Total Quality Management & Business Excellence
Management
Introduction
In business management, there are different concepts that are considered important for the success of any business. The main aim of each business entity is to make profit and grow. Therefore, management business functions are significant in determining quality business policies. In this report, different business management processes are analyzed. These are demand management, operation risk, and operation excellence.
Demand Management
According to Croxton et al. (2002), the demand management process involves balancing the customers’ needs with the ability of an organization’s supply chain. This process entails predicting the demand and harmonizing it with the process of production, procurement, and supply or distribution to the customers. Good demand management is important in enabling an organization to be effectively proactive in the expected demand of a given product as well as being reactive to the unanticipated demand. The most effective element in demand management is for a business entity to search for ways of curbing demand inconsistency and enhancing organizational operational flexibility, which assists a firm in responding quickly to both external and internal changes that affect an organization. The main significant goal of demand management is to ensure that the customers’ demand is met in the most effective manner. This process affects positively on the profitability of organizations as well as their customers and suppliers.
Madhani (2015) affirms that demand chain management refers to the complex business process and activities that assist an organization to comprehend, manage, and establish customers’ demand. Demand management is, therefore, significant and fundamentally different from the supply chain management since it begins by placing the consumer as the starting point rather than the end point of a given product or service. According to Madhani, the demand chain management focuses on the effectiveness of an organization while the supply chain emphasizes on the efficiencies of production and logistics. Demand chain is important in determining and understanding the customers demand at the correct time at the same time responding rapidly to the demand. Therefore, demand managing process involves managing and coordinating the supply chain from the customers’ end to the suppliers. Demand management and supply chain are therefore two opposite processes in an organization with regards to the direction they take. In the current market, demand supply chain is very significant in ensuring organizations’ profit.
Deshmuk and Mohan (2016) state that demand chain management is a new concept in the market aimed at creating value through a combined effort of marketing and supply chain competencies. This involves a customary external focused business management process that concentrates on organizational resources in executing marketing decisions. Therefore, demand management in marketing terms refers to the process defining demand that is fulfilled by supply chain management. According to Deshmak and Mohan (2015), several organizations across the globe have focused on developing refined supply chain, making their administrative mechanisms to appear prejudiced. This is because they lose sight to their markets’ needs and the demand of their customers, thus failing to realize their clients’ expectations. This process results in clients changing their loyalties to firms that seem to care for their needs. This means that organizations, which concentrates on supply chain management without focusing on demand management are destined to be ineffective. Demand chain management, therefore, prioritizes customers’ needs for the firm’s perspective, which also shifts the power of the supplier to the customer. This places the consumers as the most important factor in the production process for organizations, with an intention of pleasing them.
According to Frohlinch et al. (2002), the most competitive organizations today are the ones that connect their customers and suppliers through the demand chain management. Demand management refers to the process involved in managing the process of supply chain management backwards from the customers to the suppliers. In this process, the author states that it is the customers who trigger the supply chain action of products and services to be pulled out. One of the factor that has ensured the effectiveness of the demand chain management is the evolution of the Internet. Traditionally, many organizations have been aware of the significance of this process but were not willing to take part in it due the dynamics involved. With the advent of the Internet technology, the integration of different parties in the supply chain has been made easier. Through the Internet, real time information about the demand or requirement of the customers has been effectively made known to the producers through web-based technologies. This has enhanced forecasting among business and subsequent planning to meet the consumers’ demand at the effective time.
According to Antoniolli (2016), effective demand management is a significant component of an organization’s strategic coordination. Demand management offers organizations with a competitive advantage in their supply chain operations since they are able to reduce impacts created by demand amplifications. Demand management is aimed at enabling an organization to adapt to the prevailing needs of the market and ensuring a balanced operation between production capacity and the supply chain. Through demand management, supply chain management competitiveness is also enhanced. This is because the demand management ensures that the supply chain management provides the goods required by the customers at the correct time. Once this is established, an organization’s efficiency is created, thus making it maximize profits for the competitive advantage.
Personal Reflection
The five articles have clearly explained the definition and understanding of demand management. One element about the articles that has been consistent about the concept demand managing is that they have acknowledged the significance of the matter to modern day organizations, which is true. Demand management according to the five articles has also had a great significance in the supply chain management. All the articles have also discussed about the supply chain management. I agree with the articles that demand supply chain is what organizations need to focus on in the competitive markets. Any serious business organization that wants to grow should focus on the customer’s needs. The old-fashioned focus on the support chain management needs to be reversed and emphasis should be on the demand management. For example, a food production organization that is able to identify the real needs of customers in the market in terms of tastes and ingredients is likely to enhance its sales by adhering to customer specifications unlike organizations that produce food products that do not meet the customers’ needs. Supply chain has been the old fashion focus for most organizations. However, with the invention of demand management, supply chain has had positive impacts by supplying quality products to the consumers in time. Currently, demand management is the most effective trend for organizations to incorporate in order to be able to stand out in the competitive market.
The ideas that have been discussed above, however, in my opinion have not clearly emphasized on specific marketing research processes that apply to demand management. The reader who is not well versed with marketing may not fully understand how an organization understands different needs and requirements of the customers. The articles should give more information about marketing research, especially with the technological expansion that help in getting direct feedback from customers concerning their needs. One or two articles talked about technology, and this needs to have been deeply mentioned since it plays a crucial role in market research.
Operation Risk Management
In this article, it is evident that all organizations face risks in their operations. Operation risk is the risk that the management of an organization encounters every day that needs constant monitoring to ensure it has no impact on the implementation of policies. Operation risk management offers the basis for the execution of principles of corporate governance in an organization and provides a guarantee in the utilization of organization resources (Croitoru 2014). According to Croitoru (2014), the implementation of risk management process in business entities ensures that all the resources set aside are effectively and properly utilized, thus ensuring that the set objectives are attainable. This concept of operation risk is new in many business entities unlike in the past where it was only applied in financial and banking organizations. Operation risk refers to all kinds of risks resulting from incurring losses as a result of internal factors of a business, for instance, misconduct of the personnel, employee turnover, and inefficiencies in qualifications of staff (Croitoru 2014). Operation risks can also be caused by eternal forces that an organization has no control over, for instance, changes in the economic environment, technological influences, changes in consumer needs, and economic fraud. Therefore, operation risk is real and an effective management averts losses from operation risks.
According to Kulpa (2015), a risk is an aspect that is present in form of human life that deserves a special attention in the context of business activities. Effective management of risk in an organization leads to effective operations of business firms in the attainment of their goals and objectives. In financial institutions like banks, operation risks get special focus since they are public trust organizations whose operations are aimed at maximizing market values. There have been numerous crisis situations in the past, which have had consequences in the banking industry arising from operational problems. For instance, in the United States, banks and their personnel have been put to task to ensure an effective operational risk management in practice, especially since the economic crisis of 2007. Kulpa (2014) defines operation risk as the risk resulting from inadequate or failed internal process, people, system or external factors. The most significant elements that are focused on when it comes to operation risk and management are process, people, system, and external forces. Risks originate from unqualified staff, inappropriate organizational structure, and ineffective business relations with the environment among others. Operation risk, however, continues to change with time as the financial institutions and other organizations also evolve. This change ensures that the entities are protected from the risks.
According to Prokop and Pfeifer (2013), operation risk refers to the risk originating from organizational inadequate or failed internal process, personnel, and systems or from external factors. Therefore, an organization’s risk can materialize in different forms, such as internal and external fraud, accounting faults, information technology botches, and modelling mistakes among others. The main operation risks in this article are categorized into three: technological, people, and organization. Technological risks involve risks that emanate from failed IT infrastructure and facility management. People involve risk originating from human resources, fraud, and negligence. Organizational risk, on the other hand, entails aspects such as failed communication and management risks. Operational risk management is not an easy process in business organizations since a potential risk may concur with other risks that are associated with other types of businesses, and thus it is likely to be assumed and at the end affects an organization. For instance, in this article, insurance firms’ risks are similar to banking risks and should be managed effectively. Most organizational risks studies have focused on banks, leaving other types of financial institutions. This article shows the significance of operation risk management in the German insurance industry and indicates different levels in which the process is managed. Operation risk management needs to be equally applied in all firms, since it relates to each entity in one way or another.
According to Bailey (2014), enterprise risk management refers to an organizational ability to comprehend and articulate different kinds of risks in order to ensure effective business strategies are put in place and enhance accountability. Enterprise risk operation management has turned out to be a common practice among several industries over the last decade. This process has been enhanced by the increased transformation in the regulatory environment, economic conditions, and the increasing complexity of products and services in the industries. Bailey (2014) defines operation risk as a risk emanating from business entities, poor internal system, human factors and other external agents. On the other hand, operational risk management involves the oversight of the operational risks (Bailey 2014). In enterprise operational risk management, leaders in organizations establish mechanisms that entail risk valuation, risk decision making, and execution of the risk controls that results in risk avoidance or mitigation. This article further states that operational risks in an organization are different from other forms of risk since other risks are undertaken to obtain a reward. Nevertheless, operational risks are aimed at countering the natural course of activities, which have an effect on the general performance of an entity. With good operational risk management, operation risks are manageable and this reduces potential losses to an organization.
Garliste (2013) describes operation risks as events that impact on the banking financial organizations that have led to many stakeholders in the industry to set up operational risk management personnel from the sector. For instance, the Basel committee that deals with banking supervision affirms that risk operation management is significant for all current effective financial institutions. According to Garliste (2013), the prevalent forms of operation risks originate from organizational internal control systems as well as other governance principles. These nonconformities can result in errors and subsequent financial loss, fraud, and failure of the institutions to carry out their functions as per the required standards. In the banking sector, there are two main forms of operational risks: external operations and the internal operations. An effective operational risk management in a financial institution is important in ensuring they attain higher performance.
In my own view, I agree with most of the articles about operation risks and management. All organizations in one way or another usually face an operation risk that originates within or from external forces. Frequently, human risks are very prevalent unless they are contained or controlled. In handling operation risks, it is significant that organizations set up organizational risk management strategies in each department in order to control the outcomes associated with these risk. For example, in a banking industry, managing risks is very crucial in averting the institution from future problems associated with risks. In the lending department, employees must ensure that they exercise duty within their authority and not beyond, for instance, loaning extra amount of finances exceeding the limit required. This is one of the operational risk that can be easily mitigated if proper management is put in place and it saves the organization from many troubles. Nevertheless, articles on operation risks mostly address the topic and indicates that the risks apply to financial institutions. Future researches in their work need to demonstrate that operation risk management applies to all business entities and future research should open the process to other forms of business organizations.
Operational Excellence
According to Naftanaila and Cioana (2013), operational excellence is a key driver to business success because it directly deals with engagements to customers. Operational excellence enables organizational employees to identify the way in which effective organizational processes are followed and make efficient strategic decisions that have positive outcomes in organizations. There are several operational excellences in the business filed. For managers to ensure that organizations attain a competitive advantage, an effective process that add value to products and services must be adopted (Naftanaila & Cioana 2013). This article states that operational excellency involves new rules and strategies that enable business entities to compete successfully through eradicating waste and enhancing productivity. According to Naftanaila and Cioana (2013), the concept of operational excellency might initially seem to be hypothetical, new and erudite. However, according to their study, operational excellency is a practical and not a new concept, but it was performed differently and is not erudite since the concepts existed long before the development of technology.
According to Brown (2013), organizations across the globe are applying business excellency structures. One of the most common model is the European Foundation for Quality Management Excellence Model and Australian Business Excellency Framework among many others. These frameworks are generally used to guide organizations in their stratagem, business processes, and improvement. Different operations excellence approaches grounded on specific ideologies offer a well-ordered method towards undertaking business activities. Brown (2013) reiterates that the main aim of incorporating business operation excellence framework is to offer a guidance for enhancing organizational performance. Furthermore, operation excellence entails benchmarking and an organizational self-internal assessment framework that is built around the success of an entity.
According to Ekmekci (2012), there are different ways in which the concept of operation excellency has been interpreted in business entities. There seems to be very slight difference between effectiveness and excellency. Effectiveness is an old concept in the production industry that entails transformational forces, which are employed in a human organization in attaining its full potential. However, excellence can be attributed to a virtue that relies so much on the common cooperation. Virtually, all organizational in the current consumer centric world are incorporating the operational excellency concept as one of the strategic goals in their provision of goods and services. Nevertheless, without effective managerial leadership and direction, attaining operational excellence is futile. Good leadership enhances operational excellency processes like strategizing initiatives that foster organizational best outcome levels, which are considered as best practices (Ekmekci 2012). It is extensively agreed that business excellency structures and awards are crucial in enhancing organizational excellency as well as economic progression among organizations. Therefore, in this article, the author states the fact that leadership plays a significant role in defining organizational excellency in a business entities’ life as well as pursuing and attaining it (Ekmekci 2012).
According to Shehadeh et al. (2016), operational excellence is one of the important weapons that are being applied by organizations both in the private and manufacturing industry. Operational excellency is influenced by several factors, such as leadership in firms, human resource management practices, and operations strategies. The present day business environment puts a lot of emphasis on organizational leaders to put up mechanisms that respond positively to the ever-transforming business environment in order to ensure that customers do not shift their loyalty. This is especially due to the fact there is a stiff competition that has been brought about by globalization. Operation excellency mainly consists of processes that involve adding value to clients, establishing an organizational future, incorporating innovation and creativity, and ensuring sustained exceptional outcomes. Business excellence process if well applied assists organizations to assess their current modes of operations, identify areas that need improvement, and integrate all areas to come up with actions that establish the best organizational practice that will guarantee quality outcome in the market.
According to Asif and Gouthier (2014) service operational excellency entails offering services that delight customers, which lead to strong loyalty and enduring relationships. This concept is significant in organizations’ sustainability because it establishes customer ties and customers are the best target for organizational products and services. In the general terms, operational service excellency is the process in which firms exceed clients’ expectations by making them happy (Asif and Gouthier 2014). This is attained through a methodical approach such as an effective management system that support and offer guideline. Operational excellence is an important component in organizations’ aim of customer satisfaction and leads to higher profits enjoyed by the firms. There are different kinds of organizational excellence models as presented by Asif and Gouthier. These models do not have any hypothetical foundation and they are applied with regard to recommendations, especially from experts or organizational leaders.
In my view, currently, operation excellence is one of the most important elements in the market place as stated in the research above. Today’s market place is driven by competition both at local and international level. Therefore, for business entities to be successful, they must strategize ways that will enhance their competitive advantage. Operation excellency is therefore significant not only in attaining an edge in competition but also ensuring that customer loyalty is established and maintained for the benefit of an organization in the future. Customer intimacy created through operation excellency involves quality products and services that meet their needs in a special way. However, this can only be achieved through an effective leadership team in firms that understands the position of organizations and their need to grow and develop. Operation excellency focuses on adding value in the markets, such as in selling and distributing a product. Samsung electronics, a firm that opts to deliver quality and good condition to clients directly through order placing, is likely to add value in the products unlike a different firm that have no deliveries.
Conclusion
Demand management is characterized by an organization creating ways of reducing demand inconsistency and promoting organizational operational flexibility to respond to external and internal changes that affect an organization. Demand management ensures that the customers’ demand is met in an efficient way. Implementing a risk management process promotes effective utilization of resources and attainment of objectives. Operational risks are aimed at countering the natural course of activities that influence the performance of an organization. With good operational risk management, operation risks are manageable and this minimizes possible losses to an organization. Operational excellence assists organizational employees in establishing ways through which effective organizational processes are followed and make efficient strategic decisions that have positive outcomes in organizations.
References
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