
OPERATIONS TIMEOPERATIONS TIME = RUNTIME + SET UP TIMECompare to available time
THROUGHPUTTHROUGHPUT = ACTUAL NUMBER OF PRODUCTS PRODUCED
4.8 Business process reengineering [BPR]• Improve methods• Streamlining• Hammer popularised BPR in 1990’s• Debate: BPR & TQM• Development of the BPR methodology (please read section 4.8.1, p 106)
BPR VS TQM BPR TQMFundamental radical Process of incrementalredesign of process changeShort time scale Longer timescaleImmediately measurable Longer to see resultsCustomer is centre piece Customer is centre pieceto organisation to organisation
4.9 Industrial engineering• Industrial engineering is mainly concerned with the: – investigation, – redesign, – and implementation of processes, performance standards, work methods, and related issues
Summary• Process defined• Process as a strategic issue• Structures & strategies – manufacturing• Structures – services• Process performance measurement• BPR• Industrial engineering.
FOR NEXT SESSION• Read p114 – 136• Define and briefly discuss a process• List the 6 characteristics of a process• List three production strategies and discuss one of them• Briefly discuss the service shop process concept• List and discuss possible performance ratios