PROCESS SELECTION & ANALYSIS

Arijit Mitra
 PROCESS STRATEGY
• How an organization approaches process selection is determined by the
organization’s Process Strategy
• Key Aspects of Process Strategy:
• Capital Intensity
• The mix of equipment and labor that will be used by the organization
• Process flexibility
• The degree to which the system can be adjusted to changes in processing
requirements due to such factors as
• Product and service design changes
• Volume changes
• Changes in technology
 PROCESS SELECTION
• Process selection – It refers to deciding on the way
production of goods or services will be organized

• It has major implications for

Facilities and
Forecasting Capacity Equipment
• Capacity planning Planning
• Layout of facilities
Product and Layout
• Equipment
Service Design
• Design of work systems
Process
Technological Selection Work
Change Design
 PROCESS SELECTION: CONCEPT 1 - PRODUCT-PROCESS MATRIX

Two key questions in process selection:

1. How much variety will the process need to be able to handle?
2. How much volume will the process need to be able to handle?

Job
Shop
 The Trade-off Continuum
High Flexibility Lower Flexibility &
and High unit cost Lower unit cost
Job Shop Batch Assembly Line Continuous
Description Customized goods or Semi-standardized Standardized goods Highly standardized
services goods or services or services Goods or services

Advantages Able to handle a wide Flexibility; easy to add Low unit cost, high Very efficient, very high
variety of work or change products or volume, efficient volume
services

Disadvantages Slow, high cost per unit, Moderate cost per unit, Low flexibility, high Very rigid, lack of
complex planning and moderate scheduling, cost of downtime variety, costly to
scheduling complexity change, very high cost
of downtime
 MOVEMENT ALONG THE PP MATRIX:
HOOK AND SHIE STRATEGY

The same company, over a period, may move along the diagonal of the product
process matrix from low-volume to high-volume and may focus more on
standardization! Example - FORD

Hook Strategy: Keep the plant as it

is but increase the production.

Shie Strategy: Invest on Professional manager’s thinking.

plant, then increase the American way of thinking
production.

Japanese way of
thinking
 CONCEPT – 2 - PUSH/PULL PROCESS

Processes fall into push and pull depending on times of execution and customer demand
• Pull: Execution is initiated in response to a customer order (Reactive)
• Push: Execution is initiated in anticipation of customer orders (Speculative)
• The Push-Pull boundary - Decoupling Point
• At this point, the Product Postponement happens
• Product Postponement – Keeping the product in generic form by delaying the further investment / process until
the last possible moment
• Point of Discretization – When Liquid or gas is changed to solid (in case of steel etc.). It generally becomes a
decoupling point where postponement take place
 CONCEPT – 3 - PROCESSES ACCORDING TO LEAD TIME
• Engineer to Order (ETO) – Design will be started after the customer order
• Make-to-order (MTO)
• Only activated in response to an actual order
• Both work-in-process and finished goods inventory kept to a minimum
• Assemble to Order (ATO) – Parts will be stocked, but assembly will be done after customer order
• Make-to-stock (MTS)
• Process activated to meet expected or forecast demand
• Customer orders are served from target stocking level
 SANDWICH EXAMPLE: THE STORY OF THREE SANDWICHES
Buy RM Prepare Components Final Assembly Sell Product

PUSH PUSH PUSH PULL

Ready made Turkey Wrap

PUSH PUSH PULL PULL

Signature Ham Sandwich

PUSH PULL PULL PULL

One-of-a-kind Dagwood
 CONNECTING ALL THREE CONCEPTS

According to PP Matrix According to Lead According to Push-

time Pull

Job Shop ETO Pull is much more

Batch / Manufacturing MTO Pull is more and

Cell Push is Less

Assembly line / Flow ATO Push is more and

Shop Pull is Less

Continuous Process MTS Push is much more

Process
Analysis &
Little’s Law
 PROCESS ANALYSIS

• What is happening INSIDE the black box?

• Steps to understand that
I. Create a process flow diagram
II. Find the bottleneck of the process and determine the maximum flow rate
III. Conduct a basic process analysis
 EXAMPLE
Let us take the example of that Station Number Task Time (Seconds)
restaurant from where the Station 1 Greet Customer 4
employees are taking their lunch! Take Order 5
Get Bread/Wrap/Salad Bowl 4
Cut Bread 3
Meat 12
Cheese 9
Places & M/c pulls Toasting 30
Station 2 Onions 3
Lettuce 3
Tomatoes 4
Cucumbers 5
Pickles 4
Green Peepers 4
Black Olives 3
Hot Peepers 2
Place Condiments 5
Wrap/Napkins & Bag 13
Station 3 Offer Fresh Value Meal 3
Offer Cookies 14
Ring on Register 20
 DRAW A PROCESS FLOW DIAGRAM

• 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
 BASIC PROCESS VOC ABULARY FOR ANALYSIS

• Process: Is any part of an organization that takes inputs and

transforms them into outputs
• Processing times: how long does the worker spend on the task?
• Capacity=1/processing time: how many units can the worker make per unit of
time
• If there are m workers at the activity: Capacity = m/activity time
• Bottleneck: process step with the lowest capacity
• Process capacity: capacity of the bottleneck
• Flow rate =Minimum{Demand rate, Process Capacity)
• Utilization =Flow Rate / Capacity
• Flow Time:The amount of time it takes a flow unit to go through the process
• Work-In-Progress Inventory (WIP):The number of flow units in the system
 F I N D I N G T H E B OT T L E N E C K P R O C E S S A N D C Y C L E T I M E O F T H E OV E R A L L P R O C E S S

Station Number Task Time (Seconds)

37 Sec 46 Sec 37 Sec Station 1 Greet Customer 4
Take Order 5
Get Bread/Wrap/Salad Bowl 4
Cut Bread 3
Meat 12
Cheese 9
Places & M/c pulls Toasting 30
Station 2 Onions 3
Lettuce 3
• We will not draw all the sub-activities because all of them Tomatoes 4
are taking place within a particular station e.g., Station 1 Cucumbers 5
Pickles 4
• Intentionally I did not put the support activities, because Green Peepers 4
they are not directly contributing to the flow rate or flow Black Olives 3
time of the customer. We need not to consider them for Hot Peepers 2
process analysis Place Condiments 5
Wrap/Napkins & Bag 13
Station 3 Offer Fresh Value Meal 3
Offer Cookies 14
Ring on Register 20
 C AL CULATIN G T H E P RO C E S S PAR AM E T E RS : D I F F E RE NT S C E N AR IOS

Demand is Less than Process Capacity Demand is More than Process Capacity
Resource Station 1 Station 2 Station Units Resource Station Station Station Units
3 1 2 3
Processing Times (PT) 37 46 37 Sec/unit Processing Times (PT) 37 46 37 Sec/unit

Capacity of each process 0.02703 0.02174 0.02703 Units/sec Capacity of each process 0.02703 0.02174 0.02703 Units/sec
(1 / PT) (1 / PT)
Capacity of each process 97.297 78.261 97.297 Units/hr. Capacity of each process 97.297 78.261 97.297 Units/hr.
per hr. per hr.
Bottleneck Process X Bottleneck Process X

Process Capacity 78.261 Units/hr. Process Capacity 78.261 Units/hr.

Demand (for example) 80 80 80 Units/hr.

Demand (for example) 60 60 60 Units/hr.

Utilization of each station 61.67% 76.67% 61.67% Utilization of each station 82.22% 100% 82.22%
= Flow rate / Capacity = Flow rate / Capacity

Flow rate = 60 60 60 Units/hr. Flow rate = 78.261 78.261 78.261 Units/hr.

min { Demand, Capacity} min { Demand, Capacity}
Cycle Time = 1 / Flow 60 Sec/Unit Cycle Time = 1 / Flow Rate 46 Sec/Unit
Rate

Should we elevate the Bottleneck? Should we elevate the Bottleneck?

Flow Rate, Inventory and Flow Time

Inventory
- Sitting in front of the restaurant as an
(WIP)
observer……
Flow Time
- 25 minutes later

- Flow rate / throughput: number of flow units going

through the process per unit of time (Capacity or 1 / Cycle Time)
- Flow Time: time it takes a flow unit to go from the
beginning to the end of the process (Mfg. Lead Time)
- Inventory: the number of flow units in the process at a
given moment in time (WIP)
- Flow Unit: Customer or Sandwich
Other Examples: Three basic process metrics

Parameters Immigration Champagne MBA Program Auto Company

Department
Flow Unit Applications Bottle of Student Car
Champagne
Flow Rate (1/CT) Approved or Bottles sold per Graduating Sales per year
Rejected Cases year class
Flow Time / MLT Processing time Time in the 2 years 60 days
cellar
WIP Pending cases Content of cellar Total campus Inventory
population
Little’s Law: the relation among the three basic process
metrics

Inventory = Flow Time * Flow Rate

Basically, Given two of the
Or, three basic measures, you can
solve for the third!
Flow Time = Inventory (WIP) / Flow Rate

Or,

Flow Time = WIP X Cycle Time

Or,

Mfg. Lead Time (MLT) = WIP X Cycle Time

 Can you fill up the Rows “WIP Inventory”?

Demand is Less than Process Capacity Demand is More than Process Capacity
Resource Station 1 Station 2 Station 3 Units Resource Station 1 Station 2 Station 3 Units

Processing Times (PT) 37 46 37 Sec/unit Processing Times (PT) 37 46 37 Sec/unit

Capacity of each process 0.02703 0.02174 0.02703 Units/sec Capacity of each process 0.02703 0.02174 0.02703 Units/sec
(1 / PT) (1 / PT)
Capacity of each process 97.297 78.261 97.297 Units/hr. Capacity of each process 97.297 78.261 97.297 Units/hr.
per hr. per hr.
Bottleneck Process X Bottleneck Process X

Process Capacity 78.261 Sec/unit Process Capacity 78.261 Sec/unit

Demand (for example) 60 60 60 Units/hr. Demand (for example) 80 80 80 Units/hr.

Utilization of each station 61.67% 76.67% 61.67% Utilization of each station 82.22% 100% 82.22%
= Flow rate / Capacity = Flow rate / Capacity
Flow rate = 60 60 60 Units/hr. Flow rate = 78.261 78.261 78.261 Units/hr.
min { Demand, Capacity} min { Demand, Capacity}
Cycle Time = 1 / Flow 60 Sec/Unit Cycle Time = 1 / Flow 46 Sec/Unit
Rate Rate
Flow Time (MLT) 37 + 46 + 37 = 120 Sec/Unit Flow Time (MLT) 37 + 46 + 37 = 120 Sec/Unit

Inventory in the System ? Inventory in the System ?

(WIP) (WIP)
Other Examples

1. Indirect measurement of flow time: how long does it take you on average to respond to
an email? Given are:
• You write 60 email responses per day
• You have 240 emails in your inbox

2. In a large Philadelphia hospital, there are 10 births per day.

• 80% of the deliveries are easy and require mother and baby to stay for 2 days
• 20% of the cases are more complicated and require a 5 day stay

• What is the average occupancy of the department?

Little’s law: Some remarks

• Not an empirical law

• Robust to variation, what happens inside the black box
• Deals with averages – variations around these averages will
exist
• Holds for every time window
• Shown by Professor Little in 1961
 Revisit Problem – 1 with Little’s Law

A production process at Kenneth Day Manufacturing is shown in the figure below. The drilling operation occurs separately
from, and simultaneously with, sawing and sanding, which are independent and sequential operations. A product needs to
go through only one of the three assembly operations (the operations are in parallel).
1. Which operation is the bottleneck?
2. What is the bottleneck time?
3. What is the throughput time (MLT) of the overall system?
4. What is the average WIP in the system?
5. If the firm operates 8 hours per day, 20 days per month, what is the monthly capacity of the manufacturing process?
 Revisit Problem – 2 with Little’s Law

Cleaning

Takes Develops 24 min/unit Check

Check in Dentist
X-ray X-ray out

2 min/unit 2 min/unit 4 min/unit X-ray 8 min/unit 6 min/unit

exam

5 min/unit

1. Which operation is the bottleneck?

2. What is the bottleneck time?
3. What is the throughput time of the overall system? What does it signify in this case?
4. What is the average WIP in the system?
5. If the dispensary operates 8 hours per day, 22 days per month, what is the monthly capacity of the
dispensary?
PROCESS CYCLE TIME REDUCTION OR CAPACITY ENHANCEMENT

• Perform activities in parallel

• Change the sequence of activities

• Reduce interruptions

• Add resource
 CAPACITY & PROCESS ANALYSIS: A PROBLEM

Bread Fill
15 sec/sandwich 20 sec/sandwich
Wrap/
Order Toaster
Deliver
30 sec/sandwich 20 sec/sandwich
Bread Fill 37.5 sec/sandwich

15 sec/sandwich 20 sec/sandwich

• Find out the Capacity of the system

• How to increase capacity of this process?