Chapter 1 (Lecture Outline Presentation) Organization Control and Quality Improvement.

Chapter 1(Lecture Outline Presentation)

Organization Control and Quality

Improvement

Copyright © Houghton Mifflin Company. All rights reserved. Lecture Outline Presentation, 17–2

Chapter Objectives

1. Identify three types of control and the components common to all control systems.

2. Discuss organizational control from a strategic perspective.

3. Identify the four key elements of a crisis management program.

4. Identify five types of productivity.

5. Explain how providing a service differs from manufacturing a product and list the five service-quality dimensions.


Chapter Objectives (cont’d)

6. Define total quality management (TQM) and discuss the basic TQM principles.

7. Describe at least three of the seven TQM process improvement tools.

8. Explain how Deming’s PDCA cycle can improve the overall management process.

9. Specify and discuss at least four of Deming’s famous 14 points.


Fundamentals of Organizational Control

• Control• Taking preventive or corrective action to keep things

on track.

• Checking, testing, regulation, verification, or adjustment.

• Objectives are yardsticks for measuring actual performance.

• Purpose of the control function

• Get the job done despite environmental, organizational, and behavioral obstacles and uncertainties.


Types of Controls

• Feedforward Control• The active anticipation and prevention of problems,

rather than passive reaction.

• Concurrent Control• Monitoring and adjusting ongoing activities and

processes.

• Feedback Control• Checking a completed activity and learning from

mistakes.


Components of Organizational Control Systems

• Organizational Control Subsystems• Strategic plans

• Long-range plans

• Annual operating budget

• Statistical reports

• Performance appraisals

• Policies and procedures

• Cultural control


Components of Organizational Control Systems (cont’d)

• Objectives• Measurable reference points (targets) for corrective

action.

• Standards• Guideposts on the way to achieving objectives.

• Benchmarking: identifying, studying, and building upon the best practices of organizational role models.



• Evaluation-Reward Systems• Measure and reward individual and team

contributions to attaining organizational objectives.

• Can shape effort-reward expectancies that motivate better performance.



• Strategic Control• Strategic planning and strategic control go hand in

hand.

• Top-level strategy sets and/or determines objectives through the organization.

• Control measures of activities and results are translated up the organizational pyramid.



• Identifying Control Problems• Executive reality checks: top managers periodically

working at lower-level jobs to become more aware of operations.

• Internal auditing: independent appraisals of organizational operations and systems to assess effectiveness and efficiency.



• Identifying Control Problems (cont’d)• Symptoms of inadequate control

• An unexplained decline in revenues or profits.

• A degradation of service (customer complaints).

• Employee dissatisfaction .

• Cash shortages caused by bloated inventories or delinquent accounts receivable.

• Idle facilities or personnel.

• Disorganized operations.

• Excess costs.

• Evidence of waste and inefficiency.


Crisis Management

• Organizational Crisis• A low-probability, high impact event that threatens the

viability of the organization and is characterized by ambiguity of cause, effect, and means of resolution, and well as by belief that decisions must be made swiftly.


Crisis Management (cont’d)

• Crisis Management• Anticipating and preparing for events that could

damage the organization.

• Two Biggest Mistakes Regarding Organizational Crises

1. Ignoring early warning signs of an impending disaster.

2. Denying the existence of a problem when disaster actually strikes.


Crisis Management (cont’d)

• Developing a Crisis Management Program• Conduct a crisis audit seeking out trouble spots and

vulnerabilities.

• Formulate contingency plans that specify early warning signals, actions to be taken, and consequences of those actions.

• Create crisis management teams with specific skills to deal with a crisis.

• Perfect the program through serious practice and rehearsals.


The Quality Challenge

• Defining Quality• “Conformance to requirements” (Crosby).

• A subjective response by customers to the adequacy of product or service quality in meeting their expectations/needs/requirements.


Five Types of Product Quality

• Transcendent Quality• Inherent value or innate excellence apparent to the

individual.

• Product-Based Quality• The presence or absence of a given product attribute.

• User-Based Quality• Quality of the product is determined by its ability to

meet the user’s expectations.


Five Types of Product Quality (cont’d)

• Manufacturing-Based Quality• How well the product conforms to its design

specification or blueprint.

• Value-Based Quality• How much value each customer separately attributes

to the product in calculating their personal cost-benefit ratio.


Unique Challenges for Service Providers

• Strategic Service Challenge• To anticipate and exceed customer’s expectations.

• Distinctive service characteristics

• Customers participate directly in the production process.

• Services are consumed immediately and cannot be stored.

• Services are provided where and when the customer desires.

• Services tend to be labor intensive.

• Services are intangible.


Unique Challenges for Service Providers (cont’d)

• Defining Service Quality• Five service quality dimensions

• Reliability (most important)

• Assurance

• Tangibles

• Empathy

• Responsiveness


Introduction to Total Quality Management (TQM)

• Total Quality Management• Creating an organizational culture committed to the

continuous improvement of skills, teamwork, processes, product and service quality, and customer satisfaction.

• Four Principles of TQM• Do it right the first time.

• Be customer-centered.

• Make continuous improvement a way of life.

• Build teamwork and empowerment.


Introduction to Total Quality Management (TQM) (cont’d)

• Do It Right the First Time• Designing and building quality into the product.

• Be Customer-Centered• Satisfying the customer’s needs by anticipating,

listening, and responding.

• Internal customers: anyone in the organization who cannot do a good job unless you do a good job.



• Make Continuous Improvement a Way of Life• Kaizen: a Japanese word meaning continuous

improvement (quality is an endless journey).

• A gain in one area does not mean loss in another.

• Venues for continuous improvement

• Improved and more consistent product and service quality.

• Faster cycle times.

• Greater flexibility.

• Lower costs and less waste.



• Build Teamwork and Empowerment• Teamwork

• Suggestion systems.

• QC circles and self-managed teams.

• Team work and cross-functional teams.

• Empowerment

• Adequate training

• Access to information and tools

• Involvement in key decisions

• Fair rewards for results


The Seven Basic TQM Process Improvement Tools

• Flow Chart• A graphic display of a sequence of activities and

decisions.

• Cause-and-Effect Analysis• The fishbone diagram helps visualize important

cause-and-effect relationships.

• Pareto Analysis (80/20 Analysis)• A bar chart indicating which problem needs the most

attention.


The Seven Basic TQM Process Improvement Tools (cont’d)

• Control Chart• Visual aid showing acceptable and unacceptable

variations from the norm for repetitive operations.

• Histogram• A bar chart indicating deviations from a standard bell-

shaped curve.

• Scatter Diagram• A diagram that plots relationships between two

variables.


The Seven Basic TQM Process Improvement Tools (cont’d)

• Run Chart• A trend chart for tracking a variable over time.


Deming Management

• Deming Management• The application of W. Edwards Deming‘s ideas to

revitalize productive systems to make them more responsive to the customer, more democratic, and less wasteful organizations.

• Essentially the opposite of scientific management.

• Principles of Deming Management• Quality improvement drives the entire economy.

• The customer always comes first.

• Don’t blame the person, fix the system.

• Plan-do-check-act (PDCA cycle).


Deming Management (cont’d)

• Deming’s 14 Points• Constant purpose

• New philosophy

• Give up on quality by inspection

• Avoid the constant search for lowest-cost suppliers

• Seek continuous improvement

• Train everybody

• Provide real leadership

• Drive fear out of the workplace

• Promote teamwork

• Avoid slogans and targets

• Get rid of numerical quotas

• Remove barriers that stifle pride in workmanship

• Education and self-improvement are key

• “The transformation is everyone’s job”

Chapter 1 (Lecture Outline Presentation) Organization Control and Quality Improvement.

Documents

organizational objectives

control functionget

organizational pyramid

control measures of

components common

servicequality dimensions

reward individual

disorganized operations