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© 2007 Pearson Education

Process Analysis

Chapter 3


How Process Analysisfits the Operations Management

Philosophy

Operations As a Competitive Weapon

Operations StrategyProject Management Process Strategy

Process AnalysisProcess Performance and Quality

Constraint ManagementProcess LayoutLean Systems

Supply Chain StrategyLocation

Inventory ManagementForecasting

Sales and Operations PlanningResource Planning

Scheduling


Omgeo

Omgeo is the leading provider of complete global trade management services, processing more than one million trades per day and servicing 6,000 broker-dealers, custodian banks and investment managers in more than 40 countries.

Through process analysis, it was able to reduce the typical trade expense from $10 or $12 down to between 20 cents and a dollar.

Trade processing time was reduced from 20 hours down to three hours.

These changes were the result of considerable customer contact and reflect more automation and process reengineering.


Process Analysis

Process analysis is the documentation and detailed understanding of how work is performed and how it can be redesigned.

1Identify

Opportunity

1Identify

Opportunity

2Define Scope

2Define Scope

3DocumentProcess

3DocumentProcess

5RedesignProcess

5RedesignProcess

6ImplementChanges

6ImplementChanges

4Evaluate

Performance

4Evaluate

Performance


A Systematic Approach to Process Analysis

Suggestion system: a voluntary system by which employees submit their ideas on process improvements.

Design team: A group of knowledgeable, team-oriented individuals who work at one or more steps in the process, do the process analysis and make the necessary changes.

Metrics: Performance measures that are established for a process and the steps within it.

Flowcharts: A diagram that traces the flow of information, customers, equipment, or materials through the various steps of a process. Service Blueprint: A special flowchart of a service

process that shows which steps have high customer contact (line of visibility).


Standard Flowchart Symbols

A simple flowchart representing a process for dealing with a non-functioning lamp.

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Flowchart for the Sales Process of a Consulting Company

Service Blueprint


Flowchart of aNested Subprocess

Client Agreement & Service Delivery Step


Showing the Handoffs Between Departments


Process Charts

Process chart: An organized way of documenting the activities performed by a person or group of people at a work station, with a customer, or on materials.

Five categories of process charts:1. Operations that change, create or add something.2. Transportation (materials handling): Moving something. 3. Inspection: Checking or verifying something.4. Delays: Time spent awaiting further action.5. Storage: When something is put away until a later time.


Process Chart for an Emergency Room Admission

1 X Enter emergency room, approach patient window 2 X Sit down and fill out patient history3 X Nurse escorts patient to ER triage room4 X Nurse inspects injury5 X Return to waiting room6 X Wait for available bed 7 X Go to ER bed8 X Wait for doctor9 X Doctor inspects injury and questions patient

10 X Nurse takes patient to radiology11 X Technician x-rays patient12 X Return to bed in ER13 X Wait for doctor to return14 X Doctor provides diagnosis and advice15 X Return to emergency entrance area16 X Check out17 X Walk to pharmacy18 X Pick up prescription 19 X Leave the building

0.50 1510.0 -0.75 403.00 -0.75 40

1.00 -1.00 604.00 -5.00 -2.00 200

3.00 -2.00 2003.00 -2.00 -1.00 604.00 -2.00 1804.00 -1.00 20

Process: Emergency room admissionSubject: Ankle injury patientBeginning: Enter emergency roomEnding: Leave hospital

Step no.

Time (min)

Distance (ft)

SummaryNumber of stepsActivity

Time (min)

Distance (ft)

Step description

Insert Step

Append Step

Remove Step

Transport 9 11 815 Operation 5 23 —

Inspect 2 8 —

Store — — —Delay 3 8 —


Evaluating Performance

Checklist: A form used to record the frequency of occurrence of certain process failures. Failures is any performance shortfall, such as error, delay…

Histogram: A summarization of data measured on a continuous scale, showing the frequency distribution of some quality characteristic (the central tendency and dispersion of the data).

Bar chart: A series of bars representing the frequency of occurrence of data characteristics measured on a yes-or-no basis.

Pareto Chart: A bar chart on which factors are plotted in decreasing order of frequency along the horizontal axis.


Bar ChartExample 5.1

The manager of a neighborhood restaurant is concerned about rising customer complaints. He would like to present his findings in a way that his employees will understand.


Pareto ChartExample 5.1


So, in the example above, it can be seen that:• No Postcode is the most frequent result, with 98 items (out of the 240 sampled) being delayed for this reason. As the table on the Pareto Chart indicates, this is equivalent to 40.8%.• The second most frequent reason for delay is No Stamp, which represented 31.7% (76 out of the 240 sampled).• The Cumulative Frequency line (shown in blue) demonstrates that the first two categories account for 72.5% of the delayed post items.


More Tools for Evaluating Performance

Cause-and-effect diagram: A diagram that relates a key performance problem to it’s potential causes.Sometimes called the fishbone diagram.

Graphs: Representation of data in a variety of pictorial forms, such as line charts and pie charts.


Analysis of Flight Departure Delays

EXAMPLE The operations manager for Checker Board Airlines at Port Columbus International Airport noticed an increase in the number of delayed flight departures.SOLUTIONTo analyze all the possible causes of that problem, the manager constructed a cause-and-effect diagram, shown in Figure 4.11. The main problem, delayed flight departures, is the “head” of the diagram. He brainstormed all possible causes with his staff, and together they identified several major categories: equipment, personnel, materials, procedures, and “other factors” that are beyond managerial control. Several suspected causes were identified for each major category.


Passenger processing at gate

Late cabin cleaners

Unavailable cockpit crew

Late cabin crew

Personnel

Aircraft late to gate

Mechanical failures

Equipment

Procedures

Waiting for late passengers

Weight/balance sheet late

Poor announcement of departures

Delayed check-in procedure

Delayed flight departures

Materials

Late food service

Late fuel

Late baggage to aircraft

Contractor not providedupdated schedule

Weather

Air traffic delays

Other

Analyzing Flight Delays Using a Cause-And-Effect Diagram

Analysis of Flight Departure Delays


They decide to use the following tools:

The Wellington Fiber Board Company produces headliners, the fiberglass components that form the inner roof of passenger cars. Management wants to identify which defects were most prevalent and to find the cause.

Wellington Fiber Board Co.Example

Step 1. Checklist Step 2. Pareto chart

Step 3. Cause-and-effect diagram

Step 4. Bar chart


Checklist

Headliner DefectsDefect type Tally Total

A. Tears in fabric //// 4B. Discolored fabric /// 3C. Broken fiber board //// //// //// ////

//// //// //// / 36D. Ragged edges //// // 7

Total 50

Wellington Fiber Board Co.


C

DA B

Pareto Chart

100

80

60

40

20

0

Cum

ulat

ive

Perc

enta

ge

Num

ber o

f Def

ects

50

40

30

20

10

0Defect type

Wellington Fiber Board Co.72% of the quality defects broken fiber board


Cause-and-Effect Diagram

Out of specificationNot available

Materials

HumiditySchedule changes

Other

Machine maintenanceMachine speed

Wrong setup

Process

TrainingAbsenteeism

Communication

People

Broken fiber

board



Bar Chart20

15

10

5

0

Num

ber o

f Bro

ken

Fibe

r Boa

rds

First Second ThirdShift



Redesigning the Process

Ideas for process redesign and improvement can be uncovered by asking six questions about each step in the process and about the process as a whole.

1. What is being done?2. When is it being done?3. Who is doing it?4. Where is it being done?5. How is it being done?6. How well does it do on the various metrics of

importance?


Answers to the previous six questions are challenged by asking still another set of questions. Why is the process even being done? Why is it being done where it is being done? Why is it being done when it is being done?

Brainstorming is letting a group of people, knowledgeable about the process, propose ideas for change by saying whatever comes to mind.

Redesigning the Process


Benchmarking

Benchmarking is a systematic procedure that measures a firm’s processes, services, and products against those of industry leaders. Benchmarking focuses on setting quantitative goals for

improvement. Competitive benchmarking is based on

comparisons with a direct industry competitor. Functional benchmarking compares functional

areas in the firm with those of outstanding firms in any industry.

Internal benchmarking involves using an internal unit with superior performance as the benchmark for other units.


Benchmarking Steps

Planning: Identify the process, service or product to be benchmarked and the firm(s) to be used for comparison. Determine the performance metrics and collect the data.

Analysis: Determine the gap between the firm’s current performance and that of the benchmark firm(s).

Integration: Establish goals and obtain the support of managers who must provide the resources for accomplishing the goals.

Action: Develop cross-functional teams of those most affected by the changes, develop action plans, implement the plans and monitor progress.


Managing Processes

Failure to manage processes is failure to manage the business

Seven common mistakes1. Not connecting with strategic issues2. Not involving the right people in the right way3. Not giving the design teams and process

analysts a clear charter and then holding them accountable


Managing Processes

Seven common mistakes

4. Not being satisfied unless fundamental “reengineering” changes are made

5. Not considering the impact on people6. Not giving attention to implementation7. Not creating an infrastructure for continuous

process improvement


Solved Problem 1

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.


Solved Problem 1SOLUTION


Solved Problem 2

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.SOLUTIONFigure 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.


Solved Problem 2Step No.

Time (min)

Distance (ft) Step Description

1 0.80 50.0 X Direct customer into service bay2 1.80 X Record name and desired service3 2.30 X Open hood, verify engine type, inspect hoses, check fluids4 0.80 0.30 X Walk to customer in waiting area5 0.60 X Recommend additional services6 0.70 X Wait for customer decision7 0.90 70.0 X Walk to storeroom8 1.90 X Look up filter number(s)9 0.40 X Check filter number(s)

10 0.60 50.0 X Carry filter(s) to service pit11 4.20 X Perform under-car services12 0.70 40.0 X Climb from pit, walk to automobile13 2.70 X Fill engine with oil, start engine14 1.30 X Inspect for leaks15 0.50 40.0 X Walk to pit16 1.00 X Inspect for leaks17 3.00 X Clean and organize work area18 0.70 80.0 X Return to auto, drive from bay19 0.30 X Park the car20 0.50 60.0 X Walk to customer waiting area21 2.30 X Total charges, receive payment

Summary

Activity Number of StepsTime (min)

Distance (ft)

Operation Transport Inspect Delay

Store

Figure 4.16– Process Chart for Changing Engine Oil

7 16.50

8 5.50 420

4 5.00

1 0.70

1 0.30


Solved Problem 3

What improvement can you make in the process shown in Figure 4.16?

SOLUTIONYour 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 7 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.


Vanishing Cream AnalysisSolved Problem 4

Vera Johnson and Merris Williams manufacture vanishing cream. Their packaging process has four steps: mix, fill, cap, and label. They have had the reported defects analyzed, which shows the following.

Draw a Pareto chart to identify the vital defects.

Defect Frequency

Incorrect mixture (mix) 7

Over- or underfilled (fill) 18

Jar lids did not seal (seal) 6

Labels smudged (label) 29

Total 60


2960

× 100% = 48.33%

Defective labels account for 48.33 percent of the total number of defects:

Vanishing Cream Analysis

Improperly filled jars account for 30 percent of the total number of defects:

1860

× 100% = 30.00%

The cumulative percent for the two most frequent defects is

48.33% + 30.00% = 78.33%

Lumps represent of defects; the cumulative percentage is

760 × 100% = 11.67%

78.33% + 11.67% = 90.00%

Solution:

Defect FrequencyIncorrect mixture (mix) 7Over- or underfilled (fill) 18Jar lids did not seal (seal) 6Labels smudged (label) 29Total 60


Vanishing Cream AnalysisPareto Chart

Freq

uenc

y of

Def

ects

100

90

80

70

60

50

40

30

20

10

0

40

36

32

28

24

20

16

12

8

4

0

Cum

ulat

ive

Perc

enta

ge o

f Def

ects

Label Fill Mix Seal

48%

78%100%90%

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