Quality Management-MGT424-Project- Part1

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 2
Quality Management (MGT 424)
Due Date: 03/08/2024 @ 23:59
Course Name: Quality Management
Student’s Name:
Course Code: MGT 424
Student’s ID Number:
Semester: Summer
CRN:
Academic Year: 2023/24
For Instructor’s Use only
Instructor’s Name: Dr. Ibrahim Alotaibi
Students’ Grade:
/Out of 15
Level of Marks: High/Middle/Low
General Instructions –PLEASE READ THEM CAREFULLY
•
The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
•
Assignments submitted through email will not be accepted.
•
Students are advised to make their work clear and well presented; marks may be reduced for poor
presentation. This includes filling your information on the cover page.
•
Students must mention question number clearly in their answer.
•
Late submission will NOT be accepted.
•
Avoid plagiarism, the work should be in your own words, copying from students or other resources
without proper referencing will result in ZERO marks. No exceptions.
•
All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures
containing text will be accepted and will be considered plagiarism).
•
Restricted – ‫مقيد‬
Submissions without this cover page will NOT be accepted.
• The Assignment`s learning Outcomes:
In the 2nd assignment, the students are required to read thoughtfully the “ Nestlé Waters Unifying
real-time visibility across 26 factories” case study , and answer the related questions, upon
successful completion of the assignment the student should be able to:
1. State the importance of standardization and quality standards (CLO2)
2. Use quality improvement tools and practices for continuous improvement to achieve the
organizational change and transformation (CLO3)
3. Develop analytical skills of identifying pitfalls, or quality concerns through assimilated
and strategic planning. (CLO4)
• Instructions to read the case study:
“ Nestlé Waters Unifying real-time visibility across 26 factories” case study
Access below link to read the case study:

“ Nestlé Waters Unifying real-time visibility across 26 factories”
case study
This case study demonstrates the application of change management inside Nestle Waters
Company. In addition, it discusses the company need for quality improvement which encouraged
its engineers to search for alternative system to collect and analyze their data. Read the case, by
using your critical thinking skills answer the following questions:
1- Explain the driven reasons for changing the quality documentation system in the Nestle
Waters. (4 marks)
2- Outline the change objectives for both Retail Manufacturing and Home and Office
Manufacturing units. (3 marks)
3- How the InfinityQS® ProFicient™ system can control the operation processes? ( 4 marks)
4- Describe the management role in the change process? (4 marks)
Restricted – ‫مقيد‬
Important Notes: •
•
•
For each question, you need to answer not in less than 150 Words.
Support your answers with course material concepts, principles, and theories from the textbook
and scholarly, peer-reviewed journal articles etc.
Use APA style for writing references.
Answers:
1. ……
2. …….
3. ……
4. ……
Restricted – ‫مقيد‬
The Handbook for
Quality Management
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About the Authors
Thomas Pyzdek is a Six Sigma consultant with
more than 40 years of experience in the field. His
clients include Ford, McDonald’s, Intuit, Boeing,
Seagate, Avon Products, and many other
companies. Mr. Pyzdek is a recipient of the
American Society for Quality Edwards Medal for
outstanding contributions to the practice of
quality management and the E.L. Grant Medal
for outstanding leadership in the development
and presentation of meritorious educational
programs in quality. He has also received a Lean
Six Sigma Leadership award from the American
Quality Institute.
Paul Keller is president and chief operating
officer with Quality America, Inc. He has
developed and implemented successful Six
Sigma and quality improvement programs in
service and manufacturing environments. He is
the author of several books, including The Six
Sigma Handbook, Third Edition (coauthor), and
Six Sigma Demystified.
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The Handbook for
Quality Management
A Complete Guide to Operational Excellence
Thomas Pyzdek
Paul Keller
Second Edition
New York Chicago San Francisco
Lisbon London Madrid Mexico City
Milan New Delhi San Juan
Seoul Singapore Sydney Toronto
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Cataloging-in-Publication Data is on file with the Library of Congress.
McGraw-Hill books are available at special quantity discounts to use as premiums and sales
promotions, or for use in corporate training programs. To contact a representative please e-mail
us at b [email protected].
The Handbook for Quality Management
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Printed in the
United States of America. Except as permitted under the United States Copyright Act of 1976,
no part of this publication may be reproduced or distributed in any form or by any means, or
stored in a data base or retrieval system, without the prior written permission of the publisher.
1 2 3 4 5 6 7 8 9 0   DOC/DOC   1 9 8 7 6 5 4 3 2
ISBN 978-0-07-179924-9
MHID 0-07-179924-9
The pages within this book were printed on acid-free paper.
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Contents
    Preface
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
xi
Part I Business-Integrated Quality Systems
1
Organizational Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General Theory of Organization Structure . . . . . . . . . . . . . . . . .
The Functional/Hierarchical Structure . . . . . . . . . . . . . . . . . . . . .
Matrix Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cross-Functional Organization Structure . . . . . . . . . . . . . . . . . .
Process- or Product-Based (Horizontal) Organization
Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forms of Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
5
6
8
9
10
12
2
The Quality Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Juran Trilogy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Related Business Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Regulatory Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental Issues Relating to the Quality Function . . . . . . .
15
17
23
23
24
24
28
3
Approaches to Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deming’s Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Quality Control in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ISO 9000 Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malcolm Baldrige National Quality Award . . . . . . . . . . . . . . . . .
Deming Prize . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European Quality Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Quality Management (TQM) . . . . . . . . . . . . . . . . . . . . . . . .
Six Sigma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
34
36
41
45
48
49
51
52
4
Customer-Focused Organizations
. . . . . . . . . . . . . . . . . . . . . . . .
57
Strategic Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organizational Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Strategy Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65
67
69
Part II Integrated Planning
5
v
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vi
Contents
Strategic Styles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Possibilities-Based Strategic Decisions . . . . . . . . . . . . . . . . . . . . .
Strategic Development Using Constraint Theory . . . . . . . . . . . .
The Systems Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic Constraint Management Principles
and Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tools of Constraint Management . . . . . . . . . . . . . . . . . . . .
Constraint Management Measurements . . . . . . . . . . . . . .
6
71
72
74
75
78
87
98
Understanding Customer Expectations and Needs . . . . . . . . . 105
Customer Classifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Customer Identification and Segmentation . . . . . . . . . . . . . . . . . 110
Collecting Data on Customer Expectations and Needs . . . . . . . 113
Customer Service and Support . . . . . . . . . . . . . . . . . . . . . . 114
Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Focus Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
7 Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Getting Started with Benchmarking . . . . . . . . . . . . . . . . . . . . . . . 132
Why Benchmarking Efforts Fail . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
8
Organizational Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Assessing Quality Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Organizational Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Cost of Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Part III Process Control
9
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Quantifying Process Variation . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Descriptive Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Enumerative and Analytic Studies . . . . . . . . . . . . . . . . . . . . . . . . 155
Acceptance Sampling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Statistical Control Charts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Variable Control Charts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Control Charts for Attributes Data . . . . . . . . . . . . . . . . . . . 176
Control Chart Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Control Chart Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 190
Using Specifications for Process Control . . . . . . . . . . . . . . . . . . . 196
Process Capability Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
How to Perform a Process Capability Study . . . . . . . . . . 200
Statistical Analysis of Process Capability Data . . . . . . . . 202
Interpreting Capability Indexes . . . . . . . . . . . . . . . . . . . . . 205
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Contents
10
Quality Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
Types of Quality Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Product Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Process Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Systems Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Internal Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Two-Party Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Third-Party Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Desk Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Planning and Conducting the Audit . . . . . . . . . . . . . . . . . . . . . . . 216
Auditor Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Internal Quality Surveys as Preparation . . . . . . . . . . . . . . 218
Steps in Conducting an Audit . . . . . . . . . . . . . . . . . . . . . . 218
Audit Reporting Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Post-Audit Activities (Corrective Action, Verification) . . . . 220
Product, Process, and Materials Control . . . . . . . . . . . . . . . . . . . 221
Work Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Classification of Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Identification of Materials and Status . . . . . . . . . . . . . . . . 224
Purchased Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Customer-Supplied Materials . . . . . . . . . . . . . . . . . . . . . . . 224
Work-in-Process (WIP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Finished Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
Lot Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
Materials Segregation Practices . . . . . . . . . . . . . . . . . . . . . 225
Configuration Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
Deviations and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
11
Supply Chain Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Scope of Vendor Quality Control . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Evaluating Vendor Quality Capability . . . . . . . . . . . . . . . . . . . . . 230
Vendor Quality Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Post-Award Surveillance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
Vendor Rating Schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
Special Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Partnership and Alliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
vii
Part IV Continuous Improvement
12
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Effective Change Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
Roles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
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viii
Contents
Mechanisms Used by Change Agents . . . . . . . . . . . . . . . . . . . . . . 248
Building Buy-in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Project Deployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254
Selecting Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254
DMAIC/DMADV Methodology . . . . . . . . . . . . . . . . . . . . 262
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13
Define Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
Project Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267
Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . . . 268
Pareto Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Project Charters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
Top-Level Process Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
Team Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
Team Dynamics Management, Including Conflict
Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
Stages in Group Development . . . . . . . . . . . . . . . . . . . . . . . 288
Common Team Problems . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Productive Group Roles . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Counterproductive Group Roles . . . . . . . . . . . . . . . . . . . . 290
Management’s Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292
14
Measure Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
Process Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
Metric Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
Establishing Process Baselines . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
Measurement Systems Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 298
Levels of Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301
15
Analyze Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
Value Stream Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
Analyze Sources of Process Variation . . . . . . . . . . . . . . . . . . . . . . 314
Quality Function Deployment . . . . . . . . . . . . . . . . . . . . . . . 315
Cause-and-Effect Diagrams . . . . . . . . . . . . . . . . . . . . . . . . 318
Scatter Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
Determine Process Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324
Correlation and Regression Analysis . . . . . . . . . . . . . . . . . 324
Least-Squares Fit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
Interpretation of Computer Output for Regression
Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
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Contents
ix
Analysis of Residuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
Designed Experiments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331
16
Improve/Design Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335
Define New Operating/Design Conditions . . . . . . . . . . . . . . . . . 337
Define and Mitigate Failure Modes . . . . . . . . . . . . . . . . . . . . . . . . 340
Process Decision Program Chart . . . . . . . . . . . . . . . . . . . . 340
Preventing Failures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340
Failure Mode and Effects Analysis . . . . . . . . . . . . . . . . . . . 344
17
Control / Verify Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Performance Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352
Recognition and Reward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353
Principles of Effective Reward Systems . . . . . . . . . . . . . . 355
Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356
Job Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357
Developing a Structured OJT Program . . . . . . . . . . . . . . . 358
Instructional Games, Simulations, and Role-Plays . . . . . . 359
Part V Management of Human Resources
00_Pyzdek_FM_pi-xii.indd 9
18
Motivation Theories and Principles . . . . . . . . . . . . . . . . . . . . . . 367
Maslow’s Hierarchy of Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369
Herzberg’s Hygiene Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370
Theories X, Y, and Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370
19
Management Styles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373
Judgmental Management Style . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
Data-Based Management Style . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
Combination Data-Based/Judgment Management
Style . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376
Participatory Management Style . . . . . . . . . . . . . . . . . . . . . . . . . . 376
Autocratic Management Style . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377
Management by Wandering Around . . . . . . . . . . . . . . . . . . . . . . 377
Fourth Generation Management . . . . . . . . . . . . . . . . . . . . . . . . . . 378
The Fifth Discipline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379
20
Resource Requirements to Manage the Quality Function . . . 381
Performance Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385
Traditional Performance Appraisals . . . . . . . . . . . . . . . . . 385
Criticisms of Traditional Employee Appraisals . . . . . . . . 386
Alternatives to Traditional Appraisals . . . . . . . . . . . . . . . 388
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x
Contents
Professional Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393
Credentials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393
Professional Certification . . . . . . . . . . . . . . . . . . . . . . . . . . 393
Professional Development Courses . . . . . . . . . . . . . . . . . . 394
Achieving the Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395
Coaching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395
Situations That Require Coaching to Improve
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396
Forms of Coaching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397
A Control Chart Constants
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
Control Chart Equations
C Area under the Standard Normal Curve
. . . . . . . . . . . . . . . . . . . 407
D
. . . . . . . . . . . . . . . . . . 413
Simulated Certification Exam Questions
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455
Index
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465
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Preface
Thank you for your interest in McGraw Hill’s The Handbook for Quality
Management.
The original version of the text, first released in 1996 by Quality
Publishing, was written exclusively by Tom Pyzdek. I had the pleasure of
editing a revision released in 2000, which included Six Sigma and Lean
method chapters (written by myself), as well as Bill Dettmer’s Constraint
Management material, which is repeated in this edition. The early editions
sold several thousand copies by the end of 2000, establishing the Handbook
as an essential desktop reference for the quality professional.
The earlier versions relied heavily on the American Society for Quality
(ASQ) body of knowledge for quality managers, even to the extent that
the chapter headings and sub-headings matched those in the body of
knowledge. Although this may have helped those seeking to check off
items they learned, it tended to disrupt the flow of the topics. A main
objective of this edition was the reorganization of the material into more
naturally flowing discussions of the concepts and methods essential to
quality management and operational excellence. For those who want to
use this as a reference for the ASQ CMQ/OE exam, the information is still
in the book, with sample questions at the back, and answers available on
the affiliated website: www.mhprofessional.com/HQM2
The essential body of knowledge for achieving operational excellence
is heavily influenced by the works of Deming and Juran, most of which
date from the period of 1950 through the mid 1980s. These authors spent
their careers advocating a scientific approach to quality, displacing the
widely held notion that quality assurance inspections prevalent in the
post-war era were sufficient or even credible approaches to achieving
quality.
Over the last 40 years, the quality management discipline has undergone
steady evolution from internally focused command-and-control to more
proactive, customer-focused functions. The market certainly encouraged
that, as economies shifted from dominance of product-based manufacturers
xi
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xii
Preface
to more heavily depend on service-based solution providers. It seems
reasonable that service economies will naturally tend toward customerfocus, since much of the service involves direct customer contact.
Feedback can be bitterly honest, yet also quickly addressed (compared
with poor manufacturing quality). Aspects of quality management are
becoming integral to business operations; quality ratings and awards are a
competition, and success is marketed as a sign of commitment to the
customer; innovation is a constant refrain in business journals and even
advertisements; customer surveys are endemic; data is rampant, so
differentiating between real change and random variation becomes a core
competency; and so on. The cost of poor quality is realized in real time as
loss of market share or profitability.
This latest edition expands on the historical notions of Juran’s
quality trilogy to describe business transformation through innovative
customer-driven strategy, meaningful process control using statistics,
and management-sponsored, focused improvements in core products
and services. Deming’s teachings on management responsibilities and
systems are integrated throughout.
The manager in today’s world must implement cost-reducing quality
initiatives that increase market share in spite of competitive forces. This
text seeks to demystify the science of quality management for effective
use and benefit across the organization.
We hope you enjoy it.
Paul Keller
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PART
Business-Integrated
Quality Systems
M
I
CHapter 1
Organizational Structures
CHapter 2
The Quality Function
CHapter 3
Approaches to Quality
CHapter 4
Customer-Focused
Organizations
odern organizations trace their roots to the Industrial Revolution, which provided the impetus for
movement from a tradition of craftsmen to that of
mechanized industries. Rapid advances in mobile power
sources, such as the steam engine, improved transportation, gas lighting, advances in metallurgical and chemical processing, and so
on led to both supply of material, methods, and infrastructure and a demand
for business innovation to meet the needs of a growing market. As businesses
grew, smaller (often family-run) businesses were replaced by larger corporations, who could raise the capital necessary to grow rapidly.
In industrialized countries, organizations changed completely, giving rise to
the bureaucratic form of organi�zation. This organizational form is characterized
by the division of activities and responsibilities into departments managed by
full-time management pro�fessionals who had no other source of livelihood
other than the organization.
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CHAPTER
1
Organizational Structures
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O
rganizations exist because they serve a useful purpose. The transaction-cost theory of a firm (Coase, 1937) postulates that there are
costs associated with market transactions, and organizations prosper only when they provide a cost advantage. Examples of these costs
include the cost of discovering market prices, negotiation and contracting
costs, sales taxes and other taxes on exchanges between firms, cost of regulation of transactions between firms, and so on.
Transaction-cost theory offers a framework for understanding limits on
the size of a firm. As firms grow, it becomes more costly to organize additional transactions within the firm, called “decreasing returns to management.” When the cost of organizing an additional transaction equals the
cost of carrying out the transaction in the open market, growth of the firm
will cease. Of course, these costs are also affected by technology: facsimile
machines (in their day), satellites, computers, and more recently the Internet each altered the cost of organization, impacting the optimal size of the
firm accordingly. Such inventions simultaneously impact the cost of using
external markets, so the relative impact of the technology on market costs
and organization costs determines the overall impact on the organization.
Clearly, the ability to efficiently carry out market transactions, with minimal
bureaucratic overhead, impacts an organization’s usefulness to the market,
and its prosperity and eventual life span.
General Theory of Organization Structure
Organizations consist of systems of relationships that direct and allocate
resources; therefore the purpose of organization structure is to develop
relationships that perform these functions well. There are several possible
ways in which these relationships can be viewed. The most common is the
reporting relationship view. Here the organization is viewed as an entity
consisting of people who have the authority to direct other people, their
“reports.” In this view the organization appears as a stratified triangle, with
the positions higher in a given strata of the triangle having the authority to
direct the lower positions. In modern organizations, the authority to set
policy and plan strategic direction is vested in the highest level of the
5
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6
Business-Integrated Quality Systems
Figure 1.1
The six basic parts of the organization (Mintzberg and Quinn, 1991).
structure: the strategic apex. The middle line consists of management personnel who deploy the policy and plan to the operating core (at the bottom
of the structure). Technological expertise and support are provided by
groups of professionals not directly involved in operations. The entire organization is held together by a common set of beliefs and shared values
known as the organization’s ideology. Figure 1.1 illustrates these ideas.
The Functional/Hierarchical Structure
The traditional organization that results from the above view of the organization is the functional/hierarchical structure. This is a command and
control structure with ancient military origins. In this type of organization, work is divided according to function, for example, marketing, engineering, finance, manufacturing, etc. A stratum within the organization is
given responsibility for a particular function. Work is delegated from top
to bottom within the stratum to personnel who specialize in the function.
An example of the traditional functional hierarchical organization chart is
shown in Fig. 1.2.
A key component of the hierarchal structure is its command and control
elements, facilitated by the theories of scientific management developed by
Frederick Taylor. Taylor believed that management could never effective­ly
control the workplace unless it controlled the work itself, that is, the specific
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Organizational Structures
7
Top boss
Staff assistant
Top boss of accounting
Top boss of engineering
Boss of division A engineering
Division A engineer #1
Figure 1.2
Top boss of quality
Boss of division B engineering
Division A engineer #2
Functional/hierarchical organization chart.
tasks performed by the workers to get the job done. Management could
improve the efficiency of work, to the benefit of both management and
workers, by applying the methods of science in (1) selecting the individuals
best suited to a particular job and (2) identifying the optimal way in which
the jobs could be performed. Henry Ford further advanced this de-skilling
of the workforce through production mechanization.
In spite of resis­tance from craftsmen and machinists, who understood
the value of their knowledge and skill in terms of monetary rewards and
job securi­ty, the reduction of work to a series of simple tasks done with
relatively small investment in training is one of the major results of scientific management. The ramifications of these efforts includes better management oversight, reduced investment in worker training, and easier
replacement of those who did unsatisfactory work (with employee incen­
tives to improve performance). Unfortunately, the de-skilled work is usually far more boring, leading to a variety of problems such as high levels
of stress and employee turnover.
The legacy of de-skilling is that the workforce is less able to change as
new conditions arise. Whereas a machinist could work for any number of
compa­nies in many industries, machine loaders had limited mobility outside their current employer, thus increasing worker demands for job security. In the modern era, lack of generalized employee skills can be a major
impediment to a quick reaction to rapidly changing market conditions.
When rapid change creates new tasks, the workers’ previous experience
does not help them adapt to the new circumstance; they must be constantly “retrained.”
Organizationally, the introduction of scientific management perpetuated the growth of the bureaucratic form, and increasingly led to larger
and larger organizational support structures. On the technical side,
organiza­tional units were formed to codify the detailed knowledge of
necessary work practices, including manufacturing engineering, industrial
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8
Business-Integrated Quality Systems
engineering, quality control, human resources, and cost accounting.
This de-skilling of the workforce creates an increasingly large number of
transactions to manage, which leads in turn to larger bureaucracies and
decreasing returns to management, an issue described earlier by Coase.
The traditional organization structure has come under pressure in
recent years. One problem with the structure is that it tends to produce a
“silo mentality” among those who work in a particular stratum: they tend
to see the company from the perspective of an “accountant” or an “engineer”
rather than from a companywide perspective. This produces a tendency
to optimize their function without regard for the effect on the rest of the
organization—a tendency that produces markedly suboptimal results
when viewed from a holistic perspective. Cooperation is discouraged in
such an organization. In these structures, employees tend to think of their
superiors as their “customers.” The focus becomes pleasing one’s boss
rather than pleasing the external customer. Finally, the top-down arrangement often results in resource allocation that does not optimally meet the
needs of external customers, who are generally served by processes that
cut across several different functions.
Given these problems, one might wonder why such organizations still
dominate the business scene. There are several reasons, chief among them the
comfort level employees have with this model: this has been the dominant
model for decades, so there is an organizational resistance to change. Furthermore, such organizations maximize the development and utilization of specialized skills. They produce a cost-effective division of labor within the
subprocess (but not necessarily across the system). In many organizations,
particularly larger ones, the functional/hierarchical structure provides economies of scale for specialized activities. Finally, these organizations provide
clear career paths for specialists. A case in point is the quality function, where
one can enter into the specialty out of high school and potentially advance to
progressively higher positions throughout one’s career.
Matrix Organizations
In a matrix organization the functional hierarchy remains intact but a horizontal cross-functional team structure is superimposed on the functional
hierarchy. The matrix form is depicted in Fig. 1.3.
The matrix form was used extensively in the 1970s as a general method
of organizing work. Most businesses concluded that organizing routine
work in this way was impractical. Still, because of this experience, the
matrix structure is well understood. Also, the matrix did prove to be useful as a method of conducting large, cross-functional projects. To an extent,
the matrix form overcomes the “silo” mentality of the functional hierarchy by creating cross-functional teams.
When used for projects, the matrix approach creates structures that
are focused (on the project) and can exist temporarily. In fact, most large,
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Organizational Structures
A
B
C
9
D
Project
A
B
C
Figure 1.3 Matrix organization structure.
multifunctional quality improvement projects are organized using the
matrix form. This approach to project management organization is discussed in greater detail in Chap. 15.
Cross-Functional Organization Structure
As discussed earlier, a major problem with the functional/hierarchical structure is the proliferation of focused, departmental perspectives. This invariably results in neglect of company-wide issues. Cross-functional structures
provide a way of breaking down this mind-set. Figure 1.4 shows the basic
layout of a cross-functional organization structure. Note that the appearance
Function executive
Area of
concern
Function
A
Function
B
Function
C
Function
D
Quality
Cost
Cycle
time
Figure 1.4
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Cross-functional organization structure.
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10
Business-Integrated Quality Systems
is similar to that of the matrix structure. However, there are a number of
important differences between matrix and cross-functional structures:
• Scope. Cross-functional organizations deal with company-wide issues,
while matrix organizations focus on specific tasks, goals, or projects.
• Duration. Matrix organizations are temporary, while cross-functional
organiza-tions are often permanent.
• Focus. Cross-functional organizations often deal with external groups
such as customers, society at large, or regulators. Matrix organizations
are typically focused on internal concerns.
• Membership. Membership in cross-functional organizations
typically consists of high-level functional executives. Membership
in matrix organizations usually consists of personnel with technical
skills needed to complete a specific task.
Compared with traditional organizations, cross-functional organizations offer better coordination and integration of work, faster response
times, simplified cost controls, greater use of creativity, and higher job
satisfaction. It should be noted that cross-functional organizations are
an addition to, rather than a replacement for, traditional organizations.
Process- or Product-Based (Horizontal) Organization Structures
Process-based and product-based “horizontal organizations” present an
entirely different focus than traditional organizations. The basis of this
organizational structure is the goal of the work being organized, that is,
the product or service being created. This differs markedly from the traditional structure, which is based on reporting relationships. An example of
a customer process–focused organization structure is shown in Fig. 1.5,
which is a “patient-focused” labor and delivery process in a hospital.
External
suppliers
Internal customers
and suppliers
External
Customers
Pastoral services Environmental
services
Nurse
Billing
Nurse
Referral
Physician
Patient
Family
Mother and baby
Pharmaceutical
supplier
Clergy
Doula
OB/GYN Lab services
Transportation
Support group
3rd-party payer
Figure 1.5
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Patient-focused care-organization structure.
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Organizational Structures
11
The knowledgeable quality manager will immediately recognize the
similarity of Fig. 1.5 to the cause-and-effect diagram. This is a useful analogy. The “effects” being sought must be clearly defined before the design
of this type of organization can proceed. The “causes” are built into the
organization such that the desired effects can be consistently and economically produced. Note that the design can accommodate multiple customers, suppliers, and internal subprocesses; in this example the mother and
baby are the primary customers. The scope is neither internal nor external: it embraces the entire process.
Also noteworthy is the complete absence of reporting relationships.
The foundation of this type of organization is work flow, not authority. In
effect, everyone “reports” to the customer. This blurring of lines of authority is a characteristic of this type of organization, which can be a source of
discomfort for those accustomed to the clear chain of command inherent
in traditional organizations. Clearly this involves a significant cultural
change. Another cultural change is the obliteration of the professional reference group. In functional organizations, professionals (e.g., accountants,
nurses, doctors, engineers) report to and work with others in the same
profession and are often more loyal to their profession than to their
employer. This is changed dramatically in horizontal organizations. The
transition from a traditional management approach to a horizontal structure must deal explicitly with the cultural aspects of the change.
Horizontal organizations maximize core competencies, rather than
suboptimizing quasi-independent functions. For example, in the patientfocused-care example several support activities are involved in the delivery
of care (lab services, transportation, etc.). In a traditional organization there
would be a tendency for the laboratory manager to optimize the laboratory,
the transportation manager to optimize transportation, etc. However, in the
horizontal organization the optimization is focused on delivery of care. This
may well result in a perceived “suboptimal” performance of support activities, if each are (inappropriately) viewed in isolation.
Experience has shown that horizontal organizations have achieved dramatically improved efficiencies, compared to traditional hierarchal organizations. One reason is in the intelligent reintegration of work to correct the
disintegrated work practices advocated by Taylor’s scientific management
theories. This segregation of work was done partly in response to conditions that no longer exist: a better-educated workforce combined with
modern technology makes it possible to design integrated processes that
combine related tasks and bring the needed resources under local control.
In addition to improved efficiencies, the new approach to work creates
other welcome results, notably: improved employee morale, increased customer satisfaction, and greater supplier loyalty and cooperation.
Table 1.1 summarizes the changing pattern of the marketplace. In
some ways the changing business environment involves a return to the
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12
Business-Integrated Quality Systems
Was
Is
National markets
International markets
National competition
International competition
Control the business environment
Adapt to the environment
rapidly
Homogeneous product
Customized product
De-skilled jobs
Complex jobs
Product-specific capital
Flexible systems
Maintain status quo
Continuous improvement
Management by control
Management by planning
Table 1.1 The Changing Business Environment
craftsman era of the past: more complex jobs with the resulting need for
workers with a broader reper­toire of skills. Other tendencies are continuations of past trends: internation­al markets are the next logical step after
moving from local markets to national markets. In other ways the new
world of business is simply different: modern flexible systems diverge in
fundamental ways from previous systems.
It follows that yesterday’s organizations, which evolved in response to
the realities of the past, might not be suited to the changing reality. In fact,
there is strong evidence to suggest that organizations that do not adapt
will simply disappear. Over 40 percent of the 1979 list of the Fortune 500
had disappeared by 1990 (Peters, 1990). The organizations that have managed to progress have not stood still.
Forms of Organization
In addition to describing organizations in terms of their structures, Mintzberg (1994) also describes them in terms of forms. Mintzberg proposes a
framework of five basic forms of organization:
1. The Machine Organization. Classic bureaucracy, highly formalized,
specialized, and centralized, and dependent largely on the standardization of work processes for coordination. Common in stable
and mature industries with mostly rationalized, repetitive operating work (as in airlines, automobile companies, retail banks).
2. The Entrepreneurial Organization. Nonelaborated, flexible structure,
closely and personally controlled by the chief executive, who coordinates by direct supervision. Common in start-up and turnaround situations as well as in small business.
3. The Professional Organization. Organized to carry out the expert work
in relatively stable settings, hence emphasizing the standardization
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Organizational Structures
13
of skills and the pigeonholing of services to be carried out by rather
autonomous and influential specialists, with the administrators
serving for support more than exercising control; common in hospitals, universities, and other skilled and craft services.
4. The Adhocracy Organization. Organized to carry out expert work in
highly dynamic settings, where the experts must work cooperatively in project teams, coordinating the activities by mutual
adjustment, in flexible, usually matrix forms of structure; found in
“high technology” industries such as aerospace and in project
work such as filmmaking, as well as in organizations that have to
truncate their more machinelike mature operations in order to
concentrate on product development.
5. The Diversified Organization. Any organization split into semi-autonomous divisions to serve a diversity of markets, with the “headquarters” relying on financial control systems to standardize the outputs
of the divisions, which tend to take on the machine form.
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CHAPTER
2
The Quality Function
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A
s discussed in Chap. 1, organizations are traditionally structured
according to functional specializations, for instance, marketing,
engineering, purchasing, manufacturing. Conceptually, each function performs an activity essential in delivering value to the customer. In
the past, these activi­ties were performed sequentially. As shown in Fig. 2.1,
Shewhart, Deming, and Juran all depict these activities as forming a circle
or a spiral, where each cycle incorporates information and knowledge
acquired during the previous cycle.
Juran Trilogy
Juran and Gryna (1988, p. 2.6) define the quality function as “the entire collection of activities through which we achieve fitness for use, no matter
where these activities are performed.” Quality is thus influenced by, if not
the responsibility of, many different departments. In most cases, the quality
department serves a secondary, supporting role. While the quality department is a specialized function, quality activities are dispersed throughout
the orga­nization. The term “quality function” applies to those activities,
departmental and companywide, that collectively result in product or service quality. An analogy can be made with the finance department. Even
though many spe­cialized finance and accounting functions are managed by
the finance depart­ment, every employee in the organization is expected to
practice responsible management of his or her budgets and expenditures.
Juran and Gryna (1988) grouped quality activities into three categories, sometimes referred to as the Juran trilogy: plan­ning, control, and
improvement. Quality planning is the activity of developing the products
and processes required to meet customers’ needs. It involves a number of
universal steps (Juran and DeFeo, 2010):
• Define the customers.
• Determine the customer needs.
• Develop product and service features to meet customer needs.
• Develop processes to deliver the product and service features.
• Transfer the resulting plans to operational personnel.
17
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18
Business-Integrated Quality Systems
Figure 2.1 (a) Representation of quality activities in the organization (Shewhart, 1939).
(b) Deming’s wheel of quality control (1986). (c) Juran’s spiral of progress in quality (Juran and
Gryna, 1988).
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Retailing
Wholesaling
02_Pyzdek_Ch02_p015-030.indd 19
in
M
a
et
rk
p
ns
ec
I
ti
;
on
g
Ma
res rket
ear
ch
t
s
te
M
an
pl ufac
an tu
ni ri
ng ng
k
bac
M
re ar
se ke
ar t
ch
d
Fee
de Prod
ve
lop uct
me
nt
Pr
o
de du
sig ct
Sp
n
ec
ific
Pu
at
rc
io
ha
n
sin
g
pr Pro
oc d
es uc
s tio
co n;
nt
ro
l
Use
Cu
se stom
rv
ice er
The Quality Function
S
p
up
19
lie
rs
(c)
Figure 2.1 (Continued)
11/16/12 4:46 PM
20
Business-Integrated Quality Systems
Quality control is the process used by operational personnel to ensure
that their processes meet the product and service requirements (defined
during the planning stage). It is based on the feedback loop and con­sists
of the following steps:
• Evaluate actual operating performance.
• Compare actual performance with goals.
• Act on the difference.
Quality improvement aims to attain levels of performance that are
unprecedented—levels that are significantly better than any past level.
The methodologies recommended for quality improvement efforts utilize
Six Sigma project teams, as described in Part IV. Notably, whereas earlier
version of Juran’s Quality Handbook did not specifically advocate crossfunctional project-based teams for quality improvement efforts, the most
recent sixth edition (2010) clearly prescribes their use.
The mission of the quality function is company-wide quality management. Quality management is the process of identifying and administering the activ­ities necessary to achieve the organization’s quality objectives.
These activities will fall into one of the three categories in Juran’s trilogy.
Since the quality function transcends any specialized quality department, extending to all of the activities throughout the company that affect
quality, the primary role in managing the quality function is exercised by
senior leadership. Only senior leadership can effectively manage the necessary cross-functional activities.
As the importance of quality has increased, the quality func­tion has
gained prominence within the organizational hierarchy. Figure 2.2 presents
President
VP
marketing
VP
finance
VP
quality
VP
engineering
VP
production
Reliability
engineering
QC
engineering
Quality
assurance
Inspection
and test
Supplier
quality
control
Figure 2.2 Quality within a traditional organization chart.
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The Quality Function
21
a prototypical modern organization chart for a hypothet­ical large manufacturing organization.
In this traditional structure, the quality specialists have no more than
a secondary responsibility for most of the important tasks that impact
quality. Table 2.1 lists the major work elements normally per­formed by
these specialized departments.
Because the tradi­tional, functionally specialized hierarchy creates a
“silo mentality,” each func­tional area tends to focus on its own function,
often to the detriment of cross-functional concerns like quality. This is
not a failing of the workforce, but a predictable result of the system in
which these people work. The situation will not be corrected by exhortations to think or act differently. It can only be changed by modifying the
system itself.
Several alter­native organizational approaches to deal with the problems created by the traditional structure have already been discussed. The
cross-functional organization is, as of this writing, the most widespread
alternative structure. Quality “councils” or “steering committees” are crossfunctional teams that set quality policy and, to a great extent, determine
the role of the quality specialists in achieving the policy goals. The steering committee makes decisions regarding the totality of company
resources (including those assigned to other functional areas) to be
devoted to quality planning, improvement, and control.
Quality con­cerns must be balanced with other organizational concerns,
such as market share, profitability, and development of new products and
Reliability
Engineering
Establish reliability goals; Reliability apportionment; Stress
analysis; Identification of critical parts; Failure Modes & Effects
Analysis (FMEA); Reliability prediction; Design review; Supplier
selection; Control of reliability during manufacturing; Reliability
testing; Failure reporting and corrective action system
Quality
Engineering
Process capability analysis; Quality planning; Establishing
quality standards; Test equipment and gage design; Quality
troubleshooting; Analysis of rejected or returned material;
Special studies (measurement error, etc.)
Quality
Assurance
Write quality procedures; Maintain quality manual; Perform
quality audits; Quality information systems; Quality certification;
Training; Quality cost systems
Inspection & Test
In-process inspection and test; Final product inspection and test;
Receiving inspection; Maintenance of inspection records; Gauge
calibration
Vendor Quality
Preaward vendor surveys; Vendor quality information systems;
Vendor surveillance; Source inspection
Table 2.1 Quality Work Elements
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Business-Integrated Quality Systems
services. Customer concerns must be balanced with the concerns of investors and employees. The senior leadership, consisting of top management
and the board of directors, must weigh all of these concerns and arrive at a
resource allocation plan that meets the needs of all stakeholders in the organization. The unifying principle for all stakeholders is the organization’s
purpose.
There are two basic ways to become (or remain) competitive: achieve
superior perceived quality by developing a set of product specifications
and service standards that more closely meet customer needs than competitors; and achieve superi­or conformance quality by being more effective than your competitors in con­forming to the appropriate product
specifications and service standards. These are not mutually exclusive;
excellent companies do both simultaneously.
Research findings indicate that achieving superior perceived quality
(that is, as per­ceived by customers), provides three options to a business—
all of which are favorable to its competitiveness (Buzzell and Gale, 1987):
• You can charge a higher price for your superior quality and thus
increase profitability.
• You can charge a higher price and invest the premium in R&D,
thus ensuring higher perceived quality and greater market share
in the future.
• You can charge the same price as your competitor for your superior
product, building market share. Increased market share, in turn,
means volume growth and rising capacity utilization (or capacity
expansion), allowing you to lower costs (or increase profit).
Research also suggests additional benefits to companies that provide
superior perceived quality, including higher customer loyalty; more repeat
purchases; and lower marketing costs. Achieving superior conformance
quality provides two key benefits:
• Lower cost of quality than competitors, which translates to lower
over­all cost.
• Since conformance quality is a factor in achieving perceived
quality, it leads to the perceived quality benefits listed above.
Customer “satisfaction” does not simply happen; it is an effect. Quality is one important cause of the customer satisfaction effect, along with
price, convenience, service, and a host of other variables. Quality and customer satisfaction are not synonyms; the former causes the latter. Generally businesses do not seek customer satisfaction as an end in itself. The
presumption is that increased customer satisfaction will lead to higher
revenues and higher profits, at least in the long term. This presumption
has been validated by numerous studies, including the Profit Impact of
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The Quality Function
23
% Who will recommend
100
80
60
40
20
0
Figure 2.3
Excellent
Good
Fair
Poor
Customer satisfaction and sales.
Market Strategy (PIMS) studies (Buzzell and Gale, 1987). Since 1972 the
PIMS Program, working with a database of 450 companies and 3000 business units, has developed a set of principles for business strategy based on
the actual experiences of businesses. The principles drawn from this database provide a foundation for situation-specific analysis that managers
perform to arrive at good decisions. The PIMS research indicates that quality is the major driver behind customer satisfaction, which in turn impacts
a wide variety of other measures of organizational success. Figure 2.3, based
on actual customer data, illustrates one important relationship: the percentage of customers who recommend the purchase of the firm’s products or
services to others.
Based on data such as these, and the relationships between such data
and other measures of business success, the PIMS authors concluded:
“The Customer is KING!” To best serve customers, the successful quality
program will apply specific principles, techniques, and tools to better
understand and serve their firm’s royalty—the customer.
Related Business Functions
There are many related business functions within the organization that
involve the quality mission in a significant capacity but which are not
properly considered “quality functions.”
Safety
A safety problem arises when a product, through use or foreseeable misuse, poses a hazard to the user or others. Clearly, the optimal approach to
address safety issues is through prevention. Product and process-design
review activities should include safety as a primary focus. Safety is quite
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Business-Integrated Quality Systems
simply a conformance requirement. The quality professional’s primary
role is the creation of systems for the prevention and detection of safety
prob­lems caused by nonconformance to established requirements, and
development of systems for controlling the traceability of products that
may have latent safety problems that might be discovered at a future date,
or that may develop these problems as the result of unanticipated product
usage.
There are a myriad of government agencies that are primarily concerned with safety, including the Consumer Product Safety Commission
(CPSC), which deals with the safety of consumer products; the Defense
Nuclear Facilities Safety Board Office of Environment, Safety, and Health;
the Center for Food Safety and Applied Nutrition; the Mine Safety and
Health Administration; the Occupational Safety and Health Administration (OSHA); the Office of System Safety; and the Defense Nuclear Facilities
Safety Board, among others.
Regulatory Issues
For many years the fastest growing “industry” in the United States has
been federal regulation of business. The U.S. Small Business Administration estimated that compliance with federal regulations alone con­sumed
$1.75 trillion dollars in 2008 (Crain and Crain, 2010), or approximately
13 percent of 2008 GDP. Each year over 150,000 pages of new regulations
are issued by government agencies. The quality manager will almost certainly be faced with regulatory compliance issues in his or her job. In some
industries, compliance may be the major component of the quality manager’s job.
Product Liability
The subject of quality and the law is also known as product liability. While
the quality manager isn’t expected to be an expert in the subject, the quality activities bear directly on an organization’s product liability exposure
and deserve the quality manager’s attention. To understand product liability, one must first grasp the vocabulary of the subject. Table 2.2 presents
the basic terminology (Thorpe and Middendorf, pp. 20–21).
There are three legal theories involved in product liability: breach of
war­ranty, strict liability in tort, and negligence. Two branches of law deal
with these areas, contract law and tort law.
A contract is a binding agreement for whose breach the law provides a
rem­edy. Key concepts of contract law relating to product liability are those
of breach of warranty and privity of con­tract.
Breach of warranty can occur from either an express warranty or an
implied warranty. An express warranty is a part of the basis for a sale: the
buyer agreed to the purchase on the reasonable assumption that the
prod­uct would perform in the manner described by the seller. The seller’s
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The Quality Function
Assumption
of risk
Contributory
negligence
Deposition
Discovery
Duty of care
Express
warranty
Foreseeability
Great care
Implied
warranty
Liability
Negligence
Obvious peril
Prima facie
Privity
Proximate
cause
Reasonable
care
Res ipsa
loquitur
25
The legal theory that a person who is aware of a danger and its extent
and knowingly exposes himself to it assumes all risks and cannot recover
damages, even though he is injured through no fault of his own.
Negligence of the plaintiff that contributes to his injury and at common law
ordinarily bars him from recovery from the defendant although the defendant
may have been more negligent than the plaintiff.
The testimony of a witness taken out of court before a person authorized to
administer oaths.
Procedures for ascertaining facts prior to the time of trial in order to
eliminate the element of surprise in litigation.
The legal duty of every person to exercise due care for the safety of others
and to avoid injury to others whenever possible.
A statement by a manufacturer or seller, either in writing or orally, that his
product is suitable for a specific use and will perform in a specific way.
The legal theory that a person may be held liable for actions that result in
injury or damage only when he was able to foresee dangers and risks that
could reasonably be anticipated.
The high degree of care that a very prudent and cautious person would
undertake for the safety of others. Airlines, railroads, and buses typically
must exercise great care.
An automatic warranty, implied by law, that a manufacturer’s or dealer’s
product is suitable for either ordinary or specific purposes and is reason­ably
safe for use.
An obligation to rectify or recompense for any injury or damage for which the
liable person has been held responsible or for failure of a product to meet a
warranty.
Failure to exercise a reasonable amount of care or to carry out a legal duty
that results in injury or property damage to another.
The legal theory that a manufacturer is not required to warn prospec­tive
users of products whose use involves an obvious peril, especially those that
are well-known to the general public and that generally cannot be designed
out of the product.
Such evidence as by itself would establish the claim or defense of the party
if the evidence were believed.
A direct contractual relationship between a seller and a buyer. If A
manufactures a product that is sold to dealer B, who sells it to consumer C,
privity exists between A and B and between B and C, but not between
A and C.
The act that is the natural and reasonably foreseeable cause of the harm or
event that occurs and injures the plaintiff.
The degree of care exercised by a prudent person in observance of his legal
duties toward others.
The permissible inference that the defendant was negligent in that “the
thing speaks for itself” when the circumstances are such that ordinarily the
plaintiff could not have been injured had the defendant not been at fault.
Table 2.2 Fundamental Legal Terminology
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Business-Integrated Quality Systems
Standard of
reasonable
prudence
Strict liability
in tort
Subrogation
Tort
The legal theory that a person who owes a legal duty must exercise the
same care that a reasonably prudent person would observe under similar
circumstances.
The legal theory that a manufacturer of a product is liable for injuries due
to product defects, without the necessity of showing negligence of the
manufacturer.
The right of a party secondarily liable to stand in the place of the creditor
after he has made payment to the creditor and to enforce the creditor’s right
against the party primarily liable in order to obtain indemnity from him.
A wrongful act or failure to exercise due care, from which a civil legal action
may result.
Table 2.2 Fundamental Legal Terminology (Continued)
state­ment need not be written for the warranty to be an express warranty; his mere statement of fact is sufficient. An implied warranty is a
warranty not stated by the seller, but implied by law. Certain warranties
result from the simple fact that a sale has been made. One of the most
important of the attributes guar­anteed by an implied warranty is that of
fitness for normal use. The warranty is that the product is reasonably
safe.
Privity of contract means that a direct relationship exists between
two par­ties, typically buyer and seller. At one time manufacturers were
not held liable for products purchased from vendors or sold to a consumer through a chain of wholesalers, dealers, etc. Manufacturers
were treated as third-party assignees and said to be not in privity with
the end user. This concept began to deteriorate in 1905 when courts
began to permit lawsuits against sellers of unwholesome food, whether
or not they were negligent, and against original manufacturers,
whether or not they were in privity with the consumers. The first recognition of strict liability for an express warranty without regard to
privity was enunci­ated by a Washington court in 1932 in a case involving a Ford Motor Company express warranty that their windshields
were “shatterproof.” When the windshield shattered and injured a
consumer, the court allowed the suit against Ford, ruling that even
without privity the manufacturer was respon­sible for the misrepresentation, even if the misrepresentation was done inno­cently.
Under the rule of strict liability an innocent consumer who knows
nothing about disclaimers and the requirement of giving notice to a manufacturer with whom he did not deal cannot be prevented from suing. The
rule avoids the technical limits of privity, which can create a chain of lawsuits back to the party that originally put the defective product into the
stream of commerce. The seller (whether a salesman or manufacturer) is
liable even though he has been careful in handling the product and even
if the consumer did not deal directly with him.
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The Quality Function
27
The first case to apply this modern rule was Greenman vs. Yuba Power
Products, Inc., in California in 1963. A party, Mr. Greenman, was injured
when a work piece flew from a combination power tool purchased for
him by his wife two years prior to the injury. He sued the manufacturer
and produced witnesses to prove that the machine was designed with
inadequate set screws.
The manufacturer, who had advertised the power tool as having “rugged construction” and “positive locks that hold through rough or precision work” claimed that it should not have to pay money damages because
the plaintiff had not given it notice of breach of warranty within a reasonable time as required. Furthermore, a long line of California cases had
held that a plaintiff could not sue someone not in privity with him unless
the defective product was food.
The court replied that this was not a warranty case but a strict liability
case. The decision stated that any “manufacturer is strictly liable … when
an arti­cle he placed on the market, knowing that it is to be used without
inspection for defects, proves to have a defect that causes injury to a
human being.”
The concept of strict liability was a turning point for both the consumer movement and quality control. The use of effective, modern quality control methods became a matter of paramount importance. The
concept is also called strict liability in tort, which is virtually synonymous
with the common usage of the term “product liability.” A tort is a wrongful act or failure to exer­cise due care resulting in an injury, from which
civil legal action may result. Tort law seeks to provide compensation to
people who suffer loss because of the dangerous or unreasonable actions
of others.
A related concept is that of negligence. Negligence occurs when one person fails to fulfill a duty owed to another or fails to act with due care. There
are two elements necessary to establish negligence: a standard of care recognized by law, and a breach of the duty or requisite care. Also, the breach
of duty must be the proximate cause of the harm or injury. The accepted
standard of care is that of the “reasonable person.” The court must measure
the action of the parties involved relative to the actions expected from an
imaginary reasonable person. To muddy the waters further, the court must
weigh the risk or danger of the situation against the concept of “reasonable
risk.” Clearly, these concepts are far from cut and dried.
The case cited above, and many other developments since, have
resulted in a feature that is unique to product liability law: namely, the conduct of the manufacturer is irrelevant.
The plaintiff in a product liability suit need not prove that the manufac­
turer failed to exercise due care; he need show only that the product was
the proximate cause of harm, and that it was either defective or unreasonably dan­gerous. This is what is meant by “strict liability.” In a sense, it is
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Business-Integrated Quality Systems
the product that is on trial and not the manufacturer. There are several
areas in which engineering and management are vulnera­ble, including
design; manufacturing and materials; packaging, installation, and application; and warnings and labels.
Designs that create hidden dangers to the user, designs that fail to
comply with accepted standards, designs that exclude necessary safety
features or devices, or designs that don’t properly allow for possible
unsafe misuse or abuse that is reasonably foreseeable to the designer are
all suspect. Quality control includes design review as one of its major
elements, and all designs should be carefully evaluated for these shortcomings. As always, the concept of reason­ableness applies in all its
ambiguity.
The application of quality control principles to manufacturing, materials, packaging, and shipping is probably the best protection possible
against future litigation. Defect prevention is the primary objective of
quality control and the defect that isn’t made will never result in loss or
injury. Bear in mind, how­ever, a defect in quality control is usually defined
as a non-conformance to requirements. There is no such definition in the
law. Legal definitions of a defect are based on the concept of reasonableness and the need to consider the use of the product.
Environmental Issues Relating to the Quality Function
The primary connection between environmental issues and the quality
function is the ISO 14000 standard, which covers six areas:
1. Environmental management systems
2. Environmental auditing
3. Environmental performance evaluation
4. Environmental labeling
5. Life-cycle assessment
6. Environmental aspects in product standards
The 14000 series standard mirrors the ISO 9001 quality standard in requiring a policy statement, top-down management com­mitment, document
control, training, corrective action, management review, and continual
improvement. Plans call for integrating ISO 9000 and ISO 14000 into one
management standard that will also include health and safety. It is possible that eventually a single audit will cover both ISO 9000 and ISO 14000.
ISO 14001—the environmental management system (EMS) specifica­tion—
is intended to be the only standard establishing requirements against
which companies will be audited for certification. The standard does not
set requirements for results, only for the continuous improvement of a
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The Quality Function
29
company’s EMS. ISO 14001 is not a requirement; it is voluntary. ISO 14001
is a systems-based standard that gives companies a blueprint for man­
aging their impact on the environment.
The requirements fall into five main areas:
• Senior management shall articulate the company’s environmental
policy. The policy will include commitments toward pollution
preven­tion and continuous improvement of the EMS. The policy
will be avail­able to the public.
• Consistent with the environmental policy, you shall establish and
main­tain procedures to identify significant environmental aspects
and their associated impacts. Procedures should include legal and
other require­ments. Objectives and targets will also be documented,
including continual improvement and pollution prevention.
• Each employee’s role and position must be clearly defined, and all
employees must be aware of the impact of their work on the
environ­ment. Employees shall be adequately trained.
• The EMS should be set up to facilitate internal communication. To
that end, all relevant documentation should be easily available
and usable, in either print or electronic form.
• Organizations must continually monitor and document their
environ­mental effects and periodically review them to ensure
continual improvement and the effectiveness of the EMS.
Management is respon­sible for an internal review of the EMS on a
regular basis.
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CHAPTER
3
Approaches to Quality
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T
raditional quality programs for the most of the twentieth century
were focused on the command and control aspects inherent to the
functional hierarchy organizational structure. The efforts of Taylor
to both standardize and simplify work at least made this possible, if not
enforced its legitimacy. In the aftermath of WWII, American business had
extended control backward to the sources of supply and forward to the
distribution and merchandising. To the extent that organizations succeeded in this endeavor, they reduced uncertainty in their environments
and gained control over critical elements of their business.
Internal quality practices were largely associated with off-line inspection by trained quality inspectors, assigned to a Quality Control department. Operational personnel were responsible for their assigned functions,
such as production; inspectors were responsible for ensuring conformance
of the product to the customer requirement, usually just before the product was shipped to the customer. Although Shewhart had developed the
statistical control chart in the 1920s, its use in industry was dwarfed by
inspection sampling plans that better fit this organizational model. These
sampling plans had become established as MIL-STD 105, a requirement of
military suppliers, which had made them the de facto standard throughout the war years for all suppliers.
Unlike that of most of the industrialized world, the American infrastructure was undamaged by the war. While the rest of the world rebuilt,
shortages were endemic, and American suppliers ramped up production
to fill the void, resulting in a period of prosperity and profitability that
further enforced the perception of well-designed, or at least adequate,
systems. In reality, quality levels were poor, as is often the case during
shortages (Juran, 1995).
By the late 1970s, however, market influences emerged to challenge
the status quo, including (Juran, 1995):
· The growth of consumerism
· The growth of litigation over quality
· The growth of government regulation of quality
· The Japanese quality revolution
33
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Business-Integrated Quality Systems
Deming’s Approach
Deming is probably best known for his theory of management as embodied in his 14 points. According to Deming, “The 14 points all have one
aim: to make it possible for people to work with joy.” The 14 points are:
1. Create constancy of purpose for the improvement of product and
service, with the aim to become competitive, stay in business, and
provide jobs.
2. Adopt the new philosophy of cooperation (win-win) in which
everybody wins. Put it into practice and teach it to employees,
customers, and suppliers.
3. Cease dependence on mass inspection to achieve quality. Improve
the process and build quality into the product in the first place.
4. End the practice of awarding business on the basis of price tag
alone. Instead, minimize total cost in the long run. Move toward a
single supplier for any one item, on a long-term relationship of
loyalty and trust.
5. Improve constantly and forever the system of production, service,
planning, or any activity. This will improve quality and productivity and thus constantly decrease costs.
6. Institute training for skills.
7. Adopt and institute leadership for the management of people, recognizing their different abilities, capabilities, and aspirations. The
aim of leadership should be to help people, machines, and gadgets
do a better job. Leadership of management is in need of overhaul,
as well as leadership of production workers.
8. Eliminate fear and build trust so that everyone can work effectively.
9. Break down barriers between departments. Abolish competition
and build a win-win system of cooperation within the organization. People in research, design, sales, and production must work
as a team to foresee problems of production and use that might be
encountered with the product or service.
10. Eliminate slogans, exhortations, and targets asking for zero defects
or new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and
low productivity belong to the system and thus lie beyond the
power of the workforce.
11. Eliminate numerical goals, numerical quotas, and management
by objectives. Substitute leadership.
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Approaches to Quality
35
12. Remove barriers that rob people of joy in their work. This will
mean abolishing the annual rating or merit system that ranks people and creates competition and conflict.
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.
These principles clearly define responsibilities for management, many
of which were contradicted by the traditional functional hierarchy structure, as well as its command and control tendencies.
Deming also described a system of “profound knowledge.” Deming’s
system of profound knowledge consists of four parts: appreciation for a
system, knowledge about variation, theory of knowledge, and psychology.
A system is a network of interdependent components that work
together to accomplish the aim of the system. The system of profound
knowledge is itself a system. The parts are interrelated and cannot be
completely understood when separated from one another. Systems must
be managed. The greater the interdependence of the various system components, the greater the need for management. In addition, systems
should be globally optimized; global optimization cannot be achieved by
optimizing each component independent of the rest of the system.
Systems can be thought of as networks of intentional cause-and-effect
relationships. However, most systems also produce unintended effects. Identifying the causes of the effects produced by systems requires understanding of variation—part 2 of Deming’s system of profound knowledge.
Without knowledge of variation people are unable to learn from experience. There are two basic mistakes made when dealing with variation:
(1) reacting to an outcome as if it were produced by a special cause, when
it actually came from a common cause, and (2) reacting to an outcome as
if it were produced by a common cause, when it actually came from a
special cause. The terms special cause and common cause are operationally
defined by the statistical control chart, discussed in detail in Chap. 9.
Deming’s theory of profound knowledge is based on the premise that
management is prediction. Deming, following the teachings of the philosopher C. I. Lewis (1929), believed that prediction is not possible without theory. Deming points out that knowledge is acquired as one makes a
rational prediction based on theory, then revises the theory based on comparison of prediction with observation. Knowledge is reflected in the new
theory. Without theory, there is nothing to revise, that is, there can be no
new knowledge, no learning. The process of learning is operationalized
by Deming’s Plan-Do-Study-Act cycle (a modification of Shewhart’s PlanDo-Check-Act cycle). It is important to note that information is not knowledge. Mere “facts” in and of themselves are not knowledge. Knowing
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Business-Integrated Quality Systems
what the Dow Jones Industrial Average is right now, or what it has been
for the last 100 years, is not enough to tell us what it will be tomorrow.
Psychology is the science that deals with mental processes and behavior. In Deming’s system of profound knowledge, psychology is important
because it provides a theoretical framework for understanding the differences between people, and provides guidance in the proper ways to motivate them.
Total Quality Control In Japan
Japan is well-known for replacing its old reputation for terrible quality with a
new reputation for excellence. The system they employed to accomplish this
impressive feat is a uniquely Japanese version of a system that originated in
America known as total quality control (TQC). TQC is a system of specialized
quality control activities initially developed by Feigenbaum (1951, 1983). The
Japanese took Feigenbaum’s American version of quality control (which was
very much a continuation of the scientific management approach) and made
it their own. The Japanese rendition of TQC is described by Ishikawa (1985)
as a “thought revolution in management,” drawing heavily on contributions
of American quality experts, especially Walter A. Shewhart, W. Edwards
Deming, and Joseph M. Juran. However, there are some elements of the
Japanese system that are purely Japanese in character. The thought revolution involves a transformation in six categories (Ishikawa, 1985):
1. Quality first—not short-term profit first.
Management that stresses “quality first” can gain customer confidence step-by-step, resulting in a gradual increase in company
sales with longer-term improvement to profitability and management stability. A company following the principle of “profit first,”
may obtain a quicker profit but will be unable to sustain competitiveness for longer periods of time.
2. Consumer orientation—not producer orientation. Ishikawa stressed
thinking in terms of another party’s position: listen to their opinions
and act in a way respectful to their views.
3. The next process is your customer—breaking down the barrier of
sectionalism.
Especially within highly structured (functionally based) organizations, this approach is needed to drive company-wide quality
and overcome silo-based mentality (i.e., each department looking
after its own best interests). The company as a whole must look at
its processes for delivering customer value, rather than a department or section separately.
4. Using facts and data to make presentations—utilization of statistical methods.
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Approaches to Quality
37
The importance of facts must be clearly recognized. Facts, in
contrast to opinions, can be translated into data. If data are accurate,
they can be analyzed using statistical methods and engineering or
management models. This, in turn, forms the basis of decisions.
Such decisions will, in the long run, prove to be better than decisions made without this process, that is, the decisions will produce
results that more closely match management’s goals.
5. Respect for humanity as a management philosophy—full participatory management. When management decides to make companyÂ�
wide quality its goal, it must standardize all processes and procedures
and then boldly delegate authority to subordinates. The fundamental principle of successful management is to allow sub�ordinates
to make full use of their ability. The term humanity implies autonomy and spontaneity. People are different from animals or
machines. They have their own minds, and they are always thinking. Management based on humanity is a system of management
that lets the unlimited potential of human beings blossom.
6. Cross-functional management.
From the perspective of companywide goals, the main functions are quality assurance, cost control, quantity control, and
personnel control. The company must establish cross-functional
committees to address these section-spanning issues. The committee chair should be a senior managing director. Committee
members are selected from among those who hold the rank of
director or above.
At the time, cross-functional management was a uniquely Japanese
feature of quality management, requiring a fundamental modification of
the bureaucratic (functional hierarchy) model of traditional organizations.
It has long been known that this form of organization, sometimes called
the “chimney stack model,” results in isolation of the various functions
from one another. This in turn results in parochialism and other behavior
that, while optimal for a given function, is detrimental to the system as a
whole. Most business texts address this problem superficially at best. The
Japanese developed a formal approach for dealing with it, which is often
referred to as cross-functional management (GOAL/QPC, 1990).
Another feature of the Japanese approach to management was the
concentration on the “core business.” The core business is the essence of
what the company does; for example, Toyota might identify their core as
the production of personal transportation vehicles. The company strives
to provide a sense of family and belonging for full-time core employees.
Lifelong service to the employer is expected, and the employer demonstrates similar loyalty to the employee, for example by providing lifelong
job security.
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Business-Integrated Quality Systems
How is this possible? After all, the normal business cycle rises and
falls periodically and a company that is adequately staffed for peak production is overstaffed when production downturns occur. The Japanese
manage to provide security in good times and bad in a number of ways.
One is by massive outsourcing of non-core business activities to suppliers. It is not unusual to find as much as 80 percent of the value of the
finished product in purchased materials. Another is by making use of a
large buffer of part-time employees. In some Japanese companies as
many as 50 percent of their employees during peak production periods
are part-time workers.
Prevailing wisdom in America would suggest that this strategy
would result in a great increase in uncertainty and an overall decline in
quality. in Japan, however, suppliers are very tightly controlled using
a system known as Keiretsu. Suppliers within the Keiretsu often have
board members from the parent company, and from other members of
the Keiretsu. Unlike American businesses, which tend to deal with
their suppliers at arm’s length, parent companies play a very active
role in the affairs of their suppliers. While in the USA a firm might
regularly appraise the quality of the product delivered by a supplier,
in Japan the parent would also carefully evaluate how the product was
made. If appropriate, the parent would suggest better, more economical ways to produce the product. Parent companies provide larger,
longer-term contracts than their American counterparts, and they often
demand steady price decreases. The supplier might be expected to
become “dedicated” to its parent, providing product only to the parent
and not to competitors. Continuous improvement in quality, cost, and
delivery is expected of all Japanese suppliers, just as it is expected
from the employees.
KAIZEN™ (a trademark of the KAIZEN Institute, Ltd.) is a philosophy of continuous improvement, a belief that all aspects of life should be
constantly improved. In Japan, where the concept originated, KAIZEN
applies to all aspects of life, not just the workplace. In America the term is
usually applied to work processes.
The KAIZEN approach focuses on ongoing incremental improvement that involves all stakeholders. Over time these small improvements produce changes every bit as dramatic as the “big project”
approach. KAIZEN does not concern itself with changing fundamental
systems, but seeks to optimize existing systems.
All employees in an organization have responsibilities for two aspects
of quality: process improvement and process control. Control involves
taking action on deviations to maintain a given process state. In the
absence of signals indicating that the process has gone astray, control is
achieved by adhering to established standard operating procedures
(SOPs). In contrast, improvement requires experimentally modifying the
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Approaches to Quality
Top management
39
Innovation
Middle management
Kaizen
Supervisors
Workers
Maintenance
Figure 3.1 Responsibility for KAIZEN and KAIZEN’s role in process improvement
(Imai, 1986).
process to produce better results through innovation and KAIZEN. When
an improvement has been identified, the SOPs are changed to reflect the
new way of doing things. Imai (1986) illustrates the job responsibilities as
shown in Figure 3.1.
The figure illustrates both the shared responsibility and the limited role
of KAIZEN in excluding radical innovations (sometimes referred to as
reengineering). More detailed responsibilities for KAIZEN are provided
in Table 3.1.
Another rather considerable contribution from post-war Japan is the
set of lean practices documented by Taiichi Ohno of Toyota. The lean
methods are sometimes referred to as the Toyota Production System
(due to their origins), and include principles and methodologies for
improving cycle times and quality through the elimination of waste
(also known by its Japanese name of muda). Lean distinguishes between
activities that create value, and those that don’t, with the objective to
improve cycle times and efficiencies, reduce waste of resources, and
increase value to the customer.
Taiichi Ohno of Toyota defined the following five types of waste
(Womack and Jones (1996) added the sixth):
1. Errors requiring rework. (Rework refers to any activity required to
fix or repair the result of another process step. In service processes,
management intervention to resolve a customer complaint may be
considered rework.)
2. Work with no immediate customer, either internal or external,
resulting in work in progress or finished goods inventory.
3. Unnecessary process steps.
4. Unnecessary movement of personnel or materials.
5. Waiting by employees as unfinished work in an upstream process
is completed.
6. Design of product or processes that do not meet the customer’s
needs.
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Business-Integrated Quality Systems
Top management
• Be determined to introduce KAIZEN as a corporate strategy
• Provide support and direction for KAIZEN by allocating
resources
• Establish policy for KAIZEN and cross-functional goals
• Realize KAIZEN goals through policy deployment and audits
• Build systems, procedures, and structures conducive to KAIZEN
Middle management and
staff
• Deploy and implement KAIZEN goals as directed by top
management through policy deployment and cross-functional
management
• Use KAIZEN in functional capabilities
• Establish, maintain, and upgrade standards
• Make employees KAIZEN-conscious through intensive training
programs
• Help employees develop skills and tools for problem solving
Supervisors
• Use KAIZEN in functional roles
• Formulate plans for KAIZEN and provide guidance to workers
• Improve communication with workers and sustain high morale
• Support small group activities (such as quality circles) and the
individual suggestion system
• Introduce discipline in the workshop
• Provide KAIZEN suggestions
Workers
• Engage in KAIZEN through the suggestion system and small
group activities
• Practice discipline in the workshop
• Engage in continuous self-development to become better
problem solvers
• Enhance skills and job performance expertise with crosseducation
From Imai (1986).
Table 3.1 Hierarchy of Kaizen Involvement
Value is the opposite of waste, and may be identified by considering:
1. Is this something the customer is willing to pay for?
2. Does the step change form, fit, or function of the product? Stated
differently, does it convert input to output?
If the answer to both questions is “No,” then it’s likely the activity
does not create value in the customer’s eyes, even if it is necessary to
ensure quality in the current process. Inspection and review activities,
such as monitoring of sales calls or management sign-offs on exceptions,
are examples of a non–value added waste. They do nothing to change the
product (or service), and are only necessary to address the poor quality
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Approaches to Quality
41
associated with the underlying process. Unfortunately, if their removal
would degrade the quality of the product or service, then they are Type I
waste, sometimes called Business Value Added, that is necessary given
the current state of the business processes. In many cases, it is beneficial to
change the process to remove the waste.
Lean thinking has been shown to reap dramatic benefits in organizations. Organizations are able to sustain production levels with half the
manpower, improving quality and reducing cycle times from 50 to 90 percent (Womack and Jones, 1996).
Several of the lean methods are fairly well known in and of themselves.
Just in Time (JIT), for example, has been a buzzword within American
manufacturing since the 1980s. Other well-known methods include Kanban
(Japanese for cards) and 5S. Unfortunately, practitioners often find they are
unable to experience significant advances in any of these areas individually if they do not embrace the complete principles of Lean. Furthermore,
many of the methods must be undertaken in conjunction with, or after
appreciating results from, rigorous quality improvement. It would perilous
to implement JIT if the underlying processes were not in statistical control:
without statistical control, the process is not stable or predictable, so cannot be balanced to achieve JIT performance.
Although many of these techniques were initially applied to manufacturing applications, they are particularly well suited (and have broad
usage) to address issues in transactional processes within service industries. Furthermore, they have origins and a strong track record in small
job-shop type environments at Toyota and its suppliers, where production was often very low volume and far from mass production levels.
ISO 9000 Series
The best-known system of quality standards is the ISO 9000 series, published by ISO (the International Organization for Standardization). The
standards were originally published in 1987 and subsequently updated
in 1994, 2000, and 2008. The standard was initially based on the U.S.
Department of Defense Mil-Q-9858, released in 1959.
The use of ISO 9000 is extremely widespread, with over 1.1 million
organizations certified to the standard (as of 2010); 86 percent of the registrations are in Europe and the Far East. It’s likely that the proliferation of
registrations in the Far East results from the recognition in the supply
chain that use of a common standard eliminates the need for multiple
quality systems audits by their various customers. ISO 9000 registration is
achieved by third-party registrar audits; that is, audits are not performed
by customers but by specially trained, independent, third-party auditors.
In the past, many firms had to deal with auditors from many different
customers. Furthermore, the customers usually had their own specific
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42
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