Archive for the 'Quality Management' topic

20^th century management lays structures over the business to control the enterprise

The operations and development of the enterprise today are controlled by structures laid over the business for:

• Financial and statistical accounting through a chart of accounts structure
• Cost accounting through activity, center, and product structures
• Capital development control through project structures and asset registers
• Quality control through TQM, six sigma, and other quality structures

The control provided by each of these structures is limited to known entities and certain elements. Financial control covers capital for tangible assets and finances for cash receipts and expenditures, cost control is limited to known costs against selected elements like activity or project, non-financial control is sporadic depending on individual management, and quality focuses on performance producing selected end-product results.

Accounts record accrued and actual receipts and expenditures from point money comes in to the point money is spent. There is no control of the business cycle from the point money is spent until value is created to enable money to come in. Accounting control is enforcement of rules and principles rather than providing accurate information for business control.

Capital development lumps costs together as a project or tangible asset. The range or performance solutions developed are not controlled and may be classified as intangible assets. No method or information is provided to plan and control return on specific capital investments in performance solutions. Projects are not organized to capture development costs for implemented solutions and plan value-added to the business from solution utilization. Capital worth numbers are sporadic for some asset and liability solutions, but real capital worth in the capability to produce future business value is unknown.

Each structure is separate from other structures and uses its own terminology and definitions to describe the enterprise. Each structure introduces high costs and much effort to collect and report information. But, none of these overlaid structures can control the actual business.

The actual business must be controlled for each component of the current and planned business

In order to control the business the actual business must be organized, planned, and directed as explained in previous articles. [more...].

Methods like Total Quality Management and ISO 9000 Standards did not provide the quality management needed

We have had structures like Total Quality Management (TQM) and the ISO quality system for ISO 9000 standards and certification, which were found lacking as a management method. We also reengineered our business process with BPR, specifically to help us manage performance quality. But, performance quality proved difficult to comprehend and manage. Six Sigma provides another structure for our final production quality. Now we have business process and performance management (BPM) to manage the quality of our processes and performance. Even with all this, we still have not found a way to manage quality as the business routine of everyone in the enterprise.

R-pM manages customer determined quality result by result

Result-performance Management (R-pM) organizes the business by organizing results produced across the business as one-off results or as result chains and by organizing the capital utilized as performance solutions to produce each result. With an organized business, the company can manage quality as an attribute of results, not performance, and can manage real quality for any result, not just final results from production. Every result has a customer who is willing to pay a result value for a determined level of quality. Quality and value of each result must be acceptable to the customer. [more...].

There are many business management articles and a lot of talk about value, be it value creation, value propositions, value management, or value chains. With 20^th century management all we can do is write articles and talk. We cannot build actual 21^st century value-quality chains as explained in the new download “How to Build Value-quality Chains“, available now at Result-performance-Management.com.

20^th century management cannot build or manage value or quality chains

20^th century management mixes performance and the output results together as “performance” and manages “performance quality”. 20^th century business process and information systems are directed at a final result and do not specifically define or manage the results leading to the final result. So, there is no way to manage value or to build value or quality chains.

The link in the value-quality chain is the economic output result

Value-quality chains form naturally by organizing the business for 21^st Century Management using Result-performance Management (R-pM). The business consists of two entities.

• Results: The economic outputs from business production that form the links in the chain
• Performance solutions: The capital utilized in business production to produce a result at each link

Any area of the business can be organized by defining the results produced and the performance solutions utilized.

Each result in the value chain has a value, costs, and a value-added

Results form a natural chain of results that starts with input results from suppliers. [more...]

The business is the utilization of capital as business solutions in performance to produce business results. The objective of all human capital utilized as business solutions must be to produce business results. Business results are the specific economic outputs of value. Results can be counted and may be measured in other ways.

Results are managed as separate entities in today’s enterprise

Results include a wide variety of output entities that are separately defined or remain undefined today. The enterprise may have records on material, products, orders, invoices, etc. Each of these separate entities is part of one set: results. The enterprise manages each identified result separately as its own entity.

Many valuable results are produced but are not recorded or managed as something of value that incurs the performance cost of utilizing business solutions.

Defining results as one set enables management of result commonalities

Defining all outputs as results enable the enterprise to manage the common attributes of all results, such as:

• The identifier and description
• The manager responsible to produce the result
• The result customer
• The volume of results planned and produced
• Quality determinates for the result
• The value of the result
• The total performance solution charges against the result
• Result metrics to measure the quality and impact of the result
• Result goals
• Result relationships
• Access to knowledge on producing the result
• Result risk factors and incidents
• Result symptoms encountered

Results are defined down to the level of detail desired by management in order to manage all of the economic outputs produced.< [more...]

What does it mean to be competitive? Is it an attitude or a situation? Being competitive is both an attitude to strive to improve continually and a situation where performance enables better results than the competition.

Being competitive in business is not just companies competing in a market. It is people within the companies competing to increase their worth to the company. It is nations competing to improve the performance of their industries and companies. And then it is companies having an attitude to be even more competitive continually in a changing world market with new sources of competition.

In order to be more competitive you must improve performance to produce better results

If you want to be more competitive as a situation, you need ways to improve your performance to produce better results. In sports, your performance must produce a score result that beats the competition. If your company wants to be more competitive, the company also must improve performance to produce better results. [more...]

Result-performance Management (R-pM) replaces business process management with value chain management and business collaboration

Result-performance Management (R-pM) enables the enterprise to replace business process management with result-performance management and to replace re-engineered business processes with result value-quality chains. This enables the enterprise to manage result value-added and to collaborate with business partners, who use R-pM, to re-link value-quality chains for shared value. Review the article “Un-reengineer Business Processes to Create Result Value-quality Chains“, and join the R-pM Community to download “How to Build Result Value-quality Chains”

R-pM manages the result value and performance costs for each result in the chain, to manage result value-added across the chain

R-pM can do this because R-pM defines and manages the result, which provides the specific economic output of value that forms each link in the chain. R-pm also manages each performance solution utilized to produce the result to determine the cost and value added at each link in the chain. Performance solutions are classified and categorized to have comparable and benchmarked costs for alternative solutions used to produce a result. This enables comparison of alternative linking of value-quality chains to produce the highest shared value. [more...].

Corporate quality is not in business process performance quality

Conventional business process re-engineering and management emphasizes the importance of performance quality. But the re-engineered business process mixes results produced in the process with the performance across the process. In an article posted on 16 February 2006, Striving for quality performance, we discussed how many enterprises emphasize performance quality in their business processes. This became the conventional method, after enterprises reengineered their business processes to manage performance quality.

Our conclusion was that we need a better way to understand quality consistently across the whole enterprise, to understand the impact of bad quality, and to isolate problems producing bad quality. To find out how Join the R-pM community to review the download “How to Build Result Value-quality Chains”

Do you look for performance quality when you buy an input to your value-quality chain?

Does “performance quality” make sense to you? When you buy something, are you concerned about “performance quality”? Even for a service, what is more important, the performance quality in delivering the service or the quality of the result of the service? The result of the service is your input result, which you expect to be of high-quality and to which you add value. [more...].

The Business Transformation Problem

Over the past 10 years or so, business enterprises spent large sums on business transformation in such areas as business process reengineering, enterprise resource planning, supply chain management, and customer relationship management in expectation of enormous benefits and competitive advantage. We discussed this in the article of 22 May 2006, Going for true business transformation.

In the article, we explained how business transformation is just a big word for rearranging and upgrading conventional business processes, information systems, and other structures overlaid on the business to perform the same operations, administration. and development. Instead of transforming the enterprise to organize and manage business reality and solve problems, we kept creating bigger problems, requiring additional solutions. Now, business transformation conjures up “out of the frying pan into the fire”.

But, business transformation does convey the objective if we want to properly organize and manage our business.

The Business Transformation Solution

We define business transformation as redefining and restructuring the enterprise to organize and manage the business, to provide the one fundamentally-sound right way for business success. Once the business has been transformed, it will change naturally with the times and never need further transformation.

There is one fundamentally right way to organize the business for true and beneficial business transformation. [more...].

In an article on 31 March 2006, we discussed understanding the totality of costs and charging the right things. This article continues the discussion of costing.

The Corporation does not account for all costs and does not charge known costs to the right entity

We noted two big questions concerning our conventional methods of costing, such as cost accounting and activity based costing:

1. Are we gathering all of our costs?
2. Are we charging our costs to the right things?

The first question; Are we gathering all of our costs? Here we have two problems:

1. We are incurring many “unknown costs”, costs that we don’t measure and capture
2. We don’t have one entity that defines our costs, so we have to cost various entities that we can think of or “known costs”

Today, virtually every enterprise has “intangible assets”. As we have said before, these intangible assets really are unmanaged capital that we utilize in our performance. So we spend a lot of time and money capturing known costs of tangible assets and neglect the even more important unknown costs of intangible assets.

We spend our effort costing separate entities like assets, employees, supplies, payables, etc. This haphazard approach does not have a baseline to define all of the costs we incur, and allows us to skip costs that we do not understand.< [more...]

Performance quality is a fundamental concept of Business Process Re-engineering

Many enterprises emphasize quality in their business processes. How does your enterprise define quality? Do you manage the quality of your processes? How do you determine good quality? How do you prevent bad quality in one part of a process from producing bad quality in another part? Should we strive for high-quality performance?

Other quality management methods manage the quality of a final output

I have looked at business processes and attempts to manage quality. Normally quality can be seen in the final output from the process. Methods like Six Sigma may be used to manage defects. Lean Management may be employed for a quality process. These methods have proven value. But they do not necessarily enable us to control quality through a complete process. What about quality outside of production, where these methods are not employed.

Corporations need to manage quality across the corporation

We need a way to understand quality consistently across the whole enterprise, to understand the impact of bad quality, and to isolate problems producing bad quality. We need to understand what actually embodies quality and manage quality wherever it exists.

Result-performance Management (R-pM) manages quality as an attribute of every result produced

The answer is Result-performance Management (R-pM), which identifies and manages every result produced by the enterprise and the performance solutions utilized to produce each result. Quality is an attribute of the result, not performance! Effectiveness is the attribute of performance solutions. Use R-pM to manage effective performance to produce quality results in everything your enterprise does. To learn the basics of R-pM view the Forum or visit result-performance-management.com.>.