Supporting Facility and Process Flows Chapter 7 McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Course Overview Define, describe and classify services (Ch 1,2) SPECIAL TOPICS VIEWS TOOLS Information technology (Ch 5) Strategic view of service design & development (Ch 3,4) Capacity planning & queuing models (Ch 11,12,16) Project management (Ch 15) Supply Chains & Outsourcing (Ch 13) Process view of quality improvement (Ch 6,7,8) Facility location (Ch 10) Globalization (Ch 14) Encounter view of customers & employees (Ch 9) Inventory control (Ch 18)

Servicescapes Designing Physical Surroundings to Affect Employee and Customer Behavior Ambient Conditions: background characteristics such as noise level, music, lighting, temperature, and scent. Spatial Layout and Functionality: reception area, circulation paths of employees and customers, and focal points. Signs, Symbols, and Artifacts: selection, orientation, location, and size of objects.

Environmental Orientation Considerations Need for spatial cues to orient visitors Formula facilities draw on previous experience Entrance atrium allows visitors to gain a quick orientation and observe others for behavioral cues Orientation aids and signage such as “You Are Here” maps reduce anxiety Allow customers to see both into and through the space

Facility Design Considerations Nature and Objectives of Service Organization Land Availability and Space Requirements Flexibility Security Aesthetic Factors The Community and Environment

Types of Services Processes Process Type Service Example Characteristic Management Challenge Project Consulting One-of-a-kind engagement Staffing and scheduling Job Shop Hospital Many specialized departments Balancing utilization and scheduling patients Batch Airline Group of customers treated simultaneously Pricing of perishable asset (seat inventory) Flow Cafeteria Fixed sequence of operations Adjust staffing to demand fluctuations Continuous Electric Utility Uninterrupted delivery Maintenance and capacity planning

Process Flow Diagrams Visualize and document a process Identify bottlenecks Determine system capacity Make improvements

Process Flow Diagram of Mortgage Service   Property Survey CT=90 min. Yes Approved Mortgages Completed Applications Mortgage Applications Final Approval CT=15 min. No Credit Report CT=45 min. Title Search CT=30 min. Unapproved Mortgages Finish Processing Accept Mortgages

Mortgage Service Process Gantt Chart Rush Order Flow Time = 90 + 15 = 105 min 3 1 2 Process Cycle Time Fig. 7.5, pg 163 Every 90 min a new mortgage is completed Slide contributed by David Hoyte

Process Analysis Terminology Cycle Time is the average time between completions of successive units. Bottleneck is the factor that limits production usually the slowest operation. Capacity is a measure of output per unit time when fully busy. Capacity Utilization is a measure of how much output is actually achieved. Throughput Time is the time to complete a process from time of arrival to time of exit.

Process Analysis Terminology (cont.) Rush Order Flow Time is the time to go through the system without any queue time. Direct Labor Content is the actual amount of work time consumed. Total Direct Labor Content is the sum of all the operations times. Direct Labor Utilization is a measure of the percentage of time that workers are actually contributing value to the service.

Bottlenecks When flow is not synchronized, process rate is limited by the “bottleneck” The bottleneck constrains throughput. The rate of total throughput is the rate of the bottleneck Time lost on the bottleneck is time lost in the whole process Slide contributed by David Hoyte

Work Allocation – Boat Show 1 120 30 2 240 15 3 240 15 Out In Collect Payment Hand Stamp + program Apply wrist band 15 sec cycle = 4 customers per min = 4 x 60 = 240 customers per hour Capacity Calculation: What is the Process Capacity? Where is the Bottleneck? What if 1 more person is added? Activity Number(s) Capacity per hour Cycle Time in seconds Slide contributed by David Hoyte

Work Allocation – Boat Show 1 120 30 In 2 240 15 3 240 15 Out 1 120 30 In Collect Payment Hand Stamp + program Apply wrist band What is the Process Capacity now? Slide contributed by David Hoyte

Options for Eliminating a Bottleneck Add another worker to the job. Provide aid to reduce activity time. (e.g. automating an activity) Regroup the tasks to create a new line balance with different activity assignments. Goal: all jobs/activities should be of nearly equal duration.

Automobile Driver’s License Office Review Payment Violations Eye Test Photograph Issue 1 240 15 2 120 30 3 60 4 90 40 5 180 20 6 120 30 In Out Activity Number(s) Capacity per hour Cycle Time in seconds

Automobile Driver’s License Office (Improved Layout) 1,4 65 55 3 60 In Out 2 120 30 5 180 20 6 120 30 1,4 65 55 3 60 In

Health Maintenance Organization (B) Activity Time (sec.) Receive prescriptions 24 Type labels 120 Fill prescriptions * 60 Check prescriptions * 40 Dispense prescriptions * 30 * Must be performed by Pharmacist

HMO (B) Questions Identify the bottleneck activity, and show how capacity can be increased by using only two pharmacists and two technicians. In addition to savings on personnel costs, what benefits does this arrangement have?

HMO (B) Process Flow Current staffing: 2 Techs & 3 Pharmacists, each doing one task Activity 1 2 3 4 5 150 30 60 90 120 24 120 60 40 30 Cycle time Capacity per hour What is the bottleneck operation? What is the capacity of the system? Why? How can capacity be increased? Slide contributed by David Hoyte

HMO (B) Process Flow (old vs. new) 1 2 3 4 5 24 150 30 120 60 90 40 Capacity 30 / hr 2 Techs 3 Pharma 1, 2 144 3,4,5 25 130 27.7 Capacity 50 / hr 2 Techs 2 Pharma What other benefit do the two symmetrical “cells” provide? 2 Techs Slide contributed by David Hoyte

The Role of the Servicescape

The Servicescape Concept: a modern farmer’s market for the discerning customer Aesthetics Force Flow Queuing Results “We want to change the way people eat…” Brian Cronin, General Manager

Aesthetics

Force Flow Produce Flowers Meat Seafood Cheese Cashiers Beer & Wine Info Coffee Entrance Cafe Cashiers Beer & Wine Dairy Bakery Deli Grocery & Staples Catering Exit

Normal Grocery Store Cashiers Frozen Dairy Meat Produce Deli Grocery & Staples

Queuing Systems Express Lanes Checkout Deli/Meat 6 1 5 3 4 2

Comparison Central Market Average Grocery Store Size 100k ft2 60k ft2 Size Transactions / Week 25,000 50,000 $40 Sales / Customer $20 Wine Product Mix Groceries

“There’s cheese at the end of the maze…” Questions How do the environmental dimensions of the servicescape (ambient conditions, space/function, signs, symbols & artifacts) explain the success of Central Market? Comment on how the servicescape shapes the behaviors of both customers and employees?