Which of these are Processes and should have Process Maps and why?

Randy, I may be passing quite close by there on 3rd April - would like to call in if you are available.

Re: Which of these are processes and why?

Peter Fraser said:

So if you take an "effective" warehousing process (one which keeps the inventory in good condition until ready for despatch) what is the "input", what is the "output" and what was "transformed"? I would imagine that the worst possible outcome from that process would be for the goods to be “transformed” – you want them to come out looking and working exactly the way they did when they went in.

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Actually, that is my point. Warehousing does not add value to the product. (transformation <> deterioration)

So if we have a manufacturing situation where warehousing of finished goods constitutes twenty percent of the labor time for a product, it is easy to demonstrate to management that they are spending too much money on warehousing.

Some companies work very hard to eliminate warehousing activity, because it does not make the product more valuable.

If we ask how much value any process adds to the product, I believe we get better answers than if we ask what is the objective of a process.

Re: Which of these are processes and why?

CliffK said:

So if we have a manufacturing situation where warehousing of finished goods constitutes twenty percent of the labor time for a product, it is easy to demonstrate to management that they are spending too much money on warehousing.

Some companies work very hard to eliminate warehousing activity, because it does not make the product more valuable.

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That is correct in a large number of cases, but some organizations have a business model which by they do inventory management for their customers. If the customer is not sophisticated enough to provide information on their demand planning, the suppliers have to build an inventory buffer to support "unexpected" product demand. That creates a value to the customer and they normally pay for it.

Randy said:

Paul, I'm going to be fairly close to you April 1-6. I have some training to attend just outside Birmingham in Hampton-in-Arden, Solihull with Tec Transnational.

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Great!

I live between Birmingham and Milton Keynes (about 60 miles total).

Are you going in to the office to see the UK based guys? Let me know your travel arrangements and I will arrange to drop by and meet up.

If Colin is available the drinks are on him!

Re: Which of these are processes and why?

Sidney Vianna said:

That is correct in a large number of cases, but some organizations have a business model which by they do inventory management for their customers. If the customer is not sophisticated enough to provide information on their demand planning, the suppliers have to build an inventory buffer to support "unexpected" product demand. That creates a value to the customer and they normally pay for it.

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I agree.
Even if the customer is sophisticated enough on their demand planning, the customer's customer may not be.... I have seen "magic multipliers" added to compensate for demand fluctuations. Sometimes they work....

Have you ever seen an optimal model demand forecasting with an acceptable confidence level?

I think in any business model, the scope of inventory management should be defined as related to customer requirements and satisfaction in general terms.

Some customers claim to have JIT...If you examine the system closely, you will notice many pay excessive carrying cost to their suppliers for their practice of JIC.

Let's Consider a small organization business:

Factors such as low inventory turn over rate, safety stock, obsolete/excess inventory, inaccurate inventory, etc...can affect organization financially... to purchase raw material on-time and ship final product on-time. They need to establish a true JIT system.

Re: Which of these are processes and why?

Sidney Vianna said:

That is correct in a large number of cases, but some organizations have a business model which by they do inventory management for their customers. If the customer is not sophisticated enough to provide information on their demand planning, the suppliers have to build an inventory buffer to support "unexpected" product demand. That creates a value to the customer and they normally pay for it.

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Sidney,

Quite true. Your example supports the idea that activities (processes, tasks, whatever) are better measured by the value they add.

In this case, the customer pays for inventory management. The extra expense is easy to justify.

Re: Which of these are processes and why?

CliffK said:

Actually, that is my point. Warehousing does not add value to the product. (transformation <> deterioration)

If we ask how much value any process adds to the product, I believe we get better answers than if we ask what is the objective of a process.

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Clif

But that is not what I asked(!). I wanted to know what is the "input", what is the "output" and what was "transformed"? I have no problem with the idea of value being added, it is the "traditional" definition of a process that I find difficult to apply in some of these situations.

Just hoping to follow the process through until I see the light (that's my objective, and it should result in value being added as well...)

Re: Which of these are processes and why?

Peter Fraser said:

Clif

But that is not what I asked(!). I wanted to know what is the "input", what is the "output" and what was "transformed"? I have no problem with the idea of value being added, it is the "traditional" definition of a process that I find difficult to apply in some of these situations.

Just hoping to follow the process through until I see the light (that's my objective, and it should result in value being added as well...)

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Peter,

Maybe the attached process map will help in outlining of input and output....

This map shows one way of describing the process. It is not the optimum...

M

Re: Which of these are processes and why?

Peter Fraser said:

Clif

But that is not what I asked(!). I wanted to know what is the "input", what is the "output" and what was "transformed"? I have no problem with the idea of value being added, it is the "traditional" definition of a process that I find difficult to apply in some of these situations.

Just hoping to follow the process through until I see the light (that's my objective, and it should result in value being added as well...)

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Many companies define Inv. Mgt. and Shipping as one process. Generally has the same process owner. If so:

Input = finished goods.
Value added activity = hold product in bulk, pull, package and ship to customers' immediate order.
Output = packaged and shipped goods.

It would be silly to try to make the case to top management that this process adds no benefit to the company, so we have to define it in terms they can be comfortable with.

Then, develop improvement projects to reduce carrying costs.

Re: Which of these are processes and why?

CliffK said:

Actually, that is my point. Warehousing does not add value to the product. (transformation <> deterioration)

So if we have a manufacturing situation where warehousing of finished goods constitutes twenty percent of the labor time for a product, it is easy to demonstrate to management that they are spending too much money on warehousing.

Some companies work very hard to eliminate warehousing activity, because it does not make the product more valuable.

If we ask how much value any process adds to the product, I believe we get better answers than if we ask what is the objective of a process.

Click to expand...

The value comes from facilitating customer's inability to forecast effectively.