Process Analysis & Flowcharting

Process Analysis Terms

Process: Is any part of an organization that takes inputs and transforms them into outputs Utilization: Is the ratio of the time that a resource is actually activated relative to the time that it is available for use

Process Flowcharting Defined

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

2007 Pearson Education

Flowchart Symbols
Examples: Giving an admission ticket to a customer, installing a engine in a car, etc.

Tasks or operations

Decision Points

Examples: How much change should be given to a customer, which wrench should be used, etc.

Flowchart Symbols

Storage areas or queues

Examples: Sheds, lines of people waiting for a service, etc.

Flows of materials or customers

Examples: Customers moving to a seat, mechanic getting a tool, etc.

Types of Processes Single-stage Process

Stage 1

Multi-stage (Sequential) Process

Stage 1 Stage 2 Stage 3

Types of Processes
Parallel Processes
Stage 1

Stage 1

Stage 2

Stage 1

Types of Processes (Continued)

A buffer refers to a storage area between stages where the output of a stage is placed prior to being used in a downstream stage

Multi-stage Process with Buffer

Buffer

Stage 1

Stage 2

Other Process Terminology

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

Other Process Terminology (Continued)

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 multistage process, work will begin to pile up in front of that employee. In this is case the employee represents the limited capacity causing the bottleneck. maximum rate of output of a process or system.

Capacity

Process Performance Metrics

Operation time = Setup time + Run

time Cycle time = Average time between completion of units & equals time it takes to process a unit at the bottleneck Throughput time = Time it takes a single unit to go through the process from start to finish

Process Performance Metrics (Continued)

Throughput rate =

1 Cycle time

Utilization = Throughput Rate Process Capacity

Cycle Time Example

Suppose you had to produce 600 units in 80 hours to meet the demand requirements of a product. What should the cycle time be to meet this demand requirement (or in other words what should be the maximum amount of time a unit can spend at the bottleneck activity)? Answer: There are 4,800 minutes (60 minutes/hour x 80 hours) in 80 hours. So the average time between completions would have to be: Cycle time = 4,800/600 units = 8 minutes.

Where the bottleneck?

Customer
No

3. Check for credit rating (15 minutes)

5. Is loan approved? (5 min)

Yes

1. Check loan documents and put them in order (10 minutes)

2. Categorize loans (20 minutes)

6. Complete paperwork for new loan (10 minutes)

4. Enter loan application data into the system (12 minutes)

Where is the Bottleneck?

Customer
3. Check for credit rating (15 minutes) 1. Check loan documents and put them in order (10 minutes) 2. Categorize loans (20 minutes) No 5. Is loan approved? (5 min) Yes

Bottleneck
4. Enter loan application data into the system (12 minutes)

6. Complete paperwork for new loan (10 minutes)

What is the throughput time? What is the cycle time? What is the throughput rate? What is theEducation utilization rate of each station? 2007 Pearson

Bottleneck, Cycle Time and Throughput Rate & Time

Customer
3. Check for credit rating (15 minutes) 1. Check loan documents and put them in order (10 minutes) 2. Categorize loans (20 minutes) No 5. Is loan approved? (5 min) Yes

Bottleneck
4. Enter loan application data into the system (12 minutes)

6. Complete paperwork for new loan (10 minutes)

It takes 10 + 20 + max (15, 12) + 5 + 10 = 60 minutes to complete a loan application (throughput time). Unless more resources are added at step 2, the bank will be able to complete only 3 loan accounts per hour (note cycle time is 20 minutes), or 15 new load accounts in a five-hour day.

Utilization Rates at the each station

Customer
3. Check for credit rating (15 minutes) 1. Check loan documents and put them in order (10 minutes) 2. Categorize loans (20 minutes) No 5. Is loan approved? (5 min) Yes

Bottleneck
4. Enter loan application data into the system (12 minutes)

6. Complete paperwork for new loan (10 minutes)

Utilization Rate = Throughput Rate/Capacity Rate Station 1: 3/6 = .5 (50%) Station 2: 3/3 = 1 (100%) Station 3: 3/4 = .75 (75%)

Station 4: 3/5 = .6 (50%)

Station 5: 3/12 = .25 (25%)

Station 6: 3/6 = .5 (50%)

Example: Receiving goods to warehouse High level view

Goods are received at dock

Goods are inspected

Goods are put in warehouse

Warehouse supplies assembly floor

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Goods are received at dock

Goods get inspected

Contents match order?

no

Somehow tell purchasing

yes Incoming quality check

no

Goods are accepted?

yes Receiving notifies warehouse to pick up

Example: Receiving goods to warehouse: Detailed view

Receiving Goods are received at dock

Purchasing

Quality Assurance

Warehouse

Goods get inspected

Contents match order? no

yes

Incoming quality check

Somehow tell purchasing

2007 Pearson Education

Advise supplier of rejection

no

Goods are accepted?

yes

Pick up goods from QA area

Example: Receiving goods to warehouse Detailed view What is the throughput time for good items?
Receive Goods What is the capacity of each station? Where is the bottleneck? What is the cycle time? Inspect Goods (30) What is the throughput rate? If there are 15 orders coming in an 8 hr day, what would each stations utilization rate be?

Match order? (10)

Yes

Quality Check (45)

No Inform Purchasin g Supervisor Report (5) No Accept? (2) Yes Goods 4 pick up

Example: Receiving goods to warehouse What is the throughput time for good items? Detailed view What is the capacity of each station?
Receive Goods

Where is the bottleneck?

What is the cycle time? What is the throughput rate?

Inspect Goods (30)

Quality Check (45)

Goods 4 pick up Yes

Match order? (10)

Yes

Quality Check (45)

No

Accept? (2)

No Inform Purchasin g
2007 Pearson Education

Supervisor Report (5)

If we get 15 orders in an 8 hr day, what would the utilization rate be for each station?

In class Exercise: Emergency Room Case

The first thing patients do when they arrive into an emergency room is register with the front desk unless it is a life threatening condition that requires immediate attention. Those are taken immediately inside to one of the exam rooms where they receive care from the ER doctor and nurses to stabilize them. Almost all of these patients will be admitted to the hospital for further tests, observation, or surgery. The non-critical patients have to wait in a lounge until one of the exam rooms empties at which time a nurse invites them in, takes down their vital signs (blood pressure, temperature, heart rate) and then she documents their ailment. At their leisure the ER doctor comes in examines the patient and either orders more tests or prescribes medication and releases the patient. Those requiring more tests have to wait for the test results from the lab or radiology before receiving further treatment. Some of those patients are released while others are admitted to the hospital. Patients released have to settle their bills before heading home.

END 1 DISCHARGE

PRESCRIBE MEDS NO WAIT REGISTER VITAL SIGNS WAIT MED EXAM MORE TESTS ? YES ER CARE HOSP ADMIT END BLOOD WORK XRAY, OTHERS WAIT

EVALUATE RESULTS YES

EMERGENCY ROOM FLOWCHART

SERIOUS AILMENT ? NO 1

END

DISCHARGE REG PRESCRIBE MEDS NO CHECK VITAL SIGNS

MED EXAM

MORE TESTS YES PERFORM TESTS WAIT

EVALUATE RESULTS

SERIOUS AILMENT ? YES

NO

HOSP ADMIT

IDEAL ER SCENARIO!

END

Process Throughput Time Reduction

Perform activities in parallel

Change the sequence of activities Reduce interruptions

7 Key Principles
1.

The focus is on balancing flow, not on balancing capacity.

Maximizing output and efficiency of every resource will not maximize the throughput of the entire system. An hour lost at a bottleneck or constrained resource is an hour lost for the whole system. An hour saved at a non-constrained resource does not necessarily make the whole system more productive. Inventory is needed only in front of the bottlenecks to prevent them from sitting idle, and in front of assembly and shipping points to protect customer schedules. Building inventories elsewhere should be

2.

3.

4.

7 Key Principles (continued)

5. Work should be released into the system only as frequently as the bottlenecks need it. Bottleneck flows should be equal to the market demand. Pacing everything to the slowest resource minimizes inventory and operating expenses. Activation of non-bottleneck resources cannot increase throughput, nor promote better performance on financial measures. Every capital investment must be viewed from the perspective of its global impact on overall throughput (T), inventory (I), and operating expense (OE).

6.

7.

Operational Measures & Financial Measures

Operational Measures Inventory (I) Description Relationship to Financial Measures A decrease in I leads to an increase in net profit, ROI, and cash flow An increase in T leads to an increase in net profit, ROI, and cash flows A decrease in OE leads to an increase in net profit, ROI, and cash flows An increase in U at the bottleneck leads to an increase in net profit, ROI, and cash flows

All the money invested in the system in purchasing things that it intends to sell Rate at which system generates money through sales All the money the system spends to turn inventory into throughput The degree to which equipment, space, or labor is currently being used, and is measured as the ratio of average output rate to maximum capacity, expressed as a %

Throughput (T)

Operating Expense (OE) Utilization (U)