Quality Management Principles Become CEO Management Practices

Marsha Ludwig-BeckerFall 2001 © 2001 by

Becker Technology, Inc

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A Quality System versus a Management System

• The management system of a company should be determined strategically and must meet the company’s business objectives.

• The ISO standards and guides can be used to accomplish strategic business objectives, to create a quality management system that fits the business, integrates company-wide operations, and makes profit.

• The benefits of such as system are beginning to be documented as improved worker productivity, increased process efficiency, reduced errors, time saved, access to real time information, data for making decisions, positive customer surveys and empowered workers.*

*Murphy,John M., “Let the System Drive Your ISO 9000 Effort”, Quality Digest, December 1996, p.37

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Objectives

• Understand the basics of Quality Management principles

– Customer focus– Leadership– People involvement– Process approach– Systematic approach to management– Continual improvement– Factual approach to decision-making– Mutually beneficial supplier relationships

• Understand how these principles can be applied to CEO management practices

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A Quality System is a Management System

Adapted from: Ludwig-Becker, M., Electronics Quality Management Handbook, McGraw-Hill, 1997, p.18

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ISO 9000-2000 Invokes Quality Management Principles(QMP)

• ISO 9004-2000 paragraph 4.3, “Use of Quality Management Principles”:

– “To lead and operate an organization successfully, it is necessary to manage it in a systematic and visible manner. … These principles have been developed for use by top management in order to lead the organization toward improved performance. These quality management principles are integrated in the contents of this International Standard…”*

– They certainly have been incorporated– ISO 9000-2000 highlights:

• Customer focus, leadership, involvement of people, process approach, systematic approach to management, continual improvement, factual approach to decision making, and mutually beneficially supplier relations

• Evidence of where these requirements are in ISO 9001:2000 can be found in the module defining exact changes

*ISO 9000-2000, p. 4

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Quality Management Principles: Definition

• Quality Management Principles are:– A comprehensive and fundamental set of rules or beliefs

for leading and operating an organization aimed at continually improving performance over the long term by focusing on customers while addressing the needs of all stakeholders.*

*From the Quality Management Principles Internet site: http://www.wineasy.se/qmp/about.html

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What are the Eight (8) Quality Management Principles?

1. A Customer Focused Organization2. Leadership3. Involvement of People4. Process Approach5. Systematic Approach to Management6. Continual Improvement7. Factual Approach to Decision-Making8. Mutually Beneficial Supplier Relationships*

*ISO 9004-2000, p.4-5

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Principle 1: Customer Focus - OrganizationsOrganizations depend on customers and must understand, strive to meet and exceed customer expectations.*

• Two facets: Customer focused organizations, which should result in customer satisfaction is a number one objective

– World Class Companies (Motorola/Hewlitt Packard (HP)/Texas Instruments (TI) anticipate customer requirements/needs

– Baldrige category : “Customer Focus and Satisfaction” is one whole area

• Long term customers a plus for business– Profits come from upgrades, services, new products that people

believe in; Customer Satisfaction is only the first step in building long term loyal customers; the need is to focus on retention and loyalty

– Use Quality Function Deployment (QFD)• Can be used for almost anything, see Lou Cohen’s book,

How to Make QFD Work for You, (Addison-Wesley, 1995) as well as the QFD internet page http.www//akao.larc.nasa.gov/dfc/qfd.html

*ISO 9004-2000, p.4

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Principle 1: Customer Focus - Satisfaction

Quality is “perceived” according to KanoThink about what delights you as a

customer !

From: Ludwig-Becker, M., Electronics Quality Management Handbook, McGraw-Hill, 1997, p.67 from Juran and Gyrna, Quality Planning and Analysis, 3rd Ed. McGraw-Hill, 1993,p. 247, used with permission

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Baldrige Award Criteria Framework

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Principle 2: LeadershipLeaders establish unity and purpose for the internal environment of the organization.*

• Leaders must be people that– Have the ability to think in time spans of years instead of

months – Visualize life in 5 years--what do you want it to be– Stress corporate “big picture”

• Leaders– Develop a participative climate

• Partnerships• Make others responsible• Employee participation

– “Walk what you talk”– “Say what you mean, mean what you say”

*ISO 9004-2000, p.5

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Vision Led Value Driven Leadership

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Principle 2: Leadership

• Leadership skills must be cultivated – Encourage innovation and change

• No fear of failure, sponsor change

– 3M scientists spend 15% of time on new ideas

– Provide corporate funding• Create a secure environment

– Compromise between Japanese concept of lifetime employment and the American tendency to “fire at will”

– Creates greater work efficiency

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Principle 3: People Involvement People at all levels are the essence of the organization and their full involvement enables their abilities to be used for the organization’s benefits.*

• Worker empowerment comes from the ability of employees to make a difference in the process they manage

• Workers need tools to analyze, organize, understand and use large amounts of data to make important decisions that impact the bottom line

*ISO 9004-2000, p.5

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Principle 3: People Involvement

• The Way of the Beaver People*– Work best when they control their own jobs– Must have clear understanding of company’s overall purpose as

well as their place in it (clear goals, values)– People must know that their thoughts, feelings, needs and

dreams are respected listened to and acted on.• They are in the information loop

– Then people take control of their work– Must set realistic goals for employes– Individuals take pride in in holding themselves accountable for

productivity, innovations, cost control, customer service and other business needs

– Need boundaries--helps encourage self control and accountability

– Empowerment cultures become team cultures• Then must be taught to work in teams

*Blanchard, Ken, “One Minute Manager:” Quality Digest, Nov. 1997, p. 19

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Principle 3: People Involvement

Empowerment*

• Responsibility is delegated, not authority

• Three facets to empowment (each depends on the other two)

– Wisdom to know what to do and when to do it

– The will to do what needs to be done

– The wherewithal to do it

*Guest Editorial, by John Troyer, Quality Digest, Oct. 1996, p. 64

Figure 3.1a: The Empowerment Cube

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Principle 4: Process ApproachA desired result is achieved more efficiently when related resources and activities are managed as a process.*

Everything done is involved in a process– Meet needs and requirements of internal and external

customers– Must have clear responsibility for each process– Measure process, measure inputs, and outputs

*ISO 9004-2000, p.5 Note: Figure 3.3 from ISO 9000-1: 1994, p. 4

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Principle 4: Process Approach

Baldrige Approach, Category 6: Process Management

– ISO 9001-1994 generally manufacturing oriented

– With more use in other industries, the 2000 standards change

– Total quality management (TQM) is cornerstone of process

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Principle 4: Process Approach

• Processes should satisfy customer’s needs– If they don’t; they are NOT good processes

• Process improvement focuses on implementing the best methods for translating valid operational requirements into finished products and services

• Processes are defined by flow charts • Identify key processes and related goals

– Define key cross functional business processes– Form teams and develop charters– Develop measurements– Manage the Process

• Discuss process maintenance, improvement, team improvement

*“How to Manage Key Business Processes”, by Rico Yingling, Quality Progress, April 1997, p. 107-110. Used at Border Chem. in Kent, WA.

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Principle 5: Systematic Approach to ManagementIdentifying, understanding, and managing a system of interrelated processes for a given objective contributes to the effectiveness and efficiency of the organization.*

• Management:– A series of interrelated processes – A system is defined by identifying all interrelated

processes and their interdependences– A system is managed as system of interrelated processes

• Integrated Master Plan (IMP); Integrated Master Schedule (IMS)

– New requirements of DOD in US– A system is improved by continuous measuring and

evaluating– An effective system provides confidence in an

organization’s capability to meet customer requirements

*ISO 9004-2000, p.5

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Principle 5: Systematic Approach to ManagementThe Business Process

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Principle 6: Continual/Continuous ImprovementContinuous/continual improvement is the permanent object of an organization that wishes to stay in business.*

• Performance improvement: 3 flavors• Strategic planning--

customer needs• Operational planning--

translates strategy into operational and financial requirements

• Process improvement focuses on best methods for operational requirements into finished product/services

• Deming’s Plan/Do/Study(check)/ActP - Plan activitiesD - Implement the PlanC - Study (Check) the resultA - Improve the process

*ISO 9004-2000,p.5

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Principle 6: Continual/Continuous Improvement

• Phases of continuous process improvement (see next chart)– Awareness, Resistance, Expansion, Integration and finally

Regeneration, or Continuous Improvement

• Strategies for Implementation1. Commitment2. Training3. Targeting and Deployment4. Resources5. Measurements6. Management Structure7. Systems Alignment8. Communication and Information*

*Doherty, Steve D., “A Blueprint for Excellence”, Quality Progress, April 1991, p. 84-85

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Principle 6: Continual/Continuous Improvement

Blueprint for Excellence at the Air Force Logistics Command (AFLC)

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Principle 7: Factual Approach to Decision-MakingEffective decisions and actions are based on the logical and intuitive analysis of data and information.*

• “Can’t manage what you can’t measure” • “In God we trust, all others bring data”• Programs that produce employee involvement

– Statistical Process Control (SPC)--more than for manufacturing

• Now used in all soft processes• Software, in Europe, only think of SPC

– Motorola’s Six Sigma program is an SPC program that produces a goal for all employees to aim at and rally around

• Must measure all processes, especially business processes– This is where the money can be saved and customer

satisfaction heightened

• Measurement must be automatic: built into the process*ISO 9004-2000, p.5

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Principle 7: Factual Approach to Decision-Making

From: “As Easy as Two Plus Two”, News for a Change, Association for Quality and Participation, Cincinnati, OH.,

Nov. 1997, p. 4

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Principle 7: Factual Approach to Decision-Making

Measuring Business Processes

From: Kordupleski, R., Rust, R, and Zahorik, A, “Why Improving Quality Doesn’t Improve Quality”, California Management Review, vol.38, no. 3, Spring 1993, p. 91

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Principle 8: Mutually Beneficial Supplier Relationships Mutually beneficial relationships between the organization and its suppliers enhance the ability of the organization to create value.*

• A Win Win Philosophy!!!! • Supplier Partnership is the new buzzword

• Part of a new way of doing business• TQM is making the difference • Fewer suppliers/longer term suppliers,

specialization, cost• Cross functional teams including suppliers• Best Value = Customer satisfaction• Involved in Service sector as well

– Involve suppliers in product development• On Site, strategic planning, input on product plans

– Electronic purchase orders and automated systems

*ISO 9004-2000, p.5

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Principle 8: Mutually Beneficial Supplier Relationships

Supplier Chain Management

• Measures cycle time– Cuts

transportation costs 5-12%

– Inventory costs 10-40%

– Schedule changes 15-65%

• Cuts out stovepipes; allows more benchmarking** From “The Hearth of the Matter, by Roberto Michel, Manufacturing Systems (A Cahners

publication) April 1997 or see http://www.manufacturingsystems.com. Figure 1.7 from Ludwig-Becker, M., Electronics Quality Management Handbook, McGraw-Hill, 1997, p.388

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Summary

• Implementing the Eight Principles is not easy• Takes a good leader• Takes vision/perseverance• Requires infrastructure• Requires communication• Much planning should start immediately• Goes along well with ISO 9000 implementation• See attached Self Assessment for QMP Implementation

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Self Assessment for Quality Management Principles (QMP), page 1

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Self Assessment for Quality Management Principles (QMP), page 2

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Sources

• California Management Review, S549 Haas School of Business #1900, Berkeley, CA 94720, cmr@haas.berkeley.edu

• ANSI/ISO/ASQ Q9004-2000, Quality Management Systems--Guidelines for performance improvements, American Society for Quality (ASQ), P.O. Box 3005 Milwaukee, WI 53201, 2000; http://standardsgroup.asq.org

• The Informed Outlook, International Forum for Management Systems, Inc., 15913 Edgewood Dr.Montclair, Virginia 22026, www.informintl.com

• ANSI/ASQC Q9001- 1994, Quality Management and Quality Assurance Standards--Guidelines for Selection and Use, ASQ, Milwaukee, WI, 1994

• Ludwig-Becker, M., Electronics Quality Management Handbook, McGraw-Hill, 1998, becker2@worldnet.att.net

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Sources

• Manufacturing Systems (A Cahners publication) April 1997 or see http.www.manufacturingsystems.com

• Quality Digest, 1350 Vista Way., P.O. Box 882,Red Bluff, CA 96080, qualitydig@qof.com

• Quality Management Principles Internet site: http:www.wineasy.se/qmp/about.html and ISO 9004: July 1998, p.415-416 & ISO/CDI ISO 9000-1998, p. 2

• Quality Progress, American Society of Quality, 611 E. Wisconsin Ave., P.O. Box 3005, Milwaukee, WI 53201

• For Quality Function Deployment (QFD)Lou Cohen’s book, How to Make QFD Work for You, (Addison-Wesley, 1995) as well as the QFD internet page:http.www//akao.larc.nasa.gov/dfc/qfd.html