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10 OM Decisions - Part 2


10 OM Decisions - Quality


This is the 2nd post of a 10 part series providing a high level 30,000 ft overview of the 10 operations management (OM) decisions. If you need a refresher on the different levels of leadership you can catch up here quickly. So let’s zoom through the questions again before we circle back to Quality Management.

1. Goods and Services

2. Quality Management

3. Process and Capacity Design

4. Location

5. Layout

6. HR and Job Design

7. Supply Chain Mgmt

8. Inventory

9. Scheduling

10. Maintenance

After we’ve determined our goods or services we have to focus on the second decision of quality management. Assuming that your Goods or Services were defined based on the voice of the customer you have to implement standards to which your goods are made or your services are provided. This now becomes your standard operating process and any variant impacting the quality should be eradicated. My preferred method of quality control outside of systems-controlled manufacturing is product validation and product inspection at receiving. This is accomplished by a sample being validated by a product line manager or yourself during the procurement phase. You’re doing this to inspect the compliance with the technical specs you have provided the supplier. This holds true whether you’re a wholesale distributor or manufacturer inspecting raw material conformity. Remember the technical specs are what the customer wants. The second inspection is conducting quality check during the receiving process. I structure my receipt inspection on the 20% of items that make up 80% of my distribution volume by line item. This data is extracted from historical and projected sales. Now if it’s a new product line I inspect a heavier volume. Here’s an example of how I structure my quality checks at receipt. I just received a mixed pallet of 200 different skus with 100 eaches per sku. 20% of the skus (40) make up 80% of my volume therefore they are my ‘A’ movers. (Learn how to determine velocity here) A-movers / 40 skus x 100 eaches > inspect 20% of each sku (20 each per product) 800 eaches of the 4,000 received. B-movers / 100 skus x 100 eaches > inspect 10% of each sku (10 each per product) 1000 eaches of the 10,000 items received C-movers / 60 skus x 100 eaches > inspect 5% of each sku (5 each per product) 300 eaches of the 6,000 items received. In time and with increased vendor reliability I would shift inspection percentages to reduce labor costs. Something like this: A- 15% audit B- 5-7% audit C- 2-3% audit. SERVICE INDUSTRY?

Process audits aren’t much different than product audits but may be harder to identify. A preferred method for me is to determine the following:

· A core task or process (essential and critical to quality - ‘A’ tasks).

· Primary tasks or processes (necessary to maintaining a quality product or service - ‘B’ tasks)

· Ancillary tasks or processes (non-value added tasks or processes but may be ancillary to core or primary tasks - ‘C’ tasks)

I then create an inspection form to which tasks and processes are to be observed, corrected, and controlled. Quality improvement never stops and should be part of your growth strategy. Additionally, there are many ways in maintaining quality in both manufacturing or service industries and the library of knowledge on how to do so is endless. Share what you do to impact quality in your organization.




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