Process Design Strategies

1
Process Design Strategies
Chapter 3
2

• Process design decisions when
• A gap exists between competitive priorities and
  competitive capabilities
• A new or substantially modified product or
  service is begin offered
• Quality must be improved
• Competitive priorities have changed
• Demand for product or service is changing
• Current performance is inadequate
• Competitors are gaining
• Costs have changed

3
Major Decisions for Effective Process Design
Figure 3.1
4
Different Dimensions of Customer Contact in
Service Processes
Figure 3.2
5
Customer-Contact Model for Processes
Figure 3.3
6
Service Process Structures in the Financial
Services Industry

• Hybrid Office
• Creation of quarterly
• performance report
• Data obtained electronically
• Report calculated using standardized process
• Report reviewed using standardized diagnostic
  systems
• Manager provides written analysis and
  recommendations in response to individual
  employee performance
• Manager meets with employee to discuss
  performance

• Back Office
• Production of
• monthly client fund balanced report
• Data obtained electronically
• Report run using standardized process
• Results checked for reasonableness using
  well-established policies
• Hard copies and electronic files forwarded to
  analysts
• Process repeated monthly with little variation

• Front Office
• Sale of financial
• services
• Research customer finances
• Work with customer to understand customer needs
• Make customized presentation to customer
  addressing specific customer needs
• Involve specialized staff offering variety of
  services
• Continuing relationship with customer, reaction
  to changing customer needs

Figure 3.4
7
Process Repositioning at a Restaurant
Higher Complexity/Divergence Current
Process Lower Complexity/Divergence
Figure 3.5
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Product-Process Matrix for Processes
Figure 3.6
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Production and Inventory Strategy

• Make-to-stock strategy
• Holding items in stock for immediate delivery
• Combined with line process, it is sometimes
  called mass production
• Assemble to order strategy
• Producing a wide variety of products from
  relatively few assemblies and components after
  the customers orders are received
• Make-to-order strategy
• Make products to customer specifications in low
  volumes
• Changing position
• Moving a manufacturing process in the
  product-process matrix.
• Changes can be made horizontally be changing the
  degree of customization and volume.
• Changes can be made vertically be changing the
  process complexity or divergence.
• Process flows can be made more linear by
  dedication human or capital resources to a
  specific product.

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Vertical Integration
Figure 3.9
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Resource flexibility

• Workforce
• Equipment

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Capital intensity

• Which tasks will be performed by humans and which
  by machines?
• Automated (capital intensive) operations must
  have high utilization.
• Automation may not fit with competitive
  priorities being emphasized.
• More capital intensity is not always best.
• Fixed automation favored when
• High demand volume
• Stable product design
• Long life cycle
• Flexible automation
• Automating service processes
• Using capital inputs as a labor-saving device is
  also possible for service processes.

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Decision Patterns for Service Processes
High Contact Customer Contact Low Contact
Figure 3.11
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Decision Patterns for Manufacturing Processes
High Volume Customer Contact Low Volume
Figure 3.11
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Strategies for change

• Process reengineering
• Critical processes
• Strong leadership
• Cross-functional teams
• Information technology
• Clean slate philosophy
• Process analysis
• Process Improvement
• The systematic study of the activities and flows
  of each process to improve it.
• You have to get process improvements forever.