Process Analysis &

Process Metrics
Process Analysis

▪ Detailed understanding of how work is

performed and how it can be redesigned for
improvement
Process

▪ Process is the basic building block of any operating system

▪ Process: A group of related activities that takes inputs (labor,

capital, knowledge, raw materials, purchased components,
and energy) and transforms them into outputs that are of
great value to the customers and to the organization itself.
 Complete Process
 Making bread from start to finish
 Segment of a process
 Packaging of breads
▪ Process Analysis
 Documentation and detailed understanding of how work is performed
and how it can be redesigned for improvement
Process Analysis

▪ How to start?
 1st step in analyzing a process is to describe it. We
need to have a good understanding of the current
process
 Activities
 Activity times
 Sequence of activities, i.e. flow
 Draw process flow chart
Describing Process – Flow Chart
▪ Process flowcharting is the use of a diagram to
present the major elements of a process

▪ It is an ideal methodology by which to begin

analyzing a process

▪ There are various conventions for mapping

processes
Process Chart Symbols
Emergency Room Admission
Types of Processes

▪ Single Stage
 One machine

▪ Multiple stages
 Multiple machines connected in sequence
Four step process

Four step process with bottleneck

Task A Task B Task C Task D
2min/unit 4 min/unit 5 min/unit 3 min/unit

Capacity = 12 units / hour

 Four step process

Four step process with bottleneck

Task A Task B Task C Task D
2min/unit 4 min/unit 5 min/unit 3 min/unit

Task C,
5 min/unit

Capacity = 15 units/hour

Doubling the resources at a work station effectively cuts the time at that
station in half. If “n” parallel operations are added, the time of the combined
workstation operation will equal 1/n times the original time
Four-step process

Capacity = 20 units/hour
 Parallel Processing
Parallel process: Tasks that can be performed at the same time. Outputs from
parallel process are typically integrated into one product at some point in the
process flow.

Bottleneck activity Output = 120 units / hour

30 seconds/unit C

20 seconds / unit

10 seconds/unit

Utilization: UA = 30/30 = 100%, UB = 10/30 = 33.3%, UC = 20/30 = 66.7%

Parallel Process - Chair Making

Output = 4 chairs per day (assuming single shift, 8 hours per shift)

Can we further improve the output?

 Process Analysis Terminology

▪ Throughput time (or Flow time or

Manufacturing Lead Time)
 Total time for a unit to move through the system, from
beginning to end (Proc Time + Transport Time + Wait time)

1 2 3

4 minutes 4 minutes 4 minutes

FLOW TIME : 4 + 4 + 4 = 12 minutes

Throughput rate = 60 / 4 = 15 units per hour
Throughput Time: Important determinant of the speed of the process, how long
a customer will have to wait after placing an order
Process Analysis
Terminologies
▪ Capacity: The maximum rate of output of a
process and is measured in units of output per
unit of time, capacity = 1 / CT

▪ Cycle time (CT) = 1 / Capacity

▪ Efficiency: Actual output / Standard output

▪ Utilization: Time activated / Time available

Lead-Times

▪ Order to delivery lead time: Time that passes

from the instant the customer placed an
order until the instant the customer receives
the product.
 Product Design Lead Time
 Order lead time
 Procurement lead time
 Production lead time
 Delivery lead time
Process Analysis Terminology –
Batch Process
▪ Routing: Sequence of workstations passed through by
a part

▪ Run Time: Time spent actually manufacturing the item,

independent of the time required to set up the
equipment. Run time per lot is run time per unit
multiplied by the number of units in the lot

▪ Set-up: Time required to make a particular machine

ready for a particular item

▪ Operation time: Set up time + Run time

Process Analysis Terminology

▪ Cycle Time: Average time between

completion of two successive units of
product, for a service process, the average
time between departures of successive
customers
Process Analysis Terminology

▪ Buffering: Storage area in between stages where

the output of a stage is placed prior to being
used by the downstream station

▪ Blocking: Activities in upstream workstation

stopped as the downstream workstation is
unable to accept the part completed due to
limited capacity

▪ Starving: Downstream workstation waiting for

materials (stop due to no work)
 Four step process – Blocking and
Starving

Task A Task B Task C Task D

2min/unit 4 min/unit 5 min/unit 3 min/unit

Task C is the bottleneck, it limits the output of the process. Task A and B could
produce greater output, but that would result in WIP inventory building up in front
of task C indefinitely, with no increase in process output. When the physical
space for holding WIP in front of task C is full, we say Workstations A and B
are BLOCKED. Task D has to wait for Task C’s five minute cycle to do its
work. We say Task D is a STARVED task.
Capacity Calculation
 Measuring Process
Performance
▪ Assessing efficiency
 Labour utilization
 Useful time spent by the workers as a % of the total
time for which they are available
 Machine utilization (U)
 % of time that a machine is running and productive
 U = (t*AP)/h
where t = machining time for one component
AP = actual production per shift
h = number of hours per shift
Note: While calculating machine utilization we should consider set up time as well
As time the machine is actively producing output
 Labour Utilization

Four step process with bottleneck

Task A Task B Task C Task D
2min/unit 4 min/unit 5 min/unit 3 min/unit

Hourly capacity = 12 units / hour

Worker A worked: 12*2 = 24 mins
Worker B worked: 4*12 = 48 mins
Worker C worked: 5*12 = 60 mins
Worker D worked: 3*12 = 36 mins
Labour utilization for entire process = (24+48+60+36)/ (4*60) = 70 %

OR
Labor content per cycle = (2+4+5+3)/(5)(4) = 70%
Labour utilization for Task A: (2/5)*100 = 40%; Task B=80%; Task C=100%,
Task D=60%
 Labour Utilization Formula

Total direct labour content**

▪ Direct Labour Util = ----------------------------------
(Process Cycle Time) (# of workers)*

** refers to actual amount of work “contained” in the product

* Total available labor time

Process Analysis Terminology

Lot Size (also called Batch Size): # units of a

particular product type produced before
beginning production of another type
Process Analysis Terminology

▪ Process Velocity (also known as Throughput

ratio): Throughput time / Value added time

 Minimizing the time it takes to process something

through the system
 The lower the ratio, the better
 Little’s Law

Average Inventory
▪ Average Flow time = ----------------------------------------
Flow Rate (or Average demand)

The average amount of inventory in a system is equal to the

product of average demand and the average time a unit
is in the system
Process Analysis Terminology

▪ Make-to-order (MTO)– Against specific

customer order

▪ Make-to stock (MTS) – Produced as finished

good stocks, delivered later against order

▪ Assemble to order (ATO) – Assemble against

specific customer order
Blue Print for Process
Analysis

“CHANGE IS CONSTANT “ Kamal Bali, CEO, Volvo India

 Champagne MBA RM Large PC
Industry Program manufacturer

Flow unit Bottle of MBA Computer

Champagne student
Flow rate 260 lacs 120 5000
or Bottle/year students/yr units/day
throughput
Flow time Avg time in 2 years 10 days
cellar: 3.5
years
Inventory 900 lacs 240 50,000
bottle students computers
Articles for Reading

▪ Process Analysis by Roy, D. Shapiro

Harvard Business School, September 12, 2013

▪ Designing, Managing, and Improving

Operations by Roy D Shapiro, Harvard
Business School, September 12, 2013

▪ Process Fundamentals by Gray and Leonard,

Harvard Business School, September 8, 2009