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Chapter 2Chapter 2Chapter 2Chapter 2

Frameworks for Frameworks for Organizational QualityOrganizational Quality

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Malcolm Baldrige Malcolm Baldrige National Quality AwardNational Quality Award

Help improve quality in Help improve quality in U.S. companiesU.S. companies

Recognize achievements Recognize achievements of excellent firms and of excellent firms and provide examples to provide examples to othersothers

Establish criteria for Establish criteria for evaluating quality effortsevaluating quality efforts

Provide guidance for other Provide guidance for other American companiesAmerican companies

Malcolm Baldrige, former U.S. Secretary

of Commerce

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Criteria for Performance Criteria for Performance ExcellenceExcellence

LeadershipLeadership Strategic Planning Strategic Planning Customer and Market Focus Customer and Market Focus Measurement, Analysis, and Measurement, Analysis, and

Knowledge ManagementKnowledge Management Human Resource Focus Human Resource Focus Process ManagementProcess Management Business ResultsBusiness Results

Baldrige Award trophy

The Baldrige Framework –The Baldrige Framework –A Systems PerspectiveA Systems Perspective

4Measurement, Analysis, and Knowledge Management

5Human

Resource Focus

3Customer &

Market Focus

7Business Results

7Business Results

2Strategic Planning

1Leadership

6Process

Management

Organizational Profile:

Environment, Relationships, and Challenges

Baldrige Web SiteBaldrige Web Site

Links to award recipients and Links to award recipients and application summariesapplication summaries

Updated criteria versionsUpdated criteria versions CEO issue sheetsCEO issue sheets Other informationOther information

www.baldrige.org

Receive Applications

Judges Select for Consensus Review?

Judges Select forSite Visit Review?

Stage 1Independent Review

Stage 2Consensus Review

Stage 3Site Visit Review

Stage 4Judges Recommend Award

Recipients to NIST Director/DOC

Feedback report to applicant

Feedback report to applicant

Feedback report to applicant

No

No

Baldrige Award Baldrige Award Evaluation ProcessEvaluation Process

Scoring and EvaluationScoring and Evaluation

ApproachApproach DeploymentDeployment ResultsResults

ApproachApproach

Appropriateness of methodsAppropriateness of methods Effectiveness of use of the methods. Effectiveness of use of the methods.

Degree to which the approach is Degree to which the approach is – Repeatable, integrated, and consistently Repeatable, integrated, and consistently

appliedapplied– Embodies Embodies

evaluation/improvement/learning cyclesevaluation/improvement/learning cycles– Based on reliable information and dataBased on reliable information and data

Alignment with organizational needsAlignment with organizational needs Evidence of innovationEvidence of innovation

DeploymentDeployment

Extent to which the approach is Extent to which the approach is applied to all appropriate work applied to all appropriate work unitsunits

ResultsResults

Current performanceCurrent performance Performance relative to appropriate Performance relative to appropriate

comparisons and benchmarkscomparisons and benchmarks Rate, breadth, and importance of Rate, breadth, and importance of

performance improvementsperformance improvements Linkage of results measures to key Linkage of results measures to key

customer, market, process, and customer, market, process, and action plan performance action plan performance requirementsrequirements

Criteria Evolution Criteria Evolution (1 of 2)(1 of 2)

From quality assurance and strategic quality From quality assurance and strategic quality planning to a focus on process management planning to a focus on process management and overall strategic planningand overall strategic planning

From a focus on current customers to a focus From a focus on current customers to a focus on current and future customers and marketson current and future customers and markets

From human resource utilization to human From human resource utilization to human resource development and management resource development and management

From supplier quality to supplier partnershipsFrom supplier quality to supplier partnerships From individual quality improvement From individual quality improvement

activities to cycles of evaluation and activities to cycles of evaluation and improvement in all key areasimprovement in all key areas

Criteria Evolution Criteria Evolution (2 of 2)(2 of 2)

From individual quality improvement From individual quality improvement activities to cycles of evaluation and activities to cycles of evaluation and improvement in all key areasimprovement in all key areas

From data analysis of quality efforts to an From data analysis of quality efforts to an aggregate, integrated organizational level aggregate, integrated organizational level review of key company datareview of key company data

From results that focus on limited financial From results that focus on limited financial performance to a focus on a composite of performance to a focus on a composite of business results, including customer business results, including customer satisfaction and financial, product, service, satisfaction and financial, product, service, and strategic performanceand strategic performance

From organizational achievement to From organizational achievement to organizational sustainabilityorganizational sustainability

Self AssessmentSelf Assessment

A primary goal of the Baldrige A primary goal of the Baldrige program is to encourage many program is to encourage many organizations to improve on their organizations to improve on their own by equipping them with a own by equipping them with a standard template for measuring standard template for measuring their performance and their progress their performance and their progress toward performance excellence.toward performance excellence.

Boeing Airlift & Tanker Programs – 1998 winner

International Quality International Quality Award ProgramsAward Programs

Deming PrizeDeming Prize European Quality AwardEuropean Quality Award Canadian Awards for Business Canadian Awards for Business

ExcellenceExcellence Australian Business Excellence Australian Business Excellence

AwardAward Chinese National Quality AwardChinese National Quality Award Many others!Many others!

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Deming PrizeDeming Prize

Instituted 1951 by Union of Japanese Instituted 1951 by Union of Japanese Scientists and Engineers (JUSE)Scientists and Engineers (JUSE)

Several categories including prizes for Several categories including prizes for individuals, factories, small companies, individuals, factories, small companies, and Deming application prizeand Deming application prize

American company winners include American company winners include Florida Power & Light and AT&T Power Florida Power & Light and AT&T Power Systems DivisionSystems Division

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ISO 9000:2000ISO 9000:2000

Quality system standards adopted by Quality system standards adopted by International Organization for International Organization for Standardization in 1987; revised in 1994 Standardization in 1987; revised in 1994 and 2000and 2000

Technical specifications and criteria to Technical specifications and criteria to be used as rules, guidelines, or be used as rules, guidelines, or definitions of characteristics to ensure definitions of characteristics to ensure that materials, products, processes, and that materials, products, processes, and services are fit for their purpose.services are fit for their purpose.

Rationale for ISO 9000Rationale for ISO 9000

ISO 9000 defines quality system standards, based on the premise that certain generic characteristics of management practices can be standardized, and that a well-designed, well-implemented, and carefully managed quality system provides confidence that the out-puts will meet customer expectations and requirements.

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Objectives of ISO Objectives of ISO Standards Standards (1 of 2)(1 of 2)

Achieve, maintain, and continuously Achieve, maintain, and continuously improve product qualityimprove product quality

Improve quality of operations to Improve quality of operations to continually meet customers’ and continually meet customers’ and stakeholders’ needsstakeholders’ needs

Provide confidence to internal Provide confidence to internal management and other employees that management and other employees that quality requirements are being fulfilledquality requirements are being fulfilled

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Objectives of ISO Objectives of ISO Standards Standards (2 of 2)(2 of 2)

Provide confidence to customers Provide confidence to customers and other stakeholders that quality and other stakeholders that quality requirements are being achievedrequirements are being achieved

Provide confidence that quality Provide confidence that quality system requirements are fulfilledsystem requirements are fulfilled

2020

Structure of ISO 9000 Structure of ISO 9000 StandardsStandards

21 elements organized into four 21 elements organized into four major sections:major sections:– Management ResponsibilityManagement Responsibility– Resource ManagementResource Management– Product RealizationProduct Realization– Measurement, Analysis, and Measurement, Analysis, and

IimprovementIimprovement

ISO 9000:2000 Quality ISO 9000:2000 Quality Management PrinciplesManagement Principles

1.1. Customer FocusCustomer Focus

2.2. LeadershipLeadership

3.3. Involvement of PeopleInvolvement of People

4.4. Process ApproachProcess Approach

5.5. System Approach to ManagementSystem Approach to Management

6.6. Continual ImprovementContinual Improvement

7.7. Factual Approach to Decision MakingFactual Approach to Decision Making

8.8. Mutually Beneficial Supplier Mutually Beneficial Supplier RelationshipsRelationships

Six SigmaSix Sigma

Six Sigma – a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and a clear financial return for the organization.

Based on a statistical measure that equates Based on a statistical measure that equates to 3.4 or fewer errors or defects per million to 3.4 or fewer errors or defects per million opportunitiesopportunities

Pioneered by Motorola in the mid-1980s and Pioneered by Motorola in the mid-1980s and popularized by the success of General Electricpopularized by the success of General Electric

Key Concepts of Six Key Concepts of Six Sigma Sigma (1 of 2)(1 of 2)

Think in terms of key business processes, customer requirements, and overall strategic objectives.

Focus on corporate sponsors responsible for championing projects, support team activities, help to overcome resistance to change, and obtaining resources.

Emphasize such quantifiable measures as defects per million opportunities (dpmo) that can be applied to all parts of an organization

Key Concepts of Six Key Concepts of Six Sigma Sigma (2 of 2)(2 of 2)

Ensure that appropriate metrics are identified early and focus on business results, thereby providing incentives and accountability.

Provide extensive training followed by project team deployment

Create highly qualified process improvement experts (“green belts,” “black belts,” and “master black belts”) who can apply improvement tools and lead teams.

Set stretch objectives for improvement.

Six Sigma as a Quality Six Sigma as a Quality Framework Framework (1 of 2)(1 of 2)

TQ is based largely on worker empowerment and teams; Six Sigma is owned by business leader champions.

TQ activities generally occur within a function, process, or individual workplace; Six Sigma projects are truly cross-functional.

Six Sigma as a Quality Six Sigma as a Quality Framework Framework (2 of 2)(2 of 2)

TQ training is generally limited to simple improvement tools and concepts; Six Sigma focuses on a more rigorous and advanced set of statistical methods and a structured problem-solving methodology DMAIC—define, measure, analyze, improve, and control.

TQ is focused on improvement with little financial accountability; Six Sigma requires a verifiable return on investment and focus on the bottom line.

Transactional Six SigmaTransactional Six Sigma

Applications in service organizationsApplications in service organizations Issues:Issues:

– The culture of services is usually less scientific and service employees typically do not think in terms of processes, measurements, and data. The processes are often invisible, complex, and not well defined or well documented.

– The work typically requires considerable human intervention, such as customer interaction, underwriting or approval decisions, or manual report generation.