MAN Chapter 101 Chapter 10. Process Improvement zOutline yBusiness Process Reengineering xDefinition xPeople of Reengineering yElimination of Waste Identification/Elimination of Waste Commitment to People Commitment to Quality JIT Production Process

MAN Chapter 102 Business Process Reengineering zHammer and Champy (1993): “ Reengineering isn’t another idea imported from Japan. It isn’t another quick fix that American managers can apply to their organizations. It isn’t a new trick that promises to boost the quality of a company’s product or service or shave a percentage of costs. … Business reengineering isn’t about fixing anything. Business reengineering means starting all over, starting from scratch. …. What matters in reengineering is how we want to organize work today, given the demands of today’s markets and the power of today’s technologies.”

MAN Chapter 103 BPR  Process Rethinking  Focus on the product/result, not in the current process.  Combine several jobs into one, moving away from the assembly line view of process (horizontal integration).  Allow workers to make decisions, provide them multiple skills (vertical integration).  Organize the process so that the steps are performed in a natural order: eliminate unnecessary precedences.  Develop processes that have multiple versions, reducing or eliminating standardization. To improve the efficiency, start processes with a triage area that determines the correct path.

MAN Chapter 104 BPR  Process Rethinking  Plan work so it is performed where it makes the most sense, eliminating departmental barriers.  Reduce checks and controls to reduce process cost.  Implement hybrid centralized/decentralized operations that use some common operations, but allow individuals and groups to make decisions.  Have those that use the output of the process, perform the process.

MAN Chapter 105 BPR zThe People of Reengineering - Companies do not reengineer, people do. x Leader – a senior executive who motivates and supports the reengineering effort x Process Owner – a manager who is responsible for the process being reengineered x Reengineering team – a group of individuals responsible for the reengineering of the process (analysis and redesign). x Steering committee – a policy-making management team who plans the overall reengineering strategy.

MAN Chapter 106 Waste Minimization through JIT zContinuous Process improvement zFour areas:  Identification/Elimination of Waste  Commitment to People  Commitment to Quality  JIT Production Process

MAN Chapter 107 Waste Minimization through JIT- Elimination of waste zSeven Types of Waste  Waste from overproduction. The costs of overproduction are related to the costs of holding inventory described in chapter 8 (obsolescence, storage costs). Having items available when a customer arrives has value, having too much is a cost. yWaste of waiting. When materials or customers are waiting, no value is being added, instead, money is tied up, or a customer is becoming impatient. yTransportation waste. Similar to the cost of waiting; while materials are being moved there is no value being added.  Inventory waste. Also related to holding inventory costs. yProcessing waste. IT is possible that some activities of the process are either unnecessary (not adding value) or not very efficient (adding very little value for all the effort required). yWaste of motion. The cost of workers performing unnecessary movements and actions.

MAN Chapter 108 Waste Minimization through JIT- Elimination of waste Reduction of Waste y Reduction of Overproduction Waste: Minimizing finished goods inventory, JIT production system. y Reduction of Waiting Waste: Work at minimizing setup times. y Reduction of Transportation Waste: Improve layouts and equipment location. y Reduction of Inventory Waste: Reduction of inventories, JIT production system. y Reduction of Processing Waste: Process simplification, less packaging or automate processes. y Reduction of Motion Waste: Improve layouts and equipment ergonomics. y Reduction of Product defects Waste: Emphasize quality, SPC programs.

MAN Chapter 109 Waste Minimization through JIT- Commitment to People z Management Style: yImportance of employee commitment and involvement. yB ottom-round management, where committees or teams make decisions z Teamwork: yTeamwork helps the successful analysis and elimination of waste in processes, the implementation of quality programs as SPC, and the development of training programs. z Suppliers: yJIT fosters a close relationship with suppliers - o bjective is to maximize the benefits to both the buyer and the supplier. yInformation, resources and even profits are shared. z Suggestion Systems: yThe JIT philosophy encourages employee innovations by rewarding their ideas yIndividuals receive small financial incentives for ideas (that are implemented or have potential).

MAN Chapter 1010 Waste Minimization through JIT- Commitment to Quality z Suppliers ySupplier selection based on quality first, then other factors. ySupplier selection (and later vendor certification) is based on their expected ability to provide zero defect products at the right time and location. z Production Process yThe JIT system makes everyone in the organization responsible for quality. This is different from norm where the quality department is responsible for quality and the production just for making the stuff. yTo prevent quality problems three sub-steps are implemented in a process activity, a) inspect/check a characteristic that typically has problems or it is critical to the customer b) perform a value adding or required action c) inspect your work.

MAN Chapter 1011 Waste Minimization through JIT- JIT Production

MAN Chapter 1012 Waste Minimization through JIT- JIT Production zQuick Delivery zHigh Quality of Incoming Materials zStable Demand zHigh Process Quality zSmall Setup time zMulti-skilled workforce zEffective preventive maintenance

MAN Chapter 1013 Inventory Decision Making - Internal Demand zMRP Systems is a process that requires component information yProduct structure yProduction/Supply lead time yLot size if any yAvailable inventory