• What is quality?
  • Is it a manufacturing process free of errors and waste?
  • Or is it having the best specifications, regardless of price?
  • Is it perhaps a product that is ’fit for purpose’, having only features that the user actually needs?
  • Is value-for-money an important factor?

Most people would agree that quality includes: functionality, appearance, reliability, durability, ease of recovery from problems, and contact with company staff.

• Japan and quality: The Japanese actually have two words for quality -- and an understanding of each is necessary to compete today. More than 20 years after the quality craze kicked off in the U.S. (primarily because America was getting its clock cleaned by the Japanese), quality remains an elusive target for many American companies. Not that we haven't made progress. In 1980 the average car produced by Ford (F) had twice as many product flaws (as measured by J.D. Power's survey of initial quality) as the average Japanese car. By 1986 the Japanese auto industry lead over Ford had shrunk from 100% to about 20%, as Ford made quality "Job One." But since that impressive initial spurt of progress, many U.S. companies have struggled to keep up on quality, even as the Japanese began building more of their products in the U.S. with American workers.
• The truth is, the Japanese have an unfair advantage. Japanese culture intrinsically values quality and appreciates the small details. In fact, the Japanese expression for quality is atarimae hinshitsu, which can be roughly translated as "taken-for-granted quality." What do the Japanese take for granted when it comes to quality? They take for granted that things should work as they are supposed to, and they even see an elegance to things working properly -- whether it's cars, subway schedules, traditional flower arranging, or the famous tea ceremony. Japanese manufacturers were so obsessed with taken-for-granted quality that they created a constant stream of innovations that built on renowned quality-management consultant Ed Deming's original concepts: lean manufacturing, just-in-time industry, and design for quality. In today's competitive markets, manufacturers need to be very far along this quality innovation curve -- or moving along it very quickly. If they are not, you can take for granted that they will go out of business.
• Though much improved, America's quality record still isn't what it might be. Here are two traps I've seen a lot of companies fall into on the road to quality.
• Faking a commitment. Too many senior executives grab onto the fad phrases as they come and go -- from TQM to lean manufacturing and now Six Sigma -- without taking the time to learn what these processes are and how they work. They leave the nitty gritty of quality to the folks below them -- a sure way to have a quality program fail. Letting the quality zealots run wild.
• On the other extreme, some companies become so quality-process obsessed that quality-management techniques cease to be a tool to improve the company's performance and instead become an end in themselves. Organizations sometimes go through long analytical processes for problems that a little common sense could have solved. And nothing sours an organization on quality faster than meaningless quality busywork.
• That brings us to the second of the two Japanese expressions for quality: miryoku teki hinshitsu, which means "bewitching" or "enchanting quality." This kind of quality appeals not to customer expectations and reliability (that things should do what they're supposed to), but rather to a person's aesthetic sense of beauty and elegance. That's what I think Apple Computer (AAPL) got right with the iPod and its many offspring. The nano belonging to the man sitting next to me is a marvel, not just of miniaturization, but of rounded edges in a world of sharp corners.
• Quality is in the eye of the stakeholder:

a., the marketing manager: sees quality very much in terms of customer expectations and customer satisfaction

b., the design engineer: quality has to do with whether the design is fit for purpose and whether the product or part performs its intended function

c., the process engineer: quality involves whath the Japanese call Kaizen (continuous improvement) and doing things right first time (RFT)

d., internal or external quality auditors: recorded procedures are in place, and being applied and respected

e., the end-user: perfect product

• Quality costs:
  • a., Prevention costs / quality assurance:Engineers have to spend time with marketers during the development of new products to facilitate design-for-manufacture. There have to be supplier capability surveys to make sure that suppliers can achieve the quality levels that they claim. There have to be regular meetings, education and training about quality improvement.
  • b., Evaluation costs / quality control: The company has to inspect and test incoming material, material that is being processed, and the finished product. There is also the cost of buying and servicing any equipment used for measuring and testing.
  • c., Failure costs before delivery: There may be scrap, rework, re-inspection, re-testing, etc. If these continue at a high level, then perhaps there will be a fundemental review of suppliers and materials.
  • d., Failure costs after delivery: Time is needed to process customer complaints, to process customer returns, to deal with warranty claims and to handle product recalls.

• But is there anything else, and how is quality to be measured?
  • Many years ago, ’quality control’ meant taking samples of a product and doing tests to see if it met technical standards.
  • Then ’quality assurance’ widened its scope to include some non-operational functions such as customer service.
  • Nowadays, ’totaly quality management’ covers the whole organization, from more traditional areas like process and dealing with complaints. It includes all the ideas of lean operations and JIT. And a whole industry has developed to provide international standards for measuring quality; amongst the best known are the ISO 9000 family and ’Six Sigma’ (this term is a statistical measure meaning fewer than 3.4 defects per million items produced).

• The International Organization for Standardization is a worldwide federation of national standards bodies (145 countries).
• They promote the ’ISO 9000’ series of standards., and these cover a wide range of activities: determining customer needs, dealing with complaints, product testing, storage, etc. Companies are audited to make sure that they deserve the ISO award, and this provides both a discipline for manufacturers and an assurance for customers.

              a., the role of top management

              b., statutory and regulatory requirements

              c., measurable objectives

              d., resource management

              e., monitoring customer satisfaction

              f., training effectiveness

              g., continual improvement

• Another set of standards, the ISO 14000 series: covers environmental standards. The ISO approach has been adopted wordwide, but it has its critics. People say that it encourages a recipe-based approach, sometimes called ’management by manual’, rather than a more customized approach. Also, the whole process of keeping records and carrying out internal audits is expensive and time-consuming.
• An alternative approach that is becoming very popular among large companies is ’Six Sigma’. This is a term from mathematics, but in a manufacturing context it means having a target of only 3.4 defects per million items (Motorola was the first company to aim for six sigma quality). Like ISO, it now has a whole series of tools and techniques and is very expensive to implement. It recommends that organizations have a specially trained taskforce of internal consultants, dedicated full-time to improving processes. These people are ranked as Balck Belt, Green Belt, etc.

      a., one sigma: 690 000 defects per million parts

      b., two sigma: 45 000 defects per million parts

• A third approach to measuring performance against a standard is ’benchmarking’. This is not like ISO and Six Sigma because the standard is not pre-defined; instead the standard is simply the best practice of your competitors (or your own past results). The organization then tries to match (or even exceed) this best practice (e.g. reverse engineering).
  • Competitive benchmarking involves looking outside the company at how other companies in the same industry do things.
  • Functional benchmarking looks at how the same function such as manufacturing or personnel recruitment is done by non-competitors. Companies can learn a lot from firms who are not their direct competitors.

• A fourth approach is business process re-engineering: BPR. Inspired by a book by Michael Hammer and James Champy, consultants told companies not to bother with incremental improvements, but to abolish everything, go back to the drawing board and redesign all the business processes involved in producing something, whether a product or a service. They said that this redesign should be:

         a., fundamental: asking basic questions about what a process is meant to achieve

       b., radical: going to the root of things and ignoring completely how things were done before, ’like starting again with a new sheet of paper’

          c., dramatic: bringing about very big and sudden changes.

In the eyes of critics, BPR often meant delayering – removing management layers, perhaps resulting in job losses.

The benefits of BPR:

         a., leadership: strong leadership; changes are imposed from above; there is visible commitment from leaders for change

         b., people management: fewer management layers mean larger, more challenging jobs

         c., policy and strategy: clearer fit between the organization and its declared purpose and goals

         d., processes: managers and employees gain improved awareness and understanging of key processes

e., customer satisfaction: clear focus of processes on the customer for existing products and services

f., business results: dramatic improvements for companies in crisis.

• Rather than approaching employees for ideas that lead to improvements in efficiency, companies that use BPR only use ideas that originate from managers and highly qualified consultants. The work force is relatively passive: change is imposed from the top and often includes large-scale layoffs. This is because companies that use this approach often try to boost efficiency by investing in automated production systems that replace labor with capital.
• Those that favor kaizen argue that it is better to try to improve efficiency by making small but regular changes, rather than by instigating less frequent but more radical BPR changes. In competitive markets, companies that rely on BPR struggle to match the less dramatic but steadier growth achieved by kaizen. Companies using BPR can be slow to catch up because during the time it takes to develop, install, and test new systems, companies using kaizen have moved on, boosting productivity to an even higher level.
• This may be seen as analagous to the fable by Aesop in which the plodding tortoise trumps the sprinting—then delaying—hare. Increased productivity achieved by kaizen tends to be cheaper to obtain than productivity growth achieved by BPR. The source of kaizen improvement is people. Employee ideas are essentially free, unlike expensive new machinery for a new production system.
• However, from time to time the old product, and with it the old methods of production, will need to be discarded in favor of something new and radical. Companies that favor kaizen may tend to eschew radical overhauls in favor of less dramatic change. The danger here is that they can end up being left behind by their bolder rivals. A good example of a company that suffered as a result of this approach is Nokia. For many years the Finnish cell-phone company enjoyed great success by sticking to its classic design of “Candybar” phones. However, in the meantime rival companies such as Samsung and Apple took greater risks, and as a result, out-innovated Nokia, taking away their market lead.
• Quality and people: There are models and frameworks that emphasize the human dimension in improving quality.
• Investors in People is a framework developed in the UK. It sets a level of good practice for training and development of people to achieve business goals.
• The Investors in People Standard is based on four key principles:

      a., commitment to invest in people to achieve business goals

      b., planning how skills, individuals and teams are to be developed to achieve these goals

    c., action to develop and use necessary skills in a well defined and continuing programme directly tied to business objectives

      d., evaluating outcomes, the results of training and development for individuals’ progress towards their goals and the goals of the organization as a whole

• The EFQM Excellence Model was developed by the European Foundation for Quality Management, a non-profit organization set up by leading European companies to ’help European businesses make better products and deliver improved services through the effective use of leading edge management practices’. In this model, people are very much part of the wider quality picture. It refers to company stakeholders, who are not only its employees, shareholders and customers, but also the community as a whole.

  Exercise 1: Complete each definition with the given words! 

   Exercise 2: Interview with a Quality Control Manager

  Exercise 3: TQM Principles

 Exercise 4: ISO

 Exercise 5: Product Recall