Logistics and operations mgt

1. Introduction

This report has been divided into two sections. The first section consists of defining TQM in the context of product and service and applying TQM methodology to the development of product. The second section would consider five objectives of operations management against a budget airline (i.e. Ryanair).

2. Total Quality Management

It is not easy to define Total Quality Management (TQM) precisely because it is a philosophy of total organisational involvement in terms of improving quality of products/services (Pegels, 1995; Allen, 2004). Juran (1981) and Agus (2002) describe service-based TQM as a wide range of efforts aim at achieving overall service performance in areas of cost effectiveness, employee engagement, and customer satisfaction.

In the manufacturing industry, TQM primarily deals with the quality of the product development from start to finish. The quality of the product is ensured at each step of the product development in terms of materials, costs, workmanship, processes, and pricing (Tennant, 2001). Nakajima (1988) defined TQM in product manufacturing context as “the plant of improvement methodology which enables continuous and rapid improvement of manufacturing processes through the use of employee involvement, employee empowerment and closed loop measurement of results” (cited in Seth and Tripathi, 2006, p. 812).

From the above discussion, it can be concluded that TQM deals with the overall performance of the business, which is based on customer satisfaction, employee engagement, product quality, and management performance. It is also ensured that the entire activities are interlinked with each other so that the TQM framework should be applicable to all areas of concern as shown in figure 1 in appendix II.

2.1 Product Design and Development

DMADV framework as six sigma strategy can be used to apply TQM methodology for the development of the product (Poornima and Charantimath, 2011). DMACV stands for Define, Measure, Analyse, Design, and Verify.

Define: Juran and Gryna (1993) and Dale (1999) suggest that concurrent engineering technique can be applied during define phase where key staffs from different departments and internal and external customers meet with engineers and work closely with each other in defining the product parameters in order to avoid problems during subsequent production or assembly processes. Define phase is crucial in terms of product development so implementing Belbin teamwork theory can be a useful strategy to behave, contribute, and interrelate with others in a particular way (Belbin, 1993).

Measure: In order to measure the reliability of the product, reliability engineering helps the organisation to discover the reasons of failure and also to set overall reliability goals to prevent the product against failures by identifying critical areas of product success (Bergman and Klefsjo, 1994). In this phase, the key practices include the use of modular designs by breaking the whole work into smaller parts in producing the particular product (Juran and Gryna, 1993). Work Breakdown Structure is the common technique that can be utilised in this phase of product development (Feigenbaum, 1991).

Analyse: Value engineering helps the organisation to analyse the impact of internal and external factors that cause to increase the cost of the products. After the critical analysis, the management attempts to reduce or completely eliminate the impact of gratuitous costs that do not contribute to the worth or the performance of the product (Dale, 1999).

Design: Today, experimental design is known as one of the best techniques in new product development. According to Blake et al (1994, p.99), “experimental design is a strategic weapon to battle competitors worldwide by developing robust products, reducing time to market, improving quality and reliability, and reducing life-cycle cost” because the analytical examination of the information found by experimental design can result in the identification of numerous parameters related to the new product (Dale, 1999). Moreover, Computer-Aided Design is a popular tool that helps the firms to design a new product using computer. The CAD system also provides the facility to customize products quickly and inexpensively (Juran and Gryna, 1993).

Verify: The quality function deployment technique is used to determine whether the product meets the expectations of the customers. For this purpose, matrix charts are used to determine and prioritize customer needs and expectations (Juran and Gryna, 1993).

The summary of DMADV framework for developing product with the application of TQM methodology is displayed in Table 1 (see appendix I).

3. Operations Management – Competitive Factors

According to Slack et al (2001), competitive advantage can be obtained by establishing a set of performance objectives that are based on product/service’s quality, speed, dependability, flexibility and cost. These key objectives can affect the internal productivity of the firm as well as help the organisation to gain competitive advantage in the external environment. In this section of the paper, the attempt will be made to consider these five objectives against a budget airline and for this purpose a case study of Ryanair is undertaken.

Quality: Juran (1981) defined the quality as “fitness for use”. In general sense, the quality is the ability of the firm to generate error-free product/service according to the prescribed specifications. In case of budget airlines, this includes well-organized booking, efficient luggage handling, maintenance, punctuality, reliability, and communication with customers. Ryanair is UK’s famous budget airline but due to the gap between quality specifications and quality delivery, its popularity is going down day-by-day. This can be judged through the recent customer reviews on SkyTrax website (SkyTrax, 2012).

Speed: According to Slack et al (2001), speed refers the ability to accomplish the task quickly in responding customer demands. From budget airline perspective, speed is concerned with reducing time of reservation and luggage handling. Also, turnaround time of aircraft and its maintenance considered as two most important speed factors in airline industry. Ryanair is currently looking to improve it services in terms of speed by taking advantage from the advanced technology like internet. In order make reservation system speedy, Ryanair converted its host reservations system to a new system so-called ‘Flight Speed’ (Ryanair strategy, n.d.).

Dependability/reliability: In most cases, dependability refers to the ability to deliver products/service on time according to the promises made to the customers. In the airline industry, this refers to on-time flights without major delays with the reliability of luggage service. According to the statistics of 2011, Ryanair is the leading budget airline in UK in terms of reliability of being on schedule and less than one missed bags per 1000 passengers (Ryanair Annual report, 2011).

Flexibility: Slack et al (2007) states that flexibility means additional options to customers in terms of volume, delivery, and range of products and services. In a budget airline, customers usually get basic products and services in return of ordinary fare but they can get a variety of additional products and services by paying extra money. In case of Ryanair, flexibility refers to the diversification of additional services as well as the capacity to consider substitutes for numerous service industries such as maintenance agreements and outsourced functions (Ryanair annual report, 2011).

Cost: According to Shingo (1988), the traditional cost model consists of maximising the profit by reducing cost of the operations. Nowadays, the most crucial factor for a budget airline is to run their operations against increasing fuel prices. Unlike other low cost airlines, Ryanair is committed to absorb the fluctuations of fuel prices without imposing them on customers. This policy resulted in first annual loss for Ryanair in 2009 when the fuel prices were very high (BBC news, 2009).

Figure 2 in appendix II is showing how these operational objectives affect the internal and external operations of the budget airline in terms of obtaining competitive advantage. Similarly, table 2 in appendix I is demonstrating how budget airlines can achieve operations excellence in improving competitiveness by applying different techniques.

3.1 Four V’s of Operations Management

Slack et al (2007) introduced 4v’s operational model to describe and organise the management operations. The four V’s are volume, variety, variation, and visibility. According to them, it is important to understand how different operations are positioned on the 4V model. Figure 3 in appendix II is representing 4V model against operational objectives of a budget airline.

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