1. CHAPTER 2 Introduction to Quality and Performance Excellence

2. Outline Explain the concepts of quality and performance excellence
Provide reasons why they are important
Provide a brief history of the “quality revolution”
Describe quality in manufacturing, service, health care, education, and government
Explain the principles and practices of quality and performance excellence
Discuss relationships of quality with organizational models in management theory
Of the three determinants of profitability – productivity, cost, and quality – the most significant factor in determining the long-run success or failure of any organization is quality.

3. Defining Quality Perfection Fast delivery
Providing a good, usable product
Consistency
Eliminating waste
Doing it right the first time
Today most managers agree that the main reason to pursue quality is to satisfy the customers.
Delighting or pleasing customers
Total customer service and satisfaction
Compliance with policies and procedures

4. Formal Definitions of Quality
The totality of features and characteristics of a product or service that bears on its ability to satisfy given needs – American Society for Quality
Fitness for use
Meeting or exceeding customer expectations
Conformance to specifications
Quality is defined from many viewpoints. These include transcendent (judgmental) quality, product- and value-based quality, fitness for use (user-based), conformance to specifications (manufacturing-based), and customer perspectives. The official definition of quality is “the totality of features and characteristics of a product or service that bears on its ability to satisfy given needs.” Many businesses today define it as “meeting or exceeding customer expectations.”
An understanding of the user-based perspective requires a definition of customers and related terms. Thus, customers also include consumers, who ultimately use a product; external customers, who may be intermediaries between the producer and the consumer; and internal customers, who are the recipients of goods and services from suppliers within the producing firm.
Specifications, which are key to the manufacturing perspective, are defined as targets and tolerances determined by designers of products and services.

5. Performance Excellence
An integrated approach to organizational performance management that results in
delivery of ever-improving value to customers and stakeholders, contributing to organizational sustainability,
improvement of overall organizational effectiveness and capabilities, and
organizational and personal learning.
Aligning and integrating quality principles into all fundamental business activities underlies the concept of performance excellence, which is characterized by delivery of ever-improving value to customers and stakeholders, contributing to organizational sustainability; improvement of overall organizational effectiveness and capabilities;and organizational and personal learning.
Six Sigma, a customer-focused and results-oriented approach to business improvement, is revitalizing the focus on quality in the 21st Century, and is supported by traditional lean tools from the Toyota production system.
Many forces are influencing the future of quality, and will impact how organizations configure themselves, how managers plan and lead, and how all workers will perform to achieve quality.
Every function in a manufacturing system, from marketing and sales through installation and service (see Figure 1.2) contributes to quality assurance.

6. Importance of Quality
THE buzzword among business in the 1980s and 1990s
Quality problems still abound in many industries, such as automotive
Consumer expectations are high
“We’ve made dependence on the quality of our technology a part of life” – Joseph Juran

7. History of Quality Assurance (1 of 3)
Skilled craftsmanship during Middle Ages
Industrial Revolution: rise of inspection and separate quality departments
Early 20th Century: statistical methods at Bell System
Quality control during World War II
Post-war Japan: evolution of quality management
The history of quality extends from the 12th Century B.C. Zou Dynasty in China, through the age of Craftsmanship which saw the transition from informal quality to the Industrial Revolution, in the 18th and 19th Century, with its challenges of interchangeable parts, specifications, and mating parts.
Although craftspeople were attentive to quality, the industrial revolution moved responsibility for quality away from the worker and into separate staff departments. This had the effect of making quality a technical, as opposed to managerial, function. This thinking carried through Western industry until about 1980.

8. 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
In the early 20th Century, Bell Telephone Laboratories initiated the development of new theories and methods of inspection for improving and maintaining quality. The early pioneers of quality —Walter Shewhart, Harold Dodge, George Edwards, and others such as Joseph Juran and W. Edwards Deming—were members of this group.

9. History of Quality Assurance (3 of 3)
Emergence of quality management in service industries, government, health care, and education
Evolution of Six Sigma
Current and future challenge: maintain commitment to performance excellence
Quality assurance refers to any action directed toward providing consumers with goods and services of appropriate quality. Statistical quality control (SQC) is the application of statistical methods for controlling quality. SQC was vital to military production during World War II, and grew rapidly in application in the following years.
After World War II, W. Edwards Deming and Joseph Juran taught techniques of quality control and management to the Japanese in the 1950s. Over the next 20 years, Japan made massive improvements in quality, while the quality of U.S. products increased at a much slower rate.
Four significant influences brought about the “quality revolution” in the United States in the 1980s: consumer pressure, changes in technology, outdated managerial thinking, and loss of national competitiveness. Quality assumed an unprecedented level of importance in the United States. The quality movement has influenced not only product and service improvements, but the way in which organizations are managed, leading to the concepts of Big Q – managing for quality in all organizational processes as opposed to simply in manufacturing, referred to as Little Q

10. Future Influences Globalization Social responsibility
New dimensions of quality
Aging population
Health care
Environmental concerns
21st century technology

11. Quality Dimensions in Manufacturing
Performance (performans)– primary operating characteristics
Features (özellikler)– “bells and whistles”
Reliability (güvenilirlik)– probability of operating for specific time and conditions of use
Conformance (Uygunluk)– degree to which characteristics match standards
Durability (Sağlamlık)- amount of use before deterioration or replacement
Serviceability (Hizmet düzeyi)– speed, courtesy, and competence of repair
Aesthetics (estetik)– look, feel, sound, taste, smell

12. Quality Dimensions in Services
Time (Süre)– how much time must a customer wait?
Timeliness (dakiklik)– will a service be performed when promised?
Completeness (tamamlanmışlık)– Are all items in the order included?
Courtesy (nezaket) – do frontline employees greet each customer cheerfully?
Consistency (tutarlılık)– are services delivered in the same fashion for every customer, and every time for the same customer?
Accessibility and convenience (ulaşılabilirlik ve kolaylık)– is the service easy to obtain?

13. Differences Between Manufacturing and Services
Customer needs and performance standards are often difficult to identify and measure
The production of services typically requires a higher degree of customization
The output of many service systems is intangible
Services are produced and consumed simultaneously
Customers often are involved in the service process and present while it is being performed
Services are generally labor intensive
Many service organizations must handle very large numbers of customer transactions.
Every function in a manufacturing system, from marketing and sales through installation and service (see Figure 1.2) contributes to quality assurance.
The differences between services and manufacturing require different approaches in designing and implementing quality assurance activities. These differences include the difficulty of identifying and measuring customer needs, the higher degree of customization required, intangibility of service output, simultaneous production and consumption, customer involvement in the service process, labor intensity, and large number of transactions.

14. New Frontiers of Quality
Health care
Education
Government
Not-for-Profits

15. Principles, Practices, and Techniques
Principles are the foundation of the philosophy
Practices are activities by which the principles are implemented
Techniques are tools and approaches that help managers and employees make the practices effective

16. Principles of Total Quality
Customer and stakeholder focus
Process orientation supported by continuous improvement and learning
Employee engagement and teamwork
Management by fact
A strategic focus on quality as a source of competitive advantage
Visionary leadership
Total quality management (TQM), or simply total quality (TQ), is a total, company-wide effort--through full involvement of the entire workforce and a focus on continuous improvement – that companies use to achieve customer satisfaction. TQ evolved from earlier concepts of total quality control and companywide quality control as practiced in Japan. Total Quality (TQ) is a people-focused management system that aims at continual increase in customer satisfaction at continually lower real cost. TQ is a total system approach (not a seperate area or program) and an integral part of high-level strategy; it works horizontally across functions and departments, involves all employees, top to bottom, and extends backward and forward to include the supply chain and the customer chain. TW stresses learning and adaptation to continual change as keys to organizational change.

17. Customer and Stakeholder Focus
Customer is the principal judge of quality
Organizations must build relationships with customers and increase customer engagement
Organizations must understand customer needs and obtain feedback
Customers are internal and external

18. Customer-Focused Practices (1 of 2)
Identify the most important customer groups and markets
Understand both near-term and longer-term customer needs and expectations (the “voice of the customer”) and employ systematic processes for listening and learning
Understand the linkages between the voice of the customer and design, production, and delivery processes, and innovate product offerings

19. Customer-Focused Practices (2 of 2)
Create an organizational culture and manage customer relationships
Develop effective complaint management processes
Measure customer satisfaction, engagement, and dissatisfaction and use the information for improvement

20. Process Orientation
A process is a sequence of activities that is intended to achieve some result
A process is a sequence of linked activities that is intended to achieve some result, such as producing a good or service for a customer within or outside the organization. Generally, processes involve combinations of people, machines, tools, techniques, materials, and improvements in a defined series of steps or actions.
Process management involves planning and administering the activities necessary to achieve a high level of performance in key organizational processes, and identifying opportunities for improving quality and operational performance, and ultimately, customer satisfaction. Process management consists of three major activities: design, control, and improvement.

21. Cross-functional Perspective
A process perspective links together all necessary activities and increases one’s understanding of the entire system, rather than focusing on only a small part. Many of the greatest opportunities for improving organizational performance lie in the organizational interfaces (arayüzler)-those spaces between the boxes on an organizational chart.

22. Process-Focused Practices
Identify vital work processes that relate to an organization’s core competencies
Determine key work-process requirements
Design and innovate work processes to meet all requirements
Minimize overall costs associated with inspections, tests, and process or performance audits and prevent defects and errors
Implement work processes and control their day-to-day operation
Improve work processes to achieve better performance
Value-creation processes (sometimes called core processes) are those most important to “running the business” and maintaining or achieving a sustainable competitive advantage. These processes frequently relate to an organization’s core competencies and strategic objectives.
Projects are important value-creation processes in many organizations. Projects generally cut across organizational boundaries and require the coordination of many different departments and functions. Project management involves all activities associated with planning, scheduling, and controlling projects.
Support processes are those that are most important to an organization’s value-creation processes, employees, and daily operations. They provide infrastructure for value-creation processes but generally do not add value directly to the product or service.
Understanding the requirements that processes should meet is vital to designing them. Value creation process requirements usually depend significantly on product and service characteristics. Support process requirements, on the other hand, usually depend on internal requirements, and they must be coordinated and integrated to ensure efficient and effective linkage and performance.
A good process design ensures that goods and services meet both external and internal customer requirements, and that the process is capable of achieving the requisite level of performance.
In manufacturing, process design usually involves detailed technical analysis of product characteristics, technology capabilities, production sequences, assembly methods, and so on, using tools such as flow-process charts, assembly charts, and work methods analysis, which are often conducted by industrial or manufacturing engineers.
Designing a process requires a systematic approach. For most processes, this includes defining the specific sequence of steps that need to be performed, along with formal documentation of procedures and requirements. To describe the specific steps in a process and their sequence, we generally develop a process mapor flowchart, along with standard operating procedures and work instructions.

23. Continuous Improvement and Learning
Incremental and breakthrough improvement
enhancing value to the customer through new and improved products and services;
improving productivity and operational performance through better work processes and reductions in errors, defects, and waste;
improving flexibility, responsiveness, and cycle time performance; and
improving organizational management processes through learning
Learning – why changes are successful through feedback between practices and results

24. Learning Cycle Planning Execution of plans Assessment of progress
Revision of plans based upon assessment findings

25. Employee Engagement and Teamwork
Engagement (katılım)– workers have a strong emotional bond to their organization, are actively involved in and committed to their work, feel that their jobs are important, know that their opinions and ideas have value, and often go beyond their immediate responsibilities for the good of the organization
Empowerment (güçlendirme)– having the authority to make decisions
“A sincere belief and trust in people”
Workforce engagement refers to the extent of workforce commitment, both emotional and intellectual, to accomplishing the work, mission, and vision of the organization. Key factors contributing to engagement include performing meaningful work; having organizational direction, performance accountability, and an efficient work environment; and having a safe, trusting, and cooperative environment.
Empowerment—giving employees authority and autonomy to make decisions – has been advocated by quality leaders such as Juran and Deming. However, it requires significant changes in work systems, and requires managers to view work much differently. Empowerment often requires a substantial commitment to training and education, one of the hallmarks of TQ organizations.

26. Engagement-Focused Practices
Understand the key factors that drive workforce engagement, satisfaction, and motivation
Design and manage work and jobs to promote engagement
Create an environment that ensures and improves workplace health, safety, and security
Develop an effective performance management system
Assess workforce engagement and satisfaction
Assess workforce capability and capacity needs
Make appropriate investments in development and learning
Manage career progression and succession planning
The two most important components of service quality are people and technology.
Business support functions, such as finance and accounting and legal services, while not directly involved in value-creation of goods and services, have important quality responsibilities. The role of formal quality assurance departments is to provide guidance and support to everyone in the organization.
Competitive advantage denotes a firm’s ability to achieve market superiority over its competitors. Quality is a key source of competitive advantage, and studies have shown that quality is positively related to increased market share and profitability.

27. Teamwork
Vertical—teamwork between top management and lower-level employees.
Horizontal—teamwork within work groups and across functional lines (often called cross-functional teams).
Interorganizational (örgütlerarası)—partnerships with suppliers and customers
A team is a small number of people who work together and co-operate to share work and responsibility. Common types of teams include management teams, natural work teams, self-managed teams, virtual teams, quality circles, problem-solving teams, and project teams. Each type has a different role to play, but all form the foundation of today’s high performance workplace.
Building and developing successful teams requires solid management support and good planning. Self-managed teams, in particular are challenging because of the level of empowerment that they possess. The key stages of a team’s life cycle are called forming, storming, norming, performing, and adjourning. Understanding what makes successful teams can help remove obstacles to effective team development and smooth the transitioning process.

28. Management by Fact
Organizations need good performance measures to drive strategies and change, manage resources, and continuously improve
Data and information support analysis at all levels
Typical measures: customer, product and service, market, competitive comparisons, supplier, employee, cost and financial

29. Data-Driven Practices (1 of 2)
Select, collect, align, and integrate data and information for tracking daily operations and overall organizational performance
Select and ensure the effective use of comparative data and information
Review organizational performance and capabilities
Translate organizational review findings into priorities for continuous and
breakthrough improvement

30. Data-Driven Practices (2 of 2)
Make needed data and information available and accessible
Ensure that hardware and software are reliable, secure, and user-friendly
Ensure that organizational data, information, and knowledge are accurate, reliable, timely, secure, and confidential
Manage organizational knowledge
Keep performance measurement systems, hardware, and software current with business needs and directions

31. Strategic Focus
Organizations must make long-term commitments to its stakeholders
Quality should drive strategic plans along with financial and marketing objectives
Long-term organizational sustainability and competitiveness are key strategic issues

32. Strategic-Focused Practices (1 of 2)
Understand the organization’s operating environment
Understand the competitive environment
Gather and analyze relevant data and information (SWOT)
Develop and refine a systematic approach for conducting strategic planning
Develop and align short-term action plans with long-term strategic objectives

33. Strategic-Focused Practices (2 of 2)
Derive the human resource plans required to accomplish longer-term strategic objectives
Identify key measures or indicators for tracking progress on action plans
Determine the organization’s core competencies
View the work performed within the organization as a system

34. Visionary Leadership
Leadership is the responsibility of top management
Senior leaders should be role models for the entire organization
An organization cannot sustain quality initiatives without strong leadership

35. Leadership Practices (1 of 2)
Setting organizational vision and values and deploying them through the organization’s leadership system
Demonstrating a commitment to organizational values
Promoting an organizational environment that fosters, requires, and leads to legal and ethical behavior
Creating a sustainable organization
Creating an environment for organizational performance improvement
Creating an environment for organizational and workforce learning
Personally participating in succession planning

36. Leadership Practices (2 of 2)
Communicating with and engaging the entire workforce
Encouraging frank, two-way communication
Taking an active role in reward and recognition programs
Creating a focus on action to accomplish the organization’s objectives
Reviewing performance
Creating and balancing value for customers and other stakeholders
Evaluating their own performance to improve
Contributing to supporting and strengthening key communities