Operations Management Reading: Process Analysis

By: Roy D. Shapiro

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Synopsis: Organizations without the means to improve rarely can keep up with competition. Improvement requires a deep understanding of underlying operating processes and an ability to assess their performance. The essence of process analysis is the ability to answer the questions, "How is this process doing?" and "How can it do better?" In this Reading, students observe an operating process and consider the data that needs to be collected so that they are able to answer these key questions. How can a process be described as "doing" well? The answer depends on what the customer promise is and how the firm seeks to create and capture value for its stakeholders. For example, if the customer promise is fast and effective service, an organization providing that service should be concerned with speed, quality of service, and customer satisfaction. On the other hand, if an organization is running a high-volume, capital-intensive factory with a customer promise of low cost, it is most concerned with capital utilization, high volumes, and various measures of efficiency and productivity. The Reading begins with visual representations of the sequence of tasks and the flow of product and information in a process. A variety of numerical analyses are introduced to measure process performance with a focus on 3 critical dimensions: capacity, efficiency, and effectiveness.