Quality & Performance Excellence-Chapter 2 Book Summary (8th Edition) James R Evans

Quality & Performance Excellence-Book Summary-8th Edition-James R Evans. Chapter 2 Frameworks for Quality and Performance Excellence.

Chapter 2: Frameworks for Quality and Performance Excellence.

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Outline:

  • Describe the philosophies of Deming, Juran, Crosby
  • Malcolm Baldrige National Quality Award
  • International Quality Award Programs:
  • Deming Prize:
  • Quality Management Systems
  • ISO 9000,
  • Six Sigma
  • Understand the differences in scope, purpose, and philosophy of these frameworks.
Deming Philosophy

The Deming philosophy focuses on continual improvements in product and service quality by reducing uncertainty and variability in design, manufacturing, and service processes, driven by the leadership of top management.Deming Chain Reaction Quality & Performance Excellence Figure 1: Deming Chain

Deming’s System of Profound Knowledge:
  • Appreciation for a system
  • Understanding variation
  • Theory of knowledge
  • Psychology

1. Systems:

  • Most organizational processes are cross-functional
  • Parts of a system must work together
  • Every system must have a purpose
  • Management must optimize the system as a whole

2. Variation:

  • Many sources of uncontrollable variation exist in any process
  • Excessive variation results in product failures, unhappy customers, and unnecessary costs
  • Statistical methods can be used to identify and quantify variation to help understand it and lead to improvements
  1. Theory of Knowledge:
  • Knowledge is not possible without theory
  • Experience alone does not establish a theory, it only describes.
  • Theory shows cause-and-effect relationships that can be used for prediction.
  1. Psychology:
  • People are motivated intrinsically and extrinsically; intrinsic motivation is the most powerful
  • Fear is demotivating
  • Managers should develop pride and joy in work
Deming’s 14 Points (Abridged):
  1. Create and publish a company mission statement and commit to it.
  2. Learn the new philosophy.
  3. Understand the purpose of inspection.
  4. End business practices are driven by price alone.
  5. Constantly improve the system of production and service.
  6. Institute training.
  7. Teach and institute leadership.
  8. Drive out fear and create trust.
  9. Optimize team and individual efforts.
  10. Eliminate exhortations for the workforce.
  11. Eliminate numerical quotas and M.B.O. Focus on improvement.
  12. Remove barriers that rob people of pride of workmanship.
  13. Encourage education and self-improvement.
  14. Take action to accomplish the transformation.
Juran Philosophy:

Juran proposed a simple definition of quality: “fitness for use.” This definition of quality suggests that it should be viewed from both external and internal perspectives; that is, quality is related to “(1) product performance that results in customer satisfaction; (2) freedom from product deficiencies, which avoids customer dissatisfaction.”

Juran’s Quality Trilogy: (PCI)
  • Quality planning
  • Quality control
  • Quality improvement
Crosby Philosophy:

“Quality is free.  It’s not a gift, but it is free. What costs money are the non quality things — all the actions that involve not doing jobs right the first time.”

Crosby’s Absolutes of Quality Management:

  • Quality means conformance to requirements
  • Problems are functional in nature
  • There is no optimum level of defects
  • Cost of quality is the only useful measurement
  • Zero defects are the only performance standard
Malcolm Baldrige National Quality Award:
  • Help improve quality in U.S. companies
  • Recognize the achievements of excellent firms and provide examples to others
  • Establish criteria for evaluating quality efforts
  • Provide guidance for other American companies

Recent Developments:

  • From 1987 until 2012, the Baldrige program was administered through the National Institute of Standards and Technology, a division of the U.S. Department of Commerce.
  • In 2012, the House Appropriations Committee of the U.S. Congress eliminated funding for the Baldrige program
  • The Baldrige program reacted quickly and began a transition to a sustainable, non-government-supported business model. In April 2012, the Baldrige Foundation committed funds to sustain the program through the fiscal year 2015.
Criteria for Performance Excellence
  • Leadership
  • Strategy
  • Customers
  • Measurement, Analysis, and Knowledge Management
  • Workforce
  • Operations
  • Results

Criteria Structure:

Each category consists of several items  (numbered 1.1, 1.2, 2.1, etc.) or major requirements on which businesses should focus.

Each item, in turn, consists of a few areas to address (e.g., 6.1a, 6.1b) that seek specific information on approaches used to ensure and improve competitive performance, the deployment of these approaches, or results obtained from such deployment.

Quality & Performance Excellence Baldrige Performance Excellence Program

Figure 2: Baldrige Performance Excellence Program

Core Values and Concepts:
  • Systems Perspective
  • Visionary Leadership
  • Customer-Focused Excellence
  • Valuing People
  • Organizational Learning and Agility
  • Focus on Success
  • Managing for Innovation
  • Management by Fact
  • Societal Responsibility
  • Ethics and Transparency
  • Delivering Value and Results
Baldrige Award Evaluation Process
  • Examiner review of the application to identify strengths and opportunities for improvement and preliminary scores
  • Consensus review by examiner teams to reach agreement on comments and scores
  • Judges’ selection of site-visited organizations
  • Judges’ recommendation of recipients
  • Feedback reports finalized for all applicants
Scoring and Evaluation: ADR

Approach – the methods the company uses to achieve the requirements addressed in each category

Deployment – the extent to which the approaches are applied to all requirements of the item

Results – the outcomes and effects in achieving the purposes given in the item

  • 1. Approach:
  • Appropriateness of methods
  • Effectiveness of the use of the methods. The degree to which the approach is
  • -Repeatable, integrated, and consistently applied
  • -Embodies evaluation/improvement/learning cycles
  • -Based on reliable information and data
  • Alignment with organizational needs
  • Evidence of innovation
  1. Deployment:
  • Use of the approach in addressing item requirements relevant to the organization;
  • Use of the approach by all appropriate work units
  1. Results:
  • Current performance
  • Performance relative to appropriate comparisons and benchmarks
  • Rate, breadth, and importance of performance improvements
  • Linkage of results measures to key customer, market, process, and action plan performance requirements
Impacts of the Baldrige Program:
  • Benefit/cost ratio on investment of 820:1
  • Changed the way organizations around the world manage themselves.
  • Use of self-assessment
  • State, local, and national awards around the world
  • Author Jim Collins: “I see the Baldrige process as a powerful set of mechanisms for disciplined people engaged in disciplined thought and taking disciplined action to create great organizations that produce exceptional results.”
International Quality Award Programs:
  • Deming Prize-(1951-JUSE)
  • European Quality Award
  • Canadian Awards for Business Excellence
  • Australian Business Excellence Award
  • Chinese National Quality Award
  • Many others!
Deming Prize:
  • Instituted 1951 by the Union of Japanese Scientists and Engineers (JUSE)
  • Several categories including prizes for individuals, factories, small companies, and Deming application prize
  • American company winners include Florida Power & Light and AT&T Power Systems Division
Quality Management Systems
  • A quality management system (QMS)  can be considered a mechanism for managing and continuously improving core processes to “achieve maximum customer  the lowest overall cost to the organization.”
  • A quality manual serves as a permanent reference for implementing and maintaining the system.
ISO 9000:2000:

Quality system standards adopted by the International Organization for Standardization in 1987; revised in 1994 and 2000 with minor updates in other years.

Technical specifications and criteria to be used as rules, guidelines, or definitions of characteristics to ensure that materials, products, processes, and services are fit for their purpose.

The rationale for ISO 9000:

ISO 9000 defines quality system standards, based on the premise that certain generic characteristics of management practices can be standardized, and that a well-designed, well-implemented, and carefully managed quality system provides confidence that the out-puts will meet customer expectations and requirements.

  • Objectives of ISO Standards:
  • Achieve, maintain, and continuously improve product quality
  • Improve the quality of operations to continually meet customers’ and stakeholders’ needs
  • Provide confidence to internal management and other employees that quality requirements are being fulfilled.
  • Provide confidence to customers and other stakeholders that quality requirements are being achieved
  • Provide confidence that quality system requirements are fulfilled
Structure of ISO 9000 Standards
  • The standards consist of three documents
  • ISO 9000:2005— Fundamentals and vocabulary
  • ISO 9001:2008— Requirements
  • ISO 9004:2009— Guidance for performance improvement
Benefits of ISO 9000:
  1. It provides discipline. The ISO 9001 requirement for audits forces an organization to review its quality system on a routine basis. If it fails to
  2. The ISO 9000 contains the basics of a good quality system, such as understanding customer requirements, ensuring the ability to meet them, ensuring people resources capable of doing the work that affects quality, ensuring physical resources and support services needed to meet product requirements, and ensuring that problems are identified and corrected.
  3. It offers a marketing program. ISO certified organizations can use their status to differentiate themselves in the eyes of customers.
Six Sigma:

Six Sigma– a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and a clear financial return for the organization.

Based on a statistical measure that equates to 3.4 or fewer errors or defects per million opportunities(DPMO).

Pioneered by Motorola in the mid-1980s and popularized by the success of General Electric

Key Concepts of Six Sigma:
  • Think in terms of key business processes, customer requirements, and overall strategic objectives.
  • Focus on corporate sponsors responsible for championing projects, support team activities, help to overcome resistance to change and obtaining resources.
  • Emphasize such quantifiable measures as defects per million opportunities (DPMO) that can be applied to all parts of an organization
  • Ensure that appropriate metrics are identified early and focus on business results, thereby providing incentives and accountability.
  • Provide extensive training followed by project team deployment
  • Create highly qualified process improvement experts (“green belts,” “black belts,” and “master black belts”) who can apply improvement tools and lead teams.
  • Set stretch objectives for improvement.
Six Sigma as a Quality Framework:

Total Quality or TQ is based largely on worker empowerment and teams; Six Sigma is owned by business leader champions.

TQ activities generally occur within a function, process, or individual workplace; Six Sigma projects are truly cross-functional.

Total Quality training is generally limited to simple improvement tools and concepts; Six Sigma focuses on a more rigorous and advanced set of statistical methods and a structured problem-solving methodology DMAIC—define measure, analyze, improve, and control.

TQ is focused on improvement with little financial accountability; Six Sigma requires a verifiable return on investment and focus on the bottom line.

Six Sigma in Services:

The culture of services is usually less scientific and service employees typically do not think in terms of processes, measurements, and data. The processes are often invisible, complex, and not well defined or well documented.

The work typically requires considerable human intervention, such as customer interaction, underwriting or approval decisions, or manual report generation.

Service measures differ from manufacturing: accuracy, cycle time, cost, customer satisfaction

Comparing Baldrige, ISO 9000, and Six Sigma:

Baldrige focuses on performance excellence for the entire organization in an overall management framework, identifying and tracking important organizational results

ISO focuses on product and service conformity  for guaranteeing equity in the marketplace and concentrates on fixing quality system problems and product and service nonconformities

Six Sigma concentrates on measuring product quality and driving process improvement and costs savings throughout the organization.

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