University:
Duke University
Course:
ACCOUNTG 591 | Managerial Accounting
Academic year:

2023
Views:

264

Pages:

2
Author:

Bukan D

The Transformational Phase Quality at TI Productivity, teamwork, and problem-solving had always been important at TI. During the 1950s, work-simplification programs, the forerunner of what are now called "quality circles," had been estabished. In the 1960s and 1970s, TT's productivity programs were expanded to include asset management as well as people effectiveness. As international competition intensified in the late 1970s, TI's People and Asset Effectiveness activities began to focus more specifically on quality improvement. Despite these trends, however, TI continued to emphasize financial controls and a quality philosophy which, while never formally stated, expected a certain amount of defective product to be returned by the customer. In 1980, the short-run economic trade-off approach to quality was abandoned when the company decided to commit to a "Total Quality Thrust." The new thrust was triggered when Hewlett-Packard, an important TI customer, publicized a study that had found the products of its best American suppliers to be inferior to those of its worst Japanese suppliers. TI management understood well the message from this study: that its long-run competitive success required a greatly expanded commitment to quality control. The TI "Total Quality Thrust" was based on the following principles: 1. Quality and Reliability (0&R) is management's responsibility. 2. Q&R is a responsibility of all organizations. 3. Managers' performance on OaR will be a key criterion in performance evaluation. 4. Managers' commitments to Q&R will not be measured — only the outcomes. 5. The only acceptable goal for Q&R is a level that surpasses TT's best worldwide competitors at any time. In order to emphasize that quality was not just a program but had to become TI's normal way of doing business, a Vice President of People and Asset Effectiveness was appointed at the corporate level. A written policy statement, signed by the CEO, was developed and communicated. It stated: For every product or service we offer, we will understand the requirements that meet the customers' needs, and we will conform to those requirements without exception. For every job each Tler performs, the performance standard is: Do it right the first time. A massive training program for all operating personnel on the fundamentals of quality improvement was undertaken. During the first phase, 450 top managers, including 22 from M&C, were sent to quality training courses conducted by Philip Crosby, a leading quality expert. A quality reporting system was implemented to supplement TI's extensive system of financial indicators. For years TI had evaluated the profit-and-loss performance of each business with a series of financial indices published each month in the "Blue Book." In 1981, TI began a "Quality Blue Book" with indices such as product reliability, customer feedback regarding TI quality, and data on the cost of quality. The "Blue Book" format was deliberately chosen to communicate to TI managers that quality performance was now to be judged on the same level as financial per-formance.