Overview of the Quality Movement
Douglas M. Stewart, Ph.D. Anderson Schools of Management University of New Mexico
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
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Quality Assurance
...is any action directed toward providing customers with goods and services of appropriate quality.
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History of Quality Assurance (1 of 2)
Skilled
craftsmanship during Middle Ages Industrial Revolution: rise of inspection and separate quality departments Statistical methods at Bell System Quality control during World War II Quality management in Japan
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History of Quality Assurance (2 of 2)
Quality
awareness in U.S. manufacturing industry during 1980s: “Total Quality Management” Malcolm Baldrige National Quality Award (1987) Quality in service industries, government, health care, and education Current and future challenge: keep progress in quality management alive
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Contemporary Influences on Quality
Partnering Learning systems Adaptability and speed of change Environmental sustainability Globalization Knowledge focus Customization and differentiation Shifting demographics
Definitions of Quality
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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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Quality Perspectives
transcendent & product-based
Customer
user-based
needs Marketing
products and services
value-based
Design
manufacturingbased Manufacturing
Distribution
Information flow Product flow
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Customer-Driven Quality
or exceeding customer expectations” Customers can be...
Consumers External
“Meeting
customers Internal customers
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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
Principles of Total Quality
Customer
and stakeholder focus Participation and teamwork Process focus and continuous improvement
...supported by an integrated organizational infrastructure, a set of management practices, and a set of tools and techniques
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Customer and Stakeholder Focus
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
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Customer
Participation and Teamwork
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
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Employees
Process Focus and Continuous Improvement
A
process is a sequence of activities that is intended to achieve some result
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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
Deming’s View of a Production System
Suppliers of materials and equipment Receipt and test of materials A B C D Production, assembly inspection
Design and Redesign
Consumer research
Consumers
Distribution
Tests of processes, machines, methods
INPUTS
PROCESSES
OUTPUTS
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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
Infrastructure, Practices, and Tools
Infrastructure
Leadership Strategic Planning HRM Process mgt. Data and information management
Practices
Performance appraisal
Training
Tools
Trend chart
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TQ Infrastructure
Customer
relationship management Leadership and strategic planning Human resources management Process management Data and information management
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Competitive Advantage
driven by customer wants and needs Makes significant contribution to business success Matches organization’s unique resources with opportunities Is durable and lasting Provides basis for further improvement Provides direction and motivation Quality supports each of these characteristics
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Is
Quality and Profitability
Improved quality of design Higher perceived value Increased market share Higher prices Increased revenues Higher profitability
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Improved quality of conformance Lower manufacturing and service costs
Evidence that Quality Impacts Business Results
General
Accounting Office study of Baldrige Award applicants Baldrige stock study (see www.quality.nist.gov) Hendricks and Singhal study of quality award winners Performance results of Baldrige Award winners
GAO TQ Model
Product and service quality On-time delivery Error/defects Leadership for continuous improvement Quality systems and employee involvement Reliability Customer satisfaction Customer retention Complaints Market share Profits Overall satisfaction
Competitiveness
Organization benefits
Costs Cycle time Turnover Satisfaction Safety & health Productivity
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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
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Quality and Personal Values
Personal
initiative has a positive impact on business success Quality begins with personal attitudes Quality-focused individuals often exceed customer expectations Attitudes can be changed through awareness and effort (e.g., personal quality checklists)
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Challenges
True
understanding of the organization
metaphor Computer metaphor Life-form metaphor
Political/cultural
Machine
realities of the
organization
Growth of Modern Quality Management
Service quality
Performance excellence
Improved product designs
Manufacturing quality
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Systems Thinking
A system is the functions or activities within an organization that work together for the aim of the organization. Subsystems of an organization are linked together as internal customers and suppliers. A systems perspective acknowledges the importance of the interactions of subsystems, not the actions of them individually.
Manufacturing Systems (1 of 2)
Marketing
and sales Product design and engineering Purchasing and receiving Production planning and scheduling Manufacturing and assembly Tool engineering
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Manufacturing Systems (2 of 2)
Industrial
engineering and process
design Finished goods inspection and test Packaging, shipping, and warehousing Installation and service
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Quality in Business Support Functions for Manufacturing
General
management Finance and accounting Human resource management Quality assurance Legal services
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Quality in Services
Service is defined as “any primary or
complementary activity that does not directly produce a physical product – that is, the non-goods part of the transaction between buyer (customer) and seller (provider).”
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Critical Differences between Service and Manufacturing (1 of 2)
needs and performance standards are more difficult to identify and measure Services requires a higher degree of customization Output is intangible
Customer
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Critical Differences between Service and Manufacturing (2 of 2)
are produced and consumed simultaneously Customers are often involved in actual process Services are more labor-intensive than manufacturing Services handle large numbers of transactions
Services
Components of Service System Quality
Employees
Information
technology
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The Ritz-Carlton Hotel Co.
The Quality Gurus
Philosophies and Frameworks
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Leaders in the Quality Revolution
W.
Edwards Deming Joseph M. Juran Philip B. Crosby Armand V. Feigenbaum Kaoru Ishikawa Genichi Taguchi
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Who’s Who?
b a
Deming ____ Juran ____ Crosby ____
c
Deming Chain Reaction
Improve quality
Costs decrease
Productivity improves
Increase market share with better quality and lower prices
Stay in business Provide jobs and more jobs
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Deming’s System of Profound Knowledge
Appreciation
for a system Understanding variation Theory of knowledge Psychology
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Systems
Most
organizational processes are cross-functional Parts of a system must work together Every system must have a purpose Management must optimize the system as a whole
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Variation
Many
sources of uncontrollable variation exist in any process Excessive variation results in product failures, unhappy customers, and unnecessary costs Statistical methods can be used to identify and quantify variation to help understand it and lead to improvements
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Theory of Knowledge
Knowledge
is not possible without
theory Experience alone does not establish a theory, it only describes Theory shows cause-and-effect relationships that can be used for prediction
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Psychology
People
are motivated intrinsically and extrinsically Fear is demotivating Managers should develop pride and joy in work
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Deming’s 14 Points (Abridged) (1 of
2)
1. Create and publish a company mission statement and commit to it. 2. Learn the new philosophy. 3. Understand the purpose of inspection. 4. End business practices driven by price alone. 5. Constantly improve system of production and service. 6. Institute training. 7. Teach and institute leadership. 8. Drive out fear and create trust.
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Deming’s 14 Points (2 of 2)
9. Optimize team and individual efforts. 10. Eliminate exhortations for work force. 11. Eliminate numerical quotas and M.B.O. Focus on improvement. 12. Remove barriers that rob people of pride of workmanship. 13. Encourage education and self-improvement. 14. Take action to accomplish the transformation.
www.deming.org
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Deming’s 7 Deadly Sins
1. 2. 3. 4.
5.
6.
7.
Lack of constancy of purpose Emphasis on short term profits Evaluation of performance, merit rating, or annual review of performance Mobility of management Running a company on visible figures alone Excessive medical costs for employee health care that increase the final costs of goods and services Excessive costs of warranty, fueled by lawyers who work on the basis of contingency fees.
Joseph Juran
Resistances to unity:
Multiple functions
marketing, production…
Multiple levels (hierarchy) Multiple product lines
Different markets, technologies…
Solution:
A universal thought process for all levels
Juran’s Insight
Corporate finance is based on:
Budgeting (planning) Cost Control (expense control) Cost Reduction (profit improvement)
A Financial Trilogy:
Budgeting
Cost Reduction
Cost Control
Juran’s Quality Trilogy
Quality
planning Quality control Quality improvement
www.juran.com
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Juran’s Quality Trilogy
Control
Process for meeting goals Ensure that operations conducted according to plan
Preparing to meet quality goals Ensure that process capable of meeting goals
Planning
Improvement
Process of breaking through to new levels Ensure that operations at superior performance
Juran’s Quality Trilogy (cont.)
Current priorities misaligned with assessment Process Control Planning Assessment Very Strong Weak Very Weak Priority Top Priority Limited Priority Very Low Priority
Improvement
Juran’s Trilogy (cont.)
Must address:
Setting goals
Based on competition in the marketplace Removal of traditional wastes
Enable corporate review of divisional quality goals, plans and performance Ensures fit with strategy Training Measurement
Infrastructure
Resources
Juran’s Trilogy (cont.)
Tools
were shop floor oriented Measurement was cost of quality
To
incite management Economic quality level
Juran’s Breakthrough Sequence
Breakthrough in attitudes 2. Identify the vital few projects 3. Organize for breakthrough knowledge
1.
Steering group Diagnostic group
Conduct the analysis 5. Determine how to overcome resistance to change 6. Institute the change 7. Institute controls
4.
Phillip B. Crosby
Quality is free . . . :
“Quality is free. It’s not a gift, but it is free. What costs money are the unquality things -- all the actions that involve not doing jobs right the first time.”
Philip B. Crosby
Absolutes of Quality Management:
Quality
means conformance to requirements Problems are functional in nature There is no optimum level of defects Cost of quality is the only useful measurement Zero defects is the only performance standard
www.philipcrosby.com
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Crosby’s “Quality is Free”
Quality
Take
improvement programs
time Must convince people that it is in their best interests 5 stages of quality maturity
Crosby’s 14 Steps
Management commitment 2. Quality improvement team 3. Quality measurement 4. Cost of quality evaluation 5. Quality awareness 6. Corrective action 7. Establish an ad hoc committee for the Zero Defects program
1.
Crosby’s 14 Steps (cont.)
8. 9. 10.
11.
12. 13. 14.
Supervisor training Zero defects day (setting a new standard) Goal setting Error cause removal Recognition Quality councils Do it over again
A.V. Feigenbaum
Three
Steps to Quality
Leadership, with a strong focus on planning Modern Quality Technology, involving the entire work force Organizational Commitment, supported by continuous training and motivation
Quality
A.V. Feigenbaum
Need
to Classify the Cost of Quality
Prevention
Appraisal Failure
Kaoru Ishikawa
Instrumental
in developing Japanese quality strategy Influenced participative approaches involving all workers Advocated the use of simple visual tools and statistical techniques
Genichi Taguchi
Pioneered
a new perspective on quality based on the economic value of being on target and reducing variation and dispelling the traditional view of conformance to specifications:
Loss
0.480
No Loss
0.500 0.520
Loss
Tolerance
Key Quality Concepts
Systemic
integration of customer feedback Strong focus on quality defined as:
Measurable
dimensions Perceptions of internal and external customers
CI Collaboration
not competition
Key Quality Concepts (cont.)
Data
driven Teamwork
Proper
training Proper motivation
Empowerment
vision Leadership
Shared
Time Permitting:
Deming
Prize
MBNQA
Deming Prize
Instituted
1951 by Union of Japanese Scientists and Engineers (JUSE) Several categories including prizes for individuals, factories, small companies, and Deming application prize American company winners include: Florida Power & Light, and AT&T Power Systems Division
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Malcolm Baldrige National Quality Award
Help
improve quality in U.S. companies Recognize achievements of excellent firms and provide examples to others Establish criteria for evaluating quality efforts Malcolm Baldrige, Provide guidance for other former U.S. Secretary U.S. companies of Commerce
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Criteria for Performance Excellence
Leadership
Strategic
Planning Customer and Market Focus Information and Analysis Human Resource Focus Process Management Business Results
Baldrige Award trophy
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The Baldrige Framework – A Systems Perspective
Organizational Profile: Environment, Relationships, and Challenges 5 Human Resource Focus 7 Business Results
2 Strategic Planning 1 Leadership
3 Customer & Market Focus
6 Process Management
4 Information and Analysis
Baldrige Award Evaluation Process
Receive Applications
Stage 1 Independent Review
Judges Select for Consensus Review?
No
Feedback report to applicant
Stage 2 Consensus Review
Judges Select for Site Visit Review?
No
Feedback report to applicant
Stage 3 Site Visit Review
Stage 4 Judges Recommend Award Recipients to NIST Director/DOC
Feedback report to applicant
The Baldrige Award Scoring System
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Three evaluation dimensions Approach, Deployment, and Results Scoring is linked to the importance to the applicant’s business Scoring guidelines (Table 3.5)
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•
Feedback Report
Strengths
- approaches or results that demonstrate effective response to the Criteria Opportunities for improvement - how the applicant can better address the purposes of the Criteria, or issues that require clarification
Self Assessment and the Baldrige National Quality Program
A primary goal of the Program is to encourage many organizations to improve on their own by equipping them with a standard template for measuring their performance and their progress toward performance excellence.
Boeing Airlift & Tanker Programs – 1998 winner