Archive for the 'Quality Management' topic

20^th century enterprise 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
• Financial control through actual compared to budgeted measures
• 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 certain entities and known measures. Financial control covers capital for tangible assets and finances for cash receipts and expenditures against plans or budgets. Cost control is limited to known costs against arbitrary entities like activity or center. Non-financial control is sporadic depending on individual management. Quality control 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 specific capital solutions developed are not controlled and may be lumped together as one large asset or classified as intangible assets. No method or information is provided to plan and control return on specific capital solution investments. Projects are not organized to capture investment 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, Six Sigma, and ISO 9000 Standards do 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.

Customer-determined quality is managed result by result by managing the businss

Quality must be managed as part of the managed business defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. By definition, in the business, value and quality are attributes of results, the economic outputs produced across a managed business. Result-performance Management (R-pM) provides the knowledge and procedures to organize the business by organizing results produced across the business as one-off results or as result chains and by organizing the capital utilized as solutions in business performance 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. [more...].

Economic output results produced by your company business are not managed today

Every enterprise, including your company business, produces economic outputs. These outputs are results, even though they are not called results and are not managed as entities in a set of results. But, the objective of every company business is to produce products and services and other economic output results in a chain of results that lead to the revenue and profit results. Some results are identified as entities such as; design completed, material item received, machine maintained, product produced, business service rendered, production waste recovered, order delivered, etc and are managed separately.

Other results usually are not defined or managed, such as business organization updated, new personnel recruited, capability development completed, knowledge document created, computer network hour operated, supplies procured, record transaction processed, strategy approved, pricing policy initiated, market study completed, investment justified, etc.

Results are not managed as a set of outputs or accomplishments by your company business today because your company is managed as an enterprise, not as a business. The business is defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Every business in the world invests in capital. The capital solutions acquired and developed from investments are implemented to be utilized in business performance. The utilization of capital solutions in performance produces business results. [more...].

Rule No. 5 of the ten rules of 21^st century business management is Operate to optimize operations, result value-added, and the profit result. This rule requires that the capital solutions utilized to produce each result are optimized to be cost-effective and produce a high value-quality result, so that all business operations are optimized.

21^st century business management organizes the performance producing each result

Business operations cannot be optimized unless the business is organized in order to manage the specific performance that produces a specific result. The 21^st century business is organized using Result-performance Management (R-pM) knowledge and procedures, so the business can be optimized, by ensuring that capital solutions are deployed or implemented to produce the proper results and are integrated to employ the most cost-effective performance to produce the highest value-quality result.

21^st century business management organizes capital investments as specific solutions

21^st century business management organizes the capital the enterprise invests in as specific capital solutions that are implemented to be utilized to produce one or more specific results. This allows the enterprise to capture the cost of developing or improving the capital and to assess the:

• Cost of consumption of the capital in operations
• Performance costs generated as solution worth declines over the solution life
• Effectiveness of the capital to produce a high-quality result
• Capacity of the capital to produce a volume of results
• Uncertainty of the performance of the capital and the risk of a poor result
• Return provided on the investment in the capital from the share of result value added to date
• Level of performance of the capital against expectations
• Worth of the capital assessed from result values to be produced over the remaining life

Capital solutions are categorized as business, human, facility, or management capital so that a performance manager with specific capabilities can be responsible for providing qualified solutions. Within each category, solutions are classified as one of three classes; as readiness solutions to prepare an organization responsible for a set of results, as production solutions to be used or consumed in producing each actual result, and as information solutions to support or document results. Capital solutions are integrated by capital class for utilization to produce a result.

21^st century business management organizes the outputs from business performance as specific results

21^st century business management organizes the inputs incorporated and outputs produced by the enterprise as results. [more...]

Rule no. 2 of 21^st century business management: Generate profits from a chain of managed value and quality

21^st century business management manages economic outputs from the business as results, manages investments in the business as specific capital solutions, and separately manages performance in the utilization of specific capital solutions to produce specific results. Separating results and capital from performance enables the enterprise business “the activity of providing goods and services” to be managed directly.

Goods and services are final results that go to the customer and have value in the customer willingness to pay and must be of the quality to satisfy the customer. The final goods and services results are produced by a chain of results of value starting from input results from the supplier. Business activity is the utilization of human and other capital in performance to produce a given result. So the business in “the activity of providing goods and services” must be managed by managing the performance producing each result of managed value and quality in a chain of results from supplier input results, through internal result transformation, to the final customer results. The result value-added in excess of performance costs across the chain contributes to the profit result.

20^th century management manages performance across processes and information systems

20^th century enterprise management, used by all enterprises today, does not recognize or manage output results from the business as a business entity. Results or accomplishments are managed as a component of “performance” along with the business activity in utilizing capital in performance to produce the result. [more...].

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

Result-performance Management (R-pM) replaces business process management with result-performance management and re-engineered business processes with result value-quality chains. This enables the enterprise to manage result value-added and to collaborate with business and outsourcing partners, who use R-pM, to re-link value-quality chains for shared value. Review the article “Business Process Management that Prevents Value-quality Chains” to learn more about 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 capital solution utilized to produce the result to determine the total performance cost and value-added at each link in the chain. Capital 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 with business collaboration and outsourcing partners to produce the highest shared value-added. [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...]

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...].