Introduction to Operations Management & Total Quality Management PDF

BM2408 INTRODUCTION TO OPERATIONS MANAGEMENT AND TOTAL QUALITY MANAGEMENT Businesses worldwide recognize the importance of quality in every aspect of the...

BM2408 INTRODUCTION TO OPERATIONS MANAGEMENT AND TOTAL QUALITY MANAGEMENT Businesses worldwide recognize the importance of quality in every aspect of their operations. The presence or absence of quality has a wide range of implications throughout the organization, affecting suppliers, customers, product design, maintenance, and various other facets related to the firm. Establishing an organization capable of consistently achieving a high level of quality is a very demanding challenge, but it is significant for the company's long-term success. (Luther, 2024). Definition and Importance of Operations Management When formulating strategies to pursue, integrating quality from the beginning is paramount. Neglecting to prioritize quality from the outset places the company at a significant disadvantage and may jeopardize its prospects for sustained growth. (Jacobs, 2024). What is Operations Management? The field of Operations Management has undergone significant changes over the years, resulting in the emergence of distinct Traditional and Modern definitions: Traditional Definition: Operations management involves overseeing the production of goods and services within an organization, with a focus on achieving efficiency and effectiveness in the use of resources such as labor, materials, and equipment. The traditional definition emphasizes the control and optimization of processes to meet production goals. Modern Definition: Operations management is the strategic management of processes and activities involved in creating and delivering goods and services. It integrates technology, data analysis, and cross-functional collaboration to drive innovation and continuous improvement. The modern definition underscores the importance of flexibility, adaptability, and customer-centricity in operations management, considering the evolving business landscape and the need to respond quickly to dynamic market conditions. Key Functions of Operations Management As Robert Jacobs emphasizes in his book "Operations and Supply Chain Management," the primary role of operations management is to ensure high-quality goods and services, optimize resource utilization, maximize efficiency, and maintain quality control. Additionally, it encompasses the following: Capacity Planning: This involves determining the production capacity needed to meet demand, such as deciding how many workers and machines are needed in a factory. A classic example of this would be Toyota, an automobile manufacturer that utilizes forecasting its production capacity to meet the demand for a new model. Quality Management: This ensures that products or services meet the desired quality standards. Starbucks, an American multinational chain of coffeehouses, is one great example that implements quality control measures to ensure consistency in its food and beverages across all its outlets. 01 Handout 1 *Property of STI Page 1 of 7  BM2408 Inventory Management: This entails overseeing the movement of goods in and out of a business, optimizing stock levels to meet customer demand while minimizing holding costs. For example, the renowned Filipino fast-food chain Jollibee utilizes just-in-time inventory management (companies receive the exact amount of inventory they need right when they need it) to reduce storage expenses and ensure the efficient use of all raw ingredients. Supply Chain Management: This focuses on coordinating all activities involved in sourcing, procurement, conversion, and logistics management. Amazon is a good example of a company that maximizes supply chain management. They use advanced technology for inventory management and have implemented a robust logistics network to ensure efficient delivery of goods. Process Design and Improvement: This entails designing and improving production processes to enhance efficiency and productivity. McDonald's implements standardized procedures and utilizes cutting-edge technology to automate various operational tasks. By doing so, it has effectively minimized errors, eliminated bottlenecks, and significantly increased efficiency and speed. Facility Layout and Design: This involves arranging physical facilities to maximize efficiency. An example is a logistics warehouse such as DHL, J&T, and F2 Cargo, which implements a layout to streamline the movement of goods and reduce picking times. Scheduling: This includes planning and managing the timing and sequence of operations. For example, airlines like Air Asia and Philippine Airlines carefully coordinate the timing of flights to ensure effective crew deployment, minimize idle time, reduce empty flights, and maximize productivity to make better use of their aircraft fleet. Maintenance Management: This focuses on ensuring that equipment and facilities are maintained and repaired to avoid downtime. Companies like Meralco and Manila Water implementing a preventive maintenance program for their power plants are examples of this. Risk Management: This involves identifying and mitigating operational risks to ensure continuity of operations. A financial institution implementing risk management procedures to protect against fraud and cyber threats is an example. Waste Management: This is focused on maximizing customer value while minimizing wasted resources. Apple, a leading tech company, is implementing lean principles to decrease inventory levels and production lead times, which in turn helps them operate more efficiently and reduce waste in their manufacturing processes. Goals of Operations Management In the online article "Operation Management," published by Aswathi Jayanchandran (2024), he highlights the main objectives of operations management. These objectives revolve around achieving optimal resource utilization, prioritizing the quality of goods and services, and effectively controlling costs. 01 Handout 1 *Property of STI Page 2 of 7  BM2408 Figure 1: Goals of Operations Management Source: https://www.wallstreetmojo.com/operations-management Customer Satisfaction Operations management ensures that products or services meet or exceed customer expectations and satisfaction regarding quality and reliability. It also involves designing processes and systems that can quickly adapt to ever-changing customer demands and market conditions. For example, a fast-food chain implements rigorous quality control measures to ensure consistency in food and beverage preparation and customer service across its locations, leading to enhanced customer satisfaction, loyalty, and a competitive edge in the industry. Utilization of Resources Operations management aims to effectively utilize resources such as labor, materials, and equipment to optimize productivity and minimize waste. SM Department Store invests in advanced inventory management systems to track sales and adjust stock levels in real-time, reducing excess inventory and minimizing holding costs. They also implement energy-efficient technologies to reduce electricity consumption, ultimately cutting operational expenses. Profit Maximization Operations management seeks to identify and eliminate inefficiencies and waste in production processes to reduce costs without compromising product quality. A perfect example of this would be a clothing manufacturer introducing automation and process improvements in its production facility, leading to reduced labor costs and increased increase revenue. Historical Development and Evolution of Total Quality Management What is Quality? According to Besterfield (2024), quality can be defined as the benchmark of excellence or superiority of products and services. It revolves around meeting and surpassing customer expectations and adhering to industry standards and regulations and is strongly associated with reliability, durability, performance, and customer satisfaction. He also emphasized that quality encompasses the entire process, from raw materials and production to delivery and customer support. By upholding high-quality standards, businesses forge a positive reputation, retain customers, and sustain competitiveness in the market. 01 Handout 1 *Property of STI Page 3 of 7  BM2408 What is Total Quality Management (TQM)? Total Quality Management (TQM) is a comprehensive business management approach designed to enhance the quality of products, services, and overall organizational processes. Its primary objective is to exceed customer expectations by actively involving members of the organization in continuous quality enhancement initiatives (Luther, 2024). TQM covers various key aspects, such as establishing quality benchmarks, monitoring performance, gathering and analyzing data, and implementing corrective actions whenever necessary. It advocates a systematic and inclusive approach to quality, fostering collaboration between management and employees. TQM endeavors to eliminate flaws, minimize waste, optimize efficiency and efficacy, ensure longevity in business triumphs, and cultivate a competitive edge in the market (Walkme, 2023). Historical Development of Total Quality Management In his book Total Quality Management: An Integrated Approach, Davis provides a brief overview of Total Quality Management (TQM). This management philosophy centers around the principles of continuous improvement, customer satisfaction, and employee involvement. TQM has evolved from various quality management approaches that have emerged over time. One of the earliest examples is the quality control methods implemented in the manufacturing processes of ancient civilizations such as Egypt and Greece. The ancient civilizations of Greece and Egypt placed emphasis on excellence in all aspects of life, which was reflected in their pursuit of perfection in the arts, architecture, and governance. This was evident in constructing the Parthenon and the world-famous Pyramids, which requires precise planning, attention to detail, skilled labor, and effective resource management. In the 20th century, TQM gained prominence with the introduction of statistical quality control by William Edwards Deming. Deming's teachings were instrumental in the post-war economic boom in Japan, leading to the success of companies like Toyota. The concepts of TQM were further refined and popularized by quality gurus such as Joseph Juran and Philip Crosby. Today, organizations across industries use TQM principles and tools like Six Sigma and Lean to drive quality improvements, reduce defects, and enhance customer satisfaction. Evolution of Total Quality Management (Davis, 2024) Total Quality Management (TQM) has evolved from its origins in the 1950s to become a comprehensive approach to improving organizational performance. Initially, TQM focused on improving product quality through statistical methods and control charts. However, it later expanded to encompass a broader set of management practices aimed at continuous improvement, customer focus, and employee involvement. Six (6) Notable Gurus of Total Quality Management: 1. William Edwards Deming: Deming is known for his “Deming Cycle,” which emphasizes the importance of quality in all aspects of business operations. The Deming cycle, also known as the PDCA cycle, stands for Plan-Do-Check-Act. It is a continuous improvement model used for problem- solving and change management. Plan phase: objectives and processes are established. 01 Handout 1 *Property of STI Page 4 of 7  BM2408 Do phase: the plan is implemented. Check phase: results are analyzed, and outcomes are compared to the expected results. Act Phase: adjustments are made based on the findings to improve the process. 2. Joseph M. Juran: Juran is recognized for his Quality Trilogy concept, consisting of quality planning, quality control, and quality improvement. His contribution to TQM includes the development of the “Pareto Principle,” which states that a small number of causes (20%) are responsible for the majority (80%) of the problems. 3. Philip B. Crosby: Crosby is known for his zero-defects philosophy and the concept of "doing it right the first time." His contribution to TQM includes the implementation of prevention strategies to avoid quality issues, as well as the establishment of a quality improvement process that focuses on meeting customer requirements. 4. Kaoru Ishikawa: Ishikawa is well-known for developing the “Fishbone Diagram,” a tool used for identifying root causes of problems. The diagram organizes potential causes into categories such as people, processes, materials, equipment, and environment, making it easier to understand and address the root causes of a problem. 5. Genichi Taguchi: Taguchi introduced robust design concepts to minimize the variability of products and processes. His philosophy emphasized the concept of "Loss Function," shifting simple defect detection to proactive quality improvement at every stage of the product lifecycle. 6. Shigeo Shingo: Shingo is regarded as the master of lean manufacturing and is credited with developing the “Single-Minute Exchange of Die (SMED)” technique, which reduced the time required to change machines to produce different products. Shingo's ideas revolutionized manufacturing processes, improving quality, efficiency, and productivity. Integrating Total Quality Management into Operations Management Integrating Total Quality Management (TQM) into operations management is a key factor in today's rapidly changing economic environment because it enhances efficiency and reduces waste. This results in increased customer satisfaction and demands, long-term success, and unwavering sustainability. Benefits of Integrating TQM into Operations Management According to Besterfield (2024), by integrating TQM into operations management, the business can create a culture of continuous improvement where processes are constantly reviewed and refined to meet or exceed customer expectations. He also highlighted the ten (10) major benefits of this integration that can lead to long-term success and sustained competitive advantage in the marketplace. 1. Improved quality: Integrating TQM into operations management enhances the quality of products and services, leading to higher customer satisfaction and increased competitiveness. For example, Mercury Drugs, a pharmaceutical company in the Philippines, implementing TQM principles in its production processes may see a reduction in defects in its medicines, leading to improved patient outcomes and trust in its brand. 01 Handout 1 *Property of STI Page 5 of 7  BM2408 2. Cost reduction: TQM can save costs by eliminating waste and inefficiencies in processes. For instance, a manufacturing company adopting TQM may streamline its production processes, reducing operational costs and improving profitability. 3. Enhanced customer satisfaction: TQM can lead to higher customer satisfaction and loyalty by focusing on meeting and exceeding customer requirements. For instance, Globe, a telecommunications company in the Philippines implementing TQM, may see an improvement in customer service, leading to higher customer retention rates and positive word-of-mouth. 4. Increased employee involvement and empowerment: TQM encourages employees’ involvement in decision-making and problem-solving, leading to a more motivated and engaged workforce. In the retail sector, a company implementing TQM may involve its employees in suggesting and implementing improvements in customer service, leading to a more positive work environment and better customer experiences. 5. Continuous improvement: TQM fosters a culture of continuous improvement, where processes are constantly reviewed and enhanced. Kentucky Fried Chicken (KFC) is a fast-food chain that uses TQM to continually improve its food safety standards, increasing trust among consumers and regulatory bodies. 6. Better decision-making: TQM promotes using data and analysis for decision-making, leading to more informed and effective strategic choices. One example is F2 Cargo Movers, a logistics company in the Philippines, using TQM principles may make decisions about route optimization based on real- time data, leading to improved efficiency and reduced delivery times. 7. Stronger supplier relationships: TQM emphasizes building strong relationships with suppliers to ensure consistent quality of inputs. For example, a manufacturing company may work closely with local suppliers to ensure the quality of raw materials, leading to improved product quality and reliability. 8. Regulatory compliance: Integrating TQM can help businesses in the Philippines ensure compliance with local and international quality and safety standards, reducing regulatory risks and improving market access. 9. Increased productivity: TQM can improve productivity through process optimization and the reduction of errors and rework. For example, a construction company in the Philippines using TQM may implement better project management practices, leading to faster completion times and reduced costs. 10. Competitive advantage: Integrating TQM into operations management can provide businesses in the Philippines with a competitive edge by consistently delivering high-quality products and services, meeting customer expectations, and optimizing operational performance. Challenges In Integrating TQM into Operations Management Operations Management offers numerous advantages, but it also presents certain challenges. As highlighted in an online article published by the London Premiere Centre (2023), implementing TQM frequently necessitates altering normal business practices and beliefs, which can provoke resistance within an operations-focused setting. Resistance to change: Implementing TQM may face resistance from employees who are comfortable with the existing processes and are hesitant to embrace new methodologies. For example, some employees may resist using new quality control tools or methods, citing a lack of familiarity or the belief that the current processes are sufficient. 01 Handout 1 *Property of STI Page 6 of 7  BM2408 Cultural barriers: Integrating TQM may be challenging in organizations with deeply ingrained cultures that do not prioritize continuous improvement or quality management. For instance, in a company with a “blame culture,” employees might be more focused on attributing blame for errors rather than understanding root causes and implementing preventive measures. Lack of top management commitment: Without visible support from top management, TQM initiatives may struggle to gain traction. For instance, if senior leaders do not actively participate in quality improvement projects or provide resources for TQM implementation, employees may perceive TQM as a low priority. Inadequate training and education: Without proper training and education, employees may struggle to understand TQM concepts and effectively implement them in their daily operations, leading to resistance and inefficiencies. Measurement challenges: Establishing effective metrics and measurement systems to capture the impact of TQM initiatives can be complex. For example, it can be challenging to quantitatively measure the long-term benefits of improved quality and customer satisfaction resulting from TQM efforts. Sustainability: Sustaining TQM efforts over the long term can be difficult, as organizations may face challenges in maintaining the momentum of improvement initiatives and preventing regression to previous practices. Resource constraints: Allocating necessary resources, including time, budget, and personnel, to TQM initiatives may be challenging, especially in organizations with competing priorities. Communication breakdowns: Ineffective communication regarding TQM initiatives and their benefits can hinder their successful integration into operations management, leading to misunderstandings and reduced engagement among employees. Complexity of implementation: TQM integration can be complex, especially in large and multifaceted organizations. It requires careful planning and phased implementation to avoid overwhelming employees and disrupting operations. References Besterfield, D. (2024) Total Quality Management. Pearson Davis, S. (2024). Total Quality Management: An Integrated Approach. Butterworth-Heinemann Publications Jacobs, R. (2024). Operations and Supply Chain Management. McGraw-Hill Education Jayachandaran, A. (2024). Operations Management. https://www.wallstreetmojo.com/operations-management/ London Premiere Centre (2023). Total quality management: Benefits and Challenges to Implementation. https://www.lpcentre.com/articles/total-quality-management-benefits-and-challenges-to-implementation Luther, D. (2024). Operations Management: Processes & Best Practices. https://www.netsuite.com/portal/resource/articles/erp/operations-management.shtml Walkme (2023). What is Total Quality Management (TQM)? https://www.walkme.com/glossary/tqm/ 01 Handout 1 *Property of STI Page 7 of 7