Operations > Process Structure
Process Flow Structures
The flow structure of the process used to make or deliver a product or service impacts facility layout, resources, technology decisions, and work methods. The process architecture may be an important component in the firm's strategy for building a competitive advantage.
When characterized by its flow structure, a process broadly can be classified either as a job shop or a flow shop. A job shop process uses general purpose resources and is highly flexible. A flow shop process uses specialized resources and the work follows a fixed path. Consequently, a flow shop is less flexible than a job shop.
Finer distinctions can be made in the process structure as follows:
- Project - Example: building construction
- Job shop - Example: print shop
- Batch process - Example: bakery
- Assembly line - Example: automobile production line
- Continuous flow - Example: oil refinery
These process structures differ in several respects such as:
Flow - ranging from a large number of possible sequences of activities to only one possible sequence.
Flexibility - A process is flexible to the extent that the process performance and cost is independent of changes in the output. Changes may be changes in production volume or changes in the product mix.
Number of products - ranging from the capability of producing a multitude of different products to producing only one specific product.
Capital investment - ranging from using lower cost general purpose equipment to expensive specialized equipment.
Variable cost - ranging from a high unit cost to a low unit cost.
Labor content and skill - ranging from high labor content with high skill to low content and low skill.
Volume - ranging from a quantity of one to large scale mass production.
It is interesting to note that these aspects generally increase or decrease monotonically as one moves between the extremes of process structures. The following chart illustrates how the process characteristics vary with structure.
Comparison of Process Structures and Characteristics
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Project |
Job |
Batch |
Assembly |
Continuous |
Flow |
None |
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Flexibility |
High |
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No. of Products |
High |
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Capital Investment |
|
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Variable Cost |
High |
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Labor Content |
High |
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Labor Skill |
High |
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Volume |
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Continuous
Low The following sections describe each of the architectures, highlighting their differentiating characteristics.
Project
- Flow - no flow
- Flexibility - very high
- Products - unique
- Capital investment - very low
- Variable cost - very high
- Labor content and skill - very high
- Volume - one
In a project, the inputs are brought to the project location as they are needed; there is no flow in the process. Technically, a project is not a process flow structure since there is no flow of product - the quantity produced usually is equal to one. It is worthwhile, however, to treat it as a process structure here since it represents one extreme of the spectrum.
Projects are suitable for unique products that are different each time they are produced. The firm brings together the resources as needed, coordinating them using project management techniques.
Job Shop
- Flow - jumbled flow
- Flexibility - high
- Products - many
- Capital investment - low
- Variable cost - high
- Labor content and skill - high
- Volume - low
A job shop is a flexible operation that has several activities through which work can pass. In a job shop, it is not necessary for all activities to be performed on all products, and their sequence may be different for different products.
To illustrate the concept of a job shop, consider the case of a machine shop. In a machine shop, a variety of equipment such as drill presses, lathes, and milling machines is arranged in stations. Work is passed only to those machines required by it, and in the sequence required by it. This is a very flexible arrangement that can be used for wide variety of products.
A job shop uses general purpose equipment and relies on the knowledge of workers to produce a wide variety of products. Volume is adjusted by adding or removing labor as needed. Job shops are low in efficiency but high in flexibility. Rather than selling specific products, a job shop often sells its capabilities.
Batch Process
- Flow - disconnected, with some dominant flows
- Flexibility - moderate
- Products - several
- Capital investment - moderate
- Variable cost - moderate
- Labor content and skill - moderate
- Volume - moderate
A batch process is similar to a job shop, except that the sequence of activities tends to be in a line and is less flexible. In a batch process, dominant flows can be identified. The activities, while in-line, are disconnected from one another. Products are produced in batches, for example, to fill specific customer orders.
A batch process executes different production runs for different products. The disadvantage is the setup time required to change from one product to the other, but the advantage is that some flexibility in product mix can be achieved.
Assembly Line Process
- Flow - connected line
- Flexibility - low
- Products - a few
- Capital investment - high
- Variable cost - low
- Labor content and skill - low
- Volume - high
Like a batch process, an assembly line processes work in fixed sequence. However, the assembly line connects the activities and paces them, for example, with a conveyor belt. A good example of an assembly line is an automobile plant.
Continuous Flow Process
- Flow - continuous
- Flexibility - very low
- Products - one
- Capital investment - very high
- Variable cost - very low
- Labor content and skill - very low, but with skilled overseers
- Volume - very high
Like the assembly line, a continuous flow process has a fixed pace and fixed sequence of activities. Rather than being processed in discrete steps, the product is processed in a continuous flow; its quantity tends to be measured in weight or volume. The direct labor content and associated skill is low, but the skill level required to oversee the sophisticated equipment in the process may be high. Petroleum refineries and sugar processing facilities use a continuous flow process.
Process Selection
The primary determinants of the optimal process are the product variety and volume. The amount of capital that the firm is willing or able to invest also may be an important determinant, and there often is a trade-off between fixed and variable cost.
The choice of process may depend on the firm's marketing plans and business strategy for developing a competitive advantage. From a marketing standpoint, a job shop allows the firm to sell its capabilities, whereas flow-shop production emphasizes the product itself. From a competitive advantage perspective, a job shop helps a firm to follow a differentiation strategy, whereas a flow shop is suited for a low cost strategy.
The process choice may depend on the stage of the product life cycle. In 1979 Robert H. Hayes and Steven C. Wheelwright put forth a product-process matrix relating process selection to the product life cycle stage. For example, early in a product's life cycle, a job shop may be most appropriate structure to rapidly fill the early demand and adjust to changes in the design. When the product reaches maturity, the high volumes may justify an assembly line, and in the declining phase a batch process may be more appropriate as product volumes fall and a variety of spare parts is required.
The optimal process also depends on the local economics. The cost of labor, energy, equipment, and transportation all can impact the process selection.
A break-even analysis may be performed to assist in process selection. A break-even chart relates cost to levels of demand in various processes and the selection is made based on anticipated demand.
Operations > Process Structure
