Total Quality Service Management Book 1


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Total Quality Service Management Book 1

  1. 1. 2007 TOTAL QUALITY SERVICE MANAGEMENT Aireen Y. Clores, M.B.A Visayas State University
  2. 2. TOTAL QUALIT Y SERVICE MANAGEMENT Aireen Y. Clores, M.B.A 2007 VISAYAS STATE UNIVERSITY 2 Total Quality Service Management
  3. 3. C O N T E N T S TOTAL QUALITY SERVICE MANAGEMENT........................................................................2 Aireen Y. Clores, M.B.A....................................................................................................2 Introduction................................................................................................................6 Introduction to Total Quality in Organizations..........................................................................9 Principles of Total Quality.................................................................................................12 Quality in Manufacturing...............................................................................................17 The Deming Management Philosophy...........................................................................28 Profound Knowledge...................................................................................................29 Point I: Management Commitment..............................................................................31 Point II: Adopt a New Philosophy................................................................................31 Point III: Understand Inspection..................................................................................31 Point IV: End Price Tag Decisions................................................................................31 Point V: Improve constantly of production and service.......................................................32 Point VII: Adopting and Instituting leadership..................................................................32 Point VIII: Driving Out Fear.......................................................................................32 Point IX: Optimize team efforts..................................................................................32 Point X: Eliminating Slogans, Exhortations, and Targets for the Workforce.............................33 Point XI: Eliminating Quotas and MBO.........................................................................33 Point XII: Remove Barriers to Pride of Workmanship........................................................33 Point XIII: Encouraging education and Self-improvement...................................................34 Point XIV: Taking Action to Accomplish the Transformation...............................................34 What customers want ..............................................................................................58 Benefits of customer service ......................................................................................61 To take full advantage of their employees’ skills as a key competitive weapon, managers must have a “people perspective”. Organizations whose managers succeed in practicing effective people skills as they carry out their primary business functions are most likely to engender satisfied employees and repeat customers – both of which are essential to sustaining a competitive advantage into the 21st century. Table 6 shows the benefit of customer service......................................................61 Chapter 6 TOTAL QUALITY & ORGANIZATIONAL CHANGE................................................71 Classification of Benchmarking........................................................................................76 1.Competitive benchmarking – focus on the products and manufacturing of a company’s competitors. 76 2.Generic Benchmarking – evaluates processes or business functions against the best companies regardless of their industry.............................................................................................76 Types of benchmarking.................................................................................................76 3 Total Quality Service Management
  4. 4. Preface In the last few decades, business competitiveness has become an area of increasing interest as a consequence of economic globalization, increasing economic integration and market liberalization. A review of theoretical models of business competitiveness reveals the significance of two kinds of factors in regard to this area — internal factors pertaining to the actual firm and external factors related to the structure of the industry in which the firm operates, as well as the economy of the country as a whole. These models should be examined empirically, using sufficient data to identify the relative significance of each individual factor regarding the overall improvement of business competitiveness. However, most available studies are partial since they focus on 4 Total Quality Service Management
  5. 5. quantifying the effects of macroeconomic variables, the effects of sector variables, or the effects of strictly business-oriented variables. Quality of service has been one the most widely investigated factors among those strictly related to business. In this context, business competitiveness is positively related to matching the characteristics of the service to the ideal preferences of clients, i.e. their level of satisfaction. This fact reveals the key role of service quality on the improvement of business competitiveness, and how this has an effect not only outside the actual firm, but also on the variables within it. The most relevant research on this issue deals with the theoretical study of the relationships that exist between quality and business competitiveness or with partial empirical relationships between variables. Nevertheless there is little empirical evidence to verify the complex relationships between quality and economic measures. 5 Total Quality Service Management
  6. 6. Introduction W hile Total Quality Management has proven to be an effective process for improving organizational functioning, its value can only be assured through a comprehensive and well thought out implementation process. The purpose of this chapter is to outline key aspects of implementation of large-scale organizational change which may enable a practitioner to more thoughtfully and successfully implement TQM. First, the context will be set. TQM is, in fact, a large-scale systems change, and guiding principles and considerations regarding this scale of change will be presented. Without attention to contextual factors, well intended changes may not be adequately designed. As another aspect of context, the expectations and perceptions of employees (workers and managers) will be assessed, so that the implementation plan can address them. Specifically, sources of resistance to change and ways of dealing with them will be discussed. This is important to allow a change agent to anticipate resistances and design for them, so that the process does not bog down or stall. Next, a model of implementation will be presented, including a discussion of key principles. Visionary leadership will be offered as an overriding perspective for someone instituting TQM. In recent years the literature on change management and leadership has grown steadily, and applications based on research findings will be more likely to succeed. Use of tested principles will also enable the change agent to avoid reinventing the proverbial wheel. Implementation principles will be followed by a review of steps in managing the transition to the new system and ways of helping institutionalize the process as part of the organization's culture. This section, too, will be informed by current writing in transition management and institutionalization of change. Finally, some miscellaneous do's and don’ts will be offered. M embers of any organization have stories to tell of the introduction of new programs, techniques, systems, or even, in current terminology, paradigms. Usually the employee, who can be anywhere from the line worker to the executive level, describes such an incident with a combination of cynicism and disappointment: some manager went to a conference or in some other way got a "great idea" (or did it based on threat or desperation such as an urgent need to cut costs) and came back to work to enthusiastically present it, usually mandating its implementation. The "program" probably raised people's expectations that this time things would improve, that management would listen to their ideas. Such a program usually is introduced with fanfare, plans are made, and things slowly return to normal. The manager blames unresponsive employees, line workers blame executives interested only in looking good, and all complain about the resistant middle managers. Unfortunately, the program itself is usually seen as worthless: "we tried team building (or organization development or quality circles or what have you) and it didn't work; neither will TQM". Planned change processes often work, if conceptualized and implemented properly; but, unfortunately, every organization is different, and the processes are often adopted "off the shelf" "the 'appliance model of organizational change': buy a complete program, like a 'quality circle package,' from a dealer, plug it in, and hope that it runs by itself" (Kanter, 1983, 249). Alternatively, especially in the underfunded public and not for-profit sectors, partial applications are tried, and in spite of management and employee commitments do not bear fruit. This chapter will focus on ways of preventing some of these disappointments. In summary, the purpose here is to review principles of effective planned change implementation and suggest specific TQM applications. Several assumptions are proposed: 6 Total Quality Service Management
  7. 7. 1. TQM is a viable and effective planned change method, when properly installed; 2. Not all organizations are appropriate or ready for TQM; 3. Preconditions (appropriateness, readiness) for successful TQM can sometimes be created; and 4. Leadership commitment to a large-scale, long-term, cultural change is necessary. While problems in adapting TQM in government and social service organizations have been identified, TQM can be useful in such organizations if properly modified (Milakovich, 1991; Swiss, 1992). 7 Total Quality Service Management
  8. 8. P A R T I INTRODUCTION TO TOTAL QUALITY 8 Total Quality Service Management
  9. 9. CHAPTER 1 Introduction to Total Quality in Organizations QUALITY It is never and accident: it is always the result of high retention, sincere effort, intelligent direction, and skillful execution; it presents the wise choice of many alternatives, the cumulative experience of many alternatives, the cumulative experience of many masters of craftsmanship. Quality also marks the search for an ideal after necessity has been satisfied and mere usefulness achieved. Wilma A. Foster In this chapter we will introduce you to the basic principles of total quality. Specifically, we will: • Provide reasons why attention to quality should be a part of every organization’s culture and management systems; • Provide a brief history of the “quality revolution”; • Provide an overview of the key principles of total quality; • Compare and contrast quality – focused management with traditional management practices, and; • Discuss relationships of total quality with organizational models in management theory. Total Quality Management is a management approach that originated in the 1950's and has steadily become more popular since the early 1980's. Total Quality is a description of the culture, attitude and organization of a company that strives to provide customers with products and services that satisfy their needs. The culture requires quality in all aspects of the company's operations, with processes being done right the first time and defects and waste eradicated from operations. Total Quality Management, TQM, is a method by which management and employees can become involved in the continuous improvement of the production of goods and services. It is a combination of quality and management tools aimed at increasing business and reducing losses due to wasteful practices. Some of the companies who have implemented TQM include Ford Motor Company, Phillips Semiconductor, SGL Carbon, Motorola and Toyota Motor Company.1 TQM Defined 9 Total Quality Service Management
  10. 10. TQM is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and organizational objectives. TQM views an organization as a collection of processes. It maintains that organizations must strive to continuously improve these processes by incorporating the knowledge and experiences of workers. The simple objective of TQM is "Do the right things, right the first time, every time". TQM is infinitely variable and adaptable. Although originally applied to manufacturing operations, and for a number of years only used in that area, TQM is now becoming recognized as a generic management tool, just as applicable in service and public sector organizations. There are a number of evolutionary strands, with different sectors creating their own versions from the common ancestor. TQM is the foundation for activities, which include: • Commitment by senior management and all employees • Meeting customer requirements • Reducing development cycle times • Just In Time/Demand Flow Manufacturing • Improvement teams • Reducing product and service costs • Systems to facilitate improvement • Line Management ownership • Employee involvement and empowerment • Recognition and celebration • Challenging quantified goals and benchmarking • Focus on processes / improvement plans • Specific incorporation in strategic planning This shows that TQM must be practiced in all activities, by all personnel, in Manufacturing, Marketing, Engineering, R&D, Sales, Purchasing, HR, etc.2 Total Quality Management is a management style based upon producing quality service as defined by the customer. TQM is defined as a quality- centered, customer-focused, fact-based, team-driven, senior- management-led process to achieve an organization’s strategic imperative through continuous process improvement. TQM principles are also known as total quality improvement, world class quality, continuous quality improvement, total service quality, and total quality leadership. WHAT DOES T.Q.S.M STANDS FOR?  T – Stands for TOTAL;  The word "total" in Total Quality Management means that everyone in the organization must be involved in the continuous improvement effort, the word "quality" shows a concern for customer satisfaction, and the word 10 Total Quality Service Management
  11. 11. "management" refers to the people and processes needed to achieve the quality.  Q – Stands for QUALITY;  Means meeting or exceeding customer (internal or external) expectation.  It is about relationships  Fundamental to all major business decisions  It is everyone’s business  S – stands for SERVICE; act of help or assistance in a manner of serving customer  M – Stands for MANAGEMENT mean improving and maintaining business systems and their related processes or activities. Total Quality Management is not a program; it is a systematic, integrated, and organizational way-of-life directed at the continuous improvement of an organization. It is not a management fad; it is a proven management style used successfully for decades in organizations around the world. TQM is not an end in itself; it is a means to an organizational end. Total Quality Management must not be the primary focus of an organization; it should merely be the means to achieve organizational goals. Total Quality Management differs from other management styles in that it is more concerned with quality during production than it is with the quality of the result of production. Other management styles have different concerns. Some major styles are compared with TQM as follows. Management-by-Objectives (MBO) emphasizes achieving specified objectives, under the control of individual managers. This approach works against multi-functional process performance and interferes with teamwork and quality. TQM is not objective-oriented, except for its one goal of achieving continuous quality improvement. Management-by-Results (MBR) is management by viewing past results as an indication of future results. It has been compared to driving an automobile in a forward direction while looking in the rear view mirror. In today’s fast-paced, quick-changing business environment, managers cannot rely on past results as a predictor of future performance. In contrast, TQM is only concerned with current results and ways to improve them. Management-by-Exception (MBE) is management by identifying specific targets for management attention and action. It produces short-term results by reacting to immediate problems, but there is no analysis of the processes that produced the problems, so long- term benefits are lost. On the other hand, TQM is more concerned with correcting processes that produce problems than it is with responding to individual problems. Total Quality Management is very different from these and other management systems. It recognizes that quality as determined by the service provider might be much different from quality as perceived by the service receiver. If the customer is not satisfied with a service, then the service does not have quality and the processes that produced the service have failed. 11 Total Quality Service Management
  12. 12. Total Quality Management requires an organizational transformation-a totally new and different way of thinking and behaving. This transformation is not easy to achieve; it is not for the weak or the statistically untrained. At first glance, many TQM techniques may seem simple and based on common sense, but they must be understood and used correctly for TQM to function properly. Knowing the history of Total Quality Management may help in understanding its techniques. Principles of TQM The key principles of TQM are as following:3 • Management Commitment 1. Plan (drive, direct) 2. Do (deploy, support, participate) 3. Check (review) 4. Act (recognize, communicate, revise) • Employee Empowerment 1. Training 2. Suggestion scheme 3. Measurement and recognition 4. Excellence teams • Fact Based Decision Making 1. SPC (statistical process control) 2. DOE, FMEA 3. The 7 statistical tools 4. TOPS (FORD 8D - Team Oriented Problem Solving) • Continuous Improvement 1. Systematic measurement and focus on CONQ 2. Excellence teams 3. Cross-functional process management 4. Attain, maintain, improve standards • Customer Focus 1. Supplier partnership 2. Service relationship with internal customers 3. Never compromise quality 4. Customer driven standards Principles of Total Quality • Total quality is a people-focused management system that aims at continual increase in customer satisfaction at continually lower real cost. • TQ is a total system approach (not a separate area or program) and an integral part of high-level strategy; it works horizontally across functions and departments, involves all employees, top to bottom, and extends backward and forward to include the supply chain and the customer chain. • Foundation of total quality is philosophical: the scientific method: includes systems, methods, and tools. 12 Total Quality Service Management
  13. 13. • A comprehensive, organizational-wide effort to improve the quality of products and services – applies not only to large manufacturers, but t small companies. • A management of process and set of disciplines those are coordinated to ensure that the organization consistently meets and exceeds customer requirements. • Concerned with continuous improvement in performance aimed at delighting customers. • Achieving quality through gaining everyone’s commitment and involvement. • Improvement of the quality of the organizations products and services • It is the integration of all functions and processes within an organization in order to achieve continuous improvement of the goals and services. Michael Dell’s Touch of Quality Although Dell Computer Corporation’s PCs have had some of the highest quality ratings in the industry, CEO Michael Dell became obsessed with finding a way to reduce their failure rates. The key, he believed, was to reduce the number of times that each hard drive – the most sensitive part of a PC – was handled during assembly. Production lines were revamped, and the numbers of “touches” were reduced from over 30 to less than 15. Soon after, the rate of rejected hard drives fell by 40 percent, and the overall failure rate for the company PCs dropped by 20 percent. Figure 1.5 E.g. of Improving Work Processes THE IMPORTANCE OF QUALITY  Quality drives market share. • And when superior quality and large market share are both present, profitability is virtually guarantee. 13 Total Quality Service Management
  14. 14.  Quality can also reduce costs. • Provides an additional competitive edge • Types of quality: customer – driven quality and conformance or internal specifications quality.  As quality improves, so does cost, resulting in improved market share and hence profitability and growth. • Provides a means for further investment in such quality improvement areas as research and development. The cycle goes on. See Figure 1.1 The quality circle. • Rewards of higher quality are positive, substantial, and pervasive. Findings indicate that attaining quality superiority produces the following organizational benefits: 1. Greater customer loyalty 2. market share improvement 3. higher stock prices 4. reduced service calls 5. higher prices 6. Greater Productivity History of TQM Total Quality Management was developed in the mid 1940s by Dr. W. Edward Deming who at the time was an advisor in sampling at the Bureau of Census and later became a professor of statistics at the New York University Graduate School of Business Administration. He had little success convincing American businesses to adopt TQM but his management methods did gain success in Japan. After World War II, General MacArthur took 200 scientists and specialists, including Dr. Deming, to Japan to help rebuild the country. While working on the Japanese census, Dr. Deming was invited by the Japanese Union of Scientists and Engineers to give lectures on his statistical quality techniques. One of the attendees was a past professor to many of Japan’s CEOs. After attending the lectures, the professor told his CEO students that, if they wanted to turn Japan’s economy around in five years, they should attend Dr. Deming’s lectures on using statistics to achieve quality at a reduced cost. Many of the CEOs took the professor’s advice and attended the lectures. Eventually, many Japanese manufacturing companies adopted Dr. Deming’s theories and were able to produce quality products at reduced costs. While the Japanese business world was concentrating on producing quality products, businesses in the United States were more concerned with producing large quantities of products. Their emphasis on quantity at the expense of quality let the Japanese, with their inexpensive, high quality products; gain a substantial foothold in American markets. In the 1970s and 1980s, many American companies, including Ford, IBM, and Xerox, began adopting Dr Deming’s principles of Total Quality Management. This gradually led to their regaining some of the markets previously lost to the Japanese. Although Total Quality Management gained its prominence in the private sector, in recent years it has been adopted by some public organizations. 14 Total Quality Service Management
  15. 15. So far, this chapter has defined Total Quality Management, explored its origin, and explained how it emphasizes quality during production. Since quality is so important to any discussion of TQM, the next section explores this key element in detail. Deming Chain of Reaction: “As quality improves, cost will decrease costs; cost will decrease and productivity will increase, resulting in more jobs, greater market share, and long-term survival” FREDERICK TAYLOR  Developed his system of scientific management, which emphasized productivity at the expense of quality.  Centralized inspection departments were organized to check for quality at the end of the production line.  The control quality focused on final inspection of the manufactured product, and a number of techniques were developed to enhance the inspection process.  Taylor summarized his thoughts in 1951 as:  Management is science – not rule of thumb  Management is harmony – not discord  Management is cooperation – not individualism  Management is maximum output – not restricted output  Management is development of each man and to his greatest efficiency and prosperity. WALTER SHEWART, HAROLD DODGE, GEORGE EDWARDS • Developed new theories and methods of inspection to improve and maintain quality. KURT LEWIN • Provided us with an understanding of how to make large scale organizational change. Douglas McGregor • Has tremendous impact on what later became Total Quality Management. • Detailed the Theories of Management (Theory X and Theory Y). Theory X states that employees will not work if left to their own devices; employees are inherently bad and must be forced and coerced into work. Theory Y states that employees find work as natural as play and will work diligently to the firm’s aims if assumptions follow later. Fred Emery • Australian disciple of Lewin and Eric Trist. 15 Total Quality Service Management
  16. 16. • Apply open systems thinking to social change, pointed out that optimal results could be achieved only when social systems, which obey the laws of biology, psychology, and sociology are designed integrative with technical systems following the laws of physics, chemistry and engineering. • The social technical approach required that those who do not work get a great deal more authority, control, skills and information than is customary under scientific management. JOSEPH M. JURAN • Introduces the managerial dimension of planning, organizing and controlling and focused on the responsibility of management to achieve quality and the need for setting goals. • Defines quality as fitness for use in terms of design, conformance, availability, safety and field use. • Promotes concepts known as Managing Business Process Quality – a technique for executing cross functional quality improvements. ARMAND FEIGENBAUN • Achieved visibility through his work in Japanese Management for total quality improvement. • Used a total quality control approach that may very well be the forerunner of today’s TQM • Promoted a system for integrating efforts to develop, maintain and improve quality by the various groups in an organization. PHILIP CROSBY • Author of the popular book Quality is Free. • Argues that poor quality in the average firm costs about 20% of revenues; most of which could be avoided by adopting good quality practices. THE CONCEPT OF QUALITY Definition of quality: 1. Perfection 2. Consistency 3. Eliminating waste 4. Speed of delivery 5. Compliance with policies and procedures 6. Providing a good, usable product 7. Doing it right the first time 8. Delighting or pleasing customers 9. Total customer service and satisfaction 16 Total Quality Service Management
  17. 17. Today most managers agree that the main reason to pursue quality is to satisfy customers. The American National Standards Institute (ANSI) and the American Society for Quality (ASQ) define quality as “the totality of features and characteristics of a product or service that bears on its ability to satisfy the given needs.” TQM GOAL: CUSTOMER SATISFACTION Figure 1.1 TQM GOALS The view of quality as the satisfaction of customer needs is often called fitness for use. In highly competitive markets, merely satisfying customer needs will not achieve success. To beat with competition, organizations often must exceed customer expectations. Thus, one of the most popular definitions of quality is meeting or exceeding customer expectations. HOLLYWOOD CASINO RESORT Tunica, Mississippi Hollywood Casino Resort/Tunica is a place where guests feel invited and welcome. We provide the highest levels of personalized service and products for our guests, who always enjoy a fun-filled experience. Everyone at Hollywood Casino does the right thing the first time, and puts the needs and wants of our guests in the forefront of every decision we Figure 1.2 Vision Statement of Hollywood Casino Resort Managers of manufacturing and service functions deal with different types of quality issues; the following sections provide a brief overview of these issues. Although the details of quality management differ between manufacturing and service industries, the customer-driven definition eliminates these artificial distinctions and provides a unifying perspective. Quality in Manufacturing 17 Total Quality Service Management
  18. 18. • Quality systems focused primarily on technical issues such as equipment reliability, inspection, defect measurement, and process control. • Transition to a customer – driven organization has caused fundamental changes in manufacturing practices, changes that are particularly evident in areas such as product design, human resource management, and supplier relations. Quality dimensions: Manufactured products have several quality dimensions including the following: 1. Performance: a product’s primary operating characteristics. 2. Features: the “bells and whistles” of a product. 3. Reliability: the probability of a product’s surviving over a specified period of time under stated conditions of use. 4. Conformance: the degree to which physical and performance characteristics of a product match pre-established standards. 5. Durability: the amount of use one gets from a product before it physically deteriorates or until replacement is preferable. 6. Serviceability: the ability to repair a product quickly and easily. 7. Aesthetics: how a product looks, feels, sounds, tastes, or smells. 8. Perceived quality; subjective assessment resulting from image, advertising, or brand names. Quality control in manufacturing is usually based on conformance, specifically conformance to specifications. Specifications are targets and tolerances determined by designers of products and services. Targets are the ideal values for which production strives; tolerances are acceptable deviations from these ideal values. A lack of defects has constituted quality in manufacturing for many years. However, the lack of defects alone will not satisfy or exceed customer expectations. Many top managers have stated that good quality of conformance is simply the “entry into the game”. A better way to achieve distinction and delight customers is through improved product design. Thus, manufacturers are turning their attention toward improved design for achieving their quality and business goals. Quality in Services: Service can be defined as “any primary or complementary activity that does not directly produce a physical product – that is, the non-goods part of the transaction between buyer (customer) and seller (provider).” A service transaction might be as simple as handling a complaint or as complex as approving a home mortgage. A Service orientation places customer needs ahead of organizational needs. Table 1 – 3 provides examples of how the four dimensions of service quality apply to various industries. In this context, a physical product is simply the medium used to facilitate the other services and a service rather than product orientation becomes the focus. Customer’s needs take precedence over organizational needs. In contrast, when quality programs are product oriented, it is often the case that a higher priority is placed on process (and bottom – line) performance than on customer satisfaction. Trying to squeeze and the ounce of performance” from its internal business processes, a company can lose touch with its customers and what they can value. 18 Total Quality Service Management
  19. 19. INDUSTRY PHYSICAL SERVICE SERVICE SERVICE PRODUCT PRODUCT ENVIRONMENT DELIVERY Auto manufacturin Vehicle Pricing Showroom Test drive & g Co. sales pitch Hotel Room Pricing & Room Front Office/ Supplies Quality Bellman Performance Restaurant & Chef, Food & Bar waitress, Beverage bartender Service performance Airline Pricing Food & Transportatio Airport Cleanliness of Beverage n & flight facilities aircraft Service entertainmen Safety in- Ticket t flight service Baggage Handling Table 1.3 COMPONENTS OF SERVICE: Some Industry Example: How do customers make choices based on value judgments? • Customers compare alternative service providers on the basis of value. • Customers perform a gap analysis between what they expect and what perceived is the value received. • Evident in service industries where a customer’s satisfaction is often based on such intangible factors as assurance, empathy, reliability, and responsiveness. VALUE STREAM AND ITS CUSTOMERS  “QUALITY” is about people  Value stream – all the resources required to take production inputs and transform them into a suitable mixture of products or services constitutes.  Customer – can be used to describe anyone who benefits from goods or services anywhere along the value stream.  Internal customer – its suppliers share the same production system. Internal customers are linked together through the design of the value stream and the output of the value stream becomes an output to an external customer’s system.  External customer – its suppliers are members of different systems. 19 Total Quality Service Management
  20. 20. Most research dealing with the effects of quality on business competitiveness generally falls into one of two categories, depending on the kind of relationships under study. The first encompasses those studies analyzing the external effects of quality on competitiveness, while the second includes those that focus on the internal effects. External effects show the impact of changes in the quality perceived by clients on business competitiveness. These effects have their source in changes in client behavior and their level of satisfaction which, ultimately, will have a positive or negative impact on the volume of sales and market share due to variations in clients' willingness to pay, their purchase intentions or level of expenditure within the hotel. Internal effects refer to the influence quality has on competitiveness due to changes in the firm's production processes. Such changes have an influence on productivity and, therefore, on the firm's production costs SERVICE QUALITY vs. PRODUCT QUALITY  As a strategic issue, customer service can be considered a major dimension of competitiveness.  People will go out of their way and more for good service, which indicates the importance place on service by customers.  The behavior of the service provider becomes a factor in service delivery.  The service recipient has the final say regarding quality.  Service requires contact (directly or via telephone) between the service provider and the service equipment.  The image of the organization shapes the perception of customers.  The customer is present during the production process and performing the final inspection.  The measure of output is difficult to define.  Quality can mean different things to different people given the same experience.  Quality is defined in the context of the totality of the experience. DIMENSIONS OF SERVICE: The important dimensions of service quality include the following: • Time: How much time must a customer wait? • Timeliness: Will a service be performed when promised? • Completeness: Are all items in the order included? • Courtesy: Do frontline employees greet each customer cheerfully? • Consistency: Are services delivered in the same fashion for every customer, and every time for the same customer? • Accessibility and convenience: is the service easy to obtain? • Accuracy: is the service performed right the first time? • Responsiveness: Can service personnel react quickly and resolve unexpected problems? 20 Total Quality Service Management
  21. 21. Service organizations must look beyond product orientation and pay significant attention to customer transactions and employee behavior. Several points that service organizations should consider are as follows: • Customer Perceptions – example are speed of service is an important quality characteristics, yet perceptions of speed may differ significantly among different service organizations and customers. • Behavior – quality of human interaction is vital in every transaction that involves human contact; e.g. Friendliness of front desk clerks. • Image – shaping customer expectations of a service and in setting standards by which customers evaluate that service. • Service standards – value judgment, customer attitudes and employee competence. • Quality control supervision – calls for training of employees and self-management. Figure 1.4 Service Orientations Advantages of TQM  Long-term benefits that may be expected from Total Quality Management are higher productivity, increased morale, reduced costs, and greater customer commitment. 21 Total Quality Service Management
  22. 22. These benefits may lead to greater public support and improvement of an organization’s public image.  Eliminating errors and doing things right the first time saves time and resources. The savings may then be used for expansion of services or made available to employees in their efforts to increase service quality.  Total Quality Management may create an organizational atmosphere of excitement and sense of accomplishment through the rewarding of creativity. When experimentation-oriented failures are accepted as a part of the learning process, employees feel free to use their creative energies to develop new ideas.  Total Quality Management’s extensive use of teamwork gives employees the experience of problem solving and using their knowledge and experiences in a collaborative effort. As employees gain experience with team problem solving, they may be used to form cross-sectional ad-hoc "mega teams" that can attack larger organization-wide problems. TQM gives an organization greater problem-solving flexibility and increases the quality of work life for all employees.  Total Quality Management may be a "profit generator," even for public organizations. It does not actually create profit for the organizations, but if implemented properly, it may identify costly processes and cost-saving measures. Once fully implemented, the only expense of TQM is the cost of routine operations. In public organizations, saved resources may be viewed as "profits." Total Quality Management does have some detractors who have pointed out some of the disadvantages of TQM. Disadvantages of TQM  Long-range plans advocated by TQM may limit an organization’s flexibility and agility. TQM teaches that a long-term plan is required to achieve a complete quality transformation, but a long-term plan that has been pursued for a long period may become an end unto itself. Completion of the plan becomes the ultimate goal. Objectives the plan was designed to accomplish are forgotten; achieving the transformation becomes the most important objective. Instead of maintaining continuous change, the organization may reach a stable point and stagnate. To produce continuously high quality services, an organization must react quickly to changes in the community and not be restricted by its management style.  TQM detractors also argue that although Total Quality Management calls for organizational change, it does not demand radical organizational reform. Real quality improvement requires radical structural change, such as flattening organizational structures. It requires liberation of employees from stifling control systems and the tyranny of functionalism, both of which stifle teamwork.  Total Quality Management calls for the elimination of the goals and objectives required by Management-by-Objectives. Critics of TQM claim that this may negatively affect motivation. They claim that having established production goals gives employees increasingly higher goals to reach, which motivates them to find new ways to reach the goals. 22 Total Quality Service Management
  23. 23. When there are no established production goals, some employees will only produce the minimum required to keep their job.  Total Quality Management calls for the elimination of performance assessments that rate employees in relation to each other. Critics fear that without performance assessment managers would have too much power over employees and may be use it capriciously. Many managers feel performance assessments let them document employee performance for possible reward, but some employees fear the assessments might be used against them in some disciplinary actions. Performance assessments may give employees with grievances the documentation they need to prove managers are treating them unfairly. Without them, managers could make unfair accusations about an employee’s performance and the employee would not have the documentation to counter the claims. Some argue that the claims of success by TQM supporters are not supported by facts but by anecdotes and stories. They argue that TQM proponents tell heart-warming stories about how teamwork makes everyone happy, but that they cannot back up their claims with hard data. Critics maintain that TQM focuses manager attention on internal processes rather than on external results. When this is taken to an extreme, managers may become too preoccupied with internal issues, such as the documentation required by TQM methods, and ignore the shifting perceptions of customers. Managers become so concerned with the process of TQM that they neglect the needs of the customer, which was the initial reason for implementing TQM. Total Quality Management calls for its implementation to be immediate and complete. Some contend it does not make sense to try to create quality improvement in the entire organization from the very beginning. They argue that all processes are not equally good or bad, all departments do not function equally well, and all services do not measure up to the same quality standard. Because of this, they contend that quality should be introduced incrementally and only in the specific areas that need it most. Some critics claim Total Quality Management’s focus on setting and maintaining standards makes work life unexciting and boring. When employees are bored, their poor attitudes may cause customer dissatisfaction with the quality of service received from them. In addition, when too much emphasis is placed on standardization it precludes the constant internal changes needed to keep up with external changes. Total Quality Management develops its own bureaucracy. TQM detractors contend its statistical burden and committee structure is cumbersome, slows organizational momentum, and consumes too much time and resources. Opponents of Total Quality Management maintain that it appeals to egotism. After receiving some TQM training, some employees consider themselves TQM "experts" who have the answers to everyone else’s problems. They claim their department is doing everything right according to TQM principles and find fault with every other department. Some managers, instead of viewing achievement as a joint effort where every participant deserves praise, apply for awards for self-gratification or to benefit the organization’s public relations image. Some detractors posit that TQM is an emotionally cold way to manage people. Its analytical, detached programs are often devoid of human emotion that inspires attachment to the organization and its customers. 23 Total Quality Service Management
  24. 24. Total Quality Management calls for a cultural transformation. Some argue it creates a process-crazed organization, similar to a cult, where the impression is that only total commitment to TQM can save the organization from ruin. Just as in a cult, all the decisions in TQM are related to the "vision." No one wants to claim individual credit for success; instead, success is attributed to the TQM philosophy. Results become less important than performing the proper TQM techniques. Just as in a cult, periodic evangelism by TQM experts is used to maintain a missionary zeal for TQM. If an employee is not a TQM believer, he or she considered an outcast who does not care about the organization’s success. Even with its problems, Total Quality Management may still be the best choice as a successor to the militaristic, authoritative management style. Exercise NO. _____ Introduction to TQM Name _____________________________ Course & Year _______________________ Subject time/Day ____________________ Date: _____________ Instructor________ Case 1.1 APPLYING TQM TO EVERYDAY TASK Pauline Knowlton has worked for Matt Pantusa for nearly three months. Pauline really likes Matt because he practices what he preaches and is a good supervisor. But sometimes Matt can be a little overbearing, especially now that he is really sold on Total Quality Management. For example, Matt is the publicity person for the local Computer Enthusiasts Club. He sends out 5,000 copies of a brochure each month that advertises the next month’s meeting of the Club. Pauline usually is the one to make sure the flyers are copied, folded, addressed, and mailed on time. The advertisement that Pauline mailed a few weeks ago announced last week’s monthly meeting on quality productivity tools for computers. When Matt went into the office the morning after the meeting, he called Pauline into his office. He told Pauline that over 600 people had attended the meeting – a record crowd. Pauline congratulated Matt for such a successful meeting. She was pleased that had had a part in making the meeting a success. But Matt didn’t seem pleased as he gave her two copies of the flyer that had been given to him by his friends who received his mailing. One flyer was folded a little crooked and the other has a mailing label that was affixed at the slightly downward angle. Matt asked her to be more careful with these details as she did future mailings. Pauline like her work and wants to please Matt. She thinks, however, that he’s gone a little bit overboard with this TQM. Does anyone really care if a flyer is perfectly folded or a label is a little askew? And having time to think about their conversation, Pauline can’t understand why Matt is making such a big deal about the mailing. After all, more people showed up at the monthly meeting than had ever been there before. 24 Total Quality Service Management
  25. 25. RESPONDING TO THIS CASE: 1. Do you think Matt is taking the TQM philosophy too far? Why or why not? 2. Pauline feels that if the customer is satisfied, why Matt shouldn’t be please. Discuss the pros and cons of her rationale. 3. Is there a lesson that Pauline could learn from this incident? 4. What advice would you give to Matt in Supervising Pauline and here employees? Exercise NO. _____ Introduction to TQM Name _____________________________ Course & Year _______________________ Subject time/Day ____________________ Date: _____________ Instructor________ Case 1.2 The Reservation Nightmare H. James Harrington, a noted quality consultant, related the following story in Quality Digest magazine: I called to make a flight reservation just an hour ago. The telephone rang five minutes before a recorded voice answered. ‘’Thank you for calling ABC Travel services,’’ it said. ‘’To ensure the highest level of customer service, this call may be recorded for future analysis.’’ Next I was asked to select from one of the following choices: ‘’ If the trip is related to company business, press 1.Personal business, press 2. Group travel, press 3.” I pressed 1. I was then asked to select from the following choices: “If this is a trip within the United States, press 1.International, press 2.Scheduled training, press 3. Related to conference, press 4.” Because I was going to Canada I pressed 2. Now two minutes into my telephone call, I was instructed to be sure that I had my customer identification card available. A few seconds passed and a very sweet voice came on, saying, “All international operators are busy, but please hold because you are a very important customer.’’ The voice was then replaced by music. About two minutes later, another recorded message said, “Our operators are still busy, but please hold and the first available operator will take care of you.’’ more music. Then yet another message: ‘’ Our operators are still busy, but please hold. Your business is important to us.’’ more bad music. Finally the sweet voice returned, stating, ‘’to speed up your service, enter your 19-digit costumer service number.’’ I frantically searched for their card, hoping that I could find it before I was cut off. I was lucky; I found it and entered the number in time. The same sweet voice came back to me, 25 Total Quality Service Management
  26. 26. saying, ‘’ to confirm your service number, enter the last four digits of your customer service number, enter the last four digits of your social security number.” I pushed the four numbers on the keypad. The voice said: ‘’ Thank you. An operator will be with you shortly. If your call is emergency, you can call 1-800-CAL-HELP, or push all of the buttons on the telephone at the same time. Otherwise, please hold, as you are a very important customer.” This time, in place of music, I heard a commercial about the service that the company provides. At last, a real person answered the telephone and asked,’’ Can I help you? ‘’ I replied, ‘’ Yes, oh yes.’’ He answered, “Please give me your 19-digit customer service number, followed by the last digit of your social security number so I can verify who you are.’’ (I thought that I gave these numbers in the first place to speed up service. Why do I have to rattle them off again? I was now convinced that he would call me Mr. 5523-3675-0714-1313-040. But, to my surprise, he said: “Yes, Mr. Harrington. Where do you want to go and when?” I explained that I wanted to go to Montreal the following Monday morning. He replied: ‘’ I only handle domestic reservations. Our international desk has a new number: 1-800-1WE-GOTU. I’ll transfer you.’’ A few clicks later a message came on, saying. ‘’All of our international operators are busy. Please hold and your call will be answered in the order it was received. Do not hang up or redial, as it will only delay our response to your call. Please continue to hold, as your business is important to us.” DISCUSSION QUESTIONS 1. Summarize the service failures associated with this experience. 2. What might the travel agency have done to guarantee a better service experience for Mr. Harrington? How do your suggestions relate to the TQ principles? Case 1.3 A Tale of Two Restaurants Kelly’s Seafood Restaurant was founded about 15 years ago by Tim Kelley, who has run it from the start. The restaurant is very profitable because of its excellent food quality, but lately has been having problems with consistency because of numerous suppliers. The restaurant operations are divided into front-end (servers) and back-end (kitchen). The kitchen has notes to boost employee morale, employees are cross- trained in all areas, and the kitchen staff continually seeks improvements in cooking. Servers, however, have minimal wages and few perks, and turnover is a bit of a problem. Tim’s primary criterion for selecting servers is their ability to show up on time. There is little communication between and front-end and back-end operations, other than fulfilling 26 Total Quality Service Management
  27. 27. orders. Tim makes sure that any complaints are referred to him immediately by the servers. The restaurant has no automation, as Tim believes that it would get in the way of customers’ special requests. “this is the way we’ve done it for past 15 years and how we will continue to do it,’’ was his response to a suggestion of using a computerized system to speed up orders and eliminate delays. Tim used to hold staff meetings regularly, but recently they have dropped from each week to one every five or six months. Most of the time is spent focusing on negative behavior, and Tim has often said “You can’t find good people anymore.’’ Jim’s Steakhouse is a family-owned restaurant in the same state. Jim uses only the freshest meats and ingredients from the best suppliers and gives extra large portions of food to customers, who feel they are getting their money’s worth. Jim pays his cooks high wages to attract quality employees. Servers get 70 percent of tips, bussers 20 percent, and the kitchen staff 10 percent to foster team work. Many new hires come from referrals from current employees. Jim interviews all potential employees and ask them many pointed questions relating to courtesy, responsibility, and creativity. The restaurant sponsors bowling nights, golf outings, picnics, and holiday parties for its employees. At Jim’s, birthday customer receive a free dinner, children are welcomed with balloons, candy, and crayons, and big screen TV’s caters to sports fans. Jim walks around and constantly solicits customer feedback. Jim visits many restaurants to study their operations and learn new techniques. As a result of these visit, Jim installed computers to schedule reservations and enter orders to the kitchen. DISCUSSION QUESTIONS 1. Contrast these two restaurants from the perspective of TQ. What conclusions can you make and what advice would you give to the owners? 2. What type of management model (mechanistic, organismic, or cultural) do you think each organization represents? CHAPTER 2 APPROACHES TO TOTAL QUALITY TOTAL QUALITY PARADIGMS Adopting a TQ philosophy requires significant changes in organization design, work processes, and culture. Organizations use a variety of approaches. 27 Total Quality Service Management
  28. 28. A paradigm (pronounced "pair-a-dime") is a set of beliefs about phenomenon around us that constrains and guides our thinking. For example, consider yourself to be in Spain or Portugal in 1492. You believe the sun rises in the East and sets in the West. When you look westward out over the ocean, you see a straight line where water meets the sky. You are familiar with straight edges where the plane meets the sky. If you walk off the plane of a roof, you fall. Therefore, ships must fall off the earth if they travel too far. N'est-ce pas? Paradigms are shared by people creating schools of thought. The ancient mariners of the late 1400's all believed the same perceived facts and, thus, never ventured too far from land. Paradigms change when first an anomaly appears. The late 1400's brought additional facts to bear, such as: at first you see the top of a mast, then the whole mast, then the top of the ship hull, and then the full hull as a ship approaches from far out to sea. This is similar to what you see when a person climbs over a small hill. Perhaps the ocean is like a hill and there is no edge. Experimentation occurs to verify the anomaly and seek out new relationships and causes. People who explore anomalies may be considered outcasts by those who staunchly support the existing paradigm. Columbus was considered a "strange and touched" sailor by many who were sure they would never see him or his ships again. Paradigm shifts occur when the anomaly is perceived to be a violation of the natural laws. The Quality Philosophies of Edward Deming The Deming Management Philosophy Deming stresses that higher quality leads to higher productivity, which in turn leads to long-term competitive strength. Deming’s “chain of reaction,” shown in Figure 2.1, summarizes this view. This theory states that improvements in quality lead to lower costs because of less rework, fewer mistakes, fewer delays and snags, and better use of time and materials. Lower costs, in turn, lead to productivity improvements. With better quality and lower prices, the firm can achieve a higher market share and thus stay in business, providing more jobs. Deming’s states emphatically that top management has the overriding responsibility for quality improvement. Deming has summarized his philosophy in what he calls “A System of Profound Knowledge.” 28 Total Quality Service Management
  29. 29. Figure 2.1 THE DEMING CHAIN REACTION Improved quality Costs decrease because of less rework, fewer mistakes, fewer delays and snags, and better use of time and materials. Productivity Improves Capture the market with better quality and lower price. Stay in business Provide jobs and more jobs Profound Knowledge Four parts of profound knowledge:(1) appreciation of a system, (2) knowledge of the theory of variation, (3) theory of knowledge, and (4) psychology. Systems • A set of functions or activities within an organization that work together to achieve organizational goals. For example, a McDonald’s restaurant can be viewed as a system. It consists of the order-taker/cashier subsystem, grill and food preparation subsystem, drive-through subsystem, and so on. • Factors within a system that affect the individual performance of an employee;  Training received  Information and resources provided  Leadership of supervisors and managers  Disruptions on the job  Management policies and practices 29 Total Quality Service Management
  30. 30. Variation • It is the difference in the reproducibility of a particular action. It is the difference between a particular action and the target outcome. • Variation increases the cost of doing business Theory of Knowledge • It is a branch of philosophy concerned with the nature and scope of knowledge, its pre- suppositions and bases, and the general reliability of claims to knowledge. • Theory establishes a cause-and-effect relationship that can be used for prediction. Theory leads to questioning and can be tested and validated – it explains why. Psychology • Helps to understand people, interactions between people and circumstances, interactions between leaders and employees, and any system of management. People differ from one another. • We must understand how people are intrinsically motivated. It is through intrinsic motivation that people find joy in work and excitement in application of new knowledge. True innovation in a company only comes at the discretion of the employees. Think about this saying: "you can lead a horse to water but you cannot make him drink." A professor of leadership/motivation/management once told a class, "you don't get paid to get a horse to drink, and you get paid to motivate him to float on his back in the pond!" Within the concept of knowledge of psychology, we must understand how people react to change. You have heard it said that people resist change. This is absolutely untrue. People have welcomed change throughout history AS LONG AS they understood the benefit of change to them. Management's responsibility in using profound knowledge is to market change so as to be exciting and desirous by employees. Lastly, profound knowledge requires an understanding of transformation from competition to collaboration. Negotiators have long understood that cooperation and mutually satisfying results start by someone taking a risk and offering another something that is desired. Deming's Fourteen Points Edward Deming created Fourteen Points of management based upon three principles. The first one is customer orientation. The second element is continuous improvement. The last principle is to recognize that quality is determined by the system, which is the inputs and the manner in which the previous two aspects are processed. 1. Management commitment 2. Adopt the new philosophy. 3. Understand inspection. 4. End price tag decisions 5. Improve constantly of production and service. 30 Total Quality Service Management
  31. 31. 6. Institute training. 7. Institute leadership. 8. Drive out fear. 9. Optimize team efforts 10. Eliminate slogans, exhortations and targets for the work force. 11. Eliminate quotas and MBO 12. Remove barriers to pride of workmanship. 13. Institute education and retraining. 14. Take action to accomplish the transformation. Point I: Management Commitment • The main message that Deming is trying to express under this point features two key aspects. These are customer obsession and strategic planning. These two ideals converged under this first point to establish the appropriate direction for businesses to focus their attention. • They should concentrate more on pleasing the customers than defeating any of their competitors. Competition will always be present if the business remains successful and manages to stay at the top of production, yet the only way such will be feasible is if they continue to maintain customer satisfaction. Point II: Adopt a New Philosophy • This new philosophy is nothing more than businesses taking the time to notice and prevent the further production of defective products or services, which in effect will lead to increase profits in the long-term. • Deming summarizes under this point, defects are expensive, unnecessary, and not inevitable. Point III: Understand Inspection • Inspection cannot put quality into a defected product. It can only stop the defected product from advancing further. • When many inspectors are hired to inspect the individual products the problem of passing defective products to consumers worsens because nearly every inspector assumes to some degree that a minimum inspection of so many products is enough. The usual mindset to a certain extent is that a past inspector should have already found the defect or future inspectors should find it if he or she had missed the mistake Point IV: End Price Tag Decisions • Deming suggests that businesses should minimize their long-term costs rather than minimize the initial cost • Least cost is not necessarily the best cost. Buying form a supplier based on low cost rather than a quality/cost basis defeats the need 31 Total Quality Service Management
  32. 32. for a long-term relationship. Vendor quality can be evaluated with statistical tools. Point V: Improve constantly of production and service • Improving every process concerning planning, production, and service provides better products for the consumer and higher profits for the business. • Search for quality is never ending and results from studying the process itself, not the defects detected during inspection. Point VI: Institute Training • Deming urges that every level of the system be trained for its specific tasks. The laborer responsible for performing the manual tasks may misunderstand it, despite how it might seem easily to be understood by the requester in management. • When new employees are hired they should receive total quality management training in groups at the company, departmental, and local level before they begin working alone in order to prevent such misunderstandings Point VII: Adopting and Instituting leadership • Deming rationalized that at the expense of leadership, management had over-expressed organizational control, thus devoting a majority of their time worrying only about outcomes. He pushes them to concentrate their efforts in improvements by making company visions actual actions of the corporation. Corporate leaders should center their attention on finding the source of any problems and correcting them in the system rather than blaming certain individuals for these inefficiencies Point VIII: Driving Out Fear • Employees need to feel secure in order for quality to be achieved. • Fear of asking questions, reporting problems, or making suggestions will prevent the desired climate of openness. Point IX: Optimize team efforts • The employees from each level of the corporation must work well with the other levels in order for the company to function at its best potential. This includes understanding the problems among the various branches of the business at each level. Only after a high level of awareness and commitment exists between them can change initially develop because cooperation requires this earnest fundamental transition. • When managers share information with employees, they recognize that a complication exists that inhibits employees from providing statements, presenting opinions or ideas, and asking questions in 32 Total Quality Service Management
  33. 33. large group settings. Once realized, the managerial staff can prompt the specific brand of trust and interest needed by the certain group of individuals to promote an honest exchange of ideas between levels without these barriers of communication. Point X: Eliminating Slogans, Exhortations, and Targets for the Workforce • A pointless sign hanging throughout the company in an attempt to promote corporate objectives is useless to employees and a waste of money to the business. Providing employees with company policies and purposes is essential but doing so in a tactful manner in memos and letters is less insulting and ignored than are the tacky posters dispersed throughout the organization in no particular order (Anschutz, 1995, p. 25). • Presenting such necessary information in the latter manner only proves failure of the management to express company goals and objectives adequately and professionally, thus using signs to speak to employees rather than by personal confrontations (Anschutz, 1995, p. 30). Point XI: Eliminating Quotas and MBO • Eliminating numerical quotas for the staff and numerical goals for the management increase quality because each employee is no longer based on the statistical average worker but on their own performance without comparative judgments making it easier for management to advance individuals who work to the highest potential. This in effect encourages the actual above-average half especially to work to their full potential at all times rather than merely work to meet the proposed numerical objective before halting their efforts or working slower than is necessary to prevent reaching the set number before the desired time (Drummond, 1992, p. 35). Point XII: Remove Barriers to Pride of Workmanship • Abolishing annual performance appraisals promotes self worth and pride in employees because it creates improved ways for individuals to receive increases in pay. Instead of basing the pay increase on achieved results without taking into account the possible barriers outside the control of the employees or overseeing their work, the increase is solely based on how much it would cost to hire a new employee with the same skills to replace the position. • Handling pay increases in this manner prevents unneeded competition between workers and promotes teamwork since all will reap the benefit of the increase rather than a few favorites In addition, by eliminating the annual rating or merit system, tension is relieved creating room for pride in workmanship, which contributes to further improvements. 33 Total Quality Service Management
  34. 34. Point XIII: Encouraging education and Self-improvement • Deming advises that businesses should promote the institution of vigorous programs of education and self-improvement for every employee at all levels. • Employees who have a career within a certain corporation are more than likely to change positions due to newly created jobs or the decline of out-of-date ones rather than changing to gain an increase in pay. This is the main reason why there will presumably always remain a need for educating employees. • As employees advance in knowledge both within and outside the criteria of their jobs, they gain satisfaction in this opportunity, which adds increased self worth and dignity that in effect brings forth improvements in them and the company as well. Point XIV: Taking Action to Accomplish the Transformation • It basically sets forth the motivation to implement the previous thirteen points with vital patience. He emphasizes that change takes time, but its long-term outcomes are worth the initial costs and wait. • An organization that wants to establish a culture based on quality needs to emphasize the preceding 13 points on a daily basis. • This usually requires a transformation in management style and structure. Deming’s Seven Deadly Diseases • Lack of consistency of purpose  A company that is without constancy of purpose has no long – range plans for staying in business. Management is insecure, and so are employees. • Emphasis on short-term profits  Looking to increase the quarterly dividend undermines quality and productivity. • Evaluation by performance, merit rating or annual review of performance  The effects of these are devastating – teamwork is destroyed, rivalry is nurtured.  Performance rating build fear and leave people bitter, despondent and beaten. They also encourage defection in the ranks of management. • Mobility of Management  Job hopping managers never understand the companies they work for and are never long enough to follow through on long-term changes that are necessary for quality and productivity. • Running a company on visible figures alone  The most important figures are unknown and unknowable – the “multiplier” effect of a happy customer, for example. • Excessive medical cost for employee health care, which increase the final costs of goods and services.  Reduce Cost on tests and treatments on medical expenses of employees. • Excessive costs of warranty, fueled by lawyers who work on the basis of contingency fees. Deming’s Obstacles 34 Total Quality Service Management
  35. 35.  “Hope for instant pudding”  the idea that “improvement of quality and productivity is accomplished suddenly by affirmation of faith”  “Search for examples”  Which companies undertake to find a ready-made recipe they can follow when they must instead map their own route to quality?  “Our Problems are different”  The pretext managers rise to avoid dealing with quality issues.  “Our quality control department takes care of all our problems for quality”  Another excuse managers use to avoid taking responsibility.  “We would installed quality control”  yet another excuse that lets top management off the hook  “The supposition that is only necessary to meet specifications”  Not only may products meet specifications yet vary in quality, but in addition, “the supposition that everything is all right inside the specifications and all wrong outside does not correspond to this world. DEMING’S MISCELLANEOUS PRINCIPLES • The 85-15 Rule: The 85 – 15 rules holds that 85 percent of what goes wrong is with the system, and only 15 percent with the individual person or thing. In this connection, we do well to remember that in any group of people, not all, nor even the majority, can be above average. In fact, exactly half will be below average. • Know Thy Customer: In quality-minded organizations, the word “customer” describes more than a relationship in which money merely changes hands. It describes the exchange of services as well. For any given enterprise, there are two sets of customers, external and internal. The external customer is the end user of a product or service. The internal customer is the person or work unit that receives the product or the service of another within the same company. Too often one department does not understand how its work is used by the next, and thus cannot learn what things are important in carrying out its tasks. The notion of internal customers lends relevance to each employee’s job and is absolutely critical to quality transformation. CROSBY’ S PHILOSOPHY: THE 14 POINTS: The essence of Crosby’s quality philosophy is embodied in what he calls the Absolutes of Quality Management and the Basic elements of Improvement. • Quality means conformance to requirements not elegance.  Quality is simply the feeling of “excellence”.  Requirements must be clearly stated so that they cannot be misunderstood. • There is no such thing as a quality problem. 35 Total Quality Service Management
  36. 36.  Problems must be identified by the individuals or departments that cause them.  The quality departments should measure conformance, report results, and lead the drive to develop a positive attitude toward quality improvement. • There is no such thing as the economics of quality: it is always cheaper to do the right job the first time.  Quality is free. What costs money are all the actions that involve not doing jobs right the first time.  Similar to Deming’s Chain of Reaction message. • The only performance measurement is the cost of quality.  The cost of quality is the expense of nonconformance.  Quality cost data are useful in calling problems to management’s attention, selecting opportunities for corrective action, and tracking quality improvement over time. • The only performance standard is Zero Defects.  A performance standard of the craftsperson regardless of his or her assignment…The theme of ZD is do it right the first time.  Concentrating on preventing defects rather than just finding and fixing them. Crosby’ s Basic Elements of Improvements: 1. Determination – Top management must be serious about quality improvement. 2. Education – absolutes should be understood by everyone only through proper training & education. 3. Implementation – Every member of the team must understand the implementation process. THE JURAN’ S PHILOSOPHY: Juran defines quality as “fitness for use”. This is broken down into four categories:  Quality of Design -focuses on market research, product concept, and design specifications  Quality of Conformance - includes technology, manpower and management  Availability - focuses on reliability, maintainability, and logistical support.  Field service - comprises of promptness, competence, and integrity. JURAN’ S TEN STEPS TO QUALITY IMPROVEMENT: 1. Build awareness of opportunities to improve. 2. set goals for improvement 3. Organize to reach goals. 4. Provide Training 5. Carry out projects to solve problems 36 Total Quality Service Management
  37. 37. 6. Report Progress 7. give recognition 8. communicate results 9. keep score 10.Maintain momentum by making annual improvement part of the regular systems and processes of the company FRAMEWORKS FOR QUALITY AND PERFORMANCE EXCELLENCE Two most prominent frameworks for quality that have had world-wide influence:  The Malcolm Baldrige standard provides an internationally comparable framework and criteria for assessing organizational performance. It is a template for competitiveness based on the principles of Total Quality Management.  ISO 9000:2000 The Malcolm Baldrige standard: Standard Dimensions: • APPROACH: The methods (policies, procedures, processes) used to address the requirements of the operations. • DEPLOYMENT: Extent (number of users and consistency of use) to which the approach is used by all appropriate work units. • RESULTS: The outcomes (trends, measures, KPIs) of the organization’s approach and deployment. The Malcolm Baldrige standard Categories and Items Point Values 1. Leadership 120 2. Strategic Planning 85 3. Customer and Market Focus 85 4. Measurement, Analysis, and Knowledge Management 90 5. Human Resource Focus 85 37 Total Quality Service Management
  38. 38. 6. Process Management 85 7. Business Results 450 TOTAL POINTS 1000 Figure 2.2 The Malcolm Baldrige Standard CRITERIA FOR PERFORMANCE EXCELLENCE • Designed to encourage companies to enhance their competitiveness through an aligned approach to organizational performance management that results in: 1. Delivery of ever-improving value to customers, contributing to market place success. 2. Improvement of overall company performance capabilities 3. Organizational and personal learning. • The seven categories are: 1. Leadership – examines how an organization’s leaders address values, direction, and performance expectations, as well as their focus on customers and other stakeholders, empowerment, innovation, and learning. 2. Strategic planning – examine how the organization develops strategic objectives and action plans. – examines how an organization 3. Customer and market focus determines requirements, expectations, and preferences of customers and markets. 4. Information and analysis – examines and organization’s information management and performance measurement systems and how the organization analyzes performance data and ensures hardware and software quality. 5. Human resource focus – examines how an organization motivates and enables employees to develop and utilize their full potential in alignment with the organization’s overall objectives and action plans. 6. Process management – examines the key aspects of an organization’s process management including customer- focused design, product and service delivery, key business, and support processes. 7. Business results – examines and organization’s performance and improvement in key business areas – customer satisfaction, product and service performance, financial and marketplace performance, human resource results, and operational 38 Total Quality Service Management
  39. 39. performance. Also examined are performance levels relative to those of competitors. Figure 2.3 MALCOLM BALDRIGE NATIONAL QUALITY AWARD CRITERIA FRAMEWORK A Systems Perspective Framework ISO 9000:2000 • Terms such as quality management, quality control, quality system, and quality assurance acquired different, and sometimes conflicting meanings from country to country, within a country, and even within an industry. • ISO 9000 is a family of standards for quality management systems. ISO 9000 is maintained by ISO, the International Organization for Standardization and is administered by accreditation and 39 Total Quality Service Management
  40. 40. certification bodies. Some of the requirements in ISO 9001 (which is one of the standards in the ISO 9000 family) would include: a) a set of procedures that cover all key processes in the business; b) monitoring processes to ensure they are effective; c) keeping adequate records; d) checking output for defects, with appropriate corrective action where necessary; e) regularly reviewing individual processes and the quality system itself for effectiveness; and f) facilitating continual improvement • A company or organization that has been independently audited and certified to be in conformance with ISO 9001 may publicly state that it is "ISO 9001 certified" or "ISO 9001 registered." Certification to an ISO 9000 standard does not guarantee the compliance (and therefore the quality) of end products and services; rather, it certifies that consistent business processes are being applied. History of ISO 9000 Pre ISO 9000 During WWII, there were quality problems in many British high-tech industries such as munitions, where bombs were exploding in factories during assembly. The adopted solution was to require factories to document their manufacturing procedures and to prove by record-keeping that the procedures were being followed. The name of the standard was BS 5750, and it was known as a management standard because it did not specify what to manufacture, but how to manage the manufacturing process. According to Seddon, "In 1987, the British Government persuaded the International Organization for Standardization to adopt BS 5750 as an international standard. BS 5750 became ISO 9000." 1987 version ISO 9000:1987 had the same structure as the UK Standard BS 5750, with three 'models' for quality management systems, the selection of which was based on the scope of activities of the organization: • ISO 9001:1987 Model for quality assurance in design, development, production, installation, and servicing was for companies and organizations whose activities included the creation of new products. • ISO 9002:1987 Model for quality assurance in production, installation, and servicing had basically the same material as ISO 9001 but without covering the creation of new products. • ISO 9003:1987 Model for quality assurance in final inspection and test covered only the final inspection of finished product, with no concern for how the product was produced. 40 Total Quality Service Management
  41. 41. • ISO 9000:1987 was also influenced by existing U.S. and other Defense Standards ("MIL SPECS"), and so was well-suited to manufacturing. The emphasis tended to be placed on conformance with procedures rather than the overall process of management — which was likely the actual intent. 1994 version • ISO 9000:1994 emphasized quality assurance via preventative actions, instead of just checking final product, and continued to require evidence of compliance with documented procedures. As with the first edition, the down-side was that companies tended to implement its requirements by creating shelf-loads of procedure manuals, and becoming burdened with an ISO bureaucracy. In some companies, adapting and improving processes could actually be impeded by the quality system. 2000 version • ISO 9001:2000 combines the three standards 9001, 9002, and 9003 into one, now called 9001. • Design and development procedures are required only if a company does in fact engage in the creation of new products. • The 2000 version sought to make a radical change in thinking by actually placing the concept of process management front and centre. ("Process management" was the monitoring and optimizing of a company's tasks and activities, instead of just inspecting the final product.) • The 2000 version also demands involvement by upper executives, in order to integrate quality into the business system and avoid delegation of quality functions to junior administrators. Another goal is to improve effectiveness via process performance metrics — numerical measurement of the effectiveness of tasks and activities. Expectations of continual process improvement and tracking customer satisfaction were made explicit. Future Version: 2008 • TC 176, the ISO 9001 technical committee, has started its review on the next version of ISO 9001, which will in all likelihood be termed the ISO 9001:2008 standard, assuming its planned release date of 2008 is met. Early reports are that the standard will not be substantially changed from its 2000 version. • As with the release of previous versions, organizations registered to ISO 9001 will be given a substantial period to transition to the new version of the standard, assuming changes are needed; organizations registered to 9001:1994 had until December of 2003 to undergo upgrade audits. 41 Total Quality Service Management
  42. 42. Certification ISO does not itself certify organizations. Many countries have formed accreditation bodies to authorize certification bodies, which audit organizations applying for ISO 9001 compliance certification. Although commonly referred to as ISO 9000:2000 certifications, the actual standard to which an organization's quality management can be certified is ISO 9001:2000. Both the accreditation bodies and the certification bodies charge fees for their services. The various accreditation bodies have mutual agreements with each other to ensure that certificates issued by one of the Accredited Certification Bodies (CB) are accepted world-wide. The applying organization is assessed based on an extensive sample of its sites, functions, products, services and processes; a list of problems ("action requests" or "non-compliances") is made known to the management. If there are no major problems on this list, the certification body will issue an ISO 9001 certificate for each geographical site it has visited, once it receives a satisfactory improvement plan from the management showing how any problems will be resolved. An ISO certificate is not a once-and-for-all award, but must be renewed at regular intervals recommended by the certification body, usually around three years. In contrast to the Capability Maturity Model there are no grades of competence within ISO 9001. Advantages • It is widely acknowledged that proper quality management improves business, often having a positive effect on investment, market share, sales growth, sales margins, competitive advantage, and avoidance of litigation. • The quality principles in ISO 9000:2000 are also sound, according to Wade, and Barnes, who says "ISO 9000 guidelines provide a comprehensive model for quality management systems that can make any company competitive." Barnes also cites a survey by Lloyd's Register Quality Assurance that indicated ISO 9000 increased net profit, and another by Deloitte-Touché that reported that the costs of registration were recovered in three years. According to the Providence Business News [7], implementing ISO often gives the following advantages: 1. Create a more efficient, effective operation 2. Increase customer satisfaction and retention 3. Reduce audits 4. Enhance marketing 5. Improve employee motivation, awareness, and morale 6. Promote international trade 42 Total Quality Service Management
  43. 43. Exercise NO. _____ Approaches to Total Quality Name _____________________________ Course & Year _______________________ Subject time/Day ____________________ Date: _____________ Instructor________ Case 2.1 The Reservation Clerk Mary Matthews works for an airline as a reservation clerk. Her duties include answering the telephone, making reservations, and providing information to customers. Her supervisor told her to be courteous and not to rush callers. However, the supervisor also told her that she must answer 25 calls per hour so that the department’s account manager can prepare an adequate budget. Mary comes home each day frustrated because the computer is slow in delivering information that she needs, and sometimes reports no information. Without information from the computer, she is forced to use printed directories and guides. Discussion Questions: 43 Total Quality Service Management
  44. 44. 1. What is Mary’s job? What might Deming say about this situation? 2. Drawing upon Deming’s principle, outline a plan to improve this situation. CHAPTER 3 TOTAL QUALITY TOOLS AND STATISTICAL THINKING Joseph Juran describes quality management as the “Quality Trilogy”: planning, control, and improvement. He says that most managers devote too much attention to control, and too little to planning and improvement - which may be the most important activities for meeting and exceeding customer expectations and gaining competitive advantage. Two groups of tools in quality management: 1. Tools for planning • Quality function deployment, concurrent engineering, and the “new seven” management and planning tools – that are design to assist managers in planning the quality effort and making efficient use of information. 2. Tools for continuous improvement • Includes Deming Cycle, tools for data analysis, poka – yoke (mistake proofing), and bench marking. • Use to improve the manufacturing and service systems • Deming cycle and basic statistical tools are usually found in basic quality training for all employees of an organization and are used by problem – solving teams to attack specific quality problems. QUALITY TOOLS IN QUALITY IMPROVEMENT • Quality function deployment 44 Total Quality Service Management