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Lecture 7

MBF2213 | Operations ManagementPrepared by Dr Khairul Anuar

L7: Operations Improvement

Operations improvement

Operations strategy

Design Improvement

Planning and control

Organizing for improvement

Risk management stops processes becoming worse

Operations improvement makes

processes better

Operations management

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?

Key operations questions

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!

The Red Queen effect

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.

What are the key elements of operations improvement?

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)

Business process reengineering (BPR)

Six Sigma

Lean Total quality management (TQM)

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

Some of the elements of improvement approaches

Emphasis on solutions – what to

do

Emphasis on methods – how to

do it

Emphasis on gradual change

Emphasis on rapid change

• 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

Effect Pace

TimeframeChange

Involvement Approach

Mode Spark Capex

Maintenance Focus

Evaluation

Innovation Kaizen

Innovation or ‘breakthrough’ improvement versus Kaizen or continuous improvement

• 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

The plan–do–check–act, or ‘Deming’ improvement cycle, and the define–measure–analyze–improve–control, or DMAIC six sigma

improvement cycle.

Define

Measure

AnalyzeImprove

Control

Plan Do

CheckAct

Plan

Two improvement cycles

Define–identify problem, define

requirements and set the goal

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

Control–establish performance

standards and deal with any problems

The DMAIC cycle

Perf

orm

ance

Time

Planned ‘breakthrough’ improvements

Actual improvement pattern

‘Breakthrough’ improvement, does not always deliver hoped-for improvements.

Breakthrough improvement

Perf

orm

ance

Time

Continuous improvement

Standardize and maintain

Improvement

Continuous improvement

Perf

orm

ance

Time

PDCA cycle repeated to create continuous improvement

Plan

Do

Check

Act

Continuous improvement (Continued)

Perf

orm

ance

Time

Combined‘breakthrough’ and

continuous improvement

Combined improvement

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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.

What techniques can be used for improvement?

Some common techniques for process improvement

Cause–effect diagrams Why–why analysis

Why?

Why?

Why?

Flow charts Scatter diagrams

xx

x x

x xxx

x

x x

Input/output analysis

Input Output

Pareto diagrams

5 Principles of Continuous Improvement

What is Continuous Improvement?

There are 2 keys to ensuring CI improves Business Performance Identify

key processes for improvement, provide colleagues with the

necessary skills

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CI is a systematic approach for driving better performance

CI links the strategic and the CI

CI Methodologies

CI Project execution