BUS 51 - Mosley7e ch14

© 2008 Thomson/South-Western© 2008 Thomson/South-Western All rights reserved. All rights reserved.

PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookThe University of West AlabamaThe University of West Alabama

Part 5

Controlling

Mosley Mosley • Pietri• Pietri

Chapter 14

Controlling

Productivity,

Quality, and

Safety

Chapter 14

Controlling

Productivity,

Quality, and

Safety

© 2008 Thomson/South-Western. All rights reserved. 14–2

Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives

1.1. Explain the concept of productivity.Explain the concept of productivity.

2.2. Identify and explain the ways in which management, Identify and explain the ways in which management, government, unions, and employees affect government, unions, and employees affect productivity.productivity.

3.3. Describe some steps supervisors can take to increase Describe some steps supervisors can take to increase productivity.productivity.

4.4. Differentiate between total quality and quality control.Differentiate between total quality and quality control.

5.5. Describe the role of variance in controlling quality.Describe the role of variance in controlling quality.

6.6. Identify some important tools for controlling quality.Identify some important tools for controlling quality.

After reading and studying this chapter, you should After reading and studying this chapter, you should be able to:be able to:


Learning Objectives (cont’d)Learning Objectives (cont’d)Learning Objectives (cont’d)Learning Objectives (cont’d)

7.7. Explain what the Occupational Safety and Health Explain what the Occupational Safety and Health Administration (OSHA) does.Administration (OSHA) does.

8.8. Describe the supervisor’s role in promoting safety.Describe the supervisor’s role in promoting safety.

After reading and studying this chapter, you should After reading and studying this chapter, you should be able to:be able to:


Global Competition and ProductivityGlobal Competition and Productivity

• High U.S. Productivity: High U.S. Productivity: Mid-1990s to PresentMid-1990s to Present To overcome stagnant To overcome stagnant

productivity, U.S. productivity, U.S. companies built new companies built new facilities, upgraded facilities, upgraded technology, transformed technology, transformed production processes and production processes and work methods, and work methods, and invested heavily in invested heavily in employee training.employee training.


EXHIBIT 14.1 U.S. Productivity Growth in Manufacturing Output per Hour: 1960s–2006

Source: U.S. Bureau of Labor Statistics.

Year Annual Rate Year Annual Rate

1960s 2.2 1995 3.9

1970s 2.7 1996 4.1

1980s 1.4 1997 5.0

1990 2.5 1998 4.8

1991 2.3 1999 5.1

1992 5.1 2000 4.1

1993 2.2 2001 0.9

1994 3.1 2002 4.8

2003 6.2

2004 1.4

2005 4.1

2006 (1st Quarter) 3.7


Improving Productivity and Cost Improving Productivity and Cost ControlControl• ProductivityProductivity

Indicates how efficiently a country is utilizing its Indicates how efficiently a country is utilizing its human resources in producing goods and services.human resources in producing goods and services.

Is a measure of efficiency (inputs to outputs).Is a measure of efficiency (inputs to outputs).

• Calculating the Productivity Ratio:Calculating the Productivity Ratio:

Total output of goods/services

Total costs (or inputs)


Improving ProductivityImproving Productivity

• How Productivity is IncreasedHow Productivity is Increased

1.1. Increase the total output without Increase the total output without changing the total costs.changing the total costs.

2.2. Decrease the total input costs Decrease the total input costs without changing the total without changing the total output.output.

3.3. Increase the output and Increase the output and decrease the input costs.decrease the input costs.


EXHIBIT 14.2 Examples of Productivity Measurements

Input Output Salesperson labor hours Sales volume per salesperson

Energy used, in BTUs Number of pounds fabricated

Training hours for customer service personnel

Percent of error-free written orders

Number of hours of plantwide safety meetings

Number of accident-free days

Labor hours spent on preventive maintenance

Number of hours without a machine breakdown

Cost of raw materials Quantity of finished goods produced

Total labor hours of service personnel Total quantity of services produced

Total labor hours of production workforce

Total quantity of goods produced

Total costs Total number (or value) of goods or services produced

BTU, British thermal unit.


Why Productivity Is ImportantWhy Productivity Is Important

• For Individual Companies:For Individual Companies:

Increased productivity translates into lower prices, Increased productivity translates into lower prices, larger market share, and greater profits.larger market share, and greater profits.

Enables investment in research and development, Enables investment in research and development, new advanced technology, increased wages and new advanced technology, increased wages and benefits, and improved working conditions.benefits, and improved working conditions.

• For a Nation:For a Nation:

Increased productivity greatly enhances its economic Increased productivity greatly enhances its economic growth and health.growth and health.


EXHIBIT 14.3 Groups Influencing Productivity


EXHIBIT 14.5 How Supervisors Can Improve Employee Productivity

• Train employees. Can their abilities be upgraded?

• Clearly communicate the need for high standards so that workers understand what is expected of them.

• Use motivation techniques to inspire workers to increase output. Pride, ego, and security are several important motivators available.

• Eliminate idleness, extended breaks, and early quitting time.

• Build in quality the first time work is done. Productivity is lost when items are scrapped or need to be reworked.

• Work on improving attendance and turnover in your work group.


EXHIBIT 14.5 How Supervisors Can Improve Employee Productivity (cont’d)

• Reduce accidents. Accidents normally result in time lost to investigations, meetings, and reports—even if the employee does not suffer a lost–work-time injury.

• Seek to improve production measures. Will process or work-flow improvements help?

• Try to eliminate or reduce equipment or machinery breakdowns. Preventive maintenance is important.

• Exercise good control techniques. Follow up on performance and take corrective action promptly.

• Involve your employees in the process of improvement. Select their ideas and suggestions for improvement. Form special productivity improvement teams.


EXHIBIT 14.6 Performance Report

Name of department Fabrication Performance period November 2006

Budgeted output 15,700 lbs. Budgeted scrap 152 lbs.

Actual output 15,227 lbs. Actual scrap 120 lbs.

Variance –473 lbs. +32 lbs.

Item Actual Budgeted Variance

Direct labor $32,000 $32,000 $ 0 Overtime 1,500 1,000 –500 Supplies 500 385 –115 Maintenance and repairs 4,250 3,000 –1,250 Utilities 1,300 1,200 –100 Scrapped material 1,200 1,520 –320

Total $40,750 $39,105 –$1,645


Recent Productivity Improvement Recent Productivity Improvement MethodsMethods• RoboticsRobotics

The use of programmed computer-controlled The use of programmed computer-controlled machines to perform repetitive manipulations of tools machines to perform repetitive manipulations of tools or materials.or materials.

• Just-in-Time (JIT) Inventory Control SystemJust-in-Time (JIT) Inventory Control System Scheduling materials to arrive only when they are Scheduling materials to arrive only when they are

needed in the production process.needed in the production process.

• Computer-Assisted Manufacturing (CAM)Computer-Assisted Manufacturing (CAM) Using special computers to assist equipment in Using special computers to assist equipment in

performing processes.performing processes.


Historical InsightHistorical Insight

• Evolution of the Quality Explosion in the U.S.Evolution of the Quality Explosion in the U.S. W. Edwards Deming’s 85–15 ruleW. Edwards Deming’s 85–15 rule

Assumes that when things go wrong, 85 percent of Assumes that when things go wrong, 85 percent of the time the cause is from elements controlled by the time the cause is from elements controlled by management.management.

Management rather than the employee is to blame Management rather than the employee is to blame for most poor quality.for most poor quality.


EXHIBIT 14.7 Deming’s Fourteen Points for Quality

1. Top management should establish and publish a statement of the organization’s purpose and commitment to quality products and services and continuous improvement.

2. Everyone throughout the organization should learn the new philosophy.

3. Dependence on “inspecting” quality into products should be shifted to an attitude of “expecting” quality by having it built into the system.

4. There must be a systematic way to select quality suppliers, rather than simply on the basis of cost.

5. The organization must be devoted to continuous improvement.

6. All employees should be trained in the most modern quality and problem-solving techniques.

7. Leadership techniques consistent with getting the most commitment from employees should be practiced throughout the entire organization.

Source: From W. Edwards Deming, Out of Crisis (Cambridge, MA, MIT Press, 1986).


EXHIBIT 14.7 Deming’s Fourteen Points for Quality (cont’d)

8. Fear should be eliminated from the work environment.

9. Teams and work groups must work smoothly together; barriers between functional departments must be eliminated.

10. Exhortations, posters, and slogans asking for new levels of workforce productivity must be backed by providing the methods to achieve these.

11. Numerical production quotas should be eliminated. Constant improvement should be sought instead.

12. Barriers that deprive employees from pride in their work must be removed.

13. A vigorous program of education, retraining, and self-improvement for all employees must be instituted.

14. A structure in top management that will push the thirteen points above to achieve the transformation must be created.

Source: From W. Edwards Deming, Out of Crisis (Cambridge, MA, MIT Press, 1986).


EXHIBIT 14.8 The Malcolm Baldrige National Quality Award

1. Establish a plan to seek improvement continuously in all phases of operations—not just manufacturing but purchasing, sales, human relations, and other areas.

2. Put in place a system that accurately tracks and measures performance in those areas.

3. Establish a long-term strategic plan based on performance targets that compare with the world’s best in that particular industry.

4. Link closely in a partnership with suppliers and customers in a way that provides needed feedback for continuous improvement.

5. Demonstrate a deep understanding of customers in order to convert their wants into products.

6. Establish and maintain long-lasting customer relationships, going beyond product manufacture and delivery to include sales, service, and ease of maintenance.

7. Focus on preventing mistakes instead of developing efficient ways to correct them; that is, feedforward control is a must.

8. Perhaps most difficult, but imperative, is to make a commitment to quality improvement throughout all levels of the organization, including top, middle, and bottom.

Organizations must observe eight essentials in order to win:


EXHIBIT 14.9 The Total Quality Chain

Total QualityRefers to an organization’s overall effort to achieve customer satisfaction through continuous improvement of products or services.

Quality Control DefinedMeasurements designed to check whether the desired quality standards are being met.


Tools for Controlling QualityTools for Controlling Quality

• FlowchartFlowchart A visual representation of the sequence of steps A visual representation of the sequence of steps

needed to complete a process.needed to complete a process.

• HistogramHistogram A graphical representation of the variation found in a A graphical representation of the variation found in a

set of data.set of data.

• Run ChartRun Chart Data presentation showing results of a process Data presentation showing results of a process

plotted over time.plotted over time.


EXHIBIT 14.10 Flowchart of a Fast-Food Drive-Through Process


EXHIBIT 14.11 Histogram Showing Frequency and Length of Time Taken by Home Office to Process Loan Request

Source: From Total Quality by James W. Dean and James R. Evans. © 1994. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com.


EXHIBIT 14.12 Run Chart of Percentage of Restaurant Customers Waiting in Excess of 1 Minute to Be Seated

Source: From Foundations of Total Quality Management: A Readings Book by J. G. Van Matre. © 1995. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com.


Tools for Controlling Quality (cont’d)Tools for Controlling Quality (cont’d)

• Pareto ChartsPareto Charts Problem-analysis charts that use a histogram to Problem-analysis charts that use a histogram to

illustrate sources of problems.illustrate sources of problems.

• Cause-and-Effect DiagramCause-and-Effect Diagram A graphical display of a chain of causes and effects.A graphical display of a chain of causes and effects.

• Control ChartControl Chart A statistical control process chart that displays the A statistical control process chart that displays the

“state of control” of a process.“state of control” of a process.


EXHIBIT 14.13 Pareto Chart of Customers’ Complaints about Restaurants

Source: From Foundations of Total Quality Management: A Readings Book, 1/e by J. G. Van Matre, p. 146. -0030078660. © 1995. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730-2215


EXHIBIT 14.14 Cause-and-Effect Diagram for “Why Tables Are Not Cleared Quickly”

Source: From Foundations of Total Quality Management: A Readings Book, 1/e by J. G. Van Matre, p. 146. -0030078660. © 1995. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730-2215


EXHIBIT 14.15 Example of a Control Chart

Source: From Total Quality, Management, Organization, and Strategy, 1st edition by Dean/Evans © 1994. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730-2215


The Supervisor’s Role in Achieving The Supervisor’s Role in Achieving QualityQuality• Supervisors can impact quality by:Supervisors can impact quality by:

Emphasizing the importance of high qualityEmphasizing the importance of high quality Providing information and support to help employees Providing information and support to help employees

achieve qualityachieve quality Providing meaningful feedback to employees.Providing meaningful feedback to employees.

• Motivating workers to achieve high quality work Motivating workers to achieve high quality work requires that supervisors:requires that supervisors: Let employees know the quality performance is Let employees know the quality performance is

expectedexpected Involve workers in achieving and controlling quality.Involve workers in achieving and controlling quality.


EXHIBIT 14.16 Characteristics of Effective Employee Involvement Teams

• Managers at all levels, especially at the top, should be committed to the concept and give it their unqualified support.

• Projects undertaken should relate directly—or at least indirectly—to participants’ work.

• Projects should be team efforts, not individual activities.

• Participants should be trained in quality-control, decision making, and problem-solving techniques.

• Team leaders also should be trained in group dynamics and leadership of a group.

• Teams should be given feedback—in the form of results—regarding their recommendations and solutions.


Promoting Employee SafetyPromoting Employee Safety

• The Occupational Safety and Health The Occupational Safety and Health Administration (OSHA)Administration (OSHA) Is a federal agency created in 1970 by the Is a federal agency created in 1970 by the

Occupational Safety and Health Act to provide Occupational Safety and Health Act to provide consistently safer and healthier working conditions for consistently safer and healthier working conditions for employees.employees.

Requires organizations to keep safety logs and Requires organizations to keep safety logs and records of illnesses and injuries incurred on the jobrecords of illnesses and injuries incurred on the job

Develops standards, conduct standards compliance Develops standards, conduct standards compliance inspections, and issues citations and penalties inspections, and issues citations and penalties against organizations that fail to comply.against organizations that fail to comply.


Factors Influencing SafetyFactors Influencing Safety

The PeopleThe PeopleThe PeopleThe People

Size of the OrganizationSize of the OrganizationSize of the OrganizationSize of the Organization Type of IndustryType of IndustryType of IndustryType of Industry

SafetySafetySafetySafety


EXHIBIT 14.20 Occupational Injury and Illness Rates: Selected Industries, 2004

Iron Foundries 15.3

Mobile Home Mfg 15.0

Ship Building/Repair 12.3

Motor Vehicle Body Mfg. 11.3

Dairies 10.3

Soft Drink Producers 10.2

Airlines 10.0

Hospitals 7.6

Taxi Service 6.7

Grocery Stores 6.3

Hotels 5.7

Auto Dealerships 4.9

Full Service Restaurants 4.0

Book Stores 3.3

Real Estate Firms 3.2

Colleges and Universities 2.7

Women’s Clothing Stores 2.4

Radio and TV Broadcasting 1.5

Banks 1.5

CPA Firms 0.3

Average incidence rate for all industries: 4.8

Industry Incidence Rate per 100 employees


Causes of AccidentsCauses of Accidents

Environmental FactorsEnvironmental FactorsEnvironmental FactorsEnvironmental Factors

Human FactorsHuman FactorsHuman FactorsHuman Factors Technical FactorsTechnical FactorsTechnical FactorsTechnical Factors

AccidentsAccidentsAccidentsAccidents


EXHIBIT 14.21 Personal Injury Investigation

Injured: Fred Hanna

Position: Lab Assistant

Presiding: L. C. Smithson, Technical Supt.

Date of meeting: 4/15/2003

Time of meeting: 2:34 p.m.

Place of meeting: Plant Conference Room

Present: L. C. Smithson (Technical Supt.), Fred Hanna (injured), Jim Berry (Housekeeping), Tom Ahens (Safety Director), Kim Jernigan (Supervisor)

Nature of injury: Fractured distal end of radius, right arm

Lost time: 42 days (estimated)

Accident time and date: 4/13/2003 at 7:15 a.m.

Cause of injury: Floor was wet—appeared to be water. Investigation revealed that bags of Seperan (a synthetic polymer) had been rearranged during the 11 p.m.–7 a.m. shift. One bag was torn, and its contents had trickled onto the floor, causing it to be exceptionally slippery when washed at the end of the shift. Janitor noticed but did not flag it or attempt to remove hazard, as he noted at the end of his shift.

Corrective steps/recommendations:1. Apply grit to slippery areas; mark with appropriate warning signs.

2. Remind incoming shift personnel of hazardous conditions.

3. Communicate to incoming shift personnel any job priorities.

4. Store Seperan in a more remote area of the plant.


EXHIBIT 14.22 What Supervisors Can Do to Improve Safety

• Push for upgraded safety equipment and safer work methods.

• Establish and communicate safety goals for the department.

• Clearly communicate safety requirements to all employees.

• Listen to employee job complaints about safety-related matters, including noise, fatigue, and working conditions.

• Make sure new employees thoroughly understand equipment and safety rules.

• Prohibit use of unsafe or damaged equipment.

• Encourage safety suggestions from your workers.

• Post safety bulletins, slogans, and posters to reinforce the need for safety.

• Refuse to let rush jobs cause relaxed safety standards.

• Set a proper example. Don’t bend safety rules yourself.

• Conduct periodic safety meetings, with demonstrations by employee safety specialists or insurance representatives.


EXHIBIT 14.22 What Supervisors Can Do to Improve Safety (cont’d)

• Refuse to tolerate horseplay.

• Compete with other departments in safety contests.

• Report to employees any accidents that occur elsewhere in the company.

• Review past accident records for trends and insights.

• Encourage reporting of unsafe conditions.

• Make regular safety inspections of all major equipment.

• Enforce the rules when they are broken—take appropriate disciplinary action to demonstrate your safety commitment.

• Look for signs of fatigue in employees, such as massaging shoulders, rubbing eyes, and stretching or shifting position to relieve pain or fatigue. In such a case, relief for the employee may be warranted.

• Thoroughly investigate all accidents and attempt to remedy the causes.

• Develop a system for rewarding or acknowledging excellent safety conduct.


Important TermsImportant TermsImportant TermsImportant Terms

• cause-and-effect diagramcause-and-effect diagram• computer-assisted computer-assisted

manufacturing (CAM)manufacturing (CAM)• control chartcontrol chart• Deming’s 85–15 ruleDeming’s 85–15 rule• flowchartflowchart• histogramhistogram• just-in-time (JIT) inventoryjust-in-time (JIT) inventory• Occupational Safety and Occupational Safety and

Health Administration Health Administration (OSHA)(OSHA)

• Pareto chartsPareto charts• productivityproductivity• quality controlquality control• robotrobot• run chartrun chart• total qualitytotal quality• Toyota Production Toyota Production

SystemSystem

BUS 51 - Mosley7e ch14

Business

7demings fourteen

total quality

total quality

solving techniques

occupational

total output

controlling

thomson learning