Process Analysis “If you cannot describe what you are doing as a process, you do not know what you are doing.” W.E. Deming

What is a process? A process is a series of independent tasks that transforms an input into output material of higher value for the organization Examples: Honda transforms steel, rubber, and plastic into cars McDonald’s transforms meat, potatoes, and sauces into packaged food Dell transforms customer orders into PC’s

Process Analysis Let’s look at the “black box” in more detail… Why do we need to analyze the process? To identify inefficient tasks To spot possible effectiveness improvement tasks To understand where value can be added How can we analyze a process? Map it! What are the relevant performance measures?

Process Flow Charts Graphical description of a process: Holding: Raw Materials, RM Work in Process, WIP Finished Goods Inventory, FGI Flow of material or work Processing step Decision point

Make-to-order vs. make-to-stock Task 1 Task 2 FGI Demand Task 1 Task 2 If demand is satisfied by FGI then the system is make-to-stock, otherwise it is a make-to order system Some examples… What are the tradeoffs?

Process Analysis: the performance measures Assume a process is in place. What do we need to measure in order to understand how efficient it is? Task 1 Task 2 Task 3 What is its capacity? How many units per unit time go through each task? The process as a whole? What is the bottleneck? Which production step limits the process capacity? What is the throughput time? How long does it take to get through the system?

How do we measure capacity? Capacity of a task is the physical limitation in terms of “how much can be processed at this task” Cycle Time: Average time for completion of a unit at a production step or process. Does not include waiting. Measured as time/unit Throughput Rate: Average number of units processed over a time interval. Measured as units/time Key relationship 1 Cycle Time Throughput rate = Capacity = throughput rate

Computing Cycle Times Processing a fixed amount of work Example: Producing 100 cars. On average, production takes 5 hours per car. It takes 50 hours to set up the production line. Set-up Time + (Batch size) x (Time per unit) Cycle Time = Batch size

Computing Cycle Times Setup time: Production Time: 15 min 25min/unit A B Question: What is the cycle time between points A and B of the process, if we work in batches of 10?

smallest throughput rate What is a bottleneck? Bottleneck is the process stage with the smallest throughput rate (longest cycle time) Which task is the bottleneck? 3 units/hr 5 units/hr 2 units/hr

Capacity of a process The capacity of the process is: minimum throughput rate at any of the stages What is the capacity of this process? 3 units/hr 5 units/hr 2 units/hr

How do we measure throughput time? Throughput Time: Average time that a unit takes to go through the entire process (including waiting time). Measured as time Work in Process(WIP): Average number of units in system over a time interval. Measured as units Key relationship WIP Throughput rate Throughput time = (Little’s Law)

How do we analyze a complex process… Look at the process step by step Determine throughput rate (i.e. capacity) of each step Identify the process bottleneck (smallest processing rate, or largest cycle time). The capacity of the process is equal to the capacity of the bottleneck

Example : hammer production process Description Work begins at the machining center. Here two lines form the heads of the hammers and place them in a buffer. Handles are attached at the assembly step. Finished hammers are sent to the next stage, where they are packed and shipped. assembly pack and ship machining WIP

Let’s analyze the hammer process… assembly pack and ship machining WIP Process Data: machining: Set up 80 min. 4 min per unit processing. Batch size 200. Identical lines. assembly: Manual by two workers (no set up). Each hammer requires 40 min processing. 34 workers available. pack and ship: 30 min set up, 2 min per unit processing. Lot sizes of 100.

Step 1: Machining Look at one line. 200 units require: 80 + 200  4 = 880 minutes/200 units The throughput rate is: 200 / 880 = 0.227 units/minute = 13.63 units/hour But we have two identical lines, so for the machining step capacity is 2  13.63 = 27.26 units/hour.

Step 2: Assembly 1 unit requires 40 min processing time, so the throughput rate is: 1 unit / 40 min = 0.025 units/min = 1.5 units/hr 34 workers available, but 2 workers are required for each unit, so assembly capacity is: 17  1.5 = 25.5 units/hr

Step 3: Pack and ship Similar to machining: 30 + 100  2 = 230 min/100 units Pack & ship capacity is: 100 / 230 = 0.43 units/min = 26.09 units /hr

Assembly is the bottleneck! Hammer process: what is the capacity? Process Step Capacity (units/hr) Machining 27.26 Assembly 25.50 Pack & Ship 26.09 Assembly is the bottleneck!

Some vocabulary… Buffering: Keep some inventory between stages 1/2 1 1 Starving: Stoppage of activity because of lack of material 1 0/2 Blocking: Stoppage of flow because there is no storage place 1 2/2 1 1

More Examples.. Let’s study this make-to-stock system. CT = 3s CT = 1s FGI Task 1 Task 2 Note: No buffer space between stations, so upstream station has to wait if downstream station is busy Is any task starved or blocked? What is the capacity of the process? What is the throughput time? What is the average WIP?

More Examples.. CT = 3s CT = 1s FGI Task 1 Task 2 Task 2 starved for 2s. each time. Throughput rate = 20 units/min at Task 1, 60 units/min at Task 2 Capacity (throughput rate) of process = 20 units/min Throughput time = 4 seconds = 1/15 min WIP = Throughput rate x Throughput time = 20 units/min x 1/15 min = 1.33 units

More Examples.. Let’s study this make-to-stock system: CT = 1s CT = 3s FGI Task 1 Task 2 Note: No buffer space between stations, so upstream station has to wait if downstream station is busy Is any task starved or blocked? What is the capacity of the process? What is the throughput time? What is the average WIP?

More Examples.. CT = 1s CT = 3s FGI Task 1 Task 2 Task 1 blocked for 2s. each time. Throughput rate = 60 units/min at Task 1, 20units/min at Task 2 Capacity of process = 20 units/min Throughput time = 6 seconds = 0.1 min WIP = Throughput rate x Throughput time = 20 units/min x 0.1 min = 2 units

More Examples.. Let’s study this make-to-stock assembly system: CT = 3s CT = 3s Task 1 Task 2 CT = 2s CT = 4s Task 4 FGI Task 3 Note: No buffer space between stations Is any task starved or blocked? What is the capacity of the process?

More Examples.. CT = 3s CT = 3s Task 1 Task 2 CT = 2s CT = 4s Task 4 FGI Task 3 Tasks 1 and 2 are blocked by Task 3 for 1 second per product. Task 4 is starved for 2 seconds per product. The capacity of the process is 15 units/hour (limited by Task 3).