Opman 01

• Exciting new trends in Operations Management:

  • Flexibility: ability to adapt quickly to changes in demand volumes, product mix, design, or delivery schedules
  • Total Quality Management (TQM) approach: continuous quest for improving goods and services quality, involving the whole organization in the process
  • Time Reduction: reducing manufacturing cycle time and speed to market for a competitive edge
  • Worker Involvement: delegating decision-making and problem-solving to employees for empowerment
• • Business Process Re-engineering: radical improvements in performance through redesigning business processes
  • Global Market Place: globalization leading to increased competition among manufacturing firms
  • Operations Strategy: recognizing the importance of operations strategy for overall business success
  • Lean production: using minimal resources to produce high-quality goods efficiently
  • Just in time production: producing only what is necessary, in the right quantity and at the right time
  • Computer Aided Manufacturing (CAM): using computer-based software tools for product development
• • Computer Aided Design (CAD): employing computer technology for design and drafting
  • E-Supply Chain Management: Internet-enabled activities to ensure products meet customer requirements
  • Enterprise Resource Planning (ERP): organizing resources and activities for business processes
  • Environmental Issues: focus on pollution control, waste disposal, and eco-friendly practices
• Productivity Challenge:

  • Poor quality can negatively impact productivity during manufacturing processes
  • Improving and maintaining quality can have a positive effect on productivity
  • Productivity is the ratio of outputs to inputs, with the goal of enhancing efficiency
• Productivity Measures:

  • Productivity measures how efficiently inputs are transformed into outputs
  • Three measures of productivity: Labor productivity, Capital productivity, Multifactor productivity
  • Labor productivity: output per hour paid
  • Capital productivity: output growth in relation to capital inputs
  • Multifactor productivity: growth due to management processes and technology
• Productivity Variables:

  • Labor: diverse workforce skills impacting productivity
  • Capital: vital asset for productivity improvement
  • Management: crucial input to enhance organization productivity
• Productivity in Service Sector:

  • Service sector challenges in measuring and improving productivity
  • Service work is labor-intensive, focused on individual attributes, intellectual, difficult to mechanize, and evaluate for quality
  • Discussing ways to improve productivity with employees and clients is essential
• Quiz:

  1. Operations Management

  2. Agile manufacturing

  3. Total Quality Management

  4. Time reductions

  5. Business Process Re-engineering

  6. Just in time production

  7. Worker involvement

  8. Productivity

  9. Labor productivity

  10. Multifactor productivity
• Evolution of Quality:

  • In the early days of manufacturing, an operative's work was inspected and an assessment was prepared whether to accept or reject it
  • Inspection functions were created as businesses became larger, leading to the separation of the inspection department with a chief inspector
  • Quality control department was developed with a quality control manager in charge
  • Statistical theory started to be used successfully in quality control in the 1920s
• • Japan's industrial system was almost destroyed after World War II, leading to the exploration of new ways of thinking about quality with the help of quality gurus like Joseph M. Juran and Edwards W. Deming
  • Quality management practices developed rapidly in Japanese plants in the early 1950s
  • Japan's strategy focused on improving all organizational processes through people rather than just product inspection, leading to higher-quality exports at lower prices
• Quality Gurus:

  • Joseph M. Juran supported the idea that quality is connected to "fitness for use" and defined quality as having features that fit consumer necessities and fewer defects
  • Juran Trilogy outlined quality planning, quality improvement, and quality control processes
  • W. Edwards Deming presented 14 points on quality management in his work "Out of the Crisis"
  • Deming's approach became the blueprint for total quality management (TQM) and linked quality with competent management
• • Philip Crosby introduced the four absolutes of quality management, focusing on prevention, zero defects, and the cost of conformance
  • Crosby laid out 14 steps for quality improvement, emphasizing commitment of management, quality improvement team formation, measuring quality, cost of quality, quality awareness, corrective action, zero defects planning, effective training, involving everyone in the goal, eliminating causes of errors, implementing recognition, creating quality council, and continuous improvement
• Dimensions of Quality:

  • Quality can be used strategically according to David A. Garvin, who is a specialist in quality control
• • Perceived quality: consumer's perception of the quality of the product
• Dimensions of Quality according to David A. Garvin:

  • Performance: operating characteristics of the product
  • Features: supplemental characteristics to basic operating characteristics
  • Reliability: dependability and trustworthiness of the product
  • Conformance: degree to which the product meets pre-established specifications
  • Durability: length of time a product performs before replacement is needed
  • Serviceability: promptness, courtesy, proficiency, and easiness in repair
  • Aesthetics: impact on human senses such as looks, feels, sounds, tastes
• Key dimensions of service quality:

  • Reliability: ability to give what was promised
  • Assurance: knowledge, courtesy, convey trust and confidence
  • Tangibles: physical facilities, equipment, and look of personnel
  • Empathy: caring and individual attention given to customers
  • Responsiveness: willingness to aid customers and provide prompt service
• Quality Improvement:

  • Involves prospective and retrospective reviews
  • Designed for improvement and preventing errors
  • Founded on fundamental conceptions like instituting a culture of quality, deciding and prioritizing areas for improvement, gathering and examining data, discussing results, and committing to continuing evaluation
• Quality Improvement Models:

  • Model for Improvement (PDSA cycle): Plan-Do-Study-Act cycle for continual improvement
  • Lean Six Sigma: merges Lean and Six Sigma methods for process improvement
• Quality Planning:

  • Formation of an actionable plan to ensure quality from idea to delivery
  • Principles include customer satisfaction, prevention over inspection, management responsibility, and continuous improvement
• Quality Planning Process:

  • Client determines level of quality
  • Characteristics of product quality identified
  • Current practices and procedures reviewed
  • Ways established to measure and maintain desired quality level
• Quality Planning Tools:

  • Cost-benefit analysis
  • Benchmarking
  • Plan of experiments
  • Cost of quality
  • Additional tools like brainstorming, affinity diagrams, force field analysis, etc.
• Cost of Quality:

  • Not the penalty of creating a quality product or service
  • The cost of NOT generating a quality product or service
  • Redoing work amplifies the cost of quality
  • Examples include reworking a manufactured item, retesting an assembly, rebuilding a tool, correcting a bank statement, and reworking a service like reprocessing a loan operation or replacing a food order in a restaurant
• Costs of quality are grouped as prevention costs, appraisal costs, internal failure costs, and external failure costs
• Prevention Costs:

  • Incurred to prevent problems, failures, and errors in design, development, purchase, labor, and other aspects
  • Achieved through examining previous failure data and developing action plans
  • Include identifying potential problems, improving product design, training personnel, and process control through Statistical Process Control (SPC)
• Appraisal Costs:

  • Associated with controlling quality to check for problems or errors during and after product or service creation
  • Include setting up statistical acceptance sampling plans, inspecting inputs, processes, and outputs, obtaining inspection and test data, investigating quality problems, and conducting customer surveys and quality audits
• Internal Failure Costs:

  • Associated with errors dealt with inside the operation
  • Include costs of scrapped parts, reworked parts, lost production time, and lack of concentration due to troubleshooting
• External Failure Costs:

  • Associated with errors reaching the customer
  • Include loss of customer goodwill, aggrieved customers, litigation costs, guarantee and warranty costs, and costs of providing excessive capability
• Classification of Failure Cost:

  • Failures can be random or avoidable
  • Failure sources classified as failures of supply, internal failures, design failures, customer failures, and general environmental failures
• Potential Causes of Failures:

  • Supply failure: timing or quality issues in goods and services delivery
  • Human failures: personnel changes or mistakes like errors and violations
  • Organizational failure: failures in procedures, processes, organizational structure, and culture
• Risk of failure can arise from an organizational culture that lessens consideration of risk or from a lack of clarity in reporting relationships
• Technology and facilities failures:

  • All computer systems, machines, equipment, and buildings of an operation are prone to failure or breakdown
  • Failures can be partial (intermittent fault) or complete (abrupt stoppage of operation)
  • Effects of failures can bring a significant part of the operation to a stop
• Product/service design failures:

  • In the design stage, inadequacies may become obvious when products or services face real circumstances
  • Design failures can result from a trade-off between fast time-to-market performance and the risk of failure in operation
  • Design failures are common, as seen in product recalls or service failures
• Customer failures:

  • Customers may mishandle products and services, leading to failures
  • Organizations have a responsibility to inform and instruct customers to reduce the chances of failure
• Environmental disruption:

  • Causes of failure external to an operation's direct control
  • Risks include cybercrime, hurricanes, terrorism, and political changes
  • Businesses are increasingly aware of events that can disrupt normal business activity
• Cost of quality:

  • Measurement used to review waste or loss from a defined process
  • Costs can be considerably lessened or avoided
  • Typically calculated in monetary terms, converting all losses and waste to their cost equivalent
• Quality costs amplify as the detection point moves further up the production and distribution chain

  • Lowest cost when non-conformances are prevented initially
  • Most costly quality costs come from non-conformances discovered by customers
• Early detection of quality issues offers significant feedback to identify root causes

  • Cost of quality system is a subsystem of the larger cost accounting system
  • Best cost of quality accounting system aggregates quality costs to improve visibility to management
• Model of Optimum Quality Cost:

  • Efforts to improve quality beyond the optimum level increase total quality cost
  • Zero defects advocates support continuous improvement to eliminate waste and improve quality
• Continuous improvement:

  • Continuous process improvement focuses on incremental improvements that are not sweeping
  • Reengineering involves fundamental rethinking and radical redesign of business processes for dramatic improvements