The strategic objectives of operational management
Identify and explain the role and importance of effective operations management within an organization. Provide examples from SCL as evidence. Sundaram Clayton Limited had lined their site on the Deming Prize in the year 1980. Deming prize is a prestigious award presented to a company which represented the epitome of quality standards in its operation. The then CEO of SCL Srinivasan was keen on achieving the required standards to get the Deming prize. SCL from that point forward started the pursuit of achieving operational excellence in their organization.
So as to achieve the set quality standards, SCL introduced TQC (Total Quality Control) in their organization. They trained the managers with various modern manufacturing techniques. This step of making their workforce much more capable allowed the organization to gain new insights on their strengths and weaknesses. The company also introduced the concept of quality circles. As per the “Quality circles” arrangement, a group of employees from various departments gathered along to discuss the issues, shortcomings, progress and recommendations in their respective area of expertise. This step forward gave the organization a better footing to their goal to not only obtain high quality standards and higher customer satisfaction but also the Deming’s Prize.
As per the TQM (Total Quality Management) the policy framework was extended to the entire organization consisting of product development, operations, marketing, finance, and personnel.
SCL also introduced advanced engineering techniques, which were able to reduce its lead time. There was synchronicity between the product development team and the work setting on the component base. Therefore, by the time the customer approved the design the components were ready to be assembled for a prototype.
In any organization it was essential to follow certain set guidelines to achieve operational excellence, SCL did the same. It understood the importance of quality and relevance of quality in terms of customer satisfaction, and to further improve their manufacturing processes, they implemented various quality standards and adhered to these standards.
Analyze the strategic objectives of SCL
Initial analysis was done by the then CEO Srinivasan to understand the positioning of the company in terms of its standings in the global market. A SWOT analysis uncovered that even thought the company had a market share of 90% in the country they were not competent enough to deliver world class quality products. This analysis formed the foundation of the renaissance at SCL. SCL introduced various steps and procedures to ensure the quality of their products was uncompromised.
SCL not only looked at the quality of raw materials and the quality of operations at the suppliers but also refined their involvement in the operational processes. It examined various factors such as life-expectation of the product, target cost, production volume, and growth and availability of in-house expertise to meet the requirements. Based on these the team sanctioned a design and developed a prototype, which was further tested rigorously before being finally approved for manufacture.
Data acquired from all the production processes, quality variations, issues related to time management, productivity issues, breakdowns and faults was collected and analyzed to continuously to format a cause and effect sequence and to better improve the system. It also employed Kaizen and Taguchi systems to inculcate the practice of problem solving and system failure analysis. Deviations from the actual standards were analyzed and immediate measures to rectify the errors were taken to reduce down time and improve productivity and encourage productivity without errors.
SCL also incorporated the use of Kanban system to better facilitate communication and reduce in-process inventory costs.
SCL major strategy was the implementation of all the quality standards important for their quality approach. It went ahead with various steps to ensure that they re-emerge as a leader in the segment, not only in terms of market reach, but also world class quality.
Evaluate how successful are SCL operations’ objectives in meeting the organizational objectives.
SCL was able to succeed in inculcating the practice of quality in the functioning of their organization. They were able to reduce their lead time, improve their productivity and were able to incorporate world class quality standards in their organization. SCL was also able to inculcate the practice of achieving and maintaining world class quality in their employees.
After enforcing various quality standards and a review of over 8 months SCL was awarded the Deming’s prize for the success in implementing an effective operational and organizational excellence. SCL was able to implement various changes in the organization to effectively alter their standing in the world auto ancillary industries. Some of the main changes that were noted are:
There was a tremendous decrease in the defect rate at SCL, the quality measures incorporated allowed the company to produce components with high level of precision and durability.
Customer product returns reduced significantly and therefore also increasing the customer satisfaction factor.
The new product development duration was halved from 24-30 months to 12-14 months. This meant that the company was innovating at a better pace and was always ready for the changes that the market was offering them.
The employee turnover rate increased substantially (18%) annually, which highlighted the working conditions for the employees and also improved employee satisfaction.
The gross value addition by the employees to the company increased by 12%
The sales of their products increased by an annual rate of 35%, which highlighted their market reach had deepened than before the changes were incorporated.
The net profit of the company increased at an annual rate of 83%.
These improvements in the functioning of the organization can be credited to the changes that the company went through to achieve organizational excellence.
Task2 – Appropriate systems
Define two systems that might be used to ensure quality of product and services in SCL business processes.
One of the systems that can be very influential in ensuring successful implantation of quality is the Six Sigma systems. The implantation of six sigma system in the organization would allow the organization to reinvent the quality standards already existing in the organization and improve them to a higher level.
Six Sigma Systems seeks to develop the innate quality of the operational standards and their processes. It allows the identification and removal of causes of defects or errors. It also aids increasing the predictability in the manufacturing and organizational business processes. It makes use of various quality management methods like statistical methods, etc. and creates relevant data information required by the employees to improve the quality standards within the organization.
The other quality system that SCL can adopt is the Lean Manufacturing System. The lean manufacturing or lean production system is utilized to reduce the overall wastage in the operational standards of the organization. By implementing this system, SCL can increase efficiency, decrease waste and with the use of empirical quality standards set in this system, it can critically evaluate the decision of what can be termed as wastage and what can be termed as acceptable loss. This system has created successful organizational excellence in companies such as Toyota Motor Company. It can be useful in increasing the productivity of the organization and making its operational standards effective and efficient.
Define and describe the practice of ‘Quality’ audit in organizations.
Quality audit can be defined as the process of methodical assessment of various quality systems in an organization. This quality audit is carried out by an internal or external quality auditor or an audit team. It is a vital element in the incorporation of particular quality standards in an organization. The timely and accurate quality audit provides the company with a brief overview of its operational competencies and the shortcomings that occur within the organizational boundaries. It will also inculcate the practice of improvement within the organization.
Quality audits are usually performed either at random within the organization or it can be set up at predetermined time intervals so as to maintain a predictability of the quality standards at which the organization functions.
Data acquired from these audits is constantly monitored, analyzed and necessary procedures are carried out to ensure that the recommendations of the quality audit are carried out.
Explain how the implementation of TQM and standards such as ISO9001 can be used to monitor quality to satisfactory level in SCL.
As per the requirements of TQM and the quality standards, every relevant data regarding the operational processes, had to be accumulated and analyzed for discrepancies and improvements. The process of monitoring the data acquired was one of the major achievements of these quality systems. Therefore the adherence to the constant monitoring of quality standards is one of the main challenges of these systems.
According to the Deming’s “Inducting people into the quality culture of the organization is as important as the actual implementation of TQM tools….” What do you understand by the term quality culture? Comment on the effects of culture on SCL operational abilities.
Quality culture in simple terms can be defined as the basic integration of quality in the overall system of the organization. This would not only lead to operational excellence but it would also have a positive effect on the internal environment of the organization. Quality culture is more about the combined mindset of the organization rather than the behavior of one single individual or employee.
For the employees of SCL it was an ever learning process of employing quality in their everyday work. They inculcated the practices of adhering to the quality standards that were needed to be followed. The employees were constantly trained and they managed to turn the reason of winning the Deming’s prize as a form of lifestyle required to maintain operational excellence.
Compare and contrast the views of quality models in Europe (EFQM) and US (MBNQA)
EFQM is the European Foundation for Quality Management. It is more focused on aiding the organizations to develop towards being more viable in their competition against its competitors. This model is periodically reviewed and refined for incorporating better practices within an organization. This quality standard can be adopted regardless of its sector, structure, or size. It helps the organization to identify shortcomings and also helps in overcoming those inadequacies.
MBNQA is the Malcolm Baldrige National Quality Award. It identifies and honors the organizations in the business, healthcare, education, and NGO’s for their organizational excellence. This award is given in by the President of the United States. The award endorses awareness of performance brilliance as a more and more vital element in competitiveness. It also endorses the sharing of victorious performance approaches and the remuneration derived from using these approaches.
Task3 – Organizational performance
How might you monitor systems and work activities in order to help to identify problems and opportunities for quality improvement within a company?
Using Kaizen and Kanban for better communication between the management and employees can be one way implanting better monitoring. Kaizen is the term utilized for the process of continuous improvement. In this process feedback regarding the operational processes is taken from the employees and this data is analyzed and if there is any regard to improving the process by implementing a suggestion offered by any employees is present, then the organization can take necessary steps to carry out the suggestion.
Regular internal audits can be carried out to ensure that there is an efficient operation at all the stages of manufacturing.
Recommend improvements in SCL to realign operations with the organization’s objectives and reduce variation between customers’ expectations and organization delivery of products.
SCL can inculcate the use of other quality standards such as Six sigma and lean manufacturing to further improve their process structure and achieve organizational excellence.
Currently, SCL is outsourcing the part of mechanical operations to its ex-employees. This practice can be modified by starting associate companies which would be much more efficient and there is more control over the quality of the product than outsourcing it to its ex-employees.
Evaluate the wider implications of the proposed changes in 3b within SCL.
Implementation of Six sigma system would ensure that the quality of the products is better than it is already promising its customers, but implementation would also cause an increase in the operation costs of the company and further would reflect on the pricing of their products. This change would affect the pricing but since SCL is currently the market leader with more than 90% market share, the price increase would affect negligibly.
Setting up of associate companies for the outsourcing of components would require an initial working capital investment. This however would be very beneficial to achieving the quality that the company desires rather than outsourcing it to its ex-employees, but on the other hand there may be issues of dissatisfaction between employees within the organization if this step is taken. Other steps to overcome this problem need to be carried out to maintain the loyalty of the employees.
How would you plan, implement and evaluate changes within a company?
The planning implementing and evaluation changes in the organization would be carried out as per the Deming’s PDCA cycle. This cycle is efficient and effective in endorsing high level of operational excellence within the organization and would also allow the organization to carefully review their performance throughout the period of the evaluation stage. PDCA is being employed in many organizations to improve their capability and ability to thrive in the business world of today.
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