6 operations improvement

8/11/2019 6 Operations Improvement

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Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 18

18.1

Operations Improvement

Chapter coverage:

Measuring and Improving Performance

Improvement Priorities

Approaches to improvement

Techniques for process improvement


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18.2

Measuring and Improving Performance

1) Performance measurement

Performance: the degree to which the operations

fulfils performance objectives at any point in time, in

order to satisfy customers.

Performance objectives: quality, speed,

dependability, flexibility and cost

Can represented on a Polar diagram.


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18.3

Market requirements and operations performance change over time

Polar diagram - How operations can measure their performance

Cost

Dependability

FlexibilityQuality

Speed

Cost

Dependability

FlexibilityQuality

Speed

Performance of the operation Requirements of the market


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18.4

2) Performance standards

After an operation has measured its performance, it

needs to make a judgement as to whether its

performance is good, bad or indifferent.

Four ways of comparing current performance tosome kind of performance standard:

1. Historical Standard

2. Target performance standard

3. Competitor performance standards

4. Absolute performance standards


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18.5

1. Historical standards

Comparison against previous performance

Judges if operation is getting better or not over

time.

No indication if performance is satisfactory

2. Target performance standards

Target set randomly to reflect some level of

performance. Must be appropriate and reasonable

Example: Budget (quarterly review)


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18.6

3. Competitor performance standards

Comparison against one or more of the

organizations competitors.

Relates performance directly to its competitive

ability Good for strategic performance improvement

4. Absolute performance standards

Target is a theoretical limit. Example: zero defects, or zero LTI


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18.7 Measuring and Improving Performance

3) Benchmarking

Compares operation with those of other companies.

Process of learning from others

Widely adopted because:

a) The problems faced in managing their processesare most likely similar to other operations

managers elsewhere.

b) There is probably another operation somewhere

that has developed a better way of doing things


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Some objectives:

To judge how well an operation is doing

To set realistic performance standards.

To search for new idea and practices which can be

adopted


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Examples of benchmarking include:

A dishwasher manufacturer comparing the energyefficiency of its own products against its

competitors

An online retailer of computer accessories

comparing the way it organizes its warehouse anddelivery with an online retailer of books and DVDs

A hotel chain comparing the room cleaning times

in all its hotels

A chemical company comparing its transportation

and distribution practices with a specialist logistics

company.


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Types of benchmarking (not mutually exclusive):

Internal benchmarkingcomparison made withinthe same organization.

Example: a large motor vehicle manufacturer with

several factories might choose to benchmark each factory

against the others. External benchmarkingcomparison between an

operation and other operations which are not part of

same organization.


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Non-competitive benchmarkingcomparison

against external organizations which do not competedirectly in the same markets.

Competitive benchmarkingcomparison between

competitors.

Performance benchmarkingcomparisonbetween the levels of achieved performance in

different operations.

Practice benchmarkingcomparison of the way of

doing things.

Example: comparison of SOP for controlling stock levels

by other department stores.


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18.12 Improvement Priorities

Major influences on deciding improvement priorities: The needs and preference of customers

The performance and activities of competitors

1. Judging importance to customers

2. Judging performance against competitors

3. The importance-performance matrix


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18.13

2 - Provide an important advantage with most customers

3 - Provide a useful advantage with most customers

4 - Need to be up to good industry standard

5 - Need to be around median industry standard

6 - Need to be within close range of the rest of the industry

7 - Not usually important but could become more so in future

8 - Very rarely rate as being important

9 - Never come into consideration

Judging importance to customers

For this product group does this performance objective......

ORDER

WINNING

OBJECTIVES

QUALIFYINGOBJECTIVES

LESS

IMPORTANT

OBJECTIVES

9 Point Importance Scale

1 - Provide a crucial advantage with customers


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18.14

1 - Consistently considerably better than our nearest competitor

4 - Often marginally better than most competitors

Judging performance against competitors

For this product group is achieved performance ........

2 - Consistently clearly better than our nearest competitor

3 - Consistently marginally better than our nearest competitor

5 - About the same as most competitors

6 - Often close to main competitors

7 - Usually marginally worse than main competitors

8 - Usually worse than most competitors

9 - Consistently worse than most competitors

BETTER

THAN

COMPETITORS

SAME

AS

COMPETITORS

WORSE

THAN

COMPETITORS

9 Point Performance Scale


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18.15

betterthan

sameas

worsethan

lessimportant qualifying

orderwinning

1

2

3

4

5

6

7

8

9

123456789

IMPORTANCEFOR

CUSTOMERSLOW HIGH

PERFO

RMANCE

AGAINST

COMPE

TITORS

G

OOD

BA

D

URGENTACTION

IMPROVE

APPROPRIATEEXCESS ?


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18.16

Approaches to improvement

1.Breakthrough improvement

Innovation based improvement

Example: introduction of a new, more efficient machine

in a factory

2.Continuous improvement - Kaizen

Smaller incremental improvement steps

Example: modifying the way a component is fixed to an

equipment to reduce change over time.

Rate of improvement is not important but the momentum

is.


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18.17 (a) Breakthrough improvement, (b) continuous

improvement and (c) combined improvement patterns

Performance

Time

Performance

Time

Performance

Time

Planned

breakthrough

improvements

Actual improvement

pattern

Continuous

improvement

Combined

breakthrough and

continuousimprovement

(a) (b)

(c)


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18.18

3.The difference between breakthrough and continuous

improvement

Long-term, undramatic

Small steps

Continuous, incrementalGradual and consistent

Everyone

Group efforts

Conventional know-how

Spread

Little investment

People

Process

Innovation... ...KaizenShort-term, dramatic

Big steps

IntermittentAbrupt, volatile

Few champions

Individual ideas & effort

New inventions/theories

Concentrated all eggs in 1

basketLarge investment

Technology

Results for profit

Effect

Pace

TimeframeChange

Involvement

Approach

Stimulus

Risks

Practical req.

Effort orientation

Evaluation criteria


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18.19

4. Improvement cycle models

Improvement can be represented by a never-ending

process of repeatedly questioning and re-questioning the

detailed working of a process activity

This repeated and cyclical nature of continuous

improvement is usually summarized by improvement

cycles

Examples of improvement cycles:

PDCA cycle

DMAIC cycle


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18.20

Define

Measure

AnalyzeImprove

Plan Do

CheckAct

(a) The plan-do-check-act

(b) The define-measure-analyze-improve-control

Control

(a) (b)

Plan


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18.21

PDCA Cycle repeated to createcontinuous improvement

Time

Performance

Continuousimprovement

Plan

Do

Check

Act


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18.22

Input/output analysis Flow charts Scatter diagrams

Cause-effect diagrams Pareto diagrams Why-why analysis

Input Out put

x

x

x x

x xxx

x

x x

Why?

Why?

Why?

The common techniques for process

improvement


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18.23

Cause-and-effect diagram

Also called Fishbone diagram or Ishikawa diagram.

Used to identify root cause of a problem or potential

solution for an objective.

Encourages team work.

Cause Cause

CauseCause

Cause Effect


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18.24 Cause-and-effect diagram

Construct a cause-and-effect diagram to identify

the causes of poor gas mileage of your car.

Step 1:

Identify the effect

Can be positive (objective) or negative (problem)


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Step 2:Fill in the effect box and draw the spine

Step 3:

Identify main categories

Man Machinery

MethodMaterials

Environment POOR GASMILEAGE


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18.26 Cause-and-effect diagramStep 4:

Identify causes influencing the effect

Man Machinery

MethodMaterials


Wrong octane

gas

Use wrong

gear


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Step 5:Add detailed level

Man Machinery

MethodMaterials


Wrong octane

gas

Use wrong

gear

Dont know

recommendedoctane

No owners

manual

Cant hear

enginePoor hearing

Radio too loud


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Man Machinery

MethodMaterials


Wrong octanegas

Use wrong

gear

Dont know

recommended

octane

No owners

manual

Cant hear

enginePoor hearing

Radio too loud


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Step 6:Analyse the diagram

Select which cause to take action on.


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Nigel Slack Stuart Chambers & Robert Johnston 2004 Operations Management 4E: Chapter 18

18.30

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