BATANGAS STATE UNIVERSITY

College of Accountancy, Business Economics and International Hospitality Management

GRADUATE SCHOOL

Paul Joshua O. Cual

MBA1203

Narrative Report for Process Design Part II

Objectives

1. Use Tools for Process Analysis

2. Describe Customer Interaction in Process Design
3. Identify Recent Advances in Production Technology
4. Discuss the Four R’s of Sustainability

Introduction

As employees of a certain firm or agency, we tend to analyze the current process

and strategies that we commonly observe within our workplace. Sometimes, we revise it
with formulas to make the process easier and more reliable for the company.
In this chapter, we are going to discuss process designing, its tools as bases for
analysis, as well as the customer interaction related to it. Moreover, we can take note of
some valuable changes which transpire in the company. To make the discussion even
more effective, it is necessary to recognize the importance of learning process design
(PD). First,
once there is a new product, PD is needed to design the process of making a certain
product. Likewise, when an equipment is changed, the process will be altered as well and
it will result to a different product. Moreover, when a change in the methodology is
required, quality standards and technique will have changed there is a need to redesign
the way things work. Lastly, when there is a call to redesign the existing product to meet
the demand of the customers, PD will also be applied. For instance, an iPhone once it
falls into the water will soon be damaged. With this, the company has to utilize the PD in
order improve their product that will match the needs of the clients.

Process Analysis and Design

 When analyzing and designing processes, we ask the following questions such as
the following:
o Is the process designed to achieve competitive advantage in terms of
differentiation, response, or low-cost?
o Does the process eliminate steps that do not add value?
o Does the process maximize customer value as perceived by the customer?
o Will the process win orders?
1. There are Five Tools that can help us understand the complexities of
process design and redesign:

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 BATANGAS STATE UNIVERSITY
College of Accountancy, Business Economics and International Hospitality Management
GRADUATE SCHOOL

FLOWCHART is a schematic or drawing of the movement of material, product or

people. This chart can help understanding, analysis, and communication of process.

2. TIME FUNCTION MAPPING or PROCESS MAPPING is a type of

flowchart but with added time on the horizontal axis. Nodes indicate the
activities and arrows indicate the flow of direction with time on horizontal
axis. This type of analysis allows users to identify and eliminate waste
such as extra steps, duplication, and delay.

3. VALUE-STREAM MAPPING is a process that helps managers

understand how to add value in the flow of material and information
through the entire production process. It extends the analysis back to the
suppliers.
Methods in formulating VSM:
a. Begin with symbols for customer, supplier, and production to
ensure big picture.
b. Enter customer order requirements.
c. Calculate the daily production requirements.
d. Enter the outbound shipping requirements and delivery
frequency.
e. Determine inbound shipping method and delivery frequency.
f. Add the process steps (i.e. machine, assemble) in sequence from
left to right.
g. Add communication methods, add their frequency, and show the
direction with arrows.
h. Add inventory quantities between every step of the entire flow.
i. Determine total working time (value-added time) and delay (non-
value added time)

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BATANGAS STATE UNIVERSITY
College of Accountancy, Business Economics and International Hospitality Management
GRADUATE SCHOOL

4. PROCESS CHARTS use symbols, time, and distance to provide an

objective and structured way to analyze and record the activities that make
up the process. It gives the manager the ability to focus on value-added
activities.

 We can see from the computation at the bottom that value added
in this case is 87.5%. The operations managers’ job is to reduce
waste and increase the percent of value added.

5. SERVICE BLUEPRINTING is a process analysis technique that focuses

on the customer and the provider’s interaction with the customer. In our
example, the activities at level one are under customer control. The second
level are activities of the service provider interacting with customer. The
third level includes those activities that are performed away from, and not
immediately visible to the customer.

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 BATANGAS STATE UNIVERSITY
College of Accountancy, Business Economics and International Hospitality Management
GRADUATE SCHOOL

Special Considerations for Service Process Design

 Customer interaction with service processes increases the design challenge. The
trick is to find the right combination of cost and customer interaction.

Customer Interaction and Process Design

 The upper quadrant of mass service and
professional service, labor content is high, we
expect managers to focus extensively on human
resource.
 The quadrants with low customization tend to
(1) standardize or restrict some offerings, (2)
automate, or (3) remove some services.
 Because feedback is lower in the quadrants with
low customization, tight control may be
required to maintain quality.
 Operations with low labor intensity may lend
themselves particularly well to innovations in process technology and scheduling.

More Opportunities to Improve Service Processes

 Layout is an integral part of many service processes. It can enhance
product exposure (for retailing businesses), dining experience (for fast
food or restaurant businesses), and security (for banks and other financial
institutions). It provides continuing opportunity for winning orders.
 Human resources is directly linked to the issues of recruiting and training
of a committed workforce that exhibits flexibility when schedules are
made and is cross-trained to fill-in when the process requires less than a
full-time person. It can therefore lead to a tremendous impact on overall
process performance.

Selection of Equipment and Technology

 Modern technology allows operations managers to enlarge the scope of their
processes and as a result, an important attribute to look for new equipment and
process selection is flexible equipment.
 Flexibility is the ability to respond with little penalty in time, cost,
or customer value.

PRODUCTION TECHNOLOGY

 Machine Technology
Computer Numerical Control is a machinery with its own
computer and memory.
 Automatic Identification Systems (AISs) and RFID
AISs is a system for transforming data into electronic form, an
example is bar code.
RFID is a wireless system in which integrated circuits with
antennas send radio waves.

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 BATANGAS STATE UNIVERSITY
College of Accountancy, Business Economics and International Hospitality Management
GRADUATE SCHOOL

 Process Control
is the use of information technology to monitor and control a
physical process. Process controls operate in a number of ways,
but the following is typical:
 Sensors collect data.
 Devices read data on some periodic basis, perhaps once a
minute or once every second.
 Computer program read the file (the digital data) and
analyze the data.
 The resulting output may take numerous forms. These
includes messages on computer consoles or printers, signals
to motors to change valve settings, warning lights or horns,
or statistical process control charts.
 Vision Systems
is the combination of video cameras and computer technology in
inspection roles. It is consistently accurate, do not become bored,
and are of modest cost.

 Robots
A flexible machine with the ability to hold, move, or grab items. It
functions through electronic impulses that activate motors and
switches.
 Automated Storage and Retrieval Systems (ASRSs)
Computer controlled warehouses that provide for the automatic
placement of parts into and from designated places within a
warehouse.
 Automated Guided Vehicles (AGVs)
Are electronically guided and controlled carts used in
manufacturing to move parts and equipment.
 Flexible Manufacturing Systems (FMSs)
A system that uses an automated work cell controlled by electronic
signals from a common centralized computer facility.
 Computer-Integrated Manufacturing (CIM)
A manufacturing system in which Computer Aided Design (CAD),
FMS, inventory control, warehousing, and shipping are
integrated.

Technology in Services
 Operations managers in services, as in manufacturing, must be able to evaluate
the impact of technology on their firm. This ability requires particular skill when
evaluating reliability, investment analysis, human resource requirements, and
mainatenance/service.

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BATANGAS STATE UNIVERSITY
College of Accountancy, Business Economics and International Hospitality Management
GRADUATE SCHOOL

Service Industry Example

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 BATANGAS STATE UNIVERSITY
College of Accountancy, Business Economics and International Hospitality Management
GRADUATE SCHOOL

Financial Services Debit cards, electronic funds transfer, automatic

teller machine, Internet stock trading, and online
banking via cell phone.
Education Online newspapers, online journals, interactive
assignments via Web CT, Blackboard, and
smartphones.
Utilities and Automated one-man garbage trucks, optical mail
government scanners, flood-warning systems, meters
allowing homeowners to control energy usage
and costs.
Restaurant and foods Wireless orders from waiters to the kitchen, robot
butchering, and transponders on cars that track
sales at drive-thoughts.
Communications Interactive TV, eBooks via Kindle 2
Hotels Electronic check-in/checkout, electronic key/lock
systems, mobile Web bookings.
Wholesale/retail Point-of-sale (POS) terminals, e-commerce,
Trade electronic communication between store and
supplier, bar-coded data, RFID
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 is the fundamental rethinking of business processes to bring about

dramatic improvements in performance. It also focuses on those
Sustainability
 Managers may find it helpful to think in terms of Four Rs as they address
sustainability. These are (1) resources used by the production process, (2) the
recycling of production materials and product components, (3) regulations that
apply, and (4) the firm’s reputation.
RESOURCES
Most firms are at reducing resources use as it is a win-win situation: reducing
resources lowers cost as well as being a positive force towards sustainability.
 Wal-Mart and Frito-Lay have both driven down their water and energy use.
 Pepsi’s has reduced the weight of its plastic bottles for Aquafina by 20%. This
reduces resource use and saves weight in added advantage of cutting delivery
cost.
RECYCLE
There are only three things that can be done with waste: burn it, bury it, or reuse
it. The first two have undesirable consequences while recycling begins with design by

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 BATANGAS STATE UNIVERSITY
College of Accountancy, Business Economics and International Hospitality Management
GRADUATE SCHOOL

specifying products and components that have recycle potential, managers must build
processes that facilitate disassembly and reuse of those materials.
 Anheuser-Busch saves over $30 million per year in energy and waste-treatment
costs by using treated plant wastewater to generate the gas that powers its St.
Louis brewery.
REGULATIONS
Organizations are increasingly under pressure from regulatory agencies to reduce
by-products that yield green-house gasses and pollute air and water. Greenhouse gasses
(GHS) include carbon dioxide, methane, nitrous oxide, and fluorinated gasses that are
believed to contribute to global warming. To meet regulatory requirements, firms design,
redesign, and invest substantial human and financial resources.
 Public drinking water systems must comply with the Federal Drinking Water
Act’s arsenic standard, even for existing facilities.
 Hospitals are required to meet the terms of the Resource Conservation and
Recovery Act, which governs the storage and handling of hazardous materials.
 Carbon footprint. This is a measurement of greenhouse gasses for which
international is pending. Industry leaders such Frito-Lay have been able to
break down the carbon emissions from various stages in the production stages.
For instance in potato chip production, 34.5 gram bag of chips is responsible
for about twice its weight in emissions – 75 grams per bag – with
contributions coming from: (1) raw materials (potatoes, oil, seasonings), 44%;
(2) manufacture (producing the chips in the factory), 30%; (3) packaging,
15%; (4) shipping, 9%; and (5) disposal by a customer of an empty bag, 2%.
REPUTATION
The free enterprises operates in a voluntary basis and bad reputation does have
negative consequences. Our society is increasingly transparent, and both good news and
bad news travel rapidly. But green processes can yield good news, a good reputation, and
good results.
 British cosmetic The Body Shop has successfully differentiated its products
by stressing environmental sensitivity. It pursues a product design,
development, and testing strategy that it believes to be ethical and socially
responsible. This includes environment-friendly ingredients and elimination of
animal testing.
 Frito-Lay has built a plant powered by solar energy in Modesto California,
and advertises the product as Sun Chips.

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