lecture 6 quantitative process analysis i · a fast-food restaurant receives on average 1200...
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MTAT.03.231
Business Process Management
Lecture 6 – Quantitative Process
Analysis I
Marlon Dumas
marlon.dumas ät ut . ee
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Process Analysis
Process identification
Conformance and performance insights
Conformance and performance insights
Processmonitoring and
controlling
Executable processmodel
Executable processmodel
Processimplementation To-be process
model
To-be process model
Processanalysis
As-is processmodel
As-is processmodel
Process discovery
Process architectureProcess architecture
Processredesign
Insights onweaknesses and
their impact
Insights onweaknesses and
their impact
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Process Analysis Techniques
Qualitative analysis
• Value-Added & Waste Analysis
• Root-Cause Analysis
• Pareto Analysis
• Issue Register
Quantitative Analysis
• Flow analysis
• Queuing analysis
• Simulation
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1. Introduction
2. Process Identification
3. Essential Process Modeling
4. Advanced Process Modeling
5. Process Discovery
6. Qualitative Process Analysis
7. Quantitative Process Analysis
8. Process Redesign
9. Process-Aware Inf. Systems
10. Process Implementation
11. Process Monitoring
12.BPM as an Enterprise
Capability
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Process performance
If you had to choose between two
services, you would typically choose the
one that is:
• F…
• C…
• B…
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Process performance
If you had to choose between two
services, you would typically choose the
one that is:
• Faster
• Cheaper
• Better
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Process performance
Process performance
Time
CostQuality
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Processing time
Waiting time
Cycle time
Time measures
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Time taken by value-adding
activities
Time between start and completion of a
process instance
Time taken by non-value-adding
activities
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Processing Time
Cycle TimeCycle Time Efficiency
Cycle time efficiency
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Processing cost
Cost of waste
Per-Instance
Cost
Cost measures
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Cost of value-adding
activities
Cost of a process instance
Cost of non-value-adding
activities
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Material cost
•Cost of tangible or intangible resources used per process instance
Resource cost
•Cost of person-hours employed per process instance
Typical components of cost
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Time spent per resource on process
work
Time available per resource for process work
Resource utilization
Resource utilization
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Resource utilization = 60%
on average resources are idle 40% of their
allocated time
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Resource utilization Waiting time
Resource utilization vs. waiting time
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Typically, when resource utilization > 90%
Waiting time increases steeply
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Product quality
• Defect rate
Delivery quality
• On-time delivery rate
• Cycle time variance
Customer satisfaction
• Customer feedback score
Quality
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For each performance measure, define targets
ST30 > 99%
For each objective, identify variable(s) and aggregation method performance measure
Variable: customer served in < 30 min.
Aggregation method: percentage
Measure: ST30 = % of customers served in < 30 min.
For each process, formulate process performance objectives
Customer should be served always in a timely manner
Identifying performance measures
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Financial Customer
Internal business process
Innovation & learning
Balanced scorecard
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Cost measures
Quality & time
measures
Quality & time measures
Technology leadership,
Staff satisfaction
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Supply Chain Operations Reference Model (SCOR)
• Performance measures for supply chain management processes
American Productivity and Quality Council (APQC)
• Performance measures and benchmarks for processes in the Process Classification Framework (PCF)
IT Infrastructure Library (ITIL)
• Performance measures for IT service management processes
Process performance reference models
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Process model
Performance of each activity
Process performance
Flow analysis
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Flow analysis of cycle time
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1 day
1 day
3 days
3 days
1 day
2 days
Cycle time = X days
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Sequence – Example
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• What is the average cycle time?
Cycle time = 10 + 20 = 30
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50%
50%
90%
10%
Cycle time = 10 + (20+10)/2 = 25Cycle time = 10 + 0.9*20+0.1*10 = 29
Example: Alternative Paths
• What is the average cycle time?
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Cycle time = 10 + 20 = 30
Example: Parallel paths
• What is the average cycle time?
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• What is the average cycle time?
Example: Rework loop
100%
0%
Cycle time = 10 + 20 = 30
1%
99%
Cycle time = 10 + 20/0.01 = 2010
80%
20%
Cycle time = 10 + 20/0.8 = 35
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Flow analysis equations for cycle time
CT = max(T1, T2,…, TN)
CT = p1*T1+p2*T2+…+ pn*TN
CT = T / (1-r)
CT = T1+T2+…+ TN
T
r
1 - r
T1
...
T2
TN
T1
...
T2
TN
p2
pn
p1
T1 ...T2 TN
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Flow analysis of cycle time
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1 day
1 day
3 days
3 days
1 day
2 days
Cycle time = 1.25 + 3 + 3 + 1.4 = 8.65 days
20% 60%
1/0.8 max(1,3) 3 0.6*1+0.4*2
80%
40
%
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Flow analysis of processing time
27
2
hours
0.5
hour
2
hours
2
hours
0.5 mins.
Processing time = 2.5 + 3 + 2 + 1.4 = 8.9 hours
20% 60%
2/0.8 max(0.5,3) 2 0.6*2+0.4*0.5
80%
40
%3 hours
Cycle time efficiency = 8.9 hours / 8.65 days = 12.9%
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Exercise: Calculate CTE of the following
process
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Flow analysis: scope and limitations
• Flow analysis for cycle time calculation
• Other applications:• Calculating cost-per-process-instance
• Calculating error rates at the process level
• Estimating capacity requirements
• But it has its limitations…
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Limitation 1: Not all Models are Structured
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Limitation 2: Fixed arrival rate capacity
• Cycle time analysis does not consider:• The rate at which new process instances are created (arrival rate)
• The number of available resources
• Higher arrival rate at fixed resource capacity
high resource contention
higher activity waiting times (longer queues)
higher activity cycle time
higher overall cycle time
• The slower you are, the more people have to queue up… • and vice-versa
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• WIP = (average) Work-In-Process• Number of cases that are running (started but not yet completed)
• E.g. # of active and unfilled orders in an order-to-cash process
• WIP is a form of waste (cf. 7+1 sources of waste)
• Little’s Formula: WIP = ·CT• = arrival rate (number of new cases per time unit)
• CT = cycle time
Cycle Time & Work-In-Progress
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Exercise
A fast-food restaurant receives on average 1200
customers per day (between 10:00 and 22:00). During
peak times (12:00-15:00 and 18:00-21:00), the restaurant
receives around 900 customers in total, and 90 customers
can be found in the restaurant (on average) at a given
point in time. At non-peak times, the restaurant receives
300 customers in total, and 30 customers can be found in
the restaurant (on average) at a given point in time.
1. What is the average time that a customer spends in the
restaurant during peak times?
2. What is the average time that a customer spends in the
restaurant during non-peak times?
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Exercise (cont.)
3. The restaurant plans to launch a marketing campaign to attract more
customers. However, the restaurant’s capacity is limited and
becomes too full during peak times. What can the restaurant do to
address this issue without investing in extending its building?
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Next week: queuing theory & simulation
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