z

PROCESS MANAGEMENT
QUALITY PROFILES: STMicroelectronics, Inc.–Region Flexibility and Cycle Time Reduction
Americas, and Boeing Aircraft and Tanker Breakthrough Improvement
Programs PROCESS MANAGEMENT IN THE BALDRIGE CRITERIA,
THE SCOPE OF PROCESS MANAGEMENT ISO 9000, AND SIX SIGMA
Leading Practices QUALITY IN PRACTICE: Gold Star Chili: Process
PRODUCT DESIGN PROCESSES Management
Cost, Manufacturability, and Quality QUALITY IN PRACTICE: Bringing Process Management
Design Quality and Social Responsibility to Education
Streamlining the Product Development Process REVIEW QUESTIONS
DESIGNING PROCESSES FOR QUALITY DISCUSSION QUESTIONS
Special Considerations in Service Process Design PROJECTS, ETC.
PROJECTS AS VALUE-CREATION PROCESSES CASES The State University Experience
Project Life Cycle Management The PIVOT Initiative at Midwest Bank,
PROCESS CONTROL Part I
Process Control in Services Stuart Injection Molding Company
PROCESS IMPROVEMENT CapStar Health Systems: Process
Kaizen Management

T he “New Economy,” as many call it, is revolutionizing business. Despite the dot-
com crash at the turn of the century, online shopping has matured, and Amazon.com
has garnered high marks in the American Customer Satisfaction Index (see Chapter
4). However, the debut of online retailing was fraught with problems. For example,
between Thanksgiving and Christmas, 1999, some 22 million shoppers spent more
than $5 billion shopping online.1 Traffic on sites such as Yahoo and Kbkids.com grew
by 500 percent. Outpost.com, a computer and electronics retailer, sold $2 million of
merchandise in one day. However, it wasn’t long before Internet message boards
were filled with comments like “I doubt I will ever shop again online for Christmas”
and other comments unfit to print here.
As Fortune magazine noted, “It takes much more than a logo and a Website to
run an e-tailing operation. Online retailers aren’t so different from brick and mortar
314 Part 2 Quality in High-Performance Organizations

stores. They run out of stock, sell damaged merchandise, and hire rude sales help . . .
hordes of companies flooded the market. Trouble is, many of them spent heavily to
market and promote their brands but scrimped on infrastructure—the unglamorous
side of the business, which focuses on delivering products to customers. The results
were often disastrous.” Amazon.com, for example, initially tried to have suppliers
maintain inventory, but it found that it needed to build traditional distribution cen-
ters around the country to improve customer service and control over the product.2
A. Blanton Godfrey notes that many organizations are “wired for failure”; that is,
their processes are not designed effectively or aligned with each other.3 He cites other
examples in addition to the problems that confronted e-retailers. One example is
overscheduling at airports. During the 4:15 to 4:30 P.M. time slot, 35 arrivals are sched-
uled in Atlanta, even though in optimal weather conditions the airport can handle
only 25 in 15 minutes; with bad weather, this number drops to 17. Another company
celebrated its largest sales contract in history only to discover that all qualified sup-
pliers for critical materials were at capacity. A third example is the unwillingness of
departments to work together. For example, when products fail in the plant or in ser-
vice, it isn’t because designers choose components they know will fail; they often
have insufficient information about the problems that result from their choices.
These observations point to the importance of designing and managing effective
processes—such as product design, order entry, manufacturing, distribution, and
customer service—throughout the value chain. Deming and Juran observed that
the overwhelming majority of quality problems are associated with processes; few
are caused by the workers themselves. Rather, management is responsible to design
and continuously improve the processes with which individuals work. Actually, it
shares this responsibility with the workforce.
The former president of Texas Instruments Process management involves
Defense Systems & Electronics Group (now planning and administering the
part of Raytheon) had a sign in his office that activities necessary to achieve a high
sums up these issues nicely: “Unless you level of performance in key business
change the process, why would you expect the processes, and identifying opportu-
results to change?” nities for improving quality and
Process management activities help to pre- operational performance, and ulti-
vent defects and errors, eliminate waste and mately, customer satisfaction.
redundancy, and thereby lead to better quality
and improved company performance through shorter cycle times, improved flexi-
bility, and faster customer response.
Nearly every leading company views process management as a fundamental
business activity (see the Quality Profiles on page 312). AT&T, for example, bases its
methodology on the following principles:
• Process quality improvement focuses on the end-to-end process.
• The mind-set of quality is one of prevention and continuous improvement.
• Everyone manages a process at some level and is simultaneously a customer
and a supplier.
• Customer needs drive process quality improvement.
• Corrective action focuses on removing the root cause of the problem rather than
on treating its symptoms.
• Process simplification reduces opportunities for errors and rework.
• Process quality improvement results from a disciplined and structured applica-
tion of the quality management principles.4
Chapter 7 Process Management 315

z QUALITY PROFILES
STMICROELECTRONICS, INC.–REGION AMERICAS, AND BOEING AIRCRAFT AND

TANKER PROGRAMS
Headquartered in Carrollton, Texas, STMicro- ment to deliver 80 C-17s to the Air Force. A few
electronics, Inc.—Region Americas (ST), a wholly years later, the Defense Department threatened to
owned subsidiary of a French firm, ranks among cancel the C-17 program because of technical
the world’s top manufacturers of semiconductor problems, cost overruns, and late deliveries. A&T
integrated circuits, supplying consumer elec- overhauled its operations to become “process-
tronics, automotive, medical, telecommunica- focused and customer-driven,” initiating partner-
tions, and computer equipment markets. ST ships with customers, unions, and suppliers, and
competes against about 20 semiconductor manu- replacing manager-controlled teams with
facturers with broad product lines as well as hun- empowered teams of workers. To help it perform
dreds of smaller rivals that serve niche markets. to plan, A&T developed a seven-step approach to
In this industry, missteps in planning and execu- defining, managing, stabilizing, and improving
tion quickly translate into competitive disadvan- processes and established performance measures
tages. ST aims to distinguish itself through that are indicators of efficiency and the chief dri-
advances in technological innovation, increases vers of customer satisfaction: quality, timeliness,
in the breadth of its product and service offer- and cycle time. Using this process, one team
ings, and continuous improvement in just-in- developed a dry sealant to precoat the 1.4 million
time delivery, fast prototyping, rapid problem fasteners used to assemble a C-17 to replace a wet
resolution, and other areas responsive to cus- sealant that was difficult to apply and cost more
tomers’ high-priority requirements. In 1998, ST to dispose of than to buy. The innovation reduced
initiated a “gung ho” program to promote rework, improved airframe quality, reduced
teaming and employee empowerment, resulting structural fatigue, and enabled mechanics to
in the redesign of manufacturing work systems work “faster, cleaner, and better.”
and jobs, all with the aim of encouraging and Between 1995 and its winning a Baldrige
enabling employees to take control of their work. Award in 1998, A&T maintained an on-time
ST is tightly aligned with its parent corpora- delivery record of 100 percent. Productivity
tion’s quest to become the world leader in envi- increased from $200,000 per employee in 1994 to
ronmental compliance. In 1997 and 1998, energy more than $300,000 in 1998. Performance on key
used to manufacture silicon wafers declined by quality measures has improved by 50 percent
20 percent. Employee satisfaction levels in 1999 during 1994–1998, cycle time was cut by more
exceed the industry composite in 8 of 10 cate- than 80 percent, and supplier on-time delivery
gories, and its supplier management program increased from 75.9 percent to 99.8 percent. The C-
earned “best in class” rating in an independent 17’s 1997 level of performance was nearly four
evaluation of performance in 19 benchmark times better than that of the next best competitor’s
areas. ST was a 1999 Baldrige Award winner. aircraft, and return on net assets was nearly seven
Boeing Airlift and Tanker (A&T) Programs times better than the next best competitor.
designs, develops, and produces the C-17 Globe-
master 111 airlifter, which is capable of carrying
170,000 pounds and is used by the U.S. Air Force
Source: Malcolm Baldrige National Quality Award, Profiles of
to transport large, heavy cargo to sites around the Winners, National Institute of Standards and Technology, Depart-
world. In 1996, A&T signed a $14.2 billion agree- ment of Commerce.
316 Part 2 Quality in High-Performance Organizations

This chapter discusses philosophies and approaches for designing and managing
important processes in an organization. In Chapter 13, we will discuss specific tools
and techniques for process improvement in the context of Six Sigma.

THE SCOPE OF PROCESS MANAGEMENT

As we noted in Chapter 1, essentially all work in an organization is performed by
some process. Common business processes include acquiring customer and market
knowledge, strategic planning, research and development, purchasing, developing
new products or services, fulfilling customer orders, managing information, mea-
suring and analyzing performance, and training
employees, to name just a few. Leading companies identify impor-
Value-creation processes (sometimes called tant business processes throughout
core processes) are those most important to “run- the value chain that affect customer
ning the business” and maintaining or achieving satisfaction. These processes typi-
a sustainable competitive advantage. They drive cally fall into two categories: value-
the creation of products and services, are critical creation processes and support
to customer satisfaction, and have a major processes.
impact on the strategic goals of an organization.
Value-creation processes typically include design, production/delivery, and other
critical business processes. Design processes involve all activities that are performed
to incorporate customer requirements, new technology, and past learning into the
functional specifications of a product (i.e., a manufactured good or service), and thus
define its fitness for use. Production/delivery processes create or deliver the actual
product; examples are manufacturing, assembly, dispensing medications, teaching a
class, and so on. These processes must be designed to ensure that the product will
conform to specifications (the manufacturing definition of quality) and also be pro-
duced economically and efficiently. Product design greatly influences the efficiency
of manufacture as well as the flexibility of service strategies, and therefore must be
coordinated with production/delivery processes. The ultimate value of the product,
and hence, the perceived quality to the consumer, depend on both these types of
processes.
Support processes are those that are most important to an organization’s value-
creation processes, employees, and daily operations. They provide infrastructure for
value-creation processes but generally do not add value directly to the product or ser-
vice. A process such as order entry that might be thought of as a value creation process
for one company (e.g., a direct mail distributor) might be considered as a support
process for another (e.g., a custom manufacturer). In general, value creation processes
are driven by external customer needs while support processes are driven by internal
customer needs. Because value creation processes do add value to products and ser-
vices, they require a higher level of attention than do support processes. Table 7.1 shows
the value creation processes and their requirements defined by Pal’s Sudden Service.
Their support processes include accounting/finance, human resources, maintenance,
management information systems, ordering, and stocking. Other critical support
processes that lead to business success and growth might be research and development,
technology acquisition, supply chain management and supplier partnering, mergers
and acquisitions, project management, or sales
and marketing. These processes will differ greatly Process management consists of
among organizations, depending on the nature of three key activities: design, control,
products and services, customer and market and improvement.
requirements, global focus, and other factors.
Chapter 7 Process Management 317

Table 7.1 Value Creation Processes for Pal’s Sudden Service

Process Principal Requirements

Order Taking Accurate, fast, friendly

Cooking Proper temperature
Product Assembly Proper sequence, sanitary, correct ingredients
and amounts, speed, proper temperature, neat
Cash Collection Accurate, fast, friendly
Slicing Cut/size, freshness/color
Chili preparation Proper temperature, quantity, freshness
Ham/chicken preparation Proper temperature, quantity, freshness
Supply chain management Price/cost, order accuracy
Property acquisition Sales potential, adherence to budget
Construction On time, within budget
Marketing & advertising Clear message, brand recognition

Source: Courtesy of Pal’s Sudden Service.

Designing a process begins with identifying and documenting the process. As we

stated in Chapter 1, processes generally cut across traditional organizational func-
tions, and accurately defining a process may take some investigation and thought.
Documenting a process involves describing how it is performed. It will likely include
developing a process flowchart and writing standard operating procedures and work
instructions. A good process design focuses on the prevention of poor quality by
ensuring that goods and services meet both external and internal customer require-
ments, and that the process is capable of achieving the requisite level of performance.
The distinction between control and improvement is illustrated in Figure 7.1.
Any process performance measure naturally fluctuates around some average level.
Abnormal conditions cause an unusual deviation from this pattern. Removing the
causes of such abnormal conditions and maintaining level performance is the essence
of control. Improvement, on the other hand, means changing the performance to a
new level.
To apply the techniques of process management, processes must be (1) repeatable,
and (2) measurable. Repeatability means that the process must recur over time. The
cycle may be long, as with product development processes or patent applications; or
it may be short, as with a manufacturing operation or an order entry process. Mea-
surement provides the ability to capture important quality and performance indicators
to reveal patterns about process performance. Each measurement should aim for a
standard or target that is driven by customer requirements. Meeting these two condi-
tions ensures that sufficient data can be collected to reveal useful information for eval-
uation and control, as well as learning that leads to improvement and maturity.
We may view process management according to the three levels of quality dis-
cussed in Chapter 1. Major value creation and support processes are generally defined
at the organizational level; these activities require attention by senior managers. Each
major process consists of many subprocesses that are managed by functional managers
318 Part 2 Quality in High-Performance Organizations

Figure 7.1 Control versus Improvement

Performance

Out of control

Controlled
process
{
Improvement
{ New zone
of control

Time

or cross-functional teams. Finally, each subprocess consists of many specific work steps
performed by individuals at the performer level. Boeing Airlift and Tanker (A&T) Pro-
grams has developed an “enterprise process model” that views the entire business as
eight interconnected process families. These major groupings range from enterprise
leadership and new business development to production and post-delivery product
support. Each family encompasses up to 10 major processes, which, in turn, are made
up of several tiers of supporting subprocesses. A&T manages cross-cutting relation-
ships as “mega-processes” that extend to suppliers and customers.
Individuals or groups, known as process owners, are accountable for process per-
formance and have the authority to manage and improve their process. Process
owners may range from high-level executives who manage cross-functional processes
to workers who run a manufacturing cell or an assembly operation on the shop floor.
Assigning process owners ensures that someone is responsible to manage the process
and optimize its effectiveness.

Leading Practices
Process management requires a disciplined effort involving all managers and
workers in an organization. Companies that are recognized world leaders in quality
and customer satisfaction share some common practices.
• They define and document important value creation and support processes, and manage
them carefully. Many companies use ISO 9000 as a basis for defining and docu-
menting key processes. Branch-Smith Printing, for example, created more than
40 process maps as part of the process of converting to ISO 9000. Corning
Telecommunications Products Division (TPD) has identified and documented
more than 800 processes in all areas of its business, of which 50 are designated
as “core business processes” that merit special emphasis in continuous
improvement efforts. Each core process is owned and managed by a key busi-
ness leader. Many organizations also recognize that managing supplier rela-
tionships (i.e., how performance requirements are communicated and ensured,
mutual assistance and training, etc.) represents an important support process.
Chapter 7 Process Management 319

At DaimlerChrysler, for example, suppliers are involved early in the design

process.5 As a result, DaimlerChrysler often finds out about new materials,
parts, and technologies before other automakers.
• They translate customer requirements into product and service design requirements
early in the design process, taking into account linkages between product design
requirements and manufacturing or service process requirements, supplier capabilities,
and legal and environmental issues. One of the fundamental questions asked by
SSM Health Care during their process design activities is “What are the cus-
tomer’s expected outcomes from the process?” Reviewing patient/customer
feedback data, conducting specialized surveys or focus groups, and including
customers on design teams help them answer this question. Leading companies
coordinate design and production/delivery processes. AT&T Transmission Sys-
tems has a new product introduction center that evaluates designs based on
manufacturing capabilities, recognizing that good designs both reduce the risk
of manufacturing defects and improve productivity. The Bell Laboratories engi-
neering research center supports the introduction of new processes by simu-
lating the manufacturing environment needed to evaluate new technologies.
An operational policy developed at Eastman Chemical encourages employees
to maximize product value by operating the process at target levels, not just
within some specification limits, thus better meeting design performance
requirements. Eastman Chemical also reviews designs for safety, reliability,
waste minimization, patent position, toxicity information, environmental risks,
product disposal, and other customer needs. It also conducts a market analysis
of key suppliers’ abilities to manage costs, obtain materials, maintain produc-
tion, and ship reliably.
• They ensure that quality is built into products and services and use appropriate engi-
neering and quantitative tools and approaches during the development process.
Eastman Chemical, for instance, uses laboratory modeling of processes, com-
puter simulation, designed statistical experiments, and evaluation in cus-
tomers’ plants to assess the quality of its products prior to production. Texas
Instruments locates its design centers strategically throughout its facilities.
These centers offer expertise and systems with extensive capability for electrical
and mechanical computer-aided design, system engineering, and manufac-
turing, and allow the evaluation of parts that have the best quality history, pro-
ducibility, reliability, and other special engineering requirements. AT&T
Universal Card Services used qualitative and quantitative research and testing
to verify how accurately it understood customer needs. Before it introduced
new products or services, market trials were conducted to determine whether
they met customer and business requirements. The company’s program man-
agement process had guidelines for deliverables, which addressed all quality
requirements. Each phase of the process fulfilled specific requirements, which
had to be completed, reviewed, and approved before the next phase of devel-
opment began. IBM Rochester uses statistical techniques to study customers’
priorities and trade-offs; validates this information with customer councils, sat-
isfaction surveys, and other forms of feedback; and maintains a Software
Partner Laboratory in which customers can certify that requirements are being
met and that programs will operate correctly on their systems.
• They manage the product development process to enhance cross-functional communica-
tion, reduce product development time, and ensure trouble-free introduction of products
and services. Leading companies use cross-functional teams to coordinate all
phases of product development and reduce development times. Boeing A&T
320 Part 2 Quality in High-Performance Organizations

has more than 100 integrated product teams (IPTs) that oversee the design, pro-
duction, and delivery of the C-17 aircraft’s more than 125,000 parts and sup-
porting services. AT&T established nine expert breakthrough teams—called
Achieving Process Excellence Teams—that identify process improvements for
developing and deploying products faster in the market. They establish stan-
dards, procedures, and training for cross-functional communication that pre-
vents problems from occurring. At The Ritz-Carlton Hotel Company, for
instance, the interface of all design, marketing, operations, and legal functions
throughout each project allows the company to anticipate requirements and
evaluate progress. Customized hotel products and services, such as meetings
and banquet events, receive the full attention of local hotel cross-functional
teams. These teams involve all internal and external suppliers, verify produc-
tion and delivery capabilities before each event, critique samples, and assess
results. At Globe Metallurgical, a team consisting of employees from customer
service, engineering, and quality assurance works together before product
development even begins. Afterward, a team of customers and employees from
purchasing, engineering, and quality assurance works with the first team to
manage the development process. To ensure a trouble-free launch of its prod-
ucts, Solar Turbines uses advanced computerized design and analytical tools
that ensure collaboration and sharing of data between manufacturing and key
suppliers. Other tools, such as predictive modeling and rapid prototyping are
used to validate function, performance, and manufacturability.
• They define performance requirements for suppliers, ensure that requirements are met,
and develop partnering relationships with key suppliers and other organizations. At
Dana Commercial Credit, strategic suppliers include financial institutions and
law firms. Legal requirements are communicated at the early stages of a relation-
ship; feedback from customers determines whether requirements are being met.
Corning TPD classifies its suppliers in a hierarchy: Level 1 suppliers have a direct
impact on customer satisfaction; Level 2 suppliers are important, but do not have
direct linkage to customer satisfaction; Level 3 suppliers provide commodity-like
products. Level 1 suppliers are supported by cross-functional teams and inte-
grated into development activities. Armstrong conducts site visits and has a 5-
level scale to help suppliers understand where they stand in meeting the
company’s expectations. STMicroelectronics developed an annual Supplier
Quality & Service Plan, which sets goals for suppliers and specifies how ST will
review performance, share data, and carry out other responsibilities in the rela-
tionship. Long-term partnerships with quality-minded suppliers enabled Texas
Nameplate Company to nearly eliminate inspections of incoming materials.
These “ship-direct-to-stock” suppliers are required to be defect-free for at least
two years and meet all requirements specified on purchase orders.
• They control the quality and operational performance of key processes and use system-
atic methods to identify significant variations in operational performance and output
quality, determine root causes, make corrections, and verify results. Leading compa-
nies establish measures and indicators to track quality and operational perfor-
mance, and use them as a basis for controlling the processes and consistently
meeting specifications and standards. The key measures used by SSM Health
Care to monitor their processes are shown in Table 7.2. Daily, weekly, monthly,
and quarterly performance assessments provide the opportunity to review and
manage these measures and identify ways of preventing potential errors before
they affect the patient. The Ritz-Carlton Hotel Company has a policy by which
the first person who detects a problem is empowered to break away from
Chapter 7 Process Management 321

Table 7.2 SSM Health Care Process Requirements and Measures

Process Key Requirements Key Measures

Admit
Admitting/ Timeliness • Time to admit patients to the setting of care
Registration • Timeliness in admitting/registration rate on patient satis-
faction survey questions
Assess
Patient Timeliness • % of histories and physicals charted within 24 hrs or
Assessment prior to surgery
• Pain assessed at appropriate intervals, per hospital policy
Clinical laboratory Accuracy & • Quality control results/Repeat rates
and radiology Timeliness • Turnaround time
services • Response rate on medical staff satisfaction survey
Care Delivery/Treatment
Provision of Nurse • Response rate on patient satisfaction and medical staff
clinical care responsiveness survey questions
Pain management • Wait time for pain medications
• % CHF patients received med instructions/weighing
Successful clinical • % Ischemic heart patients discharged on proven therapies
outcomes • Unplanned readmits/Returns to ER or Operating Room
• Mortality
Pharmacy/ Accuracy • Use of dangerous abbreviations in medication orders
Medication use • Med error rate or adverse drug events resulting from
med errors
Surgical services/ Professional skill, • Clear documentation of informed surgical and anesthesia
Anesthesia competence/ consent
communication • Perioperative mortality
• Surgical site infection rates
Discharge
Case Appropriate • Average length of stay (ALOS)
management utilization • Payment denials
• Unplanned readmits
Discharge from Assistance and • Discharge instructions documented and provided to patient
setting of care clear directions • Response rate on patient satisfaction survey

Source: Courtesy of SSM Health Care.

routine duties, investigate and correct the problem immediately, document the
incident, and then return to their routine. Many companies use statistical
process control (see Chapter 14) and formal problem-solving processes to iden-
tify, analyze, and solve quality problems. Granite Rock, for instance, was the
first in the construction materials industry to apply statistical process control in
the management of production of aggregates, concrete, and asphalt products.
• They continuously improve processes to achieve better quality, cycle time, and overall
operational performance. Leading companies employ systematic approaches for
322 Part 2 Quality in High-Performance Organizations

analyzing data and identifying improvements. Branch-Smith Printing, for

example, uses a simple quality improvement process (QIP) shown in Figure 7.2 to
evaluate and improve all production and delivery processes, using performance
data and complaints to prioritize opportunities for process improvement.
Leading companies use proven techniques such as process analysis and simplifi-
cation and advanced technologies. Motorola’s Commercial, Government, and
Industrial Solutions Sector uses continuous improvement teams that meet regu-
larly to proactively evaluate and improve processes. At IBM Rochester, cross-
functional teams examine all elements of production and support processes, from
order entry to delivery and installation. The teams evaluate and remove, change,
and improve steps in these processes. The Ritz-Carlton has eight mechanisms
devoted solely to the improvement of process, product, and service quality:
1. New hotel start-up improvement process: a cross-sectional team from the
entire company that works together to identify and correct problem areas.
2. Comprehensive performance evaluation process: the work area team mecha-
nism that empowers people who perform a job to develop the job procedures
and performance standards.
3. Quality network: a mechanism of peer approval through which an indi-
vidual employee can advance a good idea.
4. Standing problem-solving team: a standing work area team that addresses
any problem it chooses.
5. Quality improvement team: special teams assembled to solve an assigned
problem identified by an individual employee or leaders.
6. Strategic quality planning: annual work area teams that identify their mis-
sions, primary supplier objectives and action plans, internal objectives and
action plans, and progress reviews.

Figure 7.2 QIP Process at Branch-Smith Printing

*Identify the
problem
and monitor
Ana ause

Evaluate
effectiveness
c
lyze
the

im P
pl lan
em th e
en e c t th n
ta l e i o
tio
n Se olut
s

Used with permission of AIM, Inc.

Chapter 7 Process Management 323

7. Streamlining process: the annual hotel evaluation of processes, products, or

services that are no longer valuable to the customer.
8. Process improvement: the team mechanism for corporate leaders, managers,
and employees to improve the most critical processes.
• They innovate to achieve breakthrough performance using such approaches as bench-
marking and reengineering. Briefly, benchmarking is the search for best practices in
any company, in any industry, anywhere in the world, and reengineering is the
radical redesign of business processes to achieve significant improvements in
performance. As an example of benchmarking, when Granite Rock could not find
any company that was measuring on-time delivery of concrete, it talked with
Domino’s Pizza, a worldwide leader in on-time delivery of a rapidly perishable
product (a characteristic shared with freshly mixed concrete) to acquire new ideas
for measuring and improving its processes. AT&T has a corporate database to
share benchmarking information among its business units. The database contains
data from more than 100 companies and 250 benchmarking activities for key
processes such as hardware and software development, manufacturing, financial
planning and budgeting, international billing, and service delivery. AT&T obtains
this information from customers, visits to other companies, trade shows and jour-
nals, professional societies, product brochures, and outside consultants. Pal’s
Sudden Service uses benchmarking extensively. Managers are continually on the
lookout for benchmarking candidates, and each one compiles a running list of
potential subjects. Pal’s uses benchmarking to obtain meaningful competitive
comparisons, new best practices for achieving higher performance goals, or new
organizational directions, as well as to constantly remind the entire organization
that performance can always be improved.
To illustrate the concept of reengineering, Intel Corporation previously used
a 91-step process costing thousands of dollars to purchase ballpoint pens—the
same process used to purchase forklift trucks! The improved process was
reduced to eight steps. In rethinking its purpose as a customer-driven, retail ser-
vice company rather than a manufacturing company, Taco Bell eliminated the
kitchen from its restaurants. Meat and beans are cooked outside the restaurant
at central commissaries and reheated. Other food items such as diced tomatoes,
onions, and olives are prepared off-site. This innovation saved about 11 million
hours of work and $7 million per year over the entire chain.6

PRODUCT DESIGN PROCESSES

Companies today face incredible pressures to continually improve the quality of their
products while simultaneously reducing costs, to meet ever-increasing legal and envi-
ronmental requirements, and to shorten product life cycles to meet changing con-
sumer needs and remain competitive. The ability to achieve these goals depends on a
large extent on product design (by which we also imply redesign). The complexity of
today’s products makes design a difficult activity; a single state-of-the-art integrated
circuit may contain millions of transistors and involve hundreds of manufacturing
steps. Nevertheless, improved designs not only reduce costs, but increase quality. For
example, a network interface card from around 1990 contained about 40 chips; five
years later, the entire system board of a Macintosh Performa 5200 had just 19. Fewer
components mean fewer points of failure and less chance of assembly error.7
Most companies have some type of structured product development process.
Although we tend to equate product development with manufactured goods, it is
important to realize that design processes apply to services as well. For example, in
324 Part 2 Quality in High-Performance Organizations

the late 1980s, Citibank designed a new mortgage approval procedure that reduced
turnaround times from 45 to less than 15 days; FedEx has consistently developed new
variations of its package delivery services.8
The typical product development process, shown in Figure 7.3, consists of six
phases:
1. Idea Generation. As emphasized in Chapter 4, new or redesigned product ideas
should incorporate customer needs and expectations. However, true innova-
tions often transcend customers’ expressed desires, simply because customers
may not know what they like until they have it. A good example is Chrysler’s
decision to develop the minivan, despite research that showed that people
balked at such an odd-looking vehicle.9
2. Preliminary Concept Development. In this phase, new ideas are studied for feasi-
bility, addressing such questions as: Will the product meet customers’ require-
ments? Can it be manufactured economically with high quality? Objective
criteria are required for measuring and testing the attributes associated with
these questions. One tool for assisting in this and subsequent steps is quality
function deployment, which will be described in Chapter 12.
3. Product/Process Development. If an idea survives the concept stage—and many
do not—the actual design process begins by evaluating design alternatives and
determining engineering specifications for all materials, components, and
parts. This phase usually includes prototype testing, in which a model (real or
simulated) is constructed to test the product’s physical properties or use under
actual operating conditions, as well as consumer reactions to the prototypes.
For example, in developing the user interface for an automobile navigation
system, BMW conducted extensive consumer tests with a keyboard, a rotating
push button, and a joystick (the push button was ultimately selected).10 Boeing’s
777 jet was built using digital prototypes. Design reviews are frequently con-
ducted to identify and eliminate possible causes for manufacturing and mar-
keting problems. In addition to the actual product design, companies develop,
test, and standardize the processes used in manufacturing, which include
selecting the appropriate technology, tooling, and suppliers, and performing
pilot runs to verify results.

Figure 7.3 Structured Product Development Process

Idea
Generation
Preliminary
Concept
Development
Product/Process
Development

Full-Scale
Production

Market
Introduction

Market
Evaluation
Chapter 7 Process Management 325

4. Full-Scale Production. If no serious problems are found, the company releases the
product to manufacturing or service delivery teams.
5. Market Introduction. The product is distributed to customers.
6. Market Evaluation. Deming and Juran both advocated an ongoing product
development process that relies on market evaluation and customer feedback to
initiate continuous improvements. In fact, Deming’s introductory lecture to
Japanese managers in 1950 contrasted the “old way” of product design—design
it, make it, and try to sell it—with a “new way”:
• Design the product (with appropriate tests).
• Make it and test it in the production line and in the laboratory.
• Put it on the market.
• Test it in service through market research; find out what the user thinks of it,
and why the nonuser has not bought it.
• Redesign the product, in light of consumer reactions to quality and price.11
This philosophy is one of the key ingredients in a successful TQ culture.
Many companies view customers as significant partners in product development, Quality Spotlight
thus integrating market evaluation throughout the process. Ames Rubber Company, Ames Rubber
Company
for example, uses a four-step approach to product development that maintains close
communication with the customer.12 Typically, Ames initiates a new product through
a series of meetings with the customer and sales/marketing or the technical services
group. From these meetings, management prepares a product brief listing all tech-
nical, material, and operational requirements. The brief is forwarded to internal
departments, such as engineering, quality, and manufacturing. The technical staff
then selects materials, processes, and procedures, and submits its selections to the
customer. Upon the customer’s approval, a prototype is made. Ames delivers the
prototype to the customer, who evaluates and tests it and reports results to the com-
pany. Ames makes the requested modifications and returns the prototype for further
testing. This process continues until the customer is completely satisfied. Next, Ames
makes a limited preproduction run. Data collected during the run are analyzed and
shared with the customer. Upon approval, full-scale production commences.
Design approaches often differ depending on the nature of products or services.
For example, approaches to designing entirely new products will be unlike those that
address minor changes and improvements. Design approaches might consider fac-
tors such as functional performance, cost, manufacturability, safety, and environ-
mental impacts. We address some of these issues next.

Cost, Manufacturability, and Quality

General Electric found that 75 percent of its manufacturing costs are determined by
design. With products in which parts alone represent 65 to 80 percent of the manufac-
turing cost, design may account for 90 percent or more of the total manufacturing cost.
Other companies exhibit similar figures. For Rolls Royce, design determines 80 percent
of the final production costs.
Product design can significantly Simplifying the design can often improve
affect the cost of manufacturing cost as well as quality. By cutting the number of
(direct and indirect labor, materials, parts, material costs generally go down, inven-
and overhead), redesign, warranty, tory levels fall, the number of suppliers shrinks,
and field repair; the efficiency by and production time can be shortened. Back in
which the product can be manufac- the days of dot matrix printers (ask your
tured, and the quality of the output. instructor!), IBM, for example, realized many
benefits of design simplification. IBM had been
326 Part 2 Quality in High-Performance Organizations

buying its dot matrix printers from Seiko Epson Corporation, then the world’s low-
cost producer. When IBM developed a printer with 65 percent fewer parts that was
designed to snap together during final assembly without the use of fasteners, the
result was a 90 percent reduction in assembly time and major cost reductions.
Many aspects of product design can adversely affect manufacturability and,
hence, quality.13 Some parts may be designed with features difficult to fabricate
repeatedly or with unnecessarily tight tolerances. Some parts may lack details for
self-alignment or features for correct insertion. In other cases, parts so fragile or so
susceptible to corrosion or contamination may be damaged in shipping or by internal
handling. Sometimes a design simply has more parts than are needed to perform the
desired functions, which increases the chance of assembly error. Thus, problems of
poor design may show up as errors, poor yield, damage, or functional failure in fab-
rication, assembly, test, transport, and end use.
Designs with numerous parts increase the incidence of part mix-ups, missing
parts, and test failures. Parts that are similar but not identical create the possibility
that an assembler will use the wrong part. Parts without details to prevent insertion
in the wrong orientation lead to more frequent improper assembly. Complicated
assembly steps or tricky joining processes can cause incorrect, incomplete, unreliable,
or otherwise faulty assemblies. Finally, the designer’s failure to consider conditions
to which parts will be exposed during assembly such as temperature, humidity,
vibration, static electricity, and dust, may result
in failures during testing or use. DFM is intended to prevent product
Design for manufacturability (DFM) is the designs that simplify assembly oper-
process of designing a product for efficient pro- ations but require more complex and
duction at the highest level of quality. expensive components, designs that
Table 7.3 summarizes important design simplify component manufacture
guidelines for improving manufacturability and while complicating the assembly
thus improving quality and reducing costs. Many process, and designs that are simple
and inexpensive to produce but
industries have developed more specific guide-
difficult or expensive to service or
lines. For example, guidelines for designing support.
printed circuit boards include:
• Placing all components on the topside of the board
• Grouping similar components whenever possible
• Maintaining a 0.60-inch clearance for insertable components

Design Quality and Social Responsibility

Safety in consumer products represents a major issue in design, and certainly an
important part of a company’s public responsibilities. Liability concerns cause many
companies to forgo certain product development activities. For example, Unison
Industries, Inc., of Rockford, Illinois, developed a new solid-state electronic ignition
system for piston-engine aircraft. The company dropped the product after prototype
testing. Unison says it was sued over crashes involving aircraft on which its products
were not even installed. Getting removed from the lawsuits proved costly in itself.14 In
a survey of more than 500 chief executives, more than one-third worked for firms that
canceled the introduction of products because of
liability concerns. Many companies closed plants All parties responsible for design,
and laid off workers, and more than 20 percent of manufacture, sales, and service of a
the executives said they believed their compa- defective product are now liable for
nies lost market share to foreign competitors damages.
because of product liability costs.
Chapter 7 Process Management 327

Table 7.3 Design Guidelines for Quality Assurance

Minimize Number of Parts

• Fewer parts and assembly drawings ↔ Lower volume of drawings and instructions
to control
• Less complicated assemblies ↔ Lower assembly error rate
• Fewer parts to hold to required quality ↔ Higher consistency of part quality
characteristics
• Fewer parts to fail ↔ Higher reliability
Minimize Number of Part Numbers
• Fewer variations of like parts ↔ Lower assembly error rate
Design for Robustness (Taguchi method)
• Low sensitivity to component variability ↔ Higher first-pass yield; less degradation of
performance with time
Eliminate Adjustments
• No assembly adjustment errors ↔ Higher first-pass yield
• Eliminates adjustable components with high ↔ Lower failure rate
failure rates
Make Assembly Easy and Foolproof
• Parts cannot be assembled wrong ↔ Lower assembly error rate
• Obvious when parts are missing ↔ Lower assembly error rate
• Assembly tooling designed into part ↔ Lower assembly error rate
• Parts are self-securing ↔ Lower assembly error rate
• No “force fitting” of parts ↔ Less damage to parts; better serviceability
Use Repeatable, Well-Understood Processes
• Part quality easy to control ↔ Higher part yield
• Assembly quality easy to control ↔ Higher assembly yield
Choose Parts That Can Survive Process Operations
• Less damage to parts ↔ Higher yield
• Less degradation of parts ↔ Higher reliability
Design for Efficient and Adequate Testing
• Less mistaking “good” for “bad” product and ↔ Truer assessment of quality; less unnecessary
vice versa rework
Lay Out Parts for Reliable Process Completion
• Less damage to parts during handling ↔ Higher yield; higher reliability
and assembly
Eliminate Engineering Changes on Released Products
• Fewer errors due to changeovers and multiple ↔ Lower assembly error rate
revisions/versions

Source: D. Daetz, “The Effect of Product Design on Product Quality and Product Cost,” Quality Progress 20, no. 6 (June 1987), pp. 63–67.

According to the theory of strict liability, anyone who sells a product that is defec-
tive or unreasonably dangerous is subject to liability for any physical harm caused to
the user, the consumer, or the property of either.15 This law applies when the seller is
in the business of selling the product, and the product reaches the consumer without
a substantial change in condition even if the seller exercised all possible care in the
preparation and sale of the product. The principal issue is whether a defect, direct or
indirect, exists. If the existence of a defect can be established, the manufacturer usu-
ally will be held liable. A plaintiff need prove only that (1) the product was defective,
(2) the defect was present when the product changed ownership, and (3) the defect
328 Part 2 Quality in High-Performance Organizations

resulted in injury. In 1997 Chrysler was ordered to pay $262.5 million in a case
involving defective latches on minivans; thus, the economic consequences can be
significant.
Attention to design quality can greatly reduce the possibility of product liability
claims as well as provide supporting evidence in defense arguments. Liability makes
documentation of quality assurance procedures a necessity. A firm should record all
evidence that shows the designer established test and monitoring procedures of crit-
ical product characteristics. Feedback on test and inspection results along with cor-
rective actions taken must also be documented. Even adequate packaging and
handling procedures are not immune to examination in liability suits, because pack-
aging is still within the manufacturer’s span of control. Managers should address the
following questions:16
• Is the product reasonably safe for the end user?
• What could possibly go wrong with it?
• Are any needed safety devices absent?
• What kind of warning labels or instructions should be included?
• What would attorneys call “reasonable foreseeable use”?
• What are some extreme climatic or environmental conditions for which the
product should be tested?
• What similarities does the product have with others that may have encountered
previous problems?
In addition to legal issues, environmental concerns have an unprecedented impact
on product and process designs. Hundreds of millions of home and office appliances
are disposed of each year. The problem of what to do with obsolete computers is a
growing design and technological waste problem today.17 A monitor contains eight
pounds of lead; a CPU has another three to five pounds, as well as other hazardous
metals, such as mercury. According to a 1997 Carnegie Mellon University study, 150
million dead but not decaying PCs will be buried in U.S. landfills by 2005. In Europe,
the European Commission proposed a ban on materials such as lead-based solder in
PCs and the imposition of recycling responsibilities on manufacturers beginning in
January 2004. Pressures from environmental
groups clamoring for “socially responsive” DfE is the explicit consideration of
designs, states and municipalities that are run- environmental concerns during the
ning out of space for landfills, and consumers design of products and processes,
who want the most for their money all cause and includes such practices as
designers and managers to look carefully at the designing for recyclability and dis-
concept of design-for-environment, or DfE.18 assembly.
DfE offers the potential to create more desir-
able products at lower costs by reducing disposal and regulatory costs, increasing the
end-of-life value of products, reducing material use, and minimizing liabilities. Recy-
clable products are designed to be taken apart and their components repaired, refur-
bished, melted down, or otherwise salvaged for reuse. Recyclability appeals to
environmentalists as well as city and state officials, each of whom are fighting the
effects of waste disposal. At the same time, however, it creates new issues for designers
and consumers. For example, designers must strive to use fewer types of materials,
such as plastics, with properties that allow for reuse. Business Week cites several U.S.
firms already working on or marketing such products, including Whirlpool, 3M, and
General Electric.19 The latter’s plastics division, which serves the durable goods market,
uses only thermoplastics in its products. Unlike many other varieties of plastics, ther-
moplastics can be melted down and recast into other shapes and products, thus making
Chapter 7 Process Management 329

them recyclable. Designers must also refrain from using certain methods of fastening,
such as glues and screws, in favor of quick connect-disconnect bolts or other such fas-
teners. These changes in design will have an impact on tolerances, durability, and
quality of products. Such design changes affect consumers who will be asked to recycle
products (perhaps to recover a deposit), in spite of inconveniences such as transporting
them to a recycling center.
Repairable products are not a new idea, but the concept lost favor when, in the
1960s and 1970s, the United States became known as the “throwaway society.” Many
products are discarded simply because the cost of maintenance or repair is too high
when compared with the cost of a new item. Now design for disassembly promises
to bring back easy, affordable product repair. For example, Whirlpool Corporation is
developing a new appliance designed for repairability, with its parts sorted for easy
coding. Thus, repairability has the potential of pleasing customers, who would prefer
to repair a product rather than discard it. At the same time, companies are challenged
to consider fresh approaches to design that build both cost-effectiveness and quality
into the product. For instance, even though it is more efficient to assemble an item
using rivets instead of screws, this approach is contrary to a design-for-disassembly
philosophy. An alternative might be an entirely new design that eliminates the need
for fasteners in the first place.

Streamlining the Product Development Process

The importance of speed in product development cannot be overemphasized. To suc-
ceed in highly competitive markets, companies must churn out new products quickly.
In 1990, the former Digital Equipment Corp., for example, was about to launch a new
generation of computer disk drives. However, because of product design problems, the
product was very late and competitors had already released enhanced technology
drives at much lower prices. What could have been a huge win became a great failure.20
Nearly every industry is focused on reducing product development cycles.
Whereas automakers once took four to six years to develop new models, most are
striving to do it within 24 months. In fact, Toyota’s goal is just 18 months! Boeing took
54 months to design its 777 airplane; yet the company would like to reduce it to 10
because the market changes so quickly. The product development process can be
improved with various advanced technologies, such as computer-aided design (CAD),
computer-aided manufacturing (CAM), flexible manufacturing systems (FMS), and
computer-integrated manufacturing (CIM). These technologies automate and link
design and manufacturing processes, reducing cycle times as well as removing oppor-
tunities for human error, thus improving quality. Such automation is a significant factor
at Toyota.21
Successful product development demands the involvement and cooperation of
many different functional groups within an organization to identify and solve design
problems and try to reduce product development and introduction times. All depart-
ments play crucial roles in the design process. The designer’s objective is to design a
product that achieves the desired functional requirements. The manufacturing engi-
neer’s objective is to produce it efficiently. The salesperson’s goal is to sell the
product, and the finance person’s goal is to make a profit. Purchasing seeks parts that
meet quality requirements. Packaging and dis-
One of the most significant barriers tribution deliver the product to the customer
to efficient product development is in good operating condition. Clearly, all busi-
poor intraorganizational cooperation. ness functions have a stake in the product;
therefore, all should work together.
330 Part 2 Quality in High-Performance Organizations

Unfortunately, the product development process often is performed without such

cooperation. In many large firms product development is accomplished in a serial
fashion, as suggested in Figure 7.3. In the early stages of development, design engi-
neers dominate the process. Later, the prototype is transferred to manufacturing for
production. Finally, marketing and sales personnel are brought into the process. This
approach has several disadvantages. First, product development time is long.
Second, up to 90 percent of manufacturing costs may be committed before manufac-
turing engineers have any input to the design. Third, the final product may not be the
best one for market conditions at the time of introduction.
An approach that alleviates these problems is called concurrent engineering, or
simultaneous engineering. Typical benefits include 30 to 70 percent less develop-
ment time, 65 to 90 percent fewer engineering changes, 20 to 90 percent less time to
market, 200 to 600 percent improvement in
quality, 20 to 110 percent improvement in white Concurrent engineering is a process
collar productivity, and 20 to 120 percent higher in which all major functions
return on assets. 22 involved with bringing a product to
Concurrent engineering involves multi- market are continuously involved
functional teams, usually consisting of 4 to 20 with product development from
conception through sales. Such an
members and including every specialty in the
approach not only helps achieve
company. The functions of such teams are to trouble-free introduction of prod-
determine the character of the product and ucts and services, but also results in
decide what design methods and production improved quality, lower costs, and
methods are appropriate; analyze product func- shorter product development cycles.
tions so that all design decisions can be made
with full knowledge of how the item is supposed to work; perform a design for man-
ufacturability study to determine whether the design can be improved without
affecting performance; formulate an assembly sequence; and design a factory system
that fully involves workers.
Concurrent engineering has been a major force behind the resurgence of U.S.
automobile companies by enabling them to dramatically reduce product develop-
ment time. In the past, automobile development followed a sequential process in
which styling engineers dreamed up a concept and sent the concept to product engi-
neers to design components. They in turn would send the designs to manufacturing
and suppliers. This process was costly and inefficient; each handoff lost something in
time and money. What appeared feasible for one group often proved impossible for
another to accomplish. By the time the vehicle was finally produced, marketing was
faced with selling a product for which they had no input. Often the vehicle was
priced incorrectly for the target market.
In 1980 Ford launched Team Taurus, modeled after program management con-
cepts in the aerospace industry. Program managers headed product teams that
included representatives from design, engineering, purchasing, marketing, quality
assurance, sales, and service. Cadillac adopted simultaneous engineering in 1985.
Vehicle teams, composed of disciplines from every area of the organization, were
responsible for managing all steps of product development. They defined the target
market and the overall vehicle goals, and managed the timing, profitability, and con-
tinuous improvement of the vehicle’s quality, reliability, durability, and performance.
Chrysler’s adaptation of simultaneous engineering enabled it to develop and intro-
duce the celebrated Viper sports car in just two years. Among U.S. automakers
Chrysler was an innovator in fast product development.23
One approach often used to facilitate product development is the design review.
The purpose of a design review is to stimulate discussion, raise questions, and generate
Chapter 7 Process Management 331

new ideas and solutions to help designers anticipate problems before they occur. Gen-
erally, a design review is conducted in three major stages: preliminary, intermediate,
and final. The preliminary design review establishes early communication between
marketing, engineering, manufacturing, and purchasing personnel and provides better
coordination of their activities. It usually involves higher levels of management and
concentrates on strategic issues in design that relate to customer requirements and thus
the ultimate quality of the product. A preliminary design review evaluates such issues
as the function of the product, conformance to customer’s needs, completeness of spec-
ifications, manufacturing costs, and liability issues.
After the design is well established, an intermediate review takes place to study
the design in greater detail to identify potential problems and suggest corrective
action. Personnel at lower levels of the organization are more heavily involved at this
stage. Finally, just before release to production, a final review is held. Materials lists,
drawings, and other detailed design information are studied with the purpose of pre-
venting costly changes after production setup.
In summary, a total approach to product development and process design
involves the following activities:24
1. Constantly thinking in terms of how one can design or manufacture products
better, not just solving or preventing problems
2. Focusing on “things done right” rather than “things gone wrong”
3. Defining customer expectations and going beyond them, not just barely
meeting them or just matching the competition
4. Optimizing desirable features or results, not just incorporating them
5. Minimizing the overall cost without compromising quality of function
Various tools that fall under the rubric of “Design for Six Sigma” will be discussed in
Chapter 12 and contribute to achieving these objectives.

DESIGNING PROCESSES FOR QUALITY

The design of the processes that produce and deliver goods and services can have a
significant impact on cost (and hence profitability), flexibility (the ability to produce
the right types and amounts of products as customer demand or preferences change),
and the quality of the output. Standardized processes establish consistency of output.
For example, in producing a new, very small CD player, Sony had to develop entirely
new manufacturing processes, because no process in existence was able to make this
product as small and as accurate as the design required. FedEx developed a wireless
data collection system that employs laser scanners to manage millions of packages
daily through its six main hubs, improving not only customer service, but saving
labor costs as well.25
However, standardized processes may not be able to meet the needs of different
customer segments as we discussed in Chapter 4. Today, many companies use a
strategy of mass customization—providing personalized, custom-designed products to
meet individual customer preferences at prices comparable to mass-produced items.
Motorola, for instance, produces one-of-a-kind pagers from more than 29 million com-
binations of options in a mass assembly process at a low cost. Dell Computer config-
ures each computer system to customer specifications. At Levi Strauss, customers are
measured for custom-fit jeans at local stores; the jeans are produced at a central factory
and delivered to the customer’s store. Mass customization requires significant
changes to traditional manufacturing processes that focus on either customized,
crafted products or mass-produced, standardized products.26 These products include
332 Part 2 Quality in High-Performance Organizations

flexible manufacturing technologies, just-in-

time systems, information technology, and an The goal of process design is to
emphasis on cycle time reduction. develop an efficient procedure to sat-
isfy both internal and external cus-
The design of a process begins with the
tomer requirements.
process owner. A process owner might be an
individual, a team, a department, or some cross-
functional group. A basic approach to process design is suggested by Motorola:
1. Identify the product or service: What work do I do?
2. Identify the customer: Who is the work for?
3. Identify the supplier: What do I need and from whom do I get it?
4. Identify the process: What steps or tasks are performed? What are the inputs and
outputs for each step?
5. Mistake-proof the process: How can I eliminate or simplify tasks? What “poka-
yoke” (i.e., mistake-proofing) devices (see Chapter 13) can I use?
6. Develop measurements and controls, and improvement goals: How do I evaluate the
process? How can I improve further?
Steps 1 through 3 address such questions as “What is the purpose of the process?” “How
does the process create customer satisfaction?” and “What are the essential inputs and
outputs of the process?” Step 4 focuses on the actual process design by defining the
specific tasks performed in transforming the inputs to outputs. Step 5 focuses on making
the process efficient and capable of delivering high quality. Step 6 ensures that the
process will be monitored and controlled to the level of required performance. This
monitoring involves gathering in-process measurements and/or customer feedback on
a regular basis and using this information to control and improve the process.
The actual process design is the specification of how the process works. The first
phase is to list in detail the sequence of steps—value-adding activities and specific
tasks—involved in producing a product or delivering a service, usually depicted as a
flowchart (see Chapter 13 for further discussion). Such a graphical representation
provides an excellent communication device for visualizing and understanding the
process. Flowcharts can become the basis for job descriptions, employee-training
programs, and performance measurement. They help managers to estimate human
resources, information systems, equipment, and facilities requirements. As design
tools, they enable management to study and analyze processes prior to implementa-
tion in order to improve quality and operational performance. Figure 7.4 shows The
Ritz-Carlton’s Three Steps of Service process. The process is highly structured and
defines the procedures for anticipating and complying with customer needs. All
employees who come in contact with customers are trained to follow this process.

Special Considerations in Service Process Design

The fundamental differences between manufacturing and service processes deserve
special attention in process design. This aspect is especially important because
support processes are basically services. Some
common examples of service processes are
preparing an invoice, taking a telephone order, Service process designers must con-
centrate on doing things right the
processing a credit card, and checking out of
first time, minimizing process com-
a hotel. First, the outputs of service processes plexities, and making the process
are not as well defined, as are manufactured immune to inadvertent human
products. For example, even though all banks errors, particularly during cus-
offer similar tangible goods such as checking, tomer interactions.
loans, automatic tellers, and so forth, the real
Chapter 7 Process Management 333

Figure 7.4 The Ritz-Carlton Hotel Company: Three Steps of Service Process

1 Warm
welcome
Break away
to achieve
instant
pacification
Complaint or
dissatisfaction Dissatisfied

2 Anticipation Identify Verify

need or Fulfill need guest satisfaction
and or wish
compliance wish by guest
Routine

Lateral Satisfied
Service
Break away Snap back
to respond to routine
duties
3 Fond
farewell
Complete “incident form” Daily quality Enter guest preferences
and/or “guest preference pad” report or complaints into
when appropriate for each guest analysis guest history profile

Source: © 1992, The Ritz-Carlton Hotel Company. All rights reserved.

differentiating factor among banks is the service they provide. Second, most service
processes involve a greater interaction with the customer, often making it easier to
identify needs and expectations. On the other hand, customers often cannot define
their needs for service until after they have some point of reference or comparison.
Fast-food restaurants, for example, have carefully designed their processes for
high degree of accuracy and fast response time.27 New hands-free intercom systems,
better microphones that reduce ambient kitchen noise, and screens that display a cus-
tomer’s order are all focused on these requirements. Timers at Wendy’s count every
segment of the order completion process to help managers identify problem areas.
Kitchen workers wear headsets to hear orders as they are placed. Even the use of
photos on drive-through order boards make it more likely for customers to select
these items; less variety means faster order fulfillment.
Service processes often involve both internal and external activities, a factor that
complicates quality design. In a bank, for example, poor service can result from the
way that tellers treat customers and also from poor quality of computers and commu-
nications equipment beyond the control of the tellers. Internal activities are primarily
concerned with efficiency (quality of conformance), while external activities—with
direct customer interaction—require attention to effectiveness (quality of design). All
too often, workers involved in internal operations do not understand how their per-
formance affects the customers they do not see. The success of the process depends on
everyone—workers involved in internal as
Services have three basic components: well as external activities—understanding that
physical facilities, processes, and pro- they add value to the customer.
cedures; employees’ behavior; and Designing a service essentially involves
employees’ professional judgment.28 determining an effective balance of these com-
ponents. The goal is to provide a service whose
334 Part 2 Quality in High-Performance Organizations

elements are internally consistent and directed at meeting the needs of a specific
target market segment. Too much or too little emphasis on one component will lead
to problems and poor customer perceptions. For example, too much emphasis on
procedures might result in timely and efficient service, but might also suggest insen-
sitivity and apathy toward the customer. Too much emphasis on behavior might pro-
vide a friendly and personable environment at the expense of slow, inconsistent, or
chaotic service. Too much emphasis on professional judgment might lead to good
solutions to customer problems but also to slow, inconsistent, or insensitive service.
A useful approach to designing effective services is first to recognize that services
differ in the degree of customer contact and interaction, the degree of labor intensity,
and the degree of customization. For example, a railroad is low in all three dimen-
sions. On the other hand, an interior design service would be high in all three dimen-
sions. A fast-food restaurant would be high in customer contact and labor intensity,
but low in customization.
Services low in all three dimensions of this classification are more similar to man-
ufacturing organizations. The emphasis on quality should be focused on the physical
facilities and procedures; behavior and professional judgment are relatively unim-
portant. As contact and interaction between the customer and the service system
increases, two factors must be taken into account. In services low in labor intensity,
the customer’s impression of physical facilities, processes, and procedures is impor-
tant. Service organizations must exercise special care in choosing and maintaining
reliable and easy-to-use equipment. With higher levels of contact and interaction,
appropriate staff behavior becomes increasingly important.
As labor intensity increases, variations between individuals become more impor-
tant; however, the elements of personal behavior and professional judgment will
remain relatively unimportant as long as the degrees of customization and contact
and interaction remain low. As customization increases, professional judgment
becomes a bigger factor in the customer’s perception of service quality. In services
that are high in all three dimensions, facilities, behavior, and professional judgment
must be equally balanced.
In services, quality standards take the place of the dimensions and tolerances
applicable in manufacturing. Examples of standards set by one of the airline industry
leaders, Swissair, include:
• Ninety percent of calls are answered within 30 seconds.
• Ninety percent of passengers are checked in within three minutes of arrival.
• Baggage claim time is only 10 minutes between the first and last customer.
However, service standards are inherently more difficult to define and measure than
manufacturing specifications. They require extensive research into customer needs
and attitudes regarding timeliness, consistency, accuracy, and other service require-
ments, as discussed in previous chapters. Even though many product specifications
developed for manufactured products are focused on meeting a target, such as a
product dimension, service targets typically are “smaller is better.” Thus, the true ser-
vice standard is zero defects, and any other standards (such as those of Swissair)
should be construed as interim standards and targets only.
In designing high-quality service processes, consider the following questions:29
• What service standards are already in place?
• Which of these standards have been clearly communicated to all service per-
sonnel?
• Have these standards been communicated to the public?
Chapter 7 Process Management 335

• Which standards require refinement?

• What is the final result of the service provided? What should it ideally be?
• What is the maximum access time that a patron will tolerate without feeling
inconvenienced?
• How long should it take to perform the service itself?
• What is the maximum time for completion of service before the customer’s
view of the service is negatively affected?
• At what point does service begin, and what indicator signals the completion of
the service?
• How many different people must the consumer deal with in completing the
service?
• What components of the service are essential? Desirable? Superfluous?
• What components or aspects of service must be controlled in order to deliver a
service encounter of equal quality each time one occurs?
• Which components can differ from encounter to encounter while still leading to
a total service encounter that meets standards?
• What products that affect its service performance does a service organization
obtain from other sources?
As you can see, service process design is not a trivial exercise!

PROJECTS AS VALUE-CREATION PROCESSES

Some organizations are project-focused because of the nature of their work. They
tend to deliver unique, one-of-a-kind products or services tailored to the specific
needs of an individual customer. Examples
In many companies, value creation include performing clinical trials for pharma-
processes take the form of projects— ceutical companies, market research studies,
temporary work structures that start consulting, and systems installation. Project
up, produce products or services, and management involves all activities associated
then shut down.30 with planning, scheduling, and controlling
projects. Good project management ensures
that an organization’s resources are used efficiently and effectively. Such manage-
ment is particularly important for Six Sigma, because projects generally cut across
organizational boundaries and require the coordination of many different depart-
ments and functions.
Traditional project management methodologies were developed before the
advent of total quality; hence, TQ approaches were not often incorporated. Such
approaches as identifying customer requirements, using a customer-supplier model,
teamwork principles, cycle time reduction, and in-process measurements can
improve the quality of the result. For example, although each project is unique, many
projects have similar underlying processes, and attention to these processes can
improve the overall quality of the project effort. Quality Spotlight
To illustrate, consider Custom Research Incorporated (CRI), which conducts Custom
unique market research studies for many different organizations. A Cycle Time Task Research, Inc.

Force identified nine common processes for all marketing research studies: identifi-
cation of client requirements/expectations, questionnaire design, questionnaire pro-
gramming, sampling, data collection, data tabulation, report and analysis, internal
communication, and client communication. A Process Task Force was formed to map
and improve each process. For example, CRI developed a “one-entry system” that
eliminates the need to enter data into its computer system more than once, and
336 Part 2 Quality in High-Performance Organizations

allows questionnaires to be tested for validity and reliability, eliminating several pro-
gramming steps and helping to reduce cycle time. An account team is in charge of
every research project. Project-related problems anywhere in the process are recog-
nized and reported by the team. Team members use their problem-solving skills to
determine whether the variation is due to common or special causes, analyze the rea-
sons for the occurrence, and implement changes that will prevent it from occurring.
When each project is completed, the account team completes a Project Quality Recap
documenting problems and solutions and rating the performance of internal depart-
ments. Teams refer to the Recaps on file when they have similar projects or subse-
quent projects from the same client.31
Organizations such as Custom Research use a pure project organizational structure
whereby team members are assigned exclusively to projects and report only to a project
manager. This approach makes it easier to manage projects, because project teams can be
designed for efficiency by including the right mix of skills; however, it can result in inef-
ficiencies because of duplication of resources across the organization, for example,
having a different information technology support person on each project. However, in
a typical manufacturing or service firm, projects are not the major value creation
process, but they often charter projects to meet infrequent needs, such as a new facility
layout or technology rollout. Such projects cut across organizational boundaries,
making communication across the organization difficult, and require more careful man-
agement approaches. Functional managers may be reluctant to provide the resources,
and employees assigned to projects might relegate a project to a lower priority than their
daily, functional job, making it difficult for the project manager to control the project.
A practical solution to this dilemma is a matrix organizational structure, which
“loans” people and other resources to projects while still maintaining functional con-
trol over them. Project managers coordinate the work across the functions to mini-
mize duplication of resources and facilitate communication across the organization,
but coordination requires that resources be negotiated (see Chapter 5). Such organi-
zational structures are often used in Six Sigma organizations.
A typical Six Sigma project team consists of a project manager, technical consul-
tant, project champion, external customer or process owner, and the core project
team. We discussed Six Sigma project teams in Chapter 6. The key leadership role
belongs to the project manager, who is generally trained as a Six Sigma green belt
(SSGB) or black belt (SSBB). Project managers are often generalists who have diverse
backgrounds and experience and lead the project activities, plan and track progress
of the work, and provide direction to the project team. In addition, they must manage
the relationships and communication among the members of the project team. Thus,
the project manager’s ability to facilitate is usu-
ally more important than his or her ability to Successful project managers have
supervise. The project manager must also have four key skills: a bias toward task
sufficient technical expertise to resolve disputes completion, technical and adminis-
among functional specialists. trative credibility, interpersonal
and political sensitivity, and leader-
ship ability.
Project Life Cycle Management
A project typically unfolds in stages, which can be called a life cycle. Taking a quality
perspective, Kloppenborg and Petrick32 defined the stages of the typical quality-
focused project management process as the following:
1. Project Quality Initiation: Define directions, priorities, limitations, and constraints.
2. Project Quality Planning: Create a blueprint for the scope of the project and
resources needed to accomplish it.
Chapter 7 Process Management 337

3. Project Quality Assurance: Use appropriate, qualified processes to meet technical

project design specifications.
4. Project Quality Control: Use appropriate communication and management tools
to ensure that managerial performance, process improvements, and customer
satisfaction is tracked.
5. Project Quality Closure: Evaluate customer satisfaction with project deliverables
and assess success and failures that provide learning for future projects and
referrals from satisfied customers.
These phases of the project life cycle will be discussed in more detail later in the
chapter.
These basic components are applicable to any project management endeavor, but
are directly relatable to Six Sigma design and improvement projects. The roles and
accountability of each member of the project team in each stage of the project life
cycle are summarized in Table 7.4.

Project Quality Initiation Projects are implemented to satisfy some need of a cus-
tomer or process owner; thus, the first step in managing a project is to clearly define
the goals of the project, and when and how they must be accomplished. Initiation
also includes identifying a project champion, project manager, and other team mem-
bers. The customer must be a vital participant in all stages of the process, not just at
the beginning and the end.

Project Quality Planning All project-management decisions involve four factors:

time, resources, costs, and performance. Project managers need to know how much time
a project should take and when specific activities should be started and completed so
that deadlines can be established and progress of the project monitored. They must
also determine the resources, such as people and equipment available for the project,
and how they should be allocated among the various activities. Projects usually have
limited budgets and costs generally depend on the resources expended; thus, they
must be monitored and controlled. Project managers seek ways to minimize costs
without jeopardizing deadlines. Finally, performance, which can be defined as how
well the results of the project meet customer requirements, should be a measurable
entity. Software packages, such as Microsoft Project®, incorporate various quantita-
tive analysis tools for scheduling, budgetary analysis, and tracking factors of time,
resources, and costs, and should be selected at this stage.
The project-planning process involves determining the set of activities that must
be performed, who will do them, how long each is estimated to take, and when they
should be completed to meet the organization’s goals. The project-planning process
consists of the following steps:
1. Project definition. Define the project, its objectives, and deliverables. Determine
the activities that must be completed and the sequence required to perform
them.
2. Resource planning. For each activity, determine the resource needs: personnel,
time, money, equipment, materials, and so on.
3. Project scheduling. Specify a time schedule for each activity.
4. Project tracking and control. Establish the proper control methods to be used for
tracking progress. Develop alternative plans in anticipation of problems in
meeting the planned schedule.
When projects are late, it is often because of failure to perform these four tasks ade-
quately.
338 Part 2 Quality in High-Performance Organizations

Table 7.4 Project Life Cycle Accountability Matrix

Role/Stage Project Quality Project Quality Project Quality Project Quality Project Quality
Initiation Planning Assurance Control Closure

Champion Select project Determine Conduct external Conduct external Sign off on
manager; decision-making customer customer completed
promote Six authority; commit communications; communications; project; recognize
Sigma use; align to plan; allocate mentor project mentor project and reward
and select resources needed manager; clear manager; approve participants;
project; commit for project obstacles as or reject process assess project
to charter success needed improvements; to improve
clear obstacles system
as needed

External Identify and Contribute Participate Confirm ongoing Verify when

Customer prioritize process in ongoing satisfaction usage training
(or Process expectations; knowledge; communications; level; accept and support are
Owner) commit to identify customer assist in deliverables completed;
charter satisfaction obtaining assess project
standards and approvals for to improve
trade-off values; changes in system; ensure
commit to plan processes that new
processes are
implemented;
sign off

Master Assist in Assist in Participate Provide expertise Assist in

Black Belt strategic project identifying data in ongoing in design of development of
(Technical selection; collection and communications; process management
Consultant) promote Six analysis needs; mentor project improvements; presentations;
Sigma vision, provide training manager; facilitate support project do project sign-
tools, and resources; ensure cross-project manager (SSBB offs; ensure that
process that processes sharing and and/or SSGB) project results
are statistically learning are publicized;
sound disseminate best
practices and
lessons learned

Project Select core Identify customer Conduct customer/ Track progress, Notify champion
Manager team; identify satisfaction management critical success of project
(SSBB and/ risks; empower standards and communications; factors, and costs completion;
or SSGB) performance; trade-off values; select tools; versus plan; recognize and
commit to plan for short-term confirm qualified implement mid- reward
charter training if needed; processes used; course corrections; participants;
develop quality and oversee data measure customer assess project
communications gathering and satisfaction; to improve
plans; commit to analysis; manage manage process system
plan quality audits and improvements
planning

Core Determine team Plan project; Use qualified Measure customer Provide
Team operating contribute special processes; gather satisfaction; test customer
principles; expertise; identify data, find root deliverables; support and
flowchart suppliers; qualify causes; conduct correct defects; training; assess
project; identify the process; quality audits; endorse project to
lessons learned; identify data to plan future work deliverables improve system
commit to collect; commit
charter to plan

Source: Adapted from Timothy J. Kloppenborg and Joseph A. Petrick, Managing Project Quality (Vienna, VA: Management Concepts, 2003), 11.
Chapter 7 Process Management 339

Project Quality Assurance Project quality assurance can be thought of as “customer

relationship management” while the project is in process. It requires communication,
interpersonal, and diplomacy skills on the part of the project manager. He or she
must manage upward to the project champion and out to the client, while keeping a
firm, but participative, hand on the pulse of team members and those who are actu-
ally doing the “hands-on” project work. Project quality assurance allows the project
manager to estimate how successfully the final “deliverable” will perform, not just
whether it will be on time and below budgeted cost. Software packages such as
Microsoft Project are not designed to track “deliverable” performance measures,
although some of the project tracking data for estimated final costs and estimated
completion dates may be of interest to customers. As suggested in Table 7.4, perfor-
mance tracking is often subjective, but can be quantified using communication
processes and customer surveys, tracking and controlling changes in the project plan,
and performing regular project reviews or audits.

Project Quality Control Project quality control involves systematically reviewing the
time, resources, cost, and performance measures as the project is being carried out.
Because of the uncertainty of task times, unavoidable delays, or other problems, pro-
jects rarely, if ever, progress on schedule. Managers must therefore monitor perfor-
mance of the project and take corrective action when needed. A typical project control
system includes the following:
• A project plan covering expected scope, schedule, cost, and performance goals
or requirements
• A continuous monitoring system that measures the current results or status
against the project plan through the use of monitoring tools
• A reporting system that identifies deviations from the project plan by means of
trends and forecasts
• Timely actions to take advantage of beneficial trends or to correct deviations

Project Quality Closure Project closeout is one of those mundane but vitally impor-
tant processes that facilitate future improvement in project management perfor-
mance. It consists of such steps as the following:

• Ensuring that the project has been signed off by those who must do so
• Ensuring that all bills have been paid and all financial records have been com-
pleted
• Ensuring that team members have not only been thanked, but provided for,
which may involve following up with recommendations for reassignment to
new projects or departments
• Ensuring that “lessons learned” are examined and documented, often by per-
forming a final project audit
• Ensuring that project successes and best practices are communicated and dis-
seminated to other parts of the organization

PROCESS CONTROL
An international study by Landor & Associates, an independent design and image
firm, showed conclusively that Coca-Cola is the number one brand in the minds of
soft-drink consumers around the world, and affirmed that the company is totally com-
mitted to quality. Coca Cola has stated, “Our commitment to quality is something for
which we will never lose our taste.”33 However, in early June, 1999, quite a few people
340 Part 2 Quality in High-Performance Organizations

in Europe did when almost 100 Belgian children fell ill after drinking Coca-Cola. This
incident caused the Belgian Health Ministry to require Coca-Cola to recall millions of
cans of product in Belgium and to cease product distribution. Later, France and the
Netherlands also halted distribution of Coke products as the contamination scare
spread. It was quickly determined that contaminated carbon dioxide had been used
during the carbonation process at the Antwerp bottling facility. According to the offi-
cial statement from Coca-Cola, “Independent laboratory testing showed that the
cause of the of the off-taste in the bottled products was carbon dioxide. That carbon
dioxide was replaced and all bottles with off-taste have been removed from the
market. The issue affects the taste of the soft drinks only. . . . The second issue involves
an external odor on some canned products. In the case of the Belgian distribution
system, a substance used in wood treatment has caused an offensive odor on the out-
side bottom of the can. Independent analysis determined that the product is safe. The
Company, in conjunction with its bottling partner in Belgium, is taking all necessary
steps to eliminate this offensive odor.”34 After two weeks, the company was allowed to
begin producing and distributing products in the three countries. Then, at the end of
June, Coca-Cola Beverages Poland found that 1,500 bottles of its Bonaqua water
product contained mold. This discovery resulted in 246,000 glass bottles being with-
drawn from the market in Poland, and replaced with plastic containers.
Although the Coca-Cola Company acted swiftly to resolve the problems and
recover its image and reputation, this case demonstrates the importance of process con-
trol. Control is the activity of ensuring conformance to the requirements and taking
corrective action when necessary to correct problems and maintain stable perfor-
mance. Not recognizing when contamination occurs in a bottling process for instance,
signifies a lack of control. Control charts, which
will be discussed thoroughly in Chapter 14, are Process control is important for
an important tool for controlling processes. two reasons. First, process control
Any control system has three components: methods are the basis for effective
(1) a standard or goal, (2) a means of measuring daily management of processes.
accomplishment, and (3) comparison of actual results Second, long-term improvements
with the standard, along with feedback to form the cannot be made to a process unless
basis for corrective action. Goals and standards are the process is first brought under
defined during planning and design processes. control.
They establish what is supposed to be accom-
plished. These goals and standards are reflected by measurable quality characteristics,
such as dimensions of machined parts, numbers of defectives, customer complaints,
or waiting times. For example, golf balls must meet five standards to be considered as
conforming to the Rules of Golf: minimum size, maximum weight, spherical sym-
metry, maximum initial velocity, and overall distance.35 Methods for measuring these
quality characteristics may be automated or performed manually by the workforce.
Golf balls are measured for size by trying to drop them through a metal ring—a con-
forming ball sticks to the ring while a nonconforming ball falls through; digital scales
measure weight to one-thousandth of a gram; and initial velocity is measured in a spe-
cial machine by finding the time it takes a ball struck at 98 mph to break a ballistic
screen at the end of a tube exactly 6.28 feet away.
Measurements supply the information concerning what has actually been accom-
plished. Workers, supervisors, or managers then assess whether the actual results
meet the goals and standards. If not, then remedial action must be taken. For
example, workers might check the first few parts after a new production setup (called
setup verification) to determine whether they conform to specifications. If not, the
worker adjusts the setup. Sometimes this process occurs automatically. For instance,
Chapter 7 Process Management 341

in the production of plastic sheet stock, thickness depends on temperature. Sensors

monitor the sheet thickness; if it begins to go out of tolerance, the system can adjust
the temperature in order to change the thickness.
However, in many industries, data are collected through some type of manual
inspection process. Such processes that rely on visual interpretation of product char-
acteristics or manual reading of gauges and instruments may encounter error rates of
from 10 to 50 percent. This high rate occurs for several reasons:
• Complexity: The number of defects caught by an inspector decreases with more
parts and less orderly arrangement.
• Defect rate: When the product defect rate is low, inspectors tend to miss more
defects than when the defect rate is higher.
• Inspection rate: The inspector’s performance degrades rapidly as the inspection
rate increases.36
These factors can be mitigated by using automated technology, or at the very least,
minimizing the number of quality characteristics that must be inspected, reducing
time pressures, using repeated inspections (if the same item is inspected by several
people, a higher percentage of total defects will be caught), and improving the design
of the workspace to facilitate the inspection task.
Short-term corrective action generally should be taken by those who own the
process and are responsible for doing the work, such as machine operators, order-
fulfillment workers, and so on. Long-term remedial action is the responsibility of
management. The responsibility for control can be determined by checking the three
components of control systems. A process owner must have the means of knowing
what is expected (the standard or goal) through clear instructions and specifications;
they must have the means of determining their actual performance, typically through
inspection and measurement; and they must have a means of making corrections if
they discover a variance between what is expected of them and their actual perfor-
mance. If any of these criteria is not met, then the process is the responsibility of man-
agement, not the process owner.
Both Juran and Deming made this important distinction. If process owners are
held accountable for or expected to act on problems beyond their control, they
become frustrated and end up playing games with management. Juran and Deming
stated that the majority of quality problems are management-controllable—the result
of common cause variation. For the smaller proportion of problems resulting from
special causes, process owners must be given the tools to identify them and the
authority to take action. This philosophy shifts the burden of assuring quality from
inspection departments and “quality control” personnel to workers on the shop floor
and in customer-contact positions. For example, DaimlerChrysler manufactures the
PT Cruiser at the company’s Toluca Assembly Plant in Mexico. To ensure quality, the
Toluca plant verifies parts, processes, fit, and finish every step of the way, from
stamping and body to paint and final assembly. The control practices include visual
management through quality alert systems, which are designed to call immediate
attention to abnormal conditions. The system provides visual and audible signals for
each station for tooling, production, maintenance, and material flow.37
Clearly, if incoming materials are of poor
In manufacturing, control is usually quality, then the final product will certainly be
applied to incoming materials, key no better. In a TQ environment, customers
processes, and final products and should not have to rely on heavy inspection
services. of purchased items. The burden of supplying
high-quality product should rest with the
342 Part 2 Quality in High-Performance Organizations

us Mater suppliers themselves. Occasional inspection might be used to audit compliance, but
Bon

ial
suppliers should be expected to provide documentation and statistical evidence that

s
they are meeting required specifications. The Bonus Materials folder on the CD-ROM
contains supplementary material on supplier and partnering process management.
Because unwanted variation can arise during production, in-process control is
needed throughout the production process. When the process owner assumes the
role of inspector, the occurrence of special causes of variation can quickly be recog-
nized and immediate adjustments to stabilize the process can be made. Done prop-
erly, this activity can eliminate the need for independent inspection.
Final inspection represents the last point in the manufacturing process at which the
producer can verify that the product meets customer requirements, and avoid external
failure costs. For many consumer products, final inspection consists of functional
testing. For instance, a manufacturer of televisions might do a simple test on every unit
to make sure it operates properly. However, the company might not test every aspect of
the television, such as picture sharpness or other
characteristics. These aspects might already have Effective quality control systems
been evaluated through in-process controls. include documented procedures for
Computerized test equipment is quite wide- all key processes; a clear under-
spread, allowing for 100 percent inspection to be standing of the appropriate equip-
conducted rapidly and cost-effectively. ment and working environment;
methods for monitoring and control-
Cincinnati Fiberglass, a small manufacturer
ling critical quality characteristics;
of fiberglass parts for trucks, uses a control plan approval processes for equipment;
for each production process that includes the criteria for workmanship, such as
process name, tool used, standard operating written standards, samples, or illus-
procedure, tolerance, inspection frequency, trations; and maintenance activities.
sample size, person responsible, reporting docu-
ment, and reaction plan. Of particular importance is the ability to trace all compo-
nents of a product back to key process equipment and operators and to the original
material from which it was made. Process control also includes monitoring the accu-
racy and variability of equipment, operator knowledge and skills, the accuracy of
us Mater
measurement results and data used, and environmental factors such as time and
Bon

ial
s

temperature. An example of process control in the food industry—the HACCP

approach—is discussed in the Bonus Materials folder on the CD-ROM.
Control should be the foundation for organizational learning. Many companies
are adopting an approach that has been used in the U.S. military, called after-action
review, or debrief. This review consists of asking four basic questions:
1. What was supposed to happen?
2. What actually happened?
3. Why was there a difference?
4. What can we learn?
Thus, rather than simply correcting unacceptable events, the focus is on preventing
them from occurring again in the future.

Process Control in Services

Many people think that process control applies only to manufacturing. This assump-
tion could not be further from the truth. The approach used by The Ritz-Carlton Hotel
Quality Spotlight Company to control quality is proactive because of their intensive personalized service
The Ritz-Carlton
Hotel Company environment.38 Systems for collecting and using quality-related measures are widely
deployed and used extensively throughout the organization. Each hotel tracks service
quality indicators on a daily basis. The Ritz-Carlton recognizes that many customer
Chapter 7 Process Management 343

requirements are sensory, and thus, difficult to measure. However, by selecting,

training, and certifying employees in their knowledge of The Ritz-Carlton Gold Stan-
dards of service, they are able to assess their work through appropriate sensory mea-
surements—taste, sight, smell, sound, and touch—and take appropriate actions.
The company uses three types of control processes to deliver quality:

1. Self-control of the individual employee based on their spontaneous and learned

behavior.
2. Basic control mechanism, which is carried out by every member of the work-
force. The first person who detects a problem is empowered to break away from
routine duties, investigate and correct the problem immediately, document the
incident, and then return to their routine.
3. Critical success factor control for critical processes. Process teams use customer
and organizational requirement measurements to determine quality, speed, and
cost performance. These measurements are compared against benchmarks and
customer satisfaction data to determine corrective action and resource allocation.

In addition, The Ritz-Carlton conducts both self-audits and outside audits. Self
audits are carried out internally at all levels, from one individual or function to an
entire hotel. Process walk-throughs occur daily in hotels while senior leaders assess
field operations during formal reviews at various intervals. Outside audits are per-
formed by independent travel and hospitality rating organizations. All audits must
be documented, and any findings must be submitted to the senior leader of the unit
being audited. They are responsible for action and for assessing the implementation
and effectiveness of recommended corrective actions.
An example of a structured quality control process in the service industry is the
“10-Step Monitoring and Evaluation Process” set forth by the Joint Commission on
Accrediting Health Care Organizations. This process, shown in Table 7.5, provides a
detailed sequence of activities for monitoring and evaluating the quality of health
care in an effort to identify problems and improve care. Standards and goals are
defined in steps 2 through 5; measurement is accomplished in step 6; and comparison
and feedback is performed in the remaining steps.
The most common quality characteristics in services, time (waiting time, service
time, delivery time) and number of nonconformances, can be measured rather easily.
Insurance companies, for example, measure the time to complete different trans-
actions such as new issues, claim payments, and cash surrenders. Hospitals measure the
percentage of nosocomial infections and the percentage of unplanned re-admissions to
the emergency room, intensive care, or operating room within, say, 48 hours. Other
quality characteristics are observable. They include the types of errors (wrong kind,
wrong quantity, wrong delivery date, etc.) and behavior (courtesy, promptness, compe-
tency, and so on). Hospitals might monitor the completeness of medical charts and the
quality of radiology readings, measured by a double-reading process.
Simple data collection procedures capture the measurements for service quality con-
trol. Time is easily measured by taking two observations: starting time and finishing
time. Many observed data assume only “yes” or “no” values. For example, a survey of
pharmaceutical operations in a hospital might include the following questions:

• Are drug storage and preparation areas within the pharmacy under the super-
vision of a pharmacist?
• Are drugs requiring special storage conditions properly stored?
• Are drug emergency boxes inspected on a monthly basis?
• Is the drug emergency box record book filled out completely?
344 Part 2 Quality in High-Performance Organizations

Table 7.5 10-Step Monitoring and Evaluation

Process for Health Care Organizations

• Step 1: Assign Responsibility. The emergency department director is responsible for,

and actively participates in, monitoring and evaluation. The director assigns respon-
sibility for the specific duties related to monitoring and evaluation.
• Step 2: Delineate Scope of Care. The department considers the scope of care provided
within emergency services to establish a basis for identifying important aspects of
care to monitor and evaluate. The scope of care is a complete inventory of what the
emergency department does.
• Step 3: Identify Important Aspects of Care. Important aspects of care are those that
are high-risk, high-volume, and/or problem-prone. Staff identify important aspects of
care so that monitoring and evaluation focuses on emergency department activities
with the greatest impact on patient care.
• Step 4: Identify Indicators. Indicators of quality are identified for each important
aspect of care. An indicator is a measurable variable related to a structure, process, or
outcome of care. Examples of possible indicators (all of which would need to be fur-
ther defined) include insufficient staffing for sudden surges in patient volume (struc-
ture), delays in physicians reporting to the emergency room (process), and
transfusion errors (outcome).
• Step 5: Establish Thresholds for Evaluation. A threshold for evaluation is the level or
point at which intensive evaluation of care is triggered. A threshold may be 0% or
100% or any other appropriate level. Emergency department staff should establish a
threshold for each indicator.
• Step 6: Collect and Organize Data. Appropriate emergency department staff should
collect data pertaining to the indicators. Data are organized to facilitate comparison
with the thresholds for evaluation.
• Step 7: Evaluate Care. When the cumulative data related to an indicator reach the
threshold for evaluation, appropriate emergency department staff evaluate the care
provided to determine whether a problem exists. This evaluation, which in many
cases will take the form of peer review, should focus on possible trends and perfor-
mance patterns. The evaluation is designed to identify causes of any problems or
methods by which care or performance may be improved.
• Step 8: Take Actions to Solve Problems. When problems are identified, action plans
are developed, approved at appropriate levels, and enacted to solve the problem or
take the opportunity to improve care.
• Step 9: Assess Actions and Document Improvement. The effectiveness of any actions
taken is assessed and documented. Further actions necessary to solve a problem are
taken and their effectiveness is assessed.
• Step 10: Communicate Relevant Information to the Organization-wide Quality Assur-
ance Program. Findings from and conclusions of monitoring and evaluation,
including actions taken to solve problems and improve care, are documented and
reported monthly through the hospital’s established channels of communication.

Source: “Medical Staff Monitoring and Evaluation—Departmental Review,” Chicago. Copyright by the Joint Com-
mission on Accreditation of Health Care Organizations, Oakbrook Terrace, IL. Reprinted with permission (undated).

Even though human behavior is easily observable, the task of describing and clas-
sifying the observations is far more difficult. The major obstacle is developing opera-
tional definitions of behavioral characteristics. For example, how does one define
courteous versus discourteous, or understanding versus indifference? Defining such
distinctions is best done by comparing behavior against understandable standards.
For instance, a standard for “courtesy” might be to address the customer as “Mr.” or
Chapter 7 Process Management 345

“Ms.” Failure to do so is an instance of an error. “Promptness” might be defined as

greeting a customer within five seconds of entering the store, or answering letters
within two days of receipt. These behaviors can easily be recorded and counted.
Figure 7.5 shows some behavioral questions used in a patient survey by a group of
Southern California hospitals.39

PROCESS IMPROVEMENT
Process improvement is an important business strategy in competitive markets
because
• Customer loyalty is driven by delivered value.
• Delivered value is created by business processes.

Figure 7.5 Sample Hospital Staff Behavior Questions

Admissions
11. Altogether, how long did you have to wait to be admitted?
More than 1 hour: ______ (1) 1 hour: ______ (2) 30 min.: ______ (3) 15 min.: ______ (4)
12. If you had to wait 30 minutes or longer before someone met with you, were you told why?
YES: ______ (1) NO: ______ (2) Did not wait 30 minutes: ______ (3)

Nursing Staff
21. Did a nurse talk to you about the procedures for the day?
Never: ______ (1) Sometimes: ______ (2) Often: ______ (3) Always: ______ (4)
22. Were you on IV fluids?
YES: ______ (1) NO: ______ (2)
A. If YES, did the IV fluids ever run out?
YES: ______ (1) NO: ______ (2)

Medical Staff
28. Did the doctor do what he/she told you he was going to do?
Never: ______ (1) Sometimes: ______ (2) Often: ______ (3) Always: ______ (4)

Housekeeping
36. Did the housekeeper come into your room at least once a day?
YES: ______ (1) NO: ______ (2)
39. Was the bathroom adequately supplied?
Always: ______ (1) Often: ______ (2) Sometimes: ______ (3) Never: ______ (4)

X-Ray
When you received services from the X-ray technician, were the procedures explained to you?
Always: ______ (1) Often: ______ (2) Sometimes: ______ (3) Never: ______ (4)

Food
34. Generally, were your meals served at the same time each day?
Always: ______ (1) Often: ______ (2) Sometimes: ______ (3) Never: ______ (4)

Source: Adapted from K. M. Casarreal, J. L. Mill, and M. A. Plant, “Improving Service Through Patient Surveys in a Multihospital Organiza-
tion,” Hospital & Health Services Administration, Health Administration Press, Ann Arbor, MI, March/April 1986, 41–52. © 1986, Foundation
of the American College of Health Care Executives.
346 Part 2 Quality in High-Performance Organizations

• Sustained success in competitive markets requires a business to continuously

improve delivered value.
• To continuously improve value creation ability, a business must continuously
improve its value creation processes.40
Quality Spotlight
Dell and A good illustration is Dell. Although it has had Improvement should be a proactive
Microsoft some of the highest quality ratings in the PC task of management and be viewed
industry, CEO Michael Dell became obsessed as an opportunity, not simply as a
with finding ways to reduce machine failure reaction to problems and competi-
rates. He concluded that failures were related to tive threats.
the number of times a hard drive was handled
during assembly, and insisted that the number of “touches” be reduced from an
existing level of more than 30 per drive. Production lines were revamped and the
number was reduced to fewer than 15. Soon after, the reject rate of hard drives fell by
40 percent and the overall failure rated dropped by 20 percent.41 Another example is
Microsoft. In 1996, CEO Bill Gates noticed that Microsoft was printing 350,000 sales
reports per year, and that 114 different forms were used in procurement alone.42 After
many discussions with other top managers and employees, a directive was issued
that basically stated that all paper forms and reports must be eliminated unless a
compelling need could be found for them. The results included:
• The total number of paper forms at Microsoft was reduced from 1,000 to 60; of
these, 10 are required by law, 40 are required by outside parties, and 10 are
seldom used.
• Only one procurement form now exists.
• Savings for the first year (1997–98) were estimated at $40 million.
• Studies by accounting firms suggest that the average form costs $145 to process,
and that the average cost of a similar average electronic transaction, as verified
by Microsoft, is $5.
Microsoft accomplished this process improvement by using the company intranet,
“Frequently Asked Questions” (FAQ), search capabilities, and links to related pages
for each electronic form; scanning outside documents and putting them into the
internal system; and developing a self-service approach so that individuals could
handle 90 percent of their administrative information processing needs on their own
desktop PCs.
Many opportunities for improvement exist, including the obvious reductions in
manufacturing defects and cycle times. Organizations should also consider
improving employee morale, satisfaction, and cooperation; improving managerial
practices; improving the design of products with features that better meet customers’
needs, and that can achieve higher performance, higher reliability, and other market-
driven dimensions of quality; and improving the efficiency of manufacturing sys-
tems by reducing workers’ idle time and unnecessary motions, and by eliminating
unnecessary inventory, unnecessary transportation and material handling, and scrap
and rework.
The concept of continuous improvement dates back many years. One of the ear-
liest examples in the United States was at National Cash Register Company (NCR).
After a shipment of defective cash registers was returned in 1894, the company’s
founder discovered unpleasant and unsafe working conditions. He made many
changes, including better lighting, new safety devices, ventilation, lounges, and
lockers. The company offered extensive evening classes to improve employees’ edu-
cation and skills, and instituted a program for soliciting suggestions from factory
Chapter 7 Process Management 347

workers. Workers received cash prizes and other recognitions for their best ideas; by
the 1940s the company was receiving an average of 3,000 suggestions each year.
Over the years, many other companies such as Lincoln Electric and Procter &
Gamble developed innovative and effective improvement approaches. However,
many of these focused almost exclusively on productivity and cost. A focus on
quality improvement, on the other hand, is relatively recent, stimulated by the suc-
cess of the Japanese. Toshiba in 1946, Matsushita Electric in 1950, and Toyota in 1951
initiated some of the earliest formal continuous improvement programs. Toyota, in
particular, pioneered just-in-time (JIT), which showed that companies could make
products efficiently with virtually zero defects. JIT established a philosophy of
–
improvement, which the Japanese call kaizen (pronounced ki -zen).

Kaizen43
Kaizen, which is a Japanese word that means gradual and orderly continuous improve-
ment, is a philosophy that encompasses all business activities and everyone in an orga-
nization. In the kaizen philosophy, improvement in all areas of business—cost, meeting
delivery schedules, employee safety and skill development, supplier relations, new
product development, or productivity—serve to enhance the quality of the firm. Thus,
any activity directed toward improvement falls
Kaizen focuses on small, gradual, under the kaizen umbrella. Activities to estab-
and frequent improvements over the lish traditional quality control systems, install
long term with minimum financial robotics and advanced technology, institute
investment, and participation by employee suggestion systems, maintain equip-
everyone in the organization.
ment, and implement just-in-time production
systems all lead to improvement.
At Nissan Motor Co., Ltd., for instance, management seriously considers any sug-
gestion that saves at least 0.6 seconds in a production process. The concept of kaizen is
so deeply ingrained in the minds of both managers and workers that they often do not
even realize they are thinking in terms of improvement. The Kaizen Institute
(http://www.kaizen-institute.com) suggests some basic tips for implementing
kaizen. These suggestions include discarding conventional fixed ideas; thinking of
how to do something, not why it cannot be done; not seeking perfection; not making
excuses, but questioning current practices; and seeking the “wisdom of ten people
rather than the knowledge of one.” By instilling kaizen into people and training them
in basic quality improvement tools, workers can build this philosophy into their work
and continually seek improvement in their jobs. This process-oriented approach to
improvement encourages constant communication among workers and managers.
Three things are required for a successful kaizen program: operating practices,
total involvement, and training.44 First, operating practices expose new improvement
opportunities. Practices such as just-in-time reveal waste and inefficiency as well as
poor quality. Second, in kaizen, every employee strives for improvement. Top man-
agement, for example, views improvement as an inherent component of corporate
strategy and provides support to improvement activities by allocating resources
effectively and providing reward structures that are conducive to improvement.
Middle management can implement top management’s improvement goals by estab-
lishing, upgrading, and maintaining operating standards that reflect those goals; by
improving cooperation between departments; and by making employees conscious
of their responsibility for improvement and developing their problem-solving skills
through training. Supervisors can direct more of their attention to improvement
rather than “supervision,” which, in turn, facilitates communication and offers better
348 Part 2 Quality in High-Performance Organizations

guidance to workers. Finally, workers can engage in improvement through sugges-

tion systems and small group activities, self-development programs that teach prac-
tical problem-solving techniques, and enhanced job performance skills. All these
improvements require significant training, both in the philosophy and in tools and
techniques.
The kaizen philosophy has been widely adopted and is used by many firms in the
United States and around the world. For example, at ENBI Corporation, a New York
manufacturer of precision metal shafts and roller assemblies for the printer, copier,
and fax machine markets, kaizen projects have resulted in a 48 percent increase in
productivity, a 30 percent reduction in cycle time, and a 73 percent reduction in
inventory.45 Kaizen has been successfully applied in the Mercedes-Benz truck factory
in Brazil, resulting in reductions of 30 percent in manufacturing space, 45 percent in
inventory, 70 percent in lead time, and 70 percent in setup time over a three-year
period. Sixteen employees have full-time responsibility for kaizen activities.46

Flexibility and Cycle Time Reduction

Success in globally competitive markets requires a capacity for rapid change and flex-
ibility. Electronic commerce, for instance, requires more rapid, flexible, and cus-
tomized responses than traditional market outlets. Flexibility might demand special
strategies such as modular designs, sharing components, sharing manufacturing
lines, and specialized training for employees. It
also involves outsourcing decisions, agreements Flexibility refers to the ability to
with key suppliers, and innovative partnering adapt quickly and effectively to
arrangements. changing requirements. It might
mean rapid changeover from one
One important business metric that comple-
product to another, rapid response
ments flexibility is cycle time. Cycle time refers to changing demands, or the ability
to the time it takes to accomplish one cycle of a to produce a wide range of cus-
process (e.g., the time from when a customer tomized services.
orders a product to the time that it is delivered,
or the time to introduce a new product). Reductions in cycle time serve two purposes.
First, they speed up work processes so that customer response is improved. Second,
reductions in cycle time can only be accomplished by streamlining and simplifying
processes to eliminate non-value-added steps such as rework. This approach forces
improvements in quality by reducing the potential for mistakes and errors. By
reducing non-value-added steps, costs are reduced as well. Thus, cycle time reduc-
tions often drive simultaneous improvements in organization, quality, cost, and pro-
ductivity. Significant reductions in cycle time cannot be achieved simply by focusing
on individual subprocesses; cross-functional processes must be examined all across
the organization. Through these activities, the company comes to understand work at
Quality Spotlight the organizational level and to engage in cooperative behaviors.
Proctor & One example of cycle time reduction is Procter & Gamble’s over-the-counter
Gamble
(OTC) clinical division, which conducts clinical studies that involve testing drugs,
health care products, or treatments in humans.47 Such testing follows rigorous design,
conduct, analysis, and summary of the data collected. P&G had at least four different
ways to perform a clinical study and needed to find the best way to meet its research
and development needs. They chose to focus on cycle time reduction. Their approach
built on fundamental TQ principles: focusing on the customer, fact-based decisions,
continual improvement, empowerment, the right leadership structure, and an under-
standing of work processes. An example is shown in Figure 7.6. The team found that
final reports took months to prepare. Only by mapping the existing process did they
Chapter 7 Process Management 349

Figure 7.6 Final Report “Is” and “Should” Process Map Example

How a Final Report How a Final Report

Is Actually Prepared Should Be Prepared

Initial draft report

Treatments Treatments prepared from basic
complete complete protocol information
during treatment
phase

Complete statistics Complete statistics

Draft statistical and Draft statistical and

medical summaries medical summaries

Integrate summaries,
make consistent with Integrate summaries
basic protocol in draft report
into draft report

Sequential review, negotiate Perform quality Board review of

changes one-on-one control corrections draft product

Perform quality
control corrections Core teams meet to
integrate comments,
final sign-off

Circulate for final sign-off

Yes Investigator
Changes
required? signs final
report
No

Investigator
signs final
report

Source: David A. McCamey, Robert W. Bogs, and Linda M. Bayuk, “More, Better, Faster From Total Quality Effort,” Quality Progress, August
1999, 43–50. © 1999. American Society for Quality. Reprinted with permission.
350 Part 2 Quality in High-Performance Organizations

fully understand the causes of long production times and the amount of rework and
recycling during review and sign-off. By restructuring the activities from sequential
to parallel work and identifying critical measurements to monitor the process, they
were able to reduce the time to less than four weeks.
Agility is a term that is commonly used to characterize flexibility and short cycle
times. Agility is crucial to such customer-focused strategies as mass customization,
which requires rapid response and flexibility to changing consumer demand.
Enablers of agility include close relationships with customers to understand their
emerging needs and requirements, empowering employees as decision makers,
effective manufacturing and information technology, close supplier and partner rela-
tionships, and breakthrough improvement (discussed next).

Breakthrough Improvement
Breakthrough improvement refers to discontinuous change, as opposed to the
gradual, continuous improvement philosophy of kaizen. Breakthrough improve-
ments result from innovative and creative thinking; often these are motivated by
stretch goals, or breakthrough objectives.
When a goal of 10 percent improvement is Stretch goals force an organization
set, managers or engineers can usually meet it to think in a radically different way,
with some minor improvements. However, and to encourage major improve-
when the goal is 1,000 percent improvement, ments as well as incremental ones.
employees must be creative and think “outside
of the box.” The seemingly impossible is often achieved, yielding dramatic improve-
ments and boosting morale. Motorola’s Six Sigma thrust was driven by a goal of
improving product and services quality ten times within two years, and at least 100-
fold within four years.
For stretch goals to be successful, they must derive unambiguously from corpo-
rate strategy. Organizations must not set goals that result in unreasonable stress to
employees or punish failure. In addition, they must provide appropriate help and
tools to accomplish the task. Two approaches for breakthrough improvement that
help companies achieve stretch goals are benchmarking and reengineering.

Benchmarking The development and realization of improvement objectives, partic-

ularly stretch objectives, is often aided through the process of benchmarking. Bench-
marking is defined as “measuring your performance against that of best-in-class
companies, determining how the best-in-class achieve those performance levels, and
using the information as a basis for your own company’s targets, strategies, and
implementation,”48 or more simply, “the search of industry best practices that lead to
superior performance.”49 The term best practices refers to approaches that produce
exceptional results, are usually innovative in terms of the use of technology or human
resources, and are recognized by customers or industry experts.
Through benchmarking, a company discovers its strengths and weaknesses and
those of other industry leaders and learns how to incorporate the best practices into
its own operations. Benchmarking can provide motivation to achieve stretch goals by
helping employees to see what others can accomplish. For example, to meet a stretch
target of reducing the time to build new 747 and 767 airplanes at Boeing from 18
months (in 1992) to 8 months, teams studied the world’s best producers of everything
from computers to ships. By 1996 the time had been reduced to 10 months.50
The concept of benchmarking is not new.51 In the early 1800s Francis Lowell, a
New England industrialist, traveled to England to study manufacturing techniques
Chapter 7 Process Management 351

at the best British mill factories. Henry Ford created the assembly line after taking a
tour of a Chicago slaughterhouse and watching carcasses, hung on hooks mounted
on a monorail, move from one workstation to another. Toyota’s just-in-time produc-
tion system was influenced by the replenishment practices of U.S. supermarkets.
Modern benchmarking was initiated by Xerox and has since become a common prac-
tice among leading firms.
An organization may decide to engage in benchmarking for several reasons. It
eliminates “reinventing the wheel” along with associated wasted time and resources.
It helps identify performance gaps between an organization and competitors, leading
to realistic goals. It encourages employees to continuously innovate. Finally, because
it is a process of continuous learning, benchmarking emphasizes sensitivity to the
changing needs of customers.52
Three major types of benchmarking have emerged in business. Competitive
benchmarking involves studying products, processes, or business performance of
competitors in the same industry to compare pricing, technical quality, features, and
other quality or performance characteristics of products and services. For example, a
television cable company might compare its customer satisfaction rating or service
response time to other cable companies; a manufacturer of TVs might compare its
unit production costs or field failure rates against competitors. Significant gaps sug-
gest key opportunities for improvement. Competitive benchmarking was refined
into a science by Xerox during the 1970s and 1980s.
Process benchmarking emerged soon after. It centers on key work processes such
as distribution, order entry, or employee training. This type of benchmarking identi-
fies the most effective practices in companies that perform similar functions, no matter
in what industry. For example, Xerox adapted the warehousing and distribution prac-
tices of L.L. Bean for its spare parts distribution system. Texas Instruments studied the
kitting (order preparation) practices of six companies, including Mary Kay Cosmetics,
and designed a process that captured the best practices of each of them, cutting kitting
cycle time in half. A General Mills plant in Lodi, California, had an average machine
changeover time of three hours. Then somebody said, “From three hours to 10 min-
utes!” Employees went to a NASCAR track and videotaped the pit crews, and studied
the process to identify how the principles could be applied to the production
changeover processes. Several months later, the average time fell to 17 minutes.53 The
U.S. Marine Corps studied companies such as Wal-Mart and United Parcel Service to
improve its supply chain processes, changing its inventory policies and learning to
employ modern technology like handheld computers. Thus, companies should not
aim benchmarking solely at direct competitors or similar organizations; in fact, they
would be mistaken to do so. If a company simply benchmarks within its own industry,
it may merely be competitive and have a slight edge in those areas in which it is the
industry leader. However, if benchmarks are adopted from outside the industry, a
company may learn ideas and processes as well as new applications that allow it to
surpass the best within its own industry and to achieve distinctive superiority.
Finally, strategic benchmarking examines how companies compete and seeks the
winning strategies that have led to competitive advantage and market success. The
typical benchmarking process can be described by the process used at AT&T.
1. Project conception: Identify the need and decide to benchmark.
2. Planning: Determine the scope and objectives, and develop a benchmarking
plan.
3. Preliminary data collection: Collect data on industry companies and similar
processes as well as detailed data on your own processes.
352 Part 2 Quality in High-Performance Organizations

4. Best-in-class selection: Select companies with best-in-class processes.

5. Best-in-class collection: Collect detailed data from companies with best-in-class
processes.
6. Assessment: Compare your own and best-in-class processes and develop recom-
mendations.
7. Implementation planning: Develop operational improvement plans to attain
superior performance.
8. Implementation: Enact operational plans and monitor process improvements.
9. Recalibration: Update benchmark findings and assess improvements in processes.54

Reengineering The process of reengineering has been defined as “the fundamental

rethinking and radical redesign of business processes to achieve dramatic improve-
ments in critical, contemporary measures of performance, such as cost, quality, ser-
vice, and speed.”55 Such questioning often
uncovers obsolete, erroneous, or inappropriate
assumptions. Radical redesign involves tossing Reengineering involves asking basic
out existing procedures and reinventing the questions about business processes:
process, not just incrementally improving it. The Why do we do it? and Why is it
done this way?
goal is to achieve quantum leaps in perfor-
mance. For example, IBM Credit Corporation
cut the process of financing IBM computers, software, and services from seven days
to four hours by rethinking the process. Originally, the process was designed to
handle difficult applications and required four highly trained specialists and a series
of handoffs. The actual work took only about 1.5 hours; the rest of the time was spent
in transit or delay. By questioning the assumption that every application was unique
and difficult to process, IBM Credit Corporation was able to replace the specialists by
a single individual supported by a user-friendly computer system that provided
access to all the data and tools that the specialists would use.
Successful reengineering requires fundamental understanding of processes, cre-
ative thinking to break away from old traditions and assumptions, and effective use
of information technology. PepsiCo has embarked on a program to reengineer all of
its key business processes, such as selling and delivery, equipment service and repair,
procurement, and financial reporting. In the selling and delivery of its products, for
example, customer reps typically experience stockouts of as much as 25 percent of
product by the end of the day, resulting in late-day stops not getting full deliveries
and the need to return to those accounts. Many other routes return with overstock of
other products, increasing handling costs. By redesigning the system to include
handheld computers, customer reps can confirm and deliver that day’s order and
also take a future order for the next delivery to that customer.56
Benchmarking can greatly assist reengineering efforts. Reengineering without
benchmarking probably will produce 5 to 10 percent improvements; benchmarking
can increase this percentage to 50 or 75 percent. When GTE reengineered eight core
processes of its telephone operations, it examined the best practices of some 84 com-
panies from diverse industries. By studying outside best practices, a company can
identify and import new technology, skills, structures, training, and capabilities.57

PROCESS MANAGEMENT IN THE BALDRIGE CRITERIA, ISO 9000, AND

SIX SIGMA
Category 6 of the 2003 Malcolm Baldrige National Quality Award Criteria for Perfor-
mance Excellence is Process Management. Item 6.1, Value Creation Processes, examines
Chapter 7 Process Management 353

how an organization identifies and manages its key processes for creating customer
value and achieving business success and growth. This process includes how an
organization incorporates customer and supplier input into determining its key
process requirements; how processes are designed to meet these requirements; and
how new technology, organizational learning, cycle time, productivity, cost control,
and other efficiency and effectiveness factors are designed into processes. This cri-
teria item also seeks to understand how key performance measures and indicators
are used for controlling and improving processes, how costs associated with inspec-
tions, tests, and audits are minimized, and how defects and rework are prevented.
Finally, it calls for information on how value creation processes are improved to
achieve better performance, reduce variability, improve products and services, keep
processes current with business needs and directions, and how improvements are
shared with other organizational units. It might include Six Sigma approaches, use of
ISO 9000:2000, or other process improvement tools. Item 6.2, Support Processes, calls
for similar information about key support processes, particularly on how they are
designed to meet appropriate internal and external customer requirements, and how
they are controlled and improved.
Many aspects of ISO 9000:2000 deal with process management activities (in fact,
the entire standards are focused on an organization’s ability to understand, define,
and document its processes). For example, one of the requirements is that organiza-
tions plan and control the design and development of products and manage the inter-
faces between different groups involved in design and development to ensure
effective communication and clear assignment of responsibility. The standards also
address the management of inputs and outputs for design and development activi-
ties, and use of systematic reviews to evaluate the ability to meet requirements, iden-
tify any problems, and propose necessary actions; purchasing processes; control of
production and service, including measurement and process validation; control of
monitoring and measuring devices used to evaluate conformity; analysis and
improvement; monitoring and measurement of quality management processes; and
continual improvement, including preventive and corrective action. The standard
requires that an organization use its quality policy, objectives, audit results, data
analysis, corrective and preventive actions, and management reviews to continually
improve its quality management system’s effectiveness.
Six Sigma is based on understanding and improving processes on a project-by-
project basis. Two of the advantages of Six Sigma are that projects are clearly linked to
strategic needs and organizational objectives, and that projects are managed under a
common framework. This linkage enables projects to be timely and relevant, and
ensures that controls are put in place to leverage the improvements that are identified.
The Six Sigma team-project approach provides a natural fit with the requirements
of product and process design, control, and improvement. A good system for process
management is a prerequisite to Six Sigma. Obviously, to effectively design or improve
a process you first need to understand it. If an organization does not have an ongoing
system of process management, it will be quite difficult to implement Six Sigma. Some
key processes that are necessary to implement Six Sigma include the following:
• Project selection and definition
• Financial review
• Training
• Leadership for project leaders
• Project leader mentoring
• Certification for Six Sigma specialists
354 Part 2 Quality in High-Performance Organizations

• Project tracking and reporting

• Information management and dissemination
It is important to note that Six Sigma is not a substitute for continuous improve-
ment. Because of its reliance on specialists—the “black belts” who lead the high-profile
projects—it becomes quite easy to ignore simple improvements that can be achieved at
the process owner level. In fact, it can easily alienate process owners who, instead of
seeking continuous improvements, leave them to the specialists. Thus, the objectives
are somewhat different, yet both approaches can easily support one another. Process
owners should be trained in Six Sigma methods and be involved in formal Six Sigma
projects, but still have responsibility for continuous improvement on a daily basis.

QUALITY IN PRACTICE
z GOLD STAR CHILI: PROCESS MANAGEMENT58
(We encourage you to read the Gold Star Chili case introduced to facilitate the process. For example, a
in Chapter 4 first for background information site-selection software package is used to evaluate
about the company.) Gold Star Chili, a chain of market potential using a variety of demographic
chili restaurants in the greater Cincinnati area, data. Computer-aided design is also used for site
views process management activities as critical to development. Because franchise process delays are
its business success. Quality improvement teams, costly, the process helps to eliminate variability,
technology, and strong relationships with sup- reduce cycle time, and cut down on problems that
pliers ensure that their chili is produced in a con- might occur during development and introduc-
sistent fashion with respect to taste, viscosity, and tion. Procedure manuals have been developed to
general quality. provide each store with the necessary information
Figure 7.7 shows a process-based organization and training to ensure that they operate efficiently.
of the company. Three major value-creation Restaurant processes include Cash Register,
processes link the operation of the company to its Steam Table, Drive-Thru, Tables, Bussers, and
customers and other stakeholders: Management. These processes are designed to
ensure that the principal requirements of all cus-
1. Franchising
tomers, such as being served in a timely manner
2. Restaurant operations
and receiving their order accurately, are met. Prior
3. Manufacturing/distribution
to the opening of each restaurant, training sessions
Sustaining these processes are various support ensure that these processes are performed correctly
processes, such as research and development, and according to company standards. Each
human resources, accounting, purchasing, opera- employee is cross-trained to perform each function.
tions, training, marketing, and customer satisfac- Chili production is performed at the Gold Star
tion, as well as design processes for new products, Commissary. A nine-member team, cross-trained
menus, and facilities. Production/delivery to perform each process, is responsible for adding
processes are coordinated at the corporate office beef, spices, tomatoes, and water during produc-
and documented in manuals provided to each tion. The chili must pass a series of strict tests
store. Internal customer needs are addressed in before being shipped to restaurants. Control of
quality improvement team meetings. chili production is assisted by various pieces of
The franchising process, outlined in Figure 7.8, equipment for precise measurement. For example,
is designed to ensure a smooth and successful a Bostwick Viscosity Meter determines the consis-
start-up that meets company objectives. The tency of the chili, determining whether it is too
process has been refined over time and includes thick or thin, and a flow meter adds the proper
extensive interaction with prospective and amount of water. Other equipment analyzes the
approved franchisees. New technology has been fat content of the ground beef used in the chili.
Chapter 7 Process Management 355

Figure 7.7 Gold Star Chili, Inc. Organization

Indirect Direct
Customers Customers
Franchise
Applicants

Franchising FRANCHISEES
Core Process
Selection Site Restaurant
Approval Development Core Process Restaurant
Customers

FAC Potential
Support Processes Co.
Product Customers
Stores
Suppliers
R/D Operations

H/R Training
Advertising
Agency Accounting Marketing

Purchasing CSR
Legal
Receptionist POS Systems

Service Potential
Suppliers Manufacturing/Distribution Customers
Core Process
Co-packers Manufacturing Mail Order
Receiving Shipping
Consultants
Brokers Retail/Wholesaler

Warehousing Retail

Indirect Customers

Shareholders
Regulatory Agencies

Source: Courtesy of Gold Star Chili. Used with permission.

The final taste test is performed by members of the reporting their activities. They use information
commissary to ensure that each batch meets estab- from customer comment cards, measurements of
lished standards. waiting time for drive-through service, and feed-
The commissary team also serves as a quality back from restaurant managers to analyze and
improvement team. Since July 1996, they have met adjust processes as necessary. Store performance
informally on a daily basis to discuss processes and quality are measured quarterly through visits
and feedback from internal and external cus- by corporate employees. Monthly meetings of key
tomers; they use a formal improvement process in process leaders and daily team meetings analyze
356 Part 2 Quality in High-Performance Organizations

Figure 7.8 Gold Star Chili Franchising Process

GOLD STAR CHILI, INC.

650 Lunken Park Drive
Cincinnati, Ohio 45226
(513) 231-4541

Steps to a Gold Star Chili Franchise

1. Submit a fully completed franchise application. We will respond to you within 15

business days on your applications.
2. You will receive for your review our Uniform Franchise Offering Circular and Exhibits.
At this time you will sign and date the Receipt of Offering Circular.
3. Ten days after we receive your Receipt of Offering Circular, you will be sent a Confiden-
tiality Agreement which you must hold for 5 days, then sign, date, and return to us.
4. Schedule and complete a meeting with support staff of Gold Star Chili in our Cincin-
nati location.
5. Attend a two-day orientation in Cincinnati. You will work with our Operations and
Training personnel who will review your qualifications and objectives.
6. You will then be notified of your approval or disapproval of your request to become a
Gold Star Chili Franchisee.
7. Gold Star personnel will begin the process of identifying and approving a restaurant
location. A scope of work per Gold Star standards will be completed.
8. Sign Gold Star Chili Franchise Agreement and pay initial fee.
9. Begin construction.
10. Complete the training program.
11. Develop an opening plan.
12. Open your Gold Star Chili Restaurant.

Source: Courtesy of Gold Star Chili. Used with permission.

processes for improvement opportunities, such as The selection of suppliers is driven by two cri-
changes in procedures or the introduction of new teria: quality and price. Gold Star partners with
technology. For example, several restaurants dis- key product suppliers for restaurant equipment
covered large clumps of beef in the chili. The team and food products. They seek out local companies
determined that a new beef pump was not and educate them in their business needs and
grinding the meat correctly. practices. For example, they have invited suppliers
Chapter 7 Process Management 357

to attend a seminar on the Gold Star Chili total example, by sharing information with one key
quality philosophy and suppliers’ role in the paper supplier, the supplier was able to redesign
process. To ensure that raw materials meet Gold Gold Star’s purchasing process, enabling the sup-
Star specifications, potential and current suppliers plier to increase minimum order levels for deliv-
visit the commissary to be informed about what eries, which reduced Gold Star’s overall costs. The
Gold Star requires and what technologies the com- company conducts annual cost audits to deter-
pany expects them to have. Suppliers are required mine whether costs might be lowered without sac-
to meet or exceed quality standards and provide rificing quality. If an alternative supplier is found
products at reasonable prices. Gold Star recently with similar quality, service, and lower costs, Gold
embarked on establishing a supplier scorecard to Star will approach its current supplier with the
measure and monitor supplier performance. The opportunity to lower costs.
scorecard includes ratings on on-time delivery or
service, accuracy of invoicing and shipping docu- Key Issues for Discussion
ments, customer service, cost and value, technical
expertise, and supplier quality initiatives, and 1. How does the organization structure in
seeks to identify strengths and targeted areas for Figure 7.7 reflect Deming’s view of a produc-
improvement in each key area. tion system as discussed in Chapter 1?
Gold Star attempts to establish long-term rela- 2. As a small, privately held company, Gold
tionships with its suppliers. Company managers Star is relatively new at applying total
visit suppliers’ facilities on a regular basis to solicit quality management approaches to its
comments and complaints, and to discuss areas for process management. Based on the informa-
improvement. During these discussions, suppliers tion provided here, what suggestions might
often provide Gold Star with information about you provide in the process management area
new technologies, suggestions for process as the company matures in its journey to
improvements, and other helpful knowledge. For total quality?

QUALITY IN PRACTICE
z BRINGING PROCESS MANAGEMENT
In 1991, 200 angry parents, mostly Hispanic, con-
TO EDUCATION59
of the socioeconomic diversity of its students. The
fronted Gerald Anderson in his first week as super- success of BISD has been a never-ending journey
intendent of the Brazosport Independent School of dedication and hard work, based on a philos-
District (BISD), then considered among the worst ophy of no excuses, and the belief that all children
districts in Texas. They demanded to know why can learn regardless of family background, sex, or
their children had the worst test scores and what socioeconomic status. The strategy that Brazosport
he was going to do about it. He seized the chal- employed was an eight-step process to improve
lenge, developing process-based techniques that the learning process. The process, based on TQ
raised achievement levels of all students. Today, principles and Effective Schools research that iden-
this 13,500-student school district 50 miles south of tifies characteristics of schools where all students
Houston is the largest Exemplary school district in succeed, is summarized here.
the state of Texas, a designation earned by only 121
districts based on tough accountability ratings. Bra- 1. Educators examine results of state profi-
zosport was one of only two educational institu- ciency tests, identifying areas where students
tions to receive site visits for the Malcolm Baldrige need to improve.
National Quality Award in the first year of educa- 2. Teachers develop a time line, determining
tion sector eligibility (1999). Schools across the what they will teach and how much time
country have begun to benchmark their processes. they’ll spend on each objective based on the
Brazosport is particularly noteworthy because needs of the students.
358 Part 2 Quality in High-Performance Organizations

3. Teachers devise daily 10-minute segments to “The process is nothing but effective teaching
work on concepts where students need help. practices,” states Patricia Davenport, former
Each teacher gets an instructional focus sheet director of curriculum and instruction at Bra-
stating the objectives to be taught, dates for zosport. However, its uniqueness lies in its imple-
teaching each objective, and dates when stu- mentation as a disciplined process. Brazosport
dents will be assessed on them. piloted the program for two years in Velasco Ele-
4. Students are constantly assessed to deter- mentary, its school with the highest percentage of
mine whether they have mastered the con- economically disadvantaged students—82 per-
cepts, giving teachers new data. cent—and the lowest test scores on the state
5. Students receive tutorial time so that teachers assessment. In two years’ time, students went
can reteach areas that students have not from less than 30 percent mastering the state
mastered. assessment to 70 percent.
6. Students who master the concepts take part Figure 7.9 shows the results of standardized
in enrichment activities. mathematics tests over an eight-year period. Sim-
7. Teachers receive maintenance booklets to ilar results were achieved in writing and reading
help them reteach key concepts and keep stu- as well. The American Productivity and Quality
dents on track. They meet frequently in Center, a Houston-based consulting firm, trains
teams to review progress. school districts across the nation in this process.
8. Principals monitor the instructional process
by visiting classrooms and meeting with
teachers to discuss students’ progress.

Figure 7.9 Mathematics Standardized Test Results for Brazosport Independent School District

100 97 98 98
X X X
94
93 X X 93
X
90 X 90
86
X
81
79
80
X 76 X
X 79
X

70

X 64

60
X 57
55 X

X 52
50

1991–92 1992–93 1993–94 1994–95 1995–96 1996–97 1997–98 1998–99

All Students A. American Hispanic X White X Economically

Disadvantaged

Source: Brazosport Independent School District, Freeport, Texas.

Chapter 7 Process Management 359

Key Issues for Discussion 2. What infrastructure would a school district

need to make this process effective? Com-
1. How does the eight-step process exemplify ment specifically on leadership and human
principles of total quality and process man- resource issues that would need to be
agement? addressed.

z REVIEW QUESTIONS
1. Define process management and its key components. Why is it important to any
business?
2. Summarize the principles on which AT&T bases its process management
methodology.
3. Define and illustrate the principal categories of processes.
4. Why must processes be repeatable and measurable?
5. Summarize the leading practices in process management.
6. Describe the product design and development process.
7. How can product design affect manufacturability? Explain the concept and
importance of design for manufacturability.
8. Summarize the key design practices for high quality in manufacturing and
assembly.
9. Discuss social responsibility issues relating to product design facing businesses
today.
10. Discuss the importance of and impediments to reducing the time for product
development.
11. Describe the basic approach used for designing value-creation and support
processes.
12. Explain the differences between designing manufactured products and ser-
vices. How should the design of services be approached?
13. Describe the three components of any control system.
14. How can one check whether process owners have true responsibility for con-
trolling a process?
us Mater
15. Explain the concept of after-action review. Bon

ial
s
16. Why is it important to establish strong relationships with suppliers? What are
some good supplier management practices? (See Bonus Materials.)
17. What is the purpose of supplier certification? Explain some of the common
practices for supplier certification. (See Bonus Materials.)
18. Explain the Japanese concept of kaizen. How does it differ from traditional
Western approaches to improvement?
19. How are projects considered as vital value-creation processes?
20. Explain the life cycle of a project from a TQ perspective.
21. What aspects of Six Sigma projects are process-related? Briefly define them.
22. What is flexibility and why is it important to a modern organization?
23. What are the key impacts of cycle time reduction?
24. What is a stretch goal? How can stretch goals help an organization?
25. Define benchmarking and list its benefits.
26. What is reengineering? How does it relate to TQ practices?
27. Discuss how process management is addressed in the Baldrige criteria, ISO
9000:2000, and Six Sigma.
360 Part 2 Quality in High-Performance Organizations

z DISCUSSION QUESTIONS
1. Identify some of the key processes associated with the following business activ-
ities for a typical company: sales and marketing, supply chain management,
managing information technology, and managing human resources.
2. Provide some examples of processes that are repeatable and measurable and
some that are not.
3. List some of the common processes that a student performs. How can these
processes be improved?
4. Are classroom examinations a means of control or improvement? What should
they be?
5. Why are modern products more difficult to manufacture than traditional prod-
ucts such as bicycles or hand tools?
6. How can kaizen be applied in a classroom?
7. The kaizen philosophy seeks to encourage suggestions, not to find excuses for
failing to improve. Typical excuses are “If it’s not broken, don’t fix it,” “I’m too
busy to work on it,” and “It’s not in the budget.” Think of at least five other
excuses why people don’t try to improve.
8. How might Six Sigma projects be applied to course design?
9. What is the “product development process” a school might use for designing and
introducing a new course? How might it be improved to reduce “time-to-market”?
10. How can a manager effectively balance the three key components of a service
system design?
11. In a true story related by our colleague Professor James W. Dean, Jr., the general
manager of an elevator company was frustrated with the lack of cooperation
between the mechanical engineers who designed new elevators and the manu-
facturing engineers who determined how to produce them.60 The mechanical
engineers would often completely design a new elevator without consulting
with the manufacturing engineers, and then expect the factory to somehow
figure out how to build it. Often the new products were difficult or nearly
impossible to build, and their quality and cost suffered as a result. The designs
were sent back to the mechanical engineers (often more than once) for engi-
neering changes to improve their manufacturability, and customers sometimes
waited for months for deliveries. The general manager believed that if the two
groups of engineers would communicate early in the design process, many of
the problems would be solved. At his wits’ end, he found a large empty room in
the plant and had both groups moved into it. The manager relaxed a bit, but a
few weeks later he returned to a surprise. The two groups of engineers had
finally learned to cooperate—by building a wall of bookcases and file cabinets
right down the middle of the room, separating them from each other! What
would you do in this situation?
12. Legal Sea Foods operates several restaurants and fish markets in the Boston area
and other East Coast locations. The company’s standards of excellence mandate
that it serves only the freshest, highest-quality seafood. It guarantees the quality
by buying only the “top of the catch” fish daily. Although Legal Sea Foods tries to
make available the widest variety every day, certain species of fish are subject to
migratory patterns and are not always present in New England waters. Weather
conditions may also prevent local fishermen from fishing in certain areas.
Freshly caught fish are rushed to the company’s quality control center where
they are cut and filleted in an environmentally controlled state-of-the-art
Chapter 7 Process Management 361

facility. All shellfish come from government-certified beds and are tested in an
in-house microbiology laboratory for wholesomeness and purity. There are
even special lobster storage tanks so that all lobsters are held under optimum
conditions, in clean, pollution-free water. Every seafood item is inspected for
quality eight separate times before it reaches the table.
At Legal Sea Foods’ restaurants, each meal is cooked to order. Even though
servers make every effort to deliver all meals within minutes of each other, they
will not jeopardize the quality of an item by holding it beneath a heat lamp until
the entire order is ready. The service staff is trained to work as a team for better
service. More than one service person frequently delivers food to a table. When
any item is ready, the closest available person serves it. Customer questions can
be directed to any employee, not just the person who took the initial order.
a. What are the major processes performed by Legal Sea Foods? How does the
process design support its goal of serving only the freshest, highest-quality
seafood?
b. Where would Legal Sea Foods fall on the three-dimensional classification of
service organizations? Is its process design consistent with this classification?
13. The president of Circle H assigned you to perform a complete investigation to
determine the causes of certain quality problems and to recommend appro-
priate corrective action. You have authority to talk to any other person within
the company.
The early stages of your investigation establish that the three reasons most
often cited by customers are symptomatic of some major quality problems in the
company’s operations. In proceeding with the audit, you decide to review all
available data, which may yield indications of the root causes of these problems.
Further investigation reveals that, over a recent four-month period, a proce-
dural change was made in the order approval process. You wish to find out
whether this change caused a significant difference in the amount of time
required to process an order from field sales through shipping. You therefore
decide to investigate this particular situation.
On completion of your investigation into the problems with order pro-
cessing, you determine that the change in procedures for order approval led to
an increase in the amount of time required to restock goods in the customers’
stores. You want to recommend corrective action for this problem, but you first
do additional investigation as to why the change was made. You learn that,
because of large losses on delinquent accounts receivable, the change was made
to require that the credit manager approve all restock orders. This approval
requirement added an average of three hours to the amount of internal pro-
cessing time needed for a restock order.
On review of your report, the president of Circle H takes note of administra-
tive problems whose existence he had never suspected. To assure that corrective
action will be effective and sustained, the president assigns you to take charge
of the corrective action program.61
a. What types of data would be most useful to review for clues as to why the
three major customer complaints occurred?
b. How would you investigate whether the change in the order approval
process had a significant effect on order processing time?
c. Given your knowledge of problems in both order processing and accounts
receivable, what should you do?
14. McDonald’s used to make food to stock, storing sandwiches in a large tray used to
fulfill customer orders. When sales went flat in the mid 1990s and independent
362 Part 2 Quality in High-Performance Organizations

market testing showed a widening gap with competition in food quality,

McDonald’s recognized that the make-to-stock process was not meeting customer
demands. After five years of lab and market testing, McDonald’s rolled out the
new “Just for You” system, which began in March 1998, to create a make-to-order
environment. This shift required a massive change in technology with computers
to coordinate orders; food production equipment using “rapid toasters” and tem-
perature-controlled “launching zones” to replace the old heat lamps and holding
bins; new food preparation tables, and retraining efforts for the entire domestic
food production organization of more than 600,000 crew members. However, this
system has apparently backfired. Sales did not improve as expected and cus-
tomers complained about slow service. The new system increased the average ser-
vice time 2 to 3 minutes per order, and 15-minute waits were not uncommon.
McDonald’s stock price decreased, and rivals such as Wendy’s captured addi-
tional market share.62 What lessons does this experience suggest for process man-
agement? What might McDonald’s have done differently?
15. The Cincinnati Water Works (CWW) serves approximately 1 million customers.63
Its billing system allows customer service representatives (CSRs) to retrieve
information from customer accounts quickly using almost any piece of data such
as customer name, address, phone number, social security number, and so on.
Besides a customer’s account history, the system contains everything that was
said in a call, including documentation of past problems and their resolution. An
integrated voice response system provides automated phone support for bill
paying and account balances, tells customers of the approximate wait time to
speak to a CSR, and allows the customers to leave a message for a CSR to return
a call. An information board in the department shows the number of customers
waiting, average length of time waiting, and the number of CSRs that are busy
and doing post-call work. A pop-up screen provides CSRs with customer data
before the phone rings so that he or she will have the customer’s information
before they even say hello. Work orders taken by CSRs, such as a broken water
main or leaking meter, are routed automatically to a field service supervisor for
immediate attention. This system is also used internally to allocate maintenance
workers when a problem arises at a pumping station or treatment facility. A geo-
graphic information system is used for mapping the locations of water mains
and fire hydrants, and provides field service employees, meter readers, and con-
tractors exact information to accomplish their work. Handheld meter readers are
used to locate meters and download data into computers. Touch pad devices
provide exterior connections to inside meters, eliminating the necessity to enter
a house or building. CWW is also investigating automated meter readers and
radio frequency devices that simply require a company van to drive by the
building to automatically obtain readings. Discuss how technology has affected
the processes of CWW. What specific types of improvements (quality, cycle time,
etc.) were these applications designed to address? Can you think of similar uses
of these technologies in other service applications?

z PROJECTS, ETC.
1. Identify some of the major processes a student encounters in a college or uni-
versity. What types of noneducational institutions perform similar processes
and might be candidates for benchmarking?
Chapter 7 Process Management 363

2. Write down your process for preparing for an exam. How could this process be
improved to make it shorter and/or more effective? Compare your process to
those of your classmates. How might you collectively develop an improved
process?
3. Interview a plant manager at a local factory to determine his or her philosophy
on process management. What techniques does the company use?
4. Investigate design-for-environment practices in some of your local industries.
Describe company policies and the methods and techniques that they use to
address environmental concerns in product design.
us Mater
5. Christina Clark works at a food service operation for a large amusement park.

Bon

ial
s
She has been charged with developing a process control plan based on HACCP
principles for meeting food safety requirements (see the Bonus Materials). For
example, the requirements for hot dogs include:
• Receiving: Refrigerated hot dogs should be between –40 and 34 degrees
Fahrenheit when received.
• Storage: Storage temperature should be between –40 and 34 degrees Fahren-
heit.
• Cooking: Hot dogs should be heated to a temperature of 145 ± 5°F within 30
minutes of placing on the grill.
• Cooked Storage: Leftover hot dogs must be covered and placed in refrigeration
immediately and reach a temperature of 40°F or lower within 4 hours.
• Reheating: Hot dogs must be reheated to an internal temperature of 165 ± 5°F
within 20 minutes, one time only.
Develop a process control plan for ensuring that these requirements are met.
Design any forms or “standard operating procedures” that you think would be
helpful in implementing your plan.
6. Design a process for the following activities:
a. Preparing for an exam
b. Writing a term paper
c. Planning a vacation
d. Making breakfast for your family
e. Washing your car
Draw a flowchart for each process and discuss how ways in which both quality
and cycle time might be improved.
7. Design an instrument for evaluating the “process orientation” of an organiza-
tion. For example, what characteristics would you look for in firms that have a
strong process orientation?

z CASES
us Mater
Bon

Additional cases, including Baldrige assessment cases, are available in the Bonus
ial
s

Materials Folder on the CD-ROM.

I. THE STATE UNIVERSITY EXPERIENCE
Wow! That State University video was really cool. like to be a student at State. Hmmm, I think I’ll ask
It has lots of majors; it’s close to home so I can Mom and Dad to take a campus tour with me. . . .
keep my job; and Mom and Dad loved it when I’m sure that we took our tour on the hottest
they visited. I wish I could know what it’s really day of the summer. The campus is huge—it took
364 Part 2 Quality in High-Performance Organizations

us about two hours to complete the tour and we send in the confirmation form. It really looks a lot
didn’t even see everything! I wasn’t sure that the like the application. In fact, I know I gave them a
tour guide knew what he was doing. We went into lot of the same information. I wonder why they
a gigantic lecture hall and the lights weren’t even need it again? Seems like a waste of time. . . .
on. Our tour guide couldn’t find them so we had Orientation was a lot of fun. I’m glad they
to hold the doors open so the sunlight could come straightened out my acceptance at U. College. I
in. About three-fourths of the way through the think I will enjoy State after all. I met lots of other
tour, our guide said, “State University isn’t really a students. I saw my advisor and I signed up for
bad place to go to school; you just have to learn classes. All I have left to do is pay my tuition bill.
the system.” I wonder what he meant by that? . . . Whoops. None of my financial aid is on this bill. I
This application is really confusing. How do I know I filled out all of the forms because I got an
let the admissions office know that I am interested award letter from State. There is no way my par-
in physics, mechanical engineering, and industrial ents and I can pay for this without financial aid. It
design? Even my parents can’t figure it out. I says at the bottom, I’ll lose all of my classes if I
guess I’ll call the admissions office for some don’t pay the bill on time. . . .
help. . . . I’m not confirmed on the computer? I sent in
I’m so excited! Mom just handed me a letter my form and the fee a long time ago. What am I
from State! Maybe they’ve already accepted me. going to do? I don’t want to lose all of my classes.
What? What’s this? They say I need to send my I have to go to the admissions office or my college
transcript. I did that when I mailed in my applica- office and get a letter that says I am a confirmed
tion two weeks ago. What’s going on? I hope it student. O.K. If I do that tomorrow, will I still have
won’t affect my application. I’d better check with all of my classes? . . .
Admissions. . . . I can’t sleep; I’m so nervous about my first
You can’t find my file? I thought you were only day. . . .
missing my transcript. I asked my counselor if she
had sent it in yet. She told me that she sent it last Discussion Questions
week. Oh, you’ll call me back when you locate my
1. What breakdowns in service processes has
file? O.K. . . .
this student experienced?
Finally, I’ve been accepted! Wait a minute. I
2. What types of process management activities
didn’t apply to University College; that’s a two-
should State University administrators
year program. I wanted physics, M.E., or indus-
undertake?
trial design. Well, since my only choice is U.
College and I really want to go to State, I guess I’ll

II. THE PIVOT INITIATIVE AT MIDWEST BANK, PART I64

Midwest, a bank holding company, is located in services 24-hours per day via its network of ATMs,
Ohio. Its main subsidiary provides a diverse line a 24-hour telephone customer service center, or
of banking and financial products and services online. This bank has served the financial needs of
regionally; and selected business activities are con- its customers for 100 years, and currently 3,200
ducted nationally. Consumer, small business, and associates serve approximately 600,000 customers.
investment products and services are offered
through a network of retail banking centers The PIVOT Initiative
located primarily within Ohio and Kentucky. Mid-
west Bank also has a growing presence in Florida The PIVOT initiative, the name that Midwest gave
with 13 retail banking centers. Commercial its Six Sigma process improvement approach,
banking products and services are offered through started with the selection of three pilot projects,
nine regional offices. Customers can also access one of which was in the Commercial Processing
this Midwest’s financial and banking products and Department (CPD) that works as Midwest Bank’s
Chapter 7 Process Management 365

cash vault. CPD already operated at a high level of was 150, resulting in Bank losses of
sigma (4.26) as found early in Yellow Belt Six $400,000 as well as significant potential
Sigma training. CPD processes a high dollar risk exposure. Included in the losses is an
volume of transactions. One costly error in the anomaly of $280,000. The remainder rep-
resents a gap of $120,000 versus the goal
previous year resulted in a loss of over a quarter
of $0 of total losses due to Commercial
million dollars and brought the department to the
Processing Department operations. Our
forefront of change initiatives. Once the project objective is to reduce the internal error
was chosen, the bank selected six associates to run ratio by December of the current year
the first PIVOT project. and the total amount of losses by over
A project coordinator working from the project 50% in the following 12 months. Projects
office was selected as project manager for the Six from this business case will reduce loss
Sigma functions of the project. An operations expense and risk exposure, while
financial manager was in charge of financial impact increasing customer satisfaction.
analysis and equipment purchasing. The assistant Much debate centered on whether to include
vice president and team supervisor, were subject the anomaly loss since it skewed the numbers con-
matter experts from within CPD. Another project siderably. However, the decision was finally made
coordinator was brought on board for her bank to include it. Support for the CPD PIVOT project
wide knowledge and overall project support. The centered on risk mitigation, which is difficult to
project analyst for CPD and five other areas was in quantify, and on dollar losses required to carry the
charge of the departmental project management project. Based on the potential reduction of
and was the Six Sigma analyst for the team. The Six approximately $400,000 in losses and the future
Sigma analyst was responsible for data integrity, risk mitigation, the steering committee approved
graphical analysis, and data stratification. After the project launch, and the CPD PIVOT team
their weeklong Six Sigma course, the six team moved onto the Measure stage.
members ran the project from project definition to (See “The PIVOT Initiative at Midwest Bank,
the control stage. The team followed the Six Sigma Part II” in Chapter 10 for a continuation of this
DMAIC process steps (Define, Measure, Analyze, case.)
Improve, Control) during the CPD PIVOT project
to define the project and get it underway. Discussion Questions
DMAIC Define Stage 1. What conclusions can you reach on the
importance of team preparation and member
The senior vice president and vice president over selection to the “Define” stage, and eventual
CPD were the champions for this project and ini- success of Six Sigma projects, such as the
tially worked to establish the problem definition PIVOT project?
statement. These champions were responsible for 2. How do the roles of the PIVOT team mem-
the process every day and also held accountable bers, described in the case, match or not
for the errors in the department. match the roles in Table 7.4 in the chapter?
Because the two largest potential sources of Why do you think that they differ?
errors (strapping and deposit processing) did not 3. What factors do you think weighed in the
influence each other in the process and had sepa- decision to include the $280,000 “anomaly”
rate causes for creating errors, the champions sep- in the project justification? If you were the
arated them. The problem statement defined the project champion, how would you assess this
number of errors the department was accountable justification in deciding on whether the pro-
for during the previous year and the dollar losses ject was significant enough to move forward?
of these errors. In this case study, the number of
errors and the actual dollar losses are only approx-
imate. The (disguised) problem statement was:
In (the previous year) the number of
internal and external defects for the CPD
366 Part 2 Quality in High-Performance Organizations

III. STUART INJECTION MOLDING COMPANY65

Stuart Injection Molding Company (SIMC) is a cross-functional team is selected that
small business that specializes in custom plastic includes members from project engineering,
molding for many different industries, including quality assurance, manufacturing, and sales.
appliances and various consumer products such as This team develops all the specifications to
toys. Adele Stuart, daughter of the company’s ensure that design meets customer require-
founder and current CEO wishes to expand into ments and can be made according to these
the automotive sector. However, she realizes that requirements, selects materials and process
to do so will require more formalized systems and tolerances, determines production routings
eventually ISO 9000 registration. Although many and inspection plans, develops a production
basic procedures for assuring quality are in place, control plan and measurement system, and
most have been conducted informally, and the monitors a trial production run. The cus-
company never compiled a formal quality manual tomer must approve all design changes.
that documents the system and outlines specific • The company uses a variety of contemporary
responsibilities for managers and workers. Recog- tools to simplify and optimize the product
nizing the lack of a manual as a major deficiency, while also focusing on reducing production
they called you in as a consultant to help. After cost and waste. These tools include quality
spending some time in the plant talking with function deployment, geometric dimensioning
many employees, you jotted down several notes and tolerancing, design for manufacturing and
and observations: assembly, value engineering, design of experi-
ments, failure mode and effects analysis, and
• The plant manager (PM) is responsible for cost/performance/risk analysis.
ensuring the success of the quality manage- • Inspection is routine during the production
ment system by providing the necessary process. QA lab personnel perform all phases
resources and reviewing system perfor- of inspection and testing. Production opera-
mance. However, SIMC has a quality assur- tors use a “first-piece” inspection process to
ance (QA) department that is responsible for validate the start-up for a new product.
the majority of implementation issues, such Receiving inspection is performed on mate-
as maintaining measuring and test equip- rial, purchased parts, and subassemblies used
ment, verifying process capability, per- in processing, manufacturing, and assembly.
forming inspection, selecting methods for Operators also perform in-process inspections
monitoring process performance, and during production and final inspection on fin-
auditing the system. ished products. When contractually required,
• All functional departments recognize their statistical process control techniques are used
responsibility for quality planning and pro- to ensure control of key process characteris-
ducing high-quality products. For example, tics. Gauging instruction sheets are main-
the marketing and sales department con- tained by QA for at least one year.
ducts market research to understand cus- • Nonconforming products are labeled with a
tomer needs and handles customer “Do Not Use” tag and kept from being
complaints; the project engineering depart- shipped. This tag describes the nonconfor-
ment performs design reviews; the manufac- mance, documents the disposition decision,
turing department conducts in-process and records the reinspection results. If they
inspection for the purpose of maintaining are repaired or reworked, they are rein-
control and coordinates continuous improve- spected. Products that do not fully comply
ment processes. Maintenance, supplier rela- with specific requirements are not shipped
tions, receiving, and human resources without customer authorization. When non-
departments support these functions. conformities are detected, a cross-functional
• Most products are custom-designed with the team investigates them and corrective actions
customer. When a new job is contracted, a are initiated to prevent their recurrence.
Chapter 7 Process Management 367

• SIMC has a continuous improvement ment. Some examples of opportunities for

philosophy that pervades the entire organi- quality and productivity improvement are
zation. Processes are improved beyond the reduction of cycle times, less scrap,
minimum requirements when further rework and repair rates, less unscheduled
improvements benefit customers. Quality machine downtime, and process perfor-
performance and productivity are continu- mance variation.
ously monitored to identify opportunities for
improvement. Everyone in the organization Based on this information, what would you rec-
is encouraged to come forward with ideas for ommend to the company? Specifically on their
improving products, processes, systems, and process management activities, note any addi-
productivity within the working environ- tional information that you might need.

IV. CAPSTAR HEALTH SYSTEMS: PROCESS MANAGEMENT

The complete CapStar case study, a fictitious need not consider the actual Baldrige criteria for
example of a Baldrige application, can be found on this activity.) What are their strengths? What are
the CD-ROM that accompanies this book. If you their weaknesses and opportunities for improve-
have not read the organizational profile yet (see ment? What specific advice, including useful tools
Case III in Chapter 3), please do so first. Examine and techniques that might help them, would you
their response to Category 6 in the context of the suggest?
leading practices described in this chapter. (You

ENDNOTES
1. Adapted from Katrina Brooker, “The Nightmare 12. Ames Rubber Corporation, Application Sum-
Before Christmas,” Fortune, January 24, 2000, 24–25. mary for the 1993 Malcolm Baldrige National Quality
2. Robert Hof, Debra Sparks, Ellen Neuborne, and Award.
Wendy Zellner, “Can Amazon Make It?” Business Week, 13. Adapted from Douglas Daetz, “The Effect of
July 10, 2000, 38–43. Product Design on Product Quality and Product Cost,”
3. A. Blanton Godfrey, “Planned Failures,” Quality Quality Progress, June 1987, 63–67. © 1987, Hewlett-
Digest, March 2000, 16. Packard Co. All rights reserved. Reprinted with permis-
4. AT&T Quality Steering Committee, Process sion.
Quality Management & Improvement Guidelines, AT&T 14. Carolyn Lochhead, “Liability’s Creative Clamp
Publication Center, AT&T Bell Laboratories (1987). Holds Firms to the Status Quo,” Insight, August 29,
5. Justin Martin, “Are You As Good As You Think 1988, 38–40.
You Are?” Fortune, September 30, 1996, 142–152. 15. John H. Farrow, “Product Liability Require-
6. Michael Hammer and James Champy, Reengi- ments,” Quality Progress, May 1980, 34–36; Mick Birm-
neering the Corporation (New York: HarperBusiness, ingham, “Product Liability: An Issue for Quality,”
1993), 177–178. Quality, February 1983, 41–42.
7. Steven H. Wildstrom, “Price Wars Power Up 16. Randall Goodden, “Quality and Product Lia-
Quality,” Business Week, September 18, 1995, 26. bility,” Quality Digest, October 1995, 35–41.
8. Philip A. Himmelfarb, “Fast New-Product Devel- 17. David Pescovitz, “Dumping Old Computers—
opment at Service Sector Companies,” Quality Digest, Please Dispose of Properly,” Scientific American 282, no. 2
April 1996, 41–44. (February 2000), 29; http://www.sciam.com/2000/
9. Justin Martin, “Ignore Your Customer,” Fortune, 0200issue/0200techbus2.html.
May 1, 1995, 121–126. 18. Early discussions of this topic can be found in
10. Wolfgang Schneider, “Test Drive Into the Bruce Nussbaum and John Templeton, “Built to Last—
Future,” BMW Magazine 2, 1997, 74-77. Until It’s Time to Take It Apart,” Business Week, Sep-
11. Peter J. Kolesar, “What Deming Told the tember 17, 1990, 102–106. A more recent reference is
Japanese in 1950,” Quality Management Journal 2, no. 1 Michael Lenox, Andrew King, and John Ehrenfeld, “An
(Fall 1994), 9–24. Assessment of Design-for-Environment Practices in
368 Part 2 Quality in High-Performance Organizations

Leading U.S. Electronics Firms,” Interfaces 30, no. 3 39. Adapted from K. M. Casarreal, J. I. Mills, and M.
(May/June 2000), 83–94. A. Plant, “Improving Service Through Patient Surveys
19. Nussbaum and Templeton (see note 18). in a Multihospital Organization,” Hospital & Health Ser-
20. Charles Huber and Robert Launsby, “Straight vices Administration, Health Administration Press, Ann
Talk on DFSS,” Six Sigma Forum Magazine, August 2002, Arbor, MI (March/April 1986), 41–52. © 1986, Founda-
21. tion of the American College of Health Care Executives.
21. Valerie Reitman and Robert L. Simison, 40. Robert A. Gardner, “Resolving the Process
“Japanese Car Makers Speed Up Car Making,” The Wall Paradox,” Quality Progress, March 2001, 51–59.
Street Journal (December 29, 1995), 17. 41. Andrew E. Serwer, “Michael Dell Turns the PC
22. Don Clausing and Bruce H. Simpson, “Quality World Inside Out,” Fortune, September 8, 1997, 76–86.
by Design,” Quality Progress, January 1990, 41–44. 42. Bill Gates with Collins Hemingway, Business @
23. For the fascinating story of how Chrysler the Speed of Thought (New York: Warner Books, 1999).
redesigned itself, along with their design process, see 43. Masaaki Imai, KAIZEN—The Key to Japan’s Com-
Brock Yates, The Critical Path (Boston: Little, Brown and petitive Success (New York: McGraw-Hill, 1986).
Co., 1996). 44. Alan Robinson (ed.), Continuous Improvement in
24. “A Smarter Way to Manufacture,” Business Week, Operations (Cambridge, MA: Productivity Press, 1991).
April 30, 1990. 45. Lea A. P. Tonkin, “Kaizen BlitzSM 5: Bottleneck-
25. Kelly Scott, “How Federal Express Delivers Cus- Bashing comes to Rochester, NY,” Target 12, no. 4
tomer Service,” APICS—The Performance Advantage, (September–October 1996), 41–43.
November 1999, 44–46. 46. Mark Oakeson, “Makes Dollars & Sense for Mer-
26. Rebecca Duray and Glenn W. Milligan, cedes-Benz in Brazil,” IIE Solutions (April 1997), 32–35.
“Improving Customers Satisfaction Through Mass Cus- 47. David A. McCamey, Robert W. Bogs, and Linda
tomization,” Quality Progress, August 1999, 60–66. M. Bayuk, “More, Better, Faster From Total Quality
27. Sarah Anne Wright, “Putting Fast-Food to the Effort,” Quality Progress, August 1999, 43–50.
Test,” The Cincinnati Enquirer, July 9, 2000, F1, 2. 48. Lawrence S. Pryor, “Benchmarking: A Self-
28. John Haywood-Farmer, “A Conceptual Model of Improvement Strategy,” Journal of Business Strategy,
Service Quality,” International Journal of Operations and November/December 1989, 28–32.
Production Management 8, no. 6 (1988), 19–29. 49. Robert C. Camp, Benchmarking: The Search for
29. Charles D. Zimmerman, III, and John W. Enell, Industry Best Practices That Lead to Superior Performance
“Service Industries,” Sec. 33 in J. M. Juran (ed.), Juran’s (Milwaukee. WI: ASQC Quality Press and
Quality Control Handbook, 4th ed. (New York: McGraw- UNIPUB/Quality Resources, 1989).
Hill, 1988). 50. Shawn Tully, “Why to Go for Stretch Targets,”
30. Paula K. Martin and Karen Tate, “Projects That Fortune, November 14, 1994, 45–58.
Get Quality Treatment,” The Journal for Quality and Par- 51. Christopher E. Bogan and Michael J. English,
ticipation, November/December 1998, 58–61. “Benchmarking for Best Practices: Winning Through
31. Custom Research Incorporated, “Highlights of Innovative Adaptation,” Quality Digest, August 1994,
CRI’s Best Practices,” 1996 Baldrige Application 52–62.
Abstract, 13–14. 52. Cathy Hill, “Benchmarking and Best Practices,”
32. Timothy J. Kloppenborg and Joseph A. Petrick, The 54th Annual Quality Congress Proceedings of the
Managing Project Quality (Vienna, VA: Management American Society for Quality, 2000.
Concepts, 2003), 9, 11. 53. John Hackl, “New Beginnings: Change is Here to
33. “Coca-Cola: A Taste for Quality,” The Coca-Cola Stay,” Quality Progress, February 1998, 5.
Company, Atlanta, Georgia. 54. AT&T Consumer Communication Services Sum-
34. http://www.thecoca-colacompany.com/news/ mary of 1994 Application for the Malcolm Baldrige
NewsDetail.asp?NewsDate=6/15/99. National Quality Award.
35. “Testing for Conformity: An Inside Job,” Golf 55. Hammer and Champy (see note 6).
Journal, May 1998, 20–25. 56. P. Kay Coleman, “Reengineering Pepsi’s Road to
36. Douglas H. Harris and Frederick B. Chaney, the ‘Right Side Up’ Company,” Insights Quarterly 5, no. 3
Human Factors in Quality Assurance (New York: John (Winter 1993), 18-35.
Wiley & Sons, Inc., 1969). 57. Bogan and English (see note 51).
37. “DaimlerChrysler’s Quality Practices Pay Off for 58. We wish to thank Andy Assaley, Scott Atkinson,
PT Cruiser,” News and Analysis, Metrologyworld.com, Frank Cornell, and Eugene Wulsin for their work on
(accessed March 23, 2000). which this case is based. Courtesy Gold Star Chili, Inc.
38. Adapted from The Ritz-Carlton Hotel Company, 59. Adapted from Cindy Kranz, “Schools Intend to
Application Summaries for the Malcolm Baldrige Improve,” Cincinnati Enquirer, October 15, 2001, pp. B1,
National Quality Award, 1992 and 1999. B5.
Chapter 7 Process Management 369

60. James R. Evans and James W. Dean, Jr. Total 64. Appreciation is expressed to one of the author’s
Quality: Management, Organization, and Strategy, 3rd ed., students, Michael Wolf, who wrote the paper on which
Cincinnati, OH: South-Western College Publishing, this case is based, as part of the requirements for MGT
2003. 699, Total Quality Management, 2002, at Northern Ken-
61. Adapted from ASQ Quality Auditor Certification tucky University, and Cathy Ernst, senior vice president
Brochure, July 1989. at the bank.
62. John E. Ettlie, “What the Auto Industry Can 65. We thank our former students Nick Dattilo,
Learn from McDonald’s,” Automotive Manufacturing & Brian Kessler at Woodcraft Pattern Works, Inc., and
Production, October 1999, 42; David Stires, “Fallen Tameka Flowers, on whose research this case is based.
Arches,” Fortune, April 29, 2002, 74–76.
63. Adapted from a student project by one of the
author’s students, Tim Planitz, December 2001.

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