Chapter 2
Total Quality in
Organizations
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 1
Growth of Modern
Quality Management
Service Performance
quality excellence
Improved
product designs
Manufacturing
quality
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 2
Systems Thinking
• A system is the functions or activities within
an organization that work together for the
aim of the organization.
• Subsystems of an organization are linked
together as internal customers and suppliers.
• A systems perspective acknowledges the
importance of the interactions of subsystems,
not the actions of them individually.
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 3
Manufacturing Systems (1 of 2)
• Marketing and sales
• Product design and engineering
• Purchasing and receiving
• Production planning and scheduling
• Manufacturing and assembly
• Tool engineering
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 4
Manufacturing Systems (2 of 2)
• Industrial engineering and process design
• Finished goods inspection and test
• Packaging, shipping, and warehousing
• Installation and service
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 5
Quality in Business Support
Functions for Manufacturing
• General management
• Finance and accounting
• Human resource management
• Quality assurance
• Legal services
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 6
Quality in Services
• Service is defined as “any primary or
complementary activity that does not
directly produce a physical product – that
is, the non-goods part of the transaction
between buyer (customer) and seller
(provider).”
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 7
Critical Differences between
Service and Manufacturing (1 of 2)
• Customer needs and performance standards
are more difficult to identify and measure
• Services requires a higher degree of
customization
• Output is intangible
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 8
Critical Differences between Service
and Manufacturing (2 of 2)
• Services are produced and consumed
simultaneously
• Customers are often involved in actual process
• Services are more labor-intensive than
manufacturing
• Services handle large numbers of transactions
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 9
Components of Service
System Quality
• Employees
• Information technology
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 10
The Ritz-Carlton Hotel Co.
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 11
Quality in Health Care
• Joint Commission on Accreditation of
Healthcare Organizations (JCAHO)
• National Committee for Quality Assurance
(NCQA)
• Institute for Healthcare Improvement (IHI)
• 1999 expansion of the Baldrige Award to
nonprofit health care organizations
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 12
Quality Issues in Health Care
• Avoidable errors
• Underutilization of services
• Overuse of services
• Variation in services
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 13
Quality in Education
• Koalaty Kid program
• 1999 expansion of the Baldrige Award
to nonprofit education organizations
• Success stories
– Mt. Edgecumbe High School
– Brazosport ISD
– Hunderton Central Regional HS
– Pinellas County Schools
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 14
Higher Education
as a Production System
Design and
Suppliers: Redesign Consumer
families, high research
schools, colleges,
business
Customers:
business, families,
society, students
Inputs: Outputs:
students able students
faculty new knowledge
Teaching, counseling,
scientific research
Processes
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 15
Quality in the Public Sector
• Quality in the Federal Government
• State and Local Quality Efforts
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 16
