CHAPTER 1

PRODUCTION MANAGEMENT - Production management is the process of planning,

organizing, and controlling the activities that turn raw materials into finished products or
services. It is a part of business management that deals with the production of goods
and services that meet the needs and wants of customers. Example of production
management is:

A car manufacturer that plans how many cars to produce, what materials to use, how to
assemble them, and how to deliver them to customers.

OPERATION MANAGEMENT - Operations management is the process of managing

the activities and resources of a business to achieve its goals. It involves planning,
organizing, leading, and controlling the production and delivery of goods or services.
Operations managers are responsible for ensuring that the business operates efficiently
and effectively, and that it meets the needs and expectations of its customers.

Example of operations management is:

Manufacturing: This is the process of designing, creating, and delivering goods.

Operations managers need to decide what products to make, how to make them, how
much to make, and how to distribute them. They also need to ensure that the quality,
cost, and time of production are optimal.

GLOBAL STRATEGIES - Global Strategies are plans or actions that businesses use to
operate in different countries and regions around the world. For example, a global
strategy might involve opening new factories or offices in different countries, or selling
products or services to customers in different markets.

Reduce costs - This means to lower the expenses of producing or delivering goods or
services. For example, a company might reduce costs by outsourcing labor to a country
with lower wages or by importing raw materials from a country with lower tariffs.

Improve supply chain - This means to optimize the network of suppliers, distributors,
and customers that are involved in creating and delivering goods or services. For
example, a company might improve its supply chain by locating its factories closer to its
markets or by using more efficient transportation methods.

Provide better goods and services - This means to offer products or services that have
higher quality, functionality, or value than those of competitors. For example, a company
might provide better goods or services by investing in research and development, by
using superior technology, or by adapting to local preferences.

Understand markets - This means to learn about the needs, preferences, behaviors,
and trends of customers in different countries. For example, a company might
understand its markets by conducting market research, by observing customer
feedback, or by collaborating with local partners.

Learn to improve operations - This means to acquire new ideas, methods, or best
practices that can enhance the efficiency or effectiveness of business processes. For
example, a company might learn to improve its operations by benchmarking against
competitors, by adopting international standards, or by experimenting with new
solutions.

Attract and Retain Global Talent - To attract and retain global talent, companies need to
offer both tangible and intangible reasons for employees to join and stay with them.
Tangible reasons are the concrete benefits that employees receive, such as salary,
bonuses, health insurance, pension, etc. Intangible reasons are the psychological and
emotional rewards that employees get from their work, such as recognition, respect,
autonomy, learning, growth, etc.

Examples of tangible and intangible reasons is:

A company that pays competitive salaries and offers generous bonuses to its
employees is providing a tangible reason to attract and retain global talent. This shows
that the company values the skills and contributions of its employees and rewards them
accordingly.

10 STRATEGIC OPERATION MANAGEMENT DECISION

1. Goods and Services - This decision involves choosing what products or services to
offer to the customers, and how to design and deliver them in a way that meets their
needs and expectations. For example, a beauty company may decide to offer organic
and natural products that appeal to environmentally conscious consumers.

2. Quality Management - This decision involves setting and maintaining the standards of
quality for the products or services, and ensuring that they meet or exceed the customer
requirements and expectations. For example, a furniture company may decide to
implement a quality management system that follows the ISO 9001 standards (ISO
9001 training course provides participants with the knowledge and skills) and uses
customer feedback to improve its processes and products.

3. Process and Capacity Design - This decision involves designing and managing the
processes and resources that are used to produce or deliver the products or services,
and ensuring that they are efficient, effective, and flexible. For example, a food company
may decide to use a lean production system that eliminates waste and optimizes the
flow of materials and information.

4. Location - This decision involves selecting and managing the location or locations
where the products or services are produced or delivered, and ensuring that they are
accessible, convenient, and cost-effective for the customers and the organization. For
example, a retail company may decide to open stores in strategic locations that have
high traffic, visibility, and demand.

5. Layout Design and Strategies - This decision involves arranging and organizing the
physical facilities, equipment, and people that are involved in the production or delivery
of the products or services, and ensuring that they are safe, comfortable, and
productive. For example, a hospital may decide to use a functional layout that groups
similar activities together, such as surgery, radiology, and pharmacy.

6. Human Resources and Job Design - This decision involves acquiring, developing,
motivating, and retaining the human resources that are needed to perform the tasks and
activities that are involved in the production or delivery of the products or services, and
ensuring that they are skilled, satisfied, and committed. For example, a hotel may
decide to use a job enrichment strategy that gives employees more autonomy,
responsibility, and feedback in their work.

7. Supply Chain Management - This decision involves managing the network of

suppliers, distributors, and customers that are involved in the procurement, production,
distribution, and consumption of the products or services, and ensuring that they are
coordinated, integrated, and responsive. For example, a clothing company may decide
to use a vertical integration strategy that owns or controls its suppliers and distributors,
such as fabric mills and retail outlets.

8. Inventory - This decision involves managing the quantity, quality, timing, and location
of the materials, components, finished goods, and information that are needed or
generated by the production or delivery of the products or services, and ensuring that
they are available, accurate, and cost-effective. For example, a bookstore may decide
to use an inventory management system that tracks the sales and inventory levels of
each book using barcodes and scanners.

9. Scheduling - This decision involves planning and controlling the timing and sequence
of the tasks and activities that are involved in the production or delivery of the products
or services, and ensuring that they are completed on time, within budget, and according
to specifications. For example, a construction company may decide to use a project
management software that creates a Gantt chart that shows the start and end dates of
each task and activity in a project.

10. Maintenance - This decision involves maintaining and improving the condition,
performance, reliability, and safety of the facilities, equipment, people, processes, and
products or services that are involved in the production or delivery of the products or
services, and ensuring that they are operational, efficient, and effective. For example, a
car company may decide to use a preventive maintenance program that performs
regular inspections, repairs, and replacements of its vehicles and parts.
CHAPTER 2
Quality Management- is the process of making sure that the products or services of a
company meet the desired level of excellence. Quality management involves planning,
improving, controlling and assuring the quality of the products or services.

Toyota Motors implemented a ‘just-in-time’ process, which means they only keep
enough inventory to fill customer orders. This reduces waste and costs, and improves
efficiency.

Quality planning- it is the task of determining what factors are important to a project and
figuring out how to meet those factors. The other factors include what resources you will
need, determine the cost of those resources, plan the timeline for completion of the
product, align the steps, and assign the tasks and responsibilities to each person.

Quality control- Companies typically implement quality control at every stage of

production. This includes testing the product, but also the raw materials they're using to
create it. Companies develop tests to assess the raw materials they receive to ensure
they're up to standards. Then, they test their products at various stages of production.

For example, a company that creates wooden birdhouses tests the wood and nails they
use, then tests the birdhouse when it's built and assesses it when it's painted to ensure
quality in every step. This helps companies recognise whether problems are occurring
at specific stages or if it's the materials they're using.

Quality assurance- is responsible for monitoring, inspecting, and proposing measures to

correct or improve an organization’s final products in order to meet established quality
standards. It can be where inspection is conducted prior to the production process
begins to ensure the quality or quantity of the raw materials and it can be conducted
while production is already underway. And one of the important steps is the method for
checking the quality of goods before the company places it in the market.

Quality improvement- Customers are more likely to buy your product and services if
their needs are met. If you keep supplying poor-quality products, you’ll lose a huge
percentage of customers to your competitors.
This is why quality improvement is important in any organization. Everyone on the team
can work together to improve the weak areas and contribute to building a quality
product. In addition, since it’s a continuous process, the issues are identified much
faster and addressed immediately to avoid conflicts with the customers.
The best way to achieve this is to understand what the customers expect from you as
an organization. One aspect of QI is collecting relevant data that gives you more insight
into the consumers. Collect customer feedback regularly and use that to improve the
quality of your products.

Keep in mind that if your customers are happy, they become loyal and bring new
customers with them. Ignoring this process could cost you customers, which affects the
company’s revenue.

Customer focus- customer focus has a simple motto: “prioritize your customers and
their needs”. It is a business philosophy that keeps customers above all your business
decisions. You should make all your products or services keeping customer preference
in mind. Every customer has a story but obviously, they don’t like to introduce
themselves or talk about the issues they face while interacting with your team members.
They might get irritated and chances are they will not accept you to be
customer-focused.You should make them feel important and valued- these are the two
main principles of being customer-focused.

Leadership- The role of leadership in quality management forms the backbone of any
improvement strategy. Leaders provide a unity of purpose, while also establishing the
direction of the organization. As such, the responsibility of leaders consists of creating
and maintaining the internal environment. In this environment, employees are able to
become completely involved in achieving the organization’s goals and aims. In this way,
good leadership is essential in order to improve quality across the organization, as the
leading force that sets objectives and assists employees to implement these objectives.

Engagement of people- The most valuable asset of any organization consists of

competent and engaged people. Every organization benefits if employees furnish their
knowledge and experience. Respect, recognition and enhancement of competence
facilitate the engagement of people. That is why the quality management principles of
leadership and of the engagement of people can be considered as two sides of the
same coin. They are also closely related to a third important quality management
principle: that of improvement, as continual improvement is only possible with engaged
people.

Process Approach- The approach principle places a strong emphasis on achieving

effectiveness and efficiency in organizational processes. The strategy requires an
understanding of how effective processes lead to increased consistency, quicker
activity, lower costs, waste removal, and ongoing improvement.
When leaders can manage and control a company's inputs, outputs, as well as the
procedures employed to achieve those outcomes, the organization.

Continuous improvement- Continuous quality improvement is a critical process in

which businesses strive to improve their products, services, and processes on a
continuous basis. This strategy focuses on increasing the company's long-term
competitiveness and efficiency, resulting in a 10% increase in profitability on
average.

Evidence-based decision making- Businesses should take a fact-based approach

to decision-making. Businesses that base their decisions on validated and
studied data have a better understanding of the market. They can complete
tasks that lead to the intended outcomes and defend their prior choices. Making
decisions based on facts is essential for understanding the causes and effects of
various events and for describing probable unexpected outcomes and
repercussions.

Relationship Management- Relationship management involves strategies to build

client support for a business and its offerings, and increase brand loyalty. Building a
relationship most often occurs at the customer level, but it is valuable between
businesses as well. Building a relationship with clients yields rewards for all parties.
Remember, the customer relationship management life cycle starts with your marketing
department, moves over to sales, hands off to operations, and ends up back at sales
and marketing. At that point, you’re more focused on maintaining the relationship with
your customer and possibly upselling.

BENEFITS OF QUALITY MANAGEMENT

1. It helps an organization achieve greater consistency in tasks and activities that are
involved in the production of products and services.

EXPLANATION: Quality management means making sure that the products and
services that an organization offers are of good quality and meet the customers’ needs
and expectations. For example, a restaurant that follows quality management will have
consistent food quality, hygiene standards, and service quality across all its branches.

2. It increases efficiency in processes, reduces wastage, and improves the use of time
and other resources.

EXPLANATION: Quality management also helps an organization to work more

efficiently and effectively. It helps to eliminate errors, defects, and delays that can cause
waste of money, time, and materials. For example, a car manufacturer that follows
quality management will have fewer defects in its cars, less rework, and faster delivery
times.

3. It helps improve customer satisfaction.

EXPLANATION: Quality management can also improve customer satisfaction and

loyalty. Customers are more likely to be happy and satisfied with products and services
that are of high quality, reliable, and consistent. They are also more likely to trust the
organization and recommend it to others. For example, a hotel that follows quality
management will have high ratings and reviews from its guests, who will enjoy their stay
and come back again.

4. It enables businesses to market their business effectively and exploit new markets.

EXPLANATION: Quality management can also help an organization to market its

business better and reach new customers. It can help to create a positive image and
reputation for the organization, which can attract more customers and increase sales. It
can also help to explore new opportunities and markets that demand high-quality
products and services. For example, a software company that follows quality
management will have a strong brand name and recognition, which can help it to win
more contracts and expand to new regions.

5. It makes it easier for businesses to integrate new employees, and thus helps
businesses manage growth more seamlessly.

EXPLANATION: Quality management can also make it easier for an organization to

integrate new employees and manage its growth. It can help to establish clear
standards, procedures, and policies that guide the employees’ work and performance. It
can also help to train and develop the employees’ skills and knowledge, which can
improve their productivity and motivation. For example, a school that follows quality
management will have a well-defined curriculum, assessment system, and professional
development program for its teachers and students.

6. It enables a business to continuously improve its products, processes, and systems.

EXPLANATION: Quality management can also enable an organization to continuously

improve its products, processes, and systems. It can help to monitor, measure, and
evaluate the performance and quality of the organization’s activities and outcomes. It
can also help to identify problems, gaps, and areas for improvement, and implement
solutions and changes accordingly. For example, a hospital that follows quality
management will have a regular feedback mechanism, audit system, and improvement
plan for its medical services and facilities.

CHAPTER 3 Product Design in Operations Management

PRODUCT DESIGN - Product design is one of the necessary ways to achieve the
ultimate goal of customer satisfaction. It is the process of developing and also refining
products that meet specific market needs and solve user problems. We need to make
sure that there is a need for the product and to anticipate market opportunities. The
product or service should also be able to meet the primary needs and desires of the
customer. This may not require development of a new product, but enhancement to
existing product or service. Product design must be practical enough for production and
powerful enough to provide a competitive advantage.

"New and Improved product design comes from"

CUSTOMER FEEDBACK - Customer feedback can also be used to improve the

usability of a product. It's a crucial part of the design process because it lets you know
what's working, what's not working, and how things can be improved. It helps us to point
out the aspects of our product that need improvement by listening to our customers and
getting their feedback. Through feedback it can also make our customers feel involved
and important. Customer feedback can help you convince the customers to come back
for more.

RESEARCH AND DEVELOPMENT - Research and Development involves researching

your market, your customer needs and developing new and improved products and
services to fit these needs. Research provides you with the necessary information and
insights to inform and guide your product design. This is a very important process of
product design, because we need to do the right research to help you identify your
product's competition, as well as to identify and understand your product's users. To be
able to build a better product than your competitors by understanding the problem better
than they do.

COMPETITOR'S PRODUCT - this is also one of the ways to improve product designs to
be involved in a product competition because it translates a greater quantity of products
and services, a better quality of goods. Businesses can use this to create a platform that
differentiates them from others and makes their products more appealing to consumers.
In competition, it pushes the organizations, firms and markets to make the best use of
their resources, and to think outside the box to develop new ways of doing business and
winning customers.

"Essential Requirement of good product design"

PROFIT:

This means that the product should generate more revenue than the cost of producing
it. The product should also have a competitive advantage over other similar products in
the market. For example, a smartphone that has a long battery life, a high-quality
camera, and a fast processor can attract more customers and make more profit than a
smartphone that lacks these features.

Customer Satisfaction:

This means that the product should meet or exceed the expectations and needs of the
customers. The product should be functional, reliable, usable, and pleasurable to use.
The product should also create a positive emotional connection with the customers and
make them loyal to the brand. For example, a coffee machine that is easy to operate,
makes delicious coffee, and has a sleek design can satisfy the customers and make
them happy.

Reasons for Product and Service Design or Redesign:

The factors that give rise to market opportunities and threats can be one or
more changes:

•Economic
When it comes to changes in economics, it will include the changes of
GDP, interest rates, inflation, currency exchange rates, and raw material prices.
These could help businesses to improve their products and services and meet
their expectations. These economic factors can influence market demand and
supply, creating possibilities or challenges for businesses. For example, if a
country's GDP rises, it may suggest robust economic growth and increased
product demand. On the other hand, if a country experiences inflation, it may
result in an increase in manufacturing costs, which can be a threat to
businesses.

•Social and demographic.

These social and demographic aspects may have an impact on how
consumers purchase and use goods, which may present possibilities or risks for
firms. For example, an expanding population may raise consumer demand and
present an opportunity for firms to sell more goods. On the other side, if the
population is aging, it can cause changes in consumer tastes and purchasing
patterns, which could pose a risk to enterprises.

• Political, liability, or legal.

Government policies may impact the business environment for businesses,
posing either opportunities or risks to those businesses. Companies in the green
energy sector, for instance, may profit from the increasing demand, whereas
businesses that rely on fossil fuels may see higher competition or governmental
constraints.Businesses' operations may be restricted or costlier by government
regulation. For instance, businesses in sectors that depend significantly on
low-paid workers may see their labor expenses rise if the government raises the
minimum wage, which would have an effect on their profitability.

•Competitive
Businesses may find opportunities or risks depending on how fiercely
competitive a market is competitive. In order to compete in a highly competitive
market, businesses may need to set themselves apart from their rivals, which
would raise operating expenses but also maybe open up new prospects for
innovation. Companies may be able to boost profits by raising prices or cutting
costs in a less competitive market, but they may also have less opportunities to
stand out from the crowd and introduce new products.
•Cost or availability.
The profitability and sustainability of enterprises can be impacted by changes
in the cost of labor, inputs, and raw materials as well as the accessibility of
materials and resources, offering chances to boost profits or posing risks to it.
The price of raw materials may have an impact on how competitive a business is.
If raw materials are expensive and difficult to obtain, businesses may be forced
to pass on the higher prices to customers, which could have an effect on their
profits. Alternatively, if raw materials are inexpensive and easily
accessible,businesses may be able to lower production costs, providing them
competitive advantages.

•Technological.
Artificial intelligence, machine learning, and automation advancements can
give organizations the chance to streamline their operations and become more
competitive. Businesses who do not use these technologies, however, may see
risks to their ability to compete. By enabling them to boost productivity, save
expenses, and develop new goods or services, technological breakthroughs like
artificial intelligence, machinery, and automation can present opportunities for
businesses. For example, businesses may be able to boost efficiency and
profitability if they use AI or automation to optimize their manufacturing or supply
chains.

PHASES IN PRODUCT DESIGN AND DEVELOPMENT

1. Feasibility analysis: This is when you check if your product idea is possible and
profitable. You need to research the market, the customers, the competitors, the costs,
and the risks. For example, before developing a new smartphone, you need to see if
there is a demand for it, how much it will cost to make, and what challenges you might
face.

2. Product specifications: This is when you define what your product will do and how it
will meet or exceed customer wants. You need to list the features, functions, benefits,
and requirements of your product. For example, for a new smartphone, you need to
specify the size, shape, color, screen, camera, battery, software, etc.
3. Process specifications: This is when you decide how you will make your product. You
need to choose the materials, methods, tools, equipment, and quality standards that will
be used in the production process. For example, for a new smartphone, you need to
select the components, suppliers, assembly line, testing procedures, etc.

4. Prototype development: This is when you create a sample or a model of your product
to test its functionality and design. You need to build one or more prototypes and
evaluate their performance, usability, appearance, and feedback. For example, for a
new smartphone, you need to make a working prototype and see how it works in
different situations.

5. Design review: This is when you review your product design and make any
necessary changes or improvements. You need to compare your product with the
specifications and the customer expectations and identify any gaps or flaws. For
example, for a new smartphone, you need to check if it meets all the requirements and
if it can be improved in any way.

6. Market test: This is when you test your product in the real market with real customers.
You need to launch your product in a limited area or segment and measure its sales,
satisfaction, feedback, and loyalty. For example, for a new smartphone, you need to sell
it in a few stores or online platforms and see how customers react to it.

7. Product introduction: This is when you launch your product in the full market and start
promoting it. You need to plan and execute a marketing strategy that will attract and
retain customers and increase your market share. For example, for a new smartphone,
you need to advertise it on various media channels and offer incentives or discounts to
customers.

8. Follow-up evaluation: This is when you monitor and evaluate your product
performance and customer satisfaction after the launch. You need to collect and
analyze data on sales, revenue, profit, feedback, complaints, etc. and see if your
product meets your goals and expectations. For example, for a new smartphone, you
need to track its sales figures and customer reviews and see if it is successful or not.
CHAPTER 4

New product development (NPD) is the process of bringing a new product to market.
It is a complex process that involves multiple stages, from ideation and concept
development to market research, product launch, and post-launch evaluation.

The NPD process typically follows a structured approach, but it can be iterative and
flexible depending on the specific product and company.

NPD is a critical process for any company that wants to stay competitive and grow its
business. By constantly developing new products, companies can meet the changing
needs of their customers and stay ahead of the competition.

7 stages of New Product Development Process

1. Idea generation

This is the stage where you come up with new ideas for products that can solve a
problem, meet a need, or satisfy a desire of your target customers. You can use
various sources of inspiration, such as customer feedback, market research,
competitor analysis, brainstorming, etc. For example, the idea for the iPhone
came from Steve Jobs’ vision of creating a device that combined a phone, an
iPod, and a web browser.

2. Idea Screening

This is the stage where you evaluate and filter your ideas based on their
feasibility, profitability, and alignment with your business goals and strategy. You
can use various criteria, such as market size, customer demand, technical
feasibility, cost, risk, etc. For example, the idea for Google Glass was screened
out because it faced technical challenges, privacy concerns, and low customer
acceptance.
3. Concept Development and Testing

This is the stage where the company develops a detailed description of the selected
idea and tests it with potential customers. The company uses methods such as surveys,
interviews, focus groups, or prototypes to get feedback from customers about their
needs, preferences, and expectations regarding the new product or service.

4. Marketing Strategy Development

This is the stage where you design and plan your marketing strategy for launching and
promoting your product. You can use various tools, such as segmentation, targeting,
positioning, pricing, distribution, promotion, etc. to define your target market, value
proposition, competitive advantage, revenue model, marketing mix, etc. For example,
the marketing strategy for Netflix was based on offering unlimited online streaming of
movies and TV shows for a monthly subscription fee.

5. Product Development

This is the stage where you build and test your final product based on your product
concept and marketing strategy. You can use various techniques, such as agile
development, user testing, quality assurance, etc. to ensure that your product meets the
technical specifications, customer expectations, and quality standards. For example, the
product development for Tesla Model 3 involved building and testing several prototypes
and beta versions before launching the mass production.

6. Test Marketing/Product Design

This is the stage where you introduce your product to a limited market or a sample of
customers to test its performance and acceptance before launching it to the whole
market. You can use various methods, such as pilot testing, beta testing, focus groups,
surveys, etc. to collect data and feedback from your test market or customers. You also
use this data and feedback to make any necessary changes or improvements to your
product design or marketing strategy. For example, the test marketing for Coca-Cola
Zero involved launching it in Australia before expanding it to other countries.

7. Commercialization

This is the final stage where you launch your product to the whole market and start
selling it to your customers. You can use various channels, such as online platforms,
retail stores, distributors, etc. to distribute and deliver your product to your customers.
You also use various tactics, such as advertising, social media, word-of-mouth, etc. to
promote and create awareness about your product among your customers. For
example, the commercialization for Spotify involved launching it in Sweden before
expanding it to other countries.