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Chapter 1

Introduction to Quality and

Performance Excellence


Defining Quality


Fast delivery

Providing a good, usable product


Eliminating waste

Doing it right the first time

Delighting or pleasing customers

Total customer service and satisfaction

Compliance with policies and procedures

Formal Definitions of Quality

The totality of features and characteristics of a product or service that bears on its ability to satisfy given needs – American Society for Quality

– Fitness for use

– Meeting or exceeding customer expectations

– Conformance to specifications


Performance Excellence

An integrated approach to organizational performance management that results in

– delivery of ever-improving value to customers and stakeholders, contributing to organizational sustainability,

– improvement of overall organizational effectiveness and capabilities, and

– organizational and personal learning.

Importance of Quality

THE buzzword among business in the 1980s and 1990s

Quality problems still abound in many industries, such as automotive

Consumer expectations are high

“We’ve made dependence on the quality of our technology a part of life” – Joseph Juran

History of Quality Assurance

(1 of 3)

Skilled craftsmanship during Middle Ages

Industrial Revolution: rise of inspection and separate quality departments

Early 20 th Century: statistical methods at

Bell System

Quality control during World War II

Post-war Japan: evolution of quality management


History of Quality Assurance

(2 of 3)

Quality awareness in U.S. manufacturing industry during 1980s: from “Little Q” to

“Big Q” - Total Quality Management

Malcolm Baldrige National Quality Award


Disappointments and criticism


History of Quality Assurance

(3 of 3)

Emergence of quality management in service industries, government, health care, and education

Evolution of Six Sigma

Current and future challenge: maintain commitment to performance excellence


Quality Dimensions in


Performance – primary operating characteristics

Features – “bells and whistles”

Reliability – probability of operating for specific time and conditions of use

Conformance – degree to which characteristics match standards

Durability - amount of use before deterioration or replacement

Serviceability – speed, courtesy, and competence of repair

Aesthetics – look, feel, sound, taste, smell

Quality Dimensions in


Time – how much time must a customer wait?

Timeliness – will a service be performed when promised?

Completeness – Are all items in the order included?

Courtesy – do frontline employees greet each customer cheerfully?

Consistency – are services delivered in the same fashion for every customer, and every time for the same customer?

Accessibility and convenience – is the service easy to obtain?


Differences Between

Manufacturing and Services

Customer needs and performance standards are often difficult to identify and measure

The production of services typically requires a higher degree of customization

The output of many service systems is intangible

Services are produced and consumed simultaneously

Customers often are involved in the service process and present while it is being performed

Services are generally labor intensive

Many service organizations must handle very large numbers of customer transactions.

New Frontiers of Quality

Health care




Deming Philosophy

The Deming philosophy focuses on continual improvements in product and service quality by reducing uncertainty and variability in design, manufacturing, and service processes, driven by the leadership of top management.

Deming Chain Reaction

Improve quality

Costs decrease

Productivity improves

Increase market share with better quality and lower prices

Stay in business

Provide jobs and more jobs 14

Deming’s System of Profound


Appreciation for a system

Understanding variation

Theory of knowledge




Most organizational processes are cross-functional

Parts of a system must work together

Every system must have a purpose

Management must optimize the system as a whole



Many sources of uncontrollable variation exist in any process

Excessive variation results in product failures, unhappy customers, and unnecessary costs

Statistical methods can be used to identify and quantify variation to help understand it and lead to improvements


Theory of Knowledge

Knowledge is not possible without theory

Experience alone does not establish a theory, it only describes

Theory shows cause-and-effect relationships that can be used for prediction



People are motivated intrinsically and extrinsically; intrinsic motivation is the most powerful

Fear is demotivating

Managers should develop pride and joy in work


Deming’s 14 Points


(1 of 2)

1. Create and publish a company mission statement and commit to it.

2. Learn the new philosophy.

3. Understand the purpose of inspection.

4. End business practices driven by price alone.

5. Constantly improve system of production and service.

6. Institute training.

7. Teach and institute leadership.

8. Drive out fear and create trust.


Deming’s 14 Points

(2 of 2)

9. Optimize team and individual efforts.

10. Eliminate exhortations for work force.

11. Eliminate numerical quotas and M.B.O.

Focus on improvement.

12. Remove barriers that rob people of pride of workmanship.

13. Encourage education and self-improvement.

14. Take action to accomplish the transformation.


Juran Philosophy

Juran proposed a simple definition of quality: “fitness for use.” This definition of quality suggests that it should be viewed from both external and internal perspectives; that is, quality is related to “(1) product performance that results in customer satisfaction; (2) freedom from product deficiencies, which avoids customer dissatisfaction.”

Juran’s Quality Trilogy

Quality planning

Quality control

Quality improvement


Crosby Philosophy

Quality is free . . .

“Quality is free. It’s not a gift, but it is free. What costs money are the unquality things -- all the actions that involve not doing jobs right the first time.”

Crosby’s Absolutes of

Quality Management

Quality means conformance to requirements

Problems are functional in nature

There is no optimum level of defects

Cost of quality is the only useful measurement

Zero defects is the only performance standard


Principles of Total Quality

Customer and stakeholder focus

Process orientation

Continuous improvement and learning

Employee engagement and teamwork

Management by fact

Visionary leadership and a strategic orientation


Customer and Stakeholder


Customer is principal judge of quality

Organizations must first understand customers’ needs and expectations in order to meet and exceed them

Organizations must build relationships with customers

Customers are internal and external


Process Orientation

A process is a sequence of activities that is intended to achieve some result


Cross-functional Perspective

Continuous Improvement and


Incremental and breakthrough improvement

– Products and services

– Work processes

– Flexibility, responsiveness, and cycle time

Learning – why changes are successful through feedback between practices and results

Learning Cycle






Execution of plans

Assessment of progress

Revision of plans based upon assessment findings

Employee Engagement and


Engagement – workers have a strong emotional bond to their organization, are actively involved in and committed to their work, feel that their jobs are important, know that their opinions and ideas have value, and often go beyond their immediate responsibilities for the good of the organization

Teamwork must exist vertically, horizontally, and interorganizationally


Management by Fact

Organizations need good performance measures to drive strategies and change, manage resources, and continuously improve

Data and information support analysis at all levels

Typical measures: customer, product and service, market, competitive comparisons, supplier, employee, cost and financial

Visionary Leadership and a

Strategic Orientation

Leadership is the responsibility of top management

Senior leaders should be role models for the entire organization

Leaders must make long-term commitments to key stakeholders

Quality should drive strategic plans

TQ and Agency Theory

Agency relationship : a concept in which one party (the principal) engages another party (the agent) to perform work

Key assumption : individuals in agency relationships are utility maximizers and will always take actions to enhance their self-interests.

Contrast With TQ

(1 OF 2)

TQ views the management system as one based on social and human values, whereas agency theory is based on an economic perspective that removes people from the equation.

Agency theory propounds the belief that people are self-interested and opportunistic and that their rights are conditional and proportional to the value they add to the organization. TQ suggests that people are also motivated by interests other than self, and that people have an innate right to be respected.

Contrast With TQ

(2 OF 2)

Agency theory assumes an inherent conflict of goals between agents and principals, and that agent goals are aligned with principal goals through formal contracts. In TQ, everyone in the organization shares common goals and a continuous improvement philosophy, and goals are aligned through adoption of

TQ practices and culture.

TQ takes a long-term perspective based on continuous improvement, whereas agency theory focuses on short-term achievement of the contract between the principal and agent.

TQ leaders provide a quality vision and play a strategic role in the organization; leaders in agency theory develop control mechanisms and engage in monitoring.

TQ and Organizational