Concept explainers
Case summary:
O is a leader in pest control services for residential and commercial clients. Commercial clients include offices, hospitals, hotels and food processing plants, and make a third of its revenue. It has 8000 employees in over 400 locations.
In the 1990’s, many of O’s customers obtained ISO certifications and felt the need to partner with other companies that also held ISO certifications. O also wanted to achieve greater consistency of quality in its services across its network. The company then created a quality assurance (QA) team and ultimately got ISO certified in 2005.
O’s QA team consists of experienced quality professional with over 30 years’ experience at O. All have completed ISO technical and audit courses. The team conducts 200 internal branch audits annually. Each audit takes about 4 days and includes administrative reviews, vehicle inspections, and onsite customer inspections. If a branch fails an audit, it is required to rectify errors and will be re-audited in 90 to 120 days. Even branches that receive high audit scores are cited areas to improve on.
The ISO certification has translated into $600,000 in savings for O and improved customer satisfaction from 95.8% to 97.7%.
To determine: Why do you think O believed it had a need to meet international standards for quality?
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Chapter 2 Solutions
OPERATIONS AND SUPPLY CHAIN MANAGEMENT
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- The production line that is experiencing problems produces a large quantity of food. Even a short amount of time outside of optimal operating conditions can result in substantial waste. What would be the best quality tool to use in order to ensure the line is working within established limits and why? There appears to be a variety of issues that can result in quality costs for this particular food product for Supremo. As mentioned in the list of quality costs, defects are occurring in a variety of areas – materials, processing, and personnel. In order to identify the factors directly influencing the quality of the product, what would be the best quality tool and why? One of the technicians has a theory that the ambient temperature of the facility is correlated to product quality. What quality tool could you use to test this theory and why? Another technician believes that the relationships among several variables are complex and require multiple comparisons. She believes that…arrow_forwardBecause of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power Initial Car Quality survey. With $6.6 million in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s new chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.The challenge for Chung was to get his managers to put quality, and not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colors - tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant…arrow_forwardBecause of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power Initial Car Quality survey. With $6.6 million in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s new chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.The challenge for Chung was to get his managers to put quality, and not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colors - tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant…arrow_forward
- Because of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power Initial Car Quality survey. With $6.6 million in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s new chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.The challenge for Chung was to get his managers to put quality, and not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colors - tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant…arrow_forwardBecause of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power Initial Car Quality survey. With $6.6 million in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s new chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.The challenge for Chung was to get his managers to put quality, and not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colors - tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant…arrow_forward9. Explain the essential components of the ISO 9000-2015 quality systems standard.arrow_forward
- Describe the relationship between quality and costs. How does improving quality reduce costs and increase profit?arrow_forwardFor ISO 14000 list (a) its five core elements, (b) its advantages, and (c) its environmental and economic benefits.arrow_forwardDjango Industries conducted an appraisal of all costs associated with production and found the following data. Scheduled maintenance $35,000 Machine downtime $160,000 Annual equipment calibration $39,000 Warranty exchange $125,000 Supplier quality audits $75,000 Equipment repair $56,000 Customer field repairs $97,000 Incoming material audits $80,000 Categorize these costs into the traditional four types of quality costs. What is the cumulative percentage of the two highest categories? a. 70.2% b. 65.6% c. 68.4% d. 71.8%arrow_forward
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