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Chapter 5

Process Analysis

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Process Analysis

Process Flowcharting

Types of Processes

Process Performance Metrics

OBJECTIVES

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Understanding how processes work is

essential to ensuring thecompetitiveness of the company

Analysing a process allows some

important questions to be answeredsuch as

 – How many customers can the process

handle per hour?

 – How long will it take to serve a customer? – What change is needed in the process to

expand capacity?

 – How much does the process cost?

Process Analysis 

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Process Analysis Terms

Process: Is any part of an organization

that takes inputs and transforms them

into outputsCycle Time: Is the average successive

time between completions of

successive units

Utilization: Is the ratio of the time that a

resource is actually activated relative to

the time that it is available for use

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Process Flowcharting

efined 

Often the activities associated with a process

affect one another so that it is important toconsider the simultaneous performance of a

number of activities, all operating at the same

time.

Process flowcharting is the use of a diagram topresent the major elements of a process

The basic elements can include tasks or

operations, flows of materials or customers,

decision points, and storage areas or queues It is an ideal methodology by which to begin

analyzing a process

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Flowchart Symbols 

Tasks or operations  Examples: Giving an

admission ticket to a

customer, installing a

engine in a car, etc.

Decision Points Examples: How much

change should be

given to a customer,

which wrench shouldbe used, etc.

Purpose and Examples 

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Examples: Sheds,

lines of people waiting

for a service, etc.

Examples: Customers

moving to a seat,

mechanic getting a

tool, etc.

Storage areas or

queues

Flows of

materials or

customers

Purpose and Examples 

Flowchart Symbols 

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Example: Flowchart of Student

Going to School 

Yes 

No 

Goof

off

Go to

school

today? 

Walk to

class

Drive to

school

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Types of Processes 

Single-stage Process 

Stage 1

Stage 1 Stage 2 Stage 3

Multi-stage Process 

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Types of Processes Continued)

Stage 1  Stage 2 

Buffer  

Multi-stage Process with Buffer

A buffer refers to a storage area between

stages where the output of a stage is placed

prior to being used in a downstream stage

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Other Process Terminology

Blocking – Occurs when the activities in a stage must stopbecause there is no place to deposit the item just

completed

 – If there is no room for an employee to place a unit of

work down, the employee will hold on to it not ableto continue working on the next unit

Starving

 – Occurs when the activities in a stage must stop

because there is no work

 – If an employee is waiting at a work station and nowork is coming to the employee to process, the

employee will remain idle until the next unit of work

comes

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Other Process Terminology

Continued)

Bottleneck – Occurs when the limited capacity of a

process causes work to pile up or become

unevenly distributed in the flow of a

process – If an employee works too slow in a multi-

stage process, work will begin to pile up in

front of that employee. In this is case the

employee represents the limited capacity

causing the bottleneck.

Pacing – Refers to the fixed timing of the movement

of items through the process

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Other Types of Processes

Make-to-order

 – Only activated in response to an actual order

 – Both work-in-process and finished goods

inventory kept to a minimumMake-to-stock

 – Process activated to meet expected or

forecast demand

 – Customer orders are served from targetstocking level

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Process Performance Metrics

Operation time = Setup time + Runtime 

Throughput time = Average time for aunit to

move through the

system

Velocity = Throughput time

Value-added time 

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Process Performance Metrics

Continued)

Cycle time = Average time betweencompletion of units

Throughput rate = 1 .

Cycle time

Efficiency = Actual output

Standard Output 

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Process Performance Metrics

Continued)

Productivity = Output

Input

Utilization = Time Activated

Time Available 

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Cycle Time Example

Suppose you had to produce 600 units in 80

hours to meet the demand requirements of a

product. What is the cycle time to meet this

demand requirement? 

Answer: There are 4,800 minutes (60minutes/hour x 80 hours) in 80 hours. So the

average time between completions would haveto be: Cycle time = 4,800/600 units = 8 minutes. 

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Process Throughput Time

Reduction

Perform activities in parallel

Change the sequence of activities

Reduce interruptions

P d ti it

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Productivitymeasurement

A firm’s Key Performance Indicators(KPIs) should be structured to help

managers predict the company’s

economic performance and spot the

need for changes in operations.

Evaluating how productively a firm

uses its resources is the basis for

important KPIs

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What is Productivity?

efined 

Productivity is a common measure on how well

resources are being used. In the broadest

sense, it can be defined as the following ratio:

Outputs

Inputs

Productivity is a relative measure, in order for it to

be meaningful it need to be compared with

something else.

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Total Measure Productivity

Total Measure Productivity = Outputs

Inputs

or

= Goods and services produced

All resources used

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Partial Measure Productivity

Partial measures of productivity =

 Output or Output or Output or OutputLabor Capital Materials Energy

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Multifactor Measure

Productivity

Multifactor measures of productivity =

  Output .

Labor + Capital + Energy

or

  Output .

Labor + Capital + Materials

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Example of Productivity

Measurement

 You have just determined that your serviceemployees have used a total of 2400 hours oflabor this week to process 560 insurance

forms. Last week the same crew used only2000 hours of labor to process 480 forms.

Which productivity measure should be used?

Answer: Could be classified as a TotalMeasure or Partial Measure. 

Is productivity increasing or decreasing? Answer: Last week’s productivity = 480/2000 = 0.24,

and this week’s productivity is = 560/2400 = 0.23. So,productivity is decreasing slightly.

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 Question

What should be the criteria for

management to adopt a particularperformance measure?

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Chapter 6

Manufacturing and 

Process SelectionDesign

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Types of Processes

Conversion (ex. Iron to steel)

Fabrication (ex. Cloth to clothes)

Assembly (ex. Parts to components)

Testing (ex. For quality of products)

P S l ti

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Process Selection

This section is about how to design

processes efficientlyProcess selection refers to the strategic

decision of selecting which kind of

production process to have in the

manufacturing plant.

A process flow structure refers to how a

factory organizes material flow using

one or more of the following processtechnologies

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Process Flow Structures

Job shop (ex. Copy center making a single copy

of a student term paper)

Batch shop (ex. Copy center making 10,000copies of an ad piece for a business)

Assembly Line (ex. Automobile manufacturer)

Continuous Flow (ex. Petroleum manufacturer)

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IV.

Continuous

Flow

III.

AssemblyLine

II.

Batch

I.

Job

Shop

Low

Volume,One of a

Kind

Multiple

Products,Low

Volume

Few

Major

Products,Higher

Volume

High

Volume,

HighStandard-

izationCommercial

Printer

FrenchRestaurant

Heavy

Equipment

Automobile

Assembly

Burger King

Sugar

Refinery

Flexibility (High)

Unit Cost (High)

Flexibility (Low)

Unit Cost (Low)

Exhibit

6.10 

These arethe major

stages of

 product

and

 processlife cycles

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Products usually go through a

product life cycle of introduction,

growth, maturity and decline.

The type of production process used

can be linked to the product life

cycle and marketing strategies

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A process flow design can be

defined as a mapping of the specificprocesses that raw materials, parts,and subassemblies follow as theymove through a plant

The most common tools to conduct

a process flow design includeassembly drawings, assemblycharts, and operation and routesheets

Manufacturing Process Flow Design 

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Example: Process Flow Chart 

MaterialReceived

from

Supplier  

Inspect

Material for

Defects Defects

found?

Return to

Supplier for

Credit

No,

Continue… 

 Yes 

P Fl Ch t

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Process Flow Charts

Each of these charts is a useful

diagnostic tool and can be used toimprove operations during the

steady state of the productive

systemThe focus in analyzing a

manufacturing operation should be

the identification of activities that

can be minimized or eliminated