Martes, Agosto 30, 2011

Communicating Across the Globe by Jolito Ortizo Padilla



Outsourcing and working with international partners has become part of every business. International and virtual project teams are more prevalent and 24-hour business requirements can mean that teams are geographically split across continents.

There are five areas a project manager needs to pay special attention to in this situation:
- Cultural dynamics in the team
- Helping the team work as a team
- Coordination of work
- Practical communication issues
- Stakeholder management

A project's success is often dependent on support of the stakeholders and their perception of its success. Having the team spread across a large geographical area can allow stakeholders to go directly to the local member of the team. Using these contacts wisely can bring stakeholder value but poor communication about stakeholders' needs and wishes can be alternative and damaging as a result. The project manager needs to help his team feed information back so all stakeholder views and issues can be considered in project decisions.

Stakeholders approaching local team members directly can also cause workloads to become unbalanced or changes to be made to products or plans without proper consideration for the whole team. The team needs a culture of general helpfulness towards stakeholders with a strong ethos of not undertaking any work that is not assigned to them. The use of change requests, change controls and issue management becomes increasingly important in these situations.

If the project team is working in South America, India and London to cover stakeholders' needs, the project manager will need to have a work pattern to cover very long days without too many long hours.

Central control can be delegated and distributed around the team but managing the work and the required outcomes of each step of the project is a coordination role for the project manager A core team taking responsibility for parts of the project is a common solution. The project manager in these teams must be excellent at planning and delegating work to ensure progress.

Managers must avoid using stereotypes in planning the team's work and really consider who has the best skills to do each task. There are advantages in the diversity of the team and the best available resource possibilities; the best people may have different perspectives. However, gaining this understanding is normally something the project manager does in person, which is more difficult when the team is not co-located. If possible , the project manager should fly out to meet as amny of the team members as possible, see where they live, get to know them and work out some different cultural approaches. Getting the team together where the project manager is based is more expensive, but allows team members to begin to understand their leader's approach approach too. From the start communication becomes much easier.

Team motivation can be difficult to manage at a distance and very easy to disrupt through misunderstanding. It can be difficult to gauge the morale of the group, pick up on cultural differences -for example, an agreement in one place is a contract but in another a basis for discussion-or see if determination is comprised of what we say, 38% of how we say it and the other 55% of what we can say when in the same space, such as body language and eye contact. Emails, reports and telephone conversations cannot convey the whole of the message unless very carefully worded when sending. Double checking what different cultural drivers are in play and guessing what tone a sentence was written in takes extra time that needs to be scheduled into the project.

Internet video conferencing can be arranged with most desktops or laptops. It is also possible to record meetings for those who can't make it and this cuts out the effort of minute-taking. Seeing and hearing colleagues helps our understanding and progress but careful attention must still be paid to mannerism, manners and language, especially where local expressions or colloquialism may mean the reverse of the more generally acknowledged meaning.



                                                                           
                                                                                                                       

Linggo, Agosto 28, 2011

My Intriguing Management Research for the year 2011 (January to July)


The Thousand Smile of my son Jol jr.
 
BOARD CAN BE BETTER

Boards of directors are supposed to be independent, but in fact they are often dependent on management for information. My ongoing research has shown that more cooperative approaches and new technologies can make directors increasingly effective as evaluators and advisers. Surprisingly little attention has been paid to the limited extent and compromised value of information sharing between companies' management and boards of directors.

Directors are entrusted with protecting shareholder interest, but they are often dependent on management for information on the very things they are expected to examine, assess and oversee, including management's performance.

Boards need to take more initiative in assessing their companies' performance, but are unlikely to be able to do so they can get relevant information whn they need it. This study on corporate governance has shown the board's ability to provide meaningful overviews and useful advice is determined by the quality, timeliness and credibility of the information it has; most boards have a long way to go in this area.

The study has,so far, come up with the three main considerations:
1. The pressures on management and boards to deal with information flow are likely to increase;
2. High-quality information is as vital to effective governance as it is to good performance; and
3. Technological solutions will dramatically improve the ability of boards to identify , acquire, analyze and act on the most relevant information.

Recent events have highlighted complex questions for corporate governance.  What are the minimum amounts and kinds of information that directors need to make prudent business judgments and effective decisions?If a potentially significant ethical lapse is revealed, directors may not be able to rely solely on information from management.


RECRUITMENT AGENCIES: KNOWING YOUR WORKERS

New research offers insights into workings of recruitment agencies. The world of work has changed; companies aim at being lean. Maintaining large full-time workforces is no longer possible for many firms. Companies in need of skilled specialist workers often do not have the staff in place to search for and hire people for short-term projects. Staffing firms that can provide companies with temporary workers have emerged as important players.

The recruitment agencies are effectively the employers of the workers;the best way to increase their profits and maintain their relationships with client firms is by establishing long term realtionships with the workers they place. That way, they are much more likely to make solid placements that will gain them a reputation for providing their clients with the best possible workers.

The research analysis revealed that firms can change higher prices and obtain higher margins when they place workers with whom they have longer relationships. The only difference between workers was the length of their relationship with the agency. In long-term relationships the firm acquires a great deal of information about the workers it places, which is invaluable in deciding how well each worker would suit a given company's needs. This translates into higher pay for the workers , encouraging them to stay with the agency;it also translated into higher profit margins for the firm.

These findings provide important insights as to how firms can increase their profits through the accumulation of private information about workers. This approach is very different from the current concentration by some recruting firms on cultivating relationships with the clients, for whom they find workers, rather than the worker themselves.


EMPLOYEES' VIEW ON TALENT MANAGEMENT PROGRAMME

New research examines the issue of talent management from the employee perspective. This will help organizations understand how best to focus talent investment and resources.

The main findings from the study:
- The vast majority of respondents said talent management programmes made them feel more engaged at work.
- The main reasons for wanting to be a participant in the programmes: the belief that the development activities offered help to people in the future , and also the hope that the programme would help individuals progress up the economy at a faster pace.
- Respondent were uncertain about the main objectives of programmes:half believed they were to help them perform better in their current job; the other half thought they were more about preparing them for a future role.
- Senior managers saw the benefits of the programme as increasing their networks; developing new skills ; and learning from a challenging experience.

Leadership support and sponsorship of talent initiatives were found to be strong across all the participating organizations. However, internally;support across divisions and between line managers was inconsistent, which could compromise the effectiveness of programmes. Organizations need to actively support peer groups present on the talent programmes. These people are often the highest performing employees across the business. They should be encouraged to meet and network beyond the programme. This will help organizations get the most out of these groups, harnessing their energy and creativity.

                                                               

Martes, Agosto 23, 2011

Dealing with challenges more creatively by Jolito Ortizo Padilla

The complexity of supply chains can present frequent problems, and the impact of these can be serious if they remain unresolved. We can significantly help our career progression by developing range of approaches to problem solving and honing them through practice.

First, we need to consider the words we use. "Problems" are things such as the car not starting when we are late for work. They arose negative emotions -anxiety, fear, trepidation, and pessimism. Problems at work must be viewed as "challenges". These carry more positive responses such as excitement, can do, will do, optimism and openness.

Second, when confronting a challenge be aware of your own assumptions. Must there be a complex resolution for a complicated problem? Does the challenge require an immediate fix or can we find time for more comprehensive resolution?

Be specific. Challenges arise in all shapes and sizes, so define exactly what it is. The more specific we can, the more focused our approach. A supplier failure due to specific machine breakdown is less so as it immediately focuses our attention on the most critical element requiring attention.

Perhaps the challenges is a complex set of circumstances. In this case we need to approach by breaking it down into its constituent elements. By doing this we will be able to better define the resources and timescales required to tackle each part.

The ' five whys' is a powerful approach. Simply asking "why?" five times invariably gets to the root cause. For example: Why was there a supplier problem? The "XYZ"machine broke down. Why did it break down? It hadn't been maintained . Continue to ask and get answer until you reach a root cause.

Brainstorming has a few but effective rules. Wherever possible include everyone involved or affected by the challenge. Define the challenge, then ask them to propose a resolution. It is essential all ideas (however odd they may seem) are recorded, unchallenged and that interruptions are minimized. When this process is exhausted , group the similar ideas together and work together on evaluating each proposal, then prioritize action.

Individuals and teams can use the next approach when confronting specific challenges. Wherever you are addressing the particular problem, consciously stop and step back from it. Think about the objective-what's the "end game"? What do you really want to achieve? Organize your thoughts -how well does your current direction reconcile with where you want to end up? Is there a better way of doing it? What additional internal and external resources do you need to help support you? Proceed -having found some space now get on with it but always keep in mind the outcome you want to achieve and how great it will be when you completed it.

The ability to resolve challenges is essential for your career. Enjoy it and learn from experience as I enjoy what I have experienced before.


Miyerkules, Agosto 17, 2011

A Research study into the relationship between seven key concepts of quality management and success by Jolito Ortizo Padilla


The 1980s represented an important watershed in quality as total quality management and lean production processes came to the forefront of management thinking. Since then, enough time has elapsed to allow a serious assessment of such potentially paradigmatic changes.

Such an evaluation has been carried out using data on the use of operational and related people practices and productivity in 448 manufacturing organizations over a 15- year time period. This unique study showed that organizations were adopting these key process and people management practices in integrated way and that integration was associated with highest level of productivity.

The study began in 1996 with interviews of 448 manufacturing companies with more than 150 employees in the Philippines, Singapore, Japan, Kingdom of Saudi Arabia and Kingdom of Bahrain. These were chosen because modern methods of management revolving around lean production, total quality management and employee involvement methods were all then most readily associated with this sector. These methods were particularly pioneered in the early 1990s by Japanese transplants and firms directly competing with or supplying them.

The first survey showed that the most common management practices were four operational management practices- total quality management, just-in-time, integrated computer-based technology and supply -chain partnering-and three organizational practices -team-based working, empowerment and intensive training and development. The respondents were given a definition of these seven practices as presented in figure 1, and were then asked to rate their company's use of the practice on a five -point scale from "not at all" to "entirely". In case of multi-site firms, interviewees were asked to give information about practices for the most typical site.

Figure1
Definition of  the management practices used in the study
1. Empowerment: Passing considerable responsibility for operational management to individuals or teams, rather than keeping all decision-making at the managerial level.
2. Extensive training: Providing a range of development opportunities for all employees, rather than training people occasionally to meet specific job needs.
 3. Team-based working: Placing employees into teams with their own responsibilities and giving them freedom to allocate work between team members, rather than having everyone work as individuals.
4. Total quality management: Seeking continuous change to improve quality and making all staff responsible for the quality of their work. Such practices include Kaizen and continuous improvement.
5. Just-in-time production: Making products or providing services in direct response to internal or external customer demands, rather than building in advance to maintain stock levels.
6. Advanced manufacturing technology: Linking together computerized equipment to enable enhanced integration.
7. Supply- chain partnering:Developing strategic alliances and long-term relationships with suppliers and customers, rather than negotiating on a short-term basis.

The most popular techniques were at the heart of the then-current managerial thought under the heading total quality management, integrated manufacturing or lean production. Modern management theory viewed the organization in the context of its suppliers and customers and in terms of a flow of activities pulled by the customer. The development of these different quality techniques was aimed at eliminating all elements of the production system that did not add value.

The data confirmed that the label "modern" was justified as the practices had only been adopted relatively recently. For example, in 75% of the cases where total quality management, team-based working, or intensive training existed, the practice had only been introduced the 1990s. In 1996 study, none of the management practices were extensively used by the majority of companies and that reported success rates were modest. There was ,however, a clear expectation of increased use in the future.

The next survey in 2001 concentrated on the seven most popular practices and confirmed that both their use and perceived success had increased substantially since 1996. The increase in the use of practice was at least 10% in every case, the range being from an increase of 10% and 13% for total quality management and just-in-time respectively, to 29% for integrated computer based technology. However, though the intensity of use of all seven practices had increased, the proportion of companies that reported using the practice "not at all" had not changed substantially.

The pattern of change between 1996 and 2001 was one of increase use among those companies that already had the practice. In 1996, coupled with a small number of new users who were to have built up their use gradually and a minority of firms that did not use the practice at all. However, the final survey in 2005 revealed a continuation in the growth of these practices across all companies and no significant decline in use of any companies.

Though data on when the companies had first introduced practices, it was possible to assess the change over the 15 years period from 1996 -2009. There have been a remarkable growth from a very low level of use-with no practice being used in more than 8% of companies - to a situation where all were being used in more than 80% of companies with exception of just-in-time production, which was used in 73% of companies.

The average of the total number of practices used in 2009 was 8, compared with a figure of 4 in 1996. By 2009, 75% of the companies were using all seven, and 60% , six or five, with no company using either only one or none at all.

Beyond Fashion
Advocates of modern management practices have tended to represent them as universally applicable recipes for overcoming past problems and ensuring the continuous improvement required in an increasingly competitive future. As such, any increased use of practices would be a natural reflection of their optimality. In 1990 James Womack, founder and president of the Lean Enterprise Institute, when launching with colleagues the lean production concepts proclaimed that it would become" the standard global production system of the 21st century". Nonetheless, some saw such methods as yet another fad in an increasingly questioned spread panaceas for managerial practice that would be found wanting and soon replaced by the next fashion.

Such views implies that after an initial enthusiastic take-up of the prescribed practices we would expect a decline in the use of these practices, which the study did not find. Overall the study suggests that the adoption of modern manufacturing practices was not ephemeral. They were not simply being adopted on the say- so of the latest management guru or consultants. This is more consistent with the view gained from our intensive observation of manufacturing over the period of the study that managers have approached modernization more in the spirit of experimentation rather than as gullible recipients of the latest management guru's ideas. In fact, they have improved on the rather modest success rates for the practices that they had reported in 2001 as they developed their use of them. More tellingly, the study has shown that the practices were increasingly being used together. Management thought has long advocated a systematic approach to change and adoption of holistic management perspectives in contrast to a piecemeal adoption of practices. Concepts such as integrated manufacturing , lean management and world-class manufacturing which came to the fore in 1990s all stressed the importance of integration.

The argument for integrated manufacturing was that the objective of just-in-time is to minimize work in progress and in stock, which requires each stage of production to be completed just when the next needs to start. As delay at any stage would be highly detrimental there must be no unforeseen quality problems , and thus total quality management is crucial to its success. Likewise, the minimization of work in progress means that products have to pass rapidly from one stage to the next, typically in smaller batches. This makes set-up and changeover times a critical issue, where the programmable nature of advanced manufacturing technology plays its part. In integrated manufacturing the three practices thus form a synergistic set, each having more effect when the others are used. The extreme argument is that adopting one or two practices without the others will have a minimal or no effect on organizational performance and may even have a negative impact.

The creators of lean production also considered that it entailed teamwork, intensive training and more challenging jobs. However,they tended to underplay their significance. Peter Wickens, an HR specialist at Nissan in the 1997 , argued that the emphasis being given to operational management techniques created a danger of neglecting the social aspects of production. "It is people , not robots who continuously improve both products and processes., " he said. It is typically stated that lean production depends on multi-skilled operators, organized into small teams, being responsible for quality, problem solving and continuous improvement. This requires the organizational practices in the study.

Our study revealed that operational manufacturing practices tend to be used together and more tellingly in conjunction with key organizational or HR practices. It appears that managers have either heeded Wickens' warnings or his fears were unfounded. Moreover, the longitudinal data allowed us to examine integrated use over time, which revealed an increasing integration of the operational and organizational practices overtime.

The benefits of integration
The integration may be the norm but this does not necessarily mean it pays off over and above piecemeal adoption. With leading edge statistical analysis as described in figure 2, the study was able to address the economic benefits of integrated use. The information on when practices were first introduced was matched with performance data acquired from a company for 15 years period. This enabled the measurement of a key indicator of productivity -value added . It is therefore possible to see whether the degree of integrated use in any year was correlated with value added.

Figure2:Latent variable model
Latent variable models are used to assess whether a set of observed variables or indicators are linked to an underlying variable that is not readily observable. In statistical terms, the association between these variables is explained by one or more common factor and they are assumed to be independent but for this underlying factor.

Latent variable models can be used to assess whether a set of items thought to form a unity do in fact reflect an underlying trait, attitude or orientation and to identify and develop measures of such underlying factors.

The most common model is factor analysis, where both the manifest and latent variables are continuous, and are used to develop scales from items measuring responses to questions concerning knowledge, abilities, attitudes and behaviors. One such examples is job satisfaction scales that are typically created from items on the degree of employees satisfaction with particular facets of a job.

In this study the items are the use of the seven practices, measures dichotomously  with"1" allocated to where the practice was used at all, regardless of its degree of use, and "0"  allocated to no use. Lean and total quality management are treated as an integrated philosophy with guiding principles and overarching goals, that both dictate and are reflected in the use of certain practices. Latent variable modelling was used to assess whether the association in practice use is indeed a reflection of this underlying philosophy. Latent class models were used , and companies were classified according to an ordered categorical scales.

Latent class growth models, an extension of latent class models for longitudinal data, were used to classify the companies by the evolution of their use of practices, that is whether they were early, intermediate or late adopters.

Examining the trajectories of the growth in use , three clusters of companies were identified: early adopters who made integrated use of practices early, intermediate adopters who began to use the practices in an integrated fashion later but intensified their use in a short period of time, and late adopters that only began to adopt quality practices in earnest after 2001. Interestingly, by the end of the study period , the probability of firms in the second group having each of the practices was greater than that of those in the first group, and the probability for the late adopters was not significantly different from the early adopters.

In all 15 years the extent of the use of the integrated lean approach was associated with higher levels of added value. However, the early adopters of the integrated approach continued on average to outperform even those that subsequently adopted it to a greater extent. This result supports the claim underlying modern quality and operational management that a cohesive system built around quality management and employee engagement can produce continuous improvement and give forms competitive advantages.

Overall, the research shows that the HR aspects of organizations are vital to making total quality and management work. In socio-technical systems terms the social is as important as the technical. Empowerment, teamwork and intensive training would appear to have a catalytic effect on all other practices. The message is clear that without these the potential returns on investing in total quality management, just-in-time and supply chain partnering will not be fully realized

                                                

Lunes, Agosto 15, 2011

Techniques to Boost Staff Behavior .. without having to recruit new people by Jolito Ortizo Padilla


Thanks to HR process and procedure, organizations generally get recruitment right. However, many managers say "troublesome" staff hold back performance. In the current economic climate it will be mandatory for managers to get great results from all staff. To do this we need to enhanced management skills, rather than changes to staff or recruitment.

We can observe the degree of energy that someone applies to their work, as well as their attitude and approach. By combining these two factors we can create a four -category model.

The "walking dead" are people who do as little as possible, have to be task- managed and show little initiative.

The " well poisoners" actively criticize and spread belief that things can't be done.

The "spectators" say all the right things but do little themselves.

The "players" show belief and are prepared to step forward themselves.

As employees, we spend time in all these categories. Managers need to understand how to keep people in the "players" category for as long as possible, and what tactics to adopt when things go wrong.

Let's take the "well poisoners" first. Many managers want to get rid of those who complain, but the points made by this group are often to a degree correct. Organizations are great at frustrating people who were once "players" . These care about their organization and want to succeed, that's why they bring problems to the attention of the boss. Frustration is generated by organization or managers who do not act on this information. Instead of fighting these people, which intensifies negative feelings, the manager needs to listen to them and remove the blockages frustrating staff.

People who complain need support. Once they are turned around, like reformed smokers, they regain their passion and aptly boundless energy to the cause.

"Spectators" are the folks that do much of the damage, and in fact create a lot of "well poisoners". They focus on managing upwards, telling the boss what he wants to hear, yet supporting staff and peers very little. They don't cause much trouble for the boss so are generally left alone-until it is too late and the deliverables are not met.

What these people need is to be challenged; intense management, specific deadlines, individual (not group or team) tasks. Once they find success via quality feedback on the outputs from their challenge, their energy level grow and more "players" are produced.

And what about the "walking dead"? We often get asked to help our clients get rid of the "dead wood". We argue that organizations should stop killing the trees; these people were hired as "players".

So what should a manager do here? Try to provide support and challenge , and see what happens. People in this group will either resist (and become a "well poisoner") or say the right things (and become a "spectator"). Once in either of these categories the manager can apply the tactics explained above.

Great managers understand these principles and apply what are, for many, counter intuitive approaches.



                                                              

Sabado, Agosto 13, 2011

Bodies of Knowledge by Jolito Ortizo Padilla




Much of the world is broken up into different professions, each with its own body of knowledge. Historically, this knowledge has not been widely spread and is often jealously guarded, to such an extent that learning what you need to know takes years of study and substantial cost. The Project Management Institute started a modern trend in 1987 towards making knowledge explicit with a white paper entitled A Guide to the Project Management Body of Knowledge.

The idea is simply to take a discipline and document what you know about it in a structured way that creates a useful reference, both as reminders for professionals and as a development resource for people learning more about the discipline.

You can take this idea further, building one or more bodies of knowledge in your workplace. This needs care as making knowledge explicit can lead to people working in the area becoming defensive as they fear their value is being eroded. However, there is huge imperative for organization to sustain knowledge where it may be lost when people leave or retire. Knowledge continuity  is a very important subset of business continuity , which all too often stops at IT disaster recovery and ignores the critical human dimension.

An early challenge is how to break the area down into manageble parts. A useful principle that can be used here is that of a taxonomy-a system of classification. An early example from 1735 was the biological taxonomy of Carl Linnaeus, who defined the system of species and genus. A process focus can be helpful in quality related areas, for example and a clothes manufacturer may break things down by design, sewing or storage.

One approach is to review and brainstorm all of the different things that you do, writing everything on Post-it-notes that can be then clustered into related categories and sub-categories. You can then start asking questions such as:
  - What do we know about this area?
  - Is the knowledge held diffusely or by one person?
  - Can we document it?

This will help you prioritize action to capture the key items.

Sometimes documents are a good way to go but there are other ways too, such as videoing people doing key tasks, from skilled manual activity to decision-making and social interaction. As a part of retirement or leaving activity you can also record people talking about what they did, particularly the significant events where thinhs went badly or well.

An important part of any body of knowledge is the keeper of that knowledge. A library without a librarian quickly falls into decay and so also will a body of knowledge that is not actively managed and promoted. If you want a living system of knowledge then you need to ensure that it continues to grow and add value into the future.

A body of knowledge is never complete. You can only write so much and new areas are always being discovered and developed. There may also be such a wide range of things it would take forever to write down, so you need to decide what is best to capture and then write it and store it in a way that is easy to find and use. For larger topics, you may just keep references to key journal papers and books that can be explored when there is a need in the given specialist area.

                                               

Miyerkules, Agosto 10, 2011

Your career questions answered: from the Project Manager, Kuwait Gas and Oil..

Question: Can you provide some suggestions as to how we could calculate genuine liquidated damages for service contracts? If the supplier doesn't repair a system within the agreed service level agreement, for example, the loss is downtime and this hard to quantify.

Thank you Harold for subscribing my book " Strategic Management: Putting Things In    Proper Perspectives."

 Answer: LDs clauses define the damages payable for a specified breach. Provided LDs are genuine pre-estimates of loss, they are enforceable. "Penalties" (amounts designed to deter breach , without being based on likely loss) are unenforceable. If the clause is commercially reasonable, the contractor is unlikely to risk the commercial relationship by objecting, even if , strictly legally, the clause may not be enforceable.

A common sense approach for a service contract is to divide up a contract price to give a sum per hour/day for service provision and use that (adjusted to reflect severity) to quantify the LDs for the time there is a lack of service, relating the LDs directly to the contractor's failure to deliver the service. LDs may also take into account consequential costs arising from the breach (such as lost sales) but these must be likely enough that the parties could have contemplated them.
                                                                                                           
GA Consultancy would like to thanks our clients: Singapore Airlines, Toshiba, Toyota KSA, Rolex-Asia, Etihad Airlines and Zain Telecom-Bahrain.

                                                                   

The legal terms in Procurement- the third series of Jolito Ortizo Padilla's Glossary of Terms

The following are the most contested or confusing legal terms in procurement:
- Agent: In ordinary business usage, "agent" describes any situation in which one person is the public face of another. For instance your expert in Beijing might be called your "purchasing agent" there, not to say anything about your legal relationship but just to say that they act for you. But in European law "agent" has a precise meaning, creating real risk. Your agent's acts are,in law, your acts, with the advantage  that they must (theoretically) do what you say but the disadvantage that your are fully liable to third parties for those acts. A word to use carefully.

- Consequential loss: This is a term covering types of contractual loss. By using this term, parties try to exclude liability for certain losses under contracts( such as loss of profit). But the courts attach different meaning to the term than business do, which can result in some losses being claimable under the contract that the party intended to exclude. It is important that the parties are specific when using the term "consequential loss" and expressly state which losses come under the exclusion or limitation.

- Change of control: A "change of control" provision offers protection if ownership of the other party to a contract is transferred. It will often give a party the right to terminate the agreement or renegotiate terms, therefore what constitute "control" to give effect to this right needs to be carefully defined. This type of provision will be important to buyers if ownership of a supplier is transferred, particularly if the new controlling party is a direct competitor, changes the way business is conducted, or if personally clashes prevent parties working effectively together. Buyers should note the provisions could also apply in the event that their own organization changes hands.

- Consideration: This is the value paid for a promise and is central concept in contract law. For example, if you sign a contract with someone to buy his house, which he promise to give to you.Your consideration is the money that you pay for the house. A contract saying that he would give you his house for nothing would not be valid by itself because you aren't giving him any consideration. In basic terms, the offeree must give something back to the offeror in return to his promise.

- Contract award: Be careful when you hear about public contracts being awarded. In public procurement, "contract award" is the point when the public law decision is made to proceed with a particular contractor's bid. It will trigger the duty to tell the unsuccessful bidders  about the decision giving them the opportunity to challenge the decision before the contract signed. Contracts award is not , therefore, the time when the contract is entered. That follows the compulsory standstill period triggered by the contract award decision.

- Criteria: Buyers should be aware that in most public procurement for non-commodity items, there will be a two-phase procedure with two sets of criteria. Selection criteria are used to evaluate candidates in the first round response. Those selected are invited to tender in a second round. Award criteria are then used to score the tenders and decide the winner. To stay on the right side of the law the two sets of criteria must be confused. "Experience" criteria can also be a real problem. In general, "experience" should be a criterion in the "selection"phase. If you include it as an award criterion,you might be breaking public procurement law.

- Force majeure: A " force majeure" (superior force) provision usually provides that if a party does not perform an obligation under the contract (for example, delivery of goods) for reasons outside that party's control (such as war or natural disaster), the other party will not make that party liable for non-performance. It is essential therefore that the meaning is fully defined in the contract and that the defaulting party is required to mitigate any effects. More often than not a force majeure provision will allow the parties to terminate agreement if the event continues for a psecifc
 

Martes, Agosto 9, 2011

Operations Management by Jolito Ortizo Padilla

GA Business and Management Consultancy
"The Real Best in Asia and the Middle East"

Operations management is critical to organizational performance, yet there are not enough people adequately trained in this area.
Operations Management is defined as "the direction and control of the resources (facilities, people, machines, time and money) that transform inputs into finished goods and services".

It is about managing businesses that have complex networks of stakeholders within a global environment. It covers all types of companies and the whole value chain from cradle to grave-with development process, through to end of life disposal and material reprocessing.

While supply chain management deals with the external management of resources and the performance management of outsourced material, components and services, operation management covers the internal management resources. The two complements each other-they have many similar areas of expertise, as well as their own distinct skills. For example, both require resource planning to deliver goods and services on time, but supply chain management also requires soft skills to develop good quality relationships and get the best value from suppliers.

So will studying operations management help your career? Selling the product is fairly  straightforward, but delivering goods or services of the right quality to the end user at the right time is where the problems start. If you can't deliver , it doesn't matter how much you sell as you will never get paid. The GA Business and Management Consultancy operations management module will be useful for anyone who delivers goods and services within their supply chain. Students of this module learn about the need for simple but effective product design and development process to ensure new products (the life blood of any organization) are delivered on time and on budget. They also learn about the capacity in supply chains and how to manage changing capacity requirements during the product life cycle.

 The module has a final section that covers a variety of improvement tools and concepts and how to apply them such as the "Kanban" (signal cards) system for stock reduction.

This subject is for private and public sector buyers and not just for those in the manufacturing sector. We are all operations managers in some form. Everyone has a customer, whether it's an end-user or internal stakeholder and we all have to deliver some sort of product or service.

With the increasing pressure to deliver more for less, there has never been a more relevant subject to assist the public sector in delivering essential services on time, to quality and budget.

Operation management skills are also necessary for managing suppliers and external resources,such as design services or consultants, which is increasingly important as business operations become more specialized and complex.

As well as providing usefull skills,studying operations management makes candidates more marketable to potential employers and enhances their career prospects.

Sabado, Agosto 6, 2011

Managing product recall.. ... by Jolito Ortizo Padilla


Just like our individual view of heart attacks, cancer, road accidents and muggings, most organizations think product recalls could never happen to them. To dispel that illusion, it is worth taking a look at the Trading Standards website, where a long list of the most recent product recalls will appear on your screen. If it did happen to your organization would you be able to cope and could your company survive the associated costs, let alone the bad publicity.

In 1987 when product liability and consumer protection legislation was introduced in UK and US, there was considerable speculation that product recall would become one of the most crippling side -effects of such legislation. Since then the fear has become a reality for some organization.

The Consumer Protection Act 1987 states: " The manufacturer of a product being held liable if a defect in the product or in its design could be determined to have resulted in an injury." This means that a product would be regarded as perfectly in accordance with the design itself that would be deemed defective.

So what impact has the legislation made on the number of product recalls? Famous product recall incidents include the chemical contamination of Perrier water in 1990-almost forcing the company to change its name -and Mercedes narrowly avoided a complete disaster when its new A Class was found to be unstable that it was capable of rolling over in relatively foreseeable conditions. Honda laso announced a recall of its Jazz cars due to the discovery of a defect in the design of the handbrake.

Away from the automotive industry Sainsbury's issued a recall for its frozen thin and crispy vegetable stonebake pizza in April 2009, following  discovery of metal fragments in some pizzas. In another food related recall, KP announced that free milk caps in packets of KP Skips had caused distress as people had accidentally put them in their mouths.There was nothing specifically wrong with the product itself , yet KP felt obliged to create adverts to limit the potential damage to their brand.

Anytime, anywhere
A product liability situation can arise at anytime and almost always without warning. It can happen to the most quality conscious organization as well as the most careless. So what can your organization do to protect itself? There are four possibilites:
  1. Ignore the risk and hope it doesn't happen. If you are lucky, this is the least expensive approach. If you are unlucky , it could destroy the company.
  2. Insure against the risk by passing it on to others. This assumes that insurance is available, but in many cases it will not be. Even if it is initially available, as soon as an event has taken place, future premiums will be prohibitive.
  3. Reduce the risk through the application of quality. This will reduce the risk and the right approach  will also cut cost significantly. The intensive application of the project improvement process using the outputs of design failure modes and effects analysis and process failure modes and effect analysis are essential.
 4. Establish a product recall procedure to minimize potential hazard which will require the fastest possible location of every item responsible for the risk and its removal from the market. Experience indicates that with the best will in the world this is close to impossible if an effective procedure is not in place.

For example, in the 1960s ITT, an engineering and manufacturing company, established a scheme through which every purchaser of its steam irons was logged into a database in order to be prepared for a recall. Furtheremore, the company created an in-built incentive to encourage subsequent second hand users to record the change of ownership of the product.

Even with this level of information, when the need for a recall arose, only months after the initial distribution of the product and additional intensive television and other media advertising of the recall, the company was only able to recover about 70% of the defective products. The remainder simply disappeared without a trace. Organizations should also note that attempting but failing to recover such items does not absolve the distributor of its responsibility. Any one of the missing 30% could remain as a hazard both to user and to the company.

Clearly, failure to act quickly, or acting without a plan, could result in chaos. The resulting costs will also be appreciably higher than if a proper plan is ready. To be effective , a product recall plan must be capable of instant implementation.

In a worst case scenario, decisions will need to be made on each of the following:
- Recall of products from overseas
- Tracing of individual purchasers
- Television/newspaper/online advertising
- Withdrawal or freezing of stock in warehouse and retail outlets
- Stock repleneshment
- Issuing of instructions for the safe use of the product or its disposal
- Subsequent monitoring of the health of those who may have inhaled or consumed doubtful chemicals, food stuffs, gases or radiation
- Internal costs of product modification and replacement.
-Administration of the plan

State of the Art
Apart from the pharmaceutical industry, where the Medicine Act 1968 imposes certain obligations on license-holders with regard to strategies for the withdrawal and recal of sale.

In addition, it was rarely possible for the ultimate consumer to bring a successful action against manufacturer, because it was not usual to buy the product from them directly and no contract of sale existed between them. It was only possible in exceptional cases to prove that the injury was directly caused by negligence on the part of the manufacturer.

Insurance companies do not look favorably on the idea of product recall insurance. This is because the most costly recalls are likely to be initiated as the result of the new design fault. The more limited recalls will most likely be caused by a manufacturing fault, such as a mix up with labels. Therefore insurance companies generally regard innovation as a development risk that should be borne by the company. Consequently, for the unfortunate company confronted with the reality, exposure may be unavoidable.

Speed of action is essential if a recall is necessary. This is not the time to have long discussions as to who should be in charge as this should have been decided long before such an event. Ideally, and in general, this responsibility should fall upon the shoulders of the quality professionals because he or she will be the most familiar with the systems in operation. However, there will be many specific cases where others may be more appropriate , such as the risk management team.

Whoever is selected will be responsible for calling together a team of qualified people as soon as a situation demands and he or she should report directly to CEO for this purpose. The team leader will be responsible for leading the resources assigned to deal with the media should the need arise. In the case of urgent or serious product recalls, which may be costly , likely to damage the company's reputation or receive any form of national or local publicity , it will ususally be necessary to obtain board approval for any announcements or interviews that may take place.

The Recall Process
It can be difficult to judge when a recall is necessary, but a recall should always be initiated when it has been ascertained that there is a definite or potential danger to life or health and when the continued use or circulation of the product is likely to result in legal action.

A recall may also be initiated when it is found that a fault in the product, or lack of performance , is likely to affect the reputation of the company and when the lack of performance fails to justify the claims made in advertisements. This would also include drugs, where the dosage advised was found to be at variance with requirements.

Recall data
The first stage in a recall program will be some form of notification of a hazard. This could come from a number of sources and in many forms, depending upon the product. The most likely sources include:
   - The user
   - An independent test house report
   - Government sources
   - The company's own reliability test program or research
   - Research institutes and laboratories
   - Overseas sources

Hazard Evaluation Report
Immediately a hazard has been identified by any source, it will be necessary to evaluate the level of danger, and the category of recall, if required.
Levels may be set as:
- User level recall. The most widespread and therefore expensive type of recall, most likely in the case of consumer products. It would be essential in all urgent cases and probably in most serious cases and entails recall from users, retail outlets and warehouses. It would be necessary to reimburse the owners for losses sustained as a result of the withdrawal. The order for such recall would always be made at board level.
- Retail level recall . This would apply particularly in cases where an existing product has been in widespread use for some considerable time and information has now revealed a minor hazard.
- Wholesale level recall. This would entail product recovery from the first stage in the distribution chain and may be applied in the case of non-safety critical situations.
-Limited recall- This would mean the recall of individual batches and consignments. It would be probably occur most often when manufacturing faults have been discovered or suspected in an established product.
An evaluation of the level of recall that is needed should be carried out by the manager responsible for the recall program. In any case, it is recommended that a hazard report be prepared and circulated to all concerned within two days of instigation-regardless of the action taken.

The report should include a description of the type of hazard, the category and the recall level. Apart from good husekeeping, hazard reporting provides a good source of data for future risk probability evaluation. As with accidents , near misses are far more numerous than actual events. By recording near-miss recalls , the company will soon be able to evaluate the likelihood of an actual event and its consequences.

The report should report a nil return, where applicable, on the following aspects:
1. No health and safety hazard and no action required for product improvement or modification. The hazard evaluation report should state: "No hazard expected ", followed by the date and name of the responsible person(s) making the assessment and brief reasons for the assessment.
2. If a hazard is considered possible, all relevant information must be obtained for assessment by the recall team. The evaluation information shuld state:
   - Whether any disease or injuries have already occurred
   - Whether the use of the product in any particular cirumstances could lead to a hazard. This should be supported wherever possible by the appropriate supporting evidence or research data. It should also give the following:
  - An assessment of the particular segments of the population at risk such as work people in general, work people in specific occupations, the public, medical patients, people engaged in leisure pursuits.
 - An assessment of the seriousness of the hazard
 - An assessment of the consequences of occurence
 - An assessment of the probabability of occurence
 -  An assessment of the appropriate remedial action required
 - Estimated consequential cost of the hazard
 - A statement signed by the CEO authorizing the intiation of the recal

Product recall initiation
Upon receipt of the agreement by the CEO or his nominee to intitiate the recall program, a hazard warning notice maybe required. This should contain all the information necessary to bring the risk to the attention of all those likely to be exposed to the hazardous product and the circulation may include:
 - Field specialists including service staff
 - Appropriate government or local authority departments
 - Police and emergency services
 - Press, local and national
 - Retail outlets
 - Customers, where possible
 - Trade journals and trade associations
 - Professional institutions and reserach establishments
 - Export agencies/licensees, foreign governments
 - Relevant test houses
Depending upon circumstances, the warning notice may include:
1. A statement of the hazard and likely consequences
2. Clear instructions and illustrations to enable the repair, correction, removal, immobilisation or shielding of the product.
3. Warning of hazard signs, which may be detached from the notice and attached to the product and its container
4. Instructions appertaining to the return of the product nd a recall return card, preferably reply paid. This could take the form of a tear-off portion of the letter.

Recall effectiveness assessment
Once the recall procedure is underway, it will then be necessary to fully assess the effectiveness of the procedure that have been adopted and to consider the possibility of stepping up the campaign a notch. Similarly, it will also be necessary to make a decision to terminate the recall when all possible items have been returned.

Post recall investigation
The initiation of a product recall must be regarded as a catastrophic failure of the quality plan. Even in the case of a limited recall with the return of a small number of items from a retailer, there must be a review.

The review should be conducted by the most senior personnel from the departments implicated, headed by a senior executive and supported by the quality maanger. The objective will be to determine the organizational weaknesses that allowed the event to occur. Failure to do so means that the same thing could potentially happen again.

This should not turn into a witch hunt. Except for a specific cases where negligence may have been involved the problem is more likely to reflect on the management system in place than on actions of any individual. The most effective approach is to examine the management process to identify where weaknesses occur.

The cross functional project by project improvement process (when correctly applied) is the most effective method for resolving such problems. However, typical places to look for causes are:
 - Lack of relevant training
 - Insufficient reliability testing of prototypes, components and pre-production models.
 - Inadequate research, in the case of products using chemicals; insufficeient knowledge of existing data
 - Lack of coordination of production feasibility before release for production
 - Inadequate specifications for the testing of incoming materials or components
 - Lack of coordination between design and other departments, particularly market research , reliability enginering and production, resulting in the production of inadequate specifications
 - Too much pressure to rush designs through, with the consequence that short-cuts are taken

Rigth first time
Hopefully the prospect of being faced with the consequences of having to implement the procedures described in this article will be sufficient to convince everyone of the crucial importance of attempting to "get things right the first time". Recently, the number of major source of worry to industry.

Apart from the actual costs of managing such a project, the damage to reputation of the company can be lasting. There is also the question of negative impact on brand. Most organizations spend enormous sums attempting to convince the world that they are the best in their field. having spend similar sums of money explaining that their product is actually quite harmful can have untold effects on the brand.

But even with the most intense application of quality related concepts, the risk can never be reduced to zero. After all , Ford is probably one of the biggest advocates of failure mode and effects analysis and even they get wrong sometimes.