Operations, Quality, and Managing What Could Go Wrong

Operations, is, all, about, converting, inputs, into, outputs., It’s, the, arrangement, of, everything, that, happens, in, between., Productivity, measures, how, efficiently, that, conversion, takes, place., You, get, it, by, dividing, output, by, the, input, used., Labour, productivity, looks, at, output, per, worker-hour., This, matters, because, rising, productivity, is, the, only, way, a, business, can, pay, employees, more, without, raising, prices, or, shrinking, profit, margins.

Productivity, isn’t, just, about, working, harder., Usually,, it, improves, with, better, tools,, improved, processes,, better, training,, or, by, cutting, unnecessary, steps., That’s, why, a, company, that, thinks, “work, faster”, is, the, answer, to, a, productivity, issue, has, probably, got, it, wrong.

When, we, talk, about, quality,, a, key, concept, to, understand, is, the, cost, of, quality,, which, falls, into, three, categories., Prevention, costs, are, what, you, spend, to, stop, defects, from, happening., This, includes, training,, better, design,, and, decent, equipment., Appraisal, costs, go, to, finding, defects, through, inspection, and, testing., Finally, failure, costs, come, into, play, once, defects, exist., These, can, be, internal, (like, scrap, and, rework, before, shipping), or, external, (like, returns,, warranty, claims,, and, damage, to, reputation, after, shipping).

Here's, a, consistent, rule, to, remember:, the, later, a, defect, is, caught,, the, more, it, costs., A, design, flaw, found, in, the, design, phase, is, cheap, to, fix., If, it’s, caught, on, the, production, line,, it, gets, expensive., But, if, a, customer, finds, it,, the, costs, can, include, repair,, replacement,, damage, to, the, relationship,, and, the, stories, shared, with, others., This, is, why, quality-focused, firms, invest, heavily, in, prevention, and, consider, inspection, a, backup,, not, a, strategy.

Risk, management, involves, three, steps., First,, identify, what, could, go, wrong., Next,, assess, each, risk, based, on, its, likelihood, and, potential, impact., Finally,, choose, a, response:, you, can, avoid, it, reduce, it, transfer, it, (like, through, insurance, or, contracts),, or, accept, it., Accepting, a, risk, is, a, valid, choice., It’s, not, the, same, as, ignoring, it;, an, accepted, risk, has, been, identified,, sized,, and, consciously, taken, on.