11 Capacity management

Key questions INTRODUCTION

Capacity management is the activity of understanding the
❯ What is capacity management?
nature of an operation’s supply and demand, and of coping
❯ How are demand and capacity with any differences between them. It involves selecting
measured? supply-side responses (called capacity plans) and demand-
side responses (called demand management and yield
❯ How should the operation’s base management). It aims to meet the needs of customers while
capacity be set?
maintaining the efficiency of the operation’s resources. And
❯ What are the ways of coping with to do this, operations managers must be able to understand
mismatches between demand and reconcile two competing requirements. On the one hand
and capacity? there is the importance of maintaining customer satisfaction
❯ How can operations understand by delivering products and services to customers reasonably
the consequences of their quickly. On the other there is the need for operations (and
capacity decisions? their extended supply networks) to maintain efficiency by
minimizing the costs of excess capacity. In this chapter, we
look at these competing tensions at an aggregated level. At this level, managers do not discriminate
between the different products and services that might be produced by the operation. Instead, they aim
to ensure that the overall ability to supply is in line with the overall demand placed on the operation.
Figure 11.1 shows where this chapter fits in the structure of the book. At the end of the chapter there
is a supplement on queuing for those wishing to go into more detail on this important sub-topic of
capacity management.

Topic covered in
this chapter

Deliver

Planning
and control Direct

Capacity Supply chain

management management
Operations
Design Develop
management
Inventory Planning
management and control
systems
Lean Deliver
operations

Figure 11.1 This chapter examines capacity management

M11_SLAC8678_08_SE_C11.indd 350 06/02/16 7:20 PM

 Short-term outlook for volume

Decreasing below Level with current Increasing above

current capacity capacity current capacity

Increase capacity

Decreasing below
Reduce capacity Plan to reduce

current capacity
temporarily. For
(semi) permanently. capacity (semi)
example, increase
For example, reduce permanently. For
working hours, and/or
staffing levels; example, freeze
hire temporary staff;
reduce supply recruitment; modify
modify supply
agreements. supply agreements.
Long-term outlook for volume

agreements.

Increase capacity
Level with current

Reduce capacity
temporarily. For
temporarily. For
capacity

example, increase
example, reduce Maintain capacity
working hours,
staff working hours; at current level.
and/or hire temporary
modify supply
staff; modify supply
agreements.
agreements.

Reduce capacity
Increasing above
current capacity

temporarily. For Plan to increase Increase capacity

example, reduce capacity above (semi) permanently.
staff working hours, current level; plan to For example, hire
but plan to recruit; increase supply staff; increase
modify supply agreements. supply agreements.
agreements.

Figure 11.16 Capacity management strategies are partly dependent on the long- and short-
term outlook for volumes

SUMMARY ANSWERS TO KEY QUESTIONS

❯ What is capacity management?

● The capacity of an operation is the maximum level of value-added activity over a period of
time that the process can achieve under normal operating conditions.
● Capacity management is the activity of understanding the nature of demand for products
and services, and effectively planning and controlling capacity in the short term, medium
term and long term.
● Long-term capacity management (or strategy) focuses on introducing or deleting major
increments of capacity (see Chapter 5). Medium- and short-term capacity management
focuses on adjusting capacity and demand within the constraints imposed by long-term
capacity decisions.
● The process of managing capacity involves (1) measuring and understanding changes in
aggregate demand and capacity (supply); (2) determining the operation’s base level of
capacity; (3) identifying and selecting methods of coping with demand–supply mismatches;
and (4) understanding the consequences of different capacity decisions.

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 ❯ How are demand and capacity measured?

● Demand forecasts should be expressed in terms that are useful (for example, units per hour,
operatives per month, etc.), be as accurate as possible and give an indication of uncertainty.
● Typically, the demand for products and services is not completely stable. Climatic, social,
cultural, political and economic factors all act to influence both predictable and unpredict-
able volatility in demand.
● Capacity can be measured by the availability of its input resources or by the output that
is created. Which of these measures is used partly depends on how stable is the mix of
outputs. If it is difficult to aggregate the different types of output from an operation, input
measures are usually preferred.
● It is managed either by the availability of its input resources or by the output which is pro-
duced. Which of these measures is used partly depends on how stable is the mix of outputs.
If it is difficult to aggregate the different types of output from an operation, input measures
are usually preferred.
● The usage of capacity is measured by the factors of ‘utilization’ and ‘efficiency’. A useful
measure of capacity leakage is overall operations effectiveness (OEE).

❯ How should the operation’s base capacity be set?

● Capacity planning often involves setting a base level of capacity and then planning capac-
ity fluctuations around it. The level at which base capacity is set depends on three main
factors: the relative importance of the operation’s performance objectives, the perishability
of the operation’s outputs, and the degree of variability in demand or supply.
● High service levels, high perishability of an operation’s outputs and a high degree of varia-
bility, either in demand or supply, all indicate a relatively high level of base capacity.

❯ What are the ways of coping with mismatches between demand and capacity?

● Demand–capacity mismatches usually call for some degree of capacity adjustment over
time. There are three pure methods of achieving this, although in practice a mixture of all
three may be used:
● ‘Level capacity’ plans involve no change in capacity and require that the operation
absorb demand–capacity mismatches, usually through under- or over-utilization of its
resources, or the use of inventory.
● ‘Chase demand’ plans involve the changing of capacity through such methods as over-
time, varying the size of the work force, subcontracting, etc.
● ‘Demand management’ plans involve an attempt to change demand through pricing or
promotion methods, or changing product or service mix to reduce fluctuations in activ-
ity levels. When outputs cannot be stored, yield management is a common method of
coping with mismatches.

❯ How can operations understand the consequences of their capacity decisions?

● Presenting demand and output in the form of cumulative representations allows the feasi-
bility of alternative capacity plans to be assessed.
● In many operations, especially service operations, a queuing approach can be used to
explore the consequences of capacity strategies..
● Using long-term and short-term outlook for demand allows further evaluation of alternative
capacity management decisions.

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 12 Supply chain management

Key questions INTRODUCTION

How is it that businesses such as Apple, Toyota, Zara and
❯ What is supply chain
Maersk achieve notable results in highly competitive markets?
management?
Partly, it is down to their products and services, but partly it
❯ How should supply chains is down to the way they mange their supply chains. This is
compete? what supply chain management is concerned with – the way
operations managers have to look beyond a purely internal
❯ How should relationships in
supply chains be managed? view to consider also the performance of suppliers, and
suppliers’ suppliers, as well as customers, and customers’
❯ How is the supply side managed? customers. In addition, increasingly operations are outsourcing
many of their activities, buying more of their services and
❯ How is the demand side
managed? materials from outside specialists. So the way they manage
supplies to their operations becomes increasingly important,
❯ What are the dynamics of supply as does the integration of their distribution activities. In
chains? Chapter 5 we explored the structure and scope of operations;
by contrast, this chapter is more concerned with how supply
chains and networks are subsequently managed.

Topic covered in
this chapter
Deliver

Planning
and control Direct

Capacity Supply chain

management management
Operations Develop
Design
management
Inventory Planning
management and control
systems
Lean Deliver
operations

Figure 12.1 This chapter examines supply chain management

M12_SLAC8678_08_SE_C12.indd 398 06/02/16 7:51 PM

 Channel alignment in supply networks
Channel alignment means the adjustment of scheduling, materials movements, stock levels,
pricing and other sales strategies so as to bring all the operations in the chain into line with
each other. This goes beyond the provision of information. It means that the systems and
methods of planning and control decision making are harmonized through the chain. For
example, even when using the same information, differences in forecasting methods or pur-
chasing practices can lead to fluctuations in orders between operations in the chain. One way
of avoiding this is to allow an upstream supplier to manage the inventories of its downstream
customer. This is known as vendor-managed inventory (VMI). So, for example, a packaging
supplier could take responsibility for the stocks of packaging materials held by a food man-
ufacturing customer. In turn, the food manufacturer takes responsibility for the stocks of its
products that are held in its customer’s, the supermarket’s, warehouses.

Operational efficiency in supply networks

‘Operational efficiency’ in this context means the efforts that each operation in the chain
makes to reduce its own complexity, the cost of doing business with other operations in
the chain, and its throughput time. The cumulative effect of this is to simplify through-
put in the whole chain. For example, imagine a chain of operations whose performance
level is relatively poor: quality defects are frequent, the lead time to order products and
services is long, delivery is unreliable, and so on. The behaviour of the chain would be
a continual sequence of errors and effort wasted in re-planning to compensate for the
errors. Poor quality would mean extra and unplanned orders being placed, and unreliable
delivery and slow delivery lead times would mean high safety stocks. Just as important,
most operations managers’ time would be spent coping with the inefficiency. By contrast,
a chain whose operations had high levels of operations performance would be more pre-
dictable and have faster throughput, both of which would help to minimize supply chain
fluctuations.

Forecasting in supply networks

Improved forecast accuracy also helps to reduce the bullwhip effect. This effect is caused by
demand patterns, lead times, forecasting mechanisms and the replenishment decisions used to
order product from production facilities or suppliers. Improving the accuracy of forecasts directly
reduces the inventory holding requirements that will achieve customer service-level targets.
Reducing lead times means that one needs to forecast less far into the future and thus lead times
have a large impact on bullwhip and inventory costs. The exact nature of how the bullwhip effect
propagates in a supply chain is also dependent on the nature of the demand pattern. Negatively
correlated demands require less inventory in the supply chain than positively correlated demand
patterns, for example. But the bullwhip effect is not unavoidable. By using sophisticated replen-
ishment policies, designed using control engineering principles, many businesses have been able
to eliminate bullwhip effects. Sometimes this comes at a cost. Extra inventory may be required in
parts of the chain, or customer service levels reduce. But more often, bullwhip avoidance creates a
‘win–win’ situation. It reduces inventory requirements and improves customer service.

SUMMARY ANSWERS TO KEY QUESTIONS

❯ What is supply chain management?

● Supply chain management is the management of relationships and flows between operations
and processes. Technically, it is different from supply network management, which looks at all
the operations or processes in a network, but the two terms are often used interchangeably.

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 ● Many of the principles of managing external supply chains (flow between operations) are
also applicable to internal supply chains (flow between processes and departments).

❯ How should supply chains compete?

● The central objective of supply chain management is to satisfy the needs of the end customer.
● So, each operation in the chain (and each chain in the supply network) should contribute to
whatever mix of quality, speed, dependability, flexibility and cost that the end customer requires.
● Individual operations failure in any of these objectives can be multiplied throughout the
chain. So, although each operation’s performance may be adequate, the performance of
the whole chain could be poor.
● An important distinction is between lean and agile supply chain performance. Broadly, lean
(or efficient) supply chains are appropriate for stable ‘functional’ products and services,
while agile (or responsive) supply chains are more appropriate for less predictable innova-
tive products and services.

❯ How should relationships in supply chains be managed?

● Supply chain relationships can be described on a spectrum from market-based, contrac-

tual, ‘arm’s length’ relationships to close and long-term partnership relationships.
● The types of relationships adopted may be dictated by the structure of the market itself.

❯ How is the supply side managed?

● Managing supply-side relationships involves determining sourcing strategy, selecting

appropriate suppliers, managing ongoing supply activity and supplier development.
● Sourcing strategies include multiple sourcing, single sourcing, delegated sourcing and
parallel sourcing. Their selection is influenced by the complexity and risk of the supply
market and the criticality to the business.
● Supplier selection involves trading off different supplier attributes, often using scoring
assessment methods.
● Managing ongoing supply involves clarifying supply expectations, often using service-level
agreements to manage the supply relationships.
● Supplier development can benefit both suppliers and customers, especially in partnership
relationships. Very often barriers are the mismatches in perception between customers and
suppliers.

❯ How is the demand side managed?

● This will depend partly on whether demand is dependent on some known factor and
therefore predictable, or independent of any known factor and therefore less predictable.
Approaches such as materials requirements planning (MRP) are used in the former case,
while approaches such as inventory management are used in the latter case.
● The increasing outsourcing of physical distribution and the use of new tracking technolo-
gies, such as RFID, have brought efficiencies to the movement of physical goods and cus-
tomer service.

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 ❯ What are the dynamics of supply chains?

● Supply chains have a dynamic of their own that is often called the bullwhip effect. It means
that relatively small changes at the demand end of the chain increasingly amplify into large
disturbances as they move upstream.
● Four key methods can be used to reduce this effect. E-enabled supply chains can prevent
over-reaction to immediate stimuli and give a better view of the whole chain. Channel align-
ment through standardized planning and control methods allows for easier co-ordination
of the whole chain. Improving the operational efficiency of each part of the chain prevents
local errors multiplying to affect the whole chain. Improved forecasts reduce the inventory
holding requirements for supply chains while maintaining customer service levels.

CASE STUDY Supplying fast fashion

Garment retailing has changed. No longer is there a stand-

ard look that all retailers adhere to for a whole season.
Fashion is fast, complex and furious. Different trends over-
lap and fashion ideas that are not even on a store’s radar
screen can become ‘must haves’ within six months. Many
retail businesses with their own brands, such as H&M and
Zara, sell up-to-the-minute clothes at low prices, in stores
that are clearly focused on one particular market. In the
world of fast fashion catwalk designs speed their way into
high street stores at prices anyone can afford. The quality
of the garment means that it may only last one season, but
fast fashion customers do not want yesterday’s trends. As
Newsweek puts it, ‘being a “quicker picker-upper” is what
made fashion retailers H&M and Zara successful. [They]
thrive by practicing the new science of “fast fashion”; com-
pressing product development cycles as much as six times.’
But the retail operations that customers see are only the
end part of the supply chains that feeds them. And these
have also changed. tising. The Benetton Group is present in over 20 countries
At its simplest level, the fast-fashion supply chain has throughout the world. Selling casual garments, mainly
four stages. First, the garments are designed, after which under its United Colours of Benetton (UCB) and its more
they are manufactured; they are then distributed to the fashion-oriented Sisley brands, it produces 110 million gar-
retail outlets where they are displayed and sold in retail ments a year, over 90 per cent of them in Europe. Its retail
operations designed to reflect the businesses’ brand values. network of over 6,000 stores produces revenue of around
In this case study we examine two fast-fashion operations, €1.6 billion. Benetton products are seen as less ‘high fash-
Hennes and Mauritz (known as H&M) and Zara, together ion’ but higher quality and durability, with higher prices,
with United Colours of Benetton (UCB), a similar chain, but than H&M and Zara.
with a different market positioning. H&M. Established in Sweden in 1947, H&M now sells
Benetton. Almost 50 years ago, Luciano Benetton took clothes and cosmetics in over 1,000 stores in 20 countries
the world of fashion by storm by selling the bright, casual around the world. The business concept is ‘fashion and
sweaters designed by his sister across Europe (and later quality at the best price’. With more than 40,000 employ-
the rest of the world), promoted by controversial adver- ees, and revenues of around SKr60,000 million, its biggest

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 13 Inventory management

Key questions INTRODUCTION

❯ What is inventory?
❯ Why should there be any
inventory?
❯ How much to order? The volume
decision
❯ When to place an order? The
timing decision
❯ How can inventory be controlled?
Operations managers often have an ambivalent attitude towards
inventories. On the one hand, they are costly, sometimes tying
up considerable amounts of working capital. They are also
risky because items held in stock could deteriorate, become
obsolete or just get lost, and, furthermore, they take up valuable
space in the operation. On the other hand, they provide some
security in an uncertain environment that one can deliver items
in stock, should customers demand them. This is the dilemma
of inventory management: in spite of the cost and the other
disadvantages associated with holding stocks, they do facilitate
the smoothing of supply and demand. In fact they only exist
because supply and demand are not exactly in harmony with
each other (see Fig. 13.1).

Deliver

Planning
and control Direct

Capacity Supply chain

management management
Operations
Design Develop
management
Inventory Planning
management and control
systems
Lean Deliver
operations

Topic covered in
this chapter

Figure 13.1 This chapter examines inventory management

M13_SLAC8678_08_SE_C13.indd 432 06/02/16 7:31 PM

 be) automatically updated every time that items are recorded as having been received into an
inventory or taken out of the inventory. So:
Opening stock level + Receipts in - Despatches out = New stock level
Any errors in recording these transactions, and/or in handling
the physical inventory, can lead to discrepancies between the recorded
✽ Operations principle
and actual inventory, and these errors are perpetuated until physical
The maintenance of data accuracy is
stock checks are made (usually quite infrequently). In practice there
vital for the day-to-day effectiveness of
are many opportunities for errors to occur, if only because inventory
inventory management systems.
transactions are numerous. This means that it is surprisingly common
for the majority of inventory records to be inaccurate. The underlying
causes of errors include:
● keying errors – entering the wrong product code;
● quantity errors – a mis-count of items put into or taken from stock;
● damaged or deteriorated inventory not recorded as such, or not correctly deleted from the
records when it is destroyed;
● the wrong items being taken out of stock, but the records not being corrected when they
are returned to stock;
● delays between the transactions being made and the records being updated;
● items stolen from inventory (common in retail environments, but also not unusual in
industrial and commercial inventories).

SUMMARY ANSWERS TO KEY QUESTIONS

❯ What is inventory?

● Inventory, or stock, is the stored accumulation of the transformed resources in an opera-

tion. Sometimes the words ‘stock’ and ‘inventory’ are also used to describe transforming
resources, but the terms ‘stock control’ and ‘inventory control’ are nearly always used in
connection with transformed resources.
● Almost all operations keep some kind of inventory, most usually of materials but also of
information and customers (customer inventories are normally called queues).

❯ Why should there be any inventory?

● Inventory occurs in operations because the timing of supply and the timing of demand do
not always match. Inventories are needed, therefore, to smooth the differences between
supply and demand.
● There are five main reasons for keeping physical inventory:
● to cope with random or unexpected interruptions in supply or demand (buffer inventory);
● to cope with an operation’s inability to make all products simultaneously (cycle inventory);
● to allow different stages of processing to operate at different speeds and with different
schedules (de-coupling inventory);
● to cope with planned fluctuations in supply or demand (anticipation inventory);
● to cope with transportation delays in the supply network (pipeline inventory).
● Inventory is often a major part of working capital, tying up money which could be used
more productively elsewhere.

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 ● If inventory is not used quickly, there is an increasing risk of damage, loss, deterioration or
obsolescence.
● Inventory invariably takes up space (for example, in a warehouse) and has to be managed,
stored in appropriate conditions, insured and physically handled when transactions occur.
It therefore contributes to overhead costs.

❯ How much to order? The volume decision

● This depends on balancing the costs associated with holding stocks against the costs asso-
ciated with placing an order. The main stock-holding costs are usually related to working
capital, whereas the main order costs are usually associated with the transactions necessary
to generate the information to place an order.
● The best-known approach to determining the amount of inventory to order is the eco-
nomic order quantity (EOQ) formula. The EOQ formula can be adapted to different types of
inventory profile using different stock behaviour assumptions.
● The EOQ approach, however, has been subject to a number of criticisms regarding the true
cost of holding stock, the real cost of placing an order, and the use of EOQ models as pre-
scriptive devices.

❯ When to place an order? The timing decision

● Partly this depends on the uncertainty of demand. Orders are usually timed to leave a cer-
tain level of average safety stock when the order arrives. The level of safety stock is influ-
enced by the variability of both demand and the lead time of supply. These two variables
are usually combined into a lead-time usage distribution.
● Using re-order level as a trigger for placing replenishment orders necessitates the contin-
ual review of inventory levels. This can be time consuming and expensive. An alternative
approach is to make replenishment orders of varying size but at fixed time periods.

❯ How can inventory be controlled?

● The key issue here is how managers discriminate between the levels of control they apply
to different stock items. The most common way of doing this is by what is known as the
ABC classification of stock. This uses the Pareto principle to distinguish between the differ-
ent values of, or significance placed on, types of stock.
● Inventory is usually managed through sophisticated computer-based information systems
which have a number of functions: the updating of stock records, the generation of orders,
the generation of inventory status reports and demand forecasts. These systems critically
depend on maintaining accurate inventory records.

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 17 Quality management

Key questions INTRODUCTION

❯ What is quality and why is it so
important?
❯ What steps lead towards
conformance to specification?
❯ What is total quality
management (TQM)?
Quality management has always been an important part of
operations management, but its position and role within
the subject have changed. At one time it was seen largely
as an essential, but ‘routine,’ activity that prevented errors
having an impact on customers (and would have been
located unambiguously in the ‘Deliver’ section of this book).
And that function is still there. But increasingly quality
management is viewed as also having a part to play in how
operations improve. Quality management can contribute to
improvement by making the changes to operations processes
that lead to better outcomes for customers. In fact, in most
organizations, quality management is one of the main drivers
of improvement. It is also the only one of the five ‘operations
performance objectives’ to have its own dedicated chapter
in this book. Partly this is because of this central role of
‘quality ’ in improvement. Some operations managers believe
that, in the long run, quality is the most important single
factor affecting an organization’s performance relative to its
competitors. But it is also because, in many organizations, a
separate function is devoted exclusively to the management of
quality. Figure 17.1 shows where quality management fits into
the model of operations activities.

Topic covered in
this chapter
Develop

Direct
Operations
improvement

Operations Develop Quality

Design Managing risk
management management and recovery

Project
Deliver management

Figure 17.1 This chapter examines quality management

M17_SLAC8678_08_SE_C17.indd 572 06/02/16 7:56 PM

 Green reporting and ISO 1400015
Until recently, relatively few companies around the world provided information on their
environmental practices and performance. Now environmental reporting is increasingly
common. Another emerging issue has been the introduction of the ISO 14000 standard.
It has a three-section environmental management system which covers initial planning,
implementation and objective assessment. Although it has had some impact, it is largely
limited to Europe.
ISO 14000 makes a number of specific requirements, including the following:
● a commitment by top-level management to environmental management;
● the development and communication of an environmental policy;
● the establishment of relevant and legal and regulatory requirements;
● the setting of environmental objectives and targets;
● the establishment and updating of a specific environmental programme, or programmes,
geared to achieving the objectives and targets;
● the implementation of supporting systems such as training, operational control and emer-
gency planning;
● regular monitoring and measurement of all operational activities;
● a full audit procedure to review the working and suitability of the system.

Critical commentary

The similarity of ISO 14000 to the quality procedures of ISO 9000 is a bit of a giveaway.
ISO 14000 can contain all the problems of ISO 9000 (management by manual, obsession
with procedures rather than results, a major expense to implement it, and, at its worst,
the formalization of what was bad practice in the first place). But ISO 14000 also has
some further problems. The main one is that it can become a ‘badge for the smug’. It can
be seen as ‘all there is to do to be a good environmentally sensitive company’. At least
with quality standards like ISO 9000 there are real customers continually reminding the
business that quality does matter. Pressures to improve environmental standards are far
more diffuse. Customers are not likely to be as energetic in forcing good environmental
standards on suppliers as they are in forcing the good-quality standards from which
they benefit directly. Instead of this type of procedure-based system, surely the only way
to influence a practice that has an effect on a societal level is through society’s normal
mechanism – legal regulation. If quality suffers, individuals suffer and have the sanction
of not purchasing goods and services again from the offending company. With bad
environmental management, we all suffer. Because of this, the only workable way to
ensure environmentally sensitive business policies is by insisting that our governments
protect us. Legislation, therefore, is the only safe way forward.

SUMMARY ANSWERS TO KEY QUESTIONS

❯ What is quality and why is it so important?

● The definition of quality used in this book defines quality as ‘consistent conform-
ance to customers’ expectations’. It is important because it has a significant impact on
profitability.

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 ● At a broad level, quality is best modelled as the gap between customers’ expectations
concerning the service or product and their perceptions concerning the service or
product.
● Modelling quality this way will allow the development of a diagnostic tool that is
based around the perception–expectation gap. Such a gap may be explained by four
other gaps:
● the gap between a customer’s specification and the operation’s specification;

● the gap between the service or product concept and the way the organization has
specified it;
● the gap between the way quality has been specified and the actual delivered quality;
● the gap between the actual delivered quality and the way the service or product has
been described to the customer.
● The ‘sandcone’ theory of improvement holds that it is generally better to start with improv-
ing quality rather than other performance objectives, but then keep improving quality even
as other performance objectives are pursued.

❯ What steps lead towards conformance to specification?

● There are six steps:

● define quality characteristics;
● decide how to measure each of the quality characteristics;
● set quality standards for each characteristic;
● control quality against these standards;
● find and correct the causes of poor quality;
● continue to make improvements.
● Most quality planning and control involves sampling the operations performance in some
way. Sampling can give rise to erroneous judgements which are classed as either Type I
or Type II errors. Type I errors involve making corrections where none are needed. Type II
errors involve not making corrections where they are in fact needed.

❯ What is total quality management (TQM)?

● TQM is ‘an effective system for integrating the quality development, quality maintenance
and quality improvement efforts of the various groups in an organization so as to ena-
ble production and service at the most economical levels which allow for full customer
satisfaction’.
● It is best thought of as a philosophy that stresses the ‘total’ of TQM and puts quality at the
heart of everything that is done by an operation.
● Total in TQM means the following:
● meeting the needs and expectations of customers;
● covering all parts of the organization;
● including every person in the organization;
● examining all costs which are related to quality, and getting things ‘right first time’;
● developing the systems and procedures which support quality and improvement, poten-
tially including ‘quality awards’.

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