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DEFINING QUALITY, QUALITY MANAGEMENT AND LINKS WITH PROFITABILITY

<< HISTORY OF QUALITY MANAGEMENT PARADIGMS
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Total Quality Management ­ MGT510
VU
Lesson # 11
DEFINING QUALITY, QUALITY MANAGEMENT AND LINKS WITH PROFITABILITY
Beyond Total Quality
By the end of the 1990s Total Quality Management (TQM) was considered little more than a fad by
many American business leaders (although it still retained its prominence in Europe).
As the 21st century begins, the quality movement has matured. New quality systems have evolved
beyond the foundations laid by Deming, Juran and the early Japanese practitioners of quality.
Some examples of this maturation:
·
In 2000 the ISO 9000 series of quality management standards was revised to increase emphasis
on customer satisfaction.
·
Beginning in 1995, the Malcolm Baldrige National Quality Award added a business results
criterion to its measures of applicant success.
·
Six Sigma, a methodology developed by Motorola to improve its business processes by
minimizing defects, evolved into an organizational approach that achieved breakthroughs ­ and
significant bottom-line results.
·
Quality Function Deployment was developed by Y. Akao as a process for focusing on customer
wants or needs in the design or redesign of a product or service.
·
Sector-specific versions of the ISO 9000 series of quality management standards were
developed for such industries as automotive (QS-9000), aerospace (AS9000) and
telecommunications (TL 9000 and ISO/TS 16949) and for environmental management (ISO
14000) and also for IT Sector
·
Quality has moved beyond the manufacturing sector into such areas as service, healthcare,
education and government.
·
The CMM levels 1-5 emphasize quality in IT sector from the maturity point of view of
processes and people.
·
Emphasis on learning by doing as a means of continual improvement has been accepted and has
paved the way to consider Knowledge as a strategic resource of production in 21st century work
place and in work organizations.
·
Discussion of Knowledge Management and Learning Organizations are becoming common in
all sorts of companies and all sectors of economy and is rather being taken as a source of
national competitive advantage in global interconnected and interdependent infocom oriented
world.
The Concept of Quality
People define quality in many ways. Some think of quality as superiority or excellence, others view it as
a lack of manufacturing or service defects, still others think of quality as related to product features or
price. As study that asked managers of 86 firms to define quality produced several dozen different
responses, including.
1.
perfection
2.
consistency
3.
eliminating waste
4.
speed of delivery
5.
compliance with policies and procedures
6.
providing a good, usable product
7.
doing it right the first time
8.
delighting or pleasing customers
total customers service and satisfaction6
9.
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Total Quality Management ­ MGT510
VU
Today most managers agree that the main reason to pursue quality is to satisfy customers. The
American National Standards Institute (ANSI) and the American Society for Quality (ASQ) define
quality as ""the totality of features and characteristics of a product or service that bears on its ability to
satisfy given needs." The view of quality as the satisfaction of customer needs is often called fitness for
use. In highly competitive markets, merely satisfying customer needs will not achieve success. To beat
the competition, organizations often must exceed customer expectations. Thus, one of the most popular
definitions of quality is meeting or exceeding customer expectations.
What is Quality?
To understand total quality, one must first understand quality. Customers that are business organizations
will define quality very clearly using specifications, standards, and other measures. This makes the point
that quality can be defined and measured. Although few consumers could define quality if asked, all
know it when they see it. This makes the critical point that quality is in the eye of the beholder. With the
total quality approach, customers ultimately define quality.
People deal with the issue of quality continually in their daily lives. We concern ourselves with quality
when grocery shopping, eating in a restaurant, and making a major purchase such as an automobile, a
home, a television, or a personal computer. Perceived quality is a major factor by which people make
distinctions in the market place. Whether we articulate them openly or keep them in the back of our
minds. We all apply a number of criteria when making a purchase. The extent to which a purchase
meets these criteria determines its quality in our eyes.
One way to understand quality as a consumer-driven concept is to consider the example of eating at a
restaurant. How will you judge the quality of the restaurant? Most people apply such criteria as the
following:
Service
Response time
Food preparation
Environment/atmosphere
Price
Selection
The example gets at one aspect of quality ­ the results aspect. Does the product or service meet or
exceed customer expectations? This is a critical aspect of quality, but it is not the only one. Total quality
is a much broader concept that encompasses not just the results aspect but also the quality f people and
the quality of processes.
Chain Reaction and Profitability
Deming stresses that higher quality and improvement in quality leads to higher productivity, which in
turn leads to long-term competitive strength. The Deming "chain reaction," shown in Figure below,
summarizes this view. This theory states that improvements in quality lead to lower cost because of less
rework, fewer mistakes, fewer delays and snags, and better use of time and materials. Lower costs, in
turn, lead to productivity improvements. With better quality and lower prices, the firm can achieve a
higher market share and thus stay in business, providing more and more jobs. Deming states
emphatically that top management has the overriding responsibility for quality improvement.
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Total Quality Management ­ MGT510
VU
The Deming Chain Reaction
Improve Quality
Costs decrease because of less rework,
fewer mistakes, fewer delays and snags,
and better use of time and materials,
Productivity improves
Capture the market with better quality
and lower price
Stay in business
Provide jobs and more jobs
SIPOC Analysis:
A fundamental step in improving a process is to understand how it functions from a process
management perspective. This can be seen through the analysis diagram of the process to identify the
Supplier-Input-Process-Output-Customer (SIPOC) linkages.
It begins with defining the process of interest and listing the outputs that the process creates that go the
customers.
Quality Terminology:
Quality: is fitness for use (Juran)
Quality Control: It is a system where the qualities of products or services are inspected into to produce
them economically to meet the requirement of the purchaser. It is the operational technique.
Quality Assurance: It means to assure quality in a product so that a customer can buy it with
confidence and use it for a large period of time with satisfaction.
According to ISO, QA means," all those planned and systematic actions necessary to provide adequate
confidence that a product or service will satisfy given requirements for quality.
Quality Management system refers to the organization's structure for managing its processes - or
activities - that transform inputs of resources into a product or service which meet the organization's
objectives, such as satisfying the customer's quality requirements, complying to regulations, or meeting
environmental objectives.
Total Quality Management: TQM is both philosophy and a set of guiding principles that represent the
foundation of a continuously improving organization. It is the application of quantitative methods as
well as human resources to improve the whole supply chain for customers and suppliers.
Customer: Any one who receives or is affected by the product,  service, or process.
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Total Quality Management ­ MGT510
VU
External Customer: The one outside the company walls or office/department walls or the next one in
chain who receives your product, service or idea.
Internal Customers: Staff members, employees or any one who works for the interest of a company or
office or boss and expects a reward or salary or benefit from the company or office or boss.
Investor Customer: The one who has invested his fortune and finance to build a company and expects
a good return on his/her financial capital or fortune. Shareholders, Stockholders
Social Customer: The society at large.
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Table of Contents:
  1. OVERVIEW OF QUALITY MANAGEMENT:PROFESSIONAL MANAGERIAL ERA (1950)
  2. TOTAL QUALITY MANAGEMENT AND TOTAL ORGANIZATION EXCELLENCE:Measurement
  3. INTEGRATING PEOPLE AND PERFORMANCE THROUGH QUALITY MANAGEMENT
  4. FUNDAMENTALS OF TOTAL QUALITY AND RATERS VIEW:The Concept of Quality
  5. TOTAL QUALITY MANAGEMENT AND GLOBAL COMPETITIVE ADVANTAGE:Customer Focus
  6. TOTAL QUALITY MANAGEMENT AND PLANNING FOR QUALITY AT OFFICE
  7. LEADERS IN QUALITY REVOLUTION AND DEFINING FOR QUALITY:User-Based
  8. TAGUCHI LOSS FUNCTION AND QUALITY MANAGEMENT
  9. WTO, SHIFTING FOCUS OF CORPORATE CULTURE AND ORGANIZATIONAL MODEL OF MANAGEMENT
  10. HISTORY OF QUALITY MANAGEMENT PARADIGMS
  11. DEFINING QUALITY, QUALITY MANAGEMENT AND LINKS WITH PROFITABILITY
  12. LEARNING ABOUT QUALITY AND APPROACHES FROM QUALITY PHILOSOPHIES
  13. TOTAL QUALITY MANAGEMENT THEORIES EDWARD DEMING’S SYSTEM OF PROFOUND KNOWLEDGE
  14. DEMING’S PHILOSOPHY AND 14 POINTS FOR MANAGEMENT:The cost of quality
  15. DEMING CYCLE AND QUALITY TRILOGY:Juran’s Three Basic Steps to Progress
  16. JURAN AND CROSBY ON QUALITY AND QUALITY IS FREE:Quality Planning
  17. CROSBY’S CONCEPT OF COST OF QUALITY:Cost of Quality Attitude
  18. COSTS OF QUALITY AND RETURN ON QUALITY:Total Quality Costs
  19. OVERVIEW OF TOTAL QUALITY APPROACHES:The Future of Quality Management
  20. BUSINESS EXCELLENCE MODELS:Excellence in all functions
  21. DESIGNING ORGANIZATIONS FOR QUALITY:Customer focus, Leadership
  22. DEVELOPING ISO QMS FOR CERTIFICATION:Process approach
  23. ISO 9001(2000) QMS MANAGEMENT RESPONSIBILITY:Issues to be Considered
  24. ISO 9001(2000) QMS (CLAUSE # 6) RESOURCES MANAGEMENT:Training and Awareness
  25. ISO 9001(2000) (CLAUSE # 7) PRODUCT REALIZATION AND CUSTOMER RELATED PROCESSES
  26. ISO 9001(2000) QMS (CLAUSE # 7) CONTROL OF PRODUCTION AND SERVICES
  27. ISO 9001(2000) QMS (CLAUSE # 8) MEASUREMENT, ANALYSIS, AND IMPROVEMENT
  28. QUALITY IN SOFTWARE SECTOR AND MATURITY LEVELS:Structure of CMM
  29. INSTALLING AN ISO -9001 QM SYSTEM:Implementation, Audit and Registration
  30. CREATING BUSINESS EXCELLENCE:Elements of a Total Quality Culture
  31. CREATING QUALITY AT STRATEGIC, TACTICAL AND OPERATIONAL LEVEL
  32. BIG Q AND SMALL q LEADERSHIP FOR QUALITY:The roles of a Quality Leader
  33. STRATEGIC PLANNING FOR QUALITY AND ADVANCED QUALITY MANAGEMENT TOOLS
  34. HOSHIN KANRI AND STRATEGIC POLICY DEPLOYMENT:Senior Management
  35. QUALITY FUNCTION DEPLOYMENT (QFD) AND OTHER TOOLS FOR IMPLEMENTATION
  36. BASIC SQC IMPROVEMENT TOOLS:TOTAL QUALITY TOOLS DEFINED
  37. HOW QUALITY IS IMPLEMENTED? A DIALOGUE WITH A QUALITY MANAGER!
  38. CAUSE AND EFFECT DIAGRAM AND OTHER TOOLS OF QUALITY:Control Charts
  39. STATISTICAL PROCESS CONTROL (SPC) FOR CONTINUAL QUALITY IMPROVEMENT
  40. STATISTICAL PROCESS CONTROL….CONTD:Control Charts
  41. BUILDING QUALITY THROUGH SPC:Types of Data, Defining Process Capability
  42. AN INTERVIEW SESSION WITH OFFICERS OF A CMMI LEVEL 5 QUALITY IT PAKISTANI COMPANY
  43. TEAMWORK CULTURE FOR TQM:Steering Committees, Natural Work Teams
  44. UNDERSTANDING EMPOWERMENT FOR TQ AND CUSTOMER-SUPPLIER RELATIONSHIP
  45. CSR, INNOVATION, KNOWLEDGE MANAGEMENT AND INTRODUCING LEARNING ORGANIZATION