Operations Management Basics: Calculating the flow time efficiency
Instead of simply trying to optimize processes in order to cut down on waiting time, it is also important to look at the customer experience as a whole. How does, for example, a patient experience an appointment at a physician? The customer experience in this specific case does not start in the waiting room at the clinic, but also includes driving, parking, checking-in, filling out forms, driving back home etc. We thus have – so far – looked only at a small part of this entire customer experience. Many activities along this line of activities are not adding any value for the customer – for example, getting to the doctors office is important, but does not cure any sickness.
The question of exactly how much time spent in a process (from the customer’s perspective) adds any actual value for the customer can be answered by calculating the flow time efficiency:
flow time efficiency = total value add time of a unit / total time a unit is in the process
This analysis is the basic idea behind the so-called value stream mapping. Here, every process is split-up between onstage actions (which are visible to the customer), backstage actions (which are invisible to the customer) and customer actions (which are those actions that the customer performs by himself) as well as additional support processes. Possible ideas for optimising the waiting time are moving work off stage (e.g. doing a rental car check-in via the internet), reducing customer actions (e.g. not retake basic medical information at each hospital visit), removing steps that offer no value (if possible) or avoiding too much fragmentation due to specialization.
These lecture notes were taken during 2013 installment of the MOOC “An Introduction to Operations Management” taught by Prof. Dr. Christian Terwiesch of the Wharton Business School of the University of Pennsylvania at Coursera.org.