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Process Management

Process Management. Class 3: 2/2/11. 6- 2. OBJECTIVES . Process Analysis Process Flowcharting Types of Processes Process Performance Metrics Manufacturing Processes Service Processes Business Process Reengineering. Process Management .

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Process Management

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  1. Process Management Class 3: 2/2/11

  2. 6-2 OBJECTIVES • Process Analysis • Process Flowcharting • Types of Processes • Process Performance Metrics • Manufacturing Processes • Service Processes • Business Process Reengineering

  3. Process Management • Processes relate to work that is ongoing and repetitive • Process management concepts and methods can be applied to improve manufacturing, service, and business processes • Effort is placed trying to reduce cost, increase throughput, and improve quality

  4. 6-4 Process Analysis Terms • Process: Is any part of an organization that takes inputs and transforms them into outputs • Cycle 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

  5. 6-5 Process FlowchartingDefined • Process flowchartingis the use of a diagram to present 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

  6. 6-6 Tasks or operations Decision Points Flowchart Symbols Purpose and Examples Examples: Giving an admission ticket to a customer, installing a engine in a car, etc. Examples: How much change should be given to a customer, which wrench should be used, etc.

  7. 6-7 Storage areas or queues Flows of materials or customers Flowchart Symbols Purpose and Examples Examples: Sheds, lines of people waiting for a service, etc. Examples: Customers moving to a seat, mechanic getting a tool, etc.

  8. 6-8 Single-stage Process Stage 1 Multi-stage Process Stage 1 Stage 2 Stage 3 Types of Processes

  9. 6-9 Multi-stage Process with Buffer Buffer Stage 1 Stage 2 Types of Processes (Continued) 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

  10. 6-10 Other Process Terminology • Blocking • Occurs 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 • 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 no work is coming to the employee to process, the employee will remain idle until the next unit of work comes

  11. 6-11 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

  12. 6-12 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 minimum • Make-to-stock • Process activated to meet expected or forecast demand • Customer orders are served from target stocking level

  13. 6-14 Process Performance Metrics • Capacity: maximum output of a process or resource measured in units/time: a rate • Operation time = Setup time + Run time • Setup time: the length of time required to changeover from one product to another (assumes products are produced in batches) • Throughput time = Average time for a unit to move through the system

  14. 6-15 Process Performance Metrics (Continued) • Cycle time = Average time between completion of units • Throughput rate = 1___ Cycle time • Utilization of an operation = Demand/Capacity

  15. 6-16 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 (60 minutes/hour x 80 hours) in 80 hours. So the average time between completions would have to be: Cycle time = 4,800/600 units = 8 minutes.

  16. Bread-Making Questions • What is the bottleneck when one bread-making line is used? What is the capacity of the process? What is the utilization of packaging? What is the throughput time? • What happens to capacity and utilization when two bread-making lines are used? What is the bottleneck?

  17. 6-19 Process Throughput Time Reduction • Perform activities in parallel • Change the sequence of activities • Reduce interruptions

  18. 7-20 Basic work flow structures • Project layout – fixed position; construction, movie lots • Workcenter (job shop) – similar equipment grouped together; machine shop • Manufacturing cell – similar set of processes for a limited range of products • Assembly Line – discrete parts move through workstations; toys, appliances, cars • Continuous process – flow vs discrete, flows a set sequence of steps; oil, rubber, chemicals

  19. Process types • Continuous • Assembly Line • Job Shop • Cell • Project

  20. Continuous Process • Highly standardized products in large volumes • Often these products have become commodities • Typically these processes operate 24 hours/day seven days/week • Objective is to spread fixed cost over as large a volume as possible

  21. Continuous Process continued • Starting and stopping a continuous process can be prohibitively expensive • Highly automated and specialized equipment used • Layout follows the processing stages • Output rate controlled through equipment capacity and flow mixture rates

  22. Continuous Process continued • Low labor requirements • Often one primary input • Initial setup of equipment and procedures very complex

  23. Assembly Line • Similar to continuous process except discrete product is produced • Heavily automated special purpose equipment • High volume - low variety • Both services and products can use flow shop form of processing

  24. A Generalized Assembly Line Operation

  25. Advantages of the Assembly Line • Low unit cost • specialized high volume equipment • bulk purchasing • lower labor rates • low in-process inventories • simplified managerial control

  26. Disadvantages of Assembly Line • Variety of output difficult to obtain • Difficult to change rate of output • Minor design changes may require substantial changes to the equipment • Worker boredom and absenteeism • Work not very challenging • Vulnerable to equipment breakdowns

  27. Disadvantages of Assembly Line continued • Line balanced to slowest element • Large support staff required • Planning, design, and installation very complex task • Difficult to dispose of or modify special purpose equipment

  28. Assembly Line Layout • Objective is to assign tasks to groups • The work assigned to each group should take about the same amount of time to complete • Final assembly operations with more labor input often subdivided easier • Paced versus unpaced lines

  29. Job Shop • High variety - low volume • Equipment and staff grouped based on function • Each output processed differently

  30. A Generalized Job Shop Operation

  31. Advantages of the Job Shop • Flexibility to respond to individual demands • Less expensive general purpose equipment used • Maintenance and installation of general purpose equipment easier • General purpose equipment easier to modify and therefore less susceptible to becoming obsolete

  32. Advantages of the Job Shop continued • Dangerous activities can be segregated from other operations • Higher skilled work leading to pride of workmanship • Experience and expertise concentrated • Pace of work not dictated by moving line • Less vulnerable to equipment breakdowns

  33. Disadvantages of the Job Shop • General purpose equipment is slower • Higher direct labor cost • High WIP inventories • High material handling costs • Management control very difficult

  34. The Cell Form • Combines flexibility of job shop with low costs and short response times of flow shop • Based on group technology • First identify part families • Then form machine cells to produce part families

  35. Conversion of a Job Shop Layout to a Cellular Layout

  36. Organization of Miscellaneous Parts into Families

  37. Advantages of Cellular Production • Reduced machine setup times • increased capacity • economical to produce in smaller batch sizes • smaller batch sizes result in less WIP • less WIP leads to shorter lead times • shorter lead times increase forecast accuracy and provide a competitive advantage • Parts produced in one cell

  38. Advantages of Cellular Production continued • Capitalize on benefits of using worker teams • Minimal cost to move from job shop to cellular production (e.g. EHC) • Can move from cellular production to “mini-plants”

  39. Disadvantages of Cellular Production • Volumes too low to justify highly efficient high volume equipment • Vulnerable to equipment breakdowns • Balancing work across cells • Does not offer the same high degree of customization as the job shop

  40. Cellular Layout • Teams of workers and equipment to produce families of outputs • Workers cross-trained • Nominal cells versus physical cells. • Remainder cell • Cell formation methods • production flow analysis

  41. Project Operations • Large scale • Finite duration • Nonrepetitive • Multiple interdependent activities • Offers extremely short reaction times

  42. 7-44 Product-Process Matrix

  43. Selection of Transformation System by Stage of Life Cycle

  44. 7-46 Break-Even Analysis • A standard approach to choosing among alternative processes or equipment • Model seeks to determine the point in units produced (and sold) where we will start making profit on the process or equipment • Model seeks to determine the point in units produced (and sold) where total revenue and total cost are equal

  45. 7-47 Break-Even Analysis (Continued) Break-even Demand= This formula can be used to find any of its components algebraically if the other parameters are known Purchase cost of process or equipment Price per unit - Cost per unit or Total fixed costs of process or equipment Unit price to customer - Variable costs per unit

  46. 7-48 Break-Even Analysis (Continued) • Example: Suppose you want to purchase a new computer that will cost $5,000. It will be used to process written orders from customers who will pay $25 each for the service. The cost of labor, electricity and the form used to place the order is $5 per customer. How many customers will we need to serve to permit the total revenue to break-even with our costs? • Break-even Demand: = Total fixed costs of process or equip. Unit price to customer – Variable costs =5,000/(25-5) =250 customers

  47. 7-49 Manufacturing Process Flow Design • A process flow design can be defined as a mapping of the specific processes that raw materials, parts, and subassemblies follow as they move through a plant • The most common tools to conduct a process flow design include assembly drawings, assembly charts, and operation and route sheets

  48. 7-50 Lockring 4 Spacer, detent spring 5 SA-2 A-2 Rivets (2) 6 Spring-detent 7 A-5 Component/Assy Operation Inspection Example: Assembly Chart (Gozinto) – Plug Assembly From Exhibit 7.4

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