LEADERS IN QUALITY REVOLUTION AND DEFINING FOR QUALITY LECTURE#25 TQM 1.

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LEADERS IN QUALITY REVOLUTION AND DEFINING FOR QUALITY

LECTURE#25TQM

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The Concept and Definition of Quality

• While managers have shown interest in the concept of quality, many have been frustrated by its elusiveness.

• They find diverse and often conflicting definitions in professional books, journals, and news media.

• Despite common themes such as continuous improvement, customer focus, and excellence, different people emphasize different things.

• For example, in a 1991 public television special, “Quality or Else,” executives, managers, workers, academics,

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The Concept and Definition of Qualityothers defined quality variously as follows:• A pragmatics system of continual improvement, a way to

successfully organize man and machines.• The meaning of excellence.• The unyielding and continuing efforts by everyone in an

organization to understand, meet, and exceed the needs of its customers.

• The best product that you can produce with the materials that you have to work with.

• Continuous good product which a customer can trust.• Producing a product or service that meets the needs or

expectations of the customers.• Not only satisfying customers, but delighting them,

innovating, creating.

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The Concept and Definition of Quality

• Your own sample of definitions would probably reveal similar variety.

• Different companies, and different people within the same company, often disagree on the definition of quality.

• Sometimes the disagreement is merely due to semantics. Sometimes they are the result of focusing on different dimensions of quality.

• Other times the differences are more profound, implying conflicting courses of action and approaches to management.

• Here we look at several views of quality and then offer a definition that should help to integrate managerial efforts to improve quality throughout an organization.

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The Transcendent View of Quality

• The concept of quality has often been defined, from a transcendent view, as “innate excellence”.

• This view implies that high quality is something timeless and enduring, an essence that transcends or rises above individual tastes or styles.

• It often regards quality as an un-analyzable property that people learn to recognize through experience, just as Plato argued that beauty can be understood only after exposure to a series of objects that display its characteristics.

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A Critique of the Transcendent View of Quality

• Walter A. Shewhart, the father of modern-day statistical quality control, offered the following criticism of the transcendent view of quality: Dating at least from the time of Aristotle, there has been some tendency to conceive of quality as indicating the goodness of an object.

• The majority of advertisers appeal t the public upon the basis of the quality of product.

• In so doing, they implicitly assume that there is a measure of goodness which can be applied to all kinds of product, whether it is vacuum tubes, sewing machines automobiles.

• The transcendent view of quality essentially tells a manager “you will know it when you see it” and does not inform managers how to pursue excellence.

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A Critique of the Transcendent View of Quality

• Certainly the notion of excellence is an important and inspirational component of quality.

• However, future managers must have a better understanding of the concept.

• The definition of quality must be more pragmatic, more objective, and more tangible.

• It must inform managers about how to make improvements.• To better understand how this total views of quality impacts managerial

practices, it is useful to understand how managerial approaches to quality have evolved from a narrow view, focused on inspection and conformance to specified standards, toward a broader view, focused on organizational strategy for providing superior customer value.

• We now discuss the evolution of quality approaches.

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Product-Based• Shewhart explains that the word “quality,” in Latin, qualities,

comes from quails, meaning “How constituted” and signifies a thing’s basic nature.

• Emphasizing a product-based view of quality, Shewhart argued that the quality of a manufactured product may be described in terms of a set of characteristics.

• Product-based definitions of quality suit engineers because they are concerned with translating product requirements into specific components and physical dimensions that can be produced.

• For example, measurement of capacity, inductance, and resistance may be used to define the quality of a relay.

• So, according to this view, quality is a precise and measurable variable: differences in quality reflect differences in the quantity of an attribute the product possess (Garvin, 1988).

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Product-Based

• For example, high-quality rugs have a large number of knots per square inch.

• Quality in a rug can be seen as an inherent characteristic that can be assessed objectively.

• Since quality reflects the quantity of attributes contained by a product, and because attributes are costly to produce, high quality means higher cost.

• In this view, a Cadillac loaded with a number of amenities is a higher-quality car than a stripped-down Chevrolet.

• The product-based view has some merit, but it does not accommodate differences in individual tastes and preferences.

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Manufacturing-Based• Another meaning of the word “quality” is “the degree of

excellence that a thing possess” once it is manufactured.• The manufacturing-based view of quality focuses on

manufacturing and engineering practices, emphasizes conformance to specified requirements, and relies on statistical analysis to measure quality.

• As you will see, it contradicts the notion that higher quality necessarily corresponds to higher cost.

• Returning to the example of a relay, Shewhart suggests the overall quality of a relay can be further expressed in terms of whether it meets engineering specifications for product-based characteristics (qualities), such as capacity, inductance, and resistance.

• To simplify, let’s just consider two dimensions, resistance and inductance.

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Manufacturing-Based• The quality or degree of excellence of a product (represented

by a point or a set of two measurements) falling within the rectangular region would be characterized as good or satisfactory.

• A product with quality outside the region, not conforming to satisfactions, would be characterized as bad or unsatisfactory.

• Of course, real manufacturing processes produce a stream of products. Ideally, each individual product has quality that conforms to specification.

• However, variation in the production process may produce some products that are outside the specifications.

• Shewhart suggested that the fraction of nonconforming items produced by a manufacturing process can be studied statistically to assess quality.

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Manufacturing-Based

• The knowledge gained from statistical studies can be used to improve the control of quality, thus ensuring that a larger fraction of the products conform to specification.

• By stabilizing and reducing variation in the process, managers can ensure that product quality is always within specification.

• Such improvement would mean fewer defects, les scrap, less rework, and consequently, less cost.

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User-Based

• The user-based perspective does not abandon manufacturing quality as a strategic objective, but provides a context for it.

• As Shewhart says, “The broader concept of economic control naturally includes the problem of continually shifting the standards expressed in terms of measurable physical properties to meet best the shifting economic value of these particular physical characteristics depending upon shifting human wants”.

• The user-based view of quality, popular with people in marketing, presumes that quality rests in “the eye o the beholder,” the user of the product, rather than an engineer’s specified standards.

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The Concept of Customer Value

• Value-based approaches expand on the user-based view f quality by incorporating the notion of “price of costs.”

• Regarding value-based approaches, Garvin (1988) suggests “a quality product is one that provides performance or conformance at an acceptable price or cost.

• By this reasoning, a $ 500 running shoe, no matter how well-constructed, could not be a quality product, for it would find few buyers.”

• In support of this view, researchers have demonstrated a positive relationship between market share and value-based measures of quality.

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The Concept of Customer Value• Other examples contradict this value-based approach which

assumes that lower cost always means higher value to the customer.

• Designer dresses that sell for $5,000, or luxury cars that cost more than a home, suggest that there is another dimension of value.

• The definition of customer value offered below expands on this value-based definition of quality.

• In fact, the customer value concept encompasses all of the foregoing definitions of quality.

• We define customer value as a combination of benefits and sacrifices occurring when a customer uses a product or service to meet certain needs.

• Those consequences that contribute to meeting one’s needs are benefits, while those consequences that detract from meeting one’s needs are sacrifices.

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The Concept of Customer Value• For example, a person who purchases a large luxury car to

satisfy a need for pleasurable travel might enjoy such benefits as comfort, restfulness, and audio entertainment.

• On the other hand, the person also has to make certain sacrifices, such as paying for the vehicle, difficulties in parking a large vehicle, and fuel and maintenance costs these sacrifices detract from meeting customer needs.

• For example, if the car owner lives in a town that doesn’t have a dealership for the luxury car, he or she will incur costs such as frustration, time, and the inconvenience of going to another town for service.

• The concept of customer value encompasses the benefits and sacrifices associated with the customer’s use process throughout the life cycle of product ownership.

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The Concept of Customer Value

• As Deming (1986) suggests: “Quality must be measured by the interaction between three participants:

• (1) the product itself; • (2) the user and how he uses the product, how he

installs it, how he takes care of it; and • (3) instructions for use, training of customer and

training of repairman, service provided for repairs, and availability of parts.”

• The concept of customer value also encompasses all the definitions of quality mentioned so far.

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The Concept of Customer ValueTo provide value to customers, managers must ensure the following:1. Quality of Design/Redesign:• Product designs conform to customer needs (product-based and

user-based quality). • For example, automobile producers design car seat to conform to

the contours of the diver’s back.2. Quality of Conformance:• Product manufactured conforms to product designs

(manufacturing-based quality). • For example, each car seat produced meets the targeted design

specifications.3. Quality of Performance:• Products manufactured conform to customer needs by performing

in the field (user-based quality). • For example, the car seats maintain their shape after years of use.

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The Concept of Customer Value• All of these dimensions of quality should be managed

through a quality improvement process that enhances customer value.

• Placing quality in the broader context of customer value counteracts the tendency of people with different functional orientations within an organization t take different views of quality (Garvin, 1988).

• For example, marketing people tend to have a user-based and product-based view that focuses on matching product characteristics with customer perceptions.

• Engineers, on the other hand, tend to take a product-based view that focuses on defining product characteristics.

• Manufacturing people tend to view quality as conformance to specification and targets.

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WTO, SHIFTING FOCUS OF CORPORATE CULTURE AND ORGANIZATIONAL MODEL

OF MANAGEMENT

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WTO (in 20XX), SHIFTING FOCUS OF CORPORA TE CULTURE AND

TheORGANIZATIONAL MODELOF MANAGEMENT

From To

Thinking Global Being Global

Focus on Local Market Focus on Global Market

MNC in manufacturing MNC in Services

Antagonistic towards Rivals Collaboration with Rivals

Work with Hands Work with 3H & H3

Upgrade Technology Upgrade People

Focus on Process Quality Focus on Design Quality

Mass Mindset Lean and Me Mindset

Manage by Control Manage by Commitment

Individual Values Shared Values

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DEFINING QUALITY, QUALITY MANAGEMENT AND LINKS WITH PROFITABILITY

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Beyond Total Quality

• By the end of the 1990s Total Quality Management (TQM) was considered little more than a fad by many American business leaders (although it still retained its prominence in Europe).

• As the 21st century begins, the quality movement has matured.

• New quality systems have evolved beyond the foundations laid by Deming, Juran and the early Japanese practitioners of quality.

Some examples of this maturation:• In 2000 the ISO 9000 series of quality management standards

was revised to increase emphasis on customer satisfaction.

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Beyond Total Quality

• Beginning in 1995, the Malcolm Baldrige National Quality Award added a business results criterion to its measures of applicant success.

• Six-Sigma, a methodology developed by Motorola to improve its business processes by minimizing defects, evolved into an organizational approach that achieved breakthroughs – and significant bottom-line results.

• Quality Function Deployment was developed by Y. • Akao as a process for focusing on customer wants or

needs in the design or redesign of a product or service.

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Beyond Total Quality

• Sector-specific versions of the ISO 9000 series of quality management standards were developed for such industries as automotive (QS-9000), aerospace (AS9000) and telecommunications (TL 9000 and ISO/TS 16949) and for environmental management (ISO 14000) and also for IT Sector.

• Quality has moved beyond the manufacturing sector into such areas as service, healthcare, education and government.

• The CMM levels 1-5 emphasize quality in IT sector from the maturity point of view of processes and people.

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Beyond Total Quality

• Emphasis on learning by doing as a means of continual improvement has been accepted and has paved the way to consider Knowledge as a strategic resource of production in 21st century work place and in work organizations.

• Discussion of Knowledge Management and Learning Organizations are becoming common in all sorts of companies and all sectors of economy and is rather being taken as a source of national competitive advantage in global interconnected and interdependent info-com oriented world.

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THE CONCEPT OF QUALITY• People define quality in many ways. Some think of quality as

superiority or excellence, others view it as a lack of manufacturing or service defects, still others think of quality as related to product features or price.

• As study that asked managers of 86 firms to define quality produced several dozen different responses, including.– 1. perfection– 2. consistency– 3. eliminating waste– 4. speed of delivery– 5. compliance with policies and procedures– 6. providing a good, usable product– 7. doing it right the first time– 8. delighting or pleasing customers– 9. total customers service and satisfaction

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THE CONCEPT OF QUALITY• Today most managers agree that the main reason to pursue

quality is to satisfy customers. • The American National Standards Institute (ANSI) and the

American Society for Quality (ASQ) define quality as “the totality of features and characteristics of a product or service that bears on its ability to satisfy given needs.”

• The view of quality as the satisfaction of customer needs is often called fitness for use.

• In highly competitive markets, merely satisfying customer needs will not achieve success.

• To beat the competition, organizations often must exceed customer expectations.

• Thus, one of the most popular definitions of quality is meeting or exceeding customer expectations.