PROCESS SELECTION,

DESIGN, AND ANALYSIS

CHAPTER 7

DAVID A. COLLIER AND JAMES R. EVANS

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

7-1 Describe the four types of processes used to

produce goods and services.
7-2 Explain the logic and use of the product-
process matrix.
7-3 Explain the logic and use of the service-
positioning matrix.
7-4 Describe how to apply process and value
stream mapping for process design.
7-5 Explain how to improve process designs and
analyze process maps.
7-6 Describe how to compute resource utilization
and apply Littles Law.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Choice Decisions

Process design is an important
operational decision that affects the cost
of operations, customer service, and
sustainability.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Choice Decisions Types of Goods and

Services
Custom, or make-to-order, goods and
services are generally produced and
delivered as one-of-a-kind or in small
quantities, and are designed to meet
specific customers specifications.
Examples include ships, weddings,
certain jewelry, estate plans, buildings,
and surgery.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Choice Decisions Types of Goods and

Services
Option, or assemble-to-order, goods
and services are configurations of
standard parts, subassemblies, or services
that can be selected by customers from a
limited set. are Dell computers, Subway
Examples
sandwiches, machine tools, and travel
agent services.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Choice Decisions Types of Goods and

Services
Standard, or make-to-stock, goods and
services are made according to a fixed
design, and the customer has no options
from which to choose.
Examples are appliances, shoes,
sporting goods, credit cards, online Web-
based courses, and bus service.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Choice Decisions Types of Processes

Projects are large-scale, customized
initiatives that consist of many smaller tasks
and activities that must be coordinated and
completed to finish on time and within
budget.
Characteristics: One-of-a-kind, large
scale, complex, resources brought to site;
wide variation in specs and tasks.
Examples: Legal defense preparation,
construction, customer jewelry, consulting,
and software development.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Choice Decisions Types of Processes

Job shop processes are organized around
particular types of general-purpose equipment
that are flexible and capable of customizing
work for individual customers.
Characteristics: Significant setup and/or
changeover time, batching, low to moderate
volume, many routes, many different products,
high work-force skills, and customized to
customers specs.
Examples: Many small manufacturing
companies are set up as job shops, as are
hospitals, legal services, and some restaurants.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Choice Decisions Types of Processes

Flow shop processes are organized around
a fixed sequence of activities and process
steps, such as an assembly line, to produce a
limited variety of similar goods or services.
Characteristics: Little or no setup time,
dedicated to small range of goods or services
that are similar, similar sequence of process
steps, moderate to high volume.
Examples: Assembly lines that produce
automobiles and appliances, production of
insurance policies and checking account
statements, and hospital laboratory work.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Choice Decisions Types of Processes

A continuous flow process creates highly
standardized goods or services, usually
around the clock in very high volumes.
Characteristics: Very high volumes in a
fixed processing sequence, high investment
in system,
24-hour/7-day continuous operation,
automated, dedicated to a small range of
goods or services.
Examples: Chemical, gasoline, paint, toy,
steel factories; electronic funds transfer,
credit card authorizations, and automated
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Choice Decisions

A product life cycle is a characterization of
product growth, maturity, and decline over time.
Four phases:
Introduction
Growth
Maturity
Decline and turnaround
A products life cycle has important implications
in terms of process design and choice. For
example, new products with low sales volume
might be produced in a job shop process;
however, as sales grow and volumes increase, a
flow shop process might be more efficient.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

The Product-Process Matrix

The product-process matrix is a model
that describes the alignment of process
choice with the characteristics of the
manufactured good.
The most appropriate match between type
of product and type of process occurs along
the diagonal in the product-process matrix.
As one moves down the diagonal, the
emphasis on both product and process
structure shifts from low volume and high
flexibility, to higher volumes and more
standardization.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

The Service-Positioning Matrix

In the product-process matrix, product volume, the
number of products, and the degree of
standardization/customization determine the
manufacturing process that should be used. This
relationship between volume and process is not
found in many service businesses.
The Service-Positioning Matrix is similar to the
product-process matrix in that it suggests that the
nature of the customers desired service encounter
activity sequence should lead to the most
appropriate service system design and that
superior performance results by generally staying
along the diagonal of the matrix.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

The Service-Positioning Matrix

A pathway is a unique route through a
service system. Pathways can be
customer- or provider-driven, depending
on the level of control that the service
firm wants to ensure.

The service encounter activity

sequence consists of all the process
steps and associated service encounters
necessary to complete a service
transaction and fulfill customers wants
and needs.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

The Service-Positioning Matrix

Customer-routed services are those
that offer customers broad freedom to
select the pathways that are best suited
for their immediate needs and wants, from
many possible pathways through the
service delivery system.
Examples include searching the
Internet, museums, health clubs, and
amusement parks.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

The Service-Positioning Matrix

Provider-routed services constrain
customers to follow a very small number of
possible and predefined pathways through
theExamples
service system.
are a newspaper dispenser
and logging on to a secure online bank
account.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Design Four Levels of Work

Taska specific unit of work required to
create an output.

Activitya group of tasks (sometimes

called a workstation) needed to create and
deliver an intermediate or final output.

Processa group of activities.

Value chaina network of processes.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

We divided the
work; but stood
together.
- Mr. John Ringling, Ringling Bros., Bamum & Bailey Circus,
1907

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit 7.4 The Hierarchy of Work and Cascading Flowcharts for Antacid Tablets

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process and Value Stream Mapping

A process map (flowchart) describes the
sequence of all process activities and tasks
necessary to create and deliver a desired output or
outcome.
Process maps document how work either is, or
should be, accomplished, and how the
transformation process creates value.
A process boundary is the beginning or end of a
process.
Makes it easier to obtain management
support, assign process ownership, and
identify where performance measures should
be taken.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process and Value Stream Mapping

In service applications, flowcharts generally
highlight the points of contact with the
customer and are often called service
blueprints or service maps.

Such flowcharts often show the separation

between the back office and the front office
with a line of customer visibility.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit 7.5
Automobile Repair Flowchart

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process and Value Stream Mapping

The value stream refers to all value-added
activities involved in designing, producing,
and delivering goods and services to
customers.

A value stream map (VSM) shows the process

flows in a manner similar to an ordinary
process map; however, the difference lies in
that value stream maps highlight value-added
versus non-value-added activities and include
costs associated with work activities for both
value- and non-value-added activities.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process and Value Stream Mapping

Examples of non-value-added activities
include:
Transferring materials between two
nonadjacent workstations
Overproducing
Waiting for service or work to do
Not doing work correctly the first time
Requiring multiple approvals for a low cost
electronic transaction

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit 7.6 Restaurant Order Posting and Fulfillment Process

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit 7.7
Value Stream Map for
Restaurant Order
Posting and Fulfillment
Process

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Design Methodology

1. Define the purpose and objectives of the
process.
2. Create a detailed process or value stream
map that describes how the process is
currently performed.
3. Evaluate alternative process designs.
4. Identify and define appropriate performance
measures for the process.
5. Select the appropriate equipment and
technology.
6. Develop an implementation plan to introduce
the new or revised process design.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Mapping Improves Pharmacy Service

Metro Health Hospital in Grand Rapids, Michigan,
applied process mapping reducing the lead time for
getting the first dose of a medication to a patient in
its pharmacy services operations. The lead time was
measured from the time an order arrived at the
pharmacy to its delivery on the appropriate hospital
floor. A process improvement team carefully laid out
all the process steps involved and found that it had a
14-stage process with some unnecessary steps,
resulting in a total lead time of 166 minutes.

(continued)

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Mapping Improves Pharmacy Service

During the evaluation process, the pharmacy
calculated that technicians were spending 77.4
percent of their time locating products; when a
pharmacist needed a technician for clinical activities,
the technician was usually off searching for a drug.
Overall, the pharmacy at Metro realized a 33-percent
reduction in time to get medications to patients, and
reduced the number of process steps from 14 to nine
simply by removing non-value-added steps. Patients
have experienced a 40-percent reduction in
pharmacy-related medication errors, and the
severity of those errors has decreased.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Analysis and Improvement

Strategies:
Increasing revenue by improving process efficiency in
creating goods and services and delivery of the
customer benefit package.
Increasing agility by improving flexibility and response
to changes in demand and customer expectations.
Increasing product and/or service quality by reducing
defects, mistakes, failures, or service upsets.
Decreasing costs through better technology or
elimination of non-value-added activities.
Decreasing process flow time by reducing waiting time
or speeding up movement through the process and
value chain.
Decreasing the carbon footprint of the task, activity,
2 0 1 3 O M process
4 C e n g a g e L eand/or
a r n i n g . A l l value
R i g h t s R echain.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Analysis and Improvement

Questions to ask for process analysis:
Are the steps in the process arranged in logical
sequence?
Do all steps add value? Can some steps be
eliminated and should others be added in order to
improve quality or operational performance? Can
some be combined? Should some be reordered?
Are capacities of each step in balance; that is, do
bottlenecks exist for which customers will incur
excessive waiting time?
What skills, equipment, and tools are required at
each step of the process? Should some steps be
automated?
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Analysis and Improvement

At which points in the system (sometimes called
process fail points) might errors occur that would
result in customer dissatisfaction, and how might
these errors be corrected?
At which point or points in the process should
performance be measured? What are appropriate
measures?
Where interaction with the customer occurs, what
procedures, behaviors, and guidelines should
employees follow that will present a positive
image?
What is the impact of the process on sustainability?
Can we quantify the carbon footprint of the current
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Analysis and Improvement

Reengineering has been defined as the
fundamental rethinking and radical
redesign of business processes to achieve
dramatic improvements in critical,
contemporary measures of performance,
such as cost, quality, service, and speed.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Design and Resource Utilization

Utilization is the fraction of time a
workstation or individual is busy over the
long run.
Utilization (U) = Resources Used [7.1 ]
Resources Available

or

Utilization (U) = Demand Rate [7.2]

[Service Rate Number
of Servers]

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Solved Problem
An inspection station for assembling printers receives 40
printers/hour and has two inspectors, each of whom can
inspect 30 printers per hour. What is the utilization of the
inspectors? What service rate would be required to have
a target utilization of 85 percent?

Solution
The labor utilization at this inspection station is calculated
to be 40/(2 30) = 67%. If the utilization rate is 85%, we
can calculate the target service rate by solving the
equation:

85% = 40/(2 SR)

1.7 SR = 40
2013 OM4 Cengage
SR = 23.5 printers/hour
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Design and Resource Utilization

The average number of entities completed per unit
time the output ratefrom a process is called
throughput.
Throughput might be measured as parts per
day, transactions per minute, or customers per
hour, depending on the context.
A bottleneck is the work activity that effectively
limits throughput of the entire process.
Identifying and breaking process bottlenecks is
an important part of process design and
improvement, and will increase the speed of
the process, reduce waiting and work-in-
process inventory, and use resources more
efficiently.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit 7.11 Simplified Restaurant Fulfillment Process

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Littles Law
Flow time, or cycle time, is the average time it
takes to complete one cycle of a process.

Littles Law is a simple formula that explains the

relationship among flow time (T ), throughput (R ),
and work-in-process (WIP ).
Work-In-Process = Throughput Flow Time
or
WIP = R T [7.3]

If we know any two of the three variables, we can

compute the third.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Solved Problem
Suppose that a voting facility processes an
average of 50 people per hour and that, on
average, it takes 10 minutes. What is the
average number of voters in the process? for
each person to complete the v

Solution
WIP = R T
= 50 voters/hr (10 minutes/60 minutes per
hour)
= 8.33 voters

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Solved Problem
Suppose that the loan department of a bank
takes an average of 6 days (0.2 months) to
process an application and that an internal audit
found that about 100 applications are in various
stages of processing at any one time. Using
Littles Law, we see that T = 0.2 and WIP = 100.
What is the throughput? the v

Solution
R = WIP/T = 100 applications/0.2 months
= 500 applications per month

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Solved Problem
Suppose that a restaurant makes 400 pizzas per
week, each of which uses one-half pound of
dough, and that it typically maintains an
inventory of 70 pounds of dough. In this case, R
= 200 pounds per week of dough and WIP = 70
pounds. What is the average flow time?

Solution
T = WIP/R = 70/200
= 0.35 weeks, or about 21/2 days.

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