PROCESS MANAGEMENT AND IMPROVEMENT THROUGH OPERATIONS

Dr. Jitendra SharmaProfessor - OperationsIMT - Nagpur

SESSIONS OBJECTIVES

To know what is actually a process Categorize activities in the process What is value add; non value add & required non value add? What are wastes and how to identify them What are process parameters How to read a process How to make changes in process What is process analysis What are the ways and means we can do process analysis?

PROCESS PARAMETERS Process: Is any part of an organization that takes inputs and

transforms them into outputs Capacity: Maximum capability to produce; is affected by the

mix of product or services, the choice of technology, the size of a facility, and the resource allocated

Rated/Designed/Theoretical, Utilized, Effective Capacity/Actual Utilization: Is the ratio of the time that a resource is actually

activated relative to the time that it is available for use Efficiency: Ratio of the actual output of a process relative to

some standard Productivity: Productivity is the ratio of outputs divided by the

inputs (resources)

PROCESS MANAGEMENT SKILLS All functions need to manage processes Management education teaches the basic, fundamental

and technical aspects It does not teach as to how to run a factory process or a

marketing process or an accounting process At the end of the day, org’ns runs the processes that

delivers some kind of goods or services, if not to the customers directly at-least internally known as internal services

Therefore it is very important to know about processes, and as to how to build competencies and capabilities within the processes

PROCESS SKILLS So we can say that everybody is concerned with building

capabilities and they do it because everybody is concerned with building processes

Managers should, invariably, posses an important skill which traditionally they are very bad at – internally managing process that delivers goods and services efficiently and effectively

For that you need to understand your processes – as they inside out – you should know about loading, capacity, bottlenecks, flexibility, service quality, etc.

There are certain fundamental and basic laws of behavior of a processes

TYPES OF ACTIVITIES IN ANY SET UP Value adding activities Non value adding activities

OverproductionUnnecessary inventoryTransportProcessesActivity resulting in rejects/scrapWaitingUnnecessary motion

Required non value adding activities

VALUE ADDING ACTIVITY Is the one which when carried out makes the product

more complete Work is the activity that generates revenue by causing

the product to change form to a more complete state Product is actually being built Customer values these acts, and are willing to pay to

have them performed The bottom line is that when we do this we get money

for doing them This brings us revenue and generates profits, and keeps

us alive

NON VALUE ADDING ACTIVITIES Non value added is an activity which does not advance the

product to a more complete or finished state It adds no value in the eye of customer and he is not willing to

pay for such activity; Adds to the costs and reduces profitability There are seven categories of NVAA known as WASTE

Overproduction – unnecessary production which wont sale Inventory – idle resources Transport – moving stuff from place to place Processes – incorrect tooling, setup times, changeovers Activity resulting in rejects/scrap – work till the point you get it wrong Waiting – just being idle Unnecessary motion – refers to people, ergonomics, etc.

HOW THESE ARE TO TREATED? Required Non value adding activities are the ones which cannot

just be avoided An activity which is important to run the system but doesn’t add

value in the eyes of customer, and he is/is not willing to pay for it as well

With value adding activities the work is work and there is not a lot of opportunity to change the content but still efforts are always on

With non value adding activity, you have the opportunity to make the activity go away by re-designing your processes and procedures

With required non value adding activity, you have the opportunity to greatly reduce the cost through process redesign.

Here you still need to get the activity done, but how you do it is under your control

PROCESS PARAMETERS Cycle Time: Is the average successive time between

completions of successive units Setup time: is the time required to prepare a machine to

make a particular item Run time: is the time required to produce a batch of parts Operation time: is sum of the setup time and run time for a

batch of parts that run on a machine Queue time and Waiting time Pacing: Refers to the fixed timing of the movement of

items through the process Bottleneck: Capacity or any other ‘constraint’/limiting

factor

IMPACT OF PROCESS FLOW Lead time is the length of time it takes to process an order

through the system From the view point of customer – the time taken from the

placement of order to the delivery of the same Bottleneck is your capacity constraint A constraint as we all know is a limiting factor in your process When you keep on improving your processes your bottleneck

keep getting shifted from one process to the other Visual idea of a constraint

IMPACT OF PROCESS FLOW Velocity is the speed at which an order move through

your facility The faster the better The more time it takes an order to move through your

facility and the processes, the more time it has to accumulate cost on the way out

Throughput is a measure as to how much product you can get through a given process

Throughput of any process is the function of its bottleneck Throughput can also be defined as how much of goods are

available to ship within a given timeframe

BlockingOccurs when the activities in a stage must stop because 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 able to continue working on the next unit

StarvingOccurs when the activities in a stage must stop because there

is no work If an employee is waiting at a work station and no work is

coming to the employee to process, the employee will remain idle until the next unit of work comes

PROCESS PARAMETERS

PROCESS PERFORMANCE METRICS Operation time = Setup time + Run time Throughput rate = 1 .

Cycle time Efficiency = Actual output

Standard Output

Productivity = Output Input

Utilization = Time Activated Time Available

PROCESS IMPROVEMENTS To manage something effectively and then to improve it, one

must first understand it. As in all walks of life, the ultimate test of an idea is the test of

time And the proof of the pudding is in the eating Short term success is no basis on which you can premise and

base your judgment In order to improve anything, first deconstruct it and do the

reductionist approach – break it down in as many pieces as you can and analyze it minutely for lacunae and improvements

For designing and analyzing process to transform inputs into goods or services, one should ask following questions -

Is the process designed to achieve some competitive advantage?

Does the process eliminate all non-value adding activities?

Can the process be broken down and improved further upon?

Does the process adds value as per the customers perception?

Will this process win the orders?

There are number of tools which makes sense of ‘what is happening’ and tells us ‘what should happen’…

PROCESS ANALYSIS AND DESIGN

Flow Diagrams - Shows the movement of materials and provides an overall view of the big picture

Process Charts - Uses symbols to show key activities and in much more detailed fashion

Time-Function Mapping - Shows flows and time frame; adds rigor and a time element

Service Blueprinting - focuses on customer/provider interaction; focuses on three different levels of interaction; highlights potential failure points.

PROCESS ANALYSIS AND DESIGN

PROCESS FLOW DIAGRAMS Process flow diagrams is the schematic

representation of 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

Tasks or operationsExamples: 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 should be used, etc.

Process Flow Diagrams

Examples: lines of people waiting for a service, even temporary storage, etc.

Examples: Customers moving to a seat, mechanic getting a tool, etc.

Storage areas or queues

Flows of materials or customers

Process Flow Diagrams

Process Flowchart Symbols

Operations

Inspection

Transportation

Delay

Storage

PROCESS FLOW - EXAMPLE

Thanks…