1 question
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1.Draw a cause and effect diagram for analyzing why MBA students
miss classes. Include at least four factors for each Ms. 3
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ch._2_process_analysis_and_design_3.pptx
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Operations Management: Processes and
Supply Chains
Twelfth Edition
Chapter 2
Process Strategy and
Analysis
Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Learning Objectives (1 of 2)
2.1 Understand the process structure in services and how
to position a service process on the customer-contact
matrix.
2.2 Understand the process structure in manufacturing and
how to position a manufacturing process on the productprocess matrix
2.3 Explain the major process strategy decisions and their
implications for operations.
2.4 Discuss how process decisions should strategically fit
together.
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Learning Objectives (2 of 2)
2.5 Compare and contrast two commonly used strategies
for change, and understand a systematic way to analyze
and improve processes.
2.6 Discuss how to define, measure, and analyze
processes.
2.7 Identify the commonly used approaches for effectively
improving and controlling processes.
Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved
What is Process Strategy?
Process Strategy
The pattern of decisions made in managing
processes so that they will achieve their competitive
priorities
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Process Strategy
Figure 2.1 Major Decisions for Effective Processes
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Process Structure in Services (1 of 2)
Customer Contact
The extent to which the customer is present, is actively involved,
and receives personal attention during the service process
Customization
Service level ranging from highly customized to standardized
Process Divergence
The extent to which the process is highly customized with
considerable latitude as to how its tasks are performed
Flow
How the work progresses through the sequence of steps in a
process
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Process Structure in Services (2 of 2)
Table 2.1 Dimensions of Customer Contact in Service Processes
Dimension
Physical presence
What is processed
Contact intensity
Personal attention
Method of delivery
High Contact
Present
People
Active, visible
Personal
Face-to-face
Low Contact
Absent
Possessions or information
Passive, out of sight
Impersonal
Regular mail or e-mail
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Customer-Contact Matrix
Figure 2.2 Customer-Contact Matrix for Service Processes
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Service Process Structuring
Front Office
Hybrid Office
Back Office
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Process Structure in Manufacturing (1 of 2)
Process Choice
A way of structuring the process by organizing
resources around the process or organizing them
around the products.
Job Process
Batch Process
Small or Large
Line Process
Continuous-Flow Process
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Process Structure in Manufacturing (2 of 2)
Figure 2.3 Product-Process Matrix for Manufacturing Processes
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Production and Inventory Strategies
Design-to-Order Strategy
Make-to-Order Strategy
Assemble-to-Order Strategy
Postponement
Mass Customization
Make-to-Stock Strategy
Mass Production
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Layout
Layout
The physical arrangement of operations (or
departments) created from the various processes and
put in tangible form.
Operation
A group of human and capital resources performing
all or part of one or more processes
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Process Strategy Decisions
Customer Involvement
Resource Flexibility
Capital Intensity
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Customer Involvement (1 of 2)
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
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Customer Involvement (2 of 2)
Possible Disadvantages
Can be disruptive
Managing timing and volume can be challenging
Could be favorable or unfavorable quality implications
Requires interpersonal skills
Multiple locations may be necessary
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Resource Flexibility
Workforce
Flexible workforce
Figure 2.4 Relationship between
Process Costs and Product Volume
Equipment
General-purpose
Special-purpose
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Capital Intensity
Automating Manufacturing Processes
Fixed Automation
Flexible (Programmable) Automation
Automating Service Processes
Economies of Scope
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Decision Patterns for Manufacturing
Processes
Figure 2.5 Links of Competitive Priorities with Manufacturing
Strategy
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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
Focused Factories
? The result of a firms splitting large plants that
produced all the companys products into several
specialized smaller plants.
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Process Reengineering (1 of 2)
Reengineering
The fundamental rethinking and radical redesign of
processes to improve performance dramatically in
terms of cost, quality, service, and speed
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Process Reengineering (2 of 2)
Key elements
Critical processes
Strong leadership
Cross-functional teams
Information technology
Clean-slate philosophy
Process analysis
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Process Improvement
Process Improvement
The systematic study of the activities and flows of
each process to improve it
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What is Process Analysis?
Process Analysis
The documentation and detailed understanding of
how work is performed and how is can be redesigned
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Six Sigma Process Improvement Model (1 of 2)
Figure 2.6 Six Sigma Process Improvement Model
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Six Sigma Process Improvement Model (2 of 2)
Define – The scope and boundaries of the process to be
analyzed are first established
Measure – The metrics to evaluate how to improve the
process are determined
Analyze – A process analysis is done, using the data on
measures, to determine where improvements are necessary
Improve – The team uses analytical and critical thinking to
generate a long list of ideas for improvement
Control – The process is monitored to make sure that high
performance levels are maintained
Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Defining, Measuring, and Analyzing the
Process (1 of 3)
Flowcharts
Work Measurement Techniques
Process Charts
Data Analysis Tools
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Defining, Measuring, and Analyzing the
Process (2 of 3)
Flowchart
A diagram that traces the flow of information, customers,
equipment, or materials through the various steps of a
process
Service Blueprint
A special flowchart of a service process that shows which
steps have high customer contact
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Swim Lane Flowchart
Swim Lane Flowchart A visual representation that groups functional areas
responsible for different subprocesses into lanes.
Figure 2.7 Swim Lane Flowchart of the Order-Filling Process Showing
Handoffs between Departments
Source: D. Kroenke, Using MIS, 4th ed., © 2012. Reprinted and electronically reproduced by
permission of Pearson Education, Inc., Upper Saddle River, New Jersey.
Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Defining, Measuring and Analyzing the
Process (3 of 3)
Work Measurement Techniques
Time Study
Elemental Standard Data Method
Predetermined Data Method
Work Sampling Method
Learning Curve Analysis
Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Example 1 (1 of 3)
A process at a watch assembly plant has been changed.
The process is divided into three work elements. A time
study has been performed with the following results. The
time standard for the process previously was 14.5 minutes.
Based on the new time study, should the time standard be
revised?
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Example 1 (2 of 3)
The new time study had an initial sample of four
observations, with the results shown in the following table.
The performance rating factor (RF) is shown for each
element, and the allowance for the whole process is 18
percent of the total normal time.
Blank
Obs 1
Obs 2
Obs 3
Obs 4
Average (min)
RF
Normal Time
Element 1
2.60
2.34
3.12
2.86
2.730
1.0
2.730
Element 2
4.94
4.78
5.10
4.68
4.875
1.1
5.363
Element 3
2.18
1.98
2.13
2.25
2.135
0.9
1.922
ervation
ervation
ervation
ervation
Total Normal Time = 10.015
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Example 1 (3 of 3)
The normal time for an element in the table is its average
time, multiplied by the RF.
The total normal time for the whole process is the sum of
the normal times for the three elements, or 10.015 minutes.
To get the standard time (ST) for the process, just add in
the allowance, or
ST = 10.015(1 + 0.18) = 11.82 minutes watch
The time to assemble a watch appears to have decreased
considerably. However, based on the precision that
management wants, the analyst decided to increase the
sample size before setting a new standard.
Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Work Measurement Techniques (1 of 2)
Work Sampling
Figure 2.8 Work Sampling Study of Admission Clerk at Health
Clinic using OM Explorers Time Study Solver
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Work Measurement Techniques (2 of 2)
Learning Curves
Figure 2.9 Learning Curve with 80% Learning Rate Using OM
Explorers Learning Curves Solver
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Process Charts (1 of 6)
Process Charts – An organized way of documenting all
the activities performed by a person or group of people,
at a workstation, with a customer, or working with certain
materials
Activities are typically organized into five categories:
Operation
Transportation
Inspection
Delay
Storage
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Process Charts (2 of 6)
Figure 2.10 Process Chart for Emergency Room Admission
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Process Charts (3 of 6)
Figure 2.10 [continued]
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Process Charts (4 of 6)
Figure 2.10 [continued]
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Process Charts (5 of 6)
The annual cost of an entire process can be estimated as:
Annual
? Time to perform ?? Variable costs ?? Number of times process ?
=?
??
??
?
labor cost ? the process in hours ?? per hour ?? performed each year ?
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Process Charts (6 of 6)
For example:
Average time to serve a customer is 4 hours
The variable cost is $25 per hour
40 customers are served per year
The total labor cost is:
4 hrs customer ? $25 hr ? 40 customers yr = $ 4, 000
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Data Analysis Tools
Checklists
Histograms and Bar Charts
Pareto Charts
Scatter Diagrams
Cause-and-Effect Diagrams (Fishbone)
Graphs
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Example 2 (1 of 3)
The manager of a neighborhood restaurant is concerned about the
smaller numbers of customers patronizing his eatery. Complaints have
been rising, and he would like to find out what issues to address and
present the findings in a way his employees can understand.
The manager surveyed his customers over several weeks and
collected the following data:
Complaint
Discourteous server
Slow service
Cold dinner
Cramped table
Atmosphere
Frequency
12
42
5
20
10
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Example 2 (2 of 3)
Figure 2.11 Bar Chart
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Example 2 (3 of 3)
Figure 2.12 Pareto Chart
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Example 3 (1 of 4)
A process improvement team is working to improve the
production output at the Johnson Manufacturing plants
header cell that manufactures a key component, headers,
used in commercial air conditioners.
Currently the header production cell is scheduled
separately from the main work in the plant.
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Example 3 (2 of 4)
The team conducted extensive on-site observations
across the six processing steps within the cell and they
are as follows:
1.
2.
3.
4.
5.
6.
Cut copper pipes to the appropriate length
Punch vent and sub holes into the copper log
Weld a steel supply valve onto the top of the copper log
Braze end caps and vent plugs to the copper log
Braze stub tubes into each stub hole in the copper log
Add plastic end caps to protect the newly created header
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Example 3 (3 of 4)
To analyze all the possible causes of that problem, the
team constructed a cause-and-effect diagram.
Several suspected causes were identified for each major
category.
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Example 3 (4 of 4)
Figure 2.13 Cause-and-Effect Diagram for Inadequate Header
Production
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Example 4 (1 of 3)
The Wellington Fiber Board Company produces headliners, the fiberglass
components that form the inner roof of passenger cars. Management wanted to
identify which process failures were most prevalent and to find the cause.
Step 1: A checklist of different types of process failures is constructed from
last months production records.
Step 2: A Pareto chart prepared from the checklist data indicated that broken
fiber board accounted for 72 percent of the process failures.
Step 3: A cause-and-effect diagram for broken fiber board identified several
potential causes for the problem. The one strongly suspected by the
manager was employee training.
Step 4: The manager reorganizes the production reports into a bar chart
according to shift because the personnel on the three shifts had varied
amounts of experience.
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Example 4 (2 of 3)
Figure 2.14 Application of the Tools for Improving Quality
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Example 4 (3 of 3)
Figure 2.14 [continued]
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Redesigning and Managing Process
Improvements (1 of 4)
Questioning and Brainstorming
Benchmarking
Implementing
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Redesigning and Managing Process
Improvements (2 of 4)
Questioning and Brainstorming
Ideas can be uncovered by asking six questions:
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?
Brainstorming Letting a group of people, knowledgeable
about the process, propose ideas for change by saying whatever
comes to mind
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Redesigning and Managing Process
Improvements (3 of 4)
Benchmarking
A systematic procedure that measures a firms
processes, services, and products against those of
industry leaders
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Redesigning and Managing Process
Improvements (4 of 4)
Implementing
Avoid the following seven 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
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Solved Problem 1 (1 of 3)
Create a flowchart for the following telephone-ordering process at a
retail chain that specializes in selling books and music CDs. It provides
an ordering system via the telephone to its time-sensitive customers
besides its regular store sales.
The automated system greets customers, asks them to choose a tone
or pulse phone, and routes them accordingly.
The system checks to see whether customers have an existing
account. They can wait for the service representative to open a new
account.
Customers choose between order options and are routed accordingly.
Customers can cancel the order. Finally, the system asks whether the
customer has additional requests; if not, the process terminates.
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Solved Problem 1 (2 of 3)
Figure 2.16 Flowchart of Telephone Ordering Process
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Solved Problem 1 (3 of 3)
Figure 2.16 [continued]
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Solved Problem 2 (1 of 4)
An automobile service is having difficulty providing oil
changes in the 29 minutes or less mentioned in its
advertising. You are to analyze the process of changing
automobile engine oil. The subject of the study is the
service mechanic. The process begins when the mechanic
directs the customers arrival and ends when the customer
pays for the services.
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Solved Problem 2 (2 of 4)
Figure 2.17 Process Chart for Changing Engine Oil
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Solved Problem 2 (3 of 4)
Figure 2.17 [continued]
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Solved Problem 2 (4 of 4)
The times add up to 28 minutes, which does not allow
much room for error if the 29-minute guarantee is to be met
and the mechanic travels a total of 420 feet.
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