AD6 - Operations Management in Supply Chains Flashcards
1
Q
Define Operations Management.
A
Activities, decisions and responsibilities of managing the production and delivery of products and services.
2
Q
What are the 4 types of operations?
A
- Manufacturing: where raw materials are converted to a product
- Supply: involves change of ownership of a product
- Transport: involves the movement of physical products or people
- Service: involves changing the physical, intellectual or emotional state of a customer
3
Q
Operations involve transforming input resources to output products or services. What 3 areas can the inputs be grouped into?
A
- Materials
- Information
- Customers
4
Q
All organisations can be considered to carry out three core activities, what are these?
A
- Input resources are acquired
- Those resources are processed
- Output products/services are delivered to customers
5
Q
Which key functions are involved in the core business activities?
A
- Procurement (Deals with suppliers)
- Marketing (Deals with customers)
- Operations (Processes the inputs to outputs)
6
Q
Operations management should be a driver for business strategy. What is it directly responsible for?
A
-Understanding the organisations strategic objectives
-Developing the operations strategy for the organisation
-Designing the products, services and processes
-Planning and controlling the operation
Improving organisational performance
7
Q
What functions does operations management need to have a close working relationship with due to cross overs in activity?
A
- Marketing - Operations must understand if a change in demand is likely following advertising campaigns
- IT - Must understand systems for planning and control for information provision
- HR - For recruitment or training
- Product/Service Development - Constraints of operational processes
- Finance - Financial analysis and understanding of production requirements
8
Q
What key differences are there between products and services?
A
Tangibility: products are tangible and services aren’t
Homogeneity: products are homogenous whereas services are heterogenous
Intensity: products are capital intensive however services are labour intensive
Transportability: products can be counted and transported, services can’t be measured or transported
9
Q
What issues might globalisation have raised in operations management?
A
- Design adjustments to meet differences in consumer demand and operating in different climates
- Location of operations to achieve competitive advantage (through labour or transport rates)
- Cultural differences in working practices
- The availability in overseas locations of necessary skills and competences
- Problems associated with global supply chains and sourcing
10
Q
Operations is the activity of transforming inputs to outputs. This can be split into 3 sub sections, Delegation, Transformation and Outputs. What sits under each of these categories?
A
- Delegation - People, Information, Materials, Customers
- Transformation - Machines, Processes, Facilities, Methods, Technology
- Outputs - Products, Services, Satisfied Customers
11
Q
What is meant by “Productivity” in relation to output?
A
Total productivity = Total Outputs / Total Inputs
An increase in total outputs or decrease in total inputs improves productivity.
12
Q
What is meant by “Product Mix” in relation to output?
A
The product mix is the % of total output that is devoted to each product (Assuming the manufacturing company creates more than one product).
13
Q
What is meant by “Customer Satisfaction” in relation to output?
A
The customers feelings about the gap between there expectations towards a product / company and the perceived performance of that product / company. A customer is satisfied when the performance meets or exceeds their expectations.
14
Q
Operations processes can differ according to their output. What did Professor Nigel Slack suggest the 4 different ways they can differ?
A
- Volume - High volume tend to achieve cost reduction while low volume tend to have higher unit costs.
- Variety - Higher variety achieves better customer service but costs more whereas lower variety is cheaper through standardisation.
- Variation - Low variation in demand allows for ease of scheduling and resourcing.
- Visibility - High visibility operations (such as retail shops) are more subject to the subjective views of their customers and their tolerance.
15
Q
Businesses tend to develop and implement strategies at 3 different levels, what are these?
A
- Corporate directors: set organisational objectives, policies and procedures.
- Business strategy: set by general managers where the product line is managed independently from standard business operations. For non-diversified undertakings and those with only 1 line of business, business level strategy will be the same as corporate strategy.
- Functional / Operating strategy: strategies created by the function.
16
Q
What aspects are there to be aware of around strategy strategy development?
A
- Strategy development is a continuous process made up of its planned or intended strategy and reaction to new developments or unforeseen events
- Strategies are shaped by internal and external factors
17
Q
What roles can operations play in relation to an organisations business strategy?
A
- Implement strategy: It’s most basic role is to implement the strategy
- Support strategy: This involves developing the resources needed to help the organisation improve and refine its strategic goals
- Drive strategy: To drive strategy by giving it a unique and long term advantage
18
Q
What is the Hayes and Wheelwright 4 step model used to evaluate the competitive role and contribution of the operations function in any type of company?
A
- Internal Neutrality: OM follows strategies that have been set. It makes little contribution to competitive advantage of the enterprise but aims to be neutral, not by doing anything positive but by avoiding mistakes.
- External Neutrality: OM looks outside the organisation and compares itself with similar enterprises elsewhere in the market. The OM isn’t creative or proactive but adopts best practice.
- Internally Supportive: OM aspires to be clearly the best in the market. Operations are already satisfactory but good managers seek further improvement.
- Externally Supportive: One which sees the operations function as an important foundation for its future success. Aim to always be one step ahead.
19
Q
What are the 2 key roles for operations managers?
A
- Implementing the business strategy, translating abstract concepts such as product designs into actual products
- Designing good operations that can give an organisation a competitive advantage
20
Q
What are the 9 traditional activities for OM in manufacturing?
A
- Production Planning: The analysis of customer requirements and development of production plans to satisfy their demand.
- Process Planning: Deciding how a product should be manufactured by reference to component and assembly drawings, determining the sequence of operations and the machines and labour required.
- Production Control: Ensuring the production plan is achieved
- Methods Engineering: The application of work study to record and critically appraise current and proposed ways of working to increase effectiveness and reduce costs.
- Quality Control: Techniques for ensuring that during design, production and servicing both works and materials are to the standards that will produce the desired product performance and reliability.
- Planned Maintenance: Plant, equipment or building maintenance programmes planned to ensure they operate or remain trouble free for a pre-determined period.
- Supplies: All the materials, goods or services used in an enterprise regardless of whether they are purchased outside, transferred from another branch or manufactured in house.
- Manufacturing: The process of making the product
- Distribution: The process or processes by which goods or services are transferred from the producer to the user.
21
Q
All operations have 5 basic operational objectives, what are they?
A
- Cost: producing at a target cost
- Quality: providing customers with products services of the expected quality or better
- Flexibility: ability to change or adapt operational activities to cope with innovations, emergencies or special customer requirements.
- Dependability: keeping delivery promises made to customers
- Responsiveness: ensuring the shortest possible time in meeting the customers request for goods / services
22
Q
What are the 6 inter-related elements to consider when designing a job?
A
- Environmental conditions of the workplace
- Available technology and how it will be used
- Tasks to be allocated to each person
- Best method of performing each job
- Duration of the job and how many people it needs
- Commitment to the job
23
Q
What 4 key approaches are there to job design?
A
- Scientific Management: focus on maximising individual and organisational efficiency. Standardisation of jobs and clear processes to follow.
- Motivational: focus on increasing job satisfaction. They try to make jobs more interesting by motivating with responsibility or autonomy.
- Socio-Technological Systems: combine the needs of workers and technical requirements. Emphasise getting the work done irrespective of motivation.
- Human Factors: focus on the design of equipment, facilities and environmental factors aiming to achieve maximum employee effectiveness, health, safety and satisfaction.
24
Q
In 1911, what 4 principles of Scientific Management did Frederick Winslow Taylor establish?
A
- All aspects of work should be examined and best practice established
- Workers should be selected and trained methodically to perform tasks
- Managers plan the work, while workers should be responsible for delivery
- Managers and workers should co-operate to achieve maximum prosperity for both
25
Job Design processes are generally driven by a design brief describing the need or problem to be solved, what 5 key stages does this involve?
```
Concept Generation
Screening
Preliminary Design
Evaluation & Improvement
Prototyping & final design
```
26
What methods are there for concept generation when doing job design?
- Suggestions from your internal architects and designers
- Watching what your competitors are doing
- Market Survey
- Talking direct to consumer groups
27
After concept generation, the next step to design process is screening. What three things need to be done on a concept design when screening?
- Feasibility - Can we do it? Do we have skills, resource, equipment etc?
- Acceptability - Do we want it? Does it fit with our requirements, strategic direction, give returns etc?
- Vulnerability - Do we want to take the risk? what could go wrong?
28
How can you assess design concepts?
Use a weighted scoring system against feasibility, acceptability and vulnerability scoring each between 0 - 3 and choosing the highest score.
29
After screening, the next step of design process is preliminary design where you aim to produce the first specification. What aspects are considered during preliminary design?
1. Bill of materials
2. Sequence in which components need to be assembled
3. Scope for standardisation of components so cost efficiencies can be achieved
4. Scope for commonality across a range of products so cost efficiencies can be achieved
30
The fourth step in the design process, after the preliminary design, is to evaluate the preliminary design and look for improvements. What 3 techniques are there for evaluating the preliminary design?
QFD - Quality Function Deployment involves identifying and ranking the importance of customer requirements and assessing how well the product satisfies those needs and improving where it doesn’t.
VE - Value Engineering analyses the components themselves looking at cost and relative importance or areas where similar components could do the same. VE exercise usually results in fewer components and standardisation.
Taguchi Methods - looks at the robustness of design testing it against possible risks.
31
The final step of the design process, after evaluating and improving the preliminary design is to create a prototype and test the product. What is the outcome of this stage?
A fully developed specification for a product and the processes required to make it.
32
Sustainability should be considered when designing a product. What techniques are there for considering sustainability in the design stage?
1. Life cycle analysis (LCA) is a technique which identifies the material, energy and waste flows of a product over its entire life so environmental impacts can be determined.
2. Design for disassembly (DSD) is a technique which enables a product to be easily reused, recycled or re-manufactured at the end of life.
3. Use of Environmentally preferred materials which involves selecting abundant non-toxic materials which are bio-degradable.
33
What is a supply network?
A supply network is a series of connected supply chains. Supply Chain is a co-ordinated system of entities, activities information and resources involved in moving raw materials to an end product or service.
34
What three decisions does the supply network help to make with regards to the design of an organisations operations?
- Configuration and Structure - How much should be done in house, or outsourced.
- Location - Where should each part of the supply network be located?
- Capacity - Decisions relating to the physical capacity each part of a supply network has at anyone time.
35
What options are available to the organisation in the middle of the supply network to manage the network behaviour?
- Supply Chain Management: the process of planning, implementing and controlling the operations within the supply chain aiming to supply customers as efficiently as possible.
- Horizontal Integration: acquiring or merging with a competitor (also referred to as market integration)
- Supplier Rationalisation: reducing the number of suppliers with which it has contractual relationships
- Vertical Integration: Owning more or less of its supply networks either through acquiring a supplier of customer or developing skills to penetrate a market.
- Disintermediation: The removing of intermediaries in supply chains ‘cutting out the middleman’
36
As an organisation plans the configuration of its supply networks, what decisions will it have to make which will influence operations?
1. Replacement: deciding whether and when to replace equipment which will impact the capacity and location of the supply network.
2. Expansion: deciding whether to invest in buildings, plant and machinery. Deciding with whom to form alliances and where to locate new facilities.
3. Diversification: assessing the benefits and disadvantages of offering new products or services within a market.
4. Make or Buy: comparing the cost of making a product with buying it from external specialist manufacturers
5. Non-quantifiable considerations: deciding on responsibilities to the community and the environment will affect the operations.
37
Decisions about changing a supply network involve potential investment. What two questions do organisations need to consider before progressing?
Is it feasible?
| Will the potential benefits more than justify the cost involved?
38
What four factors must be considered before investing in reconfiguring a supply network?
1. Technical feasibility: Are the technical aspects of the investment practical and achievable?
2. Operational feasibility: Are existing skills and procedures sufficient to develop, implement and operate the newly designed network?
3. Economic feasibility: Can the organisation access sufficient funds to pay for the investment and will it generate a return on investment?
4. Schedule feasibility: Can the network be developed and implemented within a given time schedule?
39
What two kinds of benefits may come from re-designing a supply network?
1. Direct benefits: can be traced directly to the network design and help to achieve tactical and operational goals.
2. Indirect benefits: help to achieve strategic goals, such as improving customer service but cannot be easily attributed to network design.
40
Outsourcing is an option when considering network design, this is using an external provider to do a key role in the operations. What are the advantages / disadvantages of outsourcing?
+Allows the organisation to concentrate on its core activities
+Hands over the role to a specialist in the field
+Provides greater responsiveness to new market technologies
+The need to maintain an in-house work-force is reduced
-There is a potential for outsourced providers to become competitors
-Security of supply may be at risk if the provider goes out of business
41
What might influence where an organisation chooses as the location for its organisation?
1. Availability - and skills of - labour
2. Access to and suitability of transport
3. Access to utilities
4. Environmental issues such as housing costs
5. Social factors such as the availability of grants
42
What techniques could be used to decide where the location of an organisations operations should be set up?
- Analytic techniques: examples include ‘factor rating’ which is a process of identifying, evaluating and comparing various factors which enter into the decision or ‘centre of gravity’ method which aims to minimise the distance travelled between the operating unit and its supply distribution.
- Linear programming: in all linear programming problems the objective is to reduce a quantity. A typical one for this problem would be to reduce the miles travelled to all customer sites.
- Simulations: models to replicate a situation. The outcome of each option can be calculated and the best one chosen.
43
Volume and variety are key issues to consider in the design of both manufacturing and service processes. What other issues are there to consider?
Mechanics - how does the process work, what physically makes it happen?
Economics - how much does the process cost and add value?
Time Spans - how long does it take to set up and how long does it take per unit once set up?
Constraints - what can’t be done? what is very difficult to do when considering time/cost?
Uncertainties - what can go wrong? what are the risks?
Skills - what isn’t done automatically? what aspects of the process take time to learn?
Flexibility - how does the process react to change? which changes are easy and which not?
Reliability - what tolerances does the process meet? how repeatable are the tolerances?
44
Manufacturing is a process technology, what are the 4 main types of process?
1. Jobbing - deals with high variety and low volumes, such as printing or consultancy.
2. Batch processing - less variety and more volume than jobbing. There will be some repetition of labour and process. Examples include clothing manufacture or a bakery.
3. Mass processing - deals with high volumes and limited variety. Examples include car manufacture.
4. Continuous processing - inflexible and highly capital intensive. Examples include a chemical plant or power station.
45
A production layout is how the machines and equipment and staff are physically configured to transform the inputs to outputs in the most efficient manner. What 3 layouts are there?
1. Fixed Position Layout: used where the product is too heavy or fragile to move. The product is assembled at a fixed location and machinery moved around it. e.g. aircraft manufacture
2. Process Layout: groups similar processes together in the layout. A good example is tool-making.
3. Product Layout: also known as assembly lines, suitable for mass production or repetitive operations with steady demand and high volume. Examples are car manufacturers.
46
What is operations planning and control?
The balancing of supply and demand so that bulk production can be used even where different products are required in low quantities.
47
What is the difference between planning and control?
Planning is establishing guidelines to be followed and when they should be followed in order to meet the organisations goals.
Control is the process of monitoring progress against results and taking action where required.
48
What is the role of planning and control in the short, medium and long term?
Short term - Control is the most important, reacting to emergent issues.
Medium term - Control and Planning are equally important, changing plans where necessary
Long term - Planning is the most important, setting out objectives and how they will be met
49
What are the basic stages in operations planning and control (OPC)?
1. Demand estimation: first stage is determining the demand for a product or service.
2. Aggregate capacity planning: planning the resources including capital, space (buildings), equipment and people required to meet demand.
3. Master operation schedule (MOS): forms the most important part of the materials resource planning system (MRP2)
4. Detailed operations schedule: involves the following overlapping activities (Scheduling, Loading, Sequencing and Monitoring & Control)
5. Short-terms rescheduling, prioritising and control: required to meet changes in capacity demands, disruptions, breakdowns etc.
50
Capacity is an organisations ability to produce products to meet demand in the timescales required. What do the following words mean in relation to not achieving 100% Capacity?
1. Utilisation - relates to the proportion of total capacity being used, actual outputs / available capacity.
2. Production - relates to the amount of products actually made
3. Productivity - is the ratio of outputs to inputs e.g. Number of units produced / machine time used
4. Efficiency - is the actual output / possible output in time operating.
51
What key objectives must an organisations capacity satisfy?
1. Maximising the financial position: trying to achieve the balance of utilisation
2. Enabling flexibility and dependability: having surplus capacity allows an organisation to deal with demand fluctuations
3. Holding the right level of inventory: the organisation may decide to stock to help supply during high demand
4. Improving response times: can be achieved by supplying from stock rather than make to order
52
Once an organisations capacity planning decisions are made its cost structure can become inflexible. How can this be addressed?
Avoiding investment by:
- Subcontracting or outsourcing
- Partnerships, Co-ownership and joint venture arrangements with other manufacturers
- Alliances, amalgamations or integration across the supply chain.
53
What 7 ways can capacity be increased?
1. Reducing downtime by increasing preventative maintenance
2. Offering incentives to employees to increase productivity
3. Enhanced mechanisation or automation
4. Simplifying the product mix, standardisation
5. Working overtime or additional shifts
6. Eliminating bottlenecks in the process
7. Improving design to increase efficiency
54
What is the main challenge when scheduling in intermediate volumes, sometimes called batch scheduling?
The optimum batch size is difficult to estimate as it must balance the cost of storing inventory with the set up costs and price per unit for production. The economic batch quantity (EBQ) should be calculated.
55
How can you calculate the Economic Batch Quantity (EBQ)?
```
EBQ = Square root of ( 2DCs / (1 - D/P)Ch ) where:
D = demand for the considered period
Cs = set up cost
P = production capacity for the period
Ch = inventory costs over period
```
56
Scheduling in low volume, or ‘job shop’, systems is more complex. What sequencing rules can be used to determine which lower volume production runs should take place?
1. Customer priority, helping important customers first
2. Due date, prioritising dates for delivery regardless of size of job
3. First come first served, work is sequenced in exactly the same order as it arrives
4. Shortest operation time, short jobs are done first
57
What rules can be used to assess how well jobs are being prioritised?
- Job flow time, total time from when a job is available for its first processing operations to when its complete.
- Job lateness, the amount of time by which a job missed its required completion date
- Makespan, the time required to complete a group of jobs from start of first job to end of final job
58
What is the difference between dependent and independent demand?
- Independent demand relates to productions which aren’t dependent on demand e.g. products for general sale or stock such as cars
- dependent demand relates to production requirements which are automatically generated by the demand for an item (after the demand is established) e.g. demand for a break system is dependent on demand for cars
59
Inventory can be held to help deal with independent demand. What 5 ways can inventory be categorised as?
1. Finished goods: ready for sale
2. Raw materials: ready to be processed
3. Work-in Progress: partly manufactured products
4. Components and sub-assemblies: complete parts such as wheels
5. Consumables: required to keep operations going
60
Why might inventory be needed?
As a safe guard against uncertainty - kept in anticipation of demand
As an insurance policy - in market shortages
For economy - quantity discounts on bulk purchases
For flexibility - to enable manufacturer to respond quickly
To ‘smooth’ production - making up goods for stock during slack periods
61
With independent demand, you can assume that the demand for a previous period will be the same for the following period unless something changes it. What might change independent demand for a school uniform manufacturer?
- Houses built in the area
- Schools deciding not to make uniform compulsory
- Opening of a new school in the area
- Opening of a new manufacturing plant creating jobs in the area
62
What are the main quantitative techniques for forecasting independent demand?
- Time series analysis: involves trending successive measurements at successive periods and statistically trending.
- Casual modelling: using another factor to measure e.g. baby grows demand will be linked to birth rates.
63
What are the main qualitative methods for forecasting independent demand?
1. Expert panels: a group of experts meet and discuss the possibilities reaching a consensus.
2. Delphi methods: forecasts are solicited independently from knowledgeable people, forecasts are compared and each expert is asked to justify why their forecasts differ from the summary, this is then repeated till agreement is reached.
64
What are MRP, MRP II and ERP?
MRP = material requirements planning
MRP II = manufacturing resource planning
ERP = enterprise resource planning
65
With MRP, what inputs into the Master Production schedule (MPS)?
Orders
| Forecasts
66
With MRP, what inputs into the MRP software?
Master production schedule (MPS)
Bill of materials (BOM)
Inventory file
67
What outputs from MRP software?
1. Primary reports (Changes, Order release, Planned order, Schedules)
2. Secondary reports (Exception reports, Planning reports, Performance, Control reports)
3. Inventory transaction (Receipts, issues)
68
What is the master production schedule (MPS) used in an MRP tool?
It is the starting point which shows what end products must be produced and when. It may be based on orders received or on demand forecasts.
69
What is a bill of materials (BOM) used in an MRP tool?
The BOM file contains details of materials, parts, components and sub-assemblies required to make one unit of the end product. Each product has its own BOM, with each material having a unique code.
70
What is an inventory file used in an MRP tool?
This file stores information relating to individual items of inventory including gross requirements, scheduled delivery dates and stock on hand. It also includes supplier lead times and lot sizes.
71
What is the difference between an MRP tool and an MRP II tool?
An MRP II tool does all the functions of an MRP tool and extends it by linking together such functions as production planning and control, engineering, purchasing, marketing, financial / cost, accounting and human resource management into an integrated decision support system.
72
What is the difference between an MRP II tool and an ERP tool?
ERP is developed as it is real-time rather than run daily which integrates internal and external management information across a whole organisation. The purpose of ERP is to facilitate the flow of information between all business functions and manage connections to external stakeholders.
73
What benefits and drawbacks are there of an ERP tool?
-may take up to 2 years to install
-may need to adapt working practices to the system
+improved quality and efficiency by keeping internal business processes running smoothly
+a enterprise wide view of real-time information available to management to make informed decisions.
+a more agile company which can adapt better to situations / change
+consolidation of finance, marketing and sales, human resource and manufacturing applications.
74
To improve performance, first you must know how good they are already. What might be 5 key measures of business objectives?
1. Quality: defects per unit, customer complaints, scrap level, mean time between failures, customer satisfaction scores
2. Flexibility: time to develop new products, range size, machine change over time, average batch size, time to change schedules
3. Speed: customer query time, order lead time, frequency of delivery, cycle time, actual vs theoretical throughput time
4. Cost: variance against budget, labour productivity, added value, cost per operation hour, efficiency
5. Dependability: % of deliveries which are late, average lateness of order, proportion of products in stock, schedule adherence
75
After measuring performance, you must decide if that level is good, bad or indifferent. To do this you must compare the measured level against a performance standard. What are the 4 main performance standards?
1. Historical: compares with previous performance
2. Targeted: set to reflect a performance level which is regarded as reasonable or appropriate
3. Competitor-based: compare performance levels with those achieved by competitors
4. Absolute: compare with the theoretical limits of best performance
76
One of the most effective ways of gaining information is to benchmark performance. What are the different types of benchmarking and how are they done?
1. Internal benchmarking: involves comparing one operating unit with another in the same organisation
2. External benchmarking: involves comparing your operating activities with those in other organisations, whether competing or not.
3. Functional benchmarking: compares performance of same functions between external organisations, often in different sectors.
4. Competitive benchmarking: compares organisations operating in the same sector
Non competitive benchmarking: comparing external organisations not competing in the same sector
5. Performance benchmarking: compares level of performance within teams within the same internal organisation e.g. customer service across different teams.
6. Practice benchmarking: a form of external benchmarking which looks at working practices in other organisations
77
What should be considered when deciding which form of benchmarking to use?
1. Objectives to be achieved or activities to be reviewed
2. Time and other resources available
3. Level of benchmarking expertise available to the organisation
4. Willingness of best-in-class organisations to make information available
78
What 7 steps are often followed when benchmarking?
1. Decide what functions to benchmark
2. Form a benchmarking team
3. Decide scope of the exercise and performance measures to assess
4. Select suitable organisations to compare with
5. Visit to gain information of those organisations performance
6. Analyse the results and make improvements
7. Regularly review and monitor performance
79
Another improvement technique other than benchmarking is failure mode and effects analysis (FMEA), what is this?
A method of improving quality of products. The technique examines potential failures in products or processes before they happen. Each failure could have a number of potential causes called failure modes which are determined using a technique called fault tree analysis which starts with the potential failure and works backwards through a series of branches to identify all possible causes of the failure. It assesses the severity of consequences, likelihood of occurrence and likelihood of going undetected to produce a risk priority number.
80
What two areas are failure mode and effects analysis (FMEA) applied to?
- Design failure modes effect analysis: identifies potential failures in design before they occur
- Process failure modes effect analysis: looks at potential failures in a process before it occurs
81
What are the 4 main aims of failure mode and effects analysis (FMEA)?
1. Recognise and evaluate the potential failure and its effect
2. Identify actions which could eliminate or reduce the occurrence, or improve detectability.
3. Document the process
4. Track changes which have been incorporated to avoid potential failures
82
Another improvement technique, other than FMEA or Benchmarking, is business process re-engineering (BPR). What is it?
BPR is the completely redesigning the processes of an organisation as it is the belief that organisations should be arranged around the processes which add value to the customer, rather than the functions or activities involved in adding value e.g. sales interface with customers whereas purchasing don’t so processes should be focussed around sales.
83
What are the 7 main principles of business process re-engineering (BPR)?
1. Organise around outcomes, not tasks
2. Those who use the outcome of a process should perform it
3. Subsume information processing work into real work that produces information
4. Treat geographically-dispersed resources as though they were centralised.
5. Link parallel activities instead of integrating their results
6. Put the decision point where the work is performed and build control into the process
7. Capture information only once
84
What potential benefits can come from business process re-engineering (BPR)?
1. Breakthrough improvement: makes step changes in organisations in pace and quality of response to customer needs
2. Organisational renewal: results in new organisational designs which can help companies respond to competitive pressures
3. Corporate culture: workers at all levels are encouraged to make suggestions for improvement and to believe that management will listen
4. Revolutionary thinking: encourages people to ‘think big’
5. Job re-design: helps to create more challenging jobs and more rewarding jobs with workers having involvement in entire processes.
85
What is Total Quality Management (TQM)?
A methodology which works together to produce an organisation focussed on customer satisfaction, continuous process improvement, employee participation, teamwork, leadership and recognition. It encompasses every part of an organisation and involves every member of staff. The philosophy is that quality and productivity both increase as process variability decreases.
86
What 14 points did Deming, the father of TQM, propose for quality improvement?
1. Create constancy of purpose
2. Adopt new philosophy
3. Cease dependence on inspection
4. End awarding business on price
5. Improve constantly the system of production and service
6. Institute training on the job
7. Institute leadership
8. Drive out fear
9. Break down barriers between departments
10. Eliminate slogans and exhortations
11. Eliminate quotas or work standards
12. Give people pride in their workmanship
13. Institute education and a self-improvement programme
14. Put everyone in the company to work to accomplish the transformation
87
What was Joseph M Jurans approach to quality?
He tried to move away from the view that quality is about conformance and that meeting the specification isn’t enough to ensure quality. Quality is actually about being ‘fit for purpose’.
88
What was Kaoru Ishikawa’s approach to quality?
Using quality circles and cause and effect diagrams as key to overall long-term quality improvement. Quality circles are groups of individuals who meet to discuss quality improvements and suggest them to management. Cause and effect diagrams shows the root cause of certain events.
89
What was Genichi Taguchis approach to quality?
He used statistics in quality and introduced the idea of quality loss function (QLF) and robust design. The QLF is a mathematical function which includes all the costs of poor quality, including wastage, repair, inspection, services, warranty and ‘loss to society’ costs. Robust designs is when it is insensitive to the sources of variability even though the sources themselves haven’t been eliminated.
90
What was Philip Crosby’s approach to quality?
He introduced the concept of ‘cost of quality’, he also emphasised ‘zero defects’ as the only performance standard which matters. Cost of quality is a simpler measure of the QLF.
91
What are the key elements stressed by Total Quality Management (TQM)?
- Meeting the needs of the customer
- Covering all parts of the organisation
- Including every person in the organisation
- Examining all quality related costs, including failure
- Getting things right first time
- Developing systems and procedures that support quality
- Embedding a continuous process of improvement
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What techniques should be taught during Total Quality Management Training?
1. Flow charts - pictorially record all operations, activities, decisions and delays in process.
2. Checksheets
3. Pareto principle - 80% of process defects from 20% of process issues
4. Histograms
5. Cause & effect analysis
6. Scatter diagrams
7. Control charts
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What criticisms are there of total quality management (TQM)?
- Blind preoccupation with quality may disregard other market changes
- Customers take 0 defects for granted and expect more in products
- TQM can create a lot of administration relating to quality
- TQM requires specialised techniques, it can delegate quality to only quality experts rather than everyone
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What is Statistical process control (SPC)?
It is a way of measuring and improving quality. It takes regular measurements, often automated, throughout production. It will look for variations and expect them to be inside known tolerances. Any movement outside these tolerances will indicate a fault has occurred.
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What is the Taguchi loss function?
This implies that loss starts as soon as the poor quality starts to move away from perfection and not when the tolerances are exceeded. It states that cost gradually increases as you move away form perfection.
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What is Poke-a-yoke?
A Japanese term for mistake proofing. It aims to design a process where mistakes cannot be made. This is done by preventing, correcting or drawing attention to human errors as they occur.
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What is Six Sigma?
The name comes from sigma being the greek symbol used in maths for a standard deviation. One standard deviation, 1 sigma, represents approximately 2 thirds of the measures that are closest to average. Committed companies will aim to be at 5 or 6 sigma.
