Process

Management
Chapter 3

Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Process Management
Process Management is the selection of inputs,
operations, work flows, and methods used to
produce goods and services.
Process Management deals with how to
produce a product or service.
Process Management is the application of
knowledge, skills, tools, techniques and
systems to define, visualize, measure, control,
report and improve processes with the goal to
meet customer requirements profitably.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Principles of Process
Management
Process underlie all work activity and
are found in all organization and in
all functions of an organization.
Process are nested within other
process along an organizations
supply chain.

Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Process Decision
Process Decisions deal with the proper mix of
human skills and equipment and which parts of the
process are to be performed by each. Decisions
about process must be consistent with competitive
priorities. Process decisions must be made when

A new or substantially modified product or service is being

offered.
Quality must be improved.
Competitive priorities have changed.
Demand for product or service is changing.
Current information is inadequate.
New technologies are available.
Competitors are gaining by using a new process.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Major Process Decisions

Process Choice: Process Choice
determines whether resources are
organized
around
products
or
processes.
Vertical Integration: Vertical Integration
is the degree to which a firms own
production system or service facility
handles the entire supply chain.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Major Process Decisions

Resource Flexibility: Resource Flexibility is
the ease with which employees and
equipment can handle a wide variety of
products, output levels, duties and functions.
Customer
Involvement:
Customer
Involvement reflects the ways in which
customers become part of the process and
the extent of their participation.
Capital Intensity: Capital Intensity is the mix
of equipment and human skills in a process:
the greater the relative cost of equipment, the
greater is the capital intensity.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Major Decisions for

Effective Process Design
Customer Involvement
Low involvement
High involvement

Process Structure
Customer-contact
position (services)
Product-process
position (manufacturing)

Vertical Integration
In-house
Outsource

Resource Flexibility
Specialized
Enlarged

Strategy for Change

Process
Reengineering
Process
Improvement

Effective
Process
Design

Capital Intensity
Low automation
High automation

Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Process Choice
The manager has five process types,
which form a continuum, to choose from:
Project Process: Project Process is 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.
Examples of project process are building a
shopping center.
Job Process: Job Process is a process with
the flexibility needed to produce a variety of
products or services in significant qualities.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Process Choice
Batch Process: Batch Process is a process
that differs from the job process with respect
to volume, variety, and quality.
Line Process: Line Process is a process that
lies between the batch and continuous
processes on the continuum, volumes are
high, and products or services are
standardized, which allows resources to be
organized around a product or service.
Continuous Process: Continuous Process
is the extreme end of high-volume,
standardized production with rigid line flows.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Product-Process Matrix for

Processes
Less Customization and Higher Volume

Less Complexity, Less Divergence, More Line Flows

Product Design

Process
Characteristics
(1)
Complex and highly
customized
process, unique
sequence of tasks
(2)
Jumbled flows,
complex work with
many exceptions
(3)
Disconnected line
flows, moderately
complex work
(4)
Connected line,
routine work
(5)
Continuous
flows, highly
repetitive work

(1)
One of a kind
products, made
to customer
order

(2)
Low volume,
low
standardization

(3)
Multiple
products
moderate
volume

(4)
Few major
products,
higher
volume

(5)
High volume
high
standardization,
commodity
products

Project
process

Job
process
Batch
process
Line
process
Continuous
process

Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Vertical Integration
Backward Integration: Backward
Integration refers to movement
upstream towards the sources of raw
materials and parts.
Forward
Integration:
Forward
Integration means that the firm
acquires
more
channels
of
distribution.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Vertical Integration
Raw materials
(eggs, flour, sugar)
Backward
integration
King
Soopers

In-house
processes
Forward
integration

Customers
(grocery stores)
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Advantages of Vertical
Integration

Improve market share

Saving through lower cost of production
Better quality of finished products and
timely delivery
Exploit core competencies
Control over crucial processes
Allows task specialization and efficiency
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Outsourcing
Outsourcing: Allotting work to

suppliers and distributors to

provide needed services and
materials and to perform those
processes that the organization
does not perform itself. The
advantages of outsourcing are
Better quality and low cost
More supplier options
Higher variety can be offered
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Virtual Corporation
Virtual Corporation: Virtual Corporation is a
situation in which competitors enter into shortterm partnership to respond to market
opportunities.
Network Companies: Network Companies are
companies that contract with other firms for
most of their production and for many of their
other functions.
Own or Lease: When a firm decides to
increase vertical integration, it must also decide
whether to lease or own the necessary facilities
and equipment.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Resource Flexibility
Flexible workforce: Flexible workforce is a
workforce whose members are capable of
doing many tasks, either at their own
workstations or as they move from one
workstation to another.
Flexible equipment: When products or
services have a short life cycle and a high
degree of customization, low volumes mean
that process manager should select flexible,
general purpose equipment.

Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Total cost (dollars)

Costs and Volume

Process 2:
Special-purpose
equipment
Break-even
quantity
F2
F1

Process 1:
General-purpose
equipment
Units per year (Q)
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Customer Involvement
Self Service: Self Service is the process
decision of many retailers, particularly
when price is a competitive priority.
Product Selection: Product Selection is a
business that competes on customization
allows customers to come up with their
own product specifications or even
become involved in designing the product.
Time and Location: Customers, at time,
desire service at a specific time and
location.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Capital Intensity
Automation : Automation is a system,
process, or piece of equipment that is
self-acting and self-regulating.
Fixed Automation: Fixed Automation is a
manufacturing process that produces one
type of part or product in a fixed sequence of
simple operations.
Flexible (or Programmable) Automation:
Flexible Automation is a manufacturing
process that can be changed easily to handle
various products.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

How should decisions be

coordinated for manufacturing
processes?
High Volume at a process typically
mean all of the following
A Line or continuous process
More Vertical integration
Less Resource flexibility
Less Customer involvement
More Capital intensity
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

How should decisions be

coordinated for manufacturing
processes?
Low volumes at a process typically
mean all of the following
A Project or job process
Less Vertical integration
More Resource flexibility
More Customer involvement
Less Capital intensity
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Decision Patterns for

Manufacturing Processes
High Volume
Line or continuous
process
Low complexity, low
divergence, and line
flows

Customer Contact

1. Process Structure

Low Volume
Project or job
process
High complexity,
high divergence,
and diverse flows

Low

2. Customer involvement

High

High

3. Vertical integration

Low

Low

4. Resource flexibility

High

High

5. Capital intensity

Low

Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

How should decisions be

coordinated for service
processes?
High Volume at a service process
typically mean all of the following
A Line or continuous process
More Vertical integration
Less Resource flexibility
Less Customer involvement
More Capital intensity
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

How should decisions be

coordinated for service
processes?
Low volumes at a service process
typically mean all of the following
A Project or job process
Less Vertical integration
More Resource flexibility
More Customer involvement
Less Capital intensity
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Decision Patterns for Service

Processes
High Contact

Customer Contact

Low Contact

Front office
High complexity,
high divergence,
and jumbled flows

1. Process Structure

Back office
Low complexity,
low divergence,
and line flows

High

2. Customer involvement

Low

Varies

3. Vertical integration

Varies

High

4. Resource flexibility

Low

Varies

5. Capital intensity

Varies

Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Job Design Considerations

Process choice, resource flexibility, and
capital intensity influence how a
manager designs jobs that go into a
process.
Specialization is the degree to which a job
involves a narrow range of tasks, a high
degree of repetition, and presumably, great
efficiency and high quality.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Job Design Considerations

Alternatives to Specialization
Job Enlargement is the horizontal
expansion of a job, increasing the range of
tasks at the same level.
Job Rotation is a system whereby
workers exchange jobs periodically, thus
getting more diverse experience in task
assignment.
Job Enrichment is a vertical expansion of
job duties; worker have greater control and
responsibility for an entire process, not just
a specific skill or operation.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Economies of Scope
Economies of scope reflect the ability to
produce multiple products more cheaply
in combination than separately. In such
situations, two conflicting competitive
priorities - customization and low price become more compatible.

Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

How can operations be

focused?
Focused factories: Splitting a large
plants that produce all the companys
products into several small specialized
plants is called focused factories.
Focused by process segments: A
facilitys process often can neither be
characterized nor actually designed
with one set of competitive priorities and
one process choice. To ensure focus on
single priority;
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

How can operations be

focused?
Plants within plants (PWPs) are different
operations within a facility with individual
competitive priorities, workforce and process under
the same roof.
Cell is a group of two or more dissimilar
workstations located close to each other that
process a limited number of parts or models that
have similar process requirements.

Focused service operations: Service

industries also have implemented the
concepts of focus, PWPs and cells. Specially
retailers opened stores that have smaller and
more accessible spaces.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Designing Process
Describe the more strategic dimensions of
the process.
Identify the inputs, outputs and customers of
the process.
Identify the important performance measures,
sometimes called Metrics of the process.
Document the process.
Redesign or refine the process to achieve
better performance.
Evaluate the changes and implement those
that appear to give the best payoffs on the
various performance measures selected in
step 3.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Approaches for Process

Designing
Process
Reengineering:
Process
Reengineering
is
the
fundamental
rethinking and radical redesign of
processes to improve performance
dramatically in terms of cost, quality,
service, and speed. Reengineering focus
should be on Critical processes, Strong
leadership, Cross-functional teams,
Information technology, Clean-slate
philosophy and Process analysis.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Approaches for Process

Designing
Process
Improvement:
Process
improvement is a series of actions
taken to identify, analyze and improve
existing
processes
within
an
organization to meet new goals and
objectives.
Process Improvement is the systematic
study of the activities and flows of each
process to improve it.
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Tools or Techniques of
designing/improvement process
Three techniques are effective for
documenting and evaluating processes.
These are
Flow Diagram
Process Charts
Simulation
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Tools or Techniques of
designing/improvement process
Flow Diagram: Flow Diagram is a
diagram that traces the flow of
information, customers, employees,
equipment, or materials through a
process.
Simulation: Simulation is the act of
reproducing the behavior of a process
using a model that describes each step
of the process
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka

Tools or Techniques of
designing/improvement process
Process Chart: Process Chart is an
organized way of recording all the
activities performed by a person, by a
machine, at a workstation, with a
customer, or on materials. We group
these activities into five categories.

Operation
Transportation
Inspection
Delay
Storage
Md. Rakibul Hoque, Lecturer, Department of MIS, University of Dhaka