Chapter 07

Process Strategy

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 Chapter outline
Global Company Profile: Dell Computer Corp.
Four Process Strategies
Process Focus
Repetitive Focus
Product Focus
Mass Customization Focus
Comparison of Process Choices
Process Analysis and Design
Flow Diagrams
Time-Function Mapping
Value-Stream Mapping
Process Charts
Service Blueprinting
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Learning objectives

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

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 Sell custom-built PCs directly to consumer

Lean production processes and good

product design allow responsiveness
Dell Computer
Company 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

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Process, Volume, and Variety

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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

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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

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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

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Process Focus

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Process Flow Diagram

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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

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Repetitive Focus

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Process Flow Diagram

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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 labour

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Product Focus

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Product Focus

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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

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Mass Customization

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Mass Customization

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Comparison of processes
Mass customization
Process focus (Low Repetitive focus Product focus ((High
(High volume, high
volume, high variety (Modular) volume, low variety)
variety)

Long runs,
Small quantity, large standardized Large quantity, small Large quantity, large
variety of products products made from variety of products variety of products
modules

Special equipment
General purpose aids in use of Special purpose Rapid changeover on
equipment assembly line equipment flexible equipment

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Comparison of processes
Mass customization
Process focus (Low Repetitive focus Product focus ((High
(High volume, high
volume, high variety (Modular) volume, low variety)
variety)

Operators are Flexible operators

Operators are Operators are less
moderately trained are trained for the
broadly skilled broadly trained
customization

Repetition reduces
Many job the training and Few work orders and Custom orders
instructions as each changes in job job instructions as require many job
job changes instructions jobs are standardized instructions

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Comparison of processes
Mass customization
Process focus (Low Repetitive focus Product focus ((High
(High volume, high
volume, high variety (Modular) volume, low variety)
variety)

Raw material JIT based Low raw material Low raw material
inventory is high procurement inventory inventory

Work in process JIT inventory Work in process Low work in process

inventory is high inventory is low inventory due to JIT

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Comparison of processes
Mass customization
Process focus (Low Repetitive focus Product focus ((High
(High volume, high
volume, high variety (Modular) volume, low variety)
variety)

Units movement is
Slow movement of measured in Fast movement of Fast movement of
units hours/days units units

Final products are Final products are Final products are

Final products are made according to made according to often based on build-
made to order forecast forecast and stored to-order

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Comparison of processes
Mass customization
Process focus (Low Repetitive focus Product focus ((High
(High volume, high
volume, high variety (Modular) volume, low variety)
variety)

Scheduling is Scheduling is based Sophisticated

complex, trade-offs on building various Relatively simple scheduling is
between inventory models from a scheduling, outputs required to
availability and variety of modules to are based on forecast accommodate the
customer service forecast customized orders

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Comparison of processes
Mass customization
Process focus (Low Repetitive focus Product focus ((High
(High volume, high
volume, high variety (Modular) volume, low variety)
variety)

Fixed costs are low, Fixed costs are Fixed costs are high,
dependent on the Fixed costs are high,
variable costs are variable costs should
flexibility of facility variable costs are low
high be low

Costs are only

Costs are usually High fixed costs High fixed costs are
estimated before the
known due to mean they are dynamic variable
job and they are
extensive experience dependent on costs make costing a
know only after the
utilization of capacity challenging taks
job is done

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Crossover Charts

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Focused 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 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 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

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“Baseline” Time-Function Map

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“Target” Time-Function Map

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Value-Stream Mapping

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Process
Chart

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Service Blueprint

• 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 Blueprint

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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

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