Process Flow Structures
A critical part of any operation is the process flow. The process flow consists of a series of steps which determine how a product is manufactured or a service provided. As such, the process flow structure determines how facilities will be laid out, the working methods used, the resources needed, the technology used, and how efficient the process is. As such, the process flow structure represents an important factor driving the competitiveness of a firm’s operations, and hence its overall level of competitive advantage.
A process flow structure generally falls into two categories: it can be either a job shop or a flow shop. The job shop process flow structure represents a fairly general structure, which is highly flexible and can use general purpose resources. In contrast, a flow shop process flow structure can only use certain specialised resources, with a fixed path for the work. As a result of this, flow shop processes tend to be less flexible than job shop ones.
These generic process flow structure can be further broken down into five distinct structures:
- Project structure, where a single project is planned with a fixed end date, such as building a house
- Job shop structure, where each flow will be similar but slightly different, such as poster printing
- A batch process, where each flow produces a batch of identical products, such as baking
- An assembly line structure, where the flow produces a continuous supply of fixed goods, such as a car assembly line
- Continuous flow structure, where a continuous supply of finished goods is produced, such as in an oil refinery
The main factors differentiating the different process structures are:
- The flow – are there a large number of paths which activities can take, or is there only one possible sequence of activities.
- Flexibility – will changing the output of the process, in terms of volume and products, alter the performance and / or cost of the process
- Range of products – can the process produce lots of different products, or is it designed to only produce one one specific product.
- Capital investment – does the process require investments in expensive specialist equipment or can it use general equipment that the firm may already own or can rent
- Variable costs – how high is the cost of producing each unit
- Labour requirements – how much labour input is required, and how skilled must the labourers be
- Volume – can the process produce lots of products, or will it only create a few, or possibly one, end product
Most of these aspects will tend to vary between extremes for different process structures. For example, a project based structure is completely flexible with only one output, whilst an assembly line structure is much less flexible, being optimised to produce a certain quantity of products, but can potentially produce hundred and thousands of outputs. Each possible structure has distinct characteristics.
- Flow – there is generally no flow, as only one path is possible
- Flexibility – this is very high, costs will reduce if a smaller project is produced
- Products – only one type of product will be produced
- Capital investment – usually very low as generic tools can be used
- Variable cost - very high as only one unit is produced
- Labour requirements – large numbers of skilled labours are usually required
- Volume – only one unit of output is produced
For a project, there is generally no flow as the product is simply completed as needed: there is no need to consider other products in the structure. Indeed, a project is arguably not a true process flow structure as there is no flow; however it is often used as an extreme example of a process. As such, a project structure will only generally be used to produce a single unique product in a single unique location, such as a house or road. As such, resources are brought to the site when needed, and coordinated by a project manager, not by a specific system or structure.
Job shop structure
- Flow – variable flow
- Flexibility – quite high
- Products – lots
- Capital investment – relatively low
- Variable cost – quite high
- Labor requirements – quite large numbers of skilled labourers are usually required
- Volume – fairly low
A job shop structure is a flexible structure which involves several activities that work can pass through in various sequences. Indeed, most job shops will have different activities to be performed on different products, and different products can pass through the activities in different sequences. For example, in a print shop, different products will be prepared in different ways. Large posters will need to be printed and potentially covered in a protective wax, whilst smaller booklets could be printed en masse in a rapid printing device and may need to be cut and stapled. As such, most job shop structures are not very efficient as they are not very specialised. This allows them to be more flexible, to cater for different types of output.
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A batch process
- Flow – mostly consistent but some processes are disconnected
- Flexibility – reasonable but quite restricted
- Products – a moderate range of products can be produced
- Capital investment – some is often required in machines for the main processes
- Variable cost – moderate when compared to other processes
- Labour requirements – some skilled labour is required, but some can be unskilled
- Volume – large batches produced, but overall volume is not very high
A batch process tends to involve a more sequential flow of activities, where some activities are consistent across all products. These dominant flows are often connected, but ancillary processes tend to be disconnected and require some skilled labour intervention. The process is so called because products are produced in certain sized batches, with each batch flowing through the structure as a whole. A batch process has some flexibility in the products it makes, with different production flows applying to different products. However, as a result of the batch structure, each product requires a separate production run, which requires time to set up and reduces efficiency. The usual example is a bakery, where dough is mixed and moulded and then placed into the oven in the form of several loaves. Cakes, buns and other products can also be made, but require different oven temperatures and ingredients.
Assembly line process
- Flow – fixed sequence of connected processes
- Flexibility – low as the line is designed to work at a certain speed
- Products – very few depending on the set up of the line
- Capital investment – lots of machinery and capital required
- Variable cost – low due to the specialised process
- Labour requirements – mostly unskilled and few workers required due to machines
- Volume – able to work at a very high volume and efficiency
An assembly line is a fixed sequence of connected activities which each take place according to a strict schedule and pacing. Greater efficiency and volume is obtained due to the specialised nature of the line, which can only make a few similar products, and the pacing which can be calculated for maximum efficiency. Car manufacturing is one of the most well know assembly line processes, with different sections being added to the car as it moves down the production line, and the end result being a set of nearly identical cars, usually only differing in colour.
Continuous flow process
- Flow – a continuous flow of a continuous product
- Flexibility – almost no flexibility as the process is set up to work at one speed
- Products – only one
- Capital investment – vast amounts needed for very specialist machines
- Variable cost – usually very low due to the specialist nature of the process
- Labour requirements – workers are generally unskilled and low in number, but supervisors often need to be skilled and experienced
- Volume - very high due to continuous production
The continuous flow process is similar to the assembly line as it has a fixed sequence and a set pace. However, the nature of the good produced means that it cannot be processed in individual steps, and instead has to be processed continuously, with production usually measured by weight or volume. As such, there is almost no flexibility in the process as there is no way any work in progress can build up. Whilst direct labourers do not need to be skilled, skilled supervisors and managers are needed due to the sophisticated equipment that is used. This type of process is seen in oil refineries, where the incoming oil is continuously fed into a cracking column, and the various products: petrol, diesel, kerosene etc are continuously removed. The process speed cannot be varied due to the size of the column and the need to maintain the temperature and volume of oil inside it.
The particular process selected for any operation will depend on the type and amount of product to be produced. For example, the construction of one vehicle would be best done by using a project methodology, whilst the construction of a large number would justify the construction of an assembly line. In addition, the firm needs to consider how much capital it has available to invest, and any economies of scale that it may achieve in the production process. A firm also needs to consider what its marketing and business strategy is, and how it can use its operations to develop a competitive advantage. For example, a job shop process flow will allow the firm to develop more individual products. In contrast, the production line and continuous flow approaches will allow companies to make products as cheaply as possible.
In addition, the choice of process flow can depend on what stage in the product life cycle the firm is at. For example, when a product is first introduced a job shop or batch process approach may be most relevant, in order to respond to the changing levels of demand and make any necessary design changes. In addition, at this stage it is difficult to construct an assembly line for a product as it is impossible to predict exactly what the total demand will be. However, as the product moves towards maturity, so the profits and volume increase may justify an assembly line or continuous flow process. Firms should also consider what production factors are available in the local economy, and what their price is. For example, in a market where labour is cheap but energy and capital is relatively expensive or scarce, a job shop may be a more efficient method of production than as assembly line. This explains why many production operations in developing countries follow the job shop process, and are sometimes referred to as ‘sweat shops’ whilst production facilities in developed nations are more likely to involve assembly lines to reduce labour costs.