PROCESS

DESIGN
CHAPTER 3
What is Process Strategy?
A process or transformation strategy is an
organization’s approach to transform resources
into good and services.

The objective of a process strategy is to find a way

to product good and services that meet customers
requirements and product specification within cost
and other managerial constraint.
Cont..
The process selected will have a long term effect
on efficiency and production as well as the
flexibility, cost and quality of the goods produced.
A major decision for operation manager is finding
the best way to produce.
Much of firm’s strategy is determined at the time
of this process decision.
4 process strategies
Product Focus Strategy
Process Focus Strategy
Repetitive Focus Strategy
Mass customization strategy
PRODUCT FOCUS
A facility organized around products, a
product-oriented, high volume, low variety
process.

They are also called continuous process, because

they have very long, continuous production runs.
Products such as glass, paper, tin sheets and bolts
are made via a continuous process.
Cont..
A product focused facility produces high volume
and low variety. The specialized nature of the
facility requires high fixed cost but low variable
cost reward high facility utilization.
Product Focus
 PowerPoint presentation to
accompany Heizer/Render –
7-8 Principles of Operations
Management, 5e, and
Operations Management, 7e

Product-Focused Strategy
♦ Facilities are organized by product
♦ High volume, low variety products
♦ Where found
♦ Discrete unit manufacturing
♦ Continuous process manufacturing
♦ Other names Products A & B
♦ Line flow production
♦ Continuous production 1 2 3
Operation
Product-Focused Strategy
Pros & Cons
Advantages
Lower variable cost per unit
Lower but more specialized labor skills
Easier production planning and control
Higher equipment utilization (70% to 90%)
Disadvantages
Lower product flexibility
More specialized equipment
Usually higher capital investment
Product-Focused Examples
Soft Drinks
(Continuous,
then Discrete)
Light Bulbs
(Discrete)
© 1995 Corel © 1995 Corel Corp.
Corp.

Mass
Flu Shots
© 1984-1994 T/Maker Co.
(Discrete)
Paper © 1995 Corel Corp.
© 2004 by Prentice Hall, Inc., Upper Saddle
(Continuous) River, N.J. 07458
PROCESS FOCUS
A production facility organized around processes
to facilitate low-volume, high-variety production.
Process Focus

© 2004 by Prentice Hall, Inc., Upper Saddle

River, N.J. 07458
 7-13

Process-Focused Strategy Examples

Bank
© 1995

Hospital Corel
Corp.

Machine
© 1995 Corel Corp. Shop
© 2004 by Prentice Hall, Inc., Upper Saddle
© 1995 Corel Corp.
River, N.J. 07458
Process Focused Strategy -
Pros & Cons
Advantages
Greater product flexibility
More general purpose equipment
Lower initial capital investment
Disadvantages
High variable costs
More highly trained personnel
More difficult production planning & control
Low equipment utilization (5% to 25%)

© 2004 by Prentice Hall, Inc., Upper Saddle

River, N.J. 07458
REPETITIVE FOCUS
A product-oriented production process that uses
modules.
Modules
Parts or components of a product previously
prepared, often in a continuous process.
Cont….
Fast food firms are example of a repetitive process
use modules.
This type of production allow more customizing
than a continuous process.
In this manner the firm obtains both the economic
advantages of the continuous model (where many
of the modules are prepared) and the custom
advantage of the low volume-high variety model.
Repetitive-Focused Strategy -
Examples
Fast
Clothes Food
Dryer

McDonald’s
over 95 billion served

Truck

© 1995 Corel Corp.

© 1984-1994 T/Maker Co.

© 2004 by Prentice Hall, Inc., Upper Saddle
River, N.J. 07458
© 1995 Corel Corp.
Repetitive Strategy
Pros & Cons
Advantages
Finished good are made to frequent forecast
Reduced training and job instruction
Easier production planning and control

Disadvantages
Lower product flexibility
More specialized equipment
Movement need to be measured in days and hours
MASS CUSTOMIZATION
Rapid, low cost production that caters to
constantly changing unique customers desires.
Mass customization is about variety, economically
making precisely what the customer wants when
the customer wants it.
 PowerPoint presentation to
accompany Heizer/Render –
7-20 Principles of Operations
Management, 5e, and
Operations Management, 7e

Mass Customization
Using technology and imagination to rapidly
mass-produce products that cater to sundry unique
customer desires.
Under mass customization the three process
models become so flexible that distinctions
between them blur, making variety and volume
issues less significant.

© 2004 by Prentice Hall, Inc., Upper Saddle

River, N.J. 07458
Cont..
Mass customization brings us the variety of
product traditionally provided by low-volume
manufacture (a process focus) at the cost of
standardized high volume (product –focused)
production.
Cont..
Example : General Motor build six different styles
on its Fairfax, Kansas assembly line.
GM adjust robot welders and other equipment
electronically as different models come down the
assembly line.
Example of Mass Customization
(Apparel Industry)

a
Mass Customization Strategy
Pros & Cons
Advantages
Lower variable cost
Large quantity of product
High variety of products

Disadvantages
Fixed cost high
Sophisticated schedulling
Custom order require many instruction
 A Comparison (1)
Process Focus Repetitive Focus Product focus Mass
(Low volume, High (Modular) (High-volume, Customization
variety) low-variety) (High-volume,
high-variety
1. Small quantity, Long runs, Large quantity, Large quantity,
large variety of standardized small variety of large variety of
products product, from products products
modules
2. General purpose Special equipment Special purpose Rapid changeover
equipment aids in use of equipment on flexible
assembly line equipment

© 2004 by Prentice Hall, Inc., Upper Saddle

River, N.J. 07458
A Comparison (2)
Process Focus Repetitive Focus Product focus Mass
Customization
3 Broadly skilled Modestly trained Operators less Flexible operators
operators employees broadly skilled trained for
customization
4 Many Reduced training Few work Custom orders
instructions and number of job orders and job require many
because of change instructions instructions instructions
in jobs
5 Raw material JIT techniques Raw material Raw material low
high relative to used low relative to relative to product
product value product value value
© 2004 by Prentice Hall, Inc., Upper Saddle
River, N.J. 07458
 A Comparison (5)
Process Focus Repetitive Focus Product Mass
focus Customization
11)Costing, done by Costs usually Because of High fixed costs
job, is estimated prior known based on high fixed and dynamic
to doing job but only experience costs, cost variable costs
known after doing job dependent on
utilization of
capacity

© 2004 by Prentice Hall, Inc., Upper Saddle

River, N.J. 07458
 PowerPoint presentation to
accompany Heizer/Render –
7-28 Principles of Operations
Management, 5e, and
Operations Management, 7e

Process Focus Repetitive Focus Product focus Mass

A Comparison (3) Customization
6 WIP high relative JIT techniques used WIP low relative to WIP driven down
to output output by JIT, kanban,
lean production

7 Units move slowly Movement Units move swiftly Goods move

thru plant measured in hours & thru facility swiftly thru facility
days
8 Finished goods Finished goods Finished goods Finished goods
made to order, not made to frequent made to forecast, made to order
stored forecasts then stored
© 2004 by Prentice Hall, Inc., Upper Saddle
River, N.J. 07458
A Comparison (4)
Process Focus Repetitive Focus Product focus Mass
Customization
9 Scheduling Scheduling based Scheduling Scheduling
complex and on building models relatively simple, sophisticated to
concerned with from a variety of concerns accommodate
trade-off between forecasts establishing customization
inventory, capacity, sufficient rate of
and customer output to meet
service forecasts
10 Fixed costs low, Fixed costs Fixed costs high, Fixed costs high;
variable costs high dependent on variable costs variable costs
flexibility of facilities low must be low
© 2004 by Prentice Hall, Inc., Upper Saddle
River, N.J. 07458