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Tuesday, May 3, 2011

Operation Management, TQM, Supply Chain Management, Reengineering

Introduction of Operations Management
Operations Management deals with the design and management of products, processes, services and supply chains. It is concerned with the production of goods and services and it deals with the management of different resources inputs like machines, raw materials, human skills, and distribution of finished goods and services i.e. outputs to the final customers. It is also concerned with planning, organizing, controlling, directing, motivating and coordinating all the activities of an operations system. Operations management decisions include long term strategic decisions concerning facility location, capacity determination, and mid-term tactical decisions on issues like identification of appropriate manpower, determination of inventory levels, and short term operational decision like production scheduling and job assignment.
According to Stevenson (2002), operations management is the management of that part of an organization that is responsible for producing goods and/or services. Operations management is that part of a business organization responsible for planning and coordinating the use of the organization's resources to convert inputs into outputs. 
The major function of the operation management is to carefully manage the processes of the business to produce and distribute goods and services to ultimate customers. All business whether very big or very small carries out the activities and functions that typically associate with the operations management.
Supply chain management

Supply chain management (SCM) is the term used to describe the management of the flow of materials, information, and funds across the entire supply chain, from suppliers to component producers to final assemblers to distribution (warehouses and retailers), and ultimately to the consumer. In fact, it often includes after-sales service and returns or recycling.
The Essentials of Supply Chain Management very clearly and concisely explains how to determine companies place in the value chain and how to enhance company’s value in that chain. After reading the book it is learned that maintaining strong customer relationships and effectively cutting costs must be priorities at a time when consumer spending and confidence is down. In this book, author starts from the explanation of the purposes of supply chain management, the forces that rule a supply chain, the variables that the supply chain manager constantly need to juggle with and optimize keeping in mind the market segment that they are serving. Supply chain management includes planning and managing of all the activities such as sourcing, procurement, conversion, and logistics of management activities. Involving the coordination and the collaboration with the suppliers, intermediaries and customers, it manages the interconnected network of a business.

TQM is management systems that focus on quality. TQM provides a framework for implementing effective quality and productivity initiatives that can increase the profitability and competitiveness of organizations. It based upon a set of principles, and supported by a set of proven methodologies and tools. Some principles of TQM are focusing the organization on satisfying customers needs, developing and tapping the full human potential of all employees, involving everyone in efforts to 'find better ways and managing business processes not just functions or departments
TQM is a continuous improvement approach to doing business through a new management model. TQM expands beyond statistical process control to embrace a wider scope of management activities of how we manage people and organizations by focusing on the entire process, not just simple measurements. TQM is a comprehensive management system which is driven by the quest for continuous improvement in all operations and quality improvement must be continuous
TQM is important because in a global marketplace a major characteristic that will distinguish those organizations that are successful will be the quality of leadership, management, employees, work processes, product, and service. This means that products must not only meet customer and community needs for value, they must be provided in a continuously improving, timely, cost-effective, innovative, and productive manner.
The authors Michael Hammer and James Champy define reengineering as, "the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed" According to them "Managers have to switch from supervisory roles to acting as facilitators, as enablers, and as people whose jobs are the development of people and their skills so that those people will be able to perform value-adding processes themselves".
Reengineering the Corporation implants basic management principles of process redesign. Specifically, the book encourages business leaders to examine their core processes the order fulfillment process. Then, starting with a clean sheet of paper, the book encourages a redesign of those processes to their maximum efficiency. A critical theme throughout the book was employee ownership of processes. In fairness to those that have been involved in process redesign, Hammer and Champy's book does not introduce new management concepts. Rather, it packages the process redesign concept very nicely. The book is a very easy read, including many examples of companies that have successfully reengineered core processes.
After reading the book I understood that how reengineering can be carried out in a variety of corporate setting. Although workers are the ones who need to be empowered to carry out reengineering, the authors are adamant that the process must start at the top. This is because it involves making major changes that are likely to cut across traditional organizational boundaries. Those empowered to make the changes at lower levels must know they have the support of top management, or change won't occur. It is also learned that why reengineering needed. As mentioned in the book, there are two reasons behind the reengineering. The first is why the company cannot stay as it is. This should be a compelling "case for action" built on facts. The second message relates to what the firm needs to become - its vision statement.
Reengineering the Corporation advocates building teams around discrete processes but fails to realize that this just moves companies from horizontal silos to vertical silos. These vertical silos cause different but still serious problems. Also, the book mentions the critical role of Information Technology, but fails to realize that they can often lead reengineering efforts because if they have a solid knowledge of the business and new technologies they are in the best position to see the new possibilities. Another confusing area is that book indicates certain problems that should be overcome in an initial reengineering project such as functional departments and lack of understanding of reengineering continue to be problems for subsequent reengineering.
The Goal
The Goal is the book which helps an individual person to develop personal approach to organizational management and leadership. By applying different measures and concept presented in the book one can easily enhance organizational efficiency by focusing in the different tools and mechanism. In addition to this, the ability to clearly communicate the rational needs of the organization enables leaders to more readily establish alignment with the needs of the individuals they lead. It provides organizational situation and narration that challenges the way we look at how we measure operational improvement which mainly focus on three elements Inventory, Overhead and Throughput.  Productivity improvements can be measured as the positive change of any combination of the three inventory, overhead and throughput elements   without a countering negative change in the remaining elements.
Another important concept mentioned in the book is bottlenecks which are the symptom of local process efficiency at the expense of system efficiency. If leaders make improvements before a bottleneck, it adds to inventories that cannot be processed through the bottleneck; an increase in inventory without a corresponding decrease in overhead or increase in throughput. If they make an improvement after the bottleneck, it adds capacity that cannot be used; an increase in overhead without a corresponding decrease in inventory or increase in throughput. Both "improvements" have an overall negative effect on the measurable elements so they are not system improvements. Most organizations strive for system improvement by rewarding production units for eliminating idle time and becoming more efficient, i.e. encouraging local efficiency, the nemesis of the system is not idle time. The nemesis is system constraints or bottlenecks. Simply put, the slowest process or bottleneck establishes the rate of throughput for the entire system; improving efficiency in any other area is not only ineffective, it is counter productive.

My Years with General Motor
In the book “My years with GM”, Mr. Sloan describes the evolution of the company's general management policies and strategies which revolutionized the automobile market dominated by Henry Ford's Model T. The book describes the early innovations and development of the company's basic management policies and strategic concepts in such areas as planning and strategy, stabilization, financial growth, and leadership. It also explains how General Motor implemented a framework of coordinated policy and decentralized operations where top managers made policy, and individual business units were free to implement the policy in the way they wanted.
The book further deals with the way higher level managers and division managers interact with each other in the policy decisions. Corporate leaders have to sell the different policy to the lower level managers and lower level managers have to convince and encouraged to sell   operational initiatives to top management. Sloan began with an engineering background, some business experience and a successful bearings business. It was bought by GM when the firm was consolidating horizontally and vertically. The main lesson that is learned after reading the book “My years with General Motors” is centralize what is most effective centralized, then let human initiative drive from that common framework. He foresaw the impact of business trends, war, and technology, and yet he was flexible when the consensus opposed him. He brought international talent when the design team needed more new influence. He fits the profile of the Type 5 leader described in "Good to Great". He frequently gives credit to others and only once exhibits the slightest hint of boast in his own capabilities. Another lesson learned from the book is that the firm would coordinate more during slow time and in times of expansion or matters of innovation, allow more decentralized control.
The Toyota Way
The Toyota Way is the management book deals with the management techniques, principle and business philosophy behind success of the Toyota Company. It gives a detailed account of Toyota’s approach to Lean Production (known as the Toyota Production System) and the 14 principles that drive Toyota towards quality and excellence. The book also explains how one can adopt the same principles to improve the business processes, while cutting down on operations and production costs.
After reading “The Toyota Way” it is learned that   managers in every industry can learn to improve business processes by eliminating wasted time and resources, building quality into workplace systems, finding low-cost but reliable alternatives to expensive new technology, producing in small quantities and turning every employee into a quality control inspector.
Using Operational Excellence as a Strategic Weapon the Toyota way reveals the management principles behind Toyota's worldwide reputation for quality and reliability. The Toyota Way is a study of how Toyota manages and improves itself and develops its own culture and skills. Following are the same principles of the Toyota that I think are very relevant for all the organization to transform a business from good to great.
§  Define the company’s purpose and develop a long-term philosophy
§  Create value streams with connected flow, standardized work, and level production
§  Build a culture to stop and fix problems
§  Develop leaders who promote and support the system
§  Find and develop exceptional people and partners
§  Learn the meaning of true root cause problem solving
§  Lead the change process and transform the total enterprise
As mentioned in the first principle, Toyota never looks for the short term benefit rather it always focuses on the long term organizational goals. Another interesting Toyota way is that they hire their CEO from within. In my opinion it is the good idea of management because by doing so Toyota can easily eliminate unevenness at executive level.
Applying the Toyota way in the organization ( conclusion)
The Toyota is the best book for the management/business student. We can apply the Toyota way in the organization to enhance the organizational effectiveness. To do this, first we can identify the long term mission of the organization where we can define what the reason behind the existence of the organization is. After defining the mission statement we can make department wise goals and objective to achieve by the different teams and different department of the organization which is aligned with that of the larger goals of the corporation.
In the next step, we can define procedures to be followed by each employee to accomplish the objectives of their job by providing them an environment where they can learn by doing the job rather than providing them training so that they can develop their own lean learning enterprise by borrowing from the Toyota way.

Liker, J; Meier, D. (2005). The Toyota Way Fieldbook: A Practical Guide for Implementing Toyota's 4Ps. McGraw-Hil
Bernstein, T. M. (1965). The careful writer: A modern guide to English usage. New York: Athenaeum.

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