2process Analysis

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Chapter 2

Process ²

Selection and Design

What is a TransformationProcess?

Defined

A transformation process is definedas a user of resources to transforminputs into some desired outputs

Transformations

Physical--manufacturing

Locational--transportation

Exchange--retailing

Storage--warehousing

Physiological--health care

Informational--telecommunications

Process Analysis

Process Flowcharting

Types of Processes

Process Performance Metrics

OBJECTIVES

Process Analysis Terms

Process: Is any part of an organizationthat takes inputs and transforms them

into outputs

Cycle Time: Is the average successivetime between completions of successive units

Utilization: Is the ratio of the time that aresource is actually activated relative tothe time that it is available for use

Process Flowcharting

Defined Process flowcharting is the use of a

diagram to present the major elements

of a process

The basic elements can include tasks or operations, flows of materials or customers, decision points, and storageareas or queues

It is an ideal methodology by which tobegin analyzing a process

Flowchart Symbols

Tasks or operations Examples: Giving an

admission ticket to a

customer, installing a

engine in a car, etc.

Decision Points Examples: How much

change should be

given to a customer,

which wrench shouldbe used, etc.

Purpose and Examples

Examples: Sheds,

lines of people waiting

for a service, etc.

Examples: Customers

moving to a seat,

mechanic getting a

tool, etc.

Storage areas or

queues

Flows of

materials or

customers

Purpose and Examples

Flowchart Symbols

Example: Flowchart of Student

Going to School

school

today?

Walk to

Drive to

school

Types of Processes

Single-stage Process

Stage 1

Stage 1 Stage 2 Stage 3

Multi-stage Process

Types of Processes (Continued)

Stage 1 Stage 2Buffer

Multi-stage Process with Buffer

A buffer refers to a storage area betweenstages where the output of a stage is placedprior to being used in a downstream stage

Other Process Terminology

(Continued) Bottleneck

± Occurs when the limited capacity of aprocess causes work to pile up or becomeunevenly distributed in the flow of a

process ± If an employee works too slow in a multi-

stage process, work will begin to pile up infront of that employee. In this is case theemployee represents the limited capacitycausing the bottleneck.

Pacing ± Refers to the fixed timing of the movement

of items through the process

Other Types of Processes

Make-to-order

± Only activated in response to an actual order

± Both work-in-process and finished goods

inventory kept to a minimum

Make-to-stock

± Process activated to meet expected or forecast demand

± Customer orders are served from targetstocking level

Operation time = Setup time + Runtime

Throughput time = Average time for aunit to

move through thesystem

Velocity = Throughput time

Value-added time

(Continued)

Cycle time = Average time betweencompletion of units

Throughput rate = 1 .

Cycle time

Efficiency = Actual output

Standard Output

Cycle Time Example

Suppose you had to produce 600 units in 80hours to meet the demand requirements of aproduct. What is the cycle time to meet this

demand requirement?

Answer: There are 4,800 minutes (60minutes/hour x 80 hours) in 80 hours. So the

average time between completions would haveto be: Cycle time = 4,800/600 units = 8 minutes.

Process Throughput Time

Reduction

Perform activities in parallel

Change the sequence of activities

Reduce interruptions

Manufacturing andProcess SelectionDesign

Types of Processes

Conversion (ex. Iron to steel)

Fabrication (ex. Cloth to clothes)

Assembly (ex. Parts tocomponents)

Testing (ex. For quality of products)

Fabrication process

Assembly process

Process Flow Structures

Job shop (ex. Copy center making a singlecopy of a student term paper)

Batch shop (ex. Copy center making 10,000copies of an ad piece for a business)

Assembly Line (ex. Automobile manufacturer)

Continuous Flow (ex. Petroleummanufacturer)

Continuous

AssemblyLine

LowVolume,

One of a

MultipleProducts,

Volume

Major Products,

Higher

Volume

Volume,High

Standard-

izationCommercial

Printer

FrenchRestaurant

Equipment

AutomobileAssembly

Burger King

Refinery

Flexibility (High)

Unit Cost (High)

Flexibility (Low)

Unit Cost (Low)

Exhibit

These are

the major

stages of

product

processlife cycles

Break-Even Analysis A standard approach to choosing

among alternative processes or equipment

Model seeks to determine the point inunits produced (and sold) where we willstart making profit on the process or equipment

Model seeks to determine the point inunits produced (and sold) where totalrevenue and total cost are equal

Break-Even Analysis (Continued)

This formula can be used to find any of its

components algebraically if the other parameters are known

Break-even Demand=

Purchase cost of process or equipment

Price per unit - Cost per unit

Total fixed costs of process or equipmentUnit price to customer - Variable costs per unit

Break-Even Analysis (Continued)

Example: Suppose you want to purchase a newcomputer that will cost $5,000. It will be used toprocess written orders from customers who will pay$25 each for the service. The cost of labor, electricityand the form used to place the order is $5 per

customer. How many customers will we need to serveto permit the total revenue to break-even with our costs?

Break-even Demand:

= Total fixed costs of process or equip.Unit price to customer ± Variable costs

=5,000/(25-5)

=250 customers

Manufacturing Process Flow Design

A process flow design can be defined asa mapping of the specific processes thatraw materials, parts, and subassembliesfollow as they move through a plant

The most common tools to conduct a

process flow design include assemblydrawings, assembly charts, andoperation and route sheets

Example: Assembly Chart (Gozinto)

A-2SA-2

Lockring

Spacer, detent spring

Rivets (2)

Spring-detent

A-5Component/Assy Operation

Inspection

From Exhibit 5.14

Ser vice Process

Selection and Design

Chapter 2

The Nature of Services

Service Strategy: Focus &A

dvantage Service-System Design Matrix

Service Blueprinting

Service Fail-safing Characteristics of a Well-Designed

Service Delivery System

OBJECTIVES

The Nature of Ser vices

1. Everyone is an expert on services

2. Services are idiosyncratic

3. Quality of work is not quality of service

4. Most services contain a mix of tangible and intangible attributes

Ser vice Generalizations

(Continued)5. High-contact services are experienced,

whereas goods are consumed

6. Effective management of servicesrequires an understanding of marketing and personnel, as well asoperations

7. Services often take the form of cyclesof encounters involving face-to-face,phone, Internet, electromechanical,and/or mail interactions

Ser vice Businesses

Facilities-based services: Where the customer must go to the service facility

Field-based services: Where the productionand consumption of the service takes place inthe customer¶s environment

A service business is the management of organizations whose primary businessrequires interaction with the customer toproduce the service

Internal

Ser vices

Defined

Internal Supplier

Internal

Customer External

Customer

Internal services is the

management of servicesrequired to support the

activities of the larger

organization. Services

including data processing,

accounting, etc

The Customer Centered View

Exhibit 7.1

Customer

The Service

Strategy

People

Systems

A philosophical view that

suggests the organization

exists to serve the

customer, and thesystems and the

employees exist to

facilitate the process of

service.

Ser vice Strategy: Focus and

AdvantagePerformance Priorities

Treatment of the customer

Speed and convenience of service delivery Price

Variety

Quality of the tangible goods

Unique skills that constitute the serviceoffering

Ser vice-System Design Matrix

Exhibit 7.6

Mail contact

Face-to-face

loose specs

Face-to-face

tight specsPhone

Contact

Face-to-face

totalcustomization

Buffered

core (none)

Permeable

system (some)

Reactive

system (much)

LowHigh

Degree of customer/server contact

Internet &

on-site

technology

Opportunity

Production

Efficiency

Example of Ser vice Blueprinting

polish

uollect

payment

shoes aterials

(e.g., polish, cloth)

elect and

purchase

supplies

tandard

execution time

2 minutes

Total acceptable

execution time

5 minutes

color ax

een by

customer 45

visibility

Not seen by

customer but

necessary to

per ormance

Ser vice Fail-safing

Poka-Yokes (A Proactive Approach) Keeping a

mistake from

becoming aservice defect

How can wefail-safe thethree Ts?

TangiblesTreatment

Information enhancement

R ely on gettinginformation to

where it can be

used to prevent

a mistake

Have we

compromisedone of the

1. Task

2. Treatment

3. Tangible

Basic functions

States of Defect Function

Defects

About to occur

(Prediction)

Occurred

(Detection)

Shut down

Control

Warning

Poka-Yoke

Three Contrasting Ser vice Designs

The production line approach (ex.McDonald¶s)

The self-service approach (ex. automaticteller machines)

The personal attention approach (ex.Ritz-Carlton Hotel Company)

Characteristics of a Well-

Designed Ser vice System

1. Each element of the service systemis consistent with the operating f ocus of the firm

2. It is user-friendly

3. It is r obust

4. It is structured so that consi stent perf ormanc e by its people andsystems is easily maintained

E l P i

Ex ample - Processing errors

Before Improvement:

It was possible to insert the chassis inthe jig backwards. Correct operation

depended on the workers vigilance.

After Improvement:

A guide pin was added, keyed to an

asymmetrical feature to the chassis.

This completely eliminates the danger

of backwards processing.

E l O itt d P i

Ex ample - Omitted Processing

Before Improvement:

The operator counted the holes as they

were drilled. However, the operator

sometimes made errors, and the

products with the wrong number of

holes were produced.After Improvement:

A counter was mounted on the drill press to

detect each hole as it is drilled. Along withthis, a limit switch was mounted on the jig to

detect when a part was removed before the

proper number of holes was drilled.

Characteristics of a Well-

Designed Ser vice System

(Continued)5. It provides effective link s between the

back office and the front office so that

nothing falls between the cracks

6. It manages the evidenc e of servicequality in such a way that customers

see the value of the service provided

7. It is cost-effec tive

Applying Behavioral Science to

Ser vice Encounters

1. The front-end and back-end of theencounter are not created equal

2. Segment the pleasure, combine the pain

3. Let the customer control the process

4. Pay attention to norms and rituals

5. People are easier to blame than systems

6. Let the punishment fit the crime inservice recovery

Learning Cur ves

Underlying Principles of Learning

Cur ves

1. Each time you perform a task ittakes less time than the last timeyou performed the same task

2. The extent of task time decreasesover time

3. The reduction in time will follow a

predictable pattern

Drilling

Example of a Learning Cur ve

Suppose you start aterm paper typingbusiness. You timeyourself on the first

paper, then the second,and so on.

Time (in

Minutes)

Note that only 90 of 100 minutes are used

in the secondrepetition. This is anexample of a 90%learning curve.

61Learning

Learning

Plotting the

Learning

Cur ve

All learning curves have this

downward sloping curve.

% Learning urve

P r o d u c t i o n

i m e ( M i n u t e s )

Types of Learning

I ndivid u al Learning

Improvement when individuals gain askill or efficiency by repetition of a job

O rganizati onal Learning

Improvement from the groups of individuals from repetition and changes

in administration, equipment, andproduct design

From Learning Cur ves to Performance

Improvement (Part 1)

Proper selection of workers

Proper training

Motivation

Work specialization

Do one or very few jobs at a time

From Learning Cur ves to

Performance Improvement (Part 2)

Use tools or equipment that

assists or supports performance

Provide quick and easy access for

Allow workers to help redesign

their tasks

Question Bowl

Learning improvement that takes place whenpeople repeat a process and gain skill or efficiency from their own experience can becharacterized by which of following terms?

rganizational learningb. Individual learning

c. Knowledge learning

d. All of the above

e. None of the aboveAnswer:

b. Individual learning

Question Bowl

The first time a student types up a 15 page termpaper it takes 40 minutes. The second time

the student types up a term paper it only

takes 36 minutes. What ³unit improvement

factor´ learning curve should be used in thisexample?

a. 95%

b. 0.4564

90%d. 88%

e. None of the above

Answer:c. 90% (36/40)

Question Bowl

Use the ³Unit Improvement Factor´ table for this

problem. If it takes 1 hour to complete the 1st

repetition a job and a 75% learning curve

applies to this situation, what is the expected

time of the 40th

repetition of this job?a. 0.2163

b. 20 minutes

c. 12.978 minutes

d. 40 minutese. None of the above

Answer:

.978 minutes(0.2163x60 minutes)

Question Bowl

Use the ³Unit Improvement Factor´ table for this problem. If it takes 20 minutes to perform

a brake job on an automobile the 1st time and

a 95% learning curve applies to this situation,

what is the expected time of the 100th

repetition of this job?

a. 15.533 minutes

b. 14.224 minutes

c. 13.978 minutesd. 10 minutes

e. None of the above

nswer:b. 14.224 minutes

(0.7112x20 minutes)

2process Analysis

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