Chapter Eight

Models of improving Operations

By; Eleni Wuhib

I.D-WM 0107/12

June,2020
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 Outlines

 The Concept of BPR

 The role of BPI
 The Concept of BSC
 The Kaizen Models
 The Six Sigma Model

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 Business Process Reengineering (BPR)
 It finding new ways of organizing tasks,
organizing people and redesigning IT systems so
that the processes support the organization to
realize its goals
 The fundamental rethinking and radical
redesign of core business processes to achieve
dramatic improvements in critical performance
measures such as quality, cost, cycle time and
service. 3
 Objectives of BPR
 When applying the BPR management technique to a
business organization it focused on the following
objectives,
o Customer focus,

Customer service oriented processes

o Speed,

Dramatic compression of the time

o Compression,

Cutting major tasks of cost and capital, throughout the

value chain.
o Flexibility,

Adaptive processes and structures to changing conditions

and competition

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 Cont’d
o Quality,
Obsession with the superior service and value to the
customers.
o Innovation,
Leadership through imaginative change providing to
organization competitive advantage.
o Productivity
Improve drastically effectiveness and efficiency

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 Cont’d

BPR have four key words,

Fundamental

Radical

Dramatic

Processes

BPR focus on looking at the complete processes from

procurement, production, marketing and distribution
rather than organizing the firm into functional specialists.

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Business processes are characterized by
three elements;
 The inputs , (data such customer inquiries or
materials).
 The processing of the data or materials (which
usually go through several stages and may necessary
stops that turns out to be time and money
consuming).
 The outcome (the delivery of the expected result).

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 cont’d

Problem of BPR,
Business processes are evolved over a period of time
and are not designed to handle changing business
environments
Overheads are soaring.
Too much time and money are spent in ineffective
coordination and communication.
Too little time for doing work that really benefits
customers
Functional departments become barriers to change

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 Reengineering
 Obliterate/demolish what you have now and start from
scratch and transform every aspect of your organization.

Having the objective of,

 Improve customer satisfaction
 Shorten cycle time
 Improve output quality
 Cut down costs
 Increase competitiveness
 Maintain the leadership position.

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 Business process improvement (BPI)
 BPI is a strategic planning methodology aimed at
identifying the operations or employee skills that could
be corrected, modified or removed to encourage
smoother procedures, more efficient workflow and
overall business growth
 BPI is systematic approach to help any organization
make significant changes in a way it does business.
 It works by
Defining the organization goals and purposes
Determining the organizations customers and
stakeholders
Aligning the organizations processes with the goal of
the organization
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 Cont’d
 BPI has reducing cost and cycle time by as much as
90% while improving quality by over 60%.

 It series of actions are taken by a process owner to

identify, analyze and improve existing business
processes within an organization to meet new goals and
objectives: such as
Increasing profits and performance,
Reducing costs and
Accelerating schedules

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 The purpose of BPI
 Enterprises use BPI to find ways to reduce the time
it takes to complete processes, to eliminate waste and
friction in those processes,
 It improve the quality of the products or services

that are produced through the processes.

 Ensure better compliance with rules and regulations
that govern those processes or to improve customer
satisfaction and/or experience.
 Meet customer demands and business goals more
effectively.
 Creates value in its ability to help enterprises fine-
tune how they operate

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 The Balanced Scorecard (BSC)
 BSC is a management system that enables organizations
to clarify their vision and strategy and translate them into
action.
 It gives feedback of both the internal business processes
and external outcomes, which allows for continuous
improvement of strategic performance and results.
 BSC is the nerve center of an enterprise.
 This are Pillars of BSC
Customer Perspective,
Internal Business Processes,
Learning and Growth and
Finance
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 The balanced scorecard is centered on four performance
metrics or perspectives:
Customers
 Internal processes
 Financial
 Learning and growth
 When implemented properly, each one of these
perspectives contain four subparts consisting of
 Objectives
 Measures
 Targets
 Initiative

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 Cont’d

Objectives - what the strategy is to achieve in that

perspective
 Measures - how progress for that particular
objective will be measured
Targets - refer to the target value that the company
seeks to obtain for each measure
 Initiatives - what will be done to facilitate the
reaching of the target

 Balanced scorecard is a performance management

system that can be used in any size organization

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 Cont’d
 The concept of “balanced scorecard "contains two words:
 “Scorecard” signifies quantified performance measures
and “Balanced” signifies the system is balanced between:
 Short-term and long term objectives

 Internal and external performance perspectives

 Financial and non-financial measures

 Lagging and leading indicators

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 Customer Concerns
 There are four major categories that managers need to
address when concerning their customers.
o Quality
Are there often recalls or problems with defects with
our products.
o Time
Do we save time by limiting defects and do we
provide fast on time delivery.
o Performance and service
Do we perform up to customers standards and do we
provide fast and adequate services.
o Cost
Do we try to minimize cost when dealing with
ordering, scheduling delivery, and paying for
materials in order to lower cost of our products to
our consumers.
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With customer perspective managers and companies have
to be careful and make sure they are setting up their balance
scorecard to help customers.
Examples of things that don’t concern customers are profit
per customer, revenue per customer, and improve profit per
customer.
These objectives don’t necessarily reflect the customer
perspective but rather the companies perspective of the
customer.
Managers need to take a step back and look at how
customers perceive your company and what they want to get
out of your company.

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 Use of the scorecard
To set objectives
To determine measures
To predict outcomes
To determine initiatives
To gain the big picture

Potential Disadvantages
Lack of a well defined strategy
Use of only lagging measures
Use of generic metrics

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 Kaizen Philosophy
The literary meaning of Kaizen: it is composed of two terms:

◦ Kai means change

◦ Zen means good

Kaizen means to “become good through a small change”
Is a process of restructuring and organizing every aspect of a
system to ensure it remains at peak efficiency.
KAIZEN is a problem solving process with existing resources
Make things better step by step
Target is “your work”

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 What KAIZEN can do?
Find root causes of problems and solutions ,

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 Cont’d

 Improve all Managing whole facility with certain level

of quality.
 Improve quality of final products or services
 Strengthen Team work.
 Increase customer satisfaction.
 Visible growth of organization.
 Making right decision for quality improvement
 Reduce the costs.
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 So, KAIZEN have 5 elements

◦ Quality circle –groups to discuss quality concerns

◦ Improved morale

◦ Team work

◦ Personal discipline

◦ Suggestion for improvement

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 Kaizen principles

The five S of kaizen implementation

Sort

Straighten

Sweep/Shine

Share

Set standard/discipline/control

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 Cont’d

Anyone can do it with:

 Little knowledge
Little dedication
Little hard work and
A very big positive attitude
Our wisdom has no limitation

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 Six Sigma Model (DMAIC Model)

o DMAIC model for quality improvement and

problem reduction (for existing processes).
o It is the most preferred tool that can help improving
the efficiency and the effectiveness of any
organization.
o Needs a drive & support from top management to
realize its full potential.

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 Cont’d
Define
The main objective of this phase is to summarize the
project plan. This phase focuses on clearly specifying the
problems.
Which is an initial blueprint for any six sigma project.
Measure
The main objective of this phase is to collect the data
that is relevant to the scope of the project.
This phase focuses on identifying the parameters
Analyze
The main objective of this phase is to find the root cause
of business inefficiency

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 Cont’d
Improve
This phase improves the process by determining
potential solutions, ways to implement them, test and
implement them for improvement.
Control 
The main objective of this phase is to generate a
detailed solution monitoring plan.
This plan ensures that the required performance is
maintained.
During this phase, post-implementation results are
evaluated.
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 six sigma definitions
Six Sigma is lots of different things because it had different
meanings over time;

The UK Department for Trade and Industry says Six Sigma

is:
"A data-driven method for achieving near perfect quality.
Six Sigma analysis can focus on any element of production
or service, and has a strong emphasis on statistical analysis
in design, manufacturing and customer-oriented activities."

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 Cont’d
six sigma according to Motorola.
“Six Sigma has evolved over the last two decades and so has its
definition. Six Sigma has literal, conceptual, and practical
definitions. At Motorola University (Motorola's Six Sigma training
and consultancy division), Six Sigma at three different levels:
 As a metric
 As a methodology
 As a management system

Essentially, Six Sigma is all three at the same time."

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 Cont’d

As A Metric: The term "Sigma" is often used as a scale for

levels of 'goodness' or quality.

As A Methodology: Six Sigma is a business improvement

methodology that focuses an organization.

As management system: Six Sigma is a high performance

system for executing business strategy. Six Sigma is a top-
down solution to help organizations:

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Six Sigma can utilize several quality
management tools.
 Popularly known as seven basic quality tools – 
 Cause and effect diagram or Ishikawa diagram
 Flow Chart
 Pareto Chart
 Histogram
 Check Sheet
 Scatter Plot
 Control Chart

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