Chapter 3

1. Chapter 3 Philosophies and Frameworks

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

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

4. Deming Chain Reaction Improvequality Costs decrease Productivity improves Increase market share with better quality and lower prices Stay in business Provide jobs and more jobs

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

6. 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

7. 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

8. 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

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

10. 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.

11. 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

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

13. Phillip B. Crosby Quality is free . . . “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.”

14. 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

15. 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

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

17. Loss No Loss Loss 0.480 0.500 0.520 Tolerance 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:

18. 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

19. 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

20. Organizational Profile: Environment, Relationships, and Challenges The Baldrige Framework –A Systems Perspective 2 Strategic Planning 5 Human Resource Focus 1 Leadership 7 Business Results 3 Customer & Market Focus 6 Process Management 4 Measurement, Analysis, and Knowledge Management

21. Criteria Evolution (1 of 2) • From quality assurance and strategic quality planning to a focus on process management and overall strategic planning • From a focus on current customers to a focus on current and future customers and markets • From human resource utilization to human resource development and management • From supplier quality to supplier partnerships

22. Criteria Evolution (2 of 2) • From individual quality improvement activities to cycles of evaluation and improvement in all key areas • From data analysis of quality efforts to an aggregate, integrated organizational level review of key company data • From 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

23. 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 Stage 3 Site Visit Review Stage 4 Judges Recommend Award Recipients to NIST Director/DOC Feedback report to applicant

24. 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. Boeing Airlift & Tanker Programs – 1998 winner

25. 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

26. Other Quality Awards • European Quality Award • Canadian Awards for Business Excellence • Australian Business Excellence Award

27. Programs in place No programs Quality Awards Around the World

28. 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.

29. 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.

30. 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

31. 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

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

33. 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

34. 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.

35. 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

36. 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.

37. 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

38. 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.

39. 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.