© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1 Philosophies and Frameworks

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Leaders in the Quality Revolution W. Edwards Deming Joseph M. Juran Philip B. Crosby Armand V. Feigenbaum Kaoru Ishikawa Genichi Taguchi 2

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 Deming Chain Reaction Improve quality Costs decrease Productivity improves Increase market share with better quality and lower prices Stay in business Provide jobs and more jobs

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 Key Idea The Deming philosophy focuses on continual improvements in product and service quality by reducing uncertainty and variability in design, manufacturing, and service processes, driven by the leadership of top management.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Deming’s System of Profound Knowledge Appreciation for a system Understanding variation Theory of knowledge Psychology 5

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Systems Most organizational processes are cross-functional Parts of a system must work together Every system must have a purpose Management must optimize the system as a whole 6

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Key Idea The aim of any system should be for all stakeholders—stockholders, employees, customers, community, and the environment—to benefit over the long term.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Variation Many sources of uncontrollable variation exist in any process Excessive variation results in product failures, unhappy customers, and unnecessary costs Statistical methods can be used to identify and quantify variation to help understand it and lead to improvements 8

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Theory of Knowledge Knowledge is not possible without theory Experience alone does not establish a theory, it only describes Theory shows cause-and-effect relationships that can be used for prediction 9

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Psychology People are motivated intrinsically and extrinsically; intrinsic motivation is the most powerful Fear is demotivating Managers should develop pride and joy in work 10

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Deming’s 14 Points (Abridged) (1 of 2) 1. Create and publish a company mission statement and commit to it. 2. Learn the new philosophy. 3. Understand the purpose of inspection. 4. End business practices driven by price alone. 5. Constantly improve system of production and service. 6. Institute training. 7. Teach and institute leadership. 8. Drive out fear and create trust. 11

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 Deming’s 14 Points (2 of 2) 9. Optimize team and individual efforts. 10. Eliminate exhortations for work force. 11. Eliminate numerical quotas and M.B.O. Focus on improvement. 12. Remove barriers that rob people of pride of workmanship. 13. Encourage education and self-improvement. 14. Take action to accomplish the transformation.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Juran’s Quality Trilogy Quality planning Quality control Quality improvement 13

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 Key Idea Juran proposed a simple definition of quality: “fitness for use.” This definition of quality suggests that it should be viewed from both external and internal perspectives; that is, quality is related to “(1) product performance that results in customer satisfaction; (2) freedom from product deficiencies, which avoids customer dissatisfaction.”

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Quality Planning begin with -identifying customers both external and internal -determining their needs -translating customer needs into specifications -developing product features that respond to those needs - Developing the processes capable of producing the product or delivering the service 15

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Quality Control Involves -determining what to control -establishing units of measurement to evaluate data objectively -establishing standards of performance -measuring actual performance -interpreting the difference between actual performance and standard -taking action on the difference 16

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Quality improvement Use breakthrough sequence -proof of need -project identification -Organization for breakthrough -diagnostic journey -remedial journey -holding the gains 17

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Similarities in Juran and Demimg -Focus on top management commitment -The need for improvement -The use of quality control techniques -Importance of training Differences: -Deming- drive out of fear -Juran: Fear can bring out the best in people 18

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Phillip B. Crosby “Quality is free It’s not a gift, but it is free. What costs money are the unquality things -- all the actions that involve not doing jobs right the first time.” 19

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Crosby Philosophy Absolutes of Quality Management: Quality means conformance to requirements Problems are functional in nature There is no optimum level of defects Cost of quality is the only useful measurement Zero defects is the only performance standard 20

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Crosby Philosophy Basic elements of improvement: determination education Implementation 21

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A.V. Feigenbaum Three Steps to Quality Quality Leadership, with a strong focus on planning Modern Quality Technology, involving the entire work force Organizational Commitment, supported by continuous training and motivation 22

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Kaoru Ishikawa Instrumental in developing Japanese quality strategy Influenced participative approaches involving all workers Advocated the use of simple visual tools and statistical techniques 23

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Genichi Taguchi Pioneered a new perspective on quality based on the economic value of being on target and reducing variation and dispelling the traditional view of conformance to specifications: No LossLoss Tolerance

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Malcolm Baldrige National Quality Award Help improve quality in U.S. companies Recognize achievements of excellent firms and provide examples to others Establish criteria for evaluating quality efforts Provide guidance for other American companies Malcolm Baldrige, former U.S. Secretary of Commerce 25

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Criteria for Performance Excellence Leadership Strategic Planning Customer Focus Measurement, Analysis, and Knowledge Management Workforce Focus Process Management Business Results Baldrige Award trophy 26

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27 The Baldrige Framework – A Systems Perspective

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Category Structure Items (1.1, 1.2, 3.1, etc.) Areas to address (6.1a, 6.1b, etc.) Questions (How, What, Who…?) Example: Leadership Category Senior Leadership a. Vision, Values, and Mission b. Communication and Organizational Performance 1.2 Governance and Social Responsibilities a. Organizational Governance b. Legal and Ethical Behavior c. Societal Responsibilities and Support of Key Communities 28

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Questions from Vision, Values, and Mission Area to Address 1. How do senior leaders set organizational vision and values? How do senior leaders deploy your organization’s vision and values through your leadership system, to the workforce, to key suppliers and partners, and to customers and other stakeholders, as appropriate? How do senior leaders’ personal actions reflect a commitment to the organization’s values? 2. How do senior leaders promote an environment that fosters, requires, and results in legal and ethical behavior? 3. How do senior leaders create a sustainable organization? How do senior leaders create an environment for organizational performance improvement, the accomplishment of your mission and strategic objectives, innovation, competitive, or role-model performance leadership, and organizational agility? How do they create an environment for organizational and workforce learning? How do they develop and enhance their personal leadership skills? How do they personally participate in succession planning and the development of future organizational leaders? 29

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30 Key Idea The Baldrige criteria define both an integrated infrastructure and a set of fundamental practices for a high- performance management system.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Core Values Visionary Leadership Customer-Driven Excellence Organizational and Personal Learning Valuing Workforce Members and Partners Agility Focus on the Future Managing for Innovation Management by Fact Societal Responsibility Focus on Results and Creating Value Systems Perspective 31

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Criteria Evolution 1988: primarily a manufacturing model with “little q” emphasis 1995: revised to capture a more comprehensive business model; focus on overall performance more than just quality Updated regularly to reflect current issues in business; for example, organizational governance and sustainability, customer and workforce engagement 32

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33 Key Idea Approaches that organizations use to address the Baldrige criteria requirements need not be formal or complex, and can easily be implemented by small businesses.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Impacts of Baldrige Net social benefits exceeding $24 billion in 2000 dollars Changed the way many organizations around the world now manage their operations Improved results for all stakeholders Spawned a network of local, state, and national award programs around the world 34

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Deming Prize Instituted 1951 by Union of Japanese Scientists and Engineers (JUSE) Several categories including prizes for individuals, factories, small companies, and Deming application prize American company winners include Florida Power & Light and AT&T Power Systems Division 35

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Other Quality Awards European Quality Award Canadian Awards for Business Excellence Australian Business Excellence Award Chinese National Quality Award Many others… 36

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ISO 9000:2000 Quality system standards adopted by International Organization for Standardization in 1987; revised in 1994 and 2000; minor revision in 2008 Technical specifications and criteria to be used as rules, guidelines, or definitions of characteristics to ensure that materials, products, processes, and services are fit for their purpose. 37

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 38 Key Idea ISO 9000 defines quality system standards, based on the premise that certain generic characteristics of management practices can be standardized, and that a well-designed, well-implemented, and carefully managed quality system provides confidence that the out-puts will meet customer expectations and requirements.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Objectives of ISO Standards Achieve, maintain, and continuously improve product quality Improve quality of operations to continually meet customers’ and stakeholders’ needs Provide confidence to internal management and other employees that quality system requirements are being fulfilled Provide confidence to customers and other stakeholders that quality requirements are being achieved 39

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Structure of ISO 9000 Standards 21 elements organized into four major sections: Management Responsibility Resource Management Product Realization Measurement, Analysis, and Improvement 40

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ISO 9000:2000 Quality Management Principles Customer Focus Leadership Involvement of People Process Approach System Approach to Management Continual Improvement Factual Approach to Decision Making Mutually Beneficial Supplier Relationships 41

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 42 Key Idea ISO 9000 provides a set of good basic practices for initiating a quality system, and is an excellent starting point for companies with no formal quality assurance program.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Six Sigma Based on a statistical measure that equates to 3.4 or fewer errors or defects per million opportunities Pioneered by Motorola in the mid-1980s and popularized by the success of General Electric 43

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 44 Key Idea Six Sigma can be described as a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and a clear financial return for the organization.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Key Concepts of Six Sigma (1 of 2) Think in terms of key business processes, customer requirements, and overall strategic objectives. Focus on corporate sponsors responsible for championing projects, support team activities, help to overcome resistance to change, and obtaining resources. Emphasize such quantifiable measures as defects per million opportunities (dpmo) that can be applied to all parts of an organization 45

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Key Concepts of Six Sigma (2 of 2) Ensure that appropriate metrics are identified early and focus on business results, thereby providing incentives and accountability. Provide extensive training followed by project team deployment Create highly qualified process improvement experts (“green belts,” “black belts,” and “master black belts”) who can apply improvement tools and lead teams. Set stretch objectives for improvement. 46

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 47 Key Idea Although different, Baldrige and Six Sigma are highly compatible and can each have a place in the management system of a successful organization.