1. Chapter 3
Information Analysis and
Information Technology
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 1

2. Information Analysis And Information
Technology
• Quality programs are dependent on good information
systems, chief information officers have the opportunity to
plan an intergal and highly visible role in shaping the
quality of the corporation.
• The Information Analysis Category examines an
organization’s information management and performance
measurement systems and how the organization analyzes
performance data and information.
1 Measurement and Analysis of Organizational
Performance
2 Information Management( Data Availability, Hardware and Software)
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

3. Reasons of Implication
• If you don’t measure results, you can’t tell
success from failure
• If you can’t see success, you can’t reward it –
and if you can’t reward success, you are
probably rewarding failure
• If you can’t recognize failure, you can’t correct
it
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

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

5. Decision Making
• The ability to how quickly decisions are
made, communicated, and carried out at all
levels, for this it is very important how
efficiently information will exchange with
subordinates, peers, customer, suppliers or
bosses. Effectiveness of decision making
are essential for competitive advantage.
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

6. Process Flow
Measurement
Data
Analysis
Information
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

7. Use of Information and Analysis
Validation
Prediction
Customer Measurements
Requirements
Control
Processes Results
Design
Measurement supports executive performance review
and daily operations and decision making.
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

8. Benefits of
Information Management
• Understand customers and customer
satisfaction
• Provide feedback to workers
• Establish a basis for reward/recognition
• Assess progress and the need for corrective
action
• Reduce costs through better planning
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

9. Empirical Survey Results
• Measurement-management companies are
more likely to:
– be in top third of industry financially
– complete organizational changes successfully
– reach clear agreement on strategy
– enjoy favorable cooperation and teamwork
– have more employee empowerment
– have a greater willingness to take risks
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

10. Example: Federal Express
• “We measure everything.
Then…we prioritize what
processes are key to the
company.”
• Most data collection systems are
automated, making it fast and
easy.
• Seeks internal measures that are
predictors for external measures.
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

11. Example: Ritz-Carlton
• “We only measure what we must.
But, we make sure that what we
measure is important to our
customers.”
• 50% marketing and financial data;
50% quality-related productivity data.
• Cost of quality is top priority. Are
improvements important to
customers, providing a good return,
and done quickly?
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

12. Leading Practices (1 of 2)
• Develop a set of performance indicators that
reflect customer requirements and key
business drivers
• Use comparative information and data to
improve overall performance and
competitive position
• Involve everyone in measurement activities
and ensure that information is widely
visible
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

13. Leading Practices (2 of 2)
• Ensure that data are reliable and accessible
to all who need them
• Use sound analytical methods to conduct
analyses and use the results to support
strategic planning and daily decision making
• Continually refine information sources and
their uses within the organization
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

14. Balanced Scorecard
1. Financial perspective
2. Internal perspective
3. Customer perspective
4. Innovation and learning perspective
Leading Lagging
measures measures
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

15. Key Types of Business
Performance Measures
• Customer satisfaction measures
• Financial and market performance
measures
• Human resource measures
• Supplier and partner performance
measures
• Company-specific measures
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

16. Example: Wainwright Industries
• Safety
• Internal customer satisfaction
• External customer satisfaction
• Six sigma quality (manufacturing
defects)
• Business performance
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

17. Common Quality Measures
• Nonconformities (defects) per unit
• Errors per opportunity
• Defects per million opportunities
(dpmo)
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

18. Importance of Comparative Data
• Comparative data: industry averages,
best competitor performance, world-
class benchmarks
• Helps recognize the need for
improvement
• Provides motivation to seek
improvement
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

19. Linkages to Strategy
Key business drivers Strategies and
(key success factors) action plans
Measures and indicators
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

20. Process-Level Measurements
• Does the measurement support our mission?
• Will the measurement be used to manage
change; that is, actionable?
• Is it important to our customers?
• Is it effective in measuring performance?
• Is it effective in forecasting results?
• Is it easy to understand and simple?
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

21. Creating Effective
Performance Measures
• Identify all customers and their requirements
and expectations
• Define work processes
• Define value-adding activities and process
outputs
• Develop measures for each key process
• Evaluate measures for their usefulness
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

22. The Cost of Quality (COQ)
• COQ – the cost of avoiding poor quality,
or incurred as a result of poor quality
• Translates defects, errors, etc. into the
“language of management” – $$$
• Provides a basis for identifying
improvement opportunities and success
of improvement programs
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

23. Quality Cost Classification
• Prevention
• Appraisal
• Internal failure
• External failure
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

24. Quality Cost Management Tools
• Cost indexes
• Pareto analysis
• Sampling and work measurement
• Activity-based costing
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

25. Return on Quality (ROQ)
• ROQ – measure of revenue gains against
costs associated with quality efforts
• Principles
– Quality is an investment
– Quality efforts must be made financially
accountable
– It is possible to spend too much on quality
– Not all quality expenditures are equally valid
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

26. Managing Data and Information
• Validity – Does the indicator measure
what it says it does?
• Reliability – How well does an
indicator consistently measure the
“true value” of the characteristic?
• Accessibility – Do the right people
have access to the data?
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

27. Analysis
• Statistical summaries and charts
• Basic
Trends over time
• Comparisons with key benchmarks
• Aggregate summaries and indexes
• Cause-and-effect linkages and
correlations (interlinking)
• Data mining
Advanced
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM

28. Interlinking
• Quantitative modeling of cause and effect
relationships between external and internal
performance criteria
customer
satisfaction
* *
rating
* * *
time on hold (telephone)
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THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM