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Chapter 10. Process Improvement

Chapter 10. Process Improvement. Outline Business Process Reengineering Definition People of Reengineering Elimination of Waste Identification/Elimination of Waste Commitment to People Commitment to Quality JIT Production Process. Business Process Reengineering.

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Chapter 10. Process Improvement

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  1. Chapter 10. Process Improvement • Outline • Business Process Reengineering • Definition • People of Reengineering • Elimination of Waste • Identification/Elimination of Waste • Commitment to People • Commitment to Quality • JIT Production Process MAN 3504 - Chapter 10

  2. Business Process Reengineering • Hammer and Champy (1993): “ Reengineering isn’t another idea imported from Japan. It isn’t another quick fix that American managers can apply to their organizations. It isn’t a new trick that promises to boost the quality of a company’s product or service or shave a percentage of costs. … Business reengineering isn’t about fixing anything. Business reengineering means starting all over, starting from scratch. …. What matters in reengineering is how we want to organize work today, given the demands of today’s markets and the power of today’s technologies.” MAN 3504 - Chapter 10

  3. BPR • Process Rethinking • Focus on the product/result, not in the current process. • Combine several jobs into one, moving away from the assembly line view of process (horizontal integration). • Allow workers to make decisions, provide them multiple skills (vertical integration). • Organize the process so that the steps are performed in a natural order: eliminate unnecessary precedences. • Develop processes that have multiple versions, reducing or eliminating standardization. To improve the efficiency, start processes with a triage area that determines the correct path. MAN 3504 - Chapter 10

  4. BPR • Process Rethinking • Plan work so it is performed where it makes the most sense, eliminating departmental barriers. • Reduce checks and controls to reduce process cost. • Implement hybrid centralized/decentralized operations that use some common operations, but allow individuals and groups to make decisions. • Have those that use the output of the process, perform the process. MAN 3504 - Chapter 10

  5. BPR • The People of Reengineering - Companies do not reengineer, people do. • Leader – a senior executive who motivates and supports the reengineering effort • Process Owner – a manager who is responsible for the process being reengineered • Reengineering team – a group of individuals responsible for the reengineering of the process (analysis and redesign). • Steering committee – a policy-making management team who plans the overall reengineering strategy. MAN 3504 - Chapter 10

  6. Waste Minimization through JIT • Continuous Process improvement • Four areas: • Identification/Elimination of Waste • Commitment to People • Commitment to Quality • JIT Production Process MAN 3504 - Chapter 10

  7. Waste Minimization through JIT-Elimination of waste • Seven Types of Waste • Waste from overproduction. The costs of overproduction are related to the costs of holding inventory described in chapter 8 (obsolescence, storage costs). Having items available when a customer arrives has value, having too much is a cost. • Waste of waiting. When materials or customers are waiting, no value is being added, instead, money is tied up, or a customer is becoming impatient. • Transportation waste. Similar to the cost of waiting; while materials are being moved there is no value being added. • Inventory waste. Also related to holding inventory costs. • Processing waste. IT is possible that some activities of the process are either unnecessary (not adding value) or not very efficient (adding very little value for all the effort required). • Waste of motion. The cost of workers performing unnecessary movements and actions. MAN 3504 - Chapter 10

  8. Waste Minimization through JIT-Elimination of waste Reduction of Waste • Reduction of Overproduction Waste: Minimizing finished goods inventory, JIT production system. • Reduction of Waiting Waste: Work at minimizing setup times. • Reduction of Transportation Waste: Improve layouts and equipment location. • Reduction of Inventory Waste: Reduction of inventories, JIT production system. • Reduction of Processing Waste: Process simplification, less packaging or automate processes. • Reduction of Motion Waste: Improve layouts and equipment ergonomics. • Reduction of Product defects Waste: Emphasize quality, SPC programs. MAN 3504 - Chapter 10

  9. Waste Minimization through JIT-Commitment to People • Management Style: • Importance of employee commitment and involvement. • Bottom-round management, where committees or teams make decisions • Teamwork: • Teamwork helps the successful analysis and elimination of waste in processes, the implementation of quality programs as SPC, and the development of training programs. • Suppliers: • JIT fosters a close relationship with suppliers - objective is to maximize the benefits to both the buyer and the supplier. • Information, resources and even profits are shared. • Suggestion Systems: • The JIT philosophy encourages employee innovations by rewarding their ideas • Individuals receive small financial incentives for ideas (that are implemented or have potential). MAN 3504 - Chapter 10

  10. Waste Minimization through JIT-Commitment to Quality • Suppliers • Supplier selection based on quality first, then other factors. • Supplier selection (and later vendor certification) is based on their expected ability to provide zero defect products at the right time and location. • Production Process • The JIT system makes everyone in the organization responsible for quality. This is different from norm where the quality department is responsible for quality and the production just for making the stuff. • To prevent quality problems three sub-steps are implemented in a process activity, a) inspect/check a characteristic that typically has problems or it is critical to the customer b) perform a value adding or required action c) inspect your work. MAN 3504 - Chapter 10

  11. Waste Minimization through JIT-JIT Production MAN 3504 - Chapter 10

  12. Waste Minimization through JIT-JIT Production • Quick Delivery • High Quality of Incoming Materials • Stable Demand • High Process Quality • Small Setup time • Multi-skilled workforce • Effective preventive maintenance MAN 3504 - Chapter 10

  13. Inventory Decision Making - Internal Demand • MRP Systems is a process that requires component information • Product structure • Production/Supply lead time • Lot size if any • Available inventory MAN 3504 - Chapter 10

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