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TU Berlin Institute for Machine Tools and Factory ManagementChair Quality ScienceProf. Dr.-Ing. Roland JochemTel. +49 30 [email protected]
Value Creation through Quality Management
Agenda
Initial situationInitial situationInitial situationInitial situation
ApproachApproachApproachApproach
Quality Orineted Value and Performance DriversQuality Orineted Value and Performance DriversQuality Orineted Value and Performance DriversQuality Orineted Value and Performance Drivers
Quality Effect Model on Value AddingQuality Effect Model on Value AddingQuality Effect Model on Value AddingQuality Effect Model on Value Adding (QEMOVA) (QEMOVA) (QEMOVA) (QEMOVA) –––– applied in a case studyapplied in a case studyapplied in a case studyapplied in a case study
ConclusionConclusionConclusionConclusion
Modified framework requirements for the company´́́́s success
Vgl. T
öpfe
r/Fro
st (2002). S
. 11
Initial situation (I/II)Requirements for enterprises
Goals .... Quality
Costs
• Developing innovative products based on new technologies• Drastically reduced development time• Intensified competition (quality, costs, time) • Customers orientation (customer value, customer process,
overall solution...)• International markets and cooperations
General conditions......
Time to market
Product*
* also in industrial or public services
„Companies produce Costs and Quality. Quality isrequired to cover the costs by the earnings in the market. ““““
Quality
CostsTime
Quote from Peter Drucker:
Our Initial Position
Costs
Quality
Time
Innovation Values
Sustainability
added value foradded value foradded value foradded value for
customers & customers & customers & customers &
the companythe companythe companythe company
Added value by more quality – Approach
7
costscostscostscosts
qualityqualityqualityquality
timetimetimetime
innovationinnovationinnovationinnovation valuesvaluesvaluesvalues
sustainabilitysustainabilitysustainabilitysustainability
added value foradded value foradded value foradded value for
customers & customers & customers & customers &
the companythe companythe companythe company
GoalGoalGoalGoal: analysis, assessment and securing of efficiency and sustainability: analysis, assessment and securing of efficiency and sustainability: analysis, assessment and securing of efficiency and sustainability: analysis, assessment and securing of efficiency and sustainabilityof QMof QMof QMof QM----systems, systems, systems, systems, ----methods and improvement of quality programsmethods and improvement of quality programsmethods and improvement of quality programsmethods and improvement of quality programs
integrated managementintegrated managementintegrated managementintegrated management----systemssystemssystemssystems
QMQMQMQM----knowledge managementknowledge managementknowledge managementknowledge management
innovation qualityinnovation qualityinnovation qualityinnovation quality
process qualityprocess qualityprocess qualityprocess quality
QM in theQM in theQM in theQM in theproduct life cycleproduct life cycleproduct life cycleproduct life cycle
QMQMQMQM----benchmarkingbenchmarkingbenchmarkingbenchmarking
added value due to QMadded value due to QMadded value due to QMadded value due to QM
standardisation of standardisation of standardisation of standardisation of quality processesquality processesquality processesquality processes
value management/CSRvalue management/CSRvalue management/CSRvalue management/CSRleadership skillsleadership skillsleadership skillsleadership skills
Sustainable quality of Sustainable quality of Sustainable quality of Sustainable quality of valuevaluevaluevalue----added processes/added processes/added processes/added processes/organisations organisations organisations organisations
continuous, integratedcontinuous, integratedcontinuous, integratedcontinuous, integratedQMQMQMQM----choice of methodschoice of methodschoice of methodschoice of methods
Added value due to more quality
Phases of economic efficiency analysis of Quality Management
Source: Bruhn/Georgi 1999, S. 11; from Giebel (2010)
Initial situation (II/II)Success chain of Bruhn and Georgi
•The success chain of Bruhn and Georgi (1999) shows the basic connections how quality donates economic success.
[cf. Bruhn, Georgi 1999]
Approach (I/III)
e.g.:
� pin point the areas where particularly a high value or performance can be created
� allocate resources optimally for the quality purpose
Answering the
question helps
organizations:
Approach (II/III)
The relationships are not to be understood as a linear dependence.
Moderating factors causing nonlinearity:
• External e.g.: change barriers, variety seeking motives, image, number of alternatives, customer potentials, willingness to pay , customer turn over, service range
• Internal e.g.: learning ability of employees, performance heterogeneity, requirements heterogeneity, process complexity, visibility of unnecessary mistakes, requirement complexity, complexity performance
----------------> > > > QM as a necessary but not sufficient condition for the desired QM as a necessary but not sufficient condition for the desired QM as a necessary but not sufficient condition for the desired QM as a necessary but not sufficient condition for the desired economic success of a company.economic success of a company.economic success of a company.economic success of a company.
Approach (III/III)
� Stakeholder profit
� Not linear
� Value and performance conditions
Internal Value and Performance Drivers Internal success chain
[cf. Jochem, Geers 2010 p. 45]
External Value and Performance Drivers External success chain
[cf. Jochem, Geers 2010 p. 51]
Quality oriented Value and Performance Drivers Conclusion
[cf. Jochem, Geers 2010 p. 54]
Quality oriented Value and Performance Drivers Conclusion
[cf. Jochem, Geers 2010 p. 54]
Quality oriented Value and Performance Drivers Conclusion
� The value and performance drivers have a positive impact to the pre-economic targets of an enterprise.
�They establish a causal relationship between the business target of cost reduction and market-oriented revenue growth, and thus result in increasing the stakeholder value.
�QM as a necessary but not sufficient condition for the desired economic success of a company.
[cf. Jochem, Geers 2010 p. 54]
Summarized Contemplation of the Challenges
Changed conditions for business success
• Global cooperation and competition
• Extension of the classical stress field of quality, time and costs by dimensions such as innovation, value creation and sustainability
Value creation through quality management
• Sustainable value networks (economic, ecological, social)
• Sustainable quality of value adding processes/organisations
• Value drivers of quality management
The following case study focuses on value adding through quality management
Quality Effect Model on Value Adding (QEMOVA)
Case study in a Pharmaceutical CompanyCase study in a Pharmaceutical CompanyCase study in a Pharmaceutical CompanyCase study in a Pharmaceutical Company
Framework of the single case study
Pharmaceutical Company
• one of the world's leading manufacturers of plasma derivatives
• produces nearly one-fifth of the world's plasma-based manufactured pharmaceutical products
• In Germany, it employs approximately 1,900 people, and about 9,000 people worldwide
• the application of QEMOVA in a German site of the company
Intended use of the QEMOVA
Analysis of the effects of the introduction of measures "quality gates in the investment process" and the "application of the PQP" in projects
• The Project Quality Plan (PQP) was introduced by the company several months ago.
• The Quality Gate methodology is not adopted within the company.
The QEMOVA can show the company where the top levers are for the use of QM method
The QEMOVA represents a 7-phase model to describe the mechanisms of action to increase value through quality management
Quality Effect Model on Value AddedResults and Information Influences (Step 1-4)
Quality Effect Model on Value AddedResults and Information Influences (Step 5-7)
QEMOVA-Case study1. Define the analysis area
Define and describe the analysis area
• Entire company,
• The core processes of the value chain,
• Individual projects or
• Corporate divisions
The purpose of the system, especially when considering an appropriate starting point for companies
Statement of mission, vision, the company's environment, strategy and business model
Case study: Process phases of investment projekts in the studied companies
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3
4
5a
5b
6
1
7
Basis of description: Process model
Model Data
Automatically generated Assistance-System
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3
4
5a
5b
6
1
7
QEMOVA-Case study1. Describe the analysis area: Description in the process model-
the provision of information in an assistance system
QEMOVA-Case study2. Define the enterprise value and success
Variables derived from the strategy of the enterprise value / success
Indicator /measure
Actual Value
Target Value
Description / computation requirements of the indicator
Deadlines Deviation from the plannedcompletion date in days
+ 60 Days
+ 15 Days
Scheduled completion date as per CARActual completion date as per Project Final Report
Budget Compliance Deviation from the plannedbudget in %
+/-25%
+/-10%
Planned and shared budgetaccording to CARActual budget of Project Accounting (Budget from CAR + possibly project changes)
Fixed documentation of authorities
Number of incorrect or missing documents relevant authorities
k.A.[1] 100% Number of documents revised after completion of the validation or subsequently filed to RAE (Regulatory Affairs)
Meet the definedperformance/customer requirements
Degree of fulfillment
k.A.[2] 100% Determined 6 months after project completion andoperation of the facility;Requirements to fulfil the requirements defined in% (according to CAR)
[1] Currently the lack of authorities relevant documents is often recognized just before the official submission of another department of the company.[2] Currently no regular, systematic feedback from the user / client ismade to the engineering.
2
3
4
5a
5b
6
1
7
QEMOVA-Case study 3. Identify factors (section of the factors)
ID System elements
Identifide performance target
Z1 Deadlines
Z2 Compliance with budget
Z3 Fixed documentation of authorities
Z4 Meet the defined performance / customer requirements
QM-Activities and -Structures
QM1 Fulfilment of the requirements of the PQP (Project Quality Plan)
QM2 Consistent application of the Q-gate system
QM3 Drivers for PQP and Q-Gates
Project character
PC1 Burden of the project organization
PC2 Complexity of the Projects
PC7 Project sponsor
PC8 Suppy quality
PC9 Completeness of specifications, procurement protocols
PC10 Completeness of Documentation
PC13 A clear definition of objectives / Project Specification
… …
2
3
4
5a
5b
6
1
7
QEMOVA-Case study4. Draw the influence -matrix
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3
4
5a
5b
6
1
7
Produkt P = AS x PS 195 0 200 182 408 168 0 220 0 14 192 0 182 130 180 198 64 198 217 56 16 161Passivsumme PS 39 31 20 26 17 6 0 22 0 1 16 0 13 10 20 18 8 9 31 2 4 7ID des Systemelements Z1 Z2 Z3 Z4 QM1 QM2 QM3 PC1 PC2 PC3 PC4 PC7 PC8 PC9 PC10 PC11 PC12 PC13 PC14 PL1 PL2 PL3
Quo
tient
Q =
(A
S :
PS
)
Akt
ivsu
mm
e A
S
ID d
es S
yste
mel
emen
ts
Wirkung
von ↓ auf →
Ter
min
einh
altu
ng
Bud
gete
inha
ltung
Beh
örde
nfes
te D
okum
enta
tion
Erfül
lung
der
def
inie
rten
Le
istu
ngsd
aten
/K
unde
nanf
orde
rung
en
Erfül
lung
der
Anf
orde
rung
en
des
PQ
P (
Pro
jekt
qual
itäts
plan
)
Kon
sequ
ente
Anw
endu
ng d
er Q
-G
ate
Sys
tem
atik
Tre
iber
für
PQ
P u
nd Q
-Gat
es
Bel
astu
ng d
er
Pro
jekt
orga
nisa
tion
Kom
plex
ität d
es P
roje
kts
Rei
fegr
ad d
er F
&E
Idee
Qua
lität
der
S
chni
ttste
llenk
oord
inat
ion
Pro
jekt
spon
sor
(Rep
utat
ion,
H
iera
chie
eben
e)
Lief
eran
tenq
ualit
ät
Vol
lstä
ndig
keit
der
Spe
zifik
atio
nen,
V
erga
bepr
otok
olle
Vol
lstä
ndig
keit
der
Dok
umen
tatio
nA
ktua
lität
des
D
okum
enta
tenm
anag
emen
t (e
insc
hl. d
er
For
tsch
ritts
beric
hte)
Def
inie
rter
E
skal
atio
nsm
echa
nism
us
Kla
re Z
ield
efin
ition
/ P
roje
ktsp
ezifi
katio
n
Dur
chla
ufze
it
Erfah
rung
des
Pro
jekt
leite
rs
Grö
ße
des
Pro
jekt
team
s
Exp
ertis
e/E
rfah
rung
P
roje
ktte
am
0,1 5 Z1Termineinhaltung 2 0 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 0 -2 0 0 0
0 0 Z2Budgeteinhaltung 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0,5 10 Z3Behördenfeste Dokumentation 3 1 0 2 0 0 -1 0 0 0 0 0 0 2 0 0 0 -1 0 0 0
0,3 7 Z4Erfüllung der definierten Leistungsdaten /Kundenanforderungen 3 2 0 0 0 0 -1 0 0 0 0 0 0 0 0 0 0 -1 0 0 0
1,4 24 QM1 Erfüllung der Anforderungen des PQP (Projektqualitätsplan) 2 2 2 1 2 0 -1 0 0 3 0 1 2 2 2 2 0 -2 0 0 0
4,7 28 QM2 Konsequente Anwendung der Q-Gate Systematik 3 1 2 2 2 0 -2 0 0 2 0 2 2 3 1 3 1 -2 0 0 0
24 QM3Treiber für PQP und Q-Gates 2 1 2 2 2 2 -1 0 0 1 0 1 2 2 2 2 0 -2 0 0 0
0,5 10 PC1Belastung der Projektorganisation -2 -1 0 0 -1 0 0 0 0 -1 0 0 0 0 -2 0 0 2 0 0 1
11 PC2Komplexität des Projekts 1 1 0 1 0 0 0 1 0 -1 0 0 0 -1 -1 0 -1 1 0 2 0
14 14 PC3Reifegrad der F&E Idee 3 2 0 2 0 0 0 -1 0 0 0 0 0 0 0 0 2 -2 0 0 2
0,8 12 PC4 Qualität der Schnittstellenkoordination 2 1 1 2 2 0 0 0 0 0 0 2 0 0 1 0 0 -1 0 0 0
16 PC7 Projektsponsor (Reputation, Hierachieebene) 2 1 0 2 0 2 0 0 0 1 0 0 0 0 2 1 2 -1 2 0 0
1,1 14 PC8Lieferantenqualität 2 1 1 2 1 0 0 -2 0 0 0 0 0 2 2 0 0 -1 0 0 0
1,3 13 PC9 Vollständigkeit der Spezifikationen, Vergabeprotokolle 1 2 1 2 0 0 0 -1 0 0 0 0 1 3 0 0 0 -2 0 0 0
0,5 9 PC10Vollständigkeit der Dokumentation 1 0 3 1 1 0 0 -1 0 0 0 0 0 0 1 0 0 -1 0 0 0
0,6 11 PC11Aktualität des Dokumentatenmanagement (einschl. der Fortschrittsberichte) 2 0 2 1 2 0 0 -1 0 0 0 0 0 0 1 0 0 -2 0 0 0
1 8 PC12 Definierter Eskalationsmechanismus 1 1 0 1 1 0 0 -1 0 0 2 0 0 0 0 0 0 -1 0 0 0
2,4 22 PC13 Klare Zieldefinition / Projektspezifikation 3 3 2 3 0 0 0 -2 0 0 1 0 2 0 0 0 0 -2 0 2 2
0,2 7 PC14Durchlaufzeit -2 -3 0 0 -1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0
14 28 PL1Erfahrung des Projektleiters 2 3 2 2 1 0 0 -1 0 0 2 0 2 2 2 2 0 3 -2 0 2
1 4 PL2Größe des Projektteams 0 0 0 0 0 0 0 2 0 0 -1 0 0 0 0 0 0 0 -1 0 0
3,3 23 PL3Expertise/Erfahrung Projektteam 2 3 2 2 1 0 0 -1 0 0 2 0 2 2 2 2 0 0 -2 0 0
QEMOVA-Case study5a. Generate the influencial portfolio
Fundamental Representation
QEMOVA-Case study 5a. Generate the influential portfolio – Case study
2
3
4
5a
5b
6
1
7
0,45
0,62
0,75
1,001,301,602,25
0,16 x (n-1)²
0,5 x (n-1)²
0,8 x (n-1)²
(n-1)²
1,2 x (n-1)²
1,7 x (n-1)²
2,5 x (n-1)²
0
5
10
15
20
25
30
35
40
0 5 10 15 20 25 30 35 40Passivsumme
Aktivsumme
A clearA clearA clearA clear definition of objectivesdefinition of objectivesdefinition of objectivesdefinition of objectives / Project/ Project/ Project/ Project SpecificationSpecificationSpecificationSpecification
Completeness of Completeness of Completeness of Completeness of thethethethe documentationdocumentationdocumentationdocumentation
ConsistentConsistentConsistentConsistent application of theapplication of theapplication of theapplication of the QQQQ----gategategategate systemsystemsystemsystem
Fulfilment of theFulfilment of theFulfilment of theFulfilment of the requirementsrequirementsrequirementsrequirements of theof theof theof the PQPPQPPQPPQP (Project(Project(Project(Project Quality Plan)Quality Plan)Quality Plan)Quality Plan)
compliance withcompliance withcompliance withcompliance with budgetbudgetbudgetbudget
DeadlinesDeadlinesDeadlinesDeadlines
QEMOVA-Case study5b. Generate the interacting network
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3
4
5a
5b
6
1
7
QEMOVA-Case study6. Active circuits and analyze effects of the QM
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3
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5a
5b
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1
7
Caption:
System elements „Identified success targets“
System elements „QM-Activities und -structures“
System elements „Project character“
System elements „Project manager und -team“
|3,0|
+ X
− X
Strong/above average effect
Rectified effect
Rectified effect
QM 2QM 2QM 2QM 2Z 3Z 3Z 3Z 3
PC 10PC 10PC 10PC 10
Z 1Z 1Z 1Z 1
PC 9PC 9PC 9PC 9
PC 12PC 12PC 12PC 12
+3,0+2,0
+3,0
+3,0
+3,0
+2,0
consistent applicationthe Q-gate system
Deadlines
authoritiesdocumentation
Completeness of documentation
QEMOVA-Case study 7. Perform the measurement planning and -control
ID o
f the S
ystem-
elemen
ts
System
elemen
t
Active cap
ital AS
Passive cap
ital PS
Qu
otien
t
Pro
du
ct
verbal aktive-
reaktive
verbally b
ufferin
g
or critical
PL1 Experience of project manager 28 2 14,000 56 Highly active Stronglybufferin
QM2 Consistent application of the Q-gate system
28 6 4,667 168 Highly active Buffering
QM1 Fulfilment of the requirements of the PQP (Project Quality Plan)
24 17 1,412 408 Slightly active Neutral
QM3 Drivers for PQP and Q-Gates 24 0 0,000 0 Strongly reactive Stronglypuffernd
PL3 Expertise / experience of project team 23 7 3,286 161 Highly active Buffering
PC13 A clear definition of objectives / Project Specification
22 9 2,444 198 Highly active Buffering
PC7 Project sponsor (reputation, hierarchy level)
16 0 0,000 0 Strongly reactive Stronglybuffering
PC3 Maturity level of R & D idea 14 1 14,000 14 Highly active Stronglybuffering
PC8 Supply quality 14 13 1,077 182 Neutral Buffering
PC9 Completeness of specifications, procurement protocols
13 10 1,300 130 Neutral Buffering
PC4 Quality of the interface coordination 12 16 0,750 192 Slightly reactive Buffering
QEMOVA evaluation of data (sorting by total assets, in descending order) (section)
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5a
5b
6
1
7
35
QEMOVA-Case study7. Perform the measurement planning and -control
Summary of the results of the application QEMOVA
Essential tools to influence the success of investment projects are :
• Experience of the project managers
• A clear definition / project specification
• Driver for PQP and Q-Gates
• consequent application of the Q-Gate systematics
• Expertise/experience of the project team
Other important levers which act only to a few elements, but above average, are :
• A clear definition / project specification
• Maturity level of R & D idea
• Project sponsor (Reputation, Hierarchy level)
Conclusion
• The company and therefore the quality management are major challenges on differentlevels of competition
• The focus of economic considerations are the value drivers of QM to identify, analyze and use
• In the case study, the QEMOVA could be used to make the active relations transparent and thus the considered QM activities and structures would utilize efficiently and effectively
