How many MBA students go to business school eager to learn operations management? It’s one of those subjects, like leadership, that most students suffer through only to wish once they are out in the world that they had paid more attention.

Operations may not have the immediately obvious career appeal of finance or strategy. But anyone who makes it their focus will have an enormous advantage when they graduate.

The recent troubles Apple (AAPL) has had in China have demonstrated how operations can trip up even the most glittering corporate reputation. As more and more companies follow the Apple model, of building sophisticated global supply chains while keeping top management, marketing, and design in their home market, operations drives everything.

Apple Chief Executive Officer Tim Cook made his name under Steve Jobs by building the supply chain relationships now giving his company grief. Jamie Dimon, the CEO of JPMorgan Chase (JPM), conquered the Wall Street jungle in large part due to his mastery of the complex information technology platforms relied on by global banks. Michael Bloomberg ran systems development at Salomon Brothers before launching his company, based on his insight into the technology systems bond traders really needed. That company, Bloomberg L.P., owns Bloomberg Businessweek.

Salaries for MBAs taking operations management jobs after graduation are rarely as high as those for consultants and banking associates. But they can quickly catch up.

If you succeed in operations, your success will be highly visible. Chances are, you will be able to take on a process and improve it with far more autonomy than your banking and consulting peers.

There tends to be a lot more low-hanging fruit in operations than in areas of business already overcrowded with MBAs with the same ideas and interests. How many MBAs want to go and run a factory when they graduate? Or manage a fast-food company or large retail chain? And yet, how many would like to be CEO of General Electric (GE) or Apple?

Mastering operations challenges early in your career, when most other MBAs have gone elsewhere, is the purest kind of general management you could ask for. And it will set you up brilliantly for whatever comes next.

Learn more about operations management in Interviews with Operations Management Masters.

Source: BusinessWeek.

Operations management is part of ever business and start ups are embracing it more then ever today.

With an average of eight out of 10 customers returning to do repeat business, the laundry service franchise is gaining recognition as an enterprise built for the long term, notes Caloy Hanzyl Ang, founder and franchise director of Suds Laundry and Dry Clean Services.

Now serving a customer base of approximately 80,000 that returns week after week to the four company-owned stores and 14 franchises, Ang and wife Charmaine, Suds operations manager, have set plans to grow the laundry service into a nationwide brand. For now, the business which the couple started in Dasmariñas, Cavite, in 2003 to service the needs of professionals working in the nearby export industrial zones has branched out to Quezon City, Makati and Parañaque.

Considering that a typical Suds client, who works in an office, sends off five kilos of clothes a week for washing and pays P35 a kilo, franchisees have been attracted to the business.

Like the Angs, they are optimistic because their market of “time-challenged” young families that have both husband and wife in the work force is growing. Just about a decade ago, these early nesters would have most probably lived with either the man’s or the woman’s family and enjoyed having their laundry done by a family member, a household helper or a daily wage earner.

But with the proliferation of affordable condominium units sprouting all over Metro Manila and mid-income homes in the outskirts of the metropolis, they now can live on their own. As of mid-2012, a Jones Lang LaSalle study projected that 137,000 residential units from the P1.5 to P6 million price range would be coming up from 2012 up to 2016. Most of the occupants of these units would not have the time, energy, space or a combination of any two or three of the aforementioned for laundry.

Caloy recalls that he was also once himself a harried professional employed with Intel in Cavite as a reliability engineer. Still single at the time, he remembers the exact day he decided to get into the business of washing other people’s clothes. It was raining, he was on foot and in a hurry to get his duffel bag of 20 kilos of soiled clothes laundered in the neighborhood. He realized that the laundry service that would go through the trouble of picking up its clients’ weekly washing—and on top of that offer them reliability and professionalism—would easily outdo all existing mom-and-pop laundry shops.

Still single but already in a relationship with Charmaine, he hatched the nucleus of a business plan that night and convinced her to resign to run their store to be named Suds. They attended seminars on the business, borrowed from relatives and in a few months’ time, they had their first store.

They had a logo and interiors that made use of the fun color orange—not the usual blue. “We wanted it to be different. We hid the machines and put in air-conditioning. I sold my car and exchanged it for a multi-cab so I could pick up laundry after work.”

Moreover, the pair found out through research that customers were particular about the smell of their clothes and the availability of parking. But even after they had opened and put in all improvements, they still did not earn enough to pay the rent.

They panicked and realized the urgency of marketing to their micro market. A combination of flyers, a promo offering a discount and a banner screaming out the special offer in conjunction with the onset of rainy season finally brought in the volume of customers they had targeted. They have since added a rewards system to loyal customers tracked by a proprietary computer program that is part of the POS (Point of Sales) machine in each Suds store.

They also focused on running the business more efficiently by “getting their chemistry right.” Among their first lessons in the subject was selecting a detergent with more active ingredients than fillers since it is the latter that gets the cleaning done. Their growing expertise in the area eventually brought them to the practice of using four different types of detergent—three of them liquid to be used for delicate, premium and regular-wear clothes. Powder is used only for bulky items that need heavy-duty cleaning such as seat covers and towels slathered with oil and lotion.

With the intensity of geeks challenged by a science problem, the Angs went into franchising in 2008 with the goal of finding a royalty program that would work for both franchisee and franchisor and push the business further forward. They developed the “ladderized” royalty system wherein no royalty is paid to Suds during the startup period and with royalty increasing as a franchisee’s revenues increase. Better yet, the royalty decreases once the franchisee gets past a revenue milestone.

“Our growth depends on the growth of our franchisees,” Caloy notes.

The Angs have further redefined the laundry business by putting up a plant that specializes in dry cleaning and bulk items such as the scores of towels used by spas and beauty parlors. Suds encourages its franchisees to look for the institutional users in their area and to pass on the washing and dry cleaning to their main plant in exchange for a marketing fee. “This way, our franchisees earn from the business of both retail and commercial clients,” Caloy says.

He discourages the thinking that owning a franchise is like running a remote control car. He declares: “The involvement of the owner in any business is critical. Our advantage is that we have already set up and tested the systems they need to remain profitable and keep on growing.”

Learn more about operations management in Interviews with Operations Management Masters.

Source: Philippine Daily Inquirer

3-D Supply Chain Could Create Many New Jobs and Revitalize the Economy

Extreme risk aversion continues to oppress the economy, and recovery is very slow. Perhaps it is time for a new take on what was wrong in the first place. Maybe all this mayhem owed less to financial disruption than is widely believed.

Our 2-D Private Supply Chain Process Is a Nineteenth-Century Relic

Since linear supply systems were developed between suppliers and customers at the beginning of the Industrial Age, each supplier has had to construct its own supply chain network. This established two-dimensionally networked (2-D) supply chains in the overall market — a framework which has not changed, even under the modern information revolution. We call for an innovative approach, a supply system that possesses a third dimension, and is public as well.

The advent of advanced information technology forced suppliers in almost all industries to develop their own electronic supply chain networks, at great cost, significantly reducing the number of competitors in supply chains and increasing the efficiency of each function (for example, logistics or warehousing) through consolidation. Because of the superior market position of big suppliers and service providers with their private supply chain networks and fast delivery speeds, businesses which couldn’t afford such networks have weakened and over time been destroyed, and this is how many jobs disappeared. But the overall effect was that the 2-D supply chain in real markets became unstable, and this contributed to the decline of jobs in the market as a whole, unavoidably and continuously.

In this situation, the mantra for suppliers and service providers became, increase efficiency or die. So, they aggressively adopted IT progress, off-shored and outsourced to lower-cost countries, and broadly adopted automation in the form of robots. Accordingly, large corporations became job-killing machines. These developments have contributed to the weakness and near collapse of the general services industry (such as auto parts and paint sundries) and have aggravated unemployment.

The existing 2-D supply chain process, focused only on efficiency, ignores human intelligence and imagination, and treats ordinary workers like machine parts, easily removed and replaced. As a result, many full-time jobs have morphed into part-time jobs, and lower- and middle-skill workers have faced job erosion.

What then has happened to our efforts to generate higher growth and demand — and create jobs over the last four years? Unfortunately, with the efficiency-driven 2-D supply chain, the Information Age has emerged at the expense of employment, policies aimed at raising employment are treading water, and capitalism’s regenerative office has been slow in reviving. Abnormal economic phenomena — astronomical government budget deficits and extreme risk avoidance — have become salient. It seems we have staved off financial collapse by creating more if not worse problems. This is the capitalism of competition by size, and history has proven that it cannot solve its problems on its own.

In limited ways, the electronic economy is doing just this: The Internet serves as a 3-D hub or platform between multiple information sources and recipients. But why haven’t we developed any such 3-D systems in U. S. supply chains, with strong operational feedback modules like Toyota’s? Real markets in tradeable goods offer little prospect of righting themselves anytime soon. This means that the disconnect between business needs and labor markets will continue without a lasting solution.

The authors have discovered the fact that our economy has erred in developing sophisticated technology-based transaction systems for supply chains over the last 30 years. Oddly, the processes of real-world markets have not been considered at all in developing private systems, and constructing a fair rule and standard for the public has escaped attention. Information technology has been misused from the start in developing such 2-D transaction board games.

The Supply Chain Revolution is a 3-D Public Supply Chain System

We believe a new 3-D supply chain system could easily be developed with largely off-the-shelf technology to overcome restrictions of time and space in commerce by improving major real-world business processes in transaction systems. A networked public supply chain infrastructure, bundled with third-party infrastructure for communication and peripheral networks, could quickly become available to all members of markets in tradeable goods.

Under this new 3-D supply chain system, each business will have a competitive relationship with like businesses under fair conditions, and not simply by size. In other words, a cooperative relationship will arise between a business and its nearby competitors. This is far different from what we see today. With these competitive-cooperative relationships, each business will be able to significantly increase its efficiency, productivity, and application capabilities — in a word, its overall market effectiveness. 3-D systems will be multiplicative, not merely additive, as with the 2-D supply chain model. This will become a business revolution.

The 3-D supply chain system will arise with the voluntary participation of many SBEs and MBEs and their suppliers and service providers, with clarified responsibility lines, centralized volume, and mutually distributed expense. Because this supply chain system connects the power of all participating members, each will benefit from the system’s size. For example, competing convenience stores could insure themselves against theft, as opposed to paying some average price computed by an uncaring and locally unsophisticated insurance industry. Numerous other applications could easily develop in real markets, based on imagination. Human intelligence will re-emerge among the robots, as at Toyota, and the cascade of full-time jobs into part-time jobs will be reversed. In effect, SBEs and MBEs will retake control of their own destinies.

Further, our proposed 3-D public supply chain system’s impact on SBE and MBE productivity, flexibility, and delivery speed will draw operations of companies that have offshored and outsourced to lower labor cost countries back to the U.S. by lowering barriers to re-entry. Accordingly, numerous new businesses and jobs will manifest in the market as a whole, and we can overcome American capitalism’s regeneration crisis and undertake economic revitalization on a realistic basis.

Ho-Hyung Lee and Jess Parmer
Huffington Post

Overview

Operations managers make companies run efficiently. Your job is to make sure the company has the people and materials necessary to provide the goods or services your clients need. This involves making tactical and strategic decisions and communicating with a wide variety of people to make sure everyone is properly coordinating to meet the end goal. “Operations really is the heart of most companies, because the operations department actually gets the job that the company needs to get done, done,” says Eric Schaudt, manager of operations programs, material planning, and analysis at Northrop Grumman.

The Bureau of Labor Statistics projects operations management employment growth of 4.6 percent between 2010 and 2020. During that time period, an additional 81,600 jobs will need to be filled.

Salary

The Bureau of Labor Statistics reports the median annual wage for operations managers was $94,400 in 2010. The best-paid 10 percent in the field made over $166,400 per year, while the bottom 10 percent made approximately $47,280. The highest-paid in the profession work in the metropolitan areas of Trenton, N.J., Newark, N.J., and New York.

Training

Many operations managers have a bachelor’s or master’s degree, but the specific level of education required depends on the type of organization. Excellent communication skills and the ability to make decisions quickly and accurately are essential. The Association for Operations Management offers certificate programs in production and inventory management and certifies employees as supply chain professionals. “A lot of companies use these certifications as search criteria and filter their candidates as whether they are certified or not certified,” says Schaudt.

Reviews and Advice

Participating in professional organizations will help you to network your way to an operations manager job. “We encourage people to go to meetings, hand out their resume, and start to build a network among the operations management profession,” says Schaudt, about the Association for Operations Management. “The best way to break into the profession is to build a professional network. A lot of the time, this can and does lead to a job interview.”

To Learn more about career in operations management and what really happens in that field, see “Interviews with Masters of Operations Management”

Source: Us News

Supply chain risk reduction is underrated

Summary: Many companies still complacent about resiliency of supply chain operations, and will struggle to procure components during disruptions unless plans to mitigate threats in place.

Many companies are confident their supply chain operations are immune from both natural and man-made disasters but fall short when operations do get disrupted due to not having a risk mitigation strategy in place, says an Avnet executive.

Gerry Fay, chief global logistics and operations officer at Avnet, told ZDNet Asia during an interview here Wednesday that businesses globally tend to assume their supply chain operations will be able to withstand shocks but are usually given a rude shock when these situations do arise.

He explained that the complacency set in during the period between 2000 and 2009, when it was easy for companies to get electronic components from suppliers as there was surplus inventory due to the dotcom crash at the turn of the century. Enterprises then started to build their supply chain systems based only on price without worrying whether these suppliers would face operational disruptions, Fay added.

Thus, when back-to-back natural disasters took place between 2010 and 2011, including Iceland’s Eyjafjallajokull and Grimsvotn volcano eruption, Japan’s tsunami and earthquake, and heavy floods in Thailand, these caused significant damage to the global supply chain. These include component shortages and, with it, spikes in price which hit many manufacturers’ bottom lines, he said.

Besides natural disasters, companies also fail to understand the importance and risks associated with picking the right supplier. Fay noted that if a key supplier fell into financial problems and became bankrupt, this could mean companies not getting their components which might negatively impact their companies.

There could also be scenarios when component makers are just unable to meet the deadlines, in which case this may pose challenges to companies too, he added.

“Natural disasters bring the issue of supply chain risk management to the forefront, as they impact so many companies at a time,” the Avnet executive said. “It is the everyday risks that companies may not be aware of.”

Resilient supply chain an advantage
This is why a risk mitigation strategy for supply chain operations is essential, said Fay, adding the more supply chain leaders understand the risks associated with their systems, the better they would do in keeping it up and maximize revenue for their companies.

Without such a strategy, companies may find that should another natural disaster befall a key components market, they would be scrambling to compete with companies that have contingency plans set in place for such scenarios, he warned.

“If any part of the supply chain breaks, it will be revenue loss for the company because every portion of the supply chain is essential for the business to function,” he added.

In order to comprehend the various risks, the Avnet executive suggested companies undertake a value-for-risk evaluation, which is based on the sum of probability of potential events times the impact of the events on the supply chain.

The model should also look at risks, probability of occurrence, and potential monetary loss to segment the threats and focus on those most critical for the company, he elaborated.

Companies ought to create stronger relationships with their suppliers which are most critical to their businesses too, so they can better understand their partners’ operations and challenges. Doing so, they are able to factor these aspects into their risk mitigation strategies action and mitigate them.

By Ellyne Phneah

True collaboration is the goal of a supply-chain partnership, but that ideal is hindered by a number of factors. One is the set-up of most data management systems, which shield and protect information within individual silos. Within the four walls of a corporation, for example, the status of a financial transaction is not visible to all users.

In a typical supply chain, that problem is exacerbated hundred-fold. Electronic data interchange (EDI) is the most popular system for managing supply and demand transactions. Information is visible only to the principals involved: say, the distributor that is placing an order with a supplier, and vice versa. If for some reason there is a problem with that order, a second-source supplier isn’t privy to it, yet, that supplier could intervene and help.

There are good reasons why information is often managed in a silo format: competitors shouldn’t be able to see each other’s pricing, for example. If certain data was shared — say, the fact that an order can’t be fulfilled — competing suppliers could collaborate on a solution while price confidentiality is maintained.

This is the concept behind a set of supply-chain solutions being offered by companies such as E2open Inc. and GT Nexus. These platforms, hosted on the cloud, enable partners to establish a set of rules that allow certain constituents to see information relevant to them. Unlike a typical closed system, the universe of collaborators can be opened to include financial institutions, logistics providers, and even governmental and regulatory agencies.

Let’s say an event at a shipping port holds up a container in customs. Typically, this information isn’t automatically shared with carriers, distributors, or even end customers. Another example: a manufacturer is awaiting a customer’s credit approval before starting production. If the OK was communicated directly from the lender, manufacturing could start immediately.

Each system emphasizes certain strengths: GT Nexus focuses on the ease of sharing data. Users can collaborate without downloading or uploading data between systems. Greg Kefer, GT Nexus director of corporate marketing, said in a phone interview earlier this year:

The supply chain is basically comprised of a lot of points of data that have a distinct chain of custody. This data is different for each company, and that information is often stored, or ‘locked up’ within an ERP system. These systems aren’t designed to work across enterprises, so the data isn’t flowing.

The only way to do that, GT Nexus believes, is through the cloud. Not only do most ERP systems not talk to one another, they don’t even speak the same language. GT Nexus partners provide data from their ERP systems. GT Nexus takes it, translates it, and then makes the data available to select members of the network. Although the information is standardized, linked, and centrally stored in the cloud, it is also partitioned. It is visible only to stakeholders that have been granted permission. “Being part of a group does not necessarily mean every partner sees the data,” explains Kefer.

In addition to the partners in a typical supply network — suppliers, distributors, and customers — global commerce also depends on air, land, and sea freight handlers, third-party logistics companies, trade and tariff officials, seaports, and trucking and rail companies. Each of these groups manages information that isn’t necessarily shared with an end customer that’s awaiting a shipment.

Most users already have EDI links and legacy systems on which they have spent millions. The cloud doesn’t replace those systems, but it does provide economies of scale. GT Nexus users pay a subscription fee based on their level of engagement. This means small companies that don’t have costly ERP platforms can participate.

A similar concept was developed by E2open, which started as a component-sharing Website for OEMs. E2open’s cloud-based trading platform, E2open Business Network V 8.0, allows supply-chain partners to view and manage procurement events in real-time. The product, among other things, enables users to “monetize” the various aspects of a buying transaction. It captures and compares component costs; assesses various logistics scenarios, and calculates risks such as manufacturing line downtime.

E2open emphasizes the real-time aspects of its system. “The problem is the electronics industry has the fastest moving supply chain in the world,” said Michael Schmitt, E2open senior vice president of marketing and product management, in a phone interview earlier this year. “It’s not just providing the data; it’s the ability to interpret and react to the data.” (See: Have OEMs Relinquished Too Much Control Over Their Supply Chains?)

PC manufacturer Lenovo Group Ltd. (Hong Kong: 992) uses the E2open system. (See: The Cloud & the Supply Chain: A Match Made in Heaven.) Lenovo set out to reduce the cost and time to onboard new trading partners and to build a real-time, consolidated view of processes and operations. Since implementing the platform, Lenovo reports it has reduced onboarding time by 85 percent, lowered IT costs by 53 percent, and reduced IT management costs associated with supplier integration by 70 percent.

Cisco Systems Inc. (Nasdaq: CSCO) has also implemented the E2open platform and estimates it has linked its systems electronically to more than 100 key suppliers and partners. In a report on its results, Cisco notes that tech companies already have the ability to view and exchange data with their suppliers, contract manufacturers, and distributors. The key to success, however, will be how companies use that data to effectively collaborate and take action.

Some analysts believe OEMs have relinquished too much control over their supply chain and open collaboration platforms will reverse the trend. So far, it appears that cloud-based solutions complement, rather than replace, legacy solutions and therefore don’t threaten the status quo. Yet, many partners in the electronics supply chain have taken on certain management functions to cement their relationships with customers.

Distributors, for example, coordinate amongst suppliers to make sure orders are fulfilled. Suppliers with proprietary customer relationships don’t generally collaborate with second sources. However, if it’s the end customer that determines the rule-set for collaboration, supply-chain responsibilities may shift, again, back to the OEM.

Barbara Jorgensen, EBN Community Editor

Photograph: Andrew Milligan/PA

I get up at 6.30am and cycle into work from Crouch End; I aim to get in for 8am. Each day starts differently but there are some things which I always do. This usually involves checking on site issues and that the hospital is in a position to carry on with business as usual for that day.

I check in with the night team to see if there’s anything that we need to be updated on, and they report on anything they think might impact on the hospital’s services that day. This could be staff travel, patient transport, or something that could affect the day-to-day running of the hospital.

Each morning I produce a short report for NHS London with an update on our operational status and any issues that may have come up. The trust has to report to NHS London on a daily basis, so it is important we can communicate any problems that may affect the operational running of the hospital.

My role is to make sure that whatever happens at the hospital doesn’t impact upon our services during the Olympics. Prior to the role I worked as a general manager at the hospital, so I have good overall knowledge of the NHS, the trust, and how it runs.

I started my role in September but our operations system for during the Games only started this Monday. So far we’ve had no problems. Some people have had slight delays coming into work, but nothing major has come up yet.

The latter part of last year involved running the program board to ensure that we are prepared for the Olympics. We’ve been making sure that we’ve been adhering to planning laws and that we are running the hospital coherently alongside other Olympic projects.

Homerton is the official hospital for athletes competing in the Games and Olympic officials. As well as planning for “business as usual” during the event, we’ve also had to ensure that we’re running service pathways for athletes and officials without disruption to the rest of the hospital.

Athletes visiting the hospital during the Games have slightly different requirements. When we do treat them we need to do so efficiently as possible so we can get them back to the Olympic village as quickly as we can.

I’ve got tickets to see the Paralympic cycling, equestrian events and athletics , so am looking forward to sneaking away to catch some of that; the Games are a great opportunity to see some excellent events. Like most of London I’m excited to see it all beginning to happen after looking forward to it for such a long time.

I usually finish my day between 6 and 7pm, although part of the arrangements for Homerton being the official Games hospital is that there will be a senior manager on site 24 hours a day so I will being staying over at the hospital some nights.

After work I like to unwind with family and friends to forget about work. Before I go to sleep I usually think through everything that’s happened during the day and make a mental check of things that I need to do the next day.

The hospital is well-prepared for the Olympics and I’m excited that they are now here; it’s a hugely exciting opportunity to be part of such a momentous event.

And what will I do after the Games? Go on holiday!

Interview by Jessica Fuhl

Guardian Professional.

To learn more about career in operations management here is a link to our recent article on MBA and its effect on earnings vs experience.

If a company was laid out on a chart like parts of the human body, the supply chain would be the spine and central nervous system. Everything operating further from the center would depend on its nearly flawless function. The brain might be the top management team, thinking through major corporate moves, but nothing moves until the supply chain is working quickly and economically.

We found an intriguing degree available called the Global Supply Chain Executive MBA.  As is often the case now, the term “global” is included, but the main emphasis is on the person becoming a supply chain executive. Currently offered by the University of Tennessee, the GSCEMBA (we are really rolling out the acronyms) is a prerequisite-dependent master’s program for industrial professionals. This program appears to be the Rolls Royce of MBA choices.

Here are some of the requisites:

• Ten years of industrial and business experience
• Senior management level job
• Experience in business outside the United States

During the twelve months of the program, students could be located in Paris, Budapest, Singapore, Rio de Janeiro or Knoxville, Tenn. The program winds up at Knoxville. Each candidate completes 45 credit hours in 12 months.

The customized curriculum includes:

• Global logistics information systems
• Network strategies
• Theory of constraints
• Managing supply chain complexity
• Warehouse management
• Environmental sustainability

The person who successfully completes this MBA would certainly become an integral part of his or her company’s spine of the supply chain.  He would be more knowledgeable in all areas of supply chain strategy, and would probably become the trainer for various divisions of the company dealing with the intake and outflow of materials.

Other MBA programs are similar, but generally without the “bells and whistles” of exotic locations. Like so many scholastic institutions today, nearly all are available online. Most are two-year, full-time programs. Students take core business courses the first year and supply chain courses the second. Courses include advanced learning in logistics, warehousing, inventory, product cycles, lean manufacturing, risk management, and demand management. Most offer courses in specialized global activity and sustainable green activity.

As with any MBA or graduate program, candidates need letters of reference and recommendation. Most require several years of experience in supply chain jobs, and some will need proof positions worked. Students who go directly into MBA programs from BS degree programs could be eligible for a specialized supply chain degree, depending on the institution.

With more and more goods being sold overseas, and raw materials coming from around the world, supply chain expertise now could involve foreign languages and contacting suppliers in every time zone. It’s exciting times for manufacturing as the U.S. tries to bring more plants to the country and build the nation into the manufacturing powerhouse it was for two centuries.

To learn more about operations field, see interviews with masters of operations management.

James Torter

Operations manager . com

Supply Chain management specialist

What is Six Sigma?

It’s hard to believe but the actual root of Six Sigma quality management is the bell curve, or normal curve, developed by Carl Gauss circa 1800. This curve of graphical points shows that far more of the examples in a set fall near the average (the norm), and far fewer examples are at the extremes. The key term is “normal,” because that is the basis of the ideas that became Six Sigma systems: normal should and must result in the perfect part, every time. So, under a 100-percent quality system, the most normal product of the manufacturing process is a perfect part.

Six Sigma got its name from Motorola’s Bill Smith. Intensive analysis of thousands of manufacturing processes has statistically shown that products coming off the line are expected to have six deviations from the customer’s expectations per million parts made. Sigma is a statistical symbol Smith used to name the process, which is based in these statistics.

In the mid-1980’s, Motorola refined the system for manufacturing, which is the subject we will stay with, but it has spread in the last 25 years into all divisions of business: finance, sales, customer service, logistics, reverse logistics and accounting.

Briefly, Six Sigma involves teams within (and often outside) the company finding errors in manufacturing and defects in products, and then defining why and how they happened. These teams or others then seek ways to stop or greatly reduce those circumstances from happening again. The goal is 100 percent defect-free products, which is impossible in reality but can be nearly achieved in short-run situations.

To incorporate Six Sigma, businesses gat key personnel trained in the basics, then assign individuals to get more advanced experience and training. Once trained, employees begin the process of implementation. Companies can hire Six Sigma professionals to integrate the system into the company’s manufacturing. This saves a lot of employee hours. Companies can also have a Sigma management team of their own workers whose responsibility will be to integrate the system and train other employees.

The quality system is not easy to implement. Like Total Quality Management and Zero Defects, Six Sigma in manufacturing depends on every employee buying into the idea and conscientiously looking for ways to improve his own work. Six Sigma tactics define “customer” as any person receiving the product at any stage, which includes the next employee down the line. The customer is therefore involved in total quality refinement as well.

In manufacturing, systems are not concerned only with quality but with reducing costs and operations, or becoming lean. This lean manufacturing must be incorporated with Six Sigma, not vice versa. Quality incentives, with a background of total quality management, must start with Six Sigma thinking. Six Sigma and lean manufacturing are now being integrated as one main objective for factories throughout the world.

All quality systems are based on statistical or historical achievements from past manufacturing incentives. As the quality of tools themselves, then electronic matching and finally Computer Aided Design and Manufacturing began to provide better products, customers began to expect then demand fewer defects. Six Sigma is one of these processes developed to make companies more competitive each year, while they improve each year.

Learn more about operations management in Interviews with Operations Management Masters.

Kyle Bergins

Six Sigma Expert

The Operations Management MBA

Many people believe they can be more effective and more comfortable in management if they get a Masters Business Administration (MBA). Having completed a bachelor’s degree in one of many possible business disciplines, many people go right into the workforce and many go right to a master’s program.An Operations Manager (OM) is responsible for the processes a business uses to produce and finance its goods and services. In many cases, there is a plant process manager and a business or fiscal manager. This divides responsibilities into two areas: production and monetary, the latter including sales.

MBA curricula offer courses that intensify the knowledge a candidate gets from the bachelor track. The most common OPMBA is the production track. This person leads a department, plant or entire company in the production and flow of goods and services. Every candidate for OPMBA will have completed core business courses in undergraduate school. This MBA is an exciting career choice because the management of flow is one of the explicit areas through which companies are trying to gain a competitive advantage. They are using two key components (among others) to bring their businesses to the top: going global and going green.

Globalization means the MBA student might include international logistics, foreign languages and Eurasian manufacturing in his or her curriculum. Every large company involved in imports or exports needs to expand its knowledge of these critical 21^st century business environments. All this information helps companies design and develop products for sale in a global market. Be sure to take courses in international import and export law.

Companies that can combine the newest technologies for manufacturing with the latest green technologies are gaining ground in the eyes of an increasingly “environmentally aware” buying public. The MBA candidate can now become involved in alternative energy industries, developing a better wind turbine or more powerful electric car. The OPMBA can also get involved in making fossil fuels safer and cleaner, another key feature of green companies.

As far as manufacturing is concerned, each plant is a microcosm of the environment itself: people are working and eating in a building where every kind of manufacturing process is going on. Safety, reliability and health concerns are all at the bottom of “the greening” of industry. Every operation in the plant plays a role in helping to eliminate waste and use resources more wisely. Keeping machinery maintained and electrical systems up to date are some of the responsibilities that could be assigned to an operations manager.

For those planning a career in manufacturing, universities offer BS degrees in several major plant functions, including a degree in manufacturing engineering. Schools like the University of Michigan offer special MBA programs. One is the MSOP/MBA master’s degree combining, officially the Master of Science in Manufacturing Operations / Master of Business Administration. Coursework for these includes a heavy dose of worldwide logistics and lean manufacturing, and perhaps Six Sigma training.

One big consideration for an MBA is taking a wide outlook and talking to people with a lot of experience in your chosen field. Don’t think five or ten years out, try to think twenty-five out and more. While formal education can never be a bad thing, certain people are “more right” than others for pursuing advanced manufacturing degrees. In addition, studies has shown that MBA increases life time earnings by 20-30% in comparison to BA degree. Therefore, it can be a smart investment.  Here is a link to our recent article on MBA and its effect on earnings vs experience.

Kriss Williams

Operations Manager.com Education Specialist