Process innovation & value chain
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Transcript of Process innovation & value chain
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PRESENTED BY:CHANDAN CHOUDHARYTRAPTI AGGARWALNEHA SHARMAVIKAS
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What Is Process?
• Process is combination of facilities, skills and technologies that are used to produce products or provide services.
• Process is a naturally occurring or designed sequence of steps or events which produces some outcome.
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INPUTSPROPERTY, MACHINERY,
LABOUR, RAW MATERIALS,
CONSUMABLES
PRODUCTION PROCESSCONVERSION, KNOWLEDGE GATHERING & PRESENTATION
OUTPUTSSALEABLE GOODS & SERVICES, VALUABLE
INFORMATION
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What is Process Innovation?
• Process innovation combines adopting a process view of business functions with the application of new ideas and technology.
• Process innovation depends on the transfer of knowledge and information.
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Why Process Innovation?
• Increase bottom-line profitability• Improve efficiency, improve productivity• Increase employee job satisfaction• Deliver enhanced product or service value to
the customer• For controlling and reducing process wastage.• For controlling and reducing work in process
inventories.• For reducing processing time & costs.
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• Process innovations builds an adaptive business process management system (BPMS)
• For manufacturing companies – integrates new production methods & technologies that lead to improved efficiency, quality, or time-to-market, and services that are sold with those products
• For service companies – introduces "front office" customer service improvements and add new services.
FOCUS
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INDICATORS OF PROCESS INNOVATION
• Ask the question: why do we process this way?, if the answer is: because we have always done it like this, then it is clear indication of need for innovation
• Think from the customer perspective • Look for the innovative ideas across the industry
and try possibilities• Check where the pain and frustration in a
business process which provide initiatives
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BLOCKERS OF PROCESS INNOVATION• Many ideas originate from work floor, but these
people are rarely asked about and if they do, they are often discarded at middle level
• Around the edges syndrome- executives keep looking at the edges of the problem and not at the heart
• Black box syndrome- executives see their processes as black box, they don’t know the details, but somehow processes produce results
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Keys to Process Innovation
• Migrating to a new process requires understanding the current one
• Recognizing problems in an existing process ensures that problems are not repeated in the new process
• Analyzing current process reveals strategies for new process
• Promoting individual and organizational learning strategies sustains process innovation
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STEPS IN PROCESS INNOVATION
Successful process innovation requires the following:
• Proper Planning
• Creating a multifunctional team of Technical, Production and Maintenance Department.
• Selecting a small group of operators and workers, seeking their participation in process innovation through communication, counselling, training & rewards etc.
• Pilot run of the new process.• Observations and improvements.• Large scale training of entire work force.• Commercial use of new Process.
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ATTRIBUTES OF INNOVATIVE PROCESSES
1. Elimination or decrease in manual processes.
2. Coordination of processes across distances.
3. Change of process sequence; allow parallel processes.
4. Capturing process information to understand process better.
5. Improved analysis of information and decision making.
6. Capture and distribute organizational information.
7. Monitoring process status.
8. Coordination of tasks and processes (cross functional).
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TOOLS FOR PROCESS INNOVATION
• Developing Assembly Charts for studying conceptual framwork of material flow .
• Developing Process Charts for studying conceptual framwork of process flow.
• Computer Aided Designing (CAD), Computer Simulation.
• Time Study for comparing time taken for various operations & tasks.
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• Value Engineering and Analysis.
• Business Process Reengineering.
• Benchmarking.
• Using Change Management Strategies.
• Financial Appraisal.
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Process Sequence1. Parallel processing2. Virtual linkages3. Simultaneous entry and review
Tracking1. Transaction volume2. Document management3. Priority processing4. Transaction type
Geographic1. Multiple sites on campus2. Coordination with other
departments
Automation1. More web information2. Improve IVR service3. Increase self-service4. Reduce access to files
Innovation Strategies
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Analysis1. Management Information2. Scheduling, staffing, process
design
Knowledge1. Knowledge Management2. Standard operating
procedures3. Regulation and statutory
changes
Information1. Process cycle times2. FAQs?3. Peak processing4. Customer profiles
Integration1. Coordination of activities2. Policy and process
alignment3. Scheduling and planning
Innovation Strategies
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FOCUSING REDESIGN ENERGY
Think time line: near term, long-term
Think cost: no/low cost, new resources or reallocated resources
Think capabilities: knowledge, expertise,
experience, staff-power
Think priorities: must change, should change,
could change
Think technology: have it, get it, use it
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MOVEMENT IN PROCESS INNOVATION
Process Innovation
Saturation
Old Process
New Process
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EXAMPLES OF PROCESS INNOVATION
Precision Ring Makers (PRM) • Make components to high specifications, largely for the aircraft
industry
• Its main development work was focused upon process improvements
• It has developed low cost tooling techniques which resulted in great savings
…… for example, tooling changes for thin guage shims using conventional techniques cost about £4000, while with PRM’s technique the cost was about £30
• It had purchased CNC machines for milling and engraving, and was planning to network the CNC machines to its computer system so that programs could be transmitted directly to production
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EXAMPLES OF PROCESS INNOVATION
Fabrication and Assembly Company (FAC) • Was primarily interested in welding technology• A recent example of process improvement was the
application of plasma cutting instead of drilling, in the manufacture of heat exchangers and plates
• A flushing system to prevent the build-up of sludge in the air chambers of the water tables which were being manufactured, was also developed to assist the introduction of plasma cutting
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TECHNIQUES OF PROCESS INNOVATION
Business Process
Reengine
ering
TQMLean
Production
SystemKaizen 5S
ConceptSix
Sigma
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BPR • Business process re-engineering(BPR) is also known as
business process redesign, business process change management.
• It is a technique by which organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors.
• It is more than just business improvising.
• A key stimulus for re-engineering has been the continuing development and deployment of sophisticated information systems and networks.
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CONTINUED…• Reengineering assumes the current process is largely
irrelevant - it shall not work on future, it's broke, forget it. Start afresh. Such a clean slate perspective enables the designers of business processes to disassociate themselves from today's process, and focus on a new process.
• Reengineering starts with a high-level assessment of the organization's mission, strategic goals, and customer needs
• Re-engineering identifies, analyses, and re-designs an organization's core business processes with the aim of achieving dramatic improvements in critical performance measures, such as cost, quality, service, and speed
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BUSINESS PROCESS REENGINEERING CYCLE
TEST & IMPLEMENT
TO-BE
DESIGN TO-BE
REVIEW, UPDATE, ANLYSE
AS-IS
IDENTIFY PROCESSES
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TQM• TQM refers to an integrated approach by management to focus
all functions and levels of an organization on quality and continuous improvement
• Focuses on encouraging a continuous flow of incremental improvements from the bottom of the organization's hierarchy
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ADVANTAGES OF TQM• Encourages a strategic approach to management at the operational
level• Provides high return on investment through improving efficiency • Works equally well for service and manufacturing sectors • Allows organizations to take advantage of developments that
enable managing operations as cross-functional processes • Fits an orientation toward inter-organizational collaboration and
strategic alliances through establishing a culture of collaboration among different departments within organization
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LEAN PRODUCTION SYSTEMIt is the western term for Toyota Production System.
This production philosophy is now widely used in auto industry around the world. This system has been modified everywhere in the auto industry, adapted to some extent on the local industrial situation or practices, however its core principles remains the same. This system is not only used in auto industry but also in other non-auto industries involved in assembling process.
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BENEFITS OF LEAN PRODUCTION SYSTEM
WAST
E REDUCTION
PRODUCTION COST
REDUCTION
MANUFACTURIN
G CYCLE REDUCTIO
N
LABOR REDUCTIO
N
INVENTORY REDUCTIO
N
PRODUCTION CAPACITY IN
CREASE0
1020304050607080
PERCENTAGE
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KAIZEN• Japanese strategy for continuous improvement• Not a single day should go without any improvement• Customer driven strategy for improvement• Quality first, not profit first• Consists of two major components
Maintenance Improvement
Innovation
Kaizen
Maintenance
Top Management
Middle Management
Supervisors
Workers
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Kaizen Cycle – PDCA Cycle
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BENEFITS OF KAIZEN
In areas such as inventory, waiting times, transportation, worker motion, employee skills, over production, excess quality and in processes
Reduces Waste
Space utilization, product quality, use of capital, communications, production capacity and employee retention
Improves
Instead of focusing on large, capital intensive improvements, Kaizen focuses on creative investments that continually solve large numbers of small problems
Immediate Results
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5S CONCEPT
• Seiri.• Seiton.• Seiso.• Seiketsu.• Shitsuke .
REFERS TO
THESE FIVE
WORDS
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SIX SIGMA
Six Sigma focuses on making improvements in all operations within a process, producing results more rapidly and effectively.
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BENEFITS OF THE SIX SIGMA STRATEGY
Remarkable improvements in
• Processes
• Products and services
• Investor relations
• Design methodology
• Supplier relationships
• Training and recruitment
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WHAT IS A VALUE CHAIN
A value chain is the full range of activities — including design, production, marketing and distribution — businesses go through to bring a product or service from conception to delivery. For companies that produce goods, the value chain starts with the raw materials used to make their products, and consists of everything that is added to it before it is sold to consumers.
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VALUE CHAIN MANAGEMENT & IT’S GOAL
The process of actually organizing all of these activities so they can be properly analyzed is called value chain management.
The goal of value chain management is to ensure that those in charge of each stage of the value chain are communicating with one another, to help make sure the product is getting in the hands of customers as seamlessly and as quickly as possible.
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TYPES OF BUSINESS ACTIVITIES
Primary Activities
Support Activities
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PRIMARY & SUPPORT ACTIVITIES
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PRIMARY ACTIVITIES
• Inbound logistics: concerned with receiving, storing and distributing the raw materials used in the production process.
• Operations: This is the stage where raw products are turned into the final product.
• Outbound logistics: This is the distribution of the final product to consumers.
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CONTINUED…
• Marketing and sales: identification of customer’s needs and generation of sales through advertising, promotion, distribution.
• Service: involves how to maintain the product's performance after it has been produced. This stage includes things like installation, training, maintenance, repair, warranty and after-sales services.
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SUPPORT ACTIVITIES• Procurement: This is how the raw materials for the
product are obtained.
• Technology development: activities intended to improve product and the process.
• Human resource management: Involved in hiring & retaining the proper employees to help design, build & market the product.
• Firm infrastructure: includes activities such as organization's structure, its management, planning, accounting, finance & quality-control mechanisms.
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