Marlon Dumas marlon.dumas ät ut . ee

Time Contents
09.00-10.30
Review of homework
Qualitative Process Analysis
10.45-12.15
Quantitative Process analysis
12.15-13.15
Lunch break
13.15-16.15
Process Re-Design (with break)
2

3

Qualitative analysis
• Value-Added Analysis
• Root-Cause Analysis
• Pareto Analysis
• Issue Register
Quantitative Analysis
• Cycle Time Analysis
• Capacity Analysis
• Queuing analysis
• Process Simulation
4

• Valued-added analysis
• Issue register
• Root-cause analysis (e.g. cause-effect diagrams)
• Pareto analysis
• PICK charts
5

1.
Decorticate the process into steps
2.
Classify each step into:
– Value-adding (VA): Produces value or satisfaction to the customer.
• Is the customer willing to pay for this step?
– Business value-adding (BVA): Necessary or useful for the business to run smoothly, or required due to the regulatory environment, e.g. checks, controls
• Would the business potentially suffer in the long-term if this step was removed?
– Non-value-adding (NVA) – everything else including handoffs, delays and rework
6

7

• Textbook, exercise 6.1
8

Consider the following process for the admission of graduate students at a university. In order to apply for admission, students first fill in an online form. Online applications are recorded in an information system to which all staff members involved in the admissions process have access to. After a student has submitted the online form, a PDF document is generated and the student is requested to download it, sign it, and send it by post together with the required documents, which include: 1. Certified copies of previous degree and academic transcripts. 2. Results of English language test. 3. Curriculum vitae.
When these documents are received by the admissions office, an officer checks the completeness of the documents. If any document is missing, an e-mail is sent to the student. The student has to send the missing documents by post. Assuming the application is complete, the admissions office sends the certified copies of the degrees to an academic recognition agency, which checks the degrees and gives an assessment of their validity and equivalence in terms local education standards. This agency requires that all documents be sent to it by post, and all documents must be certified copies of the originals. The agency sends back its assessment to the university by post as well. Assuming the degree verification is successful, the English language test results are then checked online by an officer at the admissions office. If the validity of the English language test results cannot be verified, the application is rejected (such notifications of rejection are sent by e-mail). Once all documents of a given student have been validated, the admission office forwards these documents by internal mail to the corresponding academic committee responsible for deciding whether to offer admission or not. The committee makes its decision based on the academic transcripts and the CV. The committee meets once every 2 to 3 weeks and examines all applications that are ready for academic assessment at the time of the meeting.
At the end of the committee meeting, the chair of the committee notifies the admissions office of the selection outcomes. This notification includes a list of admitted and rejected candidates. A few days later, the admission office notifies the outcome to each candidate via e-mail. Additionally, successful candidates are sent a confirmation letter by post.
9

• Purpose: to categorise identified issues as part of as-is process modelling
• Usually a table with the following columns:
– issue number
– name
– description
– consequence
– priority
– type (IT / organ. / policy)
– Impact: Qualitative vs. Quantitative
– Possible solution
10

• Process improvement project dealing with relocations of military staff and family
• Conducted ca. 2003-2004
• Main methods used:
– “As is” modelling
– Issue register
– Scenario analysis
– Simple re-design patterns  “To be” model
© Michael Rosemann 11

1 Relocat ion
Request
2 Relocat ion
Follow up
3 Dat a
Ent ry
4 I t iner ar y
Management
& Ent it lement s
5 O wnership t ransf er
8 Assess
Requir ement s
& Ent it lement s
9 Find
Housing solut ion
10 Ar range
O ccupat ion
11 Manage
Vacat ion
6 Relocat ion conf ir mat ion
7 Manage
Reimbur sement s
12 Manage Am endement s
© Michael Rosemann 12

• Relocation process
• 15 days of process analysis
• Identified cost savings: approx. $ 2.6 mio.
© Michael Rosemann
13

Issu e
No.
2
Summary
Description
Issue Explanation
Information regarding units does not match
Units in Relocation system do not match information provided by DoD or stored within CLARIFY, different stored entities.
Broad Consequence
Wrongly calculated entitlements cause manual calculation/ CLARIFY case goes to wrong workflow queue
Constraint
IT
5
11
8
Protected/
Mandatory data entry fields
Information on posting orders
AFR pack receipt by
Mbr
Not all fields in AFR data entry are relevant but mandatory. So "fuzzy" information is entered eg.
RA
Time consuming to sort through posting orders to identify relocations. Eg.
Same locality move not always identified on posting order. Sometimes only name, LL and GL received.
Pack is sent to work address, addressing to private address causes problems re privacy, 20% return to sender + x thrown
+ double issue of packs
Resource intensive, incorrect data. Cases in
Clarify need to physically be closed.
MBR does not get AFR pack therefore cannot process move. More information could be provided which could be used later in process and avoids the request from
MBR.
Packs are often not received in time, high costs involved (45$ per pack) - 200000$ per year wasted.
IT
Org
Org/
Policy
Assumptions[1]
5% of cases go to the wrong queue, 5 minutes to sort queue and redirect.
5% recalculating on average 10 minutes per calculation.
5% of cases taking 2 minutes to locate and close.
5% of relocations requiring entry that is not needed taking
30 minutes each.
Only 1/3 rd of postings and
CIPC’s are entitled to relocation.
28,000 relocations then sorting through 84,000 postings/CIPC.
3 to 4 minutes on average to sort through each.
Qualitative/
Quantitative
Impact
28,000x0.05x1
5 = 21,000 minutes
350 hours/7.5
47 hrs
9.5 working days
28,000x0.05x3
2 =
44,800 minutes
477 hours/7.5
99.5 hrs
20 working days
84,000x3.5 =
294,000 min/60/7.5 =
653 days /250 working days in year.
2.61 FTE
Total packs produced 42,000.
20% returned to sender
2% double issued.
5% disappear
$45 per pack to produce does not include postage, covering letter or envelope.
42,000x0.27x4
5 = $510,300 waste
© Michael Rosemann 14

15

• Textbook, exercise 6.4
16

• Cause-effect diagrams
• Why-why diagrams
• Pareto charts
17

18

• Site engineers keep equipment longer than needed via deadline extensions, why?
– site engineer fears that equipment will not be available later when needed, why?
• time between request and delivery too long, why? · excessive time spent in finding a suitable equipment and approving the request, why?
– time spent by clerk contacting possibly multiple suppliers sequentially;
– time spent waiting for works engineer to check the requests;
19

20

• Use the previous techniques to analyze an issue in the University admissions process
21

• Value-Added Analysis
• Root-Cause Analysis
• Issue Register
• Cycle Time Analysis
• Capacity Analysis
• Queuing analysis
• Process Simulation
22

• Cycle time: D ifference between a job’s start and end time
• Cycle time analysis : the task of calculating the average cycle time for an entire process or process fragment
– Assumes that the average activity times for all involved activities are available (activity time = waiting time + processing time)
• In the simplest case a process consists of a sequence of activities on a single path
– The average cycle time is the sum of the average activity times
• … but in general we must be able to account for
– Alternative paths (XOR splits)
– Parallel paths (AND splits)
– Rework loops
23

CT = p
1
T
1
+p
2
T
2
+…+p n
T n
= n  i

1 p i
T i

24

• What is the average cycle time?
25

• If two activities related to the same job are done in parallel the contribution to the cycle time for the job is the maximum of the two activity times.
© Laguna & Marklund
CT parallel
= Max{T
1
, T
2
,…, T
M
}
26

• What is the average cycle time?
27

• Many processes include control or inspection points where if the job does not meet certain standard, it is sent back for rework
CT = T/(1-r)
28

• What is the average cycle time?
29

• What is the average cycle time?
30

Calculate cycle time
31

• Percentage of total cycle time spent on value adding steps
= Theoretical Cycle Time / Cycle Time
• Theoretical Cycle Time (TCT) is the cycle time if we only counted value-adding activities and excluded any waiting time or handover time
32

• Cycle time analysis is only one example of what can be done using “flow analysis” techniques
• Other applications of flow analysis include:
– Calculating cost per-process-instance (cf. Textbook)
– Estimating capacity requirements
33

• Assumes that:
– Load is fixed
– Resource capacity is fixed.
• Does not consider waiting times due to resource contention
– Less resources  more contention  more waiting times
– More resources  less contention  less waiting times
• Proces simulation addresses these limitations
34

• Process simulation = run a large number of process instances, gather data (cost, duration, resource usage) and calculate statistics from the output
• Basic steps in evaluating a process model with simulation
1.
Building the simulation model
2.
Running the simulation
3.
Analyzing the simulation results (performance measure)
4.
Evaluation of alternative scenarios
35

• The process model including:
– Activities, control-flow relations (flows, gateways)
– Resources and resource pools (i.e. roles)
• Resource requirements : mapping between activities and resource pools
• Processing times (per activity, or per activityresource pair)
• Costs (per activity, or per activity-resource pair)
• Arrival rate (also called: token creation)
• Conditional branching probabilities (XOR gateways)
36

Start
Receive info Request info
No
Receive review request
Check for completeness complete?
Yes Perform checks reviiew
Make decision accept
Notify acceptance
Deliver card
Decide reject
Notify rejection review request
Time out
End
37

• Two options to define resource pools
– Define individual resources of type clerk
– Or assign a number of “anonymous” resources all with the same cost
• E.g.
– 3 anonymous clerks with cost of € 10 per hour, 8 hours per day
– 2 individually named clerks
• Jim: € 12, 4 hours per day
• Mike: € 14, 8 hours per day
– 1 manager John at € 20 per hour, 8 hours per day
38

Task
Receive application
Check completeness
Perform checks
Request info
Receive info (Event)
Make decision
Notify rejection
Time out (Time)
Receive review request (Event)
Notify acceptance
Deliver Credit card
Role system
Clerk
Clerk system system
Manager system system system system system
Execution Time
Normal distribution : mean and std deviation
0 0
30 mins 10 mins
2 hours
1 min
48 hours
1 hour
1 min
72 hours
48 hours
1 min
1 hour
1 hour
0
24 hours
30 mins
0
0
0
0
12 hours
Alternative: assign execution times to the tasks only (like in cycle time analysis)
39

10 applications per hour (one at a time)
Poisson arrival process (negative exponential)
Start
Receive info Request info
Check for completeness
No
0.3
Yes complete?
0.7
Perform checks Make decision
Decide
0.5
accept
Notify acceptance
Deliver card
0.8
reject
0.5
Notify rejection review request
Time out
End reviiew
0.2
Receive review request
Alternative: instead of branching probabilities one can assign
“conditional expressions” to the branches based on input data
40

$ 4,260.95
80.00%
3,500.00
70.00%
3,000.00
60.00%
2,500.00
50.00%
2,000.00
40.00%
1,500.00
30.00%
12
18.82%
10
6
4
2
0
0 10
50.34%
Cycle Time - Histogram
20 30
Days
40 50
41
60

Listed in no specific order:
• ITP Commerce Process Modeler for Visio
• Progress Savvion Process Modeler
• IBM Websphere Business Modeler
• ARIS
• Oracle BPA
• Simple one: http://bimp.cs.ut.ee
(connected to
Signavio)
42

Material borrowed from Wil van der Aalst
(www.workflowcourse.com)

• Purpose: Identify possibilities for improving the design of a process: “as is”  “to be”
Descriprive modelling of the real world (as-is)
Prescriptive modelling of the real world (to-be)
• No silver-bullet: requires creativity
• Re-design patterns can be used to generate ideas
44

Costs
Time
Quality
Flexibility
(T+/-,Q+/-,C+/-,F+/-)
45

• Throughput time (see earlier), including
– service time (including set-up)
– transport time (can often be reduced)
– waiting time
• sharing of resources (limited capacity)
• external communication (trigger time)
• Several ways to improve time properties:
– Improve average
– Improve variance
– Increase ability to meet due dates
– Increase perception of wait time
46

• External: satisfaction of the customer
– Product: product meets specification/expectation.
– Process: the way the product is delivered (service level)
• Internal: conditions of work
– challenging
– varying
– controlling
There is often a positive correlation between external and internal quality.
47

• Type of costs
– fixed or variable
– per time unit, per use (consumable resources)
– processing, management, or support.
– human, system (hardware/software), or external,
48

• Ability to react to changes.
• Flexibility of
– resources (ability to execute many tasks/new tasks)
– process (ability to handle various cases and changing workloads)
– management (ability to change rules/allocation)
– organization (ability to change the structure and responsiveness to demands of market or business partners
49

1.
Task elimination
2.
Task merge/split
3.
Task re-ordering
4.
Increase parallelism
5.
Triage
6.
Specialize/generalize process
7.
Improve resource allocation
8.
Streamline communication
9.
IT-Driven improvements
10.
Appoint process/case managers
50

• Sometimes "checks" may be skipped: trade-off between the cost of the check and the cost of not doing the check.
(T+,Q-,C+/-)
51

• Other tasks to consider for elimination:
– Print, Copy
– Archive
– Store
– More generally: non-value adding activities
• Task elimination can be achieved by delegating authority, e.g.
– No need for approval if amount less than Y
– Employees have budget for small expenses
– Employees keep track of their own holidays, no authorization, just notification
52

• Consider the procurement process in Exercise 1.7
– Which tasks could be eliminated or partially eliminated?
– Which issues would be addressed by eliminating tasks?
53

Pros: less work to commit, allows for specialization.
Cons: setup time, fragmentation, less commitment.
Pros: setup reduction, no fragmentation, less transportation time, more commitment
Cons: more work to commit, one person needs to be qualified for both parts.
Sometimes, splitting can be an opportunity to enable partial selfservice, e.g. Decouple scanning and payment in a supermarket
(T+,F-)
54

• Consider the class of “knock-out processes”, e.g., hiring people, handling claims, etc.
– Execute highly selective tasks first.
– Exercute tasks that raise problems first
– Postpone expensive tasks until the end
(T+,C-)
55

Purchase Request process
Purchase Request
Check purchase request for 1 st approval
Consider resubmission rejected approved
Check purchase request for 2 nd approval rejected approved
Send approved request to requestor
Make copy of purchase request
Approved Purchase Request
Forward to purchase department
Purchase Order process
56

• Textbook, chapter 1, exercise 1.5 (Prescription fulfillment process)
– What tasks could be re-ordered to address current customer service problems?
– Hint: consider the tradeoffs between front-loading and backloading checks in the process.
57

• More parallelism leads to improved performance: reduction of waiting times and better use of capacity.
• Two types of parallelism: semi and real parallelism.
• IT infrastructures which allow for the sharing of data and work enable parallelism.
A B
+
A
B
+
(T++)
58

• Consider dividing a general task into two or more alternative tasks or the integration of two or more alternative tasks into one general task.
(T+,F-)
59

• Textbook, chapter 1, exercise 1.5 (Prescription fulfillment process)
– How can we use triage to speed up the process for some classes of customers?
60

• Process customization
– Differentiate by customer classes, geographical locations, time periods (winter, summer), …
– Different activities, different resource pools,
• Process standardization
– All cases treated equally (as much as possible)
– Resources are pooled together
F+/-, C+/-
61

• Use resources as if they are in one room: avoid one group of people overloaded and another (similar) group waiting for work.
• Let people do work that the are good at. However, avoid inflexibility as a result of specialization!
• Avoid setups as much as possible.
– Route a task to a resource who is familiar with it…
– Batch tasks
(T+,Q-)
62

• Reduce the number of messages to be exchanged between the process and the environment.
• Try to automate the handling of messages (send/receive).
• Avoid communication errors (EDI, XML, Web services)
• If possible, use asynchronous instead of synchronous communication.
A request
B C command information request information response
(T+,Q+,C+/-,F-)
63

• Many processes follow the “complete kit” concept:
– Work should not begin until all pieces necessary to complete the job are available
• In such cases, consider three principles:
– provide complete and easy-to- follow instructions for those who will initiate the process.
– If a process cannot start, the client should be notified of all defects that could be reasonably identified at the onset of the process.
– Consider the tradeoff between “incomplete-kit” process initiation and roundtrip to revise and resubmit a request.
Michael zur Muehlen: “Service Processes: The Customer at the Center?” http://tinyurl.com/5tunkxy
64

• Textbook, chapter 1, exercise 1.5 (Prescription fulfillment process)
– What is the current communication structure?
– What issues arise from the current communication structure?
– How can the communication structure be improved?
65

• Data sharing (Intranets, ERPs)
– Increase availability of (subject to security/privacy) information to improve decisions or visibility
– Avoid duplicate data entry, paper copies
• Use network technology to:
– Increase communication speed: e-mail, SMS
– Enable self-service (e.g. online forms)
– Replace materials flow with information flow
• Tracking: RFID, GPS tracking
• Automation of tasks, automated support for tasks
• Process automation (T+,Q+/-,C+/-,F-)
66

• Consider the procurement process of Homework 1
– Which tasks could be automated or partially automated?
– Which issues would be addressed by automation?
67

• A process manager monitors a process to see whether there are bottlenecks, capacity problems and delayed cases. Management instruments: motivating the people involved in the process and control parameters.
• Case managers are assigned to a case. They are responsible and execute as many tasks as possible for the case. Benefits:
– commitment
– reduction of setup time
– one contact person
(Q+, C-)
68

• Textbook, exercises 6.7, 6.9 and 8.17
• Deliverable. Report covering the following:
– Classification of activities in the “as is” prescription fulfillment process into VA, BVA and NVA
– Issue register of prescription fulfillment process
– Explanation of proposed changes to the process in order to address the identified issues
– To-be process diagram of prescription fulfillment process
• Deadline: Monday 8 April
– Use “Submit” button in course Web page
• Submit individually or in teams of two people
69