1

M A N A J E M E N O P E R A S I ( EKM234)

Pertemuan KETIGA

Chapter 7 –
Judul
Process Strategy
Nama Dosen Ni Nyoman Ayu DIANTINI

Bidang Ilmu S1 Manajemen

Nama
FEB UNUD
Fakultas

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Lecture Contract

Jadwal Perkuliahan – Course Overview

Week Tanggal Materi

1 4 Mar Introduction to Operation management (Ch 1)

2 11 Mar The Global Environment and Operation (ch 2) Gr 1

3 18 Mar Process Strategy (ch 7) Gr 2

4 25 Mar Location strategy (Ch 8) Gr 3

5 1 Apr Layout Strategy (ch 9) Gr 4

6 8 Apr Management Project (Ch 3) Gr 5

7 15-Apr Management Project (ch 3) Gr 6

8 22 Apr UTS

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Jadwal Perkuliahan – Course Overview

Lecture Contract

Week Tanggal Materi

9 6 May Forecasting (Heizer Ch 4) Gr 7

10 13 May Inventory Management (Ch 12) Gr 8

11 20 May MRP (Ch 14) Gr 9

12 27 May JIT Gr 10

13 3 Jun Supply Chian Management (Ch 11) Gr 11

14 10 Jun Managing Quality (Ch 6) Gr 12

15 17 Jun Critical review articles Gr 13

16 UTS

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Operations
Management
Chapter 7 –
Process Strategy

PowerPoint presentation to accompany

Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 4
Outline
 Global Company Profile: Dell
Computer Corp.
 Four Process Strategies
 Process Focus
 Repetitive Focus
 Product Focus
 Mass Customization Focus
 Comparison of Process Choices
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 5
Outline – Continued

 Process Analysis and Design

 Flow Diagrams
 Time-Function Mapping
 Value-Stream Mapping
 Process Charts
 Service Blueprinting

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 6

Outline – Continued
 Service Process Design
 Customer Interaction and Process
Design
 More Opportunities to Improve Service
Processes
 Selection of Equipment and
Technology

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 7

Outline – Continued
 Production Technology
 Machine Technology
 Automatic Identification Systems (AISs)
and RFID
 Process Control
 Vision Systems
 Robots

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 8

Outline – Continued
 Production Technology (cont.)
 Automated Storage and Retrieval
Systems (ASRSs)
 Automated Guided Vehicles (AGVs)
 Flexible Manufacturing Systems (FMSs)
 Computer-Integrated Manufacturing
(CIM)

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 9

Outline – Continued

 Technology in Services
 Process Redesign
 Ethics and Environmentally
Friendly Processes

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 10

Learning Objectives
When you complete this chapter you should be
able to:

1. Describe four production processes

2. Compute crossover points for different
processes
3. Use the tools of process analysis
4. Describe customer interaction in
process design
5. Identify recent advances in production
technology
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 11
 Dell Computer Company
Mass customization provides a competitive
advantage
 Sell custom-built PCs directly to consumer
 Lean production processes and good product
design allow responsiveness
 Integrate the Web into every aspect of its
business
 Focus research on software designed to make
installation and configuration of its PCs fast
and simple
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 12
Process, Volume, and Variety
Figure 7.1 Volume
Low Repetitive High
Volume Process Volume
High Variety
one or few units Process Focus Mass Customization
per run, high projects, job shops (difficult to achieve,
variety (machine, print, but huge rewards)
(allows carpentry) Dell Computer
customization) Standard Register
Changes in
Modules
modest runs,
standardized Repetitive
modules (autos, motorcycles)
Harley-Davidson
Changes in
Attributes (such Product Focus
as grade, quality, (commercial
size, thickness, Poor Strategy baked goods,
etc.) (Both fixed and steel, glass)
long runs only variable costs are Nucor Steel
high) - Week 3 - NNA Diantini - FEB UNUD
Process Strategy 13
Process 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
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 14
Process Strategies
Four basic strategies
 Process focus
 Repetitive focus
 Product focus
 Mass customization
Within these basic strategies there are
many ways they may be implemented
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 15
Process 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
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 16
Process Focus
Job Shop

Many departments and

many routings
Many
Many variety
inputs of
outputs

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 17

 Process Flow Diagram
Customer

Customer sales
Purchasing
representative

Vendors PREPRESS DEPT

Accounting Receiving PRINTING DEPT

Warehouse COLLATING GLUING, BINDING,

DEPT STAPLING, LABELING

Information flow POLYWRAP DEPT

Material flow
SHIPPING

Customer Figure 7.2

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 18
Repetitive 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
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 19
 Repetitive Focus
Automobile Assembly Line

Raw Modules
materials combined
and for many
module output
inputs options

Few
modules

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 20

 Process Flow Diagram
Frame tube Frame-building Frame Hot-paint
bending work cells machining frame painting
THE ASSEMBLY LINE
TESTING Engines and
Incoming parts transmissions
28 tests
From Milwaukee
on a JIT arrival
Air cleaners Oil tank work cell schedule

Fluids and mufflers Shocks and forks

Fuel tank work cell Handlebars

Wheel work cell Fender work cell

Roller testing
Crating

Figure 7.3
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 21
Product 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
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 22
 Product Focus
Continuous Work Flow

Output
variations
Few in size,
inputs shape, and
packaging

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 23

 Product Focus
D A Scrap
Nucor Steel Plant steel

Continuous caster

B
C Electric
Ladle of molten steel furnace

Continuous cast steel sheared

into 24-ton slabs
Hot tunnel furnace - 300 ft
E F

Hot mill for finishing, cooling, and coiling

H G
I

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 24

Mass 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

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 25

Mass Customization
Table 7.1 Number of Choices
Item 1970s 21st Century
Vehicle models 140 286
Vehicle types 18 1,212
Bicycle types 8 19
Software titles 0 400,000
Web sites 0 98,116,993
Movie releases 267 458
New book titles 40,530 77,446
Houston TV channels 5 185
Breakfast cereals 160 340
Items (SKUs) in 14,000 150,000
supermarkets
LCD TVs 0
Process Strategy - Week 3 - NNA Diantini - FEB UNUD
102 26
Mass Customization
Figure 7.5
Repetitive Focus
Flexible people
and equipment
Supportive
supply Modular techniques
chains

Mass Customization
Effective Rapid
scheduling throughput
techniques techniques

Process-Focused Product-Focused
High variety, low volume Low variety, high volume
Low utilization (5% to 25%) High utilization (70% to 90%)
General-purpose equipment Specialized equipment
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 27
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Small Long runs, Large Large

quantity, large standardized quantity, small quantity, large
variety of product made variety of variety of
products from modules products products

General Special Special Rapid

purpose equipment purpose changeover
equipment aids in use of equipment on flexible
assembly line equipment

Table 7.2
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 28
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Operators are Employees Operators are Flexible

broadly are modestly less broadly operators are
skilled trained skilled trained for the
necessary
customization

Many job Repetition Few work Custom

instructions reduces orders and job orders require
as each job training and instructions many job
changes changes in job because jobs instructions
instructions standardized

Table 7.2
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 29
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Raw material JIT Raw material Raw material

inventories procurement inventories inventories
high techniques are low are low
used

Work-in- JIT inventory Work-in- Work-in-

process is techniques process process
high used inventory is inventory
low driven down
by JIT, lean
production

Table 7.2
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 30
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Units move Movement is Swift Goods move

slowly measured in movement of swiftly
through the hours and unit through through the
plant days the facility is facility
typical

Finished Finished Finished Finished

goods made goods made goods made goods often
to order to frequent to forecast build-to-order
forecast and stored (BTO)

Table 7.2
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 31
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Scheduling is Scheduling Relatively Sophisticated

complex, based on simple scheduling
trade-offs building scheduling, required to
between various establishing accommodate
inventory, models from output rate to custom orders
availability, a variety of meet forecasts
customer modules to
service forecasts

Table 7.2
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 32
 Comparison of Processes
Process Repetitive Product Focus Mass
Focus Focus (High-volume, Customization
(Low volume, (Modular) low-variety) (High-volume,
high variety) high-variety)

Fixed costs Fixed costs Fixed costs Fixed costs

low, variable dependent on high, variable high, variable
costs high flexibility of costs low costs must be
the facility low

Costing Costs usually High fixed High fixed

estimated known due to costs mean costs and
before job, extensive costs dynamic
known only experience dependent on variable costs
after the job utilization of make costing
capacity a challenge

Table 7.2
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 33
 Crossover Charts
Variable
costs
Variable Variable
$ costs $ costs $
Fixed costs Fixed costs
Fixed costs
Low volume, high variety Repetitive High volume, low variety
Process A Process B Process C

400,000
300,000
200,000
Fixed cost Fixed cost Fixed cost
Process A Process B Process C
Figure 7.6 (2,857) V1 V2 (6,666) Volume
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 34
Focused Processes
 Focus brings efficiency
 Focus on depth of product line rather
than breadth
 Focus can be
 Customers
 Products
 Service
 Technology

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 35

Changing Processes

 Difficult and expensive

 May mean starting over
 Process strategy determines
transformation strategy for an
extended period
 Important to get it right

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 36

Process Analysis and Design
 Flow Diagrams - 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
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 37
 “Baseline” Time-Function Map
Customer Order Receive
product product

Process
Sales order

Production Wait
control

Plant A Print

Warehouse Wait Wait Wait

Plant B Extrude

Transport Move Move

12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day

Figure 7.7
52 Diantini
Process Strategy - Week 3 - NNA days - FEB UNUD 38
 “Target” Time-Function Map
Customer
Order Receive
product product

Process
Sales order

Production
control Wait

Plant Print Extrude

Warehouse Wait

Transport Move

1 day 2 days 1 day 1 day 1 day

6 days
Figure 7.7
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 39
Value-Stream Mapping

Process Strategy - Week 3 - NNA Diantini - FEB UNUD Figure 7.8 40

Process Chart

Figure 7.9
Service Blueprint

 Focuses on the customer and

provider interaction
 Defines three levels of interaction
 Each level has different management
issues
 Identifies potential failure points

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 42

 Service Blueprint
Personal Greeting Service Diagnosis Perform Service Friendly Close
Level Customer arrives
#1 for service Customer departs

F
Customer pays bill
Determine Notify
Warm greeting specifics customer
and obtain No and recommend
service request an alternative F
Standard provider
Level request Can
service be F
#2 done and does No
Direct customer customer
to waiting room approve? Notify
customer the
car is ready
F F F
Yes Yes
Perform
Level required work
#3
F
Prepare invoice
Figure 7.10
Process Strategy - Week 3 - NNA Diantini -FFEB UNUD 43
Process 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
 Service Process Matrix
Degree of Customization
Low High
Mass Service Professional Service
Private
banking
Commercial
banking
High General-
purpose law firms
Full-service
stockbroker
Degree of Labor

Boutiques
Retailing

Service Factory Law clinics Service Shop

Limited-service Specialized
stockbroker hospitals
Warehouse and Fast-food Fine-dining
Hospitals
Low catalog stores restaurants restaurants

Airlines

No-frills
Figure 7.11 airlines
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 45
Service Process Matrix
Mass Service and Professional Service
 Labor involvement is high
 Selection and training highly important
 Focus on human resources
 Personalized services
Service Factory and Service Shop
 Automation of standardized services
 Low labor intensity responds well to
process technology and scheduling
 Tight control required to maintain standards
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 46
Improving Service Productivity

Strategy Technique Example

Separation Structure service so Bank customers go to
customers must go a manager to open a
where service is new account, to loan
offered officers for loans, and
to tellers for deposits
Self-service Self-service so Supermarkets and
customers examine, department stores,
compare, and Internet ordering
evaluate at their own
pace

Process Strategy - Week 3 - NNA Diantini - FEB UNUD

Table 7.3 47
Improving Service Productivity

Strategy Technique Example

Postponement Customizing at Customizing vans at
delivery delivery rather than at
production
Focus Restricting the Limited-menu
offerings restaurant
Modules Modular selection of Investment and
service, modular insurance selection,
production prepackaged food
modules in
restaurants

Process Strategy - Week 3 - NNA Diantini - FEB UNUD

Table 7.3 48
Improving Service Productivity

Strategy Technique Example

Automation Separating services Automatic teller
that may lend machines
themselves to
automation
Scheduling Precise personnel Scheduling ticket
scheduling counter personnel at
15-minute intervals at
airlines
Training Clarifying the service Investment counselor,
options, explaining funeral directors, after-
how to avoid sale maintenance
problems personnel
Process Strategy - Week 3 - NNA Diantini - FEB UNUD
Table 7.3 49
Improving Service Processes

 Layout
 Product exposure, customer
education, product enhancement
 Human Resources
 Recruiting and training
 Impact of flexibility

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 50

Equipment and Technology

 Often complex decisions

 Possible competitive advantage
 Flexibility
 Stable processes
 May allow enlarging the scope of the
processes

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 51

Production 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)
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 52
Machine Technology
 Increased precision
 Increased productivity
 Increased flexibility
 Improved environmental impact
 Reduced changeover time
 Decreased size
 Reduced power requirements
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 53
Automatic Identification
Systems (AISs)
 Improved data acquisition
 Reduced data entry errors
 Increased speed
 Increased scope
of process
automation

Example – Bar codes and RFID

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 54
Process Control

 Increased process stability

 Increased process precision
 Real-time provision of information for
process evaluation
 Data available in many forms

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 55

Process Control Software

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 56

Vision Systems

 Particular aid to inspection

 Consistently accurate
 Never bored
 Modest cost
 Superior to individuals performing the
same tasks

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 57

Robots
 Perform monotonous or dangerous
tasks
 Perform tasks requiring significant
strength or endurance
 Generally enhanced consistency and
accuracy

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 58

Automated Storage and 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

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 59

Automated Guided Vehicle
(AGVs)

 Electronically guided and controlled

carts
 Used for movement of products and/or
individuals

Process Strategy - Week 3 - NNA Diantini - FEB UNUD 60

Flexible Manufacturing 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
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 61
Computer-Integrated
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
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 62
Computer-
Integrated
Manufacturing
(CIM)

Figure 7.12
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 63
Technology in Services
Service Industry Example
Financial Debit cards, electronic funds transfer, ATMs,
Services Internet stock trading
Education Electronic bulletin boards, on-line journals,
WebCT and Blackboard
Utilities and Automated one-man garbage trucks, optical
government mail and bomb scanners, flood warning
systems
Restaurants and Wireless orders from waiters to kitchen,
foods robot butchering, transponders on cars that
track sales at drive-throughs
Communications Electronic publishing, interactive TV

Process Strategy - Week 3 - NNA Diantini - FEB UNUD Table 7.4 64

Technology in Services
Service Industry Example
Hotels Electronic check-in/check-out, electronic
key/lock system
Wholesale/retail ATM-like kiosks, point-of-sale (POS)
trade terminals, e-commerce, electronic
communication between store and supplier,
bar coded data
Transportation Automatic toll booths, satellite-directed
navigation systems
Health care Online patient-monitoring, online medical
information systems, robotic surgery
Airlines Ticketless travel, scheduling, Internet
purchases

Process Strategy - Week 3 - NNA Diantini - FEB UNUD Table 7.4 65

Process 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
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 66
Ethics and Environmentally
Friendly Processes
Reduce the negative impact on the
environment
 Encourage recycling
 Efficient use of resources
 Reduction of waste by-products
 Use less harmful ingredients
 Use less energy
Process Strategy - Week 3 - NNA Diantini - FEB UNUD 67
• Thank you

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