1. Introduction to Quality and Performance Excellence
Quality & Performance Excellence, 8th Edition
Chapter 1
Introduction to Quality and Performance Excellence

2. What is Quality?
“I don’t know what the hell this ‘logistics’ is that Marshall is always talking about, but I want some of it.” – Admiral E. J. King
“Logistics is the stuff that if you don’t have enough of, the war will not be won as soon as.” – General Nathaniel Green, Quartermaster, American Revolutionary Army

3. Outline Explain the concepts of quality and performance excellence
Provide reasons why they are important
Provide a brief history of the “quality revolution”
Describe quality in manufacturing, service, health care, education, and government
Explain the principles and practices of quality and performance excellence
Discuss relationships of quality with organizational models in management theory

4. Defining Quality (1 of 2)
1. Efficiently providing products and services that meet or exceed customer expectations 2. Adding customer value 3. Continuously measuring the improvement of processes and services for customers 4. Acting as promised and reporting failures 5. Doing the right thing at the right time in the right way with the right people 6. Ensuring customers come back and products do not

5. Defining Quality (2 of 2)
7. Providing the best value to customers by improving everyday activities and processes 8. Beyond delivering what the customer wants, anticipating what the customer will want when he or she knows the possibilities 9. Delivering customer value across the organization through best-in-class products, services, and support 10. Meeting and exceeding the expectations of clients, employees, and relevant constituencies in the community.

6. Formal Definitions of Quality
The totality of features and characteristics of a product or service that bears on its ability to satisfy given needs – American Society for Quality
Fitness for use
Meeting or exceeding customer expectations
Conformance to specifications

7. Quality Application
The main reason to pursue quality is to satisfy customers.
If good management practices are designed and executed, then good results should follow.

8. Performance Excellence
An integrated approach to organizational performance management that results in
delivery of ever-improving value to customers and stakeholders, contributing to organizational sustainability,
improvement of overall organizational effectiveness and capabilities, and
organizational and personal learning.

9. Importance of Quality
THE buzzword among business in the 1980s and 1990s
Quality problems still abound in many industries, such as automotive
Consumer expectations are high
“We’ve made dependence on the quality of our technology a part of life” – Joseph Juran

10. Examples of Successful Quality-Focused Organizations
1. Elevations Credit Union (ECU) has been named “ Best Financial Institution” by readers of the Boulder Daily Camera for 15 of the past 16 years, and repeatedly as “Best Bank,” “Best Mortgage Company,” or “Best Customer Service” by readers of the Colorado Daily, Boulder Weekly, Longmont Times-Call, and Loveland Reporter-Herald. 2. Business satisfaction with the city of Coral Springs, Florida, rose from 76 percent to 97 percent over a four-year period. The city was named as one of the “Best Places to Live.”

11. Examples of Successful Quality-Focused Organizations
3. Supplier on-time delivery at Lockheed Martin Missiles and Fire Control has been essentially 100 percent since 2006, and overall supplier quality has been nearly 100 percent since Time reductions as a result of process and performance improvement programs have occurred in all lines of businesses, yielding an estimated savings of $225 million annually. 4. The overall Net Promoter (NP) scores (a loyalty metric defined by the level of repeat sales and referrals) for MEDRAD, a manufacturer of medical imaging devices, were consistently 60 percent or higher compared to the 50 percent or higher marks for other organizations nationwide.

12. Examples of Successful Quality-Focused Organizations
5. AtlantiCare, a nonprofit health system in southeastern New Jersey, saw its system revenues grow from $280 million to $651 million over an eight-year period, reflecting an 11 percent compound annual growth rate, compared to a state average of 5.6 percent. 6. The Pewaukee School District (PSD) is the smallest K-12 educational system in Waukesha County, Wisconsin. Despite having one of the most rigorous public school graduation requirements (28 credits) in the state, PSD achieved a 97.4 percent graduation rate in 2012– 2013 and had a higher graduation rate from 2008 through 2012 than other county, state, and nearby high- performing districts.

13. History of Quality Assurance (1 of 3)
Quality assurance in Ancient China
Skilled craftsmanship during Middle Ages
Industrial Revolution: rise of inspection and separate quality departments
Early 20th Century: statistical methods at Bell System
Quality control during World War II
Post-war Japan: evolution of quality management Deming 1

14. History of Quality Assurance (2 of 3)
Quality awareness in U.S. manufacturing industry during 1980s: from “Little Q” to “Big Q” - Total Quality Management
Malcolm Baldrige National Quality Award (1987)
Cynicism and criticism among some business executives
Deming 2

15. History of Quality Assurance (3 of 3)
Emergence of quality management in service industries, government, health care, education, and non-profits
Evolution of Six Sigma
Current and future challenge: maintain commitment to performance excellence

16. Future Influences
Global responsibility
Workforce of the future
Consumer awareness
Aging population
Globalization
21st century quality
Increasing rate of change
Innovation
Ultimately, quality methodology will be used to build a better world.

17. Quality Dimensions in Manufacturing
Performance – primary operating characteristics
Features –“bells and whistles”
Reliability – probability of operating for specific time and conditions of use
Conformance – degree to which characteristics match standards
Durability – amount of use before deterioration or replacement
Serviceability – speed, courtesy, and competence of repair
Aesthetics – look, feel, sound, taste, smell Deming 3

18. Quality in Services
Average company never hears from 90% of its unhappy customers.
Of those customers who make a complaint, >50% will do business again if the complaint is resolved. If the customer feels the complaint is resolved quickly, ~95%
Average customer with a problem will tell 9-10 others. Customers who’ve had complaints resolved, tell only ~ 5
It costs six times more to get a new customer than to keep a current customer.

19. Differences Between Manufacturing and Services (1 of 2)
Customer needs and performance standards are often difficult to identify and measure
The production of services typically requires a higher degree of customization
The output of many service systems is intangible
Services are produced and consumed simultaneously

20. Differences Between Manufacturing and Services (2 of 2)
Customers often are involved in the service process and present while it is being performed
Services are generally labor intensive
Many service organizations must handle very large numbers of customer transactions.

21. Factors of Service Quality
Time – how much time must a customer wait?
Timeliness – will a service be performed when promised?
Completeness – Are all items in the order included?
Courtesy – do frontline employees greet each customer cheerfully?
Consistency – are services delivered in the same fashion for every customer, and every time for the same customer?

22. Factors of Service Quality
Accessibility and convenience – is the service easy to obtain?
Accuracy – is the service performed right the first time?
Responsiveness – can service personnel react quickly and resolve unexpected problems?

23. Quality Dimensions in Services
Reliability – the ability to provide what was promised, dependably, and accurately.
Assurance – the knowledge and courtesy of employees and their ability to convey trust and confidence.
Tangibles – the physical facilities and equipment, and the appearance of personnel.
Empathy – the degree of caring and individual attention provided to customers.
Responsiveness –The willingness to help customers and provide prompt service.

24. New Frontiers of Quality
Health care
Education
Government
Not-for-Profits

25. Total Quality (1992)
A people-focused management system that aims at continual increase in customer satisfaction at continually lower real cost.
A total system approach
High-level strategy
Stresses learning and adaptation

26. Principles, Practices, and Techniques
Principles are the foundation of the philosophy
Practices are activities by which the principles are implemented
Techniques are tools and approaches that help managers and employees make the practices effective

27. Quality Management Principles
In the beginning…
Customer Focus
Teamwork
Continuous Improvement

28. Quality Management Principles
Customer focus
Continual Improvement
Leadership
Factual Approach to Decision Making
Involvement of People
Process Approach
Mutually Beneficial Supplier Relationships
System Approach to Management

29. Customer Focus Customer is the principal judge of quality
Organizations must build relationships with customers and increase customer engagement
Organizations must understand customer needs and obtain feedback
Customers are internal and external

30. Customer-Focused Practices
Researching and understanding customer needs and expectations;
Ensuring that goods and services are linked to customer needs and expectations;
Communicating customer needs and expectations throughout the organization;
Measuring customer satisfaction and using the results to improve;
Systematically managing customer relationships; and
Ensuring a balanced approach between satisfying customers and other stakeholders

31. Leadership Leadership is the responsibility of top management
Senior leaders should be role models for the entire organization
An organization cannot sustain quality initiatives without strong leadership

32. Leadership Practices
Considering the needs of all stakeholders in decisions;
Establishing a clear vision of the organization’ s future;
Setting challenging goals and targets;
Creating and sustaining shared values, fairness, and ethics at all levels of the organization;
Establishing trust and eliminating fear;
Providing workers with adequate resources, training and freedom to make customer-focused decisions; and
Inspiring, encouraging, and recognizing worker’ s contributions.

33. Involvement of People
A company’ s success depends increasingly on the knowledge, skills, and motivation of its workforce.
Engagement – workers have a strong emotional bond to their organization, are actively involved in and committed to their work, feel that their jobs are important, know that their opinions and ideas have value, and often go beyond their immediate responsibilities for the good of the organization
Empowerment – having the authority to make decisions
“A sincere belief and trust in people”

34. People-Focused Practices
Understand the key factors that drive workforce engagement, satisfaction, and motivation
Design and manage work and jobs to promote engagement
Create an environment that ensures and improves workplace health, safety, and security
Develop an effective performance management system
Assess workforce engagement and satisfaction
Assess workforce capability and capacity needs
Make appropriate investments in development and learning
Manage career progression and succession planning

35. Teamwork
Vertical—teamwork between top management and lower-level employees.
Horizontal—teamwork within work groups and across functional lines (often called cross- functional teams).
Interorganizational—partnerships with suppliers and customers

36. Process Approach
A process is a sequence of activities that is intended to achieve some result

37. Cross-functional Perspective

38. Process-Focused Practices
Systematically defining processes that create desired outcomes; establishing clear responsibility and accountability for managing key processes;
Analyzing and measuring of the capability of processes;
Identifying the interfaces of key activities within and between the functions of the organization;
Focusing on the factors such as resources, methods, and materials that will improve processes; and
Evaluating risks, consequences and impacts of activities on customers, suppliers, and other stakeholders.

39. Systems Approach to Management
Synthesis means looking at an organization as a whole and building on key business attributes, including core competencies, strategic objectives, action plans, and work systems.
Alignment means ensuring consistency of plans, processes, measures, and actions across the organization.
Integration builds on alignment, so that the individual components of the organizational system operate in a fully interconnected manner and deliver anticipated results.

40. Systems Approach Practices
Designing the organization to achieve its objectives in the most effective and efficient way;
Understanding the interdependencies between processes;
Developing approaches that harmonize and integrate processes;
Providing a clear understanding of the roles and responsibilities necessary for achieving objectives and reducing cross-functional barriers;
Understanding organizational capabilities; defining how specific activities and processes should operate; and
Continually improving the system through measurement and evaluation.

41. Continual Improvement
Incremental and breakthrough improvement
enhancing value to the customer through new and improved products and services;
improving productivity and operational performance through better work processes and reductions in errors, defects, and waste;
improving flexibility, responsiveness, and cycle time performance; and
improving organizational management processes through learning

42. Kano Model
Dissatisfiers—those needs that are expected in a product or service. Such items generally are not stated by customers but are assumed as given. If they are not present, the customer is dissatisfied.
Satisfiers—needs that customers say they want. Fulfilling these needs creates satisfaction.
Delighters/exciters—new or innovative features that customers do not expect. The presence of such unexpected features, if valued, leads to high perceptions of quality.

43. Learning
Learning – why changes are successful through feedback between practices and results
Learning Cycle:
Planning
Execution of plans
Assessment of progress
Revision of plans based upon assessment findings

44. Practices for Continual Improvement
Deploying a systematic approach to continual improvement across the organization;
Providing the workforce with training in the methods and tools of continual improvement;
Making continual improvement of products, processes, and systems an objective for every individual;
Establishing goals to guide, and measures to track, continual improvement; and
Recognizing and acknowledging improvements.

45. Factual Approach to Decision Making
Organizations need good performance measures to drive strategies and change, manage resources, and continuously improve
Data and information support analysis at all levels
Typical measures:
product and process outcomes
customer-focused outcomes
workforce-focused outcomes
leadership and governance outcomes
financial and market outcomes

46. Data-Driven Practices
Ensuring that data and information are sufficiently accurate and reliable
Making data accessible to those who need it
Analyzing data and information using valid methods
Making decisions and taking action based on factual analysis, balanced with experience and intuition

47. Mutually Beneficial Supplier Relationships
Suppliers include not only companies that provide materials and components, but also distributors, transportation companies, and information, health care, and education providers.
Key suppliers might provide unique design, technology, integration, or marketing capabilities that are not available within the business and, therefore, can be critical to achieving such strategic objectives as lower costs, faster time-to-market, and improved quality.

48. Supplier Management Practices (1 of 2)
Recognizing the strategic importance of suppliers in accomplishing business objectives, particularly minimizing the total cost of ownership
Identifying and selecting key suppliers; developing win– win relationships that balance short-term gains with long- term considerations
Establishing trust through openness and honesty, thus leading to mutual advantages

49. Supplier Management Practices (2 of 2)
Pooling expertise and resources with partners
Having clear and open communication that information and future plans
Establishing joint development and improvement activities; and inspiring, encouraging
Recognizing improvements and achievements of suppliers

50. TQ and Agency Theory
Agency relationship: a concept in which one party (the principal) engages another party (the agent) to perform work
Key assumption: individuals in agency relationships are utility maximizers and will always take actions to enhance their self-interests.

51. Contrast With TQ (1 OF 2)
TQ views the management system as one based on social and human values, whereas agency theory is based on an economic perspective that removes people from the equation.
Agency theory propounds the belief that people are self- interested and opportunistic and that their rights are conditional and proportional to the value they add to the organization. TQ suggests that people are also motivated by interests other than self, and that people have an innate right to be respected.

52. Contrast With TQ (2 OF 2)
Agency theory assumes an inherent conflict of goals between agents and principals, and that agent goals are aligned with principal goals through formal contracts. In TQ, everyone in the organization shares common goals and a continuous improvement philosophy, and goals are aligned through adoption of TQ practices and culture.
TQ takes a long-term perspective based on continuous improvement, whereas agency theory focuses on short-term achievement of the contract between the principal and agent.
TQ leaders provide a quality vision and play a strategic role in the organization; leaders in agency theory develop control mechanisms and engage in monitoring.

53. TQ and Organizational Models

54. Review Explain the concepts of quality and performance excellence
Provide reasons why they are important
Provide a brief history of the “quality revolution”
Describe quality in manufacturing, service, health care, education, and government
Explain the principles and practices of quality and performance excellence
Discuss relationships of quality with organizational models in management theory

55. Homework Discussion Questions/Experiential Exercises, pp 41-42
10,11, 14, 26
Case Studies, pp 43-44
Nashville Custom Guitars