MGT 449 Quality Management & Productivity Joseph Lewis Aguirre.

transcript

MGT 449 Quality Management & Productivity

Joseph Lewis Aguirre

• Define total quality management (TQM).

• Compare and contrast traditional management styles with quality-focused management styles.

• Identify the impact of globalization on quality management.

WS1: Total Quality ManagementWS1: Total Quality Management

• W. Edwards Deming's Electronic Network • Joseph Juran • David P. Langford • Philip Crosby • Peter Senge • William Glasser Institute • Dr. Stephen R. Covey • Willard Daggett-- • Larry Lezotte

Quality LegendsQuality Legends

– Pioneers of TQ– Introduction to Continuous

Improvement– 1940: World War II Economic

Impact– 1950: US Has Zero Competition– 1960: Complacency

History of TQHistory of TQ

–1970: Paralysis–1980: Wake-Up–1990: Action and Successes–2000 and Beyond?

History of TQHistory of TQ

–Employee Empowerment–Data Measurement–Process Improvement–Quality Focus

Definition of TQDefinition of TQ

–Customer Focus–Level of Acceptable Quality–Six Sigma Concept

Definition of TQDefinition of TQ

–Fiscal Issues–Employee Issues–Customer Issues

Effects of Poor QualityEffects of Poor Quality

–Global sourcing–Supply chain issues–Selling in foreign countries

Globalization and QualityGlobalization and Quality

• Determine the relationship between an organization's process improvement plan and its strategic plan.

• Express the importance of leadership in relation to quality.

• Describe the strategic role of TQM in manufacturing, service, government, and non-profit organizations.

• Provide examples of techniques and tools to measure customer satisfaction.

WS2: STRATEGIC PLANNING AND CUSTOMER SATISFACTION

• Identify various types of processes.

• Describe how process analysis can be useful in quality improvement.

• Utilize quality management tools to collect and present data.

• Recommend quality improvement strategies based upon data collected.

WS3: PROCESS ANALYSISWS3: PROCESS ANALYSIS

• Define variation.

• Explain the importance of variation in total quality management.

• Identify models and methodologies used for organizational process improvement.

WS4: PROCESS IMPROVEMENT MODELS & METHODS

• Summarize the requirements for implementing a quality process.

• Outline the steps necessary to adopt a quality management system in an organization.

WS5: TOTAL QUALITY IMPLEMENTATION

TQM - According to DilbertTQM - According to Dilbert

Traditional approaches to improving performance focused on incremental improvement. Continuous improvement (CI) under TQM assumes that performance can be elevated on a constant basis.

Incremental VS Continuous Improvement

Decision Making Framework Decision Making Framework

IMPLEMENTATION OPTIONS

EVALUATION

RELATIVE TIME SPAN

OBJECTIVESPROBLEMSOPPORTUNITIES

Decision Making FrameworkDecision Making Framework

Strategic Management Executives, Directors

-Transformation

Tactical Management Business Unit Managers

-Effective, right thing

Operational Management

Efficient, do thing right

Decision Structure

Structured

Semi Structured

Un Structured

Information Characteristics

Ad Hoc Unscheduled Summarized Infrequent Forward looking External Wide Scope

Pre specified Scheduled Detailed Frequent Historical Internal Narrow Focus

RELATIVE TIME SPAN

Business Professionals

Information Age ParadoxInformation Age Paradox

"Despite the existence of more and better information than ever before, time pressure prevents decision makers from gathering all that they need and from sharing it," -- Peter Tobia, author, "Decision Making in the

Digital Age: Challenges and Responses,"

ValuesValuesHonestyCustomersEmployeesSafetyCompetitorsRevenueProfitsAlliancesNew ProductsNew Markets

Ecology

Cutting Edge

Growth

Family

Capital

Quality

Social Capital

Location

Hedonism

Collaboration

Centralization

Creativity

ORGANIZATIONAL EFFECTIVENESSORGANIZATIONAL EFFECTIVENESS

Values

STRUCTURE

CLIMATE

ENVIRONMENT

MarketplaceOther Teams

CultureCompetition

Pressures

Clarity Commitment

Reward System

Reporting Relationships

Feedback System

Behavior Norm

Decision Making

Competition

Enthusiasm

Stress

Involvement

Flexibility

Collaboration Mission Philosophy

Accountability

Generalized SystemGeneralized System

Processing

Control

OutputInput

Environment

System

Components, Relationships, Boundaries, Interfaces, Constraints

Modem Communications SystemModem Communications System

Control

ModemModem

Info Source

Destination

Message Message Received

00100010101000110001111111000110001

Generalized Communications SystemGeneralized Communications System

Transmission Channel

Control

ReceiverTransmitter

Info Source

Destination

00100010101000110001111111000110001

Modem Communications SystemModem Communications System

Control

ModemModem

Info Source

Destination

00100010101000110001111111000110001

Decision Making FrameworkDecision Making Framework

Strategic Management Executives, Directors

-Transformation

Tactical Management Business Unit Managers

-Effective, right thing

Operational Management

Efficient, do thing right

Decision Structure

Structured

Semi Structured

Un Structured

Information Characteristics

Ad Hoc Unscheduled Summarized Infrequent Forward looking External Wide Scope

Pre specified Scheduled Detailed Frequent Historical Internal Narrow Focus

RELATIVE TIME SPAN

Business Professionals

GlobalizationGlobalization GlobalizationGlobalization

Globalization of TechnologyGlobalization of Technology

"New information technologies are integrating the world in global networks of instrumentality. …

The first historical steps of informational societies seem to characterize them by the preeminence of identity as their organizing principle."

Manuel Castells, The Rise of the Network Society (The Information Age: Economy, Society and Culture, I) (Cambridge, MA; Oxford, UK: Blackwell, 1996)

•Global cities as points for flows of labor, capital, information, and technology. • •Aren't we talking about networks of cities when we talk about "globalization"? Where are non-urban regions without an infrastructure in the idea of the "global"?

Saskia Sassen, Globalization and its Discontents (New York: The New Press, 1998)

Parallel view with Wriston's Law: "capital goes where it's wanted and stays where it's well treated".

All types of capital follow this law: financial, intellectual, cultural.

Globalization is really the networked matrix of capital concentrations in cities.

• The new economy in the United States.• Use of the Internet in China.• The expanding markets in Latin America.• Internet-fostered rivalry between the United

States and Europe

•Globalization and positioning of arguments: -globalization discussed from what socially grounded perspective? - from where about whom?

•Example: Chinese model of education with direct parental involvement; students now left alone to use computers and the Internet without parental control.

- An effect of globalization?

•The use of the Net to communicate local, ethnic, religious, and national cultures to a worldwide and international audience: optimistic multiculturalism, where anyone with access can participate.

•The worldwide diffusion of dominant cultures through the global marketplace .. as another case of hegemony, cultural imperialism.

Globalization of Technology (cont)Globalization of Technology (cont)

•The goals of global access and ubiquity of the Net require dealing with two forces, one toward technology development and diffusion, the other toward governmental and institutional controls over international interconnectivity.

•International business and worldwide Internet ecommerce, promoted by transnational corporations, for access to friction-free worldwide markets.

Globalization of Technology (cont)Globalization of Technology (cont)

•The general homogenization or "internationalization" of culture, favoring Western developed nations and their languages and values.

•In the political economy of communications, the movement toward worldwide access to communications technology and connectivity across territorial boundaries.

Globalization of Technology ParadoxGlobalization of Technology Paradox

Paradox of global localization: making local identity politics a global issue through the Internet.

Local identity groups using the technologies of globalization to promote political interests.

For example, the Taliban in Afghanistan. (See www.taliban.com ) with a Netscape pop-up advertising window!).

Globalization of Technology ParadoxGlobalization of Technology Paradox

COLA WARS:

Global Resistance Coca-Cola

Employees 1 FT, 1PT 39,000

HQ Shared house in CA Atlanta

2004 Revenues $60,000 21.96 B

Countries of operation 2 >200

CEO Amit Srivastava Neville Isdell

CEO’s Compensation Own expenses $3.74 million

Source: WSJ 06-07-05

Knowledge ExplosionKnowledge Explosion

The need for intelligent information management is clear.

• Bits

• Boxes

• Bandwidth

Global Technological RevolutionGlobal Technological Revolution

• Major advances in “information and communications technologies” (“ICT”)

– Digital storage and processing of information (information)

– Satellite and optical fiber transmission of information (communications)

Global Technological Revolution - Origin

• Coupling to all information and information processors

• Pure bits e.g. printed matter • Bit tokens e.g. money• State: places, things, and people• State: physical networks

Cyberization: interface to all bits and process information

Library Volume Growth10X in 150 years

In 1999 in Costa Rica, Malaysia and Singapore, high-tech exports exceeded 40% of the total

Transformation of Business and Markets

From 1995–97:

Scientists in the United States co-authored articles with scientists from 173 other countries:

Scientists in Brazil with 114, in Kenya with 81, in Algeria 59.

Revolution in Learning and Knowledge Sharing

The six largest internet-based distance-learning universities in the world are located in developing countries -- Turkey, Indonesia, China, India, Thailand and Korea

Revolution in Learning and Knowledge Sharing

Global Information FlowGlobal Information Flow

• Governance redefined• Globalization of civil society

– The Philippines: electronic advocacy network set up in response to impeachment trial

Communities Empowered in New Ways

“E-commerce,” business conducted over the Internet, totaled $45 billion as recently as 1998 and an estimate in January 2000 projected it could explode to over $7 trillion as early as 2004.

Wealth and Economic Growth Creation

Digital DivideDigital Divide Digital DivideDigital Divide

• Between countries – the global digital divide

• Between groups of people within countries - the domestic digital divide

Digital DivideDigital Divide

• 2 billion people lack access to reliable electricity

• As much as 80% of the world's population has never made a phone call

Phones and ElectricityPhones and Electricity

• More telephones in New York City than in all of rural Asia

• In the entire continent of Africa, there are a mere 14 million phone lines -- fewer than in either Manhattan or Tokyo.

• More Internet accounts in London than all of Africa

• One in two Americans is online, compared with only one in 250 Africans.

Internet Accounts and HostsInternet Accounts and Hosts

http://www.riverdeep.net/current/2002/01/011402t_divide.jhtml

• Of all the Internet users worldwide, 60 per cent reside in North America, where a mere five per cent of the world's population reside

• Wealthy nations comprise some 16 per cent of the world's population, but command 90 per cent of Internet host computers.

• Developed states: 311.2 per 1,000

• Globally: 70.6 PCs per 1,000

• South Asia: 2.9 per 1,000

• Sub-Saharan Africa: 0.75 per 1,000

Digital Divide: PCsDigital Divide: PCs

• The vast capacity of the Internet is distributed highly unevenly throughout the world.

• By late 2000 the bulk of Internet connectivity linked the US with Europe (56 Gbps) and, to a lesser extent, the US with the Asia-Pacific region (18 Gbps).

• Africa had extremely little bandwidth reaching Europe (0.2 Gbps) and the USA (0.5 Gbps)

Digital Divide: BW Digital Divide: BW

• Internet access costs (as a percentage of average monthly income)– US: 1 to 2 percent– Uganda: over 100 percent – Bangladesh: 191 percent

Digital Divide: Costs Digital Divide: Costs

• Access costs (ISP, and telephone call costs) are almost four times as expensive in the Czech Republic and Hungary as in the United States

• In Bangladesh a computer costs the equivalent of eight years average pay

• McConnell International "E-Business report”– Europe (including Eastern Europe) and Latin

America rated well – Middle East and Africa needed to significantly

develop their human capital– Asia had a mixed scorecard

Digital Divide: Technical Training Digital Divide: Technical Training

• Global Perspective

• There are an estimated 429 million people online globally

• 429 million represents only 6% of the world’s entire population.

• 41% of the global online population is in the United States & Canada

• 27% of the online population lives in Europe, the Middle East and Africa(25% of European Homes are online)

• 20% of the online population logs on from Asia Pacific(33% of all Asian Homes are online)

• Only 4% of the world’s online population are in South America

• The United States has more computers than the rest of the world combined

(Source: First Quarter 2001 Global Internet Trends, Neilsen/Netratings)

Fact SheetFact Sheet

Among highly developed nations:• 61% of Internet connections are in Sweden • Spain trails the list with only 20% of its homes connected. • The Pew Internet and American Life Project published in Who’s Not Online that 57% of those

not online have no intention of going online. 33% of those people have chosen to not go online. Among the biggest reasons were lack of need (40%); no computer (33%); no interest (25%); lack of knowledge for use (25%); and general cost involved (16%).

• U.S. Perspective• In fall of 2000, the U.S. Department of Commerce found that • 51% of all U.S. homes had a computer; 41.5% of all U.S. homes had Internet access • White (46.1%) and Asian American & Pacific Islander (56.8%) households continued to have

Internet access at levels more than double those of Black (23.5%) and Hispanic (23.6%) households.

• 86.3% of households earning $75,000 and above per year had Internet access compared to 12.7% of households earning less than $15,000 per year.

• Nearly 65% of college graduates have home Internet access; only 11.7% of households headed by persons with less than a high school education have Internet access.

• Rural areas, though still lagging behind urban areas, had surpassed inner-cities in Internet availability and use:

Fact Sheet (Cont)Fact Sheet (Cont)

• infoDeV - Global program managed by the World Bank. Seeks to help developing economies fully benefit from modern information systems

• SDNP - assist developing countries in acquiring the capacity to access and to contribute to solutions for sustainable development via the medium of information and communication technologies

• DOI – Digital Opportunity Initiative, a public/private partnership of Accenture

• DOT Force - Digital Opportunity Task” Force

drafted at the G-8s’ Okinawa Summit. Published “Digital Opportunities for All” in May, 2001.

International Institutional ResponsesInternational Institutional Responses

Personal Challenges in Knowledge ManagementPersonal Challenges in Knowledge Management

Application of technology to business functions requires critical personal development and adaptation.

Key concepts in this process are as follows:

• Structure influences behavior.• Structure in human systems is subtle.• Leverage often comes from new ways of thinking.

• Between countries – the global digital divide

• Between groups of people within countries - the domestic digital divide

Digital DivideDigital Divide

• 2 billion people lack access to reliable electricity

• As much as 80% of the world's population has never made a phone call

• More telephones in New York City than in all of rural Asia

• In the entire continent of Africa, there are a mere 14 million phone lines -- fewer than in either Manhattan or Tokyo.

• More Internet accounts in London than all of Africa

• One in two Americans is online, compared with only one in 250 Africans.

• Of all the Internet users worldwide, 60 per cent reside in North America, where a mere five per cent of the world's population reside

• Wealthy nations comprise some 16 per cent of the world's population, but command 90 per cent of Internet host computers.

• Developed states: 311.2 per 1,000

• Globally: 70.6 PCs per 1,000

• South Asia: 2.9 per 1,000

• Sub-Saharan Africa: 0.75 per 1,000

Digital Divide: PCsDigital Divide: PCs

• The vast capacity of the Internet is distributed highly unevenly throughout the world.

• By late 2000 the bulk of Internet connectivity linked the US with Europe (56 Gbps) and, to a lesser extent, the US with the Asia-Pacific region (18 Gbps).

• Africa had extremely little bandwidth reaching Europe (0.2 Gbps) and the USA (0.5 Gbps)

Digital Divide: BW Digital Divide: BW

• Internet access costs (as a percentage of average monthly income)– US: 1 to 2 percent– Uganda: over 100 percent – Bangladesh: 191 percent

• Access costs (ISP, and telephone call costs) are almost four times as expensive in the Czech Republic and Hungary as in the United States

• In Bangladesh a computer costs the equivalent of eight years average pay

• McConnell International "E-Business report”– Europe (including Eastern Europe) and Latin

America rated well – Middle East and Africa needed to significantly

develop their human capital– Asia had a mixed scorecard

Digital Divide: Technical Training Digital Divide: Technical Training

• Global Perspective

• There are an estimated 429 million people online globally

• 429 million represents only 6% of the world’s entire population.

• 41% of the global online population is in the United States & Canada

• 27% of the online population lives in Europe, the Middle East and Africa(25% of European Homes are online)

• 20% of the online population logs on from Asia Pacific(33% of all Asian Homes are online)

• Only 4% of the world’s online population are in South America

• The United States has more computers than the rest of the world combined

(Source: First Quarter 2001 Global Internet Trends, Neilsen/Netratings)

Fact SheetFact Sheet

Among highly developed nations:• 61% of Internet connections are in Sweden • Spain trails the list with only 20% of its homes connected. • The Pew Internet and American Life Project published in Who’s Not Online that 57% of those

not online have no intention of going online. 33% of those people have chosen to not go online. Among the biggest reasons were lack of need (40%); no computer (33%); no interest (25%); lack of knowledge for use (25%); and general cost involved (16%).

• U.S. Perspective• In fall of 2000, the U.S. Department of Commerce found that • 51% of all U.S. homes had a computer; 41.5% of all U.S. homes had Internet access • White (46.1%) and Asian American & Pacific Islander (56.8%) households continued to have

Internet access at levels more than double those of Black (23.5%) and Hispanic (23.6%) households.

• 86.3% of households earning $75,000 and above per year had Internet access compared to 12.7% of households earning less than $15,000 per year.

• Nearly 65% of college graduates have home Internet access; only 11.7% of households headed by persons with less than a high school education have Internet access.

• Rural areas, though still lagging behind urban areas, had surpassed inner-cities in Internet availability and use:

Fact Sheet (Cont)Fact Sheet (Cont)

Domestic and International ResponseDomestic and International Response Domestic and International ResponseDomestic and International Response

Avoiding weapons manufacturers, tobacco, alcohol, gabling.

• Women’s Equity Fund -Advance status of women in the workplace

• Timothy Plan - Avoids companies contrary to Judeo-Christian principles

• Amana Funds - investment per Islamic principles• MFS Union Standard - Pro labor issues.

Socially Responsible FundsSocially Responsible Funds

• Socially responsible funds perform no better than other funds.

• Socially responsible investors are not focused on short term performance.

Expenses MinimumNeuberger Soc. Responsible 1.06% $1,000New Covenant Bal. Income 1.13 500New Covenant Growth 1.13 500Parnassus Equity Income 0.99 2,000Pax World Balanced 0.95 250TIAA-CREF Social Choice 0.27 2,500Vanguard Calvert Index 0.25 3,000

Socially Responsible FundsSocially Responsible Funds

•Source: Morningstar Inc.

• infoDeV - Global program managed by the World Bank. Seeks to help developing economies fully benefit from modern information systems

• SDNP - assist developing countries in acquiring the capacity to access and to contribute to solutions for sustainable development via the medium of information and communication technologies

• DOI – Digital Opportunity Initiative, a public/private partnership of Accenture

• DOT Force - Digital Opportunity Task” Force

drafted at the G-8s’ Okinawa Summit. Published “Digital Opportunities for All” in May, 2001.

International Institutional ResponsesInternational Institutional Responses

Personal Challenges in Knowledge ManagementPersonal Challenges in Knowledge Management

Application of technology to business functions requires critical personal development and adaptation.

Key concepts in this process are as follows:

• Structure influences behavior.• Structure in human systems is subtle.• Leverage often comes from new ways of thinking.

Irvine, Matt, Global Cyberculture Reconsidered: Cyberspace, Identity, and the Global Informational City, 1999 retrieved June 23, 2005 from http://www.georgetown.edu/faculty/irvinem/articles/globalculture.html

Irvine, Matt, Georgetown University, 1999, Globalization and the Internetworked Worked World, retrieved June 23, 2005 from http://cct.georgetown.edu/curriculum/505-99/globalization.html.

Irvine, Matt, 2004, Introduction to the Economics of Art and the Art Market retrieved June 23, 2005 from http://www.georgetown.edu/faculty/irvinem/visualarts/ArtMarket/ArtMarketEconomics.html.

ReferencesReferences

Multinational CustomerMultinational Customer Multinational CustomerMultinational Customer

Business Management for The Multinational Customer

Globalization of technology is bringing diverse cultures together into a common business value chain raising with consequent issues:

• The effects of cultural and language differences on consensus and collaboration.

• Standardization of business processes.• Real-time status for business transactions.• Maturity of the technological environment.

“Quality is conformance to requirements”

-- Philip Crosby, “Quality is Free” 1979

The totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. --ASQC

Quality - DefinedQuality - Defined

• User-based: “In the eyes of the beholder”

• Manufacturing-based: “Right the first time”

• Product-based: Precise measurement

• “Conformance to valid customer requirements”

• Goalpost View: “Acceptable as long as it is within acceptable limits”

• “A predictable degree of uniformity and dependability, at low cost and suited to the market.”

LossFunction

Probabilityof size

Lose FunctionLose Function

An emphasis on Quality that encompasses the entire company

• Continuous Improvement

• Employee empowerment, quality circles

• Benchmarking - best at similar activities, even if in different industries

• Just In Time - requires quality of suppliers

• TQM Tools - allow you to measure progress

TQMTQM

• Quality of Design– Quality characteristics suited to needs and wants

of a market at a given cost– Continuous, never-ending improvement

• Quality of Conformance– Predictable degree of uniformity and

dependability

• Quality of Performance– How is product performing in the marketplace?

Quality DimensionQuality Dimension

• Performance• Aesthetics• Special features: convenience, high tech• Safety• Reliability• Durability• Perceived Quality• Service after sale

Quality DimensionQuality Dimension

• Internal failure costs – before delivered to customers

• External failure costs – after delivered

• Appraisal costs – assessing conformance to standards

• Prevention Costs – reducing potential for quality problems

Cost of QualityCost of Quality

• Lower costs (less labor, rework, scrap)

• Market Share

• Reputation

• Product liability

• International competitiveness

Importance of QualityImportance of Quality

1920’s Bell Labs:

• Acceptance Sampling

• Want to guarantee certain % defective,

• How many do we need to sample?

• Supposedly 2% defective, we test 40 and 2 are bad, are more than 2% bad?

Quality Through HistoryQuality Through History

• Does not add value• Inspectors distrusted by workers• Increase quality and reduce need for

inspectors• Poka-yoke - “mistake proof”• Have workers do own inspecting

– Before – are inputs good?– During – process happening properly?– After – conforms to standards?

Quality Through History- InspectQuality Through History- Inspect

• k1 = Cost of inspecting one item• k2 = Cost to dismantle, repair, reassemble and test

a good or service that fails because of a bad input• p = average fraction defective of incoming

materials• If k1/k2 > p inspect 0%• If k1/k2 < p inspect 100%• If k1/k2 = p either 0% or 100%. If p is based on

not a lot of data, use 100%

Quality Through History- InspectQuality Through History- Inspect

• Statistics professor, specializing in acceptance sampling

• Went to Japan after WW II• Helped Japanese focus on and

improve quality• System (not employees) is cause of

poor quality• Fourteen Points

W. Edwards DemingW. Edwards Deming

1. Intrinsic & extrinsic motivation

2. Management needs to improve and innovate processes to create results

3. Optimize the system toward its aim

4. Cooperation is better than competition

Deming’s ParadigmsDeming’s Paradigms

• Went to Japan in 1951

• Quality begins by knowing what customers want

• 80% of defects are controllable– Quality Planning– Quality control– Quality improvement

Joseph JuranJoseph Juran

• Martin Marietta, ITT, starting in 1960s

• “Quality is Free”

• Management must be firmly behind any quality plans

• Do it right the first time

Philip B. CosbyPhilip B. Cosby

MGT 449 Quality Management & Productivity Joseph Lewis Aguirre.

Documents