Malcolm Baldrige National Quality Award SCM 462 Dr. Ron Tibben-Lembke

How We Got Here National conference on Productivity, 1982 National conference on Productivity, conferences leading up to White House Conference on Productivity 7 conferences leading up to White House Conference on Productivity August 20, 1987 – Award created August 20, 1987 – Award created Stimulate companies to improve quality and productivity Stimulate companies to improve quality and productivity Recognize success to be example to others Recognize success to be example to others Guidelines for companies to assess progress Guidelines for companies to assess progress

Malcolm Baldrige secty. of Commerce secty. of Commerce. Proponent of quality management as key to US economic survival Proponent of quality management as key to US economic survival Helped draft early version of quality act Helped draft early version of quality act Resolved technology transfer differences with China and India Resolved technology transfer differences with China and India First Cabinet-level meetings with Soviet Union in 7 years First Cabinet-level meetings with Soviet Union in 7 years Paved way for increased access for US firms Paved way for increased access for US firms

Champion Roper National Cowboy Hall of Fame National Cowboy Hall of Fame July 25, 1987 N. California rodeo July 25, 1987 N. California rodeo Horse threw him, fell on him, and crushed him Horse threw him, fell on him, and crushed him

Why Start? If you win, yes Fame and Fortune are yours If you win, yes Fame and Fortune are yours If you apply, free consulting from really good people If you apply, free consulting from really good people 300 hours spent looking at your application 300 hours spent looking at your application 50 page report: strengths, weaknesses 50 page report: strengths, weaknesses

What Winners Say OMI OMI

SSM Healthcare

Voice of the Customer People who’ve tried it like it People who’ve tried it like it

Not a Silver Bullet Wallace Co., won in 1990, bankruptcy protection in 1992 Wallace Co., won in 1990, bankruptcy protection in 1992 Houston, TX, pipes, valves for oil & chemical plants Houston, TX, pipes, valves for oil & chemical plants 2 competitors closed up, customers bought their inventory 2 competitors closed up, customers bought their inventory Highly leveraged Highly leveraged 1991 – IBM Rochester bad year in – IBM Rochester bad year in – Cadillac – closed plants over low sales, labor costs 1990 – Cadillac – closed plants over low sales, labor costs

Each category has several items (18 total), and each item has several “areas to address” Each category has several items (18 total), and each item has several “areas to address”

Point Values

ADLI = Approach, Deployment, Learning, Integration

How to Get Started Questionnaires (10 minutes) Questionnaires (10 minutes) Are we making progress? Are we making progress as leaders? Are we making progress? Are we making progress as leaders? 40 questions 40 questions

Online Assessment “Easy Insight” Online assessment “Easy Insight” Online assessment How much information do you have? How much information do you have? How much have you thought about strategy and operations and your customer? How much have you thought about strategy and operations and your customer? Help you figure out where to start digging Help you figure out where to start digging

Self-Analysis

Categories Manufacturing Manufacturing Service Service Small Business Small Business Education (added 1999) Education (added 1999) Health Care (added 1999) Health Care (added 1999) Nonprofit (2005) Nonprofit (2005)

Application Process Questionnaires for company and management Questionnaires for company and management Online assessment Online assessment

Application process Self-Assessment, Application turned in Self-Assessment, Application turned in Consensus Review: Initial screen by independent Board of Examiners (8) Consensus Review: Initial screen by independent Board of Examiners (8) Site Visit Review by teams of examiners Site Visit Review by teams of examiners Verify information, get questions answered Verify information, get questions answered Written summary of strengths, areas for improvement Written summary of strengths, areas for improvement 300 volunteer examiners 300 volunteer examiners U.S.-Based companies only U.S.-Based companies only Winners agree to spread the word about quality Winners agree to spread the word about quality

Preparing the Application Organizational profile describes org. and challenges Organizational profile describes org. and challenges Maybe need more information, identified problems, work on those first Maybe need more information, identified problems, work on those first Category teams: info & data on area Category teams: info & data on area Action plan for improvement Action plan for improvement Senior leaders, champions, teams evaluate how to improve process for future Senior leaders, champions, teams evaluate how to improve process for future

10-step Process 1. Boundaries of org. to be assessed 2. Champions for each area 3. Decide format & scope for self-assessment 4. Senior leaders, champions prepare Org. Profile Organizational profile describes org. and challenges & environment Organizational profile describes org. and challenges & environment Common understanding of what is important Common understanding of what is important System for improvement, strategic challenges System for improvement, strategic challenges Go directly to 9 – develop & implement improvement plan Go directly to 9 – develop & implement improvement plan

10-step process 5. Practice self-assessment with champions  Use Item 1.1 Criteria for Performance Excellence  See if meeting goals, on track 6. Champions select category teams 3-5 enthusiastic team members, different levels 3-5 enthusiastic team members, different levels Maybe outside organization being studied Maybe outside organization being studied Read the criteria, gather data, write an analysis Read the criteria, gather data, write an analysis Explain how approaches used throughout org. Explain how approaches used throughout org.

10-step process 7. Share findings among teams, stengths & weaknesses 8. Prioritize key strengths and areas to improve 9. Develop and implement action plan for improvement  Who will lead each step, what is to be accomplished, progress dates, how progress will be measured 10. Evaluate and improve your self-assessment and action process

Leadership Examines how senior executives guide the company and how the company addresses its responsibilities to the public and practices good citizenship. Examines how senior executives guide the company and how the company addresses its responsibilities to the public and practices good citizenship. 1.1 Organizational Leadership 1.2 Social Responsibility

Strategic planning Examines how the company sets strategic directions and how it determines key action plans. Examines how the company sets strategic directions and how it determines key action plans. 2.1Strategy Development 2.2 Strategy Deployment

Customer and market focus Examines how the company determines requirements and expectations of customers and markets. Examines how the company determines requirements and expectations of customers and markets. 3.1Customer and Market Knowledge 3.2 Customer Relationships and Satisfaction

Information and analysis Examines the management, effective use, and analysis of data and information to support key company processes and the company’s performance management system. Examines the management, effective use, and analysis of data and information to support key company processes and the company’s performance management system. 4.1Measurement and Analysis of Organizational Performance 4.2 Information and Knowledge Management

Human resource focus Examines how the company enables its workforce to develop its full potential and how the workforce is aligned with the company’s objectives. Examines how the company enables its workforce to develop its full potential and how the workforce is aligned with the company’s objectives. 5.1 Work Systems 5.2 Employee Learning and Motivation 5.3 Employee Well-Being and Satisfaction

Process management Examines aspects of how key production/delivery and support processes are designed, managed, and improved. Examines aspects of how key production/delivery and support processes are designed, managed, and improved. 6.1V alue Creation Processes 6.2 Support Processes

Business results Examines the company’s performance and improvement in its key business areas: Examines the company’s performance and improvement in its key business areas: customer satisfaction, customer satisfaction, financial and marketplace performance, financial and marketplace performance, human resources, human resources, supplier and partner performance, and supplier and partner performance, and operational performance. operational performance. The category also examines how the company performs relative to competitors. The category also examines how the company performs relative to competitors. better market performance, gains in market share, and customer retention and satisfaction better market performance, gains in market share, and customer retention and satisfaction

The Trophy

Malcolm Baldrige Double- Winner #1: Solectron

Malcolm Baldrige Double- Winner #1: Solectron 1991, , 1997

Two Great Honors For attention to quality For attention to quality What lovely trophies What lovely trophies Anyone notice anything? Anyone notice anything? Oopsie! I guess somebody’s processes aren’t under control

Quality Competitions in Japan Deming Prize (Japan) Named after noted quality expert Named after noted quality expert Established in 1950 Established in 1950 Florida Light & Power, AT&T Florida Light & Power, AT&T

Other Awards Rajiv Ghandi award – India, 1991 Rajiv Ghandi award – India, US states have prizes 40+ US states have prizes Many state winners win BNQA Many state winners win BNQA

Is Baldrige a U.S. version of Japan’s Deming award? The basic purposes of both awards are the same: The basic purposes of both awards are the same: to promote recognition of quality achievements and to promote recognition of quality achievements and to raise awareness of the importance and techniques of quality improvement. to raise awareness of the importance and techniques of quality improvement. However, the Baldrige Award: However, the Baldrige Award: focuses more on results and service, focuses more on results and service, relies upon the involvement of many different professional and trade groups, relies upon the involvement of many different professional and trade groups, provides special credits for innovative approaches to quality, provides special credits for innovative approaches to quality, includes a strong customer and human resource focus, and includes a strong customer and human resource focus, and stresses the importance of sharing information. stresses the importance of sharing information.

Baldrige vs. ISO 9000 Purpose of MBNQA to enhance US competitivenes Purpose of MBNQA to enhance US competitivenes Promotes quality awareness, recognizes achievements of US companies Promotes quality awareness, recognizes achievements of US companies Vehicle for sharing success strategies Vehicle for sharing success strategies ISO covers less thatn 10 percent of the Baldrige award criteria ISO covers less thatn 10 percent of the Baldrige award criteria Many apply, few are selected Many apply, few are selected MBNQA not required for business MBNQA not required for business

Six Sigma, ISO, BNQA Six Sigma concentrates on measuring product quality and improving process engineering. drives process improvement and cost savings. ISO 9001:2000 Registration is a product/service conformity model for guaranteeing equity in the marketplace. concentrates on fixing quality system defects and product/service nonconformities. Baldrige Criteria for Performance Excellence focus on performance excellence for the entire organization in an overall management framework. identify and track all-important organizational results: customer, product/service, financial, human resource, and organizational effectiveness.