OPERATIONS IMPROVEMENT

Question 1

How does total quality management fit into operations strategy?

Answer 1

• TQM is a philosophy of how to approach the organisation of quality improvement that stresses the ‘total’ of TQM.
• It puts quality and improvement generally at the heart of everything that is done by an operation.
• It provides a checklist of how to organise operations improvement.

Question 2

How do lean operations fit into operations strategy?

Answer 2

• The lean approach aims to meet demand instantaneously, with perfect quality and no waste.
• It can be seen as having four elements: customer-based demand triggers, synchronised flow, enhanced improvement behaviour and waste elimination.
• The lean concept implies some sacrifice of capacity utilisation since buffers tend to be avoided.

Question 3

How does business process reengineering fit into operations strategy?

Answer 3

• BPR is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.
• The approach strives for dramatic improvements in performance by radically rethinking and redesigning the process using ‘end-to-end’ processes and by exploiting the power of IT to integrate processes.

Question 4

How does Six Sigma fit into operations strategy?

Answer 4

• Six Sigma is a disciplined methodology of defining, measuring, analysing, improving and controlling the quality in every one of the company’s products, processes and transactions – with the ultimate goal of virtually eliminating all defects.
• It stresses the use of (preferably quantitative) evidence in decision making, systematic problem solving, and the use of improvement specialists called Black Belts, Green Belts and so on.

Question 5

What place do these new approaches (substitutes) have in operations strategy?

Answer 5

• These approaches are not strategies in themselves, but they are strategic decisions. Although none of them is incompatible with operations strategy, they can all be considered as part of a strategy.
• It is also important to understand fully any approach before it is adopted, because all the approaches are different. Some emphasise gradual change, others more radical change. Some hold a view of the best way to organise resources, others concentrate on how to decide what to do.
• Example: The focus of BPR is what should happen rather than how it should happen, and lean is similar. But both Six Sigma and TQM focus more on how operations should be improved. BPR is explicit in its advocacy of radical and dramatic change. TQM and lean, on the other hand, both incorporate ideas of continuous improvement, whereas Six Sigma can be used for small or very large changes.

Question 6

How does the direct, develop and deploy improvement cycle look like?

Answer 6

Direct, develop and deploy strategic improvement cycle

• Direct – A company’s intended market position is a major influence on how the operations function builds up its resources and processes. Some authorities argue that the most important feature of any improvement path is that of selecting a direction. In other words, even micro-level, employee-driven improvement efforts must reflect the intended strategic direction of the firm.
• Develop – Within the operations function those resources and processes are increasingly understood and developed over time so as to establish the capabilities of the operation. Essentially this is a process of learning.
• Deploy – Operations capabilities need to be leveraged into the company’s markets. These capabilities, in effect, define the range of potential market positions that the company may wish to adopt. But this will depend on how effectively operations capabilities are articulated and promoted within the organisation.
• Market strategy – The potential market positions that are made possible by an operation’s capabilities are not always adopted. An important element in any company’s market strategy is to decide which of many alternative market positions it wishes to adopt. Strictly, this lies outside the concerns of operations strategy. In this chapter we shall restrict ourselves to examining the direct, develop and deploy elements.

Question 7

How should one establish performance measurements? And how can they be aggregated?

Answer 7

1. What factors to include as performance targets
2. Which are the most important
3. How to measure them
4. On what basis to compare actual against target performance

Question 8

What is the sandcone theory?

Answer 8

The ‘sandcone model’ is so called because the sand is analogous to management effort and resources. To build a stable sandcone, a stable foundation of quality improvement must be created. Upon such a foundation one can build layers of dependability, speed, flexibility and cost – but only by widening up the lower parts of the sandcone as it is built up. Building up improvement is thus a cumulative process, not a sequential one.

Question 9

What are the characteristics of continous vs breakthrough improvements

Answer 9

Question 10

Explain the the Importance-performance matrix

Answer 10

The Importance-performance matrix

The priority for improvement that each competitive factor should be given can be assessed from a comparison of their importance and performance. This can be shown on an importance–performance matrix that, as its name implies, positions each competitive factor according to its score or ratings on these criteria

• The ‘appropriate’ zone – This zone is bounded on its lower edge by the ‘lower bound of acceptability’ – that is, the level of performance below which the company, in the medium term, would not wish the operation to fall. Moving performance up to, or above, this boundary is likely to be the first-stage objective for any improvement programme. Competitive factors that fall in this area should be considered satisfactory, at least in the short to medium term. In the long term, however, most organisations will wish to edge performance towards the upper boundary of the zone.
• The ‘improve’ zone – Any competitive factor that lies below the lower bound of the ‘appropriate’ zone will be a candidate for improvement. Those lying either just below the bound or in the bottom left-hand corner of the matrix (where performance is poor but it matters less) are likely to be viewed as non-urgent cases. They certainly need to improve, but probably not as a first priority.
• The ‘urgent-action’ zone – More critical will be any competitive factor that lies in the ‘urgent-action’ zone. These are aspects of operations performance where achievement is so far below what it ought to be, given its importance to the customer, that business is probably being lost directly as a result. Short-term objectives must be, therefore, to raise the performance of any competitive factors lying in this zone at least up to the ‘improve’ zone. In the medium term they would need to be improved beyond the lower bound of the ‘appropriate’ zone.

Question 11

Explain the four-stage model of operations contribution

Answer 11

The four-stage model of operations contribution

The model traces the progression of the operations function and is ideal for evaluating the effectiveness of the contribution/expectation cycle. The power of the model lies in the understanding that it is linked to the company’s aspirations and is the endpoint of progression that emphasizes the increasing importance and centrality of operations strategy to overall competitive advantage

Question 12

How can knowledge management systems be utilized?

Answer 12

Knowledge management systems exploit the ability of e-technologies to collect knowledge and connect individuals and knowledge in order to encourage collaboration