SCM 300 Final
What is a Business Process?
- "Any activity or group of activities that takes an input, adds value to it, and provides an output to an internal or external customer. - Processes use an Organization's resources to provide definitive results." Dr. H.J.Harrington - Business Process Improvement • Step-by-step breakdown that aids in providing high quality results on a consistent basis utilizing minimal resources.
Three Benefits of excellent business process
- Consistency - Managing from afar - Ability to grow
Quality Gurus
- Philip Crosby - W. Edwards Deming - Joseph M. Juran
TQM Principles
1. CUSTOMER - Needs of Today, Desires for Tomorrow, Dimensions of Quality 2. INVOLVEMENT (Employees and SC Partners) - Communication, Learning, Teams, Training, Mentoring 3. CONTINUOUS IMPROVEMENT CULTURE- Across the Supply Chain, Quality Tools, Improvement Programs, Rewards, Incentives, Knowledge Management, Benchmarking...
Types of Benchmarking
1. Competitive 2. Functional 3. Internal
Project Priorities Triangle
1. Performance 2. Quality 3. Cost Time
How Services differ from Products
1. Tangible Products vs. Intangible Service 2. Services cannot be inventoried. 3. Location and hours of operation can be very important for some services 4. Services are usually produced and received simultaneously 5. The production of services is often highly visible Quality Management - Dealing with mistakes, How you make it is important Importance of Hiring, Training, Fail-Safes, Customer Relations, etc. 6. Some service have very low barriers to entry/exit Consider these examples: Haircuts, Car wash, Litigation, Teaching, Banking, Healthcare, Grooming, Landscaping, Restaurants, Childcare, Travel Related industries
Keys to designing a system of metrics
1. stakeholders and goals 2. good metrics 3. simplicity 4. completeness 5. redundancy 6. continuous improvement 7. leadership
Milestones
A Specific Event in a Project. - Date of an important decision - Choose location for Factory - Start of a new phase of project, End of a project phase - Begin electrical wiring in the home - A deadline - Date home must be completed and inspected
executive dashboard
A computer-generated visual representation of a company's performance that is often available to executives on nearly any of their digital devices.
System of Metrics
A group of metrics that collectively attempt to provide a multi-dimensional view of a resource or outcome • Basketball example: Points/game, Rebounds/game, Assists/game, Turnovers/game, Turnovers caused/game • Academic example: GPA, Standardized Test Scores, Years to complete degree
Single Vendor Approach
Getting IT software from one vendor for fully integrated experience
LMS
Logistics Management System
SMART metrics
Specific Measurable Attainable Relevant Timely
SRM
Supplier Relationship Management
WMS
Warehouse Management System
Best of Breed Approach
combines modules from various vendors to create an information system that better meets an organization's needs than a standard ERP system.
Three key measurement system attributes
effectiveness efficiency adaptability
Quality Trilogy (Juran)
emphasized three things: quality planning, quality improvement, and quality control
Design - "Keep It Simple Stupid"
- Simplicity in design can be beneficial in a number of areas. - Simple design allows for greater control over reliability. Designing items with fewer parts can potentially help improve quality, specifically reliability.
Being a Good Consultant
1. DATA SKILLS - Are you skilled at Data Collection, Data Analysis? 2. VALUES FEEDBACK - Seek Feedback, Use Feedback 3. CREATIVITY - Be creative in developing solutions 4. UNDERSTANDS PEOPLE - Create solutions that work for humans 5. CHANGE AGENT - Anticipate Learning Curves and Resistance to Change 6. DESIRE TO HELP PEOPLE - Don't get angry. Remember you are there to help. 7. VALUES SIMPLICITY - Easy to Understand Solutions - Explain changes, benefits, metrics...
Four steps in project management
1. DEFINE THE PROJECT Clarity of objectives. Eliminate ambiguities. Avoid Arguments later. 2. ESTABLISH PROJECT PRIORITIES Choose two types of quality: Cost, Time, Performance 3. WORK BREAKDOWN STRUCTURE Break work items into smallest units. Estimate of needs: people, Time, Cost 4. TRACK PROJECT PROGRESS - Are we on-time, ahead of schedule, behind schedule? What happens when different groups need help? Importance of project management software
Business Process Improvement (BPI)
1. DESIRED STATE - Quantifiable Goals 2. PRESENT STATE - Collect Data and Observe 3. GAP ANALYSIS - Compare Present vs Desired State 4. PROJECT SCOPE - You can't fix everything. Stay focused. 5. COLLECT and SHARE DATA, ANALYZE - Investigate. Get Feedback. Consider solutions. 6. DEVELOP SOLUTIONS - Solutions they will buy. Make an impact. Push for creativity. 7. DEVELOP IMPLEMENTATION PLAN - Provide a path to adoption.
Primary Reasons for ERP
1. Integrate Financial Data - One Story vs. Many, One Set of Numbers 2. Integrate Inventory Data - Supply Chain Visibility, Reduce Inventory 3. Standardize Human Resources Data - Tracking Employee Time, Benefits, 4. Manufacturing and Business Process Data - Standardization, Speed, Visibility 5. Integrate Customer Order Information -Supply Chain Coordination
Being a Good Consultant - Things to Avoid
1. MAKING ASSUMPTIONS - Never assume. Investigate. Investigate more. 2. DEVELOPING SOLUTIONS TOO SOON - Long lasting solutions are rarely obvious 3. LISTENING TO CLIENT's PRE-FABRICATED SOLUTIONS - Why now? 4. SCOPE INFLATION - Limited time. Limited Resources. Stay focused. 5. STICKING TO A DEAD-END SCOPE - Is it time to quit? 6. MAINTAINING HAPPINESS - Change is difficult.
Requirements of a good metric
1. Measurable 2. Easily Understood 3. Attainable 4. Strategically Oriented 5. Easy to measure 6. Provides Value 7. Provides Guidance 8. Cheater proof
Consequences of poor metrics
1. Supply chain goals are not met 2. Poor Output 3. Waste 4. Undesirable employee behavior 5. Managers make poor decisions 6. Employee victimization 7. Undeserved winners 8. Lack of contentment
Six Sigma
A business process for improving quality, reducing costs, and increasing customer satisfaction developed by Motorola in 1980s Defect Elimination • Methodologies designed to identify and eliminate process variations that cause defects Program Basics • Black Belt Program - Green, Black, Master Black belt • Training - Methodologies, Statistics, Quality Tools • Incentives Key Methodologies • DMAIC • DMADV
Process Velocity
A measure of how long a unit sits in a process versus the amount of work time that is expended on the unit
Cash-to-cash cycle
A measure of the number days between the time a company pays their supplier for inventory and the time that same company is paid for the same inventory by their customer Amount of days that money related to inventory is out of pocket.
SCOR Model
A measurement tool that enables supply chain partners to track performance, communicate progress, and develop opportunities for improvement five primary supply chain processes: 1. Plan - demand and supply chain planning 2. Source - purchasing process 3. Make - manufacturing process 4. Deliver - logistics and transportation 5. Return - reverse logistics
Shared metrics
A metric that is impacted by two related parties
capacity utilization
A ratio of the amount of product produced by a manufacturing process versus the maximum capacity of that facility
Performance Metric (PM)
A single performance measurement used to evaluate, motivate, and improve performance Basketball example: Points per game Academic example: GPA
Managerial Paralysis
A situation where managers are inundated with data. This overflow of data actually slows decision-making and may even result in managers stalling or avoiding decision-making
What is a Project?
An endeavor in which human, material, and financial resources Are organized, in a novel way, To undertake a unique scope of work, of a given specification, within the constraints of cost and time, so as to achieve a beneficial change defined by quantitative and qualitative objectives
Why do we measure?
As Part of our Daily Lives - Resource Utilization - Decisions - Make them, Judge them - Learn, Understand, and then Predict - Rank - Identify Changes In Business: - Helping us manage from afar - Helping us manage large numbers of resources, outcomes... - Motivating good behavior and good decisions - They also help identify/establish standards - design, performance, unbiased recognition - They might even point to required corrective actions
Quality Certifications and Awards
CERTIFICATIONS and CERTIFICATION PROGRAMS • Evidence of meeting minimal acceptable scores/specifications • Communication and motivation tool for partners • Internally motivates change • Piece of mind AWARD PROGRAMS • Helps increase morale • Recognition of top performers • Opportunity to increase competition and publicize top programs • Criteria help up and coming organizations
Quality is Free (crosby)
Crosby is famous for his book that proclaimed this. Before Crosby, most saw quality as a burden on corporate costs. Crosby argued that a lack of quality may have lower costs, but it would eliminate any value. As a result, the more that was invested in quality, the greater the value of the product or service.
BPI Step FIVE: Collect Data, Share Data, Analyze
Deeper Internal and External Investigation - Benchmark, learn from others, success/failure Get Feedback- Share and Discuss Findings Consider possible elements of a solution
Designing a Business Process
Define Goals and Parameters 1. Goals, Values, Stakeholders - What needs to be accomplished? Who is involved? 2. Block Diagram - A process is part of something bigger. Describe the system in which process will lie. 3. Establish the Scope - Define parameters of process. Beginning and End. Define Success 4. Define the Service - Get more specific. Establish exactly what process needs to accomplish 5. Measurement & Management Considerations - Metrics and Data. How will they be used? Build it, Test it, Improve It 6. Primary Steps Detailed - Begin to build the process steps 7. Develop a Process Map - Create a visual representation of the process 8. Evaluation, Testing - Evaluate the process before rolling out.
Deming's 14 points
Deming was a champion of continuous improvement. In an effort to help organizations foster a culture of continuous improvement, he developed a list of quality recommendations
Deliverables
Description of services/products to be delivered - Presentation and/or Documents: Design, Process, Report, Contract - Research (Data or Document) - Physical item or Intangible outputs (Software)
BPI Step FOUR: Develop Project Scope
Develop a focused project. Which GAPS will be addressed on this improvement project? Establish goals and desired outcomes. What will be investigated? What will be developed?
Cow Path Theory
Effective does not mean Efficient Why are most initial processes inefficient? How do typical processes develop? - Who was the developer? Development conditions? - Why weren't inefficiencies addressed? Immediately? Later? - Why are some process inefficiencies sometimes required? Regulations?
ERP
Enterprise resource planning
Common measurement pitfalls
Even in organizations that value performance measurement, there are a number of common errors companies often make
Business Process Design: Value of Flowcharts
General Process Flow Problems - Quality Control Tool Information Technology - What type of software will be used to facilitate the process? - Where will data be collected? Data needs for Marketing, Finance/Accounting, SCM - Database development and IT infrastructure requirements Required Resources, Quality of those Resources - Employees and Managers - Skills, Training, Staffing requirements to meet demand - Materials and Capital Equipment - Money Operational Considerations - What can be learned through Testing? - Potential failure points in process - Average service encounter time, Variability concerns - System Capacity --- Operational difficulties, Bottlenecks, Process flexibility - Waiting Line Management --- Customer Service --- Facility, Infrastructure, and Staffing Requirements Everyone sees the process differently - What is learned in each Department? - Marketing - Customer, Suppliers, Product Line, Forecasting, Branding - Finance - Project Feasibility, Return on Investment - Accounting and IT - Costs and Data Management
AI (artificial intelligence)
Generically, AI refers to a desire to have machines behave more like humans. Cognitive Computing would be the highest form, when machines act like a human that learns and solves problems. A lower level would be machine learning. When a machine, via a basic and very simple algorithm, makes relatively low level decisions. often rooted in fundamental statistics, in particular Bayesian statistics.
Objectives
Goals. Expectations or desired outcomes in the following categories" - Performance and Quality - Improve the design of product - Budget - Reduce the cost of logistics by 10% - Time - Reduce delivery times by 2 days
Three requirements of a good process
Good Intentions - Goal Oriented, Stakeholders considered, Effective and Efficient, Outputs are desired Reproducible Results - Documented and Easily Understood Measurable and Manageable - Entire system considered. Accountability, good metrics, easy to identify problems
Black Belt Program
Green, Black, Master Black belt. Firms awards percentage of savings based on level of belt. E.g. Green gets 0.5%, Black get 1%, Master 1.5%.
BPI Step SEVEN: Develop an Implementation Plan
How should these ideas be put into action? Be Specific! - Timeline - Training and Development - Considerations Outlined Anticipated problems and corrective actions - Metrics, Standards, and Checkpoints
BPI Step THREE: Gap Analysis - Gap between Desired and Present State
Illustrate the GAP - utilize desired metrics and goals Do NOT develop Solutions!!! Share and discuss the "GAP" with clients Why does the gap exist? Consider potential causes. measure and compare the difference between the desired state and the present state
KPIs (Key Performance Indicators)
Individual performance metrics identified by the company as being imperative to achieving the organizations most important goals
BPI Step ONE: DESIRED STATE
Interview Client - Identify Objectives, Goals and Metrics Goals must be quantifiable. Establish a hierarchy. - Quantifiable Goals
BPI Step TWO: PRESENT STATE
Interview, Observe, and/or Collect Data Utilize the same metrics from "Step One" Process Maps and Data Inspections - Do actions and documentation match? Collect Data and Observe
SCM IT - System Requirements
Low Cost Speed - Efficient Delivery - On time Tracking Quality Shrinkage: Damage, Theft Accuracy Process: Effective, Efficient, Adaptable Data: Collection, Access, and Security Security: Virtual and Physical Legal and Ethical - Sustainability Planning - Communication - Relationship Building
Total Quality Management (TQM)
Management approach for an organization, centered on quality, based on the participation of all its members and aiming at long-term success through customer satisfaction, and benefits to all members of the organization and to society
MES
Manufacturing Execution System
Performance Measurement
Measuring employee performance for the purpose of motivation, improvement, statistical reference, promotion, termination, etc.
Why do Bad Processes Exist?
NEVER WAS GOOD • Ambiguity - Goals are not clearly understood. Laziness, Hubris, Lack of information • Misalignment- Goals and Actions not in alignment • Miscommunication - Employees do not understand goals, process... USED TO BE GOOD • Market Evolution - Customer's needs have changed • Miscommunication - New employees do not understand goals, process... LIMITATIONS • Development of poor or limited processes - May result in limited capacity, inefficiency, confusion... • Lack of appropriate tools, technology...
Dimensions of Quality: Product
Performance - What type of output is provided? As promised? Versus the competition? Reliability - Likelihood item will work Durability - Under normal conditions will the item break? Features - Both expected features and bonus features. Aesthetics - Looks good? Smells good? Feels good? Sounds good? Reputation/Brand - Does it give you that warm feeling inside? Serviceability - Can item be fixed? At what cost? Difficult to find repair personnel? Service Response - Can I find help? What kind of help? Cost?
Balanced Scorecard (BSC)
Performance management tool that focuses on Strategic Activity and strategic Outcomes. While some companies the 4 elements of their balanced scorecard, most companies utilize some form of the traditional scorecard that tracks outputs in four different areas: 1. Financial Results 2. Customer-Related Results 3. Internal Business Process Results 4. Learning and Growth Results
Quality Tools
Process Flowchart, Cause and Effect Diagram, Check Sheet, Pareto Analysis, Histogram, Scatter Diagram, Statistical Process Control Chart
ISO 9000
Quality Certification Quality Management Family of Standards • Documentation of Processes - Supports claims of quality • Assures products and processes of an organization meet quality standards • Certification Only - Compliance does not insure HIGH Quality • Attractive to Customers - Perception of High Quality • International Certification- Very important to any organization competing in international markets
RFID
Radio Frequency Identification
Crashing the Project
Shortening the Time of the Project by increasing the number of resources usually in the most cost effective manner. When Crashing in this class, ALWAYS choose the cheapest solution
Vendor Choices
Single Vendor Approach Best of Breed Approach WHO? - ERP Companies - Modular Approach CONSIDERATIONS - In-house system? - Which modules? Industry specificity? - Standard or Customized System
BPI Step SIX: Develop Solutions and Recommendations
Solutions they will buy. Make an impact. Push for creativity. Does this problem even require change and/or innovation? If a solution is needed, where to start? - Focus on YOUR client - Avoid one-size fits-all solutions - Start with Two Options - Change Nothing, Eliminate Process - Get Innovative: Embrace the Repugnant "Good Ideas" are Useless - Will they actually adopt the idea? Do some issues require further study? Future projects
Internal Benchmarking
Some organizations are so big that they can benchmark one department versus another. Example: GE's energy group benchmarking their healthcare group's higher practices
ERP Systems
Stores our Financial, Operations, and HR Data in Central Database • Focus is on integration of data • Collects and Stores data for Analysis, Forecasts • Facilitates sharing of Data
Relationship between business processes and the supply chain, Importance of business processes
Supply chains are made up of a series of interconnected and interdependent processes. Each process is a mini-supply chain - managing inputs and outputs at a smaller scale. Importance - growth, quality, design and improvement.
IoT - Internet of Things
The "Human" internet allows people to learn from each other, communicate, tweet, track people or things, make transactions, etc. attempts to create a similar type of system for "THINGS". Through the use of sensors, electronics, software, etc. "THINGS" can communicate with each other, control each other, and document events. Real-time efficiencies and outcomes. AND via learning: improvements in the future
Critical Path
The Longest Path (in terms of time) in the AON Network Diagram. This path dictates the expected completion time of the Project. Items on this path must be completed in time in order for project to be completed on schedule
SCM IT: Things to consider
The PURCHASE - Knowing your Company and your Supply Chain. Knowing your needs. - Purchase, Lease? From whom? The IMPLEMENTATION - Technical Considerations - Old System vs. New System, Data collection - People - Customers, Employees - Business processes - Testing of system The FUTURE - Upgrades - Constant Changes and Upgrades in Technology - Evolving Businesses and Supply Chains - Mergers, Acquisitions, Partnerships...
quality
The ability of a product or service to consistently meet or exceed customer expectations
Slack
The amount of time an activity or path can be delayed with impacting the length of the critical path
Perfect Order Fulfillment
The percentage of orders that are full, arrive on time, and are damage free
Dimensions of Quality: Service
Time - Waiting time, Time from request to completion Timely - % of time delivered on time, early, late? Complete - Based on expectations. Customer's definition of complete? Accurate - Exactly what was expected? Right the first time? Responsive - Reaction time to problems. Who found the error? Courtesy - How does each customer define courteous? Consistent - Same every time? Consider different customer expectations. Accessible - Location Convenient - Hours of operation, user-friendly, paperwork...
competitive benchmarking
Used when companies want to measure their processes, programs, and outcomes versus those of their direct competitors. Example: Dell benchmarking Apple
Value of Process improvement and Project Management on Careers - In-class examples
Vital to Corporate Careers - No matter what the major - Well-defined goals - Teams and Individuals have responsibilities - Recommendations and Implementation - Measurable Results - Success or Failure? Resume Builder - Little stories about your career - What you have done. Ability to get results. Leadership experience. - How do you deal with adversity and ambiguity... - Good way to document your accomplishments (Grades & Degrees are useless) Corporate Career - Successful Leaders get more responsibility, power, money... - Top Project Managers have the ability to choose projects, teams... - Unskilled, unintelligent, and "control freaks" are easily exposed in a project environment
functional benchmarking
When a company benchmarks an organization that is successful in an area where their processes reflect similar inputs, outputs or values. Example: Southwest Airlines benchmarking nascar pit crew to get plane ready faster
Blockchain
a list of records that are collected among a shared network of computers. It cannot be corrupted. This "distributed ledger" collects and constantly updates transactions. Money, inventory, and nearly anything else can be tracked and recorded in this ledger. aid in eliminating lies, misinformation, IT security scandals, late payments, false transactions, etc.
AS/RS
automated storage and retrieval system
business process flow chart
collection of symbols that illustrates the sequential between all of the different activities and decisions in a particular process
Total Supply Chain Management Costs
cost of every process, material, fee, defect, etc that runs through the supply chain; sometimes also explained as the cost to plan, source and deliver products and services
CRM
customer relationship management
DSS
decision support system
scope
developed to keep consultants focused
Reliability
how often do they actually deliver on their promises? when they can't meet our deadlines what is the typical outcome?
Activity-on-Node (AON)
illustration where each circle represents a single activity in the project. Inside the circles the activity is given a name or symbol. In addition, inside each circle, a number will indicate how much time is required to complete that activity
Swimlane Flowcharts
in the world of process management, these types of flowcharts are effectively the same as standard process maps except that these offer more detail. can see individual group responsible for each activity
block diagram
simple flowchart that provides a business process with a picture view of the entire system
Eprocurement
the business-to-business online purchase and sale of supplies and services
DMAIC
used for existing processes - Design, Measure, Analyze, Improve, Control
DMADV
used in designing NEW processes - Design, Measure, Analyze, Design, Verify
Scope Inflation (scope creep)
when scopes grow too big, the project becomes too difficult to manage and resources are wasted. some of this is likely and possibly healthy but consultants need to constantly manage this
Malcolm Baldrige National Quality Award
• Given to US companies in different categories • Also potentially helpful for companies that don't choose to compete for MBNQA • Based on Core TQM Values, Expensive process for competitors • Lengthy criteria includes these categories: Leadership, Strategic planning, Customer focus, Information and analysis, Human resource focus, Process management, and Business results
DEMING PRIZE
• Similar to Baldrige Award • Available to Japanese firms (and now also to non-Japanese firms and individuals)