The process for handling insurance claims at a branch of the Green Insurance Company has an average flow rate of 2 claims per minute. Branch manager Shauna Green has calculated, based

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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Module 2: Process Configurations and Metrics

Table of Contents

Module 2: Process Configurations and Metrics ……………………………………………………………… 1

Lesson 2-1: Process Types ………………………………………………………………………………………………….. 2

Lesson 2-1.1: Process Arrangements – Linear and Jumbled ………………………………………………………………………. 2

Lesson 2-1.2: Implications of Linear vs. Jumbled …………………………………………………………………………………….. 5

Lesson 2-1.3: Generic Process Configurations ………………………………………………………………………………………… 7

Lesson 2-1.4: In-Video-Question: Selecting Process Configuration ………………………………………………………….. 14

Lesson 2-1.5: Implications of Process Configurations …………………………………………………………………………….. 17

Lesson 2-1.6: Process-Product Matching ……………………………………………………………………………………………… 20

Lesson 2-1.7: Selecting a Process Configuration ……………………………………………………………………………………. 25

Lesson 2-2: Process Mapping ……………………………………………………………………………………………. 26

Lesson 2-2.1: Process Mapping …………………………………………………………………………………………………………… 26

Lesson 2-3: Metrics to Assess Performance ………………………………………………………………………… 40

Lesson 2-3.1: Metrics to Assess Performance ………………………………………………………………………………………. 40

Lesson 2-4: Little's Law ……………………………………………………………………………………………………. 54

Lesson 2-4.1: Little's Law …………………………………………………………………………………………………………………… 54

Lesson 2-5: Activities Within Processes ……………………………………………………………………………… 72

Lesson 2-5.1: Activities Within Processes …………………………………………………………………………………………….. 72

Lesson 2-6: Capacity Utilization ………………………………………………………………………………………… 83

Lesson 2-6.1: Capacity Utilization ……………………………………………………………………………………………………….. 83

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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Lesson 2-1: Process Types

Lesson 2-1.1: Process Arrangements – Linear and Jumbled

One of the most fundamental decisions for implementing an operation strategy is how you

arrange the different activities in the process. It's what we call process choice. It's determining

what kind of configuration the different activities are going to be in. Whether they're going to be

working exclusively on a product, whether they're going to be shared activities. And we call this

element of operation strategy, the process choice element. You should recognize that this is a

long term decision very rarely are you going to be able to change the configuration of the

activities very often? It's going to be expensive for you to change how you have situated your

different machines, whether it's in a manufacturing plant or whether it's in a fast food restaurant,

it is going to be time consuming. And it's going to require a lot of investment to be able to set it

up in certain ways. So let's start off with taking a look at two very basic types of process

arrangements. One of them is a linear arrangement, and one of them is what we're going to call

a jumble. So we're not going to get into the definitions of the formal process types that we see in

operation strategy, but we're simply going to call them linear and jumbled at this point.

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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So let's take a look at these basic types of process types, right? So, let's take an example here.

I want you to think of a health clinic in which you have kids that go through the health clinic, they

get treatment as well as you have adults. So here is an example of a linear arrangement for that

health clinic. So you have Children that go through the whole process. They go through the

activities like checking. They have to wait, they get seen by a nurse. They get seen by a doctor.

They may have to go get labs, get an X ray, get some treats before they leave and then they

exit out. So that's going to be the arrangement for children. And for adults, it's going to be a

similar arrangement except it's going to be maybe a different sequence, maybe a different set of

activities. So what you have here, the basic difference between this and the next arrangement

we're going to see is that you have a dedicated set of activities. The play area that we have

here is dedicated for kids. The weight room for adults has a television in it which you don't have

for the kids. So that's the main difference between this and the next arrangement that we're

going to look at is that. Each of these activities is dedicated to that particular type of customer

that is going to go through it and in this case it's patients being kids and adults.

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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Now let's take a look at the other kind of arrangement to make a contrast between a linear and

jumbled arrangement. So in a jumble arrangement you're not going to have these activities

being exclusively used for a certain type of customer. So what you have here is a set of

activities that are placed in sort of departments. There is a wait department where people can

wait whether it's customers who are kids, whether it's customers who are adults. And you can

even add customers patients who are going for geriatrics so the older patients. It's a common

weight area in this case It's a common area of being seen by nurses and doctors. So these are

all common areas. And what I have depicted over here, what you see over here is that the

process flows for kids are depicted by the solid line while the process flow for the adults is

depicted by the dotted line. So the kids go to the wait, to the nurse, to the doctors, while the

adults have to go to the wait. And from there they have to go first, get their laps done before

they go through the rest of the activities in the process. So two things here, one, the activities

are being shared across two different types of customers in this case could be shared among

many different types of customers. Otherwise the other thing is that the flow is going to be

jumbled. It's not in a linear fashion. Not every customer, not every patient is going to go through

in the same sequence through each of these activities. So that's going to be the difference

between these two types of activities, these two types of processes rather.

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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Lesson 2-1.2: Implications of Linear vs. Jumbled

So what are the implications of a decision of process choice? Whether you've picked, let's say a

jumbled process or whether you've picked a linear kind of a process. Let's take each one of

these and talk through the implications of them. So cost. Obviously when you have a dedicated

set of activities for different types of customers, the up front cost is going to be very high, right?

You have to invest separately for a process for the kids as as patients as well as for the adults

as patients. So they're going to be two parallel processes. You have two wait areas, you have

two radiology departments, two pharmacies and so on and so forth. So the up front cost is going

to be high. Now what you have to think about is over a long period of time, if you have enough

volume of each of these different types of customers. Your cost per customer, your cost per

patient in this case might be lowered. So if you're going for that kind of an advantage based on

volume. And there is enough volume of each type of patient of each type of customer. Then it

may make sense for you to make that upfront investment into two different types of processes.

Two different arrangements that are dedicated for each of those two customers, right? So that

would be the cost benefit analysis that you would have to do. When you were looking at should

we go in for a linear arrangement or should we go in for a jumbled arrangement. Because if you

were to do a jumbled arrangement, you could share the activities. However, it might get

expensive from the point of view of the customer. They have to adjust to not having a dedicated

playroom as the wait area. Or a dedicated TV room as the wait area for adults. And that's the

cost of the customers sort of have to face. And so you have to think of the implications of that.

Well, let's take the second element of speed. So, if you recognize what we're going through

here are things that customers care about things that organizations care about. We care about

the cost of producing something. The cost of providing something to a customer. We also care

about the speed at which we are able to deliver something to a customer. And the customer

also cares about that obviously. So in terms of speed, if you have a linear arrangement. If it's in

a straight line, the obvious implication is that it's going to go much quicker than it would if it was

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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a jumbled kind of flow. So speed is going to be higher if it is in a linear arrangement. And

jumbled, it's going to be more messy. What's also going to happen is that there will be some

scheduling issues getting into the picture here. Because you'll have some adults that take

longer for certain tasks and kids might take longer for some other tasks. And that's going to

mess up the way that you have each of the patients going through. And if they're in mixed

sequence, you're going to have issues of there being more waiting. So the speed is going to get

affected. Now, let's take a look at the next one, flexibility. In a linear arrangement, you have less

flexibility of being able to cater to different types of customers. Cater to different types of

patients in this case. And that's by design, right? We've arranged the process for more

efficiency. We've arranged the process for more speed. When it's a linear arrangement, you're

sacrificing flexibility in that case. Whereas in a jumble flow, there's going to be more flexibility. If

there are different needs of customers, they can be tackled in a different sequence through the

jumble flow. And that's going to work fine. Quality. The next aspect that customers care about,

that organizations care about. Now quality from a very broad perspective, if you were to take a

look at it. The linear one is going to be focusing on speed. But might be sacrificing quality in one

way. If everybody is being treated like a going through an assembly line. On the other hand, if

you're thinking about there being specialists that are dealing with each type of patients. So you

have people who are doctors and nurses who are trained not only to to deal with the ailments of

kids. But also deal with the way the different kids react. How they are different from adults.

That's going to give better quality, a better experience to the to the patients. But if you think

about it from a different perspective, now quality may be affected. In the sense that if there is a

problem that needs a broader outlook. So, if there's a teenager who's going through and has

gone through the kids process, they are trained to deal with kids. And they might not have some

of the broader knowledge that might exist if you are going through a jumble flow. And there are

people trained in that jumble flow to deal with different types of ailments. So, having a process

flow of one type. What you hopefully you're seeing is that it has implications on the other

operations strategy elements. Of how they are going to have people trained for each different

each of the different types of processes. Whether it's a jumble flow or a linear flow. Finally,

customizability. Again, the linear one, the linear flow is not meant to be customizable. It's meant

to be for a certain type of patient. And so customization is going to be difficult if you are going to

ask for any kind of changes within a linear flow. Worse is when it's a jumble flow. They are

trained to be more flexible. The people are trained to be more flexible, process is designed to be

more flexible. The kind of training that people have got is more broader. So customization, they

might be used to that. It might be possible for them easily. So you can see that a simple

decision. Or what seems like a simple decision. Should be a jumbled or a linear flow of activities

is going to have implications on what you're trying to achieve from a process. From an operation

and and the customer experience, what they are able to get from an operation, from a process.

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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Lesson 2-1.3: Generic Process Configurations

Now let's take these two types of process types, we said jumbled and linear,

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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and place them in this big arrangement of process types that we normally talk about in

operations. We think about process types on a spectrum that goes all the way from continuous

to project. What you have here is a graph, on the x-axis you have product variety going from low

to high, on the y-axis you have process flexibility going from low to high. The diagonal

represents the spectrum of process choices that you can pick from for your particular operation,

for your particular process. So if you think about the linear and jumbled that we just talked

about, the linear is going to be the one that is second from the left, it's a line kind of process,

and the jumbled is going to be the second last one, which is a job shop. If you're going left to

right, the job shop is the second last one, and that's the more jumbled flows. On the extremes,

you have continuous and project. Continuous is where things are going to be even more

extreme than linear, in the sense that they are going to flow on a continuous basis, and then you

have the line which is a linear. The small batch and the large batch which is next, they represent

the intermediate between the line and the job shop, so they are neither linear nor jumbled. The

job shop is where you have different types of departments that are okay with dealing with

different types of customers, it's not dedicated, then finally, you have a project which is dealing

with just one customer. There, the sample size or the number of customers for which the

product is being built or being catered to is one, so it's a very unique product that you're giving

to a customer. Let's go through a few examples of each of these different types to get a better

sense of what these different process types actually mean, what they are.

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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For the first one here, you have the example of a project. This is what we talked about in the

previous slide as being one unit being built for a customer at a time. Here, you see an example

of an airplane that is being developed. This is in its R&D phases and it's being developed

one at a time. This is where there are different people who are experts in different areas who

are coming together to where the airplane is located, and they're working on it to try out different

things. It's a unit of one, the experts: the people who are working on this particular product are

actually going to the site to where the product is being built. You can take this and think of other

examples of where you would be using a project type of configuration. For example, if you are

arranging a vetting, now that's a project. You have a unique product that is being done for a

particular set of people, and it's all the experts that are coming together. Making a movie is a

project, every movie is unique, it's a project, it needs process type of a project type because

there are going to be different experts coming together in order to get that project done. That's

one extreme of this spectrum of process types.

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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Next one, this is what we learned earlier as being the jumbled flow. You're looking at, here, six

different departments, four different products, and the four different products, the yellow, the

blue, the green, and the red have a different sequence in which they go through these six

different departments in order to get into a finished product. The circles here represent raw

materials, these represent the start of the job, and the squares represent the finished product,

the finished service, or the finished goods that are being delivered to customers. Here you see

it's jumbled flows, this, again, it could be a product that's being built, the product that's being

assembled, that's being manufactured, or it could be, as we saw in that earlier example,

patients going through different departments in different types of patients requiring different

sequences, and some of them may even skip some departments if that is what is needed for

their particular treatment. This could be a service or a manufactured good.

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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Next is the intermediate one, the batch one. The best way to describe this would be, well, it's

neither a job shop and nor is it an assembly line. It's neither completely jumbled, nor is it

completely linear, it's somewhere in the middle. It's a job shop that makes a single type of

product at any point in time. Here you have an example of a cheese making factory. If you think

of cheese making, they make it in batches. They make a certain type of cheese. They may

make it from a job shop kind of environment and while they're making that they don't work on

anything else. They get that done, and then they move on to the other type of product. Now, you

can take a job shop and convert that into a batch kind of environment or you can think of a

linear arrangement and convert that into a batch type of environment. What do we mean by

that? You can have an assembly line that's making different types of products but let's say you

don't have enough volume to say that we're going to dedicate this assembly line to this

particular product, then you might say, well, we'll run this assembly line for a particular kind of

product for a few days and then there's going to be a long changeover and then we're going to

run something else. If you think of, let's say, different types of pharmaceuticals that are being

made on an assembly line, they might be being made in batches. You don't have enough

volume of a particular kind, you run a certain type of a pharmaceutical, a certain type of

medication on it, and then you pause, you clean, there's going to be a thorough clean up, a

thorough scrubbing off the assembly line before you can move on to the next kind of drug or

medication that you're making on the assembly line. That's going to be a batch kind of a process

for you. It's in the middle of a linear versus a job shop.

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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Next, we come to what we may be most familiar with and that is this division of cars moving

down in assembly line. Or when you're talking about computers being assembled, people sitting

next to each other and passing it on after doing whatever little task that they're doing. It's people

who are doing a little part off the whole task and then it's being moved to the next task. This

could be just looking at those two examples. In the case of a car, it's a machine paced assembly

line. In the case of an assembly of a computer, it might be a human paced assembly line. I do

my job in terms of whatever little task I'm supposed to do, whatever little part I'm supposed to

put in for the assembly of this computer and pass it on to the next person. I physically pass it on

and they pass it on to the next person and so on and so forth. That might be the way in which

these things get accomplished through a manually paced assembly line or a machine paced

assembly line. In the case of cards, it's a machine paced assembly line. Now, as you're thinking

about these different types of configurations, you can think about the car being made from a

different type of a process configuration as well. It could be made from a job shop kind of

configuration. It's not that you are always going to make a certain product from a certain type of

process configuration, there might be contexts in which you would use one or the other. That's

what we're going to talk about in this lesson. What are the advantages and disadvantages?

What are the implications of choosing one process type over another?

Operations and Supply Chain Decisions and Metrics Professor Gopesh Anand

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Finally, let's look at this extreme of the spectrum of process configurations. Here we're looking

at a process that is generally called process industries. We call it process industries, because

it's a continuous process. The products that get made in these kinds of industries are petroleum,

for example. You have fertilizers that get made in plants. What is a characteristic of this type of

process? It's very highly automated. You start the petroleum plant and it's a refinery that's

making product from crude. You rarely stop it. You stop it maybe once in a year to do some

maintenance and it's a huge deal to have to stop it and then to restart it again. That's what we

call the continuous flow. A lot of p times it's called process industries when you're talking about

these types of process types. Process indust

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