Lecture Fundamentals of operations management (4/e): Chapter 6 - Davis, Aquilano, Chase

Chapter 5 Process measurement and analysis, after studying this chapter you will be able to: Illustrate how all activities within an organization are actually processes that need to be managed; present the various measures of performance that can be used to evaluate a process; show how process analysis can provide managers with an in-depth understanding of how a process is performing, while at the same time identifying areas for improvement;...

DAVIS F   O   U   R   T   H       E   D   I   T   I   O   N AQUILANO CHASE chapter Process Measurement  and Analysis © The McGraw-Hill Companies, Inc., 2003 PowerPoint Presentation by Charlie Cook Chapter Objectives Chapter Objectives • Illustrate how all activities within an organization are actually processes that need to be managed • Present the various measures of performance that can be used to evaluate a process • Show how process analysis can provide managers with an in-depth understanding of how a process is performing, while at the same time identifying areas for improvement • Present the concept of service blueprinting and illustrate how it is used to evaluate processes within a © The McGraw­Hill  service environment Fundamentals of Operations  Companies, Inc., 2003 Management 4e  5–2 Chapter Objectives (cont’d) Chapter Objectives (cont’d) • Introduce the concept of business processes and show how they are providing managers with a broader perspective for managing their organizations • Present the concepts of benchmarking and reengineering and show their roles in creating worldclass operations Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 5–3 Managerial Issues Managerial Issues • Recognizing that every set of activities represents a process to be managed • Acknowledging that processes are linked to other processes in other functional areas • Choosing strategically critical performance measures by which to monitor processes so that corrective actions are taken when needed • Using benchmarking to identify ways in which to create or improve world-class design, production and delivery operations for products Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 5–4 Defining a Process Defining a Process • Selecting a Process –Identifying the strengths and weaknesses of each process’s capability to support the strategic focus of the firm on particular market segments • Standardization • Flexibility • Customization • Speed of delivery Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 5–5 Process Flowcharts for Making Hamburgers Process Flowcharts for Making Hamburgers Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 5.1a 5–6 Process Flowcharts for Making Hamburgers Process Flowcharts for Making Hamburgers Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 5.1b 5–7 Relative Comparison of  Relative Comparison of  Hamburger Preparation Processes Hamburger Preparation Processes Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 5.2 5–8 Process Measurement Process Measurement • Importance of Measuring Processes –Is the basis for good management—“If you can’t measure it, you can’t manage it.” –Allows a firm to determine if its strategically important goals and standards are being met –Allows for performance comparisons with other competing firms Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 5–9 Types of Performance Measures Types of Performance Measures • Productivity –The operational efficiency with which inputs are transformed (converted) into outputs • A relative measure that becomes meaningful when compared to itself over time, similar operations internally, or externally within its industry –Partial measures of productivity can be taken using the various inputs (e.g., labor, energy, and materials) that are combined to create a product Productivity Fundamentals of Operations  Management 4e  Outputs © The McGraw­Hill  Inputs Companies, Inc., 2003 5–10 Blueprint for a Corner Shoeshine Blueprint for a Corner Shoeshine Fundamentals of Operations  Management 4e  Source: Reprinted by permission of Harvard Business Review Exhibit from Adapted from “Designing Services That Deliver” by G Lynn Shostack, January–February 1984, p 134 Copyright © 1984 by the President and Fellows of Harvard College; all rights reserved © The McGraw­Hill  Companies, Inc., 2003 Exhibit 5.8 5–28 Shoeshine Profitability Analysis Shoeshine Profitability Analysis Fundamentals of Operations  Management 4e  Source: Reprinted by permission of Harvard Business Review Exhibit from Adapted from “Designing Services That Deliver” by G Lynn Shostack, January–February 1984, p 135 Copyright © 1984 by the President and Fellows of Harvard College; all rights reserved © The McGraw­Hill  Companies, Inc., 2003 Exhibit 5.9 5–29 Process Analysis in Services (cont’d) Process Analysis in Services (cont’d) • Failsafing –Creating a control condition where the customer, server, or process can take only the correct (or desired) action while engaged in a service process FundamentalsofOperations Management4e âTheMcGrawưHill Companies,Inc.,2003 530 BusinessProcesses BusinessProcesses ã Business Process –A logical set of tasks or activities that crosses functional boundaries and recognizes its interdependence with other processes or businesses • Examples of Business Processes Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 5.10 5–31 Business Process Analysis Business Process Analysis • Define the Process Boundaries –Identify where the process begins and where it ends (its boundaries) –Determine its inputs and outputs –Recognize other processes that impact on the process under evaluation • Link the Process to the Corporate Strategy –Understand how the process contributes to the firm’s competitive advantage –Identify key measures to be used evaluate the © The McGraw­Hill  process Fundamentals of Operations  Companies, Inc., 2003 Management 4e  5–32 Measures of Performance for Measures of Performance for Specific Business Processes Specific Business Processes Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 5.11 5–33 Business Process Analysis (cont’d) Business Process Analysis (cont’d) • Map the Process –Develop a process flow chart to provide a visual context for analyzing the process: • Specific ordering of the process steps • Length of time each step takes • Resources required by each step • Cross-functional relationships • Granularity –Describes the level of detail that is used in analyzing a process © The McGraw­Hill  Fundamentals of Operations  Companies, Inc., 2003 Management 4e  5–34 Process Mapping with Functional Areas Process Mapping with Functional Areas Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 5.12 5–35 Benchmarking Benchmarking • Benchmarking –Comparison of a company’s measures of performance with those of firms that are considered to be world class –“The search of the best practices that leads to superior performance.” –Involves continuous monitoring/measurement –Applicable to all functional areas: • Goods and services • Business processes • Performance measures FundamentalsofOperations Management4e âTheMcGrawưHill Companies,Inc.,2003 536 KeyStepsinBenchmarking KeyStepsinBenchmarking ã Planning Determining where we should bench mark • Analysis – Obtaining an in-depth understanding of the firm • Integration – Defining target areas for change • Action – Incorporating findings into current processes • Maturity – Having best practices at all organizational levels FundamentalsofOperations Management4e âTheMcGrawưHill Companies,Inc.,2003 537 TypesofBenchmarking TypesofBenchmarking ã Internal Benchmarking –Comparison of similar operations within the firm • Competitive Benchmarking –Comparison with like operations of competitors • Functional Benchmarking –Comparison with the “best of breed” in a specific function, regardless of industry • Generic Benchmarking –Adopting the innovative processes of industry leaders in commonly-held practices © The McGraw­Hill  Fundamentals of Operations  Companies, Inc., 2003 Management 4e  5–38 Benchmarking Process Steps Benchmarking Process Steps Fundamentals of Operations  Management 4e  Source: Robert C Camp, Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance, (Milwaukee, WI: ASQC Quality Press, 1989) © The McGraw­Hill  Companies, Inc., 2003 Exhibit 5.12 5–39 Business Process Reengineering Business Process Reengineering • Reengineering –The process of rethinking and restructuring an organization • Characteristics of a Reengineered Process –Several jobs are combined into one –Workers make decisions –The steps in the process are performed in a natural order –Processes have multiple versions (flexibility) –Work is performed where it makes the most © The McGraw­Hill  sense Fundamentals of Operations  Companies, Inc., 2003 Management 4e  5–40 Business Process Reengineering Business Process Reengineering • Issues with Reengineering –Inability of management to link reengineering efforts to overall corporate strategy –Reengineering is regarded as a tactical program rather than as a strategy issue for the entire organization –Lack of commitment and participation by top management Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 5–41 Comparison between Strategic and Tactical  Comparison between Strategic and Tactical  Deployment Techniques for Reengineering Deployment Techniques for Reengineering Fundamentals of Operations  Management 4e  Source: Gateway Management Consulting © The McGraw­Hill  Companies, Inc., 2003 Exhibit 5.13 5–42 ... hours available Fundamentals? ?of? ?Operations? ? Management? ?4e  © The McGraw­Hill  Companies, Inc., 2003 5–13 Measures? ?of? ?Capacity Measures? ?of? ?Capacity Fundamentals? ?of? ?Operations? ? Management? ?4e  © The McGraw­Hill ... Productivity Fundamentals? ?of? ?Operations? ? Management? ?4e  Outputs © The McGraw­Hill  Inputs Companies, Inc., 2003 5–10 Partial Measures? ?of? ?Productivity Partial Measures? ?of? ?Productivity Fundamentals? ?of? ?Operations? ?... producing more than one type of product © The McGraw­Hill  Fundamentals? ?of? ?Operations? ? Companies, Inc., 2003 Management? ?4e  5– 16 Types? ?of? ?Performance Measures (cont’d) Types? ?of? ?Performance Measures (cont’d)