Analyzing Processes

Operations managers use mathematical and scientific data to improve and re-engineer the processes in business. They arrive at this data by analyzing the processes of all areas of the business. This process flow analysis can help you identify your company's current business situation, as well as independent departments within your business. With process analyses you can:

• Identify improvements in your product production processes that will turn into cost savings, allowing you to pass-on savings to your customers and gain a stronger foothold in the market
• Streamline your company's infrastructure
• Streamline your inventory and supply chain issues
• Identify improvements in your administrative, accounting, purchasing, and other departments to eliminate those that don't add value to the company

To do this, the process being studied is broken down into task-based chunks. These chunks are then analyzed to identify problems, or inefficiencies in the system.

Process flowcharts illustrate the process
A process flowchart graphically represents the individual "chunks" of the complete process from start to finish. For example, a customer order could be followed from the time of the order, to the order entry, to order processing, to fulfillment, and to shipping. If there are different methods for placing an order, such as by phone, order form, or web, then those processes can also be charted to determine which is the most efficient. The individual steps of the process are usually indicated as closed boxes with arrows pointing in the direction of the next step. Additional symbols are used to denote the beginning, ending, inputs, outputs, and other steps of the process. There are also software programs available to help you develop flowcharts. We'll talk about that a little later in this article.

Plot processes to determine value added
By plotting the process you can assign a value level to each step in the process so you can determine which actions add value to the overall process and which don't. With this knowledge, you can reorganize the process by eliminating those actions that don't add value. If you can't totally eliminate a step you may be able to simplify it. This type of analysis should work for any process in your company and can help you add value to your entire business.

The plot process uses symbols much like the flowchart to denote what is happening at a particular stage of the game. Plot Process symbols include:

Operation:		A main step in the process.
Move:		Movement of people or materials from one place to another.
Delay:		Any regular delay in the process, or temporary storage.
Store:		A regular controlled storage phase, as in completed inventoried products.
Inspect:		Routine inspections for quality or quantity.
Decision:		Approval or disapproval of inspection.

Value is added only by an operation or a decision. To determine how many steps your process has that do not add value, list the steps involved in your process and insert a column for each action symbol. For each step indicate what type of action it involves (e.g. operation, move, delay, etc.). Total each column and add the operation and decision columns to get the total value adding steps, then total the other columns to get the total non-value adding steps.

This will give you a starting point for identifying ways to improve your process.

Modeling and simulations allow for "what-if" scenarios
The flowcharts and plot processes you create can also be referred to as models. While these models work well for answering "what" questions, they do little for the more detailed questions like "how," "when," and "where." The complexity of the processes a typical business uses makes it very difficult to rely solely on flowcharts to determine the effects of changes. This is where simulation models will shine. Simulations allow you to vary the models to help you see more clearly the effects of changes in your process. By creating simulations of a process, you can identify shortcuts and streamline the process to save time and money.

Simulations also allow you to experiment with "what-if" scenarios. You can determine things like:

• The impact that absent workers can have on a process
• The extra cost of eliminating a position that may appear to be unnecessary at first glance
• The savings in time and money you might see by simply rearranging the work area to allow for closer storage of parts and supplies.
• The savings in time and money you might see by having technical staff generate their own reports rather than having administrative clerks do it.

This type of simulation involves some creative thinking and also input from those involved. Don't overlook asking the people who perform these tasks what their ideas are for making the process more efficient. They probably have the most knowledge of all about what they do and probably have quite a few ideas on improving the system.

Critical path analysis
This analysis is usually used to determine the minimum length of time in which a project can be completed. While not always as useful for ongoing processes, it is extremely useful for product development and other project-based work.

Critical path analyses require that you first determine all of the steps necessary to complete the project. You then prioritize them based on the steps that are dependant on other steps being completed first, as well as those that can run parallel to other activities. In other words, those steps that following steps are dependent upon must be completed first and so on.

You begin the chart by listing the time frame across the top. Place a circle on the graph below that represents a task and then draw a time line to the following task. The length of the line, or the space between the two tasks, represents the length of time the task will take. The line is attached to the following task and so on. The line is the "critical path." Parallel tasks, or those that are not dependent on other tasks being done first, can be drawn in below and run concurrently with the dependent tasks.

There are actually two formats in which this chart can be drawn. One is the Gantt chart, and the other is the PERT chart. For examples and a more thorough explanation of how this charting and analysis works, go to Mind Tools.

Queue Theory
For customer- and service-related situations, queuing is analyzed to determine things like how many gas pumps a gas station will need for a particular area, how many checkout counters a department store should have, or even how many parking spaces a restaurant needs. It also comes into play in maintenance and service situations where items have to wait (in line) for repair. Basically, in any situation where people or things have to wait in line there is a loss of value.

Decreasing the amount of time spent waiting increases the quality of the service. This also increases the cost of offering the service. The goal of the Queuing Theory is to find that happy medium where the waiting customer experiences the least "loss of value" and you still maintain manageable costs for the improved service.

Computing queue systems involves many formulas and algorithms, and luckily there is software with which to compute them.

Now you should have at least a feeble grasp on how analyzing your processes works, so let's move on to what you can do once you get there. Actually, we're talking about improving quality and building quality into the process itself.