2 Outline of Chapter 6 Process Thinking The Process View of Business Measuring Process FlowsMeasuring Process Flows at Pizza U.S.A.Process FlowchartingProcess-Flow Analysis as Asking QuestionsBusiness Process Reengineering (BPR)
3 Process Thinking Process Thinking: all work can be seen as a process Definition of a “system”Whole > sum of partsApplication of systems thinking to businessesDefining system boundariesRole of “cross-functional” teams in systems analysisSystems thinking requires cross-functional teams to include all affected functions
5 Measuring Process Flows Little’s LawRelates number of items in the system to arrival rate and length of time in the systemFormula:I = T x RI = average number of things in the systemT = average throughput timeR = average flow rate into the processAssumes system is in a ‘steady state’
6 Applications of Little’s Law ManufacturingWaiting linesInvoice processingLegal office transactionsAccounts receivable processingEtc.
7 Measuring Process Flows Capacity of a system = capacity of the most constraining resourceThis resource is called a ‘bottleneck.’The flow rate of a process is the minimum of:SupplyDemandCapacity
8 Process FlowchartingProcess Flowcharting: creation of a visual diagram to describe a transformation processAlso known as:Process mappingFlow-process chartingService blueprintingValue stream mapping
9 Process FlowchartingPurpose: to describe a process visually to find ways of improving the current process.Find repetitive operationsIdentify bottlenecksDescribe directions and distances of flows (people, material and information)Reduce wasteRequired for certifications such as ISO9000
10 Process Flow Analysis Might Change: Raw materialsProduct (output) designJob designProcessing steps usedManagement control informationEquipment or toolsSuppliersi.e. Anything but customers may be changed!!
11 Steps in process flowchart analysis using the systems approach Select a process to studyForm a team to analyze & improve the systemSpecify the boundaries of the transformation processIdentify and sequence the operational stepsIdentify the performance metricsDraw the flowchart
12 Symbols for Flow-Process Chart Operation (a task or work activity)Inspection (an inspection of the product forquantity or quality)Transportation (a movement of material fromone point to another)Storage (an inventory or storage of materialsawaiting the next operation)Delay (a delay in the sequence of operations)
14 Questions to Ask in Process-Flow Analysis & Improvement What does the customer need? What 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?
15 Questions to Ask in Process-Flow Analysis & Improvement Flow Balanced? Where is the bottleneck? Are all steps necessary? How jumbled is the flow?Time How long to produce one unit? Can it be reduced? Cycle time? Excessive set-up time? Excessive waiting time?Quantity Theoretical production amount? How easy to change? How many units actually produced?Quality Historical defect rate? Which step contributes to defect rate? Where do errors occur?Cost Cost to produce one unit? What are cost buckets for one unit? Can some of the buckets be reduced or eliminated?
16 Business Process Reengineering (BPR) BPR defined (Hammer and Champy, 1993)BPR PhilosophyPrinciples of BPRSuccess of BPR
17 BPR DefinedBPR is “the fundamental rethinking and radical redesign of business [or organizational] processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.”
18 BPR DefinedThis is in contrast to incremental change or continuous improvement of an existing process.“If I were recreating this company today, given what I know and given current technology, what would it look like?”
19 BPR Philosophy Neither. Does the reengineering consultant see the glass as half full or half empty?Neither.It’s the wrong size of glass!Or, should it be a glass? …or a liquid?
20 Principles of BPR Organize around outcomes, not tasks Have the people who do the work process their own informationPut the decision point where work is performed, and build control into the processEliminate unnecessary steps in the process
21 The Success of BPRAccording to Hammer & Champy, 50-70% of organizations attempting BPR do not achieve the results they expected. Why?Because they make one or more of the 17 common mistakes (see next 2 slides):
22 BPR Mistakes Trying to fix a process instead of changing it Not focusing on business processesFocusing only on the process redesignNeglecting people’s values & beliefsSettling for minor resultsQuitting too earlyConstraining the scope of the problem & effortLetting corporate culture & mgmt attitudes get in the wayTrying to reengineer from the bottom up
23 BPR Mistakes (cont.) Assigning a leader who doesn’t understand BPR Skimping on the resourcesNot making BPR a top corporate priorityTrying to do too much at once & dissipating resourcesConcentrating only on design & not implementationTrying to keep everyone happyPulling back if people resistDragging out the effort & taking too longSource: Hammer & Champy, Reengineering the Corporation, chapter 14.
24 Summary Process Thinking The Process View of Business Measuring Process FlowsMeasuring Process Flows at Pizza U.S.A.Process FlowchartingProcess-Flow Analysis as Asking QuestionsBusiness Process Reengineering (BPR)