The world of Manufacturing has moved from 1) craft manufacturing, 2) mass production, to 3) modern Manufacturing – which replaced the mass production paradigm with a combination of:
- Flexible specialization – leveraging open innovation and global supplier collaborationand long term business relationships to deliver developed networks and effective processes.
- Lean production – eliminating operational waste to expose inefficiencies, reduce costs and cut lead times.
- Mass customization – leveraging new technologies and seeking to combine high production volumes with high number of individual customer requirements.
- Agile Manufacturing – focusing on change management, large scale flexibility with ‘platformization‘ of product lines (economies of scale and scope) with the support of enabling technologies.
The above characteristics require definition, management and continuous improvement in the form of optimization of the different parameters, continuous change management and alignment of people-process-technology. Operations management consists of managing the creation and delivery of products and services by an organization. It involves the systematic direction and control of the process that transforms resources (inputs) into finished goods or services for customers (outputs). The objective of any operations management is to add value, to customers and other key stakeholders.
What to improve in operations?
- Operations vs organization’s overall performance
- Alignment to corporate strategy (cost, quality, dependability, speed and flexibility)
- Performance standards (past performance, internal targets, benchmark standards, etc.)
- Importance for customers vs performance of substitutes
How to improve operations?
- Incremental improvements (ongoing small changes)
- Radical improvements (business transformation, major change)
- Improving manufacturing performance (also applies to services) – factory focus; ‘plants within a plant‘; process flexibility: volume, product range, product mix; information technology: PLM, ERP, MES)
- Improving service performance (based on customer expectations) – increase customer engagement and involvement, with increased use of feedback loops to improve quality
Doing more with less
Opportunities for improving operations include distinguishing between activities that add value (quantifiable business benefits) and those that merely add cost. Improvement efforts can then be focused on enhancing value-adding activities, and streamlining or eliminating activities that only add costs. To plan and enable these improvements, it is necessary to map processes into a operational blueprint that includes: value-adding activities (VA) vs non value-adding activities (NVA) vs essential non value-adding activities (ENVA), competency-capability-capacity-skill, and organizational structure analysis.
Such ‘blueprint‘ will allow to identify improvement opportunities, such as business process re-engineering, they are key to understanding business performance, and they must (typically) be designed to add value from the customers’ perspective. Most importantly, the ability to do more with less will require:
- Take time to think and plan: analysis, change road-map, testing improvement recommendations, etc.
- Set priorities and focus on the most important things: specify ‘must win‘ battles, consistency of actions and drive to drive to completion.
- Communicate efficiently: better use of allowed time, not more time; make operations strategy clear to the rest of the organization.
- Embrace the need for change: avoid the trap of routines; act, don’t react.
- Treat efficiency as a process, not an event: ongoing cost reduction with change that is inevitable, and become part of the culture.
- Empower, provide clear responsibilities and accountability: provide operating capabilities that will be required in the future (forward looking approach to enable change / improvement).
Typical efficiency improvement solutions include a combination of process improvements and optimizations (Process to Create: automated processes, enabled by PLM tools and technologies) and outsourcing (Capacity to Create: access to global talents, better engagement and delivery models, combined with low cost value proposition, etc.)
What are your thoughts?
This post was originally published on LinkedIn on 12 September 2015.
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