Process Flows and Shin‐Ming Guo Supporting Facility NKFUST Process Flow Structures Process Performance Facility Layout Servicescapes 1 https://www.youtube.com/watch?v=-HmFMcZv2xE 1
Definition of a Business Process A process is a set of activities that accepts inputs and produces outputs. Processes can involve both goods and services. wood Factory guitars metal students University alumni Distribution bulk items small parcels center approved loans mortgage Calculate applications rejected loans credit risk 4 2
Services Process Structure Process Type Service Characteristic Management Example Challenge Project Consulting One‐of‐a‐kind Staffing and scheduling Quality engagement Flexibility Job Shop Hospital Many specialized Balancing utilization Variety departments and scheduling patients Batch Airline Group of customers Pricing of perishable Variety vs. Cost Shop/Process treated simultaneously asset (seat inventory) Flow Line Cafeteria Fixed sequence of Adjust staffing to Speed operations demand fluctuations Flexibility Continuous Electric Uninterrupted delivery Maintenance and Speed Process Utility capacity planning 6 Project Shop CEO Market Human Finance Operation Research Resource Manager Project A Manager Project B Manager Project C 3
Job Shop Small batches of customers with different service sequences 3 2 2 3 3 2 1 4 4 1 1 A B C D 8 Batch Process and Continuous Flow 9 4
A Flow Line at IKEA’s Cafeteria 10 Process Flow Structures Low Volume Medium Volume High Volume Very high volume (unique) (high variety) (lower variety) (standardized) Hospital, Unit variable costs Job Shop Commercial generally too high Department Store Printer Batch Process Apparel Production/Bakery Airline Low volume Worker‐paced line Cafeteria Auto Assembly High volume Fast food Machine‐paced line Auto assembly Oil refinery Internet provider Utilization of fixed capital Continuous process generally too low 11 5
Process Performance Measures • Cycle Time is the average time between completions of successive units. • Capacity is a measure of max. output per unit of time. • Throughput rate is the actual output per unit of time. • Bottleneck is the factor that limits production, usually the slowest operation or the operation with heaviest load. • Capacity Utilization is a measure of how much output is actually achieved. 12 Flow Lines and Cycle Time 0.1 min 0.7 min 1.0 min 0.5 min 0.2 min • Process Cycle time = 1 min. Capacity = 60/hour. • Direct labor content = 2.5 min. Direct Labor Utilization = 2.5/(5 × 1)=50% 0.5min 0.5 min 0.5 min 0.5 min 0.5 min Process Cycle time = 0.5 min. Capacity = 120/hour. Direct labor content = 2.5 min. Direct Labor Utilization = 2.5/(5 × 0.5)=100% 13 6
Cycle Time Analysis of Playing Slot Machines Insert coin Collect Play again and pull payout if win wait Machine spinning The faster the customer plays, the more money the casino will earn. 14 More Process Performance Measures • Throughput Time: time to complete a process from arrival to departure. It consists of processing times and possible delays. • Wait Time: time spent in the system without receiving service. • Work In Process (waiting line, inventory) number of flow units in the process; or its average across a time period. • Total Direct Labor Content: is sum of all the operations times. • Direct Labor Utilization is a measure of the percentage of time that workers are actually contributing value to the service. 15 7
Throughput Time, WIP, and Wait Patients 11 Cumulative Inflow 10 9 Cumulative 8 Outflow 7 Throughput Time 6 WIP 5 4 3 2 1 WIP =Cumulative Inflow – Cumulative Outflow Time 0 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 Process with Multiple Types of Customers • The flow may break up into multiple flows. • Not all activities are required by all types. 30 3/hr 4 4 20 3 2 10/hr 12 2 2 4/hr 10 17 8
Product Mix Affects the Process Capacity Current product mix: 3 senior/hr, 10 staff/hr, 4 intern/hr No. of Available Requested Capacity (Workload) Workers Capacity Utilization Senior Staff Intern Total (minutes) File 1 60 3 × 4 10 × 3 4 × 2 50 83% 3 × 30 Contact 2 120 0 0 90 75% References Contact 3 180 3 × 20 10 × 12 0 180 100% Employers School/Grade 2 120 0 0 4 × 10 40 33% 3 × 4 10 × 2 4 × 2 Report 1 60 40 67% 18 Process Performance for Retailing Order Receipt On Shelf Sales Throughput rate = average daily sales Throughput time = days of supply average inventory value ________________________ Days of supply = average daily sales COst of Goods Sold _______________________ Inventory turn = average inventory value 19 9
Comparing Kohl’s and Wal-Mart 2011 2010 2009 2008 2007 Kohl’s Revenue 18391 17178 16389 16474 15544 Cost of Goods Sold 11359 10679 10332 10459 9890 Inventory 3036 2923 2799 2856 2588 Net Income 1114 991 885 1084 1109 Inventory Turn 3.74 3.65 3.69 3.66 3.82 Walmart Revenue 418952 405046 401244 374526 344992 Cost of Goods Sold 307646 297500 299419 280198 258693 Inventory 36318 33160 34511 35180 33685 Net Income 16389 14335 13118 12884 12036 Inventory Turn 8.47 8.97 8.68 7.96 7.68 20 Design a process to improve flow rate. Design a process to offer more selections. Design a process to reduce wait times. Design a process to control inventory. 21 10
Product Layout: How to Allocate Work? Process cycle time = max. cycle time = 60 seconds Process Capacity = Capacity of the bottleneck = 60/hour 22 Improved Layout of Driver’s License Office Process cycle time = max. cycle time = 30 seconds Process Capacity = Capacity of the bottleneck = 120/hour 23 11
Flexible Layout • Process cycle time = 30 sec. • Process Capacity = 120/hour • No waiting in between. • No need to repeat information. • Flexible staffing. 24 Environmental Psychology & Orientation Need for spatial cues to orient visitors Place orientation (e.g., "Where am I?") Function orientation (e.g., "How does this organization work, and what do I do next?"). Formula facilities draw on previous experience Anxiety and a sense of helplessness can result if spatial cues are not present. 12
Place Orientation Function Orientation 13
Environmental Dimensions of Servicescape Ambient conditions Background characteristics (temperature, music, illumination, scent) Spatial layout and functionality Circulation path of customers, groupings of merchandise (stores) Signs, symbols, and artifacts Carry special meaning or have social significance. 29 A Grocery Store’s Layout • The entrance is designed to be inviting so it reinforces a positive customer retail response. Bakery, produce and florist at the front of the store. • Stock the items shoppers buy most often at the back of the store meat, eggs, dairy and bread. • Crafting an efficient floor plan with an expertly stocked perimeter keeps shoppers moving through the entire store and pausing at strategic stops along the way. • Pharmacy is located on the perimeter near the exit. • Impulse Buys (Candy, Magazines, Etc.) are located by Supermarket the registers and exit Psychology https://www.youtube.com/watch?v=M9f21TzP3xY 14
Queue Structures Customers Customers in service waiting Outflow Inflow Customers in service Customers waiting Outflow Inflow 31 Signs, Symbols, and Artifacts 32 15
Servicescape 33 Summary A well‐designed service process leads to effective operations and better service. Three performance measures High contact service: throughput rate, wait times Retail service: inventory Process analysis can identify the bottleneck and improve the throughput time. Facility layout improves the efficiency and affects shopping habits. 34 16
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