Process Strategy

Process strategy involves four basic process decisions that help manage processes so that competitive priorities are achieved. These four process decisions include (1) process structure, (2) customer involvement, (3) resource flexibility, and (4) capital intensity. Having successful process decisions is essential to a process strategy. Process decisions should be chosen to fit a situation while making sense together. One process should not be diminished so that the other is optimized. They should work together to form an effective strategic fit.  

Process Structure

Process structure is the decision of what kind of resources are needed, how these resources are distributed, and what their characteristics are. Process structure also involves the layout which is the physical arrangement of operations.

Process structure is different whether a service is being provided or a product is being manufactured. Scarlet Knight Liquors provides a service to its customers. Its service being, stocking a variety of beer, liquor, and wine so that customers can come in and buy what they want. Having a good strategy in service process depends on the type and amount of customer contact involved. This brings us to the customer-contact matrix that involves three options, a front office, hybrid office, or back office. These three options describe the measure of a business’s customer contact, process divergence, and flexible flow. Scarlet Knight Liquors functions as a hybrid office. A hybrid office involves some interaction with customers and contains standard services with some options. It also has flexible flows with some dominant paths, with some exceptions as to how work is performed.  

Customer Involvement

Customer involvement is the second major decision in developing a process strategy. This decision reflects how a customer becomes part of a process and the extent of their participation. Scarlet Knight Liquors has high customer involvement. Scarlet Knight Liquors use a self-service approach. Customers come into the store and pick up whatever they want. Occasionally a customer may ask for help locating specific items or for recommendations.  

Resource Flexibility

Resource Flexibility is the ability for employees and equipment to handle a wide array of duties, functions, output levels, and products. Scarlet Knight Liquors has a flexible workforce because employees are expected to be able to do several different tasks at their workstation or another.

Capital Intensity

Capital Intensity is the mix of equipment and human skills in the process. The more equipment used the higher the capital intensity. If more human skill is used the lower the capital intensity. Since Scarlet Knight Liquors provides a service it has low capital intensity. Currently technology in the service process cannot deliver the degree of customization and variety humans provide.