1. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 4 C h a p t e r P ROCESS M EASUREMENT AND A NAYLYSIS Chapter Outline Process Analysis Process Measurement Benchmarking Process Analysis in Manufacturing Process Analysis in Services Business Process Reengineering Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 4-1

2. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 4 C h a p t e r P ROCESS M EASUREMENT AND A NAYLYSIS Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 4-2 Chapter Objectives Identify the different performance measures for evaluating a process. Introduce benchmarking and demonstrate its importance to world class operations. Show how process analysis can provide an in- depth understanding of processes. Introduce the concept of service blueprinting and show how it is used to evaluate a service operation. Introduce the concept of business process reengineering and show how it radically improves processes.

3. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 E XHIBIT 4.1 Process Flow Charts for Making Hamburgers CookAssemble Finished Goods A) Standard: CookAssemble Raw Materials B) McDonald’s Customer Raw Material Customer 4-3

4. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 E XHIBIT 4.1 Process Flow Charts for Making Hamburgers continued Cook Assemble C) Burger King: Customer Assemble Raw Materials WIP Std? No Yes FG 4-4

5. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 E XHIBIT 4.1 Process Flow Charts for Making Hamburgers continued Assemble D) Wendy’s: Customer Raw Material Cook WIP 4-5

6. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 E XHIBIT 4.2 Partial Measures of Productivity Type of Business Productivity Measure (Output/Intput) Restaurant Customers (meals)/labor hour Retail store Sales/square foot Chicken farm Pounds of meat/pound of feed Utility plant Kilowatts/ton of coal Paper mill Tons of paper/cord of wood 4-6

7. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 E XHIBIT 4.3 Measures of Capacity Type of Operation Measure of Capacity Fast food restaurantCustomers (meals)/hour BreweryBarrels of beer/year Hotel reservation call centerTelephone calls/hour Automobile assembly plantCars/hour Paper Tons of paper/year 4-7

8. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 E XHIBIT 4.4 Major Steps in Benchmarking Planning Analysis Integration Action Maturity 4-8

9. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 E XHIBIT 4.5 Make-to-Stock and Make-to-Order Processes Step 1Step 2 Finished Goods Make-to-Stock: Step 1Step 2 Raw Materials Make-to-Order: Customer 4-9

10. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 E XHIBIT 4.5 Modularization Step 1 Standard Components Modularization: Step 2 Assemble- to-Order Customer 4-10

11. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 Example of Process Analysis A Commercial Bread Bakery lb./hr.Number of Total Stage per Machine MachinesCapacity Mix60 3 180 Proof25 6 150 Bake40 4 160 Package75 3 225 4-11

12. Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 Back-of-the-House Front-of-the-House Line of Visibility Start Stage 1 Stage 4 Process Analysis - Service Blueprinting Stage 3 Stage 2 (Customer Enters Process) (Customer Exits Process) End Delay 4-12