Chapter 2 Process Strategy and Analysis

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1 Chapter 2 Process Strategy and Analysis Process Structures Process Strategy Decisions Process Analysis and Improvement 1 I. Process Strategy A process converts inputs into outputs. Process Strategy: The pattern of decisions made in managing processes so that they will achieve competitive priorities. Process strategy decides 1. Process structure: the way production of goods or services will be organized 2. Customer Involvement 3. What degree of resource flexibility? 4. Capital Intensity: Cost of Equipment 影響現場佈置 顧客參與 產能彈性 設備選擇 員工技能 投資成本 3 1

2 Process Strategy Process Structure in Services DIMENSIONS OF CUSTOMER CONTACT IN SERVICE PROCESSES Dimension High Contact Low Contact Physical presence Present Absent What is processed People Possessions or information Contact intensity Active, visible Passive, out of sight Personal attention Personal Impersonal Method of delivery Face to face Regular mail or e mail 2

3 Customer-Contact Matrix Service Process Structuring Front Office has high customer contact where the service provider interacts directly with the customer. Because of the customization, many of the steps in it have considerable divergence. Work flows are flexible Hybrid Office has moderate levels of customer contact and standard services, with some options available... The work flow progresses from one workstation to the next, with some dominant paths apparent. Back Office has low customer contact and little service customization. The work is standardized and routine, with line flows from one service provider to the next until the service is completed. 3

4 Process Structure in Manufacturing Manufacturing Process Structuring Continuous flow process 自動化連續製程 : 石化 飲料 網路連線 Flow line, Assembly line (line process) 大量組裝的流水線生產 : 汽車 家電 IC 封裝 Batch process 批量生產 : 精密儀器 旅遊團 店家烘培 Job shop (job process) 零工生產, 多樣少量 : 鐵工廠 百貨公司 Project 專案生產,one of a kind: 大型建築 電影製作 9 4

5 Flow Line (repetitive): 規格相似產品依照既定順序與速度逐步完成組裝 10 Job Shop 產品多樣少量, 製造步驟因規格而異, 沒有主要的順序, 產品根據各自的製造需求到各站接受處理 Drilling work center 2 2 Assembly Painting work center Milling Lathe work center work center A B C D Raw materials 11 5

6 Batch Process and Continuous Flow Movie, Bakery 12 Why do We Produce or Process in Batches? Setup/Changeover 設備或人員從事不同類型工作所需的準備時間 Save setup time and costs Reduce processing cost per unit Maintain production quality What is the price to pay? No setup No batching 13 6

7 Process Choice Affects Activity/Function Job Shop Batch Flow Line Continuous Project Equipment general general special special Labor Skills high moderate low low Fixed Costs low moderate high very high very high Variable Costs high moderate low very low very high Cost per unit high moderate low very low very high Scheduling complex complex routine routine complex WIP high high low low very low 自動洗車 vs. 專業汽車美容學校自助餐 vs. 快餐便當店 迴轉壽司 vs. 料理壽司 婚紗攝影 14 Production Strategies Production mode Process characteristic Advantage Make to Stock 事先生產以滿足預期的未來需求 標準化規格 大量生產 Line or continuous flow 快速交貨可以庫存因應需求起伏 Make to Order 客戶下單後, 依照客戶要求生產 (customization) 規格多樣少量 Job or batch process 降低庫存壓力顧客滿意度高 利潤高 Challenge 需求預測 庫存控管 準時交貨 保持品質穩 定 Design to Order, Built to Order, Configure to Order, Assemble to Order 15 7

8 1 Customer order Pull (make to order) Supply Cook Assemble Deliver Push (make to stock) Customer order 4 Supply Cook Assemble FGI 5 Deliver McDonald s customer satisfaction drops for three years in a row. The company reported its first ever quarterly loss in Process Postponement Customer order 3 Supply Cook 1 2 WIP 4 Assemble 5 Deliver Hybrid Process 6 Assemble Supply Cook 1 2 WIP 5 Customer order Deliver 3 Assemble 4 FGI 17 8

9 II. Process Strategy Decisions Customer Involvement: extent of customer participation Resource Flexibility: account for process (task) divergence and diverse process flows. Capital Intensity: cost of equipment relative to cost of labor Customer Involvement Possible Advantages Increased net value to the customer Better quality, faster delivery, greater flexibility, and lower cost Reduction in product, shipping, and inventory costs Coordination across the supply chain Possible Disadvantages Can be disruptive Managing timing and volume can be challenging Quality measurement can be difficult Requires interpersonal skills Multiple locations may be necessary 9

10 Resource Flexibility Flexible Workforce multiple skills (training and cost) volume flexibility (part time) Equipment General purpose vs. Special purpose Capital Intensity Automating Manufacturing Processes Good for large demands, stable product designs, and long product lifecycles Large initial investment cost and relative inflexibility Automating Service Processes Cost reduction and consistent quality. Technology in the future will surely make possible even a greater degree of customization and variety 10

11 Decision Patterns for Manufacturing Processes Strategic Fit: Gaining Focus Focus by Process Segments Plant within plants (PWPs) Different operations within a facility with individualized competitive priorities, processes, and workforces under the same roof. Focused Service Operations: Stores within stores Focused Factories: splitting large plants that produced all products into several specialized smaller plants. 11

12 III. Strategies for Changes Process Reengineering The fundamental rethinking and radical redesign of processes to improve performance dramatically in terms of cost, quality, service, and speed Key elements Critical processes Strong leadership Cross functional teams Information technology Clean slate philosophy Process analysis Process Improvement and Analysis Process Improvement: the systematic study of the activities and flows of each process to improve it. No quick fix solutions. Success comes from managers and employees who really understand the processes. Process Analysis: documentation & detailed understanding of how work is performed and how it can be redesigned. Flowcharts Work Measurement Techniques Process Charts 12

13 Six Sigma Process Improvement Model the characteristics of the process s output that are critical to customer satisfaction select what to measure, identify data sources, and prepare a data collection plan. use the data on measures to determine where improvements are necessary. use analytical and creative thinking to generate ideas to meet new performance objectives. monitor the process to make sure that high performance levels are maintained. 26 Swim Lane Flowchart A visual representation that groups functional areas responsible for different sub processes into lanes. 13

14 Service Blueprint A special flowchart of a service process that shows which steps have high customer contact. Interactive Line 顧客到達 F 用餐 顧客離開 前場 Line of Visibility 訂位 入座點菜 上菜 F 結帳 F Line of Support 通知廚房烹飪準備材料 準備帳單 後場 service encounter moments of truth fail safing = pokayokes Process Charts Flowchart traces the flow of information, customers, equipment, or materials through various steps of a process Process Charts documenting all the activities performed by a person or group, at a workstation, with a customer, or working with certain materials Activities are typically organized into five categories Operation, Transportation, Inspection, Delay, Storage, 14

15 Process Chart for Emergency Room Step No. Time (min) Distance (ft) Step Description Enter emergency room, approach patient window Sit down and fill out patient history Nurse escorts patient to ER triage room Nurse inspects injury Return to waiting room Wait for available bed Go to ER bed Wait for doctor Doctor inspects injury and questions patient Nurse takes patient to radiology Technician x-rays patient Return to bed in ER Wait for doctor to return Doctor provides diagnosis and advice Return to emergency entrance area Check out Walk to pharmacy Pick up prescription Leave the building Process Charts Activity Summary Number of Steps Time (min) Distance (ft) Operation Transport Inspect Delay Store Annual Time to perform = Variable costs labor cost the process in hours per hour Number of times process performed each year 15

16 Bar Chart Discourteous server Slow service Slow service Cold dinner Cramped tables Data Analysis Tools Cramped tables Atmosphere Pareto Chart Discourteous Atmosphere server Cold dinner 100% 80% 60% 40% 20% 0% Cause and Effect Diagram 33 16

17 Redesigning & Managing Process Improvements Questioning and Brainstorming 1. What is being done? 2. When is it being done? 3. Who is doing it? 4. Where is it being done? 5. How is it being done? 6. How well does it do on the various metrics of importance? Benchmarking A systematic procedure that measures a firm s processes, services, and products against those of industry leaders Redesigning & Managing Process Improvements Avoid the following mistakes 1. Not connecting with strategic issues 2. Not involving the right people in the right way 3. Not giving the design teams and process analysts a clear charter, and then holding them accountable 4. Not being satisfied unless fundamental reengineering changes are made 5. Not considering the impact on people 6. Not giving attention to implementation 7. Not creating an infrastructure for continuous process improvement 17