Lecture Introduction to operations management - Chapter 6: Process-flow analysis

In this chapter we will discuss: Process thinking, the process view of business, measuring process flows, measuring process flows at pizza U.S.A, process flowcharting, process-flow analysis as asking questions, business process reengineering (BPR).

INTRODUCTION to Operations Management Chapter 6, Process­Flow Analysis 5e, Schroeder McGraw­Hill/Irwin Copyright © 2011 by The McGraw­Hill Companies, Inc. All rights reserved Outline of Chapter Process Thinking The Process View of Business Measuring Process Flows Measuring Process Flows at Pizza U.S.A Process Flowcharting Process­Flow Analysis as Asking Questions Business Process Reengineering (BPR) 6­2 Process Thinking Process Thinking:  all work can be seen as a process Definition of a “system” – Whole > sum of parts Application of systems thinking to businesses – Defining system boundaries Role of “cross­functional” teams in systems analysis – Systems thinking requires cross­functional teams  to include all affected functions 6­3 Figure 6.1: Process View of Business 6­4 Measuring Process Flows Little’s Law – Relates number of items in the system to arrival  rate and length of time in the system – Formula: I = T x R I = average number of things in the system T = average throughput time R = average flow rate into the process Assumes system is in a ‘steady state’ 6­5 Applications of Little’s Law Manufacturing  Waiting lines Invoice processing Legal office transactions Accounts receivable processing Etc 6­6 Measuring Process Flows Capacity of a system = capacity of the most  constraining resource – This resource is called a ‘bottleneck.’ The flow rate of a process is the minimum of: – Supply – Demand – Capacity 6­7 Process Flowcharting Process Flowcharting:  creation of a visual diagram to  describe a transformation process Also known as: – Process mapping – Flow­process charting – Service blueprinting – Value stream mapping 6­8 Process Flowcharting Purpose:  to describe a process visually to find ways  of improving the current process – Find repetitive operations – Identify bottlenecks – Describe directions and distances of flows (people,  material and information) – Reduce waste Required for certifications such as ISO9000 6­9 Process Flow Analysis Might Change: Raw materials Product (output) design Job design Processing steps used Management control information Equipment or tools Suppliers i.e.  Anything but customers may be  changed!! 6­10 Steps in process flowchart analysis using the systems approach Select a process to study Form a team to analyze & improve the system Specify the boundaries of the transformation  process Identify and sequence the operational steps Identify the performance metrics Draw the flowchart 6­11 Symbols for Flow-Process Chart Operation (a task or work activity) Inspection (an inspection of the product for quantity or quality) Transportation (a movement of material from one point to another) Storage (an inventory or storage of materials awaiting the next operation) Delay (a delay in the sequence of operations) 6­12 6­13 Questions to Ask in ProcessFlow Analysis & Improvement What does the customer need? What operations are necessary? Can some  operations be eliminated, combined, or simplified? Who is performing the job? Can the operation be redesigned to use less skill or  less labor? Can operations be combined to enrich jobs?  Where is each operation conducted?  Can layout be improved?  When is each operation performed?  Is there excessive delay or storage? Are  some operations creating bottlenecks?  How is the operation done? Can better methods, procedures, or equipment be  used?  6­14 Questions to Ask in ProcessFlow Analysis & Improvement Flow Balanced? Where is the bottleneck? Are all steps necessary?  How  jumbled is the flow? Time How long to produce one unit? Can it be reduced? Cycle time? Excessive  set­up time?  Excessive waiting time? Quantity Theoretical production amount?  How easy to change? How many  units actually produced? Quality Historical defect rate?  Which step contributes to defect rate? Where  do errors occur?  Cost Cost to produce one unit? What are cost buckets for one unit? Can some of  the buckets be reduced or eliminated?  6­15 Business Process Reengineering (BPR) BPR defined (Hammer and Champy,  1993) BPR Philosophy Principles of BPR Success of BPR 6­16 BPR Defined BPR is “the fundamental rethinking  and radical redesign of business [or  organizational] processes to achieve  dramatic improvements in critical,  contemporary measures of  performance, such as cost, quality,  service and speed.” 6­17 BPR Defined This is in contrast to incremental  change or continuous improvement of  an existing process “If I were recreating this company  today, given what I know and given  current technology, what would it look  like?” 6­18 BPR Philosophy   Does the reengineering consultant see the  glass as half full or half empty?   Neither   It’s the wrong size of glass!   Or, should it be a glass?  …or a liquid? 6­19 Principles of BPR Organize around outcomes, not tasks Have the people who do the work process their  own information Put the decision point where work is  performed, and build control into the process Eliminate unnecessary steps in the process 6­20 The Success of BPR According to Hammer & Champy, 50­70% of  organizations attempting BPR do not achieve  the results they expected.  Why? Because they make one or more of the 17  common mistakes (see next 2 slides): 6­21 BPR Mistakes Trying to fix a process instead of changing it Not focusing on business processes Focusing only on the process redesign Neglecting people’s values & beliefs Settling for minor results Quitting too early Constraining the scope of the problem & effort Letting corporate culture & mgmt attitudes get in the way Trying to reengineer from the bottom up 6­22 BPR Mistakes (cont.) Assigning a leader who doesn’t understand BPR  Skimping on the resources Not making BPR a top corporate priority Trying to do too much at once & dissipating resources Concentrating only on design & not implementation Trying to keep everyone happy Pulling back if people resist Dragging out the effort & taking too long Source:  Hammer & Champy, Reengineering the Corporation, chapter 14 6­23 Summary Process Thinking The Process View of Business Measuring Process Flows Measuring Process Flows at Pizza U.S.A Process Flowcharting Process­Flow Analysis as Asking Questions Business Process Reengineering (BPR) 6­24 End of Chapter Six 6­25 ... Storage (an inventory or storage of materials awaiting the next operation) Delay (a delay in the sequence of? ?operations) 6­12 6­13 Questions to Ask in ProcessFlow Analysis & Improvement What does the customer need? What? ?operations? ?are necessary? Can some ... Trying? ?to? ?reengineer from the bottom up 6­22 BPR Mistakes (cont.) Assigning a leader who doesn’t understand BPR  Skimping on the resources Not making BPR a top corporate priority Trying? ?to? ?do too much at once & dissipating resources... What does the customer need? What? ?operations? ?are necessary? Can some  operations? ?be eliminated, combined, or simplified? Who is performing the job? Can the operation be redesigned? ?to? ?use less skill or  less labor? Can? ?operations? ?be combined? ?to? ?enrich jobs?