Operations Improvement BUS255 Goals By the end of this chapter, you should know: Importance of Operations improvement Improvement Techniques Broad approaches to improvement Elements of Improvement 2 In ‘Alice’s adventures through the looking glass’, by Lewis Carroll, Alice encounters 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 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! The Red Queen effect 3 Think about examples! Automotive sector Telecommunications sector (cell phones) Implications Operations Improvement is necessary to retain competitive position Greater operations improvements (comparatively) are necessary to improve competitive position Improvement Techniques Scatter Diagram Scatter Diagram: A graph of the value of one variable vs. another variable Absenteeism Productivity 6 Scatter Diagram Help us understand the relationship between variables (tool to generate ideas) Remember, correlation doesn’t mean causation X and Y have positive relationship doesn’t necessarily mean X causes Y. Refer to in-class problem # 1 7 Flowchart Flowchart (Process Diagram): A chart that describes the steps in a process. It is also called as process map. 8 Flow Chart MRI Flowchart Physician schedules MRI Patient taken to MRI Patient signs in Patient is prepped Technician carries out MRI Technician inspects film If unsatisfactory, repeat Patient taken back to room MRI read by radiologist MRI report transferred to physician Patient and physician discuss 11 10 20% 9 8 80% 1 2 3 4 5 6 7 Flow Chart Flowcharts are vey useful in visually describing processes (tool to organize data) Refer to in-class problem # 2 Let’s do it in Visio Cause and Effect Diagram Cause-and-Effect Diagram: A tool that identifies process elements (causes) that might effect an outcome. Also called Fishbone diagram or Ishikawa diagram. Cause Materials Methods Manpower Machinery Effect 11 Cause-and-Effect Diagram Material (ball) Method (shooting process) Machine (hoop & backboard) Manpower (shooter) Missed free-throws Rim alignment Rim size Backboard stability Rim height Follow-through Hand position Aiming point Bend knees Balance Size of ball Lopsidedness Grain/Feel (grip) Air pressure Training Conditioning Motivation Concentration Consistency 12 Cause-and-Effect Diagram Very helpful for performing root cause analysis. Can also identify areas where further data is needed (tool to generate ideas) Most used categories: Machinery, Manpower, Materials, Methods, and Money Other categories can also be used Refer to in-class problem # 3.

1. Operations Improvement
BUS255
Goals
By the end of this chapter, you should know:
Importance of Operations improvement
Improvement Techniques
Broad approaches to improvement
Elements of Improvement
2
In ‘Alice’s adventures through the looking glass’, by Lewis
Carroll, Alice encounters 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
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!
The Red Queen effect

2. 3
Think about examples!
Automotive sector
Telecommunications sector (cell phones)
Implications
Operations Improvement is necessary to retain competitive
position
Greater operations improvements (comparatively) are necessary
to improve competitive position
Improvement Techniques
Scatter Diagram
Scatter Diagram: A graph of the value of one variable vs.
another variable
Absenteeism
Productivity

3. 6
Scatter Diagram
Help us understand the relationship between variables (tool to
generate ideas)
Remember, correlation doesn’t mean causation
X and Y have positive relationship doesn’t necessarily mean X
causes Y.
Refer to in-class problem # 1
7
Flowchart
Flowchart (Process Diagram): A chart that describes the
steps in a process. It is also called as process map.
8
Flow Chart
MRI Flowchart
Physician schedules MRI
Patient taken to MRI

4. Patient signs in
Patient is prepped
Technician carries out MRI
Technician inspects film
If unsatisfactory, repeat
Patient taken back to room
MRI read by radiologist
MRI report transferred to physician
Patient and physician discuss
11
10
20%
9
8
80%
1
2

5. 3
4
5
6
7
Flow Chart
Flowcharts are vey useful in visually describing processes (tool
to organize data)
Refer to in-class problem # 2
Let’s do it in Visio
Cause and Effect Diagram
Cause-and-Effect Diagram: A tool that identifies process
elements (causes) that might effect an outcome. Also called
Fishbone diagram or Ishikawa diagram.
Cause
Materials
Methods
Manpower
Machinery
Effect

6. 11
Cause-and-Effect Diagram
Material
(ball)
Method
(shooting process)
Machine
(hoop &
backboard)
Manpower
(shooter)
Missed
free-throws
Rim alignment
Rim size
Backboard stability

7. Rim height
Follow-through
Hand position
Aiming point
Bend knees
Balance
Size of ball
Lopsidedness
Grain/Feel (grip)
Air pressure
Training
Conditioning
Motivation
Concentration
Consistency
12

8. Cause-and-Effect Diagram
Very helpful for performing root cause analysis. Can also
identify areas where further data is needed (tool to generate
ideas)
Most used categories: Machinery, Manpower, Materials,
Methods, and Money
Other categories can also be used
Refer to in-class problem # 3
Pareto Chart
A graph to identify and plot problems or defects in
descending order of frequency
Frequency
Percent
A B C D E
14

9. Pareto Charts
Number of occurrences
Room svc Check-in Pool hours Minibar Misc.
72% 16% 5% 4% 3%
12
4
3
2
54
– 100
– 93
– 88
– 72
70 –
60 –
50 –
40 –
30 –
20 –
10 –

10. 0 –
Frequency (number)
Causes and percent of the total
Cumulative percent
Data for October
Pareto Chart
Pareto analysis is based on “relatively few causes” explaining
the “majority of effects”
Helps differentiate between “vital few” issues and “trivial
many”
A good tool to organize data
Let’s work on problem # 4 of in-class exercise
16
Four broad approaches to improvement
Total Quality Management (TQM)
Puts quality and improvement at the heart of everything that is
done by an operation.
Meet the needs and expectations of customers
Improvement covers all aspects of a company
Improvement includes every person in a company
Getting things “right first time”
Develop the systems and procedures
18

11. Lean or Just-in-time (JIT) approach
An approach to meet demand instantaneously, with perfect
quality, and no waste .
Customer-centricity
Internal customer-supplier relationships
Perfection is the goal
Synchronized flow
Reduce variation
Include all people
Waste elimination
19
Business Process Reengineering (BPR)
A radical approach to improvement that attempts to redesign
operations along customer-focused processes rather than on the
traditional functional basis.
20
BPR advocates reorganizing processes to reflect the natural
processes that fulfill customer needs
Function 1
Customer needs fulfilled
Functionally-based processes

12. Function 2
Function 3
Function 4
Business processes
End-to-end process 1
End-to-end process 2
End-to-end process 3
Customer needs

13. Business Process Reengineering (BPR)
21
BPR advocates reorganizing processes to reflect the natural
processes that fulfill customer needs
Before BPR
22
BPR advocates reorganizing processes to reflect the natural
processes that fulfill customer needs
After BPR
23
Six Sigma
Two meanings
Statistical definition of a process that is 99.9997% capable, 3.4
defects per million opportunities (DPMO)
A program designed to reduce defects, lower costs, save time,

14. and improve customer satisfaction
A comprehensive system for achieving and sustaining business
success
24
Six Sigma
Two meanings
Statistical definition of a process that is 99.9997% capable, 3.4
defects per million opportunities (DPMO)
A program designed to reduce defects, lower costs, save time,
and improve customer satisfaction
A comprehensive system for achieving and sustaining business
success
Mean
Lower limits
Upper limits
3.4 defects/million
2,700 defects/million

15. Six Sigma Program
Originally developed by Motorola, adopted and enhanced by
Honeywell and GE
Highly structured approach to process improvement
A strategy
A discipline – DMAIC
Let’s work on a problem
Strategy: Because it focuses on total customer satisfaction
Discipline: Because it follows DMAIC model of improvement
26
Six Sigma
Defines the project’s purpose, scope, and outputs, identifies the
required process information keeping in mind the customer’s
definition of quality
Measures the process and collects data
Analyzes the data ensuring
repeatability and reproducibility
Improves by modifying or
redesigning existing
processes and procedures
Controls the new process
to make sure performance
levels are maintained

16. DMAIC Approach
The ‘elements’ that are the building blocks of improvement
include:
Radical or breakthrough improvement
Continuous improvement
Improvement cycles
A process perspective
End-to-end processes
Radical change
Evidence-based problem-solving
Customer-centricity
Systems and procedures
Reduce process variation
Synchronized flow
Emphasize education/training
Perfection is the goal
Waste identification
Include everybody
Develop internal customer–supplier relationships.
You are responsible for this slide. Please read in textbook from
p. 84-90.
What are the key elements of operations improvement?
28

17. References
Slack, N., Chambers, S., & Johnston, R. (2010). Operations
management. 6th ed. Pearson Education.
Heizer, J. H., & Render, B. (2014). Operations
management (11th ed.). Pearson Education.
Homework on Operations Improvement (Due November 21)
Directions: The assignment must be submitted to Moodle as a
single Word document. Save it as
yourlastname_Improvement.docx. Only one Word document is
to be uploaded. Please upload on time (by November 21, 8:30
p.m.).
Problem 1: Oregon fiber board makes roof liners for the
automotive industry. The manufacturing manager is concerned
about product quality. She suspects that one particular failure,
tears in the fabric, is related to production-run size. An assistant
gathers the following data from production records.
Run
Run size
Failures (%)
1
1000
3.5
2
4100
3.8
3
2000
5.5
4
6000
1.9
5
6800

18. 2
6
3000
3.2
7
2000
3.8
8
1200
4.2
9
5000
3.8
10
3800
3
11
6500
1.5
12
1000
5.5
13
7000
1
14
3000
4.5
15
2200
4.2
16
1800
6
17
5400

19. 2
18
5800
2
19
1000
6.2
20
1500
7
a. Create a scatter diagram for these data (Run size vs. Failure
percent) (Use Excel to create and paste it here). (10)
b. Does there appear to be a relationship between run size and
percent failures? If so, what type or relationship you see? What
implications does this data have for Oregon Fiber Board’s
business? (Answer here). (10)
Problem 2: UP Local (UPL) is a short-haul household furniture
moving company. UPL’s labor force, selected from the local
university’s soccer team, is temporary and part-time. UPL is
concerned with recent complaints, as provided in the following
table:
Complaint
Frequency
Broken glass
13
Delivered to wrong address
9
Furniture rubbed together on truck
20
Late delivery
5
Late arrival for pickup
18
Missing items

20. 26
Scratches from rough handling
10
Soiled upholstery
8
a. Create a Pareto chart (Use Excel to draw and paste it here).
(10) (Note: Please watch a YouTube video here:
http://www.youtube.com/watch?v=TBtGI2z8V48 if you forgot
how to do it).
b. What percent of complaints are attributable to the two major
causes? (answer here) (5)
c. The manager of UPL is trying to understand the root causes
of complaints. He has identified following issues:
a. Truck broke down, ran out of packing boxes, no furniture
pads, employee dropped several items, driver got lost, ramp into
truck was bent, no packing tape, new employee doesn’t know
how to pack, moving dolly has broken wheel.
Organize these causes using the four M’s method and draw a
cause-and-effect diagram below (Fishbone diagram) (Use Visio
or any tool to do and paste it here). Also show how you
organized causes into categories. (15)
Problem 3: Draw a flow chart for a customer purchasing book
on Amazon. You have to come up with your own steps and
decision points. The chart must have at least five steps and two
decision points. (Use Visio or any tool). You must include the
steps and diagram below. (20)
Problem 4: A bottling plant samples 531 bottles to check for
consistency of quality. It finds that 5 bottles had one or more
defects and there were 12 defects in total. Four types of errors
were observed.
a) Find proportion defective? Use three decimals for reporting.
(10)
b) Find defects per unit? Use three decimals for reporting. (10)
c) Find defects per million opportunities (DPMO)? Use three
decimals for reporting. (10)

21. Show all your work including formulas, number substitution,
and answers.
· End of homework problems
Reference:
Krajewski et al. (2013). Operations Management, Pearson
publishing.