Chapter 7
Firms generally produce in response to customer orders and demand or in anticipation of them. This leads to the 3 types of goods and services.
Custom (make to order): produced and delivered as one of a kind or in small quantities and are designed to meet specific customers specs. Ex: ships, weddings, buildings, surgery
Option (assemble to order): configurations of standard parts, subassemblies, or services that can be selected by customers from a limited set. Ex: subway sandwiches, dell computers, travel agent services
Standard (make to stock): made according to a fixed design and the customer has no options from which to choose. Ex: credit cards, sporting goods, appliances, shoes
Four types of processes are used to produce goods and services
1. Projects
2. Job shop processes
3. Flow shop processes
4. Continuous flow processes
Projects: large scale, customized initiatives that consist of many smaller tasks and activities that must be coordinated and completed to finish on time and within budget. Ex: legal defense preparation, construction, software development.
Job shop processes: organized around particular types of general-purpose equipment that is flexible and capable of customizing work for individual customers. Often used for custom or option type products; generally produced in batches.
Flow shop processes: organized around a fixed sequence of activities and process steps, such as an assembly line, to produce a limited variety of similar goods or services. Ex: assembly line, automobiles, appliances, insurance policies
Continuous flow processes: create highly standardized goods or services, usually around the clock in very high volumes. Ex: car washed, paper and steel mills, paint factories. Often controlled by computers with minimal human oversight.
Product life cycle: characterization of product growth, maturity, and decline over time. Important to understand product life cycles because when goods and services change and mature, so must the processes and value chains that create and deliver them.
Product process matrix: a model that describes the alignment of process choice with the characteristics of the manufactured good. Most appropriate match occurs along the diagonal in the product-process matrix.
Product process matrix does not transfer well to service businesses and processes.
Pathway: unique route through a service system; can be customer or provider driven, depending on the level of control that service firm wants to ensure. Ex: physical as in nature as walking around Disney World or a golf-course; procedural, as in initiating a transaction via the telephone with a brokerage firm; or purely mental and visual in doing an internet search.
Customer routed services are those that offer customers broad freedom to select pathways that are best suited for their immediate needs and wants from many possible pathways through the service-delivery system. Ex: searching the internet to purchase an item or visit a park.
Provider routed services: constrain customers to follow a very small number of possible and predefined pathways through the service system. Ex: ATM machine, mailing and processing a package using UPS.
Constrained; provider routed.
Service encounter activity sequence: consists of all the process steps and associated service encounters necessary to complete a service transaction and fulfill a customer’s wants and needs. This depends of two things; the degree of customer discretion, freedom, and decision making power in selecting the service encounter activity sequence; design their own. The degree of repeatability of the service encounter activity sequence. Service encounter repeatability refers to the frequency that a specific service encounter activity sequence is used by customers.
The more unique, the less repeatable something is.
We can think about work at four levels; task, activity, process, and value chain.
Task: specific unit of work required to create an