STRATEGIC OPERATIONS MANAGEMENT OF SCL A CASE STUDY

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ABSTRACT (150)

Superior Cars Ltd. is amongst the leading car manufacturing company, successfully operating in the global market. The report is intended to explicate theoretical underpinnings of the quality management paradigm by appraising the strategic operation management of SCL and their organisational efforts to improve the quality aspect of their products and services. The study concludes that the quality management system becomes more successful when applied throughout the operational framework of the organisation and recommends the significance of TQM, cultural changes, envisioned leadership and standardised criterions to improve the quality aspects of products and services.

BIBLIOGRAPHY

INTRODUCTION

The contemporary business trends of the continuously evolving globalised organisations implies for constant improvement in quality of products and services to meet and exceed customer satisfaction and to gain competitive advantages. In accordance with the quality management paradigm the organisations are required to orient their operational, procedural and functional structures with optimum resources to support quality and innovation (Dale, B. G., 2003, p. 97) in their products and services by embedding a systemic managerial approach to demolish the barriers between workers and supervisors, to maintain long-term partnerships with suppliers, to inspire a cultural shift by concentrating on leadership building (Koontz, Harold et al. 2004, p. 122). It has been studied that total quality management can only be achieved through understating, meeting and exceeding the needs of the customers by integrating continuous improvement of quality in products and services. The study aims to illustrate TQM paradigm and evaluate the strategic operation management in context of a case study, reflecting the organisational efforts of SCL to improve quality of their products and services.

Organisation of SCL

As an international car producer company specialising in luxury sports market, Superior Cars Ltd. (SCL) has successfully expanded its operation in over 30 countries across the globe. Though SCL is autonomous in manufacturing the products like wood-veneered trim, upholstery and approximately 1,200 other parts of engine but is also found to be evidently reliant upon 800 suppliers producing approximately 3,500 essential components for developing state-of-the-art vehicles.

Problem Statement

The company has successfully produced 14,000 cars in 2000 and anticipates developing 47,000 vehicles by 2008 as per the estimated growth in its manufacturing capacity within the next five years. Growing demand of its products and to achieve 15% growth rate per annum as per its core organisational objectives, SCL has identified the need of quality management approach complimented by effective communication and control in order to penetrate and dominate the international market.

Aims and Objectives of the Study

The main objective of the study is to appraise the theoretical underpinnings of quality management approach in context of manufacturing industry. The study is designed to explore the strategic initiatives undertaken by SCL to improve its operation management by enhancing quality of their products to meet their customer's expectations and exceed the standards set by the core competitors in the market.

QUALITY BACKGROUND & DEVELOPMENT

The explanation of quality in perception of the manufacturing organisations relies on the tangibility of their product features. Conformance, performance and reliability are the most integral aspects to delineate the concept of quality within the manufacturing industry (Diekmann and Kocakulah 2002, p. 40). Certain other characteristics of the including durability and serviceability also exhibit and enhance the quality and excellence of the products (Dale, B. G., 2003, p. 101). The case study reflects the historical and contemporary quality management initiatives undertaken by SCL to gain competitive advantage in the manufacturing industry.

History of Inspection

Formerly, SCL was reliant upon the inspection-based assurance system that was not only costly, inaccurate and unfocused but also had a limited scope at the same time. It has been identified that due to the flawed and uneven application of the inspection-based assurance system the process of product appraisal remains inconsistent (Douglas and Judge 2001, p. 158) and therefore, SCL management has shifted from its focus from inspection-based assurance system to quality assurance system.

2.2 Each Car Unique

The probable growth pattern of SCL envisages a substantial increase in the variety and volume of vehicles under production with intent to promise a potential distinctiveness and uniqueness in every model and hence it is deemed indispensible to substitute the inspection-based assurance approach with quality assurance system. To achieve its organisational objectives and in accordance with the economic perspective, SCL acknowledges the role of quality control which becomes extremely crucial to corroborate the proposed models because once the product has been positioned in the market; it becomes significantly impracticable to rectify the mistakes in its quality and designs.

2.3 Quality Assurance

To address the issue of inconsistent product appraisal, the company has established that the quality assurance system is entrenched within the organisational framework followed by which the quality control department ought to be radically efficient and extensively responsible to authenticate the design specifications during the manufacturing process and is required to keep a close check on the raw materials that are being utilised till the finished vehicle has been produced.

PROBLEM PREVENTION, DETECTION & CORRECTION

Quality management approach promises significant deterrence to apparent problems that could be triggered by numerous reasons including lack of leadership, avoiding receptiveness to issues, detached departments and employees (Zeng, Tian and Tam 2007, p. 247). The primary function of the quality management system is to prevent the probable issues, timely detect the shortcomings and take corrective actions on immediate basis thus, enabling smoothness and swiftness of the quality management process. SCL has devised the following set of quality-centric measures to enhance the quality of its products and services:

Statistical Process Control

Car manufacturing is a multifaceted and comprehensive process involving numerous operations based on both the manual and mechanical inputs (Scannell, Vickery and DrToge 2000, p. 26) followed by which, the company applied a pilot scheme of statistical process control (S.P.C.) system in a section of the engine plant to appraise its enhanced applicability by exclusively scrutinising the key features of the engines including tappet bores, connecting rod boxes, engine blocks and camshaft diameters. The main objective of this exercise was to highlight the need for quality management to avoid lapse in performance levels. In order to comply with its strategic perspective to ensure quality improvement, SCL intends to compliment the S.P.C system with computerised networks to manage critical features on lines machining cylinder blocks and heads; electronic gauging for enhanced automatic input and six sigma technique to sustain consistency in the targeted areas.

Product Audit & Inspection

An independent quality assurance audit system has been applied to the process assurance controls to appraise wide-ranging features of the vehicles (Medori and Steeple 2000, p. 528). The system is also intended to be employed on vehicle assembly lines through quality surveillance centres incorporating vehicle audit equipments where the audit inspectors are enabled to concurrently manage up to ten centres, facilitated by voice recognition system. To meet the required standards, the product audits are prudently compared and reassessed against the stipulated targets (Medori and Steeple 2000, p. 530) and are conferred for rectification, where applicable.

QUALITY STRATEGIES FOR SCL

It has been studied that poor quality of the products not only generates dissatisfied customers but also results in acute financial losses to the organisations (Douglas and Judge 2001, p. 160). The study aims to evaluate the quality management strategies employed by SCL, in order to identify its limitations and propose a much more dynamic stratagem.

Quality Circles

The concept of quality circles signifies the utmost participation of the employees at all levels within the organisation (Poister and Harris 2000, p. 162) for a collective effort to identify the problem areas and propose effectual alternatives to improve quality and services. The primary objective of this theory is to inspire the employees by instigating a sense of self-worth in them through enriching work-life illustrations in order to persuade them to volunteer their maximum efforts in improving the organisational performance. SCL is a humungous organisation consisting of more than 11,000 employees and it has been instituted that by entrenching the quality circles model at the grass root level, the SCL management can effortlessly strengthen a culture based on highly motivated and firmly-gelled relationships forming efficient teams that are ready to invest their inputs to achieve the core organisational objectives (Poister and Harris 2000, p. 163) of enhanced quality of product and services. Therefore, SCL in 2002 has established a quality circle network consisting of 63 active circles within its three manufacturing plants to discover and confer the issues at work within the respective quality circle and address them through mutual conformity.

Supplier Capability

Strategic operation management necessitates preservation of quality at all stages of the manufacturing process and to construct the foundation of quality management the role of supplier is extremely crucial for the procurement of quality parts as it determines the amount of efforts invested by the buyer to inspect the quality of the incoming supplies. The quality of finished product heavily relies on the quality of incoming supplies and therefore, the organisation is required to evaluate supplier capability to respond to the buyer's needs. Decision making process between buyers and suppliers for improving quality throughout the supply chain drives the reduction in costs and lead times and significantly improves the quality and responsiveness of the product (Scannell, Vickery and DrToge 2000, p. 42). SCL has established a formal process to assess the supplier's capability and has employed the statistical process control techniques to enhance the efficacy of incoming supplies. SCL has undertaken shrewd initiatives by introducing OSCAR (On-line Stock Control and Recording System) to monitor the their supplier's quality performance and has introduced a Supplier of the Year Award to acknowledge the contributions of best performing supplier; in order to build a strong network of cost-effective and competent suppliers to ensure quality and continuity in its supply of direct material.

Quality Assurance

Quality assurance is a planned and systemic process of product development which is responsible to compute the suitability of the product against its intended purposes (Oakland 2000, p. 31). It has been studied that the quality assurance process is characterised by the two key principals i.e. identification of product aptness for which it has been manufactured and elimination of the inaccuracies during the manufacturing process to produce the desired results. SCL has entrenched quality assurance process at all levels so that the organisational performance can be consistently monitored against the recognised standards through the collection of evidence based data for constant improvement.

Problem Resolution

The success of quality management process depends upon the capability of an organisation to identify its problem areas (Oakland 2000, p. 27) and the time it takes to effectively address them at the process level. Problem resolution is all about randomly generating and evaluating numerous possible causes of the problem and thereby, selecting the key issue by employing control charts, run charts etc., to identify the potential opportunities for improvement (Oakland 2000, p. 31). The idea is to establish clear-cut problem statement through validation process as the aptness and validity of the data significantly facilitates in problem resolution. A cross-functional problem resolution system has been adopted by SCL which is responsible to address the complaints pertaining to recurring faults and quality issues. SCL has established problem resolution teams to measure non-conformance trends against the desired organisational objectives and produce Resolution Action Report (P.R.A.R.) which is meant to identify, appraise and resolve the underlying issues.

Listening to Customer

Quality is primarily customer driven concept which accentuates meeting or exceeding customer's expectations by maintaining consistent processes of improvement. It has been studied that a perfectly produced product loses its charm and value if it doesn't meet the customer's expectations (Dale, B. G., 2003, p. 104). The globalised business environment suggests that customer's preferences and tastes considerably vary depending upon numerous factors including costs, durability, ethnic origins, cultural trends etc., and therefore, organisations are required to carefully assess the needs of the of its customer base to furnish a quality product with a targeted approach. By employing strategic tools like market surveys, customer interviews and focus group researches, the organisations can fine tune their product's designs and quality as per their customer's requirement (Kiritharan 2005, p. 12). SCL has established a Market Research Department to monitor the selected customers and collect their feedback to scan their views via customer tracking data to measure the effectiveness of quality management system. The efforts of SCL to value their customer's opinions facilitate in quality improvement by early management action based on customer's feedback, during the manufacturing process.

STRATEGIC RECCOMENDATIONS

Followed by a profound appraisal on the strategic operation management of quality management SCL, the study proposes the following strategic plan with intent to further improve its quality management approach.

Total Quality Management

The foundation of total quality management is cemented with the key management functions including people, process and system as the core objective of TQM is to meet the customer's expectations by managing the all-inclusive internal and external features of the organisation (Leonard and McAdam 2002, p. 5). It has been studied that TQM heavily relies on quality improvement in organisational processes by utilising the knowledge and expertise of its workforce. SCL is recommended to espouse a comprehensive strategic management approach followed by TQM which demands the institution of effectual leadership to motivate the employees for long term commitment (Oakland 2000, p. 33) towards achieving the core organisational objectives through consistent improvement in quality and service standards.

Employ Six-Sigma Strategy

Six-sigma is a regimented concept to define, measure, analyse, improve and control the quality of the organisational products, processes and transactions with intent to practically eliminate all the defects and overcome the inadequacies (George, Rowlands and Kastle 2003, p. 45). The contemporary business environment has radically shifted the focus on the interrelations between diverse manufacturing processes and on the improvement of basic management systems that are more closely associated with strategic management activities including strengthening of organisational framework, developing visionary leadership and establishing achievable goals (Fleming, Coffman and Harter 2005, p. 109). It has been argued that the scope of six-sigma is limited as it's merely a cost-effective exercise that is implemented via effective project monitoring process (DeBusk and Debusk 2010, p. 7) however, the enhanced participation of employees and the support of an actively involved top- and mid-level management signifies that the gelling between employees at all levels develops a strengthened organisational infrastructure (George 2003, p. 101) and SCL can significantly benefit by employing six-sigma approach to improve its organisational performance.

Change in Organisational Culture

Radical shift in the organisational culture can enhance the efficacy of total quality management system as the conventional bureaucratic and hierarchal structure of the organisations tend to limit the scope of employee's long-term commitment for quality improvement (Wiele-van-der, Williams, Brown and Dale 2001, p. 325). By introducing a positive culture of effective communication fuelled by highly interactive leadership can drastically evolve the employee's sentiments towards achieving the organisational objectives. SCL is required to critically assess the relationships between employees, suppliers and the end customers to devise a step-by-step plan for implementing change as per their organisational needs. Role of leadership becomes extremely crucial in determining the positivity of cultural change as leaders can significantly influence employees to develop an organisational culture of teamwork and cooperation at all levels (Stone 2002, p, 66).

Lean/ JIT Manufacturing

Lean manufacturing is a demand-driven concept which entails customer-centric approach with intent to manufacture the products based on real customer demand with reduced lead times (Fullerton and McWatters 2001, p. 84). The key outcome of adopting the economic lean manufacturing process is to produce high-quality products at lower costs and in lesser volumes to enable the organisations to speedily position their products in the market to meet the customer's demands. Just in time manufacturing is the form of lean manufacturing which is designed to trim down the wasted resources as for example, man power required for building, maintenance, material, spoilage, obsolescence etc., during product manufacturing process instead it maximises human efforts for added value (Maynard 2007, p. 23). SCL is also recommended to adopt lean and JIT manufacturing processes to enhance its value stream by eradicating waste for cost reduction, fiscal benefits, and enhanced sales and to stay competitive within the consistently budding manufacturing industry across the globe.

Prepare for Shifts in Emerging Paradigms

Organisations today are exposed to global competitiveness and the managers are required to prepare themselves for the emerging shift in paradigm that necessitates a radical shift in their attitudes, thinking patterns and managerial activities to survive in the highly competitive international markets (Yong and Wilkinson 2001, p, 249). The paradigm shift and pervasive change is characterised by three integral stages including normalcy, anomalies and replacement paradigm. Normalcy represents the conventional managerial approach followed by clear-cut objectives, regular procedural framework and anticipated outcomes however, the managers are required to be prepared for the unforeseen events due to continuously evolving global business trends. On the other hand, anomalies signify the managerial approach towards unanticipated outcomes of inexplicable failures; and; the replacement stage characterises the re-configuration of the existing paradigms (Yong and Wilkinson 2001, p, 251). SCL is also a prominent organisation that is operating within the globalised marketplace and therefore, the management of SCL is recommended to equip them to effectively address the shift in emerging paradigms.

CONCLUSION

Quality management process requires sweeping changes throughout the organisational framework as it sets the direction for the employees and enhances the desired level of organisational commitment. Strategically designed quality management process significantly interferes with the overall operation management system because to achieve the total quality management, organisations are required to redesign their strategic framework in accordance with the customer-centric approach (Evans and Dean 2003, p. 56). Products of superior qualities can be manufactured by entrenching TQM at all levels within the organisation, to create product designs, restructure job orientation and improves the supply chain management. The report has successfully appraised the commitment and consistency of SCL towards quality management initiatives however; the study has proposed a comprehensively designed strategic plan that is meant to embed in the overall operational framework of the organisation to enhance its existing quality management approach. To conclude, TQM if prudently applied within the strategic operation management can revolutionise the quality aspect of organisational products and services.

RECCOMENDATIONS

After the critical evaluation of SCL's case study, the following set of recommendations have been proposed:

Correlation between actions, methods and operations followed by a customer-centric approach is deemed to achieve the desired organisational outcomes;

Institution of an effective TQM system necessitates a productive cultural shift fuelled by the visionary leadership and employee's commitment;

Prophetic managements of the organisations are recommended to prepare themselves for the unforeseen events triggered by the shift in emerging paradigms;

Malcolm Baldrige, EFQM together with ISO 9000 certification, propose vital strategies and estimates against numerous criteria for benchmark comparisons resulting in improving quality management and organisational performance.

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