PROCESS MANAGEMENT

Process – involves the use of an organization's resources to provide something of value

NOTE: No product can be made and no service provided without a process and no process can
exist without a product or service.

Process Management – selection of the inputs, operations, workflows and methods that
transform inputs into outputs

Process Decisions – deal with the proper mix of human skills and equipment and which parts
of the processes are to be performed by each.

Decisions about processes must be consistent with the organization's flow strategy and the
organization's ability to obtain the resources necessary to support that strategy

Process decisions must be made when:

 a new or substantially modified product/service is being offered
 quality must be improved
 competitive priorities have changed
 demand for a product/service is changing
 current performance is inadequate
 competitors are gaining by using a new process or technology
 the cost or availability of inputs has changed

MAJOR PROCESS DECISIONS

1. Process Choice–determines whether resources are organized around products or
processes in order to implement the flow strategy

5 Process Types
a. Project Process–characterized by a high degree of customization, the large scope
of each project, and the release of substantial resources once a project is completed
b. Job Process – creates the flexibility needed to produce a variety of products or
services in significant quantities
c. Batch Process–differs from the job process with respect to volume, variety, and
quantity
d. Line Process – lies between the batch and continuous process on the continuum,
volumes are high, and products or services are standardized, which allows resources
to be organized around a product or service
e. Continuous Process – the extreme end of high-volume, standardized production
with rigid line flows

2. Vertical Integration. All business buy at least some inputs to their processes, such as
professional services, raw materials, or manufactured parts, from other producers.

Outsourcing – paying suppliers and distributors to perform those processes and

provide needed services and materials
 2 Directions
a. Backward Integration – represents movement upstream toward the source of raw
materials and parts
b. Forward Integration – means that the firm acquires more channels of distribution

3. Resource Flexibility. The choices that management makes concerning competitive

priorities determine the degree of flexibility required of a company’s resources – it’s
employees, facilities, and equipment.

a. Work Force. Managers must decide whether to have a flexible work force.
Members of a flexible work force are capable of doing many tasks, either at their
own work stations or as they move from one work station to another.
b. Equipment. When a firm's product or service has a short life cycle and a high
demand of customization, low production volumes mean that a firm should select
flexible, general purpose equipment.

4. Customer Involvement – the extent to which customers interact with the process

3 Ranges
a. Self-Service – process decision of many retailers, particularly when price is a
competitive priority.
b. Product Selection. A business that competes on customization frequently allows
customers to come up with their own product specifications or even become involved
in designing the product.
c. Time and Location. When services can’t be provided in the customer’s absence,
customers may determine the time and location that the service is to be provided.

5. Capital Intensity - mix of equipment and human skills in the process; the greater the
relative cost of equipment, the greater is the capital intensity

Automation - system, process, or piece of equipment that is self-outing and self-

regulating

2 Types
a. Fixed Automation – produces one type of part or product in a fixed sequence of
simple operations
b. Flexible (Programmable) Automation – can be changed easily to handle various
products

Economies of Scope – reflect the ability to produce multiple products more cheaply in
combination than separately

DESIGNING PROCESS
–determining exactly how each process will be performed

Two Approaches
1. Process Reengineering – fundamental rethinking and radical redesign of processes to
improve performance dramatically in terms of cost, quality, service, and speed
2. Process Improvement – systematic study of the activities and flows of each process to
improve it
Six Questions
a. What is being done?
b. When is it being done?
c. Who is doing it?
d. Where is it being done?
e. How long does it take?
f. How is it being done?

Two Techniques
a. Flow Diagram– traces the flow of information, customers, employees, equipment, or
materials through a process
b. Process Chart– organized way of recording all the activities performed by a person,
by a machine, at a workstation, with a customer, or on materials

Five Categories
i. Operation – changes, creates, or adds something
ii. Transportation – moves the study’s subject from one place to another
iii. Inspection – checks or verifies something but does not change it
iv. Delay – occurs when the subject is held up awaiting further action
v. Storage – occurs when something is put away until a later time