Production and Operations Management: Manufacturing and Services

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CHASE AQUILANO JACOBS
Operations Management
For Competitive Advantage
Chapter 4
Process Analysis
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Chapter 4Process Analysis

• Mercury Marine Video
• Process Analysis
• Process Flowcharting
• Process Performance Metrics
• How to Improve Processes
• Benefits of Process Improvement
• Review of Project

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Process Analysis Terms

• Process Is any part of an organization that
  takes inputs and transforms them into outputs.
• Key Terms
• Cycle time
• Utilization
• Buffering
• Blocking
• Starving

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Key Terms continued

• Bottleneck
• Pacing
• Throughput time
• Throughput rate
• Littles Law

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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.

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Flowchart Symbols
Tasks or operations
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.
Decision Points
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Flowchart Symbols (Continued)
Storage areas or queues
Examples Sheds, lines of people waiting for a
service, etc.
Examples Customers moving to the a seat,
mechanic getting a tool, etc.
Flows of materials or customers
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Multistage Process
Stage 1
Stage 2
Stage 3
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Multistage Process with Buffer
Buffer
Stage 1
Stage 2
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Process Performance Metrics

• Why Measure Processes?

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Process Performance Metrics

• Operation time Setup time Run time
• Throughput time Average time for a unit
  to move through the system
• Efficiency Actual Output
• Standard Output
• Utilization Time Activated
• Time Available

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Process Performance Metrics (Continued)

• Cycle time Average time between completion
  of units
• Throughput rate 1 .
• Cycle time
• Productivity Output
• Input
• Product Profit Velocity (author Ostrenga)
• Product Profit/Total Cycle Time

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Caution on Definitions of Cycle Time

• Cycle Time ( 2 definitions)
• Primary Book Definition - the average successive
  time between completions of successive units
• Secondary Book Definition - the total time to
  complete an activity ( otherwise known as
  Throughput time)
• Problems in the book assume the first definition
• Class Project template and collateral uses the
  second definition

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How to Improve Processes

• Reduce/eliminate non value added activities
• Balance and synchronize
• Perform activities in parallel
• Change the sequence of activities
• Minimize buffer stocks
• Reduce interruptions to process
• Reduce process/activity/machine setup time

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Benefits of Process Improvement Better, Faster,
Cheaper

• Improve service meet customer expectations
• More predictable process and reliable outcomes
• Reduce time and inventory
• Increase capacity
• Reduce rework and scrap
• Reduce cost
• Increase Throughput
• Improve asset utilization

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Hints - Look for

• Stagnant flow of materials or documents
• Bottlenecks
• Complexity
• Process Variation
• Inventory buildup
• High Resource usage
• Impact on customers and service capability
• NVA activities Inspection, rework, setup,
  reconciliation, moves, storage, etc
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