4 Deming Chain Reaction Improve quality Costs decrease Productivity improvesIncrease market share with better quality and lower pricesStay in businessProvide jobs and more jobs
5 Key IdeaThe 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.
6 Deming’s System of Profound Knowledge Appreciation for a systemUnderstanding variationTheory of knowledgePsychology
7 Systems Most organizational processes are cross-functional Parts of a system must work togetherEvery system must have a purposeManagement must optimize the system as a whole
8 Key IdeaThe aim of any system should be for all stakeholders—stockholders, employees, customers, community, and the environment—to benefit over the long term.
9 VariationMany sources of uncontrollable variation exist in any processExcessive variation results in product failures, unhappy customers, and unnecessary costsStatistical methods can be used to identify and quantify variation to help understand it and lead to improvements
10 Theory of Knowledge Knowledge is not possible without theory Experience alone does not establish a theory, it only describesTheory shows cause-and-effect relationships that can be used for prediction
11 PsychologyPeople are motivated intrinsically and extrinsically; intrinsic motivation is the most powerfulFear is demotivatingManagers should develop pride and joy in work
12 Deming’s 14 Points (Abridged) (1 of 2) 1. Create and publish a company missionstatement 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 productionand service.6. Institute training.7. Teach and institute leadership.8. Drive out fear and create trust.
13 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 prideof workmanship.13. Encourage education and self-improvement.14. Take action to accomplish the transformation.
15 Key IdeaJuran 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.”
16 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.”
17 Philip B. Crosby Absolutes of Quality Management: Quality means conformance to requirementsProblems are functional in natureThere is no optimum level of defectsCost of quality is the only useful measurementZero defects is the only performance standard
18 A.V. Feigenbaum Three Steps to Quality Quality Leadership, with a strong focus on planningModern Quality Technology, involving the entire work forceOrganizational Commitment, supported by continuous training and motivation
19 Kaoru Ishikawa Instrumental in developing Japanese quality strategy Influenced participative approaches involving all workersAdvocated the use of simple visual tools and statistical techniques
20 Genichi TaguchiPioneered 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 LossLossTolerance0.5000.5200.480
21 Malcolm Baldrige National Quality Award Help improve quality in U.S. companiesRecognize achievements of excellent firms and provide examples to othersEstablish criteria for evaluating quality effortsProvide guidance for other American companiesMalcolm Baldrige, former U.S. Secretary of Commerce
22 Criteria for Performance Excellence LeadershipStrategic PlanningCustomer and Market FocusMeasurement, Analysis, and Knowledge ManagementHuman Resource FocusProcess ManagementBusiness ResultsBaldrige Award trophy
23 The Baldrige Framework – A Systems Perspective Organizational Profile:Environment, Relationships, and Challenges2Strategic Planning5Human Resource FocusThe 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.1Leadership7Business Results3Customer & Market Focus6Process Management4Measurement, Analysis, and Knowledge Management
24 Key IdeaThe Baldrige criteria define both an integrated infrastructure and a set of fundamental practices for a high-performance management system.
25 Criteria Evolution (1 of 2) From quality assurance and strategic quality planning to a focus on process management and overall strategic planningFrom a focus on current customers to a focus on current and future customers and marketsFrom human resource utilization to human resource development and managementFrom supplier quality to supplier partnerships
26 Criteria Evolution (2 of 2) From individual quality improvement activities to cycles of evaluation and improvement in all key areasFrom data analysis of quality efforts to an aggregate, integrated organizational level review of key company dataFrom results that focus on limited financial performance to a focus on a composite of business results, including customer satisfaction and financial, product, service, and strategic performance
27 Key IdeaApproaches that organizations use to address the Baldrige criteria requirements need not be formal or complex, and can easily be implemented by small businesses.
28 Baldrige Award Evaluation Process Receive ApplicationsStage 1Independent ReviewJudges Select forConsensus Review?NoFeedback reportto applicantStage 2Consensus ReviewJudges Select forSite Visit Review?NoFeedback reportto applicantThe 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 3Site Visit ReviewStage 4Judges Recommend AwardRecipients toNIST Director/DOCFeedback reportto applicant
29 Boeing Airlift & Tanker Programs – 1998 winner Self AssessmentA 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
30 Deming PrizeInstituted 1951 by Union of Japanese Scientists and Engineers (JUSE)Several categories including prizes for individuals, factories, small companies, and Deming application prizeAmerican company winners include Florida Power & Light and AT&T Power Systems Division
31 Other Quality Awards European Quality Award Canadian Awards for Business ExcellenceAustralian Business Excellence Award
32 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 placeNo programs
33 ISO 9000:2000Quality system standards adopted by International Organization for Standardization in 1987; revised in 1994 and 2000Technical 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.
34 Key IdeaISO 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.
35 Objectives of ISO Standards (1 of 2) Achieve, maintain, and continuously improve product qualityImprove quality of operations to continually meet customers’ and stakeholders’ needsProvide confidence to internal management and other employees that quality requirements are being fulfilled
36 Objectives of ISO Standards (2 of 2) Provide confidence to customers and other stakeholders that quality requirements are being achievedProvide confidence that quality system requirements are fulfilled
37 Structure of ISO 9000 Standards 21 elements organized into four major sections:Management ResponsibilityResource ManagementProduct RealizationMeasurement, Analysis, and Iimprovement
38 ISO 9000:2000 Quality Management Principles Customer FocusLeadershipInvolvement of PeopleProcess ApproachSystem Approach to ManagementContinual ImprovementFactual Approach to Decision MakingMutually Beneficial Supplier Relationships
39 Key IdeaISO 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.
40 Six SigmaBased on a statistical measure that equates to 3.4 or fewer errors or defects per million opportunitiesPioneered by Motorola in the mid-1980s and popularized by the success of General Electric
41 Key IdeaSix 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.
42 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
43 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 deploymentCreate 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.
44 Key IdeaAlthough different, Baldrige and Six Sigma are highly compatible and can each have a place in the management system of a successful organization.