Production and Operations Management

Chapter: 04. Process Management

Process Management
A process involves the use of an organization’s resources to provide something of value. No
product can be made and no service provided without a process and no process can exist without
a product or service. The selection of the inputs, operations, work flows and methods that transform
inputs into outputs is called process management.
Process decisions must be made when:
 A new or substantially modified product or service is being offered
 Quality must be improved
 Competitive priorities have changed
 Demand for a product or service is changing
 Current performance is inadequate
 The cost or availability of inputs has changed
 Competitors are gaining by using a new process
 New technologies are available

Major Process Decisions

Process decisions directly affect the process itself, and indirectly the products and services that it
provides. Whether dealing with processes for offices, service providers, or manufacturers,
operations managers must consider five common process decisions. These are given below:
1. Process choice: A process decision that determines whether resources are organized around
products or processes. The process choice decision depends on volume and degree of
customization to be provided. Understanding such relationship helps the process manager to
identify possible misalignments in processes, paving the way for reengineering and process
improvements.
2. Vertical integration: The degree to which a firm’s own production system or service facility
handles the entire supply chain. The more that the processes are performed in-house rather than by
suppliers or customers, the grater is the degree of vertical integration.
3. Resource flexibility: The ease with which employees and equipment can handle a wide variety
of products, output levels, duties and functions.
4. Customer involvement: The ways in which customers become part of the process and the
extent of their participation.

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5. Capital intensity: It is the mix of equipment and human skills in a process. The greater the
relative cost of equipment, the greater is the capital intensity.
These five decisions are best understood at the process or sub-process level, rather than at the firm
level. Process decisions act as building blocks that are used in different ways to implement
operations strategy.

Process Choice
One of the first decisions a manager makes in designing a well-functioning process is to choose a
process type that best achieves the relative importance placed on quality, time, flexibility, and cost.
A process decision that determines whether resources are organized around products or processes.
The manager has five process types, which form a continuum, to choose from:
1. Project process: A process characterized by a high degree of job customization, the large scope
of each project, and the release of substantial resources once a project is completed.
2. Job process: A process with the flexibility needed to produce a variety of products or services
in significant qualities.
3. Batch process: A process that differs from the job process with respect to volume, variety, and
quality.
4. Line process: A process that lies between the batch and continuous processes on the continuum,
volumes are high, and products or services are standardized.
5. Continuous process: The extreme end of high-volume, standardized production with rigid line
flows.

Techniques are Effective for documenting and Evaluating Process

Three techniques are effective for documenting and evaluating process. These are:
1. Flow diagrams: A diagram that traces the flow of information, customers, employees,
equipment or materials through a process is called flow diagram. There is no precise format and
the diagram can be drawn simply with boxes, lines and arrows.
2. Process chart: An organized way of recording all the activities performed by a person, by a
machine, at a workstation, with a customer or on materials. For our purpose we group these
activities into five categories:

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 i. Operation
ii. Transportation
iii. Inspection
iv. Delay
v. Storage
3. Simulation models: The act of reproducing the behavior of a process using a model that
describes each step of the process. A simulation model goes one step further by showing how the
process performs dynamically over time.

Process Engineering
The fundamental rethinking and radical redesign of processes to improve performance
dramatically in term of cost, quality, service and speed. Process reengineering is about reinvention,
rather than incremental improvement. It is strong medicine and not always successful.

Factors should be considered in Process Reengineering

1. Critical Processes
The emphasis of reengineering should be on core business processes rather than on functional
departments such as purchasing or marketing.
2. Strong Leadership
Senior executives must provide strong leadership for reengineering to be successful. Top
management should create a sense of urgency, making a case for change that is compelling and
constantly refreshed.
3. Cross-Functional Teams
A team, consisting of members from each functional area affected by the process change, is
charged with carrying out a reengineering project. Top-down and bottom-up initiatives can be
combined—top-down for performance targets and bottom-up for deciding how to achieve them.
4. Information Technology
Information technology is a primary enabler of process engineering. The reengineering team must
determine who needs the information, when they need it and where.
5. Clean-Slate Philosophy
Reengineering requires a “clean-slate” philosophy- that is, starting with the way the customer
wants to deal with the company. To ensure a customer orientation, teams begin with internal and
external objectives for the process.

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