book

Focused Operations Management

Name: Focused Operations Management
ISBN: 9780470145104

by Shimeon Pass, Boaz Ronen

October 2007

Intermediate to advanced

464 pages

7h 11m

English

Wiley

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Copyright
Dedication
Preface
Acknowledgments
About the Authors
1. The Modern Business Environment
From a Sellers' Market to a Buyers' MarketGlobalization—The Small Global VillageThe Remedy—Adoption of New Managerial ApproachesSummary
2. Principles of Management in the Dynamic Environment
What Is a System?System Optimization and SuboptimizationSatisficer versus OptimizerElements of Focused ManagementFocused Management TriangleGlobal‐System ViewFocusingSimple ToolsSummary
3. The Pareto Rule, the Focusing Table, and the Focusing Matrix
The Pareto RuleThe Pareto DiagramExample: Pareto Analysis of Product Contribution VolumeThe Pareto‐Based Focusing MethodologyExample 1: Applying the Focusing Methodology in PurchasingExample 2: Applying the Focusing Methodology in SalesThe Focusing Table and MatrixGenerating the Focusing MatrixThe Use, Misuse, and Abuse of the Pareto RuleSummary
4. Managing the System by Its Constraints
Step 1—Determine the System's GoalStep 2—Establish Global Performance MeasuresStep 3—Identify the System ConstraintResource ConstraintShortage of a Critical ResourcePermanent BottlenecksPeak Time Resource ConstraintsSeasonalityDiscrete Events of Resource ConstraintsMarket ConstraintPolicy ConstraintDummy ConstraintTools for Identifying ConstraintsProcess Flow DiagramTime AnalysisLoad Analysis (Capacity Utilization)The Cost‐Utilization DiagramSummary
5. Management by Constraints in a Bottleneck Environment
Step 4—Decide How to Exploit the Constraint and Break Dummy and Policy ConstraintsEfficiency—Increasing Constraint UtilizationIncreasing Bottleneck UtilizationReducing Ineffective Time (Garbage Time)EffectivenessPrioritization Methods—Strategic GatingThe Mirabilis EffectGlobal Decision‐Making MethodologyBreaking Policy and Dummy ConstraintsStep 5—Subordinate the Rest of the System to the Previous Decision (the Constraint)Subordination MechanismsTactical GatingDrum‐Buffer‐RopeDrumBufferRopeStep 6—Elevate and Break the ConstraintElevate by Using Capital InvestmentElevate without Investment through the Use of an Offloading MechanismStep 7—If a Constraint Was Broken Return to Step 3. Do Not Let Inertia Become the System ConstraintCurse of the BlessingSummary

6. Managing by Constraints When the Market Is the Constraint
Step 4—Decide How to Exploit the Constraint and Break Policy and Dummy ConstraintsMarketing and Sales EfficiencyExploiting Marketing and Sales PersonnelMarketing Strategy EffectivenessUsing Excellence in Response Times and Quality as a Strategic LeveragePrioritizing in Bid/No‐Bid ProcessesBreaking Policy and Dummy ConstraintsStep 5—Subordinate the Rest of the System to the Previous Decision (the Constraint)Step 6—Elevate and Break the ConstraintStep 7—If a Constraint Was Broken, Return to Step 3. Do Not Let Inertia Become the System ConstraintManaging Marketing and SalesFocusing on Most Valuable Customers (MVCs) as a Value DriverPeak ManagementWhere Should the Constraint Be Located?Summary
7. Focused Current Reality Tree
Principles of a Focused Current Reality TreeInformation SourcesUndesirable EffectsLeading Undesirable EffectLogical Relations of Undesirable EffectsInferencesConstructing a Focused Current Reality TreeCore ProblemsAdvantages and Disadvantages of the fCRTSummary
8. Resolving Managerial Conflicts
Three‐Step MethodologyDescribe the Conflict with a Conflict Resolution DiagramChallenge the Assumptions of the Conflict Resolution DiagramDifferentiationGlobalizationBreaking AssumptionsCreate Actions for Implementation Based on the Challenged AssumptionsSummary
9. The Efficiencies Syndrome
Dealing with the Efficiencies SyndromeSummary
10. Evils of Long Response Times
Types of InventoriesWork in ProcessRelationship between Response Time and Work in Process LevelThe Evils of WIP and Long Response TimeReduction in ThroughputHigh Operating ExpensesDiminished QualityDiminished ControlDiminished Flexibility to Market and Technological ChangesDiminished Cash FlowDiminished MotivationMissed DeadlinesLack of Customer SatisfactionDiminished Forecasting CapabilityDiminished ThroughputCauses of Excess Work in ProcessSummary
11. Reducing Response Times
Methods for Reducing Response Times and Work in ProcessStrategic GatingTactical GatingWorking with a Complete KitManaging BottlenecksUsing the Just‐in‐Time (JIT) MethodRule I of the Just‐in‐Time MethodShortage DeviationSurplus DeviationImplementing Rule I of JITViolating Rule I of JITThe 40–20–40 PhenomenonRule II of JITWorking (Production) BatchesStrategic Importance of Reducing Response Times and Working with Small BatchesFear of Increasing the Number of SetupsEconomies of Scale ThinkingFear of More Complex ControlIncreasing Cost per UnitRule III of JITMeasurement and ControlImplementing the Drum‐Buffer‐Rope MechanismQuality Improvement and Reduction of the Garbage PlantAvoiding Bad MultitaskingConcurrent EngineeringImplementing Group TechnologyWorking in Parallel Rather Than SeriallySummary
12. The Complete Kit Concept
Aspects of the Complete KitEvils of Working with an Incomplete KitWhat Prevents People from Using a Complete Kit?Specific Implementations of the Complete Kit ConceptIn ProductionIn DevelopmentIn Knowledge‐Based LaborIn SalesIn Health CareIn Human ResourcesIn PurchasingIn Information SystemsImplementing the Complete Kit ConceptSummary
13. Performance Measures and Managerial Control
Global Performance MeasuresThroughputOperating ExpensesInventoryLead TimeQualityDue Date PerformanceCalculating ProfitAdapting Global Performance Measures to a Supermarket ChainThroughputOperating ExpensesInventoryLead TimeQualityDue Date PerformanceMeasures' Profile in Global Decision MakingSummary
14. The Effects of Fluctuations, Variability, and Uncertainty on the System
FluctuationsSources of FluctuationsEvolution of Fluctuations in a ProcessChoosing an AlternativeInternal FluctuationsCumulative FluctuationsElements of CapacityTraditional Approaches to Managing Fluctuations and UncertaintyFocused Management ApproachProtecting against FluctuationsReducing FluctuationsSummary
15. Evils of Traditional Cost Accounting
Loss of RelevanceUndesireable Effects of Traditional Cost Accounting“It Costs Us More”“Large Batches”“Efficient Production”“Savings”Summary
16. Marketing, Costing, and Pricing Considerations in Decision‐Making Processes
Decision Making in a Resource‐Constrained EnvironmentToolsGlobal Decision‐Making MethodologyDecision Making in an Excess Capacity EnvironmentGlobal Economic Decisions from the CEO's PerspectiveTake Strategic Considerations into AccountChange or Refine Local Performance MeasuresDecisions about Stopping Production or Ceasing ServiceMake a Global Economic Decision from the CEO's PerspectiveMake Strategic ConsiderationsChange Local Performance Measures if NeededProduct Mix DecisionsGlobal Economic Decisions from the CEO's PerspectiveTake Strategic Considerations into AccountChange Local Performance Measures if NeededSummary
17. Quality Management and Process Control
Operational ApproachEconomic ApproachCustomer ApproachUniformity (Consistency) ApproachStages in Managing Quality and Process ControlStage A: No Quality Management or Feedback ExistsStage B: Inspection—Quality Control at the End of the ProcessStage C: Process ControlImplementing Quality Improvement ProcessesThroughput World versus Cost WorldQuality Improvement MythsSummary
18. Strategy, Positioning, and Focusing
StrategyAssess Strategic MovesImprove the Good Old SWOT AnalysisWatch Your AssetsDetermine Where the Constraint Should Be LocatedDefine a Mafia Offer and a Viable VisionTranslate Strategic Decisions into Action ItemsUtilize the Focused Arena StrategyStep 1: Identify the Organizational Goal, Vision, and MissionStep 2: Define Performance MeasurementsStep 3: Analyze Internal and External Environments with a Focused SWOT AnalysisStep 4: Identify Core Competencies Using the Core Competencies TreeStep 5: Identify Core Problems Using the Focused Current Reality TreeStep 6: Focus on the Main Opportunities and ThreatsStep 7: Perform a Gap AnalysisGap Analysis for the Main OpportunitiesGap Analysis for the Main ThreatsStep 8: Decide Where the Constraint Should Be LocatedStep 9: Determine What Actions to Take, Then Execute and Control those ActionsCase Study Analysis by the FAST MethodologyFAST Step 1: Identify the Organizational Goal, Vision, and MissionFAST Step 2: Define Performance MeasurementsFAST Step 3: Analyze Internal and External Environments with a Focused SWOT AnalysisFAST Step 4: Identify Core Competencies Using the Core Competencies TreeFAST Step 5: Identify Core Problems Using the Focused Current Reality TreeFAST Step 6: Focus of on the Main Opportunities and ThreatsFAST Step 7: Perform a Gap AnalysisFAST Step 8: Decide Where the Constraint Should Be LocatedFAST Step 9: Determine What Actions to Take, Then Execute and Control those ActionsSummary
19. Value Creation
Value Creation from Managerial ActivitiesAssessing the Value of the FirmEconomic Value Added (EVA) MetricValue Focused Management ModelDetermine the GoalDetermine the Performance MeasuresIdentify the Value DriversDecide How to Improve the Value DriversImplement and ControlValue Creation: The Supermarket ChainStage 1: Determine the GoalStage 2: Determine the Performance MeasuresStage 3: Identify the Value DriversUnDesirable EffectsPotential Value DriversIncrease the Average Customer PurchaseEstablish a Logistics CenterIntroduce a Private LabelEnhance Shelf Space ManagementIncrease the Managerial and Professional Quality of the Administrative and Operations PersonnelIncrease the Shelf Space Area at the Expense of Storerooms in the BranchesIncrease the Number of Suppliers' Credit DaysCalculate the Potential Value CreationSelecting the Value DriversStage 4: Decide How to Improve the Value DriversStage 5: Implement and ControlSummaryAppendix AAppendix B
20. Value‐Focused Project Management
Project Management EnvironmentProject ManagementValue Drivers in Project ManagementStrategic Gating and Project Initiation as a Value DriverStrategic GatingInitiation and SpecificationProject Planning as a Value DriverThe Project Manager as a Business Manager as a Value DriverPerformance Measurement Gap TragedyForward‐Oriented Execution and Forward‐Looking Control as a Value DriverImplementation of the Critical Chain Approach as a Value DriverAlternative Mechanism for the Estimation of Activities' Durations and Uncertainty ManagementCritical Chain Approach to Project PlanningCritical Chain Approach to Project Execution and ControlEffects of the Implementation of the Critical Chain ApproachSummary
21. Managing Research and Development
Complexity of R&D ManagementBusiness Thinking and Subordination to the Market and Its NeedsEffect of Project Type on Management RequirementsType A ProjectsType B ProjectsType C ProjectsType D ProjectsProject Classification TableMatching Manager Personality with Project TypeEvaluating the Project PortfolioProject Classification and the Complete Kit ConceptConflict between Generic Development and Specific DevelopmentOverspecification and OverdesignSources of OverspecificationSources of OverdesignSolutions to Overspecification and OverdesignViewing Development as a ProcessWorking without a Complete Kit or a Mandatory KitLack of Strategic Gating ProcessesLack of Tactical Gating ProcessesInappropriate MeasurementBusiness StructureSubstantial Garbage PlantMake/Buy DecisionsSummary
22. The Focused Management Approach in Logistics
What Is Logistics?Typical Issues in Logistics ManagementThe Focused Management View on Logistic SystemsA Global ViewFocusing on the Main IssuesSimple ToolsThe Global Inventory Management ModelWork in Process ManagementFinished Goods Inventory ManagementRaw Material Inventory ManagementIn What Form Should Inventories Be Kept?Leveraging Logistics for Improved Performance—Buffer ManagementThe Buffer Management Mechanism in Bottleneck ManagementBuffer PlanningMonitoring and Gap AnalysisBuffer Management in Bottleneck ManagementBuffer Management as a Warning SystemBuffer Management as a Tool for Inventory Levels ManagementBuffer Management in the Management of Finished Goods InventoryBuffer Management of Finished Goods InventoryBuffer Management for the Raw Materials Inventory ManagementSummary
23. Our Managerial Credo
The World Is Simpler Than It SeemsAll Organizations Are “Sick”Global ViewManagerial MaturityHuman ResourcesSatisficer PrincipleUsing Performance MeasuresSimple ToolsThe 85/15 Rule—Importance of ProcessThe 10 Times RuleDifferentiationImplementing Focused Management MethodsWhat to Change?What to Change to?How to Make the Change?The Process of ChangeIntroducing Changes and Reducing Resistance to ChangeRole of Information Systems in the Change ProcessSummary
References
Bibliography
Recommended Readings
Bibliography

Content preview from Focused Operations Management

Chapter 10. Evils of Long Response Times

Long response times for service, for production, and for development processes are a major concern in today's management world. In this chapter, we examine the relationship between response time and the amount of work in process (WIP), so that we may find ways to shorten these times.

Types of Inventories

The management of physical inventories (hardware, components, materials, documents, or files) and nonphysical and human inventories (pieces of software, business information to be processed, patients in the hospital or waiting for tests, or customers waiting in a bank) plays an important role in the management of business systems, operational systems, health care systems, and not‐for‐profit systems. Three types of inventories are shown in Figure 10-1 .

Figure 10.1. Figure 10-1: Types of inventories

Examples of work in process (WIP):

Software and hardware that are still in development
Items on an assembly line
Purchase orders in the negotiating process or in the approval stage
Receipts handled in the accounting department
Business information ...

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Focused Operations Management

by Shimeon Pass, Boaz Ronen

Chapter 10. Evils of Long Response Times

Types of Inventories

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