Maintaining Control and Improving Quality Chapter 8   Premium Lecture Outlines
Chapter Objectives <ul><li>Describe  three types of control, and identify the components common to all control systems. </...
Chapter Objectives  (cont’d) <ul><li>Describe  at least three of the seven TQM process improvement tools. </li></ul><ul><l...
Fundamentals of  Organizational Control <ul><li>Control </li></ul><ul><ul><li>Taking prompt preventative or corrective act...
Types of Controls <ul><li>Feedforward Control </li></ul><ul><ul><li>The active anticipation and prevention of problems, ra...
Figure 8.1 Three Types of Control
Components of Organizational Control Systems <ul><li>Organizational Control Subsystems </li></ul><ul><ul><li>Strategic pla...
Organizational Controls Organizational Control Subsystems Long-range plans Annual operating budget Statistical reports Per...
<ul><li>Objectives </li></ul><ul><ul><li>Measurable reference points (targets) for corrective action. </li></ul></ul><ul><...
<ul><li>Evaluation-Reward Systems </li></ul><ul><ul><li>Measure and reward individual and team  contributions to attaining...
<ul><li>Identifying Control Problems </li></ul><ul><ul><li>Executive reality checks:  top managers periodically working at...
Sarbanes-Oxley Act of 2002 <ul><li>Requires CEOs and CFOs to certify periodic corporate financial reports. </li></ul><ul><...
Identifying Control Problems <ul><li>Symptoms of Inadequate Control </li></ul><ul><ul><li>An unexplained decline in revenu...
 
The Quality Challenge <ul><li>Defining Quality </li></ul><ul><ul><li>“Conformance to requirements” (Crosby). </li></ul></u...
Five Types of Product Quality <ul><li>Transcendent Quality </li></ul><ul><ul><li>Inherent value or innate excellence appar...
Five Types of Product Quality  (cont’d) <ul><li>Manufacturing-Based Quality </li></ul><ul><ul><li>How well the product con...
Examples of Product Quality <ul><li>Transcendent quality </li></ul><ul><ul><li>Designer clothing </li></ul></ul><ul><li>Pr...
Unique Challenges for Service Providers <ul><li>Strategic Service Challenge </li></ul><ul><ul><li>To anticipate and exceed...
Unique Challenges for Service Providers  (cont’d) <ul><li>Defining Service Quality </li></ul><ul><ul><li>Five service qual...
Introduction to Total Quality Management (TQM) <ul><li>Total Quality Management (TQM) </li></ul><ul><ul><li>Creating an or...
Introduction to Total Quality Management (TQM)  (cont’d) <ul><li>Do It Right the First Time </li></ul><ul><ul><li>Designin...
 
 
Introduction to Total Quality Management (TQM)  (cont’d) <ul><li>Make Continuous Improvement a Way of Life </li></ul><ul><...
Introduction to Total Quality Management (TQM)  (cont’d) <ul><li>Build Teamwork and Empowerment </li></ul><ul><ul><li>Team...
Figure 8.2 Seven Basic TQM Tools Source: Arthur R. Tenner and Irving J. DeToro,  Total Quality Management  (figure 9.2 fro...
The Seven Basic TQM Process Improvement Tools <ul><li>Flow Chart </li></ul><ul><ul><li>A graphic display of a sequence of ...
The Seven Basic TQM Process Improvement Tools  (cont’d) <ul><li>Control Chart </li></ul><ul><ul><li>Visual aid to statisti...
The Seven Basic TQM Process Improvement Tools  (cont’d) <ul><li>Scatter Diagram </li></ul><ul><ul><li>A diagram that plots...
Deming Management <ul><li>Deming Management </li></ul><ul><ul><li>The application of W. Edwards Deming‘s ideas to revitali...
Figure 8.3 Everyone Benefits from Improved Quality Source: Adapted from W. Edwards Deming,  Out of the Crisis  (Cambridge,...
Figure 8.4 Deming’s PDCA Cycle Source: Adapted from Deming,  Out of the Crisis , p. 88.
Deming Management  (cont’d) <ul><li>Deming’s 14 Points </li></ul><ul><ul><li>Constant purpose </li></ul></ul><ul><ul><li>N...
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Maintaining Control & Improving Quality

  1. 1. Maintaining Control and Improving Quality Chapter 8 Premium Lecture Outlines
  2. 2. Chapter Objectives <ul><li>Describe three types of control, and identify the components common to all control systems. </li></ul><ul><li>Identify five types of productivity. </li></ul><ul><li>Explain how providing a service differs from manufacturing a product, and l ist the five service-quality dimensions. </li></ul><ul><li>Define total quality management (TQM) and discuss the basic TQM principles. </li></ul>
  3. 3. Chapter Objectives (cont’d) <ul><li>Describe at least three of the seven TQM process improvement tools. </li></ul><ul><li>Explain how Deming’s PDCA cycle can improve the overall management process, and identify at least four of Deming’s famous 14 points. </li></ul>
  4. 4. Fundamentals of Organizational Control <ul><li>Control </li></ul><ul><ul><li>Taking prompt preventative or corrective action to ensure that the organization’s mission and objectives are accomplished effectively and effectively. </li></ul></ul><ul><ul><ul><li>Checking, testing, regulation, verification, or making adjustments to keep things on track. </li></ul></ul></ul><ul><ul><ul><li>Objectives are yardsticks for measuring actual performance. </li></ul></ul></ul><ul><ul><li>Purpose of the control function </li></ul></ul><ul><ul><ul><li>Get the job done despite environmental, organizational, and behavioral obstacles and uncertainties. </li></ul></ul></ul>
  5. 5. Types of Controls <ul><li>Feedforward Control </li></ul><ul><ul><li>The active anticipation and prevention of problems, rather than passive reaction. </li></ul></ul><ul><li>Concurrent Control </li></ul><ul><ul><li>Monitoring and adjusting ongoing activities and processes. </li></ul></ul><ul><li>Feedback Control </li></ul><ul><ul><li>Checking a completed activity and learning from mistakes. </li></ul></ul>
  6. 6. Figure 8.1 Three Types of Control
  7. 7. Components of Organizational Control Systems <ul><li>Organizational Control Subsystems </li></ul><ul><ul><li>Strategic plans </li></ul></ul><ul><ul><li>Long-range plans </li></ul></ul><ul><ul><li>Annual operating budget </li></ul></ul><ul><ul><li>Statistical reports </li></ul></ul><ul><ul><li>Performance appraisals </li></ul></ul><ul><ul><li>Policies and procedures </li></ul></ul><ul><ul><li>Cultural control </li></ul></ul>
  8. 8. Organizational Controls Organizational Control Subsystems Long-range plans Annual operating budget Statistical reports Performance appraisals Policies and procedures Cultural control Strategic plans
  9. 9. <ul><li>Objectives </li></ul><ul><ul><li>Measurable reference points (targets) for corrective action. </li></ul></ul><ul><li>Standards </li></ul><ul><ul><li>Guideposts on the way to achieving objectives. </li></ul></ul><ul><ul><li>Benchmarking: identifying, studying, and building upon the best practices of organizational role models. </li></ul></ul>Components of Organizational Control Systems (cont’d)
  10. 10. <ul><li>Evaluation-Reward Systems </li></ul><ul><ul><li>Measure and reward individual and team contributions to attaining organizational objectives. </li></ul></ul><ul><ul><li>Can shape effort-reward expectancies that motivate better performance. </li></ul></ul>Components of Organizational Control Systems (cont’d)
  11. 11. <ul><li>Identifying Control Problems </li></ul><ul><ul><li>Executive reality checks: top managers periodically working at lower-level jobs to become more aware of operations. </li></ul></ul><ul><ul><li>Internal audits: independent appraisals of organizational operations and systems to assess effectiveness and efficiency. </li></ul></ul>Components of Organizational Control Systems (cont’d)
  12. 12. Sarbanes-Oxley Act of 2002 <ul><li>Requires CEOs and CFOs to certify periodic corporate financial reports. </li></ul><ul><li>Prohibits personal loans or extensions of credit to executive officers and directors. </li></ul><ul><li>Requires that guidelines be esatblished for audit committees. </li></ul><ul><li>Requires reimbursement by CEOs and CFOs of bonus and stock option profits upon restatement of financial statements. </li></ul><ul><li>Prohibits insider trading during pension fund blackout periods. </li></ul><ul><li>Requires retention of all documents relevant to a government investigation. </li></ul>
  13. 13. Identifying Control Problems <ul><li>Symptoms of Inadequate Control </li></ul><ul><ul><li>An unexplained decline in revenues or profits. </li></ul></ul><ul><ul><li>A degradation of service (customer complaints). </li></ul></ul><ul><ul><li>Employee dissatisfaction . </li></ul></ul><ul><ul><li>Cash shortages caused by bloated inventories or delinquent accounts receivable. </li></ul></ul><ul><ul><li>Idle facilities or personnel. </li></ul></ul><ul><ul><li>Disorganized operations. </li></ul></ul><ul><ul><li>Excess costs. </li></ul></ul><ul><ul><li>Evidence of waste and inefficiency. </li></ul></ul>
  14. 15. The Quality Challenge <ul><li>Defining Quality </li></ul><ul><ul><li>“Conformance to requirements” (Crosby). </li></ul></ul><ul><ul><li>How adequately product or service quality meets customer expectations/needs/requirements. </li></ul></ul><ul><li>Five Types of Product Quality </li></ul><ul><ul><li>Transcendent quality </li></ul></ul><ul><ul><li>Product-based quality </li></ul></ul><ul><ul><li>User-based quality </li></ul></ul><ul><ul><li>Manufacturing-based quality </li></ul></ul><ul><ul><li>Value-based quality </li></ul></ul>
  15. 16. Five Types of Product Quality <ul><li>Transcendent Quality </li></ul><ul><ul><li>Inherent value or innate excellence apparent to the individual. </li></ul></ul><ul><li>Product-Based Quality </li></ul><ul><ul><li>The presence or absence of a given product attribute. </li></ul></ul><ul><li>User-Based Quality </li></ul><ul><ul><li>Quality of the product as determined by its ability to meet the user’s expectations. </li></ul></ul>
  16. 17. Five Types of Product Quality (cont’d) <ul><li>Manufacturing-Based Quality </li></ul><ul><ul><li>How well the product conforms to its design specification or blueprint. </li></ul></ul><ul><li>Value-Based Quality </li></ul><ul><ul><li>How much value each customer separately attributes to the product in calculating their personal cost-benefit ratio. </li></ul></ul>
  17. 18. Examples of Product Quality <ul><li>Transcendent quality </li></ul><ul><ul><li>Designer clothing </li></ul></ul><ul><li>Product-based quality </li></ul><ul><ul><li>HDTV-ready television </li></ul></ul><ul><li>User-based quality </li></ul><ul><ul><li>Loose-fitting jeans </li></ul></ul><ul><li>Manufacturing-based quality </li></ul><ul><ul><li>Color-fast fabrics </li></ul></ul><ul><li>Value-based quality </li></ul><ul><ul><li>Credit-card interest rates </li></ul></ul>
  18. 19. Unique Challenges for Service Providers <ul><li>Strategic Service Challenge </li></ul><ul><ul><li>To anticipate and exceed customer’s expectations. </li></ul></ul><ul><ul><li>Distinctive service characteristics </li></ul></ul><ul><ul><ul><li>Customers participate directly in the production process. </li></ul></ul></ul><ul><ul><ul><li>Services are consumed immediately and cannot be stored. </li></ul></ul></ul><ul><ul><ul><li>Services are provided where and when the customer desires. </li></ul></ul></ul><ul><ul><ul><li>Services tend to be labor intensive. </li></ul></ul></ul><ul><ul><ul><li>Services are intangible. </li></ul></ul></ul>
  19. 20. Unique Challenges for Service Providers (cont’d) <ul><li>Defining Service Quality </li></ul><ul><ul><li>Five service quality dimensions </li></ul></ul><ul><ul><ul><li>Reliability (most important) </li></ul></ul></ul><ul><ul><ul><li>Assurance </li></ul></ul></ul><ul><ul><ul><li>Tangibles </li></ul></ul></ul><ul><ul><ul><li>Empathy </li></ul></ul></ul><ul><ul><ul><li>Responsiveness </li></ul></ul></ul>
  20. 21. Introduction to Total Quality Management (TQM) <ul><li>Total Quality Management (TQM) </li></ul><ul><ul><li>Creating an organizational culture committed to the continuous improvement of skills, teamwork, processes, product and service quality, and customer satisfaction. </li></ul></ul><ul><li>Four Principles of TQM </li></ul><ul><ul><li>Do it right the first time. </li></ul></ul><ul><ul><li>Be customer-centered. </li></ul></ul><ul><ul><li>Make continuous improvement a way of life. </li></ul></ul><ul><ul><li>Build teamwork and empowerment. </li></ul></ul>
  21. 22. Introduction to Total Quality Management (TQM) (cont’d) <ul><li>Do It Right the First Time </li></ul><ul><ul><li>Designing and building quality into the product. </li></ul></ul><ul><li>Be Customer-Centered </li></ul><ul><ul><li>Satisfying the customer’s needs by anticipating, listening, and responding. </li></ul></ul><ul><ul><li>Internal customers: anyone in the organization who cannot do a good job unless you do a good job. </li></ul></ul>
  22. 25. Introduction to Total Quality Management (TQM) (cont’d) <ul><li>Make Continuous Improvement a Way of Life </li></ul><ul><ul><li>Kaizen: a Japanese word meaning continuous improvement (quality is an endless journey). </li></ul></ul><ul><ul><li>A gain in one area does not mean loss in another. </li></ul></ul><ul><ul><li>Venues for continuous improvement </li></ul></ul><ul><ul><ul><li>Improved and more consistent product and service quality. </li></ul></ul></ul><ul><ul><ul><li>Faster cycle times. </li></ul></ul></ul><ul><ul><ul><li>Greater flexibility. </li></ul></ul></ul><ul><ul><ul><li>Lower costs and less waste. </li></ul></ul></ul>
  23. 26. Introduction to Total Quality Management (TQM) (cont’d) <ul><li>Build Teamwork and Empowerment </li></ul><ul><ul><li>Teamwork </li></ul></ul><ul><ul><ul><li>Suggestion systems. </li></ul></ul></ul><ul><ul><ul><li>QC circles and self-managed teams. </li></ul></ul></ul><ul><ul><ul><li>Team work and cross-functional teams. </li></ul></ul></ul><ul><ul><li>Empowerment </li></ul></ul><ul><ul><ul><li>Adequate training </li></ul></ul></ul><ul><ul><ul><li>Access to information and tools </li></ul></ul></ul><ul><ul><ul><li>Involvement in key decisions </li></ul></ul></ul><ul><ul><ul><li>Fair rewards for results </li></ul></ul></ul>
  24. 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.
  25. 28. The Seven Basic TQM Process Improvement Tools <ul><li>Flow Chart </li></ul><ul><ul><li>A graphic display of a sequence of activities and decisions. </li></ul></ul><ul><li>Cause-and-Effect Analysis </li></ul><ul><ul><li>The fishbone (Ishikawa) diagram helps visualize important cause-and-effect relationships. </li></ul></ul><ul><li>Pareto Analysis (80/20 Analysis) </li></ul><ul><ul><li>A bar chart indicating which problem needs the most attention. </li></ul></ul>
  26. 29. The Seven Basic TQM Process Improvement Tools (cont’d) <ul><li>Control Chart </li></ul><ul><ul><li>Visual aid to statistical process control showing acceptable and unacceptable variations from the norm for repetitive operations. </li></ul></ul><ul><li>Histogram </li></ul><ul><ul><li>A bar chart indicating the distribution of deviations from a standard bell-shaped curve. </li></ul></ul>
  27. 30. The Seven Basic TQM Process Improvement Tools (cont’d) <ul><li>Scatter Diagram </li></ul><ul><ul><li>A diagram that plots relationships between two variables. </li></ul></ul><ul><li>Run Chart </li></ul><ul><ul><li>A trend chart for tracking a variable over time. </li></ul></ul>
  28. 31. Deming Management <ul><li>Deming Management </li></ul><ul><ul><li>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. </li></ul></ul><ul><ul><li>Essentially the opposite of scientific management. </li></ul></ul><ul><li>Principles of Deming Management </li></ul><ul><ul><li>Quality improvement drives the entire economy. </li></ul></ul><ul><ul><li>The customer always comes first. </li></ul></ul><ul><ul><li>Don’t blame the person, fix the system. </li></ul></ul><ul><ul><li>Plan-do-check-act (PDCA cycle). </li></ul></ul>
  29. 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.
  30. 33. Figure 8.4 Deming’s PDCA Cycle Source: Adapted from Deming, Out of the Crisis , p. 88.
  31. 34. Deming Management (cont’d) <ul><li>Deming’s 14 Points </li></ul><ul><ul><li>Constant purpose </li></ul></ul><ul><ul><li>New philosophy </li></ul></ul><ul><ul><li>Give up on quality by inspection </li></ul></ul><ul><ul><li>Avoid the constant search for lowest-cost suppliers </li></ul></ul><ul><ul><li>Seek continuous improvement </li></ul></ul><ul><ul><li>Train everybody </li></ul></ul><ul><ul><li>Provide real leadership </li></ul></ul><ul><ul><li>http://cob.bloomu.edu/ramin/Amin%20Lecture%20Notes/ch08/pre_ppt08.ppt </li></ul></ul><ul><ul><li>Drive fear out of the workplace </li></ul></ul><ul><ul><li>Promote teamwork </li></ul></ul><ul><ul><li>Avoid slogans and targets </li></ul></ul><ul><ul><li>Get rid of numerical quotas </li></ul></ul><ul><ul><li>Remove barriers that stifle pride in workmanship </li></ul></ul><ul><ul><li>Education and self-improvement are key </li></ul></ul><ul><ul><li>“ The transformation is everyone’s job” </li></ul></ul>

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