MGMT 208:

Operations
Management
Fall 2011
Class #2

Toyotas Way
What is Toyota doing now?
Taiichi Ohnos answer was very simple:
All we are doing is looking at the time line from the moment
the customer gives us an order to the point when we collect
the cash. And we are reducing that time line by removing the
non-value-added wastes.
(Taiichi Ohno. Toyota Production System: Beyond Large-Scale Production.
p. ix.)

http://www.youtube.com/watch?v=kq4JVkkCzKY

Littles Law
Example

A major manufacturer sells $300 million

worth of cellular equipment per year.
Average amount in accounts receivable is
$45 million. What is the average elapse
time from the time a customer is billed to
the time payment is received?
Note that in this case, the process is the
manufacturers account receivable department
and the flow unit is a dollar in accounts
receivable.

Analyzing the
Job
Flow process chart
Chart used to examine the overall
sequence of an operation by focusing on
movements of the operator or flow of
materials

7-4

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)

7-5

7-6

De
lay
Sto
rag
e

ion
ect

Ins
p

ent
vem

ion

Requisition made by department head

Put in pick-up basket
To accounting department
Account and signature verified
Amount approved by treasurer
Amount counted by cashier
Amount recorded by bookkeeper
Petty cash sealed in envelope
Petty cash carried to department
Petty cash checked against requisition
Receipt signed
Petty cash stored in safety box

Mo

Details of Method

Op

ANALYST PAGE
Job Requisition of petty cashD. Kolb 1 of 2

era
t

FLOW PROCESS CHART

7-7

Questions to ask when adopting a

process view
1. What are the process boundaries: what is the input and output?
2. What is the flow unit or the unit of analysis?
3. Attach yourself to the flow unit and record its process steps
through the process
What are the value-added and necessary activities? What are
the associated processing times or work content?
Where does the flow unit wait (buffers)? What are the
associated waiting times?
What are the routes a flow unit can take? What are necessary
precedence relationships? (i.e., what must be done
sequentially?)
Note that the first improvement step will be to delete non-valueadded and unnecessary activities and buffers = waste

Questions to ask when adopting a

process view (Cont.)
4. Who does the work? What are the resources for each activity?
What are all the activities a given resource performs? (crosstraining , flexibility)
What are the resource constraints? What determines the flow
rate? (demand or capacity)
Key for Capacity Analysis
How is quality measured?
What is the cost of each resource?
5. What information is required to perform each activity? Where does
this information come from? This specifies the information flow
(dashed lines)

Case Study
Paediatric Orthopaedic Clinic at the Children's

Hospital of Western Ontario

Introduction
As Chief of Paediatric Orthopaedic Surgery, Dr. Leitch was

very concerned by the long wait times that the young

patients (and their parents) were experiencing in the clinic.
Long wait times tended to aggravate the already pent-up
distress and concern that they were feeling. She glanced at
recently collected data on service times and wondered how
the process might be improved, while continuing to balance
budgetary pressures to reduce costs. Moreover, any changes
could not be done in isolation, as her clinic shared resources
with other departments. A monthly executive meeting was
fast approaching, and expectations were starting to run high
that Leitchs efforts might be able to spur improvements in
other departments too.

Issues
Major:
Reducing lengthy wait times
Minor:
Improving process and service performance
Reducing variability in activity times and wait
times
Identifying the interactions with patients from
other departments (shared resources)
Efficiently managing both demand and human
resources to address patient needs.

Average Patient Mix at the Clinic

Patients - 80

New 80
(40% of total
patients)

Follow-up - 48
(60% of total
patients)

Need X-Ray 40.8

(85% of follow-up
patients)

No X-Ray required7.2
(15% of follow-up
patients)

Process Flow Diagram