Focusing on Customers

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 1

 Video Clip

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 Definition of Quality

• Customer-Based: Fitness for use, meeting customer expectations.

•
• 2. Manufacturing-Based: Conforming to design, specifications, or
requirements. Having no defects.
•
• 3. Product-Based: The product has something that other similar
products do not that adds value.
•
• 4. Value-Based: The product is the best combination of price and
features.
•
• 5. Transcendent: It is not clear what it is, but it is something good...

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 3

 What is TQM?
 TQM is the enhancement to the traditional way of doing
business.
 It is a proven technique to guarantee survival in the world-
class competition.
 TQM is for the most part common sense.
 Analyzing three words (TQM), we have:
Total—Made up of the whole
Quality—Degree of excellence a product or service
provides
Management—Act, art, or manner of handling,
controlling, directing, etc.

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 4

 Antecedents of Modern Quality
Management
 Guilds of Medieval Europe
(From the end of 13th Century to Early 19th
Century)

 The Industrial Revolution

(From the end of 17th Century to
1800s)
 The World War II
(From 1938 to 1945)
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 5
 Guilds of Medieval Europe
(From the end of 13th Century to Early 19th
Century)

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 6

 The Industrial Revolution
(From the end of 17th Century to
1800s)
 Craftsmanship

 The Factory System

 The Taylor System

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 7

 Industrial Revolution: The
Craftsmanship

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 8

 World War II

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 Post World War II
The Birth of Total Quality Management
• The birth of the Total Quality Control in US was in direct
response to a quality revolution in Japan following WW-II
as Japanese manufacturers converted from Producing
Military Goods for internal use to producing civilian
goods for trade.
• At first Japan had a widely held reputation for shoddy
exports, and their goods were shunned by international
markets. This led Japanese organizations to explore new
ways of thinking about quality.
• And from here starts the era of “Quality Gurus”!

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 10

 What is a quality guru?

• A guru, by definition, is a good person, a

wise person and a teacher.
• A quality guru should be all of these, plus
have a concept and approach to quality
within business that has made a major and
lasting impact.
• These gurus have done, and continue to do,
that, in some cases, even after their death.
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 Joseph Juran
Juran is a founder of the Juran Institute in Wilton, Connecticut. He
promoted the concept known as Business Process Quality, which is a
technique of Cross-Functional Quality Improvement.

He was invited to Japan in 1954 by the Union of Japanese Scientists

and Engineers (JUSE)

He predicted the quality of Japanese goods would overtake the quality

of goods produced in US by Mid-1970s because of Japan’s
revolutionary rate of quality improvement

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 W. Edward Deming
Deming, who had become frustrated with American managers when most
programs of statistical quality control were terminated once the war and
government contracts came to an end, was invited to Japan in 1954 by the
Union of Japanese Scientists and Engineers (JUSE).

Deming was the main figure in popularizing quality control in Japan and
regarded as national hero in that country.

He believes that quality must be built I into the product at all stages in order to
achieve a high level of excellence.

His thoughts were highly influenced by Walter Shwartz who was the proponent
of Statistical Quality Control (SQC). He views statistics as a management tool
and relies on statistical process control as means in managing variations in a
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM
process. 13
• Armand V Feigenbaum was the originator of “total quality control”, often
referred to as total quality.

• He defined it as:
• “An effective system for integrating quality development, quality
maintenance and quality improvement efforts of the various groups
within an organization, so as to enable production and
• service at the most economical levels that allow full customer
satisfaction”.

• He saw it as a business method and proposed three steps to quality:

• • Quality leadership
• • Modern quality technology
•THE MANAGEMENT
• Organisational commitment
AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 14
 Dr Kaoru Ishikawa made many contributions to quality, the most
noteworthy being his total quality viewpoint, company wide quality control,
his emphasis on the human side of quality, the Ishikawa diagram and the
assembly and use of the “seven basic tools of quality”:

– Pareto analysis which are the big problems?

– Cause and effect diagrams what causes the problems?
– Stratification how is the data made up?
– Check sheets how often it occurs or is done?
– Histograms what do overall variations look
like?
– Scatter charts what are the relationships
between factors?
– Process control charts which variations to control and
how?
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 15
 Ishikawa Diagram (Cause & Effects
Diagram)
Also known as Fishbone Analysis

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 Shigeo Shingo
Shingo is strongly associated with Just-in-Time manufacturing, and was
the inventor of the single minute exchange of die (SMED) system, in
which set up times are reduced from hours to minutes, and the Poka-
Yoke (mistake proofing) system.

In Poka Yoke, defects are examined, the production system stopped and
immediate feedback given so that the root causes of the problem may
be identified and prevented from occurring again.

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 Poka Yoke: Fail Safe/Mistake
Proofing System

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 Dr Genichi Taguchi

Taguchi believed it is preferable to design product that is robust or

insensitive to variation in the manufacturing process, rather than
attempt to control all the many variations during actual manufacture.

“Taguchi methodology” is fundamentally a prototyping method that

enables the designer to identify the optimal settings to produce a robust
product that can survive manufacturing time after time, piece after
piece, and provide what the customer wants.

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 Philip B Crosby

Crosby is known for the concepts of “Quality is Free” and “Zero

Defects”, and his quality improvement process is based on his four
absolutes of quality:

– Quality is conformance to requirements

– The system of quality is prevention

– The performance standard is zero defect

– The measurement of quality is the price of non-

conformance
THE MANAGEMENT TM
AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson Learning 20
 Tom Peters

Tom Peters identified leadership as being central to the quality

improvement process, discarding the word “Management” for
“Leadership”. The new role is of a facilitator, and the basis is
“Managing by walking about” (MBWA), enabling the leader to keep
in touch with customers, innovation and people, the three main areas in
the pursuit of excellence.

He believes that, as the effective leader walks, at least 3 major

activities are happening:

– Listening suggests caring

– Teaching values are transmitted

– Facilitating able to give on-the-spot help

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 TQM Beyond 2000
As the 21st century begins, the quality movement has matured. The new
quality systems have evolved beyond the foundations laid by
Deming, Juran and the early Japanese practitioners of quality

– In 2000 the ISO 9000 series of quality management standards was

revised to increase emphasis on customer satisfaction. Sector-
specific versions of the ISO 9000 series of quality management
standards were developed for such industries as automotive (QS-
9000), aerospace (AS9000) and telecommunications (TL 9000 and
ISO/TS 16949) and for environmental management (ISO 14000).

– Six Sigma, a methodology developed by Motorola to improve its

business processes by minimizing defects, evolved into an
organizational approach that achieved breakthroughs – and
significant bottom-line results. When Motorola received a Baldrige
Award in 1988, it shared its quality practices, like Toyota Motor
Corporation, with others.

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 Importance of Customer
Satisfaction and Loyalty
• “Satisfaction is an attitude; loyalty is a
behavior”
• Loyal customers spend more, are willing ot
pay higher prices, refer new clients, and are
less costly to do business with.
• It costs five times more to find a new
customer than to keep an existing one
happy.

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 American Customer
Satisfaction Index
• Measures customer satisfaction at national
level
• Introduced in 1994 by University of
Michigan and American Society for Quality
• Continual decline in index from 1994 through
1998 with a small improvement into 2000
suggests that quality improvements have not
kept pace with consumer expectations

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 ACSI Model
of Customer Satisfaction
Perceived Customer
quality complaints

Perceived Customer
value satisfaction

Customer
expectations Customer
loyalty

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 Customer-Driven Quality Cycle
Customer needs and expectations
(expected quality)

Identification of customer needs

Translation into product/service specifications

(design quality)

Output (actual quality)

Customer perceptions (perceived quality)

measurement and feedback

PERCEIVED QUALITY = ACTUAL - EXPECTED
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 26
 Leading Practices (1 of 2)
• Define and segment key customer groups
and markets
• Understand the voice of the customer
(VOC)
• Understand linkages between VOC and
design, production, and delivery

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 Leading Practices (2 of 2)
• Build relationships through commitments,
provide accessibility to people and
information, set service standards, and
follow-up on transactions
• Effective complaint management processes
• Measure customer satisfaction for
improvement

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 Key Customer Groups
• Organization level
– consumers
– external customers
– employees
– society
• Process level
– internal customer units or groups
• Performer level
– individual internal customers
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 Identifying Internal Customers
• What products or services are produced?
• Who uses these products and services?
• Who do employees call, write to, or answer
questions for?
• Who supplies inputs to the process?

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 AT&T Customer-Supplier Model

Your Inputs Your Outputs Your

Suppliers Processes Customers

Requirements Requirements
and feedback and feedback

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 Customer Segmentation

• Demographics
• Geography
• Volumes
• Profit potential

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 Key Dimensions of Quality
• Performance – primary operating characteristics
• Features – “bells and whistles”
• Reliability – probability of operating for specific
time and conditions of use
• Conformance – degree to which characteristics
match standards
• Durability- amount of use before deterioration or
replacement
• Serviceability – speed, courtesy, and competence
of repair
• Aesthetics – look, feel, sound, taste, smell
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 Key Dimensions of Service Quality
• Reliability – ability to provide what was promised
• Assurance – knowledge and courtesy of
employees and ability to convey trust
• Tangibles – physical facilities and appearance of
personnel
• Empathy – degree of caring and individual
attention
• Responsiveness – willingness to help customers
and provide prompt service

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 Kano Model of Customer Needs

• Dissatisfiers: expected requirements

• Satisfiers: expressed requirements
• Exciters/delighters: unexpected
features

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 Customer Listening Posts

• Comment cards and formal surveys

• Focus groups
• Direct customer contact
• Field intelligence
• Complaint analysis
• Internet monitoring

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 36

 Tools for Classifying
Customer Requirements

Affinity diagram Tree diagram

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 Customer Relationship
Management
• Accessibility and commitments
• Selecting and developing customer contact
employees
• Relevant customer contact requirements
• Effective complaint management
• Strategic partnerships and alliances

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 Measuring Customer Satisfaction
• Discover customer perceptions of business
effectiveness
• Compare company’s performance relative
to competitors
• Identify areas for improvement
• Track trends to determine if changes result
in improvements

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 Example: The Olive Garden
• The Lobby – How was the pace of your meal?
– Was the lobby staff friendly and did they • The Food
welcome you to the restaurant?
– Were you seated in a timely, efficient – How would you rate the taste of
manner? your food?
• The Table Area – Please rate the temperature of your
– Was your table area clean when you were food, hot food being piping hot.
seated? – Please rate your visit on the value
• The Server for the money.
– Was your server attentive and there when – Overall, how would you rate your
you needed him/her? visit
– Was your server knowledgeable and able to
answer your questions about our food and – Would you recommend this Olive
beverages? Garden to a close friend or relative?

Scale: 1 = poor ….5 = excellent

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 Example: The Olive Garden
• Open-ended questions:
– What one thing did you like most about your
visit?
– What one thing could we do to improve your
experience at The Olive Garden?
• Survey form provides address, 800 number,
FAX, and TDD number for hearing
impaired

THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 41

 Performance-Importance Analysis
Performance
Low High

Low Who cares? Overkill

Importance

High Vulnerable Strengths

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 Difficulties with Customer
Satisfaction Measurement
• Poor measurement schemes
• Failure to identify appropriate quality
dimensions
• Failure to weight dimensions appropriately
• Lack of comparison with leading competitors
• Failure to measure potential and former
customers
• Confusing loyalty with satisfaction
THE MANAGEMENT AND CONTROL OF QUALITY, 5e, © 2002 South-Western/Thomson LearningTM 43
 Customer and Market Focus
in the Baldrige Criteria
The Customer and Market Focus category examines how an
organization determines requirements, expectations, and
preferences of customers and markets; and how it builds
relationships with customers and determines the key factors
that lead to customer acquisition, satisfaction, and retention,
and to business expansion.
3.1 Customer and Market Knowledge
3.2 Customer Relationships and Satisfaction
a. Customer Relationships
b. Customer Satisfaction Determination

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