Вы находитесь на странице: 1из 22


The modern concept of marketing considers the customer as the king or prime as satisfaction and delight of customer is the mission of a business. is the customer who shapes the production and ma4eting policies of the rm. A marketer should understand this fact if he is to beuccess in this mission. He must have sufficient knowledge about the customers to whom he s going to sell. He must try to understand the nature of customers, their this and their buying motives if he is to win permanent customers. A buying motive induces a buyer to buy a product. It is an influence or consideration which provides an impulse to buy. There is a buying motive hind every purchase. It may not be the same with every buyer ne buyer away purchase a product to satisfy his one need and another may purchase a product to satisfy an altogether different nerd. Therefore, it is necessary for !e marketer to identify the buying motives of different kinds of customers. "r this he must study the psychology of the customer and design his market# #mi$ accordingly. %aslow&s need hierarchy which e$plains buyer&s motives as been discussed later in this chapter. types of Buying Motives, There are three considerations which make a person purchase a product' ( He has a desire which needs to be satisfied ) *ii+ He has an urge which ,ueces him to purchase ) and *iii+ He has a reasoning. -roadly speaking, individuals are motivated to buy by internal and renal forces as under' Internal otives often originate in the minds of the people and are both typical and psychological in nature. They are broadly classified into two rational which are based on logical reasoning or thinking and amoral , which are based on personal feelings. E!ternal otives are outside oneself. .ince a consumer is the product iiss environment, his buying motives are influenced by the e$ternal factors. us factors like income, occupation, religion, culture, family and social environment act as motivators. -uying motives. may also be classified on the basis of product and patronage. "# $ro%u&t Motives. These e$plain why people buy certain products. motives result directly from the needs of customers. /roduct motives be of two kinds' *A+ /rimary buying motives relate to the reasons why consumers buy one foods rather than another .uch motives result directly from the needs and wants, and include the d 0ire to achieve recognition, physical well# preservation of self#image, rela$ation, beauty, knowledge, money gain. The seller must discover the customer&s primary motives *for they are unaware of these+ and then direct has appeal as effectively as possible. *b+ .elective buying motives relate to causes that induce a consumer1 purchase certain class of 2uality goods. .election is based on such motives the desire for both economy and convenience. .ome of the most com selective buying motives include desire for convenience, versatility, econ dependability and durability. '# $atronage Motives. These cause a customer to buy products for. particular manufacturer or retailer. Important patronage motives are the. concerned with fashion, e$clusiveness, dependable after#sales service, vengeance of location, 2uality, price,

reliability of the seller, punctuality delivery, variety of selection, etc. 3hen a person decides to buy a particular product or patroni4e particular retailer, he may be guided by rational or emotional motives as cussed below.

Rational Motives (E&ono i& Consi%erations) These motives are based on a man&s reasoning, logic and ability consideration of economic conse2uences. They include the immediacy monetary cost, and long#range cost effecting the buyer such as economy durability, depreciation, efficiency, degree of labor needed, dependability and ultimate benefits achieved. E otional Motives ($sy&*ologi&al Consi%erations) 5motional buying motives are based on personal feelings and cover a we range of motives including impulses, instincts, habits and drives, etc. The motives include pleasure, comfort, status, pride, ambition, economic e social achievement, selection of gifts, maintaining and preserving heath satisfaction of appetite, proficiency, romantic instinct, social accepted recreation and rela$ation, etc. 5motional motives are found more among people of high income group T6, Air 7onditioner, 8efrigerator, 3ashing %achine,. 9eyser, 7ar, etc. a generally bought to satisfy emotional motives.

Consu er Be*avior
:The fact of buying changes the dynamics of the relationship. The will never views the sale as a favor conferred on the seller and, in effect, bits the seller&s account. A healthy relationship re2uires a conies and constant fight against the forces of decline. ne of the west signs of a bad relationship is the absence of complaints. The stomper is either not being candid or not being contacted. /robably both. ;T*eo%ore +evitt INRO,UCTION The modern marketing concept makes. customer at the centre#stage of sanitation efforts) The focus, within the marketing concept to reach the #et customer, sets the ball rolling for analy4ing each of the conditions of the #t market. The first being to find out interest of such persons as would '#t me prospective customers. Then comes the. willingness of such interested '.ones to buy the offered product. -ut since customer needs come first and the organi4ation offers the product, as imperative of the marketing pt, customer&s willingness to buy cannot be studied in isolation of the nearest of such prospects to satisfy a basic need from different satisfiers. 7onsumers& needs recognition, their involvement level, the available alternate decision to buy and post#purchase behavior, all are part of the consumer behavior. 5very consumer is uni2ue and this uni2ueness infest in search, purchasing, consuming, reacting, etc. Thus, consumer behavior must be properly understood by marketers.

Factors that influences on business buyers.

(1)Economic developments: Purchasing of materials depend upon the countrys economic conditions. If the economy is growing rapidly usually the consumption also grows proportionately then company should source materials accordingly

(2)Supply conditions: Raw materials required should be matched with the demand condition of the company. If there is an irregular or seasonal demand exists then company should adjust their supplies. Any shortage of the raw materials will force the company to go out of the company.

(3)Political and Legal environment: Any change in the government policy will have direct or indirect impact on the company. or example! An engineering firm wor" towards better environment standards in their products assuming that all automobile companies adhere to the international regulations but the government decided to post pone the regulation standard implementation for #$ years the entire material manufactured and raw materials will have extra holding and inventory costs.

(4)Competitive environment: %usiness buying is very complex. Any technology change adopted by the competitor should be carefully observed. If the company not able to identify the competitors move survival will become difficult.

(5)Culture and customs: &very country has its own culture and customs. As we discussed in the previous unit! why one should not sell beef products in India! in same

way business buying is also influenced by the culture and customs. or example! most of the products produced in 'apan are of small si(e to suit their customers. Any company buying products in 'apan should always "eep these things in mind.

( )!rgani"ational o#$ectives: Purchasing objectives are derived from the organi(ation objectives. or example! an organi(ation objective is to reduce the overall cost of $)*. Its purchasing objectives ta"e this as benchmar" and try to reduce the cost by $)*.

(%)!rgani"ational policies and procedures: +ompanies policies li"e centrali(ation versus decentrali(ation of buying and selling will have direct impact on the companys production.

(&)!rgani"ation structure and systems: ,esser the hierarchy more will be the flexibility in the organi(ation. +ompanies with more number of hierarchies will have plenty of problems to be addressed.

(')(nterpersonal )actors: %usiness buying will have different outcome on the basis of authority! status! empathy and persuasiveness that customer and organi(ation posses. Individual factors. Age! education! job position! Personality ris" attitudes of individual will determine the buying behavior of each role and in turn these changes will have direct impact on the organi(ation buying.

Marketing Strategy for New Industry Products

Pioneer in a Product - Issues

*+en a product is ne, in t+e industry li)e cycle- t+e )irm starting t+e production and sale is t+e pioneer. /ormally t+e gro,t+ is slo, in t+e introduction o) p+ase o) a ne, industry product as t+e tec+nical pro#lems ,it+ t+e product are to corrected- production capacities +ave to #e #uilt up #ased on mar0et acceptance and gro,t+- distri#ution capacity is to #e #uilt up )rom scratc+ ,+en distri#utors +ave no )amiliarity ,it+ t+e product- and customer may +ave reluctance to c+ange +is old #e+avior. () t+e product is an e1pensive +ig+ tec+nology one- only small num#er o) #uyers can a))ord it.

Companies +ave c+oice to #e a pioneer or a )ollo,er. 2 pioneer +as to initiate every t+ing connected ,it+ t+e product. 2 )ollo,er +as t+e #ene)it using various )irms t+at +elped t+e pioneer )or +is venture. 2lso +e +as t+e opportunity o) studying t+e pioneer3s product and mar0et response to it. 4e can e1amine t+e distri#ution c+annels used #y t+e pioneer and gauge t+eir e))ectiveness and +e can evaluate various mar0eting strategies employed #y t+e pioneer. 5+us an early )ollo,er +as some e1tra 0no,ledge a#out t+e product and t+e mar0et.
Is there any Advantage to the Pioneer?

Some studies indicate t+at t+e mar0et pioneer i) it can capture t+e leaders+ip position gains t+e most advantages. Some studies dispute t+e )inding t+at pioneers +ave sustained t+eir leaders+ip. 6o#ertson and 7atignon give t+e opinion t+at an alert pioneer8leader can pursue various strategies to prevent later mar0et entrants )rom ,resting a,ay leaders+ip. 9eing a pioneer +as an advantage t+at can #e capitali"ed. 5+e pioneer +as to dynamically compete in t+e mar0et place to e1ploit +is pioneering advantage. 4e needs to +ave a grand plan )or li)e8cycle o) mar0eting o) t+e product and launc+ strategy +as to #e t+e )irst step in t+at grand plan. 5+e pioneer may start )rom a speci)ic product8mar0et segment +is launc+ #ut must +ave plans to cover t+e larger part o) t+e mar0et over a period o) time #y launc+ing appropriate product variations and covering more mar0et segments.
The competitive Cycle The Pioneers


(nitially- t+e pioneer is t+e sole supplier ,it+ 1::; production capacity and mar0et s+are. (n t+e second stage- t+ere is competitive penetration as competitors #uild capacities and enter mar0et. (n t+e gro,t+ p+ase- capacity tends to #e over#uilt and any cyclical do,ntrends ,ill impact margins )or all. 2)ter some time s+are sta#ility may +appen. 5+en a commodity competition stage ,ill come ,+ere returns are average. 5+e )inal stage ,ill #e a decline )or t+e industry and )irms ,it+dra, )rom t+e industry. 5+e pioneer needs to steer t+roug+ all t+e stages o) t+e industry li)e cycle.
Pricing and Promotion Strategies for Pioneers

Pioneer +as t+e alternative o) S0imming pricing or Penetration pricing.

S0imming is entering t+e mar0et layer #y layer in t+e order o) value e1c+ange. (nitially #uyers ,+o are ,illing to pay a +ig+ price are serviced. 5+is strategy is )easi#le i) mar0et is una,are o) t+e product and special e))orts are to #e done #y )irms to ma0e t+e potential #uyers a,are o) t+e product. Pioneer ,ill do rapid s0imming i) t+e potential competition is imminent. (n t+is strategy +e ,ill spend su#stantial amount on promotion to enlarge t+e sale <uic0ly. () t+e potential competition is not imminent- t+e pioneer can underta0e slo, s0imming. 4e can e1pand sales slo,ly #y limiting promotion e1penditure. Penetration is entering a large mar0et ,it+ a lo,er price. (t is done )or price sensitive products. 6apid penetration is pre)erred ,+en t+e mar0et is una,are o) t+e product. 5+e pioneer spends a good deal on launc+ and advertising. 2 slo, penetration approac+ is used ,+en mar0et is a,are o) t+e product#ut potential competition is limited.

5+us price and promotion are t+e t,o alternative dimensions ,+ic+ t+e pioneer +as use in +is strategy.

n%ustrial Mar-eting Strategy

,eveloping . Strategy /or Su&&ess
Having an effective in%ustrial ar-eting strategy is difficult for most manufacturing firms. <ou&re busy enough as it is to have to worry about the strategies you&re employing for internet marketing. <ou&re busy spending your day taking and filling orders and ensuring the 2uality of your manufacturing product or service. And yet a good in%ustrial ar-eting strategy is vital to maintain the health of your company. Internet %arketing is as important for an industrial firm as it is for a company that target consumers. 3hether it&s consumer traffic, or business to business, people are searching for the products you sell on the internet. The only 2uestion is whether you are allowing them to find you.

In%ustrial Mar-eting Strategy0 +everaging t*e $o1er of t*e Internet

The internet is the most powerful tool for consumers ever created. It is also the most powerful advertising medium ever invented. "ailure to take advantage of it is the biggest mistake your manufacturing firm can make. The internet should be the center of any manufacturing marketing strategy. It&s not only the most effective form of marketing. It&s low cost and re2uires very little effort from you or your overworked staff.

In%ustrial Mar-eting Strategies0 Targeting t*e Rig*t Clients

ne the biggest advantages of online marketing is the volume of marketing research data. -efore we target a specific market, we so e$haustive research to discover not only the sheer number of people searching for the industrial or manufacturing products or services you sell, but the likelihood of those people to actually purchase them. 3e use data gathered from billions of searches performed on search engines to discover what search phrases these people use to find products=services you sell. nce we find your firm&s most responsive customer and the terms they

use to search, we craft your web site around the goal of attracting these customers to your site, and once there, convincing them to contact you.

In%ustrial Mar-eting Strategy0 Sti&-ing to T*e $lan

The secret of success for industrial internet marketing comes down to three things' 8esearch, "ocus, and 7onsistency of %essage. These should be the focus of any industrial marketing strategy because doing these three things well will likely make you the online authority in your company&s industry. The first step in the strategy is to convince the search engines that your web site is the best place on the internet for information. .econd, convince the online visitors that the search engines send you that you&re the best company to provide that particular product or service to them. The >ob, in essence, is the same, since search engines are constantly evolving into better mirroring the behavior of humans. .o the focus should be on attracting customers at the same time as attracting search engines. f course there are some tricks to the trade you need to follow. And that&s where we come in. ?ust because you know how to create or service industrial products doesn&t mean you know how to successfully market them online. The key to the entire strategy is to get noticed by the search engines. And without specific in#depth knowledge of search engine optimi4ation techni2ues, the whole plan falls apart. The truth is' no search engine ranking e2uals no traffic. And no traffic e2uals no online sales. 3e are e$perts in all phases of internet marketing and can implement an industrial marketing strategy that works to improve your firm&s bottom line.

In%ustrial Mar-eting .%visers0 Your Strategi& Gui%e To Greater Sales

3e&ve helped many firms dramatically e$pand their sales in a variety of industrial and manufacturing industries. ur in%ustrial ar-eting strategies have helped firms reach the top positions on search engines for their industry. And we can help your manufacturing product or service firm do the same. "ill out the form at the top of the page to get a free no#obligation consultation of what the potential is for your firm&s particular niche and how much it will cost to become an online authority in your particular industry.
In%ustrial ar-eting *or 2usiness to 2usiness ar-eting+ is the marketing of goods and services by one business to another. Industrial goods are those an industry uses to produce an end product from one or more raw materials.

#uying tec+ni<ues

tec+ni<ues- tips and rules )or pro)essional #uyers- purc+asing and supplies management 8 a strategic approac+ to #uying
&ffective purchasing management and professional buying wor"s better when a good strategic framewor" exists. +ommonly! relationships between suppliers and customers are driven by personalities! or the needs of the moment! whereas relationships and purchasing strategy should ideally be based on a combination of factors reflecting the nature of each purchasing area! includingris"! complexity! value! the mar"et and basic matters of supply and demand. .his simple article explains some of the principles! techniques and guidelines for buying! and is provided by +hristopher %arrat! a writer on the subject of professional buying! whose contribution is gratefully ac"nowledged. %ear in mind also that when buying anything you should be aware of the principles and techniques ofeffective negotiation. It is li"ely that the person selling to you will be using them! so even if you do not wish to adopt the approach and methods concerned! it/s as well that you be able to recognise the tactics.

1. c+ec0 you 0no, ,+ere your purc+ase is positioned

&very buyer wants the maximum choice of compliant suppliers. .his is a rare occurrence. %uying is often involved late! given specifications that are too tight! or not enough information to allow flexibility. .he classic /power matrix/ always helps to assess how to engage suppliers#uying relations+ips matri1

lo, item value! product complexity! buyer strength

+ig+ item value! product complexity! buyer strength

0evelop and maintain strategic Critical yet in)re<uentco alliances or partners+ips with ntract negotiations! which sustainable +ig+8<uality is the challenge. strategic suppliers. +an be difficult to attract 1ngoing colla#oration and revi and maintain priority and e, are essential. attention from suppliers! so buyers need to find 6elations+ips are li"ely to be ways to maximise more important than contracts. theappeal and interest f +ig+mar or the supplier. =ultiple "et relations+ips between buyer complexi %uyers therefore need to and seller organi(ations are ty! ris"! becreative- pragmatic li"ely to be very beneficial! and supplier and adapta#le! so as to should be encouraged and strength find ways of increasing enabled between as many the appeal and priority for counterpart levels and functions the supplier. as necessary to attain mutual understanding of operational .he li"elihood is issues and implications for both that contractswill be sides. more important than relationships! due to the Investment in >coac+ing> difficulty in sustaining suppliers to improve their senior level interest from strategic partnering capabilities the supplier. can be worthwhile. lo,mar" et complexi ty! ris"! supplier strength 1ften %uyers have e1tensive involves >commoditised> c+oice because of the number products and services. of suppliers available and the competition between them. 2enerally try to automate %uyers can exercise volume arrangements and leverage to get the best deals.

processes! so as to reduce transaction costs! variability and amount of time and effort 3ore aggressive #uying required to maintain tactics are acceptable and you supply and renegotiations. should s,ap #et,een t+e many undi))erentiated yet &stablish e))icient ade<uate suppliers. processes. 3inimise time and activity for both sides.

.he important step is to remember that even if you have little information! it doesn/t actually effect where the real mar"et pressures are. In other words let the mar"et decide their position! not your lac" of "nowledge.

2. get involved ,it+ your sales people

%uying is a critical function. 0espite this for many years it has been regarded somewhat as a second class citi(en in the commercial ran"ings. If! as a buyer! you can get involved with your own sales people this will ma"e a difference. irstly you could consider running training courses for them. 4econdly see if they can get you to one of their "ey customers to tal" to their buyers 5 it establishes good relations and can facilitate product development.

3. segment your sta))

%uying covers a very wide spectrum. 4trategic sourcing at one end! and invoice entering at the other. .his is a broad s"ill set! and not all buyers can do both. If you want to develop your buyers s"ills then start by really chec"ing who is capable! and or willing. 4ome of your

best staff may not actually want to be developed into strategic relationship managers. If you need to sell your department better internally 5 then pic" your best presenter to do this! not simply the buyer who deals with that group.

4. repetition is t+e 0ey to supplier measurement

.here are probably more supplier measurement processes than there are suppliers. &veryone is constantly inventing and re5 inventing some set of magic criteria that will measure supplier performance! and now of course the trend is to ma"e it all /e5 capable/ and self managing. 0on/t get tempted down this path. All of the processes do basically the same thing 5 ie.! get a series of aspects of supply and give you some sort of rating on a scale between /hero/ and /plon"er/. .he "ey to success is to stic" with the same simple measure 5 and do it over time. It is by definition going to be a relative movement that you want to see! not an absolute one. 1nly if you repeat the same process time and time again is this possible.

5. supplier rationali"ation 8 an ends or a means?

Any self respecting buyer has gone through some sort of supplier rationali(ation programme. It probably ma"es up one of your objectives and probably has a firm number 5 eg /reduce supplier base to 6)) suppliers/. %eware these sorts of targets 5 why 6))7 8hy not 6)9 or $:;7 .he issues is that this target loses sight of the reason for reduction 5 ie.! you want to simplify processes! increase supplier dependency and therefore reduce costs. <owever everyone also "nows that if you reduce too far you become loc"ed into certain suppliers and prices can rise. 8hat is more if you are going to go down an /e5auction/ route your first step may well be to increase the amount of suppliers. Rather than set an arbitrary number for suppliers! focus on the outcome 5 reducing costs 5 and see if this one particular tool is useful or not.

. price versus cost 8 understanding and calculating actual total cost

Price is different from cost. .he terms are often interchanged in business! which can lead to confusion in negotiations! and wrong decisions based on /false economy/. .he "ey rule is that /price/ is only one of the elements that ma"es up /cost/. .here are many other factors to consider and factor into the overall value judgement! and whether one proposition or supply arrangement is truly better than another.

actual total cost

price @ #asic cost o) product or service value @ cost o) <uality =including maintenance! disposal! and costs relating to environmental and corporate social responsibility factors> transaction @ cost o) ac<uisition =including buying resources! effort! time! payment terms! change management! training related to implementation> actual total cost ABC




4ee the Actual .otal +ost diagram in 34Powerpoint or as an Acrobat pdf. .he price is the label on the pac"et! or the basic price of the product or service! but it is no indication of true value or cost. or example! a chair has a price tag on it of ?#) or @$). .he value however! is related to useable benefits that the chair gives! and the cost implications of using it for its intended purpose. It may be a very cheaply5made chair! in which case if its role is just to last one season in a rented holiday flat and then be thrown away! then that is fine. If however the chair is required for visitors in the reception of

high quality business! then its style! comfort and durability are important required features! and therefore form a real part of its value =or not as the case may be>. 4o in this instance a chair is li"ely to warrant a relatively high /price/ in order to provide the necessary value and benefits! which ultimately produce a significantly lower /actual total cost/ than paying a low price for an inferior product which fails to perform! endure! give a suitable impression! etc. .he +&1 of a potential @$)m client who sits in a @$) reception chair might decide after all that he doesn/t want to place his business with a company who put such a low value on its visitors. 8hat/s the actual total cost of the @$) chair then7... A% the term /added value/ is used a lot in business today. 1ften it is just a smo"escreen for a price increase so be aware. .o really add value any feature should have some real and tangible effect on the longer term useBreplacement valueBcost of transactionBreputation for the buyer/s business. 8hen confronted with claims of added value! as"! /exactly what is the the added value7/ %y the same to"en! if you use the term /added value/ when selling to a buyer! ma"e sure you can demonstrate it. .he cost o) t+e transaction is what it actually costs your organi(ation to do the deal =and also to review it and renegotiate it in months and years to come>. +osts of transaction are regularly overloo"ed 5 by buyers and sellers ali"e! and everyone else who thin"s that selling and buying are all about price. or example professional buyers often receive suggestions from users or staff who say they can buy cheaper copier paper from their local discount store. .hey ignore the cost o) t+e transaction 5 that to purchase the cheaper paper from a local store involves someone spending time to go there! with cost of travel! the time to complete and fulfil an expense claim 5 all of which mean the cost of the transaction far outweighs any initially apparent /price/ savings. +onsider also the cost of change! implementation and training. .hese are also costs of the transaction! and can be enormous 5 in some cases greater than the basic price of the product or service. I. hardware and software are notable examples where the costs of executing the transaction through to implementation can produce frightening implications for costs! and also for process integrity and continuity.

An increasingly relevant factor is >total cost o) o,ners+ip> =.1+ or .+1>. .otal cost of ownership includes all of the factors above! but will also consider costs o) disposal! and increasingly for all industries! t+e cost o) reputation 5 for example the effect that sourcing low priced third5world goods can have on an organi(ation/s reputation 5 notably its reputation for Corporate Social 6esponsi#ility =+4R>. In summary! whether buying or selling! price is only a part of the actual total cost. +osts of quality including maintenance! disposal! +4R =corporate social responsibility> and environmental factors! and costs of the transaction including buying resources! effort! time! payment terms! and renegotiations =all largely dictated by the sellerCs relationship capabilities> must all be be considered when assessing or comparing the actual total costs of propositions! products or services

?ob shop
"rom 3ikipedia, the free encyclopedia

In the United Kingdom, "job shop" can also be a colloquialism for a Job Centre. 3o2 s*ops are typically small manufacturing systems that handle >ob production, that is, custom=bespoke or semi#custom=bespoke manufacturing processes such as small to medium#si4e customer orders or batch >obs. ?ob shops typically move on to different >obs *possibly with different customers+ when each >ob is completed. In >ob shops machines are aggregated in shops by the nature of skillsand technological processes involved, each shop therefore may contain different machines, which gives this production system processing fle$ibility, since >obs are not necessarily constrained to a single machine. In computer science the problem of >ob shop scheduling is considered strongly ,/#hard.

In a >ob shop product flow is twisted, also notice that in this drawing each shop contains a single machine.

A typical e$ample would be a machine shop, which may make parts for local industrial machinery, farm machinery and implements, boats and ships, or even batches of speciali4ed components for the aircraft industry. ther types of common >ob shops aregrinding, honing, >ig#boring, gear manufacturing,

and fabrication shops. The opposite would be continuous flow manufactures such as te$tile, steel,food manufacturing and manual labor.


High production mi$ fle$ibility High fle$ibility in product engineering High e$pansion fle$ibility *machines are easily added or substituted+ High production volume elasticity *due to small increments to productive capacity+ @ow obsolescence *machines are typically multipurpose+ High robustness to machine failures

7ompare to transfer line


6ery hard scheduling due to high product variability and twisted production flow @ow capacity utili4ation

+ompanies begin the process of organi(ing operations by setting competitive priorities. .hat is they must determine which of the following eight priorities are to be emphasi(ed as competitive advantages-

#. ,ow5cost operations 6. +onsistent quality E. 1n5time delivery 9. Product customi(ation

$. <igh performance design D. ast delivery time F. 0evelopment speed :. Golume flexibility

Although all eight are obviously desirable, it is usually not possible for an operation to perfor signifi!antly better than the !o petition in ore than one or t"o#
.he five "ey decisions in process management are-

I. II. III. IG. G.

Process +hoice Gertical Integration Resource lexibility +ustomer Involvement +apital Intensity

.hese decisions are critical to the success of any organi(ation and must be based on determining the best was to support the competitive priorities of the enterprise.

PROCESS CHOICE .he first choice typically faced in process management is that of process choice. 3anufacturing and service operations can be characteri(ed as one of the following-

#. $. 6. D. E.

Project 'ob 4hop %atch low ,ine low +ontinuous low

.he nature of these processes are discussed below and summari(ed in the manufacturing product5process matrix on page :.

Project Process. &xamples of a project process are building a shopping center! planning a major event! running a political campaign! putting together a comprehensive training program! constructing a new hospital! doing management consulting wor"! or developing a new technology or product. A project process is characteri(ed by a high degree of job customi(ation! the large scope of each project! and the release of substantial resources! once a project is completed. A project process lies at the high5customi(ation! low5volume end of the process5choice continuum. .he sequence of operations and the process involved in each one are unique to each project! creating one5of5a5"ind products or services made specifically

to customer order. Although some projects may loo" similar! each is unique. irms with project processes sell themselves on the basis of their capabilities rather than on specific products or services. Projects tend to be complex! ta"e a long time! and be large. 3any interrelated tas"s must be completed! requiring close coordination. Resources needed for a project are assembled and then released for further use after the project is finished. Projects typically ma"e heavy use of certain s"ills and resources at particular stages and then have little use for them the rest of the time. A project process is based on a flexible flow strategy! with wor" flows redefined with each new project.

'ob 4hop Process. Aext in the continuum of process choices is the job shop process. &xamples are custom metal processing shop! hospital emergency rooms! custom plastic injection molding shop! or ma"ing customi(ed cabinets. A job shop process creates the flexibility needed to produce a variety of products or services in significant quantities. +ustomi(ation is relatively high and volume for any one product or service is low. <owever! volumes aren/t as low as for a project process! which by definition doesn/t produce in quantity. .he wor" force and equipment are flexible and handle various tas"s. As with a project process! companies choosing a job process often bid for wor". .ypically! they ma"e products to order and don/t produce them ahead of time. .he specific needs of the next customer are un"nown! and the timing of repeat orders from the same customer is unpredictable. &ach new order is handled as a single unit55as a job. A job shop process primarily involves the use flexible flow strategy! with resources organi(ed around the process. 3ost jobs have a different sequence of processing steps.

%atch low Process. &xamples of a batch flow process are scheduling air travel! manufacturing garments! furniture manufacturing! ma"ing components that feed an assembly line! processing mortgage loans! and manufacturing heavy equipment. A batch flow process differs from the job process with respect to volume! variety! and quantity. .he primary difference is that volumes are higher because the same or similar products or services are provided repeatedly. Another difference is that a narrower range of products or services is provided. Gariety is achieved more through an assemble5to5order strategy than the job shopCs ma"e5to5order strategy. 4ome of the components for the final product or service may be produced in advance. A third difference is that production lots or customer groups are handled larger quantities =or batches> than they are with job shop processes. A batch of one product or customer group is processed! and then production is switched to the next one. &ventually! the first product or service is produced again %atch flow processes have average or moderate volumes! but variety is still too great to warrant dedicating substantial resources to each product or service. .he flow pattern is jumbled! with no standard sequence of operations throughout the facility.

<owever! more dominant paths emerge than at a job shop and some segments of the process have a linear flow.

,ine low Process. Products created by a line process include automobiles! appliances! personal computers! and toys. 4ervices based on a line process are fast5 food restaurants and cafeterias. A line flow process lies between the batch and continuous processes! volumes are high! and products or services are standardi(ed! which allows resources to be organi(ed around a product or service. 3aterials move linearly from one operation to the next according to a fixed sequence! with little inventory held between operations. &ach operation performs the same process over and over with little variability in the products or services provided. Production orders aren/t directly lin"ed to customer orders! as is the case with project and job processes. 3anufacturers with line flow processes often follow a ma"e5to5stoc" strategy! with standard products held in inventory so that they are ready when a customer places an order. .his use of a line flow process is sometimes called mass production. <owever the assemble5to5order strategy and mass customi(ation are other possibilities with line flow processes. Product variety is possible by careful control of the addition of standard options to the main product or service. .he pacing of production may be either machine5paced or wor"er5paced.

+ontinuous low Process. &xamples are petroleum refineries! chemical plants! and plants ma"ing beer! steel! and processed food items. irms with such facilities are also referred to as the process industry. An electric generation plant represents one of the few continuous processes found in the service sector. A continuous process is the extreme end of high5volume! standardi(ed production with rigid line flows and tightly lin"ed process segments. Its name derives from how materials move through the process. Hsually one primary material! such as a liquid! gas! wood fibers! or powder! moves without stopping through the facility. .he process often is capital intensive and operated round the cloc" to maximi(e utili(ation and to avoid expensive shutdowns are start5ups.