Chapter 2- Increasing Productivity and Quality
Productivity: a measure of efficiency that compares how much is produced with the
resources used to produce it.
Quality: a product’s fitness for use in terms of offering the features that consumers want.
Responding to the Productivity Challenge
Labour productivity: partial productivity ratio calculated by dividing gross
domestic product by total number of workers.
Productivity among Global Competitors:
Domestic Productivity: A country that improves its ability to make something out
of its existing resources can increase the wealth of all its inhabitants. Conversely a
decline in productivity shrinks a nation’s total health. When that happens, an
increase in one person’s wealth comes only at the expense of others with whom he
or she shares an economic system.
Manufacturing versus Service Productivity: manufacturing productivity is
higher than service productivity.
Industry Productivity: In addition to differences between the manufacturing and
service sectors, industries within these sectors differ vastly in terms of productivity.
Agriculture is more productive in Canada than in many other nations because we
use more sophisticated technology and superior natural resources.
Company productivity: high productivity gives a company a competitive edge
because its costs are lower. As a result, it can offer its product at a lower price (and
gain more customers) or it can make a greater profit on each item sold. Increased
productivity also allows companies to pay workers higher wages without raising
Total Quality Management:
Managing for Quality:
Total quality management (TQM): a concept that emphasizes that no defects are
tolerable and that all employees are responsible for maintaining quality standards.
Planning for Quality:
Performance quality: the overall degree of quality: how well the features of a
product meet consumer’s needs and how well the product performs.
Quality reliability: the consistency of quality from unit to unit of a product.
Organizing for Quality:
Perhaps most important to the quality concept is the belief that producing quality
goods and services requires an effort from all parts of the organization. The old idea
of a separate “quality control” department is no longer enough. Everyone from the chairperson of the board to the different part-time workers in the company must
work to ensure quality.
Leading for Quality:
Quality ownership: the concept that quality belongs to each employee who creates
or destroys it in producing a good or service; the idea that all workers must take
responsibility for producing a quality product.
Controlling for Quality:
By monitoring it