The Future of Quality Management

7/28/2019 The Future of Quality Management

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The Future of Quality Management

The demand for complete customer satisfaction indicates aprofound social shift for both global consumers and business

buyers.

by Armand V. Feigenbaum

The quality movement provided a solid foundation on which many U.S.companies managed their return to strong growth following the difficult

1980s and early 1990s. These quality systems and processes havesubsequently become major influences in businesses throughout Asia,

Europe, Latin America, the Middle East and Micronesia.

At the same time, however, powerful new global economic forces were

radically changing the concepts of quality and how it was managed. Theseforces now make it essential that quality managers face the future with

quality-based management programs that fit the new business era, ratherthan continuing with systems that may have worked in the recent past.

Several trends will impact quality managements future. This article

examines them and the strategies that organizations should implement as a

result.

Demanding customers

By the end of this decade, well over 1 billion men and women, and thecompanies that provide products and services to them, will make up an

increasingly demanding customer base in common markets or regional

trade alliances throughout the Americas, Asia and Europe. Moreover, thisfigure probably will increase as we proceed into the 21st century, now

within the practical time horizon for realistic corporate business planning.


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At the heart of accelerating sales and market shares that pacesetter

international companies enjoy today is an unflagging responsiveness to the

demanding global customer. Surveys conducted by General Systems Co.indicate that when a global market consumer is satisfied with quality, he or

she tells six others about the product or service; if that person is

dissatisfied, 22 others hear about it. When it comes to transactions withinindustries, data show that a satisfied industrial customer is seven to eighttimes more likely to buy again from the same supplier than from its

competitors. Thats the power of complete quality satisfaction in

todays markets.

As this global economy reaches out to world businesses, it becomes clear

that quality is becoming not only the international business language for

worldwide trade networks but also that worldwide economic and socialforces are fundamentally changing quality concepts and management.

Improved quality now means an increase in value as well as rightperformance, service, design and economy for global customers. This

differs from quality controls former focus on defect reduction alone.

Understanding and speaking this new quality language -- and transforming

quality processes accordingly -- is a principal goal of successful

companies that are becoming sales growth and earnings profitability

leaders in the new global economy.

A closer look at the global economic, social and trade forces upon which

these companies have been built can offer some insight into their success.

Shifting customer value expectations

Perhaps most important is the fundamental shift in customer value

expectations in the global marketplace.

Ongoing surveys of customer buying patterns throughout major

international markets indicate that nine out of 10 buyers make quality theirprimary purchasing standard, as compared with three or four out of 10 a

decade ago. As customers, they increasingly approach quality as a buying

discipline, which they measure by their total-value perception of the

product as well as the organization that produces it. This means that the

quality of the steel or the merchandising service customers receive is animportant part -- but just a part -- of the complete support, billing accuracy

and delivery reliability package they expect to buy.

For example, routinely and properly washing automobiles as part of a

dealer service call is a simple but nonetheless expected service that manycustomers identify as a value differentiator. The service shows that the

dealer cares, and customers appreciate saving the time and effort. They


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assume, correctly or incorrectly, that a responsible dealer can accomplish

any technical action. Similarly, the voluntary elimination by a mobile

communications company of a few dead spots on a main trucking route isone of the primary buyer-value reasons customers cite for their return sales

with that company rather than with its competitors.

For consumers, this attitude is driven by a need to improve their standard

of living. For business buyers, its driven by economic pressures that

demand reliable, predictable equipment and services without time-

consuming failures or other hidden costs. These buyers expect a level ofquality that is essentially perfect for their needs, affordable and user-

determined.

This demand for complete customer satisfaction indicates a profound

social shift for both global consumers and business buyers. Organizations

that continue to concentrate solely on defect reduction overlook their

customers new buyer-value expectations. This is most evident in the

disparity between many companies quality satisfaction measurements.

Some companies point proudly to their quality improvement data -- i.e.,

defect reduction -- even as customer surveys indicate that buyers believe

quality hasnt improved -- i.e., increased in quality value -- and they are

therefore curtailing their business with these companies.

Economic pressures

Another force is the overwhelming economic pressure on organizations.Like a giant pair of scissors, the pressure closes in on many of them fromopposing directions. One is the strong upward pressure due to increasing

costs despite concerted containment efforts; the other is a severe

downward pressure on the price of goods due to market changes. To

compound matters, even after years of cost accounting, many

organizations still dont know what things really cost as a foundation for

true cost reduction.

For example, some companies have adopted a slash-and-burn cost-

reduction approach. However, unless its synchronized with specific

improvements in process, cost reduction produces the same results as

weight reduction without a change in lifestyle: It doesnt stick. Instead, it

leads to more cost reduction, more restructuring and corporate-navel

contemplating. As a result, these companies become out of touch with

rapid changes in new markets, new employee attitudes and new

management approaches.


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The key is to directly link customer value enhancement with cost.

Improving quality also improves an organization overall -- from marketing

and design to operations and distribution. Therefore, cost must include notonly operations and sales but also delivering customer satisfaction.

General Systems survey data show that, at many companies, this accountsfor as much as 25 percent of sales, much of it for quality failures. For

companies in which total quality has been correctly managed, the figure is

10 percent or less. Total quality initiatives have established teamworkprocesses that, by improving quality for customers, have greatly reduced

the costs accrued from failing to deliver customer satisfaction. These

reductions help support quality value-enhancement programs as well as

bottom-line net operating income. Shareholders and investors canunderstand such reductions.

New management approaches

These two forces -- the shift in customer value expectations and new

economic pressures -- lead to a third force: innovative managementapproaches to human leadership.

These approaches reject the notion that good management and successful

improvement means getting the ideas out of the bosss head and into the

workers hands. Organizations that embrace this approach to business

improvement become increasingly estranged from their customers,

employees and suppliers. Top-down planning only serves to isolate

organizations from their customers buying habits. It encourages anatmosphere of intimidation with suppliers rather than a partnership.

Under the old-school management regime, human resource improvement

programs hardly fare better. They are keyed to flashy motivational

seminars, combined with regular doses of management speech making.

But when employees return to their jobs to apply what theyve heard,

they face the same old ambiguous management practices and continue to

thread their way through autonomous departmental islands without any

bridges between them.

A very different foundation for business success will characterize

competitive organizations in the future. These quality leadership

companies will:


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Make quality the epicenter of increasing revenue growth and competitive

leadership.

Achieve complete customer satisfaction by offering essentially perfectgoods and services whose quality the customer determines.

Accelerate sales and earnings growth through quality failure reduction.


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Innovate in product and service leadership and cycle-time management.

Restore thefizz to jobs by using tools and resources to encourage

employee participation in quality improvement.

Develop effective supplier partnerships.


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Create a seamless quality value network among customer, producer and

supplier relationships.

Provide environmental and safety leadership.

nEnsure that quality remains the companys international business

language.

Companies that can implement these processes wont travel under any

single national passport, nor any particular cultural or social identity. But

they will share certain quality management characteristics. In particular,

they will:


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Consider their basic objective as continuously accelerating value for

customers, investors and employees.

Emphasize thatmarket-driven means quality according to what their

customers, not the company, say it is.

Lead by a combination of passion, discipline and populism, with a bias


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for improvement and an emphasis on communication.

Recognize that sustained growth demands increasing customersatisfaction, cost leadership, human resource effectiveness and integration

with their supplier base -- all four, all the time.

Foster a deep commitment to fundamental business improvement through

knowledge, skills, democratic problem solving and teamwork.

These characteristics will provide improved quality to customers and help

organizations successfully face the social and economic changes that are

ushering in a new global business climate.

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The Future of Quality Management