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Chapter 1Chapter 1Chapter 1Chapter 1

Introduction to Quality Introduction to Quality and Performance and Performance ExcellenceExcellence

Defining QualityDefining Quality

Perfection

ConsistencyEliminating 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

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Formal Definitions of Formal Definitions of QualityQualityFormal Definitions of Formal Definitions of QualityQuality

The totality of features and The totality of features and characteristics of a product or characteristics of a product or service that bears on its ability to service that bears on its ability to satisfy given needs – American satisfy given needs – American Society for Quality Society for Quality – Fitness for useFitness for use– Meeting or exceeding customer Meeting or exceeding customer

expectationsexpectations– Conformance to specificationsConformance to specifications

Performance ExcellencePerformance Excellence

An integrated approach to An integrated approach to organizational performance organizational performance management that results in management that results in – delivery of ever-improving value to delivery of ever-improving value to

customers and stakeholders, customers and stakeholders, contributing to organizational contributing to organizational sustainability, sustainability,

– improvement of overall organizational improvement of overall organizational effectiveness and capabilities, and effectiveness and capabilities, and

– organizational and personal learning.organizational and personal learning.

Importance of QualityImportance of Quality

THE buzzword among business in the THE buzzword among business in the 1980s and 1990s1980s and 1990s

Quality problems still abound in many Quality problems still abound in many industries, such as automotiveindustries, such as automotive

Consumer expectations are highConsumer expectations are high ““We’ve made dependence on the quality We’ve made dependence on the quality

of our technology a part of life” – Joseph of our technology a part of life” – Joseph JuranJuran

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History of Quality History of Quality Assurance Assurance (1 of 3)(1 of 3)

History of Quality History of Quality Assurance Assurance (1 of 3)(1 of 3)

Skilled craftsmanship during Middle Skilled craftsmanship during Middle AgesAges

Industrial Revolution: rise of inspection Industrial Revolution: rise of inspection and separate quality departmentsand separate quality departments

Early 20Early 20thth Century: statistical methods Century: statistical methods at Bell Systemat Bell System

Quality control during World War IIQuality control during World War II Post-war Japan: evolution of quality Post-war Japan: evolution of quality

managementmanagement

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History of Quality History of Quality Assurance Assurance (2 of 3)(2 of 3)

History of Quality History of Quality Assurance Assurance (2 of 3)(2 of 3)

Quality awareness in U.S. Quality awareness in U.S. manufacturing industry during manufacturing industry during 1980s: from “Little Q” to “Big Q” - 1980s: from “Little Q” to “Big Q” - Total Quality ManagementTotal Quality Management

Malcolm Baldrige National Quality Malcolm Baldrige National Quality Award (1987) Award (1987)

Disappointments and criticismDisappointments and criticism

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History of Quality History of Quality Assurance Assurance (3 of 3)(3 of 3)

History of Quality History of Quality Assurance Assurance (3 of 3)(3 of 3)

Emergence of quality management Emergence of quality management in service industries, government, in service industries, government, health care, and educationhealth care, and education

Evolution of Six SigmaEvolution of Six Sigma Current and future challenge: Current and future challenge:

maintain commitment to maintain commitment to performance excellenceperformance excellence

Quality Dimensions in Quality Dimensions in ManufacturingManufacturing

PerformancePerformance – primary operating – primary operating characteristicscharacteristics

FeaturesFeatures – “bells and whistles” – “bells and whistles” ReliabilityReliability – probability of operating for – probability of operating for

specific time and conditions of usespecific time and conditions of use ConformanceConformance – degree to which – degree to which

characteristics match standardscharacteristics match standards DurabilityDurability - amount of use before - amount of use before

deterioration or replacementdeterioration or replacement ServiceabilityServiceability – speed, courtesy, and – speed, courtesy, and

competence of repaircompetence of repair AestheticsAesthetics – look, feel, sound, taste, smell – look, feel, sound, taste, smell

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Quality Dimensions in Quality Dimensions in ServicesServices

TimeTime – how much time must a customer wait? – how much time must a customer wait? TimelinessTimeliness – will a service be performed when – will a service be performed when

promised?promised? CompletenessCompleteness – Are all items in the order – Are all items in the order

included?included? CourtesyCourtesy – do frontline employees greet each – do frontline employees greet each

customer cheerfully?customer cheerfully? ConsistencyConsistency – are services delivered in the – are services delivered in the

same fashion for every customer, and every same fashion for every customer, and every time for the same customer?time for the same customer?

Accessibility and convenienceAccessibility and convenience – is the service – is the service easy to obtain?easy to obtain?

Differences Between Differences Between Manufacturing and Manufacturing and ServicesServices 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.

New Frontiers of QualityNew Frontiers of Quality

Health careHealth care EducationEducation GovernmentGovernment Not-for-ProfitsNot-for-Profits

Deming PhilosophyDeming Philosophy

The Deming philosophy focuses on continual improvements in product and service quality by reducing uncertainty and variability in design, manufacturing, and service processes, driven by the leadership of top management.

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Deming Chain ReactionDeming Chain Reaction

Improve quality

Costs decrease

Productivity improves

Increase market share with better quality and lower prices

Stay in business

Provide jobs and more jobs

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Deming’s System of Deming’s System of Profound KnowledgeProfound Knowledge

Appreciation for a systemAppreciation for a system Understanding variationUnderstanding variation Theory of knowledgeTheory of knowledge PsychologyPsychology

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SystemsSystems

Most organizational processes are Most organizational processes are cross-functionalcross-functional

Parts of a system must work Parts of a system must work togethertogether

Every system must have a Every system must have a purposepurpose

Management must optimize the Management must optimize the system as a wholesystem as a whole

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VariationVariation

Many sources of uncontrollable Many sources of uncontrollable variation exist in any processvariation exist in any process

Excessive variation results in Excessive variation results in product failures, unhappy product failures, unhappy customers, and unnecessary costscustomers, and unnecessary costs

Statistical methods can be used to Statistical methods can be used to identify and quantify variation to identify and quantify variation to help understand it and lead to help understand it and lead to improvementsimprovements

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Theory of KnowledgeTheory of Knowledge

Knowledge is not possible Knowledge is not possible without theorywithout theory

Experience alone does not Experience alone does not establish a theory, it only establish a theory, it only describesdescribes

Theory shows cause-and-effect Theory shows cause-and-effect relationships that can be used relationships that can be used for predictionfor prediction

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PsychologyPsychology

People are motivated intrinsically People are motivated intrinsically and extrinsically; intrinsic and extrinsically; intrinsic motivation is the most powerfulmotivation is the most powerful

Fear is demotivating Fear is demotivating Managers should develop pride Managers should develop pride

and joy in workand joy in work

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Deming’s 14 Points Deming’s 14 Points (Abridged)(Abridged) (1 of 2)(1 of 2)

1. Create and publish a company mission statement and commit to it.2. Learn the new philosophy.3. Understand the purpose of inspection.4. End business practices driven by price alone.5. Constantly improve system of production and service.6. Institute training.7. Teach and institute leadership.8. Drive out fear and create trust.

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Deming’s 14 Points Deming’s 14 Points (2 of 2)(2 of 2)

9. Optimize team and individual efforts.10. Eliminate exhortations for work force.11. Eliminate numerical quotas and M.B.O. Focus on improvement.12. Remove barriers that rob people of pride of workmanship.13. Encourage education and self-improvement.14. Take action to accomplish the transformation.

www.deming.org

Juran PhilosophyJuran Philosophy

Juran proposed a simple definition of quality: “fitness for use.” This definition of quality suggests that it should be viewed from both external and internal perspectives; that is, quality is related to “(1) product performance that results in customer satisfaction; (2) freedom from product deficiencies, which avoids customer dissatisfaction.”

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Juran’s Quality TrilogyJuran’s Quality Trilogy

Quality planningQuality planning Quality controlQuality control Quality improvementQuality improvement

www.juran.com

Crosby Philosophy

Quality is free . . . “Quality is free. It’s not a gift, but it is free. What costs money are the unquality things -- all the actions that involve not doing jobs right the first time.”

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Crosby’s Absolutes of Quality Management

Quality means conformance to Quality means conformance to requirementsrequirements

Problems are functional in natureProblems are functional in nature There is no optimum level of defectsThere is no optimum level of defects Cost of quality is the only useful Cost of quality is the only useful

measurementmeasurement Zero defects is the only performance Zero defects is the only performance

standardstandardwww.philipcrosby.com

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Principles of Total QualityPrinciples of Total Quality

Customer and stakeholder focusCustomer and stakeholder focus Process orientationProcess orientation Continuous improvement and learningContinuous improvement and learning Employee engagement and teamworkEmployee engagement and teamwork Management by factManagement by fact Visionary leadership and a strategic Visionary leadership and a strategic

orientationorientation

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Customer and Customer and Stakeholder FocusStakeholder Focus

Customer is principal judge of Customer is principal judge of qualityquality

Organizations must first Organizations must first understand customers’ needs and understand customers’ needs and expectations in order to meet and expectations in order to meet and exceed themexceed them

Organizations must build Organizations must build relationships with customersrelationships with customers

Customers are internal and Customers are internal and externalexternal

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Process OrientationProcess Orientation

A A processprocess is a sequence of is a sequence of activities that is intended to activities that is intended to achieve some resultachieve some result

Cross-functional Cross-functional Perspective Perspective

Continuous Improvement Continuous Improvement and Learningand Learning

Incremental and breakthrough Incremental and breakthrough improvementimprovement– Products and servicesProducts and services– Work processesWork processes– Flexibility, responsiveness, and cycle Flexibility, responsiveness, and cycle

timetime LearningLearning – why changes are – why changes are

successful through feedback successful through feedback between practices and resultsbetween practices and results

Learning CycleLearning Cycle

1.1. PlanningPlanning

2.2. Execution of plansExecution of plans

3.3. Assessment of progressAssessment of progress

4.4. Revision of plans based upon Revision of plans based upon assessment findingsassessment findings

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Employee Engagement and Employee Engagement and TeamworkTeamwork

EngagementEngagement – workers have a strong – workers have a strong emotional bond to their organization, emotional bond to their organization, are actively involved in and are actively involved in and committed to their work, feel that committed to their work, feel that their jobs are important, know that their jobs are important, know that their opinions and ideas have value, their opinions and ideas have value, and often go beyond their immediate and often go beyond their immediate responsibilities for the good of the responsibilities for the good of the organizationorganization

Teamwork must exist vertically, Teamwork must exist vertically, horizontally, and interorganizationallyhorizontally, and interorganizationally

Management by FactManagement by Fact

Organizations need good performance Organizations need good performance measures to drive strategies and change, measures to drive strategies and change, manage resources, and continuously manage resources, and continuously improveimprove

Data and information support analysis at Data and information support analysis at all levelsall levels

Typical measures: customer, product and Typical measures: customer, product and service, market, competitive service, market, competitive comparisons, supplier, employee, cost comparisons, supplier, employee, cost and financialand financial

Visionary Leadership and Visionary Leadership and a Strategic Orientationa Strategic Orientation

Leadership is the responsibility of Leadership is the responsibility of top managementtop management

Senior leaders should be role Senior leaders should be role models for the entire organizationmodels for the entire organization

Leaders must make long-term Leaders must make long-term commitments to key stakeholderscommitments to key stakeholders

Quality should drive strategic Quality should drive strategic plansplans

TQ and Agency TheoryTQ and Agency Theory

Agency relationship: a concept in which one party (the principal) engages another party (the agent) to perform work

Key assumption: individuals in agency relationships are utility maximizers and will always take actions to enhance their self-interests.

Contrast With TQ Contrast With TQ (1 OF 2)(1 OF 2)

TQ views the management system as one based on social and human values, whereas agency theory is based on an economic perspective that removes people from the equation.

Agency theory propounds the belief that people are self-interested and opportunistic and that their rights are conditional and proportional to the value they add to the organization. TQ suggests that people are also motivated by interests other than self, and that people have an innate right to be respected.

Contrast With TQ Contrast With TQ (2 OF 2)(2 OF 2)

Agency theory assumes an inherent conflict of goals between agents and principals, and that agent goals are aligned with principal goals through formal contracts. In TQ, everyone in the organization shares common goals and a continuous improvement philosophy, and goals are aligned through adoption of TQ practices and culture.

TQ takes a long-term perspective based on continuous improvement, whereas agency theory focuses on short-term achievement of the contract between the principal and agent.

TQ leaders provide a quality vision and play a strategic role in the organization; leaders in agency theory develop control mechanisms and engage in monitoring.

TQ and Organizational TQ and Organizational ModelsModels