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Chapter 11Chapter 11

Building and Sustaining Building and Sustaining Total Quality OrganizationsTotal Quality Organizations

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Why Adopt TQ Philosophy?Why Adopt TQ Philosophy?

Reaction to competitive threat to Reaction to competitive threat to profitable survivalprofitable survival

An opportunity to improveAn opportunity to improve

Successful TQ OrganizationsSuccessful TQ Organizations

Successful total quality organizations Successful total quality organizations require:require:– Adoption of sound practicesAdoption of sound practices

– Effective organizationEffective organization

– Readiness for changeReadiness for change

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Corporate Culture and ChangeCorporate Culture and Change

Corporate cultureCorporate culture is a company’s is a company’s value system and its collection of value system and its collection of guiding principlesguiding principles

Cultural values often seen in mission Cultural values often seen in mission and vision statementsand vision statements

Culture reflected by management Culture reflected by management policies and actionspolicies and actions

Organizational InfrastructureOrganizational Infrastructure

Organizational Infrastructure: Organizational Infrastructure: – organization’s management systemsorganization’s management systems

and practices and practices

– Vital to successful TQ implementationVital to successful TQ implementation

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Best Practices: Infrastructure Best Practices: Infrastructure Design Design (1 of 3)(1 of 3)

Low performersLow performers– process management fundamentalsprocess management fundamentals– customer responsecustomer response– training and teamworktraining and teamwork– benchmarking competitorsbenchmarking competitors– cost reductioncost reduction– rewards for teamwork and qualityrewards for teamwork and quality

Increasing levels of teamwork and participation tends to Increasing levels of teamwork and participation tends to benefit low performers the mostbenefit low performers the most

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Best Practices: Infrastructure Best Practices: Infrastructure Design Design (2 of 3)(2 of 3)

Medium performersMedium performers– use customer input and market researchuse customer input and market research– select suppliers by qualityselect suppliers by quality– flexibility and cycle time reductionflexibility and cycle time reduction– compensation tied to quality and teamworkcompensation tied to quality and teamwork

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Best Practices: Infrastructure Best Practices: Infrastructure Design Design (3 of 3)(3 of 3)

High performersHigh performers– self-managed and cross-functional teamsself-managed and cross-functional teams– strategic partnershipsstrategic partnerships– benchmarking world-class companiesbenchmarking world-class companies– senior management compensation tied to qualitysenior management compensation tied to quality– rapid responserapid response

Seeking strategic partnerships and developing Seeking strategic partnerships and developing new products based on customer input benefit new products based on customer input benefit high performershigh performers

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Areas of Critical Self-AssessmentAreas of Critical Self-Assessment Self-AssessmentSelf-Assessment – reviewing company’s current – reviewing company’s current

quality practices and proceduresquality practices and procedures

Self-Assessment should involve:Self-Assessment should involve:– Management involvement and leadershipManagement involvement and leadership– Product and process designProduct and process design– Product controlProduct control– Customer and supplier communicationsCustomer and supplier communications– Quality improvementQuality improvement– Employee participationEmployee participation– Education and trainingEducation and training– Quality informationQuality information

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ISO 9000 StandardsISO 9000 Standards Adopted by International Organization Adopted by International Organization

for Standardization in 1987for Standardization in 1987 Quality system standards that guide a Quality system standards that guide a

company’s performance of specified company’s performance of specified requirementsrequirements

Covers design/development, production, Covers design/development, production, installation, and serviceinstallation, and service

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

The standards have five objectives:The standards have five objectives:

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

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

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

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

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

5.5. Provide confidence that quality system Provide confidence that quality system requirements are fulfilledrequirements are fulfilled

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Structure of ISO 9000 Structure of ISO 9000 StandardsStandards

The standards define three levels of The standards define three levels of quality assurance:quality assurance:– Level 1 (ISO 9001) - product design, Level 1 (ISO 9001) - product design,

development, production, installation, and development, production, installation, and serviceservice

– Level 2 (ISO 9002) - production and Level 2 (ISO 9002) - production and installationinstallation

– Level 3 (ISO 9003) - final inspection and Level 3 (ISO 9003) - final inspection and testtest

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ISO 9001 RequirementsISO 9001 Requirements

Management responsibility

Quality system

Contract review

Design control

Document & data control

Purchasing

Control of customer- supplied products

Product identification and traceability

Process controlInspection and testing

Control of inspection, measuring, & test equipment

Inspection & test status

Control of nonconforming product

Corrective & preventive action

Handling, storage, packaging, preserving, & delivering

Control of quality records

Internal quality audits

Training

Servicing

Statistical techniques

Say what you do; Do what you Say!!

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ISO 9000 in the U.S.ISO 9000 in the U.S.

By 1993, only 550 U.S. company sites were By 1993, only 550 U.S. company sites were certified as compared with 20,000 certified as compared with 20,000 companies in United Kingdomcompanies in United Kingdom

By 1997, over 12,000 U.S. company sites By 1997, over 12,000 U.S. company sites were certified as compared with over were certified as compared with over 200,000 throughout Europe200,000 throughout Europe

Avg. cost for ISO 9000 registration is Avg. cost for ISO 9000 registration is $20,000 and costs companies $100,000 $20,000 and costs companies $100,000 (must be recertified every 3 years)(must be recertified every 3 years)

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QS 9000 StandardsQS 9000 Standards

Created in 1994 by automobile industryCreated in 1994 by automobile industry Interpretation and extension ofInterpretation and extension of

ISO 9000ISO 9000 Applies to all internal and external Applies to all internal and external

suppliers of production and service parts suppliers of production and service parts and materialsand materials

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ISO 14000 StandardsISO 14000 Standards

Established in 1996 to provide Established in 1996 to provide industries with structure for industries with structure for environmental management systemenvironmental management system

Unlike ISO 9000, does not require Unlike ISO 9000, does not require third-party registrationthird-party registration

U.S. Environmental Protection Agency U.S. Environmental Protection Agency (EPA) not yet formally endorsed (EPA) not yet formally endorsed standardsstandards

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Implementing Total Quality Implementing Total Quality Strategy: Key PlayersStrategy: Key Players

Senior managementSenior management Middle managementMiddle management WorkforceWorkforce

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Common Mistakes in TQ Common Mistakes in TQ Implementation Implementation (1 of 3)(1 of 3)

TQ regarded as a “program”TQ regarded as a “program” Short-term results are not obtainedShort-term results are not obtained Process not driven by focus on customer, Process not driven by focus on customer,

connection to strategic business issues, and connection to strategic business issues, and support from senior managementsupport from senior management

Structural elements block changeStructural elements block change Goals set too lowGoals set too low ““Command and control” organizational cultureCommand and control” organizational culture

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Common Mistakes in TQ Common Mistakes in TQ Implementation Implementation (2 of 3)(2 of 3)

Training not properly addressedTraining not properly addressed Focus on products, not processesFocus on products, not processes Little real empowerment is givenLittle real empowerment is given Organization too successful and complacentOrganization too successful and complacent Organization fails to address fundamental Organization fails to address fundamental

questionsquestions Senior management not personally and Senior management not personally and

visibly committedvisibly committed

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Common Mistakes in TQ Common Mistakes in TQ Implementation Implementation (3 of 3)(3 of 3)

Overemphasis on teams for cross-functional Overemphasis on teams for cross-functional problemsproblems

Employees operate under belief that more Employees operate under belief that more data are always desirabledata are always desirable

Management fails to recognize that quality Management fails to recognize that quality improvement is personal responsibilityimprovement is personal responsibility

Organization does not see itself as collection Organization does not see itself as collection of interrelated processesof interrelated processes