MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 1 Chapter 1 Introduction to Quality

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 2 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 3 Key Idea Building - and maintaining - quality into an organization’s 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 4 History of Quality Management (1 of 3)  Skilled craftsmanship during Middle Ages  Industrial Revolution: rise of inspection and separate quality departments  Early 20 th 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 5 Dr. Juran was there!! “On the assembly line at the Ford Motor Company in 1923, most of the workers producing Model T’s were immigrants and could not speak English. Many were also illiterate. Workers learned their trade by modeling the actions of other workers. They were unable to plan, problem-solve, and make decisions. As a result, the Taylor scientific school of management flourished, and MBAs and industrial engineers were invented to do this work. Today, however, the workforce is educated. Workers know what is needed to improve their jobs, and companies that do not tap into this significant source of knowledge will truly be at a competitive disadvantage.” (J. Juran, 1991)

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 6 History of Quality Management (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)

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 7 History of Quality Management (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 and Lean  Current and future challenge: continue to apply the principles of quality and performance excellence - Quality as “a race without a finish line.”

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 8 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. Quality Management cannot help if the consumer does not want what you are selling!!

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 9 Measurement Empowerment/ Shared Leadership Process Improvement/ Problem Solving Team Management Customer Satisfaction Business Results The Coca-Cola Company Continuous Improvement Model...

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 10  Meeting Customer’s Requirements  Doing (The Right) Things Right the First Time; Freedom from Failure (Defects)  Consistency (Reduction in Variation)  Continuous Improvement  Quality in Everything We Do TQM Quality Definitions

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 11 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 12 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 13 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 14 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)  Opportunities for major improvement involve cross-functional processes

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 15 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 16 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 17 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 18 Deming’s View of a Production System Suppliers of materials and equipment Receipt and test of materials Design and Redesign Consumer research ABCDABCD Production, assembly inspection Tests of processes, machines, methods Distribution Consumers INPUTS PROCESSES OUTPUTS Feedback

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 19 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

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 20 QM 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 21 Competitive Advantage  Is 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

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 22 Quality and Profitability Improved quality of design Higher perceived value Increased market share Higher prices Increased revenues Improved quality of conformance Lower manufacturing and service costs Higher profitability

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 23 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 24 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 25 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 this means you!).

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 26 Leadership Empowerment requires leadership. Leaders must create the environment for empowerment, and role-model the behaviors. Leaders must facilitate the creation of organizational mission statements to give direction and context to employees. Leadership should negotiate levels of empowerment, based on skills, experience and motivation of the worker.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 27 Levels of Empowerment Wait until told Ask Make a Recommendation Do it Do it and report periodically Do it and report immediately

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 28 MGS8760 Class Mission  Treat the course syllabus as a plan that can be modified, based on customer needs  Experience QM in the classroom  Empower the class to share leadership by providing input to the mission, content, format and measurement of the course, and through active participation