Lesson 5 Operations Improvement

18.
Chapter 18 Operations improvement
Pearson Education Ltd. Naki Kouyioumtzis
18.1
Slack, Chambers and Johnston, Operations Management, 6th Edition, Nigel Slack, Stuart Chambers, and Robert Johnston 2010
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Operations improvement
Operations strategy Operations management Improvement Planning and control
Operations improvement makes processes better Organizing for improvement Risk management stops processes becoming worse
Design
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Key operations questions

In Chapter 18 Operations improvement Slack et al. identify the following key questions:
Why is improvement so important in operations management? What are the key elements of operations improvement? What are the broad approaches to managing improvement? What techniques can be used for improvement?
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The Red Queen effect

In Alices adventures through the looking glass, by Lewis Carroll, Alice encounters living chess pieces and, in particular, the Red Queen.
Well, in our country, said Alice, still panting a little, youd generally get to somewhere else if you ran very fast for a long time, as weve been doing. A slow sort of country! said the Queen. Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!
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What are the key elements of operations improvement?

The elements that are the building blocks of improvement include:
Radical or breakthrough improvement Continuous improvement Improvement cycles A process perspective End-to-end processes Radical change Evidence-based problem-solving Customer-centricity Systems and procedures Reduce process variation Synchronized flow Emphasize education/training Perfection is the goal Waste identification Include everybody Develop internal customersupplier relationships.
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Four broad approaches to managing improvement

Business process reengineering (BPR) a radical approach to improvement that attempts to redesign operations along customerfocused processes rather than on the traditional functional basis. Total quality management (TQM) puts quality and improvement at the heart of everything that is done by an operation.
Lean an approach that emphasizes the smooth flow of items synchronized to demand so as to identify waste. Six Sigma a disciplined methodology of improving every product, process, and transaction.
All these improvement approaches share overlapping sets of elements.

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BPR advocates reorganizing processes to reflect the natural processes that fulfill customer needs
Functionally-based processes Function 1 Function 2 Function 3 Function 4
End-to-end process 1
Customer needs fulfilled Business processes Customer needs
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Some of the elements of improvement approaches

Emphasis on rapid change Radical/ breakthrough improvement Six Sigma Business process reengineering (BPR)
End-to-end processes
Emphasis on solutions what to do
Lean
Synchronized Reduce flow variation Emphasis on Waste education Perfection identification is the goal Improvement Customer Include all Continuous cycles relationships people improvement Total quality management (TQM) Emphasis on gradual change
Process based analysis Customer centric
Evidence-based decisions
Emphasis on methods how to do it Systems and procedures
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Innovation or breakthrough improvement versus Kaizen or continuous improvement
Innovation
Short-term, dramatic Large steps Intermittent Abrupt, volatile Few champions Individual ideas and effort Scrap and rebuild New inventions/theories Large investment Low effort Technology Profit Effect Pace Timeframe Change Involvement Approach Mode Spark Capex Maintenance Focus Evaluation
Kaizen
Long-term, undramatic Small steps Continuous, incremental Gradual and consistent Everyone Group efforts, systematic Protect and improve Established know-how Low investment Large maintenance effort People Process
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QI Tools and Techniques That Are Used Frequently

Tools Graphs/Piecharts/Barcharts Histograms Flowchart Control Charts Pareto Charts Fishbone Diagrams Root Cause Analysis Countermeasures Action Plans PDCA Checklists Problem Statement Target
Techniques

Brainstorming Multivoting Stratification Cause and Effect Analysis Cost Estimation Cost/Benefit Analysis Barriers and Aids Analysis Process Design and Development Statistical Process Control (SPC) QI Story/Problem-solving Process Tracking Decision Analysis and Resolution TEAMWORKS!
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PDCA
To achieve continuous improvement, we must:

Plan for it Do (implement) it Check and Analyze the results Act
Sometimes we use the term PDCA as a noun: Lets do PDCA!
At the end of meetings. After an improvement cycle. When we want to evaluate progress or possible improvement actions.
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Two improvement cycles

The plandocheckact, or Deming improvement cycle, and the definemeasureanalyzeimprovecontrol, or DMAIC six sigma improvement cycle.
Define
Plan
Do
Control Measure
Act
Check
Improve
Analyze
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The DMAIC cycle

The DMAIC cycle
Defineidentify problem, define requirements and set the goal Controlestablish performance standards and deal with any problems Measuregather data, refine problem and measure inputs and outputs Analyzedevelop problem hypotheses, identify root causes and validate hypotheses
Improvedevelop improvement ideas, test, establish solution and measure results
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Breakthrough improvement
Breakthrough improvement, does not always deliver hoped-for improvements.
Planned breakthrough improvements Performance
Actual improvement pattern
Time
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Continuous improvement
Performance
Standardize and maintain
Improvement
Time
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Continuous improvement (Continued)

PDCA cycle repeated to create continuous improvement
Performance
Plan Act Do Check
Time
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Combined improvement
Combined improvement
Performance
Combined breakthrough and continuous improvement
Time
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What techniques can be used for improvement?

Many techniques described throughout Slack et al. could be considered improvement techniques. Specific improvement techniques include: Scatter diagrams, which attempt to identify relationships and influences within processes; Flow charts, which attempt to describe the nature of information flow and decision-making within operations; Causeeffect diagrams, which structure the brainstorming that can help to reveal the root causes of problems; Pareto diagrams, which attempt to sort out the important few causes from the trivial many causes; Whywhy analysis that pursues a formal questioning to find root causes of problems.
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Some common techniques for process improvement
Input/output analysis Input Output
Flow charts
Scatter diagrams
x x x x x x x x x x
Causeeffect diagrams
Pareto diagrams
Whywhy analysis Why? Why?
Why?
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The Importance and Value of Process Improvement
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Rationale for Process Improvement
Establishing an attitude and culture of quality improvement and continuous improvement enables and empowers the members of an organization to get ever better. Having and using a set of Rules of Conduct is helpful some would say essential. Using a process improvement approach and quality tools is necessary to achieve customer satisfaction. Treat all others with whom you work as customers.
Internal customers
External customers
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What is a process improvement approach?
Identify our high priority processes Design and document them, involving all stakeholders. Deploy defined processes and implement them. Institutionalize use of defined processes. Continually improve defined processes. Apply quantitative measures (Ps and Qs) and quantitative management if appropriate.
Level 4 Working Group L4WG) - Craig Hollenbach, lead.

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How do we identify our highpriority processes?
Identify the products and services we provide. Identify our customers. Identify the processes we perform/use to provide products and services. Identify those that are most important
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Rationale for Process Improvement
Costs
Current process
Improved process
Current cost
Cost of process improvement Options depending upon business goals
Reduced cost
Capability
Reduced capability for lower cost
Source: Merle Whatley, Texas Instruments, Inc..
Current capability
Improved capability at lower cost
CMMI is a tool for improving the ability to transition to an improved process effectively
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Benefits of Process Improvement

Over a five-year period, the Software Engineering Institute(SEI) has documented that by having processes and a focus on continuous improvement, these results can be achieved.
Productivity Increases Productivity Increases Cycle Time Reduction
202% 202% 46%
Defect Reduction Predictability Error Reduction

Average time 5 years
90% 76%
Data derived from an SEI Technical Report, Benefits of CMM-Based Software Process Improvement, CMU/SEI-94-TR-13, August 1994. Slack, Chambers and Johnston, Operations Management, 6th Edition, Nigel Slack, Stuart Chambers, and Robert Johnston 2010
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Lesson 5 Operations Improvement

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18.

Chapter 18 Operations improvement

Pearson Education Ltd. Naki Kouyioumtzis

Operations strategy Operations management Improvement Planning and control

Key operations questions

The Red Queen effect

What are the key elements of operations improvement?

Four broad approaches to managing improvement

All these improvement approaches share overlapping sets of elements.

Functionally-based processes Function 1 Function 2 Function 3 Function 4

Some of the elements of improvement approaches

Emphasis on solutions what to do

Process based analysis Customer centric

Emphasis on methods how to do it Systems and procedures

Innovation or breakthrough improvement versus Kaizen or continuous improvement

QI Tools and Techniques That Are Used Frequently

To achieve continuous improvement, we must:

Plan for it Do (implement) it Check and Analyze the results Act

Sometimes we use the term PDCA as a noun: Lets do PDCA!

Two improvement cycles

The DMAIC cycle

Improvedevelop improvement ideas, test, establish solution and measure results

Actual improvement pattern

Standardize and maintain

Continuous improvement (Continued)

Plan Act Do Check

Combined breakthrough and continuous improvement

What techniques can be used for improvement?

Some common techniques for process improvement

Input/output analysis Input Output

Whywhy analysis Why? Why?

The Importance and Value of Process Improvement

Rationale for Process Improvement

What is a process improvement approach?

Level 4 Working Group L4WG) - Craig Hollenbach, lead.

How do we identify our highpriority processes?

Rationale for Process Improvement

Cost of process improvement Options depending upon business goals

Improved capability at lower cost

Benefits of Process Improvement

Productivity Increases Productivity Increases Cycle Time Reduction

202% 202% 46%

Defect Reduction Predictability Error Reduction

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