Process Analysis Chapter 3
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1 Process Analysis Chapter 3
2 How Process Analysis fits the Operations Management Philosophy Operations As a Competitive Weapon Operations Strategy Project Management Process Strategy Process Analysis Process Performance and Quality Constraint Management Process Layout Lean Systems Supply Chain Strategy Location Inventory Management Forecasting Sales and Operations Planning Resource Planning Scheduling
3 Omgeo Omgeo is the leading provider of complete global trade management services, processing more than one million trades per day and servicing 6,000 broker-dealers, custodian banks and investment managers in more than 40 countries. Through process analysis, it was able to reduce the typical trade expense from $10 or $12 down to between 20 cents and a dollar. Trade processing time was reduced from 20 hours down to three hours. These changes were the result of considerable customer contact and reflect more automation and process reengineering.
4 Process Analysis Process analysis is the documentation and detailed understanding of how work is performed and how it can be redesigned. 2 Define Scope 1 Identify Opportunity 3 Document Process 6 Implement Changes 5 Redesign Process 4 Evaluate Performance
5 A Systematic Approach to Process Analysis Suggestion system: a voluntary system by which employees submit their ideas on process improvements. Design team: A group of knowledgeable, teamoriented individuals who work at one or more steps in the process, do the process analysis and make the necessary changes. Metrics: Performance measures that are established for a process and the steps within it. Flowcharts: A diagram that traces the flow of information, customers, equipment, or materials through the various steps of a process. Service Blueprint: A special flowchart of a service process that shows which steps have high customer contact (line of visibility).
6 Standard Flowchart Symbols A simple flowchart representing a process for dealing with a non-functioning lamp.
7
8 Flowchart for the Sales Process of a Consulting Company Service Blueprint
9 Flowchart of a Nested Subprocess Client Agreement & Service Delivery Step
10 Showing the Handoffs Between Departments
11 Process Charts Process chart: An organized way of documenting the activities performed by a person or group of people at a work station, with a customer, or on materials. Five categories of process charts: 1. Operations that change, create or add something. 2. Transportation (materials handling): Moving something. 3. Inspection: Checking or verifying something. 4. Delays: Time spent awaiting further action. 5. Storage: When something is put away until a later time.
12 Process Chart for an Emergency Room Admission Process: Emergency room admission Subject: Ankle injury patient Beginning: Enter emergency room Ending: Leave hospital Insert Step Append Step Remove Step Activity Number of steps Summary Time (min) Distance (ft) Operation 5 23 Transport Inspect 2 8 Delay 3 8 Store Step no. Time (min) Distance (ft) Step description X Enter emergency room, approach patient window X Sit down and fill out patient history X Nurse escorts patient to ER triage room X Nurse inspects injury X Return to waiting room X Wait for available bed X Go to ER bed X Wait for doctor X Doctor inspects injury and questions patient X Nurse takes patient to radiology X Technician x-rays patient X Return to bed in ER X Wait for doctor to return X Doctor provides diagnosis and advice X Return to emergency entrance area X Check out X Walk to pharmacy X Pick up prescription X Leave the building
13 Evaluating Performance Checklist: A form used to record the frequency of occurrence of certain process failures. Failures is any performance shortfall, such as error, delay Histogram: A summarization of data measured on a continuous scale, showing the frequency distribution of some quality characteristic (the central tendency and dispersion of the data). Bar chart: A series of bars representing the frequency of occurrence of data characteristics measured on a yes-or-no basis. Pareto Chart: A bar chart on which factors are plotted in decreasing order of frequency along the horizontal axis.
14 Bar Chart Example 5.1 The manager of a neighborhood restaurant is concerned about rising customer complaints. He would like to present his findings in a way that his employees will understand.
15 Pareto Chart Example 5.1
16 So, in the example above, it can be seen that: No Postcode is the most frequent result, with 98 items (out of the 240 sampled) being delayed for this reason. As the table on the Pareto Chart indicates, this is equivalent to 40.8%. The second most frequent reason for delay is No Stamp, which represented 31.7% (76 out of the 240 sampled). The Cumulative Frequency line (shown in blue) demonstrates that the first two categories account for 72.5% of the delayed post items.
17 More Tools for Evaluating Performance Cause-and-effect diagram: A diagram that relates a key performance problem to it s potential causes. Sometimes called the fishbone diagram. Graphs: Representation of data in a variety of pictorial forms, such as line charts and pie charts.
18 Analysis of Flight Departure Delays EXAMPLE 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 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.
19 Analysis of Flight Departure Delays Equipment Aircraft late to gate Personnel Passenger processing at gate Other Weather Air traffic delays Mechanical failures Late cabin cleaners Unavailable cockpit crew Late cabin crew Late baggage to aircraft Late fuel Late food service Contractor not provided updated schedule Poor announcement of departures Weight/balance sheet late Delayed check-in procedure Waiting for late passengers Delayed flight departures Materials Procedures Analyzing Flight Delays Using a Cause-And-Effect Diagram
20 Wellington Fiber Board Co. Example The Wellington Fiber Board Company produces headliners, the fiberglass components that form the inner roof of passenger cars. Management wants to identify which defects were most prevalent and to find the cause. They decide to use the following tools: Step 1. Checklist Step 2. Pareto chart Step 3. Cause-and-effect diagram Step 4. Bar chart
21 Wellington Fiber Board Co. Checklist Headliner Defects Defect type Tally Total A. Tears in fabric //// 4 B. Discolored fabric /// 3 C. Broken fiber board //// //// //// //// //// //// //// / 36 D. Ragged edges //// // 7 Total 50
22 Wellington Fiber Board Co. Pareto Chart 50 72% of the quality defects broken fiber board 100 Number of Defects C D A B Cumulative Percentage 0 Defect type 0
23 Wellington Fiber Board Co. Cause-and-Effect Diagram People Materials Training Out of specification Absenteeism Not available Communication Humidity Machine maintenance Schedule changes Machine speed Wrong setup Other Process Broken fiber board
24 Wellington Fiber Board Co. Number of Broken Fiber Boards First Second Third Shift Bar Chart
25 Redesigning the Process Ideas for process redesign and improvement can be uncovered by asking six questions about each step in the process and about the process as a whole. 1. What is being done? 2. When is it being done? 3. Who is doing it? 4. Where is it being done? 5. How is it being done? 6. How well does it do on the various metrics of importance?
26 Redesigning the Process Answers to the previous six questions are challenged by asking still another set of questions. Why is the process even being done? Why is it being done where it is being done? Why is it being done when it is being done? Brainstorming is letting a group of people, knowledgeable about the process, propose ideas for change by saying whatever comes to mind.
27 Benchmarking Benchmarking is a systematic procedure that measures a firm s processes, services, and products against those of industry leaders. Benchmarking focuses on setting quantitative goals for improvement. Competitive benchmarking is based on comparisons with a direct industry competitor. Functional benchmarking compares functional areas in the firm with those of outstanding firms in any industry. Internal benchmarking involves using an internal unit with superior performance as the benchmark for other units.
28 Benchmarking Steps Planning: Identify the process, service or product to be benchmarked and the firm(s) to be used for comparison. Determine the performance metrics and collect the data. Analysis: Determine the gap between the firm s current performance and that of the benchmark firm(s). Integration: Establish goals and obtain the support of managers who must provide the resources for accomplishing the goals. Action: Develop cross-functional teams of those most affected by the changes, develop action plans, implement the plans and monitor progress.
29 Managing Processes Failure to manage processes is failure to manage the business Seven common mistakes 1. Not connecting with strategic issues 2. Not involving the right people in the right way 3. Not giving the design teams and process analysts a clear charter and then holding them accountable
30 Managing Processes Seven common mistakes 4. Not being satisfied unless fundamental reengineering changes are made 5. Not considering the impact on people 6. Not giving attention to implementation 7. Not creating an infrastructure for continuous process improvement
31 Solved Problem 1 Create a flowchart for the following telephone-ordering process at a retail chain that specializes in selling books and music CDs. It provides an ordering system via the telephone to its timesensitive customers besides its regular store sales. The automated system greets customers, asks them to choose a tone or pulse phone, and routes them accordingly. The system checks to see whether customers have an existing account. They can wait for the service representative to open a new account. Customers choose between order options and are routed accordingly. Customers can cancel the order. Finally, the system asks whether the customer has additional requests; if not, the process terminates.
32 Solved Problem 1 SOLUTION Figure 4.15 Flowchart of Telephone Ordering Process
33 Solved Problem 1 SOLUTION
34 Solved Problem 2 An automobile service is having difficulty providing oil changes in the 29 minutes or less mentioned in its advertising. You are to analyze the process of changing automobile engine oil. The subject of the study is the service mechanic. The process begins when the mechanic directs the customer s arrival and ends when the customer pays for the services. SOLUTION Figure 4.15 shows the completed process chart. The process is broken into 21 steps. A summary of the times and distances traveled is shown in the upper right-hand corner of the process chart. The times add up to 28 minutes, which does not allow much room for error if the 29-minute guarantee is to be met and the mechanic travels a total of 420 feet.
35 Step No. Time (min) Distance Solved Problem 2 (ft) Step Description Summary X Direct customer into service bay Number Time Distance X ActivityRecord name and desired service of Steps (min) (ft) X Open hood, verify engine type, inspect hoses, check fluids Operation X Walk to customer in waiting area X Transport Recommend additional services X Wait for customer decision X Inspect Walk to storeroom X Delay Look up filter number(s) X Check filter number(s) X Store Carry filter(s) to service pit X Perform under-car services X Climb from pit, walk to automobile X Fill engine with oil, start engine X Inspect for leaks X Walk to pit X Inspect for leaks X Clean and organize work area X Return to auto, drive from bay X Park the car X Walk to customer waiting area X Total charges, receive payment Figure 4.16 Process Chart for Changing Engine Oil
36 Solved Problem 3 What improvement can you make in the process shown in Figure 4.16? SOLUTION Your analysis should verify the following three ideas for improvement. You may also be able to come up with others. a. Move Step 17 to Step 21. Customers should not have to wait while the mechanic cleans the work area. b. Store small inventories of frequently used filters in the pit. Steps 7 and 10 involve travel to the storeroom. c. Use two mechanics. Steps 10, 12, 15, and 17 involve running up and down the steps to the pit. Much of this travel could be eliminated.
37 Vanishing Cream Analysis Solved Problem 4 Vera Johnson and Merris Williams manufacture vanishing cream. Their packaging process has four steps: mix, fill, cap, and label. They have had the reported defects analyzed, which shows the following. Defect Frequency Incorrect mixture (mix) 7 Over- or underfilled (fill) 18 Jar lids did not seal (seal) 6 Labels smudged (label) 29 Total 60 Draw a Pareto chart to identify the vital defects.
38 Defect Frequenc y Incorrect mixture (mix) 7 Over- or underfilled (fill) 18 Jar lids did not seal (seal) 6 Labels smudged (label) 29 Total 60 Solution: Vanishing Cream Analysis Defective labels account for percent of the total number of defects: % = 48.33% Improperly filled jars account for 30 percent of the total number of defects: % = 30.00% The cumulative percent for the two most frequent defects is 48.33% % = 78.33% 7 Lumps represent 100% = 11.67% of defects; the cumulative 60 percentage is 78.33% % = 90.00%
39 Vanishing Cream Analysis Pareto Chart Frequency of Defects % 78% 90% 100% Cumulative Percentage of Defects 0 Label Fill Mix Seal 0
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