Chapter four

Process 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:

1. accurate definition of the good/service Boundaries of process

2. customer needs must be understood

3. all possible suppliers identified

4. correct process must be defined How process will perform

5. 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 envisaged output? 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.

4.3 Strategic process decisions

Figure 4.1

4.4 Process structures for manufacturing

Process designer must ask the following:-

•What is the amount of variability in the good or service produced?

•What is the degree of flexibility required from labour and equipment?

•What are the quantities of goods and services 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

LINE PROCESS

Show Rolls Royce Video

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

CONTINUOUS FLOW PROCESS

Show Coca Cola Video

4.5 Strategies for manufacturing processes

Make 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 processes

Assemble to order strategySmall number of components large diversity of products

Manufacture to order not for stock

Main requirement lead time as short as possible

Batch or assembly line process

Components batch process, assembly line process

Requires high volumes of standard products

High inventory of materials

Eg: Plascon/Dulux paint shop

4.5 Strategies for manufacturing processes

Make 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 service

Three major process types for service 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 measurement

Design SpecificationProcess must consistently perform to specificationProcess performance measurement establishes to what extent process is performing to specificationAppropriate 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.

PRODUCTIVITY

EFFICIENCY

RUN TIME

OPERATIONS TIME

OPERATIONS TIME = RUNTIME + SET UP TIME

Compare to available time

THROUGHPUT

THROUGHPUT = 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 TQMBPR TQM

Fundamental radical redesign of process

Process of incremental change

Short time scale Longer timescale

Immediately measurable Longer to see results

Customer is centre piece to organisation

Customer is centre piece 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

4.9 Industrial engineering

• Examples:– Bonus schemes (parameters)– Profit sharing (guidelines)– Ergonomics– Method analysis– Setting labour standards.

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

Group Exercise• Case study page 109