Lean Manufacturing Quality




Everyone is on the quality improvement bandwagon these days. Quality has been a hot topic in the manufacturing arena for years. In the 1990s, all links of the product supply chain must quickly embrace the quality improvement philosophy. The objective of this presentation is to provide an overview of the essential elements of Total Quality Logistics tools, and how companies can use these tools to significantly improve customer service, inventory management, and overall productivity.

The term Total Quality Logistics describes the systems and procedures involved in improving the ability to more effectively serve customers. The sections of the presentation will focus on the efforts to improve important quality and logistics functions through implementation of Business Process Reengineering (BPR), Distribution Resource Planning (DRP), Electronic Data Interchange (EDI), and Supplier Quality Management.

The tools described here are not meant to be used simply to improve upon current logistics processes, such as order processing, replenishment or traffic management. They are meant to be used to radically alter the way that logistics organizations conduct business. World class logistics organizations are already utilizing Total Quality Logistics tools. Organizations aspiring for world class status must quickly move to adopt these tools or risk falling further behind the competition in the race for customer satisfaction.

Business Process Reengineering

Business Process Reengineering is to the 1990s what the TQM movement was to American business in the 1980s. No longer is it enough to apply quality management techniques to reduce errors, defects and cycle times of a given process. BPR shakes at the foundations of a company's organization by asking, "Should this process exist at all?"

Don't Automate, Obliterate

Consultant Michael Hammer is credited with developing the phrase "reengineering." His observations were that companies have used technologies to simply mechanize old ways of doing business. His challenge was to "reengineer" our businesses using the power of modern information technology to radically redesign business processes in order to achieve dramatic improvements in performance. Only after business processes are reengineered can quantum leaps in performance be achieved.

Companies use BPR to examine key business processes in order to streamline the process by eliminating steps or activities that do not add value to the completion of the process. The basis for value is from the "customer" perspective, whether the customer is internal or external. Candidates for BPR are typically processes that span departmental or other organizational boundaries.

BPR in Action

The essential elements of BPR are described below.

Process Targeting

The first step in BPR is to identify candidate processes to reengineer. Candidate processes targeted for analysis typically will have characteristics such as relatively large numbers of full-time equivalent employees involved in the process or pro-

cesses that span multiple departments. Often the process will contain signs of "hand-off work, which may contain redundant activities, or have large time lags across the organizations.

Typical logistics processes that are candidates for BPR include customer support functions, inventory replenishment functions and warehouse picking and staging operations.

Value vs. Non-Value-Added

After the processes have been targeted for analysis and redesign, the employees actually involved in the process, the "process owners" are assembled into a project team. The team utilizes group facilitated work sessions to analyze the current procedures and brainstorm new process improvement actions. It is through the direct participation of the process owners that the major deliverables from BPR are produced.

A key concept of BPR is to analyze each step in a process to look at the value of each activity from the customer's perspective. Each activity is either value-added or non-value-added, and the key determinant is would the customer be willing to pay for this activity.

For example, a customer would likely be willing to pay for having their purchase order entered into a system, the order printed in the warehouse for shipment, and the invoice automatically generated. However, the customer probably would not be willing to pay to have the order manually reviewed by a supervisor (it should have been entered right) or to have the order information entered into a manual log for further analysis.

Process Improvement Actions

Activities that add cost and time to a process with no value added are candidates to be eliminated. Again, simply automating existing manual activities is generally not the answer. Typical BPR solutions seek to: eliminate the need to perform the activity, reduce the number of times the activity is performed, reduce the number of steps involved performing the activity, and reduce the complexity of the steps.

The results of BPR are new, redesigned processes that are radically different from the original process. The processes often utilize new technologies, such as EDI, to dramatically alter the way that work is accomplished. Many logistics organizations now realize that old ways of doing business are no longer good enough. BPR is a proven tool for transforming logistics processes into value added operations for world class companies of the 1990s.

To be Continued

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