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Internal Operation Management

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    Best Practices Dell – Dell Chemicals Management Program Dell, one of the major computer makers in the world, has responded proactively and systematically to both increasing global legislative on the use and management of hazardous substances and increasing consumer awareness. Dell’s Chemicals Management Program not only complies with upcoming as well as existing legal requirements but also meets key stakeholders requirements, which often turn out to be tougher than the legal standards.

    Dell’s ‘Chemicals Use Policy’, last updated in December 2005, clearly re-enforces its precautionary measures to eliminate substances of concern, by (1) maintaining a ‘Restricted Substance Program’ which includes more than 50 substances and compounds, (2) tight management from the outset of the product design process to the supply chain, and (3) actively seeking viable alternative substances.

    The Chemical Use Policy also demonstrates Dell’s commitment to eliminating all remaining uses of brominated flame-retardants (BFRs) by 2015. As for polyvinyl chloride (PVC), the material is already on the Restricted Use List and a phase-out plan will be annually reviewed until it is completed. Samsung Electronics – Identification & Management of Target Substances Samsung Electronics has a firmly established, so-called “product environment” strategy, under which its policy on target substances is carefully managed.

    Its policy on the use and phase out of target substances is well detailed in a list called ‘Identification and Management of Target Substances’ and the Samsung Electronics Standard for the Control of Substances with Environmental Impacts within Products (SEC Standard 0QA-2049, latest updated in September 2006). The list identifies substances, categorized as Class III, that are not yet restricted by law but whose use in Samsung’s products is monitored and reported by suppliers in order to develop appropriate measures for future restrictions and phase out programmes.

    PVC and brominated flame-retardants (BFRs) are representative examples as Class III substances. The company has set targets to completely phase out PVC in all applications from January 2011. Although the company has made some progress, Samsung is still identifying the most suitable alternatives for each application and plans to eliminate use of BFRs as of January 2010. Meanwhile, the company has not yet announced plans on phthalates and chlorinated flame-retardants. SC Johnson and Son, Inc – GreenlistTM: Using Responsible Materials

    SC Johnson’s GreenlistTMprocess is a good example of how a company whose products are based on chemicals ingredients can systematically address their impact on human health and the environment and how to manage the risk profile accordingly. The GreenlistTM was developed in 2001 to formalize the classification of raw materials used in the company’s products based on the impact they have on the environment and human health with a rating from 3 to 0 – 3 being “Best”, 2 “Better”, 1 “Acceptable” and 0 “Restricted”. It provides ratings for more than 95 percent of the raw materials the company uses.

    The company believes that the GreenlistTMprocess enables it to track the environmental profile of their raw materials used with the scores provided and set new goals. Equally important, SC Johnson has been able to use insights from the GreenlistTM process to identify and promote ingredients that are more environmentally sustainable in its supply chain. This allows consideration of more sustainable resources, including renewable materials, and helps identify suppliers that demonstrate a higher level of environmental responsibility.

    Sony – Management Regulations for Environment-Related Substances in Parts and Materials The global nature of Sony’s markets and its extensive supply chains and instances of sales loss in recent years have urged the company to enhance its management systems to facilitate the control, reduction or elimination of a range of hazardous chemical substances. Sony has established its own global standards called “Management Regulations for Environment-Related Substances to be controlled that are included in Parts and Materials” (SS-00259).

    SS-00259 has been established taking into account all applicable local and regional laws and regulations and has been applied to all Sony products globally, including its supply chains from their procurement processes (under Sony’s Green Partner Environmental Quality Approval Program & OEM Green Partner Environmental Quality Approval Program). It is also noteworthy that the Sony group considers chemical substance management as an important part of the quality control/quality assurance processes. Sony has continued to seek technologically and economically viable alternatives to certain materials and substances, such as biobased plastics.

    It has succeeded in eliminating PVC from packaging materials and is striving to gradually replace PVC used in other areas. As for brominated flame-retardants (BFRs), it is working towards eliminating them from its products, and BFRs-free PC models were already starting to be released as of the 1st and 2nd quarters of fiscal year 2006. Wal-Mart Stores, Inc. – Preferred Chemical Principles In a move to drive the development of more sustainable products, Wal-Mart revealed its chemical policy for product ingredients in October 2006.

    The company established its “Preferred Chemical Principles” as a clear set of preferred chemical characteristics for product ingredients. The first three of these priority chemicals were selected via meetings with suppliers, NGOs, government officials, academics and experts in the field. These three include two pesticides: propoxur and permethrin (both used in household insect control products) and an ingredient in some cleaning products: nonyl phenol ethoxylates. Wal-Mart plans to expand the initiative to 17 additional chemicals that will be required to meet the Wal-Mart Preferred Chemical Principles.

    The company adopted a three-stage process to drive innovation and inspire suppliers to find substitutes or new product formulations for chemicals of concern. The three stages include: * Awareness – where suppliers will be given a period to identify for Wal-Mart any of their products that currently use one of the priority chemicals as ingredients, * Development of an Action Plan – where suppliers communicate to Wal-Mart their plans regarding the Priority Chemicals in their products, and recognition and Reward – where Wal-Mart acknowledges the suppliers who participate in this effort

    Six Sigma – GE Six Sigma implementation at General Electric started with a heavy emphasis on training the workforce for data-based problem analysis. GE required all exempt employees to undertake a 13-day, 100 hour training program in Six Sigma methodologies and complete a Six Sigma project by the end of 1998. The training covered the DMAIC procedure: •Definition or identification of the process •Measurement of process output •Analyzing process inputs for criticality •Improving process by modifying inputs •Controlling process by controlling the appropriate input

    Employees completing the initial course went through follow-up training to reinforce these newly acquired skills. Mentoring The success story of Six Sigma and GE would not have been possible without GE’s system of mentoring programs. Full-time Master Black Belts, hired specifically for implementation of Six Sigma, led the process change. Each Master Black Belt trained and mentored key process employees for the Black Belt level. Employees selected for Black Belt underwent four-month training and applied Six Sigma tools at work under the guidance of the Master Black Belt mentor.

    GE soon deployed full time Black Belt teams to implement Six Sigma projects throughout GE. Part time project leaders or employees who received Six Sigma training that were placed on Six Sigma projects only became Green Belts. Leadership General Electric’s experience in the implementation of Six Sigma shows that the best of training and mentoring efforts would crumble without effective leadership. Jack Welch, GE’s CEO supported the Six Sigma initiative not just with the necessary financial resources, but also through securing vital commitment from both the senior executives and the workforce.

    Welch linked promotion and bonus to quality improvement. Forty percent of each top management bonus depended on the successful implementation of Six Sigma goals and a Green Belt became the minimum requirement for the promotion of any employee. Jack Welch and other top management, most notably Dave Cote, President, and CEO of GE Appliances followed a hands-on approach to Six Sigma and led from the front through the following methods: •Spending time in Six Sigma Training sessions and personally answering questions for employees undergoing training •Surprised visits to Six Sigma review sessions Work-floor visits to make first hand observations on the extent of Six Sigma implementation at the workplace •Weekly summary reports and monthly reviews with the Master Black Belt team. Focused Implementation One major reason for the success story of Six Sigma and GE is the focused approach toward implementation. GE’s three time-tested implementation approaches are “Show Me the Money,” “Everybody Plays,” and “Specific Techniques. ” •Show Me the Money – GE approaches Six Sigma with a focus on the bottom-line.

    The need to cut costs in a competitive price-sensitive marketplace made GE apply Six Sigma to remove workplace defects and improve productivity, besides improving product quality. •Everybody Plays – Much of GE’s product lines are comprised of many outsourced parts. GE understood the need for the supplier to participate in the Six Sigma initiative to make the product fully Six Sigma compliant and invested in bringing the suppliers to Six Sigma. •Specific Techniques – GE cultivated the art of ranking projects and aligning them to the business goals through Six Sigma tools such as the process map.

    Conclusion Application of Six Sigma at General Electric brought a marked culture change in the attitude of individual employees toward quality, translating into dramatically lower service-call rates, and improved product reliability. The Six Sigma effort at GE contributed $700 million in corporate benefits in 1997, just two years into the program. From a small beginning to improving product quality by reducing defects at the workplace, the scope of Six Sigma at GE has expanded over the years, and today Six Sigma’s customer focused, data driven philosophy defines how GE works

    Six Sigma – Health and Hospitals Corp. (HHC) Health and Hospitals Corp. (HHC) in New York City undertook a cost-cutting initiative, hoping to reduce waste in areas such as inventory. Before Six Sigma implementation, supply inventory was typically $10. 2 million. Not only was that level of supply unneeded, it was unmanageable, and often resulted in supplies reaching their expiration date before they could be used – a complete waste of money. HHC implemented Six Sigma’s just-in-time inventory principles, where supplies arrive only as needed, five days a week.

    The result was that the Inventory was slashed in half, and $5 million in savings was instantly returned to the hospital. Where the company once kept 20 types of gloves in stock, it now carries two. This single change resulted in new pricing that saves the company nearly $4 million in glove expenses alone. Another cost-savings example is the Six Sigma processes implemented at Virginia Mason Hospital and Medical Center in Seattle, Wash. Here, too, the just-in-time inventory system was implemented, to avoid over-ordering of supplies.

    In addition, staff created standardized instrument trays, so just the instruments needed in a particular procedure were opened and used. This small step kept unused supplies from being discarded, and resulted in hundreds of dollars in savings for each procedure utilizing the instrument trays. Multiply that savings by the hundreds of surgeries and procedures performed each day, and you can easily see how costs plummeted. The hospital also used Six Sigma methodologies to redesign facilities and make workflow more productive, saving $500,000 in overtime and temporary labor expenses, and boosting roductivity by 93% – all in one year. •Akron Children’s Hospital implemented Six Sigma to increase MRI exam volume by reducing wait times. The hospital had added a second, very costly MRI machine, which had not resulted in a proportional increase in the number of exams. And hospital patients were waiting too long – from 25 days to six weeks – for this important diagnostic test. After conducting a two-day Kaizen event (which aims to eliminate efficiency and waste) with a multidisciplinary team, the hospital identified the causes and developed changes that could be implemented immediately.

    Not only were MRI wait times significantly reduced, but weekly exam volume increased, adding $1. 2 million in revenue the year following the project. The Malcolm Baldrige Award The Malcolm Baldrige National Quality Award is given annually to one or two companies in each of three categories: manufacturing, services, and small businesses (with less than 500 full-time employees). It was created by law in 1987 (named after former Secretary of Commerce Malcolm Baldrige, who died in 1987) to (1) stimulate U. S. ompanies to improve quality, (2) establish criteria for businesses to use to evaluate their individual quality improvement efforts, (3) set as examples those companies that were successful in improving quality, and (4) help other U. S. organizations learn how to manage quality by disseminating information about the award winners’ programs. The award criteria focus on the soundness of the approach to quality improvement, the overall quality management program as it is implemented throughout the organization, and customer satisfaction.

    The seven major categories of criteria over which companies are examined are leadership, information and analysis, strategic quality planning, human resource utilization, quality assurance of products and service, quality results, and customer satisfaction. The Baldrige Award competition has had a marked influence on those companies who have been finalists and winners. They have achieved higher productivity, better employee relations, increased market share, greater customer relations, and higher profitability. The Baldrige Award has also had a major influence on U. S. companies by promoting the need for quality improvement.

    Thousands of U. S. companies request applications from the government each year to obtain a copy of the award guidelines and criteria for internal use in establishing quality management programs. Many companies have made the Baldrige criteria for quality their own. Some companies have demanded that their suppliers submit applications for the Baldrige Quality Award. Since its inception in 1987, companies that have won the Baldrige Quality Award and have become known as leaders in quality include Motorola, Xerox, Cadillac, Milliken, Federal Express, and IBM, among others.

    These and other Baldrige Award winners have become models or benchmarks for other companies to emulate in establishing their own TQM programs. Success Story – The Ritz-Carlton Hotel Company, L. L. C. was named the two-time winner of the Malcolm Baldrige National Quality Award by the United States Department of Commerce in 1999 and 1992. Seven categories make up the award criteria: Leadership, Strategic Planning, Customer and Market Focus, Measurement Analysis and Knowledge Management, Human Resources Focus, Process Management and Business Results.

    At The Ritz-Carlton, a focus on these criteria has resulted in higher employee and customer satisfaction, increased productivity and market share. Perhaps most significant is increased profitability. The Ritz-Carlton has aggressively extended its brand to include a spa division, a private club management division, The Ritz-Carlton Residences (condominiums), The Ritz-Carlton Club (second home alternative) and The Ritz-Carlton Leadership Center (an educational division). Total Quality Management practices have ensured the success of these divisions and the integrity of the brand.

    All employees of The Ritz-Carlton are empowered to make a difference. Using tools ranging from nine-step quality improvement teams to guest surveys, The Ritz-Carlton employees examine every process in the hotel to ensure the most efficient, customer-service driven practice is in place. Examples include: A front desk project team at The Ritz-Carlton, Osaka reduced check-in time by 50 percent. A cross-functional team from the two Atlanta hotels and the corporate office developed a guestroom child safety program, POLO (Protect Our Little Ones), in response to an increase in family travel.

    The team spent two years benchmarking children’s programs, interviewing customers, testing products and piloting the program to ensure successful implementation. A cross-functional guest recognition database called Mystique is a company-wide tool created to meet and anticipate repeat customers’ preferences and requirements. Hotel Engineers from resorts and city hotels developed a system called CARE (Clean And Repair Everything) to create the most defect-free guestrooms in the industry.

    Merging the deep cleaning housekeeping processes with the engineering preventative maintenance schedule ensures that all guestrooms are guaranteed to be defect-free every 90 days. A cross-functional team of hourly employees and managers tackled the problem of guestroom readiness when a guest checks in. Staggering the lunch hours of the housekeeping supervisors streamlined the guest room inspection process and eliminated the problem ensuring a guest’s room is always ready when he or she wants to check-in.

    Based on the results of a nine-step customer problem solving team, business and leisure travelers on The Club Level are checked in according to their specific needs. Business travelers are checked in quickly and efficiently whereas leisure guests are given the option of a more pampered check-in with champagne and a more lengthy presentation of the hotel services and amenities. A team of catering managers from The Ritz-Carlton hotels worldwide created the first comprehensive wedding program in the hospitality industry.

    After two years of surveying guests, benchmarking the competition, meeting with wedding experts and media, a five-tier program, designed to meet the bride and groom’s needs from initial telephone call to the first anniversary, was successfully launched. Fortune- Best 100 companies to work and their incentives and best work practices These are the best companies according to Fortune to work, and below you can see the most common incentives and personnel programs: Google, Boston Consulting Group, Wegmans Food Markets, Edward Jones, NetApp, Camden Property Trust, Recreational Equipment (REI), CHG Healthcare Services, Quicken Loan, Zappos. om, Mercedes-Benz USA, DreamWorks Animation, NuStar Energy, Kimpton Hotels & Restaurants, JM Family Enterprises, Chesapeake Energy, Intuit, The Container Store, Qualcomm, Alston & Bird, Ultimate Software, Salesforce. com, Bingham McCutchen, Scottrade, Whole Foods Market, etc. 1. Flex hours and/or telecommuting – Flexible hours and telecommuting was one of the main benefit consider for the employees as they both offer: flexibility and freedom for the employee to choose when and where he or she works. 2.

    Health and wellness program – Health and wellness are becoming more important in many employees’ lives, but gym memberships are expensive. One very highly appreciated perk for the employees of these companies was a wellness benefit that includes – discount to a certain gym, cash reimbursement on fitness-related equipment and classes or company athletic events. 3. Points program – Certain behaviors or successes result in a certain number of points that can be redeemed for gift cards, cash back or a variety of other items.

    As a results of this programs in some companies the teams also encouraged competition and helped to increased the participation. 4. Separate group and individual incentives – While group incentives help improve teamwork, individual incentives are more effective, as employees like to be able to control their own destiny. However, offering both was very beneficial for this companies, as they offered as separate programs 5. PTO, paid holidays and relaxation – offering the opportunity for additional free days is highly desirable for most employees.

    As opposed to only offering paid days off for sick days or emergencies, the companies set up a program where employees work to earn additional time off that they can use whenever and however they choose. Additionally, if they are unable to use the time before the year’s end, employees are able to convert it to cash on their next paycheck. 6. Social and networking events – Offering the opportunity for team gatherings and events helped build commodore amongst employees.

    Social activities boost morale and create strong bonds between team members, encouraging them to work together and perform better on the job. Employee Incentive Programs Creating an employee incentives program should be considered a key factor in any business plan to keep the employees motivated, regardless of the economic climate. Moreover, when times do get rough, a proper incentive program can keep employees focused as company changes happen all around them. The proper incentive program can keep employees from jumping ship ecause they won’t perceive the grass to be greener on the other side. The following characteristics were essential to the success in managing incentive programs: 1. Simple and easily understood. The most successful plans were based on results of three to four key performance objectives for which the managers had some degree of control. The plan objectives must be easy to understand and the payment formula simple. Operators with incentive plans that had poor or mediocre results admit they probably “overcomplicated” the program with too many details and payment provisions. . Mutually agreed-upon, achievable goals. Many operators with successful plans stated that performance goals in sales and profit are discussed with management and mutually agreed upon. The objective is to make the goals challenging, but, at the same time, achievable and realistic. Make the goals too easy to achieve and managers can get complacent. Make them impossible to achieve and managers can get discouraged and quit trying. Particularly in setting sales goals, it’s important to be realistic and come to a mutual conclusion on achievable objectives. . Cost goals based on “ideal” costs. In those plans where some part of the incentive formula is based on controlling costs, it appeared as though the most effective and fairest way to calculate the cost goals were based on an objectively determined “ideal” cost. While calculating “ideal” costs can take some time to set up, several independent operators proved it’s possible. Once it’s set up and understood by staff, it provides an accurate, reliable and fair way to evaluate management’s effectiveness at controlling those costs. 4.

    Incentives tied to “top line” improvements as well as costs and bottom-line profit. Operators with highly successful plans indicated that some portion of their incentive payment is based on improving or maintaining high levels of sales activity. One operator’s plan calls for funding the “bonus pool” with a specified amount of dollars each week based on the week’s gross sales. The higher the weekly sales, the more dollars are set aside for potential bonus payout. As sales decline, the potential bonus payout is reduced. 5. Monthly or quarterly incentive periods.

    Operators with annual programs with an annual payment cycle only appeared to have less success than those whose programs were broken down to a four-week, monthly or quarterly cycle. 6. Accurate, timely reporting. Having a reliable, speedy accounting process before putting an incentive program in place appears to be very important. Several operators noted that interest and motivation from their incentive programs suffered because managers had to wait so long to get their numbers or that they lost confidence in the accuracy of the reports/P&Ls produced by their bookkeeper/accountants. . The incentive program is reviewed on a regular basis. Many operators with successful programs reported that they revisit the terms and goals of their incentive programs at least annually to keep it relevant with current operating conditions. 8. Weekly progress meetings. Nearly all operators with highly successful incentive programs indicated they had some type of weekly management meeting to evaluate their key numbers from the previous week. The previous week’s numbers were evaluated in light of whether they were hitting their goals as established by their incentive programs.

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