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Management meeting and exceeding customer expectation 8th ch04

Management’s
Commitments to
Quality and Productivity

Chapter 4

MANAGEMENT
Meeting and Exceeding Customer Expectations
EIGHTH EDITION
Prepared by
Deborah Baker
Texas Christian University
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

1


learning objectives
1. Discuss how customers influence the quality
of goods and services


2. Explain why quality must be cost effective
3. Relate quality, productivity, and profitability to

Chapter 4

one another

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

2


learning objectives

(continued)

4. Discuss the commitments required to improve
quality and productivity at the following:

a. The top of organizations
b. The middle of organizations
c. The bottom of organizations
5. Discuss the external commitments required to

Chapter 4

improve an organization’s quality and
productivity

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

3


11

Customer Satisfaction Model
Quality
Quality
Component


Component

Satisfaction
Satisfaction

Handle
Handle
Complaints
Complaints

Recommendation
Recommendation

Company’s
Company’s
Representative
Representative
Product
Product
Availability
Availability

Performance
Performance

Customer
Customer
Satisfaction
Satisfaction

Services
Services

Retention
Retention

Profitability
Profitability

Chapter 4

Billing
Billing
Price
Price and
and
Contracts
Contracts
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

4


11

Origination of Quality Features
Internal
Internal Designers
Designers
External
External Designers
Designers
Producers
Producers

Chapter 4

Users
Users
Customers
Customers
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

5


11

Quality Function Deployment
Quality
QualityFunction
Function
Deployment
Deployment

A disciplined approach to
solving quality problems before
the design phase of a product
Purpose is to assure customer
obtains high value from product

Chapter 4

Benchmark
Benchmark

The product to meet or beat in
terms of design, manufacture,
performance, and service

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

6


11

Quality Function Deployment
Long-Term
Long-Term
Value
Value Disciplines
Disciplines

Operational
Operational excellence
excellence
Product
Product leadership
leadership

Chapter 4

Customer
Customer intimacy
intimacy

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

7


11

Total Quality Management

Chapter 4

Total
TotalQuality
Quality
Management
Management

A strategy for continuously
improving performance at ever
level, and in all areas of
responsibility

Continuous
Continuous quality
quality
improvement
improvement

Leadership
Leadership
through
through quality
quality

Managing
Managing total
total quality
quality

Total
Total quality
quality control
control

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

8


Chapter 4

11

The TQM Model

Source: Department of Defense, Quality and Productivity Self-Assessment Guide for Defense Organizations (Washington, D.C.
Department of Defense, 1990).
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

9


TQM Principles

Chapter 4

11




Quality improvements create productivity gains



Quality is measured by continual process and product
improvement and user satisfaction



Quality is determined by product design and achieved by
effective process controls




Process-control techniques are used to prevent defects




Management is responsible for quality

Quality is defined as conformance to requirements that
satisfy user needs

Quality is part of every function in all phases of the
product life cycle
Relationships with suppliers are formed for the long
term and are quality-oriented

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

10


Productivity

22

Productivity
Productivity

Chapter 4

Output
Input

The relationship between the
amount of input needed to
produce a given amount of
output and the output itself

=

Productivity
Index

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

11


22

Improving Productivity
 Increase the amount of output generated
by a fixed amount of input

 Reduce the amount of input required to
generate a fixed amount of output

Chapter 4

 Use a combination of both approaches

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

12


33

Quality–Productivity–Profitability
Edwards
Edwards Deming
Deming on
on
Decreasing
Decreasing Costs
Costs

Reduce
Reduce mistakes
mistakes and
and waste
waste
Reduce
Reduce the
the need
need to
to
rework
rework parts
parts

Chapter 4

Improve
Improve productivity
productivity

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

13


33

Deming’s Chain Reaction
Improve
Improve
Quality
Quality

Costs
Costsdecrease
decreasebecause
because
of
offewer
fewermistakes,
mistakes,delays,
delays,
and
andsnags;
snags;less
lessneed
needto
to
rework
reworkmaterials;
materials;better
betteruse
use
of
ofmachine
machinetime
timeand
and
materials
materials

Productivity
Productivity
improves
improves

Chapter 4

Capture
Capturethe
the
market
marketwith
with
better
betterquality
qualityand
and
lower
lowerprice
price
Stay
Stayin
in
business
business

Provide
Providejobs
jobs
and
andmore
morejobs
jobs

Source: W. Edwards Deming, Out of the Crisis (Cambridge, Mass.: Massachusetts Institute of Technology Press, 1988), p. 3.
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

14


33

Minimizing Resistance to Change
1.
1. Provide
Provideparticipation
participation
2.
2. Provide
Provideenough
enoughtime
time
3.
3. Keep
Keep proposals
proposalsfree
free of
ofexcess
excess baggage
baggage
4.
4. Work
Workwith
withthe
the recognized
recognized leadership
leadership
5.
5. Treat
Treatpeople
people with
with dignity
dignity

Chapter 4

6.
6. Take
Take the
the other
otherperson’s
person’spoint
pointof
of view
view
7.
7. Look
Lookat
atthe
thealternatives
alternatives
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

15


4a
4a

Commitments at the Top
Mission
Mission

Vision
Vision

Chapter 4

Core
Core
Values
Values

A written declaration of an
organization’s central and
common purpose, its reason for
existence
Where an organization wants to
be in the future

Values that should never
change, “bedrock principles”

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

16


4a
4a

Ford’s Vision, Mission, and Core
Values
Our Vision
To become the world’s leading consumer company for
automotive products and services.

Our Mission
We are a global, diverse family with a proud heritage
passionately committed to provided outstanding products
and services that improve people’s lives.

Chapter 4

Our Values
The customer is Job 1. We do the right thing for our
people, our environment and our society. By improving
everything we do, we provide superior returns
to our shareholders.
Source: http://www.mycareer.ford.com/OURCOMPANY.ASP?CID=23.
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

17


Chapter 4

4b
4b

Commitments at the Middle
Quality
Quality
Improvement
Improvement
Team
Team

Meet to assess progress toward
goals, identify and solve
problems, plan for the future

Process
Process
Improvement
Improvement
Team
Team

Meet to analyze how they can
improve the process

Project
Project
Improvement
Improvement
Team
Team

Determine how to make the
project better

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

18


4b
4b

Quality Control Audits
1. How are we doing?

Chapter 4

2. What are the problems?

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

19


4b
4b

Measurements

Chapter 4

Statistical
Statistical
Quality
QualityControl
Control
(SQC)
(SQC)

Statistical
Statistical
Process
ProcessControl
Control
(SPC)
(SPC)

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

20


4c
4c

Commitments at the Bottom

Chapter 4

Quality
QualityCircle
Circle

A temporary team, consisting
primarily of workers who share a
problem, who meets regularly
until the problem is solved

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

21


55

External Commitments

Chapter 4

“Winning
“Winningaanew
new customer
customertypically
typicallycosts
costs
aacompany
companyup
up to
to five
five times
times as
asmuch
much as
as
keeping
keepingaacurrent
currentone
oneand
and the
the average
average
business
businessloses
loses20
20 percent
percentof
of its
its
accounts
accounts each
eachyear.”
year.”

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

22


Questions for Outsourcing

55

Chapter 4







Do they know their costs?
Do we know them?
Are their costs out of line or in check?
Are they working on cost reductions?
Can we help them to reduce costs?

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

23


55

Internal Influences
Information
Information
Facilities
Facilities
Machinery
Machinery and
and Equipment
Equipment

Chapter 4

Materials
Materials and
and Supplies
Supplies
Finances
Finances
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

24


World-Class Manufacturing

55

Characteristics
Characteristics

Chapter 4










Direct links to customers and suppliers
Flexible production lines
Short cycle times
Horizontal product, project, and process teams
Just-in-time delivery
Cleanliness
Empowered teams and individuals
Focus on efforts to improve quality
and productivity

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

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