operations management
jenny2000000
2_ProcessesFlowAnalysisI2.pptxClass 2: Processes Flow Analysis I
Instructor: Mani Lakshmanan
P300 Introduction to Operations Management
Group Remember the dead line for Group forming and submitting through Canvas
2
2
Class 1 Review
Process, and the process view of business
The definition of OM, and the position of OM in a business
Inputs
Outputs
Resources:
workers, machines, money, and knowledge
Materials, energy, money, people, and data
Goods and services
Transformation
3
Outline
Process types
Service vs. Good,
Product - Process Matrix
Service – Process Matrix
Process Analysis
Process Flow Diagram
Capacity of a Process
4
Goods vs. Service
Goods:
Automobile
Refinery
Food production
Service
Education
Consulting
Healthcare
In Between:
Restaurant
Transportation
Airline
5
5
Goods vs. Service
How did you differentiate Service from Goods when you raise examples?
Intangibility
Can not be “seen”
Service innovations cannot be patented
Customers cannot try it out before purchase
Simultaneity/ Perishability
Provided and consumed at the same time
Labor intensive
Not easy to be done by machines
6
6
Goods vs. Service
Recall the definition of process:
“With service processes, the customer provides significant inputs into the production process.”
-----Unified Services Theory (Sampson & Froehle 2006)
Inputs
Outputs
Goods
Services
Transformation
Process
Material
Information
Customer
7
Usually, we differentiate Goods vs. Service by the output of the service, right? The significance of Unified Service Theory is to differentiate by inputs of a process.
7
Product-Process Matrix
Differentiate processes by outputs, and the way transformation happens.
Inputs
Outputs
Transformation
Process
Resources
8
Process can be differentiated through another dimension.
8
High
Variety
Flexibility
Cost
Low
Project
Job Shop
Batch
Continuous
Flow
Assembly Line
(Repetitive)
Low Volume High
Product-Process Matrix
9
In detail, we use this product-process matrix to represent these different process types.
Talk about two dimensions. Show process types. Point out the correlation between volume and variety.
9
Project
Output Characteristics
Unique, “one of a kind” product: Movie production, video game development, business consulting
Transformation Characteristics
Very flexible, change from one project to another even within the same organization
High-skilled operators
10
Continuous Flow
Output Characteristics
Very high volume, little variety: Rice, laundry detergent, refinery
Transformation Characteristics
Highly specialized equipment, products follow the same sequence of activities
Operations often run 24/7, line stoppages are very costly
Low-skilled operators
11
High
Variety
Flexibility
Cost
Low
Project
Job Shop
Batch
Continuous
Flow
Assembly Line
Low Volume High
Processes Structures in between
12
In detail, we use this product-process matrix to represent these different process types.
Talk about two dimensions. Show process types. Point out the correlation between volume and variety.
12
Physical Layout
13
Functional layout
Product layout
A
B
C
D
Product 1
Product 2
A
D
B
C
B
A
Product 1
Product 2
13
High
Variety
Flexibility
Cost
Low
Cellular
Manufacturing
Mass
Customization
Project
Job Shop
Batch
Continuous
Flow
Assembly Line
Low Volume High
Product-Process Matrix
14
Re emphasize the correlation. Processes are usually across the diagonal of this matrix
Due to technology improvement, there appears process at top-right corner and bottom-left corner
14
Physical Layout
15
Functional layout
Product layout
Cellular layout
A
B
C
D
Product 3
Product 4
A
B
D
C
A
B
Product 3
Product 4
B
A
C
D
Product 3
Product 4
15
Service Process Matrix
16
| Service Factory Airlines Hotels | Service Shop Automobile repair shop Hospital |
| Mass Service Retail banks gas station | Professional Service Lawyers Doctors Consultants |
Customization/Customer interaction
High
Labor Intensity*
High
Labor Intensity*:= (labor cost ) / (capital investment for equipment)
Outline
Process types
Service vs. Good, Product-Process Matrix
Service - Process Matrix
Process Analysis
Process Flow Diagram
Capacity of a Process: Bottleneck Analysis
17
Process Analysis
SoftWide's shops will make any software you want. There's no more “I think our store in Dorking has it.”
18
18
Story line:
SoftWide retail concept: a chain of shops that has virtually no inventory and no warehousing or delivery capabilities but never runs out of a single item.
SoftWide sells software on CD-ROMs, but unlike other software retailers, it has developed a method of manufacturing the discs in the shop while you wait. The software -- along with all its packaging -- is stored in each of the seven shops, and is burned onto CD-ROMs while a pair of printers churns out a cover and the manual. On average, it takes about five minutes.
Nonetheless, the SoftWide triumph is that the people behind it have entirely eliminated two of the three biggest bugbears of manufacturing: inventory and logistics. They don't have inventory, so they don't have logistics.
Difference: Another crucial thing SoftWide has going for it is dependability. If the company stocks a product, it's in stock. So there are none of those time-honored lines of retailers. There's no "I think our store in Dorking has it." Nor is there any of the dreaded "We can order it for you." You go in. You ask for it. You get it.
And just think of those times when a software package suddenly becomes a must-have item. When the Blaster virus hit, Mr. Doll-Steinberg notes, SoftWide's sales of one popular antivirus software product increased by 1,000%. A more traditional U.K. retailer only managed to triple its sales of the same product, for the simple reason that it didn't have enough stock to meet demand and it couldn't get more from the publisher.
Process Analysis
Step 1: Process Flow Diagram (Define the process)
Determine the tasks and the flows of information and goods
Determine which resources are used in each task
Determine where inventory is kept in the process
Determine precedence relations between tasks
Step 2: Bottleneck Analysis (Determine the capacity of each task and of the process)
19
Process Flow Diagram: SoftWide
Task/Activity
Storage of goods
Flow of goods
20
20
Mark out the activity time under each activity.
Ask the meaning of each inventory. The bad thing of WIP inventory.
Point out that the flow is about material flow, information flow not marked.
Our objective today is to determine the capacity / capability of the process. In other words, how quick can the process produce products.
Terminology – Cycle Time
Cycle time: the average time between completion of successive units.
When referring to a single activity:
Cycle time = 2 min
Equals exactly the activity time
2 min
Print Package
And Manual
WIP
21
Terminology – Cycle Time
When referring to the whole process:
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
3 min
2 min
22
| Accept Order | ||||||||||||||||||
| Burn CD | ||||||||||||||||||
| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
22
Terminology – Cycle Time
When referring to the whole process:
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
3 min
2 min
23
| Accept Order | ||||||||||||||||||
| Burn CD | ||||||||||||||||||
| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Accept Order | ||||||||||||||||||
| Burn CD | ||||||||||||||||||
| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
23
Terminology – Cycle Time
When referring to the whole process:
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
3 min
2 min
24
| Accept Order | ||||||||||||||||||
| Burn CD | ||||||||||||||||||
| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Accept Order | ||||||||||||||||||
| Burn CD | ||||||||||||||||||
| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Accept Order | ||||||||||||||||||
| Burn CD | ||||||||||||||||||
| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
24
Terminology – Cycle Time
When referring to the whole process:
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
3 min
2 min
25
| Accept Order | ||||||||||||||||||
| Burn CD | ||||||||||||||||||
| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Accept Order | ||||||||||||||||||
| Burn CD | ||||||||||||||||||
| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Accept Order | ||||||||||||||||||
| Burn CD | ||||||||||||||||||
| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Cycle time = 3 min
Equals the SLOWEST (LARGEST) activity cycle time
| Accept Order | ||||||||||||||||||
| Burn CD | ||||||||||||||||||
| Print Package | ||||||||||||||||||
| Timeline | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
25
Terminology – Capacity Rate
Capacity Rate: the rate units flow through.
When referring to a single activity:
Capacity Rate = 0.5 units / min
Equals exactly =
2 min
Print Package
And Manual
WIP
Cycle time
26
Terminology – Capacity Rate
When referring to the whole process:
Capacity Rate = 1/3 unit /min
Equals the SLOWEST (SMALLEST) activity capacity rate
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
3 min
2 min
Cycle time
1 unit/min
1/3 unit/min
1/2 unit/min
Capacity Rate
27
27
Cycle Time vs. Capacity Rate
Two sides of the same coin!
For both a single activity and the whole process:
Measures the “capability” of the system, in the sense of how fast it could produce products.
Different UNITS!
Cycle Time ---- Time Units, such as minute, hour, day
Capacity Rate ---- “Speed” Units, such as units/hour
28
Terminology- Flow Time
Flow time: the total time it takes on unit to get trough a process: being processed + waiting to be processed.
Flow time = 1+3+2=6 min
Cycle time = 3 min
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
3 min
2 min
29
Terminology – Bottleneck
How to make the sand flows faster?
This is similar for processes
Increase the bulb size?
Increase the neck width?
30
Terminology – Bottleneck
Bottleneck: the SLOWEST activity of the process.
If you want to improve the process,
start from the bottleneck!
31
31
Upgrade the printer to decrease printing time by 1 min?
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
3 min
2 min
After:
Before:
32
5 units
Upgrade the CD burner to decrease burning time by 1 min?
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
3 min
2 min
Before:
After:
33
7 units
Process Analysis – A Exercise
The flow of McDonald's:
Which activity you would allocate additional employees to?
| Process Capacity Rate | |
| Process Cycle Time |
0.5 min
2 order/min
Cashier
Process
Order
WIP
Customers
2 orders/min
3 orders/min
34
An Important Assumption!
What if the activity “Accept Order” and “Printing” share the same worker?
What is the “bottleneck” now?
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
2 min
2 min
35
What if the activity “Accept Order” and “Printing” share the same worker?
Accept
Order
Print Package
And Manual
Burn CD
WIP
Orders
WIP
Complete order
1 min
2 min
1 min
60 units/hour
30 units/hour
60 units/hour
Capacity Rate
36
Case 1 – Kristen’s Cookie Company
It is a process flow analysis
A “bigger” process than our class examples
Questions:
Q1. Draw a complete flow diagram for fulfilling an order.
Do not omit any activity
Do not combine any two (or more) activities
Place triangles between activities only when it makes sense
37
Case 1 – Kristen’s Cookie Company
Q2. How long will it take to fill a rush order?
Q3. How many orders can you fill in a night, assuming you are open four hours each night?
Write down your thoughts.
Hint: Bottleneck can also be either activity or a resource!
38
Print Package
Timeline1234567890
Accept Order
Burn CD
Print Package
Timeline123456789012345678
Accept Order
Burn CD
Print Package
Timeline123456789012345678
Accept Order
Burn CD
Print Package
Timeline123456789012345678
Accept Order
Burn CD
Print Package
Timeline123456789012345678
Accept Order
Burn CD
Print Package
Timeline123456789012345678
