Operations Management 19.09.
2023: Process analysis
Tools for analysis
Lean management
Lean management, in simple terms, is a business approach focused on minimizing waste and
maximizing efficiency in processes to deliver better value to customers. It originated in manufacturing
but has since been applied to various industries. The key principles of lean management include:
Principles of Lean Management
Eliminating Waste: Identifying and reducing activities, materials, or resources that do not add value
to the product or service.
Continuous Improvement: Constantly seeking ways to improve processes, products, and services
through small, incremental changes.
Customer Focus: Prioritizing customer needs and preferences to provide high-quality products or
services that meet or exceed their expectations.
Employee Involvement: Involving and empowering employees at all levels to contribute ideas and
solutions for process improvement.
Pull System: Producing goods or services based on customer demand rather than pushing out excess
inventory.
Standardization: Establishing standardized work procedures to ensure consistency and reduce
variability in processes.
Visual Management: Using visual cues, such as charts and boards, to make it easier to monitor and
manage processes.
Flow Optimization: Ensuring that processes flow smoothly and efficiently without unnecessary delays
or bottlenecks.
Lean Journey success rate
Only 2% succeed to apply lean management!
Reasons for the failure of Lean Management application
Steps of Lean Management
Steps of lean management
1. Identify Value: This step involves defining customer value and distinguishing it from waste,
ensuring resources are directed towards delivering what customers truly want.
2. Map the Value Stream (Produce Only on Demand): After identifying value, the entire
value stream is mapped to visualize the flow of materials and actions, with an emphasis on
producing only in response to actual customer demand to minimize overproduction.
3. Create Flow: The focus shifts to optimizing work processes, eliminating bottlenecks, delays, and
interruptions to ensure a smooth and efficient workflow, ultimately reducing lead times and
improving overall process efficiency.
4. Establish Pull: Implementing pull systems, where products or services are produced in response
to customer demand, helps prevent overproduction, reduce inventory, and ensure resources are
used only when there is genuine demand.
5. Seek Perfection: Continuous improvement and the pursuit of perfection are ongoing
commitments, encouraging organizations to eliminate waste, enhance processes, and maintain a
culture of innovation and relentless improvement.
Just in Time (JIT): JIT is a manufacturing and inventory management approach where you
produce or acquire items only when they are needed, just in time for use or delivery. This
minimizes holding or storing excess inventory, reducing storage costs and the risk of
obsolescence. It aims to be efficient by having items arrive or be produced exactly when they
are needed, thus minimizing waste.
Trade off between risk and cost reduction
Just in Case (JIC): JIC is the opposite of JIT. It involves keeping extra inventory or resources
on hand "just in case" there's unexpected demand or supply disruptions. This approach
prioritizes preparedness and having a safety net of extra materials or products, even if it
means higher storage costs. It's less efficient in terms of inventory management but provides
a buffer against unforeseen problems.
More safer option
In summary, JIT focuses on efficiency and reducing inventory to a minimum, while JIC
prioritizes having reserves in case of unforeseen events, even at the cost of higher inventory
levels.
Analysis strategy
PDCA: Lean methodology
Plan Do
(planir
aj) (učini)
Act Check
(primj (provj
eni) eri)
In addition it is important to reevaluate also what you implemented!
8 Wastes of Lean management
Defects : This waste refers to errors, mistakes, or defective products that require
rework or correction. Defects can lead to customer dissatisfaction and additional
costs.
Overproduction : Overproducing goods or services beyond what the customer
demands can result in excess inventory, increased storage costs, and waste of
resources.
Waiting: Idle time or waiting for the next step in a process is a waste. It can slow
down production and reduce overall efficiency.
Not Utilizing Talent : Failing to tap into the skills, knowledge, and creativity of
employees is wasteful. Organizations should encourage and empower their
employees to contribute to process improvement.
Transportation : Excessive movement or transportation of materials or products
can be wasteful. Unnecessary handling or transfer of items can lead to damage,
delays, and increased costs.
Inventory: Maintaining high levels of inventory ties up capital, occupies space,
and can result in obsolescence or deterioration of goods. Lean aims to minimize
unnecessary inventory.
Motion : Excessive or unnecessary movement by employees, whether it's reaching
for tools or walking long distances within a workspace, can waste time and
energy.
Excess Processing : Performing more work than necessary or adding unnecessary
features or steps to a product or service can be wasteful. Lean seeks to
streamline processes to eliminate these extra efforts.
These 8 wastes are often remembered using the acronym "DOWNTIME" for
easy reference:
Defects
Overproduction
Waiting
Not Utilizing Talent
Transportation
Inventory
Motion
Excess Processing
Eliminating or minimizing these wastes is a central goal of Lean management, as
it leads to increased efficiency, reduced costs, and improved customer
satisfaction.
Lean management tools
The "5S" in Lean management represents a set of principles and practices aimed at improving
workplace organization, efficiency, and effectiveness.
5S is a workplace organization method that aims to create a clean, efficient, and
organized workspace. It originated in Japan and consists of five principles, each
starting with the letter "S." In simple terms, 5S stands for:
Sort: Get rid of unnecessary items in your workspace. Identify and remove
anything that is not essential to the task at hand. This reduces clutter and makes
it easier to find what you need.
Set in Order : Organize the remaining items in a logical and efficient way.
Everything should have a designated place, and tools and materials should be
easily accessible when needed.
Shine: Keep your workspace clean and well-maintained. Regularly clean
equipment, surfaces, and tools to ensure they function correctly and safely.
Standardize : Establish and maintain consistent procedures and practices for
organization and cleanliness. This helps ensure that everyone in the workplace
follows the same rules and maintains the improvements.
Sustain : Continuously uphold the improvements made through the first four
steps. This involves regular inspection, maintenance, and a commitment to the 5S
principles as an ongoing part of the workplace culture.
What is visual management in simple terms?
Visual management, in simple terms, is a practice of using visual cues, such as
charts, signs, diagrams, and displays, to convey information, provide guidance,
and communicate important details in a clear and easily understandable way. It's
a way to make information and processes more visual and accessible to help
individuals or teams quickly grasp and act on the information they need.
Here are a few key points about visual management:
Information at a Glance : Visual management allows people to understand
complex information or processes at a glance, without the need for extensive
reading or analysis.
Enhanced Communication : It helps in communicating important details, goals,
progress, or issues effectively, making it easier for teams to stay on the same
page.
Improved Decision-Making : Visual cues can aid in decision-making by
providing relevant data and insights in a visual format that is easier to interpret.
Process Monitoring : It's often used to monitor and manage processes in real-
time, making it easier to identify bottlenecks, inefficiencies, or deviations from
standards.
Safety and Compliance : Visual management can also be used for safety
purposes by displaying safety guidelines, warnings, and procedures in a clear
and memorable manner.
In essence, visual management harnesses the power of visuals to make
information more accessible and actionable, which can improve efficiency,
communication, and overall effectiveness in various contexts, such as workplaces,
manufacturing facilities, and project management.
Kaizen
In simple terms, Kaizen is a Japanese term that means "conti nuous improvement." It's
a concept and practi ce focused on making small, incremental changes and
improvements to processes, products, or services over ti me. The goal of Kaizen is to
create a culture of conti nuous learning and improvement within an organizati on.
Here's what Kaizen is about:
Continuous Improvement : Kaizen encourages people at all levels of an organizati on
to consistently look for ways to make things bett er. It's not about making drasti c
changes but rather making many small improvements over ti me.
Employee Involvement : It emphasizes that everyone in the organizati on, from top
management to frontline workers, should be acti vely involved in identi fying and
implementi ng improvements. Employees are encouraged to share ideas and take
ownership of the improvement process.
Problem Solving : Kaizen involves identi fying problems or ineffi ciencies in processes
and then fi nding creati ve soluti ons to address them. It encourages a problem-solving
mindset.
Eliminating Waste : Kaizen aims to reduce waste in all forms, including ti me,
materials, and resources. By eliminati ng waste, organizati ons can become more
effi cient and cost-eff ecti ve.
Standardization : Once improvements are identi fi ed and proven eff ecti ve, Kaizen
oft en involves standardizing these changes as part of the new way of doing things. This
ensures that improvements are sustained over ti me.
Long-Term Perspective : Kaizen is not a one-ti me event but a long-term commitment
to conti nuous improvement. It's about creati ng a culture where improvement is an
ongoing part of daily work.
Overall, Kaizen is a philosophy and methodology that fosters a culture of constant
learning and enhancement within an organizati on. It can be applied in various
industries and setti ngs to drive positi ve change and increase effi ciency.
What is BPM?
BPM, or Business Process Management, in simple terms, is a systematic approach to
improving how a business operates by analyzing, designing, implementing, monitoring, and
optimizing its processes.
There are many slides we did not talk about. 30-46 are these relevant for the midterm?
Assignment
Choose a company
1. Bakery: Baking goods “ Dubrovnika”
Organize a meeting to get an overview of the current situation: Current number of employees
available, current amount of input. Include also the design team in order to understand if the
prototyping task. Is the prototyping essential and needs to be completed today?
Try to get the necessary ressources in order to complete the first task. Are additional employees
available? Can we use employees from another bakery of ours?
