All entries for Saturday 21 February 2009

February 21, 2009

OPERATIONAL MANAGEMENT LESSON 3 EXERCISE– REFLECTIVE ONLINE LEARNING

OPERATIONAL MANAGEMENT LESSON 3 EXERCISE– REFLECTIVE ONLINE LEARNING

Create a new entry in your log using the subject ‘Operations Management Lesson 3 Exercise’. This is a good time to complete a process map of your own and comment upon the findings. If you work in an area with high levels of contact with customers, you should think about extending the analysis into a service blueprint, which will define degrees of visibility of the process.

  

On this exercise I am going to analyse why it is important for a company like IBM to have a well designed catering service process and, how the costs of providing this subsidised service be highly recovered through and improve on final performance (payback).

1)     What performance is this process trying to achieve?

The cost of giving catering service to employees includes not only the cost of the given food, but also the opportunity cost of using space for the restaurant, the cost of setting it up, the wages of the employees or subcontracted company, etc.

Why should a company like IBM think about investing this money on employees, when today it is really easy to give a similar service through restaurant tickets?

There are several answers for this question, and they all take you into the same final message, “because it makes you save money” through efficacy (more time) and efficiency (better time employment).

Efficacy

* On Spain the scheduled time for lunch varies from one hour to an hour and a half, what on a yearly basis represents around 330 hours.

* If by providing this service, you can reduce this length to around 40 minutes, it means your employees can work more than 180 hours per year, what it means one whole month of work saved

* On Spain the number of hours not worked due to illness or accidents is quite high, by having the restaurant on the office, you reduce this issue as employees don’t go outside and don’t have to drive or take public transport, so you have more days available

Efficiency

* Spanish lunch is really far from other’s countries fast food idea. Spanish tradition is to have 3 dishes for lunch, so depending on the kind of food consumed; it will be the performance of the employee on the next two hours. By delivering this service IBM assures not only the quality of the food but what their employees eat

* By having a shared restaurant, employees eat together, what improves the relationship between them and finally eases to work as a team, reducing the space between employees

* By sharing the same table, sometimes employees keep talking about the job, and it is a good moment to through brainstorming solve blocked situations

So the cost incurred on the restaurant can be easily recovered through work efficacy and efficiency.

2)     Process flows objectives

* Reduce the time spent on having lunch by employees

* Assure flexibility on the time chosen to have lunch

* Reduce the number of illness days

* Help on having a wealthy way of living

* Increase employees personal and professional knowledge

3)     Process flows risks

* If process is not well designed and employees spent too much time, it is no worthy at all

* Employee must appreciate the service as a reward from the company and not as a prolongation of the “daily nightmare”

4)     Process flows success keys

* Balanced Speed of process, so it is not too fast (employee could feel they don’t rest at all) and not to slow

* Balanced Hourly Employees Distribution, so it is not under usage on some hours and over usage on others

* Quality of food and balanced quantity

5)     Understanding cycle time

So, how many minutes must last each cycle time, since the employee faces the restaurant until it leaves it. As we have described on success keys, this indicator is critical as it can mark the difference between receiving the catering service as a reward or as a way of retaining the employee on the job location.

Assuming each employee has on average 90 minutes to have lunch, and the fact the company wants to reduce it to around 40 minutes, and this includes coffee time, we can establish a good cycle time on 30 minutes, leaving 10 minutes to take coffee or smoke.

So how do we define the process in order to not exceed this level? Well this can be done through several adaptations on the process:

* Not offering coffee on the restaurant but on a bar right close to the restaurant, in order to improve restaurant rotation and reduce conversation time around the coffee

* Not giving full comfort to the restaurant facilities, not reducing the noise levels and others, so the employees prefer to talk during coffee time and not lunch time

6)     Defining capacity

How many people can eat at the same time? In order to adapt needed resources to this capacity.

Total number of employees eating at the same time = (catering capacity x standard time) / cycle time

Can the company influence the flow of employees?. This can be done through two ways;

* By defining employee’s shifts, but this wouldn’t be appreciated by employees who could feel a trim of their freedom.

* By implementing tools that help employees to know the best time to access the restaurant

On IBM Barcelona for example they face the 2nd method by (1) measuring the number of employees by hour and showing this graphic on a diagram at the beginning of the row, so employees could know when is the best time to access, and (2) by installing a webcam on the row so every employee could online see the length of the row.

7)     Example of defined Process

On the following diagram we described IBM catering service on Madrid.

Catering IBM Mad Diagram

8)     Shape of the process

Analysing the previous diagram we observe a symmetric design on the restaurant. This allows in fact doubling the speed of the process in the slower tasks (lane + tray + food).

9)     Balancing losses

Analysing the previous diagram we can identify balancing losses mainly on two areas:

* on the top left and right corners, where each employee speed depends on the speed of the rest of the lane filling their trays

* on the top of the diagram where catering employees fill the employee’s tray with the desired food

10)     Little’s law

Will be left lane faster than right one?

11)     Conclusion

The design of the catering services can impact severely on the efficiency and efficacy of the employee´s performance.

I hereby include the diagram on PPT file.

l3.ppt


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