Developing Leader for Change & Innovation in Tourism

1. Developing Leader for Change & Innovation in Tourism 28th June 2010

2. QUALITY MANAGEMENT Stephen Young MSc LMLCC MCQI CQP MIM 2

3. Quality • What do we understand by the term?

4. DEFINITIONS • Juran:- Fitness for use • Crosby:- Conformance to requirements • Oakland:- Meeting the customer requirements • Gronroos:- Meeting or exceeding customer Expectations • Deming:- A predictable degree of uniformity and dependability at low cost and suited to the market

5. MOULLIN 1994 • Meeting customer requirements and expectations at an acceptable price. Implications Of Definition • Identification of customer • Determine his needs and expectations • Devise ways of satisfying those needs • Value for money

6. THE CQI WAY Definition Quality management is an organisation-wide approach to understanding precisely what customers need and consistently delivering accurate solutions within budget, on time and with the minimum loss to society.

7. ... THE CQI WAY • Quality management will ensure the effective design of processes that verify customer needs, plan product life cycle and design, produce and deliver the product or service. • This also incorporates • measuring all process elements, • the analysis of performance; and • the continual improvement of the products, services and processes that deliver them to the customer. • Quality management is also referred to as business management or integrated management.

8. ... THE CQI WAY The CQI defines quality in terms of innovation and care:

9. Quality Today • Single most important force to company success and growth (maybe even survival) • Philosophy • Total commitment • Obsession • Attitude of mind • Customer focus

10. Quality Today (continued) • Customer identification • Internal customer • Supplier partnership • Employee involvement • Team problem-solving • Communication, motivation and collective responsibility

11. IMPORTANCE OF QUALITY • TO CUSTOMER:- CUSTOMERS BENEFIT DIRECTLY AS THEIR REQUIREMENTS ARE BETTER MET, PROBABLY AT A BETTER PRICE. NOT ONLY IS QUALITY IMPORTANT FOR THESE CUSTOMER, CUSTOMERS ARE DEMANDING QUALITY ! • TO STAFF:- The motivation of staff is very much linked with quality. There are many ways staff might benefit from improved quality. These include the following:- - increased job satisfaction - less frustration as other groups of staff improve their quality - better feedback from customers, internal and external - recognition of their efforts by colleagues and, hopefully, senior management - greater pride and self-worth as the reputation of the organization grows

12. … IMPORTANCE OF QUALITY • TO COSTS:- It is relatively more difficult to accept that quality can also save money, especially in the service industry. However, consider rejects and scrap (wasteful work), rectification costs, warranty cost, inspection and prevention costs. More subtle costs like external failure costs, liability costs and related customer support costs. These are usually high and frequently unquantified. (Estimated 15-30% of Revenue. In service 40% of Budget)

13. GRADE & QUALITY Difference:- • GRADE:- “indicator of category or rank related to features or characteristics that cover different sets of needs for products or services intended for the same functional use” (BSI 1987) Example difference between one star and 4 star hotels. • QUALITY:- is the rate the customer is satisfied with the product or service in that particular grade. • Example: Rolls Royce is a high grade car. Toyota Yaris is a much lower grade car. But both satisfy the customer for the purpose they were purchased.

14. TOTAL QUALITY MANAGEMENT (TQM) IMPLIES a top-management led company-wide approach involving allemployees and focusing on preventionrather than inspection for detection and correction. Customer orientation and teamwork are key features

15. TQM (Continued) TQM is not a bolt-on method which allows managers to continue as before but with this extra tool called TQM “TQM is an ongoing process, requiring commitment from top management and involving everyone in the organisation, to continually improve the quality of products and services provided in order to satisfy the customer.” TOTAL organisation-wide, not in pockets QUALITY meeting customers’ requirements at an acceptable price MANAGEMENT an ongoing process with commitment from top management

16. REQUIREMENTS OF TQM There are a number of requirements for effective quality management: • Commitment and example from top management • Quality must be customer driven • A participative environment and teamwork • Pursuit of continuous improvement • Proper systems and tools • Quality suppliers and partners

17. The Economics of TQMThe PREVENTION, APPRAISAL, FAILURE (PAF) MODEL 1. Costs of prevention: these are the costs associated with preventing poor quality before it happens and include more attention to product and service design, employee training, and developing a proper quality management programme. 2. Costs of appraisal: this is more to do with inspection than ‘appraisal’ in the sense of staff development. These include the costs of checking that items received conform to requirements, costs of checking the service activity throughout the process and finally confirming the quality of the completed work. 3a. Internal failure costs: these refer to mistakes made but discovered before reaching the customer. An example would be a defective machine tool or an incorrect invoice discovered before reaching the customer. They include downtime, delays, scrap, corrective action, and extra labour and material costs.

18. The Economics of TQMThe PREVENTION, APPRAISAL, FAILURE (PAF) MODED 3b. External failure costs: these are the costs of mistakes discovered by customers. In addition to those costs of internal failure there is the time spent dealing with customer complaints, transporting goods to and from the customer, and possible legal wrangles. Even more serious in most organisations is the loss of confidence and goodwill resulting in loss of future sales and possible damage to the corporate image of the organisation. The essential point is that a quality improvement programme will increase prevention costs, but the other cost elements will be reduced so that the payoff will be considerable.

19. LEADERSHIP FOR TQM “Getting quality results is not a short-term instant-pudding way to improve competitiveness; implementing total quality management requires hands-on, continuous leadership.” Armand V Feigenbaum

20. Commitment to TQM In addition to leadership, achieving a sustained improvement in quality requires a high degree of commitment from senior management. Such commitment must start at the top of an organisation. The Chief Executive and senior directors must give real and personal backing to initiatives on quality. If others within the organisation or unit do not feel that top management is serious about quality then such initiatives are likely to founder. The commitment of the CEO is vital because people copy what we do. If it’s good enough for the boss, then you have a chance for the rest of the organisation. John Roberts, Chief Executive of the Post Office This commitment also applies to middle and senior managers who must not only appreciate the real benefits of improved quality but also explain them to their own staff.

21. TQM – BEHAVIOURAL CHANGE FROM • All is sub-ordinated to cost • Customers’ priority is low price • Cost and efficiency are main goals • Productivity means long runs • Quality means “good enough” – acceptable defect levels TO • All is sub-ordinate to customer service • Customers want quality at low cost • Satisfying customer needs is main goal • Short runs and quick changeovers • Zero defects is the only performance standard

22. TQM – BEHAVIOURAL CHANGE FROM • Management’s role is supervision • Learning curve mentality • Control • Cost reduction is the cheapest way • Inspect out poor quality TO • Make management commitment visual • Continuous improvement • Motivation & recognition • Right first time is cheapest method • Use prevention techniques

23. TQM – BEHAVIOURAL CHANGE FROM • Get flexibility from high inventory • Queues of WIP for high utilisation • Fire-fighting • Simplify tasks • Systems first, then people TO • Get flexibility by reducing lead times • Production should be Just-In-Time • Creative management • Multiple skilling • People before systems

24. Core Business Definition Airline Employees Traditional We’re in the flying business, getting people from A to B, safely and quickly Quality Oriented We’re in the travel business, making it easier and pleasurable for people to spend time in different parts of the world as they work or holiday

25. Quality Management Philosophies:- DEMING 25 DEMING’S GENERAL PHILOSOPHY Deming’s Chain Reaction Improve quality Costs decrease eg. less returns Productivity improves Capture the market with better quality and lower prices

26. Quality Management Philosophies:- DEMING(cont’d) DEMING’S 14 POINTS Deming’s 14 points for senior management, which are often quoted, are aimed at helping people understand and implement the necessary transformation to a quality organisation. These are as follows: 1. Create and publish to all employees a statement of the aims and purposes of the company or organisation. The management must demonstrate constantly their commitment to this statement. 2. Learn the new philosophy, top management and everybody. 3. Understand the purpose of inspection, for improvement of processes and reduction of cost. 4. End the practice of awarding business on the basis of price tag alone. 5. Improve constantly and forever the system of production and service. 6. Institute training.

27. Quality Management Philosophies:- DEMING(cont’d) 7. Teach and institute leadership. 8. Drive out fear. Create trust. Create a climate for innovation. 9. Optimise toward the aims and purposes of the company the efforts of teams, groups, staff areas. 10. Eliminate exhortations for the work force. 11.(a) Eliminate numerical quotas for production. Instead, learn and institute methods for improvement. (b) Eliminate M.B.O. Instead, learn the capabilities of processes, and how to improve them. 12.Remove barriers that rob people of pride of workmanship. 13. Encourage education and self-improvement for everyone. 14. Take action to accomplish the transformation.

28. Quality Management Philosophies:- DEMING(cont’d) Deming’s deadly diseases:- If Deming’s 14 points can be seen as a directive to management telling them what to do, then the deadly diseases can be seen as a list of what not to do. Deming (1982) tells us that the ‘deadly diseases’ are more specific to US industrial companies. Those that are more general include: • A lack of constancy of purpose • Emphasis on short-term profits etc • Evaluation of (individual) performance, merit rating, or annual review • Mobility of management “job hopping” • Management by use of only visible figures with little or no consideration of other factors.

29. Quality Management Philosophies:- JURAN The Juran Trilogy:- Juran expresses his central message through what has become knows as the Juran Trilogy. • Quality planning - Ensuring a process capable of meeting quality goals • Quality control - Measuring quality performance against standard and acting on any differences • Quality improvement - Finding ways to do better than standard and break through to unprecedented levels of performance

30. Quality Management Philosophies:- JURAN(cont’d) Juran’s Quality Planning Roadmap:- • Identifying the target customer groups, external and internal. • Determine the needs of those customers. • Translate those needs into the language of the organisation. • Design product features to meet those needs. • Develop processes capable of producing these features. • Optimise the process. • Prove that the process can produce the product under operating conditions. • Transfer the process to Operations. A key aspect of the road map is that there should be measurement at each stage – don’t just take it on trust that you have achieved the relevant stage.

31. Quality Management Philosophies - CROSBY Crosby’s four absolutes of quality management:- • Quality is conformance to requirements, not goodness. • The system for obtaining quality is prevention, not appraisal. • The performance standard is zero defects, not “that’s close enough”. • The measurement of quality is the price of non-conformance, not indexes. One of the key aspects of Crosby’s approach Is the notion of zero defects. This aspect is not always understood. According to Crosby no one should be satisfied not even with the smallest of percentages of defects. Because that small percentage would be unsatisfied. They shouldn’t be satisfied until they have ZERO DEFECTS. By this Crosby is not implying that a given organisation could necessarily achieve zero defects, but he is saying that it should never be complacent. 31

32. Quality Management Philosophies – CROSBY(cont’d) Crosby’s path to quality improvement has 14 steps. Crosby’s 14 steps 1. Make it clear that management is committed to quality. 2. Form quality improvement teams with representatives from each department. 3. Determine where current and potential problems lie. 4. Evaluate the cost of quality and explain its use as a management tool. 5. Raise the quality awareness and personal concern for all employees. 6. Take action to correct problems identified through previous steps. 7. Establish a committee for the zero defects programme. 8. Train supervisors to actively carry out their part of the quality improvement programme.

33. Quality Management Philosophies – CROSBY(cont’d) 9. Hold a ‘zero defects’ day’ to let all employees realise there has been a change. 10. Encourage individuals to establish improvement goals for themselves and their groups. 11. Encourage employees to communicate to Management the obstacles they face in attaining their improvement goals. 12. Recognise and appreciate those who participate. 13. Establish quality councils to communicate on a regular basis. 14. Do it all over again to emphasise that the quality improvement programme never ends.

34. Continuous Improvement Process CONTINUOUS IMPROVEMENT PROCESS (CIP) is a management process whereby delivery (customer valued) processes are constantly valuated and improved in the light of their efficiency, effectiveness and flexibility. The fact that it can be called a ‘management process’ does not mean that it needs to be executed by ‘management’, merely that it makes decisions about the implementation of the delivery process and the design of the delivery process itself. One very successful approach to CIP is known as KAIZEN

35. Continuous Improvement Process Kaizen (Japanese for “continuous improvement”) is a Japanese philosophy that focuses on continuous improvement throughout all aspects of life. When applied to the workplace, Kaizen activities continually improve all functions of a business, from manufacturing to management and from the CEO to the assembly line works. By improving standardized activities and processes, Kaizen aims to eliminate waste (see Lean manufacturing). Kaizen was first implemented in several Japanese businesses during the country’s recovery after World War II, including Toyota, and has since spread to businesses throughout the world. Kaizen is a daily activity, the purpose of which goes beyond simple productivity improvement. It is also a process that, when done correctly, humanizes the workplace, eliminates overly hard work (“muri”), and teaches people how to perform experiments on their work using the scientific method and how to learn to spot and eliminate waste in business processes. People at all levels of an organization can participate in kaizen, from the CEO down, as well as external stakeholders when applicable. The format for kaizen can be individual, suggestion system, small group, or large group.

36. Continuous Improvement Process Implementation The Toyota Production System is known for kaizen, where all line personnel are expected to stop their moving production line in case of any abnormality and, along with their supervisor, suggest an improvement to resolve the abnormality which may initiate a kaizen. The cycle of kaizen activity can be defined as: ◊ standardize an operation ◊ measure the standardized operation (find cycle time and amount of in-process inventory) ◊ gauge measurements against requirements ◊ innovate to meet requirements and increase productivity ◊ standardize the new, improved operations ◊ continue cycle ad infinitum. This is also known as the Shewhart cycle, Deming cycle, or PDCA. The PDCA cycles

37. Continuous Improvement Process The Ishikawa diagram (or fishbone diagram or also cause-and-effect diagram) are diagrams, that shows the causes of a certain event. A common use of the Ishikawa diagram is in product design, to identify potential factors causing an overall effect. Ishikawa diagrams were proposed by Kaoru Ishikawa in the 1960s, who pioneered quality management processes in the Kawasaki shipyards, and in the process became one of the founding fathers of modern management. It was first used in the 1960s, and is considered one of the seven basic tools of quality management, along with the histogram, Pareto chart, check sheet, control chart, flowchart, and scatter diagram. It is known as a fishbone diagram because of its shape, similar to the side view of a fish skeleton. Ishikawa diagram, in fishbone shape, showing factors of men, machines, milieu (workplace), material, methods, measurement, all affecting the overall problem. Smaller arrows connect the sub-causes to major causes.

38. Continuous Improvement Process Ishikawa Diagram (cont’d) Causes in the diagram are often based on a certain set of causes, such as the 6M’s, 8 P’s or 4 S’s, described below. Cause-and effect diagrams can reveal key relationships among various variables, and the possible causes provide additional insight into process behaviour. Causes in a typical diagram are normally grouped into categories, the main ones of which are: • The 6 M’s • Machine, Method, Materials, Maintenance, Man and Mother Nature (Environment) (recommended for the manufacturing industry). Note: a more modern selection of categories used in manufacturing includes Equipment, Process, People, Materials, Environment and Management.

39. Continuous Improvement Process Ishikawa Diagram (cont’d) The 8 P’s Price, Promotion, People, Processes, Place/Plant, Policies, Procedures and Product (or Service) (recommended for the administration and service industries) The 4 S’s Surroundings, Suppliers, Systems, Skills (recommended for the service industry). Causes should be derived from brainstorming sessions. Then causes should be sorted through affinity-grouping to collect similar ideas together. These groups should then be labeled as categories of the fishbone. They will typically be on of the traditional categories mentioned above but may be something unique to your application of this tool. Causes should be specific, measurable and controllable. 39

40. Continuous Improvement Process Six Sigma Six Sigma is a business management strategy, originally developed by Motorola, that today enjoys widespread application in many sectors of industry. Six Sigma seeks to identify and remove the causes of defects and errors in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization (“Black Belts” etc) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or profit increase). Six Sigma was originally developed as a set of practices designed to improve manufacturing processes and eliminate defects, but its application was subsequently extended to other types of business processes as well. In Six Sigma, a defect is defined as anything that could lead to customer dissatisfaction. 6σ The often-used six sigma symbol

41. Quality Improvement ProcessNature’s Way A herd of buffalo can move only as fast as the slowest buffalo. When the herd is hunted, it is the weakest ones at the back that are killed first!

42. Quality Improvement ProcessNature’s Way (Cont.) This natural selection is good for the herd as a whole, because the general speed and health of the herd as a whole keeps improving by the regular culling of the weakest members.

43. Quality Chain QUALITY is needed at every link, otherwise the chain will be broken and the failure will usually find its way to the interface between the organisation and the customer. (Barbara Morris 1989) organization boundary Customer Customer Customer Customer Customer Customer Customer Supplier Supplier Supplier Supplier Supplier Supplier Supplier "original" external supplier external customer "intermediate" external supplier

44. Internal Quality Chain • A series of supplier and customer relationships. • The typist is a supplier to her boss – error free typing, how he wants it and when he wants it. • The boss is on the other hand a supplier to the typist – legible handwriting, clear instructions, keeping her informed of his whereabouts, appointments etc.

45. Interrogating The InterfaceCUSTOMERS • Who are my internal customers? • What are their true requirements? • How do, or can, I find out what the requirements are? • How can I measure my ability to meet the requirements?

46. Interrogating The InterfaceCUSTOMERS • Do I have the necessary capabilities to meet the requirements? (If not what must change to improve?) • Do I continually meet the requirements? (If not, then what prevents this from happening, when the capability exists?) • How do I monitor changes in the requirements?

47. Interrogating The Interface SUPPLIERS • Who are my internal suppliers? • What are my true requirements? • How do I communicate my requirements? • Do my suppliers have the capability to measure and meet the requirements? • How do I inform them of changes in the requirements?

48. A Break In The Quality Chain Example: An air hostess got flustered because several of the breakfast trays she served to travellers on a short domestic flight had no bread rolls, causing both complaints and delays as she searched through to find complete trays. The cause of the problem may have been the person who packed the trays, the person who ordered the bread rolls from the supplier, or management who reduced the number of staff packing the trays. The air hostess faced the music, and the company probably paid the price.

49. Quality Standards EXCELLENCE QUALITY Standard The standard is the chock which prevents the quality of service ball rolling back down the hill. However, the aim is to push the ball to the top of the hill. Once we have achieved the current standard we need to push the ball further up the hill and replace the chock at a higher level. This process continues until we reach the top of the hill and this particular requirement is fully met. Even then, however, when we reach the top of the hill we will find another hill, reflecting another way of improving service still further. The process is never ending and one of continual improvement.

50. Quality Standards In setting a standard for an activity or process you are: • explicitly stating your view of the customers’ requirements. • Indicating that this is open to question by staff and in many cases the customer. • Communicating to your staff that you see this area as important. • Establishing that this is the target to be achieved at the present time.