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Introduction

Supply chains continue to undergo rapid evolution. Operational capabilities are increasing in ways that were not possible only a few years ago. Some organizations now deliver products or services on the same day they are ordered based on digitization and advanced inventory models. Energy efficiency and sustainability are now a focus of ethical supply chains. Global supply chains also have unique information technology (IT) platforms and applications that integrate with the supply chain participants through cloud infrastructure. Trends such as customer experience, Big Data, and the other initiatives directly impact global supply chains. Robotic process automation (RPA) and the Internet of Things (IoT) have applications everywhere. Machine learning and artificial intelligence are being applied across supply chains, just as they are in manufacturing and services. Cybersecurity has never been more important because of remote access to sensitive data.

Globalization has also forced organizations to rethink operational strategy and capabilities. This book shows how to align operational strategy to execute business goals, to design systems to meet customer experience expectations, and to improve performance to increase competitiveness. The emphasis is improving operational efficiency, customer experience, process excellence and productivity. Practical examples and applications are presented for manufacturing, service, and supporting operational systems.

Competitive organizations focus on the usefulness of actions and their beneficial impact. Adaptable organizations do not resist change, rather they embrace it with a willingness to learn and to apply new thinking to solve problems, old and new. They have strong motivation to change behaviors because experience teaches that competitiveness comes from leading rather than following. Change is about relationships and consensus from collaborative teams empowered to apply best practices to improve operational performance.

Customers have high expectations for what constitutes great customer experience. Customer satisfaction is now highly dependent on the interfaces they use to buy, sell, and use products and services. Customer expectations are set based on prior personalized experiences with other organizations when products and services are purchased. Customers now expect seamless personal interactions with organizations as more types of information are exchanged between customers and sellers. From an operational perspective, a balance can be maintained between efficiency and personalization. Digitization is enabling this balance as well as customer personalization.

Product and service design have a direct impact on an organization's operations as well as the products and services that they produce. Understanding the tools, methods, and concepts of design enables process-improvement experts to improve operational efficiency significantly. Design drives a large portion of cost over a product’s life cycle. Design impacts on operations include the amounts of direct labor, materials, capital equipment purchases, inventory investment, and others. The deployment of good design practices will reduce total life cycle cost and time to market and will increase quality and promote a better customer experience. Building a core design competency helps organizations compete more effectively through simplified operations

Digitization is now at the core of process excellence. Applications include master data management, modeling of different data types, RPA, data analytics, as well as classic methods such as Lean, Six Sigma, and other initiatives to be discussed in the following chapters. Digitization enables analysis and modifications to local processes without creating large and expensive IT projects. It also supports the basic process characterization skills associated with process improvement initiatives relative to data collection, analysis and solutions.

Twenty years ago, data accuracy focused on metadata moving across one or a few IT platforms, and applications and analytics were local. Metadata is information about data. Sales and invoicing metadata include account name, company name, first and last name, e-mail address, phone number, billing address, shipping address, city, state, zip code, country, province, postal code, DUNS Legal ID, DUNS Site ID, payment terms, sales representative, territory ID, credit limit, and so on. There are literally thousands of metadata fields across IT systems in large organizations. Actual data are created, reviewed, updated, and deleted in metadata fields. We will discuss metadata data and how it is used to improve end to end operations.

Big Data is driving global transformation relative to the ways we learn, work, and produce products and services. First, the IoT consists of devices and sensors that are connected to provide information on status, to predict performance, and to control connected devices. Currently there are more than twenty billion of these connections controlling global production and services across supply chains. They also offer through automation opportunities to improve efficiency while meeting customer expectations. Second, there is virtualization in the design of almost anything today. This enables physical objects to be created using models and algorithms. These models can also be tested in a virtual environment to identify design flaws that can be corrected prior to production. Service systems can also be simulated to analyze their response to incoming demand and capacity changes or if systems are disrupted. Data virtualization promotes the use of Big Data because it can be organized and presented in easily consumable formats that provide insights to relationships and status for operational decision making and to provide a single source of trusted truth.

Although operational changes are being pushed by digital transformations, but the basis for supply chain operations and improvement remain the same: meeting service-level agreements with enough capacity and reducing lead times and operational cost. Supply chains are becoming more complicated with different transportation modes, changes in laws and regulations, and competition from different directions. In addition to technology, the focus is on enabling the workforce. Team virtualization and diversity are competitive advantages. Understanding where value is created and reconfiguring supply chain design will be the key differentiators in an era of global supply chain digitization and competition.

The concept of value helps identify work aligned with customer experience and important to the business versus work that should be eliminated now or when feasible to do so. Even if a process was optimally designed in the past, customer and business needs change. Over time, organizations may add unnecessary operations for a variety of reasons. These situations require processes be redesigned or discarded. Aligning the things that customers value into a process is a powerful way to confirm we are working on the right things and to identify ways to improve the customer's experience. We discuss the concept of customer value and how to enhance it by applying Lean tools and methods to simply, standardize, and mistake-proof processes.

Shareholder value and productivity are higher in organizations that have the right strategic alignment and can execute operational strategy at a tactical level. Effectiveness and efficiency contribute to higher organizational productivity by allocating and utilizing resources to produce products and services efficiently. They do this by using financial metrics that measure year-over-year productivity improvements, shareholder economic value added, and other financial and operational measures.

Quality is enhanced by application of Six Sigma. The Six Sigma improvement model is designed to dramatically improve performance in existing processes. It was originally conceived at Motorola using a “breakthrough improvement” model and is considered one of the most successful process improvement models ever conceived because it enables a systematic analysis of current process performance and provides a detailed roadmap to identify root causes and eliminate them to improve process capability. It aligns to the voice of the customer and voice of the business to increase quality and productivity and to sustain higher performance. Chapter 9 discusses Six Sigma and how it is applied in practice.

Operational assessments are used to identify projects to improve productivity and competitiveness. They contribute to process excellence. Although they require a commitment of time and resources, a well-done assessment documents potential business benefits and shows how to integrate improvement projects and strategically align them. Assessments also help identify where gaps occur and their impact to key processes. Alternatively, they can be focused on a few functional areas such as manufacturing or distribution and workstreams

The last chapter discusses standards as a basis for evaluation criteria that competitive organizations jointly use, as an industry, to regulate public products and services. They also impact suppliers, customers, and society. Global and local standards exist for almost every product and service sold today. An advantage of industry standards is that they are well written by participants in a competitive environment based on extensive experience. They are a consensus of the best practices for designing, producing, and testing. Depending on how they are written, they promote or inhibit competition. No proprietary information will be included in industry standards, and internal standards will normally exceed industry standards to provide competive performance advantages relative to competitors. Highly adaptable organizations will also be able to meet variations of a standard to satisfy localized preferences. It is important that organizations support the creation and updating of their industry's standards for the benefit of everyone. Standards are continually updated to keep pace with the rapid changes occurring in operations.

This book is written for process-improvement experts, consultants, and other people interested in improving global operations. It discusses useful tools and methods that are proven to improve customer satisfaction and productivity. It incorporates practical information to integrate the tools, methods, and concepts necessary to improve productivity from the

“voice-of” back into an organization’s front office, sales, and back-end fulfillment operations. It brings together leading-edge tools, methods, and concepts that provide process-improvement experts and others a reference to improve their organization’s quality, productivity, customer service, and other operations.

Its major topics include alignment of strategy to the design of supporting systems to meet customer expectations, manage capacity, and improve performance. The fourteen chapters have been carefully designed to show relationships between innovative tools and methods for deploying programs of continued excellence, including Lean and Six Sigma. It takes a fresh approach to building improvement teams, both collocated and virtual. It introduces and integrates from an operational perspective several leading-edge topics. These include customer experience, design thinking, Big Data, IT ecosystems, and others in the context of global supply chains.

The interrelationships between Big Data and classic data gathering methods are discussed within the context of IT ecosystems. Supporting systems in most industries are now virtual and data move through many platforms and applications to support manufacturing and service processes. Understanding the ways that virtual work is done also requires an understanding of how metadata is defined, traced through applications, and governed. Operations are now digitized and rely on automation, artificial intelligence, and related methods such as RPA to do work efficiently and cost effectively. Work teams have also evolved. Global virtual teams are the common way to work, especially for supporting back- office operations. All the important topics from the first edition have been refreshed.

Chapters 1,2, and 3 are organized from a strategic and customer experience perspective. In Chapter 1, the discussion focuses on increasing productivity to compete in the global economy. It explains why organizations that are admittedly inefficient locally can survive in protective environments but, when exposed to external competitive forces, they fail. This reinforces the thought that organizations must promote and augment their core competencies. Chapter 1 also brings together several important concepts relevant for strategic deployment of operations and effective execution.

Chapter 2 discusses change initiatives. It focuses on defining organizational change and executing it in diverse organizations through initiatives such as virtual teams, Lean, Six Sigma, design excellence, supply chain excellence, IT excellence, and others. The major success and failure characteristics of change programs will be discussed relative to these initiatives.

Understanding customer experience enhances operational competitiveness. This is the focus of Chapter 3. The ability to mass-customize products and services that satisfy local needs and value expectations is a competitive strength. Customization for customer segments enables, through technology, enables smaller organizations to dominate their niche and compete effectively with larger and more established organizations. In these competitive scenarios, current investment and infrastructure may no longer be a significant barrier to market entry or have competitive relevance. Chapter 3 provides a firm foundation from which to discuss the more technical aspects of operational excellence that translate the customer experience expectations of the voice of the customer to create new products and services and produce them efficiently for local consumption.

Chapters 4, 5, 6, and 7 discuss tools and methods for enhancing productivity by translating the voice of the customer into high-value products and services. Chapter 4 discusses the translation of the voice of the customer from the external customer perspective back into the design of products and services using useful design methods. These include linking “voice of” with design thinking, concurrent engineering, and design for manufacturing methods to create, design, prototype, pilot, and launch products. The concept of risk and product life cycle issues are also discussed in this chapter. Expanding on these concepts, mass customization is discussed from the perspective of increasing operational flexibility for higher productivity and quality. Additional topics include Design for Six Sigma, design standards, and reducing product proliferation through design-simplification strategies.

The fifth chapter discusses process excellence. Once a product or service is designed, a process must be also designed to produce it. This chapter discusses process modeling, simulation, queuing analysis, linear programming, and work simplification and standardization. Chapter 6 discusses value stream mapping, operational analysis, bottleneck management, and operation balancing, as well as supporting Lean tools and methods. Chapter 7 shows how to calculate productivity, economic value added, and other metrics to measure operational effectiveness and efficiency.

Chapter 8 has been added to this second edition to discuss IT ecosystems prevalent in large organizations, which have hundreds of applications and many platforms to deploy them. These ecosystems use hundreds and thousands of metadata fields to capture customer, supplier, production, financial, and other information needed to produce goods and services and maintain their supporting processes. The impact of the IT ecosystem is discussed in the context of the design of workflow management systems, in design, and in production. These include business process management, business process modeling and analysis, business intelligence, business activity monitoring, and enterprise application integration. Agile project management is also discussed at the end of the chapter.

Chapter 9 discusses the integration of Six Sigma methods to enhance quality, increase productivity and promote operational strategy. The tools and methods range from basic to advanced. Some advanced regression methods were added to this chapter, but the proven approach for executing the Six Sigma initiative remain the same.

Chapter 10 has also been added to discuss Big Data. Big Data requires new data collection and analytical strategies. The growth of data is exponential. The differing types of data (e.g., numbers, text, pictures, videos, voice, etc.) require enormous amounts of electronic storage and specialized analytics. This includes special data conditioning, transformations, and statistical methods for the large databases. Instead of taking small samples from a larger population, we now analyze the entire population (i.e., the entire database).There are challenges, however, in the storage, searching, transfer, and visualization of large databases. At an analytical level, the challenge is to incorporate views of structured data (e.g., organized structure and defined formatting), semi-structured data in which patterns and models are created with analytical effort (e.g., numbers and parsing text), and unstructured data with no definable structure and diverse formats (e.g., text, pictures, voice, video, etc.). New analytical methods are being used to analyze the latter category.

Operational assessments are discussed in Chapter 11 relative to collecting and analyzing information to increase productivity and quality. The management of virtual teams is discussed in Chapter 12 with basic project management methods such as Gantt charts, the program evaluation and review technique (PERT), risk analysis, and other topics. Chapter 13 discusses supply chain excellence and incorporates topics from previous chapter. Finally, Chapter 14 discusses sustaining strategies including standardization and auditing. These include the Supply Chain Operations Reference (SCOR) model, the International Standards Organization (ISO), the Financial Accounting Standards Board (FASB), the Occupational Safety and Health Administration (OSHA), the Federal Drug Administration (FDA), the Automotive Industry Action Group (AIAG), and the Malcolm

Baldrige Award. Metric dashboards are also discussed to help implement effective controls.

I want to thank Michael Sinocchi, my publisher at Taylor & Francis, for providing me an opportunity to update the original operational excellence topics to include the many disruptive technologies that are impacting the translation of customer value through global supply chains. I also want to thank Neelu Sahu who managed the editing and production of this book.

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