QM Final

Quality ManagementKenya Institute of ManagementStanley Cheruiyot2011/2012

Kenya Institute of Management

Quality Management

Prepared By: Stanley Cheruiyot

ContentsContents...............................................................................................................................................2 QUALITY MANAGEMENT..............................................................................................................5 TOPIC 1: SOCIETY AND ITS INSTITUTIONS..........................................................................5 Introduction..................................................................................................................................5 Quality and Quality Management................................................................................................7 Principles of Quality Management..............................................................................................7 The Role of Society in Sustaining Quality Practices.................................................................11 Government................................................................................................................................11 Citizens/Consumers...................................................................................................................12 Civil Society...............................................................................................................................12 Employees .................................................................................................................................12 Management...............................................................................................................................13 Stakeholders (Anybody who has interest).................................................................................13 Media.........................................................................................................................................13 Impact of Quality Services on Institutions/Society...................................................................13 TOPIC 2: QUALITY AND THE ENVIRONMENT....................................................................15 Environmental Policies on Quality Management......................................................................15 Environmental Management Systems .......................................................................................16 Business and Environment.........................................................................................................16 Basic Concepts of Environmental Management........................................................................16 ISO 14000 Family of Standards.................................................................................................17 Benefits of Implementing ISO 14000 EMS ..............................................................................18 Topic 3: WORKPLACE CULTURE.............................................................................................23 Culture and Quality Paradigm...................................................................................................23 Workplace Culture and Quality.................................................................................................24 Importance of Culture to Quality Management.........................................................................25 History of Quality Management Paradigms..............................................................................26 Workplace Ergonomics and Quality..........................................................................................29 TOPIC 4: QUALITY MANAGEMENT AND LAW...................................................................30 Legal aspects in enforcing quality practices..............................................................................30 Business laws governing supply of goods and services.............................................................31 Quality and Product Liability.....................................................................................................33 Enforcement of Quality Laws in Kenya....................................................................................34 TOPIC 5: UNDERSTANDING COMPLEXITY IN QUALITY..................................................35 Systems Approach to Quality....................................................................................................41 Effects of Complex Systems on Management of Quality..........................................................43 Integrating organization structure and quality...........................................................................44 Quality Management and Organizational Productivity.............................................................46 TOPIC 6: THE MEDIA ON PUBLIC PERCEPTION..................................................................47 TOPIC 7: ORGANIZATIONS SELF-CONCEPT.......................................................................51 Self Perception and Quality.......................................................................................................51 Self Esteem ...............................................................................................................................53 Topic 8: COMMITMENT AND LEADERSHIP IN QUALITY MANAGEMENT....................54 Quality and Competitiveness.....................................................................................................55 Quality Chains...........................................................................................................................56 Managing Quality Processes......................................................................................................57 Commitment and Policy in Quality Management.....................................................................58 Policies.......................................................................................................................................59 2


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....................................................................................................................................................60 Topic 9: Historical Perspectives to Quality Management.............................................................60 The Evolution of Quality Management.....................................................................................60 The Elements of Total Quality Management.............................................................................63 Quality Gurus.............................................................................................................................67 Juran's QualityTrilogy. ..............................................................................................................74 Crosby's Cost Of Quality. .........................................................................................................75 Crosby's Four Absolutes of Quality. .........................................................................................75 Topic 10: The Future Quality Management...................................................................................83

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Chance Favors the Prepared Mind- Marie Sklodowska Curie (1867-1934)

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QUALITY MANAGEMENTTOPIC 1: SOCIETY AND ITS INSTITUTIONSIntroductionA society is a group of individuals sharing the same behavior and environment. It is groups bound together by social, political, economic, cultural ecological/technical factors. The groups of individuals are unified by a common objective to be attained. Such objectives includes profits, harmony leadership etc. In any given society, there are institutions created to form a framework/the structure of the society. Such institutions include cultural, political social and economic & Business institutions. These societies are bound by ideological components which consist of ideas, values and beliefs which will define and shape the type of organization. What is an Organization? An entity where two or more persons work together to achieve a goal or a common purpose is called Organization. There are so many organizations around us. Daily we visit and see many organizations including hospitals, colleges, factories, farms and Government offices. Mosque/Church is also an example of an organization. People go there and say prayers. Activities of praying are to achieve a certain goal. Similarly, any unit in which two or more persons are working together for some purpose is called an organization. Unit of Organization: People Purpose Process POLCA If there is an organization, then there must be some people. They work as whole for a common purpose, so there must be a defined purpose. If an organization doesnt have any purpose, it will not survive for long run. To achieve the purposes by using people, the processes are needed. Without any process, you cannot achieve any type of purpose or goal. If we see in our daily life, we have some goals. For achieving these goals, we use some processes. So that process is also obvious and important for an organization. The last important thing for any organization is that it requires main pillars of management I.e. POLCA: Planning 5


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Organizing Leading Controlling A business (also known as enterprise or firm) is an organization designed to provide goods, services, or both to consumers. Businesses are predominant in capitalist economies, in which most of them are privately owned and formed to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit or state-owned. A business owned by multiple individuals may be referred to as a company, although that term also has a more precise meaning. It is a sum total of all those activities carried out by the enterprise to produce market goods and services with the objective of earning profits through satisfaction of human wants .It is worthy to note that business although created to generate profits may actually make losses! Business Environment A business does not function in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies. Main Factors The main factor that affects most business is the degree of competition how fiercely other businesses compete with the products that another business makes. The other factors that can affect the business are: Social how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of unemployed youth in a population. Legal the way in which legislation in society affects the business. E.g. changes in employment laws on working hours. Economic how the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and regional and global economic factors. Political how changes in government policy might affect the business e.g. a decision to subsidize building new houses in an area could be good for a local brick works. Technological how the rapid pace of change in production processes and product innovation affect a business. Ethical what is regarded as morally right or wrong for a business to do. For instance should it trade with countries which have a poor record on human rights? Changing External Environment Markets are changing all the time. It does depend on the type of product the business produces, however a business needs to react or lose customers. 6


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Some of the main reasons why markets change rapidly: Customers develop new needs and wants and better quality offering New competitors enter a market. New technologies mean that new products can be made. Government introduces new legislation e.g. increases minimum wage.

Quality and Quality ManagementAlthough quality and quality management does not have a formal definition, most agree that it is an integration of all functions of a business to achieve high quality of products through continuous improvement efforts of all employees. Quality revolves around the concept of meeting or exceeding customer expectation applied to the product and service. Achieving high quality is an ever changing, or continuous, process therefore quality management emphasizes the ideas of working constantly toward improved quality. It involves every aspect of the company: processes, environment and people. The whole workforce from the CEO to the line worker must be involved in a shared commitment to improving quality. Therefore, in brief, quality and quality management in particular can be defined as directing (managing) the whole (total) production process to produce an excellent (quality) product or service. It differs from other management techniques in the attitude of management toward the product and toward the worker. Older management methods focused on the volume of production and the cost of the product. Quality was controlled by using a detection method (post production inspection), problems were solved by management and management's role was defined as planning, assigning work, controlling the production. Quality management, in contrast, is focused on the customer and meeting the customer's needs. Quality is controlled by prevention, i.e., quality is built in at every stage. Teams solve problems and everyone is responsible for the quality of the product. Management's role is to delegate, coach, facilitate and mentor.

Principles of Quality ManagementQuality management is becoming increasingly important to the leadership and management of all organisations. It is necessary to identify Quality Management as a distinct discipline of management and lay down universally understood and accepted rules for this discipline.

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The ISO technical committee working on the ISO9000 standards had published a document detailing the quality management principles and application guidelines. The latest revision (version 2008) of ISO 9000 standards are based on these principles.

Definition of Quality Management Principle: "A quality management principle is a comprehensive and fundamental rule / belief, for leading and operating an organisation, aimed at continually improving performance over the long term by focusing on customers while addressing the needs of all other stake holders". The eight principles are... 1. Customer-Focused Organisation 2. Leadership 3. Involvement of People 4. Process Approach 5. System Approach to Management 6. Continual Improvement 7. Factual Approach to Decision Making and 8. Mutually Beneficial Supplier Relationships. Now let us examine the principles in detail. Principle 1 - Customer-Focused Organisation : "Organisations depend on their customers and therefore should understand current and future customer needs, meet customer requirements and strive to exceed customer expectations". Steps in application of this principle are... Understand customer needs and expectations for products, delivery, price, dependability, etc. Ensure a balanced approach among customers and other stake holders (owners, people, suppliers, local communities and society at large) needs and expectations. Communicate these needs and expectations throughout the organisation. Measure customer satisfaction & act on results, and Manage customer relationships.

Principle 2 - Leadership: "Leaders establish unity of purpose and direction of the organisation. They should create and maintain the internal environment in which people can become fully involved in achieving the organisation's objectives." Steps in application of this principle are... Be proactive and lead by example. 8


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Understand and respond to changes in the external environment. Consider the needs of all stake holders including customers, owners, people, suppliers, local communities and society at large. Establish a clear vision of the organisation's future. Establish shared values and ethical role models at all levels of the organisation. Build trust and eliminate fear. Provide people with the required resources and freedom to act with responsibility and accountability. Inspire, encourage and recognise people's contributions. Promote open and honest communication. Educate, train and coach people. Set challenging goals and targets, and Implement a strategy to achieve these goals and targets.

Principle 3 - Involvement of People: "People at all levels are the essence of an organisation and their full involvement enables their abilities to be used for the organisation's benefit". Steps in application of this principle are... Accept ownership and responsibility to solve problems. Actively seek opportunities to make improvements, and enhance competencies, knowledge and experience. Freely share knowledge & experience in teams. Focus on the creation of value for customers. Be innovative in furthering the organisations objectives. Improve the way of representing the organisation to customers, local communities and society at large. Help people derive satisfaction from their work, and Make people enthusiastic and proud to be part of the organisation.

Principle 4 - Process Approach: "A desired result is achieved more efficiently when related resources and activities are managed as a process." Steps in application of this principle are... Define the process to achieve the desired result. Identify and measure the inputs and outputs of the process. Identify the interfaces of the process with the functions of the organisation.

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Evaluate possible risks, consequences and impacts of processes on customers, suppliers and other stake holders of the process. Establish clear responsibility, authority, and accountability for managing the process. Identify internal and external customers, suppliers and other stake holders of the process, and When designing processes, consider process steps, activities, flows, control measures, training needs, equipment, methods, information, materials and other resources to achieve the desired result.

Principle 5 - System Approach to Management: "Identifying, understanding and managing a system of interrelated processes for a given objective improves the organisation's effectiveness and efficiency." Steps in application of this principle are... Define the system by identifying or developing the processes that affect a given objective. Structure the system to achieve the objective in the most efficient way. Understand the interdependencies among the processes of the system. Continually improve the system through measurement and evaluation, and Estimate the resource requirements and establish resource constraints prior to action.

Principle 6 - Continual Improvement: "Continual improvement should be a permanent objective of the organisation." Steps in application of this principle are... Make continual improvement of products, processes and systems an objective for every individual in the organisation. Apply the basic improvement concepts of incremental improvement and breakthrough improvement. Use periodic assessments against established criteria of excellence to identify areas for potential improvement. Continually improve the efficiency and effectiveness of all processes. Promote prevention based activities. Provide every member of the organisation with appropriate education and training, on the methods and tools of continual improvement such as the Plan-Do-Check-Act cycle, problem solving, process re-engineering, and process innovation. Establish measures and goals to guide and track improvements, and Recognize improvements.

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Principle 7 - Factual Approach to Decision Making: "Effective decisions are based on the analysis of data and information." Steps in application of this principle are... Take measurements and collect data and information relevant to the objective. Ensure that the data and information are sufficiently accurate, reliable and accessible. Analyse the data and information using valid methods. Understand the value of appropriate statistical techniques, and Make decisions and take action based on the results of logical analysis balanced with experience and intuition. Principle 8 - Mutually Beneficial Supplier Relationships: "An organisation and its suppliers are interdependent, and a mutually beneficial relationship enhances the ability of both to create value." Steps in application of this principle are... Identify and select key suppliers. Establish supplier relationships that balance short-term gains with long-term considerations for the organisation and society at large. Create clear and open communications. Initiate joint development and improvement of products and processes. Jointly establish a clear understanding of customers' needs. Share information and future plans, and Recognize supplier improvements and achievements.

The Role of Society in Sustaining Quality PracticesQuality should always be everybodys responsibility within the society. Each institution therefore should be an agent that advocate for better quality goods and services in order to create better living standards. Each group within the society has a distinct role in developing and sustaining a quality system. Some of the specific institutions include:

Government.Being the appointed authority to provide services to citizens, the business of the government of the day is having the interest of citizens at heart. Their main role include Providing legislative framework that creates a system roving quality services Establish and empower institutions that are to enforce quality improvements/Protection efforts e.g. N.E.M.A ( National Environment Management Authority) To promote the use of quality practices in production of goods and services in an economy. 11


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To set up institutions that monitors and promotes the development of new technologies in product service provision To encourage the use of quality oriented technologies by setting up special entities that promotes such practices To enforce rules and regulations that advocates for quality utilization of natural resources

Citizens/Consumers.Being the biggest entity in the society and the consumer of goods and services produces in an economy, they are entrusted with the following roles To demand for better quality goods and services at all times To provide the necessary information about their quality preference to the government and producers of goods and services To propose new approaches to the government and producers on quality improvement and value enhancement To make informed quality based decisions regarding the product and services that they consume e.g. low cholesterol diet foods.

Civil SocietyThis is a social entity that advocates for the vulnerable in the society. Being an advocate, they are required to mobilize social interest so as to fight for their rights. Their role includes To act on behalf of the vulnerable group to protect their interest and rights Organize for effective representation at the various levels of decision making To educate the public on the importance of quality products and services and the use of quality practices. To mobilize resources in order to support programs directed towards better quality

EmployeesBeing members of a business entity, employees are requires to play the following roles: To act at all times with full interest to provide quality products and services. To work with the management towards improving their work environments To support the organization by contributing ideas and creativity that leads to production of better quality goods and services. To endeavor to improve their skills by acquiring the necessary knowledge and expertise through continuous training and empowerment. To inhibit any unethical practices used by the organization and always advocate for quality practices. 12


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ManagementBased on the authority entrusted on the management, they are required to play the following roles: To adopt management practices that advocate for quality systems and procedures e.g. Adoption of ISO certification such ISO 14000 for Environment Management System (E.M.S) To provide the necessary leadership that is quality focused. Allocate resources towards the development and enhancement of practices that support quality. To be a leader of change by setting roles that are quality oriented and improvement focused. To develop and enhance quality culture within the organization by providing the necessary cultural framework that is built on quality.

Stakeholders (Anybody who has interest)Being the group that has direct/indirect interest in the entity, their role in quality enhancement will include the following To impose on the entity the need to use ethical and quality practices To provide ideas and information to the management board that promotes the use of quality practices To ensure that quality sustainability interest are put ahead of financial gains To demand for accountability in quality services by business organization.

MediaBeing an information provider and source of knowledge, the media should play the following roles Disseminate information that supports quality systems To provide information on new technologies To educate the public on their rights regarding quality of products/services they consume To adequate and unbiased information about quality issues To expose any non-quality/non-ethical practices.

Impact of Quality Services on Institutions/SocietyQuality is a strategic factor that works through cycles and systems with its effect self evident on institutions within the society. Good/poor products/service will have a direct impact on entities through several ways including: A) The Organization/Business 13


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Increased customer satisfaction Enhances profitability Lower costs Enhanced competitiveness Improved responsiveness to organizations environment and customer requirements Reduces legal liabilities Improved reputation of the organization Less wastage Increased morale Increased productivity Enhances their interest on the job It provides them with an avenue of being good corporate citizens Provides and promote a positive culture and responsibility It allows procreation of better quality goods and services Better utilization of resources Improved quality of life Protecting the society against harmful practices Enhances value creation Creation of employment They will receive better quality goods and services Better living standards Higher value for money Protection against exploitation and harm Protection against harmful environmental hazards

B) Employees

C) The Society

D) The Consumer

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TOPIC 2: QUALITY AND THE ENVIRONMENTEnvironmental Policies on Quality ManagementThe intent of an environmental policy is to state the organizations commitment to continuous improvement in environmental performance. A strong, clear environmental policy can serve as both a starting point for developing the Environment Management System and a reference point for maintaining continuous improvement. The policy should be evaluated regularly and modified, as necessary, to reflect changing environmental priorities. The policy should function in two ways: (1) within the company, the policy should focus attention on environmental issues associated with company activities, products, and services; and (2) outside the company, the policy is a public commitment to addressing environmental issues and continuously improving environmental performance. The environmental policy must address: Commitment to compliance with relevant environmental legislation and regulations Pollution prevention Continuous improvement Tips for Developing an Environmental Policy: 1. Develop a policy that reflects perspectives of various employees within the company (for example, line worker, owner, wastewater treatment operator, quality inspector, compliance/legal manager, production manager). 2. Display the policy statement in view of all employees; the policy should be available to the public and customers if requested and be printed in languages other than English, as appropriate. 3. Include top management signatures on the policy to demonstrate understanding and commitment. Environmental Policy Example The E.P.ZA (The Export Processing Zones Authority)The Export Processing Zones Authority (EPZA) is an investment promotion agency of the Kenya government responsible for catalyzing export oriented investments in economic zones. At EPZA we recognize our responsibility for protection of the environment. To meet this commitment, we shall: Control our services and operational activities in order to minimize their negative environment impacts. Comply with relevant applicable environmental laws and other requirements that apply to the activities of the Organisation.

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Set up and strive to achieve our environmental objectives and targets. These targets shall be monitored and periodically reported for review. To train and motivate members of the staff to carry out their tasks in an environmentally responsible manner. Continuously improve our environmental performance by minimizing pollution, adopt waste management best practice, and minimize water and energy use. Achieve these by establishing, implementing and maintaining effective processes for environmental management as required by ISO 14001:2004 Environmental Management System.

SIGNED: JOSEPH N. KOSURE AG. CHIEF EXECUTIVE OFFICER

Environmental Management SystemsEnvironmental Management: Environmental Management is not, as the phrase could suggest, the Management of the environment as such but rather the management of man's interaction with and impact upon the environment. The need for environmental management can be viewed from a variety of perspectives. Environmental management is therefore not the conservation of the environment solely for the environments sake but rather the conservation of the environment for human kinds sake. As with all management functions, effective management tools, standards and systems are required. An 'environmental management standard or system or protocol attempts to reduce environmental impact as measured by some objective criteria. The ISO 14001 standard is the most widely used standard for environmental risk management.

Business and EnvironmentAll kinds of businesses are directly or indirectly related with the environment. It is generally agreed that environmental sustainability must be build on long-term economic and social sustainability and that the challenge of sustainable development requires integration of economy and environment in all sectors and at all levels. The objectives of private sector led economic growth in a globally competitive world are not necessarily compatible with the state and community led objectives of social equity and environmental protection. If one can properly apply the environmental management system in business, the business could be benefited by several ways. Such as: Cost savings. Minimized commercial risks and liabilities Improved competitive advantage Improved employee satisfaction

Basic Concepts of Environmental Management16


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Man-made changes in the environment have continued through most historical epochs. However, the last two centuries following the industrial revolution have witnessed accelerated environmental changes due to the exploitation of natural resources on an unprecedented scale. Extensive burning of fossil fuels, release of various chemical pollutants into the air, the water and soil, clearing of forests for agriculture and extensive exploitation of all natural resources are now threatening to destroy the very environment on which human existence depends. Fortunately, awareness of environmental problems is growing in most countries of the world. It is felt by many people that to continue development patterns that cannot be sustained in the long term is a recipe for disaster. Governments are now listening more to the advice of environmentalists and increasingly enacting legislation aiming at protecting the environment from the negative impacts of economic activities. However, the enforcement of environmental legislation is proving to be difficult in most cases. A new approach to environmental protection is now available thanks to the development of new international standards on environmental management, in particular, ISO 14001. This approach relies less on command-and-control dictates from the Government and more on proactive efforts by all workers in the company. The implementation of the environmental management system prescribed by ISO 14001 can lead to good compliance with environmental legislation and tangible, continual improvement in the environmental performance of enterprises thanks to the commitment and evolvement of top management and all workers. Widespread implementation of these standards can go a long way toward improving the environmental performance of industry and promoting sustainable development in the countries of the world.

ISO 14000 Family of StandardsISO 14000 is a group of standards covering the following areas: Environmental Management Systems (14001,14002, 14004) Environmental Auditing (14010, 14011, 14012) Evaluation of Environmental Performance (14031) Environmental Labeling (14020, 14021, 14022, 14023, 14024, 14025) Life-Cycle Assessment (14040, 14041, 14042, 14043)

ISO 14001 is the only standard intended for registration by third parties. All the others are for guidance. ISO 14001 is a management standard, it is not a performance or product standard. The underlying purpose of ISO 14001 is that companies will improve their environmental performance by implementing ISO 14001, but there are no standards for 17


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performance or the level of improvement. It is a process for managing company activities that impact the environment. Some unique and important characteristics of ISO 14001 are: It is comprehensive: all members of the Organization participate in environmental protection, the environmental management system considers all stakeholders, and there are processes to identify all environmental impacts. It is anticipative: it focuses on forward thinking and action instead of reacting to command and control policies. It is a systems approach: it stresses improving environmental protection by using a single environmental management system across all functions of the Organization. The Environmental Management System contains the following elements: Identification of environmental aspects and significant impacts. Identification of legal and other requirements. Environmental goals, objectives, and targets that support the policy. An environmental management program. Definition of roles, responsibilities, and authorities. Training and awareness procedures. Process for communication of the EMS to all interested parties. Document and operational control procedures. Procedures for emergency response. Procedures for monitoring and measuring operations that can have a significant impact on the environment. Procedures to correct nonconformance. Record management procedures. A program for auditing and corrective action. Procedures for management review.

Benefits of Implementing ISO 14000 EMSEnvironmental Management Systems (EMS) is the foundation of the ISO 14000 group of international environmental management standards. An EMS can be registered as meeting the ISO 14001 EMS standard. Since the ISO 14001 EMS includes everyone in the Organization and all aspects of the Organization that affect the environment, it can improve an organization's environmental

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performance in many ways. This improved performance comes at a cost to the Organization, a cost that can be recovered by aggressively seeking benefits. The benefits of an EMS and registration of the EMS to ISO 14000 are organized into the following categories: Increased Profits Operations Marketing Regulatory Compliance Social

The benefits gained in each category are briefly described below. Increased Profits Implementing ISO 14001 today can provide a basis for implementing the other standards in the ISO 14000 series. This incremental approach can reduce overall costs to implement ISO 14000 because of lessons learned in each phase. The quantity of materials and energy required for manufacturing a product may be reduced, thereby reducing the cost of the product, material handling costs, and waste disposal costs. Some companies have found that it costs more to run a compliance-driven system than an EMS An EMS can help reduce incidents of pollution and the associated expense of recovery. Recycling manufacturing waste and unused inputs could increase revenues. Recycling need not be within the same facility, but with another one that can use the waste as input to their production. Employee health and safety can be improved, thereby improving productivity, decreasing sick days, and reducing insurable risk. Insurance claims may be reduced, thus reducing the costs of coverage and settlements. Meeting the standards of different countries can be expensive. ISO 14000 can reduce this effort by providing one standard Operations The EMS standards can define "best practices" and create a foundation for the next level of improvement. An EMS integrated with all other business systems improves management's ability to understand what is going on in their Organization, determine the effect on the company, and provide leadership.

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The standards build consensus throughout the world that a common terminology for environmental management systems is needed. A common terminology for all locations of a multinational Organization will increase efficiency of communication and improve results. An EMS can identify instances of redundancy in day-to-day efforts for regulatory compliance. These can be eliminated, thus making the Organization more efficient. An EMS includes procedures and metrics for measuring and evaluating wastes and the costs of environmental emissions. This information can help organizations implement the best practices and determine their results.

The environmental staff can help employees and management understand and use environmental systems to improve organizational performance and benefits. A management system can lead to more reliable and predictable environmental performance, which can reduce or limit the severity of incidents. ISO 14000 requires a common terminology, which improves the communication of goals, procedures, impacts, and solutions.

Improved communications can mean greater efficiency in decision making. For example, the severity of an environmental impact can increase with time, so an efficient notification system can reduce the time it takes to respond and thus the impact, risk and liability to the Organization. ISO 14000 provides feedback on the operations of the Organization that can be used for daily action and to determine the appropriateness of pollution prevention strategies. Problems that could be expensive to resolve and damaging to the environment can be identified earlier. Early management awareness of problems would offer the best opportunity for efficient resolution.

Management awareness of environmental impacts provides the opportunity for planning to reduce negative impacts. As ISO 14000 is accepted internationally, organizations will need to meet only one standard, thus simplifying environmental management.

A unified approach to environmental management provides the opportunity for sharing ideas among facilities. This can increase the efficiency and benefits of an EMS. Spreading environmental responsibility throughout the Organization places it with those directly associated with environmental impacts and pollution prevention. This improves the effectiveness and efficiency of pollution prevention programs

Marketing When environmental risks are reduced, the company becomes a more attractive investment to potential and current stockholders. Three factors contribute; and corporate environmental management, environmental 20 performance, environmental


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communications. Establishing a strong environmental image can help attract environmentally conscious customers and create pressure on competitors. This image must be carefully marketed to receive these benefits. Employees see ISO 14000 as good for their Organization and for them personally. Companies can receive credit for existing systems and accomplishments. Customers might favor companies with an EMS. These customers could be the ultimate consumer or industrial customers. As large, multinational manufacturers register to ISO 14000, they may favor suppliers with ISO 14000 registration. Community support for a facility could be increased by demonstrating concern for the local environment through an EMS. Workers may be attracted to a company with a plan to protect the immediate work environment and the surrounding community. A company's products may appeal to customers seeking green products. ISO 14000 registration demonstrates that the EMS meets international standards. Since registration requires third party auditing, it validates the EMS and the claims made by the Organization. Regulatory Compliance ISO 14000 requires evidence of working processes to maintain compliance with laws and regulations. These processes can help companies identify where they are out of compliance and take action. Regulators may favor organizations with an ISO 14000 registered EMS. Improved compliance with legislative and regulatory requirements could reduce penalties and redemption costs. An ISO 14000 EMS demonstrates to regulatory agencies that the organization is proactive about reducing pollution and committed to continual improvement. Social ISO 14000 helps create: A common language and way of thinking about environmental aspects which can help companies, communities, governments, and organizations communicate and work together. Cleaner air, waters, and soils. Longer resource life through reduced usage. Progress toward a sustainable culture.

ConclusionProtecting the environment by coming into compliance or, ideally, going beyond compliance reduces waste and reduces costs and inefficiencies. It preserves natural resources and reduces the cost of finding new and more resources. It makes greater use of materials already purchased and 21


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reduces purchasing costs. It makes for cleaner emissions and reduces the severity of spills, leaks, and other accidents. Reducing these events reduces permitting costs, remediation costs, worker comp costs, insurance costs, lawsuit costs and fines, and many other costs and fees. Protecting the environment involves purchasing smaller amounts of materials or purchasing less toxic materials. These choices improve worker safety and morale, leading to more productive workers. Purchasing less hazardous materials reduces the need for and the costs associated with the need for special equipment, special training, and specially designed storage areas. These purchasing practices also reduce the cost of disposal. Protecting the environment by going beyond compliance helps keep regulators and inspectors out of the plant.

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Topic 3: WORKPLACE CULTURECulture and Quality Paradigm.There are many different definitions of corporate culture. Culture is defined as the way we do things around here. The way employees actually behave, think and believe determines the culture. Culture is the personality of the organization. Culture is what employees do when no one is watching. It is a walk the talk. Consistent talking and actions matters much. Culture is the basic pattern of shared beliefs, behaviors, attitudes and assumptions acquired over time by members of an organization. Attitude shows the outlook and thoughts from which the work habits emerge. It reflects attitudes and practices related to quality systems application. Formal policies, procedures, behaviors and habits operate as the ground rules and guidelines. Vision, mission, values, goals and strategy are the guiding principles of a corporation and culture culminates from them. Corporate culture is changing fast. Everyone is expected to move at much faster speed. Operational principles for the corporations are Slim, Speed and Simple. Corporate culture is people in action. Quality culture refers to the degree of awareness, commitment, collective attitude, and behavior of the organization with respect to quality. Quality culture is basically incorporation of quality in the overall system of an organization which leads to a positive internal environment and creation of delighted customers. A changed mindset at all the levels of management is the basic tool for implementation of such a culture. As the process of initiating quality culture starts with managers who understand the value of the system's view and also believe in its implications. So in order to create such a culture a changed mindset was important. It can be achieved either through self realization at the top level or through trainings and workshops or following of benchmark organizations. Enemies of Quality Culture: Its the best we can do There is not enough time There is not enough money There are not enough people It is not in my budget It is not my responsibility 23


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Let someone else worry about it It is too late to change it The customer does not understand-It is not really a problem It is not my fault The quality control only applies to manufacturing It is as good as it can be Relax, we hit the goal The customer is first Continual improvement is essential to the success Quality does not take time, it saves time What gets measured gets managed Problems are opportunities in disguise The only bad mistake is a hidden mistake Training saves money It is the process, not the people Better is better than best

Friends of Quality Culture:

In the quality culture environment focus is on customer and quality becomes everyones responsibility. Employees are empowered to do their job. Customer expectations are exceeded and customer gets delighted. Creative quality culture involves: Pursuit of solving unidentified problems Surprising and delighting customers Goal of customer loyalty instead of satisfaction only Changes with stability and control Process focus

Workplace Culture and QualityIn order to inculcate quality culture at the workplace: 1. Effective Communication: People in organizations typically spend over 75% of their time in an interpersonal situation; thus it is no surprise to find that at the root of a large number of organizational problems is poor communications. Effective communication is an essential component of organizational success whether it is at the interpersonal, intergroup, intragroup, organizational, or external levels. 24


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2. Changing Mindset. 3. Better to better: Always endeavor to make thing better. Chinese proverb, Be not afraid of going slowly, be afraid only of standing still. 4. Creativity. 5. Management Commitment. It is just purely a management system that will help us to run our business in a more organized and systematic manner which will lead to a more consistent quality of the service that we deliver to customers. The quality of any organization is determined by the satisfaction of its customers who get the services. We should not only focus on external customers, but also focus on internal customers. Any quality improvement is achieved by improving the processes of an organization. It is a continuous activity in which we have to search for a much better way. It focuses more on opportunities for improvement, rather than waiting for a problem to reveal opportunities. Elimination of a problem will reduce any future occurrence, thus improve the processes of an organization.

Importance of Culture to Quality ManagementSupportive work culture has been associated with a variety of benefits most of which are associated with the final products/service: High level of commitment to the organization High level of job satisfaction Low level of industrial stress Less conflict between employees and management High level of output and efficiency Ease of embracing new technologies and minimal resistance to change

A quality culture which is important to any serious organization will be manifested in the following ways: Customer driven excellence Valuing employees and partners Management by facts 25


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Clear and focused leadership Preventive/pro-active approach Continuous improvement Team approach Quality based and recognition systems

History of Quality Management ParadigmsThe Evolution of Quality Approaches The shift to Quality Management may be revolutionary for many managers because the tenets of the new paradigms are so radically different from past managerial practices. It will require both a thought revolution and a behavioral revolution. Approaches to quality have evolved through a series of gradual refinements over the last century. The shift seems dramatic and revolutionary to many managers because they have not kept up with the evolving approaches over the years. However, they have not defined their managerial roles in terms of the latest advancements or they feel skeptical about its success. The Four Major Quality Eras are as follows 1. Customer-Craft OR the Inspection Era Until the nineteenth century, skilled craftsmen manufactured goods in small volume. They handcrafted and fit together parts to form a unique product that was only informally inspected. Population growth and industrialization brought about production in larger volume. Manufacturing in the industrialized world tended to follow this craftsmanship model till the factory system, with its emphasis on product inspection, started in Great Britain in the mid-1750s and grew into the Industrial Revolution in the early 1800s. The factory system, a product of the Industrial Revolution in Europe, began to divide the craftsmens trades into specialized tasks. This forced craftsmen to become factory workers and forced shop owners to become production supervisors, and marked an initial decline in employees sense of empowerment and autonomy in the workplace. Quality in the factory system was ensured through the skill of laborers supplemented by audits and/or inspections. Defective products were either reworked or scrapped. In the 1800s, increased specialization, division of labor, and mass production required more formal inspection. Parts had to be interchangeable. Inspectors examined products to detect flaws and separate the good from the bad. They used gauges to catch deviant parts and make sure parts fit together at final assembly. The gauging system made inspections more consistent than those conducted solely by eye, and gave inspection a new respectability. 26


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2. The Statistical Quality Control Era In 1931, Walter A. Shewhart gave quality a scientific footing with the publication of his book Economic Control of Quality of Manufactured Product. Shewhart was one of a group of people at Bell Laboratories investigating problems of quality. The statistical quality control approach that Shewhart advocated is based on his views of quality. Statistical quality control requires that numbers derived from measures of processes or products be analyzed according to a theory of variation that links outcomes to uses. Shewhart offered a pragmatic concept of quality: The measure of quality is a quantity which may take on different numerical values. In other words, the measure of quality, no matter what the definition of quality may be, is a variable. Shewharts emphasis on measurement in his definition of quality obviously relates to his prescriptions for statistical quality control, which requires numbers. Shewhart recognized that industrial processes yield data. For example, a process in which metal is cut into sheets yields certain measurements, such as each sheets length, height and weight. Shewhart determined this data could be analyzed using statistical techniques to see whether a process is stable and in control, or if it is being affected by special causes that should be fixed. In doing so, Shewhart laid the foundation for control charts, a modern-day quality tool. Shewharts concepts are referred to as statistical quality control (SQC). They differ from product orientation in that they make quality relevant not only for the finished product but also for the process that created it. 3. The Quality Assurance Era During the quality assurance era, the concept of quality in the United States evolved from a narrow, manufacturing-based discipline to one with implications for management throughout a firm. Statistics and manufacturing control remained important, but coordination with other areas, such as design, engineering, planning, and service activities, also became important to quality. While quality remained focused on defect prevention, the quality assurance era brought a more proactive approach and some new tools. The quality assurance era significantly expanded the involvement of all other functions through total quality control, and inspired managers to pursue perfection actively. However, the approaches to achieving quality remained largely defensive. Controlling quality still meant acting on defects. Quality was something that could hurt a company if ignored, rather than a positive characteristic necessary in obtaining competitive advantage. This view started to change in the 1970s and 1980s, when managers started to recognize the strategic importance of quality. 4. The Strategic Quality Management Era

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The present quality era, Strategic Quality Management, incorporates elements of each of the preceding eras, particularly the contributions of Shewhart, Deming, Juran, and Feigenbaum. So many elements of previous eras are incorporated into Strategic Quality Management that the last two decades may at first appear to be just a repackaging of old ideas. There are, however, dramatic differences from earlier eras. For the first time, top managers began to view quality positively as a competitive advantage, and to address it in their strategic planning processes, which are focused on customer value. Because quality started to attract the attention of top managers, it impacted management throughout the organization. Quality was not just for the inspectors or people in the quality assurance department to worry about. This era marks the emergence of a new paradigm for management. A number of developments were brought together and reconfigured into a new approach to management in all departments and specialties. A variety of external forces brought quality to the attention of top managers. They began to see a link between losses of profitability and poor quality. The forces that brought this connection to their attention included a rising tide of multimillion-dollar product liability suits for defective products and constant pressures from the government on several fronts, including closer policing of defects, product recalls. Perhaps the most salient external force was the growing market share incursions from foreign competitors, particularly the Japanese, in such diverse industries as semiconductors, automobiles, machine tools, radial tires, and consumer electronics. Producing products with superior quality, lower cost, and more reliable delivery, Japanese firms gained market shares and achieved immense profitability. The onslaught of these events in the mid1970s and 1980s seemed rather sudden; However, Japanese firm had been building their industrial capabilities for decades, developing and refining approaches to quality grounded in the principles taught to them by Americans after World War II. Manager and theorists have been captivated by Japanese management over the last two decades. Indeed, the Strategic Quality Management era borrows a number of its elements from the developments that quality took place in Japan at the same time as the quality assurance era in the United States. Factors that influence paradigm shifts in quality include; Globalization-dealing with customers with a lot of varieties Speed of innovation Outsourcing Quality evolution Quality ethics/business ethics e.g. business allocating resources to conserve the environment 28


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The changes that have taken place in the practice of quality can be seen in the following ways;

Quality has moved from being the responsibility of quality department to be the responsibility of all in the organization Product quality has shifted from being a product differentiator to being a necessity to compete in the marketplace The importance of quality has extended beyond the physical product to service and cultural frameworks Issues of learning, training, education and self management are important in quality practice more than before. Organizations have recognized the importance of focusing all the activities on the customer and their requirements Best practices have been developed and are flourishing

Workplace Ergonomics and QualityErgonomics is the study of designing equipment and devices that fit the human body, its movements, and its cognitive abilities. The International Ergonomics Association defines ergonomics as follows: Ergonomics (or human factors) is the scientific discipline concerned with the understanding of interactions among humans and other elements of a system, and the profession that applies theory, principles, data and methods to design in order to optimize human well-being and overall system performance. Ergonomics is employed to fulfill the two goals of health and productivity. It is relevant in the design of such things as safe furniture and easy-to-use interfaces to machines. Proper ergonomic design is necessary to prevent repetitive strain injuries, which can develop over time and can lead to long-term disability. Ergonomics is important to quality Management for the following reasons;

It allows for the matching of the human attributes with the work. It allows optimization of operations performed by a human being. It provides an understanding of the best practices affecting quality of output. It allows for introduction of the rest cycles for maximum concentration. It allows for matching of motivational factors.

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TOPIC 4: QUALITY MANAGEMENT AND LAWLegal aspects in enforcing quality practicesPurchase/sale of goods and services are governed by the legal system. It is important that managers understand features of the law that govern the goods and services in a country. Most organizations however consider consulting a legal expert in matters relating to law. In Kenya, the following laws are closely associated to quality, Sale of goods Act(Cap 31,Laws of Kenya) The law of Contract Insurance law The law relating to carriage of goods The Negotiable instruments Act

These laws are further detailed and explained in your Business Law course. Rapid increase in liability suits in business has made the knowledge of legal services an important aspect of quality Management and assurance. An organization must attempt to fully guarantee that it fully complies with the laws and regulation pertaining to quality. The most common aspects of quality associated with the law include; Product label A label is an identity of a product and will in most cases include the name of the product, identity of the manufacturer, contents of the product and any other information. They have a direct relationship to quality Management through the doctrine of caveat emptor, warranty of disclosing the dangerous nature of goods, Conditions of fitness of use, conditions for sale (description, implied), patents rights, trademarks and copyrights. Packaging This refers to materials used in wrappings for protecting products from damage. Materials used in packaging have a direct impact on the quality of the products. Some of the legal aspects

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relating to packaging include carriage of goods, the law of contact and law relating to the environment and consumer protection. Safety This relates to the damage that the product may have on the environment and consumers during its use. Safety of product use is executed through the Law of contract, Sale of goods Act consumer and environmental protection laws. Transportation Quality is affected by movement of goods and the law protects all parties depending on their involvement. This is through the law of agency and contract. Design Patents, copyright and trademarks laws safe guide any design from any exploitation. Design quality is a key attribute and therefore should be protected by law Wording of warranties Any expressed/implied warranty of a product/service should be done with the guidance of a legal expert so as to ensure protection and enforceability. Contractual agreements Any contract entered into should have a legal framework that incorporates legal interpretation and universal understanding to both parties in a contract. Procedures and documentation All procedures and documents required in a process should be developed and facilitated based on a sound legal approach. All quality issues need to be documented to provide a basis for countering liability claims.

Business laws governing supply of goods and servicesThe scope of the law relating to quality governs the following areas of business: all commercial enterprises, all manufacturers for commercial end products, importers, exporters, and merchants; service providers of products and goods, advertisers of products, goods and services; and civic associations and non governmental agencies engaged in manufacturing, commerce, or humanitarian relief. Consumers' Rights and Business Obligations 1. Manufacturers and service providers are required to indicate on their products, goods, and service in English and Kiswahili language the ingredients, composition, users guidelines, manufacturing date, and expiration date along with other requirements which guarantee the safety and health of consumers prior to their commercialization. 31


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2. Manufacturers and services providers must comply with the general requirements of providing accurate information of their composition or configuration of the products, goods, or services so as to prevent confusion by consumers or damage competition. 3. Merchants, traders and services providers responsible for products, goods, or services first placed in the stream of commerce in Kenya will be required to ensure that their products or services are in compliance with the provisions of the law. 4. Importation of products or goods not found in compliance with the custom laws can be authorized provided they are ONLY transited for re-exportation e.g. the everpower brand of batteries from China to Uganda. 5. Importation of products and goods which are of humanitarian status or non-commercialized purposes can be allowed provided there is a special prior authorization from the Ministry of trade on behalf of the Kenya Government. 6. Presentation of proper compliance certificate, for exportation and importation, will be required for certain products which may be harmful to the health or safety of consumers, may affect fair commercial practices, may preserve and enhance the quality of locally manufactured products, are required by international trade or international conventions. 7. A quality label is a separate mark to identify the quality of a product, good, or service that the manufacturers or service providers voluntarily affix to their products or services. The affixing of the quality label is done for the purpose of meeting the consumers demand for information, to improve the manufacturers and service provider's production performance, and to enhance the quality products. Manufacturers and service providers must affix the quality label in strict compliance with the conditions stipulated by law. 8. It is prohibited to put in the stream of commerce food products which are known to be contaminated or toxic or do not meet bacteriological or sanitary requirement as stipulated by regulations of the ministries concerned. 9. It is prohibited to put into the stream of commerce products and instruments used for falsifying and counterfeiting products. 10. All forms of commercial advertising is prohibited if they are deceitful, misleading, false, or likely to cause confusion on the quality and safety of products, goods, and services .Advertisers placing commercial advertisements for their own account shall be held principally accountable in their capacity as an initiator. 11. For manufacturing, processing, and commercialization of products, goods, and services which can cause grave or imminent danger to consumers' health or safety, the competent ministries and departments can take the following actions: temporarily or permanently

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banning from sale; temporarily or permanently closing down the manufacturing facilities; or if necessary, withholding, confiscating, or destroying the products in question.

Quality and Product LiabilityThis refers to the responsibility of a manufacturer or vendor of goods to compensate for injury caused by defective merchandise that it has provided for sale. When individuals are harmed by an unsafe product, they may have a Cause of Action against the persons who designed, manufactured, sold, or furnished that product. The law has changed from caveat emptor ("let the buyer beware") to Strict Liability for manufacturing defects that make a product unreasonably dangerous. A manufacturer can be held liable for negligence if lack of reasonable care in the production, design, or assembly of the manufacturer's product caused harm. For example, a manufacturing company might be found negligent if its employees did not perform their work properly or if management sanctioned improper procedures and an unsafe product was made. Breach of warranty refers to the failure of a seller to fulfill the terms of a promise, claim, or representation made concerning the quality or type of the product. The law assumes that a seller gives certain warranties concerning goods that are sold and that he or she must stand behind these assertions. Misrepresentation in the advertising and sales promotion of a product refers to the process of giving consumers false security about the safety of a particular product, ordinarily by drawing attention away from the hazards of its use. An action lies in the intentional concealment of potential hazards or in negligent misrepresentation. The key to recovery on the basis of misrepresentation is the plaintiff's ability to prove that he relied upon the representations that were made. Misrepresentation can be argued under a theory of breach of express warranty or a theory of strict tort liability. Strict liability involves extending the responsibility of the vendor or manufacturer to all individuals who might be injured by the product, even in the absence of fault. Injured guests, bystanders, or others with no direct relationship to the product may sue for damages caused by the product. An injured party must prove that the item was defective, the defect proximately caused the injury, and the defect rendered the product unreasonably dangerous. Remedies to Product Liability 1. Attention to design to reduce the possibility of defects and errors 2. Documentation of design processes to provide supportive evidence in case of any liability claims 33


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3. Record evidence of all tests and procedures of critical product characteristics 4. Examination of all possible areas of defects and errors so as to eliminate and reduce their chances of occurrences 5. Attach all relevant warning and instructions labels in all products at all times. 6. Testing the products in all extreme and possible scenarios to identify and rectify problems 7. Designing for environmental considerations during the design of the product.

Enforcement of Quality Laws in KenyaQuality policies in Kenya are mainly established through the legislature creating Acts of Parliament. Several institutions have been created to engage in management of quality in the Kenya. They include; 1. Kenya Bureau of Standards 2. National Environment Management Authority 3. Ministry of Industrialization 4. Kenya Plant Inspectorate Services (KEPHIS) 5. Kenya legal System and other Acts of Parliament such as Public Procurement and regulation Act. All entities formed through the Acts of parliament will enforce and execute their mandate through the Kenyan Court system in case of violations. The challenges faced in enforcing quality practices in Kenya include; 1. Corruption 2. Lack of adequate resources 3. Lack of awareness on legal quality issues 4. Capacity challenges 5. Political challenges 6. Poor policies from the government

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TOPIC 5: UNDERSTANDING COMPLEXITY IN QUALITYPeople define quality in many ways. Some think of quality as superiority or excellence, others view it as a lack of manufacturing or service defects, still others think of quality as related to product features or price. Followings are some of many ways to look at quality. 1. perfection 2. consistency 3. eliminating waste 4. speed of delivery 5. compliance with policies and procedures 6. providing a good, usable product 7. doing it right the first time 8. delighting or pleasing customers 9. total customers service and satisfaction Today most managers agree that the main reason to pursue quality is to satisfy customers. The American National Standards Institute (ANSI) and the American Society for Quality (ASQ) define quality as "the totality of features and characteristics of a product or service that bears on its ability to satisfy given needs. The view of quality as the satisfaction of customer needs is often called fitness for use. In highly competitive markets, merely satisfying customer needs will not achieve success. To beat the competition, organizations often must exceed customer expectations. Thus, one of the most popular definitions of quality is meeting or exceeding customer expectations. Quality in Manufacturing Well-developed quality systems have existed in manufacturing for some time. However, these systems focused primarily on technical issues such as equipment reliability, inspections, defect 35


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measurement, and process control. The transition to a customer-driven organization has caused fundamental changes in manufacturing practices, changes that are particularly evident in areas such as product design, human resource management, and supplier relations. Product design activities, for example, now closely integrate marketing, engineering, and manufacturing operations. Human resource practices concentrate on empowering workers to collect and analyze data, make critical operations decisions, and take responsibility for continuous improvements, thereby moving the responsibility for quality from the quality control department onto the factory floor. Suppliers have become partners in product design and manufacturing efforts. Many of these efforts were stimulated by the automobile industry, which forced their network of suppliers to improve quality. Manufactured products have several quality dimensions including the following: Performance: a products primary operating characteristics measured in specific quantitative terms which allows comparison and ranking e. g speed, power, acceleration etc Feature: the bells and whistles of a product. The non-operating characteristics of a product that accompany a product offering. They are nonetheless very important to the customer. Reliability: the probability of a products surviving over a specified period of time under stated Conditions of use Conformance: the degree to which physical and performance characteristics of a product match pre-established standards. Durability: the amount of use one gets from a product before it physically deteriorates or until replacement is preferable. Serviceability: the ability to repair a product quickly and easily. Aesthetics: how a product looks, feels, sounds, tastes, or smells. Perceived quality: subjective assessment resulting from image, advertising, or brand names.

Most of these dimensions revolve around the design of the product. Quality in Services Service can be defined as any primary or complementary activity that does not directly produce a physical productthat is, the non goods part of the transaction between buyer (customer) and seller (provider). A service might be as simple as handling a complaint or as complex as approving a home mortgage. Service organizations include hotels; health, legal, engineering, and other professional services; educational institutions; financial services; retailers; transportation; and public utilities. Today services account for nearly 80 percent of the U.S., Singapore and Sweden workforce. The importance of quality in services cannot be underestimated, as statistics from a variety of studies reveals: 36


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The average company never hears from more than 90 percent of its unhappy customers. For every complaint it receives, the company has at least 25 customers with problems, about one-fourth of which are serious.

Of the customers who make a complaint, more than half will do business again with that organization is their complaint is resolved. If the customer feels that the complaint was resolved quickly, this figure jumps to about 95 percent.

The average customer who has had a problem will tell nine or ten others about it. Customers who have had complaints resolved satisfactorily will only tell about five others. It costs six times more to get a new customer than to keep a current customer.

So why do many companies treat customers as commodities? In Japan the notion of customer is equated with honored guest. Service clearly should be at the forefront of a firms priorities. The service sector began to recognize the importance of quality several years after manufacturing had done so. This can be attributed to the fact that service industries had not confronted the same aggressive foreign competition that faced manufacturing. Another factor is the high turnover rate in service industry jobs, which typically pay less than manufacturing jobs. Constantly changing personnel makes establishing a culture for continuous improvement more difficult. The production of services differs from manufacturing in many ways, and these differences have important implications for managing quality. The most critical differences are: 1. Customer needs and performance standards are often difficult to identify and measure, primarily because the customers define what they are, and each customer is different. 2. The production of services typically requires a higher degree of customization than does manufacturing. Doctors, lawyers, insurance salespeople, and food-service employees must tailor their services to individual customers. In manufacturing, the goal is uniformity. 3. The output of many service systems is intangible, whereas manufacturing produces tangible, visible products. Manufacturing quality can be assessed against firm design specifications, but service quality can only be assessed against customers subjective, nebulous expectations and past experiences. Manufactured goods can be recalled or replaced by the manufacturer, but poor service can only be followed up by apologies and reparations. 4. Customers often are involved in the service process and present while it is being performed, whereas manufacturing is performed away from the customer. For example, customers of a quick-service restaurant pace their own orders, carry their food to the table, and are expected to clear the table when they have finished eating. 5. Services are produced and consumed simultaneously, whereas manufactured goods are produced prior to consumption. This gives little room for correction of errors as opposed to 37


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the manufacturing sector where corrective action can be taken even before the product reaches to the customer Challenges involved in Service offering include the following; 1. Services are generally labor intensive, whereas manufacturing is more capital intensive. The quality of human interaction is a vital factor for services that involve human contact. For example, the quality of hospital care depends heavily on interactions among the patients, nurses, doctors, and other medical staff. Hence, the behavior and morale of service employees is critical in delivering a quality service experience. 2. Many service organizations must handle very large numbers of customer transactions. For example, on a given business day, Equity Bank of Kenya might process more than 2 million transactions for 4.5 million customer through its branches and cash machines, or Fed Ex might handle more than 1.5 million shipments across the globe. Such large volumes increase the opportunity for error. These differences have made it difficult for many service organizations to apply total quality principles. Many service organization have well-developed quality assurance systems. Most of them, however, are based on manufacturing analogies and tend to be more product-oriented than service-oriented. Many of the key dimensions of product quality apply to services. For instance, on time arrival for an airline is a measure of service performance; frequent flyer awards and business class sections represent features. A typical hotels quality assurance systems focus on technical specifications such as properly made-up rooms. However, service organizations have special requirements that manufacturing systems cannot fulfill. The most important dimensions of service quality include the following; you may remember the most important ones by RATTER: 1. Reliability: How much reliable is the service provider? 2. Accessibility and convenience: Is the service easy to obtain? 3. Timeliness: Will a service be performed when promised? 4. Completeness: Are all items in the order included? 5. Consistency: Are services delivered in the same fashion for every customer, and every time for the same customer? 6. Tangibility: after the service is over, is there anything to take home to remind the service experience? 7. Empathy or Courtesy: Do frontline employees greet each customer cheerfully? 8. Responsiveness: Can service personnel react quickly and resolve unexpected problems? Service organizations must look beyond product orientation and pay significant attention to 38


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customer transactions and employee behavior. Several points that service organizations should consider are as follows: The quality characteristics that a firm should control may not be the obvious ones. Customer perceptions are critical although it may be difficult to define what the customer wants. For example, speed of service is an important quality characteristic, yet perceptions of speed may differ significantly among different service organization and customers. Marketing and consumer research can play a significant role. Behavior is a quality characteristic. The quality of human interaction is vital in every transaction that involves human contact. For example, banks have found that the friendliness of tellers is a principal factor in retaining depositors. Image is a major factor in shaping customer expectations of a service and in setting standards by which customers evaluate that service. Establishing and measuring service levels may be difficult. Service standards, particularly those relating to human behavior, are often set judgmentally and are hard to measure. In manufacturing, it is easy to quantify output, scrap, and rework. Customer attitudes and employee competence are not as easily measured. Quality control activity may be required at times or in places where supervision and control personnel are not present. Often work must be performed at the convenience of the customer. This calls for more training of employees and self-management. These issues suggest that the approach to managing quality in services differs from that used in manufacturing. However, manufacturing can be seen as a set of interrelated services, not only between the company and the ultimate consumer, but within the organization. Manufacturing is a customer of product design; assembly is a customer of manufacturing; sales are a customer of packaging and distribution. If quality is meeting and exceeding customer expectations, then manufacturing takes on a new meaning, far beyond product orientation. Total quality provides the umbrella under which everyone in the organization can strive to create customer satisfaction. Cost of Quality The reason quality has gained such prominence is that organizations have gained an understanding of the high cost of poor quality. Quality affects all aspects of the organization and has dramatic cost implications. The most obvious consequence occurs when poor quality creates dissatisfied customers and eventually leads to loss of business. However, quality has many other costs, which can be divided into two categories. The first category consists of costs necessary for achieving high quality, which are called quality control costs. These are of two types: prevention costs and appraisal costs. The second category consists of the cost consequences of poor quality, which are 39


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called quality failure costs. These include external failure costs and internal failure costs. The first two costs are incurred in the hope of preventing the second two. Prevention costs are all costs incurred in the process of preventing poor quality from occurring. They include quality planning costs, such as the costs of developing and implementing a quality plan. Also included are the costs of product and process design, from collecting customer information to designing processes that achieve conformance to specifications. Employee training in quality measurement is included as part of this cost, as well as the costs of maintaining records of information and data related to quality. Appraisal costs are incurred in the process of uncovering defects. They include the cost of quality inspections, product testing, and performing audits to make sure that quality standards are being met. Also included in this category are the costs of worker time spent measuring quality and the cost of equipment used for quality appraisal. Internal failure costs are associated with discovering poor product quality before the product reaches the customer site. One type of internal failure cost is rework, which is the cost of correcting the defective item. Sometimes the item is so defective that it cannot be corrected and must be thrown away. This is called scrap, and its costs include all the material, labor, and machine cost spent in producing the defective product. Other types of internal failure costs include the cost of machine downtime due to failures in the process and the costs of discounting defective items for salvage value. External failure costs are associated with quality problems that occur at the customer site. These costs can be particularly damaging because customer faith and loyalty can be difficult to regain. They include everything from customer complaints, product returns, and repairs, to warranty claims, recalls, and even litigation costs resulting from product liability issues. A final component of this cost is lost sales and lost customers. For example, manufacturers of lunch meats and hot dogs whose products have been recalled due to bacterial contamination have had to struggle to regain consumer confidence. Other examples include auto manufacturers whose products have been recalled due to major malfunctions such as problematic braking systems and airlines that have experienced a crash with many fatalities. External failure can sometimes put a company out of business almost overnight. Companies that consider quality important invest heavily in prevention and appraisal costs in order to prevent internal and external failure costs. The earlier defects are found, the less costly they are to correct. For example, detecting and correcting defects during product design and product production is considerably less expensive than when the defects are found at the customer site. External failure costs tend to be particularly high for service organizations. The reason is that with a service the customer spends much time in the service delivery system, and there are fewer opportunities to correct defects than there are in 40


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manufacturing. Examples of external failure in services include an airline that has overbooked flights, long delays in airline service, and lost luggage.

Systems Approach to Quality

Diagram depicting an organization as a system

Systems theory fundamentals An organization is a complex relationship involving people, physical assets, funds and processes, all aligned to achieving predetermined goals and objectives. An organization takes the inputs and adds value to them by means of processes and procedures, which transforms them into outputs. The effectiveness of this transformation is measured by the outcomes. Systems theory and continuous improvement Systems theory holds that an organization can get better outputs, and as a result, better outcomes, by controlling the quality of both inputs and the transformation process (the first two columns in the diagram). Therefore, emphasis should be

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