This document provides an overview of ensuring high quality and productivity in organizations. It discusses techniques for quality control like statistical quality control, process control, zero-defects approach, and total quality management. It also identifies ways to measure and improve productivity, such as minimizing waste and regulating work flow. Additionally, it notes that employees may fear productivity improvements could lead to layoffs, but supervisors can address these fears through open communication.

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10 e
Chapter 9
Ensuring High
Quality and
Productivity
© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.

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Learning Objectives, 1
• Describe the consequences suffered by organizations as a
result of poor-quality work
• Compare product quality control and process control
• Summarize techniques for quality control
• Identify ways organizations measure their success in
continuous quality improvement

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Learning Objectives, 2
• Identify constraints on productivity
• Describe how productivity and productivity improvements are
measured
• Identify ways productivity may be improved
• Explain why employees have fears about productivity
improvement and how supervisors can address those fears

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Productivity
Amount of results, or output, an organization gets for a given
amount of inputs
Productivity formula
• Productivity equals outputs divided by inputs

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Dimensions of Quality
Dimension Explanation
Performance The product’s primary operating characteristic
Features Supplements to the product’s basic operating characteristics
Reliability The probability that the product will function properly and not
break down during a specified period
Conformance The degree to which the product’s design and operating
characteristics meet established standards
Durability The length of the product’s life
Serviceability The speed and ease of repairing the product
Aesthetics The way the product looks, feels, tastes, and smells
Perceived
quality
The customer’s impression of the product’s quality

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Consequences of Poor Quality
Limited resources
• Organizations develop a negative image when the quality of their
goods or services is poor, which drives away customers and clients
• Lose business and revenues and have more difficulty attracting other
important resources
Higher costs
• Businesses spend billions of dollars each year on inspections and
other costs to find and correct mistakes
• Attracting new customers costs several times more per customer
than keeping existing customers satisfied
• Manufacturers may have to recall their products for repair or
replacement after sales if their products are defective

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Quality Control
Organization’s efforts to prevent or correct defects in its goods or
services or to improve them in some way
Category of quality
control
Definition
Product Quality Control Focuses on improving the product
Process Control Focuses on improving how the goods or
services are produced or delivered

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Methods for Improving Quality
Statistical
quality control
Statistical
process control
Zero-defects
approach
Employee
involvement
teams
Six Sigma
Lean
enterprise
philosophy
Total quality
management
Jump to Methods for Improving Quality, Appendix

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Statistical Quality and Process Control
Statistical quality control: Looking for defects in parts or finished
products selected through a sampling technique
Statistical process control, or S P C: Uses statistics to:
• Monitor production quality on an ongoing basis
• Make corrections whenever the results show the process is out of
control

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Figure 9.3: Chart of Statistical Process Control
Jump to Figure 2.3: Chart of Statistical Process Control, Appendix

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Zero-Defects Approach
Based on the view that everyone in the organization should work
toward the goal of delivering such high quality that all aspects of
the organization’s goods and services are free of problems
Managers and employees at all levels seek to build quality into
every aspect of their work
• Employees work with supervisors and other managers to set goals
for quality and identify areas where improvement is needed

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Employee Involvement Teams
Teams of employees who plan ways to improve quality in their
areas of organization
Members take the following steps for improvement:
• Identify quality problems related to the employees’ areas of
responsibility
• Select the problems to focus on first
• Analyze the problem to identify its causes
• Identify possible solutions and select one to recommend to
management

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Figure 9.5: Characteristics of Successful Employee
Involvement Teams
Jump to Figure 9.5: Characteristics of Successful Employee Involvement Teams, Appendix

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Six Sigma
Process-oriented quality-control method designed to improve
the product or service output to 99.99 percent perfect
Includes an analytical process for anticipating and solving
problems to:
• Reduce defects
• Improve the yield of acceptable products
• Increase customer satisfaction
• Deliver best-in-class organizational performance
Highly structured and emphasizes costs and profits

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Lean Enterprise Philosophy
Adopts one of the following approaches:
• Improvement of work flow through a production process
• Identification and elimination of waste through a variety of
assessment, scheduling, and production control tools

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Total Quality Management, or T Q M
Organization-wide focus on satisfying customers by continuously
improving every business process for delivering goods or
services
Philip B Crosby believed an organization should have:
• Integrity
• Systems that measure quality
• Communications about progress and achievements
• Operations that educate suppliers and employees in delivering
quality
• Policies that support the organization’s commitment to quality

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Quality Standards, 1
Baldrige Performance Excellence Program: Annual award
administered by the United States Commerce Department’s
National Institute of Standards and Technology, or N I S T
• Organizations must excel in the following seven categories in order
to qualify:
• Leadership
• Strategic planning
• Customer and market focus
• Measurement, analysis, and knowledge management
• Human resource focus
• Process management
• Results

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Quality Standards, 2
ISO 9000
• Series of standards adopted by the International Organization for
Standardization to spell out acceptable criteria for quality systems
Benchmarking
• Identifying the top performer of a process, then learning and
carrying out the top performer’s practices

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Figure 9.6: Guidelines for Quality Control
Jump to Figure 9.6: Guidelines for Quality Control 1, Appendix

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Constraints on Productivity
Management
limitations
Employee
attitudes and skills
Government
regulations
Union rules
Jump to Constraints on Productivity, Appendix

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Measuring Productivity
• Productivity equals outputs divided by inputs
• Based on quantity and quality
• Increase in outputs, reduction in inputs, or both, result in
higher productivity
• Costs in terms of production per hour are also considered

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Improving Productivity, 1
Doing more work at a lower cost
Rising output without a cost increase
• Ensure the new output goals are reasonable
• Communicate new goals carefully
Improving process quality to increase efficiency and minimize
defects
Minimizing rework by getting the work done right the first time

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Improving Productivity, 2
Encouraging and using employees’ ideas for saving money
Using budgets
• Review budget reports regularly
• Observe employees’ use of resources and time
Using electronic monitoring

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Improving Productivity, 3
Methods
• Reengineering
• Process control techniques
• Giving employees more control over the way they work
• Designing jobs to make them interesting
Reducing overhead by:
• Monitoring work areas to find sources of needless expenses
• Eliminating unnecessary paperwork

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Improving Productivity, 4
Minimizing waste by :
• Reducing downtime
• Reducing detour behavior
• Using e-mail filtering software
• Setting good examples for effective time management

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Improving Productivity, 5
Regulating or leveling the work flow by:
• Ensuring adequate planning for the required work
• Working with others to examine and solve work-flow problems
• Using temporary employees during peak periods
Installing modern equipment
• Compute the payback period while deciding to buy new equipment
• Find the average rate of return, or A R R, to evaluate whether an
investment is worthwhile

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Improving Productivity, 6
Training and motivating employees
Minimizing tardiness, absenteeism, and turnover
• Employees tend to arrive late or not at all if they dislike their jobs or
find them boring
• Absenteeism may be the first step to leaving the company
• High turnover is expensive because the organization must spend a
lot of money to recruit and train new employees

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Employee Fears About Productivity Improvement
Employees believe that cost reductions can lead to:
• Less overtime pay, more difficult work, and layoffs
• Outsourcing and offshoring
Supervisors must respond to employee fears by:
• Being prepared with information
• Presenting information related to the organization’s plans and goals
to the employees
• Allowing the employees to ask questions