Business Process Types

Lecture # 06
SE-3501 Business Process Engineering
Business
Steps Asad Ur Rehman
DHA Suffa University
Business
Business
Process
Stakeholders
Goals
 Business Processes types
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We can divide the Business process into two major categories

1- Manufacturing Process

2- Services Process
 Discrete Manufacturing
 Batch process manufacturing
 Continuous process manufacturing
 Job Shop Manufacturing
 Repetitive Manufacturing

Business Process Engineering

 1- Manufacturing Processes
3

Raw Finished
Material Product

Business Process Engineering

 1- Manufacturing Processes
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What is manufacturing?
Raw
 Term manufacturing refers to the processing of material

raw materials (medicine, paints, food etc) or parts into

finished goods through the use of tools, human
labor, machinery, and chemical processing. Finished
products

 Manufacturing allows businesses to sell finished

products at a higher cost than the value of the
raw materials used.
?

Business Process Engineering

 Manufacturing Processes
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. . . What is manufacturing . . . ?
 Large-scale manufacturing allows for goods to be
mass-produced (substantial amounts of standardized products in
a constant flow) using assembly line (following progressive
assembly steps) processes and advanced technologies as
core assets.
 Rationale behind such principles is to keep
manufacturing costs low by using repetitive and
standardized processes to produce uniform products.
 Efficient manufacturing techniques enable
manufacturers to take advantage of economies of
scale, (cost advantage gain from increasing their output)
producing more units at a lower cost.
Business Process Engineering
 Manufacturing Processes
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Understanding Manufacturing
 Manufacturing involves the processing and refinement of raw materials, such as ore, wood,
and foodstuffs, into finished products, such as metal goods, furniture, and processed foods.

 Converting these raw materials into

something more useful adds value. hi n
y
er ricity r
t o Finished Goods
ac Elec Lab Tools
M
 This added value (due to manufacture skills &
efficient processes) increases the price of
Manufacturing
finished products, making manufacturing a Process
very profitable part of the business chain.
Raw Material
 Example: Nestle Milk pack will be expensive from Scrap &
normal milk-pack, Waste
 Japanese product will be higher in quality because of
their processes

Business Process Engineering

 Manufacturing Processes Productivity
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Efficiency in manufacturing can lead to higher productivity and cost

savings, ultimately profitable business.

Manufacturers are able to accomplish this if they are able to:

 Reduce redundancies
 Improve the quality of work
 Update equipment and procedures
 Streamline intake, supply chain, and distribution channels

Business Process Engineering

 Manufacturing Processes Productivity
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 Productivity is typically measured by comparing an aggregate output with a single

input or an aggregate input over time. Productivity = Output obtained
Input extended

 We can define Productivity as the . . .

o rate at which a company produces finished-goods and services (output)
o usually judged based on the amounts of inputs (labor, capital, energy, or other resources)
o used to deliver those finished-goods and services.

 Productivity is a measure of how efficiently a person (or machine) completes a task.

o Experience programmer develop 02 reports per day, whereas inexperience programmer is able to
produce only one report.
Business Process Engineering
 Manufacturing Processes Productivity
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Why is Productivity Important?

 Increased productivity indicates greater output from the same amount of input.

 Productivity growth is our opportunity to create more from less.

o Assume no prior training and inexperience worker making burger at Berger-king, perhaps waste
will be high.
o If worker using an machine with no proper training, we can expect low quality production

Benefits derived from increased productivity at workplace.

 Effective utilization of resources  Increased wages to workers
 Reduced cost of production  Lower overhead costs
 Reduced price of goods and services  Higher profits for businesses

Business Process Engineering

Manufacturing Types
1- Make to Stock (Push Sales)
2- Make to Order (Pull Sales)
 Make to Order Vs Make to Stock
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Make to Stock (Push)

Customer
Anticipated
demand of Production Sales of finished
product products

Make to Order (Pull)

Customer
Delivery of
Actual sales order Production customized
product

Business Process Engineering

 Manufacturing Types
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Make to Stock (MTS)

 Traditional production technique is make-to-stock, the manufacturing of a standard product
based on (sales) forecast demand.
 Company estimates how many units will be sold over a given period of time, then plan in
advance to manufacture that many goods.
 Goods are often held as inventory leading up to the release and broad distribution of the
finished-goods (need warehouse for finished products).
 Company must have sufficient information in advance of
a product release to understand how many goods it will
need to manufacture.
 This forecast includes . .
o Historical data from similar goods
o Understanding macroeconomic conditions
o Considering customer expectations for specific product features
Business Process Engineering
 Manufacturing Types
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Make to Stock (MTS)

 Advantage of MTS is companies can often capitalize on scales of economy.

 Because a company sets a target level of manufacturing, it can plan in advance

o how much raw materials, labor, or
o equipment it will need and
o can often build the most robust manufacturing plans.

 On the downside, not meeting expectation leaves a company with unusable

product, surplus inventory, and committed yet underutilized fixed costs.
Business Process Engineering
 Manufacturing Types
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Make to Order (MTO)

 Opposite of MTS, make-to-order manufacturing entails working directly with a
customer to understand their need and desired product specifications.
 Manufacturing typically only starts after signing contract or letter of intent.
o Example Country will purchase four Boeing 747 commercial airplane for their airline.
 MTO is most common in industries where specialized products are being made
for a very specific purpose.

Business Process Engineering

 Manufacturing Types
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Make to Order (MTO)

 Aerospace, construction, or technology (to a lesser degree) are examples of
industries where manufacturers will often not manufacture a good until a
government entity has agreed to purchase the aircraft or a tenant has signed a
long-term lease agreement.
 On one hand, MTO manufacturers can often charge a premium price for their
products as the good may not be easily acquired in a marketplace.
 This is especially true for highly-specified goods. In addition,
o MTO manufacturers often only make a good if a sale is lined up;
o therefore, it often never carries inventory (ready prepared product).

 As a downside, MTO manufacturing often comes with uneven product demand

that may result in slower periods of business
Business Process Engineering
Manufacturing Processes
 Manufacturing Processes
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Some of the Manufacturing Process

 Discrete Manufacturing AAAaaA BbBb

AAAA BBBB CCCC

 Batch process manufacturing

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 Continuous process manufacturing

 Job Shop Manufacturing A.1 A.2 A.3

Business Process Engineering

 Manufacturing Process
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Discrete Manufacturing
 Discrete manufacturing is named because each product manufactured can be
separately identified.
 Manufacturing process leverages a bill of materials to track what raw materials
(or components) go into each specific unit.
 In discrete manufacturing processes, units are often made on a production line
where assembly line workers follow a production schedule and record material
usage.
 A company can have multiple styles, sizes or modifications for a product with
discrete manufacturing, though it often means production can take longer
because of extra setup or removal as necessary.

Business Process Engineering

 Manufacturing Process
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Discrete Manufacturing
 Automobile and aircraft makers use the discrete manufacturing process, along
with many companies who produce clothing, medical devices, toys and smart-
phones.

 For example, in the computer industry, technology not only develops at a

constantly rapid rate but the customers demand mass customization.

 The manufacturing process for producing newer computers will require

modifications to the assembly line to produce and assemble orders that call for
the latest electronic components.

Business Process Engineering

 Manufacturing Process
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Discrete Manufacturing

Discrete manufacturing is named

because each product manufactured
can be separately identified.

Business Process Engineering

 Manufacturing Process
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Discrete
Manufacturing

Business Process Engineering

 Manufacturing Process
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Batch process manufacturing

 Batch process manufacturing shares similarities with discrete and job shop
manufacturing processes, driven by customer demand.
 One manufacturing run might produce a batch enough to fill client needs, . .
o . so you finish production, clean the equipment, and resume when you need another batch.
 Food production, newspaper printing, and pharmaceuticals often rely on batch
process manufacturing.

 Examples: DAWN bread will be made during night in a batch of required quantity and
will be delivered in early morning to bakeries.
o Cricket bat manufacture
o Clothing
o Baking / meal preparation

Business Process Engineering

 Manufacturing Process
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Continuous process manufacturing

 Continuous production is a flow production method used to manufacture, produce,
or process materials without interruption.
o It means that a product is made nonstop, without any interruptions (or pauses) between
batches.

 Continuous production is traditionally used for manufacturing high-volume products

which do not require customization.
o Oil refining, Metal smelting,
o Paper production and some food products like tomato sauce,
o Juice and peanut butter use continuous process manufacturing.

Business Process Engineering

 Manufacturing Process
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Job Shop Manufacturing

 This process is most often used when there is a batch to process yet the batch is
different than a company's normal product.

 Custom products that are made-to-order for the customers.

 For this specialized, customized good, a company must often perform unique set-
up and process steps including converting existing equipment to a more usable
structure.

Business Process Engineering

That is all from

Lecture # 05