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16 Operations improvement KEY QUESTIONS INTRODUCTION Improvement means to make something better. And all operations, Why is improvement so importan...

16 Operations improvement KEY QUESTIONS INTRODUCTION Improvement means to make something better. And all operations, Why is improvement so important in no matter how well managed, are capable of being better. operations management? Of course, in one sense, all of operations management is concerned What are the key elements of with being better, but there are some issues that relate specifically operations improvement? to the activity of improvement itself. Yet, at one time improvement was not central to operations managers, who were expected simply What are the broad approaches to to ‘run the operation’, ‘keep the show on the road’, and ‘maintain improvement? current performance’. No longer. In fact, in recent years the emphasis has shifted markedly towards making improvement one What techniques can be used for of the main responsibilities of operations managers. Moreover, the improvement? study of improvement as a specific activity has attracted significant attention from both academics and practitioners. Some of this How can the improvement process attention focuses on specific techniques and prescriptions while be managed? some looks at the underlying philosophy of improvement. Both aspects are covered in this chapter, because both aspects of improvement have their place in effective improvement. Figure 16.1 shows where this topic fits into our overall model of operations management. Topic covered in this chapter Develop Direct Operations improvement Operations Quality Managing risk Design Develop management management and recovery Project Deliver management Figure 16.1 This chapter examines operations improvement 548 M16 Operations Management 53961.indd 548 15/03/2019 18:01  Why is improvement so important in operations management? Why is operations improvement so important? Well, who doesn’t want to get better? And busi- nesses are (or should be) just the same as people – they generally want to get better. Not just for the sake of their own excellence, although that may be one factor, but mainly because improving operations performance has such an impact on what any organization is there to do. Emergency services want to reach distressed people faster and treat them better because by doing so they are fulfilling their role more effectively. Package delivery businesses want to deliver more reliably, at lower cost and reducing emissions because it means happier customers, higher profits and less pollution. Development charities want to target their aid and campaign for improvement in human conditions as wisely and efficiently as possible because more money will find its way to benefi- ciaries rather than be wasted or consumed in administration. It is not surprising then that the whole emphasis of operations management has shifted towards emphasizing improvement. Operations managers are judged not Operations principle only on how they meet their ongoing responsibilities of produc- Performance improvement is the ultimate ing products and services to acceptable levels of quality, speed, objective of operations and process dependability, flexibility and cost, but also on how they improve management. the performance of the operations function overall. Why the focus on improvement? Various reasons have been suggested to explain the shift towards a focus on improvement in profes- sional operations managers’ activities. ▶ There is a perceived increase in the intensity of competitive pressures (or ‘value for money’ in not-for-profit or public sector operations). In fact, economists argue about whether markets are really getting more competitive. As far as improvement is concerned it doesn’t matter; there is a perception of increased competitive pressure, and certainly the owners of operations (shareholders or governments) are less likely to tolerate poor returns or value for money. ▶ The nature of world trade is changing. Emerging economies are becoming important as both producers and consumers. This has introduced cost pressures in countries with relatively expensive labour and infrastructure costs; it has introduced new challenges for global companies, such as managing complex supply chains; and it has accelerated demand for resources (materials, food, energy), pushing up (or destabilizing) prices for these commodities. ▶ New technology has both introduced opportunities to improve operations practice and disrupted existing markets. ▶ The interest in operations improvement has resulted in the development in many new ideas and approaches to improving operations. The more ways there are to improve operations, the more operations will be improved. ▶ The scope of operations management has widened from a subject associated largely with manu- facturing to one that embraces all types of enterprise and processes in all functions of the enterprise. Because of this extended scope, operations managers have seen how they can learn from each other. The Red Queen effect The scientist Leigh Van Valen was looking to describe a discovery that he had made while studying marine fossils. He had established that, no matter how long a family of animals had already existed, the probability that the family will become extinct is unaffected. In other words, the struggle for sur- vival never gets easier. However well a species fits with its environment, it can never relax. The anal- ogy that Van Valen drew came from Through the Looking Glass, by Lewis Carroll. In the book, Alice had encountered living chess pieces and, in particular, the ‘Red Queen’. ‘Well, in our country’, said Alice, still panting a little, ‘you’d generally get to somewhere else – if you ran very fast for a long CHAPTER 16 OPERATIONS IMPROVEMENT 549 M16 Operations Management 53961.indd 549 15/03/2019 18:01  OPERATIONS IN PRACTICE Improving Sonae Corporation’s retail operations (Adapted, with permission, from an original case by Professors Rui Soucasaux Sousa and Sofia Salgado Pinto, Católica Porto Business School, Portugal.) The retail industry may not seem to be the most likely setting for the use of improvement approaches more usually associated with manufacturing, but Sonae Corporation’s Continente supermarkets’ 22,500 employees in its 170 stores and two distribution centres have demonstrated that any type of business can benefit. The operations improvement programme was originally a response to Portuguese labour laws requiring a mini- mum of 35 hours of training per year, per worker. Jaime Maia, Sonae’s Human Resource Director, was keen that the training should be ‘on-the-job’ and asked a consult- ing firm, The Kaizen Institute (KI), to help, first by improvement] stimulates a good attitude and a constant observing daily operations at several retail stores. The sense of critique’. A typical improvement project results were surprising. KI uncovered a significant concerned the company’s shelf replenishing policy. amount of waste (or ‘muda’ in lean terminology, see Initially, stock was continuously replenished as sales Chapter 15). However, when Jaime Maia and KI took place during the day. However, this meant that presented their ideas to the chief operations officer product movements were constrained by customer (COO), their photographs showing examples of waste flows and the need to keep the store clean and tidy. So a caused some discomfort; after all, they were the most new method was tested. ‘The store is fully loaded before successful retailer in Portugal. Yet the programme went the morning opening. From then on, we just need to ahead, despite several managers arguing that lean prin- perform minimal stock maintenance during the day. ciples would not work in retail. There is a time of the day at which a shelf may appear Within a store, ‘back-office’ processes include unload- to be quite empty. However, typically, there is no need ing trucks, routing goods to sales areas or the warehouses, to replenish the shelf, but simply bring the products from cleaning, shelf replenishment and store decoration. ‘Front- the back to the front of the shelf, or from the upper office’ processes include sales areas and their supporting shelves to the eye level shelves’, explained Nuno checkout and customer service areas. Key operational Almeida, Regional Operations Manager. Only a few goals include the efficient use of space, increasing sales fast-moving goods needed to be replenished during the per square metre of store space and customer satisfaction. day with the store open. The first stage of the programme focused on ‘goods recep- With the success of the programme it was expanded by tion’ and ‘shelf replenishment’. Simple lean tools such as involving all employees. A formal steering group was 5S and visual management (see Chapter 15) were used, as created with monthly general meetings and a videoconfer- was the idea of ‘Gemba’, or working out improvements in ence meeting every two weeks to assess progress. the workplace. After a seminar, store managers returned Substantial improvements in performance continued, but to work with their teams to develop training based on a progress was not uniform. Stores ranged from 87 per cent ‘lean manual’, define an action plan, identify problem implementation, down to 37 per cent implementation. So, areas, and select the lean tools to be applied. As Jaime the steering group decided to place more emphasis on Maia explained, ‘Improvements were suggested by Store benchmarking and learning. Managers, top down. But those ideas were immediately And the future? ‘One challenge’, said Jaime Maia, ‘is to enriched and put into action by the teams in the stores, sustain the motivation for the programme across the bringing about further improvements in a continuous organization, after years of continuous successes.’ He also fashion.’ felt the programme was reaching a new turning point and After just one year there had been an ‘explosion of needed to be reinvented. Until now, lean principles had creativity’ in the stores. Productivity increased; inven- been applied mainly to materials flows and workplace tory and stockouts were reduced ; and customer organization. Could lean principles be extended to satisfaction increased. As Jaime Maia put it, ‘[continuous customer flows? 550 PART FOUR DEVELOPMENT M16 Operations Management 53961.indd 550 15/03/2019 18:01  time, as we’ve been doing’. ‘A slow sort of country!’ said the Queen. ‘Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!1 In many respects this is like business. Improvements and innovations may be imitated or countered by competitors. For example, in the automotive sector, the quality of most firms’ products is very significantly better than it was two decades ago. This reflects the improvement in those firms’ oper- ations processes. Yet their relative competitive position has in many cases not changed. Those firms that have improved their competitive position have improved their operations performance more than competitors. Where improvement has simply matched competitors, survival has been the main benefit. The implications for operations improvement are clear. It is even more important, especially when competitors are actively improving their operations. An important distinction in the approach taken by individual operations is that between radical or ‘breakthrough’ improvement, on one hand, and continuous or ‘incremental’ improvement, on the other. Radical or breakthrough change Radical, breakthrough improvement (or ‘innovation’-based improvement as it is sometimes called) is a philosophy that assumes that the main vehicle of improvement is major and dramatic change in the way the operation works. The introduction of a new, more efficient machine in a factory, the total redesign of a computer-based hotel reservation system, and the introduction of an improved degree programme at a university are all examples of breakthrough improvement. The impact of these improvements is relatively sudden, abrupt and represents a step change in practice (and hope- fully performance). Such improvements are rarely inexpensive, usually calling for high investment of capital, often disrupting the ongoing workings of the operation, and frequently involving changes in the product/service or process technology. The solid line in Figure 16.2(a) illustrates the pattern of performance with several breakthrough improvements. The improvement pattern illustrated by the dashed line in Figure 16.2(a) is regarded by some as being more representative of what really occurs when operations rely on pure breakthrough improvement. Breakthrough improvement places a high value on creative solutions. It encourages free thinking and individualism. It is a radical philoso- phy insomuch as it fosters an approach to improvement which does not accept many constraints on what is possible. ‘Starting Operations principle with a clean sheet of paper’, ‘going back to first principles’ and Performance improvement sometimes ‘completely rethinking the system’ are all typical breakthrough requires radical change. improvement principles. Continuous or incremental improvement Continuous improvement, as the name implies, adopts an approach to improving performance which assumes many small incremental improvement steps. For example, modifying the way a product is fixed to a machine to reduce changeover time, simplifying the question sequence when taking a hotel reservation, and rescheduling the assignment completion dates on a university course so as to smooth the students’ workload are all examples of incremental improvements. Although there is no guaran- tee that such small steps towards better performance will be followed by other steps, the whole phi- losophy of continuous improvement attempts to ensure that they will be. Continuous improvement is not concerned with promoting small improvements per se. It does view small improvements, how- ever, as having one significant advantage over large ones – they can be followed relatively painlessly by other small improvements (see Figure 16.2(b)). Continuous improvement is also known as kaizen. Kaizen is a Japanese word, the definition of which is given by Masaaki Imai2 (who has been Operations principle one of the main proponents of continuous improvement) as fol- Performance improvement almost always lows: ‘Kaizen means improvement. Moreover, it means improve- benefits from continuous improvement. ment in personal life, home life, social life and work life. When CHAPTER 16 OPERATIONS IMPROVEMENT 551 M16 Operations Management 53961.indd 551 15/03/2019 18:01  Planned ‘breakthrough’ Performance Performance improvements Continuous improvement Actual improvement pattern Time Time (a) (b) Performance Combined ‘breakthrough’ and continuous improvement Time (c) Figure 16.2 (a) ‘Breakthrough’ improvement (b) ‘Continuous’ improvement and (c) combined improvement patterns applied to the work place, kaizen means continuing improvement involving everyone – managers and workers alike.’ In continuous improvement, it is not the rate of improvement which is important; it is the momen- tum of improvement. It does not matter if successive improvements are small; what does matter is that every month (or week, or quarter, or whatever period is appropriate) some kind of improvement has actually taken place. OPERATIONS IN PRACTICE The checklist manifesto3 Improvement methodologies are often associated with repet- itive operations. Performing the same task repeatedly means that there are plenty of opportunities to ‘get it right’. The whole idea behind continuous improvement derives from this simple idea. By contrast, operations that have to perform more difficult activities, especially those that call for expert judgement and diagnostic ability, must call for equally complex improvement approaches, no? Well no, according to Atul Gawande, a physician at the prestigious Johns Hopkins Hospital. Mr Gawande thinks that the very opposite is true. Although medicine is advancing at an astounding rate and medical journals produce learned papers adding the results of advanced research to an ever-expanding pool of knowledge, medics are less good at the basics. Surgeons carry out over 200 reliable method for learning from its mistakes. Atul major operations a year, unfortunately not all of them success- Gawande’s idea is that his and similar ‘knowledge-based’ ful, but the medical profession overall does not always have a professions are in danger of sinking under the weight of facts. ▼ 552 PART FOUR DEVELOPMENT M16 Operations Management 53961.indd 552 15/03/2019 18:01  Scientists are accumulating more and more information and Mr Gawande’s describes checklists, used in this way, as a professions are fragmenting into ever narrower specialisms. ‘cognitive net’ – a mechanism that can help prevent experi- Mr Gawande tells the story of Peter Pronovost, a specialist enced people from making errors due to flawed memory in critical care at Johns Hopkins Hospital who in 2001 tried and attention, and ensure that teams work together. Simple to reduce the number of patients who were becoming checklists are common in other professions. Civil engineers infected on account of the use of intravenous central lines. use them to make certain that complicated structures are There are five steps that medical teams can take to reduce assembled on schedule. Chefs use them to make sure that the chances of patients contracting such infections. Initially food is prepared exactly to the customers’ taste. Airlines use Pronovost simply asked nurses to observe whether doctors them to make sure that pilots take off safely and also to took the five steps. What they found was that, at least a learn from, now relatively rare, crashes. Indeed, Mr Gawande third of the time, they missed one or more of the steps. So is happy to acknowledge that checklists are not a new idea. nurses were authorized to stop doctors who had missed out He tells the story of the prototype of the Boeing B17 Flying any of the steps, and, as a matter of course, ask whether Fortress that crashed after take-off on its trial flight in 1935. existing intravenous central lines should be reviewed. As a Most experts said that the bomber was ‘too complex to fly’. result of applying these simple checklist-style rules, the Facing bankruptcy, Boeing investigated and discovered that, ten-day line-infection rates went down from 11 per cent to confronted with four engines rather than two, the pilot zero. In one hospital, it was calculated that, over a year, this forgot to release a vital locking mechanism. But Boeing simple method had prevented 43 infections, eight deaths created a pilot’s checklist, in which the fundamental actions and saved about $2 million. Using the same checklist for the stages of flying were made a mandated part of the approach, the hospital identified and applied the method to pilot’s job. In the following years, B17s flew almost two other activities. For example, a check in which nurses asked million miles without a single accident. Even for pilots, patients about their pain levels led to untreated pain reduc- many of whom are rugged individualists, says Mr Gawande, ing from 41 per cent to 3 per cent. Similarly, the simple it is usually the application of routine procedures that saves checklist method helped the average length of patient stay planes when things go wrong, rather than ‘hero-pilotry’ so in intensive care to fall by half. When Pronovost’s approach fêted by the media. It is discipline rather than brilliance that was adopted by other hospitals, within 18 months, 1,500 preserves life. In fact, it is discipline that leaves room for lives and $175 million had been saved. brilliance to flourish. Exploitation or exploration A closely related distinction to that between continuous and breakthrough improvement is the one that management theorists draw between what they call ‘exploitation’ and ‘exploration’. Exploitation is the activity of enhancing processes (and products) that already exist within a firm. The focus of exploitation is on creating efficiencies rather than radically changing resources or pro- cesses. Its emphasis is on tight control of the improvement process, standardizing processes, clear organizational structures, and organizational stability. The benefits from exploitation tend to be relatively immediate, incremental and predictable. They also are likely to be better understood by the firm and fit into its existing strategic framework. Exploration, by contrast, is concerned with the exploration of new possibilities. It is associated with searching for and recognizing new mindsets and ways of doing things. It involves experimentation, taking risks, simulation of possible conse- quences, flexibility and innovation. The benefits from exploration are principally long term but can be relatively difficult to predict. Moreover, any benefits or discoveries that might come may be so different from what the firm is familiar with that it may not find it easy to take advantage of them. Organizational ‘ambidexterity’ It is clear that the organizational skills and capabilities to be successful at exploitation are likely to be very different from those that are needed for the radical exploration of new ideas. Indeed, the two views of improvement may actively conflict. A focus on thoroughly exploring for totally novel choices may consume managerial time and effort and the financial resources that could otherwise be used for refining existing ways of doing things, reducing the effectiveness of improving existing processes. Conversely, if existing processes are improved over time, there may be less motivation to experiment CHAPTER 16 OPERATIONS IMPROVEMENT 553 M16 Operations Management 53961.indd 553 15/03/2019 18:01  with new ideas. So, although both exploitation and exploration can be beneficial, they may com- pete both for resources and for management attention. This is where the concept of ‘organizational ambidexterity’ becomes important. Organizational ambidexterity Operations principle means the ability of a firm to both exploit and explore as it seeks to Organizational ambidexterity is the ability to improve; to be able to compete in mature markets where efficiency both exploit existing capabilities and explore is important, by improving existing resources and processes, while new ones as the organization seeks to improve. also competing in new technologies and/or markets where novelty, innovation and experimentation are required. The structure of improvement ideas There have been hundreds of ideas relating to operations improvement that have been proposed over the last few decades. To understand how these ideas relate to each other it is important to dis- tinguish between four aspects of improvement. ▶ The elements contained within improvement approaches – These are the fundamental ideas of what improves operations. They are the ‘building blocks’ of improvement. ▶ The broad approaches to improvement – These are the underlying sets of beliefs that form a coher- ent philosophy and shape how improvement should be accomplished. Some improvement approaches have been used for over a century (for example, some work study approaches – see Chapter 9), others are relatively recent (for example, Six Sigma, explained later). But do not think that approaches to improvement are different in all respects; there are many elements that are common to several approaches. ▶ The improvement techniques – There are many ‘step-by-step’ techniques, methods and tools that can be used to help find improved ways of doing things; some of these use quantitative modelling and others are more qualitative. ▶ The management of improvement – How the process of improvement is managed is as important as, if not more important than, understanding the elements and approaches to improvement. The improvement activity must be organized, resources deployed and generally controlled for it to be effective at actually achieving demonstrable improvement. The rest of this chapter will treat each of these aspects of improvement. The best way to understand improvement is to deal with the elements contained within improvement approaches first, then see how they come together to form broad approaches to improvement, and then examine some typical improvement techniques, before looking briefly at how operations improvement can be managed. Figure 16.3 illustrates the structure of the four aspects of improvement. What are the key elements of operations improvement? The elements of improvement are the individual basic fundamental Operations principle ideas of improvement. Think of these elements of improvement as the building blocks of the various improvement approaches that The various approaches to improvement we shall look at later. Here we explain some, but not all (there are draw from a common group of elements. lots), of the more common elements in use today. Improvement cycles An important element within some improvement approaches is the use of a literally never-ending process of repeatedly questioning and re-questioning the detailed working of a process or activity. This repeated and cyclical questioning is usually summarized by the idea of the improvement cycle, of which there are many, but two are widely used models – the PDCA (or PDSA) cycle (sometimes called the Deming cycle, named after the famous quality ‘guru’, W.E. Deming) and the DMAIC (pro- nounced ‘De-Make’) cycle, made popular by the Six Sigma approach (see later). 554 PART FOUR DEVELOPMENT M16 Operations Management 53961.indd 554 15/03/2019 18:01  Approaches – the underlying beliefs and Improvement Improvement Improvement philosophy of how Approach 1 Approach 2 Approach 3 improvement should be accomplished Elements – the fundamental ideas Improvement Improvement Improvement Improvement Improvement of what improves Element 1 Element 2 Element 3 Element 4 Element 5 operations Techniques – the methods and tools used to find Improvement Improvement Improvement Improvement Improvement improved ways of Technique 1 Technique 2 Technique 3 Technique 4 Technique 5 doing things Managing – how the improvement process itself is resourced and organized Improvement Figure 16.3 How the four aspects of improvement – approaches, elements, techniques and management – relate OPERATIONS IN PRACTICE Anarchy at 6Wonderkinder4 It’s a problem every creative firm faces – how do you organize yourself so you can keep some kind of control over what’s happening in the firm while not inhibiting the creativity of the people whom you are paying to be creative? When 6Wonderkinder, a Berlin-based developer of ‘Wunderlist’, the task management tool, was founded in 2010 with only six people, it was relatively easy to foster a creative and innovative atmosphere. But by the time the company had grown tenfold, it was more diffi- cult to preserve the ‘start-up spirit’. Chad Fowler, the company’s chief technology officer, understands the importance of keeping the innovative culture: ‘Probably every single company wants to maintain the feeling of being in a start-up, no matter how big they get.’ As the company grew it used several mechanisms to preserve the we regularly get the “wow” factor... if everyone acts like ‘start-up spirit’, such as the yearly ‘Wunderkamp’, when a CEO, they make the decisions, [if] they are responsible all staff spend a week away in Bavarian forest cabins or for their own projects, then it completely changes [the] on the Baltic coast, and ‘Sexy Friday’ when developers dynamics.’ The relatively flat hierarchy is also an advan- get a day a week to pursue their own passions, the aim tage in retaining skilled staff in a sector where the being to challenge established patterns of working and competition for the best developers can be fierce. ‘The encourage novel thinking. Christian Reber, the German talent pool is extremely limited. People choose the work- chief executive and co-founder, says: ‘On an assembly line place, especially developers, based more on the working you always get the work you expect. People do the stuff atmosphere – the culture, rather than the salary,’ says you tell them to do. What we, here, try to achieve is that Christian Reber. CHAPTER 16 OPERATIONS IMPROVEMENT 555 M16 Operations Management 53961.indd 555 15/03/2019 18:01  The PDCA (or PDSA) cycle The PDCA cycle model is shown in Figure 16.4(a). It starts with the P (for plan) stage, which involves an examination of the current method or the problem area being studied. This involves collecting and analysing data so as to formulate a plan of action which is intended to improve performance. Once a plan for improvement has been agreed, the next step is the D (for do) stage. This is the implementation stage during which the plan is tried out in the operation. This stage may itself involve a mini-PDCA cycle as the problems of implementation are resolved. Next comes the C (for check) stage where the new implemented solution is evaluated to see whether it has resulted in the expected performance improvement. Some versions of this idea use the term ‘study’ instead of ‘check’ and call the idea the ‘PDSA’ cycle, but the idea is basically the same. Finally, at least for this cycle, comes the A (for act) stage. During this stage, the change is consolidated or standardized if it has been successful. Alternatively, if the change has not been successful, the lessons learned from the ‘trial’ are formalized before the cycle starts again. You may also find this cycle called the Deming cycle, Deming wheel or Shewhart cycle. The DMAIC cycle The DMAIC cycle is in some ways more intuitively obvious than the PDCA cycle in so much as it follows a more ‘experimental’ approach (Figure 16.4(b)). The DMAIC cycle starts with (D) defining the problem or problems, partly to understand the scope of what needs to be done and partly to define exactly the requirements of the process improvement. Often at this stage a formal goal or target for the improvement is set. After definition comes (M) the measurement stage. This stage involves validating the problem to make sure that it really is a problem worth solving, using data to refine the problem and measuring exactly what is happening. Once these measurements have been established, they can be (A) analysed. The analysis stage is sometimes seen as an opportunity to develop hypotheses as to what the root causes of the problem really are. Such hypotheses are validated (or not) by the analysis and the main root causes of the problem identified. Once the causes of the problem are identified, work can begin on (I) improving the process. Ideas are developed to remove the root causes of problems, solutions are tested and those solutions that seem to work are implemented, formalized and results measured. The improved process needs then to be continually monitored and (C) controlled to check that the improved level of perfor- mance is sustaining. After this point, the cycle starts again and defines the problems which are preventing further improvement. Remember though, it is the last point about both cycles that is the most important – the cycle starts again. In a continuous improvement philosophy these cycles quite literally never stop and improvement becomes part of every person’s job. Define Plan Do Control Measure Act Check Improve Analyse (a) (b) Figure 16.4 (a) The plan-do-check-act, or ‘Deming’ improvement cycle, and (b) the define–measure– analyse–improve–control, or DMAIC Six Sigma improvement cycle 556 PART FOUR DEVELOPMENT M16 Operations Management 53961.indd 556 15/03/2019 18:01  A process perspective Even if some improvement approaches do not explicitly or formally include the idea that taking a process perspective should be central to operations improvement, almost all do so implicitly. This has two major advantages. First, it means that improvement can be focused on what actually happens rather than which part of the organization has responsibility for what happens. In other words, if improvement is not reflected in the process of creating products and services, then it is not really improvement as such. Second, as we have mentioned before, all parts of the business man- age processes. This is what we call operations as activity rather than operations as a function. So, if improvement is described in terms of how processes can be made more effective, those messages will have relevance for all the other functions of the business in addition to the operations function. End-to-end processes Some improvement approaches take the process perspective further and prescribe exactly how processes should be organized. One of the more radical prescriptions of business process re-engineering (BPR, see later), for example, is the idea that operations should be organized around the total process which adds value for customers, rather than the functions or activities which perform the various stages of the value- adding activity. We have already pointed out the difference between conventional processes within a spe- cialist function, and an end-to-end business process in Chapter 1. Identified customer needs are entirely fulfilled by an ‘end-to-end’ business process. In fact, the processes are designed specifically to do this, which is why they will often cut across conventional organizational boundaries. Figure 16.5 illustrates this idea. Evidence-based problem solving In recent years there has been a resurgence of the use of quantitative techniques in improvement approaches. Six Sigma (see later) in particular promotes systematic use of (preferably quantitative) evidence. Yet Six Sigma is not the first of the improvement approaches to use quantitative methods (some of the total quality management (TQM) gurus promoted statistical process control, for exam- ple), although it has done a lot to emphasize the use of quantitative evidence. In fact, much of the considerable training required by Six Sigma consultants is devoted to mastering quantitative analyti- cal techniques. However, the statistical methods used in improvement activities do not always reflect conventional academic statistical knowledge as such. They emphasize observational methods of collecting data and the use of experimentation to examine hypothesis. Techniques include graphical Functionally based processes Function 1 Function 2 Function 3 Function 4 End-to-end process 1 Customer needs fulfilled Business processes Customer needs End-to-end process 2 End-to-end process 3 Figure 16.5 BPR advocates reorganizing (re-engineering) micro operations to reflect the natural customer- focused business processes CHAPTER 16 OPERATIONS IMPROVEMENT 557 M16 Operations Management 53961.indd 557 15/03/2019 18:01  methods, analysis of variance, and two-level factorial experiment design. Underlying the use of these techniques is an emphasis on the scientific method, responding only to hard evidence, and using statistical software to facilitate analysis. Customer centricity There is little point in improvement unless it meets the requirements of the customers. However, in most improvement approaches, meeting the expectations of customers means more than this. It involves the whole organization in understanding the central importance of customers to its success and even to its survival. Customers are seen not as being external to the organization but as the most important part of it. However, the idea of being customer centric does not mean that customers must be provided with everything that they want. Although ‘What’s good for customers’ may frequently be the same as ‘What’s good for the business’, it is not always. Operations managers are always having to strike a balance between what customers would like and what the operation can afford (or wants) to do. Voice of the customer (VOC) The ‘voice of the customer’ (VOC) is an idea that is closely related to the idea of customer centricity. The term means capturing a customer’s requirements, expectations, perceptions and preferences in some depth. Sometimes a VOC exercise is done as part of new service and product development as part of qual- ity function deployment (QFD), which was explained in Chapter 4. Sometimes it is part of a more gen- eral improvement activity. There are several ways to do this, but it usually involves using market research to derive a comprehensive set of customer requirements, which is ordered into a hierarchical structure, often prioritized to indicate the relative importance of different aspects of operations performance. Systems and procedures Improvement is not something that happens simply by getting everyone to ‘think improvement’. Some type of system that supports the improvement effort may be needed. An improvement system (sometimes called a ‘quality system’) is defined as: ‘the organizational structure, responsibilities, procedures, processes and resources for implementing quality management’.5 It should ‘define and cover all facets of an organization’s operation, from identifying and meeting the needs and require- ments of customers, design, planning, purchasing, manufacturing, packaging, storage, delivery and service, together with all relevant activities carried out within these functions. It deals with organ- ization, responsibilities, procedures and processes. Put simply [it] is good management practice.’6 Reduce process variation Processes change over time, as does their performance. Some aspect of process performance (usually an important one) is measured periodically (either as a single measurement or as a small sample of measurements). These are then plotted on a simple time-scale. This has a number of advantages. The first is to check that the performance of the process is, in itself, acceptable (capable). They can also be used to check if process performance is changing over time, and to check on the extent of the variation in process performance. In Chapter 17 we illustrate how random variation in the per- formance of any process can obscure what is really happening within the process. So a potentially useful method of identifying improvement opportunities is to try and identify the sources of random variation in process performance. Synchronized flow This is another idea that we have seen before – in Chapter 15, as part of the lean philosophy. Synchronized flow means that items in a process, operation or supply network flow smoothly and with even velocity from start to finish. This is a function of how inventory accumulates within the 558 PART FOUR DEVELOPMENT M16 Operations Management 53961.indd 558 15/03/2019 18:01  operation. Whether inventory is accumulated in order to smooth differences between demand and supply, or as a contingency against unexpected delays, or simply to batch for purposes of process- ing or movement, it all means that flow becomes asynchronous. It waits as inventory rather than progressing smoothly on. Once this state of perfect synchronization of flow has been achieved, it becomes easier to expose any irregularities of flow which may be the symptoms of more deep-rooted underlying problems. OPERATIONS IN PRACTICE Improvement at Heineken7 Heineken International produces and sells beer around the world with growing sales, especially in its Heineken and Amstel brands. However, sales growth can put pressure on any company’s operations. For example, Heineken’s Zoeterwoude facility, a packaging plant that fills bottles and cans in The Netherlands, had to increase its volume by between 8 and 10 per cent per year on a regular basis. The company faced two challenges. First, it needed to improve its operations processes to reduce its costs. Second, because it would have taken a year to build a new packaging line, it needed to improve the efficiency of its existing lines in order to increase its capacity. So, improving line efficiency was vital if the plant was to cut its costs and create the extra capacity it needed to delay investment in a new packaging line. The objective of the improvement project was to problems. There was poor communication between the improve the equipment efficiency of the operation. Setting various departments and job grades. For example, mainte- a target of 20 per cent improvement was seen as important nance staff believed that production stops were caused by because it was challenging yet achievable as well as meet- operating errors, while operators were of the opinion that ing cost and capacity objectives. It was also decided to poor maintenance was the cause.’ The use of better infor- focus the improvement project around two themes. First: mation, analysis and improvement techniques helped the first, obtaining accurate operational data that could be staff to identify and treat the root causes of problems. converted into useful business information on which With many potential improvements to make, staff teams improvement decisions could be based; and second, chang- were encouraged to set priorities that would reflect the ing the culture of the operation to promote fast and overall improvement target. There was also widespread use effective decision making. Having access to accurate and of benchmarking performance against targets periodically up-to-date information would help people at all levels in so that progress could be reviewed. the plant, as well as encouraging staff to focus on the At the end of 12 months, the improvement project had improvement of how they do their job rather than just achieved its objectives of a 20 per cent improvement in all ‘doing the job’. Before the improvement, project staff at the plant’s packaging lines. This allowed it to increase the the Zoeterwoude plant had approached problem solving volume of its exports and cut its costs significantly. Not as an ad hoc activity, only to be done when circumstances only that, but other aspects of the plant’s performance made it unavoidable. The improvement initiative taught improved. Up to that point, the plant had gained a repu- the staff to use various problem-solving techniques such tation for poor delivery dependability. After the project it as cause–effect and Pareto diagrams (discussed later in this was seen by the other operations in its supply chain as a chapter). Other techniques included the analysis of much more reliable partner. Yet Wilbert Raaijmakers still improved equipment maintenance and failure mode and sees room for improvement: ‘The optimization of an effective analysis (FMEA). (Both are discussed in Chapter 18.) organization is a never-ending process. If you sit back and ‘Until we started using these techniques,’ says Wilbert do the same thing tomorrow as you did today, you’ll never Raaijmakers, Heineken Netherlands Brewery Director, make it. We must remain alert to the latest developments ‘there was little consent regarding what was causing any and stress the resulting information to its full potential.’ CHAPTER 16 OPERATIONS IMPROVEMENT 559 M16 Operations Management 53961.indd 559 15/03/2019 18:01  Emphasize education/training Several improvement approaches stress the idea that structured training and organization of improvement should be central to improvement. Not only should the techniques of improvement be fully understood by everyone engaged in the improvement process, the business and organiza- tional context of improvement should also be understood. After all, how can one improve with- out knowing what kind of improvement would best benefit the organization and its customers? Furthermore, education and training have an important part to play in motivating all staff towards seeing improvement as a worthwhile activity. Some improvement approaches in particular place great emphasis on formal education. Six Sigma, for example (see later), and its proponents often mandate a minimum level of training (measured in hours) that they deem necessary before improve- ment projects should be undertaken. Perfection is the goal Almost all organization-wide improvement programmes will have some kind of goal or target that the improvement effort should achieve. And while targets can be set in many different ways, some improvement authorities hold that measuring process performance against some kind of absolute target does most for encouraging improvement. By an ‘absolute target’ one literally means the theo- retical level of perfection: for example, zero errors, instant delivery, delivery absolutely when prom- ised, infinite flexibility, zero waste, etc. Of course, in reality such perfection may never be achievable. That is not the point. What is important is that current performance can be calibrated against this target of perfection in order to indicate how much more improvement is possible. Improving (for example) delivery accuracy by 5 per cent may seem good until it is realized that only an improve- ment of 30 per cent would eliminate all late deliveries. Waste identification All improvement approaches aspire to eliminate waste. In fact any improvement implies that some waste has been eliminated, where waste is any activity that does not add value. But the identification and elimination of waste is sometimes a central feature. For example, as we discussed in Chapter 15, it is arguably the most significant part of the lean philosophy. Include everybody Harnessing the skills and enthusiasm of every person and all parts of the organization seems an obvi- ous principle of improvement. The phrase ‘quality at source’ is sometimes used, stressing the impact that each individual has on improvement. The contribution of all individuals in the organization may go beyond understanding their contribution as ‘not making mistakes’. Individuals are expected to bring something positive to improving the way they perform their jobs. The principles of ‘empow- erment’ are frequently cited as supporting this aspect of improvement. When Japanese improvement practices first began to migrate in the late 1970s, this idea seemed even more radical. Yet now it is generally accepted that individual creativity and effort from all staff represents a valuable source of development. However, not all improvement approaches have adopted this idea. Some authorities believe that a small number of internal improvement consultants or specialists offer a better method of organizing improvement. However, these two ideas are not incompatible. Even with improvement specialists used to lead improvement efforts, the staff who actually operate the process can still be a valuable source of information and improvement ideas. Develop internal customer–supplier relationships One of the best ways to ensure that external customers are satisfied is to establish the idea that every part of the organization contributes to external customer satisfaction by satisfying its own internal customers. This idea was introduced in Chapter 17, as was the related concept of service 560 PART FOUR DEVELOPMENT M16 Operations Management 53961.indd 560 15/03/2019 18:01  level agreements (SLAs). It means stressing that each process in an operation has a responsibility to manage these internal customer–supplier relationships. They do this primarily by defining as clearly as possible what their own and their customers’ requirements are. In effect this means defining what constitutes ‘error-free’ service – the quality, speed, dependability and flexibility required by internal customers. What are the broad approaches to improvement? By the broad approaches to improvement we mean the underlying sets of beliefs that form a coherent philosophy and shape how improvement should be accomplished. But do not think that approaches to improvement are different in all respects; there are many elements that are common to several approaches. Some of these approaches have been, or will be, described in other chapters. For example, both lean operations (Chapter 15) and TQM (in Chapter 17) are discussed in some detail. So, in this section we will only briefly examine TQM and lean oper- Operations principle ations, specifically from an improvement perspective, and also There is no single universal approach to add two further approaches – business process re-engineering improvement. (BPR) and Six Sigma. Total quality management as an improvement approach Total quality management was one of the earliest management ‘fashions’. Its peak of popularity was in the late 1980s and early 1990s. As such it has suffered from something of a backlash in recent years. Yet the general precepts and principles that constitute TQM are still hugely relevant. Few, if any, managers have not heard of TQM and its impact on improvement. Indeed, TQM has come to be seen as an approach to the way operations and processes should be managed and improved, generally. Even if TQM is not the label given to an improvement initiative, many of its elements will almost certainly have become routine. It is best thought of as a philosophy of how to approach improvement. This philosophy, above everything, stresses the ‘total’ of TQM. It is an approach that puts quality (and indeed improvement generally) at the heart of everything that is done by an oper- ation. As a reminder, this totality can be summarized by the way TQM lays particular stress on the following elements (see Chapter 17): ▶ meeting the needs and expectations of customers; ▶ improvement covers all parts of the organization (and should be group-based); ▶ improvement includes every person in the organization (and success is recognized); ▶ including all costs of quality; ▶ getting things ‘right first time’, i.e. designing-in quality rather than inspecting it in; ▶ developing the systems and procedures which support improvement. Lean as an improvement approach The idea of ‘lean’ spread beyond its Japanese roots and became fashionable in the West at about the same time as TQM. And although its popularity has not declined to the same extent as TQM, over 25 years of experience have diminished the excitement once associated with the approach. But, unlike TQM, it was seen initially as an approach to be used exclusively in manufacturing. Now, lean has become fashionable as an approach that can be applied in service operations. As a reminder (see Chapter 15), the lean approach aims to meet demand instantaneously, with perfect quality and no waste’. The key elements of the lean when used as an improvement approach are as follows: ▶ customer-centricity; ▶ internal customer–supplier relationships; ▶ the goal of perfection; CHAPTER 16 OPERATIONS IMPROVEMENT 561 M16 Operations Management 53961.indd 561 15/03/2019 18:01  ▶ synchronized flow; ▶ reduced variation; ▶ including all people; ▶ waste elimination. Some organizations, especially now that lean is being applied more widely in service operations, view waste elimination as the most important of all the elements of the lean approach. In fact, they sometimes see the lean approach as consisting almost exclusively of waste elimination. What they fail to realize is that effective waste elimination is best achieved through changes in behaviour. It is the behavioural change brought about through synchronized flow and customer triggering that provides the window onto exposing and eliminating waste. Business process re-engineering (BPR) The idea of business process re-engineering originated in the early 1990s when Michael Hammer proposed that rather than using technology to automate work, it would be better applied to doing away with the need for the work in the first place (‘don’t automate, obliterate’). In doing this he was warning against establishing non-value-added work within an information technology system where it would be even more difficult to identify and eliminate. All work, he said, should be examined for whether it adds value for the customer and, if not, processes should be redesigned to eliminate it. In doing this BPR was echoing similar objectives in both scientific management and more recently lean approaches. But BPR, unlike those two earlier approaches, advocated radical changes rather than incremental changes to processes. Shortly after Hammer’s article, other authors developed the ideas, again the majority of them stressing the importance of a radical approach to elimination of non-value-added work. BPR has been defined as: ‘the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed’.8 But there is far more to it than that. In fact, BPR was a blend of a number of ideas which had been current in operations management for some time. Lean concepts, process flow charting, critical examination in method study, operations network management and customer-focused operations all contribute to the BPR concept. It was the potential of information technologies to enable the fundamental redesign of processes, however, which acted as the catalyst in bringing these ideas together. It was information technology that allowed radical process redesign, even if many of the methods used to achieve the redesign had been explored before. The main prin- ciples of BPR can be summarized in the following points. ▶ Rethink business processes in a cross-functional manner which organizes work around the natural flow of information (or materials or customers). ▶ Strive for dramatic improvements in performance by radically rethinking and redesigning the process. ▶ Have those who use the output from a process, perform the process. Check to see if all internal customers can be their own supplier rather than depending on another function in the business to supply them (which takes longer and separates out the stages in the process). ▶ Put decision points where the work is performed. Do not separate those who do the work from those who control and manage the work. Example We can illustrate this idea of reorganizing (or re-engineering) around business processes through the following simple example. Figure 16.6(a) shows the traditional organization of a trading com- pany which purchases consumer goods from several suppliers, stores them, and sells them on to retail outlets. At the heart of the operation is the warehouse which receives the goods, stores them, and packs and dispatches them when they are required by customers. Orders for more stock are placed by Purchasing, which also takes charge of materials planning and stock control. Purchasing 562 PART FOUR DEVELOPMENT M16 Operations Management 53961.indd 562 15/03/2019 18:01  buys the goods based on a forecast which is prepared by Marketing, which takes advice from the Sales department, which is processing customers’ orders. When a customer does place an order, it is the Sales department’s job to instruct the warehouse to pack and dispatch the order and tell the Finance department to invoice the customer for the goods. So, traditionally, five departments (each a micro operation) have between them organized the flow of materials and information within the total operation. But at each interface between the departments there is the possibility of errors and miscommunication arising. Furthermore, who is responsible for looking after the customer’s needs? Currently, three separate departments all have dealings with the customer. Similarly, who is respon- sible for liaising with suppliers? This time two departments have contact with suppliers. (a) Marketing Sales Customer Forecasting order entry Finance Materials Allocation pick planning Note print Invoicing Customers Suppliers Purchasing Purchase order processing Goods Stores Pick and management pack Dispatch receiving Warehouse operations (b) Customer Forecasting order entry Materials Allocation pick planning Note print Invoicing Customers Suppliers Purchase order processing Customer service operations Goods Stores Pick and management pack Dispatch receiving Purchasing operations Figure 16.6 (a) Before and (b) after re-engineering a consumer goods trading company CHAPTER 16 OPERATIONS IMPROVEMENT 563 M16 Operations Management 53961.indd 563 15/03/2019 18:01  Critical commentary BPR has aroused considerable controversy, mainly because BPR sometimes looks only at work activities rather than at the people who perform the work. Because of this, people become ‘cogs in a machine’. Many critics equate BPR with the much earlier principles of scientific management, pejoratively known as ‘Taylorism’. Generally these critics mean that BPR is overly harsh in the way it views human resources. Certainly there is evidence that BPR is often accompanied by a significant reduction in staff. Studies at the time when BPR was at its peak often revealed that the majority of BPR projects could reduce staff levels by over 20 per cent.9 Often BPR was viewed as merely an excuse for getting rid of staff. Companies that wished to ‘downsize’ were using BPR as the pretext, putting the short-term interests of the shareholders of the company above either their longer-term interests or the interests of the company’s employees. Moreover, a combination of radical redesign together with downsizing could mean that the essential core of experience was lost from the operation. This left it vulnerable to any marked turbulence since it no longer possessed the knowledge and experience of how to cope with unexpected changes. Eventually the company reorganized around two essential business processes. The first process (called purchasing operations) dealt with everything concerning relationships with suppliers. It was this process’s focused and unambiguous responsibility to develop good working relationships with suppliers. The other business process (called customer service operations) had total responsibility for satisfying customers’ needs. This included speaking ‘with one voice’ to the customer. Six Sigma The Six Sigma approach was first popularized by Motorola, the electronics and communications systems company. When it set its quality objective as ‘total customer satisfaction’ in the 1980s, it started to explore what the slogan would mean to its operations processes. It decided that true customer satisfaction would only be achieved when its products were delivered when promised, with no defects, with no early-life failures and when the product did not fail excessively in service. To achieve this, Motorola initially focused on removing manufacturing defects. However, it soon came to realize that many problems were caused by latent defects, hidden within the design of its products. These may not show initially but eventually could cause failure in the field. The only way to eliminate these defects was to make sure that design specifications were tight (i.e. narrow toler- ances) and its processes very capable. Motorola’s Six Sigma quality concept was so named because it required the natural variation of processes ({ 3 standard deviations) to be half their specification range. In other words, the specifi- cation range of any part of a product or service should be { 6 the standard deviation of the process (see Chapter 17). The Greek letter sigma (s) is often used to indicate the standard deviation of a process, hence the Six Sigma label. Figure 16.7 illustrates the effect of progressively narrowing process variation on the number of defects produced by the process, in terms of defects per million. The defects per million measure is used within the Six Sigma approach to emphasize the drive towards a virtually zero-defect objective.9 Now the definition of Six Sigma has widened to well beyond this rather narrow statistical perspective. General Electric (GE), which was probably the best known of the early adopters of Six Sigma, defined it as ‘A disciplined methodology of defining, measuring, analysing, improving, and controlling the quality in every one of the company’s products, processes, and transactions – with the ultimate goal of virtually eliminating all defects’. So, now Six Sigma should be seen as a broad improvement concept rather than a simple examination of process varia- tion, even though this is still an important part of process control, learning and improvement. 564 PART FOUR DEVELOPMENT M16 Operations Management 53961.indd 564 15/03/2019 18:01  3 sigma process 4 sigma process 5 sigma process 6 sigma process variation variation variation variation Process variation Process variation Process variation Process variation LSL USL LSL USL LSL USL LSL USL = 66,800 defects per = 6,200 defects per = 230 defects per = 3.4 defects per million opportunities million opportunities million opportunities million opportunities Figure 16.7 Process variation and its impact on process defects per million Measuring performance The Six Sigma approach uses a number of related measures to assess the performance of operations processes. ▶ A defect – a failure to meet customer required performance (defining performance measures from a customer’s perspective is an important part of the Six Sigma approach). ▶ A defect unit or item – any unit of output that contains a defect (i.e. only units of output with no defects are not defective; defective units will have one or more than one defects). ▶ A defect opportunity – the number of different ways a unit of output can fail to meet customer requirements (simple products or services will have few defect opportunities, but very complex products or services may have hundreds of different ways of being defective). ▶ Proportion defective – the percentage or fraction of units that have one or more defect. ▶ Process yield – the percentage or fraction of total units produced by a process that are defect free (that is, 1 – proportion defective). ▶ Defect per unit (DPU) – the average number of defects on a unit of output (the number of defects divided by the number of items produced). ▶ Defects per opportunity – the proportion or percentage of defects divided by the total number of defect opportunities (the number of defects divided by (the number items produced * the number of opportunities per item)). ▶ Defects per million opportunities (DPMO) – the number of defects which the process will produce if there were one million opportunities to do so. ▶ The Sigma measurement10 – derived from the DPMO, this is the number of standard deviations of the process variability that will fit within the customer specification limits. Although the scope of Six Sigma is disputed, among elements frequently associated with Six Sigma are the following: ▶ Customer-driven objectives – Six Sigma is sometimes defined as ‘the process of comparing process outputs against customer requirements’. It uses a number of measures to assess the performance of operations processes. In particular, it expresses performance in terms of defects per million opportunities (DPMO). ▶ Use of evidence – Although Six Sigma is not the first of the new approaches to operations to use statistical methods, it has done a lot to emphasize the use of quantitative evidence. ▶ Structured improvement cycle – The structured improvement cycle used in Six Sigma is the DMAIC cycle. ▶ Process capability and control – Not surprisingly, given its origins, process capability and control are important within the Six Sigma approach. CHAPTER 16 OPERATIONS IMPROVEMENT 565 M16 Operations Management 53961.indd 565 15/03/2019 18:01  Worked example An insurance process checks details of insurance claims and arranges for customers to be paid. It samples 300 claims at random at the end of the process. It finds that 51 claims had one or more defects and there were 74 defects in total. Four types of error were observed: coding errors, policy conditions errors, liability errors and notification errors. Number of defects Proportion defective = Number of units processed 51 = = 0.17 (17% defective) 300 Yield = 1 - proportion of defectives = 1 - 0.17 = 0.83 or (83% yield) Number of defects Defects per unit = Number of units processed 74 = = 0.247 (or 24.7) DPO 300 Number of defects Defects per opportunity = Number of units produced * Number of opportunities 74 = = 0.062 DPO 300 * 4 Defects per million opportunities = DPO * 106 = 62,000 DPMO ▶ Process design – Latterly Six Sigma proponents also include process design into the collection of elements that define the Six Sigma approach. ▶ Structured training and organization of improvement – The Six Sigma approach holds that improvement initiatives can only be successful if significant resources and training are devoted to their management. The ‘marshal arts’ analogy The terms that have become associated with Six Sigma experts (and denote their level of expertise) are Master Black Belt, Black Belt and Green Belt. Master Black Belts are experts in the use of Six Sigma tools and techniques as well as how such techniques can be used and implemented. Primarily Master Black Belts are seen as teachers who can not only guide improvement projects, but also coach and mentor Black Belts and Green Belts who are closer to the day-to-day improvement activity. They are expected to have the quantitative analytical skills to help with Six Sigma techniques and also the organizational and interpersonal skills to teach and mentor. Given their responsibilities, it is expected that Master Black Belts are employed full time on their improvement activities. Black Belts can take a direct hand in organizing improvement teams. Like Master Black Belts, Black Belts are expected to develop their quantitative analytical skills and also act as coaches for Green Belts. Black Belts are dedicated full time to improvement, and although opinions vary on how many Black Belts should be employed in an operation, some organizations recommend one Black Belt for every 100 employees. Green Belts work within improvement teams, possibly as team leaders. They have significant amounts 566 PART FOUR DEVELOPMENT M16 Operations Management 53961.indd 566 15/03/2019 18:01  of training, although less than Black Belts. Green Belts are not full-time positions; they have normal day-to-day process responsibilities but are expected to spend at least 20 per cent of their time on improvement projects. Differences and similarities In this chapter we have chosen to very briefly explain four improvement approaches. It could have been more. Enterprise resource planning (ERP, see Chapter 14), total preventive maintenance (TPM, see Chapter 18), Lean Sigma (a combination of lean and Six Sigma), and others could have been added. But these four constitute a representative sample of the most commonly used approaches. Nor do we have the space to describe them fully. But there are clearly some common elements between some of these approaches that we have described. Yet there are also differences between them in OPERATIONS IN PRACTICE Six Sigma at Wipro11 There are many companies that have benefited from Six Sigma-based improvement, but few have gone on to be able to sell the expertise that they gathered from applying it to themselves. Wipro is one of these. Wipro is a global information technology, consulting and outsourcing company with 145,000 employees serving over 900 clients in 60 countries. It provides a range of business services from ‘business process outsourcing’ (doing processing for other firms) to ‘software development’, and from ‘Information Technology consulting’ to ‘cloud computing’. (Surprisingly for a global IT services giant Wipro was actu- ally started in 1945 in India as a vegetable oil company.) Wipro also has one of the most developed Six Sigma programmes in the IT and consulting industries, especially in its software development activities where key challenges included reducing the data transfer time within the process, reducing the risk of failures and errors, and avoid- ing interruption due to network downtime. For Wipro, Six Sigma simply means a measure of quality that strives for near perfection. It means: ▶ having products and services that meet global standards; ▶ ensuring robust processes within the organization; ▶ Consistently meeting and exceeding customer expectations; implementation was measured in terms of progress ▶ establishing a quality culture throughout the business. towards what the customer finds important (and what the Individual Six Sigma projects were selected on the basis customer pays for). This involved improving performance of their probability of success and were completed rela- through a precise quantitative understanding of the tively quickly. This gave Wipro the opportunity to assess customer’s requirements. Wipro says that its adoption of the success and learn from any problems that had occurred. Six Sigma has been an unquestionable success, whether in Projects were identified on the basis of the problem areas terms of customer satisfaction, improvement in internal under each of the critical Business Processes that could performance, or the improvement of shareowner value. adversely impact business performance. Because Wipro However, as the pioneers of Six Sigma in India, Wipro’s took a customer-focused definition of quality, Six Sigma implementation of Six Sigma was not without ▼ CHAPTER 16 OPERATIONS IMPROVEMENT 567 M16 Operations Management 53961.indd 567 15/03/2019 18:01  difficulties – and, they stress, opportunities for learning Also, the company learned not to underestimate the amount from them. To begin with, it took time to build the required of training that would be required. To build a team of profes-