Part 5

Controlling

Chapter 14

Controlling
Productivity,
Quality, and
Safety
Mosley • Pietri
PowerPoint Presentation by ...
Learning Objectives
Learning Objectives
After reading and studying this chapter, you should
be able to:
1. Explain the con...
Learning Objectives (cont’d)
Learning Objectives (cont’d)
After reading and studying this chapter, you should
be able to:
...
Global Competition and Productivity
• High U.S. Productivity:
Mid-1990s to Present
 To overcome stagnant

productivity, U...
EXHIBIT 14.1

U.S. Productivity Growth in Manufacturing Output per Hour: 1960s–2006

Year

Annual Rate

Year

Annual Rate
...
Improving Productivity and Cost Control
• Productivity
 Indicates how efficiently a country is utilizing its

human resou...
Improving Productivity
• How Productivity is Increased
1. Increase the total output without

changing the total costs.
2. ...
EXHIBIT 14.2

Examples of Productivity Measurements

Input

Output

Salesperson labor hours

Sales volume per salesperson
...
Why Productivity Is Important
• For Individual Companies:
 Increased productivity translates into lower prices,

larger m...
EXHIBIT 14.3

Groups Influencing Productivity

© 2008 Thomson/SouthWestern. All rights reserved.

14–10
EXHIBIT 14.5

How Supervisors Can Improve Employee Productivity

• Train employees. Can their abilities be upgraded?
• Cle...
EXHIBIT 14.5

How Supervisors Can Improve Employee Productivity (cont’d)

• Reduce accidents. Accidents normally result in...
EXHIBIT 14.6

Performance Report

Name of department

Fabrication

Performance period

November 2006

Budgeted output

15,...
Recent Productivity Improvement Methods
• Robotics
 The use of programmed computer-controlled

machines to perform repeti...
Historical Insight
• Evolution of the Quality Explosion in the U.S.
 W. Edwards Deming’s 85–15 rule
 Assumes

that when ...
EXHIBIT 14.7

Deming’s Fourteen Points for Quality

1. Top management should establish and publish a statement of the
orga...
EXHIBIT 14.7

Deming’s Fourteen Points for Quality (cont’d)

8.

Fear should be eliminated from the work environment.

9.
...
EXHIBIT 14.8

The Malcolm Baldrige National Quality Award

Organizations must observe eight essentials in order to win:
1....
EXHIBIT 14.9

The Total Quality Chain

Total Quality
Refers to an organization’s overall effort to achieve customer satisf...
Tools for Controlling Quality
• Flowchart
 A visual representation of the sequence of steps

needed to complete a process...
EXHIBIT 14.10

Flowchart of a Fast-Food Drive-Through Process

© 2008 Thomson/SouthWestern. All rights reserved.

14–21
EXHIBIT 14.11

Histogram Showing Frequency and Length of Time
Taken by Home Office to Process Loan Request

© 2008 Thomson...
EXHIBIT 14.12

Run Chart of Percentage of Restaurant Customers
Waiting in Excess of 1 Minute to Be Seated

© 2008 Thomson/...
Tools for Controlling Quality (cont’d)
• Pareto Charts
 Problem-analysis charts that use a histogram to

illustrate sourc...
EXHIBIT 14.13

Pareto Chart of Customers’ Complaints about Restaurants

© 2008 Thomson/SouthWestern. All rights reserved.
...
EXHIBIT 14.14

Cause-and-Effect Diagram for “Why Tables Are Not Cleared Quickly”

© 2008 Thomson/SouthWestern. All rights ...
EXHIBIT 14.15

Example of a Control Chart

© 2008 Thomson/SouthWestern. All rights reserved.

Source: From Total Quality, ...
The Supervisor’s Role in Achieving Quality
• Supervisors can impact quality by:
 Emphasizing the importance of high quali...
EXHIBIT 14.16

Characteristics of Effective Employee Involvement Teams

• Managers at all levels, especially at the top, s...
Promoting Employee Safety
• The Occupational Safety and Health
Administration (OSHA)
 Is a federal agency created in 1970...
Factors Influencing Safety
Size of the Organization
Size of the Organization

Type of Industry
Type of Industry

Safety
Sa...
EXHIBIT 14.20

Occupational Injury and Illness Rates: Selected Industries, 2004
Industry

Incidence Rate per 100 employees...
Causes of Accidents
Human Factors
Human Factors

Technical Factors
Technical Factors

Accidents
Accidents

Environmental F...
EXHIBIT 14.21

Personal Injury Investigation

Injured:

Fred Hanna

Position:

Lab Assistant

Presiding:

L. C. Smithson, ...
EXHIBIT 14.22

What Supervisors Can Do to Improve Safety

• Push for upgraded safety equipment and safer work methods.
• E...
EXHIBIT 14.22

What Supervisors Can Do to Improve Safety (cont’d)

• Refuse to tolerate horseplay.
• Compete with other de...
Important Terms
Important Terms
• cause-and-effect diagram
• computer-assisted
manufacturing (CAM)
• control chart
• Demin...
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BUS 51 - Mosley7e ch14

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Cengage Professor, Karen Gordon-Brown, Peralta Community College District @ Merritt College, Oakland, CA
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BUS 51 - Mosley7e ch14

  1. 1. Part 5 Controlling Chapter 14 Controlling Productivity, Quality, and Safety Mosley • Pietri PowerPoint Presentation by Charlie Cook The University of West Alabama © 2008 Thomson/South-Western All rights reserved.
  2. 2. Learning Objectives Learning Objectives After reading and studying this chapter, you should be able to: 1. Explain the concept of productivity. 2. Identify and explain the ways in which management, government, unions, and employees affect productivity. 3. Describe some steps supervisors can take to increase productivity. 4. Differentiate between total quality and quality control. 5. Describe the role of variance in controlling quality. 6. 2008 Thomson/South© Identify some important tools for controlling quality. Western. All rights reserved. 14–2
  3. 3. Learning Objectives (cont’d) Learning Objectives (cont’d) After reading and studying this chapter, you should be able to: 7. Explain what the Occupational Safety and Health Administration (OSHA) does. 8. Describe the supervisor’s role in promoting safety. © 2008 Thomson/SouthWestern. All rights reserved. 14–3
  4. 4. Global Competition and Productivity • High U.S. Productivity: Mid-1990s to Present  To overcome stagnant productivity, U.S. companies built new facilities, upgraded technology, transformed production processes and work methods, and invested heavily in employee training. © 2008 Thomson/SouthWestern. All rights reserved. 14–4
  5. 5. EXHIBIT 14.1 U.S. Productivity Growth in Manufacturing Output per Hour: 1960s–2006 Year Annual Rate Year Annual Rate 1960s 2.2 1995 3.9 1970s 2.7 1996 4.1 1980s 1.4 1997 5.0 1990 2.5 1998 4.8 1991 2.3 1999 5.1 1992 5.1 2000 4.1 1993 2.2 2001 0.9 1994 3.1 2002 4.8 2003 6.2 2004 1.4 2005 4.1 2006 (1st Quarter) 3.7 © 2008 Thomson/SouthWestern. All rights reserved. Source: U.S. Bureau of Labor Statistics. 14–5
  6. 6. Improving Productivity and Cost Control • Productivity  Indicates how efficiently a country is utilizing its human resources in producing goods and services.  Is a measure of efficiency (inputs to outputs). • Calculating the Productivity Ratio: Total output of goods/services Total costs (or inputs) © 2008 Thomson/SouthWestern. All rights reserved. 14–6
  7. 7. Improving Productivity • How Productivity is Increased 1. Increase the total output without changing the total costs. 2. Decrease the total input costs without changing the total output. 3. Increase the output and decrease the input costs. © 2008 Thomson/SouthWestern. All rights reserved. 14–7
  8. 8. EXHIBIT 14.2 Examples of Productivity Measurements Input Output Salesperson labor hours Sales volume per salesperson Energy used, in BTUs Number of pounds fabricated Training hours for customer service personnel Percent of error-free written orders Number of hours of plantwide safety meetings Number of accident-free days Labor hours spent on preventive maintenance Number of hours without a machine breakdown Cost of raw materials Quantity of finished goods produced Total labor hours of service personnel Total quantity of services produced Total labor hours of production workforce Total quantity of goods produced Total costs Total number (or value) of goods or services produced © 2008 Thomson/SouthBTU, British thermal unit. Western. All rights reserved. 14–8
  9. 9. Why Productivity Is Important • For Individual Companies:  Increased productivity translates into lower prices, larger market share, and greater profits.  Enables investment in research and development, new advanced technology, increased wages and benefits, and improved working conditions. • For a Nation:  Increased productivity greatly enhances its economic growth and health. © 2008 Thomson/SouthWestern. All rights reserved. 14–9
  10. 10. EXHIBIT 14.3 Groups Influencing Productivity © 2008 Thomson/SouthWestern. All rights reserved. 14–10
  11. 11. EXHIBIT 14.5 How Supervisors Can Improve Employee Productivity • Train employees. Can their abilities be upgraded? • Clearly communicate the need for high standards so that workers understand what is expected of them. • Use motivation techniques to inspire workers to increase output. Pride, ego, and security are several important motivators available. • Eliminate idleness, extended breaks, and early quitting time. • Build in quality the first time work is done. Productivity is lost when items are scrapped or need to be reworked. • Work on improving attendance and turnover in your work group. © 2008 Thomson/SouthWestern. All rights reserved. 14–11
  12. 12. EXHIBIT 14.5 How Supervisors Can Improve Employee Productivity (cont’d) • Reduce accidents. Accidents normally result in time lost to investigations, meetings, and reports—even if the employee does not suffer a lost–work-time injury. • Seek to improve production measures. Will process or work-flow improvements help? • Try to eliminate or reduce equipment or machinery breakdowns. Preventive maintenance is important. • Exercise good control techniques. Follow up on performance and take corrective action promptly. • Involve your employees in the process of improvement. Select their ideas and suggestions for improvement. Form special productivity improvement teams. © 2008 Thomson/SouthWestern. All rights reserved. 14–12
  13. 13. EXHIBIT 14.6 Performance Report Name of department Fabrication Performance period November 2006 Budgeted output 15,700 lbs. Budgeted scrap 152 lbs. Actual output 15,227 lbs. Actual scrap 120 lbs. Variance –473 lbs. Item Direct labor Overtime Supplies Maintenance and repairs Utilities Scrapped material Total © 2008 Thomson/SouthWestern. All rights reserved. +32 lbs. Actual $32,000 1,500 500 4,250 1,300 1,200 $40,750 Budgeted $32,000 1,000 385 3,000 1,200 1,520 $39,105 14–13 Variance $ 0 –500 –115 –1,250 –100 –320 –$1,645
  14. 14. Recent Productivity Improvement Methods • Robotics  The use of programmed computer-controlled machines to perform repetitive manipulations of tools or materials. • Just-in-Time (JIT) Inventory Control System  Scheduling materials to arrive only when they are needed in the production process. • Computer-Assisted Manufacturing (CAM)  Using special computers to assist equipment in performing processes. © 2008 Thomson/SouthWestern. All rights reserved. 14–14
  15. 15. Historical Insight • Evolution of the Quality Explosion in the U.S.  W. Edwards Deming’s 85–15 rule  Assumes that when things go wrong, 85 percent of the time the cause is from elements controlled by management.  Management rather than the employee is to blame for most poor quality. © 2008 Thomson/SouthWestern. All rights reserved. 14–15
  16. 16. EXHIBIT 14.7 Deming’s Fourteen Points for Quality 1. Top management should establish and publish a statement of the organization’s purpose and commitment to quality products and services and continuous improvement. 2. Everyone throughout the organization should learn the new philosophy. 3. Dependence on “inspecting” quality into products should be shifted to an attitude of “expecting” quality by having it built into the system. 4. There must be a systematic way to select quality suppliers, rather than simply on the basis of cost. 5. The organization must be devoted to continuous improvement. 6. All employees should be trained in the most modern quality and problemsolving techniques. 7. Leadership techniques consistent with getting the most commitment from employees should be practiced throughout the entire organization. © 2008 Thomson/SouthWestern. All rights reserved. Source: From W. Edwards Deming, Out of Crisis (Cambridge, MA, MIT Press, 1986). 14–16
  17. 17. EXHIBIT 14.7 Deming’s Fourteen Points for Quality (cont’d) 8. Fear should be eliminated from the work environment. 9. Teams and work groups must work smoothly together; barriers between functional departments must be eliminated. 10. Exhortations, posters, and slogans asking for new levels of workforce productivity must be backed by providing the methods to achieve these. 11. Numerical production quotas should be eliminated. Constant improvement should be sought instead. 12. Barriers that deprive employees from pride in their work must be removed. 13. A vigorous program of education, retraining, and self-improvement for all employees must be instituted. 14. A structure in top management that will push the thirteen points above to achieve the transformation must be created. © 2008 Thomson/SouthWestern. All rights reserved. Source: From W. Edwards Deming, Out of Crisis (Cambridge, MA, MIT Press, 1986). 14–17
  18. 18. EXHIBIT 14.8 The Malcolm Baldrige National Quality Award Organizations must observe eight essentials in order to win: 1. Establish a plan to seek improvement continuously in all phases of operations— not just manufacturing but purchasing, sales, human relations, and other areas. 2. Put in place a system that accurately tracks and measures performance in those areas. 3. Establish a long-term strategic plan based on performance targets that compare with the world’s best in that particular industry. 4. Link closely in a partnership with suppliers and customers in a way that provides needed feedback for continuous improvement. 5. Demonstrate a deep understanding of customers in order to convert their wants into products. 6. Establish and maintain long-lasting customer relationships, going beyond product manufacture and delivery to include sales, service, and ease of maintenance. 7. Focus on preventing mistakes instead of developing efficient ways to correct them; that is, feedforward control is a must. 8. Perhaps most difficult, but imperative, is to make a commitment to quality improvement throughout all levels of the organization, including top, middle, and bottom. © 2008 Thomson/SouthWestern. All rights reserved. 14–18
  19. 19. EXHIBIT 14.9 The Total Quality Chain Total Quality Refers to an organization’s overall effort to achieve customer satisfaction through continuous improvement of products or services. Quality Control Defined Measurements designed to check whether the desired quality standards are being met. © 2008 Thomson/SouthWestern. All rights reserved. 14–19
  20. 20. Tools for Controlling Quality • Flowchart  A visual representation of the sequence of steps needed to complete a process. • Histogram  A graphical representation of the variation found in a set of data. • Run Chart  Data presentation showing results of a process plotted over time. © 2008 Thomson/SouthWestern. All rights reserved. 14–20
  21. 21. EXHIBIT 14.10 Flowchart of a Fast-Food Drive-Through Process © 2008 Thomson/SouthWestern. All rights reserved. 14–21
  22. 22. EXHIBIT 14.11 Histogram Showing Frequency and Length of Time Taken by Home Office to Process Loan Request © 2008 Thomson/SouthWestern. All rights reserved. Source: From Total Quality by James W. Dean and James R. Evans. © 1994. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. 14–22
  23. 23. EXHIBIT 14.12 Run Chart of Percentage of Restaurant Customers Waiting in Excess of 1 Minute to Be Seated © 2008 Thomson/SouthWestern. All rights reserved. Source: From Foundations of Total Quality Management: A Readings Book by J. G. Van Matre. © 1995. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. 14–23
  24. 24. Tools for Controlling Quality (cont’d) • Pareto Charts  Problem-analysis charts that use a histogram to illustrate sources of problems. • Cause-and-Effect Diagram  A graphical display of a chain of causes and effects. • Control Chart  A statistical control process chart that displays the “state of control” of a process. © 2008 Thomson/SouthWestern. All rights reserved. 14–24
  25. 25. EXHIBIT 14.13 Pareto Chart of Customers’ Complaints about Restaurants © 2008 Thomson/SouthWestern. All rights reserved. Source: From Foundations of Total Quality Management: A Readings Book, 1/e by J. G. Van Matre, p. 146. -0030078660. © 1995. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730-2215 14–25
  26. 26. EXHIBIT 14.14 Cause-and-Effect Diagram for “Why Tables Are Not Cleared Quickly” © 2008 Thomson/SouthWestern. All rights reserved. Source: From Foundations of Total Quality Management: A Readings Book, 1/e by J. G. Van Matre, p. 146. -0030078660. © 1995. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730-2215 14–26
  27. 27. EXHIBIT 14.15 Example of a Control Chart © 2008 Thomson/SouthWestern. All rights reserved. Source: From Total Quality, Management, Organization, and Strategy, 1st edition by Dean/Evans © 1994. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730-2215 14–27
  28. 28. The Supervisor’s Role in Achieving Quality • Supervisors can impact quality by:  Emphasizing the importance of high quality  Providing information and support to help employees achieve quality  Providing meaningful feedback to employees. • Motivating workers to achieve high quality work requires that supervisors:  Let employees know the quality performance is expected  Involve workers in achieving and controlling quality. © 2008 Thomson/SouthWestern. All rights reserved. 14–28
  29. 29. EXHIBIT 14.16 Characteristics of Effective Employee Involvement Teams • Managers at all levels, especially at the top, should be committed to the concept and give it their unqualified support. • Projects undertaken should relate directly—or at least indirectly— to participants’ work. • Projects should be team efforts, not individual activities. • Participants should be trained in quality-control, decision making, and problem-solving techniques. • Team leaders also should be trained in group dynamics and leadership of a group. • Teams should be given feedback—in the form of results— regarding their recommendations and solutions. © 2008 Thomson/SouthWestern. All rights reserved. 14–29
  30. 30. Promoting Employee Safety • The Occupational Safety and Health Administration (OSHA)  Is a federal agency created in 1970 by the Occupational Safety and Health Act to provide consistently safer and healthier working conditions for employees.  Requires organizations to keep safety logs and records of illnesses and injuries incurred on the job  Develops standards, conduct standards compliance inspections, and issues citations and penalties against organizations that fail to comply. © 2008 Thomson/SouthWestern. All rights reserved. 14–30
  31. 31. Factors Influencing Safety Size of the Organization Size of the Organization Type of Industry Type of Industry Safety Safety The People The People © 2008 Thomson/SouthWestern. All rights reserved. 14–31
  32. 32. EXHIBIT 14.20 Occupational Injury and Illness Rates: Selected Industries, 2004 Industry Incidence Rate per 100 employees Iron Foundries 15.3 Mobile Home Mfg 15.0 Ship Building/Repair 12.3 Motor Vehicle Body Mfg. 11.3 Dairies 10.3 Soft Drink Producers 10.2 Airlines 10.0 Hospitals 7.6 Taxi Service 6.7 Grocery Stores 6.3 Hotels 5.7 Auto Dealerships 4.9 Full Service Restaurants 4.0 Book Stores 3.3 Real Estate Firms 3.2 Colleges and Universities 2.7 Women’s Clothing Stores 2.4 Radio and TV Broadcasting 1.5 Banks 1.5 CPA Firms 0.3 Average incidence rate for © 2008 Thomson/South- all industries: Western. All rights reserved. 4.8 14–32
  33. 33. Causes of Accidents Human Factors Human Factors Technical Factors Technical Factors Accidents Accidents Environmental Factors Environmental Factors © 2008 Thomson/SouthWestern. All rights reserved. 14–33
  34. 34. EXHIBIT 14.21 Personal Injury Investigation Injured: Fred Hanna Position: Lab Assistant Presiding: L. C. Smithson, Technical Supt. Date of meeting: 4/15/2003 Time of meeting: 2:34 p.m. Place of meeting: Plant Conference Room Present: L. C. Smithson (Technical Supt.), Fred Hanna (injured), Jim Berry (Housekeeping), Tom Ahens (Safety Director), Kim Jernigan (Supervisor) Nature of injury: Fractured distal end of radius, right arm Lost time: 42 days (estimated) Accident time and date: 4/13/2003 at 7:15 a.m. Cause of injury: Floor was wet—appeared to be water. Investigation revealed that bags of Seperan (a synthetic polymer) had been rearranged during the 11 p.m.–7 a.m. shift. One bag was torn, and its contents had trickled onto the floor, causing it to be exceptionally slippery when washed at the end of the shift. Janitor noticed but did not flag it or attempt to remove hazard, as he noted at the end of his shift. Corrective steps/recommendations: 1. Apply grit to slippery areas; mark with appropriate warning signs. 2. Remind incoming shift personnel of hazardous conditions. 3. Communicate to incoming shift personnel any job priorities. 4. Store Seperan in a more remote area of the plant. © 2008 Thomson/SouthWestern. All rights reserved. 14–34
  35. 35. EXHIBIT 14.22 What Supervisors Can Do to Improve Safety • Push for upgraded safety equipment and safer work methods. • Establish and communicate safety goals for the department. • Clearly communicate safety requirements to all employees. • Listen to employee job complaints about safety-related matters, including noise, fatigue, and working conditions. • Make sure new employees thoroughly understand equipment and safety rules. • Prohibit use of unsafe or damaged equipment. • Encourage safety suggestions from your workers. • Post safety bulletins, slogans, and posters to reinforce the need for safety. • Refuse to let rush jobs cause relaxed safety standards. • Set a proper example. Don’t bend safety rules yourself. • Conduct periodic safety meetings, with demonstrations by employee safety © specialists or insurance representatives. 2008 Thomson/South- Western. All rights reserved. 14–35
  36. 36. EXHIBIT 14.22 What Supervisors Can Do to Improve Safety (cont’d) • Refuse to tolerate horseplay. • Compete with other departments in safety contests. • Report to employees any accidents that occur elsewhere in the company. • Review past accident records for trends and insights. • Encourage reporting of unsafe conditions. • Make regular safety inspections of all major equipment. • Enforce the rules when they are broken—take appropriate disciplinary action to demonstrate your safety commitment. • Look for signs of fatigue in employees, such as massaging shoulders, rubbing eyes, and stretching or shifting position to relieve pain or fatigue. In such a case, relief for the employee may be warranted. • Thoroughly investigate all accidents and attempt to remedy the causes. • Develop a system for rewarding or acknowledging excellent safety conduct. © 2008 Thomson/SouthWestern. All rights reserved. 14–36
  37. 37. Important Terms Important Terms • cause-and-effect diagram • computer-assisted manufacturing (CAM) • control chart • Deming’s 85–15 rule • flowchart • histogram • just-in-time (JIT) inventory • Occupational Safety and Health Administration (OSHA) © 2008 Thomson/SouthWestern. All rights reserved. • • • • • • • Pareto charts productivity quality control robot run chart total quality Toyota Production System 14–37

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