This presentation is based entirely on Quality Is Free by Philip B. Crosby and is meant as a general guide or overview of its concepts.
This presentation begins with an overview of Crosby’s quality concepts and principles, including a definition of “quality is free,” the integrity systems “table,” the five erroneous assumptions that management makes, and the essential traits of a quality manager. The presentation then outlines the five stages and six measurement categories of the Quality Management Maturity Grid. Following that, several slides list the fourteen steps of Crosby’s Quality Improvement Program. The presentation concludes with a real-life example and a hands-on exercise. A list of other publications by Philip Crosby is included for reference.
The cost of implementing a corporate quality program is offset by the cost savings of preventing defects. The total cost of quality includes prevention, appraisal, and failure costs: Prevention costs include the following activities: design reviews, product qualification, drawing checking, engineering quality orientation, quality improvement programs, supplier evaluations, supplier training, specification reviews, process capability studies, tool control, operating training, quality orientations, acceptance planning, quality audits, and preventive maintenance. Appraisal costs include the following activities: prototype inspection and testing, production specification conformance analysis, supplier surveillance, receiving inspection and testing, product acceptance, process control acceptance, packaging inspection, and status measurement and reporting. Failure costs include the following activities: consumer affairs, redesign, engineering change orders, purchasing change orders, corrective action costs, rework, scrap, warranties, after-sales service, and product liability.
Quality management requires a deliberate strategy to motivate people to adopt and sustain quality principles. A corporate quality program is a “table” supported by four “legs”: Management participation . Top management has to be actively involved with quality improvement. That sets a level of expectation for the rest of the organization. Professional quality management . A successful quality program depends on networking and training activities through quality councils, formal educational training, and professional certification within the organization . Original programs . Quality programs should be based on practical activities that can be implemented at all levels in all of an organization’s units. Crosby outlines several quality programs including a fourteen-step improvement program, Zero Defects, and Buck a Day (BAD). Recognition . More important than cash or financial awards, public recognition demonstrates the organization’s commitment to and value for quality.
Most managers hold five erroneous assumptions about quality and quality programs. These assumptions are the source of most misunderstandings and disagreements between those who demand quality and those who are supposed to achieve it. The truth is-- Quality is conformance to requirements . Requirements must be clearly stated so that they cannot be misunderstood. “The only performance standard is Zero Defects.” Quality can be measured by the cost of quality , which is the expense of prevention, appraisal, and failure recovery. Measurements should be displayed as visible proof of improvement and recognition of achievement. In any business, it is cheaper to do it right the first time . There are many excuses for not adopting quality improvement programs. One is that the “economics of quality” won’t allow an organization to do something, or that “our business is different”. These are excuses that have no real meaning. Most quality problems originate with those who do the planning and creating —in accounting, engineering, information systems, or marketing—and not with manufacturing workers. “There is no such thing as a quality problem.” Quality is shared by every function . Errors, problems, and defects should be attributed to those who cause them, not the quality department.
“ Quality management is a systematic way of guaranteeing that organized activities happen the way they are planned. It is a management discipline concerned with preventing problems from occurring by creating the attitudes and controls that make prevention possible” (p.19). Radical changes in the labor force, energy consumption, and technology have left managers to deal with situations for which there is no precedent. This requires them to gain complete control of themselves, think creatively and implement ideas simultaneously, and anticipate whatever challenges might emerge ahead. The ten-iem management style checklist allows managers to rate themselves as ordinary, super, or spectacular according to essential quality management traits: Listening. “You can convey no greater honor than to actually hear what someone has to say.” Cooperating. You don’t just cause plays to be executed, you protect others in the process.” Helping. “Let someone lean on you without expecting to lean back.” Transmitting. “How you come across to others should not be left to chance.” Creating. “Original solutions are a result of hard work in uncovering unoriginal problems.” Implementing. “There comes a time when someone has to actually get the job done.” Learning. “When you have an answer for everything, you know you have stopped learning.” Leading. “Leaders start to fail when they begin to believe their own material.” Following. “You never reach the stage when you aren’t working for someone, so learn to be good at it.” Pretending. “If you’re going to be an actor, be a good one, but stay out of management.”
Crosby puts his philosophies and principles to use in three tools that any manager or engineer can use to begin preventing defects and improving quality. The Quality Management Maturity Grid and the Quality Improvement Program are described in this presentation.
The Quality Management Maturity Grid allows a manager to determine the stage of an organization’s maturity by assessing six measurement categories. These measurement categories are Management understanding and attitude Quality organization status Problem handling Cost of quality as a percent of sales Quality improvement actions Summation of company quality posture
At the first stage in the Quality Management Maturity Grid, an organization exhibits the following behaviors: Management understanding and attitude: There is no comprehension of quality as a management tool. Personnel tend to blame the quality department for “quality problems.” Quality organization status: Quality responsibilities are hidden in manufacturing of the engineering departments. Inspection is not performed, rather the emphasis is on appraisal and sorting. Problem handling: Problems are addresses as they occur without lasting resolution and poor definition. There may be a lot of finger-pointing and blame. Cost of quality as a percent of sales: Nobody know the cost of quality. In actuality, cost are likely to be 20% of sales. Quality improvement actions: There are no organized quality activities. In fact, there is no understanding of such activities. Characteristic statement: “We don’t know why we have problems with quality.”
At the second stage in the Quality Management Maturity Grid, an organization exhibits the following behaviors: Management understanding and attitude: Top management recognizes that quality management may be of value, but is not willing to provide money or time to make it all happen. Quality organization status: Management may appoints a stronger quality leader, but the responsibilities still emphasize appraisal and moveing the product. The role is still attached to manufacturing or engineering. Problem handling: Teams are set up to attack major problems. However, long-range solutions are not solicited. Cost of quality as a percent of sales: The cost of quality is reported as 3% of sales. However, because costs such as inspection, warranties and repairs are not considered, the actual cost is likely to be 18% of sales. Quality improvement actions: Management attempts obvious “motivational” short-range efforts. Characteristic statement: “Is it absolutely necessary to always have problems with quality?”
At the first stage in the Quality Management Maturity Grid, an organization exhibits the following behaviors: Management understanding and attitude: After going through a quality improvement program, true learning begins. Top managers become more supportive and helpful Quality organization status: The quality department reports to top management, all appraisal is incorporated, and the quality manager has a role in management of the company. Problem handling: Processes are established to communicate corrective action. Problems are resolved openly and in an orderly way. Cost of quality as a percent of sales: The cost of quality is reported as 8%, though it is actually 12%. Quality improvement actions: Unit by unit and function by function, the fourteen-step quality improvement program is implemented throughout the organization. All personnel understand and apply each step. Characteristic statement: “Through management commitment and quality improvement, we are identifying and resolving our problems.”
At the first stage in the Quality Management Maturity Grid, an organization exhibits the following behaviors: Management understanding and attitude: By actively participating, top management understands the principles of quality management. Managers recognize their personal role in continuing the emphasis. Quality organization status: The quality manager is an officer of the company. Effective systems ensure status reporting and preventive action. Quality management includes consumer affairs and special assignments. Problem handling: With effective systems in place, problems are identified early in their development. All functions are open to suggestion and improvement. Cost of quality as a percent of sales: Cost of quality is reported as 6.5%, though it may actually be 8% of sales. Quality improvement actions: The quality improvement program is repeated to assure continual priority. Some managers are recruited for follow-up training, making quality improvement a perpetual activity. Characteristic statement: “Defect prevention is a routine part of our operation.”
Ultimately, an organization matures to stage V, Certainty: Management understanding and attitude: Quality is considered to be an essential part of the organization. Quality organization status: The quality function is represented on the board of directors, indicating that quality is the primary concern of the organization. Quality is a “thought leader.” Problem handling: Problems are prevented, except in the most unusual cases. All but the most elusive phenomena are known. Cost of quality as a percent of sales: Quality systems are accurate and efficient, including reporting systems. Therefore, the cost of quality is reported as 2.5%, which is what it actually is. Quality improvement actions: Quality improvement is a normal and continual activity. Characteristic statement: “We know why we do not have problems with quality.”
Crosby makes recommendations for each of the six measurement categories in the maturity grid. In regards to management understanding and attitude, Crosby emphasizes the importance of top-level participation. This is necessary to motivate people to change, accept responsibility, and discipline their behavior.
The second measurement category on the maturity grid is quality organizational status. This category refers to the degree to which an organization recognizes and incorporates quality as a function.
The third measurement category on the maturity grid is handling problems. The goal in this area is to evolve from responding to problems one by one as they occur to anticipating and preventing them entirely.
The fourth measurement category on the maturity grid is cost of quality (COQ). This is measured by the fully loaded costs of All efforts involved in doing work over, including clerical work All scrap Warranty (including in-plant handling of returns) After-service warranty Complaint handling Inspection and test Other costs such as engineering change notices and purchasing change orders
The fifth measurement category on the maturity grid is quality improvement activities. These include the formal programs, both short-term and continuing, that address quality improvement within the organization. Crosby proposes a fourteen-step program, which is outlined in the following four slides.
A complete copy of this example can be found in “How Does Siemens Take a Manufacturing Plant from Worst to First? Relentless Implementation of Crosby Philosophy,” Take 10 Minutes , Issue 23, 7 July 2005, available online at www.taketenminutes.com/pdfs/Take_Ten_Minutes_Issue_23.pdf or through the corporate website of Philip Crosby Associates (PCA), www.philipcrosby.com.
Crosby emphasizes the useful of cost of quality (COQ) as a measurement and motivational tools. It can be used to persuade top management of the imperative for fully supporting and participating in quality improvement programs. It can also be used as visible evidence of the progress of such programs. Calculate the cost of quality in your organization.
The cost of quality includes prevention, appraisal, and failure costs: Prevention costs include the following activities: design reviews, product qualification, drawing checking, engineering quality orientation, quality improvement programs, supplier evaluations, supplier training, specification reviews, process capability studies, tool control, operating training, quality orientations, acceptance planning, quality audits, and preventive maintenance. Appraisal costs include the following activities: prototype inspection and testing, production specification conformance analysis, supplier surveillance, receiving inspection and testing, product acceptance, process control acceptance, packaging inspection, and status measurement and reporting. Failure costs include the following activities: consumer affairs, redesign, engineering change orders, purchasing change orders, corrective action costs, rework, scrap, warranties, after-sales service, and product liability. This is measured by the fully loaded costs of All efforts involved in doing work over, including clerical work All scrap Warranty (including in-plant handling of returns) After-service warranty Complaint handling Inspection and test Other costs such as engineering change notices and purchasing change orders
Philip Crosby presents numerous case studies throughout Quality Is Free , including an extended case exercise intended for training managers to adopt and implement the Quality Improvement Program. He has published numerous articles and books, which are listed on the following slide for reference.
Quality is free
Quality Is FreeThe Art of Making Quality Certain By Philip B. Crosby McGraw-Hill Book Company Copyright 1979 Presentation by Kristine Daynes
About the Author, Philip Crosby• Introduced the Zero Defects program at Martin- Marietta in the early 1970s• Published Quality Is Free in 1979 after fourteen years as a vice president at International Telephone & Telegraph (ITT)• Started the management consulting group Philip Crosby Associates, Inc. (PCA) in 1979
What Will Be CoveredQuality Concepts and PrinciplesQuality Management Maturity GridFourteen-Step Quality Improvement ProgramReal-Life ExampleHands-On Exercise
What does “quality is free” mean?• A quality program can save a company more money than it costs to implement• Profitability is best accomplished by reducing the cost of poor quality and preventing defects• Cost savings include prevention, appraisal, and failure costs.
The Integrity Systems “Table”• Management participation and attitude• Professional quality management• Original programs• Recognition
The Five Erroneous Assumptions• Quality means goodness, • Quality is conformance to elegance requirements • Quality is measured by the• Quality is intangible, not cost of nonconformance measurable • It is cheaper to do things• The “economics of quality” right the first time are prohibitive, not relevant • Most problems start in• Quality problems originate planning and development with the workers • Quality is shared by every• Quality is the responsibility function and department of the quality department
How can Crosby’s concepts be put to use? • Evaluate your organization’s position on the Quality Management Maturity Grid • Implement the fourteen-step Quality Improvement Program
Quality Management Maturity Grid• Five stages of an organization’s maturity• Six measurement categories – Management understanding and attitude – Quality organization status – Problem handling – Cost of quality as a percent of sales – Quality improvement actions – Characteristic statement
Maturity Grid Stage I: Uncertainty• Quality is the responsibility of the quality department• Quality is hidden within manufacturing or engineering; no inspection• Problems are fought as they occur.• The cost of quality is unknown. In reality it is about 20%.• There are no organized quality improvement activities.• “We don’t know why we have problems with quality.”
Maturity Grid Stage II: Awakening• While quality management may be valuable, the organization is not willing to commit resources.• A quality leader is appointed, but the emphasis is on appraisal and moving the product.• Teams address major problems, but long-range solutions are not solicited.• The cost of quality is reported at 3%, but is actually 18%.• Activities are limited to short-range, motivational efforts.• “Why do we always have problems with quality?”
Maturity Grid Stage III: Enlightenment• Management adopts a supportive and helpful stance.• Quality is elevated to a functional level equivalent to engineering, marketing, etc.• Problems are resolved openly and in an orderly way.• The cost of quality is reported as 8%, though it is really about 12% of sales.• The fourteen-step quality improvement program is implemented.• “We are identifying and resolving our problems.”
Maturity Grid Stage IV: Wisdom• Top management participates in and understands quality.• The quality manager is an officer of the company.• Problems are identified in early development.• The cost of quality is reported as 6.5%. It may be 8%.• The quality improvement program is continual and accompanied by follow-up training.• “Defect prevention is a routine part of our operation.”
Maturity Grid Stage V: Certainty• Quality is an essential part of the organization.• A quality manager serves on the board of directors.• Problems are prevented.• The cost of quality is reported as 2.5%, which is what it really is.• Quality improvement is normal and continual.• “We know why we do not have problems with quality.”
Management Understanding and Attitude • “Improvement itself is never the real difficulty. Once individuals recognize and agree on their position, it is never difficult to improve.” • “What works in one industry to improve quality will work in others—if you take the time to understand quality and its content.”
Quality Organizational Status• “A lot of problems will be avoided if you lay out a clear policy covering the entire quality operation…Keep it simple, and you will have the reasonable expectation of having someone read it.”• “Quality operations should always report at the same level as those departments they are charged with evaluating.”
Handling Problems• “Operations that truly want to handle problems, for the purpose of solving them must create an open society within their walls that is imbued with the basic concepts of integrity and objectivity.”• “Objectivity comes with not placing the blame for problems on individuals. Aim the questions and probing at the job.”
Cost of Quality (COQ)• “Quality is free, but no one is ever going to know it if there isn’t some sort of agreed-on system of measurement.”• “The purpose of calculating COQ is really only to get management’s attention and to provide a measurement base for seeing how quality improvement is doing.”
Quality Improvement Activities• “Real improvement just plain takes a while to accomplish.”• Quality management is ballet, not hockey. “A ballet is deliberately designed, discussed, planned, examined, and programmed in detail before it is performed.”
Fourteen Steps to Quality Improvement1. Management commitment with an emphasis on defect prevention and visibility2. Quality improvement teams composed on members of each department or function—all the necessary tools3. Quality measurement to monitor the status and improvement of activities
Fourteen Steps to Quality Improvement4. Cost of quality evaluation by the comptroller for accurate figures2. Quality awareness by communicating the cost of quality, encouraging discussion6. Corrective action to ingrain a habit of identifying problems and correcting them
Fourteen Steps to Quality Improvement7. An ad hoc committee to advocate “zero defects”2. Supervisor training so that all managers understand the programs and can explain it3. Zero Defects Day to establish “zero defects” as the organizational standard4. Goal setting as teams, specific and measurable
Fourteen Steps to Quality Improvement1. Removing the causes of defects, as described by individual workers, so that the people know their problems are heard and answered2. Genuine recognition for achievement3. Quality councils of quality professionals and team chairs for status information and ideas4. Do it over again—repetition makes the program perpetual
A Real World Example• Alberto Wisbeck took the job of top manager at Siemens’ worst factory in Jinan, China.• Production capacity was low and the cost of raw materials was 67% of sales.• If efficiency did not improve, the factory would be closed.
What did Wisbeck do?• Wisbeck focused on improving quality and meeting customer needs• Following the 14-step quality improvement program, he encouraged workers and supervisors to identify the processes and procedures that were causing problems.• Following training, top managers implemented projects in their own work areas
What were the results?• By focusing on faulty work processes, the managers avoided reprimanding their workers—a critical cultural requirement.• Over 300 projects saved the company $604,000 annually and the plant rose to rank as Siemen’s #2 plant.
Practice Exercise• Cost of quality is a necessary measurement – To persuade management to address quality issues – To monitor the progress of improvement programs• Do you know the cost of quality in your unit or division? Can you calculate it as a percentage of sales?
Practice Exercise• Remember, the cost of quality includes prevention, appraisal, and failures.• If your organizations does not currently measure and report cost of quality, it may actually equal 20% of sales
Summary• Quality is free, but it is not a gift. It is hard work.• Quality improvement has as much to do with converting people as solving problems.• Managers can use Crosby’s Quality Management Maturity Grid and 14-Step Quality Improvement Program to help their people prevent and eliminate defects.
Publications by Philip Crosby1967. Cutting the cost of quality. Boston, Industrial Education Institute. OCLC 616899. 1969. The strategy of situation management. Boston, Industrial Education Institute. OCLC 13761. 1979. Quality is Free. New York: McGraw-Hill. ISBM 0-07-014512-1.1981. The Art of Getting Your Own Sweet Way. McGraw-Hill. ISBN 0-07-014527-X. 1984. Quality Without Tears. New York: McGraw-Hill. ISBN 0-07-014511-3. 1986. Running things. New York: McGraw-Hill. ISBN 0-07-014513-X. 1988. The Eternally Successful Organization. New York: McGraw-Hill. ISBN 0-07-014533-4. 1989. Lets talk quality. New York: McGraw-Hill. ISBN 0-07-014565-2. 1990. Leading, the art of becoming an executive. New York: McGraw-Hill. ISBN 0-07-014567-9. 1994. Completeness: Quality for the 21st Century. Plume. ISBN 0-452-27024-3. 1995. Philip Crosbys Reflections on Quality. McGraw-Hill. ISBN 0-07-014525-3. 1996. Quality is still free: Making Quality Certain in Uncertain Times. McGraw-Hill. ISBN 0-07-014532-6. 1997. The Absolutes of Leadership (Warren Bennis Executive Briefing). Jossey-Bass. ISBN 0-7879-0942-4. 1999. Quality and Me: Lessons from an Evolving Life. Jossey-Bass. ISBN 0-7879-4702-4.
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