Operations Improvement

1. Operations Improvement BUS255

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

3. 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!

4. 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

5. Improvement Techniques

6. Productivity Absenteeism Scatter Diagram Scatter Diagram: A graph of the value of one variable vs. another variable

7. 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

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

9. 8 80% 7 11 6 3 2 4 5 1 9 10 20% Flow Chart MRI Flowchart • Physician schedules MRI • Patient taken to MRI • Patient signs in • Patient is prepped • Technician carries out MRI • Technician inspects film • If unsatisfactory, repeat • Patient taken back to room • MRI read by radiologist • MRI report transferred to physician • Patient and physician discuss

10. 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

11. Cause Materials Methods Effect Manpower Machinery Cause and Effect Diagram Cause-and-Effect Diagram: A tool that identifies process elements (causes) that might effect an outcome. Also called Fishbone diagram or Ishikawa diagram.

12. Method (shooting process) Material (ball) Grain/Feel (grip) Aiming point Size of ball Bend knees Air pressure Hand position Balance Lopsidedness Follow-through Missed free-throws Training Rim size Conditioning Rim height Motivation Rim alignment Consistency Backboard stability Concentration Machine (hoop & backboard) Manpower (shooter) Cause-and-Effect Diagram

13. 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

14. Percent Frequency A B C D E Pareto Chart A graph to identify and plot problems or defects in descending order of frequency

15. Data for October 70 – 60 – 50 – 40 – 30 – 20 – 10 – 0 – – 100 – 93 – 88 – 72 54 Frequency (number) Number of occurrences Cumulative percent 12 4 3 2 Room svc Check-in Pool hours Minibar Misc. 72% 16% 5% 4% 3% Causes and percent of the total Pareto Charts

16. 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

17. Four broad approaches to improvement

18. 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

19. 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

20. 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.

21. BPR advocates reorganizing processes to reflect the natural processes that fulfill customer needs Business Process Reengineering (BPR) Functionally-based processes Function 1 Function 2 Function 3 Function 4 End-to-end process 1 End-to-end process 2 Customer needs Business processes Customer needs fulfilled End-to-end process 3

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

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

24. 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

25. Lower limits Upper limits 2,700 defects/million 3.4 defects/million Mean ±3 ±6 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

26. 6 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

27. Six Sigma Definesthe project’s purpose, scope, and outputs, identifies the required process information keeping in mind the customer’s definition of quality Measuresthe process and collects data Analyzes the data ensuringrepeatability and reproducibility Improvesby modifying or redesigning existing processes and procedures Controlsthe new process to make sure performance levels are maintained DMAIC Approach

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

29. 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.