The document discusses the growth of quality management from a focus on manufacturing to other sectors such as healthcare, education, non-profits, and government. It emphasizes that a systems perspective is important for quality management and successful organizations acknowledge the interactions between subsystems. Quality principles can be effectively applied to services, although there are some differences compared to manufacturing such as intangible output and simultaneous production and consumption.

1. 11
Chapter 2Chapter 2
Total Quality inTotal Quality in
OrganizationsOrganizations The
Management
& Control of
Quality, 7e

2. 2
Growth of Modern QualityGrowth of Modern Quality
ManagementManagement
Manufacturing
quality
Improved
product designs
Service
quality
Performance
excellence

3. Key IdeaKey Idea
As consumer expectations have risen, a
focus on quality has permeated other key
sectors of the economy, most notably
health care, education, not-for-profits,
and government.

4. SystemsSystems
 AA systemsystem is a set of functions or activitiesis a set of functions or activities
within an organization that work together forwithin an organization that work together for
the aim of the organization.the aim of the organization.
 Subsystems of an organization are linkedSubsystems of an organization are linked
together as internal customers andtogether as internal customers and
suppliers.suppliers.
 A systems perspective acknowledges theA systems perspective acknowledges the
importance of the interactions ofimportance of the interactions of
subsystems, not the actions of themsubsystems, not the actions of them
individually.individually.

5. Key IdeaKey Idea
Successful management relies on a
systems perspective, one of the most
important elements of total quality.

6. 6
Manufacturing SystemsManufacturing Systems (1 of 2)(1 of 2)
 Marketing and salesMarketing and sales
 Product design and engineeringProduct design and engineering
 Purchasing and receivingPurchasing and receiving
 Production planning andProduction planning and
schedulingscheduling
 Manufacturing and assemblyManufacturing and assembly
 Tool engineeringTool engineering

7. 7
Manufacturing SystemsManufacturing Systems (2 of(2 of
2)2)
 Industrial engineering and processIndustrial engineering and process
designdesign
 Finished goods inspection and testFinished goods inspection and test
 Packaging, shipping, andPackaging, shipping, and
warehousingwarehousing
 Installation and serviceInstallation and service

8. Key IdeaKey Idea
Traditional quality assurance systems in
manufacturing focus primarily on technical
issues such as equipment reliability,
inspection, defect measurement, and
process control.

9. Relationships in a TypicalRelationships in a Typical
Manufacturing SystemManufacturing System
(Fig.2.1)(Fig.2.1)

10. Quality in MarketingQuality in Marketing
Marketing and sales personnel are
responsible for determining the needs
and expectations of consumers.

11. Quality in ProductQuality in Product
DesignDesign
Product design and engineering functions
develop technical specifications for
products and production processes to
meet the requirements determined by the
marketing function.

12. Quality in PurchasingQuality in Purchasing
A purchasing agent should not simply be
responsible for low-cost procurement, but
should maintain a clear focus on the
quality of purchased goods and materials.

13. Quality in ProductionQuality in Production
Planning & SchedulingPlanning & Scheduling
Poor quality often results from time
pressures caused by insufficient planning
and scheduling.

14. Quality in ManufacturingQuality in Manufacturing
and Assemblyand Assembly
Both technology and people are essential
to high-quality manufacturing.

15. Quality in ProductionQuality in Production
Planning & SchedulingPlanning & Scheduling
Poor quality often results from time
pressures caused by insufficient planning
and scheduling.

16. Quality in ProcessQuality in Process
DesignDesign
Manufacturing processes must be
capable of producing output that meets
specifications consistently.

17. Quality in Finished GoodsQuality in Finished Goods
Inspection and TestingInspection and Testing
The purposes of final product inspection
are to judge the quality of manufacturing,
to discover and help to resolve production
problems that may arise, and to ensure
that no defective items reach the customer.

18. Quality in Installation andQuality in Installation and
ServiceService
Service after the sale is one of the most
important factors in establishing customer
perception of quality and customer
loyalty.

19. 19
Quality in BusinessQuality in Business
Support Functions forSupport Functions for
ManufacturingManufacturing
 Finance and accountingFinance and accounting
 Quality assuranceQuality assurance
 Legal servicesLegal services

20. Key IdeaKey Idea
Every manager is responsible for
studying and improving the quality of the
process for which he or she is
responsible; thus, every manager is a
quality manager.

21. 21
Quality in ServicesQuality in Services
 ServiceService is defined as “any primary oris defined as “any primary or
complementary activity that does notcomplementary activity that does not
directly produce a physical product –directly produce a physical product –
that is, the non-goods part of thethat is, the non-goods part of the
transaction between buyer (customer)transaction between buyer (customer)
and seller (provider).”and seller (provider).”

22. Key IdeaKey Idea
The American Management Association
estimates that the average company
loses as many as 35 percent of its
customers each year, and that about two-
thirds of these are lost because of poor
customer service.

23. 23
Critical Differences BetweenCritical Differences Between
Service and ManufacturingService and Manufacturing (1 of(1 of
2)2)
 Customer needs and performanceCustomer needs and performance
standards are more difficult tostandards are more difficult to
identify and measureidentify and measure
 Services requires a higher degree ofServices requires a higher degree of
customizationcustomization
 Output is intangibleOutput is intangible

24. Critical Differences BetweenCritical Differences Between
Service and ManufacturingService and Manufacturing (2 of(2 of
2)2)
 Services are produced and consumedServices are produced and consumed
simultaneouslysimultaneously
 Customers are often involved in actualCustomers are often involved in actual
processprocess
 Services are more labor-intensive thanServices are more labor-intensive than
manufacturingmanufacturing
 Services handle large numbers ofServices handle large numbers of
transactionstransactions

25. Key IdeaKey Idea
These differences make it difficult for
many service organizations to apply total
quality principles, and foster misguided
perceptions that quality management
cannot be effectively accomplished in
services.

26. 26
Components of ServiceComponents of Service
System QualitySystem Quality
 EmployeesEmployees
 Information technologyInformation technology

27. Key IdeaKey Idea
Researchers have repeatedly
demonstrated that when service employee
job satisfaction is high, customer
satisfaction is high, and that when job
satisfaction is low, customer satisfaction is
low.

28. Key IdeaKey Idea
Information technology is essential for
quality in modern service organizations
because of the high volumes of information
they must process and because customers
demand service at ever-increasing speeds.

29. Quality in Health CareQuality in Health Care
 Joint Commission on Accreditation ofJoint Commission on Accreditation of
Healthcare Organizations (JCAHO)Healthcare Organizations (JCAHO)
 National Committee for QualityNational Committee for Quality
Assurance (NCQA)Assurance (NCQA)
 Institute for Healthcare ImprovementInstitute for Healthcare Improvement
(IHI)(IHI)
 1999 expansion of the Baldrige Award1999 expansion of the Baldrige Award
to nonprofit health care organizationsto nonprofit health care organizations

30. Quality Issues in HealthQuality Issues in Health
CareCare
 Avoidable errorsAvoidable errors
 Underutilization of servicesUnderutilization of services
 Overuse of servicesOveruse of services
 Variation in servicesVariation in services

31. Key IdeaKey Idea
Although the national health care system
as a whole may need a sweeping
overhaul, many individual providers have
turned toward quality as a means of
achieving better performance and
customer satisfaction.

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Quality in EducationQuality in Education
 Koalaty KidKoalaty Kid
– Active involvement of whole schoolActive involvement of whole school
communitycommunity
– Committed leadershipCommitted leadership
– System for continuous improvementSystem for continuous improvement
– Environment that celebrates successEnvironment that celebrates success

33. Quality in Higher EducationQuality in Higher Education
Business plays an important role in
fostering quality improvement efforts in
higher education by transferring
knowledge and expertise on quality
processes and implementation practices.

34. Academic QualityAcademic Quality
Improvement Project (AQIP)Improvement Project (AQIP)
AQIP criteria focuses on institutional practices
for helping students learn, accomplishing other
distinct objectives, understanding student and
stakeholder needs, valuing people, leading
and communicating, supporting institutional
operations, measuring effectiveness, planning
continuous improvement, and building
collaborative relationships—all of which are
key elements of TQ.

35. Quality in Small BusinessQuality in Small Business
and Not-for-Profitsand Not-for-Profits
 Slow to adopt quality approachesSlow to adopt quality approaches
– General lack of understanding andGeneral lack of understanding and
knowledge about qualityknowledge about quality
– Focus on sales and market growth, cashFocus on sales and market growth, cash
flow, and routine fire fightingflow, and routine fire fighting
– Lack of resources for formal qualityLack of resources for formal quality
systemssystems

36. Key IdeaKey Idea
Perhaps the most important factor in
successful quality initiatives in small
businesses is the recognition by the CEO
or president that a quality focus can be
beneficial and lead to achieving
organizational goals.

37. 37
Quality in the Public SectorQuality in the Public Sector
 Quality in the Federal GovernmentQuality in the Federal Government
– Federal Quality InstituteFederal Quality Institute
– President’s Quality AwardPresident’s Quality Award
 State and Local Quality EffortsState and Local Quality Efforts

38. Key IdeaKey Idea
Quality concepts and principles are
universal and can be applied in all types
of organizations. The difficulty, of
course, is developing an infrastructure
to make it happen and the discipline to
sustain efforts over time.