Ch 03 Student Krajewski

8/12/2019 Ch 03 Student Krajewski

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3 1Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

Process Strategy

3

For Operations M anagement, 9e byKrajewski/Ritzman/Malhotra 2010 Pearson Education

Homework Ch. 3: 2, 3, 5


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Proc ess St rateg y

Principles of process strategy1. Make choices that fit the situation and that

make sense together, that have a closes t ra tegic f i t

2. Individual processes are the building blocksthat eventually create the firms whole supplychain

3. Management must pay particular attention tothe interfaces between processes


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A Process View

External environment

Information onperformance

Internal and externalcustomers

Processes andoperations

1

2

3

4

5

Inputs Workers Managers Equipment Facilities Materials Land Energy

Outputs Goods Services

Figure 1.2


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The Su pp ly Chain View

Support Processes

E x

t e r n a

l s u p p

l i e r s E

x t er n

al

c u s t om

er s

Supplierrelationshipprocess

New

service/productdevelopment

Orderfulfillmentprocess

Customerrelationshipmanagement

Figure 1.4


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Proc ess St rateg y Decis ion s

Figure 3.1 Major Decisions for

Effective Processes

Process Structure Customer-contract position

(services) Product-process position

(manufacturing) Layout

Resource Flexibility Specialized Enlarged

Customer Involvement Low involvement High involvement

Effective ProcessDesign

Strategy for Change

Process reengineering Process improvement

Capital Intensity Low automation High automation


7/263 7Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall.

1.a. Serv ice Pro cess Struc tu r in g

Front off ice

Hybr id off ice

Back off ice

Less customer contact and customization

L e s s p r o c e s s e s

d i v e r g e n c e a n

d m o r e

l i n e

f l o w s (1) (2) (3)High interaction with Some interaction with Low interaction with

customers, highly customers, standard customers, standardizedcustomized service services with some options services

ProcessCharacteristics

(1)Flexible flows with

Individualprocesses

(2)Flexible flows withsome dominantpaths, withsome exceptions

to how workperformed

(3)Line flows, routinework same with allcustomers

Figure 3.2 Customer-Contact Matrix for Service Processes

High-End HomeDesign

IBM/Dell


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Serv ice Proc ess St ruc tur ing

Front, Hybrid, or Back?Bank TellerFinancial PlanningTax Service

ExpediaBarber/SalonEmployee PayrollMonthly bank statementsCar wash



1.b . Manu factu r ing Process St ruc tur in g

Continuousprocess

Jobprocess

Lineprocess

Large batchprocess

Small batchprocess

(1) (2) (3) (4)Low-volume Multiple products with low Few major High volume, highproducts, made to moderate volumeto customerorder

ProcessCharacteristics

(1)Customized process,with flexible andunique sequence of

tasks

(2)Disconnected lineflows, moderatelycomplex work

(3)Connected line, highlyrepetitive work

(4)Continuous flows

L e s s c o m p

l e x

i t y ,

l e s s

d i v e r g e n c e ,

a n

d m o r e

l i n e

f l o w s

Less customization and higher volume

Batch processes

Figure 3.3 Product-Process Matrix for Processes

standardization,commodity products

products,higher vol


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Manu fac tur in g Proc ess S truc tur ing

Job, Batch, Line or Continuous?Uniform productionElectrical productionBen & Jerrys Ice Cream Automobile manufacturingOil refineryAlconAuto repair shop/body shop



Layout (page 140 or 100)

The physical arrangement of human andcapital resourcesAn operation is a group of resourcesperforming all or part of one or moreprocesses



Clo seness Matr ix

There are two absolute requirements forthe new layout1. Education should remain where it is2. Administration should remain where it is

Closeness FactorsDepartment 1 2 3 4 5 61. Administration 3 6 5 6 102. Social services 8 1 13. Institutions 3 94. Accounting 25. Education 16. Internal audit



Develop ing a Bloc k P lan

EXAMPLE 3.1Develop an acceptable block plan for the Office of BudgetManagement that locates departments with the greatestinteraction as close to each other as possible.

150

100

63 4

2 51



150

100

Develop ing a Bloc k P lan

Figure 3.5 Proposed Block Plan

1 5

a. Departments 1 and 6 close togetherb. Departments 3 and 5 close togetherc. Departments 2 and 3 close together



3 15

2 122 20

2 16

2 2

1 12 6

3 27

1 2

2 2

Total 112

Calcu lat ing the WD Sco re

2 61 61 3

3 18

1 5

2 121 10

1 8

1 1

2 22 6

1 9

1 2

3 3

Total 82

Current Plan Proposed PlanDepartment

PairClosenessFactor ( w )

Distance(d )

Weighted-DistanceScore ( w d )

Distance(d )

Weighted-DistanceScore ( w d )

1, 2 3

1, 3 6

1, 4 5

1, 5 61, 6 102, 3 8

2, 4 1

2, 5 1

3, 4 3

3, 5 9

4, 5 25, 6 1



2. Cus tom er Inv o lvem ent



3. Reso u rc e Flexib i l i ty

A flexible workforce can often requirehigher skills and more training andeducation

Worker flexibility can help achieve reliablecustomer service and alleviate bottlenecksResource flexibility helps absorb changesin workloadsThe type of workforce may be adjustedusing full-time or part-time workers



Reso u rc e Flexib i li ty

The volume of business may affect the typeof equipment usedBreak-even analysis can be used to

determine at what volumes changes inequipment should be made



B reak-Even A n alys is

Process 2:Special-purposeequipment

Process 1:General-purpose

equipment

Break-evenquantity

T o

t a l c o s

t ( d o

l l a r s

)

Units per year ( Q )

F2

F1

Figure 3.7 Relationship Between Process Costs and Product Volume



A p p l icat ion 3.3

Q =F m F b c b c m

BBC is deciding whether to weld bicycle frames manually or topurchase a welding robot. If welded manually, investment costsfor equipment are only $10,000. the per-unit cost of manuallywelding a bicycle frame is $50.00 per frame. On the other hand,a robot capable of performing the same work costs $400,000.robot operating costs including support labor are $20.00 perframe.

At what volume would BBC be indifferent to these alternativemethods?

welded manually(Make)

welded by robot(Buy)

Fixed costs $10,000 $400,000Variable costs $50 $20

=$10,000 $400,000

$20 $50 = 13,000 frames



4. Cap ital In tens i ty



Strateg ies fo r Chang e

Process reengineering is the fundamentalrethinking and radical redesign of aprocess to improve performanceCan be successful but it is not simple oreasyThe people who are involved with theprocess each day are the best source ofideas on how to improve itProcess improvement is the systematicstudy of activities and flows of a process tofind ways to improve it



Proc ess Reen g ineer ing

TABLE 3.2 | KEY ELEMENTS OF REENGINEERING

Element Description

Critical processes Emphasis on core business processes, normal processimprovement activities can continue with other processes

Strong leadership Strong leadership from senior executives to overcomeresistance

Cross-functional teams A team with members from each functional area charged withcarrying out the project

Information technology Primary enabler of the project as most reengineering projectsinvolve information flows

Clean-slate philosophy Start with the way the customer wants to deal with the companyand includes internal and external customers

Process analysis Must understand the current processes throughout theorganization


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Solved Problem 1

A defense contractor is evaluating its machine shops currentlayout. Figure 3.11 shows the current layout and the tableshows the closeness matrix for the facility measured as thenumber of trips per day between department pairs. Safety andhealth regulations require departments E and F to remain attheir current locations.

a. Use trial and error to find a better layoutb. How much better is your layout than the current layout in

terms of the w d score? Use rectilinear distance.

Trips Between Departments

Department A B C D E FA 8 3 9 5

B 3

C 8 9

D 3

E 3

F

E

A

B

C D

F

Figure 3.11 Current Layout


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Solved Problem 1

SOLUTIONa. In addition to keeping departments E and F at their current

locations, a good plan would locate the following departmentpairs close to each other: A and E, C and F, A and B, and Cand E. Figure 3.12 was worked out by trial and error andsatisfies all these requirements. Start by placing E and F attheir current locations. Then, because C must be as close aspossible to both E and F, put C between them. Place A belowE, and B next to A. All of the heavy traffic concerns havenow been accommodated.

Trips Between Departments

Department A B C D E FA 8 3 9 5

B 3

C 8 9

D 3

E 3

F

E F

A B

C

D

Figure 3.12 Proposed Layout


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Solved Problem 1

Current Plan Proposed Plan

DepartmentPair

Number ofTrips (1) Distance (2)

w d Score(1) (2) Distance (3)

w d Score(1) (3)

A, B 8 2 16 1 8

A, C 3 1 3 2 6A, E 9 1 9 1 9

A, F 5 3 15 3 15

B, D 3 2 6 1 3

C, E 8 2 16 1 8C, F 9 2 18 1 9

D, F 3 1 3 1 3

E, F 3 2 6 2 6w d = 92 w d = 67

b. The table reveals that the w d score drops from 92 for thecurrent plan to 67 for the revised plan, a 27 percentreduction.

Ch 03 Student Krajewski

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