managing operations generic
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BMG343J4 1
BMG343J4 – Managing Operations(Managing Organisational Improvement)
Steve Pollard
Advanced Diploma in Management Practice
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The aim of this module is to:
• provide participants with both the knowledge of effective operating systems
and
• the understanding of the contexts in which they may be used.
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By the end of this module you will be able to:
• outline the process involved in performance setting
• discuss the factors taken into account when determining team
performance objectives
• list the main business improvement tools available
• critically evaluate business improvement initiatives
• assess the business improvement initiative/organisation best fit
• identify initiative compatibility for building organisational capability
• apply appropriate business improvement initiatives to a range of
organisations, ie, voluntary, public, private and not-for-profit.
AgendaFrom Me…..
What is Managing Operations
Continuous Improvement & Innovation
What is Performance Measurement
What is Quality
Total Quality Management
Improvement & Change
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Agenda
To you……
Review of Business Improvement Tools
Self-Assessment
Organisational Fit
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• Time Compression
NVA
• Eliminate Non-Value Added Activities
• Quality at Source
• Organise around outcomes
Fundamentals of business improvement
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• Set Demanding Targets
• Customer Alignment
• Utilise Cost-Effective Technology
• Empower People
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Operations Management
• The set of activities that creates goods and services through the transformation of inputs into outputs.
OM Managers• Plan • Model Processes• Organise• Staff• Lead• Control
Activity: Informal Self Assessment
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Pure Service
TeachingHouse cleaningPlumbing repairRestaurantMade to measure clothingNew carRadioSoft drinksSalt
Pure Commodity
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Objective Headings (objectives formulated for different jobs)General manager Quality manager Sales manager
Profitability Reduce waste Achievement of sales targets and plans
Volume & business growth
Quality registrations & external audits
Contribution to profits and overheads
Provision & utilisation of assets
Product and service specification performance
Customer satisfaction
Product innovation Maintain the Quality Management System
Customer needs
Customer satisfaction
Key process performance Identification of new products and services
Operating costs Foster a customer focus philosophy
Resource management of the sales force, including motivation
Management effectiveness
Foster a zero defects philosophy
Resource management of the sales force, including motivation
Employee productivity & attitude
Foster a continuous improvement philosophy
Marketing and market trends
Public responsibility Environmentally sound awareness
Legal needs and implications
BMG343J4 11Planning – the virtuous cycle
ACT
• Improvement planning
• Improvement tool
• Improvement culture
PLAN
• Business Plan
• Balanced Scorecard
DO
• Functional organisation
• Process organisation
• Policy Deployment Process
CHECK
• EFQM
• Scorecard update
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Significant events in the evolution of Business Improvement
• Smith (1776) - Division of Labour• Whitney (1800) – Standardised parts• Taylor (1881) – Scientific Management• Ford (1913) – Coordinated assembly line• Gantt (1922) – Gantt Charts• The Gilbraiths (1922) – Motion Study• Shewhart (1924) – Statistical Quality Control• Deming and Juran (1945) – Quality culture • Feigenbaum (1951) – Total Quality Control
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Five ways to increase productivity
1 Reduce Costs
2 Manage Growth
3 Work Smarter
4 Pare Down
5 Work Effectively
Productivity Improvement(Oakland, J S. 2004. Total Quality Management, 3rd ed. Text, Cases and Readings. ISBN 0-7506-5741-3 (Shelfmark 658.562)
Output
Input
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Simple OM:
INPUT THROUGHPUT OUTPUT
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Challenges driving Business Improvement
FROM:
• Local or national focus• Batch shipments• Low bid purchasing• Lengthy product
development• Standard products• Job specialisation
TO:
• Global focus• Just-in-time• Supply chain partnering• Rapid product
development• Mass customisation• Empowered employees
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Culture for continual improvement and innovation
Role of management
Leadership Focus on employees
Focus on the customer/client
Integration of continuous improvement activities
Standardisation/ quality management system
Focus on critical processes
Measurement and feedback systems
Learning from continual improvement results
The Continuous Improvement Model for Self-Assessment (SACIM)
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PERCENTAGE AWARENESS AND USAGE OF UK-WIDE QUALITY STANDARDS
(Source: Futureskills, 2003. Base 1000 charities) [Accessed 16 November 2004 - http://www.redf.org/download.sroi/sroi_method_2.pdf]
AwarenessTotal usage
Usage <£100K
Usage
£100K - £1m
Usage £1m – 10m
Usage >£10m
IIP 94.4 39.3 18.1 38.7 55.7 67.5
ISO 9001 62.5 8.4 6.4 7.4 11.3 15.9
BEM 53.4 8.0 4.4 7.8 11.0 4.8
PQASSO 48.4 45.8 53.2 49.6 28.7 0.0
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PERFORMANCE MEASUREMENT
• Analyse/clarifypolicy objectives
(goals)
• Design supportingdata collection systems/determine presentation
method
Refinemeasures
if datanot
available
• Select performancemeasures to match objectives
• Select comparators
• Review availability/collectability of data
1 Decide what is to be measured
2 Decide which measures to use
3 Ascertain sources of data
4 Design Support Systems
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PERFORMANCE MEASUREMENT
OverallStrategy
delivered by allocated to
Policy Objectives
linked to
Other targetseg cost or quality
PerformanceMeasures
Manager’s sphereof responsibility
Reporting Systems
BudgetProcess
PerformanceRelated Rewards
mgrs answerable to
results feed to
Reviewprocess
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ACTIVITY (25 minutes)
• What performance measures are used in your organisation?
• What is actually measured?• What evidence is used to support performance
management?• How does the management information system
support performance management?
BMG343J4 21Kanji, G K. (1996) Implementation and Pitfalls of Total Quality
Management, TQM, vol 7. pp331-343.
Business Excellence
DELIGHT THE CUSTOMERCONTINUOUS IM
PROVEMENT
TQM (principles)
MANAGEMENT BY FACT
PEOPLE-BASED M
ANAGEMENT
Leadership (prim
e)
Leadership (prime)
Cus
tom
er s
atis
fact
ion
Con
tinuo
us im
prov
emen
t cyc
le (
conc
epts
)P
reve
nti
on
Mea
sure
men
t (c
on
cep
ts)
Inte
rna
l cu
sto
me
rs a
re r
ea
l (c
on
cep
ts)
Te
amw
ork
All work is process
People make quality (concepts)
Prime
Business Excellence
Principles
Core Concepts
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Fundamental Rules of Customer Service
Remember:
• To always treat the customer as you would like to be treated
• if you don’t look after the customer, someone else will• If in doubt, under promise and over deliver• Nothing is gained by winning an argument, but losing a
customer• The reputation of the company is in the hands of the
individual.
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Quality
• “Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes Quality.”
(Drucker, P. (1968) The Practice of Management.)
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ORIENTATION DISCUSSION ACTIVITY1 Is there a good understanding within
the organisation of the needs, wants and behaviour patterns of clients/customers?
2 Is your organisation results-driven or people-directed?
3 Does the SMT see itself as the organisation’s senior strategist or strategic ‘champion’?
4 Does the organisation have a results-driven mission?
5 Do the organisation’s strategies reflect the realities of the external environment?
6 Is there any one function perceived as having more important than others?
7 Is the organisation organised in such a way that it can be responsive to stakeholder changes?
8 Is the Management Information System (MIS) well designed and operating effectively?
9 Do the organisation’s managers make full use of MIS in their decision making?
10 Are costs v monies recovered analysed to ensure effectiveness?
11 Is there a strong link between the MIS and the stakeholders?
12 Does the organisation deploy staff with the appropriate skills and competences?
13 Are effectiveness and efficiency recognised as the responsibility of the entire organisation?
14 Are decisions made in a well co-ordinated way and executed in an integrated manner?
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THE SEVEN S FRAMEWORK(Waterman, R H, Jr, Peters, T J and Phillips, J R. 1980. Structure is not organization, Business
Horizons, vol. 23, pp. 14-26.)
Staff
Skills
Superordinate goals
(Vision)
Structure
Systems
Strategy
Style
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Total Quality Management Model
Teams
Process
CSustomer
upplier
ToolsSystems
Cul
ture
Com
munication
Commitment
(Oakland, J S. 2004. Total Quality Management, 3rd ed. Text, Cases and Readings. ISBN 0-7506-5741-3 (Shelfmark 658.562)
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New framework for quality management
Planning
Performance
Commitment ProcessPeople
Com
munication
Cultu
re
(Oakland, J S. 2004. Total Quality Management, 3rd ed. Text, Cases and Readings. ISBN 0-7506-5741-3 (Shelfmark 658.562)
BMG343J4 28Oakland, J S. (2003) TQM Text with Cases, 3rd ed. ISBN 0-7506-5740-
5.
Process
Feedback
Feedback
The “voice” of the customer
Consistent
INPUTSThe “voice” of the process
OUTPUTS
SU
PP
LIE
RS
CU
ST
OM
ER
S
Materials
Procedures
Methods
Information (including specifications)
People
Skills
Knowledge
Training
Plant/equipment
Products
Services
Information
Paperwork
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Greiner, L G. (1972) Evolution and Revolution as Organizations Grow, Harvard Business Review, p41.
AGE OF ORGANISATION
SIZ
E O
F O
RG
AN
ISA
TIO
N
Small
Large
Young Mature
PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5
1 Growth through CREATIVITY
2 Growth through DIRECTION
3 Growth through DELEGATION
4 Growth through COORDINATION
5 Growth through COLLABORATION
1 Crisis of LEADERSHIP
2 Crisis of AUTONOMY
3 Crisis of CONTROL
4 Crisis of RED TAPE
5 Crisis of ??
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Size may . . .
provide the leverage for capturing significant market share improve access to low-cost capital bring improved brand recognition and advertising benefits permit greater investment in research and development enable global reach facilitate expertise and systems development.
lead to lower employee satisfaction lead to resistance to innovation lead to coordination problems lead to high formalisation lead to a higher risk of litigation.
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Organisational Life CycleRobbins, SP and Barnwell, N. (2002) Pearson Education Australia. ISBN 1-74009-545-6
Entrepreneurial stage
• Ambiguous goals
• High creativity
Collectivity stage
• Informal communication and structure
• High commitment
Formalisation-and-control stage
• Formalisation of rules
• Stable structure
• Emphasis on efficiency
Elaboration-of-structure stage
• More complex structure
• Decentralisation
• Diversified markets
Decline stage
• High employee turnover
• Increased conflict
• Centralisation
Formation
Growth
Maturity
Decline
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Types of Organisational ChangeOsborne, S P and Brown, K. (2005) Managing Change in Public Sector Organisations.
England. Routledge.
Small-scale incremental change
Large-scale radical change
Reactive change Proactive change
Reactive change to shifting contextual conditions, involving reconfiguration and adaptation to change
Proactive refinement and development of procedures, work arrangements and technology updates
Radical response to critical junctures, major shifts in business markets etc, to maintain and secure survival
Major restructuring and reinvention referred to as transformational and revolutionary proactive change
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Maslow’s Theory v Personal Change
Physiological
Safety or Security
Belonging Social
Ego & Self Esteem
SA
Does the Change completely rock my world to its foundation?
Has the Change the capacity to undermine me personally?
Does the Change alter my belonging to a social grouping?
Will I still have a job?
Does the Change alter my earnings capacity?
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Perception of Change Model
DENIAL
EXPLORATIONRESISTANCE
COMMITMENT
Denial
Shock
Frustration
Acceptance
Experimentation
Understanding
Integration
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Life event 8+ months
Well being
Feel good
OK
Distress / despair
First shock
Provisional adjustment
Inner contradictions
Inner crisis
Re-construction and recovery
Positive events
Excitement Honeymoon
Uncertainty
Losing confidence
Confusion
Depression
Crisis Letting go
Accepting
Exploring
Testing
New confidence, transformation
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Life event 8+ months
Well being
Feel good
OK
Distress / despair
First shock
Provisional adjustment
Inner contradictions
Inner crisis
Re-construction and recovery
Trauma or loss
Confusion
Depression
Crisis
Quitting
NumbnessDisbelief
Minimising or denial
Letting go
Accepting
Partial recovery
Extended crisis
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Life event 8+ months
Well being
Feel good
OK
Distress / despair
First shock
Provisional adjustment
Inner contradictions
Inner crisis
Re-construction and recovery
Confusion
Depression
Crisis
Quitting
NumbnessDisbelief
Minimising or denial
Letting go
Accepting
Partial recovery
Extended crisis
Excitement Honeymoon
Uncertainty
Losing confidence
Confusion
Depression
Crisis Letting go
Accepting
Exploring
Testing
New confidence, transformation
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Life event
Well being
Feel good
OK
Distress / despair
First shock
Provisional adjustment
Inner contradictions
Inner crisis
Re-construction and recovery
Uncertainty
Losing confidence
Testing
New confidence, transformation
Confusion
DepressionCrisisNumbness
Disbelief
Minimising or denial
Letting go
Accepting
Exploring
Taylor’s empirical model
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For Duck . . . (Duck. J. (2003) The Change Monster.)
“Change is inescapably an emotional human process that encompasses the whole gambit of emotions
- fear, curiosity, exhaustion, loyalty, paranoia, depression, optimism, rage, revelation, delight, love........”
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Consider Duck’s change model: -
• What are staff likely to be feeling, experiencing and doing at each of the five stages?
• What can managers do at each stage to make the overall change as stress-free and successful as possible?
• What impact does the stage of change have on communication?
GROUP ACTIVITY
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Making Change Happen(Rogers, E M. (1995) Diffusion of Innovations (4th ed). New York. The Free
Press.)
• Relative Advantage
• Compatibility
• Complexity
• Trialability
• Observability
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Making Change Happen(Rogers, E M. (1995) Diffusion of Innovations (4th ed). New York. The Free
Press.)
• Relative Advantage (Better than previous solution)
– How well does my plan show how much better off people will be when they adopt the plan?
– Why is this plan better than what has been done before?
– What advantages or benefits might there be to accepting the plan?
– Who will gain from the implementation of the plan?
– How will I (or others) be rewarded by adopting the plan?
– How will I emphasize the plan’s benefits to all?
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Making Change Happen(Rogers, E M. (1995) Diffusion of Innovations (4th ed). New York. The Free
Press.)
• Compatibility (Consistent with values, experiences and needs)
– How well does my plan demonstrate that it is compatible with current values, past experiences and needs?
– Is the plan consistent with current practice?
– Does the plan meet the needs of a particular group?
– Does it offer better ways to reach our common goals?
– Who will naturally support and agree with the plan?
– Can it be favourably named, packaged and/or presented?
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Making Change Happen(Rogers, E M. (1995) Diffusion of Innovations (4th ed). New York. The Free
Press.)
• Complexity (Being difficult to understand or use)
– How well does my plan provide for easy communication, comprehension and use?
– Is the plan easy for others to understand?
– Can it be explained clearly to many different people?
– Will the plan be easily communicated?
– How might the plan be made more simple or easy to understand?
– Is the plan easy to use or follow?
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Making Change Happen(Rogers, E M. (1995) Diffusion of Innovations (4th ed). New York. The Free
Press.)
• Trialability(May be experimented with on a limited basis)
– How well does my plan allow for trialability?
– Can the plan be tried out or tested?
– Can uncertainty be reduced?
– Can we begin with a few parts of the plan?
– How might others be encouraged to try out the plan?
– Can the plan be modified by you or others?
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Making Change Happen(Rogers, E M. (1995) Diffusion of Innovations (4th ed). New York. The Free
Press.)
• Trialability(May be experimented with on a limited basis)
– How well does my plan allow for trialability?
– Can the plan be tried out or tested?
– Can uncertainty be reduced?
– Can we begin with a few parts of the plan?
– How might others be encouraged to try out the plan?
– Can the plan be modified by you or others?
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ELAPSED TIME OF ADOPTION
%
HAVING ADOPTED
EARLY MAJORITY
(34%)
LATE MAJORITY
(34%)
LAGGARDS
(15%)
POINT OF INFLEXION
POINT OF INFLEXION
(2.5%)
INNOVATORS
(13.5%)
EARLY ADOPTERS
(Spence, W R. 1994. Innovation, The Communication of Change Ideas, Practices and Products. Chapman Hall.)
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The Effectiveness Matrix(Carnall, C. (2007) Managing Change in Organisations, 5th ed. P193)
Quantitative Measures
Qualitative Measures
EffectivenessEfficiency
ResourcesCostsWaste
Employee turnover
ResourcesStaff flexibility
Training and development
ObjectivesGrowthNew products/services
ObjectivesCorporate imageExcellenceAdaptability
Resources
Management style
Management development
Corporate culture
Resources
Satisfaction
Commitment
Objectives
Competitive position
Utilization of new technology
Objectives
Profit
Market share
Volume
Delivery
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PLANNING FOR QUALITYPolicy and StrategyBased on Concept of Total Quality
– (Values, Vision, Mission Statement)• Use of Relevant Information
– Feedback from suppliers, customers and employees• Methods of Communication• Regular Review and Improvement
People Management• Human Resource
Planning
• Recruitment, Selection and Training
• Appraisal and Review
• Promoting Individual Involvement
Resources• Financial
• Information
• Material
• Technology
Processes• Identification of Key Processes
• Systematic Management of Key Processes
• Review of Key Processes
• Implementation and Evaluation of Process Changes
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Getting the Balance Right
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Enterprise Strategy
Executive Leadership
Principle 1Mobilize Change Through Leadership
1 Top Leadership committed 4 Vision and strategy clarified
2 Case for change clearly articulated 5 New way of managing understood
3 Leadership team engaged 6 Office of strategy management established
Strategic Fit
Principle 2
Translate the Strategy to Measurement Terms
1 Strategy map developed
2 Balanced scorecard created
3 Targets established
4 Initiatives rationalized
5 Accountability assigned.
Organization Alignment
Principle 3
Translate the Strategy to Operational Terms
1 Corporate role defined
2 Corporate and SBUs aligned
3 SBU and support units aligned
4 SBU and external partners.
5 Board of directors aligned
Human Capital Alignment
Principle 4
Motivate to Make Strategy Everyone’s Job
1 Strategic awareness created
2 Personal goals aligned
3 Personal incentives aligned
4 Competency development aligned.
Planning and Control Alignment
Principle 5
Govern to Make Strategy a Continual Process
Planning Process
1 Initiative planning
2 Integrated HR/ IT planning
3 Budget linkage
Operations Management
1 Process improvement
2 Initiative management
3 Knowledge sharing
Learning and Control
1 BSC reporting system
2 Strategy review meetings.
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Remember with business improvement there is no finish line!
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DID WE ACHIEVE ANY OF OUR OBJECTIVES?By the end of these sessions you will be able to:
• identify and evaluate customer service critical success factors
• discuss the factors taken into account when determining team performance objectives
• outline the process involved in performance setting• identify a range of business improvement tools and
techniques • critically evaluate business improvement initiatives • suggest how business improvement initiatives might be
applied to own organisation.