1
Q
Process Thinking
A
- Requires major changes in how people relate to one another and work across functions.
- Effects every aspect of the company.
- Executive leadership must embrace process thinking.
2
Q
Functional Organization
A
The grouping of resources into specific departments, such as R&D, purchasing, production, logistics, and marketing.
3
Q
Research & Development
A
Translates customer needs into tangible products.
- Goal: build appealing, easy to make products with shorter concept-to-market lead times.
4
Q
Purchasing
A
Acquires the right materials at the right price for use in operations.
- Select the right suppliers and build relationships.
5
Q
Production
A
Transforms inputs into a more highly valued and desirable product or service.
- Use resources to build processes that make low-cost, high-quality goods.
6
Q
Logistics
A
Moves and stores goods so they are available for use in operations or for sale to customers.
- Leverages transportation, warehousing, and order processing.
7
Q
Marketing
A
Identifies customer needs and communicates to the customer how the company can meet those needs.
8
Q
Functional Thinking
A
- Business school classes
- Magnified by physical distance
- Managers see only their function and its performance.
- Decisions aren’t organizational (local optimum)
- Fail to recognize value added in other areas.
- Competitiveness deteriorates, costs increase, service suffers.
9
Q
Purchasing Goals, Decisions, and Measures
A
- G: Minimize purchase price.
- D: Lowest purchase price, stable requirements, multiple sourcing, frequent bidding
- M: Cost oriented, year to year purchase price.
10
Q
Production Goals, Decisions, and Measures
A
- G: Minimize costs
- D: Long runs, stable schedules, product standardization, SKU minimization
- M: Cost oriented, per-unit cost
11
Q
Logistics Goals, Decisions, and Measures
A
- G: Minimize costs
- D: Quick replenishment, minimal inventory, centralized inventory, long lead times
- M: cost oriented, inventory cost, transportation cost
12
Q
Marketing Goals, Decisions, and Measures
A
- G: Sales/Market Share
- D: High service levels, high inventory, dispersed inventory, short delivery times, quick response
- M: market oriented, sales/share growth
13
Q
Anatomy of a Process
A
- Information flow
- Physical flow
- Financial flow
14
Q
New Product Development Process
A
- Begins with an idea
- Project evaluation, approval, and budgeting (financial flow)
- Prototype is built (physical flow)
- Specific decisions are made regarding each activity (conceptualization, evaluation, ramp-up)
- Everyone works together to design a great produce.
15
Q
Materials Acquisition Process
A
- Need is identified and communicated
- Request for Proposal (RFP) sent to suppliers, a supplier is chosen.
- Physical Flow - order picking, shipping, transportation, order receipt and inspection.
- Financial Flow - product received, inspected, and accepted, payment is made.
- Decisions regarding each activity are made.
16
Q
Essential Elements of Process Management
A
- Timely flow of information
- Efficient flow of physical materials
- Effective cash flow management
(depends on collaboration)
17
Q
Systems Thinking
A
The holistic process of considering both the immediate local outcomes and the longer-term systems-wide ramifications of decisions.
- Everyone pulling in the same direction.
18
Q
5 requirements for managing a company or SC as a system
A
- Holistic View
- Information Availability and Accuracy
- Cross-functional and Interorganizational Teamwork
- Measurement
- Systems Analysis
19
Q
Holistic View
A
- Process visibility
- Need to understand all of the trade-offs that occur within the organization.
20
Q
Information Availibility and Accuracy
A
- Tremendous amounts of data must be collected, analyzed, and translated into knowledge.
- Better data tracking, analysis, and sharing is needed.
- Bar codes, scanning devised, RFID tags, data warehouses, data-mining software, ERP systems.
21
Q
Cross-Functional and Interorganizational Teamwork
A
- Sub-unit loyalties make this difficult
- Working to achieve functional goals is desirable but not at the expense of the whole organization.
- Learning to work together towards one goal.
22
Q
Measurement
A
- Recognition (bonuses and promotion) = short run results.
- People don’t make holistic decisions when they are measured on local, functional outcomes.
- Measures must support organization’s most important objectives (biggest challenge)
23
Q
Systems Analysis
A
- Establish Core Goal
- Define System Boundaries
- Determine Interrelationships
- Determine Information Requirements
- Perform Trade-off Analysis
- Consider System Constraints
- Make Decision
24
Q
Establish the Core Goal
A
- Goals must guide system behavior.
- Well though out and communicated goals.
25
Define System Boundaries
- Defining a goal is a prerequisite to identifying boundaries.
- Who is a member of the team?
- Ideal world = entire system is a SC
- Defined at the level that can most effectively accomplish the chosen goal.
- Each member must perform tasks to meet needs profitably.
26
Determine Interrelationships
- Defining roles of team members and their interrelationships.
- Determine how a decision made in one area will affect decisions and operations in other areas.
27
Determine Information Requirements
- Makes systems analysis possible.
- Identify need for info., how it can be analyzed, and then shared
- Info. must be accurate, relevant, and timely.
28
Perform Trade-off Analysis
- Decisions made in one area affect performance in other areas.
- Managers must identify consequences and make all relevant trade-offs visible.
- Process mapping and total cost analysis
29
Consider System Constraints
- Constraints limit available decision-making options.
- Internal and External
- Identifies limiting factors, diagnoses their influence on the system, and proposes steps to relieve them.
30
Total-Cost-of-Ownership
Shows that buying the lowest-priced component may not deliver the greatest competitive advantage.
- Real cost of an item is assessed by evaluating the costs associated with purchasing, transporting, using, warranting, and disposing of the item.
31
Costs Incurred in Global Operations
- Unit price
- Relationship maintenance costs
- Language and cultural training costs
- International Transportation costs
- inland Freight costs
- Insurance and tariffs
- Brokerage costs
- Letter of Credit
- Cost of money
- Risk of obsolescence
- Cost of rejects
- Damage in transit
- Inventory holding costs
- Technical Support
- Employee travel costs
- Export taxes
32
Four key relationships - Systems thinking
1. Customer focus defines value propositions & competency development.
2. Competency Development guides functional decision making = value creation (core competencies)
3. Competency Development directs resource allocation decisions.
4. Information and performance systems align efforts and create cohesion.
33
Value Proposition
The value a company promises to deliver to customers.
34
Competencies
The skills and processes that are developed to create the promised value.
35
Core competency
Something the company is so good at that it provides the company a competitive advantage.
36
Cost Leadership
- A company must create an intrinsic advantage.
- Economies of Scale
- Uniquely Productive Processes
- Low-cost factor inputs
- Providing the lowest cost to customers
37
Differentiation
Requires a company to develop a product or process attribute that reduces price sensitivity.
- Delivery, flexibility, innovation, or quality.
- Advanced Product Technology
- Advanced process technology
- Extensive distribution network.
- User-friendly products
38
Resources
- People
- Technology
- Materials
- Infrastructure
- Capital
39
People
- Determine productivity and quality of work performed.
- Getting people and technology to work together.
- Provide creativity and passion that drive success.
40
Technology
- Equipment and software used to make and deliver goods and services.
- If effectively employed, it improves productivity.
41
Materials
- Include the goods and services that are bought for use in the value-added process.
42
Infrastructure
The physical, bricks-and-mortar assets a company uses in the value creation process.
- Determine the deployment and productivity of resources.
- Facility location, process design, capacity planning, and technology selection.
43
Information Sharing
Promotes process management by communicating strategic objectives and organizational roles.
- Facilitates trade-off analysis, educates managers, and builds better relationships.
44
Performance Measurement
- Must reinforce information sharing to build a process-oriented culture.
1. Must be aligned with strategic objectives
2. Clearly communicate expectations and responsibilities to everyone.
45
Well-designed Measurement System
1. Creates understanding regarding objectives and plans.
2. Promotes behaviors consistent w/ objectives.
3. Documents actual results
4. Benchmarks capabilities
5. Motivates continuous improvement.
46
Process Reengineering
- Redesign of business processes made possible by systems thinking and improved information technology.
- Builds processes from scratch.
47
Steps for Process Reengineering
- Analysis identifies real opportunities to improve.
1. Identify Desired Outcomes
2. Make the process visible
3. Reorganize the process
4. Assign Responsibility for Work
5. Leverage Technology
6. Reimagine Systematically
48
Identify Desired Outcome
- Processes should be designed to fulfill a specific customer need.
- Why is this process performed?
- If the need no longer exists, eliminate it.
49
Make the Process Visible
- Process Map
- Identify individual activities & specific roles
- Identify people involved
- Identify critical performance dimensions (time)
50
Reorganize the Process
- Design each worker's job to involve performing as many of the tasks required to complete the process as possible.
- Consolidate and eliminate tasks.
51
Assign Responsibility for Work
- Responsibility for the process redesign should be placed where the work is done.
- Responsibility assessment chart = as-is roles.
52
Leverage Technology
- Take advantage of new technologies
| - Informational technology bridges functional and geographic distances.
53
Reimagine Systematically
Problems:
- System boundaries are too narrowly defined.
- Too many efforts emphasize tech. w/o accounting for challenges in bridging functional boundaries.
54
Michael Hammer - Reimagine Systematically
1. Look for role models outside your industry.
2. Identify and defy a constraining assumption.
3. Make the special case into the norm.
4. Rethink the 7 dimensions of work.
55
7 Dimensions of Work
1. What results (value) the work delivers
2. Who performs the work
3. Where the work is performed
4. When the work is performed
5. Whether the work should be performed
6. What information the work employs
7. How thoroughly the work is performed.
56
Transition from Function to Process
1. Imagination
2. Experimentation
3. Systems Analysis
Supply Chain Management 3050
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