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Operations Management and TQM Overview

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34 views3 pages

Operations Management and TQM Overview

Uploaded by

pamss28ss
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

OPERATIONS MANAGEMENT with TQM (OPEQUAL)

Operation is a function in an organization that is responsible for creating goods and/or services.
Goods are tangible items produced by the organization while services are activities that they render
to the customers.
Services involve elements of time, location, form or psychological value that organizations perform.
Operations Management is the management of processes that transform an organization's inputs
into goods and services that add value for the customer. The goal of operations management is to
maximize efficiency by producing products at a lower cost while being able to fulfil and satisfy
their customer needs. It deals with the creation of goods and services which we come in contact to
every day.

A cross-functional perspective is deemed necessary in order to facilitate smooth organizational


processes.

Importance of studying operations management


 Enables students to prepare for future employment
 The knowledge that you will gain will be useful for you regardless of any career path you
take

Manufacturing produces a tangible output, in the form of a good.


Production may occur in the factory or elsewhere, like farms, restaurants, etc.
Service deals with performance of an act.

Basic Functions in an Organization


1. Operations – The function in an organization that is responsible for producing goods and/or
delivering the services. The operations function is the core of the organization for without its
products and services, there would be no need for other functions.
2. Finance – The function which is responsible for allocating the resources of the organization and
securing their financial resources. They are also involved in budgeting, preparing and analyzing
investment proposals and ensuring that necessary funds are available for operations.
3. Marketing – The function which is responsible for assessing the needs and wants of the
consumers and in selling and promoting the organization’s goods and services.

Organizations exist because of their products and services, which is created and delivered through
the operations function. Support functions' (marketing, finance, human resource, etc.) responsibility
is to ensure that they are able to provide for the needs of the operations.
Operations management is the management of that part of the organization that creates products
and services.
Supply chain is the sequence of how the organization produces and delivers these products and
services. It involves the facilities, functions and all activities related to sourcing the raw materials
until the products and services reach the final customers.

The Input-Transformation-Output Process


Inputs (capital, labor, information, etc.) are transformed through different processes in order to
create outputs (goods or services) that provide value to customers (value dded).
Measurements (feedback) are likewise taken at various points of the process and are compared to
standards to determine necessary corrective action (control).
Trends and Challenges Facing Operations Management
1. Economic Conditions 2. Intense Competition
3. Technology/ Innovations 4. Environmental Concerns
5. Ethical Issues 6. Cyber-security

Historical Development Operations Management


1. Industrial Revolution
2. Scientific Management
3. Human Relations Movement
4. Decision Models and Management Science
5. The influence of Japanese Manufacturers

Operations strategy is focused in defining the role and activities of the operations function of the
organization. It focuses on capabilities that enable the firm to gain competitive advantage.
Operations is responsible in ensuring that strategies are effectively implemented.
A well-thought-of strategy is useless if the operations function would not be able to implement it as
envisioned by the organization.
Strategy is an organization’s action plan to achieve the mission.
Mission Statement is a statement defining the purpose why an organization exists.
Core Competencies attributes that give an organization a competitive edge.
Mission statement defines the purpose of an organization's existence. It is the first step in order to
come up with an effective strategy. It also discusses the present business of the organization and
serves as a basis for its goals and strategies.

Three Basic Business Strategies


1. Low Cost
This is achieved through cutting down on their expenses by locating in a place with a low labor cost
and through achieving economies of scale. Economies of scale are attained when an organization
becomes more efficient. This means that they are able to increase their production and lower their
operating costs.
2. Differentiation
It enables the organization to produce products that are remarkably differentiated from the
others which are offering the similar ones. It can relate to product or service features, quality,
reputation, or customer service.
3. Responsiveness
It refers to how quick and flexible the organization responds to the needs or the demands of their
customers.

Competitiveness refers to how effective an organization is in terms of meeting the needs and wants
of other companies that offer similar output. To become competitive, organizations offer high
quality products at better prices or utilize heavy advertising and catchy promotions.
Reasons for Business Failure
 Businesses usually only focus on making plans, but does poorly when it comes to execution
 Poor management of their operations

The importance of knowing these could make organizations deal with issues that may hinder their
success. Upon knowing the probable reasons for failure, the company can come up with strategies
that are fit with their budget, manpower, and capacity, and that are aligned with their mission and
direction.
Environment Scanning, also referred to as SWOT Analysis, is the process of assessing
the Strengths, Weaknesses, Opportunities and Threats abounding the organization. Strengths
and Weaknesses are internal to the firm, and which an organization typically has a control of.

Two types of strategies that organizations have basically pursued:


1. Quality-based strategies focus on improving the quality of an organization's output.
Organizations may be motivated to pursue this because they are doing poorly on quality aspect and
they would want to catch up with their competitors.
2. Time-based strategies are utilized by organizations who want to reduce time in terms of
introducing innovations or responding to customer demand. Organizations intend to reduce time
because by doing so, they can have the first mover advantage, thereby gaining more customers than
their competitors.

Productivity means making efficient use of your resources. For organizations, productivity refers
the effective use of their resource, or the ratio of output to input. It has important implications for
both non-profit and profit organizations. Having high productivity means lower costs for non-profit
organizations. It also tells how competitive profit-based organizations are. Productivity growth is
particularly important for nations as it has large impact on the economy and people's standard of
living.

How to Compute for Productivity Growth and Productivity?


Productivity can be computed based on a single input (partial productivity), on more than one input
(multifactor productivity), or on all inputs (total productivity). The formula for computing for
productivity is expressed as:

How do we compute for productivity growth?


Productivity growth is the increase in productivity from one period to the next relative to the
productivity in the preceding period.

Productivity in services is more difficult to measure since inputs and outputs varies. Just imagine
how hard it is to measure productivity for consultations services, repair works, surgery, etc.
Identifying ways on how to make productivity improvements for the service sector is as relevant as
it is for manufacturing companies.

Common questions

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Historical developments such as the Industrial Revolution, Scientific Management, Human Relations Movement, and Decision Models and Management Science have significantly shaped operations management by introducing efficiency, labor management, and decision science principles. The influence of Japanese manufacturers notably contributed to global practices, introducing concepts such as total quality management and lean manufacturing, thereby enhancing efficiency and quality in production processes worldwide .

Quality-based strategies focus on enhancing the quality of an organization's output by improving product/service features, standards, and customer satisfaction to remain competitive or meet industry benchmarks. In contrast, time-based strategies aim to reduce the time required for processes, such as introducing new products or responding to customer demand, to gain a first-mover advantage. Both strategies require different implementations, as quality-based strategies might involve training and process improvements, while time-based strategies require system efficiency and agility .

Productivity growth significantly impacts a nation by influencing economic performance and living standards. High productivity growth can lead to cost reduction and competitive advantages, benefiting both non-profit and profit sectors. In manufacturing, productivity is measured using ratios of output to various inputs, such as labor, materials, or capital. However, in services, measuring productivity is challenging due to varied inputs and outputs, such as in consulting or surgery services; hence, identifying efficiency improvements is crucial .

Modern operations management faces challenges including economic conditions, intense competition, technological innovations, environmental concerns, ethical issues, and cybersecurity threats. These challenges affect strategic decisions by necessitating adaptable and proactive strategies that address sustainability, ethical considerations, continuous innovation, and robust security measures to safeguard operations and maintain competitive advantage .

The main reasons for business failure related to operations management include poor execution of plans and inadequate management of operations. Organizations can avoid these pitfalls by fostering a culture of efficient execution, continuous improvement, and adaptability. Implementing sound operational practices, ensuring alignment with strategic objectives, and leveraging feedback loops for quality control and risk management are critical to sustaining success .

Cross-functional perspectives in operations management are important because they ensure collaboration among different organizational functions such as operations, finance, and marketing. This collaboration facilitates seamless processes and resource allocation, leading to enhanced efficiency, effective communication, and overall organizational success. By integrating diverse viewpoints and expertise, companies can optimize decision-making and operations to better meet customer needs and remain competitive .

Environment scanning, including SWOT analysis, assists organizations by systematically evaluating internal strengths and weaknesses and external opportunities and threats. This analysis helps in strategic planning by identifying areas for growth, improvement, and risk mitigation. It guides organizations in aligning their strategies with capabilities, resources, and market conditions to optimize success and competitiveness .

The input-transformation-output process in operations management involves inputs being transformed through various processes to create outputs that provide value to customers. Inputs include capital, labor, and information, which are transformed into tangible goods or intangible services. Feedback is collected at different points to compare against standards, allowing for corrective actions to enhance quality and ensure the goods/services provide maximum value .

A mission statement plays a pivotal role in operations strategy by clearly defining the organization's purpose and serving as a foundation for its goals and strategic actions. It influences strategic development by providing direction and a framework for alignment, ensuring that operations strategies effectively support the organization's overarching objectives and competitive positioning .

Operations management strategies contribute to competitive advantage by aligning operations capabilities with the organization's goals, ensuring effective implementation of strategic plans. The specific strategies include low-cost strategies, achieved through cost reduction and economies of scale; differentiation strategies, which involve creating distinct products or services that excel in quality, features, or customer service; and responsiveness strategies, which focus on quickly meeting customer needs and demands. These strategies bolster competitiveness by improving efficiency, enhancing product/service distinctiveness, and increasing agility .

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