Page 221 - DMGT501_OPERATIONS_MANAGEMENT

Unit 7: Process Control Charts

the product strategy. Process selection, therefore, forms a useful link between marketing and Notes
manufacturing strategies.
High volumes at a process typically mean all of the following:
1. A Line or Continuous Process.

2. More Make than Buy decisions: High volume creates more opportunities for vertical
integration.

3. Less Resource Flexibility: When volumes are high, there is less need for flexibility to utilize
resources effectively, and specialization can lead to more efficient processes.

4. Less Customer Involvement: At high volumes, products are generally standardized which
do not require customization.

5. More Mechanization: High volumes justify the large fixed costs of an efficient operation.

Low volume typically means the following:
1. A Project or Job Process.
2. Less Vertical Integration: Low volumes eliminate most opportunities for backward or
forward vertical integration.
3. More Resource Flexibility: When volumes are low, workers are trained to handle all types
of customers and often dispose of customer requests.

4. More Customer Involvement: There is more customer involvement because processes have
to be aligned to customization.
5. More Labor Intensive: The production flexibility is obtained through limited mechanization

and more labor-intensive processes that require little investment.
Of course, these are general tendencies rather than rigid prescriptions. Exceptions can be found,
but these relationships provide a way of understanding how process decisions can be linked
coherently.
Because of this evolution in the production structure, the process is frequently related to the
product lifecycle. In the early stages of the product lifecycle, the production system must deal
with low volume and during the maturity stage deal with high volumes. These characteristics are
also important to design processes, which have been discussed later in this unit.
7.5 Services Processes

Processes in services are similar to those used in production. Process sheets and flow diagrams

are used to specify a process. Typology of processes is also similar. However, a majority of
service operations operate on a MTO or ATO basis, in part because it is not possible to inventory
the product being requested. For example, restaurants stock ingredients in anticipation of a
customer’s arrival but await a request before they process it. Whether the meal is ETO or MTO
will also depend on the degree of meal customization the restaurant practices.
Lead times become a very important consideration in many service operations. Some competitive
situations allow a delay, which is called a backlog. When orders are placed, they may have to
wait in a queue until the firm has the resources to start making the product. When business is

good, backlogs may be extended—when things start to slow down, the backlog shrinks.
Firms are able to do this, in part, because customers want a particular product and are willing
to wait. Earlier customers wanting a Bajaj Scooter had to and were willing to wait. Yearlong
backlogs were common then. However, companies backlogging orders put it at a risk of losing a
customer as the uniqueness of the product fades.

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