Process Management

What is Process Management?

• Process Management – is the design and selection of the inputs, operation, workflows, and
methods that transform inputs into outputs.

Process decision must be made when:

1. A new or substantially modified product or service is being offered.
2. Quality must be improved.
3. Competitive priorities have changed.
4. Demand for a product or service is changing.
5. Current performance is inadequate.
6. The cost or availability of inputs has changed.
7. Competitors are gaining by using a new process.
8. New technologies are available.

Three (3) major principles concerning process decisions

• The key to successful process design is to make choices that both make sense for the competitive
situation and cohesively fit together.
• Although this section focuses on individual processes, they are the building blocks that eventually
create the firms whole value chain.
• Whether processes in the value chain are performed internally or by outside suppliers, managers
must pay particular attention to the interfaces between process that connect the firm to suppliers and
customers.

Principles of Process Management

• Any change in the business must be driven by performance.
• The changes should always be made with the consideration of the stakeholders.
• The changes should be accounted for.
• Changes should be segment for synchronization.
• The entire process should be managed thoroughly.
• The process should inspire insight.
• The process should follow the outside-going-to-the-inside principle.
• Proper timing of essence.
• Understand that the changes in the business should always be about people.
• The changes in the business follow a continuous process.

Is Process Management Right for your Business?

• Functional Structure Example

• Process Management Structure Example
- A process management focused organization takes a slightly different structure.
Major Process Decision

Process Structure
•Customization-volume positioning
•Customer, product, and
information flows

Major Pr
Major Process Decisions
• Process decisions directly affect the process itself and indirectly affect the products and services
Decis
that it provides.

Operation managers must consider four (4) common process decisions:

• Process Structure
•
•
•
Resource Flexibility
Customer Involvement
Resource Flexibility
Capital - Intensity

Process Structure
•Specialized or
• general-purpose
A process decision that determines whether resources are organized around products or processes.

Manager has four (4) basic process structures:

• Project process•Workforce and equipment
• Batch process
• Line process
• Continuous flow process

Strategic A
 High
Project Process
• Build new service centre
• Install enterprise software

• Batch Proces
Project process – A process characterized by a high degree of job customization, the large scope
of each project, and the release of substantial resources once a project is completed.

•
•Casting alloy whe
Batch process – A process with the flexibility needed to produce a wide variety of services and
•Filling orders by a
products in small to moderate quantities. Resources such as workers and equipment are usually grouped by
Customization

task.

• Line process – A process with linear movement of materials, information, or customers from one
operation to the next according to a fixed sequence. Volumes are relatively high, allowing resources to be
organized around standardized services and products.

• Continuous flow process – the extreme end of high volume, standardized production with rigid
line flow.

Customer Involvement
• The ways in which customers become part of the process and the extent of their participation.

Two (2) important dimensions to consider for Customer Involvement

• Management can choose to vary the extent of customer interaction or contract during service
process.
• Just as critical, the amount of time that the customer interacts with the process, termed the service
encounter, can vary significantly even within an industry.

Service Encounter – the time during which a customer is in contract with a service process, starting from
when the customer and process first meet, and finishing when the customer completes the process.
 Factors for Assessing

High Interaction

Present P

Customer Involvement fo
People What

High
Active visible
Professional service Co
•Tax accountants

Resource Flexibility
•Gourmet restaurant
• Personal
The ease with which employees and equipment can handle a wide variety of products, output
levels, duties, and functions.
Pe
Flexible workforce – A workforce whose member are capable of doing many tasks, either at their own
workstations or as they move from one workstation to another.

Face -to -face Me

Mass service
•Rail shipment
 Relationship Between Process

Total cost (dollars)

Capital-Intensity
•
•
The mix of equipment and human skill in a process.
Automation – A system, process, or piece of equipment that is self-acting and self-regulating.
Proces
• Fixed automation – A manufacturing process that produces one type of part or product in a fixed
Specia
sequence of simple operations. equipm
• Flexible (or programmable) automation – manufacturing process that can be changed easily to
handle various products.

Strategic Alignment

Volume and the Major P

Process
General
Low -volume,
F2
customized
equipme
P
process F1
•Less capital -intensity/
automation
•More resource flexibility
High volumes typically translate into all of the following:

• A line or continuous flow process. Standardized flows are preferred, with customers or products
moving though a consistent series of steps.
• Less customer involvement. For services, customers may not be present because the process has
little variation, as with the backroom operations of financial institutions.
• Less resource flexibility. High process volumes and repetition create less need for resource
flexibility, which is usually more expensive.
• More capital-intensity and automation. High volumes justify large fixed costs and increase
repetition, which can improve the efficiency of operations.

Low volumes typically mean all of the following:

• A project or small batch process. Customized treatment means a low-volume process, and each
customer requires different changes in the process itself.
• More customer involvement. Front-line employees interact more frequently with customers,
often on a one-to-one basis, to understand and diagnose each customer’s individual needs.
• More resource flexibility. Employees and equipment must be trained and able to handle new or
unique services as demand occurs and changes.
• Less capital-intensity and automation. Because of an almost infinite variability of problems and
customer specifications, the process is difficult to automate, although flexible automation might be
possible.

• Economies of scope. Economies that reflect the ability to produce multiple products more cheaply
in combination than separately.

• Gaining focus

• Focused Factories. The result of a firm’s splitting large plants that produced all the company’s
products into several specialized smaller plants.

• Focused by Process Segments

• Plants within plants (PWPs) - Different operations within a facility with individual competitive
priorities, processes, and workforces under the same roof.
• Cell – A group of two or more dissimilar workstations located close to each other that process a
limited number of parts or models with similar process requirements.

• Focused service Operations

Process Analysis
Systematic Approach
1. Describe the strategic dimension of the process.
2. Identify the inputs, outputs, and customers of the process.
3. Identify the important performance measures, sometimes called “metrics” of the process.
4. Document the process.

Characteristics
• Customers are dissatisfied with the value of the product or service that they receive from the
process
• The process introduces too many quality problems or errors.
• The process is slow in responding to customers.
• The process is costly
• The process is often a bottleneck, with work piling up waiting to go through it.
• The process creates disagreeable work, pollution, waste, or adds little value.
5. Critically questions low the process might create better customer value.
• What is being done?
• When it is being done?
• Who is doing it?
• Where is it being done?
• How is it being done?
• How well does it on the various performance measures?
6. Evaluate the changes and implement those that appear to give the best payoffs on the various
performance measures selected in step 3.

Document the Process

• Three (3) techniques effective for documenting and evaluating process.

• Flow diagram
• Process charts
• Simulation

Discu
Customer drops Mechanics makes
w
off car Diagnosis *
Cu

Process Charts
• An organized way of documenting all the activities performed on a customer or product by a
person, a group of people, equipment or a workstation.

Five (5) Categories of Activities

• Operation
• Transportation
• Inspection
Repair not authorized
• Delay

Solver – P rocessCharts
Enter datainyellowshadedareas

Process: Em ergencyroomadm ission Summary

Subject: Ankleinjurypatient Activities Number Time Distance
Beginning: Enterem ergencyroom of steps (min) (m)
Ending: LeaveH ospital Operation ? 5 23.00
Insert Step Transport ? 9 11.00 255
AppendStep Inspect ¦ 2 8.00
R em oveStep Delay ? 3 8.00
Store ? - -

Step Tim e Distance ? ? ¦ ? ? StepDescription

No. (min) (m )

1 0.50 5.0 x x x Enterem ergencyroom , approachpatientwindows

2 10.00 x Sitsdownandfilloutpatienthistory
3 0.75 15.0 x Nurseescortspatient toERtriageroom
4 3.00 Nurseinspectsinjury
5 0.75 15.0 Returntow aitingroom

6 1.00 x x x W ait foravailablebed

7 1.00 20.0 x x GotoERbed
8 4.00 W ait fordoctor
9 5.00 Doctorinspectsinjuryandquestionspatient
10 2.00 60.0 Nursetakespatient toradiology

11 3.00 x x x Technicianx -rayspatient

12 2.00 60.0 x x ReturntobedinE R
13 3.00 W ait fordoctortoreturn
14 2.00 Doctorprovidesdiagnosisandadvice
15 1.00 20.0 Returntoem ergencyentrancearea

16 4.00 x x Checkout
17 2.00 50.0 x x W alktopharm acy
18 4.00 Pickupprescription
19 1.00 10.0 Leavethebuilding

• Storage

• Simulation – is the actor reproducing the behaviour of a process using a model that describes each
step of the process?

REBUST DESIGN
• ROBUST PROCESS DESIGN – A process that is less sensitive to or accommodates variations
in inputs or operating conditions while maintaining customer value.

Developing a Better Process

• Two (2) different approaches
• Process re-engineering
• Process improvement

Process Re-Engineering

• Is the fundamental rethinking and radical redesign of processes to improve performance

dramatically in terms of cost, quality, service and speed?

Elements of the Overall Approach

• Critical processes

• Strong leadership

• Cross – functional teams

• Information technology
• Clean state - philosophy

Process Improvement

• The systematic study of the activities and flows of each process to improve its performance.

Process Management across the Organization