Chapter 1

Introduction to Total Quality in Organizations

Total Quality

A comprehensive, organization-wide effort to improve the quality of products and services

Manufacturing and service Large and small Profit and not-for-profit

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
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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

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: keep progress in quality management alive

Defining Quality
Perfection
Providing a good, usable product

Fast delivery
Consistency Doing it right the first time

Eliminating waste

Delighting or pleasing customers Total customer service and satisfaction Compliance with policies and procedures

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
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Quality in Manufacturing

Performance primary operating characteristics Features bells and whistles Reliability probability of operating for specific time and conditions of use Conformance degree to which characteristics match standards Durability - amount of use before deterioration or replacement Serviceability speed, courtesy, and competence of repair Aesthetics look, feel, sound, taste, smell

Key Dimensions of Service Quality

Time how much time must a customer wait? Timeliness will a service be performed when promised? Completeness Are all items in the order included? Courtesy do frontline employees greet each customer cheerfully? Consistency are services delivered in the same fashion for every customer, and every time for the same customer? Accessibility and convenience is the service easy to obtain?
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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.

Quality and E-commerce

Customer expectations
Valuable content that is intuitive and understandable, accurate, and current Speed and reliability Ease of use and ability to meet expectatations

Deming 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.

Deming 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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Demings System of Profound Knowledge

Appreciation for a system Understanding variation Theory of knowledge Psychology

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Systems

Most organizational processes are cross-functional Parts of a system must work together Every system must have a purpose Management must optimize the system as a whole
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Variation

Many sources of uncontrollable variation exist in any process Excessive variation results in product failures, unhappy customers, and unnecessary costs Statistical methods can be used to identify and quantify variation to help understand it and lead to improvements
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Theory of Knowledge
Knowledge is not possible without theory Experience alone does not establish a theory, it only describes Theory shows cause-and-effect relationships that can be used for prediction

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Psychology

People are motivated intrinsically and extrinsically; intrinsic motivation is the most powerful Fear is demotivating Managers should develop pride and joy in work

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Demings 14 Points
(1 of 2)

(Abridged)

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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Demings 14 Points

(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

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Juran 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.

Jurans Quality Trilogy

Quality planning Quality control Quality improvement

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Crosby Philosophy

Quality is free . . .
Quality is free. Its 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.

Crosbys Absolutes of Quality Management

Quality means conformance to requirements Problems are functional in nature There is no optimum level of defects Cost of quality is the only useful measurement Zero defects is the only performance standard
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Principles of Total Quality

Customer and stakeholder focus Process orientation Continuous improvement and learning Empowerment and teamwork Management by fact Visionary leadership that views TQ as a strategic organizational asset

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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 are internal and external

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Process Orientation

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

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Cross-functional Perspective

Continuous Improvement and Learning

Incremental and breakthrough improvement

Products and services Work processes Flexibility, responsiveness, and cycle time

Learning why changes are successful through feedback between practices and results

Learning Cycle
1.
2. 3. 4.

Planning Execution of plans Assessment of progress Revision of plans based upon assessment findings

Empowerment and Teamwork

Empowerment giving people authority to make decisions and promote change Employees know their jobs best and therefore, how to improve them Empowerment better serves customers, and creates trust and motivation Teamwork must exist vertically, horizontally, and interorganizationally
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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

Visionary Leadership and Strategic Orientation

Leadership is the responsibility of top management Senior leaders should be role models for the entire organization Leaders must make long-term commitments to key stakeholders Quality should drive strategic plans

TQ 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

(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 (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 Models