Strategies to Be Adopted by Two Organisations - Case Study Example

Two organisations that have very different requirements from the function of quality management are described below. Discuss the strategies which might be adopted by each to achieve their objectives. Organisation A This manufacturing organisation provides sub-components to a number of customers and has problems continuously meeting the various specifications placed upon it. It sees the role of quality management as that of "controlling the consistency of its products" within the tolerance limits placed upon its production facility by its customers. Organisation B This organisation is a Hospital which relies heavily on the dedication of its staff to deliver high quality patient care. Whilst, like the organisation above, it also has a need to have consistency in its working methods, it sees the role of quality management as the utilisation of its workforce to continuously improve the service. It seeks to achieve these objectives by facilitating a culture where teams of employees are sufficiently motivated to work together to revisit working practices in an effort to monitor their performance and make changes for the better. Operations management is an area of business where one is concerned with the production of his/her goods and the services s/he provides. Operations management focuses on carefully managing the processes to produce and distribute products and services. Usually, small businesses don't talk about "operations management", but they carry out the activities that management schools typically associate with the phrase "operations management." Major, overall activities often include product creation, development, production and distribution. (These activities are also associated with Product and Service Management. However product management is usually in regard to one or more closely related product - that is, a product line. Operations management is in regard to all operations within the organization.). Related activities include managing purchases, inventory control, quality control, storage, logistics and evaluations. The best option for Organization A is the Material Requirements Planning (MRP). The MRP is a software-based production planning and inventory control system used to manage manufacturing processes. An MRP system is intended to simultaneously meet 3 objectives: ensure materials and products are available for production and delivery to customers. maintain the lowest possible level of inventory. plan manufacturing activities, delivery schedules and purchasing activities. All manufacturing organizations, whatever their products face the same daily practical problem - that customers want products to be available in a shorter time than it takes to make them. Companies need to control the types and quantities of materials they purchase, plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, all at the lowest possible cost. If a company purchases insufficient quantities of an item used in manufacturing, or the wrong item, they may be unable to meet contracts to supply products by the agreed date. If a company purchases excessive quantities of an item, money is being wasted - the excess quantity ties up cash while it remains as stock and may never even be used at all. This is a particularly severe problem for food manufacturers and companies with very short product life cycles. However, some purchased items will have a minimum quantity that must be met, therefore, purchasing excess is necessary. (http://www.me.utexas.edu) MRP is used by many organizations as a tool to deal with these problems. This applies to items that are bought in and to sub-assemblies that go into more complex items. There are two kinds of output. Output 1 is the "Recommended Production Schedule" which lays out a detailed schedule of the required minimum start and completion dates, with quantities, for each step of the Routing and Bill Of Material required to satisfy the demand from the MPS. Output 2 is the "Recommended Purchasing Schedule". This lays out the dates that the purchased items should be both received into the facility and the date/s the Purchase orders, or Blanket Order Release should occur to match the production schedules. Note that the outputs are always recommended. Due to a variety of changing conditions in companies, since the last MRP/ERP system re-generation, the recommended outputs need to be reviewed by trained people to group orders for benefits in set-up or freight savings. These actions are beyond the linear calculations of the MRP computer software. (http://www.aaxnet.com) The major problem with MRP systems is the integrity of the data. If there are any errors in the inventory data, the bill of material (commonly referred to as 'BOM') data or the master production schedule the outputted data will also be incorrect. Most vendors of this type of system recommend at least 98% data integrity for the system to give useful results. Another major problem with MRP systems is the requirement that the user specify how long it will take a factory to make a product from its component parts (assuming they are all available). Additionally, the system design also assumes that this "lead time" in manufacturing will be the same each time the item is made, without regard to quantity being made, or other items being made simultaneously in the factory. (http://www.aaxnet.com) The overall ERP system needs to be able to organize inventory and needs by individual factory, and intercommunicate needs so that each factory can redistribute components to serve the overall enterprise. This means that other systems in the enterprise need to work properly both before implementing an MRP system, and into the future. The overall ERP system needs to have a system of coding parts such that the MRP will correctly calculate needs and tracking for both versions. Parts must be booked into and out of stores more regularly than the MRP calculations take place. Note, these other systems can well be manual systems, but must interface to the MRP. The other major drawback of MRP is that takes no account of capacity in its calculations. Generally, MRP II refers to a system with integrated financials. An MRP II system can include finite/infinite capacity planning. However, to be considered a true MRP II system must also include financials. In the MRP II (or MRP2) concept, fluctuations in forecast data are taken into account by including simulation of the master production schedule, thus creating a long-term control. Organization B since it is a hospital cannot afford to implement new strategies because it cannot close down the whole department to experiment new strategies; it has to improve what it has got. Therefore as a result it has to use the Continued Quality Improvement. This was already done in practice by California Health Care Centre. California's physician groups continued to show improvement in 2005 on important measures of preventive care and chronic care management, along with increased use of information technology to support patient management and care, according to the Integrated Healthcare Association (IHA). (http://www.iha.org) (http://www.academyhealth.org) Pay for performance is improving the quality of care in California. Program results, which are collected and reported by the National Committee for Quality Assurance (NCQA), indicate that these physician groups effectively managed more patients with high cholesterol and diabetes, screened more women for breast cancer and Chlamydia, and continued to track improved clinical performance in other areas. The clinical quality measures are adapted from NCQA's Health Plan Employer Data and Information Set, the most widely used set of performance measures in health care. This initiative demonstrated that bringing a value proposition that considers the quality of care provided can benefit not only consumers, but also physicians, medical groups and purchasers of health care. (http://www.iha.org) The percentage of physician groups achieving the maximum score for IT use increased by 11% in 2005. California's P4P program is the nation's largest, involving approximately 35,000 physicians in 211 physician organizations that care for over 6 million individuals enrolled in seven major health plans (Aetna, Blue Shield, Blue Cross, CIGNA, Health Net, PacifiCare, and Western Health Advantage). Physicians are rewarded financially by the plans based on their physician group's performance in relation to clinical quality and patient satisfaction measures, and for investment in information technology (IT). (http://www.iha.org) The 2005 measurement year results will be used by health plans to calculate incentive payments for distribution to physician groups later this year. Health plans have already distributed over $90 million in payments to physician organizations as a result of meeting P4P quality measures during 2003 and 2004. (http://www.iha.org) As one can see operations management depends on what type of organization one has, since there exists other strategies. However one has to keep always in mind: to be pragmatic and use his/her common sense. No one has a perfect organization, therefore there is always room for improvement. Reference: Andrew Grygus: http://www.aaxnet.com/topics/mrp.html (last accessed 27/10/07) http://www.managementhelp.org/quality/cont_imp/cont_imp.htm (last accessed 26/10/07) http://www.me.utexas.edu/jensen/ORMM/omie/computation/unit/mrp_add/mrp.html (last accessed 27/10/07) http://www.iha.org/071306.htm (last accessed 26/10/07) http://www.academyhealth.org/ruralhealth/qualityimprove.pdf (last accessed 28/10/07) Read More