T310 BA606

BA 606 Operation Management

T310
MS. Annie

Name: Antineo Yong Gee

Student ID: 020188100011

 BA 606 Operation Management T310

TABLE OF CONTENTS Page

1 INTRODUCTION 3
1.1 Authorization 3
1.2 Limitations 3
1.3 Scope Of The Report 3
2 Company Background 4
3 Total Quality Management (TQM) 5
4 TQM Principal 10
5 The Ten Elements of TQM 14
6 Business Process Re-engineering 16
7 Summary 18
9 List of references 19

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1. Introduction
1.1 Authorization

The following report was commissioned for Mr. John executive vice president of

ABC Equipment Malaysia Sdn Bhd. Its purpose is to thoroughly analyze and address

the key issues that need to improve in ABC Company Sdn Bhd.

1.2 Limitations

The production of this report proved challenging due to time constraints and limited

resources. A longer time frame would have allowed for a more comprehensive report.

Printed materials were difficult to locate and there were sufficient human resources

working on analysis.

1.3 Scope of The Report

The information presented will firstly provide a brief background of the company, its

business environment and industry. Next, it will discuss regarding the Total Quality

Management (TQM), it will discuss the point that need to focus on and elements that

need to review. Next, discuss about Business Process Re-engineering (BPR), where

discuss about the elements and steps that need to follow to make some changes in the

company. Finally, this report will provide the summary or comment regard to TQM

and BPR

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2. Background

ABC Equipment Malaysia Sdn Bhd is a company formed by the former management

team of XYZ Commercial Refrigeration and Food Service Equipment in Malaysia.

ABC took over the complete operation of XYZ Commercial Refrigeration and Food

Service Equipment with effect from 1st Oct 1999 and become the sole distributor of

the XYZ brands in these business areas.

On May 1st 2000, key members of the former XYZ-Euroclean cleaning Equipment

Division joined ABC and established a new Cleaning Equipment Division

representing Karcher of Germany, the world’s largest and most innovative cleaning

equipment manufacturer. Majority shareholders of ABC Equipment Malaysia Sdn

Bhd are The Managing Director Mr. Lee, three other members of the management

team and two external partners with manufacturing background.

ABC Equipment’s customers belong to the hospitality, retail, manufacturing,

institutional and janitorial sectors. 

Refrigerated showcase and glass doors from Europe and Japan meet all

merchandising requirement of supermarket and convenience store customers.

European-built multi-compressor rack with latest refrigeration technology and

controls ensure safe, energy saving, environment friendly store operation.

For every task in the kitchen, we offer a product to suit your specific needs. You can

create an efficient and integrated environment for food preparation, storage and

refrigeration, cooking, distribution and ware washing.

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We provide Quality, Value for Money Products & Services to meet the diverse needs

of our customers in Hospitality, Retail, Manufacturing, Institution and other targeted

market segments - aiming for long term mutually beneficial business relationship.

3. TQM

Total Quality Management (or TQM) is a management concept coined by W.

Edwards Deming. The basis of TQM is to reduce the errors produced during the

manufacturing or service process, increase customer satisfaction, streamline supply

chain management, aim for modernization of equipment and ensure workers have the

highest level of training. One of the principal aims of TQM is to limit errors to 1 per 1

million units produced. Total Quality Management is often associated with the

development, deployment, and maintenance of organizational systems that are

required for various business processes.

The basic principles for the Total Quality Management (TQM) philosophy of doing

business are to satisfy the customer, satisfy the supplier, and continuously improve the

business processes.

Satisfy the customer

The first and major TQM principle is to satisfy the customer--the person who pays for

the product or service. Customers want to get their money's worth from a product or

service they purchase.

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Users

If the user of the product is different than the purchaser, then both the user and

customer must be satisfied, although the person who pays gets priority.

Company philosophy

A company that seeks to satisfy the customer by providing them value for what they

buy and the quality they expect will get more repeat business, referral business, and

reduced complaints and service expenses.

Some top companies not only provide quality products, but they also give extra

service to make their customers feel important and valued.

Internal customers

Within a company, a worker provides a product or service to his or her supervisors. If

the person has any influence on the wages the worker receives, that person can be

thought of as an internal customer. A worker should have the mind-set of satisfying

internal customers in order to keep his or her job and to get a raise or promotion.

Chain of customers

Often in a company, there is a chain of customers, each improving a product and

passing it along until it is finally sold to the external customer. Each worker must not

only seek to satisfy the immediate internal customer, but he or she must look up the

chain to try to satisfy the ultimate customer.

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Satisfy the supplier

A second TQM principle is to satisfy the supplier, which is the person or organization

from whom you are purchasing goods or services.

External suppliers

A company must look to satisfy their external suppliers by providing them with clear

instructions and requirements and then paying them fairly and on time.

It is only in the company's best interest that its suppliers provide it with quality goods

or services, if the company hopes to provide quality goods or services to its external

customers.

Internal suppliers

A supervisor must try to keep his or her workers happy and productive by providing

good task instructions, the tools they need to do their job and good working

conditions. The supervisor must also reward the workers with praise and good pay.

Get better work

The reason to do this is to get more productivity out of the workers, as well as to keep

the good workers. An effective supervisor with a good team of workers will certainly

satisfy his or her internal customers.

Empower workers

One area of satisfying the internal suppler is by empowering the workers. This means

to allow them to make decisions on things that they can control. This not only takes

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the burden off the supervisor, but it also motivates these internal suppliers to do better

work.

Continuous improvement

The third principle of TQM is continuous improvement. You can never be satisfied

with the method used, because there always can be improvements. Certainly, the

competition is improving, so it is very necessary to strive to keep ahead of the game.

Working smarter, not harder

Some companies have tried to improve by making employees work harder. This may

be counter-productive, especially if the process itself is flawed. For example, trying to

increase worker output on a defective machine may result in more defective parts.

Examining the source of problems and delays and then improving them is what is

needed. Often the process has bottlenecks that are the real cause of the problem.

These must be removed.

Worker suggestions

Workers are often a source of continuous improvements. They can provide

suggestions on how to improve a process and eliminate waste or unnecessary work.

Quality methods

There are also many quality methods, such as just-in-time production, variability

reduction, and poka-yoke that can improve processes and reduce waste.

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In this case, ABC Company focus only 3 main principal that is, Quality methods,

Chain Customer and Company philosophy. In Quality method, ABC Company should

run a test through the product to identify whether there is a problem or lacking in that

product need to fix to prevent any waste in future. Chain customer where ABC

provide a promising quality and good that are sold is meet their satisfaction. To do so

before sell it to our ultimate customer, past complaint or report need to refer which is

provide the new product is meet our customer satisfaction expectation. Company

Philosophy, where ABC provides a good quality product that promising our customer

satisfaction and expectation. Beside promise a good quality product ABC company

also may provide an after sale service where the company can make a bond with their

customer as family of the company and customer feel that they are part of the

company.

Summary

The principles of Total Quality Management are to seek to satisfy the external

customer with quality goods and services, as well as your company internal

customers; to satisfy your external and internal suppliers; and to continuously

improve processes by working smarter and using special quality methods.

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4. TQM Principal

Basically there is 14 principal in TQM as suggested by J. Auciello, "Doing the Right

Thing, Right the First Time, All the Time; Always striving for Improvement &

always satisfying the Customer." (http://auciello.tripod.com/14tqm.html)

4.1 ADD VALUE TO THE PROCESS:

Every action by every employee should add value to the process or product in every

way all the time. Enhance your work by your actions.

4.2 DELIVER QUALITY ON TIME ALL THE TIME.

Develop a pattern of delivering perfect products & services on time. Rate your

sources by their ability to do this.

4.3 BASE BUSINESS RELATIONSHIPS ON MUTUAL TRUST and confidence

Providers and Suppliers build trust and confidence through quality and deliverability.

Customers build it by quick payment and clear lines of communication. Reliability,

Forthrightness, and Honesty are the Basis of forming Business Relations.

4.4 TRAIN INDIVIDUALS AND TEAMS TO SOLVE PROBLEMS:

Teach Problem -Solving Tools / Techniques & Teaming as the means to solve quality,

safety, productivity, and deliverability problems.

4.5 EMPOWER EMPLOYEES TO BE RESPONSIBLE:

For Quality, Safety, Productivity and Deliverability. Empowering means giving

workers responsibility for their actions affecting their work. Share governance.

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4.6 DEED 'OWNERSHIP' OF PROCESS TO EMPLOYEES:

Who have proven their capability. Reward and reinforce empowerment with

Incentives, Job Security and Equity Sharing. Make employees owners of the process,

not attendants.

4.7 IMPLEMENT THE NEW TECHNOLOGY:

Use modern information resources, INTERNET, databases, telecommunications,

applications software, and project scheduling as tools to improve productivity. Use

Statistical Process Control (SPC) to eliminate errors and defects and continually

improve the system.

4.8 COLLECT, MEASURE AND EVALUATE DATA:

Before Making Decisions. "It never hurts to turn the light on." (J. DeSimone). Make

Decisions based on evidence. "If you can't measure it, you can't evaluate it."

4.9 APPLY THE '80/20' PRINCIPLE:

Use this Problem-Solving Tool to put problems into 'Trivial Many' and 'Vital Few'

Categories. Record the causes and frequencies of problems on a Tally Sheet. Develop

this into a Pareto Chart which plots the frequencies (most- to least-important) of the

problems. 20% of the causes create at least 80% of the problems. Importance of

resolving vital problems first.

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4.10 DEVELOP 'WIN-WIN' SCENARIOS:

Create solutions that will benefit all parties. Cooperation that develops synergism is

the best solution.

4.11 DEVELOP A MASTER PLAN:

Good Design Precedes Good Craftsmanship. A well-designed plan tracks and

benchmarks an action through to its completion. "Quality begins at the Design Level."

(MartyMadigan)

4.12 PLAN FOR ALL CONTINGENCIES:

Prepare for all solutions by developing alternatives. If necessary, flowchart plans

dealing with all possible alternatives. Apply 'If-Then-Else' type of logic to problems.

4.13 MAKE ZERO DEFECTS AND ACCIDENTS YOUR GOAL:

Use the tools of TQM, SPC, and Problem-Solving to achieve these goals by detecting

and eliminating the causes.

4.14 QUALIFY YOUR SOURCES AND SUPPLIERS:

Use Quality and Deliverability as the basis for selecting the source of your materials

and services.

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4.15 DELIVERABILITY:

The Right Product at the Right Place at the Right Time. In world-class Just-in-Time

(JIT) delivery systems, source parts are used without delay and inspection in the

process.

4.16 MEET THE NEEDS OF YOUR CUSTOMERS:

Customers are anyone affected by your work: co-workers, team members,

management, & especially the end-users. They are the rationale for your work. The

justification for your work is to deliver products or services that meet or exceed their

requirements.

4.17 IMPROVE CONTINUOUSLY AND ALWAYS:

Institute continuous improvement & life-long education, principles based on the 14

Points by W. Edwards Deming. Optimize your curve. They constitute an ever

expanding continuum. Add to this list.

ABC company focus this main five point to improve the company performance and

avoid unnecessary difficulty. The five is meet the needs of our customers, improve

continuously and always, plan for all contingencies, develop win-win scenario and

lastly deliver quality on time all the times.

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5. The Ten Element of TQM

5.1 Customer Focus

It is important to focus on the customer, both internal

and external i.e., the employees and the users of the end product - the students. In

TQM parlance, the customer is the next process and not just a person who pays for the

product or service. This concept helps to strengthen the co-operation within the

organization, eliminate internal competition and drives away fear.

5.2 Employee involvement

People at all levels make up an organization and their full involvement enables their

abilities to be used for an institution's benefit.

5.3 Continuous Improvement

There is a beginning to the process of TQM, but there is no end. Checking,

rechecking, valuation, revaluation, engineering and re-engineering are essential to

ensure continuous improvement.

5.4UniversalResponsibility

A TQM leader has to learn that inspection is not a means to achieve quality. One

eliminates the need for inspection by building quality into the product in the first

place. TQM helps us to recognize the fact that it is we ourselves who are responsible

for quality work, not someone else who will check it after it is done.

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5.5 A Sustained Management Commitment to Quality

An organisation's performance and culture will ultimately reflect its senior

management's values. If an organisation is serious about implementing TQM, the

commitment to do so has to start at the top, and the organisation's senior management

has to be unwavering in its commitment to quality.

5.6 Addressing Deficiencies

TQM is a management philosophy that seeks to prevent poor quality in products and

services, rather than simply to detect and sort out defects. "An ounce of prevention is

worth a pound of cure".

5.7 Quality Measurement

"If you do not know where you are going, you will probably end up somewhere" is a

saying particularly relevant to TQM. The quality measurement aspect of TQM asks

the question: where are we and where are we going? A basic TQM concept is that

quality is a measurable commodity, and in order to improve, we need to know where

we are (or stated differently, what the current quality levels are),and we need to have

some idea of where we are going (or what quality levels we aspire to reach).

5.8 Benchmarking

Benchmarking consists of identifying other organisations that perform well and

incorporating their wisdom into one's organisation. This TQM philosophy consists of

defining the competitors' best features from both internal and customer perspectives,

and then adapting the best practices of these organisations to one's functioning.

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5.9 Value Improvement

The essence of value improvement is the ability to meet or exceed customer

expectations while eliminating unnecessary expenditure. Removing unnecessary costs

while simultaneously satisfying customer expectations and requirements can only

serve to increase customer satisfaction (after all, the customer is receiving the same

level of quality for a lower cost). Simply cutting costs,however, will not improve

value if the focus does not remain on satisfying customer requirements and

expectations.

5.10 Training

Training is basic to the TQM process. Several concepts

and technologies are inherent to TQM. In order to use

these concepts and technologies effectively, people have to be trained. Yet another

saying comes to mind: "If you think training is expensive try ignorance."

6. Business Process Re-Engineering (BPR)

The analysis and design of workflows and processes within an organization. A

business process is a set of logically related tasks performed to achieve a defined

business outcome. Re-engineering is the basis for many recent developments in

management.

Business Process Reengineering is also known as Business Process Redesign,

Business Transformation, or Business Process Change Management. There is six

elements that need to implement to it success. The major element of BPR is process-

related elements, technology-related technology and organization-related elements.

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The essential element or principles of reengineering include the following:

• Rethinking the theory of the business.

• Challenging old assumptions and discharging old rules that are no longer applicable.

• Breaking away from conventional wisdom and the constraints of organizational

boundaries.

• Using information technology not to automatic outdated process but to redesign new

ones.

• Externally focus on customers and the generation of greater value for customers.

• Internally focus on harnessing more of the potentials of people and applying it to

those activities that identify and deliver values to customers.

• Encourages training and development by building creative work environment.

• Think and execute as much activity as possible horizontally, concentrating on flows

and processes through the organization.

To implement BPR in ABC Company, there is a step that needs to follow:

a. Develop the business vision and process objectives: Business Process

Reengineering is driving by a business vision which implies specific business

objectives such as cost reduction, time reduction, output quality improvement, quality

of work life.

b. Identify the processes to be redesigned: Most firms use high- impacts approach

which focuses and most important processes or those that conflict most with the

business vision. Few number of firms use the exhaustive approach that attempts to

identify all the processes within an organization and the prioritize them in order to

redesigned urgency.

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c. Understand and measure the existing process: For avoiding the repeating of old

mistake and for providing a baseline for future improvements.

d. Design and Build a prototype of New Process: The actual design should not be

viewed as the end of the BPR process. Rather, it should be viewed as a prototype,

aligns the BPR approach with quick delivery of results and the involvement and

satisfaction of customers.

7. Summary

In developing TQM training programs, efforts should be aimed at an integrated

approach to the instruction process. Training objectives should be directed at helping

employees’ reach the goals set forth for their individual Implementing a total quality

management system has become the preferred approach for improving quality and

productivity in organizations. TQM, which has been adopted by leading industrial

companies, is a participative system empowering all employees to take responsibility

for improving quality within the organization. BPR and TQM approaches provide a

comprehensive management philosophy to these change mechanism. It must be

recognized that BPR can be a difficult undertaking and changes to the organization

are often required to support new business processes. Many companies have found

this challenging. Certainly, to regard BPR as panacea would be mistaken. Finally

along with TQM, BPR is one of the most important management ideas of recent

times.

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8. References

Stewart, TA 1998, Intellectual capital: the new wealth of organisations, Bantam

Books, New York.

Kotter JP, & Schlesinger LA 1979, “Choosing Strategies for Change.” Harvard
Business Review, vol. 57, no. 2, pp. 106–114.

Halachmi, A 2005, ‘Performance Measurement is Only One Way of Measuring

Performance’, International Journal of Productivity and Performance Measurement,
vol. 54, no. 7, pp. 502 – 516.

Wikipedia website, viewed 2nd November 2010,

<http://en.wikipedia.org/wiki/Total_quality>

School For Champions website, viewed 5th November 2010,

<http://www.school-for-champions.com/tqm>

Auciello website, viewed 3rd Novemebr 2010

<http://auciello.tripod.com/.html>

Wikipedia website, viewed 8th November 2010,

<http://en.wikipedia.org/wiki/Business>

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