SBCO 6240 Process Analysis HB Student
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Transcript of 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
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
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.
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
Continuous Improvements and Breakthroughs
Lecture 3 – Business Process Analysis |
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?
Lecture 3 – Business Process Analysis |
Square Watermelon
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
Throughput is Controlled by the Constraint, Process #3
Lecture 3 – Business Process Analysis |
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.
Lecture 3 – Business Process Analysis |
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.
Lecture 3 – Business Process Analysis |
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.
Lecture 3 – Business Process Analysis |
Multistage Process
Stage 1 Stage 2 Stage 3
Lecture 3 – Business Process Analysis |
Multistage Process with Buffer
Stage 1 Stage 2
Buffer
Lecture 3 – Business Process Analysis |
Flow Diagrams
Customer drops off
car
Mechanic makes
diagnosis*
Discuss needed
work with customer*
* = Points critical to the success of the service
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
Customer drops off
car
Mechanic makes
diagnosis*
Discuss needed
work with customer*
Customer departs with car
Checkparts
availability†
Order parts
Parts available
Parts not available
Service visible to customerRepair authorized
Repair not authorized
Perform work†
* = Points critical to the success of the service † = Points at which failure is most often experienced
Lecture 3 – Business Process Analysis |
Customer drops off
car
Mechanic makes
diagnosis*
Discuss needed
work with customer*
Customer departs with car
Checkparts
availability†
Perform work†
Order parts
Inspect/ test and repair
Perform corrected
work
Corrective work necessary
Repair not authorized
Parts not available
Parts available
Service visible to customerRepair authorized
Repair complete
* = Points critical to the success of the service † = Points at which failure is most often experienced
Lecture 3 – Business Process Analysis |
Customer drops off
car
Mechanic makes
diagnosis*
Discuss needed
work with customer*
Customer departs with car
Checkparts
availability†
Order parts
Service not visible to customer
Repair not authorized
Parts available
Service visible to customerRepair authorized
Perform work†
Inspect/ test and repair
Perform corrected
work
Corrective work necessary
Parts not available
Repair complete
* = Points critical to the success of the service † = Points at which failure is most often experienced
Lecture 3 – Business Process Analysis |
* = 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*
Customer departs with car
Collect payment
Notify customer
Checkparts
availability†
Order parts
Repair complete
Repair not authorized
Parts available
Service visible to customerRepair authorized
Service not visible to customer
Perform work†
Inspect/ test and repair
Perform corrected
work
Corrective work necessary
Parts not available
Lecture 3 – Business Process Analysis |
A Process Flowchart of Apple Processing
Lecture 3 – Business Process Analysis |
More On Process Management/Analysis
Lecture 3 – Business Process 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
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
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!)
Lecture 3 – Business Process Analysis |
Cause-and-Effect Diagram for Flight Departure Delays
(Ritzman, 2007)
Lecture 3 – Business Process Analysis |
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?
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
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?
Lecture 3 – Business Process Analysis |
Seven Basic Quality ToolsSource: American Society for Quality
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
Key Performance Indicators #2
Throughput rate = 1
Cycle time Efficiency = Actual output
Standard output Productivity = Output
Input Utilization = Time activated
Time available
Lecture 3 – Business Process Analysis |
Process Throughput Time Reduction
Perform activities in parallelChange the sequence of activitiesReduce interruptionsOthers?
Lecture 3 – Business Process Analysis |
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)
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
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
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Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
Detailed Solution
0.2
0.1
Station 1
A
B
0.4
Staion 2
C
0.3
Station 3
D
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
# of workstations?? Wrong?
46
A
B
DH
E
F
C G
I
20
18
1550
25
30
40
6
40
Stations
Lecture 3 – Business Process Analysis |
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
Lecture 3 – Business Process Analysis |
Process Analysis
48
Lecture 3 – Business Process Analysis |
Case: Zephtrex Fabric
49