DOpenartons ConsuuTinG AnD REENCINEERIN of an OM consulting practice you would ‘unique sills your team possesses that it that market.) chapter9 393/601 ‘Work with two other students to develop a two-page prospects describing the particular features afer graduation. (Hint Identify a target market and 3 Sketch a typical materials procurement process that exists in functional organizations. Using reengineering principles, challenge the status quo and redesign this process. 4 Amequipment manufacture has the following steps in its order entry process 4, Take the order and fax i to order entry. 1. Enter the order into the system (10 percent unclear or incorrect) Check stock availablity (stock not available fr 15 percent of order). ‘4. Check customer credit (10 percent of orders have credit questions) «. Send bill of materials to warehouse “The order receipt o warehouse eyee time is typically 48 hours; 80 percent ofthe orders are han- led without eror; and order handling costs are 6 percent of order revenue. Should you re hacer this process, of is eontinvous improvement the appropriate approach? If you choose to reenginoe, how would you go about it? 5 Rapid plant assessment Jeanness exercise: Form a team of four to five people and take a 3o minute our of a plant or service business At the conclusion ofthe tou, rte the leanness of the operation using the RPA questionnaire given in the appendix to this chapter. (According to the questonnaie's developer, the average number of yeses for over 400 plant tours was seven, fand the standard deviation was 2.) In clas, discuss those areas where leanness is generally lack- ing aceoss all companies visited. 6 Advanced analysis: . Prioritize targets of opportunity for management. tp.) ‘c, Develop a two-page action plan that you would present to management to help them make improvements. CASE! REENGINEERING AT SAMWON PRECISION MACHINES Company” Ixrnopvcrion Mr. Yang Yong Sik, age 48, an executive director of Samwon Precision Company who has played an important role inthe com: pany’s innovative growth, described how he saw the company sit ftion inthe business environment ia which there are increasing cost, tnd quality demands from buyers, both domestic and overseas. He argued that 1 can sce that Korean prodocts are losing thet competitive cage from cverywhere, bat why Us this happening”... 1 ave waveled to many ‘huntues in Suthast Asia and see thst prods ae in good shape, inthe mater of design and quali, butte problems le in tee cost ‘Why i creo higher compared to other countries? He then explained: In he tafe years, our labour and manafsctoring overhead cost have teen ising eoastan, but we are not ang enough valet cope with this ising cox. Thats to sa, the past, we worked fr 1,000 wons ‘afwages and produced 1100 wns of value, but we now get aid 3.000 ‘vons but price aly 2,000 wons of vate He further asked: ‘What stall we do now? We must reduce aut costs by 2-3 percent a Year and produce more vale than oUt cos... In every par of our Zompany, ean se so many areas of waste where ve could be ang Salve Our opportunity cost much higher than before and we cannck fora to waste ime and resources when we are working. He continue: ‘Now that have explained thi tomy company, we have really seen what the can do if we jst realize what we are doing... Itis ws who must realize what in font of ws ‘According to Mr. Yang, itis going t0 be two oF three years before the Korean economy is going to either prosper again or fa behind other rapidly rising countries. (Appendixes 1 and 2 illustrate some financial data that show the cost increases.) ackcnounn oF THE ComeAxY ‘The Samwon Precision Machines Company was first established i= 1974 producing springs for ballpoint pens, and expanded quiet tamil 1980, In 1975, the company started to develop auto pars thecame a member of the Korea Auto Association. It joined the Korea Metal Industry Association in September 1976, In 1978. she company established a technical coalition with Murada Haichizo Co. of Japan. ‘in 1980, Samwon was designated as an auto pats factory by the ‘Korean Ministry of Commerce and Industry and, in 1983. was des mated as a supplying company for the Ministry of National Defence. In 1986, Samwon was designated by the government as & ‘promising small to medium company and, in 1987. became a men ber of the Korea Electronics Association In 1990. jus after Samwon sas designated a6 an outstanding small 1o medium company, they established a new factory in Kyung Ki Do.6c2 Prociss SELECTION AND DESIGN ‘The Organizational Structure ‘The company now produces about 1,800 different kinds of springs and manufactures 100 million springs per month. From about 2,000 spring makers in Korea, Samwon became one of the largest suppliers after Daewon, which is now the largest company in the industry by size, The organizational structure is shown in Figure 1, However, for cold coil springs, Samwon was the largest in size and supplies various companies ranging from auto to ballpoint pen manufacturers Though there had been evidence of growth, it was in the 1980s, that the company needed some changes to cope with the hostile business environment. The economic environment of that time ‘was not very pleasant for managers of any industry in Korea, The executive director, Mr. Yang Yong Sik, worked with the owner, Mr. Mun Hak Moo, CEO, who is now 75 years old, Mr. Mun worked in the company from its beginnings asa line foreman, He Jearned his own managerial skills while managing the growing company with expanding managerial boundaries, It is interesting that Mr. ¥ regular school while he was only a line foreman and never had cation beyond the six years of public schoo! and a short term in a vocational institution, could manage to pro- pel the reformation of the company. This is very unusual for Korean companies that traditionally have a top-lown manage- Factors SETTING THE CoNTEX® oF CHANGE Due to the Korean government's growth-oriented policy of that ra, Samwon had expanded rapidly to evolve as a well-balanced ‘company, but problems arose as the company expanded. In the 1980s, just like other Korean companies, Samvon faced many problems such as rising wages and worker resistance while their ‘customers’ requests for lower costs was the strongest pressure on Semon, Recocxrn0y oF THE NexD To CHAN¢ The hostile condit Np CoNTENT oP CHANGE ‘of the 1980s were the driving force to adopt the 5S program. Samwon adopted 5S just before the crisis was fet st the company, ‘While Mr. Yang was a line foreman at Samwon, he visited Japan, Dui ng his vist, he figured that a erisis would soon come to the Korean industry and he wanted Samwon to be prepared. He met with the licensor of Samwon in Osaka and leaned from the Japanese that productivity increases could only be achieved by Executive Director ‘workers and at the place of production, He felt that his company had to change quickly to compete with the competitors in Japan, Hence, Mr. Yang's mission was to implement the SS program in Samwon. He took a risk in that he received a six-month window ‘of opportunity from Mr. Mun the CEO, and if the program did not suoceed, he was to leave the company. “SS” is Japanese which stands for seri (determine which equipment is necessary and which is not), seiton (have the necessary equipment in reach and in the right place), seiso (clean), seikersu (maintain the above 38), and sitsuke (mental discipline tnd readiness). Process oF Traxsrrion After his return to Korea, Mr. Yang, with the owner Mr. Mun's per- mission, launched this 5S project in Samwon without knowing precisely what the consequences would be. Implementation of the $5 Program The adaptation of 5S was the hardest part for the company, just like any other innovation process, reflected in the old Korean aphorism “the start is when half ‘of the work is done." The 5S program wa frst adopted in 1980 and. falled in the first and second attempts because of the resistance of the workers and other managers; however, it finaly came to fruition in 1988. When it was fully embraced by the workers, they 100k six months of pre-educational programs to establish the cultnral back- ‘around before actually adopting the fundamental principles of SS. This was when Samwon’s culture was formed, based om the follow ing forces that drive the culture: + “Tam the owner af the company’ + “I got what I earn” V+ “Tam evaluated by my work for the company, not by my school diploma “Do it myself frst Senior management were encouraged t0 take the initiative of setting an example to subordinates and were encouraged to arrive at work earlier than their subordinates. General managers would aerive 81 6:30 a. 30 minutes earlier than regular workers, and chief exec utives would arrive at 6:00 A.\. No office meeting would occur during office hours; they would meet hefore the affice hours tha, normally started at 8:00 A. Afier Mr. Yang's venture tured out to be successful, Samwon became a lean company with employee support of the new com- pany direction. It took eight years of downsizing to make the ‘company slim and fit enough to cope with the envirooment, In 4c,OpERxTIONS CONSULTING AND REENGINEERING Samwon was ahead of the downsizing tend that was carried out in Korea. Mr. Yang is proud of the fact thatthe 5S program was origi nally adopted from Japan and has been attempted by almost every Korean company, but no other company succeeded in setting up the The core part ofthe change was the new culture of the workers ‘where everyone believed that he/she was the owner of the company. ‘This is shown in the company’s payments, where every increased profit was reinvested or paid to the workers and even more impor ‘tantly the company kept its word when implementing the projec. In ‘order for Samwon to prosper, the 5S program had 10 be success The success was due to many factors peculiar to stall companies like Semwon (such as no shift in politics and no changes of CEO) The soccessful adaptation of S$ from their Japanese licensor mipany gave Samwo the structure for otber campaigns tobe suc ssfully implemented The Initiation ofthe Program Cho Kwan Ri Once management of the SS was found to be mature and the results had become well established, Mr. Yang wanted to introduce the next action program to increase the productivity and sophistication of the company by utilizing the $$ foundation. Mr. Yang thought the market pressures eater rate than they could on price and quality would increase ata ‘The next program was named “cho kwan ri” (CKR: cho stands for a second of time: kwvan r refers to management, a time-based ‘management system. Unlike the Japanese SS campaign, CKR was exclusively invented by Samwon. In the process of waste analy sis, Mr. Yang wanted to investigate the amount of time wasted during work both on the Tactory floor and at office desks, and measure these in some monetary terms. In other words, estab- lish how much While Samwon successfully adopted the 5S program after eight years of difficult work, the envizonment around Samon bad also grown more adversarial than before. Their main problem was with money the company actually lost due to wasted manufacturing cost, Siace the material cost was over 80 percent of the manufacturing cost, it was not easy for Samwon to reduce the manufacturing cost while the wages and other overheads inereased Jing more than just 5S. As was the case with other Korean manufacturers the material cot ddue to social pressure, They needed some a proportion of the toal manufacturing cost actually surpassed. the labour cost (which accounted for around 15 percent of total manufacturing cost) in competition with other foreign competing Cho Kwan Ri You cA0or Save be; Y's bo Gk MEST WHILE WE HAVE Maxacens second 3 won hour +9800 wons Bhours 86,400 wore chapter 9 sca partners. This was in contrast to Korean managers” perceptions that the labour cost was actualy the worst factor. Inestablishing cho kwan ri, Mr. Yang thought thatthe 60-minute ‘hour was not accurate enough to measure the wasted time. He took the “second” as the measuring scale to count the time as accurately as possible. M. Yang calculate the value of “each second” repre sented by workers and managers by dividing dei average annual salaries by the total nmber of seconds forthe actual annual work- ing days. Hence, one second of Boor worker” time und managers" time havea different worth. Cho kwan ri calculated all work activity, including fue team meetings, chatting ine, smoking, cfc breaks, et. into monetary ‘ale i anatemps to publicly sdentity the wasted time inthe com pany. Figure 2 shows the wage table. For example. if it took 10 see- onds to make one spring, then, since it cost 2 wons per second for wages, tha cost 20 wons in wages. It would get more expe sive when itis caleulaed fr top manager. I took 600 seconds to write a report by a manager and it cost 3 wons per second, then it would cost 1,800 wors in wages.” ‘Cho kwvan inital looked like « way of squeezing time from the workers. On the oter hand itrefected what the workers wanted The workers would get more days off than at oer companies if the factory was run 389 days a year. The main purpose was to concen trate on working hours and Use the saved time to good purpose regardless if itis fr personal use o for the company. Samwon sar cco hwan in 1990 and thse was easier than before, because the new company culture had already been established from te 5S program, Once the cost measuring ys quipped in calculating cost information on wasted time and is eifect on productivity as well asthe value creation by individual workers, departmenis, and the whole company, This enabled nanage their own ways of working in order to be as without any supervision ot diretion from the tp. Many programs to get rid of wasted tine have sted by the employees for themselves ‘The employees suggested themsclves that any business mecting should be called before the workday stats at 8:00 As. The com: pany Saw that meetings during the working day caused the most ‘waste of working hours and they did not want the company oper ations being interupted by workers being called away for the meetings. ‘As reslt of CKR, employees have shifted team meetings t© 700 AM. to discuss and find problems that Le ahead. This was quickly supported by everyone. AS a resul m was developed, everyone was workers 0 efficient as possible themselves, Worsss 6,400 wensPnocess SELECTION AND DESIGN efficient flow of communication and feedback improvements and the team leaders could then be well aware of what was going on in the company. The information flow between departments. was Sufficient to ensure that any team leader could answer simple phone calls or questions from external parties. Some of the effects that cho kwan ri has achieved for the com: pany are listed below Wasted time reduction. A new system for morning mec usually commenced at Wasted time during the day The best part of this was that all the participants were eager to have the meeting and it was very productive. A suggestion system in fact changed the way R & D efforts were conducted in such a way that work ers on the floor supported the work of R & D members, resulting in teamwork between workers and R & D person. nel. In an attempt to get rid of the waste all workers were asked 10 develop or improve their work. wi effective in process development, The machines were cus tomized to the workers so that they With the knowledge of ing 7:00 a.m. in order to reduce Id run the machines processes going on inside the machine. The workers saved a lot of time due to time-based management. They spent this time with the machines and sted improvements every week. Every worker kept management checksheet by seconds for a month and salaries were set based upon their performance. not by According fo Mr. Yang, most of the machines produced + four times more springs than when they were imported from Japan and the U.S. Some machines that made long coil spfings were redesigned to make short coil springs and replaced the imporied machines so that they did not have to Jmpost those machines again. They also had a custom-made quality checking machine made by the manufacturing department, which would be very expensive if imported Welfare was enhanced, a. Pay was 30 percent more than any other company in Korea b, Bonuses were up 6 times previous levels. © The company paid all the employees’ children’s educe tional fees up to college level d. The company supported overseas training. e. All the company-owned ears were air-conditioned for efficiency of the work force. The suggestion system worked without any intervention from upper management The CKR system was nationally acknowledged as “best prac tice” and was also recognized as a benchmark model for other ‘Companies. Samsung Group, the national representative business conglomerate, benchmarked Samwon to add the basics of the CKR. Program to its own operation. Samsung's early office hour system 7:00 AM. to 4:00 Pat) started in 1994 after Samwon’s CKR Boosting the Phase: Saryuk 0.01 Campaign As part of the company's “continuous improvement” program, Samwon then ‘adopted the Saryuk 0.01 campaign after the CKR and $8 programs Were successfully implemented. The reason for the Saryuk 0.01 campaign (saryuk means to make a desperate or frantic effort for the ultimate goal) was a goal-oriented campaign to improve by even 1 percent, Externally, it was the buyer companies’ pressure ‘on price reduction and adversarial economic conditions for small-sized supplying companies. In an effort to reduce cost, they focused on reducing the waste. The pri ciple of cho kwan ri was to Feduce wast tht is invisible, whereas the principle of Saryuk 0.01 was to reduce waste thats visible. Mr, Yang wished to continue to Seek out any waste in the company in order to meet the competitive situation. The Saryuk 0.01 program was introduced into the com pany in order to get rid of the visible waste in every aspect of the company's operations. Samwon's moto was Saryuk for 0.01 of productivity improvemen Saryuk for 0.01 of waste Saryuk for 0.01 of profit Its specific objective was o each a otal of two million wons of Waste for the whole corporation. It was calculated that if each member of the company saves 10 thousand wons of waste this ‘Would result in 2 million wons of waste forthe company. It is nat Ural that this process would be impossible to implement if they did ot have 58 and cho kwan ri in place beforehand. Mr. Yang insisted that “a company always has to prepare itself to be a wave rider instead of a victim of environmental change.” Buyers always impose their own cost and quality pressures on their suppliers, For the last contract the major automakers wanted a percent price cut While Samwon’s profit rate was only about 4 percent. This meant that if Samwon was not prepared for the cost reduction pressures from buyers there would not he any chance of surviving from such pressure, Semwon targeted nine waste categories as follows: 1 Waste from defects. It is important to keep in mind that «quality contro is important fr all, even in managerial work. Infact, defects in managerial work bring more damage to the ‘company. To prevent these wastes, we must be accurate and sensitive in every operation ‘Waste from clumsy work. We should know that no matter how precise the plan is, there is a chance that it eannot be completed at the right time. It is beter to take time inthis case, rather than poorly finishing the work 3. Waste from inventories. Inventory is money, whether itis Product or material. Any inventories over the minimum required level not only cause stagnation in cash flow, but also a waste in managing the inventories. This can be mane aged as part of a JIT [just-in-time] program 4 Waste of motions. Every motion of the work can process of creating value. We have to keep in mind that we should watch every motion of our work and machines so that itean be improved and add more value 5 Waste of waiting. For example, waiting for service in a bank isa waste of alot of time, Every member of the com: any must be organized and information flow should be ‘comprebensive so that we can reduce the waste of ime in places such as the bank or taxation office 6 Waste of transporting. Usage of mass transportation in the company and-qutside the company can reduce a large Waste of process. We should use suggestion systems so that any waste in the Aloeess can be found and the improved work situation should be communicated to all workersOprrari0xs Co JNSLUTING AND REENGINEERING prer 9 oes estof the waste 8 Waste of industrial accident, This brings for the company and forthe person, not t pain that he almost always from carelessness of the workers (90 percent mention all of the ‘she will suffer. These kinds of accidents are of the tim). It is only ourselves who can prevent these kinds Waste of manage The ‘most important thing to reduce this kind of waste isto have work. This is invisible waste {good information flow in the company, both vertically and horizootaly ‘The company saved W 49,000,000 and W 59,896,719 for the 24 months from June 1993 when it stated the Saryuk 0.01 cam= ppaign. There are weekly and monthly schedules in Samwvon to redace waste and keep up the above three campaigns. Mr. Yang asserted that the management systems operate not by ord and supervision, issued every time something has to be done as is usu ly seen in other companies, but by the predesigned “time-work schedile.” He says, We even care about the waste caused by making schedules about what we do today and this week and who should do this and that everytime. 1s done regularly by Instead, we tied to make ourselves used tothe who an by when The time-work schedule in Tuble 1 shows bow each de is scheduled todo what at which day ofthe week and in which week For instance, on Tuesday, everybody is supposed to cary out the 5S campaign tasks from 7:55 0 8:15 aM. Specifically, in Week 1 of the month, office cleaning is the work to do. Everyone has to clean up the personal drawers, files, computers, etc., by SS system rules Each one has a designated area to clean if tis for a companywide cleaning. Some of the sti workers innovated the way of serving meals in the cafeteria. The workers used to be served their meals from a fixed menu and le Achievements of Saryuk 0.01 Campaign One of examples of reducing waste was the way in which ‘The Pre-designed “Time-Work” Schedule Wonts Te Dar Wee | Werk 2 Worx 3 Week 4 Present 815 Mendy Production! «Process arkeing courting 765-815 Tuerdey = Clean Genre eaning fice Fectory factory ‘755-816 Wecnendiy Education Education: eatin: About the Production, Metal company ality preparation Orgazation flat Relates elated Related evelopment department department department department Team macing Education inspection Education department amount by cafeteria workers atthe meal stands, which resulted in, the workers throwing away any leftover food. That wasted food needed containers and the related activities to abandon the waste fad caused workers to be involved in cleaaing the containers. The workers committee recommended a self-service system by which jount of food to as much as 80 percent that they need atthe first trip to the serving stand. This system eventually climinated 20 peroeat of cafeteria overhead costs by getting rid of ‘wasted food, waste containers, and the cleaning work. The workers took seats from the frst row of tables in arival sequence so that unoccupied seats were not mixed up with the used dirty seats. They saved cleaning work of the dining room by 20 percent. Trash cans ‘were sorted by items like botles, metal cans; paper cups, and others. The workers reduced the number of dumping trash cans by crush. ing the metal cans and piling the paper cups in columns in order to ‘save space in the trash cans, They decided not to put bottled drinks in the vending machines because the empty bottles need more storage room. Another example was a reduction inthe ectiit bills by switch fing the lights in the restroom on and off as needed and indicating the ‘by using O and X signs on the outside of the door. As sch, the ideas were actually suggested by workers themselves. Each worker was committed to report 15 or more cases of removing waste per month. The company called the suggestions a “guaranteed Cheque,” meaning thatthe ideas make money by reducing waste. The ‘suggestion system vas sucessfully operated along with an incentive em. The suggesters were paid by a certain ratio of total income iEined from the specific ideas plus a compensation reward in terms cccupan ‘of promotion and wage increases based on the company evaluation scheme Me load and identifies the waste in office work. He considered the production workers to be more effectively measurable than the bifice workers. He finally decided to utilize the CKR technique to Yang wondered how the office staff determines their work analyze their work in seconds for each job for a period of one ‘month, The monthly job analysis sheets gave them important information on which jobs were more important than others in terms of time requirement and then they could easily determine department6c6 section 2 PROCESS SELECTION AND DESIGN Sand Cone of the Campaigns how to improve the way of doing jobs and the kind of jobs that ‘ould be eliminated. This process provided the company with very reasonable ways of optimizing the manpower level in the offi As shown in Figure 3, the series of campaigns are depicted as a Pounics oF Canoe When the 5S program was firs adopted, it seemed that it would be successful. However, just when the work was showing a positive ‘outcome, resistance came not from the workers but from the hi . They could not bear to see that this new approach, imple ‘mented by only a line foreman, was working out well. They refused to embrace SS and naturally the workers refused also. Samwon showed its difference from other companies with the owner backing Mr. Yang and supporting him with the power to sack employees, ‘even managers, if they were not embracing this new program. Ten Percent of the employees were fired and many of them were man- ther than workers, Consequently, this had a downsizing cffect and fatiened the ompanizational structure making it simple single-pathed, and cross-functional with a lot of power held by Mr. Yang. This was a toully new concept at that time in Korea, as traditionally, became a multiple-path structure. After ejght years of the cultural change within the compeny, there was littl, if any, functional polities during the development and implementation of cho kwan si programs and the Saryk 0.01 there were managers for each department and it campaign. OprRaTioNs oF New Practices The series of campai s eventually brought in a broad range of in the managerial system assisting to resolve the funds- ‘mental operational problems. The typicsl problems included layo of people, which was inevitable after downsizing, capital invest ‘ment that was required for replacing the old equipment and updat ing the technologies, and wage increases tha sup imereases and the like Layoffs were not generally accepted by the public in Korea and were usually subject sistance by the labour unions. Unless a natural decrease of manpower exist, the company Should depend on some other way of utilizing the excess man Power realized by a reduction of unproductive work time, Samwon Precision Company expanded the plant capacity without extra cap. ital investment by adding a third work shift wo the existing two-shift system, The plants were then operated on a 24-hour per day bass, absorbing the excess manpower ava Paigns. The company also extended the annual working days to as many as 359 days with only six days unutilized per year, which ble from the innovation cam was significantly different from the average working days of 300 ot less for other Korean companies, This system utilized the factory at the maximum capacity in such a way as to save extra capital investment otherwise required for increasing production capacity This maximum machine utilization system, combined with autom tion of the production process, allowed the company to let their workers free from work for 94 days per capita per year. This holi- ds ‘companies while keeping the factories working for more days at thee full shits. The company create its own working calendar with the work es scheduled into two groups, A and B. According tothe calendar, employees in group A did not need to work on Sundays while the employees of group B did not work on Tuesdays. The company Kept the production lines in fll operation throughout the year with It reduced factory overhead by ot increased overall productivity to our times higher than other sii lar companies in Korea. This unique operation system coupled with the automation of the process resulted in a red benefit was much longer than that of other average Korean ‘oat shutdowns. fourth and tion of production cost by 30 percent and at the same time, wi increased by 20 percent over the 18 months since the Saryuk 0.01 program was launched. On top of that, the workers benefited by 900 percent of the annual flat bonus instead of 400 percent that used tobe the amount a year ag ‘The company accelerated the automation of production lines through the innovative activities ofthe machine workers and R & D Stall. Many production processes were automated with the help of the innovative efforts through the Saryuk 0.01 waste banishment ‘rogram. Nowadays a line consisting of $0 machines is operated by just one worker. ‘As an example of a typical success story, an automatic sorting ‘machine was designed by Mr. Kim T,S., the operator who wanted to drive out the waste of man-hours requited in sorting the over sized springs from the good ones. He spent about one and a half months in developing an electrical sensor to sort the over-sized springs. Me. Kim won a grade A reward of W 00,000 as one of the ‘innovative performances of the month,” which was an incentive system to encourage the line Workers to improve the automation levelOvert Another was Mr. Lee S.C, who wondered if he could reduce the man-hours to pack the products. He tried to automate the process, by reducing the need for manual packing. He eventually automated the whole process by which the company saved 2 work time and cut inventory by 20 percent. In the process, 50 machines in that particular line were managed only by one worker, Another example was the simple adjustment of the machine rack Mr. Cho weeks and he was subsequently awarded that resulted in import substitution of Japanese machi CR. developed it in th a W 1,500,000 reward The main characteristic of these successes was thatthe R& D activites were cross-functional among the devel spment e and line workers who wor 4 hours a day on a three-shift system, providing prompt reaction to the loor problems and new product development. The company motivated its employe grams by reinforcing to participate in the pro. trust in the company policy. The policy ‘was to reinvest the profits back into the company operations, and for employees’ welfare so that the employ they worked on behalf of themselves, and believed that they could s were confident that manage their wage inereases, not by the CEO. It was not surpris ing that there was no labour union, The line managers rotated a ApveNDDx 1 —— 3,000 00 22.000,000 1,000,000 | cl NS CONSULTING AND REENGINEERING ( rintendent every month, so tha and worker had to know about the problems and issues faced in the factories. The company kept its organization exceptionally Aat, exible, and cross-functional so that communication barriers were removed “Training was also conside to share the vision, value Management submitted the model 10 the subordinates and encour- ‘aged them to accept the ide ed an important communication device of the operation, technique, and skill Covcuesiox This case sheds light on 8 g committed o the vision that everyone in the company shares and is involved in the process of improvement, Mr. Mun, the owner eral proposition that the sustained y can only be realized if top management is ‘became a winner ofthe game by implementing this proposition. He believed in the process by empowe Mr. Yang, initially only a line foreman “The point of the proposition is to run a company to achieve egate effectiveness of the total on g the company to integrate all levels of the organization and all functional areas of the company. Motivatio his employees, especially empowerment are critical foundations for tot innovation of the | [=e cesonvatie a Materia | |e Wa Administrative cos Total manufacturing cost iGC/3P4 —scin?_ Process Suton 0 Ds | | 2.00, 000 |] eB | ——_. _—s +. é are considered as only part of the total management process The ov effectiveness of the whole company operation, not the simple sum of the effc cies of each operation of the individual functions such as produc tion lines, marketing, finance, the information network, ete Another point is that the man cific prescription rather than a panax al system needs te have a spe- future, and why the org ea for all companies. This case to continually improve, ‘own innovation process and system. Education | me cost of soods Net easing Increasing demonsates tht the Samon Peision Company dicovered thir and training we d as most important tools forthe company in order to keep everyone informed of what their vision and targets were, and also 1 provide them with updated skills nd ideas. The Samwon Precision Company showed how an organization should be oriented for the nization should be flexible and motivatedOvengrions ConsetNe AND REENGINEERING rhe Mek Quarters. 00 Rail EM. The Moka CGreinee, Le, and R. Savich Consling to Management. New Yor: Improve Journal of ome M.-Recrgincing Wet D'tAworte Obitente" Hara ‘pon, and, Maca, “Why (and Hos) tT FOOTNOTES Muar, “Balancing the Profesional Service Firm.” Sloan Management Review 2,00, (al 1982) pp 18: APPENDIX A: SYSTEMS THINKING! _ TOO Key issues in operations management such as mass customization, global sup iy chains. achievement of a service factory to deliver personalized services, and inte Pe Internet and wireless technologies into operations all conspire to inerease the complexity of operations. Complexity however, i of two types: detailed complexity (dealing with many variables) and dynamic complexity (seeing patterns and relationships over time). Nearly all Sf the methods and tools of operations management (with the exception of some simulation approaches) have been developed to address detailed complexity and provide lite assistance ve deat with dynamic complexity. Dynamic complenity arises when cause and effect are dis- tent in time and location and when many consequences of actions are subtle, especially over * time horizons, and unintended. Peter Senge, a leading systems thinking expert, empha- jement situations Ties in understanding dynamic Complexity, not detailed complexty”” Along similar lines, Russell Ackoff, the management ure also reminds us thatthe job of management today is one of managing interactions. Syotems thinking provides us with a language to understand, analyze, and communicate siteclions that involve dynamic complexity Iti considered to be one ofthe core disciplines lor sizes that “the real leverage in most ma 9, no. 6 (November Decerber 199),