Productivity And Quality Management

Issue paper one: Productivity and Quality Management

Executive Report

Prepared by

G.Y. Attanayake

MBA/2003/1448

Course : MBA 501 Managing Business Operations

Dr. Travis Perera

and

Mr. A.K.L Jayawardana

July, 2003

POSTGRADUATE INSTITUTE OF MANAGEMENT

University of Sri Jayewardenepura

TABLE OF CONTENTS PAGE NO.

EXECUTIVE SUMMERY 4

1.0 INTRODUCTION 5

1.1 MEASURING PRODUCTIVITY IN THE MANUFACTURING AND SERVICE SECTORS

1.1.1 Productivity Defined and Explained 5

1.1.1.1 Why Productivity 7

1.1.2 Manufacturing Sector Productivity 8

1.1.3 Service Sector Productivity 14

1.1.4 Nestle Lanka Performance Measures 15

1.2 TOTAL QUALITY CONCEPTS

1.2.1 Total Quality Management Models 26

1.2.1.1 The origin of TQM 26

1.2.1.2 Total quality defined 26

1.2.1.3 Why TQM 27

1.2.1.4 TQM models 28

1.2.2 Issues in Application of TQM 33

1.3 HIGH PERFORMANCE ORGANIZATION

1.3.1 Characteristics of a high Performance Organization and Benefits 35

1.3.1.1 What is a high Performance Work System 35

1.3.1.2 Benefits of a High Performance Work System 36

1.3.2 Job Design Defined 37

1.3.3 Job Design in an Performance Organization 37

2.0 ORGANIZATION OVERVIEW

2.1 Nestle Mission and Vision 37

2.2 Nestle Quality Objectives 38

2.3 Nestle Key Products 40

2.4 Current Customer Expectations and Perceptions 41

2.5 The Products Which does not meet the Expectations of Customer 41

2.6 The departmental Process 42

2.6.1 The core customer requirements 42

2.6.2 The inputs 43

2.6.3 The output 43

3.0 IMPROVING THE DEPARTMENT 45

3.1 Achieving of key parameters in the operational plan and the revised plan in relation to Management accounting Department 46

3.2 Utilization of software systems to the betterment of the department and internal customers. 47

3.3 Measurement of internal customer satisfaction and identification of errors made 48

3.4 Cost per Ton Delivered 49

EXECUTIVE SUMMERY

Productivity measures in the manufacturing and the service sectors are varied and Complex ,the benefit from these, is to maintain a check on the efficiency and the effectiveness of organization processes.

In looking at the productivity concepts applied in Nestles, it seems that, almost all the aspects of productivity measures in large processes are covered to achieve excellence.

Total quality management can be defined as a change agent which will assist organizations to survive in this tough, unforgiving & changing environment. Implementing and sustaining total quality management is not a smooth sailing for any organization and many issues will have to be addressed.

To survive in this turbulent environment, companies further needs to improve their performance, and the beast way forward is to become a high performance organisation. A high performance organization would have several traits, which would support it, and one of the important ones is Job design.

Any organization would have a defined mission and set objectives to achieve it, the said variables would depend on the customer base and the internal strengths possessed.

Nestles being a company with a rich history and being renowned for being the largest food manufacturing company in the world incorporates all the things defined and practiced.

The department management accounting is service oriented, and it has no direct linkage to performance measures currently in use and by implementing a said few, we expect to improve the efficiency and to achieve the set goals. By looking at these measures, the concepts and the current position of the organization, we continuously strive to improve the organizations performance.

1.0 INTRODUCTION

In this dynamic environment of ours, it is crucial that the companies stay ahead of the competition and embrace change for survival. The way forward is by implementing various change agents like Total quality management techniques, High performance work systems & Productivity initiatives. The sections to follow will look at the said agents in brief & application to various scenarios.

1.1 Measuring productivity in the Manufacturing and service sector

1.1.1 Productivity Defined