Transcript Managing Quality Integrating the Supply Chain

Chapter 1
Differing Perspectives on Quality
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Today, supply chains compete, not individual firms.
A firm’s supply chain, upstream and downstream, constrains and
enables the firm.
Firm’s must manage quality in their supply chain, upstream and
downstream.
Quality management is not “owned” by any one of the functional areas
such as operations, HRM, marketing, etc. All functional areas must own
their “quality management” processes.
There is no one way to improve quality. Firms must use the
contingency approach to assess the current position of the firm and
identify an effective strategy for improvement based on a clear
understanding of their company, market, customers, suppliers, and the
quality management alternatives. Improvement is based on the
contingent variables that are operative in the firm as it exists.
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Differing Perspectives on Quality
Chapter 1
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Chapter Overview
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What is Quality?
Differing Functional Perspectives on Quality
The Three Spheres of Quality
Other Perspectives on Quality
Arriving at a Common Perspective
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In chapter 1 through 3, we form the basis for the
contingency approach. To apply quality improvement on
a contingency basis we need to understand the foundation
that has been laid by leaders in the quality movement.
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Quality management involves flows: process flows, information flows,
material flows, and fund flows. Each of these flows has to operate
efficiently, effectively, and with quality. Like a river, we have upstream
and downstream flows. The sums of these flows make up the supply
chain for a firm.
Using the supply chain as the model for competition, we must
internalize external upstream and downstream processes from raw
materials to after-sale service.
The firm must integrate differing functions, expertise, and dimensions
of quality. This integration requires flexible, cross-functional, problemsolving and employees who can adapt to rapidly changing markets.
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Garvin’s definitions of quality based on the perspective of the viewer
(perception is reality)
 Transcendent - quality is intuitively understood but nearly impossible to
communicate
 Product-based – quality is found in the components and attributes of a
product
 User-based – if the customer is satisfied, the product has good quality
 Manufacturing-based – if the product conforms to design specifications, it
has good quality
 Value-based – if the product is perceived as providing good value for the
price, it has good quality
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Garvin’s dimensions (measures) of product quality
Performance
 Features
 Reliability
 Conformance
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Durability
 Serviceability
 Aesthetics
 Perceived Quality
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These different dimensions of quality are not mutually
exclusive.
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Performance
Features
Efficiency
with which a
product achieves its
intended purpose
Reliability
Conformance
(
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Performance
 Attributes that
supplement the product’s
basic performance – bells
and whistles
Features
Reliability
Conformance
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Performs
consistently
over the product’s useful life.
Performance
Features
Reliability
Conformance
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Performance
Features
Reliability
Adherence
to quantifiable
specifications within a
small tolerance – the most
traditional definition of
quality
Conformance
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 Tolerate stress or
trauma without failing
Durability
 Serviceability
 Aesthetics
 Perceived Quality
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 A product is serviceable if  Durability
it can be repaired easily
 Serviceability
and cheaply
 Aesthetics
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Perceived Quality
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 Subjective
characteristics such as
taste, feel, sound, look.
Durability
 Serviceability
 Aesthetics
 Perceived Quality
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 Quality as the customer
perceives it - image,
recognition, word of mouth.
Durability
 Serviceability
 Aesthetics
 Perceived Quality
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Parasuraman, Zeithamel, and Berry provide service quality
dimensions (measures):
Tangibles
 Service Reliability
 Responsiveness
 Assurance
 Empathy
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Services have more diverse quality attributes than products
because of wide variation created by high customer involvement.
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Tangibles
 Service Reliability
 Responsiveness
 Assurance
 Empathy
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Physical appearance of
the facility, equipment, and
personnel
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Tangibles
 Service Reliability
 Responsiveness
 Assurance
 Empathy
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 The ability of the service
provider to perform the
promised service
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Tangibles
 Service Reliability
 Responsiveness
 Assurance
 Empathy
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 The willingness of the
provider to be helpful and
prompt in providing service
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Tangibles
 The knowledge and
Service Reliability
 Responsiveness
 Assurance
 Empathy
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courtesy of the employees
and their ability to inspire
trust and confidence
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Tangibles
 Caring individualized
Service Reliability
 Responsiveness
 Assurance
 Empathy
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attention from the service
company
In service “If you are in it for the money, you probably won’t
survive.” If employees are constantly focused on efficiency,
they will not give the customers the feeling that they care. There
is no empathy, so there are no return customers.
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Why does it matter that different definitions of quality exist?
 Different functional areas have different definitions of quality.
 However, we want everyone in all functional areas to execute from
the same playbook with regard to the meaning of quality for the firm.
 Cross-functional teams must share a common definition of quality
so these diverse teams will be working for a common goal. All
functional areas must focus on what they need to do to meet the
customer’s definition of quality.
 However, cross-functional teams have poor communication because
of their different vocabularies, priorities, and cognitive styles.
 As organizational processes become more cross-functional, many of
these communication issues will resolve themselves.
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What is Quality?
Differing Functional Perspectives on Quality
Functional perspectives include:
 Supply Chain
 Operations
 Strategic Management
 Marketing
 Financial
 Human resource
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Supply Chain Management (SCM) Perspective
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Supply chain management (SCM) grew out of the concept of the value chain.
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The value chain includes inbound logistics, core processes (operations and
marketing), and outbound logistics – processes which directly add value to the
product or service.
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Functions such as HRM, IS, and Purchasing support the core processes in the
value chain – non-value added processes which provide a context for the
value chain processes.
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Upstream activities include all of those activities involving interaction with
suppliers.
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Downstream activities include shipping and logistics, customer support, and
focusing on delivery reliability.
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Supply Chain Management (SCM) Perspective
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Supplier development activities include evaluating, training, and
implementing systems with suppliers, such as electronic data interchange
(EDI) to link customer purchasing systems to supplier enterprise resource
planning systems (ERP).
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Supplier qualification involves evaluating supplier performance with regard to
conformance rates, cost levels, delivery reliability, etc. using supplier filters,
such as ISO/TS 16949 (an automotive standard), ISO 9000:2000, and QS9000.
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Value stream mapping flowcharts processes to determine where customer
value is created as well as identifying non-value-added process steps. Value
stream mapping also involves analyzing processes from a systems perspective
such that upstream and downstream effects of core process changes can be
evaluated.
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Operations Management (OM) Perspective
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The OM view of quality is rooted in the engineering approach and was
the first functional field of management to adopt quality as its own.
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OM is concerned about product and process design. However, rather
than focusing on only the technical aspects of these activities, OM
concentrates on the management and continuous improvement of
conversion processes.
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OM uses the systems view which is the basis for quality management.
The systems view maintains that product quality is the result of the
interactions of several variables (manpower, materials, methods,
machinery, feedback, environment, time, and technology) which
comprise a system, and these variables and their interactions are the cause
of quality problems.
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Operations Management (OM) Perspective
Inputs
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Planning
Organizing
Controlling
Process
Control
Customer
Feedback
Conversion Process
Outputs
Customer
OM has an operations-marketing interface which focuses
priorities on the customer in the product and process design and
operations decisions.
Ferdows and Demeyer link the strategic view of OM to quality
management with their sand-cone model: quality is the basis on which
lasting improvement in other competitive dimensions (reliability dependability, cycle time - speed of delivery of concept to market, and
cost - efficiency) are accomplished.
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The Sand Cone Model for Priorities
Cost (Efficiency)
Cycle Time (Speed)
Reliability (Dependability)
Quality
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Strategic Management Perspective
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For Quality Management to be pervasive in a firm it needs to be included in all
of the firm’s business processes including Strategic Planning.
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Strategy is the planning process used by an organization to achieve a set of
long-term goals. This planned course of action must be cohesive and coherent
in terms of goals, policies, plans, and sequencing to achieve quality
improvement.
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Company strategies are based on a mission (why the organization exists) and
core values (guiding operating principals that simplify decision making).
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Mission and core values influence organizational culture, a major determinant
(and sometimes roadblock) to the successful implementation of quality
improvements.
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Strategic Management Perspective
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The ultimate goal of strategic quality planning is to aid an
organization to achieve sustainable competitive advantage.
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Alignment refers to consistency between different operational subplans and the overall strategic plan.
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Madu and Kuei propose a strategy process based on plan-do-checkact:
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plan – strategy formulation
do – implement strategy in a pilot
check – evaluate pilot implementation and make adjustments
act – full scale strategy implementation
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Financial Perspective
 “Will quality management pay us financial benefits?”
The answer is an unqualified “maybe.”
 Deming made the first theoretical link between quality improvement and financial results:
Quality Improvement leads to reduction of defects, improved organizational
performance, and increased employment.
 Finance is concerned with the relationship between the risks of investments and their
potential return on investment to maximize return for a given level of risk.
 Finance professionals communicate using an accounting language: the language of
financial management is money.
 Quality professionals must translate the quality concerns into the costs of (poor) quality in
terms of lost sales, inspection, scrap, and rework.
 The pursuit of quality does not safeguard a company against bad management because of
intervening variables (e.g., products that don’t meet customer needs).
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Financial Perspective - The Deming Value Chain
Improve Quality
Decrease Costs
Improve Productivity
Capture Market
Stay in Business
Provide More jobs
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Finance professionals believe the law of diminishing marginal returns
applies to quality improvement.
Cost
Total Quality Costs =
Sum of Losses +
Costs of Improving Quality
Losses Due to
Poor Quality
Costs of Improving
Quality
Minimum
Cost
Minimum Sum of
Losses + Costs
Quality
Optimum Quality Level
The financial perspective on quality relies on quantified measurable,
results oriented thinking.
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Human Resources (HRM) Perspective
 It is impossible to implement quality without the commitment and action of
employees (want hogs – not chickens).
 Employee empowerment moves decision making to the lowest level possible in
the organization.
 Organizational design is concerned with the design of reward systems, pay
systems, organizational structure, compensation, training programs, and
employee grievance and arbitration.
 HRM advocates the employee to management and the company’s needs to the
employee.
 Quality management flourishes where the employees’ and the company’s needs
are aligned – what’s good for the company is good for the employees.
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HRM Perspective
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HRM Functions
 Job analysis involves collecting detailed information about each job. This
information includes tasks, skills, abilities, and knowledge requirements for
each job. This information is used to define a job description which is used to
set pay levels. The bureaucratic delay in accomplishing job analysis to
modify job descriptions can limit the ability of the organization to achieve
the flexibility needed for quality management.
 Selection in recruitment and hiring decisions involves finding employees
who have the technical and behavioral preparation to perform the tasks for
a job, and who are fast learners during quality improvements. The selection
process is critical because people, politics, and culture constrain and enable
organizational change.
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HRM Perspective
 HRM Functions
 Effective training provides for standardizing methods for solving
unstructured problems in quality management. Top managers and lowranking employees should use similar processes for solving problems. This is
called vertical deployment of quality management. Different departments
should use similar processes for solving problems to achieve horizontal
deployment of quality management.
 Performance appraisals and evaluations are key methods for motivating
employees. Face-to-face reporting sessions and 360-degree evaluations (an
employee’s peers, supervisors, and subordinates evaluate the employee) are
used.
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HRM Perspective
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The following table distinguishes between traditional HRM and total quality human
resources management.
Process Characteristics
Content Characteristics
Traditional HRM
Unilateral role
Centralized
Push - Demand
Administrative
Single-mindedness
Compartmentalized
Worker-oriented
Performance
Job-based
TQHRM
Consulting role
Decentralized
Pull – Empower
Developmental
Pluralistic
Holistic
System-oriented
Satisfaction
Person-based
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Marketing Perspective
 Traditional marketing involved directing the flows of products and services from producer
to consumer. The new relationship marketing directs its attention toward satisfying the
customer and delivering value to the customer.
 Companies are basing sales commissions on perceptual measures of customer satisfaction
rather than volume of sales because the value of the loyal customer is much greater than an
individual transaction.
 The marketer focuses on the perceived quality of products and services, quality as the
customer views it, and marketing efforts are focused on managing quality perceptions.
 The primary marketing tools for influencing customer perceptions of quality have been
pricing and advertising, but these tools are inadequate for influencing perceptions of
quality because not all products are priced based on cost of materials and production
only.
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Marketing Perspective
 Marketing systems involve interactions between the producing organizations, the
intermediaries, and the final consumer, and it is often very difficult for firms to agree
on who the customer is.
 Marketing is also focused on service at the time of the transaction and after-sales
support.
 Marketing interacts closely with engineering and operations in product design to bring
the voice of the customer into the design process.
 Customer service surveys are used for assessing the multiple dimensions of quality.
 The customer is the focus of marketing-related quality improvement in developing
specialized products for different customers, which is in conflict with standardizing
products to reduce complexity by operations.
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The focus of quality management is to manage properly the interactions among
people, technology, inputs, processes, and systems to provide outstanding
products and services to customers.
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With total quality management (TQM), the role of the quality department has
moved from a technical, inspection, policing role to a supportive training and
coaching role.
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A strong knowledge of quality is best coupled with technical expertise in
business disciplines such as materials management, supply chain management,
finance, accounting, operations management, HRM, strategy, and industrial
engineering.
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The goal is to completely immerse the organization in quality thinking and
commitment.
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The Three Spheres of Quality
Quality
Management
Quality
Assurance
(proactive)
Quality
Control
(reactive)
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Quality Control
 The control process is based on the scientific method which includes the
phases of analysis, relation, and generalization.
▪ Analysis involves breaking the process into its fundamental pieces.
▪ Relation involves understanding the relationships between the parts.
▪ Generalization involves perceiving how interrelationships apply to the
larger phenomenon of quality being studied.
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Quality Control
 Activities relating to quality control include:
▪
▪
▪
▪
▪
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Monitoring process capability and stability
Measuring process performance
Reducing process variability
Optimizing processes to nominal measures
Performance acceptance sampling
Developing and maintaining control charts
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Quality Assurance
 Assurance refers to proactive activities associated with guaranteeing the
quality of a product or service, especially during the design phase.
 By contrast, quality control is reactive, rather than proactive, by detecting
quality problems after they occur.
 Quality assurance activities include:
▪
▪
▪
▪
▪
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Failure mode and effects analysis
Concurrent engineering
Experimental design
Process improvement
Design team formation and management
Off-line experimentation
Reliability/durability product testing
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Quality Management
 The management processes that overarch and tie together the control and
assurance activities make up quality management.
 The integrative view of quality management supports the idea that quality
is the responsibility of all management, not just quality managers.
 All managers, supervisors, and employees are involved in the following
quality management activities:
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▪
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Planning for quality management
Creating a quality organizational culture
Providing leadership and support
Providing training and retraining
Designing an organizational system that reinforces quality ideals
Providing employee recognition
Facilitating organizational communication
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 A customer-based perspective on quality involves the concept of value-added.
A value-added perspective on quality involves a subjective assessment of the
efficacy of every step of the process for the customer. A value-added activity can
be identified by asking , “Would this activity matter to the customer?” “Would
the customer pay for this activity?”
 A contingency perspective of quality is based on the theory that businesses
differ in key areas such as mission, core competence, customer attributes, target
markets, technology deployment, employee knowledge, management style,
culture, and a myriad of other environmental variables.
 Contingency theory presupposes that there is no theory or method for operating
a business that can be applied in all instances. A coherent quality strategy will
need to address these key environmental variables. All organizations pursue
different paths and strategies to achieve quality.
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