Business Systems - Operations Management

Transcription

1 Business Systems - Operations Management Session 2 Planning & Control, Operations Improvement Facilitator: Dr. Jonathan Farrell 1 This Evening s s Program Little s s Law Some more examples The Nature of Planning & Control Operations Improvement Case Study Geneva Construction & Risk (pp ) 2 1

2 Planning and Control Supply The operation Operations resources Delivery of products and services Required time, quantity and quality of products and services Demand The market Customer requirements 3 What is planning and control? Supply of products and services Planning and control Demand for products and services The operation s resources The activities which reconcile supply and demand The operation s customers 4 2

3 Planning is deciding Control is what activities should take place in the operation when they should take place what resources should be allocated to them understanding what is actually happening in the the operation deciding whether there is a significant deviation from what should be happening (if there is deviation) changing resources in order to affect the operation s activities 5 Significance of planning or control Months / years Time horizon Days / weeks / months PLANNING Long-term Planning and Control Uses aggregated demand forecasts Determines resources in aggregated form Objectives set in largely financial terms Medium-term Planning and Control Uses partially disaggregated demand forecasts Determines resources and contingencies Objectives set in both financial and operations terms Hours / days CONTROL Short-term term Planning and Control Uses totally disaggregated forecasts or actual demand Makes interventions to resources to correct deviations from plans Ad hoc consideration of operations objectives 6 3

4 Planning and control needs. Information on Demand levels Information on Resources 7 Objectives of Operations Planning and Control Quality? Speed? Dependability? Flexibility? Cost? 8 4

5 Quality # of defects per unit # and level of customer complaints Warranty claims Mean time between failure (MTBF) 9 Fast throughput Speed Responsive service to customers Low work-in-progress Low overheads Exposed problems 10 5

6 Dependability Things happen when they should More stability More quality potential Less wasted time/effort Facilitates improvement 11 Flexibility Time needed to develop new products / services Range of products & services Average batch size Time to change schedules 12 6

7 Cost Minimum delivery time / average delivery time Utilisation of resources Labour productivity Cost of inspections (Quality Control) 13 The nature of supply and demand Purchase Make Deliver Make to stock P D Purchase Make Deliver Make to order P D Purchase Make Deliver Resource to order P D P = total throughput time D = Demand time 14 7

8 Operation ASSEMBLE TO ORDER Order Purchase Make Assemble Deliver P D 15 Resource to order Dependent demand Each product or service large compared with total capacity of the operation Make to order Make to stock Independent demand Each product or service small compared with total capacity of the operation 16 8

9 Pull and push philosophies of planning and control PUSH CONTROL CENTRAL OPS. PLANNING AND CONTROL SYSTEM Instruction on what to make and where to send it OR FORECAST Work centre Work centre Work centre Work centre DEMAND 17 Pull and push philosophies of planning and control PULL CONTROL Request Request Request Request Work centre Work centre Work centre Work centre DEMAND Delivery Delivery Delivery Delivery 18 9

10 Dependent and independent demand Dependent demand e.g. input tyre store in car plant Demand for tyres is governed by the number of cars planned to be made Independent demand e.g. tyre fitting service ACE TYRES Demand for tyres is largely governed by random factors 19 Maximum available time Valuable operating time Quality lossesslow running equipment Equipment idling Breakdown failure Set-up and changeovers Not worked (planned) Not worked (unplanned) 20 10

11 Approaches to operations planning and control The big picture plan and control all the operation s resources together Local decision rules set decision rules for each part of the operation to take its own decisions 21 The activities of planning and control When to do things? Scheduling Loading How much to do? In what order to do things? Sequencing Monitoring and control Are activities going to plan? 22 11

12 Finite and Infinite loading Load in std. hours Finite Loading Load in std. hours Infinite Loading Capacity Capacity Work centres Work centres e.g. # of passengers on a plane e.g. # of patients arriving at Emergency department 23 Local decision rules. E.g. Sequencing Various sequencing rules are used in operations: - customer priority; - due date; - LIFO - last in, first out; - FIFO - first in, first out; - longest operation time first; - shortest operation time first

13 The control feedback loop Input Transformation Output Intervention Plans Monitor Compare / replan 25 The drum, buffer, rope, concept Buffer of inventory Activity A Activity B Activity C Activity D Activity E Communication rope controls prior activities Bottleneck drum sets the beat 26 13

14 Volume-Variety Variety influences on planning and control Volume Variety Planning horizon Main planning decision Control decision Robustness Low High Short Timing Detailed High High Low Long Volume Aggregated Low 27 Operations Improvement - A Model Managing operations process improvement Total quality management Operations process improvement Failure prevention and recovery Making processes better Preventing processes becoming worse 28 14

15 How operations can measure their performance Dependability Dependability Quality Cost Quality Cost Speed Flexibility Speed Flexibility Market requirements and operations performance change over time Operational performance Market requirements 29 Delivery performance is 87% - Is this good, bad, or indifferent? 100 Absolute performance = 100% Customer expectation = 98% Target performance = 95% Percentage of deliveries on-time Competitor performance = 81% Performance against customer expectations is POOR Historical performance is GOOD Performance against target is POOR Performance against competitors is GOOD Absolute performance is POOR Now 30 15

16 Innovation... vs...kaizen Short-term, dramatic Large Large steps steps Intermittent Abrupt, Abrupt, volatile volatile Few Few champions Individual ideas ideas & effort effort Scrap Scrap and and rebuild rebuild New New inventions/theories Large Large investment Low Low effort effort Technology Profit Profit Effect Pace Timeframe Change Involvement Approach Mode Spark Capex Maintenance Focus Evaluation Long-term, undramatic Small Small steps steps Continuous, incremental Gradual and and consistent Everyone Group Group efforts, efforts, systematic Protect Protect and and improve Established know-how Low Low investment Large Large maintenance effort effort People People Process 31 Intended performance improvement with breakthrough improvement Performance Breakthrough improvements Time 32 16

17 Actual performance improvement with breakthrough improvement Performance Actual improvement Time 33 Performance improvement with continuous improvement Performance Standardise and maintain Improvement Continuous improvement Time 34 17

18 Define Plan Do Control Measure Act Check Improve Analyze (a) (b) (a) The plan-do-check-act, or Deming improvement cycle, and (b) The define-measure-analyze-improve-control, or DMAIC six sigma improvement cycle 35 Define-identify 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 Improve-develop improvement ideas, test, establish solution and measure results Analyse-develop problem hypotheses, identify root causes and validate hypotheses 36 18

19 PDCA Cycle repeated to create continuous improvement Performance Plan Do Act Check Continuous improvement Time 37 Continuous and breakthrough improvement Cumulative improvement Continuous improvement Breakthrough improvement Time 38 19

20 Performance Planned breakthrough improvements Actual improvement pattern Performance Continuous improvement (a) Time (b) Time Performance Combined breakthrough and continuous improvement (c) Time (a) Breakthrough improvement, (b) continuous improvement and (c) combined improvement patterns 39 SEIRI 1.Straighten up WIP, Unnecessary tools Unused machinery Defective products Paperwork and Documents The Five-Step Kaizen Movement SEITON 2.Put things in order Tools and parts in the right place SEISO 3.Keep the workplace clean SEIKETSU 4.Personal cleanliness Start with your own person SHITSUKE 5.Discipline Follow agreed procedures 40 20

21 A four-step approach to problem solving Recognise the opportunity (PLAN) Act on the opportunity (ACTION) Test the theory to achieve the opportunity (DO) Observe the test results (CHECK) The Deming (Shewart) Cycle 41 Breakthrough Improvement (BPR) Principles of BPR Capture information only once at the source Put decision point where the work is performed Treat geographically dispersed resources as though they were centralised Link parallel activities instead of integrating their results 42 21

22 Characteristics of Successful BPR Aggressive performance targets Commitment of senior management Audits of customers, benchmarking of best practice Dedicated executive resources A comprehensive pilot to test the re-engineered engineered process 43 Candidates for BPR Organisation Structures more than 5 Years Old. Information Systems that are Record Keepers Island Departments e.g. Purchasing, Accounts Payable Organisations with Multiple Areas of Data Collection/Information Gathering Any Process where the Control is Separate from the Activity 44 22

23 BPR - The Problems Up to 70% of BPR Exercises fail due to: Lack of Commitment Holding on to Sacred Cows Not Delegating Responsibility and Authority Using BPR in Isolated Areas of the Organisation Lack of Clear Goals and Objectives Ineffective Use of Information Technology 45 Common techniques for process improvement Input/output analysis Flow charts Scatter diagrams Input Output x x x x x x x x x x x Cause-effect diagrams Pareto diagrams Why-why analysis Why? Why? Why? 46 23

24 Trade-off relationship between objectives Performance objective 2 Performance objective 1 Improve performance by raising the pivot 47 Prioritising ing Competitive Objectives Priorities should be determined by... The IMPORTANCE of each competitive objective Your PERFORMANCE in each of competitive objectives IMPROVEMENT PRIORITIES 48 24

25 ORDER-WINNING OBJECTIVES +ve QUALIFYING OBJECTIVES +ve LESS IMPORTANT OBJECTIVES +ve Competitive Benefit neutral Competitive Benefit neutral Competitive Benefit neutral -ve -ve qualifying level -ve Low Achieved performance High Low Achieved performance High Low Achieved performance High 49 9 Point Importance Scale For this product group does this performance objective... ORDER- WINNING OBJECTIVES 1 - Provide a crucial advantage with customers 2 - Provide an important advantage with most customers 3 - Provide a useful advantage with most customers QUALIFYING OBJECTIVES 4 - Need to be up to good industry standard 5 - Need to be around median industry standard 6 - Need to be within close range of the rest of the industry LESS IMPORTANT OBJECTIVES 7 - Not usually important but could become more so in future 8 - Very rarely rate as being important 9 - Never come into consideration 50 25

26 Temperature Controlled Overnight Service IMPORTANCE to Customers PRICE SERVQUAL (DISN.) SERVQUAL (ORDER TAKE) ENQUIRY LEAD-TIME DROP QUOTE WINDOW QUOTE DELIVERY PERFORMANCE DELIVERY FLEIBILITY VOLUME FLEIBILITY DOC. SERVICE Point Performance Scale For this product group is achieved performance... BETTER THAN COMPETITORS 1 - Consistently considerably better than our nearest competitor 2 - Consistently clearly better than our nearest competitor 3 - Consistently marginally better than our nearest competitor SAME AS COMPETITORS 4 - Often marginally better than most competitors 5 - About the same as most competitors 6 - Often close to main competitors WORSE THAN COMPETITORS 7 - Usually marginally worse than main competitors 8 - Usually worse than most competitors 9 - Consistently worse than most competitors 52 26

27 Temperature Controlled Overnight Service PERFORMANCE against Competitors COST SERVQUAL (DISN.) SERVQUAL (ORDER TAKE) ENQUIRY LEAD-TIME DROP QUOTE WINDOW QUOTE DELIVERY PERFORMANCE DELIVERY FLEIBILITY VOLUME FLEIBILITY DOC. SERVICE Estimated GOOD better than PERFORMANCE AGAINST COMPETITORS same as worse than BAD LOW 9 8 less important qualifying IMPORTANCE FOR CUSTOMERS order winning 1 HIGH 54 27

28 GOOD better than ECESS? APPROPRIATE PERFORMANCE AGAINST COMPETITORS same as worse than IMPROVE URGENT ACTION BAD LOW 9 8 less important qualifying IMPORTANCE FOR CUSTOMERS order winning 1 HIGH 55 PERFORMANCE GOOD AGAINST COMPETITORS better than same as worse than Volume Flex Price/Cost Drop Quote Window Quote Delivery Servqual (DISN) Doc Service Delivery Flex Servqual (Order Take) Enquiry Lead-Time BAD LOW 9 8 less important qualifying IMPORTANCE FOR CUSTOMERS order winning 1 HIGH 56 28

29 Case Study Geneva Construction & Risk How does the Six Sigma approach seem to differ from the TQM approach adopted by the company almost twenty years ago? Is Six Sigma a better approach for this type of company? Do you think that Tyko can avoid the Six Sigma initiative suffering the same fate as the TQM initiative? 57 29