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© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 1
77 Process Strategy and SustainabilityProcess Strategy and Sustainability
PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8ePrinciples of Operations Management, 8e
PowerPoint slides by Jeff Heyl
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 2
OutlineOutline
Global Company Profile: Harley-Davidson
Four Process Strategies Process Focus
Repetitive Focus
Product Focus
Mass Customization Focus
Comparison of Process Choices
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Outline – ContinuedOutline – Continued
Process Analysis and Design Flow Charts
Time-Function Mapping
Value-Stream Mapping
Process Charts
Service Blueprinting
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Outline – ContinuedOutline – Continued
Special Consideration for Service Process Design Customer Interaction and Process
Design
More Opportunities to Improve Service Processes
Selection of Equipment and Technology
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Outline – ContinuedOutline – Continued
Production Technology Machine Technology
Automatic Identification Systems (AISs) and RFID
Process Control
Vision Systems
Robots
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Outline – ContinuedOutline – Continued
Production Technology (cont.) Automated Storage and Retrieval
Systems (ASRSs)
Automated Guided Vehicles (AGVs)
Flexible Manufacturing Systems (FMSs)
Computer-Integrated Manufacturing (CIM)
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Outline – ContinuedOutline – Continued
Technology in Services
Process Redesign
Sustainability
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Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:
1. Describe four production processes
2. Compute crossover points for different processes
3. Use the tools of process analysis
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Learning ObjectivesLearning ObjectivesWhen you complete this chapter you When you complete this chapter you should be able to:should be able to:
4. Describe customer interaction in process design
5. Identify recent advances in production technology
6. Discuss the 4 Rs of sustainability
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Harley-DavidsonHarley-Davidson
Repetitive manufacturing worksRepetitive manufacturing works
The leading U.S. motorcycle company
Emphasizes quality and lean manufacturing
Materials as Needed system
Many variations possible
Tightly scheduled repetitive production line
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Process Flow DiagramProcess Flow Diagram
THE ASSEMBLY LINETESTING28 tests
Oil tank work cell
Shocks and forks
Handlebars
Fender work cell
Air cleaners
Fluids and mufflers
Fuel tank work cell
Wheel work cell
Roller testing
Incoming parts
From Milwaukee on a JIT arrival schedule
Engines and transmissions
Frame tube bending
Frame-building work cells
Frame machining
Hot-paint frame painting
Crating
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Process StrategiesProcess Strategies
The objective of a process strategy is The objective of a process strategy is to build a production process that to build a production process that meets customer requirements and meets customer requirements and product specifications within cost product specifications within cost and other managerial constraintsand other managerial constraints
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Process, Volume, and VarietyProcess, Volume, and Variety
Process Focusprojects, job shops
(machine, print, hospitals, restaurants)
Arnold Palmer Hospital
Repetitive(autos, motorcycles,
home appliances)Harley-Davidson
Product Focus(commercial
baked goods, steel, glass, beer)
Frito-Lay
High Varietyone or few units per run,(allows customization)
Changes in Modulesmodest runs, standardized modules
Changes in Attributes (such as grade, quality, size, thickness, etc.) long runs only
Mass Customization(difficult to achieve, but huge rewards)
Dell Computer
Poor Strategy (Both fixed and variable costs
are high)
Low Volume
Repetitive Process
High Volume
VolumeFigure 7.1
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Process StrategiesProcess Strategies
How to produce a product or provide a service that Meets or exceeds customer
requirements
Meets cost and managerial goals
Has long term effects on Efficiency and production flexibility
Costs and quality
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Process StrategiesProcess Strategies
Four basic strategies
1. Process focus
2. Repetitive focus
3. Product focus
4. Mass customization
Within these basic strategies there are Within these basic strategies there are many ways they may be implementedmany ways they may be implemented
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Process FocusProcess Focus Facilities are organized around specific
activities or processes
General purpose equipment and skilled personnel
High degree of product flexibility
Typically high costs and low equipment utilization
Product flows may vary considerably making planning and scheduling a challenge
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Process FocusProcess Focus Many inputs
(surgeries, sick patients, baby deliveries, emergencies)
Many different outputs(uniquely treated patients)
Many departments and many routings
Figure 7.2(a)
(low volume, high variety, intermittent processes)
Arnold Palmer Hospital
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Repetitive FocusRepetitive Focus
Facilities often organized as assembly lines
Characterized by modules with parts and assemblies made previously
Modules may be combined for many output options
Less flexibility than process-focused facilities but more efficient
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Repetitive Repetitive FocusFocus
Raw materials and module inputs
Modules combined for manyOutput options
(many combinations of motorcycles)
Few modules
(multiple engine models, wheel modules)
Figure 7.2(b)
(modular)
Harley Davidson
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Product FocusProduct Focus
Facilities are organized by product
High volume but low variety of products
Long, continuous production runs enable efficient processes
Typically high fixed cost but low variable cost
Generally less skilled labor
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Product FocusProduct Focus Few Inputs
(corn, potatoes, water, seasoning)
Output variations in size, shape, and packaging
(3-oz, 5-oz, 24-oz package labeled for each material)
Figure 7.2(c)
(low-volume, high variety, continuous process)
Frito-Lay
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Product FocusProduct FocusNucor Steel Plant
Co
nti
nu
ou
s ca
ster
Continuous cast steel sheared into 24-ton slabs
Hot tunnel furnace - 300 ft
Hot mill for finishing, cooling, and coiling
D
E F
GHI
Scrap steel
Ladle of molten steelElectric furnace
A
BC
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Mass CustomizationMass Customization
The rapid, low-cost production of goods and service to satisfy increasingly unique customer desires
Combines the flexibility of a process focus with the efficiency of a product focus
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Mass CustomizationMass Customization
Table 7.1
Vehicle models 140 286Vehicle types 18 1,212Bicycle types 8 211,000Software titles 0 400,000Web sites 0 162,000,000Movie releases per year 267 765New book titles 40,530 300,000Houston TV channels 5 185Breakfast cereals 160 340Items (SKUs) in 14,000 150,000 supermarketsLCD TVs 0 102
Number of Choices
Item 1970s 21st Century
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Mass Mass CustomizationCustomization
Many parts and component inputs
Many output versions(custom PCs and notebooks)
Many modules
(chips, hard drives, software, cases)
Figure 7.2(d)
(high-volume, high-variety)
Dell Computer
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Mass CustomizationMass Customization
Mass Customization
Effective scheduling techniques
Rapid throughput techniques
Repetitive FocusFlexible peopleand equipment
Process-FocusedHigh variety, low volume
Low utilization (5% to 25%)General-purpose equipment
Product-FocusedLow variety, high volume
High utilization (70% to 90%)Specialized equipment
Figure 7.3
Modular techniques
Accommodating Product and
Process DesignResponsive
Supply Chains
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Mass CustomizationMass Customization
Imaginative and fast product design
Rapid process design
Tightly controlled inventory management
Tight schedules
Responsive supply chain partners
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Comparison of ProcessesComparison of Processes
Process Focus(low-volume, high-variety)
Repetitive Focus
(modular)
Product Focus(high-volume, low-variety)
Mass Customization(high-volume, high-variety)
1. Small quantity and large variety of products are produced
1. Long runs, usually a standardized product with options, produced from modules
1. Large quantity and small variety of products are produced
1. Large quantity and large variety of products are produced
2. Equipment used is general purpose
2. Special equipment aids in use of an assembly line
2. Equipment used is special purpose
2. Rapid changeover on flexible equipment
Table 7.2
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 29
Comparison of ProcessesComparison of Processes
Process Focus(low-volume, high-variety)
Repetitive Focus
(modular)
Product Focus(high-volume, low-variety)
Mass Customization(high-volume, high-variety)
3. Operators are broadly skilled
3. Employees are modestly trained
3. Operators are less broadly skilled
3. Flexible operators are trained for the necessary customization
4. There are many job instructions because each job changes
4. Repetitive operations reduce training and changes in job instructions
4. Work orders and job instructions are few because they are standardized
4. Custom orders require many job instructions
Table 7.2
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 30
Comparison of ProcessesComparison of Processes
Process Focus(low-volume, high-variety)
Repetitive Focus
(modular)
Product Focus(high-volume, low-variety)
Mass Customization(high-volume, high-variety)
5. Raw-material inventories high relative to the value of the product
5. JIT procurement techniques are used
5. Raw material inventories are low relative to the value of the product
5. Raw material inventories are low relative to the value of the product
6. Work-in-process is high compared to output
6. JIT inventory techniques are used
6. Work-in-process inventory is low compared to output
6. Work-in-process inventory driven down by JIT, kanban, lean production
Table 7.2
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 31
Comparison of ProcessesComparison of Processes
Process Focus(low-volume, high-variety)
Repetitive Focus
(modular)
Product Focus(high-volume, low-variety)
Mass Customization(high-volume, high-variety)
7. Units move slowly through the facility
7. Assembly is measured in hours and days
7. Swift movement of units through the facility is typical
7. Goods move swiftly through the facility
8. Finished goods are usually made to order and not stored
8. Finished goods made to frequent forecast
8. Finished goods are usually made to forecast and stored
8. Finished goods are often build-to-order (BTO)
Table 7.2
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 32
Comparison of ProcessesComparison of Processes
Process Focus(low-volume, high-variety)
Repetitive Focus
(modular)
Product Focus(high-volume, low-variety)
Mass Customization(high-volume, high-variety)
9. Scheduling is complex, concerned with trade-offs between inventory, capacity, and customer service
9. Scheduling is based on building various models from a variety of modules to forecasts
9. Scheduling is relatively simple, concerned with establishing output rate sufficient to meet forecasts
9. Sophisticated scheduling is required to accommodate custom orders
10. Fixed costs tend to be low and variable costs high
10. Fixed costs dependent on flexibility of the facility
10. Fixed costs tend to be high and variable costs low
10. Fixed costs tend to be high, variable costs must be low
Table 7.2
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Crossover ChartsCrossover Charts
Fixed costs
Variable costs
$
High volume, low varietyProcess C
Fixed costs
Variable costs$
RepetitiveProcess B
Fixed costs
Variable costs$
Low volume, high varietyProcess A
Fixed cost Process A
Fixed cost Process B
Fixed cost Process C
Tota
l cos
t
Total cost
Total cost
V1(2,857) V2
(6,666)
400,000
300,000
200,000
Volume
$
Figure 7.4
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Focused ProcessesFocused Processes
Focus brings efficiency
Focus on depth of product line rather than breadth
Focus can be Customers
Products
Service
Technology
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Changing ProcessesChanging Processes
Difficult and expensive
May mean starting over
Process strategy determines transformation strategy for an extended period
Important to get it right
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Process Analysis and Process Analysis and DesignDesign
Is the process designed to achieve a competitive advantage?
Does the process eliminate steps that do not add value?
Does the process maximize customer value?
Will the process win orders?
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Process Analysis and Process Analysis and DesignDesign
Flow Charts - Shows the movement of materials
Time-Function Mapping - Shows flows and time frame
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““Baseline” Time-Function MapBaseline” Time-Function MapCustomer
Sales
Production control
Plant A
Warehouse
Plant B
Transport
12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day
52 daysFigure 7.5
Move
Receive product
Pro
du
ct
Pro
du
ct
Extrude
Wait
WIP
Pro
du
ct
Move
WaitW
IP WIP
Wait
Ord
er
WIP
Order product
Process order
Wait
Ord
er
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““Target” Time-Function MapTarget” Time-Function Map
Customer
Sales
Production control
Plant
Warehouse
Transport
1 day 2 days 1 day 1 day 1 day
6 daysFigure 7.5
Move
Receive product
Pro
du
ct
Pro
du
ct
Extrude
Wait
PrintOrd
er
WIP
Pro
du
ct
Order product
Process order
Wait
Ord
er
© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 - 40
Process Analysis and Process Analysis and DesignDesign
Flow Charts - Shows the movement of materials
Time-Function Mapping - Shows flows and time frame
Value-Stream Mapping - Shows flows and time and value added beyond the immediate organization
Process Charts - Uses symbols to show key activities
Service Blueprinting - focuses on customer/provider interaction
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Value-Stream MappingValue-Stream Mapping
Figure 7.6
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Process ChartProcess Chart
Figure 7.7
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Service BlueprintingService Blueprinting
Focuses on the customer and provider interaction
Defines three levels of interaction
Each level has different management issues
Identifies potential failure points
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Service BlueprintService BlueprintPersonal Greeting Service Diagnosis Perform Service Friendly Close
Level#3
Level#1
Level#2
Figure 7.8
No
Notifycustomer
and recommendan alternative
provider.(7min)
Customer arrives for service.
(3 min)
Warm greeting and obtain
service request.(10 sec)
F
Direct customer to waiting room.
F
Notify customer the car is ready.
(3 min)
Customer departs
Customer pays bill.(4 min)
F
F
Perform required work.
(varies)Prepare invoice.
(3 min)F
FYes
FYes
F
Standard request.(3 min)
Determine specifics.
(5 min)No
Canservice be
done and does customer approve?
(5 min)
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Process Analysis ToolsProcess Analysis Tools Flowcharts provide a view of the
big picture
Time-function mapping adds rigor and a time element
Value-stream analysis extends to customers and suppliers
Process charts show detail
Service blueprint focuses on customer interaction
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Special Considerations for Special Considerations for Service Process DesignService Process Design
Some interaction with customer is necessary, but this often affects performance adversely
The better these interactions are accommodated in the process design, the more efficient and effective the process
Find the right combination of cost and customer interaction
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Service Factory Service Shop
Degree of CustomizationLow High
Deg
ree
of
Lab
or
Low
High
Mass Service Professional Service
Service Process MatrixService Process Matrix
Commercial banking
Private banking
General-purpose law firms
Law clinicsSpecialized hospitals
Hospitals
Full-service stockbroker
Limited-service stockbroker
Retailing
Boutiques
Warehouse and catalog stores
Fast-food restaurants
Fine-dining restaurants
Airlines
No-frills airlines
Figure 7.9
Digital orthodontics
Traditional orthodontics
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Service Process MatrixService Process Matrix
Labor involvement is high
Selection and training highly important
Focus on human resources
Personalized services
Mass Service and Professional ServiceMass Service and Professional Service
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Service Process MatrixService Process Matrix
Service Factory and Service ShopService Factory and Service Shop
Automation of standardized services
Low labor intensity responds well to process technology and scheduling
Tight control required to maintain standards
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Improving Service Improving Service ProductivityProductivity
Strategy Technique Example
Separation Structure service so customers must go where the service is offered
Bank customers go to a manager to open a new account, to loan officers for loans, and to tellers for deposits
Self-service Self-service so customers examine, compare, and evaluate at their own pace
Supermarkets and department stores
Internet ordering
Table 7.3
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Strategy Technique Example
Postponement Customizing at delivery
Customizing vans at delivery rather than at production
Focus Restricting the offerings
Limited-menu restaurant
Modules Modular selection of service
Modular production
Investment and insurance selection
Prepackaged food modules in restaurants
Improving Service Improving Service ProductivityProductivity
Table 7.3
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Strategy Technique Example
Automation Separating services that may lend themselves to some type of automation
Automatic teller machines
Scheduling Precise personnel scheduling
Scheduling ticket counter personnel at 15-minute intervals at airlines
Training Clarifying the service options
Explaining how to avoid problems
Investment counselor, funeral directors
After-sale maintenance personnel
Improving Service Improving Service ProductivityProductivity
Table 7.3
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Improving Service Improving Service ProcessesProcesses
Layout Product exposure, customer
education, product enhancement
Human Resources Recruiting and training
Impact of flexibility
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Equipment and TechnologyEquipment and Technology
Often complex decisions
Possible competitive advantage Flexibility
Stable processes
May allow enlarging the scope of the processes
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Production TechnologyProduction Technology Machine technology
Automatic identification systems (AISs)
Process control
Vision system
Robot
Automated storage and retrieval systems (ASRSs)
Automated guided vehicles (AGVs)
Flexible manufacturing systems (FMSs)
Computer-integrated manufacturing (CIM)
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Machine TechnologyMachine Technology
Increased precision
Increased productivity
Increased flexibility
Improved environmental impact
Reduced changeover time
Decreased size
Reduced power requirements
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Automatic Identification Automatic Identification Systems (AISs)Systems (AISs)
Improved data acquisition
Reduced data entry errors
Increased speed
Increased scope of process automation
Example – Bar codes and RFIDExample – Bar codes and RFID
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Process ControlProcess Control Real-time monitoring and control of
processes Sensors collect data
Devices read data on periodic basis
Measurements translated into digital signals then sent to a computer
Computer programs analyze the data
Resulting output may take numerous forms
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Vision SystemsVision Systems Particular aid to inspection
Consistently accurate
Never bored
Modest cost
Superior to individuals performing the same tasks
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RobotsRobots
Perform monotonous or dangerous tasks
Perform tasks requiring significant strength or endurance
Generally enhanced consistency and accuracy
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Automated Storage and Automated Storage and Retrieval Systems (ASRSs)Retrieval Systems (ASRSs)
Automated placement and withdrawal of parts and products
Reduced errors and labor
Particularly useful in inventory and test areas of manufacturing firms
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Automated Guided Vehicle Automated Guided Vehicle (AGVs)(AGVs)
Electronically guided and controlled carts
Used for movement of products and/or individuals
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Flexible Manufacturing Flexible Manufacturing Systems (FMSs)Systems (FMSs)
Computer controls both the workstation and the material handling equipment
Enhance flexibility and reduced waste
Can economically produce low volume at high quality
Reduced changeover time and increased utilization
Stringent communication requirement between components
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Computer-Integrated Computer-Integrated Manufacturing (CIM)Manufacturing (CIM)
Extension of flexible manufacturing systems Backwards to engineering and inventory
control
Forward into warehousing and shipping
Can also include financial and customer service areas
Reducing the distinction between low-volume/high-variety, and high-volume/low-variety production
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Computer-Computer-Integrated Integrated
Manufacturing Manufacturing (CIM)(CIM)
Figure 7.10
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Technology in ServicesTechnology in ServicesService Industry Example
Financial Services
Debit cards, electronic funds transfer, ATMs, Internet stock trading, on-line banking via cell phone
Education Electronic bulletin boards, on-line journals, WebCT, Blackboard and smart phones
Utilities and government
Automated one-man garbage trucks, optical mail and bomb scanners, flood warning systems, meters allowing homeowners to control energy usage and costs
Restaurants and foods
Wireless orders from waiters to kitchen, robot butchering, transponders on cars that track sales at drive-throughs
Communications Interactive TV, ebooks via Kindle 2
Table 7.4
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Technology in ServicesTechnology in ServicesService Industry Example
Hotels Electronic check-in/check-out, electronic key/lock system, mobile web booking
Wholesale/retail trade
ATM-like kiosks, point-of-sale (POS) terminals, e-commerce, electronic communication between store and supplier, bar coded data, RFID
Transportation Automatic toll booths, satellite-directed navigation systems, WiFi in automobile
Health care Online patient-monitoring, online medical information systems, robotic surgery
Airlines Ticketless travel, scheduling, Internet purchases, boarding passes two-dimensional bar codes on smart phones
Table 7.4
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Process RedesignProcess Redesign The fundamental rethinking of business
processes to bring about dramatic improvements in performance
Relies on reevaluating the purpose of the process and questioning both the purpose and the underlying assumptions
Requires reexamination of the basic process and its objectives
Focuses on activities that cross functional lines
Any process is a candidate for redesign
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SustainabilitySustainability
Sustainability in production processes
1. Resources
2. Recycling
3. Regulations
4. Reputation
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SustainabilitySustainability
Resources Operations is primary user
Reducing use is win-win
Recycling Burn, bury, or reuse waste
Recycling begins at design
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SustainabilitySustainability
Regulations Laws affect transportation,
waste, and noise
Increasing regulatory pressure
Reputation Leadership may be rewarded
Bad reputation can have negative consequences
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