FOUR PROCESS STRATEGY

A process or transformation strategy is an organization's approach to

transform resources into goods and services. These goods or services
are organized around a specific activity or process.
Process focus
 Low-volume, high variety production.
 For example:
In an office the processes might be accounts payable, sales, and
payroll.
In a restaurant, they might be bar, grill, and bakery.
In terms of equipment, layout and supervision.
 Provides high degree of product flexibility.
 Typically high costs and low equipment utilization
Repetitive Focus

• Characterized by modules with parts and assemblies made previously

• Less flexibility than process-focused facilities but more efficient
• Fast-food firms are an example of repetitive process using modules.
Product focus
• High volume, low variety processes; also called continuous processes
• Requires a high fixed cost, but low costs.
• Generally less skilled labor
• Light bulbs, rolls of paper, beer, and bolts are examples of product
process.
Mass customization focus
 Rapid, low-cost production that caters to constantly changing unique
customer desires.
 Brings variety of products traditionally provided by low volume
manufacturer
 Requires sophisticated operational capabilities.
Capacity and strategy
• Integrated into the organizations mission and strategy
• Investments are not be made as isolated expenditures but as a part of
coordinate plan
Capacity Planning
Capacity

• The number of units a facility can hold, receive, store, or produce in a period of

time.

• Determines if demand will be satisfied or if facilities will be idle.

• Capacity planning can be viewed in three time horizons :

a)Long range planning ( greater than 1 year)

- Adding facilities and equipment that have a long lead time

b)Intermediate range planning ( 3 to 18 months)

- Add equipment, personnel, and shifts

- Build or use inventory

c)Short range planning ( usually up to 3 months)

- Primarily concerned with scheduling jobs and people, and allocating machinery
i) Design and effective capacity
• Design capacity :
- Maximum theoretical output of a system in a given period under ideal
conditions.
- Expressed as a rate
- Measuring capacity in terms of units produced in a specific time.
- Total work time available as a measure of overall capacity.
- For some firms, it is difficult: eg, capacity measured in terms of
beds(hospital), class room size ( a school)
ii) Effective capacity :
Capacity a firm can expect to achieve given its current operating
constraints.
Lower than design capacity
Utilization
• Percent of design capacity actually achieved.

• Utilization = Actual output / Design Capacity

Efficiency
• Percent of effective capacity actually achieved.

• Efficiency : Actual output / Effective capacity

• Design capacity, utilization, and efficiency are all important measures
for an operations manager.

• Managers often need to know the expected output of a facility or

process.

• Actual ( or expected output) : (Effective capacity)(Efficiency)