Maintaining Control & Improving Quality

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Maintaining Control & Improving Quality

Maintaining Control & Improving Quality

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  • 1. Maintaining Control and Improving Quality Chapter 8 Premium Lecture Outlines
  • 2. Chapter Objectives
    • Describe three types of control, and identify the components common to all control systems.
    • Identify five types of productivity.
    • Explain how providing a service differs from manufacturing a product, and l ist the five service-quality dimensions.
    • Define total quality management (TQM) and discuss the basic TQM principles.
  • 3. Chapter Objectives (cont’d)
    • Describe at least three of the seven TQM process improvement tools.
    • Explain how Deming’s PDCA cycle can improve the overall management process, and identify at least four of Deming’s famous 14 points.
  • 4. Fundamentals of Organizational Control
    • Control
      • Taking prompt preventative or corrective action to ensure that the organization’s mission and objectives are accomplished effectively and effectively.
        • Checking, testing, regulation, verification, or making adjustments to keep things on track.
        • Objectives are yardsticks for measuring actual performance.
      • Purpose of the control function
        • Get the job done despite environmental, organizational, and behavioral obstacles and uncertainties.
  • 5. Types of Controls
    • Feedforward Control
      • The active anticipation and prevention of problems, rather than passive reaction.
    • Concurrent Control
      • Monitoring and adjusting ongoing activities and processes.
    • Feedback Control
      • Checking a completed activity and learning from mistakes.
  • 6. Figure 8.1 Three Types of Control
  • 7. Components of Organizational Control Systems
    • Organizational Control Subsystems
      • Strategic plans
      • Long-range plans
      • Annual operating budget
      • Statistical reports
      • Performance appraisals
      • Policies and procedures
      • Cultural control
  • 8. Organizational Controls Organizational Control Subsystems Long-range plans Annual operating budget Statistical reports Performance appraisals Policies and procedures Cultural control Strategic plans
  • 9.
    • Objectives
      • Measurable reference points (targets) for corrective action.
    • Standards
      • Guideposts on the way to achieving objectives.
      • Benchmarking: identifying, studying, and building upon the best practices of organizational role models.
    Components of Organizational Control Systems (cont’d)
  • 10.
    • Evaluation-Reward Systems
      • Measure and reward individual and team contributions to attaining organizational objectives.
      • Can shape effort-reward expectancies that motivate better performance.
    Components of Organizational Control Systems (cont’d)
  • 11.
    • Identifying Control Problems
      • Executive reality checks: top managers periodically working at lower-level jobs to become more aware of operations.
      • Internal audits: independent appraisals of organizational operations and systems to assess effectiveness and efficiency.
    Components of Organizational Control Systems (cont’d)
  • 12. Sarbanes-Oxley Act of 2002
    • Requires CEOs and CFOs to certify periodic corporate financial reports.
    • Prohibits personal loans or extensions of credit to executive officers and directors.
    • Requires that guidelines be esatblished for audit committees.
    • Requires reimbursement by CEOs and CFOs of bonus and stock option profits upon restatement of financial statements.
    • Prohibits insider trading during pension fund blackout periods.
    • Requires retention of all documents relevant to a government investigation.
  • 13. Identifying Control Problems
    • Symptoms of Inadequate Control
      • An unexplained decline in revenues or profits.
      • A degradation of service (customer complaints).
      • Employee dissatisfaction .
      • Cash shortages caused by bloated inventories or delinquent accounts receivable.
      • Idle facilities or personnel.
      • Disorganized operations.
      • Excess costs.
      • Evidence of waste and inefficiency.
  • 14.  
  • 15. The Quality Challenge
    • Defining Quality
      • “Conformance to requirements” (Crosby).
      • How adequately product or service quality meets customer expectations/needs/requirements.
    • Five Types of Product Quality
      • Transcendent quality
      • Product-based quality
      • User-based quality
      • Manufacturing-based quality
      • Value-based quality
  • 16. Five Types of Product Quality
    • Transcendent Quality
      • Inherent value or innate excellence apparent to the individual.
    • Product-Based Quality
      • The presence or absence of a given product attribute.
    • User-Based Quality
      • Quality of the product as determined by its ability to meet the user’s expectations.
  • 17. Five Types of Product Quality (cont’d)
    • Manufacturing-Based Quality
      • How well the product conforms to its design specification or blueprint.
    • Value-Based Quality
      • How much value each customer separately attributes to the product in calculating their personal cost-benefit ratio.
  • 18. Examples of Product Quality
    • Transcendent quality
      • Designer clothing
    • Product-based quality
      • HDTV-ready television
    • User-based quality
      • Loose-fitting jeans
    • Manufacturing-based quality
      • Color-fast fabrics
    • Value-based quality
      • Credit-card interest rates
  • 19. Unique Challenges for Service Providers
    • Strategic Service Challenge
      • To anticipate and exceed customer’s expectations.
      • Distinctive service characteristics
        • Customers participate directly in the production process.
        • Services are consumed immediately and cannot be stored.
        • Services are provided where and when the customer desires.
        • Services tend to be labor intensive.
        • Services are intangible.
  • 20. Unique Challenges for Service Providers (cont’d)
    • Defining Service Quality
      • Five service quality dimensions
        • Reliability (most important)
        • Assurance
        • Tangibles
        • Empathy
        • Responsiveness
  • 21. Introduction to Total Quality Management (TQM)
    • Total Quality Management (TQM)
      • Creating an organizational culture committed to the continuous improvement of skills, teamwork, processes, product and service quality, and customer satisfaction.
    • Four Principles of TQM
      • Do it right the first time.
      • Be customer-centered.
      • Make continuous improvement a way of life.
      • Build teamwork and empowerment.
  • 22. Introduction to Total Quality Management (TQM) (cont’d)
    • Do It Right the First Time
      • Designing and building quality into the product.
    • Be Customer-Centered
      • Satisfying the customer’s needs by anticipating, listening, and responding.
      • Internal customers: anyone in the organization who cannot do a good job unless you do a good job.
  • 23.  
  • 24.  
  • 25. Introduction to Total Quality Management (TQM) (cont’d)
    • Make Continuous Improvement a Way of Life
      • Kaizen: a Japanese word meaning continuous improvement (quality is an endless journey).
      • A gain in one area does not mean loss in another.
      • Venues for continuous improvement
        • Improved and more consistent product and service quality.
        • Faster cycle times.
        • Greater flexibility.
        • Lower costs and less waste.
  • 26. Introduction to Total Quality Management (TQM) (cont’d)
    • Build Teamwork and Empowerment
      • Teamwork
        • Suggestion systems.
        • QC circles and self-managed teams.
        • Team work and cross-functional teams.
      • Empowerment
        • Adequate training
        • Access to information and tools
        • Involvement in key decisions
        • Fair rewards for results
  • 27. Figure 8.2 Seven Basic TQM Tools Source: Arthur R. Tenner and Irving J. DeToro, Total Quality Management (figure 9.2 from page 113). © 1992 by Addison-Wesley Publishing Company, Inc. Reprinted by permission of Pearson Education, Inc. publishing as Pearson Additional Wesley.
  • 28. The Seven Basic TQM Process Improvement Tools
    • Flow Chart
      • A graphic display of a sequence of activities and decisions.
    • Cause-and-Effect Analysis
      • The fishbone (Ishikawa) diagram helps visualize important cause-and-effect relationships.
    • Pareto Analysis (80/20 Analysis)
      • A bar chart indicating which problem needs the most attention.
  • 29. The Seven Basic TQM Process Improvement Tools (cont’d)
    • Control Chart
      • Visual aid to statistical process control showing acceptable and unacceptable variations from the norm for repetitive operations.
    • Histogram
      • A bar chart indicating the distribution of deviations from a standard bell-shaped curve.
  • 30. The Seven Basic TQM Process Improvement Tools (cont’d)
    • Scatter Diagram
      • A diagram that plots relationships between two variables.
    • Run Chart
      • A trend chart for tracking a variable over time.
  • 31. Deming Management
    • Deming Management
      • The application of W. Edwards Deming‘s ideas to revitalize productive systems to make them more responsive to the customer, more democratic, and less wasteful organizations.
      • Essentially the opposite of scientific management.
    • Principles of Deming Management
      • Quality improvement drives the entire economy.
      • The customer always comes first.
      • Don’t blame the person, fix the system.
      • Plan-do-check-act (PDCA cycle).
  • 32. Figure 8.3 Everyone Benefits from Improved Quality Source: Adapted from W. Edwards Deming, Out of the Crisis (Cambridge, Mass.: MIT Press, 1986), p. 3.
  • 33. Figure 8.4 Deming’s PDCA Cycle Source: Adapted from Deming, Out of the Crisis , p. 88.
  • 34. Deming Management (cont’d)
    • Deming’s 14 Points
      • Constant purpose
      • New philosophy
      • Give up on quality by inspection
      • Avoid the constant search for lowest-cost suppliers
      • Seek continuous improvement
      • Train everybody
      • Provide real leadership
      • Drive fear out of the workplace
      • Promote teamwork
      • Avoid slogans and targets
      • Get rid of numerical quotas
      • Remove barriers that stifle pride in workmanship
      • Education and self-improvement are key
      • “ The transformation is everyone’s job”