Operations Strategy 7 - Improvement Strategy

Two types of business improvement -Continuous improvement and BPR

• modification - minor realignment of activities;
• extension - redesign of sequence or routing between activities;
• development - redefinition of purpose or role of activities;
• pioneer - novel or radical change.

The more extensive the degree of process change (development or pioneer) the more the need for breakthrough approaches to improvement. See the figure below

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History of approaches

• 1. Structural solutions - to solve operational problems - ie outsource
• 2. Systems solutions - ""the unmanned factory" - High capital investment in automation
• 3. Philiosophical approaches - TQM - changing the culture - Could be fuzzy clouds of semantic overkill

Top down and bottom up approaches

Top Down

• Reconfigure operation structures
• Pilots and prototypes
• Benchmarking i.e SPC

Bottom Up approaches Upton says that

• Direction is needed
• Training improves skills but should not be a trojan horse for structural change
• Poke-yoke - error proofing

Direct Develop and Deploy

Direct, develop and deploy

The majority of the chapter is taken up in expanding the "three Ds" strategic improvement model. This proposes three sets of activities which any operations function must develop in order to take a strategic approach to improvement. These three sets of activities are as follows:

direct - understand the intended competitive position of the organization in its marketplace so as to let that direct the operations resources and processes;

develop - within the operations function develop an understanding of the resources and processes so as to enhance their overall capability;

deploy - make sure that operations capabilities are fully understood by the organization so that potentially advantageous changes in market position can be made.

In fact a fourth set of activities completes the loop, the development of market strategy. This is seen by the model as the choice of a specific market position (or sets of market positions) within the potential scope of feasible market positions dictated by the operations capabilities.

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Performance measurement

!!!DIRECT How do we know if our operation is performing well or not?

• vWhat factors describe performance
• What are the most important factors to measure
• How do you measure them
• Against what stds to you compare them

Neely 1997 gives an example of a performance measurement and how it should be anlaysed

• Purpose - identify emerging technolgies
• Realtes to: Business objective
• Target - 1000 questionnaires to be completed
• Formula - Forms completed
• Frequency - monthly
• Who measrues - CFO
• Sources of daya =- tech questionnaire
• Who acts on data - CPO
• What directs what they do - acknowledges completion

Balanced Scorecard approach - Financial, Internal, Customer, Innovation and learning

What are the most important factots to measure

few and straightforward or many and complex

How do we measure them - Neely

• derived from strategy
• simplet o understand
• Timely and accurate feeedback
• consistent
• provide information
• focus on improvement
• objective etc - Neely

Perfroamnce standards to use

• Historial
• Traget based
• competitir based
• Absolute performacne based -

DEVELOP - capabilities Learning / experience curve Roger Bohn - 8 stages of knowledge

Deploy capbailities Hayes and Wheelwrights four stage model [img[.|http://www.warwick.ac.uk/~bsscr/images/mod8_slide4.gif]]

• Internal neurality
• External neutrality
• Internally supportive
• External;ly supportive

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Sandcone theory

Ferdows and De Meyer

Improvement by focussing quality then dependability then speed flexibilty then cost

To build cumulative and lasting manufacturing capability, management attention and resources should go first towards enhancing quality, then - while the efforts to enhance quality are further expanded - attention should be paid to improve also the dependability of the production system, then - and again while efforts on the previous two are further enhanced - production flexibility (or reaction speed) should also be improved, and finally, while all these efforts are further enlarged, direct attention can be paid to cost efficiency.

Most of the traditional management approaches for improving manufacturing performance are built on the trade-off theory. Ferdows and de Meyer suggest the trade-off theory does not apply in all cases. Rather, certain approaches change the trade-off relationship into a cumulative one - i.e., one capability is built upon another, not in its place.

Applying this model requires a long term approach, tolerance and patience. It requires believing that costs will eventually come down

Performance Improvement Matrix

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