totalqualityservicemanagementbook1-090715110223-phpapp01

2007

Aireen Y. Clores, M.B.AVisayas State University

TOTAL QUALITY SERVICE MANAGEMENT

TOTAL QUALITY SERVICE

MANAGEMENT

Aireen Y. Clores, M.B.A

2007VISAYAS STATE UNIVERSITY

2 Total Quality Service Management

C O N T E N T S

PREFACE..........................................................................................................4PART 1 INTRODUCTION TO TOTAL QUALITY ……………………………………………….4

1 Introduction to Total Quality ………………………………………………………..4


Preface

In the last few decades, business competitiveness has become an area of increasing interest as a consequence of economic globalization, increasing economic integration and market liberalization. A review of theoretical models of business competitiveness reveals the significance of two kinds of factors in regard to this area — internal factors pertaining to the actual firm and external factors related to the structure of the industry in which the firm operates, as well as the economy of the country as a whole. These models should be examined empirically, using sufficient data to identify the relative significance of each individual factor regarding the overall improvement of business competitiveness. However, most available studies are partial since they focus on quantifying the effects of macroeconomic variables, the effects of sector variables, or the effects of strictly business-oriented variables.

Quality of service has been one the most widely investigated factors among those strictly related to business. In this context, business competitiveness is positively related to matching the characteristics of the service to the ideal preferences of clients, i.e. their level of satisfaction. This fact reveals the key role of service quality on the improvement of business competitiveness, and how this has an effect not only outside the actual firm, but also on the variables within it. The most relevant research on this issue deals with the theoretical study of the relationships that exist between quality and business competitiveness or with partial empirical relationships between variables. Nevertheless there is little empirical evidence to verify the complex relationships between quality and economic measures.


Introduction

While Total Quality Management has proven to be an effective process for improving organizational functioning, its value can only be assured through a comprehensive and wellthought out implementation process. The purpose of this chapter is to outline key aspects of implementation of large-scale organizational change which may enable a practitioner to more thoughtfully and successfully implement TQM. First, the context will be set. TQM is, in fact, a large-scale systems change, and guiding principles and considerations regarding this scale of change will be presented. Without attention to contextual factors, well intended changes may not be adequately designed. As another aspect of context, the expectations and perceptions of employees (workers and managers) will be assessed, so that the implementation plan can address them. Specifically, sources of resistance to change and ways of dealing with them will be discussed. This is important to allow a change agent to anticipate resistances and design for them, so that the process does not bog down or stall. Next, a model of implementation will be presented, including a discussion of key principles. Visionary leadership will be offered as an overriding perspective for someone instituting TQM. In recent years the literature on change management and leadership has grown steadily, and applications based on research findings will be more likely to succeed. Use of tested principles will also enable the change agent to avoid reinventing the proverbial wheel. Implementation principles will be followed by a review of steps in managing the transition to the new system and ways of helping institutionalize the process as part of the organization's culture. This section, too, will be informed by current writing in transition management and institutionalization of change. Finally, some miscellaneous do's and don’ts will be offered.

Members of any organization have stories to tell of the introduction of new programs, techniques, systems, or even, in current terminology, paradigms. Usually the employee, who can be anywhere from the line worker to the executive level, describes such an incident with a combination of cynicism and disappointment: some manager went to a conference or in some other way got a "great idea" (or did it based on threat or desperation such as an urgent need to cut costs) and came back to work to enthusiastically present it, usually mandating its implementation. The "program" probably raised people's expectations that this time things would improve, that management would listen to their ideas. Such a program usually is introduced with fanfare, plans are made, and things slowly return to normal. The manager blames unresponsive employees, line workers blame executives interested only in looking good, and all complain about the resistant middle managers. Unfortunately, the program itself is usually seen as worthless: "we tried team building (or organization development or quality circles or what have you) and it didn't work; neither will TQM". Planned change processes often work, if conceptualized and implemented properly; but, unfortunately, every organization is different, and the processes are often adopted "off the shelf" "the 'appliance model of organizational change': buy a complete program, like a 'quality circle package,' from a dealer, plug it in, and hope that it runs by itself" (Kanter, 1983, 249). Alternatively, especially in the underfunded public and not for-profit sectors, partial applications are tried, and in spite of management and employee commitments do not bear fruit. This chapter will focus on ways of preventing some of these disappointments.

In summary, the purpose here is to review principles of effective planned change implementation and suggest specific TQM applications. Several assumptions are proposed:


1. TQM is a viable and effective planned change method, when properly installed; 2. Not all organizations are appropriate or ready for TQM;

3. Preconditions (appropriateness, readiness) for successful TQM can sometimes be created; and

4. Leadership commitment to a large-scale, long-term, cultural change is necessary.

While problems in adapting TQM in government and social service organizations have been identified, TQM can be useful in such organizations if properly modified (Milakovich, 1991; Swiss, 1992).

P A R T6 Total Quality Service Management

IINTRODUCTION

TO TOTAL

QUALITY


CHAPTER 1Introduction to Total Quality in Organizations

QUALITYIt is never and accident: it is always the result of high retention, sincere effort, intelligent direction, and skillful execution; it presents the wise choice of many

alternatives, the cumulative experience of many alternatives, the cumulative experience of many masters of craftsmanship. Quality also marks the search for an

ideal after necessity has been satisfied and mere usefulness achieved.

Wilma A. Foster

In this chapter we will introduce you to the basic principles of total quality. Specifically, we will: Provide reasons why attention to quality should be a part of every organization’s culture

and management systems; Provide a brief history of the “quality revolution”; Provide an overview of the key principles of total quality; Compare and contrast quality – focused management with traditional management

practices, and; Discuss relationships of total quality with organizational models in management theory.

Total Quality Management is a management approach that originated in the 1950's and has steadily become more popular since the early 1980's. Total Quality is a description of the culture, attitude and organization of a company that strives to provide customers with products and services that satisfy their needs. The culture requires quality in all aspects of the company's operations, with processes being done right the first time and defects and waste eradicated from operations.

Total Quality Management, TQM, is a method by which management and employees can become involved in the continuous improvement of the production of goods and services. It is a combination of quality and management tools aimed at increasing business and reducing losses due to wasteful practices.

Some of the companies who have implemented TQM include Ford Motor Company, Phillips Semiconductor, SGL Carbon, Motorola and Toyota Motor Company.1

TQM Defined

TQM is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and organizational objectives.

TQM views an organization as a collection of processes. It maintains that organizations must strive to continuously improve these processes by incorporating the knowledge and experiences of workers. The simple objective of TQM is "Do the right things, right the first time, every time". TQM


http://www.isixsigma.com/library/content/c031008a.asp#references

is infinitely variable and adaptable. Although originally applied to manufacturing operations, and for a number of years only used in that area, TQM is now becoming recognized as a generic management tool, just as applicable in service and public sector organizations. There are a number of evolutionary strands, with different sectors creating their own versions from the common ancestor. TQM is the foundation for activities, which include:

Commitment by senior management and all employees Meeting customer requirements Reducing development cycle times Just In Time/Demand Flow Manufacturing Improvement teams Reducing product and service costs Systems to facilitate improvement Line Management ownership Employee involvement and empowerment Recognition and celebration Challenging quantified goals and benchmarking Focus on processes / improvement plans Specific incorporation in strategic planning

This shows that TQM must be practiced in all activities, by all personnel, in Manufacturing, Marketing, Engineering, R&D, Sales, Purchasing, HR, etc.2

Total Quality Management is a management style based upon producing quality service as defined by the customer. TQM is defined as a quality-centered, customer-focused, fact-based, team-driven, senior-management-led process to achieve an organization’s strategic imperative through continuous process improvement. TQM principles are also known as total quality improvement, world class quality, continuous quality improvement, total service quality, and total quality leadership.

WHAT DOES T.Q.S.M STANDS FOR?

T – Stands for TOTAL; The word "total" in Total Quality Management means that everyone in the

organization must be involved in the continuous improvement effort, the word "quality" shows a concern for customer satisfaction, and the word "management" refers to the people and processes needed to achieve the quality.

Q – Stands for QUALITY; Means meeting or exceeding customer (internal or external) expectation. It is about relationships Fundamental to all major business decisions It is everyone’s business

S – stands for SERVICE; act of help or assistance in a manner of serving customer

M – Stands for MANAGEMENT mean improving and maintaining business systems and their related processes or activities.



Total Quality Management is not a program; it is a systematic, integrated, and organizational way-of-life directed at the continuous improvement of an organization. It is not a management fad; it is a proven management style used successfully for decades in organizations around the world. TQM is not an end in itself; it is a means to an organizational end. Total Quality Management must not be the primary focus of an organization; it should merely be the means to achieve organizational goals.

Total Quality Management differs from other management styles in that it is more concerned with quality during production than it is with the quality of the result of production. Other management styles have different concerns. Some major styles are compared with TQM as follows.

Management-by-Objectives (MBO) emphasizes achieving specified objectives, under the control of individual managers. This approach works against multi-functional process performance and interferes with teamwork and quality. TQM is not objective-oriented, except for its one goal of achieving continuous quality improvement.

Management-by-Results (MBR) is management by viewing past results as an indication of future results. It has been compared to driving an automobile in a forward direction while looking in the rear view mirror. In today’s fast-paced, quick-changing business environment, managers cannot rely on past results as a predictor of future performance. In contrast, TQM is only concerned with current results and ways to improve them.

Management-by-Exception (MBE) is management by identifying specific targets for management attention and action. It produces short-term results by reacting to immediate problems, but there is no analysis of the processes that produced the problems, so long-term benefits are lost. On the other hand, TQM is more concerned with correcting processes that produce problems than it is with responding to individual problems.

Total Quality Management is very different from these and other management systems. It recognizes that quality as determined by the service provider might be much different from quality as perceived by the service receiver. If the customer is not satisfied with a service, then the service does not have quality and the processes that produced the service have failed.

Total Quality Management requires an organizational transformation-a totally new and different way of thinking and behaving. This transformation is not easy to achieve; it is not for the weak or the statistically untrained. At first glance, many TQM techniques may seem simple and based on common sense, but they must be understood and used correctly for TQM to function properly. Knowing the history of Total Quality Management may help in understanding its techniques.

Principles of TQMThe key principles of TQM are as following:3

Management Commitment1. Plan (drive, direct) 2. Do (deploy, support, participate) 3. Check (review) 4. Act (recognize, communicate, revise)

Employee Empowerment 1. Training



2. Suggestion scheme 3. Measurement and recognition 4. Excellence teams

Fact Based Decision Making 1. SPC (statistical process control) 2. DOE, FMEA 3. The 7 statistical tools 4. TOPS (FORD 8D - Team Oriented Problem Solving)

Continuous Improvement1. Systematic measurement and focus on CONQ 2. Excellence teams 3. Cross-functional process management 4. Attain, maintain, improve standards

Customer Focus 1. Supplier partnership 2. Service relationship with internal customers 3. Never compromise quality 4. Customer driven standards

Principles of Total Quality Total quality is a people-focused management system that aims at continual increase in

customer satisfaction at continually lower real cost. TQ is a total system approach (not a separate area or program) and an integral part of high-

level strategy; it works horizontally across functions and departments, involves all employees, top to bottom, and extends backward and forward to include the supply chain and the customer chain.

Foundation of total quality is philosophical: the scientific method: includes systems, methods, and tools.

A comprehensive, organizational-wide effort to improve the quality of products and services – applies not only to large manufacturers, but t small companies.

A management of process and set of disciplines those are coordinated to ensure that the organization consistently meets and exceeds customer requirements.

Concerned with continuous improvement in performance aimed at delighting customers. Achieving quality through gaining everyone’s commitment and involvement. Improvement of the quality of the organizations products and services It is the integration of all functions and processes within an organization in order to achieve

continuous improvement of the goals and services.


Michael Dell’s Touch of Quality

Although Dell Computer Corporation’s PCs have had some of the highest quality ratings in the industry, CEO Michael Dell became obsessed with finding a way to reduce their failure rates. The key, he believed, was to reduce the number of times that each hard drive – the most sensitive part of a PC – was handled during assembly. Production lines were revamped, and the numbers of “touches” were reduced from over 30 to less than 15. Soon after, the rate of rejected hard drives fell by 40 percent, and the overall failure rate for the company PCs dropped by 20 percent.

Figure 1.5 E.g. of Improving Work Processes

THE IMPORTANCE OF QUALITY

Quality drives market share. And when superior quality and large market share are both present, profitability is virtually

guarantee.

Quality can also reduce costs. Provides an additional competitive edge Types of quality: customer – driven quality and conformance or internal specifications

quality.

As quality improves, so does cost, resulting in improved market share and hence profitability and growth.

Provides a means for further investment in such quality improvement areas as research and development. The cycle goes on. See Figure 1.1 The quality circle.

Rewards of higher quality are positive, substantial, and pervasive. Findings indicate that attaining quality superiority produces the following organizational benefits:

1. Greater customer loyalty2. market share improvement3. higher stock prices4. reduced service calls5. higher prices6. Greater Productivity

History of TQM

Total Quality Management was developed in the mid 1940s by Dr. W. Edward Deming who at the time was an advisor in sampling at the Bureau of Census and later became a professor of statistics at the New York University Graduate School of Business Administration. He had little success convincing American businesses to adopt TQM but his management methods did gain success in Japan.


After World War II, General MacArthur took 200 scientists and specialists, including Dr. Deming, to Japan to help rebuild the country. While working on the Japanese census, Dr. Deming was invited by the Japanese Union of Scientists and Engineers to give lectures on his statistical quality techniques. One of the attendees was a past professor to many of Japan’s CEOs. After attending the lectures, the professor told his CEO students that, if they wanted to turn Japan’s economy around in five years, they should attend Dr. Deming’s lectures on using statistics to achieve quality at a reduced cost. Many of the CEOs took the professor’s advice and attended the lectures. Eventually, many Japanese manufacturing companies adopted Dr. Deming’s theories and were able to produce quality products at reduced costs.

While the Japanese business world was concentrating on producing quality products, businesses in the United States were more concerned with producing large quantities of products. Their emphasis on quantity at the expense of quality let the Japanese, with their inexpensive, high quality products; gain a substantial foothold in American markets.

In the 1970s and 1980s, many American companies, including Ford, IBM, and Xerox, began adopting Dr Deming’s principles of Total Quality Management. This gradually led to their regaining some of the markets previously lost to the Japanese. Although Total Quality Management gained its prominence in the private sector, in recent years it has been adopted by some public organizations.

So far, this chapter has defined Total Quality Management, explored its origin, and explained how it emphasizes quality during production. Since quality is so important to any discussion of TQM, the next section explores this key element in detail.

Deming Chain of Reaction:“As quality improves, cost will decrease costs; cost will decrease and productivity will increase,

resulting in more jobs, greater market share, and long-term survival”

FREDERICK TAYLOR

Developed his system of scientific management, which emphasized productivity at the expense of quality.

Centralized inspection departments were organized to check for quality at the end of the production line.

The control quality focused on final inspection of the manufactured product, and a number of techniques were developed to enhance the inspection process.

Taylor summarized his thoughts in 1951 as: Management is science – not rule of thumb Management is harmony – not discord Management is cooperation – not individualism Management is maximum output – not restricted output Management is development of each man and to his greatest efficiency and

prosperity.

WALTER SHEWART, HAROLD DODGE, GEORGE EDWARDS Developed new theories and methods of inspection to improve and maintain quality.

KURT LEWIN


Provided us with an understanding of how to make large scale organizational change.

Douglas McGregor Has tremendous impact on what later became Total Quality Management. Detailed the Theories of Management (Theory X and Theory Y). Theory X states that

employees will not work if left to their own devices; employees are inherently bad and must be forced and coerced into work. Theory Y states that employees find work as natural as play and will work diligently to the firm’s aims if assumptions follow later.

Fred Emery Australian disciple of Lewin and Eric Trist. Apply open systems thinking to social change, pointed out that optimal results could be

achieved only when social systems, which obey the laws of biology, psychology, and sociology are designed integrative with technical systems following the laws of physics, chemistry and engineering.

The social technical approach required that those who do not work get a great deal more authority, control, skills and information than is customary under scientific management.

JOSEPH M. JURAN Introduces the managerial dimension of planning, organizing and controlling and

focused on the responsibility of management to achieve quality and the need for setting goals.

Defines quality as fitness for use in terms of design, conformance, availability, safety and field use.

Promotes concepts known as Managing Business Process Quality – a technique for executing cross functional quality improvements.

ARMAND FEIGENBAUN Achieved visibility through his work in Japanese Management for total quality

improvement. Used a total quality control approach that may very well be the forerunner of today’s TQM Promoted a system for integrating efforts to develop, maintain and improve quality by the

various groups in an organization.

PHILIP CROSBY Author of the popular book Quality is Free. Argues that poor quality in the average firm costs about 20% of revenues; most of which

could be avoided by adopting good quality practices.

THE CONCEPT OF QUALITY

Definition of quality:1. Perfection2. Consistency3. Eliminating waste4. Speed of delivery5. Compliance with policies and procedures


6. Providing a good, usable product7. Doing it right the first time8. Delighting or pleasing customers9. Total customer service and satisfaction

Today most managers agree that the main reason to pursue quality is to satisfy customers. The American National Standards Institute (ANSI) and the American Society for Quality (ASQ) define quality as “the totality of features and characteristics of a product or service that bears on its ability to satisfy the given needs.”

TQM GOAL: CUSTOMER SATISFACTION

Figure 1.1 TQM GOALS

The view of quality as the satisfaction of customer needs is often called fitness for use. In highly competitive markets, merely satisfying customer needs will not achieve success. To beat with competition, organizations often must exceed customer expectations. Thus, one of the most popular definitions of quality is meeting or exceeding customer expectations.

Figure 1.2 Vision Statement of Hollywood Casino Resort

Managers of manufacturing and service functions deal with different types of quality issues; the following sections provide a brief overview of these issues. Although the details of quality management


HOLLYWOOD CASINO RESORTTunica, Mississippi

Hollywood Casino Resort/Tunica is a place where guests feel invited and welcome. We provide the highest levels of personalized service and products for our guests, who always enjoy a fun-filled experience. Everyone at Hollywood Casino does the right thing the first time, and puts the needs and wants of our guests in the forefront of every decision we make.

differ between manufacturing and service industries, the customer-driven definition eliminates these artificial distinctions and provides a unifying perspective.

Quality in Manufacturing

Quality systems focused primarily on technical issues such as equipment reliability, inspection, defect measurement, and process control.

Transition to a customer – driven organization has caused fundamental changes in manufacturing practices, changes that are particularly evident in areas such as product design, human resource management, and supplier relations.

Quality dimensions: Manufactured products have several quality dimensions including the following:

1. Performance: a product’s primary operating characteristics.2. Features: the “bells and whistles” of a product.3. Reliability: the probability of a product’s surviving over a specified period of time under

stated conditions of use.4. Conformance: the degree to which physical and performance characteristics of a product

match pre-established standards.5. Durability: the amount of use one gets from a product before it physically deteriorates or

until replacement is preferable.6. Serviceability: the ability to repair a product quickly and easily.7. Aesthetics: how a product looks, feels, sounds, tastes, or smells.8. Perceived quality; subjective assessment resulting from image, advertising, or brand names.

Quality control in manufacturing is usually based on conformance, specifically conformance to specifications. Specifications are targets and tolerances determined by designers of products and services. Targets are the ideal values for which production strives; tolerances are acceptable deviations from these ideal values.

A lack of defects has constituted quality in manufacturing for many years. However, the lack of defects alone will not satisfy or exceed customer expectations. Many top managers have stated that good quality of conformance is simply the “entry into the game”. A better way to achieve distinction and delight customers is through improved product design. Thus, manufacturers are turning their attention toward improved design for achieving their quality and business goals.

Quality in Services:

Service can be defined as “any primary or complementary activity that does not directly produce a physical product – that is, the non-goods part of the transaction between buyer (customer) and seller (provider).” A service transaction might be as simple as handling a complaint or as complex as approving a home mortgage. A Service orientation places customer needs ahead of organizational needs. Table 1 – 3 provides examples of how the four dimensions of service quality apply to various industries. In this context, a physical product is simply the medium used to facilitate the other services and a service rather than product orientation becomes the focus. Customer’s needs take precedence over organizational needs. In contrast, when quality programs are product oriented, it is often the case that a higher priority is placed on process (and bottom – line) performance than on customer satisfaction.


Trying to squeeze and the ounce of performance” from its internal business processes, a company can lose touch with its customers and what they can value.

INDUSTRY PHYSICAL PRODUCT

SERVICE PRODUCT

SERVICE ENVIRONME

NT

SERVICE DELIVERY

Auto manufacturing Co.

Hotel

Airline

Vehicle

Room Supplies

Food & Beverage Service

Food & Beverage ServiceTicket

Pricing

Pricing & Quality

Pricing

Transportation & flight

entertainment Baggage Handling

Showroom

Room

Restaurant & Bar

Airport facilities

Test drive & sales pitch

Front Office/ Bellman

Performance

Chef, waitress, bartender

performance

Cleanliness of aircraft

Safety in-flight service

Table 1.3 COMPONENTS OF SERVICE: Some Industry Example:

How do customers make choices based on value judgments? Customers compare alternative service providers on the basis of value. Customers perform a gap analysis between what they expect and what perceived is the

value received. Evident in service industries where a customer’s satisfaction is often based on such

intangible factors as assurance, empathy, reliability, and responsiveness.

VALUE STREAM AND ITS CUSTOMERS “QUALITY” is about people Value stream – all the resources required to take production inputs and transform them into

a suitable mixture of products or services constitutes. Customer – can be used to describe anyone who benefits from goods or services anywhere

along the value stream. Internal customer – its suppliers share the same production system.

Internal customers are linked together through the design of the value stream and the output of the value stream becomes an output to an external customer’s system.

External customer – its suppliers are members of different systems.

Most research dealing with the effects of quality on business competitiveness generally falls into one of two categories, depending on the kind of relationships under study. The first encompasses those


studies analyzing the external effects of quality on competitiveness, while the second includes those that focus on the internal effects. External effects show the impact of changes in the quality perceived by clients on business competitiveness. These effects have their source in changes in client behavior and their level of satisfaction which, ultimately, will have a positive or negative impact on the volume of sales and market share due to variations in clients' willingness to pay, their purchase intentions or level of expenditure within the hotel.

Internal effects refer to the influence quality has on competitiveness due to changes in the firm's production processes. Such changes have an influence on productivity and, therefore, on the firm's production costs

SERVICE QUALITY vs. PRODUCT QUALITY

As a strategic issue, customer service can be considered a major dimension of competitiveness. People will go out of their way and more for good service, which indicates the importance place on

service by customers. The behavior of the service provider becomes a factor in service delivery. The service recipient has the final say regarding quality. Service requires contact (directly or via telephone) between the service provider and the service

equipment. The image of the organization shapes the perception of customers. The customer is present during the production process and performing the final inspection. The measure of output is difficult to define. Quality can mean different things to different people given the same experience. Quality is defined in the context of the totality of the experience.

DIMENSIONS OF SERVICE:The important dimensions of service quality include the following:

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? 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?


Service organizations must look beyond product orientation and pay significant attention to customer transactions and employee behavior. Several points that service organizations should consider are as follows:

Customer Perceptions – example are speed of service is an important quality characteristics, yet perceptions of speed may differ significantly among different service organizations and customers.

Behavior – quality of human interaction is vital in every transaction that involves human contact; e.g. Friendliness of front desk clerks.

Image – shaping customer expectations of a service and in setting standards by which customers evaluate that service.

Service standards – value judgment, customer attitudes and employee competence.

Quality control supervision – calls for training of employees and self-management.

Figure 1.4 Service Orientations

Advantages of TQM

Long-term benefits that may be expected from Total Quality Management are higher productivity, increased morale, reduced costs, and greater customer commitment. These benefits may lead to greater public support and improvement of an organization’s public image.

Eliminating errors and doing things right the first time saves time and resources. The savings may then be used for expansion of services or made available to employees in their efforts to increase service quality.

Total Quality Management may create an organizational atmosphere of excitement and sense of accomplishment through the rewarding of creativity. When


experimentation-oriented failures are accepted as a part of the learning process, employees feel free to use their creative energies to develop new ideas.

Total Quality Management’s extensive use of teamwork gives employees the experience of problem solving and using their knowledge and experiences in a collaborative effort. As employees gain experience with team problem solving, they may be used to form cross-sectional ad-hoc "mega teams" that can attack larger organization-wide problems. TQM gives an organization greater problem-solving flexibility and increases the quality of work life for all employees.

Total Quality Management may be a "profit generator," even for public organizations. It does not actually create profit for the organizations, but if implemented properly, it may identify costly processes and cost-saving measures. Once fully implemented, the only expense of TQM is the cost of routine operations. In public organizations, saved resources may be viewed as "profits."

Total Quality Management does have some detractors who have pointed out some of the disadvantages of TQM.

Disadvantages of TQM Long-range plans advocated by TQM may limit an organization’s flexibility and agility.

TQM teaches that a long-term plan is required to achieve a complete quality transformation, but a long-term plan that has been pursued for a long period may become an end unto itself. Completion of the plan becomes the ultimate goal. Objectives the plan was designed to accomplish are forgotten; achieving the transformation becomes the most important objective. Instead of maintaining continuous change, the organization may reach a stable point and stagnate. To produce continuously high quality services, an organization must react quickly to changes in the community and not be restricted by its management style.

TQM detractors also argue that although Total Quality Management calls for organizational change, it does not demand radical organizational reform.

Real quality improvement requires radical structural change, such as flattening organizational structures. It requires liberation of employees from stifling control systems and the tyranny of functionalism, both of which stifle teamwork.

Total Quality Management calls for the elimination of the goals and objectives required by Management-by-Objectives.

Critics of TQM claim that this may negatively affect motivation. They claim that having established production goals gives employees increasingly higher goals to reach, which motivates them to find new ways to reach the goals. When there are no established production goals, some employees will only produce the minimum required to keep their job.

Total Quality Management calls for the elimination of performance assessments that rate employees in relation to each other.

Critics fear that without performance assessment managers would have too much power over employees and may be use it capriciously. Many managers feel performance assessments let them document employee performance for possible reward, but some employees fear the assessments might be used against them in some disciplinary actions. Performance assessments may give employees with grievances the documentation they need to prove managers are treating them unfairly. Without them, managers could make unfair


accusations about an employee’s performance and the employee would not have the documentation to counter the claims.

Some argue that the claims of success by TQM supporters are not supported by facts but by anecdotes and stories. They argue that TQM proponents tell heart-warming stories about how teamwork makes everyone happy, but that they cannot back up their claims with hard data.

Critics maintain that TQM focuses manager attention on internal processes rather than on external results. When this is taken to an extreme, managers may become too preoccupied with internal issues, such as the documentation required by TQM methods, and ignore the shifting perceptions of customers. Managers become so concerned with the process of TQM that they neglect the needs of the customer, which was the initial reason for implementing TQM.

Total Quality Management calls for its implementation to be immediate and complete. Some contend it does not make sense to try to create quality improvement in the entire organization from the very beginning. They argue that all processes are not equally good or bad, all departments do not function equally well, and all services do not measure up to the same quality standard. Because of this, they contend that quality should be introduced incrementally and only in the specific areas that need it most.Some critics claim Total Quality Management’s focus on setting and maintaining standards makes work life unexciting and boring. When employees are bored, their poor attitudes may cause customer dissatisfaction with the quality of service received from them. In addition, when too much emphasis is placed on standardization it precludes the constant internal changes needed to keep up with external changes.

Total Quality Management develops its own bureaucracy. TQM detractors contend its statistical burden and committee structure is cumbersome, slows organizational momentum, and consumes too much time and resources.

Opponents of Total Quality Management maintain that it appeals to egotism. After receiving some TQM training, some employees consider themselves TQM "experts" who have the answers to everyone else’s problems. They claim their department is doing everything right according to TQM principles and find fault with every other department. Some managers, instead of viewing achievement as a joint effort where every participant deserves praise, apply for awards for self-gratification or to benefit the organization’s public relations image.Some detractors posit that TQM is an emotionally cold way to manage people. Its analytical, detached programs are often devoid of human emotion that inspires attachment to the organization and its customers.

Total Quality Management calls for a cultural transformation. Some argue it creates a process-crazed organization, similar to a cult, where the impression is that only total commitment to TQM can save the organization from ruin. Just as in a cult, all the decisions in TQM are related to the "vision." No one wants to claim individual credit for success; instead, success is attributed to the TQM philosophy. Results become less important than performing the proper TQM techniques. Just as in a cult, periodic evangelism by TQM experts is used to maintain a missionary zeal for TQM. If an employee is not a TQM believer, he or she considered an outcast who does not care about the organization’s success. Even with its problems, Total Quality Management may still be the best choice as a successor to the militaristic, authoritative management style.

Exercise NO. _____21 Total Quality Service Management

Introduction to TQM

Name _____________________________ Course & Year _______________________ Subject time/Day ____________________ Date: _____________ Instructor________

Case 1.1 APPLYING TQM TO EVERYDAY TASK

Pauline Knowlton has worked for Matt Pantusa for nearly three months. Pauline really likes Matt because he practices what he preaches and is a good supervisor. But sometimes Matt can be a little overbearing, especially now that he is really sold on Total Quality Management.

For example, Matt is the publicity person for the local Computer Enthusiasts Club. He sends out 5,000 copies of a brochure each month that advertises the next month’s meeting of the Club. Pauline usually is the one to make sure the flyers are copied, folded, addressed, and mailed on time. The advertisement that Pauline mailed a few weeks ago announced last week’s monthly meeting on quality productivity tools for computers.

When Matt went into the office the morning after the meeting, he called Pauline into his office. He told Pauline that over 600 people had attended the meeting – a record crowd. Pauline congratulated Matt for such a successful meeting. She was pleased that had had a part in making the meeting a success. But Matt didn’t seem pleased as he gave her two copies of the flyer that had been given to him by his friends who received his mailing. One flyer was folded a little crooked and the other has a mailing label that was affixed at the slightly downward angle. Matt asked her to be more careful with these details as she did future mailings.

Pauline like her work and wants to please Matt. She thinks, however, that he’s gone a little bit overboard with this TQM. Does anyone really care if a flyer is perfectly folded or a label is a little askew? And having time to think about their conversation, Pauline can’t understand why Matt is making such a big deal about the mailing. After all, more people showed up at the monthly meeting than had ever been there before.

RESPONDING TO THIS CASE:

1. Do you think Matt is taking the TQM philosophy too far? Why or why not?2. Pauline feels that if the customer is satisfied, why Matt shouldn’t be please.

Discuss the pros and cons of her rationale.3. Is there a lesson that Pauline could learn from this incident?4. What advice would you give to Matt in Supervising Pauline and here

employees?

Exercise NO. _____Introduction to TQM



Case 1.2

The Reservation Nightmare

H. James Harrington, a noted quality consultant, related the following story in Quality Digest magazine:

I called to make a flight reservation just an hour ago. The telephone rang five minutes before a recorded voice answered. ‘’Thank you for calling ABC Travel services,’’ it said. ‘’To ensure the highest level of customer service, this call may be recorded for future analysis.’’ Next I was asked to select from one of the following choices: ‘’ If the trip is related to company business, press 1.Personal business, press 2. Group travel, press 3.” I pressed 1.

I was then asked to select from the following choices: “If this is a trip within the United States, press 1.International, press 2.Scheduled training, press 3. Related to conference, press 4.” Because I was going to Canada I pressed 2.

Now two minutes into my telephone call, I was instructed to be sure that I had my customer identification card available. A few seconds passed and a very sweet voice came on, saying, “All international operators are busy, but please hold because you are a very important customer.’’ The voice was then replaced by music. About two minutes later, another recorded message said, “Our operators are still busy, but please hold and the first available operator will take care of you.’’ more music. Then yet another message: ‘’ Our operators are still busy, but please hold. Your business is important to us.’’ more bad music. Finally the sweet voice returned, stating, ‘’to speed up your service, enter your 19-digit costumer service number.’’ I frantically searched for their card, hoping that I could find it before I was cut off. I was lucky; I found it and entered the number in time. The same sweet voice came back to me, saying, ‘’ to confirm your service number, enter the last four digits of your customer service number, enter the last four digits of your social security number.” I pushed the four numbers on the keypad. The voice said: ‘’ Thank you. An operator will be with you shortly. If your call is emergency, you can call 1-800-CAL-HELP, or push all of the buttons on the telephone at the same time. Otherwise, please hold, as you are a very important customer.” This time, in place of music, I heard a commercial about the service that the company provides.

At last, a real person answered the telephone and asked,’’ Can I help you? ‘’ I replied, ‘’ Yes, oh yes.’’ He answered, “Please give me your 19-digit customer service number, followed by the last digit of your social security number so I can verify who you are.’’ (I thought that I gave these numbers in the first place to speed up service. Why do I have to rattle them off again?

I was now convinced that he would call me Mr. 5523-3675-0714-1313-040. But, to my surprise, he said: “Yes, Mr. Harrington. Where do you want to go and when?” I explained that I wanted to go to Montreal the following Monday morning. He replied: ‘’ I only handle domestic reservations. Our international desk has a new number: 1-800-1WE-GOTU. I’ll transfer you.’’ A few clicks later a message came on, saying. ‘’All of our international operators are busy. Please hold and your call will be answered in the order it was received. Do not hang up or redial, as it will only delay our response to your call. Please continue to hold, as your business is important to us.”

DISCUSSION QUESTIONS1. Summarize the service failures associated with this experience.2. What might the travel agency have done to guarantee a better service experience for Mr.

Harrington? How do your suggestions relate to the TQ principles?


Case 1.3A Tale of Two Restaurants

Kelly’s Seafood Restaurant was founded about 15 years ago by Tim Kelley, who has run it from the start. The restaurant is very profitable because of its excellent food quality, but lately has been having problems with consistency because of numerous suppliers. The restaurant operations are divided into front-end (servers) and back-end (kitchen). The kitchen has notes to boost employee morale, employees are cross-trained in all areas, and the kitchen staff continually seeks improvements in cooking. Servers, however, have minimal wages and few perks, and turnover is a bit of a problem. Tim’s primary criterion for selecting servers is their ability to show up on time. There is little communication between and front-end and back-end operations, other than fulfilling orders. Tim makes sure that any complaints are referred to him immediately by the servers.

The restaurant has no automation, as Tim believes that it would get in the way of customers’ special requests. “this is the way we’ve done it for past 15 years and how we will continue to do it,’’ was his response to a suggestion of using a computerized system to speed up orders and eliminate delays. Tim used to hold staff meetings regularly, but recently they have dropped from each week to one every five or six months. Most of the time is spent focusing on negative behavior, and Tim has often said “You can’t find good people anymore.’’

Jim’s Steakhouse is a family-owned restaurant in the same state. Jim uses only the freshest meats and ingredients from the best suppliers and gives extra large portions of food to customers, who feel they are getting their money’s worth. Jim pays his cooks high wages to attract quality employees. Servers get 70 percent of tips, bussers 20 percent, and the kitchen staff 10 percent to foster team work. Many new hires come from referrals from current employees. Jim interviews all potential employees and ask them many pointed questions relating to courtesy, responsibility, and creativity. The restaurant sponsors bowling nights, golf outings, picnics, and holiday parties for its employees. At Jim’s, birthday customer receive a free dinner, children are welcomed with balloons, candy, and crayons, and big screen TV’s caters to sports fans. Jim walks around and constantly solicits customer feedback. Jim visits many restaurants to study their operations and learn new techniques. As a result of these visit, Jim installed computers to schedule reservations and enter orders to the kitchen.

DISCUSSION QUESTIONS 1. Contrast these two restaurants from the perspective of TQ. What conclusions can you make and what advice would you give to the owners?2. What type of management model (mechanistic, organismic, or cultural) do you think each organization represents?

CHAPTER 2APPROACHES TO TOTAL QUALITY

TOTAL QUALITY PARADIGMS


Adopting a TQ philosophy requires significant changes in organization design, work processes, and culture. Organizations use a variety of approaches.

A paradigm (pronounced "pair-a-dime") is a set of beliefs about phenomenon around us that constrains and guides our thinking. For example, consider yourself to be in Spain or Portugal in 1492. You believe the sun rises in the East and sets in the West. When you look westward out over the ocean, you see a straight line where water meets the sky. You are familiar with straight edges where the plane meets the sky. If you walk off the plane of a roof, you fall. Therefore, ships must fall off the earth if they travel too far. N'est-ce pas?

Paradigms are shared by people creating schools of thought. The ancient mariners of the late 1400's all believed the same perceived facts and, thus, never ventured too far from land. Paradigms change when first an anomaly appears. The late 1400's brought additional facts to bear, such as: at first you see the top of a mast, then the whole mast, then the top of the ship hull, and then the full hull as a ship approaches from far out to sea. This is similar to what you see when a person climbs over a small hill. Perhaps the ocean is like a hill and there is no edge.

Experimentation occurs to verify the anomaly and seek out new relationships and causes. People who explore anomalies may be considered outcasts by those who staunchly support the existing paradigm. Columbus was considered a "strange and touched" sailor by many who were sure they would never see him or his ships again. Paradigm shifts occur when the anomaly is perceived to be a violation of the natural laws.

The Quality Philosophies of Edward Deming

The Deming Management Philosophy

Deming stresses that higher quality leads to higher productivity, which in turn leads to long-term competitive strength. Deming’s “chain of reaction,” shown in Figure 2.1, summarizes this view. This theory states that improvements in quality lead to lower costs because of less rework, fewer mistakes, fewer delays and snags, and better use of time and materials. Lower costs, in turn, lead to productivity improvements. With better quality and lower prices, the firm can achieve a higher market share and thus stay in business, providing more jobs. Deming’s states emphatically that top management has the overriding responsibility for quality improvement. Deming has summarized his philosophy in what he calls “A System of Profound Knowledge.”

Figure 2.1 THE DEMING CHAIN REACTION


Improved quality

Costs decrease because of less rework, fewer

mistakes, fewer delays and snags, and better

Productivity ImprovesCapture the market with better quality and

lower price.Stay in businessProvide jobs and more

jobs

Profound KnowledgeFour parts of profound knowledge: (1) appreciation of a system, (2) knowledge of the theory of variation, (3) theory of knowledge, and (4) psychology.

Systems A set of functions or activities within an organization that work together to achieve

organizational goals. For example, a McDonald’s restaurant can be viewed as a system. It consists of the order-taker/cashier subsystem, grill and food preparation subsystem, drive-through subsystem, and so on.

Factors within a system that affect the individual performance of an employee; Training received Information and resources provided Leadership of supervisors and managers Disruptions on the job Management policies and practices

Variation It is the difference in the reproducibility of a particular action. It is the difference between a

particular action and the target outcome. Variation increases the cost of doing business

Theory of Knowledge It is a branch of philosophy concerned with the nature and scope of knowledge, its pre-

suppositions and bases, and the general reliability of claims to knowledge. Theory establishes a cause-and-effect relationship that can be used for prediction. Theory leads

to questioning and can be tested and validated – it explains why.Psychology

Helps to understand people, interactions between people and circumstances, interactions between leaders and employees, and any system of management. People differ from one another.


We must understand how people are intrinsically motivated. It is through intrinsic motivation that people find joy in work and excitement in application of new knowledge. True innovation in a company only comes at the discretion of the employees. Think about this saying: "you can lead a horse to water but you cannot make him drink." A professor of leadership/motivation/management once told a class, "you don't get paid to get a horse to drink, and you get paid to motivate him to float on his back in the pond!"

Within the concept of knowledge of psychology, we must understand how people react to change. You have heard it said that people resist change. This is absolutely untrue. People have welcomed change throughout history AS LONG AS they understood the benefit of change to them. Management's responsibility in using profound knowledge is to market change so as to be exciting and desirous by employees.

Lastly, profound knowledge requires an understanding of transformation from competition to collaboration. Negotiators have long understood that cooperation and mutually satisfying results start by someone taking a risk and offering another something that is desired.

Deming's Fourteen Points

Edward Deming created Fourteen Points of management based upon three principles. The first one is customer orientation. The second element is continuous improvement. The last principle is to recognize that quality is determined by the system, which is the inputs and the manner in which the previous two aspects are processed.

1. Management commitment2. Adopt the new philosophy.3. Understand inspection.4. End price tag decisions5. Improve constantly of production and service.6. Institute training.7. Institute leadership.8. Drive out fear.9. Optimize team efforts10. Eliminate slogans, exhortations and targets for the work force.11. Eliminate quotas and MBO12. Remove barriers to pride of workmanship.13. Institute education and retraining.14. Take action to accomplish the transformation.

Point I: Management Commitment The main message that Deming is trying to express under this point features two key

aspects. These are customer obsession and strategic planning. These two ideals converged under this first point to establish the appropriate direction for businesses to focus their attention.

They should concentrate more on pleasing the customers than defeating any of their competitors. Competition will always be present if the business remains successful and manages to stay at the top of production, yet the only way such will be feasible is if they continue to maintain customer satisfaction.


Point II: Adopt a New Philosophy This new philosophy is nothing more than businesses taking the time to notice and prevent

the further production of defective products or services, which in effect will lead to increase profits in the long-term.

Deming summarizes under this point, defects are expensive, unnecessary, and not inevitable.

Point III: Understand Inspection Inspection cannot put quality into a defected product. It can only stop the defected product

from advancing further. When many inspectors are hired to inspect the individual products the problem of passing

defective products to consumers worsens because nearly every inspector assumes to some degree that a minimum inspection of so many products is enough. The usual mindset to a certain extent is that a past inspector should have already found the defect or future inspectors should find it if he or she had missed the mistake

Point IV: End Price Tag Decisions Deming suggests that businesses should minimize their long-term costs rather than

minimize the initial cost Least cost is not necessarily the best cost. Buying form a supplier based on low cost rather

than a quality/cost basis defeats the need for a long-term relationship. Vendor quality can be evaluated with statistical tools.

Point V: Improve constantly of production and service Improving every process concerning planning, production, and service provides better

products for the consumer and higher profits for the business. Search for quality is never ending and results from studying the process itself, not the

defects detected during inspection.

Point VI: Institute Training Deming urges that every level of the system be trained for its specific tasks. The laborer

responsible for performing the manual tasks may misunderstand it, despite how it might seem easily to be understood by the requester in management.

When new employees are hired they should receive total quality management training in groups at the company, departmental, and local level before they begin working alone in order to prevent such misunderstandings

Point VII: Adopting and Instituting leadership Deming rationalized that at the expense of leadership, management had over-expressed

organizational control, thus devoting a majority of their time worrying only about outcomes. He pushes them to concentrate their efforts in improvements by making company visions actual actions of the corporation. Corporate leaders should center their attention on finding the source of any problems and correcting them in the system rather than blaming certain individuals for these inefficiencies

Point VIII: Driving Out Fear Employees need to feel secure in order for quality to be achieved. Fear of asking questions, reporting problems, or making suggestions will prevent the

desired climate of openness.


Point IX: Optimize team efforts The employees from each level of the corporation must work well with the other levels in

order for the company to function at its best potential. This includes understanding the problems among the various branches of the business at each level. Only after a high level of awareness and commitment exists between them can change initially develop because cooperation requires this earnest fundamental transition.

When managers share information with employees, they recognize that a complication exists that inhibits employees from providing statements, presenting opinions or ideas, and asking questions in large group settings. Once realized, the managerial staff can prompt the specific brand of trust and interest needed by the certain group of individuals to promote an honest exchange of ideas between levels without these barriers of communication.

Point X: Eliminating Slogans, Exhortations, and Targets for the Workforce A pointless sign hanging throughout the company in an attempt to promote corporate

objectives is useless to employees and a waste of money to the business. Providing employees with company policies and purposes is essential but doing so in a tactful manner in memos and letters is less insulting and ignored than are the tacky posters dispersed throughout the organization in no particular order (Anschutz, 1995, p. 25).

Presenting such necessary information in the latter manner only proves failure of the management to express company goals and objectives adequately and professionally, thus using signs to speak to employees rather than by personal confrontations (Anschutz, 1995, p. 30).

Point XI: Eliminating Quotas and MBO Eliminating numerical quotas for the staff and numerical goals for the management increase

quality because each employee is no longer based on the statistical average worker but on their own performance without comparative judgments making it easier for management to advance individuals who work to the highest potential. This in effect encourages the actual above-average half especially to work to their full potential at all times rather than merely work to meet the proposed numerical objective before halting their efforts or working slower than is necessary to prevent reaching the set number before the desired time (Drummond, 1992, p. 35).

Point XII: Remove Barriers to Pride of Workmanship Abolishing annual performance appraisals promotes self worth and pride in employees

because it creates improved ways for individuals to receive increases in pay. Instead of basing the pay increase on achieved results without taking into account the possible barriers outside the control of the employees or overseeing their work, the increase is solely based on how much it would cost to hire a new employee with the same skills to replace the position.

Handling pay increases in this manner prevents unneeded competition between workers and promotes teamwork since all will reap the benefit of the increase rather than a few favorites In addition, by eliminating the annual rating or merit system, tension is relieved creating room for pride in workmanship, which contributes to further improvements.

Point XIII: Encouraging education and Self-improvement Deming advises that businesses should promote the institution of vigorous programs of

education and self-improvement for every employee at all levels.


Employees who have a career within a certain corporation are more than likely to change positions due to newly created jobs or the decline of out-of-date ones rather than changing to gain an increase in pay. This is the main reason why there will presumably always remain a need for educating employees.

As employees advance in knowledge both within and outside the criteria of their jobs, they gain satisfaction in this opportunity, which adds increased self worth and dignity that in effect brings forth improvements in them and the company as well.

Point XIV: Taking Action to Accomplish the Transformation It basically sets forth the motivation to implement the previous thirteen points with vital

patience. He emphasizes that change takes time, but its long-term outcomes are worth the initial costs and wait.

An organization that wants to establish a culture based on quality needs to emphasize the preceding 13 points on a daily basis.

This usually requires a transformation in management style and structure.

Deming’s Seven Deadly Diseases Lack of consistency of purpose

A company that is without constancy of purpose has no long – range plans for staying in business. Management is insecure, and so are employees.

Emphasis on short-term profits Looking to increase the quarterly dividend undermines quality and productivity.

Evaluation by performance, merit rating or annual review of performance The effects of these are devastating – teamwork is destroyed, rivalry is nurtured. Performance rating build fear and leave people bitter, despondent and beaten. They

also encourage defection in the ranks of management. Mobility of Management

Job hopping managers never understand the companies they work for and are never long enough to follow through on long-term changes that are necessary for quality and productivity.

Running a company on visible figures alone The most important figures are unknown and unknowable – the “multiplier” effect of a

happy customer, for example. Excessive medical cost for employee health care, which increase the final costs of goods and

services. Reduce Cost on tests and treatments on medical expenses of employees.

Excessive costs of warranty, fueled by lawyers who work on the basis of contingency fees.

Deming’s Obstacles

“Hope for instant pudding” the idea that “improvement of quality and productivity is accomplished suddenly by

affirmation of faith” “Search for examples”

Which companies undertake to find a ready-made recipe they can follow when they must instead map their own route to quality?

“Our Problems are different” The pretext managers rise to avoid dealing with quality issues.


“Our quality control department takes care of all our problems for quality” Another excuse managers use to avoid taking responsibility.

“We would installed quality control” yet another excuse that lets top management off the hook

“The supposition that is only necessary to meet specifications” Not only may products meet specifications yet vary in quality, but in addition, “the

supposition that everything is all right inside the specifications and all wrong outside does not correspond to this world.

DEMING’S MISCELLANEOUS PRINCIPLES The 85-15 Rule:

The 85 – 15 rules holds that 85 percent of what goes wrong is with the system, and only 15 percent with the individual person or thing. In this connection, we do well to remember that in any group of people, not all, nor even the majority, can be above average. In fact, exactly half will be below average.

Know Thy Customer:In quality-minded organizations, the word “customer” describes more than a relationship in which money merely changes hands. It describes the exchange of services as well. For any given enterprise, there are two sets of customers, external and internal. The external customer is the end user of a product or service. The internal customer is the person or work unit that receives the product or the service of another within the same company.

Too often one department does not understand how its work is used by the next, and thus cannot learn what things are important in carrying out its tasks. The notion of internal customers lends relevance to each employee’s job and is absolutely critical to quality transformation.

CROSBY’S PHILOSOPHY: THE 14 POINTS:The essence of Crosby’s quality philosophy is embodied in what he calls the Absolutes of

Quality Management and the Basic elements of Improvement.

Quality means conformance to requirements not elegance. Quality is simply the feeling of “excellence”. Requirements must be clearly stated so that they cannot be misunderstood.

There is no such thing as a quality problem. Problems must be identified by the individuals or departments that cause them. The quality departments should measure conformance, report results, and lead the

drive to develop a positive attitude toward quality improvement. There is no such thing as the economics of quality: it is always cheaper to do the right job the

first time. Quality is free. What costs money are all the actions that involve not doing jobs right

the first time. Similar to Deming’s Chain of Reaction message.

The only performance measurement is the cost of quality. The cost of quality is the expense of nonconformance.


Quality cost data are useful in calling problems to management’s attention, selecting opportunities for corrective action, and tracking quality improvement over time.

The only performance standard is Zero Defects. A performance standard of the craftsperson regardless of his or her assignment…

The theme of ZD is do it right the first time. Concentrating on preventing defects rather than just finding and fixing them.

Crosby’s Basic Elements of Improvements:1. Determination – Top management must be serious about quality improvement.2. Education – absolutes should be understood by everyone only through proper training &

education.3. Implementation – Every member of the team must understand the implementation process.

THE JURAN’S PHILOSOPHY:

Juran defines quality as “fitness for use”. This is broken down into four categories: Quality of Design -focuses on market research, product concept, and design

specifications Quality of Conformance- includes technology, manpower and management Availability - focuses on reliability, maintainability, and logistical support. Field service - comprises of promptness, competence, and integrity.

JURAN’S TEN STEPS TO QUALITY IMPROVEMENT:1. Build awareness of opportunities to improve.2. set goals for improvement3. Organize to reach goals.4. Provide Training5. Carry out projects to solve problems6. Report Progress7. give recognition8. communicate results9. keep score10. Maintain momentum by making annual improvement part of the regular systems and

processes of the company

FRAMEWORKS FOR QUALITY AND PERFORMANCE EXCELLENCETwo most prominent frameworks for quality that have had world-wide influence:

The Malcolm Baldrige standard provides an internationally comparable framework and criteria for assessing organizational performance. It is a template for competitiveness based on the principles of Total Quality Management.

ISO 9000:2000

The Malcolm Baldrige standard: Standard Dimensions:


• APPROACH: The methods (policies, procedures, processes) used to address the requirements of the operations.

• DEPLOYMENT: Extent (number of users and consistency of use) to which the approach is used by all appropriate work units.

• RESULTS: The outcomes (trends, measures, KPIs) of the organization’s approach and deployment.

The Malcolm Baldrige standard

Categories and Items Point Values1. Leadership 1202. Strategic Planning 853. Customer and Market Focus 854. Measurement, Analysis, and Knowledge Management 905. Human Resource Focus 856. Process Management 857. Business Results 450

TOTAL POINTS 1000

Figure 2.2 The Malcolm Baldrige Standard

CRITERIA FOR PERFORMANCE EXCELLENCE Designed to encourage companies to enhance their competitiveness through an aligned

approach to organizational performance management that results in:1. Delivery of ever-improving value to customers, contributing to market place

success.2. Improvement of overall company performance capabilities3. Organizational and personal learning.

The seven categories are:1. Leadership – examines how an organization’s leaders address values, direction, and

performance expectations, as well as their focus on customers and other stakeholders, empowerment, innovation, and learning.

2. Strategic planning – examine how the organization develops strategic objectives and action plans.

3. Customer and market focus – examines how an organization determines requirements, expectations, and preferences of customers and markets.

4. Information and analysis – examines and organization’s information management and performance measurement systems and how the organization analyzes performance data and ensures hardware and software quality.


5. Human resource focus – examines how an organization motivates and enables employees to develop and utilize their full potential in alignment with the organization’s overall objectives and action plans.

6. Process management – examines the key aspects of an organization’s process management including customer-focused design, product and service delivery, key business, and support processes.

7. Business results – examines and organization’s performance and improvement in key business areas – customer satisfaction, product and service performance, financial and marketplace performance, human resource results, and operational performance. Also examined are performance levels relative to those of competitors.

Figure 2.3 MALCOLM BALDRIGE NATIONAL QUALITY AWARD CRITERIA FRAMEWORK

A Systems Perspective Framework


ISO 9000:2000 Terms such as quality management, quality control, quality system, and quality assurance

acquired different, and sometimes conflicting meanings from country to country, within a country, and even within an industry.

ISO 9000 is a family of standards for quality management systems. ISO 9000 is maintained by ISO, the International Organization for Standardization and is administered by accreditation and certification bodies. Some of the requirements in ISO 9001 (which is one of the standards in the ISO 9000 family) would include:

a) a set of procedures that cover all key processes in the business; b) monitoring processes to ensure they are effective; c) keeping adequate records; d) checking output for defects, with appropriate corrective action where necessary; e) regularly reviewing individual processes and the quality system itself for effectiveness;

and f) facilitating continual improvement

A company or organization that has been independently audited and certified to be in conformance with ISO 9001 may publicly state that it is "ISO 9001 certified" or "ISO 9001 registered." Certification to an ISO 9000 standard does not guarantee the compliance (and therefore the quality) of end products and services; rather, it certifies that consistent business processes are being applied.

History of ISO 9000

Pre ISO 9000

During WWII, there were quality problems in many British high-tech industries such as munitions, where bombs were exploding in factories during assembly. The adopted solution was to require factories to document their manufacturing procedures and to prove by record-keeping that the procedures were being followed. The name of the standard was BS 5750, and it was known as a management standard because it did not specify what to manufacture, but how to manage the manufacturing process. According to Seddon, "In 1987, the British Government persuaded the International Organization for Standardization to adopt BS 5750 as an international standard. BS 5750 became ISO 9000."

1987 versionISO 9000:1987 had the same structure as the UK Standard BS 5750, with three 'models' for

quality management systems, the selection of which was based on the scope of activities of the organization:

ISO 9001:1987 Model for quality assurance in design, development, production, installation, and servicing was for companies and organizations whose activities included the creation of new products.

ISO 9002:1987 Model for quality assurance in production, installation, and servicing had basically the same material as ISO 9001 but without covering the creation of new products.

ISO 9003:1987 Model for quality assurance in final inspection and test covered only the final inspection of finished product, with no concern for how the product was produced.


ISO 9000:1987 was also influenced by existing U.S. and other Defense Standards ("MIL SPECS"), and so was well-suited to manufacturing. The emphasis tended to be placed on conformance with procedures rather than the overall process of management — which was likely the actual intent.

1994 version ISO 9000:1994 emphasized quality assurance via preventative actions, instead of just

checking final product, and continued to require evidence of compliance with documented procedures. As with the first edition, the down-side was that companies tended to implement its requirements by creating shelf-loads of procedure manuals, and becoming burdened with an ISO bureaucracy. In some companies, adapting and improving processes could actually be impeded by the quality system.

2000 version ISO 9001:2000 combines the three standards 9001, 9002, and 9003 into one, now called

9001. Design and development procedures are required only if a company does in fact engage in

the creation of new products. The 2000 version sought to make a radical change in thinking by actually placing the

concept of process management front and centre. ("Process management" was the monitoring and optimizing of a company's tasks and activities, instead of just inspecting the final product.)

The 2000 version also demands involvement by upper executives, in order to integrate quality into the business system and avoid delegation of quality functions to junior administrators. Another goal is to improve effectiveness via process performance metrics — numerical measurement of the effectiveness of tasks and activities. Expectations of continual process improvement and tracking customer satisfaction were made explicit.

Future Version: 2008 TC 176, the ISO 9001 technical committee, has started its review on the next version of ISO

9001, which will in all likelihood be termed the ISO 9001:2008 standard, assuming its planned release date of 2008 is met. Early reports are that the standard will not be substantially changed from its 2000 version.

As with the release of previous versions, organizations registered to ISO 9001 will be given a substantial period to transition to the new version of the standard, assuming changes are needed; organizations registered to 9001:1994 had until December of 2003 to undergo upgrade audits.

CertificationISO does not itself certify organizations. Many countries have formed accreditation bodies

to authorize certification bodies, which audit organizations applying for ISO 9001 compliance certification. Although commonly referred to as ISO 9000:2000 certifications, the actual standard to which an organization's quality management can be certified is ISO 9001:2000. Both the accreditation bodies and the certification bodies charge fees for their services. The various accreditation bodies have mutual agreements with each other to ensure that certificates issued by one of the Accredited Certification Bodies (CB) are accepted world-wide.

The applying organization is assessed based on an extensive sample of its sites, functions, products, services and processes; a list of problems ("action requests" or "non-compliances") is


made known to the management. If there are no major problems on this list, the certification body will issue an ISO 9001 certificate for each geographical site it has visited, once it receives a satisfactory improvement plan from the management showing how any problems will be resolved.

An ISO certificate is not a once-and-for-all award, but must be renewed at regular intervals recommended by the certification body, usually around three years. In contrast to the Capability Maturity Model there are no grades of competence within ISO 9001.

Advantages It is widely acknowledged that proper quality management improves business, often having

a positive effect on investment, market share, sales growth, sales margins, competitive advantage, and avoidance of litigation.

The quality principles in ISO 9000:2000 are also sound, according to Wade, and Barnes, who says "ISO 9000 guidelines provide a comprehensive model for quality management systems that can make any company competitive." Barnes also cites a survey by Lloyd's Register Quality Assurance that indicated ISO 9000 increased net profit, and another by Deloitte-Touché that reported that the costs of registration were recovered in three years. According to the Providence Business News [7], implementing ISO often gives the following advantages:

1. Create a more efficient, effective operation 2. Increase customer satisfaction and retention 3. Reduce audits 4. Enhance marketing 5. Improve employee motivation, awareness, and morale 6. Promote international trade

Exercise NO. _____Approaches to Total Quality



Case 2.1The Reservation Clerk

Mary Matthews works for an airline as a reservation clerk. Her duties include answering

the telephone, making reservations, and providing information to customers. Her supervisor told

her to be courteous and not to rush callers. However, the supervisor also told her that she must

answer 25 calls per hour so that the department’s account manager can prepare an adequate

budget. Mary comes home each day frustrated because the computer is slow in delivering

information that she needs, and sometimes reports no information. Without information from the

computer, she is forced to use printed directories and guides.

Discussion Questions:

1. What is Mary’s job? What might Deming say about this situation?2. Drawing upon Deming’s principle, outline a plan to improve this situation.

CHAPTER 3 TOTAL QUALITY TOOLS AND STATISTICAL THINKING

Joseph Juran describes quality management as the “Quality Trilogy”: planning, control, and improvement. He says that most managers devote too much attention to control, and too little to


planning and improvement - which may be the most important activities for meeting and exceeding customer expectations and gaining competitive advantage.

Two groups of tools in quality management:1. Tools for planning

Quality function deployment, concurrent engineering, and the “new seven” management and planning tools – that are design to assist managers in planning the quality effort and making efficient use of information.

2. Tools for continuous improvement Includes Deming Cycle, tools for data analysis, poka – yoke (mistake proofing), and

bench marking. Use to improve the manufacturing and service systems Deming cycle and basic statistical tools are usually found in basic quality training for all

employees of an organization and are used by problem – solving teams to attack specific quality problems.

QUALITY TOOLS IN QUALITY IMPROVEMENT

Quality function deployment» Used to measure that customer’s requirements are met throughout the product design

process and in the design and operation of production system» Originated in 1972 at Mitsubishi’s Kobe shipyard site which represents the overall concept

that provides a means of translating customer requirements into the appropriate technical requirements for each stage of product development and production

» Represents customer requirements – referred to as the “the voice of the customer”. These are the collection of customer needs, including satisfiers, delighters, exciters, and dissatisfiers – the “what’s” that customers want from a product.

» Sometimes referred to as customer attributes.

THE NEW SEVEN MANAGEMENT AND PLANNING TOOLS

1. Affinity diagram/KJ method Gathering and organizing a large number of ideas, opinions, and facts relating to a board

problem or subject area. Enables problem solvers to sift through large volumes of information efficiently and to

identify natural patterns or groupings in the information. E.g., determining the elements of quality cost, the group will list various elements in a

random fashion. Once many ideas have been generated, they can be grouped according to their affinity or relationship, to each other.

2. Tree diagram Maps out the paths and tasks that need to be accomplished to complete a specific project or

to reach a specified goal. The planner uses this technique to seek answers to such questions as “What sequence of

tasks needs to be completed to address the issue?” or “What are all of the factors that contribute to the existence of the key problem?”


3. Interrelationship diagrams Map out logical or sequential links among related categories. It shows that every idea can

be logically linked with more than one idea at a time, and allows for “lateral” rather than “linear” thinking.

4. Matrix diagram These are spreadsheets that graphically display relationships between characteristics,

functions and tasks in such way as to provide logical connecting points between each item.

5. Matrix data analysis Takes data from matrix diagrams and seeks to arrange it quantitatively to display the

strength of relationships among variables so that they can be understood. Based on “factor analysis” technique or prioritization matrix that is easier to understand.

6. Process decision program chart Method for mapping out every conceivable event and contingency that can occur when

moving from a problem statement to possible solutions. It is used to plan for each possible chain of events that could occur when a problem or goal

is unfamiliar.

7. Arrow diagrams Used by construction planners in the form of CPM or PERT project planning process. PERT/CPM for Program Evaluation and Review Technique. CPM stands for Critical Path

Method. The two systems, although developed separately, have many similar features and today are blended together by most people.

A project consists of tens, hundreds or thousands of individual steps. Many are dependent on other steps, some are independent. Charting the flow of the project with a PERT/CPM diagram allows the manager to graphically see the relationships of the elements, one to another. It shows which steps are critical to the successful completion of the project in order that it remain on schedule. Grouping of several steps or tasks yield sub projects which may need additional care and supervision.

PERT diagrams contain only one start and one end. All activity at an event must wait until all succulents’ activity is complete. If activity can be started prior, it represents a separate succulent.

TOOLS FOR CONTINUOUS IMPROVEMENT

Flow Chart A flow chart is a diagram showing the travel and interaction with people that work entails. A flow chart is different than a decision chart. While decisions may be shown on a flow chart the

purpose is to show changes in direction of work. A flow chart documents the process, shows who is responsible for each step, and who the

internal/external customer is. Boxes, diamonds and lines are used to show work flow.


Commonly Used Symbols in Detailed Flowcharts

One step in the process; the step is written inside the box. Usually, only one arrow goes out of the box.

Direction of flow from one step or decision to another.

Decision based on a question. The question is written in the diamond. More than one arrow goes out of the diamond, each one showing the direction the process takes for a given answer to the question. (Often the answers are “ yes” and “ no.”)

Delay or wait

Link to another page or another flowchart. The same symbol on the other page indicates that the flow continues there.

Input or output

Document

Alternate symbols for start and end points

Scatter Diagrams Scatter diagrams help us see causal relationships. The diagram usually is limited to two variables,

one independent and one dependent variable. An example may help demonstrate the use of a scatter diagram. Consider a production line where plastic spoons are manufactured. Orders increased recently and production added overtime hours each week to meet demand. Unfortunately, defects increased as well. Examine the data below and the diagram. What do you think?

Useful tool to establish a potential relationship between two factors, e.g. speed of delivery and the number of complaints.


CONTROL CHARTS Shows visually whether a product or activity is within normal specifications. One a process is

operating in a controlled way; random samples are taken to monitor it for a changed output.

PARETO CHART• States that 80% of results are caused by 20% of causes.• Can be used to focus on the few (20%) causes that are responsible for the majority (80%) of the

quality problems.


RUN CHARTS• A running tally of data points over a specific time reference.• Used to find critical times or periods when various problems are prone to occur. • For example, some problems may occur on Mondays or Fridays (Friday car syndrome) or at

certain specific times of the day.

HISTOGRAMS• A commonly used graph. • The number of products in each control category is displayed using a bar. By placing the

bars next to each other, comparisons can easily be shown.

CAUSE AND EFFECT DIAGRAMS Known as fishbone or Ishikawa diagram, named after the Japanese quality expert who

popularized the concept. Constructed in a brainstorming setting; requires significant interaction among group

members. The facilitator must listen carefully to the participants and capture the important ideas.


THE DEMING CYCLE

Description

The plan–do–check–act cycle (Figure 1) is a four-step model for carrying out change. Just as a circle has no end, the PDCA cycle should be repeated again and again for continuous improvement.

The PDSA Cycle:The Plan-Do-Study-Act cycle is referred to as the Deming cycle by the Japanese. The cycle represents work on processes rather than specific tasks.

• Plan: Identify an opportunity and plan for change. • Do: Implement the change on a small scale. • Check: Use data to analyze the results of the change and determine whether it made a

difference. • Act: If the change was successful, implement it on a wider scale and continuously assess your

results. If the change did not work, begin the cycle again.

•

The Deming cycle is a methodology for improvement, based on the premise that improvement comes from the application of knowledge.

Knowledge of engineering, management, or operations may make a process easier, more accurate, faster, less costly, safer or better suited to customer needs.


POKA –YOKE (MISTAKE PROOFING) An approach for mistake-proofing processes using automatic devices or methods to avoid simple

human error. Developed and refined by the late Shigeo Shingo, a Japanese manufacturing engineer who

developed the Toyota production system. Two aspects:

o Prediction, or recognizing that a defect is about to occur and providing a warning.o Detection, or recognizing that a defect has occurred and stopping the process.

Poka – yoke techniques are also applied to the design of consumer products to prevent in adherent user errors to safety hazards.

CREATIVITY AND INNOVATION Creativity is the ability to discover useful new relationships or ideas Innovation refers to the practical implementation of such ideas. Creativity is the foundation of successful problem-solving teams in the workplace. Quality circles

and other forms of teams that address quality and productivity problems often use a “scientific” approached to solving problems.

Four key steps: Creative approaches to problem solving:1. Redefining and analyzing the perceived problem2. Generating ideas3. Evaluating ideas and selecting a workable solution, and4. Implementing the solution.

CREATIVITY AND ORGANIZATIONAL SYSTEMS “There are two ways of being creative. One can sing and dance. Or one can create an

environment in which singers and dancers flourish.” (Warren Bennis) Fostering creativity in an organization:

1. Remove or reduce obstacles to creativity within an organization2. Match jobs to individuals’ creative abilities3. Tolerate failures and establish direction4. Improve motivation to increase productivity and solve problems creatively5. Enhance self esteem and build the confidence of organizational members.6. Improve communication so that ideas can be better shared.7. Place highly creative people in special jobs and provide training to take advantage of

their creativity.

STATISTICAL THINKING Statistical thinking is at the heart of the Deming philosophy and is the basis for good

management. Statistical thinking is a philosophy of learning and action based on the principles that:

1. All work occurs in a system of interconnected processes2. Variation exists in all processes, and3. Understanding and reducing variation are keys to success.


Exercise NO. _____Total Quality Tools and Statistical Thinking

Name _____________________________ Course & Year __________ Subject time/Day _________ Date: _____________ Instructor_______________ Score ____________________________________

THE HMO PHARMACY CRISIS

John Dover just completed an intensive course, “Statistical Thinking for Continuous Improvement,” that was offered to all employees of a large health maintenance organization (HMO). There was no time to celebrate, however, because he was already under a lot of pressure. Dover worked as a pharmacy assistant in the HMO’S pharmacy, and his manager, Juan de Pacotilla, was about to be fired. Pacotilla’s dismissal appeared imminent because of numerous complaints – and even a few lawsuits – over inaccurate prescriptions. Pacotilla now was asking Dover for his assistance in trying to resolve the problem.

“John, I really need your help,” said Pacotilla. “If I can’t show some major improvement or at least a solid plan by next month, I’m history.”

“I’ll be glad to help,” replied Dover, “but what can I do? I’m just a pharmacy assistant.”“Your job title isn’t important. I think you’re just the person who can get this done,” said Pacotilla. “I

realize that I’ve been too far removed from day-to-day operations in the pharmacy, but you work there every


day. You’re in a much better position to find out how to fix the problem. Just tell me what to do, and I’ll do it”.

“But what about the statistical consultant you hired to analyze the data\a on inaccurate prescriptions?” asked Dover.

“To be honest, I’m really disappointed with that guy. He has spent two weeks trying to come up with a new modeling approach to predict the mistakes, I want to eliminate them. I don’t think I got through, however, because he said we need a month of additional data to verify the model before he can apply a new method he just read about in a journal to identify ‘change points in the time series,’ whatever that means. But get this, he will only identify the change points and send me a list. He says it’s my job to figure out what they mean and how to respond. I don’t know much about statistics. The only thing I remember form my course in college is that it was the worst course I ever took. I’m becoming convinced that statistics really doesn’t have much to offer in solving real problems. Since you’ve just gone through the statistical thinking course, maybe you can see something I can’t. I realize it’s a long shot, but I was hoping you could use this as the project you need to officially complete the course.”

“I used to feel the same way about statistics, too,” replied Dover. “But the statistical thinking course was interesting because it didn’t focus on crunching numbers. I have some ideas about how we can approach making improvements in prescription accuracy. I think it would be a great project. But we might not be able to solve this problem ourselves. As you know, there is a lot of finger pointing going on. Pharmacists blame the doctors’ sloppy handwriting and incomplete instructions for the problem. Doctors blame the pharmacy assistants, who do most of the computer entry of the prescriptions, claiming that they are incompetent. Pharmacy assistants blame the pharmacists for assuming too much about their knowledge of medical terminology, brand names, known drug interactions, and so on.”

“it sounds like there’s no hope,” said Pacotilla.“I wouldn’t say that at all,” replied Dover. “It’s just that there might be no quick fix we can do by

ourselves in the pharmacy. Let me explain what I’m thinking about doing and how I would propose attacking the problem using what I just learned in the statistical thinking course.”

Discussion Questions:1. How do you think John should approach this problem, using what he has just learned? Assume that

he really did pick up a solid understanding of the concepts and tools of statistical thinking in the course.

PART 2


TOTAL QUALITY AND ORGANIZATION

THEORY

CHAPTER 4 QUALITY IN CUSTOMER – SUPPLIER RELATIONS

“The customer is the most important part of the production line.”

W. Edwards Deming (1900 - 1993)

OBJECTIVES:Developing strong and positive relationships with customers and suppliers within the supply chain is a basic principle of total quality. This chapter will:


Demonstrate the importance of customer – supplier relationships to achieving total quality; Identify the principles and practices of quality customer-supplier relationships; and Compare the TQ approach to customers and suppliers to conventional organizational theories.

In Japanese the same word – okyaksama – means both “customer” and “honorable guest”. World – class organizations are obsessed with meeting and exceeding customer expectations.

CUSTOMER – SUPPLIER RELATIONSHIPS AND TOTAL QUALITY Develop partnerships: customers and suppliers can build relationships that will help them satisfy

their shared customers further along the customer – supplier chain.

Importance of customers: In view of customer as a buyer to increase profitability, to a view of the customer as an active

partner and the focus of all quality activities. Customer satisfaction translates directly into increase profits, thereby achieving strong

profitability and market share requires loyal customers – those who stay with a company and make positive referrals.

Quality is judge by customers. Thus, quality must take into account all product and service features and characteristics that contribute value to customers and lead to customer satisfaction, preference and retention.

Poor quality leads to customer dissatisfaction.

Importance of suppliers: Suppliers are those companies that provide the organization with goods and services that help

them to satisfy the needs of their own customers. If a suppliers performance is of consistently high quality, its customer can decrease or eliminate

costly incoming inspections that add no value to the products. Suppliers are viewed as partners with customers, because there usually is a codependent

relationship.

THE CUSTOMER SERVICE ATTRIBUTES

The delivery of the service must be timely, accurate, with concern, and with courtesy. All services are intangible and are a function of perception. They depend on interpretation. By definition, service is perishable; it can backfire on the organization. This relates to the

acronym COMFORT.

C – CARINGO - OBERVANTM - MINDFULF - FRIENDLY


O - OBLIGINGR - RESPONSIBLET – TACT

PRINCIPLES FOR CUSTOMER-SUPPLIER RELATIONSHIPS: Three governing principles describe CSRs under total quality:

Recognition of the strategic importance of customers and suppliers. Development of win-win relationship between customers and suppliers and; Establishing relationships based on trust.

Figure 4.1Customer-supplier relationship

PRINCIPLE 1: RECOGNITION OF STRATEGIC IMPORTANCE OF CUSTOMERS & SUPPLIERS: Every organization must recognize that its customers and suppliers are absolutely crucial to its

success. Customers must be at the center of the organizational universe. Satisfying their needs leads to

repeat business and positive referrals, as opposed to one – shot business and negative referrals. Suppliers must also be considered crucial to organizational success, because they make it

possible to create customer satisfaction.

PRINCIPLE 2: DEVELOP WIN-WIN RELATIONSHIP: Working together to increase the size of the pie, rather than competing over how to divide it. The goal of building partnerships with customers and suppliers can be seen as an extension of

the teamwork principle that applies to all TQ activities. Fosters spirit of continuous improvement, in which larger customers often help smaller suppliers

develop their quality management system and process capabilities.

PRINCIPLE 3: ESTABLISH RELATIONS BASED ON TRUST: This point is described by Juran as the “pattern of collaboration”.


Trust is not a blind leap into the unknown; it is developed over time “through a pattern of success by all parties to fully and faithfully deliver that which was promised.

PRACTICES FOR DEALING WITH CUSTOMERS:1. Collect information constantly on customer expectations2. To disseminate this information widely within the organization, and3. To use this information to design, produce and deliver the organization’s products and services.

Collect Customer information Acquiring customer information is critical to understanding customer needs and indentifying

opportunities for improvement. Getting employees involved in collecting customer information improves worker skills and

learning, makes work more meaningful, and enhances motivation. Monitoring customer needs and wants using the process called the voice of the customer. A more formal approach to collect customer information to getting into customers’ minds is

called imprint analysis. Imprint refers to the collection of associations and emotions unconsciously linked to a word, concept, or experience. The stronger the emotions, the stronger the imprint.

Disseminate Customer information After all information is gathered about the customer needs, the next step is to broadcast this

information within the organization. Customer information must be translated into the features of the organization’s products and

services. The bottom line of quality customer – supplier relations from the supplier’s point of view: giving the customers what they want.

Translating customer needs into product features can be done in a structured manner using quality function deployment (QFD) which allows people to see how aspects of their products and services relate to customer satisfaction, and to make informed decisions about how their products should be improved. The overall process of using information from customers to provide quality products is summarized in figure 4.2.

Customer needs and expectations (Expected quality)

Identification of customer needs

FeedbackTranslation into product/service specifications

(Design quality)

Output


(Actual quality)

Customer perceptions (Perceived quality)

Figure 4.2 customer-driven quality cycle

Use Customer information Customer feedback should be integrated into continuous improvement activities. For example,

by listening to customers suggestions, e-mails and so on.

Manage customer relationships Builds customer loyalty by developing trust and effectively managing the interactions and

relationships with customers through customer – contact employees. In services, customer satisfaction or dissatisfaction takes place during moments of truth – every

instance in which a customer comes in contact with an employee of the company. Moments of truth may be direct contacts with customer’s representatives or service personnel, or when customers read letters, invoices or other company correspondence.

Service standards are measurable performance levels of expectations that define the quality of customer contact. Survive standards might include standards such as response time, or behavioral standards.

Don’t ignore internal customers Internal customers contribute to the company’s mission and depend on the departments’ or

functions’ products or services to ultimately serve consumers and external customers. Each employee receives inputs from others and produces some output to internal customers. The linkages among internal customers build up the “chain of customers and suppliers”,

throughout the company that connect every individual and function to the external customers and consumers.

What customers want

Delivering customer service begins with understanding what customers want. And this understanding begins with the understanding that they do not always know what they want, or why they want it. Traditional market research assumes that they do.1 Regardless of how they arrived at their findings, most researchers agree on the factors listed in Table 2 What customers want. Suppliers that meet these requirements are likely to give their customers a satisfactory experience.

1


http://articles.gourt.com/en/market%20research

http://articles.gourt.com/en/customers

FIGURE 1 What Customer WantsSource: Mason, Sean. Core Values Exercise. United Communication Unlimited. [http://www.ucunlimited.com/

In a

competitive environment, however, satisfaction may not be enough. To stay in business, firms must be

at least as satisfactory as their competitors. Moreover, firms that aim to gain profitable growth must

increase the number of their customers, while reducing the cost of customer acquisition. This is

particularly true of companies that compete in mature industries. The objective then is not merely to

satisfy customers, but to convert them into promoters (customers who recommend a company to

others). Promoters serve to increase a firm’s clientele, without increasing its cost of acquisition – i.e.

with no additional marketing or promotional expense.


Category Description

'''Good People

Friendly, helpful, courteousEmpatheticKnowledgeable, accurate, thoroughResourceful, empoweredAble to recommend solutionsAble to anticipate needsEfficientTrustworthy, authenticReliableResponsibleAppropriate appearance and demeanor

'''Good Offering

Good selectionGood qualityIn stockAvailable demosClear descriptions & pricingCompetitive pricesFinancing, deferred payments

'''Convenience

Convenient locationsLong hoursAvailable help, fast serviceSignage that facilitates self-serviceFast checkoutShipping/deliveryInstallationPhone/web supportOn-site repairHassle-free returnsQuick resolution of problems

'''Good Environment

CleanOrganizedSafeLow-pressureEnergy level appropriate to clientele

http://articles.gourt.com/en/marketing

http://www.ucunlimited.com/cve.html%5D

But customers do not make recommendations lightly. When they make a recommendation, they

put their own reputations on the line. Firms must earn that recommendation through the consistent

delivery of outstanding customer service.2

Benefits of customer service

To take full advantage of their employees’ skills as a key competitive weapon, managers must

have a “people perspective”. Organizations whose managers succeed in practicing effective people skills

as they carry out their primary business functions are most likely to engender satisfied employees and

repeat customers – both of which are essential to sustaining a competitive advantage into the 21 st

century.3 Table 6 shows the benefit of customer service.

Beneficiary Benefit

Providers

Higher income (more sales, repeat business, referred business)

Recognition

Personal satisfaction & fulfillment

Less stress

Higher self-awareness and self-control

Greater authenticity

Happier life at work

Stronger social networks, family ties

Happier life outside work

Organizations Quality sales (more add-ons, more service sales)

More repeat business

More referred business

Fewer returns

Better reputation

Higher morale, happier employees

Lower employee turnover

Higher caliber of job applicants

2 Mason, Sean. Core Values Exercise. United Communication Unlimited. [http://www.ucunlimited.com/3 Frank M. Go. Et.al. Human Resource Management in the Hospitality Industry. John Wiley & Sons, Inc. c1996. p3.




Fewer complaints

Higher productivity

Better work environment

Higher inventory turnover

Higher profits

FIGURE 2 Benefit of Customer Service

Adding Value to Service

The competitive success of any hospitality and tourism organization depends largely on its capacity to

deliver high quality, value – added service, which, in turn, is dependent on the performance of the

organization’s people. How people perceive value is a function of their expectations and needs in

combination with the product’s or service’s quality and price. Because perceived value provides a

mechanism for discriminating among the services of competing organizations, consumers rely upon it as

a means by which to simplify their purchasing decisions. If for example, a consumer perceives value in a

smoke-free environment, he may be able to simplify his decision regarding where to spend the night by

eliminating from his set of possible choices all hotels that do not offer smoke – free rooms.

The prescriptions for delivering value-added service may seem simple: “To value for customers,

service improvements should be based on what customers perceived as important.”4 Creating value via

service improvements requires teamwork among an organization’s personnel. It often requires training

personnel throughout the organization in the new skills involved in delivering better service.

Delighting Customers

It does not matter how much emphasis is put on delivering good or excellent customer service; what

matters at the end of the day is if people and especially front-line people in an organization have the

feelings, will and commitment to serve the customers in a delightful way. It is said that ninety percent

of unhappy customers do not complain but they do tell at least ten people about their bad experience or

inadequate service.

4 Frank M. Go. Et.al. Human Resource Management in the Hospitality Industry. John Wiley & Sons, Inc. c1996. pp 3-4.


The Reason Customer Service Failed

Gitomer (1998) discussed that why customer service goes wrong. What happen to unsatisfied

customer? We can find out it from a variety of reliable research.

91% customers who leave with angry feeling will never return to your business

96% won’t tell you the real reason they left

80% will do business with you again if their problem is handled quickly, and to their complete

satisfaction.

When the incident is real bad and they leave, stories about what happened will be retold for

year. Also, here are the several basic reasons service is bad, which Gitomer (1998) mentioned,

• Failure to start friendly- Give what you want to receive. The first few words set the tone for

the entire dialog. The single most important brick in the foundation of customer service is

"Friendly." It is also the least consistent element of the experience.

• Failure to say it in a way that the customer wants to hear it - The first tendency of the front-

line person is to make an excuse or tell why something occurred. But that’s the last thing the

customer wants to hear. Customers want answers started in terms of them and their needs. And

that is rare or missing from front-line communication.

• Companies allow employees to be rude to customers and tell customers “No.”- When you

deny a customer, their need still exists and they are mad. Then you add to the fire by saying,

“Don’t talk to me like that, sir.” Or “I don’t have to take this.” A complaining customer is seen as

a “hassle” rather than an opportunity.

• We are living in an era of responsibility shirkers and blamers – People do not want to take

responsibility. “It is not my job” is their credo. Responsibility takers are so rare that they often

receive awards.

• Low training budget priority. – Big companies spend more money producing and airing one

sixty-second commercial than they will spend on a customer service program in a year. They

spend more money on “lip” service than “customer” service.

• Companies make the fatal mistake of only providing “company training” and “policy training.”-

They may provide some “customer” training, but very few offer any “personal development”

training such as positive attitude, goals, listening, responsibility, pride, or communication skills.

This is especially fatal for front-line people.

• Companies only train once in a while instead of every day. - Fifteen to thirty minutes of

training a day will make any employee a world-class expert in five years.


Concepts of Customer Perception and Expectation

Perceptions are frequently developed over a period and reflect the ways that we have been treated, our values, priorities, prejudices and sensitivity to others. Two people could share with same experience and then describe it differently. Unfortunately, perceptions are not necessarily based on rational ideas and may be influenced by momentary frustration and anger. It is important for the customer service staffs to anticipate customer resistance based on the customers’ prior interactions and always to work at providing customers with excellent service, so that their most current perception is a positive one. Customers may not remember every detail of an experience, but they will retain an overall feeling about it. That “feeling,” in combination with other experiences, will create their perception of company. It is hard to erase customers’ negative perceptions that are based on their prior interactions, but what customer service staffs can do is to show them, through their genuine action, that their perception is not accurate.

In addition, Harris (2000) explained expectations are our personal vision of the result that will come from our experience. Expectations may be positive or negative. Expectations are usually based on our perceptions. If customer’ last experience with a company was negative, he may approach a new situation with the expectation that he will again be dissatisfied.

Expectations can be divided into two distinct categories: primary expectations and secondary expectations. Primary expectations are the customers’ most basic requirements of an interaction. For example, when staying at the hotel, customers’ primary expectations are to clean room, excise room and amenities, to someone else clean the room, and pay a reasonable price. Secondary expectations are expectations based on customers’ previous experiences and represent enhancements to their primary expectations. That is to say, when staying at the hotel, their secondary expectations include good service, courtesy, prompt service and good, tasty food. Consequently, guest experienced bad customer service in hotel; he will not expect to get good service again and may not return to same hotel.

Factors influencing expectations from Zeithaml, Parasuraman and Berry’s (1990) focus group result are:

First, what customers hear from other customers-word-of-mouth communications is a potential determinant of expectations. For instance from focus-group findings, several respondents in product-repair focus groups indicated that the high quality of service they expected from the repair firms they chose stemmed from the recommendations of their friends, neighbors and associates. In addition, Gitomer (1998) said it is estimated that more than 50% of American business is based on this word-of-mouth ad form. If the experience was good, the customer may not proactively say something, but if the experience was bad, she or he will bring up the story in the first 5 minutes of a conversation. For instance, if a friend who will go to business trip asked which hotel is good for staying, how will we recommend it? Here is example:

A referral – “Radission Hotel is the greatest”Nothing – “Well, I do not know, they are all about the same” or, A reverse referral – “Anyplace

but Radission hotel”If we had bad experience, we might talk about all of bad experience repeatedly.Second, personal needs of customers might moderate their expectations to a certain degree.

For example, in the credit card focus groups, while some customers expected credit card companies to provide them with the maximum possible credit limits, other customers wished that their credit card companies were more stringent than they were.

Third, the extent of past experience with using a service could also influence customers’ expectation levels. Their research findings told us that more experienced participants in the securities-


brokerage focus groups seemed to have somewhat lower expectations regarding brokers’ behavioral attributes such as friendliness and politeness; however, they appeared to be more demanding with respect to brokers’ technical competence and effectiveness.

Fourth, external communications from service providers play a key role in shaping customers’ expectations. Under external communications, we include a variety of direct and indirect messages conveyed by service firms to customers: a bank’s print advertisement promising the friendliest tellers in town, a television commercial for a credit card touting its acceptability around the world, a repair firms’ receptionist guaranteeing the arrival of a service representative at an appointed time, advertising from pizza place delivering within 30 minutes and money back guarantee, hotel’s 100% guest satisfaction guarantee advertising. Guarantee come back when they might not have, and positive word of mouth from the customers who invoke the guarantee attract still more customers.

Exercise NO. _____Quality in Customer – Supplier Relationships


The Case of missing reservation

Mark, Donna, and their children, along with another family, traditionally attend Easter brunch at a large downtown hotel. This year, as in the past, Donna called and made a reservation about three weeks prior to Easter. Because half the party consisted of small children they arrived 20 minutes prior to the 11:30 reservation to assure being seated early. When they arrived, however, the hostess said that they did not have a reservation. The hostess explained that guests sometimes fail to show that she would


probably have a table available for them before long. Mark and Donna were quite upset and insisted that had made a reservation and expected to be seated promptly. The hostess told them, “I believe that you made a reservation, but I can’t seat you until all the people on the reservation list are seated. You are welcome to go to the lounge for complimentary coffee and punch while you wait.” When Mark asked to see the Manager, the hostess replied, “I am the manager,” and turned to other duties. The party was eventually seated at 11:45, but was not at all happy with the experience.

The next day, Mark wrote a letter to the hotel manager explaining the entire incident. Mark was in the MBA program at the local university and was taking a course on total quality management. In the class, they had just studied issues of customer focus and some of the approaches used at the Ritz – Carlton Hotel, a 1992 Baldrige Award winner. Mark concluded his letter with the statement, “I doubt that we would have experience this situation at a hotel that truly believes in quality”. About a week later, he received the following letter:

We enjoy hearing from our valued guests, but wish you had experienced the level of service and accommodations that we strive to achieve here at our hotel. Our restaurant manager received your letter and asked me to respond as Total Quality Lead.

Looking back at our records we did not show a reservation on the books for your family. I have addressed your comments with the appropriate department head so that others will not have to experience the same inconveniences that you did.

Thank you once again for sharing your thoughts with us. We believe in a philosophy of “continuous improvement”, and it is through feedback such as yours we can continue to improve the service to our guests.

Discussion questions:1. Were the hostess’s actins consistent with a customer-focused quality philosophy? What might

she have done differently?2. How would you have reacted to the letter that Mark received? Could the Total Quality Lead

have responded differently? What does the fact that the hotel manager did not personally respond to the customer tell you?

CHAPTER 5 DESIGNING ORGANIZATIONS FOR QUALITY

Not many people really do know how to design an organization that is not a machine.

Charles Handy (1932 - )Irish-born British management educator and writer.

Strategy and Business, Interview

OBJECTIVES: Describe the functional structure, the most common structure used at the business unit level; Show how many aspects of the functional structure stand in the way of quality and what

changes are necessary to create organization structures that support TQ; Compare organization design from a TQ point of view to more conventional perspectives.


Organizational BehaviorThe way in which individuals and groups act in the organization and the influences on these actions and behavior patterns.Takes account of people’s attitudes and beliefs and tries to examine the reasons for them.Emphasis is on the impact of individual and group behavior on the organization and vice versa.

The Main Influences on Organizational BehaviorOrganization ClimateOrganization cultureMotivationGroup norms

External influences (i.e., family, background, etc.)Management styleOrganization structureProcesses

Elements Common in OrganizationsA common purposeSome kind of structure

Processes for coordinating activitiesPeople carrying out distinct roles

Classifications of Organizations:A. According to Type of AUTHORITY (By Weber)

1. Traditional Organization – where authority is established by custom and long standing and unquestioned belief. (e.g. monarchy)

2. Charismatic Organization – where authority is derived from the outstanding personal qualities of the leader.

3. Bureaucratic Organization – where authority is based on the acceptance of formal rules and procedures. (e.g. military)

B. In terms of the MAIN BENEFICIARY (BY: Blau & Scott)1. The Rank and File Members - Mutual benefit2. The Owners or Managers - Business3. The Public who have contact with the organization - Service4. The Public in general - Commonwealth

C. In terms of POWER and INVOLVEMENT (By: Etzioni)

POWER – in terms of how it is exercised

in the organization

Three Types of Power:1. Coercive Power – relies on the

use of threats or sanctions to enforce control, (e.g. prison)

2. Remunerative Power – relies on the use of rewards and control of resources (e.g. commercial enterprise)

3. Normative Power – relies on the acceptance of the norms, values and beliefs of those exercising power (e.g. church)

INVOLVEMENT – the individuals Commitment

to the organization

Three types of Commitment:1. Alienative – where members

are forced to accept involvement


2. Calculative – where the members participate because of the rewards available to them.

3. Moral – where the members are committed to the goals and values of the organization.

D. In terms of MANAGEMENT STURCTURES (BY:Burns and Stalker)

1. Mechanistic Structures – (appropriate to stable conditions) Clear differentiation between specialized tasks Precise definitions of tasks and how these are carried out Definite hierarchy for controlling work and decision – making

2. Organismic Structures – (appropriate to changing conditions) Specialized knowledge and experience which contribute to the overall

objectives. Jobs are determined by the organization’s overall objectives Constant redefinition of jobs Network of structure and control, authority and communication Knowledge spread throughout the organization.

ORGANIZATIONAL DESIGN AND STRUCTURES

Basis for Establishing Organizational Relationships Responsibility authority accountability

FORMS OF ORGANIZATION:1. LINE ORGANIZATION

Clear delineation of line authority from direct superior to direct subordinates2. LINE & STAFF FUNCTION

Wider scope of work with multi-level departmentalized tasks structures 3. FUNCTIONAL ORGANIZATION

Organized according to the nature & types of work functions in an organization

THE FUNCTIONAL STRUCTURE: Problems with the structure:1. The functional structure separates employees from customers

The functional structure tends to insulate employees from learning about customer expectations and their degree of satisfaction with the service or product the firm is providing.

Functional structure promotes the idea that one’s boss is the customer whom the employee must satisfy. Of course, this manager is trying to satisfy the next-level manager, and so on.

If chained ended at the customer, the structure might work, but this is generally not the case.

Managers in functional organizations are usually rewarded for satisfying functional goals, such as meeting design deadlines and limiting manufacturing costs, rather than for providing value to customers.


2. the functional structure inhibits process improvement This process involves a large number of functions because the breakup of the

organization into functions is usually unrelated to the processes used to deliver a product to the customer.

This structure is likely to create complex, wasteful processes, as people do things in one area that must be redone or undone in another.

3. Functional organizations often have a separate function for quality; called Quality Control or Quality Assurance

The organization that there is a group dedicated to quality The QC department is generally responsible for collecting and maintaining quality

statistics, which may not seem as valid to the departments actually doing the work. Organizations pursuing TQ often retain their quality assurance departments, rather than

as the group with primary responsibility for quality.

REDESIGNING ORGANIZATIONS FOR QUALITY Focus on Processes

Process is how work creates value for customers. Process owners are accountable for process performance and have the authority to

manage and improve their process. Core process drive the creation of products and services, are critical to customer

satisfaction, and have a large impact on the strategic goals of the organization. Support process is critical to the operation of a business, but generally do not add value

directly to a product or service. Process Management involves the design of processes to develop and deliver products

and services that meet the needs of customers, daily control, so that they perform as required, and their continual improvement.

COMPARISON TO ORGANIZATIONAL DESIGN THEORY:

Structural Contingency Theory: Originated in the 1960s; two principal types of organization structures:

Mechanistic (centralized, many rules, strict division of labor, formal coordination across departments)

Organic (decentralized, few rules, loose division of labor, informal coordination across departments)

Institutional Theory: Based on the assumptions that organizations choose structures to help them perform better –

provide high quality, lower costs, and so forth. Holds the organizations try to succeed by creating structures that will be seen as appropriate by

important external constituencies – customers, other organizations in the industry, government agencies, and so on.

_____________________________________________________________________________Exercise NO. _____

Designing Organization for Quality



The State University Experience

Wow! That State University video was really cool. It has lots of majors; it’s close to home so I can keep my job; and Mom and Dad loved it when they visited. I wish I could know what it’s really like to be a student at State. Hmmm, I think I’ll ask mom and dad to take a campus tour with me…..

I’m sure that we took our tour on the hottest day of the summer. The campus is huge – it took us about two hours to complete the tour and we didn’t even see everything! I wasn’t sure that the tour guide knew what he was doing. We went into a gigantic lecture hall and the lights weren’t even on. Our tour guide couldn’t find them so we had to hold the doors open so the sunlight could come in. About three – fourths of the way through our tour, our guide said, “State University isn’t really a bad place to go to school; you have to learn the system.” I wonder what he meant by that?

This application is really confusing. How do I let the admissions office know that I am interested in physics, mechanical engineering, and industrial design? Even my parents can’t figure it out. I guess I’ll call the admissions office for some help…

I’m so excited! Mom just handed me a letter from State! Maybe they’ve already accepted me. What? What’s this? They say I need to send my transcript. I did that when I mailed in my application two weeks ago. What’s going on? I hope it won’t affect my application. I’d better check with Admissions………..

You can’t find my file? I thought you were missing only my transcript. I asked my counselor if she had sent it in yet. She told me that she sent it last week. Oh, you’ll call me back when you locate my file? OK..

Finally, I’ve been accepted! Wait a minute. I didn’t apply to University College; that’s a two – year program. I wanted physics, M.E., or industrial design. Well, since my only choice is U. College and I really want to go to State, I guess I’ll send in the confirmation form. It really looks a lot like the application. In fact, I know I gave them a lot of the same information. I wonder why they need it again. Seems like a waste of time…………..

Orientation was a lot of fun. I’m glad they straightened out my acceptance at U. College. I think I will enjoy State after all. I met lots of other students. I saw my advisor and I signed up for classes. All I have left to do is pay my tuition bill. Whoops. None of my financial aid is on this bill. I know I filled out all of the forms because I got an award letter from the state. There is no way my parent and I can pay for this without financial aid. It says at the bottom, I’ll lose all my classes if I don’t pay the bill on time….

I’m not confirmed on the computer? I sent in my form and the fee a long time ago. What am I going to do? I don’t want to lose all of my classes. I have to go to the admissions office or my college office and get a letter that says I am a confirmed student. OK. If I do that tomorrow, will I still have all of my classes?......

I can’t sleep; I’m so nervous about my first day……..


DISCUSSION QUESTIONS

1. What breakdowns in service processes has this student experienced? How might these be a function of organizational design?

2. What types of process management activities should State University administrators undertake?

Chapter 6 TOTAL QUALITY & ORGANIZATIONAL CHANGE

“Every organization of today has to build into its very structure the management of change.”

Peter Drucker (1909 - 2005)Austrian-born U.S. management consultant.

Post-capitalist Society


Psychologists suggest that individuals go through four stages of learning. Quality-related changes in organization structure and employee responsibilities are discussed in other chapters. This chapter will:

Explain the importance of organizational change to TQ; Identify the types of changes necessary for quality; Provide examples of firms undertaking these changes, and; Explain how TQ perspective on organizational change relates to organization

theory.

Types of change Cultural change Continuous improvement Breakthrough improvement Organizational learning

Organizations can't change without people changing first

Importance of Change Needed in implementing TQ Reengineering

o The process by which the organization operates are examined and redesigned to provide higher quality at lower cost.

Why Organizational Change is Necessary: Triggering Conditions:1. Unstable and unpredictable world economic environment2. Speed in technological advancement that hastens product obsolescence3. Rise of information technology and cybernetics shifting competition towards intelligence,

networking and strategic alliances.4. Capital rationing based on quality and security of investment returns.5. Competitive advantage derived from lower cost and speed of reaction to changing markets6. Move towards flatter, leaner organizations7. Doing more of the same no longer works

The Need to Change: When to Jump the Curve:When the Organization…….

1. Diminishes in its uniqueness or satisfaction of relevant needs.2. People need to operate more effectively3. Is financially threatened4. Must redefine its objectives, polices and structures.5. Must eliminate traditional roles, procedures, products and services.6. Must create new roles, procedures, products and services7. Must acquire new technology, specialization and markets.

Resistance to change Inertia - comfort with the status quo Timing - conflicts with other initiatives and/or priorities Surprise - proper groundwork has not been done so people are caught off guard (need for

change not established)


Misunderstanding - benefits not properly understood Cultural pressure - some who may want to change are held back by others in the organization Self-interest - conflicting personal priorities Differing assessment - conflicting agreement over the value of the benefits associated with the

change

CULTURAL CHANGE: NATURE AND FORMATION CULTURE

a set of beliefs and values shared by the people in an organization first used in the 19th century by social anthropologists; way of life of a given group of people Sum total of the knowledge, beliefs, attitudes, values, practices and behavioral patterns

commonly held by members of the society and transmitted from one generation to another.

CORPORATE CULTURE The commonly held and relatively stable beliefs, attitudes and values that exist within

the organization reflected as the organization’s way of corporate existence.

CULTURAL CHANGE: NATURE AND FORMATION

INTERACTION

People join organizations bringing their own set of values, attitudes and beliefs

Values, attitudes & beliefs commonly held/shared are: reinforced & perpetuated; No common ground:Modified, submerged, or discarded.

Therefore, with or without conscious efforts, Corporate Cultures do exist in any given organization.

Organizational culture is the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.


Organizational values are beliefs and ideas about what kinds of goals members of an organization should pursue and ideas about the appropriate kinds or standards of behavior organizational members should use to achieve these goals. From organizational values develop organizational norms, guidelines or expectations that prescribe appropriate kinds of behavior by employees in particular situations and control the behavior of organizational members towards one another. (Strategic Management, Charles W. L. Hill, Gareth R. Jones, Fifth Edition, 2001 Houghton Mifflin, MeansBusiness, Inc.)

Making the New Culture Permanent Make involvement in TQ a required part of people’s responsibilities. Use of existing organization to implement TQ Make sure everyone spends at least one hour a week working on quality issues. Change the measurement and information systems.

STRATEGIC CHANGE vs. PROCESS CHANGE Strategic Change

o Organizational changes resulting from strategy development and implementation Process change

o Organizational changes resulting from operational assessment activities

Table 6.2 Strategic vs. Process change

STRATEGIC PROCESS PROCESS CHANGE

Theme to change Shift in organizational direction

Adjustment of organizational processes

Driving force Usually environmental forces – market, rival, technological change

Usually internal – “How can we better align our processes?”

How much of the organization changes?

Typically widespread Often narrow – divisional or functional

Examples Entering new marketsSeeking low-cost positionMergers and acquisitions

Improving informational systemsEstablishing hiring guide

CONTINUOUS IMPROVEMENT

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 workers. By improving standardized activities and processes, Kaizen aims to eliminate waste.

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.

Key elements of Kaizen are quality, effort, involvement of all employees, willingness to change and communication.

Kai means literally; change (kai) to become good (zen)

The foundation of the Kaizen methods consists of 5 founding elements:1. Teamwork2. Personal discipline3. Improved morale4. Quality circles, and5. Suggestions for improvement.

Breakthrough improvement Refers to discontinuous change, as opposed to the gradual, continuous improvement philosophy

of kaizen. Result from innovative and creative thinking; often these are motivated by stretch goals, or

breakthrough objectives.

Benchmarking: Benchmarking is the process of comparing the cost, time or quality of what one organization

does against what another organization does. The result is often a business case for making changes in order to make improvements.

Also referred to as "best practice benchmarking" or "process benchmarking", it is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to make improvements or adopt best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices.

Benchmarking, originally invented as a formal process by Rank Xerox, is usually carried out by individual companies. Sometimes it may be carried out collaboratively by groups of companies (eg subsidiaries of a multinational in different countries).


http://en.wikipedia.org/wiki/Rank_Xerox

Classification of Benchmarking

1. Competitive benchmarking – focus on the products and manufacturing of a company’s competitors.

2. Generic Benchmarking – evaluates processes or business functions against the best companies regardless of their industry.

Types of benchmarking Process benchmarking - the initiating firm focuses its observation

and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms. Activity analysis will be required where the objective is to benchmark cost and efficiency; increasingly applied to back-office processes where outsourcing may be a consideration.

Financial benchmarking - performing a financial analysis and comparing the results in an effort to assess your overall competitiveness.

Performance benchmarking - allows the initiator firm to assess their competitive position by comparing products and services with those of target firms.

Product benchmarking - the process of designing new products or upgrades to current ones. This process can sometimes involve reverse engineering which is taking apart competitors products to find strengths and weaknesses.

Strategic benchmarking - involves observing how others compete. This type is usually not industry specific meaning it is best to look at other industries.

Functional benchmarking - a company will focus its benchmarking on a single function in order to improve the operation of that particular function. Complex functions such as Human Resources, Finance and Accounting and Information and Communication Technology are unlikely to be directly comparable in cost and efficiency terms and may need to be disaggregated into processes to make valid comparison.

The Benchmarking Process : The five process stages are as follows.

1) Determine what to benchmark. The purpose of this step is to define what the organization wants to benchmark. After the organization defines it, it will allocate the resources required to conduct benchmarking. The process can be described in the following steps:

Defining the customers for benchmarking information. This is the first step in determining what to benchmark. To define the customers or users of the benchmarking information one simply has to think of answers to the following questions: who is requesting the information? and who will be


using it.? If one does not know who will be using the information, one will suffer from trying to find the information because one does not know whom this information will be serve. Therefore, the purpose of benchmarking might be blurring and later will lead to failure of the process.

Determining customer requirements for benchmarking information. The second step toward this stage is to determine the information requirements of one’s benchmarking customers. A thorough understanding of users helps avoid the wasted effort of gathering useless information.

Identifying critical success factors. The last step of this stage is to identify the factors that will have the greatest impact on the performance of one’s organization. Benchmarking will have the greatest impact to organizational performance when it has applied on the bottom-line results of business.

2) Form a benchmarking team. Like other change methodology, benchmarking should be conducted in a team effort activity. Specify roles and responsibilities for each team member. In general, there are three types of benchmarking teams that can be formed as defined by their structure and reporting relationships (Spendolini, 1992).

Intact work groups. These group members are usually located in a single location reporting to a common manager. The manager may or may not play the role of the team leader; usually every member participates as a benchmarking team member. These groups are often the customers of their own benchmarking process.

Cross-functional, interdepartmental, and inter-organizational teams. These types of teams are brought together to work on a specific assignment. Members of the team are been selected to represent their departments, locations, or divisions.

Ad hoc teams. This type of team represents the flexibility of forming a team. An ad hoc team can be formed by any number of employees who share the same interests or responsibilities, which brought them together to do a benchmarking investigation.

3) Identify benchmarking partner. Identify the information sources that the company will use to collect the benchmarking information and pick the industry with the best practices. The focus of this stage is on information. There are five steps toward identify benchmarking partner as follows:

Develop a benchmarking information network. Information obtained is a resource that has a limited period of time in which one can use it to make a reasonable decision. Although the information one collects fills a specific short-term need, these referent documents and individuals that one use to collect benchmarking information should be consider a potential long-term resource. If one develops a benchmarking information network from these resources, the time required to find information is reduced. The process of collecting information for benchmarking will be easier.

Identify information resource. This step can be easily implemented by asking three questions :(a) Who produces the information I want?(b) Who else uses the information I want?(c) Who accumulates the data I want?


By answering these three questions, one will discover the resources that are available to support one’s process of benchmarking. Actually, the challenge of this stage is to identify benchmarking partners that will provide useful information to your benchmarking process.

Design list of benchmarking partner criteria. The list of criteria should express the requirements an ideal benchmarking partner should satisfy, and can cover most of the issues. These issues are such as geographical location, size, structure and organization, products and technology. The criteria might seem to carry away when the company has list too many variables and forget to focus on important issues. Therefore, the company should assure that all criteria set forward are relevant.

Identify potential benchmarking partners. Potential benchmarking partners might not have to be best-in-class or world class. They can be only “best-in-the local area” when the company draw the line to benchmark with companies located in the same area. Benchmarking with these companies can be as good as benchmarking with the world class companies, thus one can also save the company resources.

Selecting benchmarking partner(s). This step is to collect background information about the potential partners and decide which of these potential partners one will select as benchmarking partner(s).

4) Collect and analyze benchmarking information. In this stage, the company collects and analyzes the information. Also, in this stage recommendations are made for later action.

Collect information. The step of collection information can be done by many ways such as telephone

interviews, personal meetings, site visits, surveys, publications, media and archival research.

Organize information. The step can be done by (1) writing an outline of the information, (2) put information in

comparing matrix of each company, (3) analyze matrix and the collected information in phases, and (4) summarize all data.

Analyze information. After the information has been collected and summarized, the next step is data analysis.

The steps toward information analysis are (1) check for misinformation, (2) identify the patterns of the data, (3) identify omissions or displacement, (4) check for data that do not fit, and (5) draw conclusions.

5) Take Action. In this stage, all actions that are required to change the process that the company chose to benchmark are implemented. These actions may include making recommendations, conducting a report or preparing a presentation to apply to the process.

Producing a benchmarking reportThis is one of the major tasks of the benchmarking team. The report will serve several purposes including: a report to be delivered to the benchmarking customers, a summary of data that were


collected and analyzed, a record of the organization benchmarked and key project contacts, and a communications product for other internal employees and functions

Presenting finding to benchmarking customers This step might be provided upon customers’ request. This step offers an opportunity to expand the audience for the benchmarking findings and stimulate action for changes.

Identifying possible product and process ImprovementsThis step is taking the action of what the company has been planned.

Seeing the project through Benchmarking is required time like other changing methodologies. Once one has started it,

one has to make sure it has been carried out through the timing period that has been plan leads to successful of benchmarking.

Overall, benchmarking is not a one-time change methodology. The arrows in the Figure 3 show that effective benchmarking is a continuous process. Therefore, an organization would have to be aware of what is out there, and be able to improve their process in order to be able to compete with others.

The above model is generic in nature. However there is no assurance that the same process model will work for all sectors of business in all organizations. Very often organizations will have to develop their own models, which are likely to suit their specific style of functioning.

Figure 3. The five-stage benchmarking process. (Spendolini, 1992, p. 48)

Requirements of a successful benchmarking model (Spendolini, 1992)There are some guidelines for developing a benchmarking model:1) Follow a logical simple sequence of activity

The process model should be as simple as possible. There is no need to add stages to the process model just for the sake of numbers.


http://www.filebox.vt.edu/users/asolanki/References.htm#spendolini92

For exampleA ten-step model is not necessarily better than a 4-step model.It’s very essential that the model have clarity. The best measure of a process model’s level of clarity is people’s ability to describe it to others including their ability to explain why each part of the process is important to the process user. Another aspect of the clarity criterion is the listener’s ability to understand the process and translate it into action.

2) Put a heavy emphasis on planning and organization Heavy emphasis has to be laid on planning and organizing the activities that occur before

any actual contact is made with a benchmark partner. The types of activities included in this part of the process involve developing a clear understanding of the benchmarking “customer” requirements, procuring adequate resources to enable the benchmarking team to fulfill its mission, selecting and briefing members of benchmarking teams, using effective project planning and techniques and establishing appropriate benchmarking protocols that define expected behaviors toward benchmark partners.

3) Use customer focused benchmarking. Benchmarking is a process that produces information as a product. Successful benchmarking

organizations treat the benchmarking information product just as they would any other type of product. The product must meet customer requirements.

4) Make it a generic model. The benchmarking process must be consistent within the organization. Although there

should be some flexibility in any process to accommodate some level of variation, there is no need for a unique benchmarking process model for every department, division or location.

Figure 4. The benchmarking approach(http://www.metabpr.com/ben-mark.htm)



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