Quality Management Principles Become CEO Management Practices Marsha Ludwig-Becker Fall 2001 © 2001 by Becker Technology, Inc

A Quality System versus a Management System The management system of a company should be determined strategically and must meet the company’s business objectives. The ISO standards and guides can be used to accomplish strategic business objectives, to create a quality management system that fits the business, integrates company-wide operations, and makes profit. The benefits of such as system are beginning to be documented as improved worker productivity, increased process efficiency, reduced errors, time saved, access to real time information, data for making decisions, positive customer surveys and empowered workers.* *Murphy,John M., “Let the System Drive Your ISO 9000 Effort”, Quality Digest , December 1996, p.37

The management system of a company should be determined strategically and must meet the company’s business objectives.

The ISO standards and guides can be used to accomplish strategic business objectives, to create a quality management system that fits the business, integrates company-wide operations, and makes profit.

The benefits of such as system are beginning to be documented as improved worker productivity, increased process efficiency, reduced errors, time saved, access to real time information, data for making decisions, positive customer surveys and empowered workers.*

*Murphy,John M., “Let the System Drive Your ISO 9000 Effort”,

Quality Digest , December 1996, p.37

Objectives Understand the basics of Quality Management principles Customer focus Leadership People involvement Process approach Systematic approach to management Continual improvement Factual approach to decision-making Mutually beneficial supplier relationships Understand how these principles can be applied to CEO management practices

Understand the basics of Quality Management principles

Customer focus

Leadership

People involvement

Process approach

Systematic approach to management

Continual improvement

Factual approach to decision-making

Mutually beneficial supplier relationships

Understand how these principles can be applied to CEO management practices

A Quality System is a Management System Adapted from: Ludwig-Becker, M., Electronics Quality Management Handbook , McGraw-Hill, 1997, p.18

ISO 9000-2000 Invokes Quality Management Principles(QMP ) ISO 9004-2000 paragraph 4.3, “Use of Quality Management Principles”: “ To lead and operate an organization successfully, it is necessary to manage it in a systematic and visible manner. … These principles have been developed for use by top management in order to lead the organization toward improved performance. These quality management principles are integrated in the contents of this International Standard…”* They certainly have been incorporated ISO 9000-2000 highlights: Customer focus, leadership, involvement of people, process approach, systematic approach to management, continual improvement, factual approach to decision making, and mutually beneficially supplier relations Evidence of where these requirements are in ISO 9001:2000 can be found in the module defining exact changes *ISO 9000-2000, p. 4

ISO 9004-2000 paragraph 4.3, “Use of Quality Management Principles”:

“ To lead and operate an organization successfully, it is necessary to manage it in a systematic and visible manner. … These principles have been developed for use by top management in order to lead the organization toward improved performance. These quality management principles are integrated in the contents of this International Standard…”*

They certainly have been incorporated

ISO 9000-2000 highlights:

Customer focus, leadership, involvement of people, process approach, systematic approach to management, continual improvement, factual approach to decision making, and mutually beneficially supplier relations

Evidence of where these requirements are in ISO 9001:2000 can be found in the module defining exact changes

Quality Management Principles: Definition Quality Management Principles are: A comprehensive and fundamental set of rules or beliefs for leading and operating an organization aimed at continually improving performance over the long term by focusing on customers while addressing the needs of all stakeholders.* *From the Quality Management Principles Internet site: http://www.wineasy.se/qmp/about.html

Quality Management Principles are:

A comprehensive and fundamental set of rules or beliefs for leading and operating an organization aimed at continually improving performance over the long term by focusing on customers while addressing the needs of all stakeholders.*

What are the Eight (8) Quality Management Principles? 1. A Customer Focused Organization 2. Leadership 3. Involvement of People 4. Process Approach 5. Systematic Approach to Management 6. Continual Improvement 7. Factual Approach to Decision-Making 8. Mutually Beneficial Supplier Relationships* *ISO 9004-2000, p.4-5

1. A Customer Focused Organization

2. Leadership

3. Involvement of People

4. Process Approach

5. Systematic Approach to Management

6. Continual Improvement

7. Factual Approach to Decision-Making

8. Mutually Beneficial Supplier Relationships*

Principle 1: Customer Focus - Organizations Organizations depend on customers and must understand, strive to meet and exceed customer expectations.* Two facets: Customer focused organizations, which should result in customer satisfaction is a number one objective World Class Companies (Motorola/Hewlitt Packard (HP)/Texas Instruments (TI) anticipate customer requirements/needs Baldrige category : “Customer Focus and Satisfaction” is one whole area Long term customers a plus for business Profits come from upgrades, services, new products that people believe in; Customer Satisfaction is only the first step in building long term loyal customers; the need is to focus on retention and loyalty Use Quality Function Deployment (QFD) Can be used for almost anything, see Lou Cohen’s book, How to Make QFD Work for You , (Addison-Wesley, 1995) as well as the QFD internet page http.www//akao.larc.nasa.gov/dfc/qfd.html *ISO 9004-2000, p.4

Two facets: Customer focused organizations, which should result in customer satisfaction is a number one objective

World Class Companies (Motorola/Hewlitt Packard (HP)/Texas Instruments (TI) anticipate customer requirements/needs

Baldrige category : “Customer Focus and Satisfaction” is one whole area

Long term customers a plus for business

Profits come from upgrades, services, new products that people believe in; Customer Satisfaction is only the first step in building long term loyal customers; the need is to focus on retention and loyalty

Use Quality Function Deployment (QFD)

Can be used for almost anything, see Lou Cohen’s book, How to Make QFD Work for You , (Addison-Wesley, 1995) as well as the QFD internet page http.www//akao.larc.nasa.gov/dfc/qfd.html

Principle 1: Customer Focus - Satisfaction Quality is “perceived” according to Kano Think about what delights you as a customer ! From: Ludwig-Becker, M., Electronics Quality Management Handbook , McGraw-Hill, 1997, p.67 from Juran and Gyrna, Quality Planning and Analysis, 3rd Ed. McGraw-Hill, 1993,p. 247, used with permission

Baldrige Award Criteria Framework

Principle 2: Leadership Leaders establish unity and purpose for the internal environment of the organization.* Leaders must be people that Have the ability to think in time spans of years instead of months Visualize life in 5 years--what do you want it to be Stress corporate “big picture” Leaders Develop a participative climate Partnerships Make others responsible Employee participation “ Walk what you talk” “ Say what you mean, mean what you say” *ISO 9004-2000, p.5

Leaders must be people that

Have the ability to think in time spans of years instead of months

Visualize life in 5 years--what do you want it to be

Stress corporate “big picture”

Leaders

Develop a participative climate

Partnerships

Make others responsible

Employee participation

“ Walk what you talk”

“ Say what you mean, mean what you say”

Vision Led Value Driven Leadership

Principle 2: Leadership Leadership skills must be cultivated Encourage innovation and change No fear of failure, sponsor change 3M scientists spend 15% of time on new ideas Provide corporate funding Create a secure environment Compromise between Japanese concept of lifetime employment and the American tendency to “fire at will” Creates greater work efficiency

Leadership skills must be cultivated

Encourage innovation and change

No fear of failure, sponsor change

3M scientists spend 15% of time on new ideas

Provide corporate funding

Create a secure environment

Compromise between Japanese concept of lifetime employment and the American tendency to “fire at will”

Creates greater work efficiency

Principle 3: People Involvement People at all levels are the essence of the organization and their full involvement enables their abilities to be used for the organization’s benefits.* Worker empowerment comes from the ability of employees to make a difference in the process they manage Workers need tools to analyze, organize, understand and use large amounts of data to make important decisions that impact the bottom line *ISO 9004-2000, p.5

Worker empowerment comes from the ability of employees to make a difference in the process they manage

Workers need tools to analyze, organize, understand and use large amounts of data to make important decisions that impact the bottom line

Principle 3: People Involvement The Way of the Beaver People* Work best when they control their own jobs Must have clear understanding of company’s overall purpose as well as their place in it (clear goals, values) People must know that their thoughts, feelings, needs and dreams are respected listened to and acted on. They are in the information loop Then people take control of their work Must set realistic goals for employes Individuals take pride in in holding themselves accountable for productivity, innovations, cost control, customer service and other business needs Need boundaries--helps encourage self control and accountability Empowerment cultures become team cultures Then must be taught to work in teams *Blanchard, Ken, “One Minute Manager:” Quality Digest , Nov. 1997, p. 19

The Way of the Beaver People*

Work best when they control their own jobs

Must have clear understanding of company’s overall purpose as well as their place in it (clear goals, values)

People must know that their thoughts, feelings, needs and dreams are respected listened to and acted on.

They are in the information loop

Then people take control of their work

Must set realistic goals for employes

Individuals take pride in in holding themselves accountable for productivity, innovations, cost control, customer service and other business needs

Need boundaries--helps encourage self control and accountability

Empowerment cultures become team cultures

Then must be taught to work in teams

Principle 3: People Involvement Empowerment* Responsibility is delegated, not authority Three facets to empowment (each depends on the other two) Wisdom to know what to do and when to do it The will to do what needs to be done The wherewithal to do it *Guest Editorial, by John Troyer, Quality Digest , Oct. 1996, p. 64 Figure 3.1a: The Empowerment Cube

Empowerment*

Responsibility is delegated, not authority

Three facets to empowment (each depends on the other two)

Wisdom to know what to do and when to do it

The will to do what needs to be done

The wherewithal to do it

Figure 3.1a: The Empowerment Cube

Principle 4: Process Approach A desired result is achieved more efficiently when related resources and activities are managed as a process.* Everything done is involved in a process Meet needs and requirements of internal and external customers Must have clear responsibility for each process Measure process, measure inputs, and outputs *ISO 9004-2000, p.5 Note: Figure 3.3 from ISO 9000-1: 1994, p. 4

Everything done is involved in a process

Meet needs and requirements of internal and external customers

Must have clear responsibility for each process

Measure process, measure inputs, and outputs

Principle 4: Process Approach Baldrige Approach, Category 6: Process Management ISO 9001-1994 generally manufacturing oriented With more use in other industries, the 2000 standards change Total quality management (TQM) is cornerstone of process

Baldrige Approach, Category 6: Process Management

ISO 9001-1994 generally manufacturing oriented

With more use in other industries, the 2000 standards change

Total quality management (TQM) is cornerstone of process

Principle 4: Process Approach Processes should satisfy customer’s needs If they don’t; they are NOT good processes Process improvement focuses on implementing the best methods for translating valid operational requirements into finished products and services Processes are defined by flow charts Identify key processes and related goals Define key cross functional business processes Form teams and develop charters Develop measurements Manage the Process Discuss process maintenance, improvement, team improvement *“How to Manage Key Business Processes”, by Rico Yingling, Quality Progress , April 1997, p. 107-110. Used at Border Chem. in Kent, WA.

Processes should satisfy customer’s needs

If they don’t; they are NOT good processes

Process improvement focuses on implementing the best methods for translating valid operational requirements into finished products and services

Processes are defined by flow charts

Identify key processes and related goals

Define key cross functional business

processes

Form teams and develop charters

Develop measurements

Manage the Process

Discuss process maintenance,

improvement, team improvement

Principle 5: Systematic Approach to Management Identifying, understanding, and managing a system of interrelated processes for a given objective contributes to the effectiveness and efficiency of the organization.* Management: A series of interrelated processes A system is defined by identifying all interrelated processes and their interdependences A system is managed as system of interrelated processes Integrated Master Plan (IMP); Integrated Master Schedule (IMS) New requirements of DOD in US A system is improved by continuous measuring and evaluating An effective system provides confidence in an organization’s capability to meet customer requirements *ISO 9004-2000, p.5

Management:

A series of interrelated processes

A system is defined by identifying all interrelated processes and their interdependences

A system is managed as system of interrelated processes

Integrated Master Plan (IMP); Integrated Master Schedule (IMS)

New requirements of DOD in US

A system is improved by continuous measuring and evaluating

An effective system provides confidence in an organization’s capability to meet customer requirements

Principle 5: Systematic Approach to Management The Business Process

Principle 6: Continual/Continuous Improvement Continuous/continual improvement is the permanent object of an organization that wishes to stay in business.* Performance improvement: 3 flavors Strategic planning --customer needs Operational planning --translates strategy into operational and financial requirements Process improvement focuses on best methods for operational requirements into finished product/services Deming’s Plan/Do/Study(check)/Act P - Plan activities D - Implement the Plan C - Study (Check) the result A - Improve the process *ISO 9004-2000,p.5

Performance improvement: 3 flavors

Strategic planning --customer needs

Operational planning --translates strategy into operational and financial requirements

Process improvement focuses on best methods for operational requirements into finished product/services

Deming’s Plan/Do/Study(check)/Act

P - Plan activities

D - Implement the Plan

C - Study (Check) the result

A - Improve the process

Principle 6: Continual/Continuous Improvement Phases of continuous process improvement (see next chart) Awareness, Resistance, Expansion, Integration and finally Regeneration, or Continuous Improvement Strategies for Implementation 1. Commitment 2. Training 3. Targeting and Deployment 4. Resources 5. Measurements 6. Management Structure 7. Systems Alignment 8. Communication and Information* *Doherty, Steve D., “A Blueprint for Excellence”, Quality Progress , April 1991, p. 84-85

Phases of continuous process improvement (see next chart)

Awareness, Resistance, Expansion, Integration and finally Regeneration, or Continuous Improvement

Strategies for Implementation

1. Commitment

2. Training

3. Targeting and Deployment

4. Resources

5. Measurements

6. Management Structure

7. Systems Alignment

8. Communication and Information*

Principle 6: Continual/Continuous Improvement Blueprint for Excellence at the Air Force Logistics Command (AFLC)

Principle 7: Factual Approach to Decision-Making Effective decisions and actions are based on the logical and intuitive analysis of data and information.* “ Can’t manage what you can’t measure” “ In God we trust, all others bring data” Programs that produce employee involvement Statistical Process Control (SPC)--more than for manufacturing Now used in all soft processes Software, in Europe, only think of SPC Motorola’s Six Sigma program is an SPC program that produces a goal for all employees to aim at and rally around Must measure all processes, especially business processes This is where the money can be saved and customer satisfaction heightened Measurement must be automatic: built into the process *ISO 9004-2000, p.5

“ Can’t manage what you can’t measure”

“ In God we trust, all others bring data”

Programs that produce employee involvement

Statistical Process Control (SPC)--more than for manufacturing

Now used in all soft processes

Software, in Europe, only think of SPC

Motorola’s Six Sigma program is an SPC program that produces a goal for all employees to aim at and rally around

Must measure all processes, especially business processes

This is where the money can be saved and customer satisfaction heightened

Measurement must be automatic: built into the process

Principle 7: Factual Approach to Decision-Making From: “As Easy as Two Plus Two”, News for a Change , Association for Quality and Participation, Cincinnati, OH., Nov. 1997, p. 4

Principle 7: Factual Approach to Decision-Making Measuring Business Processes From: Kordupleski, R., Rust, R, and Zahorik, A, “Why Improving Quality Doesn’t Improve Quality”, California Management Review , vol.38, no. 3, Spring 1993, p. 91

Principle 8: Mutually Beneficial Supplier Relationships Mutually beneficial relationships between the organization and its suppliers enhance the ability of the organization to create value.* A Win Win Philosophy!!!! Supplier Partnership is the new buzzword Part of a new way of doing business TQM is making the difference Fewer suppliers/longer term suppliers, specialization, cost Cross functional teams including suppliers Best Value = Customer satisfaction Involved in Service sector as well Involve suppliers in product development On Site, strategic planning, input on product plans Electronic purchase orders and automated systems *ISO 9004-2000, p.5

A Win Win Philosophy!!!!

Supplier Partnership is the new buzzword

Part of a new way of doing business

TQM is making the difference

Fewer suppliers/longer term suppliers, specialization, cost

Cross functional teams including suppliers

Best Value = Customer satisfaction

Involved in Service sector as well

Involve suppliers in product development

On Site, strategic planning, input on product plans

Electronic purchase orders and automated systems

Principle 8: Mutually Beneficial Supplier Relationships Supplier Chain Management Measures cycle time Cuts transportation costs 5-12% Inventory costs 10-40% Schedule changes 15-65% Cuts out stovepipes; allows more benchmarking* * From “The Hearth of the Matter, by Roberto Michel, Manufacturing Systems (A Cahners publication) April 1997 or see http://www.manufacturingsystems.com. Figure 1.7 from Ludwig-Becker, M., Electronics Quality Management Handbook , McGraw-Hill, 1997, p.388

Supplier Chain Management

Measures cycle time

Cuts transportation costs 5-12%

Inventory costs 10-40%

Schedule changes 15-65%

Cuts out stovepipes; allows more benchmarking*

Summary Implementing the Eight Principles is not easy Takes a good leader Takes vision/perseverance Requires infrastructure Requires communication Much planning should start immediately Goes along well with ISO 9000 implementation See attached Self Assessment for QMP Implementation

Implementing the Eight Principles is not easy

Takes a good leader

Takes vision/perseverance

Requires infrastructure

Requires communication

Much planning should start immediately

Goes along well with ISO 9000 implementation

See attached Self Assessment for QMP Implementation

Self Assessment for Quality Management Principles (QMP), page 1

Self Assessment for Quality Management Principles (QMP), page 2

Sources California Management Review , S549 Haas School of Business #1900, Berkeley, CA 94720, cmr@haas.berkeley.edu ANSI/ISO/ASQ Q9004-2000 , Quality Management Systems--Guidelines for performance improvements, American Society for Quality (ASQ), P.O. Box 3005 Milwaukee, WI 53201, 2000; http://standardsgroup.asq.org The Informed Outlook, International Forum for Management Systems, Inc., 15913 Edgewood Dr.Montclair, Virginia 22026, www.informintl.com ANSI/ASQC Q9001- 1994, Quality Management and Quality Assurance Standards--Guidelines for Selection and Use, ASQ, Milwaukee, WI, 1994 Ludwig-Becker, M., Electronics Quality Management Handbook , McGraw-Hill, 1998, becker2@worldnet.att.net

California Management Review , S549 Haas School of Business #1900, Berkeley, CA 94720, cmr@haas.berkeley.edu

ANSI/ISO/ASQ Q9004-2000 , Quality Management Systems--Guidelines for performance improvements, American Society for Quality (ASQ), P.O. Box 3005 Milwaukee, WI 53201, 2000; http://standardsgroup.asq.org

The Informed Outlook, International Forum for Management Systems, Inc., 15913 Edgewood Dr.Montclair, Virginia 22026, www.informintl.com

ANSI/ASQC Q9001- 1994, Quality Management and Quality Assurance Standards--Guidelines for Selection and Use, ASQ, Milwaukee, WI, 1994

Ludwig-Becker, M., Electronics Quality Management Handbook , McGraw-Hill, 1998, becker2@worldnet.att.net

Sources Manufacturing Systems (A Cahners publication) April 1997 or see http.www.manufacturingsystems.com Quality Digest, 1350 Vista Way., P.O. Box 882,Red Bluff, CA 96080, qualitydig@qof.com Quality Management Principles Internet site: http:www.wineasy.se/qmp/about.html and ISO 9004: July 1998, p.415-416 & ISO/CDI ISO 9000-1998, p. 2 Quality Progress, American Society of Quality, 611 E. Wisconsin Ave., P.O. Box 3005, Milwaukee, WI 53201 For Quality Function Deployment (QFD)Lou Cohen’s book, How to Make QFD Work for You , (Addison-Wesley, 1995) as well as the QFD internet page:http.www//akao.larc.nasa.gov/dfc/qfd.html

Manufacturing Systems (A Cahners publication) April 1997 or see http.www.manufacturingsystems.com

Quality Digest, 1350 Vista Way., P.O. Box 882,Red Bluff, CA 96080, qualitydig@qof.com

Quality Management Principles Internet site: http:www.wineasy.se/qmp/about.html and ISO 9004: July 1998, p.415-416 & ISO/CDI ISO 9000-1998, p. 2

Quality Progress, American Society of Quality, 611 E. Wisconsin Ave., P.O. Box 3005, Milwaukee, WI 53201

For Quality Function Deployment (QFD)Lou Cohen’s book, How to Make QFD Work for You , (Addison-Wesley, 1995) as well as the QFD internet page:http.www//akao.larc.nasa.gov/dfc/qfd.html