Philosophies and Frameworks Chapter 3 Philosophies and Frameworks

Leaders in the Quality Revolution W. Edwards Deming Joseph M. Juran Philip B. Crosby Armand V. Feigenbaum Kaoru Ishikawa Genichi Taguchi

Who’s Who? b a Deming ____ Juran ____ Crosby ____ c

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

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.

Deming’s System of Profound Knowledge Appreciation for a system Understanding variation Theory of knowledge Psychology

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

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.

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

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

Psychology People are motivated intrinsically and extrinsically; intrinsic motivation is the most powerful Fear is demotivating Managers should develop pride and joy in work

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.

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. www.deming.org

Juran’s Quality Trilogy Quality planning Quality control Quality improvement www.juran.com

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.”

Quality is free . . . 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.”

Philip B. Crosby 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 www.philipcrosby.com

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

Kaoru Ishikawa Instrumental in developing Japanese quality strategy Influenced participative approaches involving all workers Advocated the use of simple visual tools and statistical techniques

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 Loss Loss Tolerance 0.500 0.520 0.480

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

Criteria for Performance Excellence Leadership Strategic Planning Customer and Market Focus Measurement, Analysis, and Knowledge Management Human Resource Focus Process Management Business Results Baldrige Award trophy

The Baldrige Framework – A Systems Perspective Organizational Profile: Environment, Relationships, and Challenges 2 Strategic Planning 5 Human Resource Focus The framework is the 30,000 foot view of the Criteria. [Note: Education and Health Care Criteria have slightly different nomenclature.] The building blocks, or Categories, are essential -- performance in the Baldrige categories is the cost of entry -- but excellence in the linkages will be the mark of competitive leadership. The arrows point to excellence. The umbrella over strategy and action plans: It is the set of customer and market focused company-level requirements. These are derived from short- and long-term planning. They are the things that must be done well for the strategy to succeed. The action plans “bring the strategy to life.” They guide overall resource decisions. They drive the alignment of measures for all work units to ensure customer satisfaction and market success. The system: The leadership triad -- leadership, strategic planning, customer & market focus -- emphasizes the importance of a leadership focus on strategy and customers. The results triad is HR focus, process management, and business results. Its focus is on the employees and key processes that accomplish the work of the organization that yields results. ALL company actions point toward results. The large arrow in the center connects the leadership and results triads -- a critical linkage for company success -- and shows the role leaders must play in driving results improvement. Information and analysis are critical to a fact-based system; they are the foundation for the performance management system. 1 Leadership 7 Business Results 3 Customer & Market Focus 6 Process Management 4 Measurement, Analysis, and Knowledge Management

Key Idea The Baldrige criteria define both an integrated infrastructure and a set of fundamental practices for a high-performance management system.

Using the Baldrige Criteria A model for business excellence A blueprint for quality improvement Self-assessment Mock award application Internal recognition program

Boeing Airlift & Tanker Programs – 1998 winner Self Assessment A primary goal of the Baldrige program is to encourage many organizations to improve on their own by equipping them with a standard template for measuring their performance and their progress toward performance excellence. The Baldrige National Quality Program is more than an Award program. A major purpose of the Criteria is to provide a framework organizations can use for self-assessment. To encourage self-assessment, the Program makes available the materials to accomplish Baldrige assessments in-house. Materials include the Criteria, scoring guidelines, a structure for identifying organizational strengths and opportunities for improvement, and a case study packet that demonstrates the complete process. Boeing Airlift & Tanker Programs – 1998 winner

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.

Baldrige Award Evaluation Process Receive Applications Stage 1 Independent Review Judges Select for Consensus Review? No Feedback report to applicant Stage 2 Consensus Review Judges Select for Site Visit Review? No Feedback report to applicant The four-stage evaluation process is illustrated in this chart. After each stage of review, the Panel of Judges meets to decide which applicants should go forward to the next stage -- consensus or site visit. The Judges’ guidelines encourage giving “benefit of the doubt” to make certain that all potential Award recipients proceed to each succeeding stage of review. When it is determined that an applicant will not proceed to the next stage of the process, the feedback report is prepared and sent within 45 days. All information remains strictly confidential throughout the process. There are strict conflict-of-interest rules that are followed by all Examiners, Judges, and National Quality Program staff. Stage 3 Site Visit Review Stage 4 Judges Recommend Award Recipients to NIST Director/DOC Feedback report to applicant

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

Other Quality Awards European Quality Award Canadian Awards for Business Excellence Australian Business Excellence Award

Quality Awards Around the World In addition to the state and local network, an international network has now evolved as well. Over 40 programs exist across the world, and many are Baldrige based. There is even a Baldrige-based Award in Japan, in addition to the Deming prize. Baldrige has truly become a global benchmark and the Criteria have become accepted as a world-wide standard for performance excellence. Programs in place No programs

ISO 9000:2000 Quality system standards adopted by International Organization for Standardization in 1987; revised in 1994 and 2000 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.

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.

Objectives of ISO Standards (1 of 2) 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 requirements are being fulfilled

Objectives of ISO Standards (2 of 2) Provide confidence to customers and other stakeholders that quality requirements are being achieved Provide confidence that quality system requirements are fulfilled

Structure of ISO 9000 Standards 21 elements organized into four major sections: Management Responsibility Resource Management Product Realization Measurement, Analysis, and Iimprovement

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

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.

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

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.

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

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.

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.