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Originally published:
Aug-29-2005
Quality. It has become the watchword for business in the 21st century. Quality is discussed in boardrooms, touted by management gurus, and committed to in most mission statements. Many of the world’s most prestigious corporations have embraced it. And, each day, more organizations subscribe to one of the currently popular management methodologies promising to make quality an integral part of their operation.
There's no argument. One of the most important keys to business success is quality. If a company neglects to focus on supplying its customers with the best the industry has to offer, its competitors will. This demands quality that extends to its operations, performance, and customer relations. A company that falls short in any of these areas is not likely to be able to compete for very long in today's marketplace.
But what does quality look like and how do you get there?
Although this article just touches the surface of the quality issue, it should give you a frame of reference and starting point in your search of quality.
Quality Defined
An excellent description of what quality means, from a business perspective, appeared on the General Electric Six Sigma web site:
“There are three key elements of quality: customer, process and employee.
- Customers. They define quality. They expect performance, reliability, competitive prices, on-time delivery, service, clear and correct transaction processing and more. In every attribute that influences customer perception, we know that just being good is not enough. Delighting our customers is a necessity. Because if we don't do it, someone else will!
- Process. Quality requires us to look at our business from the customer's perspective, not ours. In other words, we must look at our processes from the outside-in. By understanding the transaction lifecycle from the customer's needs and processes, we can discover what they are seeing and feeling. With this knowledge, we can identify areas where we can add significant value or improvement from their perspective.
- Employee. People create results. Involving all employees is essential in a quality approach. Quality is the responsibility of every employee. Every employee must be involved, motivated and knowledgeable if we are to succeed.”
Tracking the Quality Movement
According to the American Society for Quality, the quality movement traces its roots to the medieval guild system that developed in Europe in the late 13th century. Guilds were organizations of craftsmen who took responsibility for ensuring standards and training others in their craft. This model held until the Industrial Revolution in early 19th century.
The first quality methodology, basically a system of utilizing sampling techniques for product inspection, was developed in the U.S. shortly after it entered World War II. The military began using sampling in inspections in order to simplify and speed up production of munitions and armaments without compromising safety. The procedure was aided by the publication of military specification standards and training courses in statistical process control techniques.
The concept of “total quality” in the United States was a direct response to the quality revolution in Japan after the war. During the rebuilding process, the Japanese received assistance from Americans. Among them, W. Edwards Deming, a statistician who proposed focusing on improving organizational processes by concentrating on the people who used them, rather than on inspection alone. By the 1970’s, Japan had overrun high-quality industrial sectors like automobiles and electronics. U.S. companies responded by embracing a management philosophy that became known as total quality management (TQM), described below.
Four Popular Quality Programs
There are literally dozens of quality programs to choose from – some target specific industries, others specific functions, and still others address the organization as a whole. Four of the better known are briefly described below.
Total Quality Management (TQM)
TQM is a management process built on a philosophy of the perpetual improvement of all functions relating to an organization. Proponents hail it as a comprehensive approach to facilitating quality within a business.
The basic principles of the TQM philosophy for doing business are: satisfy the customer; satisfy the supplier; and continuously improve business processes. Its tenets are twelve:
- Quality can and must be managed.
- Everyone has a customer and is a supplier.
- Processes, not people are the problem.
- Every employee is responsible for quality.
- Problems must be prevented, not just fixed.
- Quality must be measured.
- Quality improvements must be continuous.
- The quality standard is defect free.
- Goals are based on requirements, not negotiated.
- Life cycle costs, not front end costs.
- Management must be involved and lead.
- Plan and organize for quality improvement.
By the end of the 1990s, TQM was considered little more than a fad by many American business leaders, although it still retained its prominence in Europe. More recently developed quality systems have moved beyond manufacturing, shifted the focus to the customer, and added emphasis on bottom-line results.
ISO 9000
ISO 9000, a series of quality-management standards, was developed by the International Organization for Standardization and published in 1987. The ISO is a specialized international agency for standardization composed of the national standards bodies of 91 countries.
ISO 9000 defines a framework of minimum requirements for the implementation of a quality system. It is intended to help companies effectively document elements to be implemented to maintain an efficient quality system.
The standards underwent major revision in 2000 and now include ISO 9000:2000 (definitions), ISO 9001:2000 (requirements) and ISO 9004:2000 (continuous improvement).
The revised ISO 9000:2000 series of standards is based on eight quality management principles that senior management can apply for organizational improvement:
- Customer focus
- Leadership
- Involvement of people
- Process approach
- System approach to management
- Continual improvement
- Factual approach to decision-making
- Mutually beneficial supplier relationships
Malcolm Baldrige National Quality Award (MBNQA)
The Malcolm Baldrige National Quality Award was created by Public Law 100-107, signed into law on August 20, 1987. It is named for Malcolm Baldrige, who served as Secretary of Commerce from 1981-87.
It is presented annually by the President of the United States to organizations that demonstrate quality and performance excellence. Three awards may be given in each of five categories: Manufacturing, Service company, Small business, Education and Healthcare.
The MBNQA is not a quality process, per se, but rather a (1) set of criteria, values and concepts by which a company can make self-assessment of its systems and processes, and (2) a means of recognizing organizations that excel in quality management. One of the first winners was Motorola in 1988, which developed its own quality system – Six Sigma® (described below).
Organizations that apply for the MBNQA are judged by an independent board of examiners. Recipients are selected based on achievement and improvement in seven areas, known as the Baldrige Criteria for Performance Excellence:
- Leadership: How upper management leads the organization, and how the organization leads within the community.
- Strategic planning: How the organization establishes and plans to implement strategic directions.
- Customer and market focus: How the organization builds and maintains strong, lasting relationships with customers.
- Measurement, analysis, and knowledge management: How the organization uses data to support key processes and manage performance.
- Human resource focus: How the organization empowers and involves its workforce.
- Process management: How the organization designs, manages and improves key processes.
- Business/organizational performance results: How the organization performs in terms of customer satisfaction, finances, human resources, supplier and partner performance, operations, governance and social responsibility, and how the organization compares to its competitors.
Winners have included Boeing Aerospace Support, Caterpillar Financial Services Corp., 3M Dental Products, Xerox Business Systems, and Corning.
Six Sigma®
Six Sigma® is one of the quality assurance programs receiving the most press at present. A management philosophy developed by Motorola, it emphasizes setting extremely high objectives, collecting data, and then analyzing results to such a fine degree that they can be used to reduce defects in products and services. The measurement standard in product variation on which it is based can be traced back to the 1920s.
Sigma (s), a term from statistical mathematics, is used to describe the amount of variance measured within a process. Basically, it is an indicator of how far a process has deviated from being perfectly aligned with customer requirements. Sigma then becomes a gauge that describes the ability of the process to act efficiency and accurately. An operation measured at the six Sigma level has a minimal amount of defect. Achieving six Sigma, as calculated by Motorola, equals 99.9997%, or just 3.4 defects per million – a near perfect performance.
In the early and mid-1980s, Motorola engineers decided that the traditional quality levels -- measuring defects in thousands of opportunities -- didn't provide enough granularity. Instead, they wanted to measure the defects per million opportunities – putting a finer point on quality assurance. As a result, Motorola developed the new standard and created the Six Sigma® methodology that utilizes data and statistical analysis to measure and improve a company’s operational performance, practices and systems.
At its core, Six Sigma® revolves around a few key concepts.
- Critical to Quality: Attributes or requirements most important to the customer
- Defect: Failing to deliver what the customer wants
- Process Capability: What your process can deliver
- Variation: What the customer sees and feels
- Stable Operations: Ensuring consistent, predictable processes to improve what the customer sees and feels
- Design for Six Sigma: Designing to meet process capability and customer needs
There are two Six Sigma® methodologies:
Six Sigma® DMAIC -- a process that Defines, Measures, Analyzes, Improves, and Controls existing processes that fall below the Six Sigma specification.
Six Sigma® DMADV -- Defines, Measures, Analyzes, Designs, and Verifies new processes or products that are trying to achieve Six Sigma quality.
Key to Six Sigma® methodology is the use of tools designed to facilitate its implementation. These include:
- Kano Model: to identify and prioritize customer needs
- Pareto Chart: to focus on problems that offer the greatest potential for improvement
- Taguchi Loss Function: to understand the benefit of reducing variation after customer specifications have been met
- Affinity Diagrams: to gather and group ideas
- Fishbone Diagrams: to explore all possible causes and their effect on a problem
- Communication Plans: to keep all those involved up to speed on a project
- Control Charts: to monitor, control and improve performance
- Critical to Quality Tree: to identify how customers evaluate a product or service
- Histograms: to summarize and graphically display data for further analysis
- Interrelationship Digraphs: to identify drivers and outcomes
- Involvement Matrices: to map responsibilities of stakeholders within a project
- Operational Definitions: to define key characteristics and how to measure them
Companies that have championed the Six Sigma® methodology include G.E., Texas Instruments, Allied Signal, and Eastman Kodak.
Which Road to Choose
The fact that there are many roads to quality, underscores its importance as a component of any successful corporate strategy. Pursuing quality has never been easy, or inexpensive. And embracing any one of the number of programs available is not a quick fix. The attainment of true and continuing quality requires a commitment and long-term, organization-wide dedication – from the top down.
What is the best way for your company to make the kinds of improvements that produce quality throughout your operation? That is a question for you and the stakeholders in your organization to consider. One thing is clear, however. In today's business environment, competition is fierce and the cost of mediocrity is high. Unless you can provide the level of service and the quality of product customers now expect – even demand – someone else in your industry will.
Resources on Quality Management
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ABC-Amega Inc. has been committed to quality since it was founded in 1929. It was the first receivable management firm to be awarded the "E" and "E Star" Awards from the President of the United States for outstanding export service and foreign marketing. It was also the first commercial a/r firm certified to the COPC-2000® Standard, the service industry's most rigorous independent benchmark for operational performance.
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