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Process Strategy

and Management
PRO The

CESS organizations
approach to
transforming
STRA resources into
goods and
TEGY services
PRO Objective: to build
a production
CESS process that meets
customer
requirements and
STRA product
specifications

TEGY within cost and


other managerial
constraints.
PROCESS FOCUS REPETITIVE
FOCUS

MASS
PRODUCT FOCUS
CUSTOMIZATION
Process Focus Many inputs
(surgeries, sick patients,
baby deliveries, emergencies)

(low-volume, high-variety,
Many departments and
intermittent processes) many routings
Arnold Palmer Hospital

Many different outputs


(uniquely treated patients)
Repetitive
Raw materials and
module inputs
(multiple engine models,
Focus wheel modules)

Few
modules

(modular)
Harley Davidson

Modules combined for many


Output options
(many combinations of motorcycles)
Product Focus Few Inputs
(corn, potatoes, water,
seasoning)

(high-volume, low-variety,
continuous process)
Frito-Lay

Output variations in size, shape,


and packaging
(3-oz, 5-oz, 24-oz package
labeled for each material)
Mass Many parts and
component inputs

Customization
(chips, hard drives, software,
cases)

Many modules
(high-volume, high-variety)
Dell Computer

Many output versions


(custom PCs and notebooks)
Process Analysis and Design

Is the process designed to achieve a


competitive advantage?
Does the process eliminate steps
that do not add value?
Does the process maximize
customer value?
Will the process win orders?
Baseline Time-Function Map
Order Receive
Customer product product

Process
Sales order

Order
Production Wait
control

Product
Order
Plant A Print

Product
WIP
Warehouse Wait Wait Wait

Product
WIP
WIP
WIP
Plant B Extrude

Transport Move Move

12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day


Figure 7.4(a)
52 days
Target Time-Function Map
Order Receive
Customer product product

Process
Sales order

Product
Order
Production
control Wait

Order
WIP
Plant Print Extrude

Product
Warehouse Wait

Product
Transport Move

1 day 2 days 1 day 1 day 1 day


6 days
Figure 7.4(b)
Process Analysis and Design

Value-Stream Mapping
Where value is added in the entire
production process, including the supply
chain
Extends from the customer back to the
suppliers
Value-Stream Mapping

Figure 7.5
Process Chart

2014 Pearson Education, Inc. Figure 7.6 7 - 14


Service Blueprinting

Focuses on the customer and provider


interaction
Defines three levels of interaction
Each level has different management
issues
Identifies potential failure points
Service Blueprint
Personal Greeting Service Diagnosis Perform Service Friendly Close

Level Customer arrives


for service. Customer departs
#1
(3 min)

F
Determine Notify Customer pays bill.
specifics. customer (4 min)
Warm greeting (5 min)
and obtain No and recommend
an alternative F
service request.
(10 sec) provider.
Standard Can (7 min) F
Level request. service be
#2 (3 min) done and does
No Notify
Direct customer customer customer the
to waiting room. approve? car is ready.
(5 min) (3 min)

F F F F
Yes Yes
Perform
Level required work. F Prepare invoice.
#3 (varies) (3 min)

Figure 7.7
RULE OF PROCEDURE FOR SMALL CLAIMS CASES (A.M.
NO. 08-8-7-SC; Took effect on October 1, 2008)
AMOUNT OF CLAIM: TWO HUNDRED THOUSAND PESOS
(Php200,000.00) exclusive of interest and costs.
WHERE TO FILE: Metropolitan Trial Courts, Municipal Trial
Courts in Cities, Municipal Trial Courts, and Municipal Circuit
Trial /Courts.
NATURE OF THE CASE:
(a) purely civil in nature where the claim or relief prayed for by
the plaintiff is solely for payment or reimbursement of sum
of money, and
(b) the civil aspect of criminal actions, either filed before the
institution of the criminal action, or reserved upon the filing
of the criminal action in court
KINDS OF DEMANDS AND CLAIMS:
I. For money owed under any of the following:
a) Contract of Lease d) Contract of Loan
b) Contract of Services e) Contract of Sale
c) Contract of Mortgage

II.For damages arising from


any of the following:
a) Fault or Negligence
b) Quasi-Contract
c) Contract

III. For the enforcement of a barangay amicable settlement or an


arbitration award involving a money claim.
HOW TO FILE:

File with the court an accomplished and


verified statement of claim together with a
certification of non-forum shopping, certified
copies of actionable documents and affidavits
of witnesses and other evidences.
COURT PROCEDURE:

Summons (Form 2-SCC) shall be issued by the
Court on the day of receipt of the Statement of
Claim giving the defendant a non-extendible
period of ten (10) days to file a verified Response
(Form 3-SCC)

Court shall also issue notice of hearing (Form4-
SCC)

If defendant failed to file a response, the court by
itself shall render judgment based on the
Statement of Claim.
COURT PROCEDURE:

only one postponement of hearing is
allowed

at the hearing the Judge shall conduct
Judicial Dispute Resolution (JDR) thru
mediation, conciliation, early neutral
evaluation or any other mode of JDR.
Settlement or resolution of the dispute
shall be in writing, signed by the parties
and submitted to the court for approval.
COURT PROCEDURE:

If JDR fails and the parties agree in writing
(Form 10-SCC) that the hearing shall be
presided over by the judge who conducted
the JDR, the hearing shall proceed
expeditiously and terminated within one
day.

the decision is final and unappealable.
PRODUCTION
TECHNOLOGY
Production Technology
1. Machine technology
2. Automatic identification systems (AISs) and RFID
3. Process control
4. Vision systems
5. Robots
6. Automated storage and retrieval systems (ASRSs)
7. Automated guided vehicles (AGVs)
8. Flexible manufacturing systems (FMSs)
9. Computer-integrated manufacturing (CIM)
Technology in Services
SERVICE INDUSTRY EXAMPLE
Financial Services Debit cards, electronic funds transfer,
ATMs, Internet stock trading, on-line
banking via cell phone
Education Electronic bulletin boards, on-line
journals, WebCT, Blackboard, and smart
phones
Utilities and Automated one-man garbage trucks,
government optical mail and bomb scanners, flood
warning systems, meters allowing
homeowners to control energy usage and
costs
Restaurants and foods Wireless orders from waiters to kitchen,
robot butchering, transponders on cars
that track sales at drive-throughs
Communications Interactive TV, e-books via Kindle
Technology in Services
SERVICE INDUSTRY EXAMPLE
Hotels Electronic check-in/check-out, electronic
key/lock systems, mobile Web bookings
Wholesale/retail trade Point-of-sale (POS) terminals, e-
commerce, electronic communication
between store and supplier, bar-coded
data, RFID
Transportation Automatic toll booths, satellite-directed
navigation systems, Wi-Fi in automobiles
Health care Online patient-monitoring systems,
online medical information systems,
robotic surgery
Airlines Ticketless travel, scheduling, Internet
purchases, boarding passes downloaded
as two-dimensional bar codes on smart
phones
PROCESS REDESIGN
PROCESS REDESIGN
The fundamental rethinking of business
processes to bring about dramatic
improvements in performance
THE NEXT
WAVE OF
PROCESS
STRATEGY
By Brad Power
Harvard Business Review
Work across organizational
and global boundaries

Creating multi-party system


Knowledge work redesign
Social collaboration tools
Knowledge work redesign
Nationwide Insurance Key Success Factors:

1. Having senior leadership lead by example


2. Setting governance and policies to ensure
security of sensitive comments
3. Using tools that make collaboration easy and
fun.
Speed
Quick experiments and more agile
management processes.
PROCESS
STRATEGY AND
MANAGEMENT
IMPROVING
CONSUMER VALUE
THROUGH PROCESS
REDESIGN
Business Context

One of the largest manufacturers supplying grocery to


retailers and wholesalers
Leader in designing how branded consumer-goods go to
market
Strong customer pull for P&Gs products
Products were sold through multiple channels, with
grocery retailers, wholesalers, mass merchandisers, and
club stores
Business Context

Recognizes the need to serve the needs of both the


consumer and the channel in order to be successful
Changes at P&G in affected both the company and the
entire channel
Focus on improving consumer value by eliminating non
value-added processes in the channel
Issues

Swings in price were creating variability and massive


inefficiency in the entire grocery supply chain
Uncertainty in demand increased manufacturer inventory
requirements and higher manufacturing costs
Profit margins for the retailers were very low since costs
were very high due to inefficient operations
Continuous Replenishment

The retailer provide P&G with daily data on warehouse


orders received from the stores
P&G uses the daily warehouse shipment data to determine
warehouse replenishment volumes needed
This would limit the retailer's warehouse inventory to
acceptable levels, eliminate costly LTL shipments, and
reduce stock outs
Electronic Data Interface

EDI is used to transmit data from the retailer to P&G on


warehouse product shipments to each store
EDI is an enhancement for the CRP and it provided
essential platform for CRP operations
It is a powerful tool when combined with proper process
reengineering
It enabled transfer or large amount of error free data
between companies
Electronic Data Interface
Benefits
Reduces transaction cost
Enables transfer of huge data
Error free transfer
Threats
In case of problems, seeks manual intervention
Potential for huge errors without human buffer
Increases cost for P&G due to manual rework
Without CRP it is useless
Ordering, Shipping, Billing

Rewrote the entire ordering, shipping, and billing (OSB)


system
The OSB system supported pricing, ordering, shipping,
invoicing, and separate credit systems
The OSB integrated many systems that did not work well
together across functions and product sectors
The system was designed to eliminate manual processing
steps and not to redesign the existing processes
Ordering, Shipping, Billing

Redesigning the ordering process involved a combination


of systems and business process changes
Shared database for product pricing and product
specifications
The batch processing system which was both inefficient
and ineffective was upgraded
Ordering, Shipping, Billing
Benefits
Standardization of the process
Automation
Reduction of complexity
Reduction in error
Reduction in the cost of the processes
Threats
Resistance to change
Time and cost of implementation
Impact

P&G led the grocery channel transformation


Moved from brand management to category management
Improvements in manufacturing and planning processes
Created value to the customers
Outsourcing to IBM

1993 - P&G sold CRP system to IBM's subsidiary (ISSC)


The P&G CRP system was to be offered by IBM to all
manufacturers
IBM CRP service offering allowed retailers to interact with
multiple vendors in a common format
Outsourcing to IBM

Benefits
Standardization in the industry
Reduced barriers to CRP adoption
Reduced P&Gs cost of operation
Increased the base for P&Gs operations
Threats
There were no economic benefits for P&G by
outsourcing
Key Learnings

IT can be a powerful tool when combined with efficient


process reengineering
IT can be used to reduce the complexity of processes
thereby reducing the errors
Outsourcing a process to a giant may increase the
chances of adoption of the technology by masses
FINANCE FLIES HIGH:
How Unilever
Redesigned the
Finance Function to
Build Brand Value and
Drive Growth

By Barbara M. Tarasovich and Bridget Lyons


IN THE
ARTICLE:
HOW THE FINANCE FUNCTION AT
UNILEVER WAS REDESIGNED TO
DELIVER THE FIRMS STRATEGIC
GOALS, INCLUDING AN EMPHASIS ON
VOLUME GROWTH AND COMPETITIVE
POSITION OF ITS BRANDS.
The FIVE-STEP process:
Finance of the Future
Partners in value
creation

Define Finance of the


Future
Develop Strategic Thrusts

Define Finance of the


Future
Innovative Business Partnership (IBP)
People and Organization
Dynamic Performance Management
World-Class Financial Processes
Financial Flexibility
Create Global Finance
Excellence Center

Develop Strategic Thrusts

Define Finance of the


Future
Develop Innovative
Business Partners

Create Global Finance


Excellence Center

Develop Strategic Thrusts

Define Finance of the


Future
Organize for Success: The
New Finance Structure

Develop Innovative
Business Partners

Create Global Finance


Excellence Center

Develop Strategic Thrusts

Define Finance of the


Future
SUMMARY
Importance of Process Strategy: It recognizes that
process brings capabilities and how these capabilities
ought to support the competitive strategies on the
Mission and Vision of the organization.
Technology plays a crucial role in the manufacturing and
service processes.
Cognizant of the impacts the choice of process have to
the environment.
Decisions should be strategic (long-term)