Implementing a High Performance Work System « Brown Consulting Group Blog. Posted by Eric Brown in Human Resources (HR), Strategy. Trackback Also seen on Brown Consulting Group’s Website here. High Performance Work System is a name given to a set of management practices that attempt to create an environment within an organization where the employee has greater involvement and responsibility. More specifically, HPWS has been defined by Bohlander et al (2004) as “a specific combination of HR practices, work structures, and processes that maximizes employee knowledge, skill, commitment and flexibility” (Bohlander & Snell, 2004, p. 690).
Barnes (2001) writes that the concept and ideas for high performance work systems has existed for quite some time and has its roots in the late twentieth century amid the upheaval in the United States manufacturing environment (Barnes, 2001, p. 2). During this period, the manufacturing industry in America had realized that global competition had arrived and they needed to rethink the ‘tried and true’ manufacturing processes. Reverse logistics. When a manufacturer's product normally moves through the supply chain network, it is to reach the distributor or customer. Any process or management after the sale of the product involves reverse logistics. If the product is defective, the customer would return the product. The manufacturing firm would then have to organise shipping of the defective product, testing the product, dismantling, repairing, recycling or disposing the product.
The product would travel in reverse through the supply chain network in order to retain any use from the defective product. The logistics for such matters is reverse logistics. Business implications[edit] In today's marketplace, many retailers treat merchandise returns as individual, disjointed transactions. Third-party logistics providers see that up to 7% of an enterprise's gross sales are captured by return costs. "Studies have shown that an average of 4% to 6% of all retail purchases are returned, costing the industry about $40 billion per year. " [9] The Focused Factory...{Strategos} What Is A Focused Factory A Focused Factory strives for a narrow range of products, customers and processes. The result is a factory that is smaller, simpler and totally focused on one or two Key Manufacturing Tasks.
The Focused Factory rests on three underlying concepts: There are many ways to compete besides low cost. A factory cannot perform well on every measure. Simplicity & repetition bring competence. Benefits of Focus At Strategos, we have seen the effects of focus- customer satisfaction, lower cost and less frustration. Key Manufacturing Tasks Skinner's research suggests that a particular factory can excel with no more than one or two overall objectives.
The Key Manufacturing Task(s) is the most important thing the factory must do or achieve for success. Why Factories Lose Focus Some factories are unfocused originally because designers fail to recognize the limits and constraints of technologies and systems. Other factories are highly focused at first but lose it over time. The Key Manufacturing Task...{Strategos} The Key Manufacturing Task provides the focus in Focused Factories. They should have only one or two such Key Manufacturing Tasks according to Wickham Skinner. The Key Manufacturing Task is the task that is most important for competition in the market. Skinner does say much about determining this Key Manufacturing Task but Professor Terry Hill of Oxford University provides some guidance. Identifying the Key Manufacturing Task starts with what Hill terms "Order Winning Criteria" or "Market Criteria. " Deciders & Qualifiers Qualifiers are criteria for which a minimum standard must be met for admission to the marketplace.
Strategists may sometimes take qualifiers for granted. "Deciders" are market criteria for which better incremental performance brings more orders. Many such deciding factors enter into the buying decision but customers do not weight them equally. The strategist's objective is to find the dominant factors for each market segment. Non-Manufacturing Criteria Case Studies. Lean Business Specialists - Nestadt Consulting.
Continual improvement process. A continual improvement process, also often called a continuous improvement process (abbreviated as CIP or CI), is an ongoing effort to improve products, services, or processes. These efforts can seek "incremental" improvement over time or "breakthrough" improvement all at once.[1] Delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility. Some see CIPs as a meta-process for most management systems (such as business process management, quality management, project management, and program management). W. Edwards Deming, a pioneer of the field, saw it as part of the 'system' whereby feedback from the process and customer were evaluated against organisational goals.
The fact that it can be called a management process does not mean that it needs to be executed by 'management'; but rather merely that it makes decisions about the implementation of the delivery process and the design of the delivery process itself. Inventory. Inventory or stock refers to the goods and materials that a business holds for the ultimate purpose of resale (or repair). [nb 1] Inventory management is a science primarily about specifying the shape and percentage of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials. The scope of inventory management concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods, and demand forecasting.
Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment. Definition[edit] Typology[edit] Core competency. A core competency is a concept in management theory originally advocated by two business authors, C. K. Prahalad and Gary Hamel. In their view a core competency is a specific factor that a business sees as central to the way the company or its employees work. It fulfills three key criteria: It is not easy for competitors to imitate.It can be reused widely for many products and markets.It must contribute to the end consumer's experienced benefits and the value of the product or service to its customers. A core competency can take various forms, including technical/subject matter know-how, a reliable process and/or close relationships with customers and suppliers.[1] It may also include product development or culture, such as employee dedication, best Human Resource Management (HRM), good market coverage, or kaizen or continuous improvement over time.
As an example of core competencies, Walt Disney World Parks and Resorts has three main core competencies:[2] Core Competence[edit] Notes[edit] Purchasing management. Purchasing is the function of buying Goods & Services from External Source to an Organisation.Purchase department buys Raw Materials, Spare parts, services etc. as Required by the company or Organisation.Purchase management is One of the most Crucial Area of the Entire Organisation. Thus, Needs Intensive management.Purchase is the Main Activity in Area of Material management.Purchasing management is a department in an organization responsible for purchasing activities.Purchase is Most Important Function in any Organisation.Purchase is the first element which affects the product cost.Purchase management decides profitability of the Company.Purchasing management also covers the areas of outsourcing and insourcing.Purchasing management is the management of purchasing process, and related aspects in an organization.
Because of production companies purchase nowadays about 70% of their turnover, and service companies purchase approximately 40% of their turnover.[1] Purchasing Process[edit] Vendor-managed inventory. Vendor-managed inventory (VMI) is a family of business models in which the buyer of a product (business) provides certain information to a vendor (supply chain) supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption location (usually a store). A third-party logistics provider can also be involved to make sure that the buyer has the required level of inventory by adjusting the demand and supply gaps.
As a symbiotic relationship, VMI makes it less likely that a business will unintentionally become out of stock of a good and reduces inventory in the supply chain. Furthermore, vendor (supplier) representatives in a store benefit the vendor by ensuring the product is properly displayed and store staff are familiar with the features of the product line, all the while helping to clean and organize their product lines for the store. One of the keys to making VMI work is shared risk. Operational risk management. The term Operational Risk Management (ORM) is defined as a continual cyclic process which includes risk assessment, risk decision making, and implementation of risk controls, which results in acceptance, mitigation, or avoidance of risk. ORM is the oversight of operational risk, including the risk of loss resulting from inadequate or failed internal processes and systems; human factors; or external events.
Four Principles of ORM[edit] The U.S. Department of Defense summarizes the principles of ORM as follows:[1] Accept risk when benefits outweigh the cost.Accept no unnecessary risk.Anticipate and manage risk by planning.Make risk decisions at the right level. Three Levels of ORM[edit] In Depth In depth risk management is used before a project is implemented, when there is plenty of time to plan and prepare.
Deliberate Deliberate risk management is used at routine periods through the implementation of a project or process. Time Critical ORM Process[edit] In Depth[edit] Deliberate[edit] The U.S. Operational risk. An operational risk is defined as a risk incurred by an organisation's internal activities. Operational risk is the broad discipline focusing on the risks arising from the people, systems and processes through which a company operates. It can also include other classes of risk, such as fraud, legal risks, physical or environmental risks.
A widely used definition of operational risk is the one contained in the Basel II regulations. This definition states that operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.[1] Operational risk management differs from other types of risk, because it is not used to generate profit (e.g. credit risk is exploited by lending institutions to create profit, market risk is exploited by traders and fund managers, and insurance risk is exploited by insurers). Background[edit] Definition[edit] The Basel II Committee defines operational risk as: Scope exclusions[edit] See also[edit] Risk management. Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events[1] or to maximize the realization of opportunities.
The strategies to manage threats (uncertainties with negative consequences) typically include transferring the threat to another party, avoiding the threat, reducing the negative effect or probability of the threat, or even accepting some or all of the potential or actual consequences of a particular threat, and the opposites for opportunities (uncertain future states with benefits). Introduction[edit] A widely used vocabulary for risk management is defined by ISO Guide 73, "Risk management.
Vocabulary. Risk management also faces difficulties in allocating resources. Method[edit] Principles of risk management[edit] Risk management should: Process[edit] Job shop. Job shops are typically small manufacturing systems that handle job production, that is, custom/bespoke or semi-custom/bespoke manufacturing processes such as small to medium-size customer orders or batch jobs. Job shops typically move on to different jobs (possibly with different customers) when each job is completed. In job shops machines are aggregated in shops by the nature of skills and technological processes involved, each shop therefore may contain different machines, which gives this production system processing flexibility, since jobs are not necessarily constrained to a single machine.
In computer science the problem of job shop scheduling is considered strongly NP-hard. In a job shop product flow is twisted, also notice that in this drawing each shop contains a single machine. The opposite would be continuous flow manufactures such as textile, steel,food manufacturing and manual labor. Advantages[edit] Compare to transfer line Disadvantages[edit] See also[edit] Job-shop problem A. Batch processing. Batch processing is the execution of a series of programs ("jobs") on a computer without manual intervention.
Benefits[edit] Batch processing has these benefits: History[edit] Batch processing has been associated with mainframe computers since the earliest days of electronic computing in the 1950s. There were a variety of reasons why batch processing dominated early computing. One reason is that the most urgent business problems for reasons of profitability and competitiveness were primarily accounting problems, such as billing. Billing may conveniently be performed as a batch-oriented business process, and practically every business must bill, reliably and on-time. Batch processing is still pervasive in mainframe computing, but practically all types of computers are now capable of at least some batch processing, even if only for "housekeeping" tasks. Modern systems[edit] Scripting languages became popular as they evolved along with batch processing.
Batch window[edit] Databases[edit] Vertical integration. A diagram illustrating vertical integration and contrasting it with horizontal integration Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration is called a vertical monopoly. Nineteenth-century steel tycoon Andrew Carnegie's example in the use of vertical integration[1] led others to use the system to promote financial growth and efficiency in their businesses. Three types[edit] Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers.
There are three varieties: backward (upstream) vertical integration, forward (downstream) vertical integration, and balanced (both upstream and downstream) vertical integration. A company exhibits backward vertical integration when it controls subsidiaries that produce some of the inputs used in the production of its products. Examples[edit] Oil industry[edit] Telephone[edit] Reliance[edit] Media industry[edit] Apple[edit] Agriculture industry[edit] Muda (Japanese term) Total quality management. Production leveling. Just in time (business) Cellular manufacturing. 8 Dimensions of Quality | Lean Six Sigma Academy. Order Winners & Order Qualifiers. 1570100606013.png (3679×1311) Capability and Maturity - Hayes and Wheelwright's Four Stages. Link Manufacturing Process and Product Life Cycles.
Industrial Organization I/O Model of Above-Average Returns. Resource-based view. Hypercompetition. Flexibility (engineering) Porter five forces analysis. SWOT analysis. Schonberger World Class Manufacturing. Project planning. Project plan. Make-or-Buy Business Decision - wikiCFO. Supply chain. Lean manufacturing. Supply chain management. Collaborative planning, forecasting, and replenishment.