Which strategic level is process strategy on?
The functional (concerns operational strategy)
Why were direct-to-customer sales effective for Dell?
- Reduce channel costs (ads, markup)
- Reduce shortages (just-in-time delivery)
- Reduce lost sales (better data for demand forecasting)
What did Dell do on the supply side?
- Reduced the number of suppliers (less cost due to economies of scale with suppliers and more important buyer)
- Close proximity of assembly-supply:
- Better supplier partnership
- Fast order fulfillment
- Inventory costs outsourced to suppliers
- Reduced inventory cost
- Reduced delivery time
Define a process:
The arrangement of resources and activities that transforms inputs into output.
It usually has some form of repetition.
Why does process strategy matter?
- It directly affects the output (final product)
- They are repetitive (thus big impact)
- The design of the process strategy concerns resources utilization.
- It is a good indicator of systems performance.
What’s a flow unit?
The basic unit of flow, based on which process we analyze, per example:
Customers in the queue at a bank
Students enrolled in a program
Parts at a car manufacturing
An order at McDonald’s
Define flow rate:
The number of flow units going through the process per unit of time. n(U)/t
Define flow time:
The time it takes a flow unit to go from the beginning to the end of a process.
Define (process strategy) inventory
The number of flow units in the process at a given point in time.
Define processing time:
how much time one worker (station/machine) spends on tasks for one flow unit.
Processing time = station time per flow unit/ standardized time unit
Capacity:
The number of flow units one worker (station/machine) can serve (output, produce) in a unit of time:
Capacity = 1 / Processing time
Define Bottleneck
The station with the lowest capacity (even if there is parallel stations), thus reduces the flow rate and flow time the most.
