CLASS 5: TOUR SUMMARY, COMPARISON OF PRODUCTION AND SERVICE PROCESSES:
THE
PROCESS SPECTRUM WHICH WE
HAVE DEFINED FOR OUR PRODUCTION PROCESSES RANGES FROM THE JOB SHOP THROUGH THE
CONTINUOUS FLOW PROCESS
AS
ONE MOVES FROM JOB SHOP TO CONTINUOUS FLOW, SOME DISTINCT
TRENDS MAY BE IDENTIFIED FOR THE MAJOR FEATURES WHICH ARE COMMON TO EACH
PROCESS:
1. PRODUCT
FEATURES:
· PRODUCT
MIX DECLINES
· VOLUMES
INCREASE
· PRODUCT
TRANSFORMED FROM CUSTOM TO STANDARDIZED
· NEW
PRODUCT INTRODUCTIONS BECOME LESS FREQUENT AND MORE COSTLY
· PRODUCT
COMPETITION YIELDS TO PRICE COMPETITION
· PRODUCT
DISTINCTIONS BETWEEN FIRMS BECOME OBSCURED
2. GENERAL PROCESS FEATURES:
· BECOMES
MORE RIGID, BETTER DEFINED
· EQUIPMENT
BECOMES MORE SPECIALIZED
· ECONOMIES
OF SCALE BECOME POSSIBLE
· EQUIPMENT
SIZE AND VALUE INCREASE
· IDLE
CAPACITY DECREASES AS PRODUCTION LINE BECOMES BETTER BALANCED AND APPROACHES
100% UTILIZATION
· CAPACITY
MEASUREMENT IN PHYSICAL UNITS VICE $
3. MATERIALS ORIENTED FEATURES:
· GEATER
DEGREE OF VERTICAL INTEGRATION (ANDROSCOGGIN, GIANT)
· RAW
MATERIALS, ALTHOUGH DIFFERENTIATED,
LOOSE IDENTITY IN THE TRANSFORMATION PROCESS
· MATERIALS
REQUIREMENTS BECOME MORE CERTAIN AS PRODUCTION TIME DRAWS CLOSER
· PURCHASE-DELIVERY
CYCLES BECOME MORE STEADY, PREDICTABLE
· VOLUME
PURCHASE POSSIBLE
· CONTROL
OVER SUPPLIERS IN AREAS OF PRICE, DELIVERY, QUALITY, DESIGN INCREASES
· CONTROL
OVER FINISHED PRODUCT COMPLETION AND DELIVERY INCREASES
· WIP
DECREASES BECAUSE OF PROCESS DESIGN
· FINISHED
GOODS INVENTORIES (PRE-DELIVERY) ARE LARGER
· FORMAL
DISTRIBUTION CHANNELS FOR FINISHED GOODS EXIST
4. INFORMATION ORIENTED FEATURES:
· PRODUCTION
DERIVED FROM DEMAND RATHER THAN BIDDING PROCEDURES (INDIVIDUAL CONTRACTS)
· LONGER
TERM SALES FORECASTS DRIVE PRODUCTION SCHEDULE
· HIGHER
HQ MAY DICTATE PLANT'S SCHEDULING - LOSS OF PLANT AUTONOMY
· INVENTORY
MANAGEMENT (FINISHED GOODS) IS MANAGED TO DEMAND VICE SPECIFIC ORDERS - IE: JOB
SHOP
· FORMAL
QUALITY CONTROL
· PROCESS
LESS FLEXIBLE
5. LABOR ORIENTED FEATURES:
· LABOR:PRODUCT
VALUE RATIO DECREASES
· JOB
DIVERSITY DIMINISHES
· COMPENSATION
SYSTEM CHANGES FROM INCENTIVE BASED (INDIVIDUAL) THRU GROUPTO STRAIGHT HOURLY
BASIS
· WORKER
ADVANCEMENT BECOMES BETTER DEFINED, MORE FORMAL
· INDIVIDUAL
PRODUCTION GOAL ATTAINMENT BECOMES LESS SIGNIFICANT (INDIVIDUAL CONTRIBUTIONS
BECOME OBSCURED)
6. MANAGEMENT FEATURES:
· STAFF
OVERSIGHT OF MATERIALS MOVEMENT, SCHEDULING, PLANNING, QUALITY CONTROL BECOMES MORE IMPORTANT RELATIVE TO LINE
OPERATIONS
· MANAGEMENT
PERSONNEL OFTEN INCREASE RELATIVE TO WORKERS DUE TO GREATER CAPITAL INTENSITY
& IMPORTANCE OF STAFF OPERATIONS(SEE TABLE TS1)
· CORPORATE
LEVEL MANAGEMENT PERSONNEL BECOME MORE INVOLVED IN PLANT OPERATIONAL MATTERS
· PLANT
IS MANAGED TO BUDGET RATHER THAN SALES (COST CENTER VICE PROFIT CENTER)
· MANAGEMENT
CHALLENGES SHIFT FROM DAY TO DAY ISSUES TO
LONG TERM PLANNING CONSIDERATIONS - IE: "RULE OF THUMB" MANAGEMENT
DISAPPEARS
(TABLE
TS2 COMPARES PROCESSES OF DIFFERENT TYPES)
SERVICE OPERATIONS
ARE DIFFICULT TO DISTINGUISH FROM MANUFACTURING OPERATIONS IN MANY RESPECTS
AMBIGUOUS
AT BEST. TAKE EXAMPLE OF PUBLIC SERVICE
SUCH AS TELEPHONE OR POWER COMPANY.SOME CHARACTERISTICS EXIST:
· SERVICES
ARE OFTEN INTANGIBLE, IE. TRANSPORTATION
· CREATION
AND DELIVERY ARE SIMULTANEOUS
· QUALITY
IMPROVEMENT MID-STREAM NOT NORMALLY FEASIBLE SO:
· TRAINING, PROCESS DESIGN, EMPLOYEE RELATIONS BECOME CRITICAL
· SERVICES ARE IMMEDIATELY CONSUMED AND THEREFORE, CANNOT BE INVENTORIED FOR LATER USE/DELIVERY
· CHANGES
IN CAPACITY DEMAND MUST NORMALLY BE MANAGED BY PRICE CHANGES OR SCOPE OF
SERVICES OFFERED
· SERVICE
FIRMS NOT ALWAYS CAPITAL INTENSIVE
3
"notions" to consider when analyzing a Service Organization-
1-SERVICE CONCEPT: FUNCTION PERFORMED FOR CUSTOMER - IE: WHAT
THE BUSINESS DOES
2-SERVICE LEVEL: MEASURE OF QUALITY TO A SPECIFIC STANDARD -
IE: TIME STDS. AT BURGER KING - SVC. NORMALLY CANNOT BE INSPECTED IN-PROCESS,
THEREFORE, THE PROCESS ITSELF MUST BE CONTROLLED. ULTIMATELY, IN ALL CASES, QUALITY
= CUSTOMER SATISFACTION
3-SERVICE DELIVERY
SYSTEM: METHOD
BY WHICH SERVICE IS PRODUCED AND DELIVERED TO THE CONSUMER (THE HOW FACTOR)
SUMMARY:
· MANAGEMENT'S
CHALLENGE IS TO DEVISE A SERVICE DELIVERY SYSTEM THAT SUPPORTS THE SERVICE CONCEPT AND MAINTAINS DESIGNATED
SERVICE LEVELS (TABLE TS3 COMPARES SERVICE SHOPS STUDIED IN TOURS F-I)
· SERVICE
INDUSTRY FOLLOWS THE TECHNOLOGY SPECTRUM. (TABLE TS3)
· AS
A PARTICULAR SERVICE CONCEPT BECOMES MORE SOPHISTICATED AND INTERACTIVE WITH
CONSUMER:
o
SUPERIOR-SUBORDINATE RELATIONSHIPS BECOME LESS
FORMAL AND RIGID
o
CUSTOMER/CLIENT RELATIONSHIPS BECOME SOMEWHAT OBSCURE