THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 1 Chapter 2 Total Quality in Organizations

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 2 Growth of Modern Quality Management Manufacturing quality Improved product designs Service quality Performance excellence

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 3 Systems Thinking A system is the 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.

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 4 Manufacturing Systems (1 of 2) Marketing and sales Product design and engineering Purchasing and receiving Production planning and scheduling Manufacturing and assembly Tool engineering

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 5 Manufacturing Systems (2 of 2) Industrial engineering and process design Finished goods inspection and test Packaging, shipping, and warehousing Installation and service

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 6 Quality in Business Support Functions for Manufacturing General management Finance and accounting Human resource management Quality assurance Legal services

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 7 Functional Relationships Shipping Warehousing Installation Service Process design Tool Engng. Planning Scheduling Marketing Sales Product design Purchasing Manufacturing Finished goods inspection Customers Suppliers

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 8 Systems Thinking Each component/area is a potential source of –creating quality –creating defects Important to recognize the role of each component and the role of each component in the system

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 9 Quality in Services 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).”

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 10 Importance of Quality in Services Increased competition High turnover Focus on achieving customer satisfaction Large percentage of customers lost because of poor quality High cost of retaining customers versus acquiring new customers

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 11 Critical Differences between Service and Manufacturing (1 of 2) Customer needs and performance standards are more difficult to identify and measure Services requires a higher degree of customization Output is intangible

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 12 Critical Differences between Service and Manufacturing (2 of 2) 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

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 13 Components of Service System Quality Employees –Customer satisfaction and employee job satisfaction related –Training –Reward/compensation system Information technology –Increasing volume, speed –E-commerce

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 14 The Ritz-Carlton Hotel Co.

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 15 Quality in Health Care Joint Commission on Accreditation of Healthcare Organizations (JCAHO) –Continuous quality improvement included in accreditation standards National Committee for Quality Assurance (NCQA) dedicated to improving the quality of health care Institute for Healthcare Improvement (IHI) 1999 expansion of the Baldrige Award to nonprofit health care organizations

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 16 Quality Issues in Health Care Avoidable errors Underutilization of services Overuse of services Variation in services

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 17 Quality in Education (K-12) Application of continuous improvement by students Koalaty Kid program –System for continuous improvement –Active involvement –Committed leadership –Environment that celebrates success

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 18 Quality in Education 1999 expansion of the Baldrige Award to nonprofit education organizations Success stories –Mt. Edgecumbe High School –Brazosport ISD –Hunderton Central Regional HS –Pinellas County Schools

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 19 Quality in Higher Education Examples of the application of total quality –Oregon State University –Northwestern Missouri State University –Babson College Businesses foster the use of quality improvement efforts in education

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 20 Higher Education as a Production System Design and Redesign Consumer research Suppliers: families, high schools, colleges, business Customers: business, families, society, students Inputs: students faculty Processes Teaching, counseling, scientific research Outputs: able students new knowledge

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning TM 21 Quality in the Public Sector Quality in the Federal Government State and Local Quality Efforts