AGRB 65 – OPERATIONS MANAGEMENT

MANAGING QUALITY
QUALITY

- Is one of the most important challenges facing a business.

- Is about meeting the needs and expectations of customers.

MARKETS
- Are more competitive.

CUSTOMERS

- are more; KNOWLEDGEABLE, DEMANDING, PREPARED TO COMPLAIN

ABOUT POOR QUALITY, AND ABLE TO SHARE INFORMATION ABOUT POOR
QUALITY (e.g. via email & social networking)
- needs and expectations; PERFORMANCE, APPEARANCE, AVAILABILITY &
DELIVERY, RELIABILITY/DURABLE, AND PRICE/VALUE FOR MONEY

QUALITY TEST

- If a product or service meets all those needs, then it passes QT.

- If it doesn’t, then it is SUB-STANDARD.

POOR QUALITY

- Is a source of competitive disadvantage.

EXAMPLES OF POOR QUALITY

 Product fails (e.g. a breakdown or unexpected wear and tear).

 Product does not perform as promised.
 Product is delivered late.
 Poor instructions/directions for use.
 Unresponsive customer service.
COST OF POOR QUALITY

 Lost customers
 Cost of reworking or remaking product
 Costs of replacements or refunds
 Wasted materials

QUALITY MANAGEMENT

- Concerned with controlling activities with the aim of ensuring that

products and services are fit for their purpose and meet the specifications.

QUALITY CONTROL

- The process of inspecting products to ensure that they meet the required
quality standards.
- Mainly about “detecting” defective output rather than preventing it.
- Can be a very expensive process.

QUALITY CONTROL AND INSPECTION

- Raw materials are received prior to entering production.

- Whilst products are going through the production process.
- When products are finished, takes place before products are despatched
to customers.

PROBLEMS WITH QUALITY INSPECTION

 Costly
 Often at the end of the production process; too late.
 Inconsistent inspection.
 Not compatible with modern production systems.
 Done by inspectors rather than workers themselves.

QUALITY ASSURANCE

- The process that ensure production quality meets the requirement of

customers.
 - Focused on the product design/development stage.

BUILT-IN

- If the production process is well controlled.

- If the production process is reliable – there is less need to inspect
production output.

TOTAL QUALITY MANAGEMENT (TQM)

- Includes all the steps that a company takes to ensure that its goods and
services meet or exceed the customers’ defined specifications and are of
sufficiently high quality to meet customers’ need.

TQM PRINCIPLES

1. Customer Satisfaction
2. Employee Involvement
3. Continuous Improvement
INTERNATIONAL ORGANIZATION FOR STANDARDIZATION (ISO9000)

- Is an international standard-setting body composed of representatives

from various standards organizations.
- Founded on February 23, 1947, in Geneva, Switzerland.

SIX SIGMA

- A set of techniques and tools for process improvement.

- Introduced by engineer Bill Smith in 1980.
SIX SIGMA QUALITY

- Is used to describe a process so well controlled that there are no more

than 3.4 defects per million opportunities.
7 TOOLS IN QUALITY IMPROVEMENT

1. Check Sheets
- An organized method of recording data.

2. Histograms
- A distribution showing the frequency of occurrences of a variable.

3. Flowchart
- A chart that describes the steps in a process.

4. Control Charts
- A chart with time on the horizontal axis to plot values of a statistic.

5. Pareto Charts
- A graph to identify and plot problems or defects in descending order of
frequency.

6. Scatter Diagrams
- A graph of the value of one variable vs. another variable.

7. Cause and Effects Diagrams

- A tool that identifies process elements (causes) that may affect an
outcome.
PROJECT MANAGEMENT

PROJECT CHARACTERISTICS

- Single unit
- Many related activities
- Difficult production planning and inventory control
- General purpose equipment
- High labor skills

EXAMPLES
- Building construction
- Research project

MANAGEMENT OF PROJECTS

 Planning
- Goal setting, defining the project, team organization.
 Objectives
 Resources
 Work break-down structure
 organization

 Scheduling
- Relate people, money, and supplies to specific activities and activities to
each other.
 Project activities
 Start and end times
 network

 Controlling
- Monitor resources, costs, quality, and budgets; revise plans and shift
resources to meet time and cost demands.
 Monitor
 Compare
 Revise
 Action
PLANNING THE PROJECT

SCHEDULING THE PROJECT

CONTROLLING THE PROJECT (DURING PROJECT)

PROJECT ORGANIZATION
 often temporary structure
 uses specialists from entire company
 headed by project manager
- coordinates activities
- monitors schedule and costs
 permanent structure called ‘matrix organization’
ROLE OF THE PROJECT MANAGER
highly visible responsible for making sure that;

- all necessary activities are finished in order and on time

- project comes in within budget
- project meets quality goals
- people receive motivation, direction, and information
THEY SHOULD BE:

 good coaches
 good communicators
 able to organize activities from a variety of disciplines

PROJECT MANAGEMENT TECHNIQUES

ARROW-ON NODE

- is a project management term that refers to a precedence diagramming

method which uses boxes to denote schedule activities.
CRITICAL PATH ANALYSIS

- is the longest path through the network

- is the shortest time in which the project can be completed

EARLIEST START (ES)

- earliest time at which an activity can start, assuming all predecessors

have been completed.

EARLIEST FINISH (EF)

- earliest time at which an activity can be finished.

LATEST START (LS)

- latest time at which an activity can start so as to not delay the completion
time of the entire project.

LATEST FINISH (LF)

- latest time by which an activity has to be finished so as to not delay the

completion time of the entire project.

SLACK – is the length of time an activity can be delayed without delaying the
entire project.

Slack = LS – ES or Slack = LF – EF

FORECASTING DEMAND
FORECASTING
- process of predicting a future event.
FORECASTING TIME HORIZONS

1. Short-range Forecast
- Up to 1 year, generally less than 3 months
- Purchasing, job scheduling, workforce levels, job assignments, production
levels

2. Medium-range Forecast
- 3 months to 3 years
- Sales and production planning, budgeting

3. Long-range Forecast
- 3+ years
- New product planning, facility location, research and development

DIFFERENCES

1. Medium/Long Range Forecasts

- Deal with more comprehensive issues and support management
decisions regarding planning and products, plants and processes.

2. Short-Term Forecasting
- Usually employs different methodologies;
- Tend to be more accurate than longer-term forecasts.

TYPES OF FORECASTS
1. Economic Forecasts
- Address business cycle – inflation rate, money supply, housing starts, etc.

2. Technological Forecasts
- Predict rate of technological progress.
- Impacts development of new products.

3. Demand Forecasts
- Predict sales of existing products and services.
SEVEN STEPS IN FORECASTING

1. Determine the use of the forecast

2. Select the items to be forecasted
3. Determine the time horizon of the forecast
4. Select the forecasting model (s)
5. Gather the data needed to make the forecast
6. Make the forecast
7. Validate and implement results

JOB DESIGN AND WORK MEASUREMENT

JOB DESIGN

- Is the function of specifying the work activities of an individual or group in

an organizational setting.
- To develop jobs that meet the requirements of the organization and its
technology and that satisfy the jobholder’s personal and individual
requirements.
APPROACHES TO JOB DESIGN
Mechanistic Approach

- Cater for jobs that are simple, routine, repetitive tasks such as assembly
jobs, packing processes.
Motivational Approach

- Cater for jobs that deal with services, tasks that involve much movements,
variety of works.
Biological Approach

- Consider ergonomics factors: to design a job that fits the worker’s

physiological nature, and not to fit the worker to the job.
Perceptual Approach

- Consider mental factors and demands that do not exceed the mental
capabilities of the worker.
WORK MEASUREMENT
- Is a process of analysing jobs for the purpose of setting time standards.

METHODS OF WORK MEASUREMENT

1. Stopwatch Time Study

- Development of a time standard based on observations of one worker
taken over a number of cycles.

2. Standard Elemental Times

- Time standards derived from a firm’s historical time data.

3. Predetermined Time Standards

- Published data based on extensive research to determine standard
elemental times.

4. Work Sampling
- Technique for estimating the proportion of time that a worker or machine
spends on various activities.

STANDARD TIME

- The length of time a qualified worker, using appropriate tools and

procedures, will take to complete a job.
IT IS USED IN:

- Costing the labor component of products

- Tracking employee performance
- Scheduling and planning required resources
SUPPLY CHAIN MANAGEMENT
Supply Chain

- Consists of all parties involved, directly or indirectly, in fulfilling a customer

requirement.
Supply Chain Management
- Is the management of the flow of goods.