November 8, 2024

Kaizen Costing and Kaizen Cost Management




                                        Narayana Rao K.V.S.S. on Cover Page of Business Today 
October 22 - November 6, 1997


Prof. Yasuhiro Monden and Prof. Kazuki Hamada explained  the key points in Toyota’s  Cost Management System in  book entitled “Toyota Management System: Linking the Seven Key Functional Areas”.

In the text of the book the authors talk about the basics of Target Costing (Toyota calls it Genka Kikaku) and Kaizen Costing (Genka Kaizen). Toyota puts a lot of work into  planning the cost and monitoring  actual costs associated with a vehicle. Just as industrial engineers watch  every second  on the shop floor to identify waste, every dollar in a component is analyzed for improvement in vehicles as well. Accounting and measurement alone will not produce results.  Measurement is just a piece of the improvement process  just as “Check” is only a part of the Plan-Do-Check-Action cycle for improvement. A critical piece of Toyota’s strength in terms of financial results lies in the realm of the overall cost planning process and the structured VA, VE, & VI activities that occur during the life cycle of the program.
https://www.theleanedge.org/2386-art-smalley-financial-benefits/  Not available now.



In the Japanese language Kaizen Costing is called ‘Genkakaizen’ with ‘genka’ meaning ‘cost’, ‘kai’ meaning ‘change’ and ‘zen’ meaning ‘good’. In other words Kaizen means change to good ways and good results. In english it is termed  continuous improvement.  Imai (1986) in his glossary of terms defines Kaizen in relation to the workplace as meaning ‘continuous improvement involving everyone – managers and workers alike’. Imai (1986) argues that a Kaizen strategy involves relatively small improvements. Monden and Hamada (1991, p. 17) suggest that ‘Kaizen Costing is the system to support the cost reduction process in the manufacturing phase of the existing product … Kaizen refers to continuous accumulations of small betterment activities rather than innovative improvement’. They also argue that target costing and Kaizen Costing can be linked together and ‘constitute the total cost management system of Japanese companies’


Kaizen eno Yon Dankai - Improvement in 4 Steps - History of Kaizen in Japan


Kaizen costing is variant of standard costing. Standard costing specifies a cost target for the production team for the coming period. Normally standard cost is set for an year. It will be revised every year. It is constant for an year as a planning device. Any variances from it are examined and the reasons are identified and understood.

Kaizen costing is cost planning that incorporates kaizen philosophy or philosophy of continuous improvement and implementation of the principles of learning effect.

According to learning effect principle, the average cost of an item is certain percentage of average cost of earlier volume. It is expressed  as  volume of production and sales doubles(X becomes 2X), the average cost of total sales (2X) is say, 90% of the average cost of producing and selling X units. There is a learning effect in every activity undertaken by the organization right from the lowest cadre employee to the CEO and Board and cost comes down.

Japanese implemented this cost reduction philosophy in a systematic manner. They made planned reductions in the standard costs of an item every year. So the production and sales team have to plan their department and activity cost to achieve reduction in standard cost. The idea was extended by them to monthly costs. They said we cannot achieve cost reduction in one day. So having a standard cost for an year and then asking for reduction in it next year is not the right approach for cost reduction. They came with a reducing cost target for every month. Such a reducing cost target for every month demands some effort on cost reduction by departments every month. Hence cost reduction is on the monthly agenda of every department in the company. Kaizen costing is providing the monthly cost target information and accounting for actuals during the month.



KAIZENshiro Budgeting


KaizenShiro Cost = Cost of Non-Productivity  = Cost of Not-Improving-Productivity





Total cost of an organization has KaizenShiro Cost. If  KaizenShiro cost is estimated, plans to identify projects that reduce it can be developed and implemented. Kaizen cost management is driven by KaizenShiro projects. Project identification and formulation is driven by KaizenShiro cost.



KAIZENshiro Budgeting is  the new paradigm for planning and developing synchronous and profitable operations for Speed-Based Target Profit Planning (SBTPP).  KAIZENshiro Budgeting is  budgeting the projects to  cost of losses and waste, which  are feasible to be improved for the year for which the budgeting is done.  Improvement is achieved by developing  and implementing  the most effective and efficient Strategic KAIZEN and KAIKAKU projects, supported by daily improvements of Gemba kaizen. Thus engineering inventions and innovations are utilized as well as ideas of shop floor operators, supervisors and engineers who are focusing on delivering to market demand utilzing the shop and supply chain capacity.






Kaizen Cost Management





For More Detailed Reading


Kaizen Costing and Value Analysis

Control Measures for Kaizen Costing - Formulation and Practical Use of the Half-Life Model

Introduction to Kaizen Budgeting

 B. Modarress;  A. Ansari; D. L. Lockwood,  “Kaizen costing for lean manufacturing: a case study” International Journal of Production Research, Volume 43, Issue 9 May 2005 , pages 1751 - 1760.




Included in Knol Handbook of Industrial Engineering - 2019

Index of articles on Cost Accounting, Costing and Cost Management


Full List of Articles on Kaizen

Kaizen eno Yon Dankai - Improvement in 4 Steps - History of Kaizen in Japan

Rules for Successful Kaizen Management


Kaizen - Engaging Front-Line Staff in Continuous Improvements - Industrial Engineering

Leading and Managing Kaizen Events

Agile Kaizen

Kaizen - The Japanese Style Productivity Improvement Methodology

Industrial Engineering is Kaizen in Engineering

Kobetsu Kaizen - Focused Improvement of Machine and Machine Work in TPM

Front Line Kaizen for Product and Process Industrial Engineering


Gadget-based improvement is widespread as improvement activities that can not only eliminate losses but also inspire the workplace.

Karakuri Kaizen - Introduction

Industrial Engineering is Kaizen Engineering

Toyota Kaizen Methods: Six Steps to Improvement - 2010 - Book Information

Kaizens - Production Improvement Ideas Implemented - India - Kaizen Eye

Kaizen Assembly: Designing, Constructing, and Managing a Lean Assembly Line - Book Information

Kaikaku: The Power and Magic of Lean : a Study in Knowledge Transfer - 2004 - Norman Bodek - Book Information


_________________________________________________________________________________


Originally published on Knol
http://knol.google.com/k/narayana-rao/kaizen-costing-and-kaizen-cost/2utb2lsm2k7a/  381  7500+ page views


Updated on  9.11.2024,  8 May 2019, 27 January 2012


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Kaizen eno Yon Dankai - Improvement in 4 Steps - History of Kaizen in Japan



The Economic and Scientific Section (ESS) group was given the  task with improving Japanese management skills and Lowell Mellen was invited to Japan to properly install the Training Within Industry (TWI) programs in 1951.

In 1951, even before the arrival of Mellen, the ESS group had a training film to introduce the three TWI "J" programs (Job Instruction, Job Methods and Job Relations)---the film was titled "Improvement in 4 Steps" (Kaizen eno Yon Dankai).

The term Kaizen was not popular in Toyota before 1950. It is only after the TWI courses that the term became popular.



Ud. 9.11.2023
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October 24, 2024

Potential Business and Profit Opportunity in Personalization in Goods and Services - $2 Trillion Global Business Opportunity

 


a new BCG book by Mark Abraham and David Edelman, published by HBR, called Personalized: Customer Strategy in the Age of AI. 

The book demystifies personalization, distilling it into five promises consumers expect companies to keep in order to deepen customer relationships. These include “empower me,” “know me,” “reach me,” “show me,” and “delight me.” Delivering on each one requires a human touch and the right technology. 


https://www.linkedin.com/pulse/2-trillion-opportunity-boston-consulting-group-nsxte/










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October 21, 2024

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


New Video


Supply Chain Trends 2024 | What You NEED to Know!

Copper Digital

https://www.youtube.com/watch?v=4k09vQCGXJA




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



22.10.2024, 27.9.2024, 29.12.2023

Pub. 13.11.2023





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Supply Chain Manager - Jobs - Job Descriptions

 



21.10.2024

Supply Chain Manager, Castings, Semi

Job Category Supply Chain

Location Fremont, California

Req. ID 229746

APPLY - Currently Required.

https://www.tesla.com/careers/search/job/supply-chain-manager-castings-semi-229746



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October 17, 2024

Resource Based View Definition of Management - Narayana Rao K.V.S.S.

 

Management is doing things acquiring and using resources.  -  Prof. Narayana Rao K.V.S.S.  - 18.10.2024


A manager or an entrepreneur visualizes doing a thing, for example in business, it would be exchanging goods or services. He may produce the goods or services or he may procure them and offer to customers. To put the visualized idea into practice he requires resources. He has to acquire them and then use them to do business and pay for the services of each factor or resource used in the business. Theoretically, the entrepreneur only needs the idea which is acceptable to the resource providers. 

The manager makes resource requirement plan. Initially it is an unconstrained resource requirement plan. He will list all the ideal resources. But as he tries to acquire resources constraints become visible and the manager has to modify the resource requirements to use available resources or resources that he could acquire.


(C)  2024 Narayana Rao K.V.S.S.  


Earlier Explanation by me.


Definition of Management: Its Nature and Purpose


Management of an organization is the process of establishing objectives and goals of the organization periodically, designing the work system and the organization structure, and maintaining an environment in which individuals, working together in groups, accomplish their aims and objectives and goals of the organization effectively and efficiently (Narayana Rao). (3rd December 2008, Version 1 of this article)


Management of an organization is the process of establishing objectives and goals of the organization periodically, designing the work system and the organization structure, and maintaining an environment in which individuals, working together in groups in combination with capital equipment and current assets (working capital), accomplish their aims and objectives and goals of the organization effectively and efficiently (Narayana Rao). (24 January 2016).

The above definition was a modification of the definition given by Koontz and O'Donnell.

The definition implies the following.

(i) Management is a process.
(ii) Management applies to every kind of organization, government, profit making, or nonprofit making.
(iii) It applies to managers at all levels in the organization.
(iv) Management is concerned with effectiveness and efficiency.  Effectiveness is producing the product or service the customer wants in business context with the required functional benefits and product attributes at the price he is willing to pay. Efficiency is minimization of resources to produce the saleable output.

Weirich and Koontz

Weihrich and Koontz defined Management and explained it as follows in the tenth edition of their book Management: A Global Perspective (p.4).

"Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims." This definition needs to be expanded:

1. As managers, people carry out the managerial functions of planning, organizing, staffing, leading, and controlling.
2. Management applies to any kind of organization.
3. It applies to managers at all organizational levels.
4. The aim of all managers is the same: to create a surplus.
5. Managing is concerned with productivity; this implies effectiveness and efficiency.



Functions of Management



The process of management can be better understood by breaking it down into the five basic functions of a manager – planning, organizing, staffing, leading and controlling. All the management concepts, principles, theories and techniques can be grouped under these five functions.

Professor Narayana Rao suggests planning, organizing, resourcing, executing and controlling as the appropriate steps for operational approach.

The resource point of view is emphasized in the RBV Definition of Management.

No doubt planning is required to establish the feasibility of the idea and to make a list of resources required. After resources are acquired execution of processes has to be there and control has to be there to modify plans based on achieved results to reach the expected final result for a period.

Management - Definition and Process



Top 25 Management Theory Articles - Online

Marketing Communication: Channels and Promotion Tools
http://nraomtr.blogspot.com/2011/12/marketing-communication-channels-and.html

Organizational Buying Processes and Buying Behavior
http://nraomtr.blogspot.com/2011/12/organizational-buying-processes-and.html


Marketing Strategy - Marketing Process - Kotler's Description
http://nraomtr.blogspot.com/2011/12/marketing-strategy-marketing-process.html




Evolution of Management Thought and Theory - Review Notes
http://nraomtr.blogspot.com/2011/12/evolution-of-management-thought-and.html

Human Resource Management - Introduction

Marketing Strategy - Differentiating and Positioning the Market Offering


Philip Kotler - Keller Definition and Explanation of Marketing Management for 21st Century - 14th Edition
http://nraomtr.blogspot.com/2015/01/philip-kotler-keller-definition-and.html




Marketing and New Product Development - Kotler and Keller's Book Chapter Summary
http://nraomtr.blogspot.com/2011/12/marketing-and-new-product-development.html


Communication: Importance and Definition

Analyzing Competitors - Market Research and Analysis

Concepts and Techniques for Crafting and Executing Strategy - Summary of Chapters - Strickland



Management - Definition and Process

Work Analysis and Design -Bernardin HRM Chapter - Review Notes

Defining Marketing for the New Realities - Kotler - Keller 15 Edition - Summary

Market Segmentation and Selection of Target Segments

Supply Chain Management - Coordination



Selling Process - 10 Steps

Kotler and Keller - Marketing Management - Brief - All Chapters - Core Themes

Operations Strategy and Competitiveness - Review Notes
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Management - Definition and Process

Definition of Management: Its Nature and Purpose



New
Management is doing things acquiring and using resources.  -  Prof. Narayana Rao K.V.S.S.  - 18.10.2024
Resource Based View Definition of Management - Narayana Rao K.V.S.S.


Management of an organization is the process of establishing objectives and goals of the organization periodically, designing the work system and the organization structure, and maintaining an environment in which individuals, working together in groups, accomplish their aims and objectives and goals of the organization effectively and efficiently (Narayana Rao). (3rd December 2008, Version 1 of this article)


Management of an organization is the process of establishing objectives and goals of the organization periodically, designing the work system and the organization structure, and maintaining an environment in which individuals, working together in groups in combination with capital equipment and current assets (working capital), accomplish their aims and objectives and goals of the organization effectively and efficiently (Narayana Rao). (24 January 2016).

The above definition was a modification of the definition given by Koontz and O'Donnell.

The definition implies the following.

(i) Management is a process.
(ii) Management applies to every kind of organization, government, profit making, or nonprofit making.
(iii) It applies to managers at all levels in the organization.
(iv) Management is concerned with effectiveness and efficiency.  Effectiveness is producing the product or service the customer wants in business context with the required functional benefits and product attributes at the price he is willing to pay. Efficiency is minimization of resources to produce the saleable output.

Weirich and Koontz

Weihrich and Koontz defined Management and explained it as follows in the tenth edition of their book Management: A Global Perspective (p.4).

"Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims." This definition needs to be expanded:

1. As managers, people carry out the managerial functions of planning, organizing, staffing, leading, and controlling.
2. Management applies to any kind of organization.
3. It applies to managers at all organizational levels.
4. The aim of all managers is the same: to create a surplus.
5. Managing is concerned with productivity; this implies effectiveness and efficiency.



Functions of Management



The process of management can be better understood by breaking it down into the five basic functions of a manager – planning, organizing, staffing, leading and controlling. All the management concepts, principles, theories and techniques can be grouped under these five functions.

Professor Narayana Rao suggests planning, organizing, resourcing, executing and controlling as the appropriate steps for operational approach.



Management Functions at Different Organizational Unit Levels



All managers carry out managerial functions. However the proportion of time spent for each function may differ from level to level. The top managers may spend more time on planning in choosing the corporate objectives and business unit objectives and in developing the work system and the organization structure. The first level supervisors may spend more time in leading the staff under them and in doing operational control.



Managerial Skills



Managers require four kinds of skills: technical, human, conceptual and design.

1. Technical skills are knowledge of and proficiency in working with the tools and specific techniques on given processes. For example, mechanics work with tools, and their supervisors should have the ability to train them how to use these tools and periodically evaluate and improve the skills of the staff under them. Similarly accounts use various formats of accounting records like journal, ledger, trial balance, balance sheet and use various procedures like entry, posting, reconciliation and reversing etc. and the supervisor of the accountants has to know these records and procedures to train the staff under him and evaluate their work for accuracy. The first level supervisors have to demonstrate or use their technical skills on a day to day basis as managers.  In an MBA curriculum number of technical disciplines are taught like marketing, purchasing, production, accounting, human resource recruiting and training, industrial engineering etc.

2. Human skills are the concepts, methods and techniques that facilitate working with people. Managers have to create an environment in which people feel comfortable, motivated, secure, and committed to the objectives and goals of the group or the organizational unit in which they are members. Organizational behavior is the subject taught in MBA curriculums to provide human skills.

3. Conceptual skill is the ability to see the “big picture.” It is the ability to recognize significant issues or elements in a situation and to understand the relationships among these key issues.

Concept skills are better understood or interpreted as business conceptual skills. Every manager at every level must be able to see his customer, his suppliers and his associates in the organization, superiors, subordinates and peers. He should be able to visualize the motivations of these agents to engage with him and the value that they are seeking and the value that they are willing to exchange. Every manager must be able to visualize how the business of the group he is managing is going to survive and prosper. Whenever managers cannot see this clearly, he will be failing in his managerial responsibility and the group is going to suffer.

4. Design skill is the ability to solve problems in ways that benefit the enterprise. To be effective managers in the organization must be capable of doing more than just seeing a problem (If they merely confine their attention to the problem, they become ‘problem watchers’ and they will not fulfill their responsibility). They Must have, in addition to the skill of identifying key problems, the skill of a good design engineer to work out a practical solution to a problem in the light of the realities they face in the situation. Solution design skills are synthesis skills. When a problem arises analytical skills may be used to identify various dimensions of the problems and possible solutions to each of these dimensions. But to solve the problem, a synthesis of all possible and useful alternatives has to be developed. Skills of synthesis are important in solution design.


The intensity or frequency with which these groups of skills are applied varies with the managerial level.

First line supervisors use their technical skills on a day to day to basis to observe the working of the staff in the department or section and guide them in carrying out the allotted tasks as per the specification of the customer or the design and in proper use of machines and tools. Quality and quantity control on a continuous basis becomes the important responsibility of first line supervisors and technical skills play a very important part in this role. Human skills are also important to both to get the task done and to make the operator feel happy and satisfied in completing the task, receiving the reward and also by the various physical facilities provided to him to take care of his professional and personal needs at the work place.

At the top level, conceptual skills and design skills have to be employed to recognize the opportunities and threats that keep on emerging in the environment. Solutions to benefit from the opportunities and contain the ill effects of threats have to be developed.

My article in my blog on the same topic
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References

Seven Strategy Questions: A Simple Approach for Better Execution

Robert Simons, Professor, HBS
2010
https://books.google.co.in/books?id=tIYrly9QjTIC




Video Introduction to Management

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Related Knols


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Original post - http://knol.google.com/k/narayana-rao/management-definition-and-process/ 2utb2lsm2k7a/ 547

Revision Article for 22 January
2nd article: Global and Comparative Management

January - Management Knowledge Revision Schedule


Updated  18.10.2024, 4 June 2019  22 January 2017, 24 Jan 2016,  19 July 2014, 2 Dec 2013
Posted by at 8:33 PM 6 comments
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October 12, 2024

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)













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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






Ud. 13.10.2024
Pub. 15.12.2011
Posted by at 5:43 PM 0 comments
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October 11, 2024

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









Posted by at 10:25 PM 0 comments
Labels:

October 1, 2024

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























Posted by at 12:50 AM 1 comments
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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/





Posted by at 12:42 AM 0 comments

September 30, 2024

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.




Operations management for services



Ud. 1.10.,23.9.2024, 30.7.2023
Pub. 7.12.2014










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