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Quality Management

Learning Objec�ves A�er comple�ng this chapter, you should be able to:

Define quality from both an internal and an external orienta�on. List the dimensions of service quality and quality for manufacturing. Understand how to gather customer expecta�ons to ensure that the firm has captured the voice of the customer. Summarize the philosophies of W. Edwards Deming, Joseph Juran, Philip Crosby, and Genichi Taguchi. Explain how quality is built into a good or service. List and explain the components of total quality management (TQM). Describe the purpose and use of quality func�on deployment.

From electronics and automobiles to clothing and produce, quality control is important to ensure that only the best items reach the consumer.

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4.1 Introduction to Quality Management

Price and quality are two cri�cal dimensions when deciding to purchase a good or service because these are key elements in the value proposi�on. That is, what does the buyer give up versus what does the buyer receive? When value proposi�on is high the benefits to the buyer substan�ally exceed the costs. Quality is a cri�cal element in the purchasing decision because quality involves cri�cal factors such as the safety of an airplane flight, the effec�veness of a surgical procedure, or the performance of an automobile. Quality is mul�faceted because the quality of a service or good is judged on several factors. For example, the quality of an airplane flight not only includes the safety factor; it also includes depar�ng and arriving on �me, the comfort of the surroundings, and baggage handling. For an automobile, quality is not only performance; it also includes safety and specific features such as video entertainment systems and global posi�oning devices.

While quality is essen�al for organiza�onal success, for many companies it is difficult to use quality to differen�ate their products from their compe�tors' products for two reasons. First, customers may not consider products for purchase that do not have high quality. Second, compe�tors have recognized the value that customers place on quality, and are striving for high quality by con�nuously monitoring customer expecta�ons, inves�ga�ng and implemen�ng new technologies that enhance quality, and quickly imita�ng compe�tors' improvements in features and performance. To use an analogy from poker, high quality has become the ante, or minimum bet, to play at the table. Despite these challenges, companies such as Apple, FedEx, and Google have been able to develop and maintain very strong reputa�ons for high quality while some of their compe�tors have not. RIM has fallen behind Apple; FedEx has taken package delivery from the U.S. Postal Service; and Google is well ahead of Yahoo!. Simply put, companies that have a strong reputa�on for quality have been able to integrate quality throughout the organiza�on, adop�ng an approach that infuses quality into company decision making. This approach has a variety of names; the one used here is quality management. The purpose of this chapter is to explain the nature of quality and how an emphasis on quality can be spread throughout the organiza�on.

Perspectives on Quality

When asked, customers can ar�culate some of the criteria that determine whether a product has high quality. For example, a hotel room should be clean and comfortable, and the guest should feel safe. A washing machine should get the clothes clean. However, defining quality is not always that simple. The factors included in quality assessment of a hotel room depends, at least in part, on its use. For a resort hotel, the pool, restaurants, beaches, and workout facili�es are part of the quality decision. For a person who is stopping for one night at a hotel while driving on the interstate, the ameni�es included in the resort hotel do not ma�er. Traveling guests only care whether or not the room is clean, comfortable, and convenient. In the earlier example of the washing machine, one customer may want a large capacity washer that minimizes water use, while another may want a small, stackable washer-drier unit that is quiet. As a result, it is not possible to fully define quality, because quality is determined by the customer and how the customer will use a product. As a result, the defini�on of quality has both an internal orienta�on—quality from the company's perspec�ve, and an external orienta�on—quality from the customer's perspec�ve.

Internally Oriented Defini�ons of Quality

Defini�ons of quality that have an internal orienta�on directly measure characteris�cs of the product, such as the number of packages delivered on �me or the thickness of an engine part. Two examples of internally oriented defini�ons of quality are:

1. Quality is the degree to which a specific product conforms to its design characteris�cs or specifica�ons. Surgeons must follow the proper procedure as the surgical team closes the incision, thereby ensuring that no sponges or other items are le� in the pa�ent. Robots must place the spot welds in the proper loca�on on the body of the automobile in order to maximize its strength.

2. Quality can be measured as the amount of a specific, desired a�ribute, such as window �nt or cheese on a pizza.

One shortcoming of internally oriented defini�ons is the company's assump�on that the product specifica�ons match what the customer wants—an assump�on that may not be correct.

Externally Oriented Defini�ons of Quality

Quality with an external orienta�on focuses on the customer, and typically includes a discussion of "fitness for use." In other words, quality cannot be effec�vely measured in the abstract. For example, a resort hotel with the finest food, cleanest rooms, best beaches, and friendliest staff does not meet the needs of the cross-country traveler who will spend only a few hours in the room. When quality is measured by customer wants, the resort hotel does not have the right fit for the cross-country traveler, so it is not the right quality. Quality is the capacity to sa�sfy customers' needs.

In some cases, customers may not know that they have a need for a product because customers may not imagine what is possible. A few years ago, when Ford Motor Company introduced the SYNC system to manage mobile phone, music, and other digital technology in its vehicles, it was done to sa�sfy a desire from car owners, but one that was not clearly ar�culated. SYNC set new expecta�ons for communica�on and entertainment systems in vehicles.

Although it may appear that externally oriented defini�ons of quality are s�ll somewhat vague, companies known for high-quality goods and services specifically define the parameters of quality. Quality means consistently mee�ng or exceeding the customer's needs and expecta�ons. Quality begins with an external process that iden�fies the customers' needs and expecta�ons. Then, those needs and expecta�ons are translated into an internal process to guarantee they are met or exceeded. One way of formalizing that process is called quality func�on deployment, which is discussed later in this chapter. Quality func�on deployment takes customer expecta�ons and transforms them into specific ac�ons designed to meet those expecta�ons.

Consumers have different expecta�ons when staying in a motel or when staying in a 5-star resort. The level of quality will be evaluated differently for each of these locales because quality is based upon mee�ng or exceeding the customer's needs and expecta�ons.

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Understanding Customer Expecta�ons

It would seem that a company that wants to achieve excellent external quality would simply ask its customers what they want and provide these things to them. Asking customers what they want is useful and provides important informa�on, however, it is not sufficient for the following reasons. First, customers o�en have unspoken desires. If you survey customers and ask open-ended ques�ons such as what they want on an airplane flight, they are much more likely to say on-�me arrivals and departures, faster check-in �mes, and be�er and faster security screening by TSA. It is not likely they would say they do not want to crash. Customers assume that the airline understands safe transporta�on as a basic need, so it is unspoken despite that it is the most important need of the customer. Referring to the poker analogy used earlier, safety is part of the ante that every airline must have to remain in the game. Second, customers operate in the environment of what is known, and o�en do not think about what is possible. If a company opera�ng 200 years ago asked its customer how they might like to communicate in the future, it is unlikely that the customers would have described voice over wire telephones. If customers were asked 50 years ago about the future of person-to-person communica�on, it is unlikely that customers would have men�oned wireless communica�on devices, the Internet, and high-speed data services. Twenty years ago, few customers would have thought to ask for the ability to download video to their wireless device. Mobile phones were large, clumsy devices that could only make phone calls and were unreliable. Organiza�ons must go beyond asking customers what they want and understand what their customers value, such as how they do their work and what makes customers happy. If companies understand these needs, firms are able to see how new ideas and new technology may help customers do more work or enjoy a be�er lifestyle. Firms should ask the following ques�ons when they want to understand customers' expecta�ons:

1. Ask customers what they want. 2. Ask customers specific ques�ons about a�ributes of the product that are not men�oned by the customer:

Probing the customers with specific ques�ons about their needs may lead to unspoken expecta�ons. 3. Ask customers about their opera�ons or how they will use the product: Knowing how the customer func�ons and

how they use the product can lead to a be�er understanding of what and how new ideas and technologies could help them. The success of Facebook, Twi�er, and Apple are based on crea�ng services and goods that customers would use despite the customer not understanding the product and its applica�on prior to product launch.

4. Ask customers how their customers use the products: Knowing the needs of the customers' customers can help the organiza�on be�er understand the impact of its product on the value-crea�on chain and, therefore, meet the needs of the final customer in this chain.

Motorola's Six Sigma System: A CEO Goes Back to the Classroom

4.2 Dimensions of Quality

Understanding the dimensions of quality is an important step in transforming customers' needs and expecta�ons into internal processes. The differences between goods-based and service-based organiza�ons have some significant impacts on the way quality is determined and measured. For example, because services are intangible, the quality of services will be based much more on human percep�on. As a result, the dimensions of service quality are somewhat different than the characteris�cs of quality for manufactured products.

Service Quality

The following five dimensions of quality are o�en used by customers to judge service quality. Understanding these dimensions helps firms to define quality and determine what steps are needed to improve quality.

1. Reliability—ability to perform the promised service dependably and accurately. 2. Responsiveness—willingness to help customers and provide prompt service. 3. Assurance—knowledge and courtesy of employees and their ability to convey trust and confidence. 4. Empathy—provision of caring, individualized a�en�on to customers. 5. Tangibles—appearance of physical facili�es, equipment, personnel, and communica�on materials, including

access and effec�veness of Internet-based informa�on.

Some examples of these five dimensions are shown in Table 4.1. The reliability and responsiveness of a service are at the core of how customers evaluate service quality. This is because customers expect the service to be performed well and to be complete at the �me demanded by the customer. Most services rely on people to design the opera�on systems and to do the work. A hairdresser's reliability and responsiveness clearly impacts the client served in a beauty shop. Likewise, it is people who determine how the system of service providers for mobile devices works, including the likelihood of dropped calls, clarity of voice, and speed of data downloads. If a company fails to provide reliability and responsiveness, it is more likely to lose a customer than if other factors or services fail. In other words, it does not ma�er how nice the furniture in your hotel room looks if the staff is rude.

Table 4.1: Examples of service quality dimensions

Reliability Did the express package arrive on �me? Was my DVR repaired correctly?

Responsiveness Did the florist deliver the flowers as ordered? Does the hotel send up an extra pillow as requested? Does the credit card company respond quickly when I have a ques�on about my statement? When an employee says he will call me right back, does he?

Assurance Can the salesperson answer my ques�ons about the computer on sale? Does the car mechanic appear to know about my car? Does my physician politely and knowledgeably answer my ques�ons?

Empathy Does someone in the restaurant recognize me as a regular customer? Is the salesperson willing to spend the �me to understand my par�cular needs? Does my advisor work with me to develop a program of courses for my specific career goals?

Tangibles Is the hotel room furniture clean and modern? Does the auto repair shop appear neat and �dy? Is my bank statement easy to understand?

Real World Scenarios: Southwest Airlines

Southwest Airlines combines reliability with subjec�ve quality dimensions for a winning combina�on in the airline industry. The dire situa�on for many airlines has been demonstrated by bankruptcy filings, companies closing, mergers, and record losses. While legacy companies such as United, American, and Delta have been losing money, Southwest has maintained profitability and also has remained at the top of customer sa�sfac�on rankings. Southwest does this by maintaining a clear focus on the customer and mee�ng the customers' needs. Customers want low fares and reliable, high-value service, and Southwest provides fares that are consistently below those of compe�tors'. In addi�on, fees are not charged for luggage transport. Southwest o�en resists a�empts by its compe�tors to raise prices because it is a low-cost provider. It keeps costs low primarily because its employees are mo�vated, energe�c, and are stakeholders in the company. In addi�on, Southwest empowers its employees to do what they can to solve any customer problems that arise.

Quality of Goods

In examining the dimensions of quality for goods, it is important to recall that a good is tangible, and therefore, direct contact between the customer and the employees who make the good does not o�en occur. As a result, the factors that comprise the quality of goods are quite different from the factors that comprise quality service. People at all levels of the

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manufacturing organiza�on are s�ll cri�cal when determining quality because they design and build the product. The impact of these employees on the customer, therefore, is transmi�ed through the customers' use of the product. The following list describes the factors that determine quality for goods. As can be expected, these focus on specific a�ributes of the product and do not include human factors, with the excep�on of serviceability:

Performance—primary opera�ng characteris�cs of a product. Features—secondary characteris�cs that supplement the product's basic func�oning. Reliability—length of �me a product will func�on before it fails, or the probability it will func�on for a stated period of �me. Conformance—degree to which a product's design and opera�ng characteris�cs match pre-established standards. Durability—ability of a product to func�on when subjected to hard and frequent use. Serviceability—speed, courtesy, and competence of repair. Aesthe�cs—how a product looks, feels, sounds, tastes, or smells. Perceived Quality—image, adver�sing, or brand name of a product.

For the quality of goods, performance and features are important dimensions of the product. These are o�en key elements in the purchase decision whether the product is a mobile device, a vehicle, or an appliance. Reliability is common to both services and goods, but as expected with a good, it is linked directly to how the product performs. Conformance is a posi�ve dimension in some applica�ons, but may be nega�ve in other applica�ons. When purchasing paint that is to match an exis�ng color, a replacement door, or new brakes for a car, conformance to specifica�ons is vital. Conversely, non-conformance may be desirable for other items such as clothing or furniture. Durability is another trait of goods that can be measured and assessed, and is o�en more important for goods that provide func�on rather than form, such as markers for white boards, hand mixers, and can openers. Most people want these products at low cost and want them to last a long �me. The last three characteris�cs are more subjec�ve in nature. With serviceability, the customer o�en interacts directly with the employee who is doing the work, so this factor has similar characteris�cs to service quality. Aesthe�cs refers to how a product looks, which is subject to individual tastes, and is o�en difficult to assess. Perceived quality is similar to aesthe�cs because customers may have different expecta�ons.

Costs of Quality

Tradi�onally, companies thought of quality costs only as those that were necessary to produce higher quality. In fact, as many companies have discovered, higher quality can mean reduced costs because of savings from reduced scrap, rework, and customer warranty claims. Whether performing a medical test or assembling a mobile device, correctly comple�ng a job the first �me improves quality and lowers costs. Iden�fying and elimina�ng steps in a process that do not add value for a customer has the poten�al to reduce selling price. While it may not be true in every instance, there is truth in the statement that "quality is free." Consider the following three categories of the costs of quality:

1. Failure costs—can be internal to the organiza�on or external involving the customer. 2. Appraisal costs—investment in measuring quality and assessing customer sa�sfac�on. 3. Preven�on costs—put a stop to the quality problem.

Failure Costs

Failure costs are incurred whenever any product or component of a product fails to meet requirements. Such costs can be divided into two categories: internal or external. Internal failure costs are those associated with defects found before the product reaches the customer. Examples of this include the costs of correc�ng errors in a customer's bank account, discarding food that was improperly cooked, scrapping defec�ve parts, or reworking products that contain defects. In some cases internal failures can be dangerous to employees, such as when a building collapses while under construc�on because of defec�ve materials.

External failure costs are incurred a�er a product has reached the customer. This can include the cost of warranty repair work, handling complaints, or replacing products. The costs of lost goodwill and possible liability if someone is injured or killed because of an external failure can be considerable. The costs of external failure can be especially devasta�ng if customers are lost.

Highlight: Product Liability

There are huge costs associated with quality problems when products reach customers. There are dozens of examples, including sudden accelera�on in Toyota's vehicles, tread separa�on on Firestone �res, mistakes in surgeries, and structures that unexpectedly collapse because of poor design or construc�on. These problems can generate lawsuits that are expensive to combat (and more expensive to se�le), and nega�vely affect the reputa�on of the company. Another example is Boeing's a�empts to deal with problems that arose soon a�er the release of its 787 Dreamliner. Worries about the poten�al for ba�ery fires led to jet's grounding soon a�er its release. The company's ability to address the problems will impact the demand for its products and the profitability of the company.

Appraisal Costs

Appraisal costs are the costs incurred to measure quality, assess customer sa�sfac�on, and inspect and test products. Ac�vi�es that are designed to improve quality by be�er understanding the current performance level of a product are included in appraisal costs. Appraisal costs could include the cost of conduc�ng a customer sa�sfac�on survey, hiring an individual to visit, and inspect each property in a hotel chain, or tes�ng new notebook computers to be sure they will operate as intended. In electronic components, most failures take place during the first 90–180 days of opera�ons or during the wear-out period at the end of the product's life, and the defect rate between these two events is very low.

Highlight: Feedback for Hotels

Hotels such as Marriot, Hya�, and Sheraton have resorts across the United States and around the world. These firms want to know what their customers like and dislike so that each hotel can make sure that a guest's stay is enjoyable. Hotel managers spend much �me and effort to collect feedback from their customers. They examine past pa�erns of use in an effort to make the next stay even be�er. These firms search their records to determine what customers purchased in their gi� shops and restaurants, which tours were booked through the concierge, and which room service requests were made. In this way, these hotels can a�empt to ensure a sa�sfied customer and another stay at the hotel chain. Because there is a large investment in a hotel's facility, a room that is not booked for one day loses revenues that can never be recovered. This is unlike a washing

machine that does not sell today but can be sold tomorrow. In addi�on to the physical facili�es, there is substan�al management overhead within a hotel and at its headquarters. This overhead must be paid whether or not a room is booked. The labor at the hotel that cares for the grounds, prepares the food, and checks in guests is paid whether or not the room is rented. Most of the costs associated with running a hotel are fixed and are not alleviated when a room is not rented. Thus customer sa�sfac�on is cri�cal for success.

Preven�on Costs

Preven�on costs result from ac�vi�es designed to prevent defects from occurring. Preven�on costs can include ac�vi�es such as employee training, quality control procedures, special efforts when designing products, or administra�ve systems to prevent defects. One example is the cost of modifying a bank's computer system to request confirma�on whenever a teller's entries are unusually large or unusually small. Electronic confirma�ons are also seen on entry screens for online purchases and other applica�ons. For example, an error message will appear if a digit in a telephone number is missing, and the customer will not be able to advance to the next screen. Conversely, if an extra keystroke is made in an a�empt to enter a phone number, the system will not accept it. Cri�cal informa�on, such as e-mail addresses, require the customer to enter the data into these systems twice. The two entries are compared, and if they are the same, the user can advance to the next screen. Double-entry greatly reduces the chance of an incorrect entry. There are many examples of this in manufacturing as well, but customers do not see them. Manufacturers design assembly systems so that a part can only be assembled in one correct way. If it fits or snaps in place, it is correct. Parts are color-coded to ensure they are placed correctly on the right product. Thousands of preventa�ve measures have been implemented to reduce the cost of maintaining quality in manufacturing.

Highlight: Poka-Yoke: Mistake Proofing

Poka-yoke is an approach adopted by many companies to prevent defects. This term is a rough approxima�on of Japanese words that mean "mistake proofing." For example, Dell uses color-coding on its connec�ons so that when customers set up their computers at home, they are less likely to plug the printer cable into the monitor connec�on. This results in a be�er experience for the customer and higher customer sa�sfac�on.

At one �me there was a philosophy that companies should trade off the costs of preven�on for the costs of failure. This resulted in the belief that companies should be willing to accept an op�mum level of defects. Many companies now find that a reputa�on for high quality has benefits that far outweigh any addi�onal preven�on and appraisal costs associated with achieving high quality.

Six Sigma

For many years, companies accepted a 1% to 3% rate of defects in goods and services, which is as many as three defects per hundred units. A few years ago, Motorola, a worldrecognized quality leader, set for itself a goal of Six Sigma quality. Six Sigma relates to the firm's ability to produce error free products. For the sta�s�cian that is six standard devia�ons rather than three standard devia�ons, which is o�en discussed when applying the normal distribu�on. While three standard devia�ons equals approximately 2.6 defects per 1,000 units, or 99.74% error free, six standard devia�ons equals 3.4 defects per 1 million units, or 99.99966% error free. The old standard of 1% to 3% defects, which is not very restric�ve, would generate about 34,000 defects per 1 million. Six Sigma increases expecta�ons and a�empts to slash defects dras�cally.

Six Sigma is a collec�on of ideas and programs that are intended to improve the quality of a service or a good by using tools that iden�fy the root cause of the defects and then implement programs to eliminate the underlying problem that caused the defects. Tools such as a fishbone chart allow the firm to trace a problem that the customer sees to the root cause of the problem. For example, long delays in baggage delivery at the airport could be the result of insufficient staffing, insufficient baggage handling equipment, or poor loading procedures that make it difficult to find the right bags. Then, tools such as simula�on or mathema�cal modeling (which are discussed in a later chapter) can be applied to determine how the problem may be solved and the baggage handling process improved. Six Sigma helps the firm make its processes consistent because when Six Sigma is achieved a defect (late baggage delivery) occurs only 3.4 �mes out of 1,000,000. Six Sigma may be good enough for baggage delivery, but some�mes, Six Sigma is not enough. Passengers on the airlines want results that are be�er than 3.4 crashes for every 1,000,000 airline flight, or about one crash in 300,000 flights. There would be several crashes each day if a three sigma standard was used, and dozens of crashes per day if a 3% defect rate was allowed.

Six Sigma develops a cadre of specialists within an organiza�on called "Black Belts" and "Green Belts," who are experts in specific methods. Six Sigma follows a set of steps that inves�gates the opera�ons process and leads the team toward outcomes that can be measured, analyzed, improved, and controlled. The effec�veness of the baggage handling process is measured by customer wait �me, and the airline should have a performance target. The outcomes of these processes are important to the company and, ul�mately, to the customer.

Six Sigma is based upon the implementa�on of ongoing, well-documented, and highly visible ac�vi�es. It is common for highly placed execu�ves in the firm to be Black Belts and to train new Green Belts and Black Belts. These firms want their employees to live and breathe quality, so that quality improvement efforts are sustainable.

American sta�s�cian W. Edwards Deming was highly influen�al in the development of quality management.

©Be�mann/Corbis/AP Images

4.3 Foundations of Quality Management

The groundwork for today's philosophies about quality was implemented over a long period by many different people. Some of the best-known individuals working in quality control have been wri�ng, teaching, and lecturing for many years. In fact, two, W. Edwards Deming and Joseph M. Juran, are credited with major influence on the approach to quality in Japanese organiza�ons.

W. Edwards Deming

Un�l his death in 1993 at the age of 93, W. Edwards Deming was probably the most influen�al individual within the specialty of quality. Deming began his career as a sta�s�cian and became involved in quality when he worked with Walter Shewhart, the founding father of sta�s�cal process control. Sta�s�cal process control (SPC) is the use of sta�s�cal methods to determine when a process that produces a good or service is ge�ng close to producing an unacceptable level of defects. When the process crosses a par�cular threshold, it is moving out of control. A�er World War II, Deming went to Japan under the auspices of the U.S. government as part of an effort to rebuild Japan's economy. His influence on the Japanese was so great that today, Japan's highest prize for quality is the Deming Prize. Surprisingly, Deming was largely ignored in the United States un�l the 1980s. Beginning in the 1980s, Deming lectured extensively to large audiences throughout the country un�l his death in 1993.

Deming's philosophy is illustrated by his wellknown 14 points for the transforma�on of management, shown in Table 4.2. Today, there is s�ll confusion and disagreement about what is meant by some of Deming's points; however, Deming's basic premise notes that the system, not employees, causes defects. Management is responsible for changing the system, and must accept that responsibility instead of blaming employees when defects occur. Because of his background, Deming also stressed the use of sta�s�cal process control, and encouraged training all employees in its use.

Table 4.2: Dr. W. Edwards Deming's 14 points for the transforma�on of management

1. Create constancy of purpose toward improvement of product and service. Aim to become compe��ve and to stay in business, and provide jobs.

2. Adopt the new philosophy. We are in a new economic age. Awaken to the challenge. Learn the responsibili�es, and take on leadership for change.

3. Cease dependence on inspec�on to achieve quality. Eliminate the need for inspec�on. Build quality into the product in the first place.

4. End the prac�ce of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier on any one item, on a long-term rela�onship of loyalty and trust.

5. Improve constantly and forever the system of produc�on and service, to improve quality and produc�vity and thus constantly decrease cost.

6. Ins�tute training on the job.

7. Ins�tute leadership.

8. Drive out fear, so everyone may work effec�vely for the company.

9. Break down barriers between departments.

10. Eliminate slogans, exhorta�ons, and targets for the workforce asking for zero defects and new levels of produc�vity.

11a. Eliminate work standards (quotas) on the factory floor. Subs�tute leadership.

11b. Eliminate management by objec�ve. Eliminate management by numbers, numerical goals. Subs�tute leadership.

12a. Remove barriers robbing the hourly worker of his right to pride of workmanship. Change the responsibility of supervisors from sheer numbers to quality.

12b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. Abolish the annual or merit ra�ng and management by objec�ve.

13. Ins�tute a vigorous program of educa�on and self-improvement.

14. Put everybody in the company to work to accomplish the transforma�on. The transforma�on is everybody's job. Source: Deming, W. E. Out of the crisis. Cambridge, MA: MIT Center for Advanced Engineering Study, 1986.

Joseph M. Juran

Joseph M. Juran, who was an ac�ve lecturer un�l 1995 when he re�red, was also a colleague of Walter Shewhart, and lectured and taught in Japan a�er World War II. Some have argued that Juran's contribu�on to Japan's quality efforts was even greater than Deming's. Like Deming, Juran emphasized management's responsibility for ensuring quality. Juran, however, focused on the customer by defining quality as "fitness for use." He also emphasized the need for con�nuous improvement and stressed that quality must be built on three elements: quality planning, quality control, and quality improvement.

Philip Crosby

Philip Crosby became interna�onally recognized with the publica�on of his 1979 book, Quality Is Free. In that book, and in later publica�ons, he argues that failure costs are much greater than most companies had thought. By reducing failure costs, companies can save money, hence the �tle of Crosby's book. Crosby is most o�en recognized for emphasizing the importance of considering all costs of quality. He is also responsible for promo�ng the idea that all errors must be eliminated, indicated by his slogan "do it right the first �me," and the concept of zero defects.

Genichi Taguchi

Japanese companies were among the world's first to place a strong emphasis on quality, so it is not surprising that several people from Japan have made significant contribu�ons to the field of quality. Genichi Taguchi's ideas are par�cularly important. Taguchi first gained prominence shortly a�er World War II, working with research facili�es to develop Japan's telephone system. A�er no�cing that considerable �me and effort were expended in experimenta�on and tes�ng, Taguchi developed procedures for designing experiments so that more informa�on could be obtained with fewer experiments. Taguchi has also contributed an en�re philosophy about how products should be designed, and that philosophy now forms an important part of quality management.

Taguchi argues that quality must be designed into a product. His point is that quality cannot be achieved through inspec�ons a�er the good is made or the service is provided. Thus, an important part of Taguchi's philosophy is based on the concept of robust design— designs that guarantee high quality regardless of varia�ons (such as employee errors) that may occur during the processes that produce the product. For example, McDonald's has designed a ketchup dispenser that puts precisely the right amount of ketchup on each burger, elimina�ng varia�ons in product quality that may result from employees dispensing too much or too li�le.

Building Quality into Product

Design for manufacture and assembly (DFMA) emphasizes that products should be designed so they are simple and inexpensive to produce. This concept has also been applied to service opera�ons under the term design for opera�ons (DFO). Both concepts underscore that the design of the product and the process by which the product is made are key factors when determining quality. Quality inspec�on does not improve the underlying quality of the product or the process. Building quality into a product, rather than trying to inspect it into the product, is described in the following:

1. Product Design: This is how the product, either a good or a service, func�ons. It determines the features, func�ons, aesthe�cs, and performance of a product, which are essen�al parts of the product's quality. For example, the capabili�es of an electronic device such as a notebook computer are determined by product design. The product design determines the capability of the display, the size and performance of the processor, and Wi-Fi accessibility. Product design also determines the reliability, durability, serviceability, and other key quality elements. The ability of Travelocity to provide robust and reliable service depends upon how it designs its servers, the user interface, and access to travel data. In large measure, the cost to produce the good or to provide the service is determined when the product is designed. Product design is one of the most important decisions a firm will make.

2. Process Design: This is how the product, either a good or a service, is produced. Process design includes the methods that the firm uses to transform the product ideas created in the product design into the good or service that the customer is purchasing. In manufacturing, process design includes selec�ng the materials, facili�es, and equipment used to make the product as well as determining the labor skills needed to execute the process plan. In restaurants, decisions regarding the quality of the purchased food are important. In health care, facili�es and equipment selec�on are also a very important decision. In banking, materials are really not an issue and facili�es and equipment are limited to office space, ATMs, and basic office equipment. By their nature, process design for service opera�ons heavily depends upon people skills. In many service opera�ons, labor costs represent 70% or more of the cost of providing a service.

3. Work Execu�on: This is the performance of the plan created in the product and process design. If the product design and the process design represent the football game plan, then playing the game is the work execu�on. The success of this depends on how well the plan is communicated to the workforce, whether the workforce has been selected so it has the basic skills to execute the plan, and how well the workforce has been trained to do the work. When these func�ons are performed well, the product and process designs should be well executed, and a high-quality product should be produced.

4. Inspec�on: This is an assessment of the quality of the good or service. If the first three steps are properly performed, then inspec�on is, theore�cally, unnecessary. Inspec�on provides feedback about how well the product is designed and built. Its primary benefit is to iden�fy quality problems and connect them to their sources. Defects may be caused by a poor product design (such as a defec�ve so�ware interface), a poor process design (such as equipment that is unsuitable for the product), or poor work execu�on (such as an untrained worker or poorly executed maintenance plan). Inspec�on does not increase the quality of the products being produced, but it may prevent defec�ve products from reaching the customer. The primary purpose of inspec�on is gaining informa�on that helps the firm improve quality by changing design and work execu�on.

American Express u�lizes the total quality management (TQM) approach that emphasizes con�nuous improvement and customer focus, among other things.

©Todd Gipstein/Corbis

The Customer Knows Best: Profi�ng from Collabora�on

4.4 Total Quality Management

Total quality management (TQM) is an approach to quality management that originated in Japan and was adopted successfully by many companies throughout the world, including American Express and GE. TQM is an organiza�on-wide philosophy that embodies the following components:

Focus on the customer Quality func�on deployment Responsibility for quality Team problem solving Employee training Fact-based management Philosophy of con�nuous improvement

Each of these components is discussed next, in detail. It should be stressed, however, that they apply to all aspects of a company's opera�on, from design of products and processes to distribu�on and a�erthe- sale service. Further, all parts of the company must be involved, including those which do not usually interact with external customers, but instead serve other parts of the company.

Focus on the Customer

Customers are usually those outside a company, specifically the people or the organiza�ons that purchase the good or service the company produces. However, it is also possible to think of internal customers as parts of an organiza�on that u�lize informa�on or other outputs from another func�onal area inside the organiza�on, such as accoun�ng. In a hospital, the laboratory could think of the physician who requests lab work as its customer. Thus, a customer can be anyone, whether inside or outside an organiza�on, who receives the output from an ac�vity or process.

Juran's defini�on of quality as fitness for use provides the groundwork for focusing on the customer. Unfortunately, many companies in the past have iden�fied what they thought the customer wanted without actually asking the customer. Companies that use TQM rely on what is called the voice of the customer.

The voice of the customer describes what customers want and what they like and do not like. Listening to the voice of the customer is essen�al to be successful. To do this, many companies get to know their customers personally. For example, some companies hold focus groups, in which customers are contacted to discuss their wants, needs, and expecta�ons, and to respond to proposals to change the good or service produced. Companies ask ques�ons about how the customer uses their product. If a company understands its customers, it can be�er meet or exceed their needs and expecta�ons. Listening to the voice of the customer is more than providing customers with what they request. Simply stated, customers are likely to verbalize what it is with which they are familiar. If a new technology is available and customers are not aware of it, they will not know how to describe their need. If the company understands the customer and the customers' wants, it may have ideas and technologies that could be applied to meet a future need. For example, which customers told Apple that they wanted a small portable device that could download and play music on the run (the iPod)? Apple has succeeded by an�cipa�ng what technology customers may want and how they could use these products.

Quality Function Deployment

The quality of a product, whether that product is a manufactured good or a service, is largely dependent upon how well the product and the processes for producing it were designed. Listening to the voice of the customer provides a company with valuable informa�on. That informa�on, however, usually describes the customer's needs or expecta�ons, such as the need for transac�ons at a bank to be handled quickly and accurately, or the expecta�on that a room reserved at a hotel will be available when the guest arrives. Those needs and

expecta�ons must be transformed into design characteris�cs for the product and process. Quality func�on deployment (QFD) is one method that can be used to make that transforma�on by rela�ng customer needs and expecta�ons to specific design characteris�cs through a series of grids or matrices.

Figure 4.1 shows the basic form of the matrix used in QFD, which is o�en called the house of quality because of its shape. The customer needs, or "WHATs," are listed along the le�-hand side of the matrix. Design characteris�cs related to these needs are listed along the top as "HOWs." The rela�onship matrix in the middle (WHAT versus HOW) indicates the nature of the rela�onship between each customer need and each design characteris�c. Figure 4.2 shows the house of quality for a limited set of customer needs related to an automobile. As shown, the need for good gas mileage is posi�vely related to the design characteris�c of fuel economy, nega�vely related to accelera�on, and has no rela�onship to turning radius. In some cases, the simple plus or minus signs used in Figure 4.2 are replaced by other symbols indica�ng the strength of the rela�onship, from strongly nega�ve to strongly posi�ve.

Figure 4.1: The house of quality

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Figure 4.2: House of quality for an automobile

When designing products and processes, companies o�en face trade-offs, such as that between fuel economy and accelera�on. The house of quality can help a company evaluate trade-offs. The roof part of the house shows how each design characteris�c affects other design characteris�cs. The right-hand side of the house shows the importance of each customer need, and can also indicate customer percep�ons about how well the company is performing rela�ve to compe�tors. Performance on each design characteris�c can be compared against compe�tors along the bo�om. Thus, less emphasis may be placed on a customer need that is not very important, or on a design characteris�c in which the company already outperforms the compe��on. The house of quality shown here is only a simple example; those developed by companies can be very complex.

This first house of quality translates the voice of the customer into design characteris�cs, but characteris�cs alone will not indicate to the firm how to make a car. Those design characteris�cs must be transformed into parts characteris�cs, as shown in the second house in Figure 4.3. Parts characteris�cs define how the engineering characteris�cs will be achieved, but the parts characteris�cs can only be achieved when the process is planned to do so. Thus, a third house is required to convert the parts characteris�cs into opera�onal processes that describe how the parts are to be produced to obtain the required characteris�cs. In the fourth house, the opera�onal process is the basis for determining the produc�on requirements, which specify inspec�on details, measuring methods, operator training, and related details.

Using the four steps shown in Figure 4.3, the voice of the customer has been deployed throughout the en�re organiza�on. Further, all parts of the organiza�on have worked together to achieve that deployment.

Phil Condit: Improvement and Benchmarking; Boeing Reinvents the Airplane

Figure 4.3: Successive houses of quality deploy the voice of the customer throughout the organiza�on

Responsibility for Quality

In the past, many companies used quality control (QC) departments to ensure quality. Unfortunately, this prac�ce allowed others in the organiza�on to assume that the QC department was solely responsible for quality. Organiza�ons that embrace TQM have realized that everyone must accept responsibility, from the company CEO to the person who cleans the parking lot. Each individual contributes to quality (or lack thereof) in some way. In addi�on, company suppliers must also accept responsibility for their role in quality. It is essen�al that TQM have top management support and commitment in order for it to succeed.

Real World Scenarios: Ritz-Carlton: Quality-Infused

The recent experiences of one person who stayed at the Ritz-Carlton in Georgia demonstrate the value of infusing quality into the organiza�on. One night, the guest wanted a newspaper, but the gi� shop was closed. During her late dinner (the hotel employees insisted on keeping the kitchen open past its closing �me to serve her), she asked if any customers had le� a newspaper behind. The waiter returned in three minutes with copies of the Atlanta Cons�tu�on, USA Today, New York Times, and Wall Street Journal. Of course, the guest was not charged for the papers.

This a�en�on to mee�ng the needs of the customer and also to deligh�ng the customer is directly ordered from the head of Ritz-Carlton Hotels. Because of its top-level commitment to customer care, Ritz-Carlton has won the Malcolm Baldrige Award, a na�onal quality award. Quality, however, extends to every ac�vity at the hotel.

When this guest stayed at the same Ritz-Carlton on another occasion, the hotel's concierge had located a special store for her. When no taxis were available, a doorman was summoned to drive her in a hotel car. Along the way, the doorman explained that he had just completed three days of training before being allowed to open the door for customers. Of course, once again, the guest was not charged for the car service to and from the store. As may be expected, the customer was delighted by this service.

Team Problem Solving

Problems are o�en encountered when a�emp�ng to meet or exceed customers' needs and expecta�ons. For example, a hospital may find that emergency room pa�ents with problems that are not life-threatening complain they have to wait too long for service, or an automobile manufacturer may find that its customers want an increasing number of product op�ons but want prices to remain low. Problems like these can be solved be�er by a team than by one individual. Team efforts to problem solve allows for different viewpoints and also enables the team members to split the workload and to brainstorm possible solu�ons with one another. When an organiza�on faces a complex problem, a team approach to decision making may be more effec�ve than relying on one individual to make the necessary decisions. One person may not have access to all the informa�on, nor have the broad range of knowledge needed to understand the problem, design alterna�ve solu�ons, and select the best approach. Group decision making is also very useful when building commitment to the selected alterna�ve. When top management makes decisions, commitment to make alterna�ve solu�ons work may be low, thereby making implementa�on very difficult. Convincing people to use a new approach is easier when each person is involved in the decision-making process. When a group is involved, each member will find ways to make the new approach work, rather than find excuses for why it will not.

Employee Training

Deming emphasized the importance of training employees to use the tools of sta�s�cal process control. As organiza�ons have adopted a team approach to problem solving, it has also been determined that employees need training to work effec�vely in groups, and to use group problem-solving tools. Pareto charts that iden�fy the most frequent causes of quality problems, cause and effect diagrams that illustrate the root cause for a problem, and quality control charts that assess quality conformance are just three of many techniques.

Fact-Based Management

Companies that use TQM must determine what their customers' needs and expecta�ons really are, not what the company thinks they are. This philosophy of basing decisions on facts, data, and analysis—instead of intui�on or inference—extends to other areas of the TQM company. Companies today are beginning to operate with a new saying: "What gets measured gets a�en�on." This has always been true as employees concentrated on the criteria they knew would be used to judge them. Now companies are realizing that those criteria must �e into the company's compe��ve strategy. As a result, some of the most important measurements today are those related to quality. These measurements of quality include not only internal measures, such as the number of customer complaints received or the percent of products reworked, but also external measures, such as customer sa�sfac�on. In many cases, firms are taking quality to the next level. They are seeking to know more about their suppliers' sa�sfac�on at working with them, as well as the suppliers' capabili�es. If the firms know something about the suppliers' capabili�es, they may be able to use those capabili�es in new ways. Product quality and sa�sfac�on of the final customer are determined by all of the par�cipants in the supply chain, so knowing something about suppliers is important to quality improvement. For example, the equipment supplier

for a medical test such as a CAT scan, or the supplier of hardware for a furniture manufacturer impact the quality of the service or good purchased by the customer.

Benchmarking

Benchmarking is a process by which a company compares its performance to the performance of other companies. Those other companies need not be compe�tors, nor be within the same industry. Instead, the purpose of benchmarking is to set a standard based upon the company that is recognized as the best at a certain ac�vity. As an example, many companies use L.L. Bean as a benchmark for online ordering and order fulfillment. To be effec�ve at benchmarking, firms must understand that a benchmark does not define the best possible outcome; it only iden�fies what a company has achieved. Choosing the wrong companies to benchmark can lead to se�ng standards that are too low. As a result, a benchmark is only one piece of informa�on that companies should use to set performance goals for quality or any other important outcome.

Broader Measures of Performance

Companies have tradi�onally measured their performance using the accoun�ng standards of cost and profit. Today, those standards alone are insufficient. Quality is an important performance measure that must be used, especially by companies using TQM. Customers' needs may include other factors such as delivery speed, flexibility, or innova�on, therefore, the performance measurement system must also include these factors.

Philosophy of Continuous Improvement

The philosophies of Deming, Juran, and Crosby all include the concept of con�nuous improvement. No ma�er how good a company is, it must always work to do be�er. This philosophy of con�nuous improvement is an extremely important part of TQM. Companies adop�ng con�nuous improvement as an organiza�onal philosophy have found that the following key components are necessary:

Standardize and document procedures. Assign teams to iden�fy areas for improvement. Use methods analysis and problem-solving tools. Use the Plan-Do-Check-Act cycle (see Figure 4.4). Document improved procedures.

Standardizing and Documen�ng Procedures

Standardiza�on and documenta�on form the basis of con�nuous improvement as shown in the preceding list, which begins and ends with documenta�on. Standardiza�on involves developing a preset procedure for performing an ac�vity or job. Documenta�on is the act of pu�ng that procedure into wri�ng. Standardiza�on and documenta�on are necessary for con�nuous improvement so the organiza�on knows exactly how something is being completed now (the "as is" condi�on). A�er the process has been improved, the firm should document the new procedure (the "should be" condi�on) so that it becomes the new standard procedure. Documenta�on and standardiza�on are especially important for companies that want to become registered under ISO 9000:2000, which is a widely-used interna�onal quality standard. It should be noted, however, that the purposes of documenta�on and standardiza�on are not to prevent change in the process, but to ensure that within a given process, each person performs a task the same way every �me. As be�er ways are found, the documenta�on and standardiza�on are changed to promote con�nuous improvement. For example, service organiza�ons rely extensively on documenta�on and standardiza�on to ensure consistent service. Fast-food restaurants have established procedures for everything—from cooking hamburgers to taking orders. Airline pilots follow a prescribed checklist each �me they land or take off. This procedure ensures a high level of customer safety and consistent service.

Iden�fy Areas for Improvement

Teams of employees from different departments work together as cross-func�onal teams to understand the current condi�ons and prepare a method to improve the performance of an organiza�onal ac�vity. If a firm needs to improve its product development process so it is faster, lower-cost, and higher-quality, it is important to have various experts examine and improve the process. These experts should understand the roles of marke�ng, produc�on, and informa�on technology. They should also understand the accoun�ng and financial aspects of this complicated process.

Methods Analysis and Problem-Solving Tools

Con�nuous improvement efforts require a set of methods or problem-solving tools. The type and applica�on of these tools depends upon the outcome measures that need to be enhanced. For example, to improve the quality of an assembly, root-cause analysis and poka-yoke may be the tools. It allows the team to understand the problem and create a solu�on that should be error proof. To reduce the number of processing errors and the cost of evalua�ng life insurance applica�ons, it would be useful to determine the process flow, iden�fy essen�al tasks, and note tasks that can be reduced in length or eliminated completely. It would also be useful to iden�fy which quality problems are the most common and to overlay those on the process flow to see how cost and quality interact.

The Plan-Do-Check-Act Cycle

The Plan-Do-Check-Act cycle, shown in Figure 4.4, is also referred to as the Deming Wheel or Shewhart cycle. The shape of a wheel embodies the philosophy of con�nuous improvement; the cycle is repeated over and over without end. Each part of the cycle is explained as follows:

Plan—Before making any changes, be sure everything is documented and standardized. Use appropriate tools to iden�fy problems or opportuni�es for improvement. Develop a plan to make changes. Do—Implement the plan and document any changes made. Check—Analyze the revised process to determine if goals have been achieved. Act—If the goals have been achieved, then standardize and document the changes. Communicate the results to others that could benefit from similar changes. If the goals have not been achieved, determine why not, and proceed accordingly.

Phil Condit: Improvement and Benchmarking From Title:

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Figure 4.4: The Plan-Do-Check-Act cycle

Document Improved Procedures

The process for con�nuous improvement ends in the same place it begins with a documented process, so that future review for the purpose of process improvement commences again here. Documents are also valuable for training new employees. Finally, documenta�on is essen�al to achieve quality cer�fica�on.

Chapter Summary

Quality has many defini�ons, both internal and external. Today, most companies define quality as consistently mee�ng or exceeding the customer's needs and expecta�ons. The characteris�cs of service quality include reliability, responsiveness, assurance, empathy, and tangibles. The characteris�cs of quality for goods include performance, features, reliability, conformance, durability, serviceability, aesthe�cs, and perceived quality. It is vital to understand what customers want, but this involves more than just asking the customer. Customers o�en have unspoken wants that will not be apparent without probing. Customers operate in a known environment and are o�en unaware of new ideas or technologies that create new products they would find very useful. Individuals who have had a significant impact on the field of quality include W. Edwards Deming, Joseph Juran, Philip Crosby, and Genichi Taguchi. Design for manufacture and assembly (DFMA) and design for opera�ons (DFO) are ways to focus on quality and cost during the design of goods and services. Product quality is a func�on of product design, process design, and employee execu�on. The be�er a firm is at these func�ons, the be�er it will be at building high-quality products. Inspec�on does not enhance quality; it provides feedback about the level of quality achieved and the poten�al source of quality problems. Every employee is responsible for quality. It should be an organiza�on-wide effort. Quality func�on deployment is used to translate the voice of the customer into product and process design characteris�cs. The components of TQM include a focus on the customer, quality func�on deployment, responsibility for quality, team problem solving, employee training, fact-based management, and a philosophy of con�nuous improvement.

Case Studies

Memorial Hospital

Memorial Hospital is a privately owned 600-bed facility. The hospital provides a broad range of health care services, including complete laboratory and X-ray facili�es, an emergency room, an intensive care unit, a cardiac care unit, and a psychiatric ward. Most of these services are provided by several other hospitals in the metropolitan area. Memorial has purposely avoided ge�ng involved in any specialized fields of medicine or obtaining very specialized diagnos�c equipment because it was felt that such services would not be cost- effec�ve. The General Hospital, located only a few miles from Memorial, is affiliated with the local School of Medicine and offers up-to-date services in those specialized areas. Instead of trying to compete with General Hospital to provide special services, Memorial Hospital has concentrated on offering high-quality general health care at an affordable price. Compared with the much larger General Hospital, Memorial stresses close personal a�en�on to each pa�ent from a nursing staff that cares about its work. In fact, the hospital has begun to place ads in newspapers and on television, stressing its pa�ent-oriented care.

However, the hospital's administrator, Janice Fry, is concerned about whether the hospital can really deliver on its promises, and worries that failure to provide the level of health care pa�ents expect could drive pa�ents away. Janice met recently with the hospital's managerial personnel to discuss her concerns. The mee�ng raised some ques�ons about how the hospital's quality of health care could be assured. Jessica Tu, director of nursing, raised the ques�on, "How do we measure the quality of health care? Do we give pa�ents a ques�onnaire when they leave, asking if they were happy here? That does not seem to answer the ques�on because we could make a pa�ent happy, but give them lousy health care." Several other ques�ons were asked concerning the hospital's efforts to keep costs down. Some people were concerned that an emphasis on costs would be detrimental to quality. They argued that when a person's life is at stake, costs should not be of concern.

A�er the mee�ng, Janice began thinking about these ques�ons. She remembered reading recently that some companies were using total quality management (TQM) to improve their quality. She liked the idea—if it could be used in a hospital.

1. Discuss some ways that a hospital might measure quality. 2. What are the poten�al costs of quality for Memorial Hospital? How could the value of a human life be included? 3. Are there any ideas or techniques from TQM that Janice could use to help Memorial focus on providing quality health care? 4. What measures could Memorial use to assess the quality of health care it is providing?

Discussion Ques�ons

Click on each ques�on to reveal the answer.

1. What are the similari�es between internally and externally oriented defini�ons of quality? (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

In both the internally oriented and externally oriented defini�ons of quality, we are comparing the characteris�cs of a product against some goal or objec�ve that can be difficult to measure. The internally oriented defini�ons focus on aspects of the product that the company controls directly such as strength, length, or processing �me, which can be rela�vely easy to measure and for which the goal is o�en set by the company itself. Externally oriented defini�ons are much vaguer and broader, emphasizing goals set by the customer.

2. Describe the approach that a company should use in order to understand customers' expecta�ons. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Firms should ask the following ques�ons when they want to understand customers' expecta�ons. What does the customer want, but this is only the first step in the process. It is important to ask customers specific ques�ons about a�ributes of the product that are not men�oned by the customer. This probing helps to iden�fy unspoken expecta�ons. Ask the customer how they use the product. Knowing how the customer func�ons and how they use the product can lead to a be�er understanding of what and how new ideas and technologies could help them. Also, ask customers how their customers use the products: Knowing the needs of the customers' customers can help the organiza�on be�er understand the impact of its product on the value crea�on chain and therefore meet the needs of the final customer in this chain.

3. List the characteris�cs for service quality and those for manufacturing quality. What are the commonali�es and differences? (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Dimensions of service quality: reliability, responsiveness, assurance, empathy, and tangibles.

Dimensions of quality for manufacturing: performance, features, reliability, conformance, durability, serviceability, aesthe�cs, and perceived quality.

Both include the dimensions of reliability, although they are defined somewhat differently. The "tangibles" dimension for service quality could conceivably include such

dimensions of manufacturing quality as features and aesthe�cs. Further, the "serviceability" dimension in manufacturing could relate to responsiveness, assurance, and empathy for services. Overall, however, the dimensions of service quality tend to focus more on percep�ons while dimensions of manufacturing quality include characteris�cs that can usually be measured objec�vely.

4. What assump�ons about the rela�onship between the company standards and those of the customer are made by internally-oriented defini�ons of quality? (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

The internally oriented defini�ons of quality assume that when we (or a company) set a goal or target value for some characteris�c of the product that this also will be what the customer wants. Unfortunately that may not always be true, which explains why some use tools such as quality func�on deployment (QFD) to be�er understand customer needs.

5. What are the differences and similari�es among the philosophies of Deming, Juran, Crosby, and Taguchi? (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Deming and Juran probably are the closest in philosophies as both emphasize management's responsibility for quality. However, Deming o�en tends to focus on internal quality while Juran takes more of an external focus. Taguchi combines both the internal and external viewpoints as he emphasizes internal ways of minimizing the costs to society. Taguchi's approach tends to be an engineering one that does not emphasize management. Crosby probably is farthest away from the others, even placing a strong emphasis on slogans, such as "zero defects" or "do it right the first �me," which Deming abhors. Crosby, like Taguchi, emphasizes costs, although he adopts a much narrower focus by considering only costs to the company.

6. What important organiza�onal ac�vi�es enable a firm to build quality into its products? Explain each of these. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

A cri�cal factor is to design the product and processes so the quality is built in. Product Design is how the product, either a good or a service, func�ons. It determines the features, func�ons, aesthe�cs, and performance of a product, which are essen�al parts of the product's quality.

Process design is how the product, either a good or a service, is produced. Process design includes the methods that the firm uses to transform the product ideas created in the product design into the good or service that the customer is purchasing. In manufacturing, process design includes selec�ng the materials, facili�es, and equipment used to make the product as well as determining the labor skills needed to execute the process plan.

Work execu�on is the performance of the plan created in the product and process design. If the product design and the process design represent the football game plan, then playing the game is the work execu�on. The success of this depends on how well the plan is communicated to the workforce, whether the workforce has been selected so it has the basic skills to execute the plan, and how well the workforce has been trained to do the work.

Inspec�on is an assessment of the quality of the good or service. If the first three steps are properly performed, then inspec�on is theore�cally unnecessary. Inspec�on provides feedback on how well the product is designed and built. Its primary benefit is to iden�fy quality problems and trace them back to the sources.

7. Is it possible for a company to implement TQM if top management delegates responsibility to middle managers? Why or why not? (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Everyone in a company must be responsible for quality. If top management delegates responsibility to middle management and then does not itself support the quality philosophy TQM is des�ned to fail. Top management must accept responsibility for quality, but also make sure everyone else in the organiza�on also accepts that responsibility.

8. List the components of quality management, and briefly describe a few of the ideas, concepts, or techniques that are included in each. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

If we focus on Total Quality Management (TQM), we have the following:

Focus on the Customer: This means iden�fying the customer's needs and expecta�ons, which is o�en referred to as the voice of the customer. Quality func�on deployment (QFD) is one way of transla�ng those needs and expecta�ons into design characteris�cs.

Everyone responsible for quality: Ritz-Carlton hotels provide a good example of this component as the CEO personally assumes responsibility for training new employees. That training ins�lls an emphasis on quality in everyone down to doormen and waiters.

Team Problem-Solving: Employees working in groups can develop much be�er problem solu�ons than individuals. Many companies use teams extensively, even holding annual compe��on that judges team presenta�ons based on teamwork, project selec�on, analysis techniques, remedies, results, ins�tu�onaliza�on, and presenta�on.

Employee Training: TQM involves new concepts and new techniques. Employees must be trained to adopt the TQM philosophy, to use the new techniques, and to work effec�vely in groups. Because con�nuous improvement is also a component of TQM this training is a never-ending cycle.

Fact-Based Management: Decisions should be made based on facts, not guesses. This o�en means collec�ng extensive data from within the company as well as outside it. One approach to collec�ng outside data, known as benchmarking, uses informa�on from compe�tors or world-recognized leaders to set performance goals.

Philosophy of Con�nuous Improvement: Organiza�ons must constantly seek to improve their performance. The Japanese term for this is "kaizen." One approach to con�nuous improvement is based on the plan-do-check-act cycle or Deming cycle.

9. List some customer needs associated with home theater equipment, and group these together by category. Suggest some possible engineering characteris�cs that could measure achievement of these a�ributes. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Quality of the picture 1. Accurate color reproduc�on. 2. Sharp picture. 3. No distor�on. Quality of the sound system 1. Realis�c sound. 2. Loud base. 3. Ability to duplicate high pitches. 4. "Brilliance" of sound produced. Quality of the system 1. Easy to operate. 2. Easy to set up. 3. Reliable.

Some engineering characteris�cs could involve number of pixels on the screen, decibel measurements of sound produced, frequency measurements, range of frequency produced, ability to withstand shocks, number of cycles before failure.

10. One quality myth is that increased quality means increased costs. Use your own personal knowledge or experiences to describe how this may not be true. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Southwest Airlines is a good example. The company consistently rates at the top of sa�sfac�on surveys, yet offers low �cket prices—and con�nues to be profitable as other airlines are losing money.

11. List the three categories of quality costs, and briefly define each. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Costs of preven�ng defects: This category includes the costs of employee training, quality control procedures, and product design.

Costs of appraising quality include the tes�ng and inspec�on of parts and materials and the costs of determining customer sa�sfac�on.

Costs associated with failures include internal and external costs. Internal costs are those costs associated with defects that are found before being shipped to the customer. External costs are associated with defects that are found a�er delivery to the customer.

12. Explain how the idea of quality func�on deployment may be applied to a service organiza�on that is not providing a tangible good as its product. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Even if a tangible good is not being supplied, the customer will be able to describe a�ributes or characteris�cs that are desirable in the service. These might be speed, friendliness of personnel, pleasant surroundings, ease of obtaining the service, and so forth. A�er collec�ng the a�ributes, some may be converted into engineering characteris�cs. For example, speed may be converted into an actual �me measure. However, other a�ributes may not convert into engineering characteris�cs, but may be converted into other measures. For example friendliness may be measured in terms of the number of customer complaints received or the number of �mes the customer smiles. Further, the process for delivering the appropriate a�ributes and for ensuring that quality is measured can be developed based on the measures being used.

Key Terms

Click on each key term to see the defini�on.

appraisal costs (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

The costs incurred to measure quality, assess customer sa�sfac�on, and inspect and test products.

benchmarking (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A process by which a company compares its performance and methods for a certain ac�vity against that of a recognized leader or an outstanding compe�tor.

con�nuous improvement (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

The concept that no ma�er how good a company is, it must always work to do be�er.

design for manufacture and assembly (DFMA) (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

Designing products so they are easy to manufacture or assemble, resul�ng in high quality and low cost.

design for opera�ons (DFO) (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

Designing services so that opera�ons func�on can provide high quality and low cost.

external failure costs (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

Costs of quality incurred a�er a product has reached the customer.

fishbone chart (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A diagram that is used in problem solving to list all the possible causes of a problem, usually divided into materials, equipment, methods, and personnel.

house of quality (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A diagram used to convert customer a�ributes desired in a product to engineering characteris�cs, parts characteris�cs, and process details.

internal failure costs (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

Costs of quality associated with defects found before the product reaches the customer.

Plan-Do-Check-Act cycle (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A problem solving process used for con�nuous improvement; also called Deming Wheel or Shewhart cycle.

poka-yoke (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

An approach adopted by many companies to prevent defects. The term is a rough approxima�on of Japanese words that mean "mistake proofing."

preven�on costs (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

Quality costs that result from ac�vi�es to prevent defects from occurring, such as employee training, quality control procedures, special efforts in designing products, or administra�ve systems to prevent defects.

quality (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

May have defini�ons that are either internal or external to a company, but defined most o�en as consistently mee�ng or exceeding customers' needs and expecta�ons.

quality func�on deployment (QFD) (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A procedure for spreading the voice of the customer throughout a company when determining how products should be designed and processes operated.

robust design (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

Product design that guarantees high quality regardless of varia�ons that may occur during the processes that make the product and provide it to the customer.

Six Sigma (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A measure of process performance that means only 3.4 defects will occur in every 1 million units produced, or 99.99966% error free. The term Six Sigma refers to a broad range of defect preven�on strategies.

sta�s�cal process control (SPC) (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

The use of sta�s�cal methods to determine when a process that produces a good or service is ge�ng close to producing an unacceptable level of defects.

total quality management (TQM) (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

An organiza�onal commitment to con�nuously improve on mee�ng or exceeding customers' needs and expecta�ons.

value proposi�on (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A measure of what the buyer gives up compared to what the buyer receives. When the value proposi�on is high, the benefits are significantly greater than the costs.

voice of the customer (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A concept in product design to determine what the customer wants, likes, and doesn't like in the product.