Chapter 4: Operations and process innovation - created from Mind Map

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4.1. Operations Management

4.2. Process design and innovation

4.3. Innovation in the management of the operations process

4.4. Design of organisation and its suppliers: Supply chain management

4.5. Lean innovation

Define: Operations management is about the control of a conversion process from an input to an output

Clothing Manufacturing – Brand: Zara -Inputs: Fabric, thread, zippers, design concepts from Zara's design team. -Process: Fabric cutting, garment sewing at Zara's factories, quality control at production centers. -Outputs: Fashion garments sold in Zara stores.

Emphasize the importance of combining physical factors (raw materials, equipment) and human factors (expertise) to create value.

the customer

information from customers

the physical and business

Continuous improvement: Through collecting and analyzing information, businesses can continuously improve production processes to improve efficiency and product quality.

Take the example of Toyota, information flow in automobile production is extremely important. Information is continuously exchanged between suppliers, manufacturers and customers, helping to improve product quality, reduce costs and meet market needs.

Businesses need to continuously adapt to environmental changes to maintain and grow. Effective management of the flow of information, materials and products is important to ensure the success of the production process.

The production process depends on effective management of resources and information and adaptation to changes in the business environment

In the automobile manufacturing industry, production stages may include: chassis processing, engine assembly, painting, and quality inspection. Environmental factors such as fierce competition, electric vehicle requirements and emissions regulations will directly affect the production processes of automakers

Process industries

The relationship

Gap Analysis

Clear determination of capacity, one routing for all products

Limited volume flexibility

High production speed, short throughput time

Rigid process control

High capital investment

Low added value

Strong impact of changeover times

Small number of production steps

Limited number of product

Low product complexity

The relationship between product and process innovation are new activities introduced into a company's manufacturing or service

Locus: where innovation takes place (Product & Process)

Level: innovation level (Modunlar & Architectuaral)

Degree: level of innovation implementation (Incremental & Ractical)

A technique used extensively to aid understanding of the differences (or gaps) between the customer and producer view or experience of a product or service

Gap analysis

Total quality management (TQM)

Quality circles and process improvement teams

Quality function deployment (QFD)

The ISO 9000 approach

The EFQM excellence model

Concept

Importance

Challenges

Illstrative Example

Producers

Customers

Consequences

A technique used extensively to aid understanding of the differences (or gaps) between the customer and producer view or experience of a product or service

Understanding customers and their expectations

Changing expectations over time

Diverse customer base

Differences between teachers and students in a lecture

External Example

Hotel Service

Service at Starbucks

Customers expect fast and comfortable service

Staff may only focus on the service process

Customers expect high-quality beverages and frinedly service

Staff may be pressured to serve quickly, leading to a lack of attention to the customer experience

Perspective on product/service

Preparation and execution

Differences between the product's perspective and customer expectations

Concepts and quality standards

Guidelines

Service delivery processes

Staff training

Focusing on process rather than customer perceptions

May lead to customer dissatisfaction

Impact of unmet expectations

Characteristics of product/service expectations

Expectations based on

Dissatisfaction

May lead to customers not returning

Product quality

Customer service

Service timing

Brand image

Personal experience

Feedback from others

Sources of dissatisfaction

Identified gaps

Negative impacts

Improvement actions in design and delivery

Need for correction

Decreased revenue

Loss of cutomers

Brand damage

Concept

History

TQM Philosophya

Challenges

Illustrative Example

Impacts

Conclusion

An effective system for integrating efforts in quality development, maintenance, and improvement

Meeting customer satisfaction at the most economical levels

Developed and refined by Crosby, Deming, Ishikawa, Juran

Introduced by Arm and Feigenbaum in the 1950s

Developing a continuous improvement process

Developing systems and procedures that support quality improvements

Designing in quality to get things right

Investigating all costs related to quality (internal and external)

Everyone in the organization participates

Involving all parts of the organization

Meeting the needs and expectations of customers

Difficulty in meeting expectations

Requires the participation of all employees

Ford

Nestlé

Amazon

Improving production processes: Using Lean Manufacturing to minimize waste and increase efficiency.

Applying modern technology: Integrating robots into the production line to enhance accuracy and reduce production time.

"Good Label" program: Ensuring that products meet high quality and food safety standards.

Acknowledging customer feedback: Using customer opinions to improve product and service quality.

Optimizing delivery processes: Utilizing big data to forecast demand and adjust inventory.

Enhancing customer experience: Creating an order tracking system that informs customers of their goods' exact location.

Encouraging innovation

Enhancing the organization’s “knowledge”

Increasing customer satisfaction

Improving product reliability

TQM is not a substitute for real leadership

Employee participation is crucial

Small improvements can lead to significant impacts

Concept

Origin

Benefits

Challenges

Illustrative Example

Outcomes

Quality Circles

Process Improvement Teams

Small groups of voluntary employees discussing problems and finding solutions

Focus on improving the entire business process

Developed from the ideas of Deming, Juran, and Ishikawa (1960s)

Widely adopted in Japan with millions of workers participating

Continuous Improvement

Encourages Innovation

Employee Involvement

Enhances product quality and processes

Employees have opportunities to contribute new ideas

Empowers and increases employee commitment

Cultural Differences (Between management and unions)

Limited applicability in certain environments

Toyota (Japan)

Vinamilk (Vietnam)

3M (USA)

Achieved significant success in the automotive industry

Uses the "Kaizen" method

Continuously improves production processes through employee contributions

Encourages employee participation in improving milk production processes

Applies quality circle models to enhance food safety standards

"15% Free Time" Program

The "Post-it Notes" product was born from this initiative

Encourages employees to spend 15% of their work time developing personal ideas

Innovative Solutions

Practical Applications

Increased Satisfaction

Generates improvement initiatives and cost savings

Many companies have registered patents based on ideas from quality circles

Positive impact on customers and the company’s image

Examples

Steps

Challenges

Benefits

Key Objectives

Definition

Toyota

Kayaba

Samsung

Boeing

Emphasized continuous improvement through QFD in the design of hybrid vehicles like the Prius, focusing on customer needs for fuel efficiency and reliability.

Used QFD to align product design with customer expectations, resulting in higher quality vehicles and improved customer loyalty.

Developed its own approach called "Anticipatory Development," which successfully incorporated customer feedback into product design, leading to winning a Deming Prize for quality achievements.

Initially struggled to implement QFD like Toyota, facing significant challenges.

Utilized QFD in the development of Galaxy smartphones to ensure features like camera quality and battery life met consumer demands.

Engaged various departments (marketing, design, engineering) from the beginning, leading to successful product launches and high customer satisfaction.

Employed QFD to improve the design of the 787 Dreamliner by integrating customer requirements for comfort and fuel efficiency directly into engineering specifications.

Facilitated cross-department collaboration between marketing and engineering, leading to a more customer-focused product development process.

How's Interaction

How's to VOC

Main Interaction

Voice of Customer

Competitive Analysis

Deployment Priority

Complexity in implementation

Requires strong coordination among multiple departments

May face resistance to change from traditional processes

Improved customer

Enhanced communication among departments

Higher quality products

Reduced time to market

Promote better understanding of customer demands

Promote better understanding of design interactions

Involve operations early in the process

Remove traditional barriers between departments

Focus the design effort

Also known as the "House of Quality"

Structured approach to relate the voice of the customer to every stage of design and delivery process

Overview

Key elements of quality management

Standard overview

Standards timeline

Set of standards governing the documentation of a quality program.

External examiner checks company compliance with standards.

Customer Focus: Quality management should prioritize customer needs.

Performance Measurement: Quality performance must be measurable.

Improvement-Driven: Management should focus on continuous improvement.

Top Management Commitment: Top leaders should maintain and improve management systems.

9000: Describes standards for quality management, vocabulary, and fundamentals.

9001: Focuses on compliance and certification requirements.

9002: Identical to 9001, focused on production lines (now obsolete).

9003: Emphasized final inspection and testing (now obsolete).

9004: Provides guidelines for long-term organizational success.

1987: Initial release of ISO 9000 standards focused on quality assurance and inspection.

1994: Revision focusing on quality assurance with less focus on inspection.

2000: Emphasized the importance of process management and stakeholder needs.

2008: Added ISO 9004:2009, focusing on "Managing for Sustained Success."

2015: Marked the 25th anniversary of ISO 9000, with emphasis on the PDCA (Plan-Do-Check-Act) cycle for systems management.

Overview: Focuses on achieving results through enablers.

Performance Measurement

Enablers

Results

Leadership

People

Policy and Strategy

Partnerships and Resources

People Results

Customer Results

Society Results

Key Performance Results

Self-assessment based on a systematic, regular review for business excellence.

What is Supply chain management?

EXAMPLE: Supply chain in Automotive Industry

Traditional versus Contemporary view

Supply Chain and Product Development: Apple iPhone 14 Pro

Definition

Objectives

Goals

A set of approaches for integrating suppliers, manufacturers, warehouses, and stores.

Right Quantities: Ensuring the correct amount of merchandise.

Right Locations: Delivering products to the appropriate locations.

Right Time: Timely production and distribution.

Minimize Costs: Reducing system-wide costs.

Satisfy Service Level Requirements: Meeting the required service levels effectively.

We can observe from this example

Supply points and demand points can be far apart.

Lead time from raw materials to finished cars is significant.

The supply chain involves many interdependent units that must work together.

Matching supply with demand can be challenging.

1. Raw Materials: Steel, aluminum, rubber, plastic, and glass are sourced from suppliers.

2. Component Suppliers: These raw materials are delivered to parts manufacturers who create key components such as engines, batteries, tires, and electronics.

3. Assembly Plant: Components are shipped to automotive assembly plants where the vehicles are assembled.

4. Distribution Center: Once assembled, vehicles are sent to distribution centers or warehouses for storage.

5. Dealerships: Cars are then delivered to local dealerships by truck for sale to customers.

6. End Users: Finally, customers purchase the vehicles from dealerships for personal or commercial use.

Traditional view

Contemporary view

Example: A small, family-owned textile manufacturer in rural Vietnam

What is this?

Limited network: The manufacturer primarily relies on a single local supplier for raw materials and a few regional distributors for their products.

Local focus: Operations are confined to the local area, with limited interactions beyond the immediate region.

Supply-demand matching: Production is driven by orders from distributors, with a focus on meeting their specific requirements.

Material and finance flow: Raw materials are purchased on credit, and finished goods are sold on credit to distributors.

Network of connected entities: Managing the flow of materials, information, and finances

Local focus: Primary focus on a few entities such as suppliers and manufacturers

Goal: Balancing supply and demand

What is this?

Example: A multinational electronics company with a global supply chain

Collaboration among partners: Creating value for customers and partners

Global focus: Emphasizes a large-scale, global perspective

Goal: Achieving a competitive advantage & sharing competencies and knowledge

Collaborative partnerships: The company works closely with suppliers, manufacturers, logistics providers, and retailers across the globe to optimize the supply chain.

Holistic focus: The company considers factors such as sustainability, risk management, and customer satisfaction throughout the entire supply chain.

Competitive advantage: The company leverages its global network and efficient operations to offer competitive pricing, faster delivery times, and innovative products.

Knowledge sharing: The company invests in technology and data analytics to facilitate information sharing and collaboration among partners.

Product Development: The initial phase focusing on ideation, design, and decision-making related to the product.

Supply Chain: The subsequent phase encompassing activities from raw material sourcing to delivering the product to the end customer.

Planning

Design

Product architecture: Apple decided to equip the iPhone 14 Pro with the powerful A16 Bionic chip, a smooth 120Hz ProMotion display, and a triple-camera system with a 48MP sensor.

Make-or-buy decisions: Apple designed the A16 Bionic chip in-house but sourced OLED displays from Samsung and other components from various suppliers worldwide.

Supplier involvement: Samsung and other component suppliers were involved in the development process early on to ensure components met Apple's standards.

Strategic partnerships: Apple maintains long-term partnerships with core suppliers like TSMC (for chip manufacturing) and Corning (for glass).

Supplier selection: Apple chose reputable suppliers for aluminum and glass to ensure the product's quality and durability.

Supply contracts: Apple signed detailed contracts with suppliers specifying quality, quantity, delivery time, and confidentiality terms.

Production

Sourcing

Distribution

Sales

Network planning: Apple has manufacturing facilities in China and manufacturing partners in Vietnam to meet high production demands.

Logistics management: Apple uses advanced logistics systems to transport components and finished products to distribution centers worldwide.

Inventory positioning: Apple uses inventory management systems to track the location of each product, ensuring fast and accurate delivery.

Inventory management: Apple uses advanced inventory management systems to track each component, ensuring sufficient raw materials for production.

Work-in-progress management: Apple applies Lean Manufacturing principles to optimize production processes and minimize waste.

Productivity management: Apple continuously improves production processes to increase productivity and reduce costs.

Promotions: Apple frequently runs promotions and discounts to stimulate demand.

Network planning: Apple has a network of retail stores and authorized resellers worldwide.

Inventory consolidation: Apple uses large distribution centers to consolidate products and distribute them to retail stores.

Sales channels: Apple has a strong online and offline sales network.

Marketing: Apple invests heavily in marketing to build a premium brand image and create anticipation for new products.

5 steps and principles

Lean innovation is creating a new product or process, including the work required to bring an idea or concept into a final form, with emphasis on identifying and creating the value and removing the waste of the new product development (NPD) process.

1. Identify customer value

2. Map the value stream

3. Create flow

4. Establish pull

5. Seek perfection

techniques

corporate culture

others focus strongly on process improvement programs