1. ENGM 620: Quality Management
Session Four – 18 September 2012
Quality and Strategy

2. Mission & Strategy
Def: The corporate mission outlines a firm’s values, intended markets and product, broad goals and objectives, core competencies, and strategic capabilities.
Def: The corporate strategy states how a firm will achieve its goals and objectives

3. What is Strategy? Distinguishing strategy from tactics:
Strategy is the overall plan for deploying resources to establish a favorable position.
Tactic is a scheme for a specific maneuver.
Characteristics of strategic decisions:
Important.
Involve a significant commitment of resources.
Not easily reversible.

4. Sources of Competitive Advantage
COST
ADVANTAGE
Similar product
at lower cost
COMPETITIVE
ADVANTAGE
Price premium
Differentiation through quality
Focus through quality
Quality as a core competency
from unique product
DIFFERENTIATION
ADVANTAGE 6

5. The Impact of Quality on Profitability
ROI (%) Relative Price Relative Direct Cost
Relative product quality
Low 33% % High
Relative product quality
Low 33% % High
Relative product quality
Low 33% % High
Low 25% % High
Relative market share
Low 25% % High
Relative market share
Low 25% % High
Relative market share
Conclusion: Increases in quality add more to price then they do to cost. 34

6. Why is leadership crucial?
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
From the textbook…

7. Effectiveness and Efficiency
Leaders
Doing Right Things
Ineffective
Effective
Managers
Doing Things Right
Death
(fast)
Success
(slow)
Survival

8. Managing Complex Change
Confusion
Skills
Incentives
Resources
Action Plan
Change
Vision
Anxiety
Gradual
Frustration
False
Starts

9. Leading Practices (Leaders)
They create a strategic vision and clear quality values that serve as a basis for business decisions at all levels of the organization.
They set high expectations.
They demonstrate substantial personal commitment and involvement in quality, often in a missionary-like fashion.
They integrate quality values into daily leadership and management.
They sustain an environment for quality excellence.
Leadership is the process by which a leader influences a group to move towards the attainment of superordinate goals.

10. Power The many forms include: The power of expertise Reward power
Coercive power
Referent power
Legitimate power
For followers to have power, leadership must share power. As a result leadership is about the sharing of power.

11. Dimensions of Leadership
Knowledge
Diversity, learning style, ethics, coping
Communication
Conflict mgmt, teaming, motivating,
Planning
Decision making, evaluation, task/time mgmt
Vision
Assessing internal, external environments, identifying opportunities

12. Discussion
What are some of the ways leaders resolve conflict in organizations? Which of these seem to be more effective?
Video – Stanford Executive Briefing, Implementing Strategy with Jennifer Chatman, edited to 15 minutes
norms

13. Costs of Quality Prevention Costs Appraisal Costs Failure Costs
Failure costs – internal and external

16. Strategic Process Strategy Formulation Strategy Implementation Mission
&
Strategic
Goals
Competitive
Analysis
* Strengths
* Weakness
* Opportun
* Threats
Specific
Strategies
* Corporate
* Business
* Functional
Carry
Out
Plans
Maintain
Control
Assess
Environmental
Factors
Organizational

17. One of the Tools Competitive Analysis SWOT Strengths Weaknesses
Opportunities
Threats

18. Macroprocesses
Inspect
Customer
Juran
anatomy of macroprocess does not match that of the functional organization
Functional goals often at a heavy price of macroprocess
There should be a clear responsibility for macroprocess

19. Forced Choice Model Organization Position Mission Objectives
Strengths, Weaknesses
Forecast Operational needs
Major Future Programs
Environmental Assessment
Economic Environment
Key regulatory issues
Major technology forces
Opportunities, threats
Competitor strategies
Strategic Options
Action Plans
Contingency Plans

20. Hoshin Kanri or Policy Deployment
The Company develops a year plan
The Senior Executives develop the current years objectives.
Catchball occurs
The process is interactive
Teams report up
Management delivers feedback
Hoshin is Japanese for a compass, a course, a policy, or a plan
Kanri refers to management control
Catchball
describes the interactive nature of the Hoshin planning process
involves reporting from teams and feedback from management

21. Leading Practices (Strategic)
Top management and employees all actively participate in the planning process.
They customer wants and needs to drive the strategy.
They involve suppliers in the strategic planning process.
They have well-established feedback systems for continuous measurement and re-evaluation of the planning process.

22. Best (Better?) Practices
Control the quality and operational performance of key processes used to produce and deliver products
Identify root causes of variation, make corrections, verify results
Continuously improve processes to achieve better quality, cycle time, and performance
Set “stretch goals” and make extensive use of benchmarking and reengineering

23. Strategy, Quality, and the Supply Chain
Logistics?
When shall we ship?
What mode of transportation shall we use?
How do we optimize our shipping practices?

24. Strategy, Quality, and the Supply Chain
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?

25. Strategy, Quality, and the Supply Chain
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?

26. Discussion
Why might the forced choice model be useful for companies inexperienced in strategic planning?
Video – Stanford Executive Briefing, Implementing Strategy with Jennifer Chatman, edited to 15 minutes
norms

27. Discussion What is the concept of catchball?
Video – Stanford Executive Briefing, Implementing Strategy with Jennifer Chatman, edited to 15 minutes
norms

28. Discussion
Juran argues for both incremental improvements and breakthrough thinking in the strategic plan. Do you agree?
Video – Stanford Executive Briefing, Implementing Strategy with Jennifer Chatman, edited to 15 minutes
norms