Classifications of Operations Systems

Classifications of Operations Systems

Make-to-order v/s Make-for-stock

Volume / Flexibility
Service Process Matrix

Make-to-order v/s Make-for-stock

Choice largely depends on the nature of

product and its market
- cheap ball point pens
- expensive pens
- aircraft manufacturer
- supermarket
- up-market restaurant

Intermediate category : assemble-to-order

- fast food outlet
- automobiles

Volume / Flexibility

Projects
- oil rig construction
- development of a computer software package
- overhaul of an airliner

Job shop
- Low volume, low standardisation one of a kind,
custom design, general purpose equipment, high
margins, jumbled flow, estimating costs, estimating
delivery times, order tracing and expediting
- tool room
- tailor
- operation theatre

Volume / Flexibilty (contd.)

Continuous
- High volume, specialised equipment, high capital
investment, high standardisation, commodity,
vertical integration, long runs, economies of scale,
timing expansion and technological changes
- nuts and bolts
- cement, sugar, petroleum
- photographic films

Volume / Flexibilty (contd.)

Batch
- Standardised designs, back-up suppliers, finished or
intermediate goods inventory, systematising diverse
elements, SPC, developing standards, large complex
operations
- aero-engines
- mining equipment
- pumps, compressors
- mail collection

Disconnected line flow or Connected line flow

Volume / Flexibilty (contd.)

The Service Process Matrix (Schmenner)

- Two Axes:
- Degree of Labour Intensity; ratio of labour cost
value of plant and equipment
Electric utilities
Communications
Amusement parks
Hospitals
: 1.63
Banking
: 1.20
Hotels
: 1.01
Retail trade : 0.62
Business services

: 14.21
: 5.31
: 2.49

: 0.42

to

Volume / Flexibilty (contd.)

The Service Process Matrix (Schmenner)

- Two Axes:
- Degree of Interaction and Customisation
Interaction : Degree to which the customer can
intervene in the process (e.g. restaurant), is not
duration of contact (e.g. lectures)
Customisation : Degree to which the service
provided is tailored to the needs of the
customers

The Service Process Matrix

Degree of Interaction &
Customisation
Low
Degree
of
Labour
Intensit
y

High

Low

High

Service Factory

Service Shop

Airlines
Hotels
Resorts

Hospitals
Auto Repairs

Mass Service

Professional

Retailing
Schools
Commercial Banking

Doctors
Lawyers
Accountants

The Service Process Matrix (contd)

Low Labour Intensity

- Capital decisions
- Technological advances
- Managing demand to avoid peaks and to promote
off peaks
- Scheduling service delivery

The Service Process Matrix (contd)

High Labour Intensity

- Hiring, training, welfare
- Methods development and control
- Scheduling workforce

The Service Process Matrix (contd)

Low Interaction & Customisation

- Marketing
- Making service warm
- Attention to physical surroundings
- Managing fairly rigid hierarchy
- Need for standardised procedures

The Service Process Matrix (contd)

High Interaction & Customisation

- Fighting expenses increases
- Reacting to customer interventions in process
- Gaining employee loyalty
- Managing flat hierarchy
- Loose subordinate / superior relationship
- Managing advancement of people

The Service Process Matrix (contd)

Help companies assess their competitive

stance and means by which they provide their
services
Possibility to move across the diagonal?
(e.g. banking and retailing becoming more automated,
restaurants with more standardised menus, professional service
firms to specialise; pursuit is for controls and reduced costs)

Assignment

Attempt to categorise the operations system

of your own organisation, or others with which
you are familiar
How would it plan to move across the
diagonal? What would be the implications
vis--vis the organisations structure, systems
and processes?