Wrap Up

1
Wrap Up

• Levers for Improving Process Performance

2
Strategic Framework

• What is improvement?
• Strategic position
• Shouldice, Wriston
• Targeting improvement
• Link to financials
• CRU Computer Rentals

3
Process Flow Measures

• Key concepts Flow time, inventory, throughput,
  process cost, quality.
• Key relation Inventory Flow time ? throughput
• Key management activity Select process flow
  measures to manage for improvement.
• Key metric Net present value, return on total
  assets.
• The basic managerial levers for process
  improvement are
• 1. Increase in throughput (decrease in flow
  time).
• 2. Decrease in inventory (decrease in flow time).
• 3. Decrease in process cost.
• 4. Improve quality

4
Levers for Managing Theoretical Flow Time

• Key concepts Critical path, critical activity,
  theoretical flow time.
• Key management activity Identify and manage
  activities on all critical paths.
• Key metric Length of critical paths.
• 1. Reduce the work content of an activity on the
  critical path.
• Eliminate non value-adding aspects of the
  activity (\work smarter").
• Increase the speed at which the activity is done
  (\work faster").
• Reduce the number of repeat activities (\do it
  right the first time").
• 2. Move some of the work content off the
  critical path.
• Move work from a critical path to a
  non-critical path.
• Move work from a critical path to the \outer
  loop" (pre- or post-processing).

5
Levers for Managing Theoretical Capacity

• Key concepts Throughput, Capacity, bottleneck
  resource
• Key management activity Identify and manage
  bottleneck resource(s).
• Key metric Contribution margin per unit time on
  bottleneck(s).
• The basic approaches to increasing the
  theoretical capacity of a resource pool can be
  summarized as
• Decrease the unit load on the bottleneck
  resource.
• Work smarter, faster, do it right the first time,
  or change the product mix.
• Move some of the work content to a non
  bottleneck resource.
• Increase the size of load batches at a bottleneck
  resource.
• Increase the scheduled availability of a
  bottleneck resource (work longer").
• Increase the number of bottleneck resource units
  (scale of operation"),

6
Levers for Reducing Waiting Time (Inventory
related)

• Key concepts Waiting time, flow time efficiency,
  cycle inventory, safety inventory, safety
  capacity.
• Key management activity Manage buffers to reduce
  waiting time.
• Key metric Waiting time in buffers.
• The basic approaches to reducing waiting time can
  be summarized as
• 1. Reduce cycle inventory (reduce batch size).
• Reduce setup or ordering cost per batch.
• Reduce forward buying.
• 2. Reduce safety inventory.
• Reduce demand variability.
• Reduce the replenishment lead time.
• Reduce the variability in replenishment lead
  time.
• Pool safety inventory.
• Physical centralization
• Exploit product substitution.
• Use common components.
• Postpone the product differentiation closer to
  the point of demand.

7
Levers for reducing Waiting Time (Capacity
Related)

• 3. Manage Safety Capacity
• Increase safety capacity.
• Decrease variability in arrivals and service.
• Pool available safety capacity.
• 4. Synchronize flows
• Manage capacity to synchronize with demand.
• Manage demand to synchronize with available
  capacity.
• Synchronize flows within the process.
• 5. Manage the psychological perceptions of the
  customers to reduce the cost of waiting.

8
Levers for Lean Operations

• Key concepts Waste, non-value adding activities,
  cellular layout, demand pull, quality at source.
• Key management activity Synchronize process
  flows while maintaining efficiency. Set up a
  framework for process improvement.
• 1. Synchronizing flows in a plant.
• Reduce batch size (transfer and production)
• Level Production and Transfer Batch size
  reduction, Heijunka.
• Pull rather than push work
• Quality at Source
• Flexible resources
• Cellular layout.
• 2. Continuous improvement How to increase
  visibility of waste at low cost?

9
Levers for Controlling Process Performance

• Key concepts Normal and abnormal variability,
  process capability.
• Key management activity Monitor and adjust
  process performance dynamically over time. Reduce
  variability and its effects.
• 1. Measure, prioritize, and analyze variability
  in key performance measures over time.
• 2. Feedback control to limit abnormal variability
• Set control limits of acceptable variability in
  key performance measures.
• Monitor actual performance and correct any
  abnormal variability.
• 3. Decrease normal process variability / increase
  process capability.
• Design for Processing (Simplify, Standardize, and
  Mistake Proof).
• Fewer steps