Process Selection, Analysis

and Design
Outline (1 of 2)
• Global Company Profile: Harley-Davidson
• Four Process Strategies
• Selection of Equipment
• Process Analysis and Design
• Special Considerations for Service Process Design
Outline (2 of 2)
• Production Technology
• Technology in Services
• Process Redesign
Harley-Davidson
• The only major U.S. motorcycle company
• Emphasizes quality and lean manufacturing
• Materials as Needed (MAN) system
• Many variations possible
• Tightly scheduled repetitive production
Process Flow Diagram
Learning Objectives
7.1 Describe four process strategies
7.2 Compute crossover points for different processes
7.3 Use the tools of process analysis
7.4 Describe customer interaction in service processes
7.5 Identify recent advances in production technology
Process Strategy
The objective is to create a process to produce offerings that meet
customer requirements within cost and other managerial constraints
Process Strategies (1 of 2)
• 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, Volume, and Variety

Figure 7.1 Process Selected Must Fit with Volume and Variety
Process Strategies (2 of 2)
Four basic strategies

1. Process focus
2. Repetitive focus
3. Product focus
4. Mass customization

Within these basic strategies there are many ways they may be
implemented
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
 (low-volume, high-variety,
intermittent processes)
Arnold Palmer Hospital

• Figure 7.2(a) Process Focus

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
 (modular) Harley Davidson

• Figure 7.2(b) Repetitive Focus

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
 (high-volume, low-variety,
continuous process)
Frito-Lay

• Figure 7.2(c) Product Focus

Mass Customization (1 of 3)
• 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
 (high-volume, high-variety)
Dell Computer

• Figure 7.2(d) Mass Customization

Mass Customization (2 of 3)
Table 7.1 Mass Customization Provides More Choices Than Ever

Blank Number of Choices Number of Choices

Item 1970s 21st Century

Vehicle styles 18 1,212
Bicycle types 8 211,000
iPhone mobile game apps 0 1,200,000
Web sites 0 634,000,000
Movie releases per year 267 1551
New book titles 40,530 300,000+
Houston TV channels 5 185
Breakfast cereals 160 340
Items (SKUs) in supermarkets 14,000 150,000

High-definition TVs 0 102

Mass Customization (3 of 3)
• Imaginative product design
• Flexible process design
• Tightly controlled inventory management
• Tight schedules
• Responsive partners in the supply-chain
Comparison of Processes (1 of 4)
Table 7.2 Comparison of the Characteristics of Four Types of Processes

Process Focus Repetitive Focus Product Focus Mass

(Low-volume, (Modular (High-volume, Customization
High-variety Harley-Davidson) Low-variety (High-volume,
Arnold Palmer Frito-Lay) High-variety
Hospital) Dell Computer)

1. Small quantity 1. Long runs, a 1. Large quantity 1. Large quantity and

and large variety standardized and small large variety of
of products product from variety of products
modules products

2. Broadly skilled 2. Moderately trained 2. Less broadly 2. Flexible operators

operators employees skilled operators
Comparison of Processes (2 of 4)
Table 7.2 [Continued]

Process Focus Repetitive Focus Product Focus Mass

(Low-volume, (Modular (High-volume, Customization
High-variety Harley-Davidson) Low-variety (High-volume,
Arnold Palmer Frito-Lay) High-variety
Hospital) Dell Computer)

3. Instructions for 3. Few changes in the 3. Standardized job 3. Custom orders

each job instructions instructions requiring many job
instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory

relative to the value
of the product
Comparison of Processes (3 of 4)
Table 7.2 [Continued]

Process Focus Repetitive Focus Product Focus Mass Customization

(Low-volume, (Modular (High-volume, (High-volume, High-
High-variety Harley-davidson) Low-variety variety
Arnold Palmer Frito-lay) Dell Computer)
Hospital)
5. Finished goods are 5. Finished goods are 5. Finished goods 5. Finished goods are
made to order and made to frequent are made to a build-to-order (BTO)
not stored forecasts forecast and
stored

6. Scheduling is 6. Scheduling is 6. Scheduling is 6. Sophisticated

complex routine routine scheduling
accommodates
custom orders
Comparison of Processes (4 of 4)
Table 7.2 [Continued]

Process Focus Repetitive Focus Product Focus Mass

(Low-volume, (Modular (High-volume, Customization
High-variety Harley-davidson) Low-variety (High-volume,
Arnold Palmer Frito-lay) High-variety
Hospital) Dell Computer)

7. Fixed costs are low 7. Fixed costs are 7. Fixed costs are 7. Fixed costs tend to
and variable costs dependent on high and variable be high and
high flexibility of the costs low variable costs low
facility
Crossover Chart Example (1 of 2)
• Evaluate three different accounting software products
• Calculate crossover points between software A and B and between
software B and C

Blank Total Fixed Cost Dollars Required Per

Accounting Report
Software A $200,000 $60
Software B $300,000 $25
Software C $400,000 $10
Crossover Chart Example (2 of 2)
200,000 +  60 V1 = 300,000 +  25 V1
35V1 = 100,000
V1 = 2,857
• Software A is most economical from 0 to 2,857 reports

300,000 +  25 V2 = 400,000 + 10 V2

15V2 = 100,000
V2 = 6,666
• Software B is most economical from 2,857 to 6,666 reports
Figure 7.3 Crossover Charts
Focused Processes
• Focus brings efficiency
• Focus on depth of product line rather than breadth
• Focus can be
• Customers
• Products
• Service
• Technology
Selection of Equipment
• Decisions can be complex as alternate methods may be available
• Important factors may be
• Cost
• Cash flow
• Market stability
• Quality
• Capacity
• Flexibility
Flexibility
• Flexibility is the ability to respond with little penalty in time, cost, or
customer value
• May be a competitive advantage
• May be difficult and expensive
• Without it, change may mean starting over
Process Analysis and Design (1 of 2)
• 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?
Process Analysis and Design (2 of 2)
• Flowchart
• Shows the movement of materials
• Harley-Davidson flowchart
• Time-Function Mapping
• Shows flows and time frame
Figure 7.4(a) “Baseline” Time-Function Map
Figure 7.4(b) “Target” Time-Function Map
Process Chart
Figure 7.5 Process Chart Showing a Hamburger Assembly Process at a Fast-Food Restaurant
Process Analysis and Design
• Value-Stream Mapping (VSM)
• Where value is added in the entire production process, including the supply
chain
• Extends from the customer back to the suppliers
Value-Stream Mapping (1 of 2)
1. Begin with symbols for customer, supplier, and production to ensure
the big picture
2. Enter customer order requirements
3. Calculate the daily production requirements
4. Enter the outbound shipping requirements and delivery frequency
5. Determine inbound shipping method and delivery frequency
Value-Stream Mapping (2 of 2)
6. Add the process steps (i.e., machine, assemble) in sequence, left to
right
7. Add communication methods, add their frequency, and show the
direction with arrows
8. Add inventory quantities between every step of the entire flow
9. Determine total working time (value-added time) and delay (non-
value-added time)
Figure 7.6 Value-Stream Mapping
Service Blueprinting
• Focuses on the customer and provider interaction
• Defines three levels of interaction
• Each level has different management issues
• Identifies potential failure points
Service Blueprint
Figure 7.7 Service Blueprint for Service at Speedy Lube, Inc.
Special Considerations for Service 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
Service Process Matrix (1 of 3)
Figure 7.8 Services Moving Toward Specialization and Focus Within the Service Process Matrix
Service Process Matrix (2 of 3)
Mass Service and Professional Service
• Labor involvement is high
• Focus on human resources
• Selection and training highly important
• Personalized services
Service Process Matrix (3 of 3)
Service Factory and Service Shop
• Automation of standardized services
• Restricted offerings
• Low labor intensity responds well to
process technology and scheduling
• Tight control required to
maintain standards
Improving Service Productivity (1 of 2)
Table 7.3 Techniques for Improving Service Productivity

Strategy Technique Example

Separation Structuring service so customers Bank customers go to a manager
must go where the service is to open a new account, to loan
offered officers for loans, and to tellers
for deposits
Self-service Self-service so customers examine, Supermarkets and department
compare, and evaluate at their stores
own pace Internet ordering
Postponement Customizing at delivery Customizing vans at delivery
rather than at production
Focus Restricting the offerings Limited-menu restaurant
Improving Service Productivity (2 of 2)
Table 7.3 [Continued]

Strategy Technique Example

Modules Modular selection of service Investment and insurance
Modular production selection
Prepackaged food modules in
restaurants
Automation Separating services that may Automatic teller machines
lend themselves to some type
of automation
Scheduling Precise personnel scheduling Scheduling ticket counter
personnel at 15-minute
intervals at airlines
Training Clarifying the service options Investment counselor, funeral
Explaining how to avoid directors
problems After-sale maintenance
personnel
Production Technology
1. Machine technology
2. Automatic identification systems (AISs)
3. Process control
4. Vision systems
5. Robots
6. Automated storage and retrieval systems (ASRSs)
7. Automated guided vehicles (AGVs)
8. Flexible manufacturing systems (FMSs)
9. Computer-integrated manufacturing (CIM)
Machine Technology
• Increased precision, productivity, and flexibility
• Reduced environmental impact
• Additive manufacturing produces products by adding material, not
removing it
• Supports innovative product design, minimal custom tooling required,
minimal assembly time, low inventory, and reduced time to market
• Computer numerical control (CNC)
Automatic Identification Systems (AISs) and RFID
• Improved data acquisition
• Reduced data entry errors
• Increased speed
• Increased scope of process automation
Bar codes and RFID
Process 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
Vision Systems
• Particular aid to inspection
• Consistently accurate
• Never bored
• Modest cost
• Superior to individuals performing the same tasks
Robots
• Perform monotonous or dangerous tasks
• Perform tasks requiring significant strength or
endurance
• Generally enhanced consistency and accuracy
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
Automated Guided Vehicle (AGVs)
• Electronically guided and controlled carts
• Used for movement of products and/or individuals
Flexible Manufacturing Systems (FMSs)
• Computer controls both the workstation and the material handling
equipment
• Enhance flexibility and reduced waste
• Can economically produce low volume but high variety
• Reduced changeover time and increased utilization
• Stringent communication requirement between components
Computer-Integrated Manufacturing (CIM)
• Extend flexible manufacturing
• Backward 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
Figure 7.9 Computer-Integrated Manufacturing (CIM)
Technology in Services (1 of 2)
Table 7.4 Examples of Technology’s Impact on Services

Service Industry Example

Financial Services Debit cards, electronic funds transfer, A T M s, Internet
stock trading, online banking via cell phone

Education Online newspapers and journals, interactive

assignments via WebC T, Blackboard, and smartphones

Utilities and government Automated one-person garbage trucks, optical mail

scanners, flood-warning systems, meters that allow
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 T V, e-books via Kindle
Technology in Services (2 of 2)
Table 7.4 [Continued]

Service Industry Example

Hotels Electronic check-in/check-out, electronic key/lock
systems, mobile Web bookings

Wholesale/retail trade Point-of-sale (P O S) terminals, e-commerce,

electronic communication between store and
supplier, bar-coded data, R F I D
Transportation Automatic toll booths, satellite-directed navigation
systems, Wi-Fi in automobiles
Health care Online patient-monitoring systems, online medical
information systems, robotic surgery

Airlines Ticketless travel, scheduling, Internet purchases,

boarding passes downloaded as two-dimensional bar
codes on smart phones
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
Copyright