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Ohio University Corporate MBA ProgramOhio University Corporate MBA ProgramOhio University Corporate MBA Program 1

TENAGA NASIONALTENAGA NASIONAL

Ohio Uni versi tyOhio Uni versi tyCorporate MBA ProgramCorporate MBA Program

CMBA 611: Management of OperationsCMBA 611: Management of OperationsCMBA 611: Management of Operations

Ohio University Corporate MBA ProgramOhio University Corporate MBA ProgramOhio University Corporate MBA Program

Microsoft PowerPointMicrosoft PowerPoint PresentationsPresentations Copyright 1996 Brian Manhire Copyright 1996 Brian Manhire

to Accompanyto Accompany

Operations Management, 2/eOperations Management, 2/e

by James B. Dilworthby James B. Dilworth 1996,1996, McGraw-Hill, Inc.McGraw-Hill, Inc.

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Ohio University Corporate MBA ProgramOhio University Corporate MBA ProgramOhio University Corporate MBA Program 3

Chapter 9Chapter 9Review and Redesign forReview and Redesign for

Continuous ImprovementContinuous Improvement

CMBA 611: Management of OperationsCMBA 611: Management of OperationsCMBA 611: Management of Operations

Ohio University Corporate MBA ProgramOhio University Corporate MBA ProgramOhio University Corporate MBA Program 4

IntroductionIntroductionThis chapters theme isThis chapters theme iscontinuous improvementcontinuous improvement

Continuous improvement isContinuous improvement isrequired in the current (andrequired in the current (and

anticipated) global businessanticipated) global businessenvironmentenvironment

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Introduction cont.Introduction cont.In addition, this chapter provides:In addition, this chapter provides:A general procedure forA general procedure for

improvementimprovement

Some tools and techniques to fosterSome tools and techniques to fosterperformance improvementperformance improvement

Some competitive improvementsSome competitive improvementscompanies are makingcompanies are making

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Breakthroughs and IncrementalBreakthroughs and Incremental

ImprovementsImprovements

BreakthroughsBreakthroughsThese are major innovations orThese are major innovations or

significant changes that make suchsignificant changes that make sucha large improvement that it isa large improvement that it is

obviously worthwhile to disruptobviously worthwhile to disruptthe established routine or statusthe established routine or status

quo in a companyquo in a company

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Breakthroughs and IncrementalBreakthroughs and Incremental

Improvements cont.Improvements cont.Incremental improvementsIncremental improvements

An example of incrementalAn example of incrementalimprovements is the Japaneseimprovements is the Japanese

culture ofculture ofkaizenkaizenwhich meanswhich means

continuous improvementcontinuous improvementinvolving everyoneinvolving everyone

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Time

Performance

Improvement throughImprovement through

BreakthroughsBreakthroughsNo RegressionNo Regression

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Improvement throughImprovement through

BreakthroughsBreakthroughs

With RegressionWith Regression

Time

Performance

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Incremental ImprovementIncremental Improvement

Time

Performance

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Incremental Improvement withIncremental Improvement with

BreakthroughsBreakthroughs

Time

Performance

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A General Procedure forA General Procedure for

(Continuous) Improvement(Continuous) Improvement1.1. Observe and understand theObserve and understand the

current methodcurrent method

2.2. Critically evaluate the currentCritically evaluate the currentmethod and propose improvementsmethod and propose improvements

33 Implement the improvementsImplement the improvements

4.4. Evaluate the improvements toEvaluate the improvements tosee if they are working as intendedsee if they are working as intended

5.5. Go to step 1Go to step 1

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Some Tools and Techniques forSome Tools and Techniques for

Performance ImprovementPerformance ImprovementFlow Process ChartFlow Process Chart

Its a schematic model used toIts a schematic model used toanalyze and improve workanalyze and improve workperformance at more thanperformance at more than

one locationone location

It uses the symbols on text p. 350It uses the symbols on text p. 350to describe the work systemto describe the work system

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Some Tools and Techniques forSome Tools and Techniques for

Performance ImprovementPerformance ImprovementFlow Process Chart cont.Flow Process Chart cont.

It uses a checklistIt uses a checklist(see Table 9.1, p. 351) to evaluate(see Table 9.1, p. 351) to evaluateand improve the work process asand improve the work process as

illustrated in the application on pp.illustrated in the application on pp.

352-353 (where a procedure for352-353 (where a procedure forpaying invoices is improved)paying invoices is improved)

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Some Tools and Techniques forSome Tools and Techniques for

Performance ImprovementPerformance ImprovementChecksheetChecksheetProduct Durians Date April 12, 1996

Number of units inspected 70 InspectorMat Salleh

Order number 527 Lot number 12

Defect Type Frequency

Blemished//// ///// /

Smell bad //// //// //// //// //// //// //// //// //// //// //// //// //// //////// //// //// //// //// //// //// //// //// //// //// //// //// ////

Overripe //// ////// //

Remarks Please transfer me out of this job!

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Some Tools and Techniques forSome Tools and Techniques for

Performance ImprovementPerformance ImprovementLocation PlotsLocation Plots

Conveys both frequency and location informationConveys both frequency and location information

LL

LLL

L

S

S

S

S

S

S

DD

D

DDDD

D

DD DD

WW

KeyL = Lamination problem

W = Wrong componentD = Defective componentS = Solder problem

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Some Tools and Techniques forSome Tools and Techniques for

Performance ImprovementPerformance ImprovementPareto Analysis (80-20 Rule)Pareto Analysis (80-20 Rule)It focuses on identifying the mostIt focuses on identifying the most

criticalcritical inventoryinventory itemsitems

It determines the frequency of variousIt determines the frequency of variousproblems or causes so that primaryproblems or causes so that primary

attention can be focused onattention can be focused on

the most important onesthe most important onesSee text pp. 354-355 for more detailsSee text pp. 354-355 for more detailsHow does the 80-20 rule apply to Figure 9.7?How does the 80-20 rule apply to Figure 9.7?

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Some Tools and Techniques forSome Tools and Techniques for

Performance ImprovementPerformance ImprovementPareto Analysis cont.Pareto Analysis cont.

Dented

PercentofScrap

10

20

30

40

50

60

70

80

90

100

0

Rejection ReasonScratched Misaligned Poor Weld Paint Flaw

36%28%

20%10%

6%

Cumulative %

Whats themessage here?

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Some Tools and Techniques forSome Tools and Techniques for

Performance ImprovementPerformance ImprovementCause and Effect DiagramCause and Effect Diagram

WorkersMaterials and supplies

Problem:

Dents in

part 1088-2

Uneven surface onincoming material

Methods

Poorly definedwork procedures

Equipment

Tooling improperlyaligned

Conveyor drops

parts too far into bin

Some equipment showshigh wear

Lack of carein handlingLack of

training

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Some Tools and Techniques forSome Tools and Techniques for

Performance ImprovementPerformance ImprovementBrainstormingBrainstorming

Its a useful technique for generatingIts a useful technique for generatingideas about how to solve problemsideas about how to solve problemsassociated with the work activitiesassociated with the work activities

of aof agroupgroup of peopleof people

The objective is to generateThe objective is to generate manymany ideasideas

To avoid stifling creativity,To avoid stifling creativity,no criticismno criticism of any idea isof any idea isallowed during the sessionallowed during the session

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Some Tools and Techniques forSome Tools and Techniques for

Performance ImprovementPerformance ImprovementScatterplotScatterplot

Mixing Time (min.)

PercentImpurity

LinearRegression

What does thisfigure suggest?

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Some Tools and Techniques forSome Tools and Techniques for

Performance ImprovementPerformance ImprovementScatterplotScatterplot

Mixing Time (min.)

PercentImpurity

LinearRegression(Horizontal)

What aboutthis one?

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Business ProcessBusiness Process

Reengineering (BPR)Reengineering (BPR)Business process reengineering*Business process reengineering*is a fundamental rethinking and ais a fundamental rethinking and a

radical redesign of a businessradical redesign of a businessprocess to achieve dramaticprocess to achieve dramatic

improvements (breakthroughs)improvements (breakthroughs)

*Michael Hammer and James Champy,*Michael Hammer and James Champy, Reengineering the Corporation:Reengineering the Corporation:

A Manifesto for Business RevolutionA Manifesto for Business Revolution (New York: Harper Business, 1993)(New York: Harper Business, 1993)

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Business ProcessBusiness Process

Reengineering (BPR) cont.Reengineering (BPR) cont.The idea is to start fromThe idea is to start from

ground zero with no assumptionsground zero with no assumptionsaccepted as essentialaccepted as essential

Then determine what thingsThen determine what things

the companythe company mustmustdo ...do ...

Then seek the best way to do thoseThen seek the best way to do those

thingsthingsandand onlyonly those thingsthose things

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Business ProcessBusiness Process

Reengineering (BPR) cont.Reengineering (BPR) cont.It ignores whatIt ignores what isis and concentratesand concentrates

on whaton whatshould beshould be

Its intended to overcome theIts intended to overcome theshortcoming of seeking incrementalshortcoming of seeking incremental

improvements, which is improvements, which is

Solving problems at one part of aSolving problems at one part of aprocess instead of replacing the entireprocess instead of replacing the entireprocess with something betterprocess with something better

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Business ProcessBusiness Process

Reengineering (BPR) cont.Reengineering (BPR) cont.

In reengineering, instead ofIn reengineering, instead ofpatching uppatching uppartsparts of a faultyof a faulty

process, theprocess, the entireentire processprocessitself is radically improveditself is radically improved

See text pp. 357-359See text pp. 357-359for further detailsfor further details

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Some Competitive ImprovementsSome Competitive Improvements

Companies are MakingCompanies are MakingThese improvements are in the areas ofThese improvements are in the areas of

StrategyStrategyProductProductDesignDesign

LogisticsLogistics

Processes andProcesses andEquipmentEquipment

ArrangementArrangementand Layoutand Layout

Systems, SchedulingSystems, Schedulingand Controland ControlEmployeesEmployees

QualityQualitySee text pp. 359-366 for further detailsSee text pp. 359-366 for further details

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Group Assignment: Chapter 9Group Assignment: Chapter 9

1. Prepare a ten-minute PowerPoint1. Prepare a ten-minute PowerPoint

presentation (with the usual docu-presentation (with the usual docu-mentation) which describes howmentation) which describes howthe topics and issues of this chapterthe topics and issues of this chapterrelate to TNB.relate to TNB.

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Dr. Edward B. YostDr. Edward B. YostCMBA Program CoordinatorCMBA Program Coordinator

Institut Kejuruteraan Teknologi TenagaInstitut Kejuruteraan Teknologi Tenaga

Nasional (IKATAN), Jalan Serdang,Nasional (IKATAN), Jalan Serdang,

43009 Kajang, Selangor D.E., MALAYSIA43009 Kajang, Selangor D.E., MALAYSIA

Tel: (03) 8332633 FAX: (03) 8365118Tel: (03) 8332633 FAX: (03) 8365118

Internet: edyost@pop.jaring.myInternet: edyost@pop.jaring.my

For information on Ohio Universitys CMBA Program at IKATAN contact:For information on Ohio Universitys CMBA Program at IKATAN contact:

To contact the author of this presentation address correspondence to:To contact the author of this presentation address correspondence to:

Brian Manhire, Ph.D.Brian Manhire, Ph.D.

Professor of Electrical EngineeringProfessor of Electrical Engineering School of Electrical Engineering and Computer ScienceSchool of Electrical Engineering and Computer Science

357 Stocker Center, Ohio University357 Stocker Center, Ohio University

Athens, Ohio 45701-2979Athens, Ohio 45701-2979

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