Krajewski IN Chapter 6 - Chapter 6 Process Performance and...

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Chapter 6 Process Performance and Quality A. Process Performance and Quality Across the Organization Process performance and quality should be everyone’s concern. TEACHING TIP This chapter first addresses the costs of poor process performance and quality and then focuses on the philosophies and tools that many companies embrace to evaluate and improve it. If possible, show the video “Crowne Plaza Christchurch,” a luxury hotel in Christchurch, New Zealand where service performance and quality get top priority. B. Costs of Poor Process Performance and Quality Any instance when a process fails to satisfy a customer is considered a defect. Four major categories of costs are associated with process performance gaps 1. Prevention costs a. Preventing defects before they happen b. Redesign the processes to remove causes of poor performance c. Redesign the service or product to make it simpler, easier to produce d. Training employees in methods of continuous improvement e. Working with suppliers to increase quality of purchased items or contracted services 2. Appraisal costs: a. Costs incurred to identify and assess performance problems b. As prevention measures improve performance, appraisal costs decrease 3. Internal failure a. Rework—incurred if some aspect of a service or product must be performed again. b. Scrap—incurred if a defective item is unfit for further processing TEACHING TIP Mention analysis of the viability of acquiring a company missing the company’s history of environmental compliance or poor paint finish on a car as examples. 4. External failure a. Costs when a defect is discovered after the customer receives the service or product. b. Warranty service 6-1
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6-2 Chapter 6: Process Performance and Quality C. Total Quality Management Total quality management (TQM) is a philosophy the stresses three principles for achieving high levels of process quality and performance. TEACHING TIP TQM also involves a number of important elements covered in other chapters and supplements in this text: Service/product design in Chapter 2 “Operations Strategy” Process design in Chapter 4 “Process Strategy” Purchasing in Chapter 10 “Supply Chain Strategy” Benchmarking in Chapter 5 “Process Analysis” Problem-solving tools in Supplement A “Decision Making” 1. Internal or external customer satisfaction: when customers’ expectations have been met or exceeded. a. Conformance to specifications It is the processes that produced the service or product that are really being judged. Specifications may relate to consistent quality, on-time delivery, or delivery speed. b. Value How well the service or product serves its intended purpose at a price customers are willing to pay. c.
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Krajewski IN Chapter 6 - Chapter 6 Process Performance and...

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