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CHAPTER 28 - OPERATIONS STRATEGY, many business now use the kaizen…

- - - - Many new ways of producing goods and services or delivering services are being developed each year
        
        some recent examples help to show the extent and importance of some of these new methods show process innovation;
        
        01 - ROBOTS IN MANUFACTURING
        02 - FASTER MACHINES TO MANUFACTURE MICROCHIPS FOR COMPUTERS
        03 - COMPUTER TRACKING OF INVENTORIES (BY USING BARCODE SCANNERS) TO REDUCE THE CHANCES OF CUSTOMERS FINDING BUSINESSES OUT OF STOCK
        04 - INTERNAL TRACKING OF THE EXACT LOCATION OF PARCELS BEING DELIEVERED WORLD TO IMPROVE THE SPEED OF DELIVERY
        
        EXAMPLE 01 - the float-glass production process revolutionized the manufacture of sheet glass. The UK based business, Pilkington, patented the process and gained a competitive advantage as the float-glass production process both is cheaper than traditional processes and produces the highest quality of glass. The company has developed an unrivalled reputation for innovation and research in the industry.
        
        EXAMPLE 02 - Amazon is testing unmanned flying drones to deliver parcels to customers to improve workflow and speed of delivery. This system is called Prime Air. According to the CEO, the drones will be able to deliver parcels weighing up to 2.3kg to customers within 30 minutes of placing an order.
        
        EXAMPLE 03 - Zara’s fast fashion innovation has revolutionised the production and selling process in the clothing industry. Only 15-25% of Zara’s clothes are produced before each new season starts. All other clothes are produced at the start of the season or during it, according to both customer demand and new styles suddenly becoming fashionable. It takes a maximum of four weeks from a new style being developed to it being available in Zara shops. Other clothing retailers struggle to achieve this in 4 months. The main benefits of process innovation are lower-cost and more effective production methods, making the business more competitive. It is also possible, if the innovation involves patents of new techniques, that these could be sold or licensed to other businesses.
- - - - ERP LIMITATIONS -
        01 - the costs of the database and computer systems have to be considered, although these costs are falling with technological advances in computing power
        02 - employee training costs have to be incurred as a badly implemented ERP system could make operation less efficient
        03 - the different ways in which different departments can operate now have to be reduced to one common system. this can cause resentment as departments are forced to give up tried-and tested ways of operating
        04 - in most businesses the full implementation of ERP can take one to three years. technological advances over this period could make the chosen software obslete. financing further investment for a new up-to-date ERP system might require other projects to be abandoned
      - ERP BENEFITS -
        (the efficiency improvements gained from ERP software include)
        01- supply only according to demand, this avoids waste and business towards achieving sustainability in its operations
        02 - more effective utilisation of capactiy and quicker response to changes, such as variations in consumer demand, these improvements are also a result of greater workforce flexibility that ERP achieves
        03 - just in time ordering of inventories
        04 - reductions in costs in all stages of the supply chain. materials and products are electronically tracked at all stages
        05 - more accurate costing and pricing of products as components and labour costs are allocated for each product
        06 - improved delievery time and better customer
        07 - departments linked more closely together by a single database, resulting in better coordination between them and less waste
        07 - reductions in costs of all stages of the supply chain, materials and products are electronically tracked at all stages
        08 - management information is increased. data from all stages of the production proces and all the supporting departments are available in one single database for senior manager to access. this could help with future decision making.
        ex --> changing suppliers if lower-priced supplies of consistent quality are offered,
      - EXAMPLE 01 - SPECIALIST BICYCLE MANUFACTURER -
        a unique racing bicycle is ordered by a customer (credit sale).
        The order is recorded on the manufactures ERP program.
        The program automatically sends a purchase order to suppliers for the special components required.
        A skilled worker is allocated the task of assembling the bicycle.
        The total labour time taken plus the cost of components is added together so that the marketing department can calculate the selling price.
        The customer is sent an invoice.
        When the payment is made, the accounting records are updated.
        The ERP program could also handle bicycle repair orders, manage spare parts inventories and provide forecasts of future sales to plan workforce needs over the next few months.
        
        EXAMPLE 02 - WATER SUPPLY COMPANY -
        a customer requests repair to a water supply pipe.
        A date is scheduled by the company’s ERP system.
        The jobs are allocated to a team of workers.
        The correct spare parts are ordered.
        When the job is completed, it is entered into the database.
        The customer is sent an invoice for the job and their payment is recorded in the accounts section of the database.
- - - - 01 - these important long-term decisions all require the operations department to assess the resources of the whole business: human resources, marketing and financial
        02 - these decisions will not only have an operational impacts
        03 - if there are insufficient resources available from human resources, marketing and finance departments, then operations decisions may have to be revised or abandoned together
        
        01 - EXPAND CAPACITY - will require long-term sales forecasts from the marketing department, a revised workforce plan from human resources and financial resources to pay for it, if these resources are not available, the decision to expand might have to be abandoned
        
        02 - RELOCATE OPERATIONS - will require a suitable supply of labour in the new location, an efficient distribution system to customers from the proposed site, and financial resources to pay for the costs of buying and developing the site. if these resources are not available or are inadequate, then an alternative site will be needed, or the decision could even be made to remain at the existing site
  - - - 01 - COMPUTER AIDED DESIGN (CAD)
        
        COMPUTER AIDED DESIGN - the use of computer programs to create two or three dimensional graphical representation of physical objects
        
        KEY FEATURES OF CAD =
        01 - this type of IT software may be developed for specific application such as architectural designs
        02 - it is widely used for computer animation and special effects in movies, and advertisement and other application. where graphic design is the finished product
        03 - computer aided design (CAD) is also used to design physical products in a wide-range of industries such as furniture making
        04 - the software performs calculation for determining an optimum shape or size for a variety of products and industrial application
        05 - in product and industrial design, CAD is mainly used to design detailed 3D models
        06 - CAD is also used throughout the engineering process from design of products, through analysis of component assemblies to the structure of manufacturing methods
        07 - this allows an engineer to interactively and automate analyse design variations in order to find the best design for manufacturing, while minimising the use of costly physical versions of the product
        
        BENEFITS OF CAD
        01- lower product development costs
        02 - increased productivity
        03 - improved product quality
        04 - quicker development of new products and reduced time to bring them to market
        05 - good visualisation of the final product and its major components
        06 - great accuracy, so errors in production are reduced
        
        LIMITATIONS OF CAD =
        01 - complexity and cost of the program
        02 - need for extensive employee training
        03 - it requires large amounts of computer processing power, which can be expensive
      - 02 - COMPUTER-AIDED MANUFACTURING (CAM)
        
        02 - COMPUTER AIDED MANUFACTURING -
        The use of computer software to control machine tools and related equipment in the manufacturing of components or complete products
        
        KEY FACTS OF CAM -
        01 - through the use of CAM, a factory can become highly automated
        02 - a CAM system usually seeks to control the production process through automation
        03 - these processes are carried out by robotic tools such as lathes, machines and wielding machines
        04 - each of the manufacturing process in a CAM system is controlled by computers, so a high degree of precision and consistency can be achieved, which is not possible with machinery that must be controlled by people
        
        BENEFITS OF CAM =
        01 - precise manufacturing and reducing quality problems
        02 - faster production and increased labour productivity
        03 - more flexible production operations, which allow quick changeover from one product to another
        04 - integrating cam and cad allows more design variants of a product to be produced. this means that niche products can be produced as well as mainstream mass-market products often on the same production line. this form of mass customisation increases the competitiveness of business in both small and large target segments
        
        LIMITATIONS OF CAM =
        01 - Cost of hardware, program and employee training, these cost may mean smaller businesses cannot afford to access the benefits of CAM although technology is becoming cheaper
        02 - hardware failure and breakdown can occur which is complex and time-consuming to solve
        03 - quality assurance is still needed. errors in programs can produce faults that have to be spotted and rectified before being passed on to the next stage of production
- - - - 02 - some businesses depend on customer service as their unique selling point. in these situations, a less lean approach with higher inventories could support this USP, it will be important to give customers a wide choice of finished products and guaranteed delivery dates
        
        03 - lean production can result in job losses as this is one aspect of increased efficiency, social enterprises may reject lean production techniques if they result in redundancies as this might be against the social objective of these businesses
        
        04 - the costs of new technology and employee training might be too high. some businesses with limited resources might have to survive on making existing systems more efficient rather than fully adopting lean production approaches
        
        05 - some manufacturers that specialise in one-off job production may decide agianst investing in lean production techiniques. by specialising in niche-marketing product, which are less price sensitive, businesses may be able to maintain competitiveness without adopting lean production
  - - - 02 - QUALITY CIRCLES
        
        03 - SIMULTANEOUS ENGINEERING
        
        04 - JUST IN TIME INVENTORY
        
        05 - CELL PRODUCTION
        
        KEY FACTS OF CELL PRODUCTION
        
        ADVANTAGES OF CELL PRODUCTION
        
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        CELL PRODUCTION - flow production split into self-contained groups that are responsible for a complete unit of work
        01- cell production is a form of flow production
        02- the production line is split into several self-contained mini-production units known as cells
        03 - each individual cell produces a complete unit for work (a complete washing machine motor) and not just one part of it
        04 - each cell has a team leader and below that a single level of hierarchy made up of multiskilled workers
        05 - the performance of each cell is measured pre-set targets
        06 - these targets include output levels, quality and lead times
        07 - cells are responsible for the quality of their own complete units of work
        08 - this links with TQM
        09 - cell production avoids some of the common limitations of traditional flow production as workers do not just undertake one boring repetitive tasks
        
        06 - WASTE MANAGEMENT
        
        WASTE MANAGEMENT REDUCTIONS CAN BE REDUCED BY -
        
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        KEY FACTS OF JUST IN TIME INVENTORY CONTROL PRINCIPLES
        
        JIT inventory control is a management strategy where raw materials, components and finished goods are received or produced only when they are needed for production or to fulfill customer demand, minimising excess stock and related costs
        02 - it is clearly part of the lean production concept because it involves fewers resources being tied up in buffer inventories
        
        eliminating buffers, reducing transfer distance and streamling processes mean higher quality products will be delivered to customers more quickly
        
        KEY FACTS OF SIMULTANEOUS ENGINEERING
        
        BENEFITS OF SIMULTANEOUS ENGINEERING
        
        that new products can be in the marketplace months or even years earlier than would have been the case with sequential methods.
        
        SIMULTANEOUS ENGINEERING - a product development organised so that different stages are done at the same time instead in a sequence
        
        01 - this is a method of developing new products which saves time
        02 - the stages of design, market research, costing and engineering tasks are all done at the same time as each other simultaneously and not sequentially
        03 - as most products become more advanced and complicated, it could take longer and longer to develop new designs
        04 - during this period, competitors might launch their new products earlier and technology might advanace during the design stage, making the newly developed product obsolte as soon as it is launched on the market
        05 - as most products become more advanced and complicated, it could take longer and longer to develop new designs
        
        KEY FACTS OF QUALITY CIRCLES
        
        BENEFITS OF QUALITY CIRCLES
        
        MAIN CONDITIONS DETERMINING SUCCESS OF QUALITY CIRCLES
        
        01 - circle members must be committed to improving quality
        02 - memebers must be given training in holding meetings and problem solving
        03 - they need full support from management
        04 - teams should be empowered to implement the recommendations identified
        
        01 - they improve qualitty through joint discussion of ideas and solutions
        02 - they improve motivation through participation
        03 - they make full use of the knowledge and experience of the employees
        
        01- it is a japenese orginated approach to quality that is based on workers inolvement in improving quality, using a small group of employeees to discuss about quality issues.
        02 - teamworking and participation can improve quality and increase workers participation
        03 - the overall aim of quality circles is to investigate quality problems and present solutions to management - or if a group is fully empowered, to put the improvements into effect themselves
      - KEY FACTS OF KAIZEN
        
        METHOD OF KAIZEN OF OPERATING IN
        
        ADVANTAGE AND EXAMPLE OF KAIZEN
        
        DISADVANTAGES OF KAIZEN
        
        01 - Some changes cannot be introduced gradually and may need a radical and expensive solution such as an AI operation system
        02 - there may be resistance by senior managers to such a programme due to their existing culture, since kaizen only wokrs effecitvely with workers involvement in the decision making process. authoritarian managers find it hard to accept
        03 - in the short term, there may be tangible costs to the business of such a scheme, such as employee training and lost output of a result of group meetings times
        04 - the most importance advances tend to only happen earlier on in the kaizen programme and later changes can be less significant
        
        the following conditions are necessary for kaizen to operate:
        01 - management culture must allow for employee- involvment - employees view and ideas should be given great importance. managers should accept that in decision-making employees work experience count as much as theoretical knowledge
        02 - teamwork is essential, suggesting and discussing ideas to improve quality and productivity is best done in gorups. kaizen groups are likely to be draw from the team operating in the workplace, each group should meet regularly, management must provide time and necessary training for employees to discuss the identified problems. each group may be empowered to put their ideas into practice.
        03 - each kaizen group should be given the power to make decisions regarding workplace improvements. this leas to quick introduction of new ideas and motivates employees to come up with even more ideas.
        
        01 - the philosophy behind kaizen is that all employees have to contribute to improving business efficiency and the way a product is made (tqm management)
        02 - theory X never gives workers the opportunity to suggest improvements to the way things are done
        03 - the assumption is that trained managers know best
        04 - the objective of managers adopting this approach is to maintain high output levels and develop one-off improvements through process innovations on new equipment and machines.
        05 -the kaizen approach suggest that very often workers actually know more than managers about how a job should be done or how productivity could be improved on
        06 - someone who has worked at a task everyday might know how to change it to improve either quality or productivity better than a manager with no hand-on experience of production
        07 - another feature of kaizen is that improvements in productivity do not just result from big one-off investments in new technology
        08 - a series of small improvements suggested by employees can over time, resulting in a big improvement in efficiency as a major new investment
  - - - 02 - efficiency is increased and average costs are reduced leading to higher profits
        
        03 - the work area is less crowded and easier to operate in
        
        04 - there is less risk of damage to inventories as lower (even zero) levels are held
        
        05 - new products are launched more quickly
        
        06 - quality has improved
        
        07 - employees jobs are enriched, their roles are enhanced which leads to motivation being improved on
- - - - CALCULATING EST =
        01 - the EST is the earliest time each activity can begin, taking into account all preceeding activities
        02 - so some activities cannot start before another acitivity is not finished
        03 - sometimes 2 activities have to be done/ completed first before an activity can take place
        
        CALCULATING LFT =
        01 - the LFT is the latest time an activity can finish without delaying the whole project
        02 - the easiest way to calculate LFT is to work from right to left
        03 - subtract the duration/days from the last option and keep going through the nodes in that way
  - - - how can all the different tasks involved in building a house be put into order so that the right goods and labour can be employed just at the right time ? the answer for many businesses is to use a technique called critical path analysis which uses network diagrams
  - - - CRITICAL PATH - the sequence of activities that must be completed on time for the whole project to be completed by the agreed date
        
        01 - the activities that must be completed to achieve this shortest time make up what is known as the critical path
        02 - CPA STEPS -
        01 - IDENTIFY OBJECTIVES OF THE PROJECT
        02 - PUT THE TASKS THAT MAKE UP THE PROJECT IN THE RIGHT SEQUENCE TO MAKE THE NETWORK DIAGRAM AND DRAW IT
        03 - ADD THE DURATIONS OF EACH ACTIVITIES
        04 - IDENTIFY THE CRITICAL PATH - THOSE ACTIVITIES THAT MUST BE FINISHED ON TIME FOR THE PROJECT TO BE FINISHED IN THE SHORTEST TIME
        05 - USE THE NETWORK AS A CONTROL TOOL WHEN PROBLEM OCCUR DURING THE PROJECT
  - - - SOME ACTIVITIES CAN BE DONE SIMULTANEOUSLY SO TWO ACTIVITIES PATHS CAN BE DRAWN (THEY DO NOT HAVE TO BE PERFORMED IN SEQUENCE)
        
        WHEN THE DURATIONS ARE ADDED TO THE NETWORK DIAGRAM, IT IS POSSIBLE TO DETERMINE - THE CRITICAL PATH OF THE ACTIVITIES, AND THAT THE PROJECT CAN BE COMPLETED IN THE SPECIFIC DURATION
        
        IF THE CRITICAL PATH IS DEVALUED IN ANY WAY THE WHOLE TASK/PROJECT WILL TAKE LONGER THAN NECESSARY (WASTAGE OF UNUSED TIME)
        
        THE OTHER ACTIVITIES NOT RELEVANT ARE KNOWN AS FLOAT TIME AS THEY MIGHT HAVE SPARE TIME IN BETWEEN
        
        IN COMPLEX PROJECTS, THIS CAN BE USEFUL FOR ACHIEVING MORE EFFICIENT USE OF RESOURCES