Calculate flow rate operations management

110

Process--Flow Analysis

Chapter outline

6.1 Process thinking

6.2 The process view of business

6.3 Process flowcharting

6.4 Process-flow analysis as asking questions

6.5 Measuring process flows

6.6 Measuring process flows at Pizza U.S.A.

6. 7 Process redesign

6.8 Key points and terms

A customer walks into a home improvement store, selects a paint color from the multitude of sample options, and gives the selection to the store employee. The employee enters information about the selection into a machine that automatically dispenses the appropriate set and quantities of pigments into a can of white paint. Another machine is used to shake the can, resulting in consistent color throughout the can. The customer walks away with a virtually customized product in a matter of minutes. The simple process used to create the customized paint combines the customer's preference, employee skills, and automated technology.

This chapter is about understanding processes and how they are used to pro- duce and deliver products and services. It is also about determining what a process is capable of producing.

Process-flow analysis is about viewing and analyzing the transformation pro- cess as a sequence of steps connecting inputs to outputs. It is used to discover bet- ter methods or procedures for producing and delivering a product or a service deemed to be of value to customers.

Measuring process flows is essential to process-flow analysis and to improving transformation processes. We describe several process measures, including pro- cessing time, throughput time, flow rate, inventory, and capacity. We also define bottlenecks and provide methods for calculating these measures.

The flowchart (often referred to as a process map) is an essential tool to facilitate process-flow analysis. Flowcharts should consider not only process flows but cus- tomers, suppliers, and employee inputs in designing better processes. A flowchart for a high-contact service process such as surgery often reflects the customer's per- spective, mapping the activities performed on the patient. In manufacturing, a

Chapter 6 Process-Flow Analysis 111

flowchart often shows the activities performed on inventory as it moves through the production system.

To truly understand process-flow analysis, we begin this chapter with process thinking. This is a very powerful idea in business education and in practice .

. 1 PROCESS THINKING

Process thinking is the point of view that all work can be seen as a process. It begins by describing the process of interest as a system. A system is defined by its boundaries, inputs, outputs, suppliers, customers, and system flows. System definition is needed before detailed measurement and process flowcharting can begin.

A system is a collection of interrelated elements whose whole is greater than the sum of its parts. The human body, for example, is a system. The heart, lungs, brain, and muscles cannot function without one another. They are interrelated, and the function of one part affects the others. The whole of the body is greater than any of its individual parts or components.

A business organization also can be viewed as a system. Its parts are the func- tions of marketing, operations, finance, accounting, human resources, and infor- mation systems. Each of these functions accomplishes nothing by itself. A business cannot sell what it cannot produce, and it does no good to produce a product or service that cannot be sold. The functions in an organization are highly interactive and have value as a system that they do not have separately.

Every operation can be viewed as a system by identifying the transformation or conversion system, as was described in Chapter 1. The transformation system must be isolated from its environment by specifying the system boundaries. The boundaries delineate the resources and activities in the system being analyzed from those that are outside of the analysis and decision area. Identification of the system boundaries is always difficult and somewhat arbitrary, but it must be done to separate the system under study from the larger system or organization in which it operates. In this sense, the boundaries of a firm separate the firm from the larger supply chain in which it resides.

To illustrate these concepts, consider the case of a bank that is installing a new information system. The new system will replace the current one, with larger ca- pacity, new hardware, and some new software. The accounting systems will not be affected by this conversion because the same accounting transactions will be pro- duced in the same way, and so accounting can safely be assumed to be outside the system boundaries. Training will be required to operate the new system, and so human resources can be considered part of the system. Operations will be affected by the new software and must be included within the system boundaries since some new operational software is being added. Each part of the organization that is affected by the new hardware and software installation should be included within the system boundary, and functions that are not affected can be excluded as being outside the system boundaries. In this way, the appropriate system bound- aries can be identified for purposes of analysis.

A cross-Junctional team should be formed, consisting of the functions that are affected by the conversion to the new information system. This team will be responsible for overseeing the conversion from each of their functional perspec- tives and should handle the interactions between functions. If this is done by a

112 Part Two Process Design

cross-functional team rather than workers from a single function, a systems vie\- of the project will be taken. This sort of process thinking considers all the inter- acting functions within the system boundaries when making the conversion.

6.2 THE PROCESS VIEW OF BUSINESS

~ "JIT at

McDonald's/' Vol. VIII

~~

FIGURE 6.1 The process view of business. Source: V. Grover and M. K. Malhorta, "Business Process Reengineering: A Tutorial on Concept, Evolution, Method, Technology and Application," Journal of Operations Management 15 (1997), p. 200.

One of the most important contributions of process thinking is that a business can be viewed as a system that consists of a collection of interconnected processes. The process view of a business is horizontal in nature; the functional view is vertical. This is shown graphically in Figure 6.1.

As an illustration of interconnected processes in a business, consider a scenario. A sales team has a process for creating the customer order, while at the same time interacting with operations to ensure adequate capacity is available to fill the order. Other marketing personnel use a process for pricing the customer order. Once operations receives the order, the necessary processes are used to produce enough output to fill the order. The shipping area has a process for securing the order for delivery, and transportation is scheduled to deliver the order to the cus- tomer. Finance uses its own processes to bill and receive payment from the customer, while relying on pricing information from marketing and order size and delivery confirmation from operations.

Viewing a business as a collection of processes emphasizes the cross-functional nature of decision making. It illustrates that"functions must make handoffs to one another in executing a process. As a result, time and information can be lost between processes. In some cases, the number of steps in a process is so large that the system cannot function in an efficient and effective manner. See the example in the Operations Leader box of the complex and time-consuming process of setting up clinical trials to test newly developed cancer treatment drugs.

Another example comes from an MRI (magnetic resonance imaging) facility. Physicians from a variety of practices referred patients for MRI services, and a backlog of patients had developed. The backlog was difficult to solve because the MRI facility did not control its own schedule. An outside service provider was contracted to schedule patients, and their scheduling caused several problems. For example, the scan indicated on the schedule did not always match with the actual scan that the patient needed, and sometimes not enough scan time was scheduled

Chapter 6 Process-Flow Analysis 113

Operations Leader Process Analysis to Improve Clinical Drug Trials ·

anderbilt-lngram Cancer Center (VICC) wanted to prove the complex process of starting a clinical trial. clinical trial is the research study used to conduct a

:ontrolled test of a new drug on humans. Patients vol- ~ t eer to participate in such studies, and the results :·e used to determine whether the new drug will be :oproved for use in the marketplace.

To begin studying the clinical trial process, VICC 'St assembled a team of experts to map the process. -e t eam included an oncologist, research nurse, ad-

- nistrator, oncology fellow, and three experts in -anagement methodologies (such as process :-alysis) . Working closely with key individuals in each :"'-j)e studied areas, the team began by mapping pro- :::s.s flows for all major activities including initial prep- ;·:~ ion, approval processes, budgeting, and final :: eoaration. Each of these four major activities con-

__ ed of multiple steps, and subsequently, each major ;_ - ity was separately mapped at a more granular ; el t o include additional detail. The maps were then : ' l ed by the people involved in the daily operation

:- - e studied processes. ext , the mapping team used archival data from

:. 3 orevious trials to calculate the times to com- - =:e each process step. They found that the median -:;to open a clinical trial was 172•days. "Contrary

'lat might be expected from comments made by ::earch team leaders]. the time for Institutional ; e v Board review and approval is one of the

::...-:est processes in the chain of processes" at a .=.::an of 47 days, according to study authors = ::: Dil ts and Alan Sandier. In contrast, other re- - processes required a median of 70 days, while _:.;eti ng and contracting consumed a median of : ::: s.

Further investigation of activities included in the process maps revealed some surprises. On the macro process map (least granular), 75 percent of process activities w ere defined as "value added ." However, on the four more-granular maps, only 32-54 percent of activities were deemed value added . The process mapping team's next step is to use what they have uncovered, both to speed up the opening of future clinical trials and to enhance patient treatment by providing more trials of more investigational drugs.

Source: Adapted from David M. Dilts and Alan B. Sandier, "Invisible Barriers to Clinical Trials: The Impact of Structural, lnfrastructural, and Procedural Barriers to Opening Oncology Clinical Trials," Journal of Clinical Oncology, October 1, 2006.

for certain patients. Further, there was a need to hire an additional technician to conduct scans, and such technicians were in relatively short supply in the local labor market. Dealing w ith the backlog of patients waiting for scans is an opera- tions p roblem, but processes outside of operations interact with processes within operations to cause the problem . Solutions to the backlog p roblem need to account for the larger system of activities within and outside of operations.

This example illustrates h ow op erations is only a p art of a larger organiza- tion that includes many other functions. Nearly all operations decisions are re- lated to at least one other part of the organization . The process view of business p rovides a vehicle for understanding the interactions between various organi- zational functions and decisions that typically cross functional and sometimes

114 Part Two Process Design

organizational lines. These interactions can be streamlined and improved by pro- cess flowcharting, as is described next.

6.3 PROCESS FLOWCHARTING

~ "Process System Improvement,''

Vol. X

FIGURE 6.2 A flowchart for selecting a supplier.

In this section, we describe process flowcharting as a tool for beginning to under- stand and improve processes. This is a very commonly used tool in a wide variety of industries. It can be useful for almost any type of process, to gain understand- ing of the activities that must occur for the process to successfully produce a prod- uct or service.

Process flowcharting refers to the creation of a visual diagram to describe a transformation process. Flowcharting is known by several names: process map- ping, flow-process charting, and in a service operations context as service blue- printing. In Chapter 7, we discuss value stream mapping, yet another specific approach to process flowcharting popularized by firms that implement lean sys- tems and lean thinking. The label used to refer to creating a pictorial depiction of a transformation process does not matter. What matters is that creating the vi- sual diagram can be invaluable in documenting what happens within a transfor- mation process. This pictorial documentation, when it includes process measurements, can help to identify how the transformation process can be improved by changing some or all of the following elements:

1. Raw materials '

2. Product or service design

3. Job design 4. Processing steps or activities used

5. Management control information 6. Equipment or tools 7. Suppliers

The visual diagram that is created from process flowcharting is known in ge- neric terms as a flowchart (or flow-process chart or service blueprint or value stream map). There are many different specific forms of the flowchart in use, but the most common is the systems flowchart. An example of a systems flowchart for the "selecting a supplier" transformation process is shown in Figure 6.2. In this

No

Buyer receives

request to buy

Buyer selects

supplier

Chapter 6 Process-Flow Analysis 115

example, the systems flowchart is drawn from the perspective of the buyer within an organization and shows the discrete steps, along with decision points and flow sequences, in selecting a supplier.

Another example appears in Figure 6.3, which shows the service provided to help a customer select and have altered a suit from a retail store. This systems flowchart depicts a service context with the customer being in the system and interacting with the service provider and is, as such, also called a service blueprint. Moreover, because the service blueprint captures the perspec- tives of different people-customer, sales associate, and tailor-it is also known generally as a swim lane flowchart (alternatively called a deployment flowchart or a matrix flowchart). A swim lane flowchart is used to show the responsibilities of groups or individuals in either horizontal or vertical columns. It shows who or what is performing each step in the flowchart in the form of "swim lanes" in a pool. In Figure 6.3, horizontal swim lanes are drawn to demarcate the various participants involved in the process of buying a suit from a retail store. The term deployment flowchart comes from showing how people and resources are deployed, and the term matrix flowchart comes from the format of this display as a matrix.

Regardless of what it is called, a number of principles should be followed to create a flowchart that is easy for individuals unfamiliar with the transformation process to understand and that facilitates process-flow analysis. These principles are consistent with process thinking, which views the transformation process as a system with inputs, outputs, customers, suppliers, boundaries, and processing steps and flows. The principles are as follows:

1. Identify and select a relevant transformation process (or system) to study. This can be the entire supply chain for a product or a service, the entire firm, or a part of the firm. Ideally, the selected transformation process is known to affect performance.

2. Identify an individual or a team of individuals to be responsible for de- veloping the flowchart and, ideally, for subsequent analyses. This indi- vidual or team not only should have some familiarity with the transformation process but also should have process ownership, that is, authority for initi- ating and/ or implementing changes to the selected transformation process. When a selected transformation process cuts across different functions, a cross-functional team should be involved. When a selected transformation process cuts across the supply chain, interfirm collaboration becomes even more critical.

3. Specify the boundaries of the transformation process. The boundaries denote where the selected transformation process begins and ends, identify who the customer(s) and the supplier(s) of the transformation process are, and deter- mine how many processing steps or activities are to be evaluated. In some cases, the next function within an organization is the customer; in other cases, another firm is the customer. Similarly, other functions within an organization or other firms can be sup.pliers to the transformation process. For example, in the case of a five-star restaurant, the transformation process can be the dining service, in which case the kitchen where food is prepared and cooked and the bar where drinks are prepared are the suppliers to the dining room where cus- tomers are served. Alternatively, the entire restaurant can be selected to be the transformation process of interest, in which case suppliers to the restaurant

116 Part Two Process Design

FIGURE 6.3 Service to select and have altered a suit from a retail store.

Customer

Sales Associate

Tailor

Tailor Shop

Customer arrives at the store

Customer provides information

Request preferences (size, style, and price)

Customer begins search

Salesperson takes customer to racks

Line of Visibility

might include firms providing cooking ingredients and beverages and the culinary schools where chefs are trained.

4. Identify and sequence the operational steps or the activities necessary to complete the output for the customer(s). It is important in process flowchart- ing to depict what is actually happening and not what one thinks is happening. Once the "as it is" flowchart has been created and the transformation process has been analyzed, creating a "to be" flowchart may help show what the trans- formation process should look like when improvement changes have been implemented.

5. Identify the performance metrics for the operational steps or the activities within the selected transformation process. These metrics should be tied to the performance of the overall transformation process. For example, if deliv- ery performance is of interest, it may be useful to track the processing times for each operational step or activity. Alternatively, if quality performance is of interest, it may be useful to track the defect rate for each operational step or activity.

6. Draw the flowchart, defining and using symbols in a consistent manner. Figure 6.4 shows the common symbols in Microsoft Visio for creating a systems flowchart. These symbols were used in Figures 6.2 and 6.3 and are also consis- tent with ISO 9000 standards for flowcharting.

Try on suit and look in mirror

Line of Visibility

Move customer to the tailor

Determine alterations needed

Make alterations

Symbol

0 Terminator

D Process

Decision/ Evaluation

Flow

Customer accepts alterations

Write up sales ticket

Chapter 6 Process-Flow Analysis 117

Thank customer

Exit

Meaning

Customer returns to pick up suit

This symbol shows the "start" and the "end" of the flowchart, thereby specifying the boundaries of the transformation process to study. The words "START" and "END" should be written inside the symbol for clarity.

This symbol denotes an operational step or an activity to be performed. A short description of the operational step or the activity should be written inside the symbol for clarity.

This symbol represents a decision, an evaluation, or an "IF-THEN" condition that has multiple potential outcomes (i.e., branches of arrows) . The decision, evaluation, or condition should be properly described in writing inside the symbol for clarity. Each branch of arrow shou~d be properly labeled to denote the meaning of the outcome from the decision, evaluation, or condition.

This symbol denotes the direction of flow within the flowchart; the flow could be that of materials, information, or person (e.g., customer).

.... 118 Part Two Process Design

FIGURE 6.5 Flow-process chart for the picking operations.

Subject Charted Produce, Dairy, Meat Depts .

Summary

FLOW I Operations Pres. I Prop. I Save

PROCESS CHART I Transports I o I I I Inspechons

Operation Picking

Charted by RGS Can I Eliminate?

Delays Chart No. Sheet 1 of 1 01 Can I Combine? Storages

DMe 1 / 8 / 13 Can I Change Sequence? lime

Dist.

I lime

in in Feet Min.

2 9 0 I 60 12 0

30 I 10

80

7 I 4

2 0

20 15

10 25

11 10

12 30 3 0

13

14

15

16

17

18

.!2. 20

21

6 0

5

45 15

4

10

50

I 526

0 D Q

Can I Simplify? Distance 215

~ ~ ~ Present ~ ~ c

' To the warehouse ~ On distribution desk le( Separated according to work areas ~ Taken to start points

_;:::. Wait for order picker 1..- Picker separates them order by order I e.. (Produce) picker fills order .__

To Dairy aisle

...)a On conveyor wait ing for picker

I~ (Dairy} picker fil ls order ~ To Meat aisle ~ On conveyor waiting for picker

le:- (Meat) picke~ fills order -.. To inspection .)1 Inspected

I e:::: Loaded onto carts route-by-route ~ Waits to be take n to the v1arehouse

I I To tal Time

SYMBOL KEY

Operation (a task or work activity)

Inspection (an inspection of the product for quantity or quality)

Transportation (a movement of material from one point to another)

Notes

v D

Storage (an inventory or storage of materials awaiting the next operation)

Delay (a delay in the sequence of operations)

When other specific forms of flowcharts are created, the individual or team re- sponsible may choose to use other symbols. This is allowed as long as the symbols are used consistently and, more importantly, a symbol key is provided to help in- terpret the flowchart that is drawn. Figure 6.5, for example, is a flow-process chart of the picking operations at a distribution center that provides produce, dairy, and

~

FIGURE 6.6 Information flowchart for the picking operations.

@

0

Chapter 6 Process-Flow Analysis 119

Picked items check on the sheets

SYMBOL KEY

Origin of record (used to identify an operation that involves the addition of significant data to a blank form)

Handling operations (any nonproductive step, such as sorting, stapling, or folding)

Move (a step in which the record is transported from one person, department, or workplace to another)

Delay, file, and destroy (identifies a point or time at which the record is inactive)

meat items to grocery stores. In this case, the interest is in tracking the flow of "materials" inside the distribution center. Figure 6.6 shows the same picking op- eration, but here the interest is in tracking the flow of "information" for the pur- pose of management and control of the distribution center.

PROCESS-FLOW ANALYSIS AS ASKING QUESTIONS

Creating a flowchart of a transformation process that is easy to understand by those unfamiliar with the transformation process is an important first step in process-flow analysis. Once created, the flowchart can be analyzed to yield insights into how the transformation process can be improved, given a specific improvement goal. The improvement goal, for example, can be to increase efficiency, reduce throughput time, increase quality, or even improve worker morale.

A systematic approach should be followed to analyze the created flowchart and the underlying transformation process. This approach is epitomized by asking questions about the flowchart and, by extension, the underlying transformation process. Tables 6.1 and 6.2 summarize two sets of useful questions. The questions in Table 6.1 are consistent with adopting the systems perspective discussed in

120 Part Two Process Design

TABLE 6.1 Process-flow analysis and improvement: Asking What, Who, Where, When, and How questions

TABLE 6.2 Process-flow analysis and improvement: Asking Flow, Time, Quantity, Quality, and Cost questions

Question Category

1. What

2. Who

3. Where

4. When

5. How

Question Category

1. Flow

2. Time

3. Quantity

4. Quality

5. Cost

Examples

• What does the customer need? • What operations are really necessary? • Can some operations be eliminated, combined, or simplified? • Should the product be redesigned to facilitate production?

• Who is performing each operation? • Can the operation be redesigned to use less skill or fewer labor

hours? • Can operations be combined to enrich jobs and thus improve

productivity or working conditions? • Who are the suppliers?

Should different suppliers be used, or can the current suppliers be used more effectively?

• Should some or all of the operations be outsourced to suppliers?

• Where is each operation conducted? • Can the layout be improved to reduce the distance traveled or

make the operations more accessible?

• When is each operation performed? Is there excessive delay or storage?

• Are some operations creating bottlenecks/ How can the waiting time be reduced?

How is the operation done? • Can better methods, procedures, or equipment be used? • Should the operation be revised to make it easier or less t ime-

consuming/

Examples

Is the t ransformation process balanced or unbalanced? • Where is the bottleneck in the transformation process? • Are all operational steps or activities necessary?

How jumbled is the flow within the tra nsformation process'

How long does it take to produce/deliver one unit of output? • Can the length of this time be reduced? • What is the time between successive units of output? • Where is there excessive setup time? • Where is there excessive waiting time?

How many units theoretically can be produced/delivered in a given period (e.g., a week)7

• How easy is it to change this quantity? How many units are actually produced/delivered in a specified period (e.g., a week)?

• What is the historical defect rate? • Which operational step or activity contributes to the defect rate? • Where do errors occur?

How much does it cost to produce/deliver one unit of output? • What are the cost buckets that make up the cost to produce/deliver

one unit of output? • Can some cost buckets be reduced/eliminated?

-e tailor makes alterations on the suit as part of the ::. ice blueprint.

Chapter 6 Process-Flow Analysis 121

Section 6.1. Questions in Table 6.2 are consistent with the supply chain and operations objectives presented in Chapter 2.

When these questions are asked, opportunities to improve the underlying transformation process can be highlighted. For example, looking at the flow- process chart in Figure 6.5 and asking questions about the picking operations at the grocery distribu- tion center led to the realization that many activities (transportation, inspection, delays, and storage) do not add value to the service provided and should be reduced or eliminated. Groceries in fact spent a con- siderable amount of time waiting for the next opera- tion or in transit and very little time in value-added operations (only 57 minutes out of 526 minutes) .

Moreover, looking at the information flowchart in Figure 6.6 and asking questions led to the realization that printing and distributing pick sheets is not only costly for the en- vironment but also time-consuming. If orders could be channeled electronically to relevant individuals, the information would be more timely and accurate. As a result of asking questions, a number of changes were implemented, including relocating aisles (i.e., a process layout change), revising picking methods to reduce bottlenecks and labor time (i.e., changes to work methods and jobs), and designing special carts to make the loading of delivery vans easier and faster (i.e., an equipment change).

Similarly, looking at the service blueprint for the service of helping a customer purchase a suit from a retail store and asking questions might lead to suggestions for improvement such as the following:

• If sales associates can be trained to listen better to customer requests, will cus- tomers b~ more likely to find a suit of interest?

• Can customers call ahead and ask to have some suggested suits waiting for ex- amination, reducing their search time?

• Can the tailor be available while the customer is trying on the suit to provide suggestions on how the suit can be tailored to fit better?

• Does the layout of the retail store make it easy for customers to search and find what they want?

In summary, process-flow analysis requires a good description of the transfor- mation process used to convert inputs into outputs. This description can be facili- tated by creating a flowchart that shows materials flows, information flows, or service flows. Once a flowchart is created, appropriate questions should be asked to highlight improvement opportunities in procedures, tasks, equipment, raw ma- terials, layout, suppliers, or management control information.