Richard Barton

Benchmarking the Key Determinants for Successful Business Growth

Within Manufacturing

Submitted for: PhD

University of Wales, Newport

2013

This thesis was submitted in partial fulfilment of the requirements of the University of Wales for the degree of Doctor of Philosophy.

i

ABSTRACT

Manufacturing companies based in high labour-cost economies must have a well defined

strategy to develop and maintain core competencies in process capability, continuous improvement

and manufacturing best practice to ensure sustainability of the business unit.

This research was undertaken to determine the key enablers of sustained business growth

and use this knowledge to contribute to the body of knowledge around use of business

improvement techniques within a manufacturing improvement strategy. Auditing and performance

measurement techniques have been used in this research to assess the growth and sustainability

characteristics in two cases, who have successfully applied very different approaches to achieve

business growth.

By reviewing existing assessment processes, and the audit output from these two case

studies, this research demonstrates the strengths and shortcomings of the available practices, in

particular the Quickscan tool selected for this research. Methodological improvements are then

proposed, to focus on aligning business improvement activities with the identified gaps between

current performance and customer requirements. The new approach provides a capability to assess

a complex supply chain system against the determinants of competitive advantage, hence achieve

sustained company growth.

This study directly contributes to the body of knowledge around supply chain auditing and

benchmarking, by focussing on novel aspects of customer demand and feedback to improve the

accuracy of the audit recommendations. This contribution is novel both in terms of the ten critical

success factors, and also the resulting methodological improvement. It overcomes weaknesses in

existing business maturity models which seek to standardise performance of a value chain rather

than provide competitive advantage through effectiveness of the complex supply chain.

ii

ACKNOWLEDGEMENTS

The author would like to acknowledge the support, guidance and opportunities provided by both

professional and academic managers and supervisors. Alun Ashcroft at Orangebox, Pam Taylor at

Ortho Clinical Diagnostics, and particularly Andrew Thomas of Glamorgan University have all

provided valuable contribution to the development of this research.

iii

CONTENTS

i. Title i

ii. Abstract ii

iii. Acknowledgements iii

iv. Contents iv

v. List of tables x

vi. List of figures xii

1 Introduction 1

1.1 Background 1

1.2 Research Motivation 3

1.3 Research Objectives 5

1.4 Program of Work 8

1.5 Preview of the Thesis Structure 10

2 Literature Review 13

2.1 Introduction 13

2.2 Manufacturing Context 14

2.3 Company Growth 16

2.4 Business Lifecycle management 19

2.5 Manufacturing Improvement Paradigm Shift 2.2 23

2.6 Business Improvement Techniques 30

2.7 Simultaneously Applying Business Improvement Techniques

with Sales Enhancers to Achieve Sustainability 42

2.8 Aligning the Business Capabilities and Improvement Strategy

to Sustain Growth 44

iv

2.9 Summary 46

3 Extended Value Chain 48

3.1 Introduction 48

3.2 Aspects of Performance Management 50

3.3 Supply Chain Maturity as a Function of Improved Business Performance 54

3.4 Supply Chain Uncertainty 56

3.5 Measuring Supply Chain capability 64

3.5.1 SCOR Methodology 68

3.5.2 Quickscan 70

3.5.3 Mechanism of Quickscan assessment 72

3.5.4 Advances in QSAM Methodology 77

3.6 Summary 78

4 Research Methodology 79

4.1 Research Philosophy Adopted in this Research 79

4.2 Research Strategy 82

4.2.1 Case Study Approach 86

4.2.2 Case Study Selection 88

4.2.3 Implication of Adopting a Case Study Approach 91

4.2.4 Data Gathering Approaches 93

4.2.5 Research Validity and Reliability 95

4.3 Weaknesses in the Research Methodology Adopted 96

4.3.1 Generalisability 96

v

4.3.2 Practical Application of Research 98

4.4 Summary 99

4.5 Research Ethics 101

5 Case Study 1; Orangebox 103

5.1 Introduction 103

5.1.1 The Product Range 105

5.2 Quickscan; Audit 1 107

5.2.1 Data Gathering and Review 108

5.2.2 Product and Process mapping 109

5.2.2.1 Giroflex product 112

5.2.2.2 Orangebox Task Seating 113

5.2.2.3 Orangebox Landscape Seating 114

5.2.3 Audit findings 117

5.2.4 Actions and recommendations 120

5.3 Supply chain activities; BIT Implementation 120

5.3.1 Supply Chain Agility 121

5.3.2 Supply Chain Activity Direct Benefits 124

5.4 Internal activities; BIT Implementation 126

5.4.1 Implementing Lean Methodology 127

5.4.2 Integration of Lean with Product and Process (re) Design

to achieve single unit flow 130

5.4.3 Building on Single Piece Flow to Develop a Business

Unit Pull System 134

5.5 Future Growth and Sustainability Roadmap 137

5.6 Orangebox Summary 138vi

5.6.1 Benefits of Applying an Improved Methodology 143

6 Case Study 2; Ortho Clinical Diagnostics (OCD) 145

6.1 Introduction to OCD 146

6.1.1 OCD Product and manufacturing facilities 148

6.1.2 Company characteristics 149

6.2 Quickscan; Audit 1 151

6.2.1 Data Gathering and Review 152

6.2.2 Value Stream Map 154

6.2.3 Audit Findings 156

6.2.4 Discussion 158

6.2.5 Audit Output 159

6.2.6 Supply Chain Maturity Benchmark 160

6.3 Supply Chain Activities; BIT Implementation 165

6.3.1 The concept of decoupling point 166

6.3.2 Utilisation of De-Coupling Point to Improve Operational Strategy 167

6.4 Internal Activities; BIT Implementation 170

6.4.1 Lean Thinking as a framework for Improvement 171

6.4.2 Using Lean as Part of a Multi-Faceted Approach to Improvement 175

6.4.2.1 People 180

6.4.2.2 Process 180

6.4.2.3 Product (velocity) 181

6.4.2.4 Structure (Complexity) 181

6.4.3 Lean Principles Project 185

6.5 Future Growth and Sustainability Roadmap 190

6.6 OCD Summary 192

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7 Cross Case Comparisons 196

7.1 Required Improvements in Supply Chain Maturity Assessment 197

7.2 Case study Review 200

7.2.1 Orangebox 201

7.2.2 OCD 203

7.3 Synthesis of a New supply Chain Assessment method 206

7.4 Critical Business Characteristics 208

7.5 Case Study Update; Benefits of Implementing BIT to

Develop the Key Determinants 224

7.6 Auditing the Current state; Drivers and Barriers to Growth 226

7.7 Assessment Framework Verification 233

7.7.1 Company A 235

7.7.2 Company B 236

7.7.3 Company C 237

7.7.4 Verification Summary 239

7.8 Enhanced Audit Recommendations; Recommending

Business Improvement Techniques 242

7.9 Summary 246

8 Conclusions 249

8.1 Contribution of this Thesis 249

8.1.1 Practical Contribution 253

8.1.2 Contribution to Personal Development 255

8.2 Reflection Upon Research Limitations 256

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8.3 Further Work 256

8.3.1 Leverage of Findings and Application to Other Companies 257

8.3.2 Testing and Refinement 258

REFERENCES 259

APPENDICES 275

Appendix 1: The Johnson and Johnson credo 275

Appendix 2: Quickscan Archival data Requirements,

questionnaires and interview themes 276

Appendix 3, Summary Graph Data From Orangebox Quickscan 297

Appendix 4: ASME flow chart of Orangebox production process 299

Appendix 5: Orangebox dispatch label 309

Appendix 6: Orangebox development timelines 310

Appendix 7: OCD audit results 312

Appendix 8: History of Site development at Cardiff / Pencoed 319

Appendix 9, Summary Graph Data From OCD Quickscan 321

Appendix 10: KPI and metric investigation from archival records of

throughput and schedule accuracy at the key process steps 323

Appendix 11: Supply Chain Integration Methodology of Local Suppliers into

the Global Orangebox Supply Chain Network 324

Appendix 12: Demonstration of the benefits of buffering a constraint 325

Appendix 13: Assessment of Companies A, B and C, using the new framework 326

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LIST OF TABLES

Table No. Table Title Page No.

Table 1. Research questions, contributions and impact 7

Table 2: Research questions, content and outcomes 9

Table 3: Thesis Structure 11

Table 4: Key Word Search Summary 14

Table 5. Evolution of the Manufacturing Improvement Paradigm 25

Table 6; Improvement paradigm phases and selected tools 27

Table 7. Four Major Business Perspectives for Sustainable growth 37

Table 8. Indicators for sustainable manufacturing 38

Table 9. Benefits of Uncertainty Reduction 63

Table 10. Comparison of Supply Chain Performance Measurement Tools 65

Table 11. Comparison of Supply Chain Performance Measurement Tools

with respect to the Research Questions 66

Table 12. SCOR performance metrics used for maturity assessment 69

Table 13. Four classes of symptoms observed in complex material flow 75

Table 14. The 12 Simplicity Rules 76

Table 15: Applicability of research strategy to research questions 99

Table 16; data Collection Summary for Orangebox 109

Table 17; data Collection Summary for OCD 153

Table 18. Quickscan audit uncertainty scores 161

Table 19. Causes of complexity 183

Table 20. Critical Business Characteristics being enhanced by improvement activities 209

Table 21; Comparing the key determinants and the simplicity rules 214

Table 22. Summary data from review of company ‘current state’ 222

Table 23. Tabulated descriptors of company performance characteristics 232

x

Table 24: Summary data of verification study; ‘current state’vs customer requirement 241

Table 25; Summary answers to the original research questions 253 

xi

LIST OF FIGURES

Figure No. Figure Title Page No.

Figure 1; Timeline demonstrating the research progression 2

Figure 2. A traditional view of a growth ‘S’ curve 19

Figure 3. Business cycle inflection points 20

Figure 4. The Success Syndrome 35

Figure 5. Sales and costs moving in opposite directions, negative profit margin 36

Figure 6. Sales and costs rising steadily to give a constant profit margin 37

Figure 7. Sales and costs moving in opposite directions, increasing profit margin 37

Figure 8. Phases of the business improvement paradigm 40

Figure 9. The business improvement strategy selection process. 43

Figure 10. A list of potential business performance measures 51

Figure 11. The “Vicious” nature of the uncertainty circle 59

Figure 12. Uncertainty circle principle 61

Figure 13. Performing Action Research requires various roles 71

Figure 14; Research Philosophy plotted on Saunders’ et al Research ‘onion’ 81

Figure 15; process flow of the research development 85

Figure 16. Possible distribution of companies according to complexity or maturity profile 90

Figure 17. Top Level Value Stream map of business process components 111

Figure 18. Giroflex Product Map 112

Figure 19. Orangebox Task Seating Product Map 113

Figure 20. Orangebox ‘Landscape’ Seating Product Map 115

Figure 21. A composite product map for all product lines 116

Figure 22; A radar plot of the component uncertainty scores at Orangebox 118

Figure 23; Orangebox uncertainty score, plotted on the Quickscan dot diagram 119

xii

Figure No. Figure Title Page No.

Figure 24. Some of the range of theG64 family 129

Figure 25. Process map of upholstery process using heat activated, solvent, glue 131

Figure 26. Process map of upholstery process using water based glue 131

Figure 27. G64 balanced flow-line setup leading to cellular manufacturing 132

Figure 28. Orangebox lorry / dispatch ordering 136

Figure 29. Flow chart of Orangebox activities 140

Figure 30. Before and after uncertainty scores 142

Figure 31. Diagnostic test components manufactured and assembled in South Wales 148

Figure 32. The OCD product range 149

Figure 33. Scope of the OCD Quickscan 151

Figure 34. The OCD Value Stream map 155

Figure 35. Supply out of phase with demand 157

Figure 36. Compensation for ‘at risk’ stock levels 157

Figure 37. A radar plot of the component uncertainty scores at OCD 160

Figure 38. Position of OCD in the Quickscan database 163

Figure 39. Projected Improvement in Position of OCD in the Quickscan database 164

Figure 40. Fundamental process flow 165

Figure 41. schematic layout of batch management for OCD 168

Figure 42. Flow chart of OCD activities 174

Figure 43. A poster collated to show deployment of goals, projects and themed activities 179

Figure 44. Complexity control levers 184

Figure 45. ToC in context at OCD – QC is the constraint 187

Figure 46. Future state map of the flow part of the production process 188

Figure 47. Radar chart of component uncertainty scores after 2 years of improvement activity 194

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Figure No. Figure Title Page No.

Figure 48. Supply Chain Maturity Levels 199

Figure 49. Model of Quickscan success criteria identification and improvement 218

Figure 50. Model of supply chain assessment to find the most appropriate

improvement activities 219

Figure 51. Modified uncertainty circle to include the new switching function 221

Figure 52. Before and after radar plots of uncertainty in companies A, B and C 240

Figure 53; process flow of the research analysis 248

Figure 54. Chronology of BIT employed as a business improvement strategy 250

xiv

1 INTRODUCTION

1.1 Background

In his first professional position, the author completed several significant projects in the role of

production engineer, targeting reduction in operating cost and lead-time. However, they were not

strictly prioritised, or structured to deliver maximum benefit to the business. A Knowledge Transfer

Partnership (KTP) project was initiated between the company, called Orangebox, and Cardiff University

to provide a framework for improvement, with the benefit of academic guidance to strengthen the

methodology. On seeing the improved speed of change, scale of benefit achieved and subsequently the

return on investment, the author has been motivated to take this further and find the most effective

methodology to manage improvement, which a company can sustain through business growth.

A key aspect of this approach was to undertake an assessment using the Quick Scan Audit

Methodology (QSAM), which served to highlight tactical areas for improvement in the extended value

chain. By partaking in this, the author was able to appreciate the value of a structured assessment

technique to highlight the most appropriate improvements. This further fuelled the motivation to find

an intuitive method to assess business needs and align the improvement efforts accordingly.

The author then worked for Cardiff University, undertaking both research and practical work,

which served to provide depth of knowledge around the process and context of QSAM, performance

measurement, value chain auditing and improvement strategies. In the process of working closely with

at least 20 companies, and visiting over 100 more, the author gained a detailed insight the adoption of

’best practice’ and was especially interested to see that companies were continuously seeking to

maintain currency and catch up with the leaders in manufacturing industry rather than establish their

own bespoke path to improvement which would set them apart from the competition. It became

evident that managements fads were creating “me too” companies with little differentiation. With the

1

benefit of this contextual sensitisation, the need for this research was clear, and the research process

was developed to deliver contributions to knowledge on the optimisation of business improvement,

focussed on delivering company specific improvement strategies.

The chronology of the work behind this thesis is shown in figure 1 below, showing a high level

time line, area of work and the significant learning points.

Timeframe Where Working

Aspect of work Significant learning points

2000 - 2005 Orangebox Industrial engineering

Implementing lean, agility and other BIT

2

KTP Motivation for improving the management of BIT.

Developing ideas and motivation for research.

2005 - 2010 Cardiff University

(engineering)

Research and Commercial work

Research & literature review; BIT, benchmarking and assessment techniques.

Fieldwork with Orangebox.

(business school)

QSAM studies Assessment techniques are applicable to every business context; this research has a strong methodological contribution.

Fieldwork with other case study companies. 2nd QSAM with Orangebox.

Fieldwork & QSAM with OCD.

Comparison of cases.

2010 - 2013 OCD Establish KTP Develop learning from cross-case comparison.

Re-visit the literature for recent advances.

Synthesise the new assessment framework.

Review case studies to validate assessment framework and criteria

Process Excellence Undertake 2nd QSAM in OCD

Application of the new framework in OCD to condense improvement cycle-time.

Review the original research requirements and develop contributions to knowledge.

Figure 1; Timeline demonstrating the research progression.

The richness of data from the case studies provided a perfect opportunity to develop novel

contribution to existing knowledge both in content and methodology, and involved investigation in a

variety of areas; competitive advantage, growth enablers and inhibitors, strategy, business improvement

execution and especially benchmarking of the current state to contextualise each of the former themes.

Therefore, the output of this research process had to be distilled down to a smaller number of research

aims and objectives, relevant to both the academic community and practitioners.

1.2 Research Motivation

To achieve a successful outcome, this research has to deliver both an academic contribution to

knowledge and also a tangible contribution for practitioners. In this case, a tool that companies can

utilise to enable company growth, especially in the SME sector. 3

“today’s SMEs could be the major corporations of tomorrow” (Lee et al, 1999)

SMEs are both a vital part of the global economy and a rich source of information for

researchers. Both case study companies in this research started from humble origins less than 50 years

ago. Having grown in size and turnover, they have each experienced the changes required to support

customer demands and design a capable value chain. The two cases have since diverged in terms of

their route to continued sustainability but in many ways have a common generic background and many

shared values. This work will identify the ingredients for success and provide a framework upon which

other SMEs can develop their own improvement strategy in a shortened timeframe, learning from this

researcher’s experience. This understanding is also the key to ensuring that the proposed output of this

research is applicable to as wide a cross-section of the manufacturing community as possible.

The importance of SME contribution to the manufacturing sector is frequently reported; SMEs

together accounted for 99.9 per cent of all enterprises, 59.8 per cent of private sector employment and

49.0 per cent of private sector turnover in the UK in 2009 (BIS statistical press release, 2010). Successful

Small to Medium Enterprises (SMEs) often create a competitive advantage by developing one particular

competitive or disruptive technology and, as a result, achieve consistent improvement in economic

performance. But this is a competitive environment with high turnover of product, staff and best

practice, so any tool that can provide a sustainable competitive advantage is well received.

There are significant numbers of individual case studies, considering examples of successful

SMEs who are flourishing even in today’s competitive manufacturing environment by developing core

competence (Simpson et al, 2004) in specific aspects of management best practice and advanced

technologies, e.g. by means of new technology implementation or a best practice adoption such as Lean

Manufacturing (McLarty, 1998) (Otero-Neira, 2009) (Humphreys, 2001). However, as mentioned above,

this cannot be developed in isolation; global competition is forcing manufacturing companies to reduce

4

operating cost while simultaneously adding value, which has given rise to a variety of improvement

paradigms designed to successfully balance the needs of these improvement strategies.

While research into SMEs can be considered important, with a clear focus on cause and effect of

a particular phenomenon, this also gives rise to some criticism. One such argument relates to the

narrowness of focus in the research, i.e. studies’ focus on few variables, and a lack of a holistic

approach, which often causes the findings of previous studies to appear contradictory (Pasanen and

Laukkanen 2006), or superficial in terms of understanding the broader drivers of (O’Regan and

Ghobadian, 2004).

Further to this, the studies undertaken rarely follow up on the proposed improvements,

conceptual models or academic findings. The author suspects that this may be principally due to the

effects described above preventing clear identification of the influencing factor, but also we must

consider the rate of change in the SME characteristics; high growth SMEs often develop next

generations of process or practice which overtake the original study, while many other small companies

fail to secure market share or support customer demand so disappear entirely. Thus, having gained an

understanding of the environmental and macro level factors, this study must consider the specific

individual growth enablers and associated tools and techniques to trace improvements back to a

particular driver. These tools have previously been ‘bundled’ into improvement paradigms, rather than

selected individually as appropriate, due to the lack of framework for accurate tool selection.

Evidently, then, the motivation is to clearly understand the critical business factors which are

relevent and applicable to the huge number if SMEs in the manhufacturing sector, and produce a

framework which individual companies can use to create their besoke improvement strategy, making

them stand out from the crowd rather than playing catch-up.

5

1.3 Research Objectives

Drawing from the benefit of having detailed academic and professional experience in two

companies, the research objective is to contribute to knowledge in the area of improvement of

manufacturing company performance. In order to accurately generate and appropriately present this

contribution, the individual components must be considered.

Firstly, company performance itself can be defined as the results achieved by undertaking

activity; effective activity yields good performance. For a manufacturing company, effective activity

means meeting customer demand in terms of cost, quality and delivery, to a degree that both satisfies

the immediate demand and perpetuates futures orders through an effective value creation process and

a reliable material control process. Improvement, therefore, relates to the implementation of tools and

techniques to deliver secure finances, sustainable growth and the means to support it. Improvement

means change, and change can relate to any aspect, from cost incurred by adding the value, the

response time to customer signal or the capability of the process to accurately meet expectation.

Secondly, the overall supply chain perspective can be divided into two parts; supply chain

management and supply chain assessment. Supply chain management refers to the management of

operations undertaken by all parties involved in creating and supplying an item, transforming it from its

most basic components to its form at the point of final consumption. All supply chains are different and

require a commensurate degree of management. In a manufacturing supply chain, the flow of material

and cost being incurred at each point of contact with the product are key variables affecting

performance. Hence, the supply chain assessment aspect is essential to understand current

performance, and identify a route for improvement. Supply chain assessment can be either absolute or

relative; benchmarking against standard criteria establishes a base level of performance, which is a

popular theme of research, however relative benchmarking is a way to identify competitive advantage.

6

This is more difficult to model and is the strongest academic motivation behind this research. To identify

the shortcomings of existing knowledge and practice in these areas, hence identify the space for

contribution, published theory has been reviewed in some depth. This is presented in chapters 2 and 3,

dedicated to the improvement of performance and supply chain management and assessment topics

respectively.

The progression of the research therefore requires several key components to successfully

develop contributions to knowledge in the areas of benchmarking and effective application of business

improvement techniques. To this extent, the phases of the research design, described above, have been

aligned to the research motivation in three main aspects:

A review of Business Improvement Techniques (BIT) being applied in companies, through their supply chains, and an evaluation of the success of such programmes.

Determination of the key determinants for effective improvement, and a standard framework against which the symptoms of these determinants can be assessed.

Development of an enhanced supply chain auditing technique, for a supply chain system, to incorporate strategic aspects of growth and sustainability which can be used and replicated in a variety of complex supply chain systems

As this research has progressed along these lines, it has become clear that the novel approach to

customer-centric process improvement is a strong contribution and prompts many new research

questions for future consideration, so it is important to stay focussed on the objectives of this work.

Table 1 summarises the core questions and contributions which have been used to maintain focus over

the course of the research. These themes recur throughout the thesis which is structured to present the

research findings in some detail and demonstrate how they have shaped development of the novel

contributions of this work.

Table 1: Research questions, contributions and impact.

7

Research Question Novel Contribution Significance and Impact

RQ1. What is the effect of implementation of business

improvement techniques (BIT) on performance of

manufacturing companies?

Ten key business enablers, which exist to some degree in all enterprises, determine the

effectiveness of BIT utilization. This is biased by customer requirement and current

company capability.

This provides a list of criteria which bridges the gap between

the academic theory behind best practice, and the aspects of

business development which practitioners are able to

understand in practical terms.

RQ2. How can companies identify the necessity for specific

improvements in an extended value chain context?

A framework of assessment for both current state (company capability) and future state

(customer requirement) of the critical enablers for business

success.

This is a significant improvement on traditional assessment techniques, which are not

capable of identifying the most appropriate BIT for a company to

employ.

RQ3. How can a company prioritise required

improvements once they have been identified and implement them for maximum return on

investment?

A switching strategy is required to process changes in market demands and re-direct efforts

between functions of cost reduction, sales enabling and

flexibility/agility.

The novel switching strategy describes a way to identify (and respond to) the most important

factors currently affecting company performance.

Having gained a good understanding of manufacturing technologies, operations management

paradigms and business measurement and improvement practices, the author has developed these

research questions in order to close the loop between current performance, improvement

implementation, and market reaction; if it is not possible to induce a market reaction, why would a

company wish to invest capital and resource to change its working methods?

To this end, it is essential to gain an overview of this entire process. Literature review and

fieldwork have exposed the author to a variety of snapshots and summary case studies which serve to

highlight a benefit derived from undertaking a particular activity, but never provide the depth of

knowledge to understand why that action was taken and how it has yielded a sustainable benefit.

8

Therefore it could be assumed that it was by chance, and that having seen it work once, the same

activity should be emulated or extended for further benefit in the future, surely something that needs to

be qualified and adapted for optimisation!

1.4 Program of Work

The following table 2 shows how the research and fieldwork were aligned to meet the research

objectives and answer the research questions. The fieldwork is the essential ingredient in terms of

supporting the research outcome, so the process needed to be vigorous and the assessment needed to

be robust; the first step was to understand how improvement is currently being achieved and measured.

The next step was to undertake the case studies in the total complexity of their supply chain,

understanding how differentiation can be achieved. It therefore became clear that longitudinal case

study was an essential part of this research activity, which is discussed in some greater detail later in the

research methodology section, chapter 4. Two case studies have been developed; firstly the Orangebox

study and secondly a case on Ortho Clinical Diagnostics (OCD), a company in which the author has

recently started employment (2009). Given that both cases have experienced significant and continuous

growth, both are useful examples to examine how the operational aspects have been managed and

developed to deliver customer requirements and meet increasing volumes. As mentioned, A KTP

project has been undertaken to directly support improvement projects and both initial and follow up

Quickscan audits have been completed. Thus, there is a wide variety and richness of data from a wide

cross section of business functions to ensure a complete picture has been assimilated.

Table 2: Research questions, content and outcomes.

Research Question Research method and literature Process and outcome

RQ1. What is the effect of implementation of business

improvement techniques (BIT) on performance of

Literature review of BIT; the changing manufacturing improvement paradigm.

Research into published case

Fieldwork with the university to gain a broad overview of how

businesses adopt the improvement paradigm.

9

manufacturing companies? studies and ‘real life’ examples observed first hand.

Output was a detailed understanding of business

measurement and assessment techniques, yielding a robust

research methodology utilising reliable measurements.

RQ2. How can companies identify the necessity for specific

improvements in an extended value chain context?

Literature review of the supply chain complexity.

Research through determination of current state, application of

the quickscan methodology, and analysis of deviations from the

expected outcomes.

Working with the case companies, observing how they could not use a standard tool to

differentiate themselves, so adopted a wider range of

improvement tools for business benefit. Deriving the critical

factors driving company growth.

RQ3. How can a company prioritise required

improvements once they have been identified and implement them for maximum return on

investment?

Literature review of practices supporting specific BIT

implementation; strategy, leadership, business growth trajectory and sustainability.Research followed to apply learnings to the case study

companies.

Undertaking the second quickscans, identifying the

deviations between cases, and creating a model to explain how

improvement is sustained through growth cycles and

changing business environments through both the initial business

assessment framework, and subsequantly by means of a

switching strategy.

By considering the theoretical literature related to deployment and implementation of

improvement practices, and observing the discrepancies in each of the case studies from this theory, the

improved audit methodology can be synthesized to close the gap and develop a novel contribution in

the methodology itself. This is a key theme and is expanded in some detail in the following chapters.

1.5 Preview of the Thesis Structure

Following this brief introduction, the critical literature review summarises the relevant literature

existing in the themes of the research objectives described above; performance improvement and

supply chain assessment. The performance improvement aspect includes the context of operations

management in the manufacturing environment, especially in context of SME activity as this makes up

10

the majority of the UK’s manufacturing sector (the target audience). Further to this, both case studies

have sustained growth through the lifecycle of an SME and there are many findings that need to be

leveraged between small and large companies in order to create a more balanced assessment as part of

this research.

The review discusses how the design and implementation of improvement programs has varied

over recent generations of paradigm shift; targeting RQ1. It then describes the newest concepts behind

economic sustainability and how this can be achieved. Underlying this, SME growth and business

lifecycle management are considered, before going on to look at how the business improvement

paradigm is practically implemented in a manufacturing environment. In order to understand the level

of improvement achieved, it is important to take a benchmark or audit approach to understanding the

current situation (McAdam and Kelly 2002), so the various measurement principles and systems

available are considered; targetting RQ2. This analysis leads into the research methodology and what

apprach is adopted in the case study fieldwork and the subsequent analysis, each described in the

subsequent chapters outlined here in table 3 below.

Table 3: Thesis Structure.

Chapter Content Significance

Chapter 2

Literature review of business improvement;

what is it, when do companies use it and what

does it do fir them.

Manufacturing improvement paradigm shift, fad vs management strategy, and how it has developed over

recent years extending the single roadmap of improvement against which a company must assess

itself and progress as prescribed.

Chapter 3

Literature review of the supply chain complexity.

How it can be assessed and used as a more intuitive

way of identifying tangible improvement strategies for

the ‘central’ company.

Identifying assessment techniques appropriate to this research, discovering that existing techniques are

linked with the limitations of the latest praradigm shift but taking significant learnings that will lead to the

identification of the critical success factors.

11

Chapter 4

Research methodology; how and why a case studt

approach is used in this research.

The research methodology is central to aligning the knowledge gained from literature, the case study

findings using the audit tecnique and the findings that describe a new assessment framework and non-deterministic approach to supply chain auditing.

Chapter 5 Orangebox

Why the supply chain perspective had to be adopted straight away and only after this could internal benefits be found through BIT implementation; in this case lean

and six sigma.

Chapter 6 Ortho Clinical Diagnostics

Why the supply chain perspective and control aspects were largely constrained but essential in deriving the greatest opportunities to meet customer demand in a

more effective way; in this case through a balanced scorecard, achieved using lean and theory of

constraints.

Chapter 7 Cross-case Comparison

Creating a framework using the common ingredients from the case studies and literature research to generate a customer-centric, non-deterministic

assessment technique to finding the improvement strategy that will make a company stand out from its

competition.

Conclusions are presented at the end of the thesis, which highlight the various contributions to

knowledge (and methodological improvement) made within this thesis, along with the impact and

significance to both academia and practice. This chapter also reflects upon the methodological

limitations inherent within the study, and culminates in a proposal for future research and development.

12

2 LITERATURE REVIEW

2.1 Introduction

This section is devoted to review and critique of published works, and presentation of findings

to support both the nature and methods of investigation covered in this research. The following chapter

describes the literature relating to performance improvement in a manufacturing context (RQ1). Initially

explaining the characteristics of business growth, and how lifecycles can be managed to optimise this

growth (RQ2). It then goes on to look at the concept of a manufacturing improvement paradigm,

highlighting the range and impact of business improvement techniques that have been utilised in recent

times, and the continuous evolution of the paradigm over the span of many years. It is seen that this

evolution consists of a number of time periods in which a particular toolset was recognized as an

initiative or practice in its own right. These tools change and the review presents an improvement

roadmap, referencing the relevant tools in context of the business growth cycle and how they can be

selected to support the changing business strategy. Finally, the aspect of integrating people process and

strategy to a holistic business plan is outlined, upon which the thesis develops the assessment and

prioritization tool in response to RQ3.

Throughout this research the author has referenced a number of key word searches,

summarised below in table 4. This key word search has proven to yield a wide variety of results, many of

which were devoted to development of specific technologies. Early attempts to screen these were seen

to reduce the overall relevance and applicability of the search results. Hence, the wide range of ‘hits’

was seen to be preferred and a lengthy manual process of screening and selection was preferred. This

also provided a valuable insight to the trends and preferences in the wider field of research

methodology.

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Table 4: Key Word Search Summary.

Subject Key Word Search Journal Databases

Business Growth

Manufacturing StrategyCompany Lifecycle

Lifecycle ManagementManufacturing Growth

Emerald Fulltext,

JStor,

Science Direct,

Scopus

and

Google Scholar

Business Improvement Techniques

Business Improvement TechniquesManufacturing paradigm

Manufacturing Improvement

Supply ChainSupply Chain DevelopmentSupply Chain Management

Supply Chain Complexity

Business Assessment

BenchmarkingBusiness Performance Auditing

Supply Chain AssessmentManufacturing Business Performance

Research Methodology Research MethodsCase Study Approach

2.2 Manufacturing Context

UK manufacturing industry is experiencing significant changes in its strategic and operational

systems (Williams 1995). The competition posed by low labour cost countries along with the mass

customisation requirements of a much more consumer conscious society is forcing UK industry to

become increasingly leaner and more responsive to customer requirements (Thomas and Pham, 2004).

It is clear that before aspirations to growth can be realised then a robust business strategy and value

adding capability must be established. In order to achieve this, UK manufacturing industry must be able

to develop and introduce increasingly sophisticated products more quickly and frequently to the

marketplace through reduced product design and development times. Various recent reports highlight

the need to develop new technologies, products and management practices in tandem to compete (UK

14

DTi Foresight panel report into Manufacturing 2020, 2000) (‘FuTMan’ report, 2000) (NRC’s ‘Visionary

Manufacturing Challenges’ report, 1998). This must also be supported by an ability to rapidly

reconfigure their manufacturing systems, ensure high product quality and low manufacturing costs. This

is not a new phenomenon and companies have strived to improve over the last 50 years to remain

competitive (Pham and Thomas 2005).

This supports the aims of this research, stating clearly that manufacturing capability is a basic

expectation and that there are many complementary capabilities that must be developed according to

customer priority, but are (in varying degrees) all critical to meeting the six grand challenges for

manufacturing in 2020. Simply following the trend will only give a company ‘qualifier’ status in the

market, when they need to be looking to differentiate themselves and become a market leader. This

research focuses on finding the way for a company to employ business improvement techniques (BIT) to

achieve a manufacturing capability suited to the overall business strategy and enable it to “stand out

from the crowd”. Simple to state but difficult to achieve, the paradigm of manufacturing improvement

has been evolving over the course of the last 50 years to try and achieve this aim.

The following sections firstly review the literature around company growth and how growth

cycles can be managed in order to draw out the business strategy going forward, which is done at a top

level and then broken down to some supporting lifecycle management. The subsequent sections then

take a top level view of the paradigm of manufacturing improvement, and go on to break these down to

their constituent practices. These aspects of literature review then come together to align the business

needs and the BIT options available to achieve them, culminating in figure 8 shown a generic growth/BIT

maturity curve.

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2.3 Company Growth

“Just as a sprinter or a race-car driver wants to go faster, and a pole vault champion wants to

jump higher, businesses around the globe are striving to get bigger.” (Strategic Direction, 2005)

To identify and incorporate the relevant approach to a business improvement strategy, it is

necessary to understand the distinct areas of; requirements for growth, characteristics of current

business performance and aspects of manufacturing strategy required to close the gap. The detail

behind these aspects is discussed later, but the first step is to understand the company’s drivers for

growth; is it faster, bigger, more flexible or any other specific characteristic?

In order to meet the requirements of the manufacturing environment of the future, and remain

economically sustainable, a company must develop from a basis of innovative technologies that will

provide competitive advantage through products and processes that meet the Quality, Cost, Delivery

and Flexibility criteria (Dale, 1996) (Vernadat, 1999) (Putterill et al, 1996) (Burgess et al, 1997) (Small,

1999).

A new manufacturing business could identify the opportunity for growth in a variety of potential

routes. One such example is sustained growth in its own right such that it directly competes with major

corporations and by virtue of its core values succeeds in increasing market share. Alternatively, the

company could value its proprietary knowledge and target merger or acquisition (M&A) for growth or

security. Or there may be a more suitable hybrid model for growth utilising contracts, franchise

opportunities or strategic partnerships. Whichever route is chosen, there is a clear threat from the

incumbent market-leading companies, who could recognise the early potential of a successful SME and

restrict growth of its particular product or service with a view to reduce sales and either hinder growth

or actually cause the company to become unsustainable in that market. This necessitates either a 16

strategic move to another market or customer base, or a further advance in technology/capability to

provide new impetus to product sales. Either way, SMEs will need some capability in company lifecycle

management, recognising growth enablers and inhibitors and responding in a timely and appropriate

way.

There are a variety of factors which promote growth in SMEs. Research by Morrison et al (2003)

shows that company growth is a function of mainly behavioural factors such as convergence of owner-

manager ambitions, intentions, and competencies, and that the flexibility to change, and maintain focus

on their unique selling points (USP), provides the mechanism for growth. The attitudes, approaches,

perspectives and priorities of those who succeed ensure they win the battle to change, break free of

past constraints, re-invent and grow (Coulson-Thomas, 2005). Sum et al (2004) propose that companies

are often able to secure enough business to support growth by maintaining three basic characteristics;

being all-rounders, being efficient innovators, and maintaining some element of differentiation. Further

to this, O’Gorman (2001) found that growth (measured in terms of turnover and employment levels)

depended on two major managerial choices; where to compete and how to compete. O’Gorman (2001)

also claims that when measured over time, these became less significant, concluding that neither

industry structure theory nor strategic choice theory gives sufficient explanation for high growth in the

SMEs studied

Contrary to this, there are a variety of studies that expose weakness in SME capabilities which

often come to light in the context of growth and expanding capacity and capability. Cagliano et al (2001)

find that despite having good technical capabilities and flexibility, a lack of alignment with wider concept

of world class manufacturing prevents realisation of many SMEs potential. Laforet and Tann (2006) go

on to explain how a lack of corporate culture, structure, effective use of technology, and analysis of

competitors can each prevent stabilisation of the growth that can be achieved. Other such factors

commonly include: slow company learning, lack of people development and networking, regulations and 17

non-compliance, poor process control and planning, and especially a lack of customer focus and

relationship management (Jayawarna et al 2006) which are all considered core competencies of larger

companies or corporations. Finally, we must include the common (but often unstated) reason for lack

of growth is that not all SMEs want to grow (McMahon, 1995). Risk aversion or lack of ambition often

ensures that many companies who could potentially establish a solid customer base do not wish to

invest enough time or money in customer service infrastructure or in the development process, such

that the company doesn’t have the fundamental novelty or competitive edge to secure continued

growth in business.

In summary, reasons for growth, and reasons for failure to grow are widely varied, and often

contradictory because of the reasons stated in the above section 2.2; that research is usually case

specific and/or non-holistic in terms of considering company scope and context. All of which serve to

remind the reader of this research than there are a range of critical success factors, or key determinants,

defining a company’s potential to succeed. Also that the correct assessment of these determinants leads

to appropriate positioning on the improvement paradigm curve, and that this is essential to correctly

define the future improvement roadmap. We can also now appreciate the significance of the route to

company growth so far, and the fact that the current operating parameters are usually mitigating some

specific environmental factors and are not to be dismissed or ignored.

There are clear parallels between the company lifecycle and the improvement paradigm

roadmap which leads this research to investigate the relationship, with a view to aligning the

prioritisation of tools with the projected business benefit. His will ensure that a company can see how to

do the right thing at the right time. To do this, the literature around active management of the company

lifecycle has been considered and is shown in the next section, before each of the significant eras of the

improvement paradigm roadmap have been broken down and described in the following section. This

analysis culminates in the aligned company growth model shown in figure 8.18

Time1. Existence

Success / growth

2. Survival

3. Success

4. Take-off

5. MaturityRe-invention

Decline

2.4 Business Lifecycle management

There are a variety of proposed company growth models with associated lifecycle stages such as

Greiner (1972), Scott and Brue (1987) and Adises (1989) (all Cited from Hill et al, 2002). Typically, these

explore the cycles of activity initiated by sequential phases of problems. As an example, Churchill and

Lewis’ (1983) five stage model consists of the stages shown in figure 2 below.

Figure 2: A traditional view of a growth ‘S’ curve.

This is a view supported by Kajanjian (1988) who describes the computer industry as a good

example stimulant for technology led start up companies who relate activity to the dominant problem

being experienced. The future of the start up company subsequently depends on the ability to adapt

and overcome the pertinent problems. Ahmed (2002) demonstrates that, at the point in which growth

slows (a wilderness company), there are two alternative routes beyond this; decline or re-invention,

which are also shown in Figure 2.

Carsen et al (1995) take a slightly more qualitative view of proposing that risk, uncertainty and

chaos, are proportional to the entrepreneurial decision makers’ input (and subsequent reward). i.e.

initially high risk requires high effort and gets low reward, later in the lifecycle risks are lower, easier to 19

manage and benefits are significantly higher. This more analogue scale also seems appropriate for the

SME context, and could be further extended to consider the outliers who manage to minimise the high

risk scenarios (or those that never seem to mature to the low risk phases).

Hanks et al. (1993) (cited from McMahon, 1995), derive a more generic life-cycle model with

four development stages, which correspond to the basic blocks of many subsequent models: start-up,

expansion, maturity and diversification. Plus two disengagement, or arrested development, limits; life-

style and capped growth. This is validated in some respect by practitioner evidence. Conroyross business

advisory consultants, among others, propose an ongoing growth moving toward merger as per figure 3

below.

Figure 3; Business cycle inflection points. (Source: Conroyross Business Advisory Consultants)

However, again there is a weakness in categorising any chosen company in these phases as

there are no agreed criteria to characterise a company for each phase; a detailed case study is required

to understand the company’s situation which, as section 2.2 describes, is published on a case by case

basis. As a first step to identifying the overall maturity, there are several alternative/component cycles

from which it is possible to identify the relative maturity of the individual business improvement

activities.

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2.4

Product lifecycle management; at the most basic level, it is essential that key product(s) has both

development opportunities and also a succession plan to maintain competitive advantage. Increased

R&D spend can stimulate improved product pipeline but will immediately highlight weakness in other

areas of the business such as process implementation, product realisation or business management.

Knowledge; SMEs are often criticised for not investing time and effort in a training programme, relying

on ad-hoc, superficial training to cover emergency shortage of specific knowledge. A successful SME

which anticipates growth must ensure that core competence is supported by soft skills training such as

business administration, communication, operations management. As an example, technology

implementation has been seen to fail on many occasions without sufficient supporting skills (Thomas et

al 2008).

Innovation; the first innovation, which launched the firms, is usually the result of a knowledge base

internal to the company, from which the company has gone on to develop an approach to product

development that could be called “knowledge-embedded solutions” to customers’ problems (Davenport

2005). Therefore the rate of innovation must be maintained by means of close relationships with key

customers, such as SMEs who are largely dedicated to a close working relationship with OEMs or first

tier suppliers, to improve competitiveness. This is especially prevalent in the automotive and aerospace

sectors where cost criticality is driving the close relationship. This view is supported by Day (2000), who

suggests that insufficient time, money or inclination to conduct customer cross-section investigation is

often a weakness. Acs and Audretsch (1988) describe how the rate of innovation in small companies is

tiny compared to that of large corporate companies (more than 1000 employees). This phenomenon can

be qualified in a bit more detail...

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“Clockspeed” (Fine, 2000); is a measure of the rate of innovation in a company, which is a function of

the company size, re-configurability and ability to design and deliver new product. One example of a fast

clockspeed presented by Fine is the IBM example of delivering increasingly more capable personal

computers at an increasing rate. This is appropriate to the market and yielded significant benefits (albeit

for the 1st tier suppliers Microsoft and Intel). Conversely there are many examples of low clockspeed

companies with little innovation but a dependable product such as the medical device industry which is

hampered by regulatory controls, and results in businesses that do not process change and

improvement at the same velocity, but again this suits the market and none are heavily penalised for

this. The key issues arise if a company cannot sustain a demanded rate of change, or manage instead to

deliver innovation to the customer faster than the competition, using clockspeed as a differentiator in

the market.

Merger and acquisition has been a variable trend, often subject to the pressures of economic climate

and relative sector strength. The 1980s saw the biggest and most sustained wave of merger activity,

estimated to have affected 25 per cent of the US workforce (Fulmer, 1986). At current scale, merger is

now “increasingly being recognised as a longer term process of organizational adaptation and transition

with more wide-scale implications for all those involved” (Cartwright and Cooper 1995). Hence, there

may also be an element of maturity to cultural development in a business cycle, which would prove to

be a threat to many SMEs. Choueke and Armstrong (2000) studied the abstracts of 200 articles related

to corporate culture and found no reference to SME in any of them, but argue that culture can be easily

established as people learn about internal and external business environments, and combine this with

their own experiences in a progressive way so as to capture the learning experiences

In summary, new and SME companies experience a range of problems through their development

and business growth. How they respond to this determines how fast they can progress up the growth

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curve. Identifying the key determinants for success in the business and developing a business strategy to

deliver them sounds straightforward but is difficult to achieve given the challenge of prioritising the

many business demands. Hence, the research questions RQ2 and RQ3 are well placed to focus on the

process of determination and improvement of these factors using many of the considerations identified

above.

However a sound business strategy does not stand alone and requires a supporting toolbox of BIT

from which the relevant practices and techniques can be selected. RQ2 and RQ3 rely on the knowledge

and expertise gained from answering RQ1; What is the effect of implementation of business

improvement techniques (BIT) on performance of manufacturing companies? So, the next few sections

review the literature in this area and outline the various benefits associated with the various BIT.

2.5 Manufacturing Improvement Paradigm Shift

Paradigm shift can be defined as the evolution of a concept or theory to meet changing

objectives. In this case, the change of improvement techniques to achieve competitive advantage

through low operating cost, repeatable quality and responsive delivery. The winner in this race is the

company that can accelerate the rate of paradigm shift in their own company.

Starting at the beginning, the grandfather of manufacturing improvement is Industrial

Engineering (IE) with its focus on availability, reliability and throughput, while today the sector is

focussed on time-compression, elimination of variation and single piece flow. This is a clear indication in

simple terms that we are progressing along the same lines and that the change is a shift and not a series

of step-changes or re-inventions.

Further shift or variation has been induced by the ‘translation’ into new sectors and industries,

e.g. application of lean manufacturing techniques being applied to service functions which require some

degrees of flexibility and agility. Subsequently, practitioners and consultants alike have created new

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frameworks and strategies, which are subsequently touted as ‘new’ paradigms such as Business Process

Re-engineering (BPR), to mix and match the various tools and aspects and find the ideal recipe for

success (Spell, 1999) (Towill, 2006). It is commonly discussed that the various aspects of process

improvement, under the banners of these paradigms, are all focussed on the same outcome of

improving operational effectiveness. There are however significant waypoints in the paradigm shift,

each of which are considered throughout this review, demonstrating how one paradigm can morph into

another as an additional success factor is identified.

Similarly, research and publication has shifted over time, charting progress of Western

manufacturing characteristics from an imitation of the Toyota Production System (TPS), toward a focus

on the extended enterprise business requirements (Watson, 1994). A summary overview is presented in

table 5, the source data for which is well established in existing literature reviews such as

Sanchez&Perez (2001), Burgess (1994), Dangayach & Deshmukh (2001), Bartezzaghi (1999) and Ramesh

& Devadasan (2005). In accordance with the chronology of the paradigm shift, we see that the seminal

publications are early in the era of popularity of that practice, hence the references listed in table 5

below may appear to be old or outdated but they are the closest to the ‘definition’ of that era in the

paradigm shift itself. This is an issue that other authors have encountered (Beer et al, 2005) (Garcia-

Sabater, 2011) (Anand et al, 2009) who have published works with 50% of references well in excess of

ten years old, many of which are dedicated to organisational development, manufacturing strategy

principles, or impact and limitation of improvement paradigms; sharing many aspects of the motivation

behind this research.

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Table 5. Evolution of the Manufacturing Improvement Paradigm.

Era Paradigm Phase Objective Characteristics Academic

reference

1970s IEEffective throughput,

Organisational structure

High WIP, Stock productJirotka et al, 1992.

Forester, 1975.

1980s TPS Lean manufacturing JIT, Waste reductionShingo, 1981.Schonberger,

1982.

1990s BPR Optimum process selection

Increased agility,frequent change

Davenport and Short, 1990.Hammer and

champy, 1993.

2000s Six Sigma Reduced variability Increased quality,complex systems

Pande and Holpp, 2001.

Perona and Miragliotta, 2004.

2010s Sustainability Durability, Responsibility

Corporate strategy,Extended value chain

networkCompany fitness

Pham and Thomas, 2005.

O’Gorman, 2001.McCarthy, 2002.

It is occasionally difficult to separate one era in the paradigm shift from another; at what point is

a ‘new’ phase recognised? Towill (2006) suggests that there are five phases between an idea being a fad

and a paradigm or way of life. Assessing all improvement ideas on this scale would be a thesis within

itself, so for the purposes of this research, the author has limited the breakdown to the indisputably

significant waypoints shown in table 5. Miller (2004) takes a more pragmatic view to differentiating

between “a fad and a classic”, using eight characteristics of a fad to define the difference.

Regarding the scope and scale of the change, Kotter (1995, 1996) clearly distinguishes between

a transformational effort and a continuous change. A transformational effort adopts a three stage 25

process; defrost the status quo, take actions that bring about change and anchor the changes in the

corporate culture. Without these formal stage gates a change in a company performance is less

distinctive, less self-contained and frankly less effective. The same can be said of the change in the

improvement paradigm. For example, the TPS came about from a well documented process of

introducing variety to the concept of mass manufacturing from Henry Ford’s days. Kotter (1996) also

outlines an eight stage process of delivering change, explaining that if any of the eight stages are missed

then the impact is slow and often ineffective. Importantly, the last stage is to “Institutionalise new

approaches”, and this is a good acid test for identifying some of the significant practices in the timeline

of the improvement paradigm. When speaking to people in the manufacturing sector, can you mention

a moniker such as lean, agility or theory of constraints and know that the person you are speaking to has

a clear understanding of both the detailed approach and also the philosophy behind it? If yes, then it is

safe to say that Kotter’s eight step model could be observed as part of the development and it is a

transformational change. Kotter’s approach is also extremely relevant to the implementation of the

various BIT in specific instances, providing a framework which an improvement team can follow to

achieve significant benefit. This is referenced in the section below, integrating people, process and

strategy.

It is accepted that there are interstitial practices, more likely to fit to Miller’s (2004) and Towill’s

(2006) fad characterisation, which are typified by the detail in table 6 rather than being a recognised

phase or era in their own right. Examples include Total Productive Maintenance (TPM) and Total Quality

Management (TQM), which are closely related to the Toyota production System (TPS) but build on more

specific principles with the view to being the ideal route to progress in their own right. Lean

practitioners often argue that these and other similar fads are integral parts of the TPS. Either way, for

this research, the interstitial practices, or fads, are not ignored, but rather referenced in terms of their

26

constituent tools and principles rather than as a phase or era in the evolution of the manufacturing

improvement paradigm.

In terms of relevance to this research, considering a paradigm shift rather than a long

consecutive list of independent fads or ideas has two impacts. Firstly, that there is an end-to end story;

there is an established road to improvement from a position of immaturity to a position in which today’s

market leaders are operating. Secondly there is a significant interest in the practices and techniques

which embody that particular era of the paradigm of improvement; what tools do we use to move to the

next level of maturity? Hence, it is important and valuable to consider this story and the trajectory of

improvement by merging the improvement paradigm to a more ‘itemised’ level, which is shown below

in table 6; aligning the phases with specific tools and techniques and making the shift more continuous.

Table 6; Improvement paradigm phases and selected tools.

Paradigm Phase

Tool / Technique /

ActivityCharacteristic / Outcome / Objective

IE

Activity samplingProactive

MaintenanceSet up

minimisation

Equipment availabilityMaterial availabilityLarge order books

Resource utilisationThroughput

ControlMeet customer demand

‘economic’ (large) batch sizeGood industrial relations,

ergonomic ways of working,

TPS

Lean manufacturing,

Waste reduction,

JIT production and delivery

TQM

Elimination of non-value-adding activities,Continuous improvement,

Multifunctional team,Integration of suppliers, andFlexible information system.Continually declining costs,

Zero defects, Zero inventories, and

Endless product variation.

27

TPM

High machine reliabilityFocus on OEE measure

Operator asset care / technical operatorCapacity management

Theory of Constraints

Constraint managementRepeatable and reproducible cycle time

Continuous throughputControlled inventory or

Controlled work in progress (ConWIP)

BPROptimum process

selection

Process designed for purposeHigh technology utilisation

Development of new, bespoke, technologiesLow level of system variation

Automation of manual processesIncreased agility,

Agility

Systematic approachResponsiveness to customer demand

Low impact of changeRapid reconfiguration of lines

Limited options, limiting variationShort customer leadtime, potentially long production leadtime per SKU

Devolution of authorityResponsiveness, Adaptability and Flexible

Enriching customersRapid increase productivity

Knowledge driven employeeOpen management

Short and effective product life cycle Information technology integration

Change in business and technical processesHybrid; le-agile

/ agi-lean systems

ConWIP buffer(s)De-coupling points through the value stream

Mis-aligned strategies creating local optimisation

Six Sigma Reduced variability

Increased quality,complex systemsFinancial Benefit

Focus on project delivery

Supply Chain Management

Total Acquisition costIntegration of supply chain; supplier Integration & supplier capabilities

System interoperabilityPostponement

De-coupling point(s)Product range, product (re)configuration and mass customisation

Sustainability

Durability, Responsibility

Corporate strategy,Extended value chain network

Company fitnessHigh performance Teams

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Competitive positionPerformance and Growth & Value MeasurementPolitical Economic Environmental Social Factors

New Product Introduction; innovation, compressed time to market When you consider this roadmap as a continuous progression, the next logical step is to identify

where a company lies on this roadmap and how it can aim to move along it. This introduces the idea of

maturity as a measure of performance; the greater the maturity a manufacturing company, the further

along the improvement roadmap it is and the better the expected performance.

It also raises the question of how to assess that maturity. As can be seen from this roadmap,

there are very limited criteria against which the maturity can be assessed to find the appropriate level

on the end-to-end roadmap. Otherwise an assessment is just determining whether a company is at a

specific level. This is a good visual representation of how a benchmarking, scoring or auditing tool is

limited in terms of finding recommendations for growth and improvement in terms of the specific

techniques, given that it can only recommend a progression to the next step. The question remains as

to how a company can find the quickest route to the highest level of maturity, and achieve capability on

a par with today’s market leaders. Again, this supports the research questions in this research,

demonstrating that a deterministic approach is naturally limited.

Another consideration is the future path on the improvement roadmap; what is the nature and

the specific tools for continued growth of today’s most successful companies? In terms of the latest

thinking behind company fitness and strategy it can often be difficult to differentiate between

paradigms, since the focus is increasingly being placed on bespoke design of an improvement

framework. The purpose of tailoring an approach is often to target the strategic benefits of a systematic

approach such as Lean or Six Sigma, but also include the practical benefits of measuring and

synchronising activities through the critical business processes to improve local activities and embed a

proposed improvement. As a result of this, many companies now claim to have developed multi-model

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or integrated manufacturing systems, but have had to introduce buffered, or smoothed, interfaces

around a locally optimised process to cope with fluctuation and residual uncertainty.

As per the previous section on growth cycles, the components making up the paradigm eras are

now considered in more detail. Individual BIT, their characteristics and business benefits are outlined, so

as to make it relatively easy to align the BIT with the appropriate business cycle and identify when a

company would (or should) elect to adopt this practice and achieve its business strategy. i.e modes and

enablers of manufacturing systems improvement are now reviewed to understand which aspects could

be utilised in response to particular issues, according to their business need, and achieve sustained

growth (RQ3). In essence taking a higher level, more strategic approach to define what the future goals

are and applying selected tools to achieve the desired outcome. There is no precedent for this approach

in published works, so in terms the research questions, RQ2 becomes the question around how to set

that future trajectory and RQ3 becomes the mechanism by which progress is assessed. By meeting the

research questions, this research is bridging the gap between the current best practice and the aims of

the improvement paradigm of the future.

2.6 Business Improvement Techniques

Zellner (2011) describes in some detail that there are a range of terms and associated

understandings of business improvement practices, and that particular techniques can be applied

accordingly. Importantly, Zellner describes a scale of activity from quick hits up to system re-design,

again with associated terms and descriptions, and states that they are all important parts of an

improvement process. This is well aligned with the work in this research and is well encapsulated by

Harrington’s (1991 quote, cited from Zellner (2011);

“BPI is an approach to increase the effectiveness and efficiency of business processes that provide output to internal and external customers”.

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Also important to this work is the supporting argument to this definition, that all of the

described improvement paradigms contribute to some improvement, but that the direction of this

improvement is not necessarily well defined; “How do <the approaches> guide the user to improve a

business process from the as-is to the to-be?” (Zellner 2011). This continues to represent a significant

opportunity which this research is attempting to tackle.

As per the previous section, the business cycles described above can usually be seen as a

progression through individual business improvement activities; from tactical industrial engineering

activities through to a company-wide strategic implementation of lean manufacturing. However, as

mentioned there are failings to both approaches; bottom up growth means that often there is no clear

or accurate vision of the future requirements, while system activities often fail to realise their full

potential because of weak implementation.

Despite, or in response, to this, the prevalence of text books, blogs, networks, support

initiatives, consultancies and other practitioner and academic publications has brought many ‘best

practices’ to the attention of SME business leaders. As per tables 5 and 6, these may have changed over

the years, and now span a vast array of subject areas and approaches which serve to fracture the

progressive nature of paradigm implementation. So, without a specific label, is there an order of BIT

adoption which SMEs will traditionally adopt en route to economic stability? The range of techniques

and approaches in table 5 has been explored and a summary of this development is now described.

Industrial engineering

As per Table 5, and references therein, industrial engineering was heavily focused on the

measurement of work, the synchronization between process, material and people, leading to the

management of operations to maximise the efficiency of utilisation. While the limitations in global trade

31

and a less competitive manufacturing sector were important stabilisers for companies based in their

home market, industrial relations with the unions and relationships with suppliers were significant

factors in achieving a reduction in waste. Organisational structure and shop floor design for inventory

control and throughput were popular themes for strategic improvement, often mitigating for issues

which were not perceived to be in the control of the manufacturing company. Even today, many

industry leaders who started their careers when industrial engineering was at the peak of its popularity

will have a mixed view of holding inventory; on the one hand it is a waste to be minimized to improve

cash flow, on the other hand it is an asset to maintain agility/responsiveness within control of the

factory. Evidently at odds, but with thought processes that lie in distinct areas of improvement following

the era of industrial engineering, this is a clear indication that the changes in improvement paradigm

over the years is evolution rather than innovation.

Lean

The significant shift from the internal focus and piece-meal activities of industrial engineering

was the introduction of Lean Manufacturing through the development of the Toyota Production System

(TPS) of the 1980s. Academic interest and widespread consultancy activities have pushed Lean

Manufacturing to the forefront of manufacturing company improvement initiatives since it incorporates

the IE principles as well as drawing in a structure for systematic improvement and a suite of tools to

achieve it. Sanchez (2001), describes six lean indicators which are considered drivers for a proactive

company and listed in table 6.

At one time lean manufacturing was confined to the automotive industry, but now many lean

principles are becoming a standard procedure in a wide range of industries. The reason for this is simple;

where they are implemented with a good performance management system, lean principles (Womack

and Jones, 1996) have a proven track record of operational and strategic success, which results in

32

increased value to the customer. Through tackling the issue of waste reduction, and successfully

implementing the principles of value creation, lean manufacturing can deliver significant improvements

in the areas of operating costs, lead time, improved working environment and speed of defect

detection.

However, there are scenarios whereby a company looking to decrease their waste and costs by

becoming lean could unintentionally put themselves in a worse situation. Limitations to lean

manufacturing have been evident when practices and techniques were taken to the extreme, or when

implementation has not been properly executed at the process. Cusumano (1994) describes an example

of traffic congestion due to frequent deliveries caused by forcing suppliers to produce in smaller and

smaller batches.

This focus is supported by other authors (McCurry and McIvor, 2001) (Shah and ward 2007)

(Phillips, 2003) who characterise a lean production system as the drive toward perfection. This highlights

how, once a well developed Lean system is in place, the drive toward excellence in these areas can often

remain the priority for operations management even though it may not be the stumbling block for

continued growth; obviously consuming improvement resource without yielding any benefit.

To do this without placing equal emphasis on improving interaction with supply and demand

chains can be dangerous and could result in a loss of sales through poor delivery performance and/or

flexibility. For some companies, this flexibility is an essential attribute and if they were to lose it, it could

have drastic effects, exacerbating the loss of customer satisfaction and confidence. Thus, once the value

chain was mapped and internal work flow was improved, many companies developed their lean

programme to incorporate aspects of flexibility and agility.

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Agility

In the modern manufacturing era, the requirement for mass customisation and the increasingly

complex product lifecycle are not only necessitating development of technologies such as those

described above but also increasing the rate at which companies are looking to implement them.

D'Aveni (1994) used the term "hyper-competition" to describe the condition of rapidly escalating

competition that is now changing manufacturing landscape for many industries.

The idea of Agile Manufacturing, was inspired by this rapid change in focus toward customer

satisfaction. Ramasesh et al (2001) offer a definition of terms which typify agility in a manufacturing

system:

Capability; this implies the potential or readiness of the manufacturing system to react to change

Unanticipated change; potential threats induced by change are minimised

Effectiveness; the response to change is cost and time effective (anyone can respond ineffectively)

Manufacturing system; includes and incorporates the supply system, production facility and

distribution system making an extended system which is responsible for achieving this reaction to

change.

Sharifi (2001) and Yusuf et al (1999) describe how Agile Manufacturing was first introduced by

Lacocca Institute, USA, in 1991. It has grown to encompass a much wider list of characteristics with

some cross-over with lean manufacturing but is typically less specific as seen in the characteristics

shown in table 6. Typically, companies receptive to this idea can see beyond the benefits of using purely

traditional lean tools and techniques, but cannot easily identify which of the agility tools to utilise and

what the subsequent route for continuous improvement will be. In response to this, a host of value

chain auditing techniques have been developed, some of which are described by Foggin et al (2004).

These are designed to undertake a benchmark style of analysis, and describe a timescale of

improvement activities in a strategic framework, although the detail is less prescriptive than the review

summarised by figure 8.

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However, it can be argued that both Lean and Agility (Dale, 1996), (Vernadat 1999), provide the

‘opportunity’ for a company to grow rather than actively to seek growth and expansion. Both paradigms

provide for greater manufacturing capacity, lower unit costs, greater responsiveness, (Christopher &

Towill, 2000). However, neither paradigm promotes breaking into new market sectors through pro-

actively aligning business process elements such as marketing and innovation in order to win new

customers. It is possible for a company to be very ‘Lean’ yet still fail as a business due to the lack of

growth opportunities created.

So, considering the improvement activities described in previous two sections, and the growth

characteristics discussed prior to that, it can be said that a successful business is based upon controlling

costs whilst developing their sales volumes through innovative product development and capturing new

high value markets (Olsen 2006). This is supported by Mayle (2006) who outlined a top level process

flow, shown in figure 4 below, he called the Success Syndrome, demonstrating that a stable market will

sustain a successful product, but without any provision for growth or improvement, a change in the

market will result in company failure. Navigating this path and achieving consistent growth gave rise to

the shift from value chain optimisation to one of business system sustainability.

Figure 4; The Success Syndrome (source: Mayle, 2006)

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Sustainability

Economic sustainability relates to the top level business performance, and is one step further

removed from the industrial engineering principles. The concept is a basic but essential proposition that

sales and costs strike the right balance, and that while a lean (including agile) approach should be

adopted to manage costs, a growth strategy must be included to promote sales and improve direct

value to the customer in terms of competitive and novel product or process.

Sustainability can be compromised by a variety of scenarios when companies deviate from the

key criteria of this definition. Any company that runs with high manufacturing costs will always be in

danger of running at a loss if the company experiences a fall in total sales, see figure 5. This can also

easily happen if the sales within a company fail to increase or even decline.

Figure 5; Sales and costs moving in opposite directions, negative profit margin

Alternatively, when sales and cost are moving in the same direction the profit margin will

remain constant, as shown in figure 6 below. This is acceptable but not ideal in competitive markets as it

prevents any release of capital or resource to develop product, improve knowledge or actively manage

the business development.

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Figure 6, Sales and costs rising steadily to give a constant profit margin.

An Ideal company would have a successful plan in which to reduce waste and costs, and also

have a good strong plan in which to sustain a steady trend of ever increasing sales, as shown below in

figure 7.

Figure 7, Sales and costs moving in opposite directions, increasing profit margin.

There are a great many scorecards that reflect the essential performance criteria to increase

sales, adapted from various marketing models (Yudelson, 1999) (Goi, 2009). Many (if not all) of these

are shown in a master matrix shown in Table 8, which Pham et al have developed from Porter’s 4Ps of

marketing (Porter, 1985). There is a shared philosophy with Kaplan and Norton’s (1996) four Major

Business Perspectives for Sustainable growth, shown in Table 7 below and later described in more detail.

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Table 7 Four Major Business Perspectives for Sustainable growth

Financial Customer

Waste FocusMaintenance and ControlVision and Strategy

Customer FocusEnvironmental

Internal Business Learning and Growth

Strategy DeploymentCross FunctionalityTechnologySocial

LeadershipContinuous LearningTeamworkingCulture and Empowerment

The common currency throughout the value chain, and the assessment of its performance, is

the link to Quality, Cost and Delivery, and flexibility (QCDF). This offers a structure to set goals and

objectives for continuous improvement, raising levels of customer satisfaction and greatly improving the

management of production. QCDF is not, however, sector-specific. These key measures can be applied

to improve production performance in any manufacturing industry, and are a function of a sub-set of

metrics specific to the process output. Many examples of metrics are published, and the varying

characteristics could be directly compared between a number of sectors such as: automotive, semi-

conductors, aerospace, textiles, building products, food and chemicals processing (autoindustries.com).

The flexibility ‘F’ is the most recently addition, driven by reaction to market demands;

developing new product capability or functionality as a sales asset (Wiendahla et al, 2007). This is

another example of how the improvement paradigm has developed from Industrial Engineering to

incorporate aspects of agility and product development/enhancement to balance the needs of cost

reduction and sales enhancement. However, this added complexity serves to confuse any company that

has not been progressing from lower down on the improvement maturity curve. From a standing start,

how does a company understand what activities to undertake for best overall impact and achieve the

38

desired growth and sustainability? The answer is to use these growth enablers to understand what the

customer wants and what the supply chain can achieve, rather than focus on internal efficiencies.

Table 8: Indicators for sustainable manufacturing (Source: Pham et al 2007)

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In review of the tools and techniques explored so far, and in support of the findings shown in

table 2, the changing emphasis of customer satisfaction, driving the requisite improvement techniques,

can be considered as a lifecycle of its own. Figure 8 demonstrates how the improvement approaches

explored so far can be plotted against the anticipated outcome, in an improvement path leading to

satisfied, loyal customers who are feeding into the new product innovation process. This is a key point

in the research; identifying which aspect of the improvement paradigm to apply by identifying what the

customer base is either expecting or would hope to see. Later in the research, it has become a key

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Process People Profit

Manufacturing/Operations strategy

Waste reduction

Manufacturing lead-time

Scheduling, capacity and set-up reduction Maintenance control and efficiency

System re-configurability and flexibility Production and information systems Complexity and responsiveness

Supply chain and supplier development

Risk management

Continuous learning

Level of skills and Scope of roles Empowerment

Incumbent employee knowledge

Loyalty, commitment and adaptability

Innovation

Strategy Deployment

Incentive Scheme

Teamwork and Co-operation Productivity

Commitment to meet customer needs and expectations

Customer retention and continued loyalty

Innovative products at affordable prices

Marketing and sales strategy

Customer services (presales and after sales)

Market and customer research

Place Product Partnership

The global positioning of core and peripheral business units in company

Environmental impact including product and waste disposal and energy usage

Market dynamics and response to customer’s changing needs

Location of knowledge base and Intellectual Property positioning

Innovative Product Design, Variety and Complexity

Quality, Cost and Delivery

Reliability

Standardisation

Product Lifecycle management Customer Focus Demand and Sales Management

Profit

Customer retention

Collaborative manufacturing

Contract manufacturing/Out-sourcing

Supply and distribution networking

Collaboration with research organisations and wider technology community

aspect to the generation of the non-deterministic assessment, hence the methodological contribution to

knowledge.

Figure 8: Phases of the business improvement paradigm.

However, there remains the question of how this can be physically supported beyond the

factory walls; how can new parts be sourced and delivered quickly, how can new technologies be

employed to improve the form, fit and function of new products and how can the innovation process be

rapidly configured to include both suppliers and customers? To move into the realm of true integration

and have customers coming back to define their own requirements, with confidence that the product

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will be fit for function and cost effective, then the extended supply chain must be brought into

consideration to maintain the competitive advantage and enable sustained growth.

It is also crucial to consider that each evolution in the drive for business improvement is reliant

on at least some capability in the previous stage; e.g. without throughput it is impossible to achieve

optimisation for increased profitability. This highlights the stage shown in red in figure 8, at which many

companies are reaching the glass ceiling and becoming largely standardised in terms of cost, quality and

delivery but cannot see a route to integrate customers and suppliers to deliver a more self-sustaining

innovation, implementation and supply process, hence business sustainability. Therefore, an assessment

process to align companies with their current position, and identify their target potential and a roadmap

of improvement to cross this gap is a very desirable tool which this research later goes on to develop.

In terms of this specific research, figure 8 is also very important in considering the research

methodology and understanding the depth of understanding required to accurately identify a

company’s level of maturity in this model; observing use of six sigma tools does not indicate an agility

capability, which is requisite to respond to new opportunities. This is referenced later, in the

methodology section, outlining how a small number of studies is preferable in gaining this level of

accuracy.

For now, though, the question remains how to exploit new opportunities in parallel with

maintaining good current performance. The overall approach to moving beyond the red zone (outlining

the requirements of the improved assessment model) is now discussed, before chapter 3 goes on to

discuss how the supply chain element is a critical aspect to the measurement, and a key tool to

achievement, of manufacturing performance improvement.

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2.7 Simultaneously Applying Business Improvement Techniques with Sales Enhancers to Achieve Sustainability in the Supply Chain

By linking the Quality, Cost, Delivery and Flexibility (QCDF) outputs with the sales improvement

and cost reduction techniques, a company can create a strategic business model to increase the level of

customer satisfaction while still improving profit margins through lean manufacturing implementation,

hence achieving the balance required for sustainability.

Barton et al (2007) have structured a cross-section of the techniques from each of the cost

reduction and sales enhancement improvement themes and introduced a control and switching

strategy, into a deployment model shown in Figure 9 below. Each of these aspects influence

performance in the areas of customer demand, supply base performance and company strategy. The

strategy aspect can, however, be prejudiced by external influence, management strategy and financial

performance. The principal impacts of the model on this research is the integration of cost reduction

tools and techniques, which are usually seen as the hard and fast lean techniques to be applied in text-

book fashion, in conjunction with the cultural and developmental aspects of strategy and culture.

Traditionally an uncomfortable compromise, this study aims to take the best of both and deliver an

integrated approach to assess a company’s current capabilities, the customer driven enablers for future

growth, and identify which aspect(s) of the manufacturing improvement paradigm should be selected to

meet that particular need.

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Figure 9: The business improvement strategy selection process.

The model in figure 9 shows the links between QCDF output and the subsequent requirement

for improvement in business enhancers and cost reduction. However, the key to realising the optimum

benefit is the switching capability to respond quickly and seamlessly to a change in the input signals

shown. Each of the individual improvement streams shown in figure 9 contributes to the outputs, and

each stream will, at some point, become the most important activity to maintain customer satisfaction.

Hence, the signal amplifier effectively has three separate outputs to adjust the balance of activities

undertaken; it is not a straight ‘switch’ between one stream and another.

A strategy that requires a bias towards cost reduction would allocate say 80% of resource to the

top stream of lean tools and techniques, with a supporting resource allocation in the control function to

ensure quality is maintained and maximum benefit is realised. It is important to consider that there is

always a continued commitment to the ‘unused’ stream; in this case the sales enhancement function.

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A strategy that necessitates new product design, functionality or capability would conversely

switch resource to customer focussed activities (Hill, 2000) to ensure that changing demands are met

and that the company maintains a competitive advantage. Again, a certain amount of effort must be

maintained in the control stream. The result of which is twofold; to prevent misalignment of new

technology or product introduction and production management capability, and to provide the

customer better value without incurring additional cost wherever possible (Hines et al, 2006).

2.8 Aligning the Business Capabilities and Improvement Strategy to Sustain Growth

As described by the previous sub-section, response to change in customer demands or in the

manufacturing landscape requires companies to reconfigure both their business and manufacturing

strategies in order to cope with the new pressures. However, there is little evidence to suggest that

companies are realigning their business strategy with their manufacturing strategy. Brown and Bessant

(2003) provide evidence that companies remain stuck in past paradigms of strategy - most notably on

the over dependence of an elite strategy-making group at the top of the organisation's hierarchy (Hayes

& Wheelwright, 1984) (Brown, 1998). They go on to state that as a result of this, a state of strategic

dissonance (Brown, 2000) occurs not only between the firm and its chosen markets but also within the

firm itself, in the mismatch between strategic intent and operations capabilities (Hamel & Prahalad,

1989). They suggest that the reason for this lies in the change of manufacturing/operations processes

over time and how these became divorced from the firm's strategy process (Lazonick, 1990) (Lazonick &

West, 1995).

Kim and Lee (1993) define manufacturing strategy as "supporting corporate objectives by

providing manufacturing objectives including costs, quality, dependability and flexibility to offer a

competitive advantage and focus on a consistent pattern of decision making within key manufacturing

45

resource categories. The objective of manufacturing strategy is to create `operationally significant

performance measures' in which the competitive dimensions comprise cost, quality, dependability and

flexibility". Brown and Bessant (2003) connect manufacturing strategy and business strategy in their

work in which they investigate the development of agility within the automotive industry. They state

that the ability to become agile and to manufacture mass customised products can only be achieved by

combining skills, technologies, know-how, processes and alliances with other players, brought about by

strategies being in place.

It is therefore clear that in order to meet the new manufacturing challenges, a company must

ensure that it aligns its business strategy (including its corporate objectives) to its manufacturing

strategy (which includes the manufacturing process elements and the technology used in the

manufacturing processes). Deployment of each aspect relies heavily on people engagement and the

ability of the company to clearly communicate and deploy the strategy in terms of individual goals and

objectives. The lean tool of deployment (Hoshin Kanri) works to draw in the expertise of the people in

the business, but again there may be a gap between company knowledge and market forces. So,

learning from this research so far, the same approach must be undertaken from a people and skills point

of view to follow the maturity path and develop core competence along the way, before identifying

customer demands and taking the step to differentiate from the competition.

The need for manufacturing strategy may seem self-evident for some academics. However,

devising and implementing manufacturing strategies is a very real challenge and often an area of poorly

defined expectation for some firms. This research is potentially a key source of information for strategy

makers, demonstrating the pre-requisites and maturity curve leading to differentiation from the

competition.

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2.9 Summary

Chapter 2 has reviewed business growth in the manufacturing sector. In response to the first

research question, it is seen that there are a number of variables influencing the effectiveness of BIT

implementation, and subsequently hindering a company’s ability to sustain growth. Examples include:

rate of innovation and product lifecycle management, management of its business lifecycle, and

alignment of operational strategies for development of people, culture and technology. Once the top

level factors are understood and controlled in context of the business and customer requirements, BIT

can be employed to target specific benefits such as profit, reduced inventory, improved cycle time, etc.

The nature of these tools and techniques can vary greatly and are seen to span a range of phases in the

development of the manufacturing improvement paradigm, summarised in table 5. The specific tools,

techniques, and guiding concepts is shown in table 6, which demonstrates the tactical shift from almost

personalized focus on improvement toward an enterprise or end-to-end supply chain perspective.

This feeds directly into the second research question about how a company can identify the

correct tools to employ in any given set of circumstances. Evidently the success of the implementation

depends on alignment with the maturity curve shown in figure 8, the correct assessment of current

capabilities and the capabilities required to meet specific customer requirements. Currently, these gaps

are not easy to identify; maturity assessment is only conducted against set criteria, does not incorporate

supply chain influence or complexity and does not identify the applicability to customer needs. The

following chapter explores the influence of the supply chain, variability in system performance and the

measures that can be adopted to understand such variables. Within this area of research, the

phenomenon of supply chain uncertainty appears frequently (Mason Jones and Towill, 1998) (Bozarth et

al, 2009) (Wilding, 1998) (Vachon and Klassen, 2002), and can be seen as a key indicator of supply chain

performance. Hence, the following chapter describes the supply chain aspects of performance

47

improvement in the extended value chain. It then goes on to discuss selection of the appropriate

improvement tools by way of using supply chain assessment as an accurate representation of the

company’s current state and position on the maturity curve shown in figure 8.

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3 EXTENDED VALUE CHAIN

3.1 Introduction

According to the Supply Chain Council; “The supply chain – a term now commonly used

internationally – encompasses every effort involved in producing and delivering a final product or

service, from the supplier’s supplier to the customer’s customer”. Within the Supply Chain Literature

there are multiple definitions found. In the interests of common terminology, the extended value chain

development of our case study companies will be considered as both the upstream and downstream

value chains. This is an understanding shared by Christopher (1998), who defines SCM as “The

Management of upstream and downstream relationships with suppliers and customers to deliver

superior customer value at less cost to the supply chain as a whole.” The following section goes on to

explore the changes behind the evolution of this aspect of manufacturing best practice and the nature

of the results being targeted.

The term Supply Chain Management (SCM) appears to have first been used by Oliver and

Webber in 1982 (cited, Harland, 1996), which aligns to the chronology outlined in table 5 as part of the

TPS era of the manufacturing improvement paradigm. The next major use of the term was by Houlihan

in 1987. These early writers on Supply Chain Management echoed the sentiment behind TPS at that

time, and took the perspective of the logistics and physical distribution functions, with specific focus on

satisfying customers through efficient control of internal operations. Supply chain systems were

regarded as channels of distribution. From this perspective, the focus of channel management was to

make each firm in the distribution channel more efficient and productive; each firm within the supply

chain operating on its own, seeking to make the highest profits with little attention paid to its channel

counterparts (Lancioni, 2000).

49

Rather than taking a material flow viewpoint, Tan et al (1999) suggest that SCM applies to the

management of suppliers, and takes an operationally-focused approach, supported by Lamming (1993).

During the early 1990’s, the peak time for business process re-engineering, the movement towards

supplier management saw an increased development of closer ties, with broadened expectations about

what both buyer and supplier receive through their ongoing relationship. This supplier management

approach that seeks some degree of increased mutual buyer-supplier collaboration and trust to improve

productivity, quality and ultimately competitive advantage (Stuart and McCutcheon (1996).

Harland (1996) usefully summarises the debate by identifying that SCM definitions relate to four

separate concepts: the integration of the internal flow, which speaks to the lean school of thought, the

management of dyadic relations i.e. buyer-seller, the management of a ‘chain’ of businesses, which

reflects the complexity of the interactions and negotiations, and finally the management of a network of

interconnected businesses, which highlights the need for a systems thinking approach to avoid local

optimisation causing macro level inefficiencies. These four concepts are structures to explain an

evolutionary development of SCM in response to changing competitive pressures, just as the

manufacturing improvement paradigm has evolved in response to the same driver. Therefore, it is

inappropriate to consider them independently. Further to this, the characteristics of a supply chain

reflect its position on this evolutionary scale, and just as was proposed for business maturity, there is a

similar scale of supply chain maturity. Building on the assertion that supply chain development is an

extension of business unit development, assessing a company against this supply chain maturity scale is

the key to identifying the business improvements, and associated BIT, to target opportunities outside

the four walls of the manufacturing site, and critical to road-mapping the route to sustained growth and

business improvement..

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Just as described earlier in this section, there are a variety of supply chain specific best practices,

metrics and measurables which are widely purported to be essential aspects of the manufacturing

improvement paradigm. To model these impacts, significant research and fieldwork has been

undertaken to characterise contribution of these supply chain BIT to improved company performance.

However, just as seen in the manufacturing specific context, these are typically individual case studies

limited in scope and depth of understanding of the environmental drivers and strategic decisions taken

to mitigate risk and enable growth.

This research, therefore, aims to tackle this weakness. The critical review of research and

publication has led us to this point, at which it has become evident that the extended value chain must

be considered and characterised, with particular attention to the interfaces between suppliers, internal

operations and customers, which are largely defined by business strategies and controls. The following

sections describe how current supply chain performance can be measured, and how the measurement

technique can be used to highlight where the company is weak in its overall business (strategic) or

operational (tactical) approaches. Thus, show how the company can improve the output from the

overall supply chain for its long term growth and sustainability.

3.2 Aspects of Performance Measurement

Business performance measurement (BPM) in a manufacturing company is designed to assess

the effectiveness of the manufacturing system and effectiveness of the business process to support the

operational functions. Neely et al (1995) express BPM as the process of quantifying action, where

measurement is the process of quantification and action leads to performance.

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Areas in which performance can be achieved vary greatly. Neely et al (1995) list a significant

cross-section which is shown in figure 10 below. Beyond this there are countless company or sector

specific measures that can be adopted, and it is a continuing process in an effort to chase increasing

levels of detail and get to the root cause of any poor business performance.

Figure 10; A list of potential business performance measures. (source: Neely et al 1995)

What is not clear, is the cost benefit of measuring, monitoring and trending any or all of these

business process metrics. The value lies in the role of the metric; if the right measure is monitored, in

the right context, and presented to the right audience then discussion and consultation time is

minimalised, the right decision is made and action is taken to improve performance. Bitici, Carrie and

Turner (2002) suggest that business performance measurement has a variety of uses, and argue that

companies must measure business performance in order to maximise the effectiveness of the

improvement effort, hence achieve alignment with organizational goals and objectives.

Simmons (2000) looks at business performance measurement as a tool to balance five major

tensions within a firm, which builds on the list of Bitici Carrie and Turner (2002), and describes the need 52

for a switching strategy as being key to a small manufacturing company’s success:

1. Balancing profit, growth and control

2. Balancing short term results against long-term capabilities and growth opportunities

3. Balancing performance expectations of different constituencies

4. Balancing opportunities and attention

5. Balancing the motives of human behaviour

There are of course weaknesses in many BPM structures and implementation, and Neely (1995)

discusses a variety of points. Jayawarna (2006) and Davenporrt (2005) also comment on organisational

traits which inhibit the alignment of cause, nature and effect of metric measurement. The principal

difficulties are; poor analytical skills (availability and selection), quality of data, frequent change in BPM

systems and metrics being requested, and lack of linkage to strategy. In context of this research, this

highlights the need to gain detailed insight to the case studies’ operations, to have a robust assessment

process and to have an end-to-end view of the value stream to identify discrepancies and inequalities in

the system performance

Bernard Marr, of Cranfield’s Centre for Business Performance presents a useful literature review

(Marr and Schiuma, 2003) which highlights the dominance of the balanced scorecard, shown in table 7,

in the theoretical world of performance measurement. Kaplan and Norton (2007), have followed

previous success with their more recent publication, dedicated to advances in strategic aspects of

operations management and integration aspects which have both been described here as key

components to achieving sustainability. Their paper “Transforming the Balanced Scorecard from

Performance Measurement to Strategic Management system” describes a hierarchy of measurement

components:

Objectives: major objectives to be achieved, for example, profitable growth.

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Measures: the observable parameters that will be used to measure progress toward

reaching the objective. For example, the objective of profitable growth might be

measured by growth in net margin.

Targets: the specific target values for the measures, for example, 7% annual decline

in manufacturing disruptions.

Initiatives: projects or programs to be initiated in order to meet the objective

As can be seen later in this research, the author identifies strongly with this structure, but proposes that

the identification of appropriate objectives driven by customer needs is the critical stage to achieving

competitive advantage.

It could be argued that this structure of measurables, if thoroughly implemented, would

inherently capture many of the inputs and outputs to the manufacturing process. However, today’s

market place is characterised by turbulence and uncertainty. Adding a function of these to the measures

immediately makes the inputs and outputs less tangible and harder to align to objectives and

subsequent improvement activities. The increasing uncertainties in supply and demand, globalisation of

the market, shorter product and technology life cycles, and the increased use of complex international

supply chains, have led to higher exposure to risks in the supply chain and less clearly defined

boundaries on which measurables can be used to identify potential or unexpected change (Christopher

and Lee 2004).

Therefore, at this point, it is important to consider how businesses can be assessed against the

various lifecycles and benchmarks; what is the current level of maturity, what is the nature of the

required performance improvement and what are the corresponding activities should be undertaken

that will actuate a balanced and integrated strategic vision onto a reality.

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3.3 Supply Chain Maturity as a Function of Improved Business Performance

So far in this review, there has been a logical progression from industrial context and

manufacturing background, through the various facets of improvement and growth, up to this point of

considering how to assess a company’s current situation, what its current capabilities and qualities are,

what an improved situation looks like and how to measure improvement towards the ideal.

In the context of lean improvement there are various frameworks for company assessment

ranging from the vigorous lean maturity assessment seen in Johnson and Johnson to the rapid and

superficial auditing approach supported by Goodson (2002) in “Read a Plant Fast”. Here we will

consider these two extremes and throughout this thesis, various best practices will be described which

contribute to specific aspects of such a model or checklist. But it is worth stating at this point that there

is no assessment technique which considers the wider scope of an enterprise and its effectiveness by

reflecting the level of integration described above as the requirements for sustained growth.

Read a Plant Fast (Goodson, 2002); While Goodson qualifies the approach in terms of

formalising much of what can be visually observed, it is primarily a tool for rapidly assessing a

plant’s strong and weak points and does not really provide a capacity to understanding what is

driving this level of capability. The questions are a good introduction, but as a methodology it is

weak in terms of rigor and repeatability.

Kobayashi’s 20 Keys (Kobayashi, 1990); takes a more philosophical approach to defining what

qualifies a production facility as mature in terms of its lean capability. The 20 keys describe

requirements for a strong, yet still generic, base for an efficient manufacturing facility.

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JnJ Lean Maturity Assessment; reflects both approaches, using a questionnaire approach to

provide a consistent framework but goes on to substantiate the findings and answers by means

of a three day investigation rather than the one hour cursory glance at the production

environment which Goodson proposes to use. The average scores are used to define the level of

lean maturity which are; Stability, Flow, Pull and Integration. The second aspect of assessment is

the focus of the interviewers and investigators (taken from other JnJ sites) on eight particular

aspects of effectiveness. While these are less numerous than Kobayashi, they are more focused

on the deployment of the facets that are judged to be key in terms of both effectiveness of the

production facility and alignment with the JnJ Corporation’s core values. The true value of the

assessment is in the latter aspect of the audit, which is something to be recreated as part of this

research and the resulting framework for assessing the supply chain maturity; identify the key

determinants and assess the supply chain against the core competencies rather than the loosely

aligned metrics or measures.

As can be seen, there are some good practices in terms of assessing current capabilities

against specific criteria, but in terms of recommending the actions and activities that are

beneficial to the specific supply chain and enable execution of the business strategy, the

direction of technique deployment and utilisation is still narrow, pre-determined and pre-

defined against textbook expectation. Hence, research question 3 is particularly important in

terms of developing a contribution to knowledge as a result of this work. RQ 1; the impact of

BIT, can be researched from the literature and validated by case study, but RQ 2; how to

prioritise BIT, relies on having a holistic supply chain perspective and RQ 3 requires a supply

chain assessment technique that simply is not currently available. However, this research aims 56

to deliver both a theoretical and practical output so must build on existing knowledge to enable

practitioners to understand how to use it and for academics to continue the thread of

development.

The concept of assessing maturity against a known profile is a tried and trusted technique, but

pre-determined in nature, and open to interpretation by the assessor / auditor. The metrics considered

by tool specific assessments are easier to chart against a benchmark but also limited by pre-

determination and also inappropriate for identifying a roadmap for improvement given its limited

outlook; a lean assessment is only going to recommend a leaner future. To continue the logical

progression toward development of a holistic assessment and improvement roadmap, this section goes

on to review the latest developments in manufacturing system maturity, which alludes to the

effectiveness of the whole supply chain. This supply chain theme has been highlighted as one of the key

factors reflecting business/value stream effectiveness and reflects many of the findings earlier in this

review that the best overall benefit for a manufacturing company is to balance internal operations with

systems development.

3.4 Supply Chain Uncertainty

Taking this systems view of a manufacturing supply chain, the signals and decision points within

the system are set up to deal with customer requirement, material availability and control of the

process chain. However, the complexity of even a short supply chain producing a simple product often

confounds the practitioner and makes it difficult to identify the priority improvement areas and tools

required to tackle it; there is a constant negotiation between the aspects of supply, demand, and

control. This complexity promotes the application of complex academic investigations which quickly take

57

the industrial practitioner away from a tangible understanding of what needs to be done to improve

system performance. Circling back to the motivation for this research, this process needs to be

simplified and grounded in case study to demonstrate the collaboration between continuous

improvement and complexity reduction techniques to deliver improved system performance. Figure 8

shows the phases and significant waypoints in continuous improvement from the business unit

perspective, how it quickly calls on improvements in the supply chain, then goes back to promote supply

chain capabilities as customer delighters and growth enablers.

The key is to break out of the ‘red zone’ and go beyond continuous improvement by

understanding customer needs and proactively offering capabilities that will drive benefit for the

customer. This evidently requires a clear vision of customer requirements and how to manage the

demand, supply and control variables to meet them. This section reviews the literature around systems

measurement and improvement, with a view to defining the characteristics required to break out of the

continuous improvement and negotiation cycles hindering this clear understanding. The concepts for

consideration here include system complexity, uncertainty, and control/reduction of both of these. It is

seen that that the level of uncertainty is a good reflection of the company’s maturity; benchmarking this

variable, if it can be quantified, provides a guide to the company’s position on the curve in figure 8.

Van der Vorst et al (2002) provide a useful definition for supply chain uncertainty. “Supply chain

uncertainty refers to decision making situations in the supply chain in which the decision maker does not

know definitely what to decide as he is indistinct about the objectives; lacks information about (or

understanding of) the supply chain or its environment; lacks information processing capabilities; is

unable to accurately predict the impact of possible control actions on supply chain behaviour; or, lacks

effective control actions (non-controllability)”.

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According to Childerhouse et al. (2002), numerous authors have identified the need to manage,

minimise and remove uncertainties from their business in order to increase control and coordination

and improve the effectiveness of their decision making processes. Christopher (1998) explains one of the

main reasons why any company carries safety stock is because of uncertainty. It may be uncertainty

about future demand or a supplier’s ability to meet a delivery promise, or about the quality of materials

or components. Bowersox and Closs (1996) further emphasize this point when they state “a basic

objective of overall logistical performance is to minimise variance”. Furthermore, Sabri and Beamon

(2000) state “Uncertainty is one of the most challenging but important problems in supply chain

management”

Childerhouse then goes on to demonstrate the potentially “vicious” nature of uncertainty, which

is shown below in figure 11. Figure 11 yields three feedback loops each capable of de-stabilising

operations (Senge 1993) and characterising the issues around identifying a clear route to improvement;

continuous improvement against the common improvement paradigm curve in figure 8 will not enable

the company to break out of this vicious cycle. Specifically, this instability can be a result of poor design,

poor implementation or poor management or a combination of these influences. Thus it is essential that

there are definite responsibilities for minimising uncertainty in the supply chain, allocated to the

fundamental process

flow

elements.

59

Figure 11; The “Vicious” nature of the uncertainty circle(Source: Childerhouse 2004)

Wilding (1998) used Uncertainty principles in the development of a “Supply Chain Complexity

Triangle” specifically for the identification of uncertainty generation in the supply chain. Wilding reveals

that there are three interacting yet independent effects that would seem to cause the dynamic

behaviour experienced within supply chains. These are deterministic chaos, parallel interactions and

demand amplification. “The combination of these effects can significantly increase the degree of

uncertainty within a supply chain system”.

Prior to Wilding’s work, Davis (1993) had coined the phrase “Uncertainty Cycle” in which he

identifies three distinct sources of uncertainty that plague supply chains: suppliers, manufacturing, and

customers. Davis takes a pragmatic approach to uncertainty by claiming that a company can make great

strides by understanding the relative impact of different sources of uncertainty in the system and then

by working to reduce or avoid the impact they have.

60

The systems approach for detecting and codifying uncertainty has been further adopted by

Mason-Jones and Towill (1998). This follows directly from Parnaby (1979) in the modelling of

manufacturing systems. It is an approach based on problem identification via the studying of flows

across business interfaces, including material, orders, cash and capacity movements (Evans et al., 2001).

So it has much in common with input-output analysis (Fry, 1990) and ties in well with the BPM processes

described in the previous sections.

Mason-Jones and Towill (1998) have segmented supply chain uncertainties into four areas so

that problematic root causes and methods for subsequent minimization can be developed (Towill et al.

1999). The Uncertainty circle model, shown below in figure 12, is a convenient way to categorise the

disturbances that may be encountered by a business in the supply chain, based on the control of our

own value-added process responding to customer demand and in turn our orders on to our suppliers

(Towill 2006).

The uncertainty circle is central to this work, and the basic ‘building blocks’ represent the

aspects of the supply chain, which are used to distinguish between aspects of improvement work in the

case studies. The value adding process relates specifically to internal improvements within the factory.

The Supply chain process steps relate to the supply input and the demand pull on the value adding

process, thus define the external supply chain improvements.

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Figure 12. Uncertainty circle principle (Source: Mason-Jones and Towill 1998)

Uncertainty can be seriously introduced in the value adding process, resulting in poor on time in

full delivery (OTIF) due to process breakdowns, capacity misalignment or other such issues. Supplier

interface uncertainty creates unreliable component supply, while demand interface uncertainty is

compounded by lack of marketplace transparency, “rogue” orders, etc. Finally, and perhaps surprisingly,

further uncertainty is induced by poor system controls based on the wrong decision rules and stale,

noisy or incomplete information (Towill 2004). By understanding which of the four areas causes the

greatest uncertainty a business may prioritise its resources strategically and focus on improving the

areas which provide the highest scope for business performance improvement, i.e. successfully follow

the process demonstrated in figure 8.

Table 9 Shows the potential benefits which may be expected from properly implementing

uncertainty reduction programmes based on various communications initiatives (Geary, 2001). Whilst it 62

Control System

Supply Side Value Adding Process Demand Side

Information Flow

Material Flow

Interfaces to be monitored/ Re-engineered`

may be argued that such a management consultant broad-brush approach is superficial, it does have a

supporting (and sometimes driving) role to play in establishing new management theory (Towill, 1999).

The overview of Table 9 Is helpful in that Geary has endeavoured to relate benefit according to the

expected impact on the four quadrants of the uncertainty circle. Furthermore Childerhouse et al. (2004)

provide strong experiential and statistical evidence which validates some of these projections especially

with regard to responsiveness.

Using uncertainty to measure and assess business performance is potentially an excellent way to

capture the systems perspective to performance assessment and overcome many of the shortcomings

of trying to extract process specific data which would be inconsistent through the process chain. The

following section explores the best practice around business process measurement, before leading into

the research approach and methodology used to measure performance in this research.

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Table 9: Benefits of Uncertainty Reduction (Source: Geary 2001)

Uncertaintycircle

source

Typical communicati

onimprovement

initiatives

In inventory In cost In market share

In profitability

Ourprocessside

Capture of order cycle time informationdirectly from orders and subsequentshipment data enables management oforder fulfilment lead times

Tighter execution based onpredictable cycle timesreduces investment ininventory

Associated financial opportunitiesReliable execution againstschedule avoids non-compliancepenalties

Management of order life cycleprocesses leads to more reliableperformance, allowing incrementalmarket share growth

Incremental sales (market share) basedon more reliable commits lead to bigmargin drop-through

Our supplyside

Real-time visibility into supplierschedules and inventories enablescommitments based on hard fact

Reduced buffer inventoriesreduces investment ininventory

Lower holding costs,warehousing costs,expediting (freight andhuman) costs

Adding supplier availability into thedecision making process allowscompanies to take advantage of salesopportunities based on actualcomponent availability

Real-time visibility removes frictionfrom the supply chain, reducing totalsupply chain management costs andimproving margins

Ourdemandside

Real-time visibility into chanceinventories enables management ofdemand fluctuations, seizing of marketopportunities and minimising channelobsolescence

Reduced buffer inventoriesreduces investment ininventory

Lower holding costs,warehousing costs,expediting (freight andhuman) costs

Balanced inventory deployment inresponse to actual channel behaviourcreates incremental sales

Real-time visibility removes frictionfrom the supply chain, so reducing totalsupply chain management costs

Our controlside

Reconciliation of demand patternsbetween forecasts

Pipeline management reducescash-to-cash cycle time

More stability leads to loweroperating costs

Reduction in lost sales due to stockouts

Better Return on Assets (ROA)

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updates enablesproactive management of schedules,suppliers and inventories

3.5 Measuring Supply Chain capability

When considering the requirements of an investigation process, the first factor consider is the

measurement system itself; how is business performance actually measured? Performance

measurement can be defined as the process of quantifying effectiveness and efficiency of action (Neely,

Gregory and Platts, 1995), and effectiveness itself is the extent to which customers’ requirements are

met while efficiency measures how economically a firm’s resources are utilised. A practical supply chain

performance assessment tool should be able to quantify both the efficiency and effectiveness of supply

chain action (Shepherd and Günter, 2006), which naturally promotes the use of benchmarking

techniques and ‘commercial’ auditing. Examples of tools can be seen in table 10 below, with very brief

indicators of scope and scale of assessment.

Although there are similarities or overlaps in measures and metrics considered, the approach to

assessment and analysis is seen to vary considerably. In considering the existing supply chain

assessment tools, it is seen that there are some different characteristics in both content and

methodology. Criticisms can be levelled at each of these existing tools such as the difficulties to collect

data, the unavailability of the required data, computation difficulties, difficulty in implementation, and

limited time resource. In the interests of assessing the competences and capabilities of these

assessment techniques in respect of the research questions, this author reviewed the literature around

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each study and summarised findings to compare at a glance the benefits and limitations of each in order

to select the right tool for the job. The results are shown in table 10 below, expanding on the summary

in table 11.

Table 10. Comparison of Supply Chain Performance Measurement Tools (Source: Adapted from Foggin,

Mentzer and Monroe, 2004).

Year Title Methodology Timescale Reference

1996 Supply Chain

Operations Reference

Model (SCOR)

Self diagnostic tool Extensive and

unknown

Supply Chain Council, 2001

Also

Huan, Sheoran and Wang (2004)

1998 Depot Service Index Statistical diagnostic

study

Extensive and

unknown

Sinha and Babu,

1998

1999 Performance

Measurement Group

Benchmarking tool 20-40 person hours Gunasekaran,

2004

1999 Supply Chain Value

Assessment Model

Self- assessment tool Less than 4 weeks Banomyong and

Supatn, 2011

2002 Quick Scan Audit

Methodology

Expert led supply chain

analysis

9 person days; 2

weeks start to

finish

Naim et al, 2002

2004 Supply Chain

Diagnostic Tool

Self- assessment tool

(Decision tree

structure)

Depending on the

number of

questions to be

completed

Foggin, Mentzer

and Monroe,

2004

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Table 11. Comparison of Supply Chain Performance Measurement Tools with respect to the Research

Questions.

Title Advantages / Limitations in Answering Research Questions

RQ1 RQ2 RQ3

Supply Chain Operations Reference Model (SCOR)

Excellent ‘accountability’ for improvements to yield improved metrics

Selection according to poor metrics (assumes only a small selection are poor). Good transferability between businesses, so many case studies to follow a good example.

Prioritisation is not clear; specific outcomes are anticipated as per RQ1. But biggest is best on all measures.

Depot Service Index (DSI)

Good focus on overall system performance.

Level of granularity behind top level DSI is dependent on time and depth of study which are not specified; there is no comparison between cases.

The echelon of the system creating customer misses is highlighted, but improvement is unclear and undefined beyond the scope of order fulfilment.

Performance Measurement Group

Good focus on total supply chain cost, material flow and level of supply chain integration. Excellent holistic overview.

Very little prescribed / recommended action to progress or improve system performance in order to ‘qualify’ for next level of integration – very academic.

A good recognition of the need to progress to customer integration, but further to RQ2, little substance to specify tangible practices as a result of the assessment.

Supply Chain Value Assessment Model

Developed learnings from SCOR over-dependence on fixed metrics, replacing these with fewer top level metrics to focus on; cost, reliability and cycle time. Good KPI breakdown under these.

No alignment between supply chain assessment and actions required to advance an individual company; study shows regional results for many companies based on self-assessment with no scope for measuring improvement

The study is based on a recognition to develop beyond continuous improvement but metrics are only retrospectively monitored and benchmarked. The improvement trajectory of metrics is not laid out to identify a route to improvement.

Quick Scan Audit Methodology

Good specification of measures in questionnaires – a balance between tangible and non-specific

The simplicity rules provide a framework to follow for overall gain. This is not aligned to any preferred practice such as lean, but sets out a codified level of competence.

It is not specified which rules have priority. Quickscan relies on expert auditing but the result is personalised and prioritised.

Supply Chain Diagnostic Tool

Limited; not specified in terms of impact on specific

Self-assessment provides great scope but prone to ‘pet’ projects

Great potential, but limited due open nature of investigation;

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metrics. This highlights the potential for improvement in this tool along the lines of this research.

or practices being adopted. answers can be tailored to meet demand but relies heavily on interpretation

It can be seen that there are two clear trends; most tools do a good job of identifying weak

metrics to be targeted, and specify the measures to be reviewed, which can be utilised for a before-and-

after analysis of BIT implementation. The question for all of these remains as to the consistency of the

before and after and whether individual BIT can be aligned to business improvement, but this is

consistent across the range. This leads to the trend that none of the tools truly align the prioritised

benefits and specific BIT. Again, the research questions are inter-related but RQ3 fills the greatest

knowledge gap in supply chain assessment.

Two of the tools stand out as being the closest fit to research requirement; SCOR model and the

Quickscan audit. Both take snapshot and time series data and identify areas for improvement, however

the SCOR model relies heavily on specific data while the Quickscan approach relies on expert guidance

to take a more holistic overview. Evidently, the outcome of this research, especially an assessment

framework to build on the findings of RQ3 will take the best of both aspects and utilise specific data but

in a more holistic categorisation. Shepherd and Günter (2006) also consider the suitability of company

data for comparison to a global data set in general for the purpose of finding routes to improvement, as

well as specifying shortcomings such as:

A focus on cost over non-cost indicators.

A lack of balanced approach between financial and non-financial performance measures

(Gunasekaran, Patel and Tirtiroglu, 2001).

A lack of a clear distinction between measures at the strategic, tactical, and operational levels.

No holistic system thinking when developing supply chain measurement dimensions (Chan and

Qi, 2003).68

There is also an insufficient focus on customers and competitors (De Toni and Tonchia, 2001),

which are vital when considering what sort of competitive edge a supply chain improvement

program is going to yield for the parent organisation.

As such, it is agreed that there is no single off the shelf diagnostic tool available that meets the

gap in knowledge which this research is aiming to develop. As such, there is evidently a key

methodological contribution to be made. The question then becomes one of identifying a base process

to develop, gaining benefit from lessons learned while focussing on the detail required to gain insight to

the impact of BIT selection. Each methodology was reviewed and the two strongest options are outlined

below.

3.5.1 SCOR Methodology

Since its introduction in 1996, SCOR has been applied to a number of supply chains and remains

a popular choice of auditing tool for companies looking for a benchmark in performance. SCOR includes

the principle of breaking down the value chain into basic blocks, in this case plan, source, make and

deliver which subsequently become the categories to be characterised by specific performance criteria.

This provides a structured approach to auditing, with a fact-based approach to identifying relative

weaknesses in the plan-make-deliver process. The metrics themselves are shown below in table 12. The

main strengths of the SCOR process are proposed to be the adherence to standard data sets (with little

flexibility for interpretation), and the degree to which the phases of maturity are categorised. Although

this does provide a repeatable framework which is more specific than other audit methodologies, it is a

significant constraint as it doesn’t allow for interpretation of a skilled auditor to offer bespoke audit

recommendations; the exact benefit which this research aims to deliver. Given the issue of establishing

context to identify the most important opportunities, as well as the frequent and sometimes significant

69

deviation between required and available data, it can be seen that there are some weaknesses of the

SCOR approach. Upon review of the authors initial time at Orangebox, it could also be seen that some of

the data shown below in table 12 was available while many of the others would have to be derived by

manipulation or additional data gathering, hence evidently do not reflect daily activity in the companies.

Table 12: SCOR performance metrics used for maturity assessment.

Category Performance Metric

Daily Reliability Delivery performance

Fill rate

Order fulfilment lead-time

Perfect order fulfilment

Flexibility and responsiveness Supply chain responsiveness

Production flexibility

Cost Total Logistics management cost

Value-added employee productivity

Warranty costs

Assets Cash-to-cash cycle time

Inventory days of supply

Asset turns

Another weakness, of many of the approaches, is the issue of multiple value chains being

audited independently, and independently competing for improvement in the performance metrics

within a shared supply chain network. This is supported by Huan et al (2004), who describe the

importance of being able to handle multiple objectives to achieve optimisation. Two suggested tools for

achieving this are the weighted sum approach, which requires determination of relative importance of

different metrics, and the pre-emptive approach, which requires determination of absolute priority.

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Huan et al (2004) argue that each of these approaches promote a decision making approach which does

not consider all of the available solutions, hence is not optimised in terms of finding the most

appropriate holistic response. As such, it highlights some improvement potential which is discussed later

in this section, after demonstrating some additional considerations to improve the quality of the

Quickscan output.

3.5.2 Quickscan

QSAM is considered the most suitable methodology, with the apparent benefits of bringing

together the best features of horizontal surveys (i.e. statistical significance) and also vertical case studies

(i.e. good understanding of the real world scenario). While, at the same time, QSAM avoids the worst

pitfalls of the traditional research approaches by utilising a range of data gathering techniques and

analysis; interview, observation, secondary data and qualitative analysis in order to triangulate the

various data and establish conclusions with a high level of confidence in the academic rigour. In

addition, QSAM also endeavours to analyse recorded information in time series format to associate

previous and future activities with trends in performance. This is supported by the historical records of

other ‘Quickscanned’ companies and value chains which now number close to one hundred.

Importantly, understanding the details behind two such cases enables investigation into

innovative ways to achieve superior levels of simplicity and robustness by developing non-typical, yet

more efficient value chain management systems, which will lead to closer customer integration and

potentially establish additional value streams for future growth. Particular benefit to this study is the

ability to replicate investigative actions in several instances but utilise elements of action research (Kock

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Project Leader

Team Member

Observer

2004), ensuring that depth of understanding is achieved and results are interpreted in order to achieve

its “dual goal of both improving the organization participating in the research project, and generating

academic knowledge” Kock (2004). Lallé (2003) further supports employing an action research

approach, especially when the roles of actor and researcher can be closely linked, as per figure 13. With

this in mind, the methodology and use of Quickscan benefits from incorporating each of these roles.

Figure 13; Performing Action Research requires various roles,(adapted from source Ottosson and Bjork, 2004)

The author proposes that there are two important omissions from the QSAM process, which

cannot easily be rectified through adaption in methodology without compromising comparability with

previous data. Hence, some limitations were accepted with the methodology chosen, with a view to

tackling them in an improved process developed as a result of the research. One weakness is that there

is some significant training and experience required to ensure compatibility between data sets. Another

weakness is that there is no prescribed process or data-driven capacity to conduct experiments and

carrying out simulation tests/audits to predict the relative increase in operational effectiveness as a

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result of improvement activities. This is an important feature both for the particular host company and

also for the more generic benefit of providing applicability to a wider range of companies such as the

companies A,B, and C that lie somewhere in between the charted familiar profiles of Quickscanned

companies.

However, one particularly strong feature of the process is the triangulation of data gathering

tools, which meets the preferred criteria for the research design and goes some way to providing a

strong basis for uncertainty modelling. The four data sources shown are ;

(i) Attitudinal and qualitative questionnaires, shown in appendix 2.(ii) Process maps, which provide detailed understanding of material and information flows. (iii) Semi-structured interviews, shown in appendix 2. (iv) Archival information, often in time series format to show trends rather than snapshots.

Note that the process flow showing execution of the Quickscan itself is also shown in appendix 2.

3.5.3 Mechanism of Quickscan assessment

Building on section 3.3, the uncertainty circle method is based on the control of a company’s

internal process in responding to the effects of customer demand and in turn the ability of the

company’s internal processes to place orders on to their suppliers (towill 2006). Uncertainty within the

supply system can be significantly affected by the company’s own process, supplier interface, demand

interface and by poor system controls, and can be by characteristics such as;

inability to cope with the requested demand patterns

irregular frequency and quantity of order profiles

lack of accurate tracking of customer requirements

players in the system generating ‘rogue’ orders for price leverage

wrong decision rules

stale, noisy or incomplete information.

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erratic, frequent and problematic downtime of its machinery and equipment

changing customer schedules

Which are likely to lead to increased demand disturbance in a system, often described as bullwhip.

As various business improvement programmes are successfully implemented into supply chains, it is

expected that the corresponding uncertainty will reduce in size and the result can be a more effective

and focused supply chain capable of moving towards a seamless supply performance (Childerhouse et al

2004).

Uncertainty in value chains is indicated by complex material flow, which Towill (1999b) has

described in terms of 24 detailed symptoms that can be categorised into four main categories:

Dynamic Behaviour,

Physical Situation,

Operational Characteristics,

Organisational Characteristics.

These symptoms and categories are shown below in table 13. All can be observed either

physically or via analysis of numerical data and/or written communication within the chain. Additionally,

“the ‘digital nature’ of the results obtained allows consistency to be built up between different analysts

auditing the same value stream” (Towill 1999b). In order to record these observations, it has been

necessary to produce checklists for supply chain analysts to use when monitoring the behaviour of their

existing systems. Codification via Likert scales allows the analysts to evaluate the statistical relationship

between these four groups of uncertainty symptoms and the four uncertainty circle segments

(Childerhouse and Towill 2003).

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By identifying the shortfall in smooth material flow it is possible to highlight those areas most in

need of re-engineering to obtain significant performance improvement. To this end, a set of 12 rules has

been devised which is shown in Table 14, below, with a summary of each which highlights why they

have been included and when they are likely to be of particular importance. Together, these rules point

the way forward to achieving smooth material flow throughout the chain by encompassing planning,

control and material control best practices. Towill and Childerhouse (2006) explain that using this

approach to identify improvement projects results in all important business metrics being

simultaneously improved since the supply chain system is tackled simultaneously in an holistic manner.

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Table 13.  Four classes of symptoms observed in complex material flow. (Source; Towill 1999b)

Class of symptoms Symptoms observed in complex material flow

Dynamic behaviour Systems-induced behaviour observed in demand patterns

System behaviour often unexpected and counter-intuitive

Causal relationships often separated geographically

Excessive demand amplifications as orders are passed upstream

Rogue orders induced by system 'players'

Poor and variable customer service levels

Physical situation Large and increasing number of products per pound turnover

High labour content

Multiple production and distribution points

Large pools of inventory throughout the system

Complicated material flow patterns

Poor stores control

Operationalcharacteristics Shop floor decisions based on batch-and-queue

'Interference' between competing value streams

Causal relationships often well separated in time

Failure to synchronise all orders and acquisitions

Failure to compress lead times

Variable performance in response to similar order patterns

Organizational characteristics Decision-making by functional groups

Excessive quality inspection

Multiple independent information systems

Overheads and indirect costs allocated across product groups and not by activity

Excessive layers of management between the CEO and the shop floor

Bureaucratic and lengthy decision-making process

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Table 14. The 12 Simplicity Rules. Source: Towill (1999b)

In terms of practical investigation, to identify the inhibitors to smooth material flow, the

Quickscan process can utilise one of any number of graphical representations, but usually benefits from

a time series based approach, which fits with the data trending preferences of engineers and also the

value stream analysis approach taken by many business analysts. However, these do not always lend

themselves to the individual case, and as mentioned above with regard to fit of metrics to benchmarking

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Rule 1 Only make products that can be quickly despatched and invoiced to customers

Rule 2 Only make in one time bucket those components needed for assembly in the next.

Rule 3 Streamline material flow and minimise throughput time

Rule 4 Reduce information lead times via the use of the shortest planning periods

Rule 5 Only take deliveries from suppliers in small batches as and when needed for processing and assembly

Rule 6 Synchronization of time buckets throughout the chain

Rule 7 Form natural clusters of products and designing processes appropriate to each value stream so that the requirements of diverse customer requirements can be best served.

Rule 8 Eliminate all uncertainties in all processes

Rule 9 Develop a structured approach to change. Understand, Document, Simply, Optimise (UDSO)

Rule 10 Highly visible and streamlined information flows

Rule 11 Use proven and robust decision support systems in the management of the supply chain

Rule 12 The operational target of the seamless supply chain needs to be commonly accepted and shared by all members of the change team

criteria, discrepancies occur which indicates that Quickscan is not necessarily the ideal process. To this

end, it was useful both to undertake the audit, and also to observe how the company approached its

own analysis without intervention as well with regard to:

The type of Process mapping techniques used,

The types of BPI techniques used

Their effectiveness in creating growth etc

The levels of complexity of their products and how BPI assists

Comparing this between the two cases gave a good idea for comparison, as well as a strong

indication of how prescriptive an audit process could or should be to maintain relevance to the widest

possible cross-section of the manufacturing industry. The following chapters describe how the author

has worked closely with the case study companies to undertake QSAM audits, observe the outcome and

identify variations that have yielded further benefits, providing the academic insight to the discussion in

chapter 7.

3.5.4 Advances in QSAM Methodology

Childerhouse and Towill (2011) state that some important areas for improvement in the

Quickscan arena include; firstly an increase in uptake by practitioners, and secondly a review of business

process improvement (BPI) techniques utilised post-audit. They recommend that the latter is achieved

by means of either linkage to the original audit or undertaking a second audit, the results of which could

help promote the required increase in uptake. However the results of this study would seem to

contradict that to some extent, demonstrating that in fact the uptake is limited because the current

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audit practice is not delivering a specific, bespoke, improvement plan against which progress can be

monitored.

Towill and Childerhouse (2011) have also expanded on application of the 12 simplicity rules,

proposing that six are for internal application with the appropriate industrial engineering experience

while six rely more heavily on external collaboration. This is important in the cases where the company

is under-resourced at either industrial engineering or management level.

3.6 Summary

This section has reviewed the literature related to use of the extended supply chain to exploit

new opportunities, and develop new capabilities. The repeated theme is to use existing business

improvement principles but go beyond the ‘red zone’ in figure 8 and achieve competitive advantage

(without developing a ‘new’ paradigm).

Literature review related to the third research question around the assessment techniques

available highlights that existing audit processes determine requirements according to the scope in

which they were created; lean assessments recommend lean activities, etc, and that there is currently

no tool available to identify the novelty required to bridge the ‘red zone’ in figure 8. Any assessment or

benchmark relies on a scoring system for performance measurement, which in a complex supply chain

system, is a challenging requirement. Thus, the uncertainty principle described above appears to

perform an essential role in translating local process capabilities into an overall balanced model of

supply chain performance. The next chapter goes on to describe how the research methodology

adopted in this research promotes use of the uncertainty principles can be for supply chain assessment,

and how Quickscan provides a solid base for methodological improvement.

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4 RESEARCH METHODOLOGY

4.1 Research Philosophy Adopted in this Research

The term research philosophy is an overarching term concerning the development and nature of

knowledge (Saunders et al., 2007). Issues of ontology and epistemology are central to this study, not

only in terms of the author’s own personal stance but also in terms of the dominant stance to be found

both within the broader management and organisational field and also the sub-field of operations

management (which has been dominated in recent years by lean and TPS in various environments).

Epistemology is concerned with establishing a theory of knowledge. This author appreciates that

there is a balance required between the traditional stances of rationalism and empiricism, given that

there is some element of irrefutable theory behind the development of business improvement

techniques, however the knowledge around their implementation is yet to be secured and requires the

element of experience and observation to derive and justify proposed ‘best practice’ as knowledge.

Predominantly this author has adopted a thought process of critical realism, understanding that when

considering a complex supply chain system, variations in components that are thought to be directly

linked may not capture the full scale of cause-and-effect. Thus a scientific methodology is preferred to

gain a more definitive understanding than the current knowledge base provides.

Ontology relates to ‘being’; what is it to ‘be’ and what is ‘real’. It is an aspect of any

philosophical approach that builds on many assumptions, or maybe decisions by the philosopher, and

will subsequently drive toward a particular route of investigation. The variations in ontology are at the

heart in the differences in methodology. So it is a key area to understand in respect of what approach

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should be taken, given an understanding of what is expected to be real and what is expected to be

investigated/discovered. At the very least, it is important to take the correct stance to maintain

consistency between the intention and the methodology. As above, this author has taken a stance that

there are aspects of reality, in that actions improve performance, and that in the manufacturing

environment there are effects that would be seen. Whether they would be seen with or without a

particular cause is therefore the heart of this investigation. Evidently this cannot be determined if the

author is the person implementing the case to aim for a specific effect, as this defeats both the intended

epistemology and ontology. Therefore it has been essential to ensure that the author’s role in the

research is part of the reality, and that the research itself is then an independent view of that reality. By

definition, this fits well with a stance of positivism. There are arguments that a positivist stance means

that there is insufficient understanding of a reality, but in this case the challenge is more one of

maintaining the distance from the reality so as not to distort it.

Evidently, the research philosophy adopted in the course of this research will drive the

approach, strategy and techniques utilised to gather data and answer the research questions. The

linkage between these is a central concept of Saunders et al (1997), who represent it as an ‘onion’; at

the heart of the research is the specific tool and technique used to gather data and develop knowledge,

but you cannot get to it without having an idea of the knowledge you want to gain and the way in which

it can be developed. The point being that the way in which the research is undertaken must be

appropriate to the nature of the knowledge being sought and the environment in which it resides. In

this case, the knowledge is around the impact of an improvement practice, how the opportunity can be

identified and which of many opportunities should be prioritised. This leads the researcher to take a

positivist stance in order to observe the implementation of an established practice, and a deductive

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approach to discover its impact. However, there is a significant caveat to this traditional approach in

terms of the limitations of how the phenomenon is observed, and whether the deduction is valid given

the complexity of the system in which this research is being carried out. Therefore the choices, time

horizons and techniques / procedures must be carefully selected to ensure that scientific validity of the

investigation is supported by a more pragmatic aspect of reviewing the findings and learnings. This

ensures that the practitioner gains a benefit from this research as well as the academic community.

Figure 14 below demonstrates the research philosophy adopted in this work.

Figure 14; Research Philosophy plotted on Saunders’ et al Research ‘onion’.

Figure 14 clearly shows the positivist approach taken by the author, adopting a deductive stance

but requiring a mixed method approach to obtaining a variety of sources in order to deduce the true

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impact of a business improvement technique. This clearly relies on achieving a level of understanding

and appreciation of the whole system behaviour, potentially a cause of great complexity in the scientific

cause-and-effect thinking. Hence a longitudinal approach is essential, which in this research revolves

around selection of an appropriate toolset and application to an appropriate selection of case studies.

David Richard of Liverpool university provides a succinct explanation that fits this author’s

intended approach in his lecture notes for “Research in politics”:

“Positivism adopts a foundationalist ontology and an according epistemology. It developed from

the empiricist tradition of natural science and sees social science capable of the same possibilities that

are there in the natural science. That is, it is possible to observe everything that happens and

understand it as such without any mediation, thereby denying any appearance/reality dichotomy. As in

natural science theory is used to generate hypothesis, which can simply be tested by way of direct

observation. The ultimate aim is to find general laws and causal statements about social phenomena.”

Considering the purpose of this research, Meredith (1998) is an important contributor to

research design, concluding that “Although there exist many trade-offs between rationalist and

case/field studies, the former tend to focus on explanation/prediction (what and how) while the latter

are more concerned with the understanding (why)”. Given that this research focuses on the

understanding, the case study approach is supported. In practice, the author has taken this positivist

view within two companies to develop detailed longitudinal case studies. To ensure that the research

philosophy was maintained, the research methods had to be carefully considered.

4.2 Research Strategy

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Watson (2004) describes a useful and practical framework for crafting research. The framework

helps focus on the source of inspiration behind the research objectives and demonstrates a top level

route to progress. A careful definition of ‘what’ the research is aiming to achieve and ‘why’ is required in

order to focus on the critical issues and avoid being side-tracked by erroneous threads of investigation.

Watson then splits the research into ‘how’ conceptually and practically, which prompts the researcher

to think forward to the data collection plan and ensure that integrity, rigor and continuity is maintained

such that the data supports the investigation and that the conclusion is appropriate to the initial

hypothesis. Following this approach, the most appropriate research philosophy and methodologies can

be identified. Ghauri and Gronhaug (2002) support this train of thought, stating that research design

relates to the choice of strategy to collect the data needed to answer the stated research problem. In

this case the ‘what’ is the prioritisation of business improvement techniques, the ‘why’ is the

competitive advantage gained by the company, and the ‘how’ is the really interesting bit. Conceptually it

is by using a supply chain auditing tool, but practically it is not clear how because there is no ideal tool

available off the shelf. Hence, the best available tool is to be selected, applied, and improved upon, as

part of the novel contribution of this work.

Research methodology itself refers to the research techniques and the analytical routines

employed in a study. The methodology of any science involves its rules of interpretation and criteria for

admissible explanation, as well as the research designs, data collection techniques and data processing

routines developed from these rules and criteria (Holt et al 1970). Methodology therefore defines the

process through which a researcher obtains information following logical steps so that data can be

useful for the purposes of the research and interpretation (Kapten 1997). How this data is gathered is

therefore a key consideration to Watson’s ‘how’ questions. Eisenhardt (1989) advocates using elements

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of both scientific fact and interpretation to further the contribution to knowledge from experience and

investigation, which is certainly supported by the opportunities the author has had during the research.

There are a variety of options available to gather the data. Survey based work, which has a

relative strength in terms of being able to draw information from a wide variety of data sources to

achieve more of a general consensus but suffers from a separation of the research from the primary

data source, which may serve to undermine the findings and specifically lead the researcher to follow

the more traditional pre-conception of business improvement techniques, as they would be explained

by the survey respondent. Ethnography is an approach which seeks to provide an in-depth explanation

of everything that is observed in a study, which would seem to be aligned to the depth of understanding

required, but is clearly at odds with the positivist stance that this research is based upon. Hence, case

study is considered to achieve the best outcome in terms of the detail required and the positivist

viewpoint of the reality to draw an informed conclusion related to the cause and effect of the business

improvement implementation. The case study approach has therefore been selected but is also carefully

considered to ensure that traditional weaknesses are avoided or mitigated.

Figure 15 below demonstrates the process flow of the research development summarising the

decision tree and rationalisation of the approach adopted for this work. This reflects the key stages

advocated by Saunders to chart the process followed, in order to align the data (and data gathering

process) with the development of new knowledge in the anticipated area. The following sections go on

to explain the thought process behind the selection of the specific techniques and procedures employed

in this case study fieldwork. This builds on the assessment of auditing/benchmarking methods outlined

in table 10 and the previous chapter, and follows the development of the research philosophy targeting

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novel contribution in the utilisation of BIT; maintaining the distinction shown in figure 12 (the

uncertainty circle) between the internal improvements and external, supply chain, improvements.

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Figure 15; process flow of the research development.

4.2.1 Case Study Approach

Analytic induction or case study research is an in depth study, within a real life context, of a

selected range of cases to empirically establish the causes of a phenomenon (Saunders et al., 2007, Yin,

2009). The terms ‘case study’ and ‘qualitative method’ now cover a diverse range of approaches

regarding the actual forms of data employed, how they are obtained, and in terms of ontological and

epistemological assumptions involved (Hammersley and Gomm, 2000, Stake, 2000). This sub-section

discusses factors that influenced use of a case study approach and the adoption of a positivist stance for

this research.

A broad definition of a case study is that it involves seeking diverse kinds of evidence which are

found within the case setting, to provide the best possible answer to the research question. Hammersley

and Gomm (2000) point out that case study research denotes a particular form of inquiry that differs

from other forms of social research such as experiments or social surveys. Unlike experimental

researchers, who seek control of variables, case study researchers build their cases from naturally

occurring situations. Case study research may vary in terms of the number of cases studied and the

amount of detail provided about the case. Essentially, case study research generally refers to the

investigation of a small number of cases, or in some instances just one, in considerable depth. Variation

exists in the extent to which researchers document the context of the case in terms of the wider society

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and historical context. Variation also occurs according to whether the case study researcher is

concerned solely with description and explanation or engages in evaluation and prescription.

Case study researchers’ aims typically differ from researchers who use experimental,

ethnographical or survey methods, in that their focus is on capturing the uniqueness of a case, rather

than using their findings as a basis for wider generalization or theoretical inference. Traditionally this is

reflected in a contrast between those who assume a positivist stance (and approach social life externally

to observe objective knowledge), and qualitative researchers (who approach it internally, attempting to

understand the meaning that social actors give to phenomena under investigation).

Yin describes a variety of case study designs and dimensions, such as the debate about validity

of single or multiple cases according to the research aim:

Single case studies use a single critical case to test a well-formulated theory; it may represent an

extreme or unique case. Single cases are also used where the case is representative or typical of

a particular circumstance or condition, or where the case is revelatory. Finally, single case

studies may be longitudinal, where the same case is studied at different points in time (Yin,

2009).

Multiple case studies allow for replication of the findings, or they can allow for ‘two-tail’ design

where case studies are chosen from the two extremes of a phenomenon are chosen. Multiple

case studies also allow the researcher to explore a range of conditions, choosing different sub-

groups of cases to cover each condition (Yin, 2009). The other dimension of analysis holistic or

embedded refers to the unit of analysis. A holistic case study treats the organisation as whole,

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whereas an embedded case study examines individual sub-units such as departments or work-

groups within that organisation (Saunders et al., 2007).

Taking all the above considerations into account, it is clear that there is a time and resource implication

in gaining the necessary insight to each individual case. Also, that given the complexity of a supply chain

system and the quantity of variables studied, that a longitudinal case study is the preferred option to be

able to observe the direct effects of the actions taken. Understanding the relation between cause and

effect lies at the heart of this research, which reinforces the depth of knowledge required around the

company context (hence the time required). However, a single case study would leave a number of

weaknesses along the lines of validity and reliability, and would be insufficient to support the findings

and conclusions that could be leveraged for the benefit of future supply chain assessments. So, a second

case was essential. Some degree of variation between the company contexts of the two cases was

inevitable, but given the nature of the study to understand cause and effect, it was not essential to be

either repeating conditions as per a repeatable experiment or aiming for a wide variation and aim for

the two-tail design described above.

4.2.2 Case Study Selection

The initial audit undertaken at Orangebox as part of the authors ‘day job’ could be reviewed in

terms of its eligibility and subsequently developed into a full case study, meeting the definition of

Hammersley and Gomm (2000) by building a full picture of context, undertaking the audit, and following

up with observation of the improvement results to gain a detailed picture from diverse kinds of evidence

which are found within the case setting. The required second case was subsequently developed as a

result of both convenience, given that again the author was close to the data source (and later

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employed by the company), and also given the commonality of history and base company

characteristics.

It was also important to consider how the research output and findings would be applied and

utilised, and that an increased number of cases with some diversity would be beneficial in terms of

delivering results. This benefit is two-fold; to practitioners for use of an improved methodology, and to

academics in accepting and further developing the contributions to knowledge. To this end, in addition

to the two full case studies, the author was able to contribute to assessments of several other

companies using the prescribed Quickscan process, which were undertaken with equal rigor and with

equally positivist output (if not more so given the limited timescale available for the audit and

observation). These are presented in less detail than the two case studies but provide a an important

insight to how the findings of the two main cases are supported by other examples, as well as gaining an

insight of how an improved audit might influence the outcomes of an assessment in the future; a ‘quick

and dirty’ validation of the theories developed through the longitudinal case studies.

In addition, these secondary data examples form a useful part of tackling the anticipated

weakness of using the case study approach, which are detailed a little later in this section but can be

referenced here as generalisability and bias. By definition, taking two cases, even if not for the purpose

of forming a two-tail design might or might not encompass the whole spectrum of cases available. When

considering the research area, studying two companies from the range of thousands available would not

be expected to encompass the whole spectrum, but could it also be thought of as representative? In

short, the situation and status of a company is formed by a great many decision points in the growth of

the company, but there are only a finite number of options, so there is only a finite range to choose

from. The extremities of the range are (at the bottom end) companies who have no desire to improve,

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and (at the top) those who have developed the art of improvement to be one of their core capabilities.

These extremes are best suited to being the subject of future work and identifying ‘exceptions to the

rule’ being developed in this work. Thus, it is suggested that the two case studies should be

representative of a majority of companies, being of similar but not identical characteristics. Therefore,

the requirement was to find two cases demonstrating sustained growth but with further opportunity in

their current trajectory (not expecting any external influence such as merger/acquisition). These two

cases should be either side of the mean improvement capability; one focussed on the traditional route

to improvement and using incremental continuous improvement, and the other that is further up the

maturity curve. It is worthy of note that some additional work could be undertaken to identify the

normality of distribution between the two extremes, as no ratified model could be found against a

particular variable of supply chain maturity or complexity; would it be sensible to propose a normal

distribution? If so, two such cases would certainly be representative, as could be demonstrated in figure

16 below.

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Figure 16; Possible distribution of companies according to complexity or maturity profile.

Regarding the selection of the case study companies, an aspect of convenience/availability was

also an important factor; a good relationship is required to maintain the longitudinal study, and support

the requirements of the research as well as deliver the practical work. Given that the author held a role

of employment with Orangebox at the time of the research motivation, that company was selected as

the ‘slow and steady’ continuous improvement company. The second case is a company that came into

contact during the author’s time at Cardiff University; a mature company with a steeper growth curve

than Orangebox (despite similar beginnings), OCD fitted the requirement and were receptive to

supporting a quickscan study. As mentioned, the author then gained a permanent position within OCD

which served to strengthen the support for the research and created a stronger parallel with the

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Case study 2

Case study 1

Company A

Company B

Company C A

Orangebox case. However, to reiterate, it was key to maintain impartiality in respect of selection of

improvement activities such that the research was not biased and that the outcomes were not pre-

conceived by the author. As is discussed in some detail later in the thesis, this became a vital aspect in

terms of developing the novel contribution; given the premise that preconception or expectation of an

auditing team directly influences the findings regardless of how appropriate they are to the company.

4.2.3 Implication of Adopting a Case Study Approach.

Undertaking longitudinal case study provides an understanding of the dynamics associated with

implementation over a sustained period of time, which therefore needs to be qualified and quantified

for the benefit of the research presentation. As such, a mixed model of quantitative and qualitative work

is inherently required. In carrying out the research, predominantly qualitative methods were used to

record the experience of a small sample of business improvement projects, while supporting this with

the quantitative impact of each case. This approach was taken in order to support the rationalist

epistemology, aligning experience with previous research and existing theory to develop new knowledge

around the implementation for optimum outcome, given the generic case characteristics. Further to

this, the triangulation of methods was reflected in the value of the study to host companies, who would

not appreciate a purely theoretical audit observation.

Burgess et al. (2006) emphasize the weakness of SCM research in terms of the dominance of

quantitative research and explain the lack of diversity in research methodology. In order to avoid such

criticism, balance must be achieved between traditionally confounding approaches such as: positivism vs

interpretivism and quantitative vs qualitative methodologies. In order to achieve balance in this study,

the author has considered a variety of quantitative measures as described below, but has focussed on

the relative strengths/weaknesses of system elements for each study. Indeed, one significant strength of 93

this work over others is the qualitative comparison between two detailed studies to identify the

relatively similar, and also confounding, business factors.

Social science researchers are familiar with the issues of qualitative vs. quantitative research.

Both methods are generally regarded as useful and legitimate, but traditionally scientific (or

quantitative) methods have been dominant. As a result, the main role of qualitative research has

typically been reduced to helping create and pose hypotheses, which can be tested and refined using

scientific and/or statistical research methods and models. This general trend reflects theoretical fields,

such as sociology, and practitioner disciplines (including management and marketing) which transform

theoretical knowledge in practical ways (Walle 1997).

In practical terms, business disciplines such as marketing have made a concerted effort to

embrace a ‘scientific’ orientation in order to establish themselves on a par with other academic

disciplines (Towill, 2006a). However, such tactics have led to a loss of relevance among practitioners

(Walle 1997). Thus, purely statistical tools are now being supplemented with more qualitative methods

and as a result, a variety of qualitative techniques have gained prestige within social science research

(Walle 1997). Therefore the author has significant confidence that a case study approach adopting this

balance of technique is sufficient to deliver all the anticipated academic and practical outcomes.

There is a variety of approaches available to gather data; from widespread questionnaire, to

individual case study. As previously discussed, the level of detail required to effectively investigate a

research issue related to company growth is far greater than that which could be gathered by

questionnaire alone. But the resource required for each case study was also a limiting factor so care had

to be taken to draw the maximum benefit of the study and avoid any potential weaknesses.

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With this approach in mind, the data gathering techniques must then be suitably well structured

to gather information with maximum impact and reliability without the need to extract every level of

data which would serve to bias the scholar toward acceptance of the original source / cause of the

existing situation. Yin (1994) describes how research design links the data to be collected to the

conclusions to be drawn to the initial questions of the study. Yin (1994) reiterates the important criteria

in terms of the size of the study, the nature of the data to be collected, the time available and other

such practical implications to design the data gathering process for optimum effectiveness.

4.2.4 Data Gathering Approaches

In light of these findings, it was clear that a mixed model of data gathering was required, which

ensured that the process undertaken was robust and rigorous, and that the subsequent conclusions are

appropriate and defensible.

Quantitative data is numerical data that has been quantified (Saunders et al., 2007).

Predominantly the quantitative data is discrete data output from a process or operation, which can be

tracked, trended and analysed to form scientific argument or conclusions. There are obviously significant

variations on the level of the business which this data can be drawn; profit and loss (P&L), sales, cost of

goods sold (COGS), etc at a top level, down to cycle time, scrap, equipment utilisation etc at an

individual machine level. The important issue at hand is the alignment of these and a significant part of

this research related to the improvement of machine performance (by whatever means) to deliver top

level benefit. Quantitative data collection can also include cost-benefit analysis and modelling, using the

findings of numerical methods to determine secondary levels of discrete data.

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Qualitative research is described by Strauss and Corbin (2008) as “A process of examining and

interpreting data in order to elicit meaning, gain understanding, and develop empirical knowledge”.

Qualitative research can be split into two forms; deductive and inductive. Deductive research develops a

theory that is tested using analytical strategies where data categories and codes are predetermined,

whereas an inductive approach allows the theories to emerge from the data, so there are no

predetermined codes or categories to guide the analysis (Saunders et al., 2007).

Within the research literature, there are different positions on the extent to which qualitative

researchers bring their own preconceptions to their studies. Creswell (2007), for example, has argued

that qualitative research, ‘begins with assumptions, a worldview’. By contrast, Denzin and Lincoln (2005)

maintain that prior assumptions should be consciously put aside, and in their place, the researcher’s

understanding of social situations is progressively facilitated by research practices, ‘that make the world

visible’. While no researcher can be said to be entirely lacking in preconceived ideas about a research

topic, an attempt was made in this study to minimise the influence of prior knowledge, so that the third

party viewpoint made the ‘world visible’, in the manner that Denzin and Lincoln describe.

4.2.5 Research Validity and Reliability

Critics of the qualitative approach suggest that it may lack rigour, especially if biased views have

been allowed to influence the findings and conclusions, or that it takes too long (Yin, 2009). The

problems of rigour can be addressed through considering issues of validity and reliability. Validity is a

description of true representation of the phenomenon being studied; how valid/representative is the

case to the wider reality? Reliability is a more operational consideration, reflecting the effectiveness of

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the research process and data gathering in extracting the real data from the case, therefore enabling

valid conclusions to be drawn. Reliability may also be impacted by management expectation or personal

influence on sources of data so, again, the positivist stance stated in this research is an important

position to maintain.

Triangulation should also help to overcome one or both of these problems. Triangulation is

described as the use of multiple sources, methods and investigators to give corroborating evidence

(Creswell, 2007). This could involve interviewing different people within an organisation,

documentation, archival reports or case studies undertaken by other researchers within the same

organisations to verify the evidence given. However, there is the caveat that different data gathering

methods could yield different results.

Burke Johnson (1997) argues that a potential threat to validity that researchers adopting a

qualitative approach need to be aware of is researcher bias. He suggests that this arises because

qualitative research tends to be exploratory, more open ended and less structured than quantitative

research. Risk of bias can arise from undertaking selective observations or the selective recording of

information. In addition, there may be a danger of the researcher allowing their own views and

perspectives to influence data collection and analysis.

4.3 Weaknesses in the Research Methodology Adopted

As mentioned earlier, many researchers have criticised a case study approach, and there are also

methodological considerations to consider in the process of undertaking the research itself. The

following two sections consider these respectively.

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4.3.1 Generalisability

In his discussion of generalisation and single case studies, Donmoyer (2000) argues that notions

of generalisability may need to be reconsidered. He contends that the ideological nature of the

paradigms and concepts researchers’ employ in carrying out investigations can leads to speculative

conceptualizations which are not determined by the data but, rather, determine what the data are.

Elaborating on this, Burke Johnson (1997) suggests that researchers should make clear the

number of respondents in their study, how they were selected for the research, information about the

informants, contextual information, the methods of data collection and data analysis techniques used. If

this detail is provided the reader can arrive at naturalistic generalizations related to their own

experience. Sample sizes do not have to be large for this to be possible, small samples and even single

cases, have the potential to enlighten and inform. Commenting on the issue of generalization and case

study research Donmoyer (2000) states that for practitioners concerned with individuals, not aggregates

“research can never be generalisable in the sense suggested by Thorndike”. Research can only function

as a heuristic; it can suggest possibilities but never dictate action. It may well be the case that case study

research can fulfil this function as well, or possibility even better, than more traditional approaches to

research. (Donmoyer, 2000).

Lincoln and Guba (2000) also argue that scientific notions of generalisation are an inappropriate

aspiration for case study researchers. They suggest that case studies can offer ‘working hypotheses’

which may offer insight into other cases because of the degree of similarity between the case studied

and another context. Lincoln and Guba talk about this in terms of the degree of transferability which is

ascertained through empirical findings. They refer to this as ‘fittingness’ and explain: Fittingness is

defined as the degree of congruence between sending and receiving contexts. If Context A and Context

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B are ‘sufficiently’ congruent, then working hypotheses from the sending originating context may be

applicable in the receiving context. (Lincoln and Guba, 2000).

Lincoln and Guba (2000) state that in order to make a judgement about fittingness the

researcher needs to provide sufficient information about the context in which an inquiry is carried out

so that other interested researchers have a basis to make a judgment. Therefore, historical, social,

environment, and political contexts may need to be considered as they will help to explain incidents and

issues of concern which form the background to the research. Lincoln and Guba (2000) define an

appropriate base of information as a ‘thick description’ which informs the reader of all they need to

know to in order to understand the findings.

With all of these requirements in mind, each of the processes and practices shown above, in

Table 10, were considered for suitability to philosophy, strategy, and research design. In addition,

repeatability and longevity were important issues in this study, necessitating accessibility and closeness

of fit to existing data and other such ‘logistical’ issues. The overall best fit was judged to be the

Quickscan Audit Methodology (QSAM) which proved to be an excellent fit with the authors full time role

in the case study companies. Hence quickscan was selected for use as the audit tool and principle data

gathering instrument.

4.3.2 Practical Application of Research

As mentioned, the author worked in each of the case study companies, in slightly different roles

but in very similar capacities. At Orangebox, the author’s first role was that of an industrial engineer, at

which time the company’s operations required some improvement in stabilisation of quality issues,

process capabilities and integration of local suppliers to aid smooth material flow. Secondly, the author

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worked as production supervisor to embed the benefits realised by the early changes resulting from the

Quickscan. Finally the role reverted to that of a production engineer, working closely with product

designers and the supply chain to further align product and process capabilities and requirements, and

continuing to embed improvements in the supply chain. The holistic view and understanding of all areas

of the business was critical to effective application of this business improvement role.

At OCD, the author has been employed as a Lean Facilitator, more recently achieving the

position of Process Excellence Leader, which is another autonomous role. The objective of the role is to

develop a similar business wide view of operations, process and product capabilities and critical

interactions and bottlenecks. The relative difficulty in this case is the complexity of the product, and

subsequently the process itself. This means that a significant ‘induction’ time is required to allow the

Lean Facilitator to propose and implement appropriate improvement ideas. This research itself has

proven to be an important aspect of this induction time, and use of the selected research methodologies

has compressed the learning time significantly. In itself this has been a significant motivation to

formalise and expand on this work, such that it may be utilised in the future for initiation of other

business improvement roles or projects.

4.4 Summary

Assessment of value chain effectiveness is an area with a variety of tools already employed.

What this research is attempting to undertake, is to develop a tool beyond its current limitations and

use it to provide an effective and accurate roadmap to sustainability as described in chapter 1. This

requires a detailed understanding of the relationship between successful company characteristics,

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customer requirements and a review of the impact of business improvement tools. To do this, case

study is the most appropriate research methodology, taking a positivist stance to minimise the potential

weaknesses. Triangulation of data using various techniques is key to getting the depth of accurate case

understanding. More than one case is required, but resource limitations prevent an expansive design, so

two cases have been described in full detail, supported by three summarised audits undertaken with

equal rigor using the Quickscan methodology. Each case models the company’s current capabilities and

identifies the variations between the traditional recommended route to improvement to that actually

taken; given that each case excelled in performance beyond that which traditional thinking would

deliver.

At the start of this chapter, it was stated that the objective of establishing the research strategy

was to align the data and data collection process with the intended gain in knowledge. This alignment is

now summarised below in table 15. It can be seen that the longitudinal case study in two detailed cases

is set up to discover the reality in supply chain improvement. By undertaking the case studies this

research is aiming to discover the key determinants of a successful business strategy, then go on to

create a model to assess the supply chain’s current capabilities in these determinants and identify the

optimum route to improvement.

Table 15: Applicability of research strategy to research questions.

Research Question Aspect of research strategy Alignment to Objectives

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RQ1. What is the effect of implementation of business

improvement techniques (BIT) on performance of

manufacturing companies?

Case study; undertaking before and after audits identifying cause

and effect of proposed and actual BIT implementation. First hand observation and collection of primary data to evidence the

cause and effect.

Identifying the key determinants to a successful manufacturing

business; the common ingredients to an effective business strategy and their

benefit to the business.

RQ2. How can companies identify the necessity for specific

improvements in an extended value chain context?

Supply chain auditing techniques; utilizing best

practice to understand the theoretical roadmap for

improvement, which should advance the business along the

maturity curve.

Observing how the case study companies deviated from the theoretical ideal improvement

plan, isolate the drivers and enablers for this deviation and

the associated benefit.

RQ3. How can a company prioritise required

improvements once they have been identified and implement them for maximum return on

investment?

Develop knowledge, based on both observed phenomenon and

learning from the literature review, to contextualize the

impact of correctly selected BIT and identify how the key drivers

and enablers can be characterised and identified in a

novel, output-centric, supply chain assessment.

Development of an assessment framework that is applicable to a

manufacturing supply chain to determine the growth

requirements and align business improvement to meet those requirements; focusing on

priorities and maximizing return on investment.

The following main chapters describe the findings in each case study, utilising the quickscan

audit approach to assess the company and identify improvements. The recommended improvements

could then be compared with the actual BIT used as time progressed, to identify where the quickscan

was accurate and where it ‘missed the point’. Thus, improvements in quickscan output could be seen

and by means of cross-case comparison, key determinants could be found and used to focus the

improved output on company priorities.

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4.5 Research Ethics

This research has had the benefit of work undertaken in more than one university, and indeed

more than one school in Cardiff. The research ethics governance at Cardiff is largely devolved to the

school’s research ethics committee, who’s procedures are reviewed and overseen by the Research and

Commercial Division;s central function and its central research ethics committee. At Newport University,

the University’s Quality Assurance and Enhancement Unit provides guidance on the University’s

approach to academic research ethics and the requirements for students and staff to maintain high

standards of ethical conduct in research. As such, the research has been assessed against the criteria of

more than one school and meets the procedural requirements.

Adopting the research approach described above makes use of human input at an individual

level by means of interview and also collaboration with scoring the simplicity questionnaires. These

inputs were key to codifying the complexity and capability of the supply chain, but have not been

published or isolated for presentation either as part of the research or as part of the quickscan feedback

to the companies. For the two longitudinal case studies, the collective accountability to the company

has been cleared with persons holding some responsibility for the legal entity, stating clearly that the

research outcomes and views of the author are in no way a reflection of opinion or product of work

undertaken by the company. This was not the case with the three additional cases in which the new

model was applied in tandem with the quickscan audit; hence the reference to companies A, B and C.

entity doing good and avoiding harm are the basic principles of research ethics.

On a day-to-day basis, the author had the opportunity to work closely with all of the

interviewees and also the business process owners who benefitted from the improvement achieved as

a result of the research. Again, the positive impact was not affiliated to any human subject, and

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reference to product lines was most appropriate to avoid many ethical issues. The main issues

considered, in line with university guidelines were:

1. Minimising the risk of harm2. Obtaining informed consent3. Protecting anonymity and confidentiality4. Avoiding deceptive practices5. Providing the right to withdraw

In practice, the companies were also offered the right to review any work before publication,

hence reserved a right to withdraw from individual aspects of the research before it was made public.

This ensured a protection of any proprietary knowledge and any information the company would wish

to withhold from the public domain.

Throughout the process, the companies have been appreciative of the benefits gained, and

supportive of the research output, especially given that the methodological outcome is, in a sense,

generic and generalisable; companies adopting a similar approach in the future will gain their own

benefit without needing any access to the original case study companies’ data or information.

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5 CASE STUDY 1; ORANGEBOX

In this chapter, the first case study company and field work is described. Orangebox is a

company which manufactures office furniture, in which the author worked for five years. The research

motivation was realised during this time, and the original quickscan audit was undertaken as a result,

toward the end of this time as per the timeline shown in figure 1. This study was focussed on the “G64”

range, being a high value and high volume model.

Following the quickscan process (appendix 2), uncertainty circle principle(figure 12) and the

research flow (figure 16), the chapter presents a number of sections which reflect;

1. Introduction2. Quickscan 1, audit findings and recommendations3. Supply chain (external) activities – BIT implementation 4. Internal activities – BIT implementation5. Future Growth and Sustainability Roadmap (quickscan 2)6. Summary

Observing firstly the impact of the supply chain, then secondly the internal improvement

activities, the deviations from the quickscan recommendations were identified and a second quickscan

was undertaken. This demonstrated the improvement against the simplicity scores and an assessment

of whether this improvement was aligned to business benefit. By learning from the similarities and

differences, it has been able to identify the essential capabilities of the manufacturing business unit. This

directly contributed to answering RQ1, and subsequently formed the basis of the cross case comparison

in chapter 7 which goes on to tackle RQ2 and RQ3.

5.1 Introduction

Orangebox was established as a private company in its own right through a management buyout

in 1999 (then known as Genetix GX Ltd). Subsequently, necessity dictated that there was a shift in

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management style towards management by results (Drucker 1999). The priority being to ‘get product

out of the door’ (however it be achieved!) to meet customer delivery expectation on time in full (OTIF).

This was frequently detrimental to the wage bill (incurring overtime) or potentially to product quality

when untrained or unbalanced work teams were rapidly reconfigured to manufacture a new batch of

product. The commitment of its staff to achieve this makes Orangebox a good example of a successful

SME continuing to develop its working practice, but finding it difficult to achieve World Class

Manufacturing status without a specified structure or framework of techniques (Hendry 1998) (Gilgeous

& Gilgeous, 1999).

The manufacturing facility is based in South Wales and with the initial help of the WDA,

Orangebox has come to own its factory premises, in addition to renting an impressive showroom in the

heart of the design community in London. The manufacturing facility had previously manufactured

furniture under licenses from a number of companies, and has previously been owned by the world’s

largest contract furniture corporation, Steelcase Strafor. This gave the new company a natural kick start

into business with strong connections and a skilled workforce already in place. It continues to be the

sole UK licensee for the Swiss companies Giroflex and Dietiker in addition to selling its own brand

Orangebox furniture. Further business facilities incorporated under the Orangebox banner include an

ergonomics consultancy, service centre and its own sales network.

The company has experienced continuous growth over recent years and has developed a

healthy market sector share based on high quality and a highly functional product base, developed and

supported by a customer-oriented internal R&D department. Today however, the company experiences

far greater competition from companies operating right in the centre of their product base. This

therefore means that Orangebox has to now concern itself with driving down product cost and

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increasing the functionality and customisability of their office seating whilst further reducing product

lead-time.

This is an innovative approach for both the archaic world of contract seating, and the time-

honoured traditions of the site and workforce. A steep learning curve in many of the tools required to

create a world class manufacturing business has been essential, accentuated by the need to adapt them

to an industry outside that in which they were conceived. At the start of this research, the author

worked within each of the production engineering, and production supervision teams. This provided a

wide appreciation of both difficulties and opportunities encountered in the day-to-day business

activities, and the process of improving them.

In terms of general company numbers, at the start of the research, Orangebox were turning

over around £20m, employed around 200 people (including sales and service), of which around 50%

were direct workforce. Cost of goods sold constituted around 55% material costs. Supply of product is

direct to customers who number over 100, mostly in the blue chip banking sector, or alternatively to

office furniture dealers, who resell the product, usually to smaller customers. The manufacturing facility

was producing around 50,000 items a year.

5.1.1 The Product Range

Having taken over the company, the new management team was quick to secure a long term

relationship with the Swiss company Giroflex, who have a strong pedigree in the sector of well designed

top-end task chairs (‘swivel’ or ‘office’ chairs). Further to this, the company supplemented its product

offering by kit building chairs from components bought effectively from a catalogue. This cheaper, ‘own 107

brand’ range, served two purposes; it opened the door to new customers (who often came to

appreciate the increased value of the more expensive Giroflex product), and it also paved the way for

product customisation and product knowledge in the components designs. The latter aspect allowed the

company to start improving the kit built chair, still buying standard movement mechanisms but adding

exclusive seat, back, arm, base and control options.

The re-branding of the company in 2002 captured this customisation and presented the

Orangebox range of task seating. This was augmented at the time be a small range of soft seating

products, typically used in lobby or breakout areas of the offices furnished with the task seating, named

under the ‘Landscape’ range of product. This in itself subsequently became a major growth area of the

business, developing significant design capability and forging close links with customers and product

specifiers in new markets and sectors.

This rapid and varied growth, determined by the sales and marketing oriented strategy of the

new executive team, significantly influenced management operations and required new skills and

capabilities which were not in place in the company or its existing supply chain. As a result, new

suppliers were approached to work in collaboration with product designers to specify components,

materials and processes to achieve the technical demands of new product development and

implementation. This product specific ad-hoc approach led to large variation in product quality and

inconsistent product lead-times, and in turn a high level of stock holding.

The production engineering team, of which the author was a member between 2000 and 2005,

became critical to component and finished product quality control and assurance. Also, the team was

responsible for improvements to production time stabilisation by improving workflow, process controls,

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jigs and fixtures, and other production variables. In an ideal world, these would be inter-linked and

undertaken concurrently, but in the environment of stretched resource and increasing demands it was

very much a fire-fighting approach to maintaining a base level of performance. The resulting confusion

and disproportionate amount of effort to maintain communication with customers and suppliers only

served to exacerbate the situation. However, despite this shortcoming, some improvement was realised

and a base level of production capability was assured with some confidence, which allowed the material

controllers and customer service functions to look at the interfaces with supply and demand chains for

information to feed into production.

5.2 Quickscan; Audit 1

At this time, the relationship was initiated with Cardiff University and the author was part of the

four person team conducting the initial Quickscan audit, which was undertaken to contextualise the

improvement activities being initiated throughout the value chain and recommend an order of priority

and structure. As part of this, various mapping techniques were employed to understand the

interactions with various aspects of the business, and the various value chains typified by the product

families; Giroflex, Orangebox Task and Orangebox Landscape.

It became evident that the relationships between the sub-processes were fairly continuous

(although a very long way from being optimised), but that significantly greater delays were being

incurred between the demand signal and the supply chain reaction. Unless stock holding was sufficiently

predicted by the control system, this created an unacceptable level of inventory, exacerbated by the

wide range of large components. Therefore, the component families were characterised by product

range, and the resulting visual representation is shown in the next section.

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5.2.1 Data Gathering and Review

As traditionally recommended by the Quickscan process, a data review was a significant body of

work for the audit team. A summary of the data collection plan is shown below in Table 16, showing the

range of data gathered, the indicative owner, the reason to gather it and the activity undertaken. This

reflects on the knowledge gained in the business performance measurement section earlier, as well as

the maturity of the metrics package in the company; the audit team worked together to find metrics and

data sets available which were closest aligned with identification of smooth material flow. The

headlines were cycle time, inventory and sources of delay/rework/inefficiency.

Many data were considered sensitive, especially sales and profit data, so are not appropriate for

publication, but graphs indicating inventory and cycle time are shown in appendix 3. In isolation, these

graphs do not highlight any particular relative trend, but it was seen that the cycletime was somewhat

variable depending on the build up of tolerance around foam and fabric availability, and subsequently

the amount of WIP waiting in front of dispatch. This was exacerbated by localised planning in the

individual processes creating some misalignment, hence WIP, in the process chain. This was observed to

be a critical variable as it was frequently seen that the MRP cycle time was a driver for the order entry

system ‘promise date’. If the tolerances built up then orders would be either close to the wire, or even

shipped by express-courier at extra cost to arrive on time.

The overall level of inventory was relatively stable, but high for two reasons; the materials were

being supplied by some high cost suppliers, which were a long distance (high transit time) away, hence

stock holding was relatively high. It is worth noting that the relative contribution to inventory, given its

high contribution to revenue, was not seen as a priority for the G64 range, but the overall level of

inventory was in excess of £0.8million, a very high figure for a relatively small company.

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Table 16; data Collection Summary for Orangebox

Data Source of Data Target Reason Data Gathering Activity

sales Sales team Trended customer demand

Identify ‘smoothness’ of demand (by

product)Archive data

Capacity Material Handling & Customer Service

Current capability to meet demand

Identify bottleneck(s) in process

MRP (retrospective reporting)

Profit Finance Contribution vs cost by product

Align sales with profit & understand

financial piorities/preferences

Financial reporting

Cycle Time Production manager Cycle time by process step

Identify smoothness of flow internally

Snapshot + MRP review

Inventory Finance $ value and days of supply value

Triangulate costs, cycle time and

throughput

MRP (retrospective reporting)

OEE Production DowntimeMachine efficiency contribution to ‘non

smooth’ flowLineside flipcharts

Process flow Production Engineering team

Time series data Identify interdependencies and bottlenecks (£ and

time)

Value stream map, process maps,

Quality defects Quality # batches affected and also duration of

time in product disposition

Process capability contribution to ‘non

smooth’ flow I

Quality ‘scores’ by process step & by

line

Simplicity Questionnaires

Nominated line management

Simplicity scores Codification of system complexity

Simplicity Questionnaires

5.2.2 Product and Process mapping

As traditionally recommended by the Quickscan process, a value stream map was also

considered, and is shown in Figure 17, but this was only completed to a very high level by the audit team

before the author undertook the primary research to develop the following figures 18 to 20 which show

the various product supply chains with some idea of source (L=local, N=national and I=international), the

location of the principal supplier, and one or two differentiators that determined why that supplier was

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selected. Figure 21 then pulls these together to show the complexity and global nature of the

Orangebox supply chain.

The geographical structure of the supplier base, and the associated complex material flow, was

an early indication that the chronology of the traditional Quickscan improvement roadmap would not be

100% appropriate. Usually the route to reduced system complexity dictates that the internal value

adding process is the initial focus, followed by efforts to bring the supply chain in line with the process

flow, then followed by a tightening of the control element before moving on to improve alignment with

customer interface and expectation. As could be seen, there were many indicators of internal

inefficiencies, but in the case of the long cycle time and high inventory, there was a clear contribution

from the supply chain architecture, shown in the following supplier maps.

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Figure 17; Top Level Value Stream map of business process components

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5.2.2.1 Giroflex product

This product is designed by Giroflex Switzerland and manufactured under franchise by each of

its worldwide licensees. Following initial design and development (often leading to tooling

modifications), parts are completely sourced from Switzerland. After this, parts can be sourced from

alternative suppliers once components are approved by the Swiss engineers. At the time of the first

Quickscan audit, the typical supply logistic was mapped as shown in figure 18.

Figure 18; Giroflex Product Map

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5.2.2.2 Orangebox Task Seating

The Orangebox Task Seating product is designed in-house, and predominantly made from stock

items from large global specialist suppliers, which are supplemented by components manufactured with

bespoke tooling to cover individual requirements e.g. injection moulding tools for handles, plywood

forming tools for seat boards. The Orangebox product allows the company to have one key strategic

advantage over the Giroflex product, with the opportunity of a limited level of product customisability.

In this case the customer is able to select its own features to suit its preferences (colours, back heights

etc). Unfortunately for the manufacturing facility, the size and nature of the customisable parts (legs,

arm rests, backrest design, greater range of cover materials etc) creates a more complex supply chain

network, seen in Figure 19, with more specialist suppliers.

Figure 19; Orangebox Task Seating Product Map

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5.2.2.3 Orangebox Landscape Seating

The subsequent extension of the Orangebox range introduced the soft seating ranges to gain

access to new markets, augment existing sales and customer relationships, and also strengthen the

brand identity. This entire product range has also been recently developed in house, and as a new

concept to Orangebox has been designed to minimise the need for “traditional” upholstery skills not

available in the workforce. These design features require components to have tighter tolerances than

can be consistently achieved by local suppliers. These problems are now mostly overcome in the

factory, and highlight a possible new area of supply chain development, which will influence the next

phase of Orangebox’ supply chain strategy. Orangebox will use this study, and the underlying

experience, to choose between a new supplier with greater capability or an intensive resource allocation

to develop the existing supplier. The result being either a significantly more complex supply chain, or a

well developed local supplier network.

Utilisation of specialist design expertise in the area of soft seating was part of a significant

investment in marketing and sales presence. Many components themselves are also new to the

company in terms of size and scale, hence some new suppliers were recruited, and some new processes

were utilised with existing suppliers to meet new requirements. The scale of this change is not fully

represented in figure 20 below, but the apparently reduced complexity in the supply chain is

representative of the more standardised bill of materials (BOM), and accurately shows how, once

established, this supply chain proved to me more capable of new product development and more

efficient in delivering new designs to market.

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Figure 20; Orangebox ‘Landscape’ Seating Product Map

The product maps shown above demonstrate the structure of the supply chain for each of the

product families built by Orangebox. Figure 21 below shows the overall summary of complexity around

daily production of all the product lines.

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Figure 21; A composite product map for all product lines

The key issues highlighted by these maps include:

The wide range of product groups for each chair.

Each product group demands specific unique manufacturing process(es).

Primary suppliers of the different product families are based in different countries, and areas

within them.

Many components require different finishing or secondary operations.

Each product family is purchased by a range of different customers, each having different

requirements.

The customisability factor offered by the Orangebox range creates greater supply system

complexity.

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5.2.3 Audit findings

The above figures and comments demonstrate the difficulty in logistics, the complex nature of

the total supply chain for each individual product, and the flexibility required to cope with a wide variety

of mixed volume parts. Therefore the first fundamental observation from undertaking the Quickscan

supply chain audit was that there would be significant tactical benefits of reducing inventory, improving

cycle time and aligning planning cycles across the echelons of the overall supply chain system.

However, this was being naturally hampered by the international complexity of the supply

chain, and the utilisation of technically capable first tier suppliers who in many cases were larger than

Orangebox as the OEM. Companies in this category strive to be cost effective but place most emphasis

on having high productive capacity, high levels of product quality and a good technical capability, with

resources to assist Orangebox in product development. To meet these requirements Orangebox is

automatically drawn to look overseas at product specific, experienced and world class companies.

However, these advantages can often be negated through logistical problems that make the Total

Acquisition Costs (TAC) of a product far greater than first imagined (Grossman & Jones, 2002). Evidently,

a more significant investigation was required to look at this trade-off.

Moreover, this needed to be the priority area of work, because the impact of the supplier lead-

time and disconnect with customer demand was clearly a driver to the areas of improvement in the

factory. Despite high inventory value, especially ‘allocated stock’ booked to the shop floor, variable

material availability was still a frequent problem. Thus despite a clear quickscan emphasis on driving

internal efficiencies to reduce cycle time to maintain the high OTIF performance, efforts to improve

internal efficiencies would be futile until the supply chain and control system were stabilised.

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Following the Quickscan methodology, uncertainty scores were allocated to reflect the

observations made. These scores are shown below in the form of a radar plot, seen in figure 22, and the

overall uncertainty co-efficient, calculated as the Euclidean norm of the component scores, was plotted

on the Quickscan “dot diagram”, seen below in figure 23.

Internal

Control

Supplier

Demand 0

2

4

Before

Figure 22; A radar plot of the component uncertainty scores at Orangebox

In addition, improvements were anticipated and represented as a future-state score. This was

also plotted on the dot diagram, seen in figure 23. This was a useful mode of feedback to the

management team as it provided some visibility of what an improved situation would look and feel like

and provide some collective understanding. To move from functional to internal integration involves a

distinct shift toward cross-functional operations management, which can represent a massive cultural

shift in some companies. Again, focus is on internal integration and the alignment of time intervals and

material flow.

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Figure 23; Orangebox uncertainty score, plotted on the Quickscan dot diagram.

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5.2.4 Actions and recommendations

The result of the audit supported much of the existing knowledge in the company by

highlighting many of the symptoms being incurred by a disconnect between customer requirements and

supply chain capability. Hence, the modest existing activity in the area of supply chain development area

was greatly increased, and the company undertook a considerable tactical effort to investigate and re-

engineer the supply chain. The following sections explain the process in some detail, then lead into the

following section which describes the impact of the internal activities and improvements that were

enabled by the initial supply chain work. Again these activities were principally tactical, given that the

company’s clear objective was to grow sales and improve profitability by increasing product offering and

market share. The chronology of this improvement activity varies slightly to that proposed by Towill

(1999b) who suggests that the internal value chain should be the initial focus for optimisation, followed

by the control function and only then can the supply chain be integrated and aligned.

5.3 Supply Chain Activities; BIT Implementation

Traditionally, Orangebox has produced its product line through a franchise agreement with its

partner companies. This meant that the management of the supply logistic was predominantly governed

by its partner company, which has meant that the opportunity for Orangebox to develop its own local

supply base to meet manufacturing demands has been severely hampered (Grossman & Jones, 2002).

The situation is further exacerbated by the fact that the mature product range requires the potential

supplier to fully meet the volume requirements almost immediately.

However, since the management buy-out in 1999, the company has now the freedom to source

its own suppliers as well as design and manufacture their own office chair range alongside their Swiss

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partner products. The ensuing business strategy has impacted profoundly on the chair assembly

operation, and in turn, on its supply chain.

This commitment to the existing supply chain, combined with the lack of any suitable local

suppliers mean that the company had previously been restricted to use of a global supply chain network

(Grossman & Jones, 2002) (MacCarthy & Atthirawong, 2003) (Hall, 1998), enhancing its supply chain

capabilities by identifying expertise throughout the wide range of overseas suppliers. This network

incorporates a range of suppliers from: Taiwan, USA, Italy, Ireland, Finland, Denmark and Germany as

well as companies within the UK. In one example, development of this supply chain has also become

more complex through the employment of an import agent for many ‘stock’ items produced in low cost

economies.

5.3.1 Supply Chain Agility

Previous work undertaken by Orangebox in identifying local companies capable of providing

products that meet the company’s performance criteria had proven to be unsuccessful. An assessment

of the manufacturing performance of selected SMEs in South Wales provided a similar conclusion to the

findings of Thomas and Webb (2002), that the vast majority of local companies do not have the

technical or logistical capabilities to support the manufacturing operations at Orangebox. Whilst it was

generally agreed that through using local suppliers the product quality could be developed over time,

the lack of any significant level of advanced manufacturing technology meant that product cost was high

and the delivery rates and frequencies could not be guaranteed.

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Previous company characteristics had strongly influenced the supply chain development

process, with many considerations which could subsequently be seen as constraints to supply chain

optimisation through the QSAM audit:

Competition at the time was relatively weak.

The holding of relatively high stock levels were seen as an asset so that quick response to customer requirements could be achieved.

The sourcing of specialist cover materials (specialist leathers etc) could only be sourced from overseas.

The product range was static with little or no new product development being undertaken.

Studies conducted by the company regarding the development of global supply networks confirmed a product’s Quality, Price and Delivery level in many cases could be significantly improved.

The lack of any suitable local suppliers made the development of a global supply network even more appealing.

However, there are other considerations that balance the selection of global suppliers:

Savings on various components can vary significantly. Some examples show up to 90% savings

in component cost can be achieved whereas for other components, savings are far more

modest.

The opportunity for continued reduction in costs becomes increasingly more difficult since the

sub-contracting companies used by Orangebox tend to be low tech’ and manually oriented.

Competitiveness and the savings achieved through initial negotiation on costs can be slowly

eroded over time, reducing or even reversing the original savings.

All supply chain systems benefit from the development of a close working relationship being

nurtured over a significant time period and changing suppliers on a frequent basis due to the

pressure to find lower costs does not allow the supply chain to develop.124

The Total Acquisition Costs (TAC) shows the additional and often hidden costs that the company

incurs through the use of an extended supply chain, such as inventory held as WIP in transport

and exchange rates.

The challenge to Orangebox then, through this author, was to develop the capability of the local

suppliers to match that of the selected overseas companies. Achieving this allows the supply chain to

provide a combination of increased flexibility of supply as provided with the local supply network with

reduced product and tooling costs currently achieved through the global network system. That is to say

that the supply chain design and management would actually become one of the more strategic core

capabilities of the company, going beyond that of an assembly or manufacturing operation with

traditional support functions. To that extent, the Quickscan was supporting an end goal without initially

recognising it; a key observation and potential capability of an improved audit process.

In practice, the supplier development timescale could be relaxed, since Orangebox already had

an incumbent supply chain network and could call on these products from the global network whilst the

local supplier base was being developed. This was one of the major reasons why the development of a

local supply chain network initially failed; because Orangebox required suppliers which could produce

the parts almost immediately in order to support rapid increase in production. To make use of this

facility, it is important to initially identify the level of integration the local suppliers will be expected to

achieve, which depends on their individual contribution to Orangebox by adding value such as supply of

customisable parts.

Customisable parts suppliers are a good example because the low volume carries a higher price

per unit such that the TAC will make the development of a local supply chain network highly desirable.

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The issue that then needs to be addressed is how to develop the technical and logistical capabilities of

local suppliers so that they can supply cost effective products to the company. Orangebox has addressed

this through an approach that integrates the potential suppliers as associate suppliers. These associate

suppliers work alongside established suppliers and incrementally take on increased volumes of product

as their technical and logistical capabilities increase.

The detailed process is not discussed here, but a summary figure is shown in appendix 11 which

shows how the author worked with local businesses during the integration process. It has not been an

overnight process, taking several years to integrate suppliers of product for the G64 chair into the global

supply chain. But now, 80% of components are sourced locally and the suppliers developed to meet

Orangebox’s requirements are now both familiar and confident in the process, enabling them to

improve knowledge, capacity and capability and take on more work currently placed with global

suppliers. This itself is part of the increasing sustainability of the local supply chain, adapting quickly to

the changing market to help meet Orangebox’s changing customer demands, which is a much slower

and less self-perpetuating process with the larger and/or more distant suppliers. The time line of the

supply chain development is shown in appendix 6.

5.3.2 Supply Chain Activity Direct Benefits

In terms of impact to the company, over the course of the 5 years peak production of the G64

chair which was the value stream analysed in the Quickscan audit, overall cost savings were estimated

to reach around 35% of original material cost. The net increase in complexity of the supplier base was

naturally limited by the locality of the suppliers, and later reduced due to the considerable ancillary TAC

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benefits discussed above, despite an overall 13% increase in quantity of suppliers. This increase was

mainly due to the sourcing of a variety of parts from 8 different suppliers which had all previously been

purchased from Giroflex in Switzerland (who had previously bought them from up to 10 European

suppliers).

The improved profitability of the G64 product enabled the sales team to compete even more

aggressively in the market place, minimising the advantage that larger manufacturers were able to

employ in a reducing unit cost. Sales were subsequently supported by factory agility providing shorter

lead-times and the unique selling point of product customisability in paint finishes, fabric selection and

even armrest selection. In automotive terms, as per the Toyota system, a car could be configured,

ordered and delivered to consistent quality faster than the competitors could achieve.

Crucially, at the time of key savings, the UK market for office furniture was badly affected by the

events of September 11th 2001, and as sales dwindled for all furniture producers, Orangebox had the

competitive edge of the more generous margins afforded from the total overall cost savings to continue

its re-branding and new product development activities that have seen it progress to the strong position

it holds today.

This had a profound effect on the culture in the factory. The understanding that orders were

won on the strength of quick response and factory flexibility lead to a collective appreciation that the

customer requirements were related to a number of factors beyond cost alone. This meant that orders

for quality (resolution), pilot (demonstration) or special (customised) products were expedited and

prioritised throughout the whole supply/value chain (the two terms were by now becoming

synonymous)

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The following work demonstrates how the improved capabilities of the localised supply chain

subsequently enabled changes to the operations management strategy and delivered continued

improvement to product throughput, cost reduction, production capacity and both product and

production flexibility. These would not have been possible without the requisite supply chain capability,

so advocates that supply chain stabilisation and development is a critical component to meeting

changing customer demands. This work was undertaken by the production engineering team while the

author was part of the team, before the author joined the production department and embedded the

lean philosophy as line manager.

5.4 Internal Activities; BIT Implementation

A key finding of the Quickscan interviews was identification of latent knowledge within the

company relating to changes in customer and other requirements which have encouraged Orangebox to

reconsider their manufacturing strategy. These factors were promoted by means of the supply chain re-

design, but were still not articulated clearly in terms of process capability. The key environmental drivers

for change that occurred by this point in time can be summarised by the following:

Increased competition at a global and local level have stressed the need for the company to

compress their design cycle so that new product introduction and current product re-design is

undertaken on a more frequent basis.

Increased competition also has triggered the production departments to employ Lean

Manufacturing strategies in order to reduce the cost of manufacture of their products. This includes the

development of single unit flow approaches and achieving significant reductions in inventory levels.

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The removal of franchise restrictions on the company’s product designs now enables the

company to have the freedom to design a whole new range of specific product lines that meet UK

market needs.

The company’s goal to move towards ‘World Class Manufacturing’ performance applies further

pressure on the company to be more responsive to customer demands, improve quality levels, increase

customer response times etc.

A growing demand for a customised product that suits the need of the customer (whether it be

colour, material spec’, delivery times etc). Orangebox UK in order to remain competitive must be able to

respond to these ever increasing demands and so flexibility of service and quicker response times are

essential.

The above issues mark a fundamental change in the way Orangebox needed to conduct their

manufacturing operations in order to continue to compete at the highest level. This change in strategy

demonstrates how a more flexible and leaner manufacturing environment would draw on benefits seen

in developing the local supply chain, as well as provide a competitive advantage that the multi-national

competition would find difficult to keep pace with.

5.4.1 Implementing Lean Methodology

As described in the critical review, Lean has a strong pedigree in cost reduction and production

improvement. However, in a recent survey, only 36% of U.S. based manufacturing companies have

implemented Lean or are in the process of implementing Lean, and a 2004 survey by Industry Week

Magazine stated that North American companies implementing Lean Manufacturing reported a median

savings of 7% of Cost of Goods Sold (Pattanaik and Sharma, 2009), which serves to highlight a relative

advantage for those companies that do implement such a practice. The major question is around the

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claim of “implementation”. At what time can a company claim to have implemented lean and gained the

full benefit?

Orangebox has seen numerous changes in its history of manufacturing office furniture, which

usually manifest themselves as changes in the manufacturing strategy employed, but never before has a

structured lean methodology been applied to a particular value stream. Over the course of this history,

there has been a gradual shift toward a smaller (order) batch size, and a changeable order profile

between different models, representing both the relative positions on the products’ lifecycles, and the

change in customer spending patterns. The product at the peak of its life at the time of this study was

the Giroflex G64 chair; a range of swivel and cantilever frame chairs in the fifth year of production. This

model accounts for 60%+ of sales and as such was judged to warrant the highest priority in terms of

time and investment. It was this value stream that was considered in the Quickscan audit and was

subsequently the focus on application of lean methodologies to improve cycle time and reduce waste.

The lessons learned from this could then be rolled-out across the different value streams to achieve

wider company benefit, although it must be borne in mind that there are a great many opportunities for

localised optimisation to be detrimental to the whole which is discussed in some detail in chapter 6.

As a first step in implementing Lean, the wasteful aspects of each section of production were

identified using a process mapping exercise (International Labour Office, 1974). At this point, the value

stream map was again thought to be insufficient, as the team were new taking the viewpoints of step-

by-step product and information flow in term of individual parts. It was decided to use the ASME and

IDEFO (McConnelly, 2004) (Childe, 1997) maps to record the production events, which are shown in

appendix 4.

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The consistent theme observed in the mapping exercise was one of waiting and misalignment

between the various production stages according to component availability and resource allocation.

This was especially prevalent in the G64 production, because of volumes, batch sizes and also product

value. Thus it was easily identified by the project team that this would be the product to focus on and

that lean manufacturing practices should be employed to improve throughput, reduce waste and

increase quality. Examples of variety in the range are shown below in figure 24.

Figure 24. Some of the range of theG64 family

(source: Orangeboxuk.com, 2005)

5.4.2 Integration of Lean with Product and Process (re) Design to achieve single unit flow

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The project to implement lean production of the G64 chair has been the most significant single

step towards achieving Lean Manufacturing to date. It had been enabled by the supply chain project,

which in turn had been an initial proposal of the Quickscan supply chain audit, but at this stage lean

manufacturing in the production facility was still a conceptual roadmap to manufacturing improvement.

As such, it was as much of a learning experience for the staff responsible for managing the change, as it

was for the operators.

Before the process redesign, the G64 was manufactured as a series of independent processes

which were functionally similar across a range of chair models, e.g. mechanism sub-assembly, gluing,

upholstery and final assembly. The different models were batched through each shop, which

necessitated the co-ordination of G64 production to some degree to prevent a grid-lock of G64 WIP.

However, as sales of the G64 increased, the work pattern of each section was seen to become split in

half, one half of the section constantly making G64’s, the other making all the other models.

The first step in bringing the processes together was to allocate time and resource to testing

different set-ups, which were experimented with in a separate area. It was seen that during trials and

experiments, the operations staff were much more able to visualise the process than by means of the

process map, although these maps were used concurrently to arrange the value chain. These tests

highlighted the opportunity to balance the process chain and set a target cycle time of 4 minutes. There

were two notable difficulties to overcome; firstly alignment with the foam plant which had a mandatory

24 hour offset, and secondly the re-engineering of the gluing operation which was outside the cycle

time. The improved gluing operation utilised new technology in the adhesive, as well as a new

drawstring technique. The ‘before and after’ situations are shown in the figures 25 and 26 below.

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WorkCentre 4

WorkCentre 3

WorkCentre 2

WorkCentre 1

Sewing

Gluing operation

Laying-up of fabric

Cutting

Finishing operation

Final assembly – cushion fitting

Pattern identification (per stretch )

Fabric testing required to find stretch

Figure 26. Process map of upholstery process using water based glue.

WorkCentre 3

WorkCentre 2

WorkCentre 1

Final assembly – cushion fitting

Finishing operation

Pre-gluing operation

Gluing operation

Laying-up of fabric

Cutting

Heat activation

Figure 25. Process map of upholstery process using heat activated, solvent, glue.

The resulting balance enabled the move toward a flow line manufacturing set-up, a polar

opposite from the original batch manufacturing arrangement. Further to this, the even distribution of

work per work station effectively future-proofs the flowline for this model, allowing the work stations to

become independent cells in a cellular manufacturing set-up (Womack, Jones and Roos, 1990). At its

current levels, the G64 product is a ‘runner’ (Bicheno 2000) in its sales profile, and as such is well suited

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Key.

Quality

Assembly

Upholstery

Mechanism

Multi skilled worker.

to a flow-line manufacture, but as its sales start to reduce it will become one of the ‘strangers’, whereby

the cycle time becomes disconnected with the takt time. As this happens, it will become harder to

predict production requirements and manage a full week’s production efficiently without an ideal level

of staffing. Hence the available solution to maintain the minimum level of waste is to maintain the line

structure but adapt the single unit flow philosophy to one of moving personnel with the product, as

demonstrated by figure 27.

Figure 27; G64 balanced flow-line setup leading to cellular manufacturing.

The advantages of using this type of system are that it is not affected as badly as the line

method if one or more of the operators are not present. This is because there would be no bottlenecks

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in the cellular method if a number of operators were required elsewhere, the system would simply

produce a number of chairs per hour per employee. So with the cellular system if half of the operators

are missing then the number of chairs produced would be half, however with the line method, when the

operators missing were mainly from one section, than the chairs produced would be far less than half

the normal rate. A second advantage of this method of production is the increased control of the

quality present on the assembly line. This is due to the fact that each operator is now responsible and

accountable for the complete assembly of each chair, therefore they are unable to claim that a fault

occurred due to someone else on the line.

One of the main concerns with this cellular method of production is that there is a need for all of

the employees to become multi-skilled, so that they can perform all of the required tasks. This can be

seen as either a disadvantage due to the extra training that is needed or as an advantage due to the fact

the a factory with multi-skilled workers is far more flexible than a factory with normal operators. Also,

as product-specific experience throughout the factory increases it will be easier to manage the skills

deficit.

Interestingly, to date, the G64 line remains in this form as the order profile has been maintained

by product refinements and additions, enabled by the design and testing capabilities of the localised

supply chain. In addition, the improved gross profit and leadtime has been utilised to good effect in sales

promotion to ensure that ideal production quantities are maintained, with minimum changeover to run

at least one line at full resource levels. The step to cross-training for individual personnel to produce

complete chairs is therefore a slower and more manageable task.

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When considering how this relates to the original findings, it is clear that the Quickscan audit did

recommend the most appropriate course of action, but not entirely for the right reasons – alignment of

the supply chain for ideal material flow alone would not take into considerations the other aspects that

directed the company to concentrate on supply chain localisation rather than development of the

existing supply chain. However, now that the supply chain was stabilised, and the benefits reflected in

the re-design of the internal process, the company could go on to consider the application of simplified

material flow at the higher, business unit, level.

5.4.3 Building on Single Piece Flow to Develop a Business Unit Pull system

Pull systems (Productivity Press development team, 2001) address the provision of requirement

from the imminence of the final demand (Hines & Taylor 2000). That is, in a pull system, production is

planned by referring to the quantity desired as an output from the system. Therefore, in the case of

Orangebox, it has been decided that giving dispatch the responsibility to dictate the order of production

will pull orders through the system in an effective ‘Lean’ manner. The result being that there were

fewer peaks and troughs in the weekly build which had previously necessitated the manual

management over-riding the theoretical ordering.

The pull system at Orangebox became evident when the author was working as line supervisor and at

the recommendation of the author, the despatch team and customer service team collaborated to

implement it internally using three distinct areas of improvement:

Order production based on delivery. The first area for improvement is the order of production. This

emphasizes the drive toward achieving single unit manufacture (in the correct order!). Having stated

that there is a need to pull from dispatch, there is a requirement to order production based on delivery

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route, in order to pull from further upstream. This was achieved with the input from, and control by,

dispatch and customer service departments in balancing the workload throughout the week using the

geographical location to re-arrange some customers’ delivery days. This single fundamental change

represented a dramatic change for customers and factory alike, and although summarised here took

many weeks to design, make and test.

Communication of the production schedule to operators. It was evidently then important to consider

how the work-to list system could regain some trust and authority over production and indeed if there

are other means to communicate the production schedule to the operators. An example of which is the

‘dispatch sticker’ which became the unit production specification in place of the work-to-list, an example

is shown in appendix 5

Organise Dispatch Area. Finally, given that dispatch will have increased responsibility if the previous

improvement is implemented, there was a need to organise the centralised dispatch area.

A further development of this, is the strict ordering of production according to lorry loads, as

shown below in figure 28, to order the lorry itself and maximise logistical efficiency as early as possible.

That is, order production so chairs come off the production lines in the order that they are required to

go onto the lorry. This requires the customer facing functions to align customer expectations with supply

chain capability. More importantly it would require strict FIFO at all points of WIP and no buffers. At this

stage the manufacturing system requires another significant step change in predictability, which the

business has decided is detrimental to flexibility in meeting customer demand and schedule changes; an

interesting but critical deviation from the recommended simplicity rules, which again is discussed in

some detail in chapter 7.

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G64 MISC.X10

Buffer

A B C D E F

A B C D E F

Figure 28.

Orangebox lorry / dispatch ordering

Having observed this programme of improvement, a single case study would seem to support

the Quickscan proposal that the high volume value chain to be considered in the audit should

subsequently become the area of focus for improvement and the carrier, test area, or pilot study for

improvements to be rolled out across the case company.

However, as is seen in this longitudinal study, this is not always the case, and it should also be

considered how the company has since focussed a vast majority of its resource, efforts and investment

across the business rather than pursue improvement in this narrow theme of simplified material flow for

the product line assessed in the initial audit. In addition, supplementary areas such as development of

new product, enhancement and customisation of existing product, and customer-centric marketing and

logistics have become the enablers for growth which make use of the capacity created by the lean

methodology. This is to say that the company has recognised the point at which the switching strategy

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must be employed to enhance growth, yet still balance this with capacity for optimum efficiency;

yielding sustained growth without runaway cost.

It is proposed that this is also reflected in the second case study of OCD, who were employing a

similar strategy at the time when the initial quaickscan was undertaken there. As such, it can be

proposed that there is an overlap in company maturity around this point in time, and that the advanced

position of OCD on the company lifecycle represents an excellent opportunity to consider that case and

come back to the Orangebox case study in order to verify and validate the observations and findings

made, as well as consider the applicability to the different companies given their different position in the

lifecycle.

5.5 Future Growth and Sustainability Roadmap

There is an ever increasing pipeline of products and components to be introduced to the

factory, many of which could have a profound effect on the balance of work and the need to redefine

the part sourcing, inventory strategy and presentation to operations. This reflects much of the new

product development and new product introduction work carried out on the back of the lean

implementation; one of the significant growth enablers that continue to prove the sustained growth

mentioned above.

One key question to be answered is whether to fit the new product to the existing capability or

whether to use it as a prompt for further improvement? Following the market research, customer

feedback questionnaires and interviews, it can be concluded that the product will be largely customised

towards its specific target market from its conception, with a narrower range of optional parts. This

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suggests that there should be a product specific area of production on the shop floor, aiming to achieve

an improved level of Lean sigma performance and raising the existing standard. As each new product is

introduced, new knowledge is gained and the switching strategy can be employed for faster turnover of

BIT projects. At this stage, audits such as the Quickscan could be reconsidered to ensure that this

perpetuation remains in line with removal of bottlenecks and barriers in the whole value chain, but a

robust switching strategy utilising a more intuitive assessment to align customer needs and company

capabilities would stand alone and negate the need for this repeating activity, which itself would incur

some hesitation and delay.

One marked area for improvement that will feature in the plan for the future is in the

establishment and recording of KPI’s and measures of performance. Not only as an indicator of

performance but as a functional input to the switching strategy to ensure that the signal is clear and if

possible amplified for accelerated improvement.

5.6 Orangebox Summary

Orangebox has continued to achieve sustained growth. Now with a turnover close to £30million,

it has grown 50% in 7 years. This growth has been in its core business, avoiding costly outlay in new

lines of business and consolidating core skills in the company. From being a relatively ‘small player’ in

the sector, the company is now securing greater domestic market share and maintaining a good level of

gross profit despite a continued focus on cost in tough economic conditions. The key traditional

strengths of agility and responsiveness to customer demand are still valuable to the company and have

been maintained while concurrently developing a customer focussed product development process.

The Quickscan highlighted many potential improvements in internal process simplification, which in turn

highlighted the importance of developing the supply chain. 140

The G64 line now manufactures a reliable percentage of the orders planned for a day’s delivery

on that day, i.e. alignment of production capability with customer demand. In hindsight this would have

been an ideal metric to demonstrate the effectiveness of the improved system. In the future, it has been

proposed by the company that new product should be timed in and out of despatch, and this could

become the driver for change, with a view to be able to incorporate as much of the production cycle

time within the customer lead-time as possible, the epitome of a Lean production facility.

G64 specific improvements have yielded sustained ‘hard’ cost improvement activities to the sum

of £1.1million, which is further amplified when considering the capacity provision that has been filled

with additional sales over the last six years, and the many cost avoidance achievements that have gone

with it.

The starting point to the improvement was the Quickscan supply chain audit which highlighted

the complexity and TAC considerations around utilisation of a global supply chain. This highlighted the

benefits of localisation of suppliers in terms of building on the company’s core capabilities of meeting

tight deadlines and offering competitive advantage in terms of customisability. These are both critical

features of the operational strategy adopted by the owner-managers to meet any short term cash-flow

issues and maintain economic sustainability by securing market share against the large corporations

competing predominantly on price. These and the constituent activities are shown in a summary flow-

chart in figure 29 below, which shows the structure of the key decision points and both company and

research activities undertaken to support them.

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Figure 29. Flow chart of Orangebox activities

Once the supply chain project was underway and product was moving faster around the

production facility, this velocity became the focal point for process improvement. The practical

implementation of which was tackled by means of the remaining KTP project time; utilising many lean

manufacturing tools and techniques to improve this. Lean principles define that pull production is a key

enabler to WIP reduction, and achieving this has represented a critical turning point in the company’s

culture change to manufacturing product in the order that customers expect to achieve it.

Improvements in line layout and material flow reduced waste, improved throughput and improved

standardisation of work, reducing non-conformance and bringing down the overall lead-time of product

from supply to demand.

Distribution of resource and investment is now being managed much more proactively along the

lines of the sustainability model promoted in sections 2.2. and 2.3, with the intention of achieving the

switch between sales enhancement and cost reduction as modelled in figure 8.These improvements

were also tracked in terms of the initial Quickscan data set and resulting uncertainty profile, such that

the benefits could be monitored in terms of improvement in the uncertainty scores. The ‘before and

after’ scores are shown below in figure 30, which reflect the changes seen in the ‘before and after’

scores on the Quickscan questionnaires.

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Figure 30; Before and after uncertainty scores.

An important part of this process was to appreciate how this improvement was achieved, in

what chronology and timescale, and with what motivation; as shown above in figure 30. In short, the

localisation of suppliers to improve the supply chain uncertainty was largely necessitated by the

Quickscan observation that inventory and cycle time issues were central to improving the simplicity

scores for the company. Although the detail behind the supply chain development was generated

entirely by the project team. The full implementation took three years and although there were many

ancillary benefits which improved the internal value adding operation, the concurrency of these aspects

could have been significantly improved. It is suggested that the prioritisation from the Quickscan, based

on the uncertainty scores, proved to be rather simplistic and somewhat linear in its progression. A

potential improvement would be to maintain a feedback signal to prompt activities as soon as

opportunities are created.

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Internal

Control

Supplier

Demand 0

2

4

After

QSAM

Non QSAM

Before

As such, as can be seen on figure 30, it was judged that the Quickscan recommended activities

yielded significant improvement over time, but could not be entirely responsible for all improvement in

uncertainty. Even in the focussed theme of uncertainty, the company achieved other significant

improvement, especially in supporting internal operations through R&D and commercial operations,

which would not have been recommended as part of the Quickscan maturity assessment.

5.6.1 Benefits of Applying an Improved Methodology

The principle benefits that could be realised by utilisation of the improved assessment are

primarily related to speed of BIT programme delivery and effectiveness of the improvement resource,

yielding improved rate of improvement. Integrating the customer requirements and growth enablers to

the supply chain development activities, rather than waiting until after the supplier and internal

efficiencies were achieved, would have delivered the growth faster, and created opportunity sooner. It

would also have created a chance to design the manufacturing process to suit the new demands rather

than re-visit the process chain as new products or customised changes are being identified. In effect

introducing some design for manufacturing influence as soon as possible. This approach is advocated by

Peng et al (2011) who have distinguished between the varying influences of the competitive priorities

driving continuous improvement, operational capability, and innovation.

The second main benefit is becoming evident now, as it is clear that the Quickscan process has

not set the company up for success beyond the scope of the planned activity; the existing mechanism

does not appear to be sufficient to maintain improvement against the ongoing trajectory of growth.

Without this feedback, the aspect of the switching strategy is not clear, and while this used to be quickly

resolved with a small focussed management team, the additional complexity incurred by increased size

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and scale introduces some lag in clarity and decision making. This is supported by Adu and Singh (1998)

who state that it is essential for a firm to have a clear signal before adjusting its degree of customer

orientation to match environmental conditions, given the complexity of changing organisational culture.

In the audit process, this would show up as a misalignment between the business measures and metrics

and the customer value requirements, usually caused by the propensity of operational or process

specific metrics tracking specific aspects of efficiency; a weakness of the SCOR model and one of the 10

key enablers to sustained growth identified from both case studies and described later.

Thus, this study has been key to identifying how BIT implementation has yielded business

benefit for Orangebox, directly focussing on RQ1 and laying the foundations to finding the key

determinants for success. This is achieved by considering both case studies, before leading into the

synthesis of an improved assessment framework in chapter 7, the main discussion chapter.

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6 CASE STUDY 2; ORTHO CLINICAL DIAGNOSTICS (OCD)

In a similar structure to chapter 5, this chapter describes the fieldwork and quickscan audits

undertaken in OCD. Having started from a similar size and scale in the 1970’s, OCD has attracted large

corporations to acquire the business unit and invest in skills and infrastructure. The business maturity is

now much higher than Orangebox and the size of the operation is also much greater. As such, this is an

ideal case to compare the assessment process and its findings; building on the previous case to find the

common ingredients in a successful manufacturing business in answer to RQ2 and RQ3; identification

and prioritisation of improvement opportunities. It would also be expected that the higher level of

maturity would be reflected in a greater business impact of BIT implementation.

The structure of this chapter is consistent with the previous chapter, developing the case study

by following the quickscan process (appendix 2), uncertainty circle principle(figure 12) and the research

flow (figure 16). The following sections track this progress in the same order as the last chapter,

1. Introduction2. Quickscan 1, audit findings and recommendations3. Supply chain (external) activities – BIT implementation 4. Internal activities – BIT implementation5. Future Growth and Sustainability Roadmap (quickscan 2)6. Summary

By learning from the similarities and difference in cases and also the literature research, the

common essential capabilities (key determinants) of a manufacturing business unit could be identified

and characterised. This directly contributes to answering RQ1, and subsequently forms the basis of the

cross case comparison in chapter 7 which goes on to tackle RQ2 and RQ3. This case study aligned

perfectly with the timing of the research flow; having undertaken a period of employment with Cardiff

University, the author had a wider understanding of business needs across other sectors and within

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companies of varying characteristics. It was seen that the ‘fiscal company’; a business unit that takes

material, adds value and sells for profit is a generic model, and that for the company to be successful

then these key determinants are also generic and each required to some degree.

To re-iterate; the intention is not to compare the two companies, but rather the response to

market forces and the quickscan assessment; these are both successful companies in their own right and

share some common characteristics to achieve success in the competitive market.

6.1 Introduction to OCD

OCD is a medical device and diagnostic (MD&D) manufacturing company, with test machine

manufacturing sites in the US, a consumable test kit manufacturing site in South Wales, and global sales

and distribution presence. Company growth is strong and continuous and production capacity is a driver

for change, with year on year growth set to exceed 10%.

The product is supplied to end-users in testing laboratories, hospitals and healthcare

organisations interested in blood-screening such as national blood-banks. The role of the product is to

detect specified infectious diseases, illnesses and markers for associated health problems such as heart-

attack susceptibility. The vital nature of this product in the fight against HIV, AIDS and many other such

diseases are strong motivation for employees and a key aspect to corporate identity.

OCD, as a site, has also experienced significant change in its history, which is common to many

high value product manufacturers becoming prime acquisition targets, Kusewitt (1985). Subsequently

the company has seen a high turnover of top management and several rebranding exercises, which have

all served to confuse the manufacturing strategy. The production facility has also recently been in a state

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of flux as it has been in the process of movement and re-validation to a new purpose-built building in

Pencoed, South Wales. The product range itself is complex in nature, and being a medical diagnostic kit,

is subject to stringent regulatory requirements. Any changes to product or process must be validated

and will be subject to audit from the regulatory bodies such as the FDA. As such, it is largely appropriate

to consider the functionality of the product, its components and raw materials as a constraint not to be

altered. Any change in process must yield a significant financial benefit to warrant the extensive

validation activities. That said, the operational management variables including planning, testing

(chronology), storage and layout are not fully defined by validation protocols, and as such are the

principal tools to achieve simplified material flow in context of the supply chain process.

Similar to Orangebox, the original modest production facility was a self-contained business unit

within a larger company but it has since taken a different route to continued growth; while Orangebox

became a self-governing company, OCD has become part of the Johnson and Johnson Corporation. This

has associated benefits of financial support and access to infrastructure, but carries the burden of a

master-slave relationship to a parent company. This in turn has necessitated significant change to

almost every aspect of the business, from control of finance and HR services to manufacturing approach

and planning commitments. The JnJ credo, shown in Appendix 1, is a strong influence on business

decisions and serves to demonstrate the influence this route to sustainability has had on the workforce.

Within OCD and JnJ there is dedicated resource allocated to deliver improvement in the fields of

(predominantly) lean, six sigma and design for excellence; packaged as the JnJ Process Excellence (PEx)

programme. This has been implemented to target improvement against the prescribed strategic

imperatives related to quality, capacity, delivery performance, people engagement and cost reduction.

The author is currently employed as part of this team and has the benefit of working with virtually every

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aspect of this large company. In terms of general company numbers, OCD were turning over around

£150m, employed around 370 people, of which around 50% were direct workforce. Cost of goods sold

constituted around 65% material cost. Supply of product is via two distribution centres, supplying

around 130 million items to 4000 instruments in the field.

6.1.1 OCD Product and manufacturing facilities

OCD is a leading provider of high-value diagnostic products and services for the global health

care community. For more than 50 years, the company has been committed to providing accurate,

timely, and cost-effective solutions for screening, diagnosing, monitoring and confirming diseases.

The franchise has earned its reputation as a trusted name in diagnostics by combining an on-

going investment in technological innovation and product quality with a strong focus on customer

service and support. The patent protected dry slide and enhanced chemiluminescence (ECi) technologies

have transformed the way that clinical laboratories perform testing, and since 1985 the company has

been ranked number one for service and customer support, although other companies do pose

significant competition on a cost basis. Figure 31 below shows some of the items manufactured in South

Wales.

Figure 31; Diagnostic test components manufactured and assembled in South Wales

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The Company (Global OCD) maintains a leadership position in two major market segments:

firstly Transfusion Medicine; Donor Screening and Immunohematology ( blood typing), and secondly

Clinical Laboratories; Clinical Chemistry and Immunodiagnostics. The latter is the product of interest

being manufactured across a menu that spans categories of thyroid function, reproductive

endocrinology, cardiology, anaemia, oncology and infectious diseases The brand new Pencoed facility is

the main manufacturing site for OCD Immunoassay diagnostic testing kits (labelled below as the ECi

System in figure 32). The machines which run the test, hence use the kits, are produced in the US.

Product is distributed worldwide, via two internal distribution centres based in Europe and North

America.

Figure 32. The OCD product range

6.1.2 Company characteristics

As a method of improving product and company knowledge, other completed business audits

were considered as useful background information. While these did not have a definitive bearing on the

Quickscan audit, they usefully indicate where the business has been directed to focus investigation and

project planning activities. Two examples are included in appendix 7; a SWOT summary taken from an

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internal marketing audit, and also the recommendation lists provided as output from a lean maturity

assessment (LMA) undertaken by experts within the corporation.

As supported by these and compliance audit results, OCD can be considered a relatively mature

company in its characteristics, with significant experience in auditing and change management required

to respond to observations and recommendations. However, this process has traditionally been based

on regulatory requirement and been tackled from a technical standpoint to improve robustness and

reliability of the process rather than looking to optimise material flow, so reviewing the process for

efficiency and effectiveness is a novel approach for the company. Having grown from a collection of

scientific laboratories with advanced testing equipment and small batch production benches, rooms and

cabinets, it has been a significant change to become a large scale production manufacturing facility at

all. To make it lean and continuous will require another similar step change. However, the original

scientists and technical experts are still resident and largely in supporting functions of the operational

areas, which themselves have employed specialist production staff with manufacturing experience and

knowledge.

There are two important impacts of this style of growth. One is that the scientists have not

designed the complex product for large scale manufacturing, but have in fact often constrained

production techniques in terms of batch size and validation protocols, making lean production almost

impossible in current form. The other is that this is further exacerbated when operational staff rely

heavily on the technical team to solve product related problems on a continual basis, with little

opportunity to reduce reoccurrence unless the technical team have validated additional activities to

solve the problem (again, usually undertaken in isolation from production specialists).

The Quickscan was undertaken with OCD late in 2009, with the KTP associate in place to gather

data as part of the induction plan included in the KTP project. The format was the same as described in

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Material Flow

Processes

Information Flows & Systems

Measures Of Performances

Relationships & Attitudes

section 3.3, with interviews, data analysis and questionnaires providing a large amount of data and

information. The supporting academic team included the author, KTP academic supervisor and an

independent research associate with experience in mass customisation.

6.2 Quickscan; Audit 1

The scope of a Quickscan is traditionally an important parameter to be agreed ahead of

undertaking the study. It defines the boundaries of the information to be gathered, and also sets the

expectation of the host company as to what the findings will be targeted toward. In the case of the OCD

audit, the scope was defined as being between customer requirement forecast as an input of the

planning process, through to the delivery of stock at the distribution centre (DC). After this point there

are a variable number of further echelons until end user consumption which in this case have not been

considered. The visual representation of this, agreed with the OCD senior management team, is shown

below in figure 33.

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Figure 33. Scope of the OCD Quickscan

6.2.1 Data Gathering and Review

As traditionally recommended by the Quickscan process, a data review was a significant body of

work for the audit team. A summary of the data collection plan is shown below in Table 17, showing the

range of data gathered, the indicative owner, the reason to gather it and the activity undertaken. This

reflects on the knowledge gained in the business performance measurement section earlier, as well as

the maturity of the metrics package in the company; the audit team worked together to find metrics and

data sets available which were closest aligned with identification of smooth material flow. The

headlines were cycle time, inventory and sources of delay/rework/inefficiency.

Many data were considered sensitive, especially sales and profit data, so are not appropriate for

publication, but graphs indicating inventory and cycle time are shown in appendix 9. These graphs show

that there has been consistent decline in the cycle time (from the point post-formulaton to pre-

dispatch), which has since continued to the more recent audit. However, the theoretical process flow

could be as low as seven days, so there is a constant and systemic source of wasted time in the process.

In addition, the data show that inventory is highlighted as something both subject to local

variation (within year) and also something that is increasing according to product demand. That is to say

that the more the customer orders, then the more quickly that safety stocks are reached, and minimum

re-order quantities of hard to source materials drive a rapid increase in inventory holding. Other impacts

that were observed (shown later in figures 35 and 36) include variable product performance driving

increased WIP, ‘protection’ of capacity by overloading the production plan and a strategy to maintain

levels of stock at the DC to prevent any order misses. Clearly, the impact of the process variation

(complexity) manifests itself in inventory and cycle time, but that the individual process steps are being

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used to buffer the impact of the wider supply chain complexity and are not the priority in terms of

reducing downtime, reducing WIP and improving throughput. Taking a traditional course of action to

tackle these symptoms would quickly surface the problems elsewhere in the supply chain (as the Toyota

System dictates), but the product performance and other variables demonstrate that this is not easily

overcome within the control of the site. So, there needs to be a more strategic approach to managing

this complexity while the root causes can be tackled and internal efficiencies gained.

Table 17; data Collection Summary for OCD

Data Source of Data Target Reason Data Gathering Activity

DC demand Shop Flor Control; Demand Planning

Trended customer demand

Identify ‘smoothness of demand (by

product)

Current snapshot from DC, plus

archive ‘repeating schedule’ tool

Capacity Shop Floor Control Current capability to meet demand

Identify bottleneck(s) in process

Fixed capacity statements

Profit Finance Contribution vs cost by product

Align sales with profit & understand

financial piorities/preferences

Financial reporting

Cycle Time Operations Summary data

Cycle time by process step

Identify smoothness of flow internally Cycle time monitor

InventoryInventory tracker;

production planning and stores

$ value and days of supply (DOS) value

Triangulate costs, cycle time and

throughput

Inventory spreadsheet tool

OEE Operations engineering Downtime

Machine efficiency contribution to ‘non

smooth’ flowOEE data package

Process Flow Future State Team Time series data Identify interdependencies and bottlenecks ($ and

time)

MRP (retrospective reporting)

FPA (first pass approval)

Technical Support # batches affected and also duration of

time in product disposition

Product performance contribution to ‘non

smooth’ flow I

FPA charting tool; top level and

product specific breakdown

Simplicity Questionnaires

Nominated line management

Simplicity scores Codification of system complexity

Simplicity Questionnaires

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6.2.2 Value Stream Map

As before, a value stream map was constructed in collaboration with OCD staff, which in this

case was already work in progress at the company, but finished and populated with data as a result of

this audit. The result is shown in figure 34. It is not a traditional value stream in many ways; the

material flow is clearly delineated in the “make to stock” side, where components are processed

separately, but come together at the 2-8oc storage facility before being assembled to kits, at which point

information flow becomes the principal consideration. The value chain in consideration for this audit is a

reagent pack, all of which follow a common process chain as per the value stream map. These kits are

usually a variable number and type of component, but always consist of a coated well, an assay reagent

and a calibrator. There are numerous accessories which share elements of the process chain but are not

fully catered for in this audit, so it does not include all sources of interference, but does show the

fundamental material flow. The timeline can only be shown in typical half-day time intervals, despite the

finely tuned machine parameters, demonstrating how planning constraints, quality variables and shift

alignment are seen to induce work buffers and waiting time between process steps.

The biggest single variable, which has a set of performance metrics entirely to itself is the

storage time in the 2-8oc coldroom. The leadtime (dwell time in this case) varies from 60 days in slow

moving calibrators to 1 day for urgently needed coated wells. Clearly then, this is a symptom of

problems related to uncertainty, variability and control in the OCD value chain. Interviews with the

senior managers demonstrated how the origins of the company have strongly influenced the supply

characteristics to Distribution Centre (DC); batching product to minimise testing and liability for multi-lot

failure which would cause stock-out and a loss of sales due to reduced confidence from the market. The

role of the wider supply chain was further explored with interviews with supply chain managers and

analysis of MRP information and manually recorded production data.

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Figure 34. OCD Value Stream Map

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6.2.3 Audit Findings

There were many attributes of the business that were attributed to the scientific background of

the company and the ethos of quality over quantity. Particular highlights observed over the duration of

the study, especially in discussion with senior employees, include:

• Mature operations data package, which contains consistent varied data,

• Consistent presence of improvement project aspect to day-jobs

• Frequent communication of changes and ‘publicity’ for projects

• Friendly/helpful environment

• Great individual skills and knowledge

• Problem solving skills

However, because of the focus on quality and compliance, it could also be considered that there is a

relative lack of ‘urgency’. Production-related prioritisation of customer demand and cost control /

reduction tactics are often a secondary considerations, which in itself becomes a barrier in terms of

motivation for change.

From the viewpoint of the experienced external auditor, it is often easy to find opportunities for

improvement, especially in context of other companies that have been studied by Quickscan or other

best practice audits. Symptoms of uncertainty which were seen by the Quickscan team include:

• Variable product performance

• Overtime required

• Inconsistent lead-time

• Variable schedule adherence

• Many points of localised information storage and manipulation

• Supply out of phase with demand, shown below in figure 35

• Compensation for ‘at risk’ stock quantities, shown below in figure 36

• Escalation of impact of these, to reduce profitability and risk market opportunity

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Dec-08

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09Jul-0

9

Aug-09

Sep-09

Oct-09

Nov-09

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

G2250PW

GEM1250 Orders quan-tity G1260PW

GEM1260 Orders quan-tity

Figure 35; Supply out of phase with demand

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42005 2006 2007 2008 2009

0

20000

40000

60000

80000

100000

120000

140000

160000

Inventory - WIP finished packs

No completed R packs

Figure 36. Compensation for ‘at risk’ stock levels

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6.2.4 Discussion

These observed symptoms were discussed at length during the Quickscan feedback meetings (3

in total). The root causes were analysed at local level with some cause-and-effect diagrams being

generated, and these were used as a framework to identify some of the behaviours driving these

inefficiencies. As mentioned above, the company culture, nature of growth to date and attitude of

constraint management all played a significant role.

Specific activities and recommendations were discussed in context of the strategic intention

behind them. The key to overcoming the behaviours mentioned above is the chronology of moving

strategic focus from a stabilised internal process to include the wider value chain. The most salient

points identified as being key to a strong strategy towards reducing uncertainty were delivered simply

and stated as such;

• Uncertainty reduction can be achieved by improving the constituent uncertainty aspects of

value adding processes and control systems. (ref. Uncertainty circle, figure 12)

• These are traditionally seen to be sequential improvements; therefore we must look at applying

the simplicity rules to the value adding area first.

• This uncertainty reduction process should identify and tackle the root causes, to achieve

• Alignment of supply with demand,

• Improvement in responsiveness to customer requirement without increasing WIP.

• The control system will subsequently require improvement around the areas of interface

between shop floor control (SFC) and production, and

• At the macro level of the supply chain, there needs to be a clear strategy around reduction of

uncertainty by use of lean and agility approaches to control WIP but maintain the buffer to

prevent supplier uncertainty impacting customer supply.

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6.2.5 Audit Output

Specific actions were identified against three main root causes;

• The trade-off between Lean and Agility is not clear, causing misalignment of metrics,

which should then be reviewed in context of the more holistic business requirements.

• Lack of cross-functional interaction in and around project activities, such that

understanding of internal customer demands were unclear, which should be overcome

by means of localised lean manufacturing activities to deliver customer value.

• And building on this, the end-to-end value chain should be considered in terms of

material flow, to identify the most appropriate points for single-piece-flow, WIP and

controlled WIP (ConWIP).

The timing of the audit served to reinforce the KTP associates company and material flow

knowledge, and also to frame the forthcoming activities in support of these strategic goals. The

foundations for the Lean KTP project were the introduction of new approaches to tackle two of the

themes described above;

• Alignment of performance criteria and production data to clarify the link between

metrics and actual performance

• Simulation of material flow between internal functions

The third aspect was assigned to the future state team (including this author) to adopt lean

principles during area specific investigations to highlight routes to local improvement, which then need

to be aligned with the customer order fulfilment process in the more holistic value chain.

As was the case with Orangebox, the uncertainty scores were shown in radar chart format,

showing the current benchmark scores to be improved upon. Figure 37 below shows the radar chart at

the time of the initial Quickscan, highlighting the potential strength to the regulated product, finite

product range and safety net of the DC storage, which are not being capitalised on in terms of internal

efficiencies.

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Internal

Control

Supplier

Demand 0

2

4

Before

Figure 37. A radar plot of the component uncertainty scores at OCD

6.2.6 Supply Chain Maturity Benchmark

To complete the QSAM assessment, a graphical benchmark is presented. This is codified by the

audit team according to QSAM methodology and guidelines as a result of: factory tours, the

observations made above, and completion of the supply chain maturity questionnaires shown in

appendix 2. The scores are shown below in table 18 and the current position in the Quickscan database

is shown in figure 38, suggesting that the company has so far achieved a maturity indicator of good

functional integration.

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Table 18. Quickscan audit uncertainty scores.

Questions asked of each value stream

Strongly Agree

Weakly Agree

Weakly Disagree

Strongly Disagree

Value Added process generates low system uncertainty 1 2 3 4

Supply Chain generates low system uncertainty 1 2 3 4

Demand generates low system uncertainty 1 2 3 4

System controls do not generate uncertainty 1 2 3 4

As a result of the recommendations made from the audit and feedback to the senior management

team, discussion around operational strategy was very enthusiastic and projections of potential

improvements were put in context of what the company thought it was aiming to achieve, and also

what the audit team perceived it would actually achieve. The anticipated result is shown in figure 39,

demonstrating how the company could expect to achieve internal integration by means of a focus on

traditional Quickscan approach of value chain simplification.

An interesting point of note is that the company did not aspire to be truly Lean according to the lean

gurus, but that it wanted to employ lean and six sigma tools where appropriate to improve product flow,

reduce waste and achieve ‘economy of scale’ by batch size management without incurring quality defect

at any stage. This prompted the discussion around lean, agility and sustainability strategies, and how

changes can be characterised, actioned and embedded in the company to achieve the correct balance; a

similar thought process as was undertaken at Orangebox, but with a different outcome. Another 163

research observation is that the utilisation of lean techniques at OCD was thought to be widespread but

largely incoherent at this point in time; a further verification of similarity with the Orangebox case.

However, in this case there is some good background in the training and established knowledge around

specific Johnson and Johnson (JnJ) Process excellence (PEx) tools including lean, six sigma and design

tools and techniques.

This report will go on to show the results of actions undertaken (both as a result of QSAM report

and other activities already prescribed at this time), how improvements were realised, and what impact

they had on the QSAM uncertainty scores.

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Figure 38; Position of OCD in the Quickscan database

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Figure 39. Projected Improvement in Position of OCD in the Quickscan database

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6.3 Supply Chain Activities; BIT Implementation

For both Orangebox and OCD, the many symptoms of complexity and inefficiency that manifest

themselves within the business unit can only be overcome through improvements throughout the

supply chain. However, the quickscan audit normally advocates that internal improvements within the

immediate control of the company are the starting point. Given the relative maturity of the company it

would be expected that the audit would recommend moving into the supply chain sooner rather than

later (as turned out to be the requirement for Orangebox). This would traditionally be developed in two

stages; firstly with the supplier base, and secondly customer facing functions and activities, represented

in the fundamental process flow shown in figure 40 below. As described later, it transpired that the

priorities were actually reversed, but in the interests of maintaining continuity in the reporting, the

supply chain aspect is reported first. However, there was a significant difference between the two cases,

in that the nature of the BIT for Orangebox in the supply chain was predominantly tactical and tangible,

whereas the maturity of the supply chain demanded a more strategic approach to managing

improvement.

Figure 40. Fundamental process flow

The relative processing times of SC and VA functions determine the characteristics that must be

achieved to meet CB demands. A lean process chain enables signal from CB to flow directly to the SC and

for product to flow seamlessly and rapidly, to order, to the customer in the anticipated delivery time,

which is the sum of all cycle-times at each stage of the process. An agile process chain is able to react in

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Value – added process (VA)

Supply chain(SC)

Customer base(CB)

1 2

the anticipated delivery time, but overcomes the difficulty created when the sum of cycle-times is

greater than the anticipated delivery time. This agility therefore necessitates a buffer of complete or

part-finished goods in the process chain, the cycle time for completion of which is less than the delivery

time.

6.3.1 The concept of decoupling point

The decoupling point can be defined as the point in the manufacturing value chain that

separates forecast driven and order driven activities (Giesberts and van den Tang, 1992). It is crucial to

position the decoupling point at the right place since it will be used to classify value-adding activities in

terms of customer demand information and clarify the need for different management approaches

depending on whether the activities are upstream or downstream of the decoupling point (Wikner and

Rudberg, 2005). With reference to figure 41, the decoupling point is the point at which the CB signal

becomes input to the order process. The de-coupling point for a lean system is at the start of the SC

process. Where system agility is required, the de-coupling point determines the point at which the WIP

buffer must be maintained. This creates a point at which there is a division between make-to-stock

(MTS) and make-to-order (MTO) strategies.

High volumes and large variation within components creates a high number of SKUs which is

cumulatively expanding due to large R&D investment. Production lead-time varies with component

variations, however, a standard SKU lead-time from manufacture start to finished goods dispatch is

currently three weeks. The batch management schematic that OCD employs is represented in Figure 41,

with the components consolidation taking place at the assembly stage. There are some product quality

concerns arising from the raw materials, however as discussed highly skilled workforce are in place to

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minimise the impact of such issues, and try to maintain balance around the kit consolidation process

step, which is where the product resides in the 2-8oc coldroom.

Finished goods are dispatched to either of two internal distribution centres; North America or

France (which supplies rest-of-world). Three weeks of stock are held for each SKU, maintained by

continuous adjustment of the master production schedule (MPS). Manufacturing is currently working to

a hybrid system, which adds further complexity due to product characteristics such as expiry dates and

frequency of product demand, with shorter shelf life products manufactured MTO just in time. In line

with the uncertainty sources identified in the Quickscan, this hybrid system has resulted in high volumes

of obsolescence, scrap, and consequently a high proportion of rework.

6.3.2 Utilisation of De-Coupling Point to Improve Operational Strategy

The QSAM identified the importance of the positioning of the decoupling point. The current

perceived position of the decoupling point suggests that all activities upstream are driven by demand

forecast. The QSAM observation, however, suggests that as the distribution centres are to some extent

perceived as a separate business entity by the manufacturing site, there seems to be a perception that

products (ordered by the DCs) are fulfilled in a MTO fashion at the manufacturing site, which may then

suggest a different view of the location of the decoupling point, and a different understanding of

customer requirement.

OCD have consequently changed the scope of value stream mapping to include the extended

value stream, and a mapping process was then scheduled for November 2010 to include this revised

understanding of impact from supply chain and customer expectation. This provided the mapping team

with the remit to assess the most efficient position of the decoupling point to minimise the amount of

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Component Manufacturing

Kit consolodation

Assembly & Dispatch

Distribution Centre stock

MTS demand agreed with DC

Parts supplied

All new batches induce a new works order for a kit

New kit demand drives new component requirement

Kit supplied Kit delivered

WIP in the flow side of the business but maintain Line Item Fill rate (LIFR) levels close to 100%, the direct

measured variable of customer satisfaction. The new scope of the value stream mapping analysis, along

with the use of simulation modelling, is expected to align improvement activities (once fully realised)

with inventory management and strategic imperatives.

Figure 41; schematic layout of batch management for OCD

When establishing the current state, the audit team characterised the value stream in essential

building blocks as per figure 40. The resulting schematic layout, shown in figure 41., shows that there

are a number of batch creation signals which induce a batch and queue type of product flow, hence one

of the major challenges created by improving flexibility and responsiveness at the customer interface is

the space constraint at the kit consolidation point shown in Figure 41. A significant potential sales

growth foreseen by the company in the next few years would require innovative thinking of order

fulfilment methods so that the constraint is not violated. Current belief that ‘the DCs is our customer’,

means that demand patterns coming from the DCs are treated as input data, which to some extent,

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restricts the exploration of possible options in overcoming the ‘top level’ (end user satisfaction)

challenge, while at the same time, the final result will only represent a local optimum.

The solution, then, is to move the decoupling point from the kit consolidation stage to the

component manufacturing stage, to align the reagent, well and calibrator finish dates for testing start

date (no queuing time) and flow the work through testing, packing and shipping with minimum dwell

time thereafter. This will minimise WIP throughout the value chain, simplify material flow and, by

stressing the system, will raise many of the currently well-managed issues up to become issues that

must be eliminated because they are immediately and obviously compromising the operational

efficiency of the factory.

Once many of the disturbances and noise signals are removed by means of reducing WIP and

associated turbulence the more holistic view of the supply chain allows the organization to re-examine

where the main constraint is and find an optimal solution. If it turns out that the kit consolidation space

is really the constraint, a potential option worth examining is to reduce the replenishment order

quantities (or increase the order frequencies), moving closer to a MTO fashion throughout the whole

value chain. However, there are a number of key enablers that must be achieved, firstly in applying a

holistic approach to improving the supply chain and secondly in the internal business strategy. This is

exactly the situation that reveals the balance of the key success factors in achieving a long term gain

rather than implementation of individual BIT. In context of the research questions, it could be

summarised that the impact if individual BIT implementation for a mature company such as OCD is

significantly less then an immature company such as Orangebox, and that for OCD to maintain its

trajectory of growth and success then RQ2 and RQ3 become critical; how to identify the gaps and

prioritise the solution.

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So, to find this balance, the improvement strategies for both the supply chain and internal

improvement should be managed and developed concurrently. In order to achieve this change in

improvement strategy, there are significant operational and cultural changes that must be implemented

to achieve the simplified material flow, many of which, as mentioned in section 6.1.2, are related to

‘soft’ issues that are not specifically catered for in a lean or agility implementation programme. This

supports the requirements seen in Orangebox and highlights a number of determinants for success that

are described later as the basis for the new assessment and prioritisation framework.

Subsequently, there was an even wider scope of internal improvement programme and

activities in OCD, to incorporate the wider scope of cultural change and enable the long term goal

described above. This has been given the title of the True North project, as suggested in nature by

Rother and Shook (1999). The following section elaborates on this and describes how the internal BIT

implementation has been deployed using a multi-faceted approach.

6.4 Internal Activities; BIT Implementation

As described by Rother and Shook (1999), there is no end to the “future becomes present” cycle,

and subsequently, there is no end to future state mapping; by applying anticipated parameters to the

current state end determining gaps in capacity, it is possible to prescribe the ideal or most appropriate

course of action to achieve the required level of performance. Evidently, the more complicated the

current situation, the greater the natural gap to the simplified future state. Especially when having the

vision to define a five year horizon and the benefit of confidence in growing volumes.

This proved to be evident in terms of the internal activities that the Quickscan team was able to

highlight. The feedback was largely directed at aspects of cultural change away from the scientific

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complexity and designing in quality at the supply chain to enable the internal value chain to focus of

process efficiencies. As such, this reflected the difference between Orangebox (tactical) and OCD

(strategic) recommendations with regard to the supply chain. The challenge was then translated and

passed over to the OCD team to draw out tactical activities from the strategic qualifications.

6.4.1 Lean Thinking as a framework for Improvement

As per the improvement paradigm already described, academic interest and widespread

consultancy activities have pushed Lean Manufacturing to the forefront of manufacturing company

improvement initiatives. There is an extensive and broad range of publications to summarise the virtues

and constituent aspects of lean thinking. Sanchez (2001) describes six lean indicators which are

considered drivers for a proactive company, I.e one of greater maturity as anticipated at OCD:

1. Elimination of non-value-adding activities,

2. Continuous improvement,

3. Multifunctional team,

4. JIT production and delivery,

5. Integration of suppliers, and

6. Flexible information system.

Richards (1996) contends that lean systems aim to achieve perfection, a view supported by other

authors (McCurry and McIvor, 2001) (Shah and Ward 2007) (Phillips, 2003) who characterise a lean

production system by adding aspects of integration such as customer involvement and autonomous

systems in operation. While OCD would seem to be too high on the maturity curve to consider ‘starting’

a lean programme, it is not too basic an approach for OCD to utilize as a tool to resolve some of the

complexity issues diagnosed in the quickscan audit. To understand the company context and specific

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opportunities, the history of lean at OCD needs to be followed and compared to the maturity curve in

figure 8.

In OCD, Lean manufacturing was introduced to the operational areas around 1999, introducing

5S, standard operations and waste reduction practices. As a standalone exercise it seemed to be well

received and fitted well, and naturally, with the scientific nature of the people working in the

operational areas. Evidently indiscriminate tool and technique utilisation alone does not enable

achievement of the strategic targets, so OCD has to concurrently achieve change in culture and personal

belief. Provision of knowledge and an operational framework of tools is important but insufficient on its

own; emphasis on lean activities in daily roles and provision of training and champion-led demonstration

is required to establish understanding of what can be achieved.

As an example, OCD has developed and rolled-out a company-wide lean training initiative in

conjunction with Cardiff University’s Lean Enterprise Research Centre (LERC) and an external training

provider whereby the whole workforce has been trained to level 1a (awareness), 50% to level 1b

(diagnostics) and 25% to level 1C (leading improvements) with trainees being distributed from all

operational and service functions. Examples and case studies from throughout the business and also

trainers’ experience are critical to demonstrating the key philosophies and embed these in order to

enable improvement in many of the following areas of improvement.

It is proposed by exponents of lean thinking that it is not just an approach to be used in

improvement of the manufacturing environment, but that it is applicable to service and strategy

definition. Naturally, service and strategy specialists resent this, and suggest that ‘tool heads’ should not

apply lean techniques to a system which they do not suit (Seddon, 2007). Voss (1995) goes on to explain

that when using lean thinking to determine manufacturing strategy and maintain a competitive edge,

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failure to achieve continuous improvement in all areas only serves to neutralise that competitive edge.

In effect you have to improve to stand still. A more effective strategy is a balance with other activities,

taking the lean principle to react to customer requirement and focus on customer needs but use a

variety of approaches to build on core business capabilities to achieve a true competitive advantage.

This is entirely relevant to the OCD case, and on reflection is a situation that all companies should be

aspiring to.

Therefore, this is a key turning point in this research cycle; appreciating that customer needs are

the driver for improvement, that they can be categorized in a number of key determinants for success,

and that the wider manufacturing improvement paradigm can be called upon to deliver the specific

improvements. This is a significant move toward a top (customer) down roadmap for improvement

rather than a bottom (audit/assessment) up approach to removing the symptoms of inefficiency. This is

a good opportunity to highlight this in the research process flow, summarized below in figure 42. This is

a similar process to the Orangebox flow shown in figure 29 and the overall research flow shown in figure

XX but demonstrates how the use of the two cases studies is vital in specifying the tangible key

determinants for success.

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Figure 42. Flow chart of OCD activities

6.4.2 Using Lean as Part of a Multi-Faceted Approach to Improvement

As described above, the company requires more than a material flow simplification approach, as

that would naturally focus on operational areas again, and miss many of the essential supporting aspects

and functions, which are effectively represented by 50% of the workforce. The first step in this process is

to identify the key philosophies and the potential barriers to their lean implementation in a regulated

environment and adapt or develop improvement activities to align to these intentions in the company’s

specific context.

One of the principal benefits of using lean thinking was to provide a framework for modeling the

current state by means of value stream mapping, then projecting forward to a future state of the

business which is capable of meeting anticipated customer demand, thus identifying the gaps and

projects required to improve capability. The future state map was represented diagrammatically in the

same format for ease of communication and consistency, with future state data shown and ‘kaizen

burst’ projects and activities imposed. This standard approach is a simple and effective analogy to

identifying what the company needs to achieve and setting out the roadmap to do so in terms of both

the lean implementation and also the wider supply chain utilizing the key determinants for success; a

thought that will carry straight into the next chapter and the discussion around RQ2 and RQ3.

In practice, three years previous to this research, OCD reflected the common trend of starting

with a traditional textbook approach but then digressed from that approach and utilized the more

scientific regression style of analysis to set out four major themes in order to capture and tackle known

deficiencies of the manufacturing system. This concurs with the arguments raised in the critical review;

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that the identification, analysis and diagnosis of shortcomings in a manufacturing system can yield

varying outputs and recommendations, dependent on the theme and scope of technique used.

In this case, the True North objective was split to several top level headings, under which the

characteristics and expected criteria for success were conveniently packaged, effectively jumping to the

answers rather than progressing through a systematic modeling process of analysis and prioritisation.

The resulting headlines were subsequently difficult to deploy to individuals’ goals as they were seen to

be disconnected, and lacking in clarity of vision. The actions and activities were not incorrect, or ill-

conceived, and were in fact unanimously agreed at board level as the most important factors to

improve. However, to those charged with implementation, the degree of improvement required, the

interdependent variables affected, and the ideal chronology of actions were not clearly communicated

or understood.

This problem would have been eradicated if a single auditing or assessment tool could be

adopted for initial benchmarking and analysis purposes. Then, from this position of strength, process

excellence tools, project management best practice and continuity of ‘soft’ systems support can be

deployed against the top level goal for clarity of vision, and further deployed in smaller components for

individuals to implement. At this point, the validity of this research was starkly apparent, highlighted by

the fact that the author and colleagues were not able to identify such an appropriate tool for the initial

auditing.

Although the headline titles of the themes vary between instances in other companies and

publications, the emerging trend is to consider aspects of improvement in generic terms of: people,

process, product and structure (OCD theme titles are indicated in brackets). Each of these umbrella

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themes then has its own component ‘bones’ to its cause and effect which reveal the detail and move

closer to the root causes of poor performance in each area..

People; (culture and education) representing the culture of improvement and engagement, this

reflects two gaps between intent and deployment. The first gap alludes to the engagement of the whole

workforce and alignment to common purpose(s), while the second gap shows the degree to which silo

mentality is hindering cross-functional co-operation and creating pockets of excellence in localised

areas.

Process; (product and process) representing the capability of the production process(es) to meet

customer demand, on time, in full, with low levels of scrap. As seen in OCD, this can be manifested in a

variety of ways. “What is the perfect process” depends on capabilities, inputs and outputs of the process

chain elements. As such, this is probably the most adaptable of the themes given the scope of activity

that could be undertaken in response to changes in the other areas.

Product; (velocity) As mentioned, product is tightly defined and constrained in terms of material,

function and design, so this theme is represented by material throughput and leadtime, it has serious

impacts on working space and work in progress (WIP) in OCD. This is a key bonus metric and the most

commonly understood performance requirement which also fits best with the simplicity rules.

Structure; (complexity) representing the degree to which infrastructure of the business, system

complexity, interactions, functional co-operation (and also this transformation process) are managed in

the business. In OCD, this is now considered to be a significant variable and a component of most

inefficiencies. Complexity is described in more detail below.

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It must be noted that the areas of commonality between these themes can serve to either

neutralise each other or even create some conflict. The ideal situation in a benchmarking exercise would

be to assess each theme in context of change in the others, considering complementary themes and

assessment of the optimum holistic gain. Further to this, the various individual activities must be

assessed in terms of their impact and contribution in order to prioritise them. A communication poster

collated for this purpose is shown in figure 43, which demonstrates some of the links between existing

systems, objectives, activities and overall contributions to business improvement.

Currently, goal deployment sessions have been radically improved and altered to accommodate

these considerations, and there is a much more focused effort on achieving ‘goodness of fit’ of

manufacturing characteristics with strategic objectives and business process improvement projects. A

further improvement which has not yet been utilised in OCD would be the introduction of a measure or

metric to calculate this goodness of fit, which could subsequently be used to promote or relegate

activities according to their relative contribution to achievement of the business objectives. This has

been highlighted when just such a consideration has been debated at some length when considering the

status of a new project idea.

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Figure 43. A poster collated to show deployment of goals, projects and themed activities.

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The following sections briefly highlight activities being undertaken as part of the True North

project, and their measures which may be an aspect of the goodness of fit, under each theme. This is

important as they represent some of the key determinants to a successful manufacturing business;

6.4.2.1 People

The People and culture aspect of the approach related to a variety of engagement activities

which were interesting in terms of their specific outcome but largely supporting in terms of contribution

to the business improvement techniques being employed. Evidently, no initiative will be successfully

implemented without engagement, and a dedicated resource must be ring-fenced to ensure that vision,

strategy and goal deployment are aligned and active. This became a key theme for development of

individuals and teams for talent development and communication were pulled together from various

functions to drive the delivery of the more tangible projects aimed at improving operational

performance. Project deployment teams were established to support these and bridge the gap between

the themes; one in the operations area to look at the ‘just do it’ projects, and one closer to the whole

site management for prioritization and resource allocation of projects requiring feasibility, capital and or

cross-functional resource.

6.4.2.2 Process

This theme focused largely on the process capability, with specific projects set up to look at the

ease and relevance of using statistical tools in process measurement and product testing and release. Of

which, the latter which was cited as being one of the biggest causes of complexity in the top level

business activity, so again demonstrating how the themes can overlap, yet cover more ground than a

single effort. As mentioned, efforts in this theme have been much more sporadic and it has been called

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on to support particular issues, including new product introduction, but with little generic output it does

not warrant any significant discourse in this research.

6.4.2.3 Product (Velocity)

Lead-time is a critical metric considered as part of the existing Quickscan time-series analysis. It

is also the most tangible, and the only real tactical aspect of internal improvement that the Quickscan

team was able to reference as an indicator of potential improvement. As such, it is strongly represented

by simplification techniques within the remit of lean implementation which has previously already been

mentioned as a relative strength of the company.

Traditionally, lead-time reduction is a key cost reduction strategy, reducing cost of labour, scrap

and inventory, and a programme of projects has been co-ordinated by the Operations Process

Excellence Manager over recent years. This has been fine-tuned to ensure activities are targeting lead-

time reduction in the critical path, which has become more challenging due to the constraints and

effects of supporting functions and process characteristics (hence demonstrating the importance of the

other True North themes described above). One notable benefit to starting with a relatively mature

theme is to instigate common language and understanding with regard to a project contribution of

individual activities; supporting the argument that proposed actions must be multi-tiered for easier and

clearer deployment.

6.4.2.4 Structure (Complexity)

Complexity is a fundamental consideration of the Quickscan methodology in terms of

uncertainty evaluation, but in its own right is rarely a key consideration of companies looking for

business improvement opportunities. Where lead-time is a leading indicator of the uncertainty rules,

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complexity is at the heart of many root causes and although difficult to capture concisely, an important

area of research for both the company and also for the development of a more effective assessment

technique.

A complex system is made up of a number of different parts interacting in a non-simple way,

such that it becomes difficult to predict the system’s behaviour without detailed analysis or computation

(Bozarth et al 2009; Deshmukh et al 1998). Complexity is often confused with complicatedness and

uncertainty, whereas they are actually the two main factors contributing to it.

An early and well known framework in this area is the supply chain complexity triangle put

forward by Wilding (1998). This emphasized uncertainty and the ‘far-from-equilibrium’ behaviour within

supply chains that causes complexity. Three independent yet interactive factors were specifically

identified: deterministic chaos (relating to the structure of operations), demand amplification (changing

the dynamic behaviour of the system) and parallel interactions (where supply chains interact with each

other). Later frameworks have been developed to identify additional detail; Vachon and Klassen (2002)

describe the technological, managerial and product variables, Milgate (2001) and Ashkenas (2010)

discuss the two way relationship between technology and information and Perona and Miragliotta

(2004) identified five key dimensions for uncertainty. Table 19 has been developed to categorise the

causes of uncertainty, populated with examples from all of the above literature.

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Table 19: Causes of complexity (adapted from Vachon and Klassen, 2002, Perona and Miragliotta, 2004)

New Product

Development

Sales

Processes

Inbound/

Outbound

Logistics

Production

Process

Production

Engineering

Managerial

Decision

Making

Com

plic

ated

ness

Structure Modifications

in design Co-design and

co-ordination Patent

Product range and customisation

Absence of suitable pricing mechanisms

Lacking information visibility

Production capability of suppliers

Stock holding costs

Delivery frequencies

Parallel interactions

Outsourcing Number of

echelons Geographical

span of suppliers & customers

Production capabilities

Demand forecast upgrading

Safety stock levels

Poor quality delivery

Throughput time variations and setup times

Stock levels inaccuracy

Fraud, theft and bending rules

ERP system logic

Production planning

Production resources

Plant location Limited

storage space

Strategies and objectives

Manpower Capacity

Allocation Product

information Process

information Cost Scheduling/

planning changes

Demand volatility

Delayed supplier delivery

Price fluctuations

Unc

erta

inty

Lifecycle length

Government and safety regulations & restrictions

Demand forecasting

Delivery constraints

Priority orders Product

ordering Record

systems Last minute

cancellations

Operational problems (loading/ unloading)

Congestion Supplier

backlog

Product variety Production

skills/know-how

Number of sub-processes

Number of components

Level of interaction between different components

Deterministic chaos - Control systems

Technology

Lack of Information Processing

Poorly designed systems used

To reduce or manage the negative impact of process complexity, Perona and Miragliotta (2004)

identify reduction levers and management levers. Hoole (2005) also identifies a number of ‘levers’

through which complexity can be reduced. These are combined in Figure 44 below to demonstrate how

both reduction and management techniques to reduce complexity in manufacturing systems. Again,

these are important factors to integrate to a more effective supply chain assessment technique.

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Figure 44: Complexity control levers (adapted from Perona and Miragliotta, 2004, and Hoole, 2005)

The research reached a point of convergence on this topic: How does the company reduce

uncertainty (complexity) in product and process performance by using management and reduction

levers; aligning supply chain management and the True North improvement programme? Evidently this

is a more elaborate situation than focussing purely on simplified material flow through a process chain,

so it can be seen that the maturity of the improvement paradigm in OCD has a profound effect on the

effectiveness of the Quickscan audit in its current form.

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Complexity control

Reduction Levers

Configuration:Plan : Product configuration and

package rationalisationMake : Plant rationalisation

Deliver: Less distribution layers

Organisation:Plan : Supplies and operationsMake: Demand management,

Outsourcing decisionsDeliver: Customer collaboration and

supplier control

External Relationships:Plan: customer & market

segmentationMake: Outsourcing

Deliver: Customer collaboration

Management levers

Management practices:Plan : Postponement

Make : Lean manufacturing Deliver : Promotions, employee involvement, reduced schedule

changes

Information levers:Plan: use of systems like VMI

Make: Lean manufacturingDeliver : e-commerce portals

In order to bring some structure to this improvement governance, the company undertook a

‘Lean Principles Project’ which reviews the OCD True North process undertaken 3 years ago to

determine whether a more proactive approach can be taken as an enabler to simplify improvement in

the future, and also to establish some commonality in purpose to achieve cost and leadtime

improvement.

6.4.3 Lean Principles Project

The author facilitated discussions around the Learning to See questions (Rother and Shook

1999), through to a more strategic approach which aligned to the known weaknesses described above.

As a summary commentary of this discussion, the questions are shown below:

1. What is the takt time?

Important to determine the time bucket, the batch size strategy, the resource requirements, hence the

bottlenecks in the current production system.

2. Will you build to a finished goods supermarket or directly to shipping ?

Important to determine finished goods holding on site and at the distribution centre (DC), the required

rate of replenishment at these supermarkets and the resulting logistics strategy to consistently meet

customer expectation.

3. Where can you use continuous flow processing ?

This really speaks to the understanding of where the process steps are balanced, where the work load

can be smoothed and at what point it will reliably stick to the production schedule to minimise variation.

4. Where will you need to use supermarket pull systems to control production of upstream

processes ?

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Supermarkets are often utilised as conWIP or buffers around particular constraints; identifying where a

supermarket is or where operations would like to hold WIP is a great way to identify the system

constraint, which is invariably the process step that should be targeted for improvement.

5. At what single point in the production chain will you schedule production ?

6. How will you level the production mix at the pacemaker process ?

Between them, these two questions allude to the balance of the first three questions, and fit perfectly

to the implementation of lean tools and techniques to simplify material flow. However, as described

thematically through this research, this cannot be optimised until the process chain is stabilised; at OCD

question 4 yielded a significant output in identifying the process constraint and using the theory of

constraints to manage it (thus using it as a complexity management lever – as described below thes

remainder of the learning to see questions). Again, this strengthens the argument that the strategic

approach was more appropriate to benchmarking in OCD operations due to its relative maturity and

complexity, while the tactical nature of questions five and six lent themselves to the necessary

improvements in Orangebox. Retrospective review suggests that it was applicable to the whole supply

chain system at Orangebox; highlighting the supplier development route for improvement prior to

implementing a lean methodology for improvement in the factory.

7. What increment of work will you consistently release and take away at the pacemaker

Process ?

Again, this often relates to where WIP is held, and at which point in the process chain the constraint

currently governs process output and often quality capability.

8. What process improvements will be necessary for the value stream to flow as your future

state design specifies ?

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This helps to translate the top level intention to a tangible schedule of works to improve the process. In

OCD this translated to utilisation of the theory of constraints approach rather than implementation of a

specific lean approach or technique.

Theory of Constraints

The Theory of Constraints (ToC) is based around the premise that the manufacturing system is a

analogous to a chain of processes, which is “only as strong as its weakest link”. Commentary on this

paradigm by Dettmer (1997) describes the fundamental stages of applying the theory of constraints, and

the qualities and characteristics of the constraints constituent parts. The author utilised figure 45 to

represent the generic ToC process chain structure and the specific OCD context to the project team.

Figure 45: ToC in context at OCD – QC is the constraint

Dettmer (1997) describes how the ToC process follows a 5 stage approach;

1. Identify the constraint2. Exploit the constraint3. Subordinate everything in the constraint4. Elevate the constraint5. Repeat for the new constraint

Aligning this with the learning to see questions, the lean principles approach identified the

constraint as the Quality Control (QC) to quality Assurance (QA) interface, at which point the product

performance variability manifests itself in terms of failed test results. A ToC simulation game was used

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MTS K Kit QC / QA KA Dispatch

to recreate this situation and demonstrate the anticipated benefits to a wide cross-section of the

company to understand potential barriers to implementation and get stakeholder buy-in. This was a

similar approach as used by Francis (2009), and the author also utilised the published results of repeated

simulation by Lange and Ziegenbein (2005) which are shown in appendix 12.

As a result, a future state map was drawn up, shown below in figure 46, demonstrating the

implementation plan of four kaizen events to achieve a change in inventory location, quantity and

control system.

Figure 46; Future state map of the flow part of the production process.

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Lean Principles Project Results

The result has been to introduce one day of leadtime before the testing stage, but has removed

two days before the packing stage, hence there is currently a net gain in cycle time reduction of one day,

with potential to progress that further in the future toward single piece (batch) flow. The saving in the

coldroom is 10 trolley spaces, which are costed at a rate of £9000 per space cost-avoidance (of building

a new cold room). In addition, OEE has improved at the kit packing stage due to the improved visibility

and improved work flow through the area, which in turn has improved the stock control in the cold

room. There is also a less tangible gain in terms of visibility of status within the process chain which was

an essential part of the control system with supplier and customer aspects to each individual area’s

visual management system. It is clearly seen, then, that the most tactical result of actions prompted by

the Quickscan feedback did not yield such clear-cut results as were seen in the ‘simpler’ Orangebox case

in which most of the feedback was directed at tactical improvements.

The question around improvement of the benchmarking practice, can now be clearly

understood; what can be done to improve the holistic nature of the Quickscan findings according to the

complexity of the organisation in which it is operating, and how can it be improved to translate the

strategic requirements and necessities into tactical improvements that the management team can

appreciate, understand and easily deploy. The following chapter, chapter six, goes on to elaborate at

some length the possibilities to improve the breadth of scope without losing any depth of penetration to

the company.

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6.5 Future Growth and Sustainability Roadmap

The new operating platforms (diagnostic machines) developed by the OCD sites in the US are key

to product growth, ensuring that market share is increased by improved coverage of end user

requirements. Throughput (volume) and processing speed are now sufficient for higher volume, or test

specific labs, which will evidently be using more consumables. This is good news for the Pencoed facility

as long as the customers’ requirements are met throughout the menu of test kits, which is outside the

control of the manufacturing facility. Thus the key factors for financial security while manufacturing the

existing product range are to provide 100% of product On Time In Full (OTIF), improve throughput by

reducing cycle time, which will allow for lower stock holding at the DCs and reduce WIP in the factory

which will, in turn, offer customers a longer shelf life and release capital for the corporation.

This is also now being translated to customer value by means of stock management services

through web-based applications to reduce the fluctuation of customer order frequencies and quantities.

Spreading the time over which orders are placed and making that quantity is simple lean approach to

inventory management which will reduce shelf-life issues and any potential stock-out situations, so

should not be a surprising idea, but many health providers are still culturally connected to the original

laboratory environment; a change being experienced by OCD themselves. By providing the motivation

in terms of stock reliability, reduced inventory and tighter control and also the mechanism to achieve

this, OCD are proactively taking improvements in this field to the customer which would, in the long run,

benefit OCD themselves by providing a wealth of customer data and reducing impact of this fluctuation

on the production process itself. In the future, this could be further enhanced by the in-built e-

connectivity function of the new analysers themselves; down-counting stock as it is used on a live basis.

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Other than this, there is significant potential to further enhance the productivity of the site by

accommodating additional product lines, which is very soon to be realised; at the time of writing,

Pencoed is approved as the location for an additional product line. This necessitates some significant

changes in terms of technology employed, development of proprietary knowledge and release of space

and resource in the factory with appropriate production support. Evidently, this will require even higher

levels of process excellence to continually improve, which will obviously require an increasingly

perceptive auditing methodology for the future. As the inefficiency is driven out of the process, the

pipeline of opportunities for product specific improvement must be maintained. However, when

imposed on the whole supply chain system, the chances are that one local improvement idea to improve

a value chain may prove to be detrimental to another value chain, emphasising the practical importance

of this research in this particular case. As mentioned, the next chapter goes on to discuss the

opportunities for improvement in existing auditing practices, using the Quickscan framework as a basis

and integrating other aspects of best practice in supply chain auditing, as reviewed in theory earlier.

Once developed, an enhanced benchmarking process could be a key tool for manufacturing

companies in high labour cost economies to establish routes forward to new product introduction while

retaining the existing product lines which would traditionally be the processes with a high level of

maturity most easily replicated in low cost economies for greater profitability.

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6.6 OCD Summary

Since the author came into contact with OCD, the company has aspired to move toward a lean

production environment, utilising lean tools and improving cycle time and inventory holding. The

company has started from a position of strength with regard to lean skills, training and implementation

of basic tools. This is in contrast to Orangebox, who recognised the opportunity but did not have any

experience in place at the start of the project.

Having undertaken the Quickscan audit, the discussion around the feedback presentation

immediately went to top level strategy and how to progress cycle time beyond that which would be

achievable by locally applied lean techniques. The author was subsequently involved in facilitating a top

level operations review, using the Learning To See Questions as part of a project entitled Lean Principles.

This review team utilised a ToC approach to re-engineer the material flow and enable more significant

gains in the company. More importantly, it also laid the foundations for further improvement toward

the ideal scenario of Make-To-Order throughout the value chain, as laid out at the Quickscan audit

feedback.

Again, the supply chain perspective was a key area for improvement in the value chain.

Specifically, the auditing team described the de-coupling point phenomenon and how it can be managed

for the benefit of the production process. By managing the point at which forecast demand is loaded to

the system in anticipation of expected cycle time, the degree of order management can be improved

beyond what is currently seen; improving schedule adherence, reducing system complexity and in turn

improving cycle time which, with a proactive approach, will lead to improved customer value.

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While reduction of stock throughout the supply chain has been an important part of improving

manufacturing performance, it has not carried the level of importance as Quickscan would recommend.

Instead, emphasis has been on the development of a multi-themed approach to improvement,

utilization of lean methodology in information flow, and a balance and deployment of a make-to-stock

and make-to-order approaches to achieve best overall supply chain performance as opposed to just site

efficiency.

In 2012 the author has developed this switching decision making process with the senior

leadership team in terms of a monthly strategy meeting. The meeting cycles through the key themes to

react to market conditions and stakeholder requirements, thus determine the relative level of effort to

be employed in the future. This reaction rather than an autocratic approach to defining future direction

from management is a vital step toward sustaining improvement, which is a view strongly supported by

both Barker (1998) and Hayes and Pisano (1994) who state that “manufacturing strategy is about

creating operating capabilities that a company needs in the future”. The company now has a solid

strategy to deploy not only aspects of complexity reduction, but also complexity management, in

mitigating variable product performance and significant demand variability, which serves to maximise

the overall supply chain performance.

The difference between the traditional focus on smoothing forward flow and the novel method

of using complexity is that the variability in the process capability can be married up to both limited

potential for change in the supply chain and the uneven customer demand. This is a clear reflection of

the thought process typified by Barker (1998) who states that: “invariably as pressure from customers

increased it was found that management sought to add further complex controls or software to their

existing systems which distanced themselves from the customer”. By taking the novel approach of using

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complexity as a “trade-off” tool, it breaks the cycle of ‘catching up’ by increasing safety stock or batch

size. As a result, batch failure has less impact on business performance and the focus moves on from just

‘getting product out’ to a focus on effectiveness and efficiency. This will prove to be an ever more

important outlook in the latest evolution of the supply chain model employed in Johnson and Johnson,

in which all ‘make’ facilities are in competition for new lines of business or other opportunities.

As was done for the Orangebox case, the improvements seen were tracked by use of the radar

chart to show what contribution the Quickscan recommendations made to the overall uncertainty score.

The result is shown below in figure 47, and shows that once again the company realised significant

benefits and also uncertainty reductions by means not prescribed, or not fully detailed as part of the

original maturity assessment.

Figure 47; Radar chart of component uncertainty scores after 2 years of improvement activity.

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Internal

Control

Supplier

Demand 0

2

4

After

QSAMNon QSAMBefore

In this instance, the regulatory and compliance constraints were a real issue for finding a way

forward and a limitation of the Quickscan was seen in terms of analysing material flow data rather than

considering the more holistic picture which brought many other variables and human factors. This

resulted in the feedback and discussion being a much higher level; directed at supply chain development

and business strategy rather than the Orangebox case which was predominantly directed at tactical

work and more specific areas for improvement. It can be considered that this is also an important

finding in relation to business maturity and complexity; as the company matures you would expect a

lower level of uncertainty, but in fact OCD is using complexity in many ways to manage the business

(some well considered and some not). As a result, the Quickscan findings are less specific and relate

more to strategic and supply chain issues and opportunities, which are often areas of frequent debate in

a corporate organisation. So, in its current form, it could be argued that Quickscan isn’t as appropriate

to this type of company as it is to a smaller company looking to optimise its internal operations. But that

the findings of this investigation are clearly defining the common key determinants to a successful

manufacturing business (RQ1), and that an improved assessment technique to identify and prioritise

these (RQ2 and RQ3) is clearly required.

The next section considers the similarities and differences in these cases and experiences and

goes on to develop a tool to tackle some of these shortcomings in the maturity assessment process.

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7 CROSS-CASE COMPARISONS

Armed with the depth of knowledge around the two case studies, this chapter reviews the

process used, the audit findings and resulting activities undertaken. Two critical comparisons are made,

firstly a comparison of the QSAM audit against other auditing approaches, and secondly a comparison of

actions resulting from QSAM findings and those actually undertaken, which explains the discrepancies

between the before and after lines on the radar plots at the end of each case study.

These comparisons give rise to the key determinants of a successful manufacturing business. BIT

successfully deployed against these are those which deliver the maximum impact (RQ1). Definition of a

company’s current capabilities against these determinants (RQ2), hence prioritisation of which BIT to

deploy (RQ3) is beyond the reach of the quickscan technique, such that a novel approach and

assessment framework is required. The two cases highlight methodological opportunities to achieve

this, which are highlighted in the research process flows in each other case study chapters and also the

research methodology chapter.

This analysis has been carried while still in the employ of OCD, having completed the quickscan

audits and while the companies have continued to apply the strategic thinking to determine what is

required from customers and the wider market and what the company is currently capable of. The aim

of this analysis is to determine the specific characteristics that are common to successful manufacturing

companies and model a maturity scale for them. As a result, an improved assessment can be

synthesised to supplement the original quickscan score and add greater context to the audit findings;

making sure that companies apply the most relevant Bit to achieve the maximum impact; answering all

three of the original research questions and meeting the research objectives.

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At this point in the research, it was important to re-visit the methodology adopted and, with the

benefit of hindsight, review the decision to use the QSAM audit. Table 10 was reviewed, plus additional

brief literature review was undertaken to monitor advances in the field, and benefit from new

knowledge developed. This was done by repeating key word searches and also searching for recent

citations of the key publications regarding supply chain maturity audit.

7.1 Required Improvements in Supply Chain Maturity Assessment

When considering recommended changes, proposed improvements, and highlighted best

practice in existing assessment techniques, Shepherd and Gunter (2006) present a strong case for

refining existing methodologies in general by carefully considering the assessment criteria and metrics

to be used in a maturity assessment itself, highlighting some particular limitations to be overcome:

Lack of alignment between business measures and strategic intent

A focus on cost metrics to the detriment of non-cost indicators

Lack of a balanced approach

Insufficient focus on competitors and customers

Loss of supply chain context

Lack of system thinking

Banomyong and Supatn (2011) have recently attempted to tackle some of these identified

weaknesses by proposing novel considerations of cycle-time and reliability measures as part of the

supply chain. These additional measures are proposed to provide a more accurate framework for

benchmarking. However, again, the process relies on alignment between the companies’ data and the

framework against which the supply chains are benchmarked. In fact, this could be highlighted as a

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more critical aspect of successful benchmarking, being able to differentiate between internal process

maturity and the overall supply chain maturity.

Observing the technical difficulties stated by Banomyong and Supatn (2011) in aligning the

benchmark and actual data sets, and also considering the potential for misunderstanding or

misinterpretation of data derived or interpolated from ‘similar’ data in a company, it must be considered

that trying to achieve both of these improvements by manipulation of the data sets available is a

significant challenge. As previously mentioned in section 3.1, standardisation of metrics and measures is

important to gauge relative maturity, but does not mitigate for the other, more critical, observations of

Shepherd and Gunter (2006). Namely that the current tools do not provide supply chain context or

adopt a systems thinking approach to understanding supply chain capabilities and requirements (thus

identify the most appropriate and relevant improvements).

In the course of research for this study, the author has found many publications discussing

application of auditing and maturity assessment to other areas such as technology readiness, skills

development, and in each case the motivation is cited as the ability to assess against a common

framework and provide a benchmark of current maturity in order to identify a route forward. As such, it

would seem that supply chain assessment is in a position of relative maturity itself, but now requires

some improvements to advance the practical impact of the process. This will serve to promote wider

utilisation and repeat application; one of Childerhouse’s objectives.

Some best practice is useful in terms of developing visual models and reflecting on other

lifecycle models, such as that of McCormack et al (2009) which is shown in figure 48 below as an

example. This figure shows the various levels of maturity, a suggested timescale, and some of the

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themes/BIT to be tackled in order to advance up the maturity curve. However, it is again a generic

model which is difficult to apply to other cases in any detail, which is a reflection of the wide-scale

nature of the research.

Figure 48; Supply Chain Maturity Levels, (Source McCormack et al, 2009)

The research being reported in this thesis serves to advance and contribute to the knowledge

and understanding in supply chain auditing along these lines, in order to deliver a more specific maturity

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assessment tool which practitioners can use to great practical effect, with a novel contribution in terms

of enabler identification; bridging the gap between conceptual maturity and tangible business growth.

Overall, this brief review of the decision to use QSAM as the initial auditing tool largely validates

the original selection made. Given the depth of understanding gained in the two case studies, several

weaknesses and opportunities were observed in the application of the tool. Many of these relate

directly to the lack of business context, relation to commercial benefit or strategic/cultural alignment.

The proposal being, that if the context could be quickly established as part of the audit then the metrics

and measures will be given additional relevance and/or weighting, and as such will contribute to the

prioritisation of improvement activities. This will ensure that opportunities are not missed and that the

recommendations formed will consider both external influences and the impact of competing value

chains within the supply chain system.

Thus, in light of these latest proposals and given the increased knowledge and experience of the

author in both auditing and business improvement techniques, this chapter goes into some depth to

create a novel approach to assessment which can act as a significant enhancement of the QSAM

technique.

7.2 Case study Review

In most basic, fundamental stages, the two cases are summarised here in order to review the

observations made during the length of the studies, and clarify the key themes that emerged when

considering the implementation of BIT within the companies; the nature, impact and effectiveness are

of primary interest, drawing out the missed opportunity wherever possible.

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7.2.1 Orangebox

In the first case study, the audit of the Orangebox G64 value chain highlighted the influence and

limitation caused by the global supply chain. Hence it highlighted the importance of re-engineering the

supply chain and utilising supplier management and development tools. It was shown that the supply

chain constraints were driving the production process to the detriment of production efficiency.

Customer demand was managed by agility of the factory to react to order signal and subsequently

replenish parts in anticipation of forward demand.

Subsequently, the company undertook a significant effort to integrate local suppliers into the

global supply chain and improve agility in the supplier base, improving the operational effectiveness of

the factory. This was expanded to the other value chains of Orangebox task seating and Landscape soft

seating; each with a family of suppliers. This in turn served to offer greater customisability to the end

user and as such significantly improved the value proposition for both existing customers and new

markets opened by having this facility. As such, the supply chain management project was implemented

to great effect and significantly enhanced the business performance. Operational performance was

subsequently enhanced as the material flow was more closely aligned to customer demand; lower stock-

holding levels in the factory provided space to manoeuvre and allowed some localised 5S activities to be

undertaken in the stores, which in turn improved presentation to the production lines, reduced waiting

times and improved visibility to the material controllers. The re-design of the delivery process to bring

customer demand closer to the production process further amplified these gains and provided a

stronger pull signal to the production line. In terms of the uncertainty circle principle, described earlier

and shown in figure 12, the chronological order of improvement was:

Supply Chain -> Value-adding operation -> Control system -> Demand chain

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It is important for this chapter to re-iterate the context in which these findings were developed.

As a small company emerging from a management buy-out, every order was important and customer

satisfaction of customer order was paramount. Production efficiency was secondary and cost of goods

sold (COGS) was considered largely constrained. Headcount was a premium commodity and it was a

constant challenge to meet customer demand without increasing labour cost. The company was

inexperienced in the marketplace, inexperienced in process improvement and had an old but immature

supply chain with no flexibility. However, customer demand was met and the product was of sufficient

quality that it could demand some premium in the market. Meeting small orders quickly was perceived

by the market to be a strong characteristic, and has proven to be a key capability that the company

continues to retain, albeit on specified models and component permutations.

Having the time to bring local suppliers online, in parallel with the original suppliers, enabled the

company to design the supply chain for purpose and achieve a much higher level of maturity in a

relatively short time. This has since been emulated with other product ranges manufactured under

franchise from the design owning company to similar good effect. In addition, as the end of the case

study describes, this practice was being further advanced by incorporation of these principles to product

and even component design levels, involving contract manufacturers and customers alike in product

specification for achievement of optimum value-cost balance.

Today, headcount is a key tool in maintaining flexibility in the factory, not to be minimised

below a critical mass, and used to accommodate setup and changeover costs necessary to maintain the

responsiveness that the traditional customer base values. This may continue to be appropriate until

such time that sales volume, or physical space taken up by product in the factory becomes a constraint,

but for now it allows for continued localised improvement activities to benefit each of the various value

chains in the factory. If a Quickscan was undertaken on each, the findings and results would most likely

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identify subtly different recommendations, but this is tolerable in the company’s current position in its

growth lifecycle.

In audit summary; The Quickscan output itself was largely a mystery to the company and

required some straight talking from the audit team to explain the intended outcome. Once the principle

was clearly demonstrated then a general consensus was achieved which was very important as the

company culture was very much a ‘can-do’ attitude and each manager was focussed on doing what they

thought was the best for the company. Hence it can be said that the audit did its job in highlighting the

intended benefits of reduced cycle time and inventory. The tactical nature of the benefit suited the

context and while the supply chain would not initially be the first point of focus, the audit team were

able to identify this area as the priority. Other, lean specific audits were far more concerned about the

wastes and inefficiencies in the internal value stream. Indeed an auditing team from an operations

management course in Cranfield used spaghetti diagrams and process flow diagrams to highlight small

gains rather than realise the potential of considering the whole supply chain system. It could be argued

that the longitudinal nature of this study was the key to recognising this, and this research was the key

to achieving the larger scale benefit for the company. So it is important to maximise these findings in

terms of proceduralising them in the audit process and formalising the approach to ensure the results

can be achieved in the required quick time scale.

7.2.2 OCD

For OCD, the supply chain is tightly constrained, relying on a small number of specified and

specialist companies to provide raw materials, however in this case the constraint is largely due to the

nature of the product and a function of the raw materials is dependent on many (some unknown)

variables. As such, it is almost impossible to re-design the supply chain as was undertaken by

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Orangebox. What was proposed instead was a reconsideration of the relationship with the distribution

centres and the demand side of the uncertainty circle by means of controlling the decoupling point in

the value chain. By using customer signal to prompt manufacturing events rather than anticipated or

repeating demand, it was proposed that schedule adherence would be greatly increased and WIP and

complexity of information flow would be significantly improved. In effect, the work was aimed at

reducing the degree of variability and uncertainty at both the supplier interface and also the customer

interface, without incurring any net gain in ‘churn’ within the factory.

At this point, the findings and principle of the Quickscan were validated by the management

team, but it was not clearly understood how this would be achieved given the uncertainties of the

production process (and specifically the product release process which was constrained by the product

performance), and the raw material availability issues. This proved to be a significant barrier to

improvement along the lines recommended by the QSAM approach, and one that would certainly have

stymied the findings of either SCOR or other measure-related auditing approaches as well.

To identify the nature of the potential route to improvement, the next echelon to be considered

(as is consistent with the Orangebox approach) was the internal value adding process. This was less

similar to Orangebox, with a much higher level of maturity and experience in implementing process

improvement techniques and statistical tools for process control and problem solving. Hence the

approach was a great deal more holistic and wide ranging, pulling on a variety of techniques across the

manufacturing improvement paradigm. The mechanics of delivering some of these were similar to the

approach taken by Orangebox, utilising a KTP project and MBA students to assist in research to pertinent

academic philosophies. But as mentioned above, the route to improvement did not perfectly correspond

to the 12 simplicity rules or aspire to the ideal of simplified material flow. The Quickscan study was not

quick, did not specify particular activities to be undertaken and did not promote the same level of

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management alignment as was seen in Orangebox. Hence, it can be said that the audit was not so

successful in its own right despite highlighting the pertinent symptoms of opportunity. This explains part

of the problem in trying to promote uptake of Quickscan, that companies have no cause to ‘tell their

friends’. Instead, they establish their own bespoke tools, such as the JnJ lean maturity assessment to

assess progress against their own requirements. This creates a site-specific outcome in terms of

improvement requirements, with varying emphasis on the maturity themes.

The resulting activity in OCD was to pursue multiple themes of improvement under the True

North heading and tackle lead-time, complexity, culture and process improvements concurrently. As

part of this review, it is increasingly clear that the intention was to achieve a similar style of

improvement as was prescribed by the Quickscan audit but to take a wider approach in order to identify

the ideal route rather than adopt one which has widely been accepted in the past to reduce the pre-

determined components of uncertainty.

In audit summary; The Quickscan output was seen by management to be something of an

academic observation, not fully appreciating the physical difficulties experienced in the day-to-day

running of the factory. Hence, the existing process was not seen to be as intuitive in the situation of a

mature, complex, supply chain and again the knowledge now gained by this research needed to be

proceduralised in an improved approach. This approach will need to identify strategic requirements and

translate to the appropriate tactical tools for improvement.

A comparison between actions resulting from QSAM findings and those actually undertaken,

plus a comparison between cases of BIT impact (RQ1), gives rise to the key determinants of a successful

manufacturing business. Definition of a company’s current capabilities against these determinants

(RQ2), hence prioritisation of BIT to deploy (RQ3) is beyond the reach of the quickscan technique, such

that a novel approach and assessment framework is required.

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7.3 Synthesis of a New Supply Chain Maturity Assessment

The research methodology chapter explains the decision to use a longitudinal case study

approach in two cases, and how this research methodology was carefully considered in order to give the

most rigorous academic output. In considering the output from each case, the author suggests that this

has proven to be a most appropriate course of research, given the depth of findings in each case. The

following discussion goes on to highlight how the outputs can be brought together and used to

contribute knowledge in the process of auditing supply chain maturity.

As stated at the beginning of this thesis, the evolution of business improvement paradigm, and

development of associated best practices, has lead to concurrent development of a broad array of

business auditing and assessment techniques. However, because of the nature of this development

process, each technique has a strong focus on the novel aspect of the most recent development. As an

example, uncertainty has been considered a key indicator of business performance and is the primary

focus for the Quickscan technique.

However, this creates the situation whereby the audit itself becomes something of a self-fulfilling

prophecy. If you look for uncertainty, you will find it. Hence, the Quickscan findings tend to have some

common elements and shared conclusions, which both academics and practitioners can easily relate to

but which may be misleading in terms of identifying the most critical aspect of improvement required

for the business to meet its strategic imperatives. This deterministic approach has proven to be very

effective when applied in the right context by the right people; when looking at a process-oriented

facility where throughput and process efficiency is the key to profitability then an industrial engineer (IE)

applying traditional IE tools will be well placed to identify the root cause of many inefficiencies and will

benefit directly from Quickscan output. However, conversely, where the key differentiator for a

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company in a competitive market is a less process-specific capability such as agility, innovation, new

product implementation or customer responsiveness, then the Quickscan could potentially direct effort

away from one of these key areas.

Therefore, it can be clearly seen that in order to answer research questions RQ2 and RQ3, there

is a real need for an assessment process which considers a broad array of capabilities and aligns them to

actual companies in a non-deterministic fashion. This is a difficult concept for many business or supply

chain auditors, who predominantly come from an engineering background. So this thesis presents a

novel contribution to the subject area by proposing a framework which enables such a non-

deterministic methodology, in a scientific approach, to the value chain assessment. The key difference is

shown in the shift between Figures 50 and 51 below, which show how the proposed process follows the

lean strategy to achieve pull from the customer rather than push from the value chain architect.

While the novelty in this approach in terms of the assessment content is interesting, the novelty

of a manufacturing value stream assessment using lean principles itself represents a significant shift

from the trend of benchmarking. In effect, the company is benchmarking against where it needs to be,

rather than where the competition are. Formalising metrics and calibrating specific performance criteria

against best-in-class standards, which is advocated by both the SCOR technique and to some extent also

the QSAM approach, supports the deterministic approach and seeks to standardise the audited value

chain against contemporaries and potential competitors alike. The proposed approach here seeks to

achieve the opposite, by matching business performance against customer expectation. The principal

difference being that the former aims to standardise all participating companies while the latter seeks to

differentiate the company in the market based on the market’s specific requirements.

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To examine this gap, the next few sections describe the case study outputs and compare the

actual activities undertaken against those which would traditionally be recommended by a Quickscan

audit to consider the differences between the outputs of the two approaches.

7.4 Critical Business Characteristics

The initial research questions, and subsequently the anticipated contributions to knowledge,

were formed on the basis of significant research and experience in the manufacturing sector. Supported

by the structured approach to business assessment and analysis, they have proven to be excellent

themes for company characterisation. As discussed above, the impact of BIT will vary according to what

the opportunity is for the business, what variables are defining company performance, the

characteristics/context of the company, and what assessment technique is adopted.

Table 20 below collates the comparison of company characteristics, audit findings, activities

undertaken and benefits achieved as a result, for each of the two case studies. Although this is a

summarised and qualitative version, with only high level detail, it gives a clear representation of the

actions undertaken and resulting output with regard to variability in company context.

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Table 20: Critical Business Characteristics being enhanced by improvement activities

Case

Traditional

strength of the

company

Quickscan

recommendations

and outputs

‘Additional’ or

alternative

activities

undertaken

Critical Business

Characteristic

enhanced as a

result of all

activities

Orangebox

Responsiveness to customer demand,

high quality product, reliable service and

distribution, and dedication of

employees to support the business.

Improve material flow through value adding

process (internal); reduce cycle time,

reduce inventory and align planning time

units.

Supply chain integration;

development of the local supply chain capability (not just

material flow), enabling integration of

customers to the ordering and product

design processes.

Improved supply chain responsiveness, hence alignment to customer

demand. Reduced complexity in the

logistical systems and more consistent

performance, enabling lower inventory and

lower COGS.

OCD

Quality and reliability of product.

Product availability at DC (line item fill rate).

Capability to solve technical issues and

manage a tightly constrained supply

chain.

Development of the supply chain capacity

and reduced cycle time; alignment of

time units from customer through to

supplier. Greater simplicity/reduced

complexity inside the business unit.

Improvement of customer (DC)

interface, hence management of the de-coupling point to

improve material flow. Strategic

improvement using a multi-faceted

approach and using ToC to manage

complexity (not just reduce it).

Reduced cycle-time inside the business,

reduced inventory at the constraint (de-

coupling point) hence improved response to

DC demand and reduced impact of technical product-

related issues.

What is common to each of these cases is the alignment to actual or anticipated customer

requirements; what are the customer values and how do they feed into the value adding process. Towill

(1999b) has previously described this as the last of the elements in the uncertainty circle to be tackled,

but the one which achieves much of the gain in light of the other activities undertaken. As such, it

would seem both a logical observation of this study and also a close alignment with lean principles to 211

understand this stage in as much detail as possible before formulating an improvement plan; identifying

the customer and the value proposition. Then, given the current state characteristics and capabilities,

identify the gaps to be filled either by manipulation of customer expectation which is both risky and also

perceived to be very difficult, or by adaptation of the characteristics and capabilities throughout the

value chain. Subsequently, dependent on the current state, the improvement activities may not align

with either the traditional strength of the company or the traditional recommendation of the Quickscan

audit. What can be said, is that the actual customer requirement will determine the areas that the

company can achieve financial benefit, and the quicker this can be achieved then the more significant

the benefit. This is both supported by, and further advocates the requirement for, a balanced or

switching strategy to maintain currency with customer demands and achieve sustainability in terms of

cost reduction, growth enhancement and provision of agility and responsiveness capabilities.

Taking this one stage further, and answering RQ2 (how does a company identify which BIT to

adopt), the presence of some specific aspects of company capability define the ability to achieve each

cost reduction, growth enhancement and system control. Disseminating the case study improvements

and existing competencies, the key determinants were identified and isolated. While there are

interdependencies between them, these need to be defined by the assessment of future requirements.

So, in no particular chronology or order, the key determinants are listed below:

1. Strategic Business Objective(s); High level intentions, ambitions and an established clarity of

purpose that is required as a key part of a goal deployment process

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2. Improvement Capability; The ability to effect change, with the defined goal contributing to

the strategic objective. Change management, project management and process assessment

skills are good examples.

3. Agility; the ability to react to variability in customer demand. This is important both in the

operational side of the business as well as the support functions which must be able to

absorb demand variability to provide consistent throughput and quality.

4. Responsiveness/Customisation; which is a more significant level of customer interaction.

Having the capacity to work to customer request in terms of product specification, process

parameters, and delivery variables will stand the company in good stead to deliver new

products and processes with minimal overhead and closer to customer requirements.

5. Smooth Flow; related to repeatability and consistency of material movement through the

supply chain. Having consistency in the process throughput provides a strong basis for

decision making and a low degree of common cause variation. A stable process is essential to

enable easy set-up, low scrap, good teamwork and a basis to deliver many of the other

capabilities in this list.

6. Escalation; this again relates to internal processes and supply chain, being able to respond to

an unexpected change. Having a clear route to adaptation, either in the short term or the

long term. This is a more significant variable for supply chains with only a small number of

interactions where WIP is minimal, but an important ability for complex supply chains which

are often slower to respond to change.

7. Structured Project Portfolio; this is related to the improvement programs which were seen

to have more than one theme of improvement, encompassing aspects such as; lead-time,

people and variability. Although there is some cross-over, which is difficult to detect, the

distinct themes provide a mechanism to adjust the emphasis on different aspects of

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improvement which, again, ties in with the balance or switching strategy required to achieve

a financially successful business.

8. Product Innovation; as mentioned earlier in the critical review, many successful companies

are established on the basis of a single strong product which effectively carries the company

forward. However, it is essential to maintain a product pipeline, preferable with strong

customer interaction, and wherever possible maintain a competitive advantage in product

feature or functionality which will ensure ongoing customer loyalty. It has also been seen in

one case here, that process capability was a more than suitable substitute in terms of

something that could be marketed to a new sector to enhance sales.

9. Process Capability; individual processes evidently have different process parameters, which

must be brought into line. It can be seen that a bottleneck or poorly managed pace-setter

can incur a system constraint and in the long term restrict throughput, variability and cause

significant complexity and poor quality. As such, the process capability must be measured

and monitored and tracked against the required capability in order that each element of the

process chain can be aligned.

10. Metrics; it is important to have a business tracking methodology for continued monitoring

against achievement of customer expectation and resulting business benefits, which serves

to highlight future opportunities and the balance between the cost, agility and sales

improvement themes. Further to this, it is important to understand how the operational

processes are linked to business performance, so a clear line of sight through this metric

framework is important to keep people up to date with the business intelligence.

Comparing these core capabilities to Towill’s simplicity rules, seen in Table 14, it can be seen that

there are some very close synergies and shared intentions. However, there are some notable differences

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in terms of the scope of the measures; the Quickscan rules are strongly biased toward material flow as

the leading indicator of business effectiveness, while the business facets described above are focused on

the achievement of customer satisfaction and adding value, with material flow being more of a lagging

indicator as it is not necessarily the key to meeting customer expectations. The difference is

predominantly down to the ‘design process’ leading to the establishment of these rules. The simplicity

rules were an excellent result of the automotive studies undertaken as part of the original Quickscan

project, a sector which has traditionally been very process-oriented hence focused on material flow

efficiencies. Whereas this research has contributed to the dissemination of the original findings to apply

it to sectors with other priorities. As such, it is unfair to say that Quickscan does not fulfill the role for

which it is designed; it is more the case that the assessment and analysis can be applied differently for

cases outside the automotive sector, with potentially more effective improvement activities identified

and quantified as a result. From this point, this novel contribution will be expanded to explore the

practical benefits and the variables which could potentially reduce the effectiveness of the improved

approach. For completeness, a comparison between the simplicity rules and the key determinants is

shown in table 21 below.

It should be remembered that the Key Determinants (KD) are to be prioritized according to the

customer requirements; some are more important than others, whereas the Simplicity Rules (SR)

converge on a central theme of simplified material flow. In the resulting improvements strategy, the KD

define a vital few, the SR mandate that all must be considered.

Table 21; Comparing the key determinants and the simplicity rules

Simplicity Rules (SR) Key Determinants (KD) Similarities / Differences /

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CommentsOnly make products that can be

quickly despatched and invoiced to customers

Product Innovationmaintain a competitive advantage in

product feature or functionality

SR limits innovation, KD stimulates customer interaction

Only make in one time bucket those components needed for assembly in

the next.

Agility; the ability to react to variability in customer demand

SR limits variability to reduce cost, KD meets customer demand

Streamline material flow and minimise throughput time Process Capability; individual

processesprocess capability must be

tracked against the required capability

SR minimizes cycle time at all steps, and all steps to be identical,

KD recognizes constraints specifies that elements of the process should meet (customer) specified capability

to prevent constraint impacting customer

Reduce information lead times via the use of the shortest planning

periodsSynchronization of time buckets

throughout the chainOnly take deliveries from suppliers

in small batches as and when needed for processing and assembly

Smooth Flow; related to repeatability and consistency of

material movement

SR; every product every day, KD; predictability and reliability

Form natural clusters of products and designing processes appropriate

to each value stream

Responsiveness/Customisation; which is a more significant level of

customer interaction

SR; the customer can have what is best to make, KD; we can make

what the customer wantsUse proven and robust decision

support systems in the management of the supply chain

Escalation;being able to respond to an

unexpected change

SR; simple repeatable improvement cycle, KD; maintain flexibility and

only standardize the process not the outcome & prioritise carefully.

Develop a structured approach to change. Understand, Document,

Simply, Optimise (UDSO)

Improvement Capability; The ability to effect change

Structured Project Portfoliowith more than one theme of

improvement

KD specifies that the holistic approach must be maintained to achieve balance; not just simple

material flow.

Highly visible and streamlined information flows

Metrics;monitoring against achievement of customer expectation and resulting

business benefits

Agreed; both specific transparent performance tracking. SR against simple flow, KD against customer

requirement.Eliminate all uncertainties in all

processes Strategic Business Objectiveclarity of purpose that is required as

a key part of a goal deployment process

SR; company-wide sole focus on material flow,

KD reflects the multi-faceted approach, clearly communicate the customer requirement and business

benefit.

The operational target of the seamless supply chain needs to be commonly accepted and shared by

all members of the change team

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Assessing a business’ maturity in terms of the KD relies on identification of several governing

factors including; historical development (motives), current level, required level, and also the concept of

delivering change. As mentioned in the critical review, an important concept in innovation which can be

leveraged at this point is the concept of ‘clockspeed’ (Fine, 2000) which defines the rate at which

innovation can, and should be, delivered to the market. The point being that this should be directly

replicated in terms of achieving improvement within the business.

Customer demands change, and an auditing tool as proposed here is a critical tool to be able to

track these changes in demands and mirror them in term of company capabilities. This feedback into a

‘switching’ function should result in definite action as required; effectively achieving a pull from the

customer. Should the company fail to do this and follow a path of redesign or improvement according

to a pre-described path as recommended by a deterministic approach such as SCOR or QSAM then the

value chain could simply fail to deliver expectation. As with any system that is not fit for purpose then

effectiveness will dwindle and lead to either a failure in the market or an emergency re-engineering to

catch up with the competition.

With this in mind, the next sections pull together the essential ingredients of a pull system and

start to establish a framework in which the critical enablers can be characterised and utilised. Firstly, it is

important to understand how these proposed KD are able to close the gap between the ideal strategic

objective of the company and the traditional ideal of simplicity in the cases that material flow is not the

priority. In addition it is important to ‘sense-check’ the priority KD against the current top level business

objectives; they should be the same! This also takes a good step toward validating the list of capabilities

in terms of their applicability to the cases detailed here, as well as giving us an idea of what is requisite

to assess the current fit against customer requirements.

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This part of the investigation involved a lengthy analysis of the data already recorded for the

companies, in light of the KD described above, with the additional challenge of trying to interrogate the

data and understand the customer requirements in terms of each KD. The output was summarised in

terms of deviation from activities that would be undertaken purely to achieve simplified material flow,

and this output is shown in Table 22 below.

Evidently this analysis hinges on consistent utilization of an assessment technique to capture

both the definitive customer requirement and the current company capabilities, thus identify the scope

and scale of required changes and improvements. The key components of such an assessment technique

include:

(a) A benchmark for the critical business capabilities(b) An understanding of the ‘current state’ of each of the core capabilities (c) An understanding of what the customer requires in each,(d) An output in terms of customer value satisfaction and future expectation, which (e) Needs to be fed back into the system as an input to the switching/balancing strategy to keep

the company aligned in a changing market.

As such, the assessment tool will inherently be able to guide the decision making of the management

team and support the switching/balancing strategy by simulating the effects of change.

So, it is important to consider the process undertaken to gather these data. In order to establish

component (a), the author has used this review process to consider the various KD, and the extent of

their maturity in the cases described in this study. To understand (b) it is proposed that the triangulation

approach employed by the Quickscan is more than competent, especially utilising the personal

observation of uncertainty symptoms and understanding the causes from semi-structured interviews.

However, it is seen that item (c) is totally missing from the Quickscan process and needs to be

understood in each different case. For these case studies, this can be retrospectively constructed from 218

the point of understanding the impact of improvements actually undertaken, but in new cases it may be

harder to understand as part of a benchmarking exercise. This is no surprise; the motivation to

undertake an assessment is to gain an insight to the route to progress, which a company would

otherwise know if customer expectations were clearly understood! In such cases, a recommendation to

undertake a long and arduous Lean implementation to focus on customer value is not what the

company wishes to hear, and it is well established and agreed that there isn’t really a ‘short-cut’ to

achieve the same outcome. So, this is another essential enhancement on both the Quickscan process

and the alternative auditing processes available; prioritising improvement to close gaps between current

capability and actual customer requirement rather than the definitive ‘ideal’. To specify these gaps, the

requirements also have to be specified in terms of the core capabilities, and this has played a significant

role in defining the scoring criteria.

The two remaining factors (d) and (e) are the elements required for sustainability, tracking

current success in terms of changes in business metrics and, by trending this, and constantly re-

balancing the KD to maintain progress. In essence this is the long term process that is being established

by the original audit, but it is essential to get the priorities as accurate as possible to provide an

immediate benefit. Evidently, if the incorrect diagnosis is made then the process will initially inhibit

growth and later go on to deplete confidence in the assessment which is already one of the principal

challenges for Quickscan, cited by Childerhouse (2011), to be overcome in the near future.

In order to demonstrate the difference in approach, the following diagrams have been

developed. Shown in figure 49, the existing Quickscan process of matching company strategy to meet a

predetermined benchmark is seen to result in congestion around the narrow scope of benchmarking

and resulting in a multitude of improvement activities. However, shown in figure 50, the proposed

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enhanced audit framework acts as a smoother ‘funnel’, comparing current state with a customer

specified future state to feed into the sustainability argument and define the points of critical focus for

business development.

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Figure 49; Model of Quickscan success criteria identification and improvement

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Figure 50; Model of supply chain assessment to find the most appropriate improvement activitiesAs can be seen in the nature of the two figures, there are some notable differences. Firstly, the

more natural ‘funnel’ of the proposed framework highlights that the outcome is focused on alignment to

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the critical aspects of customer expectation, rather than improvement across the board wherever an

actual score falls short of the best-in-class.

Secondly, that the proposed model relies on this continued understanding of customer

requirements. This itself represents a significant change; rather than the company wide path to

improvement resulting in a long term plan to the pre-determined outcome, once the company has

achieved alignment with expectation a review is required to feed back into the ‘switching’ function. This

itself is a novel contribution to the uncertainty circle principle, whereby the additional aspect of

transformation represents an opportunity to reduce or incur uncertainty as required by the customer.

In terms of continuing development of the uncertainty model, figure 51 below shows how this element

can be assimilated to the agreed model, and act as the switching function to direct efforts to the

necessary aspect of improvement and achieve sustainability (as was outlined in the cost reduction vs

sales enabler argument in the critical review).

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Figure 51; Modified uncertainty circle to include the new switching function

Having undertaken this review of the audit data and transposing it onto the proposed

assessment framework, the current and future scores were derived for each of the critical enablers

(note that the description of the scoring mechanism follows immediately afterwards). The results are

summarised and shown below in table 22. The key differences in scores between existing and required

capabilities are highlighted in yellow and the briefest summary statement of improvement activities

undertaken is shown to the right.

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Table 22: Summary data from review of company ‘current state’ (prior to improvement activity) vs customer requirement.

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Table 22 shows that for these cases, there is a tendency of customer requirements to favour, if

not rely on, an element of agility. With one or more supporting capabilities required to distinguish that

company in the marketplace. It is also interesting to note that the two may seem to be at odds to some

degree. This is clear evidence that a balance in these capabilities is required, and this consideration

provides an opportunity to improve the Quickscan. Instead of considering only simplified material flow,

the route to improvement in meeting customer demand utilises a multi-faceted strategy determined by

this audit approach.

Regarding the practical utilisation of an audit result in the implementation of a business

improvement programme, the Quickscan audit has proven time and again to be both attractive to the

management of the host organisation and often also closely aligned to either the incumbent

improvement activities or knowledge base. Therefore, in anticipation of future difficulties in wider

uptake of the audit process, a critical success factor for the improved audit process must be a well

defined ‘scoring’ mechanism that will overcome the barriers to change and make the audit findings as

realistic as those expressed by the current Quickscan.

The following sections draw from the case studies, experience of other company diagnostic

investigations while working at the university and also from the literature review. They describe some of

the enablers and barriers to both growth and change, and subsequently go on to outline the new scoring

mechanism taking these factors into consideration.

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7.5 Case Study Update; Benefits of Implementing BIT to Develop the Key Determinants

It is worth taking a moment to consider the benefits to the case study companies of developing

the priority key determinants. For both companies, the improvement strategy has changed significantly;

building on the recent gains and improvements to set a trajectory of growth in the business and

adapting the manufacturing control systems and cost/productivity accordingly. Some of the shared

improvement enablers have been; the inclusion of the senior management teams in the development of

the improvement strategy rather than the devolution to the improvement team (Future State Team for

OCD and production Engineering team at Orangebox), which has naturally resulted in improved

alignment between improvement objectives and business level metric tracking, and it is also calling out

the importance of integrating the customer needs with the improvement plan; does the customer want

reduced cost, improved responsiveness, greater customisaton? The first answer in both situations from

the improvement teams would have been cost, but in fact agility and responsiveness/customization

were higher priorities for both cases. The cycle time and inventory reduction provided some firsthand

benefit to the company, but that was secondary to the customers’ benefit in seeing quicker response

times, capability to respond to their individual requirements and a willingness to ‘strengthen customer

trust’.

In real terms, Orangebox have seen a great response to their capability for product development

and customisation in line with customer requirement. The swiss product is well engineered but

expensive and some sections of the customer base demanded a cheaper alternative in the times of

economic austerity. The resulting Orangebox task chairs are just that, and performing very well in sales.

The Lean and agility tools employed in the productivity improvement of the G64 line have been

emulated in the Orangebox task seating lines, and production agility has remained a priority over purely

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seamless material flow. In addition, a Japanese franchise came into contact with Orangebox looking for

a UK partner to assemble and market one of its products in the UK, and the Spina chair is also now

manufactured in Hengoed, South Wales. Back to one of the original questions (RQ1); what impact does

BIT have on the business; and it is difficult to state categorically that these advances and improvements

have been down to the acknowledgement of the key determinants and the switching between growth,

cost reduction and system control. However, it can be seen that for some of the other product lines such

the soft seating and contract manufacturing lines that simply leveraging the same approach for

commercial advantage and productivity improvement would not yield the same benefits. So, clearly the

company has recognized the importance of separating the value streams, analyzing the customer

demand and managing the workflow accordingly, which has prevented wasted effort on inappropriate

improvements and ensured that the speed of implementation has been as fast as possible once an

opportunity has been identified. This most certainly has been directly attributable to the new approach.

Similarly OCD have successfully attracting new business. Potentially to much greater reward

given the slow rate of change in the regulated environment, and also the fact that despite a wide range

of reagents on the ‘menu’ it was still a single line of business. Starting in 2014, Pencoed will be

manufacturing the Biovue product range, which will be to a different customer base with different

customer demands. There is a significant contribution to the consideration of the key determinants, and

in fact the ‘customer’ for this product prior to the decision was seen as the OCD franchise and also the

Make organization who held the responsibility for the sourcing strategy. The approach to the ‘sales

pitch’ demonstrated many of the key determinants as they were being formulated as part of this work,

and were clear demonstration that the Pencoed facility has been developing the multi-faceted approach

for some time in terms of internal efficiencies. By taking the next step to external integration and the

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holistic view of improving the supply chain, the company has taken a huge step toward business

maturity. As per the case study introduction, this is also a huge cultural step, away from scientific

expertise and reduction in variation toward one of commercial awareness and operations management.

Without adopting the wider viewpoint of the multi-faceted approach and recognition of the key

determinants, this would not have been possible. The speed of change is now greater than it ever has

been at OCD, and probably greater than that of most companies in the medical device sector.

Building on these case studies, experience of other company diagnostic investigations while

working at the university and also from the literature review, the following section highlights other

enablers and barriers to both growth and change, and subsequently goes on to outline the new

mechanism against which the key determinants can be scored.

7.6 Auditing the Current state; Drivers and Barriers to Growth

This section is further description of the physical difficulties experienced by manufacturing

companies, supported by the critical review, targeted specifically at the key determinants of a successful

company. The aim and intention of this section is to set the rules around the grading system, and

identify the specific characteristics that can be observed during a company audit. This in itself is also a

valuable contribution to knowledge because it takes a bold step to align reality with the theoretical

concepts behind the key determinants. From a methodology point of view, in consultation with the case

study companies, it has proven useful to ask more about problems, issues and barriers. Rather than ask

“what would be better”, ask “what is wrong”, and you will get a much more enthusiastic response. So,

this is seen to be the preferred standpoint on which to characterise the status of the key determinants.

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Evidently, these are the baseline symptoms which define a ‘zero’ score for each determinant.

For each of these symptoms, any one of them would not stand alone. However the antithesis is that a

total absence is far worse than having a poorly directed or badly formulated version. The question,

therefore is around the physical manifestation of these criteria which an auditor must observe in order

to score it and recommend activity to improve the situation. This section goes on to consider each of the

key determinants and describe, from the authors empirical and secondary observations, what symptoms

are typical in a failing company.

Strategic Business Objective – Many companies that have had a ‘good start’ in life often go on to fail as

the initial impetus is not sustained. Often this is due to erosion of whatever competitive edge provided

the original company strength, which is symptomatic of short-sighted company management. The

essence of which is a lack of a strategic vision; there are no objectives evident in any visual

management, no ‘elevator’ speech provided as an introduction, and (even after persistent questioning)

no understanding of what represents a successful outcome of activity over the next 12-36 months.

Improvement Capability – It is obvious that companies which are unable to deliver process

improvements are unlikely to realise improvements to profitability or effectiveness. It can be argued

that a strong product portfolio and a straightforward value adding process will speak for itself, as was

the traditional strength of Orangebox. But it is seen that an improvement capability is essential to

maintain effectiveness and profitability as demand variation is escalated by new processes, larger or

more customers and breadth of product portfolio. A lack of improvement capability is seen wherever

there is a lack of current state benchmarking; no standard operating procedures, no value stream map,

no metric recording and again no target future state to be reached. In addition, the attitude of the staff

will signify the roles and responsibilities around process improvement which is a key indicator.

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Agility – Agility is essential to cope with demand variability while maintaining consistent customer

satisfaction while avoiding systematic waste through occasional under utilization. Many companies do

not appreciate that this is an important facility, as they would prefer to be able to meet maximum

customer demand, never turning a customer down. There is often a tendency for these companies to

have specified capacity for parts or all of the process chain, resulting in rigid schedules which are not

usually changed, defined over long timescales. It is difficult to identify waste in terms of under-utilization

in a brief audit of these companies as the work centres will often fill the time available, so the rigidity of

schedules and response time are the key indicators.

"Responsiveness / Customisation" – a feature that is often thought to be the ‘icing on the cake’ and

also something that is normally minimised if possible because of the cost incurred in controlling non-

standard product. This evidently relates to the company’s ability to process a single unit – so the closer

the company is to single piece flow the better. Which is a feature often seen in the material flow aspect

of a manufacturing company but often one that is not incorporated to the order entry system or

customer interface. So an auditor can observe a low level of customisation by experiencing the order

entry process and establishing the level of customisation that is available in terms of customer specific

specification and/or feature permutation.

Smooth Flow – The effect of discontinuous flow is higher levels of inventory, restricting capital flow, in

both raw materials and also work in progress, the latter of which also carries the further risk of

concealing high-value scrap. The specific symptom that causes such poor flow of work is the disjointed

planning of events; if work is planned independently at all stages of the process, with little or no

alignment to the overall lead-time required by the customer, stock holding at all stages including

finished product will be high.

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Escalation – Changing circumstances, operating parameters or customer requirements evidently

demands a response from the manufacturing facility. Failure to do so risks failure in meeting customer

expectations. At a base level this results in fire-fighting responsive approach, the frequency of which

depends on the frequency of change; an hourly change is often reflected in a plethora of whiteboards

and spreadsheets, a daily change often drives a series of review meetings with a large participation to

chase progress, while irregular unusual events cause chaos due to a total lack of support. Experienced

companies are able to accommodate escalation of issues as part of the ‘standard work’ process,

adapting to the change with some ease.

Structured Project Portfolio – Continuous improvement is essential in terms of taking waste out of

existing product lines, providing capacity for growth, and enabling improvements to process capability

which in turn enhance the product offering. When there are no improvement projects being undertaken

in a company, the product profitability doesn’t improve later in its lifecycle and without the ‘cash cow’

the company finds it hard to fund new product development or enhancements to infrastructure. As

such, plans are not realised and the company finds itself working hard to stand still. The development of

a project portfolio is important to prioritise the projects with a good business case or those which are

essential enablers, which release the resource and capital to undertake further improvement projects.

So a base level is demonstrated by some dedicated resource delivering projects, usually in one or two

champion areas, whereas a strong portfolio leads to an element of the role in all day-jobs.

Product Innovation – When a manufacturing facility is established, it is requisite that there is a core

product offering with either a high level of repeat business or a strong presence in a market big enough

to sustain it. Growth evidently requires the company to expand within that market or to cross-over to a

similar one according to customer requirement. A lack of either product or customer development

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leads to a rigid and often fixed product offering which may lead to a mature supply chain with low

uncertainty scores but also leads to a decline as customer requirements change and products or

features are out-dated. Visually, a change management process often reflects the pace and frequency of

change, preferably with some indication of change control in the value-adding process such as inclusion

of updated work instructions, time stamped or version controlled production records etc. A key aspect

to a company that performs well is a well-directed innovation process with significant input from

customers all through the process. This allows alignment of process capabilities with customer

expectation, and a smooth new product introduction to the current portfolio.

Process Capability – A good understanding of process capability leads to a strong degree in confidence

in planning and resource allocation; all hands are busy but overtime is low. Also, when the process is

control and repeatability is good, then there is little or no visible evidence of scrap or rework.

Conversely, when process capability is unknown there are few targets, hence no monitors, and often

low division of labour as the focus is placed on just getting the job done and out of the door rather than

maintaining progress against a plan. As such, this is a strong enabler for many of the above, and

something that a skilled production engineer will establish as a matter of course. Visual management

will be in place to track the variables behind the process capability and trending or modeling of data

enables staff to make decisions quickly and easily with a clear knowledge of what the result will be.

Metrics- All aspects of a business can be represented by measures, metrics, statistics and other fact

based data, which are essential to understand the current state, progress against targets, impact of

change and also to characterise the process when making decisions about management and

improvement of the process. Metrics are often selectively displayed, usually as a reporting tool and / or

an active management tool, depending on the emphasis from the management team. The practical

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range varies from a checklist by a machine, up to an integrated system collating process data and

analyzing it in automatic or semi-automatic algorithms to a standardised package or format. Whichever

form they take and where they are displayed, the important thing is how they are used, which is

sometimes overlooked. During an audit it is important to observe whether there is continuity between

areas, whether there is continuity between the levels of hierarchy in the metrics, and also whether they

are then used to drive the right behavior in deploying projects and future goals.

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Table 23: Tabulated descriptors of scoring against the key determinants for business growth.

0 1 - 2 3 – 4 5 - 6 7 -8 9 - 10

Strategic Business Objective

No objectives evident

Business objectives are clearly stated

Strategic objectives are aspirational

Multiple objectives are stated and used as business strategy

Business strategy is aligned with specified customer expectation

Strategic goals are deployed as objectives for all levels

Improvement Capability

Capacity to dleiver improvement is not

evident

Capacity to deliver improvement is not

evident

Improvements are piecemeal and sporadic

Improvements are delivered by specific

staff

Change specialists coach and lead a wide base of

staff

Improvement capability throughout the business

AgilityRigid schedules

cannot be changed, in long timescales

Schedules are fixedschedules are adaptable

to meet customer requirement

process steps are level loaded to provide

predictable response

response to customer requirement is rapid

and seamless

Variable customer requirement is met 100%

OTIF

Responsiveness/Customisation

Customers isolated from product and

process spec

Changes are induced as a result of a 'push'

process

Changes are induced as a reaction to customer

feedback

Customers are consulted on their

requirements

Customers are involved and given a chance to

trial change

Customers are interactively involved throughout

Smooth Flowwork is planned

independently at all stages of the process

Inventory is seen at all stages, planning is

reactive to this

Planned process steps are linked by an information tool

Planning is one central point, but requires local

re-planning

Re-planning reduces WIP but throughput is

inconsistent

Work is planned to a schedule, to which it adheres, with no WIP

EscalationNo escalation;

unusual events cause chaos

Requirement for escalation is identified

Senior managers manage escalation on a

regular basis

Responsibility & authority lies with all

employees

Change in work spec occurs frequently,

escalation is normal

changing circumstance is controlled and leads to

adaptation

Structured Project Portfolio

Projects are rarely undertaken

Projects are ad-hoc and standalone

Always several projects underway, run by project managers

Everyone has an aspect of project work in their

normal role

Projects are structured and managed by all levels of governance

Goals are deployed to align to business goals

Product InnovationProduct offering is fixed and does not

change

Some new products are introduced

New products are regularly introduced, plus special requests

New products are regularly developed,

success is variable

NPI/NPD is fast and frequent, plus product is

customisable

NPI/NPD is conducted with significant customer

contribution

Process Capability Process capability is unknown

Process varies significantly for

unknown reasons

Common cause variety is being reduced. Special

causes monitor

Process is reliable and repeatable

Process variables are well understood

Impact of changes is clearly understood and decisions

are easy

Metrics No regular daily measures

Activity is recorded somewhere by team

leaders

Measures used by all to monitor progress and

make decisions

Continuity in metrics between areas, but not

top to bottom

Daily measures track against business

objectives

Metrics are aligned; business goals, project objectives,

daily work

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7.1

7.2

7.3

7.4

7.5

In summary, there is a worst case for all of these features as well as a best case, hence a range in

between which will yield varying levels of benefit accordingly. As already discussed there will be a most

appropriate level of achievement according to what the customer values in that particular trait, and it is

important to identify the current status in order to focus improvement at the priority areas. Using this

range and the associated symptoms and visual representations, a scoring system is proposed and shown

in table 23 above. This is a critical step in the improvement of the auditing process, again reflecting the

best practice of contemporary auditing procedures to codify the level of capability of a company, but

this time in terms of key determinants of business growth.

As seen in the previous section, this has been applied to the test case companies to verify the

alignment of the scoring criteria with the company’s capabilities at the start of the process and the

resulting activities that were successfully undertaken. When this is applied in a new study it will be

important to consider the best way to deliver the study’s findings to best effect and in the most

appropriate format. The next section goes on to describe the strengths and weaknesses in the Quickscan

delivery to identify where this improved auditing tool offers most significant impact.

7.7 Assessment Framework Verification

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To verify the scoring framework, and understand if the assessment against this framework

provides the intuitive prioritisation required to select the most appropriate Bit (RQ2 and RQ3), it is

essential to test the methodology on other cases that have completed quickscan audits and found that

the recommended course of action is potentially misaligned to the strategic level of business

requirement.

The debate is not whether the quickscan audit identified opportunities for improvement, so

much as whether it identified the priority area of growth enhancement, cost reduction, system control

(or an aspect of more than one) and was able to proscribe the most appropriate BIT for utilization in the

improvement roadmap. In simple terms: for companies in which minimization of the uncertainty score is

all well and good, can we use the key determinants to go back and understand where more urgent

priorities became evident and were acted on, naturally taking on greater priority than the quickscan

recommendations through the course of (slower) natural discovery?

Often this is seen when a company has identified a core capability or aspect of customer value

that is an essential part of the company’s competitive advantage. In order to offer this value, the

company has to maintain some inventory, flexibility or other symptom of uncertainty which by

definition increases the uncertainty score. This is one of the key principles on which the improved audit

methodology is based, while making specific use of the key determinants to make the alternative

improvements more tangible by using the scoring framework in table 23.

As seen in the phases of the research outlined in the introduction and the flow chart in the

research methodology, the author now took some time to reflect on three other audits undertaken

during his time at Cardiff University (of which the author was a key audit team member). The purpose of

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the review was to use this review as a ‘quick and dirty’ test of the KD in place of the simplicity rules and

see how the quickscan process can be improved by using the pull system in figure 50. In effect this was

also a reflection on the validity of the case study selection; if the case studies were representative then

these audits should also show opportunities for improvement beyond the scope of the quickscan.

The three cases described below are not detailed in terms of the operation, and are not

intended to be formative in the conclusions of this research, but do show further exemplars of a

successful business utilising some aspect of complexity for benefit. The important point to make is that

they are valuable examples of exceptions which serve to support the findings of the two detailed cases;

an important part of building theory from case study (Eisenhart, 1989). While these examples would

suggest that it is easy to find fault with the process, this author continues to support Quickscan in its

existing scope and context, and would not wish to lose the benefit of having an existing base of

information and a proven framework, but instead develop an improved process with enhanced

capability to identify the most appropriate improvements and improve the quality of the tangible output

for the host company. This, in turn should serve to increase the uptake from private enterprise, working

towards the proposed goals of Childerhouse and Towill (2011). Each of the following cases utilised the

existing Quickscan with a skilled team and the same level of initial data analaysis that was used in the

case studies.

7.7.1 Company A

Company A is a relatively small pharmaceutical consumable manufacturing facility with an

overseas parent company and several international distribution centres. Despite a limited number of

raw materials, there are over 10,000 SKUs defined by the potential permutations. This lies at the heart

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of many difficulties seen in the business; where the order entry and management system is very manual

and fragmented due to the complexity and potential expense of an automated system. Product

volumes vary across the range of potential configurations, with a traditional split between runners,

repeaters and strangers. Accordingly, WIP is maintained between each work cell and at the DCs,

resulting in high levels of total inventory, spread throughout the site and across the complete range of

product. As volumes increase for the company, so does the WIP. Hence, according to Little’s law (Hopp

and Spearman, 2000), so does lead-time.

This naturally makes simplification of material flow an attractive proposition, with potential to

enable growth and minimise overhead. However, this is tempered by the factors of product variation

and demand variability, which are the key to success for this company; put simply, the WIP enables

agility that other companies are unwilling to provide, giving this company a competitive advantage

which would be foolish to waste. The management of this complexity is the key to its advantage, and

some of the key determinants are the key to that management; strategic selection of which SKUs are

available at what customer leadtime, clear metrics to provide transparency against objectives and even

the extremes of offering bespoke combinations as customer customizability are aspects which the

quickscan would rather eliminate.

7.7.2 Company B

Company B is a larger manufacturing facility, purpose-built by the holding company, supplying

automotive components, which collaborated with the Cardiff Business School for the purpose of supply

chain benchmarking, given the pedigree of the QSAM process in the automotive sector.

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Productivity, OEE and quality output were seen to be consistently high, with some root cause

data indicating some scope for improvement in changeover, small stops and ‘availability’, but these

were small examples and the company showed systematic good behavior, so scored well in the QSAM

assessment. However the good score against the quickscan criteria was essential just for the survival of

the company due to the small margin of profitability per item, thus limiting the potential gains in the

area in the future.

Unfortunately, the limited scope of the operation and the constrained link to the customers and

simple material flow exposed a reliance on the narrow product offering. Such that when a market

slowdown occurred, the impact on the company was almost disastrous. So there was evidently a

potential improvement for the business which had not been detected by the Quickscan; agility to

change, escalation of change efforts when the market signals altered, and creation of a strategic

objective for growth rather than cost reduction and flow simplification (given that the performance was

already strong in that area).

Company B’s management team subsequently introduced a change management programme,

project leadership initiatives, a strategic vision of growth, and some flexibility between teams and value

stream brought team spirit throughout the various levels within the organisation. This is subsequently to

be used as a vehicle for broadening the customer base in both the core product offering and developing

new opportunities. It is important to note the deviation from traditional quickscan recommendations in

that the latter group of products, with lower business contribution and poor uncertainty scores would

not usually be identified as the recommended route for sustainability.

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7.7.3 Company C

Company C was also part of a large group, but a self-contained business unit which could be

treated as an SME in its own right. The main objective of the QSAM for company C was to provide an

independent critical analysis of the complete business process to identify lean sigma opportunities and

projects for an ongoing pipeline.

It was interesting to note that the value adding process itself only accounted for between 10%

to 20% of the overall TRT, while problems with over-scheduling of a pre-test station, and the lack of

correct spares, incurred significant delay in the process. The VSM showed that in some cases where

seamless scheduling is achieved i.e. parts can flow from pre-test through to processing and dispatch that

a product can be turned around within 3-5 days where in some cases current TRT of the original product

is between 30-60 days. As such, the materials costs represent a significant portion of the total operating

cost. Again, this would suit improvement activities in the customer and demand interfaces to integrate

external demand with internal capabilities.

It was observed that there are two key issues concerning the demand chain system. Firstly,

Company C have no clear control over the TRT. The TRT is provided by the customer and takes no

account of the current workload capacity nor does it take into account of spares availability. At the same

time, Company C do not seem to synchronize their spares with current demands and there are instances

where some products have remained in stores for many years without being used. Secondly, due to the

lack of clear business process systems, it was observed that synchronization between customer demand

and work scheduling at Company C was not apparent. This meant that products not required for months

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were processed and ready to go, while products which were well over the TRT had not been processed,

causing shortages in the system.

It is clear that from the observations made that the company has the capability to significantly

increase its capacity provided that the demand and supply chains are synchronised and stabilised

considerably. As a result, the company sought to enable earlier definition of customer requirements,

further up the value stream, in order to mobilise its supply chain system earlier and get the spare parts

in by the time the TRT counter starts to tick.

At a more strategic level, it is seen that in practice, the company was maintaining a certain

amount of resource buffer to try and reduce the impact of the observed demand amplification. The

stated aim to focus on internal lean sigma projects to reduce this buffer in the interests of capacity and

profitability would actually prove detrimental to the effectiveness supply chain system; removing this

buffer without undertaking the strategic level work first could cause major problems to company C.

However once the customer and demand interfaces are improved and the supply chain is operating

effectively, there is scope to significantly improve the internal processes and apply more localized

projects for the desired efficiency gains.

7.7.4 Verification Summary

As per the main studies, the before and after uncertainty scores are recorded in the form of a

radar plot (the ‘after’ scores being recorded in much shorter timescale). It is seen that for each case

there is a discrepancy between the anticipated scoring, as would be achieved by delivery of the

improvements proposed from the audit, and the actual level of uncertainty achieved.

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When these cases were reviewed against the key determinants (KD), and the same assessment

was made for them as was conducted retrospectively in the two main cases, some key deviations were

noted. These are highlighted in the table below in the same format as the main cases, and some brief

annotation is recorded in appendix 13, in the same format as table 20, whereby the companies’ key

strengths are highlighted and compared against the traditional quickscan recommendations. Again, it is

seen that there are some obvious shortcomings of the quickscan approach to focus on simple material

flow. These variations are clear support for the more holistic and strategic nature of the KD and support

the use of the new customer-centric approach to business assessment.

Figure 52; Before and after radar plots of uncertainty in companies A, B and C

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Note that these shorter term company interventions were valuable experience for the author

and in many ways significant in terms of understanding other circumstances in which QSAM style of

audit did not yield the ideal outcome, however the depth of understanding was not fully developed and

these observations are not directly comparable with the OCD and Orangebox cases. The principal reason

for including them in this research write-up is to focus on the how the nature and style of the quickscan

investigation and delivery can be adapted to include the proposed improvements to the assessment

framework. Toward the end of this chapter there are some important sections which build on these

experiences to describe the potential improvements and practical implications for the auditor.

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Table 24: Summary data of verification study; ‘current state’ (prior to improvement activity) vs customer requirement.

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7.8 Enhanced Audit Recommendations; Recommending Business Improvement Techniques

As seen In many of the papers referenced in the literature review, academics have been

exploring the cause and effect of business improvement techniques (BIT) for some time, examining

variables and trends in improvement objective, style of implementation and type of company adopting

the various approaches. Given the wide range or permutations of these variables, there are a wide

variety of tools and techniques that a production engineer can call on to effect change and improvement

in manufacturing operations, depending on the particular thread or theme of outcome desired. What

has been lacking is the holistic auditing process to enable confident selection of that particular outcome

or outcomes. Now that this framework has been provided, the deployment of projects and selection of

most appropriate activities can be considered concurrently, in context of the skills, knowledge,

experience and preferences of the change agents in the company.

As mentioned, many practices or projects will be in place or in progress at the time of the audit,

which will yield their own benefits, so the challenge for the auditing team is to identify complementary

techniques to maximise the benefits of the improvements being undertaken. However, the supporting

activities may not necessarily be similar in nature or implementation, according to the required output.

As a reminder of the recurring theme in this chapter, flexibility is a key attribute to be developed in

parallel with lean or waste reduction projects, which is something academics have tried repeatedly to

understand and replicate in single case studies. Reference to lean agility (“leagile” systems) or an agile

supply chain supporting a lean production system (“agilean”) has been made to explain this

phenomenon, which this author now understands in terms of a distributed effort between the various

improvement themes to deliver the key determinants for business growth.

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Similarly, complexity and simplicity can also be balanced. It is largely undesirable and incurs cost

to the business, but also provides an element of the required agility and flexibility, e.g. to absorb

volatility in demand. The main business objective is to be able to accommodate appropriate flexibility

without incurring additional resulting complexity, not just to remove this capability completely and fail

to meet localised peaks in customer demand.

In many ways this is also appreciated by the host companies, who may have previous experience

of auditing teams or external observers who have only gained a superficial understanding and proposed

a superficial improvement, summarised by the idiom “if it was that simple it would have been done

before”. This itself supports the proposal that the company history, pedigree and previous route to

growth should be understood in order to contextualise proposed improvements and ensure alignment

to customer requirements.

Evidently it is stereotypical to ask a question and present the answer as an observation, but

without this, the proposal for improvement stands alone which, if it is novel to the company and in

some aspects complex itself, is a difficult proposition for the management team. As an example, the

problem experienced in OCD in the coldrooom storage was presented to be a symptom of localised

planning and poor synchronization of time buckets, but the auditing team were making observations

from a third party perspective without a detailed knowledge of the company’s history. As a result, the

proposal to manipulate the de-coupling point to improve this was largely isolated and not fully

appreciated until the KTP project was undertaken to simulate this and inspire the Lean Principles

Project; the complex management of work improved the resulting material flow.

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Soon and Udin (2011) agree that value chain flexibility is a critical characteristic, and one which

can be achieved in a variety of ways. It can be achieved by adoption of either MTS or MTO approaches,

with provision to manage the ‘dynamic’ work flow of urgent or late orders, by means of postponement

or logistic systems. They describe four cases that have adopted various JIT, scheduling and load-leveling

practices to achieve this and by means of qualitative investigation explain that each system is

appropriate to meet the demands of environmental uncertainty. Such variability within a process chain

cannot be absorbed while trying to achieve seamless material flow alone and, similarly, whenever there

are multiple value chains conjoined by shared processes, each process will induce variability in each of

the value chains. Proposing improvements to reduce uncertainty in a particular value chain will

therefore have a knock-on effect on all of the other value streams. So, obviously trying to optimise each

of the value chains is impossible in isolation and the supply chain system must be considered as a whole.

Traditionally in a Quickscan audit each value stream would be considered, and material flow

improvements proposed, in separate audits. Hence, where only one value stream is considered, it must

be understood that flow specific improvements may be detrimental to other value chains. As a case in

point, due to the simplicity of the supply chain system, Orangebox were able to undertake activities in

one value stream and emulate them in others, however OCD were already more integrated in value

streams and less able to isolate activities with an overall gain. Again, this is an opportunity for

improvement in the audit process; by ensuring that the audit is focused on customer value, the simplest

(most obvious) problem can be found and the team must establish the most appropriate overall

solution, even if this appears to utilise an aspect of complexity.

Regarding the ability of the company to adopt the proposed improvements, there are a variety

of aspects to company readiness, which is reflected in the improved ‘funnel’ approach proposed in this

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research; to build on the strengths and mitigate the weaknesses currently in place as a result of past

events and company history. In order to develop this and highlight where proposed activities may be at

odds with current company policy or capability, the audit feedback presentation should be given in

context of;

Culture – what are the core values and key experiences that are driving staff behavior? One example is a

company which is dedicated to scientific excellence having to overcome the traditions of a rigid change

process in order to incorporate the flexibility required to improve the customer experience.

Knowledge – are there prerequisite skills and experience required to facilitate a change? One example

would be the establishment of a lean competency training system, put in place to establish a common

approach and a common language in implementing goals and improvement projects

Goal Deployment – are the top level goals of the business aligned to the goals of localised areas, and

even individuals? One example is the change of emphasis from achieving the day-to-day base business

requirements to one of achieving improvements in efficiency and effectiveness. This also alludes to the

leadership and team structure within the business, which determines many of the dynamics around

Business strategy – is the long term plan appropriate for the current scope and scale of operation?

There are many examples of gaps between these, such as the shipping and logistics strategy, which

significantly affects the customer experience and is instrumental in realising benefit in material flow

optimisation whenever a change in product flow or volume throughput is seen.

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By including these considerations in the structured delivery they change from being a distraction to

being a part of the framework for implementation. Naturally this helps focus the audit process as well as

making the feedback more tangible, more appropriate to the individual case and hence more easily

understood and appreciated by the host company.

7.9 Summary

This section has reviewed the methodology undertaken in the research, both in light of recent

advances in auditing as a whole, and specifically in the area of supply chain auditing. The finding is that

the Quickscan is proficient in its stated context, but also struggling to gaining momentum due to a

perceived lack of specific recommendation. This specificity of recommendation is a strength of the SCOR

process if the conditions and available data are well aligned to the SCOR framework, however it is seen

that often, and certainly in these cases, this is not the case. They both lack the sensitivity of an in-depth

company investigation.

The two main case studies were reviewed in terms of what was actually undertaken in

comparison with an ‘ideal’ Quickscan recommendation, finding that there were some significant

deviations. The impact of BIT implementation is limited by the relative opportunity (RQ1). The

opportunity is best identified by a business maturity assessment (RQ2) and this assessment needs to be

holistic in nature and encompass a wider variety of criteria than simplicity alone (RQ3). One of the key

findings is that the Quickscan process can be enhanced by considering alignment to all aspects of

customer value, rather than focusing purely on material flow. This often manifests itself in a balance in

efforts between cost reduction, growth enhancement and system control. The resulting

recommendations for BIT implementation are therefore collated to a multi-faceted improvement

approach, often highlighting responsiveness and flexibility as key attributes for complexity management.250

The mechanism to assess companies’ current capabilities against the ten KD is by means of a

scoring framework created by examining the drivers and barriers to growth for the business. The key

difference is that there are two aspects to the assessment; firstly for the customer requirements and

secondly for the company’s current capabilities. It is not a benchmark against absolute standards. This

shift towards demand pulling on improvements is shown in the ‘funnel’ figures, highlighting the

importance of the switching strategy discussed in the literature review to maintain feedback and a

direction for continuous improvement.

Finally, some aspects of audit feedback and improvement implementation were outlined;

building on the strengths of both the existing Quickscan delivery experience, and also identifying

opportunities to maximise the increased level of understanding provided by the greater detail, more

holistic nature, and more specific recommendations of the improved assessment. In summary, the flow

of activity and analysis is shown in the flow chart below, figure 53, building on the flow established at

the research methodology development.

251

Figure 53; process flow of the research analysis.

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8 CONCLUSIONS

The research methodology utilised in this research involved detailed first hand assessment of

two case study companies, providing an overview of comparative models for success, and rich enough

detail to identify the environmental, cultural, behavioural and management imperatives driving changes.

This has been utilised to generate academic and practical contribution to knowledge in the use of

business improvement techniques, as well as developing a methodological contribution.

8.1 Contribution of this Thesis

Specifically, this research has aimed to provide answers to three research questions:

RQ1. Determine the effect of implementation of business improvement techniques (BIT) on

performance of manufacturing companies

RQ2. Determine how companies can identify the necessity for specific improvements in an extended

value chain context.

RQ3. Determine a process by which a company can prioritise required improvements, once they have

been identified, and implement them for maximum return on investment.

In response to RQ 1: The research has found that both actual and potential implementation of

BIT varies according to the business context; there are a number of critical factors that govern what

tools are used and what impact they have. These variables include; how the company has grown, what

the company culture is, what the company’s current level of maturity is, what level of complexity is

present throughout the supply chain system, and what aspects of supply chain performance provide

value to the customer.

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De-coupling point

Utilise complexityOCD

O’box

ToC - flow

Local supply

Utilise supplychaincapabilities

LeanCustomer pull

NPI

The last variable on this list is critical to establishing its impact on the business. Whatever the

context, the selection of the correct tools will deliver business benefit. As discussed in the literature

review, and characterised in figure 8, it is seen that there is a natural chronology to the family of BIT that

can be employed in order to enable successful implementation of the next in the process. Figure 54

below shows how the cases have reflected the trend for this chronology, and how the commonality

between the cases validates the research methodology to undertake two longitudinal case studies.

Variation in turnover, speed of reaction, customer responsiveness, throughput and other similar actors

proved only to feed into the decision making process of which tools to utilise rather than effect the

process itself.

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Figure 54; Chronology of BIT employed as a business improvement strategy

Evidently, the key to implementation with maximum efficiency is to identify where the company

position currently is in this chronology. In each case it was seen that following a traditional maturity

audit, the actual tools employed varied from those proposed and different outcomes are seen from

those which would be anticipated. This is due in part to the incorrect tool identification, and also the

poor presentation in terms of translation to specific activities to be undertaken. Evidently the former will

negate any positive outcome from the audit, while the latter serves to miss the full opportunity when a

key improvement is correctly identified by failing to present a clear and tangible vision, management

buy-in is poor and subsequent deployment of activity is not focussed. This overview chronology is, in

itself, a contribution to knowledge in terms of structured continuous improvement in a holistic business

strategy but still needs some framework to identify where in the maturity lifecycle the company is

operating and which specific techniques are required to progress.

In response to RQ 2: At the critical stage of “Understand customer requirements” in the figure

above, it is essential to understand what aspects of the company’s current activity and performance is

meeting customer expectation and which are not, hence which areas are the focus for improvement. In

response, this research has collated existing published works, and latent business knowledge and the

first-hand experience in the two cases, to outline ten key determinants for successful business growth in

the manufacturing sector.

1. Strategic business objective

2. Improvement capability

3. Agility – customer demand

4. responsiveness – customer request (customisation)

5. smooth flow (throughput)

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6. escalation – internal and supply chain

7. structured project portfolio

8. product innovation

9. process capability

10. metrics or business tracking methodology for continued monitoring

For each of these critical factors, there is an optimum level, and if the company can strike the

correct balance then it will derive the maximum return on effort employed in improvement, hence

achieve a competitive edge over the company that fails to do so. Hayes and Pisano recognised this

symptom in essence back in 1994, stating that “two companies may adopt similar strategies, but one

can end up far more successful”. This is a key contribution to academic knowledge and the single biggest

reason that companies are failing to meet their potential through under-utilisation of, and lack of

intuition by, existing benchmarking processes. The ten determinants were characterised into a scoring

framework, derived from calibrating a nominal score of ‘5 to 6’ out of 10 against the issues identified in

the case studies, and extending these issues to the extremes of the scoring range; 0 representing a

complete lack, and 10 representing a position of security at which the company is entirely ‘compliant’

with the control of that issue.

In response to RQ 3: this scoring framework could then be used, in conjunction with the findings

against RQ1, to plot the company’s current capability against the customer expectation and thus define

the areas requiring remedial or proactive improvement. This simple comparator acts as the central

aspect to a benchmarking tool which is totally focussed on providing value to the customer, establishing

a competitive edge and securing a route to sustained business growth. In terms of a methodological

approach, this represents another key contribution to knowledge; moving away from the deterministic

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approach of benchmarking against anticipated presence of a particular phenomenon. From a

practitioner viewpoint, it provides a contribution to knowledge in terms of providing a vehicle to ‘go

beyond lean’ by carefully defining what represents lean for that particular company. The aspect of

sustaining this position and maintaining improvement hinges on the feedback aspect of the assessment

model, which cycles back round to the modified uncertainty circle; developing academic knowledge by

taking the practitioners view. To close the loop in the format of this research, Tables 1 and 2 are

followed up with the table 25 below, which summarises the response to the original research questions.

Table 25; Summary answers to the original research questions.

Research Question Conclusions Contribution

RQ1. What is the effect of implementation of business

improvement techniques (BIT) on performance of

manufacturing companies?

BIT improve business performance. Immature

companies focus on internal efficiency; cycle time and

inventory. Mature business’ focus on supply chain

effectiveness. Both must recognise and maintain their

core competencies.

Ten key business enablers, which exist to some degree in all enterprises, represent a

company’s effectiveness. The key to successful BIT utilization is to understand which aspects of

the business need improvement; there is an optimum level which is not always the maximum level.

RQ2. How can companies identify the necessity for specific

improvements in an extended value chain context?

Traditional assessment techniques are not capable of

identifying the most appropriate BIT for a company to employ. The process is traditionally a

learning process, akin to trial and error, to deliver continuous

improvement over time.

A framework of assessment for both current state (company capability) and future state

(customer requirement) of the key determinants highlights the gaps, thus all opportunities for

improvement.

RQ3. How can a company prioritise required

improvements once they have been identified and implement them for maximum return on

investment?

The novel switching strategy describes a way to respond to the priority factors currently

limiting company performance. The systems must continuously

monitor and balance efforts employed in improvement of:

By assessing customer requirement, a company can integrate the customer to the

improvement cycle and deliver effectiveness and efficiencies

beyond any single aspect (era) of the manufacturing improvement

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cost reduction, sales enhancement and control.

paradigm, in the shortest possible timescale.

Another interesting observation of this research is that business improvement achieved by

timely implementation of the most appropriate tool does not heavily rely on specialist staff. Orangebox,

with little previous process excellence knowledge, have maintained their impressive rate of growth

without an army of sigma belts and lean experts by means of focussing improvements on customer

requirements. OCD, with significant resource advantage in both lean and six sigma expertise had

continued to focus on delivering lean and six sigma initiatives to reduce variability, with determined but

limited success due to the use of the tools regardless of the impact on the business. Evidently there is an

advantage in terms of change management, and reflection of change in movement of metrics, in a lean

production environment. However, it is not pre-requisite in order to undertake a maturity audit with

expectation of realising a benchmark and improvement plan.

8.1.1 Practical Contribution

This research has several implications for practitioners, especially related to the change in focus

from benchmarking against prescribed standards towards achieving improved value for the customer,

according to their own demands. This is both a utilisation, and advancement, of lean principles. To this

end, it has been shown that existing benchmarking practices are limited in their impact. Internal use, to

reinforce compliance to a particular standard may be appropriate, and if the customer demands are

strictly quantified then they may be useful to provide the benchmark criteria, but for a complex supply

chain system a more holistic strategy is required to deliver benefit to the business. Without this

understanding, ‘improvements’ are merely providing routes to market standardisation. The synthesis of

an improved audit process provides the tool to make this differentiation and identify improvements

most relevant to that company, at that time.

258

As outlined in the summary in each of the main chapters, there are practical benefits to each

case study company in using the improved model, providing the right focus on the right BIT at the right

time, thus compressing the improvement cycles in use in the company and delivering financial benefit in

the shortest timescale.

8.1.2 Contribution to Personal Development

As this research has progressed, knowledge and experience of the author has significantly

increased in the realms of supply chain auditing, performance measurement and improvement

methodologies. It has become clear over this time that the deterministic nature of methodologies

researched at the start of the work was very limiting in terms of quality and intelligence of the output.

This led to the development of the proposed approach here, avoiding determination of finite levels of

competence required by all companies. This shifted the focus of the research from the effectiveness of

particular tools to the profile or balance of the various key enablers; essentially a shift from maximum is

best to optimum is best. For the author, this developed a new level of strategic awareness and a sense

of urgency to identify the gaps in company performance rather than a blanket tool introduction.

Throughout this subtle change in focus on methodology, there was a necessity to maintain focus

on the research outcome – maintaining both clarity of the research questions and also the presentation

of the research in thesis; continuity of theme rather than the story of chronological and logical

development. This reflects the importance of undertaking the case study research and adopting many of

the action research principles rather than the constant linear progression toward an ever changing goal;

use the findings of this study to set the most appropriate goal and take action to meet it. The author

will continue to use this philosophy in both personal and professional life and will aim to instil this vision

to all those who he is fortunate to work with.

259

8.2 Reflection Upon Research Limitations.

The case study approach was appropriate to the research philosophy adopted in this research,

and provided a great depth of detail, to the benefit of the research output. Clearly this could be further

improved in terms of reliability and validity by inclusion of additional cases, but resource implication and

timescale involved in completing this work acted as limiting factors.

In addition, the validity of the findings could be improved in terms of quantifying the

contribution made by the individual BIT selected against the particular customer requirement. However

this presents an aspect of paradox, in that the alignment to particular metrics or measures falls into the

trap of benchmarking in a pre-deterministic manner. The author has not resolved a satisfactory

compromise on this issue, and it remains a weakness in terms of closing the circle in absolute and

quantifiable terms, and the nature of the findings reveal that the benefits are predominantly intangible

at an individual level despite a quantifiable overall benefit in compressing cycle time and reducing

inventory. Hence, it could be suggested that once the outcome of this work, derived by taking a

positivist stance and observing the reality, could be complemented by an ethnographical piece of work

to explain the cultural impact and variation. Other aspects of verifying the findings lie in delivery of the

improved methodology and future research.

8.3 Further Work

There is a clear route to use this improved framework of assessment as part of the Quickscan

tool to ensure applicability and intuition to company requirements regardless of sector or business

context. However, there is also a clear route to further improve the resolution around effectiveness of

utilisation and implementation of specific tools and techniques such as the components of the lean,

260

agility, six sigma and sustainability approaches. A weighting of each tool could be assigned regarding its

contribution to moving the business from its current score to its ideal state. The sum of which would

represent an accurate potential gain to deliver customer requirements. Because the ideal situation is an

optimisation not a maximisation, this reflects the ‘goodness of fit’ of the tool within the company

profile. This would take a step toward creating an even simpler A-B-C guide to achieving improvement

in a manufacturing business, but is another significant body of work to be developed in future research.

8.3.1 Leverage of Findings and Application to Other Companies

In line with the discussion section, it is proposed that the key enablers are relevant to most if

not all companies, and that the benefit of using this tool rather than a traditional deterministic

assessment technique will be especially visible for companies with priorities other than throughput

and/or leadtime. For future validation and fine-tuning, it will require some application in short term

assessment (maintaining the benefit of the ‘quick’ aspect of the Quickscan) and a follow up along the

lines that this research has followed, to determine whether the recommended actions were indeed

appropriate to the context and provided the anticipated benefit. This is something that several QSAM

practitioners have tried to achieve to some extent but have failed to articulate through the QSAm

approach alone, due to the misalignment with QSAM output and actual company activity. This supports

the finding that it is difficult to establish the direct correlation between Quickscan findings and

recommendations with company growth, and advocates use of the feedback approach to maintain

relevance of the improvement strategy employed. In order to advance this knowledge further the

nature of the feedback signal itself should be investigated and wherever possible broken down to

metrics or measures relevant to the ten key determinants, improving the goodness of fit of the

improvement techniques.

261

8.3.2 Testing and Refinement

A good test of the approach could be conducted retrospectively, in order to detect the level of

generalisability of the research outputs and conclusions. This was the intention in the ‘quick and dirty’

analysis of companies A,B and C which indicated some significant alignment with the research questions

and the conclusions formed. This was done from the author’s viewpoint, so the relevance of further

retrospective analysis lies in the application of the new approach by an auditor familiar with quickscan

but not this work. Using this thesis as explanation, it will be useful to get feedback from practitioners, on

the understanding that it is not a replacement or criticism of current quickscan utilisation. Evidently the

benefit is purely in confirmation of the philosophy presented here. The test and benefit to deliver both

new knowledge to refine this tool as ‘outliers and exceptions’ are found will be to apply it in future

audits and to follow up those audits in a similar fashion as was undertaken in this longitudinal case

study. It is the hope that use of the improved audit and feedback as presented here will also stimulate

closer collaboration between academia and the manufacturing industrial sector. Should this be the case,

then many such audits should give rise to longitudinal case study by KTP, industrial placement of

students or researchers, knowledge transfer research projects or industry-led research centres.

Refinement of the tool will without doubt result in improved alignment with industrial need,

building on intelligence gained in customer-led demand. Additional detail and characterisation of the

key determinants may yield more than one ‘stream’ of customer requirements to focus a company on

aspects of the improvement paradigm even more quickly. Alternatively, the additional detail in the

customer demand may lead to customer integration into the assessment itself, effectively removing any

de-coupling of changing customer requirements and associated business improvement techniques.

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APPENDICES

Appendix 1: The Johnson and Johnson credo

Our CredoWe believe our first responsibility is to the doctors, nurses and patients,

to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We

must constantly strive to reduce our costs in order to maintain reasonable prices. Customers' orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to

make a fair profit.

We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an

individual. We must respect their dignity and recognise their merit. They must have a sense of security in their jobs. Compensation must be fair

and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family

responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment,

development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical.

We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens – support good

works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain

in good order the property we are privileged to use, protecting the environment and natural resources.

Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be

carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realise

a fair return.

279

Appendix 2: Quickscan process, Archival data Requirements, questionnaires and interview themes

280

Figure;  Process Flow demonstrating the typical QSAM process (Source: Naim et al 2002)

Data Area / Time Period Data Description Collected by

Inventory (1 year period on

a monthly breakdown)

Overall stock levels (Raw material, work in

progress, finished goods)

Overall usage rates (Raw material, work in

progress, finished goods)

Obsolete stock

Spent by (1 year period on a

monthly breakdown)

Orders received by customers for each value

stream

Orders placed on the supplier for each value

stream (material and £)

Volume delivered to customer for each value

stream (material and £)

Supplier’s spent (material and £)

Performance data (yearly

average and on a monthly

breakdown)

Overall supplier performance (including supplier

lead times)

Overall and product specific customer delivery

performance (including customer lead times)

Production performance (product specific) 281

(including BOM (costed))

Throughput Analysis / Order – Satisfaction level

Schedules Customer order schedules (product specific) /

how often

S and OP data schedules (Forecast accuracy)

Supplier schedules / how often

Strategic Plan

Annual Report

Organisational Chart (top 3 layers)

Key Performance Indicator (top 3 layer

breakdown)

Job Descriptions

Financial Data

Investment Plan

Anything else the organisation wants us to have a look

at?

282

QSAM Questionnaire

Quickscan Interview Questions

FOR ALL INTERVIEWEES

Introduction

What is your role and what are your day to day responsibilities?

What are your key performance indicators?

How do you interact with the supply chain (material flow/ information flow)?

How can you influence the supply chain (material flow/ information flow)?

Figure: Areas that need to be covered

283

Technology

Strategy

People / Skills

Processes

Strategy

What is this organisation’s top-level strategy? Is it well-communicated to staff? (Any visible statements

in evidence?)

What communication channels do you use regarding strategy?

People

What KPIs are used when assessing department’s performance? Do these cross over into other

functional divisions?

Are people rewarded (or controlled) in respect to meeting these targets?

How much training is provided to staff members?

How would you describe the company culture (functional silos etc)?

Technology

What are the major types of IS that serve users inside and outside the organisation and what

information needs do they satisfy?

What attitude does senior management have towards the provision of information systems?

(proactive/reactive/cost centre/enabler/ IS leader/follower…)

What major new IS initiatives are currently underway?

284

What IS do you provide that help senior managers know how well the organisation is doing?

Processes

How good is internal supply chain visibility from your perspective?

How good is external supply chain visibility from your perspective?

How much of the yearly budget is spent on procurement? (total and %)

How much of the yearly budget is spent on supply chain improvements / material flow improvements?

(total and %)

How automated is procurement / material replenishment?

What are the major short comings regarding supply chain and material management in your hospital?

Where are the gaps and cracks?

Wrap up

What is the biggest pain in your day to day activities?

Anything else you would like to add? Any documents or other people it would be helpful for me to see?

285

FUNCTION SPECIFIC QUESTIONS

Factory Manager

1. Where does the company wish to be in 5 years time? (Markets, Capacity, Location, Business Plan).

2. What tactics will the company employ to this end? (Tools, Partnerships)

3. How do you see the current market changing over the next 5 years?

Logistics Manager

4. How does the logistics system work?

5. Does the logistics system work well?

6. Does it mesh well with production?

7. Are there any performance measures? And how often are deliveries and despatches?

8. Are there any targets?

Customer Interface

9. What is the number of customers?

10. What is the number of customer locations?

11. What (type of) customers do you try particularly hard to keep happy?

12. Are these the same customers as spend the most?

13. What is the number of deliveries to customers per day?

14. What is the frequency of deliveries to the same customer?

15. What are the measures of performance?

16. What are the perceived customer satisfaction levels?

17. What is the frequency of communication?

286

18. What are the methods of communication?

19. Does the company share schedules with customers/ suppliers?

20. Are the customers perceived as friends or foes?

21. Are there any identifiable demand patterns?

22. What is the product mix?

23. Is the company able to predict future demand (forecast)?

Production Scheduling

24. What is the production system?

25. Is the production schedule adhered to?

26. Is there any forecasting?

27. Are there any problems with production?

28. What are the types of information passed around the factory?

29. Do any of these conflict?

30. Are there any problems caused by these conflicts?

Raw Material Scheduling

31. Are there any systems used to order, schedule orders, of raw material?

32. How often is expediting required?

33. What is the number of raw materials or components required for a typical product?

34. What is the typical lead time for raw materials?

35. What are the standard minimum quantities held?

287

Human Resources

36. What is the workforce like? (Skill level, work level, pool size, desire to work at company, longevity)

37. Are there any training programs?

Production Manager

38. Is there a schedule of work?

39. How is it scheduled?

40. What is the scope of the schedule?

41. Is the schedule changed often?

42. How reliable are the machines?

43. Do the machines do the work required?

44. Are there any maintenance practises?

45. How does WIP flow?

46. What is the average batch size?

47. Are there any improvement programs?

48. Are there any team structures?

49. What are changeovers like?

50. What is the scrap to production ratio?

Shopfloor Team288

51. Do the shop floor staff know their roles and responsibilities?

52. Are they adhered to?

53. What are the communication channels?

54. Are employees happy with their working conditions?

55. Is the company taking part in any Continuous Improvement programs?

56. What do operators feel about changes on the shop floor?

Goods In

57. Are there any procedures for goods inwards?

58. What documents are required?

62. Who controls them?

63. How often are there deliveries?

64. Are there any records of quality, or quality control?

Goods Out

65. Are there any procedures for goods outwards?

66. What documents are required?

67. Who controls them?

68. How often are goods despatched?

69. What records are there of goods outwards?

289

Quality Manager

70. What are the quality procedures?

71. Are they followed?

72. Are there any programs for change?

73. Do the capabilities of the machine match the requirement of the customer?

74. What can be done to improve quality (in a perfect world)?

75. What are scrap rates?

76. What are the perceived customer satisfaction levels?

Equipment Engineers

77. Does the machinery do the work required?

78. Is the machinery reliable?

79. What is the structure of the maintenance team?

80. Is the maintenance proactive, or reactive?

81. What is the budget available?

82. Are the operators capable of operating their own machinery? What is the level of ownership?

83. Is the machine capacity known? What % of it is used?.

290

Supply Chain Integration Maturity Questionnaire

Select a single value stream to analysis. The value stream should be a major product family that is reasonably representative of the supply chain operations.

If necessary repeat the questionnaire for other value streams if major differences are present.

Organisation Name

Interviewee Name

Product Name

Brief description of the product and its associated value stream

Major value adding processes (e.g. assembly or machining)

Location of Plant/ organisation

291

Outbound Logistics Definition Response Units

Customer

Delivery Lead Time

Please state the time between when a firm order is placed and when the product is

delivered. (Call-off)

weeks

Customer

Delivery Frequency

State the frequency of deliveries to your customers for the specified product. Deliveries per

week

Number of Customers Please state the number of alternative customer companies. On Books

Customer Locations State the number of customer locations the specified product is deliver to. Countries

Customer

Delivery Distance

State the average customer delivery distance. Miles

292

Internal Logistics Definition Response Units

B.O.M. Levels Please state the number of levels in the Bill of Materials for the specified product.

Manufacturing Lead Time State the average time between when the raw materials are taken out of stock to

when the final product is completed ready for delivery.

Position of De-Coupling

Point

Products are manufactured and distributed to stocking points close to the customer.

End products are held in stock at the end of the production then sent to customers

on demand.

Sub-assemblies held in stock, no FG stock, final assembly triggered by specific

customer order.

Only raw materials are kept in stock; each order for a customer is a specific project.

No stocks are kept at all; purchasing takes place on the basis of the specific

customer order.

Product Characteristics Definition Response Units

293

Product Variety State the number of variants of finished goods for the specified product. (i.e. FG

live part numbers)

Product Margins What is the products profit margin?

Annual Volume What was last years total sales volume? Please also specify the units (e.g. tones,

pallets).

Echelons from end

consumer

Number of organisations carrying out activities on the product before end

consumption, excluding transport.

Length of product life-

cycle

Please state your best estimate of the products total life-cycle length.

Customer Schedule

Stability

Please give your best estimate of the percentage variation between what was

scheduled one month ahead and what was actually required on the day.

Stage of product life-cycle Which of the three alternatives best describes the current stage of the products

life-cycle?

Infancy Maturity Decline

294

Inbound Logistics Definition Response Units

Number of Suppliers How many different suppliers do you require for the specified product?

Customer Specified

Suppliers

How many suppliers are specified by the customer?

Suppliers Delivery Lead

Time

Please state the average time between when you place a firm order with your

suppliers and when they deliver the product (Call-off).

Suppliers Delivery

Frequency

How frequently do your suppliers deliver components for the specified products?

Suppliers Delivery

Distance

State the average delivery distance for the suppliers of the specified product.

Bought Out Components How many different bought out components are required to produce one product?

Supplier relationships On the whole how close a relationship do you have with your suppliers? Partnership Adversarial

1 2 3 4

295

Complex Material Flow

Class of symptoms Symptoms of complex material flow

Observed Symptom

1= present, 2= not present or ?= not

looked for or investigated

Dynamic behaviour Systems-induced behaviour observed in demand patterns.

System behaviour often unexpected and counter-intuitive.

Causal relationships often geographically separated.

Excessive demand amplification as orders are passed upstream.

Rogue orders induced by system “Players”.

Poor and variable customer service levels.

Physical situation Large and increasing number of products per pound of turnover.

High labour content.

Multiple production and distribution points.

Large pools of inventory throughout the system.

Complicated material flow patterns.

Poor stores control.

296

Operational

characteristics

Shop floor decisions based on batch-and-queue.

“Interference” between competing value streams.

Causal relationships often well separated in time.

Failure to synchronise all orders and acquisitions.

Failure to compress lead times.

Variable performance in response to similar order patterns.

Organisational

characteristics

Decision-making by functional groups.

Excessive quality inspection.

Multiple independent information systems.

Overheads and indirect costs allocated across product groups, and not by activity.

Excessive layers of management between CEO and shop floor.

Bureaucratic and lengthy decision-making process.

297

Simplified Material Flow Questionnaire

For each of the following 12 simplicity rules rank how closely they are adhered to.

Rule Description and definition Adherence

(1=never, 2=sometimes, 3=most of

the time or 4=always)

1 Only make products which can be quickly despatched and invoiced to customers

2 In any one ‘time bucket’ only make components needed for assembly in the next period

3 Streamline material flow and minimise throughput time, i.e. compress all lead times.

4 Use the shortest planning period, i.e. the smallest run quantity that can be managed efficiently

5 Only take deliveries from suppliers in small batches as and when needed for processing or assembly

6 Synchronise ‘time buckets’ throughout the supply chain

298

7 Form natural clusters of products and design processes appropriate to each value stream

8 Eliminate all uncertainties from all processes

9 Understand, document, simplify and only then optimise (UDSO) the supply chain

10 Streamline and make highly visible all information flows throughout the chain

11 Use only proven, simple yet but robust Decision Support Systems

12 The operational target is to facilitate a Seamless supply chain i.e. all players to “think and act as one”

299

Uncertainty Questionnaire

Questions asked of each value stream

Rating by QS Team

Strongly agree

Weakly agree

Weakly disagree

Strongly disagree

The value added process(es) generates low system uncertainty 1 2 3 4

The supplier side generates

low system uncertainty 1 2 3 4

The demand side generates

low system uncertainty 1 2 3 4

The system controls

do not generate uncertainty 1 2 3 4

300

Appendix 3, Summary Graph Data From Orangebox Quickscan

Figure; Cycle Time at 1st Quickscan

Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec0

1

2

3

4

5

6

FoamFabricwaitassemblyfinished goodsTotalMoving average (Total)

Figure; Cycle Time after 2nd Quickscan Note, this graph modified to provide comparability (reporting format had since changed)

301

Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec0

1

2

3

4

5

6

7

8

9

10

FoamFabricwaitassemblyfinished goodsTotalMoving average (Total)

Figure; Inventory at 1st Quickscan

Figure; Inventory after 2nd Quickscan.

302

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0

50

100

150

200

250

Inventory 2011

MANUFACTURE AND SELL QUALITY G64 CHAIRS

0

Orders

Information

External Materials

Finance

Giroflex RegulationsCustomer

Product & Manufacturing Information

Due Date

Giroflex Regulations

Quality RegulationsSafety Standards

Company Departments In-house Manufacturing People

DesignEquipment Tools

Finished Product

Production Data

Company Reputation

Appendix 4: process flow maps of Orangebox production process

IDEFO of Manufacturing at Orangebox: level 1303

FULFIL ORDERS

2

PLAN FOR MANUFACTURE 1

Number of ProductsDue Date Customer Requirements

Chair DesignGiroflex Regulations

Customer Order

EquipmentComputer System

Ideas Design

Order materialsEquipment set up

Production Plan

Materials

Stock

Finance

Due Date

Quality Control Safety Standards

Training

Production Data

Rejects

Equipment set upPeople

In-house manufactureOrder sheets

Finished Chairs SUPPLY CHAIRS

3

Due DateProduction Rate

DispatchRejects from Customer

ProductPayment

Customer Satisfaction

Company Reputation

PROCESS CUSTOMER ENQUIRY

1

PROCESS CUSTOMER

ORDER 2

Customer Services

Order

Quote to customer

Assess customer status Giroflex regulationsProduct Range

Computer SystemDesign

Size of OrderCustomer requirements

Order Requirements

Unavailable materials

CHECK STOCK LEVELS

3

ORDER MATERIALS

4

Due Date

Availability of suppliersCustomer Requirement Plan

Material Required

Supplier List

Importance of customer

Equipment/tools capability

IDEFO of Manufacturing at Orangebox: level 2

304

IDEFO of Manufacturing at Orangebox: level 3

305

Figure: IDEFO of Manufacturing at Orangebox: level 4

306

Do we need any patterns?

Cut Lengths of fabric. Place fabric on CNC machine.Download pattern.

Cut fabric on CNC machine.Waiting for fabric to be cut.Remove the cut fabric.Store.

Check WTL.

ASME Process Flow for the CNC material cutting machine.

No.

Yes.

307

Pull cord from machine.

Over lock fabric with cord.

Store.

Take materials to shelves.

Store.Pull cord.

Any unsown Fabric?

No.

Yes.

ASME Process Flow for the Sewing section

Cut the cord from machine.

Place fabric on sewing machine.

Store.

308

Release edges.

What forms are needed?Collect the correct mould.Put correct mould on carousel.Clean mould. Spray releasing agent.Is the correct mould already present?

Clip on frame.

Fill with liquid foam.Inspection of liquid foam.Close lid and clamp.Delay for foam to set.Unclamp lid.

Remove foam.

Take to rack for trimming.Rack. Wait for the rack to be filled.

Take rack to trim area.WIP in racks.

Trim edges.Inspection of edges.

Fully trimmed?Piles on table.Take from table to crates.Crates.Wait to be taken to shop floor.

Yes.

No.

No.

Yes.

ASME Process Flow for the Foam section.

309

Look at order sheet. What seats are to be built?

Move fabric edges and smooth the fabric out.Spray glue and place fabric edges.

Place fabric over foam.

Turn foam upside down.

Spray glue onto foam.Pick up foams from stores.Pick up fabric from store.

Spray around edges.Pull drawstring.Staple drawstring to foam.

Cut drawstring to size. Glue curing delay. Steam edges to ensure no creases.Upholstered foam stored.Upholstered foam stored.

To final assembly.

No.

Yes.

Foam Store.From sewing. From foam store.

ASME Process Flow for the upholstering section.

Fabric store.

310

Remove assembly and place on floor

Steam clean

Place arms on mech.

Pick up two arm rests

Any chairs needed

Dispatch Stores.

Take mechanism from conveyor and place on jigLubricate joints Place plate onto mechanismPick up a seat and back shellPlace shells on mechanism

Attach screwdriver bit 1

Stores

Look at order sheet

Screw on seat shellDetach screwdriver bit 1 and attach bit 2Screw on back shellLubricate screwsOperate pneumatic piston to invert mechApply code stickerHang giroflex tag onto mechanism

Fix arms to mech using screwsPick up hydraulic lift and baseSlot on hydraulic liftSlot base on to hydraulic lift

Operate switch to right chair.

Check handles are working correctlyRelease pneumatic jig

Wheel chair to cushion storePop back and seat onto chair

Pick up seat & back

Inspect chair for correctnessSite on chair and testWheel chair to dispatch areaDispatch

Stores

Stores

Stores Stores

Stores

ASME map of General assembly.

311

Order from IT system. Is order correct. Produce label for each order.

Bring chairs to the dispatch area.

Group orders together according to the delivery route.

Find the chairs.

Has the order been built.

Wait for order to be built.

Are chair in correct order.

Wheel chairs onto lorry.Stack chairs in the lorry.

Fetch cardboard.

Separate chairs into rows of four. Fetch more cardboard. Place more chairs on top.

Check with customer services.

Update IT system regarding dispatch

No.

No.

No.

Yes.

Yes.Yes.

Place stickers onto the chair covers.

ASME Process Flow for the Dispatch section.312

Ship To:Mr J. SmithYorkshire HouseGreek StreetLeedsLSx xxXUK

Model:Giroflex 64 64-3078 Midback Swivel Chair

Fabric: Interface Xtreme – Costa

Trim: Black

Plain Shell Standard Upholstery

Mechanism: Grey 812 PrintedGaslift: Standard HeightBase Unit: Grey AluminiumArm Type:

Castor/Glide: Hard Non Braked (Standard)

Non Standard Stain:Specific Details:

Our Ref is: N051028Line No: 1

Item Quantity:1 of 2

Due Date:18/03/03

Appendix 5: Orangebox dispatch label

313

Appendix 6: Orangebox development timelines

314

Figure; Timeline of Business Issues Driving Supply Chain Development

Figure; Detailed Timeline of Business Issues Driving Supply Chain Development

315

Appendix 7: OCD audit results: 1. Marketing audit summary

316

SWOT analysis of OCD production capabilities(source OCD marketing audit 2010)

317

2. Lean Maturity Assessment audit results (recommendations)

318

Leadership CommentsLeadership

Change Management Comments

Change Management

319

Change Management CommentsChange Management

Roles & Responsibilities Comments

Roles & Responsibilities

Roles & Responsibilities CommentsRoles & Responsibilities

320

Goal Alignment Comments

Goal Alignment

Goal Alignment CommentsGoal Alignment

Value Comments

Value

321

Flow Comments

Flow

Flow CommentsFlow

Flow CommentsFlow

322

Pull Comments

Pull

Continuous Improvement Comments

Continuous Improvement

Continuous ImprovementContinuous Improvement Comments

Appendix 8: History of Site development at Cardiff / Pencoed

323

324

Appendix 9, Summary Graph Data From OCD Quickscan 

Figure; Cycle Time at 1st Quickscan

Figure; Cycle Time after 2nd Quickscan

325

Definition: 3 month Average Time to complete a production order from reagent pick to book to stock for 95% of all Reagent kits.

10

12

14

16

18

20

22

24

2011 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cycle Time days

Actual Target 3 month avg

17.0 / 17.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

20

40

60

80

100

1202009 Inventory

DOS

Figure; Inventory at 1st Quickscan

Figure; Inventory after 2nd Quickscan

326

Definition:

Comment:

0

20

40

60

80

100

120

140

160

Inventory DOS on site

Actual BP NU

Appendix 10: KPI and metric investigation from archival records of throughput and schedule accuracy at the key process steps

327

328

Identification of customisable parts for manufacture by Local Suppliers. Generally the low volume products where the TAC would be too high to supply using overseas companies

Accurately Calculate TAC for each part within the manufacture of the product

Draw up preliminary list of local suppliers within agreed area.

Select suitable suppliers that could be developed to manufacture product base

Process Engineer allocated to work with supplier. Product identified and product standard is analysed.

Action plan developed and tooling requirements analysed. Prototype production undertaken.

Work revised in light of any technical changes required.

Technical Development Stage

Capacity quota established. Higher volume production runs developed. Quality levels analysed.

Developmental work if any undertaken prior to movement to next stage.

Capacity Development Stage

Development of delivery frequency targets. Improvement of delivery reliability and consistency.

Development of continuous improvement plan year on year. Set process indices and throughput analysis to measure continuous improvement.

Logistics and Continuous Development Stage

Appendix 11: Supply Chain Integration Methodology of Local Suppliers into the Global Orangebox Supply Chain Network

329

Appendix 12: Demonstration of the benefits of buffering a constraint, used in communication of the Lean Principles project to OCD staff, taken from Lange and Ziegenbein (2005).

330

331

Appendix 13: Assessment of Companies A, B and C, using the new framework

Case

Traditional

strength of the

company

Quickscan

recommendations

and outputs

‘Additional’ or

alternative

activities

undertaken

Critical Business

Characteristic

enhanced as a

result of all

activities

Company AProduct quality and availability demands

a ‘premium’ price

Integration of customer demand to

improve internal material flow; remove

cost incurred by achieving high

availability

Split product groups to allow 50% MTO,

responding to customer demand and

50% MTS, inventory approach

Reduced inventory in make to order products and

improved throughput in make to stock

products

Company B Seamless flow internally

customer integration; alignment of good internal flow and supply with less

reliable customer demand

Compromised internal flow capabilities to

improve flexibility and accessibility to new

market

Responsiveness and flexibility

Company C

Technical capability, ability to meet tight

time scales for product turnaround

Internal inventory and excess capacity can

be reduced if customer interface is

improved

Followed Quickscan recommendations to date, postponing the

intended localised improvements

Alignment of strategic improvement with

plan to improve internal efficiencies

332