Building and Sustaining Total Quality Organizations Chapter 11 Building and Sustaining Total Quality Organizations Slide 11.1 1

Why Adopt TQ Philosophy? Reaction to competitive threat to profitable survival An opportunity to improve Slide 11.2 2

Successful TQ Organizations Successful total quality organizations require: Adoption of sound practices Effective organization Readiness for change Slide 11.3

Corporate Culture and Change Corporate culture is a company’s value system and its collection of guiding principles Cultural values often seen in mission and vision statements Culture reflected by management policies and actions Slide 11.4 3

Organizational Infrastructure organization’s management systems and practices Vital to successful TQ implementation Slide 11.5

Best Practices: Infrastructure Design (1 of 3) Low performers process management fundamentals customer response training and teamwork benchmarking competitors cost reduction rewards for teamwork and quality Increasing levels of teamwork and participation tends to benefit low performers the most Slide 11.6 4

Best Practices: Infrastructure Design (2 of 3) Medium performers use customer input and market research select suppliers by quality flexibility and cycle time reduction compensation tied to quality and teamwork Slide 11.7 5

Best Practices: Infrastructure Design (3 of 3) High performers self-managed and cross-functional teams strategic partnerships benchmarking world-class companies senior management compensation tied to quality rapid response Seeking strategic partnerships and developing new products based on customer input benefit high performers Slide 11.8 6

Areas of Critical Self-Assessment Self-Assessment – reviewing company’s current quality practices and procedures Self-Assessment should involve: Management involvement and leadership Product and process design Product control Customer and supplier communications Quality improvement Employee participation Education and training Quality information Slide 11.9 7

ISO 9000 Standards Adopted by International Organization for Standardization in 1987 Quality system standards that guide a company’s performance of specified requirements Covers design/development, production, installation, and service Slide 11.10 8

Objectives of Standards (1 of 2) The standards have five objectives: Achieve, maintain, and continuously improve product quality Improve quality of operations to continually meet customers’ and stakeholders’ needs Provide confidence to internal management and other employees that quality requirements are being fulfilled Slide 11.11 9

Objectives of Standards (2 of 2) Provide confidence to customers and other stakeholders that quality requirements are being achieved Provide confidence that quality system requirements are fulfilled Slide 11.12 10

Structure of ISO 9000 Standards The standards define three levels of quality assurance: Level 1 (ISO 9001) - product design, development, production, installation, and service Level 2 (ISO 9002) - production and installation Level 3 (ISO 9003) - final inspection and test Slide 11.13 11

ISO 9001 Requirements Say what you do; Do what you Say!! Management responsibility Quality system Contract review Design control Document & data control Purchasing Control of customer- supplied products Product identification and traceability Process control Inspection and testing Control of inspection, measuring, & test equipment Inspection & test status Control of nonconforming product Corrective & preventive action Handling, storage, packaging, preserving, & delivering Control of quality records Internal quality audits Training Servicing Statistical techniques Slide 11.14 12

ISO 9000 in the U.S. By 1993, only 550 U.S. company sites were certified as compared with 20,000 companies in United Kingdom By 1997, over 12,000 U.S. company sites were certified as compared with over 200,000 throughout Europe Avg. cost for ISO 9000 registration is $20,000 and costs companies $100,000 (must be recertified every 3 years) Slide 11.15 13

QS 9000 Standards Created in 1994 by automobile industry Interpretation and extension of ISO 9000 Applies to all internal and external suppliers of production and service parts and materials Slide 11.16 14

ISO 14000 Standards Established in 1996 to provide industries with structure for environmental management system Unlike ISO 9000, does not require third-party registration U.S. Environmental Protection Agency (EPA) not yet formally endorsed standards Slide 11.17 16

Implementing Total Quality Strategy: Key Players Senior management Middle management Workforce Slide 11.18 17

Common Mistakes in TQ Implementation (1 of 3) TQ regarded as a “program” Short-term results are not obtained Process not driven by focus on customer, connection to strategic business issues, and support from senior management Structural elements block change Goals set too low “Command and control” organizational culture Slide 11.19 18

Common Mistakes in TQ Implementation (2 of 3) Training not properly addressed Focus on products, not processes Little real empowerment is given Organization too successful and complacent Organization fails to address fundamental questions Senior management not personally and visibly committed Slide 11.20 19

Common Mistakes in TQ Implementation (3 of 3) Overemphasis on teams for cross-functional problems Employees operate under belief that more data are always desirable Management fails to recognize that quality improvement is personal responsibility Organization does not see itself as collection of interrelated processes Slide 11.21 20