Bài giảng môn Quản trị kinh doanh - Chapter seventeen: The management and control of quality

 The Management and Control of QualityChapter SeventeenMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.17-2Discuss the strategic importance of qualityDefine accounting’s role in the management & control of qualityDevelop a comprehensive framework for the management & control of qualityUnderstand alternative approaches for setting performance expectationsPrepare and interpret relevant financial information to support quality-related initiativesLearning Objectives17-3Discuss the use of nonfinancial performance data to support quality-related initiativesDescribe & understand techniques that can be used to detect and correct quality problemsDescribe lean manufacturing and changes in management accounting systems to support a change to “lean” Learning Objectives (continued)17-4Strategic Importance of QualityBaldrige Quality AwardISO 9000 and ISO 14000Conceptual linkage between Quality and Profitability (Exhibit 17.1—see next slide)17-5Exhibit 17.117-6Accounting’s Role in the Management & Control of QualityAccountants can add value to the organization by providing decision-makers with relevant financial and nonfinancial information related to qualitySuch information actively supports the quality initiatives embraced by management 17-7Basic Terminology“Quality”— customer satisfaction with the total experience of a product or service, consisting of two components: Design quality (focuses on the features that customers want)Performance quality (focuses on product/service performance) 17-8Basic Terminology (continued)Exhibit 17.217-9Creating a Comprehensive Framework for Managing/Controlling Quality: Exhibit 17.317-10Characteristics of the Comprehensive Framework for Managing/Controlling QualityBroad business perspective—knowledge of business processesParamount role of the consumerRelevant financial dataNonfinancial performance indicatorsFeedback loopsLinkage to operations managementBreadth of the system—value-chain approach17-11Setting Quality-Related ExpectationsSix-Sigma approach:DefineMeasureAnalyzeImproveControl Goalpost vs. Absolute Conformance:Goalpost conformanceAbsolute quality conformance (robust quality approach)17-12Goalpost Conformance (Exhibit 17.4)Goalpost conformance assumes that the firm incurs no quality or failure cost or loss if quality measures fall with the specified limits17-13Absolute Conformance (Exhibit 17.5)Absolute quality conformance requires that all products or services meet exactly the target value with no variation allowed17-14Setting Performance Expectations: Taguchi Loss FunctionsThe basic idea is that a quadratic functions provides a good approximation of quality costs (losses): the farther from the target value, the greater the penalty or cost/loss. L(x) = k(x − T)2Where k can be approximated as:k = Total quality cost/(Tolerance allowed)2Taguchi Quality Loss Function: ExampleYour firm has determined that no customer will accept sheet-metal deviating more than 0.05” from the target thickness (0.50”). The cost to the firm is estimated as $5,000 for each rejection by a customer. Total Quality Cost(Tolerance Allowed)2k =k = $5,000 ÷ (0.05)2 = $2,000,00017-15Taguchi Quality Loss Function: Example (continued)L(x) = k(x − T)L(0.47) = $2,000,000(0.47 − 0.50)2L(0.47) = $1,800Thus, if the actual thickness of a unit is 0.47, then the estimated total loss for the unit is $1,800. 17-1617-17Financial Measures & Cost of Quality (COQ)Relevant cost information for decision-making (refer to concepts in Chapter 11):Future costs and revenues that differ between decision alternatives“Avoidable costs” vs. Sunk costsOut-of-Pocket costs + Opportunity costsCost of Quality (COQ) Reporting17-18COQ Reporting: Cost Categories Prevention costs—expenditures incurred to keep quality defects from occurringAppraisal costs —costs incurred in the measurement and analysis of data to find out if products and services conform to specification/customer expectationsInternal failure costs—costs incurred as a result of poor quality found through appraisal prior to delivery to customersExternal failure costs—costs incurred to rectify quality defects after unacceptable products or services reach the customer 17-19Sample Costs of QualityPrevention: Quality training costs Equipment maintenance costsAppraisal: Testing & inspection costs Quality audits Vendor certification Test equipment and instruments17-20Sample Costs of Quality (continued) Internal failure: Rework costs Scrap (net of disposal value) Lost contribution margin because of schedule disruptions External failure: Costs to handle customer complaints & returns Lost sales/market share (customer ill-will) Field service/repair costs Product liability lawsuits17-21Sample COQ Report(Exhibit 17.10) 17-22Conformance and Nonconformance Quality CostsCost of Conformity: Prevention Costs Appraisal CostsCost of Nonconformity: Internal Failure Costs External Failure Costs17-23Nonfinancial Quality IndicatorsInternal Nonfinancial Quality Metrics: Process yield Productivity Machine up-time Safety record Throughput Cycle time efficiency17-24Nonfinancial Quality Indicators(continued)External Nonfinancial Quality Metrics: Customer response time (CRT) No. of defective units shipped No. of customer complaints Delivery delays On-time delivery ratePercentage of products that experience early or excessive failure 17-25Detecting & Correcting Poor QualityDetecting Poor Quality: Control Charts Statistical Control Charts Run Charts Taking Corrective Action: Histograms Pareto Diagrams (Charts) “Cause-and-Effect” (“fishbone”) Diagrams17-26Control Chart(Exhibit 17.11, Workstation B)17-27Control Chart (continued)The circled observations are unacceptable, that is, they suggest an out-of-control process. Management may want to investigate the underlying causes of these observations and take appropriate corrective action. Histogram (Exhibit 17.12)1 = Quality of chocolate; 2 = Liqueur; 3 = Egg size; 4 = Blending speed; 5 = Blending duration; 6 = Improper refrigeration17-28Pareto Diagram (Exhibit 17.11)17-29Cause-and-Effect (‘fish-bone”) Diagram (Exhibit 17.14)17-30Chocolate MousseCause-and Effect Diagram (Exhibit 17.15)17-31Lean Manufacturing and Accounting for LeanLean Manufacturing (“lean” for short)— reconfiguring the manufacturing process to increase product flow and product quality, reduce inventories, improve decision-making, and enhance profitabilityFive Principles of Lean Manufacturing: Value Value Stream Pull and Flow Empowerment Perfection17-32Lean Manufacturing and Accounting for Lean (continued)Accounting for Lean: Dysfunctional (or limiting or inhibiting) nature of traditional control mechanisms? Value-Stream Income Statements: Definition of “value stream”? Intended to support/encourage/recognize the value of “lean” Generate a more refined measure of “operating income” 17-33Sample Value-Stream Income Statement (Exhibit 17.17)17-3417-35We defined an appropriate role for accounting in terms of the management & control of qualityWe defined “quality” and its two major components, conformance quality and design qualityWe developed and discussed a comprehensive framework for the management & control of quality, and the role of accounting within this frameworkWe discussed two different approaches for setting quality-related goals (Six Sigma and Goalpost versus Absolute Conformance) Chapter SummaryChapter Summary (continued) We discussed two areas where financial information can be supplied by the accountant to support TQM initiatives: Relevant cost information for decision-making purposes Cost of Quality (COQ) Reporting We discussed the use of both internal and external nonfinancial quality metrics 17-36Chapter Summary (continued) We described techniques, borrowed from operations management, that can be used for detecting & then correcting quality problems (including control charts, statistical control charts, histograms, Pareto charts, and cause-and-effect diagrams) We described the term “lean manufacturing” and offered some insights as to changes to management accounting systems needed to support “lean” initiatives of management (e.g., the switch to “value- stream” income statements) 17-37Chapter Summary (continued) Finally, in the Appendix we explored a way to estimate a quadratic loss functions (in conjunction with the use of absolute conformance standards); the Appendix also showed how the Taguchi quality loss function can be used to set tolerances for an operation 17-38