Operation Management Decisions

The main purpose of this report is to study Operation and Total Quality Management knowledge in real situation. The scope includes how critical operations management decisions are made in a company, how competitive advantage is achieved through operations strategy in the company and lastly, how quality of outputs is ensured in that company. The object of study that has been chosen is a Japanese manufacturing company, Mandom Group, with its flagship brand, Gatsby. Mandom specializes mainly in manufacturing hair- and skin-related products, as well as perfumes and deodorants. Its business has expanded into international markets across Asia.

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The company has a range of marketing brand names, among which Gatsby is the most successful one with hair styling products for men. Therefore, the study will only focus on the operation of hair wax products of Gatsby. As trends and lifestyles change, the needs and wants that consumers have for products also change. Thus, Mandom has a systematic product design process which starts with efforts to understand consumer troubles and dissatisfactions. This job is done by marketing department through exhaustive market surveys into consumer lifestyles, awareness, preferences, and dealer feedback.

After that, a product development team consisting of representatives from R&D, production and marketing department will get together to design the product. The design of product is based on ideas derived from needs and wants discovered through surveys, incorporated with the company’s inherent environmental and quality requirement concepts. The 3Rs concept addresses environmental issues and is used in product design to reduce an adverse impact on the environment, complemented by ease of use. The quality requirement emphasizes product functionality, effectiveness and usability to deliver customers satisfaction.

This concept covers every aspect of the product from content formula to package design. The R;D department is consistently researching for new comfortable materials and ingredients and accumulating latest technology for further use by collaborating with universities and external research bodies. The research results are used in a prototype of the new product, together with a detailed specifications. The prototype is then reviewed through design meetings and tested on quality, safety and whether it applies directly to the troubles and dissatisfactions that consumers have before its mass production.

After the product is on sale, Mandom will implement verification as the last part of the product design process to research customer satisfaction level and collect feedback for further improvement. For Mandom, services are important to customer satisfaction. Although the company has no immediate interaction with consumers, it has approaches to ensure that customer services are provided. The company strives to get maximal possible shelf space at every outlet for consumers to easily see, and cooperates with retailers to ensure that customers are familiar with the product specifications and how to use through in-store and online presentation.

It also collects customer feedback via stores to design better services. On top of that, Mandom has been publishing videos, posts through various channels to provide customers with tips and techniques in using its products. This service delivery system serves as the reason why Gatsby becomes so successful. According to the 2008 annual report, Mandom produces about 800 million products every year at its 3 production sites. Evidently, the company unitizes a product-focused manufacturing process to produce goods at high volume for a long timeframe.

Because it is the company’s objective to supply safe, high-quality products at reasonable prices to as many consumers as possible, Mandom has established mass production technology to enable stable high volume production, with the same quality as products formulated at the research stage. The company has built integrated, automatic production system, which includes an aerosol line and covers everything from content filling to finishing and packaging, as showed in the picture. At present, it is seeking to shift some of its outsourced manufacturing processes in-house to cut costs.

The company seek to improve productive capacity using technology. This will result in further cost reduction as an increased production lowers fixed cost and thus increase efficiency. Also, this will allow prompt response to market and help avoid stock-out situation. In the future, Mandom will continue to upgrade the process by capital investments made in stages on infrastructure development to support increase in production. These projects are expected to increase the annual production capacity to over 1,000 million units.

At Mandom, it is believed that a business is only as good as the people who work for it, and its personnel are its key resource. To this end, Mandom has a personnel planning system in which organizational needs are balanced with individual capability. The system is based on the yearly business strategy and generates personnel needs for each function with Mandom. The personnel department collects information to perform job design in which production efficiency and compensation are considered. For example, the factory workers is important for production, but this job has a relatively high turnover.

Therefore, personnel department has to analyze work time needed to meet operation strategy and consistently recruit to ensure labor supply. The job design for factory workers is linked to expected production, work time needs, wages and incentives, specific skills and is the basis for achieving operation efficiency. So far, Mandom is developing a training system whereby workers themselves can choose and learn skills that they consider necessary for their daily work. The training program comes with clear preliminary instructions on what skills sets are required for different career and roles and what course employees should pursue.

It includes courses in fields such as marketing, finance, practical techniques, etc. and seminars with internal or external professionals to identify organizational and operational issues. Also, Mandom creates opportunities for employees to consider their life plans, and strives to adapt to a changing social context and diverse employee lifestyles to create worker-friendly environments, where employees would throw themselves wholeheartedly into work. For instance, employees are allowed to take childcare leave, family-care leave, or work more according to their particular needs. This way, flexibility in working hours is achieved.