Average time between the completion of successive units of output is called
Term
Definition Any set of activities performed by an organization that takes inputs and transforms them into outputs ideally of greater value to the organization than the original inputs.Term Definition The average time between completions of successive units in a process (this is the definition used in this book). The term is sometimes used to mean the elapsed time between starting and completing a job.Term Definition The ratio of the time that a resource is actually activated relative to the time that it is available for use.Term Definition A storage area between stages where the output of a stage is placed prior to being used in a downstream stage. Buffering allows the stages to operate independently.Term Definition The activities in the stage must stop because there is no place to deposit the item just completed.Term Definition The activities in a stage must stop because there is no work.Term Definition A resource that limits the capacity or maximum output of the process.Term Definition A process that is activated only in response to an actual order.Term Definition A process that produces standard products that are stored in finished goods inventory. The product is delivered quickly to the customer from the finished goods inventory.Term Definition Combines the features of both make-to-order and make-to-stock. Typically, a generic product is made and stocked at some point in the process. These generic units are customized in a final process to meet actual orders.Term Definition Movement of items through a process is coordinated through a timing mechanism. Most processes are not paced, but assembly lines usually are paced.Term Definition The ratio of output to input. Taking the dollar value of the output and dividing by the dollar value of the inputs usually measures total factor productivity. Alternatively, partial factor productivity is measured based on an individual input and often is not calculated using dollar values (an example would be units/person).Term Definition A ratio of the actual output of a process relative to some standard.Term Definition The time required to produce a batch of parts.Term Definition The time required to prepare a machine to make a particular item.Term Definition The sum of the setup time and run time for a batch of parts that are run on a machine.Term Definition The average time that it takes a unit to move through an entire process. Usually the term lead time is used to refer to the total time that it takes a customer to receive an order (includes time to process the order, throughput time, and delivery time).Term Definition The output rate that the process is expected to produce over a period of time.Term Process velocity or throughput ratioDefinition The ratio of the total flow time to the value-added time.Term Definition The time in which useful work is actually being done on the unit.Term Total average value of inventoryDefinition The total average investment in raw material, work-in-process, and finished goods inventory. This is valued at the cost to the firm.Term Definition The cost of goods sold divided by the total average value of inventory.Term Definition The number of days of inventory of an item. If an item were not replenished, this would be the numbers of days until the firm would run out of the item (on average). Also, the inverse of inventory turn expressed in days.Term Definition States a mathematical relationship between throughput rate, flow time, and the amount of work-in-process inventory. Flow time is equal to work-in-process divided by the throughput rate.Term Partial Factor productivityDefinition measured based on an individual input, labor being the most common An operation is composed of processes designed to add value by transforming inputs into useful outputs. Inputs may be materials, labor, energy, and capital equipment. Outputs may be a physical product (possibly used as an input to another process) or a service. Processes can have a significant impact on the performance of a business, and process improvement can improve a firm's competitiveness. The first step to improving a process is to analyze it in order to understand the activities, their relationships, and the values of relevant metrics. Process analysis generally involves the following tasks:
Process Flow DiagramThe process boundaries are defined by the entry and exit points of inputs and outputs of the process. Once the boundaries are defined, the process flow diagram (or process flowchart) is a valuable tool for understanding the process using graphic elements to represent tasks, flows, and storage. The following is a flow diagram for a simple process having three sequential activities: Process Flow DiagramThe symbols in a process flow diagram are defined as follows:
In a process flow diagram, tasks drawn one after the other in series are performed sequentially. Tasks drawn in parallel are performed simultaneously. In the above diagram, raw material is held in a storage bin at the beginning of the process. After the last task, the output also is stored in a storage bin. When constructing a flow diagram, care should be taken to avoid pitfalls that might cause the flow diagram not to represent reality. For example, if the diagram is constructed using information obtained from employees, the employees may be reluctant to disclose rework loops and other potentially embarrassing aspects of the process. Similarly, if there are illogical aspects of the process flow, employees may tend to portray it as it should be and not as it is. Even if they portray the process as they perceive it, their perception may differ from the actual process. For example, they may leave out important activities that they deem to be insignificant. Process Performance MeasuresOperations managers are interested in process aspects such as cost, quality, flexibility, and speed. Some of the process performance measures that communicate these aspects include:
Little's LawThe inventory in the process is related to the throughput rate and throughput time by the following equation: W.I.P. Inventory = Throughput Rate x Flow Time This relation is known as Little's Law, named after John D.C. Little who proved it mathematically in 1961. Since the throughput rate is equal to 1 / cycle time, Little's Law can be written as: Flow Time = W.I.P. Inventory x Cycle Time The Process BottleneckThe process capacity is determined by the slowest series task in the process; that is, having the slowest throughput rate or longest cycle time. This slowest task is known as the bottleneck. Identification of the bottleneck is a critical aspect of process analysis since it not only determines the process capacity, but also provides the opportunity to increase that capacity. Saving time in the bottleneck activity saves time for the entire process. Saving time in a non-bottleneck activity does not help the process since the throughput rate is limited by the bottleneck. It is only when the bottleneck is eliminated that another activity will become the new bottleneck and present a new opportunity to improve the process. If the next slowest task is much faster than the bottleneck, then the bottleneck is having a major impact on the process capacity. If the next slowest task is only slightly faster than the bottleneck, then increasing the throughput of the bottleneck will have a limited impact on the process capacity. Starvation and BlockingStarvation occurs when a downstream activity is idle with no inputs to process because of upstream delays. Blocking occurs when an activity becomes idle because the next downstream activity is not ready to take it. Both starvation and blocking can be reduced by adding buffers that hold inventory between activities. Process ImprovementImprovements in cost, quality, flexibility, and speed are commonly sought. The following lists some of the ways that processes can be improved.
In some cases, dramatic improvements can be made at minimal cost when the bottleneck activity is severely limiting the process capacity. On the other hand, in well-optimized processes, significant investment may be required to achieve a marginal operational improvement. Because of the large investment, the operational gain may not generate a sufficient rate of return. A cost-benefit analysis should be performed to determine if a process change is worth the investment. Ultimately, net present value will determine whether a process "improvement" really is an improvement. |