Supporting Facility and Shin Ming Guo Process Flows NKFUST - PDF document

Supporting Facility and Shin ‐ Ming Guo Process Flows NKFUST  Servicescapes  Process Flow Structures  Process Performance  Facility Layout 1 1

Environmental Psychology & Orientation  Need for spatial cues to orient visitors  Place orientation (e.g., "Where am I?")  Function orientation (e.g., "How does this organization work, and what do I do next?").  Formula facilities draw on previous experience  Anxiety and a sense of helplessness can result if spatial cues are not present. 6 2

Environmental Dimensions of Servicescape Ambient conditions Background characteristics (temperature, music, illumination, scent) Spatial layout and functionality Circulation path of customers, groupings of merchandise Signs, symbols, and artifacts Carry special meaning or have social significance. 7 Definition of a Business Process  A process is a set of activities that accepts inputs and produces outputs.  Processes can involve both goods and services. wood Factory guitars metal students University alumni Distribution bulk items small parcels center approved loans mortgage Calculate applications credit risk rejected loans 9 3

Process Flowcharting  Process flowcharting is the use of a diagram to present the major elements of a process. Basic elements include An ellipsoid denotes the start or the end of a process  The design of a product or services has a major impact on the process design.  What operations are needed? What is the right sequence? 10 Flowchart of Graduate School Admissions 11 4

Process Flow of Mortgage Service 12 Gantt Chart of Mortgage Service 13 5

Two Sides of the Same Coin From the perspective of the Server Why is there waiting time? Why is the resource under ‐ utilized? ∵ limited supply and variable demand From the egocentric perspective of the customer Long wait time despite arriving on time. ∵ poor planning ∴ perception of low quality 14 Types of Services Processes Process Service Characteristic Management Type Example Challenge Project Consulting One ‐ of ‐ a ‐ kind Staffing and engagement scheduling Job Shop Hospital Many specialized Balancing utilization departments and scheduling patients Batch Airline Group of customers Pricing of perishable treated simultaneously asset (seat inventory) Flow Cafeteria Fixed sequence of Adjust staffing to operations demand fluctuations Continuous Electric Uninterrupted delivery Maintenance and Utility capacity planning 15 6

Job Shop Small batches of different products with different processing sequences Assembly Drilling work center 3 2 2 3 Painting 3 work center 2 1 4 4 1 1 Milling Lathe work center work center A B C D Raw materials 16 Batch Process and Continuous Flow Bread production 17 7

A Flow Line at IKEA’s Cafeteria 18 Process Flow Structures Low Volume Medium Volume High Volume Very high volume (unique) (high variety) (lower variety) (standardized) Hospital, Unit variable costs Job Shop Commercial generally too high Department Store Printer Batch Process Apparel Production Airline Low volume Worker ‐ paced line Auto Assembly Cafeteria High volume Machine ‐ paced line Auto assembly Fast food Oil refinery Utilization of fixed capital Continuous process generally too low Internet provider 20 8

Process Analysis of Slot Machines Insert coin Collect Play again and pull payout if win wait Machine spinning The faster the customer plays, the more money the casino will earn. 21 Process Analysis Terminology • Cycle Time is the average time between completions of successive units. • Bottleneck is the factor that limits production usually the slowest operation. • Capacity is a measure of max. output per unit of time. • Throughput rate is the actual output per unit of time. • Capacity Utilization is a measure of how much output is actually achieved. 22 9

Process Analysis Terminology (cont.) • Throughput Time is the time to complete a process from time of arrival to time of exit. • Rush Order Flow Time is the time to go through the system without any queue time. • Total Direct Labor Content is the sum of all the operations times. • Direct Labor Utilization is a measure of the percentage of time that workers are actually contributing value to the service. 23 Flow Lines and Cycle Time 0.1 min 0.7 min 1.0 min 0.5 min 0.2 min • Process Cycle time = 1 min. Capacity = 60/hour. • Direct labor content = 2.5 min. Direct Labor Utilization = 2.5/(5 × 1)=50% 0.5min 0.5 min 0.5 min 0.5 min 0.5 min  Process Cycle time = 0.5 min. Capacity = 120/hour.  Direct labor content = 2.5 min.  Direct Labor Utilization = 2.5/(5 × 0.5)=100% 24 10

Inventory Turns (retail service) Order Receipt On Shelf Sales  Throughput rate = average daily sales  Throughput time = days of supply average inventory value ________________________  Days of supply = average daily sales Cost of Goods Sold _______________________  Inventory turn = average inventory value 25 Comparing Kohl’s and Wal-Mart 2011 2010 2009 2008 2007 Kohl’s Revenue 18391 17178 16389 16474 15544 Cost of Goods Sold 11359 10679 10332 10459 9890 Inventory 3036 2923 2799 2856 2588 Net Income 1114 991 885 1084 1109 Inventory Turn 3.74 3.65 3.69 3.66 3.82 Walmart Revenue 418952 405046 401244 374526 344992 Cost of Goods Sold 307646 297500 299419 280198 258693 Inventory 36318 33160 34511 35180 33685 Net Income 16389 14335 13118 12884 12036 Inventory Turn 8.47 8.97 8.68 7.96 7.68 26 11

Design a process to improve flow rate. Design a process to offer more selections. Design a process to reduce wait times. Design a process to control inventory. 27 Product Layout: How to Allocate Work? Process cycle time = min. cycle time = 60 seconds Process Capacity = Capacity of the bottleneck = 60/hour 28 12

Improved Layout of Driver’s License Office Process cycle time = min. cycle time = 30 seconds Process Capacity = Capacity of the bottleneck = 120/hour 29 Flexible Layout • Process cycle time = 30 sec. • Process Capacity = 120/hour • No waiting in between. • No need to repeat information. • Flexible staffing. 30 13

Process Layout: Where to Locate Departments? A B C D E F A B C D E F A 7 20 0 5 6 15 30 0 15 6 B 8 6 10 0 2 12 40 10 8 Net C 10 6 15 7 8 20 8 8 flow D 0 30 5 10 3 30 6 E 10 10 1 20 6 10 F 0 6 0 3 4 Flow matrix Triangularized matrix Description of attractions: A=killer whale, B=sea lions, C=dolphins, D=water skiing, E=aquarium, F=water rides. 31 Ocean World Theme Park (Proposed Layout) (a) Initial layout (b) Move C close to A Pair Flow distances Pair Flow distances C AC 30 x 2 = 60 CD 20 x 2 =40 A B C AF 6 x 2 = 12 CF 8 x 2 =16 A B DC 20 x 2 = 40 DF 6 x 2 = 12 D E F D E F DF 6 x 2 = 12 AF 6 x 2 = 12 Total 124 CE 8 x 2 = 16 Total 96 (c ) Exchange A and C (d) Exchange B and E and move F Pair Flow distances Pair Flow distances AE 15 x 2 = 30 AB 15 x 2 = 30 A A F CF 8 x 2 = 16 AD 0 x 2 = 0 C B C E AF 6 x 2 = 12 FB 8 x 2 = 16 D E F AD 0 x 2 = 0 FD 6 x 2 = 12 D B DF 6 x 2 = 12 Total 58 Total 70 32 14

Case 5.4: Central Market • Answer both questions. • Comment on this: www.youtube.com/watch?v=g3IwOgA3Ngw • Due 12:00 noon, 3/31 33 Summary A successful firm needs to have good products and good processes Three performance measures  High contact service: throughput rate, wait times  Retail service: inventory Process analysis can identify the bottleneck and improve the throughput time. Facility layout improves the efficiency and minimizes the travel distance. 34 15