Industrial Engineering and Scientific Management in Japan

Japanese scholars and business men embraced scientific management, efficiency movement, and industrial engineering right from the inception and excelled in implementing it and reaped great rewards in economic as well as academic spheres. In the process there were many innovations in the subject on the Japanese soil.

Early Adoption of Scientific Management by Japan

Late nineteenth century Japan was a rational shopper for products, technology and organizational models[1]. Scientific management of F.W. Taylor was quickly spotted by Japanese and was translated into Japanese in 1912, within one year of its publication in USA in 1911 [1]. It is an astonishing fact that one million copies were sold to workers in a special edition for workers. Yoichi Ueno and Araki Toichiro were enthusiastic supporters. Yoichi Ueno was responsible for organizing the Industrial Efficiency Research Institute (Sngyo Noritsu Kenkyujo) in 1921.

Motion analysis techniques were used in Japanese companies in starting in 1913. Firms like Mitsubishi Electric and Nippon Electric took the lead. In the area of textiles, Kannebo and Toyobo took the initiative.

Industrial engineering was organized as a subject that increases the education and skills of workmen in Japan. Improving the education and skill of a workman is a dominant concept in Japanese industrial set up compared to the slogan of deskilling in US systems. Also, the Efficiency Research Institute was an initiative of Harmony and Cooperation Society (Kyochokai) formed in 1919 by the state and leading corporations of Japan. Industrial engineering has a more welcome environment in Japan to deliver its scientific potential.

Zenjiro Imaoka [3]  explained Industrial Engineering as a concept for improving the efficiency of production and is the driving force that brings success in mass production today. OR (Operations Research) is an approach to explore optimization using statistical figures and linear programming. Both of them are included in supply chain flow [2].  IE (industrial engineering) is a concept that was first structured as a concept to enable the improvement of production efficiency. Various scientific approaches started by Taylor were tried out to improve production efficiency by various companies. During the Civil War, the U.S. promoted the standardization of firearms and parts of munitions. As a result, the U.S. succeeded in the mass production of parts by realizing low-cost and short-lead time production. The engine of the further success of mass production was the concept of IE. IE was employed by Henry Ford for producing the Model T Ford and that was a starting point of growth for auto industry.  The base of business administration and management consulting methodology of today started with IE. We can also say that IE is a technology that combines manufacturing techniques and product technologies or it synchronizes management resources. If IT (information technology) can be used together with IE (manufacturing technologies), information and communication will be combined with production systems, leading to the efficient flow in supply chain management which resulted in supply chain innovations such as CALS, BPR, ECR, and QR.

Contribution of JMA in Promoting and Using IE and Scientific Management in Japan

Scientific Management began in 1880s and spread quickly around the world. In Japan, this concept evolved into the pursuit of efficiency, and in 1942 the Japan Management Association (JMA) was established as an organization to promote that concept, based on IE and other management methods.

JMA set three basic principles to govern all its activities.

1. Japan-oriented strategy toward efficiency.
2. Execution than vacuous theory
3. Priority basis than all-round policy



Contribution of Taichi Ohno and Shigeo Shingo

An interesting point is that Taichi Ohno did not accept the present method as the best method. He advocated that it can be improved today or tomorrow. It is only a present standard operating procedure subject to improvement today or tomorrow. He wanted every body to believe in progress and improvement of methods.

Total Productive Maintenance - Japan Management Association ( Zero Breakdowns for Elimination of  delays in material flow)

https://nraoiekc.blogspot.com/2013/12/total-productive-maintenance-japan.html

_______________________________________________________________

References

1. Oxford handbook of work and organization, OUP 2005
2. http://www.lean-manufacturing-japan.com/scm-terminology/ieor-industrial-engineering-operational-research.html
3. Zenjiro Imaoka, Understand Supply Chain Management through 100 words,
KOUGYOUCHOUSAKAI


________________________________________________________

Bibliography

Manufacturing Ideology: Scientific Management in Twentieth-Century Japan
By William M. Tsutsui, Princeton University Press, 2001
http://books.google.com/books/p/princeton?id=Np9Y0x-b37sC


Manufacturing Ideology: Scientific Management in Twentieth-Century Japan - A Review
http://findarticles.com/p/articles/mi_hb3024/is_2_11/ai_n28809136/

___________________________________________________________________
Related Articles

Industrial Engineering

Industrial Engineering - Articles of Narayana Rao K V S S

Total Industrial Engineering - H. Yamashina

Reviewed 3.3.2011

Originally posted on
http://knol.google.com/k/industrial-engineering-and-scientific-management-in-japan

Industrial Engineering Knowledge Revision Plan - One Year Plan

January - February - March - April - May - June

July - August - September - October - November - December

Ud. 13.10.2024

Pub. 15.12.2011

Systems and Processes - Improvement Made Easy (IME) - Improvement Management Made Easy (IMME)

Improvement of systems and processes is  required in every management function.

But improvement task in operations management will be mainly covered in this note.

Industrial engineering is also focused on improvement of systems and processes. The role of industrial engineering in operations function is large relative to other management functions. The IE aspects are also covered in this note.

This note is initiated after viewing some posts by KaizenMadeEasy profile on LinkedIn. Plain English for the Japanese word "Kaizen" is "Improvement" - Good change.

Articles on Improvement and Improvement Management

System Design Principles

https://nraomtr.blogspot.com/2011/11/system-design-principles.html

Systems Improvement

https://nraomtr.blogspot.com/2011/12/systems-improvement.html

Management of Service Businesses - Processes

 

 Harvard Business Review (HBR) articles on service business  literature

 

1. Customer Fit in Service Operations (I)

Chase, Richard B. (1978), “Where Does the Customer Fit in a Service Operation?,” Harvard Business Review, 56 (November-December), 137-42.

2. Behavioral Sciences (I)

Chase, R.B., Dasu, S., 2001. Want to perfect your company’s service? Use behavioral science. Harvard Business Review (June), 79–84.

3. Service Factory – Productivity  (III)

Chase, R.B.,Garvin, D. (1989) The Service Factory, Harvard Business Review, July-August 1989 (lead article), pp. 61-69.

4. Service Science (I, II II)

Chesbrough, H. (2005) Toward a science of services. Harvard Business Review 83, 16–17.

5. Industrialization of Service – Productivity (III)

Levitt, Ted (1976), “Industrialization of Service,” Harvard Business Review, 54 (September-October), 63-74.

6. Designing Services that Deliver – Quality (II)

Shostack, Lynn (1984), “Designing Services that Deliver,” Harvard Business Review, 62 (January-February), 133-39.

7. Putting the Service-Profit Chain to Work – Quality (II)

Heskett, James L., Thomas O. Jones, Gary W. Loveman, W. Earl Sasser, Jr., and Leonard A. Schlesinger (1994), “Putting the Service-Profit Chain to Work,” Harvard Business Review (March/April), 164-72.

8. Quality Comes To Services – Quality (I & II)

Reichheld, Frederick and W. Earl Sasser, Jr. (1990), “Zero Defections: Quality Comes to Services,” Harvard Business Review, 68 (September/October), 105-11.

9. Profitable Art of Service Recovery – Quality (I & II)

Hart, Christopher W.L., W. Earl Sasser, Jr., and James L. Heskett (1990), “The Profitable Art of Service Recovery” Harvard Business Review, (July-August), 148-56.

10. Matching Supply and Demand (Productivity)

Sasser, W. Earl (1976), “Match Supply and Demand in Service Industries,” Harvard Business Review, 54 (November-Decem- ber), 133-40.

11. The Service Driven Company (Quality)

Schlesinger, Leonard A. and James L. Heskett (1991), “The Service-Driven Service Company,” Harvard Business Review (September/October), 71-81.

12. Effective Marketing for Professional Services (Growth)

Bloom, Paul N. (1984), “Effective Marketing for Professional Services,” Harvard Business Review (September/October), 102-10.

13. Capturing Value of Supplementary Services (Growth, Scope, Adjacent Spaces, Sustainable Innovation, Quality)

Anderson, James C. and James A. Narus (1995), “Capturing the Value of Supplementary Services,” Harvard Business Review, 73 (January/February), 75-83.

14. Cost Accounting Comes to Service Industries (Productivity)

Dearden, John (1978), “Cost Accounting Comes to Service Industries,” Harvard Business Review, 56 (September-Oc- tober), 132-140.

15. Production-Line Approach to Services (Productivity)

Levitt, Theodore (1972), “Production-Line Approach to Services,” Harvard Business Review, 50 (September-Octo- ber), 42-52.

16. Knowledge Based Busienss (Sustainable Innovation)

Davis, S., J. Botkin. 1994. The coming of the knowledge-based business. Harvard Bus. Rev.72 (Sept./Oct.) 165-170.

17.Exploiting the Virtual Value Chain (Productivity)

Rayport, Jeffrey F. and John J. Sviokla (1995), “Exploiting the Virtual Value Chain,” Harvard Business Review, 73 (November/December), 14-24.

18. Surviving the Revolution

Karmarkar, Uday (2004).“Will You Survive the Services Revolution?,” Harvard Business Review, 82 (June) 100–108.

20. Making Mass Customization Work

Pine, Joseph B., II, Bart Victor, and Andrew C. Boynton (1993), “Making Mass Customization Work,” Harvard Business Re- view, 71 (September/October), 108-19.

21. Service Life Cycle of Products

Potts, G.W. (1988), ªExploiting your product’s service life cycleº, Harvard Business Review, Vol. 66 No. 5, pp. 32-5.

22. Beyond Products: Services-Based Strategy

Quinn, J.B., Doorley, T.L. and Paquette, P.C. (1990), “Beyond products: services-based strategy,” Harvard Business Review, Vol. 68 No. 2, pp. 58-67.

23. Unconditional Service Guarantees

C.W.L. Hart, “The Power of Unconditional Service Guarantees,” Harvard Business Review, 66(4) July-August 1988, 54-62

24. Governance

Mintzberg, Henry. 1996. Managing Government, Governing Management. Harvard Business Review74(3): 75-83.

25. IT

McAfee A, Brynjolfsson E. 2008. Investing in the IT that makes a competitive difference. Harvard Business Review 86(7–8).

26. Sell Services More Profitably

Reinartz, W. and Ulaga, W. (2008) How to Sell Services More Profitably, Harvard Business Review, 86: 90-96.

27. Downstream profits

Wise, R. and Baumgartner, P. (1999) Go Downstream: The New Profit Imperative in Manufacturing. Harvard Business Review, Sept-Oct, 133-141.

29. Experience Economy

Pine, B. Joseph and James H. Gilmore (1998), Welcome to the Experience Economy.Harvard Business Review.

31. Co-opting Customer Competence

Prahalad, C.K and Venkatram Ramaswamy (2000), “Co-opting Customer Competence,” Harvard Business Review, 78 (January- February), 79-87.

32. Strategy and the New Economics of Information

Evans, Philip B. and Thomas S. Wurster (1997), “Strategy and the New Economics of Information,” Harvard Business Review, 75 (September-October), 71-82.

33. Symbols for Sale

Levy, Sidney J. (1959), “Symbols for Sale,” Harvard Business Review, 37 (July–August), 117–24.

35. Reengineering works

Hammer, M. (1990). ‘Reengineering works: Don’t automate, obliterate’, Harvard Business Review, 68(4), pp. 104–112.

36. Lean Service Machine

Swank CK. The lean service machine. Harvard Bus Review 2003; 81(10):123-129, 38.

37. Fixing Health Care

Spear SJ. Fixing health care from the inside, today. Harvard Bus Review 2005;83(9):78-91.

41. Lessons in the Service Sector

Heskett, James L. (1987), “Lessons in the Service Sector,” Harvard Business Review, 87 (March-April), 118-26.

44. Learning to love the service economy

Canton, I. D. [1984] ‘Learning to love the service economy’, Harvard Business Review, may-June, 89-97.

45. Hearing the voice of the market

Barabba, Vincent and Gerald Zaltman (1991), Hearing the Voice of the Market. Cambridge, MA: Harvard Business School Press.

46. Information and Competitive Advantage

Porter, Michael E. and Victor E. Millar (1985), “How Information Gives You Competitive Advantage,” Harvard Busi- ness Review, 85 (July-August), 149-60.

47. Relationship marketing

Fournier, Susan Susan Dobscha, and David Glen Mick (1998), “Preventing the Premature Death of Relationship Marketing,” Harvard Business Review, 77 (January/February), 42-51

49. Trust and virtual organization

Handy, C. (1995). Trust and the virtual organization. Harvard Business Review, 73(3), 40-48.

50. Contextual marketing & Internet

Kenny, D., & Marshall, J. F. (2000). Contextual marketing: The real business of the Internet. Harvard Business Review, 78(6), 119-125.

51. Commoditization of Process

Davenport, T. The coming commoditization of processes. Harvard Business Rev. (June 2005), 100–108.

53. Knowledge Creating Company

Nonaka, I. The knowledge creating company. Harvard Business Review 69 (Nov–Dec 1991), 96–104.

56. Value Proposition

Anderson, J. C., Narus, J. A., & van Rossum, W. (2006). Customer value propositions in business markets. Harvard Business Review, 84, 90–99.

58. Restitching

Eisenhardt, K., and Brown, S. L. “Patching: Restitching Business Portfolios in Dynamic Markets,” Harvard Business Review (77:3), May/June 1999, pp. 72-82.

59. Coevolving

Eisenhardt, K., and Galunic, D. C. “Coevolving: At Last, a Way to Make Synergies Work,” Harvard Business Review (78:1); January/ February, 2000, pp. 91-102.

61. Strategy and the Internet

Porter, M. (2001) “Strategy and the Internet,” Harvard Business Review, March-April 2001, pp. 63-78.

62. Value Disciplines

Treacy, M., and Wiersema, F. “Customer Intimacy and Other Value Disciplines,” Harvard Business Review (71:1), January/February 1993, pp. 84-93.

65. Competitor collaboration

Hamel, G., Doz, Y. L., & Prahalad, C. K. 1989. Collaborate with your competitors-and win. Harvard Business Review, 67(1): 133-140.

70. Planning as Learning

DeGeus, Arie P. (1988), “Planning as Learning,” Harvard Business Review, 66 (March/April), 70-74.

71. Competing on the Eight Dimensions of Quality

Garvin, David A. (1987), “Competing on the Eight Dimensions of Quality,” Harvard Business Review, 57, 173-84.

72. Customer-Centered Brand Management

Rust, R. T., V. A. Zeithaml, K. N. Lemon. 2004. Customer-centered brand management. Harvard Bus. Rev. 82(9) 110-118.

74. Cultural Issues

Nonaka, Ikujiro (2007) The Knowledge-Creating Company. HBR.

M. Baba and J. Gluesing (1992), Knowledge creation:  Japan vs. the West, HBR 70(1):157-58.

75. Supply Chain

Bowersox, Donald J.  1990.  The Strategic Benefits of Logistics Alliances.  HBR 90(4):4-11.

76.  Service Worker Productivity

Drucker, Peter F.  1991.  The New Productivity Challenge.  HBR 91, November/December, 70-79.

77. Service Analytics

Davenport, T., Mule, L. D., & Lucker, J. (2011), Know what your customers want before they do. Harvard Business Review, 89, 84-92.

78. Service Excellence

Frei, F. X. 2008. The four things a service business must get right. Harvard Business Review 86(4): 70–

80.

79.  Value-cocreation

Ramaswamy, V., Gouillart, F., 2010, Building the cocreative enterprise, Harvard Business Review, Volume 88 (10): 100-109.

80. Customer Experience

Meyer, Christopher and Andre Schwager (2007), “Understanding Customer Experience,” Harvard Business Review, February 117–26.

81. Customer-Employee Interactions

Fleming, J. H., Coffman, C., & Harter, J. K. (2005). Manage your human sigma. Harvard Business Review, 83(7/8), 106–114.

83. Self-Service

Moon, Y. and Frei, F.X. (2000), “Exploding the self-service myth’’, Harvard Business Review, Vol. 78 No. 3, pp. 26-7.

84. Customers

Dougherty D, Marty A (2008). What service customers really want? Harvard Business Review, September: p. 22.

85. Customer loyalty

O’Brien, Louise and Charles Jones, “Do Rewards Really Create Loyalty?”, Harvard Business Review (May – June, 1995), 75–82.

86. Strategy

Allmendinger, G.; Lombreglia, R.; Four Strategies for the Age of Smart Services. Harvard Business Review, Oct2005, Vol. 83 Issue 10, pp.131-145.

87. Customer Satisfaction

Taylor, A. (2002, July). Driving customer satisfaction. Harvard Business Review, 24-25.

88. Quality and Productivity Tradeoff

Frei, Frances X. (2006), “Breaking the trade-off between efficiency and service,” Harvard Business Review, 84 (11), 92-101.

89. Service Innovation

Thomke, Stefan (2003), “R&D Comes to Services,” Harvard Business Review, 81 (4), 70-79.

91. Employees and Customers

Chun, Rosa, and Gary Davies. “Employee Happiness Isn’t Enough to Satisfy Customers.” Harvard Business Review 87.4 (2009): 19.

92. Service Quality and Customer Trust

Bell, Simon J. and Andreas B. Eisingerich (2007), ―Work With Me,‖ Harvard Business Review, 85 (March), 32.

93. Productivity

Merrifield, R., Calhoun, J., & Stevens, D. (2008). The next revolution in productivity. Harvard Business Review, June, 72–80.

94. Global Networks

Bartlett, C., & Ghoshal, S. 1989. Managing across borders: The transnational solution. Boston, MA: Harvard Business School Press.

100. Not-for-profit service

Harvey, P. D., and Snyder, J. D. (1987) Charities need a bottom line too. Harvard Business Review (January-February). Harvard Business Publishing, Boston.

 https://service-science.info/archives/2210

Production Line Approach Service System Design

 

Industrialization of services business model

https://en.wikipedia.org/wiki/Industrialization_of_services_business_model

Interesting Article

Creating Customer Value through Industrialized Intimacy

To really serve customers requires a deep understanding of their needs. It also requires customization, personalization and empathy.

by Peter Kolesar, Garrett van Rysin, and Wayne Cutler  

July 1, 1998

Consumer & retail/ Third Quarter 1998 / Issue 12

https://www.strategy-business.com/article/19127

Both manufacturing and services have their origins in craft production -- the village smith and cooper, the town barber and the household servant. More than a century ago, with the Industrial Revolution, manufacturers took great strides forward in productivity and quality by abandoning the craft production model in favor of mass production, standardization, division of labor and control, while service providers largely continued operating in a craft production mode. In the late 1960's, some service establishments began to move toward industrialization. Theodore Levitt , observing these trends, argued for bringing factory management concepts into the service industries -- the "industrialization of services" as he called it. 

https://typeset.io/papers/production-line-approach-to-service-4jk536rv2y

shows limited information on the paper AI application on the paper

Applicability of Lean Thinking in Service Industries

Khalil Amiroune

Entrepreneur

March 6, 2016

https://www.linkedin.com/pulse/applicability-lean-thinking-service-industries-khalil-amiroune/

Product Design and Process Selection—Services - Review Notes

Main Section 

• The Nature of Services
• 
  
• An Operational Classification of Services
• 
  
• Designing Service Organizations
• 
  
• Structuring the Service Encounter: Service-System Design Matrix
• 
  
• Service Blueprinting and Fail-Safing
• 
  
• Three Contrasting Service Designs
• 
  
• Applying Behavioral Science to Service Encounters
• 
  
• New Service Development Process
• 
  
• Service Guarantees as Design Drivers

Services are different from manufacturing, with the key service difference being the interaction of the customer in the delivery process. Service design is no longer considered to be an art form as logical approaches to better design and management of service systems are emerging.

In a facilities-based service, the customer must go to the service facility. In contrast, in a field-based service, the production and consumption of the service takes place in the customer's environment. Internal services refer to services required to support the activities of the larger organization. There is a blurring of manufacturing and service firms since the manufacturer product always has a certain percentage of service content. Services are also seen as the next source of competitive advantage for firms.


The Nature of Services - Seven Generalizations
Chase et al (11th Edition)

1. Everyone is an expert on services.
It means many more people understand how services are delivered and have an opinion how they should be delivered.
2. Services are idiosyncratic.
People want services done differently at different times and places.
3. Quality of work alone is not quality of service.
Time spent is also a parameter.
4. Most services have tangible and intangible attributes.
5. High contact services are experienced.
6. Effective management of services requires understanding of marketing aspects, operations aspects as well as aspects of service personnel involved.
7. Services often take different forms of encounters involving face-to-face, telephone, electromechanical, and mail interactions.

• An Operational Classification of Services

The item that operationally distinguishes one service system from another in its operation function,  is the extent of customer contact in the creation of the service.

In services we also consider the amount of customer contact or the physical presence of the customer in the system. Service systems range from those with a high degree of customer contact to those with a low degree of customer contact.

• Designing Service Organizations

Service strategy begins by selecting the performance priorities.

1. Treatment of the customer in terms of friendliness and helpfulness.

2. Speed and convenience of service.

3. Price of service

4. Variety of services offered by the organization

5. Quality of the tangible goods that are used to provide the service including the service facility and interaction spaces.

6. Skills of service personnel

• Structuring the Service Encounter: Service-System Design Matrix

Service encounters can be configured in a number of different ways. 

The service-system design matrix includes six common alternatives. Flowcharting, like in manufacturing process design, is the standard tool for service process design. The flowchart, or service blueprint, emphasizes the importance of design. 

• Service Blueprinting and Fail-Safing

Poka-yoke systems applied to services prevent mistakes from becoming service defects.

• Three Contrasting Service Designs

Approaches to services include the production line approach, the self-service approach, and the personal attention approach. 

Production Line Approach 

Illustration:     Macdonald Item Preparation Process

Self-service approach  

Illustration:  Babk ATM

Website interaction by customers - Amazom

Personal attention approach. 

Illustration:  Nordstrom Department Stores - Service Design

Ritz-Carlton Hotel Company - Service Design

• Service Guarantees as Design Drivers

Service guarantees are not only a marketing tool for services but, from an operations perspective, these guarantees can be used as an improvement incentive and can focus the firm's delivery system on things it must do well to satisfy the customer. 


Waiting Lines

Understanding waiting lines or queues and learning how to manage them is one of the most important areas in operations management. Queuing theory is used in both manufacturing and service organizations to understand queues and to arrive at solutions to eliminate or minimize them.

The waiting line system consists of six major components: the source population, the way customers arrive at the service facility, the physical waiting line itself, the way customers are selected from the line, the characteristics of the service facility, and the condition of the customer exiting the system.

Arrivals at a service system may be drawn from a finite or limited customer pool or from a population that is large enough in relation to the service system so that changes do not significantly affect the system probabilities.

Another determinant of waiting line formation is the arrival characteristics of the queue members. The arrivals are far more controllable than normally recognized. Coupons, discounts, sales, and other methods can control demands on a system.

Queue lines can vary in length, in the number of lines used, and in the queue discipline or rules used for determining the order of service to customers. First come, first serviced is the most common priority rule. The service facility itself, with its particular flow and configuration can influence the queue. Computer spreadsheets are used to arrive at answers to waiting line problems. Computer simulations can also be used to arrive at solutions of more complex or dependent waiting line situations. Waiting line problems present challenges to management to attempt to eliminate them.

Service Blueprinting - The Process

https://nraomtr.blogspot.com/2023/07/service-blueprinting-process.html 

Chapter outline

The Nature of Services
Service Businesses and Internal Services
Facilities-Based Services Defined
Field-Based Services Defined
A Customer-Centered View of Service Management

An Operational Classification of Services
High and Low Degree of Customer Contact Defined

Designing Service Organizations
Service Strategy: Focus and Advantage

Structuring the Service Encounter: Service-System Design Matrix
Strategic Uses of the Matrix

Service Blueprinting and Fail-Safing
Service Blueprint Defined
Poka-Yokes Defined

Three Contrasting Service Designs
The Production-Line Approach
The Self-Service Approach
The Personal-Attention Approach

Applying Behavioral Science to Service Encounters

New Service Development Process

Service Guarantees as Design Drivers
Service Guarantee Defined

Conclusion

Case: Pizza U.S.A.: An Exercise in Translating Customer Requirements into Process Design Requirements.

Case: Contact Centers Should Take a Lesson From Local Businesses


Outline of the technical notes on Waiting lines

Queues Defined

Economics of the Waiting Line Problem
Cost-Effectiveness Balance
The Practical View of Waiting Lines

The Queuing System
Queuing System Defined
Customer Arrivals
Arrival Rate Defined
Exponential Distribution Defined
Poisson Distribution Defined
Distribution of Arrivals
The Queuing System: Factors
Service Rate Defined
Exit

Waiting Line Models

Approximating Customer Waiting Time

Computer Simulation of Waiting Lines

Conclusion


MBA Core Management Knowledge - One Year Revision Schedule



Sources

http://highered.mcgraw-hill.com/sites/0072983906/student_view0/technical_note7/


Summaries of all Chapters of Operation Management

Journal of Operations Management

Volume 25, Issue 2, March 2007, Pages 364-374

The emergence of service operations management as an academic discipline

Janelle Heineke, Mark M. Davis 

https://doi.org/10.1016/j.jom.2006.11.003

Abstract

The service sector surpassed  50% of the U.S. economy in the 1950s.  There emerged a growing demand for business schools to develop both research agendas and courses in service operations. Beginning at the Harvard Business School in the early 1970s, courses in service operations have evolved. This article traces the evolution of service operations from  its early years as an academic discipline in business schools to the present, identifying “pioneers” in service operations who truly blazed a previously unmarked trail that many have since followed. 

By 2000, services comprised almost 80% of U.S. employment. This rapid growth was caused by several factors including changing population lifestyles, deregulation, and new and improved infrastructure including the widespread availability of new technologies.

https://www.sciencedirect.com/science/article/abs/pii/S0272696306001318

Operations management for services

https://en.wikipedia.org/wiki/Operations_management_for_services

Ud. 1.10.,23.9.2024, 30.7.2023

Pub. 7.12.2014

Manufacturing Process Design - Work Flow

Manufacturing process design is not adequately described in books so far.

Manufacturing process design is not adequately described in the current Operations Management  textbooks. Hence developing this  article. -  Manufacturing Process Design.

Please share useful articles, case studies or papers. Give reference. I want to use and include in the bibliography.

The  book, Manufacturing Organization and Management, Harold T. Amrine et al.  has better content on manufacturing process but still it is also not comprehensive.

Manufacturing Organization and Management, Harold T. Amrine et al.Pearson Education India, 1993 - 640 pages      https://books.google.co.in/books?id=LzfVL6ge_MwC   See page 109 for the chapter Design of Manufacturing Processes.

Introduction to Modern Industrial Engineering.  

In 0.5% on Academia.edu. 10,600+ Downloads so far.

FREE Download from:

https://academia.edu/103626052/INTRODUCTION_TO_MODERN_INDUSTRIAL_ENGINEERING_Version_3_0 

What is Industrial and Systems Engineering?

IISE Definition of Industrial Engineering

Industrial and systems engineering (ISE) is concerned with the design, improvement and installation of integrated systems of people, materials, information, equipment and energy. It draws upon specialized knowledge and skill in the mathematical, physical, and social sciences together with the principles and methods of engineering analysis and design, to specify, predict, and evaluate the results to be obtained from such systems.

https://nraoiekc.blogspot.com/2022/03/industrial-engineering-iise-definition.html

Note: 

Industrial and systems engineering (ISE) is concerned with the design, improvement and installation of integrated systems ...   to specify, predict, and evaluate the results to be obtained from such systems.

It is result orientation. Primarily productivity orientation.

Simple Explanation by Narayana Rao K.V.S.S.

Industrial engineering is system efficiency engineering. Its main components are productivity science, productivity engineering and productivity management.

---------------------------

Proposed Procedure for  Process Design and Communication

1. First Specify the output required. Get the drawing of the part, subassembly or assembly.  Find out indicated volume for annual production.

2. Determine possible inputs based on the material specified.

3. For each input,  determine the material transformation stages (Find out  the best machine available in the market for various volume levels. Incorporate existing machines in the company also in the proposal. Incorporate pure manual method also as an alternative).

4. Subject the initial proposal to technical feasibility analysis.

5. Do cost analysis for each alternative.

6. Select techno-economically feasible alternative for each operation in the process.

7. Decide quality related inspection activities for each material transformation operation.

8. Find out the best possible instruments for the inspection and related data processing. Incorporate existing instruments and pure manual alternatives also.

9. Subject the initial proposal to technical feasibility analysis.

10. Do cost analysis for each alternative.

11. Select techno-economically feasible alternative for each operation in the process.

12. Determine tentative batch quantity for manufacture (based on the setup cost in processing operations and inspection operation).

13. Determine working process storage provision required. Determine the storage facility after  techno-economic analysis including best facility currently available and existing facilities.

14. Determine the transport of material required between machine, inspection station and storage location.

15. Indicate the equipment to be used for transportation. Incorporate best possible equipment, existing equipment, and pure manual alternatives also.

16. Subject the initial proposal to technical feasibility analysis.

17. Do cost analysis for each alternative.

18. Select techno-economically feasible alternative for each operation in the process.

19. Present the complete process as a flow process chart.

This flow process chart is still a high level chart.

Each operation has to be designed and documented further using the equipment finalized. At the lowest level each element of machine work and manual motion are to be specified. For machine work, various parameters of the machine are to be determined. For the work of man,  the motion pattern of the operator needs to be specified. Process design requires many hours of planning and design work by knowledgeable and experienced manufacturing engineers, quality engineers, material handling engineers, facility planners and industrial engineers. Industrial engineers provide productivity related input. Engineers specializing in various technical areas present technical inputs and deveolp the details. Operations managers and process managers provide strategy related input, demand related inputs, and manpower management related inputs apart from technical inputs.

Interaction between steps, that is revising a design finalized in the earlier step may be revised based on the decisions in the later stage. For instance, based on the knowledge gained during planning inspection operation, material processing operation may be changed.

Process design is a systems engineering project and ISEs must have the capability to undertake it as system engineering related to industrial engineering.

Some Material Related to the Steps of Proposed Manufacturing Process Design

1. First Specify the output required. Get the drawing of the part, subassembly or assembly.  Find out indicated volume for annual production.

2. Determine possible inputs based on the material specified.

DFMA Notes on Selection of Materials and Processes

https://nraoiekc.blogspot.com/2021/11/dfma-notes-on-selection-of-materials.html

3. For each input,  determine the material transformation stages (Find out  the best machine available in the market for various volume levels. Incorporate existing machines in the company also in the proposal. Incorporate pure manual method also as an alternative).

DFMA Notes on Selection of Materials and Processes

https://nraoiekc.blogspot.com/2021/11/dfma-notes-on-selection-of-materials.html

Manufacturing Process Planning and Production Quantity Planning - Manufacturing Planning

https://nraoiekc.blogspot.com/2022/09/manufacturing-process-planning-and.html

Selection of Metal Removal Processes - Initial Steps - Process Planning and Process Industrial Engineering

https://nraoiekc.blogspot.com/2020/07/selection-of-metal-removal-processes.html

Process Planning Lectures

Lecture 20. Example Selection of Machining Operation

https://nraoiekc.blogspot.com/2020/05/process-planning-lectures.html

4. Subject the initial proposal to technical feasibility analysis.

5. Do cost analysis for each alternative.

Economic Analysis of Processes - Case Studies

https://nraoiekc.blogspot.com/2013/09/economic-analysis-of-processes-case.html

6. Select techno-economically feasible alternative for each operation in the process.

7. Decide quality related inspection activities for each material transformation operation.

8. Find out the best possible instruments for the inspection and related data processing. Incorporate existing instruments and pure manual alternatives also.

9. Subject the initial proposal to technical feasibility analysis.

10. Do cost analysis for each alternative.

11. Select techno-economically feasible alternative for each operation in the process.

12. Determine tentative batch quantity for manufacture (based on the setup cost in processing operations and inspection operation).

13. Determine working process storage provision required. Determine the storage facility after  techno-economic analysis including best facility currently available and existing facilities.

14. Determine the transport of material required between machine, inspection station and storage location.

15. Indicate the equipment to be used for transportation. Incorporate best possible equipment, existing equipment, and pure manual alternatives also.

Material Handling - Transport Between Work Stations - Inspection Stations and Storage Points - Manufacturing Process Design

https://nraoiekc.blogspot.com/2024/09/material-handling-transport-between.html

16. Subject the initial proposal to technical feasibility analysis.

17. Do cost analysis for each alternative.

18. Select techno-economically feasible alternative for each operation in the process.

19. Present the complete process as a flow process chart.

This flow process chart is still a high level chart.

WHAT OBJECTIVES SHOULD PROCESS DESIGN HAVE? 

The whole point of process design is to make sure that the performance of the process is appropriate for whatever it is trying to achieve. For example, if an operation competed primarily on its ability to respond quickly to customer requests, its processes would need to be designed to give fast throughput times.

Similarly, if an operation competed on low price, cost-related objectives would be likely to dominate its process design.

More ‘micro’ and detailed set of objectives. 

These are largely concerned with flow through the process. When whatever are being ‘processed’ enter a process they will progress through a series of activities where they are ‘transformed’ in some way. Between these activities they may dwell for some time in inventories, waiting to be transformed by the next activity. This means that the time that a unit spends in the process (its throughput time) will be longer than the sum of all the transforming activities that it passes through. Also the resources that perform the process’s activities may not be used all the time because not all items will necessarily require the same activities and the capacity of each resource may not match the demand placed upon it. So neither the items moving through the process, nor the resources performing the activities may be fully utilized. Because of this the way that items leave the process is unlikely to be exactly the same as the way they arrive at the process. It is common for more ‘micro’ performance flow objectives to be used that describe process flow performance. For example: 

● Throughput rate (or flow rate) is the rate at which items emerge from the process, i.e. the number of items passing through the process per unit of time. 

‘Paced’ processes like moving belt assembly lines. It is the ‘beat’, or tempo, of working required to meet demand. 

● Throughput time is the average elapsed time taken for inputs to move through the process and become outputs. 

● The number of items in the process (also called the ‘work in progress’, or in-process inventory), as an average over a period of time. 

● The utilization of process resources is the proportion of available time that the resources within the process are performing useful work.

Standardization is also an important objective in the design of some services and products, for similar reasons. The practical dilemma for most organizations is how to draw the line between processes that are required to be standardized, and those that are allowed to be different.

See page 616 in Buffa and Sarin

Chapter 19 - Design of Processes, Jobs and Work Measurement

https://books.google.co.in/books?id=1yE98UfxctUC&printsec=frontcover#v=onepage&q&f=false

 Chopra, S. , Anupindi, R. , Deshmukh, S.D. , Van Mieghem, J.A. and Zemel, E. ( 2012 ) Managing 

Business Process Flows, 2nd edn , Prentice Hall, Upper Saddle River, NJ. An excellent, although 

mathematical, approach to process design in general. 

 Hammer, M. ( 1990 ) Reengineering Work: Don’t automate, obliterate, Harvard Business Review , July–August. This is the paper that launched the whole idea of business processes and process management in general to a wider managerial audience. 

Smith, H. and Fingar, P. ( 2003 ) Business Process Management: The Third Wave , Meghan-Kiffer Press, Tampa, FL. A popular book on process management from a BPR perspective.

The Basics of Process Mapping, 2nd Edition

By Robert Damelio

https://books.google.co.in/books?id=I6O_Z-dTap8C

Design and management of service processes

by Ramaswamy, Rohit, 

Publication date 1996

Includes bibliographical references (pages 411-414) and index

Ch. 1. Designing Services -- an Introduction -- Ch. 2. The Service Design and Management Model -- A Methodological Overview -- Ch. 3. Developing Design Specifications -- Part 1: Defining Design Attributes -- Ch. 4. Developing Design Specifications -- Part 2: Setting Design Performance Standards -- Ch. 5. Generating and Evaluating Design Concepts -- Ch. 6. Performing Detailed Process Design -- Part 1: Generating Design Alternatives -- Ch. 7. Performing Detailed Process Design -- Part 2: Evaluating and Testing Alternatives -- Ch. 8. Implementing the Design -- Ch. 9. Measuring Performance -- Ch. 10. Assessing Customer Satisfaction -- Ch. 11. Improving Service Performance -- Ch. 12. Conclusion

Essentials Of Service Design

November 2011Journal of Service Science (JSS) 4(2):43

Jr. Harry Katzan

https://www.researchgate.net/publication/292952356_Essentials_Of_Service_Design

Bitner, M., Ostrom, A., and F. Morgan. 2007. Service Blueprinting: A Practical Technique for Service 

Innovation. Center for Service Leadership, Arizona State University.

Service blueprinting: A practical technique for service innovation

M J Bitner, Amy Ostrom, Felicia N. Morgan

Journal California Management Review

Volume50

Issue number 3, 2008

Process Strategy and Analysis - Important Points - Summary - Krajewski - 12th Edition

https://nraomtr.blogspot.com/2019/08/process-strategy-and-analysis-important.html

Process Design - A Note - Nigel Slack et al. - Chapter 4 in 7th edition

https://nraomtr.blogspot.com/2022/05/process-design-note-nigel-slack-et-al.html

Process Analysis - Chase, Aquilano, Chase Book - Operations Management, 11th Ed.

https://nraomtr.blogspot.com/2011/12/process-analysis.html

Manufacturing Process Selection and Design - Review Notes - 11th Edition Chase & Jacobs & Aquilano

https://nraomtr.blogspot.com/2011/12/manufacturing-process-selection-and.html

Production Process Planning of Machining

64. Production Process Planning - Foundation for Production

65. Assembly Design - Process Planning & Industrial Engineering Perspective

66. Technical Drawings - Important Guidelines - Process Planning and Industrial Engineering

67. Selection of Metal Removal Processes - Initial Steps - Process Planning and Process Industrial Engineering

68. Fixturing and Clamping the Work Piece - Process Planning and Process Industrial Engineering

69. Determining Operation Type, Feed and Depth of Cuts for Multiple Cuts - Process Planning and Process Industrial Engineering

70. Selecting Cutting Speed - Process Planning and Process Industrial Engineering

71. Selecting a Machine for the Operation - Process Planning and Process Industrial Engineering

72. Selecting Tools for a Machining Operation - Process Planning and Process Industrial Engineering

Inspection Operations Improvement

126

Inspection Activities - Operation Analysis - Process Improvement

127

Software Inspection Process Improvement

128

Automated Inspection - Bibliography

Machine vision Based Inspection Productivity Improvement on Bottling Line - IE Case Study - 2013

129

Poka-Yoke - Shigeo Shingo - Industrial Engineering of Inspection Activity

Inspection Activities of Transformers

132

News - Information for Inspection Operation Analysis

Skoda Auto - Modernisation and Improvement of Coordinate Measuring Machines (CMMs).

Case Study 132.

Transport - Material Handling Operations

136-145

136

Improvement of Transport - Material Handling Operations in Processes

137

Material Handling and Transport System - Principles for Design and Options

Supporting Materials

Material Handling Options for Methods Efficiency Engineers

Material Handling - ILO Work Study Book

Robots in Material Handling

Conveyors - Material Handling

138

Automated Material Handling - Transport - Industrial Engineering - Bibliography

139

Material Handling Productivity Analysis in Methods Efficiency Engineering

140

News - Information for Material Handling and Transport Operation Analysis

141

Plant Layout Lecture Notes

Storage - Warehousing Operations

146 - 155

146

News - Information for Storage/Warehousing Operation Analysis

Warehouse and Factory Material Handling Equipment and Systems - Manufacturers and Systems

Improvement of Warehouse Order Picking Activity - Research and Models

Ud.29.9.,26.9.2024, 17.9.2024

Pub. 15.9.2024 - Engineers Day India

2024 Perspectives - Themes for Operations and Supply Chain Management & Managers

In 2024— productivity, technology enablement, and sustainability are the key drivers of future success. 

Navigating the new normal: Operations insights for 2024

November 10, 2023.  McKinsey Podcast

https://www.mckinsey.com/capabilities/operations/our-insights/navigating-the-new-normal-operations-insights-for-2024

Cost Reduction through Productivity Improvement is Industrial Engineering.

2023 BEST New E-Book on Industrial Engineering.   

INTRODUCTION TO MODERN INDUSTRIAL ENGINEERING.   FREE Download. 

https://academia.edu/103626052/INTRODUCTION_TO_MODERN_INDUSTRIAL_ENGINEERING_Version_3_0

Industrial engineering improves technology, facilities and processes in the dimension of productivity. 

This article is a Top 10 for 2023. Hence more needs to be written highlighting the issues and supporting points.

‘Operational’ twins should rise in their use in 2024

Jan. 4, 2024

Applied to the production process, these twins integrate data from disparate IT and OT systems and generate a holistic view of operations easily understood by employees.

https://www.smartindustry.com/special-reports/article/33016743/operational-twins-should-rise-in-their-use-in-2024

McKinsey Podcast

What are the three things companies should be thinking about when it comes to their operations agendas?

Number one, how to apply generative AI and automation to the back-office and shared-service functions. 

Number two, purchasing under inflationary circumstances; there are huge gains to be had quickly if you navigate this space. 

And third, sustainability. In operations, we’ve long been optimizing for efficiency, quality, and cost. Now, it’s also about sustainability and carbon footprint.

Your company’s future success demands agile, flexible, and resilient operations. 

There is an increasing demand on supply chains and organizations to deliver productivity.

The second thing  is that supply chain executives are also being asked to deliver on sustainability and to help improve the carbon footprint and reduce the impact on our environment. And they’re also being asked to increase the resiliency of their operations coming out of a global pandemic, not to mention the many other disruptions we’ve had. 

Consumer-facing industries are relatively weak. At the same time, some industry sectors  are booming. For example,  green-energy transition and battery factories. So the combination is an unusual one. I would say in both of these extremes, operations has never been higher on the CEO agenda.

A new trend is purchasing in an inflationary environment. We have had 25 to 30 years since we saw something similar. So the capabilities needed to purchase the tools are quite different from what we’ve seen for a while. We also have new technological opportunities, opening up brand-new opportunities to restructure back-office and such functions. And given the macroeconomics, tying back to that, I think the urge to move has never been bigger among our clients. And it’s not just a COO topic; it’s really a CEO topic.

Where are clients placing their big bets and using consultancy services?

The reality is that for a lot of operations leaders, productivity is a nonnegotiable.  

It’s just the reality of where we sit and the reality of the cost pressures a lot of people have faced—whether you’re a product manufacturer and input costs and raw materials or whether you’re a services company, you’ve seen the cost of labor grow meaningfully. The need to drive productivity has never been higher. So I would say for most of our clients and companies, that’s kind of a nonnegotiable. 

Then what we see on top of that is a lot of supply chain leaders and executives thinking really hard about where they’re going to make their big bets.

For example, resiliency and how to build in more operational flexibility were supercritical capabilities that were front and center for everybody over the last couple of years. But the question is, how much will companies invest in that supply chain and operational resiliency as we return to something that feels more normal? And will the importance there continue to be as high as it has been the past couple of years? While we can’t predict what the next disruption will be, we are quite confident that there are more and more disruptions coming down the pike.

On the sustainability front, we’ve also got to tackle head-on where the emissions sit today. A lot of companies are heavy emitters, and a lot of that is upstream from their individual supply chains, so they are having to place big bets on how they can improve impact and the environment through their operations. And some of those things actually reduce costs, which is a very good thing. 

Automation now a savior for how we get the work done.

Now, there are nearly a million manufacturing jobs open in the US.

And that’s before we add the billions and billions of dollars of investment that will come from IRA [Inflation Reduction Act], the CHIPS [and Science] Act, and the [Bipartisan] Infrastructure Law that the US government has passed. When you look at that, the increasing demand for manufacturing jobs, construction jobs, etcetera, is going to put real strains on our ability to fill them and, therefore, to produce the products we need to make and get the jobs done that need to get done we welcome automation.

The capital intensity in the world is seemingly going up, driven by a number of megatrends. We touched upon electrification, battery factories being built, the electric grid needing to be rebuilt, and more power generation needed in Europe. There’s a huge need for infrastructure investment, and infrastructure investment is going up. So any type of capital intensity is increasing, also driven by IT and different digital innovations that also require investment.

Therefore, capital excellence, or how to deal with large capital-consuming projects in an efficient way, is also a theme  seeing increased traction. I think this trend will probably become more prominent in the next 15 to 20 years. 

Fundamentals of operational excellence, COOs cut their teeth on the lean methodologies, and we’re seeing that back-to-basics approach happening now, but enhanced with technology and thinking differently, holistically, about purpose and how people are involved in delivering excellence.

Our practice was initially founded on the lean principles, and for many years, the vast majority of the work we did was around lean methodologies. I think over the past 15 years or so, we’ve seen a shift from classical lean toward more technology-driven operations of various forms.  Most of our clients are pretty good at doing lean.  Now our clients are thinking more about the next wave of lean and digital manufacturing and leveraging the latest procurement tools in digital.

We already spoke about service operations, automation, and what generative AI can mean for that. All of this is, of course, based on lean principles, but it’s really the technology-enabled, next-generation version of that. And I think the macroeconomic environment that we started talking about is driving a much faster adoption of these new technologies and new practices with our clients.

How are CEOs engaging with some of these typical operations topics?

For a lot of companies, things went wrong in operations and were very challenging over the last couple of years. Naturally, it has become more of a board- and a CEO-level topic. 

One of the things I think has been lost in the discussion around the supply chain disruptions over the past couple of years is the crazy spikes in demand that we saw in different industries.

The second is this led to some challenging conversations and big strategic discussions. Early on in the pandemic, what we found in all of our surveys was that people were basically trying to increase inventory, and that’s fine. You can do that in relatively short order, etcetera. But as we’ve seen it evolve over the past couple of years—and it’s not just been the pandemic; there’s been the war in Ukraine and all these other disruptions—all of a sudden people are saying, “Should we be doing more nearshoring or reshoring and doing more production closer to the consumer? Should we be rethinking our talent profile? And are we overconcentrated in certain countries around the world? Should we be thinking about changing the specifications of our product?”

A lot of those things led to really strategic, important discussions that brought supply chain to the forefront of not just the CEO and the executive room, but the boardroom as well.

It’s a record time for the amount of different operations-related topics that reaches the board. Manufacturing and supply chain footprint has been a huge topic, given political tensions, and increased supply chain resiliency needs to be more focused than it was ten years ago. Sustainability is also a key consideration. A certain supplier of nickel can be thousands of times more environmentally hazardous than another supplier of the same metal. So your supplier selection matters greatly from a sustainability point of view. That’s also on the board agenda.

How do you save money? is, of course, on the agenda.  We have a shortage of some professions, so we can’t hire for some jobs. Why do we have unemployment in other areas? There’s just a record number of very different operations topics that all reach a CEO or reach a board. And then prioritizing where we start and how we make sense of this is, of course, much more difficult now than it ever has been before.

And of course, part of that is around transparency, data information, and having that at your fingertips at a much faster pace. Which is presumably an opportunity for the technology and the innovations that are coming down the pike and then also, potentially, the impact of generative AI.

The opportunities, leveraging data on digital across the operations space, are more or less infinite. We’ve seen it for a decade or more in digital manufacturing and in various next-generation digital applications. But now, we are expecting a new S-curve driven by generative AI. You can see applications of generative AI in most areas within operations. I think the shift will be almost as big as when the computer hit the desk in the office: what you can do, how it will change clients, how it will change the software industry, and how it will change customer service. It will be a big new revolution.

But to benefit from that, you need to have your data strategies well sorted. You need to have control of what data you are accessing, should be accessing, and should be leveraging to make your corporation even better.

The CTO [chief technology officer] and the COO have to be in lockstep right?

When you look backward at some of the technology implementations within operations, one of the failure modes you see is that sometimes the CTO and the head of operations or the head of the supply chain weren’t in lockstep. So what you end up with is a tool implementation that hasn’t reaped the benefits or had the impact that one might hope. We see this all the time, whether in advanced planning or technology implementations or whether we see it with more source-to-pay in the procurement arena, where people have put the tool in but haven’t gotten the value.

So the idea of being super clear on the business case, understanding where the impact comes from, and also recognizing the nontechnological factors that are required to deliver the impact are crucial. For example, how do you build the capabilities of your organization to actually use the tool? How do we put the right performance management and metrics in place to measure how we’re doing, both in terms of compliance with tool usage and the outputs? As these technologies get better, and as people get clearer on what it requires to deliver impact, the CTO and the CEO will need to be in lockstep.

The other way we need to look at it is for each area where you’re trying to improve your business, what’s the full potential of the technology in generative AI? We should never do a planning transformation that isn’t really looking across "how do you improve the process and the capabilities of the people? How do you leverage traditional technology, such as an advanced planning system? And do you leverage generative AI, etcetera?" So not only should we be looking at it as generative AI end to end across your company, but we should be asking the question, “For each business problem, what full suite of tools, including the more advanced technologies, do we have to solve that problem?" And that’s a learning and an adaptation for people across a lot of client organizations.

Global Lighthouse Network

I know we’ve been working on the Global Lighthouse Network with the World Economic Forum, and it’s encouraging to see the number of lighthouses being called out; they’re growing each year.

Value of Industry 4.0 Technology Set

This is super exciting. We’ve been able to generate several lighthouses proving the latest and greatest in different operations technologies—most notably, various types of digital manufacturing or digital tools, generating results that bring them to the top of the top in their respective industries. Speaking of the impact and common thread across those cases, I believe the key concept is value. I think that’s an evergreen topic, something every operations leader needs to bring with them. All these lighthouses began by identifying the applications for new technologies within operations that can bring them the biggest value. Then within those areas, how do we apply the technology in the most efficient way and get the most bang for the buck? Then actually do it so you have a proof point—a lighthouse—to show that it can be done, and you can prove the impact with it.

This staging, starting value back, and then deciding which technology to apply sounds very simple. But actually, very few do that. We all have a tendency to go with the latest trend and get excited about some tool and then invest many millions of dollars in applying various tools without always getting the value for it.

One of the things that’s been really interesting is making sure companies are thinking about scaling the impact from these use cases and the digital journeys from the very beginning. In the good old days, people would try something, see if it worked, then have the proof point, and then think about how they scale it. Well the reality is, what you need to do to scale it could be very different from what you need to do to prove that it works the first time.

We see a lot of leading companies changing their mindset of trying to figure it out in one place. And not only [are they] doing that, but also they’re thinking what are the things that I need to put in place so I can scale this across my entire network from the beginning, and that is a massive shift in thinking.

As C-suite leaders and the boardroom are thinking about their planning for 2024 and the opportunities, but also the challenges that need to be navigated, what are the three things they should be thinking about when it comes to their operations agenda, Axel?

Number one, how to apply generative AI and automation to the back-office and shared-service functions; there’s a huge opportunity for every company I know of regardless of industry. 

Number two, purchasing under inflationary circumstances; there are huge gains to be had quickly if you navigate this space. It has been a long time since we faced a similar environment. So most people in the purchasing department are not up to speed with what can be done. 

And third, sustainability in operations. In operations, we’ve long been optimizing for efficiency, quality, and cost. Now it’s also about sustainability and carbon footprint. There are many methodologies to do both at the same time, and you can make money from that.

Another Three

One is, while I think a lot of our clients feel enormous pressure to deliver productivity in this environment, I would encourage people to use this environment as a chance to change the mindset around productivity within your organizations.

There’s never been a better opportunity to get heads of marketing, CFOs, and heads of sales focused on productivity to tackle some of the things that an operations executive can’t do on their own, but that require collaboration with others. 

The second thing I would think about is, how do we infuse technology enablement into everything we do from an operations perspective and have it not be a tech agenda versus an operations agenda—but bring those two things together?

And the third mindset I encourage people to have is, how do we ensure that supply chains and operations remain a boardroom topic and a CEO priority? As we return to something that feels more “normal”—I’m not sure any of us know what normal means anymore— this has been a unique time where operations and supply chains have moved into the boardroom, and I think that’s a really good thing. It’s especially good for companies to have more boards and CEOs thinking about supply chains and operations every day.

The CEO: Architect of the new operations agenda

December 6, 2021 | Article

https://www.mckinsey.com/capabilities/operations/our-insights/the-ceo-architect-of-the-new-operations-agenda

27.9.2024, 29.12.2023

Pub. 13.11.2023