Lecture 6 MBF2213 | Operations Management Prepared by Dr Khairul Anuar L6: Operations Improvement

Operations improvement Organizing for improvement Risk management stops processes becoming worse Operations improvement makes processes better Operations strategy Operations management Design Improvement Planning and control

Key operations questions 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?

The Red Queen effect 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!

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 customer–supplier relationships.

Four broad approaches to managing improvement 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.   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. (Refer to Slack et al. page 549-554)

Some of the elements of improvement approaches Emphasis on gradual change Emphasis on rapid change Business process reengineering (BPR) End-to-end processes Radical/ breakthrough improvement Evidence-based decisions Systems and procedures Improvement cycles Perfection is the goal Reduce variation Customer centric Emphasis on education Include all people Customer relationships Waste identification Synchronized flow Process based analysis Continuous improvement Six Sigma Lean Total quality management (TQM) Emphasis on solutions – what to do Emphasis on methods – how to do it

Innovation or ‘breakthrough’ improvement versus Kaizen or continuous improvement 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 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 Effect Pace Timeframe Change Involvement Approach Mode Spark Capex Maintenance Focus Evaluation

Two improvement cycles The plan–do–check–act, or ‘Deming’ improvement cycle, and the define–measure–analyze–improve–control, or DMAIC six sigma improvement cycle. Plan Do Check Act Define Measure Analyze Improve Control

Define–identify problem, define requirements and set the goal The DMAIC cycle Control–establish performance standards and deal with any problems Measure–gather data, refine problem and measure inputs and outputs Analyze–develop problem hypotheses, identify ‘root causes’ and validate hypotheses Improve–develop improvement ideas, test, establish solution and measure results

Breakthrough improvement ‘Breakthrough’ improvement, does not always deliver hoped-for improvements. Planned ‘breakthrough’ improvements Performance Actual improvement pattern Time

Continuous improvement Standardize and maintain Improvement Performance Time

Continuous improvement (Continued) PDCA cycle repeated to create continuous improvement Plan Do Check Act Performance Time

Combined ‘breakthrough’ and continuous improvement Combined improvement Combined ‘breakthrough’ and continuous improvement Performance Time

What techniques can be used for improvement?

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; Cause–effect 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; Why–why analysis that pursues a formal questioning to find root causes of problems.

Some common techniques for process improvement Input/output analysis Input Output Flow charts Scatter diagrams x Cause–effect diagrams Pareto diagrams Why–why analysis Why?