1.. Success in service and manufacturing operations requires managers to maintain high levels of both productivity and quality. High productivity ensures that the company is cost competitive with rivals; and high quality helps the company to attract customers and grow revenues and profi ts. Because productivity and quality are basic drivers of company success, managers must be adept at measuring and improving both. This exercise will give you some practice in developing productivity and quality measures.

Step 1: Your professor will organize your class into small groups of three or four students.

Scenario: Your group is a management team working to improve productivity and quality in a pharmaceutical company. You have been assigned two units of this company as the focus of your improvement efforts. The fi rst is a pill-packaging unit, and the second is a research and development (R&D) laboratory.

Workers in the packaging unit are responsible for checking to ensure that the pills in the box match the packaging and labeling; placing the appropriate labels and packaging information on each box; and then certifying with a stamp that the box of pills is ready for shipping to wholesale customers, for example, chains like Walgreens and Costco. Mistakes in packaging, if undetected by pharmacists, could have serious, even fatal, outcomes. These manufacturing workers are skilled and highly trained. If they detect a problem, they have the authority to halt production.

Workers in the R&D unit are responsible for developing new drugs and for testing their effectiveness and safety. The company relies for its success upon a steady pipeline of promising new products. At the same time, some basic research (for example, study of progression of a particular type of cancer) is necessary in order to develop new drugs. These workers are mostly Ph.D.s and highly skilled laboratory technicians.

Step 2: Develop metrics. Working as a team, develop some productivity and quality measures for (a)

packaging unit workers and

(b) R&D unit workers. Be sure to consider whether productivity and quality should be measured on an individual or unit basis, and why.

Step 3: Analyze the metrics. Critically examine your team’s measures for each unit. What unintended consequences might develop as workers in each unit strive to improve on the measures you have designed?

Are you more confi dent of your measures in one unit versus the other? Why or why not?

Step 4: Debrief as a class. What are some of the challenges of measuring productivity and quality? Are these challenges greater for particular types of work?

Which level of measurement and accountability—individual or unit—is most likely to generate positive results?

Why? What impact do productivity and quality systems of measurement and improvement have on workers?

How can fi rms ensure productivity and quality without overloading workers and/or fostering unhealthy levels of stress?