Business Management, Quality engineering question

Please read the pages and make a short and clear summary of them with your own words please. Mention only the necessary important parts

Also, you will put your comments and ideas about the topic briefly

It is what you understand

You must prepare neat the summary

Thank you
Transcribed Image Text:CHAPTER CHAPTER TwO Quality and Global Competitiveness 19 TWO Traditional Costs companies from throughout the world. Like Juan Arballo, A Tale of Two Companies some of these companies find the competition to be more intense than any they have ever encountered. Only those Two companies, ABC Inc. and XYZ Inc., both need to com- who are able to produce world-class quality can compete at this level. In practical terms, it is extremely important for a be expected, over the years competition has become in- country's businesses to be able to compete globally. When creasingly intense. In order to be more competitive, ABC's they can't, jobs are lost and the quality of life in that country declines correspondingly. Waste Rejects Testing Rework Customer returns Inspection Recalls QUALITY AND GLOBAL pete in the global marketplace in order to survive. As might COMPETITIVENESS Hidden Costs executives undertook a major company-wide cost-cutting initiative. They eliminated quality audits; changed from trusted, proven suppliers to low-bid suppliers; purchased new computer systems; cut back on research and develop- ment; and reduced customer service staff. These cost-cutting strategies did have the desired effect Handling complaints Expediting * System costs Planning delays Late paperwork Lack of follow-up Excess inventory -Customer allowances -Unused capacity L Excessive overtime Pricing errors L Biling errors LEARNING OBJECTIVES How Quality and Competitiveness Encourage Job Satisfaction and Financial Benefits Excessive turnover Premium freight costs Development cost of the failed product Field service costs Overdue receivables Human resource professionals know that job satisfaction of decreasing the company's overhead, but they also had the is affected by several factors including working conditions, unplanned consequences of disrupting the company's ability opportunity for advancement, workload, stress level, rela- to satisfy customers and reducing the company's potential to tionships with co-workers, relationships with supervisors, develop new business in the future. The net outcome of all this and financial benefits. What is less known is that all of was unhappy customers, disenchanted employees, and a de- FIGURE 2.1 Factors to Consider When Quantifying the these job satisfaction factors are affected by an organiza- tion's commitment to quality and, in turn, competitiveness. was still struggling with the poor performance record that The formula is simple. The better an organization's qual- caused its executives to want to cut costs in the first place. ity is, the more competitive the organization is. The more competitive an organization is, the better everything in the changes in order to stay competitive, but they decided to provement projects have the highest priority: organization functions. For example, because everything that affects quality and identify all of the costs that would disappear if their company competitiveness is continually improved in an organization improved its performance in key areas. The costs identified 2. Decide how to estimate the costs of these activities. that is committed to total quality, working conditions, work- load, and stress levels tend to be better in the organization. Because competitive organizations have no trouble finding payable errors. In other words, XYZ's executives decided to customers for their products and services, they are able to stay in business and even grow which, in turn, provides op- so, they were able to begin improvement projects in the areas portunities for advancement. In addition, because competi- tive organizations generate a profit, they are better able to reward their personnel financially (salary, benefits, bonuses, incentive pay, and perquisites). Finally, in competitive organizations that continually im- Cost of Poor Quality and Competitiveness prove quality, interpersonal relationships among employees Few things affect an organization's ability to compete in the and between employees and supervisors tend to be more pos- itive because the quality of these relationships is stressed and continually improved. P'urther, relationships always go better when they are not complicated by the stress of wondering (cycle time, wassauty custs, sciap and iework, on-time deliv- about layoffs, reductions in force, restructuring, buyouts, and all of the other pressures inflicted on employees of organi- zations that struggle to stay in business. In short, everything Reducing the costs associated with poor quality is mandatory tends to work better in organizations that effectively use qual- ity management to maintain their competitive edge. After completing this chapter, you should be able to: . Explain the relationship between quality and competitiveness. - Describe how poor quality costs an organization. Summarize the effects of competitiveness on the U.S. economy. . Recognize the factors that inhibit competitiveness. Costs of Poor Quality. . cline in business. To make matters even worse, the company Explain human resources as a factor in competitiveness. Summarize the characteristics of world-class organizations. Explain why management-by-accounting is the antithesis of total quality. . Describe the global strengths and weakness of U.S. organizations. Compare and contrast quality management practices in Asia with those in the United States. to yield the highest return. The following steps can be used The executives of XYZ Inc. also needed to make some to measure the costs of poor quality so that selected im- take a different approach. XYZ's management team set out to 1. Identify all activities that exist only or primarily because of poor quality. One of the results of World War II combined with subsequent technological advances was the creation of the global marketplace. Following the war, industrialized countries began iooking for markets outside their own borders. Although the war gave the world a boost in this regard, it was advances in technology that really made the glabal marketplace possible. Advances in communications technology have made people from all over the world electronic neighbors and electronic customers. Advances in transportation technology allow raw materials produced in one country to be used in the manufactune of products in a second country that are, in turn, sold to end users in a third country. For example, leather produced in Australia might be shipped as raw material to italy, where it is used in the manufacture of shoes and purses that are sold in the United States, France, and Japan. At the same time, leather produced in South America is sent to shoe manufacturers in Indonesia. These manufactur- ers, like their Italian counterparts, sall their shoes in the United States, France, and Japan. This means the manufacturers in italy compete with the manufacturers in Indonesia. This simple example demonstrates the kind of competition that takes place on a global scale every day. Such competition has become the norm, and it can be intense. AL une line, un ily lenge urpunaliuns aind large iunulinaliuals laceu gkulal upeliliar, w eveni Sall cumpaies are affactart Torlay nn rempany is immiune tn the efferts of ginhal rompotitinn included those associated with the following: late deliveries to customers, billing errors, scrap and rework, and accounts 3. Collect data on these activities and make the cost estimates. identify the costs associated with poor quality. Having done 4. Analyze the results and take necessary corrective ac- tions in the proper order of priority. identified without making cuts in functions essential to Reducing the cost of poor quality reduces all other costs- competitiveness (e.g. product quality, research and develop- product costs, the cost of doing business, and so on. This, in ment, customer service). turn, improves the superior value equation: quality, cost, and service. global marketplace more than the costs associated with poor quality. When an organization does what is necessary to im- prove its performance by reducing deficiencies in key areas THE RELATIONSHIP BETWEEN QUALITY AND COMPETITIVENESS again better than that to which Juan was accustomed. He made the Olympic team but only in two events: the 200- ery, billing, etc.), it can reduce overall costs without eliminating essential services, functions, product features, and personnel. meter dash and the 4 x 100 relay. In the preliminary events at the Olympics, Juan Arballo The relationship between quality and competitiveness is found the quality of his competitors to be even better than best illustrated by an example from the world of athlet- he had imagined it would be. Some competitors had pre- ics. Consider track star Juan Arballo. In high school, he liminary times better than the best times he had ever run in meets. Clearly, Juan faced the competitive challenge of his career. When his event was finally run, Juan, for the first time in his life, did not place high enough to win a medal. in which he was the anchor. He did well enough in high The quality of the global competition was simply beyond for companies that hope to compete in the global marketplace. Reducing such costs is one of the principal drivers behind the total quality concept of continual improvement. Figure 2.1 summarizes both the traditional and the hid- den costs of poor quality. The key principle to understand COST OF POOR QUALITY was his track team's best sprinter. Competing at the district level, Juan easily topped the competition in such events as the 100-, 200-, and 400-meter runs and several relays Many business executives adopt the attitude that ensuring when examining the hidden costs shown in Figure 2.1 is that quality is good thing to do until hard times set in and cost if every activity in an organization is performed properly cutting is necessary. During tough times, quality initiatives every time, these costs simply disappear. are often the first functions to go. Companies that take this approach are those that have never integrated continual qual- Interpreting the Costs of Poor Quality ity improvement as a normal part of doing business. Rather, they see it as a stand-alone, separate issue. What executives Once activities have been identified that exist only or pri- in such companies fail to calculate or to even understand is marily because of poor quality, improvement projects can be the costs associated with poor quality. This ironic dilemma is best illustrated with an example of two companies. school to win a college scholarship. However, at the col- his reach. lege level the competition was of a higher quality, and Juan In this example, at each successive level of competi- tion the quality of the competitors increased. A similar phenomenon happens to businesses in the marketplace. Companies that used to compete only on a local, regional, or national level now find themselves competing against found he had to train harder and run smarter to win. This he did, and although he no longer won every race, Juan did well enough to pursue a spot on the U.S. Olympic team. In the Olympic Trials, the quality of the competition was yet undertaken to correct the situation. It is important at this stage to select those projects that have the greatest potential 18

Question

Business Management, Quality engineering question

Please read the pages and make a short and clear summary of them with your own words please. Mention only the necessary important parts

Also, you will put your comments and ideas about the topic briefly

It is what you understand

You must prepare neat the summary

Thank you

CHAPTER
CHAPTER TwO Quality and Global Competitiveness
19
TWO
Traditional Costs
companies from throughout the world. Like Juan Arballo, A Tale of Two Companies
some of these companies find the competition to be more
intense than any they have ever encountered. Only those Two companies, ABC Inc. and XYZ Inc., both need to com-
who are able to produce world-class quality can compete at
this level. In practical terms, it is extremely important for a be expected, over the years competition has become in-
country's businesses to be able to compete globally. When creasingly intense. In order to be more competitive, ABC's
they can't, jobs are lost and the quality of life in that country
declines correspondingly.
Waste
Rejects
Testing
Rework
Customer returns
Inspection
Recalls
QUALITY AND GLOBAL
pete in the global marketplace in order to survive. As might
COMPETITIVENESS
Hidden Costs
executives undertook a major company-wide cost-cutting
initiative. They eliminated quality audits; changed from
trusted, proven suppliers to low-bid suppliers; purchased
new computer systems; cut back on research and develop-
ment; and reduced customer service staff.
These cost-cutting strategies did have the desired effect
Handling complaints
Expediting
* System costs
Planning delays
Late paperwork
Lack of follow-up
Excess inventory
-Customer allowances
-Unused capacity
L Excessive overtime
Pricing errors
L Biling errors
LEARNING OBJECTIVES
How Quality and Competitiveness Encourage
Job Satisfaction and Financial Benefits
Excessive turnover
Premium freight costs
Development cost of
the failed product
Field service costs
Overdue receivables
Human resource professionals know that job satisfaction of decreasing the company's overhead, but they also had the
is affected by several factors including working conditions, unplanned consequences of disrupting the company's ability
opportunity for advancement, workload, stress level, rela- to satisfy customers and reducing the company's potential to
tionships with co-workers, relationships with supervisors, develop new business in the future. The net outcome of all this
and financial benefits. What is less known is that all of was unhappy customers, disenchanted employees, and a de- FIGURE 2.1 Factors to Consider When Quantifying the
these job satisfaction factors are affected by an organiza-
tion's commitment to quality and, in turn, competitiveness. was still struggling with the poor performance record that
The formula is simple. The better an organization's qual- caused its executives to want to cut costs in the first place.
ity is, the more competitive the organization is. The more
competitive an organization is, the better everything in the changes in order to stay competitive, but they decided to provement projects have the highest priority:
organization functions.
For example, because everything that affects quality and identify all of the costs that would disappear if their company
competitiveness is continually improved in an organization improved its performance in key areas. The costs identified 2. Decide how to estimate the costs of these activities.
that is committed to total quality, working conditions, work-
load, and stress levels tend to be better in the organization.
Because competitive organizations have no trouble finding payable errors. In other words, XYZ's executives decided to
customers for their products and services, they are able to
stay in business and even grow which, in turn, provides op- so, they were able to begin improvement projects in the areas
portunities for advancement. In addition, because competi-
tive organizations generate a profit, they are better able to
reward their personnel financially (salary, benefits, bonuses,
incentive pay, and perquisites).
Finally, in competitive organizations that continually im- Cost of Poor Quality and Competitiveness
prove quality, interpersonal relationships among employees Few things affect an organization's ability to compete in the
and between employees and supervisors tend to be more pos-
itive because the quality of these relationships is stressed and
continually improved. P'urther, relationships always go better
when they are not complicated by the stress of wondering (cycle time, wassauty custs, sciap and iework, on-time deliv-
about layoffs, reductions in force, restructuring, buyouts, and
all of the other pressures inflicted on employees of organi-
zations that struggle to stay in business. In short, everything Reducing the costs associated with poor quality is mandatory
tends to work better in organizations that effectively use qual-
ity management to maintain their competitive edge.
After completing this chapter, you should be able to:
. Explain the relationship between quality and competitiveness.
- Describe how poor quality costs an organization.
Summarize the effects of competitiveness on the U.S. economy.
. Recognize the factors that inhibit competitiveness.
Costs of Poor Quality.
.
cline in business. To make matters even worse, the company
Explain human resources as a factor in competitiveness.
Summarize the characteristics of world-class organizations.
Explain why management-by-accounting is the antithesis of total quality.
. Describe the global strengths and weakness of U.S. organizations.
Compare and contrast quality management practices in Asia with those in the United States.
to yield the highest return. The following steps can be used
The executives of XYZ Inc. also needed to make some to measure the costs of poor quality so that selected im-
take a different approach. XYZ's management team set out to 1. Identify all activities that exist only or primarily because
of poor quality.
One of the results of World War II combined with subsequent technological advances was the creation of the global marketplace.
Following the war, industrialized countries began iooking for markets outside their own borders. Although the war gave the world a
boost in this regard, it was advances in technology that really made the glabal marketplace possible. Advances in communications
technology have made people from all over the world electronic neighbors and electronic customers.
Advances in transportation technology allow raw materials produced in one country to be used in the manufactune of products
in a second country that are, in turn, sold to end users in a third country. For example, leather produced in Australia might be
shipped as raw material to italy, where it is used in the manufacture of shoes and purses that are sold in the United States, France,
and Japan. At the same time, leather produced in South America is sent to shoe manufacturers in Indonesia. These manufactur-
ers, like their Italian counterparts, sall their shoes in the United States, France, and Japan. This means the manufacturers in italy
compete with the manufacturers in Indonesia. This simple example demonstrates the kind of competition that takes place on a
global scale every day. Such competition has become the norm, and it can be intense.
AL une line, un ily lenge urpunaliuns aind large iunulinaliuals laceu gkulal upeliliar, w eveni Sall cumpaies are
affactart Torlay nn rempany is immiune tn the efferts of ginhal rompotitinn
included those associated with the following: late deliveries
to customers, billing errors, scrap and rework, and accounts 3. Collect data on these activities and make the cost
estimates.
identify the costs associated with poor quality. Having done 4. Analyze the results and take necessary corrective ac-
tions in the proper order of priority.
identified without making cuts in functions essential to Reducing the cost of poor quality reduces all other costs-
competitiveness (e.g. product quality, research and develop- product costs, the cost of doing business, and so on. This, in
ment, customer service).
turn, improves the superior value equation: quality, cost, and
service.
global marketplace more than the costs associated with poor
quality. When an organization does what is necessary to im-
prove its performance by reducing deficiencies in key areas
THE RELATIONSHIP
BETWEEN QUALITY
AND COMPETITIVENESS
again better than that to which Juan was accustomed. He
made the Olympic team but only in two events: the 200-
ery, billing, etc.), it can reduce overall costs without eliminating
essential services, functions, product features, and personnel.
meter dash and the 4 x 100 relay.
In the preliminary events at the Olympics, Juan Arballo
The relationship between quality and competitiveness is found the quality of his competitors to be even better than
best illustrated by an example from the world of athlet- he had imagined it would be. Some competitors had pre-
ics. Consider track star Juan Arballo. In high school, he liminary times better than the best times he had ever run in
meets. Clearly, Juan faced the competitive challenge of his
career. When his event was finally run, Juan, for the first
time in his life, did not place high enough to win a medal.
in which he was the anchor. He did well enough in high The quality of the global competition was simply beyond
for companies that hope to compete in the global marketplace.
Reducing such costs is one of the principal drivers behind the
total quality concept of continual improvement.
Figure 2.1 summarizes both the traditional and the hid-
den costs of poor quality. The key principle to understand
COST OF POOR QUALITY
was his track team's best sprinter. Competing at the district
level, Juan easily topped the competition in such events
as the 100-, 200-, and 400-meter runs and several relays
Many business executives adopt the attitude that ensuring when examining the hidden costs shown in Figure 2.1 is that
quality is good thing to do until hard times set in and cost if every activity in an organization is performed properly
cutting is necessary. During tough times, quality initiatives every time, these costs simply disappear.
are often the first functions to go. Companies that take this
approach are those that have never integrated continual qual- Interpreting the Costs of Poor Quality
ity improvement as a normal part of doing business. Rather,
they see it as a stand-alone, separate issue. What executives Once activities have been identified that exist only or pri-
in such companies fail to calculate or to even understand is marily because of poor quality, improvement projects can be
the costs associated with poor quality. This ironic dilemma is
best illustrated with an example of two companies.
school to win a college scholarship. However, at the col- his reach.
lege level the competition was of a higher quality, and Juan
In this example, at each successive level of competi-
tion the quality of the competitors increased. A similar
phenomenon happens to businesses in the marketplace.
Companies that used to compete only on a local, regional,
or national level now find themselves competing against
found he had to train harder and run smarter to win. This
he did, and although he no longer won every race, Juan did
well enough to pursue a spot on the U.S. Olympic team. In
the Olympic Trials, the quality of the competition was yet
undertaken to correct the situation. It is important at this
stage to select those projects that have the greatest potential
18

Accepted Answer

Total quality management (TQM) is a management technique used by organizations to achieve excellence…