4 Process Analysis PowerPoint Slides by Jeff Heyl For Operations Management, 9e by Krajewski/Ritzman/Malhotra © 2010 Pearson Education 4–1 Process Analysis Processes may be the least understood and managed aspect of a business A firm can not gain a competitive advantage with faulty processes Processes can be analyzed and improved using certain tools and techniques Process analysis can be accomplished using a six-step blueprint 4–2 A Systematic Approach Define scope Identify opportunity Document process Implement changes Evaluate performance Redesign process Figure 4.1 – Blueprint for Process Analysis 4–3 Documenting The Process Three effective techniques for documenting and evaluating processes are 1) Flowcharts 2) Service blueprints 3) Process charts They help you see how a process operates and how well it is performing Can help find performance gaps 4–4 Flowcharts Marketing lead Sales: Initial conversation with client Sales and/or consulting drafts proposal Sales lead Follow-up conversation between client and sales No Consulting: Initial conversation with client Consulting lead Consulting drafts proposal Follow-up conversation between client and consulting Line of visibility Follow-up by accounting, sales, or consulting Client billed by accounting, sales, or consulting Yes Approval by consulting? Is proposal complete? Yes Nested Process Client agreement and service delivery Final invoice created by accounting, sales, or consulting No No Payment received? Yes Finish Figure 4.2 – Flowchart of the Sales Process for a Consulting Company 4–5 Flowcharts Is proposal complete? Final invoice created by accounting, sales, or consulting Verbal OK from client Form completed by sales or consulting Project manager assigned Delivery of service by consulting 50% invoiced by accounting, sales, or consulting Letter of agreement signed Figure 4.3 – Flowchart of the Nested Subprocess of Client Agreement and Service Delivery 4–6 CUSTOMER Order completed and submitted 100% of credit checked within 24 hours Two scheduling errors per quarter Payment sent FINANCE Yes New customer? Credit check OK? Yes Production scheduled Order Items manufactured ` Packages assembled and inventoried Invoice sent Order stopped Order picked Product packages Inventory adjusted Invoice prepared Payment received Notice of shipment Production Control and Manufacturing Order entered No Order cancellation Order Order received No Assembly and Shipping Payment Order cancelled Credit and invoicing PRODUCTION Product and invoice received Order Order generated SALES Flowcharts Order shipped Figure 4.4 – Flowchart of the Order-Filling Process Showing Handoffs Between Departments 4–7 Process Charts An organized way to document all the activities performed by a person or group Activities are typically organized into five categories  Operation,   Transportation,  Inspection,  Delay,     Storage,  4–8 Process Charts Step No Time (min) Distance (ft) 0.50 15.0 10.00 0.75 3.00 0.75 1.00 1.00 4.00 5.00 10 2.00 11 3.00 12 2.00 13 3.00 14 2.00 15 1.00 16 4.00 17 2.00 18 4.00     Sit down and fill out patient history X Nurse escorts patient to ER triage room X Nurse inspects injury X 40.0 Return to waiting room X X 60.0 X Nurse takes patient to radiology X Technician x-rays patient X Return to bed in ER X X X X X Return to emergency entrance area Check out X 180.0 Wait for doctor to return Doctor provides diagnosis and advice X 60.0 Wait for doctor Doctor inspects injury and questions patient X 200.0 Wait for available bed Go to ER bed X 200.0 Step Description Enter emergency room, approach patient window X 40.0  Walk to pharmacy Pick up prescription Leave the building 20.0 for Emergency Figure Process Chart 19 4.5 –1.00 X Room Admission 4–9 Process Charts Step No Time (min) Distance (ft) 0.50 15.0 10.00 0.75 3.00 0.75 1.00 1.00 4.00 5.00 10 2.00 11 3.00 12 2.00 13 3.00 14 2.00 15 1.00 16 4.00 17 2.00 18 4.00     Activity X Operation X X 40.0 Transport X Inspect X 60.0 X Delay X X 200.0 Store X  to ER triage 23.00room Nurse escorts patient Nurse inspects injury  Return to waiting room  Wait for available2bed Go to ER bed  Wait for doctor 11.00 815 8.00 8.00  Doctor inspects injury patient ― and questions ― Wait for doctor to return Doctor provides diagnosis and advice X X Return to emergency entrance area Check out X X X (ft) Return to bed in ER X 180.0 (min) Technician x-rays patient X 60.0 of Steps Nurse takes patient to radiology X 200.0 Number TimepatientDistance Enter emergency room, approach window Sit down and fill out patient history X 40.0 Summary Step Description  Walk to pharmacy Pick up prescription Leave the building 20.0 for Emergency Figure Process Chart 19 4.5 –1.00 X Room Admission – 10 Benchmarking New Service/Product Development Process       Percentage of sales due to services/products launched last year Cost of “generate new services/products” process per $1,000 revenue Ratio of projects entering the process to projects completing the process Time to market for existing service/product improvement project Time to market for new service/product project Time to profitability for existing service/product improvement project Supplier Relationship Process  Cost of “select suppliers and develop/maintain contracts” process per $1,000 revenue  Number of employees per $1,000 of purchases  Percentage of purchase orders approved electronically  Average time to place a purchase order  Total number of active vendors per $1,000 of purchases  Percentage of value of purchased material that is supplier certified Figure 4.13 – Illustrative Benchmarking Metrics by Type of Process – 36 Benchmarking Customer Relationship Process       Systems cost of finance function per $1,000 revenue Percentage of finance staff devoted to internal audit Total cost of payroll processes per $1,000 revenue Number of accepted jobs as percentage of job offers Total cost of “source, recruit, and select” process per $1,000 revenue Average employee turnover rate Figure 4.13 – Illustrative Benchmarking Metrics by Type of Process – 37 Managing Processes Failure to manage processes is failure to manage the business Seven common mistakes Not connecting with strategic issues Not involving the right people in the right way Not giving the design teams and process analysts a clear charter and then holding them accountable – 38 Managing Processes Seven common mistakes Not being satisfied unless fundamental “reengineering” changes are made Not considering the impact on people Not giving attention to implementation Not creating an infrastructure for continuous process improvement – 39 Solved Problem Create a flowchart for the following telephone-ordering process at a retail chain that specializes in selling books and music CDs It provides an ordering system via the telephone to its time-sensitive customers besides its regular store sales The automated system greets customers, asks them to choose a tone or pulse phone, and routes them accordingly The system checks to see whether customers have an existing account They can wait for the service representative to open a new account Customers choose between order options and are routed accordingly Customers can cancel the order Finally, the system asks whether the customer has additional requests; if not, the process terminates – 40 Solved Problem SOLUTION Figure 4.14 – Flowchart of Telephone Ordering Process – 41 Solved Problem SOLUTION Figure 4.14 – Flowchart of Telephone Ordering Process – 42 Solved Problem An automobile service is having difficulty providing oil changes in the 29 minutes or less mentioned in its advertising You are to analyze the process of changing automobile engine oil The subject of the study is the service mechanic The process begins when the mechanic directs the customer’s arrival and ends when the customer pays for the services SOLUTION Figure 4.15 shows the completed process chart The process is broken into 21 steps A summary of the times and distances traveled is shown in the upper right-hand corner of the process chart The times add up to 28 minutes, which does not allow much room for error if the 29-minute guarantee is to be met and the mechanic travels a total of 420 feet – 43 Solved Problem Step No Time (min) Distance (ft) 0.80 50.0 1.80 2.30 0.80 0.60 0.70 0.90 1.90 0.40 10 0.60 11 4.20 12 0.70 13 2.70 14 1.30 15 0.50 16 1.00 17 3.00 18 0.70 19 0.30 20 0.50     X Operation X X X X X 420 5.00 0.70 0.30 Fill engine with oil, start engine X Inspect for leaks X Walk to pit X Inspect for leaks X Clean and organize work area X Return to auto, drive from bay X 60.0 5.50 Climb from pit, walk to automobile X 80.0 16.50 Perform under-car services X 40.0 Recommend Transport additional8services Wait for customer decision InspectWalk to storeroom  Delay Look up filter  number(s) Check filter number(s) Store Carry filter(s)  to service pit X 40.0  Walk to customer in waiting area X Distance (ft) Open hood, verify engine type, inspect hoses, check fluids X 50.0 Summary Number Time ActivityRecord name and desired service of Steps (min) X 70.0 Step Description Direct customer into service bay X 0.30  X Park the car Walk to customer waiting area Figure 4.15 – Process Chart for Changing Engine Oil 21 2.30 X Total charges, receive payment – 44 Solved Problem What improvement can you make in the process shown in Figure 4.14? SOLUTION Your analysis should verify the following three ideas for improvement You may also be able to come up with others a Move Step 17 to Step 21 Customers should not have to wait while the mechanic cleans the work area b Store small inventories of frequently used filters in the pit Steps and 10 involve travel to the storeroom c Use two mechanics Steps 10, 12, 15, and 17 involve running up and down the steps to the pit Much of this travel could be eliminated – 45 Solved Problem Vera Johnson and Merris Williams manufacture vanishing cream Their packaging process has four steps: (1) mix, (2) fill, (3) cap, and (4) label They have had the reported defects analyzed, which shows the following: Defect Lumps of unmixed product Over- or underfilled jars Jar lids did not seal Frequency 18 Labels rumpled or missing 29 Total 60 Draw a Pareto chart to identify the vital defects – 46 Solved Problem SOLUTION Defective labels account for 48.33 percent of the total number of defects: 29  100% = 48.33% 60 Improperly filled jars account for 30 percent of the total number of defects: 18  100% = 30.00% 60 The cumulative percent for the two most frequent defects is 48.33% + 30.00% = 78.33% – 47 Solved Problem of defects; the  100% = 11.67% 60 cumulative percentage is Lumps represent 78.33% + 11.67% = 90.00% Defective seals represent cumulative percentage is of defects; the  100% = 10.00% 60 10% + 90% = 100.00% The Pareto chart is shown in Figure 4.16 – 48 Solved Problem – 100 90% 36 – Frequency of Defects 32 – 100% – 90 – 80 78% 28 – – 70 24 – – 60 20 – – 50 16 – 48% – 40 12 – – 30 8– – 20 4– – 10 0– –0 Label Fill Mix Cumulative Percentage of Defects 40 – Seal Figure 4.16 – Pareto Chart – 49 – 50 ... invoice created by accounting, sales, or consulting Verbal OK from client Form completed by sales or consulting Project manager assigned Delivery of service by consulting 50% invoiced by accounting,... client and consulting Line of visibility Follow-up by accounting, sales, or consulting Client billed by accounting, sales, or consulting Yes Approval by consulting? Is proposal complete? Yes Nested... Explorer – 17 Evaluating Performance Chapter 5, Quality and Performance     Customer satisfaction measures Error rate Rework or scrap rate Internal failure costs Chapter 6, Capacity Planning; Supplement