Continuous Improvement - Going beyond Operations Management

Production and Operations Management

Continuous Improvement - Going beyond Operations Management

Improvement usually means doing something that we have never done before. (Shigeo Shingo)

Team Members
Waqas Ali Tunio, Saud Zafar Usmani, Lt. Cdr. Ghulam Qadir, Lt. Cdr. Tahir & Zulfiqar Hussain Institute Industrial & Manufacturing Engineering (IME), Pakistan Navy Engineering College (PNEC), National Univeristy of Sciences & Technology (NUST), Karachi - Pakistan

Abstract
This research is to recognize the need for continuous improvement in all areas of operations management, right from the strategy formulation process to the delivery of product to the costumer. To accomplish this, a thorough analysis has been carried out to identify the true application of operations management in general and lean management in particular. The key areas are identified, analyzed and the framework is provided for future development.
(2) Aligning Operations with Manufacturing Networks and Supply Chain (3) Re-manufacturing of waste and achieving better cost-effectiveness

Introduction
The current business environment has become highly competitive because of the manufacturing systems ability to deliver high performance and flexible products to the costumer, as well as costumers demand are becoming more and more sophisticated. The products are becoming highly customizable and this has led to a new era of gaining competitive edge by technological superiority. To handle the technology and deliver results to the costumer there is a need to align the operations of the firm with the technology, crack those weak linkages throughout supply chain in order to maintain flow and deliver performance at the costumers end. In this research, three major areas are covered which provide the framework for achieving the continuous improvement.
(1) The strategic management cycle and its formulation.

(1) The Strategic Management Cycle and its Formulation

Traditional performance should go hand in hand with the technological innovation to maintain or improve the companys competitive position over time. Especially in mature, advanced markets, the company needs to differentiate itself significantly to give customers a reason to replace existing products. It is often difficult to fully recognize the contributions of high performance manufacturing practices in meeting the increasing market demands, because to meet these demands, management must align these sets of practices rather than imitating individual practices of a benchmarked company.

Institute of Industrial and Manufacturing Engineering, PNEC (NUST), Karachi

Continuous Improvement - Going beyond Operations Management

Production and Operations Management

Technologically innovative developments tend to be more expensive in terms of cost and time. They demand a well focused and designed development strategy to satisfy the markets cost effectiveness criterion. In addition, technological innovations must be aligned with competitive features and a fast ramp-up operational process. The linkages now require development strategy to operations. Therefore, the emergence of linkages is a critical organizational phenomenon. Understanding them can yield more prescriptive statements for managers. Earlier research has reported that there often is a positive relationship between the extent of linkages among workers and levels of manufacturing performance. The concept of strategic management cycle is basically similar to the adaptive cycle proposed without explicit consideration of the transition from one cycle to next one over time. The adaptive cycle consists of three problems, the Entrepreneurial, the Engineering (Creating of a system, which operationalizes managements solution to the entrepreneurial problem) and the Administrative problem (Reducing uncertainty within the organization and rationalizing and stabilizing those activities that solved problems faced by the entrepreneurial and engineering problems). These problems are the managerial agenda to adapt the company to environmental changes. The authors recognized four types of steering patterns of the cycle, the defender, the analyzer, the prospector, and the reactor. The prospector makes most innovative adaptation and the reactor is inconsistent in achieving solutions to the three problems. The strategic management cycle underlies the plants actions and behaviors. Each stage of the cycle is determined by the plants strength in the prior stage, when a plant is strong in one stage, it will be strong in the

next stage. In other words, the dynamic processes should be implemented rapidly to be competitive. It requires a speedy product development process that repeats the cycle from design to making at least more than one time within an allowable period under the competitive situation. In other words, product development time should be shorter. A formal front end loading process potentially makes such experimental and iterative processes more likely in highvelocity markets. The front-end loading process can promote clarity and a common language that can be used to address the unstructured front-end of the cycle. It has been noted that the building of the total linkage from the front-end is Toyotas strategy of management.

Systematization of the front-end loading process

Firms must pay more attention to the linkage between strategy and operations as business environments increase in uncertainty, because misalignment between strategic actions and operations increases. Little attention to these linkages results in high variability in the front-end stages. This study revealed that a key to high performance manufacturing is in how well a manufacturing plant develops a levered linkage among its activities. The linkage exploits its resources and enhanced knowledge to create products with greater and more attractive values to customers than their competitors do. Manufacturing practices and culture are important ingredients in developing this levered linkage. Alone, neither one cannot sustain the levered linkage over time. The key to success in manufacturing is to drive the strategic management cycle effectively. To accomplish this, the

Institute of Industrial and Manufacturing Engineering, PNEC (NUST), Karachi (www.nust.edu.pk)

Continuous Improvement - Going beyond Operations Management

Production and Operations Management

company needs to be aware of its visionary environment and the formulating strategy, which are most problematic stages of the cycle. Thus, the integration of knowledge at the front-end of the strategic management cycle is a key to high performance manufacturing. This study indicates the development and use of an effective frontend loading mechanism is one of the most important issues managers must address. Many companies that once had high levels of manufacturing performance and reputation find it easy to lose these attributes as markets become saturated and many other uncertainties emerge, as happened in the last decade. A key contribution of the strategic management cycle is to suggest that over time highly efficient manufacturing practices without strategy cannot lead to high performance. This was first noted almost 15 years ago by Porter (1996), when he reported that there is a significant difference between operational excellence and a true strategic position. Porters observations were directed at Japanese manufacturing firms. The strategic management cycle can provide the necessary process to ensure that firms do not fall into the trap of pursuing operational excellence for its own sake. This study explores the mechanism of building an effective linkage among manufacturing practices that is a basic attribute of high performance manufacturing. High performance manufacturing companies are those that sustain high levels of performance over time. We propose a strategic management cycle, which explains how a firm establishes and maintains sustainable performance. We hypothesize and demonstrate how the cycle creates an effective linkage that integrates strategic activities and operational practices, which in turn yields high performance. We also argue and show how the first stage of

the cycle, visionary planning, supported by the cross-functional culture, is a key to the high performance manufacturing company.

2. Aligning Operations With Manufacturing Networks & Supply Chain

The manufacturing networks consist of the facilities network spread over a wide region. It may or may not be within a country, it may spread wide across the globe. The purpose of spreading the manufacturing network wide and far is to optimize the transportation of the raw material supply, as well as the distribution supply. Shi and Gregory [1] view a manufacturing network As a factory network with matrix connections, where each node (i.e. factory) affects the other nodes and hence cannot be managed in isolation. The current information systems are capable enough to integrate the operations of the manufacturing network and deliver high performance products with optimum resource utilization and minimum waste. a. Value Networks Martin Rudberga and Jan Olhagerb [2] view Value networks are regarded as a network of facilities consisting of different facilities where time, money and energy are spent which ultimately supports what the costumer is really paying for. To extract maximum from the Value networks it is necessary to have a good configuration of the Value Networks as well as good coordination between them as viewed by Martin Rudberga and Jan Olhagerb. [2] b. Manufacturing Networks The manufacturing network must be clearly identified, with clear focus on strategic

Institute of Industrial and Manufacturing Engineering, PNEC (NUST), Karachi (www.nust.edu.pk)

Continuous Improvement - Going beyond Operations Management

Production and Operations Management

importance of each manufacturing node. When the manufacturing network has been identified it becomes easier for the operations management perspective, the management of the whole manufacturing network. For example, the Toyota has its Assembling plants wide across the globe. Each plant has its strategic importance clearly identified. The plants in third world countries do not assemble SUVs or high performance, expensive vehicles because of little demand. Rather, small cars like corolla are being assembled, this shows a clear strategy and alignment of operations with the manufacturing plants. c. Supply Chain Management Cooke [3] defines the supply chain management concept as the coordination of all those activities associated with moving goods from the raw materials stage through to the end user, for sustainable competitive advantage. This includes activities like system management, sourcing and procurement, production scheduling, order processing, inventory management, transportation, warehousing, and customer service. Whenever the manufacturing networks spans wide it will give rise to Suppy Chain Management concept. Otherwise, beforethe globalization, this function was not so far and wide so the term, Logistics Management was used. In order to extract maximum from the Value Networks. The operations of Manufacturing Networks as well as Supply Chains have to be aligned. The KESC, supply chain management is focused on the delivery performance. So they go for those suppliers who can deliver in time, they are compromising on cost, because of the strategic implications of the

utility. The operations of the supply chain are therefore aligning all the links which suits the strategic implication of the company. d. Achieving Improvement Manufacturing Networks. Continuous in aligning & Supply Chain

To optimize the manufacturing and the supply chain networks. Martin Rudberga, Jan Olhagerb [2] have proposed two dimensions, configuration and coordination. The literature has proposed a matrix for both dimensions.

Fig1 Configuration Matrix

The configuration matrix shows as the no. of organization increases from single to multi at a single site, will give rise to a supply chain. And as the no. of sites per organization increases will give rise to a intra-firm network. Now to achieve continuous improvement, the organization must focus correspondingly to its matrix position, and hence a corresponding operations strategy / technique are used.

Institute of Industrial and Manufacturing Engineering, PNEC (NUST), Karachi (www.nust.edu.pk)

Continuous Improvement - Going beyond Operations Management

Production and Operations Management

Fig 2. Coordination matrix The coordination matrix depicts how coordination should be carried out depending upon the position of the plant in the matrix. From single organization to single user the term used is utilization of the facility to the optimum. As the no. of organizations increase at a single site, the term used is synchronize, which means to synchronize the operations the organizations to optimize performance. Horizontally as the sites per organization increase the term used is optimize. Optimize means to use only those facilities which serve to optimize the overall operation. And as the organizations increase with the increase in sites the term used is harmonize. Which means that all these should perform in harmony with each other to maximize performance, quality and delivery. This is how continuous improvement may be achieved by the matrix classification.

conventional supply chain, system now contains two material flows, named conventional manufacturing flow sourcing from new materials, and recovery flow sourcing from end-of-use products returned back to the production system. V. Daniel R. Guide Jr [4] have indicated in their research that the remanufacturing is efficient and reduces waste because; it restores the inherent value of the damaged product to even better value or at least to the original value. If the product had been discarded, and then recycled it would not have utilized the value which the discarded product had. Remanufacturing involves complete disassembly of the damaged product as indicated by V. Daniel R. Guide Jr [4]. The parts are sorted out and added into inventory after thorough cleaning and minor repair. The process of remanufacture involves utilizing this inventory and produce the product again. This continuous reusing of the damaged product will in the end significantly reduce wastes and hence reduce costs.

Conclusion
The research has identified the key areas on which focus should be laid inorder to achieve continuous improvement. The strategy building, supply chain management and remanufacturing can provide sustainable continuous improvement in the overall operations of a firm as evident from the research. For future work it is recommended to focus on energy saving inorder to achieve continuous improvement.

3. Re-Manufacturing of Waste and achieving better costeffectiveness

Remanufacturing end-of-use product is considered as one effective way to provide ecologically sustainable production industry. Remanufacturing, production system is significantly different from conventional manufacturing production system. Instead of single forward flow of material in

Institute of Industrial and Manufacturing Engineering, PNEC (NUST), Karachi (www.nust.edu.pk)

Continuous Improvement - Going beyond Operations Management

Production and Operations Management

References
[1] Shi Y, GregoryM. International Manufacturing Networksto develop global competitive capabilities. Journal of Operations Management 1998;16(2,3):195214. [2] Martin Rudberga, Jan Olhagerb Manufacturing networks and supply chains: an operations strategy perspective - Omega 31 (2003) 29 39 [3] Cooke JA. Supply Chain Management Review 1997;1(1):3. [4] V. Daniel R. Guide Jr - Production planning and control for remanufacturing: Industry practice and research needs - Journal of Operations Management 18_2000.467483

Institute of Industrial and Manufacturing Engineering, PNEC (NUST), Karachi (www.nust.edu.pk)