Priorities

World Class Priorities

Three principal priorities for operations in the new millenium are Lean operations, Six Sigma quality and Supply Chain management. These interlink. They also need to be embedded in a background of three related forms of thinking.

LEAN THINKING

Lean thinking is a philosophy not a system or a technique. It is about simplicity, flow, visibility, partnership, and value. Womack and Jones' "Lean Thinking" emphasises the elimination of waste and the adoption of five Lean principles.

1. Specify value from the point of view of the customer.
2. Identify the value stream (mapping is a powerful way to do this). Concentrate on the object not the organisational department. There are three streams to be mapped, the physical flow, the information flow, and new product introduction. In each there will be value adding activities, non-value adding activities, and temporarily necessary non-value adding activities. Improve the first, eliminate the second, and reduce the third.
3. Make value flow. If possible use one piece flow. Avoid batch and queue. Remove all obstacles that prevent flow from taking place.
4. Pull at the customer's rate of demand. Use one, make one. This extends to the full supply chain.
5. Seek perfection through continual improvement and the steady adoption of the first four principles.

The family of Lean techniques described in this course support the adoption of these key principles.

SYSTEMS THINKING

Systems Thinking, with origins in biology a century or more ago, only began to have an impact on management during the last thirty or so years. It is the basis of process reengineering and the internet. It is also fundamental to Lean, which is ultimately a systems philosophy.

A system is a set of entities together with the relationship between them. Think of a children's mobile - touch one element and the whole thing moves. So it is with management systems. There is ecology at work.

A central tenent is the process view. Think in terms of end-to-end processes that deliver the products and services customers require, rather than vertical departmental "silos". Some processes will be core and some support. The process view is integral in process reengineering, in total quality, in Lean thinking, and in supply chain thinking.

Human activity systems generally have a goal or purpose around which the entities or activities are organised. Systems have clients and customers, beneficiaries and victims. They contain resources (people, materials, and machines) which are joined together by information flows to support the goals. Systems contain sub-systems with all the characteristics of the higher level system. Trying to optimise a sub-system on its own is futile and may be counterproductive. Systems grow, decline and interact with their environment; they are only self-sustaining together with their environment; they affect the environment and the environment affects them. Feedback and control are parts of every system, the effectiveness of which has a major impact on the ability to achieve the goals.

The concept of Learning is central to Systems Thinking. Natural systems learn by evolution. Management systems also learn by experience but this may be too slow. They need to set out to learn specifically about themselves, their operations, their processes, and their customers.

An important idea in Systems Thinking is feedback loops. Positive feedback grows like interest in a bank. Negative feedback is goal seeking like a thermostat. Most systems contain both types of loop. The point is, understanding the loops is essential to managing systems behaviour. A classic case is the so-called Forrester Effect in Supply Chains resulting in demand amplification.

Systems Thinking teaches that effective ways to manage systems are to decrease response time, not to attack positive feedback (work harder), but ot go for negative feedback (prevention), and to work in systems or processes rather than in "silo". In other words, get to the root cause.

STATISTICAL THINKING

Statistical Thinking recognises that varition is everywhere. The key task is to understand and reduce variation, to manage it, but it cannot be eliminated. Deming said that a prime failure of management was their inability to understand variation. Consider why so many management "solutions" (MRP, TQM, and even some Lean) do not work - ignoring variation is a big reason.

Statistical Thinking overlaps with Systems Thinking in as far as both recognise that all work should be viewed as a process, and all processes are inter-connected. Data is needed to guide decisions, and such data should include measurement of variation. Avoid "drowning in a river of average depth one metre".

One needs to be aware of the differences between common cause variation and special cause variation. Treating common causes as special causes (known as tinkering) can make the situation far worse. Unlearning the deterministic view of the world is a great challenge.