Process Design

• Operations management is concerned with ensuring that organizations meet their

target objectives, promises while simultaneously creating value for their stakeholders.
• The basic building block of any accomplishing any such objective is operating
processes.
• A process is a set of tasks to be performed in a defined sequence and uses inputs such
as labor, capital, knowledge, raw materials and energy.
• Examples: Automobile assembly, steel making and all types of manufacturing
processes
• Service sectors: Banking, Tech, Consultants, Retail etc.
• All economic activity has a customary underlying process involved. Public or private,
manufacturing or service, for-profit or not-for-profit organizations set out to achieve
their target objectives through some kind of operating processes.
Some examples of operating processes
Constituents of a process in a hospital
• Takes input as a sick patient.
• Applies labor (doctors, nurses and other
personnel)
• Uses energy and supplies (cotton,
syringes, beds, towels etc)
• Knowledge in the form of technical
expertise of doctors
• Technology in the form of MRI, CT scans
equipments.
• Produces a healthy patient as an output
(hopefully!).
Constituents of a process in an airline
• Takes a passenger at point A as
input.
• Applies labor (pilots, flight
attendants, stewards, safety
personnels etc.)
• Uses energy (turbine fuel) and
supplies (tissues, napkins, wate
bottles)
• Output in the form of a transporting
the passenger to point B.
Objectives of a process
Deliver the customer promise.
Effectiveness refers to the measures of how well a process does what it
is supposed to do.
Quality (Performance and conformance quality)
Speed (measured by throughput/flow time)
Do it in a way that organization generates maximal values
for stakeholders
Efficiency refers to how well the process uses its resources in
accomplishing what it sets out to achieve.
• The first step in analyzing a process is describing it.
• A process has various flows in it. Product flows, information flows,
cash flows etc. Product and information flows are usually covered
from the perspective of OM.
• Two types of processes: Sequential processes, Parallel processes or
hybrid processes.
• A process is depicted by a process flow diagram
• Process flow diagrams are not absolute. They are iterative and are
drawn to depict the level of detail required.
 Sequential and parallel
processes
In a sequential process, it is imperative
that task A is finished before task B can
start. Both tasks A and B should be
finished for task C to start.
In a parallel process, Tasks A and B can
occur simultaneously. Both tasks A and
B should be finished for task C to start.
Usually processes contain sequential
and parallel tasks simultaneously.
Process flowchart for shipping process of Amazon

Process flowcharts are not

absolute. That is, a
professional in logistics role
may have a different
flowchart of the same
situation as compared to
professional working in
sourcing/ purchasing/
procurement roles.
Process flowchart for Amazon prime Air
• Process flow diagrams is a communication tool which allows a team of
people to have a bird’s eye view of the process.
• When a team has such a shared view of what activities in operation, they can
discuss, debate and revise the task sequence and make changes accordingly.
• Valuable conversations such as the following add value to the process:
“I know the manual says that we are supposed to do Y after we do X, but in
practice we don’t.”
“Why do we do A after B? Would it be more efficient to do them in parallel?”
“Why do we have to do Z? It would take less time if we eliminated that.”
“How is that decision made? Don’t we need more information?”
How is the process doing?
The first step in determining process performance is measuring task times.
How do you measure task times?
• Primary surveys (asking experts or people about their opinion)
• Predetermined motion time study (PMTS)
Old technique (Work measurement, time study etc.)
Decomposes the human movement into micro-motions. The time taken for micro-motions
is prescribed according to pre-determined time study tables.
Its implementation usually receives resistance from involved participants.
• Use of existing empirical data (based on previous experience). E.g. Take the
mean of times taken by workers in an assembly line.
• Assuming widely used probability distributions (Normal)
• A widely used technique is to use Monte Carlo simulation for analyzing
data (when a standard probability distribution can’t be assumed)
Template for determining task times.xlsx
https://www.ibm.com/cloud/learn/monte-carlo-simulation

• Another important measure is labor content.

It is the total time that is spent by the firm’s employees on product or
service.
Note: Labor cost > (Labor content * Wage rate)
Bottleneck analysis

Q. Which activity constrains the throughput/output?

A. Task A
Q. Which activity(s) is(are) starved?
A. Activities B, C, D
Q. Which activity(s) is(are) blocked?
A. None
Q. What is the flow/ throughput time of a unit of product?
A. 14 minutes
Q. What is the term for the time elapsed between two consecutive process completion events?
A. Cycle time
Bottleneck analysis(continued)
• The worker at task A is always
busy.
• The worker at task B has a minute
of idle time between successive
products.
• The worker at task C has two
minutes of idle time between
successive products.
• The worker at task D has three
minutes of idle time between
successive products.
Analyzing
bottlenecks
Bottlenecks are pain points.
Process analysis teams aim to identify
bottlenecks by discussion and brainstorming.
What can we do to relieve the constraints
imposed by the bottleneck?
Increase the capacity? (Increase the oven size
for baking pizza)
Reduce the task time? (Bake the pizza at
higher temperature)
Allotting more workforce? (Have two people
bake pizza at the same time)
Bottlenecks aren’t
always bad. Are they?
Blocked and starved activities
Video to demonstrate starved and blocked
tasks
https://s3.amazonaws.com/he-assets-prod/interactives/013_blocked_a
nd_starved/Launch.html

Reduction of cycle time with multiple workers

https://s3.amazonaws.com/he-assets-prod/interactives/022_cycle_tim
e_multiple_workers/Launch.html
 Capacity utilization
• Capacity=(1 /Cycle time)
Capacity
Cycle Capacity(uni utilisation at
Task time(min/unit ts/hour) bottleneck(in %)
Capacity utilization is unbalanced.
A 2 30 40
Only bottleneck activity is operating at 100
percent capacity utilization. B 4 15 80
Imbalanced capacity utilization leads to
lower total labour content and higher idle C 5 12 100
times.
D 3 20 60
• To make this process more efficient, we can do the following:
1. Hire one more specialized worker/resource at task C
2. Cross train existing worker at task B to work on C.
3. Hire one highly skilled worker who can work on tasks B and C both.

Analyse each case from the standpoint of efficiency and

effectiveness.
Template for process analysis.xlsx
Case 1: Hire one more
specialized →We assume that the hired
worker/resource at task C worker has same efficiency as
that of the existing worker.
→With the additional worker,
the cycle time of task C
would be ____?
→Task __ is the bottleneck.
→Increase in process capacity
(in units/hour)?
Case 2: Cross train
existing worker at task B →An existing worker at task B is cross-
to work on C. trained to work on task C in his/her idle
time (ofcourse for some additional
incentives)
→It is assumed that when this worker,
after cross training, becomes equally
efficient as the incumbent worker at
task C.
→With the cross trained worker, the
cycle time of task C would be ____?
→Task __ is the bottleneck.
→Increase in process capacity (in
units/hour)?
Case 3: Hire one highly
skilled worker who can work
on tasks B and C both.
→“Hire a new worker and that too a very
special one. Only then will I be relieved of
the pressure from the Sales team” …Mr.
Sharma said in frustration.
→It is assumed that this worker is as efficient
as the incumbent workers on tasks B and C
respectively.
→With the highly skilled worker, the cycle
time of task C would be ____?
→Is it correct to talk about the cycle time of
task C alone in this case?
→Increase in process capacity (in
units/hour)?
• We have discussed possible alternatives to increase process capacity
by reducing cycle times of bottleneck activity in the foregoing
scenario.
• However, decision making entails more than measures of operational
efficiency.
• Factors such as _____ and ____ are instrumental for us to
comprehensively analyse the process.
Strategic cost analysis of the process
Consider the following data:
1. The contribution margin of the product is 5 dollars per unit.
2. The process runs for an 8-hour shift.
3. The additional variable cost levied on per unit product because of
process alterations as mentioned in aforementioned cases is as follows:
Variable cost levied under the following cases (per unit) In ($/unit)

Hiring a new specialized worker (only work on task C) 1

Cross train an existing worker in task B on task C 0.3

Hiring a new skilled worker (work on task B & C) 2.5

Q.) Which alternative is optimal for process improvement under the given
costing structure?
Template for Strategic cost analysis.xlsx
Questions for practice
1. Rohan worked at a barbershop and he felt he worked on an assembly line, cutting
one person’s hair after another throughput his seven-hour shift. His average
number of customers per shift was 12. What was Rohan’s cycle time in minutes?
2. Karen ran a cookie factory. Her operators worked eight-hour shifts. The first shift
utilized the equipment at an average 76-percent capacity, but the second shift only
used 71-percent capacity on average. Karen did not run a third shift. What was
Karen’s average capacity utilization over a 24-hour day?
3. A factory assembled small plush toys in two steps. The first step, filling the pre-
sewn exterior of the toy with plastic pellets, took three minutes, and the machine
that performed this step ran eight hours a day. The second step, during which a
second machine assisted a person in sewing shut the exterior, had a daily capacity
of 124 plush toys. What was the daily capacity in assembled units for the factory?
UV3514-PDF-ENG.pdf
Answers
1. 3 minutes/unit
2. 49%
3. 124 toys