INTRODUCTION TO

QUALITY
 Defining to Quality
▹ Perfection
▹ Doing it right the first time
▹ Consistency
▹ Delighting or pleasing
▹ Eliminating waste
customers
▹ Speed of delivery
▹ Total customer service and
▹ Compliance with
satisfaction.
policies and
▹ Providing a good, usable
procedures
product
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 Transcendent (Judgmental)
Perspective
1931, Walter Shewhart, who was one of the
pioneers of quality control, first defined quality as
the goodness of a product.
This view is referred to as the transcendence
(transcend, "to rise above or extend notably
beyond ordinary limits"), or judgmental,
definition of quality.
Excellence is abstract and subjective, and
standards of excellence may vary
considerably among individuals.
 “
Product Perspective
This assessment implies that larger numbers of product
attributes are equivalent to higher quality, so designers often
try to incorporate more features into products.
the assessment of product attributes may vary considerably
among individuals. Thus, good marketing research is needed
to understand what features customers
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want in a product.
 “
User Perspective
Individuals have different wants and needs and,
hence, different expectations of a product. This leads
to a user-based definition of quality—fitness for
intended use, or how well the product performs its
intended 7function.
 “
Value Perspective
A fourth approach to defining quality is based on value; that
is, the relationship of product benefits to price. Consumers
no longer buy solely on the basis of price. They compare the
quality of the total package of goods and services that a
business offers (sometimes called the customer benefit
package) with price and with
8 competitive offerings.
 “
Manufacturing Perspective
Consumers and organizations want consistency in goods and
services.
Having standards for goods and services and meeting these
standards leads to the fifth definition of quality: conformance
to specifications. Specifications are targets and tolerances
determined by designers9 of goods and services.
 Customer Perspective
“
-defined quality as the totality of features and
characteristics of a product or service that bears on its
ability to satisfy given needs. This definition draws
heavily on the product and user definitions and is driven
by the need to create satisfied customers.
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 “
customers
ultimate purchaser of a product or service; for instance,
the person who buys an automobile for personal use or
the guest who registers at a hotel is considered an
ultimate purchaser.
Clearly, meeting the expectations of consumers is the
ultimate goal of
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any business.
 “
external customers
Before a product reaches consumers, however, it may flow through a
chain of many firms or departments, each of which adds some value to
the product. For example, an automobile engine plant may purchase
steel from a steel company, produce engines, and then transport the
engines to an assembly plant. The steel company is a supplier to the
engine plant; the engine plant is a supplier to the assembly plant. The
engine plant is thus a customer of the steel company, and the assembly
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plant is a customer of the engine plant.
 “
internal customers
An assembly department, for example, is an internal
customer of the machining department, and a person on
an assembly line is an internal customer of the person
who performs the previous task.
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 “
Integrating Quality Perspectives in the Value Chain
The customer is the driving force for the production of
goods and services, and customers generally view quality
from either the transcendent or the product perspective.
The goods and services produced should meet customers'
needs and expectations. It is the role of the marketing
function to determine these.14Hence, the user perspective
HISTORY OF QUALITY
MANAGEMENT
"Those who cannot remember the past are
condemned to repeat it.”
George Santayana
 “
Specific governmental departments were created
and given responsibility for:
▹ Production, inventory, and product distribution of raw
material (what we now call supply chain management)
▹ Production and manufacturing
▹ Formulating and executing quality standards
▹ Supervision and inspection
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 “
The Age of Craftsmanship
During the Middle Ages in Europe, the skilled craftsperson
served both as manufacturer and inspector. "Manufacturers"
who dealt directly with the customer took considerable pride
in workmanship. Craft guilds, consisting of masters,
journeymen, and apprentices, emerged to ensure that
craftspeople were adequately
18 trained.
 “
The Early Twentieth Century
In the early 1990’s the work of Frederick W. Taylor, often
called the “Father of scientific management,” led to a
new philosophy of function.
. Taylor innovation was to separate the planning function
from the execution function.
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 “
These pioneers coined the term quality assurance—
which refers to any planned and systematic activity directed
toward providing consumers with products (goods and
services) of appropriate quality, along with the confidence
that products meet consumers' requirements—and developed
many useful techniques for measuring, controlling, and
improving quality. Thus, 20quality became a technical
 “
The Western Electric group, led by Walter Shewhart,
ushered in the era of statistical quality control (SQC),
the application of statistical methods for controlling
quality. Shewhart is credited with developing control
charts, which became a popular means of identifying
quality problems in production processes and ensuring
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consistency of output.
 “
Post—World War Il
After the war, during the late 1940s and early 1950s, the
shortage of civilian goods in the United States made
production a top priority. In most companies, quality
remained the province of the specialist. Quality was not a
priority of top managers, who delegated this
responsibility to quality
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managers.
 “
The U.S. "Quality Revolution"
The decade of the 1980s was a period of remarkable
change and growing awareness of quality by consumers,
industry, and government.
During the 1970s, however, increased global competition
and the availability of high quality.
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 “
Early Successes
In 1984, the U.S. government designated October as
National Quality Month. In 1985, NASA announced an
Excellence Award for Quality and Productivity. In 1987,
the Baldrige Award, a statement of national intent to
provide quality leadership, was established by an act of
Congress.
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 “
From Product Quality to Total Quality Management
product lines that received customer praise were found to
emphasize satisfying customer expectations, determine
customer needs through market research, use customer-
based quality performance measures, and have
formalized quality control systems in place for all
business functions, not 25just for manufacturing.
 “
Total Quality (TQ) is a people-focused management system that aims at
continual increase in customer satisfaction at continually lower real
cost. TQ is a total system approach (not a separate area or program)
and an integral part of high-level strategy; it works horizontally across
functions and departments, involves all employees, top to bottom, and
extends backward and forward to include the supply chain and the
customer chain.
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 “
▹ TQ stresses learning and adaptation to continual change
as keys to organizational success.
▹ The foundation of total quality is philosophical: the
scientific method. TQ includes systems, methods, and
tools. The systems permit change; the philosophy stays the
same. TQ is anchored in values that stress the dignity of
the individual and the power
27 of community action.
 “
Management Failures
With all the hype and rhetoric (and the unfortunate three-
letter-acronym, TQM), organizations scrambled to
institute quality programs in the early 1990s. In their
haste, many failed, leading to very disappointing results.
Consequently, TQM met some harsh criticism.
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 “
Management Failures
Although quality the editor of Quality Digest put it: "No,
TQM isn't dead. TQM failures just prove that bad
management is still alive and kicking." Although quality can
drive business success, it cannot guarantee it, and one must
not infer that business failures Or Stock price drops are the
result of poor quality. Today, quality
29 is a requirement just to
 “
Performance Excellence
Performance excellence can be defined as an integrated approach to
organizational performance management that results in:
▹ delivery of ever-improving value to customers and stakeholders,
contributing to organizational sustainability
▹ Improvement of overall organizational effectiveness and capabilities
▹ organizational and personal learning.
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 “
Emergence of Six Sigma
Six Sigma is a customer-focused, results-oriented
approach to business improvement that integrates many
traditional quality improvement tools and techniques that
have been tested and validated over the years, with a
bottom-line and strategic orientation that appeals to
senior managers, thus-31gaining their support.
 “
Current and Future Challenges
Eight key forces that will influence the future of quality:
Global Responsibility-An organization must be fully
aware of the global impact of its local decisions and
realize that as demand grows for the planet's finite
resources, waste is increasingly unacceptable.
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 “
Eight key forces
Consumer Awareness: With today's technology such as the
Internet, Twitter, and Facebook, consumers have access to a
wealth of information on which to make purchasing
decisions. As a result, organizations must be quick when
responding to their customers' concerns and match their
products to customers' wants and needs, or risk having their
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customers defect to a competitor.
 “
Eight key forces
Globalization: Globalization no longer means just an
opportunity for organizations to enter new markets.
Today, firms have to contend with a growing number
of competitors and sources of lower-cost labor and
assume the risks associated with global supply chains.
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 “
Eight key forces
Increasing Rate of Change: Technology has shifted
the rate of change into an entirely new gear, which
brings with it opportunities and threats. The threat lies
in the Possibility that humanity won't be able to adapt
to the disruptions that accompany technological
advances. 35
 “
Eight key forces
Workforce of the Future: Competition for talent will
increase, and along with technological advances, will
change how and where work is done. As a result,
organizations will need to become more flexible with
how and where their work forces operate.
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 “
Eight key forces
Aging Population: As people live longer,
organizations face higher costs for healthcare and
social welfare programs. Retirement becomes "a
short-lived artifact of the latter half of the twentieth
century."
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 “
Eight key forces
Twenty-first Century Quality: Quality isn't the same
as it was 50 years ago, or even five years ago. Quality
is moving beyond the organization's walls to
encompass a customer's entire experience with the
organization rather than just the quality of the product
or service. 38
 “
Eight key forces
Innovation: According to the study, innovation is "the
pursuit of something different and exciting."
Innovation lies at the heart of organizational survival.

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Manufacturing
Systems
“

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 “
Marketing and Sales
Milton Hershey, the founder of Hershey Foods
Corporation, understood the relationship between quality
and sales. He used to say' "Give quality.” That's the best
advertising in the world."

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 “
Product Design and Engineering
Under-engineered products will fail in the marketplace
because they will not meet customer needs. Products that
are over-engineered, that is, those that exceed the
customer requirements, may not find a profitable market.
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 “
Purchasing and Receiving
The purchasing department can help a firm achieve
quality by:
▹ Selecting quality-conscious suppliers
▹ Ensuring that purchase orders clearly define the
quality requirements specified by product design and
engineering 43
 “
Purchasing and Receiving
▹ Establishing long-term supplier relationships based on trust.
▹ Providing quality-improvement training to suppliers
▹ Informing suppliers of any problems encountered with their
goods.
▹ Maintaining good communication with suppliers as quality
requirements and design changes occur.
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 “
Production Planning and Scheduling
A production plan specifies long-term and short-term
production requirements for filling customer orders and
meeting anticipated demand. The correct materials, tools,
and equipment must be available at the proper time and in
the proper places in order to maintain a smooth flow of
production.
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 “
Manufacturing and Assembly
The role of manufacturing and assembly in producing
quality is to ensure that the product is made correctly. The
linkage to design and process engineering, as noted
earlier, is obvious; manufacturing cannot do its job
without a good product design and good process
technology.
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 “
Tool Engineering
The tool engineering function is responsible for designing
and maintaining the tools used in manufacturing and
inspection. Worn manufacturing tools result in defective
parts, and improperly calibrated inspection gauges give
misleading information.
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 “
Industrial Engineering and Process Design
The job of industrial engineers and process designers is
to work with product design engineers to develop realistic
specifications. In addition, they must select appropriate
technologies, equipment, and work methods for
producing quality products.
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 Finished Goods Inspection and Testing
▹ If quality is built into the product properly, inspection should be
unnecessary except for auditing purposes and functional testing.
Electronic components, for example, are subjected to extensive
"burn-in" tests that ensure proper operation and eliminate short-life
items. In any case, inspection should be used as a means of
gathering information that can be used to improve quality, not
simply to remove defective items.

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 Packaging, Shipping, and Warehousing
▹ Even good-quality items that leave the plant floor can be
incorrectly labeled or damaged in transit. Packaging,
shipping, and warehousing—often termed logistics
activities—are the functions that protect quality after
goods are produced. Accurate coding and expiration
dating of products is important for traceability (often for
legal requirements) and for customers.
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 Installation and Service
▹ Products must be used correctly in order to benefit the
customer. Users must understand a product and have
adequate instructions for proper installation and operation.
Should any problem occur, customer satisfaction depends
on good after-the-sale service.

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 Quality service Organizations
▹ Include all non manufacturing organizations such as
hotels, rants' financial and legal services, and
transportation, except such industries as tore, mining, and
construction. The service sector grew rapidly in the
second half of the twentieth century. Today than 80
percent of the non farm employees in the United states are
working in services, and more than half the jobs in
manufacturing industries are 52
service-related.
 Components of Service Quality
▹ Service quality may be viewed from a manufacturing
analogy, for instance, technical standards such as the
components of a properly made-up guest room for a hotel,
service transaction speed, or accuracy of information.
However, managing intangible quality characteristics is
more difficult, because they usually depend on employee
performance and behavior.
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 Finance and Accounting
▹ The finance function is responsible for obtaining funds,
controlling their use, analyzing Investment opportunities,
and ensuring that the firm operates cost-effectively and—
ideally—profitably. Financial decisions affect
manufacturing equipment purchases, cost-control policies,
price-volume decisions, and nearly all facets of the
organization.
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 Legal Services
▹ A firm's legal department attempts to guarantee that the
firm complies with laws and regulations regarding such
things as product labeling, packaging, safety, and
transportation; designs and words its warranties properly;
satisfies its contractual requirements; and has proper
procedures and documentation in place in the event of
liability claims against it.
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 Quality Assurance
▹ Because some managers lack the technical expertise
required for performing needed statistical tests or data
analyses, technical specialists—usually in the quality
assurance department"—assist the managers in these
tasks. Quality assurance specialists perform special
statistical studies and analyses and may be assigned to
work with any of the manufacturing or business support
functions. 56
QUALITY AND COMPETITIVE ADVANTAGE
▹ Competitive advantage denotes a firm's ability to
achieve market superiority. A strong competitive
advantage provides customer value, leads to financial
success and business sustainability, and is difficult for
competitors to copy. High quality is itself an important
source of competitive advantage

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QUALITY AND COMPETITIVE ADVANTAGE
▹ Product quality is an important determinant of business
profitability.
▹ Businesses that offer premium-quality products and
services usually have large market shares and were early
entrants into their markets.

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QUALITY AND COMPETITIVE ADVANTAGE
▹ Quality is positively and significantly related to a higher
return on investment for almost all kinds of products and
market situations. (PIMS studies showed that firms whose
products were perceived as having superior quality earned
more than three times the return on sales of firms whose
products were perceived as having inferior quality.)

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QUALITY AND COMPETITIVE ADVANTAGE
▹ Instituting a strategy of quality improvement usually leads
to increased market share, but at the cost of reduced short-
run profitability.
▹ High-quality producers can usually charge premium prices

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Quality is not only free, it is an honest-
to-everything profit maker.
 Quality and Business Results
▹ As shown an Old that saying quality-focused goes, "The
proof is achieved in the pudding.’ Various research studies
better studies have shown that quality-focused companies
achieved better employee participation and relations,
improved product and service quality, higher productivity,
greater costumer satisfaction, increased market share, and
improved profitability.
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 The exceptional performance of Baldrige Award
recipients
▹ Nestlé Purina PetCare Co. (NPPC) has had sustained revenue
growth and met its sales goal during the nation's economic
downturn and when the U.S. pet population grew only marginally.
▹ Business satisfaction with the city of Coral Springs, Florida, rose
from 76 percent to 97 percent over a four-year period. Money
magazine •named Coral Springs as one of the Best Places to Live.
The city was named as one of the 100 best communities for young
people by America's Promise Alliance for multiple years.
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 The exceptional performance of Baldrige Award
recipients
▹ PRO-TEC Coating Company consistently achieves the
quality expectations of its customers by delivering
products with a defect rate of less than 0.12 percent and
has scored better than its competition on product quality,
on-time delivery, service, ' and product development. Its
return on assets, a measure of long-term viability, has had
a sustained upward trend.
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 QUALITY AND PERSONAL VALUES
▹ Today, organizations are asking employees to take more
responsibility for acting as the point of contact between
the organization and the customer, to be team players, and
to provide better customer service.

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 REVIEW QUESTIONS
1. What factors have contributed to the increased awareness of quality
in modern business?
2. What practices do Motorola and MidwayUSA in the Quality
Profiles use to help them achieve high quality?
3. Summarize the six quality perspectives described in this chapter.
4. Distinguish among consumers, external customers, and internal
customers. Illustrate how these concepts apply to a Chipotle's
restaurant, a Walmart, or a similar franchise or chain store.
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 REVIEW QUESTIONS
1. Explain why a single quality definition is not sufficient.
2. Briefly summarize the history of quality before and since the
industrial revolution. What caused the most significant changes?
3. Define the following terms:
▹ quality assurance
▹ total quality
▹ performance excellence
▹ competitive advantage
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 REVIEW QUESTIONS
1. Explain how each major function of a manufacturing system
contributes to total quality.
2. Why is service quality especially important in today's business
environment?
3. Discuss the differences between manufacturing and service
organizations. What are the implications of these differences for
quality management?

68
 REVIEW QUESTIONS
1. Explain the roles of people and information tech nology in
providing quality service. How does The Ritz-Carlton Hotel
Company, LLC use employees and information technology for
quality service?
2. How can business support activities help to sustain quality in an
organization? Give examples of some key business support
activities and their role in quality.
3. How does quality support the achievement of competitive
advantage? 69
 REVIEW QUESTIONS
1. What did Philip Crosby mean by ('Quality is free"?
2. Explain the role of both design and conformance quality in
improving a firm's profitability.
3. What evidence exists to counter the claim that “Quality does not
pay”?.
4. Why it is important to personalized quality principles?

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 DISCUSSION QUESTIONS
▹ Discuss how either good or poor quality affects you personally as a
consumer. For instance, describe experiences in which your
expectations were met, exceeded, or not met when you purchased
goods or services. Did your experience change your regard for the
organization and/or its product? How?
▹ Discuss the importance of quality to the national interest of any
country in the world. Given China's emergence as a global
economic power, of what importance do you believe that quality
will play jn their future? 71
 DISCUSSION QUESTIONS
▹ Choose a product or service to illustrate how several definitions of
quality can apply simultaneously.
▹ Think of a product or a service that you are considering purchasing.
Develop a list of fitnessfor-use criteria that are meaningful to you.
▹ A top Ford executive stated "You can't have great value unless you
have great quality." Comment on this statement. Do you agree?
Why or why not?

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 DISCUSSION QUESTIONS
▹ What do you think are the most important lessons that managers can learn from
studying the history of quality management?
▹ Provide some specific examples that illustrate how any of the eight forces that
will influence the future of quality are reflected in today’s business news.
▹ Provide specific examples of how the differences between manufacturing and
service organizations are evident in a school or a hospital.
▹ Select a service activity with which you are familiar. If you were the manager of
this activity, what "conformance to specifications" criteria would you use to
monitor it?

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 DISCUSSION QUESTIONS
▹ Cite some examples from your own experience in which you felt
service quality was truly top-notch,and some in which it was not.
What do you think might be some of the fundamental differences in
the infrastructure and management practices of these organizations?
▹ How are people and information technology used to improved
service in your college or university?
▹ What role has the internet played in improving service quality?
What barriers to service quality might it have?
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 DISCUSSION QUESTIONS
▹ In this chapter, we noted that much of the work performed in
traditional manufacturing organizations now involve service.
Provide some examples of this, drawing upon the functions
illustrated in Fiqure 1.2
▹ Choose an organization that you have read above or with which you
have personal experience and describe their sources of competitive
advantage.
▹ How can you internalize and practice at a personal level in your
daily activities? 75
PROJECTS, ETC.

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 PROJECTS, ETC.
▹ Develop a portfolio of advertisements from newspapers and
magazines and illustrate how quality is used in promoting these
products. How do the ads imply the different definitions of quality?
▹ Similar to the Xerox case, another organization that reinvented
itself through quality initiatives is Continental Airlines (recently
merged with United Airlines). Conduct some research and write a
three- to five-page paper on Continental's quality journey and
practices. Comment on the potential impact of Continental's quality
initiatives on the merged company.77
 PROJECTS, ETC.
▹ Develop a "personal quality checklist» that you would like to achieve each day and analyze the results over an extended
period of time. The listing of possible checklist standards might include:
▹ Review class notes after each class
▹ No text messaging during classes
▹ Limit phone calls to 10 minutes No more than 30 minutes per day spent on social networking websites
▹ No more than x hours of television per week Update schedule daily on PDA or computer calendar
▹ Get up promptly—no snooze alarm Ensure that team members are informed on project progress, each day or each week
▹ Complete all reading assignments as due
▹ Inform professor of essential absences via e-mail, text, or phone message at least 24 hours in advance
▹ Work in library (or other quiet place) •to avoid interruptions
▹ No more than one "junk food)' snack per day Exercise in gym for at least one hour, twice per week •
▹ Turn off cell phone during classes
▹ Prepare or buy, and eat, breakfast every day
▹ E-mail or call parents at least once per week
▹ Ensure that bank account is never overdrawn by checking balance online at least every other day
▹  
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