1. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Chapter Two Champions of Quality

2. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 “An organization’s senior leaders should set directions and create customer focus, clear and visible values, and high expectations. The directions, values, and expectations should balance the needs of all your stakeholders. Leaders should ensure the creation of strategies, systems, and methods for achieving excellence, stimulating innovation, and building knowledge and capabilities.” Baldrige National Quality Program Statement on Visionary Leadership

3. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Learning Objectives Understand Deming’s 14 Obligations of Top Management Explain the Malcolm Baldrige National Quality Award Describe “Six Sigma” applications to the hospitality industry Describe common themes among quality gurus

4. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 The History of Managing for Quality Industrial Revolution transforms the U.S. Auto companies develop mass production Duplication/strong marketing change U.S. advantage GM dominates the industrial world

5. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 The History of Managing for Quality (cont.) After WWII, customers demand product differentiation Most U.S. companies did not recognize shift in expectations Japanese took advantage through incremental improvements Deming’s move to Japan created surge in Japanese auto production

6. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Quality Gurus W. Edwards Deming Joseph M. Juran Armand Feigenbaum Philip Crosby Karou Ishikawa Genichi Taguchi

7. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Dr. W. Edwards Deming Introduced quality improvement in post-WWII Japan Presented long-term process manufacturing improvement strategies to Ford Motor Company Building the skills and knowledge of associates “98%” of the quality challenge Introduced teamwork concepts Creation of a culture of quality within a company at the heart of philosophy

8. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Deming’s 14 Obligations of Top Management 1.Create constancy of purpose for improvement of products and services 2.Adopt the new philosophy 3.Cease dependence on inspection to achieve quality 4.End the practice of awarding business on the basis of price tag alone

9. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Deming’s 14 Obligations of Top Management (cont.) 5.Improve, constantly and forever, every process for planning, production, and service 6.Institute training on the job 7.Adopt and institute leadership 8.Drive out fear

10. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Deming’s 14 Obligations of Top Management (cont.) 9.Break down barriers between staff areas 10.Eliminate slogans, exhortations, and targets for the work force 11.Eliminate numerical quotas and goals for the work force and management

11. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Deming’s 14 Obligations of Top Management (cont.) 12.Remove barriers that rob people of pride of workmanship 13.Institute a vigorous program of education and self-improvement for everyone 14.Put everybody in the company to work to accomplish the transformation Source: Out of Crisis by W. Edwards Deming. Copyright 1982 by W. Edwards Deming. Reprinted by permission of MIT Press.

12. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Dr. Joseph M. Juran Philosophy that quality requires: –Commitment and action from top management –Training in the management of quality –Quality improvements at a revolutionary rate Transforms financial planning, control, and improvement into quality planning, control, and improvement Quality Control Handbook (1951) details philosophy in Ten Steps to Quality Improvement

13. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Juran's 10 Steps to Quality Improvement 1.Create awareness of and commitment to improve 2.Establish improvement goals via input from cross-functional sources 3.Rally the people in the organization around the common goal of improving quality 4.Train associates by creating a quality-focused learning organization

14. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Juran's 10 Steps to Quality Improvement (cont.) 5.Continuously learn and improve as problems are solved and projects completed 6.Regularly communicate progress 7.Recognize those who contribute to improving quality

15. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Juran's 10 Steps to Quality Improvement (cont.) 8.Communicate results 9.Measure progress toward the goals of improving quality 10.Integrate improvement into organizational systems Source: “Ten Steps to Quality Improvement” from Juran’s Quality Control Handbook by Joseph M. Juran. Used by permission of the McGraw-Hill Companies.

16. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Baldrige Core Values and Concepts Leadership Strategic planning Customer and market focus Measurement, analysis, and knowledge management

17. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Baldrige Core Values and Concepts (cont.) Human resource focus Process management Business results –Customer-focused results

18. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Baldrige Core Values and Concepts (cont.) Product and service results Financial and market results Human resource results Organizational effectiveness results Governance and social responsibility results

19. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Baldrige Criteria for Performance Excellence Framework

20. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 According to the Baldrige Criteria Leadership occurs when the senior executives help others understand customer requirements for quality products and services Performance Excellence Process (PEP) engages organization and requires total commitment from all

21. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Strategic Planning Optional, but it provides important information Addresses questions such as: –Why do we exist as an organization? –Where are we going as an organization? –What are the restraints that will temper our decisions?

22. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Baldrige Award in the Food and Hospitality Industry Application submitted Evaluated by a team from several industries Organization’s quality evaluated for a week

23. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 VANO Manager Beliefs Visual Appearance/Accounting Numbers Only A sales transaction is just a number The level of internal and external customer satisfaction does not impact profit

24. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Armand V. Feigenbaum “Cost of nonconformance” philosophy Refined the concept of work process flow Approach to quality is driven by those who purchase products and services Philosophy of managing and improving quality in the form of six key points

25. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Feigenbaum's Six Key Points 1.Total Quality Control (TQC) is a system 2.Quality Control (QC) is a management tool 3.Quality affected by technological and human factors (most important)

26. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Feigenbaum's Six Key Points (cont.) 4.QC impacts all aspects of production 5.Operating costs of quality: prevention, appraisal, internal failure, and external failure 6.Quality is controlled in the entire process, not simply after production is completed

27. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Philip Crosby ITT Corporation’s first Vice President of Quality “Zero defects” concept as part of the Crosby Complete Management System By focusing on prevention, it is less expensive to “do things right the first time” and the achievement of quality is relatively easy

28. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Crosby's 14 Steps for Implementing Quality Improvements 1.Management must commit to centering its quality focus on customers’ needs 2.Quality improvement teams with representatives from each department oversee improvement process 3.Measurement tools to establish baselines and find current and potential problems 4.Costs of quality are carefully defined and used as a management tool

29. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Crosby's 14 Steps for Implementing Quality Improvements (cont.) 5.Quality awareness and personal concerns heightened by training in quality improvement principles 6.Once trained, corrective action is taken closest to the sources of defects and nonconformance 7.Zero defects planning analyzes the relevant activities using a committee 8.Associates educated about their roles in the quality improvement process

30. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Crosby's 14 Steps for Implementing Quality Improvements (cont.) 9.A zero defects day launches the quality improvement program company-wide and signals a change 10.Individuals and groups establish their own quality improvement goals 11.Associates inform management of obstacles faced and types of work environments needed

31. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Crosby's 14 Steps for Implementing Quality Improvements (cont.) 12.All who participate are recognized for their commitment to quality improvement 13.Quality councils spotlight quality and share information about the process of continuous improvement 14.The quality improvement process is continuous and never ends Source: Quality Is Free, by Philip Crosby. Used by permission of The McGraw-Hill Companies

32. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Karou Ishikawa Quality circles Uniquely described the customer as both internal and external Promoted the necessity of a company-wide shared vision

33. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Genichi Taguchi Taguchi Loss Function to calculate the costs associated with a lack of quality When a deviation from quality occurs, there is a resulting economic loss that follows in geometric proportion The effect of the loss is cumulative and dramatic

34. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Modern Day Quality Efforts The quality effort was a major topic in the U.S. during the 1970s-1980s U.S. auto industry loses large market share due to deteriorating quality Japanese gain ground by auto quality improvement U.S. realizes Japanese success based on quality improvement process management Ford Motor takes action with 1980s “Quality Is Job One” initiative

35. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Modern Day Quality Efforts (cont.) Managing for quality was a journey; some expected immediate success Japan’s culture was more compatible to managing for quality U.S. management-results oriented; Japanese management-process oriented Quality of the process leads to quality outcomes

36. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Six Sigma Pioneered by Motorola in the 1980s Sigma (∂) is referenced when measuring how far from perfection a product deviates Six Sigma = 3.4 errors per million opportunities Indicates 99.9997% (rather than 100%) perfect Shows how a process is performing The fundamental goal of Six Sigma is to improve the process through DMAIC

37. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 DMAIC/DMADV DMAIC: a process that Defines, Measures, Analyzes, Improves, and Controls existing processes DMADV: a process that Defines, Measures, Analyzes, Defines, and Verifies

38. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Starwood Hotels & Resorts Worldwide, Inc. First lodging company to adopt Six Sigma in 2001 If a hotel’s room service delivers only about 68% of the meals on time, the process of delivery scores only a “2 sigma” To become a Six Sigma room service, there would have to be on time service delivery 99.9997% of the time Continuous data-driven approach to improving a process Helps raise productivity, which increases profitability

39. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 5Nines Program Developed by Motorola to make systems more available A commitment to total customer satisfaction Refers to end-to-end availability 99.999% (5Nines) of the time (no more than five minutes of total downtime per year for customers)

40. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Common Themes of the Gurus People in organizations that regularly improve quality have a vision of a future that is better than the present Shared commitment to the quality vision through a common goal of continuous improvement

41. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Common Themes of the Gurus (cont.) The organization is viewed as a system; progress toward improving quality is measured in a series of processes in the organization The organization exists to meet the needs of both internal and external customers

42. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Common Themes of the Gurus (cont.) Ongoing training of internal customers is essential People want to share in the planning and creation of the organization’s vision and be recognized for their efforts in improving quality Gurus’ consistent messages form the basis for any quality improvement program in any organization

43. Managing for Quality in the Hospitality Industry© 2006 Pearson Education, Inc. King/CichyUpper Saddle River, NJ 07458 Summary One must have a basic knowledge and appreciation of the history of quality to fully understand what needs to be done to manage and improve quality today Today’s quality management and improvement efforts are built on the foundation laid by the quality gurus in the 20th Century Companies taking quality to the next level are using this knowledge and these skills