Culture Change Management Process

Culture is artifacts and symbols, values explicitly stated currently, beliefs held by people. Sometimes the beliefs can hinder implementation of new business methods, production methods and management methods. Like for example, statistical quality control thinking resulted in thinking that 5% defects are acceptable. But then zero defects idea was developed in some company. How do people react to zero defects initially. They cannot believe it. It is against their belief.

To implement zero defects program, culture change is required. What is the basis of culture change. Knowledge change. Knowledge transfer.

In their book “Blue Ocean Strategy,” W. Chan Kim and Renee Mauborgne cite four hurdles that face a manager trying to institute broad change in an organization. The first is cognitive – people must have some understanding of why the change in strategy or in culture is needed. The second is limited resources – inevitably, changing an organization will require shifting resources away from some areas and towards others. The third hurdle is motivation – ultimately, workers have to want to make the change. And the final hurdle is institutional politics. They quote one manager who complains: “In our organization, you get shot down before you stand up.”

To overcome those hurdles, recognize that all people cannot be changed at once. There are some who have disproportionate influence in the organization. Get them committed to the change by providing information on benefits to them. Inform them the possible rewards in the new environment and motivate them And once they are committed to change and do things as required, shine a spotlight on their accomplishments, so others get the message through actual demonstration of new practices.

F.W. Taylor advised similar strategy in book Scientific Management in 1911. He said to change work methods or operating methods, first take one operator. Promise him more pay under the new method and train him and make him succeed. Then only take more persons and make them successful.

http://guides.wsj.com/management/innovation/how-to-change-your-organizations-culture/

Give productive feedback to create a culture of innovation in corporate space
29 March 2015
http://articles.economictimes.indiatimes.com/2013-03-29/news/38125588_1_feedback-creative-thinking-ideas

7 Principles of effective innovation culture change programs - Frank Mattes

http://www.innovationmanagement.se/2014/07/24/the-7-principles-of-highly-effective-innovation-culture-change-programs/
1. Understand your starting point.
2. Draw energy from existing culture.
3. Know where you want to go
4. Act your way into thinking
5. Provide learning spaces
6. Arrange management alignment
7. Use easy and effective navigation tools.

About Culture Change - From a Textbook of Sociology

No culture is ever static. All cultures change, although they do so in different ways and at different rates.

Full summary of the chapter

Adoption of New Products and Processes

Marketing Management Revision Article Series

Recent Research Papers

Managing Consumer Uncertainty in the Adoption of New Products: Temporal Distance and Mental Simulation

Consumers are frequently confronted with new products. Although they may be excited by the performance potential of new products, consumers stay with the traditional options when the time to make a purchase decision arrives. In this article, in Study 1, the authors delineate how temporal distance to adoption (time to adopt) influences consumers’ concerns regarding the different types of uncertainties that surround new products. The authors hypothesize and find evidence that over time, consumers’ concerns shift from a consideration of benefit-related uncertainties (performance and symbolic uncertainties) to cost-related and buying process related uncertainties (switching costs). [The two important issues related to buying are clearly brought out. Benefits from the product or service and cost and inconvenience in buying. Many times, when a product is being presented, the audience asks what is the price? The marketers normally would say, we will tell at the end. The marketer things the customer has to listen the explanation on benefits first and then only know the cost. But the customer thinks the other way. He has an amount allocated for the likely benefits of the product and only when the price is below his allocated amount, he is willing to listen to the product characteristics.]

In the second step of the study, the authors draw on theories of mental simulation to reduce the two types of uncertainties (performance and cost) associated with adopting new products. The authors distinguish between outcome and process simulation. They show that communication strategies that promote adoption in the distant future guide consumers to engage in outcome simulation to reduce performance uncertainty, bolster positive feelings, and enhance behavioral intentions. In contrast, communication strategies that promote adoption in the near future encourage process simulation to reduce switching-cost and affective-cost uncertainties, alleviate anxiety, and increase behavioral intentions. Thus, changing communication strategies with reference to temporal distance increases actual adoption rates and, importantly, postconsumption satisfaction.

In Study 3, the authors  argue that at a high level of product newness, understanding and managing uncertainty are critical to adoption.

The findings have managerial and public policy implications.  Carefully tailored communication strategies are necessary for new product success. They are also applicable to public goods and hence can also have a beneficial impact on consumer welfare and well-being.

Journal of Marketing Research, Vol. XLV, No. 3, June 2008

Financial Analysis for Operations Management Decisions - Review Notes

Operations managers has to do engineering economic analysis and financial analysis of their project and expenditure proposals.

Chapter Outline of

Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano, Operations Management for Competitive Advantage, 10/e, McGraw-Hill Higher Education, 2004


Concepts and Definitions

Fixed Costs
Variable Costs
Sunk Costs
Opportunity Costs
Avoidable Costs

Expected Value
Economic Life and Obsolescence

Depreciation
Straight-Line Method
Sum-of-the-Years' Digits (SYD) Method
Declining-Balance Method
Double-Declining Balance-Method
Depreciation-By-Use Method

Activity-Based Costing
The Effects of Taxes

Choosing Among Investment Proposals

Determining the Cost of Capital

Interest Rate Effects
Compound Value of a Single Account
Compound Value of An Annuity
Present Value of A Future Single Payment
Present Value of An Annuity
Discounted Cash Flow

Methods of Ranking Investments

Net Present Value
Payback
Internal Rate of Return

Ranking Investments with Uneven Live

Relevant Costs for Decision Making

Financial Analysis for Operations Management Decisions - Summary for Revision

Financial analysis tools and concepts are important for OM.

These tools include the types of costs, activity-based costing, risk, and expected value, and depreciation for more periodic operating decisions. When the focus of OM decisions is capital investment, issues of cost-of-capital calculations and methods of ranking investment proposals are important.


Fixed costs are any expenses that remain constant regardless of the level of output of production.

Variable costs, conversely, vary directly with changes in output levels.

Sunk costs are past expenses or investments that have no salvage value and therefore should not be taken into account when considering investment alternatives.

Opportunity costs are the benefits lost that result from choosing one action over another action.

Avoidable costs are expenses not incurred if an investment is made but that must be incurred if the investment is not made. Avoidable costs becomes the cost savings, for the proposed projects and hence enter into financial or economic analysis as positive cash flows against the negative cash flows due to investment in the project.

Expected value is the sum of expected outcomes multiplied by the probability of their occurrence. Expected values result because there is risk inherent in any investment decision.


The life of a machine or other income-producing assets is estimated and for accounting purposes, the asset is depreciated over this period. Depreciation is a method for allocating costs of capital equipment. Methods of depreciation include the straight-line method, the sum-of-the-years' digits method, the declining-balance method, the double-declining -balance method, and the depreciation-by-use method.

Activity based costing is an important accounting concept for OM and it is the practice of allocating overhead to better reflect actual proportions of overhead consumed by the production activity. Causal factors or cost drivers are identified and are used as the basis for overhead allocation as direct labor is not the best basis for allocating all overheads.

When choosing among investment proposals, investments are generally ranked according to the return they yield in excess of their cost of capital. Investment decisions can include the purchase of new equipment or facilities, replacement of existing equipment or facilities, make-or-buy decisions, lease-or-buy decisions, temporary shutdowns or plant abandonment decisions, or the addition or elimination of a product or product line.

Other financial decisions include determine the cost of capital, tax issues, and interest rate effects on OM decisions. Ways to rank investments include the net present value method, payback period, and the internal rate of return.

Costs relevant to aggregate production planning include basic production costs to costs associated with changes in the production rate, inventory holding costs, and backordering costs.

Important Operations Decisions Requiring Financial Analysis

1. Purchase of new equipment or Facilities
2. Replacement of existing equipment or facilities
3. Make or buy decisions (components)
4. Lease or buy decisions (equipment)
5. Temporary shutdowns or total plant closure decisions
6. Addition or elimination of a product or product line


Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano, Operations Management for Competitive Advantage, 10/e, McGraw-Hill Higher Education, 2004

Originally posted at
http://knol.google.com/k/narayana-rao/financial-analysis-for-operations/2utb2lsm2k7a/434

Full material from the book


Updated 27 March 2015, 9 Dec 2011

Operations Management Update 2014

MBA Core Management Knowledge - One Year Revision Schedule




March 2015

Construction Management in Transportation Projects
FTA Guide 2006
Federal Transit Administration
http://www.fta.dot.gov/documents/Construct_Proj_Mangmnt_CD.pdf


2014

December 2014

Learn from the Manufacturing Leaders of the Week - Industry Week Articles
http://www.industryweek.com/leadership/manufacturing-leader-week


 SEP 2014 Harvard Business School  WORKING PAPERS
Chief Sustainability Officers: Who Are They and What Do They Do?
by Kathleen Miller and George Serafeim
http://hbswk.hbs.edu/item/7615.html



April 2014


Demystifying Technology Decisions
http://www.di.net/articles/demystifying-technology-decisions/


Europe's Solution Factories - How some manufacturing companies are successful in competing against low labor cost economy - but good quality competition. The strategies that they are using.

They use one or more of four distinct strategies:
They leverage data flows to integrate closely with their supply chain partners;
they optimize customer value across the whole chain, not just their part of it;
they cooperate with suppliers to rapidly improve their manufacturing processes; and
they harness their technical capabilities to offer a high degree of product customization for their customers. In short, they work with partners to manufacture solutions for other partners.

HBR article - April 2014
http://hbr.org/2014/04/europes-solution-factories/ar/1


January


36 Operational Excellence Stats Every Manufacturing Leader Must See
Posted by Mike Roberts on Mon, Jan 27, 2014
http://blog.lnsresearch.com/blog/bid/193248/36-Operational-Excellence-Stats-Every-Manufacturing-Leader-Must-See

Managing Operational Excellence
Quality Magazine Article
http://www.qualitymag.com/articles/91559-managing-operational-excellence



POMS 2014 Martin K. Starr Excellence in  Production andOperations Management Practice Award
Dr. Dean Bartles, Vice‐President, Advanced Programs and Strategic Growth, General  Dynamics  
Mr. Josue Gomes da Silva, CEO, Coteminas, Inc.              


Dr. Dean Bartles

Dr. Dean Bartles has been a manager with General Dynamics for twenty‐nine years and currently serves as Vice President, Advanced Programs and Strategic Growth, and General Manager of the Ordnance and Tactical   Systems Division—the largest strategic business unit in the firm.  He has previously served as Vice
President and Director of Business Development, Director of International Marketing and has been a Program Manager and Administrator.
In his career at General Dynamics, Dr. Bartles has excelled in operations management practice
through the introduction of many manufacturing innovations and improvements.  He first
managed modern co‐production facilities in Egypt and Turkey under US supervision.  He
successfully implemented lean manufacturing at three heavy manufacturing plants, greatly
increasing productivity.  His plants have received numerous awards for environmental and
manufacturing excellence, including a US Secretary of Defense Environmental Excellence Award
for Sustainability and several General Dynamics Manufacturing Excellence Awards.   He serves
as Chairman of the board for the National Center for Defense Manufacturing and Machining
and is an International Director of SME.  In 2014 he will join the Board of the National Center
for Manufacturing Science.


Dr. Bartles received his PhD in Technology Management from Indiana State University, a
Doctorate in Business Administration from Nova Southeastern University, Master’s degrees in
Business from Tampa College and Shippensburg University and a BS in Business Administration
from Shepherd University.




Josue Gomes da Silva

Mr. JosueGomes da Silva isthe Chairman and Chief Executive Officer of Coteminas, a global bed and bath
home fashion products company based in Brazil, with manufacturing facilities in several countries in the
Americas. He joined the company in 1989 as Chief  Financial Officer and became CEO in 1993. As CEO, he developed international operations with rapidly increasing exports and, subsequently, with the
acquisition of Springs, Inc. in the U.S., was able to combine low cost, efficient South American
manufacturing facilities with brands and a distribution platform in the U.S. and Canada.
Coteminas developed a vertically integrated operation including cotton production, ginning,
spinning, weaving, dyeing, printing and finishing of textiles.  With faster operations the firm was
able to move closer to the end user and serve more than 5,000 retail customers.  Beginning in
2009, Coteminas introduced 50 retail outlets, and today has about 250 stores. Under Josue’s
leadership, Coteminas diversified and increased production capacity by incorporating 17 new
plants into the group, acquiring some plants through mergers and acquisitions and others as
greenfield facilities.  A global sourcing platform was created through the establishment of
strategic alliances with suppliers in Pakistan, India, and China.  Today Coteminas operates a
completely integrated, dynamic global supply chain in textiles from cotton all the way to the
final consumer.

Mr. Gomes da Silva is founder and Chairman of the Board of Cantagalo General Grains S.A., a
company with integrated operations including the production, commercialization, and distribution of grains. Josue is a Board member of Embraer. He also is President of the  International  Textile Manufacturers Federation– ITMF, and is Chairman of  the  Brazil Chapter of  the  Brazil‐United States CEOs Forum‐ICESP.

Mr. Gomes da Silva has a graduate degree in civil engineering from the Federal University of
Minas Gerais (1986) and a law degree from Faculdade Milton Campos (Belo Horizonte, MG‐
1987). In 1989, he received a Master’s of Business Administration from Vanderbilt, and was
awarded Vanderbilt’s Founder’s Medal for First Honors in recognition of his academic
achievement. He has received numerous tributes for his operations and entrepreneurial
activities, including the Medalha da Ordem do Merito Industrial – CNI.
http://www.pomsmeetings.org/ConfEvents/051/29.01_Write%20up%20MKS%20Winners%202014%20Final.pdf



Basic Articles on Operations Management

Chapter Summaries of Chase - Aquilano Book

The IBM® Cognos® 8 Business Intelligence Solution for Operations Excellence

The IBM® Cognos® 8 Business Intelligence solution can make your entire supply chain, all your operations and your entire enterprise intelligent — by delivering the global visibility that is the key to your success in your business endeavor.

IBM Cognos 8 BI can track a number of key metrics that are the critical factors in the success of your Operations, for example:

Increased throughput.
Reduced manufacturing costs.
Shortened lead times.
Reduced backlog.
Improved quality performance.
Reduced reject rate.
Reduced scrap levels.
Reduced line downtime.


Linking strategic metrics developed by executives down to operational metrics on the plant floor


Most Operations personnel working in a large plant may have little idea of the official corporate strategy, or how they can best contribute to that strategy. Similarly, visibility of operational performance between the corporate and business levels is often very poor.


A scorecarding system, which may be based on the Balanced Scorecard approach or on the SCOR (Supply Chain Operations Reference) model created by the Supply Chain Council, can be very effective in making performance visible, thereby forcing an emphasis on visibility of performance targets and actual performance and encouraging an environment of increased accountability.

Manufacturers that have undertaken the  task of defining their KPIs are well positioned to adopt scorecarding technology. They will be very useful if these have been defined across multiple plants within a business unit. These KPIs should be hierarchically defined, so that business users can “drill down” into areas of poor performance to understand root causes. Web-based scorecards and dashboards
ensure maximum visibility, access and use.

Linking strategic metrics developed by executives down to operational metrics on the plant floor drives business and operational alignment, and the result is operational excellence.


Procurement Excellence

 The purchasing organization and your suppliers’ performance are quantified and tracked with KPIs
that measure quality and cost (including comparisons to alternate sources), delivery and order or requisition placement.

Supplier scorecards enable continuous, timely measurement against consistent standards for all suppliers.
With consolidated procurement information, you are better able to leverage your company’s purchasing power. You can identify suppliers that offer the same materials or services, and rapidly evaluate their offerings against the same standards.

With the ability to monitor all your suppliers, you can leverage your knowledge to improve supplier responsiveness and the efficiency of your supply chain, and you can gather data that will help you make the most profitable decisions when negotiating future procurement contracts. In addition, you can share information, such as supplier performance data, with suppliers via an extranet, so they know when corrective action is required or when standards have not been met.

Also, having aggregate information on demand, including inventory, supply, supplier performance, etc., allows for quicker and better purchasing decisions leading to a more proactive purchasing organization. With better information in hand, you can consolidate and optimize your suppliers and leverage your buying power, which means a potential for better terms and lower supply costs.

Production Excellence

IBM Cognos BI software offers visibility across all plants, lines and shifts, allowing you to monitor performance trends and to identify, isolate and analyze the source and impact of problems, whether product defects or production anomalies. With the ability to make accurate comparisons, for example, between facilities and shifts, you can discover lags and other problems that had previously gone unnoticed. You
can also identify trends in quality, efficiency or throughput, and make proactive decisions based on this insight.

Similarly, the solution makes available allows you to analyze the cost of failures: scrapped production, customer returns and other quality-related problems; downtime; as well as costs for specific
overhead items such as re-engineering and equipment upgrades.

This intelligence can be used to help capitalize on success, to analyze savings created by new efficiencies or to help understand how to repeat an event that improved quality or throughput. It also offers the benefit of being able to share production performance information with staff, including comparisons across
locations, over time, measurement against production standards, etc.


Inventory Management Excellence

The solution opens visibility into the entire inventory: the levels and locations of all assets at any point in time, their worth, their depletion rates, their use; who supplied them, who uses them; what is spoiled, obsolete or surplus; what alternative items are available. With inventory accurately quantified and tracked
across the company and its partners, and with changes measured against common standards, such as minimum or age thresholds, you will know at all times what you have, where it is and how long it will last.


From start to finish, from negotiations with suppliers through customer delivery, IBM Cognos software offers full visibility into processes and events, transparency of information and coherent standards made available across your organization.


Reference - The content is from IBM White Paper on Operational Excellence
http://www-07.ibm.com/sg/manufacturing/pdf/manufacturing/wp_operational.pdf

Just-in-Time and Lean Systems - Review Notes of Chase et al. Book Chapter

Just-in-time or JIT is an integrated set of activities designed to achieve high-volume production using minimal inventories of raw materials, work in process, and finished goods. Parts arrive at the next workstation "just in time" and are completed and move through the operation quickly. Nothing is produced until it is needed later in the assembly line. The consumer expresses a need for a product, and "pulls" demand through the production system.

In Japan, JIT has been used to isolate the elements of waste in an organization. The Japanese practice a great respect for people and depend on the personnel to identify and eliminate sources of waste, excess, and inefficiency. The basic elements of JIT are a focused factory with networks following the strategy of reducing waste, the use of group technology or teams for problem-solving, quality at the source so no time and energy and materials are wasted on less than perfect quality products, uniform plant loading, Kanban production control systems, and empowerment of workforce.

While North American systems have modified JIT, the techniques can be used in layouts and design flows as well as in job shops. JIT has also merged in theory and practice with TQC, or building quality into the process. JIT works at its best when only good-quality products are pulled through the system and no "just-in-case" extra inventory is needed.

JIT requires a stable schedule over a lengthy time horizon. Along, with customers and employees, who are key components of the JIT system, vendors are also important to the process.

JIT is also applicable to service industries. Successful service applications include organizing problem-solving groups, upgrading housekeeping and quality, clarifying process flows, eliminating unnecessary activities, and developing supplier networks among others.


JIT is a powerful tool for reducing inventory and improving production and service operations. Management support, commitment, and training to continuing JIT progress are essential to success.

Industrial engineering and JIT

I define industrial engineering as human effort engineering and systems efficiency engineering. Functional design of a system is not the core focus of industrial engineers. There are various disciplines of engineering for functional design. Each of the designs created by functional engineers can be evaluated by industrial engineers for efficiency audit and improvement. JIT may have started as an efficiency improvement initiative. But now JIT could have become a functional discipline. Industrial engineers still have the role to audit efficiency of JIT systems and improve their efficiency further with the tools of efficiency currently in their tool box and tools which may come out subsequently.

Chapter Topics

Lean Logic

Lean production is an integrated set of activities designed to achieve production using minimal invetories of raw materials, work-in-progress, and finished goods. Parts arrive at the next workstation "just in time" and are completed and move through the process quickly. Lean is also based on the logic that nothing will be produced until it is needed.

The Toyota Production System

Toyota production system was created as the chief of Toyota told his team, we have to become price competitive to survive American imports. Hence we have to become lower cost and more productivity company.

Elimination of waste, improvement of efficiency, an industrial engineering slogan became the theme of Toyota Managers. Taichi Ohno, a production manager is credited for the development of TPS. Along with the elimination of waste, respect for people is also highlighted in Toyota culture. People are given importance in the system and they are asked to learn new skills and focus on productivity and continuously improve productivity.

The book gives a Toyota President, Fujio Cho's statement. "We must use the minimum amount of equipment, materials, parts, and workers (working time) which are absolutely essential to production." So the emphasis on finding optimal or ideal requirement of resources and controlling the process in such a way that production is achieved with those optimal resources.  But waste occurs in production processes and more resources are consumed by production systems. Seven types of wastes were described in TPS which have to measured and eliminated. 1. Waste from overproduction  2. Waiting time 3. Unnecessary transportation  4. Inventory  5. Unnecessary processing  6. Unnecessary human motionand 7. Defects and reworking.

MIT Team who studied TPS and developed theory of lean systems, recommended value stream mapping as the major visual tool to identify waiting time and inventory. It provided a box structure to various show waste at various work centers and operations in a process.

Lean Implementation Requirements

Design principles that guide the design of lean supply chains (Production facility and supply and distribution networks)

Focused factory networks
Group technology
Quality at the source
JIT Production
Uniform plant loading
Kanban production control systems
Minimized Setup times
Respect for people

Lean layouts and design flows
Preventive maintenance
Six sigma quality
A stable schedule
Working with suppliers as partners on a long term contracts

Lean Services

The concepts of efficiency implemented very successful in production systems are being extended to services systems.

Suggestions given are:

Organize problem solving groups.
Upgrade housekeeping
Upgrade quality
Clarify process flows
Revise equipment and process technologies
Level the facility load
Eliminate unnecessary activities
Reorganize physical configuration
Introduce demand pull scheduling
Develop supplier networks

Chapter Outline of  Richard B. Chase 12/e

Richard B. Chase. F. Robert Jacobs, Nicholas J. Aquilano, Operations and Supply Chain Management 12/e, McGraw-Hill Higher Education, 2010


Lean Six Sigma at Solectron
Lean Logic
The Toyota Production System
Lean Implementation Requirements
Lean Services

Chapter Outline of Richard B. Chase  10/e

Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano, Operations Management for Competitive Advantage, 10/e, McGraw-Hill Higher Education, 2004



JIT Logic
The Toyota Production System
Elimination of Waste
Respect for People
North American Modifications of JIT
JIT Implementation Requirements
JIT Layouts and Design Flows
JIT Applications for Line Flows
JIT Applications for Job Shops
TQC (Total Quality Control)
A Stable Schedule
Work with Suppliers
JIT in Services

Case: Toyota, Ford, GM, and Volkswagen - Some Differing Opinions about Working with Suppliers
Case: Quality Parts Company


References



Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano, Operations Management for Competitive Advantage, 10/e, McGraw-Hill Higher Education, 2004

http://highered.mcgraw-hill.com/sites/0072506369/student_view0/chapter11/

Originally posted in

http://knol.google.com/k/narayana-rao/just-in-time-and-lean-systems/2utb2lsm2k7a/ 448



Updated  26 March 2015, 10 Dec 2011

3PL and 4PL Logistics Services - Issues, Implementation Decisions, Service Provider Selection and Management

MANAGEMENT GUIDELINES FOR THIRD-PARTY LOGISTICS

Michael Maloni

Kennesaw State University,

Spring 2006 

http://www.deltanualpha.org/pdfarticles/2006/spring/maloni.pdf