Operations management, 9e by krajewski itzman malhotra chapter 03

3

Process Strategy

PowerPoint Slides
by Jeff Heyl
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hal

For Operations Management, 9e by
Krajewski/Ritzman/Malhotra
© 2010 Pearson Education
3–1


Process Strategy
Principles of process strategy
1. Make choices that fit the situation and that

make sense together, that have a close
strategic fit

2. Individual processes are the building blocks

that eventually create the firm’s whole supply
chain

3. Management must pay particular attention to

the interfaces between processes

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Process Strategy
There are four basic process decisions
1. Process structure including layout
2. Customer involvement
3. Resource flexibility
4. Capital intensity

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Process Strategy Decisions
Process Structure
• Customer-contract position
(services)
• Product-process position
(manufacturing)
• Layout
Customer Involvement
• Low involvement
• High involvement

Resource Flexibility
• Specialized
• Enlarged

Capital Intensity
• Low automation
• High automation

Strategy for Change
• Process reengineering
• Process improvement

Figure 3.1 – Major Decisions for
Effective Processes

Effective Process
Design

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Process Structure in Services
Customer contact is the extent to which the
customer is present, actively involved, and
receives personal attention during the
service process
Face-to-face interaction is sometimes
called a moment of truth or a service
encounter

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Process Structure in Services
TABLE 3.1

|
|

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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Process Structure in Services
The three elements of the customercontact matrix are
1. The degree of customer contact
2. Customization
3. Process characteristics

Process characteristics include

1. Process divergence deals with customization
and the latitude as to how tasks are performed
2. Flow is how customers, objects, or information
are process and can be either line of flexible

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Service Process Structuring
Less processes divergence and more line flows

Less customer contact and customization

Process
Characteristics
(1)
Flexible flows with
Individual
processes
(2)
Flexible flows with
some dominant
paths, with
some exceptions
to how work
performed

(1)

High interaction with
customers, highly
customized service

(2)
Some interaction with
customers, standard
services with some options

(3)
Low interaction with
customers, standardized
services

Front office

Hybrid office

(3)
Line flows, routine
work same with all
customers

Figure 3.2 – Customer-Contact Matrix for Service Processes
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hal

Back office

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Product-Process Matrix
For manufacturing organization it brings
together
1. Volume
2. Product customization
3. Process characteristics

Process choices include job, batch, line,
and continuous flow processes
Production and inventory strategies
include make-to-order, assemble-to-order,
and make-to-stock
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Product-Process Matrix
Less customization and higher volume

Less complexity, less divergence, and more line flows

Process
Characteristics
(1)
Customized process,
with flexible and
unique sequence of
tasks

(2)
Disconnected line
flows, moderately
complex work

(1)
(2)
Low-volume
Multiple products with low
products, made to moderate volume
to customer
order

(3)
Few major
products,
higher
volume

(4)
High volume, high
standardization,
commodity
products

Job
process

Small batch

process
Batch processes

(3)
Connected line, highly
repetitive work

(4)
Continuous flows

Figure 3.3 – Product-Process Matrix for Processes
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hal

Large batch
process

Line
process

Continuous
process

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Layout
The physical arrangement of human and
capital resources
An operation is a group of resources
performing all or part of one or more

processes
Layout involves three basic steps
1. Gather information
2. Develop a block plan
3. Design a detailed layout

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Layout
 Gather information on space requirements,

available space, and closeness factors
Department

Area Needed (ft2)

1. Administration

3,500

2. Social services

2,600

3. Institutions

2,400

4. Accounting

1,600

5. Education

1,500

6. Internal audit

3,400
Total 15,000

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Block Plan

3

6

4
100’

1

2

5

150’

Figure 3.4 – Current Block Plan for the Office of Budget Management

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Closeness Matrix
Closeness Factors
Department

1

2

3

4

5

6

1. Administration

―

3

6

5

6

10

―

8

1

1

―

3

9

―

2

2. Social services
3. Institutions
4. Accounting
5. Education
6. Internal audit

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―

1
―

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Requirements
There are two absolute requirements for
the new layout
1. Education should remain where it is
2. Administration should remain where it is
Closeness Factors
Department

1

2

3

4

5

6

1. Administration

―

3

6

5

6

10

―

8

1

1

―

3

9

―

2

2. Social services
3. Institutions
4. Accounting
5. Education
6. Internal audit

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―

1
―

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Developing a Block Plan
EXAMPLE 3.1
Develop an acceptable block plan for the Office of Budget
Management that locates departments with the greatest
interaction as close to each other as possible.

SOLUTION
Using closeness ratings of 8 and above, you might plan to
locate departments as follows:
a. Departments 1 and 6
close together
b. Departments 3 and 5
close together
c. Departments 2 and 3
close together

Closeness Factors
Department

1

2

3

4

5

6

1. Administration

―

3

6

5

6

10

―

8

1

1

―

3

9

―

2

2. Social services
3. Institutions
4. Accounting

5. Education
6. Internal audit

―

1
―

Departments 1 and 5 should
remain at their current locations
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Developing a Block Plan
a. Departments 1 and 6 close together
b. Departments 3 and 5 close together
c. Departments 2 and 3 close together

6

2

3
100’

1

4

5

150’
Figure 3.5 – Proposed Block Plan
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The Weighted-Distance Method
The weighted-distance method can be used
to compare alternative block plans when
relative locations are important
Euclidian distance is the straight-line
distance between two possible points

d AB =

( x A − xB ) + ( y A − y B )
2

2

where
dAB
xA
yA
xB
yB

= distance between points A and B
= x-coordinate of point A
= y-coordinate of point A
= x-coordinate of point B
= y-coordinate of point B

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The Weighted-Distance Method
Rectilinear distance measures the distance
between two possible points with a series
of 90-degree turns

d AB = x A − xB + y A − y B
The objective is to minimize the weighteddistance score (wd)
A layout’s wd score is calculated by
summing the products of the proximity
scores and distances between centers
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Application 3.1
What is the distance between (20,10) and (80,60)?
Euclidian Distance

dAB =

(20 – 80)2 + (10 – 60)2

=
Rectilinear Distance
dAB = |20 – 80| + |10 – 60| =

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Application 3.1
What is the distance between (20,10) and (80,60)?
Euclidian Distance
dAB =

(20 – 80)2 + (10 – 60)2

= 78.1
Rectilinear Distance
dAB = |20 – 80| + |10 – 60| = 110

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Calculating the WD Score

EXAMPLE 3.2
How much better is the proposed block than the current block
plan?
SOLUTION
The following table lists pairs of departments that have a
nonzero closeness factor and the rectilinear distances
between departments for both the current plan and the
proposed plan
3

6

4

6

2

3

1

2

5

1

4

5

Current Block Plan

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Proposed Block Plan

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Calculating the WD Score
Current Plan
Department
Pair

Closeness
Factor (w)

1, 2

3

1, 3

6

1, 4

5

1, 5

6

1, 6

10

2, 3

8

2, 4

1

2, 5

1

3, 4

3

3, 5

9

4, 5

2

5, 6

1

Distance
(d)

Weighted-Distance
Score (wd)

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Proposed Plan
Distance
(d)

Weighted-Distance
Score (wd)

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Calculating the WD Score
Current Plan
Department
Pair

Closeness
Factor (w)

Distance
(d)

Proposed Plan

Weighted-Distance
Score (wd)

Distance
(d)

Weighted-Distance
Score (wd)

1, 2

3

1

3

2

6

1, 3

6

1

6

3

18

1, 4

5

3

15

1

5

1, 5

6

2

12

2

12

1, 6

10

2

20

1

10

2, 3

8

2

16

1

8

2, 4

1

2

2

1

1

2, 5

1

1

1

2

2

3, 4

3

2

6

2

6

3, 5

9

3

27

1

9

4, 5

2

1

2

1

2

5, 6

1

2

2

3

3

Total 112

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Total 82

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OM Explorer Analysis

Figure 3.6 – Second Proposed Block Plan (Analyzed with Layout Solver)

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