managing for total quality in organizations chapter 21

33
Managing for Managing for Total Quality in Total Quality in Organizations Organizations Chapter 21 Chapter 21

Upload: edmund-rice

Post on 26-Dec-2015

220 views

Category:

Documents


2 download

TRANSCRIPT

Page 1: Managing for Total Quality in Organizations Chapter 21

Managing for Total Managing for Total Quality in Quality in

OrganizationsOrganizations

Chapter 21Chapter 21

Page 2: Managing for Total Quality in Organizations Chapter 21

Describe the connection between productivity and quality.

Understand the importance of increasing productivity.

Explain total and partial measures of productivity and show how they are used to keep track of national, industry-wide, and company-wide productivity.

Identify the activities involved in total quality management and describe four tools that companies can use to achieve it.

List six ways in which companies can compete by improving productivity and quality.

Learning Objectives

Page 3: Managing for Total Quality in Organizations Chapter 21

Definition of Quality

Quality – the totality of features & characteristics of a product or service that bear on its ability to satisfy stated or implied needs

Total Quality Management – a strategic commitment by top management to change its whole approach to business to make quality a guiding factor in everything it does

Page 4: Managing for Total Quality in Organizations Chapter 21

Eight Dimensions of Quality

Performance

Features

Reliability

Conformance

Durability

Serviceability

Aesthetics

Perceived quality

Page 5: Managing for Total Quality in Organizations Chapter 21

Total Quality Management

EmployeeinvolvementEmployee

involvement

Materials

Materials

TechnologyTechnology MethodsMethods

Strategic commitment

Quality improvement

Page 6: Managing for Total Quality in Organizations Chapter 21

Managing Productivity

Improving operations

Increasing employee involvement

Improving productivity

Page 7: Managing for Total Quality in Organizations Chapter 21

Designing Operations Systems for Quality

Product service

mix

Product service

mix

CapacityCapacity

FacilitiesFacilities

Page 8: Managing for Total Quality in Organizations Chapter 21

ProductivityProductivity

a measure of efficiency that compares how much is produced with the resources used to produce it

productivity grows if an organization can produce more of an item with a given amount of resources than it could in the past

all stakeholders (employees, business, economy) benefit from increased productivity

Page 9: Managing for Total Quality in Organizations Chapter 21

The Productivity ParadoxThe Productivity Paradox

despite massive investment in computers, the rate of productivity growth is now lower than it was before computers were introduced...Why? possibly measures of productivity are not

sensitive enough to detect growth in the area of services where most of the growth has occurred

perhaps gains in productivity are still building and may become apparent in the next few years

perhaps information technology is not the boon to productivity that it was anticipated to be

Page 10: Managing for Total Quality in Organizations Chapter 21

QualityQuality

a product’s fitness for use in terms of offering the features that consumers want

quality and quantity are not the same: quantity measures efficiency of production, not product quality

firms may be efficient but still lack the quality that consumers seek

Canada’s competitive problems are largely linked to focusing on quantity instead of quality

global competitors are focusing on both quality and quantity to “out-compete” Canadian firms

Page 11: Managing for Total Quality in Organizations Chapter 21

International Productivity Affects Wealth

International Productivity Affects Wealth

countries with greater productivity on an international scale: have a larger share of the

global resource base have greater wealth to divide

among their citizens have a population which enjoys

a greater standard of living relative to other nations

Page 12: Managing for Total Quality in Organizations Chapter 21

National Productivity Affects Wealth

National Productivity Affects Wealth

countries with greater domestic productivity: have greater wealth for all citizens

countries with limited domestic productivity: can only allocate limited wealth to their

citizens an individual’s wealth can only increase at

the expense of another individual investors, employees, business and

individuals are negatively affected

Page 13: Managing for Total Quality in Organizations Chapter 21

Industry ProductivityIndustry Productivity

differences exist in the productivity between services and goods manufacturing sectors, with the services sector showing slower growth

differences also exist within specific industries

agriculture is more productive internationally for Canada than steel or automobile production due to investment in technology and superior natural resources

Page 14: Managing for Total Quality in Organizations Chapter 21

Company ProductivityCompany Productivity

a more productive company: enjoys lower costs can pass on savings in reduced prices can obtain a competitive edge enjoys better stock prices can offer employee profit-sharing plans

based on productivity-improvement can rely on productivity-planning to

maintain a long-term market advantage

Page 15: Managing for Total Quality in Organizations Chapter 21

Measuring ProductivityMeasuring Productivity

productivity is measured as a ratio of outputs to inputs

managers must choose which inputs or outputs they desire to use in the ratio

outputs may include sales in units or dollars

inputs may include labour, capital, materials, and energy required to produce the output

Page 16: Managing for Total Quality in Organizations Chapter 21

Productivity RatiosProductivity Ratios

Total Factor Productivity Ratio

Productivity = OutputsLabour + Capital + Materials + Energy Inputs

Partial Productivity Ratio

Uses a choice of inputs in the formula to customize theproductivity measure.

Page 17: Managing for Total Quality in Organizations Chapter 21

Total Quality Management (TQM)Total Quality Management (TQM)

requires attention to both efficiency (quantity produced) and quality (the ability of the product to deliver the consumers’ expectations) and recognizes that: no defects are tolerable all employees are responsible for

maintaining quality standards

Page 18: Managing for Total Quality in Organizations Chapter 21

Quality AssuranceQuality Assurance

also called quality management: those activities necessary to get

quality goods and services into the marketplace

planning organizing leading controlling

ManagingManagingQuality Quality EffortsEfforts

Page 19: Managing for Total Quality in Organizations Chapter 21

Planning for QualityPlanning for Quality

quality planning must begin before goods are designed, or redesigned

performance quality (the overall degree of quality): the features of the product to

meet consumers’ needs how well the product performs

quality reliability: the consistency of quality from

product unit to product unit

Page 20: Managing for Total Quality in Organizations Chapter 21

Controlling for QualityControlling for Quality

establish specific quality standards and measurements

compare results to standards using quality assurance tools

detect mistakes and make corrections

Page 21: Managing for Total Quality in Organizations Chapter 21

Quality Assurance ToolsQuality Assurance Tools

competitive product analysis

value-added analysis

statistical process control

quality/cost studies for quality improvement

quality circles

benchmarking cause & effect

diagrams ISO 9000 Re-

engineering

Page 22: Managing for Total Quality in Organizations Chapter 21

Competitive Product AnalysisCompetitive Product Analysis

dismantling a competitor’s product to test each component against a firm’s own equivalent product and components

determine areas for improvement to maintain competitiveness in the marketplace

Page 23: Managing for Total Quality in Organizations Chapter 21

Quality/Cost StudiesQuality/Cost Studies

improving product quality by determining the firm’s quality-related costs and identifying areas with the greatest cost-saving potential

quality costs are associated with making, finding, repairing or preventing product defects

requires determining the costs of internal and external failures through objective analysis (not guesswork or hunches)

Page 24: Managing for Total Quality in Organizations Chapter 21

Internal FailuresInternal Failures

internal failures include expenses associated with substandard products from their manufacture, until they leave the plant, including detection

up to 50% of total costs is attributable to internal failures

individual costs of internal failures must be objectively determined

Page 25: Managing for Total Quality in Organizations Chapter 21

External FailuresExternal Failures

external failures include expenses associated with substandard products that occur outside of the plant

these include difficulties due to customer complaints and the cost of correcting the problem (replacement/repair, transportation, legal costs)

Page 26: Managing for Total Quality in Organizations Chapter 21

Quality CirclesQuality Circles

employees are grouped into small teams (called quality circles)

each group chooses a team leader and determines rules for discussion

each team must define, analyze, and solve quality and other process-related problems within their areas of responsibility

may involve brainstorming, discussion and the use of quality/cost study

Page 27: Managing for Total Quality in Organizations Chapter 21

ISO 9000ISO 9000

a system developed by the International Standards Organization (ISO) to “score” a firm’s quality

to receive the rating firms must be formally measured by qualified consultants

the rating addresses: product testing, employee training, record-keeping, correcting defects

A+A+

Page 28: Managing for Total Quality in Organizations Chapter 21

Statistical Process ControlStatistical Process Control

statistical analysis techniques that allow managers to: analyze variations in production data detect when adjustments are needed

to create products with high quality reliability

Page 29: Managing for Total Quality in Organizations Chapter 21

Statistical Process Control Procedures

Statistical Process Control Procedures

process variation process capability study specification limits control charts

Page 30: Managing for Total Quality in Organizations Chapter 21

Process VariationProcess Variation

any change in employees, materials, work methods, or equipment that affects output quality

some variation is acceptable any variation outside of the

acceptable range must be detected and eliminated

Page 31: Managing for Total Quality in Organizations Chapter 21

An Example:Process

Variation in Filling Cereal

Boxes

An Example:Process

Variation in Filling Cereal

Boxes

Cereal Machine A: Box Filling

Off centreToo much variation

390 grams 410 grams

Lower 400 grams Upper Specification Specification

Limit Limit

Cereal Machine B: Box Filling

CentredAcceptable variation

390 grams 410 grams

Lower 400 grams Upper Specification Specification

Limit Limit

Page 32: Managing for Total Quality in Organizations Chapter 21

Control ChartsControl Charts

a sample is tested and the results are displayed graphically

control limits are critical values which are noted on the graph to depict the acceptable range of the specification limits

the point of production where results begin to deviate from the requirements can be spotted and remedied

Page 33: Managing for Total Quality in Organizations Chapter 21

Quality-of-Work-LifeQuality-of-Work-Life

employees have a dramatic effect on product quality

product quality has improved in small business relative to large business often due to a better work-life for employees

employees must be empowered to make decisions which allow their work to flow better and increase product quality

often, the ability to empower employees is limited by inadequate employee training