The flow structure of the process used to make or deliver a product or service
impacts facility layout, resources, technology decisions, and work methods. The
process architecture may be an important component in the firm's strategy for
building a competitive advantage.
When characterized by its flow structure, a process broadly can be classified
either as a job shop or a flow shop. A job shop process uses general purpose
resources and is highly flexible. A flow shop process uses specialized resources
and the work follows a fixed path. Consequently, a flow shop is less flexible
than a job shop.
Finer distinctions can be made in the process structure as follows:
Project - Example: building construction
Job shop - Example: print shop
Batch process - Example: bakery
Assembly line - Example: automobile production line
Continuous flow - Example: oil refinery
These process structures differ in several respects such as:
Flow - ranging from a large number of possible sequences of activities to only
one possible sequence.
Flexibility - A process is flexible to the extent that the process performance
and cost is independent of changes in the output. Changes may be changes in
production volume or changes in the product mix.
Number of products - ranging from the capability of producing a multitude of
different products to producing only one specific product.
Capital investment - ranging from using lower cost general purpose equipment to
expensive specialized equipment.
Variable cost - ranging from a high unit cost to a low unit cost.
Labour content and skill - ranging from high labour content with high skill to
low content and low skill.
Volume - ranging from a quantity of one to large scale mass production.
It is interesting to note that these aspects generally increase or decrease
monotonically as one moves between the extremes of process structures.
The following sections describe each of the architectures, highlighting their
Flow - no flow
Flexibility - very high
Products - unique
Capital investment - very low
Variable cost - very high
Labour content and skill - very high
Volume - one
In a project, the inputs are brought to the project location as they are needed;
there is no flow in the process. Technically, a project is not a process flow
structure since there is no flow of product - the quantity produced usually is
equal to one. It is worthwhile, however, to treat it as a process structure here
since it represents one extreme of the spectrum.
Projects are suitable for unique products that are different each time they are
produced. The firm brings together the resources as needed, coordinating them
using project management techniques.
A job shop is a flexible operation that has several activities through which
work can pass. In a job shop, it is not necessary for all activities to be
performed on all products, and their sequence may be different for different
To illustrate the concept of a job shop, consider the case of a machine shop. In
a machine shop, a variety of equipment such as drill presses, lathes, and
milling machines is arranged in stations. Work is passed only to those machines
required by it, and in the sequence required by it. This is a very flexible
arrangement that can be used for wide variety of products.
A job shop uses general purpose equipment and relies on the knowledge of workers
to produce a wide variety of products. Volume is adjusted by adding or removing
labour as needed. Job shops are low in efficiency but high in flexibility.
Rather than selling specific products, a job shop often sells its capabilities.
Flow - disconnected, with some dominant flows
Flexibility - moderate
Products - several
Capital investment - moderate
Variable cost - moderate
Labour content and skill - moderate
Volume - moderate
A batch process is similar to a job shop, except that the sequence of activities
tends to be in a line and is less flexible. In a batch process, dominant flows
can be identified. The activities, while in-line, are disconnected from one
another. Products are produced in batches, for example, to fill specific
A batch process executes different production runs for different products. The
disadvantage is the setup time required to change from one product to the other,
but the advantage is that some flexibility in product mix can be achieved.
Assembly Line Process
Like a batch process, an assembly line processes work in fixed sequence.
However, the assembly line connects the activities and paces them, for example,
with a conveyor belt. A good example of an assembly line is an automobile plant.
Continuous Flow Process
Like the assembly line, a continuous flow process has a fixed pace and fixed
sequence of activities. Rather than being processed in discrete steps, the
product is processed in a continuous flow; its quantity tends to be measured in
weight or volume. The direct labour content and associated skill is low, but the
skill level required to oversee the sophisticated equipment in the process may
be high. Petroleum refineries and sugar processing facilities use a continuous
The primary determinants of the optimal process are the product variety and
volume. The amount of capital that the firm is willing or able to invest also
may be an important determinant, and there often is a trade-off between fixed
and variable cost.
The choice of process may depend on the firm's marketing plans and business
strategy for developing a competitive advantage. From a marketing standpoint, a
job shop allows the firm to sell its capabilities, whereas flow-shop production
emphasizes the product itself. From a competitive advantage perspective, a job
shop helps a firm to follow a differentiation strategy, whereas a flow shop is
suited for a low cost strategy.
The process choice may depend on the stage of the product life cycle. In 1979
Robert H. Hayes and Steven C. Wheelwright put forth a product-process matrix
relating process selection to the product life cycle stage. For example, early
in a product's life cycle, a job shop may be most appropriate structure to
rapidly fill the early demand and adjust to changes in the design. When the
product reaches maturity, the high volumes may justify an assembly line, and in
the declining phase a batch process may be more appropriate as product volumes
fall and a variety of spare parts is required.
The optimal process also depends on the local economics. The cost of labour,
energy, equipment, and transportation all can impact the process selection.
A break-even analysis may be performed to assist in process selection. A
break-even chart relates cost to levels of demand in various processes and the
selection is made based on anticipated demand.
Order-winning / Order Qualifying (Hill)
Order qualifying in order to be able to compete in the
Order winning in order to win in the market place.
Also pre-qualifying criteria, such as reputation
(Brand), know how, expertise (particularly for Jobs and
Different customers will have different attributes for
the same product . flight simulators. Order winning
become order qualifying over time. Must NOT see order
qualifying as inferior ~ fundamental !
Also pre-qualifying criteria (intangibles), reputation,
brand, know how, expertise ~ hence, process choice and
dictate basis of competition and customers ie McDonald