Quality and Productivity
Quality can be defined as how well a product does what it is intended to do—how closely it satisfies the specifications to which it was built.10 In a broad sense, quality is the degree of excellence on which products or services can be ranked on the basis of selected features or characteristics. It is customers who determine this ranking and also define quality in terms of appearance, performance, availability, flexibility, and reliability.11 Product quality determines an organization’s reputation.
MyManagementLab : Watch It, Blackbird Guitars
If your instructor has assigned this activity, go to mymanagementlab.com to watch a video and answer the questions about how a guitar company’s production process supports its commitment to high quality.
During the last decade or so, managerial thinking about the relationship between quality and productivity has changed drastically. Many earlier managers chose to achieve higher levels of productivity simply by producing a greater number of products given some fixed level of available resources. They saw no relationship between improving quality and increasing productivity. Quite the contrary: They viewed quality improvement as a controlling activity that took place toward the end of the production process and largely consisted of rejecting a number of finished products that were too obviously flawed to offer them to customers. Under this approach, quality improvement efforts were generally believed to lower productivity.
Focus on Continual Improvement
Management theorists have more recently discovered that concentrating on improving product quality throughout all phases of a production process actually improves the productivity of the manufacturing system.12 U.S. companies were far behind the Japanese in making this discovery. As early as 1948, Japanese companies observed that continual improvements in product quality throughout the production process typically resulted in improved productivity. How does this improvement happen? According to Dr. W. Edwards Deming, a world-renowned quality expert, a serious and consistent focus on quality typically reduces nonproductive variables such as the reworking of products, production mistakes, delays and production snags, and inefficient use of time and materials.
Deming believed that for continual improvement to become a way of life in an organization, managers need to understand their company and its operations. Most managers feel that they do know their company and its operations; but when they begin drawing flowcharts, they discover that their understanding of strategy, systems, and processes is far from complete. Deming recommended that managers question every aspect of an operation and involve workers in discussion before taking action to improve operations. He maintained that a manager who earnestly focuses on improving product quality throughout all phases of a production process will initiate a set of chain reactions that benefit not only the organization but also the society in which the organization exists.
Focus on Quality and Integrated Operations
Deming’s flow diagram for improving product quality (see Figure 18.1 ) contains a complete set of organizational variables. It establishes the customer as part of the process and introduces the idea of continually refining the knowledge, design, and inputs of the process to constantly increase customer satisfaction. The diagram shows the operations process as an integrated whole, from the first input to the actual use of the finished product; thus, a problem at the beginning of the process will affect the entire process as well as the end product. Deming’s diagram eliminates barriers between the company and the customer, between the customer and the suppliers, and between the company and its employees. Because the process is unified, the greater the harmony among all its components, the better the results will be.
Figure 18.1 Deming’s flow diagram for improving product quality
An organization’s interpretation of quality is expressed in its strategies. If a company does not incorporate quality into its strategic plan, customers may look for other solutions.
Wal-Mart’s continuous focus on “everyday low prices” has led some consumers to equate the retailer with low quality.14 Because of these perceptions, Wal-Mart’s sales growth decreased when some Wal-Mart customers started shopping at stores such as Target, which is associated with higher quality. The following sections elaborate on the relationship between quality and production by discussing quality assurance and quality circles as part of organizational strategy.
Quality Assurance
Quality assurance is an operations process involving a broad group of activities aimed at achieving an organization’s quality objectives.15 Quality assurance is a continuum of activities that starts when quality standards are set and ends when quality goods and services are delivered to the customer. Although the precise activities involved in quality assurance vary from organization to organization, activities such as determining the safest system for delivering goods to customers and maintaining the quality of parts or materials purchased from suppliers are parts of most quality assurance efforts.16
Statistical Quality Control
Statistical quality control is a much narrower concept than is quality assurance. Statistical quality control is the process used to determine how many products should be inspected to calculate a probability that the total number of products will meet organizational quality standards. An effective quality assurance strategy reduces the need for quality control and subsequent corrective actions.
“No Rejects” Philosophy
Quality assurance works best when management adopts a “no rejects” philosophy. Unfortunately, such a philosophy is not economically feasible for most mass-produced products. What is possible is training employees to approach production with a “do not make the same mistake” mind-set. Mistakes are costly because detecting defective products in the final quality control inspection is expensive. Emphasizing quality in the early stages—during product and process design—will reduce rejects and production costs.
Quality Circles
One trend in U.S. organizations is to involve all company employees in quality control by soliciting their ideas for judging and maintaining product quality. This trend developed from a successful Japanese control system known as quality circles. Although many U.S. corporations are now moving beyond the concept of the quality circle to that of the work team, as discussed in Chapter 15, many ideas generated from quality circles continue to be valid.17
A quality circle is a small group of workers that meets to discuss quality-related problems in a particular project and to communicate their solutions to these problems to management directly at a formal presentation session.18 Figure 18.2 shows the quality circle problem-solving process.
Most quality circles operate in a similar manner. The circle usually has fewer than eight members, and the circle leader is not necessarily the members’ supervisor. Members may be workers on the project and/or outsiders. The focus is on operational problems rather than on interpersonal ones. The problems discussed in the quality circle may be assigned by management or uncovered by the group itself.
Automation
The preceding section discussed the relationship between quality and productivity in organizations. This section introduces the topic of automation, which shows signs of increasing organizational productivity in a revolutionary way.19
Automation is defined as the replacement of human effort by electromechanical devices in such operations as welding, materials handling, design, drafting, and decision making. It includes robots—mechanical devices built to perform repetitive tasks efficiently—and robotics, which is the study of the development and use of robots.
Over the past 20 years, a host of advanced manufacturing systems have been developed and implemented to support operations. Most of these automated systems combine hardware—industrial robots and computers—and software. The goals of automation include reduced inventories, higher productivity, and faster billing and product distribution cycles.
Amazon is an example of a company using automation to increase productivity. The company recently purchased Kiva Systems, a manufacturer of robots designed to improve warehouse productivity. When an order is placed, these robots search Amazon’s warehouses for the items purchased by the consumer and take the items to the Amazon employee tasked with fulfilling the order. These robots eliminate the need for employees to expend effort on retrieving the merchandise. Investors expect these robots to reduce order fulfillment costs by approximately 30 percent, for a potential annual savings of nearly $1 billion for Amazon.20
Figure 18.2 The quality circle problem-solving process
Strategies, Systems, and Processes
According to Kemper and Yehudai, an effective and efficient operations manager is skilled not only in management, production, and productivity but also in strategies, systems, and processes. A strategy is a plan of action. A system is a particular linking of organizational components that facilitates carrying out a process. A process is a flow of interrelated events toward a goal, purpose, or end. Strategies create interlocking systems and processes when they are comprehensive, functional, and dynamic—that is, when they designate responsibility and provide criteria for measuring output.21