SBCO 6240 Process Analysis HB Student

D. Anthony Chevers

SBCO 6240 - Production and Operations Management

Lecture 3 – Business Process Analysis |

Lecture #3a – Process Analysis

Definitions & PurposeThe Systematic ApproachDocumenting the Process

• Flowcharts

Evaluating Performance• Data Analysis Tools

Key Performance IndicatorsLine BalancingExercises

2

Lecture 3 – Business Process Analysis | 3

Process Analysis“Unless you change the process, why would you expect the results to change”

- Wisdom from Texas Instrument


Definitions

Process Analysis• The systematic examination of all aspects

of a process to improve its operation –to make it faster, more efficient, less costly or more responsive to the customer.

• Each step of your process must add value

Reengineering• The total redesign of a process


Process Analysis TermsProcess: Is any part of an organization

that takes inputs and transforms them into outputs.

Cycle Time: Is the average successive time between completions of successive units.

Utilization: Is the ratio of the time that a resource is actually activated relative to the time that it is available for use.


Purpose -Process Analysis

Efficiency• It is the actual output attained to the standard output expected• If the output of an operator is 120 piece per hour while the standard rate is 180

piece per hour• The operator’s efficiency is:

• 120/180 x 100 = 66.67%• Efficiency = Actual output/Expected x 100 [Utilization, doing the task right]

Effectiveness• It is the degree of accomplishment of objectives• How well a set of results is accomplished reflects effectiveness [Ends]• Whereas how the resources are utilized, refers to efficiency [Means]• Example – Delivering a package three blocks away on foot instead of using an

expensive car may be an efficient method. But, if the package arrives too late and the customer waiting to collect it has left, it is not an effective one.

• In your pursuit to win a semi final football match, you coach your players to play dirty. They won the match but 80% of the players received red and yellow cards and the coach is unable to select a winning team for the final game.

Reason for analyzing process – effectiveness of conversion technique and utilize resources more efficiently


Continuous Improvements and Breakthroughs


ExamplesCommercial Passenger flights Crew

• Earlier – 2 Pilots + 1 Flight Engineer• Now – 2 Pilots [Computer replaces engineer]• Future – 1 Pilot only

Bottling Plant – 1986 = 24 men/line; 1999 = 8 men/line

Alumina Plants (2002), cost/ton – Ja=US$155, Australia=US$110

Sugar industry (2007), cost/lb – Ja=US$0.26; Cuba=US$0.12; Brazil=US$0.11

Square Watermelons in Japan; Others?


Square Watermelon


Implementchanges

6

Redesignprocess

5

A Systematic Approach to Process Analysis (Ritzman et al., 2007)

Documentprocess

3

Definescope

2

Evaluateperformance

4

Figure 4.2Figure 4.2

Identify opportunity

1


Throughput is Controlled by the Constraint, Process #3


Process FlowchartingDefined

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 storage areas or queues.

It is an ideal methodology by which to begin 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 should be used, etc.


Flowchart Symbols (Continued)

Storage areas or queues

Examples: Sheds, lines of people waiting for a service, etc.

Flows of materials or customers

Examples: Customers moving to the a seat, mechanic getting a tool, etc.


Multistage Process

Stage 1 Stage 2 Stage 3


Multistage Process with Buffer

Stage 1 Stage 2

Buffer


Flow Diagrams

Customer drops off

car

Mechanic makes

diagnosis*

Discuss needed

work with customer*

* = Points critical to the success of the service


Repair authorized

Customer drops off

car

Mechanic makes

diagnosis*

Discuss needed

work with customer*

Customer departs with car

Repair not authorized

* = Points critical to the success of the service


Customer drops off

car

Mechanic makes

diagnosis*

Discuss needed

work with customer*


Checkparts

availability†

Order parts

Parts available

Parts not available

Service visible to customerRepair authorized


Perform work†

* = Points critical to the success of the service † = Points at which failure is most often experienced


Customer drops off

car

Mechanic makes

diagnosis*

Discuss needed

work with customer*


Checkparts

availability†

Perform work†

Order parts

Inspect/ test and repair

Perform corrected

work

Corrective work necessary


Parts not available

Parts available


Repair complete



Customer drops off

car

Mechanic makes

diagnosis*

Discuss needed

work with customer*


Checkparts

availability†

Order parts

Service not visible to customer


Parts available


Perform work†


Perform corrected

work


Parts not available

Repair complete




Customer drops off

car

Mechanic makes

diagnosis*

Discuss needed

work with customer*


Collect payment

Notify customer

Checkparts

availability†

Order parts

Repair complete


Parts available


Service not visible to customer

Perform work†


Perform corrected

work


Parts not available


A Process Flowchart of Apple Processing


More On Process Management/Analysis


Volume and Process Volume and Process Decisions for Decisions for

ManufacturingManufacturing

HighLowVolume

Less vertical integration

More resource flexibility

More customer involvement

Less capital intensity/automation

More vertical integration

Less resource flexibility

Less customer involvement

More capital intensity/automation

Low volume, make-to-order process

High volume, make-to-stock process

Project process• Selecting location for new

plant in Europe• Installing ERP for a

manufacturing firm’s business processes

Job process• Machining precision metal

tubes• Internal consulting team at

manufacturing firm

Batch process• Forging process to make fittings

for pressure vessels access• Producing a batch of textbooks at

R. R. Donnelley’s plant

Line process• Auto assembly• King Soopers bread

line

Continuous process• Oil refining process• Borden’s pasta making

process

Pro

cess

des

ign

ch

oic

es


Volume and Process Volume and Process Decisions for ServicesDecisions for Services

Pro

cess

des

ign

ch

oic

es

Less vertical integration

More resource flexibility

More customer involvement

Less capital intensity/automation

More vertical integration

Less resource flexibility

Less customer involvement

More capital intensity/automation

Low volume, customized-service process

High volume, standardized-service process

HighLowVolume

Project process• Real estate process for leasing

and constructing facilities for large insurance company

• Student team’s field project

Job process• Customer service process

at financial services firm• General medical practice

Batch process• Order fulfillment process of

importer/distributor• Placing purchase orders at public

relations agency

Line process• Cafeteria line• Teller line at bank

Continuous process• Power generation plant• Providing telephone line

access


TQM Tools - Brainstorming & Benchmarking

Benchmarking• A systematic procedure that measures a firm’s

processes, services and products against those of industry leaders (Ritzman, 2007)

Brainstorming session• A time when a group of people, knowledgeable on

the process and its disconnects, propose ideas for change in a rapid-fire manner (Ritzman, 2007)

• During the exercise, all ideas are captured and discussed (throw mud on the wall!)


Cause-and-Effect Diagram for Flight Departure Delays

(Ritzman, 2007)


Discussion The operations manager, having a good

understanding of the process, suspected that most of the flight delays were caused by problems with materials. Consequently, he had food service, fueling, and baggage-handling operations examined. He learned that there were not enough tow trucks for the baggage-transfer operations and that planes were delayed waiting for baggage from connecting flights

What are your thoughts?


Data Analysis Tool –Pareto Chart

A bar chart on which the factors are plotted in decreasing order of frequency along the horizontal axis (Ritzman, 2005)

E.g. – The manager of a neighborhood restaurant is concerned about the small numbers of customers patronizing his entity. The number of complaints have been rising, and he would like some means of finding out what issues to address and of presenting the findings in a way his employees can understand

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 tables 20• Smoky air 10

Total = 89 Recommend improvements


Pareto Chart

Pareto Chart - Restaurant Complaints

01020304050

Slo

w

serv

ice

Cra

mped

table

s

Dis

court

eou

s s

erv

er

Sm

oky a

ir

Cold

din

ner

Complaints

Fre

qu

en

cy

Series1


Discussion

It is clear to the manager and all employees which complaints, if rectified, would cover most of the quality problems in the restaurant.

First, slow service will be addressed by training the existing staff, adding another server and improving the food preparation process.

Second, removing some decorative, but otherwise unnecessary, furniture from the dining area and spacing the tables better will solve the problem with cramped tables.

The Pareto chart shows that these two problems, if rectified, will account for 69.7% [(42+20)/89] of the complaints

What other recommendations are possible?


Seven Basic Quality ToolsSource: American Society for Quality


Key Performance Indicators

Operation time = Setup time

Run time Throughput time = Average time for a

unit to move through the system Velocity = Throughput time

Value-added time Cycle time = Average time between

completion of units


Key Performance Indicators #2

Throughput rate = 1

Cycle time Efficiency = Actual output

Standard output Productivity = Output

Input Utilization = Time activated

Time available


Process Throughput Time Reduction

Perform activities in parallelChange the sequence of activitiesReduce interruptionsOthers?


Designing Line-Flow Layouts

Operations line is only as fast as its slowest workstation.

If the slowest station takes five minutes per customer or unit, the line’s fastest possible output is one customer or unit every five minutes

Line Balancing• The assignment of work to stations in a line so as to

achieve the desired output rate with the smallest number of workstations (Ritzman, 2007)


Cycle Time Example

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

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

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

Cycle time is the maximum amount of time a product is allowed to spend at each workstation


Assembly Line Balancing

Line balancing is usually done to minimize imbalance between machines or personnel while meeting a required output from the line

To balance a line, management must know the tools, equipment, work methods used, time required for each assembly task and precedence relationship among the activities:

Procedure• Draw the precedence diagram in sequence & note times• Group tasks into work stations to meet production rate [3 steps]• Calculate line efficiency

Equations• Cycle time = prod. time available per day / prod. units per day• Mini. # of workstations = ∑ time for all tasks / cycle time• Efficiency = ∑ of task times / (# of workstations x assigned cycle time)

Station guidelines [3] Cycle time; Mini # of stations; Precedence

39


ExerciseReal Fruit Snack Strips are made from a mixture of dried fruit, food colouring, preservatives, and glucose. The mixture is pressed out into a thin sheet, imprinted with various shapes, rolled, and packaged. The precedence and time requirements for each step in the assembly process are given below. To meet demand, Real Fruit needs to produce 6,000 fruit strips every 40-hour week. Design an assembly line with the fewest number of workstations that will achieve the production quota without violating precedence constraints.

40

Real fruit Snack Strips are made from a mixture of dried fruit, food coloring,preservatives and glucose. The mixture is pressed out into a thin sheet,imprinted with various shapes, rolled and packaged. The precedence andtime requirements for each step in the assembly process are given below.To meed demand, Real Fruit needs to produce 6,000 fruit strips every 40-hrweek. Design an assembly line with the fewest number of workstations thatwill achieve the production quota without violating precedence constraints.

Task Work Element Precedence Time (mins)

A Press out sheet of fruit --- 0.1B Cut into strips A 0.2C Outline fun shapes A 0.4D Roll up and package B,C 0.3

Lecture 3 – Business Process Analysis | 41

Solution

DA

B

C

Cycle Time = 40 hours x 60 minutes/hour = 2,400 = 0.4 minute6,000 units 6,000

# of Stations = 0.1 + 0.2 + 0.3 + 0.4 = 1.0 = 2.5 stations0.4 0.4


Detailed Solution

0.2

0.1

Station 1

A

B

0.4

Staion 2

C

0.3

Station 3

D


Workstation & Efficiency

43

DA

B

C

Our assembly line consists of 3 workstations

Efficiency = 0.1 + 0.2 + 0.3 + 0.4 = 1.0 = 83.30%3(0.4) 1.2

0.1 0.30.4


ExerciseGreen Grass, Inc. a manufacturer of lawn and garden equipment, is designingan assembly line to produce a new fertilizer spreader, the Big Broadcaster. Using the following information on the production process, construct aprecedence diagram for the Big Broadcaster.

Work Element Description

Time (sec)

Immediate Predecessor

A Bolt leg frame to hopper 40 NoneB Insert impeller shaft 30 AC Attach axle 50 AD Attach agitator 40 BE Attach drive wheel 6 BF Attach free wheel 25 CG Mount lower post 15 CH Attach controls 20 D,EI Mount nameplate 18 F,G

Total 244

Green Grass's plant manager has just received marketing's latest forecast ofBig Broadcaster sales for the next year. She wants its production line to bedesigned to make 2,400 spreaders per week for at least the next three months.The plant will operate 40 hours per week.(a) What should be the line's cycle time?(b) What is the smallest number of workstations that she could hope for in designing the line for this cycle time?(c ) Suppose that she finds a solution that requires only five stations. What would be the line's efficiency?

44


Solution

(a) First convert the desired output rate (2,400 units per week) to an hourly rate [2,400/40]=60 units per hour]

Cycle time=1/60 hour/unit = 1 minute/unit

(b) Minimum# of stations = 244 seconds/60 seconds=4.067 or 5 stations

(c) Efficiency of a five-station solution = [244/5(60)]x100=81.3%

45

A

B

D H

E

F

G

C

G

I

20

18

1550

25

30

406

40


# of workstations?? Wrong?

46

A

B

DH

E

F

C G

I

20

18

1550

25

30

40

6

40

Stations


Discussion Questions & Case

Continuous improvement recognizes that many small improvement add up to sizable benefits. Will continuous improvement take a company at the bottom of an industry to the top? Explain.

To give utilities an incentive to spend money on new pollution-control technology, the EPA proposes that flue gas emission limits be changed to require slightly cleaner stacks than the older technology is capable of producing. To comply, some utilities will install the new technology. Some will not. Utilities that reduce emissions below the new requirements will receive “credits,” which they can sell to utilities that choose not to install the pollution-control technology. These utilities can then continue business as usual, so long as they have purchased enough credits to accounts for the extra pollution they create. The price of the credits will be determined by the free market. Form sides and discuss the ethical, environmental and political issues and trade-offs associated with this proposition

Case – Custom Molds, Inc.

47


Process Analysis

48


Case: Zephtrex Fabric

49

50

NEXT LECTURE:

Productivity

D. Anthony Chevers

[email protected], Room #28

Documents

SBCO 6240 Process Analysis HB Student