1. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 1 Chapter 1 Introduction to Quality The Management & Control of Quality, 7e

2. THE MANAGEMENT & CONTROL OF QUALITY, 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

3. THE MANAGEMENT & CONTROL OF QUALITY, 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.

4. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 4 Quality Assurance...is any action directed toward providing customers with goods and services of appropriate quality.

5. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 5 History of Quality Assurance (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

6. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 6 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

7. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 7 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.

8. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 8 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.”

9. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 9 Contemporary Influences on Quality  Globalization  Innovation/creativity/change  Outsourcing  Consumer sophistication  Value creation  Changes in quality

10. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 10 Defining Quality Perfection Consistency Eliminating waste Fast delivery Compliance with policies and procedures Providing a good, usable product Doing it right the first time Delighting or pleasing customers Total customer service and satisfaction

11. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 11 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

12. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 12 Quality Perspectives Customer Distribution products and andservices needs needs transcendent & product-based user-based manufacturing- based based value-based Marketing Design Manufacturing Information flow Product flow

13. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 13 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.

14. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 14 Customer-Driven Quality  “Meeting or exceeding customer expectations”  Customers can be...  Consumers  External customers  Internal customers

15. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 15 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

16. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 16 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

17. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 17 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

18. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 18 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.

19. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 19 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

20. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 20 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.

21. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 21 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

22. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 22 Key Idea A process is a sequence of activities that is intended to achieve some result

23. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 23 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

24. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 24 Key Idea Major improvements in response time may require significant simplification of work processes and often drive simultaneous improvements in quality and productivity.

25. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 25 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

26. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 26 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

27. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 27 Infrastructure, Practices, and Tools Leadership Strategic HRM Process Information and knowledge Planning mgt. management Planning mgt. management Performance Training appraisal appraisal Trend chart Tools Practices Infrastructure

28. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 28 TQ Infrastructure  Customer relationship management  Leadership and strategic planning  Human resources management  Process management  Information and knowledge management

29. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 29 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

30. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 30 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

31. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 31 Key Idea Considerable evidence exists that quality initiatives positively impact bottom-line results.

32. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 32 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

33. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 33 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.

34. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 34 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

35. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 35 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!).

36. THE MANAGEMENT & CONTROL OF QUALITY, 7e, © 2008 Thomson Higher Education Publishing 36 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.