Process Analysis

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Process Analysis

• McDonalds Made-for-You Kitchen
• Process Analysis Tools
• Process Performance Metrics
• Process Flow Analysis

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The Process View of Organizations

• A Process is a transformation of inputs into
  outputs

Inputs (resources)
Black Box
Outputs
Inputs (raw materials)
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Process Architecture/Structure

• Inputs and outputs tangible or intangible items
  that flow into/from the process. Their entry and
  exit points define process boundaries
• A network of activities steps/flows inside a
  process that constitute the transformation
• Information structure What information is
  needed/available for decision making

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• McDonalds Kitchen System
• ..\..\VIDEO_TS\VIDEO_TS.IFO

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Discussion Questions

• How do you like the Made-for-You idea?
• How much did the new system cost?
• Did anything go wrong with the new system? If
  yes, what is the problem?

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2. Process Analysis Tools

• Flowcharting
• Other tools

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Process Analysis Tools

• Flow diagram, Process charts, Time-function
  mapping, and work-flow analysis
• Business process reengineering
• rethinking and radical redesign
• reevaluating the purpose of the process and
  underlying assumptions
• reexamining the basic process and its objectives

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Process Flowcharting

• 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

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Flowchart Symbols
Examples Giving an admission ticket to a
customer, installing a engine in a car, etc.
Examples How much change should be given to a
customer, which wrench should be used, etc.
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Flowchart Symbols (continued)
Examples Sheds, lines of people waiting for a
service, etc.
Examples Customers moving to a seat, mechanic
getting a tool, etc.
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Flowchart Example Student Going to School
Yes
Go to school today?
Drive to school
Walk to class
No
Goof off
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Process Analysis Terminologies

• Blocking
• Occurs when the activities in a stage must stop
  because there is no place to deposit the item
  just completed
• If there is no room for an employee to place a
  unit of work down, the employee will hold on to
  it not able to continue working on the next unit
• Starving
• Occurs when the activities in a stage must stop
  because there is no work
• If an employee is waiting at a work station and
  no work is coming to the employee to process, the
  employee will remain idle until the next unit of
  work comes

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Process Analysis Terminologies (contd)

• Bottleneck
• Occurs when the limited capacity of a process
  causes work to pile up or become unevenly
  distributed in the flow of a process
• If an employee works too slow in a multi-stage
  process, work will begin to pile up in front of
  that employee. In this case the employee
  represents the limited capacity causing the
  bottleneck.
• Pacing
• Refers to the fixed timing of the movement of
  items through the process

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Illustration Example

• If stage 1 produces a unit every 30 second and
  stage 2 produces a unit every 60 seconds, what
  will happen to the process at the end of one hour
  of operation?
• If the capacity of the two stages if reversed,
  what will happen to the process at the end of one
  hour?
• What may be done to the process to achieve higher
  efficiency?

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Single-/Multiple-Stage Processes
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Make-to-Order/Make-to-Stock

• 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 target stocking
  level

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Revisit McDonalds Old Kitchen
Raw Material
Assemble
Cook
Finished Goods
Deliver
Make-to-stock Or pushing system
Customers Place Order
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Revisit McDonalds New Kitchen
Make-to-order Or pulling system
Customers Place Order
Raw Material
WIP
Assemble
Cook
Deliver
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3. Process Performance Metrics

• Operation/setup/run time
• Cycle/throughput/velocity time
• Efficiency/Productivity/Utilizaton

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Process Performance Metrics

• Operation time Setup time Run time
• If the Run Time for a batch of parts is 45
  minutes on a machine, and the Setup Time is 65
  minutes, what is the Operation Time?
• Throughput time Average time for a unit
  to move through the system
• Velocity Throughput time / Value-added time

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Process Performance Metrics (contd)

• Cycle time Average time between completion of
  units
• Example Suppose you have 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?
• Throughput rate 1/Cycle time

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Process Performance Metrics (contd)

• Efficiency Actual output/Standard Output
• If the standard expected phone calls for a
  telephone marketer is 24 calls per hour, and one
  telephone marketer did 27 calls per hour, what is
  the Efficiency?
• Productivity Output / Input
• Utilization Time Activated / Time Available

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Process Throughput Time Reduction

• Perform activities in parallel
• Change the sequence of activities
• Reduce interruptions

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4. Process Flow Analysis

• Littles law
• Applications

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Process Flow Analysis
New work enters the process
Work waiting to be completed
Throughput time
Process required to complete work
Complete work
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Littles Formula in Process Analysis

• Queuing system
• Time in system
• Customer in system/Arrival Rate
• General Process
• Throughput Time
• Work-In-Process/Throughput Rate

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A Process Analysis Example

• A Bread-Making Operation
• (Chase et al. 2007, p 165, see handout)
• Solution (see class discussion)

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Bread making on One Line
Bread-making
100
Throughput rate 100/hour
0
2
1
Packaging
Throughput time 175/100 1.75 hours
0
2
1
3
1.75
Inventory
WIP 1001/4 2003/4 175
200
100
200
100
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Bread making on Two Parallel Lines
Input 200 loaves every hour
Throughput rate 100/0.75 hours
0
2
3
1
Output 100 loaves every 0.75 hours
Maximum inventory at the end of the second shift
16200 15100/0.75 1200 Average inventory
600 Throughput time 600/100/0.75 4.5 hours
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Performance Measurements Example

• See the attached file MB_Finance for the
  mini-case

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Process I Performance
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Process II Overall Performance
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Process II Flowchart
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Process II Subgroup Performance
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5. Question Bowl
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Question 1

• Which of the following are possible examples of
  cycle times?
• Time for each television to come off an assembly
  line.
• Time it takes for a stock purchase
• Time it takes for an instructor to grade an exam
• Time it takes to build an automobile
• All of the above

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Question 2

• Which of the following are used as symbols in a
  Process Flowchart?
• Decision points
• Blocking
• Starving
• Bottleneck
• All of the above

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Question 3

• Which type of process is configured as follows?
• Single-stage process
• Multi-stage process
• Make-to-order process
• Make-to-stock process
• All of the above

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Question 4

• When an assembly line employee is waiting for a
  unit of work to come down the line so they can
  stop being idle and get back to work, it is an
  example of which of the following process terms?
• Buffering
• Blocking
• Starving
• Bottleneck
• All of the above

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Question 5

• When a company waits until they have an order for
  their product in hand before beginning any
  production for that order, we can characterize
  their operation as which of the following
  processes?
• Single-stage process
• Multi-stage process
• Make-to-order process
• Make-to-stock process
• All of the above

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Question 6

• If the Run Time for a batch of parts is 45
  minutes on a machine, and the Setup Time is 65
  minutes, which of the following is the Operation
  Time?
• 75 minutes
• 110 minutes
• Only 45 minutes
• 65/45 minutes or 1.44 hours
• Can not be computed on the data above

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Question 7

• If the standard expected phone calls for a
  telephone marketers is 24 per hour, and one
  telephone marketer did 27 per hour, which of the
  following can be used to describe their
  Efficiency?
• 88.8
• 100
• 112.5
• Well over 150
• Can not computed on the information given.

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End Q A