The Foundation of Modern Quality Management: The Gurus

Who is considered the father of statistical quality control?

Walter Shewhart

What did Walter Shewhart develop to analyze the output of processes?

Control charts

Which two quality gurus were influenced by Walter Shewhart?

W. Edwards Deming and Joseph Juran

What significant contribution did W. Edwards Deming make to Japan after WWII?

improving quality and productivity

What is the name of the award established in honor of W. Edwards Deming?

Deming Prize

Joseph M. Juran viewed quality as?

Fitness-for-use

What trilogy did Joseph M. Juran describe in terms of quality management?

Quality planning, quality control, and quality improvement

Armand Feigenbaum was instrumental in advancing the?

cost of nonconformance

Armand Feigenbaum recognized that quality was not simply a collection of tools and techniques, but a?

total field

Philip B. Crosby developed the concept of ____ and popularized the phrase ______

Zero defects and Do it right the first time

What phrase is popularized by Philip B. Crosby?

Do it right the first time

The late Japanese expert on quality who was strongly influenced by both Deming and Juran

Kaoru Ishikawa

He is best known for the Taguchi loss function, which involves a formula for determining the cost of poor quality

Genichi Taguchi

Which two individuals developed the philosophy and methods of kaizen?

Taiichi Ohno and Shigeo Shingo

What does the term 'kaizen' refer to in quality management?

Continuous improvement.

He established the cause-and-effect diagram also known as the fishbone diagram

Kaoru Ishikawa

He was the first quality expert to call attention to the internal customer-the next person in the process, the next operation, within the organization.

Kaoru Ishikawa

Has a book with the concept quality-is-free

Philip B Corby

The book of Philip B Crosby

Quality Without Tears: The Art of Hassle-Free Management

Armand Feigenbaum recognized that quality was not simply a collection of tools and techniques, but a _____

total field

According to Armand Feigenbaum, it is the customer who defines _____

quality

Awarded annually to firms that distinguish themselves with quality management programs and to individuals who lead such efforts.

Deming Prize

______ had a strong influence on the thinking of two other gurus, W. Edwards Deming and Joseph Juran

Walter Shewhart

The Father of Scientific Management

Frederick Winslow Taylor

Walter Shewhart, developed ______ for analyzing the output of process to determine when corrective actions was necessary

control charts

refers to an upper limit or ceiling on the load that an operating unit can handle.

Capacity

refers to an upper limit on the rate of output

Capacity

The maximum output rate or service capacity an operation, process, or facility is designed for

Deisgn Capacity

Design capacity minus allowances such as personal time, and preventive maintenance.

Effective Capacity

The design of ______, including size, and provision for expansion, is key. Locational factors, such as transportation costs, distance to market, labor supply, energy sources, and room for expansion are also important.

Facilities

can have a tremendous influence on capacity.

Product and Service Factors

The quantity capability of a process is an obvious determinant of of capacity.

Process Factors

The tasks that make up a job, the variety of activities involved, and the training, skill, and experience required to perform a job all have an impact on the potential and actual output.

Human Factors

Management policy can affect capacity by allowing or not allowing capacity options such as overtime or second or third shifts.

Policy Factors

Scheduling problems may occur when an organization has differences in equipment capabilities among alternatives pieces of equipment or differences in job requirements.

Operational Factors

_______ must be taken into account in capacity planning if substantial capacity changes are involved.

Supply Chain Factors

Product standards, especially minimum quality and performance standards, can restrict management’s options for increasing and using capacity.

External Factors

The three primay strategies are

leading, following, and tracking.

capacity strategy builds capacity in anticipation of future demand increases

Leading

strategy builds capacity when demand exceeds current capacity.

Following

strategy is similar to a following strategy, but it adds capacity in relatively small increments to keep pace with increasing demand.

Tracking

_________ which is an amount of capacity in excess of expected demand when there is some uncertainty about demand.

capacity cushion

If an organization has available equipment, necessary skills, and time, it often makes sense to produce an item or perform a service in-house.

Available Capacity

if a firm lacks the _____ to do a job satisfactorily, buying might be a reasonable alternative.

Expertise

firms that specialize can usually offer higher quality than an organization can attain itself, is called?

Quality Considerations

When demand for an item is high and steady, the organization is often better off doing the work itself, is called?

The Nature of Demand

any ___ saving achieved from buying or making must be weighed againts the preceding factors.

Cost

Buying goods or services may entail considerable ____. Loss of direct control over operations, knowledge sharing, and the possible need to disclose propritary information are three risks.

Risks

The long-term nature of many capacity decisions and the risks inherent in long-term forecasts suggest potential benefits from designing flexible systems, is called?

Design Flexibility into systems

Capacity requirements are often closely linked to the stage of the life cycle that a product or service is in, is called?

Take stage of life cycle into account

Existing organizations may need to make locations decisions for a variety of reasons. Firms such as banks, fast-food chains, supermarkets, and retail stores view locations as part of marketing strategy, and they look for locations that will help them to expand their markets.

The need for Location Decisions

Location decisions for many tyes of businesses are made infrequently, but they tend to have a significant impact on the organisation

The Nature of Location Decisions

Location decisions are closely tied to an organisation’s strategies. For example, a strategy of being low-cost producer might result in locating where labor or materials costs are low or locating near markets or raw materials to reduce transportation costs.

Strategic Importance of Locations Decisions

As a general rule, profit-oriented organizations base their deicisions on profit potential, whereas nonprofit organizations strive to achieve a balance between cost and the level of customer service they provide.

Objectives of Location Decisions

Location criteria can depend on where a business is in the supply chain

Supply Chain Considerations

This option can be attractive if there is adequate room for expansion, especially if the location has desirable features that are not readily available elsewhere. Expansion costs are often less than those of other alternatives.

Exapand an existing facility

This is done in many retail operations. In such cases, it is essential to take into account what the impact will be on the total system. Opening a new store in a shopping mall may simply draw customers who already patronize an existing store in the same chain, rather than expand the market.

Add new locations while retaining existing ones

An organization must weigh the costs of a move and the resulting benefits againts the costs and benefits of remaining in an existing location.

Shut down at one location and move to another-

If a detailed analysis of potential locations fails to uncover benefits that make one of the previous three alternatives attractive, a firm may decide to maintain the status quo, at least for the time being.

Do nothing

Globalization has opened new markets, and it has meant increasing dispersion of manufacturing and service operations around the world. In addition, many companies are outsourcing operations to other companies in foreign locations

Global Locations

Barriers to international trade such as tariffs and quotas can have a detrimental effect on trade, while trade agreements that are fair to all sides can help trade to flourish.

Trade Agreement

______ advances in communication and information sharing have been vey helpful. These include texting, e-mail, cell phones, teleconferencing, and the internet.

Technological

Companies often seek opportunities for expanding markets for their goods and services, as well as better serving existing customers by being more attuned to local needs and having a quicker response time when problems occur.

Markerts

Among the areas for potential cost savings are transportation costs, labor costs, raw material costs, and taxes

Cost Savings

There may be more favorable liability and labor laws, and lessrestrictive environmental and other regulations.

Legal and Regulatory

Companies can avoid the impact of currency changes and tariffs that can occur when goods are produced in one country and sold in other countries.

Financial

High transportation costs can occur due to poor infrastructure or having to ship over great distances, and the resulting costs can offset savings in labor and materials costs.

Transportation Costs

Increased security risks and theft can increase costs.

Security Costs

Low labor skills may negatively impact quality and productivity, and the work ethic may differ from that in the home country.

Unskilled Labor

Some countries place restrictions on the importation of manufactured goods, thus having local suppliers avoids those issues.

Import Restrictions

Critics may argue that cost savings are being generated through unfair practices such as using sweatshops, in which employees are paid low wages and made to work in poor conditions; using child labor; and operating in countries that have less stringent environmental requirements.

Criticisms

Low labor productivity may offset low labor costs or other advantages.

Productivity

companies that outsource production to foreign countries need to have assurance that that intellectual property rights will be preserved.

Protecting intellectual property rights

_______ instability and political unrest can create risks for personnel safety and the safety of assets. Moreover, a government might decide to nationalize facilities, taking them over.

Political

continues to be a threat in many parts of the world, putting personnel and assets at risk and decreasing the willingness of domestic personnel to travel to or work in certain areas.

Terrorism

laws and regulations may change, reducing or eliminating what may have been key benefits.

Legal

corruption and bribery, common in some countries, may be illegal in a company’s home country.

Ethical

________ differences may be more real than apparent. (walmart in japan)

Cultural

Lax _____ controls can lead to recalls and liability issues.

Quality

_______ is having a major influence on the decision of where to produce goods, particularly if the main markets are domestic

Automation

Firms locate near or at the source of raw materials for three primary reasons: necessity, perishability, and transportation costs.

Location of Raw Materials

mining operations, farming, forestry, and fishing.

Necessity

canning or freezing of fresh fruits and vegetables, processing of dairy products, baking and so on.

Perishability

are important in industries where processing eliminates much of the bulk connected with a raw material, making it less expensive to transport the product or material after processing.

Transportation Costs

Profit-oriented firms frequently locate near the markets they intend to serve as part of their competitive strategy, whereas nonprofit organizations choose locations relative to the needs of the users of their services.

Location of Market

Primary labor considerations are the cost and availability of labor, wage rates in an area, labor productivity and attitudes toward work, and whether unions are a serious potential problem.

Labor Factors

______ and ______ sometimes play a role in location decisions

Climates and taxes

______ can arise during location searches, so it is important for companies and governments to have policies in place before that happens, and to keep ethical aspects of decisions in mind while negotiating favorable treatment.

Ethical Issues

With this strategy, entire products or product lines are produced in separate plants, and each plant usually supplies the entire domestic market.

Product Plan Strategy

With this strategy, plants are designed to serve a particular geographic segment of a market (e.g., the West Coast, the Northeast).

Market Area Plant Strategy

With this strategy, different plants concentrate on different aspects of a process. Automobile manufacturers often use this approach, with different plants for engines, transmissions, body stamping, and even radiators.

Process Plant Strategy

With this strategy, plants are flexible and capable of handling a range of products. This allows for quick response to product or market changes, although it can be less productive than a more focused approach.

General-purpose Plant Strategy

_________ is a computer-based tool for collecting, storing, retrieving, and displaying demographic data on maps.

Geographic Information Systme (GIS)

uses GIS data to plan fleet activities such as routes and schedules based on the locations of their customers.

Logistics Companies

of magazines and newspapers use a GIS to analyze circulation and attract advertisers.

Publishers

companies rely heavily on a GIS to make maps available online to prospective home and business buyers.

Real Estate

use a GIS to help decide where to locate brand banks and to understand the composition and needs of different market segments.

Banks

use a GIS to determine premiums based on population distribution, crime figures, and the likelihood of natural disasters, such as flooding in various locations, and to manage risks.

Insurance Company

are able to link information about sales, customers, and demographics to geographic locations in planning locations.

Retailers

use a GIS to balance supply and demand and identify problem areas.

Utility Companies