1. Business Development: Initiatives for improvement
HOD (298)
Business Development: Initiatives for improvement

2. Themes Business Improvement Platts Gregory tool
Maintaining alignment with market requirements
Balanced Scorecard
Application of Lean principles

3. Common Themes of Business Improvement Approaches
Emphasising improvements to productivity and profitability.
Emphasising the importance of striving for zero defects (consistent conformance).
Aligning processes and people with the strategic aims of the organisation.
A continuous journey of improvement.
Utilising various tools to help analyse, choose, implement and monitor decisions.

4. Problem solving steps based on Deming’s PDCA cycle
Recognise the problem and establish priorities.
Form quality improvement teams.
Define the problem.
Develop performance measures.
Analyse the problem / process.
Determining possible causes.
Select and implement the solution.
Evaluate the solution: Follow-up.
Ensure permanence.
Continuous improvement.
Plan Do
Check
Act
Fitzsimmons & Fitzsimmons, 2014

5. The key module theme What you HAVE What you NEED What you WANT
in terms of operations capabilities
What you NEED
to ‘compete’ in the market
Operations Resources
Market Requirements
What you WANT
from your operations to help you ‘compete’
What you DO
to maintain your capabilities and satisfy markets
Strategic Reconciliation / Alignment
Slack & Lewis, 2008 & 2011

6. Basic questions addressing
Where do we need to be?
What does the market tell us that it wants?
Where are we now?
What capabilities do we have now?
Where are the performance gaps between what we have and what the market wants?
How do we get to where we need to be?
Can we / how do we align our capabilities as closely as possible to what the market wants?

7. The Platts-Gregory procedure
Opportunities and threats?
The existing operation
Facilities
Capacity
Span of process
Processes
Human resources
Quality
Control policies
Suppliers
New Products
What the market wants?
Features
Quality
Delivery
Flexibility
Price
What do we need to do to improve the revised operations strategy?
How the operations performs
Features
Quality
Delivery
Flexibility
Price
Platts, K.W. & Gregory, M.J. (1990) Manufacturing Audit in the process of Strategy Formulation International Journal of Operations & Production Management, Vol10, No. 9, pp

8. Uses of profiling in the Platts-Gregory procedure
Market requirements
Achieved performance
Delivery lead-time:
Ex-stock Short
Not significant Long
Reliability:
Into stock point Variable
Critical: Project delay Good
Features:
Fit for purpose Few features
Many features/ High absolute level
Quality:
Acceptable at price Acceptable
Total reliability essential
High
Flexibility design:
Standard range only Standard only
All designs customer specified
All products customised
Volume:
Stable market
Little variation required Volume variations low
Highly cyclic variable market
Volume variations high
Price / cost:
Price competition dominant
Low
Non-price competition dominant
High

9. Two views You can ‘fit’ operations resources to market requirements:
You can do this with a new business concept (brand) or with radical change.
Establish your existing capabilities and ‘fit’ the market position to them:
You generally need to do this with a particular brand or established business with expensive fixed assets.
You can carry out incremental change to adapt to changes in the market.

10. ‘Fit’ operations resources to market requirements
Market Segmentation
Operations Strategy Decision Areas
Operations Performance Objectives
Operations Capabilities
Market Positioning
Competitor Activity
State market requirements in terms of operations performance objectives
… to enhance core capabilities
Make strategic operations decisions
Define competitive position
Understand markets

11. ‘Fit’ market positioning to operations resources capabilities
Tangible and Intangible Resources
Operations Strategy Decision Areas
Potential Market Positioning
Operations Capabilities
Operations Performance
Operations Processes
Make appropriate strategic operations decisions
Define market potential of operations performance
Understand resources and processes
Determine competitive position
Identify core capabilities

12. Alignment = change Tools for identifying need for change, e.g.
Market research.
SWOT analysis.
Gap analysis (see capabilities lecture).
Process mapping and analysis (see process improvement lecture).
Ishikawa (fishbone) diagrams.
Tools for prioritising change, e.g.
Order qualifiers and order winners (see capabilities lecture).
Performance Importance matrix (see capabilities lecture).
Organisational approaches, e.g.
Balanced Scorecard.
Investors in People (see developing people lecture).
Lean (Six Sigma, Lean Six Sigma).

13. Ishikawa (Fishbone) Diagram
Employee
Customer
Supplier
Problem
Equipment
Materials
Process
Categories of cause are identified and possible causes within each category are identified and discussed.
Action can then be taken to address the causes of failure.
See next slide for four problem analysis examples

14. Problem
Kimes, S. (2004) Revenue Management Implementation at Chevys Arrowhead Restaurant, CHRAQ

15. Balanced Scorecard Intro
BSC developed in the 1980’s by Kaplan & Norton.
Role to ensure a balanced view of performance measurement.
Could include the use of business improvement methodologies.
Key aim to align operations with the strategy of the organisation.

16. OR …… The measures used in the balanced scorecard
Financial performance measures
To achieve strategic impact how should we be viewed by shareholders?
Internal process performance measures
To achieve strategic impact what aspects of performance should business process excel at?
Customer performance measures
To achieve strategic impact how should we be viewed by customers?
Overall strategic objectives
Learning and growth performance measures
To achieve strategic impact how will we build capabilities over time?
OR ……

17. Overall strategic objectives
Financial performance measures
To achieve strategic impact how should we be viewed by shareholders?
Customer performance measures
To achieve strategic impact how should we be viewed by customers?
Internal process performance measures
To achieve strategic impact what aspects of performance should business process excel at?
Learning and growth performance measures
To achieve strategic impact how will we build capabilities over time?

18. BSC Steps Organisational SWOT analysis
Development of business strategy
Decomposition of strategy into objectives
Creation of strategy map to identify linkages between objectives
Development of performance measures
Identification of initiatives.

20. Strategy Maps (Step 4)
Is a ‘cause and effect’ diagram that is developed, using objectives derived from strategies, to show how the four business dimensions can contribute to strategy achievement.
Desired outputs & Outcomes are derived
Measures, targets and initiatives follow

21. Strategy Maps Improve Returns Improve Revenue
Improve Operating Efficiency
FINANCIAL
Increase Customer Satisfaction
Maintain Price Competitiveness
CUSTOMER
INTERNAL PROCESSES
Understand Customer Segments
Develop New Products
Reduce Quality Defects
Reduce Process Costs
Reduce Utilities Costs
Reduce Cost of Sales
Improve Employee Productivity
Hire Key Technical
Talent
Implement Cross- Training
Provide Access to Transaction Information
Align Personal Goals
LEARNING & GROWTH (EMPLOYEES)

22. Airline example http://www.youtube.com/watch?v=lBolz48uMtA

23. Lean Operations
A business philosophy with its roots in Japanese manufacturing that aims to improve quality, reduce cost and speed throughput.
‘The key principle of lean operations is relatively straightforward to understand: it means moving towards the elimination of all waste in order to develop an operation that is faster and more dependable, produces higher quality products and services and, above all, operates at low cost.’
Slack (2010)

24. Lean Manufacturing as Performance Improvement
Origins:
Manufacturing, especially the Toyota Production System (TPS).
See Womack, J.P. et al (1990) The machine that changed the world.
Lean also includes Just In Time (JIT) inventory.
Aims:
Eliminate waste (adds cost and time).
Continuous improvement.
Involve everyone.

25. Eliminate Waste. Eliminate Waste:
Waste can be defined as any activity which does not add value.
Identifying waste is the first step towards eliminating it.
What types of waste might occur in service operations ?

26. influencing the throughput efficiency
Waste (muda)
Activities:
Types of waste:
operation
over-production
waiting time
movement
transport
process
inspection
inventory
delay
motion
defective goods
storage
influencing the throughput efficiency
Slack (2010)

27. Kaizen
Continuous improvement - usually, but not always, applied to improving manufacturing performance through the elimination of waste.
The philosophy of kaizen is to make gradual improvements at little or no cost - use your knowledge, not your money.
Those who do the job are best placed to identify improvements. Encourage all employees to find ways to improve performance.
(the ten commandments of continuous improvement).

28. The Five S’s
Sort (Seiri) Eliminate what is not needed and keep what is needed.
Straighten (Seiton) Position things in such a way that they can be easily reached whenever they are needed.
Shine (Seiso) Keep things clean and tidy; no refuse or dirt in the work area.
Standardize (Seiketsu) Maintain cleanliness and order – perpetual neatness.
Sustain (Shitsuke) Develop a commitment and pride in keeping to standards.
Slack (2010)

29. Six Sigma
“The primary means to achieving six sigma quality level is to eliminate the causes of quality or process related problems before they are transformed into defects. The focus of “six sigma” is not on counting the defects in processes, but the number of opportunities within a process that could result in defects.”
JIJU, A. (2006) Six Sigma for Service Processes Business Process Management Journal Vol. 12 No. 2 pp

30. Six Sigma
Developed in 1980’s and Copyrighted by Motorola ( )
Disciplined data driven approach and methodology for eliminating defects in a process
Defect is anything outside of customer expectations
Focuses on process improvement
Uses two sub-methodologies, DMAIC & DMADV

31. Sub-methodologies
DMAIC
Define, Measure, Analyse, Improve, Control

32. DMAIC Tool Examples
Define: Brainstorming, Importance Performance matrix, Pareto.
Measure: Data collection.
Analyse: Data analysis, 5-whys, cause and effect diagrams, process map.
Improve: Process redesign.
Control: SOPs and performance objectives.

33. Lean or Six Sigma? Lean: Six Sigma:
Waste elimination, quality improvements are a factor here.
Immediate benefits, not copyrighted.
Six Sigma:
Defect identification and minimisation.
Involves significant upfront training of ‘guru’ staff.
Approaches are being combined by some to create Lean Six Sigma.
(Summary of all three).