BPR, TQM, Cross-cultural Aspects and Models of Excellence

After reading this chapter, you will be able to understand:The concept of Business Process Restructuring (BPR) and its influence on Production and Operations Management (POM)Technology and the Influence of Culture on POMTQM and the Culture of QualityCross-cultural Issues of POM Functions Pro-active and Re-active CultureBest Practice Models of POMSix Sigma PracticesLean, Toyota Production System (TPS) and Quick Response Manufacturing

Effective POM functions require the systematic restructuring of organizations through business process restructuring (BPR), lean management and Toyota Production Systems (TPS) practices, Six Sigma, total quality management (TQM), and quick response manufacturing (QRM). These are the major drivers for organizational transformation. BPR is essential to enable organizations to keep pace with global competition. It requires organizations to align with global change to redefine their missions, and if required, even refocus their business priorities. Lean management, TPS, TQM, Six Sigma, QRM, etc. require to be understood in terms of production and operations management functions. Through the process of internationalization POM functions, globally, companies are now able to emulate best practice models, both in terms of theories and applications.

Business process is defined as logical tasks which are performed to achieve some defined business outcome" (Davenport and Short, 1990). The two important attributes of a project are: customers (either internal or external) and the cross-organizational aspect. Internal customers are the employees of the organization, while external customers are those who buy products and services from the companies and other stakeholders.The three dimensions of processes (Davenport and Short, 1990), are:Entities: Processes take place between organizational entities. They could be inter-organizational, inter-functional or inter-personal. Objects: Processes result in the manipulation of objects. These objects could be physical or informational. Activities: Processes could involve two types of activities managerial and operational.

Successful business process reengineering considers people-related issues as well. According to Hammer and Champy (1993), introducing teamwork and empowerment of employees in any organization would not be possible unless these are done by addressing the culture of the organization.Therefore, the restructuring of production and operations through BPR; particularly when organizations go global, needs to be thought of in the context of culture. Culture can be an enabler, inhibitor or an outcomeRealizing the importance of culture-fit in the organizational restructuring process, Davenport (1993) considered organizational and human resource issues as being more important than technological issues in BPR. Johansson et al (1983) observed three stages of BPR:Initial or Discover phase: it is important to consider values and culture.The Redesign phase: values and issues of culture are ignored, as it is at this stage that the organization systematizes processes.The Realize phase: issues of culture come up again. At this stage of BPR, organizations create a new corporate culture.

Andrews and Stalick (1994) warn that leaders must not use negative reinforcement, but rather, encourage an environment which is : reflective, open, problem solving, communicative, facilitating, packed with ideas, fun, learning, productive, quality-focused and customer-driven. Obeng and Crainer (1994) highlighted the idea that cultural change precedes BPR. Vidgen et al (1994) see culture, or at least the neglect of people, as an inhibitor to effective implementation of BPR. BPR can be defined as the fundamental rethinking and redesign of the business processes of an organization, addressing technological, human and internal ways of functioning of the organization, keeping pace with the changes, to achieve success in critical performance areas, like cost, quality, service and delivery. BPR has now become so synonymous with manpower redundancy (although it is not), some scholars prefer to refer to it as Business Process Management (BPM).

To assess the impact of BPR, McKinsey's 7s model is used. Strategy: to determine the allocation of scarce resources and to commit the organization to a specific course of action.Structure:, to determine the number of levels (in a hierarchy) and authority centres.Systems: to determine organizational processes, procedures, reports and routines.Staff: to determine the key human resource groups in an organization and describe them demographically.Style: to determine the manner in which managers should behave to achieve organizational goals.Super-ordinate goals (shared vision): to determine the guiding concepts that an organization needs to instill in its members. Skills: to determine the abilities of people in an organization.

The 7-S framework suggests that any change in any S factor may result in an adjustment of other S factors. Recently, the concept of 8-S has been introduced by adding one more S streaming. Streaming includes those areas that either indirectly or directly influence or shape all the 7-Ss.Peters and Waterman (1982) in their pioneering work, `In search of Excellence identified some common characteristics of excellent organizations, which have now become important management principles and also form the basis for BPR or BPM in organizations. These are:A bias for action Excellent firms make things happen.Closeness to the customer These firms know their customers and their needs.Autonomy and entrepreneurship They value these in each employee.Productivity They achieve this through people, based on trust.Hands-on, value-driven management They make it mandatory.Stick to the knitting They always deal from a position of strength.Simple form, lean staff They develop cost-effective work teams.Simultaneous loosetight properties They decentralize many decisions, while at the same time, retaining tight overall control.

BPRTQMEssentially a top-down approachCould be a top-down and a bottom-up approachAssumes that the existing system is redundant and therefore reinvents the process by reengineering an organizational restructuringDoes not make the existing process redundant; rather, it tries to improve this, and hence, receives support from employees. Emphasizes radical changes and improvements.Aims at incremental improvementsBelieves in total involvement, which even extends to stakeholders, including customers and suppliersCould be even without the participation of employees,Involves flexibility, and hence, makes standardization as low as possible., so documentation is not as in TQMImplementation is ensured through standardization of practices. This enables employees to achieve a consistent performance. Only makes use of information technologyMakes use of statistical process controlMore like a project, which emphasizes achieving a time-bound targetTQM is by nature a cultural issue. Used when organizations are in deep trouble, to overcome a crisis phaseTQM is a consolidation approach, and it is always on-going to ensure continuous improvement

Effective POM functions require the consideration of cross-cultural influences on technology, its selection and implementation. We are increasingly getting things done through technology which, quite universally, shapes culture. On the other hand, technology is also influenced by our culture. For example, if modern, remote-controlled blast furnaces replace traditional blast furnaces in a factory, it changes work culture.Two basic cultures, specific to technological issues are reactive technological culture and proactive technological culture. When the organization monitors the product, we understand that the culture is reactive in nature. Here, the emphasis is on finding the defects. In contrast, where the process is monitored in an organization, we call it a proactive culture, because such organizations focus on defect prevention, before the defect arises. A proactive technological culture can only be developed and sustained in an organization that addresses people-related issues.

A proactive technological culture focuses on the prevention of defects before they happen. Proactive technological cultures never slow down process improvement efforts. Process improvement efforts have to be continuous, considering quality and cycle time improvement as an unending journey. The focus has to be on sustained human resource development activities, liketraining in process development statistics problem solving project management and new product design.These organizations consider customers as being inseparable from their operations and do their best for customer integration with their business and operational plans.

Other characteristics of a proactive technological culture are:It invests in training its operators, supervisors, managers, engineers and technicians in Statistical Process Control (SPC), Design of Experiments (DOE), Design for Manufacturability (DFM), Problem Solving, etc.Proactive technological culture operation makes use of DOE to identify and quantify critical operating parameters or critical success factors (CSF), using statistical tools such as SPC to monitor the process.It monitors the process continuously to initiate corrective action. It monitors the process to prevent defects, and not to find defects that have already arisen. Proactive technological culture minimizes non-value added activity. One such non-value adding activity is process inspection. It is focused on using timely data to drive continuous improvement.A proactive technological culture does not solve the same problems every day. A proactive technological culture involves all functions in the operation to brainstorm, evaluate and implement effective process improvements.

Technological changes lead to adjustments at three levels: individual, social organization and of the cultural value system. Therefore, the technology must complement the culture.Even sociologists consider technology as being a part of culture, considering it as inherited artefacts, goods, technical processes, ideas, habits and values.For example reversed gripping, demonstrated in the picture, explains how cultural issues can influence technology.

Reversed gripping of share tools According to Alrusheidat (2006), some of these culture-related ergonomic aspects are :Interface design: This relates to the use of human emotion in product design. It is concerned with factors like colour and shape. Culture-wise perceptions of colour differ. For example, red indicates danger in western countries, while it symbolizes happiness in China. Control/display compatibility: It indicates spatial movement of control, and refers to the users expectation of the stimulusresponse relationship. A compatible system considers perceptualmotor behaviour, that is, differences in reading or scanning habits. Workplace design: Suitable workplace design eliminates harmful posture and improves user performance; it has to take into account the users biological needs, preferences and task requirements. Variations in preferred posture influence machine and workplace design. Therefore, it deserves improvement in the operators efficiency and comfort. Design of protective equipment: There exist both psychological and physical constraints with regard to wearing protective clothing. In some cultures, the use of helmets may be prohibited.

Technology is a science, it is the outcome of R&D initiatives by firms. Chris Floyd in his `Managing technology for corporate success (1970), defined technology as `the practical application of scientific or engineering knowledge to the conception, development or application of products or offerings, processes or operations.Technology is important for two critical reasons:(1) to achieve success in business, sustaining competitive position, and (2) to promote the culture of innovation through technology for long-term sustainability. Using technology as a driver for organizational change, both for long-term and short-term objectives, is now more a strategic than just a technical issue. The advanced technologies, which particularly affect the areas of organizational operations, are:designs and engineeringprocessing fabrication and assemblyautomated material handlingInspectionintegration and controlnetwork communication

How technology exerts an influence on the organization as a whole, including its design, can be understood in the context of the Thompsons model and Woodwards technologies.Thompsons model: James Thompson (1967) developed three classifications for technology: (1) Intensive technology: is developed, keeping in view, a high level of uncertainty. It helps to produce the desired outcomes, even in uncertain situations by avoiding technological obsolescence. It also makes workers interdependent and creative and they become capable of solving their work-related problems through mutual coordination (2) Mediating technology: brings together individuals and/or groups to seek a mutually beneficial exchange of values. This form of technological environment is more applicable in service industries, like banks, financial institutions(3) Long-linked technology: is appropriate for mass-production processes, like an automobile assembly line.Thompsons Model argues that each type of technology has specific bearings on the design and structure of organizations.

Woodwards Technologies: Joan Woodward (1965) with her team of researchers studied about 100 organizations in England in the 1960s, to establish the linkage between the size and the structure of organizations. However, they could not establish any such relationships. In their follow-up study, they could find some relationships between the structure and three basic forms of technology: Small batch production technology: which is suitable for the production of a few varieties of products, to meet the specific requirements of customers. Large batch or mass-production technology: which is used for producing a large volume of standardized products to cater to the demand of a large market. Continuous process production technology: which is a completely mechanized production process, where machines undertake all the jobs, making people focus on quality inspection and adjustment, and monitoring.Woodward and her associates referred to such differences in these three production technologies as technical complexity.

EFQM Excellence Model: introduced in early 1992, as the framework for assessing applications for The European Quality Award, it is the most widely-used organizational effectiveness framework in Europe and has become the basis for most national and regional Quality Awards. It helps the organization to understand whether it is on the path of excellence, duly identifying gaps and then stimulating solutions. The fundamental concepts are:Result OrientationCustomer FocusLeadership and Constancy of PurposeManagement by Processes and FactsPeople Development and InvolvementContinuous Learning, Innovation and ImprovementPartnership DevelopmentCorporate Social ResponsibilityThe model is based on nine criteria. Five of these are enablers and four are results. The enabler criteria cover what an organization does. The results criteria cover what an organization achieves. Results are caused by enablers and feedback from results help to improve the enablers

2. Shingo Prize Model of Organizational ExcellenceIt is named after the Japanese industrial engineer, Shigeo Shingo, an engineering genius who helped create the revolutionary manufacturing practices which comprise the renowned Toyota Production System.The Shingo Prize philosophy is that world-class business performance may be achieved through focused improvements in core manufacturing and business processes. The Prize was established in 1988 to promote awareness of Lean manufacturing concepts and recognize companies in the United States, Canada and Mexico that achieve world-class manufacturing status. The Shingo Prize Model includes 11 key elements of world-class manufacturing. These elements are grouped into five categories, signifying that it is necessary to integrate them into a complete system to achieve world-class results.

3. Malcolm Baldrige Model for Organizational Excellence This Prize was started in 1987 to recognize U.S. companies for their achievements in quality and business performance. Three awards may be given annually in each of these categories manufacturing, services, small business, and, starting in 1999, education and healthcare.The Baldrige performance excellence criteria are a framework, and any organization wanting to improve its overall performance can use such criteria as their basic guideline. There are seven categories that make up the award criteria: 1. Leadership: examines how senior executives guide the company and how the company addresses its responsibilities to the public and practices good corporate citizenship.2. Strategic planning: examines how the company sets its strategic directions and how it determines key action plans.3. Customer and market focus: It examines how the company determines the requirements and expectations of customers and markets.

4. Information and analysis: examines the management, effective use, and analysis of data and information to support key company processes and the companys performance management system.5. Human resource focus: examines how the company enables its workforce to develop its full potential and how the workforce is aligned with the companys objectives.6. Process management: examines aspects of how key production/delivery and support processes are designed, managed and improved.7. Business results: examines the companys performance and improvement in its key business areas: a) customer satisfaction b) financial and marketplace performance c) human resources d) supplier and partner performance and e) operational performance.

Sigma is a letter in the Greek alphabet and is used to denote the standard deviation of a process. First developed by Motorola from the mid-1980s and adopted by many major manufacturing organizations including General Electric. GE Capital, the world's first service transaction-based company introduced this in 1996. It is the statistical application of Total Quality Management.Sigma quality level describes the output of a process. It emphasizes business process improvement in general, which includes cost reduction, cycle-time improvement and increased customer satisfaction.It implies a whole culture of strategies, tools and statistical methodologies to improve the bottom line of companies. Higher sigma values indicate better quality products and lower sigma values represent less quality products. At six sigma level, products are virtually defect-free, that is, it allows for 3.4 defects per million Opportunities (DPMO) only. Six Sigma has been discussed in detail in Chapter 10

Lean practices are characterized by world class performance (key measures), world class practices (methods and processes) and the culture of relentless continuous improvement (environment). Originally developed at Toyota, it is now embraced as a necessity for organizations to survive, particularly in a volatile market situation. Through lean practices, Toyotas Production System achieved a 50%70% improvement in productivity, floor space, working capital, quality and safety within a 23 year time frame. The transformation of an organization through lean practices starts with the value stream which the sequence of steps which an organization needs to perform to optimize its capital, material and labour costs to satisfy customer needs; to eliminate unnecessary activities that cause delays, add value and enhance customer satisfaction.Lean practices require the creation of cells and the determination of flow within the cells. The idea behind a cell is that there should have been hardly any work-in-process, which might otherwise deter the value-adding steps. Work-in-process within a cell is controlled via pull systems like kanbans, and production is managed through simple scheduling/replenishment systems. Pull systems are continuously developed to improve the value stream.

Quick Response Manufacturing (QRM) is a culture-centric organizational strategy, which helps reduce the lead times in all activities of the organizations. It identifies `white spaces within and between processes, and accordingly, eliminates those to shorten the time-to-market on products, and engineer-to-order product solutions.Toyota Production System (TPS)TPS was developed in Japan by Toyota Corporation, led by Taiichi Ohno. It was based on two primary concepts the manufacturing production system of Henry Ford and the Ford Motor Company, and the supermarket operations in the United States.Ohno visited the U.S.A. in 1956, and closely observed the functioning of the supermarket, where the supply of merchandise on every shelf was continuous, to ensure the availability of the merchandise to the customers.Emulating this, TPS incorporated the Just-In-Time (JIT) production and Jidoka techniques to optimize time and human assets in the manufacturing environment. TPS later became the basis for lean production and the lean enterprise movements beginning in the early 1990s.

JIT system of production manufactures and delivers the required quantity just when it is needed. Jidoka practices ensure availability of machines and operators. Jidoka can detect the abnormal condition in the production systems and can stop it immediately. It ensures in-built quality in each process and can separate men and machines to achieve better work efficiency. Kaizen ensures continuous improvement of the entire value stream or an individual process, adding more value with less waste. System or flow kaizen focuses on the overall value stream, and process kaizen focuses on individual process. Both levels of kaizen benefit the organization, achieving efficiency.