CHAPTER 3

Philosophies and Frameworks 2

CHAPTER 3Philosophies and FrameworksTeaching NotesThis chapter focuses on the "founding fathers" of total quality management -- Deming, Juran, Crosby, Feigenbaum, Ishikawa and Taguchi. The chapter does not give in-depth biographical sketches of the quality "gurus," but summarizes their philosophies and principles on which they believe that quality rests. Key objectives should be:

To develop an appreciation for the insight, wisdom, contributions, and forward thinking of Deming, Juran, Crosby, Feigenbaum, Ishikawa, and Taguchi -- the pioneering "gurus" of quality.

To study Deming's philosophy, which was based on systems thinking, statistical understanding of variation, the theory of knowledge, and psychology, as well as his 14 points, his "chain reaction," and the resulting radical changes in organizations.

To investigate how Juran's philosophy seeks to provide change within the current American management system. Juran defined quality as fitness for use, and developed the Quality Trilogyplanning, control, and improvement to provide a direction for quality assurance in organizations. He also developed and advocated use of the breakthrough sequence as a detailed program for quality improvement. To appreciate how Crosby's approach to quality is summarized in the four "Absolutes of Quality Management," the Zero Defects concept, and the Basic Elements of Improvement that emphasize behavioral change rather than improvements through the use of statistical techniques.

To explore the impacts of A.V. Feigenbaum, Kaoru Ishikawa, and Genichii Taguchi on the quality movement. These gurus developed the concepts of "total quality control using Three Steps of Quality, the Japanese concept of "companywide quality control" anchored in the use of employee teams and problem-solving tools for quality improvement, and variation reduction in support of new engineering approaches for product design focused on quality improvement, respectively. To develop reasons for why managers must understand the similarities and differences in leading quality philosophies and must develop a quality management approach tailored to their organizations.

To provide information that may be used to compare and contrast the Deming Prize, the Malcolm Baldrige Quality Award, ISO 9000, and Six Sigma.

To introduce Six Sigma as a quality system framework that integrates human and process elements of improvement, and in many ways, reflects the spirit of total quality management. Six Sigma complements the Baldrige philosophy and ISO performance standards, and can provide a vehicle for implementation of an organization-wide quality process.

Note to Instructors:

ANSWERS TO QUALITY IN PRACTICE KEY ISSUESISO 9000 and Sears Quality Management System

1. It is likely that Sears had to face a number of issues when it began to implement ISO 9000. The company wanted a consistent process for improving customer satisfaction and enhancing service capabilities. It no doubt needed a way to develop process standardization across the company. Sears had to overcome the hurdle of communicating the value of a QMS within a retail and service environment to all affected employees. It was also searching for fundamental tools to provide the company with a safe base for continued improvements.2. Sears probably had to review and revise all management and operating practices to conform to the Quality Management Principles of ISO 9000, including:

Principle 1: Customer Focus - understanding current and future customer needs, meeting customer requirements, and striving to exceed customer expectations.

Principle 2: Leadership - leaders establishing unity of purpose and direction of the organization.

Principle 3: Involvement of People - full involvement of people at all levels to enable their abilities to be used for the organizations benefit.Principle 4: Process Approach achieving desired results more efficiently by managing activities and related resources as a process.Principle 5: System Approach to Management- identifying, understanding, and managing interrelated processes as a system, thus contributing to the organizations effectiveness and efficiency in achieving its objectives.

Principle 6: Continual Improvement ensuring that continual improvement of the organizations overall performance becomes a permanent objective.Principle 7: Factual Approach to Decision Making basing decisions on the analysis of data and information.Principle 8: Mutually Beneficial Supplier Relationships ensuring that all associates understand that an organization and its suppliers are interdependent and a mutually beneficial relationship enhances the ability of both to create value.These principles were seen in operation as Sears made dramatic improvements in such areas as calibrating the tools used for repairs and service calls. The company began 100-percent tool calibration for safety purposes, which led to opening and registering its own calibration lab to ISO/IEC 17025. Sears improved its existing hazardous-materials program by implementing a comprehensive program on refrigerant handling. Efficiency in completing repairs in the Chattanooga, Tennessee, carry-in facility was doubled. Sears' district office in Houston improved its technician recall rate, which was reduced from about 12 percent to 7.9 percent. Finally, ISO 9001 was instrumental in helping to standardize the manner in which technicians record field observations. To ensure consistency, technicians use a special tool kit for recording the event, including a disposable camera and standardized forms.

The issues of customer satisfaction and enhancing service capabilities have improved as indicated by quicker service times and reduced callback rates. Process standardization across the company is reflected in the tool calibration and technician record-keeping processes. The hurdle of communicating the value of a QMS within a retail and service environment to all affected employees has taken place as improvements have been successfully implemented. And, the search for fundamental tools to provide the company with a safe base for continued improvements seems to have been successful, as ISO 9000 requirements have driven the improvement process.Integrating Quality Frameworks at Veridian Homes

Key Issues for Discussion

1. Veridien uses various tools and approaches, such as the Baldrige Express surveys, to integrate quality throughout the organization. The surveys give employees the opportunity to rate the company on a Likert scale in each criterion and provide comments on strengths, weaknesses and OFIs. A report provides a detailed analysis for management to conduct annual measuring and monitoring and to identify and prioritize weaknesses. Strategic goals are linked to each employee via the performance planning and development (PPD) process. This helps an employee understand his or her role, priorities, resources, accomplishments and professional development as they relate to the companys vision, mission, strategic drivers and departmental strategic goals. The employees also take part in a profit sharing program, motivating and rewarding employees based on measured and sustained improvements in cost, quality, cycle times, customer service and profits.

In addition, various improvement tools and techniques are used to support quality implementation. For example, a quality toolbox provides templates, PowerPoint based training, videos and other materials covering topics such as trade partner certification, builder certification, NHQA criteria, Baldrige criteria; Six Sigma methodology, and other improvement tools and techniques are available to all employees.

2. NHQA is a quality award process, similar to the Baldrige Award. In support of their efforts to win that award, Veridian attained NAHBRC builder certification status for quality and safety management systems. The certification, based on ISO 9000, is third-party audited and included Veridians construction, sales and customer relations departments. Since earning certification, the land development, purchasing, estimating and design departments have been incorporated into the certification. The company uses the Baldrige Express report analysis to drive its annual strategic planning process (SPP). Veridians green building practices address the corporate social responsibility aspect of quality management and are reflected in the leadership criteria of the NHQA and the Baldrige award. Green Built certified builders undergo reviews of building plans, specifications and on-site visits to ensure the criteria are met. The criteria cover waste reduction, recycling and disposal of materials, energy efficient insulation and air sealing, storm water management and water conservation, landscape conservation, energy efficient mechanical systems, and use of recycled materials and energy efficient materials and construction products. Veridien has developed an integrated quality, environmental, health and safety (QEHS) management system, which provides a tactical level methodology to structure, document, disseminate, implement and manage Veridians those QEHS requirements. This integrated system has led to measurable results in efficiency and cost effectiveness as noted in the case.

ANSWERS TO REVIEW QUESTIONS1.The Deming "chain reaction" theory states that by (a) improving quality, a firm can (b) decrease costs because of less rework, fewer mistakes, delays, and snags, and better use of time and materials, thus (c) improving productivity. The firm will therefore be able to (d) capture the market with better quality and lower prices, and thus, not only (e) stay in business, but also (f) provide and create more jobs. Student answers to the second part of the question will vary, based on their readings.

2.Deming never actually gave a definition of quality. However, if he had explicitly defined quality, he might have said:

Quality is the result of action taken by management, acting as leaders, with the willing cooperation of knowledgeable workers, to constantly and forever improve products and services by reducing variability and uncertainty in processes, thereby remaining competitive and providing profits and enough jobs for everyone.

3.Deming's System of Profound Knowledge consists of four interrelated parts: (1) appreciation for a system; (2) understanding of variation; (3) theory of knowledge; and (4) psychology. Appreciating a system involves understanding how each component of the system works to produce the end product or service, and understanding how the system may be optimized for better or smoother performance. Understanding of variation involves knowing and anticipating factors (i.e. increasing personnel, the wearing out of tools) that may cause the system to change, for better or worse. Theory of knowledge involves understanding the system and current and possible variations within, to the point where past and present events and performance can suggest possible outcomes of future courses of action within the system. Psychology involves understanding what motivates people, including the facts that people must enjoy their work, be treated with respect, work within a system that promotes dignity and self-esteem, receive adequate recognition, not just financial remuneration, and feel that they are part of a winning, high quality team that makes a difference.

4.As Scholtes explained, lack of understanding of the components of Profound Knowledge can have a profound impact on the health of organizations. To briefly summarize the multiple points that Scholtes made is difficult. However, he pointed out that when people dont understand systems, they basically dont understand that incidents, interventions, and control are the net result of many actions and interdependent forces. When people don't understand variation, they dont understand the difference between prediction, forecasting, and guesswork, thus being unable to distinguish between fact and opinion. When people dont understand psychology, they dont understand motivation or why people do what they do, which causes them to misunderstand change and resistance to it. When people dont understand the theory of knowledge, they dont know how to plan, accomplish learning, improve, change, or solve problems, despite their best efforts.

5.As explained in the answer to question 3, above, Deming's System of Profound Knowledge consists of four interrelated parts: (1) appreciation for a system; (2) understanding of variation; (3) theory of knowledge; and (4) psychology. There are a number of ways to classify his 14 Points, which could include these as categories.

Under appreciation for a system, points 1, 2, 4, 5, 9, 13, and 14 are most oriented towards systems. Numbers 1 and 2, relating to vision, commitment, and development of a new philosophy of leadership require a big picture view of the organization and its place in business and society. Number 4 relates to the requirement that total costs, not incremental costs, must be optimized throughout an organizational system. Number 5 is a call to make improvements continuously throughout the system. Number 9 requires the development of teamwork and breaking down of artificial barriers between departments and organizational units. Number 13 relates to broad education to benefit both the organization and society, in the long run. Point 14 calls for a major cultural change within the organization, and is similar to point 2.

To understand variation, Deming established points 3, 5, 10, and 11. Point 3 requires that everyone understand inspection and use it to understand variation by avoiding mass inspection. Point 5 advises to improve constantly and forever, thus eliminating the causes of excessive variation and waste. Number 10 suggests that improvement does not take place by exhorting workers to do a better job, but by understanding the cause of poor quality and eliminating them. Point 11 makes a similar point that quotas and management by objectives are approaches that do not encourage improvement, but instead, create fear.

As Scholtes explained, when people dont understand the theory of knowledge, they dont know how to plan, accomplish learning, improve, change, or solve problems, despite their best efforts. Thus points 1, 2, 5, 6, and 13 may be seen as falling under theory of knowledge category. Demings concept in points 1 and 2 of constancy of purpose and learning his new philosophy are needed in order to effectively plan, learn and change. Point 5 relating to constant improvement is also essential to knowledge, as is point 6 on instituting training, so that workers will be able to understand their work processes, predict the result of changes, and actively participate in problem solving and improvement. Point 13 is related in that it advises that education and self-improvement will assist the organization in learning, changing, improving and reaching organizational goals.

An understanding and appreciation of psychology is a requirement for points 7 through 13. Each of these has leadership and motivational characteristics that are essential to Demings new philosophy and to improved quality and productivity. Numbers 7 and 11 are related to improving leadership; points 8, 9, 10, 11, and 12 advise removing barriers that keep workers from doing their best, most effective work; and number 13 advises that workers should be educated, not just trained.

6.Juran's "Quality Trilogy," like most trilogies these days, consists of three parts: Quality planning--the process for preparing to meet quality goals; quality control--the process for meeting quality goals during operations; and quality improvement--the process for breaking through to unprecedented levels of performance.

Quality planning begins with identifying customers, both external and internal, determining their needs, and developing product features that respond to customer needs. Quality goals are then established that meet the needs of customers and suppliers alike, and do so at a minimum combined cost.

Quality control involves determining what to control, establishing units of measurement so that data may be objectively evaluated, establishing standards of performance, measuring actual performance, interpreting the difference between actual performance and the standard, and taking action on the difference.

Juran specifies a program for quality improvement which involves proving the need for improvement, identifying specific projects for improvement, organizing guidance for the projects, diagnosing the causes, providing remedies for the causes, proving that the remedies are effective under operating conditions, and providing control to maintain improvements.

7.Like Deming, Juran advocated company-wide quality management, with a never-ending process of quality improvement, involving such activities as market research, product development, production process control, inspection and testing, and customer feedback. He emphasized the need for management commitment to quality improvement, and the need for training of all employees in quality techniques. Juran also asked workers to get to know their external and internal customers, and to identify and reduce causes of variation by determining the difference between standard and actual performance and taking action on the difference.

Unlike Deming, Juran did not propose major cultural changes in the organization, but sought to improve quality within the system familiar to U.S. managers. His detailed plan was based on identifying areas for improvement and acting accordingly. Juran also recognized the different "languages," or trains of thought, which occupy different levels of an organization, and advocated communication between these "languages," where Deming proposed that statistics should be shared as a common language.

8.Crosby's Absolutes of Quality Management are:

(1) Quality means conformance to requirements, not elegance. Crosby sees requirements as being ironclad; they are communication devices which must be clearly stated so that they cannot be misunderstood. Once this is done, a company can take measurements to determine conformance to those requirements.

(2) Crosby maintains there is no such thing as a quality problem. Those individuals or departments that cause them, so there are accounting problems, manufacturing problems, logic problems, etc, must identify problems.

(3) There is no such thing as the economics of quality; it is always cheaper to do the job right the first time. Most of us will remember this one as a frequent and sometime annoying axiom, used by our mothers every time we had to perform some complicated chore. Crosby supports the premise that "economics of quality" has no meaning. Quality is free. What costs money are all actions that involve not doing jobs right the first time.

(4) The only performance measurement is the cost of quality. The cost of quality is the expense of nonconformance. Crosby's program calls for measuring and publicizing the cost of poor quality.

(5) The only performance standard is "Zero Defects." Zero Defects is a performance standard, NOT a motivational program. The idea behind ZD is to do it right the first time, to concentrate on preventing defects rather than just finding and fixing them.

(6) People are conditioned to believe that error is inevitable; thus they not only accept error, they anticipate it. Each of us has limits within which we can accept errors. Eventually we reach a point where the errors are unacceptable. This usually occurs when the errors affect us personally, such as when you discover that your bank has made a $100 error in your account, in their favor.

Crosby's Basic Elements of Improvement include determination, education, and implementation. According to Crosby, most human error is caused by lack of attention rather than lack of knowledge. Lack of attention is created when we assume that error is inevitable. By determination, Crosby means that top management must be serious about quality improvement. Everyone must understand the Absolutes; this can be accomplished only through education. Finally, every member of the management team must understand the implementation process.

Like Deming, Crosby advocated interior searches by individual departments (i.e. manufacturing, accounting) within a firm for sources of negative variation and acting to reduce these. He also advocated the policy of doing the job right the first time. Unlike Deming, Crosby's plan focuses on managerial thinking, calling for change within the current system, holding employees, as well as management accountable for reducing defects, and not requiring a complete organizational overhaul.

9.A.V. Feigenbaum is primarily known for three contributions to quality -- his international promotion of the quality ethic, his development of the concept of total quality control, and his development of the quality cost classification.

Kaoru Ishikawa was instrumental in the development of the broad outlines of Japanese quality strategy, the concept of CWQC, the audit process used for determining whether a company will be selected to receive the Deming award, the quality control circle, and cause-and-effect diagrams--a principle tool for quality management.

Taguchis contributions were centered on explaining the economic value of reducing variation. He maintained that the manufacturing-based definition of quality as conformance to specification limits is inherently flawed. He also contributed to improving engineering approaches to product design. By designing a product that is insensitive to variation in manufacture, specification limits become meaningless. Taguchi advocated certain techniques of experimental design to identify the most important design variables in order to minimize the effects of uncontrollable factors on product variation. Thus, his approaches attacked quality problems early in the design stage rather than react to problems that might arise later in production.10.Taguchi measured quality as the variation from the target value of a design specification, and then translated that variation into an economic "loss function" that expresses the cost of variation in monetary terms. In doing this, Taguchi offered a method of measuring the monetary loss resulting from creation of products or services that do not conform to quality standards. This method was used by Deming to compare the decreased costs of producing products or services with quality values closer to those of standard quality specifications.

11. The purposes of the Malcolm Baldrige Award are to:

Help stimulate American companies to improve quality and productivity for the pride of recognition while obtaining a competitive edge through increased profits.

Recognize the achievements of those companies that improve the quality of their goods and services and provide an example to others.

Establish guidelines and criteria that can be used by business, industrial, governmental, and other enterprises in evaluating their own quality improvement efforts.

Provide specific guidance for other American enterprises that wish to learn how to manage for high quality by making available detailed information on how winning enterprises were able to change their cultures and achieve eminence.

12.The Baldrige Award framework (see the Baldrige Model and other details in the Bonus Materials on the Premium website) has three basic elements, as part of an integrated system:

Strategy and action plans: these yield the set of customer and market-focused requirements, derived from short-term and long-term strategic planning, that must be met or exceeded for an organizations strategy to succeed. They guide overall resource decisions and alignment of measures for all work units to ensure customer satisfaction and market success

The system: comprises a set of well-defined and well-designed processes and a human resource focus for meeting the company's customer and performance requirements. The system consists of the leadership triad and the results triad. Senior executive leadership sets directions, creates values, goals, and systems, and guides the pursuit of organizational strategic planning and customer and market focus. The results triad shows that the organization depends on its employees and process management to yield business results. Business results are a composite of customer, financial, and performance results, including human resource results and public responsibility.

Measurement, analysis and knowledge management: are critical to effective management of the organization and to a fact-based system for improving performance and competitiveness. Measurement, analysis and knowledge management serve as the foundation for the performance management system.

The basic aims of the system are the delivery of ever-improving value to customers and success in the marketplace, improvement of overall company performance and capabilities, and organizational and personal learning.

13.The seven categories in the Baldrige Criteria for Performance Excellence and the key issues that are addressed include:

Leadership: This category examines how an organizations senior leaders personal actions guide and sustain the organization. Also examined are an organizations governance system and how the organization fulfills its ethical, legal, and societal responsibilities, and supports its key communities.1. Strategic Planning: This category examines how an organization develops strategic objectives and action plans. Also examined is how the chosen objectives and plans are deployed and changed if circumstances require, and how progress is measured.2. Customer Focus: This category examines how an organization engages its customers for long-term marketplace success and builds a customer-focused culture. Also examined is how the organization listens to the voice of its customers and uses this information to improve and identify opportunities for innovation.3. Measurement, Analysis, and Knowledge Management: This category examines how an organization selects, gathers, analyzes, manages, and improves its data, information, and knowledge assets, and how it manages its information technology. Also examined is how the organization reviews and uses reviews to improve its performance.

4. Workforce Focus: This category examines how an organization engages, manages, and develops its workforce to utilize its full potential in alignment with the organizations overall mission, strategy, and action plans. Also examined is the organizations ability to assess workforce capability and capacity needs and to build a workforce environment conducive to high performance.5. Process Management: This category examines how an organization designs its work systems, and how it designs, manages and improves its key processes for implementing those work systems to deliver customer value and achieve organizational success and sustainability. It also examines an organizations readiness for emergencies.6. Results: This category examines an organizations performance and improvement in key business areas product outcomes, customer-focused outcomes, financial and market outcomes, workforce-focused outcomes, process-effectiveness outcomes, and leadership outcomes. Performance levels are examined relative to those of competitors and other organizations providing similar products and services.

Details of these criteria are provided in the Bonus materials on the Premium website for this chapter.

14. Many companies use the Baldrige Award criteria to evaluate their own quality programs, set up and implement TQ programs, communicate better with suppliers and partners, and for education and training. Using the award criteria as a self-assessment tool provides an objective framework, sets a high standard, and compares units that have different systems or organizations. The award addresses the full range of quality issues and can help those setting up new systems to obtain a complete picture of TQ. The award criteria assist companies with internal communications, communications with suppliers, and communications with other companies seeking to share information. Finally, the award examination is being used for training and education, particularly for management, because it summarizes major issues that managers must understand.

15. The Baldrige Criteria support Demings 14 Points by emphasizing the central importance of leadership, organization-wide quality management, customer focus and feedback, attention to employee well-being, satisfaction, and teamwork through a human resource focus, and continuous improvement of processes. The detailed explanation of the criteria include the need for management commitment to quality improvement, and the need for training of all employees in quality and other techniques in order to attain performance excellence.

Unlike Deming, the Criteria did not propose that a specific philosophy be adopted in organizations, except the philosophy of excellence in performance of every part of the system. Perhaps the greatest difference that Deming would oppose is the emphasis on measurable results of the Baldrige process.

16.In comparing the frameworks of the European Quality Award with the framework of the Baldrige award, several key differences are apparent.

For both the Baldrige and the European Quality Award, results -- including customer satisfaction, people (employee) satisfaction, and impact on society -- are important, but are treated somewhat differently. Enablers -- the means by which an organization approaches its business responsibilities, drive results in the European Award. These are roughly similar to the Baldrige criteria. The "impact on society" results category focuses on the perceptions of the company by the community at large and the company's approach to the quality of life, the environment, and the preservation of global resources. The European Quality Award criteria place greater emphasis on this category than is placed on the public responsibility item in the Baldrige Award criteria.

17.A study of national cultural differences can help to understand and explain why the MBNQA has been adapted in various ways in various countries. Research has shown that the Baldrige award is better suited to some national cultures than to others. Receptiveness to change differs greatly among cultures, suggesting the need for countries to adapt their quality award programs to local conditions to ensure effectively implementing them. Perhaps surprisingly, Baldrige is a better fit to the national culture of Japan than it is to the U.S. Some of the reasons for this are that the Baldrige framework was initially influenced heavily by Japanese quality management practices, and that changes to the criteria over the years are focused on changing U.S. management culture, not reflecting its current practice. These results provide even more validation of Demings observation related to the Theory of Knowledge, that best practices cannot be copied blindly, but must be understood and adapted intelligently. This is an important lesson for managing in todays global environment.

18.ISO 9000:2000 was structurally changed and simplified versus the original ISO 9000 standard. It placed much more emphasis on quality management concepts, as contrasted with procedural correctness of the previous standard.

The key requirements of ISO 9000 include:

Quality management system Management responsibility Resource management Product realization Measurement, analysis and improvementYes, every company should be involved in development and improvement of their quality management system in each of these five areas. If not, how can performance management take place?

19.The ISO 9000 standards have evolved into criteria for companies (customer and supplier) who wish to "certify" their quality management or achieve "registration" through a third-party auditor, usually a laboratory or some other accreditation agency (called a registrar). Rather than a supplier being audited for compliance to the standards by each customer, the register certifies the company, and the certification is accepted by all of the supplier's customers.

The registration process includes document review by the registrar of the quality system documents or quality manual; preassessment, which identifies potential noncompliance in the quality system or in the documentation; assessment by a team of two or three auditors of the quality system and its documentation; and surveillance, or periodic re-audits to verify conformity with the practices and systems registered. Recertification is required every three years. Individual sites--not entire companies--must achieve registration individually. All costs are borne by the applicant, so the process can be quite expensive.

In addition to improving internal operations, the most important reasons why companies seek ISO 9000 certification include:

a. Meeting contractual obligations-- Some customers now require certification of all their suppliers. Suppliers that do not pursue registration will eventually lose customers.

b. Meeting trade regulations-- Many products sold in Europe, such as telecommunication terminal equipment, medical devices, gas appliances, toys, and construction products require product certifications to assure safety. Often, ISO certification is necessary to obtain product certification.

c. Marketing goods in Europe--ISO 9000 is widely accepted within the European Community. It is fast becoming a de facto requirement for doing business in the region.

d. Gaining a competitive advantage--Many customers use ISO registration as a basis for supplier selection. Companies without it may be at a market disadvantage.

20.ISO 9000 has been controversial for a number of reasons. It was imposed by the European Union as an attempt to provide standardization for all suppliers doing business within any of the EU countries. However, it was complicated, expensive, and time consuming to develop, qualify for, and maintain. Perhaps the most troubling drawback was that an ISO 9000 organization could still produce poor quality products. They just do so more consistently! Thus it was not a total quality system, nor did it provide the same characteristics as the Malcolm Baldrige National Quality Award.

The ISO 9000:2000 revision addressed a number of the more controversial issues by incorporating eight quality management principles, as follows:

Customer focus

Leadership

Involvement of people

Process approach

System approach to management

Continual improvement

Factual approach to decision making

Mutually beneficial supplier relationships

Despite these much-needed improvements, ISO 9000:2000 still does not offer a comprehensive business performance framework, nor does it provide the same characteristics as the Malcolm Baldrige National Quality Award.

21.Motorola pioneered the concept of Six Sigma as an approach to measuring product and service quality. The late Bill Smith, a reliability engineer at Motorola, is credited with originating the concept during the mid-1980s and selling it to Motorolas CEO, Robert Galvin. Smith noted that system failure rates were substantially higher than predicted by final product test, and suggested several causes, including higher system complexity that resulted in more opportunities for failure, and a fundamental flaw in traditional quality thinking. He concluded that a much higher level of internal quality was required and convinced Galvin of its importance.

The core philosophy of Six Sigma is based on some key concepts:

Thinking in terms of key business processes and customer requirements with a clear focus on overall strategic objectives.

Focusing on corporate sponsors responsible for championing projects, supporting team activities, helping to overcome resistance to change, and obtaining resources.

Emphasizing such quantifiable measures as defects per million opportunities (dpmo) that can be applied to all parts of an organization: manufacturing, engineering, administrative, software, and so on.

Ensuring that appropriate metrics are identified early in the process and that they focus on business results, thereby providing incentives and accountability.

Providing extensive training followed by project team deployment to improve profitability, reduce non-value-added activities, and achieve cycle time reduction.

Creating highly qualified process improvement experts (green belts, black belts, and master black belts) who can apply improvement tools and lead teams.

Setting stretch objectives for improvement.

The recognized benchmark for Six Sigma implementation is General Electric. The efforts by General Electric, driven by former CEO Jack Welch, brought significant media attention to the concept and made Six Sigma a very popular approach to quality improvement. In the mid-1990s, quality emerged as a concern of many employees at GE. Jack Welch invited Larry Bossidy, then CEO of AlliedSignal, who had phenomenal success with Six Sigma, to talk about it at a Corporate Executive Council meeting. The meeting caught the attention of GE managers and Welch. To ensure success, GE changed its incentive compensation plan so that 60 percent of the bonus was based on financials and 40 percent on Six Sigma, and provided stock option grants to employees in Six Sigma training. In their first year, they trained 30,000 employees at a cost of $200 million and got back about $150 million in savings. From 1996 to 1997, GE increased the number of Six Sigma projects from 3,000 to 6,000 and achieved $320 million in productivity gains and profits. By 1998, the company had generated $750 million in Six Sigma savings over and above their investment, and would receive $1.5 billion in savings the next year.

22.The three frameworks are all process-focused, data-based, and management-led, but each offers a different emphasis in helping organizations improve performance and increase customer satisfaction. The Baldrige framework focuses on performance excellence for the entire organization in an overall management framework, identifying and tracking important organizational results; ISO focuses on product and service conformity for guaranteeing equity in the market place and concentrates on fixing quality system problem and product and service nonconformities; and Six Sigma concentrates on measuring product quality and driving process improvement and cost savings throughout the organization.

ISO 9000 has incorporated many of the principles that the Baldrige criteria have had since its inception, but it still is not a comprehensive business performance framework. Implementing Six Sigma fulfills in part many of the elements of ISO 9000:2000, including the Quality Management System, Resource Management, Product Realization, and Measurement, Analysis, and Improvement sections of the standards. Both Baldrige and Six Sigma provide much more comprehensive views of quality management.

ANSWERS TO DISCUSSION QUESTIONS

1.Melissas job is to satisfy customers who are trying to obtain information or make reservations, while she simultaneously attempts to satisfy her internal customers, the supervisor and the account manager. Using Deming's principles, her supervisor (and the supervisor's customer, the account manager) need to "adopt the new philosophy" of quality, to remove the barriers in the system that are preventing Melissa from satisfying her customers and to provide the encouragement and support that she needs so that she can take pride in her work. These include analyzing the problems with the slow computer; the missing information in the system; the quota that often prevents her from giving adequate customer service; and the fact that she may need training on use of printed directories and guides (if they must be used), as well as how to courteously handle customers.

2.Theory of knowledge is the branch of philosophy concerned with the nature and scope of knowledge, its presuppositions and basis, and its general reliability of claims to knowledge. In Deming's system, this involves understanding the complete system and current and possible variations within it to the point where past and present events and performance can suggest possible outcomes of future courses of action within the system.

For the Wall Street analyst, the theory of knowledge raises severe questions as to whether the Stock Market is a stable system whose operations are subject to "knowledge" about what makes prices rise and fall. If the complete system and what drives it cannot be known with a fairly high degree of certainty, then it is foolish to try to predict earnings of a company or group of companies on a quarterly basis.

3.Deming's 14 points are interrelated as part of a complete system. They support each other as part of a complete system for managing. For example, Point #1 requires that managers publish a statement of the aims and purposes of the organization. Point #9 states that management must optimize the efforts of teams, groups, and staff areas toward meeting the aims and purposes of the organization. Deming felt that a company - the whole company - must commit to quality as a total effort, as published in their aims and purposes. This means that all 14 points must be adopted as a package. You can't embrace the quality philosophy in one area of work and ignore it in another. If each person is responsible for their own quality, then you don't need many of the rules, regulations, and external controls that have been the "norm" in many organizations for decades. This suggests that management must take on a new leadership role to foster innovation, change, improvement and high quality at every level in the organization.

4.Deming's 14 points may be put into the six categories listed, but it should be realized that some of his 14 points apply to more than one category.

a. Organizational purpose and mission: Points 1, 7, 9, and 14. These relate the need to develop a mission statement (aims and purposes), publish the statement, develop leadership to carry out the purpose, focus the efforts of everyone on the mission, and act to ensure that the transformation happens.

b. Quantitative goals: Points 3, 4, 8, 10, 11.a. & 11.b. These points may not be chosen by everyone, but several have "hidden agendas" that relate to quantitative goals. Inspection (point 3) is frequently used to develop quantitative goals and to "catch" problems (and the people who supposedly caused them) after they have occurred. Price tags (point 3), rather than overall quality levels, are the quantitative goal used to measure the efficiency, rather than effectiveness of the purchasing function. Fear (point 8) has been heightened, as workers are exhorted (point 10) to "do better" and meet their quotas and goals (points 11a. and b.).

c. The revolution in management philosophy: Points 2, 7, and 14. These points are keys to the change in management philosophy, but all 14 points really are needed to encompass the philosophy. Deming said that leadership, training, appropriate uses of inspection, purchasing based on quality (instead of cost, alone), self-development, and continuous improvement go hand-in-hand.

d. Elimination of seat-of-the-pants decisions. Points 3, 4, 5, and perhaps 11. Seat-of-the-pants decisions seem to flow from faulty logic and the short-term pressure to meet goals in order to make the "bottom line" look good. The best decisions seem to be made when the system is thoroughly understood, workers are taught personal responsibility and problem-solving skills, and the focus is on long-term objectives and constant long-term commitment to quality.

e. Build cooperation. Points 1, 2, and 6-13. All of the development of a common philosophy, leadership, training, and casting out fear is aimed toward improving cooperation.

f. Improve manager-worker relations. Points 7, 8, 9, 12, and 13. These points cover management-worker relations in more detail, but building cooperation, as covered by the points in part (e), above, also contributes to improved worker-manager relations.

5.See Review Question 3, above, for a definition from which to begin discussion. Answers will vary, depending on the organization chosen. Optimization requires recognizing the fact that there are interactions among the parts of a system and managers cannot manage the system well by simply managing them in isolation; they must understand that processes that cross functional boundaries, align these processes toward a common vision or goal, and optimize their interactions. Suboptimization (doing the best for individual components) results in losses to everybody in the system.

6.Common causes of variation occur as a natural part of any process and are difficult to change without making a major change in the system of which they are a part. Special causes of variation arise from sources outside the system and can generally be traced back to a specific change that has occurred and needs correction. For example, a process may be stable and running well until the supplier of a critical material or information is changed. An example of such a system that affects us all is the structure of health care insurers in the U.S., today. A change in providers, which now happens very frequently in many organizations, causes the process to go out of control (become unstable) almost every year. A possible "solution" to the special cause is to have the organization work with the vendor to correct deficiencies, and to provide incentives for the vendor to remain the supplier via multi-year contracts and other strategies.

7. Fear can become apparent in many ways in organizations. Workers will tend to do only what they are told to do. They will be afraid to stick their necks out. Managers will be the last to hear of a quality or production problem, because there is a tendency to shoot the messenger, who brings bad news. Rules, both for managers and workers, will become more important than producing a quality products or services. Turnover will be high and morale will be low. If there is a union, grievances will probably be high, due to the lack of union-management trust and cooperation. It is difficult to root out fear, once it has become established. Trust must be rebuilt, and workers must be rewarded for bringing problems forward before they become crises. Workers must also be encouraged and rewarded for developing innovative ideas and improving processes.

8.Deming's philosophy can be applied to an academic environment, but only with concerted efforts on the part of faculty, administrators, and students. Professors obviously serve in a key role in transforming the classroom to a "total quality" environment. Unless they "adopt the new philosophy," change will never come about. Many classes operate on a "control" model and the professor must work hard to "cast out fear." Administrators have a long way to go in learning how to "Improve constantly and forever the system of production and service." Students must learn to work together in teams to "Optimize toward the aims and purposes of the [organization]..." Still, there are a number of departments, colleges of business and engineering, and even universities that are trying and succeeding in applying the Deming principles to improve classroom performance.

9. Demings classic example of the woman on the airplane is an illustration of sub-optimization -- optimizing goals of a sub-unit of an organization while undermining the goals of the larger organization. It shows that the people in the Travel Department did not understand the concept of the system in which they worked. Thus, the components of any system must work together if the system is to be effective. As pointed out in the answer to question 5, suboptimization results in losses to everybody in the system. The Travel Department wins, the travelers department loses, etc. Management must have an aim, a purpose toward which the system continually strives and must understand the interrelationships among the systems components and among the people that work in it. Deming believed that the aim of any system should be optimization for everybodystockholders, employees, customers, communityand the environment to gain over the long term.

This example also illustrates to danger of ignoring Demings Point 4 of the 14 Points: Stop making decisions purely on the basis of cost. Purchasing departments have long been driven by cost minimization without regard for quality. By tradition, the purchasing managers (and probably the Travel Department managers) performance is evaluated by cost. What is the true cost of purchasing substandard airline tickets? The direct costs of poor quality performance of the executive when she arrived at her destination, as well as the possible loss of customer goodwill, can far exceed the cost savings perceived by purchasing. The Travel Department must understand its role as a supplier to the traveler. This relationship should cause individuals to rethink the meaning of an organizational boundary. It is not simply the four walls around the department. The supplier and traveler must be considered as a macro organization.

10. A comparison of Demings newer version of the 14 Points versus the original 14 Points shows more of a systems emphasis. For a number of points, Deming shortened and simplified them, perhaps to eliminate the obvious duplications, and perhaps to make them easier to remember.

1.Create a Vision and Demonstrate Commitment. Originally, in Demings earlier version, commitment to aims and purposes of the organization by senior leaders was something that might or might not be made clear to employees throughout the organization. In the newer version, Deming urged that it be published to all employees.

2.Learn the New Philosophy. Again, the older version suggested that it was primarily the job of management to adopt the new philosophy and provide leadership for change. The new version emphasizes the need for communication of values, expectations, customer focus, and learning as a key area for everyone.

3. Understand Inspection. In the old version, it appeared that Deming wanted to end inspection (although a closer reading showed that he did not advocate ending all inspection). The newer version suggests the need to develop appropriate measurement plans and to understand where measurement should and should not be used.

4.End Price Tag Decisions. The new version makes the simple statement, without prescribing how this should be done, as the old version did.

5.Improve Constantly. This statement is a simplification of his old version of this point, as are the points 6, 7, 8, 10, 12, 13, and 14. He seemed to be willing to let the statements speak for themselves, rather than drawing out their implications or results. Thus it is obvious (he might say) that continuous improvement is to be done so that it will increase quality and reduce costs.

6.Institute Training. Recognizes the critical importance of training.

7.Teach and Institute Leadership. The new version states that leadership should be taught, as well as instituted.

8.Drive Out Fear and Innovate. The new version of this point expands the emphasis to include developing trust and innovation, which is an interesting confluence. Deming implies that when fear is driven out, it is replaced by trust, which then can create a climate for innovation.

9.Optimize the Efforts of Teams and Staff. This point has been broadened considerably to imply that teamwork is the activity required to deploy and optimize the aims and purposes of the organization. The older version indicated that the need for teamwork was related to removing barriers between departments so that problems could be foreseen and solved. This is not negated in the new version, but a vertical dimension is introduced, to complement the horizontal dimension.

10.Eliminate Exhortations. Once again, Deming simplifies the old wording, to eliminate the (to him) obvious statements.

11.Eliminate Quotas and MBO; Institute Improvement; and Understand Processes. Deming saw no need for work standards, quotas, and management by objectives approaches. He assumed that if everyone was working constantly toward process understanding and quality improvement, that there would be no need to exhort workers to work harder to meet numerical goals.

12.Remove Barriers. This is a simplification of his previous point, which had two parts to cover workers and managers.

13.Encourage Education. This point is similar to point 6, but takes a broader view that education, as well as training, is essential for all employees.

14.Take Action. This is the role of leadership, but everyone has to be involved in the transformation process.

11. a. How do senior leaders set organizational vision and values? When Horst Schulze became president in 1983, he and his leadership team personally took charge of managing for quality because they realized that managing for quality could not be delegated. They personally established the Gold Standards, which are the foundation of The Ritz-Carlton quality philosophy. b. How do senior leaders deploy your organizations vision and values through your leadership system, to all employees, to key suppliers and partners, and to customers and other stakeholders, as appropriate? The Gold Standards, in their simplicity, represent an easy-to-understand definition of service quality and are aggressively communicated and internalized at all levels of the organization. The constant and continuous reinforcement techniques of the Gold Standards, led by senior leaders, include lectures at new employee orientation, developmental training, daily line-up meetings, administration of both positive and negative reinforcement, mission statements displayed, distribution of Credo cards, the Credo as first topic of internal meetings, and peer pressure. As a result, employees have an exceptional understanding and devotion to the companys vision, values, quality goals, and methods.

c. How do their personal actions reflect a commitment to the organizations values? Since 1984, all members of senior leadership have personally ensured that each new hotels goods and services are characteristic of The Ritz-Carlton on opening day. An important aspect of this quality practice takes place during the concentrated and intense seven-day countdown when senior leaders work side-by-side with new employees using a combination of hands-on behavior modeling and reinforcement. During these formative sessions, which all new employees must attend, the president and COO personally interacts with every new employee, both individually and in a group setting. He personally creates the employeeguest interface image and facilitates each departments first vision statement. Throughout the entire process, the senior leaders monitor work areas for start-up, instill Gold Standards, model the companys relationship management, insist on 100 percent compliance to customers requirements, and recognize outstanding achievement.d. Senior leaders set organizational vision and values through seven specific decisions:

10-Year Vision: To be the premier Worldwide Provider of Luxury Travel and Hospitality Products and Services

5-Year Mission: Product and Profit Dominance

3-Year Objectives: The Vital Few Objectives

1-Year Tactics: Key Production and Business Processes

Strategy: Customer and Market Focus Strategy with Action Plans

Methods: Total Quality Management (TQM)Application of Quality Sciences; Malcolm Baldrige National Quality Award Criteria; The GreenBook, 2nd Edition (the companys handbook of quality processes and tools)

Foundation: Values and Philosophy, The Gold Standards, Credo; Motto, Three Steps of Service, Basics, Employee PromiseLeadership effectiveness is evaluated on key questions of a semiannual employee satisfaction survey and through audits on public responsibility. Gaps in leadership effectiveness are addressed with development/training plans and extensive12.

Baldrige

CategoryTraditional Management PracticesGrowing

Awareness of QualityQuality Management

SystemWorld-Class

Quality Management

1 Senior leaders job is to maintain the status quo by preventing change

Managers oversee departments or functions. Senior leaders job is to ensure that quality problems are brought to mgt.s attention

Managers oversee dept./functions to stop external failures Senior leaders job is to define and manage change toward a quality mgt. system

Managers guide departments/ func-tions toward quality prevention/appraisal Senior leaders job is to develop vision and encourage innovation and change.

Managers facilitate departments/ func-tions efforts to reach stretch goals

2 Senior leaders develop goals and pass down to lower levels

Goals are zero-sum game - loser for every winner

Senior leaders develop goals in consultation with

middle managers

Goals are based on incentives for highest individual performers

Senior leaders and lower level managers develop goals and resolve through give and take.

Goals are based on mutual trust and team efforts

Senior leaders develop mission and vision on which stretch goals are based and use a catchball process to deploy

Goals are cascaded with individual and team rewards for accomplishment

3 Customers are outsiders in the domain of marketing and sales

Customers have no impact on product design

Complaints are only reacted to Customers needs are the focus of marketing and sales

Customers have some impact on product design

Complaints are taken as a signal of quality problems

Customer/supplier dialogs on quality sometimes occur Customers are surveyed to determine satisfaction

Customers/suppliers are consulted in product design decisions

Complaints are handled system-atically and used for product/process improvement Customers are insiders in the domain of design, production, and marketing

Customers have a major impact on product design

Complaints are only a part of a complete customer management process

4 Control is achieved by pre-established inflexible responsive patterns

Information is generally considered to be secret Control is achieved by somewhat flexible responsive patterns

Information is generally considered to be confidential, but available Control is achieved by cooperative team efforts to improve processes

Information is considered to be widely available to those inside the organization Control is achieved by alignment with goals

Information is interlinked and is considered to be openly available unless proprietary or personally sensitive

5 People are an interchangeable commodity

Adversarial relation-ship between union (if one exists) and management

Hierarchical chimney structures prevent teamwork between functions.

Performance appraisal and reward systems place people in a competitive environment. People often have valuable unique skills and should be rewarded for indivi-dual contributions

Consultative relationship between union and management

Chimney structures need to be reduced to permit teamwork between functions.

Performance appraisal and reward systems need modifi-cation to reduce competitive environ-ment People should be encouraged to work in teams to solve problems

Cooperative relationships between union and management need to be developed

Chimney structures virtually eliminated to enhance teamwork between functions.

Performance appraisal and reward systems modified by team and/or goal-based reward systems People should be empowered to work individually and in teams to meet individual and organizational goals

Relationships between union and management based on full partnership

Cross-functional teams and project structures virtually eliminate hierarchy.

Performance appraisal and reward systems replaced by team, goal, and knowledge-based reward systems

6 Processes are seen as a collection of separate, specialized units, in a functional hierarchy.

Suppliers are pitted against each other to obtain the lowest price

Processes are seen as a collection of separate units, in a functional hierarchy, but cross-functional activities require a coordinative mechanism.

Suppliers are selected, based on performance to obtain better quality and service at an acceptable price Reorganization of processes of some separate units, out of the functional hierarchy, is seen as advantageous

Suppliers are consulted for critical design information and given support in efforts to develop improved products and services

Processes are seen as a system of interdependent sub-processes linking the organization to customers and suppliers

Suppliers are partners with their customers. Goal is to have few suppliers and establish long-term relationships

7 Results are primarily stated financially

Any negative deviation is a cause for corrective action and search for a scapegoat Results are primarily stated in financial and market terms

Any negative deviation is a cause for corrective action Results are stated in financial, market, operating, quality metrics

Any negative deviation is a cause for correction after some investigation, and development of a new tracking measure, if required Results are stated as a balanced scorecard

Benchmarking and historical comparisons are used for setting goals, tracking, and improvement.

Any negative deviation is a cause for investigation using existing goals and metrics before any corrective action is taken

13.In a sense, all of the Baldrige criteria pertain to the concept of sustainability. Within the Baldrige framework, sustainability refers to an organizations ability to address current business needs and to have the agility and strategic management to prepare successfully for the future, and to prepare for real-time or short-term emergencies. Recently, concepts of workforce and customer engagement have been integrated within the Baldrige criteria.

In particular, senior leaders are charged with the responsibility of developing a sustainable organization. Thus, these Baldrige questions are relevant: How do senior leaders create a sustainable organization? How do senior leaders create an environment for organizational performance improvement, the accomplishment of your mission and strategic objectives, innovation, competitive or role-model performance leadership, and organizational agility? How do they create an environment for organizational and workforce learning? How do they develop and enhance their personal leadership skills? How do they personally participate in succession planning and the development of future organizational leaders?

14.The Deming Prize is a nationwide Japanese (later extended to other countries) quality award that recognizes individuals, factories, divisions, small businesses and individuals for quality excellence. It has 10 measurement categories that are related to CWQC based on statistical quality control concepts. Some of these are policy/objectives, organization, information, analysis, quality assurance, effects, and future plans. The MBNQA has 7 criteria, including a number that are in the Deming Prize criteria. Some of these are strategic quality planning, information and analysis, human resource (workforce) utilization, quality assurance, and quality results. Interestingly, customer satisfaction and leadership are included in the MBNQA criteria, but not in the Deming Prize requirements. (See Bonus materials on the Premium website.)15.As in many areas or types of organization, the Baldrige process can be effective in developing high-quality e-commerce organizations.

Leadership: Leaders (Category 1) such as Bill Gates, Michael Dell, and Jeff Bezos possess strong corporate visions. They seem to have the ability to transform existing business models into strategic frameworks that will create and deliver value. The real test will come in determining whether those models have staying power during an economic downturn. Innovation must be balanced with performance, and performance measures must be developed and used to assess the quality of e-business results.

Strategic planning and strategy development (Category 2) are two areas in which e-commerce businesses have not generally excelled. A number of strategic factors in e-commerce have changed, but many more have remained the same. Among those that have changed are lower per-customer marketing costs, higher cost of establishing brand identity, a need to decide which e-commerce channels to compete in [e.g. B2B, B2C, C2B, or C2C; B = business, C = consumer], and needs for extreme agility and speed. Those that have not changed include the requirement to deliver value to the customer, the requirement to develop a well-thought-out mission, vision, and business plan, the need for cost-efficient operations, the requirement to have effective processes, the need to deliver quality products and services, the need for production-oriented people, not just creative nerds, and the need to make a profit.

Customer and market focus (Category 3) requires an understanding of the power of the customer in the e-marketplace. Building relationships with customers is harder than ever in e-commerce, but more vital to the health of the business. Mass customization, market segmentation, value-added service, and customer relationship management are all essential to healthy e-business.

Category 4, Information and analysis, is almost too obvious to mention in relation to e-commerce. The challenge is to turn data into information. It doesnt matter if an e-business web site is getting 10,000 hits a week. What matters are the characteristics of the people who are buying the organizations products or services. Thus, Amazon.com uses sophisticated software to suggest items that may appeal to a customer, based on his/her previous purchases, as well as purchases of others with similar interests.

Process management (Category 6) is necessary, because if an organization cant deliver its product or service, it is doomed to failure. Yet, delivery is the weak link in many e-business plans. As Phillip Crosby said, companies should be willing to share their quality successes, because only a handful of firms understand that its necessary to slog out quality a yard at a time. Only a few e-businesses understand that its necessary to slog out the nitty-gritty processes of delivering a quality product to the customer. Often that takes use of old fashioned technology, like a UPS or FedEx delivery truck to get that book, CD, or airline ticket ordered on-line to the customers door.

16.In examining the ISO 9001 requirements of:

a. The organization shall determine requirements specified by the customer

b. Records from management reviews shall be maintained.

c. . . .documentation shall include . . . documents needed . . . to ensure the effective planning, operation and control of its processes. . .

d. . . .shall determine the monitoring and measurement to be undertaken. . .to provide evidence of conformity of product to determined requirements.

e. The quality management system. . .shall include a quality manual.

f. . . .establish and implement the inspection or other activities necessary for ensuring that purchased product meets specified requirements.

It could be argued that only items d. and f., and perhaps c., are directly involved in quality control. However that only addresses the issue of quality of conformance. To develop a system of quality design and continuous improvement, the voice of the customer (item a.), standardization of processes (item e.), and record-keeping for control and improvement purposes (items b. and c.) must be implemented. 17.The philosophy of Six Sigma quality design and improvement often proves to be challenging to implement in almost any organization, initially. In some instances, there may be unique barriers in educational organizations. Human issues include management leadership, a sense of urgency, focus on results and customers, team processes, and culture change; process issues include the use of process management techniques, analysis of variation and statistical methods, a disciplined problem solving approach, management by fact. However, it is more than simply a repackaging of older quality approaches, such as the traditional notion of Total Quality Management. Some educational institutions have implemented many of the traditional TQM approaches, but:

TQM is based largely on worker empowerment and teams; organizational leader champions must own Six Sigma.

TQM activities generally occur within a function, process, or individual workplace; Six Sigma projects are truly cross-functional.

TQM training is generally limited to simple improvement tools and concepts; Six Sigma focuses on a more rigorous and advanced set of statistical and a structured problem solving methodology DMAIC Define, Measure, Analyze, Improve, and Control.

TQM is focused on improvement with little financial accountability; Six Sigma requires a verifiable return on investment and focus on the bottom line.

In addition, Six Sigma has elevated the importance of statistics and statistical thinking in quality improvement. Six Sigmas focus on measurable bottom line results, a disciplined statistical approach to problem solving, rapid project completion, and organizational infrastructure make it a powerful methodology for improvement.Several of these characteristics could prove to have practical difficulties for hospitals, governmental agencies, and non-profit organizations. These could appear in the areas of cross-functional cooperation (professional vs. business staff in universities, and turf issues in school systems); training and use of rigorous statistical tools (capability of personnel and availability of funds to hire and maintain technical experts, such as Six Sigma Black Belts); focus on financial accountability (many educational organizations have difficulty maintaining financial systems and accountability); and rapid project completion (most such organizations are not know for their speed in completion of projects and studies, due to their collegial and bureaucratic environments that often exist side by side).

Six Sigma may be implemented in a school or university if some of the above issues can be addressed. However, resistance could be high when speaking to liberal arts (or even engineering and business faculty) about return on investment for classroom and departmental improvement projects. Again, many projects and studies, while they are often team-based, move at glacial speed towards completion in the academic environment.

SUGGESTIONS FOR PROJECTS. ETC.

1. This project is designed to allow students to determine for themselves if companies that they are familiar with emphasize total quality. As can be seen from the Deere and Company case (see Bonus materials on the Premium website), some companies have continuing references to their total quality efforts. Others may mention it in passing or not at all.

2. Students could use principles from Chapter 5 (see information on survey design) to design the questionnaire and content from Demings 14 Points to perform this project.

3. This website is an excellent location for information about the Baldrige process, events, and news items.

4. This exercise is designed to involve students in assessing specific quality categories and criteria in an organizational setting (their college or university) that most of them understand, in general, but probably would not know how to start to assess the particulars.

5.This project permits students to discover how differences in terminology and approach in education and health care differ from those in business. However, they can also see the commonalities that are built into the Baldrige criteria that make them applicable to a wide variety of organizations. The second part of the project asks students to address the specific changes needed to tailor criteria to a type of organization within a sector. Answers to discussion questions 14 and 15 may prove to be helpful in structuring this project.

6. Since approximately 45 out of the 50 states do have awards, most students will discover that their state does have such an award. The majority of awards have their own web sites, which can be used to obtain contact information, and in some cases, profiles of state award winners.

7. This exercise is designed to expose students to the use of ISO 9000:2000 in organizations. Students may find that managers perceive that ISO 9000:2000 is going to be more costly and difficult to attain and keep, based on the need for a more comprehensively deployed system required by the new standards.

8.This is an interesting source of information on the current ISO registrations. Now that the ISO 9000:2000 requirements are fully in place, it will be interesting to see whether the trend will be toward increasing or decreasing numbers of registrations.

9.The results will vary, depending on the organizations chosen for study.

ANSWERS TO CASE QUESTIONSI.Santa Cruz Guitar CompanyBased on the tour of Santa Cruz Guitar Company, it is easy to identify how the operations and quality practices reflect Demings 14 points. Almost every point can be matched with a specific practice followed by SCGC.1. Create a Vision and Demonstrate Commitment. This principle is exemplified in the small staff of 14 craftsmen, known as luthiers, who apply care and attention to detail while hand-crafting the major components of each instrument. Also, the company recruits only those who desire to work in a team environment and have a passion for guitar making.

2.Learn the New Philosophy. Experienced luthiers, who are empowered to make their own quality decisions, staff each station.3. Understand Inspection. The manufacturing department inspects what it produces.4.End Price Tag Decisions. This makes the simple statement, without prescribing how this should be done. It seems obvious that SCGC does not cut corners when it comes to using quality materials. This is shown by: The guitar body is finished with 12 protective layers of a specially formulated lacquer composed primarily of nitrocellulose and plasticizers to preserve the wood surfaces.5.Improve Constantly. These opportunities for training and improvement (reference points 10. 11. And 14, below) allow the craftsmen to explore new techniques in guitar building and become familiar with the entire guitar building process.

6. & 7. Institute Training and Teach and Institute Leadership. Teamwork and mentoring of new and seasoned luthiers show how training, teraching and leadership through mentoring is built in to the process. The guitar does not move to the next station until the luthier and another more senior luthier are satisfied with the quality of the work.

8.Drive Out Fear and Innovate. Although modern computer numerical controlled (CNC) equipment is used to manufacture minor parts of the guitar, the secret of SCGCs success lies in the small staff of 14 craftsmen.

9.Optimize the Efforts of Teams and Staff. The shop floor is divided into six workstations at which the guitars are progressively assembled as they move from station to station.

10. & 11. Eliminate Exhortations and Eliminate Quotas and MBO; Institute Improvement; and Understand Processes. SCGC is a small-scale manufacturing operation, producing fewer than 800 instruments a year. Since the true sound of the instruments will not be fully realized until they are assembled, the luthiers write down what they did while building the top. After final assembly, if a guitar produces a sound so special it knocks the players socks off, the luthier who built the top will immediately be notified and asked to check his notes to see how this was accomplished so the sound can be duplicated in the future.

12.Remove Barriers. SCGC workers are even encouraged to go out on their own to open a luthier business someday.13.Encourage Education. At SCGC, workers are encouraged to further enhance their skills either by taking external courses or by a practice that allows them to build two instruments a year for personal use.14.Take Action. This is the role of leadership, but everyone has to be (and appears to be) involved in the transformation process at SCGC.

II.Can Six Sigma Work in Health Care?

As the old proverb says: The longest journey begins with the first step. Colin has taken the first step by encouraging the executive management team at Southwest Louisiana Regional Medical Center (SLRMC) to get involved in developing their quality process. However, as a consultant, your first step is to educate and assess readiness for change. In the initial agenda, you would want to concentrate on helping the executives to understand that Six Sigma is not a program, but a process. That agenda might include:

Discussion of mission, vision, and values of SLRMC

Leadership activities

Strategic and operational planning approaches

Goals and goal-setting

Concepts of quality

Goals and expectations about Six Sigma

Willingness to commit personal and organizational time and money to develop a Six Sigma process

From the chapter, the following would help lay the philosophical groundwork. A Six Sigma process requires:

Thinking in terms of key business processes and customer requirements with a clear focus on overall strategic objectives.

Focusing on corporate sponsors responsible for championing projects, supporting team activities, helping to overcome resistance to change, and obtaining resources.

Emphasizing such quantifiable measures as defects per million opportunities (dpmo) that can be applied to all parts of an organization: patient services, quality assessment, financial management, human resources, and so on.

Ensuring that appropriate metrics are identified early in the process and that they focus on health care results, thereby providing incentives and accountability.

Providing extensive training followed by project team deployment to improve profitability, reduce non-value-added activities, and achieve cycle time reduction.

Creating highly qualified process improvement experts (green belts, black belts, and master black belts) who can apply improvement tools and lead teams.

Setting stretch objectives for improvement.

Questions related to the above would be: where are you now in the quality journey? Where would you expect to be in three years? What are you willing to commit to in order to reach that goal?

The infrastructure design might revolve around the Baldrige criteria or ISO 9000-2000 requirements. So how should SLRMC choose? The correct answer is that is should not be either/or, but rather, any appropriate combination of Baldrige, ISO, and/or Six Sigma.

III.Novel Connect: Understanding the Organizational EnvironmentNote: The Novel Connect Case Study (see Baldrige Materials folder on the Premium website for complete case) was prepared for use in the 2008 Malcolm Baldrige National Quality Award Examiner Preparation Course. It used the 2008 Baldrige criteria, which may have some key differences in the criteria questions as compared to later versions of the criteria, however these differences are not relevant for this case.

Students are asked to:

Read the Organizational Profile, which is a description of the organizational environment, relationships, and challenges that impact the companys performance excellence approaches. In examining the scope of the first six categories (excluding results) in the 2008 Baldrige criteria (also available in the Baldrige Materials folder on the Premium website), list the most relevant factors from the Organizational Profile that would affect your assessment of the management practices for this organization.Although more extensive than students might be expected to discover, the following are comprehensive listings of the relevant factors that might apply to each of the six Baldrige criteria, based on the organization profile.

Category 1. Leadership:Purpose: Facilitates a world on the move. Vision: the most innovative company for mobile communication in the world. Mission: leverages new and existing technology to advance mobile communication. Core values: agility, valuing employees/partners, innovation, and sustainability

Culture promotes core competencies of agility and communication: working out of the home, flexible work schedules, and maximizing technology (cell phones, virtual meetings, teleconferencing) to minimize travel.

4,188 employees make up a virtual, distributed workforce: 1,200 in innovation (sales, R&D, marketing, IT, and product engineering), 2,738 in operations, and 250 in administration and support. There is no employee union. Women compose 65% of the workforce; 50% of employees are under age 40; for 20%, English is asecond language; and 15% are disabled.

Organizational structure: A nine-member Board of Directors (BOD) composed of eight independent members and the CEO, four standing BOD committees, and a five-member Senior Leader Team (SLT). The relatively flat organization has one rotating ethics officer, and the 11 pods have team leaders.

Key suppliers/partners: two offshore manufacturing suppliers (in China and India), a cell carrier, retailers, transportation companies, integrated component/software manufacturers, universities, IT support, a security company, and a law firm

Strategic challenges: communication, rapidly changing customer/market needs (volatility in niche markets), volatility of the overseas environment

Category 2. Strategic Planning:

4,188 employees make up a virtual, distributed workforce: 1,200 in innovation (sales, R&D, marketing, IT, and product engineering), 2,738 in operations, and 250 in administration and support. There is no employee union.

Key customer requirements: allease of use, reliability; personal consumerstrendiness, convenience, secure/encrypted data and transmission, personal/home safety and security, low cost, ruggedness; business consumersruggedness, personal safety and security, data and voice capability, sustained signal/strength across distances, secure/encrypted data and transmission; business/government consumerssecurity, data and voice capability, secure/encrypted data and transmission, sustained signal/strength across distances

Key suppliers/partners: two offshore manufacturing suppliers (in China and India), a cell carrier, retailers, transportation companies, integrated component/software manufacturers, universities, IT support, a security company, and a law firm

Key competitors: five of the largest cell phone manufacturers, two other niche market competitors, several manufacturers of integrated communication devices, and several dozen competitors in the fragmented cell phone component and ringtone markets

Strategic advantages: product/feature design innovation, business model innovation, lowered costs from offshore supplier/partnership relationships

Strategic challenges: availability of a highly skilled workforce, communication, logistics, rapidly changing customer/market needs (volatility in niche markets), protection of intellectual property, volatility of the overseas environment, market forces driving the cost of cell phones and market penetration

Category 3. Customer Focus:Five major product lines: Novel Complete, Novel Secure 1, Novel Free, Novel Bug, and Novel Aid

Serves only the U.S. market. Seventh-largest manufacturer of cell phones, with approximately a 3% market share, and the fourth-largest supplier of ringtones. $3.25 billion in sales, with approximately 26.6 million phones sold in 2007. The focus is on profit, rather than growth.

Key customer segments: personal consumers (students in Gen-Y, celebrities and sports stars, preteens, single adult females, the elderly, the disabled); personal/business consumers (outdoors people); business consumers(truckers, taxi drivers); business/government consumers (emergency services workers); and government consumers (the Department of Homeland Security)

Key customer requirements: allease of use, reliability; personal consumerstrendiness, convenience, secure/encrypted data and transmission, personal/home safety and security, low cost, ruggedness; business consumersruggedness, personal safety and security, data and voice capability, sustained signal/strength across distances, secure/encrypted data and transmission; business/government consumerssecurity, data and voice capability, secure/encrypted data and transmission, sustained signal/strength across distances

Principal success factors: a strong relationship with carriers, ability to respond to rapid changes in the marketplace with new product design and/or superior hardware/software quality, and collaborations with key suppliers/partners

Strategic challenges: rapidly changing customer/market needs (volatility in niche markets), volatility of the overseas environment, market forces driving the cost of cell phones and market penetration

Category 4. Measurement, Analysis, and Knowledge Management:Key suppliers/partners: two offshore manufacturing suppliers (in China and India), a cell carrier, retailers, transportation companies, integrated component/software manufacturers, universities, IT support, a security company, and a law firm

Strategic challenges: rapidly changing customer/market needs (volatility in niche markets), protection of

Comparative data sources: the QuEST Forum, the Association for Connecting Electronics Industries, PH and Smell, the American Production and Inventory Control Society (APICS), the Best-of-the-Rest Freight Carriers, Bloodred Orange, Rushed, Allegiance Survey data, the HDI, and SooperdooperSoft

Core value: innovation

4,188 employees make up a virtual, distributed workforce: 1,200 in innovation (sales, R&D, marketing, IT, and product engineering), 2,738 in operations, and 250 in administration and support.

Performance improvement system: Process Improvement Process (PIP), which is based on Design, Measure, Analyze, Improve (DMAI); balanced scorecard; and Measuring, Action, and Performance (MAP) integrated databases. Also starting to use Lean and Six Sigma methodologies.

Category 5. Workforce Focus:4,188 employees make up a virtual, distributed workforce: 1,200 in innovation (sales, R&D, marketing, IT, and product engineering), 2,738 in operations, and 250 in administration and support. There is no employee union. Highly educated workforce: 25% with a postgraduate degree, 40% with an undergraduate degree, 25% with some technical college, and 99% with a high school diploma. Women compose 65% of the workforce; 50% of employees are under age 40; for 20%, English is a second language; and 15% are disabled.

Workforce requirements for all: knowing what is expected, having the right materials and training, timely and appropriate feedback and recognition, opportunities for growth and development, organizational flexibility to accommodate diverse lifestyles, coworkers committed to excellence, connection with the companys values, and the ability to contribute to its success.

Additional requirements for office and home workers: appropriate work space ergonomics, personal safety, and security. Additional requirements for manufacturing workers: appropriate ergonomics, machine operation safety, environmental safety, emergency preparedness, personal safety, and security

Culture promotes core competencies of agility and communication: working out of the home, flexible work schedules, and maximizing technology (cell phones, virtual meetings, teleconferencing) to minimize travel.

Core values: valuing employees/partners and innovation

Strategic challenges: availability of a highly skilled workforce, communication

Category 6. Process Management:Midsized manufacturer of cell phone hardware, software (including ringtones), cell phone accessories, and other communication devices that integrate audio, text, and Global Positioning System (GPS) features. Basic manufacturing (components and hardware) is done by offshore suppliers.