Quality Management for Organizational Excellence:Introduction to Total Quality David L. Goetsch Stanley Davis Seventh Edition ISBN 10: 1-292-02233-7 ISBN 13: 978-1-292-02233-8 Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk © Pearson Education Limited 2014 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affi liation with or endorsement of this book by such owners. ISBN 10: 1-292-02233-7 ISBN 13: 978-1-292-02233-8 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Printed in the United States of America 11111121356801357911951751915339 P E A R S O N C U S T O M L I B R AR Y Table of Contents 1. The Total Quality Approach to Quality Management: Achieving Organizational Excellence David L. Goetsch/Stanley Davis 1 2. Quality and Global Competitiveness David L. Goetsch/Stanley Davis 19 3. Quality Management, Ethics, and Corporate Social Responsibility David L. Goetsch/Stanley Davis 35 4. Quality Culture: Changing Hearts, Minds, and Attitudes David L. Goetsch/Stanley Davis 51 5. Strategic Management: Planning and Execution for Competitive Advantage David L. Goetsch/Stanley Davis 67 6. Partnering and Strategic Alliances David L. Goetsch/Stanley Davis 85 7. Customer Satisfaction, Retention, and Loyalty David L. Goetsch/Stanley Davis 101 8. Employee Empowerment David L. Goetsch/Stanley Davis 119 9. Leadership and Change David L. Goetsch/Stanley Davis 131 10. Team Building and Teamwork David L. Goetsch/Stanley Davis 155 11. Effective Communication David L. Goetsch/Stanley Davis 173 12. Education and Training David L. Goetsch/Stanley Davis 193 13. Overcoming Politics, Negativity, and Conflict in the Workplace David L. Goetsch/Stanley Davis 219 I 222333344445902580365719775151 14. ISO 9000 and Total Quality: The Relationship David L. Goetsch/Stanley Davis 245 15. Overview of Total Quality Tools David L. Goetsch/Stanley Davis 257 16. Problem Solving and Decision Making David L. Goetsch/Stanley Davis 291 17. Quality Function Deployment David L. Goetsch/Stanley Davis 309 18. Optimizing and Controlling Processes through Statistical Process Control David L. Goetsch/Stanley Davis 327 19. Continual Improvement Methods with Six Sigma, Lean, Lean Six Sigma, and More David L. Goetsch/Stanley Davis 357 20. Benchmarking David L. Goetsch/Stanley Davis 385 21. Just-in-Time/Lean Manufacturing (JIT/Lean) David L. Goetsch/Stanley Davis 401 22. Implementing Total Quality Management David L. Goetsch/Stanley Davis 435 Index 461 II THE TOTAL QUALITY APPROACH TO QUALITY MANAGEMENT: ACHIEVING ORGANIZATIONAL EXCELLENCE There are really only three types of people: those who make things happen, those who watch things happen, and those who say, “What happened?” —Ann Landers MAJOR TOPICS People deal with the issue of quality continually in . What Is Quality? their daily lives. We concern ourselves with quality when . The Total Quality Approach Defined we are grocery shopping, eating in a restaurant, and making a major purchase, such as an automobile, a home, . Two Views of Quality a television, or a personal computer. Perceived quality is . Key Elements of Total Quality a major factor by which people make distinctions in the . Total Quality Pioneers marketplace. Whether we articulate them openly or keep . Keys to Total Quality Success them in the back of our minds, we all apply a number of . The Future of Quality Management in the criteria when making a purchase. The extent to which a Twenty-First Century purchase meets these criteria determines its quality in our . Quality Certifications eyes. One way to understand quality as a consumer-driven concept is to consider the example of eating at a restaurant. The total quality concept as an approach to doing How will you judge the quality of the restaurant? Most peo- business began to gain wide acceptance in the United ple apply such criteria as the following: States in the late 1980s and early 1990s. However, individual elements of the concept—such as the . Service use of statistical data, Six Sigma, Lean, teamwork, . Response time continual improvement, customer satisfaction, and . Food preparation employee involvement—have been used by visionary . Environment or atmosphere organizations for years. It is the pulling together and . Price coordinated use of these and other previously dispa- . Selection rate elements that gave birth to the comprehensive This example gets at one aspect of quality—the results concept known as t otal quality . This chapter provides aspect. Does the product or service meet or exceed customer an overview of that concept, laying a foundation for expectations? This is a critical aspect of quality, but it is not study. the only one. Total quality is a much broader concept that encompasses not just the results aspect but also the quality of people and the quality of processes. WHAT IS QUALITY? Quality has been defined in a number of different ways by a number of different people and organizations. Consider To understand total quality, we must first understand q uality . the following definitions: Customers that are businesses will define quality very clearly using specifications, standards, and other measures. This . Fred Smith, CEO of Federal Express, defines qual- makes the point that quality can be defined and measured. ity as “performance to the standard expected by the Although few consumers could define q uality if asked, all know customer.”1 it when they see it. This makes the critical point that quality . The General Services Administration (GSA) defines is in the eye of the beholder. With the total quality approach, quality as “meeting the customer’s needs the first time customers ultimately define quality. and every time.”2 From Chapter 1 of Quality Management for Organizational Excellence: Introduction to Total Quality, 7th Edition. David L. Goetsch, Stanley B. Davis. Copyright © 2013 by Pearson Education, Inc. All rights reserved. 1 The Total Quality Approach to Quality Management . Boeing defines quality as “providing our customers With these common elements extracted, the following defi- with products and services that consistently meet their nition of q uality can be set forth: needs and expectations.” 3 Quality is a dynamic state associated with products, serv- . The U.S. Department of Defense (DOD) defines qual- ices, people, processes, and environments that meets or ity as “doing the right thing right the first time, always exceeds expectations and helps produce s uperior value. striving for improvement, and always satisfying the customer.”4 Consider the individual elements of this definition: The dynamic state element speaks to the fact that what is consid- In his landmark book Out of the Crisis , quality pioneer ered quality can and often does change as time passes and W. Edwards Deming has this to say about quality: circumstances are altered. For example, gas mileage is an important criterion in judging the quality of modern auto- Quality can be defined only in terms of the agent. mobiles. However, in the days of 20-cent-per-gallon gaso- Who is the judge of quality? In the mind of the pro- line, consumers were more likely to concern themselves duction worker, he produces quality if he can take with horsepower, cubic inches, and acceleration rates than with pride in his work. Poor quality, to him, means loss gas mileage. of business, and perhaps of his job. Good quality, The p roducts, services, people, processes, and environ- he thinks, will keep the company in business. ments element is critical. It makes the point that quality Quality to the plant manager means to get the num- applies not just to the products and services provided, but bers out and to meet specifications. His job is also, also to the people and processes that provide them and the whether he knows it or not, continual improvement of environments in which they are provided. In the short term, leadership. 5 two competitors who focus on continual improvement Although Deming’s landmark book is now dated, his might produce a product of comparable quality. But the thoughts on quality are still valid and insightful. Deming competitor who looks beyond just the quality of the finished makes the point that quality has many different criteria product and also focuses on the continual improvement of and that these criteria change continually.6 To complicate the people who produce the product, the processes they use, matters even further, different people value the various cri- and the environment in which they work will win in the long teria differently. For this reason, it is important to measure run and, most frequently, in the short run. This is because consumer preferences and to remeasure them frequently. quality products are produced most consistently by quality Deming gives an example of the criteria that are important organizations. to him in selecting paper:7 The superior value element acknowledges that quality is a key element in providing superior value (i.e., superior . It is not slick and, therefore, takes pencil or ink well. quality, cost, and service). . Writing on the back does not show through. . It fits into a three-ring notebook. Quality, Value, and Organizational . It is available at most stationery stores and is, therefore, Excellence easily replenished. It is important for quality professionals to understand how . It is reasonably priced. quality fits into the bigger picture of providing superior Each of these preferences represents a variable the man- value to customers. Organizations survive and thrive in a ufacturer can measure and use to continually improve deci- globally competitive marketplace by providing superior sion making. Deming is well-known for his belief that 94% value to customers. Achieving organizational excellence is of workplace problems are caused by management and espe- about developing the ability to consistently provide supe- cially for his role in helping Japan rise up out of the ashes of rior value to customers over the long term. Superior value World War II to become a major industrial power. Deming’s has three basic elements: superior quality, superior cost, and contributions to the quality movement are explained in superior service. greater depth later in this chapter. Although there is no universally accepted definition of quality, enough similarity does exist among the definitions QUALITY TIP (cid:2) that common elements can be extracted: Ishikawa’s Definition of Quality . Quality involves meeting or exceeding customer Any discussion of the Japanese quality gurus must include expectations. Kaoru Ishikawa. Ishikawa defines quality as follows: (1) . Quality applies to products, services, people, processes, quality and customer satisfaction are the same thing and (2) quality is a broad concept that goes beyond just product and environments. quality to also include the quality of people, processes, and . Quality is an ever-changing state (i.e., what is consid- every other aspect of the organization. ered quality today may not be good enough to be con- Source: w ww.businessballs.com/ retrieved on January 15, 2011. sidered quality tomorrow). 2 The Total Quality Approach to Quality Management In order to achieve organizational excellence—the as the primary arbiter of what is acceptable in terms of qual- level of performance necessary for long-term success ity. Each of the three legs is a broad element of the total qual- in a global environment—it is necessary to consistently ity philosophy (i.e., measures, people, and processes). The provide superior value to customers. Quality is obvi- “measures” leg of the stool makes the point that quality can ously one of the key elements in providing superior value. and must be measured. The “people” leg of the stool makes But total quality is even more than that. Total quality is the point that quality cannot be inspected into a product or a broad-based approach that encompasses all three of service. Rather, it must be built in by people who are empow- the elements of superior value. Continually improving ered to do their jobs the right way. The “processes” leg of the the quality of products, processes, services, and costs is stool makes the point that processes must be improved, con- what total quality is all about—hence the name t otal qual- tinually and forever. What is considered excellent today may ity . Organizations that effectively apply the total qual- be just mediocre tomorrow. Consequently, “good enough” ity approach to management are the ones most likely to is never good enough. achieve organizational excellence. Another way to understand total quality as a concept is shown in Figure 2 . Notice that the first part of the defini- tion in Figure 2 explains the w hat of total quality; the second THE TOTAL QUALITY part explains the how . In the case of total quality, the h ow APPROACH DEFINED is important because it is what separates this approach to Just as there are different definitions of q uality , there are doing business from all of the others. different definitions of t otal quality . For example, the DOD The total in t otal quality indicates a concern for quality defines the total quality approach as follows: in the broadest sense—what has come to be known as the “Big Q.” Big Q refers to quality of products, services, people, Total quality consists of the continual improvement of processes, and environments. Correspondingly, “Little Q” people, processes, products (including services), and refers to a narrower concern that focuses on the quality of environments. With total quality anything and everything one of these elements or individual quality criteria within an that affects quality is a target for continual improvement. individual element. When the total quality concept is effectively applied, the end results can include organizational excellence, supe- How Is Total Quality Different? rior value, and global competitiveness. An easy way to grasp the concept of total quality is to What distinguishes the total quality approach from tra- consider the analogy of a three-legged stool, as shown in ditional ways of doing business can be found in how it is Figure 1 . The seat of the stool is customer focus. This means achieved. The distinctive characteristics of total quality are with total quality the customer is in the “driver’s seat” these: customer focus (internal and external), obsession with FIGURE 1 Three-Legged Stool of Total Quality 3 The Total Quality Approach to Quality Management FIGURE 2 Total Quality: What It Is and How It Is Achieved quality, use of the scientific approach in decision making neering, in turn, resulted in the use of statistical methods in and problem solving, long-term commitment, teamwork, the control of quality, which eventually led to the concepts continual process improvement, bottom-up education and of c ontrol charts and s tatistical process control , which are now training, freedom through control, unity of purpose, and fundamental aspects of the total quality approach. employee involvement and empowerment, all deliberately Reliability engineering emerged in the 1950s. It began aimed at supporting the organizational strategy. Each of a trend toward moving quality control away from the tra- these characteristics is explained later in this chapter. ditional after-the-fact approach and toward inserting it throughout the design and production processes. However, for the most part, quality control in the 1950s and 1960s The Historic Development of Total Quality involved inspections that resulted in nothing more than cut- The total quality movement had its roots in the time and ting out bad parts. motion studies conducted by Frederick Taylor in the 1920s. World War II had an impact on quality that is still being Table 1 is a timeline that shows some of the major events in felt. In general, the effect was negative for the United States the evolution of the total quality movement since the days and positive for Japan. Because of the urgency to meet pro- of Taylor. Taylor is now known as “the father of scientific duction schedules during the war, U.S. companies focused management.” more on meeting delivery dates than on quality. This The most fundamental aspect of scientific manage- approach became a habit that carried over even after the war. ment is the separation of planning and execution. Although Japanese companies, on the other hand, were forced to the division of labor spawned tremendous leaps forward in learn to compete with the rest of the world in the production productivity, it virtually eliminated the old practice of one of nonmilitary goods. At first, their attempts were unsuc- highly skilled individual performing all the tasks required cessful, and “Made in Japan” remained synonymous with to produce a quality product. In a sense, that individual poor quality, as it had been before World War II. Around was CEO, production worker, and quality controller all 1950, however, Japan decided to get serious about quality rolled into one. Taylor’s scientific management did away and establishing ways to produce quality products. with this by making planning the job of management and Japanese manufacturers overcame a reputation for pro- production the job of labor. To keep quality from falling ducing cheap, shabby products and developed a reputation through the cracks, it was necessary to create a separate as world leaders in the production of quality products. More quality department. Such departments had shaky begin- than any other single factor, it was the Japanese miracle— nings, and just who was responsible for quality became a which was not a miracle at all but the result of a concerted clouded issue. effort that took 20 years to really bear fruit—that got the rest As the volume and complexity of manufacturing grew, of the world to focus on quality. When Western companies quality became an increasingly difficult issue. Volume and finally realized that quality was the key factor in global com- complexity together gave birth to quality engineering in the petition, they responded. Unfortunately, their first responses 1920s and reliability engineering in the 1950s. Quality engi- were the opposite of what was needed. 4 The Total Quality Approach to Quality Management TABLE 1 1 00 Years of Selected Historic Milestones in the Global Quality Movement 1908 1924 Ford attains perfect Shewhart identifies Prior to 1906–1908 part interchangeability, causes of process 1931 All autos assembled by eliminating the need variation as Common skilled craftsmen called for skilled craftsmen. and special, and Shewhart publishes “Fitters.” Time req’d. to Time req’d. for a Ford develops the Statistical his book, “Economic complete a Ford Fitter’s “Assembler” to complete his Process Control (SPC) Control of Quality of task was 8.56 hours. assigned task: 2.3 minutes. chart. Manufactured Products.” 1906 1913 1927 1939 Cadillac achieves Ford introduces the Deming meets Shewhart, Start of World War II perfect interchan- moving assembly line, and sees the relevance geability of parts. reducing the Assembler’s of his ideas to management. task time to 1.9 minutes. 1941 1946 1950 1960s & 1970s Deming teaches SPC SPC fades in America Eiji Toyoda & Taiichi Japan captures market share to American wartime as pent up demand for Ohno start development of from Western manufacturers. production workers. manufactured goods the Toyota Production System U.S. loses some market SPC widely used. seems boundless. (TPS). Continues to this date. segments completely. 1945 1950 1954 1980 End of World War II Deming trains hundreds of Juran conducts Quality NBC Airs TV documentary, Japanese engineers, managers, Management courses “If Japan Can, Why Can’t We?” executives and scholars in in Japan. Brings attention to Japanese SPC and Quality concepts. success with quality and to Deming. American industry begins to learn from Japan. 2010 TQM/Lean/Six Sigma generally acknowledged 1981 1985 1988 worldwide as the 1993 Ford and GM invite Beginning of adoption U.S. Dept. of Defense management system of Deming to speak of Total Quality endorses TQM, causing TQM is widely taught the 21st Century, and are to executives. Ford Management by DoD contractors in U.S. colleges practiced by organizations listened better than GM. American organizations. to follow suit. and universities. across the planet. 1982 1987 1990 2000 Deming publishes U.S. Congress establishes “Lean Production” as ISO 9000, the International “Quality, Productivity, the Malcolm Baldrige a definition of the Toyota Standard for Quality was and Competitive National Quality Award. Production System is rewritten to incorporate Position,” his philosophy used by the book, “The TQM concepts. Motorola introduces Six of management based Machine That Changed Sigma as a more powerful on his “Fourteen Points.” The World.” version of TQM. In spite of these early negative reactions, Western com- produced. The traditional view focused on after-the-fact panies began to realize that the key to competing in the global inspections of products. With total quality, the emphasis marketplace was to improve quality. With this realization, the is on continual improvement of products, processes, and total quality movement finally began to gain momentum. people in order to prevent problems before they occur. The traditional view of quality saw employees as passive work- ers who followed orders given by supervisors and manag- TWO VIEWS OF QUALITY ers. It was their labor, not their brains, that was wanted. The total quality philosophy introduced a whole new With total quality, employees are empowered to think and way of looking at quality. The traditional view of qual- make recommendations for continual improvement. They ity measured process performance in defective parts per are also shown the control boundaries within which they hundred produced. With total quality, the same measure- must work and are given freedom to make decisions within ment is thought of in terms of defective parts per million those boundaries. 5