Operations Management Reviewer products, processes and services

against specific requirements to ensure

Lesson 1: Fundamentals of Quality and Total that each element adhered to set
Quality Management standards and guidelines
Customer Satisfaction • Companies started to experience
difficulties in following through with
• Utmost customer satisfaction is a quality control standards. It became
primary need for a product (whether its evident that there was a great need
goods or service). It is therefore for change and development.
necessary for products and services to • Change and development were
meet or exceed customer brought forth during the 1940’s by
expectations. industry leaders and experts like
• Marketing/sales have a great impact Deming, Dodge, Juran and Kawasaki.
on the opinions of customers and their This would be the beginning of Total
perception of quality; regardless of the Quality Management as we know it
manufacturer's perception of quality today.
for that product/service. • Inspections were now carried out by
• this widens the gap between the production personnel. They were
operations/manufacturing team and responsible for inspections during
the sales and marketing team. specific production intervals. This would
• Customer expectations should be change the focus from simply
fulfilled by the quality of the product or inspecting the end product to actually
service. preventing end product problems
through early detection on the
Quality production line.
• is the totality of features and The Great Philosophers of Quality:
characteristics of a product or service
that bear on its ability to satisfy given William Edwards
needs.
• “The quality of the experience will be ❖ is widely acknowledged as the leading
remembered long after the price has management thinker in the field of
been forgotten.” quality. He was a statistician and
business consultant whose methods
Total Quality Management History: helped hasten Japan's recovery after
the Second World War and beyond.
• The history of quality management can ❖ It was during the 1940’s that Japan
be traced all the way back to The caught wind of Total Quality
Middle Ages. Work completed by Management. At that time, Japanese
journeymen and apprentices were products were considered poor quality
evaluated and inspected by the skilled imitations. Hearing about the success
worker to ensure that quality standards of quality management in the west,
were met in all aspects of the finished Japan employed the assistance of
product, ensuring satisfaction of the quality management experts like
buyer. And while the history of quality Deming and Juran.
management has gone through a ❖ Little did the Western culture know at
number of changes since that time, that time, Japan would soon push the
the end goal is still the same. envelope and set new standards in
• It was during the 1920’s when quality TQM.
management systems, as we know
them today, started to surface. The
focus of quality management was on
the end product, it was the first time
that statistical theory was applied to
product quality control.

• Product quality control was determined

through inspections. This involved
measuring, examining and testing the
Deming Joseph Moses Juran Kaoru Ishikawa

❖ Juran is widely regarded as the ❖ Kaoru Isikawa is considered as the

founding father of many of the key Father or Japanese Quality. He was a
quality management programs used Japanese professor, advisor and
by organizations today. motivator with respect to the
❖ The Juran Trilogy, also called Quality innovative developments within the
Trilogy, was presented by Dr. Joseph field of quality management.
M. Juran in 1986 as a means to reduce ❖ Kaoru Ishikawa is best known for the
poor quality. development of the concept of the
❖ In essence, the Juran Trilogy is a fishbone diagram, which is also known
universal way of thinking about as the “Ishikawa diagram“
quality—it fits all functions, all levels,
and all product and service lines. The
underlying concept is that managing
for quality consists of three universal
processes: Quality Planning (Quality by
Design) Quality Improvement (Lean Six
Sigma) Quality Control (Process
Control & Regulatory)

Lesson 2: Forecasting

Forecast

• Basic input in the decision processes of

operations management because
they provide information on future
demand.
• Is a statement about the future value
Philip Bayard Crosby of a variable of interest, such as
demand. Or simply, the prediction
❖ "Phil" Crosby was a businessman and
about the future.
author who contributed to
• Forecasts can be Short range (e.g. an
management theory and quality
hour, day, week, or month), or Long
management practices.
range (e.g., the next six months, the
❖ In 1979, based on all the experience
next year, the next five years, or the life
he had acquired over the years, he
of a product or service)
decided to found Philip Crosby
Associates (PCA) based in Winter Park, Two important aspects of forecast:
Florida. PCA generated many admirers
and, in short time, several companies ✓ The expected level of demand.
like GM, Chrysler, Motorola, Xerox, and ✓ The degree or accuracy that can be
hundreds of corporations around the assigned to a forecast.
world came to PCA and Crosby to
The primary goal of operations management is
learn about Quality Management and
to match supply to demand.
implement it.
❖ Quality is free. It's not a gift, but it's free. Having a forecast of demand is essential for
The 'unquality' things are what cost determining how much capacity or supply will
money." be needed to meet the demand.

For instance, operations need to know what

capacity will be needed to make staffing and
equipment decisions, budgets must be
prepared, purchasing needs information for
ordering from suppliers, and supply chain
partners need to make their plans.
Features Common to all Forecasts: 6. Simple to understand and use- The
forecasting technique should be
1. Assumes that the same underlying simple to understand and use. Users
casual system that existed in the past often lack confidence in forecasts
will continue to exist in the future. based on sophisticated techniques;
2. It's not perfect; actual results differ from they do not understand either the
predicted values due to randomness. circumstances in which the techniques
3. Forecasts is more accurate for groups are appropriate or the limitations of the
than individuals. techniques. Misuse of techniques is an
4. Forecast accuracy decreases as time obvious consequence. Not surprisingly,
horizon increases. fairly simple forecasting techniques
Elements of a Good Forecast: enjoy widespread popularity because
users are more comfortable working
1. Timely- The forecast should be timely. with them.
Usually, a certain amount of time is 7. Cost effective- The forecast should be
needed to respond to the information cost-effective: The benefits should
contained in a forecast. For example, outweigh the costs.
capacity cannot be expanded over-
night, nor can inventory levels be Steps in Forecasting:
changed immediately. Hence, the 1. Determine the purpose of forecast-
forecasting horizon must cover the How will it be used and when will it be
time necessary to implement possible needed? This step will provide an
changes. indication of the level of detail
2. Accurate- The forecast should be required in the forecast. the amount of
timely. Usually, a certain amount of resources (personnel, computer time,
time is needed to respond to the dollars) that can be justified. and the
information contained in a forecast. level of accuracy necessary.
For example, capacity cannot be 2. Establish a time horizon- The forecast
expanded over-night, nor can must indicate a time interval, keeping
inventory levels be changed in mind that accuracy decreases as
immediately. Hence, the forecasting the time horizon increases.
horizon must cover the time necessary 3. Gather and analyze data- Obtaining
to implement possible changes. the data can involve significant effort.
3. Reliable- The forecast should be Once obtained. the data may need to
reliable; it should work consistently. A be "cleaned" to get rid of outliers and
technique that sometimes provides a obviously incorrect data before
good forecast and sometimes a poor analysis.
one will leave users with the uneasy 4. Select a forecasting technique
feeling that they may get burned 5. Prepare the forecast
every time a new forecast is issued. 6. Monitor the forecast- The forecast
4. Meaningful Units- The forecast should errors should be monitored to
be expressed in meaningful units. determine if the forecast is performing
Financial planners need to know how in a satisfactory manner. If it is not.
many dollars will be needed, reexamine the method. assumptions,
production planners need to know validity of data, and so on: modify as
how many units will be needed, and needed; and prepare a revised
schedulers need to know what forecast.
machines and skills will be required. The
choice of units depends on user needs. Note: additional action may be necessary.
5. Written- The forecast should be in For example, if demand was much less
writing. Although this will not guarantee than the forecast. an action such as a
that all concerned are using the same price reduction or a promotion may be
information, it will at least increase the needed. Conversely, if demand was much
likelihood of it. In addition, a written more than predicted. increased output
forecast will permit an objective basis may be advantageous That may involve
for evaluating the forecast once working overtime. outsourcing. or taking
actual results are in. other measures.
 Forecasts Based on Time-Series Data: ideas, that’s the time that the
discussion will start.
Trend ▪ Bodystorming- Refers to ideas that
❖ long-term upward or downward come to your mind by physically
movement in the data. experiencing a situation resembling
❖ ex. population shifts, changing your problem using people, props, or a
incomes, and cultural changes digital prototype.
▪ Force Fit- Is simply the process of
Seasonality combining two ideas into one.
▪ Poetry- Is the process of combining
❖ short-term fairly regular variations random elements to make up one new
related to factors such as calendar or idea.
time of day. ▪ Borrowing- The process of creating a
Cycles new product using the same structure
of an existing product or item, but this
❖ Wavelike variations of more than one time, he will create it for a totally
year's duration. different purpose.
❖ Often related to a variety of
economic, political, and even Journey of an Idea:
agricultural condition. • Confusion, Chaos
OVERLY OPTIMISTIC FORECASTS CAN BE “BAD • Validation
NEWS” • Minimum viable product
• Traction
▪ Overly optimistic forecasts by retail
store buyers can easily lead retailers to Sources of New Ideas:
overorder, resulting in bloated
• Consumers
inventories. When that happens, there
• Government
is pressure on stores to cut prices in
• Distribution Channels
order to move the excess
• Research and Development
merchandise. Although customers
• Existing Products and Services
delight in these markdowns, retailer
profits generally suffer. Factors Influencing Market Opportunities:
Benchmarking- Comparison • Economic Change
• Sociological and
• Demographic change
Lesson 3: Product and Service Design • Technological change
• Political Change
Methods of Generating Ideas
Product Development : The 5 Frameworks:
Ideation Techniques:
• Idea stage
▪ Brainstorming- Nothing beats the • Concept stage
classic form of ideation, the • Test marketing stage
brainstorming. This is the process of • Prototyping stage
generating wild ideas in one session. • Commercialization
The ideas will be verbally stated during
the group session. Physical Store/Brick& Mortar:
▪ Brainwriting- All participants would
• Social Media
have to write their ideas first on a piece
• Website
of paper. The participant will write her
• E-Commerce
ideas on a piece of paper before
passing it on to someone else. Then the Product Life Cycle:
next person will read her idea and
would add onto it. The process will 1. Introduction
continue until all participants have 2. Growth
been able to write their idea on the 3. Maturity
piece of paper. After collecting all 4. Decline