INTRODUCTION TO OPERATIONS MANAGEMENT FOR AUTOMOTIVE SERVICE

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FALCUTY FOR HIGH QUALITY TRAINING GRADUATION PROJECT INTRODUCTION TO OPERATIONS MANAGEMENT FOR AUTOMOTIVE SERVICE NGUYEN VAN NHAN Student ID 16145037 NGUYEN HUU HIEN Student ID 16145012 DANG TAN THIEN Student ID 16145046 Major AUTOMOTIVE ENGINEERING TECHNOLOGY Advisor HUYNH TAN THUYET, Engineer Ho Chi Minh City, August 2020 HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FALCUTY FOR HIGH QUALITY TRAINING GRADUATION PROJECT INTRODUCT.

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION

FALCUTY FOR HIGH QUALITY TRAINING

GRADUATION PROJECT INTRODUCTION TO OPERATIONS MANAGEMENT

FOR AUTOMOTIVE SERVICE

Ho Chi Minh City, August 2020

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION

FALCUTY FOR HIGH QUALITY TRAINING

GRADUATION PROJECT INTRODUCTION TO OPERATIONS MANAGEMENT

FOR AUTOMOTIVE SERVICE

Ho Chi Minh City, August 2020

confirm that this has been indicated in the thesis.

Ho Chi Minh City, 12th August 2020

To complete the project on time and achieve the results not only the effort of theperson who made the topic, but also the help and advice of the Faculty of Vehicle andEnergy Engineering and Faculty of High Quality Training and the motivation andexperience of classmates, the project team completed the graduation project on time.Our group would like to sincerely thank to:

- The guidance and enthusiastic help of Mr Huynh Tan Thuyet for instructing,providing necessary documents and supporting to check and correct inaccurateinformation

- The classmates who shared useful information and documents

- Our team would like to thank the Ho Chi Minh City University of Technology andEducation lecturers, Faculty of Vehicle and Energy Engineering, and Faculty ofHigh Quality Training for their dedication to instruction, imparting experience andknowledge in the learning and training process so that we could have today success

In the process of implementing this project, although we have tried our best, there will

be inevitable shortcomings We hope to receive the comments and criticism of lecturersand students

Once again, thank you lecturers and students

Ho Chi Minh City, 12th August 2020

Project members:

Instructor

Nguyen Van Nhan

Nguyen Huu Hien

Huynh Tan Thuyet

2.1.4 Overcoming Inefficiencies: The Three System Inhibitors 5

2.2.2 Three Key Process Metrics: Inventory, Flow Rate, and Flow Time 102.2.3 Little’s Law – Linking Process Metrics Together 11

2.3.3 How to Compute Flow Rate, Utilization, and Cycle Time 162.3.4 How to Analyze a Multistep Process and Locate the Bottleneck 18

2.4 Process Improvement 19

3.2.2 Using literature to develop the research topic 353.2.3 Considerations in choosing a research approach 36

3.3.2 What is needed prior to survey research design? 38

3.3.4 Questions to Check the Quality of an Ongoing Survey Research 40

3.4.3 The Research Framework, Constructs and Questions 44

3.5.3 Collecting data in the longitudinal field study 53

3.5.5 Building theory from longitudinal field studies 543.5.6 Evaluating theory from longitudinal field studies 54

3.6.2 Origins and development of model-based research in OM 55

4.1.2 Measure of central tendency the mean median mode and their interpretations

4.1.3 Measure of spread in data, the range, interquartile – range, standard deviation

4.2.2 Probability and Random Variables; Discrete Versus Continuous Data,

Probability Density Function and Area Under the Curve 654.2.3 The Normal Distribution (Bell Curve), Norm.Dist, Norm.Inv Functions in

5.1.1 Summarizing the data in separate sub-processes 725.1.2 Analyzing and Finding the Bottlenecks of the sub-processes 75

LIST OF FIGURES

Figure 2.1 Consumer Utility, its components and subcomponents 3

Figure 2.7 Activities at Reception sub-process of EM service 14

Figure 2.9 Analyzing a process and locating the bottleneck 18

Figure 4.3 Example of Continuous Data (Copyright®: towarddatascience) 67Figure 4.4 Example of Normal Distribution (Copyright®: alamy) 68Figure 4.5 Bell curve properties of the distribution (Copyright®: alamy) 68

Figure 5.7 Time required for each task at Express Maintenance station 77

Figure 5.8 Time required for each task at General Jobs station 78

Figure 5.11 The inventory within a certain period of time 81

LIST OF TABLES

The principal objective of the graduated thesis is to introduce basic OperationsManagement theory, acknowledge from the Research Methods, apply Data Analysis todemonstrate general workflows, spot bottlenecks for operation improvement atautomotive dealership First of all, we design the process map diagram to clarify thewhole process at the service station, to see how a flow unit travels through from one sub-process to another, to understand how the result of one process can affect the followingone, to get the main idea how the main service station operates Along with that, we alsocollect and measure figures from workshop stations and service advisor section, in order

to simulate and deeply analyze the overall and small processes Combining those toolsand knowledge, we can clearly spot the bottlenecks with evidences by simulating figures

in diagrams and charts, which is very essential for every large business in general andautomotive service stations in specific

In this research, we have 4 chapters in order to introduce and illustrate how anautomotive dealer operates The first chapter will be the introduction to all relatedinformation about the paper The second one will present basic definitions of operationsmanagement’s key words, main formulas which are indeed related to theoreticaldefinitions Moreover, there will be process map diagrams which demonstrate andexplain how each definition can be applied in particle at dealership Furthermore, therewill also have elementary examples and scenarios which can highlight key words andgain easy access to new readers The third chapter will describe the ways and methods weapply to observe, collect and measure figures correctly without spending too much time

on experiencing fail trials The fourth chapter will be the description, explanation, deeplyanalyzing and simulating all the data which have been measured from three main sub-processes, and those figures can be illustrates into several graphs and diagrams which canassist viewers to have a better, clearer and more aspects of the whole operation at theautomotive dealership

LIST OF ABBREVIATION

PMF Probability Mass Function Hàm khối xác suất

CHAPTER 1: INTRODUCTION TO THESIS1.1 OVERVIEW

In the new millennium, operations management service plays a crucial role in everyentrepreneurs, modernized industries and advanced companies all around the globe

It is the obvious fact that service not only support any businesses but also enhance anddevelop their quality for customers’ utility

Advanced operations mean teaching young readers the content they need in today’sworld, not the world of 40 or 50 years ago Therefore, “services” and “global” areincorporated throughout, rather than confined to dedicated chapters Manufacturingcannot be ignored, but again, the emphasis is on contemporary problems that areaccessible and relevant to young learners For instance, Toyota Bien Hoa service station

is important for the functioning production, but young generation no longer need to beable to replicate those calculations Instead, they should acknowledge how to identify thebottleneck in a process and use the ideas from the Toyota Production System to improveperformance And readers should understand what contract manufacturing is and why ithas grown so rapidly Summary, we want young readers to see how operations influenceand explain their own experiences

General view of operations means educating young readers much more than how to domath problems Instead, the emphasis is on the explicit linkages between operationsanalytics and the strategies organizations use for success For instance, we want younggeneration to acknowledge how to manage inventory In other words, general view ofoperations supplies readers with a brand new, broader perspective into the organizationsand markets they interact with every day We strongly believe that operationsmanagement is as relevant for a young adult’s future career as any other topic taught in abusiness school New companies and business models are created around concepts fromoperations management Established organizations live or die based on their ability tomanage their resources to match their supply to their demand One cannot trulyacknowledge how business works nowadays without understanding operationsmanagement To be a bit colloquial, this is “neat stuff,” and because the young willimmediately see the importance of operations management, we hope and expect they will

be engaged and excited to learn

1.2 THE OBJECT AND SCOPE OF RESEARCH

1.2.1 Object of Research

- Data Analysis

- Automotive Operation Management service theory

- Research methods about collecting figures in sub-processes

1.2.2 Scope of the Research

- Collecting and analyzing figures from three main sub-processes

- Acknowledging the first five chapters from Operation Management material

- Learning Data Analysis to apply on Automotive Service

1.3 RESEARCH METHODOLOGY

Research Method is the ideal way to observe and collect data correctly We willdemonstrate with detail in Research Method section in this graduated thesis

1.4 OUTLINE OF THESIS

Chapter 1: Introduction to Thesis

Chapter 2: Theoretical Basic

Chapter 3: Research Method

Chapter 4: Data Analytics

Chapter 5: Conclusion and Improving Suggestions

CHAPTER 2: THEORETICAL BASIC2.1 INTRODUCTION TO OPERATIONS MANAGEMENT

2.1.1 Introduction

Generally, in this very first phase, we would like to emphasize the main elementarydifficulties of connecting supply to demand This beginning desire us to focus ondemand, what do purchasers really want? After the demand is acknowledged, we take acareful look at the aspect of a solid experiment to deliver the demand, we look at thesupply procedure Following that, we consider the operational choices, a firm mustaccomplish to grant consumers with what they want at a minimum charge At the present,regularly, customers need better, more development and improvement in products foraffordably cheap costs However, in the particle modern world, this happening maybe notoften be elementary to settle Usually, a consecutive segment in this first phase discussabout overwhelming three main prevention that maintain the service from bringingoutstanding merchandises at low expend In addition, these avoidances, the activity alsorequires creating trade-offs and equity multiple, promisingly competing objectives Wecome to an end in this introductory stage by clarifying what occupation suited tooperations administration look alike and by supplying a short and solidified general view

of service control

2.1.2 The Customer’s View of The World

Figure 2.1 Consumer Utility, its components and subcomponents

Utility – A certain amount of preference that buyers really want for any product or

service Consumers buy the product or service that maximizes their utility Mostcustomers are looking for maximum utility For instance, customers want to purchase acheap, spacious, durable and reliable vehicles, which most of them are Toyota brand

Consumption Utility – Your ideal measure of how much level you want a product or

service, and not caring the effects of charge, cost and the uncomfortable of getting acertain product or service For example, a random person buys you a full Toyota repairingservice package at the Sub-process near the place you live

Performance – A sub-factor of the using utility that seizes how much an average

person, who consumes, really wants for a given service or product For instance, most ofyoung consumers really love to buy and drive a 2020 Toyota Supra supercar

Fit – A sub-element of the devouring utility that takes up how well the product or

service connects to the exclusive characteristics of a certain customer For some people,they just want a spacious and luxurious SUVs, while some other prefer small, compact,powerful sedans

Price – The full amount of charge of receiving the service or having the product For

instance, the total bill for purchasing the brand-new Toyota Camry, which including taxesand number plate, is approximately 1.2 billion VND

Inconvenience – The devaluation in utility that results from the achievement of

purchasing the merchandise or service Example like customers in District 6 want to buy

a certain service package at Toyota Bien Hoa center but it is too far away from theirdestination

Location – The accommodation where a consumer can buy or obtain a product or

service For example, Toyota Bien Hoa center is the ideal place in Bien Hoa city forrepairing or buying new Toyota vehicles

Timing – The amount of period that flows away between the purchaser ordering

service or a product and the consumer obtaining service or the merchandise It’s likeFlow Time from vehicle’s repaired order is made to the car is well-oiled

2.1.3 A Firm’s Strategic Trade-Offs

In the new millennium, all our new or loyal purchasers would be amazed because wedeliver and bring out excellent products or assistance and facility, we would adjustcustomers to the miscellaneous requirements of each and every our buyers, we woulddistribute to customers frequently anytime and anyplace the consumer feels like, and wewould also suggest everything, every item at very minimum and reasonable price

entertainment, it is nearly impossible that you will be the best at wrestling, running,shooting, tennis, basketball, volleyball, soccer, gymnastics, and so on The same casecovers manufactures, they cannot be good at entirety Producers and manufactures havethe abilities that let them to accomplish well on some but not all the sub-factors making

up the purchasers’ serviceableness function

So, manufactures and producers hardly be good at all every aspect, as the matter offact; they must cope with trade-offs in their business and organizations For more detail,they trade off consumption utility and the charges of delivering the merchandises orservices It is also the same with this challenge, they trade off the inconvenience anduncomfortable of purchasing their services or products with the price of supplying them;and, as the Toyota competes with Honda for instance demonstrated, they even have todeal with trade-offs among non-cost-related sub-elements of the utility function

To put it briefly, you can wonder about three main techniques in which operationsadministration can be enhanced a business or organization as it seeks to connect almostperfectly supply with demand:

● Make trade-offs among the aspects and elements of accomplishment

● Lower incompetence and inefficiencies in case the business does not have toeliminate one performance aspect versus another, thereby moving toward theproductive frontier

● Renew, redevelop and improve the operations, approaching to a shift in theeffective boundary

2.1.4 Overcoming Inefficiencies: The Three System Inhibitors

Waste corresponds to all the consumption of inputs and resources that do not add

value to the customers Because waste consumes inputs and resources, waste is costly.Most of eateries must get rid of redundant food that has been bought and maintained buthas not been performed before it is out of date Some worse scenarios, food is cookedproperly and repaired but then not been purchased, costing the eatery resources and input

On the other hand, variability is the second system inhibitor Variability correlates withchanges in either supply or demand over time Think about buyer demand draws parallelwith the variability first We have the ability of distinguishing between the followingforms of demand variability:

● Customer arrivals: Purchasers may arrive at any period of the day when they

want However, some of this variability is easy to forecast and predict Forinstance, a random eatery has more order and demand at early afternoon than

at 16:00 But differences come in every day and it is almost impossible to have

a perfectly advanced plan

● Customer requests: It is quite challenging because we also don’t really know

what exact menu item a random consumer feels like to have Additionally, thequantity of purchasers’ demand food on a certain day unpredictable to us

Manufactures also have to deal with variability in their supply too This could

illustrate in the following forms:

● Disruptions: Occasionally, an employee works faster than normal; also, on

other occasion, he performs slower There is also a change that he is absenttoo There are a lot of reasons why workers might take a day off, such asterrible weather, illness, family’ problems and so on This situation is also thesame as some devices might be broke down and electronic systems coulddisplay slowly, or a repair is required

● Defects: A business cannot be developed easily in a straight line, sometimes

things have to go in other direction in a negative way Chiefs cook the wrongcustomer order, food gets undercooked, blue or not season properly, and paychecks can also goes wrong Therefore, these situations may grow morevariability in the operation

We define flexibility as an operation’s ability to react to variability Inflexibility,

which is our third process inhibitor, is thus the inability of an operation to change inresponse quickly and cheaply to new information

2.1.5 Conclusion

The only thing that matter in operations control is serving customers their idealservices or products while utilizing and taking good advantage of facilities, inputs andresources so that charges are minimum enough to created value to the company.Connecting supply to demand while making benefit is never easy and sometimeshardship occurs due to the fact that the three system inhibitors happens all the time andmanufacturers have to deal with them Self-wonder what the buyer really feels like andwhat maintains us from suiting this demand to a supply that we can somehow supply atreasonably affordable low price to still create value to company

2.2 INTRODUCTION TO PROCESSES

2.2.1 Process Definition, Scope, and Flow Units

Process is an arrange of actions which conclude of intakes, processing stage or

operations with those inputs, and then produce a group of results

For instance, Express Maintenance repaired-category at Toyota in Bien Hoa industrialcity receives Toyota vehicles (inputs); carries out several advanced techniques, depend onconditions and vehicle’s odometers, like changing engine oil, filling coolant, cleaning airfilter, replacing old tires with new ones; and then sends them back to drivers or owners(output), hopefully with better repair quality or customer service to enhance customersatisfaction This can appear like a very complicated process There are many peopleinvolved, such as Customers, Receptionist, Service Advisors, Technical Advisors, andTechnicians There are various pieces of complex equipment and there are also a couple

of rooms, including a waiting room, customer service room and procedure areas Despitethe complication of an Express Maintenance stage, if we get down to business and look at

the general picture, the complication can be taken down to the Figure 2.2.

Figure 2.2 Express Maintenance Process

Process Flow Diagram stimulates the processing stage by some basic graphics, for

instance squares as facilities or resources, arrows consider as flows, and triangles ascapacity or inventory accommodation

This Figure 2.2 is known as a process flow diagram because it demonstrates a graphical

representation of the repair process It has some components The inputs to the processare illustrated as arrows flowing into the process and outputs are shown as arrowsflowing out of the process Rectangular boxes within the process flow diagram can berecognized as resources For instance, there is a single resource, the quick paintingrepaired category, but later, process flow diagrams can have multiple resources with theoutput of some resources used as the inputs to other resources

Resource is a certain quantity of people and/or devices, equipment, or tools that make intakes into results We can see that at a simple stage, the Express Maintenance takes in

cars that need repair as inputs, then performs several tasks on them when they are in thestage, and then treated vehicles leave as the outputs This describes the ExpressMaintenance’s process scope

Process Scope is an arrange of operations and processes which consist of the process.

The scope of this process is defined to conclude the entire Express Maintenance stage.This is suitable if we take full responsibility of the whole stage and we want to keep track

of how the entire Express Maintenance process is operating However, the other scopesare certainly reasonable, relying on your point of view and positions For specificinstance, if you are an EM Technician who assists with changing engine oil, you mayonly focus on the portion of the process that takes act in changing engine oil In that

scenario, your process flow diagram perhaps looks slightly different like this in Figure

2.3.

Figure 2.3 Quick Repair Process

If the scope can be compacted, it can also expand We have kept the unchangeableinputs and outputs, but our scope has normally focus on just a single type of procedure.But what if you are the president or manager or maybe people play crucial roles in thecompany, specifically you are the vice-president of Toyota Bien Hoa Then your process

could be expressed with the “advanced phase” map demonstrated in Figure 2.4.

Figure 2.4 Toyota Bien Hoa Service Process

Moreover, the process scope, to start with acknowledging and analyzing a process, aflow unit must be defined The flow unit is the basically main unit that travels through aprocess It is usually involved in the outputs of a certain process In the situation of theExpress Maintenance process, an obvious flow unit is a “Toyota vehicle” because the

main purpose of the Express Maintenance is to repair and replace old components forcars quickly.

Flow Unit is the given item or unit of analysis that we see in a process analysis.

Measuring and analyzing some key performance variables for the process are ready to bebegin when only the scope of the process and its flow unit are determined

Figure 2.5 Flow Unit of a Process

Figure 2.5 demonstrates possible flow units and three other processes In each case, it

is not hard to imagine that the flow unit could be something different than what is listed.For instance, the flow unit in a brake repairing repaired category could be a vehicle,” butbrake pads are better if your interest is specifically on the output of brakes The paintingrepaired category could use mixture of paint as the flow unit, but generally it makes moresense to define the flow unit in terms of output rather than input And while at ServiceAdvisor room, the service may more directly be concerned with the output of revenue interms of “$s.”

Summarizing everything up, there are several critical rules with reference todetermining the flow unit:

1 Pick a flow unit up that relates to what you want to concentrate on andmeasure with reference to the process

2 Only follow the flow unit that you determined Don’t measure some aspects

of the process using a customer as the flow unit and then switch to vehicle.Combining things in distinctive units does not make any sense after all

3 A selected flow unit that can be took advantage of describing and measuringall the operations and activities within the process

2.2.2 Three Key Process Metrics: Inventory, Flow Rate, and Flow Time

We can measure a process metric which can tell us about the capability of a processand its performance For a process examiner or creator, there are three main key processmetrics:

Inventory is the quantity of flow units which stay in a process For example, “Toyota

vehicles” in process, “customers” in process, or “car’s genuine parts” in process.Inventory is described as how much item is in the processing step Overall inventoryoccupies space and may charge a certain amount of money, and this is a good thing toacknowledge in mind For instance, if the normal inventory of Toyota cars in Toyota BienHoa service rockets rapidly, then the company might eventually require a larger parkingspace, which goes along with some extra charges Besides, if a car component retailerneeds to boost the quantity of genuine parts and engine oil in the store, then the ownermight have to get a bigger store (which the rent is higher than the exist one) and morecash needs to be available to purchase that inventory

Flow Rate is the rate at which flow units go from the beginning to the end of a

process As a rate, it is calculated in “flow units per unit of time”; for instance, “cars go toTBH service per month”, “waiting time per customer”, or “Toyota Camry sales per year”.The main factor of a rate is that it is often demonstrated in terms of several unit per unit

of time If the “per unit of time” is not available, then it is just inventory only

Flow Rate = Minimum {Demand, Process capacity}

Flow Rate can illustrate how much item moves through the processing stage per unit

of time More units traveling through a processing step is basically desirable because thedirection of the processing phase is all about yielding result

Flow Time is the period a flow unit is dealt with in a processing stage, from the

beginning to the end Certain units for this calculation are minutes, hours, days, weeks,months, or years Flow Time could demonstrate how much time that item spends in theprocessing stage If you are a customer in the Toyota Service Advisor room, then yousurely care about your Flow Time The leader of the Service Advisor group is thereforeinterested in Flow Time because it affects the customers’ satisfaction

2.2.3 Little’s Law – Linking Process Metrics Together

Little’s Law is the law that can be explained as the connection between three main

In any processing stage, the three main key process metrics are firmly connected toeach other in the following way, known as Little’s Law:

Inventory = Flow Rate × Flow Time (Shorthand version: I = R × T)

Little’s Law is unusually effective, but it is also just basically simple It informs us that

if we acknowledge any two out of three of the process metrics, we can surely take aguess, or derive, the third Moreover, if adjusting our process, we modify one of themetrics while maintaining a second one unchanged, then we can find out how the thirdone changes

How about applying Little’s Law into the Express Maintenance process? Let’s justpick up a simple data for example, the Flow Time is T = 2.06 hours and the Flow Rate is

R = 1.08 cars/hour Therefore, according to Little’s Law, the average inventory ofvehicles throughout the day is:

I = 1.08 cars/hour × 2.06 hours = 2.22 vehicles

The advanced potential of Little’s Law is that it could operate on any process Forinstance, we observe customers (our flow unit) loading onto the escalator in the shoppingmall in Vincom district 9, which is 150 feet (45 meters) long It is a rush hour time of theday and we clearly see that the Flow Rate of shoppers onto the escalator is 2.8 people persecond, R = 2.8 shoppers per second We then hop on the escalator ourselves and recordthat the Flow Time from bottom to top is 35 seconds, T = 35 seconds While riding on theescalator, we try to count the quantity of shoppers riding with us, which is the inventorymetric for this process, but it is not easy to see everyone Besides, there seem to be toomany customers to count By using Little’s Law, we can determine the average inventory

of shoppers on the escalator:

2.3.1 How to draw a Process Flow Diagram

● Step 1: Summarizing all the stages you have in current service management

● Step 2: Classifying processes General processes which every input material have

to travel through Special processes for materials require special demand Forinstance, Reception and Delivery sub-processes are the places which all of inputmaterials have to pass through But for EM, GJ and BP are repaired categoriesthat only complete distinctive repaired orders of different input materials

● Step 3: Stimulating by using graphs or geometry, various colors and shapes mayalso be used to demonstrate different tasks Form the example above, we usesquares for GJ and circles for BP, so that they can be easily recognize, and arrowsillustrate direction of the workflows

What is a Process Flow Diagram?

Process flow diagram is a type of graph which demonstrates your current serviceoperation in a detail way It consists of several stages which input materials need to betransform into serviced products at the output phase With Process Flow Diagram, it willassist some of the workflows for high-level managers:

- Have the general picture of service management

- Easily spot the workflows and bottleneck

- Easily adjust and utilize processes in the future

Application of Process Flow Diagram in Automotive Industry

With the subject is automotive dealerships, process flow diagram illustrates step carefully of a certain accidented vehicle will have expereinced from customer arrival

step-by-to important service repair is completed

Below here is Process Flow Diagram at a certain automotive repaired service

Figure 2.6 General Process Flow Diagram

From the Process Flow Diagram above, rectangles stand for work in processes whiletriangles illustrate waiting processes Input materials will be distributed into 3 distinctivecontents which include:

1 Reception has the responsibility of receiving and classifying customers

2 General Jobs are responsible for all the tasks in the General Jobs repairedservice (General Jobs), for every quick maintenance (ExpressMaintenance), or for tasks which related to painting (Body & Paint)

3 Delivery will receive input vehicle’s profile after accomplishing all theservices, and then guide customer to pay total receipt

Observing the graph from above, high-level managers will have a clear picture ofcurrent real-time workflows in their operation management Which job positions takeresponsibility for which tasks? If the overview is acknowledged, spotting bottlenecks inprocesses will become way more recognizable thanks for simple measurements

Process Analysis

It gives an exact foundation for acknowledging the closed-up operations of a company

or a business, insist of the solutions to the difficulties developed in the past segment.Process analysis opens the black box of the operations and peeks inside by determiningand analyzing all the activities related in serving one unit of demand or giving one unit ofsupply When the process has been analyzed, it can be improved: you can serve moreconsumers, you can answer the correct quantity of employees to work for you, and you

can get your buyers what they really feel like in short amount of time In brief, yourprocess can be enhanced and better.

Everyone who operating a business can use this framework which is known as processanalysis Process analysis, for example, can be used by the person who owns the smallcompany, by those managing the Toyota Bien Hoa service, by those working in theToyota Bien Hoa service, or by those consulting to the company In smaller car services,this is the responsibility of the owner In bigger services or service brands, many jobpositions exist that consist of the term “operations” in it, like Operations Expert, Director

of Operations, Chief Operating Officer, Vice President of Operations, and many more.But acknowledging the operations of a company is crucial to everyone Overall,everybody should have an interest in making it better in the business By drawing aprocess flow diagram is the ideal way to start any analysis of an operation A processflow diagram is a graphical way to tell the process It will encourage us structure the dataand figures we collect as we try to develop our acknowledging of the process By usingthe case of Express Maintenance at Toyota Bien Hoa, we will demonstrate this newmaterial We have the feeling that Express Maintenance provides an ideal example,because we suppose that most of modern customers nowadays have been in car dealers orvehicle garages, maybe even a large car service At the aggregate level, the car repairedservice includes a quantity of customers, a set of employees, some work Sub-process, and

a Cash Register or Service Advisors

Figure 2.7 Activities at Reception sub-process of EM service

At Toyota Bien Hoa, there are some stages for Express Maintenance The stages forExpress Maintenance service provide you with detailed instructions on how to make

quick repair on the vehicle Figure 2.7 gives instructions on how to quick repair on the

certain vehicle depends on the vehicle’s odometer and customers’ need We refer to the

steps shown in the table as activities Several of the activities in Figure 2.7 relate directly

to repairing and fixing vehicle But Figure 2.7 also consist of a set of activities that need

to occur when interacting with customers in Toyota Bien Hoa service, from greeting thecustomer to ringing up the customer to pay the repaired order total bill When meeting atService Advisor room, our customer is the unit of analysis – we refer to her or him as ourflow unit We also label the quantity of customers in the process as inventory

When a car purchaser arrives at Toyota Bien Hoa service, that person is politelywelcomed by the first employee and then guide to meet Service Advisor The ServiceAdvisor has a duty of receiving the customer’s information, vehicle’s condition,odometers and starting the repair order We can consider the employee as a resource.Resources assists the flow units travel from being an intake unit to transforming a resultunit We use several directional arrows in a process flow diagram to illustrate the flowunit’s trip from intake to result In our scenario, the flow unit has just transported fromthe waiting line (inventory) to the first resource Resources are stimulated as rectangularboxes in the process flow diagram Then, our process flow diagram includes a set of atriangle, a box, and an arrow

Following that, for instance, the first employee in Express Maintenance (employee A)has finished the work, the second employee (employee B)’s turn is to replace old tires onthe vehicles and then install the new ones Then employee B puts old tires intocustomer’s car The second employee has a duty of a different arrange of actions for theflow unit, which is why we can draw a second box for employee B with an arrow goingfrom the first box to the second box Depending on how fast employee A works relative

to employee B, we might see a line forming between the two basic sub-processes, which

is inventory Next, we put a triangle between employee A and employee B to illustratethis in the process flow diagram Following employee B, employee C‘s duty is to offerthe consumer another repair service and receive total bill from repair order We canobserve this time, we create a box to the process flow diagram, along with two morearrows and a triangle between employee B and C Now the consumer has a well-fixedvehicle and so we finish the process flow diagram The process flow diagram emphasizes

a directional flow in the process Keep this in mind, we consider the start of the flow asthe upstream of the process and the result of the process as the downstream We further

see that a resource upstream from another resource serves half-finished repaired car to theresource downstream Other saying, we can think about sub-process 2 being theconsumer of sub-process 1.

Figure 2.8 Complete Process Flow Diagram

2.3.2 Capacity for a One-Step process

There are many actions and operations related to completing one consumer order,starting with “welcome the customer” and ending with “ring on register.”

Processing Time – The period that one flow unit is accomplished by a resource.

Capacity – The maximum quantity of flow units that can travel from start to end of

that resource per unit of time

Process Capacity – The maximum Flow Rate a process can give per unit of time This

defines the maximum provide of the process The process capacity is the smallestcapacity of all resources in the processing stage

Process Capacity = Min [Capacity[i]]

2.3.3 How to Compute Flow Rate, Utilization, and Cycle Time

Now, assume we have a demand rate of

Demand = 50 units/hour

The demand rate is the qunatity of flow units that consumers want per unit of time So

50 consumers want a 3M paint protection film (3M PPF) each hour, but we only have theability to make 40 We next determine the Flow Rate as:

Flow Rate = Minimum{Demand, Process capacity}

= Minimum{50 consumers/hour, 40 consumers/hour}

= 40 consumers/hour

In this scenario, the feature which limiting the Flow Rate is the process capacity.Therefore, the demand is more than supply and the Flow Rate is equal to process capacity

as capacity-constrained If the process capacity is more than demand, the Flow Rate will

be equal to the demand rate and so we consider the process as demand-constrained

Following that, we identify the utilization of a process as the ratio between the theprocess capacity and the Flow Rate:

Finally, we define the Cycle Time in a process as

Demand Rate – The quantity of flow units that consumers want per unit of time.

Flow Rate = Minimum{Demand, Process capacity}

Determine the capacity of a resource with X (for multiple) employees staffing thatresource as:

With more capacity and more demand, our Flow Rate would go up to:

Flow Rate = Minimum{Demand, Process capacity}

= Minimum{200, 120} = 120 customer/hour

We can also compute our utilization as:

Utilization = Flow Rate/Capacity = 120/120 = 1

Our Cycle Time thus goes down to

Cycle Time = 1/Flow Rate = 0.00083 hour/customer = 30 seconds/customer

Even those experienced in operations, confuse the terms Cycle Time and lead time Wedetermine the Cycle Time as 1/Flow Rate Therefore, Cycle Time is demonstrated in units

of time per unit

On the contrary, lead time is the period between a consumer placing individual’s orderand that order being completed Lead time is identified as Flow Time, the time a flowunit takes to travel through the process Lead time are illustrated in units of time.

2.3.4 How to Analyze a Multistep Process and Locate the Bottleneck

Figure 2.9 Analyzing a process and locating the bottleneck

2.3.5 The Time to Produce a Certain Quantity

Worker-paced – Process line in which each facility or resource is available and ready

to perform: if the first resource completes before the following one is ready to accept theflow unit, then the first resource puts the finished flow unit in the inventory between thetwo resources

Machine-paced – A process that every stage is matched through a conveyor belt, and

even if some of them have more capacity than others, all the segments must operate at thesame rate

Time through the empty system – The period that the first flow unit spends to travel

from the start to the end of an empty process, it is considered that inventory is notavailable in that process

2.3.6 Conclusion

To sum everything up, the foundation of process analysis is introduced in this chapter.Alternatively, considering at the process as a black box, merely tracking Flow Time,inventory, and Flow Rate, the process operation is acknowledged We observed that theprocess flow diagram is a wonderful tool to visibly demonstrate the flow By usingtriangles as inventory locations, arrows for the movement of flow units, and boxes asresources, it is clearly that the process flow diagram is like a directional map of theprocess The same performance (work on one 3M paint protection film) can be organized

in very different methods Even when the actions were like each other, we could arrangethe process flow in various ways However, the process flow diagram will not illustratethe quantity units travel through the process

2.4 PROCESS IMPROVEMENT

2.4.1 Introduction

We all know that efficiency runs the profit in any operations Analyze, control,improving efficiency is an advanced skill that helps you to leads your operation tosucceed It does not matter if you work for a multibillion corporation or run your ownbusiness As an owner, we all want to earn profit alongside with reducing cost Anefficiency is an advanced tool you may consider improving your operation

Next, we look at several ways of how we improve efficiency in operation Then wediscuss how these improvements affect profit We do as following steps:

1 The first thing we need to do to improve our workflow is to identify the actualfactors we need to measure If we misidentify the measurement in the first place,our work will be useless in the future, wasting a lot of time and money

2 After making a list of measurement factors, we need to have an overall chartshowing the relationship between the factors Calculating the amount of requiredcapacity for current needs, having large capacity doesn't always mean that youhave large Flow Rates If:

• Capacity > Demand, this will incur unnecessary charges You will still payfor idle employees while your income is not growing

• Capacity < Demand, this means that you will not meet the needs ofcustomers, reducing sales

3 Dividing the amount of work in a reasonable way for employees to make themost of employee productivity

4 We want our business to run at its best We must specialize We target for eachemployee one or two fixed tasks We might reduce the Flow Time and increasecapacity.

5 Finally, we go for evaluating the impact of improvement on our operations

2.4.2 Measures of Process Efficiency

In the context of process analysis, we define a process as efficient if it can achieve ahigh Flow Rate with few resources In the case of our Toyota Bien Hoa analysis, ourfocus is primarily on the employees (the labor) as the key resource (as opposed to theoven or the real estate) And so rather than talking about efficiency in general, we willfocus on labor efficiency

There are 4 main measures of labor efficiency: Cost of direct labor, Labor content,Average labor utilization and Idle Time

Table 2.1 General Workflow Example

Cost of Direct Labor

Cost of Direct Labor is the amount of money we must pay for each completed unit ofproduct This includes labor costs at all Sub-process in the process, from start to finish

We can compute the cost of direct labor as:

For example, at Toyota Bien Hoa, the workflow is divided into 3 main sub-processes:Reception, Production and Delivery We consider that 3 sub-processes are conducted at 3different places with different capacity To complete a service, the work must go throughall 3 service sub-processes is given in the table below

As we all know that Flow Rate is the lowest capacity (as demand is unlimited), so

Flow Rate = Number of products per hour

Cost of direct labor

Labor Content

The average labor tells us the employee's labor efficiency, we will have to pay fullsalaries for employees no matter how much they work, whether they're effective.Ineffective employees come with useless expenses Therefore, an optimized process willalways find ways to increase this measure

In the earlier example, we can easily see that the capacity of 3 sub-processes are 1/15,1/20 and 1/18, which can be converted to hour capacity as 4, 3, 3.3 respectively Weobtain the utilization level at 75%, 100% and 90%

Average labor utilization = Average utilization across employees

Idle Time, Cycle Time and Processing Time are related by the formula:

Idle Time(i) = Cycle Time – Processing Time (i)

Measure Cycle Time Processing

Definition

Cycle Time is how long do you have to wait between completingthe order of two consecutive customers The Cycle Time is equal to 1/Flow Rate

Time from beginning

to end of a product at resource

The Idle Time measures how long resource is idle for each flow unit it serves

Table 2.2 Definitions of Measures

Based on the formula, we can compute the Idle Time at sub-process as:

Cycle Time Cycle Time Processing

Table 2.3 Cycle Time of Sub-processes

We calculate Idle Time by relation between Cycle Time and Processing Time:

Idle Time (Sub-process 1) = 20 - 15 = 5 mins Idle Time (Sub-process 2) = 20 - 20 = 0 min Idle Time (Sub-process 3) = 20 - 18 = 2 mins

We have total Idle Time equal to 5 + 0 + 2 = 7 (mins)

Average Labor Utilization 88,3%

As we deeply understand our business, we can compute the efficiency in many ways.Now, we are about to calculating the average labor content by considering 3 main factors.They are Cycle Time, Processing Time, Idle Time

2.4.3 How to Choose a Staffing Level to Meet Demand

Takt time is the ratio between the time available and the quantity that need to beproduce Target Manpower is the ratio between the labor content and takt time If we findout a perfect balance between takt time and target manpower, we could have anappropriate staffing plan

As we run a business, we always want to keep the cost as lowest as possible while stillhave incredible profit There are many ways to do that, one of them is reduce the fee wepay for unnecessary number of employees We all want to find out the enough employees

in order to match with demand rate

We have a very first definition as Takt Time

Imagine serving 100 customers in an hour We must finish serving each customer at

Takt time = = 0.01 (hour/customer)

Note: Please keep in mind that Takt Time is driven by demands

Moreover, the overall formula for Takt time is

Takt Time =

2.4.4 Off-Loading the Bottleneck

Overall, off-landing stands for how we adjust the workload between those sub-process inorder to ensure that bottleneck is out of workflow To efficient off loading, there are 3ways we can apply at the same time to peak the performance:

1 Study deep down on the bottleneck sub-process, then zoom out to see the overallprocess to redesign the workflow, reassign the right amount of workload for eachsub-process to balance Flow Rate

2 Application of information technology in production: management levels atenterprises can research and analyze improvement of bottlenecks by automating

a number of time-consuming processes This may require a certain amount ofmoney for the purchase of machinery and equipment, however, if analyzedsufficiently, this amount is reasonable

3 Outsourcing: We should analyze in detail the work at the congested sub-process,list the unnecessary time-consuming jobs, so we can consider outsourcing to savetime and associated costs For example, at an auto dealership, the carbeautification stage can be outsourced, businesses will not have to spend toomuch on developing services from the beginning and purchasing equipment

2.4.5 Conclusion

Improving efficiency is an important topic for almost any organization If we can getmore output with an equal or lower amount of input, we will profit financially This cantake the form of lower costs or, if we are presently constrained by capacity, can alsotranslate into higher revenues

2.5 PROCESS ANALYSIS WITH MULTIPLE FLOW UNITS

2.5.1 Introduction

Choosing an appropriate flow unit is an essential step when repairing a process flowdiagram Yet what happens if a process does not have one type of flow unit, but multipletypes? And what happens if these different types of flow units don’t always follow thesame path through the process flow diagram? Before we consider the answers to thesequestions, let’s make sure such situations in which we face multiple types of flow unitsreally exist in practice

2.5.2 Generalized Process Flow Patterns

The main difference between a process flow diagram with one type of flow unit and aprocess flow diagram with multiple types of flow unit is that we now your differentarrows to capture different type of flow unit These arrows could be depicted usingdifferent colors by adding a little label identifying the flow unit next to the arrow theseinventories simply correspond to “piles” of application that are in process While thecircle stands for flow units that are not currently handled by resource

2.5.3 Attrition Losses, Yields, and Scrap Rates

Yield of the resource is defined as:

The process in which Defective units are eliminated and each good unit have visited

Process yield = Y1 * Y2 * … * Ym

Where m is the number of resources in the sequence and Yi is the yield of the Yiresource If we want to know how many flow units, we have to produce in order to makesure we have enough good units Use the formula as below:

How to find the bottleneck and capacity in a process with attrition loss

Step 1: Compute the demand matrix, which only has a single column

Note: Start with the last resource and then work from downstream to upstream.Step 2: Compute the capacity level for each resource

Step 3: Compute the implied utilization for each resource

Step 4: To find the capacity of the process in good units per unit of time

2.5.4 Flow Unit – Dependent Processing Time

In fact, the dealership's current service needs vary widely, from maintenance anddiagnostics to heavier jobs such as general repairs and repairing car accidents (these carsrequire both general repair and copper painting repair) These jobs may go through awork sub-process together, but the time required for actual work requirements varies.Consider the example at Toyota Bien Hoa

We classify of job requirements as:

Type 1 (Maintenance): This job requires 20 minutes at Express Maintenance stall.Type 2 (Diagnostic) This job requires 15 minutes at General Jobs stall

Type 3 (General Jobs): This job requires 45 minutes at General Jobs stall

Type 4 (Accidental vehicles): This job requires 50 minutes at step General Jobs

stall and 40 minutes at Body and Paint stall

Note that, all types of job require 10 minutes at sub-process Reception and 9 minutes atsub-process Delivery

At here, we have to divide types of requires of job If only the GJ stall was told thatthere would be one more vehicle to be entered the production process, they would notknow how long it would take to complete the car and therefore there would be no bestrepaired As usually, we need to determine Capacity and Demand by unit of Flow unit In

this case, we consider that each stall will be responsible for 1 worker, but GJ sub-processwill be responsible for 2 workers We have:

Capacity at each sub-process is calculated by unit of hour:

The table below describes demand for agents at 10-hour shift:

Table 2.4 Demand for agents at 10-hour shift

From the demand parameters, we can easily calculate the time required at each process during the process called Workload Matrix