Boston Matrix What was supposed to happen? _______________ Why was there a difference? _______________ What actually happened? (Did we get hurt?) _______________ What have we learnt? Actions? _______________  David Hoyle 2012

Putting Quality First Can quality once again be the first priority and drive competitive advantage? David Hoyle Hon FCQI. CQP

 David Hoyle 2012 Positive views from Linkedin Quality is the only thing an organization needs to do Companies have little choice other than to get quality right Yes if we are talking about big Q Quality first, yes of course Ford made Quality Job#1 Putting quality first sustains delivery of business results

 David Hoyle 2012 Negative views from Linkedin Safety comes first Profit comes first Neither come first, there has to be a balance Quality has never been first Putting quality first could be damaging Putting quality first is conceptually flawed

 David Hoyle 2012 The resultant issues Big Q or Systems Approach? Quality and profit? Quality First? Quality? Balancing priorities ?

 David Hoyle 2012 Quality?

 David Hoyle 2012Definition The degree to which a set of inherent characteristics fulfils requirements (ISO 9000) Time Standard the need, requirement or expectation The performance level reached Superior qualityInferior quality Satisfactory quality The gap between achievement and expectation (Zone of acceptability)

 David Hoyle 2012 Quality, safety, & reliability Quality characteristics –permanent distinguishing feature related to a requirement (need or expectation) Safety and reliability are quality characteristics of a product, process, system etc If safety, reliability or any other characteristic is critical it would be a top priority but doing so does not subordinate quality

 David Hoyle 2012 Quality, price & delivery Price and delivery are assigned characteristics. Rolls Royce Phantom "After the price is forgotten quality endures" Product quality, price quality and delivery quality

 David Hoyle 2012 Point 1 Putting quality first is not about putting conformity above design or product above process, or one characteristic above another; its about fulfilling expectations

 David Hoyle 2012 Big Q, TQM or Systems Approach?

 David Hoyle 2012 Virtuous and vicious circles Increase health risk Increases body weight  Q Process Q  Life Increase Consumption Q  Employment Q  Profit Demand Q  System Q  Alliances Q  Product Q  Service Q  Marketing Q  Distribution

 David Hoyle 2012 Rights and responsibilities Every business has a right to seize opportunities to make money providing it’s legal With rights come responsibilities No business should knowingly put life, property or the environment at risk But until there is irrefutable evidence businesses are not compelled to act

 David Hoyle 2012 Competitive advantage Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors.

 David Hoyle 2012 Drivers of competitive advantage Q Education Q Research Q Social infrastructure Q National culture Q Personal fitness Health care Q Government Competition Q Education system Social infrastructure Health & fitness Domestic competition Research Culture

 David Hoyle 2012 Quality of what? Work Actions & Decisions Behaviour Without association with an object discussion about quality is meaningless; it causes assumptions to be made by the parties involved that get in the way of effective communication goods, service, process, distribution, system, profit, alliances, employment, life, marketing, education, personal fitness, competition, research, culture, government………

 David Hoyle 2012 Point 2 Within any given system are many variables. Prioritizing the quality of any one variable to the detriment of others may lead to undesirable consequences.

 David Hoyle 2012 Point 3 Satisfying customers in the short term is not profitable in the long term if you are selling them a product or a service that will ultimately do them harm

 David Hoyle 2012 Quality and profit?

 David Hoyle 2012 Money making process Output Unsustainable strategy X

 David Hoyle 2012 Money making process Process Input Output Output: Class 1 eggs Sustainable strategy

 David Hoyle 2012 The source & function of profit Profit comes from creating and adding value. Profit is the result of what you do not the reason for doing it. It’s needed to cover the risks and invest in the future. To GET, you must first GIVE or to reap you must first sow We have allowed the financial system to become master, not servant, of industry

 David Hoyle 2012 Productivity is key Interest rates, exchange rates & labour rates are not barriers to competitive advantage The only meaningful concept of competitiveness at the national level is productivity. Productivity depends on both the quality and features of products (which determine the prices that they can command) and the efficiency with which they are produced. (M Porter 1990) Productivity depends on both the quality of products and the efficiency with which they are produced. (M Porter 1990)

 David Hoyle 2012 Balancing priorities?

 David Hoyle 2012 Deriving objectives CustomersInvestorsEmployeesSuppliersSociety Objectives How can we fulfil all requirements and stay in business? Stakeholder Needs MISSION

 David Hoyle 2012 Adjusting objectives Customers –let our customers find the faults Suppliers –Delay paying invoices until they threaten legal proceedings Employees –Delay pay rise until next year and only pay those we want to keep if they hand in their notice Society –Don’t comply with certain regulations until we are compelled to do so Investors –Pay smaller dividend and pay bonus to directors instead

 David Hoyle 2012 Who do we work for? MISSION CustomersInvestorsEmployeesSuppliersSociety Objectives/ Constraints Constraints Without customers none of the others stakeholders exist for long Satisfy customers in a way that meets the needs of other stakeholders in the long term

 David Hoyle 2012 Redefining objectives Design, produce and market a range of new products that meet defined customer needs by Dec 2016 in a way that: –Captures 30% of the market (Suppliers/Investors) –Delivers a 7% profit (Investors/Employees) –Consumes 25% fewer resources than the product it replaces (Society/Investors) –Is free of defects and occupational injuries and illnesses from the start (Employees) –Reduces emissions to atmosphere by 30% (Society) –Creates employment in the local community (Society)

 David Hoyle 2012 Point 4 Putting quality first is not about putting anything second, its about knowing which is the objective and which the constraint and achieving the objective in a way that satisfies the constraints

 David Hoyle 2012 Quality First?

 David Hoyle 2012 Reputation Providing fault free products that possess the features customers want –World leader Providing products that possess most of the features customers want but which might be faulty –Average player Providing faulty products that don’t possess the features customers want but appear as if they do –Rogue trader Reputations are hard to win and easy to loose

 David Hoyle 2012 Quality first principle in USA Henry Ford 1910 For Henry Ford, quality was the number one priority in manufacturing his cars. He felt that if one of his cars broke down on a customer, that he was personally to blame. “It was our duty to see that his machine was put into shape again at the earliest possible moment”. 80 yrs later Ford declares as one of its guiding principles in Q101, that Quality comes first “To achieve customer satisfaction, the quality of our products and services must be our number one priority.”

 David Hoyle 2012 Quality first principle in Germany Robert Bosch 1919 It has always been an unbearable thought to me that someone should inspect one of my products and find it inferior. I have therefore always tried to ensure that only such work goes out as is superior in all respects.

 David Hoyle 2012 Quality first principle in USA Alfred P Sloan 1925 We have elected, as a large corporation, to build quality products sold at fair prices …however we must admit that such a policy throws the added responsibility upon our sales departments to get the cost of quality plus a profit on quality

 David Hoyle 2012 Quality first principle in USA Newport News Shipbuilding circa 1940 We will build good ships here; at a profit if we can, at a loss if we must, but always good ships

 David Hoyle 2012 Quality first principle in UK Bill Haydon VP Manufacturing Ford Europe 1984 postponed the launch of the twin cam engine by two years because the quality wasn’t up to Japanese quality levels of 5 defects per 100 engines.

 David Hoyle 2012 Quality first principle in Japan Kaoru Ishikawa 1981 The pursuit of short-term profit, loses competitiveness and ultimately long-term profit whereas putting "quality first" increases profits in the long-run. Masaaki Imai 1986 If you take care of the quality, the profits will take care of themselves

 David Hoyle 2012 Quality first principle in Japan today It’s an attitude of mind It’s a fundamental management concept It’s not a big issue because its acknowledged by all people in all levels of the company.

 David Hoyle 2012 Who puts quality first

 David Hoyle 2012

Quality first is a principle A guide to action; not a rule, requirement or objective. May not be useful under all conditions. A violation of a principle results in consequences. When quality is made the first priority in all actions and decisions the long term needs and expectations of all stakeholders are assured Ignore this principle and you may be endangering life, endangering the environment, endangering the jobs of your colleagues and jeopardising the long term profits of the company

 David Hoyle 2012 We have a choice Do we –compromise the quality of our work to meet a delivery target or to save time and money and thus increase short term profits? or –make the quality of our work the first priority then fathom out how we can satisfy the constraints imposed by the other stakeholders?

 David Hoyle 2012 Point 5 Not putting quality first is knowingly producing work that is substandard and charging the same price as if it were work of an acceptable standard.

 David Hoyle 2012 Putting quality first or delivery first You are put under pressure to deliver a product to a customer knowing that all the product requirements have not been fulfilled You run out of the approved material and can’t get a delivery in time to honour your commitment to your customer but you do have an untested alternative

 David Hoyle 2012 Putting quality first or cost first You are notified about a batch of defective product of relatively low value and decide to scrap the lot. Then you are notified of another batch, and then another batch, the value now runs into thousands. You find that a subordinate manager is rewarding production teams for record runs related to volume/waste/delay and during the run quality (incl safety) is not considered

 David Hoyle 2012 Point 6 Making quality the first priority is about a way of thinking, it’s a principle that one can choose to adopt but ignoring it when making choices may have undesirable consequences

 David Hoyle 2012 Summary of Points Quality first is about fulfilling expectations. Prioritizing the quality of any one variable to the detriment of others may lead to undesirable consequences Satisfying customers in the short term is not profitable in the long term if you are selling them product that will ultimately do them harm

 David Hoyle 2012 Summary of Points Quality first is about achieving the objective in a way that satisfies the constraints Not putting quality first is knowingly producing work that is substandard and charging the same price as if it were work of an acceptable standard Making quality the first priority is about a way of thinking and getting everyone to think this way creates a competitive advantage.

 David Hoyle 2012 Food for thought There is an implication that if an organization is certificated to ISO 9001, it must have made a commitment to make quality the first priority