Lesson 5

Process Selection, Design and

Analysis
Iris A. Hernandez
Arizza Josef
Rhia Shin Pasuquin
BSBA 2-FM
 Learning Objectives
1. Describe the four types of processes used to produce
goods and services
2. Explain the logic and use of the product matrix
3. Explain the logic and use of the service positioning matrix
4. Describe how to apply process value stream mapping for
process design
5. Explain how to improve process design and analyze
process maps.
6. Describe how to compute resource utilization and apply
Little’s Law
Process Choice Decisions

Process design is an important operational decision

that affects the cost of operations, customer service,
and sustainability.
In the future, process managers will not only need
to quantify the trade-offs among the cost, quality,
time, and other priorities, but also the carbon foot
print of their process.
Types of Goods and Services
Custom or make-to-order
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- Produced and delivered as one-of-a-kind or in small quantities and are designed to
meet specific customers' specifications.
Option or assemble-to-order
- Configurations of standard parts, subassemblies, or services that can be selected by customers
from a limited set.
Standard or make-to-stock
https://youtu.be/WFo6tGFmqyg
- Made according to a fixed design, and the customer has no options from which to choose.
Types of Processes

Processes can be classified as:

◦ Project
◦ Job shop/Batch
◦ Flow shop/Line
◦ Continuous
Project
Large-scale, customized initiatives that consist of smaller tasks and
activities that must be
coordinated and completed to finish on time and within budget
• Space shuttle, cruise ships, dams and bridges construction,
weddings and software development
etc.
• High degree of customization, Low volume
• Production Strategy: Make to Order
Job Shop/batch Process
Organized around particular types of general-purpose
equipment that are flexible and capable of customizing work for
individual customers
• Produces small quantities of a product in groups or batches
based on customer orders or specs.
• Print shop, computers (Dell), education classes, hospital
works
• Production Strategy: Assemble to Order
Flow shop/Line Process
Organized around a fixed sequence of activities and process steps,
such as an assembly line
• Produces large quantities of a standardized product.
• Assembly line operation designed for mass production.
• Each unit is produced or assembled by going through same series of
operations performed in same order
• Automobile, hospital laboratory work, etc.
• Production Strategy: Make to Stock
Continuous flow process
• Creates highly standardized goods or services, around the clock in very high volumes
• Product is continuous - liquid or gas
• Oil refinery
• Water purification plant
• Liquid chemicals
• Capital intensive, Use of highly specialized computers,
robot
• Production Strategy: Make to Stock
THE PRODUCT-PROCESS MATRIX
Product-process matrix
- is a model that describes the alignment
of process choice with the characteristics
of the manufactured good.
- First proposed by Hayes and
Wheelwright.
- Appropriate match between type of
product and type of process occurs along
the diagonal in the product-process matrix
THE SERVICE-POSITIONING MATRIX
● Pathway - is a unique route through a service system.
● The Service-Positioning Matrix is similar to the product-
process matrix in that it suggest that the nature of the
customer’s desired service encounter activity sequence
should lead to the most appropriate service system design
and that superior performance results by generally staying
along the diagonal of the matrix.
THE SERVICE-POSITIONING MATRIX

● Customer-routed services - are those that offer customers

broad freedom to select the pathways that are best suited
for their immediate needs and wants from many possible
pathways through the service delivery system.
- Examples include searching the internet, museums,
health clubs, and amusement parks.
THE SERVICE-POSITIONING MATRIX
● Provider-routed services - constrain customers to follow a very
small number of possible and pre-defined pathways through the
service system.
-Examples are a newspaper dispenser and logging on to a secure
online bank account.
● Service-encounter activity sequence - consists of all the
process steps and associated service encounters necessary to
complete a service transaction and fulfil a customer's wants and
needs
Service-encounter activity sequence depends on
two things:
1. The degree of customer discretion, freedom, and decision-
making power in selecting the service-encounter activity
sequence. Customers may want the opportunity to design their
own unique service-encounter activity sequence, in any order
they choose.
2. The degree of repeatability of the service-encounter activity
sequence. Refers to the frequency that a specific service-
encounter activity sequence is used by customers. It provides a
measure analogous to product volume for goods-producing firms
Process Design

We can think about work at four hierarchical levels:

1. Task - a specific unit of work required to create an output.
2. Activity - a group of task needed to create and deliver an
intermediate or final output
3. Process - a group of activities
4. Value chain - a network of processes
The Hierarchy of Work and Cascading Flowcharts for Antacid Tablets
Process and Value Stream Mapping
● Process Map (flowchart) – describes the
sequence of all process activities and tasks
necessary to create and deliver a desired output
or outcome.
● Process boundary – is the beginning or end of a
process.
Process and Value Stream Mapping

● In service applications, flowcharts generally

highlight the points of contact with the customer
and are often called service blueprints or service
maps.
● Such flowcharts often show the separation between
the back office and the front office with a ‘line of
customer visibility’
Automobile Repair Flowchart
Process and Value Stream Mapping

● The value stream refers to all value-added

activities involved in designing, producing, and
delivering goods and services to customers.
Strategies:
● Increasing revenue by improving process efficiency in creating goods and
services and delivery of the customer benefit package.
● Increasing agility by improving flexibility and response to changes in demand
and customer expectations.
● Increasing product and/or service quality by reducing defects, mistakes,
failures, or service upsets.
● Decreasing costs through better technology or elimination of non-value-added
activities.
● Decreasing process flow time by reducing waiting time or speeding up
movement through the process and value chain.
● Decreasing the carbon footprint of the task, activity, process and/or value
chain.
Process Analysis and Improvement
Questions to ask for process analysis:

● Are the steps in the process arranged in logical sequence?

● Do all steps add value? Can some steps be eliminated and should
others be added in order to improve quality or operational
performance? Can some be combined? Should some be
reordered?
● Are capacities of each steps in balance; that is do bottlenecks
exist for which customers will incur excessive waiting time?
● What skills, equipment, and tools are required at each step of the
process? Should some steps be automated?
Process Analysis and Improvement
● At which point in the system (sometimes called process fail points)
might error occur that would result in customer dissatisfaction, and
how might these errors be corrected?
● At which point or points in the process should performance be
measured? What are appropriate measures?
● Where interaction with the customer occurs, what procedures,
behaviors, and guidelines should employees follow that will
present a positive image?
● What is the impact of the process on sustainability? Can we
quantify the carbon footprint of the current process?
Process Analysis and Improvement

● Reengineering has been defined as “the fundamental

rethinking and radical redesign of business processes to
achieve dramatic improvements in critical, contemporary
measures of performance, such as cost, quality, service, and
speed
Process Design and Resource Utilization
The average number of entities completed per unit time— the output rate—
from a process is called throughput.
• Throughput might be measured as parts per day, transactions per minute, or
customers per hour, depending on the context.
• A bottleneck is the work activity that effectively limits throughput of the entire
process.
• Identifying and breaking process bottlenecks is an important part of process
design and improvement, and will increase the speed of the process, reduce
waiting and work-in-process inventory, and use resources more efficiently.
Process Design and Resource Utilization

Utilization - is the fraction of time a

workstation or individual is busy over the
long run.
Example
An inspection station for assembling printers receives 40 printers/hour and has two inspectors, each of
whom can inspect 30 printers per hour. What is the utilization of the inspectors? What service rate would be
required to have a target utilization of 85 percent?

SOLUTION

U= Resources Used/Resources available

U= 40/(30x2)=0.67 OR 67%

Solution
The labor utilization at this inspection station is calculated to be 40/(2 × 30) = 67%. If the utilization rate is
85%, we can calculate the target service rate by solving the equation:
85% = 40/(2 × SR)
1.7 × SR = 40
SR = 23.5 printers/hour
Little’s Law

https://youtu.be/2Lx7QtaPDKw
• Flow time, or cycle time, is the average time it takes to complete
one cycle of a process.
• Little’s Law is a simple formula that explains the relationship
among flow time (T), throughput (R ), and work-in-process (WIP ).

Work-In-Process = Throughput × Flow Time or WIP = R × T

Example

Suppose that a voting facility processes an average of 50 people

per hour and that, on average, it takes 10 minutes. What is the
average number of voters in the process? for each person to
complete
Solution
WIP = R x T
     = 50 voters/hr (10 minutes/60 minutes per hour)
     = 8.33 voters
Suppose that the loan department of a bank takes an average of
6 days (0.2 months) to process an application and that an internal
audit found that about 100 applications are in various stages of
processing at any one time. Using Little’s Law, we see that T =
0.2 and WIP = What is the throughput? the v
Solution
R = WIP/T = 100 applications/0.2 months
= 500 applications per month
Suppose that a restaurant makes 400 pizzas per week, each
of which uses one-half pound of dough, and that it typically
maintains an inventory of 70 pounds of dough. In this case, R
= 200 pounds per week of dough and WIP = 70 pounds. What
is the average flow time?
Solution
T = WIP/R = 70/200
= 0.35 weeks, or about 21/2 days.
THANK YOU