Business Operations & Process Management

Pakgohar, Alireza
Contents

1. Introduction to the subject.............................................................................................3

2. About the company.........................................................................................................3

3. Task 3: Lean Management and its challenges................................................................7

3.1. The Scientific Method in Lean Management...........................................................7

3.3. Seven Wastes...........................................................................................................8

3.5. Application of Lean................................................................................................10

3.6. Lean at ESP.............................................................................................................10

3.7. Value Stream Mapping..........................................................................................11

3.7.1. Current State......................................................................................................11

3.7.2. Future State........................................................................................................13

3.8. Criticism of Lean.....................................................................................................15

3.9. Conclusion..............................................................................................................16

4. Task 4: Critical Reflection..............................................................................................17

4.1.Description..........................................................................................................17

4.2. Feelings......................................................................................................................17

4.3. Evaluation..................................................................................................................17

4.4. Analysis......................................................................................................................18

4.5. Conclusion.................................................................................................................18

References............................................................................................................................19

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1. Introduction to the subject

Operations and process management is about how organisations produce goods and
services. Within the operations function of any enterprise, operations managers look after
the processes that produce services and products. But operations and process management
is even wider than this, managers in other functions, such as Marketing, Sales and Finance,
also manage processes. These processes often supply internal ‘customers’ with services
such as marketing plans, sales forecasts, budgets, and so on. In fact, all parts of all
organisations are made up of processes. That is why operations and process management is
of direct relevance to all managers, irrespective of which function they work in (Slack,
Brandon-Jones, Johnston, & Betts, 2015). Effective operations management is about
understanding what value means to customers. By identifying tasks that are not valuable to

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customers but generate costs to the business, lean management can be implemented to
continuously improve by removing waste from the processes and adding value.

2. About the company XX

ESP is a designer, manufacturer and distributor of Sealing and Gasket products to the
Original Equipment Manufacturer (OEM) and Maintenance, Repair and Overhaul (MRO)
sectors. ESP is a Strategic Business Unit within UK site which is multi product specialist
offering a wide range of engineering components and technical services. The product range
consists of Own Brand, Private Label, Partner Brand and commodity sealing components,
rubber technology components and designed-for-function plastic products. Current
turnover of ESP is £29M per annum (Holland, 2018). I am currently employed as Operations
Manager at ESP, responsible for Production, Logistics, Quality Control and Health & Safety
with 5 direct managerial reports and 54 staff members within my operational team.

3. Task 3: Lean Management and its challenges

Lean management has been defined as, "The practice of using scientific methods to solve
business problems in order to create value", by the lean thinking pioneer, author and
academic Professor Daniel Jones.

3.1. The Scientific Method in Lean Management

Womack et al devised the expression ‘lean production’ in their book ‘The Machine That
Changed the World’ (Womack, Jones, & Roos, 1990), also meaning ‘Lean Manufacturing’ this
term refers to a manufacturing model with the aim to constantly reduce waste and
maximise flow (Dinesh & Vaibhav, 2005). Lean initiatives began at Toyota to help improve
productivity at a time when investment was minimal, the idea to eliminate waste from
processes by identifying those that added value and those that didn’t. Identifying the value
in lean production means understanding the activities required to produce a specific
product, and then optimise the whole process from the view of the customer (Kariuki &
Mburu, 2013). By understanding the meaning of value and waste, processes can be
managed to be as lean as possible and scientific methods can be used to solve problems.

The Scientific Method is a process for asking and answering questions using a specific set of
procedures, including:

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• Observing

• Asking questions

• Generating hypotheses and predictions

• Experimentation or testing of a hypothesis

• Summarizing or analysing data to draw a conclusion

• Communicating discovery and process to others: verbally and/or in writing

• Identifying a new question

(Gerde, Schachter, & Wasik, 2013)

This method can be adapted to lean management by following the ‘5 Principles of Lean’
(Womack, Jones, & Roos, 1990) as shown in Figure 1

Figure 1: Adapted from (Womack, Jones, & Roos, 1990)

Each element of the scientific method can be integrated into the five principles to ensure
the current situation is understood, a possible way forward that improves the process is
identified, an action plan formulated to implement the changes and then monitor the
situation to ensure the predicted results are achieved.

3.2. Types of Operation

Monden (1993) suggested categorising processes into three types;

 Non-value adding (NVA) – Pure waste activities such as waiting, double handling,
overproducing and defects.

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  Necessary but non-value adding (NNVA) – Wasteful activities but are necessary to
carry out the process such as second operations of raw material to improve yield but
add no direct customer value
 Value adding (VA) – Activities that add value to a product, ones that convert inputs
to outputs such as converting raw material or changing the fit, form or function.

3.3. Seven Wastes

There are seven commonly accepted wastes in the Toyota production system(TPS) (Hines &
Rich, The seven value stream mapping tools, 1997):

 Overproduction is regarded as the most serious of wastes which can lead to

excessive stock and costly storage, also defective parts may not be detected if goods
are in storage.
 Delay/Waiting is the time between the end of one process and the start of another
one, if time is not used efficiently costs increase, therefore the ideal situation is a
process flow with no waiting time.
 Transportation/Conveyance is the unnecessary movement of materials, products or
information. Double or multiple handling increases the risk of damage and
deterioration.
 Motion waste can be walking, talking, stretching and reaching if it is unnecessary to
perform during the task (Liker J. K., 2004).
 Unnecessary inventory in the form of raw material, finished goods or work in
progress can cause delayed lead times and increased costs, it can also lead to
disposal of stock if it is not consumed within its shelf life.
 Inappropriate processing like taking unneeded steps to process parts caused by poor
tool or product design. Waste is also generated when providing higher-quality
products than necessary (Liker J. K., 2004).
 Defects mean costly re-work could be required or re-manufacture if they must be
scrapped. Increased inspection and handling time is required to identify and confirm
the defects which again increase costs.

3.4. 5 performance objectives for value

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Slack et al (2010 ) describe how an organisation can measure its operational performance
using five basic operations performance objectives, which are quality, speed, dependability,
flexibility and cost.

Ferdows & De Meyer (Ferdows & De Meyer, 1990) suggest that quality is the building block
and the basis that all businesses should base their improvements on, the sand cone in figure
2 shows the importance of quality on performance.

Figure 2: Adapted from Ferdows & De Meyer

By illustrating the importance of quality on performance and the need to ensure it is

consistently attained, the use of lean management can be implemented to achieve this as it
eliminates waste in all its forms. Resource costs that do not contribute to the value of a
product are categorised as waste in a lean manufacturing location. When waste is
eliminated, the results are an improvement in customer service, process efficiency and the
quality of the products or services a business delivers.

3.5. Application of Lean

Various tools can be used when applying lean, there is no standard methodology to follow
but some are:

 Layout – A variety of layouts can be used to best suit the business or product to
ensure the most efficient flow.
 Just in Time(JIT)/Kanban - A ‘pull’ system of production ensuring only what is
required is manufactured in the correct quantity and at the correct time. A Kanban
system can be used to trigger JIT using cards or bins.
 5S - A methodology for arranging areas so tasks can be performed efficiently,
effectively, and safely. It focuses on keeping only the tools required where they
belong and the workplace tidy, making it easier for operators to do their jobs
without wasting time or risking injury.
3.6. Lean at ESP

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ESP is both a manufacturing facility and a distribution centre, lean principles have been
applied to the manufacturing part of the business as this is historically where lean
management has its roots. As the business grew over the years and more machinery was
installed the factory floor evolved into a job shop lay out with unclear routes for raw
material and the inputs and outputs unorganised. Following a lean initiative, the factory
was re-arranged into a cellular layout with incoming raw materials at one end of the
building and out going finished goods processed at the other, this reduced waste and costs
and improved processes. 5S has previously tried to be implemented but the initiative failed
and is not practiced at ESP.

The warehouse has also developed over time with the growth of the business, but no lean
initiatives have been carried out to identify where improvements could be made. Cudney &
Elrod (Cudney & Elrod, 2011) suggest that lean philosophy is not restricted to manufacturing
industry and can be applied to any sector, which would include warehousing.

3.7. Value Stream Mapping

Following the scientific method to understand the current situation of the warehouse at
ESP, Value Stream mapping(VSM) can be used. A value stream consists of all the materials
and information required in the manufacturing of a particular product and how they flow
through the manufacturing system. Value-stream mapping is simply transferring
information about the value stream to a ‘map’, which represents either the current or
future state of the manufacturing system. As the name implies, a current-state VSM shows
how both materials and information flow through the processes in the current system. A
future-state VSM represents the ideal state of the manufacturing system (Chen, Li, & Shady,
2010). By understanding the processes in the value stream, the types of operations can be
identified and through Cell layout, 5S, JIT, Kanban and other lean methodologies the wastes
can be removed, and the process made more efficient.

3.7.1. Current State

The current as is VSM for the warehouse at ESP is shown in figure 3:

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Figure 3

The wastes identified in the value stream linked to the seven wastes are:

 Delay/Waiting – Due to ESP being a merger of two business units within XX, all
quality inspections are performed at ESP Warrington, but the stock is received and
stored at ESP Barnsley. Excessive delays are incurred due to the physical transport of
the goods to Warrington and the current backlog time of moving parts through
inspection. As the inspectors are removed from the stock, priorities are not known,
and parts are not processed quickly enough, unnecessary communication between
the two sites occurs.
 Motion – The current layout of the warehouse is not conducive to efficient picking;
the warehouse was acquired several years ago with racking already assembled and
has not been altered. The racking, as shown in Figure 3, is installed at 90° to walls
meaning to carry out picks an operator has to re-trace their steps multiple times as
there is no access between aisles other than the central aisle. This also means lifting
equipment is travelling within this area frequently and therefore delaying other
pedestrians or lifting equipment to ensure safe working procedures are followed.
 Inappropriate processing – ESP currently runs a fully batch traceable Warehouse
Management System(WMS) but does not utilise any technology to link to it. Due to
the lack of Barcode scanners or radio-frequency identification, operators must
process all warehouse tasks manually, this means excessive processes are performed

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 where operators are confined to inputting into the WMS and not carrying out value
added activities.
 Transport/Conveyance – In the current warehouse value stream it is shown that
after a product is picked there is a returns process, this is due to a lack of capability
of counting stock as it is picked. Products at ESP are small sealing products that are
received in bulk, typically bags of tens of thousands, but picked for customers in
hundreds or thousands. The products cannot be counted by hand due to time
restrictions, so product is over picked then taken to the packing area where it is
weigh counted on scales, the excess stock returned to its original location. This
double handling is a non-value process which increases the risk of product being
returned to an incorrect location and therefore becoming lost stock.

ESP monitors several Key Performance Indicators(KPI) including Customer Complaints, year
to date ESP has recorded 32 customer complaints, 14 due to incorrect goods being picked
from the warehouse, totalling 56.25% of all complaints from eight departments. The VSM
identified that the manual use of the WSM the picking process was not robust and allowed
for incorrect picks to occur causing poor performance. Another KPI measured is stock
adjustments, results show that in the previous month 495 stock adjustments were made
against a target of 100, root causes of these adjustments were identified as the manual
returns process pick confirmation.

These two issues are both waste through defects, and the implementation of lean
management could improve performance and quality by reducing them to acceptable levels.

3.7.2. Future State

By use of the scientific method, the current value stream was observed, and questions
asked to understand the processes, therefore predictions and hypotheses can be made to
improve it. Through the implementation of the following tasks the process time and lead
time could be reduced:

 New warehouse layout

The VSM identified an inefficient warehouse layout where travel was duplicated and there
was no flow from goods in to despatch, figure 4 shows the current layout and the
duplication of travel. The layout has no logical process flow and goods are stored in random
locations.

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Figure 4

Salvendy (2001) states that layout is integral to the successful performance of all warehouse
activities. The objectives of a proper warehouse layout are:

 To use space effectively

 To allow the most efficient material handling
 To provide the most economical storage in relation to costs of equipment, use of
space, damage to material, and handling labour

By following these guidelines, figure 5 shows the proposed layout for the warehouse where
a cellular process flow is adopted. Similar product categories are stored together, and the
racking is laid out to reduce travel time to a minimum.

Figure 5

 Barcode scanning

All processes in the ESP warehouse are manual which increases the risk of human error,
leading to lost stock causing delays in picking, and incorrect picks. The implementation of
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barcode scanning would improve this area of the VSM and eliminate the inappropriate
processing waste.

The advantages of using bar code information system are obvious for warehousing
operations. Logistics staff are liberated from many low knowledge or duplicated tasks, bar
code technology can improve the efficiency of logistics operations and reduce management
costs, it can reduce the error rate of data collection and improve the quality of work.
Picking becomes more accurate, and stocktaking goods is more effective (Hong-Ying, 2009).

 Re-locate QC Inspection to Barnsley

Significant delays occur due to sending parts to Warrington for inspection, if this process
was moved to the Barnsley site the lead time of the product would be reduced. This would
not be an easy task as it would involve the relocation of both staff and equipment but with a
plan to replace staff at Barnsley this could be achieved but it would be a gradual
improvement. Until this change could take effect goods would need to be delivered earlier
from suppliers to account for the extra lead time in the process.

 Introduce mobile scale picking

To eliminate the motion waste identified in the VSM, mobile weigh counting stations should
be introduced which would eliminate the need to over pick product and then return it to its
location. The use of such a system would also improve quality and performance if a scale
was used that works on stored piece part data, meaning pick accuracy would be improved
up to 99.75% accuracy (WEIGH-TRONIX, 2019) and customer complaints reduced.

By implementing the above improvements identified, the future VSM, shown in figure 6,
would be:

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Figure 6

Table 2 shows a total process time of 87 days 190 mins, an 11.5% reduction. Process time
reduces from 190 mins to 150 mins, a 21% decrease in activities that operators must carry
out. It also reduces the number of operators required from 12 to 10

Current Future % Decrease

Lead time 2362 Hrs 2091 Hrs 11.5
Process Time 190 mins 150 mins 21
Operator 12 10 17
Table 2

The new VSM must be regularly monitored to ensure the targeted improvements occur, if
not the cycle must begin again to achieve the continuous improvement desired.

3.8. Criticism of Lean

JIT manufacturing does not allow for defects, ESP delivers Kanban products to several
customers but has failed to deliver products because of JIT, an unknown defect occurred
which meant finished parts were non-conforming and as there was no stock, the customer
line stopped, therefore ESP now holds safety stock as a contingency for this. Another issue
with not over-producing is that set-up times increase, and raw material is wasted through
inefficient yield. Producing longer batch runs can reduced costs enabling savings for both

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customers and the business. Analysis of storage costs can be made to ensure the over-
produced stock is not impacting the business negatively.

VSM can be a narrow tool focussing on one area, consideration must be made for activities
upstream and downstream in the business, will significant changes in one area have an
impact in others that negate the improvements made?

Another criticism of lean is that people are unsure of the direction to take, there is no
standard methodology for implementation just a variety of tools that can be used. At ESP
due to a lack of training in lean it is difficult to achieve staff buy-in as the goal is not always
clear as to what the business is trying to achieve, training can help to eliminate some of this
issue, but this is costly.

Lean tools only show what a process is at a specific moment, whereas most operations are
dynamic in nature meaning processes change quickly, unless modelling can be carried out to
account for every variable, the risk of wasting resources by repeating the lean tasks can be
higher than the waste eliminated.

3.9. Conclusion

Studies suggest that only 2% of organisations that implement lean achieve their targets
(Liker & Rother, 2011), considering this it is questionable as to why a business would
attempt it, however if implemented correctly it can give competitive advantage over
competitors. Other research shows lean manufacturing ensures that an organisation
achieves superior performance with improved performance and profits (Alhuraish, Robledo,
& Kobi, 2015).

It was found at ESP that the VSM carried out in the production facility yielded performance
and quality benefits by changing the layout of the factory, but the change to pure JIT
manufacture did cause a customer line stop. This shows that whilst lean can give
improvements, an organisations culture and product base must be understood to ensure
the changes do not have a negative result elsewhere, the bigger picture of an organisation
must be considered before any improvements are made, how will they impact not only on
other areas of the business but external stakeholders as well?

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4. Task 4: Critical Reflection

To critically reflect, I have used Gibbs’ reflective cycle (Gibbs, 1988). In lean manufacturing
one of the steps encouraged to carry out is “Hansei”, roughly translated as “reflection”,
Toyota believe it is vital step (Hogg, 2016), ensuring we learn from everything we do,
whether good or bad.

4.1. Description

I am currently undertaking the Business Operations and Process Management module as

part of my Executive MBA and required to produce a portfolio of work that shows
application and understanding of contemporary theories and the application of this to my
organisation.

4.2. Feelings

As a current Operations Manager I felt comfortable with this module and had a solid
understanding of the content, I felt I would be able to carry out the assignment if work and
personal life didn’t create any issues that would prevent me from completing the task.

4.3. Evaluation

The supply chain evaluation problem was interesting, and the application of solver gave me
new insights into capacity planning, I will be able to use this method for production planning
in several areas in my organisation, the current methods we use encompass some of the
information, but I will be able to include more using solver such as overtime costs, hiring
and laying off for more accurate data.

The A3 problem and the essay will both be projects that can be implemented at ESP,
however as for this portfolio they have only been created through my own thinking I will
assemble a team to carry out the tasks and validate the conclusions that I surmised.

4.4. Analysis

I enjoyed this module and believe it went well as this is my area of knowledge, I think there
are other modules to come where I will struggle to understand the content as much as this.
I believe the A3 poster is an excellent way of identifying and understanding problem areas
and can give strong results if the team are enthused and motivated to succeed. I
understand the importance of lean and know it can give successful results but my findings
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and experience is that to be done right it is very costly and time consuming, management
must be dedicated and training is essential.

4.5. Conclusion

From this module there are elements I will implement at ESP such as capacity planning, A3
poster and some lean practices but I will be careful how the ‘lean’ project is implemented. I
feel lean can become a narrow viewpoint where the focus is only on one area. Hines et al
(2018) argue that lean shouldn’t be a single waste reduction tool but a lifelong journey to
create a culture of improvement based on a rigorous use of systems that ensures
improvements are aligned, behaviours are exemplified, improvement is both planned and
organic, systems are checked, and people are continually coached and developed. This
means taking a long-term approach to culturally changing the organisation using ‘lean’ tools
so that improvements work. I believe the failure of 5S implementation at ESP was due to a
rushed project from management that didn’t understand the philosophy behind lean and
thought it was ‘tidying up’, this highlights the crucial need for training and coaching of
people if lean is to be successful.

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