St.

Paul University Surigao

St. Paul University System
8400 Surigao City, Philippines

Lira, Sheila Mae O. Operation Management and TQM

BSA – 202 November 20, 2020

Introduction to Operations Management

(Assignment # 1)

 What is Operation Management?

Operations management (OM) is the business function that plans, organizes,
coordinates, and controls the resources needed to produce a company’s goods and
services. Operations management is a management function. It involves managing
people, equipment, technology, information, and many other resources. It is also the
central core function of every company. This is true whether the company is large or
small, provides a physical good or a service, is for-profit or not-for-profit.

 Describe the Transformation Process and some Categories.

A transformation process is any activity or group of activities that takes one or

more inputs, transforms and adds value to them, and provides outputs for customers or
clients. Where the inputs are raw materials, it is relatively easy to identify the
transformation involved, such as when milk is transformed into cheese or butter. Where
the inputs are information or people, the nature of the transformation may be less
obvious. For example, a hospital transforms ill patients (the input) into healthy patients
(the output). Often all three types of input – materials, information and customers – must
be transformed by a single organization. For example, withdrawing money from a bank
account involves information about the customer’s account, materials such as cheques
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St. Paul University System
8400 Surigao City, Philippines

and currency, and the customer. Treating a patient in hospital involves not only the
“customer’s” state of health, but also any materials used in treatment and information
about the patient. Transformation processes can be categorized into four groups:
manufacture (the physical creation of products, e.g. automobiles), service (the treatment
of customers or storage of products, e.g. hospitals or warehouses), supply (a change in
ownership of goods, e.g. retail), and transport (the movement of materials or customers,
e.g. taxi service). Several different transformations are usually required to produce a good
or service. The overall transformation can be described as the macro operation, and the
more detailed transformations within this macro operation as micro operations. 

 Why should a business student study Operations Management?

In most organizations, operations tend to be the largest department in terms of the

number of employees. For a new graduate, you may be smart to look for a position within
the operations of a business. In a larger company these jobs are far more plentiful than
those in smaller departments. If you have a passion for working for a large organization,
you might want to focus more on which organization you go to work for, and less focus
on the actual job title.  Soon enough, if you’re punctual, energetic and proactive, you will
likely apply or get promoted into the job you desire.

Operation is where the largest share of the firm’s dollars are spent. It is a huge
focus of top management. All other departments in the organization are interrelated with
operations. In finance, marketing and human resources, you will be interacting with
operations on a regular basis. You should understand the businesses’ core transformation
process regardless of the department in which you work.

 What are some of the Professional Organizations involved in Operations

Management?
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St. Paul University System
8400 Surigao City, Philippines

 Supply Chain Management Association (SCMA)

As the leading and largest association in Canada for supply chain management
professionals, the Supply Chain Management Association (SCMA) is the national voice
for advancing and promoting the profession. SCMA sets the standard of excellence for
professional skills, knowledge and integrity and was the first supply chain association in
the world to require that all members adhere to a Code of Ethics.

 Canadian Institute of Traffic and Transportation (CITT)

CITT is a non-profit organization created by industry in 1958. Today, CITT is

industry's most experienced, valued and respected source of complete, career-long
learning and career-path development open for everyone who buys, sells or manages the
flow of goods and product, or is impacted by supply chain logistics. 

 Association for Supply Chain Management (APICS)

APICS is the association for supply chain management and a not-for-profit

international education organization offering certification programs, training tools, and
networking opportunities to increase workplace performance. 

 American Society for Quality (ASQ)

The American Society for Quality, formerly the American Society for Quality
Control, is a knowledge-based global community of quality professionals, with nearly
80,000 members dedicated to promoting and advancing quality tools, principles, and
practices in their workplaces and communities.
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St. Paul University System
8400 Surigao City, Philippines

 Project Management Institute (PMI)

The Project Management Institute is a global nonprofit professional organization

for project management. Career opportunity knocks as the need for project talent
continues to grow. Research indicates that employers will need to fill nearly 2.2 million
new project-oriented roles each year through 2027. This means skilled project managers
will be in high demand. Wherever you are in your career, the globally recognized Project
Management Professional (PMP) certification tells employers, peers, and the world you
know what you’re doing in project management. Even if “project manager” isn’t part of
your title, the PMP applies to anyone who helps bring a project to completion. Just like a
CPA validates expertise for accountants, the PMP recognizes your ability to manage
projects and the hard work you’ve done so far.

 Describe each of the three phases of Operations Management history.

 Craft manufacturing

Craft manufacturing describes the process by which skilled craftspeople produce

goods in low volume, with a high degree of variety, to meet the requirements of their
individual customers. Over the centuries, skills have been transmitted from masters to
apprentices and journeymen, and controlled by guilds. Craftspeople usually worked at
home or in small workshops. Such a system worked well for small-scale local production,
with low levels of competition. Some industries, such as furniture manufacture and clock
making, still include a significant proportion of craft working.

 Mass production
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In many industries, craft manufacturing began to be replaced by mass

production in the 19th century. Mass production involves producing goods in high
volume with low variety – the opposite of craft manufacturing. Customers are expected to
buy what is supplied, rather than goods made to their own specifications. Producers
concentrated on keeping costs, and hence prices, down by minimizing the variety of both
components and products and setting up large production runs. They developed
aggressive advertising and employed sales forces to market their products. An important
innovation in operations that made mass production possible was the system of
standardized and interchangeable parts known as the “American system of manufacture”
(Hounshell, 1984), which developed in the United States and spread to the United
Kingdom and other countries. Instead of being produced for a specific machine or piece
of equipment, parts were made to a standard design that could be used in different
models. This greatly reduced the amount of work required in cutting, filing and fitting
individual parts, and meant that people or companies could specialize in particular parts
of the production process.
A second innovation was the development by Frederick Taylor (1911) of the
system of ‘scientific management’, which sought to redesign jobs using similar principles
to those used in designing machines. Taylor argued that the role of management was to
analyze jobs in order to find the ‘one best way’ of performing any task or sequence of
tasks, rather than allowing workers to determine how to perform their jobs. By breaking
down activities into tasks that were sequential, logical and easy to understand, each
worker would have narrowly defined and repetitious tasks to perform, at high speed and
therefore with low costs (Kanigel, 1999).
A third innovation was the development of the moving assembly line by Henry
Ford. Instead of workers bringing all the parts and tools to a fixed location where one car
was put together at a time, the assembly line brought the cars to the workers. Ford thus
extended the ideas of scientific management, with the assembly line controlling the pace
of production. This completed the development of a system through which large volumes
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St. Paul University System
8400 Surigao City, Philippines

of standardized products could be assembled by unskilled workers at constantly

decreasing costs – the apogee of mass production.

 The modern period

Mass production worked well as long as high volumes of mass-produced goods

could be produced and sold in predictable and slowly changing markets. However, during
the 1970s, markets became highly fragmented, product life cycles reduced dramatically,
and consumers had far greater choice than ever before. An unforeseen challenge to
Western manufacturers emerged from Japan. New Japanese production techniques, such
as total quality management (TQM), just-in-time (JIT) and employee involvement were
emulated elsewhere in the developed world with mixed results. More recently, the mass
production paradigm has been replaced, but there is yet no single approach to managing
operations that has become similarly dominant. 

 Discuss how producing goods is different from performing services.

The production and goods and the performance of services are both part of
operations management. There are however some key differences in the two. In the
production of goods, the result is the creation of a tangible product such as a vehicle, an
article of clothing, a cell phone or a shovel.  A service on the other hand is an intangible
such as a car repair, a haircut, or a medical treatment. There are some key differences in
managing these two types of businesses.
Goods are the material items that the customers are ready to purchase for a price.
Services are the amenities, benefits or facilities provided by the other persons. Goods are
tangible items i.e. they can be seen or touched whereas services are intangible items.
When the buyer purchases the goods by paying the consideration, the ownership of goods
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moves from the seller to the buyer. Conversely, the ownership of services is non-
transferable. The evaluation of services is difficult because every service provider has a
different approach of carrying out services, so it is hard to judge whose services are better
than the other as compared to goods. Goods can be returned to or exchanged with the
seller, but it is not possible to return or exchange services, once they are provided. Goods
can be distinguished from the seller. On the other hand, services and service provider are
inseparable. A particular product will remain same regarding physical characteristics and
specifications, but services can never remain same. Goods can be stored for future use,
but services are time bound, i.e. if not availed in the given time, then it cannot be stored.
First of all, the goods are produced, then they are traded and finally consumed, whereas
services are produced and consumed at the same time.