TQM CH 8 U
-
Upload
nick-jagolino -
Category
Documents
-
view
37 -
download
3
description
Transcript of TQM CH 8 U
![Page 1: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/1.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 1
Chapter 8Chapter 8
Performance Measurement and Information Management
![Page 2: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/2.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 2
Key Idea
A supply of consistent, accurate, and timely data across all functional areas of business provides real-time information for the evaluation, control, and improvement of processes, products, and services to meet both business objectives and rapidly changing customer needs.
![Page 3: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/3.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 3
Information Management
If you don’t measure results, you can’t tell success from failure
If you can’t see success, you can’t reward it – and if you can’t reward success, you are probably rewarding failure
If you can’t recognize failure, you can’t correct it
![Page 4: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/4.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 4
Process Flow
Measures and Indicators
Data
Analysis
Information
![Page 5: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/5.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 5
CustomerRequirements
Measurements
Processes ResultsDesign
Control
Prediction
Validation
Use of Information and Analysis
Measurement supports executive performance review and daily operations and decision making.
![Page 6: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/6.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 6
Key Idea
Measurement-managed companies are more likely to be in the top third of their industry financially, complete organizational changes more successfully, reach clear agreement on strategy among senior managers, enjoy favorable levels of cooperation and teamwork among management, undertake greater self-monitoring of performance by employees, and have a greater willingness by employees to take risks.
![Page 7: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/7.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 7
Benefits of Information Management
Understand customers and customer satisfaction
Provide feedback to workers Establish a basis for reward/recognition Assess progress and the need for
corrective action Reduce costs through better planning
![Page 8: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/8.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 8
Leading Practices (1 of 2)
Develop a set of performance indicators that reflect customer requirements and key business drivers
Use comparative information and data to improve overall performance and competitive position
Continually refine information sources and their uses within the organization
Use sound analytical methods to conduct analyses and use the results to support strategic planning and daily decision making
![Page 9: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/9.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 9
Leading Practices (2 of 2)
Involve everyone in measurement activities and ensure that information is widely visible
Ensure that data are accurate, reliable, timely, secure, and confidential
Ensure that hardware and software systems are reliable and user-friendly
Systematically manage organizational knowledge and identify and share best practices
![Page 10: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/10.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 10
Key Idea
To make decisions that further the overall organizational goals of meeting, or exceeding, customer expectations and making productive use of limited resources, companies need good data and information about customers and markets, human resource effectiveness, supplier performance, product and service quality, and other key factors, in addition to traditional financial performance and accounting measures.
![Page 11: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/11.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 11
Balanced Scorecard1. Financial perspective
Measures the ultimate results that the business provides to its shareholders. They include profitability, revenue growth, return on investment, economic value added (EVA), and shareholder value.
2. Internal perspective Focuses attention on the performance of the key internal processes that drive the business. They include such measures as quality levels, productivity, cycle time, and cost.
3. Customer perspective Focuses on customer needs and satisfaction as well as market share. This includes service levels, satisfaction ratings, and repeat business.
4. Innovation and learning perspectiveDirects attention to the basis of a future success—the organization’s people and infrastructure. Key measures might include intellectual assets, employee satisfaction, market innovation, and skills development.
![Page 12: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/12.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 12
Key Idea
A good balanced scorecard contains both leading and lagging measures and indicators. Lagging measures (outcomes) tell what has happened; leading measures (performance drivers) predict what will happen.
![Page 13: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/13.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 13
Baldrige Classification of Performance Measures
Customer-focused outcomes Product and service outcomes Financial and market outcomes Human resource outcomes Organizational effectiveness outcomes Governance and social responsibility
outcomes
![Page 14: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/14.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 14
Customer Measures
Customer satisfaction and dissatisfaction Customer retention Gains and losses of customers and customer
accounts Customer complaints and warranty claims. Perceived value, loyalty, positive referral, and
customer relationship building
![Page 15: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/15.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 15
Product and Service Measures Internal quality measurements Field performance of products Defect levels Response times Data collected from customers or third parties
on ease of use or other attributes Customer surveys on product and service
performance
![Page 16: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/16.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 16
Financial and Market Measures
Revenue Return on equity Return on investment Operating profit Pretax profit margin Asset utilization Earnings per share
![Page 17: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/17.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 17
Human Resource Measures
Employee satisfaction Training and development Work system performance and effectiveness Safety Absenteeism Turnover
![Page 18: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/18.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 18
Organizational Effectiveness Measures
Cycle times Production flexibility Lead times and setup times Time to market Product/process yields Delivery performance Cost efficiency Productivity
![Page 19: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/19.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 19
Governance and Social Responsibility Measures
Organizational accountability Stakeholder trust Ethical behavior Regulatory/legal compliance Financial and ethics review results Community service Management stock purchase activity
![Page 20: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/20.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 20
Key Idea
Organizations need comparative data, such as industry averages, best competitor performance, and world-class benchmarks to gain an accurate assessment of performance and know where they stand relative to competitors and best practices.
![Page 21: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/21.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 21
Purposes of Performance Measurement Systems Providing direction and support for
continuous improvement Identifying trends and progress Facilitating understanding of cause-and-effect
relationships Allowing performance comparison to
benchmarks Providing a perspective of the past, present,
and future
![Page 22: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/22.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 22
Key Idea
In designing a performance measurement system, organizations must consider how the measures will support senior executive performance review and organizational planning to address the overall health of the organization, and how the measures will support daily operations and decision making.
![Page 23: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/23.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 23
Practical Guidelines Fewer is better. Link to the key business drivers. Include a mix of past, present, and future Address the needs of all stakeholders. Start at the top and flow down to all levels of
employees Combine multiple indexes into a single index Change as the environment and strategy
changes Have research-based targets or goals
![Page 24: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/24.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 24
Linkages to Strategy
Key business drivers (key success factors)
Strategies and action plans
Measures and indicators
![Page 25: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/25.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 25
Key Idea
The things an organization needs to do well to accomplish its vision are often called key business drivers or key success factors. They represent things that separate an organization from its competition and define strengths to exploit or weaknesses to correct.
![Page 26: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/26.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 26
Process-Level Measurements
Does the measurement support our mission? Will the measurement be used to manage change? Is it important to our customers? Is it effective in measuring performance? Is it effective in forecasting results? Is it easy to understand and simple? Are the data easy/cost-efficient to collect? Does the measurement have validity, integrity, and
timeliness? Does the measure have an owner?
![Page 27: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/27.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 27
Key Idea
Good measures and indicators are actionable; that is, they provide the basis for decisions at the level at which they are applied.
![Page 28: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/28.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 28
Common Process Quality Measures
Nonconformities (defects) per unit Errors per opportunity Dpmo – defects per million opportunities
![Page 29: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/29.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 29
Creating Effective Performance Measures
Identify all customers and their requirements and expectations
Define work processes Define value-adding activities and process
outputs Develop measures for each key process Evaluate measures for their usefulness
![Page 30: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/30.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 30
Analyzing and Using Data Analysis – an examination of facts and data
to provide a basis for effective decisions. Examples
Examining trends and changes in key performance indicators
Making comparisons relative to other business units, competitor performance, or best-in-class benchmarks
Calculating means, standard deviations, and other statistical measures
Seeking to understand relationships among different performance indicators using sophisticated statistical tools such as correlation and regression analysis
![Page 31: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/31.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 31
Key Idea
Organizations need a process for transforming data, usually in some integrated fashion, into information that top management can understand and work with.
![Page 32: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/32.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 32
Interlinking
Quantitative modeling of cause-and-effect relationships between external and internal performance measures
Facilitated by data mining – the process of of searching large databases to find hidden patterns in data, using analytical approaches and technologies such as cluster analysis, neural networks, and fuzzy logic
![Page 33: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/33.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 33
The Cost of Quality (COQ)
COQ – the cost of avoiding poor quality, or incurred as a result of poor quality
Translates defects, errors, etc. into the “language of management” – $$$
Provides a basis for identifying improvement opportunities and success of improvement programs
![Page 34: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/34.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 34
Quality Cost Classification
Prevention Appraisal Internal failure External failure
![Page 35: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/35.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 35
Key Idea
In manufacturing, quality costs are primarily product-oriented; for services, however, they are generally labor-dependent, with labor often accounting for up to 75 percent of total costs.
![Page 36: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/36.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 36
Quality Cost Management Tools
Cost indexes Pareto analysis Sampling and work measurement Activity-based costing
![Page 37: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/37.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 37
Return on Quality (ROQ)
ROQ – measure of revenue gains against costs associated with quality efforts
Principles Quality is an investment Quality efforts must be made financially
accountable It is possible to spend too much on quality Not all quality expenditures are equally valid
![Page 38: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/38.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 38
Key Idea
Data used for planning and decision making need to be reliable, accurate, secure, and accessible to those who need them.
![Page 39: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/39.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 39
Managing Data and Information
Data Reliability – How well does an indicator consistently measure the “true value” of the characteristic?
Data Accessibility – Do the right people have access to the data?
![Page 40: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/40.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 40
Key Idea
In many companies, business information is only accessible to top managers and others on a need-to-know basis. In high-performing companies, business information is accessible to everyone.
![Page 41: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/41.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 41
Knowledge Management
The process of identifying, capturing, organizing, and using knowledge assets to create and sustain competitive advantage Explicit knowledge includes information stored in
documents or other forms of media. Tacit knowledge is information that is formed
around intangible factors resulting from an individual’s experience, and is personal and content-specific.
![Page 42: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/42.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 42
Key Idea
Knowledge assets refer to the accumulated intellectual resources that an organization possesses, including information, ideas, learning, understanding, memory, insights, cognitive and technical skills, and capabilities.
![Page 43: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/43.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 43
Internal Benchmarking The ability to identify and transfer best
practices within the organization Process:
Identify and collect internal knowledge and best practices
Share and understand those practices Adapt and apply them to new situations and
bringing them up to best-practice performance levels.
![Page 44: TQM CH 8 U](https://reader034.fdocuments.net/reader034/viewer/2022042601/552b21884a79593a588b45a8/html5/thumbnails/44.jpg)
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 44
Measurement and Information Management in the Baldrige Award CriteriaThe Measurement, Analysis, and Knowledge Management Category examines an organization’s information management and performance measurement systems and how the organization analyzes performance data and information.
4.1 Measurement, Analysis, and Review of Organizational Performance
a. Performance Measurement b. Performance Analysis and Review
4.2 Information and Knowledge Managementa. Data and Information Availabilityb. Organizational Knowledge Managementc. Data, Information, and Knowledge Quality