Quality & Performance

Excellence, 8th Edition

Chapter 1

Introduction to Quality
and Performance
Excellence

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 Outline

 Explain the concepts of quality and performance excellence

 Provide reasons why they are important

 Provide a brief history of the “quality revolution”

 Describe quality in manufacturing, service, health care, education,

and government
 Explain the principles and practices of quality and performance
excellence
 Discuss relationships of quality with organizational models in
management theory

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 Defining Quality (1 of 2)

1. Efficiently providing products and services that meet or

exceed customer expectations
2. Adding customer value
3. Continuously measuring the improvement of processes
and services for customers
4. Acting as promised and reporting failures
5. Doing the right thing at the right time in the right way
with the right people
6. Ensuring customers come back and products do not

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 Defining Quality (2 of 2)

7. Providing the best value to customers by improving

everyday activities and processes
8. Beyond delivering what the customer wants,
anticipating what the customer will want when he or she
knows the possibilities
9. Delivering customer value across the organization
through best-in-class
products, services, and support
10. Meeting and exceeding the expectations of clients,
employees, and relevant constituencies in the community.
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 Formal Definitions of Quality

S The totality of features and characteristics of

a product or service that bears on its ability
to satisfy given needs – American Society for
Quality
S Fitness for use
S Meeting or exceeding customer
expectations
S Conformance to specifications
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 Performance Excellence

 An integrated approach to organizational

performance management that results in
 delivery of ever-improving value to
customers and stakeholders, contributing
to organizational sustainability,
 improvement of overall organizational
effectiveness and capabilities, and
 organizational and personal learning.
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 Importance of Quality

 THE buzzword among business in the 1980s

and 1990s
 Quality problems still abound in many
industries, such as automotive
 Consumer expectations are high
 “We’ve made dependence on the quality of
our technology a part of life” – Joseph Juran
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 Examples of Successful Quality-
Focused Organizations

1. Elevations Credit Union (ECU) has been named “ Best Financial

Institution” by readers of the Boulder Daily Camera for 15 of the
past 16 years, and repeatedly as “Best Bank,” “Best Mortgage
Company,” or “Best Customer Service” by readers of the Colorado
Daily, Boulder Weekly, Longmont Times-Call, and Loveland
Reporter-Herald.

2. Business satisfaction with the city of Coral Springs, Florida, rose

from 76 percent to 97 percent over a four-year period. The city was
named as one of the “Best Places to Live.”

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 Examples of Successful Quality-
Focused Organizations

3. Supplier on-time delivery at Lockheed Martin Missiles and Fire

Control has been essentially 100 percent since 2006, and overall
supplier quality has been nearly 100 percent since 2007. Time
reductions as a result of process and performance improvement
programs have occurred in all lines of businesses, yielding an
estimated savings of $225 million annually.

4. The overall Net Promoter (NP) scores (a loyalty metric defined

by the level of repeat sales and referrals) for MEDRAD, a
manufacturer of medical imaging devices, were consistently 60
percent or higher compared to the 50 percent or higher marks for
other organizations nationwide.
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 Examples of Successful Quality-
Focused Organizations

5. AtlantiCare, a nonprofit health system in southeastern New

Jersey, saw its system revenues grow from $280 million to $651
million over an eight-year period, reflecting an 11 percent
compound annual growth rate, compared to a state average of 5.6
percent.
6. The Pewaukee School District (PSD) is the smallest K-12
educational system in Waukesha County, Wisconsin. Despite
having one of the most rigorous public school graduation
requirements (28 credits) in the state, PSD achieved a 97.4 percent
graduation rate in 2012– 2013 and had a higher graduation rate from
2008 through 2012 than other county, state, and nearby high-
performing districts.
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 History of Quality Assurance
(1 of 3)

 Quality assurance in Ancient China

 Skilled craftsmanship during Middle Ages
 Industrial Revolution: rise of inspection and
separate quality departments
 Early 20th Century: statistical methods at Bell
System
 Quality control during World War II
 Post-war Japan: evolution of quality management
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 History of Quality Assurance
(2 of 3)

S Quality awareness in U.S. manufacturing

industry during 1980s: from “Little Q” to “Big Q”
- Total Quality Management
S Malcolm Baldrige National Quality Award (1987)

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 History of Quality Assurance
(3 of 3)

S Emergence of quality management in

service industries, government, health care,
education, and non-profits
S Evolution of Six Sigma

S Current and future challenge: maintain

commitment to performance excellence
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 Future Influences

 Global responsibility  Workforce of the

future
 Consumer awareness
 Aging population
 Globalization
 21st century quality
 Increasing rate of
change  Innovation

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 Quality in Manufacturing

 Performance – primary operating characteristics

 Features –“bells and whistles”

 Reliability – probability of operating for specific time and

conditions of use

 Conformance – degree to which characteristics match standards

 Durability – amount of use before deterioration or replacement

 Serviceability – speed, courtesy, and competence of repair

 Aesthetics – look, feel, sound, taste, smell

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 Quality in Services

 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?

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Differences Between Manufacturing
and Services (1 of 2)

S Customer needs and performance standards are often

difficult to identify and measure

S The production of services typically requires a higher

degree of customization

S The output of many service systems is intangible

S Services are produced and consumed simultaneously

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Differences Between Manufacturing
and Services (2 of 2)

S Customers often are involved in the service process and

present while it is being performed

S Services are generally labor intensive

S Many service organizations must handle very large

numbers of customer transactions.

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 New Frontiers of Quality

S Health care

S Education

S Government

S Not-for-Profits

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 Principles, Practices, and
Techniques

S Principles are the foundation of the philosophy

S Practices are activities by which the principles

are implemented
S Techniques are tools and approaches that help
managers and employees make the practices
effective

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 Quality Management Principles

S Customer focus S Continual

Improvement
S Leadership
S Factual Approach to
S Involvement of People Decision Making
S Process Approach S Mutually Beneficial
S System Approach to Supplier Relationships
Management
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 Customer Focus

 Customer is the principal judge of quality

 Organizations must build relationships with
customers and increase customer engagement
 Organizations must understand customer
needs and obtain feedback
 Customers are internal and external

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 Customer-Focused Practices

 Researching and understanding customer needs and expectations;

 Ensuring that goods and services are linked to customer needs and
expectations;

 Communicating customer needs and expectations throughout the

organization;

 Measuring customer satisfaction and using the results to improve;

 Systematically managing customer relationships; and

 Ensuring a balanced approach between satisfying customers and other

stakeholders

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 Leadership

S Leadership is the responsibility of top

management
S Senior leaders should be role models for the
entire organization
S An organization cannot sustain quality
initiatives without strong leadership

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 Leadership Practices

 Considering the needs of all stakeholders in decisions;

 Establishing a clear vision of the organization’ s future;

 Setting challenging goals and targets;

 Creating and sustaining shared values, fairness, and ethics at all

levels of the organization;
 Establishing trust and eliminating fear;

 Providing workers with adequate resources, training and freedom

to make customer-focused decisions; and
 Inspiring, encouraging, and recognizing worker’ s contributions.
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 Involvement of People

S A company’ s success depends increasingly on the knowledge,

skills, and motivation of its workforce.

S Engagement – workers have a strong emotional bond to their

organization, are actively involved in and committed to their
work, feel that their jobs are important, know that their
opinions and ideas have value, and often go beyond their
immediate responsibilities for the good of the organization
S Empowerment – having the authority to make decisions
S “A sincere belief and trust in people”

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 People-Focused Practices

 Understand the key factors that drive workforce engagement, satisfaction, and
motivation

 Design and manage work and jobs to promote engagement

 Create an environment that ensures and improves workplace health, safety, and
security

 Develop an effective performance management system

 Assess workforce engagement and satisfaction

 Assess workforce capability and capacity needs

 Make appropriate investments in development and learning

 Manage career progression and succession planning

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 Teamwork

 Vertical—teamwork between top management

and lower-level employees.
 Horizontal—teamwork within work groups
and across functional lines (often called cross-
functional teams).
 Interorganizational—partnerships with
suppliers and customers
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 Process Approach

S A process is a sequence of activities that is

intended to achieve some result

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Cross-functional Perspective

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 Process-Focused Practices

 Systematically defining processes that create desired outcomes; establishing

clear responsibility and accountability for managing key processes;

 Analyzing and measuring of the capability of processes;

 Identifying the interfaces of key activities within and between the functions
of the organization;

 Focusing on the factors such as resources, methods, and materials that will
improve processes; and

 Evaluating risks, consequences and impacts of activities on customers,

suppliers, and other stakeholders.

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 Systems Approach to
Management

 Synthesis means looking at an organization as a whole and

building on key business attributes, including core
competencies, strategic objectives, action plans, and work
systems.

 Alignment means ensuring consistency of plans, processes,

measures, and actions across the organization.

 Integration builds on alignment, so that the individual

components of the organizational system operate in a fully
interconnected manner and deliver anticipated results.

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 Systems Approach Practices

 Designing the organization to achieve its objectives in the most effective

and efficient way;

 Understanding the interdependencies between processes;

 Developing approaches that harmonize and integrate processes;

 Providing a clear understanding of the roles and responsibilities

necessary for achieving objectives and reducing cross-functional barriers;

 Understanding organizational capabilities; defining how specific activities

and processes should operate; and

 Continually improving the system through measurement and evaluation.

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 Continual Improvement

S Incremental and breakthrough improvement

S enhancing value to the customer through new and
improved products and services;
S improving productivity and operational performance
through better work processes and reductions in errors,
defects, and waste;
S improving flexibility, responsiveness, and cycle time
performance; and
S improving organizational management processes through
learning

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 Kano Model

S Dissatisfiers—those needs that are expected in a product or

service. Such items generally are not stated by customers but
are assumed as given. If they are not present, the customer is
dissatisfied.

S Satisfiers—needs that customers say they want. Fulfilling these

needs creates satisfaction.

S Delighters/exciters—new or innovative features that customers

do not expect. The presence of such unexpected features, if
valued, leads to high perceptions of quality.
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 Learning

 Learning – why changes are successful through

feedback between practices and results
 Learning Cycle:
1. Planning
2. Execution of plans
3. Assessment of progress
4. Revision of plans based upon assessment findings
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 Practices for Continual
Improvement

 Deploying a systematic approach to continual improvement across

the organization;

 Providing the workforce with training in the methods and tools of

continual improvement;

 Making continual improvement of products, processes, and systems

an objective for every individual;

 Establishing goals to guide, and measures to track, continual

improvement; and

 Recognizing and acknowledging improvements.

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 Factual Approach to
Decision Making

 Organizations need good performance measures to drive

strategies and change, manage resources, and continuously
improve

 Data and information support analysis at all levels

 Typical measures:
 product and process outcomes,
 customer-focused outcomes,
 workforce-focused outcomes,
 leadership and governance outcomes, and
 financial and market outcomes.
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 Data-Driven Practices

S Ensuring that data and information are sufficiently

accurate and reliable;
S Making data accessible to those who need it;

S Analyzing data and information using valid methods;

and
S Making decisions and taking action based on factual
analysis, balanced with experience and intuition.

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 Mutually Beneficial Supplier
Relationships
S Suppliers include not only companies that provide materials
and components, but also distributors, transportation
companies, and information, health care, and education
providers.

S Key suppliers might provide unique design, technology,

integration, or marketing capabilities that are not available
within the business and, therefore, can be critical to achieving
such strategic objectives as lower costs, faster time-to-market,
and improved quality.

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 Supplier Management
Practices (1 of 2)

 Recognizing the strategic importance of suppliers in

accomplishing business objectives, particularly
minimizing the total cost of ownership;

 Identifying and selecting key suppliers; developing win–

win relationships that balance short-term gains with long-
term considerations;

 Establishing trust through openness and honesty, thus

leading to mutual advantages;

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 Supplier Management
Practices (2 of 2)

 Pooling expertise and resources with partners;

 Having clear and open communication that
information and future plans;
 Establishing joint development and improvement
activities; and inspiring, encouraging,
 Recognizing improvements and achievements of
suppliers.
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