Transcript The Scope and Language of Operations Management

Chapter 2
Total Quality in
Organizations
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Growth of Modern Quality
Management
Performance
excellence
Service
quality
Improved
product designs
Manufacturing
quality
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Key Idea
As consumer expectations have risen, a
focus on quality has permeated other key
sectors of the economy, most notably
health care, education, not-for-profits,
and government.
Systems
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A system is a set of functions or activities
within an organization that work together
for the aim of the organization.
Subsystems of an organization are linked
together as internal customers and
suppliers.
A systems perspective acknowledges the
importance of the interactions of
subsystems, not the actions of them
individually.
Key Idea
Successful management relies on a
systems perspective, one of the most
important elements of total quality.
Manufacturing Systems
(1 of 2)
Marketing and sales
 Product design and engineering
 Purchasing and receiving
 Production planning and
scheduling
 Manufacturing and assembly
 Tool engineering
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Manufacturing Systems
(2 of 2)
Industrial engineering and process
design
 Finished goods inspection and test
 Packaging, shipping, and
warehousing
 Installation and service
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Key Idea
Traditional quality assurance systems in
manufacturing focus primarily on technical
issues such as equipment reliability,
inspection, defect measurement, and
process control.
Relationships in a Typical
Manufacturing System (Fig.2.1)
Quality in Marketing
Marketing and sales personnel are
responsible for determining the needs
and expectations of consumers.
Quality in Product
Design
Product design and engineering functions
develop technical specifications for
products and production processes to
meet the requirements determined by the
marketing function.
Quality in Purchasing
A purchasing agent should not simply be
responsible for low-cost procurement, but
should maintain a clear focus on the
quality of purchased goods and materials.
Quality in Production
Planning & Scheduling
Poor quality often results from time
pressures caused by insufficient planning
and scheduling.
Quality in Manufacturing
and Assembly
Both technology and people are essential
to high-quality manufacturing.
Quality in Production
Planning & Scheduling
Poor quality often results from time
pressures caused by insufficient planning
and scheduling.
Quality in Process
Design
Manufacturing processes must be capable
of producing output that meets
specifications consistently.
Quality in Finished Goods
Inspection and Testing
The purposes of final product inspection
are to judge the quality of manufacturing,
to discover and help to resolve production
problems that may arise, and to ensure
that no defective items reach the
customer.
Quality in Installation and
Service
Service after the sale is one of the most
important factors in establishing
customer perception of quality and
customer loyalty.
Quality in Business Support
Functions for Manufacturing
Finance and accounting
 Quality assurance
 Legal services
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Key Idea
Every manager is responsible for studying
and improving the quality of the process
for which he or she is responsible; thus,
every manager is a quality manager.
Quality in Services
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Service is defined as “any primary or
complementary activity that does not
directly produce a physical product –
that is, the non-goods part of the
transaction between buyer (customer)
and seller (provider).”
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Key Idea
The American Management Association
estimates that the average company
loses as many as 35 percent of its
customers each year, and that about twothirds of these are lost because of poor
customer service.
Critical Differences Between
Service and Manufacturing (1 of 2)
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Customer needs and performance
standards are more difficult to
identify and measure
Services requires a higher degree of
customization
Output is intangible
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Critical Differences Between
Service and Manufacturing (2 of 2)
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Services are produced and consumed
simultaneously
Customers are often involved in actual
process
Services are more labor-intensive than
manufacturing
Services handle large numbers of
transactions
Key Idea
These differences make it difficult for
many service organizations to apply total
quality principles, and foster misguided
perceptions that quality management
cannot be effectively accomplished in
services.
Components of Service
System Quality
Employees
 Information technology
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Key Idea
Researchers have repeatedly demonstrated
that when service employee job satisfaction
is high, customer satisfaction is high, and
that when job satisfaction is low, customer
satisfaction is low.
Key Idea
Information technology is essential for
quality in modern service organizations
because of the high volumes of information
they must process and because customers
demand service at ever-increasing speeds.
Quality in Health Care
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Joint Commission on Accreditation of
Healthcare Organizations (JCAHO)
National Committee for Quality
Assurance (NCQA)
Institute for Healthcare Improvement
(IHI)
1999 expansion of the Baldrige Award
to nonprofit health care organizations
Quality Issues in Health
Care
Avoidable errors
 Underutilization of services
 Overuse of services
 Variation in services
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Key Idea
Although the national health care system
as a whole may need a sweeping
overhaul, many individual providers have
turned toward quality as a means of
achieving better performance and
customer satisfaction.
Quality in Education
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Koalaty Kid
– Active involvement of whole school
community
– Committed leadership
– System for continuous improvement
– Environment that celebrates success
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Quality in Higher Education
Business plays an important role in
fostering quality improvement efforts in
higher education by transferring
knowledge and expertise on quality
processes and implementation practices.
Academic Quality
Improvement Project (AQIP)
AQIP criteria focuses on institutional practices
for helping students learn, accomplishing
other distinct objectives, understanding
student and stakeholder needs, valuing
people, leading and communicating,
supporting institutional operations, measuring
effectiveness, planning continuous
improvement, and building collaborative
relationships—all of which are key elements of
TQ.
Quality in Small Business
and Not-for-Profits
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Slow to adopt quality approaches
– General lack of understanding and
knowledge about quality
– Focus on sales and market growth, cash
flow, and routine fire fighting
– Lack of resources for formal quality
systems
Key Idea
Perhaps the most important factor in
successful quality initiatives in small
businesses is the recognition by the CEO
or president that a quality focus can be
beneficial and lead to achieving
organizational goals.
Quality in the Public Sector
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Quality in the Federal Government
– Federal Quality Institute
– President’s Quality Award
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State and Local Quality Efforts
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Key Idea
Quality concepts and principles are
universal and can be applied in all types
of organizations. The difficulty, of
course, is developing an infrastructure
to make it happen and the discipline to
sustain efforts over time.