Process-Flow Analysis

Chapter 7

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc. 2007, All Rights Reserved

 Outline of Chapter 7
Systems Thinking
The Process View of Business
Measuring Process Flows
Flowchart Analysis
Materials-Flow Analysis
Information-Flow Analysis
Service Blue Printing
Business Process Reengineering (BPR)

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 Systems Thinking
Definition of a “system”
– Whole > sum of parts
Application of systems thinking to businesses
– “Can’t sell from an empty wagon.”
– Defining systems boundaries
Role of “cross functional” teams in systems analysis
– Systems thinking requires cross-functional teams
to include all affected functions.

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Process View of Business

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 Measuring Process Flows
Little’s Law
– Relates number of items in the system to arrival
rate and length of time in the system.
– Formula:
I=TxR
I = average number in the system
T = average throughput time
R = average flow rate into the process
Assumes system is in a ‘steady state’

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 Applications of Little’s Law

Manufacturing
Waiting lines
Invoice processing
Legal office transactions
Accounts receivable processing
Etc.

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 Measuring Process Flows
Capacity of a system = capacity of the most
constraining resource.
– This resource is called a ‘bottleneck.’

The flow rate of a process is the minimum of

– Supply
– Demand
– Capacity

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Flow-Process Chart Analysis
Purpose: to describe a process visually to find ways
of improving the current process.
– Find repetitive operations
– Identify bottlenecks
– Describe directions and distances of flows (people, material
and information)
– Reduce waste

Required for certifications such as ISO9000.

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Process Flow Analysis Might Change:
Raw materials
Product (output) design
Job design
Processing steps used
Management control information
Equipment or tools
Suppliers
i.e. Anything but customers may be
changed!!

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Steps in process flowchart analysis
using the systems approach
1. Select a process to study
2. Form a team to analyze & improve the system
3. Decide on the objectives of the analysis
4. Define customers and suppliers
5. Flowchart the existing transformation process
6. Develop improved process design
7. Gain management approval of the improved design
8. Implement the new process design

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Symbols for Flow-Process Chart
Operation (a task or work activity)

Inspection (an inspection of the product for

quantity or quality)

Transportation (a movement of material from

one point to another)

Storage (an inventory or storage of materials

awaiting the next operation)

Delay (a delay in the sequence of operations)

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 Questions to Ask in FPA
What does the customer need?, operations are necessary? Can some
operations be eliminated, combined, or simplified?….

Who is performing the job? Can the operation be redesigned to use less
skill or less labor? Can operations be combined to enrich jobs? ….

Where is each operation conducted? Can layout be improved? ….

When is each operation performed? Is there excessive delay or
storage? Are some operations creating bottlenecks? …..

How is the operation done? Can better methods, procedures, or

equipment be used? ….

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 Information Flow Analysis
Purpose: to improve the efficiency and
effectiveness of the process.

Types of information flow:

– Information is the product of operation
– Information is used for management control

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Symbols for Information Processing Flow Chart
Origin of record (used to identify an operation that involves the addition
of significant data to a blank form)

Subsequent writing (a step in which significant data is added to an existing

record)

Handling operations (any nonproductive step, such as sorting, stapling, or

folding)

Move (a step in which the record is transported from one person, department,
or work place to another)

Inspection (used when the step involves examination of the quality or

clearness of a record)

Delay, file, and destroy (identifies a point or time at which the record is
inactive

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 Service Blue Printing
Flow charting of a service operation
Shows the ‘cycle of service.’
Points on SBP are “moments of truth”
Ask the same questions as in PFA (what, who,
where, when, and how)

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Business Process Reengineering
(BPR)
BPR defined (Hammer and
Champy, 1993)
BPR Philosophy
Principles of BPR
Success of BPR
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 BPR Defined
BPR is “the fundamental rethinking
and radical redesign of business [or
organizational] processes to achieve
dramatic improvements in critical,
contemporary measures of
performance, such as cost, quality,
service and speed.”

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 BPR Defined
This is in contrast to incremental
change or continuous improvement of
an existing process.
“If I were recreating this company
today, given what I know and given
current technology, what would it look
like?”

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 BPR Philosophy
Does the reengineering consultant see the
glass as half full or half empty?

Neither.
It’s the wrong size of glass!
Or, should it be a glass? …or a liquid?
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 Principles of BPR
Organize around outcomes
Have the people who do the work, process
their own information
Put the decision point where work is
performed and build control into the process
Eliminate unnecessary steps in the process

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 The Success of BPR
According to Hammer & Champy, 50-70
percent of the organizations attempting BPR
do not achieve the results they expected.
Why?
Because they make one or more of the 17
common mistakes:

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 BPR Mistakes
Trying to fix a process instead of changing it
Not focusing on business processes
Focusing only on the process redesign
Neglecting people’s values & beliefs
Settling for minor results
Quitting too early
Constraining the scope of the problem & effort
Letting corporate culture & mgmt attitudes get in the way
Trying to reengineer from the bottom up

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 BPR Mistakes (cont.)
Assigning a leader who doesn’t understand BPR
Skimping on the resources
Not making BPR a top corporate priority
Trying to do too much at once & dissipating resources.
Concentrating only on design & not implementation.
Trying to keep everyone happy.
Pulling back if people resist.
Dragging out the effort & taking too long.

Source: Hammer & Champy, Reengineering the Corporation, chapter 14.

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 Summary
Systems Thinking
The Process View of Business
Measuring Process Flows
Flowchart Analysis
Materials-Flow Analysis
Information-Flow Analysis
Service Blue Printing
Business Process Reengineering (BPR)

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End of Chapter Seven

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