CHAPTER 3 Managing Processes and Capacity McGrawHillIrwin Learning Objectives LO31 Understand the importance of processes and process thinking LO32 Define the various components of a process ID: 247457
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Copyright © 2014 McGraw-Hill Higher Education. All rights reserved.
CHAPTER 3
Managing Processes and Capacity
McGraw-Hill/IrwinSlide2
Learning Objectives
LO3-1
Understand the importance of processes and process thinking
LO3-2
Define the various components of a processLO3-3 Distinguish between operational, tactical, and strategic capacity planning
LO3-4
Estimate capacity and utilization
LO3-5 Explain the impacts of bottlenecks, variance, and other factors on performance.LO3-6 Describe process improvement methodologies
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2Slide3
What is a process?
A system of structured activities that use resources to turn inputs into valuable outputs.
Process thinking views activities in an organization as a collection of processes
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3
LO3-1Slide4
Activities of a process
Operations
change inputs
Transportation
moves an input from place to placeInspection verifies the results of an activityDelay
unintentionally stops the flow of an input
Storage is the formal inventorying of an input
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LO3-2Slide5
Process Capacity
Capacity:
amount of input that can go into or the amount of output that can be created by a process, at a given level of resources over a given time period
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LO3-4Slide6
Theory of Constraints (TOC)
Every process has a constraint
Every process has variance that consumes capacity
Every process must be managed as a system
Process measures are crucial to the process’s successEvery process must continually improve
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LO3-5Slide7
Measures of process flow:
Flow time:
time for one unit to get through a processCycle time: time it takes to process one unit at an operation in the overall process
Little’s Law
: there is a relationship between flow time (F), inventory level (I) and throughput rate (TH) Every
Process has a Constraint
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LO3-5Slide8
Variability in:
Outputs
: product variety and variable schedulesProcesses:
quality variance, resource availability, and processing speedInputs:
variance in quality and delivery
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Variance
C
onsumes
C
apacity
LO3-5Slide9
Processes
Managed as Systems
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Changing one element of a process may impact other elements, sometimes in unexpected ways.
Process elements are interdependent
Activities
Inputs/Outputs/Flows
Process structures
Management policies
LO3-5Slide10
Measure
Processes for Success
Metrics
should address aspects of performance that are important to both customers and the organization.
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LO3-5Slide11
Continuous Improvement of Processes
Kaizen
: focused, incremental improvement efforts
small + small + small + small
+ … + n = LARGE
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LO3-5Slide12
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Managing Process and Capacity:
A Summary - Part I
Processes define a business.
A process is a collection of activities.
Processes are characterized by activities, flows, structures, resources, and metrics.
Supply chain capacity should be managed strategically.
There is a proven link between output volumes and process economies.Slide13
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The bottleneck activity sets the maximum level of output of any process.
Capacity requirements depend on processing and setup times.
Variability consumes capacity, cost, and lead times.
Processes need to be continuously improved
Managing Process and Capacity:
A Summary - Part II