Process Strategy

Process Strategy 

The pattern of decisions made in managing processes to ensure they achieve their competitive priorities

Key Objective of Process Strategy

To create a process that produces offerings meeting customer requirements within cost and other managerial constraints

Process Choice

Structuring the process by organizing resources around the process (e.g., job, batch) or around the products (e.g., line, continuous-flow)

Process Analysis

A set of tools used to identify improvement opportunities, document current processes, evaluate performance gaps, redesign processes, and implement changes

Differentiation

Robust process to protect the "value"

Typical volume of differentiation

typically lower

low cost

Efficiency - low manufacturing cost

Typical volume of low cost

typically high

Response 

Flexibility - delivery, speed, etc.

Typical volume of response

varies

4 key dimensions for process-relation decisions

Process structure, customer involvement, resource flexibility, capital intensity

Process structure

resources requirements and layout

Customer involvement

the extent customers are involved in the process

Resource flexibility

ease of handling output levels, products, and functions

capital intensity

relative cost of equipment and skills of the process

process focus (job shop) volume/variety

High Variety/Low Volume

process focus (job shop) organization/flow

Organized around processes; many departments and many routings

process focus (job shop) key characteristics

General-purpose equipment, skilled personnel, high product flexibility, high cost, low equipment utilization, complex scheduling

process focus (job shop) examples

Specialized machines, surgeries, emergencies, tunnel boring machine

Repetitive focus (assembly line/batch) volume/variety

Long runs, standardized product from modules (Changes in Modules)

Repetitive focus (assembly line/batch) organization/flow

Organized around modules in assembly lines

Repetitive focus (assembly line/batch) key characteristics

Moderately trained employees, routine scheduling, less flexible than Process Focus, more efficient

Repetitive focus (assembly line/batch) examples

cars, appliances

Product focus (continuous flow) volume/variety

High Volume/Low Variety

Product focus (continuous flow) organization/flow

Organized around products; long, continuous production runs

Product focus (continuous flow) key characteristics

Specialized equipment, less broadly skilled operators, high fixed cost, low variable cost, routine scheduling

Product focus (continuous flow) examples

potato chips, steel, gasoline

Mass customization volume/variety

High Volume/High Variety

Mass customization organization/flow

Combines flexibility of Process Focus with efficiency of Product Focus

Mass customization key characteristics

Flexible operators, sophisticated scheduling, build-to-order (BTO), low inventory relative to product value

Mass customization examples

Paint

Efficiency=

value=features/cost

competitive priorities

cost, quality, flexibility. delivery

postponement

push final assembly as close to customer as possible

Dimensions of goods

volume (quantity), variety (standard/custom)

Dimensions of services 

variety, labor (per unit)

Low degree of customization

mass services and service factory

low degree of labor

service factory, service shop

Mass service key characteristics

Focus on human resources, selection/training highly important, personalized services³⁴

Mass service examples

Commercial banking, private banking

high degree of customization

professional service, service shop

high degree of labor

mass service, professional service

professional service key characteristics

Labor involvement is high, personalized services

Professional service examples

Traditional orthodontics, general-purpose law firms

service factory degree of labor

low

service factory key characteristics

Automation of standardized services, restricted offerings, low labor intensity, tight control to maintain standards

Service factory examples

Airlines, fast-food restaurants, warehouse/catalog stores

Service shop degree of labor

low

Service shop key characteristics

Automation of standardized services, low labor intensity

Service shop examples

Specialized hospitals, fine-dining restaurants

flowchart 

Traces the flow of information, customers, equipment, and materials

Swim lane flowchart 

Groups functional areas responsible for sub-processes into lanes

Service blueprint

A special flowchart showing steps with high, medium, or low customer interaction

Process charts

 Organized way to document all activities performed by a person or group

Value Stream Mapping

Identifies where value is added in the entire production process, from customer back to suppliers

Process re-engineering

fundamental change to dramatically improve - focuses on critical processes (strategic advancement)

Process improvement

systematic approach with incremental improvement

Technology in goods

Technology blurs the traditional boundaries by enabling companies to efficiently customize output, reducing the cost and/or time penalties that would inherently be incurred for operating off the optimal defined by the diagonal defined by the Product-Process Matrix.

Economies of scope for both goods and services

New capabilities with increase volumes

Economies of scale in goods

reducing setup time/$ making smaller lots feasible

Economies of scale in services

reducing time/$ making smaller lots feasible

High contact (to you)

• physical presence

• ppl is processed

• active/visible contact

• personal attention

• face to face delivery

low contact (for you)

• physical presents is absent

• possessions/info is processed

• passive/out of sight contact

• inpersonal attention

• regular mail, email, etc delivery