Financially Focused Quality

by Cappels; Thomas

• ISBN13: 9781574442489
• ISBN10: 1574442481
• Format: Hardcover
• Copyright: 1999-06-17
• Publisher: CRC Press
• More Book Details
• Purchase Benefits

Summary

The author introduces Financially Focused Quality (FFQ) to the business world. The FFQ management strategy has been evolving over the years at Lockheed Martin and has been documented as having saved them millions of dollars. FFQ takes TQM and Full-Cycle Corrective Action (FCCA) a critical step further by including a financial viewpoint at the beginning of process improvement activity, and integrating recognition of cost in each step of the process. In the 21st century, technical expertise alone will not be enough. This book offers valuable financial concepts and insights that will greatly improve your worth to your companies. Equipped with FFQ concepts and methodologies, you will be able to observe your workplace from a financial viewpoint, enhancing your value as a decision maker and leader. The book presents the methodology for insuring a company-wide education on key financial issues. With an understanding of basic concepts, the book explains FFQ elements and their use in making and implementing business decisions. The final chapters contain case studies showing successful FFQ applications. Financially Focused Quality: TQM in the 21st Century gives you the skills necessary to implement FFQ in work environments, offering the prospect of improving the translation of quality and cost-cutting measures to the bottom line. It is an important professional reference and provides the financial education that all employees should receive to become leaders in the 21st century.

Table of Contents

Update on Quality	1	(8)
Introduction	1	(1)
Focus on Quality	2	(1)
Quality Becomes Big Business	3	(1)
The Business of Quality	4	(1)
Evolution of the Corporate World	5	(1)
Financially Focused Quality	6	(1)
Self-Study/Discussion Questions	6	(1)
References	7	(2)
Employee Involvement in Quality Management	9	(22)
Introduction	9	(1)
Human Resources	10	(4)
Employee Benefits	10	(1)
Retirement Plan	10	(1)
Medical and Dental Benefits	11	(1)
Vacation/Holiday Benefits	11	(1)
Sick Pay/Salary Continuation Policy	11	(1)
Employee Stock Ownership Plans	11	(1)
Employee Stock Options	12	(1)
Assistance With Further Education	12	(1)
Company Training Programs	13	(1)
Flexibility of Shifts	13	(1)
Transportation and Commute Alternatives	13	(1)
Employee Recreation Facilities	13	(1)
Executive Perks	14	(1)
Summary	14	(1)
Employee Participation in Quality Management Activities	14	(15)
Total Quality Management	15	(1)
Total Quality Service	15	(1)
Empowerment and Ownership	16	(1)
Employee Suggestion Systems	17	(1)
Cost Reduction or Avoidance Programs	18	(1)
Continuous Quality Improvement	18	(1)
Process Management	19	(1)
Pay for Performance	19	(1)
Participative Management and Team Building	20	(1)
Quality Circles	20	(1)
Task Force Teams	21	(1)
Natural Work Teams	21	(1)
Process Improvement Teams	22	(1)
Effective Meetings	22	(3)
Meet at the Right Time and Place	25	(1)
Meeting Locations	26	(1)
Possible Roles of Attendees	26	(1)
Brainstorming	27	(1)
Affinity Diagrams	28	(1)
Lean Process	28	(1)
Kaizen Event	28	(1)
Six Sigma	28	(1)
Summary	29	(1)
Self-Study/Discussion Questions	29	(1)
References	29	(2)
Managerial Strategies for Quality Management	31	(18)
Introduction	31	(1)
Total Improvement Management	32	(1)
The Financially Focused Quality Blueprint	32	(3)
Component 1: Direction	33	(1)
Component 2: Basic Concepts	34	(1)
Component 3: Profit Generation	34	(1)
Component 4: Enterprise Impacts	35	(1)
Component 5: Rewards and Recognition	35	(1)
Manufacturing Resource Planning	35	(1)
Just-in-Time Manufacturing	36	(1)
Business Objectives	36	(1)
Vision Statements	36	(3)
Mission Statement	39	(1)
Benchmarking/Best Practices	39	(1)
Training	40	(1)
Measurement Process	41	(1)
Core Competencies	42	(1)
Outsourcing	42	(1)
Reengineering	43	(1)
Restructuring	43	(1)
Rightsizing/Smartsizing	44	(1)
Downsizing and Budget Cutting	44	(1)
Partnerships With Suppliers	45	(1)
Quality Costs and Poor Quality Costs	45	(1)
Full-Cycle Corrective Action	46	(1)
Cost as an Independent Variable	46	(1)
Summary	46	(1)
Self-Study/Discussion Questions	46	(1)
References	47	(2)
Quality Management Systems and Customer Focus	49	(14)
Introduction	49	(1)
Quality Management Systems	50	(1)
Standardization	50	(2)
The Euro	50	(1)
Movie, Video, and Computer Products	51	(1)
8-mm Movies: Super 8 vs. Single 8 Movie Formats	51	(1)
Beta vs. VHS Videotape Formats	51	(1)
VHS vs. 8-mm Videotape	51	(1)
Macintosh vs. Personal Computers	52	(1)
ISO 9000 and ISO 14000 Series	52	(3)
ISO 9000 Series	53	(1)
ISO 14000 Series	54	(1)
External Customer Focus	55	(1)
Customer Feedback	56	(5)
Expensive Products and Customer Feedback	56	(1)
Inexpensive Products and Customer Feedback	57	(1)
Service Industry Feedback --- Surveys and Questionnaires	58	(1)
Service Industry Feedback --- Real Time (Restaurant)	58	(2)
Service Industry Feedback --- Real Time (Hotel)	60	(1)
Unsolicited Letters	60	(1)
Summary	61	(1)
Self-Study/Discussion Questions	62	(1)
References	62	(1)
Quality Control	63	(24)
Introduction	63	(1)
Dr. W. Edwards Deming	63	(2)
Process Quality Control and Statistical Analysis	65	(1)
Diminishing Returns of Quality Control Measures	65	(2)
Quality Control Definition and Goals	67	(1)
Quality Assurance Organization	67	(1)
Closed-Loop Corrective Action	68	(2)
Relationship of Financially Focused Quality to Closed-Loop Corrective Action	70	(6)
CLCA Operations and Failure Reporting Systems	70	(1)
Supplier Operations	70	(4)
Fleet and Field Facilities Operations	74	(1)
Quality Engineering	74	(2)
Summary	76	(1)
Quality Assurance and the Product Life Cycle	76	(1)
Research and Development Phase	76	(1)
Design Phase	76	(1)
Production Phase	77	(1)
Operation Phase	77	(1)
Disposal Phase	77	(1)
Cycle of Quality Activities	77	(1)
Quality Assurance Functions	78	(5)
Receiving Inspection	78	(1)
In-Process Inspection	79	(1)
Shipping Inspection and/or Final Inspection	79	(1)
Accelerated Test	79	(1)
Configuration Management	79	(1)
Destructive Testing	80	(1)
Engineering Evaluation Test	80	(1)
Electrical In-Process Inspection	80	(1)
Fabrication and Assembly Inspection and Test	80	(1)
Failure Analysis	80	(1)
Failure Diagnosis	80	(1)
Failure Verification	81	(1)
First Article Compatibility Test	81	(1)
Material Review Board	81	(1)
Mechanical In-Process Inspection	81	(1)
Metrology Audits	81	(1)
Parts Application Review	81	(1)
Product Evaluation Test	81	(1)
Quality Assessment	82	(1)
Quality Audit	82	(1)
Receiving Inspection and Test	82	(1)
Source Acceptance	82	(1)
Source Verification Inspection	82	(1)
Statistical Process Control	82	(1)
Value Engineering	82	(1)
Summary	83	(1)
Traditional Finance Involvement in the Cycle of Quality Activities	83	(2)
Completing the Cycle of Quality Activities: Finance	85	(1)
Self-Study/Discussion Questions	86	(1)
References	86	(1)
Avoiding Product Liability: Design and Development	87	(20)
Introduction	87	(1)
Product Safety	87	(1)
Responsibility for Product Safety	88	(1)
Manufacturer Liability	88	(1)
Basic Conditions of a Product Liability Case	89	(1)
Manufacturing Defects	90	(1)
Quality Assurance vs. Product Liability	90	(1)
Evolution of Quality Assurance	91	(1)
Relationship Between Quality Assurance and Product Liability	92	(1)
Systematic Approach to Quality and Safety Assurance	92	(1)
Product Design Safety	93	(1)
Purchased Material Quality	93	(1)
Manufactured Product Quality	93	(1)
Product Safety After Delivery	94	(1)
Quality Control and Product Liability Aversion	95	(1)
Product Safety-Related Quality Information	95	(1)
The Financially Focused Approach to Product Safety-Related Corrective Action	96	(1)
Product Design: The Beginning	96	(4)
Product Design Safety	96	(1)
Product Safety Specification	97	(1)
Standards for Design and Manufacture	97	(1)
Evaluation of Safe Product Design Quality	98	(1)
Design and Documentation Reviews	98	(1)
Safety Design Review	99	(1)
Classification of Safety Critical Characteristics	100	(1)
Design and Qualification Test	100	(1)
Vendor Materials Control	101	(4)
Sources for Raw Materials, Parts, and Components	101	(1)
Make-or-Buy Committees	101	(1)
Supplier Selection	102	(1)
Ordering Cost-Effective Quantities	102	(1)
Conforming to Requirements	102	(1)
Suppliers' Performance Histories	103	(1)
Supplier Quality Evaluation Survey	103	(1)
Supplier Evaluation Questionnaire	104	(1)
Purchasing Provisions and Specifications	104	(1)
Summary	105	(1)
Self-Study/Discussion Questions	105	(1)
References	106	(1)
Avoiding Product Liability: Manufacturing and Use	107	(30)
Introduction	107	(1)
Inspection and Test of Vendor Components	107	(3)
First Article Inspection	108	(1)
Source Inspection	108	(1)
Vendor Inspection	109	(1)
Receiving Inspection	109	(1)
Inspection Records During the Receiving Cycle	110	(1)
Source/Receiving Inspection: Corrective Action	110	(1)
Inspection of Storage Facilities	110	(1)
Inspection and Testing in Manufacturing	111	(1)
The Obligation To Inspect and Test	111	(1)
Inspection and Test Areas	111	(1)
Measurement	112	(1)
Training of Inspectors	113	(1)
Inspection Instructions	114	(1)
Inspection Procedure Manuals	115	(1)
Industrial Quality Assurance	116	(1)
Assessing the Production Process	116	(1)
Process Capability Studies	116	(1)
Mandatory Process Evaluation	116	(1)
The Manufacturing Process	117	(1)
Process Control	117	(1)
In-Process Inspection and Testing	118	(1)
Tolerances	119	(1)
Nonconforming Material	119	(1)
Quality Assurance Through Statistics and Sampling	120	(5)
Definition of Terms	120	(1)
Sampling Inspection	121	(1)
Random Numbers	121	(2)
Sampling Plans	123	(1)
Degree of Inspection	124	(1)
Sampling Plans vs. 100% Inspection	124	(1)
Arguments Against Sampling Plans	125	(1)
Inspector Errors	125	(1)
Consumerism	126	(1)
Shipping Inspection	126	(1)
Packaging for Product Safety	126	(1)
Product Safety in the Field	127	(1)
Service Publications	127	(1)
Field Results	127	(1)
Product Recall	128	(1)
Management Resources for Assuring Quality	129	(1)
Accredited Laboratories	129	(1)
Audit Control	130	(2)
Vendor Audit	130	(1)
Product Safety Audit	131	(1)
Quality Assurance Evaluation Checklist	132	(1)
Summary	133	(1)
Self-Study/Discussion Questions	134	(1)
References	134	(3)
Financial Administration and Financially Focused Quality Training	137	(26)
Introduction to Financially Focused Quality	137	(1)
Financial Training	138	(1)
Cycle of Financial Activities	139	(2)
Financial Concepts	141	(5)
Accounting Classifications	142	(1)
Direct vs. Indirect Costs	142	(1)
Labor vs. Nonlabor Costs	143	(1)
Direct-Direct and Allocated-Direct Costs	144	(1)
Overhead Costs (Indirect Costs)	144	(1)
Work Breakdown Structure	144	(1)
Cost Accumulation Structure	145	(1)
Charge Numbers	145	(1)
Timekeeping, Timecards, and Cost Segregation	146	(4)
Virtual and Manual Timecards and Labor Recording	148	(2)
Forecasting Personnel	150	(4)
Criteria	150	(1)
Proposals	150	(1)
Training	150	(1)
Facilities	150	(1)
Human Resources	151	(1)
Forward Pricing Rates/Overhead and General & Administrative Costs	151	(1)
Forecasting Direct Personnel	151	(1)
Yield/Realization Factor	152	(2)
Forecasting Problem	154	(1)
Contracting Modes (Fixed Price/Cost Reimbursable)	154	(2)
Fixed Price	154	(1)
Firm Fixed Price	154	(1)
Fixed Price Incentive	155	(1)
Cost Reimbursable Contract	155	(1)
Cost Plus Fixed Fee	155	(1)
Cost Plus Incentive Fee	155	(1)
Cost Plus Award Fee	156	(1)
Disallowances	156	(1)
Rates per Direct-Labor Hour	156	(1)
Teaching Financially Focused Quality and Financial Concepts	157	(3)
An Effective FFQ Training Guideline	158	(2)
Examples of Financially Focused Training Materials	160	(1)
Self-Paced Training	160	(1)
Summary	160	(1)
Self-Study/Discussion Questions	161	(1)
References	161	(2)
Financial Functions	163	(16)
Introduction	163	(1)
Proposals and Pricing	163	(7)
Commercial Contracting	163	(1)
Government Contracting	164	(1)
Proposal Preparation Flow	165	(1)
Raw Resource	166	(1)
Proposal Components	166	(1)
Basis of Estimate	166	(2)
Elements of a Historical Basis of Estimate	168	(1)
Engineering Estimates	168	(1)
Security Guidelines for Cost Proposals	168	(1)
Audit Checklist for Basis of Estimate	169	(1)
Pricing	170	(1)
Budgeting	170	(1)
Government Appropriations and Funding Fences	171	(1)
Management Reserve and Undistributed Budget	171	(1)
Reporting	172	(1)
General Accounting	173	(1)
Payroll Accounting	173	(1)
Accounts Payable	174	(1)
Financial Accounting	175	(1)
Cost Accounting	175	(1)
Contract Closure	176	(1)
Summary	176	(1)
Self-Study/Discussion Questions	177	(2)
Financially Focused Quality Performers and Components	179	(24)
Introduction	179	(1)
Financially Focused Quality Overview	180	(3)
Failure Identifier or Opportunity Identifier	181	(1)
Failure Notice	181	(1)
Process Improvement Recommendation	181	(1)
Process Improvement Coordinator	181	(1)
Failure Analyst or Process Analyst	181	(1)
Process Analysis Meeting	182	(1)
Finance	182	(1)
Process Improvement Cost Analysis	182	(1)
Process Improvement	182	(1)
Process Improvement Follow-Up Plan	182	(1)
Product Support	183	(1)
Process Improvement Closure Notice	183	(1)
Failure or Opportunity Identifier	183	(3)
Process Improvement Begins With Opportunity Identification	185	(1)
Methods for Failure and Opportunity Identification	185	(1)
The Failure and Opportunity Identification Process	186	(4)
Customers	188	(1)
Government Failure Identification	188	(1)
Warranty Service Department	189	(1)
Failure Identifiers in the Factory	189	(1)
Inspectors	189	(1)
Manufacturing Employees	189	(1)
All Other Company Employees	189	(1)
Summary	190	(1)
Failure Notice	190	(3)
Failure During Manufacturing	190	(1)
Failure: Customer Return	191	(1)
Failure: Hotel Industry	192	(1)
Generic Failure	192	(1)
Process Improvement Recommendation	193	(9)
Process Improvement Recommendation Success Factors	195	(1)
Ease of Processing	195	(1)
Low Implementation/Administration Costs	195	(1)
Mandatory Management Involvement	196	(2)
Process Improvement Recommendation Motivation	198	(2)
Examples of Process Improvement Recommendations	200	(1)
Illustration of Acting on a Process Improvement Recommendation	201	(1)
Summary	202	(1)
Self-Study/Discussion Questions	202	(1)
Financially Focused Quality Process Improvement Coordination and Decision-Making	203	(30)
Introduction	203	(1)
Process Improvement Coordination	203	(3)
When Process Improvement or Corrective Action Is Not Required	204	(1)
Time Requirements for Process Improvement Coordination	205	(1)
Time Requirements for Process Improvement Recommendation Coordination	205	(1)
Time Requirements for Failure Notice Coordination	205	(1)
Process Improvement Recommendations: Related Functions of the Process Improvement Coordinator	206	(1)
The Financially Focused Quality Mindset	206	(2)
The Process Improvement Coordinator and the Failure Notice	207	(1)
Auto or Aircraft Manufacturing Failure	207	(1)
Television Manufacturing	208	(1)
Service Industry Failure #1	208	(1)
Service Industry Failure #2	208	(1)
The Coordination Process	208	(4)
Coordination of Process Improvement Recommendation Projects	209	(1)
Coordination of Process Improvement Recommendation Concerns	210	(2)
Coordination of Failure Notices	212	(1)
Failure Analysts	212	(2)
Process Analysis Meeting	214	(2)
Brainstorming	216	(4)
Topic or Objective Definition	217	(1)
Recording Ideas	218	(1)
Presentation of Rules	218	(1)
Take Turns	218	(1)
Place Maximum Effort on Idea Generation	218	(1)
Don't Throw Anyone into a State of Self-Conscious Distress	218	(1)
Everyone Has To Participate	219	(1)
Relax and Have a Sense of Humor	219	(1)
Exaggerate	219	(1)
Condense Ideas and Be Concise	219	(1)
No Judgments Allowed	219	(1)
Completion of Brainstorming and Discussion	220	(1)
Financially Focused Quality and Probabilities	220	(2)
Selection	221	(1)
Components of Effective Brainstorming	221	(1)
Process Improvement Cost Analysis	222	(2)
Process Improvement Follow-Up Plan	224	(2)
Process Improvement Closure Notice	226	(1)
Financial Administration	227	(2)
Product Support Organizations	229	(1)
Summary	230	(1)
Self-Study/Discussion Questions	231	(1)
References	231	(2)
Case Study A: Perky Pets --- Commercial Manufacturing	233	(12)
Case Study B: Financially Focused Quality Implemented in Software Engineering	245	(12)
Case Study C: Bob's Purple Bayou Cafe	257	(8)
Case Study D: One Company's Success With Outsourcing	265	(8)
Case Study E: Hotel Operations	273	(14)
Index	287