1. Productivity and Quality Improvement
Chapter 7
Productivity and Quality Improvement

2. Learning Objectives
Describe the current status and future directions of management efforts to improve productivity and quality.
Discuss how total quality management programs are increasing productivity and quality.
Identify the steps in TQM programs and briefly describe each step.
Explain how Pareto chart analysis, cause-and-effect diagrams, customer-value-added programs, and benchmarking reduce errors and increase quality.

3. Learning Objectives (contd.)
Relate the value of alternative work arrangements and empowerment to increased productivity and quality.
Define the term intrapreneurship and relate its value to improved organizational productivity and quality.
Explain the importance for developing intrapreneurship strategies.

4. Productivity
Typically measured by the equation: output/input

5. Total Quality Management
Total Quality Management seeks to increase customer service and reduce cost
The first principle of TQM is:
Do it right the first time

6. New Beliefs About Quality
The quality output of goods and services is everyone’s job
The thinking that quality is “good enough” must be replaced by the belief that quality must be continually improved
Work can often be done faster without any loss in quality
Everybody associated with the organization needs to be part of the quality effort, including top managers, low-level workers, outside suppliers, and customers

7. Steps in Implementing a TQM Program
Formulation of strategic intent
Careful design of organization structure and training efforts
Use of common tools and techniques
Emphasis on use of customer value added
Use of benchmarking and continuous improvement
Careful measurement of performance results

8. TQM Tools and Techniques
A Pareto chart is a vertical bar graph used to identify and rank-order problems
A cause-and-effect diagram is designed to help identify reasons for a problem

9. Benchmarking
… is an ongoing process of measuring products, services, and practices against those of competitors and industry leaders
Type of Benchmarking
Activity Performed
Improve-ment (%)
Internal
Competitive
Functional
Generic
Compare similar process. within comp.
Specific competitor-to-comp. compar.
Compare similar func. to ind. leaders
Compare unrelated practices/processes 10 20 35
>35

10. Figure 7.3 The Benchmarking Process
Identify the processes to be benchmarked
Determine the competitor to benchmark against
Decide how the benchmarking data will be collected
Compute the “gap” that exists between the competitor’s performance and your own performance

11. Feedback Figure 7.3 (Contd.) Create a plan for eliminating this “gap”
Implement the plan
Monitor the progress
Decide what, if any, additional steps now need to be taken

12. Benefits of Incremental, Small Improvements
Increased quality of output
Greater competitiveness
Higher profitability
A lower operating break-even point
The opportunity to use a participative management approach that allows employees to play a role in decision making
A way of learning from past experiences and using this information to set realistic, attainable goals

13. Alternative Work Schedules
A compressed workweek has longer individual workdays
Flextime allows workers to decide when they want to stop and start their workday
Shift work is assigned on the basis of time shifts such as 8 a.m. to 5 p.m.

14. Intrapreneur
An intrapreneur is an entrepreneur who works within the confines of an organization

15. Key Terms in the Chapter
Productivity
Total quality management (TQM)
First principle of TQM
Strategic intent
Quality council
Pareto chart
Cause-and-effect diagram
Customer value added
Benchmarking
Compressed work week
Flextime
Shift work
Empowerment
Intrapreneur