Process Management and Productivity
Process Management and Productivity

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Process Management and Productivity 

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In this Session Long Project, you will be able to use your creativity. You will choose a specific type of non-manufacturing business from the list below. You will use this business type and create your own organization around it. In each SLP module you will create issues/challenges about the specific Operations Management topic and discuss these issues/challenges and how you would solve them.

NOTE: When choosing your business/project, you need to consider that it will meet the criteria for all SLP assignments. Module 2 covers Total Quality Management, Module 3 talks about Supply Chain Planning using Operations Strategy (Module 4).

Session Long Project

Choose one of the following types of service organizations: Hospital, Car Repair, generic family restaurant, Information Technology consulting, Software Development, or another organization type with Instructor Approval.

Read about the real company online in the same industry and then create/invent your own company of this type. Be creative. Make this company real.

Identify several key processes in a process flow diagram. The most important aspect of inventing your company is determining the key PROCESSES. What is the work being done to provide your services to your customers? What are the repetitive processes of obtaining the materials, supplies, etc., and moving them through the company via processes to generate the outputs?

Write the paper with the focus on the following topics.

  1. Discuss the key processes and how these processes would be analyzed.
  2. What are some ways the processes could be improved?
  3. Discuss concepts and ideas from process improvement and lean thinking.
  4. Identify and discuss at least three productivity issues that this company faces. Include the various productivity ratios that would be calculated. Generate some numbers indicating the current level of productivity.
  5. Identify and discuss how this company would deal with improving its productivity

This paper should be approximately 4 pages in length, counting the introduction, body, and summary. You should include references and cite them properly in the paper. Generally, at least three references should be used. Find references about productivity in your type of business.

SLP Assignment Expectations

  • First discuss some background about your company. You can give it a name. How big is the organization – people, size, etc.? What is its mission? Who are its customers?
  • Then identify at least one area of concern for productivity. Identify at least three productivity measures. While it is not required, if you want, you can also create some numbers and show the calculation of the productivity measures.
  • Identify the key processes. What are the steps involved in the processes? Do the processes interact?
  • What are some possible ways that these processes could be improved for productivity? Consider how you can produce more output and/or reduce the inputs, so that you can increase productivity.
  • What are some problems or issues that you might encounter as you attempt to change the processes? How could you overcome these problems/issues?

Module Overview

Processes are fundamental to all the activities that produce goods and activities. For example, operations managers make process decisions about the type of work to be done in-house, the extent of automation to use, the technologies to pursue, etc.

Operations management transforms inputs (labor, capital, equipment, land, buildings, materials, and information) into outputs (goods and services) that provide added value to customers. The figure below summarizes the transformation process. The arrow labeled “Transformation System” is the critical element in the model that will determine how well the organization produces goods and services that meet customer needs. It does not matter whether the organization is a for-profit company, a non-profit organization (religious organizations, hospitals, etc.), or a government agency; all organizations must strive to maximize the quality of their transformation processes to meet customer needs.

Example of typical transformation process

The 3M Company is a good example of the strategic importance of transforming inputs into outputs that provide competitive advantage in the marketplace. 3M manufactures a top-quality adhesive tape called “Magic Tape”. Magic Tape is used for everyday taping applications, but it offers attractive features that most other tapes do not, including smooth removal from the tape roll, an adhesive that is sticky enough to hold items in place (but not too sticky that it cannot be removed and readjusted if necessary), and a non-reflective surface. For several decades, 3M has enjoyed a substantial profit margin on its Magic Tape product because 3M engineers make the manufacturing equipment and design the manufacturing processes that produce Magic Tape.

In other words, 3M enjoys a commanding competitive advantage by controlling the transformation processes that turn raw material inputs into the high value-added Magic Tape product. Controlling the transformation process makes it extremely difficult for competitors to produce tape of the same quality as Magic Tape, allowing 3M to reap significant profits from this superior product.

An opposite example of the strategic implications of the input/output transformation process is 3M’s decision in the 1980s to stop manufacturing VHS tape for video players and recorders. In the VHS tape market, 3M had no proprietary manufacturing advantage, as there were many Asian competitors that could produce high-quality VHS tape at lower cost. Since 3M had no proprietary control over the transformation process for VHS tape that would allow the company to protect its profit margins for this product, it dropped VHS tape from its offerings. The two 3M examples of Magic Tape and VHS tape show how important the transformation process and operations management can be to providing and protecting an organization’s competitive advantage.

A service example of the strategic importance of the transformation process is ING Bank, a banking company that conducts all banking transactions through the Internet, phone, and mail. ING maintains no traditional bank facilities, except for the buildings that house the employees that execute remote transactions with ING’s customers. This strategy results in tremendous cost savings and competitive advantage to ING by not having to spend capital resources on land and buildings that traditional banks must spend. Consequently, ING can offer its customers’ higher interest rates on savings accounts and lower interest rates on loans.

A major responsibility of Operations Management is to measure performance and determine ways to improve it. Productivity measurement and process improvement are the focus of this first module.Productivity is a major concern of most businesses. It is a fundamental basis of competition, to reduce costs and do more with less. Productivity in the U.S. is measured and has been for over 125 years by the U.S. Bureau of Labor Statistics. Labor productivity is a key index that is used to determine how the overall economy is doing year to year.The basic measurement is the ratio of Output/Input. Or, Productivity = O/I.

But industries and individual businesses also measure productivity. And it is this measurement that is key to productivity and process improvement. Without quantitative measurement, you cannot know if you are improving.

At the business level, there are many ways to count output and input. For example, you could have the output measured as the number of parts produced and the input is the number of hours. Prod = widgets/hour. A key criterion for counting each of these is to make sure you are using the same time period, that you are matching the actual input effort to the outputs generated. You must also use the same process for each. For example, counting widgets, you would look at a specific process and/or group of people for a specific time period, say last week, Monday thru Friday. If this group of people produced 3500 widgets collectively, and spent 200 hours collectively, then you would get, P = 3500 widgets/200 hours. Or, P = 17.5 widgets / hr.

Productivity is measured using simple or complex ratios of outputs/inputs. At the business level, there are many financial ratios that are measures of productivity (e.g., ROS, or Return on Sales). If you consider the amount of Sales as input to generating profit, and profit is the results or the output, then you get ROS = Profit/Sales. Businesses measure their productivity in different ways based on what makes sense to them and what is important. But for Operations Management, the key productivity measures have to do with the inputs and outputs within Operations.

So once a measurement system is in place, an improvement program can be implemented. Improvements come by focusing on PROCESSES. Processes are the repetitive actions in a specific sequence that are intended to produce a specific output. Outputs can be parts and components that make up a finished product, or part of a service or the finished service.

Businesses are always trying to improve productivity and processes in order to be competitive. Indeed, some companies attempt to be the “low-cost leader”, which then makes productivity a driving force for the business. Other businesses consider productivity a necessity to keep ahead of inflation, to keep costs down, and to maintain margins.

Process improvement can take several different forms within a business. This can be viewed by the amount of change being made in the process. There is the incremental process improvement, which utilizes small changes. The next amount of change usually considers a wholesale change to the process, called Process Re-engineering. This approach attempts to redo a whole process by looking at it from the view of how this process should be designed from scratch. The third approach is fostered by Lean Thinking, which is to look at the chain of processes, both inside the company and outside, including those of its up-strain supply chain and down-stream supply chain. This kind of change is radical.

Actually, in lean thinking, all three kinds of process change are used. Kaikaku is radical change, which can also include some aspects of process re-engineering. Kaizen is the incremental continuous improvement efforts. And the focus of this change is to eliminate waste, or muda. By eliminating muda, processes become efficient and productivity is improved throughout.

Steps to Improving Productivity

  1. Identify the process – what are the activities involved in the flow of work – what is the starting point and what is the ending point?
  2. Identify the outputs – What is the output of the process? What is the end result and how do you count or measure this? What is the basic time frame you are using?
  3. Identify the inputs – What are the inputs of the process? Labor hours, quantity of materials, energy, etc.? How can you count or measure these inputs?
  4. Determine the Productivity Measure – What is the Productivity Measure you want to use to calculate, Outputs/Inputs? Which inputs are you concerned about?
  5. Determine a data collection process – How do you collect the data during the time period? Is there a system or method for counting the outputs and inputs during the same time period?
  6. Analyze the steps in the process and determine how to modify it to obtain more output with the same inputs, or the same outputs with less inputs, or more outputs with less inputs. 

What Are Ways to Generate Labor Productivity?

  • Increase the rate of at least one process step.
  • Eliminate or combine process steps. – Time and motion study -Lean engineering
  • Automate – replace the manual process with a machine process.- Partial Automation – add the use of tools, jigs, and fixtures to aid the work and speed up the process.- Full Automation – completely replace the worker with a machine.
  • Reduce non-productive time that is included in the labor input.- Setup or changeover time -Interruptions
  • Machine or tool breakdowns or problems
  • Stop for quality issueso Waiting for material to arrive


Required Reading

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Optional Reading

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Process Management and Productivity

Introducing the company

The company of choice, in this case, is a hospital. The firm is Better Medical Hospital, an organization aimed at the improvement of enhancing service delivery and improving the quality of healthcare for the community. These two statements define the mission of the organization. Better Medical has a bed capacity of 200 and around 2500 employees at the facility. The facility offers proactive treatment outreach to the community, diagnosis, treatment, and palliative and end of life care services. The target customers for the firm are members of the public within the county and state. However, the firm anticipates receiving a few referral cases from out of state regions in the country.

Key processes within the organization

Diagnosis processes

Diagnostic processes within Better Medical Hospital are vital to the operations of the institution. The process involved in the diagnosis of a patient varies depending on the possible predetermined outcomes. While the steps may be different for varying situations, the process will usually commence with an assessment of the patient. This will consist of looking into their medical history on record and asking relevant questions – about themselves and the symptoms. The second stage of testing may follow if the practitioner requires further analysis of test results before making a decision. A third stage is the consultation and referral to other MDs who may be specialized in the identified condition. Treatment and follow up usually follow this stage of the process.

Medication processes

The medication process within the organization involves a critical step in the achievement of the firm’s goals. Owing to the risk involved and importance of this process, it bears significant importance to the firm (Lisby, Nielsen, & Mainz, 2005, pp. 20 – 21). The process involves an array of services including the handling of requests from MDs on various types of medication, ensuring timely administration of treatment, measuring correct dosages, and the use of correct and relevant technology. This step is identified as critical in the healthcare fraternity, and potent to most of the errors that may lead to severe repercussions (Magalhães, et al., 2015).

Documentation processes

The treatment of patients, identification of problems, and conducting of meaningful medical research depend on existence and maintenance of data and information. As such, the process of documentation within the organization is important for various reasons: medical research, business development, and operations management among others (Cheng, Gilchrist, Robinson, & Paul, 2009). The process of documentation encompasses all personnel within the firm at different levels, reasons, and capacities. This case, however, only focuses on the documentation process that revolves around the customer.

Patient flow processes

Ensuring a consistent flow of patients within the facility is critical to the success of the organization and achieving its goals of a better community. The patient flow process is dependent on an array of factors that together determine whether the operations within the hospital is optimal. Such factors include the available space, capacity, utilization rate, delay in diagnosis, consensus between personnel, delay in discharge, and patient waiting times among others. In this case, customer satisfaction is the metric used to measure the effectiveness of the patient flow process within the firm….

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