ISO 9000

1
ISO 9000

• International Organization for Standardization
• Internationally accepted guidelines for quality
  management and standards
• Cost of quality 20 - 25 percent of sales

2
Quality and Strategic Cost Management

• Quality and profitability are related
• Premium on quality leads to larger market share
• Premium on quality leads to higher ROI

3
Elements of TQM

• Continuous improvement
• Customer focus
• Employee involvement

4
IMAs TQM Process

• Year One
• Quality council and staff
• Executive quality training
• Quality audits
• Gap analysis
• Strategic quality improvement plans
• Year Two
• Employee quality training
• Quality teams
• Establish measurement system and goals
• Year Three
• Revise compensation system
• Launch external initiatives (value chain)
• Review and revise

5
Other Quality Thoughts

• Poor quality is disastrous for service industries
• Increased quality increased productivity
• True management accountants must increase their
  focus on quality

6
Ansari MMQC

• Quality costs costs incurred to ensure
  products/services meet customers expectations
• Features
• Performance

7
MMQC

• Strategic Implications of Quality Cost System
• Supports quality as a strategic adv.
• Provides the total cost of quality to a product
• Assists in avoiding non-productive time

8
MMQC

• Types of quality costs
• Prevention
• Appraisal
• Internal failure
• External failure

9
MMQC

• Quality Management System
• Understand customer requirements
• Establish quality goals
• Set work processes (P)
• Perform work monitor output (A I)
• Deliver product monitor cust. satisf.(E)
• Perform root cause analysis

10
MMQC

• Quality Cost and Customer Satisfaction
• Total firm spending
• Spending by category
• Amount of financial benefits
• Focus on customer quality concerns
• Elimination of root causes

11
MMQC

• Value Index
• Develop customer perf. rankings
• Estimate quality costs for each element
• Compute the value index
• Cust. Perf. / Cost
• Root cause analysis and fish bones

12
MMQC

• Attribute Implications
• Technical
• Improved decision relevance
• Process understanding
• Behavioral
• Focus on Customer Requirements
• Improved quality attitudes
• Better mgt. Visibilitybut watch out for
  padding
• Cultural
• Quality as a way of life
• Quality as an ethical value