Module 1 – SLP Example from school and all hybrid link material Productivity and Process Improvement In this Session Long Project you will be able to use your creativity. You will choose a specific type of non-manufacturing business from the list below. You will use this business type and create your own organization around it. In each SLP module you will create issues about the specific Operations Management topic and discuss these issues and how you would solve them. NOTE: When choosing your business, you need to consider that it will meet the criteria for ALL SLP assignments. It must use inventories (Module 2), requires some effort to achieve quality (Module 3), and have the ability to expand its capacity (Module 4). Session Long Project Choose one of the following types of service organizations: hospital, car repair, computer repair, generic family restaurant, generic convenience store (could be a franchised store), or another organization typewith Instructor Approval. Create/Invent a company of this type. Be creative. Make this company real. Generate some numbers that specify the productivity. Identify several key processes in a process flow diagram. (To see an example of a process flow diagram, see Section C: Plasti-Brack Information, Figure 2.)  Identify and discuss at least three productivity issues that this company faces. Include the various productivity ratios that would be calculated. Generate some numbers indicating the current level of productivity.  Identify and discuss how this company would deal with improving its productivity.  Discuss the key processes and how these processes would be analyzed.  What are some ways the processes could be improved?  Discuss concepts and ideas from process improvement and lean thinking. This paper should be approximately 3–5 five pages in length counting the introduction, body, and summary. You should include references and cite them properly in the paper. Generally, at least three references should be used. Find references about productivity in your type of business. Use ProQuest. Also check IBISWorld available through the TUI library. INVENTING YOUR COMPANY FOR THE SLP The SLP project in this course requires that you INVENT your own non- manufacturing company. This is your company, so be inventive and creative. USE YOUR IMAGINATION! First, make sure that it follows the guidelines specified in SLP1 - it should have some type of inventories so that you can do SLP2. The most important aspect of inventing your company is determining the key PROCESSES. What is the work being done to provide your services to your customers? What are the repetitive processes of obtaining the materials, supplies, etc., and moving them through the company via processes to generate the outputs? Also, consider that the business does not have to be a new startup. It works better if you invent a company that has been in business for a while. You should generate some numbers for your business. You can't operate a business without doing the numbers. How big is it? How many customers, how many employees, what is the sales volume, what are the costs, etc. If you spend time early in SLP1 and invent the company with some numbers, you will find it easier as you move through the other SLPs. SLP Assignment Expectations  First discuss some background about your company. You can give it a name. How big is the organization – people, size, etc.? What is its mission? Who are its customers?  Then identify at least one area of concern for productivity. Identify at least three productivity measures. While it is not required, if you want, you can also create some numbers and show the calculation of the productivity measures.  Identify the key processes. What are the steps involved in the processes? Do the processes interact?  What are some possible ways that these processes could be improved for productivity? Consider how you can produce more output and/or reduce the inputs, so that you can increase productivity.  What are some problems or issues that you might encounter as you attempt to change the processes? How could you overcome these problems/issues? Review all of the resources for this module. Use them to help you create/invent issues about productivity and processes and how you would improve. You should look for additional references about the type of business you are operating with specific information about improving processes and productivity. Example Would you like to see an example? Click to see an example based on a Ford Dealership. Example from school SLP1 Example: Excellent Ford, Inc. NOTE: This is an example of identifying and discussing the issues of Productivity and Process Improvement. Your paper may or may not take on the same form or format depending on the business you choose and the nature of the issues you identify. I have generated this business from my experience. You will see that I used four references. You should use at least three references (more is better) and citations to back-up your discussion about productivity and process improvement, as well as any information about the nature of your company that you may have obtained from the literature. Introduction & Company Background This discussion is about a fictitious Ford dealership, Excellent Ford, Inc. Excellent Ford, Inc. sells new Ford cars and trucks as well as quality used cars. The dealership has these departments: New Vehicle Sales, Used Vehicle Sales, Parts & Service, Body Shop, and the Accounting and Back Office. The dealership has generally done well over the many years it has been in business, serving the community of 50,000 and surrounding area of farmers and small businesses. The business is managed day to day by the General Manager. As in any other business, productivity at Excellent Ford is measured by the ratio of output/input, as defined in many references such as Wikipedia (n.d.-a) and Kumar (2008). Productivity has generally not been an issue except during tough economic times, such as Excellent Ford has been experiencing the last several years and up to now. Each department has its own productivity issues since they are staffed and structured differently and each has its own goals. The New Vehicle Sales department is managed by the New Sales Manager. There are several ways that productivity is measured. Keeping in mind the general form of Productivity, Output/input, productivity measures for new car sales are: Total number of new cars sold/cost of new cars sold Profit from sales of new cars/cost of new cars sold Profit from sales of new cars/Number of new cars sold Profit from sales of new cars/number of prospects on the lot The Service department is managed by the Service Manager. And there are several ways to measure productivity. Total Retail Sales / Repair Order Tech time sold / Repair Order Parts sold / Repair Order Tech time sold / Total Tech time paid Processes at Excellent Ford, Inc. Excellent Ford, Inc., like all businesses, is comprised of many processes as defined in the Handbook for Basic Process Improvement (n.d.) Here are some examples: New and Used Vehicle Processes: ORDERING NEW VEHICLES FROM FORD PREPING NEW VEHICLES ON ARRIVAL FOR SALE BUYING/SELLING USED VEHICLES AT AUCTION REPAIRING USED VEHICLES TO MEET STANDARDS AND PREP FOR SALE SELLING AND DELIVERY OF VEHICLE Parts and Service Processes: ORDERING PARTS RECEIVING AND STOCKING PARTS TALKING TO CUSTOMER AND WRITING A REPAIR ORDER REPAIRING A CUSTOMER VEHICLE Productivity and Process Improvement This discussion will review productivity and process improvement at Excellent Ford in the Vehicle Sales Department and the Service Department. In the Vehicle Sales Department, one key to productivity is to utilize the sales person's time effectively. Another key is to generate as much gross profit per vehicle sold. This is true in both cases of New Autos and Used Autos. Here is the process as it flows: Prospect on the lot --> Sales person gets a deal written --> Prospect signs the deal --> Deal is approved for financing --> Closer attempts to sell add-ons to increase profit Over the course of a week or a month, data is collected and the following productivity ratios are calculated at each step of the process: Deals written / Prospects on lot (130 / 510) Deals signed / Deals written (82 / 130) Deals approved / Deals signed (66 / 82) Gross Profit / Deals approved ($207,372 / 66 = $3142/deal approved) To improve productivity for the dealership and for the sales person (who gets paid commissions on each sale), the process is studied in detail. How can the sales person get more prospects to agree to getting a deal written and then signed? What are the issues with customers approved for finance? How can the Closer present and sell more add-ons such as Credit Insurance, additional warranties, membership in the Priority Club, etc.? The answer to these questions are not so much based on muda or waste and inefficiencies in a physical process as they are based on psychology and marketing. They are, nonetheless, important productivity and process issues. Sales managers and sales people meet on a regular basis to discuss these issues, share ideas, and agree to try different incentives and promotions to induce prospects to become buyers. Now let's look at the Service Department. The primary goal of providing service to an owner's vehicle is to find and fix the problem. Customers do not like or want to spend money that is unnecessary fixing things that are not broken and having to come back several times until it is fixed. This is considered to be a prime area that makes or breaks Customer Satisfaction, both with the dealership and Ford Motor Co. The tricky part is knowing what to bill the customer and what to "eat" in terms of non-productive time fixing the real problem. Highly trained technicians, using up to date tools and technologies, and correctly diagnosing the problem are three main keys to a productive and profitable Service Department. In order to measure productivity, data is collected on a weekly or monthly basis and key productivity measures are calculated with total number of Repair Orders written as the initial input: Total Tech time paid / Repair Orders written Tech time billed / Tech time paid Flat Rate time quoted / Tech time billed Another key productivity measurement is Time Vehicle in Shop / Repair Orders written. Customers do not want to wait days for their car to be fixed. And the dealership provides loaners to some customers, which is an expense. So getting the car in and out is also a priority. The Service Manager collects information about the difficult and long repairs that occurred during the month. These are analyzed and discussed with the technicians in order to generate ideas for correct diagnosis and repair procedures. Team work is considered on some major repairs. Ways to reduce the wait time for parts is also analyzed. Both of these examples use the continuous improvement model of process improvement (Wikipedia, n.d.-b). There are ways to consider use of lean thinking (Lean.org, n.d.). In the New Car Sales department, customers could order their vehicles from Ford to be delivered within five business days. This would reduce the amount of New Car Inventory at both the dealership and the factory. Customers could create their orders online without even going to the dealership. If they wanted to test drive, then a trip to the dealership would suffice. The dealership would need to have only a small number of new cars as demos. Lean thinking in the service area is little trickier. Consider transporting the vehicle to a large regional repair center where all parts are available and there is a cadre of highly trained factory technicians. In the meantime, the customer is provided with a comparable vehicle on loan. Repairs could be done by replacing modular parts with credit for these parts on trade-in. The parts that are removed could then be repaired and sold as refurbished for a lower price at the customer's choice. The economics of this supply chain process would need to be analyzed in cost-benefit terms. References Handbook for Basic Process Improvement (n.d.) Retrieved from http://www.balancedscorecard.org/Portals/0/PDF/bpihndbk.pdf Lean.org (n.d.). Retrieved from http://www.lean.org/WhatsLean/