March 17, 2016

Process Analysis

Understanding manufacturing processes is essential to ensuring a firm's competitiveness. A process is any part of an organization that takes inputs and transforms them into outputs that ideally are of greater value to the customer than the original inputs. Processes can be analysed and improved for increasing effectiveness and efficiency. Effectiveness improves when a process can produce to better specifications in terms size and performance. Efficiency is improved when a process utilizes less resources and produces less number of defects. Operations managers use industrial engineering techniques to improve efficiency of processes.

In the book (Chase et al.), Using examples of a fast food restaurant and a Las Vegas slot machine, processes are described and cycle time and utilization are presented. In the slot machine example, the diagram or process flowchart is discussed.

Analyzing a process allows some important questions to be answered, such as: What is the production rate?  How much does the process cost? What is the process capability? etc.  The purpose of the analysis needs to be clarified first to select an analysis technique.

Processes can be either single-stage or multiple-stage. For multiple-stage processes buffers or storage areas exist between manufacturing activities. Key manufacturing issues arising from multiple-stage operations include buffering, blocking, starving, and bottlenecks.

An additional way to classify manufacturing processes is either as make-to-order or make-to-stock. The type of process depends on whether the production is initiated in response to an actual order or whether customer orders are filled from existing finished goods inventories. Hybrid processes combine features of both make-to-order and make-to-stock environments.

Process Metrics

Measuring process performance is an important activity. Companies can be compared to others in a benchmarking process.

The most common process metric is utilization. Utilization is the ratio of the time that a resource is actually being used relative to the time it is available for use.

Productivity is the ratio of output to input. It is also popularly used to assess a firm's performance. Efficiency is defined as the ratio of the actual output to a standard output.
Run time is the time required to produce a batch of parts. Setup time, and operation time along with throughput time and throughput rate are also important metrics.

Process velocity (also known as throughput ratio) is the ratio of the toal throughput time to the value added time.

The chapter ends with a discussion of ways to reduce throughput time and offers suggestions including performing activities in parallel, changing the sequence of activities, and reducing interruptions.

Process Metrics - Video

Prof. Bussom - Widener University
An operations manager uses job design techniques to structure work to meet the physical and behavioral needs of the employee. Work measurement methods are used to determine the most efficient means of performing a given task, as well as to set reasonable standards for performing it. Work performance standards are important to the workplace so accomplished can be measured and evaluated. Standards permit better planning and costing and provide a basis for compensating the work force and even providing incentives.

Trends in job design include quality as part of the worker's job. Today many workers are cross-trained to perform multiskilled jobs and total quality programs are important for all employees. Team approaches, informating, use of temporary workers, automation, and organizational commitment are other key issues in job design decisions.

Behavioral considerations in job design include how specialized a job will be. Specialization has unique advantages and disadvantages. At the other extreme from specialization are the concepts of job enlargement and job enrichment. Sociotechnical systems of the interaction between technology and the work group influence job design as do ergonomic or physical consideration.

Work methods determine how the work should be accomplished in organizations, while work measurement determines how performance may be evaluated. Work methods can be established for an overall productive system, a worker alone, a worker interacting with equipment, and a worker interacting with other individuals.

Work measurement and standards exist to set time standards for a job. A technique used in work measurement is the time study. Examples of time studies are included for a four-element job and for a nursing environment. Finally, work sampling is compared to time study.

Another issue in job design is the financial incentive plan. These plans determine how workers should be compensated. In preparing a financial incentive plan, management must consider individual, group, and organization wide rewards.

I. Process Analysis

A. Process Defined

B. Analyzing a Las Vegas Slot Machine

C. Cycle Time Defined

Utilization Defined
Process Flowcharting

III. Types of Processes

Buffering, Blocking, Starving, and Bottleneck Defined
Make-to-Order, Make-to-Stock, and Hybrid Processes Defined
Pacing Defined

Buffering refers to a storage area between stages where the output of a state is placed prior to being used in a downstream stage.

Blocking occurs when the activities in the stage must stop because there is no place to deposit the item just completed.

Starving occurs when the activities in a stage must stop because there is no work.

IV. Measuring Process Performance

A. Productivity and Efficiency Defined

B. Run Time, Setup Time, and Operation Time Defined

C. Throughput Time and Throughput Rate Defined

D. Process Velocity or Throughput Ratio Defined

E. Value-Added Time Defined

Little's Law Defined
Process Analysis Examples

A. A Bread-Making Operation

B. A Restaurant Operation

Planning a Transit Bus Operation
Process Throughput Time Reduction

Case: Analyzing Casino Money – Handling Processes

Job Design Decisions
Job Design Defined

Behavioral Considerations in Job Design
Degree of Labor Specialization
Specialization of Labor Defined
Job Enrichment
Job Enrichment Defined
Sociotechnical Systems
Sociotechnical Systems Defined

Physical Considerations in Job Design
Work Physiology Defined
Ergonomics Defined

Work Methods
A Production Process
Workers at a Fixed Workplace
Workers Interacting with Equipment
Workers Interacting with Other Workers

Work Measurements and Standards
Work Measurement Techniques
Work Measurement Defined
Work Sampling Compared to Time Study
Time Study Defined
Predetermined Motion Time Data Systems Defined
Elemental Data Defined
Normal Time Defined
Standard Time Defined
Work Sampling Defined

Financial Incentive Plans
Basic Compensation Systems
Individual and Small-Group Incentive Plans
Organizationwide Plans


Case: Jeans Therapy—Levi's Factory Workers Are Assigned to Teams, and Morale Takes A Hit


Summaries of all Chapters of Operation Management

MBA Core Management Knowledge - One Year Revision Schedule

Updated 17 Mar 2016, 7 Dec 2014

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