CHAPTER 2:Frameworks for Quality and Performance Excellence

Foundations of Performance ExcellenceTrue Management GurusW. Edwards DemingJoseph M. JuranPhilip B. CrosbyThe Deming PhilosophyThe Deming Chain ReactionA System of Profound Knowledge

William Edwards Deming was an American statistician, professor, author, lecturer, and consultant. He is perhaps best known for the "Plan-Do-Check-Act" cycle popularly named after him.

Joseph Moses Juran was a Romanian-born American management consultant and engineer. He is principally remembered as an evangelist for quality and quality management.

Crosby initiated the Zero Defects program at the Martin Company. As the quality control manager of the Pershing missile program, Crosby was credited with a 25 percent reduction in the overall rejection rate and a 30 percent reduction in scrap costs.

THE DEMING CHAIN REACTIONImprove QualityCosts decrease because of less rework, fewer mistakes, fewer delays and snags, and better use of time and materialsProductivity improvesCapture the market with better quality and lower priceStay in businessProvide jobs and more jobs

A SYSTEM OF PROFOUND KNOWLEDGEAppreciation for a systemUnderstanding process variationTheory of knowledgePsychology

A SYSTEM OF PROFOUND KNOWLEDGEAppreciation for a systemSystems is a set of functions or activities within an organization that work together to achieve organizational goals.Systems require cooperation

A SYSTEM OF PROFOUND KNOWLEDGEUnderstanding process variationCommon causes of variation factors that are present as a natural part of a process

Special causes of variation, often called assignable causes

A SYSTEM OF PROFOUND KNOWLEDGETheory of Knowledge a branch of philosophy concerned with the nature and scope of knowledgeManagement decisions should be driven by facts, data, and justifiable theories, not solely by opinions.

A SYSTEM OF PROFOUND KNOWLEDGEPsychology helps us to understand people, interactions between people and circumstances, interactions between leaders and employees, and the drivers of behavior.

14 POINTS FOR MANAGEMENTManagement CommitmentLearn the New PhilosophyUnderstand InspectionEnd Price Tag DecisionsImprove ConstantlyInstitute TrainingInstitute Leadership

14 POINTS FOR MANAGEMENTDrive Out FearOptimize Team EffortsEliminate ExhortationsEliminate Quotas and MBORemove Barriers to Pride in WorkmanshipInstitute EducationTake Action

JURAN PHILOSOPHYJoseph M. Juran wrote, edited, and published one of the most comprehensive books on quality, Quality Control HandbookHe defines quality as fitness for use

JURAN PHILOSOPHYFour Categories of Fitness for Use:Quality of designQuality of ConformanceAvailabilityField Service

JURAN PHILOSOPHYQuality TrilogyQuality Planning the process for preparing to meet quality goalsQuality Control the process for meeting quality goals during operationsQuality Improvement the process for breaking through the unprecedented levels of performance

CROSBY PHILOSOPHYHis first book, Quality Is Free, is credited with bringing quality to the attention of top American executivesThe essence of Crosbys quality philosophy is embodied in what he calls the Absolutes of Quality Management and the Basic Elements of Improvement

CROSBY PHILOSOPHYAbsolutes Quality of ManagementQuality means conformance to requirements not eleganceThere is no such thing as a quality problemThere is no such thing as the economics of quality: it is always cheaper to do the job right the first timeThe only performance measurement is the cost of qualityThe only performance standard is Zero Defects

CROSBY PHILOSOPHYBasic Elements of ImprovementDeterminationEducationImplementationHe placed more emphasis on management and organizational processes for changing corporate culture and attitudes than on the use of statistical techniques

Malcolm Baldrige was nominated to be Secretary of Commerce by President Ronald Reagan on December 11, 1980, and confirmed by the United States Senate on January 22, 1981. During his tenure, Baldrige played a major role in developing and carrying out Administration trade policy.

History and PurposePresident Reagan signed legislation mandating a national study/conference on productivity in October 1982.

Baldridge Award was signed into law on August 20, 1987.

The purpose of the award are to:Help stimulate American companies to improve quality and productivityRecognize the achievements of those companies that improve the quality of their goods and servicesEstablish guidelines and criteriaProvide specific guidance for other American enterprises that wish to learn how to manage for high quality

Baldridge Award recognizes US companies that excel in quality management practice and performance.The award has evolved into a comprehensive National Quality program of which Baldridge Award is only one part.

The Criteria for Performance ExcellenceDesigned to encourage companies to enhance their competitiveness through an aligned approach to organizational performance management that results in:Delivery of ever-improving value to customers, contributing to marketplace success.Improvement of overall company performance and capabilities.Organizational and personal learning.

7categories of the Criteria:

1.Leadership2.Strategic Planning3.Customer focus4. Measurement, Analysis, and Knowledge Management5. Workforce Focus6. Process Management7. Results

1.The DEMING PRIZE

Instituted in 1951 by the Union of Japanese Scientists and Engineers (JUSE) in recognition and appreciation of W. Edwards Demings achievements in statistical quality control and his friendship with the Japanese people.

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\Annual award presented to a company or a division of company that has achieved distinctive performance improvements through the application of Companywide Quality Control defined by JUSE as a system of activities to assure that quality products and services required by customers are economically designed,produced and supplied while respecting the principle of customer -orientation and the overall public well-being.

10 CATEGORIES AS JUDGING CRITERIA:PoliciesThe organizations and its operationsEducation and disseminationInformation gatheringCommunication and its utilizationAnalysisStandardizationControl/management Quality assuranceEffects

Objectives are to ensure that that a company has so thoroughly deployed a quality process that it will continue to improve long after a prize is awarded.

2.EUROPEAN EXCELLENCE AWARD(European Quality Award )

In October 1991,it was created by the European Foundation for Quality Management (EFQM) in partnership with the European commission and the European Organization for quality.Designed to increase awareness throughout the European Community and business in particular, of the growing importance of quality to their competitiveness in the increasingly global market and to their standards of life.

Base on this premise: Excellent results with respect to performance , customers, people, and society are achieved through leadership driving policy and strategy , that is, delivered through people partnerships and resources, and processes.

THREE RECOGNITION LEVELS OF EFQMA. EFQM excellence awardB. Recognized for excellenceC. Committed to excellence

3.CANADIAN AWARD FOR BUSINESS EXCELLENCECanadas National Quality Institute (NQI)recognizes Canadas foremost achievers of excellence through this award.Quality criteria are similar in structure to the Baldrige Award Criteria, with some key differences.

MAJOR CATEGORIES AND ITEMS IN THIS CATEGORY:A .LeadershipB. Customer FocusC. Planning for improvementD. People FocusE. Process OptimizationF. Supplier Focus

4. AUSTRALIAN BUSINESS AWARD( Australian Quality Awards)

Developed independently from Baldrige Award in 1998.Administered by Australian Quality Awards Foundation ,subsidiary of Australian Quality controlProminent award available for business in Australia

FOUR LEVELS OF AWARDS:The Foundation In Business Excellence awardBronze Award LevelThe Silver Award LevelThe Gold Award Level

Assessment criteria are leadership, strategy and planning ,information and knowledge, people, customer focus, processes, products and services and business results

Criteria are benchmarked with the Baldrige criteria and European Business Excellence Model.

5.QUALITY AWARDS IN CHINAIn 2001,National Quality award was introduced by China Association for Quality (CAQ).Criteria are based on components of the Baldrige National Quality Award In 2004,Shenzen became the first city to launch a Local quality award called Mayors Cup Quality AwardEncouraged many organization to participate and share best practices.

The organization's name would have different acronyms in different languages e.g. IOS is English, OIN in French so it adopted the short name ISO, based on the Greek wordisos(, meaningequal)

International Organization for StandardizationOrganisation internationale de normalisation [1]

Logo of the ISO

Formation23 February 1947TypeNon-governmental organizationPurpose/focusInternational standardizationHeadquartersGeneva,SwitzerlandMembership163 members[2]OfficiallanguagesEnglish,FrenchandRussian[3]Websiteiso.org

HistoryThe organization today known as ISO began in 1926 as the International Federation of the National Standardizing Associations (ISA), whose focus was mainlymechanical engineering.

disbanded in 1942 duringWorld WarIIbut was reorganized under its current name, ISO, in 1946, when delegates from 25 countries met at theInstitute of Civil EngineersinLondon the new organization officially began operations in February1947.

INTERNATIONAL STANDARD ORGANIZATION(ISO)ISO 9000:2000Founded in 1946 and composed of representatives from the national standards bodies of 91 nations.Most recent versionDefines quality system standards

FIVE OBJECTIVES1.Achieve, maintain and seek to continuously improve product quality in relationship to requirements.

2.Improve the quality of operations to continually meet customers and stakeholders stated and implied needs.

3.Provide confidence to internal management and other employees that quality requirements are being fulfilled and that improvement is taking place.

4.Provide confidence to customers and other stakeholders that quality requirements are being achieved in the delivered product.

5.Provide confidence that quality system requirements are fulfilled.

FACTORS LEADING TO ISO:DissatisfactionDeficiencies in the old ISO 9000 on quality process

IMPLEMENTATION AND REGISTRATION

Registration Process:Document reviewPreassessmentAssessment by a team of two or three auditorsSurveillance or periodic reauditRecertification is required every three years.Individual sites must achieve registration individually

Benefits of ISO 9000:2000Set good basic practices for initiating a quality systemProvide detailed guidance on process and product controlIt helped improve quality and service customersIt improves productivity, decrease cost, and increase customer satisfaction.

Sigmais the eighteenth letter of theGreek alphabet ; standard deviation.

The term "six sigma process" comes from the notion that if one has sixstandard deviations between the processmeanand the nearest specification limit, as shown in the graph, practically no items will fail to meet specifications.

Graph of the normal distribution50

Hence the widely accepted definition of a six sigma process is a process that produces 3.4 defective parts per million opportunities (DPMO). This is based on the fact that a process that is normally distributed will have 3.4 parts per million beyond a point that is 4.5 standard deviations above or below the mean.

Sigma levelSigma (with 1.5 shift)DPMOPercent defectivePercentage yieldShort-term CpkLong-term Cpk1-0.5691,46269%31%0.330.1720.5308,53831%69%0.670.1731.566,8076.7%93.3%1.000.542.56,2100.62%99.38%1.330.8353.52330.023%99.977%1.671.1764.53.40.00034%99.99966%2.001.575.50.0190.0000019%99.9999981%2.331.83

SIX SIGMAcan be best described as a BUSINESS INPROVEMENT approach that seeks to find and eliminate causes of defects and errors in manufacturing and services processes by focusing on outputs that are critical to customers and a clear financial return for the organization.

Six Sigma projects follow two project methodologies inspired byDeming'sPlan-Do-Check-Act Cycle.DMAIC is used for projects aimed at improving an existing business process.DMAIC is pronounced as "duh-may-ick".

DMADV is used for projects aimed at creating new product or process designs. DMADV is pronounced as "duh-mad-vee.

DMAICDefinethe system, the voice of the customer and their requirements, and the project goals, specifically.Measurekey aspects of the current process and collect relevant data.Analyzethe data to investigate and verify cause-and-effect relationships. Improveor optimize the current process based upon data analysis using techniques .Controlthe future state process to ensure that any deviations from target are corrected before they result in defects.

DMADV or DFSS ("DesignForSixSigma")Definedesign goals that are consistent with customer demands and the enterprise strategy.Measureand identify CTQs (characteristics that areCriticalToQuality), product capabilities, production process capability, and risks.Analyzeto develop and design alternativesDesignan improved alternative, best suited per analysis in the previous stepVerifythe design, set up pilot runs, implement the production process and hand it over to the process owner(s).

EVOLUTION OF SIX SIGMA

Mid-1980 Motorola pioneered the concept of six sigma as an approach to measuring product and service quality.1989-1991Motorola Improve product service ten times by 1989 and at least one hundred fold by 1991.1992Achieve six-sigma capability by 1992.

The core philosophy of Six Sigma is based on some key concepts:

Think in terms of key business processes and customer requirements with a clear focus on overall strategic objectives. Focus on corporate sponsors responsible for championing projects, support team activities, help to overcome resistance to change, and obtain resources. Emphasize such quantifiable measures as defects for million opportunities (dfmo) that can be applied to all parts of an organization.

The core philosophy of Six Sigma is based on some key concepts:Ensure that appropriate metrics are identified early in the process and that they focus on business results, thereby providing incentives and accountability. Provide extensive training followed by project team deployment to improve profitability, reduce non- value added activities, and achieve cycle time reduction Create highly qualified process improvement experts who can apply improvement tools and lead teams Set stretch objectives for improvement

The recognized benchmark for Six Sigma implementation is General Electric which efforts are driven by former CEO, Jack Welch.

Jack Welch brought significant media attention to the concept and made Six Sigma a popular approach to quality improvement. One of the key learnings GE discovered was that Six Sigma is not only for engineers.

Mid-1990sQuality emerged as a concern of many employees at General Electric.1996-1997GE increase the number of six sigma projects from 3,000 to 6,000 and achieve 320 million dollars in productivity gains and profits.1998GE generated 750 million dollars in six sigma savings over and above their investment.

Welch observed that it can also be used by: Plant managersHuman Resource managers Regional sales managers plumbers, car mechanics, and gardeners

SIX SIGMA AS A QUALITY FRAMEWORK

In many ways, Six Sigma is the realization of many fundamental concepts of "total quality management". However it is more than simply a repackaging of older quality approaches and traditional concepts of "total quality".

Total QualitySix SigmaBased largely on working empowerment and teamsOwned by business leader championsActivities generally occur within a function, process or individual workplaceProjects are truly cross-functionalTraining is generally limited to simple improvement tools and conceptsFocuses on more rigorous and advanced set of statistical methods and a structured problem-solving methodologyFocused on improvement with little financial accountabilityRequires a variable return on investment and focus on the bottom line

SIX SIGMA IN SERVICE ORGANIZATIONS

All Six Sigma projects have three key characteristics:A problem to be solvedA process in which the problem exists One or more measures that quantify the gap to be closed and can be used to monitor progress.

Applying Six Sigma to services require examination of four key measures of the performance: Accuracy Cycle time CostCustomer Satisfaction

Some examples of financial applications of Six Sigma include the following: Reduce the average and variation of days outstanding of accounts receivable Close the books fasterImprove the accuracy and speed of the audit process Reduce variation in cash flow Improve the accuracy of journal entries Improve accuracy and cycle time of standard financial reports

COMPARING BALDRIGE, ISO 9000, AND SIX SIGMA

Baldrige focuses on performance excellence for the entire organization in an overall management framework.ISO focuses on product and service conformity for guaranteeing equity in the marketplace and concentrates on quality system problems and product and service nonconformitiesISO provides a set of good basic practices for initiating a quality system. In fact it provides more detailed guidance on process and product control than baldrige, and provides systematic approaches to many of the baldrige criteria requirement in the process management category.Six Sigma concentrates on measuring product quality and driving process improvement and cost savings throughout the organization. Implementing Six Sigma fulfills in many part of the elements of ISO 9000:2000