Reviewer by: @Kixx_ten

OPERATION MANAGEMENT AND TQM FUNCTIONS OF OPERATION

OPERATION MANAGEMENT MANAGEMENT
Operations – The part of a business 1. Production Plan And Control
organization that is responsible for producing 2. Product Designs
goods and services. 3. Process Designs
Operation Management – The management of 4. Quality Control
systems or processes that create and/or provide 5. Plant Layouts
service. 6. Maintenance
7. Material Control
GOODS OR SERVICES
8. Material Handling
Goods – physical items that include raw
THE VARIOUS FUNCTIONS OF
materials, parts, subassemblies, and final
OPERATIONS MANAGEMENT
products.
Services – activities that provide some 1. Forecasting is an attempt at predicting the
combination of time, location, form or future with the help of systematic analysis and
psychological value. scientific methods.
2. Capacity Planning – Capacity measures the
SUPPLY CHAIN
rate of the production capability of a facility.
Supply Chain – A sequence of activities and 3. Location Facility – It is important to determine
organizations involved in producing and a location facility of the plant that can ensure
delivering goods and services. maximum operating efficiency. It provides
WHY STUDY OPERATIONS efficiency, cost control, and profit.
MANAGEMENT? 4. Layout – A good plant layout plans for
Every aspect of business affects or is affected by placement of machines, pieces of equipment,
operations utilities, service areas, storage areas, and
Many service jobs are closely related to arrangement of other facilities.
operations Financial services 5. Integration of Activities – Successful
1. Marketing services execution of an organization’s operations
2. Accounting services includes cordial and efficient workflow between
3. Information services various departments such as sales, production,
Through learning about operations and supply and accounting.
chains you will have a better understanding of: WHY IS OPERATIONS MANAGEMENT
1. The world you live in IMPORTANT?
2. The global dependencies of companies and It is important as operations management aims to
nations reduce wastage of resources, increase profit, and ensure
3. Reasons that companies succeed or fail customer satisfaction through maximum efficiency.
4. The importance of working with others QUALITY MANAGEMENT
Operations management is a business area that
Quality Management—Systematic policies,
implements practices ensuring the conversion of
methods, and procedures are used to ensure that
inputs into goods and services with maximum
goods and services are produced with
efficiency.
appropriate quality levels to meet customers'
The goal is to increase an organization’s income
needs.
by improving its operations and maximizing the
1. Quality – meeting or exceeding customers'
use of existing resources.
expectations.
Operations management deals with the
2. Quality of conformance – the extent to
management of processes and operations in an
which a process is able to deliver output that
organization.
conforms to the design specification.
It involves active coordination from various
3. Specifications – targets and tolerances
other departments such as production, sales,
determined by designers of goods and
accounting, and customer service.
services.
GOALS OF OPERATION MANAGEMENT 4. Service Quality – consistently meeting or
1. Customer Satisfaction exceeding customer expectations (external
2. Operational Management focus) and service-delivery system
3. Utilization of Resources performance criteria (internal focus) during
4. Profit Maximization all service encounters.

Reviewer by: @Kixx_ten

Reviewer by: @Kixx_ten

SERVQUAL
1. Reliability KEY BENEFITS
2. Responsiveness 1. Increased Customer Value
3. Competence 2. Increased Customer Satisfaction
4. Access 3. Improved Customer Loyalty
5. Courtesy 4. Enhanced Repeat Business
6. Communication 5. Enhanced Reputation of the Organization
7. Credibility 6. Expanded Customer Base
8. Security 7. Increased Revenue and Market Share
9. Knowing the Customer ACTIONS YOU CAN TAKE
10. Tangibles
1. Recognize direct and indirect customers as those
TOTAL QUALITY PRINCIPLES who receive value from the organization.
1. Focus on customers and stakeholders. 2. Understand customers’ current and future needs
2. Process focus supported by continuous and expectations.
improvement and learning. 3. Link the organization’s objectives to customer
3. Participation and teamwork by everyone in the needs and expectations.
organization. 4. Communicate customer needs and expectations
THIS DOCUMENT INTRODUCES 7 QUALITY MANAGEMENT throughout the organization.
PRINCIPLES (QMPS). ISO 9000, ISO 9001, AND RELATED ISO
QUALITY MANAGEMENT STANDARDS ARE BASED ON THESE 7 5. Plan, design, develop, produce, deliver and
QMPS support goods and services to meet customer
One of the definitions of a “Principle” is that it needs and expectations.
is a basic belief, theory, or rule that has a major 6. Measure and monitor customer satisfaction and
influence on the way in which something is take appropriate actions.
done. 7. Determine and take actions on interested
“Quality Management Principles” are a set of parties’ needs and expectations that can affect
fundamental beliefs, norms, rules, and values customer satisfaction.
that are accepted as true and can be used as a 8. Actively manage relationships with customers to
basis for quality management. achieve sustained success.
This document provides for each QMP: INFLUENTIAL LEADERS IN MODERN
Statement: Description of the principle. QUALITY MANAGEMENT
Rationale: Explanation of why the principle is W. Edwards Deming
important for the Organization. Joseph Juran
Key Benefits: Examples of benefits associated Philip B. Crosby
with the principle THE GAP MODEL
Actions you can Take: Examples of typical
Gap 1 = Discrepancy between customer
actions to improve the Organization’s
expectations and management perceptions
performance when applying the principle.
Gap 2 = Discrepancy between management
THE SEVEN QUALITY MANAGEMENT
perceptions of what features constitute a target level
PRINCIPLES ARE:
of quality and the task of translating these
QMP 1 – Customer Focus perceptions into executable specification
QMP 2 – Leadership
Gap 3 = Discrepancy between quality specifications
QMP 3 – Engagement Of People
documented in operating and training manuals and
QMP 4 – Process Approach
plans and their implementation
QMP 5 – Improvement
QMP 6 – Evidence-Based Decision Making Gap 4 = Discrepancy between actual manufacturing
QMP 7 – Relationship Management and service-delivery system performance and
external communications to the customers
STATEMENT
Gap 5 = Difference between the customer's
The primary focus of quality management is to
expectations and perceptions
meet customer requirements and to strive to
exceed customer expectations. ISO 9000 PRINCIPLES
RATIONALE 1. Customer Focus
2. Leadership
Sustained success is achieved when an
3. Engagement of people
organization attracts and retains the confidence
4. Process Approach
of customers and other interested parties.
5. Improvement
6. Evidence-Based Decision
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Reviewer by: @Kixx_ten

7. Relationship Management Incurred after poor-quality goods or services reach

ISO 9000 the customer.
ISO 9000 defines quality system standards, Costs due to customer complaints and returns.
based on the premise that certain generic Product-liability costs.
characteristics of management practices can be TOTAL QUALITY MANAGEMENT (TQM)
standardized and that a well-designed and Total quality management (TQM) is the
carefully managed quality system. continual process of detecting and reducing or
SIX SIGMA eliminating errors in manufacturing. It
A business improvement approach that seeks to streamlines Supply Chain Management,
find and eliminate causes of defects and errors improves the customer experience, and ensures
in manufacturing and service processes by that employees are up to speed with training.
focusing on outputs that are critical to PRIMARY ELEMENTS OF TQM
customers. TQM can be summarized as a management
DEFECT – Any mistake or error that is passed system for a customer-focused organization that
on to the customer. involves all employees in continual
UNIT OF WORK – The output of a process or improvement. It uses strategy, data, and
an individual process of step. effective communications to integrate the
quality discipline into the culture and activities
of the organization.
GE DMAIC 8 PRINCIPLES OF TQM
1. D – Define 1. Customer-focused: The customer ultimately
2. M – Measure determines the level of quality.
3. A – Analyze 2. Total Employee Involvement: All employees
4. I – Improve participate in working toward common goals.
5. C – Control 3. Process-centered: A fundamental part of tqm is
COST OF QUALITY MANAGEMENT a focus on process thinking.
Cost of Quality – Costs associated with 4. Integrated system: An organization may
avoiding poor quality or those incurred as a consist of many different functional specialties
result of poor quality. often organized into vertically structured
PREVENTION COST departments, it is the horizontal processes
interconnecting these functions that are the
Those expended to keep nonconforming goods and
focus of TQM.
services from being made and reaching the
5. Strategic and Systematic Approach: Critical
customer.
part of the management of quality is the
Quality planning costs strategic and systematic approach to achieving
Process-control costs an organization's vision, mission, and goals.
Information-systems costs 6. Continual Process Improvement: Large aspect
Training and general management costs of TQM is continual improvement drives an
APPRAISAL COSTS organization to be both analytical and creative in
Those expended on ascertaining quality levels finding ways to become more competitive and
through measurement and analysis of data to detect effective at meeting stakeholder expectations.
and correct problems. 7. Fact-based decision making: In order to know
Test and inspection costs how well an organization is performing, data on
Instrument maintenance costs performance measures are necessary.
Process-measurement and process- control costs 8. Communications: During times of
organizational change, as well as part of day-to-
INTERNAL FAILURE COSTS
day operation, effective communications plays a
Costs incurred as a result of unsatisfactory quality large part in maintaining morale and in
that is found before the delivery of a good or service motivating employees at all levels.
to the customer.
TQM IMPLEMENTATION AND SYSTEMS
Scrap and Rework Cost
GENERIC STRATEGY MODEL FOR
Cost of Corrective Action
IMPLEMENTING TQM SYSTEMS
Downgrading Cost
Process Failures Top management learns about and decides to
commit to tqm.
EXTERNAL FAILURE COSTS
TQM is identified as one of the organization’s
strategies.
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Reviewer by: @Kixx_ten

The organization assesses current culture, Cycle, the concept and application was first
customer satisfaction, and quality management introduced to Dr. Deming by his mentor, Walter
systems. Shewhart.”
Top management identifies core values and
principles to be used, and communicates them.
A TQM master plan is developed on the basis of
steps 1, 2, and 3.
The organization identifies and prioritizes COMPONENTS OF THE PDSA TECHNIQUE
customer demands and aligns products and 1. PLAN STEP that entails identifying a goal or
services to meet those demands. an objective and then formulating a plan of
Management maps the critical processes through action wherein the success metrics or the
which the organization meets customers’ needs. measures that indicate the determination of the
Management oversees the formation of teams success of the plan are defined followed by a
for process improvement efforts. well thought-out strategy to put the plan into
The momentum of the tqm effort is managed by action.
the steering committee. 2. DO STEP wherein the actual implementation of
Managers contribute individually to the effort the strategies of the plan is done.
through Hoshin planning, training, coaching, or 3. STUDY STEP wherein the outcomes of the
other methods. implementation are monitored and measured
Daily process management and standardization. and the determination of the success or
Progress is evaluated and plan revised as otherwise of the plan is made.
needed. 4. ACT PHASE wherein the feedback from the
Constant employee awareness and feedback on previous step is integrated into the learning from
status are provided and a reward/recognition the entire process and then based on the same,
process is established. the goals are adjusted as well as the methods
COMMONLY USED TOTAL QUALITY changed to ensure the success of the next
MANAGEMENT (TQM) TOOLS AND iteration and this can also include
TECHNIQUES INCLUDE reformulation or recalibration of the strategy
1. Pareto Principle (80/20 Rule) – States that: altogether.
20% of the effort or leads to 80% of the results. PDCA
2. Scatter Plots – Graphs that present the Plan-Do-Check-Act
relationship between two variables in a data-set. PDCA is an iterative design and management
It represents data points on a two-dimensional method that helps businesses to control and
plane or on a cartesian system. These plots are improve their performance. It is based on the
often called scatter graphs or scatter diagrams. scientific method of hypothesis, experiment, and
3. Control Charts – Graphical representations evaluation.
show how well a system performs over time. The origin of PDCA can be traced back to the
4. Flow Charts – Graphical representation of the 1930s, when the American statistician Walter
data or the algorithm for a better understanding A. Shewhart proposed a three-step process of
of the code visually. It displays step-by-step specification, production, and inspection for
solutions to a problem, algorithm, or process. quality control.
5. Cause-And-Effect (Fishbone Or Ishikawa) In the 1950s, another American statistician, W.
Diagrams - Assessment tool that combines Edwards Deming, popularized the PDCA cycle
brainstorming and mind mapping techniques to in Japan, he taught the Japanese manufacturers
explore the possible causes of an issue. It was how to improve their quality and productivity.
developed by Kaoru Ishikawa, a quality 8 DIMENSIONS OF QUALITY
management pioneer in the 1960s and originally
1. Performance is often a source of contention
used as a quality control tool.
between customers and suppliers, particularly
Plan-Do-Study-Act TQM when deliverables are not adequately defined
The PDSA or the Plan-Do-Study-Act Technique within specifications.
is a famous QI or Quality Improvement tool 2. Features – Performance specifications rarely
or initiative that helps organizations enhance the define the features required in a product. Thus,
quality of their products and services. it’s important that suppliers designing products
“The PDSA cycle is a systematic series of steps for or services from performance specifications are
gaining valuable learning and knowledge for the familiar with their intended uses.
continual improvement of a product or process.
Also known as the Deming Wheel, or Deming
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Reviewer by: @Kixx_ten

3. Reliability is a major contributor to brand or

company image and is considered a fundamental
dimension of quality by most end-users.
4. Conformance – The product or service conform
to the specification. Developed based on a
performance specification.
5. Durability is closely related to warranty.
Requirements for product durability are often
included within procurement contracts and
specifications.
6. Serviceability – As end users become more
focused on the Total Cost of Ownership than
simple procurement costs, serviceability is
becoming an increasingly important dimension
of quality and criteria for product selection.
7. Aesthetics – A product looks is important to
end-users. The aesthetic properties of a product
contribute to a company’s or brand’s identity.
8. Perception is reality. The product or service
may possess adequate or even superior
dimensions of quality but still fall victim to
negative customer or public perceptions.
COST OF QUALITY is the process that measures
and determines where and how organizations'
resources are utilized to maintain quality and
prevent poor outputs.

Cost of Good quality = CoGQ.

Cost of Poor quality = CoPQ.
Prevention cost = PC.
AC = Appraisal costs;
IFC = Internal failure costs.
EFC = External failure costs.

Reviewer by: @Kixx_ten