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Chapter 2

Ensuring
Quality
and
Productivity
If you forget the
customer, nothing much
else matters.
Anne Mulcahy,
CEO, Xerox Corporation
McGraw-Hill/Irwin

Copyright 2010 by The McGraw-Hill Companies, Inc. All

Learning Objectives
1. Describe the consequences suffered by
organizations as a result of poor-quality work.
2. Compare product quality control and process
control.
3. Summarize techniques for quality control.
4. Identify ways organizations measure their
success in continuous quality improvement.
5. Identify constraints on productivity.

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Learning Objectives (cont.)


6. Describe how productivity and productivity
improvements are measured.
7. Identify ways productivity may be improved.
8. Explain why employees have fears about
productivity improvement and how supervisors
can address those fears.

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Ensuring High Quality


and Productivity
Productivity
The amount of results (output) an
organization gets for a given amount of inputs

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Dimensions of Quality

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Consequences of Poor Quality


Limited resources
When the quality of an organizations goods
or services is poor, the whole organization
suffers.
The organization has more difficulty attracting
other important resources.

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Consequences of Poor Quality


Higher costs
Businesses spend billions of dollars each year
on inspections, errors, rework, repairs,
customer refunds, and other costs to find and
correct mistakes.
Attracting new customers costs several times
more per customer than keeping existing
customers satisfied.

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Types of Quality Control


Quality control
An organizations efforts to prevent or correct
defects in its goods or services or to improve
them in some way

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Methods for Improving Quality

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Chart Used for Statistical


Process Control

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Steps for an Employee


Improvement Team
1. Identify quality problems related to the
employees areas of responsibility.
2. Select the problems to focus on first.
3. Analyze the problem to identify its causes.
4. Identify possible solutions and select one
to recommend to management.

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FIGURE 2.5
Characteristics
of Successful
Employee
Involvement
Teams

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Total Quality Management


Philip Crosby believed an organization should
be injected with
Integrity
Systems that measure quality
Communications about progress and
achievements
Operations that educate suppliers and
employees in delivering quality and
Policies supporting the organizations
commitment to quality.
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Total Quality Management


Edward Deming
to achieve product quality, the organization
must continually improve not only the
products design but also the process of
producing it.

Joseph Juran
management should seek to maintain and
improve quality through efforts on two levels:
the organization as a whole and individual
departments in the organization.
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Quality Standards
Malcolm Baldrige National Quality
Award
an annual award administered by the U.S.
Commerce Departments National Institute of
Standards and Technology (NIST) and given
to the organization that shows the highest
quality performance as measured by seven
categories

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Quality Standards
1. Leadership
2. Strategic planning
3. Customer and market focus
4. Measurement, analysis, and knowledge
management
5. Human resource focus
6. Process management
7. Results
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Quality Standards
ISO 9000
a 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
performers practices
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Constraints on Productivity

Management limitations
Employee attitudes and skills
Government regulations
Union rules

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Measuring Productivity
The basic way to measure productivity is
to divide outputs by inputs.
To increase productivity, a supervisor
needs to increase outputs, reduce inputs,
or both.
Quantity without quality does not boost
productivity.

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Improving Productivity
Do equal work at a lower cost, and increase
output without a cost increase.
Improve process quality so that employees work
more efficiently and do not have to spend time
correcting mistakes or defects.
Use their specific knowledge of the tasks and
processes their teams perform to find unique
ways to contribute to productivity.
Encourage and use employees ideas for saving
money.
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Improving Productivity
Use budgets
Review budget reports
Observe employee use of resources

Increase output
Increase output without boosting costs
Ensure the new output goals are reasonable
Communicate new goals carefully

Electronic monitoring
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Improving Productivity
Improve methods
Reengineering
Process control techniques
Give employees more control over the way
they work
Design jobs to be interesting

Reduce overhead
Monitor work areas
Eliminate unnecessary paperwork
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Improving Productivity
Minimize waste
Reduce downtime
Reduce detour behavior
Use e-mail filtering software
Set a good example

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Improving Productivity
Regulate or level the work flow
Ensure adequate planning for the required
work
Work with others to examine and solve workflow problems
Use temporary employees
during peak periods

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Improving Productivity
Minimize waste

Reduce downtime
Reduce detour behavior
Use e-mail filtering software
Set a good example

Regulate or level the work flow


Ensure adequate planning for the required work
Work with others to examine and solve work-flow
problems
Use temporary employees during peak periods
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FIGURE 2.11
The Costs of
Uneven Work
Flow

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Improving Productivity
Install modern equipment
Compute the payback period
Find the average rate of return (ARR)
Payback period = Cost of new equipment
Savings per year
Average rate of return = Average annual earnings or
savings
Amount invested (cost)
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Improving Productivity
Train and motivate employees
Minimize 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 recruit and train new employees
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Employee Fears About


Productivity Improvement
Many employees believe that cost reductions
can lead to less overtime pay, more difficult
work, and even layoffs
Supervisors must respond to employee fears
Be prepared with information
Present the information to the employees
Allow employees to ask questions

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