OPERATIONS MANAGEMENT  Product quality control was determined through

inspections. This involved measuring, examining and

CHAPTER 1 testing the products, processes and services against
specific requirements to ensure that each element
Fundamentals of Quality and Total Quality Management adhered to set standards and guidelines.

What is TQM?  Companies started to experience difficulties in

 Total Quality Management (TQM) is an following through with quality control standards. It
enhancement to the traditional way of doing became evident that there was a great need for
business. It is a proven technique to guarantee change and development.
survival in world-class competition.  Change and development were brought forth during
the 1940’s by industry leaders and experts like
TQM Six Basic Concepts: Deming, Dodge, Juran and Kawasaki. This would be
the beginning of Total Quality Management as we
 A committed and involved management to provide know it today.
long-term top-to-bottom
 organizational support.  Inspections were now carried out by production
 An unwavering focus on the customer, both personnel. They were responsible for inspections
internally and externally. during specific production intervals. This would
 Effective involvement and utilization of the entire change the focus from simply inspecting the end
work force. product to actually preventing end product problems
 Continuous improvement of the business and through early detection on the production line.
production process.
 Treating suppliers as partners.
The Great Philosophers of Quality
 Establish performance measures for the processes.

What is the CORE OF QUALITY? Joseph Moses Juran

 Juran is an American-Romanian engineer who
Customer Satisfaction dedicated his life to quality management. He is
 Utmost customer satisfaction is a primary need for a widely regarded as the founding father of many of
product (whether its goods or service). It is therefore the key quality management programs used by
necessary for products and services to meet or organizations today. The Juran Trilogy, also called
exceed customer expectations. Quality Trilogy, was presented by Dr. Joseph M. Juran
in 1986 as a means to reduce poor quality.
Customer Satisfaction Quality Rating
 Marketing/sales have a great impact on the opinions In essence, the Juran Trilogy is a universal way of thinking
of customers and their perception of quality. about quality—it fits all functions, all levels, and all
product and service lines.
 Thus, this widens the gap between the
operations/manufacturing team and the sales and The underlying concept is that managing for quality
marketing team. consists of three universal processes: The Juran Trilogy

Quality  Quality Planning

 Is the totality of features and characteristics of a Identify customers

product or service that bear on its ability to satisfy  Determine customer needs
given needs.  Develop product that can respond to those needs
 Optimize the product features and prove its
“The quality of the experience will be remembered capability
long after the price has been forgotten.”  Quality Control
 The process must product under operating
TOTAL QUALITY MANAGEMENT HISTORY conditions with minimal inspection.
 The organization must determine what to
History measure, what data is needed to know if the
 The history of quality management can be traced all process is working.
the way back to The Middle Ages. Work completed  This where goals are set for performance. It
by journeymen and apprentices were evaluated and requires getting feedback by measuring actual
inspected by the skilled worker to ensure that quality performance and improving performance to
standards were met in all aspects of the finished those that does not meet the goals.
product, ensuring satisfaction of the buyer.  Quality Improvement
 And while the history of quality management has  Repair (reactive) - fix what is broken
gone through a number of changes since that time,  Refinement (proactive) - continually improve a
the end goal is still the same. process that isn't broken or the continuous
pursuit of perfection.
 It was during the 1920’s when quality management  Renovate - being innovative and creative to
systems, as we know them today, started to surface. improve quality.
The focus of quality management was on the end  Reinvention - recreating something or starting
product, it was the first time that statistical theory over with a clean state.
was applied to product quality control.
William Edwards Deming  This fishbone diagram variation is most commonly
 Is widely acknowledged as the leading management use in manufacturing and allows to organize
thinker in the field of quality. He was a statistician potential causes of a problem into these categories:
and business consultant whose methods helped Man, Materials, Machine, Methods, Measurements
hasten Japan's recovery after the Second World War and Environment.
and beyond.
In a few cases, two more categories are include:
 It was during the 1940’s that Japan caught wind of Management/Money and Maintenance.
Total Quality Management. At that time, Japanese Kaoru Ishikawa is best known for the development of the
products were considered poor quality imitations. concept of the fishbone diagram, which is also known as
Hearing about the success of quality management in the “Ishikawa diagram “
the west, Japan employed the assistance of quality
management experts like Deming and Juran. Material Measurement Machine
Cause Cause Cause
Little did the Western culture know at that time, Japan Cause Cause Cause
would soon push the envelope and set new standards in
Cause Cause Cause
TQM
Cause Cause Cause
Deming Chain Reaction
Improve Quality >> Costs Decrease (Because of less Method Environment People
rework, fewer mistakes, fewer delays, snags, better use
of machine-time and materials) >> Productivity
Improves >> Capture the market (with better quality CHAPTER 2
and lower price) >> Stay in Business >> Provide jobs
and more jobs Forecasting

Philip Bayard Crosby What is Forecasting?

 "Phil" Crosby was a businessman and author who
contributed to management theory and quality  Forecasts are basic input in the decision processes of
management practices. operations management because they provide
information on future demand. The primary goal of
 In 1979, based on all the experience he had acquired operations management is to match supply to
over the years, he decided to found Philip Crosby demand.
Associates (PCA) based in Winter Park, Florida. PCA
generated many admirers and, in short time, several  Having a forecast of demand is essential for
companies like GM, Chrysler, Motorola, Xerox, and determining how much capacity or supply will be
hundreds of corporations around the world came to needed to meet the demand.
PCA and Crosby to learn about Quality Management
and implement it.  For instance, operations need to know what capacity
"Quality is free. It's not a gift, but it's free. The will be needed to make staffing and equipment
'unquality' things are what cost money." decisions, budgets must be prepared, purchasing
needs information for ordering from suppliers, and
The 14 Steps to Quality Improvement supply chain partners need to make their plans.

Step 1: Management Commitment Forecast

Step 2: Quality Improvement Teams  Is a statement about the future value of a variable of
Step 3: Measure Processes interest, such as demand. Or simply, the prediction
Step 4: Cost of Quality about the future.
Step 5: Quality Awareness
Step 6: Correct Problem Two important aspects of forecast:
Step 7: Monitor Progress
Step 8: Train Supervisors  The expected level of demand
Step 9: Zero Defects Day  The degree or accuracy that can be assigned to a
Step 10: Establish Improvement Goals forecast.
Step 11: Remove Fear
Step 12: Recognize  Forecasts can be Short range (e.g. an hour, day, week,
Step 13: Quality Councils or month), or Long range (e.g., the next six months,
Step 14: Repeat the Cycle the next year, the next five years, or the life of a
product or service).

Kaoru Ishikawa Features Common to all Forecasts

 Kaoru Ishikawa is considered as the Father or a. Assumes that the same underlying casual system
Japanese Quality. He was a Japanese professor, that existed in the past will continue to exist in the
advisor and motivator with respect to the innovative future.
developments within the field of quality b. It's not perfect; actual results differ from predicted
management. The Fishbone diagram identifies values due to randomness.
numerous potential causes for an effect or problem. c. Forecasts is more accurate for groups than
individuals.
d. Forecast accuracy decreases as time horizon increase.
 Elements of a Good Forecast 4. Select a forecasting technique.
5. Make the forecast.
A properly prepared forecast should fulfill certain 6. Monitor the forecast errors. The forecast errors
requirements: should be monitored to determine if the forecast is
performing in a satisfactory manner. If it is not,
I. The forecast should be timely. Usually, a certain amount reexamine the method. assumptions, validity of data.
of time is needed to respond to the information and so on: modify as needed: and prepare a revised
contained in a forecast. For example, capacity cannot forecast.
be expanded over-night, nor can inventory levels be
changed immediately. Hence, the forecasting horizon Note too that additional action may be necessary. For
must cover the time necessary to implement possible example, if demand was much less than the forecast, an
changes. action such as a price reduction or a promotion may be
needed. Con-versely, if demand was much more than
II. The forecast should be accurate, and the degree of predicted, increased output may be advantageous. That
accuracy should be stated. This will enable users to may involve working overtime, outsourcing, or taking
plan for possible errors and will provide a basis for other measures.
comparing alternative forecasts.
OVERLY OPTIMISTIC FORECASTS CAN BE BAD NEWS
III. The forecast should be reliable; it should work
consistently. A technique that sometimes provides a  Overly optimistic forecasts by retail store buyers can
good forecast and sometimes a poor one will leave easily lead retailers to over order, resulting in
users with the uneasy feeling that they may get burned bloated inventories.
every time a new forecast is issued.
 When that happens, there is pressure on stores to
IV. The forecast should be expressed in meaningful units. cut prices in order to move the excess merchandise.
Financial planners need to know how many dollars will Although customers delight in these markdowns,
be needed, production planners need to know how retailer profits generally suffer.
many units will be needed, and schedulers need to _______________________________________________
know what machines and skills will be required. The
choice of units depends on user needs. CHAPTER 3
Product and Service Design
V. The forecast should be in writing. Although this will not
guarantee that all concerned are using the same Objectives of Product & Service Design
information, it will at least increase the likelihood of it.
In addition, a written forecast will permit an objective a. Be competitive by introducing new products.
basis for evaluating the forecast once actual results are b. Translate customer wants and needs into a product.
in. c. Satisfy the customer while making a reasonable
profit.
VI. The forecasting technique should be simple to d. Other considerations include:
understand and use. Users often lack confidence in  Development time and cost
forecasts based on sophisticated techniques; they do  Product or service cost
not understand either the circumstances in which the  Product or service quality
techniques are appropriate or the limitations of the  Design for operations
techniques. Misuse of techniques is an obvious
consequence. Not surprisingly, fairly simple forecasting Methods of Generating Ideas
techniques enjoy widespread popularity because users Ideation Techniques
are more comfortable working with them.
Brainstorming
VII. The forecast should be cost-effective: The benefits  Nothing beats the classic form of ideation, the
should outweigh the costs. brainstorming. This is the process of generating wild
ideas in one session. The ideas will be verbally stated
Basic 6 steps in Forecasting during the group session.

1. Determine the purpose of the forecast. How will it be Brainwriting

used and when will it be needed? This step will provide  All participants would have to write their ideas first
an indication of the level of detail required in the fore- on a piece of paper. The participant will write her
cast, the amount of resources (personnel, computer ideas on a piece of paper before passing it on to
time. dollars) that can be justified, and the level of someone else. Then the next person will read her
accuracy necessary. idea and would add onto it. The process will
continue until all participants have been able to
2. Establish a time horizon. The forecast must indicate a write their idea on the piece of paper. After
time interval. keeping in mind that accuracy decreases collecting all ideas, that’s the time that the
as the time horizon increases. discussion will start.

3. Obtain, clean, and analyze appropriate data. Obtaining Bodystorming

the data can involve significant effort. Once obtained,  Refers to ideas that come to your mind by physically
the data may need to be "cleaned" to get rid of outliers experiencing a situation resembling your problem
and obviously incorrect data before analysis. using people, props, or a digital prototype.
Poetry
 Is the process of combining random elements to Aspects of Servicescape
make up one new idea.
 Spatial Layout and Functionality
Force Fit  Signs, Symbols, and Artifacts
 Is simply the process of combining two ideas into  Ambient Conditions
one.
Spatial Layout and Functionality
Borrowing  is concerned with how furnishings, equipment, and
 The process of creating a new product using the machinery are arranged, their shape and size, and, of
same structure of an existing product or item, but course, the spatial relationship that exists between
this time, he will create it for a totally different them. Functionality refers to an item's ability to
purpose. provide customer satisfaction.

The Journey of an idea Signs, Symbols, and Artifacts

Confusion, Chaos > Validation > Minimum > Traction  In a physical environment, the sign is one of the
(Time & Money) YAY! Viable Product Wooohoo! most explicit signals that can communicate directly
with a customer. These are prominently displayed on
Where can you get new ideas for your business? both the exterior and interior of a building and serve
Sources of New Ideas as communicators.
 Consumers

 Government  The signs can be used as labels, such as the name of

 Distribution Channels a department or company, for directional purposes,
 Research and Development such as an entrance, or as rules for specific behavior,
 Existing Products and Services such as no smoking. Symbols and artifacts can also
be used to give the reader an implicit cue.
Product Development Process
Ambient Conditions
What's in there?  Ambient conditions include an environment's
PRODUCT DEVELOPMENT background conditions such as color, noise, music,
 Product development is the process of building a sound, lighting, and so on. These are significant
new product, from ideation all the way through factors because they affect one or more of our five
launch. senses and can alter a person's mindset and
perception.
 Product development begins with those initial
brainstorming sessions, when you’re just discussing a Importance of Servicescape
budding idea. From there, the process is creative but  When the product value of two companies is the
strategic, and you may have seen it done in a million same, what distinguishes them is their physical
different ways. environment.

The 5 Frameworks  A person will feel at ease in one location but not in
1. Idea stage another. This could be the deciding factor for him.
2. Concept stage For example, if you have the choice between having
3. Test marketing stage dinner in a plain room with only basic amenities and
4. Prototyping stage another place with a soothing ambiance, you will
5. Commercialization always choose the latter.
_______________________________________________
CHAPTER 4

Servicescape and The 8 Deadly Waste in Operations

Management

Servicescape
 Is defined as the physical environment in which a
service can be performed. It aids in the analysis and
identification of the impact of a favorable
environment on the service-based industry.
 Since it's a physical environment, this should be one
of the easiest factors to (quality) control as a service
industry.

What do you usually notice in a store?

 Advertisment
 Location
 Signages
 Parking Lot
 Store Condition
 Employees
 The 8 Deadly Wastes in Operation and Quality Excess in supply. When the supply is more than the actual
needed supply for the production. The cause can be
 In Operations Management, we learn techniques, inventory being tracked poorly.
strategies, and methodologies for us to reduce the 8
Deadly Waste in Operations. Anything collecting dust or stored in obscure,
infrequently utilized corners is probably inventory in
 This refers to the wasteful activities or process that excess that soon will be obsolete. Not to mention the
either the customer is not willing to pay for or those waste of storage space as well.
that are unnecessary for the creation of customer
satisfaction. This is a risk because the raw materials quality might
decrease due to long storage.
For example:
Imagine if a customer orders a Coke with no ice and the 7. Motion Waste
staff prepared the drink with ice. The crew had to dump Movement of employees and equipment that does not
the ice and refill the glass. wasted ice add value to your product or service such as walking to
and from the copier, excessive effort or process steps like
 wasted time for the crew because of the an operator reaching far above his head, or the act of
 additional time for the preparation getting your print out from another room.
 wasted time for the guest because he needs
 to wait for a few more minutes.

1. Defects and Scrap

Creating and manufacturing defective products just to be 8. Employee Unutilized Skills
revoked, repaired or scrapped. In short, creation of sub- Not using people's abilities, skills, and experience to the
standard products. fullest extent. Having employees with good ideas and
experience is valuable, and the worst thing to do is to
 wasted scraps/ materials, wasted labor energy ignore it completely.
 Also, imagine if the defective product has been sent
out to customers already, this will surely result to Employees are the best source if there's something
complaint and negative experience. wrong with the process. Listening to them does not only
do good for the business but it will also makes the
2. Overproduction employee feel valued and appreciated.
The process of producing more than the necessary.
Some people doesn't take it as a waste - but it is. The 8 Deadly Waste in operations can be easily
Overproduction or creating more than what is remembered using the mnemonic.
intended is also wastes.
D. Deffective
 The next problem will be on how to sell or dispose O. Overproduction
the extra products. Business usually resorts to selling W. Waiting
it in a much lower price. N. Non-Value added process
T. Transportation
3. Waiting I. Inventory
Idle time before the next process begins. It can be caused M. Motion Waste
by the lack of raw materials or by an unbalanced E. Employees Unutilized Skills
workload among employees and shifts.

4. Non-Value Added Processing

Refers to additional material or performing activities that
add no value to the product or service from the
customer's perspective. It can also refers to manipulating
and changing final product/ service above and beyond
what the customer is willing to pay for.

While sometimes we can try to make products even

better the customer expects, you have to check first if it's
something that the customer will be willing to pay.

5. Transportation
Refers to the process of moving the material from one
place to another. Transportation involves the touching,
moving, recovering of raw materials, tools, finished goods,
etc. for use at a different stages of a process.

This is the reason why as much as possible, it is better to

source our raw materials locally instead of international
as it will save us time and money.
6. Inventory