Fourth Edition

MANAGING QUALITYINTEGRATING THE SUPPLY CHAIN

GLOBAL EDITION

S. Thomas FosterBrigham Young University

Boston Columbus Indianapolis New York San Francisco Upper Saddle RiverAmsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto

Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

CONTENTSPreface 21

Part I Understanding Quality Concepts 27Chapter 1 Differing Perspectives on Quality 28

Recognizing Different Perspectives on Quality 28 A CLOSER LOOK AT QUALITY 1-1: Which Is Better, Digital

or Analog? 29What Is Quality? 29

Product Quality Dimensions 29Service Quality Dimensions 32Why Does It Matter That Different Definitions

of Quality Exist? 33Differing Functional Perspectives on Quality 34

A Supply Chain Perspective 34An Engineering Perspective 35An Operations Perspective 37A Strategic Management Perspective 39 QUALITY HIGHLIGHT 1-1: Quality Strategy at GE 41A Marketing Perspective 42A Financial Perspective 43The Human Resources Perspective 45Is Quality Management Its Own Functional

Discipline? 46The Three Spheres of Quality 47

QUALITY HIGHLIGHT 1-2: Federal Express Corporation 49Other Perspectives on Quality 50

The Value-Added Perspective on Quality 50Cultural Perspectives on Quality 50

Arriving at a Common Understanding of Quality Usinga Contingency Perspective of Quality 50

Summary 51 Key Terms 51 DiscussionQuestions 52

CASE 1-1: FedEx: Managing Quality Day and Night 53 CASE 1-2: Granite Rock Company: Achieving Quality through

Employees 55

Chapter 2 Quality Theory 56What Is Theory? 56

Is There a Theory of Quality Management? 58 A CLOSER LOOK AT QUALITY 2-1: The Product That Is

Quality 58

8 Contents

History of Quality Management 60Leading Contributors to Quality Theory: W. Edwards

Dem ing 60Deming's 14 Points for Management 62The Deadly Diseases 66

Leading Contributors to Quality Theory:Joseph M. Juran 67The Juran Trilogy 67Control versus Breakthrough 68Project-by-Project Improvement 68 A CLOSER LOOK AT QUALITY 2-2: Juran on the Past Century

of Quality 69Pareto Analysis 70

Leading Contributors to Quality Theory:Kaoru Ishikawa 71The Basic Tools of Quality 71Ishikawa's Quality Philosophy 71

Leading Contributors to Quality Theory: ArmandFeigenbaum 72The 19 Steps of TQC 73

Leading Contributors to Quality Theory: Philip Crosby 73Leading Contributors to Quality Theory: Genichi

Taguchi 75Definition of Quality 75Quality Loss Function 75Robust Design 76

Leading Contributors to Quality Theory: The Rest ofthe Pack 76Robert C. Camp 76Stephen R Covey's " 8 " Habits 76Tom Peters 77Michael Hammer and James Champy 78 A CLOSER LOOK AT QUALITY 2-3: Hammer Recants (Sort of), or In

Search of the Lost Product to Sell 78Viewing Quality Theory f rom a Contingency

Perspective 79Resolving the Differences in Quality Approaches:

An Integrative View 80Leadership 81Employee Improvement 82Quality Assurance 82Customer Focus 82Quality Philosophy 82

Contents

Information Analysis 82Strategic Planning 82Environment or Infrastructure 83Team Approach 83Focus of the Quality Department 83Breakthrough 83

Theoretical Framework for Quality Management 83Summary 84 Key Terms 85 DiscussionQuestions 85

CASE 2-1: Rheaco, Inc.: Making a Quality Turnabout by Asking forAdvice 86

CASE 2-2: Has Disney Developed a Theory of Quality Guest ServicesManagement? 87

Chapter 3 Global Supply Chain Quality and InternationalQuality Standards 89Managing Quality for the Multinational Firm (MNF) 90

QUALITY HIGHLIGHT 3-1: Supply Chain Quality in the GlobalContext 94

Quality Improvement: The American Way 95The Malcolm Baldrige National Quality Award 95

The Baldrige Process 99 A CLOSER LOOK AT QUALITY 3-1: Who Was Malcolm Baldrige? 100Baldrige Scoring 101Being a Baldrige Examiner 103 QUALITY HIGHLIGHT 3-2: Harland Clarke, Inc. 104State Awards 105

Quality Improvement: The Japanese Way 106Deming Prize 106Other Japanese Contributions to Quality Thought 107Lean Production 107Japanese Total Quality Control (TQC) 108

Quality Improvement: The European Way 110European Quality Award 110

ISO 9000:2008 111Quality Management Principles Underlying

ISO 9000:2008 115Selecting a Registrar 116The ISO 9000-2008 Process 116ISO 14000 117

Quality Improvement: The Chinese Way 119Does Chinese Quality Management Exist? 119 A CLOSER LOOK AT QUALITY 3-2: Outsourcing Woes 120

10 Contents

Are Quality Approaches Influenced by Culture? 121Summary 122 Key Terms 123 DiscussionQuestions 123

CASE 3-1: University of Wolverhampton: Becoming an ISO 9000University 124

CASE 3-2: Wainwright Industries: An Entirely New Philosophyof Business Based on Customer Satisfactionand Quality 125

Part II Designing and AssuringQuality 127

Chapter 4 Strategic Quality Planning 128Strategy Content 128The Importance of Time in Quality Improvement 128

A CLOSER LOOK AT QUALITY 4-1: Problems with MeasuringEducational Performance 130

Leadership for Quality 131Leadership Dimensions 132

Quality and Ethics 133 QUALITY HIGHLIGHT 4-1: Solectron Corporation 134

Quality as a Strategy 135Costs of Quality 135PAF Paradigm 136Accounting for Quality-Related Costs 137Lundvall-Juran Quality Cost Model 139Differentiation through Quality 139Focus through Quality 140Order Winners 140Quality as a Core Competency 141

Quality Strategy Process 142Forced-Choice Model 142

Deploying Quality (Hoshin Kanri) 143 A CLOSER LOOK AT QUALITY 4-2: A Mature Strategic

Planning Process 143Does Quality Lead to Better Business Results? 144

Quality and Price 146Quality and Cost 146Quality and Productivity 146Quality and Profitability 147Quality and the Environment 147

Supply Chain Strategy 148Summary 149 Key Terms 150 DiscussionQuestions 150 Problems 151

Contents 11

CASE 4-1: Ames Rubber Corporation: Realizing Multiple Benefitsthrough Improved Quality 152

CASE 4-2: Make No MistakeAt Eastman Chemical, Quality Is aStrategic Issue 154

Chapter 5 The Voice of the Customer 156Customer-Driven Quality 157

A CLOSER LOOK AT QUALITY 5-1: Customer Serviceon the Internet 157

The Pitfalls of Reactive Customer-DrivenQuality 158

Customer-Relationship Management 160Complaint Resolution 161Feedback 162Guarantees 162Corrective Action 163

The "Gaps" Approach to Service Design 163Segmenting Customers and Markets 165Strategic Supply Chain Alliances between Customers

and Suppliers 168The Role of the Customer in the Supply

Chain 168Communicating Downstream 169Actively Solicited Customer-Feedback

Approaches 170Telephone Contact 170Focus Groups 171Customer Service Surveys 171 A CLOSER LOOK AT QUALITY 5-2: Misusing Surveys 172

Passively Solicited Customer-FeedbackApproaches 175Customer Research Cards 176Customer Response Lines 176Web Site Inquiries 177

Managing Customer Retention and Loyalty 177Customer-Relationship Management Systems

(CRMS) 179A Word on Excellent Design 181

Summary 182 Key Terms 183 DiscussionQuestions 183 Problems 184

CASE 5-1: Customer Quality Feedback at Apple Computer 185 CASE 5-2: Chaparral Steel: Achieving High Quality through a

Commitment to Both External and InternalCustomers 186

12 Contents

Chapter 6 The Voice of the Market 188What Do We Mean by the Voice of the Market? 188Gaining Insight through Benchmarking 189

Process Benchmarking 190Financial Benchmarking 190Performance Benchmarking 191Product Benchmarking 191Strategic Benchmarking 191 QUALITY HIGHLIGHT 6-1: Pal's Sudden Service 191Functional Benchmarking 193

Purposes of Benchmarking 193Difficulties in Monitor ing and Measuring

Performance 193Commonly Benchmarked Performance Measures 197

Why Collect All These Measures? 198Key Business Factors 198

Business Process Benchmarking 199Robert Camp's Business Process Benchmarking

Process 200Leading and Managing the Benchmarking Effort 202

A CLOSER LOOK AT QUALITY 6-1: Toyota: Benchmarking AmericanAuto Companies (Before It Was Called Benchmarking) 202

Training 203Baselining and Reengineering 203

A CLOSER LOOK AT QUALITY 6-2: The Legal Environment ofBenchmarking 204

Problems wi th Benchmarking 206Summary 207 Key Terms 207 DiscussionQuestions 207 Problems 208

CASE 6-1: Amgen Corporation: Using Benchmarking as a Meansof Coping with Rapid Growth 211

CASE 6-2: At&TTeleholdings: Making Benchmarking a Part of theProcess Improvement Tool Kit 213

Chapter 7 Quality and Innovation in Product and ProcessDesign 215Designing Products for Quality 215The Design Process 216

QUALITY HIGHLIGHT 7-1: A Turnaround at Kellogg's Cereals: Drivenby Design 218

Quality Function Deployment (QFD) 220Technology in Design 226Other Design Methodologies 228

Organizing the Design Team 228The Product Life Cycle 229

Contents 13

Product Families and the Product Life Cycle 229 A CLOSER LOOK AT QUALITY 7-1: Ski Design 229Complementary Products 230Designing Products That Work 231 A CLOSER LOOK AT QUALITY 7-2: Why It Takes a Rocket Scientist

to Design a Golf Ball 231Design for Manufacture Method 233

Design for Maintainability 234Designing for Reliability 235

Reliability Analysis Tools 235Failure Modes and Effects Analysis 235 QUALITY HIGHLIGHT 7-2: Designing Reliable Luxury at

Vuitton 236How FMEA Works 237Fault-Tree Analysis 238Failure Modes, Effects, and Criticality

Analysis 240Product Traceability and Recall Procedures 240

Environmental Considerations in Design 241Summary 242 Key Terms 243 DiscussionQuestions 243 Problems 244

CASE 7-1: Designing the Ford Taurus: Why Quality Had toBe Job 1 246

CASE 7-2: Nucor Corporation: Producing Quality Steel by StressingSound Management Practices 248

Chapter 8 Designing Quality Services 250Differences between Services and Manufacturing 250

Internal versus External Services 252Voluntary versus Involuntary Services 252How Are Service Quality Issues Different f rom Those

of Manufacturing? 253 A CLOSER LOOK AT QUALITY 8-1: Service Warranties: Profitable

or a Rip-OffYou Decide 254How Are Service Quality Issues Similar to

Manufacturing? 254What Do Services Customers Want? 254

QUALITY HIGHLIGHT 8-1: Ritz-Carlton Hotels 256SERVQUAL 257

Expectations 257Perceptions 259Gap Analysis 259Assessing Differences in Expectations

and Perceptions by Using the DifferencingTechnique 262

14 Contents

Designing and Improving the Services Transaction 265Services Blueprinting 265Moments of Truth 266 A CLOSER LOOK AT QUALITY 8-2: Quality in Health

Care 267Poka-yoke 268

The Customer Benefits Package 269Service Transaction Analysis 271Improving Customer Service in Government 273

A CLOSER LOOK AT QUALITY 8-3: Government Service Quality:A Stop-and-Go Process 274

Quality in Health Care 275Supply Chain Quality in Services 275A Theory for Service Quality Management 276

Summary 277 Key Terms 277 DiscussionQuestions 278 Problems 278

CASE 8-1: Yahoo! Designs Quality Services with Customersin Mind 280

CASE 8-2: UPS: Delivering the Total Package in CustomerService 281

Chapter 9 Managing Supplier Quality in the SupplyChain 283The Value Chain 283

The Chain of Customers 284Managing the Supply Chain 284

Supplier Partnering 286 A CLOSER LOOK AT QUALITY 9-1: Supply Chains

and Terrorism 287Single-Source Examples 288 QUALITY HIGHLIGHT 9-1: Supplier Partnerships

at Mercedes-Benz 289Supplier Development 290