Operations management, 9e by krajewski itzman malhotra chapter 03

Process Structure in ServicesTABLE 3.1 | DIMENSIONS OF CUSTOMER CONTACT IN SERVICE Contact intensity Active, visible Passive, out of sight Method of delivery Face-to-face Regular mail or

by Jeff Heyl

Process Strategy

make sense together, that have a close

strategic fit

that eventually create the firm’s whole supply chain

the interfaces between processes

Process Strategy

3 Resource flexibility

4 Capital intensity

Process Strategy Decisions

Figure 3.1 – Major Decisions for

Strategy for Change

Process Structure in Services

customer is present, actively involved, and receives personal attention during the

service process

called a moment of truth or a service encounter

Process Structure in Services

TABLE 3.1 | DIMENSIONS OF CUSTOMER CONTACT IN SERVICE

Contact intensity Active, visible Passive, out of sight

Method of delivery Face-to-face Regular mail or e-mail

Process Structure in Services

customer-contact matrix are

and the latitude as to how tasks are performed

are process and can be either line of flexible

Service Process Structuring

Process Characteristics

(1) Flexible flows with Individual

processes

(2) Flexible flows with some dominant paths, with some exceptions

to how work performed

(3) Line flows, routine work same with all customers

Figure 3.2 – Customer-Contact Matrix for Service Processes

and continuous flow processes

include make-to-order, assemble-to-order, and make-to-stock

Product-Process Matrix

Continuous process

Job process

Line process

Large batch process

Small batch process

Low-volume Multiple products with low Few major High volume, high products, made to moderate volume products, standardization,

Process Characteristics (1)

Customized process, with flexible and unique sequence of tasks

(2) Disconnected line flows, moderately complex work

(3) Connected line, highly repetitive work

(4) Continuous flows

capital resources

performing all or part of one or more processes

available space, and closeness factors

Figure 3.4 – Current Block Plan for the Office of Budget Management

the new layout

Developing a Block Plan

EXAMPLE 3.1

Develop an acceptable block plan for the Office of Budget

Management that locates departments with the greatest

interaction as close to each other as possible.

SOLUTION

Using closeness ratings of 8 and above, you might plan to

locate departments as follows:

a Departments 1 and 6 close together

b Departments 3 and 5 close together

c Departments 2 and 3 close together

Departments 1 and 5 should

remain at their current locations

Closeness Factors Department 1 2 3 4 5 6

100’

Developing a Block Plan

Figure 3.5 – Proposed Block Plan

a Departments 1 and 6 close together

b Departments 3 and 5 close together

c Departments 2 and 3 close together

The Weighted-Distance Method

to compare alternative block plans when relative locations are important

distance between two possible points

B A

B A

The Weighted-Distance Method

between two possible points with a series

of 90-degree turns

B A

B A

AB x x y y

weighted-distance score (wd)

summing the products of the proximity scores and distances between centers

Application 3.1

Rectilinear Distance

d AB = |20 – 80| + |10 – 60| =

Euclidian Distance What is the distance between (20,10) and (80,60)?

d AB = (20 – 80) 2 + (10 – 60) 2

=

Calculating the WD Score

EXAMPLE 3.2

How much better is the proposed block than the current block

plan?

SOLUTION

The following table lists pairs of departments that have a

nonzero closeness factor and the rectilinear distances

between departments for both the current plan and the

6

5 4

Current Block Plan Proposed Block Plan

Calculating the WD Score

Current Plan Proposed Plan Department

Pair Closeness Factor (w) Distance (d) Weighted-Distance Score (wd) Distance (d) Weighted-Distance Score (wd)

OM Explorer Analysis

Figure 3.6 – Second Proposed Block Plan (Analyzed with Layout Solver)

Application 3.2

Matthews and Novak Design Company has been asked to design the

layout for a newly constructed office building of one of its clients The

closeness matrix showing the daily trips between its six department

offices is given below.

Departments Trips between Departments

Department Pair

Closeness Factor

Students complete highlighted cells.

Based on the above results, propose a better plan and evaluate it in terms

of the load-distance score.

Department Pair

Closeness Factor

Students complete highlighted cells.

Based on the above results, propose a better plan and evaluate it in terms

of the load-distance score.

Department Pair

Closeness Factor Distance Score

Department Pair

Closeness Factor Distance Score

A Detailed Layout

detailed representation is created showing the exact size and shape of each center

storage areas can be shown

resolved

Customer Involvement

Can mean better quality, faster delivery, greater flexibility, and lower cost

costs

customers’ role

Resource Flexibility

higher skills and more training and education

customer service and alleviate bottlenecks

in workloads

using full-time or part-time workers

Resource Flexibility

of equipment used

determine at what volumes changes in equipment should be made

Break-Even Analysis

Process 2:

Special-purpose equipment

Process 1:

General-purpose equipment

Break-even quantity

BBC is deciding whether to weld bicycle frames manually or to

purchase a welding robot If welded manually, investment costs

for equipment are only $10,000 the per-unit cost of manually

welding a bicycle frame is $50.00 per frame On the other hand,

a robot capable of performing the same work costs $400,000

robot operating costs including support labor are $20.00 per

Capital Intensity

of capital and labor

substitute capital equipment for labor

are high

company’s competitive priorities

Capital Intensity

part or product in a fixed sequence

relatively inflexible

handle various products

flexible automation

Capital Intensity

automate service processes

reduction and increased task divergence through expanded customer choice

operations

Capital Intensity

produce multiple products more inexpensively in combination than separately

Strategic Fit

desired competitive priorities

on customer involvement, resource flexibility, and capital intensity

Decision Patterns for Services

• Less complexity, less

divergence, more line flows

• Less customer involvement

• Less resource flexibility

• Capital intensity varies with

volume

High customer-contact

process

• More complexity, more

divergence, more flexible

flows

• More customer involvement

• More resource flexibility

• Capital intensity varies with

Decision Patterns for Manufacturing

of customization and volume

linear

when choosing processes

Decision Patterns for Manufacturing

Competitive Priorities Process Choice

Competitive Priorities Production and Inventory Strategy

(b) Links with Production and Inventory Strategy

Top-quality, on-time delivery,

and flexibility small batch process Job process or

(a) Links with Process Choice

Low-cost operations, consistent quality, and delivery speed continuous flow process Large batch, line, or

Top-quality, on-time delivery,

and flexibility Make-to-order Delivery speed and variety Assemble-to-order

Low-cost operation and delivery speed Make-to-stock

Figure 3.9 – Links of Competitive Priorities with Manufacturing Strategy

Decision Patterns for Manufacturing

Continuous process

Job process

Line process

Large batch process

Small batch process

• Less process divergence

and more line flows

• Less customer involvement

• Less resource flexibility

• More capital intensity

Low-Volume, make-to-order process

• More process divergence

and more flexible flows

• More customer involvement

• More resource flexibility

• Less capital intensity

Gaining Focus

segments when competitive priorities differ

operations under the same roof

way

splitting a large plant into several smaller plants dedicated to narrower product lines

Strategies for Change

rethinking and radical redesign of a process to improve performance

easy

process each day are the best source of ideas on how to improve it

study of activities and flows of a process to find ways to improve it

Process Reengineering

TABLE 3.2 | KEY ELEMENTS OF REENGINEERING

Element Description

Critical processes Emphasis on core business processes, normal process

improvement activities can continue with other processes Strong leadership Strong leadership from senior executives to overcome

resistance Cross-functional teams A team with members from each functional area charged with

carrying out the project Information technology Primary enabler of the project as most reengineering projects

involve information flows Clean-slate philosophy Start with the way the customer wants to deal with the company

and includes internal and external customers Process analysis Must understand the current processes throughout the

organization

Solved Problem 1

A defense contractor is evaluating its machine shop’s current

layout Figure 3.11 shows the current layout and the table

shows the closeness matrix for the facility measured as the

number of trips per day between department pairs Safety and

health regulations require departments E and F to remain at

their current locations.

a Use trial and error to find a better layout

b How much better is your layout than the current layout in

terms of the wd score? Use rectilinear distance.

Trips Between Departments Department A B C D E F

Solved Problem 1

SOLUTION

a In addition to keeping departments E and F at their current

locations, a good plan would locate the following department pairs close to each other: A and E, C and F, A and B, and C and E Figure 3.12 was worked out by trial and error and satisfies all these requirements Start by placing E and F at their current locations Then, because C must be as close as possible to both E and F, put C between them

Place A below E, and B next to A All of the heavy traffic concerns have now been accommodated.

Trips Between Departments Department A B C D E F

b The table reveals that the wd score drops from 92 for the

current plan to 67 for the revised plan, a 27 percent reduction.