Business Processes 1.6 (2021-2022) Analysis of the Bikeur Process at DBS This document consists of the description and questions you need to work on for the course case "BiKeur". It consists of two parts each of which covers a part of the course and allows you to practice the theory learned during the hearing lectures on a business problem. Although the case is about a service process, the learning objectives can be generalized to other types of processes such as manufacturing processes (e.g. manufacturing of wood, glass, etc.). Deliverables: • • • Report: It describes your approach, solutions and methodology (see template on canvas). Excel File: A neat, readable and well organized excel file needs to be delivered and that supports the solution and analysis. Presentation: You will present your main findings and conclusions (see template on canvas). More details on the deliverables, the corresponding deadlines and other rules can be found in the course manual. 1 Background Bicycles are an integral part of lifestyle and used by more and more people for everyday transportation as well as for recreational purposes. With society becoming ever more sensitive towards environmental issues, more and more people try to avoid cars and choose for a bicycle (in combination with public transportation options), especially in the warmer periods of the year. However, even though people re-discover their interest for bicycles, the average knowledge about bicycle technique and safety remains low for many. Especially if the bicycle is not used for recreation but as a pure mode of transportation, many bicycle riders are not overly concerned with obtaining a high-end quality bike but usually seek out the budget option. The combination of these factors leads to many bicycles being unfit for road usage (either because of bad lighting / brakes) or having other flaws that could turn into security risks (e.g., loose bolts or low tire pressure). 2 BiKeur Dan van Doorn owns DBS, a bicycle shop in Amsterdam. After analyzing the market for many years, Dan has noticed the potential of offering standardized safety checks for bicycles in the first weeks of spring. At this time of year, there is a steep increase in people that start using their bikes again after not using it throughout the winter. For this, Dan has devised the BiKeur bicycle check process (outlined in Section 3) in which a thorough check of the bicycle’s stability, tires, and, most importantly, brakes is performed. The store is located next to the station of Amsterdam Zuid and hence easily reachable both by bike and by customers that want to bring in their bike using public transportation or car in order to perform the safety check. After a market analysis and research, Dan has devised a marketing campaign that will result in a steady inflow of customers for this year’s early spring season. Currently, DBS employs 6 workers in total that are assigned to the BiKeur process as outlined in Section 5 below. 3 The BiKeur bicycle check process at DBS This section describes the BiKeur bicycle check process at DBS: Registration When a customer arrives, they are welcomed at the registration desk. The registration clerk registers the personal details of the customers and attaches a tag to the customer’s bicycle so that the owner and bike can be mapped to each other. The clerk also offers the customer a coffee and a place to sit in the lounge to wait for the bike to be inspected. The customer may also leave the premises and return to pick up the bike at the end of the day. On average, the clerk takes 3 minutes per customer to perform the registration. Preliminary Checks After the registration, the bikes are taken in by another employee. First, a torque check on nuts and bolts is performed in order to ensure all bike parts are properly secured. Since the check would be very time consuming to perform on all bolts, she performs the check on a security-relevant sample of bolts that also indicates whether other bolts should be checked as well. The initial torque check only requires 2 minutes. After the torque check, the tire pressure is checked and brought to the optimal pressure level. The check and readjustment takes approximately 1 minute per tire. The final preliminary check is concerned with the fitness for the bike for road usage and general safety. For this, a rudimentary check of the brakes is performed (taking 2 minute per bike). All preliminary checks are performed, even if the bike already fails one of them. In case that the bike fails any of the preliminary checks, the bike is sent to the repair shop for inspection. Otherwise, the bikes are sent directly to the brake distance check. Only 5% of the bikes are in such a bad condition that they fail the tests at this stage. Brake Distance Check Bicycles that are sent for the brake distance check, are brought to the short test track in the backyard of the bicycle store where the braking distance of the bikes are tested. For this, the street has been prepared to simulate both dry and wet weather conditions. The employee accelerates the bike to a certain point then verifies how long it takes the bicycle to come to a complete halt. Since multiple breaks and conditions are tested, this test takes approximately 7.5 minutes per bicycle. Around 70% of the bicycles pass the brake distance test and are safe enough to be used in daily situations. However, roughly 30% of the bikes can be shown to have unreliable brakes and have to be sent to the repair shop. Repair Shop In the repair shop, Dan tries to repair and readjust the brakes or other parts of the bicycle depending on the findings of preceding checks. At this stage, they do not replace larger parts since installing new components requires the consent of the customer as it leads to a higher price for the bicycle repair. When the bike is inspected after failing the preliminary checks the inspection takes approximately 10 minutes. In 30 % of such inspections, it turns out that an important part has to be replaced. Then, the necessary repairs are marked at the bike tag and the bike is immediately sent to the debriefing desk with the remark “Needs additional repair”. In the other 70% of cases the Brake Distance check is done after finishing this inspection. Bikes that are inspected in this way are not guaranteed to pass the brake distance check, but have the same average probability to do so as the other bikes. When the bike is inspected in the repair shop because the brake distance check has shown unreliable brakes, Dan performs a targeted re-inspection of the brakes. In this case, this reinspection takes about 15 minutes. In around 60% of these cases, the issues are minor and can be repaired on site. However, in 40% of these cases, the re-inspection shows that a major component needs to be replaced. In this case, the necessary repairs are marked at the bike tag and the bicycle is sent to the debriefing desk with the remark “Needs additional repair”. Test ride and re-adjustment After all checks (and, possibly, repairs) have been performed, bikes which have not been sent to the debriefing desk, are taken on a short test ride in order to see whether everything is in order now or whether the bicycle still requires additional care. The test ride takes approximately 7 minutes. In 85% of the cases, the test ride ends with a positive evaluation of the bicycle and the bicycle is sent to the debriefing desk with the note “In order”. In the other 15% of the cases, the bicycle needs to be (re-)inspected depending on the problem. The reinspection and additional repairs are done by the employee doing the test rides. In 70% of the time, this inspection solves the underlying problem and after a short additional test, the bicycle is sent to the debriefing desk with the note “In order”. In the other 30% of the cases, the bicycle is sent to the debriefing desk with the note “Needs additional repair”. The reinspection and re-adjustment take an average of 11 minutes in total. Debriefing Desk Finally, the customer is called to the debriefing desk where a clerk goes over all the checks and repairs that have been performed by the staff. The debriefing clerk compiles a list of all checks that have been done. In the case that the bicycle is deemed “In order”, the clerk simply hands the customer this list and returns the bicycle to the customer (if the customer is still present) or messages the customer that they can pick up the checked bike. In this case, the process takes approximately 4 minutes per customer. In the case that the customer requires more detailed repair, the clerk also compiles a list of the checks that have been performed and the additional steps that need to be taken. The clerk also adds the costs of additional material and service fees if the customer chooses to let the necessary additional service be performed by DBS. Since the customers only agree upon the costs of the initial checks, DBS does not perform any additional chargeable service without the implicit consent of the customer (no hidden fees!). Therefore, the clerk either talks to the customer or calls them in order to discuss whether the additional repairs should be performed by DBS or whether the customer wants to pick up the bike in the current condition. In this case, the debriefing takes on average 10 minutes. If the customer decides to have the additional repairs be made by DBS, the repairs are made in the repair shop outside of the regular hours for the BiKeur process detailed above (and hence do not require any resources during this time). 4 Customers DBS allows registration to the bicycle check from 09:00 in the morning to 15:00 in the afternoon. Outside of these hours, the bicycle shop is in “standard operation” (meaning that regular repairs and services are performed outside of the BiKeur process). Customers cannot book an appointment but are served as they arrive at the store according to the process outlines in section 3 above. Currently, DBS plans to charge €25 per bike as a standard fee during the coming weeks. Market research has determined that this would attract up to 70 customers per day for the coming weeks. 5 Current structure at BiKeur In order to help with the BiKeur program, DBS planned to hire several employees to be working within the process. Each working day, these employees are available for 6 hours to work within the BiKeur process. After designing the process as described in Section 4, DBS has made the following schedule and assignments for the employees: • • • • • • Employee A (Adam) is in charge of the registration desk. Employee B (Bea) does all of the preliminary checks. Employee C (Cloe) performs the brake distance check. Employee D (Dan) performs all repairs in the repair shop. Employee E (Ethan) performs the test rides and potential repairs after the test rides. Employee F (Fiona) performs the debriefing. All employees have expert knowledge of bicycles and could be instructed to perform any of the other tasks if that would be beneficial for the process. DBS pays all of its staff a wage of €25 per hour (For accounting purposes, Dan also pays himself this salary). Hence, each member of staff receives €150 for the 6-hour shift that they are involved in the BiKeur process. DBS currently owns two complete sets of tools do perform bicycle repairs which are used by Dan at the repair shop and Ethan for re-adjusting bikes after the test rides. Therefore, at most two employees can perform repairs at the same time. The check-in area and desk also only allow up to two customers to be registered at the same time. For all other activities, an unlimited (realistically achievable) number of customers can be served at the same time. 6 Questions Part I: Process Analysis The first part of the case study focuses on the business process analysis of the BiKeur process. The case description provides information of the planned bicycle checking process, the expected demand and the current employee structure at DBS. For the first part of the analysis, assume that the employees are assigned as described in section 5 and therefore each employees performs the actions of the corresponding checks that they are assigned to. 1.1 Draw a process flow diagram corresponding to the bicycle check process described above. Make sure that the provided flow diagram looks neat and is clearly readable. The flow diagram must indicate the different types of flow units. Define the different flow units and include the flow chart in the appendix. Now, the performance of the process needs to be analyzed. First, we want to determine how many minutes of work are required from each resource for the inspection of one bicycle (in expectation!) and what the bottleneck of the process is. 1.2 Determine the demand rate for each resource in minutes of work and the implied utilization for each resource. For this, you will need to prepare a workload matrix and calculate for each employee how many minutes of time of their time are required in expectation for the inspection of one bicycle. The calculations need to be attached in the corresponding Excel file. Hint: For the process flow diagram, you can assume the flow units to be bicycles of certain types (e.g., differentiated by their condition, depending on how the bicycle flows through the process). When calculating the workload, you can then determine the minutes of work that are required for each type of bicycle. 1.3 Determine the bottleneck of the process. How many bicycles can be inspected within the BiKeur process if each employee works up to 6 hours? What is the profit that DBS makes from the current strategy (Only counting the price and wages, you can assume the variable costs per bike as negligible)? As stated in section 4, the market research has determined that with a price of 25€ per customer, DBS attracts 70 customers within the 6-hour shift. With the results from part I, it becomes apparent that DBS cannot serve all of these customers with its current setup. For the following analysis in this and the next section, you may assume that customers arrive without variability and equally spread throughout the 6-hour shift. Further, your calculations may assume that each bike uses the average time indicated by the demand rate you derived in 1.2. 1.4 DBS wants to guarantee that a customer receives their debriefing at most 120 minutes after they arrive. At what time does DBS need to start turning away customers because they can no longer guarantee this? [Hint: This question might be easier to answer after the content of week 3, so you might want to postpone the answer. You can work on the remaining questions independent of this one beforehand!] Part II: Process Improvement After analyzing the current process, it becomes apparent that there is some room for improvement. The market research has found out, that demand is not fixed, but elastic according to a linear demand function: Given a price p, the demand for the 6-hour period is 170 – 4p (so as described above, 70 customers will make use of the service at a price of 25€. Nobody would pay 42.50 € for the service and even if the service was free, DBS could not attract more than 170 customers per day). 2.1 Given this demand curve and the current process plan, what would be the optimal price to charge for the BiKeur process given the current process design and available workforce? What would be the profit using this optimal price? Since DBS has already advertised the price of €25 as the initial offer, DBS is reluctant to change the price in the beginning of the season and wants to make sure that no customers are turned away. There is still flexibility in changing the process with regards to the allocation of jobs to workers and Dan could also hire more employees (for the same contract of 25€ per hour) 2.2 Give a recommendation for redesigning the process such that DBS is able to meet the demand of 70 customers per day. What is the profit using your recommendation? Dan thinks that either after the initial starting phase, or in the coming years, changing the price as well as other process improvement methods as discussed in 2.2 are possible in order to maximize DBS’s profits. 2.3 What is your recommendation for the future of the BiKeur process taking into account that you can adjust the process as well as the price? You may assume that the demand curve and wages remain the same for the foreseeable future and this analysis. Discuss possible benefits and drawbacks of your recommendation. Describe why your recommendation leads to the maximal profit. Note: For Questions 2.2 and 2.3 there exist several possibilities as to how to improve the process and optimize the profits by changing the process and the price for the customers. You can make use of any methodology learned in the program (e.g., solving a constraint optimization problem with the Excel Solver) in order to determine the optimal process design. Note that you should be able to argue why your design is optimal under your assumptions and that a higher profit is not possible. Your report will be evaluated on your assumptions, as well as the validity and implementability of the recommendations and the resulting profits. For instance, keep the process flow as well as any restrictions with regards to space or available tools in mind when (re-) assigning tasks to employees. Make sure to derive the assignment of employees to activities and the resulting implied utilizations and capacity of the process.
