Business 6: Operations Management - Process Management Flashcards
What do you call the management approach that seeks to coordinate the functions of an organization toward an ultimate goal of continuous improvement in customer satisfaction?
BPM (Business process management)
What does BPM stand for?
Business process management
BPM activities can be grouped into what five categories?
1) Design
2) Modeling
3) Execution
4) Monitoring
5) Optimization
In BPM, what does the design phase involve?
Id existing processes and the conceptual design of how processes should f(x) once they have been improved
In BPM, what does the modeling phase involve?
Introduces variables to the conceptual design for what-if analysis
In BPM, what does the execution phase involve?
Design changes are implemented AND key indicators of success are developed
In BPM, what does the monitoring phase involve?
Info is gathered and tracked and compared to expected performance
In BPM, what does the optimization phase involve?
Using the monitoring data and the original design, the process manager continues to refine the process
What techniques do we use as part of the BPM process?
1) Define - Where are we now?
2) Measure - Are we getting better?
3) Analyze - What’s the ideal goal? What’s the best what-if?
4) Improve - Can I actually make the change happen?
5) Control - Did it work? If not, can I make other changes to try and make it work?
Process management also has been commonly referred to as what?
PDCA
- Plan
- Do
- Check
- Act
What are four examples of measures or process metrics that are compared to expectations to monitor progress?
1) Gross revenue (financial)
2) Customer contacts (e.g. leads)
3) Customer satisfaction (e.g. complaints)
4) Operational statistics (e.g. time)
What are three benefits of process management?
1) Efficiency
2) Effectiveness
3) Agility
Define agility.
Responses to change are faster and more reliable
Define effectiveness.
Objectives are accomplished with greater predictability
Define efficiency.
Fewer resources are used to accomplish organizational objectives
What refers to seeking out redundant services, combining them, and then sharing those services w/i a group or organization?
Shared services
Shared services create efficiency through consolidation of redundant services. What are the two downsides?
1) Service flow disruption
2) Failure demand
What is outsourcing?
Contracting of services to an external provider
Give an example of outsourcing.
Payroll service
What is offshore operations?
Outsourcing of services or business functions to an external party in a different company
What are the four most common types of offshore outsourcing?
1) IT outsourcing
2) Business process outsourcing (e.g. call centers)
3) Software R&D (e.g. software development)
4) Knowledge process outsourcing (e.g. reading x-rays)
What are the implications for business risks and controls for offshore outsourcing?
- Generally same as outsourcing but with greater emphasis on LACK OF CONTROLS associated with proximity, as well as potential LANGUAGE ISSUES
Rational and irrational methods may be used to select process improvement initiatives. What characterizes irrational methods?
Intuitive and emotion
Rational and irrational methods may be used to select process improvement initiatives. What characterizes rational methods?
Structured and systematic
What are four crucial features of successful implementation activities?
1) Internal leadership
2) Inspections
3) Executive support
4) Internal process ownership (accountability)
What refers to techniques to help organizations RETHINK how work is done to dramatically improve customer satisfaction and service, cut costs of operations, and enhance competitiveness?
BPR (business process reengineering)
What is the key difference between BPM and BPR?
BPM - seeks incremental change
BPR - seeks radical changes
True or false.
BPM has been criticized for what some believe was overaggressive downsizing.
False (BPR not BPM)
What do performance improvement philosophies and techniques seek to provide?
Seek to provide
- highest quality goods and services
- in the most efficient and effective manner possible
How does JIT management anticipate achievement of efficiency?
By scheduling the deployment of resources JIT to meet customer or production requirements
According to JIT management, does inventory add value?
NO (produces wasteful costs)
True or false.
A benefit of JIT implementation is greater efficiency in the use of employees with multiple skills.
True
What is broadly defined by the marketplace as a product’s ability to meet or exceed customer expectations?
Quality
The costs of quality include costs associated with activities related to what?
- Conformance costs: Conformance w/ quality standards
- Non-conformance costs: Opportunity costs or activities associated w/ correction nonconformance w/ quality standards
The costs of ensuring conformance w/ quality standards are classified as what?
1) Prevention costs
2) Appraisal costs
Prevention costs are conformance costs incurred to do what?
Prevent the production of defective units (e.g. employee training, product redesign, etc.)
Appraisal costs are conformance costs incurred to do what?
Discover and remove defective parts before they’re shipped to the customer or the next department (e.g. testing, inspection, etc.)
Are statistical quality checks an appraisal cost?
YES
What type of costs are often difficult to compute b/c most of these costs are in the form of opportunity costs (e..g lost sales or rep damage)?
Nonconformance costs
What do you call the costs to cure a defect discovered before the product is sent to the customer?
Internal failure costs
Give an example of an internal failure cost.
- rework costs
- scrap
- tooling changes
- costs to dispose
- cost of the lost unit
- downtime
What do you call the costs to cure a defect discovered after the product is sent to the customer?
External failure costs
Give an example of an external failure cost
- warranty costs
- cost of returns
- liability claims
- lost customers
- reengineering an external failure
An ______ relationship b/w conformance and nonconformance costs exists.
Inverse
“Cost of quality” reports display the financial result of quality which include what four types of costs.
APIE
Appraisal
Prevention
Internal failure
External failure
What does TQM stand for?
Total quality management
What does TQM represent?
An organizational commitment to customer focused performance that emphasizes both QUALITY and CONTINUOUS IMPROVEMENT
How many critical factors does TQM identify?
7
What do you call the technique used as part of the strategic positioning function in which management assesses the quality practices of the organization?
Quality audits
What do you call the analysis that determines the gap between industry best practices and the current practices of the organization?
Gap analysis
What is lean manufacturing?
Requires use of only those resources required to meet the requirements of customers
Does lean manufacturing have a quality focus?
No (waste reduction and efficiency focus)
What does the Japanese term “Kaizen” refer to?
Continuous improvement efforts that improve the efficiency and effectiveness of organizations through greater operational control
ABC and ABM are highly compatible with process improvements and _______.
TQM (total quality management)
ABC and ABM systems highlight the costs of activities. The availability of cost data by activity makes the id of costs of quality and value-added activities more ______.
obvious
Demand flow manages resources using what?
Customer demand as the basis for resource allocation
Which theory states that organizations are impeded from achieving objectives by the existence of one or more constraints?
Theory of constraints
True or false.
The organization or project must be consistently operated in a manner that either works around or leverages the constraint.
True
When are internal constraints evident?
When market demands more than system can produce
When do external constrains exist?
When our system produces more than the market requires
What eliminates the effect of the constraint on work flow?
Buffers
In a quality control program, which is categorized as internal failure costs?
I. Rework
II. Responding to customer complaints
III. Statistical quality control procedures
I. Rework
What type of program is Six Sigma?
Continuous quality-improvement program that requires specialized training
What model of process management does Six Sigma expand on?
Plan-Do-Check-Act model
Six Sigma outlines methodologies to improve current process and develop ___ processes.
New
What methodology does Six Sigma outline to improve current processes?
DMAIC for existing product and business process improvements
- Define the problem
- Measure key aspects of current process
- Analyze data
- Improve or optimize current processes
- Control
What methodology does Six Sigma outline to develop new processes?
DMADV for new product or business process development
- Define design goals
- Measure CTQ issues
- Analyze design alternatives
- Design optimization
- Verify the design
All of the following would be included in a cost of quality report, except:
a) Lost CM
b) Design engineering
c) Supplier evaluations
d) Warranty claims
a) Lost CM
Which of the following is not a characteristic of TQM?
a) Continuous improvement
b) Waste reduction
c) Customer focus
d) Quality circles
b) Waste reduction
The maximization of throughput is an inherent concept in which management philosophy?
Theory of Constraints
Which management philosophy strives to please customers by improving their products?
Total quality management
Which management philosophy emphasizes cost reduction above production constraints?
Six Sigma
Which management philosophy focuses on value added by identifying the cost drivers that add value?
ABC
