Flow Time 1-Introduction Based on the book: Managing Business Process Flows

1. Flow Time 1-Introduction Based on the book: Managing Business Process Flows

2. Competitive Advantages of a shorter flow time • Shorter response time (both in production and product design). • More responsive to changes in customer preferences and technological advancements. • Delayed differentiation (Postponement). • Moving from the extreme of MTS towards MTO. • Lower inventory costs (due to Little’s Law). Ardavan Asef-Vaziri, Sep. 2013

3. Lean Operations: The Real Cost of Inventory Inventory adversely affects all competing edges (P/Q/V/T) • Has cost: • Physical carrying costs • Financial costs • Causes obsolescence: • Due to market changes • Due to technology changes • Leads to poor quality: • Feedback loop is long • Hides problems: • Unreliable suppliers. • High defect rate. • Long set-up times. • Frequent machine breakdowns. • Leads to long flow time Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 3

4. Direct Methods of Measuring Flow Time • Randomly sample flow units over an extended period of time. • Measure the flow time for each flow unit from entry to exit. • Compute the average of flow times. • During a given month, a sample of 50 applications was taken • The average flow time = 20.85 working days. Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 4

5. Indirect Methods of Measuring Flow Time • Count the number of units produced over an extended period of time. • R = number of units produced / duration of time period . • Count the number of units of inventory at random points during the time period. Compute the average inventory (I). • Compute flow time T =I/R 200 applications processed during 20 days; average throughput of R=200/20 = 10 applications per day. The number of applications were counted at 4 random points during these days, the average inventory (I) was 860/4 =215. T = I/R  T = 215/10  flow time is 21.5 days Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 5

6. Process Flow Chart Process : Network of activities performed by resources 1-2. Flow unit (input/output): Unit of analysis– Level of detail 3. Network of Activities & Buffers • Define Process Boundaries • Activities with activity times • Buffers with waiting times • Routes:precedence relationships (solid lines) with throughputs 4. Resources & Allocation • Who does what? 5. Information Structure & flow (dashed lines) Key for capacity analysis Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 6

7. Decision Event Physical flow Information flow Flowcharting Activity Buffer • See the total process; asystems view • Defineflow units andprocess boundaries • Include only the key steps • Clarify the level of detail needed. Processes can be broken down into sub-activities. On the other hand, cascading allows several activities to be combined in a single sub-process • Depicts resources required to carry out activities • Identify the processes that need attention (weak points) Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 7

8. Wondershed Inc: Narrative Representation • Separate the roof and the base sheets 2. Punch the base 3. Punch the roof 4. Form the base 5. Form the roof 6. Sub-assemble the base 7.Assemble 8.Inspect Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 8

9. Activity A Activity B Activity C End Start Wondershed Inc. : Schematic Representation Punch base Form base Sub assemble base Separate Sheet Start Punch roof Form roof End Assemble Inspect Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 9

10. Theoretical Flow Time Theoretical Flow Time: The minimum amount of time required for processing a typical flow unit without any waiting. Activity Time: The time required by a typical flow unit to complete the activity. Unless stated otherwise, we assume that an activity cannot be broken down into smaller activities that can be executed in parallel. What does that mean??? Buffer Activity Entry Exit Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 10

11. Activity Time 1 Activity Time 2 Activity Time 3 Activity Time 1 Activity Time 2 Activity Time 3 Activity Time 1 Activity Time 4 Activity Time 5 Activity Time 2 Activity Time 3 Activity Time 6 Sequential Activities Sequential Activities Parallel Activities Critical Path Theoretical flow time of each path in the process flowchart = sum of the activity times of all activities on that path Critical Path: the longest path Critical Activities: activities that lie on the critical path Theoretical flow time of the process = Time of the theoretical critical path How many Paths? Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 11

12. Wondershed Inc. Theoretical Flow Time Path 1 (roof) Start  1  3  5  7  8  End 10 +20 +10 +10+30 = 80 min Path 2 (base) Start  1  2 4  6  78 End 10 +25+5+ 10 +10+30 = 90 min Theoretical Flow Time = 90 min Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 12

13. Wondershed Inc. Flow Time Path 1 (roof) Start  1  3  5  7  8  End 30 +110 + 85+55 + 105 = 385 min Path 2 (base) Start  1  2 4  6  78 End 30 +70 +40 + 70 + 55+105 = 370 min Flow Time = 385 min Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 13

14. Flow Time Efficiencies in White Collar Processes Flow Time Efficiency = Theoretical Flow Time / Flow Time Flow Time Efficiency = 90/385 = 23.4% Flow Time - Introduction Ardavan Asef-Vaziri, Sep. 2013 14