Foster Ch01

8/6/2019 Foster Ch01

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Managing QualityIntegrating the Supply Chain

S. Thomas Foster

Chapter 1

Differing Perspectives on Quality

( 2007 Pearson Education

01/16 6:00AM


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Major Themes Today, supply chains compete, not individual firms.

A firms supply chain, upstream and downstream, constrains and enablesthe firm.

Firms must manage quality in their supply chain, upstream anddownstream.

Quality management is not owned by any one of the functional areas suchas operations, HRM, marketing, etc. All functional areas must own theirquality management processes.

There is no one way to improve quality. Firms must use the contingency

approach to assess the current position of the firm and identify an effectivestrategy for improvement based on a clear understanding of their company,market, customers, suppliers, and the quality management alternatives.Improvement is based on the contingent variables that are operative in thefirm as it exists.


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Chapter Overview

What is Quality?

Differing Functional Perspectives on Quality The Three Spheres of Quality

Other Perspectives on Quality

Arriving at a Common Perspective

(

Differing Perspectives on QualityChapter 1


In chapter 1 through 3, we form the basis for the contingency

approach. To apply quality improvement on a contingency basis we

need to understand the foundation that has been laid by leaders in

the quality movement.


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What is Quality?Cross-functional and Cross-firm Flows

Quality management involves flows: process flows, information flows,

material flows, and fund flows. Each of these flows has to operate

efficiently, effectively, and with quality. Like a river, we have upstream and

downstream flows. The sums of these flows make up the supply chain for afirm.

Using the supply chain as the model for competition, we must internalize

external upstream and downstream processes from raw materials to after-

sale service.

The firm must integrate differing functions, expertise, and dimensions ofquality. This integration requires flexible, cross-functional, problem-solving

and employees who can adapt to rapidly changing markets.


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What is Quality?Product Quality Dimensions

Garvins definitions of qualitybased on the perspective of the viewer(perception is reality)

Transcendent - quality is intuitively understood but nearly impossible to

communicate

Product-based quality is found in the components and attributes of a product

User-based if the customer is satisfied, the product has good quality

Manufacturing-based if the product conforms to design specifications, it has

good quality

Value-based if the product is perceived as providing good value for the price,it has good quality


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Performance

Features Reliability

Conformance

Durability

ServiceabilityAesthetics

Perceived Quality


Garvins dimensions (measures) of product quality

These different dimensions of quality are not mutually

exclusive.


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(

Performance

Features

Reliability

Conformance

Efficiency with which a

product achieves its intended

purpose



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What is QualityProduct Quality Dimensions

Performance

Features

Reliability

Conformance

Attributes that supplement

the products basic performance

bells and whistles

2007 Pearson Education


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Performance

FeaturesReliability

Conformance

Performs consistently over the

products useful life.



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Performance

Features

Reliability

Conformance

Adherence to quantifiable

specifications within a small

tolerance the most traditional

definition of quality



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Tolerate stress or trauma

without failing

Durability

Serviceability

Aesthetics

Perceived Quality



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A product is serviceable if it

can be repaired easily and

cheaply

Durability

Serviceability

Aesthetics

Perceived Quality



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Subjective characteristics

such as taste, feel, sound, look.

Durability

Serviceability

Aesthetics

Perceived Quality



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Quality as the customer

perceives it - image, recognition,

word of mouth.

Durability

Serviceability

Aesthetics

Perceived Quality



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What is QualityService Quality Dimensions

Tangibles

Service Reliability

Responsiveness

Assurance

Empathy


Parasuraman, Zeithamel, and Berry provide service quality

dimensions (measures):

Services have more diverse quality attributes than products

because of wide variation created byhigh customer involvement.


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Tangibles

Service Reliability

Responsiveness

Assurance

Empathy

Physical appearance of the

facility, equipment, and

personnel



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Tangibles

Service Reliability

Responsiveness

Assurance

Empathy

The ability of the service

provider to perform the promised

service



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Tangibles

Service Reliability

Responsiveness

Assurance

Empathy

The willingness of the

provider to be helpful and

prompt in providing service



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Tangibles

Service Reliability

Responsiveness

Assurance

Empathy

The knowledge and courtesy

of the employees and their

ability to inspire trust and

confidence



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Tangibles

Service Reliability

Responsiveness

Assurance

Empathy

Caring individualized

attention from the service

company


In service If you are in it for the money, you probably wont survive. If

employees are constantly focused on efficiency, they will not give the

customers the feeling that they care. There is no empathy, so there are

no return customers.


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What is Quality?Why does it matter that different definitions of quality exist?


Different functional areas have different definitions of quality.

However, we want everyone in all functional areas to execute fromthe same playbook with regard to the meaning of quality for the firm.

Cross-functional teams must share a common definition of quality

so these diverse teams will be working for a common goal. All

functional areas must focus on what they need to do to meet the

customers definition of quality.

However, cross-functional teams have poor communication because

of their different vocabularies, priorities, and cognitive styles.

As organizational processes become more cross-functional, many of

these communication issues will resolve themselves.


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Functional perspectives include:

Supply Chain Operations

Strategic Management

Marketing

Financial Human resource

What is Quality?Differing Functional Perspectives on Quality



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What is Quality?

Differing Functional Perspectives on Quality

Supply Chain Management (SCM) Perspective

Supply chain management (SCM) grew out of the concept of the value chain.

The value chain includes inbound logistics, core processes (operations andmarketing), and outbound logistics processes which directly add value to the

product or service.

Functions such as HRM, IS, and Purchasing support the core processes in the valuechain non-value added processes which provide a context for the value chain

processes.

Upstream activities include all of those activities involving interaction withsuppliers.

Downstream activities include shipping and logistics, customer support, andfocusing on delivery reliability.


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What is Quality?


Supply Chain Management (SCM) Perspective

Supplier development activities include evaluating, training, and implementingsystems with suppliers, such as electronic data interchange (EDI) to link customer

purchasing systems to supplier enterprise resource planning systems (ERP).

Supplier qualification involves evaluating supplier performance with regard toconformance rates, cost levels, delivery reliability, etc. using supplier filters, such asISO/TS 16949 (an automotive standard), ISO 9000:2000, and QS9000.

Value stream mapping flowcharts processes to determine where customer value is

created as well as identifying non-value-added process steps. Value stream mappingalso involves analyzing processes from a systems perspective such that upstreamand downstream effects of core process changes can be evaluated.


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What is Quality?

Differing Functional Perspectives on QualityOperations Management (OM) Perspective

The OM view of quality is rooted in the engineering approach and wasthe first functional field of management to adopt quality as its own.

OM is concerned about product and process design. However, ratherthan focusing on only the technical aspects of these activities, OMconcentrates on the management and continuous improvement ofconversion processes.

OM uses the systems view which is the basis for quality management.

The systems view maintains that product quality is the result of theinteractions of several variables (manpower, materials, methods,machinery, feedback, environment, time, and technology) whichcomprise a system, and these variables and their interactions are the causeof quality problems.


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What is Quality?


Ferdows and Demeyer link the strategic view of OM to quality management withtheir sand-cone model: quality is the basis on which lasting improvement inother competitive dimensions (reliability - dependability, cycle time - speed ofdelivery of concept to market, and cost - efficiency) are accomplished.

Operations Management (OM) Perspective

Inputs Conversion Process Outputs Customer

Process

Control

Customer

Feedback

Planning

Organizing

Controlling

OM has an operations-marketing interface which focusespriorities on the customer in the product and process design and

operations decisions.


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What is Quality?


The Sand Cone Model for Priorities

Cost (Efficiency)

Cycle Time (Speed)

Reliability (Dependability)

Quality


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What is Quality?


Strategic Management Perspective

For Quality Management to be pervasive in a firm it needs to be included in all of thefirms business processes including Strategic Planning.

Strategy is the planning process used by an organization to achieve a set of long-term goals. This planned course of action must be cohesive and coherent in terms ofgoals, policies, plans, and sequencing to achieve quality improvement.

Company strategies are based on a mission (why the organization exists) and corevalues (guiding operating principles that simplify decision making).

Mission and core values influence organizational culture, a major determinant (andsometimes roadblock) to the successful implementation of quality improvements.



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What is Quality?


Strategic Management Perspective

The ultimate goal of strategic quality planning is to aid an organization toachieve sustainable competitive advantage.

Alignment refers to consistency between different operational sub-plansand the overall strategic plan.

Madu and Kuei propose a strategy process based on plan-do-check-act:

plan strategy formulation do implement strategy in a pilot

check evaluate pilot implementation and make adjustments

act full scale strategy implementation


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What is Quality?


Financial Perspective Will quality management pay us financial benefits?

The answer is an unqualified maybe.

Deming made the first theoretical link between quality improvement and financial results:

Quality Improvement leads to reduction of defects, improved organizational performance,and increased employment.

Finance is concerned with the relationship between the risks of investments and theirpotential return on investment to maximize return for a given level of risk.

Finance professionals communicate using an accounting language: the language offinancial management is money.

Quality professionals must translate the quality concerns into the costs of (poor) quality interms of lost sales, inspection, scrap, and rework.

The pursuit of quality does not safeguard a company against bad management because ofintervening variables (e.g., products that dont meet customer needs).



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What is Quality?


Financial Perspective - The Deming Value Chain

Improve Quality

Decrease Costs

Improve Productivity

Capture Market

Stay in Business

Provide More jobs


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What is Quality?


Finance professionals believe the law of diminishing marginal returns

applies to quality improvement.

MinimumCost

Total Quality Costs =

Sum of Losses +

Costs of Improving Quality

Optimum Quality Level

Cost

Quality

Costs of Improving

Quality

Losses Due to

Poor Quality

The financial perspective on quality relies on quantified measurable,

results oriented thinking.

Minimum Sum ofLosses + Costs


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What is Quality?

Differing Functional Perspectives on Quality Human Resources (HRM) Perspective

It is impossible to implement quality without the commitment and action ofemployees (want hogs not chickens).

Employee empowerment moves decision making to the lowest level possible inthe organization.

Organizational design is concerned with the design of reward systems, paysystems, organizational structure, compensation, training programs, andemployee grievance and arbitration.

HRM advocates the employee to management and the companys needs to theemployee.

Quality management flourishes where the employees and the companys needsare aligned whats good for the company is good for the employees.



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What is Quality?


HRM Perspective HRM Functions

Job analysis involves collecting detailed information about each job. This

information includes tasks, skills, abilities, and knowledge requirements foreach job. This information is used to define a job description which is used toset pay levels. The bureaucratic delay in accomplishing job analysis to modify

job descriptions can limit the ability of the organization to achieve the flexibilityneeded for quality management.

Selection in recruitment and hiring decisions involves finding employees who

have the technical and behavioral preparation to perform the tasks for a job, andwho are fast learners during quality improvements. The selection process iscritical because people, politics, and culture constrain and enableorganizational change.


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What is Quality?


HRM Perspective

HRM Functions Effective training provides for standardizing methods for solving unstructured

problems in quality management. Top managers and low-ranking employeesshould use similar processes for solving problems. This is called vertical

deployment of quality management. Different departments should use similar

processes for solving problems to achieve horizontal deployment of quality

management.

Performance appraisals and evaluations are key methods for motivating

employees. Face-to-face reporting sessions and 360-degree evaluations (an

employees peers, supervisors, and subordinates evaluate the employee) are

used.


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What is Quality?


Marketing Perspective

Traditional marketing involved directing the flows of products and services from producerto consumer. The new relationship marketing directs its attention toward satisfying thecustomer and delivering value to the customer.

Companies are basing sales commissions on perceptual measures of customersatisfaction rather than volume of sales because the value of the loyal customer is muchgreater than an individual transaction.

The marketer focuses on the perceived quality of products and services, quality as thecustomer views it, and marketing efforts are focused on managing quality perceptions.

The primary marketing tools for influencing customer perceptions of quality have beenpricing and advertising, but these tools are inadequate for influencing perceptions ofquality because not all products are priced based on cost of materials and productiononly.



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What is Quality?


Marketing Perspective

Marketing systems involve interactions between the producing organizations, theintermediaries, and the final consumer, and it is often very difficult for firms to agree on

who the customer is.

Marketing is also focused on service at the time of the transaction and after-sales support.

Marketing interacts closely with engineering and operations in product design to bring thevoice of the customer into the design process.

Customer service surveys are used for assessing the multiple dimensions of quality.

The customer is the focus of marketing-related quality improvement in developingspecialized products for different customers, which is in conflict with standardizing

products to reduce complexity by operations.


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What is Quality Management?

The focus of quality management is to manage properly the interactions amongpeople, technology, inputs, processes, and systems to provide outstandingproducts and services to customers.

With total quality management (TQM), the role of the quality department has movedfrom a technical, inspection, policing role to a supportive training and coaching role.

A strong knowledge of quality is best coupled with technical expertise in businessdisciplines such as materials management, supply chain management, finance,accounting, operations management, HRM, strategy, and industrial engineering.

The goal is to completely immerse the organization in quality thinking andcommitment.


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What is Quality Management?The Three Spheres of Quality

Quality

Management

QualityAssurance

(proactive)

QualityControl

(reactive)



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What is Quality Management? Quality Control

The control process is based on the scientific method which includes the

phases of analysis, relation, and generalization.

Analysis involves breaking the process into its fundamental pieces.

Relation involves understanding the relationships between the parts.

Generalization involves perceiving how interrelationships apply to thelarger phenomenon of quality being studied.


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What is Quality Management? Quality Control

Activities relating to quality control include:

Monitoring process capability and stability

Measuring process performance

Reducing process variability

Optimizing processes to nominal measures

Performance acceptance sampling

Developing and maintaining control charts


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What is Quality Management? Quality Assurance

Assurance refers to proactive activities associated with guaranteeing the qualityof a product or service, especially during the design phase.

By contrast, quality control is reactive, rather than proactive, by detectingquality problems after they occur.

Quality assurance activities include:

Failure mode and effects analysis

Concurrent engineering Experimental design

Process improvement

Design team formation and management

Off-line experimentation

Reliability/durability product testing


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What is Quality Management? Quality Management

The management processes that overarch and tie together the control andassurance activities make up quality management.

The integrative view of quality management supports the idea that quality is the

responsibility of all management, not just quality managers. All managers, supervisors, and employees are involved in the following quality

management activities:

Planning for quality management

Creating a quality organizational culture

Providing leadership and support

Providing training and retraining Designing an organizational system that reinforces quality ideals

Providing employee recognition

Facilitating organizational communication


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What is Quality? A customer-based perspective on quality involves the concept of value-added.

A value-added perspective on quality involves a subjective assessment of theefficacy of every step of the process for the customer. A value-added activitycan be identified by asking , Would this activity matter to the customer?

Would the customer pay for this activity?

A contingency perspective of quality is based on the theory that businessesdiffer in key areas such as mission, core competence, customer attributes,target markets, technology deployment, employee knowledge, managementstyle, culture, and a myriad of other environmental variables.

Contingency theory presupposes that there is no theory or method for operatinga business that can be applied in all instances. A coherent quality strategy willneed to address these key environmental variables. All organizations pursuedifferent paths and strategies to achieve quality.

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Foster Ch01