managing for total quality in organizations chapter 21
TRANSCRIPT
Managing for Total Managing for Total Quality in Quality in
OrganizationsOrganizations
Chapter 21Chapter 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
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
Eight Dimensions of Quality
Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality
Total Quality Management
EmployeeinvolvementEmployee
involvement
Materials
Materials
TechnologyTechnology MethodsMethods
Strategic commitment
Quality improvement
Managing Productivity
Improving operations
Increasing employee involvement
Improving productivity
Designing Operations Systems for Quality
Product service
mix
Product service
mix
CapacityCapacity
FacilitiesFacilities
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
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
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
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
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
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
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
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
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.
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
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
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
Controlling for QualityControlling for Quality
establish specific quality standards and measurements
compare results to standards using quality assurance tools
detect mistakes and make corrections
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
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
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)
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
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)
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
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+
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
Statistical Process Control Procedures
Statistical Process Control Procedures
process variation process capability study specification limits control charts
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
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
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
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