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Chapter 1

Introduction to Quality

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Modern Importance of Quality


The first job we have is to turn out quality merchandise that consumers will buy and keep on buying. If we produce it efficiently and economically, we will earn a profit, in which you will share. - William Cooper Procter

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Key Idea
Buildingand maintainingquality into an organizations goods and services, and more importantly, into the infrastructure of the organization itself, is not an easy task.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Quality Assurance
...is any action directed toward providing customers with goods and services of appropriate quality.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

History of Quality Assurance


(1 of 3)

Skilled

craftsmanship during Middle Ages Industrial Revolution: rise of inspection and separate quality departments Early 20th Century: statistical methods at Bell System Quality control during World War II Post-war Japan: evolution of quality management
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

History of Quality Assurance


(2 of 3)

Quality

awareness in U.S. manufacturing industry during 1980s: from Little Q to Big Q - Total Quality Management Malcolm Baldrige National Quality Award (1987) Disappointments and criticism
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Key Idea
Although quality initiatives can lead to business success, they cannot guarantee it, and one must not infer that business failures or stock price dives are the result of poor quality.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

History of Quality Assurance


(3 of 3)

Emergence of quality management in service industries, government, health care, and education Evolution of quality to performance excellence Growth and adoption of Six Sigma Current and future challenge: continue to apply the principles of quality and performance excellence. Quality is a race without a finish line.
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Contemporary Influences on Quality


Globalization Innovation/creativity/change Outsourcing

Consumer

sophistication Value creation Changes in quality

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Defining Quality
Perfection
Providing a good, usable product

Fast delivery
Consistency Doing it right the first time

Eliminating waste

Delighting or pleasing customers Total customer service and satisfaction Compliance with policies and procedures
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Formal Definitions of Quality


Transcendent

definition: excellence Product-based definition: quantities of product attributes User-based definition: fitness for intended use Value-based definition: quality vs. price Manufacturing-based definition: conformance to specifications
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MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Quality Perspectives
transcendent & product-based
Customer

user-based
needs

Marketing

products and services

value-based

Design

manufacturingbased Manufacturing
Distribution
Information flow

Product flow
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Key Idea
Because individuals in different business functions speak different languages, the need for different views of what constitutes quality at different points inside and outside an organization is necessary to create products of true quality that will satisfy customers needs.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Customer-Driven Quality
Meeting

or exceeding customer expectations Customers can be...


Consumers External

customers Internal customers

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Total Quality
People-focused

management system Focus on increasing customer satisfaction and reducing costs A systems approach that integrates organizational functions and the entire supply chain Stresses learning and adaptation to change Based on the scientific method
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Principles of Total Quality


Customer

and stakeholder focus Participation and teamwork Process focus supported by continuous improvement and learning
all supported by an integrated organizational
infrastructure, a set of management practices, and a set of tools and techniques
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MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Customer and Stakeholder Focus


Customer is principal judge of quality Organizations must first understand customers needs and expectations in order to meet and exceed them Organizations must build relationships with customers Customers include employees and society at large

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Key Idea
To meet or exceed customer expectations, organizations must fully understand all product and service attributes that contribute to customer value and lead to satisfaction and loyalty.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Participation and Teamwork


Employees know their jobs best and therefore, how to improve them Management must develop the systems and procedures that foster participation and teamwork Empowerment better serves customers, and creates trust and motivation Teamwork and partnerships must exist both horizontally and vertically

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Key Idea
In any organization, the person who best understands his or her job and how to improve both the product and the process is the one performing it.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Process Focus and Continuous Improvement


A process is how work creates value for customers Processes transform inputs (facilities, materials, capital, equipment, people, and energy) into outputs (goods and services) Most processes are cross-functional

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Key Idea
A process is a sequence of activities that is intended to achieve some result

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Continuous Improvement
Enhancing

value through new products and services Reducing errors, defects, waste, and costs Increasing productivity and effectiveness Improving responsiveness and cycle time performance

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Key Idea
Major improvements in response time may require significant simplification of work processes and often drive simultaneous improvements in quality and productivity.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Demings View of a Production System


Suppliers of materials and equipment Design and Redesign Receipt and test of materials

Consumer research Consumers Distribution

A B C D

Production, assembly inspection

Tests of processes, machines, methods

INPUTS

PROCESSES
Feedback

OUTPUTS
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MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Learning
The foundation for improvement Understanding why changes are successful through feedback between practices and results, which leads to new goals and approaches Learning cycle:

Planning Execution of plans Assessment of progress Revision of plans based on assessment findings
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MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Infrastructure, Practices, and Tools


Infrastructure
Leadership Strategic Planning HRM Process mgt. Information and knowledge management

Practices

Performance appraisal

Training

Tools

Trend chart

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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TQ Infrastructure
Customer relationship management Leadership and strategic planning Human resources management Process management Information and knowledge management

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Competitive Advantage

Is driven by customer wants and needs Makes significant contribution to business success Matches organizations unique resources with opportunities Is durable and lasting Provides basis for further improvement Provides direction and motivation Quality supports each of these characteristics
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Quality and Profitability


Improved quality of design Higher perceived value Increased market share Higher prices Increased revenues Higher profitability
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Improved quality of conformance Lower manufacturing and service costs

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Key Idea
Considerable evidence exists that quality initiatives positively impact bottom-line results.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Quality and Business Results Studies


General

Accounting Office study of Baldrige Award applicants Hendricks and Singhal study of quality award winners Performance results of Baldrige Award recipients

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Key Idea
An organization that is committed to total quality must apply it at three levels: the organizational level, the process level, and the performer/job level.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Three Levels of Quality


Organizational

level: meeting external customer requirements Process level: linking external and internal customer requirements Performer/job level: meeting internal customer requirements

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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Quality and Personal Values


Personal initiative has a positive impact on business success Quality-focused individuals often exceed customer expectations Quality begins with personal attitudes Attitudes can be changed through awareness and effort (e.g., personal quality checklists) Unless quality is internalized at the personal level, it will never become rooted in the culture of an organization. Thus, quality must begin at a personal level (and that means you!).
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MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

Key Idea
In the daily attempt to bring about change in the individual parts of the organizational universe, managers, employees, professors, and students can find that personal quality is the key to unlock the door to a wider understanding of what the concept really is all about.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, 2008 Thomson Higher Education Publishing

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