1. Ensuring High Quality and Productivity2
Ensuring High Quality and Productivity
If you forget the customer, nothing much else matters.
—Anne Mulcahy,
CEO, Xerox Corporation

2. Learning Objectives
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.
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.
See text page: 30

3. The Productivity Formula
See Learning Objective 1: Describe the consequences suffered by organizations as a result of poor quality work.
See text page: 31

4. Dimensions of Quality Performance Features Reliability Conformance
Durability
Serviceability
Aesthetics
Perceive quality
See Learning Objective 1: Describe the consequences suffered by organizations as a result of poor quality work.
See text page: 32

5. Consequences of Poor Quality
Limited resources
When the quality of an organization’s goods or services is poor, the whole organization suffers.
The organization loses business and therefore revenues, and it also has more difficulty attracting other important resources.
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.
Quality programs may carry some start-up costs, but the cost of poor quality is higher.
See Learning Objective 1: Describe the consequences suffered by organizations as a result of poor quality work.
See text pages: 32-33

6. Types of Quality Control
Product quality control
An organization’s efforts to prevent or correct defects in its goods or services or to improve them in some way.
Process quality control
Quality control that focuses on ways to improve the product itself.
See Learning Objective 2: Compare product quality control and process control.
See text pages: 33-34

7. Methods for Improving Quality Control
Statistical quality control
Zero-defects approach
Employee involvement approach
Six sigma
Total Quality Management
See Learning Objective 3: Summarize techniques for quality control.
See text page: 35-41

8. Quality Standards Malcolm Baldrige Quality Award ISO 9000 Benchmarking
Leadership
Strategic planning
Customer and market focus
Information and analysis
Human resource focus
Process management
Business results
ISO 9000
Benchmarking
Delivering greater customer value
See Learning Objective 4: Identify ways organizations measure their success in continuous quality improvement.
See text page: 41

9. Guidelines for Quality Control
See Learning Objective 4: Identify ways organizations measure their success in continuous quality improvement.
See text page: 43

10. Productivity in the United States: Manufacturing Workers
See Learning Objective 4: Identify ways organizations measure their success in continuous quality improvement.
See text page: 45

11. Constraints on Productivity
Management limitations
Employee attitudes and skills
Government regulations
Union rules
See Learning Objective 5: Identify constraints on productivity.
See text pages: 45-47

12. 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.
See Learning Objective 6: Describe how productivity and productivity improvements are measured.
See text pages: 47-49

13. 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.
Understand the goals of quality programs and their own role in achieving those goals.
Use their specific knowledge of the tasks and processes their teams perform to find unique ways to contribute to productivity.
Use as many of these strategies as will work.
Encourage and use employees’ ideas for saving money.
See Learning Objective 7: Identify ways productivity may be improved.
See text pages: 50-51

14. Improving Productivity (continued)
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
See Learning Objective 7: Identify ways productivity may be improved.
See text page: 51

15. Improving Productivity (continued)
Improve methods
Reengineering
Process control techniques
Kaizen
Give employees more control over the way they work
Design jobs to be interesting
Reduce overhead
Monitor work areas
Eliminate unnecessary paperwork
See Learning Objective 7: Identify ways productivity may be improved.
See text pages: 51-53

16. Improving Productivity (continued)
Minimize waste
Reduce downtime
Reduce detour behavior
Use 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
See Learning Objective 7: Identify ways productivity may be improved.
See text pages: 53-54

17. The Costs of Uneven Work Flow
See Learning Objective 7: Identify ways productivity may be improved.
See text page: 54

18. Improving Productivity (continued)
Install modern equipment
Compute the payback period
Find the average rate of return (ARR)
Payback period = Cost of new equipment
Savings per year
See Learning Objective 7: Identify ways productivity may be improved.
See text page: 55
Average rate of return = Average annual earnings or savings
Amount invested (cost)

19. Improving Productivity (continued)
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
See Learning Objective 7: Identify ways productivity may be improved.
See text pages: 55-56

20. 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
See Learning Objective 8: Explain why employees have fears about productivity improvement and how supervisors can address those fears.
See text page: 57

21. Summary
Poor-quality work gives an organization a negative image, which drives away customers and makes it harder to recruit superior employees and borrow money.
Product quality control focuses on ways to improve the product.
Process control focuses on how to do things in a way that results in higher quality.
Techniques for quality control:
Statistical quality control
Zero-defects approach
Employee involvement teams
Six Sigma
Total quality management
See text pages: 58-59

22. Summary (continued)
Supervisors and other managers should set, communicate, and enforce standards for quality control.
Supervisors must identify constraints on productivity.
Productivity is measured by dividing the amount of outputs by the amount of inputs.
Two ways to improve productivity are to control quality and control costs.
Supervisors should address employee concerns about productivity improvement.
See text pages: 58-59