Quality is Free- The Art of Making Quality Certain

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Quality Is FreeThe Art of Making Quality Certain

By Philip B. CrosbyMcGraw-Hill Book CompanyCopyright 1979

Presentation by Kristine Daynes

1This presentation is based entirely on Quality Is Free by Philip B. Crosby and is meant as a general guide or overview of its concepts. About the Author, Philip CrosbyIntroduced the Zero Defects program at Martin-Marietta in the early 1970sPublished Quality Is Free in 1979 after fourteen years as a vice president at International Telephone & Telegraph (ITT)Started the management consulting group Philip Crosby Associates, Inc. (PCA) in 1979

2What Will Be CoveredQuality Concepts and PrinciplesQuality Management Maturity GridFourteen-Step Quality Improvement ProgramReal-Life ExampleHands-On Exercise

3This presentation begins with an overview of Crosbys quality concepts and principles, including a definition of quality is free, the integrity systems table, the five erroneous assumptions that management makes, and the essential traits of a quality manager. The presentation then outlines the five stages and six measurement categories of the Quality Management Maturity Grid. Following that, several slides list the fourteen steps of Crosbys Quality Improvement Program. The presentation concludes with a real-life example and a hands-on exercise. A list of other publications by Philip Crosby is included for reference.What does quality is free mean?A quality program can save a company more money than it costs to implementProfitability is best accomplished by reducing the cost of poor quality and preventing defectsCost savings include prevention, appraisal, and failure costs.

4The cost of implementing a corporate quality program is offset by the cost savings of preventing defects. The total cost of quality includes prevention, appraisal, and failure costs:Prevention costs include the following activities: design reviews, product qualification, drawing checking, engineering quality orientation, quality improvement programs, supplier evaluations, supplier training, specification reviews, process capability studies, tool control, operating training, quality orientations, acceptance planning, quality audits, and preventive maintenance.Appraisal costs include the following activities: prototype inspection and testing, production specification conformance analysis, supplier surveillance, receiving inspection and testing, product acceptance, process control acceptance, packaging inspection, and status measurement and reporting.Failure costs include the following activities: consumer affairs, redesign, engineering change orders, purchasing change orders, corrective action costs, rework, scrap, warranties, after-sales service, and product liability.The Integrity Systems TableManagement participation and attitudeProfessional quality managementOriginal programsRecognition

5Quality management requires a deliberate strategy to motivate people to adopt and sustain quality principles. A corporate quality program is a table supported by four legs: Management participation. Top management has to be actively involved with quality improvement. That sets a level of expectation for the rest of the organization.Professional quality management. A successful quality program depends on networking and training activities through quality councils, formal educational training, and professional certification within the organization.Original programs. Quality programs should be based on practical activities that can be implemented at all levels in all of an organizations units. Crosby outlines several quality programs including a fourteen-step improvement program, Zero Defects, and Buck a Day (BAD).Recognition. More important than cash or financial awards, public recognition demonstrates the organizations commitment to and value for quality.The Five Erroneous AssumptionsQuality means goodness, elegance

Quality is intangible, not measurableThe economics of quality are prohibitive, not relevantQuality problems originate with the workersQuality is the responsibility of the quality departmentQuality is conformance to requirementsQuality is measured by the cost of nonconformanceIt is cheaper to do things right the first timeMost problems start in planning and developmentQuality is shared by every function and department

6Most managers hold five erroneous assumptions about quality and quality programs. These assumptions are the source of most misunderstandings and disagreements between those who demand quality and those who are supposed to achieve it. The truth is--Quality is conformance to requirements. Requirements must be clearly stated so that they cannot be misunderstood. The only performance standard is Zero Defects.Quality can be measured by the cost of quality, which is the expense of prevention, appraisal, and failure recovery. Measurements should be displayed as visible proof of improvement and recognition of achievement. In any business, it is cheaper to do it right the first time. There are many excuses for not adopting quality improvement programs. One is that the economics of quality wont allow an organization to do something, or that our business is different. These are excuses that have no real meaning.Most quality problems originate with those who do the planning and creatingin accounting, engineering, information systems, or marketingand not with manufacturing workers. There is no such thing as a quality problem.Quality is shared by every function. Errors, problems, and defects should be attributed to those who cause them, not the quality department.

Essential Traits of a Quality ManagerListeningCooperatingHelpingTransmittingCreating

Implementing Learning Leading Following Pretending 7Quality management is a systematic way of guaranteeing that organized activities happen the way they are planned. It is a management discipline concerned with preventing problems from occurring by creating the attitudes and controls that make prevention possible (p.19).

Radical changes in the labor force, energy consumption, and technology have left managers to deal with situations for which there is no precedent. This requires them to gain complete control of themselves, think creatively and implement ideas simultaneously, and anticipate whatever challenges might emerge ahead. The ten-iem management style checklist allows managers to rate themselves as ordinary, super, or spectacular according to essential quality management traits:Listening. You can convey no greater honor than to actually hear what someone has to say.Cooperating. You dont just cause plays to be executed, you protect others in the process.Helping. Let someone lean on you without expecting to lean back.Transmitting. How you come across to others should not be left to chance.Creating. Original solutions are a result of hard work in uncovering unoriginal problems.Implementing. There comes a time when someone has to actually get the job done.Learning. When you have an answer for everything, you know you have stopped learning.Leading. Leaders start to fail when they begin to believe their own material.Following. You never reach the stage when you arent working for someone, so learn to be good at it.Pretending. If youre going to be an actor, be a good one, but stay out of management.

How can Crosbys concepts be put to use?Evaluate your organizations position on the Quality Management Maturity GridImplement the fourteen-step Quality Improvement Program

8Crosby puts his philosophies and principles to use in three tools that any manager or engineer can use to begin preventing defects and improving quality. The Quality Management Maturity Grid and the Quality Improvement Program are described in this presentation.Quality Management Maturity GridFive stages of an organizations maturitySix measurement categoriesManagement understanding and attitudeQuality organization statusProblem handlingCost of quality as a percent of salesQuality improvement actionsCharacteristic statement

9The Quality Management Maturity Grid allows a manager to determine the stage of an organizations maturity by assessing six measurement categories. These measurement categories areManagement understanding and attitudeQuality organization statusProblem handlingCost of quality as a percent of salesQuality improvement actionsSummation of company quality postureMaturity Grid Stage I: UncertaintyQuality is the responsibility of the quality departmentQuality is hidden within manufacturing or engineering; no inspectionProblems are fought as they occur.The cost of quality is unknown. In reality it is about 20%.There are no organized quality improvement activities.We dont know why we have problems with quality.

10At the first stage in the Quality Management Maturity Grid, an organization exhibits the following behaviors:Management understanding and attitude: There is no comprehension of quality as a management tool. Personnel tend to blame the quality department for quality problems.Quality organization status: Quality responsibilities are hidden in manufacturing of the engineering departments. Inspection is not performed, rather the emphasis is on appraisal and sorting.Problem handling: Problems are addresses as they occur without lasting resolution and poor definition. There may be a lot of finger-pointing and blame.Cost of quality as a percent of sales: Nobody know the cost of quality. In actuality, cost are likely to be 20% of sales.Quality improvement actions: There are no organized quality activities. In fact, there is no understanding of such activities.Characteristic statement: We dont know why we have problems with quality.Maturity Grid Stage II: AwakeningWhile quality management may be valuable, the organization is not willing to commit resources.A quality leader is appointed, but the emphasis is on appraisal and moving the product.Teams address major problems, but long-range solutions are not solicited.The cost of quality is reported at 3%, but is actually 18%.Activities are limited to short-range, motivational efforts.Why do we always have problems with quality?

11At the second stage in the Quality Management Maturity Grid, an organization exhibits the following behaviors:Management understanding and attitude: Top management recognizes that quality management may be of value, but is not willing to provide money or time to make it all happen.Quality organization status: Management may appoints a stronger quality leader, but the responsibilities still emphasize appraisal and moveing the product. The role is still attached to manufacturing or engineering.Problem handling: Teams are set up to attack major problems. However, long-range solutions are not solicited.Cost of quality as a percent of sales: The cost of quality is reported as 3% of sales. However, because costs such as inspection, warranties and repairs are not considered, the actual cost is likely to be 18% of sales.Quality improvement actions: Management attempts obvious motivational short-range efforts.Characteristic statement: Is it absolutely necessary to always have problems with quality?Maturity Grid Stage III: EnlightenmentManagement adopts a supportive and helpful stance.Quality is elevated to a functional level equivalent to engineering, marketing, etc.Problems are resolved openly and in an orderly way.The cost of quality is reported as 8%, though it is really about 12% of sales.The fourteen-step quality improvement program is implemented.We are identifying and resolving our problems.

12At the first stage in the Quality Management Maturity Grid, an organization exhibits the following behaviors:Management understanding and attitude: After going through a quality improvement program, true learning begins. Top managers become more supportive and helpfulQuality organization status: The quality department reports to top management, all appraisal is incorporated, and the quality manager has a role in management of the company.Problem handling: Processes are established to communicate corrective action. Problems are resolved openly and in an orderly way.Cost of quality as a percent of sales: The cost of quality is reported as 8%, though it is actually 12%.Quality improvement actions: Unit by unit and function by function, the fourteen-step quality improvement program is implemented throughout the organization. All personnel understand and apply each step.Characteristic statement: Through management commitment and quality improvement, we are identifying and resolving our problems.Maturity Grid Stage IV: WisdomTop management participates in and understands quality.The quality manager is an officer of the company.Problems are identified in early development.The cost of quality is reported as 6.5%. It may be 8%.The quality improvement program is continual and accompanied by follow-up training.Defect prevention is a routine part of our operation.

13At the first stage in the Quality Management Maturity Grid, an organization exhibits the following behaviors:Management understanding and attitude: By actively participating, top management understands the principles of quality management. Managers recognize their personal role in continuing the emphasis.Quality organization status: The quality manager is an officer of the company. Effective systems ensure status reporting and preventive action. Quality management includes consumer affairs and special assignments.Problem handling: With effective systems in place, problems are identified early in their development. All functions are open to suggestion and improvement.Cost of quality as a percent of sales: Cost of quality is reported as 6.5%, though it may actually be 8% of sales.Quality improvement actions: The quality improvement program is repeated to assure continual priority. Some managers are recruited for follow-up training, making quality improvement a perpetual activity.Characteristic statement: Defect prevention is a routine part of our operation.Maturity Grid Stage V: CertaintyQuality is an essential part of the organization.A quality manager serves on the board of directors.Problems are prevented.The cost of quality is reported as 2.5%, which is what it really is.Quality improvement is normal and continual.We know why we do not have problems with quality.

14Ultimately, an organization matures to stage V, Certainty:Management understanding and attitude: Quality is considered to be an essential part of the organization.Quality organization status: The quality function is represented on the board of directors, indicating that quality is the primary concern of the organization. Quality is a thought leader.Problem handling: Problems are prevented, except in the most unusual cases. All but the most elusive phenomena are known.Cost of quality as a percent of sales: Quality systems are accurate and efficient, including reporting systems. Therefore, the cost of quality is reported as 2.5%, which is what it actually is.Quality improvement actions: Quality improvement is a normal and continual activity.Characteristic statement: We know why we do not have problems with quality.Management Understanding and AttitudeImprovement itself is never the real difficulty. Once individuals recognize and agree on their position, it is never difficult to improve.What works in one industry to improve quality will work in othersif you take the time to understand quality and its content.

15Crosby makes recommendations for each of the six measurement categories in the maturity grid. In regards to management understanding and attitude, Crosby emphasizes the importance of top-level participation. This is necessary to motivate people to change, accept responsibility, and discipline their behavior.Quality Organizational StatusA lot of problems will be avoided if you lay out a clear policy covering the entire quality operationKeep it simple, and you will have the reasonable expectation of having someone read it.Quality operations should always report at the same level as those departments they are charged with evaluating.

16The second measurement category on the maturity grid is quality organizational status. This category refers to the degree to which an organization recognizes and incorporates quality as a function. Handling ProblemsOperations that truly want to handle problems, for the purpose of solving them must create an open society within their walls that is imbued with the basic concepts of integrity and objectivity.Objectivity comes with not placing the blame for problems on individuals. Aim the questions and probing at the job.

17The third measurement category on the maturity grid is handling problems. The goal in this area is to evolve from responding to problems one by one as they occur to anticipating and preventing them entirely. Cost of Quality (COQ)Quality is free, but no one is ever going to know it if there isnt some sort of agreed-on system of measurement.The purpose of calculating COQ is really only to get managements attention and to provide a measurement base for seeing how quality improvement is doing.

18The fourth measurement category on the maturity grid is cost of quality (COQ). This is measured by the fully loaded costs of All efforts involved in doing work over, including clerical workAll scrapWarranty (including in-plant handling of returns)After-service warrantyComplaint handlingInspection and testOther costs such as engineering change notices and purchasing change ordersQuality Improvement ActivitiesReal improvement just plain takes a while to accomplish.Quality management is ballet, not hockey. A ballet is deliberately designed, discussed, planned, examined, and programmed in detail before it is performed.

19The fifth measurement category on the maturity grid is quality improvement activities. These include the formal programs, both short-term and continuing, that address quality improvement within the organization. Crosby proposes a fourteen-step program, which is outlined in the following four slides.Fourteen Steps to Quality ImprovementManagement commitment with an emphasis on defect prevention and visibilityQuality improvement teams composed on members of each department or functionall the necessary toolsQuality measurement to monitor the status and improvement of activities

20Fourteen Steps to Quality Improvement4.Cost of quality evaluation by the comptroller for accurate figuresQuality awareness by communicating the cost of quality, encouraging discussion6.Corrective action to ingrain a habit of identifying problems and correcting them

21Fourteen Steps to Quality Improvement7.An ad hoc committee to advocate zero defectsSupervisor training so that all managers understand the programs and can explain itZero Defects Day to establish zero defects as the organizational standardGoal setting as teams, specific and measurable

22Fourteen Steps to Quality ImprovementRemoving the causes of defects, as described by individual workers, so that the people know their problems are heard and answeredGenuine recognition for achievementQuality councils of quality professionals and team chairs for status information and ideasDo it over againrepetition makes the program perpetual

23A Real World ExampleAlberto Wisbeck took the job of top manager at Siemens worst factory in Jinan, China.Production capacity was low and the cost of raw materials was 67% of sales.If efficiency did not improve, the factory would be closed.

24A complete copy of this example can be found in How Does Siemens Take a Manufacturing Plant from Worst to First? Relentless Implementation of Crosby Philosophy, Take 10 Minutes, Issue 23, 7 July 2005, available online at www.taketenminutes.com/pdfs/Take_Ten_Minutes_Issue_23.pdf or through the corporate website of Philip Crosby Associates (PCA), www.philipcrosby.com.What did Wisbeck do?Wisbeck focused on improving quality and meeting customer needsFollowing the 14-step quality improvement program, he encouraged workers and supervisors to identify the processes and procedures that were causing problems.Following training, top managers implemented projects in their own work areas

25What were the results?By focusing on faulty work processes, the managers avoided reprimanding their workersa critical cultural requirement.Over 300 projects saved the company $604,000 annually and the plant rose to rank as Siemens #2 plant.

26Practice ExerciseCost of quality is a necessary measurement To persuade management to address quality issuesTo monitor the progress of improvement programsDo you know the cost of quality in your unit or division? Can you calculate it as a percentage of sales?

27Crosby emphasizes the useful of cost of quality (COQ) as a measurement and motivational tools. It can be used to persuade top management of the imperative for fully supporting and participating in quality improvement programs. It can also be used as visible evidence of the progress of such programs.

Calculate the cost of quality in your organization. Practice ExerciseRemember, the cost of quality includes prevention, appraisal, and failures. If your organizations does not currently measure and report cost of quality, it may actually equal 20% of sales

28The cost of quality includes prevention, appraisal, and failure costs:Prevention costs include the following activities: design reviews, product qualification, drawing checking, engineering quality orientation, quality improvement programs, supplier evaluations, supplier training, specification reviews, process capability studies, tool control, operating training, quality orientations, acceptance planning, quality audits, and preventive maintenance.Appraisal costs include the following activities: prototype inspection and testing, production specification conformance analysis, supplier surveillance, receiving inspection and testing, product acceptance, process control acceptance, packaging inspection, and status measurement and reporting.Failure costs include the following activities: consumer affairs, redesign, engineering change orders, purchasing change orders, corrective action costs, rework, scrap, warranties, after-sales service, and product liability.This is measured by the fully loaded costs of All efforts involved in doing work over, including clerical workAll scrapWarranty (including in-plant handling of returns)After-service warrantyComplaint handlingInspection and testOther costs such as engineering change notices and purchasing change orders

SummaryQuality is free, but it is not a gift. It is hard work.Quality improvement has as much to do with converting people as solving problems.Managers can use Crosbys Quality Management Maturity Grid and 14-Step Quality Improvement Program to help their people prevent and eliminate defects.

29Philip Crosby presents numerous case studies throughout Quality Is Free, including an extended case exercise intended for training managers to adopt and implement the Quality Improvement Program. He has published numerous articles and books, which are listed on the following slide for reference.Publications by Philip Crosby1967. Cutting the cost of quality. Boston, Industrial Education Institute. OCLC 616899. 1969. The strategy of situation management. Boston, Industrial Education Institute. OCLC 13761. 1979. Quality is Free. New York: McGraw-Hill. ISBM 0-07-014512-1. 1981. The Art of Getting Your Own Sweet Way. McGraw-Hill. ISBN 0-07-014527-X. 1984. Quality Without Tears. New York: McGraw-Hill. ISBN 0-07-014511-3. 1986. Running things. New York: McGraw-Hill. ISBN 0-07-014513-X. 1988. The Eternally Successful Organization. New York: McGraw-Hill. ISBN 0-07-014533-4. 1989. Let's talk quality. New York: McGraw-Hill. ISBN 0-07-014565-2. 1990. Leading, the art of becoming an executive. New York: McGraw-Hill. ISBN 0-07-014567-9. 1994. Completeness: Quality for the 21st Century. Plume. ISBN 0-452-27024-3. 1995. Philip Crosby's Reflections on Quality. McGraw-Hill. ISBN 0-07-014525-3. 1996. Quality is still free: Making Quality Certain in Uncertain Times. McGraw-Hill. ISBN 0-07-014532-6. 1997. The Absolutes of Leadership (Warren Bennis Executive Briefing). Jossey-Bass. ISBN 0-7879-0942-4. 1999. Quality and Me: Lessons from an Evolving Life. Jossey-Bass. ISBN 0-7879-4702-4.

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