What is Quality? Quality Management, Quality Improvement

What is Quality?

The American Society for Quality (ASQ) defines quality as “a subjective term for which each person has his or her definition. In technical usage, quality can have two meanings: (1) The characteristics of a product or service that bear on its ability to satisfy stated or implied needs and (2) A product or service free of deficiencies.”

Quality can be defined in many ways, depending on who is defining it and the product or service it refers to. In this section, we provide a perspective on what quality means to customers and companies. The “Along the Supply Chain” box describes the evolution of the definition of quality in businesses.

Asked “What is quality?” one of our students replied, “Getting what you pay for.” Another student added that to her, quality was “getting more than you paid for!” The Oxford American Dictionary defines quality as “a degree or level of excellence.”

Quality From the Customer’s Perspective

A business organization produces goods and services to meet its customers’ needs. Customers want value, and quality has become a major factor in the value of products and services. Customers know that certain companies produce better-quality products than others, and they buy accordingly. That means a firm must consider how the consumer defines quality. The customer can be a manufacturer purchasing raw materials or parts, a store owner or retailer purchasing products to sell, or someone who purchases retail products or services over the Internet.

W. Edwards Deming, author and consultant on quality, said “The consumer is the most important part of the production line. Quality should be aimed at the needs of the consumer, present and future.” From this perspective, product and service quality is determined by what the customer wants and is willing to pay for.

Since customers have different product needs, they will have different quality expectations. This results in a commonly used definition of quality as a service’s or product’s fitness for its intended use, or fitness for use: how well does it do what the customer or user thinks it is supposed to do and wants it to do?

Products and services are designed with intentional differences in quality to meet the different wants and needs of individual consumers. A Mercedes and a Ford truck are equally “fit for use,” in the sense that they both provide automobile transportation for the consumer, and each may meet the quality standards of its purchaser.

However, the two products have been designed differently for different types of consumers. This is commonly referred to as the quality of design—the degree to which quality characteristics are designed into the product. Although designed for the same use, the Mercedes and Ford differ in their performance, features, size, and various other quality characteristics.

Dimensions of Quality for Manufactured Products

The dimensions of quality for manufactured products that a consumer looks for include the following:

• Performance: The basic operating characteristics of a product; for example, how well a car handles or its gas mileage.
  
  
• Features: The “extra” items added to the basic features, such as a stereo CD or a leather interior in a car.
  
  
• Reliability: The probability that a product will operate properly within an expected time frame; that is, that a TV will work without repair for about seven years.
  
  
• Conformance: The degree to which a product meets preestablished standards.
  
  
• Durability: How long the product lasts; its life span before replacement. A pair of L.L. Bean boots, with care, might be expected to last a lifetime.
  
  
• Serviceability: The ease of getting repairs, the speed of repairs, and the courtesy and competence of the repair person.
  
  
• Aesthetics: How a product looks, feels, sounds, smells, or tastes.
  
  
• Safety: Assurance that the customer will not suffer injury or harm from a product; an especially important consideration for automobiles.
  
  
• Other perceptions: Subjective perceptions based on brand name, advertising, and the like.

These quality characteristics are weighed by the customer relative to the cost of the product. In general, customers will pay for the level of quality they can afford. If they feel they are getting what they paid for (or more), then they tend to be satisfied with the quality of the product.

Dimensions of Quality for Services

The dimensions of quality for a service differ somewhat from those of a manufactured product. Service quality is more directly related to time and the interaction between employees and customers. Evans and Lindsay identify the following dimensions of service quality:

• Time and timeliness: How long must a customer wait for service, and is it completed on time? For example, is an overnight package delivered overnight?
  
  
• Completeness: Is everything the customer asked for provided? For example, is a mail order from a catalog company complete when delivered?
  
  
• Courtesy: How are customers treated by employees? For example, are catalog phone operators at L.L. Bean nice, and are their voices pleasant?
  
  
• Consistency: Is the same level of service provided to each customer each time? Is your newspaper delivered on time every morning?
  
  
• Accessibility and convenience: How easy is it to obtain the service? For example, when you call L.L. Bean, does the service representative answer quickly?
  
  
• Accuracy: Is the service performed right every time? Is your bank or credit card statement correct every month?
  
  
• Responsiveness: How well does the company react to unusual situations, which can happen frequently in a service company? For example, how well is a telephone operator at L.L. Bean able to respond to a customer’s questions about a catalog item not fully described in the catalog?

Quality From the Producer’s Perspective

Product or service design results in design specifications that should achieve the desired quality. However, once the product design has been determined, the producer perceives quality to be how effectively the production process can conform to the specifications required by the design, referred to as the quality of conformance. What this means is quality during production focuses on making sure that the product meets the specifications required by the design.

Examples of the quality of conformance: If new tires do not conform to specifications, they wobble. If a hotel room is not clean when a guest checks in, the hotel is not functioning according to the specifications of its design; it is a faulty service. From the producer’s perspective, good-quality products conform to specifications—they are well made; poor-quality products are not made well—they do not conform to specifications.

Achieving quality conformance depends on several factors, including the design of the production process (distinct from product design), the performance level of machinery, equipment, and technology, the materials used, the training and supervision of employees, and the degree to which statistical quality-control techniques are used.

When equipment fails or is maladjusted, when employees make mistakes, when material and parts are defective, and when supervision is lax, design specifications are generally not met. Key personnel in achieving conformance to specifications include the engineering staff, supervisors and managers, and, most importantly, employees.

An important consideration from the customer’s perspective of product quality is product or service price. From the producer’s perspective, an important consideration is achieving quality of conformance at an acceptable cost. Product cost is also an important design specification. If products or services cannot be produced at a cost that results in a competitive price, then the final product will not have acceptable value—the price is more than the consumer is willing to pay given the product’s quality characteristics. Thus, the quality characteristics included in the product design must be balanced against production costs.

Final Perspective on Quality

We approached quality from two perspectives, the customer’s and the producer’s. These two perspectives are dependent on each other.

Although product design is customer-motivated, it cannot be achieved without the coordination and participation of the production process. When a product or service is designed without considering how it will be produced, it may be impossible for the production process to meet design specifications, or it may be so costly to do so that the product or service must be priced prohibitively high.

Depicts the meaning of quality from the producer’s and consumer’s perspective. The final determination of quality is fitness for use, which is the customer’s view of quality. It is the consumer who makes the final judgment regarding quality, and so it is the customer’s view that must dominate.

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Quality Management System

To make sure that products and services have the quality they have been designed for, a strategy to achieve quality throughout the organization is required. This approach to the management of quality throughout the entire organization and supply chain has evolved into what is generally referred to as a quality management system (QMS).

Evolution of Quality Management

A handful of prominent individuals, summarized in Table 9.1, have had a profound impact on the importance of quality in the United States, Japan, and other countries. Of these “quality gurus,” W. Edwards Deming has been the most prominent.

Quality Guru	Contribution
Walter Shewhart	Working at Bell Laboratories in the 1920s, he developed the technical tools such as control charts that formed the basis of statistical quality control; he and his colleagues at Bell Labs introduced the term quality assurance for their program to improve quality through the use of statistical control methods.
W. Edwards Deming	A disciple of Shewhart, he developed courses during World War II to teach statistical quality-control techniques to engineers and executives of companies that were military suppliers; after the war, he began teaching statistical quality control to Japanese companies, initiating their quality movement.
Joseph M. Juran	An author and consultant, he followed Deming to Japan in 1954; he focused on strategic quality planning within an annual quality program, setting goals for product quality, and designing processes to achieve those goals; quality improvement is achieved by focusing on projects to solve problems and securing breakthrough solutions.
Armand V. Feigenbaum	In his 1951 book, Quality Control: Principles, Practices, and Administration, he introduced the concept of total quality control and continuous quality improvement as a companywide strategic commitment requiring the involvement of all functions in the quality process, not just manufacturing; discovered by Japanese in the 1950s at about the same time as Juran’s visit; from 1958 to 1968 he was director of manufacturing operations and quality control at GE.
Philip Crosby	In his 1979 book, Quality Is Free, he emphasized that the costs of poor quality (including lost labor and equipment time, scrap, downtime, and lost sales) far outweigh the cost of preventing poor quality; in his 1984 book, Quality Without Tears, he defined absolutes of quality management—quality is defined as conformance to requirements, quality results from prevention, the performance standard is “zero defects.”
Kaoru Ishikawa	This Tokyo University professor promoted the use of quality circles and developed the “fishbone” (cause and effect) diagram to diagnose quality problems; he emphasized the importance of the internal customer, that is, that a quality organization is first necessary to produce quality products or services.

In the 1940s Deming worked at the Census Bureau, where he introduced the use of statistical process control to monitor the mammoth operation of key-punching data from census questionnaires onto millions of punch cards. During World War II, Deming developed a national program of 8- and 10-day courses to teach statistical quality-control techniques to over 10,000 engineers at companies that were suppliers to the military during the war. By the end of World War II, he had an international reputation.

In 1950 Deming began teaching statistical quality control to Japanese companies. As a consultant to Japanese industries and as a teacher, he was able to convince them of the benefits of statistical quality control. He is a major figure in the Japanese quality movement, and in Japan, he is frequently referred to as the father of quality control.

Deming’s approach to quality management advocated continuous improvement of the production process to achieve conformance to specifications and reduce variability. He identified two primary sources of process improvement: eliminating common causes of quality problems, such as poor product design and insufficient employee training, and eliminating special causes resulting, for example, from equipment malfunctions or an operator problem. Deming emphasized the use of statistical quality-control techniques to reduce variability in the production process.

He dismissed the then widely used approach of final product inspection as a means of ensuring good quality as coming too late to reduce product defects. Primary responsibility for quality improvement, he said, was employees’ and management’s. He promoted extensive employee involvement in a quality improvement program, and he recommended training for workers in quality-control techniques and methods. Deming’s overall philosophy for achieving improvement is embodied in his 14 points, summarized.

1. Create a constancy of purpose toward product improvement to achieve long-term organizational goals.

2. Adopt a philosophy of preventing poor-quality products instead of acceptable levels of poor quality as necessary to compete internationally.

3. Eliminate the need for inspection to achieve quality by relying instead on statistical quality control to improve product and process design.

4. Select a few suppliers or vendors based on quality commitment rather than competitive prices.

5. Constantly improve the production process by focusing on the two primary sources of quality problems, the system and employees, thus increasing productivity and reducing costs.

6. Institute worker training focuses on the prevention of quality problems and the use of statistical quality-control techniques.

7. Instill leadership among supervisors to help employees perform better.

8. Encourage employee involvement by eliminating the fear of reprisal for asking questions or identifying quality problems.

9. Eliminate barriers between departments, and promote cooperation and a team approach for working together.

10. Eliminate slogans and numerical targets that urge employees to achieve higher performance levels without first showing them how to do it.

11. Eliminate numerical quotas that employees attempt to meet at any cost without regard for quality.

12. Enhance worker pride, artisanry, and self-esteem by improving supervision and the production process so that employees can perform to their capabilities.

13. Institute vigorous education and training programs in methods of quality improvement throughout the organization, from top management down, so that continuous improvement can occur.

14. Develop a commitment from top management to implement the previous 13 points.

Deming is also credited with the development of the Deming Wheel, although it was originally formulated by Walter Shewhart, and later recast and renamed by the Japanese as the plan-do-check-act (PDCA) cycle. The PDCA cycle is a four-stage process for continuous quality improvement that complements Deming’s 14 points.

Years later, Deming once again modified the original Shewhart cycle as a circle flow diagram for learning and improvement of a product and process that he called the plan-do-study-act (PDSA) cycle. The PDCA cycle later formed the basis for the Six Sigma five-step DMAIC breakthrough strategy. Deming’s approach to quality embodied in his 14 points and PDCA cycle are the foundation for today’s quality management systems employed by many successful companies.

TQM And QMS

Total quality management (TQM) has been the most prominent and visible approach to quality to evolve from the work of Deming and the early quality gurus. TQM originated in the 1980s as a Japanese-style management approach to quality improvement and became very popular during the 1990s, being adopted by thousands of companies. Although it has taken on many meanings, it was (and still is) a philosophy for managing an organization centered on quality and customer satisfaction as “the” strategy for achieving long-term success.

It requires the active involvement, participation, and cooperation of everyone in the organization, and encompasses virtually all of its activities and processes. Achieving and sustaining this pervasive focus on quality requires a significant long-term commitment on the part of the organization’s leadership.

Deming’s 14 points and the philosophies and teachings of the early quality gurus are embodied in the basic principles of TQM:

• Quality can and must be managed.
  
  
• The customer defines quality, and customer satisfaction is the top goal; it is a requirement and is not negotiable.
  
  
• Management must be involved and provide leadership.
  
  
• Continuous quality improvement is “the” strategic goal, which requires planning and organization.
  
  
• Quality improvement is the responsibility of every employee; all employees must be trained and educated to achieve quality improvement.
  
  
• Quality problems are found in processes, and problems must be prevented, not solved.
  
  
• The quality standard is “no defects.”
  
  
• Quality must be measured; improvement requires the use of quality tools and especially statistical process control.

TQM has been supplanted to a large extent by what is most referred to as a quality management system (QMS). This approach (or term) has evolved out of the ISO:9001 certification process that many companies around the world have gone through; essentially ISO certifies a company’s “quality management system,” and much of the ISO’s written materials refer directly to “quality management systems.”

A QMS tends to focus more on individual projects that have a quantifiable impact (i.e., increased profitability). Some companies have adopted the Malcolm Baldrige National Quality Award criteria as their QMS; another well-known QMS is Six Sigma.

Quality Tools

A major cornerstone of the commitment to quality improvement prescribed by Deming and the other early quality gurus is the need to identify and prevent the causes of quality problems, or defects. These individuals prescribed several “tools” to identify the causes of quality problems that are still widely used today, including Pareto charts, process flowcharts, check sheets, histograms, scatter diagrams, statistical process control charts, and cause-and-effect diagrams. These popular tools became the basis for the quality management programs developed by many companies. In this section, we will briefly describe some of these tools.

Process Flowcharts

A process flowchart is a diagram of the steps in a job, operation, or process. It enables everyone involved in identifying and solving quality problems to have a clear picture of how a specific operation works and a common frame of reference. It also enables a process improvement team to understand the interrelationship of the departments and functions that constitute a process.

This helps focus on where problems might occur and if the process itself needs fixing. Development of the flowchart can help identify quality problems by helping the problem solvers better understand the process.

Cause-and-Effect Diagrams

A cause-and-effect diagram, also called a fishbone or Ishikawa diagram, is a graphical description of the elements of a specific quality problem and the relationship among those elements. It is used to identify the causes of a quality problem so it can be corrected. Cause-and-effect diagrams are usually developed as part of brainstorming to help a quality team of employees and managers identify the causes of quality problems.

It is a cause-and-effect diagram for a Six Sigma project at a hospital to reduce delays in patient bed turnaround time, which creates a patient flow problem throughout the hospital. The primary cause of the problem is suspected to be related to the “bed tracking system” (BTS), an electronic system that indicates the status of each bed to the registered nurse (RN) who admits patients and assigns them to a room.

The “effect” box at the end of the diagram is the quality problem that needs correction. A center line connects the effect box to the major categories of possible problem causes, displayed as branches off the center line. The box at the end of each branch (or fishbone) describes the cause category.

The diagram starts in this form with only the major categories at the end of each branch. Individual causes associated with each category are attached as separate lines along the length of the branch during the brainstorming process. Sometimes the causes are rank-ordered along the branches to identify those that are most likely to affect the problem.

A complementary tool related to the fishbone diagram is the cause-and-effect matrix, which is used to prioritize the potential causes of quality problems in a process that might first be identified using a cause-and-effect diagram. The output (or Y) variables are listed along the top of the matrix.

These are also referred to as CTQs or CTQCs (i.e., “critical-to-quality characteristics”), and they are measurable characteristics that express the key requirements defined by a customer. CTQCs are what the customer expects from a product, and accordingly, they have a significant impact on customer satisfaction. The input (or X) variables that might affect the outcome of the process (i.e., the potential causes of an outcome) are listed along the left side of the matrix (or grid).

The CTQCs are ranked or weighted in terms of importance to the customer; then, the relationship between causes and effects (CTQs) is weighted or ranked; and finally, an overall score is calculated for the causes (or X variables). The causes with the highest score should be addressed first in improvement efforts because they will have the largest impact on customer satisfaction.

A cause-and-effect matrix for the hospital bed turnaround time example. Note that staff communication has the highest score and, thus, the greatest impact on how satisfied the customers are with the overall process.

Checksheets and Histograms

A checksheet is a fact-finding tool used to collect data about quality problems. A typical checksheet for quality defects tallies the number of defects for a variety of previously identified problem causes. When the checksheet is completed, the total tally of defects for each cause can be used to create a histogram or a Pareto chart.

Pareto Analysis

Pareto analysis is a method of identifying the causes of poor quality. It was devised in the early 1950s by the quality expert Joseph Juran. He named this method after a nineteenth-century Italian economist, Vilfredo Pareto, who determined that a small percentage of the people accounted for most of the wealth. Pareto analysis is based on Juran’s finding that most quality problems and costs result from only a few causes.

It can be applied by tallying the number of defects for each of the different possible causes of poor quality in a product or service and then developing a frequency distribution from the data. This frequency distribution, referred to as a Pareto diagram, is a useful visual aid for focusing on major quality problems.

Scatter Diagrams

Scatter diagrams graphically show the relationship between two variables, such as the brittleness of a piece of material and the temperature at which it is processed. One temperature reading should result in a specific degree of brittleness representing one point on the diagram.

Process Control Charts and Statistical Quality Control

A control chart is a means for measuring if a process is doing what it is supposed to do, like a thermostat monitoring room temperature. It is constructed with a horizontal line through the middle of a chart representing the process average or norm. It also has a line below this center line representing a lower control limit and a line above it for the upper control limit. Samples from the process are taken over time and measured according to some attribute.

In its simplest form, if the measurement is within the upper and lower control limits, the process is said to be in control and there is no quality problem, but if the measurement is outside the limits, then a problem probably exists and should be investigated and corrected. Statistical quality-control methods such as the process control chart are important tools for quality improvement. Employees who are provided with extensive training in statistical quality-control methods can identify quality problems and their causes and make suggestions for improvement.

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Customers and Employees in Quality Management

The main focus of Deming’s 14 points, TQM, and all QMSs is to achieve customer satisfaction, and most of Deming’s 14 points refer to employees. The reasons are simple. Customers who are delighted are less likely to switch to a competitor, which translates to profits. Employees have the most direct influence on quality.

A high level of satisfaction creates an emotional bond instead of simply a rational preference. Research by companies has shown that there is a direct link between customer satisfaction and attrition rates, indicating that delighted customers are less likely to defect than dissatisfied customers.

Quality Management in the Supply Chain

Companies and their suppliers joined together in a supply chain must work together to meet the needs of the company’s customers. A partnership exists between the supplier and its customer wherein the supplier is expected to manage its quality effectively so that the company it supplies can count on the quality of the materials, parts, and services it receives.

Many companies reduce their number of suppliers to have more direct influence over their suppliers’ quality and delivery performance, which was one of Deming’s 14 points. It is based on the notion that if a company has a major portion of a supplier’s business, then the supplier is more willing to meet the customer’s quality standards. The company and supplier enter into a business relationship referred to as partners, in which the supplier agrees to meet the company’s quality standards, and in return, the company enters into a long-term purchasing agreement with the supplier that includes a stable order and delivery schedule.

To ensure that its supplier meets its quality standards, a company will often insist that the supplier adopt a QMS similar to its own or a company’s QMS will include its suppliers. Still, other companies require that their suppliers achieve ISO 9001 certification, an international quality standard that ensures a high industry standard of quality as its QMS; some companies require their suppliers to follow Baldrige National Quality Award guidelines or even enter the Baldrige Award competition as their QMS.

At the other end of a company’s spectrum from its suppliers is its direct relationship with its customers. An important component of any QMS is the company’s ability to measure customer satisfaction; and to “hear” what the customer wants. The company needs to know if its QMS is effective. A QMS requires that some form of measurement system be in place to answer these questions and provide data about the customer’s level of satisfaction. It is a well-established fact of consumer behavior that unhappy customers will tell almost twice as many others about their quality problems as they will about satisfactory products or services.

Measuring Customer Satisfaction

It requires that a company somehow gather information on what the customer wants and needs, disseminate that information throughout the company, use that information to improve its products and processes develop new products, and then monitor customer satisfaction to ensure that the customer’s needs are being met.

The primary means for garnering information from customers and measuring customer satisfaction is the customer survey. The customer survey is a means for companies to listen to what is often referred to as the “voice of the customer (VoC).” Applicants for the Malcolm Baldrige National Quality Award are expected to provide measures of customer satisfaction typically through customer surveys.

Motorola, a two-time Baldrige Award winner, contracts with an independent survey firm to conduct regularly scheduled surveys with its customers around the world to help Motorola determine how well it’s meeting its customers’ needs. Figure 9.8 provides several examples of VoC impact.

Increasingly prevalent VoC sources are the Internet and social media. Customers can easily post reviews of products and services in a matter of seconds on company websites like Amazon, Best Buy, and Target, and share opinions about products and services on social media sites like Facebook and Twitter.

These sources are easy for customers to access and use, and fast, which results in feedback to companies about what their customers are thinking virtually every second. This can result in a huge amount of information, which is referred to as “big data,” that companies can store and analyze mathematically to not only fix quality problems but also to understand and predict their customers’ needs and wants (i.e., fitness for use).

Role of Employees in Quality Improvement

Job training and employee development are major features of a successful quality management program. Increased training in job skills results in improved processes that improve product quality. Training in quality tools and skills such as statistical process control enables employees to diagnose and correct day-to-day problems related to their job. This provides employees with greater responsibility for product quality and greater satisfaction for doing their part to achieve quality.

When achievement is reinforced through rewards and recognition, it further increases employee satisfaction. At Ritz-Carlton, employees receive over 100 hours of training annually. Marriott employees are trained to view breakdowns in service as opportunities for satisfying customers; for example, they may send a gift and note of apology to customers who have experienced a problem in the hotel.

Another important aspect of a successful QMS is internal customer (e.g., employee) satisfaction. It is unlikely that a company will be able to make its customers happy if its employees are not happy. For that reason, many successful companies conduct employee satisfaction surveys just as they conduct customer surveys.

When employees are directly involved in the quality management process, it is referred to as participative problem-solving. Employee participation in identifying and solving quality problems is effective in improving quality, increasing employee satisfaction and morale, improving job skills, reducing job turnover and absenteeism, and increasing productivity. Participative problem-solving is usually within an employee involvement (EI) program, with a team approach. Some of these programs for involving employees in quality management are kaizen, quality circles, and process improvement teams.

Kaizen and Continuous Improvement

Kaizen is the Japanese term for continuous improvement, not only in the workplace but also in one’s personal life, home life, and social life. In the workplace, kaizen means involving everyone in a process of gradual, organized, and continuous improvement. It is most closely associated with lean systems, an approach to continuous improvement throughout the organization.

Employees are most directly involved in kaizen when they are determining solutions to their problems. Employees are the real experts in their immediate workspace. In its most basic form, kaizen is a system in which employees identify many small improvements continually and implement these improvements themselves. This is the application of the steps in the Deming Wheel at its most basic, individual level.

Toyota is probably the most famous company to use kaizen with great success, and they are responsible for proving that its results could be very effective. However, while Toyota may be the best-known company to use kaizen, they are by no means the only one. Ford adopted the kaizen philosophy to focus on implementing practices that allow them to make their processes more efficient and find ways to slowly but surely reduce process times. Nestlé is another important global company to employs kaizen to improve their processes by reducing wasted time and materials.

The Mayo Clinic followed Toyota’s lead to improve their medical procedures, waiting times, and patient record keeping. Lockheed Martin applied the kaizen philosophy to reduce its costs of manufacturing while lowering their defect rate to 3.4 instances per plane. They also were able to reduce the time to move parts from receiving to stock from 30 days to just four hours.

Employees at Dana Corporation’s Spicer Driveshaft Division, North America’s largest independent manufacturer of driveshafts, and a 2000 Malcolm Baldrige National Quality Award winner, participate in a kaizen-type program. On average, each employee submits three suggestions for improvements per month, and almost 80% of these ideas are implemented.

The company also makes use of kaizen “blitzes” in which teams brainstorm, identify, and implement ideas for improvement, sometimes as often as every three or four weeks. Companywide, Dana Corporation employees implemented almost 2 million ideas in one year alone.

Quality Circles

One of the first team-based approaches to quality improvement was quality circles. Called quality-control circles in Japan when they originated during the 1960s, they were introduced in the United States in the 1970s, and they are still used today. A quality circle is a small, voluntary group of employees and their supervisor(s), comprising a team of about 8 to 10 members from the same work area or department. The supervisor is typically the circle moderator, promoting group discussion but not directing the group or making decisions; decisions result from group consensus.

A circle meets about once a week during company time in a room designated especially for that purpose, where the team works on problems and projects of their own choice. These problems may not always relate to quality issues; instead, they focus on productivity, costs, safety, or other work-related issues in the circle’s area. Quality circles follow an established procedure for identifying, analyzing, and solving quality-related (or other) problems.

Process Improvement Teams

Process improvement teams, also called quality improvement teams (QIT), focus attention on business processes rather than separate company functions. It was noted previously that quality circles generally consist of employees and supervisors from the same work area or department, whereas process improvement teams tend to be cross-functional or even cross-business between suppliers and their customers. It would include members from the various interrelated functions or departments that constitute a process.

For example, a process improvement team for customer service might include members from distribution, packaging, manufacturing, and human resources. A key objective of a process improvement team is to understand the process the team is addressing in terms of how all the parts (functions and departments) work together.

The process is then measured and evaluated, to improve the process to make it more efficient and the product or service better. A key tool in helping the team understand how the process works is a process flowchart.

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Customer (VOC) at Jetblue

The “Along the Supply Chain” box describes the use of VoC feedback at JetBlue.

JetBlue Airways is a recipient of multiple J.D. Power and Associates Awards for leading all airlines in customer satisfaction and has a place on Bloomberg Businessweek’s list of top 25 Customer Service Champs. JetBlue believes its success in distinguishing itself from its competitors is due in large part to customer feedback, which shows that more travelers choose JetBlue for its superior quality service than for its low fares. JetBlue receives direct feedback from its customers from passenger surveys, ad hoc surveys, interviews, and an online customer panel. On average, JetBlue receives more than 40,000 survey responses every month plus online customer surveys from its over 15,000 “TrueBlue” members. These surveys provide feedback in a structured format. JetBlue also receives, on average, around 500 emails each day plus customer comments from posts on its website, other websites, forums, and blogs. However, this feedback is provided in an unstructured text format that is time-consuming and expensive to individually read and analyze, especially when events occur that spike emails (such as a 2007 ice storm that canceled almost 1000 flights, resulting in 30,000 emails in two days). To accommodate valuable email correspondence from its customers, JetBlue implemented text analytics software that breaks down sentences linguistically to identify facts that can then be searched and analyzed in a structured format with survey data. Text analytics automatically extracts relevant data from customer text communications, including emails and web forums, that identifies facts, opinions, requests, trends, and trouble spots and provides JetBlue with insights into customer satisfaction, sentiment, and loyalty. JetBlue also uses Voice of the Customer (VoC) software to search the Internet for customer conversations about competitors, including service, products, and price issues. Examples were given of how JetBlue used surveys and VoC tools to assess customer satisfaction. What other tools do you think they (or other organizations) might employ to get customer feedback?

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Quality in Services

Service organizations and manufacturing companies both convert inputs into outputs— products or services—through a productive process. Both manufacturing and services use the same kinds of inputs—resources such as physical facilities, capital, materials, equipment, and people. In some instances, the processes and products are similar. For example, both Toyota and McDonald’s produce a tangible, physical product (cars and hamburgers) assembled from parts.

However, in pure service industries such as law, hotels, entertainment, communication, engineering, education, clubs, real estate, banks, retail, healthcare, and airlines, the processes are less similar and the products are not as tangible. The “products” provided by these organizations are not typically physical items that can be held or stored. The customer of a manufacturer tends to interact only at the output end of the production process.

The customer of a service often interacts directly with the production process, consuming services like legal advice, a classroom lecture, or an airline flight as they are being produced. Services tend to be customized and provided at the convenience of the customer; for example, doctors prescribe individually to patients. In addition, services tend to be labor-intensive, while manufacturing is more capital-intensive. Thus, human contact and its ramifications are an important part of the process of producing services.

Quality Attributes in Services

Timeliness, or how quickly a service is provided, is an important dimension of service quality, and it is not difficult to measure. The difficulty is determining what is a “quick” service and what is a “slow” service. How long must a caller wait to place a phone catalog order before it is considered poor service? The answer, to a large extent, depends on the caller’s expectations: “Too long” is not the same for everyone. Varying expectations make it difficult to determine an exact specification.

Quality management in services must focus also on employee performance related to intangible, difficult-to-measure quality dimensions. The most important quality dimensions may be how correctly and pleasantly employees can provide service.

That is why service companies such as Federal Express, Starbucks, Avis, Disney, and Ritz-Carlton Hotels have well-developed quality management programs that focus on employee performance, behavior, and training, and serve as “benchmarks” for other companies. Service companies lose more customers because either their service is poor or their competitor’s is better than for any other reason, including price.

McDonald’s has a reputation for high-quality service resulting from its application of established quality management principles. It provides fresh food promptly on demand. Restaurant managers meet with customer groups regularly and use questionnaires to identify quality “defects” in their operations. It monitors all phases of its process continuously, from purchasing to restrooms to restaurant decor and maintenance. It empowers all employees to make spot decisions to dispose of stale food or to speed service.

The McDonald’s workforce is flexible so that changes in customer traffic and demand can be met promptly by moving employees to different tasks. Food is sampled regularly for taste and freshness. Extensive use is made of information technology for scheduling, cash register operation, food inventory, cooking procedures, and food assembly processes—all with the objective of faster service. All of these quality improvement procedures are standard and similar to approaches to quality improvement that could be found in a manufacturing firm.

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Six Sigma

Six Sigma was first developed at Motorola, and they and other companies have had a great deal of success with it. Several companies have credited Six Sigma with billions of dollars in cost savings and increased profits, and these reported successes have led many other large and small companies to adopt all or some of the Six Sigma methodology. As a result, Six Sigma is currently one of the most popular quality management systems in the world.

Six Sigma is a project-oriented methodology (or system) that provides businesses with the tools and expertise to improve their processes. This increase in performance through a decrease in process variation leads to defect reduction (to near zero) an increase in product and service quality and increased profits. In its simplest form, Six Sigma is based on Deming’s PDCA cycle and Joseph Juran’s assertion that “all quality improvement occurs on a project-by-project” basis, with elements of kaizen-type employee involvement.

The Six Sigma Goal—3.4 DPMO

Six Sigma is a process for developing and delivering virtually perfect products and services. The word sigma is a familiar statistical term for the standard deviation, a measure of variability around the mean of a normal distribution. In Six Sigma it is a measure of how much a given product or process deviates from perfection or zero defects. The main idea behind Six Sigma is that if the number of “defects” in a process can be measured, then it can be systematically determined how to eliminate them and get as close to zero defects as possible.

In Six Sigma “as close to zero defects as possible” translates into a statistically based numerical goal of 3.4 defects per million opportunities (DPMO), which is the near elimination of defects from a process, product, or service. This is a goal far beyond the quality level at which most companies have traditionally operated. Through the reduction of variation in all processes (i.e., achieving the Six Sigma goal), the overall performance of the company will be improved and significant overall cost savings will be realized.

Six Sigma Process

It follows four basic steps—align, mobilize, accelerate, and govern. In the first step, “align,” senior executives create a balanced scorecard of strategic goals, metrics, and initiatives to identify the areas of improvement that will have the greatest impact on the company’s bottom line. Process owners (i.e., the senior executives who supervise the processes) “champion” the creation of high-impact improvement projects that will achieve the strategic goals. In the second step, “mobilize,” project teams are formed and empowered to act.

The process owners select “Black Belts” to lead well-defined improvement projects. The teams follow a step-by-step, problem-solving approach referred to as DMAIC. In the third step, “accelerate,” improvement teams made up of Black Belt and Green Belt team members with appropriate expertise use an action-learning approach to build their capability and execute the project. This approach combines training and education with project work and coaching. In the final step, “govern,” executive process owners monitor and review the status of improvement projects to make sure the system is functioning as expected.

Improvement Projects

The first step in the Six Sigma process is the identification of improvement projects. These projects are selected according to business objectives and the goals of the company. As such, they normally have a significant financial impact. These projects are not one-time, unique activities as projects are typically thought of, but team-based activities directed at the continuing improvement of a process.

Once projects are identified, they are assigned a champion from upper management who is responsible for project success, providing resources, and overcoming organizational barriers. Champions are typically paid a bonus tied to the achievement of Six Sigma goals.

Breakthrough Strategy: DMAIC

At the heart of Six Sigma is the breakthrough strategy, a five-step process applied to improvement projects. The five steps in the breakthrough strategy are very similar to Deming’s four-stage PDCA cycle, although more specific and detailed. The breakthrough strategy steps are define, measure, analyze, improve, and control (DMAIC)

• Define: The problem is defined, including who the customers are and what they want, to determine what needs to improve. It is important to know which quality attributes are most important to the customer, what the defects are, and what the improved process can deliver.
  
  
• Measure: The process is measured; data are collected and compared to the desired state. Analyze: The data are analyzed to determine the cause of the problem.
  
  
• Improve: The team brainstorms to develop solutions to problems; changes are made to the process, and the results are measured to see if the problems have been eliminated.
  
  
• Control: If the process is operating at the desired level of performance, it is monitored to make sure the improvement is sustained, and no unexpected and undesirable changes occur.

Black Belts and Green Belts

The project leader who implements the DMAIC steps is called a Black Belt. They hold full-time positions and are extensively trained in the use of statistics and quality-control tools, as well as project and team management. A Black Belt assignment normally lasts two years during which the Black Belt will lead 8 to 12 projects from different areas in the company, each lasting about one quarter. It is certified after two successful projects. These are typically very focused change agents who are on the fast track to company advancement.

Master Black Belts monitor, review, and mentor Black Belts across all projects. They are primarily teachers who are selected based on their quantitative skills and their teaching and mentoring ability. As such, they are a resource for project teams and Black Belts. They also hold full-time positions and are usually certified after participating in about 20 successful projects, half while a Black Belt and half as a Master Black Belt.

Project team members are Green Belts, which is not a full-time position; they do not spend all of their time on projects. Green Belts receive similar training to Black Belts but somewhat less of it. At General Electric employees are not considered for promotion to any management position without Black Belt or Green Belt training. It is part of the Six Sigma overall strategy that as Black Belts and Green Belts move into management positions they will continue to promote and advance Six Sigma in the company.

A generally held perception is that companies that have successfully implemented Six Sigma have one Black Belt for every 100 employees and one Master Black Belt for every 100 Black Belts. This will vary according to the size of the company and the number of projects regularly undertaken. At GE, Black Belt projects typically save $250,000 or more and Green Belt projects frequently yield savings in the $50,000 to $75,000 range.

In Six Sigma all employees receive training in the Six Sigma breakthrough strategy, statistical tools, and quality-improvement techniques. Employees are trained to participate in Six Sigma project teams. Because quality is the responsibility of every employee, every employee must be involved in, motivated by, and knowledgeable about Six Sigma.

Design for Six Sigma

An important element of the Six Sigma system is Design for Six Sigma (DFSS), a systematic project methodology for designing products and processes that meet customer expectations and can be produced at Six Sigma quality levels. Also known as DMADV, it follows the same basic five-step approach as the DMAIC breakthrough strategy with Master Black Belts, Black Belts, and Green Belts, and makes extensive use of statistical tools and design techniques, training, and measurement.

The five DMADV steps are to define design goals consistent with customer demand; measure and identify characteristics that are “critical to quality” (CTQs), product capabilities, process capabilities, and risks: analyze design alternatives and select the best design; design details and optimize the design; and verify the design and implement the production process.