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

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