WEEK 1: OPERATIONS AND TOTAL QUALITY MANAGEMENT Importance of Operations Management

• Operations Management helps in achieving organizational objectives

• It helps in improving the productivity of employees
What is Operations Management? • It helps optimize the use of resources
• It helps in motivating employees to perform their roles
• Operations Management pertains to the application of business practices within an
organization in order to develop the highest level of efficiency. It is about turning raw
materials and labor into goods and services as effectively as possible in order to Operations Management Decision
optimize an organization's income.
• Strategic Decision Making
• Operations Management is VITAL to any organization. A systematic management of
all day to day processes, practices and resources makes the operations effective and This is characterized as long-term decisions that affect the organization in the long run.
efficient.
• Tactical Decisions
• Know the process, the practice and utilize your 7M’S (Man, Money, Materials,
This is characterized as a short-term decision and is focused on the day to day problems
Machines, Methods, Measurement, Marketing)
of the organization such as issues with production quantities and delivery of goods.

What are Operations?

Role of Operations Manager
• Operations is responsible for producing goods and services.
• The role of an operations manager is to take full responsibility for the manufacturing of
• Goods and Services are different in numerous ways.
goods or services at a corporation and to supervise all the work done in the creation of
 Goods are tangible and can be transferred upon purchase. The quality is
goods or services.
quantifiable and can be directly seen in the product, quality is uniform and
goods can be stored for the longest time (depends on the product).
 Service is intangible, ownership cannot be transferred and is consumed
simultaneously upon payment. Service quality depends on the person What Operations Managers do?
performing the service.
• Planning
• Organizing
Manufacturing Vs. Service • Staffing
• Leading
• Tangibility and intangibility of output • Controlling
• Consumption
• Customer Interaction Ten Critical Decisions in Operations Management
• Customer Performance
• Performance Measurement • Goods and service design
• Managing Quality
• Process and capacity design
Relationships of Operations Management to other functions. • Location strategy
• Layout strategy
• Human Resource Development
• Human resource and job design
• Marketing
• Supply chain management
• Research and Development
• Scheduling
• Logistics
• Maintenance
• Finance
Challenges for Operations and Management
• Global Focus
• Supply Chain partnering
• Sustainability
• Rapid Product development
• Mass customization
• Just in time performance
• Empowered employees
WEEK 2: HISTORY OF OPERATIONS AND TOTAL QUALITY MANAGEMENT
History of Operations Management:
• Pre-Industrial Revolution 1700’s
The Scottish philosopher and father of modern economics — Adam Smith-was one of
the first people to address operations management questions. Smith wrote the "Wealth
of Nations" in 1776 which described the division of labor. If workers divided their tasks,
they could produce their products efficiently, according to Smith, then if the same
number of workers each built product from start to finish.
• Frederick Taylor (Scientific Management) (1900)
Machinery allowed factories to grow in capacity during the industrial revolution, and
greatly increased their production. Despite this growth, production has shown
considerable inefficiency. In the early 20th century, two people helped to overcome
those inefficiencies: Frederick Winslow Taylor and Ford. Taylor developed a quantitative
approach to operations management, gathering output data, analyzing this data and
using it to enhance operations. Ford improved efficiency in production by introducing
assembly line production and enhance the supply chain through just-in-time delivery.
• Human Relations Movement
Frank and Lilian Gilbreth (Motion and study jobs)
The process of human relations is seen as the predecessor to the work of modern
human capital. People were seen as replaceable cogs in the corporate structures before
the human rights movement. It's the H.R. Movement who stressed the importance of
human element in the design of jobs Lillian Gilbreth – applications of psychology Frank
and Lillian Gilbreth stressed one way to get the job done.
Frank and Lillian Gilbreth emphasized efficiency by identifying and replicating one best
way to complete a task. Husband and wife Frank and Lillian Gilbreth believed in
consistency and regulation in the workplace. Rather than a company of many working
parts, they value efficiency above all. The couple believed that there is one best way to
get a job done, and the specific process should, when identified, be replicated through
the manufacturing process, eliminating individual steps and producing the most
efficient results.
• Elton Mayo (Hawthorne Studies)
The Hawthorne studies found that employees were highly responsive to their managers'
extra attention the feeling that their managers actually cared about their work, and
were interested in it. The studies have also found that while financial motivations are
significant, social problems are equally important factors in the productivity of workers.
• Management Science
Ford Whittman Harris mathematical model for inventory management (1915)
F.W. Harris – mathematical model for inventory management, 1915 In inventory
management, economic order quantity (EOQ) is the order quantity minimizes the total
holding costs and ordering costs. It is one of the oldest production scheduling models.
The model was developed by Ford W. Harris in 1913, but R. H. Wilson, is the consultant
who applied it extensively, and K. Andler are given credit for their in-depth analysis.
• Walter A. Shewart (Statistical Process Control Tools)
The original conceptions of Total Quality Management and continuous improvement
are traced back to Walter Shewhart, a former Bell Telephone employee. He preached
the importance of adapting management processes to create profitable situations for
businesses and consumers alike, promoting the use of his own creation — the SPC
control chart.
• The Computer Age of Operations Management
During the 1970’s it is said that the use of computers in companies became popular.
With this the methods and models developed during the era of management science
become widely used. Activities like forecasting, inventory management and scheduling
are easily done and monitored. This leads to the birth of the Material Requirement
Planning system or simply known as MRP. This system is used to improve productivity
and helps on the effective and efficient management of inventory management and
scheduling.
• Just in Time
JIT is a philosophy formulated in Japan during the 1980’s. Companies use this inventory
strategy to improve productivity and minimize waste by only acquiring products when
 they need them for the manufacturing process, which decreases the cost of inventories.
Example, Apple is using JIT they are keeping their inventory relatively small as a result
the company the company has lower risk of over stocking their goods and having dead
stock in their inventory.
• Total Quality Management
Total Quality Management is a holistic approach that is not only focusing on the
products itself; it is a concept that inculcates quality in every part and function of the
organization. Quality starts inside the organization, from the management, the people
who are directly or indirectly involved in the conversion of goods, the manufacturing
process, delivery of goods and the after sales service provided after consumer purchase.
• Business Process Reengineering
This refers to the act of reconstructing a business process with the objective of
improving product output, quality to reduce cost. Example, Due to the pandemic
restaurants and fast food chains are now redesigning their delivery systems through the
use of food delivery applications. Another example is the birth of angkas and carpooling
systems that solves transportation issues in some areas.
• Flexibility
The capacity of a system to cost effectively varies its output over a certain range and
given timeframe, such as a manufacturing process. For example, due to the covid-19
pandemic, academic institutions are transitioning from traditional classroom set-up to
the online-blended, full online class strategy, modular learning to reach and deliver
learning materials to students.
TRENDS IN OPERATIONS MANAGEMENT
• Lean management is a strategy designed to minimize waste from the manufacturing
process and efficiently optimize the value of product or service without jeopardizing the
quality of the product. For example, the company Johnny Jay adopted a lean
management approach to their business. Many of their quality control methods are fully
automated which means that in a shorter period, more parts can be checked for defects.
That means more supply can get out of the door every day and the product can be given
at a lower price to the consumer.
• Enterprise Resource Planning. According to Labarre, this is a system which is used by
companies to integrate key areas of the business such as planning, purchasing,
inventory, sales, marketing, finance and human resources. This system enables these
areas to communicate effectively, disseminate information and collect data.
• Customer Relationship Management refers to technology frameworks that businesses
can use to collect customer data. This is also used in determining customer experiences
during the consumer lifecycle, starting from exploration of the market up to generating
awareness, purchase and post-purchase.
• Cross functional Decision Making refers to the organized decision making from
different functions of the organization. Companies are forming cross functional teams
from various departments to address organizational problems. Employees who are
chosen to be part of this have the responsibility to communicate their decisions and
understand the goals of the organization.
What is Production?
• Production refers to an act wherein we are combining raw materials, labor and
methods to produce finished goods.
What is Productivity?
• The challenge in the modern-day operations management is to improve productivity.
In order for managers to improve productivity one must take in consideration the
following factors: process improvement, ratio of inputs and outputs and employee
motivation.
Factors in Productivity:
• Process of improvement
• Ratio of Inputs and outputs
• Employee motivation
NOTE: Productivity is defined as the quantitative measurement between how much we can
produce and the amount of resources we used to produce a product.
Productivity = units produced/inputs used
Labor Productivity = Units produced/ Labor hours used
Multi Factor Productivity also known as total factor productivity.
Productivity = Output/labor + material+ energy + capita l+ miscellaneous
Measurement Problems:
• Quality- the amount of products produced may not change but degree of quality
excellence may vary depending on how the products are manufactured.
• External elements- this refers to extrinsic and uncontrollable elements that affect
the quality of products.
• Precise units-this refers to the accuracy of products such as the size, shape,
measurement of the product.
Productivity Variables
• Labor- workforce required to run day to day operations and finish goods. Worker
skills are different but the performance still can be enhanced by focusing on certain
main areas that affect the labor.
• Capital- this refers to financial assets or capital assets required to start an enterprise.
Organizations spend a great deal of money to integrate themselves with state-of-
the-art capital technology or instruments to enhance their productivity.
• Management- This is considered as one of the major manufacturing and economic
resource factors because in order to build powerful and competent management
they must invest in educating and training their people to meet the objectives of the
organization.
Challenges faced by the Operations Managers
• Endorse and create better products
• Ensure a clean and safe environment
• Providing a safe work environment
• Acknowledging social responsibilities and societal commitment
Note: Acknowledging social responsibilities ad societal commitment means company must do
something good for the society. (Examples are creating livelihood programs for the community,
charity programs for the society, tree planting, medical mission and so on)
WEEK 3: DEVELOPING MISSIONS AND STRATEGY
What is a mission?
• The mission statement sets out the purpose of the company both for those in the
institution and for the general public.
• Example:
“To provide goods and vital services well within the reach of every Filipino, making
everyday life a celebration”. –San Miguel Corporation
• According to Hezier, Barry and Munson (2019) a mission statement is a short overview
of the primary purpose of an enterprise. The mission statement sets out the purpose of
the company both for those in the institution and for the general public.
FACTORS AFFECTING MISSION
• Philosophy and Values-This are values that a company believes, depending on how they
are regarded in relation to products or community it could be social or political. It must
be aligned with the mission of the company.
• Profitability and Growth-When it comes to market success, productivity and
development are two interrelated factors. Profitability is vital to a company’s financial
survival while growth is important for long-term sustainability.
• Public Image- Companies must maintain a good public image in order to protect their
reputation and must live up to their purpose.
• Benefit to the society- what is your responsibility in making their life better? What will
they gain in supporting your company?
• Customers- They help companies build successful marketing and promotional
strategies, offer goods and services that meets their needs and desires.
• Environment- Management should think of eco-friendly ways to operate their business,
they may consider reducing their energy consumption and dispose their waste properly
as to preserve the natural environment.
MISSION VS. STRATEGY
• Mission refers to the purpose of your existence. Why do you exist? who are you?
And where you’re going?
• Strategy outlines how the organization will achieve success. It is often referred to as
an action plan that is used by companies to achieve their goals.
STRATEGIES FOR COMPETITIVE ADVANTAGE
• Product Differentiation
Product differentiation is a marketing strategy targeted directly at distinguishing the
products or services of an enterprise from the competitors. Effective product
differentiation includes evaluating and discussing the unique characteristics of a set
of products, while emphasizing the significant differences between those offerings
and others on the market.
• Cost Leadership
Cost leadership is a term used in a market when a firm positions itself as the lowest
producer or supplier of a specific product or service. The method is difficult to
implement, because the company must consistently work to reduce costs at all
levels in order to stay competitive.
• Quick response is a strategy that enables manufacturers or retailers to
communicate their inventory needs real time for their shelves or assembly lines.
• Flexibility- The capacity of a system to cost effectively adjust the number of its
output within a certain scope and given timeframe.
• Reliability- is an object's overall capability to perform a desired function and
maintain the quality of rated operational indicators within specified time limit and
technical conditions.
• Timeliness-is often associated to with the timely and accurate delivery of products
and services.
PRECONDITIONS TO IMPLEMENT A STRATEGY
• Analyze the strengths and weaknesses of competitors and new market entrants
• Analyze the environmental, legal and economic issues
• Assess the product life cycle
• Assess the resources available with the firm and within OM function
• Assess the integration of OM strategy with company strategies and other functions
STRATEGIC OPTIONS MANAGERS USE TO GAIN COMPETITIVE ADVANTAGE
• Operations Management. This includes the management of activities such as:
researching the use of raw materials and ensure that nothing goes to waste.
Operations managers uses various methods, like the quantity formula for economic
order to decide when and how big an inventory order is to be handled and how much
inventory should be kept on hand.
• Marketing/distribution. Marketing as a strategy encompasses all activities that a
company uses to attract, communicate and establish relationships with consumers.
Communicating with potential, current and past customers is part of their work. The
task includes writing and sending emails, meeting prospective customers and
informing customers. To make it short, marketing matches the company’s products
to customers. The viability of the product is evaluated through the use of 4P’s which
stands for Products (items you are offering), Price (how much is the price of your
items?), Place (distribution of product), Promotion (how are you going to
communicate with your customers?)
• Brand recognition “brand recall”. This refers to a customer’s capacity to perceive
and recall a brand name from their memory when they are asked to think of a
product category. Brand recall tends to indicate a stronger brand connection than
mere recognition. Company can use a special, inspiring, or melodramatic tale that
informs customers why they are doing business. Customers like to think of brands
touching them on a deeper personal basis.
• Quality. Quality refers to the degree of excellence. A product has no defects and is
in good condition. Customers have their own view of quality and manufacturers must
be critical on maintaining the consistency of the products produced to satisfy
customers.
• Good management. There is no perfect management to begin with. But then
managers should do their best to coordinate management activities in a sequential
manner to achieve the goals and objective of the organization.
• Financial resources. It pertains to resources such as: cash, liquid securities, and
credit lines that a company owns to start a business. Before making decisions, a
manager must take into consideration if the company has enough financial resources
to be able to operate efficiently and well enough to promote success.