OPSM 405 Service Operations Management Koç University OPSM 405 Service Operations Management Class 17: Wrap-up of process game Process Analysis Zeynep Aksin zaksin@ku.edu.tr

Original process flowchart M M P C P M M C Task times? Bottleneck? Resource utilization? Cycle time? (Flow time) Value adding time? (theoretical)

Terminology Flow Time (CT or T) The flow time (also called variously throughput time, cycle time) of a given routing is the average time from release of a job at the beginning of the routing until it reaches an inventory point at the end of the routing. Flow time 1 2 3 4

Terminology Throughput Rate (TH or R) The average output of a production process per unit time. At the firm level, it is defined as the production per unit time that is sold. 1 2 3 4

Critical Path & Critical Activities Critical Path: A path with the longest total cycle time. Critical Activity: An activity on the critical path. A B D C

X-Ray Service Process 1. Patient walks to x-ray lab 2. X-ray request travels to lab by messenger 3. X-ray technician fills out standard form based on info. From physician 4. Receptionist receives insurance information, prepares and signs form, sends to insurer 5. Patient undresses in preparation of x-ray 6. Lab technician takes x-ray 7. Darkroom technician develops x-ray 8. Lab technician checks for clarity-rework if necessary 9. Patient puts on clothes, gets ready to leave lab 10. Patient walks back to physicians office 11. X-rays transferred to physician by messenger

Example: X-Ray 3 7 1 2 9 10 6 12 7 75% 4 5 6 7 8 start end 5 3 2 3 25% 11 20 6 20 transport support Value added decision Measured actual flow time: 154 minutes

Consider all possible paths

Levers for Reducing Flow Time Decrease the work content of critical activities work smarter work faster do it right the first time Move work content from critical to non-critical activities to non-critical path or to ``outer loop’’ Reduce waiting time. ........................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................

X-Ray revisited Resource Pool Res. Unit Load Load Batch Theoretical Capacity of Res. unit No of units in pool Theoretical capacity of pool Messenger 40 min/patient 1 1.5 patients/hr 6 9 Patient/hr Receptionist 5 12 X-ray technician 16 3.75 4 15 X-ray lab 7.5 8 2 Darkroom technician 3 Darkroom Changing room 10 20

Utilizations given an observed throughput of 5.5 patients/hr Resource pool Theoretical capacity Patients/hr Capacity utilization Messenger 9 61.11 Receptionist 12 45.83 X-ray technician 15 36.67 X-ray lab 16 34.38 Darkroom technician Darkroom 8 68.75 Changing room 20 27.50

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 ........................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................

Structuring The Service Enterprise Example: Automobile’s Driver’s License Office License Renewal Times Activity Description Time (Sec) 1 Review application for correctness 15 2 Process and record payment 30 3 Check for violations and restrictions 60 4 Conduct eye test 40 5 Photograph applicant 20 6 Issue temporary license 30

Present Flow Diagram Flow time: sec Throughput rate: per hour Activity Activity Activity 2 120 30 Activity Activity 4 90 40 Activity 5 180 20 6 120 30 1 240 15 3 60 60 /hr /hr /hr /hr /hr /hr sec sec sec sec sec sec Flow time: sec Throughput rate: per hour What happens if you hire one more employee? Activity flow rate per hour time (sec)

Throughput rate: per hour Proposed Flow Diagram Activity Activity 1,4 65 55 3 60 60 /hr /hr sec sec Activity Activity 2 120 30 Activity 5 180 20 6 120 30 /hr /hr /hr sec sec sec Activity Activity 1,4 65 55 3 60 60 /hr /hr sec sec Flow time: sec Throughput rate: per hour

Throughput rate: per hour Another Design 1-5 22 165 sec /hr Activity 1-5 22 165 sec /hr Activity 1-5 22 165 sec /hr Activity Activity 6 120 30 /hr 1-5 22 165 sec /hr Activity sec 1-5 22 165 sec /hr Activity Flow time: sec Throughput rate: per hour 1-5 22 165 sec /hr Activity

The role of task times: a balanced line if task times are similar will have a balanced line in the absence of variability (deterministic) complete synchronization is possible in a balanced line idleness is minimized, though in the presence of variability full synchronization cannot be achieved

The role of task times: an unbalanced line if average task times are different will have an unbalanced line will have idleness in unbalanced case, slowest task determines output rate bottleneck is busy idleness in other stages

The role of variability 6/hr 6/hr 4 or 8/hr 4 or 8/hr 2 or 10 2 or 10 0 or 12 0 or 12 As variability increases, throughput (rate) decreases

Compounding effect of variability and unbalanced task times 6/hr 4/hr 4/hr 3.5/hr 4 or 8/hr 2 or 6/hr 2 or 10 0 or 8 2.5/hr

Resource interaction effects In a serial process downstream resources depend on upstream resources: can have temporary starvation (idleness) 6/hr 6/hr 6/hr 6/hr 6/hr 6/hr 4 or 8/hr 4.5/hr 4 or 8/hr 4 or 8/hr 2 or 10 2 or 10 3/hr 6/hr 2 or 10 6/hr 0 or 12 0 or 12 1.5/hr 0 or 12 As variability increases, the impact of resource interaction increases

Want to eliminate as much variability as possible from your processes: how? specialization in tasks can reduce task time variability standardization of offer can reduce job type variability automation of certain tasks IT support: templates, prompts, etc. incentives

Want to reduce resource interference in your processes: how? smaller lotsizes (smaller batches) better balanced line by speeding-up bottleneck (adding staff, changing procedure, different incentives, change technology) through cross-training eliminate steps buffers integrate work (pooling)

The impact of task integration (pooling) balances utilization... reduces resource interference... ...therefore reduces the impact of temporary bottlenecks there is more benefit from pooling in a high utilization and high variability process pooling is beneficial as long as it does not introduce excessive variability in a low variability system the benefits exceed the task time reductions due to specialization

Examples of pooling in business Consolidating back office work Call centers Single line versus separate queues

Summary of fundamental process principles identify and eliminate bottlenecks reduce as much variability as possible eliminate handoffs, improve communication to minimize resource interference for high utilization processes build-in more slack