Krajewski Om9 PPT 04

4
Analyzing Processes
PowerPoint Slides by Jeff Heyl

Copyright 2010 Pearson Education, Inc.
For Operations Management, 9e (Global Edition) by Krajewski/Ritzman/Malhotra 2010 Pearson Education
41
Process Analysis
Processes may be the least understood and managed aspect of a business A firm can not gain a competitive advantage with faulty processes Processes can be analyzed and improved using certain tools and techniques Process analysis can be accomplished using a six-step blueprint
42
A Systematic Approach
Define scope 2 Identify opportunity 1
Document process 3
Implement changes 6 Redesign process 5

Figure 4.1 Blueprint for Process Analysis
Evaluate performance 4
43
Documenting The Process

Three effective techniques for documenting and evaluating processes are
1) Flowcharts 2) Service blueprints 3) Process charts
They help you see how a process operates and how well it is performing Can help find performance gaps
44
Flowcharts
Marketing lead Sales: Initial conversation with client Sales lead Sales and/or consulting drafts proposal Follow-up conversation between client and sales
No
Is proposal complete? Yes Nested Process Client agreement and service delivery
Consulting lead
Consulting: Initial conversation with client
Consulting drafts proposal
Follow-up conversation between client and consulting
Line of visibility Follow-up by accounting, sales, or consulting Client billed by accounting, sales, or consulting Final invoice created by accounting, sales, or consulting
Yes
Approval by consulting? No
No
Payment received?
Yes
Finish
Figure 4.2 Flowchart of the Sales Process for a Consulting Company

45
Flowcharts
Is proposal complete?
Verbal OK from client
Form completed by sales or consulting
Project manager assigned
Final invoice created by accounting, sales, or consulting
Delivery of service by consulting
50% invoiced by accounting, sales, or consulting
Letter of agreement signed
Figure 4.3 Flowchart of the Nested Subprocess of Client Agreement and Service Delivery
46
Flowcharts
CUSTOMER Order generated 100% of credit checked within 24 hours
Two scheduling errors per quarter
Product and invoice received
Payment sent
Order
Payment
SALES
Order completed and submitted
Order cancelled Order cancellation
Order
FINANCE
Order received
New Yes customer?
Credit check OK? Yes
No
Payment received Invoice sent Notice of shipment Product packages
No Credit and invoicing
Invoice prepared
PRODUCTION
Production Control and Manufacturing
Order entered
Inventory adjusted
Production scheduled
Items manufactured
Order stopped
Packages assembled and inventoried Assembly and Shipping Order
Order picked
Order shipped
Figure 4.4 Flowchart of the Order-Filling Process Showing Handoffs Between Departments
47
Process Charts
An organized way to document all the activities performed by a person or group Activities are typically organized into five categories
Operation,
Transportation, Inspection, Delay,
Storage,
48
Process Charts
Step No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Time (min) 0.50 10.00 0.75 3.00 0.75 1.00 1.00 4.00 5.00 2.00 3.00 2.00 3.00 2.00 1.00 4.00 2.00 4.00 1.00 20.0 180.0 X X 60.0 X X X X 200.0 200.0 X X X X X 60.0 X X 40.0 X X 40.0 Distance (ft) 15.0 X X X
Step Description Enter emergency room, approach patient window Sit down and fill out patient history Nurse escorts patient to ER triage room Nurse inspects injury Return to waiting room Wait for available bed Go to ER bed Wait for doctor Doctor inspects injury and questions patient Nurse takes patient to radiology Technician x-rays patient Return to bed in ER Wait for doctor to return Doctor provides diagnosis and advice Return to emergency entrance area Check out Walk to pharmacy Pick up prescription Leave the building
Figure 4.5 Process Chart for Emergency Room Admission

49
Process Charts
Step No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Time (min) 0.50 10.00 0.75 3.00 0.75 1.00 1.00 4.00 5.00 2.00 3.00 2.00 3.00 2.00 1.00 4.00 2.00 4.00 1.00 20.0 180.0 X X 60.0 X X X X 200.0 200.0 X X X X X 60.0 X 40.0 X 40.0 Distance (ft) 15.0 X X X
Summary Step Description

Enter emergency room, approach patient window Sit down and fill out patient history
Activity Operation Transport Inspect X Delay

X
Number of Steps
Time (min)
Distance (ft)
Store
Nurse inspects injury 9 11.00 815 Return to waiting room 8.00 Wait for available2 bed Go to ER bed 3 8.00 Wait for doctor Doctor inspects injury and questions patient
5 23.00 Nurse escorts patient to ER triage room
Nurse takes patient to radiology Technician x-rays patient Return to bed in ER Wait for doctor to return Doctor provides diagnosis and advice Return to emergency entrance area Check out Walk to pharmacy Pick up prescription Leave the building
Figure 4.5 Process Chart for Emergency Room Admission

4 10
Process Charts
The annual cost of an entire process can be estimated It is the product of
1) Time in hours to perform the process each time
2) Variable costs per hour

3) Number of times the process is performed each year
Annual labor cost
Time to perform the process in hours
Variable costs per hour
Number of times process performed each year
4 11
Process Charts
If the average time to serve a customer is 4 hours The variable cost is $25 per hour And 40 customers are served per year
The total labor cost is

4 hrs/customer $25/hr 40 customers/yr = $4,000
4 12
Work Measurement Techniques

Used to estimate the average time each step in a process would take
1) Time study method 2) Elemental standard data approach 3) Predetermined data approach 4) Work sampling method
Learning curve analysis is appropriate for new products or processes
4 13
Time Study of Revised Process

EXAMPLE 4.1 A process at a watch assembly plant has been changed. The process is divided into three work elements. A time study has been performed with the following results. The time standard for process previously was 14.5 minutes. Based on the new time study, should the time standard be revised? SOLUTION The new time study had an initial sample of four observations, with the results shown in the following table. The performance rating factor (RF) is shown for each element, and the allowance for the whole process is 18 percent of the total normal time.
4 14
Time Study of Revised Process

Obs 1 Element 1 Element 2 Element 3 2.60 4.94 2.18 Obs 2 2.34 4.78 1.98 Obs 3 3.12 5.10 2.13 Obs 4 2.86 4.68 2.25 Average (min) 2.730 4.875 2.135 RF 1.0 1.1 0.9 Normal Time 2.730 5.363 1.922
Total Normal Time = 10.014
The normal time for an element in the table is its average time, multiplied by the RF. The total normal time for the whole process is the sum of the normal times for the three elements, or 10.01 minutes. To get the standard time (ST) for the process, just add in the allowance, or
ST = 10.014(1 + 0.18) = 11.82 minutes/watch
4 15
Work Sampling
Figure 4.6 Work Sampling Study of Admission Clerk at Health Clinic Using OM Explorer
4 16
Learning Curves
140,000 120,000 Labor Hours per Unit 100,000 80,000
60,000
40,000 20,000 0| 0
| | | | | |
20
40
60
80
100
120
Cumulative Units Produced
Figure 4.7 Learning Curve with 80% Learning Rate Using OM Explorer
4 17
Evaluating Performance
Chapter 5, Quality and Performance Customer satisfaction measures Error rate Rework or scrap rate Internal failure costs Chapter 6, Capacity Planning; Supplement C, Waiting Lines; Supplement H, Measuring Output Rates; Supplement I, Learning Curve Analysis Processing time Total time from start to finish (throughput time) Setup time Operating expenses Capacity utilization Average waiting time Average number of customers or jobs waiting in line
Figure 4.8 Metrics for Flowcharts, Process Charts, and Accompanying Tables
4 18
Evaluating Performance
Chapter 7, Constraint Management Cycle time Idle time Chapter 8, Lean Systems Setup time Average waiting time Total time from start to finish (throughput time)
Waste
Figure 4.8 Metrics for Flowcharts, Process Charts, and Accompanying Tables
4 19
Data Analysis Tools

Help identify causes of problems
1) Checklists
2) Histograms and bar charts

3) Pareto charts 4) Scatter diagrams 5) Cause-and-effect diagrams 6) Graphs
4 20
Pareto Chart for a Restaurant

EXAMPLE 4.2 The manager of a neighborhood restaurant is concerned about the smaller numbers of customers patronizing his eatery. Complaints have been rising, and he would like to find out what issues to address and present the findings in a way his employees can understand.
SOLUTION
The manager surveyed his customers over several weeks and collected the following data:
Complaint Discourteous server Slow service Cold dinner Frequency 12 42 5
Cramped table
Atmosphere
20
10
4 21

Figure 4.9 is a bar chart and Figure 4.10 is a Pareto chart, both created with OM Explorers Bar, Pareto, and Line Charts solver. They present the data in a way that shows which complaints are more prevalent (the vital few).
50 45 40 35 30 25 20 10 5 0
Failures
Discourteous server
Slow service
Cold dinner Failure Name
Cramped tables
Atmosphere
Figure 4.9 Bar Chart
4 22

(42 + 20) 100% = 69.7% 89
45 40 35 Failures 30 25 20 10 5 0 Slow service Cramped tables Discourteous server Atmosphere Cold dinner 0.0% 100.0% 80.0% 60.0% Percent of Total
4 23
40.0%
20.0%
Failure Name
Figure 4.10 Pareto Chart
Analysis of Flight Departure Delays

EXAMPLE 4.3 The operations manager for Checker Board Airlines at Port Columbus International Airport noticed an increase in the number of delayed flight departures. SOLUTION To analyze all the possible causes of that problem, the manager constructed a cause-and-effect diagram, shown in Figure 4.11. The main problem, delayed flight departures, is the head of the diagram. He brainstormed all possible causes with his staff, and together they identified several major categories: equipment, personnel, materials, procedures, and other factors that are beyond managerial control. Several suspected causes were identified for each major category.
4 24
Analysis of Flight Departure Delays

Equipment Other Weather Air traffic delays Unavailable cockpit crew Late cabin crew Delayed flight departures Late baggage to aircraft Late fuel Late food service Contractor not provided with updated schedule Materials Poor announcement of departures Weight/balance sheet late Delayed check-in procedure Aircraft late to gate Mechanical failures Personnel Passenger processing at gate Late cabin cleaners
Waiting for late passengers
Procedures
Figure 4.11 Cause-and-Effect Diagram for Flight Departure Delays

4 25
Data Analysis Tools

Tools can be used together for data snooping to analyze data and determine causes Simulation can show how a process changes over time
Process simulation is the act of reproducing the behavior of a process using a model that describes each step
4 26
Causes of Headliner Process Failures

EXAMPLE 4.4 The Wellington Fiber Board Company produces headliners, the fiberglass components that form the inner roof of passenger cars. Management wanted to identify which process failures were most prevalent and to find the cause. SOLUTION Step 1: A checklist of different types of process failures is constructed from last months production records. Step 2: A Pareto chart is prepared from the checklist data. Step 3: A cause-and-effect diagram for identifies several potential causes for the problem.
Step 4: The manager reorganizes the production reports into a bar chart according to shift because the personnel on the three shifts had varied amounts of experience.
4 27

SOLUTION Figure 4.12 shows the sequential application of several tools for improving quality
Number of Failures Step 2. Pareto Chart 50 100
30
60
Step 1. Checklist Defect type A. Tears in fabric B. Discolored fabric C. Broken fiber board D. Ragged edges Tally || || ||| |||| |||| |||| |||| |||| |||| |||| | | | || || Total Total 4 3 36 7 50
20
40
10
D A
20
B
0
0 Defect Failure
Figure 4.12 Application of the Tools for Improving Quality

4 28
Cumulative Percentage
40
80

SOLUTION
Number of Broken Fiber Boards Step 4. Bar Chart 20 15 10 5
Figure 4.12 shows the sequential application of several tools for improving quality
Step 3. Cause-and-Effect Diagram
Materials Out of specification Not available People Training Absenteeism Communication Broken fiber board
0 First Second Third Shift
Humidity Schedule change Other
Machine maintenance Machine speed Wrong setup
Process
Figure 4.12 Application of the Tools for Improving Quality

4 29
Redesigning the Process

After a process is documented, metrics are collected, and disconnects are identified, the process analyst determines what changes should be made People directly involved in the process are brought in to get their ideas and inputs
4 30
Generating Ideas
Ideas can be uncovered by asking six questions
1. What is being done? 2. When is it being done? 3. Who is doing it? 4. Where is it being done? 5. How is it being done? 6. How well does it do on the various metrics of importance?
4 31
Generating Ideas
Brainstorming involves a group of people knowledgeable about the process proposing ideas for change by saying whatever comes to mind After brainstorming the design team evaluates ideas and identifies those with the highest payoff
4 32
Generating Ideas
Benchmarking is a systematic procedure that measures a firms processes, services, and products against another firm Competitive benchmarking is based on comparisons with a direct competitor
Functional benchmarking compares areas with those of outstanding firms in any industry Internal benchmarking compares an organizational unit with superior performance with other units
4 33
Benchmarking
There are four basic steps
Step Step Step Step
1. Planning 2. Analysis
3. Integration
4. Action
Collecting data can be a challenge
Some corporations and government organizations have agreed to share data
4 34
Benchmarking
Customer Relationship Process Total cost of enter, process, and track orders per $1,000 revenue System costs of processes per $100,000 revenue Value of sales order line item not fulfilled due to stockout, as percentage of revenue Average time from sales order receipt until manufacturing logistics is notified Average time in direct contact with customer per sales order line item Order Fulfillment Process Value of plant shipments per employee Finished goods inventory turnover Reject rate as percentage of total orders processed Percentage of orders returned by customers due to quality problems Standard customer lead time from order entry to shipment Percentage of orders shipped on time
Figure 4.13 Illustrative Benchmarking Metrics by Type of Process

4 35
Benchmarking
New Service/Product Development Process
Percentage of sales due to services/products launched last year Cost of generate new services/products process per $1,000 revenue Ratio of projects entering the process to projects completing the process Time to market for existing service/product improvement project Time to market for new service/product project Time to profitability for existing service/product improvement project
Supplier Relationship Process Cost of select suppliers and develop/maintain contracts process per $1,000 revenue Number of employees per $1,000 of purchases Percentage of purchase orders approved electronically Average time to place a purchase order Total number of active vendors per $1,000 of purchases Percentage of value of purchased material that is supplier certified
4 36
Benchmarking
Customer Relationship Process Systems cost of finance function per $1,000 revenue Percentage of finance staff devoted to internal audit Total cost of payroll processes per $1,000 revenue Number of accepted jobs as percentage of job offers Total cost of source, recruit, and select process per $1,000 revenue Average employee turnover rate

4 37
Managing Processes
Failure to manage processes is failure to manage the business Seven common mistakes
1. Not connecting with strategic issues 2. Not involving the right people in the right way 3. Not giving the design teams and process analysts a clear charter and then holding them accountable
4 38
Managing Processes
Seven common mistakes
4. Not being satisfied unless fundamental reengineering changes are made 5. Not considering the impact on people 6. Not giving attention to implementation
7. Not creating an infrastructure for continuous process improvement
4 39
4 40
Solved Problem 1
SOLUTION
4 41
Solved Problem 1
SOLUTION
Figure 4.14 The Pareto Chart

4 42
Solved Problem 2
Create a flowchart for the following telephone-ordering process at a retail chain that specializes in selling books and music CDs. It provides an ordering system via the telephone to its time-sensitive customers besides its regular store sales. The automated system greets customers, asks them to choose a tone or pulse phone, and routes them accordingly. The system checks to see whether customers have an existing account. They can wait for the service representative to open a new account. Customers choose between order options and are routed accordingly. Customers can cancel the order. Finally, the system asks whether the customer has additional requests; if not, the process terminates.
4 43
Solved Problem 2
SOLUTION
4 44
Solved Problem 2
SOLUTION
4 45
Solved Problem 3
An automobile service is having difficulty providing oil changes in the 29 minutes or less mentioned in its advertising. You are to analyze the process of changing automobile engine oil. The subject of the study is the service mechanic. The process begins when the mechanic directs the customers arrival and ends when the customer pays for the services. SOLUTION Figure 4.15 shows the completed process chart. The process is broken into 21 steps. A summary of the times and distances traveled is shown in the upper right-hand corner of the process chart. The times add up to 28 minutes, which does not allow much room for error if the 29-minute guarantee is to be met and the mechanic travels a total of 420 feet.
4 46
Solved Problem 3
Step No. 1 2 3 Time (min) 0.80 1.80 2.30 Distance (ft) 50.0 X X
Step Description
Summary
Direct customer into service bay
Number Time Activity Record name and desired service of Steps (min) 7 Operation to customer in waiting area 16.50 Walk
Recommend additional8 services Transport X
Distance (ft)
Open hood, verify engine type, inspect hoses, check fluids
4
5 6 7 8 9
0.80
0.60 0.70 0.90 1.90 0.40
0.30
X
5.50 5.00 0.70 0.30
420
70.0 X
Inspect Walk to storeroom Delay
Wait for customer decision
10
11 12 13 14 15
0.60
4.20 0.70 2.70 1.30 0.50
50.0
X 40.0 X
Store
1 Carry filter(s) to service pit

Look up filter number(s) 1 Check filter number(s) Perform under-car services Climb from pit, walk to automobile Fill engine with oil, start engine
X 40.0 X
Inspect for leaks Walk to pit
16
17 18 19 20 21
1.00
3.00 0.70 0.30 0.50 2.30 60.0 X X 80.0 X X
Inspect for leaks

Clean and organize work area Return to auto, drive from bay X Park the car Walk to customer waiting area Total charges, receive payment
4 47
Figure 4.15 Process Chart for Changing Engine Oil

Solved Problem 4
What improvement can you make in the process shown in Figure 4.14? SOLUTION Your analysis should verify the following three ideas for improvement. You may also be able to come up with others.
a. Move Step 17 to Step 21. Customers should not have to wait while the mechanic cleans the work area.
b. Store small inventories of frequently used filters in the pit. Steps 7 and 10 involve travel to the storeroom. c. Use two mechanics. Steps 10, 12, 15, and 17 involve running up and down the steps to the pit. Much of this travel could be eliminated.
4 48
4 49

Krajewski Om9 PPT 04

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Krajewski Om9 PPT 04

Uploaded by

Copyright:

Available Formats

4

PowerPoint Slides by Jeff Heyl

For Operations Management, 9e (Global Edition) by Krajewski/Ritzman/Malhotra 2010 Pearson Education

Copyright 2010 Pearson Education, Inc.

Implement changes 6 Redesign process 5

Documenting The Process

Copyright 2010 Pearson Education, Inc.

Consulting: Initial conversation with client

Consulting drafts proposal

Follow-up conversation between client and consulting

Figure 4.2 Flowchart of the Sales Process for a Consulting Company

Verbal OK from client

Form completed by sales or consulting

Project manager assigned

Final invoice created by accounting, sales, or consulting

Delivery of service by consulting

50% invoiced by accounting, sales, or consulting

Letter of agreement signed

Two scheduling errors per quarter

Product and invoice received

Order completed and submitted

Order cancelled Order cancellation

New Yes customer?

Credit check OK? Yes

Payment received Invoice sent Notice of shipment Product packages

No Credit and invoicing

Production Control and Manufacturing

Packages assembled and inventoried Assembly and Shipping Order

Transportation, Inspection, Delay,

Copyright 2010 Pearson Education, Inc.

Figure 4.5 Process Chart for Emergency Room Admission

Summary Step Description

Activity Operation Transport Inspect X Delay

Figure 4.5 Process Chart for Emergency Room Admission

2) Variable costs per hour

Time to perform the process in hours

Variable costs per hour

Number of times process performed each year

Copyright 2010 Pearson Education, Inc.

The total labor cost is

Copyright 2010 Pearson Education, Inc.

Work Measurement Techniques

Learning curve analysis is appropriate for new products or processes

Copyright 2010 Pearson Education, Inc.

Time Study of Revised Process

Copyright 2010 Pearson Education, Inc.

Time Study of Revised Process

Total Normal Time = 10.014

ST = 10.014(1 + 0.18) = 11.82 minutes/watch

Copyright 2010 Pearson Education, Inc.

140,000 120,000 Labor Hours per Unit 100,000 80,000

Cumulative Units Produced

Copyright 2010 Pearson Education, Inc.

Data Analysis Tools

2) Histograms and bar charts

Copyright 2010 Pearson Education, Inc.

Pareto Chart for a Restaurant

Pareto Chart for a Restaurant

Cold dinner Failure Name

Figure 4.9 Bar Chart

Copyright 2010 Pearson Education, Inc.

Pareto Chart for a Restaurant