Transcript 24594418-chapter-18

Chapter 18
Operations improvement
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Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Operations improvement
Operations
improvement
Operations
strategy
Design
Operations
management
Planning and
control
Improvement
Total quality
management
organizes process
improvement
Operations
process
improvement
makes processes
better
Failure
prevention and
recovery stop
processes
becoming worse
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Performance measurement
• The activity of measuring and assessing the
various aspects of a process or whole
operation’s performance.
• Performance measurement, as we are treating it
here, concerns three generic issues.
– What factors to include as performance measures?
– Which are the most important performance
measures?
– What detailed measures to use?
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
What factors to include as
performance measures?
• The five generic performance objectives –
– quality,
– speed,
– dependability,
– flexibility and cost
• can be broken down into more detailed measures, or
they can be aggregated into ‘composite’ measures, such
as ‘customer satisfaction’, ‘overall service level’ or
‘operations agility’.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
What factors to include as
performance measures?
• These composite measures may be
further aggregated by using measures
such as
– ‘Achieve
market objectives’,
– ‘Achieve financial objectives’,
– ‘Achieve operations objectives’ even
– ‘Achieve overall strategic objectives’.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Performance measures at different levels of aggregation
Broad strategic
measures
Functional strategic
measures
Overall strategic
objectives
Market
strategic
objectives
Operations
strategic
objectives
Financial
strategic
objectives
Composite
Customer
performance
Agility
Resilience
satisfaction
measures
Generic operations
Cost
Quality Dependability Speed Flexibility
performance
measures
Transaction
Defects per Mean time Customer
Time to
costs
query time
unit
between
market
Some detailed
failures
Labour
Order lead time Product
performance Level of
productivity
Lateness
range
customer
Throughput
measures
complaints time
complaints
Machine
efficiency
Scrap level
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Performance measures at different levels of aggregation
Broad strategic
measures
High strategic
relevance and
aggregation
Functional strategic
measures
Composite performance
measures
Generic operations
performance measures
Detailed performance
measures
High diagnostic
power and
frequency of
measurement
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The balanced scorecard
approach
• The balanced scorecard is a strategic planning
and management systemthat is used extensively
in business and industry, government, and
nonprofit organizations worldwide to align
business activities to the vision and strategy of
the organization, improve internal and external
communications, and monitor organization
performance against strategic goals.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The measures used in the balanced scorecard
Financial performance
measures
To achieve strategic impact,
how should we be viewed by
shareholders?
Internal process
performance measures
To achieve strategic impact,
what aspects of
performance should
business process excel at?
Overall strategic
objectives
Learning and growth
performance measures
Customer performance
measures
To achieve strategic
impact, how should we
be viewed by
customers?
To achieve strategic
impact, how will we
build capabilities over
time?
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Setting target performance
• Setting performance targets transforms performance
measures into performance ‘judgments'. Several
approaches to setting targets can be used, including the
following.
– Historically-based targets – targets that compare current
against previous performance;
– Strategic targets – targets set to reflect the level of
performance that is regarded as appropriate to achieve strategic
objectives;
– External performance-based targets – targets set to reflect
the performance that is achieved by similar, or competitor,
external operations;
– Absolute performance targets – targets based on the
theoretical upper limit of performance.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Benchmarking
• Benchmarking is ‘the process of learning from
others’ and involves comparing one’s own
performance or methods against other
comparable operations.
• Its rationale is based on the idea that
– (a) problems in managing processes are almost
certainly shared by processes elsewhere, and
– (b) there is probably another operation somewhere
that has developed a better way of doing things.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Types of Benchmarking
• There are many different types of
benchmarking some of which are listed
below:
– Internal benchmarking
– External benchmarking
– Non-competitive benchmarking
– Competitive benchmarking
– Performance benchmarking
– Practice benchmarking
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Improvement Priorities
• we identified two major influences on the
way in which operations decide on their
improvement priorities:
– The needs and preferences of customers;
– The performance and activities of
competitors.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Judging importance to customers
+ve
+ve
neutral
–ve
Achieved
performance
High
neutral
–ve
Low
Qualifying
level
Achieved
performance
High
Competitive benefit
+ve
Low
Less important
objectives
Qualifying
objectives
Competitive benefit
Competitive benefit
Order-winning
objectives
neutral
–ve
Low
High
Achieved
performance
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
9-point importance scale
For this product or service, does this performance objective …
1 …provide a crucial advantage with customers?
Order-winning
objectives
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?
Qualifying
objectives
Less important
objectives
5 …need to be around median industry standard?
6 …need to be within close range of the rest of the industry?
7 …rate as not usually important but could become more so
in future?
8 …very rarely rate as being important?
9 …never come into consideration?
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
GOOD
1
better
EXCESS ?
2
than
APPROPRIATE
COMPETITORS
AGAINST
PERFORMANCE
3
4
same
as
5
IMPROVE
6
7
X
worse
than
BAD
X
URGENT
ACTION
8
9
9
8
less
important
7
6
5
qualifying
4
3
2
1
order
winning
IMPORTANCE
LOW
FOR
CUSTOMERS
HIGH
The Importance–Performance Matrix
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
GOOD
1
better
Delivery
Volume flex.
2
X
than
COMPETITORS
AGAINST
PERFORMANCE
X
X
4
same
as
X Servqual
(Disn.)
5
Doc service
6
Price/Cost
X
X
XDelivery flex.
7
worse
than
BAD
Window
quote
Drop quote
3
X
Servqual X
(order take)
X
Enquiry Lead-time
8
9
9
8
less
important
7
6
5
4
qualifying
3
2
1
order
winning
IMPORTANCE
LOW
FOR
CUSTOMERS
HIGH
The Importance–Performance Matrix
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Approaches to Improvement
• Two particular strategies represent different, and to
some extent opposing, philosophies. These two
strategies are:
• Breakthrough improvement An approach to improving
operations performance that implies major and dramatic
change in the way an operation works.
• Continuous improvement An approach to operations
improvement that assumes many, relatively small,
incremental, improvements in performance, stress the
momentum of improvement rather than the rate of
improvement; also known as kaizen, often contrasted
with breakthrough improvement.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Approaches to Improvement
Innovation
Short-term, dramatic
Large steps
Intermittent
Abrupt, volatile
Few champions
Individual ideas & effort
Scrap and rebuild
New inventions/theories
Large investment
Low effort
Technology
Profit
Kaizen
Effect
Pace
Timeframe
Change
Involvement
Approach
Mode
Spark
Capex
Maintenance
Focus
Evaluation
Long-term, undramatic
Small steps
Continuous, incremental
Gradual and consistent
Everyone
Group efforts, systematic
Protect and improve
Established know-how
Low investment
Large effort
People
Process
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The plan–do–check–act (or ‘Deming’) improvement cycle,
and the define–measure–analyze–improve–control
(or DMAIC) ‘six sigma’ improvement cycle
Define
Plan
Do
Control
Act
Check
Improve
Measure
Analyze
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The DMAIC
cycle
Define – identify the
problem, define
requirements and set
the goal
Control – establish
performance
standards and deal
with any problems
Measure – gather
data, refine problem
and measure inputs
and outputs
Analyze – develop
Improve – develop
improvement ideas, problem hypotheses,
identify ‘root causes’
test, establish
and validate
solution, and
hypotheses
measure results
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The business process reengineering approach
• The philosophy that recommends the redesign
of processes to fulfill defined external customer
needs.
• The fundamental rethinking and radical redesign
of business processes to achieve dramatic
improvements in critical, contemporary
measures of performance, such as cost, quality,
service and speed.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The Principles of BPR
• The main principles of BPR have been
summarized as follows:
– Rethink business processes in a cross-functional
manner.
– Strive for dramatic improvements in the performance
by radically rethinking and redesigning the process.
– Have those who use the output from a process
perform the process.
– Put decision points where the work is performed.
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
BPR advocates reorganizing (reengineering) processes
to reflect the natural processes that fulfil customer needs
Functionally based processes
Function 2
Function 3
Function 4
End-to-end process 2
End-to-end process 3
Business processes
Customer needs
End-to-end process 1
Customer needs fulfilled
Function 1
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Some common techniques for process improvement
Input/output analysis
Flowcharts
Scatter diagrams
x
Input
Output
x
x
Cause–effect diagrams
Pareto diagrams
x
x
x
x
x
x
x
x
‘Why-why’ analysis
Why?
Why?
Why?
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The sandcone model of improvement
Cost
Flexibility
Speed
Dependability
Quality
Quality
Quality + dependability
Quality + dependability + speed
Quality + dependability + speed + flexibility
Quality + dependability + speed + flexibility + cost
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007