Designing Processes for Effective Product and Service Creation

1. Chapter 4 Process design Source: Joe Schwarz, www.joyrides.com

2. Process design Process design Operations strategy Supply network design Layout and flow Operations management Improvement Design Process technology Job design Planning and control Product/service design

3. Products, services and the processes which produce them all have to be designed Decisions taken during the design of a product or service will have an impact on the decisions taken during the design of the process which produces those products or services, and vice versa Nature and purpose of the design activity

4. Designing the process Designing the product or service Processes should be designed so they can create all products and services which the operation is likely to introduce Product / service design has an impact on the process design and vice versa Products and services should be designed in such a way that they can be created effectively Design of products / services and design of processes are interrelated and should be treated together

5. Design of the Product Design of the Service Design of the Process Design of the Process In manufacturing operations overlapping the activities of product and process design is beneficial In most service operations the overlap between service and process design is implicit in the nature of service

6. Process mapping symbols derived from Systems Analysis Process mapping symbols derived from ‘Scientific Management’ Beginning or end of the process Operation (an activity that directly adds value) Activity Inspection (a check of some sort) Input or output from the process Transport (a movement of something) Direction of flow Delay (a wait, e.g. for materials) Decision (exercising discretion) Storage (deliberate storage, as opposed to a delay)

7. Designing processes There are different ‘process types’ Process types are defined by the volume and variety of ‘items’ they process Process types go by different names depending on whether they produce products or services

8. Process flow Process tasks Diverse/ complex Project Intermittent Jobbing Batch Mass Contin-uous Repeated/ divided Continuous Manufacturing process types High Variety Low Low Volume High

9. One-off, complex, large-scale ‘products’ with high work content Specially made, every one ‘customized’ Defined start and finish: time, quality and cost objectives Many different skills have to be coordinated Project processes

10. A project process with a small part of the process map that would describe the whole process

11. Very small quantities: ‘one-offs’, or only a few required Specially made: high variety, low repetition, ‘strangers’, every one ‘customized’ Skill requirements are usually very broad Skilled jobber, or team, completes whole product Jobbing processes

12. Preparing photolithography materials on a jobbing basis with a typical process map

13. Higher volumes and lower variety than for jobbing Standard products, repeating demand. But can make specials Specialized, narrower skills Set-ups (changeovers) at each stage of production Batch processes

14. A batch process in a kitchen together with an illustrative process map

15. Higher volumes than batch Standard, repeat products (‘runners’) Low and/or narrow skills No set-ups, or almost instantaneous ones Mass (line) processes

16. A mass process – a packing process

17. Extremely high volumes and low variety:often single product Standard, repeat products (‘runners’) Highly capital-intensive and automated Few changeovers required Difficult and expensive to start and stop the process Continuous processes

18. Part of a continuous process and a typical process map

19. Process flow Process tasks Diverse/ complex Professional service Intermittent Service shop Mass service Repeated/ divided Continuous Service process types High Variety Low High Low Volume

20. A professional service –Consultants planning how best to help their client

21. A service shop – This health club offers some varietywithin a standard set of facilities and processes

22. A mass service – This call centre can handlea very high volume of customer enquiries because it standardizes its process Source: Royal Bank of Scotland Group

23. Manufacturing operations process types Service operations process types Project Professional service None More process flexibility than is needed so high cost Jobbing Service shop Batch Less process flexibility than is needed so high cost Mass Mass service Continuous The ‘natural’ line of fit of process to volume/variety characteristics Deviating from the ‘natural’ diagonal on the product–process matrix has consequences for cost and flexibility Volume Variety None

24. Volume Variety None Old process, new product Old process New process, new product None Deviating from the ‘natural’ diagonal on the product–process matrix has consequences for cost and flexibility

25. Volume Flow Jobs Technology Variety Custom furniture maker Little / general Varied / high discretion Unorganized None Machine tool maker Automobile factory None Petro- chemical refinery Routine / low discretion Predictable Specialist Flow (layout), technology and job design are all influencedby process positioning

26. Volume Variety None Investment banking Customer service branch Bank call centre None Credit card processing Flow (layout), technology and job design are all influencedby process positioning Flow Jobs Technology Little / general Varied / high discretion Unorganized Routine / low discretion Predictable Specialist

27. Process mapping symbols derived from Systems Analysis Process mapping symbols derived from ‘Scientific Management’ Beginning or end of the process Operation (an activity that directly adds value) Activity Inspection (a check of some sort) Input or output from the process Transport (a movement of something) Direction of flow Delay (a wait, e.g. for materials) Decision (exercising discretion) Storage (deliberate storage, as opposed to a delay)

28. Raw materials Stored sandwiches Move to outlets Assembly Stored sandwiches Take payment Sell Customer request Customized sandwich – old process Standard sandwich process

29. Take payment Raw materials Assembly Customer request Customized sandwich – old process

30. Assemble as required Take payment Prepare Bread and base filling Outline process of making and selling customized sandwiches Assemble whole sandwich Use standard ‘base’? No Yes Fillings Detailed process of assembling customized sandwiches Customer request Assemble from standard ‘base’ Stored ‘bases’ The operation of making and selling customized sandwiches Sandwich materials and customers Customers ‘assembled’ to sandwiches

31. Assemble whole sandwich Assembly of ‘sandwich bases’ Take payment Use standard ‘base’? No Fillings Yes Bread and base filling Customer request Assemble from standard ‘base’ Stored ‘bases’ Customized sandwich – new process

32. Description of activity Description of activity Report arrives Report arrives 1 1 Stamp and date report Wait for processing 2 2 3 3 Check expenses report Check expenses report 4 4 Stamp and date report Attach payment voucher 5 5 Wait for batching Send cash to receipt desk 6 6 Wait for processing Collect retorts into batch Batch to audit desk Check advance payment 7 7 8 8 Send to accounts receivable Wait for processing 9 9 Check reports and vouchers Wait for processing Reports to batch control 10 10 Check employee record 11 11 Send to account payable Batch control number Attach payment voucher Copy of reports to filing 12 12 Log report Reports filed 13 13 14 14 Payment voucher to keying Check against rules Confirm payment 15 15 Wait for batching Collect retorts into batch 16 Totals Batch to audit desk 17 5 5 2 1 2 Wait for processing 18 19 Batch of reports logged 20 Check payment voucher 21 Reports to batch control Batch control number 22 23 Copy of reports to filing 24 Reports filed Payment voucher to keying 25 26 Confirm payment 8 7 Totals 5 1 5 Flow process charts for processing expense reports at Intel before and after improving the process

33. WIP = 10 Throughput time = ? Little’s law (a really quite useful law) Throughput (TH) = Work in process (WIP) × Cycle time (CT) Cycle time = 2 minutes Throughput time = 10 × 2 minutes = 20 minutes

34. Cycle time = 35 hours = 0.07 hours 500 scripts Number of markers = Work content = 1 hour = 14.29 Cycle time 0.07 Little’s law (a really quite useful law) Throughput (TH) = Work in process (WIP) × Cycle time (CT) 500 exam scripts need to be marked in 5 days (working 7 hours a day).It takes 1 hour to mark a script. How many markers are needed? Throughput time = 5 days × 7 hours = 35 hours 35 hours = 500 scripts × Cycle time

35. Work content Throughput efficiency = × 100 Throughput time Throughput efficiency Throughput efficiency is the work content of whatever is being processed as a percentage of its throughput time

36. 20 mins Arrival frequency (demand) 5–15 mins 9 mins 10 mins 5–15 mins Processing time 30 mins X Utilization = 100 % Q = infinity Utilization = 100 % Q = 0 Utilization = 50 % Q = 0 Utilization < 100% Q > 0 High utilization but long throughput times Low utilization but short throughput times X Reduce process variability X X Arrival frequency (demand) 10 mins Processing time Utilization = 33.33 % Q = 0 High Process throughput time (or inventory) Average length of queue X X Low X 0 20% 40% 60% 80% 100% Capacity utilization

37. The relationship between process utilization and number of units waiting to be processed for variable arrival and activity times High utilization but long waiting time Average number of units waiting to be processed Average number of units waiting to be processed Decreasing variability Reduction in process variability X Short waiting time but low utilization Z Y 10 10 0 0 20 30 20 30 40 40 50 60 70 80 90 100 50 60 70 80 90 100 Utilization Utilization (a) Decreasing variability allows higher utilization without long waiting times (b) Managing process capacity and/or variability

38. Throughput time The time for a unit to move through a process. Utilization The ratio of the actual output from a process or facility to its design capacity. Life cycle analysis A technique that analyzes all the production inputs, the life cycle use of a product and its final disposal in terms of total energy used and wastes emitted. Key Terms Test

39. Process types Terms that are used to describe a particular general approach to managing processes. In manufacturing these are generally held to be project, jobbing, batch, mass and continuous processes; in services they are held to be professional services, service shops and mass services. Project processes Processes that deal with discrete, usually highly customized, products. Jobbing processes Processes that deal with high variety and low volumes, although there may be some repetition of flow and activities. Key Terms Test

40. Batch processes Processes that treat batches of products together, and where each batch has its own process route. Continuous processes Processes that are high volume and low variety; usually products made on continuous processes are produced in an endless flow, such as petrochemicals or electricity. Professional services Service processes that are devoted to producing knowledge-based or advice-based services, usually involving high customer contact and high customization. Examples include management consultants, lawyers, architects, etc. Key Terms Test

41. Service shops Service processes that are positioned between professional services and mass services, usually with medium levels of volume and customization. Mass services Service processes that have a high number of transactions, often involving limited customization, for example mass transportation services, call centres, etc. Product–process matrix A model derived by Hayes and Wheelwright that demonstrates the natural fit between volume and variety of products and services produced by an operation on one hand, and the process type used to produce products and services on the other. Key Terms Test

42. Process mapping Describing processes in terms of how the activities within the process relate to each other (may also be called process blueprinting or process analysis). Process mapping symbols The symbols that are used to classify different types of activity, usually derived either from scientific management or from information systems flowcharting. High-level process mapping An aggregated process map that shows broad activities rather than detailed activities (sometimes called an outline process map). Key Terms Test

43. Work content The total amount of work required to produce a unit of output, usually measured in standard times. Throughput time The time for a unit to move through a process. Cycle time The average time between units of output emerging from a process. Key Terms Test

44. Work-in-process The number of units within a process waiting to be processed further (also called work-in-progress). Little’s Law The mathematical relationship between throughput time, work-in-process and cycle time: Throughput time = work-in-process × cycle time Key Terms Test