Quality Awards

Prizes awarded for quality performance and excellence achieved by an organization. Awards winners are
allowed to use the logo on the promotional literature of the organization. The basic aim of the award to align
the workforce and help accelerate the pace of growth of the organization. In the event of organization not
winning the award, a feedback is provided for the improvement of the organization for better performance
on the eligibility and performance criteria of the award for the next time of participation of the organization.
The qualification of an organization for the award is based on the assessment of the applicant’s performance
against the specified criteria of the award. The main objective of the quality awards is to encourage the
organization to adopt quality management principle. The objective of these award categories are mainly to
enhance TQM awareness and acknowledge the users of excellent application of TQM principles. It provides
the user information about its strength and area of improvements. It encourages the organization to
introduce quality management improvement process. It helps organization stimulate information on
successfully deploy quality strategies and on benefits derived from implementing these strategies.
The component of awarding include Application process from the organization which include both
Government as well as Private sectors and based on the eligibility both manufacturing and services sectors.
The second component is scoring system which determines the level of quality leadership attained and area
of strengths and weakness of an organization. The last component is Examination process which defines
how the organization are evaluated and how award winners are selected.
In general, there are 15 National level and 3 International level award categories which includes awards on
Corporate Social responsibility, corporate excellence and Sustainability. The major Quality awards are
namely

Quality Awards Country Administering Organization

Deming Prize Japan Japanese Union of Scientists and Engineers(JUSE)

Malcolm Baldrige Award USA National Institute of Standards and Technology

Canada Awards for Canada Excellence Canada

Excellence
 EFQM Excellence Europe European Foundation for Quality Management (EFQM)
Award

Rajiv Gandhi National India Bureau of Indian Standards

Quality Award

Golden Peacock Award India Institute Of Directors (IOD)

IMC Ramakrishna Bajaj India IMC Chamber of Commerce & Industry

National Quality Award

Rajiv Gandhi National awarded by Bureau of Indian Standard and Golden Peacock Award awarded by Institute
of Directors are few of the major national level quality awards.

Sales and Operations Planning

Aggregate Planning
This section mostly focus on the operational, tactical and short-range planning. Long-range planning consist of
planning for 2-4 years of span. Intermediate range include 3 to 18 months of span but of most of the
organization practice it for at least 12 month period. In general language, it is known as budgeting or annual
budgeting while in technical term, it is known as Sales and Operational planning (SOP). Most of the Software
companies exercise this process once in their finance year depending on the period of Dec-Jan or Apr- Mar.
Invariably, whenever the SOP is to be started, the SOP is completed minimum 2 months before to provide time
for change necessary before to implementation of SOP. The SOP is also known as aggregate planning.
Along with the SOP, rolling of the Long range planning is done. For example, when SOP was rolled out in the
year 2017, the long range planning was done for the year 2020, but when the SOP is rolled again in 2018, the
long range planning was rolled further to 2021 invariably for all the companies. We will not go the process of
explaining long range planning as it was discussed in details in earlier classes, rather we will focus on the
immediate range planning. After immediate planning , it is divided into further two processes , first short range
planning for the manufacturing and secondly short range planning for the services which one provide . Short
range planning for manufacturing is definitely production scheduling and for services sector, it is management
scheduling or manpower scheduling which may be repetitive or one time.
Now the big question, why Intermediate range planning is required. Intermediate range planning is mostly
applicable to Job shop and batch processing of manufacturing sector. It is applicable to mass production but
only when the process is simple. During the earlier class on long range planning, we came to know about the
capacity. We use the long range demand forecast as input to calculate the capacity. The accuracy of the long
range plan is not that good to use for the annual or 12 month forecast. So by bring down the span of forecasting,
the accuracy can be improved. So for a 12 month forecasting, we invariably go for a quantitative forecasting
may be time series or regression. In long range, both these methods are mere helping methods but the methods
followed are rather subjective. In long range planning, the unit of forecast is year, so it is demand for the year,
though it is output daily or output daily but it is mostly termed as annual demand. So, when we calculate for the
intermediate range, unit of the forecast is month. In long range, the capacity is output per day or unit is per day
but when we come to intermediate range, the unit is monthly demand. Monthly demand is not annual demand
divided by 12 in most of the cases invariably for every sector.
Taking an example of Corporate hospital , the monthly demand was considered flat which is a wrong notion as
the demand had seasonality and it depends either on the availability of the product or the usability of the
product. Very few products are there where the demand is uniform like sugar and salt, most of the product has
component of seasonality in their demand or fluctuating demand.

Is the capacity varies monthly or it remains constant?

It remains constant depending on the investment and it only depend on the demand of the product. One sets up
the capacity at the best operating limit. The capacity of the month depends on the working days of the month.
So monthly capacity = production per day * No. of working days
Capacity is always physical capacity but the irregularities are not predictable in nature like breakdowns are
unpredictable but some preventive maintenance or shutdown can be planned or take place on some months.
Like in the month of May, the capacity is more than demand but in the month of Apr, the demand is less than
Capacity. So, how to plan to meet the demand of every month keeping in mind the capacity. Here intermediate
range planning help in planning the demand forecasting. In the beginning of the year, the monthly demand is
planned keeping in mind the monthly capacity of every month.
If the capacity is constant every month, there is no problem in achieving the demand but if the capacity
fluctuates every month, how to achieve the desired target. Rather on focusing on daily capacity unit, it is better
on monthly capacity planning to achieve the desired output.
Whether we can increase capacity on short range or not when the demand is high or less?
For example, a hotel has a banquet hall which stay overbooked during the marriage season and the seasonality
last for 3 months. It requires staffs for service during that period but rest of the year, the hall is underutilized,
what will the hotel management do in this situation?
Hiring contractual staff may be substitute but the level of skillfulness is questionable, also hiring contractual
staff is not so easy due to compliance issues. So the variables available to one for minimizing the cost through
proper utilization of resources. The easiest way is to maintain the inventories. Rather than underutilizing the
resource, better to produce up to mark and keep the extra inventory as reserve for use on next month when the
demand is more than capacity. The other variable available is make the workmen to work overtime to increase
the capacity though one has to pay overtime cost. Another way is plan another shift by hiring extra people.
Another way is to outsource to another party but still there is a fear of quality and disclosure of trade secret.
Last option available is a back ordering which mostly prevails in B2B sectors. This is also known as negative
inventory. In this option, the producer do not have the capacity to produce as per demand from the party and
request the party to supply rest of the demand in upcoming months. The producer may have to provide some
discount from his side to retain the party from going to another producer for supply of product.
For a company producing variety of product like a company making drinking water bottles like 1L, 2L, 5L, and
etc. How does it establish capacity planning? Aggregate the unit of demand to unit of capacity. It cannot be 20
boxes of 200 ml or 50 boxes of 500 ml. The common unit of capacity is litres of water to which one need to
convert and the demand is based on SKU. Manpower can change and policies can be based on subcontracting,
overtime, inventory level and back order. The various cost considered are wages, overtime rate, rate of extra
shift, cost of subcontracting, back ordering, inventory cost, cost of extra recruitment, compensation, etc.

Strategy
1. Peak Demand Strategy: - Very costly, predict it to few areas, e.g., operations in disaster management, F1
racing.
In manufacturing sector, adopted where there is a very niche products are sold where one cannot afford
to lose contract.
2. Level Production: - Daily product along with standard demand (average demand). Inventory is produced
and retained if demand is low and next month the extra inventory is passed on.
3. Chase demand :- Whatever is the demand , one produce that much , where cost of inventory is very high
4. Mixed Strategy :- Wherein the carrying cost is not very high , not very low , one decide for month to
month basis
Planning Techniques (Solution Methods)
1) Graphical / Charting (trial and error method)
2) Mathematical modelling (Linear simulation /programming model)