The case study of a hypothetical clothing company, named Wu Designs, from Hong Kong, supplying their products to retail stores in mainland China is evaluated in this assignment. However, this company has been experiencing customers returning their purchases due to quality issues. On closer inspection, the two partners of the company discovered that the organization does not have a set standard of quality; instead, machinists and their team leaders set standards. Additionally, foreign retailers and manufacturers are increasingly entering the markets, which threaten their business. Therefore, in regards to this issue, the importance of operation management and quality management is discussed, with information derived from literature and the case study. Following the discussion, a plan for strategic quality change is provided. Lastly, outcomes of this change are discussed and evaluated.
a) Importance of effective operations management
Wu Designs (WD) has been experiencing certain issues related to quality for some time. The operations at the company are inconsistent and quality is measured by individual standards, not officially established standards. This is affecting the business. Therefore, to counter this problem, the co-director has formulated a report to analyse the issue and provide a strategic plan. Wu Designs is experiencing severe losses due to return of items. As co-director of Wu Designs, I have established three primary objectives to plan a strategy:
To increase profits by improving quality and production
To ensure products have zero defects through quality improvement
To gain competitive advantage over foreign companies in the market
The management of operations involves supervising, designing, production process controlling and business operations redesigning in the production of services and goods (refer to Appendix 1). In the manufacturing setting like Wu Designs from Hong Kong, includes creating efficient processes to develop the product, acquire the raw materials on time, insuring satisfactory numbers of appropriately trained workers, and correct equipment maintenance (Taj and Morosan, 2011).
The main operations management (OM) strategies of the Wu Designs are focused on the production of garments. In this connection, the importance of OM is very significant. The operational strategies have been very helpful for the machinists as well as the designers. In addition, these effective strategies have also improved the quality of the garments, which in turn ensured zero defects in their products. On account of these improved garments, the company also gained competitive advantage over its rivals and competitors. Moreover, the other departments also gained various advantages due to these effective operations management.
The overall strategic objective is to provide their customers with the best quality garments on a budget and minimizing wastefulness. Thus, for Wu Designs, operations management has grave importance. The company needs an effective operations management if it wants to accomplish their objective.
Evaluating existing operational management success
In Wu Designs, their objectives should relate to the four performance dimensions of cost, quality, variety and time. Under cost, the company needs to maintain efficiency without overspending their budget. When it comes to quality, their strategy should improve both their product and process quality. Since the market is very competitive, their response to demand must be timely. Their target customer base is quite heterogeneous, thus when the strategy is developed, it must fulfill the varied needs of their customers.
Additionally, the operation management process at the garment-making company has no delegation of authority as seen from how the individual machinists and their team leaders are responsible for quality management. This has led to returns of products, and since the company functions in the highly competitive clothing industry in China, it affects the overall organisation. Thus, to evaluate the overall effectiveness of operation management, benchmarking and the balanced scorecard will be used.
Benchmarking is a set of standards or a singular standard, which is used as a mark of reference for analyzing quality levels or performance. The benchmarks can be derived from the company’s own experience or from other companies in the clothing industry. The recommended benchmark for WD would be customer traffic and gross margin. This will help them to understand how many customers are buying their items versus how many are returning them. The return of items will affect their gross margin, which has been chosen as a benchmark. Together these two benchmarks will help WD measure their performance. This will allow managers to check their performances and monitor their growth.
The balanced scorecard, developed by Robert Kaplan and David Norton in 1992, is a tool of performance management that are applied by managers to monitor the execution of tasks by the employees under their control and to keep track of the results emerging from these tasks (refer to Appendix 2). It is used to identify small numbers of non-financial and financial measures and adhering targets to them, so when they are examined, it becomes possible to decide whether performance met the expectations (Biazzo and Gareng, 2012).Wu Designs can use the balanced scorecard to compare their objectives with their actual progress (see below appendix 3). The directors can then encourage staff to focus their attentions on determined areas, and hope that this triggers enhanced performance within the organisation (AndjelkovicPesic and Dahlgaard, 2013).
A balance scorecard for Wu Designs
b)Importance of quality management
Quality is the most important factor for any organization, and for a clothing company, it is critical. If the company cannot manage their quality, it will causes issues such as high rejections and alteration of garments, requirement of additional labor for examining products and repair work and delay in completing production among others. Since the company is part of the manufacturing industry, they are responsible to develop and sell best quality goods to their customers. This ensures customers spend their money to purchase the company’s goods rather than on the goods produced by their competitors.
Quality management is a defined system that records procedures, responsibilities and processes for accomplishing quality objectives and policies. According to William Deming, one of the pioneers of quality management focused his approach on three essential premises: customer orientation, continuous improvement and quality as identified by the system (Kim et al. 2012). Joseph Juran proposed an approach that focused more on management commitment and responsibilities. He conjectured that 85% of quality issues can be attributed to errors in the system regulated by the management. Juran focused on three main processes of quality, which are usually referred to as the Juran Trilogy: quality control, quality planning and quality improvement. Quality planning is determining the customer needs (external or internal) and then devising plans to meet those needs through a number of processes; while quality control are the processes done to make sure the goals of quality are accomplished during operations. Lastly, quality improvement is the way of materializing unprecedented performance levels (van der Wiele et al. 2011).
At a wider level, quality is best understood as the gap between expectations of the customers regarding the service or product and their assumptions concerning the service or product. Primarily, there are five main gaps as identified by the 5 Gap Model developed in 1985, which are (refer to Appendix 4):
1. Gap between operation’s specification and customer’s specification- the customers expects real silk threads, while the operations at the company has capacities to use only rayon threads
2. Gap between the concept of the service/product and the way the company specified it- the customers has a concept that the company produces garments made from pure cotton, while the company often uses blended cotton for certain garments
3. Gap between the actual quality and specified quality- customers expect certain products to be made from georgette, however, the company is using faux georgette since it is more durable
4. Gap between the description of the service/product given to the customer and the real delivered quality- it was broadcasted that their staff are highly skilled, however, some of them are not that skilled
5. Gap between experienced and expected service provided to the customer- the company claims high quality products yet customer experience variations in colour grade or size issues in purchased garments
The third gap between specified and actual quality is of particular interest to the company’s operation manager. Wu Designs needs to use this model to understand their errors and rectify them to meet customer expectations.
Customer satisfaction is guaranteed when quality is assured. When companies fail to maintain a standard of quality, customers stop purchasing from them (Siddiqi, 2011). Thus, quality management is of extreme importance to companies if they want to retain customer loyalty and increase their profits.
Evaluating existing quality management’s success
At Wu Designs, customers are increasingly returning their purchases, which signify that there are quality problems. Moreover, in the backdrop of a competitive industry and foreign products with improved quality, the company can lose their market advantage and their profit margin can diminish. The major issue of quality in the operations is identified in the way individual machinists and their team leaders are deciding quality standards. This creates personal standards are not uniform, which results in goods being produced of varying qualities. Therefore, the products are not uniform in their designs or processes (Baird et al. 2011). When these goods are later purchased, customers are bound to identify quality deficits and they will return their purchases.
Therefore, the first task is to formalize the quality procedures in the company. A quality management team must be set up, and they will be responsible to ensure every machinist and team leader follows the formal quality procedures. A formal quality procedure can improve the profit margin and turnover.
In order to evaluate the success of the quality management, three tools are suggested: Deming Model, Six Sigma Model and European Foundation of Quality Management (EFQM).
The Deming Model focuses on the PDCA cycle, which is Plan, Do, Check and Act (refer to Appendix 4). The Deming model provides a thorough process cycle, which includes:
1. The customer’s requirement of quality is understood
2. The department for quality control is organized and trained
3. The proper quality requirements flow to the quality control department are ensured
4. The proper quality requirements flow to the manufacturing department are ensured
5. The quality plans, inspection systems, parameters, sampling, etc. are established
6. Tests, measurements and inspections are done according to plans
7. Deviations are recorded (Santorum 2011)
8. Feedback is provided to the manufacturing department
9. Any plans for future improvements are done
The approach of Six Sigma, invented by General Electric and Motorola, provides a useful method of accomplishing both cost reduction and quality management. Particularly, the model utilizes methods for improving and evaluating processes (refer to Appendix 6). There are two processes: DMAIC (Define, Measure, Analyse, Improve, Control) and DMADV (Define, Measure, Analyse, Design, Verify).
In case of Wu Designs, the DMAIC model will be very beneficial. With the help of these quality management strategies, the company will be able to efficiently identify the loopholes in their functional areas. In addition, WD will also be able to effectively measure the extent of the problems and analyse the required strategies for quality improvement. Moreover, this will ensure improved quality of the goods that the company is producing and the efficiency as well as the productivity of the company. Lastly, Wu Designs should maintain the improved quality of the products by using these strategies.
Thus, with the help of these quality management strategies, the company will be able to produce high quality products, which will in turn help the company in gaining greater competitive advantage over its rivals in the market. In this way, WD will also be able to improve the profitability of the company.
The EFQM developed the Excellence Model in 1991, which has been used as a structure for organizational management (refer to Appendix 7). The model will motivate WD to work for better quality, applying it as an important agent for supplementing their market position. It also inspires a system of self-appraisal that helps business planning, applying the EFQM model as a base for effective evaluation and monitoring (Dahlgaard-Park 2011).
Strategic quality change
A transformation in the strategic quality is expected to make sure services and products are of the highest quality, and to improve the effectiveness of an organization. The focus will be on reducing the gap between specified quality and expected quality to improve overall quality at Wu Designs. The previously mentioned 5 Gap Model is the right tool to determine expectations of customers and implement them to the overall performance and strategy of the organization (Jhandir 2012). In order to secure participation of the labor and stakeholders, the importance and value of developing a consistent culture of quality improvement in the entire organization must be broadcasted and change culture must be put into action. The result of the planning should be developing targets that must meet all the SMART (Specific, Measurable, Attainable, Relevant, Timely) objectives.
a) Plan for achieving quality improvement
WD formulated their strategy to meet their objectives of quality improvement. Their current process or system of quality improvement is poor, thus the company is aware of what changes need to be affected.
The strategic objectives of WD are to increase the profits by improving the quality of the products, to ensure zero defects through quality improvement and therefore, to gain competitive advantage over the foreign companies in the domestic as well as international market. In this connection, the above mentioned objectives are aligned with the SMART objectives. The Gap model has found out the issues, which is the gap between customer expectations of quality and actual quality, and using the EFQM framework, the targets to be achieved will be developed, and these targets have to specific, measurable, attainable, relevant and timely.
In this connection, the EFQM framework will be created after the gap analysis in the company. Therefore, the employees will be given rigorous and effective training in order to fulfill the gap. On the basis of this gap, the employees of the business organizations should be provided with effective training by the specialists of EFQM. This will help the company to increase the efficiency of the employees, to fulfill the gaps and thereby to improve the profitability of the company. Contextually, the stakeholders of the company should be informed as they can take part in the training process as well to understand the changes (Kim, 2011).
The company will implement its vision and mission by creating strategies, plans, objectives and policies focused on their organization, which could include:
1. Understanding the requirements of the organization, by collecting organization’s expectations and needs as an input to the process of strategy development
2. Determine and evaluate the external determinants such as market and economic trends
3. Analyse the trends of operational performance to comprehend the potential and current capabilities and determine where development is required
4. Benchmark and contrast their performance to analyse their strengths and fields of improvement
5. Choose distinct objectives and goals which align with the opportunities in the market
The plan for quality change strategy will be evaluated in three parts: quality control, value manufacturing and operations management. The first criterion is quality control, which evaluates the strategic change of quality for WD. If the quality is satisfactory, then the company could achieve optimal success within its lifetime and ensure their customers are satisfied. The second criterion is value manufacturing, which provides quality in terms of manufacturing. The last criterion is operations management, which assimilates quality in garment manufacturing and control to enhance overall quality for the WD.
Quality will be then evaluated across five systems: results, customer response, continuous purpose, people development and continuous improvement. These five systems are part of the various fundaments of the EFQM (Prakash and Mohanty 2013). Quality is a measure of excellence, and WD wants to improve that, therefore the resulting garments will give the company a standard of evaluation. The customer, who purchases the product, will provide a structure of evaluation as well. WD needs to remain constant in their purpose of implementing quality improvement, which in turn fosters continuous improvement and developments in staff quality.
b) Implementing change and embedding quality culture to ensure consistent improvement
The strategic quality change process will be implemented according to four steps, which include:
From the mentioned steps, the process of implementation of quality change can be performed in an efficient manner. The first step is to obtain awareness of conferred business process to enable the organization to understand the current situation of the company (Lam et al. 2012). The following step is to analyze the business process so that the process can effectively performed. The third step is to compare the past conditions with the present, so that the WD can understand their progress rates in the organisation’s quality change. Lastly, the gap should be fulfilled since this fulfillment will provide the organization optimal customer satisfaction levels.
A company’s culture is the embodiment of important values, guiding attitudes, behaviours and principles that collaboratively add to the company’s regular operations (Besant 2012). Generally, culture matures over several years as norms are transferred from one generation of employees to the next. Thus, changing WD’s culture needs commitment and premeditated change process management.
When a quality culture is accomplished, every employee, from senior management to front line employees, have integrated quality improvement into the way the conduct their business every day. Employees constantly consider how processes can be enhanced, and quality improvement is not seen as an extra task anymore, but as a structure of mind wherein quality improvement application becomes second nature.
The organizational objectives that the change would help meet
In Wu Designs, the organizational changes hope to improve their quality management. The company hopes to create purpose, maintain it to improve their products. Deming’s Total Quality Management states that continuity of purpose will help businesses to gain competitive advantage and remain in business. Through the EFQM model, WD is provided a framework that will allow them to identify their current levels of quality and the areas that require improvement. Based on Deming’s theory, the EFQM model will help WD to align their strategies so that they can improve their quality.
Current and proposed systems / process / technology
The EFQM model is a framework for excellence for managing organizations and it is designed to help companies to gain more competitive advantage.
-To increase profits by improving quality and production
-To ensure products have zero defects through quality improvement
-To gain competitive advantage over foreign companies in the market
Targets to be achieved
The targets are aligned with SMART objectives, and they are
-Lesser returns of purchased products
These targets are specific, that is, it relates directly to the organizational strategies. They are measurable, that is, they can be examined and analysed to start improvements. The targets are attainable, that is, they can be accomplished as they are realistic and not over-the-top goals. This relates to the realistic factor in SMART goals. Additionally, these targets are timely. They can be achieved under the described time.
Physical and Human Resources required
The resources required are:
-External quality and EFQM specialist
-Economic and market researcher
-Sales Target KPI
The effect of the change to stakeholders and steps needed to be taken for QM
Stakeholder engagement is necessary, and they will be involved in various steps in the quality management. The effects of the change experienced by WD stakeholders could be:
-emphasis on developing mutual benefits and opportunities
-associated to long-term goals of the business
The steps taken for stakeholder QM includes:
Developing a foundation by assessing relationship building
Aligning stakeholders with organizational objectives
Developing the strategy
Evaluation of relationship building
Evaluation of change
The change will be evaluated by using the EFQM model of excellence.
The staff and the stakeholders will need training over the period of four months, and this training will be done to:
-To align staff with strategic targets
-To ensure everyone has knowledge about the new quality procedures
How the effectiveness of the change will be evaluated
As mentioned, the changes will be evaluated using the EFQM model. Coincidentally, the EFQM model specialist advises the company to use the balanced scorecard to evaluate changes. The balanced scorecard and its implication were discussed previously. WD will use the indicators against their goals to evaluate change. The outcomes of their objectives will provide them with the effect of the changes.
How you would monitor the implementation of the change
The change implementation will be monitored through the EFQM model-provided balanced scorecard. For instance, under the financial indicator, WD can monitor their sales to understand whether their quality improvements are working or not.
Evaluating the outcomes of change against organizational objectives and prior performance
The primary goal of planned quality change is to improve customer satisfaction by improving quality (Shantanu Welekar 2013). For the final evaluation, Wu Designs has to assess their processes for an established duration. The outcomes of this assessments will be considered as a tracker for the strategic goals, and ensure that the planned objectives are coordinated with the system of operation management. This helps the top management to examine the trends in business and market to keep their company on their way to gaining customer satisfactions and surviving in the market where foreign alternatives are vying for a place in the market.
Quality standards were disparate across machinists and their team leaders in the organization. With planned quality change, these standards were formalized, which resulted in fewer errors. Mistakes and defective products when manufacturing garments are some errors that can prove to be costly for the company. Since this company is small, and the level of goods produced is nowhere near the mass of larger companies, such errors are especially expensive (Maruta, 2012). Therefore, when the company focuses on constantly determining potential factors of error and repairing them, they can avoid issues that may otherwise occur. Thus, the company with its small production scale will be now better equipped to adapt their processes to dynamic markets.
In order to understand their improvement better, they can use the KPI of Sales Targets, through which they can compare their current sales against target value or previous performance. This KPI is simple and motivates employees to be competitive and visualize their performance in a measurable way. The Sales Target is easy to use, and by comparing their past and present sales, they can understand if there have been any quality improvements. In addition, the company can also use the output and quality indicators in order to analyze the quality improvement of this company.
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