Process and Location Strategy
Modular Learning Objectives
By the end of this module, the student shall be able to satisfy the following outcomes expectations:
Identify the four process strategies.
Discuss the factors that affect location decisions.
A process strategy is an organization's approach to transform resources into goods and services. The objective of a process strategy is to find a way to produce goods and services that meet customer requirements and product specifications within cost and other managerial constraints. The process selected will have a long-term effect on efficiency and flexibility of production, as well as on cost and quality of goods produced. Therefore, much of a firm's strategy is determined at the time of this process decision.
Location has a major impact on the overall risk and profit of the company. For instance, depending on the product and type of production or service taking place, transportation cost alone can total as much as 25% of the product's selling price. That is, one-fourth of a firm's total revenue may be needed just to cover freight expenses of the raw materials coming in and finished products going tout. Other cost that may be influenced by location include taxes, wages, raw material costs and rents.
Module 2 - Case
Process and Location Strategy
The Arnold Palmer Hospital (APH) in Orlando, Florida, is one of the busiest and most respected hospitals for the medical treatment of children and women in the U.S. Since its opening on golfing legend Arnold Palmer's birthday September 10, 1989, more than 1.5 million children and women have passed through its doors. It is the fourth busiest labor and delivery hospital in the U.S. and the largest neonatal intensive care unit in the Southeast. And APH ranks fifth out of 5,000 hospitals nationwide in patient satisfaction.
Part of the reason for APH's success, says Executive Director Kathy Swanson, is our continuous improvement process. Our goal is 100% patient satisfaction. But getting there means constantly examining and reexamining everything we do, from patient flow, to cleanliness, to layout space, to colors on the walls, to speed of medication delivery from the pharmacy to a patient. Continuous improvement is a huge and never-ending task.
One of the tools the hospital uses consistently is the process flowchart. Staffer Diane Bowles, who carries the Clinical Practice Improvement Consultant, charts scores of processes. Bowles's flowcharts help study ways to improve the turnaround of a vacated room (especially important in a hospital that has operated at 130% of capacity for years), speed up the admission process, and deliver warm meals warm.
Lately, APH has been examining the flow of maternity patients (and their paperwork) from the moment they enter the hospital until they are discharged, hopefully with their healthy baby a day or two later. The flow of maternity patients follows these steps:
1. Enter APH's Labor & Delivery check-in desk entrance.
2. If the baby is born en route or if birth is imminent, the mother and baby are taken by elevator and registered and admitted directly at bedside. They are then taken to a Labor & Delivery Triage room on the 8th floor for an exam. If there are no complications, the mother and baby go to step 6.
3. If the baby is not yet born, the front desk asks if the mother is preregistered. (Most do preregister at the 28?30-week pregnancy mark). If she is not, she goes to the registration office on the first floor.
4. The pregnant woman is taken to Labor & Delivery Triage on the 8th floor for assessment. If she is ready to deliver, she is taken to a Labor & Delivery (L&D) room on the 2nd floor until the baby is born. If she is not ready, she goes to step 5.
5. Pregnant women not ready to deliver (i.e., no contractions or false alarm) are either sent home to return on a later date and reenter the system at that time, or if contractions are not yet close