Managing Business Process Flows - Northwestern …

1 Managing Business Process 6/18/11 9:31 PM Page 6/18/11 9:32 PM Page iiThird EditionManaging Business Process FlowsPRINCIPLES OF OPERATIONS MANAGEMENTRavi AnupindiUniversity of MichiganSunil ChopraNorthwestern UniversitySudhakar D. DeshmukhNorthwestern UniversityJan A. Van MieghemNorthwestern UniversityEitan ZemelNew York UniversityPrentice HallBostonColumbusIndianapolisNew YorkSan FranciscoUpper Saddle RiverAmsterdamCape TownDubaiLondonMadridMilanMunichParisMon trealTorontoDelhiMexico CityS o PauloSydneyHong KongSeoulSingapore 6/18/11 9:32 PM Page iiiEditorial Director:Sally YaganEditor in Chief:Eric SvendsenSenior Acquisitions Editor:Chuck SynovecSenior Project Manager: Mary Kate MurrayEditorial Assistant: Ashlee BradburyDirector of Marketing.

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3 , publishing as Prentice Hall, One Lake Street,Upper Saddle River, New Jersey rights reserved. Manufactured in the United States of publication is protected by Copyright, and permission should be obtained from the publisher prior toany prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means,electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material fromthis work, please submit a written request to Pearson Education, Inc.

4 , Permissions Department, One LakeStreet, Upper Saddle River, New Jersey of the designations by manufacturers and seller to distinguish their products are claimed astrademarks. Where those designations appear in this book, and the publisher was aware of a trademarkclaim, the designations have been printed in initial caps or all of Congress Cataloging-in-Publication DataManaging Business Process Flows : principles of operations management / Ravi Anupindi .. [et al.]. 3rd : 978-0-13-603637-1 ISBN-10: 0-13-603637-61.

5 Production Process Anupindi, Ravi. dc23201102336610987654321 ISBN 10:0-13-603637-6 ISBN 13: 6/23/11 12:11 PM Page ivBRIEF CONTENTSP reface xvPA RT IProcess Management and Strategy 1 Chapter 1 Products, Processes, and Performance2 Chapter 2 Operations Strategy and Management20 PART IIProcess Flow Metrics 45 Chapter 3 Process Flow Measures46 Chapter 4 Flow-Time Analysis80 Chapter 5 Flow Rate and Capacity Analysis 102 Chapter 6 Inventory Analysis121 PART IIIP rocess Flow Variability 151 Chapter 7 Managing Flow Variability.

6 Safety Inventory152 Chapter 8 Managing Flow Variability: Safety Capacity188 Chapter 9 Managing Flow Variability: Process Control and Capability229 PART IVProcess Integration 271 Chapter 10 Lean Operations: Process Synchronization and Improvement272 Appendix IMBPF Checklist303 Appendix IIProbability Background306 Solutions to Selected Problems 311 Glossary 317 Index 6/18/11 9:32 PM Page 6/18/11 9:32 PM Page viCONTENTSP reface xvPA RT IProcess Management and Strategy 1 Chapter 1 Products, Processes, and The Process View of Organizations Performance Measures The Importance of Measurement: Management by Fact Types of Measures.

7 Financial, External, and Internal Products and Product Attributes Processes and Process Competencies Enabling Process Success Some Basic Process Architectures The Plan of the Book 17 Summary 18 Key Terms 18 Discussion Questions 18 Selected Bibliography 19 Chapter 2 Operations Strategy and Management20 Introduction Strategic Positioning and Operational Effectiveness The Strategy Hierarchy Strategic Fit Focused Operations Matching Products and Processes

8 The Operations Frontier and Trade-Offs The Evolution of Strategy and Operations Management The Opportunity Today in Service Operations 40 Summary 41 Key Terms 42 Discussion Questions 42 Selected Bibliography 43 PART IIProcess Flow Metrics 45 Chapter 3 Process Flow Measures46 Introduction The Essence of Process Flow Three Key Process Measures 6/18/11 9:32 PM Page Flow Time, Flow Rate, and Inventory Dynamics Throughput in a Stable Process Little s Law.

9 Relating Average Flow Time, Throughput, andAverage Inventory Material Flow Customer Flow Job Flow Cash Flow Cash Flow (Accounts Receivable) Service Flow (Financing Applications at Auto-Moto) Analyzing Financial Flows through Financial Statements Assessing Financial Flow Performance Cash-to-Cash Cycle Performance Targeting Improvement with Detailed Financial Flow Analysis Two Related Process Measures: Takt Time and Inventory Turns(Turnover Ratio) Takt Time Inventory Turns Linking Operational to Financial Metrics.

10 Valuing an Improvement Linking Operational Improvements to NPV Linking Operational Improvements to Financial Ratios 73 Summary 75 Key Equations and Symbols 75 Key Terms 76 Discussion Questions 76 Exercises 76 Selected Bibliography 79 Chapter 4 Flow-Time Analysis80 Introduction Flow-Time Measurement The Process Flowchart Flow Time and Critical Paths Theoretical Flow Time and the Role of Waiting Flow-Time Efficiency Levers for Managing Theoretical Flow Time Moving Work Off the Critical Path Reduce Non-Value-Adding Activities Reduce the Amount of Rework Modifying the Product Mix Increase the Speed of Operations Zhang & Associates Revisited 6/18/11 9.