UNIVERSITY OF NAIROBI

JLS 606: QUALITY ASSURANCE LECTURE NOTES

MSc LEATHER SCIENCE

QUALITY

Definition of quality

In simple terms quality can be defined through the voice of the customer. It can be said that a

product is of satisfactory quality if it satisfies the customer’s needs. A customer will buy a

product if it meets the minimum expectations. Therefore, quality refers to the ability of a

product or service to consistently meet or even exceed customer needs and expectations.

Several aspects about quality clearly stand out from this definition;

1. Customer determination- it is only customers who can decide if and how well a

product or service meets his or her needs, requirements and expectations.

2. Actual experience- the customer will judge the quality of a product or a service based

on actual experience either during the purchase or after.

3. Requirements- aspects of the product or service required by the customer may be

stated or unstated, conscious or merely sensed. The product or service must meet the

requirements; hence, quality is about measuring up to the predetermined standards

and meeting those standards time and again.

4. Technically operational- aspects of the product or service may be clearly identified

in words by the customer.

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 5. Entirely subjective- aspects of the product or service may be interpreted in the

customer’s personal feelings.

Dimensions of quality

1. Performance – the most essential aspect of quality is whether the product does what

it is supposed to do. Where a customer provides product specifications such as

weight, designs etc., adherence to those specifications is an important dimension of

quality; for example, when buying a car, performance would mean acceleration,

speed, consumption levels and comfort, among others.

2. Aesthetic properties- such as appearance, feel, smell, taste or sound may form

important aspects of quality. The saying goes that the best goods are not the most

sophisticated, rather the most appealing and that the market belongs not to the highly

sophisticated goods but rather to the most appealing goods.

3. Reliability – is the ability of a product to continue to be fit for the intended purpose

(i.e. continued fitness for purpose) or function. Reliability measures how consistently

the product performs at acceptable level under normal maintenance. It is the

probability that a product or part of the equipment will perform satisfactorily

for a given time under normal conditions of use.

4. Durability- durability measures how long the product performs until repair is needed

and the overall usage and lifespan of the product.

5. Maintainability and serviceability- it measures the frequency, cost and difficulty of

actions required to keep the product operating at a desired level of performance. It

entails the ease of repair of the product. Other important aspects include the training

offered to customers in order to use the product, the assistance available, the

availability of replacement parts and the ease of replacement.

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 6. Special features- customers are normally interested in extra features in the product.

For example, remote control for television.

7. Conformance: This deals with how well a product corresponds to design

specifications. It applies to products that have specifications, and that a quality

product depends on whether it matches the manufacturer’s specifications.

8. Perceived quality: Quality is largely a matter of customer perception; hence

customers’ perception of the product is very important. Customers rely heavily on the

past performance and the reputation of the firm producing the product, hence

attaching a perceived value on the previous performance of the company’s other

products.

Other dimensions of quality include;

 Time: the speed with which the service is provided.

 Convenience: the availability and accessibility of the service.

 Price: the selling price of the product and service.

Quality is therefore determined by balancing technical considerations such as fitness for

purpose/use, performance, safety and reliability, with economic factors, which include price

and availability.

THE IMPORTANCE OF QUALITY

Quality is a strategic factor that works through virtuous cycle to enhance a company’s

sustainable competitiveness as illustrated in Figure 1.1. In the present time, every company is

interested in product quality because of the following reasons;

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 1. It increases customer satisfaction

2. It enhances profitability- improved quality increases demand for the products or

services which enables the firm to charge high prices for the value differentiation that

it offers

3. It lowers cost- process improvement have a direct bearing on cost because defects are

not free, rather someone is paid to make them, resources are used and opportunity for

the making saleable products are lost.

4. It increases productivity- quality improvement results in fewer delays, mistakes and

rework which may result in increase in net output

5. It enhances competitiveness

6. It enhances staff morale- poor quality is demoralizing for staff because they spend

time coping with complains and are frustrated when nothing seems to be done to

relieve them

7. It increases flexibility in meeting the changing needs of the market

8. It improves service and delivery times

EFFECTS OF POOR QUALITY

1. Loss of business which may be occasioned by increased criticism, or controls by the

government or pressure from activities groups. Studies have shown that while a

satisfied customer is likely to tell a few people about their experiences, a dissatisfied

customer will tell an average of nine others. It is also important to note that people

rarely complain directly to the company for poor quality but more often switch to a

competing product causing loss of business.

2. Liability- organization incur heavy liabilities occasioned by damages or injuries due

to faulty designs or poor workmanships, for instance a surgeon may be held liable for

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 negligence during a patient’s operation. liability for poor quality has been well

established in the courts of law

3. Reduced productivity- productivity and quality are closely related. Poor quality

affects productivity because defective products have to be reworked or scrapped

thereby reducing the amount of usable output.

PHILOSOPHIES OF QUALITY MANAGEMENT

Deming’s philosophy

Diming’s initial approach, largely rejected by the American industry was based on this

background in statistical methods. Deming believed that management needs to focus on

causes of variability in manufacturing process. According to him, there are two main causes

of quality problems. ’Common’ and ‘special’ causes. Special causes are those relating to

particular operators or machines and requiring attention to the individual causes while

common causes are those which arise from the operation of the system itself and are the

responsibilities of management.

Deming believed in the use of statistical process control (SPC) charts as the key methods for

identifying special and common causes and assisting in the diagnosis of the quality problems.

His aims were to identify quality problems relating to special causes and remove them

through training, improved machinery and equipment among others. SPC enabled the

production process to be brought under control; however,the remaining quality problems

remained were considered to be related to common causes i.e. they were inherent in design of

the production process.

Deming believed in a systematic approach to problem solving and promoted the widely

known Deming, shewhart or PDCA cycle. Plan, Do, Check, Action as illustrated below:

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 ACT

CHECK
PLAN

DO

The Plan- stage entails identifying and recognizing opportunities for improvement. Since

customer’s satisfaction is the focal point, the degree of difference between customers’ needs

and process performance is analyzed. Customers’ needs can be obtained through market

survey and customer research while process performance may be obtained from the feedback

information

The Do stage involves implementing the course of action that is intended to satisfy the

customer needs on a small scale while the CHECK stages will involve auditing the Do stage

to confirm the performance of the system i.e. customer satisfaction.

The ACT stage entails making a decision regarding the implementation. If the result of the

check stage is positive, then the proposed plan is adopted. Customers and process feedback

will again be obtained after a full- scale implementation. However, if the check stage shows

no significant improvement alternative plans must be developed and the cycle continues

The PDCA cycle is a universal quality improvement methodology, the ideas being to

constantly improve and thereby reduces the differences between customer requirement and

the performance of the process.

PDCA cycle is about learning and ongoing improvement learning what works and what does

not work in a schematic way.

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Deming philosophy of total quality assurance can then be stated as follows;

“To ensure total quality the next person in a chain or process must be treated as a personal

customer, not just the end user”

One of Deming’s recruits and spokesmen a slogan about quality which later came to be

referred to as “the lotus quality ethic, it stated that “a stricter emphasis on quality leads to

higher standards”

THE SEVEN DEADLY DISEASES/SINS

Deming illustrated seven fundamental beliefs which he referred to as “seven deadly sins or

diseases” about bad management practices which he considered must be eliminated before

management could be transformed to support the implementation of a successful quality

initiative as follows:

a) Lack of constancy of purpose:

Top management must always aim at long term goals and formulate operational strategies to

achieve them. The management must walk their talk because constancy of purpose insures

and assures survival. A healthy organization provide a sense of security to its workers, hence

when employees see that the company has a long-term vision and sees daily demonstration of

this vison, they see stability. The mission vision and goals of the organization must be

propagated through all levels of the organization and interpreted and understood by all. The

management should create a culture where the emphasis is on the process and not the end

result.

b) A short-term orientation:

Deming was particularly worried by the emphasis of short-term goas and objectives. Such

short-term aims are meant to satisfy shareholders. Short-term goals such as increased profits,

increased quarterly production, increased sales may give birth to the culture of manipulation;

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for example, to reflect an increased profit training and education costs may be curtailed.

Although such an action may show an increased short-term profit, the long-term effects may

be devastating. Other actions that promote short-term goals include linking executive pay on

profit figures.

c) Over-emphasis is a Performance Appraisal and Merit Rating:

Performance appraisal and merit rating can be devastating for organization because it may

promote rivalry and internal competition hence reducing the spirit of cooperation and team

work that may have existed. Performance appraisal encourages counterproductive behavior

among workers since rivalry within weakens rivalry without. For an organization to be

competitive, a concerted effort must be made to ensure that everyone works as a team.

Effective team work is achieved when employees share a common goal of authorizing

organizational performance.

d) Job-hopping:

Organizational instability occurs when management’s mobility is high because management

may not get to learn the real problems and requirements of an organization. Getting

acquainted with and accustomed to a quality culture requires a major paradigm shift and it

takes considerable time. Frequent changes in management are detrimental to “constancy of

purpose.” Therefore, there is need to reduce top management’s mobility by encouraging

promotion from within, instituting job enrichment programs and practicing job relation.

Organizations should also demonstrate their concern for their advancement by investing in

management trainings and seminars geared towards responsibilities. Similarly, there is need

to pay attention to remuneration and work environment relative to industry practice.

e) Management by Visible Figures alone;

Deming argued that management by numbers such as monthly productivity, amount shipped,

sales made, profits, among others do not present an accurate picture of the state of

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organization because numbers are prone to manipulation. There are cases when management

cut down a research, training and education costs to report an increased profit. Deming argues

that “he who runs the company on visible figures alone will in time have neither the company

nor the figures.” The management should select statistical data, unbiased and as objective as

possible to measure the quality performance of an organization such as data on customer

satisfaction and the reputation of the organization.

f) Excessive Medical Costs:

Deming criticized the practice of incurring excessive costs in medical programs arguing that

it paralyzes competitiveness.

g) Excessive Legal Costs:

He was also not supportive of the way American organizations incur excessively in legal

costs because it would also affect its competitiveness. He noted that the last two deadly

sins/diseases were common among the American organizations, but may be a foretaste of

problems to come in Europe and also other parts of the world.

DERMING’S QUALITY APPROACH

Deming came up with four principal quality approaches, including the PDCA cycle. The

others are:

1) The Statistical Process Control

This is a quantitative approach based on measurement of process performance. Essentially a

process is considered to be under control, which is stable when the random variation falls

within the determined upper and lower limits. At this point the process is seen to have

achieved a position where the special causes of failure have been eradicated. Events that fall

outside the normal variation limits are considered “special” and should prove traceable to

individual diagnosis and treatment. events falling without the two limits are considered to

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have common causes and hence a product of the organization and require treatment at the

system level. Accordingly, Deming estimates that 94% of quality problems belong to the

system and are the responsibility of management, while 6% are due to special causes and are

worker controllable.

2) Deming’s 14 Points for Management

According to Deming, a major proportion of the problems can be solved by management and

hence cannot “pass the buck”. He argued that 94% of the problems can be solved by

management and the remaining 6% can be attributed to suppliers or workers. So accordingly,

what must change fundamentally is the style of management and corporate culture inherent in

the organization. His argument revolved around the fact that without management,

commitment, the adoption and implementation of total quality system will not succeed. It is

the management that invests in the processes. It is management that creates corporate culture,

and it is also management that selects suppliers and develops long-term relationships.

Deming was convinced that management must be provided with a sense of direction as

contained in his principles (points) as follows:

1. Create Constancy of Purpose towards Improvement of Product and Service.

This point stresses that there is need to create long-term plans that will steer the company in

the right direction. Long-term constancy of purpose for continuous improvement is an

obligation that management should accept as first priority and hence allocate resources for

planning. To create constancy of purpose, a “team” type of environment is required where all

work together towards a common goal. It calls for management to make a commitment to

achieve ever improving quality as a primary objective of the organization. Therefore, there

should be a consistent message about quality throughout the organization which should not

vary by department, time or customer. A clear statement is required from the management

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that merely meet the competition is not a long-term strategy; rather the company must focus

on customers’ satisfaction.

2. Adopt the new philosophy for economic stability

The new age of quality requires commitment to continuous improvement. We can no longer

live with commonly accepted levels of delay, mistakes and defective workmanship.

Declaring any level of defects to be acceptable promotes the belief that defects are

acceptable. The new philosophy of no defects must be adopted. Quality consciousness must

be everything to everyone and management must accept that the responsibility for developing

and achieving quality is theirs. They need to recognize that workers are not to blame for

quality deficiencies.

3. Cease dependence as on mass inspection to achieve quality

Design quality into their product at the development stage instead of inspecting quality into

the product. Inspection merely separates the acceptable from the unacceptable. It does not

address the root cause of the problem. The output from the process is inspected and a good

product is shipped, while defective one is reworked or scrapped. Such an approach can

actually keep what is shipped defect free but the method is not a good one because; it is

expensive in terms of inspection and rework and secondly, the part of the process causing the

defect is never fixed. A firm should therefore, move away from defect detection to defect

prevention, inspect the process rather than the product, insist that the same quality standard

procedures are followed by everyone including suppliers to ensure quality of incoming

material. According to Deming 100% inspection is similar to planning for defects,

acknowledging that processes cannot function correctly or that specifications made no sense

in the first place (Deming 1982). It focuses on the negative aspect without offering alternative

means of improving quality of the product. It is a waste of time and effort to simply check

goods with no consideration on how to make them better.

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 4. End the practice of awarding business on the basis of price

Many organizations, including government, award contracts to the lowest binders as long as

they satisfy certain specifications. This practice should cease and review be based on the

quality conformance, for instance what quality assurance do the bidders use? What methods

do they use to improve quality? What is the attitude of the management towards quality?

Answers to those questions along with price may be used to select vendor because low bids

do not necessarily guarantee quality. To remedy this situation, there is need to reduce the

number of suppliers and move towards a single supplier for any item, if necessary, the

supplier should be appropriately train in quality techniques and partnership. The uses of

single supplies invariably result in less variation otherwise caused when different supplies are

used and reduces inspection costs. Supplier selection should be based on quality assurance

rather than price.

5. Improve constantly and forever the system of production and service

According to Deming, organizations should move away from defect detection to defect

prevention and continue with process improvement to meet and exceed customer requirement

on continuous basis. He developed a four-stage cycle commonly known as “Deming’s PDCA

cycle” for constant improvement.

6. Institute modern methods of job-related training:

Employees are the organization’s most valuable assets. When employees are hired, they

should be properly oriented in the company’s goals in clear-cut terms. Employees must have

a clear understanding of what is to be done and its importance in the entire process. The

management must not only train on the way things are done but provide employees with the

right tools to implement their training.

7. Institute modern methods of leadership

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The responsibilities of supervisors must change from sheer numbers to quality. Because they

form the link between employees and top management, they need to understand both the

problem of the workers and top management’s goals. Communicating top management’s

commitment to quality improvement to the workers is a key function of supervisors. To be

effective leaders they must adopt a style of coaching and support. They must no longer think

positively, rather they must think in terms of helping workers to do a better job. They also

need to be trained in statistical method of quality.

8. Drive out fear:

The fear of failure and being exposed inhibits our willingness to do the correct difficult thing.

Working in an environment of fear is counterproductive, because employee’s actions are

dictated by the behavior patterns that will please management, rather than those that meet

organizational goals.

9. Break down barriers between departments and individuals:

Remove any departmental barriers that impede quality improvement. Poor communication is

always the main cause of barriers. Similarly, a fear ridden atmosphere builds barriers as well

as lack of cross functional teams. Every individual from every department must work hand in

hand so as to foresee problems before they arise. The management’s responsibility is to

reduce inter departmental conflicts by encouraging open communications.

10. Eliminate the use of slogans, posters and exhortations:

Avoid the use of slogans which demand zero defects, doing right the first time and new level

of excellence without providing the means and the method. Deming suggests that such

practices act more to vet the staff rather than to encourage them, and may at the extreme

generate frustration and resentment. Numerical goals set arbitrarily by management have

demoralizing effect. Management should provide a road map to help in accomplishing the set

targets and should demonstrate a commitment to a continuous process of quality

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improvement. Rather than providing slogans they should describe clearly what they are doing

to implement this long-term goal to employees. The goal or standard setting should bottom-

up where employees are involved in setting the quality standards. Deming argues that most

causes of poor quality are systemic and are beyond the power of the work force.

11. Eliminate numerical quotas, work standards and management by objectives or

numerical goals.

Work standards are normally established by someone other than those who perform the job

and such standards are based on quantity and without regard to quality. They encourage poor

workmanship in order to meet the quotas. According to Deming, settling such work standards

guarantees inefficiency and increases cost. Management therefore, should replace quotas with

statistical methods of process control.

12. Remove barriers that rob workers of right to pride in workmanship:

There are several factors that impede worker pride. Such factors include management

inability to treat workers with dignity, lack of proper communication of the company’s goals

and objectives to all employees. Management may blame employees for failing to meet

company goals while in the real sense the fault lies with management; for instance,

inadequate provision of training, punitive supervision and inadequate or ineffective tools and

equipment provided to perform the tasks. Workers always want to do a good job and be

proud of it, but it may be difficult if no quality tools are provided, no adequate documentation

is given especially showing what is expected of them or no appropriate training is offered.

Deming observed that if you give the workforce a chance to work with pride, the 3% that

apparently does not care will erode itself by peer pressure.

The performance appraisal system also robs workers of their pride in workmanship because

such systems have no clear-cut methodologies and is normally influenced by management

which ultimately lead to inconsistencies in performance evaluation. The appraisal procedure

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should be replaced by proper leadership; communication and counselling whose main

purpose is to identify, sustain or develop employee’s contribution towards continuous

improvement of the organization as a team.

Deming recommended that there is need to abolish the merit rating system because it affects

teamwork, fosters mediocrity and focuses on the short-term. He argued that merit rating is a

subjective method without a statistical basis which attempts to justify the fact that an

employee depends on the personal opinion of the manager. Similarly, merit rating may cause

internal competition and isolation which kills the team spirit and reduces initiative and risk

taking.

13. Institute educational and retraining programs:

Because of the value attached to human resource in an organization, it is vital that its people

be motivated and adequately trained. The management must commit resources for education

and training in terms of time and money because well-educated and trained workers are likely

to be motivated. According to Deming, if the organization is to continuously improve, then

the people must continuously improve. He argues that future competitive advantage will be

achieved through knowledge, an observation that is hard to dispute. Secondly, education and

training enable the company to inform the employees on the goals and objectives of the

organization; thirdly, continuously training programs keeps workers up-to-date with new

developments such as change in information technology, change in product design and

machinery and other innovative technologies. Lastly, education and training discourage job-

hopping. By investing in the workers through seminars, workshops and technical training the

organization gains workers’ loyalty and normally loyal employees stay with the organization

longer. It should be noted that without adequate training there is no guarantee to innovation

or any improvement in the company’s performance.

14. Take action to accomplish the transformation:

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A full transformation must be put in place for forms to implement the 13 points. More

specifically, a structure has to be created and maintained for the dissemination of the

concepts outlined in the 14 points. The onus for creating this structure lies with top

management. The management must be visionary, knowledgeable and set long-term goals.

Without full management belief and support, progress in quality will not succeed even if it

has a full backing of the people below. Deming argues that quality is made in the boardroom;

however, limitations on quality also emanate from the same room. The management therefore

should put everyone to work to achieve the transformation. This will require a strong and a

unified culture within the organization with absolute commitment from top to bottom. Such

culture can be achieved when committed management walk the talk.

THE SEVEN POINT ACTION PLAN

To enable the 14 points to be implemented, Deming proposed a seven-point action plan

which is perhaps best interpreted as statements about what to do, rather than the more

important question of how to do as follows;

i. Management must agree on the meaning of the quality program, its implication and

the direction to take.

ii. Top management must accept and adopt the new philosophy.

iii. Top management must communicate the plan and the necessity for it to the people in

the organization.

iv. Every activity must be recognized as a step in a process and customers of that process

identified.

v. Each stage must adopt the “Deming” or Shewhart cycle – plan, do, check and act- as

the basis of quality improvement.

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vi. Team working must be engendered and encouraged to improve inputs and outputs;

everyone must be enabled to contribute to this process.

vii. An organization for quality must be constructed with the support of knowledgeable

statiacans.

Deming advocated key companchart that are necessary for the journey towards

continuous improvements which he called system of profound knowledge as follows;

1. Knowledge of the system and the theory of optimization:

According to Deming, effective leaders must have an appreciation of the systems that

work together to create their organization’s product and services. Management need

to comprehend that optimization of an entire system is an overriding goal to that of an

individual sub-system. Optimizing individual sub-systems may lead to sub-optimal

systems where the stakeholder’s needs may not be satisfied. Management which has

ana appreciation for a system aligns their customers’ needs, requirements and

expectation to the system that produces products and services, and their organizations

goal.

2. Knowledge of theory of variation;

According to Deming all processes exhibit variation which may be caused by either

special causes or common causes. Special causes of variation are normally external to

the system and it is the responsibility of the technical people to eliminate, whereas

common causes are due to design and structure of a system and is their management’s

responsibility to eliminate.

A business that exists in an environment of common causes is said to be stable and in

control. Deming suggests that significant process improvement comes from obtaining

knowledge about process through charting, the study of variation and collection and

analysis of data.

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3. Exposure to the theory:

Knowledge provides a basis of making predictions and such predictions are based on

underlying theory. The underlying theory is either supported or invalidated when

observed outcome is compared to the predicted value. Thus, experience and intuition

are not valuable to management unless they can be interpreted and explained in the

context of a theory. Therefore, Deming stressed a data analysis-oriented approach to

problem solving where data is collected and analyzed to ascertain results which help

in formulating remedial actions. He encouraged management to use fact-based

information when making decisions by analyzing such information to establish trends

and patterns before making a decision.

4. Knowledge of psychology:

Deming argued that proper management of people requires an understanding of

psychology because it helps in understanding human behavior and interactions among

one another and with the environment. He argues that it helps us understand each

other better, whether as customers or employees. It also helps in understanding

motivation which is a necessary ingredient in managing human resources. By

understanding people, their interaction and their motivation, management can make

informed decisions.

ISHIKAWA’S PHILOSOPHY OF QUALITY CONTROL

Ishikawa believed in the concept of companywide quality. He argued that quality

control activities not only ensure the quality of industrial products but also contributes

to the organizational overall business. Ishikawa defines quality as “not only the

quality of the product but also of after sales service, quality of management, the

company itself and the human beings.” According to Ishikawa everyone involved or

affected by the company and its operations should be involved in the quality program.

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His approach to participation emphasizes greater worker involvement and motivations

which can be created through a conducive atmosphere, awareness and change of

attitude.

Ishikawa believed that effective participation among people is an absolute

requirement for a quality organization. He saw open groups as critical particularly in

the use of his tools for problem solving. He believed in simplicity and using the

language of the shop floor in order to have an empowering effect. Since training is

given to all levels of employees, a common quality language is spoken by all which in

turns aid and enhances communications. Therefore, three principal strands can be

identified in Ishikawa’s philosophy:

1. Holistic approach advocated by a “company - wide quality” control.

2. Participation active and creative cooperation among those affected by quality

initiatives.

3. Communication through simplicity of methods and commonly of language.

ISHIKAWA’S QUALITY APPROACH

Ishikawa’s main method of quality management is company-wide quality control.

Company-wide quality control is the founding concept of Ishikawa which is seen

as embracing all departments and functions. Secondly, the use of quality circles is

Ishikawa’s is Ishikawa’s principal method for achieving participation. The circles

are composed of between four and twelve workers from the same area of activity

and headed by a worker or supervisor. Their task is basically to identify local

problems and recommend solutions. Ishikawa suggested that quality circles should

be an integral part of the quality effort and shot an isolated approach. Quality

circles have met with both success and failures which in Japan, many quality

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 circles have collapsed, usually because of management’s lack of interest or

excessive interventions.

Ishikawa approach also comprised of quantitative approach referred to as “seven

tools of quality control”. Such tools are sets of pictures of quality representing in

diagrammatic or chart form the quality status being reviewed. He suggested at all

staff should be trained in these seven tools of quality control. These quality

control tools include:

1. Pareto charts; this is used to identify the principle causes of problems.

2. Ishikawa (fishbone) diagram; is a chart showing cause and effect in

process. It determines the causes of the problems.

3. Stratification; this is a layer chart which place each set of data successively

on top of the previous one. It describes how the data is made up.

4. Check sheets; provide a record of quality.

5. Histograms; this are graphs used to display frequency of various ranges of

values of a quality.

6. Scatter diagrams; these are graphs used to display frequency of various

ranges of values of quality.

7. Control charts; they are used in statistical process control which shows

which variations to control and how.

He believed these seven tools should be known by everyone in the organization and used to

analyze problems and develop improvements because they form a powerful tool box as far as

quality control is concerned. Therefore, Ishikawa’s approach contains both quantitative and

qualitative aspects which are focused on achieving a company-wide quality control.

A CRITIQUE OF DEMING’S WORK

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While overall Deming can be said to have been very successful in his achievements, there are

both success and failures. The principle strength in Deming’s approach in the systematic

logic in his thinking, particularly the idea of the internal customer- supplier relationships and

secondly his emphasis on management leadership and bias in statistical approaches are

amazing. However, Deming’s work lacked a well-defined methodology and his work is not

adequately grounded in human aspects. Some have even criticized his work as essentially

based on “hard sciences”.

A CRITIQUE TO ISHIKAWA’S WORK

i. Ishikawa’s reputation and worldwide acceptance of his work is a precursor to his

success. He is best known for the fishbone diagram and similarly, the success of the

quality circles can not be doubted.

ii. His emphasis on participation especially of people at all levels in the organization is

of enviable value.

iii. The choice of a mixture of methods and tools which are both quantitative and

qualitative encourages a broader understanding that quality can be achieved with a

simple focus on either a single tool, or purely qualitative or quantitative approach.

iv. The quality control circles are relevant to all sectors of the economy, be they

industrial or service sector.

The main weaknesses of Ishikawa approach include:

i. Quality control circles depend on management support. It has been observed hat

quality control circles is often used as a device for allowing workers to feel they are

involved but with little real commitment for managers. This is according to old adage

that “the theory in practice is rarely a successful as a theory in theory!”

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 ii. The linear view of problems proposed by the fishbone diagram is in limited use. It

would be better to recognize that problems are often interacting and far more complex

than the fishbone can reveal.

iii. Participation is highly valued in Ishikawa’s work and the idea of training everybody

in the same tools and technologies is a sound method to encourage this; however, the

approach relies too heavily on a willingness to participate which is often difficult to

come by.

iv. There does not emerge from Ishikawa’s work a methodology which bonds together

and integrates all the different strands of his thinking. While man of the tools and

techniques suggested by him are useful in isolation, there is no clear means of

implementing on Ishikawa program

v. To assume as Ishikawa appears to, that everything must be simplified is perhaps

difficult to realize in real business life.

vi. Ishikawa’s work may be seen as undervaluing or underestimating the people in the

organization in a assuming that they can only cope with simple concept and methods.

In reality, majority of the people deal extremely well with a highly complex

environment.

CROSBY’S PHILOSOPHY

Crosby defined quality as “conformance to requirements” and believed that any

product that consistently reproduced its design specifications was of high quality.

Another powerful idea associated with Crosby is the idea that “quality is free”. This

idea is remised on the fact that savings from quality improvements programs pay for

themselves. He argues that the real cost of quality is the nonconformance which

22
results in scrap, rework, test and inspection. His philosophy is encapsulated in his five

absolutes for quality and the vaccination serum.

THE FIVE ABSOLUTES OF QUALITY

1. Absolute 1: Definition of quality- he defined quality as “conformance to

requirements,” not as ‘goodness’ or ‘elegance’. This implies that when he talks

about a quality product or service he is referring to one which meets the

requirements of the customer; hence for one to provide a quality product or

service, customer requirements must be defined, communicated to all

stakeholders ad measures must be taken to continually determine them. If the

organizations manufacture what they can rather than what customers demand,

then there will be perennial quality problems since customers’ requirements are

never met. This fundamental belief was based on the fact that quality is a

measurable aspect and that quality ca be achieved when customer expectations

are met.

2. Absolute 2: There is no such thing as quality problem- Crosby believes that

poor management is the source of quality problems. Such problems do not create

themselves or exist as matters separate from the management process. Product

quality does not exist in a vacuum, but is an outcome of management process. If

the management process has inherent quality, then a quality product will be

produced. He also believed that the management has a fundamental role to play in

leading workers to produce quality output.

3. Absolute 3: It is always cheaper to do right first time- Crosby has made clear

that inspection is a cost and that quality needs to be designed into a product rather

flaws being inspected out. He believes in conforming to requirements by

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 developing a quality process with no expectation of failure. He strongly opposed

the use of inspectors whose job is to catch the errors made by the workers. He

argued that we are conditioned to expect errors in the workplace and not other

forms of human activity. He prescribe the establishment of an organization that

does not expect mistakes; where errors are not expected or inevitable (Beckford,

2002). His believe agrees with the saying prevention of error is better than cure or

rectification, hence, an organization which relies on inspection of the final output

to improve on quality is in danger. Logothetis (1992) suggested that a company

focused on inspection will be achieving more than it deserves if it stagnates,

because it is more likely to fail altogether in the long run.

4. Absolute 4: The only performance measure is the cost of quality- Crosby

believes that the cost of quality is measurable; for instance, the cost of rework,

warranty costs, rejects, scrap, among others. Such costs comprise the cost of

nonconformance; more so Crosby was biased in using quantitative approach to

measure cost of nonconformance.

5. Absolute 5: Zero defect performance- Crosby introduced the zero defects

concept as a way of making management believe that it does not have to accept

defects. He proposes that no defects are acceptable, hence perfection is the

standard to aim for thorough sound processes, product design and continuous

improvement. He argues that zero defects is an achievable and measurable

objective for an organization. Zero defects will be achieved if the product

conforms to customer specification and requirements. He strongly stood against

the idea that there will always be some level of defectives because any level of

defect is too high, and that management must install programs that help the

organization move toward zero defects. He argued that we are conditioned to

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 believe that it is alright to make errors through such common sayings as “to err is

human”, “everybody makes mistakes”, and “nobody is perfect”, all of which

serve to justify the lack of conformance to quality. Crosby suggested that top

management must make commitment to zero defects and have zero defects as a

management standard, and not simply a motivational program for employees. As

a way forward, he proposes the establishment of quality improvement teams,

training in quality, quality councils and even setting aside a zero defects day to

signal employees that the organization has a new standard of quality.

QUALITY APPROACH ACCORDING TO CROSBY

Crosby’s principal approach is his 14-step plan to help business implement a quality

improvement program and achieve zero defect goals as follows:

1. Establish management commitment

For quality improvement to take place, commitment must start at the top. Management must

accept responsibility for, or an obligation to achieving quality. Such commitment puts a

demand on the management to consistently behave in a manner oriented towards quality . the

emphasis on defect prevention ha to be communicated and a quality policy that states the

individual performance requirements needed to match customer requirements must be

developed.

2. Formation of quality improvement team

Crosby puts emphasis on the need to form multi-disciplinary teams which may comprise

representatives for each department or division. The team members act as spokesperson for

each group they represent. The team members are responsible for ensuring that suggestions

are brought too action. This means that managers and other staff must take a break out of

their comfort zones and relinquish some of the expert and position ponker that goes with a

25
functional organization. An initiative from the quality department alone will not be successful

unless everyone is represented.

3. Establish quality measurements:

Measurements are necessary to determine the level of quality of a product or service, hence is

a precursor to evaluation. Measurement defines areas that need corrective action and where

quality improvement efforts should be directed. Every activity in an organization must be

amenable to measurement; hence way has to be designed to measure all aspects e.g design,

manufacturing, delivery, etc. the results of measurements are placed in visible charts for all to

see.

4. Evaluate the cost of quality

The cost of quality consists of such things as the cost of things going wrong; scrap, rework,

having to be things of an inspection and testing costs among others. It is important to be able

to identify the costs of quality and put a value on them as this will result in saving for the

company.

5. Raise the quality awareness

The result of the cost of nonconformance to quality should be shared with all employees and

management because getting everybody involved with quality enhances a quality attitude and

culture. This quality awareness program is normally undertaken through the training of

managers and supervisors, through communications such as books and videos and by

displays and posters.

6. Take corrective action

This is the point where the entire organization must “walk the talk”. If the numbers generated

through measurements are used to humiliate the staff, then the effort is unlikely to prove

helpful. The numbers must be used to provide guidance and support to the action taken and

the actions must in harmony with the words spoken. Open communication and active

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discussions of problems creates feasible solutions because such discussions may also expose

other problems not identified previously and hence determine a procedure to eliminate them.

For problems with no immediate identifiable remedies, discussions may be postponed to

subsequent meetings for further deliberations.

7. Undertake zero defects planning

The concept of zero defects must be communicated clearly to all the employees and everyone

must have an understanding that the achievement of zero defects goal is the company’s

objective. The zero defects planning is undertaken by establishing a committee or working

group to develop ways to initiate and implement a zero defects program. This committee

gives credibility to the quality program and demonstrates a commitment of top management.

8. Train supervision and managers

Management at all levels must be made aware of the steps needed to implement a quality

improvement program in order that they can explain it in turn to their subordinates. This

practice of “train the trainer” is a powerful instrument for culturally embedding the behavior

changes that are required in the organization.

9. Hold a zero defects day

To ensure a uniform understanding of the concept of zero defects, a one-day event should be

held as a celebration of achievements in quality and a new beginning to quality improvement

program. Crosby wants this to be done in a celebratory atmosphere accompanied by badges,

buttons and balloons. The management has the sole responsibility of explaining the program

to employees and they should describe the day as signifying “new attitude”.

10. Encourage the setting of goals

Employees and management should set specific and measurable goals with predetermined

time span for achievement. Goals are of course of no value unless they are related to

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appropriate time scale for their achievement. The goal setting process creates a favorable

attitude for people to ultimately achieve their goals.

11. Encourage obstacle reporting

The employees should be encouraged to report on obstacles that derail their quality efforts.

They should be asked to identify reasons that prevent them from meeting the zero defects

goal, but not to make suggestions on how to address them. It is task of cross functional teams

to come up with procedures for removing these problems.

This process enables those facing problems to report them and more importantly, it places

obligations on management to address those issues. Hence an environment of mutual trust is

necessary so that both groups can work together to achieve zero defects.

12. Provide recognition for contributors

Crosby considers that those who contribute to the quality program should be rewarded

through a formal non-monetary reward scheme. Award programs should be based on

recognition rather than money and should identify those employees who have either met or

exceeded their goals or have excelled in other ways. Recognizing and rewarding the

contributors to the program is a device for reinforcing among the entire staff a particular kind

of behavior which further impedes a quality culture.

13. Establish quality councils

These are essentially forums comprised of quality professionals and team leaders allowing

them to communicate and determine action plans for quality improvement. The quality

council should meet on a regular basis to keep everyone up to date on quality progress. Such

meetings provide a fertile ground for new ideas on quality improvement. The establishment

of quality councils seen as institutionalizing the quality program and making it part of the

embedded quality culture.

14. Do it all over again

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This is a reminder that quality improvement never stops and that achievement of quality is an

ongoing process. Therefore, any quality program may overtime lose the impetus and drive

because perhaps the leadership will have achieved the objectives which they had set for

themselves. In order to sustain the quality improvement momentum, it is necessary to pump

new energy into the organization by way of appointing new people and the establishment of

new objectives.

A CRITIQUE OF CROSBY’S WORK

i. Crosby’s recognition of worker participation cannot be denied. The worker’s

involvement is important in any quality improvement program because involvement

implies easier acceptance of ownership of the on the program on the solutions.

Similarly, people who are engaged in doing the work can recognize the root cause of

the problems. This argues with the saying that it is the shoe wearer who knows where

it pinches.

ii. His rejection of a tangible quality problem and the conception that all quality issues

can be resolved is very useful in provoking ideal goal setting behavior in an

organization. Acceptance that certain problems cannot be resolved could be seen as

reinforcing behavior and attitudes which ensure that they never will be.

iii. The clarity and simplicity of Crosby approach and in its 14-point implementation

program.

iv. Crosby’s 14-step program is very extensive. It is not simply a motivation effort, but

rather an educational program aimed at improving quality.

Crosby’s work was, however criticized on the following ground:

i. Crosby’s does not believe that workers should take prime responsibility for poor

quality. He argues that you have to get management straight first because quality

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 initiatives come from the top. The problem however, may rest on how the massages

are translated by the managers in the middle level and how competent they are to

transmit them.

ii. Crosby considered only one goal of the organization and that its zero defects. He

however neglected to address workers perception of their own values needs. It must

be understood that the requirement for quality is being driven from the environment

of the organization which embodies the employees.

iii. His misinterpretation of “zero defect” as meaning the avoidance of risk is another

weak link. There will always be an element of risk involved in change of behavior or

a process. To overcome the danger of risk aversion, management must develop a

cultural environment where risk can be calculated and minimized and where learning

from mistakes is encouraged.

iv. Crosby’s assumption that people will work in an open and conciliatory manner may

be far-fetched. Although he suggested absence of political and coercive tendencies,

many management writers concur that an element of politics and coercion is present

in most organization, whether implicit or not. There is always a dominant group or

individual in an organization and that having a fully open and conciliatory atmosphere

is an ideal rather than an achievable objective.

FEIGEINBAUM’S QUALITY PHILOSOPHY

Feigenbaum’s philosophy is found in his early idea of the “total” approach to quality which

reflects a systematic attitude to mind. He believed in involvement of all functions in the

quality process and that quality should be built into the product rather than failure being

inspected out. He defined quality as “best for the customer use and selling price” and quality

control as “an effective system for integrating quality development, quality maintenance and

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quality improvement effort of the various groups within an organization so as to enable

production and service at the most economical levels which allows full customer

satisfaction.”

His definition of quality emphasized “customer use” and “selling price”. While customer use

is similar to Deming’s needs for customers and Crosby’s conformance to requirements,

selling price was entirely a new idea. Feigenbaum perceives that for any given price, there are

limits to the expectation of quality. He believed in a complex world of organizations, there is

every need to manage from systematic perspective while recognizing and dealing with

interaction across internal and external organizational boundaries as well as with supplies,

customers and other stakeholders in the organization.

Feigenbaum recognizes that organizations do not only manufacture products, but also design

and develop them. This means that quality problems can be addressed right from the

conception of the ideas through to delivery of the products. Therefore, Feigenbaum’s

philosophy resonated around a commitment to a systematic, total approach and an emphasis

on designing for quality and involving all the functional areas, including recognition of and

enhancement of human aspects of the organization.

QUALITY APPROACH

Feigenbaum’s quality approach can be distilled into a four-step approach which is intended to

lead to a total quality system. The steps include:

1. Set quality standards.

2. Appraising performance based on standards.

3. Act when standards are not met.

4. Plan to make improvements.

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He proposed participation as a means of harnessing the contribution of people and

encouraging a sense of belonging. He further proposed the measurement of what he called

“operating quality costs” which he categorized into four groups; internal failure costs,

external failure costs, appraisal costs and prevention costs. His thinking was that by

measuring quality at its critical stage, the total costs of running the organization will be

reduced.

A CRITIQUE TO FEIGENBAUM’S WORK

The systematic concept of “total quality” i.e. running throughout the organization from its

inputs, transformation process and output has immense. Feigenbaum’s work has the

following strengths;

1. It places emphasis on the important roll played by the management.

2. He promoted the use of participation.

3. It stresses a total of whole approach to quality control.

The main weaknesses include;

The focus on his work was on industrial activities and has little value for service-based

organizations.

There are more clear methods and instructions on what to do and how it should be done.

Although Feigenbaum accepts the value of a participative approach, the question that remains

unanswered is how such participation is to be achieved.

PROCESS APPROACH TO QUALITY CONTROL

Definition of a process in terms of quality control

A process is a means of converting inputs into the intended outputs. Waste is an outcome of

an event, process or item /resource which is, less than the total amount of input(s) invested.

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PROCESS MODEL SUMMARY

Quality Performance Standard Procedures/Process

Definition

Process
Inputs internal Outputs
actions

Equipment/Facilities Training/Knowledge

PROCESS APPROACH

This is the management of all value adding activities within the organization.

Value adding activities in a tannery

1. Following strictly the process recipe for the various process-steps of leather

manufacture. For instance, soaking of dry hides need two soaking steps as follows;

Pre-soak

700-800% in a static vessel.

Main soak

200-300% water (with the addition of wetting agent and a biocide or antiseptic

depending on the status of cleanliness and duration of the soak).

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 2. Ensuring that all the enablers for all the various process-steps are available (i.e. in

place) in the right quantities and grades /conditions.

3. Ensuring that the various sections of the tannery are manned by qualified technical

personnel.

4. Ensuring that the suppliers of raw materials for leather processing supply materials of

the right quality and specifications.

5. Ensuring that there is minimum wastage in both material resources and time as well as

good environmental practice and occupational health safety measures during leather

processing.

QUALITY AUDIT

Quality audit is merely the actions of checking and verifying whether or not an organization

is operating in accordance with the requirements of their own documented quality system. i.e.

policies, procedures, etc. to ensure that such a system complies with a national/international

standard.

THE COST OF QUALITY

The cost of quality is the amount of money that has to be spent as a result of quality problems

within the organization. It aims at quantifying in financial terms all activities involved in the

prevention and rectification of defects. These are costs associated with the discovery of

failure, and the cost of preventing poor quality. The American Society of Quality Control

(1971) categorized quality cost into categories:

i. Internal Failure Costs

ii. External Failure Costs

iii. Appraisal Costs

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 iv. Preventions Costs

i. INTERNAL FAILURE COSTS

Failure cost are cost that result from producing defective products. They are the cost of doing

it wrong. They are considered as internal failure cost if the defective item is detected within

the organization before delivery to the final customer. Internal failures may occur due to

variety of reasons such as defective materials from vendors, faulty equipment’s and

machines, incorrect methods, carelessness, faulty materials handling procedures and incorrect

processing. The cost of internal failure cost includes:

 Downtime: this is the cost of idle personnel and facilities when production is halted to

correct a quality problem, including stoppage due to defects materials

 Scrap: these are defective products which cannot be repaired, used or sold

 Rework or rectification: it involves the cost of correcting non-conforming units such

as additional manufacturing operations

 Cost of re-inspection; reworked items may require re-inspection or retesting to

ensure compliance to quality standards

 Downgrading cost: products which do not meet specifications may be sold at a

discounted price or as second hand at a throw away prices

 Waste: the activities associated with doing unnecessary work or holding stocks as a

result of error, wrong materials among others

 Cost of investigation: include the cost of all the activities required to establish the

cause of internal product failure.

Nobody wants to take responsibility for the high proportion of defectives; hence one

department or an employee may shift the blame to another which eventually affects

the morale of the workforce

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  Inventory safety stocks: cost of extra safety stocks held specifically to guard against

shortages and breakdowns due to making defective products

 Excess capacity cost: cost of excess capacity that must be maintained to make up for

the capacity lost from making defective products. This include the cost of extra

facilities and equipment above those that would be needed if the production were

defects free

 Defects generated overtime costs; additional cost of having employee work overtime

to meet delivery deadline for orders that were late because defective items have to be

reworked

ii. EXTERNAL FAILURE COSTS

These are cost incurred when the products fail to perform satisfactorily after being transferred

to the customer. External failure cost may include;

 Loss of goodwill: goodwill is always created as a result of good performance over a

long period of time. Poor quality has a negative impact on the reputation and image

and impinges directly on the future prospect for sale. Re- establishing a lost goodwill

is a difficult task.

 Warranty charges: failed products within the warranty time may have to be replaced

under guarantee

 Liability cost: these are costs of defending law suits and compensating customers for

the injury death and business losses and even change of contracts

 Cost of returned, replacement or allowance: these costs include cost of

investigation of the rejected products, replacing shipping and handling or any price

reduction or allowance to compensate for a defective product

36
  Complaint costs; these include all cost incurred with servicing customer complaints

such as cost of investigation and adjustments, cost of receiving and handling the

complaints

RETHINKING TRADITIONAL QUALITY ASSURANCE

Changes in attitude and organizational culture may determine its future.

Before the fate of the quality profession can be determined, the functions, jobs and tasks it

includes must be established. In the past, the profession encompassed quality auditors, quality

control inspectors and quality engineers, who ensured that design documents contain

necessary and sufficient quality assurance and control criteria, that in-process or finished

products met specific and measurable criteria and that organizations established appropriate

procedural controls. These quality disciplines resulted from regulated mass production

processes of the world war II era.

The heavily regulated commercial nuclear industry of the 1970’s helped solidify quality

professional’s role in business and government and as overseas competition for manufactured

goods increased. American business began to adopt this quality disciplines in an attempt to

survive. More recently, however, manufacturing has changed. The world economy has

levelled the playing field in which the United States was once the dominant player. An

example of this is the switch from mass customization and from stable, long-term services to

constantly changing and niche services. Mass customization can be seen everywhere from

37
coffee and blue jeans to automobiles and health insurance. Short production runs, customer

input, short product life cycles and innovations in computer controlled and robotized

manufacturing methods are causing business to rethink traditional quality assurance.

Finding value in the quality profession

Attempts to quantify the value added by traditional quality disciplines have produced

unflattering results. General belief is that traditional quality roles (inspection, process audit,

document review etc.) add costs that are seldom recovered. This is largely due to many

organizations’ dependence on quality professionals to inspect and audit their products. In

addition, responsibilities and ownership of the processes are assigned to the quality

departments. The quality professional has responded by shifting its emphasis from audit and

inspection to preventive methodologies. This shift is positive, but it won’t be sufficient if the

intent is merely to create another discipline such as total quality engineering or total quality

management department. It doesn’t dispel the notion that organisations need a central area

responsible for quality. This shift has caused an upheaval among quality professionals. Many

including inspectors, auditors and other quality department employees, still cling to the

traditional approach to quality assurance.

US businesses will survive by using TQM, continuous improvement and business process re-

engineering as management tools and principles - not as job titles, departments or disciplines.

Those that rely on audit and inspection will die, as more forward-thinking business innovate,

reduce costs and gain market share. The unrelenting change facing businesses demands that

managers and employees work in teams to ensure that customer expectations are exceeded

and that product and services delight rather than merely satisfy.

Redefining quality

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Business need to change their understanding of quality: it is no longer a department, a

discipline or a measure of compliance or conformance. Quality is a value no different from

integrity or honesty. It is not an objectively measured attribute as much as it is a way of

business. There is no acceptable level of quality-products and services either delight or they

are doomed. Workers must take back control of their processes to feel ownership and

responsibility for their contribution and their perception of the customer must shift from the

line inspector to the end user.

Business and organization need to make the transition from the oversight to ownership. To do

that they must understand the trade -offs required. For example, if quality control inspectors

are pulled from the line without any other changes being made, unsatisfactory product will

end up in customers’ hands.one way to begin the transition process is to look at what would

happen if traditional quality function disappeared. What would happen if the compliance

audit department vanished? People would be responsible for policing themselves and would

have to comply with written policies, requirements or contracts.

Are empowered knowledgeable workers capable of following written policies and directions

on their own? What about inspectors? Can line workers be trusted to do excellent to do

excellent work or must they be subject to persistent QC inspection and oversight? The answer

will most likely depend on the company’s culture and the worker’s attitudes. Responsible

leadership must rely on self-assessment rather than independent oversight. Business results

must be directly linked with process and will be the measure of effectiveness. Worker’s

perceptions of themselves must change from labor components to process owners. This will

require attitude changes on the part of workers, management and the organization. In other

words, the culture must change.

39
An organization’s attitude about quality must be evident in both its implicit and explicit

behavior and must be congruent with stated or written philosophy. More thought must go into

planning, developing values and principles and creating a mission statement that is lived by

all employees and stake-holders. Stakeholders include customers, suppliers, regulators,

shareholders, directors, employees and communities. When all stakeholders are considered in

the vision and operating and management systems are designed to realize that vision,

departments such as quality assurance not only become unnecessary, but detrimental.

Formal quality assurance and quality control departments perpetuate the idea that

conformance or compliance is the objective rather than customer delight. Instead, companied

must educate stakeholders on the vision and the philosophy of the company, each

stakeholder’s contribution and what to expect from living that philosophy. Everyone must

have a genuine desire to live the philosophy. This desire is created when policy and behavior

are congruent, when all participants know their rules and value and when all share visibly in

the organisation’s success. This doesn’t mean that those with the word ‘quality’ or

‘compliance’ in their job title should be fired. New roles must be found for these people and

those currently working in traditional quality roles must create their own future. There is

plenty of work to be done as businesses make the transition from mass production to mass

customization.

Traditional quality professionals can work to give responsibility back to the workers and they

can help in the education process necessary for this reassignment. But, when the initial

transition is complete, they must fill new roles. Those who cannot or will not change will no

longer be needed. Auditors and inspectors (most of whom have considerable knowledge of

the processes they audit or inspect) can become doers rather than watchers. Change has

affected, and will continue to affect, workers and businesses. The age of the specialist is

giving way to the age of the adaptive team. The cold science of industrial engineering is

40
being blended with the art and pride of the craftsman. Loggers, autoworkers, textile workers,

miners and quality professionals will survive in better, more productive roles or they will go

the way of the dinosaur.

Loyalty levels

Research shows that customer satisfaction is a poor indicator of customer loyalty. If

satisfaction levels are not close to the 100% level, disloyalty is a given. Shopping around

pays. Today, you do not have to pay more for less; with little effort, you can get more for

less. So, where does this leave you as manager? How can you become more competitive?

What should you do to improve your service levels? Where do you begin?

As the accompanying diagram shows, business involves an exchange between two value

systems. The “value demand system” is the customer’s world. The “value delivery system” is

yours.

Value Delivery system Value Demand System

Company Customers
Information
Purpose Products/
& InsightDemographics
Services
Philosophies (Age, education, income, geographic

People location, etc.)

Partnerships Psychographics

Products (Needs, wants, values, beliefs, assumptions,

Positioning etc.)

Processes Experience

Resources Competence

Options

Resources

41
 Context

(Political/legal, economic, social, technological, competitive)

CUSTOMER SERVICE AS AN EXCHANGE PROCESS

The more closely you can connect them, the better for both you and your customers.

Customers are valuable because they provide the revenue you need to survive and grow. But

equally important, and often overlooked, is the fact that they also provide the information and

insights that let you rejuvenate your organization and its offerings. Without these, all the

money in the world is of limited worth. It will not be long before you loose touch with what

customers want and need, and cut off the flow of their funds.

Get into his head

To create an effective business strategy-and to design effectively an organization- you have

to begin in the mind of the customer. You have to understand what drives him or her. This is

the starting point for any re-engineering effort, or for the shift to learn production. All too

often, companies start this improvement processes in the wrong place. Their transformations

are planned from an internal rather than an external perspective. Little wonder that so many

bold plans bite the dust.

Customer knowledge

Two broad categories of customer knowledge are needed. Firstly, there are demographic

factors such as age, education, income, geographic location- and yes even race. In the case of

business buyers, demographics would include information about when and how they place

orders, order quantities and value, usage, and so on. Secondly. There are softer psychographic

42
facts about their needs, wants, values, beliefs, and assumptions. Yes, even industrial buyers

are human.

But there is more you need to know. What is your customer’s experience with products like

yours, or with others, that might impact on his behavior? Is that experience positive or

negative? What has customers learnt that they might make them more discriminating? What

competencies do they have that will affect how they buy and use your product? Can they be

easily sold? What support might they require? And what options do they have- either directly

competitive products, or substitute sources of value? How easily can they avoid you? What

else could they buy that would satisfy them? Then, naturally, there is the question of

resources. Can customers afford your product? Can they use it? Do they have appropriate

systems, tools, skills? Thus armed, you can begin to design your company’s value delivery

system. to do it effectively, you need to address some very specific questions.

Seven factors in particular, drive business performance-and, thus, customer service:

 Purpose. Why does your firm exist? What is your reason for being- your overall

intention? Where do you compete? What are your ambitions?

 Philosophies. What are your guiding principles? What do you believe about every

aspect of your business, including service level and policies, human sources

developments, information technology investment, growth, competitiveness, and the

like?

 People. What kind of people should you hire? How will you induct, develop, manage

and reward them?

 Partnerships. Which stakeholders must you win to your side? What do you expect

from them? How can they help you? How should you communicate with them? What

is in it for them?

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  Products. What products should you sell? Why do they matter to customers? How will

you keep them alive in customer’s mind? What innovation is needed?

 Positioning. What should your products promise to set them from others? Why are

they different? How will you promote them?

 Processes. Consider everything you do, and the way you do everything. The first

question to ask is not, “how can we improve this process?” but rather, “why do we do

this at all?” there is no point becoming better at the wrong things.

As with the factors in the customer’s value demand system, all of these are underpinned by

your resources, finance, capabilities, and skills you can call upon. Do you have what you

need? Can you acquire o develop it? Can you compete in spite of deficiencies? How might

you compensate for what you lack? Customer service is a perception in your customer’s

mind. No matter how rationally you try to measure it, you ultimately are dealing with

feelings, impressions, opinions, and other-soft issues which change literally from moment to

moment. But to win against your competition- and to sustain your advantage – you need to

make perfectly rational decisions and extremely hard choices.

Difficult customers

There is no arguing that attitude is a vital element in superior service. Front line people

should be carefully selected for their people skills. After all, customers can be demanding,

rude, irrational, and even crooked. Some personality types are simply more suited to dealing

with them. Your customer team should also be thoroughly trained, and retrained as often as

needed. But no matter how well you select your sales and service staff, and no matter how

well you train them, you still have to support them in a way that lets them excel.

You have to see service as organizational design. You have to be willing to create a service

organization, not just try to shape a service culture. This is an important insight. Most efforts

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to improve service begin and end with stabs at changing culture. Managers talk about the

need to improve attitudes. There are many theories about how to do it. Any number of gurus

promise sophisticated methodologies.

But the results are dismal. All evidence points to the simple fact that changing culture is

harder than anyone knows – and no one really knows how to pull it off.

Change behavior first

Where most attempts go wrong is in trying to alter behavior by altering minds. In fact,

psychologies have long known that the way to change minds is to change behavior. This,

then, is where customer service must begin. Attention must focus on the organizational

arrangements that make it possible for people to perform.

Every company I know talks of empowering its people. Yet the fact is, almost all of them

systematically disempower their people. They expect breakthrough performance, yet prevent

it. They set high standards, yet get in the way of them. They spend like crazy on badges,

buttons, posters and parties, yet skimp where it counts – IT systems, product design and

quality, logistics, support.

Customers must obviously be the focal point of every company’s attention and efforts. Their

needs and wants determine what a firm must do, how, and when. To think that you can

improve service levels with a few superficial waves of a wand is ridiculous. To underestimate

the importance of working at the real basics is foolish.

As service levels continue to rise, companies will face growing pressure to change faster and

more radically. If the past is any guide, managers will flail about in search of silver bullets

that might save them. Management fads will stay attractive. And we will see many more

failures and a lot of frustrations.

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Customers’ service is not something you tag on to the tail of a business. It is the reason

businesses exists. It should drive every aspect of competitive strategy and every corporation:

reengineering, quality, IT, training, rewards, or whatever. Set it out into the future with

customers in mind, and you have a good chance of designing an organization that will survive

and thrive in the tough years ahead. Start elsewhere – trying to satisfy your own needs first,

or relying on smiles to save you – and you will pay dearly. Your costs will rise, inefficiencies

will be assured, and your customers will defect. Get this simple fact right, and you win. Try

anything else, and you lose.

EFFECTIVE METHODS FOR MEASURING THE COST OF POOR QUALITY

Reducing a company’s non-value creating costs-the cost of poor quality-is one of the best

ways of increasing profitability and competitiveness, yet ineffective measurement prevents

many businesses from releasing the benefits. In the second of a two-part report on research

among some of Sweden’s largest companies, Lars Sorqvist describes some of the more

effective methods they have pinpointed

There is much talk these days about the cost of poor quality. As competition become stiffer,

more companies and organizations are trying to reduce their non -value creating costs as a

means of increasing their competitiveness. Public bodies are being forced to make cutbacks

and savings to balance national budgets. At the same time awareness is building on how high

the cost of poor quality really is.

Swedish company managers estimate that on average the cost of poor quality corresponds to

about a quarter of sales, according to a recent survey. The real cost of poor quality would be

probably be even higher if it were possible to calculate the value of the effects poor quality

often has on the market in the form of bad will and loss of customers.

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It is important for a company to know how high its poor-quality costs are in order to motivate

all parties to make systemic improvements. Drawing attention to the often-large costs reveals

the potential for improvement on which investment decisions on corporate and product

development should be based.

The introduction of a monetary unit into the quality measurements also helps to create a

simple means of comparing and prioritizing between different problems. The cost of poor

quality can also be used to monitor trends in quality over a period of time. Many companies

have tried to calculate the cost of poor quality, but have come up against serious problems. A

high proportion of the costs have proved difficult to measure and have thereby remained

hidden.

Attempts to measure these costs have been most successful on the production side which has

sometimes led to sub optimization with improvement work being concentrated (wrongly) on

production. The accuracy of the measurements is not always what it might be which has

resulted in misleading comparisons. Problems arise from difficulties in getting the personnel

to produce reports that contain the requested information.

Moreover, there is often much disagreement over which costs should be regarded as being

associated with poor quality. But over the past few years Sweden’s Royal Institute of

Technology, inn collaboration with some of the country’s top companies, has developed

effective methods for measuring the cost of poor quality.

The project, which began in 1993, moved from general studies to more detailed case studies.

As well as companies such as Scania, Ericson, Volvo, SAAB, Sandvik, SAS, Telia, Teli and

the Swedish Post Office, the study was supported and advised by several international

experts, among them Blanton Godfrey, Frank Gryna and William Golomski.

Defining the concept

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Clarifying what is meant by the cost of poor quality requires a clear and comprehensive

definition. A suitable one is costs which would be eliminated if a company’s products and the

processes in its business were perfect. To apply this usually to a particular company, the

individual parameters which reflect the cost of poor quality have to be identified.

At a general level, these could include rework, scrap, complaints or lost sales. These should

then be broken down further until specific activities are reached. The cost of poor quality is

usually divided into internal and external failure costs and appraisal costs. Prevention costs

were once included, but these should rather be classed as an investment in quality and not as

a cost arising out of poor quality.

There is little need to measure them, as the information available is never sufficient to make

an optimization analysis possible. The problems which cause poor quality costs may be

divided into sporadic and chronic problems. Sporadic problems are those which occur in an

acute situation and cause disturbances while chronic problems tend to be hidden and

accepted. In many cases, the chronic problems are very costly, but also require more detailed

analysis if they are to be detected.

Measurement

There are two general methods for measuring the cost of poor quality in an organization.

Either a measuring system is built up to enable employees to report the quality defects and

faults which occur or an assessment is performed in which a team analyses the business as a

means of identifying poor quality costs.

Traditionally most companies have tried to introduce permanent measuring systems- often

without realizing that there are alternatives and without questioning their choice. Experience

shows that company-wide measuring systems are difficult to use successfully as they require

far reaching changes in attitudes and corporate culture. The time required can also vary

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widely since a measuring system may take several years to build whereas a study can usually

be carried out in a few weeks.

ASSESSMENT

An assessment to mark the quality status becomes simple and systematic if the analysis is

made sequentially along the process in the business. By starting the study with external

customers and moving back to external suppliers, valuable information can be obtained from

later stages in the process on problems in earlier stages. Such studies consist of four phases:

preparation, planning, performance and processing.

Preparation

The scope of the assessment and the breakdown level required are established. This decision

represents a balance between the accuracy of the study’s result and the time taken. The

project team which is to carry out the assessment is appointed. It should be cross-functional

in character so that the team is well informed about all aspects of the business. The financial

and quality functions can make a valuable contribution. The team is then given training to

ensure its members have the necessary skills and understanding.

Planning

The purpose of the assessment is stated in detail. A time table for the work is drawn up,

giving clear final and subsidiary targets. The necessary resources are allocated. The methods

for the work are established. An inventory is made up of what secondary data are available.

Brainstorming produces a list of potential costs of poor quality in the business.

Performance

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The work can be carried out in accordance with two principles. According to the first,

‘deviation analysis,’ existing defects and faults are listed, their frequency is determined and

their cost are estimated. The second principle, ‘best- in- class analysis,’ involves determining

the best possible way of running the business and then comparing with the current situation to

establish the cost of poor quality. The latter method is usually more complicated to use, but

has a better chance of identifying problems of a chronic nature. Collecting data for the

deviation analysis begins with existing information from the accounting system, the

measuring and reporting systems and other available documentation.

Information can also be obtained with relative ease by identifying individual and units which

are concerned wholly or partly with activities which gives rise to poor quality costs. Such

individuals could include inspectors, adjusters and complaints department personnel. In

complicated situations a simple assessment of the cost of poor quality can be obtained by

estimating a unit’s quality costs from its failure rate. When the documented and readily

available data have been collected, the study continues with interviews of the personnel

concerned. Interviews can vary in scope, from a general one with management to detailed

interviews at a lower level.

They can take the form of individual interviews, group interviews or questionnaires. A good

way of beginning the interview is with an information and motivation phase in which the

necessary background is provided. This is followed by the data collection phase, where

questions are asked about existing problems, defects and faults, together with estimates of

their frequency. Another way of obtaining this information is to carry out a survey in the

form of a measurement of limited duration. This can be performed using a simple report form

on which employees can make daily notes of the faults and problems that occur.

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In a best-in-class analysis, the best practice can be established by making a theoretical

analysis of the process, carrying out practical studies and comparisons or through a

combination of both methods. A theoretical analysis can be made by surveying and studying

the process. A practical study can be carried out in the form of interviews, where employees

make assessments of how their work would be done under ideal conditions or in the form of

benchmarking in which different situations are compared and most suitable methods are

identified. Benchmarking can be carried out internally at various levels, from individual to

company level or externally through comparisons with other companies.

Processing

Analyzing the data obtained. Proposals for improvement projects are established. Reports are

drawn up for management and the units concerned. The assessment is evaluated and

proposals laid down for improving its procedures.

MEASURING SYSTEMS

Measuring systems can be useful for monitoring the quality level over a period of time.

However, it is inadvisable to attempt to introduce a measuring system which is intended to

reflect the entire business. The task is complicated and a high level of maturity is required

among both management and personnel. Many have failed in the attempt. Measuring systems

should instead be focused on a few costs or a selected area with readily available information

such as production in a manufacturing company. If a well-designed measuring system is

used, the measured data will be accurate. The work of developing a measuring system can be

divided into five phases (see the figure below)

PHASE 1

PROOF OF NEED

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PHASE 2

DEVELOPMENT

PHASE 3

TRAINING

PHASE 4

IMPLEMENTATION

PHASE 5

MEASUREMENT

Phase 1: Proof is needed

The company’s management must first decide on whether a measuring system should be

introduced. The reason for this is that it is essential for the functioning of the system that

management gives it priority and constantly asks for and uses the information it provides.

Developing this support may require training courses and seminars for company

management. It is also useful to present the results of earlier assessments of the costs of poor

quality.

Phase 2: Development’

This work is most appropriately done as a project. A cross-functional group is formed and the

scope of the measuring system established. It is important not to be over-ambitious as this can

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lead to difficulties. It is often a good idea to begin on a small scale and them expand.

Available sources of information (for instance, accounting and other measuring systems) are

studied. A model for a measuring system is then created. This could be an integrated

component of an already existing system or a separate system. the former is often preferable.

Detailed parameters for the cost of poor quality are established. Procedures for reporting are

developed. A comprehensive pilot test should then be carried out to adapt the system to the

specific conditions of the business. During the development stage, it is important that as

many employees as possible feel they are fully involved in the work.

Phase 3: Training

Before the system can be implemented, all users need to be given the appropriate training.

The objective of the training is to impart skills in the use of the measuring system and to

bring out a change of attitude among employees. This change of attitude has proved to be

essential to the functioning of the system.

Phase 4: Implementation

The measuring system is not implemented until the pilot test show positive results and the

skills and attitudes of the employees are judged to be adequate. If there are any doubts, then

implementation should be delayed and development and training should continue as a failure

always makes further attempts more difficult. When the measuring system has been

introduced and is functioning, responsibility is transferred to a line function – the financial

function may be appropriate.

Phase 5: Measurement

Procedures should be established and responsibility decided for supervision and maintenance

of the measuring system, analysis of the data obtained, design and distribution of reports and

evaluation and improvement of the system.

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APPLICATION

When the cost of poor quality is being measured the method used should be decided in the

light of the purpose of the study. If the primary purpose is to motivate long-term

improvement work and make the quality concept more tangible, it is important to use a

measuring method accepted in the organization so that the results will not be questioned.

Where the purpose is to identify problem areas and priorities among them, the measuring

method must be consistent so that the entire organization is analyzed in the same way and sub

optimization is avoided. If the purpose is to monitor the organization’s quality level, the

measuring method must first have a good capability. A suitable way of working on the cost of

poor quality is to begin with a simple survey mainly using accepted parameters for poor

quality costs, to make the quality concept more tangible and to create understanding at

management level.

This survey is then expanded to identify and prioritize suitable improvement objectives. The

improvement work is begun and then followed up using a simple measuring system which

consist of appropriate poor-quality cost parameters. Parallel to this, capable measuring

methods can be developed for certain key quality costs such as rejects in production and

complaints.

QUALITY MANAGEMENT AND SYSTEMS THINKING

An organization is a system- it functions as a whole through the interaction of its parts. The

overall results you get are determined by the structure of the system-how the parts relate. The

whole is more than the sum of its parts. A business is more than the sum of its different

functional departments. The relationship between them-how they work together-is what

produces results. To analyze a system into its component parts does not help to understand

how it works overall. Systems thinking cease beyond one-way relationships of cause and

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effect. In a system what is an effect of one change can be the cause of another or feedback to

modify what caused it in the first place. Systems thinking sees chains and circles of cause and

effect rather than straight lines. Systems thinking focuses on the relationship between the

parts themselves. Parts of a system connect in one of two ways:

 Reinforcing feedback is when the effects of an action return to amplify the change

and lead to more change in the same direction. The principle of reinforcing feedback

is the more you do it, the more you get. Example: compound interest on a bank

account. Reinforcing feedback leads to growth.

 Balancing feedback is when the effects of an action return to oppose the original

change and so dampen the effect. It leads to less of an action that is creating it.

Balancing feedback leads to stability. The principle of balancing feedback is the more

you do it, the less you need to it. Example: customer care.

Feedback is not always obviously connected to what caused it. There may be a substantial

time delay between the cause and the effect. Systems are sustained by the beliefs and values

of the people within them. Change in the beliefs and values will create change in the system.

ORGANIZATIONAL PUZZLES

Actions intended to increase understanding and trust often have the opposite effect. There is a

surprising gap between what is intended and the actual result. Nobody wants

misunderstanding and yet it frequently happens. Sometimes others do not seem to act

reasonably, even when it is in their best interest. What seems reasonable from one person’s

perspective looks different to others and different again from an organizational point of view.

How do individual and organizational perspective align?

People are blamed for poor decisions, yet from their point of view they did the best they

could in the system they were in. to avoid risk and blame people may then adopt a safety-first

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way of working. This leads to organizational inertia. Initiating and improvements can be

risky. (‘If it isn’t working, do it twice as hard, twice as careful and twice as fast’). Defensive

routines and unofficial channels proliferate. Sometimes the only way to effectively act is to

bypass the established and recommended way. How do procedures that are designed to be

helpful become a restriction?

Direct actions and decisions designed to solve a problem often have no effect or even seem to

make it worse in the long run. What worked last year probably may not work this year.

Results are not proportional to effect. Small changes can produce large results and it is hard

to know what those changes might be. It is easy to get bogged down in details of a complex

system and forget the larger picture. (‘When you are up to your knees in crocodiles, it is hard

to remember you went in to drain the swamp’). It is hard to connect cause and effect when

the effects may happen months or years afterwards. We have act now, but do not see the

results until much later.

Systems thinking- factors to loops

One widely used way of analyzing and dealing with an issue or problem is to make a list of

key factors involved. The factors put in order of importance and have resources allocated to

them.

Each factor may be dealt with, the different elements may improve and progress, yet the

overall results may be disappointing. Also, when resources are moved, the problem may

return. This is sometimes called ‘laundry list’ thinking as it does not take the relationships

between the factors into account. Systems thinking looks at how the factors relate and so

creates a series of key loops rather than key factors.

Group exercise

Take an issue or new initiative that is confronting organization (Diagram 1).

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  Brainstorm a list of key factors and put them in order of priority.

 Starting with the top factor, aim to increase a self-reinforcing loop. Ask: what would

lead to this factor growing and being self-sustaining? How does it link to other factors

in a way that leads to growth?

 Create self-sustaining loops for all the factors if possible.

 Look at the loops and see if they can be connected into one diagram. Identify the

overlapping factors.

 Look for leverage points where resources will be best allocated.

 Explore any side effects of these loops that might work against the project.

 Consider the possible negative side effects that could result from the loops you have

constructed.

Fixes that fail

Solutions that work in the short-term may not work in the long-term. Because of the complex

relationships in a system, a problem may be maintained or exacerbated by the very efforts

that are made to solve it. In the short-term the problem may disappear only to appear again in

a worse form later. This is because there is a delay while the feedback has an effect on the

wider system. the fix has unintended consequences.

In the example in Diagram 2, cost cutting improves profits in the short-term, but may also

lead to loss of staff, low morale, a decline in the quality of work and a downturn on profits

which leads to more cost cutting. This pattern solves yesterday’s difficulties by creating

tomorrow problem.

Types of learning

Diagram 3 represents simple learning and problem solving. We learn through feedback.

There is a gap between what we know and what we want to know. We take action to close

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that gap. The results are feedback, increased knowledge or skills. A problem is a difference

between where we are and where we want to be. When we engage in a problem, we try

different actions and solutions.

The results are feedback we use to narrow the gap between where we are and where we want

to be. Solving the problem is closing the gap. In simple learning and problem solving, this

takes place within a boundary of assumptions and beliefs about what is possible and

necessary. These assumptions may limit us and blind us to certain types of feedback.

Diagram 4 illustrates what is known as double loop learning- it brings our beliefs and

assumptions about the issue into the feedback loop. Feedback from our actions leads us to

question our assumptions. Double loop learning is generative. The basic questions to ask for

double loop learning are:

 How are my assumptions about this?

 How else could I think about this?

 How might my assumptions be contributing to the problem?

 How come this situation has persisted?

Diagram 1

SKILLED PEOPLE

NEW PRODUCTS RECRUITING

POLICY

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 INCREASED REVENUE

Diagram 2

PROFIT COST CUTTING

QUALITY OF WORK LOSS OF STAFF

TIME DELAY

STAFF MORALE

Diagram 3

PROBLEM
A DIFFERENCE BETWEEN WHERE
YOU ARE AND WHERE YOU WANT TO BE

DECISION
FEEDBACK
THE RESULT OF YOUR ACTION

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ACTION

Diagram 4

BELIEFS AND ASSUMPTIONS

PROBLEM
A DIFFERENCE BETWEEN WHERE YOU
ARE AND WHERE YOU WANT TO BE

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FEEDBACK DECISION
THE RESULT OF
YOUR ACTION

ACTION

61