What Is Forecasting?

• Forecasting refers to the process of predicting

everything about your business to ensure smooth
running and continued growth. This is done using
various data points and research methods.
• Another term Supply chain forecasting not just helps in
demand forecasting and sales projections, but also
makes it easy to determine production lead times,
product pricing, labor needs, and others.
• You can forecast using two types of methods or
techniques: quantitative and qualitative.
• Quantitative forecasting methods use past data to
determine future outcomes.
• On the other hand, the Qualitative forecasting
method is primarily based on fresh data like surveys
and interviews, industry benchmarks, and competitive
analysis. This technique is useful for newly launched
products, or verticals wherein historical data doesn’t
exist yet.
Qualitative Forecasting Techniques

• Delphi Technique
• In this method, a forecast is made, and then it is validated by
experts. The estimates made are discussed in a group until all the
members reach a final decision.
• For instance, you could forecast the amount of inventory you need
to hold to meet your holiday demand in the upcoming winter
season. Your forecast could then be analyzed by all department
heads in a group discussion until everyone is on the same page.
• The Delphi method is a process mostly used in research and economics.
• The Delphi method was originally conceived in the 1950s by Olaf Helmer and
Norman Dalkey of Rand Corp.
Delphi Method Process

• Delphi method allows experts to work toward a mutual agreement by conducting a circulating series
of questionnaires and releasing related feedback to further the discussion with each subsequent
round.
• Delphi Method Process
• First, the group facilitator selects a group of experts based on the topic being examined. Once all
participants are confirmed, each member of the group is sent a questionnaire with instructions to
comment on each topic based on their personal opinion, experience, or previous research.
•
The questionnaires are returned to the facilitator, who groups the comments and prepares copies of
the information. A copy of the compiled comments is sent to each participant, along with the
opportunity to comment further. At the end of each comment session, all questionnaires are
returned to the facilitator, who decides if another round is necessary or if the results are ready for
publishing.
• The questionnaire rounds can be repeated as many times as necessary to achieve a general sense of
consensus.
• Advantage:-
• The Delphi method seeks to aggregate opinions from a diverse set of experts,
and it can be done without having to bring everyone together for a physical
meeting. Since the responses of the participants are anonymous, individual
panelists don’t have to worry about repercussions for their opinions.
• Disadvantage:-
• Delphi method does not result in the same sort of interactions as a live
discussion.
• Since the method often requires multiple rounds of questionnaires, there is a
chance that some participants may drop out from the study before it has
been completed.
Video on Delphi method
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 Market Research

• Market research is a technique that is used to collect data on any aspect

that you want to know to be later able to interpret it and, in the end, make
use of it for correct decision-making.
• Another more specific definition could be the following:
• Market research is the process by which companies seek to collect data
systematically to make better decisions. Still, its true value lies in the way in
which all the data obtained is used to achieve a better knowledge of the
market consumer.
• The process of market research can be done through deploying surveys,
interacting with a group of people, also known as a sample, conducting
interviews, and other similar processes.
• The primary purpose of conducting market research is to understand or
examine the market associated with a particular product or service to
decide how the audience will react to a product or service.
 Why is market research important?

• Valuable information: It provides information and

opportunities about the value of existing and new products, thus,
helping businesses plan and strategize accordingly.
• Customer-centric: It helps to determine what the customers
need and want.
• Forecasts: By understanding the needs of customers,
businesses can also forecast their production and sales. Market
research also helps in determining optimum inventory stock.
• Competitive advantage: To stay ahead of competitors market
research is a vital tool to carry out comparative studies.
Businesses can devise business strategies that can help them
stay ahead of their competitors.
Types of Market Research

• 1. Primary Market Research (A combination of both

Qualitative and Quantitative Research):
• Primary market research is a process where organizations or
businesses get in touch with the end consumers or employ a
third party to carry out relevant studies to collect data. The
data collected can be qualitative data (non-numerical data)
or quantitative data (numerical or statistical data).
• Focus groups:
• Focus group is one of the commonly used qualitative
research methods. Focus group is a small group of people (6-
10) who typically respond to online surveys sent to them.
• One-to-one interview:
• As the name suggests, this method involves personal
interaction in the form of an interview, where the
researcher asks a series of questions to collect
information or data from the respondents. The
questions are mostly open-ended questions and are
asked to facilitate responses.
 Secondary Market Research:

• Secondary research uses information that is organized by outside sources like

government agencies, media, chambers of commerce etc. This information is
published in newspapers, magazines, books, company websites, free
government and nongovernment agencies and so on. The secondary source
makes use of the following:
• Public sources: Public sources like library ,Government libraries usually offer
services free of cost and a researcher can document available information.
• Commercial sources: Commercial source although reliable are expensive.
Local newspapers, magazines, journal, television media are great commercial
sources to collect information.
• Educational Institutions: Although not a very popular source of collecting
information, most universities and educational institutions are a rich source of
information as many research projects are carried out there than any
business sector.
Steps for conducting Market
Research
• Step #1: Define the Problem
• Having a well-defined subject of research will help
researchers when they ask questions. These questions
should be directed to solve problems and must be
adapted to the project. Make sure the questions are
written clearly and that the respondents understand
them. Researchers can conduct a test with a small
group to know if the questions are going to know
whether the asked questions are understandable and if
they will be enough to gain insightful results.
• Step #2: Define the Sample
• To carry out market research, researchers need a
representative sample that can be collected using one
of the many sampling techniques. A representative
sample is a small number of people that reflect, as
accurately as possible, a larger group.
• Step #3: Carry out data collection
• First, a data collection instrument should be developed. The fact that
they do not answer a survey, or answer it incompletely will cause
errors in research. The correct collection of data will prevent this.
• Step #4: Analyze the results
• Each of the points of the market research process is linked to one
another. If all the above is executed well, but there is no accurate
analysis of the results, then the decisions made consequently will not
be appropriate. In-depth analysis conducted without leaving loose
ends will be effective in gaining solutions. Data analysis will be
captured in a report, which should also be written clearly so that
effective decisions can be made on that basis.
• Step #5: Make the Research Report
• When presenting the results, researchers should focus
on: what do they want to achieve using this
research report and while answering this question they
should not assume that the structure of the survey is
the best way to do the analysis. One of the big mistakes
that many researchers make is that they present the
reports in the same order of their questions and do not
see the potential of storytelling.
Characteristics of a Good Report

• Characteristic # 1. Simplicity:
• The language shall be as simple as possible so that a
report is easily understandable. Jargons and technical
words should be avoided. Even in a technical report
there shall be restricted use of technical terms if it has
to be presented to laymen.
• Characteristic # 2. Clarity:
• The language shall be lucid and straight, clearly
expressing what is intended to be expressed. For that
the report has to be written in correct form and
following correct steps.
• Characteristic # 3. Brevity:
• A report shall not be unnecessarily long so that the
patience of the reader is not lost and there is no
confusion of ideas. But, at the same time, a report must
be complete. A report is not an essay.
• Characteristic # 4. Positivity:
• As far as possible positive statements should be made
instead of negative ones. For example, it is better to
say what should be done and not what should not be
done.
• Characteristic # 5. Punctuation:
• Punctuations have to be carefully and correctly used
otherwise the meaning of sentences may be misunder­
stood or misrepresented.
• Characteristic # 6. Approach:
• There are two types of approaches: (a) Per­son—When a
report is written based on personal enquiry or obser­
vations, the approach shall be personal and the
sentences shall be in the first person and in direct
speech, (b) Impersonal—When a report is prepared as a
source of information and when it is merely factual
(e.g. a report on a meeting), the approach shall be
impersonal and the sentences shall be in the third
person and in indirect speech.
• Characteristic # 7. Readability:
• The keynote of a report is readability. The style of
presentation and the diction (use of words) shall be
such that the readers find it attractive and he is
compelled to read the report from the beginning to the
end.’ Then only a report serves its purpose. A report on
the same subject matter can be written differ­ently for
different classes of readers.
• Characteristic # 8. Accuracy:
• A report shall be accurate when facts are stated in it. It
shall not be biased with personal feelings of the writer.
• Characteristic # 9. Logical Sequence:
• The points in a report shall be arranged with a logical
sequence, step by step and not in a haphazard manner.
A planning is necessary before a report is prepared.
• Characteristic # 10. Proper Form:
• A report must be in the proper form. Some­times there
are statutory forms to follow.
• Characteristic # 11. Presentation:
• A report needs an attractive presentation. It depends
on the quality of typing or printing as well as quality of
paper used. Big companies make very attractive and
colourful Annual Reports.
 Panel Consensus

• In this method, members from all levels of a business come together

to make a forecast. It enables all the participants to express their
opinions based on their knowledge and experience openly.
• For example, you could work with your customer support team to
identify which products are being given negative feedback and why.
Similarly, you could ask your sales team to tell you your best-selling
products.
• Historical Analysis:-
• This kind of forecasting is used to forecast sales on a presumption that
a new product will have a similar sales pattern to that of an existing
product. This can be either being sold by you or your close competitor.
• Historical analysis might not be that accurate in the short term, but it
can prove to be helpful in the medium as well as the long term.
Quantitative Forecasting Methods

• Moving Average
• Moving average is a statistical method in which the
normal average is considered as the basic calculation
for forecasting seasonal demand. To make your average
move over time, you need to remove the oldest values
from the data and add new values.
• For instance, you could use your week-by-week revenue
data to forecast revenue for the coming week using the
moving average method.
Regression Analysis
Regression analysis is done by knowing the
relationship between two or more variables. The idea
is to measure the influence of one or more
independent variables on a dependent variable.
This is a relatively faster and easier method to
establish forecasts based on existing assumptions,
like seasonality.
Exponential Smoothing
This method considers past data but gives more
importance to recent observations. It allows you to
make essentially data-driven forecasts without the
need to examine multiple sets of data.
If you have the right tools, the exponential smoothing
method can prove to be really effective for short-
term forecasting.
Six most common types of business
forecasts
• General business forecasting
• Financial forecasting
• Accounting forecasting
• Demand forecasting
• Sales forecasting
• Capital forecasting
• General business forecasting
• A general business forecast is used to determine the overall business
climate for a future date and can be applied to many company and
industry types.
• It is the forecasting is when companies utilise a range of tools and
techniques to predict changes in the business. These could be
changes in sales, expenditures, profits and losses.
• What is financial forecasting?
• Financial forecasting is a financial plan that estimates the projected
income and projected expenses of a business, and a solid financial
forecast contains both macroeconomic factors and conditions that
are specific to the organisation. A comprehensive forecast includes
short- and long-term outlooks on conditions that could impact
revenues and contingencies for expenditures not currently viewed
as necessary.
• What is accounting forecasting?
• An accounting forecast is using past and present data to predict
future costs to be incurred by the company. By using past and
present data, you can estimate how much your business will pay for
costs like raw materials, inventory, utilities, insurance, and more.
• Working capital forecasting is a difficult task. Working
capital forecasting is based on the overall financial
requirements and financial policies of the concern.
• Working capital forecasting methods:
1.Cash Forecasting Method.
2.Balance Sheet Method.
3.Adjusted Profit and Loss Method.
4.Percent of Sales Method.
5.Operating Cycle Method.
6.Regression Analysis Method
• 1. Cash Forecasting Method
• Total cash receipts and cash disbursement for a particular
period are taken into consideration .
• Cash receipts may be estimated cash sales, cash collected from
debtors, and bills receivables, other miscellaneous cash receipts
and sale of fixed assets and investments. Delay in cash receipts
is taken into consideration.
• Cash disbursement may be relating to estimated cash
purchases, payment to sundry creditors, repayment of loan,
payment over bills payable, payment of wages, salaries, bonus,
advances, payable to suppliers, repayment of loans and
advances interest and principal amount and the like.
• 2. Balance Sheet Method
• A balance sheet is prepared by adjusting the
anticipated transactions for the ensuring year in the
opening balances. The closing balances of all accounts
are arrived other than cash and bank balances. The
accountant has confirmed that all the assets and
liabilities are balanced and recorded in the balance
sheet. Lastly, closing cash and bank balances are
arrived to find the working capital.
• 3. Adjusted Profit and Loss Method
• Working capital is forecasted on the basis of opening cash and bank balances.
Under this method, some of the items are added and some of the items are
deducted to arrive closing cash and bank balances i.e. working capital. The
items like depreciation, preliminary expenses written off, deferred revenue
expenses, goodwill written off, reduction in closing stock, decrease in sundry
debtors and bills receivable, decrease in investments and marketable
securities, increase in sundry creditors and other liabilities, increase in loans
and accrued expenses are added with opening cash and bank balances.
• The items like accrued rent, accrued interest/Dividend/ Royalty, increase in
closing stock, increase in sundry debtors, increase in investments, increase in
bills receivables, decrease in sundry creditors, bills payable and other
liabilities, payment of expenses of last year and payment of dividend are
deducted from opening cash and bank balances. The net amount will be
required working capital.
• 4. Percent of Sales Method
• The existing relationship between sales and working
capital is identified for one or two years. The
relationship between sales and working capital and its
various components may be expressed in three ways:
• as number of days of sales;
• as turnover;
• as percentage of sales.
• 5. Operating Cycle Method:
• The operating cycle refers to the period required to convert the
cash back into cash. In the case of trading concern, cash is
used to buy goods, goods are sold on credit to customers who
become sundry debtors, the sundry debtors may accept bill of
exchange i.e. Bills Receivable, conversion of bills receivable
into cash. At this stage, one operating cycle is completed. Thus,
a loop from cash back to cash is called the “Operating Cycle“.
• The following formula may be used to express the frame work
of the operating cycle:
• T = (r-c)+w+f+b
• Where,
• t = The total period of the operating cycle in number of
days.
• r = Number of days of raw material and requirements
of stores consumption held in raw materials and stores
inventory.
• c = Number of days of purchases in trade creditors.
• w = Number of days of production held in work in
progress.
• f = Number of days of cost of sales held in finished
goods inventory.
What is Scheduling ?

• Scheduling may be defined as the process of arranging the work associated

with the manufacturing process with a view
• to (i) having the optimum output, and
• (ii) keeping a control over the entire process.
• As part of this process, the work is assigned to the plant with appropriate time-
frame for each operation and the sequence in which they need be carried out.
Backward as well as forward scheduling is used by the manufacturers to
• (i) allocate plant and machinery resources,
• (ii) plan human resources, and
• (ii) plan production processes and purchase material.
• Scheduling provides short-term production planning, which may be as short as on
daily basis or weekly basis.
• Definition of Scheduling

• According to Kimball and Kimball :

• "The determination of time that is required to perform
each operation and also the time required to perform
the entire series as routed is scheduling".
Functions of Scheduling

• The functions of scheduling basically include dealing

with the problems related to the production process.
They may be summarized as follows :
• 1) Assignment :
• Allocation of orders or jobs amongst various work
centres.
• 2) Sequencing :
• Stipulating the specific sequencing of various
operations, which are required to be. performed at a
specific work-centre.
• 3) Dispatching :
• Ensuring the beginning of the work at various work
centres.
• 4) Monitoring and Controlling :
• The progress of the work assigned to various work-
centres needs to be monitored on an ongoing basis, and
wherever required, necessary adjustments in the
schedules are made.
Objectives of Scheduling

• 1) Customer Satisfaction :
• The prime objective of the scheduling is customer
service. The date of completion of a job is determined
through the scheduling, which in turn put pressure on
all the operative heads ensure adherence with the pre-
decided time-frame in respect of each step involved in
the process. The result is timely finished product in
hand, ready for delivery to the customer.
• 2) Optimization of Cost :
• Pre-mature or delayed completion of any job by a manufacturer
may prove to be costly for it, in view of the following :
• If a job is completed by a manufacture before the scheduled date
(pre-mature completion), the inventory of finished goods or work-
in-progress (WIP) stands at a higher level. The result is obvious
more wastage and higher cost.
• Any delay in completion of a job by a manufacturer is likely to
lead, idling of machines, which are required to wait for next
activity in the transformation process. This waiting period acts
against the optimum utilization men and machines, and as such
proves to be costly for the organization.
• 3) Increase in Efficiency :
• It is a well-established fact that a remarkable
improvement is brought about the shop-floor people in
the schedule finalized by the planning department of
any organization. This comes naturally as a result of
the expertise, knowledge and experience of the shop-
floor people. Therefore, the overall efficiency of the
shop-floor, credit also needs to be given to the
scheduling (in addition to the people).
Types of Scheduling
The scheduling pattern is not uniform in all the cases, it is job
specific. In other words, it varies from job to job
• Production Schedule :
• Production scheduling ensure that the amount of work
is conveniently carried out by the plants, machinery,
equipment, etc. without any outside intervention.
following points need to be taken into consideration :
• Type of the available facilities in the plant,
• Individuals or workers with requisite expertise and
experience
• Various required materials & purchased parts.
• Master Schedule :
• Preparation of the master schedule is the first step in the
scheduling exercise. Master schedule involves breaking down
of the weekly or monthly requirement in respect of each
product for a certain time-frame.
• Manufacturing Schedule :
• Preparation of manufacturing schedule depends upon the
nature /pattern of manufacturing process Manufacturing
schedule is of extreme use in the cases, where the production
of a single or few products takes place in a repetitive manner
on a regular basis. It shows the necessary quality of order and
each product in which the same needs to be operated.
Example:
Prepare the master schedule for working on a milling machine
for a month. From the past data it is known that the machine
works 20 hrs a day. So max number of M/C – hrs per week = 20
x 6 = 120
Now the scheduling is to be done in such a way that the
maximum number of M/c – hrs should not exceed 120 per week
and should be below minimum number of M/c – hrs (say 6
machine – hours)
Master Schedule:
For a Milling Machine.
Max. Productions =120 hrs.
Min. Production = 6 hrs.

(say)
From this chart it is evident that the M/c is engaged in first week for 100 hrs, in second
week for 85 hrs, in third week for 40 hrs and in the fourth week there is no load on the
m/c. Now there is a fourth job on this m/c.
If this new job takes less than 20 hrs in processing on that m/c then it can be directly
loaded either in first week or in second week or in 3rd or 4th. If the completion time is
more than 20 hours then the job has to be loaded in different weeks or where there is
no load.
• Parts Scheduling :
• Parts scheduling provides the information with regard
to the number of units required to be produced in
respect of various parts of a product.
• Machine Loading Schedule :
• Machine loading schedule is associated with the
earmarking of work load for different machines. It acts
as a time-schedule to be followed by different
machines.
Techniques of Scheduling
• Job Sequencing Rule
Sequencing may be defined as the arrangement of a
series of activities in a particular order. It is a process,
which establishes the priorities to be given to various job
orders in the manufacturing process. The priorities are
decided in terms of 'priority rules' for job orders.
• Gantt Charts

• The Gantt chart is an improvised kind of bar chart,

wherein horizontal bars are used to show each activity in
ratio of the time required for its completion.
• Queuing Analysis
• Queuing analysis is associated with the study of queuing systems
and waiting lines. A queue may be defined as a line or sequence of
customers or units waiting for their turn to be attended to or to be
serviced. The length of a queue depends upon the rate of arrival of
customers and the rate of service provided to them.
• Critical Ratio Method
• The critical ratio of a job is computed by operation's managers with
the help of the following formula :
Actual Time Remaining
• Critical Ratio = ----------------------------------
Scheduling Time Remaining
 Factors Affecting Scheduling

• External Factors :
• The external factors are beyond the control of the management.
They are governed by the outside forces, on which the
company's management has no control whatsoever. The
management makes an effort to make necessary adjustments
with those forces, so that the company's interests are kept
protected. Some of the external factors are as under :
• Customer's Demand :
• Customer's Delivery Dates :
• Stock of Goods Already Lying with Dealers and Retailers :
• Internal Factors :
• Internal factors are those, which can be monitored and
controlled by the company's management.
Stock of Finished Goods with the Firm :
Time Interval to Process Finished Goods from Raw-Material :
Availability of Machines :
Availability of Manpower :
Availability of Materials :
Manufacturing Facilities :
What is Batch Production?

• Batch production is a production methodology in which products

are manufactured in groups called batches rather than in a
continuous fashion. In batch production, a group or set or batch
of products are made, and the same machinery is used to make
the next batch of goods. Batch production is usually used for
making group orders
• Manufacturing clothes also use batch production. Consider a t-
shirt manufacturing company. In its first batch, it makes 100
blue t-shirts, followed by 100 green & 100 red t-shirts in the
subsequent batches. All these t-shirts are made using the same
machinery, just by tweaking the colors & machinery.
Batch Production Examples:

• Baked goods
• Clothing
• Computer chips
• Computer software
• Die- or mold-making
• Electrical goods
• Flat-pack furniture
• Jet engine production
• Jig and fixture production
• Machine tool manufacturing
• Material coating
• Newspapers/magazines
Characteristics of Batch Production

• 1. Reuse
• The same machinery can be re-utilized for producing another
batch of products which may be same or can have minor
changes like color, size or shape
• 2. Group Customizations
• Customizations can be done at a group level in batch
production. In batch production, the customization related to
minor changes can be done in groups to produce batches as
per production plan and market demand.
• Batch Size
• Parts or products are made in smaller batches. These smaller
batches are beneficial because the time taken is less and also
the quality control can be done in a more efficient way.
• Cost Effective
• It is cost effective as compared to every customized job
production product.
What are the advantages?

• Cheaper to produce a whole batch of a product than a

single item
• allows for flexibility
• Machinery can be utilised more efficiently,
• The overall wastage is reduced
• Useful for seasonal items
What are the disadvantages?

• Increased storage costs for large quantities of produced

products
• Errors with the batch produced will incur wasted time and cost
• The product cannot be personalised or unique to an individual
customer
• Periods of downtime where the specialist machinery must be
altered.
• time during which a machine, especially a computer, is out of action or
unavailable for use.
• https://www.google.com/search?q=batch+production+video&rlz
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• Continuous Production System
• | Characteristics
• | Types
• | Merits
• | Demerits
• | Suitability
• Continuous Production System
• Continuous production system involves a continuous or
almost continuous physical flow of materials. It makes
use of special purpose machines and produces
standardized items in large quantities. The examples
are petrochemical, cement, steel, sugar and fertilizer
industries, etc.
• In process storage is not necessary, which in turn
reduces material handling and transportation facilities.
First-in-First-out method is followed in the system.
Characteristics of Continuous Production System

• Standard products are manufactured, which have large demand

throughout the year.
• standardized sequence of operations, machine tools and equipment are
used.
• Division of labour is made more efficient.
• Minimum and constant material handling.
• Minimum flow of work at any point of time.
• Small work in progress is involved.
• Use of productivity techniques is feasible.
• Minimum cost of production per unit is possible.
• Rigid quality control is exercised.
• More maintenance is required.
Types of Continuous Production

• 1. Mass Production
• In this type of continuous production, only one type of product
or a maximum of two or three types are manufactured in large
quantities, as much emphasis is not given to orders of the
consumers. Standardization of product, process, materials,
machine and uninterrupted flow of materials are the main
characteristics of this system.
• Electronics, electrical, automobiles, bicycles and container
industries are a few examples of mass production industries.
• Mass production system offers economies of scale as the
volume of output is large. Quality of products tends to be
uniform
• 2. Process Production
• This system is used for the manufacture of those items
whose demand is continuous and high. Here, single
raw material can be transformed into different kinds of
products at different stages of the production process
e.g., processing of crude oil in refinery — we get
kerosene, gasoline, etc., at different stages of
production.
• 3. Assembly Production
• In assembling process, two or more components are
combined to manufacture a finished product.
Manufactured parts are joined into sub-assemblies or
final assemblies. Such process is employed in
assembling automobiles, radio sets, television sets,
bicycles, watches, cameras, etc.
• Assembly line is a type of flow production which was
developed in the automobile industry in the U.S.A
Process selection
Table of Contents
• Unpacking Process Selection
• The Process Selection Process
• 1. Understanding Your Needs
• 2. Identifying Process Options
• 3. Evaluating Options
• 4. Decision Making
• Key Factors in Process Selection
• Cost Considerations
• Flexibility
• Speed and Efficiency
• Quality and Consistency
• Resource Utilization
Process selection
• Process selection is a fundamental aspect of operations
management, influencing a company’s efficiency, cost-
effectiveness, and overall success.
• Process selection, often referred to as process choice, is
the strategic decision-making process of determining
the most appropriate methods and techniques for
producing goods or delivering services within an
organization. It’s about choosing the right path that
aligns with your business objectives and optimizes
resource utilization.
The Process Selection Process

1. Understanding Your Needs

The first step in process selection is gaining a deep understanding of your
organization’s needs and goals. This involves assessing factors like
production volume, product complexity, quality requirements, and cost
constraints.
2. Identifying Process Options
Once your needs are clear, it’s time to explore different process options.
These options can be categorized into four main types:
• Project Processes: Used for unique, one-time projects with specific
requirements.
• Job Shop Processes: Suitable for small-scale, custom production with
varying requirements.
• Batch Processes: Ideal for moderate production volumes with some
standardization.
• Continuous Processes: Best for high-volume, standardized production
with minimal variation.
The Process Selection Process
3. Evaluating Options
Each process type comes with its advantages and
disadvantages. You must evaluate these options against
your organization’s needs, considering factors like cost,
flexibility, speed, and quality.
4. Decision Making
• Based on the evaluation, you can make an informed
decision on which process type aligns best with your
objectives. This choice will significantly impact your
operations.
Key Factors in Process Selection

Cost Considerations
Understanding the cost structure of different processes is
crucial. Some may require significant initial investments
but offer lower per-unit costs, while others may be more
cost-effective for smaller production runs.
Flexibility
• Consider how adaptable a process is to changes in
product specifications or production volumes. Flexibility
can be a critical factor in dynamic markets.
Key Factors in Process Selection
Speed and Efficiency
Evaluate the speed and efficiency of each process type. Some
may be faster but less efficient, while others may offer a
balance between speed and efficiency.
Quality and Consistency
The quality of the final product is vital. Some processes may
lend themselves better to maintaining consistent quality
standards.
Resource Utilization
• Efficient use of resources, including labor, materials, and
equipment, is essential for cost control and competitiveness.
"job shop"
• A "job shop" is a manufacturing facility that produces small
batches of custom or semi-custom products, often tailored to
specific customer needs, using flexible setups and skilled
workers.
• Job shop production involves creating customized products in
small batches, often tailored to specific customer needs, unlike
mass production. Examples include machine tool shops,
machining centers, paint shops, and commercial printing shops.
• https://www.google.com/search?
q=job+shop+video&sca_esv=3b3972d1bf5f20a1&rlz=1C1CHBF_enIN1025IN1025&ei=OZDWZ4SsJaH2seMPzKrFqAg&ved=0ah
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The product-process matrix
The product-process matrix combines the product lifecycle, which
includes all steps of the product development process from the
initial idea to its development or decline, with the technological or
process lifecycle. This visualizes the progression towards a more
practical and valuable production framework.

A product process matrix establishes the relationship between

different products and services and the steps involved in their
manufacturing or delivery.

• Businesses and strategic managers can use this relationship tool

to analyze whether the process approach that a company is using
is suitable for its life cycle or not.
4 Stages of Product Process
Matrix
1.Job shop

2.Batch

3.Assembly line

4.Continuous
1. Job Shop
• A job shop is where products that are unique and usually designed as
per strict customer specifications are made. The products made here
require high levels of skills and precision, and therefore,
manufacturers, as well as service providers following this model, ask
for higher compensation.

2. Batch
• Then comes the batch stage. The material flow in batch production is
in line, but it is disconnected due to specific differentiation in different
batches. Businesses that follow this product process structure are
involved in making similar products that require low volumes.
3. Assembly Line
• When the demand for a specific standardized product or service is
high enough, firms can move towards an assembly line setup. The
streamlined line setup follows a connected line flow that produces
large volumes of standardized products as per customer demand.

4. Continuous
• And lastly, we have the continuous form of product process
alignment. A constant flow process structure is deployed by
efficient manufacturing concerns where a commodity product is
produced in a very high volume.
• Example of a Product Process Matrix in Action
• Law and medical clinics services are the best examples of job
shops. The service provided is not only customized but also requires
excellent attention to detail, along with only specific individuals being
skilled enough to handle it. No two deliverables are alike, and the human
factor plays a significant role.
• Moving on to an example of batch production, it can be understood
with the standard of a print shop where different cards and
envelopes are produced with customizations in smaller batches.
• When talking about assembly lines, car production, and
manufacturing or even fast-food chain restaurants.
• As an example of the continuous stage in the product process
framework, we can look at the petroleum or the gas industry
Services design matrix

• https://www.google.com/search?
q=Services+design+matrix&sca_esv=3b3972d1bf5f20a1&rlz=1C1CHBF
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1. Buffered Core (None)

• Low Customer Contact, High Production Efficiency

• Example:
Mail contact services.

• Sales Opportunities:
Limited direct interaction, relying on efficient, standardized
processes.

• Sales Channels:
Direct mail, email campaigns.

• Actions to Increase Sales:

• Automate communication processes, implement data analytics
for targeted messaging.
2. Permeable System (Some)

Moderate Customer Contact, Moderate Production

Efficiency

• Example:
WWW and on-site technology, phone contact.

• Sales Opportunities:
Balance between customer interaction and efficient service
delivery.

• Sales Channels:
• Websites, on-site kiosks, call centers.
3. Reactive System (Much)

High Customer Contact, Low Production Efficiency

• Example:
Face-to-face interactions with varying degrees of customization.

• Sales Opportunities:
High potential for personalized service and customer relationship building.

• Sales Channels:
In-person consultations, retail stores.

• Actions to Increase Sales:

• Invest in personalized service training for staff, develop loyalty programs,
gather and utilize customer feedback for continuous improvement.
Challenges of Business Process Design

• http://www.triodyne.com/SAFETY~1/B_V6N3.PDF

1. Overcomplicating processes

• It’s easy to overthink processes and make them more complicated than
they need to be. Adding extra steps, unnecessary approvals, or too
narrow limitations can create bottlenecks and hurt overall productivity.

2. Training employees on processes

• In an ideal world, your business processes should be simple enough that

just about any employee can follow the step-by-step instructions, but
that isn’t always the case. Sometimes, new processes require
comprehensive employee training.
3. Resistance to change

• When your team is used to doing things a certain way, they may not
want to make a change. Whether they’re open about their resistance to
the new process or they just ignore the updated instructions, not having
your team on board can severely impact productivity.

4. Low process adoption

• Resistance to change and low process adoption often go hand-in-hand,

but there may be other reasons why your team isn’t adopting your new
processes. If the process is too complex and time-consuming, or they
don’t understand why it’s important to follow each step exactly, you
may find your process adoption too low.