Unit 5A - Business Processes
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Questions and Answers

What is the productivity per labor hour when producing 12 paper airplanes in 8 hours?

  • 2 planes/hr
  • 1.5 planes/hr (correct)
  • 1 plane/hr
  • 1.2 planes/hr

What distinguishes a primary process from a support process?

  • Support processes are essential for delivering the main products or services.
  • Primary processes do not add value to the organization.
  • Support processes are temporary and do not contribute to long-term objectives.
  • Primary processes focus on value-added activities, while support processes handle necessary but non-value-added activities. (correct)

What is the standard cycle time in minutes for producing 15 paper airplanes in 8 hours?

  • 40 minutes
  • 32 minutes (correct)
  • 60 minutes
  • 48 minutes

What is the efficiency percentage when producing 12 paper airplanes if the standard is 15?

<p>80% (A)</p> Signup and view all the answers

What is the purpose of mapping business processes?

<p>To develop graphic representations that help define process boundaries and relationships. (A)</p> Signup and view all the answers

If each cycle has a value added time of 24 minutes out of a standard cycle time of 32 minutes, what is the percentage of value added time?

<p>75% (C)</p> Signup and view all the answers

Which of the following is considered a development process?

<p>Developing new products (C)</p> Signup and view all the answers

Why is managing flows across the supply chain crucial?

<p>It accounts for a significant portion of total operating budgets, up to 75% in some cases. (B)</p> Signup and view all the answers

What is the purpose of competitive benchmarking?

<p>To identify and adapt practices from within the industry (D)</p> Signup and view all the answers

What is a critical factor to consider when improving a business process?

<p>Identifying the need for value-added changes and elimination of non-value activities. (D)</p> Signup and view all the answers

What is the difference between competitive benchmarking and process benchmarking?

<p>Competitive benchmarking focuses on external competitive standards, while process benchmarking targets internal processes. (D)</p> Signup and view all the answers

How can efficiency be compared to productivity?

<p>Efficiency reflects the ratio of outputs to inputs, while productivity represents effectiveness in achieving goals. (C)</p> Signup and view all the answers

What does percent value-added time represent in a business process?

<p>The portion of time where an activity contributes directly to the product or service value. (A)</p> Signup and view all the answers

What is the correct formula to calculate efficiency in a business process?

<p>Efficiency = (actual outputs / standard outputs)(100%) (B)</p> Signup and view all the answers

If a welder is producing 27 units per hour and the standard output is 30 units, what is their efficiency percentage?

<p>90% (A)</p> Signup and view all the answers

Which of the following statements accurately differentiates between productivity and efficiency?

<p>Productivity focuses on outputs over time, whereas efficiency focuses on output versus standard output. (A)</p> Signup and view all the answers

What best describes standard output in a business process?

<p>An estimate of what should be produced with certain resources. (D)</p> Signup and view all the answers

What role does efficiency play in evaluating business processes?

<p>It measures the ratio of actual outputs to expected outputs. (A)</p> Signup and view all the answers

Why is it said that 'If you can’t measure it, you can’t manage it' in the context of efficiency?

<p>Management decisions cannot be based on assumptions. (C)</p> Signup and view all the answers

Which option is an example of a measure that supports improving business process efficiency?

<p>Standardizing processes to reduce time and waste. (C)</p> Signup and view all the answers

What is the primary purpose of a process map?

<p>To identify the specific activities in a business process. (B)</p> Signup and view all the answers

Which of the following is NOT a process mapping rule?

<p>Keep it complicated to encompass all details. (D)</p> Signup and view all the answers

What is the average time an order spends waiting in the process?

<p>3 hours (D)</p> Signup and view all the answers

How often do orders get lost due to copier jams or accidental discards?

<p>1 out of 25 orders (B)</p> Signup and view all the answers

What happens if an item is not in stock?

<p>The dealer is notified and a special shipment is arranged. (C)</p> Signup and view all the answers

What is the average delivery time of the transport firm?

<p>1 to 3 hours (A)</p> Signup and view all the answers

What is a critical measure of process performance?

<p>Quality (B)</p> Signup and view all the answers

What percentage of orders are incorrectly filled?

<p>5 percent (C)</p> Signup and view all the answers

Which airline had the highest percentage of flights arriving on time?

<p>Hawaiian (C)</p> Signup and view all the answers

Which airline reported the lowest number of mishandled baggage reports per 1,000 passengers?

<p>Virgin America (D)</p> Signup and view all the answers

What was the percentage of flights cancelled by Frontier during March 2016?

<p>2.6% (A)</p> Signup and view all the answers

Which airline had a higher percentage of flights cancelled, JetBlue or American?

<p>JetBlue (A)</p> Signup and view all the answers

How does the mishandled baggage rate of Delta compare to that of United?

<p>United has a higher rate than Delta (C)</p> Signup and view all the answers

Which measure is indicated as not the only consideration for process performance?

<p>Cycle time (D)</p> Signup and view all the answers

Which airline had a percentage of arriving on time closest to 80%?

<p>Virgin America (D)</p> Signup and view all the answers

What percentage of flights cancelled does Delta have?

<p>0.1% (B)</p> Signup and view all the answers

What formula is used to calculate cycle time?

<p>Elapsed time / # cycles (A)</p> Signup and view all the answers

What does % Value Added Time represent?

<p>The proportion of time spent on value-added activities compared to total cycle time (D)</p> Signup and view all the answers

If 12 paper airplanes are produced in 8 hours, what is the productivity per labor hour?

<p>1.5 planes/hr (C)</p> Signup and view all the answers

How do you calculate the standard cycle time in minutes if the standard production is 15 planes in 8 hours?

<p>Total minutes of work divided by the number of planes (C)</p> Signup and view all the answers

What is the efficiency calculated from producing 12 paper airplanes when the standard is 15 in the same time?

<p>80% (B)</p> Signup and view all the answers

If the value added time is 24 minutes for each cycle, what is the % Value Added Time for the cycle?

<p>50% (C)</p> Signup and view all the answers

Which of the following is NOT a factor of cycle time improvement?

<p>Completing steps in series (A)</p> Signup and view all the answers

In a scenario where 12 paper airplanes are produced in 8 hours but the standard is 15, what does this imply about the production process?

<p>Production is below standard efficiency (C)</p> Signup and view all the answers

Flashcards

Business Process

A collection of related tasks/activities to achieve a specific business goal.

Primary Process

Core activities adding value to the product or service.

Support Process

Necessary tasks, not directly adding value.

Development Process

Processes that improve primary and support processes.

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Process Mapping

Creating visual representations of business processes.

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Purpose of Mapping (Business Process)

Creates a shared understanding of a process and its steps, defining its boundaries.

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Efficiency

A measure of how well resources are used to achieve a specific goal; ratio of output to input (e.g., units produced per hour).

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Productivity

A measure of output achieved in relation to resources used (e.g., units produced per worker-hour).

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Productivity per Labor Hour

The number of units produced by a worker in one hour. It measures how efficiently workers utilize their time.

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Standard Cycle Time

The average time it takes to complete one cycle of a process, based on industry standards.

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Value Added Time

The time spent directly contributing to the value of a product or service.

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Benchmarking

The process of comparing your business practices to those of top performers in your industry or others with similar processes.

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Baseline Measurement

A starting point for evaluating process improvement efforts.

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Process Map

A visual representation of the steps involved in a business process.

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Process Mapping Rules

Guidelines for creating a clear and effective process map.

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Order-Filling Process

Steps involved to fill a dealer order at a distribution center.

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Order Lost

Orders that fail to make it to the required stages of in-house process.

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Waiting Time

Time spent waiting during the process before being moved to the next stage.

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Process Performance

Measure how well a process meets customer needs by analyzing quality and other metrics.

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Average Time (Ordering-Delivery)

Average duration of a product from order processing by the DC to delivery.

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What is efficiency?

A measure of how well resources are used. It's the ratio of actual output to standard output, usually expressed as a percentage.

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How is efficiency calculated?

Efficiency = (Actual Output / Standard Output) * 100%

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Standard Output

An estimate of what should be produced given a certain level of resources.

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Efficiency Example: Lloyd

Lloyd welds 27 units/hour with a standard output of 30 units/hour. His efficiency is (27/30) * 100% = 90%.

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Efficiency Example: Doug

Doug welds 33 units/hour with a standard output of 30 units/hour. His efficiency is (33/30) * 100% = 110%.

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Productivity vs. Efficiency

Productivity measures output in relation to input (e.g., units per worker-hour), while efficiency compares actual output to standard output.

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Why measure efficiency?

Measuring efficiency helps identify areas for improvement and optimize resource utilization. It's essential for managing processes effectively.

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Efficiency and Management

Efficiency measurements provide factual data for decision-making, helping managers avoid relying solely on opinions or assumptions.

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Airline Benchmarking

Comparing performance metrics of different airlines to identify areas for improvement.

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Process Benchmarking Example

Comparing your supply chain to Dell's to learn about efficiency and best practices.

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Competitive Benchmarking Example

Comparing your overall GPA to other students in Fanshawe Business programs.

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Cycle Time Focus Risk

Focusing solely on reducing cycle time might negatively impact other important process performance metrics.

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Efficiency vs. Productivity

Efficiency measures how well resources are used, while productivity measures the output achieved.

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Cycle Time

The total time required to complete a process, measured from start to finish. It's calculated by dividing the elapsed time by the number of completed cycles.

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Process Efficiency

A measure of how well resources are used to complete a specific process.

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Non-Value Added Steps

Steps in a process that do not directly contribute to the value of the final product or service. These steps can include waiting, moving, or any unnecessary activity within the process.

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Process Productivity

A measure of the output achieved from a specific process.

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Competitive Advantage

A unique capability or advantage that sets a company apart from its competitors.

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Improving Cycle Time with Parallel Steps

Streamlining a process by completing certain steps simultaneously, reducing the overall time required for the entire process. This is particularly effective for steps that are not dependent on each other.

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% Value-Added Time Calculation

Calculating the percentage of value-added time involves dividing the time spent on value-adding activities by the total cycle time and multiplying by 100%.

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Study Notes

Unit 5A - Business Processes

  • Business processes are a set of logically connected tasks to achieve a defined outcome.
  • The business process perspective differs from a traditional functional perspective.
  • Process maps visually represent business processes, activities, and steps.
  • Process maps help diagnose processes and improve them.
  • Factors to consider when improving a business process include quality, cost, and time.
  • Efficiency measures actual outputs against standards.
  • Productivity measures outputs relative to inputs.
  • Cycle time is the total time required to complete a process.
  • Value-added time is the portion of cycle time directly contributing to the product or service.
  • Benchmarking identifies, understands, and adapts best practices from other organizations or industries to improve performance.
  • Competitive benchmarking compares a company to others in the same industry.
  • Process benchmarking compares a company's processes to "world-class" processes in unrelated industries.
  • Key measures of process performance include quality, cost, time, and flexibility.

Mapping Business Processes

  • Mapping is the process of graphically representing organizational relationships and activities within a business process.
  • Mapping purposes include shared understanding of process content, defining process boundaries, and measuring improvement impacts.
  • A process map details the flow of information, physical products, etc. within a process.
  • Process mapping rules include identifying the focal point, clear start and end points, and simplicity.

Example - Business Process at Distribution Center (DC)

  • Dealer emails an order to the DC.
  • Copier issues may lead to order loss (1/25).
  • Order print sits in inbox for an average of 2 hours.
  • Internal mail delivers order to the picking area (1 hour average; errors may occur - 1/100).
  • Order sits in clerk’s inbox for an average of 1 hour processing.
  • Processing takes 5 minutes.
  • In-stock items are picked and packed (20 mins, +/-10-45 mins).
  • Inspector checks the order (2 mins, errors may occur 1/200).
  • Transport firm delivers the order (1-3 hours).
  • Out-of-stock items have a special shipment arranged within a week.

Example - Distribution Center (Figure 4.6)

  • Specific steps in the process and average wait times (e.g., order in inbox, mail delivery, clerk processing) are listed.
  • Includes success percentages and error rates.

Example - Performance Impact

  • Shows average processing time for in-stock items is 6.4 hours. Other issues included are lost orders and incorrect items.
  • 3 hours of the 6.4 hours are waiting time.
  • 5 percent of orders are lost before picking.
  • 1 in 200 orders get incorrect items.

5.3 - Measuring and Improving Business Processes

  • Questions to ask to improve business processes include how customers' needs are met and whether the process is efficient and effective.
  • How can business process improvement be organized and what steps should be taken?

5.4 - Efficiency

  • Efficiency is a process performance measure; the ratio of actual outputs to standard outputs.
  • Efficiency is usually expressed as a percentage.

5.4 - Productivity Versus Efficiency

  • Productivity is outputs/inputs(e.g., planes produced/machine hours).
  • Efficiency is (actual output/standard)(100%).

Example - Efficiency with Standard Output

  • Example shows calculating efficiency given a standard output rate (e.g., units per hour).
  • This illustrates how actual output against a standard output can calculate efficiency.

5.5 - Cycle Time & Percent Value-Added Time

  • Cycle time is the total time required to complete a process
  • Value-added time is the portion of the cycle time where activities directly add value to the finished product or service.
  • Percentage value-added time is (value-added time / total cycle time) x 100%.

Example - Customer Order Fulfillment Process at retail store

  • Specific steps with associated time estimates are presented for a customer order fulfillment process at a retail store.

Improving Cycle Time - Steps Done in Parallel

  • Shows how parallel steps reduce total cycle time.

Measuring Business Process Efficiency (Sample Problem)

  • Example uses paper airplane production during class time to illustrate concepts like productivity (12 planes in 8 hours), standard (15 planes in 8 hours), efficiency, cycle time, and value-added time.

5.6 - Benchmarking - Competitive vs Process

  • Benchmarking is identifying and adapting best practices.
  • Competitive benchmarking compares to similar companies in the same industry.
  • Process benchmarking compares to best practices in unrelated companies.

Table 4.7 Competitive Benchmarking Data

  • Shows performance metrics for some U.S. airlines (e.g., on-time arrival rate, cancellations, mishandled baggage).

5.6 - Competitive or Process Benchmarking?

  • Questions to decide if competitive or process benchmarking is appropriate (e.g., comparing grades, supply chains between companies).

Review

  • Cycle time is an important but not only measure of process performance. Focus on cycle time may affect other important measures.
  • Efficiency and productivity are compared; their different focuses help understand business process performance.

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Unit 5A - Business Processes PDF

Description

Explore the concepts of business processes and their importance in achieving defined outcomes. Learn about process mapping, efficiency, productivity, and benchmarking as tools for diagnosing and improving business workflows. This quiz will test your understanding of the key concepts and factors involved in managing business processes.

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