INTRODUCTION

to
Operations Management
Chapter 6, Process-Flow Analysis

5e, Schroeder
McGraw-Hill/Irwin Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
 Outline of Chapter 6
Process Thinking
The Process View of Business
Measuring Process Flows
Measuring Process Flows at Pizza U.S.A.
Process Flowcharting
Process-Flow Analysis as Asking Questions
Business Process Reengineering (BPR)

6-2
 Process Thinking
Process Thinking: all work can be seen as a process
Definition of a system
Whole > sum of parts
Application of systems thinking to businesses
Defining system boundaries
Role of cross-functional teams in systems analysis
Systems thinking requires cross-functional teams
to include all affected functions

6-3
Figure 6.1: Process View of Business

6-4
 Measuring Process Flows
Littles Law
Relates number of items in the system to arrival
rate and length of time in the system
Formula:
I=TxR
I = average number of things in the system
T = average throughput time
R = average flow rate into the process
Assumes system is in a steady state

6-5
 Applications of Littles Law

Manufacturing
Waiting lines
Invoice processing
Legal office transactions
Accounts receivable processing
Etc.

6-6
 Measuring Process Flows
Capacity of a system = capacity of the most
constraining resource
This resource is called a bottleneck.

The flow rate of a process is the minimum of:

Supply
Demand
Capacity

6-7
 Process Flowcharting
Process Flowcharting: creation of a visual diagram to
describe a transformation process
Also known as:
Process mapping
Flow-process charting
Service blueprinting
Value stream mapping

6-8
 Process Flowcharting
Purpose: to describe a process visually to find ways
of improving the current process.
Find repetitive operations
Identify bottlenecks
Describe directions and distances of flows (people, material
and information)
Reduce waste

Required for certifications such as ISO9000

6-9
Process Flow Analysis Might Change:
Raw materials
Product (output) design
Job design
Processing steps used
Management control information
Equipment or tools
Suppliers
i.e. Anything but customers may be changed!!

6-10
Steps in process flowchart analysis
using the systems approach
1. Select a process to study
2. Form a team to analyze & improve the system
3. Specify the boundaries of the transformation
process
4. Identify and sequence the operational steps
5. Identify the performance metrics
6. Draw the flowchart

6-11
Symbols for Flow-Process Chart
Operation (a task or work activity)

Inspection (an inspection of the product for

quantity or quality)

Transportation (a movement of material from

one point to another)

Storage (an inventory or storage of materials

awaiting the next operation)

Delay (a delay in the sequence of operations)

6-12
6-13
Questions to Ask in Process-
Flow Analysis & Improvement
What does the customer need? What operations are necessary? Can some
operations be eliminated, combined, or simplified?

Who is performing the job? Can the operation be redesigned to use less skill or
less labor? Can operations be combined to enrich jobs?

Where is each operation conducted? Can layout be improved?

When is each operation performed? Is there excessive delay or storage? Are
some operations creating bottlenecks?

How is the operation done? Can better methods, procedures, or equipment be

used?

6-14
Questions to Ask in Process-
Flow Analysis & Improvement
Flow Balanced? Where is the bottleneck? Are all steps necessary? How
jumbled is the flow?

Time How long to produce one unit? Can it be reduced? Cycle time? Excessive
set-up time? Excessive waiting time?

Quantity Theoretical production amount? How easy to change? How many

units actually produced?

Quality Historical defect rate? Which step contributes to defect rate? Where do
errors occur?

Cost Cost to produce one unit? What are cost buckets for one unit? Can some of
the buckets be reduced or eliminated?

6-15
Business Process Reengineering
(BPR)
BPR defined (Hammer and Champy,
1993)
BPR Philosophy
Principles of BPR
Success of BPR
6-16
 BPR Defined
BPR is the fundamental rethinking
and radical redesign of business [or
organizational] processes to achieve
dramatic improvements in critical,
contemporary measures of
performance, such as cost, quality,
service and speed.

6-17
 BPR Defined
This is in contrast to incremental
change or continuous improvement of
an existing process.
If I were recreating this company
today, given what I know and given
current technology, what would it look
like?

6-18
 BPR Philosophy
Does the reengineering consultant see the
glass as half full or half empty?

Neither.
Its the wrong size of glass!
Or, should it be a glass? or a liquid?
6-19
 Principles of BPR
Organize around outcomes, not tasks
Have the people who do the work process their
own information
Put the decision point where work is
performed, and build control into the process
Eliminate unnecessary steps in the process

6-20
 The Success of BPR
According to Hammer & Champy, 50-70% of
organizations attempting BPR do not achieve
the results they expected. Why?
Because they make one or more of the 17
common mistakes (see next 2 slides):

6-21
 BPR Mistakes
Trying to fix a process instead of changing it
Not focusing on business processes
Focusing only on the process redesign
Neglecting peoples values & beliefs
Settling for minor results
Quitting too early
Constraining the scope of the problem & effort
Letting corporate culture & mgmt attitudes get in the way
Trying to reengineer from the bottom up

6-22
 BPR Mistakes (cont.)
Assigning a leader who doesnt understand BPR
Skimping on the resources
Not making BPR a top corporate priority
Trying to do too much at once & dissipating resources
Concentrating only on design & not implementation
Trying to keep everyone happy
Pulling back if people resist
Dragging out the effort & taking too long

Source: Hammer & Champy, Reengineering the Corporation, chapter 14.

6-23
 Summary
Process Thinking
The Process View of Business
Measuring Process Flows
Measuring Process Flows at Pizza U.S.A.
Process Flowcharting
Process-Flow Analysis as Asking Questions
Business Process Reengineering (BPR)

6-24
End of Chapter Six

6-25