Strategic Quality Planning Chapter 4 Strategic Quality Planning 4- 1

Strategic Quality Planning Chapter 4 Strategy Content The importance of time in quality improvement Leadership for quality Quality and ethics Quality as a strategy Quality strategy process Deploying quality Does quality lead to better business results? Supply chain strategy 4- 2

Strategy content Quality improvement-identifying potential improvements, prioritizing potential area for improvement and planning for improvement. Core competency in quality planning: time, leadership, quality cost, generic strategies, order winners and quality.

What is Strategic ?

What is Strategic ? Quality is strategic. Strategic Forming part of plan Tactical Quality Customer satisfaction Definitions of strategic adjective relating to the identification of long-term or overall aims and interests and the means of achieving them.

Strategic Planning Strategic planning have 2 dimensions; Content and Process Content: What is to be contained in strategic plan? Time, leadership, quality costs, generic strategies (cost, differentiation and focus) and quality. Process: Steps for developing strategy within organization Quality results: Is it improve bottom line results? Quality, productivity, Profitability

Strategic Quality Planning Strategy Content Quality improvement involves identifying potential areas for improvement and planning the implementation of projects and improvements 4- 7

How long it takes to obtain to see improvement in strategic management?

Strategic Quality Planning Strategy Content (Time) The importance of time in quality improvement Strategic planning implies planning for the long term Takes time (2-4 years) to see the results Shigeo Shingo stated that Toyota required 25 years to achieve significant improvement. Creating goals without providing good system will not improved the performance. Deming stated continuous improvement required commitment of resource and time. Improved quality will increase market share and sales. 4- 9

Strategic Quality Planning The importance of time in quality improvement There are two aspects of time: The time it takes to achieve business goals as a result of quality Foster and Adam (1996) study shows that The speed at which companies improve study shows that those plants that improved quality conformance more quickly did not see cost improve as much as plants improved more slowly. 4- 10

What happen if management creating goals and but not providing systems to achieve goals?

Strategic Quality Planning The importance of time in quality improvement When goals are set, one of three things will occur: People will achieve the goals and incur positive results People will distort the data People will distort the system The problem happen when creating goals and but not providing systems to achieve goals (Base on Deming) 4- 12

Strategic Quality Planning Leadership for quality Leadership is the process by which a leader influences a group to move towards the attainment of superordinate goals. Superordinate is goals-higher achievement that benefit to individual and organisation. Definitions of superordinate noun a thing that represents a superior order or category within a system of classification. "a pair of compatibles must have a common superordinate" adjective superior in status. "senior staff's superordinate position" 4- 13

Strategic Quality Planning Leadership for quality Key strategic variable for quality improvement Organizes, plans, controls, communicates, teaches, advises and delegates For followers to have power, leadership must share power. As a result leadership is about the sharing of power. 4- 14

Strategic Quality Planning Leadership for quality This power takes many forms: The power of expertise (Special knowledge) Reward power ( power to reward subordinates) Promotions, rewards, recognition and incentives Coercive power (Power to punish the follower for not following rules and guidelines) Referent power (Charismatic or charming) He or she is liked. Legitimate power ( Power to obligate subordinates and they should comply the request). Comes from position. 4- 15

Strategic Quality Planning Leadership for quality What are Leadership Skills: Knowledge (Competence, ethics, ..) Communication with others (Effective speaking, writing..) Planning (Task and time management, decision making…) Vision (Identify the opportunities) 4- 16

Strategic Quality Planning Quality and Ethics Quality appears to be good business Quality is also good ethics Reliable products and low defect rates reflect an ethical approach for its customers. “We build good ships. At a profit if we can, at a loss if we must. But, we build good ships” From Shipbuilder, Massachusetts Ethics reflected to its customers and employees; education, training, health, wellness, recycling programs and improve environmental practices, customer, employees satisfaction, environment 4- 17

Is quality sufficient to win orders in the marketplace?

Is quality sufficient to win orders in the marketplace? Quality as a strategy Is quality sufficient to win orders in the marketplace? Quality is effective tools in successfully exporting in the international market. Quality as a strategy from the perspective of generic strategies; cost, differentiation and focus

What is cost of quality?

Strategic Quality Planning Quality as a strategy Cost of quality Traditionally, based on lowest price New, cost are expansive (wide range), considering the summation of costs over the life of a product (life cycle cost) Service, maintenance, operating cost, environmental costs Definitions of expansive adjective covering a wide area in terms of space or scope; extensive or wide-ranging. "deep, expansive canyons" synonyms: extensive, sweeping, rolling; wide-ranging, extensive, broad, wide, comprehensive,thorough, full-scale 4- 21

Strategic Quality Planning Quality as a strategy How quality can help decrease the cost of doing business? Cost of Quality PAF Paradigm Prevention Costs Appraisal Costs Failure Costs 4- 22

Strategic Quality Planning Quality as a strategy Cost of Quality PAF Paradigm Prevention Costs Appraisal Costs Failure Costs Cost of preventing defects and imperfections from occurring Quality training Supplier quality assurance Process Re-engineering 4- 23

Strategic Quality Planning Quality as a strategy Cost of Quality PAF Paradigm Prevention Costs Appraisal Costs Failure Costs Cost of measuring quality Inspection and test Product quality audit Quality award assessment 4- 24

Strategic Quality Planning Quality as a strategy Cost of Quality PAF Paradigm Prevention Costs Appraisal Costs Failure Costs Cost of failure Internal failure External failure 4- 25

Strategic Quality Planning Quality as a strategy Failure Costs Internal failure costs External failure costs 4- 26

Strategic Quality Planning Quality as a strategy Differentiation through quality (Customer the product or service is unique in an important way). A Rolex or iPod Focus through quality; a product that is particularly regional or population Quality as a core competency Lunvall-Juran quality cost model 4- 28

Lunvall-Juran quality cost model Prevention and appraisal activities increase, quality conformance should increase.

Strategic Quality Planning Quality Strategy Process The Forced Choice Model (Strategic Planning Model)-The model help to identify strengths and weaknesses, environment assessment. Statement of the mission Interrelated financial and non-financial objectives Statement of strengths and weaknesses Forecast of operations Major future operations Organizations position 4- 30

Strategic Quality Planning Quality Strategy Process The Forced Choice Model Broad economic Assumptions Key government/regulatory issues Major technological forces Significant marketing opportunities/threats Explicit competitor strategies for each competitor Environment Assessment 4- 31

Strategic Quality Planning Quality Strategy Process The Forced Choice Model Generating Strategic options 4- 32

Strategic Quality Planning Deploying Quality Hoshin Kanri or Policy Deployment The Company develops a 3 - 5 year plan The Senior Executives develop the current years objectives. 4- 33

Strategic Quality Planning Deploying Quality Hoshin Kanri or Policy Deployment Catchball occurs The process is interactive Teams report up Management delivers feedback 4- 34

Does Quality Lead to Better Business Results?

Does Quality Lead to Better Business Results? The effect of quality on business result are mixed; Successful and unsuccessful. 2 reasons: Many variables affect profitability besides quality such as economic factor and customer acceptance. Many companies implement quality incorrectly. To be effective in a variety of cultures and industries if implemented correctly.

Strategic Quality Planning Does Quality Lead to Better Business Results? Is it higher price product has higher quality? Supply and demand laws; Superior product has higher price. Kettinger (1995) study shows that different cultures have different customer priorities. Some study found differences cultures could perceive the relation positive or negative Quality and Price Cost Productivity Profitability Environment 4- 37

Strategic Quality Planning Does Quality Lead to Better Business Results? Quality and Price Cost Productivity Profitability Environment Higher quality strategy to incur lower costs because high productivity and reduction of rework and scrap. 4- 38

Strategic Quality Planning Does Quality Lead to Better Business Results? Quality and Price Cost Productivity Profitability Environment Quality has relation with productivity The elimination of waste results in higher productivity. 4- 39

Strategic Quality Planning Does Quality Lead to Better Business Results? Quality always result in improved profitability Quality improvement improved employee relation, lower cost, greater customer satisfaction and improved market share. Quality improve in long terms Quality and Price Cost Productivity Profitability Environment 4- 40

Strategic Quality Planning Does Quality Lead to Better Business Results? Effect business on the environment Regulatory pressures: Firms must integrate environmental concerns into their strategic plans such as reduction of pollution and emission Environmental friendliness is a part of being a good corporate citizen. Environment management system Quality and Price Cost Productivity Profitability Environment 4- 41

Strategic Quality Planning Supply Chain Strategy Supply chain strategy is important for effective supply change management (Raw material-customers) Consideration in supply chain strategy Understand the different classes of sources items Identify your supply chain’s optimal performance levels Understand your current level performance and where you can improve Organize team projects and plan for achieve objective Implement improvement Monitor results and take corrective action if needed.

Strategic Quality Planning Supply Chain Strategy Logistics? When shall we ship? What mode of transportation shall we use? How do we optimize our shipping practices? 4- 44

Strategic Quality Planning Supply Chain Strategy Suppliers? Who are our preferred suppliers? What is our process for supplier selection? How do we develop suppliers? How do we link with our suppliers? Do we source globally? 4- 45

Strategic Quality Planning Supply Chain Strategy Inventory management? Where do we optimally store inventory How much? How long? Do we have perishable stock? Do we carry safety stock? ARE we maintaining good levels of service? 4- 46

Strategic Quality Planning Supply Chain Strategy Products? How much product do we stock? What product variety is necessary? How do we win orders? Where are our products in their life cycles? 4- 47

Strategic Quality Planning Supply Chain Strategy Service? How do we define service along the supply chain? What do our customers want? can we segment the supply chain? Who are our customers? 4- 48

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