Unit 3: Operations and Process Analysis
This unit covers operations analysis of business functions with an emphasis on process optimization and operational efficiencies. The tools and methods presented here can help organizations understand their processes better and to evolve into leaner producers and manufacturers. By knowing where attention needs to be focused, businesses can effectively manage current and future challenges and maintain their competitive advantage.
Completing this unit should take you approximately 8 hours.
Upon successful completion of this unit, you will be able to:
- construct a flow chart for a production or service process with performance metrics;
- describe the advantages and disadvantages of lean production systems;
- describe risk mitigation solutions in terms of uncertainty and potential breaks in production;
- describe how queueing theory relates to customer service waiting lines; and
- perform a waiting line analysis on a service industry firm where uncertainty of demand for customer service varies over time within a predictable pattern.
3.1: Process Analysis
Business process analysis is a method used to increase both efficiency and effectiveness of a given process. Ultimately this approach assesses how well the process achieves its overall goal. An organization can determine whether or not they are operating at maximum capacity and providing the best possible customer experience.
Watch this video. It demonstrates how a process analysis is used to improve customer service. By breaking down stakeholder experiences, the organization can test different approaches at any stage to see how it changes the overall experience. While watching, think of the last time you had to stand in a long line to register your automobile or pay a bill. What would you modify in the process to improve your experience?
3.1.1: Process Flow Charting
Process flow charting is a diagram that represents a workflow or process. From beginning to end, each step is visually represented by a shape and connected by directional arrows. This representation aids in seeing the interdependent relationships that currently exist and can help to inform of flaws, bottlenecks, or unnecessary steps.
Read this chapter. It presents a general overview of the flow-charting process. The part on types of charts helps us understand what chart can be used for a given scenario. When do you think a flow chart would not be necessary?
3.1.2: Performance Analysis Measures
Strategically measuring, managing, and analyzing performance is critical to every business. Performance measures serve many purposes from an accountability perspective, driving decision-making, as well as a learning mechanism to achieve improved results.
- Read this section. It suggests that performance can be measured in different ways. Given that, is it possible to measure everything? How are you measured at work?
3.2: Production Analysis
Production can be defined as a step-by-step process to achieve a desired outcome. Understanding the step-by-step process and associated inputs and outputs of production is the essence of production analysis. Through this model, it is possible to numerically describe a process while quantifying inputs and outputs.
Read this journal article. The study uses production analysis to develop a robust workflow and help in designing sustainable shale production. Figure 2 depicts an initial production analysis. What would an organization need to collect production parameters?
3.2.1: Lean Production Systems
Modern businesses need to be agile and efficient to remain competitive in the marketplace. A lean production system seeks to maximize resources, increase quality, and eliminate waste. Furthermore, this constant drive for efficiency results in a higher return on investment for the company, which is indicated in overall bottom-line profits.
Read this chapter. It presents the lean 5S approach to workplace organization and safety. It also covers the Kaizen idea of continuous improvement. Kaizen seeks out and identifies waste, inconsistencies, and strain on people and machines. Reflect on your current or previous job. What types of waste occurred, and how would you apply the Kaizen philosophy?
3.2.2: Performance Analysis Measures
Measuring, analyzing, and managing performance in producing a good is key to sustaining success for any business. Performance measures serve to analyze productivity, determine time-to-market for a product, project time to develop new products, and maintain product quality, to name a few of the key purposes. In addition, break-even analysis allows for cost comparisons across a range of scenarios, including different levels of production, different production time frames, and alternate production input sources.
- Read this article. It highlights the importance, in a global competition environment, of measuring and analyzing lean manufacturing processes.
- Read this article. Given the speed with which consumer tastes change, being able to develop new, high quality products on a regular basis is key to sustainable profits for firms. This article covers performance measurements for new product development.
Read this text on break-even point analysis. It goes through the process of calculating the break-even point for cost analysis under different scenarios. Take notes on each of the following: define the break-even point, differentiate between fixed and variable costs, and write the formulas on how to calculate the break-even point, calculate the contribution margin, calculate the contribution margin ratio, and calculate the margin of safety.
3.3: Services Analysis
As a business grows, services provide inputs into the production cycle to support and stimulate growth. Services can be financial and business related and are frequently instrumental to an organization. This intangible manufacturing component is easily overlooked because it does not occupy a physical presence.
- Read this working paper in the Policy Research Working Papers series put out by the World Bank. The authors argue that services have to compete for resources alongside manufacturing, with implications for export industries.
3.4: Waiting and Queues
The pause in a process when an item is being produced is known as waiting. An accumulation of these items waiting in line is known as a queue. Ultimately, this may create congestion within a system which wastes time and potentially affects stages before and after its pause.
Read this article. It discusses synchronizing transportation schedules. Because the logistics segment of the cycle is a large-scale effort, the waiting and queues are magnified. How many different modes of transportation do you think are required to make a product from raw material to the customer's hand?
Read this paper on waiting line analysis and queues. It provides a good survey of the theory and uses of this type of analysis. Pay particular attention to sections 1 through 3. How might these models be used to balance firm costs with different levels of customer satisfaction?
Study Guide: Unit 3
We recommend reviewing this Study Guide before taking the Unit 3 Assessment.
Unit 3 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.