Operations Management and TQM
Service operations are often
The operations function in business organizations is
responsible for producing goods and
providing services.
Goods are physical items that include raw materials,
parts, subassemblies such as
motherboards that go into computers, and final
products such as cell phones and automobiles.
Services are activities that provide some combination
of time, location, form, or psychological value.
Examples of goods and services are found all around
you.
A supply chain is the sequence of organizations—their
facilities, functions, and activities—that
are involved in producing and delivering a product or
service. The sequence begins with basic
suppliers of raw materials and extends all the way to
the final customer.
The creation of goods or services involves
transforming or converting inputs into outputs.
Various
inputs such as capital, labor, and information are used
to create goods or services using one or more
transformation processes (e.g., storing, transporting,
repairing).
Value-added is the term used to describe the
difference between the cost of inputs and the value or
price of outputs.
Production of goods results in a tangible output, such
as an automobile, eyeglasses, a golf ball, a
refrigerator—anything that we can see or touch. It
may take place in a factory, but it can occur
elsewhere. For example, farming and restaurants
produce nonmanufactured goods.
Consider these points of comparison:
Degree of customer contact. Many services involve a
high degree of customer
contact, although services such as Internet providers,
utilities, and mail service do not.
Labor content of jobs. Services often have a higher
degree of labor content than
manufacturing jobs do, although automated services
are an exception.
Uniformity of inputs.
subject to a higher degree of
variability of inputs.
Measurement of productivity. Measurement of
productivity can be more difficult for
service jobs due largely to the high variations of
inputs.
Quality assurance. Quality assurance is usually more
challenging for services due to
the higher variation in input, and because delivery and
consumption occur at the same
time.
Inventory. Many services tend to involve less use of
inventory than manufacturing
operations,
Wages. Manufacturing jobs are often well paid,
Ability to patent. Product designs are often easier to
patent than service designs, and
some services cannot be patented, making them
easier for competitors to copy.
Finance and operations management personnel
cooperate by exchanging information and
expertise in such activities as the following:
1. Budgeting. Budgets must be periodically prepared
to plan financial requirements. Budgets
must sometimes be adjusted, and performance
relative to a budget must be evaluated.
2. Economic analysis of investment proposals.
Evaluation of alternative investments in
plant and equipment requires inputs from both
operations and finance people.
3. Provision of funds. The necessary funding of
operations and the amount and timing of
funding can be important and even critical when funds
are tight. Careful planning can help
avoid cash-flow problems.
The legal department must be consulted on contracts
with employees, customers, suppliers,
and transporters, as well as on liability and
environmental issues.
Management information systems (MIS) is concerned
with providing management with the
information it needs to effectively manage.
The personnel or human resources department is
concerned with recruitment and training of
personnel, labor relations, contract negotiations, wage
and salary administration, assisting in
manpower projections, and ensuring the health and
safety of employees.
Public relations is responsible for building and
maintaining a positive public image of the
organization.

Module 3: Competitiveness and Strategy
Competitive Advantage denotes a firm’s ability to
achieve market and financial superiority over
its competitors.
Competitiveness is an important factor in determining
whether a company prospers, barely gets by,
or fails. Business organizations compete through some
combination of price, delivery time, and
product or service differentiation.
1. Identifying consumer wants and/or needs is a basic
input in an organization’s decision-making
process, and central to competitiveness. The ideal is to
achieve a perfect match between those wants
and needs and the organization’s goods and/or
services.
2. Price and quality are key factors in consumer
buying decisions. It is important to understand the
trade-off decision consumers make between price and
quality.
3. Advertising and promotion are ways organizations
can inform potential customers
about features of their products or services and
attract buyers.
Operations has a major influence on competitiveness
1. Product and service design should reflect joint
efforts of many areas of the firm to achieve a
match between financial resources, operations
capabilities, supply chain capabilities, and
consumer wants and needs.
2. Cost of an organization’s output is a key variable
that affects pricing decisions and profits.
Cost-reduction efforts are generally ongoing in
business organizations. Productivity
(discussed in the next modules) is an important
determinant of cost.
3.Location can be important in terms of cost and
convenience for customers. Location near
inputs can result in lower input costs. Location near
markets can result in lower transportation
costs and quicker delivery times.
4 Quality refers to materials, workmanship, design,
and service.
5 Quick response can be a competitive advantage.
One way is quickly bringing new or
improved products or services to the market.
6. Flexibility is the ability to respond to changes.
Changes might relate to alterations in design
features of a product or service, or to the volume
demanded by customers,
7. Inventory management can be a competitive
advantage by effectively matching supplies of
goods with demand.
8. Supply chain management involves coordinating
internal and external operations (buyers
and suppliers) to achieve timely and cost-effective
delivery of goods throughout the system.
9. Service might involve after-sale activities customers
perceive as value-added, such as
delivery, setup, warranty work, and technical support.
10. Managers and workers are the people at the heart
and soul of an organization, and if they
are competent and motivated, they can provide a
distinct competitive edge by their skills and
the ideas they create. One often overlooked skill is
answering the telephone.
`
Mart Niton S. Getalia BSA 1
Activity
Describe a customer experience you have
personally encountered where the good or
service or both were unsatisfactory (for
example, defective product, errors, mistakes,
poor service, service upsets, and so on). How
might the organization have handled it better
and how could operations management have
helped?

I recently had a bad customer experience at

Wing Master silog. I ordered a unlimited
Wing, ultimate silogs and drinks. The food is
very well-worth the price. I was very
disappointed with the quality of the services.
I contact the customer service and give some
feedback toward to the poor quality services
that I’ve experience and explained the
problem. They have apologized for the poor
quality of service and offered me a discount
on your meal. They promised have trained
their staff on how to provide better customer
service.

The customer service representative was

very apologetic and said that they would send
me a replacement laptop as soon as
possible. However, it took them over a week
to send me the replacement laptop.

exI just bought a new phone from Olivia

Digos Istore, a well-known online seller. I was
excited to get the phone from the box and
use it. The screen was dented, I tried using a
soft cloth to wipe the screen because I
believed it was just dust, The LCD screen is
actually broken. I contacted with the retailer's
customer service and explained the problem
to them. I eventually got the replacement
phone, and it functioned perfec

tly.