Fifth Edition
MANAGING QUALITY
INTEGRATING THE SUPPLY CHAIN
S. Thomas FosterBrigham Young University
International Editions contributions by
Kunal K. GangulyInstitute of Management Technology Ghaziabad
PEARSON
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CONTENTS
Preface 20
Part 1 Understanding Quality Concepts 25
Chapter 1 DIFFERING PERSPECTIVES ON QUALITY 26Recognizing Different Perspectives on Quality 26
• A CLOSER LOOK AT QUALITY 1 - 1 : What's in an Airport? 27
What Is Quality? 27Product Quality Dimensions 27Service Quality Dimensions 29
Why Does It Matter That Different Definitions of Quality Exist? 30
Differing Functional Perspectives on Quality 31
A Supply Chain Perspective 31
An Engineering Perspective 32
An Operations Perspective 33
A Strategic Management Perspective 34
• QUALITY HIGHLIGHT 1 -1: Quality Strategy at GE 36
A Marketing Perspective 37
A Financial Perspective 38
The Human Resources Perspective 40
Is Quality Management Its Own Functional Discipline? 41
Three Spheres of Quality 41
• QUALITY HIGHLIGHT 1 -2: Federal Express Corporation 43
Other Perspectives on Quality 43
The Value-Added Perspective on Quality 43
Cultural Perspectives on Quality 44Arriving at a Common Understanding of Quality Using a ContingencyPerspective of Quality 44
Summary 44Key Terms 45Discussion Questions 45 .
• CASE 1-1: FedEx: Managing Quality Day and Night 46• CASE 1-2: Granite Rock Company: Achieving Quality through Employees 47
Chapter 2 QUALITY THEORY 49What Is Theory? 49
Is There a Theory of Quality Management? 51
• A CLOSER LOOK AT QUALITY 2-1: Quality and Management Fads 51
History of Quality Management 52
Leading Contributors to Quality Theory: W. Edwards Deming 52
Deming's 14 Points for Management 54
Contents
Leading Contributors to Quality Theory: Joseph M. Juran 57
The Juran Trilogy 57
Control versus Breakthrough 58'
Project-by-Project Improvement 58
• A CLOSER LOOK AT QUALITY 2-2: Juran on the Past Century of Quality 59
Pareto Analysis 60
Leading Contributors to Quality Theory: Kaoru Ishikawa 60
Basic Tools of Quality 60
Ishikawa's Quality Philosophy 60
Leading Contributors to Quality Theory: Armand Feigenbaum 61
The 19 Steps of TQC 62
Leading Contributors to Quality Theory: Philip Crosby 62
Leading Contributors to Quality Theory: Genichi Taguchi 63
Definition of Quality 64
Quality Loss Function 64
Robust Design 64
Leading Contributors to Quality Theory: The Rest of the Pack 64
Robert C. Camp 64
Stephen R. Covey's "8" Habits 65
Tom Peters 65
Michael Hammer and James Champy 66
• A CLOSER LOOK AT QUALITY 2-3: Selling Quality Fads 66
Viewing Quality Theory from a Contingency Perspective 67Resolving the Differences in Quality Approaches:An Integrative View 67
Leadership 69
Employee Improvement 69
Quality Assurance 69
Customer Focus 69
Quality Philosophy 69
Information Analysis 69
Strategic Planning 69
Environment or Infrastructure 70
Team Approach 70
Focus of the Quality Department 70
Breakthrough 71
Theoretical Framework for Quality Management 71Summary 71Key Terms 71Discussion Questions 71
• CASE 2-1: Rheaco, Inc.: Making a Quality Turnabout by Asking for Advice 72• CASE 2-2: Has Disney Developed a Theory of Quality Guest Services
Management? 73
Contents
Chapter 3 GLOBAL SUPPLY CHAIN QUALITY AND INTERNATIONALQUALITY STANDARDS 75Managing Quality for the Multinational Firm (MNF) 76
• QUALITY HIGHLIGHT 3-1: Supply Chain Quality in the Global Context 79
Quality Improvement: The American Way 80
The Malcolm Baldrige Award 80
• A CLOSER LOOK AT QUALITY 3-1: Who Was Malcolm Baldrige? 85
The Baldrige Process 86
Baldrige Scoring 89
• QUALITY HIGHLIGHT 3-2: Honeywell Federal Manufacturing & Technologies 89
Being a Baldrige Examiner 90
State Awards 90
Quality Improvement: The Japanese Way 91
Deming Prize 91
Other Japanese Contributions to Quality Thought 92
Lean Production 92
• QUALITY HIGHLIGHT 3-3: The Humbling of Toyota 92
Japanese Total Quality Control (TQC) 93
Quality Improvement: The European Way 95
European Quality Award 95
ISO 9000:2008 96
Quality Management Principles Underlying ISO 9000:2008 98
Selecting a Registrar 99
The ISO 9000:2008 Process 99
ISO 14000 100 /
Quality Improvement: The Chinese Way 102
Does Chinese Quality Management Exist? 102• A CLOSER LOOK AT QUALITY 3-2: Outsourcing Woes 103
Are Quality Approaches Influenced by Culture? 104Summary 105Key Terms 105Discussion Questions 105
• CASE 3-1: Denver International Airport Becomes ISO 14001 Certified 106• CASE 3-2: Wainwright Industries: An Entirely New Philosophy of Business
Based on Customer Satisfaction and Quality 107
Part 2 Designing and Assuring Quality 109
Chapter 4 STRATEGIC QUALITY PLANNING 110Strategy Content 110
The Importance of Time in Quality Improvement 110• A CLOSER LOOK AT QUALITY 4-1 : Problems with Measuring EducationalPerformance 112
Leadership for Quality 112
Leadership Dimensions 113
10 Contents
• QUALITY HIGHLIGHT 4-1: Solectron Corporation 115
Quality and Ethics 116
Quality as a Strategy 116
Costs of Quality 116
PAF Paradigm 117
Accounting for Quality-Related Costs 118
Lundvall-Juran Quality Cost Model 119
Differentiation through Quality 120
Focus through Quality 120
Order Winners 121
Quality as a Core Competency 122
Quality Strategy Process 122
Forced-Choice Model 122
Deploying Quality (Hoshin Kanri) 123
• A CLOSER LOOK AT QUALITY 4-2: A Mature Strategic Planning Process 123
Does Quality Lead to Better Business Results? 125
Quality and Price 126
Quality and Cost 126
Quality and Productivity 126
Quality and Profitability 127
Quality and Sustainability 127
Supply Chain Strategy 128Summary 129Key Terms 130Discussion Questions 130Problems 130
• CASE 4-1: Ames Rubber Corporation: Realizing Multiple Benefits throughImproved Quality 132
• CASE 4-2: Midway USA 133
Chapter 5 THE VOICE OF THE CUSTOMER 135Customer-Driven Quality 136
• A CLOSER LOOK AT QUALITY 5-1: Online Review of Merchandise 136
The Pitfalls of Reactive Customer-Driven Quality 137
Customer-Relationship Management 138
Complaint Resolution 138 —
Feedback 139
Guarantees 139
Corrective Action 140
The "Gaps" Approach to Service Design 140
Segmenting Customers and Markets 142
Strategic Supply Chain Alliances between Customers andSuppliers 143
The Role of the Customer in the Supply Chain 144
Contents 11
Communicating Downstream 145Actively Solicited Customer-Feedback Approaches 146
Telephone Contact 146Focus Groups 146Customer Service Surveys 147• A CLOSER LOOK AT QUALITY 5-2: Misusing Surveys 147
Passively Solicited Customer-Feedback Approaches 150Customer Research Cards 151Customer Response Lines and Web Sites 151
Managing Customer Retention and Loyalty 152
Customer-Relationship Management Systems 152
A Word on Excellent Design 154
Summary 154
Key Terms 155
Discussion Questions 155
Problems 156
• CASE 5-1: Customer Quality Feedback at Apple Computer 156• CASE 5-2: Chaparral Steel: Achieving High Quality through a Commitment to
Both External and Internal Customers 157
Chapter 6 THE VOICE OF THE MARKET 159What Do We Mean by the Voice of the Market? 159
Gaining Insight through Benchmarking 160
Process Benchmarking 161
Financial Benchmarking 161
Performance Benchmarking 161
Product Benchmarking 162
Strategic Benchmarking 162
• QUALITY HIGHLIGHT 6-1: Pal's Sudden Service 162
Functional Benchmarking 163
Purposes of Benchmarking 163
Difficulties in Monitoring and Measuring Performance 164
Commonly Benchmarked Performance Measures 166
Why Collect All These Measures? 168
Key Business Factors 168
Business Process Benchmarking 168
Robert Camp's Business Process Benchmarking Process 169
Leading and Managing the Benchmarking Effort 171
• A CLOSER LOOK AT QUALITY 6-1: Benchmarking at Intuit 171
Training 172• A CLOSER LOOK AT QUALITY 6-2: The Legal Environment of
Benchmarking 172
Baselining and Reengineering 174
12 Contents
Problems with Benchmarking 174Summary 175Key Terms 175Discussion Questions 175Problems 176
• CASE 6-1: Amgen Corporation: Using Benchmarking as a Means of Copingwith Rapid Growth 179
• CASE 6-2: AT&T Teleholdings: Making Benchmarking a Part of the ProcessImprovement Tool Kit 180
Chapter 7 QUALITY AND INNOVATION IN PRODUCT ANDPROCESS DESIGN 182
Designing Products for Quality 182
The Design Process 183• QUALITY HIGHLIGHT 7-1: A Turnaround at Kellogg's Cereals: Driven by
Design 185
Quality Function Deployment (QFD) 187
Technology in Design 191
Other Design Methodologies 194
Organizing the Design Team 194
The Product Life Cycle 195
• A CLOSER LOOK AT QUALITY 7-1: Ski Design 195
Product Families and the Product Life Cycle 196
Complementary Products 196
Designing Products That Work 196• A CLOSER LOOK AT QUALITY 7-2: It Takes a Scientist to Design a Winter
Coat 197
Design for Manufacture Method 198
Design for Maintainability 199
Designing for Reliability 200
m QUALITY HIGHLIGHT 7-2: Designing Reliable Luxury at Vuitton 200
Reliability Analysis Tools 201
Failure Modes and Effects Analysis 201
How FMEA Works 202
Fault-Tree Analysis 202
Failure Modes, Effects, and Criticality Analysis 204
Product Traceability and Recall Procedures 204 —
Environmental Considerations in Design 205
Summary 206Key Terms 206Discussion Questions 206Problems 207
• CASE 7-1: Keeping Apple's iPhone Competitive 209
• CASE 7-2: Nucor Corporation: Producing Quality Steel by Stressing SoundManagement Practices 210
Contents 13
Chapter 8 DESIGNING QUALITY SERVICES 211
Differences between Services and Manufacturing 212
Internal versus External Services 213
Voluntary versus Involuntary Services 213
How Are Service Quality Issues Different f rom Those ofManufacturing? 213• A CLOSER LOOK AT QUALITY 8-1: Service Warranties: Profitable or a
Rip-off—You Decide 214
How Are Service Quality Issues Similar to Manufacturing? 215
What Do Services Customers Want? 215
• QUALITY HIGHLIGHT 8-1: Ritz-Carlton Hotels 216
SERVQUAL 217
Expectations 217
Perceptions 219
Gap Analysis 220Assessing Differences in Expectations and Perceptions by Using theDifferencing Technique 221
Designing and Improving the Services Transaction 224
Services Blueprinting 224
Moments of Truth 225
• A CLOSER LOOK AT QUALITY 8-2: Quality in Health Care 226
Poka-yoke 227
The Customer Benefits Package 228
Service Transaction Analysis 229
Improving Customer Service in Government 232• A CLOSER LOOK AT QUALITY 8-3: Government Service Quality:
A Stop-and-Go Process 232
Quality in Health Care 233
Supply Chain Quality in Services 234
A Theory for Service Quality Management 234
Summary 235Key Terms 236Discussion Questions 236Problems 237
• CASE 8-1: Yahoo! Designs Quality Services with Customers in Mind 240• CASE 8-2: UPS: Delivering the Total Package in Customer Service 241
Chapter 9 MANAGING SUPPLIER QUALITY IN THE SUPPLYCHAIN 243
The Value Chain 243
The Chain of Customers 244
Managing the Supply Chain 244
Supplier Alliances 244
• A CLOSER LOOK AT QUALITY 9-1: Supply Chains and Terrorism 247
14 Contents
Single-Sourcing Examples 247
• QUALITY HIGHLIGHT 9-1: A Bumpy Ride at Boeing 248
Supplier Development 250a QUALITY HIGHLIGHT 9-2: Integrating Forward along the Supply Chain:
3M Dental Products Division 250
Supplier Awards 252
Supplier Relationship Management Systems (SRMSs) 252
Applying the Contingency Perspective to Supplier Partnering 252
A Supplier Development Program: /SO/73 1 6949:2009 252
ISO/TS 16949 252
Quality Management System 254
Management Responsibility 254
Resource Management 254
Product Realization 254
Measurement, Analysis, and Improvement 254
Acceptance Sampling and Statistical Sampling Techniques 254
Is Acceptance Sampling Needed? 254• A CLOSER LOOK AT QUALITY 9-2: For RFID to Take Hold, Reliability
Needs to Improve 255Building an Understanding of Supply Chain QualityManagement 256
Summary 256Key Terms 257
Discussion Questions 257• CASE 9-1: AT&T: Setting High Standards for Suppliers and Rewarding
Supplier Performance 257• CASE 9-2: Managing the Supply Chain at Honeywell 258
Part 3 Implementing Quality 261
Chapter 10 THE TOOLS OF QUALITY 262
Improving the System 262
Ishikawa's Basic Seven Tools of Quality 263
Process Maps 264• A CLOSER LOOK AT QUALITY 10-1: Extended Value Stream Mapping of
Supply Chains 268
Check Sheets 270
Histograms 271
Scatter Diagrams 272
Control Charts 274
Cause-and-Effect (Ishikawa) Diagrams 274
Pareto Charts 276
The Seven New Tools for Improvement 279
The Affinity Diagram 281
Contents 15
The Interrelationship Digraph 283
Tree Diagrams 284
Prioritization Grid 286
Matrix Diagram 288
Process Decision Program Chart 289
Activity Network Diagram 289
Reflections on the Managerial N7 Tools 291
Other Tools for Performance Measurement 291
Spider Charts 291
Balanced Scorecards 291
Dashboards 293Summary 293
Key Terms 293Discussion Questions 293Problems 294
• CASE 10-1: Corporate Universities: Teaching the Toolsof Quality 297• CASE 10-2: Lanier: Achieving Maximum Performance by Supporting Quality
Products with Quality Services 298
Chapter 11 STATISTICALLY BASED QUALITY IMPROVEMENT FORVARIABLES 300Statistical Fundamentals 300
What Is Statistical Thinking? 300• QUALITY HIGHLIGHT 11-1: Statistical Tools in Action 301
Why Do Statistics Sometimes Fail in the Workplace? 302
Understanding Process Variation 302
Process Stability 304
Sampling Methods 304
Random Samples 304
Systematic Samples 304
Sampling by Rational Subgroups 304
Planning for Inspection 305
Control Plans 305
Process Control Charts 305
Variables and Attributes Control Charts 305
A Generalized Procedure for Developing Process Charts 307
Understanding Process Charts 307
x and R Charts 309
Interpreting Control Charts 310
Using Excel to Draw x and R Charts 315
X and Moving Range {MR) Charts for Population Data 316
Using Excel to DrawXand MR Charts 318
Median Charts 318
16 Contents
Using Excel to Draw Median Charts 320
x and s Charts 320
Using Excel to Draw s and x Charts 322
Other Control Charts 322
Moving Average Chart 322
Cusum Chart 323
Some Control Chart Concepts for Variables 323
Choosing the Correct Variables Control Chart 323
Corrective Action 325
How Do We Use Control Charts to ContinuouslyImprove? 325
Tampering with the Process 325
Process Capability for Variables 325• A CLOSER LOOK AT QUALITY 11-1: A Justification for Meeting Standards in
Software Quality 326
Population versus Sampling Distributions 326
Capability Studies 328
Ppk 330
The Difference between Capability and Stability 330
Other Statistical Techniques in Quality Management 330Summary 331Key Terms 332Discussion Questions 332Problems 332
, • CASE 11-1: Ore-Ida Fries 336
Chapter 12 STATISTICALLY BASED QUALITY IMPROVEMENT FORATTRIBUTES 338Generic Process for Developing Attributes Charts 339
Understanding Attributes Charts 339
p Charts for Proportion Defective 339
Using Excel to Draw p Charts 341
np Charts 342
Using Excel to Draw np Charts 344
c and u Charts 344
Using Excel to Draw c and u Charts 346 —
Attributes Charts Summary 347
Choosing the Right Attributes Chart 347
Reliability Models 349
Series Reliability 349
Parallel Reliability 350
Measuring Reliability 351
Mean Time to Failure (MTTF) 352• A CLOSER LOOK AT QUALITY 12-1: Is Quality on the Decline? 352
Contents 17
System Availability 353Summary 354Key Terms 354Discussion Questions 354Problems 355
• CASE 12-1: Decision Sciences Institute National Conference 358
Chapter 13 SIX SIGMA MANAGEMENT AND LEAN TOOLS 361What Is Six Sigma? 361
Organizing Lean-Six Sigma 363
Packaging Lean with Six Sigma 365
DMAIC Overview 365m A CLOSER LOOK AT QUALITY 13-1: DMAIC in Action 366
Define Phase 367
Developing the Business Case 367
Project Evaluation 368
Pareto Analysis 371
Problem Definition 371
Measure Phase 371
Selecting Process Outcomes 371
FMEA 375
Verifying Measurements 375
Gauge R&R 376
Using Excel to Perform Gauge R&R Analysis 379
Analyze Phase 379
Defining Objectives 379
Identifying Xs 379
Analyzing Sources of Variation 379
Improve Phase 380
Control Phase 380
Taguchi Design of Experiments 381
Robust Design 381
Background of the Taguchi Method 382
Taguchi Definition of Quality 382
Quality Loss Function 382
The Taguchi Process 384
Using Excel to Solve Taguchi Experiments 386
Design for Six Sigma 388
Lean-Six Sigma from a Contingency Perspective 388Summary 388Key Terms 389Discussion Questions 389Problems 389
• CASE 13-1: The Neiman-Marcus Cookie 394
18 Contents
Part 4 Forever Improving the Quality System 395
Chapter 14 MANAGING QUALITY IMPROVEMENT TEAMS ANDPROJECTS 396
Why Employees Enjoy teams 397
Leading Teams for Quality Improvement 397
Employee Empowerment and Involvement 397
• A CLOSER LOOK AT QUALITY 14-1: Empowerment in Action 398
Flattening Hierarchies for Improved Effectiveness 399
Team Leader Roles and Responsibilities 399
Team Roles and Responsibilities 400
Team Formation and Evolution 401
Team Rules 402
Types of Teams 402
Process Improvement Teams 403
Cross-Functional Teams 403
Tiger Teams 403
Natural Work Groups 403
Self-Directed Work Teams 403
Virtual Teams 404• A CLOSER LOOK AT QUALITY 14-2: Lessons from Effective Teams outside the
Business World 404
Implementing Teams 405
Meeting Management 405
Conflict Resolution in Teams 406
Saving Quality Teams from Failure: Diagnosing Problems andIntervening Before It Is Too Late 409
Managing and Controlling Projects 409
Qualifying Projects 410
Project Charters 411
Force-Field Analysis 412
Work Breakdown Structure (WBS) 413
Identifying Precedence Relationships 413
Identifying Outcome Measures 413
Identifying Task Times 414
Activity Network Diagrams 415
Arrow Gantt Charts 418
Managing Multiple Projects 418
Summary 419Key Terms 420Discussion Questions 420
Problems 421• CASE 14-1: Whole Foods Market: Using Teamwork as a Recipe
for Success 423
Contents 19
Chapter 15 IMPLEMENTING AND VALIDATING THE QUALITYSYSTEM 425Building Blocks for the system of Quality Improvement 426
People 426
Organizational Learning and Knowledge 427
Culture 428
Closeness to Customers 428
Information and Finance 429
The Three Spheres of Quality 429
The Integrative Approach 429
Alignment between the Quality System and Strategy 430
m QUALITY HIGHLIGHT 15-1: Back to Basics at Ford 430
Internal Validation: Documenting and Assessing the Quality System 430
• A CLOSER LOOK AT QUALITY 15-1: A Simple Self-Assessment Tool 433
Quality Audits 436
Quality Audit Process 437
Types of Audits 437
Operational Audits 438
Performance Audits 438
• A CLOSER LOOK AT QUALITY 15-2: Quality Audits in Action 440
Qualitative and Quantitative Elements in Audits 440
Validating the Quality System 441Summary 442Key Terms '442Discussion.Questions 443Problems 443
• CASE 15-1: Setting Priorities Using the Baldrige Criteria 443
Appendix 446
Glossary 449
Index 464