BPR 8 Sem Notes

July 30, 2017 | Author: Hafizullah Ansari | Category: Business Process, Enterprise Resource Planning, Lean Manufacturing, E Commerce, Strategic Management
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Page 1 of 31 Chapter 1 Introduction Definition, Business Process, Business Process Improvement, Business Process Reengineering-The Need Of BPR # Definition  Business process reengineering (BPR) is the analysis and redesign of workflow within and between enterprises.  BPR is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.  BPR is not:  Automation  Downsizing  Outsourcing # 7 principles of BPR:  Organize around outcomes, not tasks.  Identify all the processes in an organization and prioritize them in order of redesign urgency.  Integrate information processing work into the real work that produces the information.  Treat geographically dispersed resources as though they were centralized.  Link parallel activities in the workflow instead of just integrating their results.  Put the decision point where the work is performed, and build control into the process.  Capture information once and at the source. # Steps to execute BPR:  Develop business vision and objectives of processes:  Objectives can be (i) Cost reduction (ii) Faster cycle time (iii) High quality output  Select the processes to be redesigned:  For this there are two approaches (i) The priority approach [i.e. it involves identification of all the processes within an organization and then assignment of priority for redesign] and (ii) The critical success approach [i.e. it involves redesign of processes which are critical to the success of the organization].  Understand and measure the existing processes:  Use of Data Flow Diagrams [DFDs] and Entity Relationship [E-R] Diagram.  Redesign the processes and build a prototype of new processes:  Various tools can be used in redesigning the processes like Flow chart, Fishbone diagram, Control charts, etc.  Continuous improvement – “KAIZEN”:  It is not a one time affair we must focus on continuous improvement to cope with dynamic nature of the globalization. # Goals of BPR:  Customer friendliness:  Meeting customer requirement  Providing convenience  Effectiveness:  Output based approach  Gaining loyalty of customers  Image and branding  Efficiency:  Time  Cost  Effort # Challenges of BPR:  Identifying customer needs and performance problems in current process.  Reassessing the strategic goals of the organization.  Controlling risks.  Maximizing benefits.  Managing organizational changes.  Defining the opportunities for reengineering. # Critical successful factors in BPR:  Cleat vision for transformation.  Top management commitment.  Ambitious BPR team.  Engaging external consultant.  Tolerance of genuine failures.  Change management.

Page 1 of 31 # Critical failure factors in BPR:  Trying to fix a process instead of changing.  Lack of focus on business critical processes.  Quitting too early.  Dominance of existing corporate culture.  Adopting bottom-up approach.  Poor leadership. # Business Process A business process can be defined as a set of logically related tasks performed to achieve a defined business outcome. # Types of business process:  Inter organizational processes:  Takes place between two or more business organization.  Inter functional processes:  Takes place within the organization but across several functions or divisions in the organization.  Inter personal processes:  Are those which involve tasks within and across the small work groups within the organization. # Types of business process: (also)  Management process:  These are process that governs the operation. Typically management process includes – Corporate Governance and Strategic Management.  Operational process:  These processes create the primary value streams that are part of the core business.  Typically operational processes are – purchasing, manufacturing, marketing and sales.  Supporting process:  These supports the core processes. Examples include – accounting, recruitment, IT support, etc. # Business Process Improvement (BPI) BPI is a process of developing and implementing incremental improvements for a process. It is a systematic approach to help any organization make significant changes in the way it does business. The goal of BPI is a radical change in the performance of an organization rather than a series of incremental changes. Vision of Business Process Improvement:  Increase efficiency  Improve customer service  Reduce costs  Share data and information  Use of IT – at right place at right time  Reduce duplicates, stove pipe systems # Process of BPI or Continuous Process Improvement: Documenting process Establish measures

Follow process

Measure performance Identify & implement improve

# Business Process Reengineering-The Need Of BPR  Preventing errors from occurring instead of rectifying them at a later stage i.e. less rework.  Enabling the organization to focus on the customers.  Enhancing the organization’s ability to compete by reducing costs i.e. optimal utilization of available resources.  Higher productivity through reduced cycle time of the processes. Chapter 2 Business Process Reengineering Winning Order Criteria, Qualifier, Principles In Applying BPR, Methodology, Some Success Factors Of Re-engineering # Winning Order Criteria Order winners are the criteria that differentiate the products and services of one firm from another. Repair services can be “order winners” for examples: Warranty, Roadside Assistance, Leases, etc. A firm’s ability to win orders on the market depends on its competitiveness. A competitive firm wins orders on the market, which has a positive impact on its sales performance. Order winning criteria are those criteria that make a difference to the customer when s/he decides between qualified offered products. The selling and the buying actors may have the same or different ideas about what constitute these order winners, and they may also

Page 2 of 31 differ in their evaluation of the competitive strengths of a firm. Analyses the selling and buying actors’ perceptions of order winners and competitive strengths as the degree of fit between these perceptions. A good fit means that the two actors agree on order winning criteria and the firm’s competitive strength on these criteria. It is expected that a good fit relates to a positive sales growth of the selling firm’s product. The criteria can be:  Cheapest price than the competitors.  Better quality than the competitors. # Qualifier Order qualifiers are the basic criteria that permit the firms products to be considered as candidates for purchase by customers. For example: A brand name for a car can be an “order qualifier”. The criteria can be:  Registered company.  Legally exist.  Quality declaration.  Meeting specified quality and price. # Principles In Applying BPR Refer to 7 principles of BPR – Page no. 1 # Methodology BPI employs a structured methodology that reduces work processes to their essential composite activities, and provides cost performance metrics to facilitate a business case for dramatic improvements. Both functional and cross-functional processes are evaluated through workflow analysis and activity based costing. In many cases, the application of new technology and industry best practices will enable quantum improvements in an organization's cost and performance. # Some Success Factors Of Re-engineering  Strategic focus  Resources  Change management  Top-Down commitment  Bottom-Top support  Empowering people and getting them to take initiative  Precise vision A key to success in any BPI effort is strategic focus and top-down leadership. Additionally, there must be some “sense of urgency” due to drastic resource constraints, competition for resources or customers, downsizing and consolidation, or a need for reductions in cycle time, or increases in volume of input or output. # Making BPR a success:  Start BPR by setting up one task force to select and structure all processes, to conduct the first high level process review and to eliminate structural inefficiencies.  Each process has to cover the entire sequence of activities from source to customer and produce measurable results which are relevant to the customer.  Set the objectives from the customer’s viewpoints and measure results as relevant to them; always measure costs, response time, quality and variance.  Measure the result of existing processes first before setting targets and compare them with competition and customer’s feedback. Set the baseline for improvement.  Appoint one person to be responsible for the re-engineering process, implementation management and success tracking of one complete process.  Develop the “should be” process from the customer backwards and never forwards from resource level. “Engineer from scratch” rather than “re-engineer”.  Choose a “top down” approach to process mapping and avoid overly detailing... but take great care in measuring and defining the output. Use maps of existing processes primarily for “as is” vs. “should be” comparison and implementation action planning. Do not use detailed process mapping for upwards elimination of steps.  Involve every function which takes part in the whole process. Train, motivate and support the teams in every possible way. Recognize and reward teams for success. Cascade experience down the organization.  Set performance measures for each participating function. This enables tracing performance deviations back to the originator and prevents failures being blamed on other links in the process chain. Avoid double counting of successes.  Set up one decision making team for each whole process and another for the whole program. Manage conflicts though teams. # Generic steps to BPI project:  Develop strategic vision and design new process(es)  Identify and select process(es)  Reengineering opportunities  Identify IT levers and cost performance metrics  Design new process(es)

Page 1 of 31 Develop a business case for selection and implementation of change alternatives Formulate implementation plan and/or pilot program Review, approval, and execution Training and change management for the new environment

   

# Re-engineering model: Strategic business planning

Develop expectation and organizational vision, mission, objectives and actions plans

Concepts of operations

Principles, desired characteristics, roles and responsibilities, high level products, service and line of business

Scoping and redesign effort

High level activity modes, select candidates processes

Assessment of the “AS-IS” process

Activity and data modeling, activity based costing

Gathering data from customers and stakeholders


Benchmarking best practices in related processes

Performance measures

Reengineering and design of the “TO-BE” process

Generate redesign alternative, evaluate and tests, simulation modeling

Develop business case

Select best alternatives, functional economic analysis

Develop implementation plan


Prototyping and system development

Data management planning

Implementations integration and system migration

Awareness training

Education and communication Evaluation and reassessment BPI cycle Chapter 3 Change Management Change Management From Different Perspective, Critical Elements Of Change Management # Change Management From Different Perspective Change management is a process of planning, coordinating, and implementing changes to the information processing, production, distribution, and system facilities.

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Business Context

Current State

Organization And People

Processes Change Management Desired State


# Top        

10 mistakes made by top managers while implementing change: Failed to provide visible support and reinforce the change with other managers. Did not take the time to understand how current business processes would be affected by change. Delayed decision making, which leads to low morale and slow project progress. Were not directly or actively involved with change project. Failed to anticipate the impact on employees. Underestimate the time and resources needed. Abdicated ownership of the project to another manager. Failed to communicate both the business reasons for the change and the expected outcome to employees and other managers.  Changed the project direction mid-stream.  Did not set clear directions and objectives for the project.

Page 1 of 31 S C o t m r o m ni g t m C e n o

Chapter 4 Quality Management Defining Quality, TQM, TQM Tools, Process Capability, Statistical Process Control

# Defining Quality Commitment Model Quality is the degree, to which the design specifications for a product or service are appropriate to its function and use, and the degree to which a product or service conforms to its design specification. Internalization Sustainable Levels Institutionalization

Commitmen t Phase

Adoption Installation

Acceptance Phase

Degree of support for change

# Dimension of quality:  Performance  Durability  Features  Aesthetics  Serviceability  Perceived quality  Reliability  Conformance

Preparation Phase

# Total Quality Management (TQM) +ve Perception T – Made up of the whole Q – Degree of excellence a product or service provides M – Act, art or manner of planning, controlling,Understanding and directing the Therefore, TQM is the art of managing the whole to achieveChange excellence. Awarenessmeans of In other words, Total Quality Management that the organization's culture is defined by and supports the constant attainment of customer Change satisfaction through an integrated system of tools, techniques, and training. This involves the continuous improvement of organizational processes, resulting in high quality products Contact and services. # Dimension of TQM: Dimension of TQM

Supporting resources

Quality culture

Business excellence model, team building, etc


#Quality Critical Elements Of Change Management strategy ISO 9000  Change plan Quality improvement Continuous improvement What and why you want to change?  Deployment plan Quality tools effect analysis, brainstorming, process mapping, quality function How you will get the Cause unit to&change?  Implementation plan deployment, etc  How the unit will execute?  What the unit will do? # TQM components: # Critical Elements Of Change Management (also)  Planning  Implementation Awareness Why the change is needed?  Monitor and control Design To support and participate in the # Basic tenets of TQM:  The customer makes the ultimate determination of quality. change.  Top management must provide leadership and support for all quality initiatives. Knowledge  Preventing variability is the How key to toproducing change? high quality.  Quality goals are a moving target, thereby requiring a commitment toward continuous improvement. Ability Improving quality requires the To implement newof skills and metrics. We must speak with data and facts not establishment effective just opinions. behavior. Reinforcement # TQM Tools To sustain the change (long term  Check sheets durable).  Pareto analysis  Control chart Cause and effect # Keyprinciples driving thediagram elements of change management: Run chart  Targeted commitment levels Flow chart  Executive ownership # Process Capability To know about the process capability first of all we must know what process control is – Process Control refers only to the “voice of the process” i.e. looking at the process using an agreed performance measure to see whether the process forms a stable distribution over time. Now we can say that Process Capability measures the “goodness of a process” i.e. comparing the voice of the process with the “voice of the customers”; where, voice of the customers is the specification range (tolerance) or the nearest customer specification limit.

Page 1 of 31 Here, the objective is to get as close to the theoretical best that your process can achieve by eliminating special causes of variation, so that only common (natural) causes are acting on the process, and then to reduce these to a minimum, whenever possible. Process capability-:  Is a statistical indicator that measures how close a process is running to its specifications limit.  Measures of how well a given process is functioning.  Is dependent on a calculation of the total probability of defects reflected through sort-term variation generally expressed.  Is a comparison of the actual variability of a process to the process specification. # Types of processes:  Conversion (ex. Iron to steel)  Fabrication (ex. Cloth to clothes)  Assembly (ex. Parts to components)  Testing (ex. For quality of products) # Process flow structures:  Job shop (ex. Copy center making a single copy of a student term paper)  Batch shop (ex. Copy center making 10,000 copies of an ad piece for a business)  Assembly Line (ex. Automobile manufacturer)  Continuous Flow (ex. Petroleum manufacturer) # Statistical Process Control It is a method designed to ensure that a process attains and remains in a state of statistical control. In other words, it is a methodology for monitoring a process to identify special causes of variation and signal the need to take corrective action when appropriate. SPC relies on control charts. # Commonly used control charts:  Control chart for variables:  Control chart for mean (X-chart)  Control chart for range (R-chart)  Control chart for attributes:  Control chart for fraction defectives (P-chart)  Control chart for number of defectives (NP-chart) # SPC     

implementation requirements: Top management commitment Project champion Initial workable project Employee education and training Accurate measurement system

Chapter 5 Product Design And Development Product Life Cycle, Product Design Process, Concurrent Engineering, Quality Function Deployment, Value Analysis, Product Design In Service Sectors # Product Life Cycle  Product life cycle is an attempt to recognize distinct stages in the sales history of a product.  Product life cycle shows the stages that products go through from development to withdrawal from the market. # Product Design Process  Step – 1 Idea Development  Someone thinks of a need and a product/service design to satisfy it  Step – 2 Product Screening  Every business needs a formal/structured evaluation process  Step – 3 Preliminary Design and Testing  Technical specifications are developed, prototypes are built, testing starts  Step – 4 Final Design  Final design based on test results, facility, equipment, material, & labour skills defined, suppliers identified # Concurrent Engineering (CE) CE is a systematic approach to creating a product design that considers all elements of the product life cycle from conception through disposal. CE defines simultaneously the product, its manufacturing processes, and all other required life-cycle processes, such as logistic support. CE is not the arbitrary elimination of a phase of the existing, sequential, feed-forward engineering process, but rather the co-design of all desired downstream characteristics during upstream phases to produce a more robust design that is tolerant of manufacturing and use variation, at less cost than sequential design.

Page 1 of 31 # Quality Function Deployment (QFD) QFD is a planning tool which:  Translates customer needs into appropriate product development requirements.  Identifies the significant items on which to focus time, product improvement efforts, and other resources. QFD is not:  A quality control strategy. VOICE OF CUSTOMER



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# Value Analysis Value analysis is:  An organized effort directed at analyzing the functions of systems, products, specification standards, practices, and procedures for the purpose of satisfying the required function at the lowest total cost of effective ownership consistent with the requirements for performance, reliability, quality, and maintainability.  The organized use of methodologies that focus on the functions of materials, processes, or services in providing value to the customers. # Product Design In Service Sectors Product design in service sectors means designing service which is different from designing product since services are intangible and they cannot be stored for future use. According to James Heskett, designing service involves following four steps:  Identification of target markets:  Who are customers?  Where is the market?  Service concepts:  What are the service types?  How is it different from others?  Service strategy:  What is service policy?  What are the priorities?  What are the service packages and focus of service?  Service delivery system:  What are the actual processes?  What are the systems and facilities?  Who are the employees and what should be their skills and ability? # New service development process: The new service development process can be viewed as a cycle of activities as depicted below. The development and analysis stages represent the planning phase where the strategic fit and market viability are determined. The design and full launch stages represent the implementation phase.

Full launch

Developme People Service


Business analysis Project authorization



Formulation of strategies Idea generation & screening Concept development

Full scale launch Post launch review


Service design & testing Personal training Service testing & pilot run Test marketing

Page 1 of 31 Chapter 6 Process Analysis & Design And Capacity Planning Classification Of Process, Process Analysis, Process Selection, Selection Of Equipment And Technology, Strategy Capacity Management, Some Quantitative Tools For Capacity Planning Process Analysis In Service Sectors, JIT, Lean Production # Classification Of Process A process is a particular course of action intended to achieve a result. Project




Type of product


Made to order

Made to stock


Type of customer

One at a time

Few individuals

Mass market

Mass market

Product demand




Very stable

Demand volume

Very low

Low to medium


Very high

No. of different products

Infinite variety

Many, Varied


Very few

Production system

Long term projects

Discrete, Job shops

Repetitive, Assembly lines

Continuous, Process industries



General purpose

Special purpose

Highly automated

Primary type of work

Specialized contracts



Mixing, Treating, Refining Worker skills

Experts craft person


Custom work latest technology

Wide range of skills Flexibility, Quality

Limited range of skills Efficiency, Speed, Low cost

Equipment monitors Highly efficient, Large capacity, Ease of control

Non-repetitive, Disadvantages

Small customer base,

Costly, Slow, Difficult to manage

Capital investment, Lack of responsiveness

Difficult to change, Far reaching errors, Limited variety



Construction, Ship building, Space craft

Machine shops, Print shops, Bakeries, Education

Automobiles, Television, Computers, Fast food

Paint, chemicals, Food stuffs

# Process Analysis Process analysis is the systematic examination of a process to understand the process in order to develop ideas for improvement of the process.  Process flow charts  Symbolic representation of processes  Incorporates ➢ Non productive activities (inspection, transportation, delay, storage) ➢ Productive activities (operations) Operations



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Fig: Process flowchart symbols # Principles of redesigning process:  Remove waste, simplify, and consolidate similar activities  Link processes to create value  Let the swiftest and most capable enterprise execute the process  Flex process for any time, any place, any way  Capture information digitally at the source and propagate it through process  Provide visibility through fresher and richer information about process status  Fit process with sensors and feedback loops that can prompt action  Add analytic capabilities to process  Connect, collect, and create knowledge around process through all who touch it  Personalize process with preferences and habits of participants # Process strategy:  Capital intensity  Mix of capital and labor resources used in production process  Process flexibility  Ease with which resources can be adjusted in response to changes in demand, technology, products or services, and resource availability  Vertical integration  Extent to which firm will produce inputs and control outputs of each stage of production process  Customer involvement  Role of customer in production process # Factors determining make or buy decision:  Cost  Capacity  Quality  Speed  Reliability  Expertise # Process Selection Process selection is considered into three categories:  Methodologies:  Methodologies are general approaches to taking a large variety of problems. They are not aimed at ways of selecting a particular process but at creating frameworks within which certain classes of problems can be addressed. The intention is to guide the creation of procedures ensuring that all the relevant aspects of selection are addressed.  Procedures:  Procedures can be considered as algorithms for tackling a set of related process selection problems. They will content all the necessary steps and the appropriate tools for selecting a process in a given situation. The way in which the procedure is actually used to carry out a selection will depend upon its implementation. Implementations are usually software based, although they can be as simple as a series of instructions and chart.  Tools:  It refers to the tools used in selection procedures. Examples include – charts of properties, linear regression analysis, etc. At the implementation stage it becomes to utilize more generic tools such as expert systems. # Selection Of Equipment And Technology A technology decision is closely linked with the capacity and system maintenance areas. The technology selection process will depend on the basis of strategy adopted by planners and on general trend in the organization. Factors that affects the selection of technology:  Technological factor:  Demand (Present and future)  Capital  Extension capacity  Competitive advantage  Environmental factor:

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 Seasonal variations  Production quality and improvement  Resource protection  Availability, accessibility and reliability Institutional factor:  Legal framework  National strategy  Institutional setup  Support from government, NGO and external support Community and managerial factor:  Local economy  Living patterns and population growth  Living standards and general balance  Users preference Financial factor:  Capital/cost  Budget allocations  Financial participation of users  Local economy

# Strategy Capacity Management Capacity is the maximum output of a system in a given period. It is the amount of output that a system is capable of achieving over a period of time. Thus, strategy capacity management means the ideas developed to ensure that the maximum output is achieved in a given period. Capacity Management is divided into three subprocesses, of which the capacity planner typically manages the first two:  Business Capacity Management – obtaining business projections and forecasting the impact of the new demand on the existing resources.  Resource Capacity Management – monitoring and analyzing the current resource demands.  Service Capacity Management – managing the systems to the service level agreements established. Performance management (the day-to-day managing and monitoring of the system) is a subset of this process. # Types of strategy:  Lead strategy is adding capacity in anticipation of an increase in demand. Lead strategy is an aggressive strategy with the goal of luring customers away from the company’s competitors. The possible disadvantage to this strategy is that it often results in excess inventory, which is costly and often wasteful.  Lag strategy refers to adding capacity only after the organization is running at full capacity or beyond due to increase in demand (North Carolina State University, 2006). This is a more conservative strategy. It decreases the risk of waste, but it may result in the loss of possible customers.  Match strategy is adding capacity in small amounts in response to changing demand in the market. This is a more moderate strategy. # Some Quantitative Tools For Capacity Planning Process Analysis In Service Sectors Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. In the context of capacity planning, "capacity" is the maximum amount of work that an organization is capable of completing in a given period of time. Quantitative tools for capacity planning process:  Modeling  A methodology for predicting the future impact of change. In IT, this usually means a tool that can map the existing environment and demands, and then add to this the projected demand, resulting in a picture of the resource demands expected.  Trending  A simpler way of looking at future growth, it assumes that growth rates in the past reflect growth rates in the future. It generates a straight line into the future to determine growth. This technique is generally used only when actual projections are not known.  Linear regression  A method for determining the relation between two (or more) metrics. Assuming that they are related, an equation can be developed which explains this relationship, so you can figure out what the value of one would be from the value of the other. Most methods for calculating linear regression will develop an equation and a line, even if there is no relationship between the variables, so it is important to test the relationship (correlation) before putting too much weight on the result.  Forecast  The process of estimating the unknown. Take all the data you can find about the subject, hopefully leaving only one variable to estimate.  Workload characterization  This is the process of mapping IT processes and transactions to a business unit of work. In the past, a CICS transaction often was the same thing as a business transaction, but now, as many business applications span multiple platforms and IT applications, this exercise is necessary. The end user view is critical in performance reporting, availability management and even chargeback.

Page 1 of 31 # Steps in capacity planning:  Determine service level requirements:  Define workloads  Determine the unit of work  Identify service levels for each workload  Analyze current system capacity:  Measure service levels and compare to objectives  Measure overall resource usage  Measure resource usage by workload  Identify components of response time  Plan for the future:  Determine future processing requirements  Plan future system configuration # Considerations in adding capacity:  Maintaining system balance  Frequency of capacity additions  External sources of capacity # JIT (Just In Time) JIT is a pull system driven by actual demand. The goal is to produce or provide one part Just In Time for next operation. JIT is a management philosophy that strives to eliminate sources of manufacturing waste and cost by producing right part in the right place at the right time.

Ultimate goal A balanced rapid flow

Supporting goal

Eliminate disruptions & Make system flexible

Product design

Process design

Eliminate waste

Manfing planning

Personal elements

Building blocks

Fig: JIT goals and building blocks # Benefits of JIT:  Low inventory carrying cost  Fast detection of defects in production  Reduce inspection and networks of parts  High quality parts at low cost # Lean Production Lean production or lean thinking (Womack et al., 1990; Womack and Jones, 1996) has its origin in the philosophy of achieving improvements in most economical ways with special focus on reducing muda (waste). The concept of muda became one of the most important concepts in quality improvement activities primarily originated by Taiichi Ohno's famous production philosophy from Toyota in the early 1950s (Dahlgaard-Park, 2000, p. 128). This philosophy was widely called as Toyota production system in Japan (Udagawa et al., 1995; Womack et al., 1990), and it became later on (1986) labelled as lean production and lean thinking by Womack et al. (1990). Lean production is a strategy that aims at high levels of production using lesser effort, time, and materials. It is an integrated business approach to eliminate non – value added activities from the customer delivery cycle in the operations. This approach enables companies to respond quickly and profitably to changes in customer demands. The technique of lean manufacturing can be applied to every situation in a company by finding out what the customer wants, eliminating waste from processes and making flow continuously according to customer pull. The idea is to create a culture in which people at various levels of an organization are continuously improving their productivity every day in every way. Lean Production V/S Traditional Production Systematic efforts are made to reduce supply chain lead times

Separate organizations link together through the market, and take what the market offers

Learning is incorporated into project, firm, and supply chain management

Learning occurs sporadically

Stakeholder interests are aligned

Stakeholder interests are not aligned

Page 1 of 31 Buffers are sized and located to perform their function of absorbing system variability

Participants build up large inventories to protect their own interests

# 10 steps to lean production:  Re-engineer the manufacturing system  Setup reduction or elimination  Integrate quality control into the system  Integrate preventative maintenance into the system  Level, balance, sequence and synchronize  Production Control  Reduce work-in-process  Integrate suppliers  Automation  Computer-Integrated Manufacturing 4 Pillars of Lean production Chapter 7 Operation Technology The Internet, Design Technology, Production Technology, Technology In Service Sector, Benefits & Shortcoming Of Investing New Technology, Enterprise Resource Planning, Management Information System # The Internet An internet is a group of networks connected together. The internet refers to the global connection of networks around the world. The internet is a world wide, publicly accessible network of interconnected computer networks that transmits data by packet switching using the standard internet protocol (IP). It is a network of networks that consists of millions of smaller domestic, academic, business, and government networks which together carry information and services such as electronic mails, online chats, file transfer, and the interlinked webpage and other documents of the World Wide Web. The size, scope, and design of the internet allows user to:  Connect easily through ordinary personal computers and local phone numbers.  Exchange information using e-mails.  Access multimedia information that include sound, photographic images, and even videos.  Download information. # Design Technology Design technology will help:  Evaluate the viability of a design  Recommend appropriate development techniques  Propose appropriate manufacturing processes and systems  Propose appropriate quality assurance procedures in design and manufacture  Implement and evaluate technology in a business environment  Manage technology systems  Manage information systems  Specify and manage computer based resources # Production Technology Production technology includes:  Types of Automation  Automated Production Systems  Factories of the Future  Automation in Services  Automation Issues  Decision Approaches # Types of automation:  Machine Attachments – one operation  Numerically Controlled (N/C) – reads computer or tape inputs  Robots - simulates human movements  Automated Quality Control – verifies conformance to specifications  Auto ID Systems - automatic acquisition of data  Automated Process Control – adjusts processes per set parameters  Automated Flow Lines (Fixed Automation)  Automated processes linked by automated material transfer  Automated Assembly Systems  Automated assembly processes linked by automated material transfer  Flexible Manufacturing Systems (FMS)  Groups of processes, arranged in sequence, connected by automated material transfer, and integrated by a computer system

Page 2 of 31 # Technology In Service Sectors It is technology which establishes corporate direction and provides the framework for the identification, implementation, operation, and maintenance of technologies used in the operation of the corporation facilities. These technologies would include process control, electro-mechanical and electronics, telecommunications, etc. Technology facilitates all service sectors like accounting, travel and tourism, engineering, photographic, etc. # Benefits & Shortcoming Of Investing New Technology Benefits:  Easy diversification in business with established reputation and recognition of “chaebols” brand name.  Scope economies by synergy effects.  Scope economies by large size improvements in decision making by having cumulated knowledge and experiences of many companies in a chaebol improvement in capturing new business opportunities with vast knowledge in many fields of business. Shortcoming:  Lack of business transparency.  High risks of business due to CEO’s autocratic decision-making.  Increase in management cost due to the bureaucratic organization.  Inefficient resource allocation.  Delay of development in core capabilities. # Enterprise Resource Planning (ERP) ERP appeared in the 1970’s as software modules that aimed to support business processes such as production, inventory control, purchasing, enterprise data management, finances and other internal processes. Several international Information Technology (IT) companies developed ERP software packages which shared common databases and included several modules of ERP tasks. Over the last 20 years, a significant number of companies all over the world started to apply ERP either in the form of simple small PC applications or in the form of integrated ERP software packages with several modules. ERP system integrates all activities and process of an organization into a unified system. The term ERP originally implies system design to plan the use of enterprise wide resources. The ERP delivers the following activities:  Production: ERP applications for production were among the first that appeared and are based mainly on MRPII (Manufacturing Resource Planning) methodology. MRPII is a descendant of MRP (Material Requirements Planning) and was implemented through several modules concerning Master Production Scheduling (MPS), Capacity Requirements Planning (CRP), Production Order Release, Operations Scheduling, Shop Floor Control (SFC), Inventory Control, Purchasing, Production Data Management, etc. Also in this category of ERP software, Computer Aided Design (CAD), Computer Aided Manufacturing (CAM) and Computer Integrated Manufacturing (CIM) applications are included.  Sales & Marketing: Sales ERP applications had software modules that aimed to support selling processes and transactions with customers usually through Local Area Networks (LANs) and for large enterprises through Wide Area Networks (WANs). The purpose of such applications was not only the invoice and receipt preparation but also the entire processing of the customer order, from the time that the order was placed by the customer until the shipment of the product and the invoice release. On the other hand marketing applications were trying to utilize and process customer data and other relevant information in an effort to support marketers at their work. Such applications can be compared with today’s CRM (Customer Relationship Management) and Data Mining e-marketing applications, but they were less powerful, since less customer data was available particularly compared with the wealth of customer data gathered today through Internet transactions.  Finance: Financial ERP applications were one of the most important categories of ERP. Accounting and other financial applications (like payrolls and costing) were the first ERP applications that appeared when computers were first introduced in business. They support people in their calculations, work automation and provide storage for huge amounts of data. Today, financial applications are still among the most important ERP applications and an effort is made to ensure good cooperation and integration with the other ERP functions.  Logistics: Logistics ERP applications appeared more recently as separate applications, since initially the management of the inventories and the purchasing were considered part of the production ERP modules. But after the mid 1980’s when the Japanese industries significantly reduced the cost of material handling by applying new methods like Just-In-Time (JIT) and increased their competitiveness, American and European industries started to concentrate more on the management and control of their logistics.  Human resources: Initially human resources ERP applications were considered as part of production planning and financial modules, where humans were considered as part of the processes, and their data, part of the enterprise database. Today, since the human factor in the companies is thought one of the most important factors of success in the business world, ERP software providers included modules for human resources management. These modules extended applications for human resources focusing on human

Page 2 of 31 improvement, satisfaction and cooperation. Principles of Total Quality are embodied in such applications helping both humans and enterprises to become more efficient, to be satisfied and to achieve goals. # Advantages of ERP:  Highly Graphics based User Interface.  Zero down time/planned down time.  Ready made solutions for most of the problems.  Integration of all functions ensured.  Easy enterprise wide information sharing.  Suppliers and Customers can have on-line communication.  Knowledge transfer between industries guarantees innovation.  Automatic adaptation to new technology. # Management Information System (MIS) In general term MIS is a computer system in an organization that provide information about its business operations. Typically, it is also referred to as a central or centrally coordinated system of computer expertise and management after including by extension the corporation’s entire network of computer resources. Thus, it is a system that provides management with needed information on regular basis. # Advantages of MIS:  Core competency support.  Enhanced distribution channel management.  Increased brand equity.  Boost production process.  Expand e-commerce.  Leverage stability. Chapter 8 E-Commerce Definition, Benefits And Limitations Of E-Commerce, E-Procurement # Definition E-Commerce, abbreviation for electronic commerce, usually defined as the conduct of business online, via the Internet. Until recently, e-commerce was limited mainly to large companies and their suppliers, who connected their computers together to speed up ordering and payment systems. Today, millions of people are involved in ecommerce on the Internet – when, for example, they visit World Wide Web sites to buy books or CDs, order flowers or pizzas, or check their bank accounts, etc. Thus, in short, e-commerce is the buying and selling of goods and services on the internet, especially the World Wide Web. # Benefits And Limitations Of E-Commerce Benefits:  Increase sales  Decrease costs  Greater market coverage  24/7 transaction facility  Better inventory management  Effective customer relation management  Fast feedback from customers Limitations:  Technical limitations:  High cost of technological solution  Some protocols are not standardized around the world  Reliability for certain purpose  Insufficient telecommunication bandwidth  Access limitations of dialup, cables, and wireless  Some vendors require certain software to show features on their pages, which is not common in the standard browser used by the majority.  Non-technical limitations:  Customer fear of personal information being used wrongly  Privacy issues  Customer expectations unmet  Vulnerability to fraud and other crimes  Lack of trust and user resistance  Fear of payment information being unsecure # E-Procurement E-procurement (electronic procurement, sometimes also known as supplier exchange) is the B2B or B2C or B2G purchase or sale of supplies. Typically, e- procurement websites allow qualified and registered users to look for buyers or sellers of goods and services. Depending on the approach buyers or sellers may specify costs or invite bids.

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E-procurement is expected to be integrated with the trend toward computerized supply chain management. E-procurement is done with a software application that includes features for supplier management and complex auctions. The new generation e-procurement is now on-demand or software-as-a-service.

# Types of E-procurement:  Web based ERP (Electronic Resource Planning):  Creating and approving purchase requisition, placing purchase orders, receiving goods and services etc by using a software system based on the internet technology.  E-MRO (Maintenance, Repair and Operating supplies):  Same as web based ERP except that the goods and services ordered are non product related i.e. MRO supplies.  E-Sourcing:  Identifying new suppliers for a specific category of purchasing requirement using internet technology.  E-Tendering:  Sending requests for information and prices to suppliers and receiving the responses of suppliers using internet technology.  E-Reverse Auctioning:  Using internet technology to buy goods and services from a number of known and unknown suppliers.  E-Informing:  Gathering and distributing purchasing information both from and to internal and external parties using internet technology.  E-Market sites:  Expands on web based ERP to open up value chains. Buying communities can access preferred suppliers’ products and services, add to shopping carts, create requisition, seek approval, receipt purchase orders, and process electronic invoices with integration to suppliers supply chains and buyers financial systems. Chapter 9 Reengineering And Humane Resources Labor Planning, Job Design, Visual Workplace, Work Measurement # Labor Planning Labor planning or HR planning means forecasting the number and types of personnel whom the organization will have to hire, train, and promote in a particular period in order to achieve its objectives, policies, programs, and procedures. What is workforce planning then? At its simplest form it is ensuring that there would be:  The right person  The right place  The right time  Accomplish aims of the organisation  No ONE workforce planning model # Objectives/Benefits of labor planning:  Making optimum use of available talent.  At national level, it is needed for economic development.  It reduces labor cost.  Delays due to non availability of a particular type of labor can be avoided by planning for manpower in advance.  Labor planning identifies gaps in existing labor so that suitable training programs may be arranged to develop the skills required. # Steps in labor planning:  Forecasting labor requirements  Preparing labor inventory  Identifying manpower gaps  Formulating manpower plans # Job Design Job design is the process of linking specific tasks to specific jobs and deciding what techniques, equipment, and procedures should be used to perform those tasks. It is also defined as the function of specifying the work activities of an individual of group in an organizational setting. Job design helps to determine:  What tasks are done?  How many tasks are done?  In what order the tasks are done? It takes into account all factors which affect the work and organizes the content and tasks so that the whole job is less likely to be a risk of the employee.  Early approaches:  Scientific Management

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 Job Enlargement  Job Enrichment More recent approaches:  Job Characteristics Model  Social Information Processing Theory Job design involves administrative areas such as: Job rotation Job enlargement Job enrichment Work breaks Working hours Job design is an ongoing process. The goal is to make adjustments as conditions for task changes within the workplace.

# Approaches to job design:  Job enlargement:  Increasing the number of tasks a worker performs but keeping all of the tasks at the same level of difficulty and responsibility; also called horizontal job loading.  Job rotation:  It moves employees from one place to another i.e. from one task to another.  It distributes the group of tasks among the member of the employees.  Job enrichment:  Increasing a worker’s responsibility and control over his or her work; also called vertical job loading.  Ways of enriching jobs:  Allow workers to plan their own work schedules.  Allow workers to decide how the work should be performed.  Allow workers to check their own work.  Allow workers to learn new skills.  Work design (Job engineering):  It allows employees to see how the work methods, layout, and handling procedure link together as well as the interaction between people and machine. # Goals of job design:  Task variety  Work breaks  Allowances for an adjustment period  Provide training  Vary mental activities # Visual Workplace Visual workplace means showing labor work, teaching a line or providing a place to post their workshops on answer questions. A visual work place means showing the all operational activities in one place in increasing efficiency to the labor. # 5 pillars of visual workplace: Sort means that you remove all items from the workplace that are not needed for current Sort production operations and add anything that is needed but is not there. Set In Order

Set In Order means that you arrange needed items so that they are easy to use and label them so that anyone can find them and put them away.


Shine means we keep everything swept and clean.


Standardize is the result that exists when the first three pillars – Sort, Set In Order, and Shine – are properly maintained.

Sustain Safety

Sustain is having the discipline to maintain a higher standard.


# Benefits of visual workplace:  Employee engagement (Everyone can participate)  Mutual trust and respect (Solve lingering problems)  Customer satisfaction (New business) # Work Measurement Work measurement is the application of techniques designed to establish time for a qualified worker to carry out a specific job at a defined level of performance. It helps to:  Prepare realistic work schedule.

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Compare the efficiency of alternative methods. Balance the work of team members. Determine the number of machine one can operate or monitor. Set standards for machine use and labor performance.

# Steps in work measurement:  Select the work to be studied.  Record the relevant data.  Examine the recorded data.  Measure the quantity of work involved in each element in terms of time.  Compile or compute the standard time for the operation.  Define precisely the series of activities and methods of operation for which the time has been compiled and derive the standard time for the activities and methods specified. # Techniques of work measurement:  Direct observation:  Time study  It is a work measurement technique for recording the times and rates of working for the elements of a specified job carried out under specified conditions in order to determine the time necessary to carry out the job at a defined level of performance.  Activity sampling  It measures the percentage of the time and activity or delay occurs when a large no. of observations are made at random intervals over a period of time for one group of machines, processes, or workers. Each observations record what is happening at the particular instant and the percentage for a particular activity or delay.  Pre-determination:  Analytical estimating  Here, the time of elements of a job at defined level of performance is estimated partly from synthetic data and partly from knowledge and experience.  Comparative estimating  Here, the time for job is estimated by comparing the work in it with the work in a series of similar jobs – benchmarks – the work contains of which has been measured.  Pre-determined Time System (PTS)  PTS is a work measurement technique where times estimated for basic human motions (classified according to their nature and conditions in which made) are used to build the time for a job at a defined level of performance.  Synthesis  It is a work measurement technique for building of the time for a job or parts of the jobs at defined level of performance by summing up the elements times obtained previously from time studies on other jobs containing the demand concerned or synthetic data.

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