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Operations management
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3 level analysis of Operations Management
Supply network level —> Flow between operations (Organizations, externalsupply network)
Operations level —> Flow between processes (Departments, internal supplynetwork)
Process level —> Flow between resources
4Vs analysis
High unit cost
Low Volume
Low repetition
Each stuff performs several tasks
High Variety
Flexible and complex
Tailor made to customer needs
High Variation in demand
Changing capacity
Flexible and in touch with demand
High Visibility
Short waiting tolerance
Customer perception governs satisfaction
Communication with customer
Low unit cost
High Volume
High repeatability
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Specialization
Capital intensive
Low Variety
Well defined
Routine, standardized
Low Variation in demand
Stable and predictable
High utilization
Low visibility
Standardization and centralization
No need to communicate with customer
high staff utilization
Operations performance
Process efficiency
Lower costs
Reduced errors, better resilience
Lower operational risk
Higher capacity utilization
Lower capital requirement
Enhanced service
Secure revenue
Opportunity for process learning
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Capabilities for future innovation
5 Competitive objectives (both internal and external), you have to sacrifice oneperformance objective to achieve excellence in another
1. Speed
Internal: reduce WIP, so less inventory and labor will be needed
External: improve time to delivery —> more satisfied customers, shortdelivery time
2. Quality
Internal: prevent errors —> faster throughput, more dependable, and lesswaste on time and effort
External: enhance product or service, so less customer complaints, on-specification products and services
3. Dependability
Internal: prevent late delivery of WIP to slow down throughput so there'sless waste of time and effort
External: at least avoids customer complaints because the product orservice is dependable, reliable delivery
4. Flexibility
A operation's ability to change.
Frequent new products/services, wide range, volume and deliverychanges
5. Cost
Internal: influence quality, speed, dependability, and flexibility
External: influence the 4Vs, low price, high margin, or both
Efficient frontier
A company trade off variety for cost efficiency
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Those companies on the efficient frontier are the industry leaders
If you use a focused strategy in improvement, you are doing a conveximprovement, meaning you sacrifice one to improve the other
What is strategy?
Identify the goal, planning the path to achieve the goal
Long-term orientation, deal with the full picture
How is operations strategy different to operations management?
The time scale is longer
The level of analysis is higher (aggregate planning)
The level of aggregation is higher (overall strategy)
The level of abstraction is higher (philosophical)
4 stage model of operations contribution
1. Correct the worst problems
2. Adopt best practice (Implement strategy)
3. Link strategy with operations (Support strategy)
4. Given an operations advantage (Drive strategy)
4 perspectives on operations strategy
1. Top down: start with corporate vision
2. Bottom up: start with operational experience
3. Operations resources: consider first the resources available, what do you have—> what you do
4. Market requirement: satisfy requirement of market, what do you need —>what you want
Competitive factors
Order-winning factors: more competitive better performance
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Qualifying factors: good performance as long as you have average competitivebenefit
Less important factors: very little change to performance with changes incompetitive benefit
5 Ps of operations strategy implementation
Purpose
shared understanding of the motivation, boundaries and context fordeveloping the operations strategy
Point of entry
where the process of implementation starts in the organization
Process
how the operations strategy formulation process is made explicit
Project Management
management of implementation
Participation
who is involved in implementation
Process design: design of processes and flow of activities so that the product orservice can be created effectively. There are 2 process types: volume and variety.
Manufacturing process types
Project (Highest variety, lowest volume, most complex, large scale, customized,coordination of many different skills, have start and finish time, quality, costobjective)
Jobbing (Very small quantity, high variety, require very broad special skills,skilled jobber or team to complete whole product)
Batch (Standard product, repeating demand, specialized, requires changeover ateach stage of production)
Mass / flow-line (No set-up needed, narrow skills, repeat products)
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Continuous (Lowest variety, highest volume, repeated, highly capital-intensiveand automated, difficult and expensive to start and stop the process)
Service process types
Professional service (Consultant, high level of customer contact, highinvolvement from client, highly customized, people-based rather thanequipment-based)
Service shop (Medical doctor, medium or mixed levels of customercontact/customization)
Mass service (MTR, high volume of customer, low level of customercontact/customization)
Little's Law:
Throughput = Number of WIP x Cycle Time
Throughput efficiency = ( Work Content / Throughput Time ) X 100%
Stages of product / service design
Concept generation (research from customer, competitor, staff, or R&D)
Concept screening (feasibility —> investment required, acceptability —>what's the return, vulnerability —> what are the risks?)
Preliminary design (component structure)
Evaluation and improvement (QFD, FMEA, etc)
Prototyping and final design (simulation, rapid prototyping)
Benefits of looking at the whole supply chain: the supply chain will break at itsweakest link
Understand the competitiveness
Identify the significant links in network
Focus on long-term issues.
Don't outsource
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High strategic importance
Company already possess that specialized knowledge
Company can produce better than its competitors
Produce in-house can bring in significant performance improvement
4 Layouts
Fixed Position Layout (restaurant with waitress)
High variety low volume
Low fixed cost high variable cost
Adv.
Very high product and mix flexibility
Product / customer not moved
High variety of tasks for staff
Dis.
Very high unit costs
Scheduling space and activities can be difficult
Functional Layout (kitchen)
Medium or high variety medium or low volume
Adv.
High product and mix flexibility
Relatively robust in the case of disruptions
Easy to supervise
Dis.
Low utilization
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Can have very high WIP
Complex flow —> need more trainings
Cell Layout (buffet restaurant)
Medium or low variety medium or high volume
Adv.
Can give good compromise
Fast throughput
Group work can result in good motivation
Dis.
Can be costly to rearrange existing layout
Can need more plant
Types of cell
Specialist functional manufacturing cell (high amount of internalresources, low amount of external support required, e.g. internalaudit group)
Plant-within-a-plant manufacturing operation (high amount ofinternal resources and high amount of external support, e.g.maternity unit in a hospital)
Small multi-machine manufacturing cell (low amount of internalresources and low amount of external support, e.g. copying room inlibrary)
Complete component manufacturing cell (low amount of internalresources and high amount of external support, e.g. lunch and snackproduce area in supermarket)
Product (line) Layout (supermarket / cafe de coral)
Low variety high volume
High fixed cost low variable cost
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Adv.
Low unit costs for high volume (maximize layout)
Opportunities for specialization of equipment
Dis.
Can have low mix flexibility
Not very robust in the case of disruptions
Work can be very repetitive
Different type of layouts
Long-thin process layout
Many stages and each stage has little work content
Advantages: controlled flow, simple materials handling,lower capital requirement, greater efficiency, higher spaceutilization
Balanced process layout
Short-fat process layout
Small number of stages and each stage has a lot of workcontent
Advantages: higher mix flexibility, higher volume flexibility,greater robustness, less monotonous, higher ownership
Balancing loss = the proportion of time invested in processing the non-value-addedelements of a product or service
Balancing loss = idle time each cycle / (cycle time x number of cycles)
Decide how many staff to hire
Available productive time / Forecast demand during the period = Cycle time
Work content / Cycle time required = Number of staff required
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Process technologyMaterial processing technology
CNC machining, industrial robot, automatic guided vehicle, flexiblemanufacturing system, CIM
Information processing technology
RFID, EDI, ERP
Customer processing technology
Active interaction with the technology
Personal communication, internet-based ordering, ATM
Pass interaction with the technology
Transport system, theme park ride, car wash
Hidden interaction with the technology
Security cameras, retail scanners, credit card tracking
Interaction with the technology through an intermediary (the agent relieson technology to serve you)
Call center, hotel reservation system
Categorizing processing technology
Degree of automation (high < — > low)
Scalability (volume) (high < — > low)
Degree of integration (variety) (narrow < — > broad)
Job design: to impact quality, speed, dependability, flexibility, cost, health and safety,quality of working life
Environmental condition
Ergonomics: concerns with the human body and how it fits intosurroundings
How the person interfaces with the physical aspects of his or her
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work placeHow the person interfaces with the environmental conditionsprevalent in his or her immediate working area
Team working: the staff often with overlapping skills, collectivelyperform a defined task and have a high degree of discretion over howthey actually perform the task
Technology available
Allocation of tasks
Flexible working: working from home, working while traveling, workingas an independent contractor, working as for job consignment etc.
Behavior approaches: through job enlargement (more tasks of the sametype) and job enrichment (more tasks which give increased responsibilityautonomy or decision making)
Techniques of job design: combine tasks, form natural work units,establish client relationships, vertical loading, opening feedbackchannels
Core job characteristics: skill variety, task identify, tasksignificance, autonomy, feedback
Mental states: experienced meaningfulness of the work,experienced responsibility for outcomes of the work, knowledge ofthe actual results of the work activity
Performance and personal outcomes: high motivation, high qualityof performance, high satisfaction, low absenteeism and turnover
Method to perform each job
Time and number of workers allocated to tasks
Scientific management: work study
Division of labor
Adv.: faster learning, easier to have automation, ensures that non-productive work is reduced
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Dis.: leads to monotony, can result in physical injury, not robust,reduce flexibility
Maintaining commitment
Empowerment: giving staff the ability to change how they do their jobs,this is more than autonomy because they are authorized to make changesto the job itself as well as the way how it is performed
Relationship between HR & OM
Strategic Partner: HR align HR strategy with business strategy, and OMintegrates operations with HR strategy.
Administrative expert: OM is an internal customer of the processes (appraisal,selection, communication) carried out by HR.
Employee champion: HR listens and responds to employees, OM must besensitive to feedback from HR on how it manages day-to-day operations.
Change agent: OM and HR are jointly responsible for operations improvementactivities. HR manages transformation and change.
Cause of stress
Cannot cope with the amount or type of work asked to do. —>Provide trainingor change the job, or introduce more flexible working hours.
Have no control or say over how and when they do their work. —> Involvestaff in decision making
Feeling unsupported. —> Keep them informed, and give them opportunity totalk about their issues
Don't know their role in the organization and what is expected. —> Work out ajob description and maintain a close link between individual targets andorganizational goals
Uncertainty and insecurity due to change. —> Have employee involved inplanning the change.
Organizational structure
U-form —> functional grouping of resources
M-form —> resources based of separate divisions
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Matrix-form —> resources are structured with multi-levels of responsibility (2–level of responsibility, mixing U-form and M-form)
N-form —> loss networks internally and externally, no particular form
P:D ratio, P = production time, D = delivery time, R = time to gather resources
Produce to stock: P >> D + R, wait till production is completely finished thendeliver to customers
Independent demand
Product or service is small compared with tittle capacity of the operation
Part produce to order: P > D + R, wait till production is half way through(finished half the order) then deliver to customers
Produce to order: P = D + R, delivery starts right at the time when resources isdelivered
Resource to order: P = D, delivery starts when order is placed, production anddelivery and resource gathering are conducted simultaneously
Dependent demand
Product or service is large compared with total capacity of the operation
Loading = the reduction of time available for value-added operation time.
Loading = maximum available time — value-added operation time
Finite loading limits the loading on each center to its capacity, even if it meansthat jobs will be late
Infinite loading allows loading on each center to exceed the capacity to ensurethat jobs will not be late
Operating equipment effectiveness
Loading time = valuable operating time + quality losses + speed losses +availability losses
Availability rate = total operating time / loading time
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Performance rate = net operating time / total operating time
Quality rate = valuable operating time / net operating time
Efficiency = actual output / effective capacity
Utilization = actual output / design capacity
Production strategy
Level strategy: absorb demand
Have excess capacity
Make to stock
Make customers wait
Chase strategy: adjust output to match demand
Hiring and firing
Work overtime or work short time
Subcontracting
Demand management: change demand
Change demand pattern
Develop alternative products and/or services
Cumulative representations of demand and supply: capacity planning is bestconsidered on a cumulative basis, this allows alternative capacity and output plans tobe evaluated for feasibility
Inventory system
Single-stage inventory system
Suppliers —> Stock —> Sales operations
Two-stage inventory system
Suppliers —> Central depot —> Distribution —> Local distribution point
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—> Sales operations
Multi-stage inventory systemSupplier —> Input stock —> Stage 1 –> WIP —> Stage 2 –> WIP —>Stage 3 –> Finished goods stock
Multi-echelon inventory system
Each level will have its own inventory, then you need to minimize itsinventory in each level
Replenishment model (periodic review = every period bring up to maximum level,continuous monitoring = fixed re-order point)
Slope = demand rate (how many units you need per period)
Q = re-order quantity
Average inventory = Q/2
Re-order interval = Q/D
Inventory-related costs
Holding costs (inventory cost)
Ordering costs (admin costs to the supplier)
Pareto curve (ABC classification), only stock the most important items (A)
A = 20% of item, 80% of value
B = next 30% of item, 10% of value
C = remaining 50% of item, 10% of value
Re-ordering system
Two-bin system
Bin 1 = items being used, re-order when bin 1 is empty
Bin 2 = re-order level + safety inventory
Three-bin system
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Bin 1 = items being used
Bin 2 = re-order level inventoryBin 3 = safety inventory
Supply chain management
Upstream flow of customer requirements
Long-term plans and requirements
Market research information
Individual orders
Payment
Potential new products and services
Downstream flow of products and services for customer fulfillment
Products and services
New products and services
Delivery information
Payment request / credit
Factors for rating long-term suppliers
Short-term ability to supply
Range of products or services provided
Quality of products or services
Responsiveness
Dependability of supply
Delivery and volume flexibility
Total cost of being supplied
Ability to supply in the required quantity
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Longer-term ability to supply
Potential for innovation
Ease of doing business
Willingness to share risk
Long-term commitment to supply
Ability to transfer knowledge as well as products and services
Technical capability
Operations capability
Financial capability
Managerial capability
Types of supply relationship
Virtual spot trading: many suppliers, transactional contact, does not need to doanything to build such relationship
Partnership: medium to few suppliers, the supplier is medium to important tothe buyer
Vertical integration: close contact, few supplier, supplier is very important tobuyer so the buyer integrates it to its business
Long-term virtual operation: very few supplier but the buyer does nothing in itsbusiness to integrate the supplier
Bullwhip effect
Responsive supply chain exhibit a dynamic behavior, small changes at thedemand end of a supply chain are progressively amplified for operations furtherback in the chain
To reduce bullwhip effect
Information sharing: efficient distribution of information throughout thechain can reduce demand fluctuations along the chain by linking all
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operations to the source of demand
Channel alignment: adopting the same or similar decision-making
processes through the chain to coordinate how and who decisions aremade
Operational efficiency: eliminating sources of inefficiency orineffectiveness in the supply chain.
Effects of supply chain time compression
Shorter cycle time —> less need for safety stock —> reduced inventory holdingcost
Faster time-to-market —> higher revenue, less discounted sales
Piece flow —> easier defect detection, reduced waste cost and higher quality
Shorter cycle time —> more flexibility on scheduling and production, betterresponse to market changes
Matching supply chain with market requirements
Lean supply chain management
Efficient supply chain
Low cost
High utilization
Minimum inventory
Low cost suppliers
Functional product
Predictable
Few changes
Low variety
Price stable
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Long lead-time
Low margin
Agile supply chain management
Responsive supply chain
Low throughput times
Low utilization
Deployed inventory
Flexible suppliers
Innovative products
Unpredictable
Many changes
High variety
Price markdowns
Short lead-times
High margins
Benefits of ERP
Software communicates across all functions, therefore, there's absolute visibilityof what is happening in all parts of the business.
The discipline of forcing business-process-based changes is an effectivemechanism for making all parts of the business more efficient.
There's a better sense of control of operations that will form the basis forcontinuous improvement.
It enables far more sophisticated communication with customers, suppliers andother business partners.
It is capable of integrating whole supply chains including suppliers' suppliers
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and customer's customers.
Measures in balanced scorecard
Internal process performance measures: what aspects of performance shouldbusiness process excel at
Financial performance measures: how should be viewed by the shareholders
Customer performance measures: how should be viewed by the customers
Learning and growth performance measures: how to build capabilities over time
Types of benchmarking
Internal benchmarking: comparison between operations or parts of operationswhich are within the same total organization
External benchmarking: comparison between an operation and other operationswhich are part of a different organization
Non-competitive benchmarking: benchmarking against external organizationswhich do not compete directly in the same markets
Performance benchmarking: comparison between the levels of achievedperformance in different operations
Practice benchmarking: comparison between an organization's operationspractices and those adopted by another operation
Nine-point scale of importance (1–3: better than competitors, 4–6: same ascompetitor, 7–9: worse than competitors)
1. Provide a crucial advantage with customers
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
5. Need to be around median industry standard
6. Need to be with close range of the rest of the industry
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7. Not usually important but could become more so
8. Very rarely rate as being important
9. Never come into consideration
Nine-point scale of performance (1–3: better than competitors, 4–6: same ascompetitor, 7–9: worse than competitors)
1. Considerably better than our nearest competitors
2. Clearly better than our nearest competitor
3. Marginally better than our nearest competitor
4. Often marginally better than most competitors
5. About the same as most competitors
6. Often close to main competitors
7. Usually marginally worse than main competitors
8. Usually worse than most competitors
9. Consistently worse than most competitors
Importance — Performance matrix
Measure against performance against competitors and importance for customers
A company should be at least perform the same as competitors
As the performance is positively related to the importance for customers
Sand-cone model of improvement (you have to satisfy the lower priority first beforeyou can start targeting higher priority aspects. In this case, an organization have tofirst achieve quality then start with other aspects)
1. Quality
2. Dependability
3. Speed
4. Flexibility
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5. Cost
Double loop learning
Learning loopLearn new insight and capability
Make improvements
Access operations performances
Compare performance with objectives
Loop based on stuff you've learnt
Question relevance of objective
Develop more relevant new objectives
Compare performance with objectives
Total quality management
Principles of TQM
Customer-oriented
Leadership
Strategic planning
Employee responsibility
Continuous Improvement
Cooperation
Statistical methods
Training and education
TQM include
All parts of the organization
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All staff of the organization
Consideration of all costs
All the systems that affect quality
Every opportunity to get things right
Approaches in TQM
Prevent 'out of specification' products and services reaching market —>inspection
e.g. Error detection
Solves the root cause of quality problems —> quality control
e.g. Statistical quality control, process analysis, quality standards
Broaden the organizational responsibility for quality —> qualityassurance
e.g. Quality systems, problem solving, quality planning
Make quality central and strategic in the organization —> TQM
e.g. staff empowerment, teamwork, involve customers andsuppliers
TQM is about people
Employees are valuable resource
Employee training and education are long-term investment
Employees have decision making power to improve quality and customerservice
Teamwork and group participation required to achieve strategic goal forquality and customer satisfaction
TQM's target is ISO9000
1. Quality management should be customer-based. Customer satisfactionshould be measured through surveys and focus groups and improvement
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against customer standards should be documented
2. Quality performance should be measured. Measures should related bothto processes that create products and services and customer satisfactionwith those products and services
3. Quality management should be improvement-driven. Improvement mustbe demonstrated in both process performance and customer satisfaction
4. Top management must demonstrate their commitment to maintaining andcontinually improving management systems. This commitment shouldinclude communicating the importance of meeting customer and otherrequirements, establishing a quality policy and quality objectives,conducting management reviews to ensure the adherence to qualitypolicies, and ensuring the availability of the necessary resources tomaintain quality systems.
Benefits of ISO9000 and quality awards
Give detailed guidance on how to design their control procedures.
Provide assurance to customers that the products and services theypurchase are produced by an operation working to a defined standard.
Lead to error reduction, reduced customer complaints and reduced costsof quality.
Marketing benefit — demonstrates that an organization takes qualityseriously
Provide a focused structure for the organization to assess its own qualitymanagement and improvement efforts
Deming's 14 points for quality improvement
Create constancy of purpose
Adopt new philosophy
Cease dependence on inspection
End awarding business on price
Improve constantly the system of production and service
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Institute training on the job
Institute leadership
Drive out fear
Break down barriers between departments
Eliminate slogans and exhortations
Eliminate quotas or work standards
Give people pride in their job
Institute education and a self-improvement program
Put everyone to work to accomplish it
EFQM business excellence model
5 Enablers
Leadership — how leaders develop and facilitate the achievement of themission and vision, develop and implement values required for long termsuccess
Policy and strategy — how the organization implements its mission andvision through clear stakeholder-focused strategy, supported by relevantpolicies, planes, target and processes.
People — how the organization manages, develop and releases theknowledge and potential of its people
Partnership and resources — how the organization plans and manages itsexternal partnership and internal resources
Processes — how the organization designs, manages and improves itsprocesses and generate increasing values for its customers stakeholders
4 Results
People — motivation, satisfaction, performance and services theorganization provides for its people
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Customer — loyalty and perception of customers to the organization'simage, product and services
Society — the organization's performance as a responsible citizen andinvolvement in community
Key performance — the financial and non financial outcomes of the
organization's planned performance, including cash flow, profit, meetingbudget, success rate and value of intellectual property
If an organization is able to do the 5 enablers right, then it will be able toachieve the 4 results
GAP model of quality
Gap between internal quality specification and external quality expectation ofcustomers
Gap between internal quality specification and intended concept of design
Gap between internal quality specification and actual product or service qualityconformance
Gap between actual product quality and customer's expectation of the product,can the expectations derived
Quality characteristics of goods and services
Functionality — how well the product or service does the job for which it wasintended
Appearance — look and feel, sound and sell of the product and services
Reliability — consistency of product or service performance over time
Durability — total useful life of the product or service
Recovery — ease with which problems with the product or service can berectified or resolved
Contact — nature of the person to person contact that take place
Total cost of quality decrease overtime if you use TQM, and at the end the cost will beconstant as time goes by
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Prevention
Appraisal
Internal failure
Appraisal
Statistics control — behaviors that require investigation
Alternating and erratic behavior
Suspiciously average behavior (might have wrong scale)
Two points near control limit
Five points on one side of center line
Apparent trend in one direction
Sudden change in level
Six Sigma DMAIC methodology
Define — identify problem, define requirements and set the goal
Measure — gather data, refine problem and measure inputs and outputs
Analyze — develop problem hypothesis, identify root causes and validatehypotheses
Improve — develop improvement ideas, test, establish solution and measureresults
Control — establish performance standards and deal with any problems
PDCA cycle philosophy
Plan — establish a target for improvement
Do — implement the improvement plan
Check — assess whether the implementation remains on track
Standardize the procedure and set goal for new improvement
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6–M
Measurement
Man
Machine
Method
Material
Mother nature
Lean operations — moving towards the elimination of all waste in order to develop anoperation that is faster, more dependable, produces higher quality products andservices and operates at low cost
Process-oriented
Quality is created during the process, assessment of result would be toolate to assure and to restore the quality. Therefore, an operation can onlybe controlled in the process, not in the output
Continuous improvement
Kaizen
Good housekeeping — 5S
Sort out (Seiri) / Cleaning up — Eliminate what is not needed and keepwhat is needed
Set in order (Seiton) / Arranging — Position things in such a way thatthey can be easily reached whenever they are needed
Shine (Seiso) / Neatness — Keep things clean and tidy, no refuse or dirtin the work area
Standardize (Seiketsu) / Discipline — Maintain cleanliness and order,perpetual neatness
Sustain (Shitsuke) / Ongoing improvement— Develop a commitment andpride in keeping to standards
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Benefits:
Reduce defects —> higher quality
Reduce wastes —> lower costs
Reduce delays —> reliable deliveries
Reduce injuries —> improved safety
Reduce breakdowns —> higher availability rate
Eliminate waste
Over production —> production ahead of demand
Excess inventory —> WIP & finished products not being used
Defective products —> effort involved in inspection & repair
Excess motion —> unneeded movement of people / equipment
Unneeded process —> poor tool / product design creating waste
Waiting —> waiting for the net production step
Transportation —> products moving not for processing
Just in time inventory control
Focus on producing only when needed
Lower-capacity utilization
No surplus production goes into inventory
Low inventory so problems are exposed and solved
Fewer stoppages
Kanban systems
Standard containers for parts with the content displayed in a card
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Conveyance Kanban as used with a conveyer
Production Kanban as used in a production system
Containers holding parts can be moved only when a card isattached, always use standard containers, each container must befilled only with the standard number of units
The next process is the customer
Internal customer = the next process
Each process has its own customer and supplier
The preceding process myst always do what the next process says
Quality first
Speaking with data
ISO 31000
Provides generic guidelines for the design, implementation and maintenance ofrisk management process in an organization
Defines risk as the effect of uncertainty on objectives, therefore, risk can beboth undesirable possibilities and also positive possibilities
Scope is to enable all strategy, management and operational tasks of anorganization throughout projects, functions, and processes to be aligned to acommon set of risk management objectives
Failure management (Prevention, Mitigation, Recovery)
Discover what happened and what are the consequences
Act — inform, contain, follow up
Learn — Find root cause, engineer out
Plan — Analyze failure, plan recovery
FMEA (Failure Mode and Effects Analysis)
Probability of failure
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Degree of severity
Likelihood of detection
P x S x D = Risk priority number
Total Productive Maintenance (TPM)
Adopt the team-working and workers empowerment principles, as well as acontinuous improvement approach to failure prevention
See maintenance as an organization-wide issue, which is similar to the TQMapproach
Principles of TPM
Improve equipment effectiveness by examine all the losses which occur
Allow staff to take responsibility for some of the maintenance tasks andfor the improvement of maintenance performance
Plan maintenance with a fully worked out approach to all maintenanceactivities involving everyone
Train all staff in relevant maintenance skills so that both maintenance andoperating staff have all the skills to carry out their roles
Achieve early equipment management by maintenance prevention, whichinvolves considering failure causes and the maintainability of equipment
Quality Function Deployment (QFD)
Customer requirements (WHAT) — list of competitive factors which customersfind significant
Design characteristics (HOW) — various dimensions of the design which willenable the product or service to meet customer requirements
Relationship matrix —> interrelationship between the customer requirementsand design characteristics, the score is either 1, 3, 9
Roof of the house captures information the team has about the correlationsbetween the various design characteristics
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Type 1 error — rejects product that's actually of good quality
Type 2 error — accepts product that's actually of bad quality
Taguchi quality loss function
L = total cost of loss to society
D = deviation from target performance
K = constant
L = KD^2
Cost of quality loss is in the form of an inverted bell shape
Reduce variation = reduce risks
Ethical and financial performance always exist a trade-off
5 dimensions of CSR
Social dimension
Stakehoder dimension
Economic dimension
Environmental dimension
Voluntariness dimension
Triple Bottom Line concept
Profit and loss account — measure of corporate financial performance
People account — measure of how socially responsible an organization has beethroughout its operations
Planet account — measure of how environmentally responsible it has been
Bearable, Equitable and Viable conditions are the Triple Bottom Lines of asustainable society
CSR issues = TBL issues
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Environmental issues — pollution, waste disposal, emission, climate change,use of energy
Social issues — basic labor rights, no chid labor or forced labor, safety andhealth for workers / stakeholders
Financial issues — poverty, jobs, public revenues, tax and fair trade, education,skills and knowledge transfer
GlobalizationPros
The increasing reliance of economies on each other
The opportunities to be able to buy ad sell any country in the world
The opportunities for labor and capital to locate anywhere in the world
The growth of global markets in finance
Increased choice
Greater potential for growth
Increase international economies of scale
Greater employment opportunities
Cons
Damage to the environment. — Environmental Burden (EB = P x A x T,P = population, A = affluence of the population, T = technology)
Exploitation of labor
Monopoly power
Economic degradation
Non-renewable resources
Damage to cultures
Increase in gap between the rich and poor
Dominance of global trade by the rich, northern hemisphere countries
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Lack of opportunities for the poor to be able to have access to markets
Exploitation of workers and growers
ISO 26000
Definition — the responsibility of an organization for the impacts of itsdecisions and activities on society and the environment, through transparent andethical behavior that:
Contributes to sustainable development, including health and the welfareof society
Takes into account the expectations of stakeholders
Is in compliance with applicable law and consistent with internationalnorms of behavior
Is integrated throughout the organization and practiced in its relationships
Principles
Accountability — an organization should be accountable for its impactson society, the economy and the environment
Transparency — an organization should be transparent in its decisionsand activities that impact on society and the environment
Ethical behavior — an organization should behave ethically
Respect for stakeholder interests — an organization should respect,consider and respond to the interests of its stakeholders
Respect for the rule of law — an organization should accept that respectfor the rule of law is mandatory
Respect for international norms of behavior — an organization shouldrespect international norms of behavior, while adhering to the principle ofrespect for the rule of law
Respect for human rights — an organization should respect human rightsand recognize both their importance and their universality
Core subjects
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Organizational governance
Human rights
Labor practices
Employment and employment relationships
Conditions of work and social protection
Social dialogue
Health and safety at work
Human development and training in the workplace
Environment
Fair operating practices
Consumer issues
Community involvement and development
Benefits of implementing ISO 26000
Competitive advantage / reputation of organization
Ability to attract and retain workers, customers, clients or users
Maintenance of employees' morale, commitment and productivity
View of investors, owners, donors, sponsors and the financial community
Relationship with companies, governments, to media, suppliers, peers,customers, and the community in which it operates.
Building an integrated management system
Voice of stakeholders
Policy & objectives
Processes & responsibilities
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