Chapter 19_Week 8 PPT - CHAPTER 19 Balanced Scorecard...

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CHAPTER 19 Balanced Scorecard: Quality, and Time
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Chapter 19 learning objectives 1. Explain the four cost categories in a costs-of-quality program 2. Develop nonfinancial measures and methods to improve quality 3. Use costs-of-quality measures to make decisions 4. Use financial and nonfinancial measures to evaluate quality 5. Describe customer-response time and on-time performance and why delays occur 6. Determine the costs of delays 7. Use financial and nonfinancial measures of time
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Quality as a Competitive Tool Quality—the total features and characteristics of a product or a service made or performed according to specifications to satisfy customers at the time of purchase and during use. Companies find that a focus on the quality of a product or service generally builds expertise in producing it, lowers the cost of providing it, creates higher satisfaction for customers using it and generates higher future revenues for the company selling it.
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Quality as a Competitive Tool Companies are also using quality management and measurement practices to find cost-effective ways to reduce the environmental and economic costs of air pollution, wastewater, oil spills, and hazardous waste disposal. Product quality can also be an important engine for environmental progress.
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Two Basic Aspects of Quality 1. Design quality—refers to how closely the characteristics of a product or service meet the needs and wants of customers. 2. Conformance quality—refers to the performance of a product or service relative to its design and product specifications. Quality has both financial and nonfinancial components relating to customer satisfaction, improving internal quality processes, reducing defects and the training and empowering of workers. Let’s look at it from the four perspectives of the balanced scorecard.
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Quality and Failure
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Four Perspectives of the Balanced Scorecard 1. Financial 2. Customer 3. Internal business process 4. Learning and growth
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The Financial Perspective: Costs of Quality (COQ) Four categories of quality costs: 1. Prevention costs—costs incurred to preclude the production of products that do not conform to specifications. 2. Appraisal costs— costs incurred to detect which of the individual units of products do not conform to specifications.
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