Operations management

Table of Contents

1. Topic pack - Operations management - introduction
2. Operations Management (OM) - Introduction
3. 5.1 Production methods notes
4. 5.1 Production methods - questions
5. 5.2 Costs and revenues - notes
6. 5.2 Costs and revenues - questions
7. 5.3 Break-even analysis - notes
8. 5.3 Break-even analysis - questions
9. 5.3 Break-even analysis - simulations and activities
10. 5.4 Quality assurance - notes
    1. Quality control and assurance
    2. The customer, the customer and the customer
    3. Case study - quality through your customer's eyes
    4. Case study - Portakabin
    5. Operations management and quality
    6. Quality control and quality assurance
    7. Classic quality control (QC)
    8. Quality Assurance (QA)
    9. Total quality culture (TQC)
    10. Total Quality Management (TQM)
    11. TQM planning process
    12. Case study - Six sigma
    13. Lean Production
    14. Continuous improvement
    15. Benchmarking
    16. Case study - Strategy: Benchmarking
    17. Case study - Cadillac benchmarks BMW
    18. Task - Benchmarking report
11. 5.4 Quality assurance - questions and activities
12. 5.5 Location - notes
13. Innovation - notes (HL only)
14. 5.6 Innovation - questions
15. 5.7 Production planning - notes
16. 5.7 Production planning - questions
17. 5.8 Project management - notes (HL only)
18. 5.8 Project management - questions (HL only)
19. Print View

Total Quality Management (TQM)

A key part of creating a total quality culture is to develop a commitment to quality at every stage of the production process from research and development to after sales service. TQM capitalises on the involvement of management, workforce, suppliers, and customers, in order to meet or exceed customer expectations.

In his 1982 book Out of the Crisis, W Edwards Deming offered fourteen key principles for management for transforming business effectiveness. Although Deming does not use the term TQM in his book, it is credited with launching the Total Quality Management movement. The book presented a blueprint for many management 'revolutions' of the subsequent 15 years: Excellence, Re-engineering, Process Management and Systems Thinking.

TQM is not a management tool; it is a philosophy enshrined in the way a firm does business.

W. Edwards Deming along, with Joseph Juran, developed a tool for identifying production problems called Statistical Process Control (SPC). Deming proposed that quality could be achieved by identifying the causes of production problems throughout the manufacturing process and carefully monitoring production to stop errors before too many products were produced. Every step of the process is an opportunity for increased efficiency, hence the term Total Quality Management (TQM).

Joseph Juran was the first to develop strategies for recognising the human aspect of TQM and identifying changes in the nature of HRM to facilitate the change in corporate culture required for the process to be successful. For example:

• Teamwork - TQM stresses that a team approach to quality is the most effective as it gives a greater range of skills, helps solve problems across departments in the firm, leads to more 'ideas' to help improve quality and should result in improved employee morale and involvement in the production process.
• Monitoring - TQM requires close monitoring of the business process to ensure that quality improvements are being met. This monitoring will often have a quantitative element with data being collected about production and various quality indicators using Statistical Process Control methods.
• Company policy - TQM is a culture and requires changes in company policy if it is to be effective. TQM must be adopted at all levels of the firm starting at the top with its adoption by senior management. If there is not full commitment to it, then it is unlikely to succeed.
• Quality chains - TQM needs to be adopted at all stages of the production process if it is to be successful and this may require quality chains from supplier through to customer. These may be internal quality chains with departments being treated as suppliers to other departments. Quality needs to be right at all stages from say one team to another.

Advantages

• TQM significantly improves the quality of the final product or service.
• The volume and cost of waste is reduced.
• Employee productivity improves as they use their time more effectively on issues affecting the 'bottom line' of the organisation.
• As quality improves, market share should show sustainable long-term increases through the creation of competitive advantage.
• Employee morale and motivation improves, resulting in improved staff retention and easier recruitment.
• Customers are satisfied at a lower cost.

Problems

• Lack of commitment from staff will undermine the process. TQM standards are extremely demanding for management and staff.
• TQM requires significant investment; sometimes in new capital equipment, but also investment in training and development of staff. TQM is not a quick fix - it may take years to implement and then is an on-going process.
• TQM may require close monitoring and the collection of large amounts of data to ensure quality at all stages and levels and this will impose additional bureaucracy and therefore cost on the firm. The process may be perceived as 'mechanical', focusing on the means rather than the end.
• Training and development costs will be high as it requires total commitment at all levels of the firm. This may cause some production co-ordination problems and impose an additional cost burden.