Total Quality Service Management Book 1

2007

TOTAL QUALITY SERVICE
MANAGEMENT

Aireen Y. Clores, M.B.A
Visayas State University

TOTAL QUALIT Y
SERVICE
MANAGEMENT

Aireen Y. Clores, M.B.A

2007
VISAYAS STATE UNIVERSITY

2 Total Quality Service Management

C O N T E N T S

TOTAL QUALITY SERVICE MANAGEMENT........................................................................2
Aireen Y. Clores, M.B.A....................................................................................................2
Introduction................................................................................................................6
Introduction to Total Quality in Organizations..........................................................................9
Principles of Total Quality.................................................................................................12
Quality in Manufacturing...............................................................................................17
The Deming Management Philosophy...........................................................................28
Profound Knowledge...................................................................................................29
Point I: Management Commitment..............................................................................31
Point II: Adopt a New Philosophy................................................................................31
Point III: Understand Inspection..................................................................................31
Point IV: End Price Tag Decisions................................................................................31
Point V: Improve constantly of production and service.......................................................32
Point VII: Adopting and Instituting leadership..................................................................32
Point VIII: Driving Out Fear.......................................................................................32
Point IX: Optimize team efforts..................................................................................32
Point X: Eliminating Slogans, Exhortations, and Targets for the Workforce.............................33
Point XI: Eliminating Quotas and MBO.........................................................................33
Point XII: Remove Barriers to Pride of Workmanship........................................................33
Point XIII: Encouraging education and Self-improvement...................................................34
Point XIV: Taking Action to Accomplish the Transformation...............................................34
What customers want ..............................................................................................58
Benefits of customer service ......................................................................................61
To take full advantage of their employees’ skills as a key competitive weapon, managers must have a
“people perspective”. Organizations whose managers succeed in practicing effective people skills as
they carry out their primary business functions are most likely to engender satisfied employees and
repeat customers – both of which are essential to sustaining a competitive advantage into the 21st
century. Table 6 shows the benefit of customer service......................................................61
Chapter 6 TOTAL QUALITY & ORGANIZATIONAL CHANGE................................................71
Classification of Benchmarking........................................................................................76
1.Competitive benchmarking – focus on the products and manufacturing of a company’s competitors. 76
2.Generic Benchmarking – evaluates processes or business functions against the best companies
regardless of their industry.............................................................................................76
Types of benchmarking.................................................................................................76


Preface

In the last few decades, business competitiveness has become an area of increasing

interest as a consequence of economic globalization, increasing economic integration

and market liberalization. A review of theoretical models of business competitiveness

reveals the significance of two kinds of factors in regard to this area — internal factors

pertaining to the actual firm and external factors related to the structure of the industry

in which the firm operates, as well as the economy of the country as a whole. These

models should be examined empirically, using sufficient data to identify the relative

significance of each individual factor regarding the overall improvement of business

competitiveness. However, most available studies are partial since they focus on


quantifying the effects of macroeconomic variables, the effects of sector variables, or the

effects of strictly business-oriented variables.

Quality of service has been one the most widely investigated factors among those

strictly related to business. In this context, business competitiveness is positively related

to matching the characteristics of the service to the ideal preferences of clients, i.e. their

level of satisfaction. This fact reveals the key role of service quality on the improvement

of business competitiveness, and how this has an effect not only outside the actual firm,

but also on the variables within it. The most relevant research on this issue deals with

the theoretical study of the relationships that exist between quality and business

competitiveness or with partial empirical relationships between variables. Nevertheless

there is little empirical evidence to verify the complex relationships between quality

and economic measures.


Introduction

W hile Total Quality Management has proven to be an effective process for improving
organizational functioning, its value can only be assured through a comprehensive and well
thought out implementation process. The purpose of this chapter is to outline key aspects of
implementation of large-scale organizational change which may enable a practitioner to more
thoughtfully and successfully implement TQM. First, the context will be set. TQM is, in fact, a
large-scale systems change, and guiding principles and considerations regarding this scale of
change will be presented. Without attention to contextual factors, well intended changes may
not be adequately designed. As another aspect of context, the expectations and perceptions of
employees (workers and managers) will be assessed, so that the implementation plan can
address them. Specifically, sources of resistance to change and ways of dealing with them will
be discussed. This is important to allow a change agent to anticipate resistances and design for
them, so that the process does not bog down or stall. Next, a model of implementation will be
presented, including a discussion of key principles. Visionary leadership will be offered as an
overriding perspective for someone instituting TQM. In recent years the literature on change
management and leadership has grown steadily, and applications based on research findings
will be more likely to succeed. Use of tested principles will also enable the change agent to
avoid reinventing the proverbial wheel. Implementation principles will be followed by a review of
steps in managing the transition to the new system and ways of helping institutionalize the
process as part of the organization's culture. This section, too, will be informed by current
writing in transition management and institutionalization of change. Finally, some miscellaneous
do's and don’ts will be offered.

M embers of any organization have stories to tell of the introduction of new programs,
techniques, systems, or even, in current terminology, paradigms. Usually the employee, who
can be anywhere from the line worker to the executive level, describes such an incident with a
combination of cynicism and disappointment: some manager went to a conference or in some
other way got a "great idea" (or did it based on threat or desperation such as an urgent need to
cut costs) and came back to work to enthusiastically present it, usually mandating its
implementation. The "program" probably raised people's expectations that this time things would
improve, that management would listen to their ideas. Such a program usually is introduced with
fanfare, plans are made, and things slowly return to normal. The manager blames unresponsive
employees, line workers blame executives interested only in looking good, and all complain
about the resistant middle managers. Unfortunately, the program itself is usually seen as
worthless: "we tried team building (or organization development or quality circles or what have
you) and it didn't work; neither will TQM". Planned change processes often work, if
conceptualized and implemented properly; but, unfortunately, every organization is different,
and the processes are often adopted "off the shelf" "the 'appliance model of organizational
change': buy a complete program, like a 'quality circle package,' from a dealer, plug it in, and
hope that it runs by itself" (Kanter, 1983, 249). Alternatively, especially in the underfunded
public and not for-profit sectors, partial applications are tried, and in spite of management and
employee commitments do not bear fruit. This chapter will focus on ways of preventing some of
these disappointments.
In summary, the purpose here is to review principles of effective planned change
implementation and suggest specific TQM applications. Several assumptions are proposed:


1. TQM is a viable and effective planned change method, when properly installed;
2. Not all organizations are appropriate or ready for TQM;
3. Preconditions (appropriateness, readiness) for successful TQM can sometimes
be created; and
4. Leadership commitment to a large-scale, long-term, cultural change is necessary.
While problems in adapting TQM in government and social service organizations have
been identified, TQM can be useful in such organizations if properly modified (Milakovich, 1991;
Swiss, 1992).


P A R T

I

INTRODUCTION TO
TOTAL QUALITY


CHAPTER 1
Introduction to Total Quality in Organizations

QUALITY
It is never and accident: it is always the result of high retention, sincere effort, intelligent direction, and skillful
execution; it presents the wise choice of many alternatives, the cumulative experience of many alternatives,
the cumulative experience of many masters of craftsmanship. Quality also marks the search for an ideal after
necessity has been satisfied and mere usefulness achieved.

Wilma A. Foster

In this chapter we will introduce you to the basic principles of total quality.
Specifically, we will:
• Provide reasons why attention to quality should be a part of every
organization’s culture and management systems;
• Provide a brief history of the “quality revolution”;
• Provide an overview of the key principles of total quality;
• Compare and contrast quality – focused management with
traditional management practices, and;
• Discuss relationships of total quality with organizational models in
management theory.

Total Quality Management is a management approach that originated in
the 1950's and has steadily become more popular since the early 1980's.
Total Quality is a description of the culture, attitude and organization of a
company that strives to provide customers with products and services
that satisfy their needs. The culture requires quality in all aspects of the
company's operations, with processes being done right the first time and
defects and waste eradicated from operations.

Total Quality Management, TQM, is a method by which management and
employees can become involved in the continuous improvement of the
production of goods and services. It is a combination of quality and
management tools aimed at increasing business and reducing losses due
to wasteful practices.

Some of the companies who have implemented TQM include Ford Motor
Company, Phillips Semiconductor, SGL Carbon, Motorola and Toyota
Motor Company.1

TQM Defined


TQM is a management philosophy that seeks to integrate all organizational
functions (marketing, finance, design, engineering, and production,
customer service, etc.) to focus on meeting customer needs and
organizational objectives.

TQM views an organization as a collection of processes. It maintains that
organizations must strive to continuously improve these processes by
incorporating the knowledge and experiences of workers. The simple
objective of TQM is "Do the right things, right the first time, every time".
TQM is infinitely variable and adaptable. Although originally applied to
manufacturing operations, and for a number of years only used in that
area, TQM is now becoming recognized as a generic management tool,
just as applicable in service and public sector organizations. There are a
number of evolutionary strands, with different sectors creating their own
versions from the common ancestor. TQM is the foundation for activities,
which include:

• Commitment by senior management and all employees
• Meeting customer requirements
• Reducing development cycle times
• Just In Time/Demand Flow Manufacturing
• Improvement teams
• Reducing product and service costs
• Systems to facilitate improvement
• Line Management ownership
• Employee involvement and empowerment
• Recognition and celebration
• Challenging quantified goals and benchmarking
• Focus on processes / improvement plans
• Specific incorporation in strategic planning

This shows that TQM must be practiced in all activities, by all personnel, in
Manufacturing, Marketing, Engineering, R&D, Sales, Purchasing, HR, etc.2

Total Quality Management is a management style based upon producing
quality service as defined by the customer. TQM is defined as a quality-
centered, customer-focused, fact-based, team-driven, senior-
management-led process to achieve an organization’s strategic
imperative through continuous process improvement. TQM principles are
also known as total quality improvement, world class quality, continuous
quality improvement, total service quality, and total quality leadership.

WHAT DOES T.Q.S.M STANDS FOR?

 T – Stands for TOTAL;
 The word "total" in Total Quality Management means that everyone in the
organization must be involved in the continuous improvement effort, the word
"quality" shows a concern for customer satisfaction, and the word

"management" refers to the people and processes needed to achieve the
quality.
 Q – Stands for QUALITY;
 Means meeting or exceeding customer (internal or external)
expectation.
 It is about relationships
 Fundamental to all major business decisions
 It is everyone’s business

 S – stands for SERVICE; act of help or assistance in a manner of
serving customer

 M – Stands for MANAGEMENT mean improving and maintaining
business systems and their related processes or activities.

Total Quality Management is not a program; it is a systematic, integrated, and
organizational way-of-life directed at the continuous improvement of an organization. It is
not a management fad; it is a proven management style used successfully for decades in
organizations around the world. TQM is not an end in itself; it is a means to an
organizational end. Total Quality Management must not be the primary focus of an
organization; it should merely be the means to achieve organizational goals.

Total Quality Management differs from other management styles in that it is more
concerned with quality during production than it is with the quality of the result of
production. Other management styles have different concerns. Some major styles are
compared with TQM as follows.

Management-by-Objectives (MBO) emphasizes achieving specified objectives, under the
control of individual managers. This approach works against multi-functional process
performance and interferes with teamwork and quality. TQM is not objective-oriented,
except for its one goal of achieving continuous quality improvement.

Management-by-Results (MBR) is management by viewing past results as an indication of
future results. It has been compared to driving an automobile in a forward direction while
looking in the rear view mirror. In today’s fast-paced, quick-changing business
environment, managers cannot rely on past results as a predictor of future performance. In
contrast, TQM is only concerned with current results and ways to improve them.

Management-by-Exception (MBE) is management by identifying specific targets for
management attention and action. It produces short-term results by reacting to immediate
problems, but there is no analysis of the processes that produced the problems, so long-
term benefits are lost. On the other hand, TQM is more concerned with correcting processes
that produce problems than it is with responding to individual problems.

Total Quality Management is very different from these and other management systems. It
recognizes that quality as determined by the service provider might be much different from
quality as perceived by the service receiver. If the customer is not satisfied with a service,
then the service does not have quality and the processes that produced the service have
failed.

Total Quality Management requires an organizational transformation-a totally new and
different way of thinking and behaving. This transformation is not easy to achieve; it is not
for the weak or the statistically untrained. At first glance, many TQM techniques may seem
simple and based on common sense, but they must be understood and used correctly for
TQM to function properly. Knowing the history of Total Quality Management may help in
understanding its techniques.

Principles of TQM
The key principles of TQM are as following:3

• Management Commitment
1. Plan (drive, direct)
2. Do (deploy, support, participate)
3. Check (review)
4. Act (recognize, communicate, revise)
• Employee Empowerment
1. Training
2. Suggestion scheme
3. Measurement and recognition
4. Excellence teams
• Fact Based Decision Making
1. SPC (statistical process control)
2. DOE, FMEA
3. The 7 statistical tools
4. TOPS (FORD 8D - Team Oriented Problem Solving)
• Continuous Improvement
1. Systematic measurement and focus on CONQ
2. Excellence teams
3. Cross-functional process management
4. Attain, maintain, improve standards
• Customer Focus
1. Supplier partnership
2. Service relationship with internal customers
3. Never compromise quality
4. Customer driven standards

Principles of Total Quality
• Total quality is a people-focused management system that aims at
continual increase in customer satisfaction at continually lower real
cost.
• TQ is a total system approach (not a separate area or program) and
an integral part of high-level strategy; it works horizontally across
functions and departments, involves all employees, top to bottom,
and extends backward and forward to include the supply chain and
the customer chain.
• Foundation of total quality is philosophical: the scientific method:
includes systems, methods, and tools.


• A comprehensive, organizational-wide effort to improve the quality of
products and services – applies not only to large manufacturers, but
t small companies.
• A management of process and set of disciplines those are
coordinated to ensure that the organization consistently meets and
exceeds customer requirements.
• Concerned with continuous improvement in performance aimed at
delighting customers.
• Achieving quality through gaining everyone’s commitment and
involvement.
• Improvement of the quality of the organizations products and
services
• It is the integration of all functions and processes within an
organization in order to achieve continuous improvement of the
goals and services.

Michael Dell’s Touch of Quality

Although Dell Computer Corporation’s PCs have had some of the highest
quality ratings in the industry, CEO Michael Dell became obsessed with finding
a way to reduce their failure rates. The key, he believed, was to reduce the
number of times that each hard drive – the most sensitive part of a PC – was
handled during assembly. Production lines were revamped, and the numbers of
“touches” were reduced from over 30 to less than 15. Soon after, the rate of
rejected hard drives fell by 40 percent, and the overall failure rate for the
company PCs dropped by 20 percent.

Figure 1.5 E.g. of Improving Work Processes

THE IMPORTANCE OF QUALITY

 Quality drives market share.
• And when superior quality and large market share are both present, profitability is virtually
guarantee.


 Quality can also reduce costs.
• Provides an additional competitive edge
• Types of quality: customer – driven quality and conformance or internal specifications
quality.

 As quality improves, so does cost, resulting in improved market share and hence profitability and
growth.
• Provides a means for further investment in such quality improvement areas as research and
development. The cycle goes on. See Figure 1.1 The quality circle.
• Rewards of higher quality are positive, substantial, and pervasive. Findings indicate that
attaining quality superiority produces the following organizational benefits:
1. Greater customer loyalty
2. market share improvement
3. higher stock prices
4. reduced service calls
5. higher prices
6. Greater Productivity

History of TQM

Total Quality Management was developed in the mid 1940s by Dr. W. Edward Deming who
at the time was an advisor in sampling at the Bureau of Census and later became a
professor of statistics at the New York University Graduate School of Business
Administration. He had little success convincing American businesses to adopt TQM but his
management methods did gain success in Japan.

After World War II, General MacArthur took 200 scientists and specialists, including Dr.
Deming, to Japan to help rebuild the country. While working on the Japanese census, Dr.
Deming was invited by the Japanese Union of Scientists and Engineers to give lectures on
his statistical quality techniques. One of the attendees was a past professor to many of
Japan’s CEOs. After attending the lectures, the professor told his CEO students that, if they
wanted to turn Japan’s economy around in five years, they should attend Dr. Deming’s
lectures on using statistics to achieve quality at a reduced cost. Many of the CEOs took the
professor’s advice and attended the lectures. Eventually, many Japanese manufacturing
companies adopted Dr. Deming’s theories and were able to produce quality products at
reduced costs.

While the Japanese business world was concentrating on producing quality products,
businesses in the United States were more concerned with producing large quantities of
products. Their emphasis on quantity at the expense of quality let the Japanese, with their
inexpensive, high quality products; gain a substantial foothold in American markets.

In the 1970s and 1980s, many American companies, including Ford, IBM, and Xerox, began
adopting Dr Deming’s principles of Total Quality Management. This gradually led to their
regaining some of the markets previously lost to the Japanese. Although Total Quality
Management gained its prominence in the private sector, in recent years it has been
adopted by some public organizations.


So far, this chapter has defined Total Quality Management, explored its origin, and
explained how it emphasizes quality during production. Since quality is so important to any
discussion of TQM, the next section explores this key element in detail.

Deming Chain of Reaction:
“As quality improves, cost will decrease costs; cost will decrease and productivity will increase,
resulting in more jobs, greater market share, and long-term survival”

FREDERICK TAYLOR

 Developed his system of scientific management, which emphasized productivity at the
expense of quality.
 Centralized inspection departments were organized to check for quality at the end of the
production line.
 The control quality focused on final inspection of the manufactured product, and a number
of techniques were developed to enhance the inspection process.
 Taylor summarized his thoughts in 1951 as:
 Management is science – not rule of thumb
 Management is harmony – not discord
 Management is cooperation – not individualism
 Management is maximum output – not restricted output
 Management is development of each man and to his greatest efficiency and
prosperity.

WALTER SHEWART, HAROLD DODGE, GEORGE EDWARDS
• Developed new theories and methods of inspection to improve
and maintain quality.

KURT LEWIN
• Provided us with an understanding of how to make large
scale organizational change.

Douglas McGregor
• Has tremendous impact on what later became Total Quality
Management.
• Detailed the Theories of Management (Theory X and Theory Y).
Theory X states that employees will not work if left to their own
devices; employees are inherently bad and must be forced and
coerced into work. Theory Y states that employees find work as
natural as play and will work diligently to the firm’s aims if
assumptions follow later.

Fred Emery
• Australian disciple of Lewin and Eric Trist.


• Apply open systems thinking to social change, pointed out that
optimal results could be achieved only when social systems, which
obey the laws of biology, psychology, and sociology are designed
integrative with technical systems following the laws of physics,
chemistry and engineering.
• The social technical approach required that those who do not work
get a great deal more authority, control, skills and information than is
customary under scientific management.

JOSEPH M. JURAN
• Introduces the managerial dimension of planning, organizing
and controlling and focused on the responsibility of
management to achieve quality and the need for setting goals.
• Defines quality as fitness for use in terms of design,
conformance, availability, safety and field use.
• Promotes concepts known as Managing Business Process
Quality – a technique for executing cross functional quality
improvements.

ARMAND FEIGENBAUN
• Achieved visibility through his work in Japanese Management for
total quality improvement.
• Used a total quality control approach that may very well be the
forerunner of today’s TQM
• Promoted a system for integrating efforts to develop, maintain and
improve quality by the various groups in an organization.

PHILIP CROSBY
• Author of the popular book Quality is Free.
• Argues that poor quality in the average firm costs about 20% of
revenues; most of which could be avoided by adopting good quality
practices.

THE CONCEPT OF QUALITY

Definition of quality:
1. Perfection
2. Consistency
3. Eliminating waste
4. Speed of delivery
5. Compliance with policies and procedures
6. Providing a good, usable product
7. Doing it right the first time
8. Delighting or pleasing customers
9. Total customer service and satisfaction

Today most managers agree that the main reason to pursue quality is to satisfy customers. The
American National Standards Institute (ANSI) and the American Society for Quality (ASQ) define
quality as “the totality of features and characteristics of a product or service that bears on its
ability to satisfy the given needs.”

TQM GOAL: CUSTOMER SATISFACTION

Figure 1.1 TQM GOALS

The view of quality as the satisfaction of customer needs is often called fitness for use. In highly
competitive markets, merely satisfying customer needs will not achieve success. To beat with
competition, organizations often must exceed customer expectations. Thus, one of the most
popular definitions of quality is meeting or exceeding customer expectations.

HOLLYWOOD CASINO RESORT
Tunica, Mississippi

Hollywood Casino Resort/Tunica is a place where guests
feel invited and welcome. We provide the highest levels of
personalized service and products for our guests, who always
enjoy a fun-filled experience. Everyone at Hollywood Casino
does the right thing the first time, and puts the needs and
wants of our guests in the forefront of every decision we

Figure 1.2 Vision Statement of Hollywood Casino Resort

Managers of manufacturing and service functions deal with different types of quality issues; the
following sections provide a brief overview of these issues. Although the details of quality management
differ between manufacturing and service industries, the customer-driven definition eliminates these
artificial distinctions and provides a unifying perspective.

Quality in Manufacturing


• Quality systems focused primarily on technical issues such as equipment reliability, inspection,
defect measurement, and process control.
• Transition to a customer – driven organization has caused fundamental changes in
manufacturing practices, changes that are particularly evident in areas such as product design,
human resource management, and supplier relations.

Quality dimensions:
Manufactured products have several quality dimensions including the following:

1. Performance: a product’s primary operating characteristics.
2. Features: the “bells and whistles” of a product.
3. Reliability: the probability of a product’s surviving over a specified period of time under
stated conditions of use.
4. Conformance: the degree to which physical and performance characteristics of a product
match pre-established standards.
5. Durability: the amount of use one gets from a product before it physically deteriorates or
until replacement is preferable.
6. Serviceability: the ability to repair a product quickly and easily.
7. Aesthetics: how a product looks, feels, sounds, tastes, or smells.
8. Perceived quality; subjective assessment resulting from image, advertising, or brand names.

Quality control in manufacturing is usually based on conformance, specifically conformance to
specifications. Specifications are targets and tolerances determined by designers of products and
services. Targets are the ideal values for which production strives; tolerances are acceptable deviations
from these ideal values.
A lack of defects has constituted quality in manufacturing for many years. However, the lack of
defects alone will not satisfy or exceed customer expectations. Many top managers have stated that
good quality of conformance is simply the “entry into the game”. A better way to achieve distinction
and delight customers is through improved product design. Thus, manufacturers are turning their
attention toward improved design for achieving their quality and business goals.

Quality in Services:

Service can be defined as “any primary or complementary activity that does not directly produce
a physical product – that is, the non-goods part of the transaction between buyer (customer) and seller
(provider).” A service transaction might be as simple as handling a complaint or as complex as approving
a home mortgage. A Service orientation places customer needs ahead of organizational needs. Table 1 –
3 provides examples of how the four dimensions of service quality apply to various industries. In this
context, a physical product is simply the medium used to facilitate the other services and a service
rather than product orientation becomes the focus. Customer’s needs take precedence over
organizational needs. In contrast, when quality programs are product oriented, it is often the case that
a higher priority is placed on process (and bottom – line) performance than on customer satisfaction.
Trying to squeeze and the ounce of performance” from its internal business processes, a company can
lose touch with its customers and what they can value.


INDUSTRY PHYSICAL SERVICE SERVICE SERVICE
PRODUCT PRODUCT ENVIRONMENT DELIVERY
Auto
manufacturin Vehicle Pricing Showroom Test drive &
g Co. sales pitch

Hotel Room Pricing & Room Front Office/
Supplies Quality Bellman
Performance

Restaurant & Chef,
Food & Bar waitress,
Beverage bartender
Service performance
Airline Pricing

Food & Transportatio Airport Cleanliness of
Beverage n & flight facilities aircraft
Service entertainmen Safety in-
Ticket t flight service
Baggage
Handling
Table 1.3 COMPONENTS OF SERVICE: Some Industry Example:

How do customers make choices based on value judgments?
• Customers compare alternative service providers on the basis of
value.
• Customers perform a gap analysis between what they expect and
what perceived is the value received.
• Evident in service industries where a customer’s satisfaction is
often based on such intangible factors as assurance, empathy,
reliability, and responsiveness.

VALUE STREAM AND ITS CUSTOMERS
 “QUALITY” is about people
 Value stream – all the resources required to take production inputs and transform them into
a suitable mixture of products or services constitutes.
 Customer – can be used to describe anyone who benefits from goods or services anywhere
along the value stream.
 Internal customer – its suppliers share the same production system.
Internal customers are linked together through the design of the value stream and the
output of the value stream becomes an output to an external customer’s system.
 External customer – its suppliers are members of different systems.


Most research dealing with the effects of quality on business competitiveness generally falls into
one of two categories, depending on the kind of relationships under study. The first encompasses those
studies analyzing the external effects of quality on competitiveness, while the second includes those
that focus on the internal effects. External effects show the impact of changes in the quality perceived
by clients on business competitiveness. These effects have their source in changes in client behavior and
their level of satisfaction which, ultimately, will have a positive or negative impact on the volume of
sales and market share due to variations in clients' willingness to pay, their purchase intentions or level
of expenditure within the hotel.
Internal effects refer to the influence quality has on competitiveness due to changes in the
firm's production processes. Such changes have an influence on productivity and, therefore, on the
firm's production costs

SERVICE QUALITY vs. PRODUCT QUALITY

 As a strategic issue, customer service can be considered a major dimension of competitiveness.
 People will go out of their way and more for good service, which indicates the importance place on
service by customers.
 The behavior of the service provider becomes a factor in service delivery.
 The service recipient has the final say regarding quality.
 Service requires contact (directly or via telephone) between the service provider and the service
equipment.
 The image of the organization shapes the perception of customers.
 The customer is present during the production process and performing the final inspection.
 The measure of output is difficult to define.
 Quality can mean different things to different people given the same experience.
 Quality is defined in the context of the totality of the experience.

DIMENSIONS OF SERVICE:
The important dimensions of service quality include the
following:

• Time: How much time must a customer wait?
• Timeliness: Will a service be performed when promised?
• Completeness: Are all items in the order included?
• Courtesy: Do frontline employees greet each customer cheerfully?
• Consistency: Are services delivered in the same fashion for every customer, and every time for
the same customer?
• Accessibility and convenience: is the service easy to obtain?
• Accuracy: is the service performed right the first time?
• Responsiveness: Can service personnel react quickly and resolve unexpected problems?


Service organizations must look beyond product orientation and pay significant
attention to customer transactions and employee behavior. Several points that
service organizations should consider are as follows:

• Customer Perceptions – example are speed of service is an
important quality characteristics, yet perceptions of speed
may differ significantly among different service organizations
and customers.

• Behavior – quality of human interaction is vital in every transaction that
involves human contact; e.g. Friendliness of front desk clerks.

• Image – shaping customer expectations of a service and in
setting standards by which customers evaluate that service.

• Service standards – value judgment, customer attitudes and
employee competence.

• Quality control supervision – calls for training of employees
and self-management.

Figure 1.4 Service Orientations

Advantages of TQM

 Long-term benefits that may be expected from Total Quality Management are higher
productivity, increased morale, reduced costs, and greater customer commitment.


These benefits may lead to greater public support and improvement of an
organization’s public image.

 Eliminating errors and doing things right the first time saves time and resources. The
savings may then be used for expansion of services or made available to employees
in their efforts to increase service quality.

 Total Quality Management may create an organizational atmosphere of excitement
and sense of accomplishment through the rewarding of creativity. When
experimentation-oriented failures are accepted as a part of the learning process,
employees feel free to use their creative energies to develop new ideas.

 Total Quality Management’s extensive use of teamwork gives employees the
experience of problem solving and using their knowledge and experiences in a
collaborative effort. As employees gain experience with team problem solving, they
may be used to form cross-sectional ad-hoc "mega teams" that can attack larger
organization-wide problems. TQM gives an organization greater problem-solving
flexibility and increases the quality of work life for all employees.

 Total Quality Management may be a "profit generator," even for public organizations.
It does not actually create profit for the organizations, but if implemented properly, it
may identify costly processes and cost-saving measures. Once fully implemented,
the only expense of TQM is the cost of routine operations. In public organizations,
saved resources may be viewed as "profits."

Total Quality Management does have some detractors who have pointed out some of the
disadvantages of TQM.

Disadvantages of TQM
 Long-range plans advocated by TQM may limit an organization’s flexibility and
agility.
TQM teaches that a long-term plan is required to achieve a complete quality
transformation, but a long-term plan that has been pursued for a long period
may become an end unto itself. Completion of the plan becomes the ultimate
goal. Objectives the plan was designed to accomplish are forgotten; achieving
the transformation becomes the most important objective. Instead of
maintaining continuous change, the organization may reach a stable point
and stagnate. To produce continuously high quality services, an organization
must react quickly to changes in the community and not be restricted by its
management style.
 TQM detractors also argue that although Total Quality Management calls for
organizational change, it does not demand radical organizational reform.
Real quality improvement requires radical structural change, such as
flattening organizational structures. It requires liberation of employees from
stifling control systems and the tyranny of functionalism, both of which stifle
teamwork.

 Total Quality Management calls for the elimination of the goals and objectives
required by Management-by-Objectives.
Critics of TQM claim that this may negatively affect motivation. They claim
that having established production goals gives employees increasingly higher
goals to reach, which motivates them to find new ways to reach the goals.


When there are no established production goals, some employees will only
produce the minimum required to keep their job.

 Total Quality Management calls for the elimination of performance assessments that
rate employees in relation to each other.
Critics fear that without performance assessment managers would have too
much power over employees and may be use it capriciously. Many managers
feel performance assessments let them document employee performance for
possible reward, but some employees fear the assessments might be used
against them in some disciplinary actions. Performance assessments may give
employees with grievances the documentation they need to prove managers
are treating them unfairly. Without them, managers could make unfair
accusations about an employee’s performance and the employee would not
have the documentation to counter the claims.

Some argue that the claims of success by TQM supporters are not supported by facts but by
anecdotes and stories. They argue that TQM proponents tell heart-warming stories about
how teamwork makes everyone happy, but that they cannot back up their claims with hard
data.

Critics maintain that TQM focuses manager attention on internal processes rather than on
external results. When this is taken to an extreme, managers may become too preoccupied
with internal issues, such as the documentation required by TQM methods, and ignore the
shifting perceptions of customers. Managers become so concerned with the process of TQM
that they neglect the needs of the customer, which was the initial reason for implementing
TQM.

Total Quality Management calls for its implementation to be immediate and complete. Some
contend it does not make sense to try to create quality improvement in the entire
organization from the very beginning. They argue that all processes are not equally good or
bad, all departments do not function equally well, and all services do not measure up to the
same quality standard. Because of this, they contend that quality should be introduced
incrementally and only in the specific areas that need it most.
Some critics claim Total Quality Management’s focus on setting and maintaining standards
makes work life unexciting and boring. When employees are bored, their poor attitudes may
cause customer dissatisfaction with the quality of service received from them. In addition,
when too much emphasis is placed on standardization it precludes the constant internal
changes needed to keep up with external changes.

Total Quality Management develops its own bureaucracy. TQM detractors contend its
statistical burden and committee structure is cumbersome, slows organizational momentum,
and consumes too much time and resources.

Opponents of Total Quality Management maintain that it appeals to egotism. After receiving
some TQM training, some employees consider themselves TQM "experts" who have the
answers to everyone else’s problems. They claim their department is doing everything right
according to TQM principles and find fault with every other department. Some managers,
instead of viewing achievement as a joint effort where every participant deserves praise,
apply for awards for self-gratification or to benefit the organization’s public relations image.
Some detractors posit that TQM is an emotionally cold way to manage people. Its analytical,
detached programs are often devoid of human emotion that inspires attachment to the
organization and its customers.


Total Quality Management calls for a cultural transformation. Some argue it creates a
process-crazed organization, similar to a cult, where the impression is that only total
commitment to TQM can save the organization from ruin. Just as in a cult, all the decisions
in TQM are related to the "vision." No one wants to claim individual credit for success;
instead, success is attributed to the TQM philosophy. Results become less important than
performing the proper TQM techniques. Just as in a cult, periodic evangelism by TQM
experts is used to maintain a missionary zeal for TQM. If an employee is not a TQM believer,
he or she considered an outcast who does not care about the organization’s success. Even
with its problems, Total Quality Management may still be the best choice as a successor to
the militaristic, authoritative management style.

Exercise NO. _____
Introduction to TQM

Name _____________________________ Course & Year _______________________
Subject time/Day ____________________ Date: _____________ Instructor________
Case 1.1
APPLYING TQM TO EVERYDAY TASK

Pauline Knowlton has worked for Matt Pantusa for nearly three months. Pauline really likes
Matt because he practices what he preaches and is a good supervisor. But sometimes Matt can
be a little overbearing, especially now that he is really sold on Total Quality Management.

For example, Matt is the publicity person for the local Computer Enthusiasts Club. He
sends out 5,000 copies of a brochure each month that advertises the next month’s meeting of the
Club. Pauline usually is the one to make sure the flyers are copied, folded, addressed, and
mailed on time. The advertisement that Pauline mailed a few weeks ago announced last week’s
monthly meeting on quality productivity tools for computers.

When Matt went into the office the morning after the meeting, he called Pauline into his
office. He told Pauline that over 600 people had attended the meeting – a record crowd.
Pauline congratulated Matt for such a successful meeting. She was pleased that had had a part
in making the meeting a success. But Matt didn’t seem pleased as he gave her two copies of the
flyer that had been given to him by his friends who received his mailing. One flyer was folded
a little crooked and the other has a mailing label that was affixed at the slightly downward
angle. Matt asked her to be more careful with these details as she did future mailings.

Pauline like her work and wants to please Matt. She thinks, however, that he’s gone a
little bit overboard with this TQM. Does anyone really care if a flyer is perfectly folded or a
label is a little askew? And having time to think about their conversation, Pauline can’t
understand why Matt is making such a big deal about the mailing. After all, more people
showed up at the monthly meeting than had ever been there before.


RESPONDING TO THIS CASE:

1. Do you think Matt is taking the TQM philosophy too far? Why or why not?
2. Pauline feels that if the customer is satisfied, why Matt shouldn’t be please. Discuss the
pros and cons of her rationale.
3. Is there a lesson that Pauline could learn from this incident?
4. What advice would you give to Matt in Supervising Pauline and here employees?

Exercise NO. _____
Introduction to TQM

Name _____________________________ Course & Year _______________________
Case 1.2

The Reservation Nightmare

H. James Harrington, a noted quality consultant, related the following
story in Quality Digest magazine:
I called to make a flight reservation just an hour ago. The telephone
rang five minutes before a recorded voice answered. ‘’Thank you for
calling ABC Travel services,’’ it said. ‘’To ensure the highest level of
customer service, this call may be recorded for future analysis.’’ Next I
was asked to select from one of the following choices: ‘’ If the trip is
related to company business, press 1.Personal business, press 2. Group
travel, press 3.” I pressed 1.
I was then asked to select from the following choices: “If this is a
trip within the United States, press 1.International, press 2.Scheduled
training, press 3. Related to conference, press 4.” Because I was going
to Canada I pressed 2.
Now two minutes into my telephone call, I was instructed to be sure
that I had my customer identification card available. A few seconds
passed and a very sweet voice came on, saying, “All international
operators are busy, but please hold because you are a very important
customer.’’ The voice was then replaced by music. About two minutes
later, another recorded message said, “Our operators are still busy, but
please hold and the first available operator will take care of you.’’ more
music. Then yet another message: ‘’ Our operators are still busy, but
please hold. Your business is important to us.’’ more bad music. Finally
the sweet voice returned, stating, ‘’to speed up your service, enter your
19-digit costumer service number.’’ I frantically searched for their card,
hoping that I could find it before I was cut off. I was lucky; I found it and
entered the number in time. The same sweet voice came back to me,


saying, ‘’ to confirm your service number, enter the last four digits of
your customer service number, enter the last four digits of your social
security number.” I pushed the four numbers on the keypad. The voice
said: ‘’ Thank you. An operator will be with you shortly. If your call is
emergency, you can call 1-800-CAL-HELP, or push all of the buttons on
the telephone at the same time. Otherwise, please hold, as you are a very
important customer.” This time, in place of music, I heard a commercial
about the service that the company provides.
At last, a real person answered the telephone and asked,’’ Can I
help you? ‘’ I replied, ‘’ Yes, oh yes.’’ He answered, “Please give me
your 19-digit customer service number, followed by the last digit of your
social security number so I can verify who you are.’’ (I thought that I
gave these numbers in the first place to speed up service. Why do I have
to rattle them off again?
I was now convinced that he would call me Mr.
5523-3675-0714-1313-040. But, to my surprise, he said: “Yes, Mr.
Harrington. Where do you want to go and when?” I explained that I
wanted to go to Montreal the following Monday morning. He replied: ‘’ I
only handle domestic reservations. Our international desk has a new
number: 1-800-1WE-GOTU. I’ll transfer you.’’ A few clicks later a
message came on, saying. ‘’All of our international operators are busy.
Please hold and your call will be answered in the order it was received. Do
not hang up or redial, as it will only delay our response to your call. Please
continue to hold, as your business is important to us.”

DISCUSSION QUESTIONS
1. Summarize the service failures associated with this experience.
2. What might the travel agency have done to guarantee a better
service experience for Mr. Harrington? How do your suggestions
relate to the TQ principles?

Case 1.3
A Tale of Two Restaurants

Kelly’s Seafood Restaurant was founded about 15 years ago by Tim
Kelley, who has run it from the start. The restaurant is very profitable
because of its excellent food quality, but lately has been having problems
with consistency because of numerous suppliers. The restaurant
operations are divided into front-end (servers) and back-end (kitchen).
The kitchen has notes to boost employee morale, employees are cross-
trained in all areas, and the kitchen staff continually seeks improvements in
cooking. Servers, however, have minimal wages and few perks, and
turnover is a bit of a problem. Tim’s primary criterion for selecting
servers is their ability to show up on time. There is little communication
between and front-end and back-end operations, other than fulfilling


orders. Tim makes sure that any complaints are referred to him
immediately by the servers.

The restaurant has no automation, as Tim believes that it would get in
the way of customers’ special requests. “this is the way we’ve done it
for past 15 years and how we will continue to do it,’’ was his response to
a suggestion of using a computerized system to speed up orders and
eliminate delays. Tim used to hold staff meetings regularly, but recently
they have dropped from each week to one every five or six months. Most
of the time is spent focusing on negative behavior, and Tim has often said
“You can’t find good people anymore.’’

Jim’s Steakhouse is a family-owned restaurant in the same state. Jim
uses only the freshest meats and ingredients from the best suppliers and
gives extra large portions of food to customers, who feel they are getting
their money’s worth. Jim pays his cooks high wages to attract quality
employees. Servers get 70 percent of tips, bussers 20 percent, and the
kitchen staff 10 percent to foster team work. Many new hires come from
referrals from current employees. Jim interviews all potential employees
and ask them many pointed questions relating to courtesy, responsibility,
and creativity. The restaurant sponsors bowling nights, golf outings,
picnics, and holiday parties for its employees. At Jim’s, birthday customer
receive a free dinner, children are welcomed with balloons, candy, and
crayons, and big screen TV’s caters to sports fans. Jim walks around and
constantly solicits customer feedback. Jim visits many restaurants to study
their operations and learn new techniques. As a result of these visit, Jim
installed computers to schedule reservations and enter orders to the
kitchen.

DISCUSSION QUESTIONS
1. Contrast these two restaurants from the perspective of TQ. What
conclusions can you make and what advice would you give to the owners?
2. What type of management model (mechanistic, organismic, or cultural)
do you think each organization represents?

CHAPTER 2
APPROACHES TO TOTAL QUALITY
TOTAL QUALITY PARADIGMS
Adopting a TQ philosophy requires significant changes in
organization design, work processes, and culture. Organizations use a
variety of approaches.


A paradigm (pronounced "pair-a-dime") is a set of beliefs about
phenomenon around us that constrains and guides our thinking. For
example, consider yourself to be in Spain or Portugal in 1492. You believe
the sun rises in the East and sets in the West. When you look westward
out over the ocean, you see a straight line where water meets the sky.
You are familiar with straight edges where the plane meets the sky. If you
walk off the plane of a roof, you fall. Therefore, ships must fall off the earth
if they travel too far. N'est-ce pas?

Paradigms are shared by people creating schools of thought. The
ancient mariners of the late 1400's all believed the same perceived facts
and, thus, never ventured too far from land. Paradigms change when first
an anomaly appears. The late 1400's brought additional facts to bear, such
as: at first you see the top of a mast, then the whole mast, then the top of
the ship hull, and then the full hull as a ship approaches from far out to
sea. This is similar to what you see when a person climbs over a small hill.
Perhaps the ocean is like a hill and there is no edge.

Experimentation occurs to verify the anomaly and seek out new
relationships and causes. People who explore anomalies may be
considered outcasts by those who staunchly support the existing
paradigm. Columbus was considered a "strange and touched" sailor by
many who were sure they would never see him or his ships again.
Paradigm shifts occur when the anomaly is perceived to be a violation of
the natural laws.

The Quality Philosophies of Edward Deming

The Deming Management Philosophy

Deming stresses that higher quality leads to higher productivity,
which in turn leads to long-term competitive strength. Deming’s “chain
of reaction,” shown in Figure 2.1, summarizes this view. This theory
states that improvements in quality lead to lower costs because of less
rework, fewer mistakes, fewer delays and snags, and better use of time
and materials. Lower costs, in turn, lead to productivity improvements.
With better quality and lower prices, the firm can achieve a higher market
share and thus stay in business, providing more jobs. Deming’s states
emphatically that top management has the overriding responsibility for
quality improvement. Deming has summarized his philosophy in what he
calls “A System of Profound Knowledge.”


Figure 2.1 THE DEMING CHAIN REACTION

Improved quality

Costs decrease because of less
rework, fewer mistakes, fewer
delays and snags, and better use
of time and materials.

Productivity Improves

Capture the market with better
quality and lower price.

Stay in business

Provide jobs and more jobs

Profound Knowledge
Four parts of profound knowledge:(1) appreciation of a system, (2)
knowledge of the theory of variation, (3) theory of knowledge, and (4)
psychology.

Systems
• A set of functions or activities within an organization that work
together to achieve organizational goals. For example, a
McDonald’s restaurant can be viewed as a system. It consists of
the order-taker/cashier subsystem, grill and food preparation
subsystem, drive-through subsystem, and so on.
• Factors within a system that affect the individual performance of an
employee;
 Training received
 Information and resources provided
 Leadership of supervisors and managers
 Disruptions on the job
 Management policies and practices


Variation
• It is the difference in the reproducibility of a particular action. It is the
difference between a particular action and the target outcome.
• Variation increases the cost of doing business

Theory of Knowledge
• It is a branch of philosophy concerned with the nature and scope of knowledge, its pre-
suppositions and bases, and the general reliability of claims to knowledge.
• Theory establishes a cause-and-effect relationship that can be used for prediction. Theory leads
to questioning and can be tested and validated – it explains why.
Psychology
• Helps to understand people, interactions between people and
circumstances, interactions between leaders and employees, and
any system of management. People differ from one another.
• We must understand how people are intrinsically motivated. It is
through intrinsic motivation that people find joy in work and
excitement in application of new knowledge. True innovation in a
company only comes at the discretion of the employees. Think about
this saying: "you can lead a horse to water but you cannot make him
drink." A professor of leadership/motivation/management once told a
class, "you don't get paid to get a horse to drink, and you get paid to
motivate him to float on his back in the pond!"

Within the concept of knowledge of psychology, we must understand
how people react to change. You have heard it said that people resist
change. This is absolutely untrue. People have welcomed change
throughout history AS LONG AS they understood the benefit of change to
them. Management's responsibility in using profound knowledge is to
market change so as to be exciting and desirous by employees.
Lastly, profound knowledge requires an understanding of
transformation from competition to collaboration. Negotiators have long
understood that cooperation and mutually satisfying results start by
someone taking a risk and offering another something that is desired.

Deming's Fourteen Points

Edward Deming created Fourteen Points of management based upon
three principles. The first one is customer orientation. The second element
is continuous improvement. The last principle is to recognize that quality is
determined by the system, which is the inputs and the manner in which the
previous two aspects are processed.

1. Management commitment
2. Adopt the new philosophy.
3. Understand inspection.
4. End price tag decisions
5. Improve constantly of production and service.

6. Institute training.
7. Institute leadership.
8. Drive out fear.
9. Optimize team efforts
10. Eliminate slogans, exhortations and targets for the work force.
11. Eliminate quotas and MBO
12. Remove barriers to pride of workmanship.
13. Institute education and retraining.
14. Take action to accomplish the transformation.

Point I: Management Commitment
• The main message that Deming is trying to express under this point
features two key aspects. These are customer obsession and
strategic planning. These two ideals converged under this first point
to establish the appropriate direction for businesses to focus their
attention.
• They should concentrate more on pleasing the customers than
defeating any of their competitors. Competition will always be
present if the business remains successful and manages to stay at
the top of production, yet the only way such will be feasible is if they
continue to maintain customer satisfaction.

Point II: Adopt a New Philosophy
• This new philosophy is nothing more than businesses taking the time
to notice and prevent the further production of defective products or
services, which in effect will lead to increase profits in the long-term.
• Deming summarizes under this point, defects are expensive,
unnecessary, and not inevitable.

Point III: Understand Inspection
• Inspection cannot put quality into a defected product. It can only stop
the defected product from advancing further.
• When many inspectors are hired to inspect the individual products
the problem of passing defective products to consumers worsens
because nearly every inspector assumes to some degree that a
minimum inspection of so many products is enough. The usual
mindset to a certain extent is that a past inspector should have
already found the defect or future inspectors should find it if he or
she had missed the mistake

Point IV: End Price Tag Decisions
• Deming suggests that businesses should minimize their long-term
costs rather than minimize the initial cost
• Least cost is not necessarily the best cost. Buying form a supplier
based on low cost rather than a quality/cost basis defeats the need


for a long-term relationship. Vendor quality can be evaluated with
statistical tools.

Point V: Improve constantly of production and service
• Improving every process concerning planning, production, and
service provides better products for the consumer and higher profits
for the business.
• Search for quality is never ending and results from studying the
process itself, not the defects detected during inspection.

Point VI: Institute Training
• Deming urges that every level of the system be trained for its
specific tasks. The laborer responsible for performing the manual
tasks may misunderstand it, despite how it might seem easily to be
understood by the requester in management.
• When new employees are hired they should receive total quality
management training in groups at the company, departmental, and
local level before they begin working alone in order to prevent such
misunderstandings

Point VII: Adopting and Instituting leadership
• Deming rationalized that at the expense of leadership, management
had over-expressed organizational control, thus devoting a majority
of their time worrying only about outcomes. He pushes them to
concentrate their efforts in improvements by making company
visions actual actions of the corporation. Corporate leaders should
center their attention on finding the source of any problems and
correcting them in the system rather than blaming certain individuals
for these inefficiencies

Point VIII: Driving Out Fear
• Employees need to feel secure in order for quality to be achieved.
• Fear of asking questions, reporting problems, or making suggestions
will prevent the desired climate of openness.

Point IX: Optimize team efforts
• The employees from each level of the corporation must work well
with the other levels in order for the company to function at its best
potential. This includes understanding the problems among the
various branches of the business at each level. Only after a high level
of awareness and commitment exists between them can change
initially develop because cooperation requires this earnest
fundamental transition.
• When managers share information with employees, they recognize
that a complication exists that inhibits employees from providing
statements, presenting opinions or ideas, and asking questions in


large group settings. Once realized, the managerial staff can prompt
the specific brand of trust and interest needed by the certain group
of individuals to promote an honest exchange of ideas between
levels without these barriers of communication.

Point X: Eliminating Slogans, Exhortations, and Targets for the Workforce
• A pointless sign hanging throughout the company in an attempt to
promote corporate objectives is useless to employees and a waste
of money to the business. Providing employees with company
policies and purposes is essential but doing so in a tactful manner in
memos and letters is less insulting and ignored than are the tacky
posters dispersed throughout the organization in no particular order
(Anschutz, 1995, p. 25).
• Presenting such necessary information in the latter manner only
proves failure of the management to express company goals and
objectives adequately and professionally, thus using signs to speak
to employees rather than by personal confrontations (Anschutz,
1995, p. 30).

Point XI: Eliminating Quotas and MBO
• Eliminating numerical quotas for the staff and numerical goals for the
management increase quality because each employee is no longer
based on the statistical average worker but on their own
performance without comparative judgments making it easier for
management to advance individuals who work to the highest
potential. This in effect encourages the actual above-average half
especially to work to their full potential at all times rather than merely
work to meet the proposed numerical objective before halting their
efforts or working slower than is necessary to prevent reaching the
set number before the desired time (Drummond, 1992, p. 35).

Point XII: Remove Barriers to Pride of Workmanship
• Abolishing annual performance appraisals promotes self worth and
pride in employees because it creates improved ways for individuals
to receive increases in pay. Instead of basing the pay increase on
achieved results without taking into account the possible barriers
outside the control of the employees or overseeing their work, the
increase is solely based on how much it would cost to hire a new
employee with the same skills to replace the position.
• Handling pay increases in this manner prevents unneeded
competition between workers and promotes teamwork since all will
reap the benefit of the increase rather than a few favorites In
addition, by eliminating the annual rating or merit system, tension is
relieved creating room for pride in workmanship, which contributes
to further improvements.


Point XIII: Encouraging education and Self-improvement
• Deming advises that businesses should promote the institution of
vigorous programs of education and self-improvement for every
employee at all levels.
• Employees who have a career within a certain corporation are more
than likely to change positions due to newly created jobs or the
decline of out-of-date ones rather than changing to gain an increase
in pay. This is the main reason why there will presumably always
remain a need for educating employees.
• As employees advance in knowledge both within and outside the
criteria of their jobs, they gain satisfaction in this opportunity, which
adds increased self worth and dignity that in effect brings forth
improvements in them and the company as well.

Point XIV: Taking Action to Accomplish the Transformation
• It basically sets forth the motivation to implement the previous
thirteen points with vital patience. He emphasizes that change takes
time, but its long-term outcomes are worth the initial costs and wait.
• An organization that wants to establish a culture based on quality
needs to emphasize the preceding 13 points on a daily basis.
• This usually requires a transformation in management style and
structure.

Deming’s Seven Deadly Diseases
• Lack of consistency of purpose
 A company that is without constancy of purpose has no long – range plans for staying in
business. Management is insecure, and so are employees.
• Emphasis on short-term profits
 Looking to increase the quarterly dividend undermines quality and productivity.
• Evaluation by performance, merit rating or annual review of performance
 The effects of these are devastating – teamwork is destroyed, rivalry is nurtured.
 Performance rating build fear and leave people bitter, despondent and beaten. They
also encourage defection in the ranks of management.
• Mobility of Management
 Job hopping managers never understand the companies they work for and are never
long enough to follow through on long-term changes that are necessary for quality and
productivity.
• Running a company on visible figures alone
 The most important figures are unknown and unknowable – the “multiplier” effect of a
happy customer, for example.
• Excessive medical cost for employee health care, which increase the final costs of goods and
services.
 Reduce Cost on tests and treatments on medical expenses of employees.
• Excessive costs of warranty, fueled by lawyers who work on the basis of contingency fees.

Deming’s Obstacles


 “Hope for instant pudding”
 the idea that “improvement of quality and productivity is accomplished suddenly by
affirmation of faith”
 “Search for examples”
 Which companies undertake to find a ready-made recipe they can follow when they
must instead map their own route to quality?
 “Our Problems are different”
 The pretext managers rise to avoid dealing with quality issues.
 “Our quality control department takes care of all our problems for quality”
 Another excuse managers use to avoid taking responsibility.
 “We would installed quality control”
 yet another excuse that lets top management off the hook
 “The supposition that is only necessary to meet specifications”
 Not only may products meet specifications yet vary in quality, but in addition, “the
supposition that everything is all right inside the specifications and all wrong outside
does not correspond to this world.

DEMING’S MISCELLANEOUS PRINCIPLES
• The 85-15 Rule:
The 85 – 15 rules holds that 85 percent of what goes wrong is with the system, and only 15
percent with the individual person or thing. In this connection, we do well to remember that in
any group of people, not all, nor even the majority, can be above average. In fact, exactly half
will be below average.

• Know Thy Customer:
In quality-minded organizations, the word “customer” describes more than a relationship in
which money merely changes hands. It describes the exchange of services as well. For any
given enterprise, there are two sets of customers, external and internal. The external customer
is the end user of a product or service. The internal customer is the person or work unit that
receives the product or the service of another within the same company.

Too often one department does not understand how its work is used by the next, and thus
cannot learn what things are important in carrying out its tasks. The notion of internal
customers lends relevance to each employee’s job and is absolutely critical to quality
transformation.

CROSBY’ S PHILOSOPHY: THE 14 POINTS:
The essence of Crosby’s quality philosophy is embodied in what he
calls the Absolutes of
Quality Management and the Basic elements of Improvement.

• Quality means conformance to requirements not elegance.
 Quality is simply the feeling of “excellence”.
 Requirements must be clearly stated so that they cannot be
misunderstood.
• There is no such thing as a quality problem.


 Problems must be identified by the individuals or departments
that cause them.
 The quality departments should measure conformance, report
results, and lead the drive to develop a positive attitude toward
quality improvement.
• There is no such thing as the economics of quality: it is always cheaper to do the right job the first
time.
 Quality is free. What costs money are all the actions that
involve not doing jobs right the first time.
 Similar to Deming’s Chain of Reaction message.
• The only performance measurement is the cost of quality.
 The cost of quality is the expense of nonconformance.
 Quality cost data are useful in calling problems to
management’s attention, selecting opportunities for
corrective action, and tracking quality improvement over time.
• The only performance standard is Zero Defects.
 A performance standard of the craftsperson regardless of his
or her assignment…The theme of ZD is do it right the first time.
 Concentrating on preventing defects rather than just finding
and fixing them.

Crosby’ s Basic Elements of Improvements:
1. Determination – Top management must be serious about quality
improvement.
2. Education – absolutes should be understood by everyone only through
proper training & education.
3. Implementation – Every member of the team must understand the
implementation process.

THE JURAN’ S PHILOSOPHY:

Juran defines quality as “fitness for use”. This is broken down into four
categories:
 Quality of Design -focuses on market research, product concept, and
design specifications
 Quality of Conformance - includes technology, manpower and management
 Availability - focuses on reliability, maintainability, and logistical
support.
 Field service - comprises of promptness, competence, and
integrity.

JURAN’ S TEN STEPS TO QUALITY IMPROVEMENT:
1. Build awareness of opportunities to improve.
2. set goals for improvement
3. Organize to reach goals.
4. Provide Training
5. Carry out projects to solve problems


6. Report Progress
7. give recognition
8. communicate results
9. keep score
10.Maintain momentum by making annual improvement part of the
regular systems and processes of the company

FRAMEWORKS FOR QUALITY AND PERFORMANCE EXCELLENCE
Two most prominent frameworks for quality that have had world-wide
influence:

 The Malcolm Baldrige standard provides an internationally comparable framework and criteria
for assessing organizational performance. It is a template for competitiveness based on the
principles of Total Quality Management.

 ISO 9000:2000

The Malcolm Baldrige standard: Standard Dimensions:

• APPROACH: The methods (policies, procedures, processes) used to
address the requirements of the operations.

• DEPLOYMENT: Extent (number of users and consistency of use) to
which the approach is used by all appropriate work units.

• RESULTS: The outcomes (trends, measures, KPIs) of the
organization’s approach and deployment.

The Malcolm Baldrige standard

Categories and Items Point Values
1. Leadership 120
2. Strategic Planning 85
3. Customer and Market Focus 85
4. Measurement, Analysis, and Knowledge
Management 90
5. Human Resource Focus 85


6. Process Management 85

7. Business Results 450
TOTAL POINTS 1000

Figure 2.2 The Malcolm Baldrige Standard

CRITERIA FOR PERFORMANCE EXCELLENCE
• Designed to encourage companies to enhance their competitiveness
through an aligned approach to organizational performance
management that results in:
1. Delivery of ever-improving value to customers, contributing to
market place success.
2. Improvement of overall company performance capabilities
3. Organizational and personal learning.
• The seven categories are:
1. Leadership – examines how an organization’s leaders address
values, direction, and performance expectations, as well as
their focus on customers and other stakeholders,
empowerment, innovation, and learning.

2. Strategic planning – examine how the organization develops
strategic objectives and action plans.

– examines how an organization
3. Customer and market focus
determines requirements, expectations, and preferences of
customers and markets.

4. Information and analysis – examines and organization’s information
management and performance measurement systems and
how the organization analyzes performance data and ensures
hardware and software quality.
5. Human resource focus – examines how an organization motivates
and enables employees to develop and utilize their full potential
in alignment with the organization’s overall objectives and
action plans.

6. Process management – examines the key aspects of an
organization’s process management including customer-
focused design, product and service delivery, key business,
and support processes.

7. Business results – examines and organization’s performance and
improvement in key business areas – customer satisfaction,
product and service performance, financial and marketplace
performance, human resource results, and operational


performance. Also examined are performance levels relative
to those of competitors.

Figure 2.3 MALCOLM BALDRIGE NATIONAL QUALITY AWARD CRITERIA FRAMEWORK
A Systems Perspective Framework

ISO 9000:2000
• Terms such as quality management, quality control, quality system, and quality assurance
acquired different, and sometimes conflicting meanings from country to country, within a
country, and even within an industry.
• ISO 9000 is a family of standards for quality management systems. ISO 9000 is maintained by
ISO, the International Organization for Standardization and is administered by accreditation and


certification bodies. Some of the requirements in ISO 9001 (which is one of the standards in the
ISO 9000 family) would include:
a) a set of procedures that cover all key processes in the business;
b) monitoring processes to ensure they are effective;
c) keeping adequate records;
d) checking output for defects, with appropriate corrective action where necessary;
e) regularly reviewing individual processes and the quality system itself for effectiveness;
and
f) facilitating continual improvement
• A company or organization that has been independently audited and certified to be in
conformance with ISO 9001 may publicly state that it is "ISO 9001 certified" or "ISO 9001
registered." Certification to an ISO 9000 standard does not guarantee the compliance (and
therefore the quality) of end products and services; rather, it certifies that consistent business
processes are being applied.

History of ISO 9000

Pre ISO 9000

During WWII, there were quality problems in many British high-tech
industries such as munitions, where bombs were exploding in factories
during assembly. The adopted solution was to require factories to
document their manufacturing procedures and to prove by record-keeping
that the procedures were being followed. The name of the standard was
BS 5750, and it was known as a management standard because it did not
specify what to manufacture, but how to manage the manufacturing
process. According to Seddon, "In 1987, the British Government persuaded
the International Organization for Standardization to adopt BS 5750 as an
international standard. BS 5750 became ISO 9000."

1987 version
ISO 9000:1987 had the same structure as the UK Standard BS 5750,
with three 'models' for quality management systems, the selection of
which was based on the scope of activities of the organization:
• ISO 9001:1987 Model for quality assurance in design, development,
production, installation, and servicing was for companies and
organizations whose activities included the creation of new products.

• ISO 9002:1987 Model for quality assurance in production, installation,
and servicing had basically the same material as ISO 9001 but
without covering the creation of new products.

• ISO 9003:1987 Model for quality assurance in final inspection and
test covered only the final inspection of finished product, with no
concern for how the product was produced.


• ISO 9000:1987 was also influenced by existing U.S. and other
Defense Standards ("MIL SPECS"), and so was well-suited to
manufacturing. The emphasis tended to be placed on conformance
with procedures rather than the overall process of management —
which was likely the actual intent.

1994 version
• ISO 9000:1994 emphasized quality assurance via preventative
actions, instead of just checking final product, and continued to
require evidence of compliance with documented procedures. As
with the first edition, the down-side was that companies tended to
implement its requirements by creating shelf-loads of procedure
manuals, and becoming burdened with an ISO bureaucracy. In some
companies, adapting and improving processes could actually be
impeded by the quality system.

2000 version
• ISO 9001:2000 combines the three standards 9001, 9002, and 9003
into one, now called 9001.
• Design and development procedures are required only if a company
does in fact engage in the creation of new products.
• The 2000 version sought to make a radical change in thinking by
actually placing the concept of process management front and
centre. ("Process management" was the monitoring and optimizing
of a company's tasks and activities, instead of just inspecting the
final product.)
• The 2000 version also demands involvement by upper executives, in
order to integrate quality into the business system and avoid
delegation of quality functions to junior administrators. Another goal
is to improve effectiveness via process performance metrics —
numerical measurement of the effectiveness of tasks and activities.
Expectations of continual process improvement and tracking
customer satisfaction were made explicit.

Future Version: 2008
• TC 176, the ISO 9001 technical committee, has started its review on
the next version of ISO 9001, which will in all likelihood be termed the
ISO 9001:2008 standard, assuming its planned release date of 2008
is met. Early reports are that the standard will not be substantially
changed from its 2000 version.
• As with the release of previous versions, organizations registered to
ISO 9001 will be given a substantial period to transition to the new
version of the standard, assuming changes are needed;
organizations registered to 9001:1994 had until December of 2003 to
undergo upgrade audits.


Certification
ISO does not itself certify organizations. Many countries have formed
accreditation bodies to authorize certification bodies, which audit
organizations applying for ISO 9001 compliance certification. Although
commonly referred to as ISO 9000:2000 certifications, the actual standard
to which an organization's quality management can be certified is ISO
9001:2000. Both the accreditation bodies and the certification bodies
charge fees for their services. The various accreditation bodies have
mutual agreements with each other to ensure that certificates issued by
one of the Accredited Certification Bodies (CB) are accepted world-wide.
The applying organization is assessed based on an extensive sample
of its sites, functions, products, services and processes; a list of problems
("action requests" or "non-compliances") is made known to the
management. If there are no major problems on this list, the certification
body will issue an ISO 9001 certificate for each geographical site it has
visited, once it receives a satisfactory improvement plan from the
management showing how any problems will be resolved.
An ISO certificate is not a once-and-for-all award, but must be
renewed at regular intervals recommended by the certification body,
usually around three years. In contrast to the Capability Maturity Model
there are no grades of competence within ISO 9001.

Advantages
• It is widely acknowledged that proper quality management improves
business, often having a positive effect on investment, market share,
sales growth, sales margins, competitive advantage, and avoidance
of litigation.
• The quality principles in ISO 9000:2000 are also sound, according to
Wade, and Barnes, who says "ISO 9000 guidelines provide a
comprehensive model for quality management systems that can
make any company competitive." Barnes also cites a survey by
Lloyd's Register Quality Assurance that indicated ISO 9000
increased net profit, and another by Deloitte-Touché that reported
that the costs of registration were recovered in three years.
According to the Providence Business News [7], implementing ISO
often gives the following advantages:

1. Create a more efficient, effective operation
2. Increase customer satisfaction and retention
3. Reduce audits
4. Enhance marketing
5. Improve employee motivation, awareness, and morale
6. Promote international trade


Exercise NO. _____
Approaches to Total Quality

Name _____________________________ Course & Year _______________________

Case 2.1
The Reservation Clerk

Mary Matthews works for an airline as a reservation clerk. Her
duties include answering the telephone, making reservations, and
providing information to customers. Her supervisor told her to be
courteous and not to rush callers. However, the supervisor also told her
that she must answer 25 calls per hour so that the department’s account
manager can prepare an adequate budget. Mary comes home each day
frustrated because the computer is slow in delivering information that she
needs, and sometimes reports no information. Without information from
the computer, she is forced to use printed directories and guides.

Discussion Questions:


1. What is Mary’s job? What might Deming say about this situation?
2. Drawing upon Deming’s principle, outline a plan to improve this
situation.

CHAPTER 3
TOTAL QUALITY TOOLS AND STATISTICAL THINKING

Joseph Juran describes quality management as the “Quality Trilogy”: planning, control, and
improvement. He says that most managers devote too much attention to control, and too little to
planning and improvement - which may be the most important activities for meeting and exceeding
customer expectations and gaining competitive advantage.

Two groups of tools in quality management:
1. Tools for planning
• Quality function deployment, concurrent engineering, and the “new seven”
management and planning tools – that are design to assist managers in planning the
quality effort and making efficient use of information.

2. Tools for continuous improvement
• Includes Deming Cycle, tools for data analysis, poka – yoke (mistake proofing), and
bench marking.
• Use to improve the manufacturing and service systems
• Deming cycle and basic statistical tools are usually found in basic quality training for all
employees of an organization and are used by problem – solving teams to attack specific
quality problems.

QUALITY TOOLS IN QUALITY IMPROVEMENT

• Quality function deployment


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