Learning Objectives

After studying this chapter, you should be able

to:
1.1 Define quality using different perspectives.
1.2 Discuss the history of quality management.
1.3 Describe quality in manufacturing.
1.4 Describe quality in service organizations.
1.5 Describe quality in business support
functions.
 Learning Objectives

1.6 Explain how quality and competitive

advantage are related.
1.7 Explain how personal values impact
quality.
 Defining Quality
Quality can be a confusing concept, partly
because people view quality subjectively and in
relation to differing criteria based on their individual
roles in the production-marketing value chain. In
addition, the meaning of quality continues to evolve
as the quality profession grows and matures.
Neither consultants nor business professionals
agree on a universal definition. The Quality
Improvement Glossary defines quality as “ a
subjective term for which each person has his or her
own definition.
 Defining Quality
For example, one study that asked managers of 86
firms in the eastern United States to define quality
produced several dozen different responses,
including the following:

1. Perfection
2. Consistency
3. Eliminating waste
4. Speed of delivery
5. Compliance with policies and procedures
6. Providing a good, usable product
 Defining Quality
7. Doing it right the first time
8. Delighting or pleasing customers
9. Total customer service and satisfaction

Thus, it is important to understand the various

perspectives from which quality is viewed in order to
fully appreciate the role it plays in the many parts of
a business organization.
Quality can be defined form six perspectives:
transcendent, product, value, user, manufacturing,
and customer.
Defining Quality: Transcendent (Judgmental)
Perspective
One common notion of quality, often used by
consumers, is that is synonymous with superiority or
excellence. In 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 transcendent
(transcend, “to rise above or extend notably beyond
ordinary limits”), or judgmental, definition of quality.
In this sense, quality is “both absolute and universally
recognizable, a mark of uncompromising standards
and achievement. From this perspective,
Defining Quality: Transcendent (Judgmental)
Perspective
quality cannot be defined precisely – you just know it
when you see it.
Excellence is abstract and subjective, and
standards of excellence may vary considerably
among individuals. Hence, the transcendent
definition is of little practical value to managers. It
does not provide a means by which quality can be
measured or assessed as a basis of practical business
decisions.
 Defining Quality: Product Perspective

Another definition of quality is that it is related to

the quantity of some product attribute, such as the
thread count of a shirt or bed sheet, or the number
of different features in an automobile or cell phone.
This assessment implies that larger numbers of
product attributes are equivalent to higher quality,
so designers often try to incorporate more features
into products, whether the customers want them or
not.
 Defining Quality: 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 it functions.
Nissan Motor Company Ltd.’s early experience in the
U.S. market provides an example of applying the
fitness-for-use concept. Nissan tested the U.S. market
in 1960. Not wanting to put Nissan name on a very
risky venture, they have decided to use the name
Datsum on all cars and trucks sold in North America.
Although the car was economical to own, the U.S.
drivers found it to be slow, hard to drive, low
 Defining Quality: User Perspective

powered, and not very comfortable. In essence, it

lacked the qualities that North American drivers
expected and was not “fit for use.”
 Defining Quality: Value Perspective

A fourth approach to defining quality is based on value;

that is, the relationship of product benefits to price.
Consumer 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
competitive offering.
From this perspective, a quality product is one that
provides similar benefits as competing products at a lower
price, or one that offers greater benefits at a comparable
price. A good example is generic pharmaceuticals, which
usually provide the same medical benefits at a lower price.
Defining Quality: 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 designers of goods and services. Targets (formally
called nominal specifications) are ideal values for
which the production is to strive; tolerances are
necessary because it is impossible to meet targets all
of the time. Specifications are meaningless, however,
if they do not reflect the attributes deemed important
to the customers.
Defining Quality: Customer Perspective
The American National Standard Institute (ANSI)
and the American Society for Quality (ASQ)
standardized the official definitions of quality
terminology in 1978. They define Quality as the
totality of features and characteristics of a product or
service that bears on its ability to satisfy given needs.
By the end of 1980s, many organizations had
begun using a simpler, yet powerful, customer-based
definition of quality that remains popular today:
meeting or exceeding customer expectations.
Eventually, the concept of external and internal
customers were introduced.
Integrating Quality Perspective in the Value
Chain

Individuals in different business functions – for example,

the designer, manufacturer or service provider,
distributor, or customer – speak different “languages”.
Thus, different quality perspectives at different points in
the value chain are important to ultimately create and
deliver goods and services that will satisfy customers’
needs and expectations.
Throughout the value chain, each function is an internal
customer of others, and the firm itself may be an external
or supplier to the other firms. Thus, the customer
perspective provides the basis for coordinating the entire
value chain.
 History of Quality Management
As the philosopher George Santayana once said,
“Those who cannot remember the past are
condemned to repeat it.” Thus, an understanding
of the history of quality can be quite insightful.
Quality has been an important aspect of
production operations throughout history. For
instance, Egyptian wall painting circa 1450 BC
show evidence of measurement and inspection.
Stones for the pyramids were cut so precisely
that even today it is impossible to put a knife
blade between the blocks. The Egyptians success
was due to good design, the
History of Quality Management
consistent use of well-developed building
methods and procedures, and precise measuring
devices.
Modern quality assurance methods began
millennia ago in China during the Zhou Dynasty.
Specific governmental departments were
created and given responsibility for:
-production, inventory, and product distribution
-production and manufacturing
- formulating and executing quality standards
- supervision and inspection
History of Quality Management
These departments were well-organized and
helped establish China’s central control over
the production process. The system even
included an independent quality organization
responsible for end-to-end oversight that
reported to highest level of government.
In ancient China, inspection at various
stages by worker themselves was important in
establishing responsibility for quality. When a
product was found to be non conforming, the
responsible worker was identified and the root
causes for the failure evaluated.
Module 1 Introduction to Quality
 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 trained.
Quality assurance was informal; every effort
was made to ensure that quality was built into
products by the people who produced them.
 The Age of Craftsmanship
In the middle of the eighteenth century, a French
gunsmith named Honore Blanc developed a
system for manufacturing muskets to a standard
pattern using interchangeable parts. Thomas
Jefferson brought the idea to America, and in
1798, the new U.S. Government awarded Eli
Whitney a two-year contract to supply 10,000
muskets to its armed forces.
The use of interchangeable parts necessitated
careful control of quality. Whereas as customized
product built by craftsperson can be tweaked and
hammered to fit and work correctly, random
matching of mating parts
 The Age of Craftsmanship
provides no assurance. The parts must be
produced according to carefully defined
standard. Whitney underestimated the effects
of variation in the production process,
however, because of the resulting problems, he
needed more than 10 years to complete the
project.
Nonetheless, the value of the concept of
interchangeable parts was recognized, making
quality assurance a critical component of the
production process during the Industrial
Revolution.
 The Early Twentieth Century
In the early 1900s, the work of Frederick W.
Taylor, often called the “father of scientific
management. “led to a new Philosophy of
production. Taylor’s innovation was to separate
the planning function from the execution
function. By segmenting a job into specific work
tasks and focusing on increasing efficiency, quality
assurance fell into the hands of inspectors.
Manufacturers were able to ship good-quality
products, but at great costs. Defects were present,
but were removed by inspection. Inspection was
thus the primary means of quality control during
the first half of the twentieth century.
 The Early Twentieth Century
Inspection was thus the primary means of
quality control during the first half of the
twentieth century.
Eventually, manufacturing companies
created separate quality departments. This
artificial separation of production workers from
responsibility for quality assurance led to
indifference to quality among both workers and
their managers. Concluding that quality was
the responsibility of the quality department,
many managers turned their attention to
output quantity and efficiency.
 The Early Twentieth Century

The early pioneers of quality – Walter

Shewhart, Harold Dodge, George Edwards, and
others such as Joseph Juran and W. Edwards
Deming coined the term quality assurance.
Quality Assurance refers to any planned and
systematic activity toward providing consumers
with products (goods and services) of
appropriate quality, along with confidence that
products do meet consumer requirements –
and developed many useful techniques for
measuring, controlling, and improving quality.
 The Early Twentieth Century

A related term (often used interchangeably

with quality assurance is quality control.
Quality Control is the evaluation of a process
to determine if corrective action is needed to
ensure that a requisite level of quality is
achieved, often through some type of
inspection or measurement activity.
The Western Electric Group, led by Walter
Shewhart, ushered in the area of Statistical
Process Control (SQC), the application of
statistical method for controlling quality.
 Post – World War II
After the war, during 1940s and early 1950s, the
shortage of civilian good in the United States
made production a top priority. In most
companies, quality remained the province of
specialist. Quality was not a priority of top
managers, who delegated this responsibility to
quality managers.
During this time, two U.S. consultants, Dr. Joseph
Juran and Dr. W. Edwards Deming , introduced
statistical quality control techniques to the
Japanese to aid them in their rebuilding efforts.
A significant part of their educational activity
was focused on upper management,
 Post – World War II
rather than quality specialist alone. With the
support of top managers, the Japanese
integrated quality throughout their
organizations and developed a culture of
continuous improvement (sometimes referred
to by the Japanese term Kaizen.
Improvements in Japanese quality were
slow and steady; some 20 years passed before
the quality of the Japanese products exceed
that of Western manufacturers.
 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 1950s and 1960s, when “made in
Japan” was associated with inferior products, U.S.
consumer purchased domestic goods and
accepted their quality without question.
During 1970s, however, increased in global
competition and the availability of higher-quality
foreign products led U.S. consumers, armed with
increased access to information, to consider their
purchasing decision more carefully and demand
high quality and reliability
 The U.S. “Quality Revolution”
in goods and services at fair price. One of the most
influential individuals in the quality revolution was
W. Edwards Deming.
In 1980, NBC televised a special program entitled
“If Japan Can … Why Can’t We ?” The widely-
viewed program revealed Deming’s key role in the
development of Japanese quality, and his name
was soon a household word among corporate
executives.
Although Deming had helped to transform
Japanese industries three decades earlier, it was
only after viewing the television program that U.S.
manufacturers asked for his help.
 The U.S. “Quality Revolution”
From 1980 until his death in 1993, his
leadership and expertise helped many U.S.
organizations to revolutionized their approach
to quality.
Rapid Growth of Quality in Business

As business and industry began to focus on

Quality, the government recognized how
critical quality is to the nation’s economic
health. 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
became the most influential instrument for
creating quality awareness among U.S.
businesses, and has also had significant global
impact. From the late 1980s and through the
Rapid Growth of Quality in Business

mid 1990s, interest in quality grew at an

unprecedented rate. Manufacturers as well as
in service organizations made significant strides
in improving quality.
From Product Quality to Total Quality
Management
As organizations came to recognize the
broad scope of quality, the concept of total
quality management (TQM), or simply total
quality (TQ), emerged.
Proctor & Gamble proposed a more concise
definition: Total quality is the underlying and
continually improving effort by everyone in
organization to understand, meet and exceed
the expectations of customers.
 Early Management Failures
With all the hype and rhetoric ( and 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. In reference to Douglas
Aircraft, a troubled subsidiary of Mc Donnell
Douglas Corporation.
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 is a requirement just
to play a game.
 Performance Excellence
The product-focused notion of quality evolve into
a new concept, called performance excellence.
Performance excellence can be defined as integral
approach to organizational performance
management that results in:

1. delivery of ever-improving value to customers

and stakeholders, contributing to ongoing
organizational success.
2. improvement of overall organizational
effectiveness and capabilities, and
3. learning for organization and for people in the
workplace.
 Emergence of Six Sigma

In the quest to remain competitive, and

after learning from failures of TQM, a new
approach to quality improvement emerged in
the late 1990s, called Six Sigma.
Six Sigma is a customer-focused, result-
oriented approach in business improvement
that integrates many traditional quality
improvement tools and techniques that have
been tested and validated over the years over
the years, with a bottom-line and strategic
orientation that appeals to senior managers,
thus gaining their support.
 Current and Future Challenges
The real challenge today is to ensure that
managers continue to focus on quality
management and performance excellence
throughout their organizations. Thus, a key
challenge is to allocate the necessary resources
to maintain a focus on quality, particularly in
times of economic downturns.
However, businesses will require an
economic justification for quality initiatives:
Quality must deliver bottom-line results. But as
we noted earlier, the process is not easy;
quality requires persistence, discipline and
steadfast leadership committed to excellence.
 Current and Future Challenges
In 2011, the American Society for Quality
identified eight key factors that will influence the
future of quality:

1. Global Responsibility
2. Consumer Awareness
3. Globalization
4. Increasing Rate of Change
5. Workforce in the Future
6. Aging Population
7. Twenty-first Century Quality
8. Innovation
 Globalization of Quality
The global marketplace and domestic and
international competition have made
organizations around the world realize that
their survival depends on high quality. Many
countries, such as Korea and India, have
mounted national efforts to increase quality
awareness, including conferences, seminars,
radio shows, school essay contest, and
pamphlet distribution.
Spain and Brazil have encouraged the
publication of quality books in their native
language to make them more accessible.
 Globalization of Quality

Many people believe that quality practices vary

widely among different countries and regions.
While this may have been true in the past, a
2013 study by the American Society for Quality
found no significant indication that the use of
quality practices differs among regions around
the world. The study suggests that increased
accessibility to data, information, and people
makes modern quality practices available to
everyone and that globalization of organizations
has also helped to introduced quality practices
by transplanting quality leaders.
 Quality in Manufacturing

- Marketing and Sales

- Product Design and Engineering
- Purchasing and Receiving
- Production Planning and Scheduling
- Manufacturing and Assembly
- Tool Engineering
- Industrial Engineering and Process Design
- Finished Goods Inspection and Testing
- Packaging, Shipping, and Warehousing
- Installation and Service.
 Quality in Service Organizations

Service organizations include all manufacturing

organizations such as hotels, restaurants, financial
and legal services, and transportation, except such
industries as agriculture, mining, and construction.
The service sector grew rapidly in the second half of
the twentieth century. Today more than 80 percent of
the nonfarm employees in the United States are
working in services, and more than half the jobs in
manufacturing industries and service-related.
 Quality in Service Organizations

Service organizations were probably a good 10

years behind in manufacturing in implementing
quality approaches. This lag can be attributed to the
fact that the service industries had not confronted
the same aggressive foreign competition that
manufacturing faced.
 Quality in Business Support Functions

In addition to manufacturing and service activities,

other business support activities are necessary for
achieving quality.
- Finance and Accounting
- Legal Services
- Quality Assurance

A customer-driven quality focus must involve every

function in the organization, including manufacturing,
service, and business support functions. Quality is
indeed everyone’s responsibility.
 Quality and Competitive Advantage

Traditionally, quality has focused on defect and

error reduction and product control as means to
reduce costs. However, more progressive
organizations have realized that high quality in itself
an important source of 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 stability, and is difficult for
competitors to copy.
 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 customers
service.
A survey from Rath & Strong, a Lexington,
Massachusetts - based management consulting firm
revealed that personal initiative, when combined
with a customer orientation, resulted in a positive
impact on business success and sales growth rate.
 Quality and Personal Values

Quality begins with individual attitudes and

behaviour. Robert Galvin, former CEO of Motorola,
once told the Economic Club of Chicago, “Quality is a
very personal obligation. If you can’t talk about
Quality in the first person ... Then you have not
moved to the level of involvement of quality that is
absolutely essential.”
Personal Quality is an essential ingredient to make
quality happen in the workplace, yet most
organizations have neglected it for a long time.
 Quality and Personal Values

Perhaps management, in particular, operates

under the idea that promoting quality is something
that organizations do to employees, rather that
something they do with employees.
Unless quality is internalized at the personal level,
it will never become rooted in the culture of the
organization. Thus, quality must begin at personal
level (and that means you!) and practiced in all
activities of daily life.