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Five process elements: 1. Inputs and outputs 2. Flow units 3. A network of activities and buffers 4. Resources and 5. Information structure Some generic business processes Process Order fulfillment Production Customer service Cash cycle Flow Unit Orders Products Customers Cash Transformation From the receipt of an order to the delivery of the product From the receipt of materials to the completion of the finished product From the arrival of a customer to the departure From the expenditure of funds to the collection of revenues
Network of Activities and Buffers Inputs
Source: OperationsNow by Finch & Managing Business Process Flows by Anupindi, et al.
setting up a machine. Process cost is the total cost incurred in producing and delivering outputs. 2. Value adding activities – increase the economic value of a flow unit because they are valued by the customer. It is an integrative measure of overall process performance – short flow time frequently requires a high level of overall operational excellence. Process quality is the ability of the process to produce and deliver quality products. auditing and inspection.Process View is a tool for: 1. filling out a form. 2. Flow time affects delivery response time. piloting an airplane. evaluating a loan application. Process flow time is the total time needed to transform a flow unit from input into output. Process Attributes: 1. For each flow unit in the sample. 4. 4. extended period of time. Shorter flow times reduce the inventory and associated costs. measure its flow time from entry to exit. Compute the average of flow times measured. 2. Source: OperationsNow by Finch & Managing Business Process Flows by Anupindi. Studying the ways in which processes can be designed. and waiting time (the total amount of time that a flow unit spends in the process waiting to be processed. Direct measurement of flow time: 1. 2. Activity Major Categories: 1. et al. 3. Observe the process over a specified. Process flow time: the advantages of a shorter flow time are: 1. serving meals in a hospital. restructured. 3. 3. Take a random sample of flow units over the specified period. Non value adding activities – while not directly increasing the value of a flow unit are required by the firm’s current process structure. For example: performing surgery. Process flexibility is the ability of the process to produce and deliver desired product variety. and managed to improve performance. Process flow chart is a graphical representation of all the elements that make up a process. and included theoretical flow time (the minimal time require to process a flow unit that does not have to wait at any point in the process). Evaluating processes and 2. 2 . Flow Time: the total amount of time that a flow unit spends in a process. For example: moving work.
and 3. 2. Given: Throughput rate = R = 1500/day or 100 customers / hour Average inventory = I = 75 customers Derived: Time = I/R = 75/100 or average customer spends ¾ hour in the restaurant. Add waiting times in buffers to the theoretical flow time of the appropriate path. Obtain the average flow time of the process by finding the path whose overall length (activity plus waiting) is maximal. A process improvement team was set up to study the X-ray service process and recommend improvements. 75 customers in the restaurant. Treat waiting in each buffer as an additional (passive) activity with activity time equal to the amount of time spend in that buffer. Flow time = value adding flow time + non value adding flow time Flow time efficiency = theoretical flow time / average flow time EXAMPLE (Hospital Process) A hospital has undertaken a series of process improvement initiatives. In addition. et al. there are. One of the first processes targeted for improvement is the X-ray service. At any point in time. 3 .Indirect measurement of flow time: Little’s Law: T = I / R T (average flow time) = I (average inventory) / R (average throughput or flow rate) Example (customer flow): A restaurant processes. on average. Theoretical flow time = minimal amount of time required for processing a typical flow unit – without any waiting. A major concern is the amount of time required to get an X ray. on average. The team identified the point of entry into the process as the instant that a patient leaves the physician’s office to walk to the X- Source: OperationsNow by Finch & Managing Business Process Flows by Anupindi. management would like to make sure that available resources are utilized efficiently. Average flow time: we can combine the process flow chart with information about waiting in its various buffers to study flow time using this procedure: 1. 1500 customers per 15-hour work day.
To further study process flow time. activities 7. The average of the 50 data points was 154 minutes. and sends to the insurer 4 Patient undresses in preparation for X-ray 5 A lab technician takes X-ray 6 A darkroom technician develops X-ray 7 The X-ray technician checks X-ray for clarity: If an X-ray is not satisfactory. and 9 are repeated (on average 75% of X-rays are found satisfactory the first time.3 The receptionist receives the patient information concerning insurance prepares and signs a claim form. For each patient. serves as an estimate of the average flow time for the X-ray service process. To determine the flow time of the existing process. 8.ray lab.11 Patient and X-rays arrive at the Physician’s office Type Event: start of process Activity: Transport Activity: Transport Activity: Support 5 6 7 8 Activity: Support Activity: Support Activity: Value added Activity: Value added Activity: Inspection Activity: Support Activity: Transport Activity: Transport Event: end of process 4 9 10 11 End Source: OperationsNow by Finch & Managing Business Process Flows by Anupindi. the team recorded times of entry and exit from the X-ray service process. . The difference between these two times was then used as a measure of flow time for each patient. et al. the team examined the entire process in detail and broke it down into the constituent activities identified in the following table. then. virtually no units require more than two takes. while 25% require on retake. The point of exit was defined as the instant that both the patient and the completed X-ray film are ready to enter the physician’s office for diagnosis. a random sample of 50 patients was observed over a two-week period. 8 Patient puts on clothes and get ready to leave lab 9 Patient walks back to the physician’s office 8 The X-rays are transferred to the physician by a messenger 10. Activity/ Event Dep Start 1 2 3 4 Description Patient leaves the physician’s office Patient walks to the X-ray lab The X-ray request travels to the X-ray lab by messenger 2 An X-ray technician fills out a standard form based on the information supplied by the physician 1. This figure.
et al. The total work content of these paths are 50. Activity Start 1 2 3 4 5 6 7 8 9 10 11 End Activity Time 7 20 6 5 3 6 12 2 3 7 20 Number of visits per flow unit 1 1 1 1 1 1 1.25 1 1 1 1 Work content per flow unit 7 20 6 5 3 7. There are two basic approaches to reducing the work content of a critical path: 1.5 15 2.25 1. The average work content for each of these activities is thus obtained by multiplying their activity times by 1. Reducing work content: 1. This implies that waiting corresponds to about half the time in this process. 2.25 1.5 3 7 20 - Four activity paths are identified. Decrease the work content of an activity on the critical path 2. Because the actual flow time was measured at 154 minutes. For each patient. Eliminate non-value-adding aspects of the activity (work smarter). Source: OperationsNow by Finch & Managing Business Process Flows by Anupindi. the only way to reduce it is by shortening the length of every critical path. Because theoretical flow time is determined by the work content of its critical path. 7 and8 were repeated once for 25% of the patients.A process flow chart is developed based on the information in the table. 3. 60 and 79. as well as the number of visits to that activity were recorded.25. flow-time efficiency is expressed as: 79/154 = 51%. 4. 5 . The data and computations are recorded below. 69. Next. Increase the speed at which the activity is performed (work faster).25. Change the product mix. Reduce the number of repeat activities (do it right the first time). the average number of visits to these activities is 1. The path with the theoretical flow time of 79 minutes is the CRITICAL PATH. Because activity 6. another sample of 50 patients was studied over a two-week period. the times required to perform each activity. Move some of the work content off the critical path.
m. or 5.The average flow rate (throughput) of a stable process can be determined by the following four-step process: 1. Identify a particular entry and exit point in the process. to 5:00 p. et al. six days per week. Observe the process over a given. Theoretical capacity Resource Unit load Resource pool (min/pat) Messenger 40 Receptionist 5 X-ray tech 16 X-ray lab 7. 6 .5 patients/hour utilization is computed: Source: OperationsNow by Finch & Managing Business Process Flows by Anupindi.5 Darkrm tech 15 Darkroom 15 Chang rm 6 Theoret Capacity Res Units (pat/hr) 1. Resource pools with minimum theoretical capacity are called theoretical bottlenecks. Compute the average number of flow units per unit of time. 3. The theoretical capacity of a resource pool is the sum of the theoretical capacities of all the resources units in that pool. The theoretical capacity of a process is the theoretical capacity of its slowest resource pool. 4.5 patients per hour.m. Measure the number of flow units that pass through the selected point over the selected period of time. 2. Based on a throughput of 5. All resources are scheduled for operation from 9:00 a. each day. units in Res Pool Resource Pool (pat/hr) 6 9 1 12 4 15 2 16 3 12 2 8 2 20 Load Batch (pat/batch) 1 1 1 1 1 1 1 Note that the theoretical bottleneck resource is the darkroom with a capacity for processing 8 patients per hour. Theoretical capacity of a resource unit: (1/unit load) * load batch * scheduled availability Continuing the previous example: By observing the number of patients processed over a three-week period the hospital found that its X-ray unit process. 44 patients per eight hour day. on average.75 8 4 4 10 Theoret Cap of No.5 12 3. extended period of time. Capacity utilization =Throughput / Theoretical capacity The theoretical capacity of a resource unit is its maximum sustainable flow rate if it were fully utilized during its scheduled availability.
38 45. perform preventative maintenance outside periods of scheduled availability. Work faster. b.67 34. ii. Manage supply and demand to increase the throughput. b. a. 2. Invest in flexible resources. Improve maintenance policies. 7 . a. Synchronize flows within the process to reduce starvation. a. c. Increase the theoretical capacity.50 Key Managerial Levers for Managing Flow Rate: 1. d. Decrease unit load on the bottleneck resource pool. et al.Theoret ical Capacity Of Resource Pool Resource pool (min/pat) Messenger 9 Receptionist 12 X-ray tech 15 X-ray lab 16 Darkrm tech 12 Darkroom 8 Chang rm 20 Capacity Utilization (%) 61. 4.11 45. Increase scheduled availability of the bottleneck resource pool (work longer). Source: OperationsNow by Finch & Managing Business Process Flows by Anupindi. c. do it right the first time. institute effective problem solving measures that reduce frequency and duration of breakdowns. i. Increase the net availability of resources to increase process capacity. produce better forecasts of demand. Increase the load batch of resources in the bottleneck resource pool (increase scale of resource). a. 3. Reduce the frequency of or time required for setups or changeovers for a given product mix or change the product mix.83 36. work smarter. increase employee morale.83 68. Institute motivational programs and incentives to reduce absenteeism. change product mix. Set appropriate size buffers to reduce blockage. Have reliable suppliers. iii. Decrease resource idleness to increase process capacity. b.75 27. Subcontract or outsource. Increase the number of units in the bottleneck resource pool (increase scale of process).
as listed below. et al. larger facility. 8 .t LS LF Source: OperationsNow by Finch & Managing Business Process Flows by Anupindi. It has identified eight activities necessary to bring the new facility into production.5 6 7 Time (weeks) 4 10 2 4 3 16 4 1 3 (2) 1 (4) 2 (10) 4 (4) 5 (3) 6 (16) 7 (4) 8 (1) ES 1 (21) EF ES = earliest start EF = earliest finish LS = latest start LF = latest finish EF = ES + t LS = LF . Precedence relationships and an estimated time are included for each activity.Project Management (source: Finch. Identify the critical path. Activity Needs analysis Architect plans Equipment selection Building permits and zoning Vendor ID and equipment order Construction Interior finish Installation and setup Designation 1 2 3 4 5 6 7 8 Immediate Predecessors 1 2 2 3 4. Operations Now) A small printing shop has determined that it has the demand and market potential to build a new.
2. LS and LF for each activity. most likely (m). 2 ∑ σ cp = Sum of all the variances along the critical path. the best procedure is to use three time estimates: minimum (a). Determine the activities that need to be accomplished to complete the project. Determine the precedence relationships and estimated completion times for each activity. maximum (b). Construct a network diagram for the project. ET = ( a + 4m + b ) / 6 Variance (σ2 ) = ( (b – a) / 6 )2 Z= D − TE ∑ σ cp 2 D = Desired completion date for the project. et al. Determine the critical path by identifying the path that takes the longest. 5. 3 (2) 1 (4) 2 (10) 4 (4) 5 (3) 6 (16) 7 (4) 8 (1) If a single estimate of the time required to complete an activity is not reliable.Steps: 1. 9 . 4. TE = Expected completion time for the project. EF. Add this information to the network diagram using conventional notation. 3. Determine the earliest start schedule and latest start schedule by calculating ES. Source: OperationsNow by Finch & Managing Business Process Flows by Anupindi.
What is the probability of completing the project in 39 weeks? Source: OperationsNow by Finch & Managing Business Process Flows by Anupindi. 7. 2. Create estimates for a. Determine the earliest start schedule and latest start schedule by calculating ES. Determine the activities that need to be accomplished to complete the project. 10 . Add this information to the network diagram using conventional notation. 3. 5. 4. Calculate the variances (σ2) for the activity times. et al. a m b 1 3 4 5 2 8 10 12 3 1 2 4 4 5 6 7 8 3 2 13 3 1 4 3 16 4 1 6 4 20 6 2 ET Variances Steps (Expanded): 1.Activity Needs analysis Architect plans Equipment selection Building permits and zoning Vendor ID and equipment order Construction Interior finish Installation and setup Time Estimates (weeks) Desg. m and b. EF. Determine the precedence relationships and estimated completion times for each activity. 6. Determine the critical path by identifying the path that takes the longest. LS and LF for each activity using TE for the estimated times. Calculate the probability of the desired due date D. Construct a network diagram for the project.