Operating Processes process  A process is a set of tasks to be performed in a defined sequence  A process uses inputs to create outputs that are of value to the customer and the organization  An organization’s operating processes should fulfill two goals:  Deliver the “customer promise” (i.e. organization’s identified competitive advantage)  Create value for stakeholders

Process Analysis  How is a process doing?  How can the process be improved?  Process flow diagrams  Process flow diagrams describe pictorially the process and the flow of product and information in the process  Process performance is measured based on capacity, efficiency and effectiveness

A Sequential Process: Four- Station Assembly Line 20 min/unit 8 min/unit 15 min/unit Task ATask B Task C 10 min/unit Task D

Process Times for Tasks and Systems process time of a task  The process time of a task is the time it takes to perform the task bottleneck time  The bottleneck time is the time of the longest process time in the system throughput time  The throughput time is the time it takes for a product to go through production or for a customer to receive service from start to end (assuming no waiting)

Cycle Times and Bottleneck Pacing system cycle time  The system cycle time is the average time between completion of successive units of product or departures of successive customers  The system cycle time is the process time of the bottleneck  The bottleneck limits the output of the process! blocked tasks starved tasks  Other tasks in process are blocked tasks or starved tasks that will experience idle time as they wait to start their tasks

Determining Capacity  Capacity  Capacity is the number of units of product that a process can produce in a specified time period (e.g. units per hour) capacity  For service processes, capacity is the number of customers who can be served in a specified time period  The capacity of a process is the inverse of the cycle time (i.e. 1/cycle time)

Bottleneck Management 1.Release work orders to the system at the pace set by the bottleneck 2.Lost time at the bottleneck represents lost time for the whole system 3.Increasing the capacity of a non-bottleneck task is a mirage 4.Increasing the capacity of a bottleneck increases the capacity of the whole system 5.Capacity at a station can be increased by lowering the process time.

Capacity Analysis  Two identical sandwich lines  Each line has two workers and a toaster to perform the three operations  All completed sandwiches are wrapped Wrap 37.5 sec/sandwich Order 30 sec/sandwich BreadFillToast 15 sec/sandwich 20 sec/sandwich 40 sec/sandwich BreadFillToast 15 sec/sandwich20 sec/sandwich40 sec/sandwich

Measures of Process Performance  Capacity  Capacity affects revenue potential  Efficiency  Efficiency measures how well processes make use of inputs (e.g. labor, material, equipment) and affects costs and profits  Effectiveness  Effectiveness measures how well the process delivers the customer promise  Quality  Speed  Flexibility & responsiveness  Safety