Managing Quality

Integrating the Supply Chain

S. Thomas Foster

Chapter 2

Quality Theory
01/26 7:00AM

2007 Pearson Education 2-1

Quality Theory
Chapter 2

Leading Contributors to Quality Theory

Viewing Quality Theory from a Contingency Perspective
Theoretical Framework for Quality Management

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Quality Theory
Is there a theory of quality management?

There is not a unified theory explaining quality management in the

supply chain that is widely accepted by the quality community. The
literature concerning quality is contradictory and somewhat confusing.
The differing approaches to quality improvement represent competing
philosophies that are seeking their place in the quality marketplace of
theories. Practicing quality managers must apply those theories that are
appropriate to their particular situations using the contingency approach.

The contingency approach identifies the relevant conditions in a situation

and applies the appropriate theory. This means the effectiveness of the
competing philosophies depends on the context.

You cannot buy effective quality systems off-the-shelf or apply them

without question from books. You must grow your own quality system
yourself within your firm for your firm.

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Quality Theory
Leading Contributors to Theory W. Edwards Deming

Deming was widely accepted as the worlds leading authority on quality

management prior to his death in 1993.

Deming significantly influenced Japanese industry before the late 1970s

when the quality of Japanese products surpassed U.S. products.

Deming emphasized the management of a system for improving

quality and statistics for continual improvement.

After WWII, Deming was sent to Japan by the U.S. Secretary of War to
work on a population census. During this time, Deming presented lectures
to the Japanese Union of Scientists and Engineers on statistical quality
control. Deming became impressed with the precise, single-minded,
focus of the Japanese on quality. Deming believed that the lack of focus
on quality in America led to mediocre results with regard to quality.

Demings emphasis was continuous, never-ending improvement.

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 Quality Theory
Leading Contributors to Theory Demings 14 Points

The closest Deming came to expounding a theory was his 14 points

for management.

The foundation of the 14 points was Demings belief that the historic
approach to quality used by American management was wrong in one
fundamental aspect: Poor quality was not the fault of labor; it resulted
from poor management of the system for continual improvement.

1. Create a constancy of purpose toward improvement of product and

service with the aim to become competitive, stay in business and
provide jobs.

Constancy of purpose means that management commits

resources long-term to see that the quality is completed. U.S.
management is too short-term oriented.

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 Quality Theory
Leading Contributors to Theory Demings 14 Points

2. Adopt a new philosophy: We are in a new economic age.

Western management must no longer accept defective

products and services as normal.

3. Cease dependence on mass inspections to improve quality.

Build quality into the product or service do not inspect

quality into the product or service.

Quality at the source means management must train and trust

workers so workers can be responsible for quality and
inspections.

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 Quality Theory
Leading Contributors to Theory Demings 14 Points

4. End the practice of awarding business on the basis of price

tag alone.

Minimize total cost by sole sourcing, developing long-term

relationships of loyalty and trust, JIT purchasing, and certified
suppliers (Malcolm Baldrige National Quality Award Criteria, ISO
9000:2000 international standard for quality systems).

Using many suppliers causes an overemphasis on per piece

cost, increased variability, and increased supplier management
cost.

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 Quality Theory
Leading Contributors to Theory Demings 14 Points

5. Improve constantly and forever the system of production and

service to improve quality and productivity, and, thus, constantly
decrease cost.

Management is responsible for system design. Workers can be

held responsible only for their inputs into the system. Mediocre or
poor performance of a system is most often the result of poor
performance of management.

85% of errors and defects are caused by flaws in the system and
only 15% are caused by workers.

80% of the errors and defects are caused by 20% of the system.

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 Quality Theory
Leading Contributors to Theory Demings 14 Points

6. Institute training on the job.

Training, although a necessary condition for improvement, is not

sufficient to guarantee successful implementation of quality
management.

7. Improve leadership. This is key to improving quality.

Improvement by employees can occur only within the realm of

influence of the employee. For wide-ranging improvements to
occur, upper management must be committed (hogs, not
chickens).

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 Quality Theory
Leading Contributors to Theory- Demings 14 Points

8. Drive out fear of admitting or identifying problems and creating

change so that everyone may work effectively for the company.

Does an organization want employees who are satisfied with the

status quo or who are fearful of challenging the waste in the status
quo because of blame-fixing or layoffs?

9. Break down barriers between departments.

Employees from different departments must work together in

cross-functional teams in team-based decision making.
Sequential or departmental approaches to team-based decision
making limit the knowledge, information, and perspectives. Parallel
processing in cross-functional, focused teams bring all available
knowledge, information, and perspectives to bear on the subject. In
design, parallel processing in cross-functional, focused teams is
called concurrent engineering.
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 Quality Theory
Leading Contributors to Theory Demings 14 Points

10. Eliminate slogans, exhortations and targets for the

workforce that ask for zero defects and new levels of
productivity.

The bulk (85%) of causes of low quality and low productivity

belong to the system and lie beyond the power of the workforce.

By pressuring employees to higher levels of productivity and

quality, managers place the onus for improvement on the
employees. If systems or the means for achieving these higher
levels of performance are not provided, workers can become jaded
and discouraged.

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 Quality Theory
Leading Contributors to Theory Demings 14 Points

11. Eliminate work standards on the factory floor.

Eliminate management by objective.

Eliminate management by numbers and numeric goals.

Substitute leadership.

Eliminate work measurement standards on the shop floor.

Eliminate performance appraisals.

Althoughobjectives are set for employees, systems often are not

provided by management to attain these goals.

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 Quality Theory
Leading Contributors to Theory Demings 14 Points

12. Remove barriers that rob workers of their right to pride in the
quality of their work.

The responsibility of supervisors must be changed from sheer

numbers to quality.

Employees must be trusted with decisions and self-determination

or employees will suffer from low morale and low commitment.

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 Quality Theory
Leading Contributors to Theory Demings 14 Points

13. Institute a vigorous program of education and self

improvement.

Learning in an organization is a function of the creativity of

employees and the ability of the organization to institutionalize
the lessons over time.

Organizational learning requires a structure that reinforces and

rewards learning. Such an organization is difficult to create in a
command-and-control environment because command-oriented
managers will not understand what it takes to allow employees to
achieve their best.

14. Put everybody in the company to work to accomplish the

transformation. A total system for improving quality is needed that
includes all of the people in the organization.

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 Quality Theory
Leading Contributors to Theory The Deadly Diseases

1. Lack of constancy of purpose.

2. Emphasis on short-term profits.
3. Evaluation of performance, merit rating, or annual
review.
4. Mobility of management.
5. Running a company on visible figures alone.
6. Excessive medical costs for employee health care.
7. Excessive cost of warranties.

Deming believed these factors would keep the U.S. from

achieving top quality or competitiveness in a world
market.

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Quality Theory
Leading Contributors to Theory An Underlying Theory

Demings 14 points do not represent a theory but do represent the artifacts

of a theory. Anderson, Rungtusanatham, and Schroeder propose a
theoretical causal model underlying the Deming management method.

Visionary
Leadership

Organizational Employee Satisfaction

Learning Customer Satisfaction

Process
Management

Process Low Cost

Outcomes High Quality

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 Quality Theory
Leading Contributors to Theory - Juran

The Juran Trilogy three basic processes are essential for managing
to improve quality

Planning provides the operating forces with the means of

producing products that can meet the customers needs
Control gathers data about processes to ensure that processes
are stable and provide a relatively consistent outcome
Improvement can be continuous or breakthrough improvements
which should occur simultaneously
Continuous improvement incremental process improvements
Breakthrough improvement major process improvements
Improvement is accomplished on a project-by-project basis.
Managers must prioritize projects based on financial return.
Juran applied Paretos Law (80/20 rule) in stating that the majority
of quality problems are the result of relatively few causes. Focus
on the vital few instead of the trivial many.
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Quality Theory
Leading Contributors to Theory Scientific Management

Frederick Taylor wrote The Principles of Scientific

Management.
Scientific management separated planning from execution.
The engineers and managers did the planning and the
supervisors and workers executed the plans.
Inspectors were moved out of the plant to a central
inspection (quality) department.
Upper managers concluded that quality was the
responsibility of the quality department and these upper
managers became detached from quality and lost their
knowledge of how to build quality into the product.
Inspecting quality into the product worked as long as all
competitors did the same. However, the Japanese changed
the game by building quality into the product in the 70s.
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 Quality Theory
Leading Contributors to Theory Kaoru Ishikawa

Ishikawa became the foremost Japanese leader in the

Japanese quality movement.

Ishikawa provided the basic seven tools of quality (B7)

for continuous improvement. The B7 tools worked well within
the Deming and Juran frameworks.

Ishikawa democratized statistics which provided for the

complete involvement of the workforce in improving quality.

Ishikawas major theoretical contribution is his emphasis

on total involvement of the operating employees in
improving quality.

Ishikawa created the phrase company-wide quality

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 Quality Theory
Leading Contributors to Theory Armand Feigenbaum

Feigenbaum wrote Total Quality Control which studied

quality in the context of the business organization.

Feigenbaums primary contribution to quality thinking

in America was his assertion that the entire organization
should be involved in improving quality.

Feigenbaums three step process to improving quality:

quality leadership the motivating force for quality

improvement
quality technology includes statistics and machinery
organizational commitment including everyone in
the quality struggle

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Quality Theory
Leading Contributors to Theory Armand Feigenbaum

Major impediments to improving quality:

Hothouse thinking quality programs that receive a lot of hoopla and

no follow-through which happens when firms do not commit resources
over time
Wishful thinking occurs with those who would pursue protectionism
to keep American firms from having to compete on quality
Producing overseas used by managers who wish that out of sight,
out of mind could solve quality-related problems
Confining quality to the factory floor quality is the responsibility of
the shop-floor and not everyones responsibility

Feigenbaum proposed 19 steps for improving quality which emphasize

total organizational involvement in improving quality.

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 Quality Theory
Leading Contributors to Theory Philip Crosby

Crosby wrote Quality Is Free in this book he stressed that

quality, as a managed process, can be a source of profit.

Crosby specified a 14 step quality improvement program.

These steps provide the Crosby zero-defects approach to quality,
the behavior and motivational aspects of quality rather than
statistical approaches, and his prescribed actions for management
and workers.

Althoughhe prescribes quality teams consisting of department

heads, Crosby did not promote the same kind of strategic
planning proposed by Deming and Juran.

Crosby adopted a human resources approach similar to

Demings in that worker input is valued and is encouraged as
central to quality improvement.

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Quality Theory
Leading Contributors to Theory Genichi Taguchi

The Taguchi method was first introduced by Dr. Genichi Taguchi to AT&T
Bell Laboratories in the U.S. in 1980. The Taguchi method for improving
quality is now believed to be comparable in importance to the Deming
approach and to the Ishikawa concept of total quality control.

Unique aspects of the Taguchi Method:

Definition of Quality - Ideal quality is a function of customer

perceptions and satisfaction. The target specification should be a
measure of the targeted customer perception and satisfaction.

Quality Loss Function - Any deviation from the target specification

results in a loss to society. The magnitude of the loss to society is
directly related to the degree of deviation.

Robust Design Products and services should be designed so that

they are inherently defect-free and of high quality. Robust design is
achieved in a three-step process: concept design, parameter
design, tolerance design.
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Quality Theory
Leading Contributors to Theory Stephan Covey

Stephan Covey wrote The 7 Habits of Highly Effective People.

Dr. Coveys approach to management is value-based.
According to Dr. Covey, our beliefs affect how we interact with others,
which in turn affects how they interact with us. Therefore, we need to
focus on how we approach our lives rather than focusing on external
factors that affect our lives.
Many quality management principles from people such as Deming are
integrated into Dr. Coveys habits.
Dr. Coveys 7 habits include:
Be proactive. Control your environment, instead of having it control
you, in the way you react to your environment.
Begin with the end in mind. Identify the desired outcome and focus
on activities that achieve that end.

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Quality Theory
Leading Contributors to Theory Stephan Covey

Put first things first. Managers need to personally manage

themselves and implement activities that aim to achieve the second
habit looking to the desired outcome. Habit two is the first, or mental,
creation; habit three is the second, or physical creation.
Think win-win. This is the most important aspect of interpersonal
leadership because most achievements are based on cooperative
effort. Therefore, the aim needs to be win-win solutions for all.
Seek first to understand and then to be understood. Listening well
is more important than speaking well. Be interested, not interesting.
Once you understand their perspective then you can be understood.
Synergize. Through creative cooperation, collaboration often achieves
more than could be achieved by individuals working independently.
Sharpen the saw. Learn from previous experience and encourage
others to do the same.
Find your voice, and inspire others to find theirs. Merge talent,
passion, and conscience to achieve, and to help others to achieve.

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Quality Theory
Leading Contributors to Theory Other Quality Researchers

Robert C. Camp Pioneered benchmarking with the sharing of

information between companies so that both can improve.

Tom Peters wrote In Search of Excellence which produced

eight best practices from empirical research of successful quality
practices in the form of case studies of firms. The book is thought-
provoking, though methodologically loose. His latest book, In
Search of Wow!, is entertainment coupled with serious
management thinking.

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Quality Theory
Leading Contributors to Theory Other Quality Researchers

Michael Hammer and James Champy Their collaboration is termed

reengineering, which has produced unfortunate consequences for many
companies. Their underlying model is sound: Firms can become
inflexible and resistant to change and must be able to change in order to
become competitive. The problem is in the flawed process for
reengineering they promote in their book Reengineering the
Corporation. They admit their failure rate is 70% or higher. By ignoring
the necessity for attention to detail and analysis, they led many firms to
make radical changes to reengineer processes that led to major failures.

Lesson to be learned from reengineering failures Some quality and

performance improvement approaches are brainchildren. Others have
been observed to work in a number of organizations, in a variety of
cultures, and in a number of economic sectors. Avoid the former until
they become part of the latter.

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 Quality Theory
Quality Theory from a Contingency Perspective

There is a mass of contradictory, conflicting information and

disagreement it is best to focus on fundamental
questions during the self-assessment phase of strategic
planning such as the following types of questions:

What are our strengths?

What are our competencies?
In what areas do we need to improve?
What are our competitors doing to improve?
What is our organizational structure?
What do our customers want?
What are our customers unmet needs?
Where are our customers going?

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Quality Theory
Quality Theory from a Contingency Perspective

Once you answer these types of questions, you will have a deep
understanding of your business. You combine your business
understanding with your understanding of the major approaches
to quality improvement. This combination will provide the basis
for selecting those points, philosophies, concepts, and tools that
will form the basis for your quality improvement plans. Then you
creatively apply your selected quality approaches to your
business.

Firms well known for quality do not adopt only one quality
philosophy. The successful firms adopt aspects of each of the
various approaches that help them improve. This is called the
contingency perspective.

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 Quality Theory
Resolving Differences An Integrative View

Reviewing the literature identifies common variables used by

Deming, Juran, Crosby, Taguchi, Ishikawa, and Feigenbaum and by
Parasurmaman, Zeithamel, and Berry for the services approach.
Leadership Customer role in Quality
Information Analysis Quality Department
Strategic Planning Environment
Employee Improvement Philosophy Driven
Quality Assurance Quality Breakthrough
Project/team-based
improvement

The core variables are in red. The second layer variables are in
blue. And the third layer variables are in black. The primary
driver is a customer focus.
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Quality Theory
Resolving Differences An Integrative View

The core variables:

Leadership The role of the leader in being the champion and major
force behind quality improvement is critical. Companies having weak
leadership in quality will not achieve a market advantage in quality.
Leaders must become proficient in quality management approaches and
must be willing to lead by example, not just by words.
Employee Improvement Employees must be trained and developed.
This training is a long-term undertaking requiring direct investment in
training delivery costs and indirect costs associated with temporary lost
productivity and time spent in training.
Quality Assurance Quality can be assured only during the design
phase. Although statistical inspection is important to improving quality, it
is inherently reactive. Effort must be invested in designing products,
services, and processes so they are consistently of high quality.

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Quality Theory
Resolving Differences An Integrative View

Customer Focus An understanding of the customer is key to quality

management efforts. Unless firms are gathering data about customers and
analyzing these data, they are poorly informed about customer needs and
wants. You will not go wrong if you continuously focus on your
customers needs.
Quality Philosophy Adoption of a philosophy toward quality
improvement should establish a clear, simple, focused message
providing the company with a map to follow during their quest for
improvement. It is up to each organization to determine its own
philosophy.

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Quality Theory
Resolving Differences An Integrative View

The second layer variables.

Information Analysis Fact-based improvement requires information
gathering and analysis. Data gathering is a key variable for quality
improvement. Included in data gathering are statistically related quality
control activities.
Strategic Planning This provides a framework for a rational quality
strategy that will align your key business factors with your quality
management philosophy.
Environment or Infrastructure This infrastructure must provide human
resource systems and technological networks that support all other
variables in this list.
Team approach Cross-functional teams achieve process improvement
and manage key processes. The firm should become a collection of
loosely related cross-functional teams performing the work of the firm.

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Quality Theory
Resolving Differences An Integrative View
The third layer variables.

Focus of the Quality Department Rather than performing the policing

function, these departments fill more of a coaching role. Also, the
knowledge these quality specialists have is useful for training and in-
house consulting.

Breakthrough The need to make large improvements is not precluded

by continuous improvement. Firms must find ways to achieve radical
improvements. You must run the firm with excellent execution and control
processes, grow the firm with continuous improvement, and destroy the
firm with radical breakthroughs. The processes used to achieve this often
involve technological or organizational redesign. Analysis and data are
necessary for successful continuous improvements and breakthrough
implementations.

The power of these common variables is that they focus management

on systemic issues rather than the tactical, day-to-day problems.

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 The Primary
Quality Theory Driver Variable
Theoretical Framework for Quality Management

2nd Layer
Core Variables Variables

3rd Layer
Variables
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