2 Objectives Service Process Differences Little’s Law Process Analysis & Mapping
3 Measuring Process Flows Capacity of a system = capacity of the most constraining resource. We also called it a ‘bottleneck.’ The flow rate of a process is the minimum of: Supply rate Demand rate Capacity rate
4 Example: Bank Clearing House What is the capacity of the system to process checks? Receive Checks 1000 checks/hour Sort Checks by Bank 800 checks/hour Ship Checks 1200 checks/hour
5 Measuring Process Flows Little’s Law Relates number of items in the system to arrival rate and length of time in the system. Formula: I = T x R I = average number in the system T = average throughput time R = average flow rate into the process Assumes system is in a ‘steady state’
6 Example: Bank Clearing House If the rate of checks into the system is 600 checks per hour (supply), what is the flow rate? There is an average of 200 checks in the system, what is the throughput time of checks? How can we reduce the throughput time of checks? Receive Checks 1000 checks/hour Sort Checks by Bank 800 checks/hour Ship Checks 1200 checks/hour
7 Applications of Little’s Law Manufacturing Waiting lines Invoice processing Legal office transactions Accounts receivable processing Restaurant & Theme Park Design Many others!!!!
8 Sell-by-Dating for Fresh Beverages Your store sells 20 bottles of “Fresh Local Beverage” per day, The producer says that product has a shelf life of 30 days (your warehouse & store), What is the maximum inventory that you should hold to insure fresh beverages?
9 Process Flow Mapping & Analysis Purpose: to describe a process visually to find ways of improving the current process. Find repetitive operations Identify bottlenecks Describe directions and distances of flows (people, material and information) Create better value & reduce waste
10 Detailed Process Map Identifies the specific activities that make up the process. Basic steps are: Identify the entity that will serve as your focal point: Customer? Order or item? Identify clear boundaries, starting and ending points, and line of visibility between customer and order. Keep it simple Does this detail add any insight? Do we need to map every exception condition?
12 Mapping Symbols Operation (task or work activity) Inspection Decision point (typically requires a “yes” or “no”) Document or order created Delay Storage Move Materials or employees activity or
13 Distinguish between Value-Add and Non Value-Add Process Step Value Add (VA) Business Non-value-add (BNVA) Non-value-add (NVA)
14 Value Add Steps Work that contributes what your customers want out of your product or service Cooking a meal Measuring & Cutting Material Assembling Does it meet these criteria? Adds a desired function, form, or feature to the product or service Enables a competitive advantage (reduced price, faster delivery, fewer defects) Includes an activity that a customer would be willing to pay for or would not prefer our competitors is he/she knew we did this task.
15 Business Non-Value Add Activities that your customer doesn’t want to pay for (it does not increase value in their eyes) but are required for some reason Accounting, legal, regulatory Is task required by law or regulation? Does task reduce financial/liability risk? Does task support financial requirements? Does process break down if task is removed?
16 Non-value Add Work that does not add value in the eyes of the customer and that they would not want to pay for it (nor is it required for BNVA) Rework, multiple signatures & copies, counting, handling, inspecting, set-up, downtime, transporting, moving, delaying, storage.
17 Process Chart (supplements Map) Measure A Measure B Activity (O, I, S, D, TP, TI) Value Code (V/B/N) Description of activity O= operations; I= inspections; S= storage; D=delay; TP= transportation of people TI= transportation of inventory or materials
18 Linking Processes to Value with Metrics Possible Measures or Metrics: Link desired customer value to process Time (measure distance traveled and task time) Cost Quality Flexibility Sustainability Set standards Guide design of new or redesign of existing process
20 Process Flow Analysis Might Change: Raw materials Product (output) design Job design Processing steps used Management control information Equipment or tools Suppliers i.e. Anything but customers may be changed!!
21 Steps in process flow analysis using the systems approach Select a process to study Find a group of “different eyes” to analyze & improve the system Decide on the objectives of the analysis improve cost, quality, flexibility, responsiveness (service), sustainability (ergonomics, recycling, reduce energy) Define customers and suppliers Flowchart the existing transformation process Develop improved process design Implement the new process design
22 Questions to ask to improve process flow What does the customer need?, operations are necessary? Can some operations be eliminated, combined, or simplified?…. Who is performing the job? Can the operation be redesigned to use less skill or less labor? Can operations be combined to enrich jobs? …. Where is each operation conducted? Can layout be improved? …. When is each operation performed? Is there excessive delay or storage? Are some operations creating bottlenecks? ….. How is the operation done? Can better methods, procedures, or equipment be used? ….
23 In Class Exercise: Process Flow Diagrams & Value-adding activities Do a process flow diagram and process chart for Pizza Delivery (show operator & customer perspectives) Evaluate value-adding and non-value adding activities (V,B,N). Justify your decision. How would you modify or delete non-value added activities?