GIVE THE RELATIONSHIP BETWEEN PRODUCTION, PRODUCTIVITY AND TQM AND HOW TQM IS USEFUL IN COMPETITVE ENVIRONMENT

SUBJECT: TQM SECTION: FS-2 GROUP NO.: 2 Bhupendra Choubisa Jitesh Jain Rishon Bhastekar Rohit Chaturvedi Swanand Bhadang 06 13 32 35 45

INTRODUCTION
Process optimization refers to various organizational capabilities and practices to control and achieve efficient operations in the value delivery processes. It aims to lower product costs while ensure quality of conformance to design. Constant improvement in process may lead to best practices, which can be reflected through high plants and facilities utilization; labour efficiency; reduced scrap, waste and rework; increased product and service reliability; and reduced relative operating costs. This emphasis is consistent with cost leadership advantage, although not all process optimization emphasis leads to lowest cost in the industry. Internally focused revenue growth can be derived from either cost saving in operation or reduction in capital employed, which mean in either case managing effectively existing resources. In another word firms TQM contents are tailored to improve productivity that is by getting more output from the same resources or getting the same outcome from fewer resources. Through TQM efforts productivity is achieved without specifically resulting in reduced headcount, unlike downsizing, rightsizings, or reengineering, which almost always do. Cost avoidance through holding capital expansion, cutting promotion, deferred physical investment or making employees redundant (through downsizing, restructuring or reengineering) are common practices in times of economic malaise, but cost reduction by continuous process improvement can be a continual pursuit irrespective of economic conditions. Lower cost can be the result as well as the cause to increased productivity. In the context of operation, increased productivity is parallel to process optimisation, which can be derived from improved design, improved reliability or conformance to specifications. In this article we define the terms Production, Productivity, TQM. We have further tried to give a relation between them showing the importance of TQM and its usefulness in todays environment.

DEFINITIONS

1) Production: Production refers to the volume, value or quantity of goods and services produced by a worker, plant, firm or economy. Its the sum total of the results achieved by the various factors together. Production is an activity of the economy. Economy here refers to the manner in which production and services are produced and distributed for consumption for gainful reason. Production starts from the customer and ends with customer. Production is nothing but a value added concept. It can also be defined as a series of operations in a sequential manner. Mathematically it can be given as,

2) Productivity: Productivity is concerned not merely with the total value or volume of output of product, but it shows us the efficiency of production. It refers to the quality of production. Productivity is the ratio of output to aggregate inputs. It is a related concept i.e.

It measures the effectiveness and efficiency of a product system. Productivity is always measured in percentage. Mathematically it is given as,

Where, P = productivity O = output I = input W = waste We also know that, I=O+W Or O=IW Diagrammatically,

input

output

waste From the above we can infer that, Productivity increases with decrease in waste and productivity decreases when waste increases. If waste is zero then productivity is 100%. Thus, reduction in waste is also known as productivity. Productivity is a continuous war on waste. It is optimization of resources. Management is responsible for increasing or improving productivity.
Identify Waste

Reduce Waste

Eliminate Waste

Prevention of Waste

Graphically it can be shown as follows:

Effectiveness is a measure of performance and efficiency is how best resources have been utilized to get output. Effectiveness is more important than efficiency. Both these are equally important for a companys good performance. These factors help determine productivity. Dimensions which measures effectiveness and efficiency are as follows: Quality Cost Time Flexibility Modular construction Reliability and dependability

3) Total Quality Management: Total quality management (TQM) is an enhancement to the traditional way of doing business. It is a proven technique to gurantee survival in world class competition. Only by changing the actions of management will the culture and actions of an entire organization be transformed. TQM is art of managing the whole to achieve excellence. The golden rule is a simple but effective way to explain it. TQM is a set of guiding principles that represent the foundation of a continuously improving organization. It is the application of quantitative methods and human resource to improve all the processes within an organization and exceed customer needs now and in future.

RELATION BETWEEN PRODUCTION AND PRODUCTIVITY

Production refers to the volume, value or quantity of goods and services produced by a worker, plant, firm or economy. Its the sum total of the results achieved by the various factors together. Productivity, on the other hand, is concerned not merely with the total value or volume of output of product, what is more important is that it shows us the efficiency of the production. The difference between the two is when we find that all increases in production, does not necessarily result in increased productivity. If increase in total output is brought about with an increase in the input of factors of production, production will have increased, but productivity will only remain constant or low. Keeping all factors same, when we achieve higher output, then it is called increased productivity. In fact Productivity refers to the quality of production. The clear definition of Productivity is the ratio of output to aggregate inputs. As per the International Labour Organization, the aggregation, if done in monitory terms, gives the exact value of productivity. A bit of common sense can tell that productivity is valued higher as output should be more than all the inputs put together. The analysis of elements and determinants of production functions and productivity function has shown certain interdependence between them. The elements and character of the interdependence can be discussed by using certain direct relations that are valid both for a discrete set of values (a) and for comparing the production function and the productivity function (b). Since the productivity of labour is equal to a relation between the quantity q of a product Q and the investment quantity u of labour force U, then some aspects of the interdependence can be discussed direct by using elements of

this relation. Namely, from the expression p = q/u it follows q = up, i.e. the quantity q of a product Q can be obtained by multiplying the investment quantity u of labour force U and the level of productivity p. The expression q = up is related to the elements of productivity complex. The expression, as we can see, confirms the attitude of the economic essence of productivity, as the expression of the investment quantity of labour force and its productive capability. The volume of product is proportional to the investment quantities and the level of productivity, while the investment quantities for a certain volume of product is in inverse proportion to the level of productivity (u = q/p). On the basis of the formula we can conclude: 1. If the production function is elastic, i.e. Eq,u > 1, then the productivity elasticity is positive, i.e. Ep,u > 0. 2. If the production function is indifferent elastic, i.e. Eq,u = 1, then the productivity function is perfect nonelastic Ep,u = 0. 3. If the production function is nonelastic, i.e. Eq,u < 1, then the productivity elasticity is negative, i.e. Ep,u < 0.

IMPORTANCE OF TQM
We explored the relationship between the degree to which total quality management (TQM) practices were adopted within organizations and the corresponding competitive advantages achieved. We found relatively strong support for this relationship. In addition, our data showed some support for the moderating influence of organizational structure on TQM implementation effectiveness. Specifically, two measures of organizational structure, labeled "control" and "exploration," were found to offer independent and interdependent influences on the financial performance of firms implementing TQM programs. Much has been written about total quality management (TQM) practices and the many benefits that these practices bring to the organization that successfully adopts them. Notably, a considerable number of organizations have tried to implement these practices and have failed to achieve much, if any, competitive advantage, while many other organizations have implemented TQM with great success. Some observers have argued that the problem lies either with the failure to fully implement all of the key TQM practices or with the absence of complementary assets that must be combined with TQM to achieve competitive advantage. Total Quality Management (TQM) is a management style that implies non-stop process of quality improvement of products, processes and personnel work. This is a bunch of methodologies that drive company to strategic goals achievement through unceasing quality development. It is focused on production of goods and services that possess high-quality from viewpoint of customers. TQM was elaborated on basis of Edward Deming's theory. This philosophy has successfully started many years ago in Japan and USA . TQM has shown phenomenal results and now it is used in many successful enterprises all across the world. It allows obtaining faster, fundamental and more efficient business development, because it stimulates production of much better products for better prices.

TQM gives some short-term advantages, however majority of advantages is long-termed, and tangible benefits from them appear only after successful realization. In big organizations this process can take few years. Long-term benefits expected from implementation of TQM - higher productivity, higher moral tonus of personnel, decreasing of costs and increasing of consumers' trust. This will make company popular and increase its status within society. Avoidance of mistakes allows company to save money and time. Extra resources can be used for range of products and services expansion or for other improvements. TQM creates atmosphere of enthusiasm and satisfaction with performed job and welcomes awarding bonuses for creative approach to professional duties. TQM intensively uses team style of work that allows employees share their experience, use their skills effectively and apply joint efforts for solving issues. As far as team members gain experience of team problem solving they can be a part of cross-department "mega teams" that work at tasks that are beyond of local group possibilities. TQM gives to organization more flexibility in work and problem solving and improve work environment for each employee.