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Chapter 12

RSM 100 - Chapter 12 - Summary Notes

Rotman Commerce
Course Code
John Oesch

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RSM 100Y Chapter 12: Increasing Productivity and Quality
Productivity – Measure of Economic Performance
Quality - Product’s fitness for use
Quality Improvement Practices: Customers, Quality, Productivity, Profits
Measuring Productivity
Labour Productivity of a Country = GDP/# of Workers
Manufacturing versus Service Productivity
Service Sector suffers from the Baumol disease
- Service industry cannot be replaced by machines, thus productivity cannot
increase as rapidly as the manufacturing sector
Specific Industry Productivity
Certain sectors are more productive than others
- Agriculture in Canada is more productive than elsewhere
oMainly due to Technological advancements and SIZE
Company Productivity
High Productivity = Low Cost = More Profits or Lower Prices = More competitive
Managing Quality
Juran’s Quality Trilogy
- Quality Planning, Control and Improvement
Total Quality Management: NO DEFECTS ARE TOLERABLE!
Quality Ownership: Each employee responsible for creating/destroying quality
Value-Added Analysis: Evaluate all activities to determine benefits to customer
Competitive Product Analysis
Firm will reverse engineer products (study them) to see where they can improve
their own products
Statistical Process Control: Stats analysis that allows firm to see when
adjustments are needed to maintain high quality of produced shit
Process Variation: A certain range is acceptable, but too much is bad quality
Quality/Cost Study
Method of improving quality by identifying high cost areas and savings potential
Internal Failures: Expenses incurred with bad products before leaving a plant
External Failures: When the defect reaches the customers hands
Benchmarking: Comparing a firm’s output quality with that of industry leaders
ISO 9000: Program certifies that a place has met quality management standards
of the International Organization of Standardization
ISO 14000: Certifies ENVIRONMENTAL Performance
Process Re-Engineering (6 Step Process)
Redesigning a product or service step by step to improve its quality (SWOT)
Supply Chain
Flow of information/materials that starts with raw materials, finishes at customer
Supply Chain Management
Principle of looking at the process as an entire chain and how to improve it
Ways to Improve Quality
- Invest in Innovation and Technology
- Adopt a Long-Run perspective (Continuous Improvement)
- Emphasize Quality of Work Life (Better workers = Better products)
1. Reliability – Provide service on time as promised
2. Responsiveness – Willing to help customers as needed
3. Assurance – Employees earn the trust of consumers
4. Empathy – Caring, individualized attention
5. Tangibles – Pleasing facilities and appearances