MANAGING QUALITY

`Total Quality is a world movement. Regardless of country or industry, the laggards are at risk; conversely, the leaders acquire insulation against failure.' (R. Schonberger) 

Many would argue that those organizations that embrace quality processes, so that they permeate all systems at all levels, are the ones that prosper in an increasingly competitive world. So what is `quality management'? The following are some models.

Total Quality Management (TQM)
TQM as proposed by Deming and Juran, is an all-pervading system of continuous improvement of products (and services) that came to prominence in the USA during World War 2. Deming, a statistician, developed monitoring processes that attempted to reduce wastage. He persuaded industry to re-examine production processes in order to build in quality and thereby reduce rejection rates. As a result, wartime productivity and quality rose. Later on, TQM concepts were enthusiastically embraced by Japanese companies, eager to enter world markets. It has been well documented how, by the 1960s and 70s, through wholehearted adoption of Total Quality principles, the reputation of Japanese goods was transformed. TQM has been the root from which numerous offshoots have branched: Total Quality Control (TQC), Statistical Process Control (SPC) and Statistical Quality Control (SQC) being the more notable. 

Many useful summaries have been produced of the TQM philosophy, most notably Deming's own `Fourteen Points' and Crosby's re-interpretation of them. A synthesis of the key processes and requirements is as follows: 

1.  Senior management must embrace the process and take personal charge of quality
   

2. Top-down cascade of training from the chief executive through the organization
   

3.  Effective gathering of statistical data, its correct interpretation and utilization
   

4. Clear quality goals must be written into business plans.

In the West, enlightened managements adopted TQM, well known examples being Xerox, Hewlett Packard and Harley Davidson. In these successful companies, TQM led to measurable bottom-line benefits and many other organizations were quick to follow down the TQM route to quality.

However, for many, perhaps 80%, the results were disappointing. Analysis of the TQM adoption strategies of these dissatisfied companies suggested that many had simply attempted processes that could be described as `bolt-on', or `overlay'. This resulted in low levels of ownership and consequently poor integration. Benefits were likely to be transitory and the process often generated so much ill feeling amongst members of the organization that, far from being of advantage to quality management, it became counter-productive with disillusioned staff losing motivation. 

Success is far more likely in companies that carry out proper analyses and full overhaul
of existing systems. They place customer service and continuous improvement
systems at the centre of all value adding operations, and are able to demonstrate
quality improvements with concomitant improvements in production and decrease in costs. 

Customer Service 
Customer service is seen as an integral, yet identifiable, part of TQM. In 1950, Deming told his audiences that `the consumer is the most important part of the production line'. Then, as now, the problem is in determining and analysing customer satisfaction. Should this be a reactive process of response to customer complaints or should it be a pro-active TQM process that is not content with mere `customer satisfaction' but rather strives for `customer delight'? Participants in PIMS (Profit Impact of Marketing Strategy) tabulated quality  assessments with financial returns - analysis showed strong
correlation between perceived quality and (a) year-on-year growth in market share; and (b) price margin over competitors. 

In the US the criteria of the Baldridge Quality Awards are frequently used by organizations in quality audits and self-assessments that address:

• Leadership

• Information and analysis

• Strategic quality planning

• Human resource development and management

• Management of process quality

• Quality and operational results

• Customer satisfaction and focus.

UK and European Quality Standards 
In the UK, attempts to define an effective, comprehensive and widely applicable model for quality management have moved from BS5750, via the ISO9000 series and Investors in People Standard to the Business Excellence Model (currently viewed as the most flexible, rigorous and business-focused standard yet). 

BS5750 
The British Standards Institute's quality award BS5750 (now superseded by the ISO9000 awards) was developed in the late 1980s. The general aim was to allow UK firms to demonstrate control of their systems through manuals and instructions that define all stages and all processes of their operations. In the absence of better systems, this quality process had value in coercing organizations to overhaul and tighten up their administrative and control procedures so that `cradle-to-grave' tracking of products and documentation was possible. 

As with the superseding ISO9000, BS5750 has suffered from the perception among many users that it creates a bureaucratic impediment, stifling creativity. Often, ownership of the system is minimal and workers operate `by the book'. Surveys have shown that it is difficult to see any appreciable effect on the bottom line, and a common complaint against BS5750 is that it doesn't distinguish between effective and ineffective processes; any kind of process will do so long as it is documented. 

ISO9000 
ISO9000 is an international quality management system adopted in nearly 100 countries: recognition has been achieved by some 100,000 organizations. It aims to provide quality assurance and consistency in products and services. Its popularity is in large part due to the independent inspection and accreditation system, and to the re-interpreting of the standard so that it can be applied as successfully within a small service sector business as in a large manufacturer. 

One serious limitation of ISO9000 is its lack of commercial focus. Critics have pointed out that it is quite possible for an organization to demonstrate religious adherence to all of the 20 clauses in ISO9000, and yet still to be failing as a business.. 

Business Excellence Model (BEM) 
BEM has been developed by the European Quality Foundation, in part to improve upon ISO9000. Key features of this increasingly popular model are: the inclusion of a commercial dimension, the deliberate attempt to appeal to small businesses (via optional self-assessment), and the integral use of benchmarking. The BEM is based on the integration of all quality systems and a demand that tangible
benefits and improvements in performance are demonstrated in the organization. It is based on nine criteria, divided into two groups: enablers and results.

Six Sigma
In the mid-1990s, Six Sigma (a set of problem-solving improvement tools and techniques for managers) came into vogue in the USA. The Motorola Corporation demonstrated through its use, considerable increase in profits and the systems have been widely adopted since. Six Sigma takes its name from the Greek letter used in statistical distribution equations and in this context is an expression of defect rates. Most companies operate at 3 sigma (6.7% defect rate) or 4 sigma (0.62%) rate - the 6 sigma standard aims to reduce this defect rate to less than 0.00034% or 34 per million. In revenue terms, at 2 sigma, poor quality is likely to cost 40% of sales revenue whereas at 6 sigma, the figure is reduced to 10% or less of sales revenue. 

POINTS TO PONDER

1. Which of the different quality models could (or should) apply to your organization?
   
   

2. Is quality a journey or a destination?
   

In order to help you,  we will be publishing a dossier on this subject called  "Managing Quality"  this dossier along with our well stocked on-line reading room will help you to develop your knowledge in this area as part of our multi-format management development infrastructure.

Update to Quality Standards (June 2001)

Since publication of Managing Quality (Dossier 10), there have been changes to three of the key quality standards:

• Investors in People 

• ISO 9000 

• Business Excellence Model

Changes to Investors in People (IIP)

Following a comprehensive review in 1999/2000, the IIP standard was revised to:

• simplify the structure and language of the standard

• change the emphasis of the standard so that organisations will be required not only to provide evidence of people management processes, but also to show that these are producing positive outcomes (e.g. it is no longer sufficient to prove a business planning process. An organisation now has to demonstrate that the process results is a general understanding of business aims and objectives.)

• substitute 'learning' for 'training' - this implies a philosophical shift from passive to active development.

At the same time, Investors in People UK ('the guardians of the standard') have begun to introduce more flexible ways of achieving IIP recognition. These centre on the assessment methodology and mean that organisations have more choice about how and when they are assessed. The idea is that Investors in People, and the assessment process, should become both more affordable and more valuable, particularly for smaller organisations.

The new IIP standard has been slimmed down from 23 to 12 indicators (the original four principles remain). This doesn't mean that a lot of the content has been removed - essentially organisations are required to demonstrate the same principles and practices. But it is felt that the new 12-indicator standard is easier to understand, and fits more naturally with the way organisations manage and develop their people.

The twelve indicators of the revised standard are as follows:

ISO 9001:2000 was published in December 2000. ISO 9000 certified organisations have a maximum of 3 years to upgrade to the new standard of forego their certification. The new standard replaces the former ISO 9001, 9002 and 9003 documents with a single standard.

ISO 9001:2001 places new emphasis on the measurement and meeting of customers' requirements. Quality assurance is the priority now, rather than process consistency. Despite this shift of emphasis, the essence of the standard remains the same and can be summarised in the following simple steps:

• Say what you do (by documenting your quality-critical procedures)
• Do what you say (by training and requiring staff to follow those procedures)
• Prove it (prove that you follow your own procedures via internal auditing and management reviews)
• Improve it (with corrective and preventative actions on those issues where deficiencies or non- conformities  are discovered between the documented procedures and the actual work performance)

The structure of the standards has been considerably revised. The 20 familiar IS0 9000 elements have been replaced with 5 broad categories of quality management:

1. Quality Management System
2. Management Responsibility
3. Resource Management
4. Process Management
5. Measurement, Analysis and Improvement.

The number of required procedures has been considerably reduced. Only 6 procedures are mandatory.
Below is a summary of requirements in the new standard. 

The major change to the Business Excellence Model is the specific integration of "partnership" both as an enabling process, and as a result. The new model looks like this:

• The linking of knowledge to people
• A new focus on the innovation and learning feeding back from results
• The emphasis on customer focused processes
• The change of terminology from "business results" to "organisational performance" so that public and not-for-profit sectors are included in the standard's scope.

New criteria

The approach to assessment and self-assessment against the criteria has been rationalised to try to make the model more flexible and easily applicable to organisations of all types. Key changes are as follows: