RSM100Y1 Chapter 12: CHAPTER 12-Increasing Productivity and Quality
CHAPTER
12:
INCREASING PRODUCTIVITY
AND QUALITY
- firms
insist
on
quality
so the can bring to the market products that
satisfy
customers,
improve sales
and
boost profits
The
productivity
-
quality
connection
-
productivity
=
measure
of
efficiency
that compares how much is produced
related
to the
resources
that you
used to produce it
- the more we produce
while
using fewer
resources,
the better off the economy is
-
quality
=
measure
of a product and how fit is for customers to use it and if it has the
features
that
customers want;
value
to the customer
Responding to the
productivity
challenge
-
productivity
on a
national
scheme - one country more productive than
another,
that county will
have
more
wealth
-
countries
must
increase productivity relative
to each other
- since
quality
is
defined
in terms of
value
to the customer,
companies design
their
marketing
to make their
products seem more customer oriented
www.notesolution.com
- there are 4 factors in this process: customers,
quality, productivity
and profits
MEASURING PRODUCTIVITY
:
- use
labour productivity
ratio = gross domestic product/total number of workers
-
labour productivity
compares country¶s
annual
output of goods with the
resources
used to produce that
output
- focus is on
capital
and not
really
raw
materials because countries like
to keep records of
employment
and
the hours worked
- firms that compete
internationally have
more
incentive
to be more productive
PRODUCTIVITY AMONG GLOBAL COMPETITORS
- there are many
differences
in
productivity ranging
from country to country
because
of
technology,
human
skills,
economic
policies, natural resources
and traditions
- for
Canada
to grow
competitively,
we need to
emphasize innovation
and
develop
a better mix of products,
instead
of only
living
off of our
natural
resources
DOMESTIC PRODUCTIVITY
:
- regardless of global
standing, nations
must
consider
domestic productivity
- by being able to make
something
out of its own
resources,
a country can
increase
the
wealth
of
all
its
inhabitants
-
decline
in
productivity shrinks national
wealth. In this case, an
increase
in one person¶s
wealth
is at the
expense
of
another
person
- for
example,
when
productivity
drops, wages can only be
increased
by
reducing
profits (bad for investors)
or by
increasing
prices (bad for
customers).
High
productivity yields additional wealth
and can be shared
among workers
(ie
in the form of
higher wages), investors (higher profits)
and customers
(better
prices)
MANUFACTURING VERSUS SERVICE PRODUCTIVITY
:
-
manufacturing
is
higher
than service
- people in the
service industry
are more focused on hands on
activity
that
machines
can¶t
replace
so
it
¶
s
more
difficult
to
increase
productivity
-
recently, however, service
sectors are able to
increase productivity because service companies
become
more
like factories
and use modern
technology
to
eliminate
inefficiencies
INDUSTRY PRODUCTIVITY
:
-
industries
within the
manufacturing
and
service
sectors are
different
in terms of productivity
- in
Canada, agriculture
is more productive than in other
countries because
of our
superior natural
resources
- new
technologies
has made
certain industries
way more productive
-
productivity
concerns people for
different reasons: labour unions
must
consider negotiating
contracts since
productive
industries
can
give raises
more
quickly
and
easily
than
less
productive industries
-
investors
and
suppliers
look at a firm¶s
productivity
when making
decisions
about
loans, giving
merchandise
etc
COMPANY PRODUCTIVITY:
high
productivity
is good for a company
because
it
makes
the company more
productive and the company becomes the low cost
leader
-
therefore
offer its product at a lower price and
gain more customers, and
subsequently
make more profits
-
increased productivity
=
increased
wages, without
increasing
the price
-
productivity
is important for
investors,
workers and
managers
- profit
sharing companies
are based on the
company;s
productivity
and
improvements
each year
Total
quality management
-
businesses
can no
longer measure productivity
in terms of the
numbers
of each item produced.
Quality
is
now important
- must
improve quality
just as much as quantity
www.notesolution.com
- methods and tools for
implementing quality
=
quality trilogy: quality planning, quality
control and quality
improvement
-
quality trilogy identifies management
steps for
ensuring
quality
-
employee
wide
participation
in
quality improvement
is important for
improving
the
entire
firm - improving
day to day work
activities
=>
real quality
improvements
- ³ILVKERQH´
diagrams
aka cause and effect
diagrams
aka
Ishikawa diagrams
- these help employees
investigate
and track down
causes
of
quality
problems in their work areas
Managing for Quality
-
Total quality management (TQM)
=
emphasizes
that no defects are
tolerable
and
all employees
are
responsible
for
maintaining quality
standards
- TQM
includes all activities necessary
for getting high
quality
goods and
services
into the marketplace
- TQM must
consider all
parts of the
business
- customers,
suppliers,
employees
-
strategic
approach to TQM starts with
leadership
and the
desire
for total
quality
management
-
strategic
approach
involves
gettings people¶s
attention,
getting people to think in a new way about what
they do and then getting them to
improve processes
and products
- customer focus is the starting point
-
companies
need to
develop
methods of
finding
out what customers want and then direct their resources
toward
fulfilling
those needs in order to gain
greater
customer satisfaction
- total
participation
from
all employees
is vital
-
all employees
must be working toward improved
quality. This
way, the firm
utilizes all contributions
from
human
resources and is able to become more
competitive
in the marketplace
- TQM today
involves unending
and continuous
improvement
of products, after
sales services
and
all
internal
processes (like
accounting,
delivery, billing
and
information
flow)
- to run a
successful
company, must care about customers and
employees
and suppliers
- to bring the
interests
of customers,
employees
and
suppliers
together, TQM
involves planning,
directing and
controlling
-
Successful
TQM
involves
commitment from
all members
of the organization
PLANNING FOR
QUALITY:
-
planning
for
quality begins
before products are
designed
or redesigned
-
managers
need to set goals for
quality levels
and
quality reliability
from the start
-
performance quality
= the
overall degree
of
quality,
the
features
of a product, how well it
performs
and how
well it meets customer needs
-
quality reliability
= the
consistency
of
quality
from unit to unit of a product
(ie
no matter which
Toyota
car
you buy, you
rely
on the same
quality
of each car
because
it¶s from a
reputable
firm)
ORGANIZING FOR
QUALITY:
- producing
quality
good and
services requires
effort from
all
parts of he organization
-
everyone
must work to
ensure
quality
- by making
all employees individually responsible
for their own work, it
reduces
the amount of eventual
products
because
the
employee makes
the product right from the beginning
-
everyone
must contribute to product
quality,
but
responsibility
for specific aspects of total quality
management
is
usually assigned
to specific departments and jobs
- many
companies have quality
control, and these departments are staffed by
quality
experts.
These
people
may be
called
in by other departments to
solve
any
quality related
problems.
They
conduct research and
are
aware
of
all potential quality improvements
out there in the market
LEADING FOR QUALITY:
firms may
fail
to take the
initiative
to make
quality
happen
-
leading
for
quality means
that
managers
must
inspire
and
motivate employees
throughout the company to
achieve quality
goals
- they need to help
employees
see how they affect
quality
and how
quality
affects their jobs and their
company
www.notesolution.com
Document Summary
Firms insist on quality so the can bring to the market products that satisfy customers, improve sales and boost profits. Productivity = measure of efficiency that compares how much is produced related to the resources that you used to produce it. The more we produce while using fewer resources, the better off the economy is. Quality = measure of a product and how fit is for customers to use it and if it has the features that customers want; value to the customer. Productivity on a national scheme - one country more productive than another, that county will have more wealth. Countries must increase productivity relative to each other. Since quality is defined in terms of value to the customer, companies design their marketing to make their products seem more customer oriented www. notesolution. com. There are 4 factors in this process: customers, quality, productivity and profits. Use labour productivity ratio = gross domestic product/total number of workers.
