Krajewski Om9 Ppt 04

4 – 1Copyright © 2010 Pearson Education, Inc.

Analyzing ProcessesAnalyzing Processes4

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

PowerPoint Slides PowerPoint Slides by Jeff Heylby Jeff Heyl


Process AnalysisProcess 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


A Systematic ApproachA Systematic Approach

Figure 4.1 – Blueprint for Process Analysis

Define scope

2

Identify opportunity

1

Implement changes

6

Evaluate performance

4

Redesign process

5

Document process

3


Documenting The ProcessDocumenting 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


FlowchartsFlowcharts

No

Yes

No Yes

No

Yes

Line of visibility

Finish

Figure 4.2 – Flowchart of the Sales Process for a Consulting Company

Payment received?

Client billed by accounting,

sales, or consulting

Follow-up by accounting,


Approvalby

consulting?

Final invoice created by

accounting, sales, or consulting

Nested Process Client agreement

and service delivery

Is proposal

complete?

Follow-up conversation

between client and sales

Sales and/or consulting

drafts proposal

Sales: Initial conversation

with client

Marketing lead

Follow-up conversation

between client and consulting

Consulting drafts

proposal

Consulting: Initial

conversation with client

Consulting lead

Sales lead



Final invoice created by

accounting, sales, or consulting

Delivery of service by consulting

50% invoiced by accounting,


Letter of agreement

signed

Project manager assigned

Form completed by

sales or consulting

Verbal OK from client

Is proposal

complete?

Figure 4.3 – Flowchart of the Nested Subprocess of Client Agreement and Service Delivery


Credit and invoicing

Production Control and Manufacturing

Assembly and Shipping

PR

OD

UC

TIO

NF

INA

NC

ES

AL

ES

CU

ST

OM

ER


No

Yes No

Yes

Payment received

Paym

ent

Order stopped

Ord

er cancellatio

nOrder

cancelled

Payment sent

Pro

du

ct packag

esProduct

and invoice received

100% of credit

checked within 24 hours

Two scheduling errors per

quarter

Invoice sent

No

tice of sh

ipm

ent

Order shipped

Order pickedOrder

Packages assembled and

inventoried

`Items manufactured

Production scheduled

Inventory adjusted

Invoice prepared

Credit check OK?

New customer?

Order received

Ord

er

Order entered

Order completed

and submitted

Ord

er

Order generated

Figure 4.4 – Flowchart of the Order-Filling Process Showing Handoffs Between Departments


Process ChartsProcess 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,


Step No.

Time (min)

Distance (ft) Step Description

1 X

2 X

3 X

4 X

5 X

6 X

7 X

8 X

9 X

10 X

11 X

12 X

13 X

14 X

15 X

16 X

17 X

18 X

19 X

0.50 15.0

10.00

0.75 40.0

3.00

0.75 40.0

1.00

1.00 60.0

4.00

5.00

2.00 200.0

3.00

2.00 200.0

3.00

2.00

1.00 60.0

4.00

2.00 180.0

4.00

1.00 20.0


Figure 4.5 – Process Chart for Emergency Room Admission

Sit down and fill out patient history

Enter emergency room, approach patient window

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


Step No.

Time (min)


1 X

2 X

3 X

4 X

5 X

6 X

7 X

8 X

9 X

10 X

11 X

12 X

13 X

14 X

15 X

16 X

17 X

18 X

19 X

0.50 15.0

10.00

0.75 40.0

3.00

0.75 40.0

1.00

1.00 60.0

4.00

5.00

2.00 200.0

3.00

2.00 200.0

3.00

2.00

1.00 60.0

4.00

2.00 180.0

4.00

1.00 20.0


Figure 4.5 – Process Chart for Emergency Room Admission

Sit down and fill out patient history

Enter emergency room, approach patient window

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

Summary

Activity Number of Steps

Time (min)

Distance (ft)

Operation 5 23.00

Transport 9 11.00 815

Inspect 2 8.00

Delay 3 8.00

Store ― ―



The annual cost of an entire process can be estimated

It is the product of1) 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 performthe process in hours

Variable costsper hour

Number of times processperformed each year=



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


Work Measurement TechniquesWork 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


Time Study of Revised ProcessTime 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.


Time Study of Revised ProcessTime Study of Revised Process

Obs 1 Obs 2 Obs 3 Obs 4 Average (min) RF Normal

Time

Element 1 2.60 2.34 3.12 2.86 2.730 1.0 2.730

Element 2 4.94 4.78 5.10 4.68 4.875 1.1 5.363

Element 3 2.18 1.98 2.13 2.25 2.135 0.9 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


Work SamplingWork Sampling

Figure 4.6 – Work Sampling Study of Admission Clerk at Health Clinic Using OM Explorer


Learning CurvesLearning Curves

140,000

120,000 –

100,000 –

80,000 –

60,000 –

40,000 –

20,000 –

0

Lab

or

Ho

urs

per

Un

it

Cumulative Units Produced

| | | | | | |

0 20 40 60 80 100 120

Figure 4.7 – Learning Curve with 80% Learning Rate Using OM Explorer


Evaluating PerformanceEvaluating Performance

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

Chapter 5, Quality and Performance

Customer satisfaction measures

Error rate

Rework or scrap rate

Internal failure costs

Figure 4.8 – Metrics for Flowcharts, Process Charts, and Accompanying Tables


Evaluating PerformanceEvaluating Performance

Chapter 8, Lean Systems

Setup time

Average waiting time

Total time from start to finish (throughput time)

Waste

Chapter 7, Constraint Management

Cycle time

Idle time

Figure 4.8 – Metrics for Flowcharts, Process Charts, and Accompanying Tables


Data Analysis ToolsData Analysis Tools

Help identify causes of problems1) Checklists

2) Histograms and bar charts

3) Pareto charts

4) Scatter diagrams

5) Cause-and-effect diagrams

6) Graphs


Pareto Chart for a RestaurantPareto 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 Frequency

Discourteous server 12

Slow service 42

Cold dinner 5

Cramped table 20

Atmosphere 10



50 –45 –40 –35 –30 –25 –20 –10 –5 –0 –

Fa

ilu

res

Discourteous server

Slow service

Cold dinner

Cramped tables

Atmosphere

Failure Name

Figure 4.9 – Bar Chart

Figure 4.9 is a bar chart and Figure 4.10 is a Pareto chart, both created with OM Explorer’s Bar, Pareto, and Line Charts solver. They present the data in a way that shows which complaints are more prevalent (the vital few).



Figure 4.10 – Pareto Chart

100% = 69.7%(42 + 20)

89

– 100.0%

– 80.0%

– 60.0%

– 40.0%

– 20.0%

– 0.0%

45 –

40 –

35 –

30 –

25 –

20 –

10 –

5 –

0 –

Fa

ilu

res

Discourteous server

Slow service

Cold dinner

Cramped tables

Atmosphere

Failure Name

Pe

rce

nt

of

To

tal


Analysis of Flight Departure DelaysAnalysis 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.


Analysis of Flight Departure DelaysAnalysis of Flight Departure Delays

Delayed flight departures

Weather

Air traffic delays

Other Aircraft late to gate

Mechanical failures

Equipment

Passenger processing at gate

Late cabin cleaners

Unavailable cockpit crew

Late cabin crew

Personnel

Poor announcement of departures

Weight/balance sheet late

Delayed check-in procedure

Waiting for late passengers

Procedures

Late baggage to aircraft

Late fuel

Late food service

Contractor not provided with updated schedule

Materials

Figure 4.11 – Cause-and-Effect Diagram for Flight Departure Delays


Data Analysis ToolsData 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


Causes of Headliner Process FailuresCauses 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 month’s 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.



Defect type Tally Total

A. Tears in fabric 4

B. Discolored fabric 3

C. Broken fiber board36

D. Ragged edges 7

Total 50

|

|

|

|

| |

|

| ||

||

|

| | | | || | | || | |

| | | || | | || | | ||

|| ||

C

D

A B

50 –

40 –

30 –

20 –

10 –

0 –

– 100

– 80

– 60

– 40

– 20

– 0

Nu

mb

er o

f F

ailu

res

Cu

mu

lati

ve P

erce

nta

ge

Defect Failure

SOLUTION

Figure 4.12 shows the sequential application of several tools for improving quality

Step 1. Checklist

Step 2. Pareto Chart

Figure 4.12 – Application of the Tools for Improving Quality



SOLUTION

Figure 4.12 shows the sequential application of several tools for improving quality

Step 3. Cause-and-Effect Diagram

Step 4. Bar Chart

Humidity

Schedule change

Other

Out of specification

Not available

Materials

Training

Absenteeism

Communication

People

Machine maintenance

Machine speed

Wrong setup

Process

Broken fiber board

20 –

–

15 –

–

10 –

–

5 –

–

0 –

Nu

mb

er o

f B

roke

n F

iber

Bo

ard

sShift

First Second Third

Figure 4.12 – Application of the Tools for Improving Quality


Redesigning the ProcessRedesigning 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


Generating IdeasGenerating 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?



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



Benchmarking is a systematic procedure that measures a firm’s 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


BenchmarkingBenchmarking

There are four basic steps Step 1. Planning Step 2. Analysis Step 3. Integration Step 4. Action

Collecting data can be a challenge

Some corporations and government organizations have agreed to share data



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



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




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



Managing ProcessesManaging Processes

Failure to manage processes is failure to manage the business

Seven common mistakes1. 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


Managing ProcessesManaging Processes

Seven common mistakes4. 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



Solved Problem 1Solved Problem 1

SOLUTION



Figure 4.14 – The Pareto Chart

SOLUTION



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.



SOLUTION



SOLUTION



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 customer’s 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.


Solved Problem 3Solved Problem 3Step No.

Time (min)


1 0.80 50.0 X Direct customer into service bay

2 1.80 X Record name and desired service

3 2.30 X Open hood, verify engine type, inspect hoses, check fluids

4 0.80 0.30 X Walk to customer in waiting area

5 0.60 X Recommend additional services

6 0.70 X Wait for customer decision

7 0.90 70.0 X Walk to storeroom

8 1.90 X Look up filter number(s)

9 0.40 X Check filter number(s)

10 0.60 50.0 X Carry filter(s) to service pit

11 4.20 X Perform under-car services

12 0.70 40.0 X Climb from pit, walk to automobile

13 2.70 X Fill engine with oil, start engine

14 1.30 X Inspect for leaks

15 0.50 40.0 X Walk to pit

16 1.00 X Inspect for leaks

17 3.00 X Clean and organize work area

18 0.70 80.0 X Return to auto, drive from bay

19 0.30 X Park the car

20 0.50 60.0 X Walk to customer waiting area

21 2.30 X Total charges, receive payment

Summary

Activity Number of Steps

Time (min)

Distance (ft)

Operation Transport Inspect Delay Store

Figure 4.15 – Process Chart for Changing Engine Oil

7 16.50

8 5.50 420

4 5.00

1 0.70

1 0.30



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.


Documents

Krajewski Om9 Ppt 04