Quality Management: Creating and Sustaining Organizational Effectiveness Chapter 1

1. Quality Management: Creating and Sustaining Organizational Effectiveness Chapter 1

2. Figure 1-1 Achieving Organizational Success

3. Organizational Effectiveness • Brief History of the Quality Management • Skilled Craftsmen/Artisans supervised by masters of the trade • Small volume: Parts fitted ‘by eye’ • 1798-Eli Whitney • Designed and manufactured guns with interchangeable parts (quality control) • 1911- Frederick Taylor • Principles of scientific management defines role of inspector • 1914 - Henry Ford • Creates the assembly line on a big scale (Quality = Inspection) • 1924- Juran, Dodge, Romig, Edwards • Western Electric IE department: • 1931- Shewhart • publishes control chart concepts • 1950-1980’s- Wake-up call for U.S. manufacturing • 1980’s-1990’s - • Total Quality Management – including ISO • 1987 Malcolm Baldrige National Quality Award created • 1990’s to today • Six Sigma and its variations

4. Historic Short term/Quick Fix focus Fire fighting We’ve always done it this way Random improvement efforts Inspect for errors Reactive Opinions not facts Motivated by profit Rely on programs Localized competition Reasonable cost Large budgets Resources available Compete Individual efforts Strong management Now Long term focus Structured problem solving Innovation and change Structured improvement Error identification and prevention Proactive Facts not opinions Motivated by customers New way of life Intense global competition Lowest possible cost Small budgets Limited resources Cooperate Team efforts Strong leadership Organizational EffectivenessWhy do we care?

5. Organizational Effectiveness • Efficiency focuses on activities • Effectiveness focuses on results

6. Organizational Effectiveness • What is an effective organization? • An effective organization, one that excels, is one that continually strives to identify and focus on factors critical to its customers and improves its processes in order to provide the highest-quality product or service possible. • Every company wants to do this, it’s not easy!

7. Organizational Effectiveness • What is an effective organization? • Organizations try different strategies in order to achieve their goals. • Disjointed efforts • Flavor of the month • Most efforts are successful in the short run • How can an organization sustain effective performance?

8. Organizational Effectiveness • What is an effective organization? • How can an organization sustain effective performance? • Generating success requires an organization-wide approach that improves and enhances the whole process of providing a product or service, enabling the organization to exceed customer expectations, each time and every time.

9. Organizational Effectiveness • What is an effective organization? • How can an organization sustain effective performance? • People need a sense of how to pull a variety of knowledge and skills together to make improvements in a complex environment. • “umbrella coverage”

10. Umbrella coverage Six Sigma Lean Manufacturing Business Results Information and Knowledge Management Organizational Philosophy Value Engineering Teams Just-in-time Process Management Improvement Customer Focus Value Chain management Leadership Strategic Planning Quality Assurance Project Management Elimination of Waste Human Resource Management Quality Tools

11. Figure 1-2 Organizational Effectiveness

12. Figure 1-3 Factors Affecting Organizational Success Organizational Factors Strategic Deployment Effective Leadership Policies Procedures Processes Continuous Improvement Culture Problem-solving Commitment Culture Measures of Performance Trust, Honesty, & Ethical Behavior Strategic Factors Market Product Technology Customers Suppliers Vision Value Creation Strategy People Factors Employee Involvement Education Training Internal Supplier-Customer Relations Motivation Teamwork Communication Safety Environmental Factors Social Economic Competitive Technology

13. Organizational Effectiveness • How is an effective organization created? • What is the mission of the organization? • What is the business the organization is really in? • What are the primary products or services the organization provides to their customers? • Who are their customers? • What do their customers expect and need? • How does the organization know what the customers’ needs and expectations are?

14. Organizational Effectiveness • How is an effective organization created? • How well does the organization meet the needs and expectations of their customers? • How does the organization know how well it is doing? What is the proof? What are the indicators? • Do management’s strategies and actions support the business and support the organization in meeting the customers’ needs and expectations? • Do the employees know how the work they do specifically benefits the ultimate, external, customer? • What improvements have been made based on the answers to these questions? • What is management doing to support improvement efforts?

15. Organizational Effectiveness • What benefits can be gained from creating an effective organization? • Improved profitability • Increased customer retention • Reduced customer complaints and warranty claims • Reduced costs through less waste, rework • Greater market share • Increased employee involvement and satisfaction, lower turnover

16. Organizational Effectiveness • What benefits can be gained from creating an effective organization? • Increased ability to attract new customers • Improved competitiveness • Improved customer satisfaction • Improved management-employee relations • Improved focus on key goals • Improved communication • Improved teamwork

17. Figure 1-4 The Journey to Organizational Effectiveness

18. Figure 1-5Benefits of Creating and Maintaining an Effective Organization • Improved: • profitability • competitiveness • customer satisfaction • management-employee relations • focus on key goals • communications • teamwork • employee morale • company image • revenue • service to customers (internal & • external) • effectiveness • planning • work environment • decision making • Reduced: • customer complaints • warranty claims • cost • waste • rework • employee turn-over • Increased: • employee involvement • employee satisfaction • ability to attract new customers • Greater: • market share • adaptability