Production Operations management

Chapter 2:Process & Service Design

 Product flow characteristics
(1) Job Production:
Under this method peculiar, special or non-standardized
products are produced in accordance with the orders
received from the customers. As each product is non-
standardized varying in size and nature, it requires separate
job for production.

The machines and equipment’s are adjusted in such a

manner so as to suit the requirements of a particular job.

Job production involves intermittent process as the work is

carried as and when the order is received. It consists of
bringing together of material, parts and components in
order to assemble and commission a single piece of
equipment or product.
Job production basically focuses on low volume of production but offers a higher
variety of the finished product.
Characteristics:
The job production possesses the following characteristics.
1. A large number of general purpose machines are required.
2. A large number of workers conversant with different jobs
will have to be employed.
3. There can be some variations in production.
4. Some flexibility in financing is required because of
variations in work load.
5. A large inventory of materials, parts and tools will be
required.
6. The machines and equipment setting will have to be
adjusted and re­adjusted to the manufacturing requirements.
7. The movement of materials through the process is
intermittent.
Limitations:
Job production has the following limitations:
1. The economies of large scale production may not be
attained because production is done in short-runs.
2. The demand is irregular for some products.
3. The use of labour and equipment may be an inefficient.
4. The scientific assessment of costs is difficult.
(ii) Batch production:
Batch production pertains to repetitive production. It refers to
the production of goods, the quantity of which is known in
advance. It is that form of production where identical
products are produced in batches on the basis of demand of
customers’ or of expected demand for products.

Instead of making one single product as in case of job

production, a batch or group of products are produced at one
time. It should be remembered here that one batch of products
may not resemble with the next batch.
The time taken between consecutive
batches is known as cycle time.
(ii) Batch production: cont….

Under batch system of production the work is divided into

operations and one operation is done at a time. After
completing the work on one operation it is passed on to the
second operation and so on till the product is completed.

The work will be divided into different operations. The first

operation on all the motors will be completed in the first
batch and then it will pass on to the next operation. The
second group of operators will complete the second operation
before the next and so on. Under job production, the same
operators will manufacture full machines and not one
operation only.
Batch production can fetch the benefits of repetitive
production to a large extent, if the batch is of a sufficient
quantity.

Thus batch production may be defined as the manufacture of

a product in small or large batches or lots by series of
operations, each operation being carried on the whole batch
before any subsequent operation is operated.

This method is generally adopted in case of biscuit and

confectionery and motor manufacturing, medicines, tinned
food and hardware’s like nuts and bolts etc.
The batch production method possesses the following
characteristics:
1. The work is of repetitive nature.
2. There is a functional layout of various manufacturing
processes.
3. One operation is carried out on whole batch and then is
passed on to the next operation and so on.
4. Same type of machines is arranged at one place.
5. It is generally chosen where trade is seasonal or there is a
need to produce great variety of goods.
(iii) Mass or flow production:

This method involves a continuous production of

standardized products on a large scale. Under this method,
production remains continuous in anticipation of future
demand.

Standardization is the basis of mass production. Standardized

products are produced under this method by using
standardized materials and equipment.

There is a continuous or uninterrupted flow of production

obtained by arranging the machines in a proper sequence of
operations. Process layout is best suited method for mass
production units.
(iii) Mass or flow production:

Flow production is the manufacture of a product by a series

of operations, each article going on to a succeeding operation
as soon as possible. The manufacturing process is broken into
separate operations.

The product completed at one operation is automatically

passed on to the next till its completion. There is no time gap
between the work done at one process and the starting at the
next. The flow of production is continuous and progressive.

Characteristics:
The mass or flow production possesses the following
characteristics.
1. The units flow from one operation point to another
throughout the whole process.
2. There will be one type of machine for each process.
3. The products, tools, materials and methods are
standardised.
4. Production is done in anticipation of demand.
5. Production volume is usually high.
6. Machine set ups remain unchanged for a considerable long
period.
7. Any fault in flow of production is immediately corrected
otherwise it will stop the whole production process.
Advantages of mass production:
A properly planned flow production method, results in the
following advantages:
1. The product is standardised and any deviation in quality etc.
is detected at the spot.
2. There will be accuracy in product design and quality.
3. It will help in reducing direct labour cost.
4. There will be no need of work-in-progress because products
will automatically pass on from operation to operation.
5. Since flow of work is simplified there will be lesser need for
control.
6. A weakness in any operation comes to the notice
immediately.
7. There may not be any need of keeping work-in-progress,
hence storage cost is reduced.
 Process design
WHAT IS PROCESS DESIGN?
To design is to conceive the looks, arrangement and
workings of something before is created.
At the start of the process design activity it is important to
understand the design objectives, especially at first, when
the overall shape and nature of the process is being decided.
The most common way of doing this is by positioning it
according to its volume and variety characteristics.
Eventually the details of the process must be analysed to
ensure that it fulfils its objectives effectively.
Product/Service design are
interrelated
Small changes in the design of products and services can
have profound implications for the way the operation
eventually has to produce them.
 The design of a process can constrain the freedom of
product and service designers to operate as they would wish.
The overlap between the two design activities is generally
greater in operations which produce services.
Because many services involve the customer in being part of
the transformation process, the service as far as the customer
sees it cannot be separated from the process to which the
customer is subjected.
When product designers also have to make or use the things
which they design, it can concentrate their minds on what is
 What objectives should process design have
The whole point of process design is to make sure that the
performance of the process is appropriate for whatever it is
trying to achieve.
Operations performance objectives translate directly to
process design objectives.
Because processes are managed at a very operational level,
process design also needs to consider a more micro and
detailed set of objectives. These are largely concerned with
flow through the process.
When whatever are being processes enter a process they
will progress through a series of activities where they are
transformed in some way.
Also the resources that perform the process activities may
not be used all the time because not all units will necessarily
require the same activities and the capacity of each resource
may not match the demand placed upon it.
So neither the units moving through the process or the
resources performing the activities may be fully utilised.
It is common for more micro performance flow objectives to be
used that describe process flow performance:
 Throughput rate – the rate at which units emerge from the
process i.e. The number of units passing through the process per
unit of time.
Throughput time – the average elapsed time taken for inputs to
move through the process and become outputs.
Work in progress - the number of units in the process as an
average over a period of time.

 Environmentally Sensitive Design
With the issue of environmental protection becoming more
important, both process and product/service designers have to
take account of green issues.
Interest has focused on some fundamental issues:

-The sources of inputs to a product/service.

-Quantities and sources of energy consumed in the process.
-The amounts and type of waste material that are created in

manufacturing.
-The life of the product itself.
-The end life of the product.
Designers are faced with a complex trade-off between these
factors, although it is not always easy to obtain all the
 Process selection decision
 Four Types of Processes-
1.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 of projects: legal defence preparation, construction, customer
jewellery, consulting, and software development.
2.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.
 3. 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.
An assembly line is a common example of a flow shop
process. Many option-oriented and standard goods and services are
produced in flow-shop settings.
Examples: automobiles, appliances, insurance policies,
checking account statements, and hospital laboratory work.
4. A continuous flow process creates highly standardized
goods or services, usually around the clock in very high volumes.
Characteristics: not made from discrete parts, 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
car wash.
Characteristics
of Different
Process Types
A process map (flowchart)describes the sequence of all
process activities and tasks necessary to create and deliver a
desired output or outcome.
A process include the flow of goods, people, information, or
other entities, as well as decisions that must be made and tasks
that are performed.
Process maps document how work either is, or should be,
accomplished, and how the transformation process creates
value.
Process maps delineate the boundaries of a process. A process
boundary is the beginning or end of a process.
A process flow chart is the basis for value stream mapping,
service blueprinting, and service maps.
Service blueprints add a “line of visibility” that separates the
back and front offices
 Steps of process selection
Define the purpose and objectives of the process.
Create a detailed process or value stream map that
describes how the process is currently performed.
Evaluate alternative process designs. Identify and
define appropriate performance measures for the
process.
Select the appropriate equipment and technology.
Develop an implementation plan to introduce the new
or revised process design.
 Process Analysis
Few processes are designed from scratch. Many process
design activities involve redesigning an existing process to
improve performance. Management strategies to improve
process designs usually focus on one or more of the
following:
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.
Management strategies to improve process designs usually
focus on one or more of the following (continued from
previous slide):
Increasing product and/or service quality by reducing defects,
mistakes, failures, or service upsets.
Decreasing costs through better technology or elimination of
 Service
Service design-It is a form of
conceptual design that involves the activity
of planning and organizing people,
infrastructure, communication and material
components of a service in order to
improve its quality and the interaction
between the service provider and its
customers.
 Characteristics of service design
Service design is the specification and construction of
processes that delivers valuable capacities for action to a
particular customer. Capacity for action in Information
Services has the basic form of assertions. In Health
Services, it has the basic form of diagnostic assessments
and prescriptions (commands). In Educational Services,
it has the form of a promise to produce a new capacity
for the customer to make new promises.
Service design can be both tangible and intangible. It
can involve artefacts or other elements such as
communication, environment and behaviours.
 Service design methodology
Together with the most traditional methods used for product
design, service design requires methods and tools to control
new elements of the design process, such as the time and the
interaction between actors. An overview of the methodologies
for designing services is proposed by (Morelli 2006), who
proposes three main directions:
Identification of the actors involved in the definition of the
service by means of appropriate analytical tools
Definition of possible service scenarios, verifying use cases,
and sequences of actions and actors’ roles in order to define the
requirements for the service and its logical and organizational
structure
Representation of the service by means of techniques that
illustrate all the components of the service, including physical
elements, interactions, logical links and temporal sequences
Analytical tools refer to anthropology, social studies,
 Service design in the public
sector
Due to new investments in hospitals, schools,
cultural institutions and security infrastructures
in the last few years, the public sector has
expanded. The number of jobs in public services
has also grown; such growth can be associated
with the large and rapid social change that is
calling for a reorganization of the welfare state.
In this context, governments are considering
service design for a reorganization of public
services.
 Service matrix
The Service Process Matrix is a classification matrix of service
industry firms based on the characteristics of the individual
firm's service processes. The matrix was derived by Roger
Schmenner and first appeared in 1986.
The Service Process Matrix can be useful when investigating
the strategic changes in service operations.
The classification characteristics include the degree of labour
intensity and a jointly measured degree of customer interaction
and customization. Labour intensity can be defined as the ratio
of labour cost to plant and equipment. A firm whose product, or
in this case service, requires a high content of time and effort
with comparatively little plant and equipment cost would be
said to be labour intense.
FIGURE CLASSIFICATION BASED ON DEGREE OF LABOR INTENSITY AND
DEGREE OF INTERACTION AND CUSTOMIZATION
The vertical axis on the matrix, as shown in above
Figure , is a continuum with high degree of labour
intensity on one end (bottom) and low degree of
labour intensity on the other end (top). The
horizontal axis is a continuum with high degree of
customer interaction and customization on one
ends (right) and low degree of customer interaction
and customization on the other end (left). This
results in a matrix with four quadrants, each with a
unique combination of degrees of labour intensity,
customer interaction and customization.
The upper left quadrant contains firms with a low degree
of labour intensity and a low degree of interaction and
customization. This quadrant is labelled "Service
Factory." Low labour intensity and little or no customer
interaction or customization makes this quadrant similar
to the lower right area of the Product-Process Matrix
where repetitive assembly and continuous flow processes
are located. This allows service firms in this quadrant to
operate in a fashion similar to factories, hence the title
"Service Factory." These firms can take advantage of
economies of scale and may employ less expensive
unskilled workers as do most factories. Firms classified
as service factories include truck lines, hotels/motels,
and airlines.
The upper right quadrant contains firms with a low degree of
labour intensity but a high degree of interaction and
customization. The upper right quadrant is labelled "Service
Shop." Hospitals, auto repair shops and many restaurants are
found in this quadrant.
The lower left quadrant contains firms with a high degree of
labour intensity but a low degree of interaction and
customization. This quadrant is labelled "Mass Service."
Mass service providers include retail/wholesale firms and
schools.
Finally, the lower right quadrant contains firms
with a high degree of labour intensity and a high
degree of interaction and customization. The
lower right quadrant is labelled "Professional
Service." This quadrant is similar to the upper
left section of the Product-Process Matrix where
job shops and batch processes are found.
Doctors, lawyers, accountants, architects, and
investment bankers are typical service providers
that tend to be labour intense and have a high
degree of customer interaction and
customization.
 Challenges for
managers
(low labour intensity)
•Capital decisions
•Technological
advances

Service shop(low Challenges for

Challenges for Service Factory(low
labour/high managers
managers labour/low interaction
interaction & (high interacti
(low interaction/low and customization)
customization) customization)
customization)
•Marketing Professional service •Fighting cost
Mass service(high increase
•Attention to physical (high labour/high
labour/low interaction •Maintaining q
surrounding interaction &
& customization)
customization)
Challengers for
managers (High labour
intensity)
•Hiring
•Training
 Process choices in service
The product-process matrix does not transfer well to
service businesses and processes.
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.
For example, to meet increased volume, service
businesses such as retail outlets, banks, and hotels have
historically added capacity in the form of new stores,
branch banks, and hotels (i.e., bricks and mortar) to meet
demand, but do not change their processes.
So, new ways to think about services and their
processes are needed, such as 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.
Service Positioning Matrix-The service
encounter activity sequence consists of all the
process steps and associated service encounters
necessary to complete a service transaction and
fulfil customer’s wants and needs.
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.
 Customer contact technology in

service
By being proactive, a company can dazzle its customers with
great service. The biggest payoffs often come from providing
information and setting expectations.
 Customer experience is a top priority for 86 percent of
executives.
 Technology can enhance many aspects of customer experience,
but most companies are missing the biggest opportunity-
anticipation and proactive service.
The technology, service, marketing and quality departments can
partner to enhance the customer experience and the bottom line
in several ways: Set proper customer expectations via welcome
messages; provide just-in-time education and warning of
problems; confirm imminent service delivery; and help service
and quality functions gather voice-of-the-customer information
 Setting Customer Expectations
Technology can set expectations via emails,
videos, new user portals and Websites. Up to 30
percent of all customer dissatisfaction is caused
by customers making simple mistakes or having
incorrect expectations.
Technology can deliver welcome packages that
highlight the top five things customers need to
know, as well as problems to avoid. The
welcome message can be a mash up of video,
graphics and bulleted text. Technology can also
tailor the welcome package to the customer’s
 -Providing education and early
warning
The technology department can partner with the service
group to provide just-in-time education on how to get
more from complex product functions. Further, the
company’s operational databases can highlight and
communicate process failures and impending unpleasant
surprises. Customers appreciate the warning, since it
allows them to avoid—or at least prepare for—the
problem.

Example-Auto companies can learn, via wireless links to

the car, which functions of the entertainment and
navigation systems are not being used. They can then push
a short video on how to use the functionality. Using more
 -Confirming Delivery
Technology also can be used to confirm service
delivery, eliminating unnecessary service costs.
Example-When New Jersey Natural Gas makes an
appointment for a home visit, it asks for the
customer’s preferred communication channel. At
2:30 p.m. on the day before the visit, the company
emails or texts a confirmation that the technician
will call at 8:15 a.m. with an approximate arrival
time. This eliminates multiple confirmation calls
from the customer and reduces the number of times
the customer is not present when the technician
 -Listening to the customer
Finally, the technology department can help the company’s
service and quality departments create an effective voice-of-the-
customer process that lets the company know how much money
it loses due to consumer problems and what the payoff of an
enhanced customer experience might be.
 Example-The Cheesecake Factory and Hilton both use their bill-
generation system as the basis for a voice-of-the-customer
process. If a customer has a problem, an adjustment is made to
the bill, along with a coded reason. Customer survey data and
other inputs, such as mystery shops data, are tied to the
information in the billing system. This compilation provides the
basis for quality improvement, training, incentives and product
development.
 Prerequisites
 Five prerequisites must be in place if the technology, service, quality and
marketing departments are to partner successfully to enhance the customer
experience and maximize the company’s bottom line. These are:
 A process map of the current and ideal customer experience should be developed
jointly by technology and other key departments. The map provides the context
for all customer experience and technology implementations, ensuring that they
are coordinated.
 A common customer identifier must exist across all databases and transaction
systems so that all process failures can be flagged, and the organization can
proactively communicate to the customer about impending process failures and
financial actions such as late charges.
 Key operational databases must be able to flag and communicate process failures.
This data, using a common customer identifier, feeds both psychic pizza actions
and the voice of the customer.
 The company’s Website must be reoriented to balance education and support with
traditional marketing and sales activities.
 The marketing and sales departments must understand and accept the idea that
proactive communication is vital and that setting proper customer expectations
enhances long- term loyalty.