83697609 6 lo001-module-handbook-improving-business-performance-edit

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UNIVERSITY OF DERBY
The Derby Business School
6LO001
Improving Business Performance
MODULE HANDBOOK
Polina Baranova
January 2012
Teaching Team: Room Telephone Email
Polina Baranova E305 1192 p.baranova@derby.ac.uk
John Day E301b 1436 j.day@derby.ac.uk
Time Room
Lecture Thursday 12.00 – 13.00 N405
1

Tutorial Thursday 13.00 – 14.00 N405
14.00 – 15.00 N504
2

6IM005 Improving Business performance
Week Date Topic Content
1 26.01.12
Module Introduction and
Operations Strategy
Introduction & context
2 2.02.12 BPR
Background / Hammer and Champey’s argument /
Principles / Deciding on BPR / BPR
Methodology / Successful BPR / Unsuccessful
BPR
3 9.02.12 Kaizen
Background / Concepts / PDCA cycle / Tools
and Techniques / Managing change &
implementation / strategies for Kaizen
4 16.02.12
Managing Quality and the Systems
Thinking
TQM and the John Seddon approach to
System Thinking
5 23.02.12 Improvement in Action Sid’s Heroes example
6 1.03.12 Supply Chain Management Group Presentations
7 8.03.12 Lean Synchronization Group Presentations
8 15.03.12 People, Jobs and Organisation
Group Presentations
9 22.03.12 Project Management 1 Project Management network analysis
EASTER BREAK
10 19.04.12 Project Management 2
Project management activities / dealing with
uncertainty / prioritisation / feasibility,
vulnerability and acceptability
11 26.04.12 Assignment Preparation
12 3.05.12 Assignment Hand in May 3rd of 2012
MODULE DESCRIPTION
Operations Strategy lies at the heart of how organisations manage their strategic intent in practice,
and is the context within which managers make strategic decisions. Operations strategy is central,
ubiquitous and vital to any organisations sustained success.
Improvements are core to the operations strategy of organisations, no matter how well they are
managed. They drive initiatives to breach the gap between current and required performance of
organisations to achieve and sustain a competitive advantage in the long-term.
The key components of the improvement cycle of an organisation will include:
• understanding how an organisation currently performs and what its overall strategy;
• identification and prioritisation areas of improvement;
• selection of the most appropriate improvement path, its planning and implementation;
• selection of the appropriate tools and techniques to facilitate improvement;
• reviewing the outcomes of improvement and evaluation of the progress made;
• formalisation of improvement initiatives in organisational practices, processes and
systems.
This improvement cycle requires development and understanding of the ways in which resources can
be measured, allocated to processes and controlled, the ways in which businesses seek to manage
3

change through continuous improvement (Kaizen) and / or Business Process Re-engineering (BPR),
and the way in which project management and control methodologies enable the change process.
This module will allow students to develop an appreciation for continuous improvements efforts
required my managers to ensure the success of operational and organisational strategies. They will be
introduced to a number of theoretical, methodological and practical approaches and techniques to
improvement facilitation and implementation. Students will be introduced to the "cutting edge"
improvement philosophy - Systems Thinking - which often addresses problems of transformation,
change and redesign in organisations. It provides important connections between systems thinking,
the subject (organisation) and study of organisational change.
LEARNING OUTCOMES
Upon completion of this module students will be able to:
1. To appreciate the contribution of the operations function within the formulation of business
strategy
2. To analyse various business situations and recommend improvements using relevant approaches
that meet the business needs
3. To apply the concepts of project management in business improvement and to be able to plan a
project using appropriate computer software
INDICATIVE CONTENT / AREAS OF STUDY
• What is strategy?
• The strategic role and objectives of operations
• The role of systems thinking
• Understanding business needs
• Identifying the need for change
• The Kaizen approach to change - tools, techniques and applicability
• The Business Process Re-engineering approach to change- tools, techniques and applicability
• Quality Initiatives, ISO9001
• The prioritisation of improvements
• Project management
• Network planning and Gantt charts
• Microsoft Project
RESOURCES
Key Texts:
Slack N, Chambers S, Johnston R, (2009), Operations Management (6th
Edition), Financial
Times Pitman Publishing. (Although the 5th
edition of Slack is recommended, any other of the
editions will be ok to use.)
Bruce A, and Langdon K (2000), Project Management, Dorling Kindersley
Imai M, (1997), Gemba Kaizen: A Commonsense, Low-Cost Approach to Management,
McGraw Hill
Peppard J, and Rowland P (1995), The Essence of Business Process Engineering, Prentice
Hall
Other useful Text books:
Baker S, Baker K (2000), The Complete Idiot's Guide to Project Management – Alpha Books
Heizer J. and Render B. (2005), Operations management (8th
edition), Prentice Hall
4

Hill T, (2005), Operations management (2nd
edition), Palgrave
Lockyer K, Gordon J, (1996), Project management and project network techniques (6th edition),
Pitman Publishing
Russell R S, Taylor B W, (2006), Operations management (5th
edition), Wiley
Journals and other sources of Resources through the University:
Learning Centre Resources, Videos, C-D Roms and a wide range of Books on 1st Floor shelves. In
particular Databases accessed via the LIBRARY RESOURCES PAGES, such as ANBAR,
EMERALD and GENERAL BUSINESS INDEX.
Learning Centre contact for resources- Chris Martindale. He is very helpful and knowledgeable,
please take advantage of this.
Internet:
Internet Learning Materials for MBA Students:
http://www.bized.co.uk/
Open Learning Space – the Open University
http://www.open.ac.uk/openlearn/home.php
Institute of Operations Management
http://www.iomnet.org.uk/
European Operations Management Association
http://www.euroma-online.org/r/default.asp?iId=IDIDI
Intute – Business and Management
http://www.intute.ac.uk/socialsciences/business/
Project Management Institute
http://www.pmi.org/
ISO
http://www.iso.ch/
BPR Online Learning Centre
http://www.prosci.com/
Brint.com
http://www.brint.com/BPR.htm
ASSESSMENT METHOD
Assessment Weighting: 100% Coursework
CW1: 50% weighting Learning outcome to be assessed: 1 & 2
This will be a case study based group presentation and group report.
CW2: 50% weighting Learning outcome to be assessed: 3
This will be an individual report and project plan based on the group presentation above.
In order to fulfil the requirements of your Personnel Development Plan (PDP) you may wish to
include a personal reflection on the process of managing your learning on this module. If you would
like to include this as an appendix to your individual assignment then you can receive feedback on
your reflection. This will not count towards your overall mark or the word count.
ATTENDANCE
Your Participation Contract, which you signed on enrolment, states that attendance at lectures and
tutorials is mandatory. Your participation contract is considered breached if you fail to attend any 3
sessions of one of the components of the module without mitigating circumstances. If you are in
breach of the contract then you may have your enrolment on the module terminated.
5

Group Assignment (50%)
Using the SSC Case Study provided:
• Evaluate how it is currently performing and establish the areas that require improvement
(20%)
• Put forward a case for using BPR as the means for delivering the required improvements for
the organisation, identifying the benefits and disadvantages of using this method. (20%)
• Put forward a case for using Kaizen as the means for delivering the required improvements
for the organisation, identifying the benefits and disadvantages of using this method. (20%)
• Recommend your choice of improvement method(s), giving reasons. (20%)
• Recommend what role the operations function should have in the development of the SSC
strategy, and explain the benefits to SSC of your recommendations. (20%)
The deliverables are to be an 8 minute group presentation together with a 1,000 to 1,500 word
group report identifying all the required changes, your method of change, and a justification for your
choice of method. You need to provide 2 copies of your presentation plus 2 copies of the report.
Note: If the group report exceeds 1,600 words you will be deducted a grade; if it exceeds 1,750
words you will automatically be failed.
The report and presentation to be in the form of a proposal to the management of your chosen
organisation to gain approval for your change proposal. The report is to contain a front cover giving
the assignment details, the name and student number of each of the group members, and the word
count. Each page is to be numbered. There should be a half page executive summary at the start of
the report explaining your recommendations.
You are to allow 10 minutes for questions. Marks will be allocated equally between presentation and
the group report according to the above marking scheme.
The Group presentations will take place in weeks 32 and 33 of the academic calendar. Your group
will be allocated a time slot to present in one of those weeks either in your normal tutorial slot, or in
the lecture slot.
Tips on how to answer the group assignment.
There are certain common areas within any enterprise that appear in the case study which you
should address within your assignment. You need to critically evaluate the performance of the
company in all areas to identify any problems.
The group assignment question asks you to evaluate the current performance of SSC and to
evaluate the use of Kaizen and / or BPR as a way of improving performance. In order to do this
you need to identify the existing problems faced by the company and decide which of the
improvement methods is best suited to overcoming them. Having done this you are in a position to
decide which method (or methods) you recommend the company to adopt and your reasons for
doing so. You can recommend a Kaizen approach, a BPR approach or a mixed Kaizen / BPR
approach for each identified problem facing SSC.
You will need to briefly explain what BPR and Kaizen are – but do not forget that you are doing a
presentation and report to the Management of SSC on how to move their business forward. You
need to concentrate on the application of the Kaizen and BPR business models and focusing on
6

what needs doing and how you advise them to do it. Do not produce a descriptive academic report
or presentation – you need to produce an analytical management report and presentation.
You will also need to consider what the role of the Operations function should be in the
development of strategy at SSC, and how they should develop and co-ordinate an operations
strategy with the other functional strategies and with the overall SSC strategy.
In the Group Presentation you are not asked to produce solutions to the problems (and must not do
this!); you need to identify the problems facing SSC, and the impact on the company of the
problems, and the most appropriate improvement method.
7

Individual Assignment (50%)
Taking as a starting point your group presentation and report (and the inclusion of any feedback that
you received from the lecturers on that presentation and report), produce a report (50%) and
project plan (50%), identifying all the key activities, constraints and milestones for your
preferred method of change.
The report (2000 to 2500 words) to be in the form of a management report to obtain agreement for
your plan to proceed. It is not to provide solutions, as you cannot anticipate the results of your
investigations, just how you would plan to investigate and implement your proposed changes. The
project plan Gantt chart is to be produced using Microsoft Project. A copy of your Microsoft Project
project plan is required both as hard copy and electronically on either a floppy disk or CD-ROM.
Note: If you exceed 2,750 words you will be deducted a grade; if you exceed 3,000 words you will
automatically be failed.
Your report is expected to have a front cover containing the assignment details, your name and
student number, and the word count. Each page is to be numbered, each question is to be answered
on a separate page, and you are to use Harvard referencing where appropriate. There should be a
half page executive summary at the start of the report explaining your recommendations.
The individual report is due on Thursday 3rd
May 2012.
Tips on how to answer the individual assignment question.
The individual assignment question asks you to produce a management report outlining how you
would plan to implement your proposed changes. In order to do this you need to identify the
activities that you need to undertake to move the company from their current way of working to
your new preferred method as outlined in your group presentation.
The sort of details that you need to identify for each major change (activity) are:
What is it you are trying to achieve (aims and objectives of activity);
Who needs to be involved (resource use);
How long do you think it will take to complete (duration);
What are the benefits for the firm of undertaking the activity (e.g. financial, culture);
What are the likely costs of undertaking the activity (order of magnitude if possible);
Does anything need to be done before you can start (linked predecessor activity);
What cannot be done until this activity is completed (linked successor activity);
What to choose to do first (e.g. quick easy successes / biggest payback / least risky)
You now need to build your activities together into a project plan, using the successor /
predecessor relationships and identified constraints as a starting point to determine the sequence.
In order to make the project plan easier to manage, it is usual to break it up into discrete chunks,
called milestones. You will need to consider which are the key steps to success or milestones. A
milestone is a decision point, your first milestone will be the presentation of your project plan in
your report, where management will take the opportunity to review progress and decide whether to
continue or not. You can create a separate plan for each milestone if you like. Do not assume that
you have unlimited resources and remember that SSC will need to continue trading during
implementation.
On top of this you need to consider getting some activities that show success into the early stage of
your project. This will start to create a bandwagon effect and give the project momentum.
8

The aim of the individual assignment is to produce a practical management report and needs to
concentrate on what you are going to do, the timescales, and benefits to the company.
Good Luck!
The marking guidelines are as follows:
Criteria Fail Pass Excellent
Overall Unsatisfactory with
some serious
shortcomings with
some attempt at
meeting the
requirements of the
questions but the
answers are unclear
or not of sufficient
detail.
Good in most
respects with the
majority of answers
being clear and
relevant to the
questions and
scenario.
Excellent in most
respects with full,
clear, concise and
correct answers,
considering all facts
relevant to the
questions and
scenario.
Knowledge and
application
Little evidence of
knowledge or
understanding
shown.
Fundamental
misconceptions.
Learning outcomes
not met.
Some display of
relevant knowledge
and understanding
at an appropriate
level.
Thorough display
of relevant breadth
and depth of
knowledge, at the
appropriate level.
Research and
reading
Little or no
evidence of wider
reading or research.
Evidence of
satisfactory
research and
reading, using
mainly
recommended
sources.
Evidence of wide
and varied reading,
from up-to-date
and relevant
sources. Wider
research apparent.
Evaluation and
synthesis
Little or no critical
evaluation - mostly
descriptive.
Attempt at critical
evaluation, with
appropriate
conclusion.
High standard of
critical analysis,
synthesis and
evaluation.
Summary &
conclusions
Few or no
conclusions.
Some appropriate
conclusions.
Good evaluation of
findings,
appropriately
summarised.
Presentation Poorly presented.
Content mainly
unstructured and a
failure to
communicate ideas.
Clear and
recognisable format
with logical
structure.
Excellent
presentation of
work- clear
structure and
logical development
of arguments.
9

SSC CASE STUDY
INTRODUCTION
The Shirts and Skirts Company (SSC) comprises fifteen large clothing stores located throughout the
UK. The company, which is privately owned by the Cullotte family, specialises in selling clothes to a
particular market niche – older men and women with a conservative taste in fashion.
All the stores occupy key centre of town locations and the freehold ownership of the buildings
belongs to the family and have been acquired through a mixture of organic growth, and the recent
addition of five stores from a competitor that ceased trading. There is a centrally located distribution
warehouse which receives all the stock from the suppliers and distributes it to the stores.
For some time, Mr Louis Cullotte, the Managing Director and the other directors of the company
have seen profitability falling – not drastically, but still diminishing – and, as all shares are owned by
the family, then there has never been a question of concern over dividend payments.
Other trends noticed are that fashions have begun to change. The effect of this is that some of the
product ranges are now seen as out of step with present day needs which in turn has led to some
overstocking problems with some lines. A marketing analysis of the customer needs was undertaken
in 1993, which established the guidelines within the group for the store décor and layout, buying,
merchandising and display.
The five new stores have become profitable, changing their garments to the SSC range over a period
of 6 months. There are still some outstanding issues, however, with the integration of business
processes, and personnel practices.
It has become clear to the Cullottes that an outside business influence is required. To this end, a new
chief executive has been recruited. Ricky Masterson has a background in marketing, having worked
for a number of years in fast moving consumer goods and the grocery trade. These industries
traditionally exist on small margins but high-volume sales. Masterson’s style of negotiating is
aggressive with suppliers; this being an attitude that prevails in the type of industries from which he
has gained experience.
Ricky’s remit from the Cullottes is to arrest the decline and ensure that the business does not become
a target for a predator seeking a takeover of the highly valuable fixed asset base.
SAMPLING THE SUPPLY CHAIN
Being fully conversant with modern supply chain management, Ricky decides to examine a number
of product lines to gain an understanding of prevailing practices and procedures. Walking around the
stores, he notices that the stores put a great deal of emphasis on selling ladies skirts and men’s shirts.
Ladies skirts:
Sizes: 8 different sizes
Lengths: short, medium and long
Designs: 80
Selling prices (including vat): £35–£80
Materials: wool, cotton and synthetic
Stocks: 45,000 in total with large quantities of the smallest size and largest size, being equal
to 7 weeks sales.
Men’s shirts:
Collar sizes: 10 different sizes
Sleeve lengths: short, standard and long
Designs: 90
10

Selling prices (including prevailing taxes): £20–£45
Materials: cotton, synthetic (polyester), poly-cotton
Stocks: 70,000 in total with large numbers of the smallest size and largest size, being equal to
8 weeks sales.
A Pareto analysis indicated that 80% of the sales of the skirts were made by 8 designs, and for shirts,
85% of sales were made by 9 designs.
All the skirts and shirts are manufactured in the United Kingdom, in a geographical area that has
traditionally manufactured cotton products. Two suppliers have provided the goods for the last 15
years, since the supplier exercise was conducted in 1992: Dolly Designs for the skirts and Lootah
Fashion for the shirts. Cotton cloth is imported from the USA and the synthetic raw materials are
manufactured in the UK.
No contracts appear to exist, all trading being dealt with by ‘arrangements’ carried out by SSC’s
Elena Macumba who acts as a ‘general merchandiser’ in that she selects the designs which she feels
will sell, pays a stated cost price and then fixes a selling price, attempting to work on a mark-up of
100% (the traditional minimum in fashion retailing).
Elena’s contact at Dolly Design is Matilda Smith, who acts in every capacity for her company:
showing new designs, fixing the cost prices and arranging production schedules and deliveries. Skirts
are currently being supplied for £15–£25.
Elena’s contact at Lootah is Greg Charles, sales manager, who likewise works from a set range of
patterns (designs) and gives Elena the top discount of 50% off the selling price, which effectively
means the buying-in price is £10–£20. This still allows a minimum markup of 100%.
No breakdown of costs has ever been requested or supplied, and the only post-order commercial
activity followed by Elena is that of expediting deliveries, which are late 75% of the time.
SALES ANALYSIS
Ricky then carried out some detailed analysis of recent product sales. Rather than examine detailed
figures, he decides to benchmark movements based on a factor of 100 in 2007. These indicate the
following:
Skirts 2007 2008 2009 2010
Sales by quantity 100 96 90 85
Profitability 100 103 107 111
Quality (measured by returns) 100 95 89 85
Customer satisfaction 100 96 92 88
Shirts 2007 2008 2009 2010
Sales by quantity 100 96 93 89
Profitability 100 103 108 111
Quality (measured by returns) 100 99 97 96
Customer Satisfaction 100 96 93 89
Ricky then identifies a number of issues:
(a) a large number of consignment stocks
(b) the use of very basic procurement procedures
11

(c) long term agreements
(d) overstocking of product
(e) large volume purchasing.
(f) no integrated IT system to cover ordering, warehousing, distribution, and sales.
In addition there is little or no:
(a) supplier analysis
(b) pro-active sourcing, either within the UK or overseas
(c) price and /or cost analysis
(d) contingency planning for any disruption in supply.
TRANSPORT
SSC has a fleet of approximately 20 vehicles, ranging from small lorries to cars. The fleet is owned in
its entirety by the SSC; leasing has been judged to be unsuitable by the Finance Director.
The fleet is managed by Jenson Jensen, whose career in SSC has always been involved with transport
and distribution. He is an operator who likes to take the line of least resistance; never having been
one for budgets or financial control. He has always seen his function as one of a manager dealing
with the day to day problems with drivers. His range of responsibilities have been prioritised to
ensure that the lorries get the goods to the stores irrespective of cost. This has led him to take risks
with vehicle conditions, abuse of tachographs, reduced maintenance schedules, and on ions, a not
too close look at a driver's track record in terms of experience and conviction. He well knows that
his drivers frequently break the law in terms of speeding and overloading, but adopts the attitude of
'dealing with these irritations when the problems arise'.
He is liked by his drivers as he is also agreeable to shift changes to suit their domestic needs; the fact
that often drivers are 'working out of hours' is overlooked.
Jenson negotiates the purchase of fuel from a major supplier. Fuel storage tanks are located at the
distribution warehouse, and all drivers are required to victual their fuels from these dedicated pumps.
Purchase from outside garages is strictly forbidden, as Speed prides himself on getting a small cost
advantage over the main road pump price. The same supplier has been delivering to Pipes for over
ten years.
The records maintained in the office relating to hours worked, vehicle service, tyre replacement,
tachograph, licensing and personnel are poorly maintained, often inaccessible and, more critically,
sometimes not up to date and inaccurate. Vehicle costs (petrol, depreciation, insurance, servicing
etc) account for some £220,000 per annum.
PERSONNEL
Headed up by Angela Beck, she has responsibility for employment-related issues including training,
recruitment and more recently, the facilities operations on the Group's sites. These include office
cleaning, security and catering.
Angela is often referred to as 'Attila' by the company's managers as she has assumed immense power
through the combination of a very strong personality, extremely aggressive management style, a
violent temper when provoked, and ruling by fear. Procedures put in place by her make it clear that
no manager has any authority when it comes to certain personnel issues, for instance:
• she insists on women being given equal opportunities for advancement
• she ruthlessly invokes policies in terms of retirement at the earliest opportunity
• she will delay and prevaricate on pay rises in the interests of cash flow within the
company
12

• opportunities for promotion are identified through her personal observations, and not
through any structured planning techniques
There are, however, inconsistencies in pay and rewards amongst staff. Company cars are left to the
discretion of each store manager, who allocates on a grace and favour basis. Differentials exist within
and across the stores and the warehouse for both terms and conditions of employment. The most
recent case involved a 24 year old graduate earning £15,000 per annum being recruited and given a
company car and paid overtime whereas more senior members of staff were not paid overtime and
were without cars.
The overall analysis indicated that only 5% of the total work force was exposed to any type of
training in the last 18 months.
OVERALL PERFORMANCE
In order to better understand the competitive situation of the company, Ricky commissioned a
Benchmarking exercise which considered the company as a whole, which provided the following
results:
Human Resources SSC Competitor
A
Competitor
B
World Class
Retailer
Sickness and Absenteeism Rate 11% 12% 6% 1%
Average Annual Staff Turnover 16% 21% 9% 4%
Average Length of Service 8 years 9 years 8 years 12 years
Responsibility for Quality Management Team
Leaders
Team
Leaders
Operators
Responsibility for People Issues HRM Supervisors
/ HRM
HRM Supervisors
/ HRM
Number of improvement suggestions per
employee
0 5 8 47
Shop Profiles SSC Competitor
A
Competitor
B
World Class
Retailer
Sales per Square Foot (SSC =100) 100 150 200 500
Sales per Employee (SSC = 100) 100 200 250 750
Average Margin Achieved (SSC = 100) 100 250 300 350
Incoming Quality (% defective) 6 2 2 0
Average Days Stock 35 7 12 3.5
Average Stock Value £4,000,000 Not available Not available Not available
Average time between order by shop and
delivery from the distribution warehouse
2 weeks 1 week 1 week 48 hours
Distribution and Warehousing SSC Competitor
A
Competitor
B
World Class
Retailer
Average Days Stock 90 14 14 7
Average Stock Value £12,000,000 Not available Not available Not available
Incoming Quality (% defective) 12 3 3 0.2
Time between supplier order and actual
delivery
4 weeks 1 week 1 week 48 hours
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