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ISO 9000

ISO 9000. International Organization for Standardization Internationally accepted guidelines for quality management and standards Cost of quality = 20 - 25 percent of sales. Quality and Strategic Cost Management. Quality and profitability are related

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ISO 9000

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  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. IMA’s 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 • Management accountants increase the focus…see page 186.

  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. Visibility…but watch out for “padding” • Cultural • Quality as a way of life • Quality as an ethical value

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