Operations Management MD 707
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This 14 page Class Notes was uploaded by Mr. Warren Lang on Saturday October 3, 2015. The Class Notes belongs to MD 707 at Boston College taught by Staff in Fall. Since its upload, it has received 7 views. For similar materials see /class/218049/md-707-boston-college in Operations,Information & Strategic Mgmt at Boston College.
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Date Created: 10/03/15
Process Management and Major Process Decisions Process management is the selection of the inputs operations work ows and methods that transform inputs into outputs Major process decisions Process selection A process decision that determines whether resources are organized around products or processes Vertical integration The degree to which a f1rm s own production system or service facility handles the entire supply chain Resource exibility The ease with which employees and equipment can handle a wide variety of products output levels duties and functions Customer involvement The ways in which customers become part of the process and the extent of their participation Capital intensity The proportion of production costs that consists of capital stock Major Process Decisions by Process Type Low volume customized process Egt Less vertical integration Egt More resource exibility Job shop Igt More customer involvement Egt Less capital intensityautomation 4 D Batch D D Repetitive line D High volume standardized process 4 Igt More vertical integration Egt Less resource exibility Continuous Egt Less customer involvement Egt More capital intensityautomation Layout Types gt Process gt Product gt Fixedposition gt Combination cgt Cellular Product Layout Although product layouts often follow a straight line a straight line is not always the best and layouts may take an L O S or U shape Why 60 Incremental Process Improvement and Reengineering De nitions The purpose of incremental process improvement and reengineering is to move operations toward the performance frontier by l eliminating nonvalue added activities and steps in the process andor 2 moving to a new performance frontier Nonvalue added activities or steps can be characterized as waste ie no potential to add value or slack ie resources in excess of what are required to get the job done including buffers The concept of value added can be thought of in the context of whether a customer would be willing to pay for that activity or step to be performed andor whether a product or service s value can be increased through that activity Incremental process improvement involves eliminating nonvalue added activities or steps while leaving the current process essentially intact Reengineering involves a fundamental rethinking and radical redesign of processes to improve performance dramatically in terms of cost quality service and speed Elimination of nonvalue added activities or steps increases productivity by definition 61 Sources of NonValue Added Activities Why do nonvalue added activities or steps occur in processes cgt Poor process andor organizational design dysfunctional uncertainty gt Historical artifact cgt Barriers to learning gt To nd and correct errors elsewhere in the process cgt Unclear understanding of value and risks 62 Process Improvement Procedure Discover Where nonvalue added activities are in the process and prioritize improvement efforts Egt Flow charts value stream mapping Egt Brainstorming Igt Data collection Take action based on the source of the nonvalue added activity Igt Process reviews Egt Remove barriers to learning Egt Continuous improvement gt Reducing dysfunctional uncertainty gt Implementing a systematic approach to process improvement gt Increasing process knowledge Reengineering projects often take more of a cleanslate approach than incremental process improvement and are typically higher risk and higher return 63 Quality as a Competitive Weapon gt The costs of poor quality are estimated to be 20 30 of product or service costs gt Companies can improve their bottom line through better quality in several ways gt Lower costs gt Higher prices gt Greater market share cgt Consistent quality has become or is becoming an order quali er in many markets 64 Quality at the Source Errors or defects should be caught and corrected at the source not passed along to an internal or external customer In other words Do It Right the First Time Why gt It costs less cgt Inspection and sorting are often not effective 65 Employee Involvement Employee involvement an important component of TQM because perceived and actual quality is assessed throughout the process involving all employees This suggests that gt Quality perceptions can be negatively affected at one point in the process even if the rest of the process is ne gt All employees can participate in improving quality 66 Work Teams Work teams are small groups of people Who have a common purpose performance goals and accountability Types of teams cgt Problemsolving teams cgt Specialpurpose teams cgt Selfmanaging teams How can work teams help improve quality gt Products and services are becoming more complex and interrelated Quality can not be ensured by individual efforts alone cgt Employees producing products or services often have the best ideas how the processes can be improved 67 Tools for Organizing Data for Analysis Flowcharts Check Sheets Histograms Pareto Analysis Scatter Diagrams CauseandEffect Diagrams Control Charts 68 Costs of Quality Cost categories gt Prevention Quality assurance costs cgt Appraisal gt Internal failure Nonconformance costs gt External failure There is a tradeoff between quality assurance and nonconformance costs As the product or service moves farther along in the process the cost to address a quality problem rises steeply 69 Quality Awards and Standards Awards gt Malcolm Baldrige National Quality Award gt European Quality Award cgt Deming Prize gt State quality awards cgt Vendor supplier quality awards Standards cgt ISO 900014000 70
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