Reviewer for TQM Models - An abstraction of reality; a simplified

representation of something.
OPERATIONS MANAGEMENT
Quantitative Approaches - Attempt to obtain
- The science and art of ensuring that goods and services mathematically optimal solutions to managerial
are created and delivered successfully to customers. problems.
(Collier, Evans and Lindsay).
- Management of systems or processes that create Performance Metrics – those related to profits, costs,
goods and/or provide services. (Stevenson). quality, productivity, flexibility, assets, inventories,
- Involves planning, organizing, and supervising schedules, and forecast accuracy.
process and making necessary improvements for
Analysis of Trade-offs - Listing the advantages and
higher efficiency. Maximizing productivity, minimizing
disadvantages—the pros and cons—of a course of
costs and ensuring high quality output. Directly impacts
action.
the profitability and customers satisfaction
Degree of Customization - Additional requirements
Goal of operation management compared to standardized products.
(1) To meet customers satisfaction. (2) A Systems Approach - The whole is greater than the
ROI/Profitability to shareholders sum of its individual parts
Challenges in OM COMPETITIVENESS, STRATEGY, AND
(1) managing costs. (2) ensuring quality (3) PRODUCTIVITY
adapting to market changes
Mission - The purpose or rationale for an
Goods - Physical items that includes raw materials, organization’s existence (values).
parts, subassemblies and final product.
Vision – wishes to become.
Characteristics of Goods
Strategy/Goals - An organization’s action plan to
1. Tangible
achieve the mission. All about integrating
2. Product can usually be kept in inventory
organizational activities and utilizing, allocating the
3. Similar products produced
scarce resources. Strategy is well-define road map.
4. Limited customer involvement in production
5. Product standardized • Corporate strategy – overarching
6.Standard tangible products tends to make automation strategy of diversified firm (what
feasible business are we?)
7. Product typically produced at a fixed facility • Business strategy – aggregated (how
8. Many aspects of quality are easy to evaluate do we compete?)
9. Product often has some residual value • Functional strategy – short & mid-
term plans (how do we support each of
Services - Activities that provide some combination of our strategy?)
time, location, form and psychological value.
COMMON OPERATIONAL STRATEGIES
Characteristics of services
1. Intangible of Services Quality-based - to elevate their reputation in
2. Produced and consumed simultaneously market place. Improving design and reduce
3. Unique errors.
4. High customer interaction
5. Inconsistent product definition Time-based – used to reduce lead time.
6. Often knowledge based Scale-based – intensive capital method to
7. Services dispersed: Service may occur at retail store, achieve high output volume and low unit costs.
local office, house call, or via internet
8. Quality may be hard to evaluate Specialization – focus on narrow products
9. Reselling is unusual lines and limited services.

Major functions areas of organizations Newness – lagi bago

Marketing- Creates demand. Focus on Flexible – adjust what customers wants.

selling/promoting.
Competitiveness – ability and performance of a firm to
Finance – tracks how well the org. is doing. Pays bills
sell and supply goods and services in a given market.
and collects money.
Production - creates/produces and delivers products. 1. Products and service designs
Human resource – train, hire, motivates. 2. Cost
Information system - enables information to flow 3. Location
throughout the organization (forecasts, supplier 4. Quality
deliveries, worker scheds) 5. Quick response
6. Flexibility
O.M DECISIONS MAKING APPROACHES 7. Inventory management
 8. Supply chain management Benefits of SCM: 1. Lower inventories 2. Higher
9. Service productivity 3. Higher profits 4. Shorter lead
10. Managers and workers times 5. Greater customer loyalty 6. Ingrates
separate organizations into a cohesive
Competitive advantage - Creation of a unique operating system.
advantage over competitors.
Distribution channel – make goods available to final
- Competing on Differentiation, customers in sales outlets as soon as possible.
Uniqueness
- Competing on Cost, Low cost Logistics - Movement of materials, services, cash, and
- Competing on Response, Flexible, information in a supply chain. Involved with the forward
Reliable, Quick and reverse flow of goods, services, cash, and
information.
Core competencies – resource and capabilities that
comprise the strategic advantages of a business. Risk management and resiliency - Risk management
Company’s people, physical assets, patents, brand involves identifying risks, assessing their likelihood of
equity and capital can make contribution to occurring and their potential impact, and then
competencies. developing strategies for addressing those risks.
Resiliency is the ability of a business to recover from an
- Modern management theory, a business event that negatively impacts the supply chain.
must define, cultivate and exploit its core
competencies.

Order qualifiers – non-negotiable requirements of the

customers

Order winner – wins the order.

Productivity – maximizing resources. Thing we pay

attention whether the productivity has
improved/decline/stay the same.

Factors affecting productivity: capital, quality,

techno, and management

Productivity ratios are used for:

1. Planning workforce requirements

2. Scheduling equipment
3. Financial analysis

INPUTS
• Land
• Human (Labor)
• Capital
• Raw Materials (Water, Wood)
• Equipment (Machines, Trucks)
• Facilities (Factories, Retail Stores)
• Others (Information, Time)

SUPPLY CHAIN MANAGEMENT AND LOGISTICS

Supply chain - Supply chains are sometimes referred Make or buy decision - A choice between producing a
to as value chains, a term that reflects the concept that component or service in-house or purchasing it from an
value is added as goods and services progress through outside source.
the chain. it is also the network of all activities involved Outsourcing - Transferring a firm’s activities that have
in delivering a finished product/service to the customer traditionally been internal to external suppliers.
sourcing of: raw materials, assembly, warehousing,
order entry, distribution, delivery. Purchasing (procurement) - The function responsible
Supply chain management – is the strategic for acquiring raw materials, component parts, tools,
management of activities involved in the acquisition and services and other items required from external
conversion of materials to finished products delivered to suppliers.
the customers. It is a vital function that coordinates all
of the network links. SOURCING STRATEGIES

Many Suppliers
Typical service supply chain
Supplier → Storage→ Service → Customer o Order usually going to the low bidder
 o Holds the supplier responsible for Classifying inventory according to some
maintaining the necessary technology, measure of importance and allocating control
expertise, cost, quality, and delivery efforts accordingly: A - very important, B -
competencies moderately important, C - least important
Few Suppliers
o Can create value by allowing
suppliers to have economies of
scale and a learning curve
o Yields both lower transaction
costs and lower production
costs
o Encourages those suppliers to
provide design innovations and
technological expertise
Vertical Integration

o Developing the ability to

produce goods or services
previously purchased or to
actually buy a supplier or a Basic Economic Order Quantity Model - Used to
distributor identify a fixed order size that will minimize the sum of
o Can be forward or backward the annual costs of holding inventory and ordering
integration. inventory.

Keiretsu Networks Assumptions of EOQ Model:

o Keiretsu is a Japanese term - Only one product is involved

that describes suppliers who - Annual demand requirements known
become part of a company - Demand is even throughout the year
coalition. - Lead time does not vary
o Members are assured long- - Each order is received in a single delivery
term relationships and - There is no quantity discount
expected to collaborate as
partners

INVENTORY MANAGEMENT
Inventory management – maintain right balance of
stock. Achieve satisfactory levels of customer service
while keeping inventory costs within reasonable
bounds.

Kinds of inventory
• Raw materials and purchased parts.
• Partially completed goods, called work-in-process
(WIP).
• Finished-goods inventories (manufacturing firms) or KEY TERMS
merchandise (retail stores).
• Tools and supplies. Lead time: time interval between ordering and receiving
• Maintenance and repairs (MRO) inventory. the order
• Goods-in-transit to warehouses, distributors, or
Purchase cost: the amount paid to a vendor or supplier
customers (pipeline)
to buy the inventory; largest of all inventory costs

Functions of inventory Holding (carrying) costs: cost to carry an item in

• To meet anticipated customer demand inventory for a length of time, usually a year
• To smooth production requirements
• To decouple operations Ordering costs: costs of ordering and receiving
• To reduce the risk of stock outs inventory
• To take advantage of order cycles JIT & LEAN OPERATIONS
• To hedge against price increases
• To take advantage of quantity discounts. Lean operations - A flexible system that uses minimal
resources and produces high quality goods or services.
ABC Analysis - Divides on-hand inventory into three (Stevenson). Eliminates waste through continuous
classifications on the basis of annual dollar volume. improvement and focus on exactly what the customer
- Pareto principle states that there are a wants. (Heizer, Munson, and Render).
“critical few and trivial many.”
Just in time (JIT) - A highly coordinated processing
system in which goods move through the system, and
services are performed, just as they are needed. 3. Increased quality motivated by customer
Continuous and forced problem solving via a focus on focused and the need for high quality processes
throughput and reduced inventory. 4. Reduced cycle time due to elimination of non-
value-added operations.
Toyota Production System (TPS) - Focus on 5. Increased flexibility due to quick changeovers
continuous improvement, respect for people, and 6. Increased productivity due to elimination of
standard work practices. Contributes to a world-class non-value-added processes.
operation at Toyota Motor Corporation.
Risk of Lean Systems
Terms commonly used:
1. Increased stress on workers due to increased
• Muda: Waste and inefficiency materials.
responsibilities for equipment changeovers,
• Heijunka: Workload leveling.
problem solving, and process and quality
• Kanban: A manual system that signals the need for
improvement.
parts or materials
2. Fewer resources (e.g., inventory, people, time)
• Kaizen: Continuous improvement of the system.
available if problems occur.
• Jidoka: Quality at the source; Autonomation
3. Supply chain disruptions can halt operations
due to minimal inventory or time buffers.
Principles of Lean Operating systems
8 wastes according to Lean Philosophy
1. Elimination of waste
2. Increase speed and response 1. Excess inventory
3. Improved quality’ 2. Overproduction
4. Reduced costs. 3. Waiting time
4. Unnecessary transporting
Lean Tools and Approaches 5. Processing waste
6. Inefficient work methods
5Ss: Sort, Straighten, Sweep, Standardize, Self-
7. Product defects
discipline
8. Underused people
Visual controls - indicators that are placed in plain
Kaizen philosophy
sight of all employees that everyone can easily
understand the status and performance of the work • Waste is the enemy
system. • Improvement should be done gradually
and continuously
Single minute exchange of dies (SMED) - quick setup
or changeover of tooling and fixtures in processes that • Everyone should be involved
multiple products in smaller batches can be run on the • Built on a cheap strategy
same equipment. • Can be applied anywhere
• Supported by a visual system
Small batch & Single-piece flow – Batching: process • Focuses attention where value is created
of producing large quantities of items as a group before • Process oriented
they are transferred to the next operation. Single-piece • Stresses main effort of improvement
flow: the concept of ideally using batch size of one. should come from new thinking and work
style
Quality & continuous improvement - Quality at the
• The essence of organizational learning is to
source requires doing it right the first time, and
learn while doing
therefore eliminates the opportunities for waste.

Total Preventive Maintenance - ensuring that

operations system will perform their intended function
reliably.

TPM seeks to: (1) maximize overall equipment

effectiveness and eliminate unplanned downtime, (2)
create worker “ownership” of the equipment, (3) foster
continuous efforts to improve equipment operation

Goals of Lean system

1. Eliminate disruptions
2. Make the system flexible
3. Eliminate waste
PROJECT MANAGEMENT
Benefits of Lean Systems
Project – one-time operations designed to accomplish a
1. Reduced waste due to emphasis on waste specific set of objectives in a limited time frame; under
reduction non routine activities.
2. Lower cost due to reduced waste and lower
inventories
Examples: • Activity-on-node (AON) – a network diagram
a. designing new products or services convention in which nodes designate activities.
b. designing advertising campaigns
c. designing information systems
d. designing databases
e. designing Web pages
f. reengineering a process, and
g. software development.

PROJECT LIFE CYCLE

• Network Convention - special feature that is

sometimes used in AOA networks to clarify
relationships is a dummy activity. In order to recognize
the need to use a dummy activity using the AOA
approach when presented with a list of activities and the
activities each precedes, examine the “Immediate
Predecessor” list.

PERT & CPM technique

PERT (Program Evaluation and Review Technique.) -

that employs three-time estimates for each activity.

CPM – (Critical Path Method.) - uses only one time factor

per activity

ADVANTAGES & LIMITATIONS OF PERT/CPM

• Path - sequence of activities that leads from the
✓ Forces managers to organize starting node to the finishing node
✓ Provides graphic display of activities
✓ Identifies critical activities and slack activities. • Events – the starting and finishing of activities,
o Important activities may be omitted designated by nodes in the AOA convention.
o Procedure relationships may not be correct
o Estimates include a fudge factor • Critical path - the longest path; determines expected
o May focus solely on critical path project duration

• Critical activities - activities on the critical path

THE NETWORK DIAGRAM
• Slack- allowable slippage for path; the difference the
• Network (precedence) diagram – diagram of project length of path and the length of critical path
activities that shows sequential relationships by the use
• Forward pass - A process that identifies all the early
of arrows and nodes.
times
• Activity-on-arrow (AOA) – a network diagram
• Backward pass - An activity that finds all the late start
convention in which arrows designate activities.
and late finish times

TIME-COST TRADE-OFFS: CRASHING

• Crash – shortening activity duration

• Procedure for crashing
• Crash the project one period at a time
• Only an activity on the critical path • Crash
the least expensive activity
• Multiple critical paths: find the sum of
crashing the least expensive activity on each
critical path

AGGREGATE PLANNING

Aggregate plan- Forecast levels for inventories,

shortages, workforce changes, and families of finished
goods products. Usually covering a time horizon of two Process flexibility – ease with which resources
to twelve months, an intermediate-range capacity plan can be adjusted in response to changes in
might last up to eighteen months in certain demand, technology, products or services and
organizations. Typically, the objective is to minimize resources availability
expenses during the planning time while meeting
anticipated demand. Customer involvement – the role of the
customer in the production process.
AGGREGATE PLANNING STRATEGIES:
Process strategies:
Proactive – alter demand to match capacity
Process focus – low volume, high variety products.
Reactive – alter capacity to match demand
Repetitive focus – modules. classic assembly line
Mixed – some of each.
Mass customization – rapid, low-cost production.
Demand options – pricing, promotion, back orders, unique customer desires.
new demand
Product focus – high volume, low variety products.
Supply/capacity options – hire and lay off workers, continuous processes.
overtime/slack time, part time workers, inventories,
subcontracting. PROCESS TYPES:

Level capacity strategy - Maintaining a steady rate of 1. Job shop

regular time output while meeting variations in demand - usually operates on a relatively small
by a combination of options. scale. It is most commonly used when a low
volume of high-variety goods or services
Chase demand strategy - Matching capacity to will be needed, product is being produce
demand; the planned output for a period is set at the uniquely for each-customers. It is make-
expected demand for that period. to-order type of business where
production is intermittent; work includes
PRODUCT AND SERVICE DESIGN (OKS NA) small jobs, each with somewhat different
processing requirements. The workers are
PROCESS, LAYOUT, AND LOCATION DECISIONS
very highly skilled in their craft or trade.
PROCESS SELECTION – deciding on the way e.g. customized cakes business, custom
production of goods or services will be organized and it guitars or bicycle.
has major implications for planning, layout of facilities, 2. Batch
equipment and design of work systems. - used when a moderate volume of goods or
services is desired, and it can handle a
moderate variety in products or services.
The equipment need not be as flexible as in
a job shop, but processing is still
intermittent (start, stop, start). Employees
need to be skilled and experienced at
operating equipment and producing these
products. e.g baked goods, clothing, vaccine
3. Repetitive
- Produces products that are more
standardized in nature. Usually the
output is high. Equipment used tend to
be specialized and often highly customize
Process – group of related tasks with specific inputs and for that process. Skill level of the employees
outputs. It exists to create value for the customer, tend to be LOW because the steps are
shareholder, or society. highly standardized. Often use flexible
automation that allows customization
Process analysis – systematic examination of all
such as addition of upgraded features. e.g
aspects of a process to improve its operation to be faster.
cafeteria line, carwash, and assembling
Process innovation – continual improvement of efforts automobiles/electronics.
has been exhausted and performance expectations still 4. Continuous
cannot be reached with an existing process, it is time to - a very high volume of non-discrete,
completely redesign/innovate the process. highly standardized output is desired, a
continuous system is used. These systems
PROCESS STRATEGY DEFINES ITS: have almost no variety in output and,
hence, no need for equipment flexibility. e.g
Capital intensity – mix of capital and labor sugar, oil, gasoline, steel.
resources used in the production process. 5. Project
Vertical integration – extent which the firm - used for work that is nonroutine, with a
will produce the inputs and control the outputs unique set of objectives to be
of each stage of the production process. accomplished in a limited time frame.
 One time event, such as construction of an 3. Fixed position layout
apartment bldg., writing a book, and etc. - Layout in which the product or project
has a high degree of customization, remains stationary, and workers,
substantial use of resources, and a materials, and equipment are moved as
complex set of related activities. Only needed. Fixed-position layouts are used in
single output at the end of the project. large construction projects (buildings, power
plants, dams), shipbuilding, and production
Technology decisions – involve large sums of money of large aircraft and space mission rockets.
and can have a tremendous impact on the cost, speed, 4. Cellular layout
quality, and flexibility of operations. Define the future - workstations are grouped into what is
capabilities of a firm and set stage for competitive referred to as a cell. Groupings are
interactions. determined by the operations needed to
perform work for a set of similar items, or
Financial justifications of technology
part families, that require similar
✓ purchase cost processing.
✓ operating cost 5. Service layouts
✓ annual savings a. Warehouse and Storage Layout-
✓ revenue enhancement storage facilities present a different set
✓ replacement analysis of factors than the design of factory
✓ risk and uncertainty layouts. Frequency of order is an
important consideration; items that
are ordered frequently should be placed
FACILITIES LAYOUT – way which organizations near the entrance to the facility, and
position their equipment, departments, or work centers. those ordered infrequently should be
Effective facility layout can ensure smooth work flow placed toward the rear of the facility.
and eliminate wasted or redundant movement and b. Retail Layout- guide design of
improve safety. manufacturing layouts often pertains
to cost minimization and product
BASIC AND OTHER TYPES OF LAYOUTS
flow. Traffic patterns and traffic flow
1. Product layout are important factors to consider.
- highly standardized goods or services c. Office Layouts - undergoing
that allow highly standardized, repetitive transformations as the flow of
processing (repetitive or continuous) to paperwork is replaced with the
achieve smooth, rapid, high-volume increasing use of electronic
flow. High volume of standardized goods is communications.
produce efficiently by people, equipment, or d. Restaurant Layouts - type of
departments arranged in a series of restaurant typically adheres to a floor
workstations - a production or assembly plan established by the company.
e. Hospital Layouts - Key elements of
hospital layout design are patient care
and safety, with easy access to
critical resources such as X-ray, CAT
scan, and MRI equipment.

LOCATION DECISIONS - objective for this is to

maximize the benefits of location of the firm.
line as in manufacturing environments.
General procedure for making location decisions:

➢ Decide on the criteria to use for evaluating

2. Process layout alternatives.
- Layout that can handle varied processing ➢ Identify important factors.
requirements. These are used for ➢ Develop location alternatives.
- Identify general region for a location
- Identify community alternatives.
- Identify site alternatives.
➢ Evaluate alternatives and make a selection.

SERVICE LOCATION DECISIONS

Revenue focus – major revenue factor. Affects
intermittent processing - a discontinuous amounts of customer contact and volume of
workflow. This is applicable for jobshop business.
and batch processing. These are
occasionally called as functional layouts. INDUSTRIAL LOCATION BUSINESS
Cost focus – major factor is cost. Production
separate from consumption.
ORGANIZATIONS THAT LOCATE CLOSE TO 2. Locational break-even analysis
SUPPLIERS OR MATERIALS -Identify the least cost location based on
Transporting materials is more expensive quantity produced or highest profit location.
than transporting finished goods. Such as
perishable raw materials and heavy/bulky raw
materials.

ORGANIZATIONS THAT LOCATE CLOSE TO

MARKETS OR CUSTOMERS
Transporting finished goods is more
expensive than transporting materials. Such
as police & fire departments, fast food
restaurant, banks, supermarkets and etc.

FACTORS TO CONSIDER
o Labor Productivity 3. Center of gravity method
o Exchange Rates and Currency Risk - based on minimum distribution costs.
o Costs Single facility serving several destinations.
o Political Risk, Values and Culture Used for services and distribution centers
o Proximity to Markets 4. Transportation model
o Proximity to Suppliers - decision based on movements costs of raw
o Proximity to Competitors (Clustering) materials or finished goods. Finds amount to
be shipped from several sources to several
LOCATION DECISION FACTORS destinations. Used primarily for industrial
o Regional – condition of business. locations.
o Community consideration – condition of
people around. CAPACITY PLANNING (OKS NA)
o Site related – condition of environment.
o Multiple plant strategy QUALITY
➢ Product plant strategy –
assign different products to Quality can be defined from six different perspectives:
different plants which can
1. Transcendent (Judgemental) perspective
generate higher volume and
- often used by consumers, is that it is
result in cost savings.
synonymous with superiority or excellence.
➢ Market area plant strategy –
2. Product perspective
designed to service
- implies that the larger number of product
geographic needs (e.g west
attributes are equivalent to higher quality.
coast and southeast) and may
3. User perspective
have higher costs than in a
- a user-based definition of quality - fitness
“product strategy”.
for intended use, or how well the product
➢ Process plant strategy –
performs its intended function.
different plants concentrate on
different aspects of a process.
4. Value perspective
- relationship of product to its price
GLOBALIZATION 5. Manufacturing perspective
- conformance to specifications.
Factors: trade agreements & technology 6. Customers perspective
- American National Standards Institute (ANSI)
Benefits: markets, cost saving, legal and regulatory, and the American Society for Quality (ASQ)
financial. defined quality as “the totality of features and
characteristics of a product or service that bears
LOCATION EVALUATION METHODS
on its ability to satisfy given needs”. Meeting or
1. Factor rating method exceeding customer expectation.

QUALITY IN MANUFACTURING

Marketing and Sales - learning the products and

product features that consumers want and knowing
the prices that consumers are willing to pay for them.

Product Design and Engineering - Good design can

help prevent manufacturing defects and service
errors and to reduce the need for non-value-adding
inspection practices.

Purchasing and Receiving - The quality of purchased

parts and services and the timeliness of their delivery
are CRITICAL. The receiving department is the link 2. The production of services typically requires a higher
between purchasing and production. It must ensure degree of customization than does manufacturing.
that the delivered items are of the quality specified by
the purchase contract. 3.The output of many service-system is intangible and
can only be assessed against customers’ subjective,
Production Planning and Scheduling - Modern nebulous expectation, and past experiences.
concepts of production planning and scheduling, such as
small batch and single piece flow, have been shown to 4. Services cannot be stored, inventoried or inspected
lead to quality improvement and cost saving. prior to delivery as manufactured goods are.

Manufacturing and Assembly - ensure that product is 5. Customers are involved in the service process and are
made correctly. present while it is being performed.

Tool and Engineering - responsible for designing and 6. Services are generally labor intensive, whereas
maintaining the tools used in manufacturing and manufacturing is more capital intensive.
inspection.
7. Many service organizations must handle large
Industrial engineering and Process design - work with numbers of customer transactions
product design engineers to develop realistic
Quality and Profitability
specifications. They must select appropriate
technologies, equipment, and work methods for
producing quality products.

Finished goods inspection and Tagging - If quality is

built into the product properly, inspection should be
unnecessary except for auditing purposes and fuctional
testing.

Packaging, shipping, and Warehousing - often termed

logistics activities; are the functions that protect
quality after goods are produced.

Installation and Service - Users must understand a

product and have adequate instruction and proper CUSTOMER FOCUS
installation and operation. Should any problem occur, (CUSTOMER SATISFACTION APPROACH)
customer satisfaction depends on a good after-the-sale
service. TQM emphasizes meeting or exceeding customer
expectations to satisfy their needs and expectations.
Understanding customer needs is crucial for winning
new and existing business. Offering quality products
or services at reasonable prices, including on-time
delivery and outstanding service, requires continuous
evaluation of the organization's quality system to
remain responsive to evolving customer needs.

THE CUSTOMER IS THE MOST IMPORTANT PERSON

IN OUR BUSINESS “-Mahatma Gandhi”

• He does not depend on us. We depend on him.

• He is not an interruption to our work. He is the
purpose to it.
• He is not an outsider. He is a part of our business.
• We are not doing him a favor by serving him.
QUALITY IN SERVICE • He is giving us an opportunity for us to do so.
• He is the life and blood of our business. Without him,
The two most important drivers of service quality are we will close our shop.
people and technology. Customer-contact employees • He comes to us with his needs and wants. It is our
need access to the right technology and company duty to fulfill them.
information to do their job. Information technology • He is a human with feelings and emotions just like us.
improves productivity, increases communication, and
allows customer contact employees to handle almost CUSTOMER SATISFACTION AND ENGAGEMENT
any customer issue.
Customer Satisfaction as defined by the ASQ Quality
The most critical differences between services and Glossary as the result of delivering product or service
manufacturing are: that meets customer requirements.
1.Customer needs and performance standards are Customer satisfaction drives profitability. Although
difficult to identify and measure. satisfaction is important, organizations need to look
further.
• They must avoid dissatisfied customers NORIAKI KANO MODEL - based on an analysis of
• They must try to develop loyal customers - those who customer demands by Noriaki Kano (1940), a professor
stay with a company and make referrals. at Tokyo University of Science.

Customer Engagement refers to customers’ 1. Dissatisfiers/Basic Needs (“must haves”)

investment in or commitment to a brand and 2. Satisfiers/Performance Needs (“wants”)
product offerings. Customer engagement is influenced 3. Exciters/Excitement Needs (“never thought of”)
by an organization’s integrity and relationships it builds
with its customers
QUALITY DIMENTION OF GOODS

1. Performance
IDENTIFYING CUSTOMERS
2. Features
- To understand customer needs, a company must know 3. Reliability
who their customers are. 4. Conformance
5. Durability
-Identifying customers begin with asking some 6. Serviceability
fundamental questions: 7. Aesthetics
• What products or services are produced?
• Who uses the products and services? QUALITY DIMENTION OF SERVICES
• Who do I call, write to, or answer question for? 1. Reliability
• Who supplies input to my process? 2. Assurance
-This model suggests that suppliers must be considered 3. Tangibles
as a customer. 4. Empathy
5. Responsiveness

-EXTERNAL CUSTOMER, also known as clients or

accounts, are individuals who purchase products or
services from an organization, either as a one-time MANAGING CUSTOMER RELATIONSHIP
purchaser or long-term customers, and are provided
with customization options and add-ons. 1.Strategic Partneship and Alliances Customer
- supplier partnerships - long term
-INTERNAL CUSTOMERS, End users, internal relationships characterized by teamwork and
customers, shareholders, and stakeholders are mutual confidence - represent an important
significant within an organization. They form strategic alliance achieving excellence and
relationships with the company, either through business success.
employment or as partners delivering products or 2. Customer-Focused Technology and Analytics
services. These may or may not purchase the product -Technology can greatly enhace an
or service. organization’s ability to leverage customer-
related information and provide improved
customer service.
CUSTOMERS SATISFACTION MODEL
MEASURING CUSTOMER SATISFACTION AND
ENGAGEMENT

Direct Methods: directly contacting customers and

getting their valuable feedback is very important.
Following are some ways by which customers could be
directly tabbed:
• Getting customer feedback through third party
agencies.
• Getting customer feedback through face-to-face
conversation or meeting.
• Direct customer feedback through surveys and
questionnaires.
• Direct marketing, in-house call centers, complaint PRINCIPLES OF WORKFORCE ENGAGEMENT AND
handling department could be treated as a first point of MOTIVATION
contact for getting customer feedback.
• Suprise market visit Workforce Engagement, extent of workforce
commitment, both emotional and intellectual, to
Indirect Method: the major drawback of direct method accomplishing the work, mission and vision of the
is that it turns out to be very costly and requires a lot of organization.
pre-compiled preparations to implement.
a. Customer Complaints: the issued and problem Employee Involvement (IE), Any activity by which
reported by the customer to supplier with regards to any employees participate in work-related decisions and
specific product. improvement activities, with the objectives of tapping
b. Customer Loyalty: It is necessarily required for an the creative energies of all employees and improving
organization to interact and communicate with their motivation.
customers on a regular basis to increase customer
loyalty Employee suggestion System, A management tool for
the submission, evaluation, and implementation of an
WORK FORCE FOCUS employee’s idea to save cost, increase quality, or
Refers to everyone who is actively involved of improve other elements of work such as safety.
accomplishing the work in organization.
o paid employees Motivation theory
o volunteers
o contract employees
o team leaders
o supervisors
o managers at all level

Workforce Management (which has also been widely

known as human resource management or HRM) is
the function performed in organizations that facilitates
the most effective use of people (employees) to achieve
organizational and individual goals.
• determining the organization’s workforce
needs
• assisting in the design of work systems
•recruiting, selecting, training and developing,
counseling, motivation, and rewarding DESIGNING HIGH-PERFORMANCE WORK SYSTEM
employees
•acting as a liason with unions and government WORK AND JOB DESIGN
organizations Work Design refers to how employees are
• handling other matters of employee well- organized in formal and informal units, such as
being. department and teams. Approaches to work design are
job enlargement, job rotation and job enrichment.
STRATEGIC HUMAN RESOURCE MANAGEMENT Job Design refers to the responsibilities and
HR strategies significantly contribute to organizational tasks assigned to individuals.
effectiveness by ensuring that an organization's human Core Job design characteristics:
capital effectively aligns with its business objectives • Task significance
through consistent policies and practices. • Task identity
• Skill variety
HIGH PERFORMANCE WORK CULTURE • Autonomy
Performance – extent which an individual contributes • Feedback from the job
to achieve the goals and objectives of an organization. Empowerment
High performance work – work approaches used to This entails granting individuals authority to
systematically pursue ever-higher levels of overall make decisions based on their own judgment,
organizational and human performance. exercise control over their work, take risks,
learn from mistakes, and encourage change.
CONDITIONS OF COLLABORATION Teamwork
Kay Kendall and Glenn Bodison propose five who work together and cooperate to share work
“Conditions of Collaboration” in a High-Performance and responsibility.
Work Culture Compensation and Recognition
• Respect refers to all aspect of pay and reward, including
• Aligned Values promotion, bonuses, and recognition, either
• Shared purpose monetary and non-monetary, individual or
• Communication group.
• Trust
 PROCESS FOCUS PROCESS DESIGN
Process design aims to develop efficient processes that
Process Management satisfy both internal and external customer
involves planning and administering the requirements, achieving the requisite level of quality
activities necessary to achieve a high level and performance. Technology plays a crucial role in
of performance in key organizational ensuring that service and manufacturing processes
processes, and identifying opportunities for operate productively and meet customer needs better
improving quality and operational performance, than ever.
and ultimately, customer satisfaction. Process mapping - The standard procedures
and work instruction are outlined in a process map,
Three major activities in Process Management which clearly outlines specific steps and their sequence.
o Design
o Control
o Improvement
Process Owners
individual or groups that are accountable for
process performance and have the authority
to control or improve their process.

Process requirements to apply Process

Management Techniques
o Repeatable, the process must recur
over time PROCESS DESIGN FOR SERVICES
o Measurable, ability to capture Fundamental differences between manufacturing
important quality and performance and service processes
indicators to reveal patterns about Service processes involve greater interaction with
process performance. customers, enhancing the efficiency of manufactured
products. This balance between people and technology
2 CATEGORIES OF PROCESSES is crucial for effective service design.
1. Value-Creation Processes (sometimes called
as core processes)
Are those most important process to MISTAKE-PROOFING PROCESSES
“running the business” and Errors can arise from the following factors:
maintaining or achieving a sustainable • Forgetfulness due to lack of reinforcement or guidance
competitive advantage. Driven by • Misunderstanding or incorrect identification because
consumer or external customer of the lack of familiarity with a process or procedures
needs. • Lack of experience
• They drive the creation of •Absentmindedness or lack of attention, especially
product and services when a possess is automated
• critical to customer
satisfaction Ways to Prevent Mistakes
• have major impact on the 1. Designing potential defects and errors out of the
strategic goals of an process.
organization 2. Identifying potential defects and errors and stopping
Value-creation processes typically include a process before they occur.
product design and production/delivery 3. Identifying defects and errors after they occur and
processes. quickly correcting the process.
2. Support Processes
Are those that are most important to Poka-yoke is an approach for mistake-proofing
an organization’s value creation processes using automatic devices or simple
processes, employees, and daily methods to avoid human error. Poka yoke is focused on
operation. Driven by internal two aspects: (1) prediction (2) detection.
customer needs and must be aligned
with the needs of key value-creation Types of Service Errors
processes. 1. Task Errors
2. Treatment Errors
Support Processes might include 3. Tangible Errors
processes for: 4. Customer Errors in preparation
• Finance and accounting 5. Customer Errors during encounter
• facilities management 6. Customer Errors at the resolution stage
• legal services
• human resource services PROCESS CONTROL
• public relations Control is the activity of ensuring conformance to the
• and other administrative requirements and taking corrective action when
service necessary to correct problems and maintain stable
performance.
 Importance of Process Control
• Process control methods are the basis for effective
daily management.
• Long-term improvements cannot be made to a process
unless the process is first brought under control

Process control in Manufacturing

In manufacturing, control is applied at key
stages starting from purchasing and
receiving materials, continuing through in-
process checks to manage variations, and
ending with final inspection to ensure the
product meets customer requirements.

Process control in Services

For many services, process control follows the
same paradigm as in manufacturing. In
services with high customer contact is more
difficult to control than mechanical or
automated process.

PROCESS IMPROVEMENT
Continuous Improvement
refers to both incremental changes, which are
small and gradual, and breakthrough
improvements, which are large and rapid.

o Just-In-Time (JIT) encourages the philosophy

of kaizen, a Japanese term meaning
continuous, gradual, and orderly
improvement. Kaizen emphasizes small,
frequent changes over time with minimal
financial investment and active
participation from everyone in the
organization. A kaizen event is a more intense,
short-term improvement effort where a team or
department dedicates its resources often on a
part-time basis to rapidly improve a specific
process within a limited time frame.

Breakthrough Improvement
refers to discontinuous change. Breakthrough
improvements result from innovative and
creative thinking; often this are motivated by
stretch goal or breakthrough objectives.

Approaches in breakthrough improvement:

1. Benchmarking
2. Re-engineering

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