Operations Improvement

BUS255

Goals

By the end of this chapter, you should know:• Importance of Operations improvement• Improvement Techniques• Broad approaches to improvement• Elements of Improvement

In ‘Alice’s 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, ‘you’d generally get to somewhere else – if you ran very fast for a long time, as we’ve 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!

The Red Queen effect

Think about examples!

• Automotive sector• Telecommunications sector (cell phones)

Implications• Operations Improvement is necessary to

retain competitive position• Greater operations improvements

(comparatively) are necessary to improve competitive position

Improvement Techniques

Scatter DiagramScatter Diagram: A graph of the value of one variable vs. another variable

Absenteeism

Pro

duct

ivity

Scatter Diagram

• Help us understand the relationship between variables (tool to generate ideas)

• Remember, correlation doesn’t mean causation

• X and Y have positive relationship doesn’t necessarily mean X causes Y.

• Refer to in-class problem # 1

FlowchartFlowchart (Process Diagram): A chart that describes the steps in a process. It is also called as process map.

Flow ChartMRI Flowchart1. Physician schedules MRI2. Patient taken to MRI3. Patient signs in4. Patient is prepped5. Technician carries out MRI6. Technician inspects film

7. If unsatisfactory, repeat8. Patient taken back to room9. MRI read by radiologist10. MRI report transferred to

physician11. Patient and physician discuss

11

10

20%

9

880%

1 2 3 4 5 6 7

Flow Chart

• Flowcharts are vey useful in visually describing processes (tool to organize data)

• Refer to in-class problem # 2

• Let’s do it in Visio

Cause and Effect DiagramCause-and-Effect Diagram: A tool that identifies process

elements (causes) that might effect an outcome. Also called Fishbone diagram or Ishikawa diagram.

CauseMaterials Methods

Manpower Machinery

Effect

Cause-and-Effect DiagramMaterial

(ball)Method

(shooting process)

Machine(hoop &

backboard)Manpower(shooter)

Missed free-throws

Rim alignment

Rim size

Backboard stability

Rim height

Follow-through

Hand position

Aiming point

Bend knees

Balance

Size of ball

Lopsidedness

Grain/Feel (grip)

Air pressure

Training

Conditioning Motivation

Concentration

Consistency

Cause-and-Effect Diagram

• Very helpful for performing root cause analysis. Can also identify areas where further data is needed (tool to generate ideas)

• Most used categories: Machinery, Manpower, Materials, Methods, and Money

• Other categories can also be used

• Refer to in-class problem # 3

Pareto ChartA graph to identify and plot problems or defects in descending order of frequency

Freq

uenc

y

Per

cent

A B C D E

Pareto Charts

Number of occurrences

Room svc Check-in Pool hours Minibar Misc.72% 16% 5% 4% 3%

124 3 2

54

– 100

– 93– 88

– 72

70 –

60 –

50 –

40 –

30 –

20 –

10 –

0 –

Freq

uenc

y (n

umbe

r)

Causes and percent of the total

Cum

ulat

ive

perc

ent

Data for October

Pareto Chart

• Pareto analysis is based on “relatively few causes” explaining the “majority of effects”

• Helps differentiate between “vital few” issues and “trivial many”

• A good tool to organize data• Let’s work on problem # 4 of in-class exercise

Four broad approaches to improvement

Total Quality Management (TQM)

• Puts quality and improvement at the heart of everything that is done by an operation.– Meet the needs and expectations of customers– Improvement covers all aspects of a company– Improvement includes every person in a company– Getting things “right first time”– Develop the systems and procedures

Lean or Just-in-time (JIT) approach

• An approach to meet demand instantaneously, with perfect quality, and no waste .– Customer-centricity– Internal customer-supplier relationships– Perfection is the goal– Synchronized flow– Reduce variation– Include all people– Waste elimination

Business Process Reengineering (BPR)

• A radical approach to improvement that attempts to redesign operations along customer-focused processes rather than on the traditional functional basis.

BPR advocates reorganizing processes to reflect the natural processes that fulfill customer needs

Function 1

Cus

tom

er n

eeds

fulfi

lled

Functionally-based processes

Function 2 Function 3 Function 4

Bus

ines

s pr

oces

ses

End-to-end process 1

End-to-end process 2

End-to-end process 3Cus

tom

er n

eeds

Business Process Reengineering (BPR)

BPR advocates reorganizing processes to reflect the natural processes that fulfill customer needs

Before BPR

BPR advocates reorganizing processes to reflect the natural processes that fulfill customer needs

After BPR

Six Sigma Two meanings

Statistical definition of a process that is 99.9997% capable, 3.4 defects per million opportunities (DPMO)

A program designed to reduce defects, lower costs, save time, and improve customer satisfaction

A comprehensive system for achieving and sustaining business success

Six Sigma► Two meanings

► Statistical definition of a process that is 99.9997% capable, 3.4 defects per million opportunities (DPMO)

► A program designed to reduce defects, lower costs, save time, and improve customer satisfaction

► A comprehensive system for achieving and sustaining business success

Mean

Lower limits Upper limits

3.4 defects/million

±6

2,700 defects/million

±3

Six Sigma Program► Originally developed by Motorola, adopted

and enhanced by Honeywell and GE► Highly structured approach to process

improvement► A strategy► A discipline – DMAIC

► Let’s work on a problem 6

Six Sigma1. Defines the project’s purpose, scope, and outputs,

identifies the required process information keeping in mind the customer’s definition of quality

2. Measures the process and collects data3. Analyzes the data ensuring

repeatability and reproducibility4. Improves by modifying or

redesigning existing processes and procedures

5. Controls the new process to make sure performance levels are maintained

DMAIC Approach

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 customer–supplier relationships.

You are responsible for this slide. Please read in textbook from p. 84-90.

What are the key elements of operations improvement?

References

• Slack, N., Chambers, S., & Johnston, R. (2010). Operations management. 6th ed. Pearson Education.

• Heizer, J. H., & Render, B. (2014). Operations management (11th ed.). Pearson Education.