OPERATIONS MANAGEMENT for MBAs Fourth Edition Meredith and Shafer Prepared by: Al Ansari Seattle University John Wiley and Sons, Inc. Chapter 3: Controlling Processes

Controlling Processes Chapter 3 Controlling Processes Chapter 3: Controlling Processes

Introduction Chapter 3: Controlling Processes

Texas Instruments Wanted to design new Accounts Receivable using new technologies To monitor and control their cost They identified variety of measures to track including actual versus projected spending Problem – the planned budget exceeded the contract funs available Chapter 3: Controlling Processes

Automotive Systems Group of Johnson Controls Having trouble controlling their product development process Each manager used a different process Workers did not know who was responsible for the work Developments were failing because of rapid company growth New employees were having trouble fitting into the culture. Chapter 3: Controlling Processes

Monitoring and Control Monitor processes, output, and environment to make sure that strategy is appropriate to achieve goals. First, identify the key factors to be controlled. Second, identify the relevant information to be collected. Chapter 3: Controlling Processes

Stages of Operational Effectiveness Internally Neutral Minimize manufacturing’s negative potential Externally Neutral Industry practice is followed Internally Supportive Manufacturing investment support the business strategy Externally Supportive Manufacturing is involved up front in strategic decision Chapter 3: Controlling Processes

Benefits of Balanced Scorecard An effective way to clarify and gain consensus of the strategy A mechanism for communicating the strategy throughout the entire organization A mechanism for aligning departmental and personal goals to the strategy A way to ensure that strategic objectives are linked to annual budgets Timely feedback related to improving the strategy Chapter 3: Controlling Processes

ISO 9000 ISO 9000 was developed by International Organization for Standardization. ISO 9000 was developed as a guideline for designing , manufacturing, selling, and servicing products. It is a “checklist” of good business practices. Chapter 3: Controlling Processes

ISO 9000 Guidelines for designing, manufacturing, selling, and servicing products. Selecting an ISO 9000 certified supplier provides some assurance that supplier follows accepted business practices in areas covered by the standard Chapter 3: Controlling Processes

Elements of ISO 9000 Control of Inspection, Measuring, and Test Equipment Inspection and Test Status Control of Nonconforming Product Corrective and Preventive Action Handling, Storage, Packaging, Preservation, and Delivery Internal Quality Audits Training Servicing Statistical Techniques Management Responsibility Quality System Contract Review Design Control Document and Data Control Purchasing Control of Customer Supplied Product Product Identification and Traceability Process Control Inspection and Testing Chapter 3: Controlling Processes

ISO 14000 Series of standards covering environmental management systems, environmental auditing, evaluation of environmental performance, environmental labeling, and life-cycle assessment. Intent is to help organizations improve their environmental performance through documentation control, operational control, control of records, training, statistical techniques, and corrective and preventive actions. Chapter 3: Controlling Processes

Process Control Chapter 3: Controlling Processes

Process Control Process control is the act of reducing difference between plan and reality for each process. Control is one of the manager’s most difficult tasks involving mechanistic and human elements. Chapter 3: Controlling Processes

Process Control Characteristic of a good control system: Should be flexible Should be cost effective Should be simple Must operate in a timely manner Should be precise Should be fully documented Chapter 3: Controlling Processes

Control Based on Attributes and Variables Inspection for Variables: measuring a variable that can be scaled such as weight, length, temperature, and diameter. Inspection of Attributes: determining the existence of a characteristic such as acceptable-defective, timely-late, and right- wrong. Chapter 3: Controlling Processes

Chance Versus Assignable Variation Chance variation is variability built into the system. Assignable variation occurs because some element of the system or some operating condition is out of control. Quality control seeks to identify when assignable variation is present so that corrective action can be taken. Chapter 3: Controlling Processes

Control Charts Chapter 3: Controlling Processes

Control Charts Developed in 1920s to distinguish between chance variation in a system and variation caused by the system’s being out of control - assignable variation. Chapter 3: Controlling Processes

Control Charts continue Repetitive operation will not produce exactly the same outputs. Pattern of variability often described by normal distribution. Random samples that fully represent the population being checked are taken. Sample data plotted on control charts to determine if the process is still under control. Chapter 3: Controlling Processes

Control Chart with Limits Set at Three Standard Deviations Chapter 3: Controlling Processes

Control Charts for Variables Chapter 3: Controlling Processes

Two Control Charts Sample Means Chart Range Chart Chapter 3: Controlling Processes

Sample Data of Weights of Tacos (Ounces) Chapter 3: Controlling Processes

Analysis of Scenario 1 Sample means show problem having increased from 5 ounces to 8 ounces. Sample ranges have not changed from sample to sample. Chapter 3: Controlling Processes

Analysis of Scenario 2 Sample ranges show problem having increased from 2 ounces to 6 ounces. Sample means have not changed from sample to sample. Chapter 3: Controlling Processes

Patterns of Change in Process Distributions Chapter 3: Controlling Processes

Control Limits Sample Means Chart: Range Chart: Chapter 3: Controlling Processes

Constructing Control Charts Chapter 3: Controlling Processes

Mean Age of Ice Cream Chapter 3: Controlling Processes

Range in Ice Cream Age Chapter 3: Controlling Processes

Control Charts for Attributes Chapter 3: Controlling Processes

Fraction-Defective (p) Charts Chapter 3: Controlling Processes

Number-of-Defects (c) Charts Chapter 3: Controlling Processes

Service Defections Organizations should monitor customer defections feedback from defecting customers can be used to identify problem areas can determine what is needed to win them back changes in defection rate can be used as early warning signal Chapter 3: Controlling Processes

Chapter 3: Controlling Processes

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