Strategic Operations and Quality Management: A Case Study

This report analyzes the operational and quality management challenges faced by Toys (Cyprus) Ltd., a company experiencing declining profitability and increased sales returns. It discusses strategic frameworks for operations and quality management within a global business environment, focusing on methods for designing and managing operations and supply chains. The report provides suggestions for applying operational improvement concepts, such as buying cheaper materials, working to industry norms on defectives, and implementing Material Planning Systems (MRP) and Just in Time (JIT) inventory management. Additionally, it explores the role of operations within different business models, including ABC Analysis and Enterprise Resource Planning (ERP), to enhance efficiency, reduce costs, and improve customer satisfaction. The goal is to assist the company in mitigating losses, enhancing product quality, and improving its overall operational effectiveness.

Running head: Operations and Quality Management
Operations and Quality Management

Operations and Quality Management 1
Contents
Introduction.................................................................................................................................................2
Strategic Frameworks of Operations and Quality Management within a Global Business Environment.....2
Methods Related to Designing and Managing Operations and Supply Chains in Toys (Cyprus) Ltd..........3
Suggestions regarding the application of Operational Improvement Concepts............................................4
Role of Operations within Different Business Models/Functions................................................................6
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9

Operations and Quality Management 2
Introduction
Operation Management can be defined as designing and monitoring the procedure of
production and business activities in the creation of goods and services. It is accountable to make
sure that fewer resources are utilized in the business with maximum returns in terms of
profitability and customer satisfaction. It is related with the entire process which transforms input
into output. Operation and Quality Management is concerned with the creation of goods and
services, managing the quality and ensuring that the business uses fewer resources to produce
maximum returns resulting in satisfied customers and higher profitability (Majukwa & Haddud,
2016).
In the given case, Toys (Cyprus) Ltd. is facing with the problems relating to decrease in its
profitability and higher cost of production. Also, it has been confronted with the issues
concerning to the higher sales returns resulting in loss of goodwill and reputation of the firm .In
this essay, problems faced by the company in its inventory management techniques and
procedures adopted by it to face sales returns shall be discussed. Also, suggestions related to the
improve its operational concepts to mitigate the losses would be mentioned in this essay.
Strategic Frameworks of Operations and Quality Management within a Global Business
Environment
Operations Management is concerned with converting inputs into outputs. It manages the assets
of the company to create and deliver products and services to its customers. Operations and
Quality Management is an important component of the organization as it transforms input into
output and monitors the quality of the goods and services delivered to the clientele of the
company. It exists in the core procedures of the organization as it regulates the system of
operations. Also, it manages the creation , management and improvement of the production and
sales procedures of the company ,so that it can fulfill its motive of maximizing profits with
utilizing fewer resources with the aim of satisfying customers thereby increasing the goodwill of
the company (Ganapavarapu & Prathigadap, 2015).
The Operations and Quality Managers have the responsibility to be accustomed with the
objectives of the firm and work accordingly to monitor aspects such as enhancing the quality of
the products, speed of production, flexibity in its processes for creating customized goods and

Operations and Quality Management 3
services on the demand of its customers and lowering the cost of production to maximize the
profits of the company.
In the given case of TOYS (Cyprus) Ltd, the company is facing the reduction in the profits
especially in its education segment of business and higher sales return due to defective products.
The role of Operations and Quality Management plays an important role in improving its
procedures. In this context, Total Quality Management plays an important role in delivering
quality products to the customers speedily. In implementing this procedure, all the members of
the organization participate in the improvement of the processes, products and services and the
work culture in which they work (Stevenson, 2015).
The Total Quality Management (TQM) can be described as the management strategy which
involves all the work force in the development of the organization. It utilizes the information,
and strategies of the company to improve its processes for mitigating the losses and working
towards profitability. It is in continuous dialogue with the stakeholders of the company to
assimilate the quality discipline into the work culture and the activities of the company. There
are various techniques used in Total Quality Control (TQM) such as Statistical Quality Control,
Acceptance Sampling plans and Off-Line Quality Control (ESSEC Business School, 2015).
The objectives of Operations and Quality Management are to increase the company’s
profitability by making the goods which are accepted by the consumers and to minimize the
company’s cost by reducing the losses incurred by selling defected goods.
Methods Related to Designing and Managing Operations and Supply Chains in Toys (Cyprus)
Ltd.
As Toys (Cyprus) Ltd. is facing with the problems of lower profitability and higher sales
returns, thereby affecting the reputation and goodwill of the firm. It is also facing the problem of
blockage of funds in its working capital leading to higher cost of production thereby decreasing
its profitability. The following is the process of its operations management and supply chains of
Toys (Cyprus) Ltd:

Operations and Quality Management 4
The process starts with procurement of material from the suppliers. The company purchases its
raw materials from the suppliers at a higher price than its competitors. It leads to higher cost of
raw materials to the company. Then the next step is followed by manufacturing the products and
retaining the semi-finished goods in the warehouse. It leads to blockage of funds and higher
working capital requirements for the company. The third step is transferring the finished goods
to the Sales and Quality Control Department. The Sales Manager should appoint the workforce
to check and implement the quality controls to evaluate whether the products are suitable for sale
or not. Due to lack of proper quality control mechanisms, the company is facing higher sales
return thereby decreasing the profitability of the firm. Also, it is facing higher cost of production
due to blockage of funds in the working capital. It thereby keeps the sale price of its products
higher, resulting in lower retention of its customers. Also, outdated machinery is a major
component contributing in producing fewer goods at a higher rate thereby decreasing its
profitability and lower retention of its customers (Bromiley & Rau, 2016).
Suggestions regarding the application of Operational Improvement Concepts
To minimize the problems of low profitability, higher cost of production and blockage of funds,
the firm can choose the strategies proposed by the company’s accountants which are as follows:
1. Buying cheaper components and materials: The purchase department can buy the raw
materials from a wholesale supplier in bulk. It will help the company in buying raw
materials at a lower cost.
Suppliers
Warehouse
Finished / Quality
goods Control
Process
Sales
Department

Operations and Quality Management 5
2. Working to industry norms on defectives and acceptance levels: As suggested by the
company’s marketing manager, the faulty goods can be replaced with the new toys.
Also, the defective toys can be sent back for repairs and sold at a discount. This
would increase the sales of the company without appointing extra staff. Furthermore,
Toys (Cyprus) Ltd. can work upon its Sales and Quality Control department by
appointing personnel for quality checks of the finished products. If they don’t meet
the specified benchmarks, they should be sent back to the warehouse for repairing and
resale.
3. Denying the liability and resisting compensation by replacement of defective
products: The policy must be adopted for shipping and transportation charges which
should be borne by the customers, so that the liability of breakage or damage can be
transferred to them instead to the company (Ziukov, 2015).
Some of the other strategies proposed to increase the sales and effectiveness of the
company are:
1. Material Planning Systems (MRP): It is a production planning, scheduling and
inventory control mechanism which is used to regulate manufacturing processes. It
also helps in planning from where to procure the raw materials at a lower cost and the
entire manufacturing processes and delivery schedules (Plinere & Borisov, 2015).
MRP System
2. Just in Time or JIT: It is a strategy which aims at increasing the effectiveness of the
business and decreasing the blockage of funds in working capital by procuring the
material only when it is required in the production. So, Toys (Cyprus) Ltd. can adopt
JIT to avoid blockage of funds in its working capital to lower its cost of production.

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3. Gantt chart: It was founded by Henry Gantt; it is a commonly used technique in
project management to project certain tasks or activities against time. Towards the
left side of the chart, there are certain activities or processes displayed and
corresponding to them on the right side, their scheduled time scales are shown. In
the Gantt chart, every activity is depicted in the form of a bar, the start date ,end
date and duration of the activity is shown by the position and dimensions of the
bar diagram. It will help the management to review the organization’s planning
activities, their end and start date and their duration (Barwa, 2015).
Gantt chart
4. Time Schedules: It is a method which is used to set a particular time based on
continuous observations of one employee taken over a number of cycles which
comprises of all the components of the job. However, it is essential for Toys
(Cyprus) Ltd. to inform each employee about the time study of the job (Freestyle
Solutions, 2015).
Role of Operations within Different Business Models/Functions
The Operations Management plays an important role in contributing to the success of the
organization. It helps the company to achieve its goal of profit maximization and customer
retention. There are various methods of Operation Management which assists the organization
towards producing better outputs with fewer inputs. Some of them are:
1. ABC Analysis: According to Kiyak, Timuş & Karayel (2015) it is an inventory
categorization methodology which bifurcates the raw materials into three categories viz

Operations and Quality Management 7
A, B and C. A being the most valued item and C being the least valued one. An item
account for the highest consumption value with the lowest account of the total inventory.
They comprise of 10-20 % of the overall inventory. On the other hand, C items comprise
of the items of lowest consumption value. They account for 15-20 % of the total
consumption value with 50 % of the total inventory items. B is the mediocre items which
comprise of 15-20 % of the annual consumption value with 30 % of the total inventory
quantity. The annual consumption value can be calculated by (Annual demand) x (item
cost per unit).
Hence ABC Analysis has a crucial role in the procurement of the raw materials and its
accounting (Kolińska & Cudziło, 2016).
2. Enterprise Resource Planning (ERP): It is a set of tasks which assists the organization to
manage its business. ERP merges all the processes of the business into one software
thereby facilitating the flow of information within the company so that the decision
making can be easier with the procurement of the desired data (Jinno , Abe &
Iizuka ,2017).
So, the Operations Management integrates all the business processes and assists the organization
in its smoother working regarding the accomplishment of the goals and objectives of the
organization.

Operations and Quality Management 8
Conclusion
So, to conclude, Operations Management focuses on all the aspects of the processes of the
business. It is concerned with providing goods and services to the customers of the organization.
It is related to the functions of the management, i.e. planning, organizing, staffing, coordinating
and controlling. All the components of Operations Management are concerned with
comprehending the goods and services, their location and quantity with respect to the customer’s
necessities and demands. Also, it is assigned with the task of selecting the best technology and
product designs and procuring the best raw materials at low prices to design the products
according to customer’s demands and to attract them by selling the products at lower prices (Li,
2014).
Operations Management is also responsible for planning the necessary workforce and their hiring
and training. Its focus is on adopting latest technology to improve the productivity and to
decrease the cost of production and the flexibility to meet the changing demands of the
customers. Its role starts from product designing which is related with the product development.
It should be designed in such a way so that it meets the changing demands of the consumers at
lower prices to mitigate the competition faced by the firm (Skripak, 2016).
Also, systematic planning is necessary to decide how the management uses the available
resources to deal with various situations. Operations Management plays an important role in
planning the entire process of the product creation or delivering of the services to the consumers.
It is also responsible for managing the workforce which is an important part the successful
operations. Operations Management helps the management through better planning and
scheduling of the work force .It helps them in better performance through proper training,
leadership and work culture (World Bank, 2017).
It also helps in coordinating amongst the various processes to deliver the best quality products
and services to the customers of the company. So, Operations and Quality Management can
assist Toys (Cyprus) Ltd. in managing its processes in a better way to maximize its profits and
minimize its cost of production.

Operations and Quality Management 9

Operations and Quality Management
10
References
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Implementations for Company’s Growth.
International Journal of Economics, Finance and
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Bromiley , P. & Rau, D.(2016) Operations management and the resource based view: Another
view.
Journal of Operations Management.41(2016),pp.95-106.
ESSEC Business School (2015)
Operations Management Department [online]. Available from:
http://m.essec.edu/media/faculte-et-recherche/departements/presentation-management-
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Freestyle Solutions (2015)
Inventory Management For Online Retailers[online]. Available from:
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Analysis and Optimisation of Inventory in Enterprises
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11
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