All entries for March 2009

March 28, 2009

OPERATIONAL MANAGEMENT LESSON 8 EXERCISE– REFLECTIVE ONLINE LEARNING

“Process map a process (or use one you have already compiled earlier) and assess each process step to decide whether or not each step adds value from a Lean thinking perspective. Pay particular attention to delays and to quality checking points. Assess the throughput efficiency of the process. Is a demand-pull or Kanban system used to control flow?”

Spanish ITV

ITV1

ITV stands for Vehicle Technical Inspection, and it is a semi public technical control all cars must go through periodically for security and environmental reasons.

Accessing ITV sites can take place:

*    when client decides to go directly according to his availability and the last revision date

*    when government reminds through a letter last revision will prescribe shortly and reminds you can contact them and order a particular date

ITV2

The second method eases resource planning forecasting, so this channel is boosted by government reducing the total process time for customers with fixed dates.

If on the other hand customer decides not to set a fix date, there is much waste generated as resources haven’t been planned aligned with supply.

ITV3

Once all papers have been reviewed by employee number 1, each car is given a queue number (1 out of 12) in order to go thorough the whole revision process. The queue management is done through an information system that alerts how many cars are still on each queue; and takes into account the aging of the car, as the older the car is the longer time takes normally to go through the whole process.

itv44.jpg

Whole revision process is done on a rolling car basis (each employee is specialised on controlling specific sections, and the car moves straight from one section to the other one).

5

This process allows controlling exactly the time spent on each of the queues, and reduces the time spent by employees going from one car to another.

Between each section there is a traffic light that alerts the car it can move towards the next section, and to the first employee to allow a new car enter the queue.

In this way the waste time and waste efforts between sections is reduced and allows the whole process to get good time metrics.

6

One of the potential problems of this process management, is that if one of the cars takes too much time on one section of the Queue, it will surely mean a waste of time not only for this car, but for the rest of the cars on the queue.

7

Could this current process be improved by implementing a more complex Kanban system?

If we generate one additional queue with no employees, that is used only in case one car seems to need more time than others, we would for sure reduce the waste without incrementing the needed resources.

8


March 21, 2009

OPERATIONAL MANAGEMENT LESSON 7 EXERCISE– REFLECTIVE ONLINE LEARNING

"Take a look at a material processing operation. What types of stock control methodologies (re-order point, MRP, ERP etc.) are used? Comment on the possible reasons for the choice of method. If you can, conduct a sample Pareto (80/20) analysis of stock levels and stock usage (by value). How effective is the stock management?"

State of the art restaurant material processing operations

On the last years “state of the art cuisine” has increased its popularity into levels no one expected before. This art is today a complex process of transforming simple raw materials into complex mix of flavour, texture or smells in order to “transmit impressions, feelings, sensations, and experiences”.

No chef in history has received as much publicity as Ferran Adria. He is called an artist and is compared to Dali, Picasso and is often called a genius managing his Spanish restaurant “El Bulli".

El Bulli

Being the recipe of this commercial success based on a tremendous effort to reach art levels with food, the recipe for doing it on a profitable way must be based on a accurate control of resources, due to high price of its unique raw materials, and the importance of reaching quality levels on schedule.

A tasting menu on “El Bulli” could be for example based on several different “complex processes” such as:

*     Dishes that are foremost based on morphing, a concept which means that an ingredient is transformed into something else or into another state. Creations that show a great respect for the ingredient – although it is turned into another shape and form and a different taste angle

*     Dishes that are based on various earlier concepts developed by Adria mainly creations with an appearance different than what we normally associate with the name or looks of a dish.

*     Dishes that are more normal dishes but where a less than normal taste combination plays a part in the dish. Examples of this category were the civet of rabbit and the chocolate dessert with a black sesame sauce. Both these have been on the repertoire for a long time.

Analysing the complexity of this tasting menu, ant taking into account that it can be renewed on a monthly basis, we could categorize raw materials on a ABC Basis:

*     A - The most expensive and perishable raw materials that can mean more than 65 % of the inventory value but account for less than 20 % items stocked. These items depend highly on the composition of each tasting menu, so depending on the month they are stocked or not.

*     B – Not the most expensive raw materials on a value basis, but high perishable or high seasonality can mean more than 25 % of inventory value.

*     C – Basic raw materials (oil, garlic, sugar, salt, etc) with low cost of buying and low holding cost. or ones non really perishable (beverages, wine, etc) with high buying cost but low holding one.

Pareto

As every tasting menu is the outcome of a complex process with multiple ant interrelated tasks, the management of A Category items must be done through an MRP system, while the management of B and C categories could be done through a ROP system, as almost all tasting menus have this raw materials in common.

Focusing on A Category items, we could identify:

*     The bill of materials would be the list of all raw materials required to form the complete tasting menu, remember this tasting menu is changed periodically, being important to analyse the impact it would have on the rest of the MRP system

*     The item master file would keep track of every raw material and its specifications

*     Transaction file would keep track of all transactions

*     Location file is crucial to make possible a high speed kitchen daily work

*     MRP explosion must be measured and control on detail to assure quality on time reducing economic potential losses

So analysing briefly the “state of the art cuisine” we can see how important can be the Operations Manager role not only on the quality of final design but on the profitability of it.


March 01, 2009

OPERATIONAL MANAGEMENT LESSON 6 EXERCISE– REFLECTIVE ONLINE LEARNING

OPERATIONAL MANAGEMENT LESSON 6 EXERCISE– REFLECTIVE ONLINE LEARNING

“Find extreme or good examples of the following practices and justify the reasons for their adoption:

1. Level capacity management.

2. Chase capacity management.

3. Yield management.

4. Queue design”

Example of Level Capacity Management

A good example of level capacity management are the public services offered by spanish goverment at any public office, for example the  birth register office.

The demand for this services is quite predictable as there exist some ratios that can help to anticipate future births, but the ageing of the society, the increase on imigration and international adoptions has increased the unpredictability of this figures (on following diagram number of births on Spain on the last 26 years).

Nacimientos

Therefore birth register offices could have a capacity planning with part time or temporal jobs to overcome this changes on demand, but as this is a public service all employees are fixed ones, and capacity is established fixed.

The number of employees attending office desk is fixed, capacity can be reviewed on a for example yearly basis but not during the year. As it is a public service, demand must adapt to offer. Performance Objective is cost control rathen than efficacy or revenue goals.

Level Capacity

Example of Chase Capacity Management

What would happen for example with previous example if we were on preelection  months?. Maybe the political party would bet on efficacy as a performance objective in order to have happier electors.

In this case they could appky a Chase Capacity Managment model, in which demand could be measured more periodically (for example a monthly basis) and capacity readapt partially in order to cope better with it. This could be done by using more resources (part time) or maybe by introducing better efficiency on current process (for example leave one desk just to collect info from the customers and work on backoffice generating quite an inventory or work in progress process).

Chase Capacity

Example of Yield Capacity Management

A good example of Yield Capacity Management is the newspaper industry, as newspapers can be categorized as perishable goods as their value last for only 24 hours.

On the newspaper offer there are the following indicators to measure the

*   Production : total produced issues

*   Distribution: out of produced issues those who have been delivered for distribution

*   Returns: issues given back by distributors

*   Effective distribution: distributed issued less given back ones

*   Effective lecture: those really read by customers

News

All issues produced but not bought have not yield at all, and those sold but not effective read have short term yield (revenue per issue) but affect negatively mid and log term revenue (through ads revenue).

So news companies must adapt their daily circulation to demand fluctuation in order to maximise revenue.

Yield

Example of Queue Management

A good example of Queue Management is the collection toll road management, as cars arrivals can vary from none on off peak time to collapse on peak time.

For an optimal management of these queues, companies establish multi queues organised by payment type (cash, credit card or automatic payment systems as RFID), vehicle type (car, TT, truck, etc).

Traffic density is constantly measured and employees have flexible time schedules to cope with demand changes, opening and closing queues as demand requires or even changing lane direction.

Toll


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  • Ignacio, You have produced a very good blog for lesson 8, your last blog. Your chosen example is an … by Neil McPhater on this entry
  • Hi Ignacio I have read your blog 3 I can not see any other blogs by on this entry
  • Hi Neil as you have told me I have included at the beginning of the blog the question asked on lesso… by on this entry
  • Ignacio, In ypur blog section 7) you have included a very good process map (including it on a PPT fi… by Neil McPhater on this entry
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