Operations Management: Processes and

Supply Chains
Twelfth Edition

Chapter 2
Process Strategy and
Analysis

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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 product-
process 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.

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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 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

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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 Figure 2.4 Relationship between

– Flexible workforce 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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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

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Copyright

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