MR. EDMUND G.

ARIAS, MBA, LPT

MS. MARIA NINNIA R. AGALOOS, MBA
Faculty Members, Management Department
Marikina Polytechnic College
Marikina City
 Table of Contents

Chapter 1 Total Quality Management Evolution

Learning Outcomes ………………………………… 9

Learning Contents ………………………………….. 9

Practice Activities …………………………………… 14

Assessment (with Rubrics/Criteria) ……………. 16

Enrichment Exercises ……………………………… 17

Chapter 2 Quality Cost

Learning Outcomes ………………………………… 19

Learning Contents ………………………………….. 19

Practice Activities …………………………………… 22

Assessment (with Rubrics/Criteria) ……………. 23

Enrichment Exercises ……………………………… 24

Chapter 3 Leadership Effectiveness

Learning Outcomes ………………………………… 26

Learning Contents ………………………………….. 26

Practice Activities …………………………………… 30

Assessment (with Rubrics/Criteria) ……………. 32

Enrichment Exercises ……………………………… 33

2
Chapter 4 Total Quality Management Implementation

Learning Outcomes ………………………………… 35

Learning Contents ………………………………….. 35

Practice Activities …………………………………… 40

Assessment (with Rubrics/Criteria) ……………. 42

Enrichment Exercises ……………………………… 43

Chapter 5 ISO Certification

Learning Outcomes ………………………………… 45

Learning Contents ………………………………….. 45

Practice Activities …………………………………… 52

Assessment (with Rubrics/Criteria) ……………. 53

Enrichment Exercises ……………………………… 54

Chapter 6 Customer Satisfaction

Learning Outcomes ………………………………… 56

Learning Contents ………………………………….. 56

Practice Activities …………………………………… 64

Assessment (with Rubrics/Criteria) ……………. 66

Enrichment Exercises ……………………………… 67

3
Chapter 4 Total Quality Management Implementation

Learning Outcomes ………………………………… 35

Learning Contents ………………………………….. 35

Practice Activities …………………………………… 40

Assessment (with Rubrics/Criteria) ……………. 42

Enrichment Exercises ……………………………… 43

Chapter 5 ISO Certification

Learning Outcomes ………………………………… 45

Learning Contents ………………………………….. 45

Practice Activities …………………………………… 52

Assessment (with Rubrics/Criteria) ……………. 53

Enrichment Exercises ……………………………… 54

Chapter 6 Customer Satisfaction

Learning Outcomes ………………………………… 56

Learning Contents ………………………………….. 56

Practice Activities …………………………………… 64

Assessment (with Rubrics/Criteria) ……………. 66

Enrichment Exercises ……………………………… 67

4
Chapter 7 Employee Involvement

Learning Outcomes ………………………………… 69

Learning Contents ………………………………….. 69

Practice Activities …………………………………… 75

Assessment (with Rubrics/Criteria) ……………. 76

Enrichment Exercises ……………………………… 77

Chapter 8 Continuous Process Improvement

Learning Outcomes ………………………………… 79

Learning Contents ………………………………….. 79

Practice Activities …………………………………… 84

Assessment (with Rubrics/Criteria) ……………. 85

Enrichment Exercises ……………………………… 86

Chapter 9 Supplier Partnership

Learning Outcomes ………………………………… 88

Learning Contents ………………………………….. 88

Practice Activities …………………………………… 95

Assessment (with Rubrics/Criteria) ……………. 96

Enrichment Exercises ……………………………… 97

5
Chapter 10 Performance Measures

Learning Outcomes ………………………………… 99

Learning Contents ………………………………….. 99

Practice Activities …………………………………… 104

Assessment (with Rubrics/Criteria) ……………. 105

Enrichment Exercises …………………………….. 106

Chapter 11 Benchmarking

Learning Outcomes ………………………………… 108

Learning Contents ………………………………….. 108

Practice Activities …………………………………… 112

Assessment (with Rubrics/Criteria) ……………. 114

Enrichment Exercises …………………………….. 115

Chapter 12 Quality Function Deployment

Learning Outcomes ………………………………… 117

Learning Contents ………………………………….. 117

Practice Activities …………………………………… 120

Assessment (with Rubrics/Criteria) ……………. 121

Enrichment Exercises …………………………….. 122

6
Chapter 1 Total Quality
Management
Evolution

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

7
Chapter 1: Total Quality Management Evolution

Learning Outcomes:

After this chapter, students shall be able to:

- Know the Foundation of Total Quality Management (TQM)
- Appreciate the significance of TQM in business organization
- Adopt TQM in business operation.

Learning Contents:

1. Foundation of TQM
1.1 Historical Background of TQM
1.2 Definition
1.2.1 TQM
1.3 Basic Concepts of TQM
1.4 Transformation of TQM
1.5 Meaning of Quality
1.6 The Deming Philosophy
1.7 Impediments of TQM

Introduction

Quality starts with understanding the needs of the customers. This all
started the foundation of TQM. Even before research already begun through
asking questions in the right order which replaces the strategy from
generation to generation. The foundation of Quality control is as old as
business industry itself. The concept was introduced during the Industrial
Revolution. It was the time when a worker no longer made the whole product
instead, he made a part only. It was a decline in workmanship, because of
this most manufactured product during that period were not that
complicated, quality was not greatly affected. In fact, because productivity
improved, there was also a decrease in cost. Inspection after production
became necessary because the products became more complicated and jobs
more specialized.

Historical Background

It was 1924 when W.A. Shewhart of Bell Telephone Laboratories

developed a statistical chart for control of product variables. This chart is
considered to be the beginning of statistical quality control. In the same
decade, H.F. Dodge and H. G. Romig, both of Bell Telephone Laboratories,

8
 developed the area of acceptance sampling as a substitute for 100%
inspection.
In 1980’s to the 1990’s a new phase of Quality control and management
began. This became known as Total Quality Management. Having observed
Japan’s success of employing quality issues, western companies started to
introduce their own quality initiatives. TQM developed as catchall phrase for
the broad spectrum of quality focused strategies, programs and techniques
during this period, became the center of focus for the western quality
movement.

Definition of TQM

Total Quality Management is an improvement to the traditional way of

doing business. It is a proven technique to guarantee survival amidst world-
class competition. Only by changing the actions of management will the
culture and actions of an entire organization be transformed. TQM is for the
most part common sense, as stated by D.H. Besterfield.
Total Quality Management is mainly concerned with continuous
improvement in all work. It is a long-term planning. It is the consistent
improvement in the quality. It is a never
Ending process.

Analyzing the three words such as:

Total - Made up of the whole.
Quality -Degree of excellence a product or service provides.
Management -It is a process of planning, organizing, directing and
controlling. An act or manner of handling, controlling, directing etc.

Therefore, TQM is the art of managing the whole to achieve excellence.

TQM covers all the set rules, regulations, and guidelines and principled and
standard that contribute in improving the organization. It is a continuous
process of improvement for individuals, and the whole organization. It is the
application human resources to improve all the processes within an
organization to satisfy the needs of customers consistently. TQM integrates
all the fundamental management techniques, existing improvement efforts,
and technical tools under a disciplined approach. It covers the most quality
principles and practices proposed by quality gurus.

Total Quality Management (TQM) is a management approach for an organization,

centered on quality, based on the participation and commitment of all the internal and
external customers and aiming at strategically long- term success through customer
satisfaction, and benefits to all members of the organization and to society

9
Six Basic Concepts of TQM
By B. Creech

1. A committed and involved management to provide long –term top – to-

bottom organizational support.
2. An unwavering focus on the customer, both internally and externally.
3. Effective involvement and utilization of the entire work force.
4. Continuous improvement of the business and production process
5. Treating suppliers as partners.
6. Establish performance measures for the processes.

The purpose of TQM is to provide a quality product or service to

customers, which will in turn, increase productivity, and lower cost. With a
higher quality product or service and lower price, competitive position is the
market place will be enhances. These series of events will allow the business
organization to achieve the objectives of profit and growth with greater ease.
Furthermore, the workers will have job security, which will create a satisfying
environment to work.

Transformation to TQM

A business organization cannot start the transformation to TQM until

it is aware that the quality of the product or service must be improved.
Awareness comes in when a business organization loses market share or
realizes that quality and productivity go hand-in-hand. It also happens if
TQM is mandated by the customer or if management realizes that TQM is a
better way to operate a business and compete in domestic and foreign
markets.

Automation and other productivity enhancement might not help a

business organization if it is unable to market its product or service because
of poor quality.

Quality and productivity are not exclusive. Thus, improvements in

quality can directly lead to increase productivity and other benefits. Many
quality improvements projects are achieved with the same work force, some
overhead, and no investment in new equipment.

According to E. Deming, “Quality improvement is not limited to the

conformance of the product to specifications; it also involves the inherent
quality in the design of the system. The prevention of product and process
problems is a more desirable objective than taking corrective action after the
product is manufactured or a service rendered.”
10
 TQM does not occur overnight; there are no quick solutions. It takes a
long period of time to build the appropriate systems and techniques into the
culture. Short term results and profits must be set aside so long-term
planning and constancy of purpose will be done.

Meaning of Quality

When “quality is used, we usually think of an excellent product or

service that satisfies or exceeds our expectations. These expectations are
based on the intended use and the selling price. When a product surpasses
our expectation, we always consider it as a quality product, as stated by D.A.
Garvin.

The Deming Philosophy

According to D.H. Besterfield, Dr. W. Edwards Deming was influenced

of Dr. Walter Shewhart, who pioneered Statistical Process Control (SPC) at
Bell Laboratories. Both spent much time together during the late 1920s,
under Sir Ronald Fisher, who pioneered design of experiments. During
World War II E. Deming taught statistical quality control as part of the
wartime production effort. In 1950 he taught SPC concepts and the
importance of quality to the leading CEOs of Japanese industry.

14 Deming Points as a Theory for Management for Improvement of

quality, productivity and competitive positions:

1. Create and Publish the Aims and Purposes of the Organization.

2. Learn the New Philosophy.
3. Understand the Purpose of Inspection.
4. Stop Awarding Business Based on Price Alone.
5. Improve Constantly and Forever the System.
6. Institute Training.
7. Teach and Institute Leadership.
8. Drive Out Fear, Create Trust, and Create a Climate for Innovation.
9. Optimize the Efforts of Teams, Groups and Staff Areas.
10. Eliminate Exhortations for the Work Force.
11. Eliminate numerical Quotas for work force and Management by
Objectives.
12. Remove barriers that Rob people of Pride of Workmanship.
13. Institute a vigorous program of education and self-improvement for
everyone.
14. Put everybody in the company to work accomplishing the
transformation.
11
 .
Impediments of TQM

Many business organizations like small ones with niche are

comfortable with their present condition. They are satisfied with the work
being performed and their perceptions that the customers are satisfied. This
kind of organizations do not need TQM until they begin to lose market share.

Once a business organization take off on TQM, there will be a

resistance to change. People become accustomed to doing things in a
particular way and it becomes the preferred way. People become closed to
innovations, and TQM is viewed as another thing that is deemed to fail. It is
hard for individuals to change their way of doing things; it is much more
difficult for a business organization to make a cultural change.

A considerable amount of training in the six stated concepts is needed

to overcome these impediments to TQM. Also, the channels of
communication will need to be improved and developed.

12
Chapter 2 Quality Cost

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

13
Chapter 2: Quality Cost

Learning Outcomes:

After this chapter, students shall be able to:

- Know the classification of Failure, Reducing, Internal and external
cost.
- Identify and internalize the powerful tool that could raise awareness
on how to lessen the failure of cost.

Learning Contents:

2. Quality Cost
2.1 Classification of Failure cost
2.2 Reducing Cost
2.3 Internal and external cost

Introduction

Cost of quality (COQ) is defined as a methodology that allows an

organization to determine the extent to which its resources are used for
activities that prevent poor quality, that appraise the quality of the
organization’s products or services, and that result from internal and external
failures. Having such information allows an organization to determine the
potential savings to be gained by implementing process improvements. Cost
of quality is a method that allows an organization to determine the extent to
which its resources are used for activities that prevent defects or failures.

The costs of doing a quality job, conducting quality improvements, and

achieving goals must be carefully managed so that the long-term effect of
quality on the organization is a desirable one.

These costs must be a true measure of the quality effort, and they are
best determined from an analysis of the costs of quality. Such an analysis
provides a method of assessing the effectiveness of the management of
quality and a means of determining problem areas, opportunities, savings,
and action priorities.

Cost of quality is also an important communication tool. Philip Crosby

demonstrated what a powerful tool it could be to raise awareness of the
importance of quality. He referred to the measure as the "price of
nonconformance" and argued that organizations choose to pay for poor
quality.

14
 Many organizations will have true quality-related costs as high as 15-
20% of sales revenue, some going as high as 40% of total operations. A
general rule of thumb is that costs of poor quality in a thriving company will
be about 10-15% of operations. Effective quality improvement programs can
reduce this substantially, thus making a direct contribution to profits.

The quality cost system, once established, should become dynamic and
have a positive impact on the achievement of the organization’s mission,
goals, and objectives.

Classification of Failure cost

Internal failure cost

Internal failure costs are incurred to remedy defects discovered before

the product or service is delivered to the customer. These costs occur when
the results of work fail to reach design quality standards and are detected
before they are transferred to the customer. They could include:

Waste: Performance of unnecessary work or holding of stock as a

result of errors, poor organization, or communication
Scrap: Defective product or material that cannot be repaired,
used, or sold
Rework or rectification: Correction of defective material or errors
Failure analysis: Activity required to establish the causes of
internal product or service failure

External failure costs

External failure costs are incurred to remedy defects discovered by

customers. These costs occur when products or services that fail to reach
design quality standards are not detected until after transfer to the customer.
They could include:

Repairs and servicing: Of both returned products and those in

the field
Warranty claims: Failed products that are replaced or services
that are re-performed under a guarantee
Complaints: All work and costs associated with handling and
servicing customers’ complaints
Returns: Handling and investigation of rejected or recalled
products, including transport costs

15
 Reducing the Cost of Quality Failure Prevention

Prevention costs are incurred to prevent or avoid quality problems.

These costs are associated with the design, implementation, and
maintenance of the quality management system. They are planned and
incurred before actual assembly of the product at the shop floor.

Figure 1. This shows how hidden failure costs dominate the more obvious costs of
failure

Prevention is the key to reduced quality costs. Customer-facing processes, including

customer support call centers and web pages, must be designed to prevent errors and
minimize cost of failure. Failure in this context includes time wasted by customers in
seeking support, in addition to the issue causing them to seek support in the first place.
Support systems must be designed so they are readily available to the customer, with
accurate information provided to quickly resolve the issue. The customer support process
should be analyzed for waste and process capability, typically by monitoring the time to
initial response and overall time to resolution.

16
Chapter 3 Leadership
Effectiveness

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

17
 Chapter 3: Leadership Effectiveness

Learning Outcomes:

After this chapter, students shall be able to:

- Know the concepts and definition of effective leadership.
- Appreciate the role of management and the TQM council.
- Identify and internalize core values, quality concepts, strategic
planning.

Learning Contents:

3. Leadership Effectiveness
3.1 Leadership concepts and Definitions of Leadership
3.2 Leadership Styles and Characteristics
3.3 Management Strategies for quality improvement
3.4 Strategic Planning

Introduction

A good leader will find ways to reward and thereby inspire employees.
Employees must believe a task is important if they are to be committed to it.
Employees must also be given some personal control over the task in order to
make the task their own and, therefore, something to which they can commit.
A leader, by giving the employees a measure of control over an important
task, will tap into the employee’s inner drive. Employees, led by the manager,
become excited participants in the business organization.

Leadership Concepts and Definitions of Leadership

Leadership needs a strong understanding of the nature of human

being: the basic needs, wants, interest and abilities.

Leadership is defined as:

L- Leadership is loyalty to God, country and people

E- It is enthusiasm and effort to help and secure others.
A - It is advocacy, action and accomplishments.
D- It is a dedication, discipline, dignity, decency, devotion to duty and
decisiveness for the general welfare
E- It is excellence and exemplary work for others to follow and emulate.
R- It is reliability, responsibility, respect for the law and the rights of others, and
reconciliations for peace and unity.
18
 S- It is sincerity, service, self -sacrifice, social justice to make life better
for mankind.
H- It is humility, honesty, honor, helpfulness, and hard work for
accomplishment and fulfillment.
I – Integrity, interest, imitative, and idealism.
P- Leadership is patience, perseverance, beyond partisanship, religion
or creed; it works for peace, progress and prosperity to mankind.

Leadership Styles and Characteristics (Filipino Leadership Styles)

This is because the culture of Filipinos is derived from deep rooted

indigenous core values. These included focusing on kinship, family, and
social acceptance.

Those value were then intertwined with ideologies from Chinese

mercantilism, American Westernization and Spanish Catholicism. Because of
this, the leadership styles of the Filipino are what it is today.

The four types of Filipino leadership are Pakiramdam, Takutan, Kulit,

and Patsamba-tsamba. This is according to Management and Culture in the
Philippines.

Pakiramdam. This is because this style does not provide workers with
guidance required to give them sense of initiative.

Instead the leader motivates through being friendly or “Feeling the

other” with the staff. This is done by inferring the manager’s absolute
expectations, regardless of the relevance to organizational objectives.

Takutan is a style of leadership that puts the responsibility on the

manager who relies on oppression, conceit, and hostility. This leadership is
easily explained as a matter of professionalism.

This requires social distance between leaders and subordinates. In

other words, workers and individuals with the “ranks” such as supervisors.

The manager persuades subordinates to obey without complaints to

steer clear from threats and punishments. As to secure one’s acceptance
within the work group, it was preferred to avoid dispute with higher-ranks.

Kulit which refers to a superior closely observes and controls the work
of their subordinates by checking every detail of the assignment. This results
in a lack of freedom within the workplace.

19
 Patsamba-tsamba is a style of management that has no goals,
objectives, and direct instructions. It relies on trial and error leaving success
or failure to fate.

Rather than making rational decisions, the manager often prefers

buoyant actions that creates disaster and disorder. This leads to confusion
among subordinates resulting to inefficient organization on its operations.

Characteristics of Effective Leaders

1. They give priority attention to external and internal customers and

their needs. Leaders place themselves in customer’s shoes and
continually evaluate the customer’s changing requirements.
2. They empower, rather than control, subordinates. Leaders have
trust and confidence in the performance of their subordinates.
3. They emphasize improvement rather than maintenance. There is
always room for improvement, even if the improvements are small.
4. They emphasize prevention
5. They encourage collaboration rather than competition. There must
be collaboration among and within units.
6. They train and coach.
7. They learn from problems. When a problem exists, it is treated as
opportunity rather than something to be minimized or covered up.
8. They continually try to improve communications.
9. They continually demonstrate their commitment to quality. Leader
walk their talk – their actions, rather than their words,
10. They choose suppliers on the basis of quality not price.
11. They establish organizational systems to support the quality effort.
12. They encourage and recognize team effort.

Strategic Planning

Many business organizations are finding that strategic quality plan and
business plans are inseparable. The period of time for strategic planning is
there to ten years and short-term planning is one year (annual) or less. Both
types of planning require goals and objectives.

Goals and Objectives

According to John Pesico Jr. and Gory N. Mclean, goals and objectives
have basically the same meaning. The similarities between the two are
differentiated by using goals for long term and objectives for short term
planning.

20
Seven Steps to Strategic Planning

There are seven basic steps to strategic quality planning, according to

John R. Dew. The process starts with the principal that quality and customer
satisfaction are the center of an organization’s future. It brings together all
the key stakeholders.

1. Customer needs. The first step to discover the future needs of the
customers.
2. Customer positioning. The planners determine where the
organization wants to be in relation to the customers.
3. Predict the Future. The planners must take into their crystal balls to
predict future conditions that will affect their product or service.
4. Gap Analysis. This step requires the planners to identify the gaps
between the current state and the future state of the organization.
5. Closing the Gap. The plan can now be developed to close the gap by
establishing goals and responsibilities.
6. Alignment. As the plan is developed, it must be aligned with the
mission, vision, and core values of the organization.
7. Implementation. This last step is frequently the most difficult.
Resources must be allocated to collecting data, designing changes
and overcoming resistance to change.

Strategic planning can be performed b any organization. It can be

highly effective, allowing organization to do the right thing at the right time,
every time, as stated by John R. DW.

21
Chapter 4 Total Quality
Management
Implementation

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

22
Chapter 4: Total Quality Management Implementation

Learning Outcomes:

After this chapter, students shall be able to:

- Understand statistical process control and its usefulness as technical
tools for improving procedures.
- Learn the different charts used in controlling processes.

Learning Contents:

4. TQM Implementation
4.1 TQM Tools and Techniques
4.2 PDSA
4.3 Barriers to TQM implementation

TQM Tools and Techniques

(Statistical Process Control -SPC) by Dale H. Besterfield

Introduction

One of the best technical tools for improving product and service
quality is statistical process control (SPC). There are seven basic techniques.
The word statistical is somewhat of a misnomer since the first four
techniques are not really statistical. Furthermore, this technical tool not only
controls the process but has the capability to improve it as well.

Pareto Diagram

The Pareto Principle, named after esteemed economist Vilfredo Pareto,

specifies that 80% of consequences come from 20% of the causes, asserting
an unequal relationship between inputs and outputs. This principle serves as
a general reminder that the relationship between inputs and outputs is not
balanced. The Pareto Principle is also known as the Pareto Rule or the 80/20
Rule.

Time management is the most common use for the Pareto Principle, as
most people tend to thinly spread out their time instead of focusing on the
most important tasks. In terms of personal time management, 80% of your
work-related output could come from only 20% of your time at work.

23
Example of the Pareto Principle

Financial advisory businesses commonly use the Pareto Principle to

help manage their clients. The business is dependent on the advisor’s ability
to provide excellent customer service, as its fees rely on its customers’
satisfaction. However, not every client provides the same amount of income
to the advisor. If an advisory practice has 100 clients, according to the Pareto
Principle, 80 percent of the financial advisor’s revenue should come from the
top 20 clients. These 20 clients have the highest amount of assets and the
highest fees charged.

The Pareto diagram is a powerful quality improvement tool, it is

applicable to problem identification and the measurement of progress.

Process Flow Diagram

The Flow diagram shows the flow of the product or service as it moves
through the various processing operations. The diagram makes it easy to
visualize the entire system, identify potential trouble spots, and locate control
activities. It answers the question, who is the net customer? Improvements
can be accomplished by reducing, combining, or eliminating steps.

Standardized symbols are used by industrial engineers; however, they

are not necessary for problem solving. The symbols used in the figure should
be sufficient.

Cause and Effect Diagram

A cause and effect diagram is a picture composed of lines and symbols

designed to represent a meaningful relationship between an effect and its
causes. It was developed by Dr. Kaoru Ishikawa in 1943 and is sometimes
referred to as an Ishikawa diagram or a fishbone diagram because of its
shape.

This diagram used to investigate either a “bad” effect and to take action
to correct the causes or a “good” effect and to learn those causes that are
responsible. For every effect, there are likely to be numerous causes. The
effect is the quality characteristic that needs improvement. Causes are
sometimes broken down into the major causes of work methods, materials,
measurement, people, equipment the environment. Other major causes
could be used for service type problems, depending on the effect.

Each major cause if further subdivided into numerous minor causes.

24
Example; under work methods, we might have training, knowledge, ability,

25
physical characteristics, and so forth. Cause and effect diagram are the means
of picturing all these major and minor causes.

One of the strongest assets is the participation and contribution of

everyone involved in the brainstorming process. The diagrams are useful to:
1. Analyze actual, conditions for the purpose of product or service
quality improvement, more efficient use of resources, and reduced
costs.
2. Eliminate condition causing nonconformities and customer
complaints.
3. Standardize existing and proposed operations
4. Educate and train personnel in decision making and corrective
action activities.

Checklist/ Check sheets

The main purpose of check sheets is to ensure that the data are
collected carefully and accurately by operating personnel. Data should be
collected in such a manner that they can be quickly and easily used and
analyzed. The forms of the check sheet are individualized for each situation
and is designed by the project team.

The check sheet is a simple document that is used for collecting data
in real-time and at the location where the data is generated. The document is
typically a blank form that is designed for the quick, easy, and efficient
recording of the desired information, which can be either quantitative or
qualitative. When the information is quantitative, the check sheet is
sometimes called a tally sheet.

A defining characteristic of a check sheet is that data is recorded by

making marks (“checks”) on it. A typical check sheet is divided into regions,
and marks made in different regions have different significance. Data is read
by observing the location and number of marks on the sheet.

Histogram

The first “statistical” SPC technique is the histogram. It describes the

variation in the process. The histogram graphically estimates the process
capability and, if desired, the relationship to the specifications and the
nominal (target). It also suggests the shape of the population and indicates if
there are any gaps in the data.

26
 Histograms can give sufficient information about a quality problem to
provide a basis for decision making without further analysis. They can also
be compared in regard to location, spread, and shape. It is like a snapshot of
the process showing the variation. It can determine the process capability,
compare with specifications, suggest the shape of the population, and
indicate discrepancies in the data, such as gaps.

Scatter Diagrams

The simplest way to determine if a cause and effect relationship exists

between two variables is to plot a scatter diagram. Also called: scatter plot, X-
Y graph. The scatter diagram graphs pairs of numerical data, with one
variable on each axis, to look for a relationship between them. If the variables
are correlated, the points will fall along a line or curve. The better the
correlation, the tighter the points will hug the line. This cause analysis tool is
considered one of the seven basic quality tools. (The Quality tool box 2nd
edition by Nancy R. Tague)

PDSA Cycle

PDSA (plan – do – study – act) is an iterative four-step → problem

solving process typically used in business process improvement.

Kaizen Mindset

PDCA (plan – do – check – act) was made popular by Dr. W. Edwards

Deming. Later Deming modified PDCA to "Plan, Do, Study, Act" (PDSA) so as
to better describe the nature of → continuous improvement.

Plan: Establish the objectives and processes necessary to deliver

results in accordance with the expected output.

Do: Implement the new processes. Often on a small scale if possible.

Study: Evaluate the new processes and compare the results against
the expected results to ascertain any differences. Show how the quality of
goods can be improved.

Act: Analyze the differences to determine their cause. Each will be part
of either one or more of the P-D-S-A steps. Determine where to apply
changes that will include improvement. When a pass through these four steps
does not result in the need to improve, refine the scope to which PDSA is
applied until there is a plan that involves improvement.
27
 A fundamental principle of the scientific method and PDSA is iteration
– once a hypothesis is confirmed, executing the cycle again will extend the
knowledge further. Repeating the PDSA cycle can bring us closer to the goal,
usually a perfect operation and output.

Source: 1000ventures.com

Masters (1996) found the following contributing factors leading to

ineffective TQM Implementation:

1. Lack of management commitment;

2. Weak comprehension of quality management;
3. Inability to change organizational cultures;
4. Lack of accuracy in quality planning;
5. Absence of continuous training and education;
6. Insufficient resources.

28
Chapter 5 ISO Certification

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

29
Chapter 5: ISO Certification

Learning Outcomes:

After this chapter, students shall be able to:

- Understand and appreciate ISO;
- Learn and identify the significance of implementing ISO; and
- Apply ISO to the company.

Learning Contents:

5. ISO Certification
5.1 Quality Management System
5.2 Environmental Management System
5.3 Quality Awards

Introduction

Even before the arrival of the Spaniards in the Philippines our

forefathers were already doing business with Chinese and Indian traders.
And even then, we prove that the survival of communities has depended on
trade.

Trade continues to this day on the strength of the customer supplier

relationship. The relationship survives through trust and confidence. Broken
promises, whatever the cause, harm reputation and promises are broken
when an organization does not do what it committed itself to do. This can
arise either because the organization accepted a commitment it did not have
the capability to meet or had the capability but failed to manage it effectively.
This where ISO 9000 come in.

ISO 9000 is a set of criteria that, when applied correctly, will help
organizations develop the capability to create and retain satisfied customers.
ISO 9000 provides a tried and tested framework for taking a systematic
approach to managing the organization’s processes so that they consistently
turn out products that satisfy customer’s expectations. Some of the
requirements in ISO 9001 (which I one of the standards in the ISO 900
family) include:
1. A set of procedures that cover all key processes in the business;
2. Monitoring processes to ensure they are effective;
3. Keeping adequate records;
4. Checking output for defects, with appropriate and corrective action

30
where necessary;

31
 5. Regularly reviewing individual processes and the quality system
itself for effectiveness; and
6. Facilitation continual improvement

Quality Management System

A quality management system (QMS) is a set of policies, processes and

procedures required for planning and execution
(production/development/service) in the core business area of an
organization (i.e., areas that can impact the organization’s ability to meet
customer requirements). ISO 9001 is an example of a Quality Management
System. Some people generically refer to the group of documents as a QMS,
but specifically, it refers to the entire system – the documents just describe
it.

A QMS integrates the various internal processes within the

organization and intends to provide a process approach for project execution.
A process based QMS enables the organizations to identify, measure, control
and improve the various core business processes that will ultimately lead to
improved business performance.

A complete ISO 9001 Quality Management System must address all the
requirements of ISO 9001, including the ISO 9001 documentation
requirements.

The Concept of Quality Management

A Quality Management System in its basic concept is quite simple. It

seeks to:

- Recognize interested party requirements including Licenses to Trade,

guidelines, customer requirements, and the chosen management
system standard(s).
- Ensure that all requirements have been met.
- Confirm that employees receive applicable training in the quality
system requirements.
- Determine processes, their interaction, inputs and outputs.
- Produce records or evidence that system requirements have been met.
- Measure, monitor and report the performance of the QMS.
- Plan changes to the QMS and take actions to address risks and
opportunities as a result of changes.
- Perform internal audit to analyze the QMS and correct nonconformities.
- Continually improve the QMS.

32
What a Quality Management System Is Not

There are many definitions for general quality management systems.

Most of them emphasize the use of some type of system that is repeatable,
measurable and constantly improving. In an ISO 9001 (or other ISO
standards) quality system, this structured way of delivering a better service
or product is supported by documented information such as procedures,
work instructions, policies and forms. The key is to provide all those who
must execute the quality system with documented, understandable and
workable instructions which define both expectations, responsibilities and
actions to achieve the stated quality goals. Most of the systems include some
type of external and internal auditing process which ensures that the system
is in compliance with requirements.

At its core, a quality management system is an integrative element,

uniting diverse aspects of a company into a unified purpose of delivering
products/services in their best form. Rather than be seen as a cost burden,
an effective quality management system is viewed as a key component of
success. Quality management systems focus on:

- Being centered on the customer or consumer of the good or service,

actively providing that customer with the best value possible.
- Some type of continuous improvement program, which implies that
there is not a “perfect” state, all processes can be continually improved
upon.
- An efficiency imperative that says waste must be reduced and all
resources maximized.
- Top management is to support and provide adequate resources to
achieve goals.
- It aids or facilitates a clear understanding of expectations between all
participants.
- Measurement and accurate data collection are incorporated to support
data-driven decision making.
- Documentation of QMS processes is maintained and controlled.

The three primary processes of a management system include:

1. Core processes, their outputs, and the identification of significant

environmental aspects and impacts
2. Key supporting processes, such as those for maintaining awareness of
legal requirements, ensuring competency of employees, providing
infrastructure, communicating EMS information, and monitoring and
evaluating environmental performance

33
 3. Management system supporting processes, such as document control,
record control, and internal auditing

Like many quality management systems, environmental management

systems reinforce a need to align processes into integrated systems of
processes, all focused on providing the highest value to the customer. In this
sense, the primary customer of the EMS is the local, regional, and global
environment. Secondary customers may include the organization’s owners or
shareholders, customers, government agencies, and employees.

ISO 14001:2015 and Environmental Management Systems

The International Organization for Standardization (ISO) developed an

international standard, ISO 14001, to specify requirements for environmental
management systems. According to ISO, more than 300,000 organizations in
171 countries have certified to ISO 14001, including more than 3,800
companies in the Unites States.

The standard was revised in 2015. As part of the development process,

ISO conducted a continual improvement survey to develop an understanding
of the needs of current, past, and potential users.

The purpose of the ISO 14001 management system standard is to

specify general requirements and guidelines that, when followed, should
provide reasonable assurance that the outputs from the system will have
minimal negative environmental impact and improved environmental
performance. It should be noted that the ISO 14001 standard is no
prescriptive; that is, it details what should be done, not necessarily how to do
it.

The ISO 14001 standard is developed around the plan-do-check-act

(PDCA) model of improvement, an iterative process that must be applied
regularly to ensure benefits are being realized and the standard is being
upheld. The primary operational components of an ISO 14001 EMS can be
grouped as follows:

1. Create/update environmental policy.

2. Plan:
▪ Environmental aspects
▪ Legal and other requirements
▪ Objectives, targets, and programs
3. Do:
▪ Resources, responsibilities, and authority

34
 ▪ Competence, training, and awareness
▪ Communication
▪ Documentation
▪ Control of documents
▪ Operational control
▪ Emergency preparedness and response
4. Check:
▪ Monitor and measure
▪ Evaluate compliance
▪ Nonconformity, corrective and preventive action
▪ Control of records
▪ Internal audits
5. Act:
▪ Management review
▪ ISO 14001 audit

The advantages of using an environmental management system include:

- Ensuring a holistic approach to environmental impacts
- Focusing on only critical aspects and processes
- Making use of time-tested, mature approaches recognized worldwide
- Establishing positive relationships with regulators

Economic benefits of implementing an environmental management

system or good environmental stewardship that an organization can expect
are discussed in greater detail in Joe Kausek’s book Environmental
Management: Quick and Easy. Kausek identifies four significant economic
benefits:

1. Corporate reputation and image

2. Lower environmentally related costs and fees
3. Increased access to new customers
4. Direct savings through environmental source reduction

Susan L.K. Briggs discusses the ways to measure and show value of an
EMS within an organization in the Quality Progress article, "Do
Environmental Management Systems Improve Performance?" In addition to
the obvious quantifiable benefits in reductions in pollutant emissions and
waste, there are three approaches to measuring improvements within an
organization:

1. Management system improvement: Qualitative and quantitative

improvements to management support processes, such as
employee

35
 training and awareness, compliance assurance processes, or
corrective/preventative action programs
2. Organizational reputation: Unquantifiable improvements in an
organization’s reputation or improved relations with regulatory
bodies, community organizations, or other interested parties
3. Financial benefits: Quantitative cost savings or cost avoidance
associated with any of the improvements

Since the ISO 14001 standard is non-prescriptive, it is important to

understand that an environmental management system is what any
organization makes it. If one organization does not realize the expected
benefits from its management system, an improvement team should identify
the organization’s level of maturity and take the steps needed to proceed to
the next level in order to reach the full potential of the environmental
management system.

The History of Environmental Management System

Quality approaches have traditionally maintained a fairly strict focus

on business and customer issues, such as reducing defects and waste and
improving efficiency, profitability, and customer satisfaction.

Environmental and sustainability goals for quality initiatives are

relatively recent. Because the business world is accustomed to treating
environmental practices as sources of added costs, the challenge for quality
practitioners is to identify where environmental and sustainability quality
issues, such as reduction of waste and use of renewable energy, also serve
business and customer interests.

In EMS the Bridge to Sustainability, a presentation available from the

Energy and Environmental Division, Chris Spire of the ANAB Accreditation
Council explains the characteristics of each stage in the evolution of
compliance management to sustainability:

- 1990 to 1994: Compliance management (CM) meant focusing on

regulation and relying on environmental departments to react to
issues.
- 1994 to current: Environmental management systems (EMS) brought a
more systematic, organization-wide focus on environmental issues.
- 1998 to current: Environmental information management systems
(EIMS) involve using web-based systems and integrating multiple
systems.
- 2002 to current: Environmental process management systems (EPMS)
make use of quality tools, using a project focus to drive improvements.
36
 - 2006 to current: Sustainability requires integrating environmental,
social, and economic goals and using best practices to address risk and
uncertainty.
In 2004, Larry R. Smith of Ford Motor Co. defined sustainability as
"finding win/win/win solutions for both the short- and long-term effects of
design on social responsibility, environmental performance and business
results—the triple bottom line."

Quality Awards

The Malcolm Baldrige National Quality Award competition to identify

and recognize top quality companies. This model addresses a broadly based
range of quality criteria, including commercial success corporate leadership.
Once an organization has won an award it has to wait several years before
being eligible to apply again.

The European Foundation for Quality Management (EFQM)

Excellence Model supports an award scheme similar to the Malcolm Baldrige
Award for European companies.

In Canada, the National Quality Institute presents the ‘Canada Awards

for Excellence” on an annual basic to organizations that have displayed
outstanding performance in the areas of Quality and Workplace Wellness,
and have met the Institute’s criteria with documented overall achievements
and results.

The Alliance for Performance Excellence is a network of state, local,

and international organizations that use the Malcolm Baldrige National
Quality Award criteria and model at the grassroots level to improve the
performance of local organizations and economies. Network for
excellence.org is the Alliance web site; browsers can find Alliance members in
their state and get the latest news and events from the Baldrige community

37
 Chapter 6 Customer Satisfaction

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
Enrichment Exercises

38
Chapter 6: Customer Satisfaction

Learning Outcomes:

After this chapter students shall be able to:

- Know and understand the importance of customer satisfaction in
business organization.
- Understand customer perception of TQM.
- Know the importance of customer feedback and complaints in
providing quality customer service.

Learning Contents:

6. Customer Satisfaction
6.1 Service Quality
6.2 Features of Services
6.3 Customer Satisfaction
6.4 Kano Model
6.5 Customer Requirements
6.6 The Government Citizen’s Charter

Introduction

Total Quality Management suggest an organizational desire to meet or

exceed customers’ expectations, to the point that customers are delighted.
Understanding the customer’s needs and expectation is necessary to win new
business and keeps existing business. Business organization must give its
customers a quality product or a service that meets their needs, a reasonable
price, on time delivery, and outstanding service. To achieve this level, the
organization must continually examine their quality system to see if it is
responsive to ever changing customer requirements and expectations.

Dr. W. Edwards Deming stated, “Quality means anticipating the future

needs of the customer. Customer satisfaction, not increasingly profits, must
be the primary goa of the organization. It is the most important
consideration, because satisfied customers will lead to increase in profits.”
Total satisfaction is achieved when the offer matches the need or exceeded
the expectations.

One fundamental concept of TQM is a continuous focus on customers,

both internal and external. Most personnel know about the external
customer or end user but may not think of other personnel who are internal

39
customers of their own output.

40
Service Quality

Customer satisfaction and service quality are inter-related. The higher

the service quality, the higher is the customer satisfaction. Many agree that
in the banking sector, there are no recognized standard scales to measure the
perceived quality of a bank service.

It is a combination of two words, Service and Quality where we find

emphasis on the availability of quality services to the ultimate users. The
term quality focuses on standard or specification that a service generating
organization promises. We can’t have a clear-cut boundary for quality. Sky is
the limit for quality generation. Scientific inventions and innovations make
the ways for the generation of quality. More frequency in innovations, less
gap in the process of quality up-gradation.

Features of Services

One of the fundamentals of TQM philosophy is continuous process

improvements. This concept implies that there is no acceptable quality level;
therefore, the customer’s needs, values or expectations are constantly
changing and becoming more and more demanding.

Many people check consumer’s magazines or surf their internets,

before making final decisions on major purchases. The American Society for
Quality Control (ASOC) conducted a survey on customer’s perception of
important factors that influenced purchases showed the following ranking:

1. Performance
2. Features
3. Service warranty
4. Price
5. Reputation

The factors of performance, features, and warranty are part of product

quality; therefore, it is evident that product quality and service are more
important than price. Although this information is based on the retail
customer, seemingly, to some extent, it is also true for the commercial
customer.

41
Performance

Involves “fitness for use”, this phrase tells that product quality and
services is ready for the customer’s use at the time of sale. Other
considerations are: availability, which is the probability that a product will
operate when needed; reliability, which is freedom from failure over time;
and maintainability, which is the case by which the product can be kept
operable.

Features

Identifiable features or attributes of a product or service are

psychological, time oriented, contractual, ethical, and technological. Features
are secondary characteristics of the product or service.

Service

The emphasis on customer service is greatly emerging as method for

business organizations to give the customer added value. Customer service
intangible, it is made up of many small things, all directed to change or
improved customers perception.

Warranty

This represents a business organization’s public promise of a quality

product supported by a guarantee of customer satisfaction. This requires the
organization to focus on the customer’s definition of product and service
quality. This also motivates customers to buy a service by reducing the risk
of the purchase decision and it generates more sales from existing customers
by enhancing loyalty.

Price

Present customers are willing to spend a higher price to obtain value.

Customers are constantly evaluating one business organization’s products
and or services against those of its competitors to determine who provides
the greater value.

Reputation

Total customer satisfaction is based on the entire experience with the

business organization. Good experiences are repeated to six people and bad
experiences are repeated to fifteen people; therefore, it is more difficult to

42
create a favorable reputation.

Customer Feedback

According to D.H. Beterfield, customer feedback must be continually

solicited and monitored. Feedback enables the business organization to:

1. Discover customer dissatisfaction

2. Discover relative priorities of quality
3. Compare performance with the competition
4. Identify customers’ needs
5. Determine opportunities for improvement.

Methods to obtain Reponses from the customers

Comment card

It’s a low-cost method of obtaining feedback from customers. It is

usually attached to the warranty card and is included with the product at the
time of purchase. The purpose of the card is to get basic information, such
as name, sex, age, address, occupation, monthly income etc. However, there
are very little incentives for buyers to respond to this type of card and quality
of the response may not provide a true measure of customer’s feelings.

Survey

This is a common technique or tool for gathering opinions about a

business organization and its products and services. However, it can be
costly and time consuming. This can be administered by mail, telephone/
mobile
/email /FB and YouTube.

Focus groups

A focus group is a research method used to determine what the

customers are thinking. A group of customers is gathered in a meeting room
to answer several questions. Meetings are designed to focus on current,
proposed, and future products and services. The people selected to
participate have the same profile as the customers that the business
organization is trying to attract. Focus groups are sometimes used with a
business organizations personnel to examine internal issues.

Toll free Telephone Numbers

43
 This is a good technique for receiving complaint feedback. Business
organizations can respond faster and cheaper to the complaint.

44
 Customer Visits

Visit to a customer’s place is another strategy to gather information

about the products and services of a business organization. Managers should
be evolved in these visits and should not be delegated to just anybody.

Report card

This is another way of gathering information about a given product or

service. Normally, it is sent to every customer on a quarterly basis. The data
shall be analyzed to determine the areas of improvement.

Kano Model

Kano Model is a conceptualization of the customer requirements by

representing the major areas of customer satisfaction.

In the 1980's, Professor Noriaki Kano developed a system of product

development and customer satisfaction to help classify customer preference
and focus business effort. This system is called the Kano Model, and is used
in many industries around the world today.

Companies today use the Kano Model to help identify what their
customers really value in their products. This can be helpful to determine
how to change or improve a product, and can also be used to evaluate
whether a new product that is being considered is a good idea.

Source: https://www.creativesafetysupply.com/articles/kano-model/)

45
 The Kano Model works by breaking the features of products down into
groups based on how they contribute to customer satisfaction. There are five
categories identified. A product or feature of a product can be listed in any
one of the categories. The category that it is in, however, can change over
time based on changing attitudes of consumers.

Each category is named after a translation from the original Japanese

names written by Kano himself. The following image can show how the
information, and the categories, can be tracked to make it easier for those
using this model:

Must-Be Quality

Any product or feature that is in the must-be quality category are going
to be requirements from consumers. This is not to say that customers '˜really
want' them, but rather that they take them for granted. While it might seem
that products in this category would be great marketing points that is not
typically the case. When a must-be quality feature is done properly,
consumers won't really notice them. When they are done incorrectly,
customers will be extremely upset.

An example of this would be the door on a vehicle. Customers want the

door to open and close easily, lock and unlock conveniently, and have
windows that go up and down without trouble. This is just an expected
feature of every vehicle, and customers don't put much thought into it at all.
If a car was made with a door that didn't work, however, customers would not
purchase that car.

One-Dimensional Quality

A one-dimensional quality product or feature is one that, when

delivered upon properly, will drive customer fulfillment. If it fails to deliver,
customers will be dissatisfied. These items are typically used as part of
marketing, and talked up to boost sales. An easy example of this when a
product advertises saying, 'contains 10% more than the competitors.' If the
container does indeed contain 10% more, customers will be happy about
getting a good deal. If the container actually only contains 5% more,
customers will be upset because they were lied to.

In the example, the numbers would be real, but this can also apply to
perceived failure to meet the promise. If a company says 10% more by volume,
a customer may weigh the product and find that they aren't getting 10% more

46
than the competitor, even though by volume, there is 10% more. This is why
it can be so important to look at consumer perception, not just raw numbers.

Attractive Quality

An attractive quality is one that will cause increased satisfaction to

customers when done, but won't cause dissatisfaction when the feature is
missing. In most cases, these features won't be something that is advertised,
but rather will be a '˜pleasant surprise' when the customer finds it on their
own. This could be something like a coupon for their next purchase printed
inside the box.

In many industries, the features that are listed under this category are
what are most often used to set a product apart from the competition. When
a base version of a product is similar no matter what company makes it, it is
these attractive qualities that can help to swing a customer to one brand over
another.

Focusing on attractive quality features is also smart because in the

event that the feature is not implemented properly, customers still won't be
upset about having it there. This helps to limit the potential downside (other
than the expenses associated with it) and maximizes the upside potential.
Each industry will have to determine if this is a good strategy for their
particular situation.

Indifferent Quality

An indifferent quality is something that customers won't care about

one way or the other. In most cases, they aren't even aware of these types of
features. In a cereal box, for example, an indifferent quality would be the
thickness of the cardboard that is used. As long as the box holds the cereal,
they don't care how thick it is. Manufacturers need to make this decision
based on factors like cost, shipping durability, and more while keeping in
mind that the end consumers won't ever give it a second thought.

Reverse Quality

Reverse quality features can cause consumer dissatisfaction, even

when done properly. This is typically due to the fact that not all customers
are alike, and requires brands to be well aware of their target audience. Smart
Phones are a good example of this. Adding advanced technology to phones
takes a lot of investment, and should be done with the understanding that a

47
portion of the market will be dissatisfied because of the complexities that
advanced technologies bring.

Benefits of the Kano Model

Using the Kano Model allows a company to take information from

consumers, and apply it directly to the planning and creation of products.
Companies can conduct consumer surveys and use the information that is
put into this model to evaluate whether a particular product or feature is
worth the time and capital that it would take to create and produce.

The information can also be used to come up with products or features

that customers are more likely to want to purchase, since a company will
have a better idea of what types of things they demand.

48
Chapter 7 Employee
Involvement

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

49
Chapter 7: Employee Involvement

Learning Outcomes:

At the end of this chapter, the student shall be able to:

- Know the value of inspiring and encouraging the workers.
- Apply the concepts of performance evaluation, performance
acknowledgment and reward as a method of sustaining quality and
efficiency achievement.

Learning Contents:

7. Employee Involvement
7.1 Effective Communication
7.2 Employee Motivation
7.3 Teambuilding
7.4 Team Trainings
7.5 Performance Appraisal
7.6 Employees Recognitions
7.7 Benefits of Employees

Introduction

Total Quality Management is the task of everyone in the organization

(from top to bottom). Employee involvement plays an essential part in the
continuous improvement of the quality of business’ products and services to
meet and exceed customers’ desired expectations. Some approach under
employee involvement involves the effective communication, employee
motivation, employees’ safety, teamwork, training and seminars,
performance appraisal, employees’ recognitions, and benefits of employees
given by the management as support and help to their employee’s
development and productivity.

What is Employee Involvement?

Employee involvement is very important for the achievement and

maintenance of high-quality standards. All the employees should be involved
in working to achieve common goals. Employees must be encouraged and
involved in quality enhancement programs. The staff must be empowered
and developed to be fully committed to improving the quality. Regular
training and development of employees is essential for the achievement and
maintenance of high-quality standards.

50
Effective Communication

Effective communication is an indispensable instrument of

organizational success, because without communication one remains isolated
and stranded. Effective communication occurs when the desired effect is the
result of intentional or unintentional sharing of information, which is
interpreted by multiple entities and acted upon in the desired manner. This
effect also ensures that the message is not distorted during the
communication process. Effective communication should generate the
desired effect and maintain the effect, with the potential to increase the
impact of the message. Effective communication therefore serves the purpose
for which it was planned or designed. Possible purposes may be to bring
about change, to generate action, to create understanding, to inform or to
communicate a certain idea or point of view. When the desired effect is not
achieved, factors such as communication barriers are explored, with the aim
of discovering how communication has been ineffective.

Employee Motivation

Every organization, down to specific positions, offers opportunities for

motivation. Motivating factors include such thing as:

1. Improving morale
2. Improving job skills
3. Utilizing proper and timely communication skills
4. Having a safe work environment
5. Exercising good management skill
6. Acknowledging that job security is important
7. Developing a good communication system

Effective communication is one of the keys to motivation. Employees

need to know that they are important, as individuals, not as numbers.

There are theories that supports the idea of motivation and one these
is expressed in hierarchy theory by Dr. Abraham H. Maslow. This is the most
quoted of all the theories existing today. Maslow’s hierarchy consisted of five
levels. These are survival, security, social, esteem, and self-actualization (see
figure below).

51
 Source: www.simplypsychology.org

Another theory is Theory X authored by Sigmund Freud. This

characterizes employees as given below:
1. Avoid work
2. No ambition
3. No initiative
4. Do not take responsibility
5. Needs security

To make the employees work, management has to do the following:

1. Reward
2. Coerce
3. Intimidate
4. Punish

Douglas Mc Gregor is the author of Theory Y. Mc Gregor’s theory of

people is given below:
1. Want to learn
2. Work is a natural activity
3. Have self-discipline
4. Develop themselves

These employees do not get motivated as much by any reward, but they
seek free-all by themselves. If the managers can guide the employees in
identifying challenging jobs, the potentials of the employees will be realized.

Frederick Herzberg has divided the motivational aspects of human

beings (Herzberg two-factory theory) into the following:
1. Hygiene Theory
2. Motivation

52
 The hygiene theory is the minimum that every employee requires for
not being dissatisfied. Without the above, the employee will get dissatisfied.
There are the basic needs. Further efforts are needed to motivate the
employees.

Hygiene Theory includes:

1. The company
2. Its policies and its administration
3. The kind of supervision which people receive while on the job
4. Working conditions
5. Interpersonal relations
6. Salary
7. States
8. Security

Motivation factors include:

1. Achievement
2. Recognition for achievement
3. Interest in the task
4. Responsibility for enlarged task
5. Growth and advancement to higher level tasks.

Team Building

Team building is fundamental part of the empowerment process. One

basic barrier in team building is resistance from supervisors. Supervisors
play a key role in effective team building and without their support it will fail.
Common reasons why supervisors do not support empowering teams are:

1. Reluctance to give up power

2. Preconceived ideas about subordinates
3. Need to set a good example
4. Job sensitivity
5. Can do it better
6. Fear of looking bad
7. Ultimately held accountable

A team is defined as a group of individuals working together to achieve

common goals and objectives. Teams are successful because of the emphasis
placed on individuals. Modern processes are more complex, requiring the
involvement of individual employees. Going from specialized job, functions
to a team environment where team members share responsibility and
accountability will increase the degree of quality, efficiency, and

53
effectiveness.

54
Team Trainings

Working as a team is a new concept to many employees. Training is

very important for an effective team. The quality council must take an active
role in establishing the training program. Large business organizations spend
thousands of money in team training.

The training must be experimental, because the trainees will retain

20% of what they do. Training should be practical when possible, role-
playing and case studies should be used. Trainers should be carefully selected
for their knowledge, enthusiasm, and respect from the trainees.

Performance Appraisal

The objective of performance appraisal is to improve performance, let

employees know how they are doing and provide a basis for promotions,
salary increases, counseling, and other purposes related to an employee’s
future. There should be a good relationship between the employee and the
appraiser. Employees should be made aware of the appraisal process, what is
evaluated, and how often. Employees should be told how they are doing on a
continuous basis, not just at appraisal time. The appraisal should point out
strengths and weaknesses as well as how performance can be improved.

Employees Recognition and Award

Recognition and reward have an important role in motivation and

employee satisfaction. They are powerful moves for letting employees know
they are important members of the business organization. Recognition and
award recognize and promote goal related activities. Awards are forms of
employee’s involvement in which the organization identifies and gives
recognition to employees who made a positive contribution to the
organization’s success.

Awards should be appropriate to the situation by being rank-ordered,

the higher the achievement, the higher the award. Awards may be such things
as a bonus, salary increase, and change in title, promotion, concert tickets,
educational tour, or perhaps a part on the back, and etc.

Benefits of Employees

Involving employees, empowering them, and bringing them into the

decision-making process provide the opportunity for continuous process

55
 improvement. The latent potentialities, ideas, innovations and creative
thoughts of employees can make the difference between success and failure.
Benefits can be derived from the employee’s involvement, as stated by
D.H Besterfields:

1. Employees make better decisions using their expert knowledge of

the process.
2. Employees are more likely to implement and support decisions
they had a part in making.
3. Employees are better able to spot and pinpoint areas
for improvement.
4. Employees are better able to take immediate corrective actions.
5. Employee involvement reduced labor/management problems.
6. Employee involvement increases morale by creating a feeling of
belonging to the organization.

56
Chapter 8 Continuous Process
Improvement

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

57
Chapter 8: Continuous Process Improvement

Learning Outcomes:

At the end of this chapter, the students shall be able to:

- Value the famous methods of quality improvement.
- Learn the Juran Trilogy.
- Apply effective methods of problem solving in their everyday lives.

Learning Contents:

8. Continuous Process Improvement

8.1 Juran Trilogy
8.2 Kaizen
8.3 Workplace Effectiveness
8.4 Three MU’s

The Importance of Continuous Process Improvement

The primary goal is to attain perfection by continuously improving the

business and production processes. Ideally, perfection is an elusive goal;
however, we must continuously aspire for its achievement.

We continuously improve by:

1. Considering all work as a process, whether it is associated with
production or business activities/tasks
2. Doing effective, efficient, and adaptable processes.
3. Forecasting changing customer needs
4. Regulating in-process performance using measures such as scrap
reduction, cycle time, control charts, etc.
5. Keeping constructive dissatisfaction with the present level of
performance
6. Removing waste and rework wherever in occurs
7. Evaluating activities that do not add value to the product or
service, with the aim of removing those activities
8. Removing nonconformities in all phases of everyone work, even if
the increment of improvement is small
9. Benchmarking to improve competitive advantage
10. Planning to achieve breakthroughs
11. Keeping gains so there is no regression
12. Integrating lessons learned into future activities

58
 13. Employing technical tools such as Statistical Process Control
(SPC), experimental design, benchmarking, Quality Function
Development (QFD), etc.

Process refers to business and production activities of all organization.

Business processes such as purchasing, engineering, accounting, budgeting
and marketing are areas where nonconformance can represent an
opportunity for substantial improvement.

There are five basic ways of improvement, according to D. H. Besterfield:

1. Reduce resources
2. Reduce errors
3. Meet or exceed expectations of downstream customers
4. Make the process safer, and
5. Make the process more satisfying to the person doing it.

The last way to improve a process is to increase the satisfaction of the

individual performing the process. Although it is difficult to quantify, the
evidence suggests that a happy, satisfied employee is a more productive one.
Sometimes a little change, such as a better table, can make a substantial
change in a person’s attitude.

The Juran Trilogy

Process improvement involves proper planning. Dr. Joseph M. Juran

developed three components of process improvement, such as: planning,
control, and improvement.

Planning

The planning component starts with external customers. Marketing

determines the external customers and all organizational personnel, either as
managers or members of multifunctional teams or work groups, determine
the internal customers. External customers may be quite numerous, as is the
case of a bank supply organization, where they include tellers, financial
planners, loan officers, auditors, managers, and the bank’s customers. Where
there are numerous customers, a Pareto diagram might be useful to
determine the vital few.

59
Control

Control is used by operating forces to help meet the product, process,

and service requirements. It uses the feedback loop and consists of the
following steps:
1. Evaluate actual operating performance
2. Compare actual performance to goal
3. Act on the difference

Statistical Process Control (SPC) is the primary technique for achieving

control. The basic Statistical Process Control (SPC) tools are: histograms,
control charts, and scatter diagrams.

Improvements

This part of the Juran trilogy aims to achieve levels of performance that
are significantly higher than current levels. Process improvements begin with
the establishment of an effective infrastructure such as the quality council.
Two of the duties are to identify the improvement projects and establish the
project teams. Furthermore, the quality council needs to provide the teams
with the resources to determine the cause, create solutions and establish
controls to hold the gains.

Kaizen

Kaizen, a Japanese word, is the philosophy that defines management

role in continuously encouraging and implementing small improvements
involving everyone. It is the process of continuous improvement in small
increments that makes the process more efficient, effective, under control
and adaptable. Improvements are usually accomplished at little or no
expense without sophisticated techniques or expensive equipment. It focuses
on their sub-processes and then improving them.

Kaizen largely depends on a culture that encourages suggestions by

operators who continuously try to improve job or process.
There are three (3) basic principles of Kaizen:
1. Work place effectiveness
2. Elimination of waste, strain and discrepancy
3. Standardization

60
Workplace Effectiveness

Japanese have developed 5S tools for addressing the work

effectiveness. 5S is a management tool focused on fostering and sustaining
high quality housekeeping.

The 5S practices are:

1. Seiri (Sort) – separate out all unnecessary things and eliminate
them.
2. Seiton (Straighten) – arrange the essential things in order, so that
they can be easily accessed.
3. Seiso (Scrub) – keep machinery and working environments clean.
4. Seiketsu (Systematize) – make cleaning and checking as a routine
practice.
5. Shitsuke (Standardize) – standardize the previous steps.

Eliminating Waste, Strain, and Discrepancy

Kaizen is achieved through application of 5S tools for workplace

effectiveness and elimination of three Mus. The three (3) Mus stands for
three Japanese words Muda (means waste), Muri (means strain), and Mura
(means discrepancy).

The waste is not free, but have been paid for by the organization, since
those who produce waste also get paid and the material wasted costs money.
Therefore, one has to minimize and ultimately eliminate the waste in an
organization. The waste, strain, and discrepancy in respect of the following
are reduced and finally eliminated:

1. Human Resources
2. Production Volumes
3. Inventory (materials)
4. Time
5. Working Space
6. Machinery
7. Technique
8. Facilities
9. Tools and Jigs
10. Thinking

61
Standardization

Kaizen stresses standardization of processes, materials, machinery, etc.

with the following objectives:

1. Represent the best, easiest and safest way to carry out a job in
the form of operating procedures and work instructions.
2. Represent the best way to presence know-how and expertise and
standardize the procedures for the same.
3. Evolve effective means to measures performance and
standardization for the same.
4. Standardize all the procedures that are used in the organization
for maintenance and improvement of process.
5. Standardize the training programs.
6. Standardize the audit for diagnosing problems.
7. Standardize the procedures for preventing occurrence of errors
and minimizing variability.

62
Chapter 9 Supplier Partnership

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

63
Chapter 9: Supplier Partnership

Learning Outcomes:

At the end of this chapter, students shall be able to:

- Know the value of working in collaboration with suppliers.
- To understand the method of choosing, certifying and ranking
suppliers.
- Apply the concepts of establishing a good client / supplier partnership.

Learning Contents:

9. Supplier Partnership
9.1 Importance of Suppliers
9.2 Partnering and Sourcing
9.3 Supplier Selection
9.4 Principles of Customer – Supplier Relations
9.5 Supplier Certification
9.6 Supplier Rating
9.7 Relationship Development

Importance of Suppliers

We can safely assume that more than 50% of every sales peso is spent
by a business organization in purchased raw materials, components, and
services. Therefore, poor supplier quality has a substantial unfavorable
output. One vital key in obtaining high quality products and services is to
work with suppliers in a partnering atmosphere to attain the same quality
level as achieved within the business organization.

Business organizations and suppliers have the same goals, which is to

satisfy the end user. The better the supplier’s quality, the better its long-term
position because the business organization itself will have better quality.
Because bot the business organization and the supplier have limited
resources, they must work together as partners to maximize their return on
investments.

Partnering

Partnering is a long-term commitment between two or more business

organizations for the purpose of attaining specific goals and objectives by
maximizing the effectiveness of each participant’s resources. The relationship
is based upon trust, dedication to common goals and objectives, and
64
understanding of each other’s expectations and values. Benefits include
improved quality, increase efficiency, lower cost, increased opportunity for
innovation, and the continuous improvements of products and services.
Partnering is a multi-faceted relationship needing continuous nurturing to
attain improvement and maximum benefit.

There are three elements to a partnering relationship: long-term

commitment; trust; and shared vision, according to Rusty Haggard.

1. Long-term Commitment: The benefits of partnering are not

achieved quickly. Problems require time to solve or processes need
constant improvement. Long-term commitment provides the
needed environment for both parties to work towards continuous
improvement. There must be a total business organization
involvement from the CEO down to the workers.

2. Trust: Trust enables the resources and knowledge of each partner to

be combines to eliminate an adversarial relationship. Partners are
then able to share information and accept reduced control. Mutual
trust forms the basis for a strong working relationship. It should be
viewed as a “leap of faith” or paradigm shift and begins with the
purchase contract. The purchasing functions of the organization
must be subordinate to the overall relationship goals and objectives.
There should be no terms that create an adversarial environment.

3. Shared Vision: Every partnering business organizations must

understand the need to satisfy the end-user. To achieve this vision
there should be an open and candid exchange of needs and
expectations. Shared goals and objectives ensure a common
direction and must be aligned with each party’s mission. Employees
of both partners must understand each other’s business so that
equitable decisions are made. These decisions must be formulated
and implemented as a team.

Sourcing

There are three (3) types of sourcing: sole; multiple; and single, as
stated by A. Aswad:

1. Sole: The business organization is forced to use only one supplier.

This situation is due to the following factors, such as: patents;
technical specifications; raw materials locations; only one
organization producing the item; or the item being produced by

65
 another plant; or division of the business organization. Partnering is
a natural consequence of this type so that the end user is satisfied.

2. Multiple: Multiple sourcing is the use of two or more suppliers for

an item. Usually three suppliers are chosen, and their portion of the
business is a function of their performance in terms of price,
quality, and delivery. The theory of multiple sourcing is that
competition will result in better quality, lower costs, and better
service. In practice, an adversarial relationship results without the
claimed advantages. Multiple sourcing does eliminate description of
supply due to strikes and other catastrophes.

3. Single: this is a planned decision by the business organization to

select one supplier for an item when several sources are available. It
results in large, long-term contracts and a partnering relationship.
With a guaranteed future volume, the supplier can direct its
resources to improve the processes. For the organization, the
advantages are reduced cost, complete accountability, supplier
loyalty, partnering, and a better end product with less variability.
Delivery disruption is always a problem and is even more so with
the JIT technique.

Supplier Selection

There are three questions that need to be clarified before the business
organization shall decide whether or not to produce or outsource a particular
item, such as:

1. How critical is the item to the design of the product or service?

2. Does the business organization have the technical knowledge to
produce the items internally? If not, should we develop that
knowledge?
3. Are there suppliers who specialize in producing the item? If not, is
the organization willing to develop such a specialized supplier?

The above-mentioned questions must be answered in terms of cost,

delivery, and the acquisition of the technical knowledge.

Principles of Customer/Supplier Relations

Kaoru Ishikawa recommended ten principles to ensure quality

products and services and eliminate unsatisfactory conditions between the
customer and the supplier, such as:

66
 1. Both the customer and the supplier are fully responsible for the
control of quality with mutual understanding and cooperation
between their quality systems.
2. Both the customer and the supplier should be independent of each
other and respect each other’s independence.
3. The customer is responsible to provide the supplier with clear and
sufficient requirements so that the supplier can know precisely what
to produce.
4. Both the customer and the supplier should enter into a non-
adversarial contract with respect to quality, quantity, price, delivery
method, and terms of payments.
5. The supplier is responsible for providing the quality that will satisfy
the customer and submitting necessary data upon the customer’s
request.
6. Both the customer and the supplier should decide the method to
evaluate the quality of the product or service to the satisfaction of
both parties.
7. Both the customer and the supplier should establish in the contract
the method by which they can reach an amicable settlement of any
disputes that may arise.
8. Both the customer and the supplier should continuously exchange
information that will improve the product or service quality.
9. Bothe the customer and the supplier should perform business
activities such as procurement, production and inventory planning,
clerical work, and systems so that an amicable and satisfactory
relationship is maintained.
10. Both the customer and supplier, when dealing with business
transaction, should always have the best interest of the end user in
mind.

Supplier Certification

Certification process shall start after the supplier begins shipment of

the product. This process has been described by the Customer/Supplier
Technical Committee of American Society for Quality Control (ASQC), which
developed the following eight certification criteria:

1. The customer and supplier shall have agreed upon specifications

that are mutually developed, justifiable, and not ambiguous.
2. The supplier shall have no product-related lot rejections for a
significant period of time, say one year, or significant number of
lots, say twenty.

67
 3. The supplier shall have no non-product-related rejections for a
stated period of time, say three months, or number of lots, say five.
Non-product related nonconformities such as the wrong count or a
billing error are not as serious as product-related ones and are
usually correctable in a short period of time.

The supplier shall have no negative non-product-related incidents for

a stated period say six months, or number of lots, say ten. This criterion
covers incidents or problems that occur even though inspections and test
showed conformance to specifications. Most likely the supplier would have
been notified of the incident by memorandum.

4. The supplier shall have a fully documented quality system. ISO

9000 is an excellent model to build a system even if registration is
not the goal.
5. The supplier shall have successfully passed an on-site system
evaluation. This evaluation could be done by the third party as an
ISO 9000 registrar or by a second party – the customer.
6. The supplier must make inspection and tests. Laboratory results are
used for batch processes and Statistical Process Control (SPC) is
used for piece part production.
7. The supplier shall have the ability to timely provide inspection and
test data. Because this documentation is necessary when the
product arrives, it must be sent by FAX, computer hookup, or
courier.

There are benefits to certification: (1) It eliminates receiving

inspection, which allows the supplier to ship directly to stock. (2) A
customer/supplier partnership is created with each partner being responsible
for their appropriate quality. (3) It also reduces the number of suppliers to a
manageable level.

Supplier Rating

The objectives of a supplier rating system, as stated by R.J Dekock, are:

1. To obtain an overall rating of supplier performance.
2. TO ensure complete communications with supplier concerning their
performance in the areas of quality, service, delivery, and any other
measure the customer desires.
3. To provide each supplier with a detailed and factual record of
problems for corrective action.
4. To enhance the relationship between the customer and the supplier.

68
 A supplier rating system is usually based on quality, delivery, and
service; however, some organizations have added other categories, such as
machine ability and cost. These basic categories are weighted, with quality
usually having the greatest weight. They also have subcategories. A score is
given is given to each category by means of a numerical value or a letter
grade, which can be converted to a numerical value.

Relationship Development

1. Inspection

The goal is to eliminate, substantially reduce, or automate the

inspection activity. There are four phases: (1) 100% inspection, (2) sampling,
(3) audit, (4) identity check.

Initial phase 100% inspection of the critical quality characteristics by

both the customer and the suppler is recommended. As the customer gains
confidence in the supplier’s quality performance, sampling is initiated.

As the supplier gains confidence in its quality performance, sampling

the is recommended, provided there is statistical control of the process using
control charts and process capability. At this point the customer changes to
auditing the supplier’s performance using a ship-lot scheme or some type of
random sample of the submitted lots.

In the next phase the supplier continues statistical control of the

process and initiates auditing. The customer now has complete confidence in
the supplier and initiates checks, which verify the item number and quantity
for accounting and inventory control.

The final phase occurs when both the customer and supplier perform
only identity checks. There is statistical control of the process and continuous
improvement of the process.

2. Training

In small organization the managers perform many faceted functions.

Frequently no one has expertise in quality or the ability to train the work
force. Therefore, the customer or a consultant must start the training
process. Many large customers invite the supplier to attend their courses and
mat even present he course at the supplier’s plant.

69
 3. Team Approach

Customer/supplier teams are organized in a number of areas, such as

product design, process design, and the quality system. It is a good idea to
involve suppliers when the team is first assembled rather than at the end of
its activities. Team meetings should occur at both parties’ plants sot they
obtain a greater understanding of the processes.

4. Recognition and Award

Creating incentives for suppliers is one way to ensure that they remain
committed toa quality improvement strategy. Incentives may be in the form
of a preferred supplier category with its reward. Usually the supplier is
interested in recognition such as publication of outstanding contributions in
the customer’s newsletter; a letter of accommodation that can be posted on
the TQM bulletin.

70
Chapter 10 Performance
Measures

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

71
Chapter 10: Performance Measures

Learning Outcomes:

At the end of this chapter, students shall be able to:

- Know the concept of Performance Measures or Success Indicators and
how it is used in TQM.
- Learn and apply the Malcolm Baldrige National Quality Award
(MBNQA) and its significant contribution to TQM.

Learning Contents:

10. Performance Measures

10.1 Basic Concepts of Performance Measures
10.2 The Malcolm Baldridge National Quality Award (MBNQA) criteria

Basic Concepts of Performance Measures

Performance Measures (PM) is the sixth and final concept of Total

Quality Management (TQM), according to Dr. Deming. One of the Malcolm
Baldrige National Quality Award (MBNQA) core values is managing by fact
rather than by gut feeling. Managing a business organization without
performance measures is like a captain of a ship navigating in the middle of
the ocean without any instrumentation. The captain would most likely end up
traveling in circle without a port of destination, as would a business
organization. Performance measures play an important part in the overall
success or failure or a business organization. Production activities use
measure such as defects per million, inventory turns, and on time delivery.
Service activities use measures such as billing errors, sales per square feet,
engineering changes, and activity time.

There are essential elements of performance measures, as stated by Ray

F. Boedecker:

1. Objectives

Performance measurements as used to achieve one or more of the

following six objectives, such as:

1.1 Establish baseline measures and reveal trends.

1.2 Determine which processes need to be improved.
1.3 Indicate process gains and losses.
1.4 Compare goals with actual performance
72
 1.5 Provide information for individual and team evaluation.
1.6 Manage by fact rather than gut feeling.

2. Typical Measurement

What should be measured is frequently asked by managers and teams.

Suggested items that can be measured, such as:

2.1 Human Resources

2.2 Customers
2.3 Production
2.4 Research Development
2.5 Suppliers
2.6 Marketing/Sales
2.7 Administration

3. Criteria

All business organizations have some measurements in place that can

be adopted for TQM. However, many measurements will need to be added. In
order to evaluate the existing measures or add new ones, there are seven
criteria to be followed:

3.1 Simple
3.2 Few in number
3.3 Developed by users
3.4 Relevance to customer
3.5 Improvement
3.6 Cost
3.7 Visible

4. Characteristics

One or more seven basic characteristics is used to measure the

performance of a particular process or function:

4.1 Quantity
4.2 Cost
4.3 Time
4.4 Accuracy
4.5 Function
4.6 Aesthetics
4.7 Service

73
The Malcolm Baldrige Criteria for Performance Excellence

In the early and mid-1980s, many industry and government leaders

saw the need for a renewed emphasis on quality for doing business in an ever
expanding, and more demanding, competitive world market. The Malcolm
Baldrige National Quality Award was envisioned as a standard of excellence
that would help U.S. organizations achieve world-class quality. The Malcolm
Baldrige Criteria for Performance Excellence have played a major role in
achieving the goals established for the Baldrige Award. They now are
accepted widely, not only in the United States but also around the world, as
the standard for performance excellence.

For over 20 years, the Baldrige Criteria have been used by thousands
of U.S. organizations to stay abreast of ever-increasing competition and to
improve performance. In today’s business, health care, education, nonprofit,
and government environments, the Criteria help organizations respond to
current challenges: openness and transparency in governance and ethics; the
need to create value for the business and its customers, patients, or students;
and the challenges of rapid innovation and capitalizing on knowledge assets.
Whether an organization is small or large, is for-profit or not-for profit, or
has one location or multiple sites across the globe, the Criteria provide a
valuable framework that can help plan and achieve in an uncertain
environment. The Criteria help to assess performance on a wide range of key
business indicators: customer, product and service, financial, human
resource, and operational. The Criteria can help to align resources and
approaches, such as ISO9000, Lean Enterprise, Balanced Scorecard, Six
Sigma, and regulatory requirements; improve communication, productivity,
and effectiveness; and achieve strategic goals.

The Criteria are built upon a set of interrelated core values and
concepts found in high performing organizations. These core values and
concepts are embodied in seven linked categories. Together they provide the
foundation for an organization to integrate key business requirements within
a results- oriented framework to create a basis for action and feedback.

The Criteria for Performance Excellence Fact Sheet

What are the Baldrige criteria?

The Baldrige Criteria for Performance Excellence are a framework that

any organization can use to improve overall performance. While the Criteria
characteristics, goals, and purposes remain constant, the Criteria have

74
evolved significantly over time to help organizations address current
economic and marketplace challenges and opportunities.

The Criteria Characteristics:

▪ Focus on results in all areas of organizational performance to ensure
that all strategies are balanced.
▪ Are non-prescriptive and adaptable to promote creative and flexible
approaches for meeting requirements, and to foster incremental and
breakthrough improvements.
▪ Support a systems perspective to maintain organization-wide goal
alignment.
▪ Support goal-based diagnosis on a profile of performance-oriented
strengths and opportunities for improvement.

Criteria Goals: The Criteria are designed to help organizations use an

integrated approach to organizational performance management that results
in
▪ Delivery of ever-improving value to customers, contributing to
marketplace success
▪ Improvement of overall organizational effectiveness and capabilities
▪ Organizational and personal learning

Criteria Purposes: The criteria are used by thousands of organizations of all

kinds for self-assessment and training and as a tool to develop performance
and business processes. For many organizations, using the criteria results in
better employee relations, higher productivity, greater customer satisfaction,
increased market share, and improved profitability. According to a report by
the Conference Board, a business membership organization, ―A majority of
large U.S. firms have used the criteria of the Malcolm Baldrige National
Quality Award for self-improvement, and the evidence suggests a long-term
link between use of the Baldrige Criteria and improved business
performance.

In addition, the Criteria have three important roles in strengthening

U.S. competitiveness
▪ To help improve organizational performance practices, capabilities,
and results
▪ To facilitate communication and sharing of best practices information
among U.S. organizations of all types
▪ To serve as a working tool for understanding and managing
performance and for
guiding organizational planning and opportunities for learning

75
Seven categories make up the award criteria:
▪ Leadership—Examines how senior executives guide and sustain the
organization and how the organization addresses Governance, ethical,
legal and community responsibilities.
▪ Strategic planning—Examines how the organization sets strategic
directions and how it determines and deploys key action plans.
▪ Customer focus—Examines how the organization determines
requirements and expectations of customers and markets; builds
relationships with customers; and acquires, satisfies, and retains
customers.
▪ Measurement, analysis, and knowledge management—Examines the
management, use, analysis, and improvement of data and information
to support key organization processes as well as how the organization
reviews its performance.
▪ Workforce focus—Examines how the organization engages, manages,
and develops all those actively involved in accomplishing the work of
the organization to develop full potential and how the workforce is
aligned with the organization’s objectives.
▪ Process management—Examines aspects of how key
production/delivery and support processes are designed, managed,
and improved.
▪ Results—Examines the organization’s performance and improvement
in its key business areas: customer satisfaction, financial and
marketplace performance, workforce, product/service, and operational
effectiveness, and leadership. The category also examines how the
organization performs relative to competitors.

Core Values and Concepts: The Criteria are built on a set of interrelated,
embedded beliefs and behaviors found in high-performing organizations. The
core values and concepts are the foundation for integrating key business
requirements within a results-oriented framework that creates a basis for
action and feedback. Baldrige Core Values and Concepts are as follows:
▪ Visionary Leadership
▪ Customer-Driven Excellence
▪ Organizational and Personal Learning
▪ Valuing Workforce and Partners
▪ Agility
▪ Focus on the Future
▪ Managing for Innovation
▪ Management by Fact
▪ Societal Responsibility
▪ Focus on Results and Creating Value
▪ Systems Perspective

76
Chapter 11 Benchmarking

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

77
Chapter 11: Benchmarking

Learning Outcomes:

At the end of this chapter, students shall be able to:

- Identify the process of benchmarking.
- Know the value why companies participate in benchmarking.
- Understand current success of a business and apply the concepts of
benchmarking.

Learning Contents:

11. Benchmarking
11.1 Definition
11.2 Reasons for Benchmarking
11.3 Benchmarking Process
11.4 Selecting What to Benchmark
11.5 Understanding Present Performance
11.6 Benchmarking Planning
11.7 Learning from the Data
11.8 Using the Findings
11.9 Basic Criticisms of Benchmarking

Definitions of Benchmarking

According to L.S. Pryor, “Benchmarking is measuring performance

against that of best-in-class organizations, determining how the best in class
achieve those performance levels, and using the information as the basis for
goals, strategies, and implementation.

Reasons to Benchmarking

Benchmarking is a tool to attain business and competitive objectives. It

is powerful and effective when used for the right reasons and aligned with
organizational strategy. It is not a remedy that can replace all other quality
efforts or management processes. Business organizations must still
determine which markets to serve and decide the strengths that will enable
them to gain competitive advantage. Benchmarking is one toll to help
business organizations develop those strengths and lessen weaknesses.

Furthermore, benchmarking requires an external orientation, which is

critical in an environment where the competition can easily be on the other

78
side of the coin. An external outlook greatly reduces the chance of being
caught unaware by competition.

Process of Benchmarking

Business organizations that benchmark adapt the process to best fit

their own needs and culture. Although the number of steps in the process
may vary from organization to organization, the following six steps contain
the core techniques, such as:

1. Decide what to benchmark.

2. Understand current performance.
3. Plan.
4. Study first.
5. Learn from the data.
6. Use the findings.

Selecting what to Benchmark

Most business organizations have strategy in determining how the

organization wants to position itself and compete in the market place. This
strategy is commonly expressed in terms of vision and mission statements.
To support these statements is a set of critical activities, which the business
organization must do successfully to achieve its vision and mission. They are
usually referred to as critical success factors. Critical processes are commonly
made of any number of sub processes. In other words, when deciding what to
benchmark, it is good to start by thinking about the vision, mission and
critical success factors. The benchmarker can then analyze the processes,
looking for high-impact application.

Understanding Present Performance

To compare practices to outside benchmarks, it is first important to

properly understand and document the present process. Several techniques,
such as: flow diagrams and cause-and-effect diagrams, aid understanding.
Attention must be given to input and outputs. Tactful questioning is
necessary to determine circumstances that result in exception to the normal
routine. Exceptions commonly consume a good deal of the process resources;
however, process participants mat not thinks to mention them during
interviews.

In documenting the process, it is necessary to quantify it. Units of

measure must be determined. These are the metrics that will be compared

79
during the benchmarking process. Examples: unit cost, hourly rates, asset
measures, and quality measures. In some cases, important measures are not
available or unclear. Decision will have to be made as to whether the
information can be estimated or if additional data-collection activities are
needed. Data from the baseline for benchmark comparisons.

Benchmarking Planning

When internal processes are understood and documented, it is possible

to make decisions about how to conduct the study. If not yet selected, a
benchmarking team should be chosen. The team should decide what types of
benchmarking to perform, what type of data are to be collected, and method
of collection. Business organizations to serve as the benchmark need to be
determined. Finally, timetables for each of the benchmarking tasks and the
desired output from the study should be agreed upon.

Benchmarking planning is a learning process. In other words, the

entire purpose of benchmarking is to learn. There is a tendency to want to
call several business organizations immediately and schedule visits. This
activity is usually a waste of time. It is better first to use available information
to focus the inquiry and to find appropriate benchmarks partners.

Learning from the Data

Learning from the data generated in a benchmarking study involves

answering a series of questions:

1. Is there a gap between the organization’s performance and the

performance of the best-in-class organizations?
2. What is the gap? How much is it?
3. What is there a gap? What does the best-in-class do differently that
is better?
4. If best-in-class practices were adopted what would be the resulting
improvement?

Using the Findings

When the benchmarking study shows a s negative gap in performance,

the objective is to change the process to close the gap. If a change is not the
result, the process has been a waste of time. To effect change, the findings
must be communicated to the people within the business organization who
can enable improvement. The findings must translate to goals and objectives
and action plans must be developed to implement new processes.

80
Basic Criticisms of Benchmarking

Basically, benchmarking can be summed up quite simple. Find

someone who executes a process better than you do and copy what they do.
The most persistent criticism of benchmarking comes from the idea of
copying others. How can a business organization be truly superior if it does
not innovate to get a head of competitors? It is a good question, but no one
can also ask the reverse. How can an organization even survive if it loses
track of its external environment forces?

Benchmarking is not a cure/remedy. It is not a strategy, nor is it

intended to be a business philosophy. It is an improvement tool. To be
effective, it must be used for processes that don’t offer much opportunity to
the business organization. It breaks down if process owners and managers
feel threatened or do not accept and act on the findings. All things change; in
fact, what was state of the art yesterday may not be today. Some processes
may have to be benchmarked repeatedly, depending upon the need of the
time.

Benchmarking is not a substitute for innovation; however, it is a source

of ideas from outside the organization. Business success depends on setting
and achieving goals and objectives. Benchmarking forces an organization to
set goals and objectives based on external reality consumers don’t care if a
process achieved a 30% year-to-year productivity. They care about quality,
cost, delivery and the amount they are going to pay.

81
Chapter 12 Quality Function
Deployment

- Learning Outcomes
- Learning Contents
- Practice Activities
- Assessment (with
Rubrics/Criteria)
- Enrichment Exercises

82
Chapter 12: Quality Function Deployment

Learning Outcomes:

At the end of this chapter, students shall be able to:

- Identify the concept of Quality Function Deployment.
- Appreciate the benefits of QFD process in a business towards
achieving and sustaining quality of their products and services.

Learning Contents:

12. Quality Function Deployment

12.1 Concept and definition of Quality Deployment
12.2 Quality Deployment Team
12.3 Benefits of Quality Deployment Team
12.4 Quality Function Deployment Process

Introduction

Quality must be designed into the product, not inspected into it.
Quality can be defined as meeting customer needs and providing superior
value. This focus on satisfying the customer's needs places an emphasis on
techniques such as Quality Function Deployment to help understand those
needs and plan a product to provide superior value.

Quality Function Deployment (QFD) is a structured approach to

defining customer needs or requirements and translating them into specific
plans to produce products to meet those needs. The "voice of the customer" is
the term to describe these stated and unstated customer needs or
requirements. The voice of the customer is captured in a variety of ways:
direct discussion or interviews, surveys, focus groups, customer
specifications, observation, warranty data, field reports, etc. This
understanding of the customer needs is then summarized in a product
planning matrix or "house of quality". These matrices are used to translate
higher level "what's" or needs into lower level "how's" - product requirements
or technical characteristics to satisfy these needs.

While the Quality Function Deployment matrices are a good

communication tool at each step in the process, the matrices are the means
and not the end. The real value is in the process of communicating and
decision-making with QFD. QFD is oriented toward involving a team of
people representing the various functional departments that have
involvement in product development: Marketing, Design Engineering,
Quality Assurance,
83
Manufacturing/ Manufacturing Engineering, Test Engineering, Finance,
Product Support, etc.

Quality Function Deployment Team

If QFD is implemented, consider:

Committing considerable amount of time.

TWO TYPES OF TEAM: New Product Team & Existing Product team

Similarities:
1. Allow information to be collected between times that will ensure that
the right info is being entered in QFD matrix.
2. Keep the team focused on quality improvement goal.

Meetings are conducted in most efficient manner and members are

well- informed. How good the QFD process is working at each meeting.

▪ Defining the priorities of project also;

▪ Providing clearly defined scope of the project.
▪ Composed of members from marketing, design, quality, finance,
production.
▪ Utilize time & inter-team communication.
▪ Using "time" effectively is essential in getting the project done on
scheduled.
▪ Using "inter-team communication" will alleviate unforeseen problems.

TEAM LEADER SHOULD ASSURE:

The duration of the meeting will rely on where the team members are
coming from. (depends whether the participants are coming from around the
world or if everyone is local).

Benefits of Quality Deployment Team

Quality Function Deployment (QFD)-House of Quality –is an effective

Management tool to drive the design process and production process with
the main aim of satisfying the customer needs. The benefits of QFD are:

1. A systematic way of obtaining information and presenting it.

2. Shorter product development cycle.
3. Considerably reduced start-up costs.
4. Fewer engineering changes.
5. Reduced chance of overnights during design process.

84
 6. An environment of team work.
7. Consensus decision.
8. Everything is preserved in writing.
9. It facilitates identification of the causes of customer complaints and
makes it easier to take prompt remedial action.
10. It is a useful tool for improving product Quality.
11. It is a useful tool for competitive analysis of product quality.
12. It stabilizes quality.
13. It cuts down on rejects and rework at the production site.
14. It decreases claims substantially.
15. Marketing benefits are obtained by identifying sales point.

Quality Function Deployment Process

Quality Function Deployment begins with product planning; continues

with product design and process design; and finishes with process control,
quality control, testing, equipment maintenance, and training. As a result,
this process requires multiple functional disciplines to adequately address
this range of activities. QFD is synergistic with multi-function product
development teams. It can provide a structured process for these teams to
begin communicating, making decisions and planning the product. It is a
useful methodology, along with product development teams, to support a
concurrent engineering or integrated product development approach.

Quality Function Deployment, by its very structure and planning

approach, requires that more time be spent up-front in the development
process making sure that the team determines, understands and agrees with
what needs to be done before plunging into design activities. As a result, less
time will be spent downstream because of differences of opinion over design
issues or redesign because the product was not on target. It leads to
consensus decisions, greater commitment to the development effort, better
coordination, and reduced time over the course of the development effort.

Quality Function Deployment is an extremely useful methodology to

facilitate communication, planning, and decision-making within a product
development team. It is not a paperwork exercise or additional documentation
that must be completed in order to proceed to the next development
milestone. It not only brings the new product closer to the intended target, but
reduces development cycle time and cost in the process.

85