BUS 51 - Mosley7e ch14

Part 5

Controlling

Chapter 14

Controlling
Productivity,
Quality, and
Safety
Mosley • Pietri
PowerPoint Presentation by Charlie Cook
The University of West Alabama

© 2008 Thomson/South-Western
All rights reserved.

Learning Objectives
Learning Objectives
After reading and studying this chapter, you should
be able to:
1. Explain the concept of productivity.
2. Identify and explain the ways in which management,
government, unions, and employees affect
productivity.
3. Describe some steps supervisors can take to increase
productivity.
4. Differentiate between total quality and quality control.
5. Describe the role of variance in controlling quality.
6. 2008 Thomson/South© Identify some important tools for controlling quality.
Western. All rights reserved.
14–2

Learning Objectives (cont’d)
Learning Objectives (cont’d)
After reading and studying this chapter, you should
be able to:
7. Explain what the Occupational Safety and Health
Administration (OSHA) does.
8. Describe the supervisor’s role in promoting safety.

© 2008 Thomson/SouthWestern. All rights reserved.

14–3

Global Competition and Productivity
• High U.S. Productivity:
Mid-1990s to Present
 To overcome stagnant

productivity, U.S.
companies built new
facilities, upgraded
technology, transformed
production processes and
work methods, and
invested heavily in
employee training.

14–4

EXHIBIT 14.1

U.S. Productivity Growth in Manufacturing Output per Hour: 1960s–2006

Year

Annual Rate

Year

Annual Rate

1960s

2.2

1995

3.9

1970s

2.7

1996

4.1

1980s

1.4

1997

5.0

1990

2.5

1998

4.8

1991

2.3

1999

5.1

1992

5.1

2000

4.1

1993

2.2

2001

0.9

1994

3.1

2002

4.8

2003

6.2

2004

1.4

2005

4.1

2006 (1st Quarter)

3.7


Source: U.S. Bureau of Labor Statistics.

14–5

Improving Productivity and Cost Control
• Productivity
 Indicates how efficiently a country is utilizing its

human resources in producing goods and services.
 Is a measure of efficiency (inputs to outputs).

• Calculating the Productivity Ratio:
Total output of goods/services
Total costs (or inputs)


14–6

Improving Productivity
• How Productivity is Increased
1. Increase the total output without

changing the total costs.
2. Decrease the total input costs

without changing the total
output.
3. Increase the output and

decrease the input costs.


14–7

EXHIBIT 14.2

Examples of Productivity Measurements

Input

Output

Salesperson labor hours

Sales volume per salesperson

Energy used, in BTUs

Number of pounds fabricated

Training hours for customer service
personnel

Percent of error-free written orders

Number of hours of plantwide safety
meetings

Number of accident-free days

Labor hours spent on preventive
maintenance

Number of hours without a machine
breakdown

Cost of raw materials

Quantity of finished goods produced

Total labor hours of service personnel

Total quantity of services produced

Total labor hours of production
workforce

Total quantity of goods produced

Total costs

Total number (or value) of goods or
services produced

© 2008 Thomson/SouthBTU, British thermal unit.

14–8

Why Productivity Is Important
• For Individual Companies:
 Increased productivity translates into lower prices,

larger market share, and greater profits.
 Enables investment in research and development,

new advanced technology, increased wages and
benefits, and improved working conditions.

• For a Nation:
 Increased productivity greatly enhances its economic

growth and health.

14–9

EXHIBIT 14.3

Groups Influencing Productivity


14–10

EXHIBIT 14.5

How Supervisors Can Improve Employee Productivity

• Train employees. Can their abilities be upgraded?
• Clearly communicate the need for high standards so that
workers understand what is expected of them.
• Use motivation techniques to inspire workers to increase
output. Pride, ego, and security are several important
motivators available.
• Eliminate idleness, extended breaks, and early quitting
time.
• Build in quality the first time work is done. Productivity is
lost when items are scrapped or need to be reworked.
• Work on improving attendance and turnover in your work
group.
14–11

EXHIBIT 14.5

How Supervisors Can Improve Employee Productivity (cont’d)

• Reduce accidents. Accidents normally result in time lost
to investigations, meetings, and reports—even if the
employee does not suffer a lost–work-time injury.
• Seek to improve production measures. Will process or
work-flow improvements help?
• Try to eliminate or reduce equipment or machinery
breakdowns. Preventive maintenance is important.
• Exercise good control techniques. Follow up on
performance and take corrective action promptly.
• Involve your employees in the process of improvement.
Select their ideas and suggestions for improvement.
Form special productivity improvement teams.
14–12

EXHIBIT 14.6

Performance Report

Name of department

Fabrication

Performance period

November 2006

Budgeted output

15,700 lbs.

Budgeted scrap

152 lbs.

Actual output

15,227 lbs.

Actual scrap

120 lbs.

Variance

–473 lbs.

Item
Direct labor
Overtime
Supplies
Maintenance and repairs
Utilities
Scrapped material
Total


+32 lbs.

Actual
$32,000
1,500
500
4,250
1,300
1,200
$40,750

Budgeted
$32,000
1,000
385
3,000
1,200
1,520
$39,105

14–13

Variance
$
0
–500
–115
–1,250
–100
–320
–$1,645

Recent Productivity Improvement Methods
• Robotics
 The use of programmed computer-controlled

machines to perform repetitive manipulations of tools
or materials.

• Just-in-Time (JIT) Inventory Control System
 Scheduling materials to arrive only when they are

needed in the production process.

• Computer-Assisted Manufacturing (CAM)
 Using special computers to assist equipment in

performing processes.

14–14

Historical Insight
• Evolution of the Quality Explosion in the U.S.
 W. Edwards Deming’s 85–15 rule
 Assumes

that when things go wrong, 85 percent of
the time the cause is from elements controlled by
management.
 Management rather than the employee is to blame
for most poor quality.


14–15

EXHIBIT 14.7

Deming’s Fourteen Points for Quality

1. Top management should establish and publish a statement of the
organization’s purpose and commitment to quality products and services
and continuous improvement.
2. Everyone throughout the organization should learn the new philosophy.
3. Dependence on “inspecting” quality into products should be shifted to an
attitude of “expecting” quality by having it built into the system.
4. There must be a systematic way to select quality suppliers, rather than
simply on the basis of cost.
5. The organization must be devoted to continuous improvement.
6. All employees should be trained in the most modern quality and problemsolving techniques.
7. Leadership techniques consistent with getting the most commitment from
employees should be practiced throughout the entire organization.


Source: From W. Edwards Deming, Out of Crisis (Cambridge, MA, MIT Press, 1986).

14–16

EXHIBIT 14.7

Deming’s Fourteen Points for Quality (cont’d)

8.

Fear should be eliminated from the work environment.

9.

Teams and work groups must work smoothly together; barriers between
functional departments must be eliminated.

10. Exhortations, posters, and slogans asking for new levels of workforce
productivity must be backed by providing the methods to achieve these.
11. Numerical production quotas should be eliminated. Constant
improvement should be sought instead.
12. Barriers that deprive employees from pride in their work must be
removed.
13. A vigorous program of education, retraining, and self-improvement for all
employees must be instituted.
14. A structure in top management that will push the thirteen points above to
achieve the transformation must be created.


Source: From W. Edwards Deming, Out of Crisis (Cambridge, MA, MIT Press, 1986).

14–17

EXHIBIT 14.8

The Malcolm Baldrige National Quality Award

Organizations must observe eight essentials in order to win:
1. Establish a plan to seek improvement continuously in all phases of operations—
not just manufacturing but purchasing, sales, human relations, and other areas.
2. Put in place a system that accurately tracks and measures performance in those
areas.
3. Establish a long-term strategic plan based on performance targets that compare
with the world’s best in that particular industry.
4. Link closely in a partnership with suppliers and customers in a way that provides
needed feedback for continuous improvement.
5. Demonstrate a deep understanding of customers in order to convert their wants
into products.
6. Establish and maintain long-lasting customer relationships, going beyond
product manufacture and delivery to include sales, service, and ease of
maintenance.
7. Focus on preventing mistakes instead of developing efficient ways to correct
them; that is, feedforward control is a must.
8. Perhaps most difficult, but imperative, is to make a commitment to quality
improvement throughout all levels of the organization, including top, middle, and
bottom.


14–18

EXHIBIT 14.9

The Total Quality Chain

Total Quality
Refers to an organization’s overall effort to achieve customer satisfaction
through continuous improvement of products or services.
Quality Control Defined
Measurements designed to check whether the desired quality standards
are being met.


14–19

Tools for Controlling Quality
• Flowchart
 A visual representation of the sequence of steps

needed to complete a process.

• Histogram
 A graphical representation of the variation found in a

set of data.

• Run Chart
 Data presentation showing results of a process

plotted over time.


14–20

EXHIBIT 14.10

Flowchart of a Fast-Food Drive-Through Process


14–21

EXHIBIT 14.11

Histogram Showing Frequency and Length of Time
Taken by Home Office to Process Loan Request


Source: From Total Quality by James W. Dean and James R. Evans. © 1994. Reprinted with
permission of South-Western, a division of Thomson Learning: www.thomsonrights.com.

14–22

EXHIBIT 14.12

Run Chart of Percentage of Restaurant Customers
Waiting in Excess of 1 Minute to Be Seated


Source: From Foundations of Total Quality Management: A Readings Book by J. G. Van Matre. © 1995.
Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com.

14–23

Tools for Controlling Quality (cont’d)
• Pareto Charts
 Problem-analysis charts that use a histogram to

illustrate sources of problems.

• Cause-and-Effect Diagram
 A graphical display of a chain of causes and effects.

• Control Chart
 A statistical control process chart that displays the

“state of control” of a process.


14–24

EXHIBIT 14.13

Pareto Chart of Customers’ Complaints about Restaurants


Source: From Foundations of Total Quality Management: A Readings Book, 1/e by J. G. Van Matre, p. 146. -0030078660. © 1995.
Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730-2215

14–25

EXHIBIT 14.14

Cause-and-Effect Diagram for “Why Tables Are Not Cleared Quickly”


Source: From Foundations of Total Quality Management: A Readings Book, 1/e by J. G. Van Matre, p. 146. -0030078660. © 1995.
Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730-2215

14–26

EXHIBIT 14.15

Example of a Control Chart


Source: From Total Quality, Management, Organization, and Strategy, 1st edition by Dean/Evans © 1994. Reprinted
with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800 730-2215

14–27

The Supervisor’s Role in Achieving Quality
• Supervisors can impact quality by:
 Emphasizing the importance of high quality
 Providing information and support to help employees

achieve quality
 Providing meaningful feedback to employees.

• Motivating workers to achieve high quality work
requires that supervisors:
 Let employees know the quality performance is

expected
 Involve workers in achieving and controlling quality.

14–28

EXHIBIT 14.16

Characteristics of Effective Employee Involvement Teams

• Managers at all levels, especially at the top, should be committed
to the concept and give it their unqualified support.
• Projects undertaken should relate directly—or at least indirectly—
to participants’ work.
• Projects should be team efforts, not individual activities.
• Participants should be trained in quality-control, decision making,
and problem-solving techniques.
• Team leaders also should be trained in group dynamics and
leadership of a group.
• Teams should be given feedback—in the form of results—
regarding their recommendations and solutions.


14–29

Promoting Employee Safety
• The Occupational Safety and Health
Administration (OSHA)
 Is a federal agency created in 1970 by the

Occupational Safety and Health Act to provide
consistently safer and healthier working conditions for
employees.
 Requires organizations to keep safety logs and

records of illnesses and injuries incurred on the job
 Develops standards, conduct standards compliance

inspections, and issues citations and penalties
against organizations that fail to comply.
14–30

Factors Influencing Safety
Size of the Organization
Size of the Organization

Type of Industry
Type of Industry

Safety
Safety

The People
The People


14–31

EXHIBIT 14.20

Occupational Injury and Illness Rates: Selected Industries, 2004
Industry

Incidence Rate per 100 employees

Iron Foundries

15.3

Mobile Home Mfg

15.0

Ship Building/Repair

12.3

Motor Vehicle Body Mfg.

11.3

Dairies

10.3

Soft Drink Producers

10.2

Airlines

10.0

Hospitals

7.6

Taxi Service

6.7

Grocery Stores

6.3

Hotels

5.7

Auto Dealerships

4.9

Full Service Restaurants

4.0

Book Stores

3.3

Real Estate Firms

3.2

Colleges and Universities

2.7

Women’s Clothing Stores

2.4

Radio and TV Broadcasting

1.5

Banks

1.5

CPA Firms

0.3

Average incidence rate for
© 2008 Thomson/South- all industries:

4.8

14–32

Causes of Accidents
Human Factors
Human Factors

Technical Factors
Technical Factors

Accidents
Accidents

Environmental Factors
Environmental Factors


14–33

EXHIBIT 14.21

Personal Injury Investigation

Injured:

Fred Hanna

Position:

Lab Assistant

Presiding:

L. C. Smithson, Technical Supt.

Date of meeting:

4/15/2003

Time of meeting:

2:34 p.m.

Place of meeting:

Plant Conference Room

Present:

L. C. Smithson (Technical Supt.), Fred Hanna (injured), Jim Berry (Housekeeping),
Tom Ahens (Safety Director), Kim Jernigan (Supervisor)

Nature of injury:

Fractured distal end of radius, right arm

Lost time:

42 days (estimated)

Accident time and date:

4/13/2003 at 7:15 a.m.

Cause of injury:

Floor was wet—appeared to be water. Investigation revealed that bags of Seperan (a
synthetic polymer) had been rearranged during the 11 p.m.–7 a.m. shift. One bag
was torn, and its contents had trickled onto the floor, causing it to be exceptionally
slippery when washed at the end of the shift. Janitor noticed but did not flag it or
attempt to remove hazard, as he noted at the end of his shift.

Corrective steps/recommendations:
1. Apply grit to slippery areas; mark with appropriate warning signs.
2. Remind incoming shift personnel of hazardous conditions.
3. Communicate to incoming shift personnel any job priorities.
4. Store Seperan in a more remote area of the plant.


14–34

EXHIBIT 14.22

What Supervisors Can Do to Improve Safety

• Push for upgraded safety equipment and safer work methods.
• Establish and communicate safety goals for the department.
• Clearly communicate safety requirements to all employees.
• Listen to employee job complaints about safety-related matters, including
noise, fatigue, and working conditions.
• Make sure new employees thoroughly understand equipment and safety
rules.
• Prohibit use of unsafe or damaged equipment.
• Encourage safety suggestions from your workers.
• Post safety bulletins, slogans, and posters to reinforce the need for safety.
• Refuse to let rush jobs cause relaxed safety standards.
• Set a proper example. Don’t bend safety rules yourself.
• Conduct periodic safety meetings, with demonstrations by employee safety
© specialists or insurance representatives.
2008 Thomson/South-


14–35

EXHIBIT 14.22

What Supervisors Can Do to Improve Safety (cont’d)

• Refuse to tolerate horseplay.
• Compete with other departments in safety contests.
• Report to employees any accidents that occur elsewhere in the company.
• Review past accident records for trends and insights.
• Encourage reporting of unsafe conditions.
• Make regular safety inspections of all major equipment.
• Enforce the rules when they are broken—take appropriate disciplinary
action to demonstrate your safety commitment.
• Look for signs of fatigue in employees, such as massaging shoulders,
rubbing eyes, and stretching or shifting position to relieve pain or fatigue. In
such a case, relief for the employee may be warranted.
• Thoroughly investigate all accidents and attempt to remedy the causes.
• Develop a system for rewarding or acknowledging excellent safety conduct.


14–36

Important Terms
Important Terms
• cause-and-effect diagram
• computer-assisted
manufacturing (CAM)
• control chart
• Deming’s 85–15 rule
• flowchart
• histogram
• just-in-time (JIT) inventory
• Occupational Safety and
Health Administration
(OSHA)

•
•
•
•
•
•
•

Pareto charts
productivity
quality control
robot
run chart
total quality
Toyota Production
System

14–37

BUS 51 - Mosley7e ch14

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