Managing Quality

Integrating the Supply Chain

S. Thomas Foster

Chapter 2

Quality
Theory

© 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

© 2007 Pearson Education 2-2

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
© 2007 Pearson Education 2-3
firm.
Quality Theory
Leading Contributors to Theory – W. Edwards Deming

 Deming was widely accepted as the world’s 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.
 Deming’s emphasis©was
2007“continuous, never-ending
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improvement.”
 Quality Theory
Leading Contributors to Theory – Deming’s 14 Points

 The closest Deming came to expounding a theory was

his 14 points for management.

 The foundation of the 14 points was Deming’s 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.
© 2007 Pearson Education 2-5
 Quality Theory
Leading Contributors to Theory – Deming’s 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 – Deming’s 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.

© 2007 Pearson Education 2-7

 Quality Theory
Leading Contributors to Theory – Deming’s 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.

© 2007 Pearson Education 2-8

 Quality Theory
Leading Contributors to Theory – Deming’s 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).

© 2007 Pearson Education 2-9

 Quality Theory
Leading Contributors to Theory- Deming’s 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
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perspectives to bear on the subject. In design, parallel
 Quality Theory
Leading Contributors to Theory – Deming’s 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.

© 2007 Pearson Education 2 - 11

 Quality Theory
Leading Contributors to Theory – Deming’s 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.

 Although objectives are set for employees, systems often are not
provided by management to attain these goals.

© 2007 Pearson Education 2 - 12

 Quality Theory
Leading Contributors to Theory – Deming’s 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.

© 2007 Pearson Education 2 - 13

 Quality Theory
Leading Contributors to Theory – Deming’s 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.

© 2007 Pearson Education 2 - 14

 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.

© 2007 Pearson Education 2 - 15

Quality Theory
Leading Contributors to Theory – An Underlying Theory

 Deming’s 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

© 2007 Pearson Education 2 - 16

 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
customer’s 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.
© 2007 Pearson Education 2 - 17
 Juran applied Pareto’s Law (80/20 rule) in stating that the majority
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 70’s.
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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.

 Ishikawa’s major theoretical contribution is his

emphasis on total involvement of the operating
employees in improving quality.
© 2007 Pearson Education 2 - 19

 Quality Theory
Leading Contributors to Theory – Armand Feigenbaum

 Feigenbaum wrote Total Quality Control which

studied quality in the context of the business
organization.

 Feigenbaum’s primary contribution to quality

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

 Feigenbaum’s three step process to improving

quality:

 quality leadership – the motivating force for

quality improvement
 quality technology – includes
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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 everyone’s
responsibility

 Feigenbaum proposed 19 steps for improving quality which

emphasize total organizational involvement in improving
quality. © 2007 Pearson Education 2 - 21
 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.

 Although he 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 Deming’s in that worker
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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
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high quality. Robust design is achieved in a three-step
Quality Theory
Leading Contributors to Theory – Stephan Covey

 Stephan Covey wrote The 7 Habits of Highly Effective

People.
 Dr. Covey’s 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. Covey’s habits.
 Dr. Covey’s 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.
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 Find your voice, and inspire others to find theirs. Merge
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.
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Education
 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 customer’s 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. 2 - 29
© 2007 Pearson Education
 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  Philosophy Driven
Improvement  Quality Breakthrough
 Quality Assurance  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.
© 2007 Pearson Education 2 - 30
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
© 2007 Pearson Education 2 - 31
they are consistently of high quality.
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 customer’s
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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