Relationship matrix
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Relationship matrix
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CHAPTER 4Section 4.4 Total Quality Management
Problems are often encountered when attempting to meet or exceed customers’ needs and expectations. For example, a hospital may find that emergency room patients with problems that are not life-threatening complain they have to wait too long for service, or an automobile manufacturer may find that its customers want an increasing number of product options but want prices to remain low. Problems like these can be solved better by a team than by one individual. Team efforts to problem solve allows for different view- points and also enables the team members to split the workload and to brainstorm pos- sible solutions with one another. When an organization faces a complex problem, a team approach to decision making may be more effective than relying on one individual to make the necessary decisions. One person may not have access to all the information, nor have the broad range of knowledge needed to understand the problem, design alternative solutions, and select the best approach. Group decision making is also very useful when building commitment to the selected alternative. When top management makes decisions, commitment to make alternative solutions work may be low, thereby making implemen- tation very difficult. Convincing people to use a new approach is easier when each person is involved in the decision-making process. When a group is involved, each member will find ways to make the new approach work, rather than find excuses for why it will not.
Deming emphasized the importance of training employees to use the tools of statistical process control. As organizations have adopted a team approach to problem solving, it has also been determined that employees need training to work effectively in groups, and to use group problem-solving tools. Pareto charts that identify the most frequent causes of quality problems, cause and effect diagrams that illustrate the root cause for a
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CHAPTER 4Section 4.4 Total Quality Management
problem, and quality control charts that assess quality conformance are just three of many techniques.
Companies that use TQM must determine what their customers’ needs and expectations really are, not what the company thinks they are. This philosophy of basing decisions on facts, data, and analysis—instead of intuition or inference—extends to other areas of the TQM company. Companies today are beginning to operate with a new saying: “What gets measured gets attention.” This has always been true as employees concentrated on the criteria they knew would be used to judge them. Now companies are realizing that those criteria must tie into the company’s competitive strategy. As a result, some of the most important measurements today are those related to quality. These measurements of quality include not only internal measures, such as the number of customer complaints received or the percent of products reworked, but also external measures, such as cus- tomer satisfaction. In many cases, firms are taking quality to the next level. They are seek- ing to know more about their suppliers’ satisfaction at working with them, as well as the suppliers’ capabilities. If the firms know something about the suppliers’ capabilities, they may be able to use those capabilities in new ways. Product quality and satisfaction of the final customer are determined by all of the participants in the supply chain, so knowing something about suppliers is important to quality improvement. For example, the equip- ment supplier for a medical test such as a CAT scan, or the supplier of hardware for a fur- niture manufacturer impact the quality of the service or good purchased by the customer.
Benchmarking is a process by which a company compares its performance to the perfor- mance of other companies. Those other companies need not be competitors, nor be within the same industry. Instead, the purpose of benchmarking is to set a standard based upon the company that is recognized as the best at a certain activity. As an example, many com- panies use L.L. Bean as a benchmark for online ordering and order fulfillment. To be effec- tive at benchmarking, firms must understand that a benchmark does not define the best possible outcome; it only identifies what a company has achieved. Choosing the wrong companies to benchmark can lead to setting standards that are too low. As a result, a benchmark is only one piece of information that companies should use to set performance goals for quality or any other important outcome.
Broader Measures of Performance
Companies have traditionally measured their performance using the accounting stan- dards of cost and profit. Today, those standards alone are insufficient. Quality is an impor- tant performance measure that must be used, especially by companies using TQM. Cus- tomers’ needs may include other factors such as delivery speed, flexibility, or innovation, therefore, the performance measurement system must also include these factors.
The philosophies of Deming, Juran, and Crosby all include the concept of continuous improvement. No matter how good a company is, it must always work to do better. This
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CHAPTER 4Section 4.4 Total Quality Management
philosophy of continuous improvement is an extremely important part of TQM. Compa- nies adopting continuous improvement as an organizational philosophy have found that the following key components are necessary:
• Standardize and document procedures. • Assign teams to identify areas for improvement. • Use methods analysis and problem-solving tools. • Use the Plan-Do-Check-Act cycle (see Figure 4.4). • Document improved procedures.
Standardization and documentation form the basis of continuous improvement as shown in the preceding list, which begins and ends with documentation. Standardization involves developing a preset procedure for performing an activity or job. Documentation is the act of putting that procedure into writing. Standardization and documentation are necessary for continuous improvement so the organization knows exactly how something is being completed now (the “as is” condition). After the process has been improved, the firm should document the new procedure (the “should be” condition) so that it becomes the new standard procedure. Documentation and standardization are especially important for companies that want to become registered under ISO 9000:2000, which is a widely-used international quality standard. It should be noted, however, that the purposes of docu- mentation and standardization are not to prevent change in the process, but to ensure that within a given process, each person performs a task the same way every time. As better ways are found, the documentation and standardization are changed to promote continu- ous improvement. For example, service organizations rely extensively on documentation and standardization to ensure consistent service. Fast-food restaurants have established procedures for everything—from cooking hamburgers to taking orders. Airline pilots fol- low a prescribed checklist each time they land or take off. This procedure ensures a high level of customer safety and consistent service.
Identify Areas for Improvement
Teams of employees from different departments work together as cross-functional teams to understand the current conditions and prepare a method to improve the performance of an organizational activity. If a firm needs to improve its product development process so it is faster, lower-cost, and higher-quality, it is important to have various experts exam- ine and improve the process. These experts should understand the roles of marketing, production, and information technology. They should also understand the accounting and financial aspects of this complicated process.
Continuous improvement efforts require a set of methods or problem-solving tools. The type and application of these tools depends upon the outcome measures that need to be enhanced. For example, to improve the quality of an assembly, root-cause analysis and poka-yoke may be the tools. It allows the team to understand the problem and create a solution that should be error proof. To reduce the number of processing errors and the cost of evaluating life insurance applications, it would be useful to determine the process flow,
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CHAPTER 4Section 4.4 Total Quality Management
identify essential tasks, and note tasks that can be reduced in length or eliminated com- pletely. It would also be useful to identify which quality problems are the most common and to overlay those on the process flow to see how cost and quality interact.
The Plan-Do-Check-Act cycle, shown in Figure 4.4, is also referred to as the Deming Wheel or Shewhart cycle. The shape of a wheel embodies the philosophy of continuous improvement; the cycle is repeated over and over without end. Each part of the cycle is explained as follows:
• Plan—Before making any changes, be sure everything is documented and standardized. Use appropriate tools to identify problems or opportunities for improvement. Develop a plan to make changes.
• Do—Implement the plan and document any changes made. • Check—Analyze the revised process to determine if goals have been achieved. • Act—If the goals have been achieved, then standardize and document the
changes. Communicate the results to others that could benefit from similar changes. If the goals have not been achieved, determine why not, and proceed accordingly.
Document Improved Procedures
The process for continuous improvement ends in the same place it begins with a docu- mented process, so that future review for the purpose of process improvement commences again here. Documents are also valuable for training new employees. Finally, documenta- tion is essential to achieve quality certification.
Continuous improvement
Check
Do
Act
Plan
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CHAPTER 4Case Studies
• Quality has many definitions, both internal and external. Today, most companies define quality as consistently meeting or exceeding the customer’s needs and expectations.
• The characteristics of service quality include reliability, responsiveness, assurance, empathy, and tangibles.
• The characteristics of quality for goods include performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality.
• It is vital to understand what customers want, but this involves more than just asking the customer. Customers often have unspoken wants that will not be apparent without probing. Customers operate in a known environment and are often unaware of new ideas or technologies that create new products they would find very useful.
