Theory of Constraint Cost of Quality Gap Analysis Model Failure Modes of Effects Analysis Business Processing Re-Engineering Introduction 1

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Theory of Constraint

Cost of Quality

Gap Analysis Model

Failure Modes of Effects Analysis

Business Processing Re-Engineering

Introduction

1.1 Capita Background

Capita, a UK-based outsourcing organisation, provides business process management and integrated professional services to the public and private sectors (Capita, 2016). This report focuses on a specific health and disability assessments across England, Wales, and Northern Ireland (Capita, 2016). PIP consists of an estimated over 1000 employees across a number of departments including Disability Assessors, back office employees to ensure the assessments are delivered on behalf of the Department.

The assessment is a non-means tested benefit for people aged 16 – 64 who have a long- term health condition. It replaced the Disability Living Allowance. An important part of the assessment process for most customers is a face-to-face consultation. This is carried out by a qualified Disability Assessor who assesses your ability to carry out everyday activities and your mobility, then writes a report for DWP setting out how your daily living and mobility are affected by your condition or disability. The remainder of assessments will be paper based, which means that a face-to-face consultation will not be required Comment by Ishtiaq, Iram (Health and Wellbeing): References still need to be added -

1.1 Aim/Purpose

This report will look at a detailed evaluation of the reasons why decisions are overturned; the availability of evidence used to support appeal decisions compared to evidence available at assessment and/or mandatory reconsideration stage; whether Capita PIP’s end to end processes (including complaints process and the re-work process) are correctly calibrated to prevent cases being referred to Tribunal and whether there is opportunity to gather the same level of information used by Tribunals at an earlier point in the process.

1.2 Why is this report important to the client?

The report is important to the Capita PIP because, this research project will help Capita PIP identify any shortfalls in their internal processes (complaints process and reworks process). Any shortfalls identified, realistic recommendations will be provided to ensure the service is run efficiently to enhance the claimant experience and gaining the correct outcomes for the claimants before getting to the tribunal stage. Furthermore, this project has the potential to reduce costs and give Captia PIP a competitive advantage at the re-bid stage as this is an area where Capita lacks visibility. Importantly, it will help Capita PIP to understand the contributing factors to why a significant number of cases are overturned at tribunal.

1.2 Key business challenges

 

1.3 Research questions

 

 

1.4 Approach

 

1.5 Limitations

 

2. Literature Review

Theory of constraints

Cost of Quality

Business Process Re-engineering

Gap Analysis Model

Failure Modes Effects Analysis Comment by Ishtiaq, Iram (Health and Wellbeing): Order of Precedence for lit review – main theory is TOC + COQ

 

2.1 This literature review will provide an overview of operational management theory. The focus of the literature will be on operational management theory, looking at how an organisation operates more efficiently, for example this could be through re-designing a process.

 

Definitions of Operations Management and Service Quality

 

2.2 A service organisation responds to the requirements of customers and satisfies needs of customers through a service delivery process. The operations department is responsible for the day-to-day running of the service. Porter (2011) defined operations management as an activity of managing the resources that deliver goods and services (Slack, Chambers, & Johnston, 2009). As organisation strives for service quality, an approach is managing business processes to ensure full satisfaction and quality in the service provided and if expectations are greater than performance this leads to customer dissatisfaction. It has been argued that service quality has a direct lasting impact on customer loyalty and satisfaction (Brady & Cronin, 2001; Parasuraman, Zeithaml, & Berry, 1988).

 

 

 

2.3 Theory of Constraints

 

Dr. Eliyahu Goldratt conceived the Theory of Constraints (TOC), recognising that every system was built for a purpose and has an ultimate goal. The TOC looks at tools to help achieve the goal including:

 

· The Five Focusing Steps (a methodology for identifying and eliminating constraints)

· The Thinking Processes (tools for analysing and resolving problems)

· Throughput Accounting (a method for measuring performance and guiding management decisions)

TOC recognising that every process has a single constraint and that total process throughput can only be improved when the constraint is improved TOC seeks to provide precise and sustained focus on improving the current constraint until it no longer limits throughput, at which point the focus moves to the next constraint. The five focusing tool, is one of the tools to help an organisation achieve their goals the steps include:

1) Identifying the systems constraints and prioritising them according to the impact on the goal.

2) Exploiting the constraint includes making quick improvements to throughput of the constraint using existing resources.

3) Subordinating includes reviewing all activities in the process to ensure they are aligned and with and truly supports the needs of the constraint to help limit the impact of the constraints.

4) Elevating the constraint, and if the constraint still exists consider what further action can be taken to eliminate it from being a constraint

5) Repeating the process, the steps are a continuous improvement cycle, one a constraint is addressed the next one should be immediately, be addressed.

Goldratt argues that there are two conceptual break-through ideas. First, what he calls the throughput mind-set. He encourages managers to `think global and not local'. This requires the use of cause and effect to understand the impact of an action or decision in one part of the project on the other parts as well as the ability to achieve the objective of the project.

 

Goldratt, theory has been described as a prescriptive theory, it emphasis there’s only one constraint in the system at a given time and everything else in the system is a non-constraint (……)

The second tool used in TOC is the thinking process (process of change); the thinking process addresses three improvement questions known as, what needs to be changed? Once the problem has been identified, then the focus should be on what should it be changed to? By constructing, simple and practical solutions. Before, identifying what actions will cause the change? By inducing the right people to get involved. Goldratt expresses that, not every change is an improvement but certainly every improvement is a change. Therefore, we cannot improve something without changing it (…..)

The thinking process includes exploring, Current Reality Tree (CRT), Evaporating Cloud Tree (ECT), Future Reality Tree (FRT) and the Strategy and Tactics Tree (STT).

The CRT shows the current state including constraints and undesirable effects (UDEs) of the process which are traced back to their root cause. The ECT helps identify specific injections to eliminate the UDEs. This step helps move from CRT to FRT by using different approaches to solve problems. The FRT shows the future state and reflects the changes of the injections.

The original model was modified, the Strategy and Tactics Tree (STT) replaces the Prerequisite Tree in the thinking process. The STT shows an implementation plan for achieving the future state deriving tactics from strategy.

Furthermore, the final tool is looking at Throughput accounting, as Goldratt realised that conventional accounting systems do not support TOC, or lean-based efforts. Goldratt proposes replacing all traditional measures derived from the "product cost" accounting paradigm. The following measures are the only way to increase profit through TOC:

Throughput

The rate at which the entire organisation generates money through sales for a service. Throughput represents all the money coming into an organisation.

Inventory

All the money the organisation invests in things it intends to sell. Inventory represents all the money tied-up inside an organisation.

Operating Expense

Operating Expense is all the money an organisation spends turning Inventory into Throughput. It represents the money going-out of the organisation.

All three of these measures are interdependent.

Goldratt, uses the below formula:

Maximize Throughput while Minimizing Inventory and Operating Expense

Goldratt advocates that all improvement opportunities should be prioritized by their effect on the three measures, especially Throughput, for which the only limit on how high it can be increased is market size.

The strongest emphasis (by far) is on increasing Throughput. In essence, TOC is saying to focus less on cutting expenses (Investment and Operating Expenses) and focus more on building sales (Throughput).

The effect cause effect helps identify core problems; Goldratt argues it’s the only feasible technique known to identify constraints.

The benefits of the theory include, it is an analytical and diagnostic tool that lays out a step by step process and it’s a tool that strives for improvements (…..)

It has been argued that, Lean puts more emphasis variation and attempts to eliminate constraints over time.

TOC has been described as ‘too simple’, focusing on what is important to make analysis possible is the essence of good modelling. Therefore, initially, many details may be omitted, to be dealt with at other hierarchical levels later.

CIMA has described the tool as a short-term decisions making tool. Also, TOC may only be valid concepts if applied to the totality of the supply chain including management, production, resources and support (CIMA)

TOC has been compared and contrasted to Lean, where TOC starts by identifying constraints; Lean thinking instructs the change agent to rethink the notion of value first.

The lean change agent identifies opportunities for eliminating waste from the system.

Both Lean Thinking and TOC agree that the organisation must first find the change, and then determine if a sensei is required.

2.4 Business Process Re-Engineering

This model holds that the reorganisation and redesign of a process is likely to reduce costs while increasing the quality and productivity of services that are provided. The reengineering process can be pursued through seven suggested principles. The first step lies in the decision to reorganise operations around the outcomes, rather than tasks. The second step constitutes the identification of all organisation processes before prioritising based on the redesign urgency (Goldratt, Cox & Whitford, 2004). The third and fourth step is documented to entail the integration of information processing work into actual work before treating resources that are geographically dispersed as though they are centralised. In turn, parallel activities are linked in workflows before putting decision points where works are performed. Lastly, information is captured once to radically redesign the core processes of a business (Goldratt, Cox & Whitford, 2004). According to Bicheno, Catherwood and James (2005), the central benefit of the BPR framework lies in the achievement of dramatic improvements in quality, cycle times, and productivity.

In summary, BPR works in such a way that firms rethink the existing processes while seeking to deliver more value to service users or customers. Hence, the new value system adopted is poised to place increased emphasis on the customers’ needs.

 

The process requires organisational change for the redesign to be effective, which may be problematic causing cultural resistance (Coa,Clarke and Lehaney, 2001). To tackle this it is important that changes are communicated out accurately and consistently to minimise resistance (Coa,Clarke and Lehaney, 2001) . BPR is powerful in addressing process change, but incapable of dealing with other types of organisational changes such as embedding the new process into the existing culture (Coa,Clarke and Lehaney, 2001). This could potentially lead to low morale of the workforce and ultimately hinder the meeting of KPIs.

Critics have also argued the process cannot be planned meticulously as it’s an all or nothing proposition with uncertain results which is a risk to any organisation if the process is not implemented correctly (Dr. R.Ocker, 2017).

 

2.5 Failure Modes and Effects Analysis (FMEA)

The FMEA model aids in the identification of all potential failures in a given design or service (Camp, 1995). In this case, failure modes refer to the manner in which a process could fail. Thus, the failures are seen as defects or errors that affect service users and can be actual or potential. This is done by providing a checklist procedure around key questions for failures (Camp, 1995):

1) What is the likelihood the failure will occur?

2) What would the consequence of failure be?

3) How likely is such a failure to be detected before it affects the customer?

 

Figure 1: Process of FMEA - Slack, Chambers and Johnston (2010)

Then each failure mode on a scale of 1 to 10 in each three areas (severity, probability of occurrence, probability of detection) calculates a Risk Preference Number (RPN):

 

Risk Preference Number = (severity) x (frequency of occurrence) x (likelihood of detection)

 

Using figure 2 as an example of a FMEA analysis, the highest risk failure mode can be identified to be ‘2) Seat Belt Bolt Not Fully Tightened’ due to a risk preference number of

144. That therefore should be the highest priority for process improvement (MoreSteam, 2017).

The process constitutes the decision to study potential consequences that could be introduced by those failures identified in a system (Brown, 2000). Therefore FMEA models provide more than that the perceived failures. It also priorities them based on the degree of seriousness that their consequences pose (Brown, 2000). Similarly, the prioritisation is dependent on the frequency of occurrence of these failures as well as the ease with which they can be detected.

 

Critics have argued that is that the ordinal values are subjectively assigned and are not based on factual or data-driven evidence (QualityDigest, 2014) therefore inaccurate results can be provided based on opinions rather than facts.

 

3. Methodology

3.1 Overview of methods

The two main methodological foundations in research are quantitative and qualitative (Cohen et al., 2012). A combination of these traditions is referred to as mixed methods, which was used in this research. Quantitative methodology is concerned with objectively measuring phenomena by answering questions such as how many? (Dawson, 2009). This approach was useful for measuring, for example, the number of cases referred to the tribunal, the number complaints received from claimants to Capita PIP and to DWP, the number of internal re-works and other data that was capable of being measured, such as the closed questions in the questionnaire that will be devised.

3.2 – Quantitative

The combination of this data facilitated the comparison of findings of this research with other research in the literature review. Bryman (2008) draws attention to the limits of quantitative approaches to research, including not being readily able to take into account and understand the experiences of participants. Therefore, understanding people’s lives through quantitative approaches can be more difficult compared to the same aim in qualitative-based research. However, closed questions do allow participants to provide details of their experiences, even if choosing from pre-determined response options. What is limited though is the variation and depth of responses in closed questions, which can restrict the collection of in-depth descriptions. This point is significant because of the importance of being able to collect data to demonstrate participant’s experiences of the processes. Interviews will be used as part of the data collection…..

3.3 – Qualitative

Research in the qualitative model tends to explore the attitudes, behaviours and experiences of participants (Dawson, 2009). The emphasis is more on the explanation of social facts using narrative and meanings provided by participants, whilst recognising that meanings are fluid as opposed to fixed, and interpretations are subjective rather than objective (Plowright, 2011). Such features of the qualitative approach were central to understanding the experiences of those involved in the process from DWP Case Managers, Presenting Officers that represent the DWP, and claimants that have gone through the tribunal experience, stakeholders from charities.

Bryman (2008) recognised the traditional contrast between qualitative and quantitative approaches to research, in termsof data collection methods. The mixed methodological design utilised elements of both quantitative and qualitative approaches and resulted in increased depth of data. Observations are a key part of the report, controlled observations will be undertaken as part of the research, the strengths of this type of observation is are quick to conduct and can cover a larger sample size, limitations include they can lack sometimes lack validity because when participants know they are being watched they may act differently.

Secondary data includes,