CIPS Level 5 Advanced Diploma

in Procurement and Supply

Module title: Operations Management [L5M9]

Leading global excellence in procurement and supply

Learning outcome 1: The concept and scope of
operations management

1.1 Analyse the role and activities of operations

management in organisations
1.2 Critically assess the objectives and strategies of
operations management
1.3 Evaluate operations management processes
1.4 Analyse the application of operations management
across supply chains

Slide 1
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 Operations Management
The process of obtaining inputs, transforming inputs and
distributing
• Outputs needs to be well managed to ensure
I. Effectiveness
II. Efficacy
III. Efficiency
Performance objectives of operations management (Slack
and Brandon- Jones, 2018)
IV. Quality
V. Speed
VI. Dependability
VII.Flexibility
VIII.Cost

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(1.1) Operations management and the functional
areas

Figure 1.1 Functional areas in an organisation

Slide 2
Leading global excellence in procurement and supply
 Operations management
I. The process of managing the resources and processes involved in
the acquisition
II. of inputs, the transformation of inputs and the distribution of
outputs
III. Involves planning, organizing, controlling and co-ordinating the
processes required to produce products and services
IV. Defines the activities, responsibilities and decisions of operations
managers
V. Purpose is to ensure that quality products and services are
produced in
VI. the right quantity at minimum cost within the required time-frame
VII. Uses five performance objectives: quality, speed, dependability,
flexibility and cost

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Operations managers
I. Oversee the operations management function
II. Guarantee that resources are used efficiently in order
to create competitive
III. advantages for the organisation and keep customers
satisfied
IV. Make strategic, operations and control decisions
V. Collaborate with other functional areas to identify
aspects in which the operations
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Operations managers
• Management function can make improvements and
contribute to improved
• Organisational performance (refer to the diagram on
the slide)
• Need a range of skills to make effective decisions and
undertake their duties,
• including leadership skills, data entry and processing,
collaboration,
• Budgeting skills, etc.

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 Class discussion or research activity
• Class into two groups. Using the organization of one team member,
Group 1
How do Operations Departments work cross-functionally with
marketing, finance and production.
Group 2 discusses how operations
• How do Operations Departments work cross-functionally with
human resources, information systems and procurement
departments.

Both Groups answers questions to help compare and contrast the

different organizational processes.

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(1.1) Key activities of operations management
• Product or service selection and design
• Process selection and planning
• Facility location
• Plant layout
• Production planning and control
• Quality control
• Materials management
• Capacity management
• Inventory management
• Maintenance and replacement

Slide 3
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Operations Management-What is It?

Leading global excellence in procurement and supply

(1.1) Key activities of operations management
Ten key activities undertaken by operations managers are as follows.
I. Product or service selection and design. The selection and
design of planning methods that will be used, such as
intermittent project or batch processes, or line/continuous
processes
II. Process selection and planning. Decisions on where to locate
facilities, and planning the layout of the plant, including
arranging and positioning resources and people within the
facility
III. Facility location. Constantly reviewing decisions regarding the
location of services
IV. Plant layout. Arranging or positioning resources and people
within the production facility; apportioning tasks to the various
resources

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(1.1) Key activities of operations management
V. Production planning and control. Key activities of the production
planning and control process – planning, routing, scheduling,
dispatching and follow-up
VI. Quality control. Ensuring that the desired product or service
quality is attained and maintained – quality management
techniques such as: total quality management (TQM), Six Sigma
or just in time (JIT) are used to aid this
VII. Materials management. Managing the acquisition, storage,
control and use of materials to ensure that required items are
received on time to complete product or service production
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(1.1) Key activities of operations management

VIII.Capacity planning. Determining the effective capacity

of the operations process to ensure it can effectively
handle the demands placed on it
IX. Inventory management. The process of planning,
organizing, controlling and coordinating the inventory
needs within an organization with the goal of
minimizing inventory-related costs.
X. Maintenance and replacement. Undertaking
preventive, corrective, repair or replacement tasks on
equipment or machines

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Duties
• Duties of the operations manager
of the operations manager
– Strategic decisions
– Operations decisions
– Control decisions
• Other indirect activities
Decisions
• 10 key operational decision aspects
Skills
I. Leadership
II. Conflict and negotiation
III. Decision-making
IV. People management

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Skills
I. Data-handling
II. Co-ordination and organising
III. Dependability and adaptability
IV. Problem-solving
V. Communication
VI. Planning
VII. Collaboration and team work
VIII. Delegation
IX. Stress management
X. Budgeting

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Relationship with other Functional Areas (Page 11 Table)
The relationship between the operations function and
other functional areas
Marketing/sales
– Key decision area
– Interaction with operations management
Finance
– Key decision area
– Interaction with operations management
– Production
– Key decision area
– Interaction with operations management

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Relationship with other Functional Areas (see Page11)
Human resource management
– Key decision area
– Interaction with operations management

Information systems
– Key decision area
– Interaction with operations management
Procurement
– Key decision area
– Interaction with operations management

Leading global excellence in procurement and supply

Session Summary
• Students should leave this session with an overall
understanding of:
• The different roles and activities involved in the
operations management of organisations.
• The key concepts and definitions should be understood
and
• Interactions between functional Areas
• how operations management differs within different
types of organisations and sectors.
• Examples of different operations management
approaches should be explored so that the students can
understand the processes and approaches within their
own and other organisations
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Understand the concept and scope of operations- (PP12)
I. Analyse the role and activities of operations management in
organisation
II. Analyse the role and activities of operations management in
organisations
III. Operations management is the process of managing the
resources that create and deliver products and services
including
IV. Procuring and transforming inputs into outputs for
consumers

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Operations need to be effectively managed through

– Planning
– Organising
– Controlling
– Co-ordination
• Analyse the role and activities of operations management
in organisations: The extent of operations management in
10 key activities of operations management
I. Product or service selection and design: Choose
products, decide your customer needs ,Design your
product
II. Process selection and planning: Select your top
design,Process how are going to produce? Step 1-20
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Intermittent operations(meet processing Needs) which may involve
I. Labour intensive processes instead of capital intensive
II. Manual processes rather than automation (Which might
not be cost effective)
III. Multi-skilled and flexible employees-to perform
different tasks instead of specifics
IV. Use of general purpose equipment-to perform many
tasks
V. Production of products/services only in response to
customer orders Leading global excellence in procurement and supply
Categories of intermittent operations
• Project processes: To meet specific customer
requirements. When there is need for customisation.
Low product volume. Unique products. High Level of
customer involvement.
• Batch processes: Manufacture of small amounts in
collections and batches. Small volumes with high
degree of customisation,

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Continuous operations
I. Categories of continuous processes
A. Line processes- Manufacturing of large volume of
standard products. Little or no customisation E.g
food, electronics or vehicles
B. Continuous processes: Production in continuous basis.
Very high volume of single product. Capital Intensive and
very automated.
II. The differences between intermittent and continuous
operations

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 Designing processes
4.24

•There are different ‘process types’.

•Process types are defined by the volume and

variety of ‘items’ they process.

•Process types go by different names

depending on whether they produce products or
services.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.24
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Manufacturing process types
4.25

Process Process
tasks flow

High
Diverse/ Project
Intermittent
complex

Jobbing

Variety
Batch

Mass

Contin-
Low

Repeated/ Continuous uous

divided
Low Volume High

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.25
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Project processes
4.26

One-off, complex, large scale, high work content

‘products’

Specially made, every one customized

Defined start and finish: time, quality and cost objectives

Many different skills have to be coordinated.

Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.26
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Jobbing processes
4.27

Very small quantities: ‘one-offs’, or only a few required

Specially made. High variety, low repetition. ‘Strangers’

every one customized

Skill requirements are usually very broad

Skilled jobber, or team, complete whole product.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.27
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Batch Processes
4.28

Higher volumes and lower variety than for jobbing

Standard products, repeating demand. But can make

specials

Specialized, narrower skills

Set-ups (changeovers) at each stage of production.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.28
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Mass (line) processes
4.29

Higher volumes than batch

Standard, repeat products (‘runners’)

Low and/or narrow skills

No set-ups, or almost instantaneous ones.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.29
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Continuous processes
4.30

Extremely high volumes and low variety: often single

product

Standard, repeat products (‘runners’)

Highly capital-intensive and automated

Few changeovers required

Difficult and expensive to start and stop the process.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.30
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Service process types
4.31

Process Process
tasks flow

High
Diverse/ Professional
Intermittent
complex service

Variety Service shop

Mass service
Low

Repeated/ Continuous
divided
Low Volume High

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.31
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Professional service
4.32

High levels of customer (client) contact.

Clients spend a considerable time in the service process.

High levels of customization with service processes being

highly adaptable.

Contact staff are given high levels of discretion in

servicing customers.

People-based rather than equipment-based.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.32
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Service shops
4.33

Medium levels of volumes of customers

Medium, or mixed, levels of customer contact

Medium, or mixed, levels of customization

Medium, or mixed, levels of staff discretion.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.33
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Mass service
4.34

High levels of volumes of customers

Low to medium levels of customer contact

Low, or mixed, levels of customization

Low, or mixed, levels of staff discretion.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.34
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.35 Deviating from the ‘natural’ diagonal on the product–process
matrix has consequences for cost and flexibility

Manufacturin Volume Service

g operations operations
process types Variety process types

Project None Professional

service
More process
Jobbing flexibility than
is needed so
high cost Service
Batch shop
Less process
Mass flexibility than
is needed so Mass
high cost
service
Continuous None

The ‘natural’ line of fit of process to

volume/variety characteristics

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.35
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.36

Facility location pp16 Table 1.3

Categories that may influence location decisions. Decide
where to locate an Operation geographically. Strategic
level decision. Wasted effort can result from wrong
location.
General location factors Page 16
A. Controllable factors
B. Uncontrollable factors
Specific location factors
o Factors for manufacturing organisation
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th

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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.37

Plant layout:
I. Arranging resources around for use by people within a
production facility.
II. Gets rid of confusion delays and disruptions.
III. Affects efficient use of space,time and effort.
IV. Resources Placed where they are within reach, lessens effort to
move back and forth.
V. Operations managers need to decide on proper Layout to deliver
strategic goals: Clear, Safe for customers, Minimise Lead-
time,Allow easy access to resources,Ideally locate staff from
noisy areas,
Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.37
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.38

WHAT IS LAYOUT
The layout of an operation or process means how its transformed
resources are
A. Positioned relative to each other and
B. how its various tasks are allocated to these transforming
resources trying to achieve.
• Together these two decisions will dictate the patter of flow for
transformed resources as they progress through the operation or
process.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.39

It is an important decision because if the layout proves wrong it

can lead to
A. Overly long or confused flow patterns,
B. Customer queues,
C. Long process times,
D. Inflexible operations,
E. Unpredictable flow and high cost.
I. Re-laying out an existing operation can cause disruption leading
to customer dissatisfaction or lost operating time.
II. Layout must start with a full appreciation of the objectives that
the layout should be Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.39
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.40

Examples of good layout

4 basic types of layout
Fixed-position layout
Examples- Building dam,Aeroplane,Ship
Limitations: crowded, Lot of machinery
Functional (process or job-shop) layout
Examples: Making a gate, \Door
Advantages: Line machinery
o Disadvantages
Cell layout
o Examples o Advantages 
Product (line or flow) layout o Examples o Advantages o
Disadvantages
Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.40
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.41

Basic Layout Types

I. Location of transforming resources. Physical appearance and characteristics of the operation.
II. Affects organisation of facilities, technology of transformation.
III. Flow of work through the unit, speed which helps in production.

Basic layout
types
Fixed Process
position layoutare
Activities
layouts arranged by
The product
sequence of
built in situ
operation

Product layout Hybrid

Product moves layouts
Activities are
in sequential arranged by cell
stages which completes
a part or
assembly

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.41
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
Basic Layout Types
I. Location of transforming resources. Physical appearance and
characteristics of the operation.
II. Affects organisation of facilities, technology of transformation.
III. Flow of work through the unit, speed which helps in production.
Basic layout
types
Fixed Process
position layoutare
Activities
layouts arranged by
The product
sequence of
built in situ
operation

Product layout Hybrid

Product moves layouts
Activities are
in sequential arranged by cell
stages which completes
a part or
assembly

Operations Management
Objectives of good facilities layout
I. Maximising the return on the fixed investment by enabling optimum
production levels to be achieved and by minimising the amount of floor
space required

II. Minimising materials handling and transportation requirements

III. Ensuring that labour is utilised effectively and efficiently

IV. Reducing the hazards in the production operation that may affect
production workers and products

V. Allowing for flexibility for changes that may come from new products,
processes or growth in demand

VI. Enabling a smooth, logical flow of product or customers through the

processes
Criteria for good layout
Maximum flexibility-modified quick Minimum handling- reduced to
minimum or non.

Maximum coordination- entry & exit Minimum discomfort - Good heating

convenient for flow. & light

Maximum use of volume-Use of flow Inherent safety- No exposure to

space& use all equipment to danger
maximise

Maximum visibility- observable Maximum security- Fire,moisture,theft

material & people

Maximum accessibility- servicing & Efficient process flow- even

maintenance accessible workflow ,no cross between work &
supply.
Minimum distance- Necessary & Identification- worker with space for
direct moves. free flow
4.45

Layout coverage
• Basic layout types
• Selecting a layout type
• Detailed design of a layout
Layout:
The layout of an operation is concerned with the physical
location of its transforming resources, that is deciding where to
put the facilities, machines, equipment and staff in the operation.
Layout types:
1) Fixed position layout
2) Process layout
3) Cell layout
4) Product layout
Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.45
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.46

Fixed position layout

1) In a fixed position layout, the transformed resource does
not move between its transforming resources.
2) Equipment, machinery, plant and people who do the
processing move as necessary because the product or
customer is either:
i. Too large
ii. Too delicate or
iii. Objects being moved

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.46
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.47

Process layout
1) In a process layout, similar processes or processes with
similar needs are located together because:
i. It is convenient to group them together or
ii. The utilization of the transforming resource is
improved

2) Different products of customer have different

requirements therefore they may take different routes
within the process.
Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.47 3) The flow in a process layout can be very complex.
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.48

An example of a process layout in a library

showing the path of just one customer
Loan books in subject order
On-line and
CD-ROM
access room

Study desks To
journal

Company reports
sack
Enquiries

Current
journals

Reference
section
Reserve
collection
Store Counter staff
room Copying area

Entrance Exit

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.48
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Cell layout
4.49

1) In a cell layout, the transformed resources entering the

operation move into a cell in which all the transforming
resources it requires in located.
2) After being processed in the cell, the transformed resource
may move to a different cell in the operation or it may be a
finished product or service.
3) Each cell may be arranged in either a process or product
layout.
4) The cell type layout attempts to bring order to the
Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.49
complex flow seen in a process layout.
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.50

The ground floor plan of a department store

showing the sports goods shop-within-a-shop
retail ‘cell’
Books
and
videos Footwear Sports shop Menswear

Entrance
Perfume
& jewellery

Confectionery, Elevators
newspaper,
magazines and Women’s clothes
stationery

Luggage
and gifts
Entrance

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.50
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.51

Product layout
1) In a product layout, the transformed resource flow
a long a line of processes that has been
prearranged.
2) Flow is clear, predictable and easy to control.
3) Each product takes a pre-arranged route.
Activities are sequenced according to different
processes.
4) Line balancing often done so that the activities
require about equal time to process and pass goods
to next stage, Reduces idle time & Inventory
Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.51
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.52

An army induction centre with uses

product layout

Waiting Waiting
Lecture theatre area area

Blood
Doctor Doctor test
Uniform X-ray Record
issuing personal
area history
and
Blood medical
Doctor Doctor test details
X-ray

Blood
Doctor Doctor test
Uniform
store X-ray

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.52
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.53

A restaurant complex with all four basic

layout types Line layout cafeteria

Cell layout buffet

Fixed-position layout
service restaurant

Desert

Starter
buffet

buffet
Main course
buffet Service line
Preparation

Oven
Process layout kitchen
Cool room
Freezer Vegetable prep Grill

Slack, Chambers and Johnston, Operations Management, 6th Edition,

4.53
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.54

Volume-variety relationship
Flow is Low High
Volume
intermittent

Fixed-position layout
High

Regular flow more feasible

Process layout
Variety

Cell layout

Product
layout

Flow becomes
Low

continuous

Regular flow more important

Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.54
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Key activities of Production Planning and Control
4.55

I. Planning: Planning sets the intention of :

A. what is to happen & incorporates changes as when deemed
necessary to keep the plan on track.
B. Shift work , more money , more time.
C. Plan lets management visualize the future & determines
whether there are enough resources. Resources might
constrain what the organisation might be capable of doing.
II. Routing: What path the product will follow as being transformed
from inputs ,raw materials to a finished product or service.
Efficient path to final product
Slack, Chambers and Johnston, Operations Management, 6th Edition,
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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.56
Production Planning and Control

III. Scheduling: Sequence in which operations should be

performed. Production dates and Times
IV. Dispatching: Authority to start start production to the
Operation Manager. Production dates and times
determined. Meets routing outlines and
V. Follow-up: Reporting on the progress of work through
each work progress/production and deviation from the
planned

Slack, Chambers and Johnston, Operations Management, 6th Edition,

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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.57

Quality control

I. Methods taken to ensure there is ensured production and goods

and services that are fit for use .

II. Minimise poor or defective goods and service.

III. Feedback is done to ensure improvement of Operations processes

Example methods

A. Total quality management (TQM)

B. Six Sigma-Improves processes by statistics

C. Just in time (JIT)

Slack, Chambers and Johnston, Operations Management, 6th Edition,
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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.58

Aims of quality control:

I. Revenue improvement by improvements in value for

money

II. Minimise costs related to poor products-product recall

III. Optimal quality is obtained at reasonable price.

IV. Customers satisfied and provide loyalty

V. Variation/unreliable during the production process

identified and cured

Slack, Chambers and Johnston, Operations Management, 6th Edition,
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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.59

Materials management
I. Processes that gets materials needed by production is delivered
to the organisation used or stored
II. Ensures goods are obtained in right quality and time
III. Reasonable prices , timing, Quality is ensured
Aims of materials management
IV. Reduce costs associated with purchase and transportation of
goods, controlling use of those materials.
V. Minimise costs through standardisation, Negotiation, Value
analysis
VI. Cheaper raw materials, relationship management. Guarantee
supply. Minimise purchases and assure
Slack, Chambers goodOperations
and Johnston, inventory
Management, 6 Edition,
th

4.59
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
 Capacity management
4.60

I. Involves matching the Operations system with demands it is to

meet.
II. Capacity is the ability of the Operations system to produce
work in a given time. All the production qualities depend on
capacity. 2-18 months
III. Effective & Efficient capacity - two variables that measure
ability of the system to meet demand.
IV. Fluctuations in demand - Medium- and long-term forecasts
needed to meet anticipated demand. Forecasts inherently
unreliable. Need for investment to assure that the forecasts are
as near reliable as possible.
Slack, Chambers and Johnston, Operations Management, 6 Edition,
th

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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.61
Capacity management

V. Long term operational plans- their accuracy dictate

manufacturing & service provisions, network designs,
based on strategic plan.
VI. Resource usage, system design & capacity
management to effectively deliver products or services
taken by Operations manager.
VII. Demand is difficult to predict especially long term.
Decisions at this stage affects organisation ability to
meet demands
Slack, Chambers and Johnston, Operations Management, 6th Edition,
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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.62

Capacity planning and management

Objectives
3 stages of capacity Planning see pp23

I. Measuring and forecasting aggregate demand for a given

period

II. Identifying different capacity plans required to meet

forecasted demand

III. Identifying the most suitable capacity plan

Slack, Chambers and Johnston, Operations Management, 6th Edition,
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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.63
Capacity management

I. Minimise costs associated with failure in

production/demand fluctuations
II. Maximise revenue by mopping up excess demand
III. Capital expenditure maximum usage
IV. Services provided to the customer of required
demand and quality
V. Create dependability within Operations system
VI. Flexibility to respond to Market needs
Slack, Chambers and Johnston, Operations Management, 6th Edition,
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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.64
Stages in capacity Planning
I. Measure overall demand & capacity over the time-
frame,(units produced, tonnes etc.)
II. Identify changes to be made Case study 24

III. Choose the capacity plan.

Operation does not meet demands at times. Operation activity is
therefore re-considered at strategic level & made part of the plan for
Operational level.
Operations ,at its level, can carry out the following to adjust
capacity:
1. Increasing operating times: maximise existing resources by
increasing the number of shifts (2 to 3) to keep the plant operating
around the clock.
Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.64
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.65

I. Stages in capacity Planning

II. Overtime: labour available for longer & pay adjusted

for extra work. Expensive.

III.Use of part-time staff: extra staff when there is up-

tempo. Issues of security & lack of familiarity or
skills.

IV.Subcontracting: Sudden surges in demand met by

giving work to suppliers- all relationship issues with a
supplier considered.
Slack, Chambers and Johnston, Operations Management, 6th Edition,
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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.66

Inventory management
Different types of inventory: for different reasons
I. Raw materials: converted or transformed to Fished goods
II. Work-in-progress: material being processed or awaiting
further processing
III. Finished products: Production ready to be transported to
customers
IV. Transit inventory: Known as pipeline, on movement from
one location to the other
V. Buffer inventory: Protect the org against
uncertainty ,delays , supplier failures
Slack, Chambers and Johnston, Operations Management, 6th Edition,
4.66
VI. Anticipation inventory © Nigel Slack, Stuart Chambers, and Robert Johnston 2010
4.67

Maintenance
Maintenance and replacement
Objectives
A. Preventive maintenance
B. Corrective maintenance
C. Emergency maintenance

Slack, Chambers and Johnston, Operations Management, 6th Edition,

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© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
Operations Management in different Types of Organisations
I. Operations management in different types of
II. The operations function is more visible in some
organisations than in others
A. Manufacturing vs service sector
B. Tangible vs intangible outputs
C. Variation in goals
D. Variation in size

– Public sector

Leading global excellence in procurement and supply

Topics for various Operations
I. Production selection and design
II. Process selection and planning
III. Facility location
IV. Plant layout
V. Quality control
VI. Materials management
VII. Capacity management
VIII. Inventory management
IX. Maintenance and replacement

Leading global excellence in procurement and supply

Examples of Operations
I. Car factory: Operations

A. Location of Industry is important: Suppliers,Transportation

B. Layout places resources (machines, staff and Inventory).

C. Capacity planning to determine how many cars can be

assembled. control to ensure cars conform to requirements.

D. Inventory management ensures material are procured to mee

needs of capacity.

E. Material management for WIP and Finished products

Leading global excellence in procurement and supply
Examples of Operations
II. Medical practice:

A. layouts important in hospitals, processes in facility, capacity planning will be

used to determine staff members.

B. Location Analysis to Geographically locate. Inventory

C. Management determines what tools, Machines etc

III. Consultancy company:

A. Operations used to predict Usage and need for the services

B. Processes are also determined to serve and include customer needs

C. Capacity management will determine the volume of customers and decide

face to face or Online service Leading global excellence in procurement and supply
 Operations in Different Types of Organisations

IV. Relief or charity programmes:

A. Operations would determine Location & processes to serve customers
B. Capacity need and capability of the organisation will be determined
C. Inventory will be used to determine on need of customers

V. Advertising agency:
A. Ops used to select processes for design of adverts to meet
customer needs
B. Quality control ensures conformance to requirements to
standards as well as customer needs

VI. Education providers: CJSS for example; Location, How

many Children, Online or Physical,Staff-Full and part-time
Leading global excellence in procurement and supply
 Summary of section
I. Students should leave this session with an overall understanding
of the different roles and activities involved in the operations
management of organisations.
II. The key concepts and definitions should be understood and how
operations management differs within different types of
organisations and sectors.
III. Examples of different operations management approaches should
be explored so that the students can understand the processes
and approaches within their own and other organisations

Leading global excellence in procurement and supply

(1.2) Four-stage model of operations
contribution

Figure 1.3 Hayes and Wheelwright four stages of operations contribution from
implementing to supporting to driving strategy (Source: Hayes, R.H. and Wheelwright,
S.C. (1984) Restoring our Competitive Edge: Competing Through Manufacturing. New
York, NY: John Wiley & Sons)

Slide 4
Leading global excellence in procurement and supply
(1.2) Strategies
A strategy is a course of action or plan designed to enable
the achievement of a goal or objective on one of three
levels.
1. Corporate level
2. Business level
3. Functional level

Slide 5
Leading global excellence in procurement and supply
(1.3) Operations function: Input – transformation
– output

Figure 1.4 The operations function (Slack, N., and Brandon-Jones, A. (2018), Operations
and process management: Principles and practice for strategic impact (5th ed.).
Harlow, Essex: Pearson Education)

Slide 6
Leading global excellence in procurement and supply
The input–transformation–output model

Leading global excellence in procurement and supply

Inputs
– People
The workforce who provide the skills, knowledge and
competencies that underpin the operation.
– Materials
The raw materials or the assembly items that form part of
the finished product. Ingredients, Delivered, keep ,order
– Energy
the management of costs is central to operations
management. Energy management represents just one area
for consideration.
– Finance
The organisation must have adequate finance for buying and
updating capital items and for working capital.
– Information
Good information is essential to any operational activity in
today’s workplace. Leading global excellence in procurement and supply
Process considerations
I. Capacity-Enough bricks, satisfy our
customers ,Production
II. Type of production or operation: Batch, mass
production
III. Level of skills available: People Transforming. Skilled
brickmakers. Machinery capable
IV. Layout of plant and equipment
V. Effectiveness of information technology
VI. Cost to be achieved Leading global excellence in procurement and supply
(1.3) Examples of transformation processes (46)

• Mixing: Sand, • Teaching

Cement • Examining
• Cooking: Baking • Advising: Social
• Repairing: repair pots • Researching: new
• Reconditioning: • Transporting
change parts • Developing
• Cutting: cut into
needed pieces

Slide 7
Leading global excellence in procurement and supply
Output for customers
I. All organisations produce goods and services cars
clothing books are goods and Services: medical care,
cleaning, child care
II. Goods and services normally go together. Car industry
service cars. Hotel offer service and goods
III. Differences between goods and services studied as they
have implication on Operations, service normally offered
by people
IV. Technology offered services: Some
Leading global services
excellence are
in procurement offred
and supply
Process considerations
I. Processes fall into:

a) Operating (add value to product/service) and

b) Management (efficient and effective running of process)processes

II. Both important as they are mutually reinforcing. Operations is linked to operating process.

III. Transformation process relies mainly: buildings, machinery, equipment and process technology ,

staff

IV. Services follow the same model like hotels, airlines. Take in people & transform them-

accommodating moving them

V. Process considerations that facilitate the transformation

a. Capacity
b. Type of production or operation
c. Level of skills available
d. Layout of plant and equipment
e. Effectiveness of information technology
f. Cost to be achieved
All these combine to give desired result. Design of transformation process is key. Output delivery of goods and
services.
Examples of 4vs
a. Taxi service low volume (more variety-you specify where it goes) while a bus
is high volume one station to the other..

b. Corporate tax is specific to a firm but audit is generally standardised.

1. Volume: low levels company has specific characteristics such as high

repeatability ,capital intensive and high capitalization.

2. Variety: More flexibility in operations, matches customer needs, unit costs

high.

3. Variation in demand there is large changes in demand. Anticipate what

customer will need. Extreme end there is high unit costs.

4. Visibility. Customer ability to track own order. Short waiting tolerance-

customer perception important.
(1.4) Operations management in different sectors
MANUFACTURING Production planning Production control
SECTOR •Production methods that will be used •Scheduling/monitoring ops activities
•Site selection •Quality control
•Facility layout •Capacity planning & management
•Components/materials management •Location decisions
•Inventory management

SERVICE SECTOR •Production methods that will be used

•Site selection and facility ambience
•Capacity planning and scheduling
•Inventory control

RETAIL SECTOR •Facility management

•Inventory management
•Management of receipts
•Customer service
•Managing events and relationships

CONSTRUCTION •Cost minimisation •Process selection

SECTOR •Quality control •Management of materials
•Safety •Capacity and inventory management
•Staff recruitment and training •Maintenance and replacement

PUBLIC SECTOR All above processes applicable, as activities may be undertaken in all sectors
Slide 8
Leading global excellence in procurement and supply
Learning exercise: Kanako’s Charity
Kanako runs a charity collecting, storing and distributing
aid to people who have suffered loss through natural
disasters.
In groups, referencing operations management consider
what would be the best option for:

1. Facility location
2. Plant layout
3. Materials management
4. Quality control
Slide 9
Leading global excellence in procurement and supply
Learning outcome 2: Improvement methodologies in operations
management
2.1 Analyse tools for improving performance in operations
management
2.2 Explain techniques in failure prevention and recovery
that can be applied in operations management
2.3 Evaluate the role of total quality management in
operations management
2.4 Analyse the techniques for quality improvement that
can be applied in operations management
Slide 10
Leading global excellence in procurement and supply
(1.3) Operations function: Input – transformation
– output

Figure 1.4 The operations function (Slack, N., and Brandon-Jones, A. (2018), Operations
and process management: Principles and practice for strategic impact (5th ed.).
Harlow, Essex: Pearson Education)

Slide 6
Leading global excellence in procurement and supply
Fundamentals of Operations
Management

Leading global excellence in procurement and supply

(1.3) Examples of transformation processes
• Mixing • Advising
• Cooking • Researching
• Repairing • Transporting
• Reconditioning
• Developing
• Cutting
• Teaching
• Examining

Slide 7
Leading global excellence in procurement and supply
(1.4) Operations management in different sectors
MANUFACTURING Production planning Production control
SECTOR •Production methods that will be used •Scheduling/monitoring ops activities
•Site selection •Quality control
•Facility layout •Capacity planning & management
•Components/materials management •Location decisions
•Inventory management

SERVICE SECTOR •Production methods that will be used

•Site selection and facility ambience
•Capacity planning and scheduling
•Inventory control

RETAIL SECTOR •Facility management

•Inventory management
•Management of receipts
•Customer service
•Managing events and relationships

CONSTRUCTION •Cost minimisation •Process selection

SECTOR •Quality control •Management of materials
•Safety •Capacity and inventory management
•Staff recruitment and training •Maintenance and replacement

PUBLIC SECTOR All above processes applicable, as activities may be undertaken in all sectors
Slide 8
Leading global excellence in procurement and supply
Learning exercise: Kanako’s Charity
Kanako runs a charity collecting, storing and distributing
aid to people who have suffered loss through natural
disasters.
In groups, referencing operations management consider
what would be the best option for:

1. Facility location
2. Plant layout
3. Materials management
4. Quality control
Slide 9
Leading global excellence in procurement and supply
Learning outcome 2: Improvement methodologies in operations
management

2.1 Analyse tools for improving performance in operations

management
2.2 Explain techniques in failure prevention and recovery that can
be applied in operations management
2.3 Evaluate the role of total quality management in operations
management
2.4 Analyse the techniques for quality improvement that can be
applied in operations management
Slide 10
Leading global excellence in procurement and supply
Improving performance
Measuring the performance :
I. Measuring Performance of an organisation an important part of management. How well is
the organisation doing? Where improvements are necessary?

II. Performance measures: Gets quantitative data on products, services & processes for their
production. Effectiveness & efficiency of productive actions is collated.

III. Quantifiable measures are developed. They identify the aspects of processes that need to be
improved & those working well. Helps in evaluating organizational measures

IV. Expectations of performance are known and the performance can then be compared to this.
Encourages management by objectives to meet customer needs.

V. Performance objectives in operations- Quality, speed , dependability ,flexibility & cost are
measured. Helps in breaking down these objectives e.g.. Quality has defects per
1000,customer complaints, scrap produced etc. So key performance Indicators can be used as
targets for comparing performance overtime to.
Performance objectives and measures
Objectives Some typical measures
Quality • Number of defects per unit • Warranty claims
• Level of customer complaints • Mean time between failures
• Scrap level • Customer satisfaction score
Speed • Customer query time • Actual versus theoretical
• Order lead time throughput time
• Frequency of delivery • Cycle time
Dependability • Percentage of orders • Mean deviation from promised
delivered late arrival
• Average lateness of order • Schedule adherence
• Proportion of products in
stock
Flexibility • Time needed to develop new • Average batch size
products or services • Time to increase activity rate
• Range of products and • Average capacity and maximum
services capacity
• Machine changeover time • Time to change schedules

Cost • Minimum delivery time and • Labour productivity

average delivery time • Added value
• Variance against budget • Efficiency
• Utilisation of resources • Cost per operation hour
 Cashflow Statement

I. Look at the sample cash flow statement for Company

XYZ on the left. What does it tell us?
II. It tells us
III. that the company’s cash flow for the (US) financial
year 2003 was $1,522,000
IV. that the bulk of the earnings came from the core
business of the company, which means that the
company is doing well
V. that the company has cash to invest in inventory
for expansion (shown by the purchase of equipment
for $500,000—figures in parentheses show cash
payments)
VI. that cash is available should the company need to
go in for a loan (indicated by the entry against
“notes payable”)
Cashflow Statement
Merits of the cash flow statement.
I. As the cash flow statement focuses on the inflow and
outflow of cash, it can be used to analyse the actual
performance of a business.
II. Although the cash flow statement is seen as less important
that other financial statements of a company, such as the
balance sheet and the income statement, it shines light on
aspects of performance not readily visible in other
documents.
III. Financial experts see the cash flow statement as a true
reflection of the financial health of a business in a
given period and its viability, as it is more difficult to
doctor, compared with other financial documents of a
company, such as the income statement.
IV. Therefore, the cash flow statement, often described as the
most transparent index of performance of a company, is an
important tool of financial analysis.
Profit and Loss Statement for ABC Manufacturing Company Ltd. For the quarter ended March 31, 2014

NET SALES 300,000

Cost of goods sold:
Beginning inventory − 85,000
Material purchased − 150,000
Shipping − 45,000
Cost of goods available for
280,000
sale
Less ending inventory − 90,000
COST OF GOODS SOLD − 190,000
GROSS PROFIT 110,000
Operating expenses (Selling,
Administrative, and General
Expenses):
Salaries and Wages − 52,000

Rent − 10,000

Electricity − 4,000

Other Expenses − 6,000

Local Taxes − 3,000

Depreciation − 1,000

Repairs − 2,500

Total operating expenses − 78,500

 Expenses
Operating expenses (Selling,
Administrative, and General
Expenses):
−
Salaries and Wages 52,00
0
−
Rent 10,00
0
Electricity − 4,000

Other Expenses − 6,000

Local Taxes − 3,000

Depreciation − 1,000

Repairs − 2,500

−
Total operating expenses
78,500

Profit From Operations 67,500

Performance objectives
I. Combination of smaller parts of performances. Right combination

of objectives have to be put together for the business to achieve.

II. Performance measurement always has some existing framework

to compare to. The organisation strategy, competitor actions,

prevailing technology all impact on organisation measures.

III. Performance measurement is dynamic- customer needs, wants,

expectations are forever changing.

Leading global excellence in procurement and supply

The balanced scorecard
•Financial objectives alone not sufficient to measure and control businesses. Other parameters needed which are long-
term.
•Four perspectives are presented by the balanced scorecard:

I. Financial-how do we create value for our shareholders?

II. Customers-their needs and wants ,what do they want/value?

III. Internal business processes? How do we do things? What things to do & deem ourselves successful? CSFs

IV. Innovation & internal Learning- What new services? What training do we do? Where do we go from here?

I. Balance Financial & non-financial? Short & long term perspectives? Internal and
external focus? Describe- long term goals,
Leadingsuccess factorsinto
global excellence achieve goals
procurement and supply
(2.1) Balanced scorecard

Figure 2.1 The balanced scorecard (Source: adapted from Kaplan and Norton)

Slide 11
Leading global excellence in procurement and supply
Cost
• Gross margin is a company’s net sales
minus its cost of goods sold.
– The gross margin reveals the amount that a business earns from the
sale of its products and services,
– before the deduction of any selling and administrative expenses.

Leading global excellence in procurement and supply

Setting performance targets
Performance depends on what you compare it against-94% quality might
look good, but what if competitors have 99%? We set targets:
I. Historically-based targets
I. we compare current measures with those that we achieved in the past
II. Strategic targets
I. we set targets to reflect how the operation is doing against stated strategic aims
and objectives
III. Externally performance-based targets
I. we set targets to match or exceed the performance level achieved by a competitor,
external operations or recognised performance standards within the industry
IV. Absolute performance targets
I. based on the theoretical upper level of performance. Calculated growth projections
A. All results must be considered and refined overtime to get meaningful results.
B. Different goals might be used depending on the organisations needs. Goals point to
an area of focus the org needs to develop.
C. Goals & targets difficult to compare as focus differ.

Leading global excellence in procurement and supply

Performance judgment
Performance Measurement:
I. What to measure, when to measure it, what the targets will be influences what
will be done by individuals or groups within the org.
II. Performance review will also form part of the organisations process

III. Performance targets will lead to performance judgment. These will call for
comparators of what entails good performance. Hard data as well as what
influences the business internally & externally
IV. Strategic objectives are ensured to be achieved if all levels are coherent (from
operational , business , strategic) and support corporate strategy

Leading global excellence in procurement and supply

What is Benchmarking
A method for identifying and importing best practices in order to
improve performance
The process of learning, adapting, and measuring outstanding practices
and processes from any organization to improve performance
Why benchmark?
I. Identify opportunities to improve performance
II. Learn from others’ experiences
III. Set realistic but ambitious targets
IV. Uncover strengths in one’s own organization
V. Better prioritize and allocate resources to improve performance
Five phases of benchmarking
Planning Identify benchmark outputs
Identify best competitor
Determine data collection method
Analysis Determine current competitive gap
Project future performance levels
Integration Establish functional goals
Develop functional action plans
Action Implement specific actions
Monitor results and report progress
Recalibrate benchmarks
Maturity Leadership position obtained
Processes fully integrated in our practices
Four types of benchmarking
Comparing company performance against others. Used by all departments. Aspects of
purchasing, can be used across all departments. Will be realistic as they are compared

• Measure performance against best practices. Use the info so gained in your organisation
I. Internal benchmarking: Uses cross functional/and or cross site teams. Development of
measurement criteria of similar functions; high performers within the organisation

II. Competitor benchmarking: comparison with high competitors within the market where
you want to gain competitive edge. Data hard to come by. Specialist organisation can have
this data available.

III. Functional benchmarking: with a department in another organisation e.g. material

management. Or distribution and storage. Use benchmarking data. Third party Logistics
will compare their company with others to ensure competitive edge.
Bases for process requirement
Uses process triangle. Differentiates type and importance of process.
Helps highlight development areas.
I. Basic processes
I. looks at processes such as receiving, administration and
effective storage that underpin the service delivery
II. Benchmark processes
I. examines those processes that are important in delivering the
required level of customer service and in consequence must be
of a high standard
III. Competitive processes
I. examines those areas that may serve to give a competitive
advantage and help differentiate the organisation against its
competitive market
Preparing to benchmark
Be well organised – prepare thoroughly Select the appropriate measures
Determine what the customers really Select benchmarking partners
want
Structured approach determines
Undergo an appropriate self-analysis information needs
Set and understand priorities
Identify the resources and processes
Identify companies for comparison that will influence the outcome
Realistically assess the competition Establish benchmarking teams
Identify best practice Enable cross-functional working
Understand the aims and objectives of Highlight process areas that you feel
the exercise require priority
Learn from related and other business Provide research feedback in a useful
sectors format
Introduce relevant best practice Adapt to the results of the benchmarking
Provide a means to continuous exercise
improvement
Measure the results
Benefits of benchmarking
I. Learning from others who have enjoyed success and greater
confidence in developing and delivering new approaches

II. Greater involvement and motivation of staff engaged in

benchmarking and change programmes

III. Heightened awareness about performance levels

IV. Increased willingness to share solutions to common problems

V. Wider understanding of the strategic implications

VI. Increased collaboration and enhanced working relationships

 Limitations of Benchmarking

I. Tends to ignore what the customer wants

II. Tends to focus on current competitive issues rather

than future ones. Stifles innovation as ideas just obtained

from another and adapted.

III. Tends to identify only performance levels and not how

improvements may be achieved

IV. It is only the first step to improvement: benefits come

only after implementation

Priorities for Improvement-continuous improvement

I. Customer preferences and needs: Organisations need

to respond to customer needs and stay competitive in
the market. If customers prefer lower quality then the
Operations branch should be focused on achieving
cost effective operations.
II. Competitors are performing in their operations its in
the interest of the organisation to match or support
them. This will help areas where operations needs to
improve
W E Deming – PDCA Cycle
Continuous Improvement Ergonomics in
the PDCA Cycle
 Continuous Improvement
I. Quality thinking (Philosophy) - No matter how good we are we
are capable of improvement
II. Incremental over time to improve the process. It steps that
occurs ongoing nature of change rather than speed is important.
III. Change that increases effectiveness and efficiency of the
organisation to fulfill objectives &policy. Other than quality it
improves strategic gains, customer satisfaction, supplier relations
etc.
IV. Improvements can: reduce costs, improve quality, motivate
workers and provide better product to customers. Improvement
is a result
Continuous improvement- 10 steps.
1. Determine current performance
2. Establish a need to improve
3. Obtain commitment and define the improvement objective
4. Organise the diagnostic resources
5. Carry out research and analysis to discover the cause of current
performance
6. Define and test solutions that will accomplish the improvement
objective
7. Produce improvement plans which specify how and by whom the
changes will be implemented
8. Identify and overcome any resistance to the change
9. Implement the change
10. Put in place controls to hold new levels of performance and begin
all over
(2.1) Sandcone model of improvement (Ferdows & de Meyer, 1990)
I. Quality
II. Dependability
III. Speed
IV. Flexibility
V. Cost

Slide 12
Leading global excellence in procurement and supply
Sand cone Theory
I. When planning for improvement of operations, importance must be
placed on the following.
A. Customer preferences and needs
B. How competitors are performing in their operations
II. The sandcone theory (Ferdows and de Meyer, 1990) (refer to diagram
on slide) illustrates the following measures, with quality as the
foundation, i.e. the highest priority.
1. Quality 2. Dependability Speed Flexibility 5. Cost
III. Overall reduction in costs results from improvements in all measures.
IV. The central thesis of this model is that manufacturing
performance is cumulative and sequential, with
Leading global excellence in procurement and supply
quality performance forming the foundation.
Sandcone
I. Overall reduction in costs results from improvements
in all measures.
II. While it is important to focus simultaneously on all
five measures, a minimum level in each must be
reached before moving up to the next.
III. Moving to the next priority should lead to greater
improvement in the previous measure.
IV. The way the organisation looks at improvement may
lead it to develop ‘an improvement culture’, which
consists of two elements.
A. Improvement capabilities
B. Learning

Leading global excellence in procurement and supply

 The Sand Cone model
I. The Sand Cone model suggests that although in the
short term
A. it is possible to trade off capabilities one
against the other,
B. there is actually a hierarchy amongst the four
capabilities.
II. To build cumulative and lasting manufacturing
capability, management attention and resources
should go first towards
A. enhancing quality, then - while the efforts to
Leading global excellence in procurement and supply
enhance quality are further expanded
 Business Process Re-Engineering
Stage in the evolution of quality.
“Rethinking and radical redesign of business processes to achieve
dramatic improvements in measures such as cost, service and
speed”
I. Organisation is designed as series of processes. Team that has
responsibility for all processes of the organisation-suppliers and
customers later included.
II. Not gradual improvement but a radical approach of processes
over given period of time.
III. It harnessed as radical change. Automates way business is
achieved.
IV. Put forwards the principles of re-engineering.
Principles of re-engineering
• Organise around outcomes, not tasks
• Have those who use the output of the processes perform the
processes
• Integrate information processing work into the real work that
produces the information
• Treat geographically dispersed resources on a centralised basis
• Link parallel activities instead of integrating their results
• Place the decision point where the work is performed and build
control into the process
• Gather information once and at the source
 BPR
I. Clean slate-Do away with what existed before and start over again.

Usually done at the adoption of new method or technology.

II. Highly competitive and demanding organisations- open markets drive

BPR

III. Fewer layers of management and more skilled workers doing

specialised jobs.
A five-stage approach to the
implementation of BPR
• Develop the business vision and process objectives
• Identify the processes to be redesigned
• Understand and measure the existing processes
• Identify the contribution of IT
• Design and build a prototype of the new process
BPR: success and failure
PRECONDITIONS FOR SUCCESS OF BPR REASONS FOR FAILURE OF BPR
Senior management support The wrong sponsor
Realistic expectations Cost-cuttng focus
Empowered and collaborative Narrow, technical focus
workers
Strategic context of growth and Unsound financial condition of the
expansion organisation
Shared vision Too many projects underway
Sound management practices Fear and lack of optimism
Appropriate people participating full-
time
Sufficient budget
The benefits of BPR
• Revolutionary thinking
Organisations need to abandon conventional thinking and make a paradigm shift to
the new way of thinking.

• Breakthrough improvement
BPR helps organisations take a more radical approach to quality, seeking big gains
rather than on a more continuous basis.

• Organisational structure
A genuine focus on identifying customer needs with a structure built to do just that.

• Corporate culture
Reducing management while at the same time genuinely empowering workers.

• Job redesign
More rewarding and satisfying jobs where workers are involved in the entire process.
2.2 Explain techniques in failure prevention and recovery that
can be applied in operations management

I. Measuring failure and the impact of failure

II. Mechanisms to detect failure
III. Failure mode and effect analysis
IV. Improving process reliability
V. Maintenance and approaches to
maintenance
VI. Failure distributions
VII. Business continuity
(2.2) Types of failure

I. Design failure
II. Facilities failure
III. Staff failure
IV. Supplier failure
V. Customer failure
VI. Organisational failure
VII. Environmental disruption
Slide 13
Leading global excellence in procurement and supply
 Mechanisms to detect failure & results of failure
I. Failure patterns can be identified to avoid and study so as to come up with avoidance. Failure happens
when something does not do what it was designed to do

II. Something does not work as its supposed to is failure. Operations if something ceases to do what its
supposed to. So failure in operations should not be acceptable Failures go from total offline to partial
which can be managed.

III. Prevent failure: even though Operations go to great lengths to get rid of failure they never succeed
absolutely. They are an opportunity to learn. Role of operations managers to ensure that strategies are
in place to minimise failure.

IV. Simulating failure/Recovery from failure - Computer etc. are modeling such events to detect what
their results are. Defenses against failure will be build around this. Recovery from disasters are also the
job of the Operations manager to plan for.

V. Failure in quality affects the company(Financially) as well as the customer and intertwined and
therefore security has become key. Loss of customers can result.

VI. Failure can be measured through: Failure rates, Reliability and availability
Types and causes of failure
I. Total failure
I. is the complete lack of ability of the product or service to perform or fulfil
its function

II. Partial failure

I. where the item does not work as expected but has not completely failed

III. Gradual failure

I. which takes place progressively over time
II. can often be anticipated or built in.

IV. Sudden failure

I. occurs unpredictably and is not easily planned for
Failure Prevention and Recovery

I. Measuring failure & impact of Failure

II. Mechanisms to detect failure

III. Failure mode and Effect Analysis

IV. Improving process reliability

V. Maintenance and approaches to maintenance

 Definition of failure and causes
I. Quality is inherent (part & puzzle of) product and service. Product
accepted because it preforms over the expected time.

II. Reliability is taken highly by customers: that the item will perform when
its expected to. That is related to quality . But all items fail at a certain
stage.

III. Preventing failure through design controls: Plan should be to design

quality and reliability into products. Product designed to meet customer
needs-quality , reliability , and marketing

IV. Failure results when product has failed to meet its required function.
Failure can be built into the product, anticipated. Just do enough to work
for awhile!!!
The bath-tub curve
I. Attempt to describe the length of life of a component , machine ,structure
device.
II. Failure prevention measures can be planned if we have an idea when things
can fail. Just before failure
III. Failure can happen in different ways:-Fracture occurs after single load ,
structure instability, corrosion , fatigue due to cycle loading and mechanical
assemblies sticking together
Failure Prevention and Recovery

I. Measuring failure & impact of Failure

II. Mechanisms to detect failure

III. Failure mode and Effect Analysis

IV. Improving process reliability

V. Maintenance and approaches to maintenance

 Improving process Reliability
I. Reliability-Measure of the ability to perform as expected over a time period.
Each component has its own reliability.
II. System which has three different parts which are in series i.e they depend on
each other with each having reliability of 0.96,0.90 and 0.94 respectively have
total reliability of
III. R t =R1XR2XR3= 0.96X0.9X0.94=0.812---The more the items in the system the
less the reliability. Car industry has to work hard
IV. Early failures are improper design, production mistakes. A new car is likely to
have mistakes showing in year 1 than year 5. Failure rate- the number of failures
over a given time.
V. Mean time between Failures(MTBF): If failure rate is assumed to be constant a
figure of Mean time between failures can be a prediction of when failure can
occur and that’s when interventions can be made. = Operating Hours/no.of
failures= ( 5+4+6+6+7)/5= 28/5= 5.6hours
VI. Determines frequency of maintenance and inspections
Series
Availability
Mechanisms to detect failure (PP97)
I. In-process checks-
A. During process to assure the part of the machine is working according to plan.
Are you receiving a good service etc
II. Machine diagnostic checks:
I. Machine is run through a series of processes to determine if the machine or
service is behaving as expected
III. Point of departure:
I. At the end of provision of service on the service to test satisfaction levels to
determine if improvements can be done. Service has been rendered and
therefore not a good way to deal with failure
IV. Phone surveys: collect info about customers. Wider reach
V. Focus groups : group made up to respond to set of questions
VI. Complaint or feedback forms: Normally after service support. To gauge
satisfaction.
VII. Questionnaire
Failure Prevention and Recovery

I. Measuring failure & impact of Failure

II. Mechanisms to detect failure

III. Failure mode and Effect Analysis

IV. Improving process reliability

V. Maintenance and approaches to maintenance

(2.2) FMEA
Steps for performing failure mode and effects analysis
(FMEA):

I. Identify potential failures

II. Establish the degree of severity

III. Evaluate the probability of occurrence

IV. Detection or prevention of failure

V. Calculate and assign the risk priority number (RPN)

Slide 14
FMEA
I. FMEA is a systematic approach for identifying likely failures in
products and services as well as in business processes such as
manufacturing or product assembly.
II. FMEA may be performed at different stages throughout the
product or process life cycle, depending on the organisation’s
needs.
III. FMEA may point out why there has been a failure and identify ways
to detect failures before they happen.
IV. There are two types of FMEA.
I. Design FMEA is aimed at assessing the likelihood of faults.
II. Process FMEA detects malfunctions that affect the following.
A. The quality of the product
B. Time-limited product function
C. Safety, which may be compromised by human error,
manufacturing processes, faults with the machines and
 Failure mode and effects analysis
I. Identify the components forming part of the product

II. For each component, list the different ways in which failure may occur and

the causes of each

III. For each failure mode identified, list the effects on the overall product

IV. Assess the probability (P) of each failure on a scale of 1 (not very probable) to

10 (extremely probable)

V. Assess the seriousness (S) of each failure mode by considering its effects,

again, on a scale of 1 (not very serious) to 10 (extremely serious)

VI. Assess the difficulty (D) of detecting the failure before the customer uses the

product, on a scale of 1 (easy to detect) to 10 (very difficult to detect)

VII. Calculate the criticality index (C) for each failure mode by use of the formula:
FMEA
Early detection of failure results in the following.

I. Lower costs and reduced product/process risks

II. More options to fix the problem and reduce risks

III. Time and opportunity to verify and validate any changes

required

IV. More co-ordinated efforts between product and process

design
Failure mode and effects analysis ( see pp100)
I. Identify the components forming part of the product
II. For each component, list the different ways in which failure may
occur and the causes of each
III. For each failure mode identified, list the effects on the overall product
IV. Assess the probability (P) of each failure on a scale of 1 (not very
probable) to 10 (extremely probable)
V. Assess the seriousness (S) of each failure mode by considering its
effects, again, on a scale of 1 (not very serious) to 10 (extremely
serious)
VI. Assess the difficulty (D) of detecting the failure before the customer
uses the product, on a scale of 1 (easy to detect) to 10 (very difficult
to detect)
VII. Calculate the criticality index (C) for each failure mode by use of the
formula: C = P × S × D
1. Design for reliability (Improving process reliability)
I. DFR– giving time to plan, allot resources and integration of reliability plans
into the design and manufacture & the product.

II. Set of tools & process design are identified and applied all the way from
concept generation throughout the whole design of the product.

III. Tools are applied: Reliability engineering tools applied, when these are
applied (the order). Reliability aims of organisation are then met.

IV. Quality is assurance that the item will conform to technical or

performance specification while reliability is the assurance that the item
will perform its intended purpose for a given time.
Building redundancy into a process
Understand failure and you can then understand how to deal with it
using methods such as:
I. Redundancy: making sure back-ups are available ;two or more identical
components or systems. Done as backup systems
a) Switching allows only one system to be active. System ready to run if
another breaks down. Expensive
b) Outputs can be combined so switching is not necessary (e.g. power
distribution systems)
II. Expensive to have redundancies but uptime of the system is increased as one
component is ready to run once the one its replacing is down.
III. Reliability of the whole system that has a redundancy is reliant upon the
reliability of the redundancy that it will function when called upon
B. Ra+b= (Ra+(RbXP))= Total Reliability of the System
IV. Ra=0.7,Rb=0.4 & P=0.5
3. Fail-safeing(poka-yoke) (improving process reliability)
Human error unavoidable therefore come up with method to eliminate.
Objects that can stop machine & alert the operator if something goes wrong.
Color codes,texture & other visuals used
I. Examples from manufacturing:
I. Limit switches on machines which allow the machine to operate
only if the part is positioned correctly
II. Gauges placed on the machine through which a part has to pass
to be loaded-on or taken-off a machine
III. Light beams that activate an alarm if positioned incorrectly
II. Examples from service contexts:
I. Colour-coding cash register keys
II. The McDonald’s French-fry scoop which picks up the right
quantity in the right orientation to go in the pack
III. Trays with indentations for food ensuring all items are present
Fail-safeing : human mistake are inevitable and have to be
planned for.
Failure Prevention and Recovery

I. Measuring failure & impact of Failure

II. Mechanisms to detect failure

III. Failure mode and Effect Analysis

IV. Improving process reliability

V. Maintenance and approaches to maintenance

Asset Maintenance
4. Asset Maintenance (improving process reliability)

I. Purpose is to optimize the performance of facilities, buildings and

equipment are in good working order

II. Operations can view the production schedules more confidence as

equipment is “trusted”. Improved reliability. Decreased wear and tear.

Cost savings due to efficiency in repairs. Risks due to failure reduced.

III. Quality is related to Maintenance as those machines which are well-

maintained and are within specification will produce quality goods.

Objectives of maintenance
I. To enable quality and customer satisfaction to be achieved through
correctly adjusted, serviced and operated equipment

II. To maximise the useful life of the equipment

III. To keep the equipment safe and prevent the development of safety
hazards

IV. To minimise the costs directly attributable to equipment service and

repair

V. To minimise the frequency and severity of interruptions to operating

processes

VI. To maximise production capacity from the given equipment resources

Effects of preventive maintenance
Types of maintenance
Run to breakdown- Letting the equipment to run as long as possible
and only preforming maintenance as and when the equipment
runs down. Fridges etc

Preventative maintenance is maintenance that is regularly

performed on equipment to lessen the likelihood of it failing. It is
performed while the equipment is still working so that it does not
break down unexpectedly. Preventive maintenance can be
scheduled on a time or usage-based like number of hours
operated or used. E.g. Vehicle service
Preventative Maintenance
Assets suitable for preventive maintenance
include those that:
I. Have a critical operational function
II. Have failure modes that can be prevented
(and not increased) with regular maintenance
III. Have a likelihood of failure that increases
with time or use
Unsuitable applications for preventive
maintenance include those that:
• Have random failures that are unrelated to
maintenance (such as circuit boards)
• Do not serve a critical function
Condition based maintenance
I. Condition-based maintenance (CBM) refers to a collection of
activities, inspections, tests and procedures that are performed
in response to the failure or destabilization of equipment, a machine
or a material.

II. CBM is performed depending on the current condition of your

assets. The condition of the asset is checked through: visual
inspections, tests and procedures

III. CBM can act as a guide on the road to failure and back. Another
important consideration is the criticality of your assets. CBM
provides the best return on investment on your most critical assets.
Mixed Maintenance Strategies
Common for organisations to include a combination of
repair tehniques.
Vehicles
a) Run-to-failure maintenance: Lamps and electronic items
are
b) Preventative maintenance Engine oil and some parts are
changed at certain intervals.
c) Condition-based maintenance: Tyres , Vehicle alignment,
Brakes

d) Total Productive Maintenance is discussed as a method

Maintenance Decisions
The following considered when coming up with policy:
A. What is to be maintained?(machine,buildings)
B. What appropriate type of maintenance
C. Whats the organisation of maintenance work?
Machine of same capacities used together-often serviced
together, preventative maintenance.
D. Aims & Objectives of org control maintenance as maintenance staff
might need machines to be operated when operations needs to
produce.
E. Alternatives to preventative maintenance are also suggested as part
of policy
Preventive maintenance policy

I. Work-based
I. where maintenance is carried out after a set number of
operating hours or usage. E.g. A helicopter goes for
maintenance after 200hrs of operation.
II. Time-based
I. where maintenance is based on time intervals irrespective of
usage
III. Opportunity-based
I. where maintenance takes place outside work hours or when
machine breakdowns provide downtime on other machines
that can then be used for maintenance
IV. Condition-based
I. often relies on planned, visual or measured inspection in order
to ascertain the need for maintenance. State of the oil. X-ray
Key features of total productive maintenance (TPM)

Involves preventative and repair maintenance at various levels of

the organisation , mostly involving operators
I. To optimise the use and effectiveness of equipment and eliminate
unplanned failures
II. To involve the operator in maintenance activities where
appropriate in order to develop a sense of ownership, involvement
and responsibility
III. To encourage employees to be involved in continuous
improvements in machinery and equipment operation
Asset Replacement: Setting replacement levels when maintenance
becomes too expensive is part of the policy
Factors in asset replacement
I. Cash flow implications: Replacement cost and whole life costing :Asset replacement will often be

planned coincide with good cash in-flows. Alternates to replacement will involve leasing/hiring

II. Downtime costs: Outages of machine cost operation time. So maintenance of machines in the

same line maintained together often when production is not being done

III. Obsolescence: Equipment might become out-dated especially the electronic controls.

Leasing/hiring latest equipment might be solution. Outsourcing of work etc.

IV. Projected long-term production requirements: Purchase of high value items will be budgeted for

and proper procedures followed in purchasing the equipment. Purchasing such will be justified

and proper purchasing procedures ( production increase, quality etc.)

V. Predictive maintenance : computers and associated equipment can analyse the impending failure

of mechanical equipment and help to achieve maintenance aims.

 Business Continuity
I. BC- Planning that ensures the sutainability of business beyond any eventuality
that its customers are serve. Failures are planned for. Business able to recover
after catastrophic failures

II. Framework for managing public,private orgs: Maintaning the business

deliverables even after a major disruption such as fire.

III. Part of the resilience policy of the organisation. Company can be moved to a
diffrent site while the original is beng repaired.

IV. Following a disaster the business should continue. Disaster recovery or

contigency considers business replacement. Operations continue. Spill over to
other parts of business is ovoided.

V. Processes & procedures to be developed during and after disaster. They

involve processes critical to the org.
 Comments
BCM – A Process Overview
BCM is a management process of “considered activities”. BCP is
a tactical plan. Includes the following:
General Intent

1. Risks identified process offers a “considered manage. ment

Context / Scope
approach” to address a prescribed threat / event. It does not
necessarily provide the solution - but it introduces the “test of
1. Risk Assessment reasonableness” into a “measurable framework”

2. Core Business Processes 2. Identify and rank their core processes according to how
important they are to the business. process attempts to introduce
Protection of rigour while retaining flexibility by way of application – “events
Enterprise
simply don’t happen they way we plan”
3. Recovery Value

3. Recovery–The time that the company will recover from a

4.Maintenance disaster or failure is concluded. Priorities of recovery also
identified.

5. Communication 4. Resources: Needed for recovery and their availability ensured.

Offices backup servers etc.

5. Role of employees should be clarified. What role they have.

BCM activities vary in their applied complexity and intensity as

determined by the “dynamics” of the event.
 BCM process
I. Management support and governance of the organisation
should be gained before efforts can begin. Strategic design
should be done.

II. BCP is then formed and all processes will be around the
team,timescales for process is set

III. Risk assessment-; Identify threats, where plan will focus. All
riskks considered and prioritised.

IV. Preventative,detection and reactive means planned.

Insurances,shoring out,outsourcing
Total Quality Management
Total
TQMquality management (TQM): a holistic
approach to
I. the management of quality that emphasizes the
role of all parts of an organization and all people
within an
II. organization to influence and improve quality;
heavily influenced by various quality ‘gurus’, it
reached its peak
III. TQM is ‘an effective system for integrating the
quality development, quality maintenance and
IV. quality improvement efforts of the various
groups in an organization so as to enable
production and service at the most economical
levels which allow for full customer satisfaction’.
2.3 : TQM role in Operations management
I. TQM is a management methodology to deliver customer
satisfaction by ensuring that all. Improves Operations
management to improve customer value.
II. Employees work to deliver value to customers, while
minimizing costs from poor work or product failure.
III. All employees, departments and levels participate in delivering
and improving. Encompasses effort of all withing the org.
IV. Product/service quality. TQM is integrated into the company
culture, strategy, operations, procedures and regulations.

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TQM
I. TQM brings many benefits, ensuring superior quality and design
of products and services, which increases customer satisfaction
and loyalty. TQM can thereby lead to higher
II. Revenue and productivity levels in an organisation, while
enabling organisations to reduce waste and inventory.
III. Just in time (JIT) seeks to minimise waste and increase efficiency
by ensuring that goods are received only when they are required.
IV. Statistical process control (SPC) assesses and controls quality by
monitoring data on the manufacturing process.
V. Total productive maintenance (TPM) seeks to maintain
equipment in perfect production condition by minimizing defects,
breakdowns, accidents, short disruptions and instances of having
to slow down the production process.

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TQM
I. Quality circles (QCs) aim to improve quality, safety and
productivity, and minimise costs incurred in undertaking
operations processes.
II. Quality function deployment (QFD) defines customer needs,
translates them into engineering specifications, and designs
processes to produce products or services
Customer needs. It consists of four phases:
A. Product definition,
B. Product Development,
C. Process development, and
D. Process quality control.

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SPC charts

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Statistical process control (SPC
A. Statistical process control (SPC) involves using
control charts to track the performance
•of one or more quality characteristics in the operation.
The power of control charting lies in its ability to set
control limits derived from the statistics of the natural
variation of processes.
A.These control limits are often set at {3
standard deviations of the natural variation of the
process samples.
B. Control charts can be used for either attributes
or variables. An attribute is a quality characteristic
which has two states (for example, right or wrong). A
variable is one which can be measured on a
continuously variable scale.
C. Process control charts allow operations
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managers to distinguish between the ‘normal’
(2.3) Total Quality Management (TQM)
Principles of TQM
I. Customer focus:
• Understand what your customer wants or needs, you have a better
chance of figuring out how to get the right materials, people, and
processes in place to meet and exceed their expectations.
To implement this TQM principle:
I. Research and understand your customers’ needs and expectations.
II. Align your organization’s objectives and processes with
customer needs.
III. Communicate with customers, measure satisfaction, and use
the results to find ways to improve processes.
IV. Manage customer relationships.
V. Balance for satisfying customers and other interested
parties (such as owners, employees, suppliers, and investors).
Benefits of Customer focus
• More sales, increased revenue, market share, and mindshare
• Strong customer loyalty leading to repeat business
• Increased possibility that satisfied customers will tell others about your
products and services Slide 15
Leading global excellence in procurement and supply
TQM Principles
II. Involvement Employees. They need to understand the
vision and goals that have been communicated.
They must be sufficiently trained and given the
proper resources to complete tasks in order to be
committed to reaching goals on time. Employees will
give their best. Involved in delivering quality
products.
III. Process Improvement: Specific processes are
improved to improve the whole organisations
system. Well trained employees to man tease
processes.
IV. System integration: Connected together so
hierarchies and departments to work. Flow of info
and services
V. Strategic & Systematic Approach: Quality
planning included in goals ,objective
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TQM Principles
VI. Fact-based decision making: Decision based on fact.
Observations influence decisions not human interest,
feelings or opinions. Minimizes errors and Costs
VII. Continuous Improvement: Quality of product and
services constantly improvement.
a. Talk and get feedback from customers and include their needs
and areas of improvement.
b. Trained and empowered staff offer customer complaints and
provide quality services.
c. Question: Motivate staff to work towards Quality? Some
strategies???

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Benefits of TQM
I. Services and goods which are superior quality to the customer &
to those of competitors are offered.
II. Customer satisfaction is ensured by offering better quality
III. Products that customer desire as their opinion is constantly
gathered and used to improve products
IV. High revenue and profit levels attained as customers get their
needs in products and services.
V. Right thing first time and waste and function of products offered
by employees.
– Exam Questions: on principles and benefits of TQM

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Quality Function Deployment(QFD)
I. Methodology used to obtain customer
needs and apply them to a product
Engineering specification
II. Ensures that the company is customer
focused and includes customer needs as
new products are developed.
III. Minimises possibility of late design
changes: As customer needs are included
from inception
IV. Framework for making and recording
informed decisions: can be used in
future designs justification
V. Marketing and Advertising often gathers
QFD usually implemented in four phases
I. Product definition: Customer needs, expectation
and requirements are compiled by the supplier and
translated into customer specifications. These are
then included in initial design.
II. Product development : Product are identified and
translated Key parts of product or service.
Requirements for every operation process are then
defined.
III. Process development: Service product
specifications are then used to develop production
process. Operations identified and sequencing
developed.
IV. Process Quality Control: Quality controls
identified and included before production process
commences. To ensure the service or goods meet
specifications
HoQ used in organisations

I. Applied by large organisations as houses of

Quality
II. Smaller organisations can adapt simpler
versions for their product and services.
III. Diagrams designed by a team of specialists.
Usually multi-disciplinary. For smaller companies
administration may suffice.
IV. Questions to be answered by HoQ
a) What attributes of service or product do our
customers need.
a) What design attributes do we need to include in
product or process
b) What design targets are being aimed for in
the new design
Customer requirements

1. Weight the attributes by %

2. Design attributes that deliver expected
customer requirements
3. Compare the manufacturer ratings
against a competitor
Quality Function QFD is a reliability technique for
Deployment (QFD) getting the voice of the customer
into the design process so the
product possesses the customer
desires.in particular ,it is applicable
to soft issues that are difficult to
specify
I. What to do, the best way to
accomplish the objective the
best order for achieving the
design objective and staffing
asserts to complete the task
II. Helps learn and understand the
customer’s requirement and the
approach that will satisfy their
objectives
III. Team approach to solving
problems and satisfying
 Kansei engineering- Psychological feelings & needs

I. In Kansei engineering, production systems

are designed to deliver products and services that
meet customers’ aesthetic and performance
expectations (feel &smell)
II. Japanese term used to describe people’s
impression towards object, surrounding, situation
III. Promotes customer satisfaction and loyalty that
raises the competitive advantage.
Implementing a needs
• The organisation TQMlong-term
approach
commitment to constant
improvement.
• Adopt the philosophy of zero errors/defects to change the culture to
right first time.
• Train people to understand the customer-supplier relationships.
• Do not buy products and services on price alone – look at the total cost.
• Recognise that improvement in the systems must be managed.
• based on numbers; barriers to pride of workmanship; fiction – get to
the facts by using the appropriate tools.
• Constantly educate and retrain – develop the ‘experts’ in the business.
• Develop a systematic approach to manage the implementation of TQM.
Adopt modern methods of supervision and training – eliminate fear.
• Eliminate barriers between departments by managing the process –
improve communications and teamwork.
• Eliminate: arbitrary goals without methods; all standards
 Considerations when implementing TQM

Reported drawbacks of TQM include the following:

I. It is time consuming
II. It is not panacea (cure-all) for a failing organisation
III. TQM is not a 'quick fix' – it can take years to implement
and will be a constant process
IV. It involves costs, namely capital costs and the costs of
retraining staff

V. Requires high quality change management.

Concept of Quality assurance
 QA-ascertains Advantages
whether the service  Costs spend on
or good meets
demand. refining goods or
 Assure that there is services reduced.
no defects in product  Proactive
or service delivered inspection reduces
to customers need for
 People,process
subsequent
organized to deliver
quality
inspection and
 Proactive motivates staff
inspection by staff  Quality of
on production or products and
delivery of service services improves
 The differences between total quality and quality
assurance
 Total quality management(TQM): a holistic
approach to the management of quality that
emphasizes the role of all parts of an organization
and all people within an organization to influence
and improve quality; heavily influenced by various
quality ‘gurus', it reached its peak of popularity in the
1980s and 1990s
 Originally quality was achieved by inspection –
screening out defects ,before they were noticed by
customers.
 The quality control (QC) concept developed a more
,systematic approach to not only detecting but also
treating quality problems.
 QA & TQM
 Quality assurance(QA) widened the responsibility for
quality to include functions other than direct operations. It
also made increasing use of more sophisticated statistical
quality techniques.
 TQM included much of what went before but developed its
own distinctive themes. We will use some of these themes
to describe how TQM represents a clear shift from
traditional approaches to quality.
 In fact, ,TQM is best thought of as a philosophy of how to
approach the organization of quality improvement. This
philosophy, above everything, stresses the ‘total’ of TQM.
 So process and perspectives differ for the two
approaches
Gurus-work of pioneers of Total quality
Management

 TQM theories and practices that form the

bedrock of systems and principles were
put forward by Industrialists called gurus.
 Philip Crosby, Deming and Duran are
taken as the most important
The quality gurus
Quality is free – the optimum is zero
Philip Crosby defects

Deming’s 14 points
W. Edwards Deming
How to use statistics

Armand Feigenbaum Total quality control. Crosby – 5 absolutes

of quality, 14 step process

Quality circles and cause and effect

Kaoru Ishikawa diagrams

Quality as fitness for use, rather than conformance

Joseph Juran to specification, quality planning map,

Loss function
Genichi Taguchi Minimize variation
Philip Crosby in TQM Pp117
 The contributions of quality Guru Philip Crosby in
TQM ( Basis- top management support,People-taught,power to
implement, All employees should understand quality implement process)
A. PDCA Cycle
B. Quality trilogy
C. PDSA
D. Concept of Zero defects
Explanation:
 Philip Crosby’s contributions are
1. Four absolutes of quality (Zero defects,Conformance,Cost of
quality,Preventive)

2. 14 steps to quality management

3. Crosby’s quality vaccine
4. Concept of Zero defects So option D is correct
Crosby Absolutes
 What is Crosby's definition of quality?
 Throughout his work, Crosby's thinking was
consistently characterized by four absolutes:
1. The definition of quality is conformance to
requirements.
2. The system of quality is prevention.
3. The performance standard is zero defects.
4. The measurement of quality is the price of non-
conformance.
 W. Edward Deming

 In TQM , the contributions of quality Guru W. Edward

Deming
 A. Deming’s 14 points
 B. Deming’s Cycle
 C. System of profound knowledge
 D. All the above
 Explanation:
 W. Edward Deming contributions are
 1. Deming’s 14 points route to quality
 2. Deming Cycle or PDCA cycle
 3. Seven deadly diseases of Management
 4. System of profound knowledge So option D is Correct
W Edwards Deming
■ regarded by the Japanese as the chief architect of their industrial success
■ “all processes are vulnerable to loss of quality through variation: if levels of
variation are managed, they can be decreased and quality raised”
■ Quality is about people, not products

■ Core element is the “management circle”

● Planning
● Do/implementation
● Check/study
● Action
● PDCA cycle
■ Continuous improvement (Kaizen)
● teamwork and competence in problem solving
Problem-solving process Deming Wheel
Plan
■ Select a process needing improvement
■ Document process
■ Analyse data

Quality
■ Set improvement goals

level
■ Discuss alternatives
■ Assess benefits and costs
■ Develop a plan and improvement measures.

Do
■ Implement plan
■ Monitor improvements.
Time

Check
■ Analyze data to evaluate effectiveness of the plan.

Act
■ Document and disseminate improved process as a standard procedure
An approach to continuous process improvement.
■ plan an improvement, implement it,
■ check that it is having the correct effect and if not you act on*it and start again.
■ It is particularly useful when an organisation goes through incremental change.
PDCA
 W Edwards Deming fourteen points

1.Create constancy of purpose for continual improvement of products

and service
2.adopt the new philosophy created in Japan. We can no longer live
with commonly accepted levels of delays, mistakes, defective workmanship.
3.Cease dependence on mass inspection build quality into the
product . Require, instead, statistical evidence that quality is built in.
4.End lowest tender contract : require meaningful quality along with
price
5.improve constantly and forever every process for planning,
production and service
W Edwards Deming fourteen points
6. Institute modern methods of training on the job for all, including management
7 Adopt and institute leadership aimed at helping people do a better job

8 Drive out fear encourage effective two-way communication

9 Break down barriers between departments and staff areas

10. eliminate exhortations for the workforce they only create adversarial
relationships .
11. Eliminate quotas and numerical targets substitute aid and helpful leadership

12. Remove barriers to pride of workmanship including annual appraisals

and management by objectives

13. Encourage education and self improvement for everyone

14. Define top management permanent commitment to ever improving quality
and productivity and their obligation to implement all these principles
Problem-solving process Deming Wheel
Plan
■ Select a process needing improvement
■ Document process
■ Analyse data

Quality
■ Set improvement goals

level
■ Discuss alternatives
■ Assess benefits and costs
■ Develop a plan and improvement measures.

Do
■ Implement plan
■ Monitor improvements.
Time

Check
■ Analyze data to evaluate effectiveness of the plan.

Act
■ Document and disseminate improved process as a standard procedure
An approach to continuous process improvement.
■ plan an improvement, implement it,
■ check that it is having the correct effect and if not you act on*it and start again.
■ It is particularly useful when an organisation goes through incremental change.
 9. Break down barriers
14 points for management between departments
1. Create constancy of purpose towards
improvement of product and service
10. Eliminate numerical
2. Adopt the new philosophy for the new
goals, posters and
economic age slogans for the
3. Cease dependence on mass inspection workforce asking for
4. End the practice of awarding the new levels of
business on price productivity without
5. Improve constantly and forever the providing methods
system of production and service to 11. Eliminate work
improve quality and increase standards that
productivity prescribe numerical
6. Institute modern methods of training quotas
on the job 12. Remove barriers that
7. Institute modern methods of stand between the
supervision of production workers hourly worker and
8. Drive out fear, so that everyone may their right to pride of
work effectively for the company workmanship
13. Institute a vigorous
programme of
 Juran
Quality Trilogy is the contributions of
 A. Walter Shewhart
 B. Philip Crosby
 C. Joseph M Juran
 D. W. Edward Deming

Explanation:
 Juran’s Contributions are
 1. Internal customer
 2. Cost of quality
 3. Fitness of Use
 4. Quality trilogy
 5. Juran’s 10 steps for quality improvement
 6. Breakthrough concept So option C is correct
Juran’s Quality Trilogy
Quality Planning
● Initial design within the organisation based on meeting customer
needs/expectations
● Involves understanding what the customer needs and expectations are
● All aspects of the systems are then designed to meet customer needs by
the organisation. All parts of organisation involved to guarantee outcome.

Quality Control
● Involves continuous monitoring to measure if quality goals are being met
● Involved constantly monitoring performance for compliance with the
original design standards. Quality measurements efforts delivered
● If standards were not met, corrective actions were undertaken.

Quality Improvement
● Results from “breakthrough analysis”—the achievement of
unprecedented levels of performance
● Special teams to plan, test & implement new methods of reaching these
levels.
Joseph M. Juran’s Quality Trilogy/Juran’s Quality Planning Process
Three managerial processes that he identified for use in managing for
quality.

Quality Planning Quality Control Quality Improvement

Establish quality goals ● Prove the process ● Seek to optimise the

Identify customer needs can produce under
process via tools of
Translate needs into our operating conditions
language ● Transfer process to diagnosis
Four steps of quality
Develop a product for operation Improvement:

these needs Repair: Reactive & fixes what's

broken
Refinement: Proactive and all the
Optimise product features while improves process
Renovate: technological
for these needs progression
Re-Invention: start all over.
 Juran’s 10 steps of
Quality Improvement:
1. Create awareness of the need and
opportunity for improvement.
2. Set goals for improvement.
3. Organise to reach the goals.
4. Provide training throughout the
organisation.
5. Carry out the projects to solve problems.
6. Report progress.
7. Give recognition.
8. Communicate results.
9. Keep score.
10. Maintain momentum by making annual
improvement part of the regular systems and
 The Basic Seven (B7) Tools of Quality
"As much as 95% of quality related problems in the
factory can be solved with seven fundamental
quantitative tools." - Kaoru Ishikawa
I. Discusses techniques for quality management that can
be applied in Operations management.
II. It focuses on quality problems and then Process control
tools & Taguchi Loss Function
III. Poka-Yoke and Six sigma closes up the session
There are various approaches to diagnosing quality
problems. The following are seven prominent original ones.
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 What are the Basic Seven Tools of Quality?

1. Flowcharts (No statistics)

2. Pareto Analysis (SPC approach)
3. Histograms (SPC approach)
4. Control Charts (SPC approach)
5. Fishbone Diagrams (No statistics)
6. Check-sheets (statistics)
7. Scatter Plots (SPC)

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 Flow-Charts
Symbols of flow-Charts
• Process flow chart, Shows steps in process-illustrates process,
understanding.

Process Decision
The process flow

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 Flowcharts
I. Illustrates steps in a process.
II. Usually includes actions to be undertaken ,inputs, outputs,
decisions to be made and sometimes time required in the
process and process measurements.
III. Flowchart shows steps to be carried out and gives employee
clear implementation steps.
Usefulness:
A. better understand specific process
B. Goal of improvement
C. Demonstrate how process is to be implemented.
D. Document the process
E. Provide detailed process info and timings
Don’t Forget to:
A. Define symbols before beginning
B. Stay consistent-order events in sequence they occur C. Draw arrows,flow
C. Check that process is accurate with employees
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 Acme Pizza Example (Flowchart)

Window Take Customer Money?

(start) Order
yes
no

Get Pizza

Lockup no
Put More in
yes
Oven 2
Pies no
yes
Available?
Leading global excellence in procurement and supply
●How can we use the flowchart to analyze
improvement ideas from the Histogram?

Window Take Customer Money?

(start) Order
yes
no
Get Pizza

Lockup
Put More in
no
yes
Oven 2 Pies
no
Available? yes

Leading global excellence in procurement and supply

 Some practice?
Make a flowchart for:
I. Figure 2.4 page 125
II. Taking a shower
III. Cooking dinner
IV. Driving a car
V. Having a party
VI. Creating a Flowchart

Any other processes you can think of?

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 Pareto Analysis
A statistical methodology applied to bring out a small
proportions of activities that have a substantial effect
on the process.

■ Very similar to Histograms

■ Use of the 80/20 rule-20% of the activities result in
80% of the benefits to the process.
■ Use of percentages to show importance of problems
■ Rule can be applied:
A. 80% quality problems are caused by 20%
activities
B. 80% of profit given by 20% activities
C. 80% of Sales given by 20% staff
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 Acme Pizza
Slices Frequency %
0 1 .3
1 33 13.09
2 65 25.79
3 8 3.17
4 12 4.76
5 0 0
6 0 0
7 1 0.3

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 Acme Pizza orders
■ The completed Pareto Analysis results in the following graph:

70

# times ordered 60
50

40
30
20
10
0
21 12 3
4 34 5
7 56 6
7

Slices of Pizza

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 Pareto Analysis
Critical Thinking
■ How does the Pareto Analysis differ from the
Histogram?
■ How can this be a useful tool to the Acme boss?

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 Histograms

I. Frequency of the quality problems

II. Records the occurrence of a type of quality
problem
III. The re-occurence of a given problem every hour is
recorded,
IV. Used to graphically represent groups of data

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 Constructing a Histogram
From a set of data compute
■ Sum
■ mean (x)
■ Max
■ Min
■ Range (max-min)

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 Constructing a Histogram
I. Use range to estimate beginning and end
II. Calculate the width of each column by dividing the range by the
number of columns

Range
= Width
# of Columns
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Checksheets
I. Sheet used to obtain data on Quality problems
II. Has a list of possible problems and will record a number of
quality problems.
III. When the check sheet is completed, the problems collated are
used to create a Histogram or Pareto chart

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Example Checksheet

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 Acme Pizza Example
Let’s say the owner wants a distribution of Acme’s Thursday Night
Sales. To decrease shortages
Data Set from last Thursday(slices)
0212241312122434143223212212214221212212121212121
222121211222314223222123224224412223221224212421
721223121121222122121222424
Mean = 2.032258
Max = 7
Min = 0
Range = 7
Question
For 7 columns what would the width be?
Range/Columns=7/7=1 slice

Leading global excellence in procurement and supply

Acme Pizza Example
Histogram
70 65
# times ordered

60
50
40 33
30
20
12
8
10
0 0 1
0
1 2 3 4 5 6 7

Slices of Pizza
Leading global excellence in procurement and supply
 Constructing a Histogram
How is this helpful to Acme?
I. 2 slices of pizza most common order placed
II. Distribution of sales useful for forecasting next
Thursday’s late night demand

If you were an Acme manager how could you apply

this information?

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Control Charts

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 Control Charts
I. Deviation from Mean over time. Average quality score or
nominal figure represented by a central line
II. Upper and Lower Specification: Two other lines ,one above
(Upper Control Limit) representing the highest acceptable
score
III. Below the nominal line (Lower Control Limit) representing
the lowest acceptable score
IV. Range: Acceptable quality score is between the LCL and the
UCL
V. The score above these limits is investigated and rejected.
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 Control Charts

Upper Limit

Unacceptable
Lower Limit deviation
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 Control Charts

Acme Pizza Management wants to get in on the control

chart action
• Average Diameter = 16cm
• Upper Limit = 17 cm
• Lower Limit = 15 cm

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 Acme example Control Charts

Upper Limit
17 inches

16 inches= X
Lower Limit
15 Inches

Small Pie
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 Acme example #50
Control Charts
• Pies within specifications were acceptable
• One abnormally small pie is “uncommon”
• Should be examined for quality control

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 Fishbone Diagrams

■ No statistics involved

■ Maps out a process/problem

■ Makes improvement easier

■ Looks like a “Fish Skeleton”

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 Constructing a Fishbone Diagram

Step 1 - Identify the Problem

Step 2 - Draw “spine” and “bones”

Example: High Inventory Shrinkage at local Drug Store

Shrinkage

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 Constructing a Fishbone Diagram
■ Step 3 - Identify different areas where problems may arise
from
Ex. : High Inventory Shrinkage at local Drug Store

employees

Shrinkage

Shoplifters
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 Constructing a Fishbone Diagram
Step 4 - Identify what these specific causes could be

Ex. : High Inventory Shrinkage at local Drug Store

Step 5: Use the completed Chart to brain-storm

Shrinkage
Anti-theft tags poorly designed
Expensive merchandise out
in the open

No security/ surveillance
shoplifters
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 Constructing a Fishbone Diagram

■ Ex. : High Inventory Shrinkage at local Drug Store

Employees
attitude
training
new trainee
benefits practices

Shrinkage
Anti-theft tags poorly designed
Expensive merchandise out in the open

No security/ surveillance

shoplifters
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Cause-and-effect diagram

Figure 2.10 Step 2 of the cause-and-effect diagram (Source: Yousaf, Faheem & Ikramullah,
Shahid. (2014). “Reduction in Repair rate of Welding Processes by DeterminationSlide & 16
Controlling of Critical KPIVs”, International Journal
Leadingof Production
global Management
excellence in procurementand
and supply
Engineering)
Cause-and-effect diagram
There are three key steps in creating a cause-and-effect diagram (refer to the diagram on the
slide).

I. Step 1. Write down the quality problem being

investigated (in this case, ‘welding defects’)
II. and draw the ‘backbone’ (the straight line) leading to it.
III. Step 2. Identify the possible causes of the quality
problem. For example, welding defects may be caused
by problems in measurements, materials, personnel,
environment, methods and/or machines.

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Cause and Effect Diagram
I. Step 3. Break down the identified causes of the quality problem
II. into more detailed causes, so that all possible causes are
identified, in order to solve the problem. For
Incorrect measurements may be due to:
A. Visual inspection, non-destructive testing and
B. destructive testing.
C. These should also be further detailed, if possible,
continuing until each identified cause is broken down
into the finest possible detail.

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Activity: Cause and Effect Diagram
• Activity
• Class into two groups.
I. Present each group with a different scenario and ask them to
create a cause-and-effect diagram.
A. Scenario 1. High-end chocolate cakes are regularly failing
QC.
B. Scenario 2. A private tutor is getting a decreasing pass rate
from students.
II. Each group presents its cause-and-effect diagram to the other
group.
III. Provide feedback on each presentation, ask the class for their
views and add in any content that has been missed.

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 Acme Pizza(Scatter Diagram)
2 Dimensional X/Y plots

Used to show relationship between independent(x) and

dependent(y) variables

Minutes Cooking Defective Pies

10 1
45 8
30 5
75 20
60 14
20 4
25 6

In this simple example, you can find the existing relationship without
much difficulty but there are times when the relation is not easy to
determine
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 Scatter Diagrams
• Easier to see direct relationship

25

20
Defective Pizzas

15

10

0
0 20 40 60 80

Time Cooking (minutes)

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 Scatter Diagrams
As a quality tool
■ What does this tell Acme management about their
processes?
■ Improvements?
25

20
Defective Pizzas

15

10

0
0 20 40 60 80

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Time Cooking (minutes)
 Scatter Diagrams or Run charts
I. Time-based (x-axis)
II. Cyclical
III. Look for patterns- Increase in one variable might lead to
decrease in the other and vice versa
IV. Used for relationship between two variables. One X-
independent and the other Y-dependent.
V. Data collected and drawn on an X-Y plot. As data is drawn
a general relationship would emerge

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 Run Charts
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
Slices/hour

8 9 10 11 12 1 2 3 4 8 9 10 11 12 1 2 3 4 8 9 10 11 12 1 2 3 4 Time
PM- AM PM- AM PM- AM
Thursday Leading
Thursdayglobal excellence in procurement and supply
Thursday
Week 1 Week 2 Week 3
 Summary

■ Basic Seven Tools of Quality

■ Measuring data

■ Quality Analysis

■ “Democratized statistics”

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SPC charts

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 Seven Tools for TQM
(a) Check Sheet: An organized method of
recording data

Hour
Defect 1 2 3 4 5 6 7 8
A /// / / / / /// /
B // / / / // ///
C / // // ////

Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 245

 Seven Tools for TQM
(b) Scatter Diagram: A graph of the value
of one variable vs. another variable
Productivity

Absenteeism

Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 246

 Seven Tools for TQM
(c) Cause and Effect Diagram: A tool that
identifies process elements (causes) that
might effect an outcome

Cause
Materials Methods
Effect

Manpower Machinery
Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 247

 Seven Tools for TQM
(d) Pareto Charts: A graph to identify and plot
problems or defects in descending order of
frequency
Frequency

Percent
A B C D E
Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 248

 Seven Tools for TQM
(e) Flow Charts (Process Diagrams): A chart
that describes the steps in a process

Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 249

 Seven Tools for TQM
(f) Histogram: A distribution showing the
frequency of occurrence of a variable
Distribution
Frequency

Repair time (minutes)

Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 250

 Seven Tools for TQM
(g) Statistical Process Control Chart: A chart with
time on the horizontal axis to plot values of a
statistic

Upper control limit

Target value

Lower control limit

Time
Figure 6.5

© 2006 Prentice Hall, Inc. 6 – 251

 Cause-and-Effect Diagrams

clean pillows
Machinery

Insufficient
Material

& blankets

not available
on-board

equipment
Deicing
Inadequate
Mechanical delay
supply of
magazines on plane
Inadequate special Broken luggage
meals on-board carousel
Dissatisfied
Airline
Overbooking policies Understaffed Customer
crew
Bumping policies Understaffed

Poorly trained
Poor check-in

ticket counters

attendants
policies
Mistagged
bags

Methods Manpower
Figure 6.6

© 2006 Prentice Hall, Inc. 6 – 252

 Pareto Charts
Data for October
– 100
70 – – 93
– 88
60 – 54
Frequency (number)

Cumulative percent
– 72
50 –
40 –
Number of
30 – occurrences
20 –
12
10 –
4 3 2
0 –
Room svc Check-in Pool hours Minibar Misc.
72% 16% 5% 4% 3%
Causes and percent

© 2006 Prentice Hall, Inc. 6 – 253

 Flow Charts
Packing and shipping process

Sealing Quick freeze

Packing Storage Shipping
Weighing storage
station (4 to 6 hrs) dock
Labeling (60 Mins)

© 2006 Prentice Hall, Inc. 6 – 254

 Statistical Process Control
(SPC)
 Uses statistics and control charts to
tell when to take corrective action
 Drives process improvement
 Four key steps
 Measure the process
 When a change is indicated, find the
assignable cause
 Eliminate or incorporate the cause
 Restart the revised process

© 2006 Prentice Hall, Inc. 6 – 255

 An SPC Chart
Plots the percent of free throws missed

Upper control limit

20%

Coach’s target value

10%

| | | | | | | | | Lower control limit

0% 1 2 3 4 5 6 7 8 9

Game number
Figure 6.7

© 2006 Prentice Hall, Inc. 6 – 256

Statistical process control (SPC
A. Statistical process control (SPC) involves using
control charts to track the performance of one or more
quality characteristics in the operation.
B. The power of control charting lies in its ability to set
control limits derived from the statistics of the
natural variation of processes.
C.These control limits are often set at {3 standard
deviations of the natural variation of the process
samples.
D. Control charts can be used for either attributes
or variables. An attribute is a quality characteristic
which has two states (for example, right or wrong). A
variable is one which can be measured on a
continuously variable scale.
E. Process control charts allow operations
Leading global excellence in procurement and supply
managers to distinguish between the ‘normal’
(2.4) SPC Tools
Common Statistical Process Control (SPC) tools
1. Pareto Analysis (SPC approach) 2. Histograms (SPC approach) 3. Control Charts (SPC
approach) 4. Check-sheets (Statistics) 5. Scatter Plots (SPC)
A. Before SPC is implemented in any organisation the potential
Problems should be collected to determine source of problems and
areas to be improved.
B. Time and resource limits do call for prioritisation of what needs to
be done.
C. Identification of Problems: also aids recognition of the problems
D. Cross-functional teams needed to determine key requirements of
SPC implementation
E. Collection of SPC data: Recorded on check-sheet and plotted in
process control chart. Data might be collected continuously or at
planned intervals.
F. Plotted data is investigated for any variation: Slide 17
Leading global excellence in procurement and supply
 Taguchi Loss Function
“A graphical of how an increase in variation, within specification limits,leads
to an exponential increase in customer dissatisfaction”

Concept:
I. Quality does not suddenly go bad leading to unseen costs.
II. Poor quality and costs are from deviations and variations from predefined
targets or optimal quality levels
III. Quality decrease leads to private and social quality cost losses
IV. More the deviation from target quality (Loss=0) the more the cost

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 Taguchi Loss Function
I. The features of the Taguchi loss function are as follows (refer to the
first set of points on the slide).
Nominal value. The target quality value is mid-way between the upper
and lower satisfactory quality limits. Private and social costs at
minimum
a) Private costs includes acquisition, cost of raw materials, hiring
competent staff, maintaining equipment and payment of
Utilities such water& electricity.
b) Social costs are those incurred by the community due to
actions of the Organisation. (Pollution, Environment, harm
from products, even price of produce).
c) Producing below or above the nominal is a detriment to both
costs.
d) Example: If organisation produces milk of poor quality. Milk is
below target. Private Costs: Costs of law suites ,returns etc.
Social cost: Illness, Hospitalisations, loss of working hours
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Taguchi Loss Function Features
A. The smaller the better. The perfect target value for
quality, or the best quality standard, is zero.
A. The less usage the better. Deviation from
quality or nominal figure is as close to zero as
possible.
B. Private and social costs increase as deviation
increases
C. Example: Fuel consumption of an operational
vehicle. Less the deviation the less the loss and
vice-versa. Money spend for fuel less and less
social costs in terms of pollution

Leading global excellence in procurement and supply

Taguchi Loss Function features
Some cases larger values are more desirable than lower values
The larger the better. The higher the value attained, the better.
a) The larger the specification the better. Such cases private and
social costs are lower.
b) Example: the size of seeds for an agricultural product such as
corn.
i. They would yield high produce values. Larger seeds implies
high quality products.
ii. Lower yield results in higher private costs and Social costs.

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The Taguchi loss function Taguchi loss function
features
A. Nominal value
B. The smaller the
better
C. The larger the better

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The Taguchi loss function

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Taguchi’s U-shaped loss Function Curve.
I. Quality Loss Occurs when a product’s deviates from target or nominal value
(N).

II. Deviation Grows, then Loss increases.

III. Taguchi’s U-shaped loss Function Curve.

Taguchi loss Fn

Scrap or Rework Cost.

Loss

Measured
characteristic

LTL UTL
Nominal
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Formula to find Taguchi’s Loss Function
Taguchi uses Quadratic Equation to determine loss Curve
■

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 Problem
A part dimension on a power tool is specified as 32.25± 0.25.Company
records show ±0.25 exceeded & 75% of products are then returned for
replacement. Cost of replacement is Pula 12,500.Determine k & QLF.

Solution : Expected Cost of repair

C = 0.75(12500) = Pula 9,375

k = C/d²= 9375/(0.25)² = Pula 1,50,000

Quality Loss Function (QLF)

= L (x)= 1,50,00(x-N)

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 Important Taguchi Ideas

I. Quality should be measured by deviation from the specific target value

not by conformance to set limits.

II. Inspection alone cant ensure quality, rework must be budgeted for.

III. Robust Design A product/process that produces consistent, high-

level performance "despite being subjected to a wide range of changing
client and manufacturing conditions...."

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Learning exercise: In need of improvement
Vaughn’s manufacturing business has been producing
some poor quality plastic cups.

Work in groups to discuss what process improvement

method could Vaughn implement to analyse, improve
and monitor his production with a view to reducing
defects?

Slide 18
Leading global excellence in procurement and supply
 Six Sigma Approach to Quality
I. Quality management approach applied in businesses to achieve product and
service or process Quality.
II. It identifies and eliminates defects
III. Customer satisfaction and retention are at the heart of six sigma.
IV. Data is applied on processes. The more defects are identified the easier to get
rid of them.
V. A perfection rate of 3.4 defects per million or 99.9997% quality.
Six Sigma key concepts:
1. Critical to quality: Most important attributes to customers
2. Defect: Product or service that does not meet customer needs or
expectations
3. Process capability: Ability of Operations on what they can deliver.
4. Variation: Deviation from customers wants
5. Stable operations: Ensuring consistency and predictability . Customers feel
safe on what to expect.
6. Design for Six Sigma: Design product and services or processes to match
process capability and needs of customers.
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 Key Stakeholders in the Six Sigma methodology
I. Customer-driven objectives. Six Sigma is sometimes
defined as ‘the process of comparing process outputs
against customer requirements’.
A. It uses a number of measures to assess the performance of
operations processes.

B. In particular it expresses performance in terms of defects

per million opportunities (DPMO). Customer satisfaction is
high.

II. Process capability and control. Process capability and

control is important within the Six Sigma approach. Process
design. Process design into the collection of elements that
define the delivery of items & service.
III. Employees: Structured training and organization of
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The DMAIC methodology

Amend ways of working;

Quantify and sign-off
benefits; Track
improvement; Officially
close the project; Gain
Analysis of collected data to determine the extent of approval to release
the problem & causes of the problem resources

Improvement of process and quality by identify

possible
Leading solutions that caninbe
global excellence implemented
procurement andtosupply
solve
 DMAIC
I. DMAIC is the problem-solving approach that drives Lean
Six Sigma. For improving existing process problems with
unknown causes
II. Data-driven improvement cycle used for improving,
optimizing and stabilizing business processes and designs.
The DMAIC improvement cycle is the core tool used to
drive Six Sigma projects.
III. Five-phase method—Define, Measure, Analyze, Improve
and Control.

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DfSS Process improvement: DMAIC
– Define
a serious problem is identified and a project team is formed and
given the responsibility and resources to attain the defined
project goals.
– Measure
• the process to determine the existing level of performance.
The data gathered is analysed in order to produce initial ideas
about what might be causing the problem.
– Analyse
• based on preliminary ideas, theories are generated and
investigated to determine the root cause(s) of the defects.
– Improve
• the identified root causes are removed by designing and
implementing changes to the process.
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Design for Six Sigma (DFSS)

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DfSS Process design: DMADV
I. Define
identify and set the goals for the new process taking into account internal and
external requirements.
II. Match/measure
determine customer needs. Benchmark where appropriate and develop
performance measures that meet these goals.
III. Analyse
undertake an analysis of these performance measurements and develop an
outline design for the new process that will meet customer needs.
IV. Design (and implement)
detail the process to meet the performance and customer criteria and
implement. It will deliver a competitive advantage
V. Verify
the design performance by introducing controls to ensure the stated goals are
being met without errors

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A typical six sigma team

I. Champions
executives who understand six sigma and serve as mentors to black
belts and interface with senior management
II. Mentors
drive the project forward and give support and direction
III. Master black belts
experienced, full-time leaders with a developed knowledge of six sigma
IV. Black belts
will lead quality projects, usually on a full-time basis until they are
complete
V. Green belts
work on projects on a part-time basis but will often lead teams in their
own area or function
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Leading global excellence in procurement and supply
Six themes of six sigma
I. A genuine focus on the customer with improvements measured in
terms of customer satisfaction and value

II. It is based on data and fact so that problems can be effectively

defined, analysed and resolved

III. Process improvement or design is at the heart of six sigma.

IV. Six sigma demands proactive management

V. Boundaryless collaboration: six sigma involves both internal and

external providers and contributors to the six sigma program

VI. Strive for perfection, tolerate failure. New ideas come with risk.
Learn from mistakes but encourage original thinking
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