CREATING QUALITY AT STRATEGIC, TACTICAL AND OPERATIONAL LEVEL

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Total Quality Management MGT510

Lesson # 31

CREATING QUALITY AT STRATEGIC, TACTICAL AND OPERATIONAL LEVEL

In 1950 Deming drew the following picture on a blackboard for a handful of Japanese executives:

Consumer

Design and redesign

research

Suppliers

Inputs

Outputs

Customers

Processes

Many people see this as simply a diagram of a typical Production or Operation System that is linked to

customers and suppliers. Visionaries in the practice of TQ see this as a new model of an organization

chart from a strategic perspective.

The Functional Structure and Operations

In the functional structure, the organization is divided into functions such as operations, marketing, MIS

and maintenance, each of which is headed by a manager. In such organizations communication occurs

vertically up or down the chain of command, rather than horizontally across functions. Functional

structures provide organizations with a clear chain of command and allow people to specialize in the

aspect of the work for which they are best suited. They also make it easy to evaluate people based on a

narrow but clear set of responsibilities. For these reasons functional structures are common in both

manufacturing and service organizations at plant and business unit levels.

Problems with Functional Structure

Despite its popularity, the functional structure is designed primarily for the administrative convenience

of the organization, rather than for providing high-quality service to customers. From a TQ point of

view, the functional structure has several inadequacies.

The Functional Structure Separates Employees from Customers

Few employees in the functional organization have direct contact with customers or even a clear idea of

how their work combines with the work of others to satisfy customers. The functional structure tends to

insulate employees from learning about customer expectations and their degree of satisfaction with the

service or product the firm is providing. Being insulated from customers encourages in workers a

narrow conception of their responsibilities. This is often expressed in statements such as "It's not my

job" or "I just work here." Even when such employees want to help customers, they often have such a

limited understanding of how their organizational system works that they are unable to do so. This often

results in demotivated workers and poor quality work.

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Total Quality Management MGT510

Functional Structure for a Manufacturing Company

President

Marketing

Production

Finance

Engineering

Director

Manager

Plant # 1

Plant # 2

Operations

Quality Control

Purchasing

Accounting

Manager

Most of us have experienced this phenomenon when we call a large organization trying to get help and

get switched to several different people before (if we're lucky) finding someone willing and able to help

us. If our needs as customers relate to the product or service as a whole, but the knowledge and

responsibilities of anyone with whom we deal relate only to their function, we are doomed to

disappointment.

The Functional Structure Inhibits Process Improvement

No organizational unit has control over a whole processes, although most processes involve a large

number of functions. This is because the breakup of the organization into functions is usually unrelated

to the processes used to deliver a product to the customer. This structure is likely to create complex,

wasteful processes, as people do things in one area that must be redone or undone, in another.

For example, some organization maintain a group of engineers whose sole responsibility is to redesign

products so that they can be manufactured effectively. The engineers who design the products in the

first place worry only about product performance, not manufacturability. (For another example of

problems in coordinating design and manufacturing.) Worse yet, if one function tries to improve its

part, it may well make things worse (more wasted time and effort, more cost) for another part of the

process. In this environment, continuous process improvement doesn't stand a chance. This arrangement

obviously stands in the way of continuous process improvement. Organizations pursuing TQ often

retain their quality assurance departments, but these units act more as coaches or facilitators to

employees, rather than as the group with primary responsibility for quality. In summary, the functional

organization compromises total quality in several ways: It distances people from customers and

insulates them from customer expectations. It promotes complex and wasteful processes and inhibits

process improvement. It separates the quality function from the rest of the organization, providing

people with an excuse for not worrying about quality.

Redesigning Organizations for Quality

Poor organization design can be devastating to a company. One of Deming's 14 Points is to "break

down barriers between departments" because "people in various departments must work as a team."

This slogan captures in a nutshell what the TQ philosophy entails for organizational design. People

cannot contribute to customer satisfaction and continuous improvement if they are confined to

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functional prisons where they cannot see customers or hear their voices. Some of the more effective

ways to break down these barriers are to focus on processes, recognize internal customers, create a

team-based organization, reduce hierarchy, and use steering committees.

Focus on Processes

A process is how work creates value for customers. Common business process include acquiring

customer and market knowledge, fulfilling customer orders, purchasing, developing new products or

service, strategic planning, production or service delivery, distribution, research and development,

information management, performance measurement, and training, to name just a few. Individuals or

groups, known as process owners, are accountable for process performance and have the authority to

manage and improve their process. Process owners may range from high-level executives who manage

cross-functional processes to workers who run machinery on the shop floor. Assigning process owners

ensures that someone is responsible to manage the process and optimize its effectiveness.

Process versus Function

CEO

Vice President

Department

Manager

Process A

Process B

Process C

Process D

Process E

A process focus, as opposed to the functional structure, is shown below. Nearly every major activity

within a business involves some form of cross-functional cooperation. A process perspective links all

parts of an organization together and increases employee understanding of the entire system, rather than

focusing on only a small part. In addition, it helps managers to recognize that problems arise from

processes, not people. By aligning the structure of an organization with the actual work processes that

the organization performs, customers may be served more effectively. Process management involves the

design of processes to develop and deliver products and services that meet the needs of customers, daily

control so that they perform as required, and their continual improvement.

Create a Team-Based Organization

As more and more companies accept the process view of organizations, they are structuring the quality

organization around functional or cross-functional teams, each of which has the responsibility to carry

out and improve one of the organization's core processes. Depending on the size of the organization and

the nature of the processes, teams may include everyone who contributes to a given process or only a

representative subset. Similarly, the tams may meet continuously on a crash basis until their new

process design is complete, after which they may meet periodically or on an ad hoc basis whenever

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necessary. For example, Solectron Corporation, a two-time Baldrige recipient, has a customer focus

team for each customer that includes personnel from quality, manufacturing management, project

engineering, sales, production control, test engineering, and a project buyer and program manager.

Team based Organizational Structure at one Plant

Team

Reps

Council

Safety

Team

Core Process

Teams

Safety

Reps

Innovation

Team

Quality

Reps

Team-Based Organizational Chart

Customers

Customer

Team

System and Support Service

Executive

Steering

Committee

CEO

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Total Quality Management MGT510

Strategic Planning and the Baldrige Award

The Baldrige Award recognizes the importance of integrating total quality principles with overall

business planning. The Strategic Planning category addresses strategic business planning and

deployment of plans. It stresses tat customer-driven quality and operational performance are key

strategic business issues that need to be an integral part of overall company planning, and emphasizes

that improvement and learning must be integral parts of company work processes. The special role of

strategic planning is to align work processes with the company strategic directions, thereby ensuring

that improvement and learning reinforce company priorities.

The Strategic Planning category examines how organizations.

Plan for the long term, and understand the key influences, risks, challenges, and other

requirements that might affect the organization's future opportunities and directions. This is to

help ensure that short-term action plans are aligned with the organization's longer-term strategic

directions.

Project the future competitive environment to help detect and reduce competitive threats,

shorten reaction time, and identify opportunities.

Develop action plans and deploy resources particularly human resources to achieve

alignment and consistency, and provide a basis for setting and communicating priorities for

ongoing improvement activities.

Ensure that deployment will be effective that a measurement system enables tracking of action

plan achievement in all areas.

The integration of quality planning with business planning occurred in the 1995 criteria revision. Most

symbolic was the change in the category's title from "Strategic Quality Planning" to "Strategic

Planning." This change signaled a "major emphasis on business strategy as the most appropriate view-

of-the-future context for managing performance." The integration of quality and operational issues with

business planning became a dominant theme, with a focus on "Performance," "Competitive position,"

"Customer-related," and "Operational" themes.

The ISO-9001 model has still to work out ways how to incorporate strategic planning into business

planning; however, it does take good care of tactical and operational quality control.

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