Week 4 - Strategi Substitusi Operasi

Slide 3.
Week 4
S&L - Chapter 3
Substitutes for Strategy
Slack and Lewis, Operations Strategy PowerPoints on the Web, 4th edition © Pearson Education Limited 2015
Slide 3.2
Agenda
• Total Quality Management

• Lean Organization
• Business Process Reengineering
• Six Sigma
Slide 3.3
Look at four of the most commonly adopted

approaches to operations that are often used
as ‘substitutes for strategy’
• Total quality management

• Lean operations
• Business process reengineering
• Six Sigma
Slide 3.4
Slide 3.5
Why Choose the Approaches?
(a) easily understood and a relatively simply way to tackle

the complexities of modern operations; or
(b) seem to have worked in other organizations; or
(c) sound as if they are new and considered better than

what went before; or
(d) promoted the idea by consultants and it’s worth trying

something new
Slide 3.6
1. Total Quality Management

(TQM)
Slide 3.7
TQM Definition
According to Feigenbaum, TQM definition is:
‘An effective system for integrating the quality

development, quality maintenance and quality
improvement efforts of the various groups in an
organization so as to enable production and service
at the most economical levels which allow for full
customer satisfaction’.
Slide 3.8
The Elements of TQM
• Meeting the needs and expectations of customers

• Covering all parts of the organization
• Including every person in the organisation
• Examining all costs which are related to quality,
especially failure costs
• Getting things ‘right first time’, i.e. designing-in quality
rather than inspecting it in
• Developing the systems and procedures that support
improvement.
Slide 3.9
Lesson from TQM
• The core concept of a ‘total, or holistic, view’ of any issue

is both powerful and attractive.
• At its simplest, it provides an outline ‘checklist’ of how to

go about operations improvement.
• It is also capable of being developed into a more

prescriptive form.
Slide 3.10
Slide 3.11
How does TQM fit into operations

strategy?
Deming’s 14 points and the operations

strategy decision areas
Slide 3.12
Slide 3.13
TQM elements in the four operations

strategy decision categories
Capacity strategy Resource usage
Quality
Market competitiveness
Speed • Provide resources to
Performance
objectives
support quality
Dependability • Use quality as
performance criterion
Flexibility
Cost
Development
Capacity Supply Process
and
strategy network technology
organisation
Decision areas
Figure 3.3 TQM elements in the four operations strategy decision categories
Slide 3.14

strategy decision categories (Continued)
Supply network Resource usage
Quality • Continuous quality
emphasis with
suppliers
Speed • Purchase using
Performance
objectives
quality criterion
Dependability • Work on functional
barriers
Flexibility
Cost
Development
Capacity Process
Supply network and
strategy technology
organisation
Decision areas
TQM elements in the four operations strategy decision categories

Figure 3.3
(Continued) th
Slack and Lewis, Operations Strategy PowerPoints on the Web, 4 edition © Pearson Education Limited 2015
Slide 3.15

Process technology Resource usage
Quality • Built-in quality in
processes
• Statistical process
Speed
Performance
control
objectives
• Enhance quality
Dependability capability
• Quality as a
Flexibility performance criterion
Cost
Development
Capacity Supply Process technology and
strategy network
organisation
Decision areas
Figure 3.3
(Continued) th
Slide 3.16

Development and organisation Resource usage
• Long-term plans
Quality
• Quality culture
• Continuous improvement
Speed • Quality performance
Performance
objectives
measurement and control

• Training and education
Dependability emphasis
• Operational supervision
Flexibility is important
• Communication
• Appropriate
Cost organisational structure
Capacity Supply Process Development

strategy network technology and organisation
Decision areas
Figure 3.3
(Continued) th
Slide 3.17
2. Lean Operations
Slide 3.18
The lean approach aims to meet demand

instantaneously, with perfect quality
and no waste
It means that the flow of products and services always

delivers…
• exactly what customers want (perfect quality);
• in exact quantities (neither too much nor too little);
• exactly when needed (not too early or too late);
• exactly where required (not to the wrong location);
• at the lowest possible cost.
It results in items flowing rapidly and smoothly through

processes, operations and supply networks.
Slide 3.19
Lean flow – how do items move through

your processes?
Traditional approach – ‘Push’
buffer buffer
Work inventory Work inventory Work
centre centre centre
Slide 3.20
Lean flow – how do items move through

your processes?
Lean approach – ‘Pull’
Request Request Request
Work Work Work Work

centre centre centre centre
Delivery Delivery Delivery
…Don’t send nothin’ nowhere… Make ‘em come and

get it…
Slide 3.21
Elements of Lean
The lean approach to operations includes:

• Customer-based demand triggers
• Synchronised flow
• Fewer inventory  Involvement behaviour
• Waste elimination
• Waste from irregular flow
• Waste from inexact supply (no under or over, early or
late)
• Waste from inflexible response
• Waste from variability (in quality)
Slide 3.22
The four elements of lean
Slide 3.23
WIP
Defective
productivity materials
problems
Scrap Rework
Downtime
Reduce the level of inventory (water) to reveal the operation’s

problems
WIP
Defective
materials
productivity
problems Scrap Rework
Downtime
Slide 3.24
How do lean operations fit into

operations strategy?
Slide 3.25
Slide 3.26
Lean elements in the four operations

Resource usage
Capacity strategy
Quality
Speed • Sacrifice high
Performance
objectives
utilisation for fast

Dependability and dependable
throughput
Flexibility
Cost

network technology and
strategy organisation
Decision areas
Figure 3.5 Lean elements in the four operations strategy decision categories
Slide 3.27

Quality • Supplier development

to ensure quality and
delivery conformance
Speed • Integrated supply
Performance
objectives
network coordination
Dependability to ensure
synchronous flow
Flexibility • Work on functional
barriers
Cost
Capacity Process Development

Supply network technology and
strategy organisation
Decision areas
Lean elements in the four operations strategy decision categories

Figure 3.5
(Continued)
Slide 3.28

Quality • Small flexible

technology
• Emphasis on
Speed
Performance
equipment reliability
objectives
• Reduce process
Dependability variability
Flexibility
Cost
Development
Capacity Supply Process technology and
strategy network
organisation
Decision areas

Figure 3.5
(Continued)
Slide 3.29

Quality • Continuous
improvement
through waste
Speed
elimination
Performance
objectives
• Smooth synchronised
Dependability flow exposes waste
• People motivation and
Flexibility involvement through
reduced buffering
Cost

Decision areas
Figure 3.5
(Continued)
Slide 3.30
3. Business Process Reengineering

(BPR)
Slide 3.31
What is BPR?
BPR has been defined as…
‘…the fundamental rethinking and radical

redesign of business processes to achieve
dramatic improvements in critical,
contemporary measures of performance, such
as cost, quality, service and speed.’
Hammer, M. and Champy, J. (1993) Reengineering the Corporation: A

manifesto for business revolution. New York: Harper Business.
Slide 3.32
Elements of BPR
• Rethink business processes
• Strive for dramatic improvements  ‘disruptive

technologies’
• Have those who use the output from a process, perform

the process
• Put decision points where the work is performed
Slide 3.33
BPR advocates reorganising (re-engineering) processes

to reflect the natural processes that fulfil customer needs
Slide 3.34
Where does BPR fit into operations

strategy?
Slide 3.35
Slide 3.36
BPR elements in the four operations

Capacity strategy Resource usage
Quality
Speed • Balance capacity
Performance
objectives
across end-to-end
Dependability processes
Flexibility
Cost
Capacity Development
Supply Process
and
strategy network technology
organisation
Decision areas
Figure 3.7 BPR elements in the four operations strategy decision categories
Slide 3.37

Quality • Internally, customers

become their own
supplier rather than
Speed depending on another
Performance
objectives
function
Dependability
Flexibility
Cost
Development
Capacity Process
Supply network and
strategy technology
organisation
Decision areas
BPR elements in the four operations strategy decision categories

Figure 3.7
(Continued)
Slide 3.38

Quality • Information
technology is an
enabler of cost
Speed
reduction
Performance
objectives
Dependability
Flexibility
Cost
Supply Development
Capacity Process technology and
strategy network
organisation
Decision areas

Figure 3.7
(Continued)
Slide 3.39

Quality • Locate decision
making at the lowest
practical level
Speed
• Rethink business
Performance
objectives
processes in a cross-
Dependability functional manner
• Dramatic cost
Flexibility reductions can come
from the elimination of
unnecessary process
Cost
steps

Decision areas

Figure 3.7
(Continued)
Slide 3.40
4. Six Sigma
Slide 3.41
What is Six Sigma?

Named because it requires the natural variation of processes (±3
standard deviations, or ‘sigma’) should be half their specification range.
So the specification range of a product or service should be ±6 the

standard deviation of the process.
Now the definition of Six Sigma has widened to be defined it as…
… a disciplined methodology of defining,

measuring, analysing, improving and controlling the
quality in every one of the company’s products,
processes and transactions – with the ultimate goal
of virtually eliminating all defects.
Slide 3.42
The Elements of Six Sigma
• Customer driven objectives

• Use of evidence / facts
• Structured improvement cycle  DMAIC
• Structured training and organization of
improvement
• Process capability and control
• Process design
• Process improvement
Slide 3.43
The DMAIC cycle used in Six Sigma
Define – identify
problem, define
requirements and
set the goal
Control – establish Measure – gather

performance data, refine problem
standards and deal and measure inputs
with any problems and outputs
Improve – develop Analyse – develop

improvement problem hypotheses,
ideas, test, identify ‘root causes’
establish solution and validate
and measure hypotheses
results
Figure 3.8 The DMAIC cycle of Define, Measure, Analyse, Improve and Control
Slide 3.44
How does Six Sigma fit into operations

strategy?
Slide 3.45
Slide 3.46
Six Sigma elements in the four operations

Quality • Emphasis on process

control
Speed
Performance
objectives
Dependability
Flexibility
Cost
Supply Development
Capacity Process technology
network and
strategy
organisation
Decision areas
Figure 3.9 Six Sigma elements in the four operations strategy decision categories
Slide 3.47
Six Sigma elements in the four operations

Quality • Improvement through

a structured decision-
making cycle
Speed
• Strong evidence-
Performance
objectives
based methodology
Dependability •Very substantial
training required
Flexibility • Emphasis on process
knowledge
Cost

Decision areas
Six Sigma elements in the four operations strategy decision categories
Figure 3.9
(Continued)
Slide 3.48
Some Points for Discussion
• How much should one be influenced by the experiences of

other organisations?
• Operations that rely on others to define what is ‘best practice’,
are always limiting themselves to currently accepted methods
of operating or currently accepted limits to performance.
• Best practice is not ‘best’ in the sense that it cannot be
bettered, it is only ‘best’ in the sense that it is the best one can
currently find.
Slide 3.49
Some Points for Discussion (Continued)
• Senior managers sometimes use these new approaches

without fully understanding them.
• If senior managers do not understand these approaches,
how can the rest of the organisation take them seriously?
• The details of these approaches are not simply technical
matters. They are fundamental to how appropriate the
approach could be in different contexts.
• Not every approach fits every set of circumstances. So
understanding in detail what each approach means must
be the first step in deciding whether it is appropriate.
Slide 3.50
Some points for discussion (Continued)
• All these approaches are different.

• Does the approach emphasise a gradual, continuous
approach to change, or a more radical ‘breakthrough’
change?
• What is the balance between whether the approach
emphasises what changes should be made or how
changes should be made?
Slide 3.51
Each of the ‘new approaches’ positioned in terms of their

emphasis on what changes to make or how to make the changes,
and whether they emphasise rapid or gradual change
Emphasis on
rapid change
BPR
Six Sigma
Emphasis on Emphasis on
what to do how to do it
Lean
TQM
Emphasis on
gradual change
Figure 3.10 Each of the ‘new approaches’ positioned in terms of its emphasis on what
changes to make or how to make changes, and whether it emphasises rapid or
gradual change
Slide 3.52
Some points for discussion (Continued)
• These approaches are not strategies but they are

strategic decisions.
• Operations strategy is the reconciliation of market
requirements and operations resource capabilities.
• An individual enterprise’s market requirements and
operations resource capabilities are unique.
• Operations strategy is individual and specific to one
organisation at one point in time, but these approaches
are generic.
• They are an important part of a strategy, but not
strategies in themselves.

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Slide 3.

• Total Quality Management

Look at four of the most commonly adopted

• Total quality management

Why Choose the Approaches?

(a) easily understood and a relatively simply way to tackle

(b) seem to have worked in other organizations; or

(c) sound as if they are new and considered better than

(d) promoted the idea by consultants and it’s worth trying

1. Total Quality Management

According to Feigenbaum, TQM definition is:

‘An effective system for integrating the quality

The Elements of TQM

• Meeting the needs and expectations of customers

Lesson from TQM

• The core concept of a ‘total, or holistic, view’ of any issue

• At its simplest, it provides an outline ‘checklist’ of how to

• It is also capable of being developed into a more

How does TQM fit into operations

Deming’s 14 points and the operations

TQM elements in the four operations

TQM elements in the four operations

Quality • Continuous quality

TQM elements in the four operations strategy decision categories

TQM elements in the four operations

Quality • Built-in quality in

TQM elements in the four operations

measurement and control

Capacity Supply Process Development

The lean approach aims to meet demand

It means that the flow of products and services always

It results in items flowing rapidly and smoothly through

Lean flow – how do items move through

Traditional approach – ‘Push’

Lean flow – how do items move through

Lean approach – ‘Pull’

Request Request Request

Work Work Work Work

Delivery Delivery Delivery

…Don’t send nothin’ nowhere… Make ‘em come and

The lean approach to operations includes:

The four elements of lean

Reduce the level of inventory (water) to reveal the operation’s

How do lean operations fit into

Lean elements in the four operations

utilisation for fast

Capacity Supply Process Development

Lean elements in the four operations

Quality • Supplier development

Capacity Process Development

Lean elements in the four operations strategy decision categories

Lean elements in the four operations

Quality • Small flexible

Lean elements in the four operations strategy decision categories

Lean elements in the four operations

Capacity Supply Process Development

3. Business Process Reengineering

BPR has been defined as…

‘…the fundamental rethinking and radical

Hammer, M. and Champy, J. (1993) Reengineering the Corporation: A

• Rethink business processes

• Strive for dramatic improvements  ‘disruptive

• Have those who use the output from a process, perform

• Put decision points where the work is performed