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

LO1 Describe the four types of processes

used to
produce goods and services.
LO2 Explain the logic and use of the
product-process matrix.
LO3 Explain the logic and use of the service-
positioning
matrix.
LO4 Describe how to apply process and
value stream mapping for process design.
LO5 Explain how to improve process designs
and
analyze process maps.
LO6 Describe how to compute resource
utilization
OM3 Chapter 7 Process Selection, Design, and Analysis and apply Little’s Law.
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

i
The
called to make an airline flight reservation just an
hourtelephone
ago. rang five times before a recorded
voice answered. “Thank you for calling
ABC Travel Services,” it said. “To ensure the highest
level of customer service, this call may be recorded
for future analysis.” Next, I was asked to
select from one of the following three choices: “If the
trip is related to company business, press 1. Personal
business, press 2.
Group travel, press 3.” I pressed 1. I was
then asked to select from the following four choices:
“If this is a trip within the United States, press 1.
International, press 2. Scheduled training, press 3.
Related to a conference, press 4.” Because
3
I was going to Canada, I pressed 2.
OM3 Chapter 7 Process Selection, Design, and Analysis
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Now two minutes into my telephone call, I was

instructed to enter my 19-digit customer service
number. The voice then said: “Thank you. An
operator will be with you shortly.” …Ten minutes
passed and then a real person answered the
telephone. “Please give me your 19-digit
customer service number… I only handle domestic
reservations. I’ll transfer you.” A few clicks later a
message came on, saying: “All of our international
operators are busy. Please hold, as your
business is important to us.”

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

What do you
think?
Describe a situation
that you have
encountered in
which a process was
either well designed
and enhanced your
customer
experience, or
poorly designed and
resulted in
dissatisfaction.
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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.
 Examples are Dell computers, Subway
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
customer’s 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
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

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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 product’s 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
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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
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit
7.1
Characteristics
of Different
Process
Types

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit 7.2
Product-Process
Matrix

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit 7.2
Product-Process
Matrix

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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 customer’s 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 customer’s 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 the service system.
 Examples are a newspaper dispenser
and logging on to a secure online
bank account.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit 7.3
The
Service
Positioning
Matrix

Source: Adapted from D. A.

Collier and S. M. Meyer, “A
Service Positioning Matrix,”
International Journal of
Production and Operations
Management, 18, no. 12, 1998,
pp. 1123–1244. Also see D. A.
Collier and S. Meyer, “An
Empirical Comparison of Service
Matrices,” International Journal of
Operations and Production
Management, 2000 (no. 5–6), pp.
705–729.

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Process Design – Four Levels of

Work
• Task—a specific unit of work required to
create an output.

• Activity—a group of tasks (sometimes

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

• Process—a group of activities.

• Value chain—a network of processes.

OM3 Chapter 7 Process Selection, Design, and Analysis 25
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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 The Hierarchy of Work and Cascading Flowcharts for Antacid

7.4 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.
OM3 Chapter 7 Process Selection, Design, and Analysis 28
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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.
OM3 Chapter 7 Process Selection, Design, and Analysis 31
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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

OM3 Chapter 7 Process Selection, Design, and Analysis 32

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit Restaurant Order Posting and Fulfillment

7.6 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 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.
OM3 Chapter 7 Process Selection, Design, and Analysis 35
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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
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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?
OM3 Chapter 7 Process Selection, Design, and Analysis 37
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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) = [7.1
Resources Used ]
Resources Available

or
Utilization (U) = Demand Rate [7.2
[Service Rate × ]
Number of
Servers]
OM3 Chapter 7 Process Selection, Design, and Analysis 39
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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit Restaurant Order Posting and Fulfillment

7.6 Process

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit Utilization Analysis of Restaurant Order

7.8 Posting and Fulfillment Process

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit Revised Utilization Analysis of Restaurant Order

7.9 Posting and Fulfillment Process (4 chefs)

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 CHAPTER 7 PROCESS SELECTION, DESIGN, AND ANALYSIS

Exhibit Revised Utilization Analysis of Restaurant Order

7.10 Posting and Fulfillment Process (4 ovens)

OM3 Chapter 7 Process Selection, Design, and Analysis 43

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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:

OM3 Chapter 7 Process Selection, Design, and Analysis 85% = 40/(2 × SR) 44
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