Presentation on theme: "OM&PM/Class 2b1 1Operations Strategy –Class 1a: Introduction to OM –Class 1b: Strategic Operational Audits 2 Process Analysis –Class 2a + 2b: Process Flow."— Presentation transcript:
OM&PM/Class 2b1 1Operations Strategy –Class 1a: Introduction to OM –Class 1b: Strategic Operational Audits 2 Process Analysis –Class 2a + 2b: Process Flow Analysis »CRU Computer Rentals presentation »Detailed Capacity Analysis: Kristen’s Cookies »Key levers for improving process capacity and flow time 3Lean Operations 4Supply Chain Management 5Capacity Management in Services 6Total Quality Management 7Business Process Reengineering Operations Management & Performance Modeling
OM&PM/Class 2b2 CRU Computer Rentals: Revenue and Cost Drivers Customer I c ReceivingRepairs Pre-Config Parts places order Receives from Supplier Repairs Status 40 Status 24 Status 41 Status 42 Status 20 Config 30% 70% 15% Ship Status 32 Ship R R1R1 R2R2
OM&PM/Class 2b3 Kristen’s Cookies: Flow Chart Take Order Wash & Mix Spoon Load & Set Timer Bake UnloadCoolPackPay Order Ready You 6min / 1-3doz You 2min / doz Roommate, Oven 1 min / doz Oven 9 min/doz Roommate --- 5 min Roommate 2 min /doz Roommate 1 min / order
OM&PM/Class 2b4 Process Architecture is defined and represented by a process flow chart: Process = network of activities performed by resources 1. Process Boundaries: –input –output 2. Flow unit: the unit of analysis 3. Network of Activities & Storage/Buffers –activities with activity times –routes: precedence relationships (solid lines) 4. Resources & Allocation 5. Information Structure & flow (dashed lines)
OM&PM/Class 2b5 Operational Measure: Flow Time Driver: Activity Times (Theoretical) Flow Time Critical Activity Flow Time efficiency
OM&PM/Class 2b6 Levers for Reducing Flow Time Decrease the work content of critical activities –work smarter –work faster –do it right the first time –change product mix Move work content from critical to non-critical activities –to non-critical path or to ``outer loop’’ Reduce waiting time.
OM&PM/Class 2b7 Most time inefficiency comes from waiting: E.g.: Flow Times in White Collar Processes
OM&PM/Class 2b8 Operational Measure: Capacity Drivers: Resource Loads (Theoretical) Capacity of a Resource Bottleneck Resource (Theoretical) Capacity of the Process Capacity Utilization of a Resource/Process = throughput [units/hr] capacity [units/hr]
OM&PM/Class 2b9 A Recipe for Capacity Measurements * assuming system is processing at full capacity
OM&PM/Class 2b11 Levers for Increasing Process Capacity Decrease the work content of bottleneck activities –work smarter –work faster –do it right the first time –change product mix Move work content from bottlenecks to non-bottlenecks –to non-critical resource or to third party Increase Net Availability –work longer –increase scale (invest) –increase size of load batches –eliminate availability waste
OM&PM/Class 2b12 Increasing Process Capacity in The Goal “is to increase the capacity of only the bottlenecks” –“ensure the bottlenecks’ time is not wasted” »increase availability of bottleneck resources »eliminate non-value added work from bottlenecks u reduce/eliminate setups and changeovers »synchronize flows to & from bottleneck u reduce starvation & blockage –“ the load of the bottlenecks (give it to non-bottlenecks)” »move work from bottlenecks to non-bottlenecks »need resource flexibility – unit capacity and/or #of units. »invest
OM&PM/Class 2b13 Pricing and Capacity Investment: Trays + Rent another oven at $10/hr? Resource cost = Material cost = Minimum sale price = Contribution margin if sale price is $5 / dozen =
OM&PM/Class 2b14 Other factors affecting Process Capacity Batch (Order) Sizes Product Mix other managerial policies...
OM&PM/Class 2b15 Chocolate Chip and Peanut Butter Data
OM&PM/Class 2b16 Class 2b Learning Objectives CRU: manage better with the three key operational measures and an inter-functional macro process view of the organization Process measures: –Flow time manage critical activities –Capacity manage bottleneck resources Levers for improving –Flow time manage critical activities –Capacity & Throughput Process capacity depends on a zillion things