Management Question

‫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 3
Quality Management (MGT 424)
Due Date: 30/11/2024 @ 23:59

Course Name: Quality Management

Student’s Name:

Course Code: MGT 424

Student’s ID Number:

Semester: First

CRN:
Academic Year: 2024-25-1st

For Instructor’s Use only
Instructor’s Name: Dr. Ibrahim Alotaibi
Students’ Grade:
/Out of 10

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 3rd assignment, the students are required to read thoughtfully the Using Six Sigma DMAIC to
improve the quality of the production process: case study , and answer the related questions, upon
successful completion of the assignment the student should be able to:
1. Recognize the importance of quality management theory, principles, and practices applied in
businesses on national and international levels.(CLO1)
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 access the case study:
• Using Six Sigma DMAIC to improve the quality of The production process: a case study ,
Monika Smętkowska, Beata Mrugalska* ‘Instructions to read the case study’
Access the below link to download directly the case study PDF:

Or
Through SDL
Using Six Sigma DMAIC to improve the quality of the production process: a case study
This case study discusses the application of six sigma as one of the common tools to improve the
quality and practice continues improvements. The paper is supported by practical example of the
DMAIC implementation ( one of the Six sigma methods), which presents the efficiency of such
practice on the processes quality level. Read the case, by using your critical thinking skills answer
the following questions:
1- Using your own words, explain in brief the idea behind six-sigma concept, and how it does
benefit the business? ( 2.5 Mark) ( 100 -150 words)

Restricted – ‫مقيد‬

2- Describe the main stages of DMAIC as indicated in the case study. ( 2.5) ( 100 – 150 words)
3- From your point of view, which one of these stage is more critical, and Why? ( 2.5 Mark).
( 100 – 150 words)
4- Assess the application of DMAIC on the company ( production process) in term of its
implementation and results efficiency ( 2.5 mark ) ( 100 – 150 words)
Important Notes: •
•
•

For each question, you need to answer not more 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

Available online at www.sciencedirect.com

ScienceDirect
Procedia – Social and Behavioral Sciences 238 (2018) 590 – 596

SIM 2017 / 14th International Symposium in Management

Using Six Sigma DMAIC to improve the quality of
the production process: a case study
Monika Smętkowska, Beata Mrugalska*
Poznan University of Technology, Faculty of Engineering Management,ul. Strzelecka 11, 60-965 Poznan, Poland

Abstract
Over the last two decades there has been a growing awareness of the need to improve quality in the industrial sector. This paper
presents how to implement the DMAIC cycle as an element of continuous improvement in practice. In order to achieve it, the
problem of quality and quality improvement is widely discussed. Based on the recognized problem in the organization, an
analysis with the application of DMAIC is done. The propositions of improvements, which can be implemented in the
organization in order to increase the effectiveness of production process, are also presented.
©
by Elsevier
Ltd. This
is an openLtd.
access article under the CC BY-NC-ND license
© 2018
2018Published
The Authors.
Published
by Elsevier
(
Peer-review under responsibility of SIM 2017 / 14th International Symposium in Management.
Peer-review under responsibility of SIM 2017 / 14th International Symposium in Management.

Keywords: DMAIC; quality; improvement; Six Sigma

1. Introduction
Nowadays, there is a huge pressure on organizations to improve the customer satisfaction and quality in the
organization, and at the same time to decrease ineffectiveness and reduce the number of errors. The organizations
have to solicit to gain and keep customers, because now, they are the key elements that drive economy. There are
many different conceptions, methods and tools that may be used to maintain the good quality level and help in
continuous development in the company (Zu, et al., 2008; Bendoly, 2016; Gołaś, et al., 2016). For example, it can

* Corresponding author. Tel.: +48-61-665-3364; fax: +48-61- 665-3375.
E-mail address: [email protected]

1877-0428 © 2018 Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(
Peer-review under responsibility of SIM 2017 / 14th International Symposium in Management.
doi:10.1016/j.sbspro.2018.04.039

Monika Sme˛tkowska and Beata Mrugalska / Procedia – Social and Behavioral Sciences 238 (2018) 590 – 596

591

be Six Sigma which is an innovative method of quality management introduced in Motorola by Bob Galvin and Bill
Smith in the middle of the eighties (Schroeder et al., 2008; Evans & Lindsay, 2014).
“Sigma” is a notion taken from statistics. It means any standard deviation of the random variable around the
mean value. Therefore, Six Sigma means six times the distance of standard deviation. To achieve Six Sigma a
process cannot produce more than 3.4 defects per million opportunities. A defect is defined as anything outside the
customer specifications (Moosa, & Sajid, 2010; Lei, 2015). It is inseparably connected with the principles of TQM.
Due to its dynamic character it has become one of the most effective tools in continuous development and pursuit of
excellence. Six Sigma has developed and systematized many statistical and business tools while reducing costs,
defects and cycle time of production, and at the time increasing market share, maintaining customers, product
development. Its program can be used at every stage of the production and administrative process (Zu, et al., 2008;
Glasgow et al., 2010).
Six Sigma is perceived as a philosophy or concept of a broad sense. Using it as a philosophy helps with changing
the world and transformation of an enterprise. Treating it as a strategy ensures development and increases the
position of the company. It is based on six main principles which should be implemented in companies that want to
develop and increase their position on the market. The very first point is concentration on the customer. Every
action, which is taken, should be in agreement with customers’ specifications and requirements. Six Sigma is also
based on real data and facts which are used to perform a detailed analysis. It is based on continuous improvement of
all aspects of functioning development in the organization as well as proactive management and cooperation without
boundaries at every level in enterprise. It should be underlined that it is not only an approach for solving the
problems with manufacturing but also business processes (Taborski, 2010).
2. DMAIC cycle
Among many different tools of quality management which may be considered as methods of quality
improvement, there are two main ones used in Six Sigma concept: DMAIC and DMADV (Kumar & Sosnoski,
2009; Jones, et al., 2010). DMAIC is an acronym from the words Define-Measure-Analyze-Improve-Control. This
method is based on process improvement according to Deming cycle. It is a process improvement of many different
areas in the enterprise. DMAIC cycle consists of five stages which are connected with each other (Sokovic, et al.,
2010; Sin, et al., 2015):
x

Defining the goal and its requirements:
9 defining needed resources and responsibilities,
9 defining organization structure which is favorable to achieve the goals,
9 identification of the elements and setting the estimated date of the end of project,
9 obtaining support from management.

The main purpose of this stage is to verify if the actions, which should be taken in order to solve the problems, are
connected with the priorities in the organization and that there is support from management and availability of
required resources. It starts with identifying the problem which needs a solution and ends with understanding this
issues as well as a clear evidence of management supervision. There are a lot of ways how to identify a project for
improvement. Firstly, it is better to focus on external factors, which create the cost for organization and take the
actions to eliminate them and after that solve the internal-costs problems. A useful tool which helps to narrow the
problem can be Pareto diagram (Shankar, 2009).
x

Measuring the current process:
9 identification of valid and reliable metrics,
9 checking if there is enough data to measure,
9 documentation of current performance and effectiveness,
9 performing comparative tests.

The measure stage concerns gathering information about processes which are going to be improved. It focuses on

592

Monika Sme˛tkowska and Beata Mrugalska / Procedia – Social and Behavioral Sciences 238 (2018) 590 – 596

information which is needed in order to better understand all the processes in organization, customers’ expectations,
suppliers’ specifications and identification of the possible places where a problem may occur. It may be done by
creating a process map of the actual situation and performing failure mode and effect analysis (FMEA) which will
indicate the places of possible risk. The main issue of the measure phase is to collect and analyze the data which will
be needed in the control phase to show the differences and assess the progress which will be presented to the
management. It is also essential to assess the measurement system and to ensure that all data are veritable and
collected in a proper way (Shankar, 2009).
x

Analyzing the results of measurements, determining the causes of process imperfections and possible
solutions for them:
9 identification of key reasons for problems,
9 identification of the differences between current and target performance,
9 estimation of resources required to achieve target,
9 identification of possible obstacles.

In the analyze stage different tools and methods are used to find root causes, assess the risk and analyze data. To
confirm the analysis some samples should be performed and potential problems have to be proven to be real
problems. In this phase it is needed to define process capability, clarify the goals based on real data gained in the
measure phase and start root cause analysis which has impact on process variability. By calculating process
capability which is defined as “sigma” of the process, ability of the process to meet customers’ requirement is
measured. Process capability will be a key point for planned improvements.
x

Improving the process, implementing the changes, which eliminates the imperfections:
9 preparing the structure of work division,
9 developing and testing possible solutions, selecting the best one,
9 designing the implementation plan.

The goal of this stage is to take necessary information to create and develop an action plan in order to improve the
functioning of the organization, financial aspects and customer relationship issues. The possible solutions for the
action plan should be presented and performed. Some kind of pilot solutions, confirming the validity and accuracy
of analytical work which allows to make any corrections before applying the solutions on a large scale, are carried
out.
x

Controlling of the improved process, monitoring the results in a continuous way:
9 documentation of the plan of standardization and process monitoring improvements,
9 confirmation of the improved procedures,
9 transferring the ownership of the relevant teams after the completion of the project.

The control stage is about confirmation if changes implemented at the improve stage are sufficient and continuous
by verifying the quality of the improved process. It also controls the future state of the process in order to minimize
deviation from the objectives and ensure that the correction is implemented before it would have bad influence on
the result in the process. Control systems such as statistical process control should be implemented. The process has
to be continuously monitored. In the control phase control charts are used to identify if the process is controllable or
not.
Six Sigma allows to implement scientific methods in the organization to deliver the best value to the customers.
There are also some additional steps that should be taken in DMAIC cycle:
x
x
x
x

observation of important issues of the business and external environment,
development of a hypothesis based on this observation,
making predictions upon hypothesis,
testing the predictions and further observation, conducting experiments and using statistical methods,

Monika Sme˛tkowska and Beata Mrugalska / Procedia – Social and Behavioral Sciences 238 (2018) 590 – 596

x

593

repeating two last steps and comparing the hypothesis to the results for observation and experiments
(Pyzdek, 2014).

3. Case Study
3.1. Defining the problem
The research study started with a meeting in the company to discuss its problems. A deep analysis of the whole
production process was carried out. As a result of it some bottlenecks connected with visible downtime in the
production process were observed. They referred to performing the process of connecting blocks and covers on the
machine Kolbus BF 511. There were also others machines, which were used for this kind of activities, but only this
one had low effectiveness. The first issue to deal with, was to eliminate all the external factors which resulted in the
lower effectiveness of the process and then focusing on the internal ones.
At the meeting with the managing director and production director it was established that in a case of any needed
support the management would be ready to help. Every person involved in this project had to declare that he
understood his own position and responsibilities in performing and focusing on continuous improvement of quality
in the whole organization. The roles for performing this project mainly involved: Managing Director, Production
Director, Production Manager, the representative of financial aspects and Quality Controller. The needed resources
were defined as internal documentation of the company as well as own an observation of the processes on a
production line. The deadline of the project was set up for the end of April 2016.
As one of the main issues of the whole Six Sigma project is to focus on a customer, his needs and requirements
for the process had to be defined. The investigated company had only B2B (business-to-business) customers which
meant that it did not cooperate with individual clients. The main customers for this enterprise were the biggest
publishing houses from Poland and abroad, and their main requirement was to have orders on time. In order to
provide them high quality products and services it was essential that the production process run smoothly with the
greatest effectiveness and without any unnecessary downtimes.
3.2. Measuring data
After the problem was defined the next step was to collect historical data to get the information about processes
which were to be improved, check if there was enough data, documentation of the current situation and also perform
the comparative tests. However, the main assumption was to collect and measure data which would be needed at the
control stage in order to show the differences and asses the progress. The obtained data are shown on Figure 1.
300.000
250.000
200.000
150.000
100.000
50.000
0

2015

2016

Fig. 1. Efficiency on the machine BF 511

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Monika Sme˛tkowska and Beata Mrugalska / Procedia – Social and Behavioral Sciences 238 (2018) 590 – 596

As it can be seen the effectiveness in year 2016 was lower than in 2015. The biggest difference appeared in October
and November, which were the most productive months connected with a calendar season. In October the difference
was 86 464 pieces and in November 86 246 pieces in comparison to the previous year. It resulted from the fact that
there was an increase in orders from the customers, but decrease in their edition (number of printed volumes in one
order) what led to the increased number of changeovers on this machine .
3.3. Analyzing the main issue
In order to analyze the effectiveness of the machine Kolbus BF 511 brainstorming was performed. At first it was
organized in a form of an individual brainstorming and then there was a discussion about different ideas and
propositions. Every person involved had to present their own ideas in the form of a list on a Flipchart. On the basis
of these data it was possible to determine four main groups:
x
x
x
x

work organization
machine
method
man.

In a case of work organization the implemented control system was not sufficient enough to control the work
organization of every employee. Moreover, bad organization resulted from too long time spent on changeovers on
the machine due to too many customer’s orders. Till then the orders performed on this machine were selected by the
earliest date of delivery of materials what influenced negatively the production cycle to a large degree.
The technical state, age, construction of the machine and unexpected breakdowns also decreased the
effectiveness of the analyzed production processes. As the years were passing by, the machine was getting older. Its
maintenance was time-consuming and required engagement of employees from the company. However, the cost of a
new machine was really high and not adequate to benefits.
Another group of causes referred to methods of work. They were divided into: lack of instructions and
procedures, old technology and specification of production. The lack of procedures and clear instructions was an
impediment especially for new machine’s operators. They had to be informed how to choose formats of orders to
make the process much more effective. Although, this company developed quickly and tried to follow new trends
there was still old technology which slowed the production process and influenced its effectiveness.
Low effectiveness of the production process also resulted from the lack of experience, qualification and
knowledge of the employees, their predisposition, culture and motivation for work. In the company there were not
organized any trainings except obligatory health and safety training. The workers were not aware that their daily
actions contribute on a large scale to the functioning of the whole organization. As there was no bonus system the
lack of motivation for work was clearly visible. The predisposition of employees was also very important as some
people were more willing to work in specific conditions than others. It can be connected with their psychophysical
conditions which should be checked before hiring a new employee.
4.4 Improvement proposition
The first improvement proposition was to perform Single Minute Exchange of Die (SMED) on the machine
Kolbus BF 511 to reduce the time needed for changeovers and set-ups during production time. In order to achieve it,
it was proposed to:
x
x
x
x
x

gather parts and tools at spot,
eliminate internal operations,
simplify set-up to reduce adjustments,
replace only necessary parts and make all others as universal as possible,
measure time.

Monika Sme˛tkowska and Beata Mrugalska / Procedia – Social and Behavioral Sciences 238 (2018) 590 – 596

595

It was suggested to develop and complete the external set-up checklist to define the needed tools, materials and
gauges and their storage location. Moreover, it was proposed to develop and fill in a set-up observation form on the
basis of video of the process. As its results there should be done a classification of activities into internal or external
groups. Internal activities concern actions that can be only performed while the machine is shut down, whereas,
external activities can be performed while the machine is running. Thus, this division should lead to the conversion
of all possible internal actions to external set-up. For this aim, the employees, who perform the changeover or setup, should be invited and they should participate in brainstorming. In the next step, if it is possible, standardization
of tools and “one-touch” fasteners could be introduced. Furthermore, the possibility of performing operations
simultaneously could be taken into consideration. The introduced propositions should be measured in time to
evaluate their effectiveness.
Another proposition how to increase the quality of production process on the machine Kolbus BF 511 was to
perform trainings for the employees to make them aware how their actions contribute to productivity on this
machine and the whole production process. There is also a need to introduce clear instructions and procedures at
workplace. Each employee should know how to perform their tasks correctly. It is necessary to ensure that the
workers know how to collect orders for the process of connecting blocks with the covers. This issue does not only
concern machines’ operators and workers at the production line, but mainly employees working with production
planning and control.
The last proposed improvement concerns the implementation of Total Productive Maintenance (TPM) which is a
maintenance of machines and equipment performed by operators and workers inside the organization. It is based on
the elimination of breakdowns, changeovers, downtimes, decrease of speed of work, errors and corrections. It
requires involvement of machines’ operators for daily routine activities, not only employees from maintenance
department as it is in traditional methods.
4.5 Continuous control
After implementing the changes they should be controlled to check if they influence the production process
positively and bring any profits to the company. It can be performed by creating a control plan where it should be
exactly define what data, how, how often and who should control. If any non-conformance is detected, instructions
regarding needed actions to undertaken, should be also included. Over time, such a plan should be updated
depending on the evaluations after its implementation.
4. Conclusions
Nowadays, Six Sigma is getting more and more popular among organizations from various industries. It focuses
mostly on improving production processes what leads to the increase of profitability of the company. Achieving Six
Sigma level requires from organizations understanding the reasons of processes variability, performing their analysis
of cause and effect and the assessment of their costs. The application of DMAIC, which is one of the methods of
quality improvement used in Six Sigma concept, can increase the effectiveness while adequate reacting for the
appearing problems. As it was shown on the example of the machine Kolbus BF 511, it can be achieved by
implementing SMED, trainings for employees, work standardization and Total Productive Maintenance and after
that, it is necessary to introduce continuous control on the efficiency of the processes performed on that machine.
The proposed solutions may bring many different profits not only for the company, but also for other entities
involved in their functioning. Benefits of this implementation can be as follows:
x
x
x
x

company – avoiding penalties for non-compliance with the agreement, lower costs of production, increased
productivity, and consequently reduced amount of work in progress,
customers – increased customer satisfaction due to increased timeliness,
employees – increased comfort and better organization, lack of overtime,
other – the possibility of taking more orders during the „calendar season”.

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Monika Sme˛tkowska and Beata Mrugalska / Procedia – Social and Behavioral Sciences 238 (2018) 590 – 596

References
Zu, X., Fredendall, L. D., & Douglas, T. J. (2008). The evolving theory of quality management: the role of Six Sigma. Journal of Operations
Management, 26(5), 630-650.
Bendoly, E. (2016). Fit, bias, and enacted sensemaking in data visualization: frameworks for continuous development in operations and supply
chain management analytics. Journal of Business Logistics, 37(1), 6-17.
Gołaś, H., Mazur, A., & Mrugalska, B. (2016). Application of risk analysis and quality control methods for improvement of lead molding process.
Metalurgija, 55(4), 811-814.
Schroeder, R. G., Linderman, K., Liedtke, C., & Choo, A. S. (2008). Six Sigma: Definition and underlying theory. Journal of Operations
Management, 26(4), 536-554.
Evans, J. R., & Lindsay, W. M. (2014). An introduction to Six Sigma and process improvement. Stamfort: Cengage Learning.
Moosa, K., & Sajid, A. (2010). Critical analysis of Six Sigma implementation. Total Quality Management, 21(7), 745-759.
Lei, G., Wang, T., Zhu, J., Guo, Y., & Wang, S. (2015). System-level design optimization method for electrical drive systems—Robust approach.
IEEE Transactions on Industrial Electronics, 62(8), 4702-4713.
Glasgow, J. M., Scott-Caziewell, J. R., & Kaboli, P. J. (2010). Guiding inpatient quality improvement: a systematic review of Lean and Six
Sigma. The Joint Commission Journal on Quality and Patient Safety, 36(12), 533-AP5.
Taborski, D. (2010). Czy wzdrożenie inicjatywy Six Sigma to idealny sposób na poprawę efektywności organizacji? In M. Salerno-Kochana (ed.),
Wybrane aspekty zarządzania jakością II, Kraków: Wydawnictwo AG.
Kumar, S., & Sosnoski, M. (2009). Using DMAIC Six Sigma to systematically improve shopfloor production quality and costs,
International Journal of Productivity and Performance Management, 58(3), 254-273.
Jones, E. C., Parast, M. M., & Adams, S. G. (2010). A framework for effective Six Sigma implementation. Total Quality Management, 21(4),
415-424.
Sokovic, M., Pavletic, D., & Pipan, K. K. (2010). Quality improvement methodologies – PDCA cycle, RADAR matrix, DMAIC and DFSS.
Journal of Achievements in Materials and Manufacturing Engineering, 43(1), 476-483.
Sin, A. B., Zailani, S., Iranmanesh, M., & Ramayah, T. (2015). Structural equation modelling on knowledge creation in Six Sigma DMAIC
project and its impact on organizational performance. International Journal of Production Economics, 168, 105-117.
Shankar, R. (2009). Process improvement. Using Six Sigma. A DMAIC guide, Wisconsin: ASQ Quality Press.
Pyzdek, T. (2014). The Six Sigma handbook, New York: The McGraw-Hill, Inc.

The Handbook for
Quality Management

00_Pyzdek_FM_pi-xii.indd 1

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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.

00_Pyzdek_FM_pi-xii.indd 2

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The Handbook for
Quality Management
A Complete Guide to Operational Excellence
Thomas Pyzdek
Paul Keller

Second Edition

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Lisbon London Madrid Mexico City
Milan New Delhi San Juan
Seoul Singapore Sydney Toronto

00_Pyzdek_FM_pi-xii.indd 3

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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

00_Pyzdek_FM_pi-xii.indd 5

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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

00_Pyzdek_FM_pi-xii.indd 6

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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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

00_Pyzdek_FM_pi-xii.indd 8

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

00_Pyzdek_FM_pi-xii.indd 10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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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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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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)

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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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22

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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24

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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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 t…
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