PROCESS MANAGEMENT AND

IMPROVEMENT THROUGH
OPERATIONS

Dr. Jitendra Sharma

Professor - Operations
IMT - Nagpur

SESSIONS OBJECTIVES
To know what is actually a process
Categorize activities in the process
What is value add; non value add & required non value add?
What are wastes and how to identify them
What are process parameters
How to read a process
How to make changes in process
What is process analysis
What are the ways and means we can do process analysis?

PROCESS PARAMETERS
Process: Is any part of an organization that takes inputs and
transforms them into outputs
Capacity: Maximum capability to produce; is affected by the
mix of product or services, the choice of technology, the size
of a facility, and the resource allocated

Rated/Designed/Theoretical, Utilized, Effective Capacity/Actual

Utilization: Is the ratio of the time that a resource is actually

activated relative to the time that it is available for use
Efficiency: Ratio of the actual output of a process relative to
some standard
Productivity: Productivity is the ratio of outputs divided by the
inputs (resources)

PROCESS MANAGEMENT SKILLS

All functions need to manage processes
Management education teaches the basic, fundamental
and technical aspects
It does not teach as to how to run a factory process or a
marketing process or an accounting process
At the end of the day, orgns runs the processes that
delivers some kind of goods or services, if not to the
customers directly at-least internally known as internal
services
Therefore it is very important to know about processes,
and as to how to build competencies and capabilities
within the processes

PROCESS SKILLS
So we can say that everybody is concerned with building
capabilities and they do it because everybody is
concerned with building processes
Managers should, invariably, posses an important skill
which traditionally they are very bad at internally
managing process that delivers goods and services
efficiently and effectively
For that you need to understand your processes as they
inside out you should know about loading, capacity,
bottlenecks, flexibility, service quality, etc.
There are certain fundamental and basic laws of behavior
of a processes

TYPES OF ACTIVITIES IN ANY SET UP

Value

adding activities
Non value adding activities
Overproduction
Unnecessary inventory
Transport
Processes
Activity resulting in rejects/scrap
Waiting
Unnecessary motion

Required

non value adding activities

VALUE ADDING ACTIVITY

Is the one which when carried out makes the product
more complete
Work is the activity that generates revenue by causing
the product to change form to a more complete state
Product is actually being built
Customer values these acts, and are willing to pay to
have them performed
The bottom line is that when we do this we get money
for doing them
This brings us revenue and generates profits, and keeps
us alive

NON VALUE ADDING ACTIVITIES

Non value added is an activity which does not advance the
product to a more complete or finished state
It adds no value in the eye of customer and he is not willing to
pay for such activity; Adds to the costs and reduces profitability
There are seven categories of NVAA known as WASTE

Overproduction unnecessary production which wont sale

Inventory idle resources
Transport moving stuff from place to place
Processes incorrect tooling, setup times, changeovers
Activity resulting in rejects/scrap work till the point you get it wrong
Waiting just being idle
Unnecessary motion refers to people, ergonomics, etc.

HOW THESE ARE TO TREATED?

Required Non value adding activities are the ones which cannot
just be avoided
An activity which is important to run the system but doesnt add
value in the eyes of customer, and he is/is not willing to pay for
it as well
With value adding activities the work is work and there is not a
lot of opportunity to change the content but still efforts are
always on
With non value adding activity, you have the opportunity to make
the activity go away by re-designing your processes and
procedures
With required non value adding activity, you have the opportunity
to greatly reduce the cost through process redesign.
Here you still need to get the activity done, but how you do it is
under your control

PROCESS PARAMETERS
Cycle Time: Is the average successive time between
completions of successive units
Setup time: is the time required to prepare a machine to
make a particular item
Run time: is the time required to produce a batch of parts
Operation time: is sum of the setup time and run time for
a batch of parts that run on a machine
Queue time and Waiting time
Pacing: Refers to the fixed timing of the movement of
items through the process
Bottleneck: Capacity or any other constraint/limiting
factor

IMPACT OF PROCESS FLOW

Lead time is the length of time it takes to process an order
through the system
From the view point of customer the time taken from the
placement of order to the delivery of the same
Bottleneck is your capacity constraint
A constraint as we all know is a limiting factor in your process
When you keep on improving your processes your bottleneck
keep getting shifted from one process to the other
Visual idea of a constraint

IMPACT OF PROCESS FLOW

Velocity is the speed at which an order move through
your facility
The faster the better
The more time it takes an order to move through your
facility and the processes, the more time it has to
accumulate cost on the way out
Throughput is a measure as to how much product you can
get through a given process
Throughput of any process is the function of its bottleneck
Throughput can also be defined as how much of goods are
available to ship within a given timeframe

PROCESS PARAMETERS
Blocking
Occurs when the activities in a stage must stop because there
is no place to deposit the item just completed
If there is no room for an employee to place a unit of work
down, the employee will hold on to it not able to continue
working on the next unit
Starving
Occurs when the activities in a stage must stop because there
is no work
If an employee is waiting at a work station and no work is
coming to the employee to process, the employee will remain
idle until the next unit of work comes

PROCESS PERFORMANCE METRICS

Operation time = Setup time + Run time

Throughput rate =

Efficiency = Actual output

Standard Output

Productivity = Output
Input

Utilization = Time Activated

Time Available

1
.
Cycle time

PROCESS IMPROVEMENTS
To manage something effectively and then to improve it, one
must first understand it.
As in all walks of life, the ultimate test of an idea is the test of
time
And the proof of the pudding is in the eating
Short term success is no basis on which you can premise and
base your judgment
In order to improve anything, first deconstruct it and do the
reductionist approach break it down in as many pieces as
you can and analyze it minutely for lacunae and improvements

PROCESS ANALYSIS AND DESIGN

For designing and analyzing process to transform inputs into
goods or services, one should ask following questions

Is the process designed to achieve some competitive advantage?

Does the process eliminate all non-value adding activities?

Can the process be broken down and improved further upon?

Does the process adds value as per the customers perception?

Will this process win the orders?

There are number of tools which makes sense of what is

happening and tells us what should happen

PROCESS ANALYSIS AND DESIGN

Flow Diagrams - Shows the movement of materials
and provides an overall view of the big picture
Process Charts - Uses symbols to show key activities
and in much more detailed fashion
Time-Function Mapping - Shows flows and time
frame; adds rigor and a time element
Service Blueprinting - focuses on customer/provider
interaction; focuses on three different levels of
interaction; highlights potential failure points.

PROCESS FLOW DIAGRAMS

Process

flow diagrams is the schematic

representation of the major elements of a process

The

basic elements can include tasks or operations,

flows of materials or customers, decision points, and
storage areas or queues

It

is an ideal methodology by which to begin

analyzing a process

Process Flow Diagrams

Tasks or operations

Decision Points

Examples: Giving an
admission ticket to a
customer, installing a
engine in a car, etc.

Examples: How much

change should be given to
a customer, which wrench
should be used, etc.

Process Flow Diagrams

Storage areas or
queues

Flows of materials or
customers

Examples: lines of people

waiting for a service, even
temporary storage, etc.

Examples: Customers
moving to a seat, mechanic
getting a tool, etc.

Process Flowchart Symbols

Operations
Inspection
Transportation
Delay

Storage

PROCESS FLOW - EXAMPLE

Thanks