Quality

1
Resource Usage
Issues include

• Organizational structure and operations
  effectiveness
• Performance measurement used for setting the
  direction of improvements
• Benchmarking against other operators
• Prioritising improvements
• Learning and enhancing process knowledge
  through control
• Expectations on, and contributions from, the
  operations function

Quality
Speed
Performance objectives
Dependability
Market Competitiveness
Flexibility
Cost
Development and Organization (Operations
development and improvement)
Supply Network
Process Technology
Capacity
Decision areas
Issues covered in this chapter
2
Operations Resources
Market Requirements
DEPLOY operations contribution
Market potential
Operations capabilities
The Strategic Operations Improvement Cycle
DEVELOP operations capabilities through learning
Market strategy
Operations resources and processes
Intended market position
DIRECT performance and prioritization
The Direct, Develop, Deploy strategic
improvement cycle
3
Continuous improvement at a strategic level
Market Requirements
Operations Resources
4
DIRECT getting the fit right
Fit means that the operations resources and
processes are aligned with the requirements of
its markets.
Line of fit
Market requirements
Operations resource capability
5
Performance
Operations resources and processes
Intended market position
DIRECT
Targets
Directing improvement is a cycle of comparing
targets with performance
6
Increasing strategic relevance
Increasing aggregation
Quality
Customer Satisfaction
Dependability
Market Objectives
Operations resources and processes
Detailed performance targets
Intended market position
Overall Strategy
Speed
Agility
Financial Objectives
Flexibility
Productivity
Cost
Increasing frequency of measurement
Increasing diagnostic power
Performance targets can involve different levels
of aggregation
7
100
90
Actual performance 83
X
80
70
X
X
Last years average performance 60
60
X
X
X
50
Time
40
Performance by historical standards is GOOD
100
Improvement goal 95
90
Actual performance 83
X
80
70
X
X
Last years average performance 60
60
X
X
X
50
Time
40
Performance by historical standards is
GOOD Performance against improvement goal is POOR
Different standards of comparison give different
messages
8
100
Improvement goal 95
90
Actual performance 83
X
80
Competitor performance 75
70
X
X
Last years average performance 60
60
X
X
X
50
Time
40
Performance by historical standards is
GOOD Performance against improvement goal is
POOR Performance against competitors is GOOD
Absolute performance 100
100
Improvement goal 95
90
Actual performance 83
X
80
Competitor performance 75
70
X
X
Last years average performance 60
60
X
X
X
50
Time
40
Performance by historical standards is
GOOD Performance against improvement goal is
POOR Performance against competitors is
GOOD Absolute performance is POOR
Different standards of comparison give different
messages
9
F
1
GOOD
EXCESS?
2
B
APPROPRIATE
3
E
4
5
Performance against competitors
D
IMPROVE
6
A
7
URGENT
8
ACTION
9
1
BAD
2
3
4
5
7
8
9
6
C
Importance for customers
HIGH
LOW
The importance-performance matrix
10
1
Delivery
GOOD
X
Volume flexibility
2
X
Drop quote
Window quote
3
X
X
4
Distribution quality
X
5
Performance against competitors
Documentation service
X
6
Price/Cost
Delivery flexibility
X
X
7
X
Order/dispatch quality
Enquiry lead-time
8
X
9
1
BAD
2
3
4
5
7
8
9
6
Importance for customers
HIGH
LOW
The importance-performance matrix for TAGs
overnight temperature-controlled service
11
Cost
Flexibility
Speed
Dependability
Quality
Quality
Quality dependability
Quality dependability speed
Quality dependability speed flexibility
Quality dependability speed flexibility
cost
The sandcone model of improvement cost reduction
relies on a cumulative foundation of improvement
in the other performance objectives
12
DIRECT getting the fit right
Key Indicators
All staff are able to explain the operations
strategic objectives
Individuals and groups use the strategic
objectives to focus improvement activity
All proposed changes are assessed against
strategic objectives
All improvement is monitored and measured against
strategic objectives
13
Operations capabilities
Control
Knowledge
DEVELOP
Operations resources and processes
Developing operations capabilities is encouraged
by a cycle of attempting to control processes
which enhances process knowledge which, in turn,
makes control easier
14
DEVELOP through learning
It isnt just a matter of being given the right
resources
Operations with the same resources will not all
give the same performance
So what makes the difference?
How they are able to learn
15
Upper bound of acceptability
Upper bound of variation
Process performance variable
Lower bound of variation
Lower bound of acceptability
TIME
A process performance chart
16
Upper bound of acceptability
Distribution of normal variation in process
performance
Upper control limit
Process performance variable
Lower control limit
Lower bound of acceptability
TIME
A statistical process control chart
17
Upper control limits
Lower control limits
TIME
TIME
Low process variation allows changes in process
performance to be readily detected
18
Systematic learning
You cant learn about a process when its out of
control
If things are in control
you notice changes
so you can investigate them
so you can identify root causes
so you can put things right
and improve the process
and learn more about it
19
Process control starts the learning which
develops process knowledge
Learning
Process Knowledge
Process Control
20
DEVELOP through learning
Knowledge is power
Stage
Term
Knowledge
Typical form of knowledge
1
Complete ignorance
Nowhere
None
2
Awareness
Tacit
3
Measurement
Written
4
Control of mean
Written and in hardware
5
Process capability
Hardware and operating manual
6
Process characterization
Empirical equations
7
Know why
Scientific models
Full
8
Complete knowledge
21
Better products and services
Enhanced supplier relationships
Operations capabilities
Understanding process limits
Understanding of process inputs
Enhanced quality
Customer loyalty
Retain best staff
Staff job satisfaction
Control
Knowledge
DEVELOP
Less costly flexibility
Higher process efficiency
Operations resources and processes
Wide product/service range
Lower costs
Process control may be one of the most
operational of tasks, but it can bring strategic
benefit
22
Building on learning
Key Indicators
Learning is made explicit, What have you learned
at work today?
Process knowledge is seen as a key operations
objective
23
DEPLOY the contribution and role of Operations
In everyday life we all switch roles
How we see our role shapes how we behave and
interact with others
So critical to success operations strategy is
changing how operations management see themselves
and are seen by others
The key issues is What should we expect from
operations management?
24
Contribution
Market potential
Operations capabilities
DEPLOY
Expectations
Deploying operations capabilities to create
market potential means ensuring that the
operations function is expected to contribute to
market positioning
25
Challenges for operations
Operations are expected to be .
Redefine the industrys expectations
Give an operations advantage
Externally supportive
Be clearly the best in the industry
Link strategy with operations
Internally supportive
Increasing contribution of operations
Be as good as competitors
Adopt best practice
Externally neutral
Stop holding the organization back
Correct the worst problems
Internally neutral
STAGE 1
STAGE 2
STAGE 3
STAGE 4
Hays and Wheelwrights 4-stage model
26
The role of operations can be defined by its
aspirations
Stop holding the organization back
Correct the Worst Problems
Internally neutral
STAGE 1
STAGE 2
STAGE 3
STAGE 4
27
Contribution and Role
Key Indicators
Staff cooperate and contribute in areas other
than their own
Staff understand their role in the internal and
external supply chain
The concept of internal supplier development is
established
Staff have visited and talked with their internal
and external customers
Staff are capable of making a contribution two
organizational levels above their own
28
1
GOOD
2
3
Staff attitude
4
Knowledge of staff
Time to resolution
5
Getting to right person
Staff understanding
PERFORMANCE
Completeness
6
Kept informed
7
8
9
BAD
9
8
7
6
5
4
3
2
1
LOW
HIGH
IMPORTANCE
Importance-performance matrix for the New Jersey
survey
Slide 11.17
29
10.0
1.0
Associate hours per call
0.1
0.01
1000
100000
100000
1000000
10000000
Cumulative volume of calls processed
Log-log experience curve for KPG Atlanta call
center
Slide 11.18