PRINCIPLES OF OPERATIONS AND QUALITY

MANAGEMENT
 Operations Management
Learning Outcomes

 Evaluate the management of operations

 Analyse problems associated with quality in organisations

 Evaluate Quality Assurance and Quality Control concepts

 Identify difference between quality issues associated products and

services
 The Operations function of the
organisation is…

• The arrangement of resources devoted to the production of its goods and services

 or

• The process of transforming inputs into useful outputs and thereby adding value to some
entity; this constitutes the primary function of virtually every organisation

 Operations Management concerns the activities, decisions and responsibilities of those

managers who have a particular responsibility for managing some or all of the resources
which comprise the operations function
A background to the management of
operations

‘What the company does’.

Various kinds of Useful

Inputs: raw materials, money Outputs:Goods,
People, machine, time etc.
services

Performing
Operations: manufacturing,
Assembly, packaging
 Product
Marketing Accounts Development Operations
Operations in context
Manage appeals Retranslate Conduct Weddings
Church Call on newcomers administer give as scriptures, set up and Funerals
you earn tax relief bible classes

Prepare salad,
Advertise on TV. Pay suppliers, count Design new burgers relishes, burgers,
McDonalds Place money off cash, prepare and healthier ranges rolls, make up
coupons in local budgets and happy meal boxes,
press costings fill straw dispenser

Pay raw material Assemble furniture

Furniture suppliers and staff. Design new (to order) and
Manufacturer Sell to stores Prepare budgets and furniture to follow deliver to store or
costings current trends customer

Prepare project Change delivery Design recruitment

reports, pay mechanism to campaign, write
advertising support new advertising copy,
Payne Associates Encourage client agencies, prepare technologies (job approve adverts,
Limited referral management reports sites, remote interview
on profitability interviewing, candidates, prepare
internet based and test shortlist
Operations: contemporary thinking
 Porter’s Value Chain

A supply chain is:

Network of facilities and distribution

options for:
getting inputs (typically materials) processing
them into intermediate and finished products/services
to customers
Porter’s Value Chain

Firm infrastructure
Technology Development

MA
Human Resource Management

RG
N I
Procurement

Inbound

N
Operations Outbound Marketing

I
RG
Service
logistics and Sales

MA
logistics
Porter’s Value Chain

 Inbound logistics- raw material handling, warehousing, receipt, stock control

 Operations – machining assembling testing,

 Outbound logistics – warehousing, distribution

 Marketing and sales – advertising, pricing, promotion

 Service- install, repair

Porter’s Value Chain
 Support activities:

 Procurement- refers to the function of purchasing inputs used in the firm’s value chain, not to the
purchased inputs themselves.

 Human resource management – Human resources management consists of activities involved in the
recruiting, hiring, training, development, and compensation of all types of personnel; labour
relations activities; and development of knowledge-based skills Recruitment, selection, training,
reward polices

 Technology development- The activities, costs, and assets relating to product R&D, process design
improvement, equipment design, computer software development, telecommunications systems,
computer-assisted design and engineering, new database capabilities, and development of
computerized support systems.

 Firm infrastructure- systems, structures and routines

PRINCIPLES OF QUALITY MANAGEMENT
 Quality in organisations

 ‘Fitness for use’ (Juran)

 ‘…the totality of features of a product or service that meets the stated or

implied needs of the customer.’ (ISO 9000)

 ‘Quality, meaning getting everyone to do what they have agreed to do and do

it right the first time, is the skeletal structure of an organisation, finance is the
nourishment, and relationships the soul.’
(Crosby)
Operations in services & manufacturing

Service Overlap Manufacturing

Simultaneous production Goods stored for later

and consumption consumption

Customised output Standardised output

Customer participation Technical core buffered

from customer
Intangible output Tangible output

Labour intensive Capital intensive

Examples Examples

Airlines Fast food outlets Drinks

Hotels Banks Steel

Consultancy Cosmetics Cars

Teaching/training Estate agents Mining

Health Retailing
Quality gurus….
 W. Edward Denning
 Statistician – management should concentrate on setting and continuously
improving system
 Best feedback is from people who actually do the jobs
 Unlike scientific methods, involve managers in setting standards and methods
 Need to train staff in statistical process control and work analysis
 Joseph M. Juran
 Worked in Hawthorne electric plan 1920s Chicago
 Taught Japanese Pareto Principle
 80% of quality problems are due to systems
 Identify all problems, identify key ones that will provide most benefits
 Introduced the idea of internal customers
 Philip P. Crosby
 Crosby (engineer) introduced the idea of zero defects
 Management should measure quality by cost of getting it wrong
 Quality is defined as conformance to customer specs
 Quality is about prevention not detection
 Problems of quality in service sector

Services are Services are

Intangible and difficult Consumed and
to measure cannot be stored

Customer evaluate
More Than just
Customers participate the product
directly in the delivery e.g. also
process face to face
interaction
T otal – Everyone linked to the organisation
(staff, customers, suppliers) is
involved
in this continuous improvement

Q uality – The quality requirements of the

customer are achieved

M anagement – Senior managers must be

fully committed if all other parties are
to
be committed to quality
Total Quality Management (TQM)

‘…an all encompassing organisational philosophy that

encourages and fosters continuous improvement
throughout the whole organisation.’

Prevention of errors and Total quality in design of

defects before they occur products, services and
systems