1. OPSM 301 Operations Management Spring 2012 Class 6: Business Process Analysis

2. Key Learnings: Little’s Law
Relates three leading performance measures based on process flows: throughput, inventory, flow time
Applies to processes in steady state
Important to
First determine process boundaries for analysis
Then identify appropriate flow unit for your analysis

3. From measurement to analysis
So far we have considered
Measuring process flows-R, T, I
Relating these measures through Little’s Law: I=RxT
Next: understand what drives each measure
What drives flow time?
What drives throughput rate?
What drives inventory?

4. Process Architecture is defined and represented by a process flow chart:
Process = network of activities performed by resources
1. Process Boundaries:
input
output
2. Flow unit: the unit of analysis
3. Network of Activities & Storage/Buffers
activities with activity times
routes: precedence relationships (solid lines)
4. Resources & Allocation
5. Information Structure & flow (dashed lines)

5. Flowchart Symbols Tasks or operations Decision Points
Examples: Giving an admission ticket to a customer, installing an engine in a car, etc.
Examples: How much change should be given to a customer, which wrench should be used, etc.
Decision Points 4

6. Flowchart Symbols Storage areas or queues
Examples: Lines of people or cars waiting for a service, parts waiting for assembly etc.
Examples: Customers moving to a seat, mechanic getting a tool, etc.
Flows of materials or customers 4

9. Recall:Terminology Flow Time (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

10. Operational Measure: Flow Time Driver: Activity Times, Critical Activity
(Theoretical) Flow Time: The minimum amount of time required for processing a typical flow unit- without any waiting
Flow Time efficiency =

11. Smiley Guys Factory... 2 x2 1 3 4

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

13. Analyzing Process Performance
20min
Assembly R5
15min R1
15min R3
15min R4
15min
To illustrate the concepts, consider a simple example—which could be that of requesting a home mortgage.
Q1: What is the minimal amount of time to process an input into an output?
Find the critical activities = longest path = bottom path = 1 hour = theoretical flow time.
Q2: What is the maximal number of flow units we can process per hour?
Find the slowest resource = bottleneck = R2 whose resource capacity is 1 every 20 min. The weakest link determines the chain’s strength, so process capacity can not go above 3/hr.
Note: BN need not be on the critical path. Both concepts address different questions:
critical activities is about input-output flow/response time
bottleneck resources are about throughput rate
J.A. Van Mieghem/Operations/Strategy

14. 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

15. Example-Valley of Hope Hospital
Measured actual flow time: 154 minutes 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
Dark room
dark room technician
messanger
X-ray
technician
receptionist
Changing room
X-ray Lab
Value added
decision

16. Consider all possible paths
Flow time efficiency of the process=79/154=51%

17. Most time inefficiency comes from waiting: E. g
Most time inefficiency comes from waiting: E.g.: Flow Times in White Collar Processes

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

19. Theoretical Capacity
Theoretical capacity: The capacity (throughput rate) of a process under ideal conditions (units / time)
Effective capacity: The capacity that one expects of a process under normal working conditions (units/time)
Effective capacity < Theoretical capacity

20. Effective Capacity (scheduled availability)
Effective capacity depends on the following
Number of shifts
Product variety
Maintenance
Idleness

21. Realized Capacity (net availability)
Actual production or realized throughput rate
Usually lower than effective capacity.
Machine and equipment failures
Quality problems
Workforce losses
Other uncertainties

22. Tools: Gantt Chart
Gantt charts show the time at which different activities are performed, as well as the sequence of activities 1 2 3 4
activities
Resources
time

23. Gantt Chart Time A A A A Resources and Activities 5 20 10 15 B B B B 712 17 22
Takt time=5min

24. Example of a two-stage production lineB
5 min A2
2 min
5 min

25. Gantt Chart A1 A1 A1 A1 15 5 10 20 A2 A2 A2 A2 5 17 22 12 B B B B B B9 12 14 17 19 22 24
2 min
3 min
Takt time=2.5 min

26. Theoretical Capacity
Capacity of the Process= Capacity of the Bottleneck
Theoretical capacity: The capacity (throughput rate) of a process under ideal conditions (units / time)
If resource is fully utilized during scheduled availability (e.g. 8 hr per day)
Effective capacity: The capacity that one expects of a process under normal working conditions (units/time)
If resource is fully utilized during net availability
Effective capacity < Theoretical capacity
(net availability<scheduled availability)