maintaining control & improving quality

Maintaining Control and Improving

Quality

Chapter 8 Premium Lecture Outlines

Copyright © Houghton Mifflin Company. All rights reserved. Premium Lecture Outlines, 8–2

Chapter Objectives

1. Describe three types of control, and identify the components common to all control systems.

2. Identify five types of productivity.3. Explain how providing a service differs from

manufacturing a product, and list the five service-quality dimensions.

4. Define total quality management (TQM) and discuss the basic TQM principles.


Chapter Objectives (cont’d)

5. Describe at least three of the seven TQM process improvement tools.

6. Explain how Deming’s PDCA cycle can improve the overall management process, and identify at least four of Deming’s famous 14 points.


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.


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.


Figure 8.1Three Types of Control


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


Organizational Organizational Control Control

SubsystemsSubsystems

Long-range plansLong-range plans

Annual operating Annual operating budgetbudget

Statistical reportsStatistical reportsPerformance Performance appraisalsappraisals

Policies and Policies and proceduresprocedures

Cultural controlCultural control

Strategic plansStrategic plans

Organizational Controls


• 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)


• Evaluation-Reward Systems– Measure and reward individual and team

contributions to attaining organizational objectives.– Can shape effort-reward expectancies that motivate

better performance.



• 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.



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.


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.


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


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.


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.


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


Unique Challenges for Service Providers

• Strategic Service Challenge– To anticipate and exceed customer’s expectations.– Distinctive service characteristics

1. Customers participate directly in the production process.

2. Services are consumed immediately and cannot be stored.

3. Services are provided where and when the customer desires.

4. Services tend to be labor intensive.5. Services are intangible.


Unique Challenges for Service Providers (cont’d)

• Defining Service Quality– Five service quality dimensions

1. Reliability (most important)2. Assurance3. Tangibles4. Empathy5. Responsiveness


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 TQM1. Do it right the first time.2. Be customer-centered.3. Make continuous improvement a way of life.4. Build teamwork and empowerment.


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.



• 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.



• 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


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.

Figure 8.2Seven Basic TQM Tools


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.


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.


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.


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).


Source: Adapted from W. Edwards Deming, Out of the Crisis (Cambridge, Mass.: MIT Press, 1986), p. 3.

Figure 8.3Everyone Benefits from Improved Quality


Source: Adapted from Deming, Out of the Crisis, p. 88.

Figure 8.4Deming’s PDCA Cycle


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– http://cob.bloomu.edu/ramin/

Amin%20Lecture%20Notes/ch08/pre_ppt08.ppt

– 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”

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