Process in Operations

1. Process in Operations Alison Smart Full-time MBA Winter 2004

2. Process - Definition • Not agreed! • ‘A collection of activities that takes one or more kinds of input and creates an output that is of value to the customer’ (Hammer and Champy) • ‘A specific ordering of work activities across time and space, with a beginning, an end and clearly identified inputs: a structure for action’ (Davenport) Slide 1

3. What is a process? • Transforms inputs into outputs (transformed resources) using entities to achieve transformation (transforming resources) • Comprises activities and flows of resources Slide 2

4. Essential features • Involves activity – people and machines do things • Generally involves more than one person or machine – it is collaborative • A process has a goal Slide 3

5. What types of flows? • Transformed resources • materials • information (paper-based, verbal, electronic) • equipment • people • Transforming resources • people • equipment Slide 4

6. Why take a process view? • Moves focus from task to achieving goal • Concentrates on what needs to be done to satisfy the customer • Highlights links between the different sections and departments • Highlights areas of overlap or gaps Slide 5

7. Management processes Customer request Satisfied customer Core processes Support processes Three types of process Slide 6

8. Raw material suppliers Component maker Wholesaler Retailer Narrow process span Wide process span Upstream vertical integration Downstream vertical integration Scope of process Assembly operation Slide 7

9. Key questions in process analysis and design • Is the process designed to achieve competitive advantage in terms of differentiation, low cost or response? • Does the process eliminate non-value adding steps? • Does the process maximise value as perceived by the customer? • Will the process win orders? Slide 8

10. = operation = transportation = inspection = delay = storage Process charts – symbols Derived from ‘scientific management’ Slide 9

11. X Slide 10

12. = beginning or end of process = activity = process input or output = direction of flow = decision point Process mapping symbols Derived from systems analysis Slide 11

13. Slide 12

14. Process Design • Human resources • selection • job design • Technology selection • capacity • size • tolerances • Layout Slide 13

15. Ergonomic environmental design Ergonomic workplace design Workplace environmental conditions? Available technology and how it will be used? Best method of performing each job? Duration of each task and number of people needed? How is commitment maintained? Usually identified by work study Work measurement Behavioural approaches Elements of job design Tasks allocated to each person? Slide 14

16. Work study Generic name for techniques used in examination of work in all its contexts. Systematic investigation of all factors which affect efficiency and economy of situations being reviewed in order to bring about improvement Method study Work measurement Systematic recording and critical examination of existing and proposed methods of working to develop easier and more cost effective ways Techniques to establish the time for a qualified worker to carry out specified tasks in a specified way Work study Slide 15

17. Capacity • Maximum level of value-added activity over a period of time • The maximum output rate that can be achieved by a facility • e.g. number of calls than can be answered per hour • e.g. number of cars that can be produced per month Slide 16

18. Design capacity theoretical maximum output of a system in a given period Effective capacity capacity an organization can expect to achieve Defining capacity Slide 17

19. Capacity issues How much capacity How to utilise to make available? existing capacity? Capacity planning Capacity scheduling Slide 18

20. J F M A M J J A S O N D J F M A M J J A S O N D Inventory built up in anticipation of future demand Under-utilised capacity Level capacity plan Processing capacity set at uniform level throughout planning period, regardless of fluctuations in forecast demand Slide 19

21. J F M A M J J A S O N D J F M A M J J A S O N D Equipment capacity Capacity throughout year Capacity throughout year Chase demand capacity plan Match capacity closely to closely to varying levels of forecast demand Slide 20

22. Manage demand • Change demand • price • advertising • Alternative products/services Use mixed approaches (e.g. make to inventory and offer discounts to selected customers) Slide 21