Operations management, 9e by krajewski itzman malhotra chapter 04

4

Process Analysis

PowerPoint Slides
by Jeff Heyl

For Operations Management, 9e by
Krajewski/Ritzman/Malhotra
© 2010 Pearson Education
4–1


Process Analysis
Processes may be the least understood
and managed aspect of a business
A firm can not gain a competitive
advantage with faulty processes
Processes can be analyzed and improved
using certain tools and techniques
Process analysis can be accomplished
using a six-step blueprint

4–2


A Systematic Approach
Define
scope
2
Identify

opportunity
1

Document
process
3

Implement
changes
6

Evaluate
performance
4
Redesign
process
5

Figure 4.1 – Blueprint for Process Analysis
4–3


Documenting The Process
Three effective techniques for
documenting and evaluating processes are
1)

Flowcharts

2)

Service blueprints

3)

Process charts

They help you see how a process operates
and how well it is performing
Can help find performance gaps

4–4


Flowcharts
Marketing
lead
Sales: Initial
conversation
with client

Sales and/or
consulting
drafts proposal

Sales
lead

Follow-up
conversation

between client
and sales
No

Consulting:
Initial
conversation
with client

Consulting
lead

Consulting
drafts
proposal

Follow-up
conversation
between client
and consulting

Line of visibility
Follow-up by
accounting,
sales, or
consulting

Client billed by
accounting,
sales, or

consulting

Yes

Approval
by
consulting?

Is
proposal
complete?
Yes
Nested Process
Client agreement
and service
delivery

Final invoice
created by
accounting, sales,
or consulting

No
No

Payment
received?

Yes

Finish

Figure 4.2 – Flowchart of the Sales Process
for a Consulting Company
4–5


Flowcharts

Is
proposal
complete?

Final invoice
created by
accounting, sales,
or consulting

Verbal OK
from client

Form
completed by
sales or
consulting

Project
manager
assigned

Delivery of
service by
consulting

50% invoiced
by accounting,
sales, or
consulting

Letter of
agreement
signed

Figure 4.3 – Flowchart of the Nested Subprocess of
Client Agreement and Service Delivery
4–6


CUSTOMER

Order
completed
and submitted

100%
of credit
checked within
24 hours

Two

scheduling
errors per
quarter

Payment
sent

FINANCE

Yes
New
customer?

Credit
check
OK?
Yes

Production
scheduled

Order

Items
manufactured

`

Packages
assembled and

inventoried

Invoice
sent

Order
stopped

Order
picked

Product packages

Inventory
adjusted

Invoice
prepared

Payment
received

Notice of shipment

Production Control
and Manufacturing

Order
entered

No

Order cancellation

Order

Order
received

No

Assembly and
Shipping

Payment

Order
cancelled

Credit and
invoicing

PRODUCTION

Product
and invoice
received

Order

Order
generated

SALES

Flowcharts

Order
shipped

Figure 4.4 – Flowchart of the Order-Filling Process Showing Handoffs
Between Departments
4–7


Process Charts
An organized way to document all the
activities performed by a person or group
Activities are typically organized into five
categories
 Operation,



 Transportation,
 Inspection,
 Delay,







 Storage,



4–8


Process Charts
Step
No.

Time
(min)

Distance
(ft)

1

0.50

15.0

2

10.00

3

0.75

4

3.00

5

0.75

6

1.00

7

1.00

8

4.00

9

5.00

10

2.00

11

3.00

12

2.00

13

3.00

14

2.00

15

1.00

16

4.00

17

2.00

18

4.00

   

Sit down and fill out patient history

X

Nurse escorts patient to ER triage room

X

Nurse inspects injury

X
40.0

Return to waiting room

X
X

60.0

X

Nurse takes patient to radiology

X

Technician x-rays patient

X

Return to bed in ER

X
X

X

X
X

Return to emergency entrance area
Check out

X
180.0

Wait for doctor to return
Doctor provides diagnosis and advice

X
60.0

Wait for doctor

Doctor inspects injury and questions patient

X

200.0

Wait for available bed
Go to ER bed

X

200.0

Step Description
Enter emergency room, approach patient window

X

40.0



Walk to pharmacy
Pick up prescription

Leave the building
20.0 for Emergency
Figure
Process Chart
19 4.5 –1.00

X Room Admission
4–9


Process Charts
Step
No.

Time
(min)

Distance
(ft)

1

0.50

15.0

2

10.00

3

0.75

4

3.00

5

0.75

6

1.00

7

1.00

8

4.00

9

5.00

10

2.00

11

3.00

12

2.00

13

3.00

14

2.00

15

1.00

16

4.00

17

2.00

18

4.00

   

Activity

X

Operation

X
X

40.0

Transport

X

Inspect
X
60.0

X

Delay
X
X

200.0

Store

X



5 to ER triage
23.00room
Nurse escorts patient
Nurse inspects injury



9

Return to waiting room



Wait for available2bed
Go to ER bed



Wait for doctor

3

11.00

815

8.00

8.00



Doctor inspects injury
patient
― and questions
―

Wait for doctor to return
Doctor provides diagnosis and advice

X
X

Return to emergency entrance area
Check out

X
X
X

(ft)

Return to bed in ER

X

180.0

(min)

Technician x-rays patient

X

60.0

of Steps

Nurse takes patient to radiology

X

200.0

Number
TimepatientDistance
Enter emergency
room, approach
window
Sit down and fill out patient history

X
40.0

Summary
Step Description



Walk to pharmacy
Pick up prescription

Leave the building
20.0 for Emergency
Figure
Process Chart
19 4.5 –1.00
X Room Admission
4 – 10


Process Charts
The annual cost of an entire process can
be estimated
It is the product of
1)

Time in hours to perform the process each
time

2)

Variable costs per hour

3)

Number of times the process is performed
each year

Annual
labor cost

=

Time to perform
the process in hours

Variable costs
per hour

Number of times process
performed each year

4 – 11


Process Charts
If the average time to serve a customer is
4 hours
The variable cost is $25 per hour
And 40 customers are served per year
The total labor cost is
4 hrs/customer  $25/hr  40 customers/yr = $4,000

4 – 12


Work Measurement Techniques

Used to estimate the average time each
step in a process would take
1)

Time study method

2)

Elemental standard data approach

3)

Predetermined data approach

4)

Work sampling method

Learning curve analysis is appropriate for
new products or processes

4 – 13


Time Study of Revised Process
EXAMPLE 4.1
A process at a watch assembly plant has been changed. The
process is divided into three work elements. A time study has
been performed with the following results. The time standard
for process previously was 14.5 minutes. Based on the new

time study, should the time standard be revised?
SOLUTION
The new time study had an initial sample of four observations,
with the results shown in the following table. The performance
rating factor (RF) is shown for each element, and the allowance
for the whole process is 18 percent of the total normal time.

4 – 14


Time Study of Revised Process
Obs 1

Obs 2

Obs 3

Obs 4

Average
(min)

RF

Normal
Time

Element 1

2.60

2.34

3.12

2.86

2.730

1.0

2.730

Element 2

4.94

4.78

5.10

4.68

4.875

1.1

5.363

Element 3

2.18

1.98

2.13

2.25

2.135

0.9

1.922

Total Normal Time = 10.014

The normal time for an element in the table is its average time,
multiplied by the RF. The total normal time for the whole
process is the sum of the normal times for the three elements,
or 10.01 minutes. To get the standard time (ST) for the process,
just add in the allowance, or
ST = 10.014(1 + 0.18) = 11.82 minutes/watch

4 – 15


Work Sampling

Figure 4.6 – Work Sampling Study of Admission Clerk at Health

Clinic Using OM Explorer
4 – 16


Learning Curves
140,000

Labor Hours per Unit

120,000 –
100,000 –
80,000 –
60,000 –
40,000 –
20,000 –
0
|

|

|

|

|

|

|

0

20

40

60

80

100

120

Cumulative Units Produced
Figure 4.7 – Learning Curve with 80% Learning Rate Using OM Explorer

4 – 17


Evaluating Performance
Chapter 5, Quality and Performance





Customer satisfaction measures
Error rate
Rework or scrap rate

Internal failure costs

Chapter 6, Capacity Planning; Supplement C, Waiting Lines; Supplement H,
Measuring Output Rates; Supplement I, Learning Curve Analysis








Processing time
Total time from start to finish (throughput time)
Setup time
Operating expenses
Capacity utilization
Average waiting time
Average number of customers or jobs waiting in line

Figure 4.8 – Metrics for Flowcharts, Process Charts, and Accompanying Tables
4 – 18


Evaluating Performance
Chapter 7, Constraint Management
 Cycle time
 Idle time
Chapter 8, Lean Systems






Setup time
Average waiting time
Total time from start to finish (throughput time)
Waste

Figure 4.8 – Metrics for Flowcharts, Process Charts, and Accompanying Tables
4 – 19


Data Analysis Tools
Help identify causes of problems
1)

Checklists

2)

Histograms and bar charts

3)

Pareto charts

4)

Scatter diagrams

5)

Cause-and-effect diagrams

6)

Graphs

4 – 20


Pareto Chart for a Restaurant
EXAMPLE 4.2
The manager of a neighborhood restaurant is concerned about
the smaller numbers of customers patronizing his eatery.
Complaints have been rising, and he would like to find out what
issues to address and present the findings in a way his
employees can understand.
SOLUTION
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 table

20

Atmosphere

10
4 – 21


Pareto Chart for a Restaurant

Failures

Figure 4.9 is a bar chart and Figure 4.10 is a Pareto chart, both
created with OM Explorer’s Bar, Pareto, and Line Charts solver.
They present the data in a way that shows which complaints are
more prevalent (the vital few).

50 –
45 –
40 –

35 –
30 –
25 –
20 –
10 –
5–
0–

Discourteous
server

Slow
service

Cold
dinner

Cramped
tables

Atmosphere

Failure Name

Figure 4.9 – Bar Chart

4 – 22


Pareto Chart for a Restaurant

(42 + 20)
 100% = 69.7%
89
45 –

– 100.0%

40 –

Failures

30 –

– 60.0%

25 –

– 40.0%

20 –

– 20.0%

10 –

Percent of Total

– 80.0%

35 –

– 0.0%

5–
0–
Slow
service

Cramped
tables

Discourteous
server

Atmosphere

Cold
dinner

Failure Name

Figure 4.10 – Pareto Chart

4 – 23


Analysis of Flight Departure Delays
EXAMPLE 4.3
The operations manager for Checker Board Airlines at Port
Columbus International Airport noticed an increase in the

number of delayed flight departures.
SOLUTION
To analyze all the possible causes of that problem, the
manager constructed a cause-and-effect diagram, shown in
Figure 4.11. The main problem, delayed flight departures, is the
“head” of the diagram. He brainstormed all possible causes
with his staff, and together they identified several major
categories: equipment, personnel, materials, procedures, and
“other factors” that are beyond managerial control. Several
suspected causes were identified for each major category.

4 – 24


Analysis of Flight Departure Delays
Equipment

Personnel

Aircraft late to gate

Other

Passenger processing at gate

Mechanical failures

Late cabin cleaners

Weather

Unavailable cockpit crew

Air traffic delays

Late cabin crew

Late baggage to aircraft
Late fuel
Late food service
Contractor not provided
with updated schedule
Materials

Poor announcement of departures

Delayed
flight
departures

Weight/balance sheet late
Delayed check-in procedure
Waiting for late passengers

Procedures

Figure 4.11 – Cause-and-Effect Diagram for Flight Departure Delays
4 – 25