Importance of effective operations management
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). Functions of operation management vary depending on the organisation’s purpose. In the manufacturing setting like the clothing manufacturer 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).
While the focus of operations management is on production of clothes for not every season for the company in the case study, its significance to the whole organisations can be undervalued. When the operations of an organisation are properly maintained, the other departmental functions are smooth; however, if it is not, then every department suffers.
The department for human resources seems negligible in the company. The machinists and in-house designer seem to work however they please, which affect the company’s chances of recruiting new workers. An effective HR department is enabled to predict the requirement for staff, to develop positive job descriptions, and to hire and train people when operations are carried smoothly (Gunasekaran and Ngai 20120. When they are not run well, the outcomes of HR are not positive. The garment company is facing quality issues, which reflects on their employees, and due to this, their HR team might find recruiting new people a difficult process.
The accounting department when supported by good management of operation can pay supply and materials bills on time because an operation that is well-run plans ahead. Payroll can be easily handled when costs are predicted. However, if the operations are poorly run, predictable costs are difficult to confirm, making it strenuous for the accounting department to perform well (Battistoni et al. 2013). The finance department is charged with obtaining capital, through either equity financing or debt. It can raise money more easily with a successful, smooth-running operations division. On the other hand, if the department of finance is only able to show a record of wastefulness, too little or too much inventory, and unequal productivity, it is arduous to raise money.
In addition, a basic process of operations management in any organisation is as follows:
Objectives and plans: The main target of any organisation are objectives, therefore it is important to concentrate on the organisation’s target
Establishing tasks: In order to accomplish the objectives, it is important to set specific tasks that are associated with the work to ensure accomplishment of objectives
Classifying groups according to work patterns: The managers must use the power of decentralisation and categorise groups that are associated with the required tasks
Delegating authority: In order to share the burden of work, the authority of the organisation should delegate the burden to bordinates (Bititci et al. 2012)
Maintaining relationships based on hierarchy: The manager must ensure the power and relationship delegation is held according to authority
Lastly, operations are the core of the organisation that provides products and/or services. When operations are maintained well, it allows other departments to function easier, and if operations are poor, then the whole organisation suffers.
Evaluating existing operational management success
In the chosen company, 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 analysing quality levels or performance. The benchmarks can be derived from the company’s own experience or from other companies in the clothing industry. The company chose from benchmarks such as customer traffic (number of people buying their products), rates of retail conversion (retail buyer versus retail visitors who do not buy anything), value of average sale/purchase, items per sale and gross margin to check their operations management. 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 Garengo 2012). The managers at the clothing company can use the balanced scorecard to stay alert regarding areas where performance digresses from expectations. The managers can then encourage staff to focus their attentions on determined areas, and hope that this triggers enhanced performance within the organisation (Andjelkovic Pesic and Dahlgaard, 2013).
Importance of quality management
Quality is the most important factor for any organisation, 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 repairwork 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 materialising 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 3):
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
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
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
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
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.
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
In the company, 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 formalise 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 PDCA Model, Six Sigma Model, Baldrige System 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:
The customer’s requirement of quality is understood
The department for quality control is organised and trained
The proper quality requirements flow to the quality control department are ensured
The proper quality requirements flow to the manufacturing department are ensured
The quality plans, inspection systems, parameters, sampling, etc. are established
Tests, measurements and inspections are done according to plans
Deviations are recorded (Santorum 2011)
Feedback is provided to the manufacturing department
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 utilises methods for improving and evaluating processes (refer to Appendix 5). There are two processes: DMAIC (Define, Measure, Analyse, Improve, Control) and DMADV (Define, Measure, Analyse, Design, Verify).
The EFQM developed the Excellence Model in 1991, which has been used as a structure for organisational management (refer to Appendix 6). It has helped organisations to become more quality conscious and competitive. The model motivates organisations 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). Lastly, the Baldrige System focuses on determining important business processes and enhancing them to deliver improved value to their customers (refer to Appendix 7).
These quality management processes and tools can be used to control and improve quality. The PDCA model can help the company streamline their goals into applicable measures that the whole company can follow (thus, diminishing individualised quality standards). The Six Sigma model can further enhance quality processes to ensure lesser returns of items. Further, the EFQM and Baldrige System can provide the company a structure for evaluating their product quality.
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 organisation. The process of strategy planning to change quality includes certain steps, which are as follows:
Identifying the expectations and demands of the customers
Ensuring overall workforce participation
Benchmarking the processes of quality management
Developing and implementing a mission and vision
Developing and recording current quality standards
Ensuring the impact of standards and enforcing continuous improvement
The focus will be on reducing the gap between specified quality and expected quality to improve overall quality in the company. 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 organisation (Jhandir 2012). In order to secure participation of both the labour and stakeholders, the importance and value of developing a consistent culture of quality improvement in the entire organisation 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.
Plan for achieving quality improvement
Strategic quality transformation can be separated into 3 categories: resources, tools and systems. Resources can relate to both human and financial resources; arranging financial resources is the first priority followed by human resources (Siami and Gorji 2012). Tools are the models and approaches chosen to facilitate change; and for the clothing company, the EFQM and 5 Gap Model is chosen. Lastly, systems are the most efficient combination of tools and resources of business processes that will be focused on customer satisfaction.
For developing the plan, the main tool to be used will be the EFQM Excellence Model, which is a functional framework that helps organisations to:
Examine where the company is on the way to excellence, and assisting them to comprehend their important and potential strength
Provide a mutual vocabulary and method of thinking about the company that expedites the efficient exchanging of ideas
Assimilate planned and existing initiatives, expelling duplication and determining gaps
Provide an essential framework for the management system of the company
Among the various criterions of the EFQM framework, two criteria are chosen for formulating the plan for the company: strategy criterion and people criterion (Kim 2011).
The company will implement its vision and mission by creating strategies, plans, objectives and policies focused on their organisation, which could include:
Understanding the requirements of the organisation, by collecting organisation’s expectations and needs as an input to the process of
Determine and evaluate the external determinants such as market and economic trends
Analyse the trends of operational performance to comprehend the potential and current capabilities and determine where development is required
Benchmark and contrast their performance to analyse their strengths and fields of improvement
Choose distinct objectives and goals which align with the opportunities in the market
The company has to value their people and develop a culture that grants commonly beneficial accomplishment, develops abilities of people and promotes equity and fairness by the following:
Defining clearly the level of performance for staff to achieve strategic goals
Coordinating strategic goals with employee plans
Developing competencies and skills of staff to make sure their future employability and mobility
Understanding the communication requirements of their staff and apply proper strategies and tools to maintain them
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 the company. 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 value manufacturing and quality control to enhance overall quality for the company.
Quality will be then evaluated across four systems: product design, process design, layout design and network design. Product design refers to the specific product, which in this case, are the high-quality women’s clothing and its design, durability, quality and features (Prakash and Mohanty 2013). Process design refers to the physical change of the product that involves four processes: raw materials (fabrics, threads, sewing machines, accessories, etc.), work-in-progress, semi and finished goods. Layout design refers to the location of the company. It involves overall organisational infrastructure, and geographic, demographic or political conditions. Lastly, network design refers to the integration of layout, process and product design. The company’s successful implementation and outcome of their strategic plan depends upon their systems.
Implementing change and embedding quality culture to ensure consistent improvement
The strategic quality change process will be implemented according to four steps, which include:
Being aware of conferred business processes
Analysis of the business processes
Business performance comparisons
Execution of compulsory measures to cover the gap in performance (Lam et al. 2012)
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 organisation to understand the current situation of the company. The following step is to analyse 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 company can understand their progress rates in the organisation’s quality change. Lastly, the gap should be fulfilled since this fulfillment will provide the organisation 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. Changing a company’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 everyday. 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.
Evaluating the outcomes of change against organisational 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, the company 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. With quality improvement, the company acquires outcomes such as error reduction, enhanced adaptability, increased productivity and improved morale.
Quality standards were disparate across machinists and their team leaders in the organisation. With planned quality change, these standards were formalised, 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. The philosophy of constant quality improvement makes businesses better supplied to adjust to changes in the market, derive benefits from opportunities and avoid risks. Thus, the company with its small production scale will be now better equipped to adapt their processes to dynamic markets.
Constant quality improvement can lead to obstructions in productivity as the company carries out better processes, yet in the end, this can also lead to increased productivity. However, after the changes come into effect, the company will experience lesser production stagnation and higher productivity. After the change process is implemented, quality standards will be the same for every employee, and the company can now focus on improving the staff morale. They will be empowered and educated, instead of reprimanded. This will ensure lower turnover rates. Lastly, in order to sustain this change, the sole recommendation would be to constantly monitor and control the criteria that have been implemented.
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