Professional Documents
Culture Documents
CHPT - 2 2
CHPT - 2 2
Page 44
The cost of Quality
● “traditional” attitude is that there is a cost to quality
● Quality is a “support” function; does not contribute
directly to manufacturing and so is often one of the
first functions to go in hard times
● Waste
● Rejects
● Testing
● Rework
● Customer returns
● Inspection
● Recalls
Pg 46
Cost of Poor Quality
The costs of poor quality include the following hidden costs:
Pg 46
Competitiveness and the U.S. Economy
● The United States came out of World War II as the only
major industrialized nation with its manufacturing sector
completely intact.
● Germany and Japan were devastated by damage during
the war.
● They rebuilt their manufacturing bases on the
assumption that to compete globally, they would have to
produce goods of world-class quality.
● That strategy helped them recover and become world
leaders in manufacturing.
Pg 46
Competitiveness and the U.S. Economy
● While the U.S. was enjoying it’s position as the world’s
preeminent economic superpower, the other industrialized
nations of the world were busy rebuilding their manufacturing
sectors.
● U.S. manufacturers were slow to catch to catch on that the
game had changed
● Foreign companies started to errode U.S. markets
● U.S. companies mistakenly saw cost rather than quality as
the issue & began sending work off shore to reduce labor
cost
● In a relatively short time, the U.S. went from the world’s
leading lender & exporter to the world’s biggest debtor…..by
1980 the U.S. was consuming more than it produced.
Pg 47
Competitiveness and the U.S.
Economy
● Ability to compete globally has direct impact on
quality of life
● Ability to compete depends upon the ability to do a
better job of producing goods
● To do a better job producing goods nations and
organizations need to focus on policies, systems
and resources in a coordinated way to continually
improve
Pg 47
Competitiveness and the U.S.
Economy
● Many industrialized nations have taken steps to link
education, economics and labor market policy to
promote competitiveness
● The U.S. is still debating the need for a national
industrial policy and a national education policy
● 1980s – U.S. improved productivity by putting more
people to work – other nations improved productivity
by making the worker more efficient
● 2000 to 2010 – the number of U.S. workers is on the
decline to maintain productivity U.S. workers must
become more efficient
Pg 48
Competitiveness and the U.S.
Economy
● Today 27% of children born in the U.S. will live in
poverty. 30 years ago it was 12%
● The real hourly wage of a worker in the U.S. today
is 16% less than in 1979
● Today the U.S. has the most unequal distribution of
wealth of any industrialized nation in the world.
Pg 56
Pg 49
Factors Inhibiting Competitiveness
Pg 49
DEMING'S SEVEN DEADLY DISEASES
● 1. Lack of constancy of purpose to plan product and service that will
have a market and keep the company in business, and provide jobs.
● 2. Emphasis on short-term profits: short-term thinking (just the
opposite of constancy of purpose to stay in business), fed by fear of
unfriendly takeover, and by push from bankers and owners for
dividends.
● 3. Personal review systems, or evaluation of performance, merit
rating, annual review, or annual appraisal, by whatever name, for
people in management, the effects of which are devastating.
Management by objective, on a go, no-go basis, without a method for
accomplishment of the objective, is the same thing by another name.
Management by fear would still be better.
● 4. Mobility of management; job hopping.
● 5. Use of visible figures only for management, with little or no
consideration of figures that are unknown or unknowable.
● 6. Excessive medical costs.
● 7. Excessive costs of liability.
Page 21
Factors Inhibiting Competitiveness
Family
● The family unit is the nation’s most important
human resource development agency
● Single parents who must work full time jobs have
little or no time to help their children excel in school
● Parents who must work more than one job have
little or no lime to help their children excel in school
● Children with parents who do no value education
are unlikely to value it themselves
Pg 51
Factors Inhibiting Competitiveness
Education
● Quality of the education system is a major factor in
the quality of the labor pool
● The higher the quality of the labor pool, the higher
the quality of entry level employees
● The higher the quality of the entry level employees,
the faster they can become productive employees
and contribute to competitiveness
Pg 55
Comparisons of International
Competitors
● When making comparisons among internationally
competing countries, the following indicators are
usually used:
● standard of living
● trade and export growth
● Investment
● manufacturing productivity
Comparisons of International
Competitors
Standard of Living
Pg 57
Comparisons of International
Competitors
Trade and export growth
Pg 58
Comparisons of International
Competitors
Manufacturing productivity
Pg 59
Human Resources and Competitiveness
● Cooperation among business, labor, and government
● Social partners is the term used in both Japan & Germany
● Both Germany & Japan were very much like the U.S. prior to WWII
● High-quality education and training
● U.S. standing among industrialized nations is poor
● Germany & Japan go about it different ways, but arrive in the same
place
● Employee involvement and empowerment
● In Germany & Japan employees are involved in functions which in the
U.S. would be traditional management responsibilities
● Leadership at all levels
● In Germany & Japan leadership and leadership training occurs at all
levels including first line employees.
● Teamwork
● In Germany & Japan, not only is work done by teams of employees, but
planning and design as well.
Pg 60
Characteristics of World-Class
Organizations
● Ultimate manufacturers are those that perform at world-class
levels in the following areas:
● Competitive analysis strategies
– Operations cost efficiencies, speed to market, RnD, rapid
supplier delivery, logistics, real time delivery, zero defects, zero
inventory
● Production and supply chain management strategies
– Collaborative planning, forecasting, delivery to point of use,
supplier managed inventory
● Customization strategies
– Building to order, global sourcing
● Electronic commerce strategies
– Supply management, purchasing, internet ordering and tracking
● Compensation systems strategies
Pg 63
Management by Accounting, Antithesis
of Total Quality
Managing the organizations financial results instead of
the people and processes that produce those results
Pg 67
Key global trends
Pg 68
U.S. Companies: Global Strengths and
Weaknesses
Strengths Weaknesses
● Strong entrepreneurial spirit ● Expanding government
● Presence of a “small cap” stock regulation (?)
market for small and mid-sized ● A growing underclass of
firms “have-nots”
● Rapidly advancing technologies ● A weak public school system
● Comparatively low taxes (k-12)
● Low rate of unionization ● A poorly skilled labor force and
poor training opportunities
● World class system of higher
education ● An increasing protectionist
sentiment
● Growing public alienation with
large institutions
Pg 70
Focus on the long term