Operations Management

For Competitive Advantage

Process Analysis
 PROCESS ANALYSIS

“IF YOU CANNOT DESCRIBE WHAT YOU ARE DOING AS A

PROCESS, YOU DO NOT KNOW WHAT YOU ARE DOING.”
W.E. DEMING
What is a process?
A process is a series of independent tasks
that transforms an input into output material
of higher value for the organization

Examples:
1. Honda transforms steel, rubber, and plastic into cars
2. McDonald’s transforms meat, potatoes, and sauces
into packaged food
3. Dell transforms customer orders into PC’s
Process Analysis
• Process Analysis

• Process Flowcharting

• Types of Processes

• Process Performance Metrics

 Process Analysis Terms
• Process: Is any part of an organization that takes inputs and
transforms them into outputs.

• Cycle Time: Is the average successive time between

completions of successive units.

• 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.
Flowchart Symbols

Tasks or operations Examples: Giving an

admission ticket to a
customer, installing a
engine in a car, etc.

Decision Points Examples: How much

change should be
given to a customer,
which wrench should
be used, etc.
Flowchart Symbols (Continued)
Storage areas or Examples: Sheds,
queues lines of people waiting
for a service, etc.

Flows of Examples: Customers

materials or moving to the a seat,
customers mechanic getting a
tool, etc.
Example: Flowchart of Student Going to
School

Go to Yes
Drive to Walk to
school school class
today?

No

Goof
off
Multistage Process

Stage 1 Stage 2 Stage 3

Multistage Process with Buffer

Buffer
Stage 1 Stage 2
 Other Types of Processes
• Make-to-order
• Only activated in response to an actual order.
• Both work-in-process and finished goods inventory kept to
a minimum.
• Make-to-stock
• Process activated to meet expected or forecast demand.
• Customer orders are served from target stocking level.
 Process Performance Metrics
• Operation time = Setup time
Run time

• Throughput time = Average time for a unit to

move through the system

• Velocity = Throughput time

Value-added time
 Process Performance Metrics (Continued)
• Cycle time = Average time between
completion of units
• The cycle time is the fastest repeatable time in which
you can produce one part.

• Throughput rate = 1 .
Cycle time

• Efficiency = Actual output

Standard Output
 Computing Cycle Times

Processing a fixed amount of work

Example: Producing 100 cars. On average, production

takes 5 hours per car. It takes 50 hours to set up the
production line.

Set-up Time + (Batch size) x (Time per unit)

Cycle Time =
Batch size
 Computing Cycle Times

Processing a fixed amount of work

Example: Producing 100 cars. On average, production

takes 5 hours per car. It takes 50 hours to set up the
production line.

50 + (100) x (5)
Cycle Time =
100
5.5 Hr/Car
 Computing Cycle Times
Setup time: Production Time:
15 min 25min/unit

A B

Question: What is the cycle time between points A and B

of the process, if we work in batches of 10?

Set-up Time + (Batch size) x (Time per unit)

Cycle Time =
Batch size
 Process Performance Metrics (Continued)

• Productivity = Output
Input

• Utilization = Time Activated

Time Available
 Cycle Time Example
• Suppose you had to produce 600 units in 80 hours to meet
the demand requirements of a product. What is the cycle
time to meet this demand requirement?

• 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.
 Process Throughput Time Reduction
• Perform activities in parallel.

• Change the sequence of activities.

• Reduce interruptions.
Have you observed such situation?
What is a bottleneck?
Bottleneck is the
process stage with the
smallest throughput rate
(longest cycle time)

Which task is the bottleneck?

3 units/hr 5 units/hr 2 units/hr

 A bottleneck is a limiting factor or
constraint.
 A bottleneck has the lowest effective
capacity in a system.
Capacity of a process

The capacity of the process is:

minimum throughput rate at any of the stages

What is the capacity of this process?

3 units/hr 5 units/hr 2 units/hr

 How do we measure throughput time?

Throughput Time: Average time that a unit takes to go

through the entire process
(including waiting time). Measured as
time
Work in Process(WIP): Average number of units in
system over a time
interval. Measured as
units

Key
WIP
relationship Throughput time =
Throughput rate

(Little’s Law)
How do we analyze a complex process…

1. Look at the process step by step

2. Determine throughput rate (i.e. capacity) of each step
3. Identify the process bottleneck (smallest processing
rate, or largest cycle time).
4. The capacity of the process is equal to the capacity of
the bottleneck
Example : hammer production process
Description
1. Work begins at the machining center. Here two lines
form the heads of the hammers and place them in a
buffer.
2. Handles are attached at the assembly step.
3. Finished hammers are sent to the next stage, where
they are packed and shipped.

machining
pack and
assembly
ship
machining
 Let’s analyze the hammer process…
machining
pack and
assembly
ship
machining

Process Data:
• machining: Set up 80 min. 4 min per unit processing.
Batch size 200. Identical lines.
• assembly: Manual by two workers (no set up). Each
hammer requires 40 min processing. 34 workers available.
• pack and ship: 30 min set up, 2 min per unit processing.
Lot sizes of 100.
Step 1: Machining

• Look at one line. 200 units require:

80 + 200  4 = 880 minutes/200 units
• The throughput rate is:
200 / 880 = 0.227 units/minute
= 13.63 units/hour
• But we have two identical lines, so for the machining step
capacity is 2  13.63 = 27.26 units/hour.
Step 2: Assembly

• 1 unit requires 40 min processing time, so the

throughput rate is:
1 unit / 40 min = 0.025 units/min
= 1.5 units/hr
• 34 workers available, but 2 workers are required for
each unit, so assembly capacity is:
17  1.5 = 25.5 units/hr
Step 3: Pack and ship

• Similar to machining:
30 + 100  2 = 230 min/100 units

• Pack & ship capacity is:

100 / 230 = 0.43 units/min

= 26.09 units /hr
Hammer process: what is the
capacity?
Process Step Capacity (units/hr)
Machining 27.26

Assembly 25.50

Pack & Ship 26.09

Assembly is
the
bottleneck!
THANK YOU