GSOE9810 Week 2

Erik van Voorthuysen / Ron Chan

Never Stand Still Faculty of Engineering Mechanical & Manufacturing Engineering

 Chapter 2 – Quality Theory
• What is Theory?
• Leading Contributors to Theory
• Viewing Quality Theory from a Contingency
Perspective
• Theoretical Framework for Quality
Management

Managing Quality Integrating the Supply Chain S. Thomas Foster

 Quality Theory – What is Theory?

A coherent group of general propositions used

as principles of explanation for a class of
Phenomena

Managing Quality Integrating the Supply Chain S. Thomas Foster

 Quality Theory – What is Theory?
A Theoretical Model Relating Quality
Improvement to Worker

Managing Quality Integrating the Supply Chain S. Thomas Foster

 Quality Theory – What is Theory?
For a theory to be complete it must have 4
elements:
• What?
• How?
• Why?
• Who – Where – When?

Managing Quality Integrating the Supply Chain S. Thomas Foster

 Quality Theory – What is Theory?
• What
– Involves which variables or factors are included in the
model.
– The Variables are the “What” of the model.
• How
– The nature, direction and extent of the model. This is
represented by the arrow in the model.
• Why
– The Theoretical glue that holds the model together.
• Who – Where – When
– Place contextual bounds on the model.
Managing Quality Integrating the Supply Chain S. Thomas Foster
Quality Theory – Leading Contributors to Theory
• Deming 14 Points for Management
1. Create a consistency of purpose toward
improvement of product and service with the
aim to become competitive, stay in business
and provide jobs.
2. Adopt a new philosophy: We are in a new
economic age.
3. Cease dependence on mass inspections to
improve quality.
Managing Quality Integrating the Supply Chain S. Thomas Foster
Quality Theory – Leading Contributors to Theory
4. End the practice of awarding business on the
basis of price tag alone.
5. Improve constantly and forever the system of
production and service, to improve quality
and productivity, and thus constantly
decrease cost.
6. Institute training on the job.
7. Improve leadership.
8. Drive out fear so that everyone may work
effectively for the company.
Managing Quality Integrating the Supply Chain S. Thomas Foster
Quality Theory – Leading Contributors to Theory
9. Break down barriers between departments.
10.Eliminate slogans, exhortations and targets for
the workforce that ask for zero defects and new
levels of productivity.
11.Eliminate work standards on the factory floor.
12.Remove barriers that rob workers of their right
to pride in the quality of their work.
13.Institute a vigorous program of education and
self improvement.
14.Put everybody in the company to work to
accomplish the transformation.
Managing Quality Integrating the Supply Chain S. Thomas Foster
Quality Theory – Leading Contributors to Theory
Juran
The Juran Trilogy
• Planning
• Control
• Improvement

Managing Quality Integrating the Supply Chain S. Thomas Foster

Quality Theory – Leading Contributors to Theory
• Planning
– Provide the operating forces with the means of
producing products that meet the customers
needs.
• Control
– Control vs. Breakthrough.
• Improvement
– Project by project improvement.

Managing Quality Integrating the Supply Chain S. Thomas Foster

Quality Theory – Leading Contributors to Theory
• Juran – Pareto’s Law or the 80/20 rule
• The majority of quality problems are the result
of relatively few causes.

Managing Quality Integrating the Supply Chain S. Thomas Foster

Quality Theory – Leading Contributors to Theory
• Ishikawa
– Training
– Continuous Improvement
– Statistical quality control

Managing Quality Integrating the Supply Chain S. Thomas Foster

Quality Theory – Leading Contributors to Theory
• Crosby
– Zero Defects
– Behaviour and motivational aspects of quality
improvement.

Managing Quality Integrating the Supply Chain S. Thomas Foster

Quality Theory – Leading Contributors to Theory
• The Rest of the Pack
– Camp
– Peters
– Hammer & Champy
– Covey

Managing Quality Integrating the Supply Chain S. Thomas Foster

 Quality Theory – Quality Theory from a
Contingency Perspective
• There is a mass of contradictory information…
it is best to focus on fundamental Questions:
– What are our strengths?
– What are our competencies?
– In what areas do we need to improve?
– What are our competitors doing to improve?
– What is our organizational structure?

Managing Quality Integrating the Supply Chain S. Thomas Foster

 Quality Theory – Quality Theory from a
Contingency Perspective
• Core Variables
– Leadership
– Information Analysis
– Strategic Planning
– Employee Improvement
– Quality Assurance
– Customer role in quality
– Quality Department
– Environment
– Philosophy Driven
– Quality Breakthrough
– Project/team-based improvement
Managing Quality Integrating the Supply Chain S. Thomas Foster
Quality Theory – Theoretical Framework for
Quality Management

Managing Quality Integrating the Supply Chain S. Thomas Foster

 Quality Theory – Summary
• Information Analysis
• Team Building
• Strategic Planning
• Quality Department Role
• Breakthrough

Managing Quality Integrating the Supply Chain S. Thomas Foster

Key Factor for Success
 Previously in Week 1
• Understand major problems, opportunities
etc.
• Break complex problems into smaller, more
manageable ones.
• Create hypotheses to test solutions.
• These point the way to information, analysis
and data requirements.
A systematic way to design targeted
improvements
 How Do We Identify these Issues?
• Some: will be obvious
– Process breakdowns, product warranty returns,
cost overruns, customer complaints etc.
• Others: will be hidden
– May not be problems now, but will be in the
future (market trends).
– Implication of some problems may not even be
understood.
– Hidden within internal processes, systems,
product design
 What are Key Factors for Success
• Strategies and outcomes that lead to
improved performance.
– Product specific
– Process specific
– Supply chain specific
– Quality, cost, time, capacity, functionality, pricing,
service, etc.
Compare against existing corporate capability
(strengths and weaknesses)
 Quality as Part of SCA
• Sustainable competitive advantage
– Competitive advantage
• Unique strength over competition.
• Can be: product design (functionality, performance,
capability, reliability etc.), cost, time to market,
flexibility, agility, etc.
– Sustainable
• Long term, not a one-off.
• Part of corporate strategy.
• Requires investment, ongoing control.
Cannot think of Quality in isolation
 Examples of Key Factors
Industry KFS
Mature technology and industry, multiple Focus on competitive pricing and cost
suppliers – standard industrial equipment control – process, distribution and service
quality.

Improve product-market strategies for

creating price-insensitive niches.
Fast pace of technology change, reducing Reduce product lead times – quality R&D,
product life cycle – personal computers concurrent processes

Intense competition, major expenditure Perceived quality, value for money,

item, multiple suppliers, high visibility excitement factors – product quality,
branding – automotive supply chain management
New product introduction, ‘take-off’ Quickly achieve a high level of market
market development and penetration
 How Do We Start?
• Initial market, industry and corporate analysis
– Identify external and internal forces.
– Define ‘industry’ KFSs.
– Identify corporate strengths and weaknesses
(capability – quality).
– Compare the two.
– Proceed to issue analysis (form a hypothesis and
analyse).

Compare to Porter’s Analysis

 Initial Analysis towards KFS
• Market characteristics
– Product functionality, use, substitutes.
– Who are the customers?
– Buying decision.
– Pricing.
– Sales channels.
Quality Improvement
KFS Our capability Implications Strategy
(ISSUE) (HYPOTHESIS)

Implementation
 Initial Analysis towards KFS (cont’d)
• Industry characteristics
– Structure of market supply
• Number of competitors
• Size, capacity, characteristics (include niches)
• Supply, chain, etc.
– Nature of competition
• Unique strengths and weaknesses
• Competitive product analysis
– Barriers to entry
• Investment – capital, systems, staff
• Skills etc.
 Initial Analysis towards KFS (cont’d)
• Product/Process technology
– Product – process relationship
• Speed, capacity, investment, product lead time,
competition
– Technology risk (e.g. mature, tried, new, risky, etc.)
– Technology trends
• Rate of innovation, improvement, performance,
functionality
– Industry growth
• Creating new markets
• Creating substitutes
 Initial Analysis towards KFS (cont’d)
• Regulatory and statutory requirements
– Quality control
– Process control
– Product development and specifications
– Service delivery
– Maintenance & engineering
– Occupational Health & Safety
– Pharmaceuticals, food, airlines, construction,
transport, etc.
 Initial Analysis towards KFS (cont’d)
• Dynamic aspects – what factors will change
– Short to medium term
• Immediate action
• High priority items
– Long term
• Long term risk
• Investment and planning
• Compare case study’s performance against
KFS
– Formulate issues and hypotheses
 Example Worksheet
Strategic Area Driver or Factor Trend or Change (quantify)

Market characteristics Product specification Increased fuel efficiency

Improved comfort

Smart systems

Price Decrease in real terms

Low entry level options

Reliability Increased reliability

Branded roadside assist