Chapter 6, Process-Flow Analysis
5e, Schroeder
McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Process Thinking
The Process View of Business
Measuring Process Flows
Measuring Process Flows at Pizza U.S.A.
Process Flowcharting
Process-Flow Analysis as Asking Questions
Business Process Reengineering (BPR)
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Process Thinking: all work can be seen as a process
Definition of a “system”
– Whole > sum of parts
Application of systems thinking to businesses
– Defining system boundaries
Role of “cross-functional” teams in systems analysis
– Systems thinking requires cross-functional teams to include all affected functions
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Figure 6.1: Process View of Business
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Little’s Law
– Relates number of items in the system to arrival rate and length of time in the system
– Formula:
I = T x R
I = average number of things in the system
T = average throughput time
R = average flow rate into the process
Assumes system is in a ‘steady state’
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Manufacturing
Waiting lines
Invoice processing
Legal office transactions
Accounts receivable processing
Etc.
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Capacity of a system = capacity of the most constraining resource
– This resource is called a ‘bottleneck.’
The flow rate of a process is the minimum of:
– Supply
– Demand
– Capacity
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Process Flowcharting: creation of a visual diagram to describe a transformation process
Also known as:
– Process mapping
– Flow-process charting
– Service blueprinting
– Value stream mapping
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Purpose: to describe a process visually to find ways of improving the current process.
– Find repetitive operations
– Identify bottlenecks
– Describe directions and distances of flows (people, material and information)
– Reduce waste
Required for certifications such as ISO9000
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Process Flow Analysis Might Change:
Raw materials
Product (output) design
Job design
Processing steps used
Management control information
Equipment or tools
Suppliers i.e. Anything but customers may be changed!!
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Steps in process flowchart analysis using the systems approach
4.
5.
6.
1.
2.
3.
Select a process to study
Form a team to analyze & improve the system
Specify the boundaries of the transformation process
Identify and sequence the operational steps
Identify the performance metrics
Draw the flowchart
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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)
Storage
(an inventory or storage of materials awaiting the next operation)
Delay
(a delay in the sequence of operations)
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What does the customer need? What operations are necessary? Can some operations be eliminated, combined, or simplified?
Who is performing the job? Can the operation be redesigned to use less skill or less labor? Can operations be combined to enrich jobs?
Where is each operation conducted? Can layout be improved?
When is each operation performed? Is there excessive delay or storage? Are some operations creating bottlenecks?
How is the operation done? Can better methods, procedures, or equipment be used?
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Flow
Balanced? Where is the bottleneck? Are all steps necessary? How jumbled is the flow?
Time
How long to produce one unit? Can it be reduced? Cycle time? Excessive set-up time? Excessive waiting time?
Quantity
Theoretical production amount? How easy to change? How many units actually produced?
Quality
Historical defect rate? Which step contributes to defect rate? Where do errors occur?
Cost
Cost to produce one unit? What are cost buckets for one unit? Can some of the buckets be reduced or eliminated?
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Business Process Reengineering
(BPR)
BPR defined (Hammer and Champy,
1993)
BPR Philosophy
Principles of BPR
Success of BPR
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BPR is “the fundamental rethinking and radical redesign of business [or organizational] processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.”
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This is in contrast to incremental change or continuous improvement of an existing process.
“If I were recreating this company today, given what I know and given current technology, what would it look like?”
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Does the reengineering consultant see the glass as half full or half empty?
Neither.
It’s the wrong size of glass!
Or, should it be a glass? …or a liquid?
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Organize around outcomes, not tasks
Have the people who do the work process their own information
Put the decision point where work is performed, and build control into the process
Eliminate unnecessary steps in the process
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According to Hammer & Champy, 50-70% of organizations attempting BPR do not achieve the results they expected. Why?
Because they make one or more of the 17 common mistakes (see next 2 slides):
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Trying to fix a process instead of changing it
Not focusing on business processes
Focusing only on the process redesign
Neglecting people’s values & beliefs
Settling for minor results
Quitting too early
Constraining the scope of the problem & effort
Letting corporate culture & mgmt attitudes get in the way
Trying to reengineer from the bottom up
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(cont.)
Assigning a leader who doesn’t understand BPR
Skimping on the resources
Not making BPR a top corporate priority
Trying to do too much at once & dissipating resources
Concentrating only on design & not implementation
Trying to keep everyone happy
Pulling back if people resist
Dragging out the effort & taking too long
Source: Hammer & Champy, Reengineering the Corporation, chapter 14.
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Process Thinking
The Process View of Business
Measuring Process Flows
Measuring Process Flows at Pizza U.S.A.
Process Flowcharting
Process-Flow Analysis as Asking Questions
Business Process Reengineering (BPR)
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