Lean Operating Systems

Today we were introduced to a successful example of lean operating systems implementation through our case study at the end of Collier and Evans (2015) chapter 17. The videos below are helpful supplements to our reading, highlighting some of lean's key concepts. We'll put these concepts to work in class next week. We'll also apply them in case study, part 3.

An introduction to lean.

This next video captures Collier and Evan's (2015) four principles of lean, but in a slightly different way.

And now a review of the seven types of waste. Note that the narrator adds an eighth type. This video does a particularly good job applying lean to service environments.

Finally, this video highlights some additional lean concepts not captured in today's case study, but that are critical to lean operations. Can you identify the concepts and tools we've discussed earlier in the semester?

Reference

Collier, D.A. & Evans, J.R. (2015). OM5. Boston: Cengage Learning.

Pareto Charts & Fish Bone Diagrams

Xia makes an important connection in today's discussion board between Pareto charts and cause-and-effect (or fish bone) diagrams. She proposes that fish bone diagrams can be used to dig into the top problem(s) identified in a Pareto chart for the purpose of conducting root cause analysis. This is absolutely correct. The combination of Pareto charts and fish bone diagrams is a powerful quality assurance tool.

This video from Jay Arthur (author of Lean Six Sigma Demystified) connects Pareto charts and fish bone diagrams, and succinctly explains how the "5 whys" can be used to complete the cause-and-effect chart.

Process Mapping

Process mapping is an important tool in process design and process improvement. One critical aspect of process improvement is identifying valued-added activities and waste. Waiting time is always a form of waste (we'll talk about this more in our lean module in the coming weeks). We can identify waste in a process by taking process mapping a step further using value stream mapping. Take a look at this video for a helpful introduction to value stream mapping.

Several of your process maps included a number of different parties participating in the process. Xia's map of the "fulfillment by Amazon" (FBA) process is a good example. Sometimes we want to have a clear picture of who's responsible for what step of the process and when. We do this using a swim lane diagram. The approvals swim lane diagram below uses all of the flow charting symbols we used in today's project, but organizes them by responsible party using "swim lanes".

Source: Paul Kerr, Wikimedia Commons, Public Domain

This next video provides a helpful tutorial on how to get started with a swim lane diagram. 

How might you use this tutorial to convert Xia's FBA process map into a swim lane diagram?

The Wedding Wagon

Collier & Evans (2015) characterize four basic process types: project, job shop, flow shop, and continuous flow. How would you classify this process, and where would you place it on their service positioning matrix. How might that be different from more traditional wedding planning?




Reference: Collier, D.A. & Evans, J.R (2015). OM5. Boston: Cengage Learning.

How to Create a Productive Office Space

View image | gettyimages.com

Here's a useful article covering the basics of office space design. Check it out and enjoy: How to Create a Productive Office Space

Store Location Using the Factor Weighting Method

Save-A-Lot is a good example of a company using a cost leadership strategy to meet unique needs in the  marketplace. This video from Good Morning America provides a nice overview of their strategy from the consumer's side of the check-out counter.



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Save-A-Lot operationalizes their cost leadership strategy using a limited-assortment approach to grocery retailing. Their stores are smaller than conventional grocery stores, and carry a reduced number of SKUs (as you saw in the GMA video). The site requirements you built into your factor weighting grids all play a key role in ensuring each Save-A-Lot location is sustainable over the long term. See Julie, Kristen, Andrew and Eddie's posts for good examples of grids with well considered factor weightings.

Ryan brings up another important point in his grid and question to Eddie: the role of median family income. Save-A-Lot's operationalization of its cost leadership strategy allows it to locate in neighborhoods with median household incomes below $45,000 (approximately). These neighborhoods are often neglected by conventional supermarkets, resulting in Save-A-Lot meeting a real social need. This story from WCPO in Cincinnati illustrates just such a circumstance (note the importance of foot traffic for this location).

This video shed new light on Save-A-lot's site requirements, helping us to understand the role/importance of each factor. A special shout-out to Lauren and Micah who not only created their factor weighting grids, but researched location data to come up with some potential store sites (though they didn't identify this location).  :-)   Nice work!

As we discussed in class, the factor weighting grid can be used for any number of management decisions. You now have a tool you can put to use in a variety of OM settings and circumstances; anytime you have multiple variables against which you need to exercise managerial discretion and judgement in making your decision.

Fashion Supply Chain Case

H&M business concept | Source: about.hm.com

Thanks for your thoughtful comparisons of the H&M and Zara supply chains this week . Many of you made the point that these two supply chains have similarities, but also some important differences. See Kristen, Andrew, Mario, Michael, and Micah's posts for excellent comparisons of the two supply chains using the SCOR model. 

A central concept in supply chain design is effectiveness. How do we determine and design the most effective supply chain for our business? The answer to this question goes back to our company's overall strategy. Do we want an efficient supply chain, a responsive supply chain, or some combination of both? (See Collier & Evans, 2015, chapter 9, for a full discussion of the differences between these choices.)

H&M identifies their core business concept is "fashion and quality at the best price". Fashion certainly implies some level of supply chain responsiveness, but H&M spends significant time and energy outlining the efficiency aspects of their supply chain design as well. H&M ensures best price by designing in-house, purchasing in large volumes, efficient logistics, and overall cost consciousness (H&M, 2015). Zara, as Mario points out in his post, has a different focus. Zara clearly comes down on the responsiveness side of the design discussion with their focus on fast fashion. Your posts this week and earlier in the month detail how Zara delivers on their fast fashion commitment.

Sustainability is an important third measure of supply chain effectiveness. Andrew and Jacob point out H&M's efforts in this area. Resource efficient transportation is an important part of the H&M sustainability mix, as are reverse logistics: taking back used clothing for fabric re-purposing or fiber recycling. Note that the most resource efficient transportation methods are also the slowest. This is not necessarily a problem for supply chains that are strictly designed for efficiency, but can be problematic for supply chains designed to be responsive. It will also be a challenge for supply chain design that seeks to balance both efficiency and responsiveness. 

So, which supply chain design is most effective? The answer is the supply chain that best supports the company's strategy and facilitates delivery of the their customer benefit package. Be sure to consider these issues of efficient, responsiveness, sustainability and alignment with company strategy as you conduct the supply chain analysis in your case studies.

Enjoy the weekend. Stay warm. We'll continue our supply chain discussion in class on Monday. See you then!

References

Collier, D.A. & Evans, J.R. (2015). OM5. Boston: Cengage Learning.

H&M (2015). About H&M: Our business concept. Retrieved from http://about.hm.com/en/About/facts-about-hm/about-hm/business-concept.html.