Operation

Management and
Total Quality
Management
PREPARED BY: ENGR. D. LABRO
"Operations management is the
art of making sure that business
processes run as efficiently and
effectively as possible."

- UNKNOWN
Concept of Operation Management
Operations Management Operations management is the collection of tasks that converts inputs
into outputs to produce value in the form of goods and services. It is the process of merging and
changing different resources employed in the organization's production/operations subsystem
into value-added products or services in a regulated way in accordance with organizational
policies.
Operation Service and Manufacturing
Total Quality Management
Total Quality Management (TQM) is a management approach focused on continuous improvement in
all aspects of an organization. It involves every employee, from top management to frontline workers,
in the pursuit of quality in products, services, and processes
Activity #1(Group)
1. Create Business / Company Name
2. Create Mission and Vision
3. Select a product and sell it
Thank you!!!
Productivity – Module 2
PREPARED BY: ENGR. D. LABRO
Productivity
Productivity
Components of the productivity formula
Here’s what each component means:

1. Output: This refers to the goods or services generated, such as the number of products
produced or the amount of sales revenue generated.

2. Input: These are aspects that directly influence outputs, such as the amount of time spent on
tasks or resources dedicated to a project.

3. Productivity: This tells you how efficiently and effectively your workforce is delivering results
over a set period.
Schematic Production System
Productivity Computation
Productivity Computation
Productivity Computation
Productivity Computation
Productivity Computation
Productivity Computation
6.
Example:
Scenario:
A company, “Jaraya-Laqui Manufacturing," produces 10,000 units of a product in a month. The company
uses the following resources:

•Labor: 2,000 hours of work

•Capital: $50,000 worth of machinery
•Materials: 5,000 kilograms of raw materials costing $25,000
•Energy: 10,000 kilowatt-hours (kWh) of electricity costing $1,500

a. What is the Labor productivity?

b. What is Capital Productivity?
c. What is Material Productivity?
Example:
Example:
Example:
Thank you!!!
Operations Strategy in a
Global Environment –
Module 3
PREPARED BY: ENGR. D. LABRO
 Operations Strategy
➢ The set of decision that are warranted in the operational processes to support the competitive
of the business.

To develop organizational strategies at three level of operation:

CORPORATE STRATEGY LEVEL BUSINESS STRATEGY LEVEL FUNCTIONAL STRATEGY LEVEL
It involves decisions that affects the entire It addresses how to achieve competitive (PRODUCT OR SERVICES)
organization including the overall scope advantage, whether through cost These strategies are concerned with how to
and direction of the company. leadership, differentiation, or focusing on a implement the business-level strategies
niche market. effectively through the optimization of
Example: resources and processes within each
function

Electronics Industries
Financial Services
Chemicals Industries
Machinery and Heavy Industries
Operations Strategy in a Global Environment
Globalizing operations management is a strategic decision made by organizations to
enhance their competitiveness, efficiency, and overall performance on an international scale

Here are some key reasons why companies choose to globalize their operations management:

➢ Improve the Supply Chain

➢ Cost Reduction
➢ Improve operations
➢ Understand markets
➢ Improve products
➢ Global Brand Presence
➢ Diversification of Risk
 Example of Global Strategies
1. Global Standardization Strategy: 2. Localization Strategy:

Approach: McDonald’s follows a global Approach: Nestlé adapts its products and marketing
standardization strategy by offering a consistent strategies to suit local preferences and cultural tastes. For
menu and experience across its restaurants example, it offers unique flavors and products tailored to
worldwide. While it adapts some menu items to regional markets, such as “Masala Maggi” noodles in India.
local tastes, the core offerings and brand
experience remain uniform.
 Example of Global Strategies
3. Transnational Strategy: 4. International Strategy:

Approach: Unilever combines global efficiency with Approach: Apple employs an international strategy by leveraging its
local responsiveness. It standardizes certain aspects strong global brand and standardized product offerings while also
of its operations for efficiency while also adapting adapting certain aspects of its marketing and distribution to different
products and marketing strategies to meet local regions. For instance, Apple’s products are consistent worldwide, but
needs. For instance, it offers different variants of its the company adapts its promotional strategies to fit regional
personal care products tailored to local consumer markets.
preferences.
 Example of Global Strategies
5. Global Diversification Strategy: 6. Global Alliances and Partnerships:

Approach: GE uses a global diversification strategy by Approach: Starbucks formed a global alliance with PepsiCo to
expanding into various industries and markets around distribute its ready-to-drink coffee beverages in international
the world, including aviation, healthcare, and markets. This partnership leverages PepsiCo’s distribution network
renewable energy. This approach helps GE spread risk and expertise in the beverage industry.
and leverage opportunities in different sectors.
 Example of Global Strategies
7. Emerging Market Focus Strategy: 8. Global Niche Strategy:

Approach: Huawei focuses heavily on emerging Approach: Tesla focuses on a global niche strategy by positioning
markets, particularly in Africa and Asia, where it itself as a leader in high-end electric vehicles (EVs) and sustainable
provides telecommunications infrastructure and energy solutions. Its products and innovations cater to a specific
consumer electronics. The company tailors its segment of environmentally conscious consumers worldwide.
products and services to meet the specific needs of
these markets.
Cultural and Ethical Issues

▪ Cultures can be quite different

▪ Attitudes can be quiets different towards

1. Compliance with Local Laws and Regulations

2. Fair Labor Practices
3. Environmental Responsibility
4. Corruption and Bribery
5. Consumer Privacy and Data Protection
Developing Mission and Strategy
Thank you!!!
Managing Quality and
processes– Module 4
PREPARED BY: ENGR. D. LABRO
What is Quality Management

Total Quality Management means that the

organization’s culture is defined by and
supports the constant attainment of
customer satisfaction through on integrated
system tools, techniques, and training.

This involves the continuous improvement

of organizational processes, resulting in
high quality products and services.
4 key components or Quality Process:
Quality Planning – Identifying standards and setting
objectives to meet them.

Quality Assurance – Ensuring that processes are in

place to prevent defects.

Quality Control – Monitoring specific outcomes to

ensure that products/services meet the standards.

Quality Improvement – Continuous efforts to

enhance all aspects of the production and delivery
process.
8 Muda or Waste
 Dimensions of Quality
➢ Are used at strategic level to analyze the
product or service quality characteristic.

They were first described by

Harvard Business school Professor David A.
Garvin in 1987
Thank you!!!
Continuous Process
Improvement,
Benchmarking– Module 5
PREPARED BY: ENGR. D. LABRO
 What is Continuous Process Improvement
➢ It is the continuous analysis of performance to identify opportunities for
improvement and implement incremental changes to processes,
products, and personnel. By refining these processes, your company
can save time and enhance product quality.

➢ CPI refers to an ongoing, systematic effort to enhance processes, products,

or services over time. The goal is to reduce waste, improve efficiency, and
adapt to changes in business environments. Many businesses adopt CPI
frameworks like Lean, Six Sigma, and Kaizen to drive these improvements.

- Max Rehkopf (Atlassian)

- Womack, J.P., & Jones, D.T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation. Simon and Schuster.
PDCA Cycle: Plan – Do – Check - Act
➢ It is a systematic process for gaining valuable
learning and knowledge for the continual
improvement of a product, process, or service.

- William Edward Demings (Quality Control Method in

Industrial Production)
Frameworks:
Lean Manufacturing: Originating from Toyota, Lean focuses on minimizing waste without sacrificing productivity.
Key tools:

The Just-In-Time (JIT) inventory system aligns raw

Value stream mapping (VSM) is defined as a lean tool The 5S methodology is a system for
material orders with production schedules, helping
that employs a flowchart documenting every step in organizing workplaces to improve
companies improve efficiency and reduce waste by
the process. Many lean practitioners see VSM as a efficiency, reduce waste and increase
receiving goods only when needed, thus lowering
fundamental tool to identify waste, reduce process safety.
inventory costs. This method depends on precise
cycle times, and implement process improvement.
demand forecasting.
Frameworks:
Six Sigma utilizes a variety of tools and techniques to improve processes and reduce defects.
Key tools:

DMAIC is an acronym that stands for Define, Fishbone Diagram (Ishikawa) - A cause-and- Pareto Chart: A bar graph that displays the most
Measure, Analyze, Improve, and Control. It effect diagram that helps identify potential significant factors in a dataset, based on the
represents the five phases that make up the root causes of a problem by categorizing 80/20 rule, to focus improvement efforts on the
process: Define the problem, improvement them into different groups. most impactful areas.
activity, opportunity for improvement, the
project goals, and customer (internal and
external) requirements.
Frameworks:
Kaizen - This approach emphasizes continuous, incremental improvements and involves all employees. It is
often seen as a cultural practice rather than a structured framework. Kaizen encourages employees to
suggest small improvements regularly.
Key tools:

Gemba Walks -
Management practice of going to
the "gemba" (the real place) to
observe processes, engage with
employees, and understand
challenges firsthand.
 What is Benchmarking?
➢ Benchmarking is a systematic process where a business measures its success
against competitors to discover how to improve performance. The goal is to identify gaps, learn
from the best, and make necessary improvements to achieve superior performance.

Watson, G. H. (1993). Strategic Benchmarking: How to Rate Your Company's Performance Against the World's Best. Wiley.
 Types of Benchmarking?
1. Internal Benchmarking: Involves comparing practices within different departments or divisions of the same organization. For
instance, if one division is performing better than another in terms of quality control, the less efficient division may adopt the
successful methods.

Example:

Comparing Performance Across Plants: Coca-Cola gathers data from VS

its high-performing plants, such as the bottling plant in Atlanta, USA,
and compares it with other plants, such as the one in São Paulo,
Brazil. The goal is to assess performance on metrics like water
usage efficiency and energy consumption.

Watson, G. H. (1993). Strategic Benchmarking: How to Rate Your Company's Performance Against the World's Best. Wiley.
 Types of Benchmarking?
2. Competitive Benchmarking: A company compares itself against its direct competitors to gain a competitive advantage by adopting
superior practices. This is common in industries like technology, automotive, and consumer goods, where companies constantly
monitor competitors' pricing, features, and service levels.
Example:

Apple Inc. and Samsung have long been

rivals in the smartphone industry. Both
companies frequently engage in competitive
benchmarking to gain an edge in innovation,
product features, customer service, and
marketing strategies.

Watson, G. H. (1993). Strategic Benchmarking: How to Rate Your Company's Performance Against the World's Best. Wiley.
 Types of Benchmarking?
3. Functional Benchmarking: Examines similar functions across different industries. For example, a company may benchmark its
logistics process against that of a company in a completely different industry but one known for excellence in logistics.

Example:

Selecting Benchmarking Partners: DHL looked at

companies outside its immediate competition to
identify best practices. Key benchmarking partners
included:

•Amazon: Renowned for its highly efficient

warehousing and fulfillment center operations,
particularly in last-mile delivery.

•Walmart: Known for its advanced supply chain

management practices and inventory control systems.

Watson, G. H. (1993). Strategic Benchmarking: How to Rate Your Company's Performance Against the World's Best. Wiley.
 What is Benchmarking?
➢ Benchmarking is a systematic
process where a business
measures its success
against competitors to discover how
to improve performance. The goal is
to identify gaps, learn from the
best, and make necessary
improvements to achieve superior
performance.

Watson, G. H. (1993). Strategic Benchmarking: How to Rate Your Company's Performance Against the World's Best. Wiley.
 Benefits CPI and Benchmarking?
• Improved Efficiency: CPI tools help identify and eliminate inefficiencies, while benchmarking
provides external standards to measure progress.

• Higher Quality: Six Sigma, for example, focuses on reducing defects, while benchmarking can help
compare quality metrics with industry leaders.

• Cost Savings: By improving processes and reducing waste, CPI helps lower operational costs, and
benchmarking ensures these improvements are in line with industry standards.

• Competitive Advantage: Benchmarking ensures that companies are not only meeting internal
performance metrics but also keeping up with or exceeding industry standards.

Watson, G. H. (1993). Strategic Benchmarking: How to Rate Your Company's Performance Against the World's Best. Wiley.
Thank you!!!
Statistical Process
Control Tools –
Module 6
PREPARED BY: ENGR. D. LABRO
Introduction to Statistical Process Control (SPC)
➢ Statistical Process Control (SPC) is a method used to monitor, control, and improve processes through the use of
statistical methods.
➢ It helps identify variations in processes and ensures that the processes operate at their full potential.
Key SPC Tools:
 How to Use SPC Tools in
Accounting
Control Charts:

➢ To track trends or anomalies in monthly accounting data such as revenue and expenses. The chart
helps to identify any deviations from expected trends, which can indicate issues like data entry
mistakes, errors in accounting, or unexpected fluctuations in business performance.
SPC Rules
Thank you!!!