Chapter 7

Question 1

What is the process performance dimension time?

Answer 1

Cycle time: time that it takes to handle one case from start to end.

• Usually aim of a redesign effort to reduce cycle time
• Aim to reduction of the average cycle time
• Focus on the ability to meet cycle times that are agreed upon with a client at run time
• Focus on its variation

1. Processing time(also service time): time that resources spend on actually handling the case
2. Waiting time: time that a case spends in idle mode. This includes the queueing time – waiting time due to the fact that no resources available to handle the case.

Question 2

What is the process performance dimension cost?

Answer 2

• Distinguish between fixed costs and variable costs.
  o Fixed costs: overhead costs which are not affect by the intensity of processing. Use of infrastructure and the maintenance of information systems
  o Variable costs: variable quantity, number of new hires
• Operational costs can be directly related to the outputs of a business process

Question 3

What is the process performance dimension quality?

Answer 3

• Client’s side
• Participant’s side
  Also known as the external quality(client’s satisfaction) and internal quality(business process related to the process participants’ viewpoint).
• Internal process quality: level that a process participants feel in control, level of variation experienced, context of business process challenging.
• External process quality: the average cycle time, percentage of cases where deadlines are missed

Question 4

What is the process performance dimension flexibility?

Answer 4

Flexibility
Ability to react to changes:
• The ability of resources to execute different tasks within a business process setting.
• The ability of a business process as a whole to handle various cases and changing workloads.
• The ability of the management in charge to change the used structure and allocation rules.
• The organization’s ability to change the structure and responsiveness of the business process to wishes of the market and business partners.

Distinguish between run time and build time flexibility:

• Run time: concerns the opportunities to handle changes and variations while executing a specific business process
• Build time: concerns the possibility to change the business process structure.

Question 5

What i a balanced scorecard?

Answer 5

Balanced Scorecard: essentially an approach to align the goals and measures that are used to evaluate the work of managers.
• The ability of resources to execute different tasks within a business process setting.
• The ability of a business process as a whole to handle various cases and changing workloads.
• The ability of the management in charge to change the used structure and allocation rules.
• The organization’s ability to change the structure and responsiveness of the business process to wishes of the market and business partners.

Question 6

What is the Cycle time efficiency?

Answer 6

evaluating the ratio of overall processing time relative to the overall cycle time

Question 7

CTE = TCT / CT

Answer 7

• Close to 1: indicates that there is little room for improving the cycle time, unless relatively radical changes are introduced in the process.
• Close to 0: indicates that there is a significant amount of room for improving cycle time by reducing the waiting time.

TCT, theoretical cycle time: the amount of time that an instance of the process would take if there was no waiting time at all.

Question 8

Work-in-process (WIP)?

Answer 8

average number of instances of a process that are active at a given point in time, meaning the average number of instances that have not yet completed.

Question 9

Fundamental law – Little’s law: WIP = lapda x CT

Answer 9

the average number of new instances in the process

• WIP increases if the cycle time increases or if the arrival rate increases. In other words, if the process slows down — meaning that its cycle time increases — there will be more instances of the process active concurrently. Also, the faster new instances are created, the higher will be the number of instances in an active state.
• If the arrival rate increases and we want to keep the WIP at current levels, the cycle time must decrease.
Little’s law holds for any stable process. By stable, we mean that the number of active instances is not increasing infinitely. In other words, in a stable process, the amount of work waiting to be performed is not growing beyond control.

Question 10

What are the limitations of fundamental law - little’s law

Answer 10

Limitations
- first need to estimate the average cycle time of each activity in the process model.

Two approaches for this obstacle:

1. interviews or observation
2. collect logs from the information systems used in the process.

• A major limitation of flow analysis is that it does not take into account the fact that a process behaves differently depending on the load, that is, depending on the amount of instances of the process that are running concurrently.
  Resource contention occurs when there is more work to be done than resources available to perform the work, like for example more claims than insurance claim handlers.
• Flow analysis does not take into account the effects of increased resource contention. Instead, the estimates obtained from flow analysis are only applicable if the level of resource contention remains relatively stable over the long-run.