OTQM 111 Lecnote#1

What is Operations Management?

Operations Management is the administration of business practices to create the highest level of efficiency possible
within an organization. It is concerned converting materials and labor into goods and services as efficiently as possible
to maximize the profit of an organization. Operations management teams attempt to balance costs with revenue to
achieve the highest net operating profit possible.

Understanding Operations Management

Operations Management involves utilizing from staff, materials, equipment, and technology. Operations managers
acquire, develop, and deliver goods to clients based on client needs and the abilities of the company.
Operations management is the administration of business practices to create the highest level of efficiency possible
within an organization.

Special Considerations
 A critical function of operations management relates to the management of inventory through the supply chain.
To be an effective operations management professional, one must be able to understand the processes that are
essential to what a company does and get them to flow and work together seamlessly.
 An operations management professional understands local and global trends, customer demand and the
available resources for production. Operations management approaches the acquisition of materials and the
use of labor in a timely, cost-effective manner to deliver customer expectations. Operations management is
responsible for finding vendors that supply the appropriate goods at reasonable prices and have the ability to
deliver the product when needed.
 Another large facet of operations management involves the delivery of goods to customers. This includes
ensuring products are delivered within the agreed time commitment. Operations management also typically
follows up with customers to ensure the products meet quality and functionality needs. Finally, operations
management takes the feedback received and distributes the relevant information to each department to use in
process improvement.

Reference: investopedia.com

What is Best Practice in Business?

Best practice in business means finding – and using – the best ways of working to achieve your business goals. It
involves keeping up to date with the ways that successful businesses operate in your sector and others, and includes
measuring your ways of working against those used by the market leaders.

Management Best Practice Involves;

- Communicating a clear mission and strategy
- Leadership by example
- The setting of demanding but realistic targets
- An open and communicative management style
- Clear and careful strategic planning

Reference: www.nibusinessinfo.co.uk
References: R. Ashley Rawlins
CA Zarate

What is Quality?
- Quality is often used to signify “excellence” of a product or service.
- Quality is meeting the customer requirements.
- Quality if fitness for purpose or use. (Juran)
- Quality is the totality of features and characteristics of a product or service that bears on its ability to satisfy
stated or implied needs”.
- The total composite product and service characteristics of marketing, engineering, manufacturing, and
maintenance through which the product and service in use will meet the expectation of the customer.
(Feigenbaum)

Dimensions of Quality
1. Performance is the primary operating characteristics of a product.
2. Features are add-ons or supplement.
3. Reliability means no malfunctions or breakage for a specific period of time.
4. Conformance is the degree of meeting standards.
5. Durability refers to a product’s life.
6. Serviceability refers to speed and ease of repair.
7. Aesthetics refers to the product’s look.
8. Perceived Quality refers to the quality as received by the customers.

TOTAL QUALITY MANAGEMENT (TQM)

- Also called Leadership Through Quality (LTQ) and Continuous Quality Improvement (CQI). It is an organizational
strategy of improving customer satisfaction by developing procedures to manage output quality.
- TQM is an organizational strategy of improving customer satisfaction by developing procedures to manage
output quality.

Total means that everyone in the organization is involved in the final product or service for the customer.
Quality is meeting the customer’s requirements. These requirements must be clearly measurable.
Management involves the functions of planning, organizing, leading, and controlling.

Characteristics of TQM
1. TQM is company-wide. TQM takes place in any area of an organization.
2. The CEO and other top managers visibly support it.
3. TQM is a value ingrained in the corporate culture.
4. Continuous improvement penetrates the culture and values of the organization.
5. TQM forms a partnership with customers and suppliers.
6. Each employee in the organization has a customer.
7. Cycle times for products and services are reduced.
8. There are various techniques used in TQM.
9. TQM is doing it right the first time.
10. There is no single formula for everyone.

“The key objectives of TQM is to change the overall culture of the organization”; to eliminate the view that errors are
inevitable and that inspection are fire-fighting are therefore part of everyday life, to create the feeling that everyone in
the organization is committed to total continuous improvement.