Quality & Performance Excellence Chapter 1, Book Summary (8th Edition) James R Evans

Quality & Performance Excellence-Book Summary-8th Edition-James R Evans. Chapter 1: Introduction to Quality and Performance Excellence.

Quality & Performance Excellence-Book Summary-8th Edition-James R Evans

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Outline:
  • Defining Quality
  • Importance of Quality
  • History of Quality Assurance
  • Future Influences
  • Quality in Manufacturing
  • Quality in Services
  • New Frontiers of Quality
  • Principles, Practices, and Techniques
  • Quality Management Principles
  • Kano Model
  • Learning Cycle
  • TQ and Agency Theory
Defining Quality:

1. Efficiently providing products and services that meet or exceed customer expectations adding customer value.

2. Continuously measuring the improvement of processes and services for customers

3. Acting as promised and reporting failures

4. Doing the right thing at the right time in the right way with the right people

5. Ensuring customers come back but products do not come back.

6. Providing the best value to customers by improving everyday activities and processes

7. Beyond delivering what the customer wants, anticipating what the customer will want when he or she knows the possibilities

8. Delivering customer value across the organization through best-in-class products, services, and support.

9. Meeting and exceeding the expectations of clients, employees, and relevant constituencies in the community.

The totality of features and characteristics of a product or service that bears on its ability to satisfy given needs – American Society for Quality -FMC

  • Fitness for use
  • Meeting or exceeding customer expectations
  • Conformance to specifications

Performance Excellence: An integrated approach to organizational performance management that results in;

  • Delivery of ever-improving value to customers and stakeholders, contributing to organizational sustainability,
  • Improvement of overall organizational effectiveness, and
  • Capabilities, and organizational and personal learning.
Importance of Quality:

The slogan/ buzzword among businesses in the 1980s and 1990s.

Quality problems still abound / plentiful in many industries, such as automotive.

Consumer expectations are high.

“We’ve made dependence on the quality of our technology a part of life” – Joseph Juran
  1. Elevations Credit Union (ECU) has been named “Best Financial Institution” by readers of the Boulder Daily Camera for 15 of the past 16 years, and repeatedly as “Best Bank,” “Best Mortgage Company,”  or “Best Customer Service” by readers of the Colorado Daily, Boulder Weekly, Longmont Times-Call,  and Loveland Reporter-Herald.
  2. Business satisfaction with the city of Coral Springs, Florida, rose from 76 percent to 97 percent over a four-year period. The city was named as one of the “Best Places to Live.”
  3. Supplier on-time delivery at Lockheed Martin Missiles and Fire Control has been essentially 100 percent since 2006, and overall supplier quality has been nearly 100 percent since 2007. Time reductions as a result of process and performance improvement programs have occurred in all lines of businesses, yielding an estimated savings of $225 million annually.
  4. The overall Net Promoter (NP) scores (a loyalty metric defined by the level of repeat sales and referrals) for MEDRAD, a manufacturer of medical imaging devices, were consistently 60 percent or higher compared to the 50 percent or higher marks for other organizations nationwide.
  5. AtlantiCare, a nonprofit health system in southeastern New Jersey, saw its system revenues grow from $280 million to $651 million over an eight-year period, reflecting an 11 percent compound annual growth rate, compared to a state average of 5.6 percent.
  6. The Pewaukee School District (PSD) is the smallest K-12 educational system in Waukesha County, Wisconsin. Despite having one of the most rigorous public school graduation requirements (28 credits) in the state, PSD achieved a 97.4 percent graduation rate in 2012– 2013 and had a higher graduation rate from 2008 through 2012 than other counties, state, and nearby high-performing districts.
History of Quality Assurance
  • Quality assurance in Ancient China.
  • Skilled craftsmanship during Middle Ages.
  • Industrial Revolution: the rise of inspection and separate quality departments.
  • Early 20th Century: statistical methods at Bell System.
  • Quality control during World War II
  • Post-war Japan: evolution of quality management
  • Quality awareness in U.S. manufacturing industry during the 1980s: from “Little Q” to “Big Q” – Total Quality Management
  • Malcolm Baldrige National Quality Award (1987).
  • Cynicism and criticism among some business executives
  • The emergence of quality management in service industries, government, health care, education, and non-profits.
  • Evolution of Six Sigma
  • Current and future challenges: maintaining a commitment to performance excellence.
Future Influences:
  • Aging population
  • Global responsibility
  • Globalization
  • Innovation
  • The increasing rate of change
  • Consumer  awareness
  • The workforce of the future
  • 21st-century quality
Quality in Manufacturing: (DCSPRFA)

Durability – the amount of use before deterioration or replacement

Conformance – the degree to which characteristics match standards

Serviceability – speed, courtesy, and competence of repair

Performance – primary operating characteristics

Reliability – The probability of operating for specific time and conditions of use.

Features –“bells and whistles”

Aesthetics – look, feel, sound, taste, smell

Quality in Services:(2T3CA)

Time – how much time must a customer wait?

Timeliness – will service be performed when promised?

Completeness – Are all items in the order include?

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?

Differences Between Manufacturing and Services: Customer needs and performance standards are often difficult to identify and measure

The production of services typically requires a higher degree of customization

The output of many service systems is intangible/ cannot touch

Services are produced and consumed simultaneously

Customers are often involved in the service process and present while it is being performed

Services are generally labor-intensive

Many service organizations must handle very large numbers of customer transactions.

New Frontiers of Quality: (H-GEN)
  • Health care
  • Government
  • Education
  • Not-for-Profits
  • Principles, Practices, and Techniques:
  • Principles are the foundation of the philosophy
  • Practices are activities by which the principles are implemented
  • Techniques are tools and approaches that help managers and employees make the practices effective.

Quality Management Principles:(CLPPSCCFM)

  1. Customer focus
  2. Leadership
  3. People
  4. Process Approach
  5. System Approach to Management
  6. Continual Improvement
  7. Factual Approach to Decision Making
  8. Mutually Beneficial Supplier Relationships
1. Customer Focus:
  • The customer is the principal judge of the quality
  • Organizations must build relationships with customers and increase customer engagement
  • Organizations must understand customer needs and obtain feedback
  • Customers are internal and external
  • Customer-Focused Practices
  • Researching and understanding customer needs and expectations;
  • Ensuring that goods and services are linked to customer needs and expectations;
  • Communicating customer needs and expectations throughout the organization;
  • Measuring customer satisfaction and using the results to improve;
  • Systematically managing customer relationships, and Ensuring a balanced approach between satisfying customers and other stakeholders.
2. Leadership:
  • Leadership is the responsibility of top management.
  • Senior leaders should be role models for the entire organization.
  • An organization cannot sustain quality initiatives without strong leadership.
  • Leadership Practices
  • Considering the needs of all stakeholders in decisions;
  • Establishing a clear vision of the organization’s future;
  • Setting challenging goals and targets;
  • Creating and sustaining shared values, fairness, and ethics at all levels of the organization;
  • Establishing trust and eliminating fear;
  • Providing workers with adequate resources, training, and freedom to make customer-focused decisions; and
  • Inspiring, encouraging, and recognizing worker’s contributions.
3. People:
  • A company’s success depends increasingly on the knowledge, skills, and motivation of its workforce.
  • Engagement – workers have a strong emotional bond to their organization, are actively involved in and committed to their work, feel that their jobs are important, know that their opinions and ideas have value, and often go beyond their immediate responsibilities for the good of the organization
  • Empowerment – has the authority to make decisions
  • “A sincere belief and trust in people
  • People-Focused Practices:
  • Understand the key factors that drive workforce engagement, satisfaction, and motivation
  • Design and manage work and jobs to promote engagement
  • Create an environment that ensures and improves workplace health, safety, and security
  • Develop an effective performance management system
  • Assess workforce engagement and satisfaction
  • Assess workforce capability and capacity needs
  • Make appropriate investments in development and learning
  • Manage career progression and succession planning.
Teamwork:

Vertical—teamwork between top management and lower-level employees.

Horizontal—teamwork within workgroups and across functional lines (often called cross-functional teams).

Inter-organizational—partnerships with suppliers and customers.

4. Process Approach:

A process is a sequence of activities that are intended to achieve some results.

Cross-functional Perspective:

Quality & Performance Excellence Chapter 1 Cross-functional Management Perspective

Process-Focused Practices:
  • Systematically defining processes that create desired outcomes; establishing clear responsibility and accountability for managing key processes;
  • Analyzing and measuring the capability of processes;
  • Identifying the interfaces of key activities within and between the functions of the organization;
  • Focusing on the factors such as resources, methods, and materials that will improve processes; and
  • Evaluating risks, consequences, and impacts of activities on customers, suppliers, and other stakeholders.
5.Systems Approach to Management:

Synthesis means looking at an organization as a whole and building on key business attributes, including core competencies, strategic objectives, action plans, and work systems.

Alignment means ensuring consistency of plans, processes, measures, and actions across the organization.

Integration builds on alignment so that the individual components of the organizational system operate in a fully interconnected manner and deliver anticipated results.

Systems Approach Practices:

Designing the organization to achieve its objectives in the most effective and efficient way;

Understanding the interdependencies between processes;

Developing approaches that harmonize and integrate processes;

Providing a clear understanding of the roles  and responsibilities necessary for achieving objectives and reducing cross-functional barriers;

Understanding organizational capabilities; defining how specific activities and processes should operate; and

Continually improving the system through measurement and evaluation.

6. Continual Improvement:
  • Incremental and breakthrough improvement
  • enhancing value to the customer through new and improved products and services;
  • improving productivity and operational performance through better work processes and reductions in errors, defects, and waste;
  • improving flexibility, responsiveness, and cycle time performance; and
  • improving organizational management processes through learning
Practices for Continual Improvement:
  • Deploying a systematic approach to continual improvement across the organization;
  • Providing the workforce with training in the methods and tools of continual improvement;
  • Making continual improvement of products, processes, and systems an objective for every individual;
  • Establishing goals to guide, and measures to track, continual improvement; and
  • Recognizing and acknowledging improvements.
Kano Model:(DSD)

Dissatisfiers —those needs that are expected in a product or service.  Such items generally are not stated by customers but are assumed as given. If they are not present, the customer is dissatisfied.

Satisfiers—needs that customers say they want. Fulfilling these needs creates satisfaction.

Delighters/exciters—new or innovative features that customers do not expect. The presence of such unexpected features, if valued, leads to high perceptions of quality.

Learning – why changes are successful through feedback between practices and results

Learning Cycle: (PEAR)
  • Planning
  • Execution of plans
  • Assessment of progress
  • Revision of plans based upon assessment findings
  1. Factual Approach to Decision Making:

Organizations need good performance measures to drive strategies and change, manage resources, and continuously improve

Data and information support analysis at all levels

Typical measures:

  • product and process outcomes,
  • customer-focused outcomes,
  • workforce-focused outcomes,
  • leadership and governance outcomes, and
  • financial and market outcomes.
Data-Driven Practices:
  • Ensuring that data and information are sufficiently accurate and reliable;
  • Making data accessible to those who need it;
  • Analyzing data and information using valid methods; and
  • Making decisions and taking action based on factual analysis, balanced with experience and intuition.
  1. Mutually Beneficial Supplier Relationships:

Suppliers include not only companies that provide materials and components, but also distributors, transportation companies, and information, health care, and education providers.

Key suppliers might provide unique design, technology, integration, or marketing capabilities that are not available within the business and, therefore, can be critical to achieving such strategic objectives as lower costs, faster time-to-market, and improved quality.

Supplier Management Practices:
  • Recognizing the strategic importance of suppliers in accomplishing business objectives, particularly minimizing the total cost of ownership;
  • Identifying and selecting key suppliers; developing win-win relationships that balance short-term gains with long-term considerations;
  • Establishing trust through openness and honesty, thus leading to mutual advantages;
  • Pooling expertise and resources with partners;
  • Having clear and open communication that information and future plans;
  • Establishing joint development and improvement activities; and inspiring, encouraging,
  • Recognizing improvements and achievements of suppliers.
TQ and Agency Theory:
  • Agency relationship: a concept in which one party (the principal) engages another party (the agent) to perform work
  • Key assumption: individuals in agency relationships are utility maximizers and will always take actions to enhance their self-interests.
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CRM and SRM: Importance of CRM, Types of CRM Software

CRM and SRM: Importance of CRM and SRM, Types of CRM Software, companies. Definition of CRM and SRM, Five companies who are executing CRM management in business, The Importance and Objectives of CRM: Customer gratification, Improve Effectiveness, Marketing Campaign, Attract Potential Customers, Increase Sales Growth. Types of CRM Software

CRM and SRM:
Definition of CRM:

CRM is the abbreviation form of customer relationship management. CRM refers to the practices, strategies, and technologies applied by the industry for easily managing and communicating with their existing and potential consumers. Customer relationship management focuses on improving customer services, building rapports, and increasing sales growth. CRM collects and analyzes customer data in many ways. The data of the customers can be collected through many channels such as social media platforms, the website of the company, live chat, direct marketing, telephone, and so on. Many renowned companies all over the world are using CRM software to maintain their customers as well as regulating business properly.

CRM and SRM customer relationship management

Figure 1: CRM (customer relationship management)

The example of the five companies who are executing CRM management in business:

  1. Apple CRM
  2. Coca-Cola CRM
  3. Amazon CRM
  4. Activision CRM
  5. Tesco CRM
The Importance and Objectives of CRM:

Although the main objective of customer relationship management  (CRM) is maintaining an effective relationship with customers to improve the company’s sales growth, I have outlined five goals that every industry wants to achieve by CRM tool.

1. Customer gratification

No business can exist without customers; therefore, customer satisfaction is an important factor to increase sales growth. The company always try to satisfy their customers as if they return to buy more products or services. Paying attention to customer satisfaction is part of corporate branding, so every industry uses the CRM strategy for both company and customer mutual benefit. For example, a contact management tool helps the company to implement the CRM strategy properly. Contact management software enables the company to track the conversation between customers and company employees. Therefore, customers feel that they are a very important person in the industry as the company keeps a record of the conversations. Finally, customers will be amused by the communication service offered by the company, and they will be willing to buy more products and services.

2. Improve Effectiveness

The CRM tool assists the company to regulate hassle-free communication with effectiveness. It gives a great opportunity for the industry to respond quickly when customers query to know something. It yields an effective communication between the company and clients and produces customer satisfaction. For the purpose of the marketing campaign, CRM can keep a record to lead the industry taking further decisions in the future.

3. Marketing Campaign

CRM software plays an important role in the marketing campaign purpose. It makes easy the way of conducting sales campaigns to target audiences. This software can design a way of targeting potential customers by using a special tool.   The target audience segmentation process can be driven by the CRM software accurately that yields an effective campaign.

4. Attract Potential Customers

The CRM software allows the company to track the detailed information of the existing customers. This software is also capable to identify loyal clients of the company so that industries can easily reward loyal customers. So, it will not only keep satisfied the current customers but persuade new customers to buy products or services. CRM software can identify the gap in the industry that needs to be fulfilled for customer satisfaction. It can explore the reason why the customer is not interested to buy the products or services so that company can fill the gap to persuade customers to buy them.

5. Increase the Sales Growth

Based on the discussion, it is clear that CRM software helps the company to sell more products and services to the customers by satisfying them. The company will be benefited automatically when increasing the sales growth.

Types of CRM Software:

CRM software has become one of the most popular tools in the global business market to collect more clients than competitors. The company increases the use of CRM software currently to cope with the digital era. He also said that the industry uses many types of CRM tools based on business policy.

Five types of CRM software are as follows:

1. Operational CRM: This type of software helps the customer sales and marketing department of the industry to give better service to existing and potential customers. This tool also can be used in marketing automation, service automation, and sales automation.

Example of operational CRM: Mailchimp or Outreach.

2. Analytical CRM: Analytical CRM assist the company to gather data about customers including point of contact, interests, channels, and customer preference. This software tries to understand customers when operational CRM attributes them to sales funnel. Thus, the industry can make the best business decision after collecting customers’ data through CRM tools.

Examples of analytical CRM: Zoho Analytics or Wave: Salesforce Analytics Cloud

3. Collaborative CRM: This software supports different types of the department in an industry to share customers information. Collective CRM focuses more on providing customer services while operational CRM works for marketing and selling products.

Examples of collaborative CRM: Pipedrive or Copper

4. Campaign management CRM: This tool works for both analytical or operational purposes in the industry. Campaign management CRM collects customer’s information and apply into marketing and sales campaigns. The prime objective of this tool is to assist to run a campaign properly via email integration software.

Examples of campaign management CRM: Active Campaign (email marketing campaigns)

5. Strategic CRM: It focuses on customers to develop the relationship between industry and client. This tool is very useful to build rapport rather than short term relationships for example instant sale or short campaign.

CRM and SRM:
Definition of SRM:

Supplier relationship management (SRM) is an effective way of managing and maintaining a better relationship with suppliers in organizations. SRM helps to reduce the risk of miscommunication and misunderstanding between industry and supplier. In order to provide good service to suppliers, SRM works for increasing the value of the intercommunication. In order to achieve a competitive advantage, most of the reputed companies are using the SRM tool to create and maintain strong and loyal relationships with suppliers.

The example of the five companies that using SRM in business:
  1. Amazon
  2. France’s Renault
  3. Japan’s Nissan
  4. PepsiCo
  5. Alcoa
The Importance of Customer

Customer engagement – customers’ investment in or commitment to a brand and product offerings

Characteristics:

  • Customer retention and loyalty.
  • Customers’ willingness to make an effort to do business with the organization.
  • Customers’ willingness to actively advocate for and recommend the brand and product offerings.
The Importance of Suppliers:
  • Quality of the supply chain affects the quality that customers receive
  • “Superior quality, consistent service, and competitive pricing are just the price of entry to get into the game.”
  • Suppliers must continually improve and align their operations with customer needs.
Principles for Customer-Supplier Relationships
  • Recognition of the strategic importance of customers and suppliers
  • Development of win-win relationships between customers and suppliers
  • Establishing relationships based on trust
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Six-Sigma (6σ): DMAIC Five Systematic Improvement Process

Six-Sigma (6σ): DMAIC Five Systematic Improvement Process. The history Example and development of the Six-Sigma strategy. Also, the development and implementation system of the Six-Sigma program. The example of the top-ranked company that practices the six-sigma process. The history and development of the Six-Sigma strategy. Examples of the most used tools in the Improvement phase

The development and implementation system of the Six-Sigma program:

Six Sigma (6σ) refers to a set of tools and technologies that identify and erase the cause of defects and minimize the variability in manufacturing to improve the business process. This strategy was articulated by Bill smith in 1986. He was American engineering and working at Motorola when he introduced this process. A six-sigma process can produce a defect-free feature. Six-sigma applies a systematic improvement system known as DMAIC-Define, Measure, Analyze, Improve, and Control Evans, 2013).

The Six-sigma process follows a sequence of stages when carried out in an organization. Finally, the project has a special value target that reduces cycle time, pollution, costs, and increases customer satisfaction and company profits.

The example of the top-ranked company that practices the six-sigma process:
  • Amazon
  • Motorola
  • BAE Systems
  • Bank of America
  • Becton Dickinson
The history and development of the Six-Sigma strategy:

At the end of the 1970s, Japanese business industries had managed to maintain competitiveness markets all over the world, because of providing a higher quality product at a lower cost (Yang, 2012). However, the secret 0f this competitiveness market was the systematic integration of the knowledge, skills, technology, and experiences to improve core products and new business markets.

Firstly, Motorola implements the six-sigma program to improve the operation to yield an effective result. After implementing this program, Motorola earned a huge profit by reducing the defect of the products. Six-sigma program managed to save about $2.2 billion and finally, Motorola achieved the Malcolm Baldrige National Quality Award in 1988.

The implementation system of the Six-Sigma program:

The Six-Sigma program has a five systematic improvement process known as DMAIC- ‘Define,’ ‘Measure,’ ‘Analyze,’ ‘Improve,’ and ‘Control’ (Evans, 2013). Another cycle of the six-sigma program is DMADV- ‘Define,’ ‘Measure,’ ‘Analyze,’ ‘Design,’ and ‘Verify’ that organization applies to design and redesign.

Six-Sigma (6σ) DMAIC Five Systematic Improvement Process

Figure-1: DMAIC the five systematic improvement process of Six-Sigma Strategy

Define

Define is the first step of the six-sigma project that summarizes the plan of the project. Therefore, this step focuses on identifying the problems of the project, the objective of the project, and the opportunity for the six-sigma project. The input of this stage comes from the voice of the customers, business, process, or employee. Finally, the Define stage addresses some management issues such as what will need to be completed, by whom, and when.

Examples of the most used tools in the Define phase: Business Case, Problem Statement, Project Scope, Team & their broad responsibilities, and Time plan.

Measure

The measure is the second stage of the six-sigma and the main purpose is to gather data related to the project. It can use the histogram to analyze the data as well as discover its nature. The most common measurement methods are process sigma and defects per million opportunities (DPMO).

Examples of the most used tools in the Measure phase: Benchmarking, process flowcharts, run charts, process capability, and Gage R & R.

Analyze

The principal objective of this stage is to dig out the main cause of the business ineffectiveness. In addition, It focuses more on finding out the root cause among many causes that identified initially. Although, It very often matters to jump to a solution without emphasizing on to find out the source of the problems. Hence, this phase tries to find out why errors, defects, and variations occurred in production in the industry.  However, the Analysis step of the DMAIC process conducts an experiment after identifying the variables.

Examples of the most used tools in the Analysis phase: Fishbone Diagram, Hypothesis testing, Brainstorming, 5 Whys, Scatterplot, Histogram, and Time-series plot.

Improve

The prime objective of this phase is to ascertain the potential result and execute them for improvement. This stage will start to remove or resolve the problem once the root cause is identified exactly. One of the common problems of this stage is to prejudice ideas before evaluating them. But,  A good problem solver always accepts the most promising ideas among a set of proposed ideas.

Examples of the most used tools in the Improvement phase:

Mistake-proofing (Poka Yoke), Piloting, Brainstorming, Simulation software, Prototyping, and Pugh Matrix.

 Control

The control stage focuses on how to continue the improvement and ensure excellent performance. The main objective of the Control phase is to ensure-Holding the gains. It also ensures the monitoring system, improving the standard, and increasing profits in the organizations. In the meantime, the post-implementation result will be evaluated to ascertain the progress or modify them. The most important part of this stage is to train the relevant stakeholders to overcome the challenges.

Example of the most used tools in the Control phase: Control plan, Process sigma calculation, Cost saving calculations, and Control charts.

Conclusion

In sum, Six Sigma DMAIC methodology has become one of the most popular and worldwide accepted strategies. This strategy can be executed in high-profile to small-size organizations; because five important staged – DMAIC ensures the continual improvement in the business.

References:

N. (2020, May 18). Total Quality Management and Six Sigma. Six Sigma Study Guide. https://sixsigmastudyguide.com/total-quality-management-and-six-sigma/

Yang, C. C. (2012). The integration of TQM and Six-Sigma. Total Quality Management and Six Sigma, 219.

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