U1 & U2 Flashcards
(336 cards)
1
Q
Manufacturers have realized that quality is of immense importance to stay competitive in the market and must plan how to offer good quality throughout the their value chain. The process begins with?
A
-the selection of suppliers
-and raw material,
-continues with the production process,
-and ends with the customer.
2
Q
a firm that does not manage its quality systematically is unlikely to be successful in ?
A
building good brand reputation and customer loyalty. Considering the fierce competition in global markets
3
Q
Quality management emerged around ?
A
the ninteenth century, when the term primarily referred to controlling quality, e.g., in production or as a service provider .
4
Q
People performed specific jobs in factories and a select individual (typically the foreman) was responsible for?
A
overseeing the workers and the products.
5
Q
Before the First World War, the production of many goods became ?
A
more sophisticated, and the role of official quality controllers emerged (Ingason, 2020, p. 21).
6
Q
As time progressed, and extensive production took place during and after the Second World War, —————————————was introduced.
A
statistical quality control
7
Q
Quality controllers, for example,
A
took product samples, noted deviations and defects, and summarized their findings in charts .
8
Q
As early as the 1980s, Garvin (1984) identified —————————–as an important issue for creating a firm’s —————————————–.
A
product quality
competitive advantage
9
Q
Around that time, many Japanese manufacturers who?
A
entered the US market offered better product reliability and had lower dissatisfaction levels.
10
Q
Once the US firms lost market share to their new competition, they understood?
A
the value of quality in creating a competitive advantage.
11
Q
Competitive advantage?
A
This is what makes a firm more successful, e.g., they have an increase in proportion of total sales compared to other competing businesses and cannot be easily imitated.
12
Q
Another movement became popular in the same decade. Companies understood that control beyond the ———- was necessary, and total quality management (TQM) systems were ———- ————————————-.
A
project
set in place
13
Q
Quality management thus developed into a?
A
management style.
14
Q
The focus further shifted from performance control on total quality management to?
A
the management of customer expectations.
15
Q
Every employee was now responsible for providing quality, from the worker on the assembly line, to the service person who had direct customer contact. Due to?
A
increasing globalization, it was difficult for large firms to manage quality across countries.
16
Q
Firms worked to introduce certification along international quality standards.?
A
it was difficult for large firms to manage quality across countries.
17
Q
National standard associations around the world formed the —————————————————————, located in Geneva, Switzerland. Isos is the Greek word for—————— .
A
International Standardization Organization (ISO)
“equal”
18
Q
The ISO has created a series of standards related to organizational management. One internationally recognized quality norm is?
A
DIN EN ISO 9001
19
Q
DIN EN ISO 9001?
A
Which relates to quality procedures concerning management and quality assurance (ISO 9001:2015;
This norm is helpful for an international understanding of quality.
20
Q
Numerous definitions of quality exist since there are so many different meanings associated with the term quality. Because the term is ?
A
ambiguous,
21
Q
however, it is essential that every worker in a given company have the same understanding of ?
A
quality,
or communication errors will arise.
22
Q
First, ?
A
there needs to be a comprehensible strategic plan concerning quality in a firm.
23
Q
Second,?
A
if quality is not precisely defined, quality cannot be measured and controlled for.
24
Q
And third,?
A
firms cannot work toward common goals without these being clearly defined .
25
today, the issue of quality in a broader context is still as important to firms as it was in the past. Quality can be influenced by myriad factors:
-saturated markets;
error costs;
-increasing environmental awareness, technification of everyday life, customer knowledge (and the availability of information), and customer legal power;
-globalization;
-and company image
26
Product and service quality is influenced by all activities in a company across?
the value chain.
27
Quality can be a critical success factor for a firm to establish a -------------------------------------- Many other firms compete on ------------(e.g., the car manufacturer Dacia), whereas other choose to compete on ---------------- (e.g., the car manufacturer Bentley). These firms then need to carefully plan and monitor their -------------.
competitive advantage.
costs
quality
quality
28
Starbucks, for example, has a competitive advantage because of ?
its coffee quality, which leads to very high customer satisfaction.
29
To be able to maintain a competitive advantage, it is essential that firms include?
strategic planning of their processes as part of their corporate management.
30
Strategic management first involves?
-the careful research of the internal and external environment of the firm.
-Next, it includes the formulation of a strategic plan and the implementation of the plan and the strategic control.
31
In the literature, these steps are presented as a--------------------. One of the essential models in management, it is also called the ----------------------------------.
circle
management circle
32
Part of quality management is the creation of ?
trust that all quality requirements are fulfilled.
33
Many of these requirements are specified in a ?
firm’s quality management handbook.
34
The task of quality management in a firm is then to increase?
their ability to meet the set quality requirements.
35
It is essential that the firm has an understanding of -------------------. Quality is not something that is achieved by ----------------------; instead, quality needs to be ---------
quality
extensive testing
created
36
Many firms decide to use a quality management system (QMS) to improve?
their performance.
37
This system is a good basis for ?
sustainable development (ISO 9001:2015).
38
A QMS is a formal system in which promises are delineated in?
documents and operation is controlled.
39
The system ensures that the work follows the specified -------------. In the end, there needs to be documented evidence that the procedures were all performed ---------------------------.
procedures
according to plan
40
Thus, “the three foundations of a quality system [are]:
a promise,
execution of the promise,
and proof thereof”
41
The QMS is important for -----------employees, e.g., job training, but also for --------------- parties, e.g., customers, suppliers, and shareholders. Overall, managing quality systematically with the help of a QMS saves a firm time and cost by reducing ---------.
internal
external
mistakes
42
The international standard is to apply a --------------------------- when -------------a quality management system to meet customer requirements.
process approach
using
43
A process approach ?
“involves the systematic definition and management of processes, and their interactions, so as to achieve the intended results in accordance with the quality policy and strategic direction of the organization” .
44
This process approach is accomplished by using ?
the plan-do-check-act (PDCA) cycle,
45
the plan-do-check-act (PDCA) cycle, which was used in seminars by?
W. Edward Deming since 1940.
46
It is often associated with?
quality management
and continuous improvement.
47
Deming used the “P” to explain that --------------------------------------------------------. “D” explains that the process is------------------------;
“C” is for check and implies that the processes ----------------------------------------. The final letter, “A” shows that firms need to ---------------------------------------------------------------------.
business processes and resources need to be planned
realized
need to be controlled
act on any deviations found in the control phase
48
The term “quality” has evolved since its first use in ancient times.
Indeed, it is used in many ways in our everyday language. People will say things like “That is quality stuff” or “When I see quality, I know it.”
Even in literature, we can find numerous approaches to define it. But what exactly does quality mean?
49
Several types of definitions are discussed in Garvin.
-The transcendent approach
- The product-based approach
-The customer-based (also called upper-based)
-The manufacturing-based definition
-The value-based definition
50
The transcendent approach
begins with the absolute and refers to subjective feelings about objects.
51
The product-based approach
refers to measurable and classifiable product characteristics.
52
The customer-based (also called upper-based)
definition places emphasis on perceived customer demands.
53
The manufacturing-based definition
defines secondary characteristics that are required for the fulfillment of the product, value- and customer-related characteristics for manufacturing the product.
54
The value-based definition
refers to the cost or price of the benefit.
55
Yet, the early definitions of quality often centered around ?
product quality.
56
A further popular, but simple, definition of quality is -------------------------” which refers to product features (e.g., ---------------------------------------------------------------------------------------)
and freedom from deficiencies (e.g., -------------------------------------------------------------------------------------------).
“fitness for use,
design, technical features, product performance, reliability, and durability
in the production process, the conformity to requirements, and lack of errors or defects at the time the product is delivered or used;
57
Kerzner criticizes the use of the term as a quality definition and points out that terms like “fitness for use” or “zero defects” are ?
goals rather than definitions of quality .
58
As organizations realized that quality was necessary to be competitive on international markets, they started to think about quality management more --------------------. Rather than just looking at product quality, they looked at quality throughout the whole ----------------------.
professionally
value chain
59
The term quality needed to mean the same for anyone in the company and for trading partners outside the company?
As organizations realized that quality was necessary to be competitive on international markets, they started to think about quality management more professionally. Rather than just looking at product quality, they looked at quality throughout the whole value chain.
60
Firms have started to use the international definition based on ISO 9000:15 . Quality based on the ISO 9000:2015 norm is defined as?
the “the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs”.
61
A quality object is fit for?
its purpose and conforms to specific requirements.
62
Objects refer to :
products, services, processes, and systems
63
Objects build three levels for quality consideration
(system, process, and product) as depicted in the figure below.
64
An object is described with adjectives like
“bad,” “good,” or “excellent.”
65
Objects have inherent and assigned characteristics. The inherent characteristics are properties of an object (e.g., ?
a product, service, process, system, organization) that are fundamental to an object and cannot be exchanged easily without further effort.
66
Inherent characteristics
An object has a characteristic property.
67
The material, color, size, and durability of a product, e.g., a shoe, are inherent characteristics of the object that ?
cannot be changed after production.
68
Customers have certain requirements on these inherent characteristics, like the color and size, but?
not necessarily on all inherent characteristics.
69
They might want a black leather shoe in US size 9. Customers place quality requirements on inherent characteristics but?
not on assigned characteristics
70
Assigned characteristics
These characteristics have been explicitly assigned to an object.
71
Assigned characteristics can be altered without?
Because these assigned characteristics can vary and because these are not fundamental characteristics of a product, they are not quality indicators for firms
changing the object itself.
72
The price or the brand name of the shoes, for example, can vary over time but changing the price or brand name does not change the product itself?
Because these assigned characteristics can vary and because these are not fundamental characteristics of a product, they are not quality indicators for firms.
73
The term “requirement” refers to?
defined expectations that are assumed or obligatory. When quality is assessed, the inherent characteristics of objects are compared with their requirements.
74
Without knowing the requirements, it is impossible to formulate a-------------------------- about quality.
statement
75
Requirements
These needs or expectations from stakeholders are either explicitly defined or implicitly given by common ideas from the participants.
76
The concept of TQM allows many stakeholders to/
formulate requirements.
77
Stakeholders include, for example,
suppliers, employees, investors, and society.
78
Stakeholders might formulate requirements like ------------------------------------------. Customers might have product-specific requirements, like a specific -----------------------------. Other stakeholders might formulate more ----------------------, like legal requirements (e.g., working conditions or safety regulations),------------------------------(e.g., noise regulationsm or traffic routing), or ---------------------------------- (e.g., energy and water consumption).
1-laws and norms
screw or tire size
2-general requirements
3- social aspects
4-environmental regulations
79
These stakeholders then formulate requirements concerning
a) product quality,
b) process quality,
and c) system quality.
80
It is then the task of the firm to implement these requirements as part of?
their quality policy ).
81
Using ISO 9000:2015 as a reference, quality then means?
fulfillment of the targets the firm sets itself.
82
Quality considerations can be distinguished into three levels.
First, the product quality characteristics and customer demands build one perspective for quality consideration.
Second, the processes and the product themselves are considered. Here, the production process conforms to the requirements and is extended to further services processes.
Third, the product and the process do not exist in isolation but in a system that includes the processes and resources in a whole organization .
83
Rather than looking at the three levels of quality considerations, some firms work with?
quality dimensions.
84
Garvin (1984) identified the following self-contained quality dimensions:
-Performance refers to the objective operating characteristics of a product, e.g., speed, which can be measured. In addition, it includes subjective characteristics, e.g., handling and clarity of mobile phone display, which are evaluated differently by every individual.
-Features refer to secondary characteristics of a product beyond its basic functions, e.g., a fingerprint sensor on a mobile phone.
-Reliability refers to the probability that the product will fail in a given time period.
85
-Conformance is “the degree to which a product’s design and operating characteristics match preestablished standards” (p. 31). It is measured by the incidence of defects.
-Durability refers to the economic and technical life span of a product, e.g., before it breaks down or needs repair.Serviceability refers to “the speed, courtesy, and competence of repair” (p. 32).
86
p
=Aesthetics is a subjective measure of quality and relates to the look and feel of the product.
=Perceived quality is a subjective measure of overall quality in terms of brand image, advertising, or brand name. This is done especially when only incomplete information is available prior to purchase.
87
In today’s understanding of quality management, managers know that?
there is more to quality than product and production quality.
88
Other aspects, like “design, handling of raw materials, [and] customer complaint processes,” also play a role in?
quality management
89
Companies should develop a quality ----------------that views quality as both a means to reduce -------- and as an opportunity to safeguard the existence of the company and jobs.
culture
cost
90
In a firm with a quality culture, quality should then be?
lived by everyone in the company. Quality is created in every segment or task of the firm’s operations.
91
An effective quality management system depends heavily on the employees. They therefore?
need to be trained,
knowledgeable,
friendly,
and engaged at all times
and should be responsible for delivering a product or service “with the right quality”
92
If the firm does not plan strategically and nor communicates the quality requirements to all people in the firm, the individual and the firm as a whole is unlikely to be?
successful.
93
The following conditions must be ensured when firms want to offer good quality:
-Quality should be planned strategically.
-Quality is the result of clear decisions about all deliverables.
-Communication paths for all production processes are needed to ensure the exchange of information for all people involved.
-Quality management covers all areas within the company.
-Quality is something that needs to be lived by everyone in the firm daily.
94
The requirements for quality are ?.
manifold
95
Quality in its broadest sense has different influencing factors. The graph below shows seven influences that need to be managed.
96
A single factor could destroy a customer’s ------------------------------------------.
quality perception
97
The importance of all seven influences can be illustrated by someone who enters a fast-food restaurant and orders a burger.
The person is somewhat in a rush and therefore wants food quickly. The overall quality perception is going to depend on the interaction with personnel (human), the machine (display order), the management of the process, the overall restaurant environment, and the quality of the product itself (e.g., the burger meat and toppings). Even if the person had a nice interaction with the personnel, the product arrived quickly, the card payment was smooth, and the restaurant ambiance was nice, a crushed burger box with a smashed product could diminish the overall positive quality perception. It is therefore essential to have a broader view on quality management and its necessary requirements.
98
In 2007, the car manufacturer Daimler experienced a marketing disaster when....
their A-class car was introduced to the market prematurely. Just after the product went on the market, a Swedish magazine seeking “the car of the year,” conducted a product test and discovered that the car could not pass one of their standard tests, the “elk test” When driving quickly toward obstacles, the car did not run smoothly around them and instead tipped over. The media coverage was a disaster for the firm. In addition to their loss of reputation, the overall total loss resulting from this failed market launch was estimated to be 1.25 billion euro .Consequently, the firm thought more carefully about its quality control management.
99
As the A-class example illustrates, poor product quality can have severe consequences for a firm. Quality is a success factor for firms, and poor quality can be very risky.
Imagine a tire manufacturer that produces defective tires. These tires could burst and cause horrible accidents.
100
According to Benes and Groh (2017), :
-false planning,
-lack of supervision and communication,
-lack of motivation and work responsibility,
-and inability to meet customer requirements lead to quality failure .
101
Many additional negative consequences result from'?
quality failures, e.g., complaint costs and decreased customer satisfaction and liabilities.
102
The prevention, appraisal, failure cost (PAF) framework divides quality costs into three categories
table
103
Firms can invest in the prevention of quality costs by?
setting up and implementing a quality management system,
104
for example?
They can introduce quality planning of the production system and invest in test procedures and equipment.
In addition, they can perform quality engineering, which includes :
preventive maintenance;
collecting defective data;
and regularly calibrating the production equipment.
105
Firms can also:
work with their suppliers on quality assurance and assess these.
106
Further, firms can increase the durability of their products with ?
robust design,
offer quality trainings for everyone in a firm,
and invest in quality audits.
107
If quality defects are prevented, customers are more likely to be?
satisfied.
108
Appraisal costs can be prevented by ------------------. Firms can set up inspection and test material, they can introduce --------------------------------------------------------------- that they have collected.
inspections
quality audits, review, and evaluate the data
109
They can:
conduct product performance tests,
monitor their suppliers,
and qualify for ISO 9000
110
As the table explained, failure costs exist in two forms:
internal and external.
111
Internal failure costs emerge because of ?
a fault that comes from the firm during the production process, like troubleshooting in the assembly line; reinspection or disruption of production schedules; plant maintenance; warranties; keeping higher stocks levels to compensate product defects; time; and cost for handling complaints, customers, and repairs.
112
External failure costs occur after?
and include costs that occur after the customer is in possession of the product (e.g., lost production after system failure or costs due to the unavailability of labor, process waste, and disposal; Foster, 2017, p. 114).
the production process
113
External failure costs occur after include ?
costs that occur after the customer is in possession of the product
(e.g., lost production after system failure or costs due to the unavailability of labor,
process waste, and disposal).
114
Customer satisfaction is of great economic importance and thus?
is the focus of quality management regulations.
115
Brand loyal
An individual is brand loyal and buys a product repeatedly if they have a positive attitude toward the brand and believe that the brand is superior to its competitors.
116
Satisfied customers tend to be------------------------------------------------------------------------.
brand loyal and continue to buy products from the same firm
117
Over time, loyal customers also tend to?
buy other products from the same company and are less price-sensitive because of their high satisfaction level.
118
Over time, loyal customers also tend to buy other products from the same company and are less price-sensitive because of their?
high satisfaction level.
119
Overall, customer satisfaction leads to higher ------- and reduces the --------------------------------------through ---------------------------.
revenues
cost of attracting customers
advertising
120
Unsurprisingly, the main goal of DIN EN ISO 9001:2015 is to improve?
customer satisfaction.
121
The PDCA cycle, for example, is a tool applied in this context to ?
continuously improve quality.
122
Customers generally buy products as a solution to a problem and then pass through a ?
five-step decision-making process.
123
They start with problem recognition,......
search for information,
evaluate alternatives,
choose a product,
and evaluate it in post-purchase processes.
124
The product or service quality can play a role in ----------------.
all five steps
125
Imagine that Martin’s TV is broken.
In the first step of the decision-making process, he recognizes that the broken TV is a problem and that he wants a better-quality TV next time.
While researching, Martin might look for products that possess certain quality criteria. When evaluating competing products, the ones that meet his quality criteria might be preferred over alternatives.
He might buy one of his preferred brands because he is brand loyal. During the purchase phase, Martin might select a store known for a nice ambiance and employing competent salespeople. In the end, Martin evaluates his TV.
The result of this post-purchase evaluation will be Martin’s level of satisfaction or dissatisfaction.
126
Satisfaction
The customer’s perception of the service received, this measures how happy or unhappy the customer is with the firm’s product, service, or experience.
Satisfaction “refers to the overall feelings, or attitude, a person has about a product after [they purchase] it” .
127
Through communication in the media or discussions with other people, customers have expectations about?
the product features (technical features, design, performance, reliability, and durability), but they also expect freedom from deficiencies.
128
The firm’s communication should thus?
correspond to the delivered product quality.
129
After the product purchase and \/or use, the customers compare their expectations with?
the confirmation\/disconfirmation paradigm.
what was actually delivered.
130
This is called?
the confirmation\/disconfirmation paradigm.
131
New product development is very important for ?
a firm’s strategy.
132
When a firm develops new products, it needs to consider the -----------------------------------------------in the planning stage.
customer requirement
133
Companies today do not grow because of?
volume or price,
but because they offer customers innovative and valuable products with which they differentiate themselves from competitors.
134
Normally, a linear relationship between ---------------------------------------------------- is assumed in the literature.
product attributes and customer satisfaction
135
Nevertheless, this linear relationship between product attributes and satisfaction has been --------.
challenged
136
The Kano model :
displays customer satisfaction levels and customer requirements.
It is based on a questionnaire consisting of five categories of customer requirements.
137
These five categories are:
-Excitement attributes are not necessarily voiced or expected by customers, but they proportionally lead to customer satisfaction.
-Performance, or one-dimensional quality, attributes are the ones customers require. The higher the performance, the greater the customer satisfaction.
-Basic needs are must-have attributes that the customer requires.
-Indifferent attributes cause neither satisfaction nor dissatisfaction.
-Reverse features flip the relationship, whereby the absence of features cause satisfaction and the feature itself causes dissatisfaction.
138
Satisfaction is determined by?
one-dimensional (or performance) attributes linearly with a constant slope.
139
The excitement attributes and basic needs influence satisfaction in a nonlinear way, i.e.,?
when basic needs are not met, customers are dissatisfied.
140
Excitement attributes, or satisficers, have a positive influence on satisfaction with a --------------------- when
steeper slope
141
The steep slope implies that?
when these excitement attributes are absent, the influence on satisfaction is very low.
142
Although firms might assess the degree to which customer expectations are completely fulfilled based on ?
a service provider assumes complete (100%) fulfillment, the customer does not necessarily make the same judgements. Customer satisfaction is influenced by many factors, such as the perception of the environment (e.g., competing products, product image, or the opinion of others), the product perception (e.g., price, design, follow-up costs, guarantee, security, or environmental focus), and the perception of the behavior of sales and maintenance personnel
their own requirements, the fulfillment of customer expectations remains subjective.
143
Even if, for example,
a service provider assumes complete (100%) fulfillment, the customer does not necessarily make the same judgements.
144
Customer satisfaction is influenced by many factors, such as?
the perception of the environment (e.g., competing products, product image,
or the opinion of others), the product perception (e.g., price, design, follow-up costs, guarantee, security, or environmental focus),
and the perception of the behavior of sales and maintenance personnel.
145
The net promoter score (NPS) was introduced as?
a single item loyalty measure by Reicheld (2003) in the Harvard Business Review. It is a loyalty measure that is closely linked to customer satisfaction.
146
Customers answer the following question on a scale from 1 to 10:
“How likely is it that you would recommend our company\/product\/service to a friend or colleague?”
147
Detractors, who are unlikely to recommend the company, respond with a score between --------------Customers who are passively satisfied choose a score of ---------------; promoters of the company, who are extremely likely to recommend the company, product, or service choose-------------.
1 and 6.
7 or 8
9 or 10
148
The NPS is the ratio of?
and is calculated by subtracting the percentage of detractors from the percentage of promoters
promoter to detractor
149
The NPS is calculated by?
subtracting the percentage of detractors from the percentage of promoters .
150
Values of 75 to 80 percent are seen as ?
“very good”
151
Values of 75 to 80 percent can be used to compare?
regions,
products,
customer segments,
or even competitive products
152
The NPS has, however, also been criticized because?
it does not fully measure loyalty or satisfaction.
153
Moreover, in research, using a single item measurement is-------------------------. Indeed, the NPS is just one of many ways of measuring ----------------- and does not give indicators for --------------.
problematic
satisfaction
improvement
154
Quality is determined by?
the degree to which an object’s inherent characteristics meet certain criteria.
155
Quality objects are?
primarily products,
services,
and processes.
156
The requirements originate primarily from customers but can also ?
come from various other stakeholders of the firm.
157
They are contractually ------------------------------- assumed.
defined or implicitly
158
In addition, there are mandatory requirements from laws, standards, or other regulations. The capability of a company, its systems, and processes describe the way in which it produces quality.
159
Firms should create an environment in which quality is delivered by?
everyone in the firm on an everyday basis.
160
Quality needs to be planned and managed strategically, so that ?
it can be communicated,
measured,
and controlled.
161
The view of quality has developed from quality control as a downstream process in production, through?
process-integrated quality assurance,
to systematic quality planning within the framework of quality management.
162
In many quality management regulations, increasing customer satisfaction is----------------------------------.
the main objective
163
The Kano model shows ?
customer satisfaction levels and customer specifications.
164
Businesses are working in an environment of ?
They need to both respond to current customer requests and anticipate future ones. Moreover, they need to adapt to these changes very quickly, because their competitors will also try to react as quickly as possible (Szelągowski, 2019, p. 3). In this fast-changing environment, the quality of services and products is dependent on the underlying business processes of the firm. Only those companies that master their processes can guarantee the desired product and service quality
constant change.
165
Due to changes in ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- is increasing.
business culture,
globalization,
and developments in communication and information technology,
the pace at which businesses must adopt to changes
166
Firms should define clearly how ?
processes are structured in their company and determine who is designing,
analyzing,
and optimizing these processes in the firm.
167
If any constraints are identified in these processes, firms need to think about?
their removal to become more efficient.
168
To understand how quality management works, it is essential to?
understand the concept of a basic process.
169
A process is defined as a ?
“set of interrelated or interacting activities that use inputs to deliver an intended result”.
170
The goal of quality management is not to produce an outcome; the goal is?
the achievement of an intended outcome.
171
As show in the figure below, there are overall business goals and strategies (strategic goals are visions for ?
a business with quantitative or qualitative results)
172
As show in the figure below, there are overall business goals and strategies (strategic goals are visions for a business with quantitative or qualitative results) that determine?
general organizational business processes, e.g., contracts with suppliers who supply raw materials.
173
These organizational business processes then determine------------------------------------------ processes, which are much more detailed and specify tasks in business process ---------------------.
operational business
models
174
These then influence the specification and implementation of the process, i.e.,?
the execution of the process,
activity planning,
as well as the technical and organizational environment.
175
Process
A process is a series of activities that are completed to achieve an intended outcome.
176
Core processes
These processes reflect the core competence of the company.
177
image
178
Core processes are those processes that give the firm a sustainable competitive advantage and reflect the core competence of a firm. They should therefore be performed by ?
the firm itself and should not be outsourced, e.g., to save costs.
179
Based on Benes and Groh core processes are?
=unique resources or competencies of the firm.
=advantageous over the competition.
=perceived by the customer as added value.
=knowledge-based.
=difficult to trade.
=difficult to copy.
=difficult to substitute.
=value chains.
=derived from core competencies.
180
The core process of a manufacturing company is, for example,?
the production of a part, or in a service organization, it is the performance of the service.
181
A core process of a bakery would be ---------------. These core processes are usually accompanied by -----------------processes.
breadmaking
support
182
Support processes
These processes do not reflect the core competence of the company and can be outsourced.
183
Support processes also take place within the firm, but do not belong to ?
the core processes and therefore do not add value to the customer directly
184
Examples of support processes are :
human resources,
accounting, data processing,
maintenance, or a cafeteria,
which can be outsourced if necessary.
185
A support process in a bakery could be?
personnel management or cleaning.
186
The figure below depicts a simple process in which a firm uses
its resources, performs value-adding activities, and ends with the client receiving the product or service
187
its resources, performs value-adding activities, and ends with the client receiving the product or service
188
1A firm can use raw material, money, energy, and information as inputs into the process.
2When a series of interconnected value-adding activities start, a transformation of these inputs takes place as part of the process.
3The firm must think about the impact its processes have, for example, on conformance, the environment, health, and safety.
4 The output of the process is usually a product or service. In addition to the product or service, the output is also waste (e.g., defective products or excess material from production).
189
The effectiveness and efficiency of the process is ---------------------------------------------. In addition, the impact of the process on various stakeholders (e.g., employee health or the firm’s environment) needs to be ------------------.
measured and monitored
evaluated
190
The example of a bakery can be used to explain the simple business process.
The bakery receives a customer order on 50 baguettes for an event (information). Raw material (flour, yeast, and water) is needed to start the value-adding activity.
An employee starts the process with the activities 1) baguette making,
2) baguette baking,
and 3) baguette packaging.
The bakery needs to think about conforming to hygiene regulations, energy use for the baking oven, and preventive measures against burns and other health requirements for employees. The output is 50 baguettes, which the customer will receive as requested.
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The bakery should measure and monitor the process (e.g., ?
ingredient quality, delivery time, and customer satisfaction rates) and use this information as feedback for future orders.
192
Firms must manage these business processes to?
minimize the production of waste and maximize customer satisfaction by engaging in process management .
193
The main idea is to continuously improve the efficiency of processes throughout---------------. Business processes are thus ?
the organization
activities a firm performs to realize a business goal
194
These business processes are not performed in isolation but with ?
the help of other organizations, like suppliers, as well as management instructions and other internal resources.
195
The bakery example shows that?
the process does not work without further management instructions and additional internal resources.
196
Both influence the sequence of activities during the transformation of ------------------------------------ activities in the process.
value-added
197
Management or leadership processes accompany core processes and include:
those processes necessary for the strategic orientation of the firm, e.g., strategic planning, risk management, and the provision of resources.
198
Additional internal resources are those that :
are not visible to the customer and for which the customer does not directly pay.
199
In the bakery, this could be ---------------------------------------------------------------------------------------------------
oven maintenance, procurement, or stockpiling of material.
200
The process flow depends on?
the organizational structure of a firm, which is usually displayed in an organigram.
201
Firms with a functional structure typically have?
a president and are organized in business functions, e.g., marketing, production, finance, personnel, and research and development.
202
This functional structure can lead to?
interdepartmental conflict.
203
If a process is dependent on input from several departments, it is unclear who is responsible for --------------------------------------
the overall process
204
Interface
An interface is a point at which the responsibility of a process is transferred from one person or organizational unit to another.
205
Business processes are complex, and many value-adding and support activities are necessary in production. If there are too many interfaces in the process, information might be?
lost, decreasing the efficiency of the total process.
206
In addition, if one organizational function takes responsibility, there is a missing interest to?
take mutual responsibility across functions.
207
In grown and complex organizations, where a firm operates in a matrix organization, there exist:
functional and divisional structures.
It is also less clear who is responsible for a process.
208
a constant process orientation is helpful.?
because In grown and complex organizations, where a firm operates in a matrix organization, there exist functional and divisional structures. It is also less clear who is responsible for a process.
209
Process owner
This is a person who is accountable for the process performance and management on a daily basis.
210
Process orientation allows firms to think beyond functions and organizational structures to -------------------------------------------------------------------
“think in processes”
211
Each process should ideally be assigned to?
This is an individual who is responsible for the process and its correct and efficient execution. The process owner interacts with the process participants (internal and external). In the end, the process owner should detect inefficiencies and improve the process where necessary in consultation with the process designers.
a process owner.
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a process owner
This is an individual who is responsible for the process and its correct and efficient execution.
The process owner interacts with the process participants (internal and external).
In the end, the process owner should detect inefficiencies and improve the process where necessary in consultation with the process designers.
213
The concept of a process owner can be illustrated with the example of?
a customer who bought a defective mobile phone at an electronics store. The customer calls the support center to get more information on the procedure. The employee who answers the phone could be assigned as the process owner, making sure that the problem is solved. The employee might have to contact different departments (e.g., salesperson, shipping, or service guarantee).
214
If no specific employee is assigned as a process owner, the return process might be?
delayed, and information might be lost between the several involved employees (interfaces).
215
Without designated responsibilities, the customer lacks?
a quick and satisfying solution.
216
Business process management
This is the practice of using various methods to discover, model, analyze, measure, improve, and optimize business processes for the whole company.
217
Business process management (BPM) is ?
a management method that includes the whole firm.
218
Whereas quality management mainly focuses on?
maximizing customer satisfaction, business process management also includes the optimization of a firm’s economic efficiency and effectiveness.
219
It includes concepts and methods to help?
model and analyze business processes.
220
BPM emphasizes a ----------------------------------approach to improvement.
holistic, company-wide
221
The turtle model can be the foundation for?
an analysis of business process and risk.
It includes a variety of influencing factors.
222
The head of the turtle is the process--------, and its tail is the process ---------------. The legs symbolize -----------------processes. The transparency gained from the analysis is a solid basis for management -----------------.
input
output
support
decision-making
223
There are four phases in BPM:
1-Prepare process work.
2-Describe processes.
3-Optimize processes.
4-Steer and continuously improve processes.
224
Prepare process work.
The project team is built, and processes are identified. All processes need to be collected and placed in a logical order. Process tasks, input, and output are briefly described.
A project timeline is created, the resources are planned, and a project organization is set.
It is helpful if the steering committee includes a member from top management who can help and react quickly when problems arise.
225
Describe processes.
The process team needs to describe all processes that serve as input into the system. The main processes are decomposed into sub-processes. Whereas the main processes are often displayed in block charts very generally, sub-processes are much more detailed.
In the bakery example, a main process would be baguette making. The breakdown in sub-processes would entail, for example, mixing, kneading, and rolling.
The process of mixing could even be further sorted into sub-processes specifying all the ingredients and the order of adding them.
Overall, a list of input processes is compiled, and the inputs are assigned to the corresponding suppliers. The processes are documented, e.g., in lists, flow-charts, or service blueprints.
226
Optimize processes.
After processes are visualized, it is much easier to optimize them, which is the main task of business process management.
Optimizing processes is much easier when key figures about the processes are measured and analyzed.
It is possible to optimize single processes, merge two processes, change the order of processes, run two processes in parallel, accelerate a process, automate processes or parts of them, add processes (e.g., for quality assurance), and eliminate processes.
227
Steer and continuously improve processes.
The processes described in phase 2 are now realized as specified. Forms should be available to document and prove the process realization. If the project team recognizes that not all processes were optimized in phase 3, another round of optimization and an adaptation to the previously described process might be necessary.
228
After a firm implements a quality management system, -------------------------- begins.
the operation
229
It is then necessary to measure and control the specified processes carefully to?
reach the intended process outcome
230
Many processes were specified and described in detail in process management phase 2. Phase 2 thus includes:
the definition of measures.
231
Once operation begins, the appropriate measurements need to be selected to ?
quantify and control the specified processes.
232
The process is monitored and then the results are ?
compared to the specifications.
233
If the results are far off the specified value, it is an indicator that?
something is not working properly and that corrective action is needed.
234
Employees should then be encouraged to
-----------------the process.
improve
235
A company that produces nails, for example,:
should measure and monitor their lengths during the production process. If the deviation from the norm is too big (the acceptable deviation should be specified), the process owner in the production process needs to take corrective action (e.g., check machine settings or change defective tools).
236
Various machines usually collect data about the products or processes. This method, called --------------------------------- (SPC),
statistical process control
237
statistical process control
is used to “measure and control quality by continually improving the manufacturing processes” .
238
Firms should move toward preventing quality problems rather than?
simply trying to detect mistakes.
239
The main goal of SPC is to improve the quality of goods continually by ?
reducing variations.
240
Das et al. (2020, p. 461) outline several benefits of SPC:
=elimination for inspection in the supply =chainreduction in scrap and inspection cost
=increased motivation among the workers
=increased productivity
=low investments leading to a decrease in costs
=better communication throughout the organization
241
Critical for process measurement is the question of?
which key performance indicators to select.
242
Sophisticated machines can provide numerous statistics, but the selection of the relevant ones for a particular process can be ?
challenging. The timing also needs to be specified.
243
Key performance indicator
A KPI is a performance metric for a business activity that measures a firm’s success versus a set of targets or objectives.
244
According to Weske the performance of each process should be measured with?
one or two metrics, called key performance indicators (KPI).
245
Each KPI needs to contribute to ?
a specific business goal.
246
The definition should include:
how to measure the KPI and what the target value is.
Moreover, upper and lower margins or limits should define an acceptable corridor for the value.
247
The graph below shows
these upper and lower margins or limits for the percentage of products that were produced without defects.
248
If the company tolerates a lower limit of --------percent, it is necessary that the firm react in month ------------because the lower limit was not reached. Corrective action was necessary, e.g., to -------------the machine.
97
five
calibrate
249
There are various types of process performance indicators. Absolute indicators are?
absolute values that are unrelated to some other number, e.g., 25 product defects on a chosen day.
250
Absolute indicators can be problematic. If?
the company produces more products on a given day, the number of defective products is likely to rise as well.
251
Consequently, many firms provide relative indicators. Relative indicators (also called ratio):
set the absolute numbers in relation to another key figure.
The number of defective parts could thus be reported in relation to the number of products produced on a given day (25 defective products that day / 5000 products produced that day = 1.25%).
252
When processes are redesigned, there are four typical dimensions for process measurement:
time, cost, quality, and flexibility.
253
A very popular measurement in a process is cycle time or throughput rate, which is ?
the total process time needed from start to end.
254
If a customer wants to register a car with the authorities, they need to go through several steps. The process at the registration office in Germany includes the following steps from the viewpoint of an office employee.
table
255
The overall time for the process is thus ?
the sum of all processes together:
picture
256
The theoretical capacity of each employee per hour can be represented in the following formula:
picture
257
In the example table, this would be
picture
258
In reality, the target capacity is probably set lower because?
bottleneck, the point in a process at which the flow of tasks gets reduced or stops completely (Heizer et al., 2020, p. 345). When we pour water from a bottle, the speed is determined by the width of the bottleʼs neck.
there might be a little bit of spare time before the next customer arrives at the employee’s desk.
259
The process with the lowest capacity is called a ?
bottleneck,
the point in a process at which the flow of tasks gets reduced or stops completely.
When we pour water from a bottle, the speed is determined by the width of the bottleʼs neck.
260
Imagine a different scenario in which each employee performs just one of the five tasks or activities at the car registration office. Then the processes can be displayed as
in the figure below.
261
The upper left-hand corner shows the step of the activity, e.g., “1” is checking and copying the customer ID.
262
The number at the bottom represents the process duration in seconds; the number on the right represents the capacity in one hour.
263
The process with the lowest capacity is the bottleneck. Outlined in red, the bottleneck in the graph is process 2 with 45 customers per hour. If a second employee supports the employee with process 2, the capacity of process 2 increases to 90 customers per hour, and the overall capacity could be increased to 80 per hour because the new bottleneck is process 4.
in the figure
264
Of course, this is just a hypothetical example to illustrate process capacity display, because?
if the six employees were to complete all steps sequentially, the total capacity would be 108 (6 x 18 customers per hour).
265
There are many more time-related key performance indicators:
(lead time,
downtime to operating time,
first past yield, etc.),
especially in manufacturing.
266
When analyzing and improving processes, financial indicators are:
it is a decrease in cost). Many firms redesign their processes to reduce cost,and thus cost reduction is emphasized (Dumas et al., 2018, p. 60).
also common.
267
The focus could also be on turnover, yield, or revenue (e.g., an increase in yield also increases a firm’s overall revenue because?
it is a decrease in cost). Many firms redesign their processes to reduce cost,and thus cost reduction is emphasized
268
Firms divide their costs into fixed costs and variable costs?
=(overhead costs which occur regardless of production processes or volume, e.g., infrastructure, software, equipment lease, and insurance)
=and variable costs (which can be linked to production volume, e.g., sales levels, the number of new employees hired for production
269
When redesigning business processes, firms often reduce these labor costs through?
automation, which in turn produces other costs (e.g., machine purchases;
270
The costs linked closely to production are :
operational costs, which are the cost for the daily operation of the process.
Some of these are fixed costs (e.g., insurance), and others are variable costs (e.g., cost of material and labor), whereas a major part of the costs are labor costs.
271
Quality is the third dimension for process measurement and can be seen from either?
the customer or the process management perspective.
272
Customer satisfaction can be measured using ?
the net promoter score or traditional satisfaction scales.
273
Popular measurements from the process measurement perspective are:
first pass yield (FPY)
and final yield (FY).
274
First pass yield provides ?
the percentage of units that pass the process without error on the first attempt (without rework) and is calculated the following way.
275
picture
If 1,000 units enter the production process and 20 are scrapped or reworked, then 980 are finished the first time according to the specification.
276
First pass yield would be 98 percent
picture
277
Final yield (FY) is the percentage of units that pass the process after the defective parts have been reworked (Herrmann & Fritz, 2018, p. 102):
picture
278
picture
279
Most assembly lines have several production steps where defects occur. Thus,?
it is interesting to understand the yield at the end of the production chain of several processes.
280
Therefore, the cumulative yield is calculated either using FPY or FY, depending on which is of-------------.
interest
281
The cumulative yield is the product of the individual yields of each production step:
picture
282
The description of the formula components is as follows:
-i is the number of the process steps.
-m is the total number of process steps.
-FYiis the first pass yield of process step i.
-FPYiis the final pass yield of process step i.
283
Let us suppose that the FPY of three production steps are FPY1= 98%, FPY2= 96%, and FPY3= 99%. To calculate the cumulative FPY, it is necessary to take the product of these:
picture
284
Of 100 products that go into the production process, 93.13 percent can be used without
-------------------
rework.
285
The importance of quality in combination with time can be illustrated with the car registration example.
Assume that customers have complained about poor service, and especially about long waiting times, at the car registration office.
Customers who have booked an online appointment find waiting times of more than 30 minutes unacceptable, but would accept to wait up to 15 minutes.
The percentage of customers who are served within 30 minutes should be set to 100 percent.
Because of the importance of this value, the manager should set this as a relevant performance measure.
Because 15 minutes waiting time is acceptable to customers, this could also be set as the target average waiting time or even as an upper limit as a performance objective.
If the process is then redesigned, the process requires a time frame, e.g., the performance objective should be reached three months after its redesign. With the added time frame, it is now called a performance target.
286
Flexibility is the ability to react to change and is an important dimension when?
measuring the effect of process redesign.
287
Runtime flexibility concerns changes during the execution of the process and can mean that ?
resources (e.g., employees) can perform different tasks within a process.
288
Build-time flexibility refers to ?
, a process that can cope with various cases or altering workloads (e.g., seasonal businesses, like ice cream shops), or that management makes changes to the structure or the process because of market or business partner demands
changes of the business structure
289
for example,
a process that can cope with various cases or altering workloads (e.g., seasonal businesses, like ice cream shops),
or that management makes changes to the structure or the process because of market or business partner demands.
290
Both individuals and organizations face problems (Krajnc, 2012). A problem occurs when?
the current state deviates from the targeted, desired state.
291
Quality management is closely linked to ?
defining process specifications and monitoring the process outcome.
292
In the context of process management, a problem occurs if there is?
failure to meet a requirement.
293
It is the task of quality management in a firm to?
eliminate problems and faulty processes.
294
Although sometimes people may be inspired by solutions to problems (e.g., in their sleep), most of the time, a more ---------------------------- toward problem-solving is necessary.
systematic approach
295
The PDCA cycle, DMAIC model, the eight disciplines method, and six sigma are these types of ?
systematic problem-solving approaches.
296
The plan-do-check-act (PDCA) management cycle originates from-----------------------------------------, who used it in ---------- and later in the -------.
W. Edwards Deming
1940s Japan USA
297
The plan-do-check-act (PDCA) management cycle is also referred to as?
the Deming Wheel,
the Deming Cycle,
or the PDSA cycle (where “check” is replaced with “study”).
298
Deming even preferred to use “study” because?
“check” might apply to situations where change is implemented.
299
Deming originally focused on ?
studying and comparing the results of improvement efforts and then changed the theory, if necessary (The Deming Institute, n.d.).
300
In the literature the term “Check” is often used like it is in the following table.
table
301
The PDCA cycle is an -------------------- tool. It is ongoing because the circle always ------------------ after its execution. Because of this circular approach, organizations that use it continously ------------their business --------------------.
evolving
restarts
improve
processes
302
The DMAIC model is ?
an extension of Deming’s PDCA cycle. It is used to analyze business processes and is the theoretical foundation to achieve six sigma.
303
The five phases in the model for a systematic analysis are in the table below.
304
In contrast to the PDCA cycle, this model includes
and emphasizes?
the measurement phase, in which the problem is described with quantitative measurese
305
The emphasis on perfection to the detriment of innovation is a ?
common critique of both the PDCA and DMAIC models.
306
If a firm only tries to achieve perfection in existing processes, they might not?
pay attention to rapid or disruptive changes to technology or work culture.
307
If a firm only tries to achieve perfection in existing processes, they might not pay attention to rapid or disruptive changes to technology or work culture?
Therefore, the approach is rather slow and seen as a limitation to knowledge management.
308
The eight disciplines method, also called 8D:
was created in the USA after the Second World War.
It was used by the US Defense Department as part of a quality standard
and was not developed by the Ford company as is sometimes reported.
309
The following table describes the steps.
310
The method can be used for?
a system or
a process level for continuous improvement
or for taking corrective action on non-conformities.
311
When the method is used on a product, it is mainly used to ?
solve product-related problems that result from internal or external customers.
312
When the method is used on a product, it is mainly used to solve product-related problems that result from internal or external customers.
Thus, it can be used to eliminate deviations from suppliers, as well as complaints from end customers.
313
8D forms can guide the team through?
the process.
It is the task of the team coordinator to follow the steps
carefully.
314
Six sigma is
a helpful tool to understand complex processes and prevent defects.
It applies the DMAIC process improvement methodology to reduce defects defined by internal or external customers, depending on who receives the process output.
Six sigma was first introduced by Motorola in 1979 and used by firms like General Electric, Sony, and AlliedSignal in the early 1990s.
315
Six sigma is a method for quality ---------------------and a -------------------------concept. As a method for
----------------achievement,
achievement
statistical
quality
316
it includes every type of work in the manufacturing process (e.g., production), but also?
any related support processes from maintenance, marketing, and personnel.
317
As a statistical method, six sigma is used to reduce?
variation in process performance.
318
The number six corresponds to six standard
----------------------------. In six sigma, the process may only deviate ------------------standard deviations from perfection (-------------------), which essentially means that there are zero defects. Specifically, this means that six sigma strives for processes in which the mean of the individual values is not more than --------------------- the standard deviation away from the nearest tolerance limit.
deviations
three
target mean value
three times
319
picture
320
The graph above shows a standard distribution from Gauß, which should be familiar from---------------------------- classes.
math or statistics
321
Sigma (σ) refers to?
μ corresponds to?
the standard deviation
the target mean value.
322
Six sigma means that?
the distribution of mean values is between —3 and +3 standard deviations around the target mean.
323
This distribution implies that------------- percent of all values lie within this range of------------------------standard deviations in a standard.
99.7
+3 and —3
324
normal distribution. By definition, the standard normal distribution has?
mean of 0
and a standard deviation of 1.
The remaining 0.3 percent are outside the six sigma range.
325
normal distribution. By definition, the standard normal distribution has mean of 0 and a standard deviation of 1. The remaining 0.3 percent are outside the six sigma range. Because?
a defect rate of 0.3 percent is still seen as too much,
a security tolerance of 1 standard deviation is often added on both sides,
and the range is —4 to 4 sigma around the mean
326
When firms use six sigma,:
a cross-functional team is built,
which then strictly applies the DMAIC method and uses numbers,
graphics, and other analytical tools to find and eliminate the defect.
327
Using six sigma can initially lead to rework and frustration until most major defects are eliminated or alternative solutions are found (Kerzner, 2017, p. 722). Because?
the firms that introduced six sigma had tremendous quality and productivity gains, it is now used by tens of thousands companies worldwide (Herrmann & Fritz, 2018, p. 129).
328
A simple process is ?
one in which a firm uses its resources, performs value-adding activities, and, in the end, delivers a product or service.
329
The goal of process management is to?
achieve an intended outcome in four stages of process management: prepare, describe, optimize, and improve continuously.
330
Organizational and operational processes originate from?
a firm’s business goals and strategies and are closely linked to the its vision.
331
It is important that firms clearly define?
=how processes are structured in their company =and determine who is designing, analyzing, and optimizing these processes.
332
They should assign a process owner to be responsible for?
the process and its correct and efficient execution.
333
Additionally, to measure performance,?
KPIs are used.
334
These key performance metrics measure the firm’s?
Firms eliminate problems through systematic quality management. Because problems usually do not simply solve themselves, and the solution is not immediately evident, the use of systematic problem-solving techniques like the PDCA cycle, DMAIC model, the eight disciplines method, and six sigma are strongly recommended. Six sigma has successfully been used to increase quality and process efficiency by thousands of firms around the world.
success toward a set of targets or objectives.
335
Firms eliminate problems through systematic quality management. Because?
problems usually do not simply solve themselves, and the solution is not immediately evident,
the use of systematic problem-solving techniques like the PDCA cycle,
DMAIC model, the eight disciplines method, and six sigma are strongly recommended.
336
Six sigma has successfully been used to increase?
quality and process efficiency by thousands of firms around the world.
