Understanding the roles of Operations Management and the importance of managing quality. Implement Strategic Quality Change and evaluating its wider implications

Contents

1 Understanding the role of Operations Management in an Organisation
1.1 The importance of Effective Operations Management in achieving organisational objectives
1.1.1 Definition of Operations Management
1.1.2 The role of operations management
1.2 Evaluating the Success of an Existing Operations Management Process in Meeting GIGAPRODUCTION’s Overall Strategic Management Objectives
1.2.1 Product design
1.2.2 Manufacturing and logistics
1.2.3 Job design

2 Understanding the Importance of Managing Quality in an Organisation
2.1 The Importance of Effective Quality Management in Achieving Organisational Objectives
2.2 Evaluating an Existing Quality Management Process’ Ability to Meet an *GIGAPRODUCTION’s Overall Strategic Management Objectives

3 The Ability to Plan for Strategic Quality Change in an Organisation
3.1 Planning a Strategic Quality Change to Improve Organisational Objectives
3.2 Defining the Resources, Tools and Systems to Support Business Processes in a Strategic Quality Change
3.2.1 Human resources
3.2.2 Financial resources
3.2.3 Tools & Techniques
3.3 Evaluating the Wider Implications of Planned Strategic Quality Change in an Organisation
3.3.1 Business performance
3.3.2 Corporate image
3.3.3 Satisfaction of employees
3.4 Designing Systems to Monitor the Implementation of a Strategic Quality Change in an Organisation

4 The Ability to Implement Strategic Quality Change in an Organisation
4.1 Implementing a Strategic Quality Change in an Organisation
4.2 Embedding a Quality Culture in an Organisation to Ensure Continuous Monitoring and Development
4.2.1 Quality circles
4.2.2 Kaizen
4.2.3 Fishbone Diagram
4.3 Monitoring the Implementation of a Strategic Quality Change in an Organisation

5 The Ability to Evaluate the Outcomes of a Strategic Quality Change in an Organisation
5.1 Evaluating the Outcomes of a Strategic Quality Change in an Organisation
5.2 Recommend areas for improvement to a strategic quality change that align with organisational objectives

6 Conclusion

References

*Company names in this paper have been altered for publication and do not refer to existing companies now or in the future which may coincidentally bear the same name.

List of abbreviations

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List of figures

Figure 1: Operations strategies and the links to manufacturing paradigms (Brown et. al. 2009)

Figure 2: The Deming Wheel (Howell 2006)

Figure 3: The Fishbone Diagram (Imler 2006)

1 Understanding the role of Operations Management in an Organisation

1.1 The importance of Effective Operations Management in achieving organisational objectives

1.1.1 Definition of Operations Management

According to Plenert (2002), Operations Management (OM) can be defined as the management of activities that enable an organisation to transfer a range of basic inputs (raw materials, energy, customer requirements, information, skills, finance, etc.) into outputs that deliver the organisation’s primary products and services to the end customer.

Stevenson (2011) and Brown et al. (2013) enlarge that definition by adding factors such as inventory management, supply and logistics, design decisions related to capacity planning and scheduling, quality assurance and the management of processes and human resources in order to ensure that the right skill base is developed and utilised.

1.1.2 The role of operations management

The nature of how the management of the strategic objectives is organised depends largely on the type of organisation, such as a government authority, a manufacturing or wholesale business, a retail company or an agency (Pycraft et al. 2007). According to Brown et al. (2013) and Mahadevan (2010), the importance of effective operations management in achieving organisational objectives can be divided into three broad categories: strategic decisions, tactical decisions and operational decisions.

Strategic Decisions:

OM assists senior level management in making strategic level decisions. Such decisions consider the existing constraints as well as the current conditions to formulate efficient systems and companywide processes to achieve a competitive advantage.

Examples of these long-term, strategic decisions include mergers and acquisitions or major technological changes that directly affect the organisation’s core businesses.

Tactical Decisions:

OM enables management to efficiently schedule the available resources and manage the staff under the legal regulations and the constraints defined by the organisation’s strategic plan (Radford 1998). Examples of these intermediate tactical decisions include operational shift planning and the scheduling of the delivery of raw materials.

Operational Decisions:

Following Mahedevan (2010) and Johnson et. al. (2005) OM assists management in planning, controlling and monitoring operational decisions under the constraints defined by the tactical decisions. These decisions are narrowly focussed on individual departmental targets. Examples of these short-term operational decisions include typical day-to-day business decisions made by team leaders, such as planning individual daily tasks and goals.

The following figure will highlight several operation strategies and their links to manufacturing paradigms. The transition from mass customisation up to strategic manufacturing is shown an the role of OM is described within every step in this transition.

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Figure 1: Operations strategies and the links to manufacturing paradigms (Brown et. al. 2009)

1.2 Evaluating the Success of an Existing Operations Management Process in Meeting GIGAPRODUCTION’s Overall Strategic Management Objectives

The business areas of GIGAPRODUCTION (GPRO) include the manufacturing and worldwide distribution of furniture and POS marketing tools, such as window and in-store decoration tools, according to the needs of customers in the premium and luxury retail areas.

GPRO’s existing operations are closely linked to the organisation’s management targets. The success of meeting these objectives is evaluated within the following business areas: production design, manufacturing and logistics and job design.

1.2.1 Product design

According to Chary (2004) OM processes relating to design include the achievement of consistent and similar quality across all customer campaigns by developing a sophisticated supplier and distribution network. This area also deals with the innovativeness in product design and materials to address the preferences and needs of the customers in order to attract consumers to the company’s products.

It also includes the reengineering of window decorations according to the aesthetics of local markets and cultures; for example, the use of positive testimonials in local markets or the abandonment of specific raw materials.

1.2.2 Manufacturing and logistics

Following Wöhe (2008) OM ensures the coordination between project management and production to achieve economy of scale effects through mass production. The value of these effects is a reduction in the costs of production and logistics as well as an increase in revenue.

Schulte (2013) and Hammer (2004) added it also includes evaluating an organisation’s performance by setting benchmarks, which are used to discover ways to make improvements by identifying the best way to conduct business. These benchmarks can either be used externally to target the company’s biggest competitor or within the organisation to target the company’s best teams; for example, the performance of the best teams within the logistic department can be measured and the processes they use can be adapted to other logistic teams.

1.2.3 Job design

Although an organisation’s human resource department copes with employees and their working conditions, OM processes are typically related to the employees’ operational areas as well as to their development (Scholz 2000).

OM ensures guidelines to calculate the effectiveness of time-bound campaigns as well as tasks to help ensure that the production and logistics of all campaigns run smoothly. OM also identifies best methods for the logistics of hiring hourly paid staff. This includes shift planning in accordance with the timetables of local schools and universities.

2 Understanding the Importance of Managing Quality in an Organisation

2.1 The Importance of Effective Quality Management in Achieving Organisational Objectives

Quality is the most essential aspect for an organisation like GPRO. Being in the marketing manufacturing industry adds to the organisation’s responsibility to produce and sell high quality products to their customers so that consumers will be willing to spend their money on the company’s products rather than on the products produced by the company’s competitors.

This is essential if GPRO is to maintain the reputation it has earned over the years. Therefore, a quality management system (QMS) plays an important part in ensuring the effectiveness of the company’s production. Furthermore, quality is not restricted to the production of goods; it is also aimed at the quality of the services the customers receive (Johnson et. al. 2005).

According to quality guru, Joseph Juran, the management of quality consists of three parts: the planning, the assurance and the control of quality (Pycraft et al. 2007). However, according to Stevenson (2011) and Brown et al. (2013), in order to achieve excellence continuous quality improvement should be added to these three functions.

Dr Kaoru Ishikawa, another quality guru, notes that the unreasonable behaviour of industry and society can be corrected by thoughtful application of total quality management.

Quality can be managed by using different tools, such as the 5 Gap Model and the PDCA Model, both of which will be discussed within this chapter.

According to Wall et al. (2010) the 5 Gap Model was designed to deal with the lack of quality in customer service. That model can also be used to measure quality.

The 5 Gaps are defined as follows:

Gap 1: Between the customers’ expectations and the management’s perceptions about these expectations
Gap 2: Between management’s perception and service quality specifications
Gap 3: Between service quality specifications and service delivery
Gap 4: Between service delivery and external communications about service delivery
Gap 5: Between expected and experienced service by the customer

The 5 Gap Model takes into account the tangibles, reliability, responsiveness, assurance and empathy that is required in Quality Management.

Following Howell (2006) as specification of Wall et. al. (2010) PDCA is an acronym for PLAN-DO-CHECK-ACT. It is mostly known as the Deming Wheel. The Deming Wheel is used for continuous improvement and it permits two types of counteractive action: temporary and permanent. Temporary action seeks to handle and solve issues that are a hindrance and permanent action is used to eliminate the source of those issues.

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Figure 2: The Deming Wheel (Howell 2006)

These models also reinforce the importance of prevention rather than correction, which means that an organisation can realise a total cost benefit by spending money on failure prevention rather than paying for the correction of failure.

2.2 Evaluating an Existing Quality Management Process’ Ability to Meet an GIGAPRODUCTION’s Overall Strategic Management Objectives

GPRO, and its sister company and marketing agency GIGANOVA (GNOV), is very successful in the POS area of marketing, which is shown by an almost 25% year-to-year growth in turnovers within the last five years. In addition to this growth in turnovers, the number of customers, the number of yearly accomplished marketing campaigns and the amount of needed staff also increased.

For GPRO, the current quality management process is mostly based on flowchart diagrams and organisational diagrams. These tools encouraged active and effective leadership within the senior management and empower the company’s middle and lower management by providing clear and understandable guidelines enabling them to take responsibility for every part of the production and logistics process.

These responsibilities also ensure a continuous focus on quality problems within manufacturing and distribution. Furthermore, the flowchart is broken down, thereby providing team leaders with a fixed timeframe for the delivery of all tasks.

Both tools have enabled GPRO to succeed in meeting its overall management targets. However, the growth of the company, as shown at the beginning of this chapter, is also a major issue for the existing QM processes. To meet the increased needs and preferences of the organisation’s customers in the future, and to meet the organisation’s core objective of being a major leader in the field of POS marketing, a strategic change in quality management is necessary.

3 The Ability to Plan for Strategic Quality Change in an Organisation

3.1 Planning a Strategic Quality Change to Improve Organisational Objectives

A change in the strategic quality is supposed to ensure high quality productions and services and enhance an organisation’s effectiveness. The process of planning a strategic quality change includes the following steps (Balding 2011):

- Identifying the customers’ demands and expectations
- Ensuring the overall participation of the workforce
- Benchmarking the quality management processes
- Creating and implementing a vision and mission
- Developing and documenting new quality standards
- Ensuring the effectiveness of the standards and implementing continuous improvement

According to Howell (2006) and Balding (2011) the 5 Gap Model, as previously mentioned, is a proper tool that can be used to identify the customers’ expectations and apply them to the organisation’s overall strategy and performance. To ensure participation not only of the workforce, but also of the stakeholders, the value and importance of developing a continual quality improvement culture within the whole organisation must be communicated and a culture of change must be implemented.

The outcome of the planning must be the development of targets that should have all of the essential features to be SMART objectives (Wöhe 2008; Johnson et. al. 2005).

3.2 Defining the Resources, Tools and Systems to Support Business Processes in a Strategic Quality Change

All the business processes at GPRO are based upon the availability of resources and tools. For a strategic quality change, the following resources will need to be implemented: human resources, financial resources and tools and techniques.

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