Zahid Nazir

Roll # AB523655
ASSIGNMENT 2

[TYPE THE COMPANY ADDRESS]

OPERATIONS
MANAGEMENT
OPERATION MANAGEMENT
VS
QUALITY MANAGEMENT

ZAHID NAZIR
Roll No. AB523655
MBA Executive
2nd Semester , Spring 2009

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

C O M M O N W E A L T H O F L E A R N I N G1 E X E C U T I V E M B A P R O G R A M M E
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OPERATION MANAGEMENT
Every business is managed through three major functions: finance, marketing,
and operations management. Figure 1-1 illustrates this by showing that the vice
presidents of each of these functions reports directly to the president or CEO
of the company. Other business functions—such as accounting, purchasing,
human resources, and engineering—support these three major functions.
Finance is the function responsible for managing cash flow, current assets, and
capital investments. Marketing is responsible for sales, generating customer
demand, and understanding customer wants and needs. Most of us have some
idea of what finance and marketing are about, but what does operations
management do?

Fig: Organizational chart showing the three major business functions

Operations management (OM) is the business function that plans, organizes,

coordinates, and controls the resources needed to produce a company’s goods
and services.

Operations management is a management function. It involves managing

people, equipment, technology, information, and many other resources.

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Operations management is the central core function of every company. This is

true whether the company is large or small, provides a physical good or a
service, is for profit or not for profit. Every company has an operations
management function. Actually, all the other organizational functions are there
primarily to support the operations function. Without operations, there would
be no goods or services to sell. Consider a retailer such as Gap that sells casual
apparel. The marketing function provides promotions for the merchandise, and
the finance function provides the needed capital. It is the operations function,
however, that plans and coordinates all the resources needed to design,
produce, and deliver the merchandise to the various retail locations. Without
operations, there would be no goods or services to sell to customers.

WHY OPERATION MANAGEMENT

The importance of operations management was not always recognized by

business. In fact, following World War II American corporations were
dominated by marketing and finance functions. The United States had just
emerged from the war as the undisputed global manufacturing leader due in
large part to efficient operations. At the same time Japan and Europe were in
ruins with their businesses and factories destroyed. U.S. companies were left
to fill these markets: the post-World War II period of the 1950s and 1960s
represented the golden era for U.S. business. The primary opportunities were
in the areas of marketing, to develop the large potential markets for new
products, and in finance, to support the growth. Since there were no
significant competitors, the operations function became of secondary
importance, because companies could sell what they produced. Even the
distinguished economist John Kenneth Galbraith was noted as saying: “the
production problem has been solved.”

Then in the 1970s and 1980s things changed. American companies experienced
large declines in productivity growth, and international competition began to
be a challenge in many markets. In some markets such as the auto industry,

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American corporations were being pushed out. It appeared that U.S. firms had
become lax with the lack of competition in the 1950s and 1960s. They had
forgotten about improving their methods and processes, partly due to the lack
of competitive challenge. In the meantime, foreign firms were rebuilding their
facilities and designing new production methods. By the time foreign firms had
recovered, many U.S. firms found themselves unable to compete. To regain
their competitiveness companies turned to operations management, a
function they had overlooked and almost forgotten about.

The new focus on operations and competitiveness has been responsible for the
recovery of many corporations, and U.S. businesses experienced a resurgence
in the 1980s and 1990s. Operations became the function at the core of
organizational competitiveness. Although U.S. firms have rebounded, they are
fully aware of continued global competition. Companies have learned that to
achieve long-run success they must place much importance on their
operations.

Systematic Approach

to Org. Processes

Business Education Operations Career Opportunities

Management

Cross-Functional

Applications

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SYSTEM OF OPERATION MANAGEMENT (Transformation Process)

The role of operations management is to transform a company’s inputs into

the finished goods or services. Inputs include human resources (such as
workers and managers), facilities and processes (such as buildings and
equipment), as well as materials, technology, and information. Outputs are the
goods and services a company produces.

Figure shows this transformation process. At a factory the transformation is

the physical change of raw materials into products, such as transforming

leather and rubber into sneakers, denim into jeans, or plastic into toys. At an
airline it is the efficient movement of passengers and their luggage from one
location to another. At a hospital it is organizing resources such as doctors,
medical procedures, and medications to transform sick people into healthy
ones.

Operations management is responsible for orchestrating all the resources

needed to produce the final product. This includes designing the product;

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deciding what resources are needed; arranging schedules, equipment, and

facilities; managing inventory; controlling quality; designing the jobs to make
the product; and designing work methods. Basically, operations management
is responsible for all aspects of the process of transforming inputs into outputs.
Customer feedback and performance information are used to continually
adjust the inputs, the transformation process, and characteristics of the
outputs. As shown in Figure , this transformation process is dynamic in order to
adapt to changes in the environment.

Proper management of the operations function has led to success for many
companies. For example, in 1994 Dell Inc. was a second-tier computer maker
that managed its operations similar to others in the industry. Then Dell
implemented a new business model that completely changed the role of its
operations function. Dell developed new and innovative ways of managing the
operations function that have become one of today’s best practices. These
changes enabled Dell to provide rapid product delivery of customized products
to customers at a lower cost, and thus become an industry leader.

For operations management to be successful, it must add value during the

transformation process. We use the term value added to describe the net
increase between the final value of a product and the value of all the inputs.
The greater the value added, the more productive a business is. An obvious
way to add value is to reduce the cost of activities in the transformation
process. Activities that do not add value are considered a waste; these include
certain jobs, equipment, and processes. In addition to value added, operations
must be efficient. Efficiency means being able to perform activities well, and at
the lowest possible cost. An important role of operations is to analyze all
activities, eliminate those that do not add value, and restructure processes
and jobs to achieve greater efficiency. Today’s business environment is more
competitive than ever, and the role of operations management has become
the focal point of efforts to increase competitiveness by improving value
added and efficiency.

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DIFFERENCES BETWEEN MANUFACTURING AND SERVICE

ORGANIZATIONS

Organizations can be divided into two broad categories: manufacturing

organizations and service organizations, each posing unique challenges for the
operations function. There are two primary distinctions between these
categories. First, manufacturing organizations produce physical, tangible
goods that can be stored in inventory before they are needed. By contrast,
service organizations produce intangible products that cannot be produced
ahead of time. Second, in manufacturing organizations most customers have
no direct contact with the operation. Customer contact is made through
distributors and retailers. For example, a customer buying a car at a car
dealership never comes into contact with the automobile factory. However, in
service organizations the customers are typically present during the creation of
the service. Hospitals, colleges, theaters, and barber shops are examples of
service organizations in which the customer is present during the creation of
the service.

The differences between manufacturing and service organizations are not as

clear-cut as they might appear, and there is much overlap between them. Most
manufacturers provide services as part of their offering, and many service firms
manufacture physical goods that they deliver to their customers or consume
during service delivery. For example, a manufacturer of furniture may also
provide shipment of goods and assembly of furniture. On the other hand, a
barber shop may sell its own line of hair care products. You might not know
that General Motors’ greatest return on capital does not come from selling cars
but rather from post sales parts and service. The differences between
manufacturing and services are shown in Figure 1-3, which focuses on the
dimensions of product tangibility and the degree of customer contact. Pure
manufacturing and pure service extremes are shown, as well as the overlap
between them.

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Fig: Characteristics of manufacturing and service organizations

Even in pure service companies some segments of the operation may have low
customer contact while others have high customer contact. The former can be
thought of as “back room” or “behind the scenes” segments. Think of a fast-
food operation such as Wendy’s, for which customer service and customer
contact are important parts of the business. However, the kitchen segment of
Wendy’s operation has no direct customer contact and can be managed like a
manufacturing operation. Similarly, a hospital is a high-contact service
operation, but the patient is not present in certain segments, such as the lab
where specimen analysis is done.

In addition to pure manufacturing and pure service, there are companies that
have some characteristics of each type of organization. For these companies it
is difficult to tell whether they are actually manufacturing or service
organizations. Think of a post office, an automated warehouse, or a mail-order
catalog business. These companies have low customer contact and are capital
intensive, yet they provide a service. We call these companies quasi-
manufacturing organizations.

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TYPES OF OPERATIONS

Types of
Operations

Manufacturing
Service System
System

Continuous Intermittent
Production Production

Mass
Processing Batch Job
Production
Production Production Production
(Flow)

Basic Types of Production Processes

•Intermittent Production System

Production is performed on a start-and-stop basis, such as for the manufacture
of made-to-order products.
•Mass Production

A special type of intermittent production process using standardized methods

and single-use machines to produce long runs of standardized items.

Mass Customization

–Designing, producing, and delivering customized products to customers for at

or near the cost and convenience of mass-produced items.

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–Mass customization combines high production volume with high product

variety.
–Elements of mass customization:

• Modular product design

• Modular process design
• Agile supply networks

Continuous Production Processes

–A production process, such as those used by chemical plants or refineries, that

runs for very long periods without the start-and-stop behavior associated with
intermittent production.
–Enormous capital investments are required for highly automated facilities that
use special-purpose equipment designed for high volumes of production and
little or no variation in the type of outputs.
Mass Production System (Flow)

Continuous Production

• Anticipation of demand
• May not have uniform production
• Standardized Raw material
• Big volume of limited product line
• Standard facility- high standardization.
• Fixed sequence of operation
• Material handling is easier
• High skilled operator not required
• More Human problem is foreseen
• Huge investment.
• High raw material inventory.

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Processing Production System

• Extended form of mass production system

• F.G of one stage is fed to next stage
• More automatic machines
• One basic raw material is transferred into several products at several
stages.
• Less highly skilled workers required
• More human problems foreseen
• Highly standardized system

Batch Production System

• Highly specialized Human resource is required

• Highly specialized multi tasking machines
• Machines are shared.
• Production in batches
• Production lots are based on customer demand or order.
• No single sequence of operation
• Finished goods are heterogeneous

Custom built / job order production system

• Highly specialized Human resource is required

• Highly specialized multi tasking machines
• Machines are shared
• Raw material is not standardized
• Process is not standardized
• No scope for repetition of production

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Comparative study of different production systems

Type Mass/ Flow Process Job Batch

Parameter

Per unit High Low High High

manf.cost

Size & Large V. Large Small Medium

Capital Invest. Less High Low High

Flexibility No No More More

Technical ability Less Less High High

Skills

Orgn. Structure Line staff Line staff Functional Functional

Industrial Automobile Chemical Construction Consumer

application prod.
Sugar Petroleum Bridges
M/c. Tools
Refinery Milk SPM
process.

OPERATIONS MANAGEMENT DECISIONS

Decisions made in operations management are mainly of two types:

• Strategic Decisions
• Tactical Decisions

Long-term decisions that set the direction for the entire organization are called
strategic decisions. They are broad in scope and set the tone for other, more
specific decisions. They address questions such as: What are the unique
features of our product? What market do we plan to compete in? What do we
believe will be the demand for our product?

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Short-term decisions that focus on specific departments and tasks are called
tactical decisions. Tactical decisions focus on more specific day-to-day issues,
such as the quantities and timing of specific resources. Strategic decisions are
made first and determine the direction of tactical decisions, which are made
more frequently and routinely. Therefore, we have to start with strategic
decisions and then move on to tactical decisions. This relationship is shown in
Figure. Tactical decisions must be aligned with strategic decisions, because
they are the key to the company’s effectiveness in the long run. Tactical
decisions provide feedback to strategic decisions, which can be modified
accordingly.

Fig: The relationship between strategic and tactical decisions

FUNCTIONS OF OPERATION MANAGEMENT

Operation management involves the management of human, technology and

system resources. To manage these resources, operations managers must
perform the same basic functions that all mangers are expected to perform.
The operations management functions include planning, directing, organizing,
staffing, motivating and controlling.

PLANNING
Planning is a management function that involves the establishment of goals
and objectives towards which employees direct a course of action. There are
many different type of planning activities.

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• Strategic Planning: It involves the establishment of long-term goals for

the entire organization or system. An example of an OM strategic plan is
to achieve a goal of growth by building and locating a new production
facility.
• Tactical Planning: Planning that involves a more specific effort to
establish a means by which to achieve the desired goals and objectives in
the medium term is sometimes referred to as tactical planning. An
example of an OM tactical plan is the stepwise implementation
procedures for locating a new plant.
• Operational Planning: It’s a shorter term planning that implements the
critical objectives. If the first step of an OM tactical plan to locate a new
plant is to determine which state the plant is to be located in, an
operational plan might establish a team of researchers and detailed
methodology to be used by the team to facilitate their state selection
decision.

DIRECTING

The directing function of management involves supervising, ordering and

commanding. Examples of directing in operations management include making
daily job assignments, giving directions to employees on job-related
procedures, and ordering people to perform specific tasks.

ORGANIZING

The organizing function involves structuring the organization’s systems to

achieve planned objectives. Examples of organizing in operation management
includes structuring the tasks that make up an employee’s job, defining the
procedures that are required to produce a product and coordinating individual
and group activities.

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STAFFING

The staffing function of management includes recruiting employees, screening

job applicants, and selecting and training personnel. Staffing can also include
writing job specifications, which are the job requirements that the each worker
is expected to perform for a specific job (for example learning to use
microcomputers), and job descriptions, which define the type of tasks involved
( such as keeping inventories in the stock room).

MOTIVATING

The motivating function of management involves guiding, coaching and

inspiring employees to achieve planned objectives. In operation management
motivating employees involves understanding psychological and sociological
factors that affect employee’s behavior in the workplace. In recent years, the
motivating function of management has shifted from the study of psychology
of the individual working in the OM system to how the individual interacts with
the OM system. Management is learning how the OM system can be structured
to motivate the employee to achieve planned objectives.

CONTROLLING

The controlling management function involves setting standards, monitoring,

measuring, observing and when necessary, taking appropriate actions to
adjust the system to keep it on track to achieve planned objectives. Both
human and physical resources requires some type of control. Examples of
operation management controlling include using computerized lasers to spot
defects in paint jobs and auditing freight bills to determine the accuracy of
vendor delivery times and charges.

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ACTIVITIES IN OPERATION MANAGEMENT

In addition to the management functions, operation managers perform many
other activities. These operation management activities are what make up an
operations manager’s job and are often included in OM job descriptions and
job specifications. The OM activities can be organized into three categories of
activities:

• Planning for the future

• Planning and controlling operations
• Improving products and systems

a). PLANNING FOR THE FUTURE

operations managers must anticipate the future and plan it for today.
Three activities that are focused on planning for the future are total
quality management, forecasting and improving technology and
international integration of OM systems.

Total Quality management

Total quality management (TQM) is primarily concerned with the

principles and overall philosophy that drive an organization to seek
quality in the products and services that it provides to customers. TQM is
a corporate level strategy that becomes an operation management
strategy for manufacturing and service excellence. TQM is so
prerequisite to OM success.

Forecasting

Operations mangers must be able to accurately forecast demand for

timely production of their products. They must be able to forecast
human resource needs to acquire necessary worker inputs into their
transformation process. Managers must be acquainted with different
types of forecasting that affect the OM system.

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Improving Technology and International Integration of OM System

International competition is forcing operations managers to develop

global planning strategies. Adapting and integrating international
strategies require operations managers to understand the various
restrictive roles the integration of management resources can play, and
the strategic opportunities offered by advanced OM technology. For
example, manufacturing firms during the 1980’s that choose a strategy
of cost reduction to be competitive with international manufacturers
found their strategy to be successful in the 1990’s when coupled with the
mid 1980s devaluation of the US dollar.

b). PLANNING AND CONTROLLING OPERATIONS

Another category of operations management activities involves basic

planning and controlling activities. These activities includes production
planning, materials management, inventory management and
scheduling.

Production Planning

Production planning activities involves setting and achieving goals

specifically related to operations management planning of management
resources.

Materials Management

The materials management activity involves the grouping of

management functions supporting material flow. Materials management
includes activities such as the purchase and internal control of
production materials; the planning and control of work in process
(unfinished products in various stages of production; and warehousing
shipping and distribution of the finished product.

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Inventory Management

The inventory management activity is concerned with the planning and

control of inventories. There are two general type of inventory;
dependant demand inventory and independent demand inventory.

Dependant demand inventory is made up of inventory items that are

consumed within an organization to produce a finished product. For
example, rubber- the raw material used by the Good Year Company to
produce automobile tires for consumers is an example of a dependant
demand inventory item. Dependant demand inventory items depend on
consumer demand of finished products.

Independent demand inventory comprises inventory items consumed by

customers external to the organization. For example, a grocery store’s
inventory of flashlight batteries is an independent demand inventory
item.

Scheduling

Scheduling involves assigning specific tasks, jobs and work for

equipment, facilities and human resources in accordance with a timed
planning horizon.

c). IMPROVING PRODUCT AND SYSTEMS

Operation management activities in the 1990s must also support

continuous improvement of product and systems. These activities
include product and service design, quality assurance, facility location
analysis and layout design and job design and work measurement.

Product and Service Design

Product and service design includes all the activities that are required to
create and structure a product or service. Although the design stage
largely involves design engineers and marketing personnel, operation
managers are often included as well, to ensure that the end result is

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producible. Examples of activities in product design includes performing

cost analysis to determine if new product designs are economically
feasible, linking activities between computer aided design systems and
actual production facilities, and sequencing activities to ensure an
ordered sequence of production tasks to complete the product.

Quality Assurance

The quality assurance activity involves the rules and methodological and
technological aspects of manufacturing and service quality. It includes a
comprehensive analysis of the entire operations management system
from input to output on any attribute that can be used to define quality.
Quality assurance seeks to implement TQM as an OM strategy. Examples
of quality assurance include reducing product defects, maintaining a
customer service department and monitoring the quality of incoming
raw materials.

Facility Location and Layout Design

The facility location activity involves determining where to establish a

manufacturing plant or a service facility. The layout design activity
involves determining how the internal facility (departments, equipment,
and service or work stations) will be arranged.

Job Design and Work Measurement

The job design activity involves the structuring of work tasks assigned to
an employee. Job design is the study of the tasks that make up a job. The
work measurement activity involves the timing of tasks that comprise a
job.

Not all operations managers perform all of these activities. Many

mangers make a productive career out of performing just one of the
above activities. To be a successful manager, one must have some
knowledge of all of these activities and the role they play in an
organization.

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COMMUNICATION IN OPERATION MANAGEMENT

In the age of information, operation managers must be able to

communicate and interact with the people with whom they work and
with those for whom the work is performed. There are two types of
communication:

i). Communication or interaction within the organization is known as

cross-functional relations. This is the communication b/w different
function or departments like accounting, marketing, finance, IT,
personnel and technical specialists.

DEPARTMENTAL AREAS WITHIN THE INTERNAL

ENVIRONMENT OF THE ORGANIZATION

Marketing Finance

Operations
Accounting IT
Management

Technical
Specialist Personnel

ii). Communication or interaction with individuals outside the

organization is referred to as external relations. External individuals
includes customers, public interest groups, competitors, stockholders
and owners, suppliers and government.

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THE ORGANIZATION AND THE EXTERNAL ENVIRONMENT

Public Interest
Customers
groups

THE
Government ORGANIZATION Competitors

Suppliers Stockholders &

Owners

**********************

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QUALITY MANAGEMENT
Quality management is a method for ensuring that all the activities necessary to
design, develop and implement a product or service are effective and efficient
with respect to the system and its performance.

Quality Improvement

W. Edwards Deming ng is best known for his management philosophy establishing

quality, productivity, and competitive position. He has formulated 14 points of
attention for managers, some of these points are more appropriate for service
management:

• Break down barriers betwe

between departments;
• Management should learn their responsibilities, and take on leadership;
• Improve constantly;
• Institute a programme of education and self-improvement.
self improvement.

The following diagram is the Shewhart cycle (PDCA) for quality improvement,
made popular by Deming.

SHEWART CYCLE (PDCA)

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The philosophy is to keep improving the quality of an organization. It is defined

by four keys:

• Plan: Design or revise business process components to improve results

• Do: Implement the plan and measure its performance
• Check: Assess the measurements and report the results to decision
makers
• Act: Decide on changes needed to improve the process

The consolidation phase enables the organization to take stock of what has
been taking place and to ensure made to processes that require
documentation (both to allow processes to be repeatable and to facilitate
recognition of the achievement of some form of quality standard).

QUALITY ASSURANCE

It is part of quality management focused on providing confidence that quality

requirement will be fulfilled.

Productions quality starts with process capable of producing to design

Specification and continuous with an inspection program arises if standards are
being met. As said earlier the initial deviation concerning specification is based
on precision sought by customers and accuracy attainable by production
facilities. Given a process capable of obtaining the required precision
unacceptable variations still occurs. Bluent tools, misalignment due to wear
and tear of machinery, workers unless they can contribute to inferior output
from a process inherently capable of acceptable quality. Coordinator controlled
activities to prevent this and ensuring what customer wants they get.

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QUALITY INSPECTIONS

The single act most costly associated with quality control is inspection (e.g.
technicians testing concrete slabs in lab, food inspectors are also inspecting
food grading tea, etc). In addition to maintaining quality inspectors provide
information by which the performance of sorters, machines, departments, and
plans can be evaluated.

COST OF QUALITY

Prevention costs
• Quality planning
• Formal Technical Reviews
• Test equipment
• Training

Appraisal costs
• In-process and inter-process inspection
• Equipment calibration and maintenance
• Testing

Failure costs
• Internal failure costs

Rework

Repair

Failure mode analysis

• External failure costs

Complaint resolution

Product return and replacement

Help line support

Warranty work

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EVALUATION OF QUALITY CONTROL

Part 1: The ancient Egyptians demonstrated a commitment to quality in the

construction of their pyramids Greeks set high standards in arts and crafts. The
quality of Greek architecture of the 5th century BC was the motivation behind
subsequent architectural construction of Rome. Roman built cities; bridges and
roads inspire us even today.

Part 2: up to 1800 production of goods and services was predominantly

confirmed to single individuals/family responsible for quality of product
(operator quality control period)

Part 3: Starting in early 1900 – 1920 . The second phase called former quality
control period. With the industrial revolutions (steam engine-James watt-coal
and iron) came the concept of mass production which was based on principle
of specialization of labor .supervisor will be responsible for overall quality.
(Companies with machine power in place of Human power alone came into
existence.

Part 4: Period from 1920- 1940. This is the inspection quality control period.
Product and processes become more complicated and production volume
increased. No. of workers reporting to a foreman increased. Inspectors were
therefore designated to check the quality of the product item with those of
standards. Non-conforming items were either reworked if feasible or were
discarded.

During the period the foundations of statistical aspects of quality control were
being developed. Bell labs proposed the concept of using statistical charts to
control the variables of a product dodge and rowing proposed acceptance
sampling.

1930 saw the application of acceptance sampling plan in industring .In 1929
Walter show hart got sponsorship of ASTM, ASME, ASA for creating a joint

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committee for the development of statistical applications in engineering and

manufacturing.

US Food Drugs and cosmetic Act 1938 came into existence-a quality measure.

Phase 5: the next phase in the evaluation process occurred between 1940-1960
and is termed as statistical quality control phase.

American society for quality control was formed in 1946. Use of quality control
procedures however no where close to the level that it should have been even
in America. Japan although totally destroyed during World War II embraced the
new philosophical whole-heartedly.

QUALITY ASSURANCE

• Analysis
• Auditing
• Reporting

Goal of quality assurance

• Provide management with the data necessary to be informed about

product quality.
• Make confidence and be sure that product quality is meeting.

Quality Standards

The International Organization for Standardization (ISO) created the Quality

Management System (QMS) standards in 1987. These were the ISO 9000:1987
series of standards comprising ISO 9001:1987, ISO 9002:1987 and ISO
9003:1987; which were applicable in different types of industries, based on the
type of activity: designing, production or service delivery. The standards have

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been regularly reviewed every few years by the International Organization for
Standardization. The version in 1994 and was called the ISO 9000:1994 series;
comprising of the ISO 9001:1994, 9002:1994 and 9003:1994 versions. The last
revision was in the year 2000 and the series was called ISO 9000:2000 series.
However the ISO 9002 and 9003 standards were integrated and one single
certifiable standard was created under ISO 9001:2000. Since December 2003,
ISO 9002 and 9003 standards are not valid, and the organizations previously
holding these standards need to do a transition from the old to the new
standards. The ISO 9004:2000 document gives guidelines for performance
improvement over and above the basic standard (i.e. ISO 9001:2000).

The Quality Management System standards created by ISO are meant to certify
the processes and the system of an organization and not the product or service
itself. ISO 9000 standards do not certify the quality of the product or service.

Recently the International Organization released a new standard, ISO 22000,

meant for the food industry. This standard covers the values and principles of
ISO 9000 and the HACCP standards. It gives one single integrated standard for
the food industry and is expected to become more popular in the coming years
in such industry.

The most elaborated and accepted concept of quality management is the

model of the EFQM Excellence Model.

THE DETERMINANTS OF QUALITY

The degree to which a product or service successfully satisfying its intended

purpose has four primary determinants

1) Quality of design
2) How well it confirms to the design
3) Ease of use
4) Service after delivery

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Quality of design

Quality of design refers to the intentions of designers to include or exclude

certain features in a product or service (e.g.: different automotives with
different size appearance, fuel economy, comfort, material used etc) These
differences reflect choices made by designers that determines the quality of
design. There design decisions take into account customer wants, production
or service capabilities, safety, liability cost and similar other considerations.
Designers may work closely with marketing and operations department. A
poor design can result in difficulties in production or service. For example,
materials might be difficult to obtain specifications to meet, procedure difficult
to follow, similarly a superior design usually cannot offset
poor workmanship.

Quality of conformance

Refers to the degree to which goods and services conform (i.e. to achieve) the
intent of designers. This is affected by factors such as the capability of
equipments, skills, training, taking prompt corrective action etc. (That is the
reason we want designers to work in close coordination with manufacturing
and inspection department during pilot job and procedures for manufacture
developed accordingly.

Ease of Use

The determinants of quality does not stop once the product or service has
been sold. Ease of use and user instructions are important. They increase the
chances but do not guarantee, that the product will be used for its intended
purposes and in such a way that it will continue to function properly and safely.
(i.e. user misused case) Much of the same can be applied to services also.
Customers, patients, clients must be clearly informed. Much of the instructions
takes the form of printed instructions, labels and what to do if something goes
wrong.

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Service after delivery

For a variety of reasons products do not always perform as expected and

services do not always yield the desired results. Through recall adjustment
replacement, buyback etc this situation is remedied.

Quality of care should be defined in light of both technical standards and

patients' expectations. While no single definition of health service quality
applies in all situations, the following common definitions are helpful guides:

• Technical performance
• Access to services
• Effectiveness of care
• Efficiency of service delivery
• Interpersonal relations
• Continuity of services
• Safety
• Physical infrastructure and comfort
• Choice

QUALITY MANAGEMENT PRINCIPLES

Following are the eight quality management principles on which the quality
management system standards of the revised ISO 9000:2000 series are based.
These principles can be used by senior management as a framework to guide
their organizations towards improved performance. The principles are derived
from the collective experience and knowledge of the international experts who
participate in ISO Technical Committee ISO/TC 176, Quality management and
quality assurance, which is responsible for developing and maintaining the ISO
9000 standards.

Principle 1 Customer focus

Organizations depend on their customers and therefore should understand
current and future customer needs, should meet customer requirements and
strive to exceed customer expectations.

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Principle 2 Leadership

Leaders establish unity of purpose and direction of the organization. They

should create and maintain the internal environment in which people can
become fully involved in achieving the organization's objectives.

Principle 3 Involvement of people

People at all levels are the essence of an organization and their full
involvement enables their abilities to be used for the organization's benefit.

Principle 4 Process approach

A desired result is achieved more efficiently when activities and related

resources are managed as a process.

Principle 5 System approach to management

Identifying, understanding and managing interrelated processes as a system

contributes to the organization's effectiveness and efficiency in achieving its
objectives.

Principle 6 Continual improvement

Continual improvement of the organization's overall performance should be a

permanent objective of the organization.

Principle 7 Factual approach to decision making

Effective decisions are based on the analysis of data and information.

Principle 8 Mutually beneficial supplier relationships

An organization and its suppliers are interdependent and a mutually beneficial

relationship enhances the ability of both to create value.

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BENCHMARKING
Benchmarking (also "best practice benchmarking" or "process
benchmarking") is a process used in management and particularly strategic
management, in which organizations evaluate various aspects of their
processes in relation to best practice, usually within their own sector. This then
allows organizations to develop plans on how to adopt such best practice,
usually with the aim of increasing some aspect of performance. Benchmarking
may be a one-off event, but is often treated as a continuous process in which
organizations continually seek to challenge their practices.

A process similar to benchmarking is also used in technical product testing and

in land surveying. See the article benchmark for these applications.

Advantages of benchmarking

Benchmarking is a powerful management tool because it overcomes

"paradigm blindness." Paradigm Blindness can be summed up as the mode of
thinking, "The way we do it is the best because this is the way we've always
done it." Benchmarking opens organizations to new methods, ideas and tools
to improve their effectiveness. It helps crack through resistance to change by
demonstrating other methods of solving problems than the one currently
employed, and demonstrating that they work, because they are being used by
others.

Competitive benchmarking

Advantage of the benchmarking for a company:

1. A better understanding of the wants (expectations) of the customer because

it is: based on the reality of the market estimated in an objectivist way.

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2. A better economic planning of the purposes and the objectives to achieve in

the company because they are: centered on what takes place outside
controlled and mastered.

3. A better increase of the productivity: resolution of the real problems

Understanding of the processes and what they produce”

4. Better current practices Search for the change Many decisions practices of
break

5. A better competitiveness thanks to: a solid knowledge of the competition a

strong implication of the staff new ideas on practices and tried techniques.

Benchmarking has consequences which are beyond the process itself: it

reforms all the levels of the company.; modifies the process of manufacture of
the product leads(drives) ; also reforms the hierarchical organization of the
company, the product itself, and the state of mind of the employees.

Procedure

1. Identify your problem areas - Because benchmarking can be applied to any

business process or function, a range of research techniques may be required.
They include: informal conversations with customers, employees, or suppliers;
exploratory research techniques such as focus groups; or in-depth marketing
research, quantitative research, surveys, questionnaires, reengineering
analysis, process mapping, quality control variance reports, or financial ratio
analysis.

2. Identify other industries that have similar processes - For instance if one
were interested in improving handoffs in addiction treatment s/he would try to
identify other fields that also have handoff challenges. These could include air
traffic control, cell phone switching between towers, transfer of patients from
surgery to recovery rooms.

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3. Identify organizations that are leaders in these areas - Look for the very best
in any industry and in any country. Consult customers, suppliers, financial
analysts, trade associations, and magazines to determine which companies are
worthy of study.

4. Survey companies for measures and practices - Companies target specific

business processes using detailed surveys of measures and practices used to
identify business process alternatives and leading companies. Surveys are
typically masked to protect confidential data by neutral associations and
consultants.

5. Visit the "best practice" companies to identify leading edge practices -

Companies typically agree to mutually exchange information beneficial to all
parties in a benchmarking group and share the results within the group.

6. Implement new and improved business practices - Take the leading edge
practices and develop implementation plans which include identification of
specific opportunities, funding the project and selling the ideas to the
organization for the purpose of gaining demonstrated value from the process.

Cost of benchmarking

Benchmarking is a moderately expensive process, but most organizations find

that it more than pays for itself. The three main types of costs are:

• Visit costs - This includes hotel rooms, travel costs, meals, a token gift,
and lost labor time.

• Time costs - Members of the benchmarking team will be investing time in

researching problems, finding exceptional companies to study, visits, and
implementation. This will take them away from their regular tasks for
part of each day so additional staff might be required.

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• Benchmarking database costs - Organizations that institutionalize

benchmarking into their daily procedures find it is useful to create and
maintain a database of best practices and the companies associated with
each best practice now.

KAIZEN
Kaizen, a Japanese term that basically translates to 'continuous improvement'
or 'change to become good', is a management concept originated by the
Japanese in order to continuously effect incremental changes for the better,
involving everybody within the organization from workers to managers. Kaizen
is aimed at producing more and more value with less and less wastes (higher
efficiency), attaining better working environment, and developing stable
processes by standardization.

This never-ending process of achieving small improvements within the

company everyday is in contrast to trying to achieve breakthrough results from
a large improvement once in a while. Kaizen as a management technique is
therefore more suitable for organizations with a collective culture that is trying
to achieve long-term gains from a continuous supply of small and less radical
contributions from its employees.

Kaizen implementation is said to operate on the following principles: 1) that

human resources are the company's most important asset; 2) that success can
not be achieved by some occasional radical changes alone, but more so by
incremental yet consistently arriving improvements; and 3) that improvements
must be based on a statistical or quantitative study of the performance of the
process.

Thus, under Kaizen, everyone is a valued contributor to the company's success,

and must therefore be given the necessary education and training in order to

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contribute in his or her own way on a continuous basis. Everyone in the

organization must genuinely believe in the idea of Kaizen and strive to achieve
one small goal at a time, each of which is considered a step towards the
company's over-all success.

Every person must therefore be willing to: 1) learn; 2) communicate; 3) be

disciplined; 4) get involved; and 5) change in order to maximize gains from
Kaizen. Management must also be able to support this Kaizen structure by
aligning resources, metrics, rewards, and incentives to Kaizen principles,
encouraging all employees to contribute in their own ways.

Management programs that promote Kaizen include but are not limited to the
following: 1) employee suggestion systems; 2) recognition systems for
employees who exert effort for continuous improvement; 3) group-oriented
suggestion or improvement systems like Quality Circles (small groups that
perform quality improvement activities); 4) JIT; 5) 5- S; 6) Total Productive
Maintenance; and 7) Total Quality Management.

Kaizen's Business Tenets

1) Not a single day should pass without any kind of improvement anywhere in
the company.

2) Improvement strategies must be driven by customer requirements and

satisfaction.

3) Quality must always take a higher priority over profits.

4) Employees must be encouraged to recognize problems and suggest

improvements to address these problems.

5) Problems must be solved by a collaborative and systematic approach

through cross functional teams.

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6) Process-oriented thinking (as opposed to results-oriented thinking) must be

practiced by everyone, so that every process gets continuously improved from
time to time.

SIX-SIGMA
6-Sigma refers to a quality improvement and business strategy concept started
by Motorola in the United States in 1987. In statistical terms, 6-Sigma is the
abbreviated form of 6 standard deviations from the mean, which
mathematically translates to about 2 defects per billion. Thus, strictly speaking,
your process is said to have achieved 6- sigma if it is producing no more than 2
defects per billion parts produced.

No company is probably nearly perfect enough to achieve this quality level.

Consequently, the term 6-Sigma in the industry has somehow taken on the
equivalent defect rate of 3.4 ppm, which in reality corresponds to roughly 4.5
sigmas. Thus, in the industry today, a person speaking of 6-sigma is most likely
referring to a quality level equivalent to 3.4 defects per million.

Regardless of how one wishes to use the term 6-sigma, though, it is apparent
that its purpose when its concept was first incepted is to make processes as
consistent as possible in order to reduce the defect rates of their outputs.
Consistency of meeting customer specifications as well as the probability of
meeting them consistently in the future is the essence of 6-sigma. To see how
the number of sigmas relates to the process Cpk and the process ppm level,
please refer to the Cpk/ppm Table.

6-Sigma has evolved into a continuous, disciplined, and structured process of

improving operations to make products that are consistently meeting
customer requirements. In effect, 6-Sigma no longer simply means excellent
finished products, but more importantly, excellent processes, services, and
administration. When Motorola started 6- Sigma in the 80's, it was applied to

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repetitive manufacturing processes. Presently, however, the use of 6-Sigma is

well-established in almost all aspects of doing business in a wide range of
industries.

6-Sigma encourages leanness, simplicity, and doing things right the first time,
so that wastes and corresponding costs are avoided. Statistics-based problem
solving, results orientation, and quantifiable top and bottom-line returns are
also ingredients of 6-Sigma. Lastly, 6-Sigma is driven by the voice of the
customer.

TOTAL QUALITY MANAGEMENT

Total Quality Management is a structured system for managing the quality of
products, processes, and resources of an organization in order to satisfy its
internal and external customers, as well as its suppliers. Its main objective is
sustained (if not progressive) customer satisfaction through continuous
improvement, which is accomplished by systematic methods for problem
solving, breakthrough achievement, and sustenance of good results
(standardization).

Total Quality Management (TQM) is a management strategy aimed at

embedding awareness of quality in all organizational processes. TQM has been
widely used in manufacturing, education, government, and service industries,
as well as NASA space and science programs.

Total Quality provides an umbrella under which everyone in the organization

can strive and create customer satisfaction. TQ is a people-focused
management system that aims at continual increase in customer satisfaction at
continually lower real costs.

Definition

TQM is composed of three paradigms:

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• Total: Organization wide

• Quality : With its usual Definitions, with all its complexities (External
Definition)
• Management : The system of managing with steps like Plan, Organize,
Control, Lead, Staff, etc.

As defined by the International Organization for Standardization (ISO):

"TQM is a management approach for an organization, centered on quality, based

on the participation of all its members and aiming at long-term success through
customer satisfaction, and benefits to all members of the organization and to
society."

Principles of TQM

1) Quality can and must be managed.

2) Everyone has a customer to delight.
3) Processes, not the people, are the problem.
4) Every employee is responsible for quality.
5) Problems must be prevented, not just fixed.
6) Quality must be measured so it can be controlled.
7) Quality improvements must be continuous.
8) Quality goals must be based on customer requirements.

5S

Five related terms, beginning with an S sound, describing workplace practices

conducive to visual control and lean production. The five terms in Japanese are:

1. Seiri: Separate needed from unneeded items-tools, parts, materials,

paperwork-and discard the unneeded.

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2. Seiton: Neatly arrange what is left-a place for everything and everything in its
place.

3. Seiso: Clean and wash.

4. Seiketsu: Cleanliness resulting from regular performance of the first three

Ss.

5. Shitsuke: Discipline, to perform the first four Ss.

Muda, Mura, Muri

Three Japanese terms often used together in the Toyota Production System
(and called the Three Ms) that collectively describe wasteful practices to be
eliminated.

• Muda: Any activity that consumes resources without creating value for
the customer.

• Mura: Unevenness in an operation; for example, an uneven work pace in

an operation causing operators to hurry and then wait.

• Muri: Overburdening equipment or operators.

CONTROL CHART

A control chart is a statistical tool used to distinguish between variation in a

Process resulting from common causes and variation resulting from special
causes. It presents a graphic display of process stability or instability over time.

Every process has variation. Some variation may be the result of causes which
are not normally present in the process. This could be special cause variation.
Some variation is simply the result of numerous, ever-present differences in the

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process. This is common cause variation. Control Charts differentiate between

these two types of variation.

One goal of using a Control Chart is to achieve and maintain process stability.
Process stability is defined as a state in which a process has displayed a certain
degree of consistency in the past and is expected to continue to do so in the
future .This consistency is characterized by a stream of data falling within
control limits based on plus or minus 3 standard deviations (3 sigma) of the
centerline.

ISO 14000
The ISO 14000 environmental management standards exist to help
organizations minimize how their operations negatively affect the environment
(cause adverse changes to air, water, or land), comply with applicable laws,
regulations, and other environmentally oriented requirements, and continually
improve on the above.

ISO 14000 is similar to ISO 9000 quality management in that both pertain to the
process (the comprehensive outcome of how a product is produced) rather
than to the product itself. As with ISO 9000, certification is performed by third-
party organizations rather than being awarded by ISO directly. The ISO 19011
audit standard applies when auditing for both 9000 and 14000 compliance at
once.

Standards

The material included in this family of specifications is very broad. The major
parts of ISO 14000 are:

• ISO 14001 is the standard against which organizations are assessed. ISO
14001 is generic and flexible enough to apply to any organization
producing any product or service anywhere in the world.

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• ISO 14004 is a guidance document that explains the 14001 requirements

in more detail. These present a structured approach to setting
environmental objectives and targets and to establishing and monitoring
operational controls.

These are further explicated by the following:

• ISO 14040 discusses pre-production planning and environment goal

setting.
• ISO 14020 covers labels and declarations.
• ISO 14030 discusses post-production environmental assessment.
• ISO 14062 discusses making improvements to environmental impact
goals.
• ISO 14063 is an addendum to 14020, discussing further communications
on environmental impact.
• ISO 19011 which specifies one audit protocol for both 14000 and 9000
series standards together. This replaces ISO 14011 meta-evaluation—how
to tell if your intended regulatory tools worked. 19011 is now the only
recommended way to determine this.

ISO 14001 is an internationally accepted specification for an environmental

management system. It specifies requirements for establishing an
environmental policy, determining environmental aspects and impacts of
products/activities/services, planning environmental objectives and measurable
targets, implementation and operation of programs to meet objectives and
targets, checking and corrective action, and management review.

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ISO 9000
ISO 9000 is a family of standards for quality management systems. ISO 9000 is
maintained by ISO, the International Organization for Standardization and is
administered by accreditation and certification bodies. For a manufacturer,
some of the requirements in ISO 9001 (which is one of the standards in the ISO
9000 family) would include:

• A set of procedures that cover all key processes in the business;

• Monitoring manufacturing processes to ensure they are producing
quality product;
• Keeping proper records;
• Checking outgoing product for defects, with appropriate corrective
action where necessary; and
• Regularly reviewing individual processes and the quality system itself for
effectiveness.

A company or organization that has been independently audited and certified

to be in conformance with ISO 9001 may publicly state that it is "ISO 9001
certified" or "ISO 9001 registered." Certification to an ISO 9000 standard does
not guarantee the compliance (and therefore the quality) of end products and
services; rather, it certifies that consistent business processes are being
applied.

Although the standards originated in manufacturing, they are now employed

across a wide range of other types of organizations, including colleges and
universities. A "product", in ISO vocabulary, can mean a physical object, or
services, or software. In fact, according to ISO in 2004, "service sectors now
account by far for the highest number of ISO 9001:2000 certificates - about 31%
of the total" - source: the ISO Survey 2004

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Advantages

1. Create a more efficient, effective operation

2. Increase customer satisfaction and retention
3. Reduce audits
4. Enhance marketing
5. Improve employee motivation, awareness, and morale
6. Promote international trade

********************

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PRACTICAL STUDY
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GALXOSMITHKLINE

S OVERVIEW
COMPANY’S
At GlaxoSmithKline,, we conduct our business with integrity and honesty, and
aspire to excellence in all we do. We know our people are vital to the success
of the business, and encourage everyone to achieve their maximum potential.
We offer a competitive benefits
benefits package and recognize the need for a healthy
balance between work and family life.

GlaxoSmithKline welcomes the talent of people from diverse backgrounds to

provide the expertise, dedication and imagination to propel us toward a
prosperous future. We look
look for individuals with daring spirits and inquisitive
minds who seek a broad range of opportunities for personal and professional
growth, and whose efforts are realized in the improved health of people
worldwide.

GlaxoSmithKline is an exciting organization, which offers a variety of career

opportunities. Our recruitment process aims to achieve the highest level of
candidate care by listening to your interests, and treating you like a valued
customer.

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BUSINESS UNITS
The organizational
zational structure of GlaxoSmithKline (GSK) is designed to make our
company a model for excellence in the pharmaceutical industry - a new
company that represents best practice in every way.

GSK is a company with the size and scale to invest in the tools we need to
succeed, and to drive that success going forward. To achieve that goal, GSK is
organized as a flexible company, capable of responding quickly to a rapidly
changing marketplace. Organized globally to coordinate activities and gain the
benefits of size
ize and scale, the company is built on smaller, customer-focused
customer
units, dedicated to delivering medicines that relieve the suffering of patients
around the world.

The new and innovative model for R&D, the focused structure of our
pharmaceutical business throughout
throughout the world and the organization of our
global services such as IT and Procurement are some of the highlights in the
approach which will lead our success.

GSK CONSUMER HEALTHCARE

HEALTHC
GlaxoSmithKline is a leader in the worldwide consumer healthcare market.
With nearly $6 billion in sales, over ten million brands and present in 130
markets, the consumer healthcare business brings an added dynamic
dimension to GSK.

Operating in the fiercely competitive environment of retail and consumer

marketing GlaxoSmithKline Consumer Healthcare brings oral healthcare, over-
over

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the-counter
counter medicines and nutritional healthcare products to millions of
people.

Brand names such as Panadol, Aquafresh toothpaste, Lucozade, Nico Nicorette and
Niquitin smoking cessation products are household names around the world. In
one year GSK Consumer Healthcare produces - among many others - nine
billion tablets to relieve stomach upsets, six billion tablets of pain relief tablets
and 600 million n tubes of toothpaste.

But the driving force behind GlaxoSmithKline's Consumer Healthcare business

is science. With four dedicated consumer healthcare R&D centers and
consumer healthcare regulatory affairs, the business takes scientific innovation
as seriously
usly as marketing excellence and offers leading
leading-edge
edge capability in both.

GSK CORPORATE FUNCTIONS

FUNCTI
The Corporate business unit within GlaxoSmithKline,, is responsible for
leadership, processes, policies, standards and services in the core business
areas of Corporate Communications & Global Community Partnerships,
Corporate Ethics & Compliance, Finance, Human Resources and Legal. The
functions work individually and in cross
cross-functional
functional teams across different
corporate functions and businesses within GSK.

The functions
unctions aim to achieve compliance with legal, financial and regulatory
frameworks within and outside the corporation; protecting, supporting and
motivating GSK people and the communities in which they work. They utilize a
responsive business infrastructure
infrastructur - combining account management and
shared services approaches - to work with GSK's diverse businesses. The
Corporate functions count among their audiences; employees, communities,
media, governments, analysts, institutions and shareholders worldwide.

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GSK
SK INFORMATION TECHN
TECHNOLOGY

In GSK, Information Technology is a business unit, one that is closely integrated

with all parts of the company, all around the world. It is organized to take best
advantage of global scale when that is appropriate, while supporti
supporting GSK
people and businesses locally so they have the IT tools they need to succeed.

Global capabilities:
Six IT departments provide core services that are required by each of the
business units and by GSK at large. These IT departments are:

• Cross Functional Process Design - Ensures that all proposed systems

changes have a significant, positive impact on the performance of the
business processes.
• Global eBusiness - Develops GSK's commercial capabilities in eBusiness.
• Global Strategy & Applications - Drives the overall IT strategy of GSK and
ensures the IT architecture is coordinated in concert with business
strategies.
• Project and Portfolio Management - Builds processes for approving
projects, manages project issues as they progress and works with th the
project management groups to build skills and capabilities.
• Systems and Communications Services - Builds, deploys and operates the
cost effective, flexible, computing and communications infrastructure
required by GSK.
• Risk Management & Security - Identifies
ies and addresses security and other
risks resulting from external or internal use of information technology
and computerized information.

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IT is supported by six core service teams: Audit, Communications, Finance &

Alliances, Human Resources, Legal and Pro
Procurement.

GLOBAL MANUFACTURING AND SUPPLY

GSK has 85 manufacturing sites in 37 countries with over 35,000 employees.
The sites within the GSK manufacturing network:

 supply products to 191 global markets for GSK

 produce over 1,200 different brands
 manufacture
ture almost 4 billion packs per year
 produce over 28,000 different finished packs per year
 supply around 6,900 tons of bulk active each year
 manage about 2,000 new product launches globally each year

Production of nutritional products is in excess of 300 million

million Lucozade/Ribena
bottles, 350 million Ribena tetra packs and 20 million Lucozade carbonated
cans per year. The annual output of Horlicks is 50 million kilograms, equivalent
to about 1,000 million servings. In oral care, the volume of toothpaste
manufactured
actured annually exceeds 600 million tubes.

GSK PHARMACEUTICALS
You would be forgiven for thinking that a company the size of GlaxoSmithKline
- with over 100,000 employees around the world - is only ever concerned with
the bottom line. But the truth is that every member of our organization is

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equally dedicated to helping

helpi people around the world Live
ive longer, Feel
F better
and Do more.

We have a diverse portfolio of brands, as well as a health pipeline of new

exciting compounds. Every year

GlaxoSmithKline invests approx. $5 billion into research and development.

GlaxoSmithKline
line is a leader in four major therapeutic areas - anti infectives,
central nervous system, respiratory and gastro-intestinal.
gastro intestinal. Based on 2004
Annual Results, GSK had sales of $37.2 billion and profit before tax of 11.1 billion.
Pharmaceutical sales accounte
accountedd 24.8 billion with new products representing
22% of total pharmaceutical sales.

This continued success is achieved by being a responsible leader, committed to

working with healthcare professionals, listening to patients and responding to
a changing environment.
nment.

RESEARCH AND DEVELOPMENT

DEVELOPMENT (R&D)
We live in an exciting moment in the history of biomedical science. Disease is
giving up its secrets to the intelligence and dedication of scientists aided by
technological marvels that might have been the stuff of science fiction only a
generation ago. We have every reason to believe that ahead of us lies
accelerating progress against many of the afflictions of humankind.

At GlaxoSmithKline, scientists in Research and Development are committed to

capturing this moment. nt. They bring to it their own very considerable abilities,
the resources of a parent company devoted to the scientific enterprise, and the
urgency of knowing that their highest purpose is the relief of human suffering.
In pursuit of this purpose, they desire
desire to make of GlaxoSmithKline a magnet for
others who share their talents, whether as prospective corporate colleagues or
as collaborators in industry, academe, and government.

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Creating a new medicine is a complex business, costing over $324 million and
typically
ypically taking between 12 and 15 years. Regulatory hurdles are increasingly
stringent, yet escalating costs, medical need and the pressure of competition
demand that the whole process is condensed into as short a time as possible.
GSK uses the scale of a huge company to reach its goal of applying science to
improve patient health. Equally important is its flexibility, allowing teams of
scientists the freedom to take an entrepreneurial approach, and enabling them
to move quickly, on the basis of informed decisions.
de

Once a compound has been identified as a potential drug candidate, it goes

through an exacting, rigorous process to prove that the new drug is both safe
and effective. Any potential new project not meeting the criteria at any stage is
dropped from the company portfolio to make way for other, more promising
candidates.

GSK IN TIME

 Every second, more than 30 doses of vaccines are distributed by

GSK worldwide.
 Every minute, more than 1,100 prescriptions are written for GSK
products worldwide.
 Every hour, GSK spends more than $450,000 to find new
medicines.
 Every day, more than 200 million people around the world use a
GSK brand toothbrush or toothpaste.
 Every year, GlaxoSmithKline donates more than $138 million in cash
and products to communities around
aro the world.

GSK employees are each expected to strive for improvement in these key
competencies and align themselves with the supportive behaviors.

Performance with Integrity - Delivering on promises with organizational

and individual trustworthiness.

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People with Passion - People are enabled and motivated to do their best
work.

Innovation & Entrepreneurship - Competitive advantage through well-

executed ingenuity.

Sense of Urgency - A nimble, focused, resilient and fast-learning

organization.

Everyone Committed, Everyone Contributing- All employees have an

opportunity to make a meaningful contribution, and to succeed based on
merit.

Accountability for Achievement - Clear expectations; focus on the critical

few. Performance matters, and will be rewarded.

Alignment with GSK Interests - One team, in single-minded pursuit of our

mission, reflecting a common spirit and integrated strategies.

Develop Self and Others - A norm of career-long learning agility across

the organization. Employees continuously learn and develop their
professional potential. Leaders have key roles as teachers, coaches and
champions of development.

WHAT IS DIVERSITY AT GSK?

At GSK, we are committed to creating an inclusive environment for our

employees, customers, and stakeholders.

For employees, it means creating an environment where we value and

draw on the differing knowledge, perspectives, experiences, and styles
resident in our global community.

For customers, it means understanding who they are, what their

changing needs are, and how GSK can help them do more, feel better,
and live longer.

For stakeholders, it means understanding what they prefer, what they

require, and how GSK can work most effectively with them.

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What makes GSK a great place to work?

We asked some of our current employees, and here's what they said:

"There are lots of local companies that would welcome someone of my

background and experience. Here, I get the added bonus of knowing
that I am contributing to better lives around the world"

"The company offers a compe

competitive
titive salary and excellent benefits. If you
analyze the whole package, you'll find that most companies can't beat it"

"Through friendly and supportive teams, individual innovation is

encouraged and rewarded."

"When you have a project there is a real sense of ownership which

means things get done"

"It's the people within the company that makes it great"

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GALXOSMITHKLINE PAKISTAN LIMITED

Overview
GlaxoSmithKline Pakistan Limited was created on January 1st 2002 through the
merger of SmithKline and French of Pakistan Limited, Beecham Pakistan
(Private) Limited and Glaxo Wellcome (Pakistan) Limited- standing today as the
largest pharmaceutical company in Pakistan.

As a leading international pharmaceutical company we make a real difference

to global healthcare and specifically to the developing world. We believe this is
both an ethical imperative and key to business success. Companies that
respond sensitively and with commitment by changing their business practices
to address such challenges will be the leaders of the future. GSK Pakistan
operates mainly in two industry segments: Pharmaceuticals (prescription drugs
and vaccines) and consumer healthcare (over-the-counter- medicines, oral care
and nutritional care).

GSK leads the industry in value, volume and prescription market shares. We are
proud of our consistency and stability in sales, profits and growth. Some of our
key brands include Augmentin, Panadol, Seretide, Betnovate, Zantac and
Calpol in medicine and renowned consumer healthcare brands include Horlicks,
Aquafresh, Macleans and ENO.

In addition, we are also deeply involved with our communities and undertake
various Corporate Social Responsibility initiatives including working with the
National Commission for Human Development (NCHD) for whom we were one

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of the largest corporate donors. We consider it our responsibility to nurture the

environment we operate in and persevere to extend our support to our
community in every possible way. GSK participates in year round charitable
activities which include organizing medical camps, supporting welfare
organizations and donating to/sponsoring various developmental concerns and
hospitals. Furthermore, GSK maintains strong partnerships with non-
government organizations such as Concern for Children, which is also
extremely involved in the design, implementation and replication of models for
the sustainable development of children with specific emphasis on primary
healthcare and education.

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MISSION STATEMENT
Excited by the constant search for
innovation, we at GSK undertake our
quest with the enthusiasm of
entrepreneurs. We value performance
achieved with integrity. We will attain
success as a world class global leader with
each and every one of our people
contributing with passion and an
unmatched sense of urgency.
Our mission is to improve the quality of
human life by enabling people to do more,
feel better and live longer.
Quality is at the heart of everything we do-
from the discovery of a molecule to the
development of a medicine.
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QUALITY MANAGEMENT SYSTEM (QMS)

GSK has developed a comprehensive system of QMS by aligning internationally
recognised standards and best practices. The primary goal of this vital exercise
is to provide safe and effective products for patients and customers, satisfying
the stringent requirements of the regulators and the needs of our
shareholders.

For GSK to remain an indisputable industry leader, the company has set a list of
stringent criteria that ensures all customer needs are achieved.
• Standards:
• Global quality policies
• Global quality guidelines
• Global quality management processes

Training

Material

Auditing

Continuous improvement

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GSK’s Quality Management System is an innovative yet practical tool that is

benchmarked against all international standards and guidelines ensuring risk
minimization, and more importantly top-notch managerial skills.
Our QMS is a ‘living system’ which focuses on the ever changing needs of our
main customer groups – patients, regulators, company / shareholders. This is a
fast-paced world and industry where changes are constant, and the QMS has
been created to ascertain that everything is managed in a controlled and
proficient manner.

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To reiterate GSK’s quality statement:

“Quality is at the heart of everything we do – from the discovery of the
molecule through to product development, manufacture, supply and sale – and
vital to all the services that support our business performance.”
Andrew Witty, Chief Executive Officer

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