Increasing Productivity and Quality

State the connection between productivity and quality.

     Productivity is a measure of economic performance. It is a ratio of how much is produced relative to the resources used to produce it. Quality is a product's fitness for use. An emphasis solely on productivity or solely on quality is not enough. Competition in today's business world demands high levels of both productivity and quality.

Describe the decline in U.S. productivity and why some consider it a crisis.

     Although the United States is the most productive country in the world, other nations are closing the gap as the U.S. productivity growth rate slows. Manufacturing productivity is increasing, but the service sector is bringing down the nation's overall productivity growth. In addition, certain industries, companies, departments, and individuals are less productive than others. If these trends continue, several other countries will surpass the United States in productivity by the next decade.

Explain total and partial measures of productivity and how they are used to keep track of national, industry, and company productivity.

     Total factor productivity is a complex measure that includes all types of input resources&-labor, capital, materials, energy, and purchase business services. Partial productivity measures use fewer input factors. Labor productivity is the most often used national productivity measure. The United States also measures capital productivity which has stagnated in recent years. Most companies develop their own measurement for partial and total productivity within the firm.

Identify the activities involved in total quality management and describe three tools that companies can use to achieve TQM.

     Total quality management is the management (planning, organizing, leading, and controlling) of all the activities needed to get quality goods and services into the marketplace. It requires managers to set goals for and implement the processes needed to achieve high quality levels and high reliability levels. Statistical tools such as process capability studies and control charts can help keep quality consistently high. Quality/cost studies, which identify potential savings, can help firms improve quality. Quality circles (quality improvement teams) also can improve operations by more fully involving employees in decision&-making.

List six ways in which companies can compete by improving productivity and quality.

     To remain competitive, a business must first and foremost stay close to customers, to better know their needs. To increase quality and productivity, businesses must invest in innovation and technology. They must also adopt a long&-run perspective for continuous improvement. Smaller can be better; many smaller businesses have succeeded because they provide quality service and job satisfaction. Placing greater emphasis on the quality of work life can also help companies compete. Satisfied, motivated employees are especially important in increasing productivity in the fast&-growing service sector.