Chapter 2

Total Quality in
Organizations

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 1

 Growth of Modern
Quality Management

Service Performance
quality excellence
Improved
product designs

Manufacturing
quality

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 2

 Systems Thinking
• A system is the functions or activities within
an organization that work together for the
aim of the organization.
• Subsystems of an organization are linked
together as internal customers and suppliers.
• A systems perspective acknowledges the
importance of the interactions of subsystems,
not the actions of them individually.

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 3

 Manufacturing Systems (1 of 2)

• Marketing and sales

• Product design and engineering
• Purchasing and receiving
• Production planning and scheduling
• Manufacturing and assembly
• Tool engineering
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 4
 Manufacturing Systems (2 of 2)

• Industrial engineering and process design

• Finished goods inspection and test
• Packaging, shipping, and warehousing
• Installation and service

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 5

 Quality in Business Support
Functions for Manufacturing
• General management
• Finance and accounting
• Human resource management
• Quality assurance
• Legal services

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 6

 Quality in Services
• Service is defined as “any primary or
complementary activity that does not
directly produce a physical product – that
is, the non-goods part of the transaction
between buyer (customer) and seller
(provider).”

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 7

 Critical Differences between
Service and Manufacturing (1 of 2)
• Customer needs and performance standards
are more difficult to identify and measure
• Services requires a higher degree of
customization
• Output is intangible

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 8

 Critical Differences between Service
and Manufacturing (2 of 2)
• Services are produced and consumed
simultaneously
• Customers are often involved in actual process
• Services are more labor-intensive than
manufacturing
• Services handle large numbers of transactions

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 9

 Components of Service
System Quality
• Employees
• Information technology

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 10

 The Ritz-Carlton Hotel Co.

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 11

 Quality in Health Care
• Joint Commission on Accreditation of
Healthcare Organizations (JCAHO)
• National Committee for Quality Assurance
(NCQA)
• Institute for Healthcare Improvement (IHI)
• 1999 expansion of the Baldrige Award to
nonprofit health care organizations

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 12

 Quality Issues in Health Care
• Avoidable errors
• Underutilization of services
• Overuse of services
• Variation in services

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 13

 Quality in Education
• Koalaty Kid program
• 1999 expansion of the Baldrige Award
to nonprofit education organizations
• Success stories
– Mt. Edgecumbe High School
– Brazosport ISD
– Hunderton Central Regional HS
– Pinellas County Schools
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 14
 Higher Education
as a Production System
Design and
Suppliers: Redesign Consumer
families, high research
schools, colleges,
business

Customers:
business, families,
society, students
Inputs: Outputs:
students able students
faculty new knowledge
Teaching, counseling,
scientific research
Processes
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 15
 Quality in the Public Sector
• Quality in the Federal Government
• State and Local Quality Efforts

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