Planning process improvement

CHAPTER 11 – PROCESS PLANNING AND IMPROVEMENT

AIMS OF THE CHAPTER
The process consists of all the operations that combine to make a product.  It follows that each product has its own unique process.  As with product planning, this process does not just happen, but it needs careful planning.  This chapter shows how managers set about planning the process.  In particular, it looks at the types of process available and the factors that are important in choosing the best.  As with product planning and design, there is a distinction between process planning (the strategic function that looks at the overall type of process) and process design (the more immediate tactical and operational decisions that add details). 

The last chapter made the point that TQM involves continuous improvement.  This has become standard management practice, so after planning the initial process managers have to continually look for adjustments and improvements.

The aim of the chapter is to discuss the broad issue of process planning.  More specific aims are to:

• understand the relationship between a product and the process used too make it

The process consists of all the operations that combine to make a product.  In different circumstances the process might include manufacturing, service, information processing, supply, transport, storage, and all the other operations that combine to supply products to customers.  As each product is somehow unique, it follows that every process is also unique.

• explain the role of process planning

Process planning is responsible for all the long-term decisions about a process.  Most products can be made in a number of different ways, and so the basic job of process planning is to find the best.  It describes the broad type of process, and general type of operations that are best suited to a particular product.  Process planning only considers the long-term shape of the process, but not the tactical and operational detail, which are added by process design.

• describe different types of process

There are basically three types of process:  those that make a single unit of a product; those that make products in batches; and those who make things in continuous flows.  Most organisations work with batches, so for convenience people usually divide these into three types of process that correspond to small, medium and large batches.  This gives a spectrum of five types of process – projects, jobbing, batch, mass and continuous.  Each of these is best suited to different types of product variety and size of demand.

• discuss different levels of available technology

There are three general levels of process technology:

• Manual – where people have full control over operations that need their constant attention
• Mechanised – where some operations are done automatically, but there are still some human tasks
• Automated – which form a broad category where equipment performs a series of jobs without any human involvement

• consider factors that affect the choice of process

The best level of technology generally rises with production quantities, so a rule of thumb has manual processes for projects and jobbing processes, mechanised processes for batches and automation for mass and continuous processes.  Important factors for the choice of process include the overall demand, changes in demand, nature of demand, product design, variability in design, product quality, product flexibility, point in the product life cycle, available skills and experience, customer involvement, finances, amount of vertical integration, and other factors.

• understand the need for change and process improvement

Conditions in the external environment are continually changing.  Any organisation that ignores these changes soon gets overtaken by more innovative competitors.  The only realistic response is to continually monitor, adjust and improve internal operations.

• discuss general approaches to improvement

There are several ways of finding improvements, with a basic one described by a plan, do, check, act cycle.  The chapter describes a more useful approach with eleven steps to consider the broad context, study the aims of operations, choose the process to be investigated, describe the current process, measure performance, identify areas for improvement, describe new operations, plan the implementation, implement the changes, monitor and control the results, remain committed to the new methods

• describe different rates of improvement, illustrated by continuous improvement and re-engineering

There are many ways of introducing change, with the size of change in a spectrum that ranges from minor adjustment through to radical redesign.  Continuous improvement is at one end of this spectrum, suggesting that operations continue with a series of small adjustments to bring continuing improvements.  Re-engineering is at the other end of the spectrum, suggesting a break in operations, with radical changes bringing completely new methods.  Organisations often use methods that come between these two, or they work with some combination of both extremes.

DISCUSSION QUESTIONS

• Customers are only interested in the product that they buy and not how they are made.  So the process is an internal matter for operations managers.  Do you agree with this? 

Not really – but this depends on the type of product.  It is true that when you buy some goods you are not really concerned with the process used to make them.  On the other hand, the process affects the properties of the product, so you are indirectly concerned.  And you may demonstrate this by paying more for some hand-made products (such as clothes, chocolates, cars, etc) than machine-made ones.  In reality, you have some interest in the process for goods, but this effect is more pronounced with services.  Here the product and process are more intimately related, and it is often difficult to draw a distinction between the two.  For example, when you visit a doctor you are very interested in the process they use, as this defines the way you are treated.  Similarly, when you go to a restaurant you are as concerned with the process (the way the mean is prepared and served) as the goods (the food itself).

• Do different types of process need different management skills or types of management?

To some extent.  Each type of process has its own problems and needs specific skills.  For example, a jobbing process can involve complex movements of products through facilities and this raises difficult scheduling problems.  Continuous processes do not have this problem, but they have to match constant supply to variable demand.  However, these specific skills are superimposed on the fundamental problems faced by all managers, regardless of the process.  So it is fair to sat that all managers need a common core of skills, enhanced by some more that are specific to the type of process they work with.

• An increasing number of organisations realise that their work really consists of a series of distinct projects.  As a result, project management has become much more popular in recent years.  Will we reach the stage when all organisations see themselves as doing a series of projects?  

There are always trends and fashions in management, and project management is currently very popular.  It reflects the way that many – if not most –mangers actually work, moving through a series of jobs, each of which can be treated as a project.  And it has the advantage of tapping into the huge amount of work that has been done on project management.  It is debateable whether this trend will continue until almost every manager becomes a project manager, or whether views will change so that managers move in different directions.

• Technology is improving so quickly that managers can only really imagine conditions over the medium term.  Does this mean that the level of technology in an organisation is a tactical rather than strategic issue?

No.  Technology available for some operations may be changing quickly – while that available for other operations is changing quite slowly.  Although managers may not be able to imagine the details of technology in the long term, they can certainly follow likely trends and use these to forecast future conditions.  They can use this information for long-term process plans.  Details are added with process design, which is used for shorter term tactical and operational decisions.  As with most management decisions, work has to be done at all three levels – strategic, tactical and operational. 

• Some people say that operations can only be automated at the expense of the people working on them.  What do they mean by this?

Presumably they are looking at two ways that automation can affect people working on the process.  The first effect has automation reducing the number of people employed; the second removes the skills needed by the people remaining, so that they have less rewarding jobs.  Both of these can clearly harm current employees.  However, these views concentrate on negative effects, and automation can obviously bring benefits.  For example, it can bring long-term security and increase the overall number of people employed; it can introduce new types of products; it needs highly skilled people to work with the new facilities, and so on.  Automation is best suited to certain types of process, where it can be essential for success.  It makes no sense to take a simplistic view of automation replacing large numbers of skilled workers by a few unskilled ones.

• How would you set about improving an existing process? 

There are different views on this, with alternatives described in the chapter. A basic approach uses a plan, do, check, act cycle.  A fuller description has eleven steps to consider the broad context, study the aims of operations, choose the process to be investigated, describe the current process, measure performance, identify areas for improvement, describe new operations, plan the implementation, implement the changes, monitor and control the results, remain committed to the new methods

• When managers have a good process it does, by definition, give the best results.  So why do they continually look for further improvements?

Because circumstances – particularly in the business environment – are constantly changing.  As a consequence, what seems to be the best choice of process at one point, will no longer be best at a future date, as better alternatives appear and overtake it.  A simple view says that there are always competitors who are looking for ways of gaining an advantage; they are always trying to identify and implement improvements.  Any organisation that does not move will soon be overtaken by more innovative and adventurous competitors. 

• Any use of Business Process Re-engineering is a result of good marketing by consultants rather than inherent benefits of the method.  What do you think of this view?

There is a lot of truth in this.  The idea of radical redesign has been around for as long as organisations.  The whole of modern industry is based on a redesign of production processes to replace craft technology by mass production.  There is nothing fundamentally new about business process re-engineering, but it does bring together related ideas under a single umbrella.  Most of the evidence for BPR’s success is anecdotal, and it has undoubtedly enabled some organisations to increase their performance dramatically.  But tales of success from radical changes have a long history, and they are not limited to organisations describing their activities as BPR.  It is also highly risky, and evidence that eighty percent of organisations do not achieve their hoped-for break through suggest that the ideas have often been used inappropriately. 

IDEAS IN PRACTICE
Bechtel Corporation
Aim: to illustrate the type of work done in a project management company, and suggest features of projects

Many organisations specialise in a particular type of process.  Project management is becoming increasing popular and many organisations see themselves as completing a series of projects.  This is not a new idea, and some industries – such as construction – have always focussed on project management.  This case lists some of the work done by Bechtel Corporation, which is one of the world’s leading engineering, construction and project management companies.  The work suggests some of the man features of projects, including fixed duration, fixed budget, risk, distinct product, work done by a dedicated team, and so on.  Not all projects are these huge construction jobs, and it is interesting to compare these with the smaller projects done by, say, advertising companies, book publishers, etc.

Buma System SA
Aim: to describe the way that a company used a new type of process for a traditional

Many organisations – and whole industries – continue to use the same type of process for a long time.  There are many advantages in this, including experience and sunk investment.  Sometimes a new organisation comes along, questions the process and suggests new ways of doing things.  They see that conditions have changed and maybe a new approach can give better results.  This was the approach of Volvo when it experimented with car assembly that did not use traditional assembly lines – and it is also the approach of Buma Systems to house building.  Buma is really the latest in a long line of companies that has tried to use new methods for building houses.  Some of these have been very successful – such as the temporary ‘Prefabs’ built early in the twentieth century and still popular almost a hundred years later.  Others have been less successful, such as the ‘system designs’ for multi-storey blocks of flats in the 1960s.   

Martyn Hertzmann
Aim: to describe an organisation where it is difficult to change from a project process to an apparently more efficient jobbing process

The usual aim for a process is to move down the diagonal in Figure 11.2, continually looking for higher output and moving to more efficient larger-scale operations.  Often this is difficult, usually because of limited demand that cannot justify larger scale operations.  Sometimes there are more subtle constraints.  In this case, a company uses a project process, where each instrument is unique, but it could increases sales by moving to a jobbing process.  Initial difficulties came from the employees who did not like the move away from a skilled, craft industry to what they viewed as mass production – and they did they appreciate the implication that they had spare time to fill.  Then problems also arose with customer perception, which would consider their own instrument devalued by association.  And even if the company moved ahead with their plans there was no guarantee that they could compete against cheaper, mass produced competitors.  There are many ways that the company can assess the prospects for new products, and their options range from keeping the status quo to opening a completely new company.

The EFOM excellence model
Aim: to introduce the EFQM excellence model

Many ways have been suggested for approaching process improvement.  This case describes the approach suggested by EFQM.  This gives a framework for improving performance, based on a series of checklists.  The case hints at the type of issues raised in these checklists.

Dell Inc
Aim: to illustrate the potential benefits of using a dramatically new process

Dell gives a classic example of a company that looked at existing operations – and then completely redesigned them to take advantage of new technology and methods.  Rather than adopt traditional methods, Dell started from scratch to design the best process of collecting orders from customers, making computers to meet this demand, and delivering the finished products.  This uses a new approach that does not work through layers of intermediaries, but puts the manufacturer directly in touch with customers.  The result is a highly efficient process.  The benefits of this are clear, as Dell has quickly moved to become the world’s largest supplier of PCs.

CASE STUDY – IATA’S PASSENGER SERVICES
The airline industry was founded on its ability to give a luxurious and expensive travel service to a small number of passengers.  The product for each passenger was tailored to their needs, using a project process – or at best a jobbing one.  As time moved on the number of passengers rose – and the industry moved progressively through jobbing, batch and into mass processes.  Some operations, such as sales and booking, have moved to continuous processes through Websites.  This case shows some ways in which airline processes continue to evolve.

• What problems are currently faced by the airline industry, and why is IATA considering improvements to its operations?

The problems faced by the airline industry are largely a result of their move from a small-scale personal service to giving a standard mass service.  They have continually adjusted their services and the processes used to deliver them.  This move is driven by the increased demand for flights – and also by the intense competition within the industry.  One cause of this competition was the view that airlines reflected national prestige, so governments encouraged ‘flag carriers’ and even set-up state-run airlines.  Later there was deregulation of the industry, and each airline tried to expand and get the substantial economies of scale achievable.  The result was too many airlines all trying to expand, and it became clear that there was considerable over-capacity.  This became worse after the 1980s when new budget airlines started operating and offering even more basic services at lower prices.  So the airline industry is facing many of the usual problems of an industry with over-capacity and intense competition – as well as problems of progressively moving to mass processes, and some specific problems with the nature of their operations (high capital costs, a variety of scheduling problems, global operations, emphasis on safety, new types of planes to consider, and so on).

IATA is considering improvements to its operations because, like most other organisations, it continually reviews its operations to find improvements.  To take a specific example, the process of checking passengers into planes is now too long and complicated.  In some cases, passengers on an international flight that lasts for less than an hour, are asked to start checking-in two hours before departure.  This is an obvious area for improvement. 

• IATA is looking to improve airline service by introducing high technology alternatives.  Will this necessarily improve passenger service?  Are there any viable alternatives?

As the airline industry is moving inexorably towards mass – and even continuous – processes, it seems inevitable that they will move towards a more automated, less personalised service.  The four improvements described all attempt to replace a manual process by an automated one.  And in particular, they attempt to get passengers to do more of the work themselves.  This will give faster, more efficient, more convenient and cheaper processes.  Many people will welcome this and say that the resulting service will be better.  However, other people will disagree, saying that replacing a personal service done by the airlines with a machine used by the passengers actually reduces service.  The truth is that while cost and speed are critical factors – the key success factors – there is no real alternative but to introduce more automation for mass processes.

• IATA is also considering a system of paperless cargo.  Are the problems here different to passenger operations?

The problems are surprisingly similar.  Passenger luggage is already treated as cargo and automated systems for handling it are becoming more sophisticated.  In some ways cargo is easier to deal with, as it does not needs flights that are co-ordinated with a particular passenger, it can be moved quickly by automated handling equipment, it does not need meals or other services, and it does not move itself and wander off at key times.  On the other hand, there are some additional problems, as it cannot explain where it wants to go, identify itself, move itself between points in an airport, catch connecting flights, or move itself to and from airports.  It is generally felt that the problems of handling cargo are more difficult and will take more effort to solve.