Chapter 14
Implementing and Validating
the Quality System
S. Thomas Foster, Jr.
Boise State University
Slides Prepared by
Bruce R. Barringer
University of Central Florida
©2001 Prentice-Hall
Chapter Overview
• Building Blocks for the System of Quality
Improvement
• Internal Validation: Documenting and
Assessing the Quality System
• Quality Audits
• Externally Validating the Quality System
© 2001 Prentice-Hall
Transparency 14-2
Introduction
• When you reach best-in-class or best-in-theworld status, how do you get beyond that point?
• If you have reached the limit of your knowledge
and yet feel that more improvement can be made,
how do you determine the next step?
• Answering these questions is the goal of this
chapter.
© 2001 Prentice-Hall
Transparency 14-3
Introduction
• World-class competitors were good at performing
the fundamentals.
• World-class performers have a good
understanding of where they are and where they
want to be.
© 2001 Prentice-Hall
Transparency 14-4
Building Blocks for the System of
Quality Improvement
• A quality system depends on the interactions
of many different variables.
• Figure 14.1 shows a quality system model
containing many different variables.
• Quality improvement requires the interactions
of many different disciplines to create
products, services, processes, and systems that
effectively serve customers.
© 2001 Prentice-Hall
Transparency 14-5
Building Blocks for the System of
Quality Improvement
• Figure 14.1 Quality system model
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Transparency 14-6
Building Blocks for the System of
Quality Improvement
Slide 1 of 5
People
For a quality system
to function effectively,
employees must
understand that they
are integral to that
system.
© 2001 Prentice-Hall
Organizational Learning
and Knowledge
Learning needs
assessment, training
design, and delivery
of training are
important for
competitiveness.
Transparency 14-7
Building Blocks for the System of
Quality Improvement
• People
-- The model in Figure 14.1 is built on a base of
people.
-- People represent the core of a firm’s capabilities
because they provide the intellect, empathy, and
ability that is required to provide outstanding
customer service.
-- System must be in place to develop, train, and
motivate people to serve the customer properly.
© 2001 Prentice-Hall
Transparency 14-8
Building Blocks for the System of
Quality Improvement
• People
-- For a quality system to function effectively,
employees must understand that they are integral
to that system.
-- They must be made to feel important and
necessary for the continual survival and growth
of the company.
-- Another people-related issue involves corporate
restructure and reengineering.
© 2001 Prentice-Hall
Transparency 14-9
Building Blocks for the System of
Quality Improvement
• People
-- Quality improvement efforts, when performed
properly, are associated with improved moral
and improved confidence among employees that
company is becoming more competitive and the
employees’ personal security is improving.
-- Many managers forget that human beings
desire security.
-- Some employees will forego higher wages in
order to achieve higher job security.
© 2001 Prentice-Hall
Transparency 14-10
Building Blocks for the System of
Quality Improvement
• Organizational Learning and knowledge
-- Knowledge is the capital that fuels outstanding
quality results.
-- Learning need assessment, training design, and
delivery of training are important for
competitiveness.
-- Outstanding customer service results from
providing employees with outstanding knowledge
and training.
© 2001 Prentice-Hall
Transparency 14-11
Building Blocks for the System of
Quality Improvement
Slide 2 of 5
Culture
Companies that respond
quickly to customers’
needs have cultures
where decision making
is open, information is
available to everyone,
and risks are rewarded.
© 2001 Prentice-Hall
Closeness to Customers
Closeness to customers
describes the firm’s
understanding of the
customers, their needs,
and their wants.
Transparency 14-12
Building Blocks for the System of
Quality Improvement
• Culture
-- Culture refers to the norms and beliefs that lead to
decision-making patterns and actions in an
organization.
-- Some of the key aspects of culture include attitudes
toward changes; presence or absence of fear; degree of
openness, fairness, and truth; and employee behavior
at all levels.
-- Companies that respond quickly to customers’ needs
have cultures where decision making is open,
information is available to everyone, and risks are
rewarded.
© 2001 Prentice-Hall
Transparency 14-13
Building Blocks for the System of
Quality Improvement
• Closeness to customer
-- Closeness to customers describes the firm’s
understanding of the customers, their needs, and
their wants.
-- Note that the building block “ Closeness to
customer” is built on people, organizational
learning and knowledge, and culture.
-- For customer closeness to be achieved, systems
must be put in place for gathering data about
customers, analyzing the data, and implementing
change
systems based on the analysis.Transparency 14-14
© 2001 Prentice-Hall
Building Blocks for the System of
Quality Improvement
• Closeness to customer
-- Not only is an understanding of customers required,
but also an understanding of the competitor’s
customers.
-- Customer closeness engenders loyalty.
-- Brand loyalty may become less important as time
passes and consumers move to an ethos where product
choices are valued over brand.
-- In this environment, personal relationships between
vendors, suppliers, and customers become important
differentiators.
© 2001 Prentice-Hall
Transparency 14-15
Building Blocks for the System of
Quality Improvement
• Closeness to customer
-- The level of customer contact achieved in
service requires an understanding not only of
customers’ current wants but also of their
emerging wants.
-- An understanding of the types of customers that
a firm will serve and a focus on key capabilities
are important in determining to which customers
a firm should become close.
© 2001 Prentice-Hall
Transparency 14-16
Building Blocks for the System of
Quality Improvement
Slide 3 of 5
Information and Finance
Information systems
provide the core of
the support systems
for satisfying the
customer.
© 2001 Prentice-Hall
Transparency 14-17
Building Blocks for the System of
Quality Improvement
• Information and finance
-- Information systems provide the core of support
system for satisfying the customer.
-- Well-designed information systems, such as
described at Ritz-Carlton hotels ( see Quality
Highlight 8.1 on page 229), become the
institutional memory for customer needs.
-- If information systems are not well designed
and information is difficult or slow to obtain,
customers will go elsewhere.
© 2001 Prentice-Hall
Transparency 14-18
Building Blocks for the System of
Quality Improvement
• Information and Finance
-- EDI is of increasing importance for satisfying customer
needs.
-- The objective of a quality information system is to
gather information relating to the key variables that
affect customer service and product quality.
-- The scope of the information system includes the entire
organization, linkages to customers, and linkages to
suppliers.
-- The action required to make the information system
effective are problem identification, analysis, and
corrective action.
© 2001 Prentice-Hall
Transparency 14-19
Building Blocks for the System of
Quality Improvement
• Information and Finance
-- Financial resources are needed to provide the
infrastruture and services that customers want.
-- Most firm that are world-class examples of quality
are also financially successful.
-- High quality can improve bottom-line results and
enhance financial stability.
-- Finance is a two-way street. Companies that are
financially successful are able to invest in systems that
will satisfy customers; and high-quality processes,
products, and services lead to financial success.
© 2001 Prentice-Hall
Transparency 14-20
Building Blocks for the System of
Quality Improvement
Slide 4 of 5
Three Spheres of Quality
Quality planning
and management
Quality
assurance
© 2001 Prentice-Hall
Quality
Control
Transparency 14-21
Building Blocks for the System of
Quality Improvement
Slide 5 of 5
• Notice that they are closely related to enterprise
capabilities and customer service.
-- Enterprise capabilities
– Are those capabilities firms have that make
them unique and attractive to customers.
-- Customer service
– Is both a goal and an outcome of system.
© 2001 Prentice-Hall
Transparency 14-22
Building Blocks for the System of
Quality Improvement
• The Interactive Approach
-- The integrative systems view recognizes that all
the building blocks must be in place in all the
functional areas and throughout all levels of the
organization for quality improvement to be both
horizontally and vertically deployed in worldclass companies.
© 2001 Prentice-Hall
Transparency 14-23
Building Blocks for the System of
Quality Improvement
• Alignment between the Quality System and
Strategy
-- The design of the quality system must have focus.
-- A strategy framework is necessary to achieve this
focus, which means that the design of the quality system
must be in alignment with the strategic objectives and
plans of the organization.
-- Hoshin planning or policy deployment provides a
framework for achieving alignment through the catchball process.
© 2001 Prentice-Hall
Transparency 14-24
Internal Validation: Documenting and
Assessing the Quality System
• Once a quality system has been established, the
system must be allowed to operate effectively
over time.
• The goal of self-assessment is to observe
current practices, to assess those practices, and
to identify gaps in deployment.
• Figure 14.2 shows a generic process for
performing self-assessment in a four-step
process of surveying, categorizing,
investigating, and evaluating.
© 2001 Prentice-Hall
Transparency 14-25
Internal Validation: Documenting and
Assessing the Quality System
• Figure 14.2 Internal environmental analysis process
© 2001 Prentice-Hall
Transparency 14-26
Internal Validation: Documenting
and Assessing the Quality System
Slide 1 of 2
• Four Step Self Assessment Process
– Step 1: Surveying
• Generate long-list of strengths and
weaknesses from primary and support
activities of the firm’s value chain.
© 2001 Prentice-Hall
Transparency 14-27
Internal Validation: Documenting and
Assessing the Quality System
• Four Step Self Assessment Process
– Step 2: Categorizing
• Re-conceptualize long-list in terms of
resources and capabilities and complete
deeper inspection with the application of key
questions.
© 2001 Prentice-Hall
Transparency 14-28
Internal Validation: Documenting
and Assessing the Quality System
Slide 2 of 2
• Four Step Self Assessment Process
– Step 3: Investigating
• Determine where, along the firm’s value
chain, potential competitive advantage lies.
Look at each competitively relevant resource
and capability relative to its potential as a
cost or uniqueness driver.
© 2001 Prentice-Hall
Transparency 14-29
Internal Validation: Documenting and
Assessing the Quality System
• Four Step Self Assessment Process
– Step 4: Evaluating
• Choose the appropriate generic strategy for
the firm - cost leadership , differentiation,
and focus.
© 2001 Prentice-Hall
Transparency 14-30
Quality Audits
• Quality Audits
– The approach to auditing used in ISO 9000 has
not yet achieved general acceptable as a useful
model for internal assessment.
– There are a number of different approaches to
auditing company systems.
– We should first define what we mean by audits.
– These are audits that can be defined as an
internal assessment tool to identify areas for
improvement.
© 2001 Prentice-Hall
Transparency 14-31
Quality Audits
• Quality Audits
– Study ways to improve customer service and to
ascertain whether current customer service
processes are being performed.
• Audit Process
– The audit process is based on a framework of
standards, concepts, procedures, and reporting
practices. The steps in a quality audit are
shown on Figure 14.3.
© 2001 Prentice-Hall
Transparency 14-32
Quality Audits
Slide 2 of 4
Figure 14.3 Generic Auditing Steps
Familiarization
Verification
Evaluation
Recommendation
© 2001 Prentice-Hall
Transparency 14-33
Quality Audits
• Intuition alone does not constitute a sufficient
conceptual basis for a proper audit.
• In-depth knowledge of auditing standards, proper
establishment of audit objectives, carefully planned
audit procedures, controlled execution of audit steps,
and disciplined adherence to proper auditing methods in
arriving at conclusions are all requisite for accurate
audits.
• An audit must be designed and conducted to gather all
the facts relevant to the matter in question, weighing the
“good” against the “bad.”
© 2001 Prentice-Hall
Transparency 14-34
Quality Audits
Slide 3 of 4
• There are three main ingredients to an audit
– Auditing principle
• Is a fundamental truth, primary law, or doctrine.
• It does constitute a rule that is derived from reasoning
and experience.
• It indicate the objective of auditing.
• It suggest the manner in which the objectives are
achieved.
• It constitute the basis for the application of audit
procedures to a logical manner.
© 2001 Prentice-Hall
Transparency 14-35
Quality Audits
• There are three main ingredients to an audit
– Auditing standard
• Is a measurement of performance or a
criterion establishing professional authority
and consent.
• A standard is a performance-measuring
device.
© 2001 Prentice-Hall
Transparency 14-36
Quality Audits
• There are three main ingredients to an audit
– Auditing procedure
• Establishes the courses of action available to the
auditor to judge the adherence to the standards
and the validity of the application of the principles.
• Although auditing concepts and methods are not as
rigid as methods in the physical sciences, there is a
similarity.
• In auditing there is evidential support for every
conclusion.
• An “audit-scientific” method should be developed
and followed.
© 2001 Prentice-Hall
Transparency 14-37
Quality Audit Process
Slide 4 of 4
Steps of basic quality audit
Preparation
Audit team
selection
Develop
checklists
The opening
meeting
The exit
meeting
Reporting
and
corrective
action
Follow-up
Analysis
© 2001 Prentice-Hall
Implementing
the audit
Closure
Transparency 14-38
Types of Audits
Operational Audits
Performance Audits
Certification Audits
Award Audits
Consultant Audits
Presidential Audits
Qualitative Audits
© 2001 Prentice-Hall
Transparency 14-39
Types of Audits
Slide 1 of 5
• Operational Audits
– Are directed towards improving the operations
that are being studied.
– Operational auditing is being used now
frequently for services and government.
– Operational audits represent the application of
the talents, background, and techniques of the
internal auditors to the operating controls that
exist in the business.
© 2001 Prentice-Hall
Transparency 14-40
Types of Audits
• The general objective of the operational audit is
to “assist all members of management in the
effective discharge of their responsibilities by
furnishing them with objective analyses,
appraisals, recommendations, and pertinent
comments concerning the activities reviewed.”
© 2001 Prentice-Hall
Transparency 14-41
Types of Audits
• Performance Audits
– There are several major types of performance
audits.
• Supplier audits are conducted by purchasers of
their suppliers.
• In the automotive industry, these are conducted
using the QS 9000 standards.
• Periodic audits are then performed to endure that
the suppliers is maintaining standards and to
improve the performance of the suppliers.
• This approach is referred to as supplier
development.
© 2001 Prentice-Hall
Transparency 14-42
Types of Audits
• Performance Audits
– There are several major types of performance
audits (continued).
• Certification audits are used to maintain a
certification such as ISO 9000 or ISO 14000.
• These audit focus on the documentation of
systems and adherence to those standards.
© 2001 Prentice-Hall
Transparency 14-43
Types of Audits
Slide 2 of 5
• Performance Audits
– Types of performance audits (continued)
• Award audits such as the Baldrige, state quality
awards, customer awards, and other prizes
involve site visits to externally validate the claims
made by applicants in their applications.
• These visits exist to clarify and verify the
information that has been provided by the
applicant.
© 2001 Prentice-Hall
Transparency 14-44
Types of Audits
• Performance Audits
– Types of performance audits (continued)
• Consultant audits are studies performed by
consultants to determine the maturity of a
company in the quality pursuit and to help
identify areas to be addressed in future quality
plans.
• These are sometimes called quality maturity
studies.
© 2001 Prentice-Hall
Transparency 14-45
Types of Audits
Slide 3 of 5
• Performance Audits
– Types of performance audits (continued)
• Presidential audits performed by a team led by the
president of the company. These audits are usually
operational and quality-related in focus.
• This gets the president of the firm actively involved
in the quality audits and design of the quality
system
• During a presidential audit, the questions in Table
14.2 are asked.
© 2001 Prentice-Hall
Transparency 14-46
Types of Audits
• Table 14.2 Questions to be answered in a
presidential audit
© 2001 Prentice-Hall
Transparency 14-47
Types of Audits
– Presidential audits
• In these audits, an overall assessment of the
organization is performed, and this information is
inserted into the following year’s strategic plans.
• Kaoru Ishikawa was an advocate of presidential
audits.
• Table 14.3 shows expected benefits of presidential
audits as Kaoru Ishikawa defined them.
• A closer look at quality 14.1 show the quality audit
in action.
© 2001 Prentice-Hall
Transparency 14-48
Types of Audits
• Table 14.3 Benefits of presidential audits
© 2001 Prentice-Hall
Transparency 14-49
Types of Audits
Slide 5 of 5
• Qualitative and Quantitative Audits
– Some audits have more of a quantitative flavor
when focusing on issues such as conformance
and quality control.
– Cost-of-quality audits may be conducted to
determine whether quality costs are lessening
and the programs are working.
© 2001 Prentice-Hall
Transparency 14-50
Types of Audits
• Qualitative and Quantitative Audits
– Qualitative audits compare current practice
against structural measures.
– Structural measures are the documents
relating to processes.
– These include standards, contracts,
procedures, regulatory requirements, and
hierarchical standards.
– In qualitative audits, studies are performed to
see that procedures are being followed.
© 2001 Prentice-Hall
Transparency 14-51
Externally Validating the Quality System
Slide 1 of 3
• External Validation
– Using someone from the outside to study a
firm’s quality systems and identify areas for
improvement.
– The strength of the Baldrige criteria is its
applicability as an assessment tool.
© 2001 Prentice-Hall
Transparency 14-52
Externally Validating the Quality System
• Self Assessment
– Figure 14.5 shows a model of the selfassessment process using the Baldrige criteria.
© 2001 Prentice-Hall
Transparency 14-53
Externally Validating the Quality System
Slide 2 of 3
Figure 14.5 Self Assessment Process
Establish a purpose
Make a plan
Collect data
Document findings
Establish strengths and areas
for improvement
Develop improvement strategy
© 2001 Prentice-Hall
Transparency 14-54
Externally Validating the Quality System
• After evaluating the reports, the examiners write
responses to the evaluation document outlining areas
that should be improved.
• Figures 14.6 through 14.8 show examples of the type of
feedback received.
• The first feedback is the overview.
• Next feedback is provided for each of the Baldrige
categories.
• The most useful information for improvement comes
from the areas for improvement items.
• The feedback reports provide very specific areas for
improvement.
© 2001 Prentice-Hall
Transparency 14-55
Externally Validating the Quality System
• Figure 14.6 Example of a Baldrige summary
© 2001 Prentice-Hall
Transparency 14-56
Externally Validating the Quality System
• Figure 14.7 Item 1.1 example of a feedback report
© 2001 Prentice-Hall
Transparency 14-57
Externally Validating the Quality System
• Figure 14.8 Item 1.2 example of a feedback report
© 2001 Prentice-Hall
Transparency 14-58
Externally Validating the Quality System
Slide 3 of 3
• State Quality Awards
– State quality awards can provide a low-cost
means of using the Baldrige criteria in firms.
– There are currently 44 state quality awards.
– More than 1,000 companies annually apply for
state quality awards, and most of the award
programs are Baldrige based. American firms
can also apply for the Japanese Deming Prize.
– State quality awards allow companies to
receive
external
reviews
for
a
nominal
cost.
© 2001 Prentice-Hall
Transparency 14-59