With improvements in communication and in transportation, industry competition is no longer limited to the next city, parish or state; industry faces challenges from global competition. Local manufacturers have the advantage of being closer to their markets and being able to relate face-to-face with their customers. However, while developing these niche markets gives a competitive edge, understanding one’s manufacturing process – how value is added to the inputs (materials, labor, energy and equipment) – can have a significant effect on performance and competitiveness.

Process analysis

The best way to improve the process is to analyze it. This allows a better understanding of the activities involved, their relationships and the values of relevant measurements. Process analysis usually involves the following tasks:

• Process identification of all the steps involved from entry point of the process inputs to exit points of the process outputs;

• Construct a process flowchart that illustrates the various process activities and their interrelationships;

• Determine the capacity of each step in the process. Calculate other measures of interest;

• Identify the step having the lowest capacity (bottleneck) and evaluate further limitations in order to quantify the impact of the bottleneck;

• Use tools and approaches to make the process run more effectively and efficiently.

Process flowchart

Once the process boundaries have been defined, mapping the process flowchart is a helpful tool that uses graphic elements to represent tasks, flows and storage. Figure 1 is a flow diagram of a simple process having three sequential activities and one remanufacturing step.

The Symbols on the flow diagram are defined as follows:

• Rectangles represent tasks

• Arrows represent flows. Flows can include the flow of material and the flow of information. The flow of information may include production orders and instructions. The information flow may take the form of a slip of paper that follows the material, or it may be routed separately, possibly ahead of the material in order to ready the equipment. Material flow usually is represented by a solid line and information flow by a dashed line.

• Inverted triangles: represent storage (inventory). Storage bins commonly are used to represent raw material inventory, work in process inventory, and finished goods inventory.

In a process flow diagram, tasks drawn one after the other in series are performed sequentially. Tasks drawn in parallel are performed simultaneously.

In figure 1, raw material is held in a storage bin at the beginning of the process. Work that needs to be remanufactured is held in a storage bin, waiting to be processed at the first station. After the last task, the output also is stored in a storage bin.

Measuring process performance

Process aspects of interest to managers are cost, quality, flexibility and speed. The following is a list of process performance measures that can be used to assess these aspects.

• Capacity - The capacity of the process is its maximum output rate, measured in units produced per unit of time. The capacity of a series of tasks is determined by the lowest capacity task in the sequence. The capacity of parallel sequences of tasks is the sum of the capacities of the two sequences, except for cases in which the two sequences have different outputs that are combined. In such cases, the capacity of the two parallel sequences of tasks is that of the lowest capacity parallel sequence.
• Capacity utilization - the percentage of the process capacity that actually is being used.
• Throughput (also known as flow rate) - the average output of a production process (machine, workstation, line, plant) per init time (e.g. parts per hour). The maximum throughput rate is the process capacity.
• Lead time (also known as throughput time or flow time) - the average time that a unit requires to flow through the process from the entry point to the exit point. Flow time includes both processing time and any time the unit spends between steps.
• Cycle time - The cycle time is measured as the average time from when a job is released at the beginning of the routing until it reaches an inventory point at the end of the routing.
• Process time - the average time that a unit is worked on. Process time is flow time less idle time.
• Idle time - time when no activity is being performed, for example, when an activity is waiting for work to arrive from the previous activity. The term can be used to describe both machine idle time and worker idle time.
• Work In process (WIP) - the amount of inventory between the start and end points of a routing.
• Set-up time – Setup time is the time a job spends waiting for the station to be set up..
• Direct labor content - the amount of labor (in units of time) actually contained in the product. Excludes idle time when workers are not working directly on the product. Also excludes time spent maintaining machines, transporting materials, etc.
• Direct labor utilization - the fraction of labor capacity that actually is utilized as direct labor.

Little's Law

The inventory in the process is related to the throughput rate and throughput time by the following equation:

WIP = 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 = WIP x Cycle Time

The Process Bottleneck

A bottleneck is any resource whose capacity is equal to or less than the demand placed upon it. A non-bottleneck is any resource whose capacity is greater than the demand placed upon it. It is important to balance flow, not capacity in relation to demand. If bottleneck capacity is kept equal to demand, and demand drops, costs will go up resulting in a loss of money. The objective is to maintain capacity at slightly less than demand.

Total plant capacity equals the bottleneck capacity. Bottlenecks should be optimized by eliminating time wasted through idle bottleneck time, processing defective parts, or producing parts which do not contribute to throughput.

Finally, the manager will want to know what costs are tied to these bottlenecks. Work-in-process bottleneck costs are not appropriately measurable by using standard material and labor component cost elements. True process costs incorporate the market value of the finished goods waiting for the part to be completed at the bottleneck. Bottleneck per unit cost thus equals the total plant operating cost divided by the total bottleneck production hours because the bottleneck defines the plant throughput.

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. The four primary time components include: setup time, process time, queue time (associated with bottlenecks where parts wait for a machine to become free), and wait time (associated with non-bottlenecks when a part waits for another part to continue processing). Time saved at a non-bottleneck is imaginary because when non-bottlenecks are being set up, the time spent is taken away from idle time, not production time.

Process Improvement

Improvements in cost, quality, flexibility, and speed are commonly sought. The following lists some of the ways that processes can be improved.

• Reduce work-in-process inventory - reduces lead time.
• Add additional resources to increase capacity of the bottleneck. For example, an additional machine can be added in parallel to increase the capacity.
• Improve the efficiency of the bottleneck activity – ensure that the bottleneck has no idle time.
• Move work away from bottleneck resources where possible by inspecting quality of parts waiting to be processed – no need to waste valuable time processing a part that has a defect in it.
• Increase availability of bottleneck resources (if possible), for example, by adding an additional shift - increases process capacity.
• Minimize non-value adding activities – decreases cost, reduces lead time. Non-value adding activities include transport, rework, waiting, testing and inspecting, and support activities.
• Redesign the product for better manufacturability - can improve several or all process performance measures.
• Flexibility can be improved by outsourcing certain activities. Flexibility also can be enhanced by postponement, which shifts customizing activities to the end of the process.

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