1 INTRODUCTION Operations management focuses on carefully managing the processes to produce and distribute products and services. Usually, small businesses do not talk about "operations management", but they do carry out the activities that management schools typically associate with the phrase "operations management." Major, overall activities often include product creation, development, production and distribution. These activities are also associated with Product and Service Management. However product management is usually in regard to one or more closely related product -- that is, a product line. Operations management is in regard to all operations within the organization. Related activities include managing purchases, inventory control, quality control, storage, logistics and evaluations. A great deal of focus is on efficiency and effectiveness of processes. Therefore, operations management often includes substantial measurement and analysis of internal processes. Ultimately, the nature of how operations management is carried out in an organization depends very much on the nature of products or services in the organization, for example, retail, manufacturing, wholesale, etc. (http://managementhelp.org/ops_mgnt/ops_mgnt.htm) Another definition of Operations management is that it’s the maintenance, control, and improvement of organizational
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INTRODUCTION
Operations management focuses on carefully managing the processes to produce and distribute
products and services. Usually, small businesses do not talk about "operations management", but
they do carry out the activities that management schools typically associate with the phrase
"operations management." Major, overall activities often include product creation, development,
production and distribution. These activities are also associated with Product and Service
Management. However product management is usually in regard to one or more closely related
product -- that is, a product line. Operations management is in regard to all operations within the
organization. Related activities include managing purchases, inventory control, quality control,
storage, logistics and evaluations. A great deal of focus is on efficiency and effectiveness of
processes. Therefore, operations management often includes substantial measurement and
analysis of internal processes. Ultimately, the nature of how operations management is carried
out in an organization depends very much on the nature of products or services in the
organization, for example, retail, manufacturing, wholesale, etc.
(http://managementhelp.org/ops_mgnt/ops_mgnt.htm)
Another definition of Operations management is that it’s the maintenance, control, and
improvement of organizational activities that are required to produce goods or services for
consumers. Operations management has traditionally been associated with manufacturing
activities but can also be applied to the service sector. The measurement and evaluation of
operations is usually undertaken through a process of business appraisal. Efficiency and
effectiveness may be monitored by the application of ISO 9001 quality systems, or total quality
Total quality management (TQM) is best thought of as a philosophy of how to approach the organization
of quality improvement. This philosophy, above everything else, stresses the “total” of TQM. It is an
approach that puts quality at the heart of everything this is done by an operation and including all
activities within an operation. This totality can be summarized by the way TQM lays particular stress on
the following (Slack, Chambers & Johnston, 2004):-
Meeting the needs and expectations of customers
Covering all parts of the organization
Including every person in the organization
Examining all costs that are related to quality, especially failure cost
Getting things “right first time”
Developing the systems and procedures which support quality and improvements
Developing a continuous process of improvement
As defined by ISO, "TQM is a management approach of an organization, centered on quality, based on
the participation of all its members and aiming at long-term success through customer satisfaction, and
benefits to all members of the organization and to society."
TQM requires that the company maintain this quality standard in all aspects of its business. This requires ensuring that things are done right the first time and that defects and waste are eliminated from operations. (http://answers.yahoo.com/question/index?qid=20060830050834AAeJ7FX)
The main objective of TQM is to ultimately satisfy the customer needs. The TQM wheel shown below helps us to understand the process of total quality management in a better way.
The Total Quality Management Wheel
The wheel shows customer satisfaction as the chief target. In order to achieve this, the employee must be involved in continuous improvement (the inner circle) to reach quality in the following areas (represented in the outer circle):
PRODUCT/SERVICE DESIGN: Design changes often require changes in methods, materials, or specifications in order to decrease the rate of defective items. Change invariably increases the risk of making mistakes, therefore stable product and service designs can help reduce internal quality problems. The need to make design changes in order to have a competitive edge, BMW tries to carefully test their models and redesigns them with a focus on simplicity and uniqueness. The manufacturers are very concerned about the quality of each and every component that are being used to assemble a multi-functional automobile which is durable, reliable and fuel-efficient.
PROCESS DESIGN: The design of the process is a key factor affecting the quality of the products or services. One of the keys to obtaining high quality is concurrent engineering, in which operations managers and designers work closely together in the initial phases of product or service design to ensure that production requirements and process capabilities are synchronized.
PURCHASING CONSIDERATIONS: Most businesses depend on outside suppliers for materials, services or certain equipments. Large companies like BMW and Toyota have thousands of suppliers from all parts of the world, some of which supply the same type of
PRODUCT DESIGN, PROCESS DESIGN, PURCHASING, BENCH-MARKING, DECISION MAKING TOOLS
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parts. Purchased parts of poor quality can have devastating effects on the quality. For example the Ford Motor Company lost about 2000 cars each day and had to halt their production in four cities in the United States of their models named Tempo and Topaz due to faulty engine parts purchased from outside suppliers. Therefore it is evident that both the buyer’s approach and specification management are key factors to controlling supplier quality.
BENCHMARKING: This is a continuous, systematic process that measures products, services and practices against those of industry leaders. Companies use this to understand where they stand in the industry and how to improve their own operations or reach a certain target. Typical benchmarking tools are: cost per unit, process time per unit, revenue per unit, return on investment, customer retention rates, etc. Companies like BMW that are involved in continuous improvement rely on benchmarking to formulate goals and targets for performance. The four basic steps of benchmarking are:
1. Planning – the collection of data, identifying the process and the firm to be used for comparison, determining the measures of process performance, etc.
2. Analysis – determining the gap between current process and the benchmark, identifying the significant causes, etc.
3. Integration – establishing goals, obtaining resources and skilled managers for accomplishing the goals.
DECISION MAKING TOOLS: The first step in improving the quality of an operation is data collection. There are seven tools for organizing and presenting data:
Management must develop the proper tools to manage quality – not only machine or hand tools, but also statistical methods to control process or incoming materials and to help identify the sources of quality problems. W. Edwards Deming believed that statistical methods are the backbone of management’s arsenal of tools for managing quality. He created a list of 14 points that summarizes his philosophy for achieving better quality (Deming, 1981-1982). Some of his fundamental ideas include – adopting a new philosophy, cease dependence on mass inspection, drive out fear, institute modern methods of training and many more.
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In a global marketplace a major characteristic that will distinguish those organizations that are successful will be the quality of leadership, management, employees, work processes, product, and service. This means that products must not only meet customer and community needs for value, they must be provided in a continuously improving, timely, cost-effective, innovative, and productive manner.
In 2000, after the Insurance Institute for Highway Safety--a vehicle safety testing organization--tested
BMW's X5, Institute President Brian O'Neil hailed its performance as outstanding. "BMW has set the
standard for all other manufacturers to aspire to," O'Neil claimed. The BMW X5 had not only
outperformed all of the other SUVs tested, it earned the highest rating the institute had ever given a
vehicle of any type or price range.
"This achievement speaks not only to BMW's worldwide commitment to the safety of its vehicles, but
also to driver protection instituted in the design and craftsmanship of the X5," boasts Helmut Leube,
president of BMW Manufacturing Corp. In addition to two electronic safeguards, hill descent control and
dynamic stability control, Leube explains that the X5 also boasts BMW's hallmark security package
called FIRST, for Fully Integrated Road Safety Technology.
Better known for their looks, which aspire to reach the aesthetic levels of museum-quality sculpture, as
well as their precision mechanical superiority, BMW vehicles are manufactured to exacting tolerances.
But attaining such an astonishing safety rating is evidence that, for the X5, BMW raised the standard even
higher. "It goes without saying that quality and safety are interrelated," affirms Eduard Walek, BMW's
X5 project leader. "If you can't guarantee that each vehicle which comes off the production lines was
produced in accordance with a high quality standard, you can't ensure a high standard of safety either. But
there's more to it than that. Safety must be designed, simulated, tested and, finally, produced. During all
of these stages, high quality standards must be met as far as computation, construction, testing and