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Process Flows andSupporting Facility

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Process Flow Structures 

Process Performance 

Facility Layout 

Servicescapes

Shin‐Ming GuoNKFUST

https://www.youtube.com/watch?v=-HmFMcZv2xE

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Definition of a Business Process

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Factorywood

metalguitars

Universitystudents alumni

Distribution center

bulk items small parcels

Calculatecredit risk

mortgage applications

approved loans

rejected loans

A process is a set of activities that accepts inputs and produces outputs.

Processes can involve both goods and services.

Services Process Structure

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Services Process Structure

Process Type ServiceExample

Characteristic Management Challenge

Project Consulting  One‐of‐a‐kind engagement

Staffing and scheduling

Job Shop Hospital Many specialized departments 

Balancing utilization and scheduling patients

Batch Shop/Process

Airline Group of customers treated simultaneously

Pricing of perishable asset (seat inventory)

Flow Line Cafeteria Fixed sequence of operations

Adjust staffing to demand fluctuations

ContinuousProcess

Electric Utility

Uninterrupted  delivery Maintenance and capacity planning

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QualityFlexibility

Variety

Variety vs. Cost

SpeedFlexibility

Speed

Project Shop

CEO

Market Research

Finance OperationHuman Resource

ManagerProject A

ManagerProject B

ManagerProject C

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Job Shop

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Small batches of customers with different service sequences

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1

1

2

2

2 3

3

3

4 4

A B C D

Batch Process and Continuous Flow

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5

A Flow Line at IKEA’s Cafeteria

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Choosing Process Structure

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Job Shop

Batch Process

Worker‐paced line

Machine‐paced line

Continuous process

Low Volume(unique)

Medium Volume(high variety)

High Volume(lower variety)

Very high volume(standardized)

Utilization of fixed capitalgenerally too low

Unit variable costsgenerally too highCommercial 

Printer

Apparel Production/Bakery

High volumeAuto assembly

Oil refinery

Low volumeAuto Assembly

Hospital, 

Department Store

Airline

Cafeteria

Fast food

Internet provider

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Process Performance Measures

• Cycle Time is the average time between completions of successive units.

• Capacity is a measure of max. output per unit of time.

• Throughput rate is the actual output per unit of time.

• Bottleneck is the factor that limits production, usually the slowest operation or the operation with heaviest load.

• Capacity Utilization is a measure of how much output is actually achieved.

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Flow Lines and Cycle Time

• Process Cycle time = 1 min.    Capacity = 60/hour. 

• Direct labor content = 2.5 min.    

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0.1 min 0.7 min 1.0 min 0.5 min 0.2 min

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. 

Capacity Utilization = ?

90/hourThroughput?

150/hour Throughput?

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More Process Performance Measures

• Throughput Time: time to complete a process from arrival to departure. It consists of processing times and possible delays.

• Wait Time: time spent in the system without receiving service.

• Work In Process (waiting line, inventory) number of flow units in the process; or its average across a time period.

• Total Direct Labor Content: is 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.

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Throughput Time, WIP, and Wait

7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00

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10

9

8

7

6

5

4

3

2

1

0

Throughput Time

WIP

WIP=Cumulative Inflow – Cumulative Outflow

Cumulative Inflow

Cumulative Outflow

Time

Patients

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Process with Multiple Types of Customers

• The flow may break up into multiple flows.  

• Not all activities are required by all types.

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10/hr

3/hr

4/hr

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3

2

30

4

2

2

20

12

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Product Mix Affects the Process Capacity

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No. of Workers

Available Capacity (minutes)

Requested Capacity (Workload)UtilizationSenior Staff Intern Total

File 1 60 3×4 10×3 4×2 50 83%

Contact References

2 120 3×30 0 0 90 75%

Contact Employers

3 180 3×20 10×12 0 180 100%

School/Grade 2 120 0 0 4×10 40 33%

Report 1 60 3×4 10×2 4×2 40 67%

Current product mix: 3 senior/hr, 10 staff/hr, 4 intern/hr

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Process Performance for Retailing

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Throughput rate =  average daily sales

Throughput time = days of supply

Days of supply =

Inventory turn =COst of Goods Sold_______________________

average inventory value

average daily sales

average inventory value________________________

Order Receipt On Shelf Sales

Comparing Kohl’s and Wal-Mart

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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

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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.

Product Layout: How to Allocate Work?

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Process cycle time = max. cycle time = 60 seconds

Process Capacity = Capacity of the bottleneck = 60/hour

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Improved Layout of Driver’s License Office

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Process cycle time = max. cycle time = 30 seconds

Process Capacity = Capacity of the bottleneck = 120/hour

Flexible Layout

• Process cycle time = 30 sec.

• Process Capacity = 120/hour

• No waiting in between.

• No need to repeat information.

• Flexible staffing.

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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.

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Place Orientation

Function Orientation

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Environmental Dimensions of Servicescape

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Ambient conditions Background characteristics (temperature, music, illumination, scent)

Spatial layout and functionalityCirculation path of customers, groupings of merchandise (stores)

Signs, symbols, and artifactsCarry special meaning or have social significance.

A Grocery Store’s Layout

• The entrance is designed to be inviting so it reinforces a positive customer retail response.  Bakery, produce and florist at the front of the store.

• Stock the items shoppers buy most often at the back of the store meat, eggs, dairy and bread.

• Crafting an efficient floor plan with an expertly stocked perimeter keeps shoppers moving through the entire store and pausing at strategic stops along the way.

• Pharmacy is located on the perimeter near the exit.

• Impulse Buys (Candy, Magazines, Etc.) are located by the registers and exit

Supermarket Psychology

https://www.youtube.com/watch?v=M9f21TzP3xY

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Queue Structures

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Inflow Outflow

Customerswaiting

Customersin service

Inflow Outflow

Customerswaiting

Customersin service

Signs, Symbols, and Artifacts

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Servicescape

Summary

A well‐designed service process leads to effective operations and better service.

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 affects shopping habits. 

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