Q8 IM03 Final

CHAPTER 3
Philosophies and Frameworks

Teaching Notes
This chapter focuses on the "founding fathers" of total quality management -- Deming, Juran,
Crosby, Feigenbaum, Ishikawa and Taguchi. The chapter does not give in-depth biographical
sketches of the quality "gurus," but summarizes their philosophies and principles on which they
believe that quality rests. Key objectives should be:
To develop an appreciation for the insight, wisdom, contributions, and forward thinking of
Deming, Juran, Crosby, Feigenbaum, Ishikawa, and Taguchi -- the pioneering "gurus" of
quality.
To study Deming's philosophy, which was based on systems thinking, statistical

understanding of variation, the theory of knowledge, and psychology, as well as his 14
points, his "chain reaction," and the resulting radical changes in organizations.
To investigate how Juran's philosophy seeks to provide change within the current
American management system. Juran defined quality as fitness for use, and developed the
Quality Trilogyplanning, control, and improvement to provide a direction for quality
assurance in organizations. He also developed and advocated use of the breakthrough
sequence as a detailed program for quality improvement.
To appreciate how Crosby's approach to quality is summarized in the four "Absolutes of

Quality Management," the Zero Defects concept, and the Basic Elements of Improvement
that emphasize behavioral change rather than improvements through the use of statistical
techniques.
To explore the impacts of A.V. Feigenbaum, Kaoru Ishikawa, and Genichii Taguchi
on the quality movement. These gurus developed the concepts of "total quality
control using Three Steps of Quality, the Japanese concept of "companywide
quality control" anchored in the use of employee teams and problem-solving tools for
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quality improvement, and variation reduction in support of new engineering

approaches for product design focused on quality improvement, respectively.
To develop reasons for why managers must understand the similarities and differences in
leading quality philosophies and must develop a quality management approach tailored to
their organizations.
To provide information that may be used to compare and contrast the Deming Prize, the
Malcolm Baldrige Quality Award, ISO 9000, and Six Sigma.
To introduce Six Sigma as a quality system framework that integrates human and process
elements of improvement, and in many ways, reflects the spirit of total quality
management. Six Sigma complements the Baldrige philosophy and ISO performance
standards, and can provide a vehicle for implementation of an organization-wide quality
process.
Note to Instructors:
ANSWERS TO QUALITY IN PRACTICE KEY ISSUES
ISO 9000 and Sears Quality Management System
1.
It is likely that Sears had to face a number of issues when it began to implement ISO 9000.
The company wanted a consistent process for improving customer satisfaction and
enhancing service capabilities. It no doubt needed a way to develop process
standardization across the company. Sears had to overcome the hurdle of communicating
the value of a QMS within a retail and service environment to all affected employees. It
was also searching for fundamental tools to provide the company with a safe base for
continued improvements.
2.
Sears probably had to review and revise all management and operating practices to
conform to the Quality Management Principles of ISO 9000, including:
Principle 1: Customer Focus - understanding current and future
customer needs, meeting customer requirements, and striving to
exceed customer expectations.
Principle 2: Leadership - leaders establishing unity of purpose and
direction of the organization.
Principle 3: Involvement of People - full involvement of people at all
levels to enable their abilities to be used for the organizations benefit.
Principle 4: Process Approach achieving desired results more

efficiently by managing activities and related resources as a process.
Principle 5: System Approach to Management- identifying,
understanding, and managing interrelated processes as a system, thus
contributing to the organizations effectiveness and efficiency in
achieving its objectives.
Principle 6: Continual Improvement ensuring that continual
improvement of the organizations overall performance becomes a
permanent objective.
Principle 7: Factual Approach to Decision Making basing decisions on
the analysis of data and information.
Principle 8: Mutually Beneficial Supplier Relationships ensuring that
all associates understand that an organization and its suppliers are
interdependent and a mutually beneficial relationship enhances the
ability of both to create value.
These principles were seen in operation as Sears made dramatic improvements in such
areas as calibrating the tools used for repairs and service calls. The company began 100percent tool calibration for safety purposes, which led to opening and registering its own
calibration lab to ISO/IEC 17025. Sears improved its existing hazardous-materials
program by implementing a comprehensive program on refrigerant handling. Efficiency in
completing repairs in the Chattanooga, Tennessee, carry-in facility was doubled. Sears'
district office in Houston improved its technician recall rate, which was reduced from
about 12 percent to 7.9 percent. Finally, ISO 9001 was instrumental in helping to
standardize the manner in which technicians record field observations. To ensure
consistency, technicians use a special tool kit for recording the event, including a
disposable camera and standardized forms.
The issues of customer satisfaction and enhancing service capabilities have improved
as indicated by quicker service times and reduced callback rates. Process standardization
across the company is reflected in the tool calibration and technician record-keeping
processes. The hurdle of communicating the value of a QMS within a retail and service
environment to all affected employees has taken place as improvements have been
successfully implemented. And, the search for fundamental tools to provide the company
with a safe base for continued improvements seems to have been successful, as ISO 9000
requirements have driven the improvement process.
Integrating Quality Frameworks at Veridian Homes

Key Issues for Discussion
1.
Veridien uses various tools and approaches, such as the Baldrige Express surveys, to
integrate quality throughout the organization. The surveys give employees the opportunity
to rate the company on a Likert scale in each criterion and provide comments on
strengths, weaknesses and OFIs. A report provides a detailed analysis for management to
conduct annual measuring and monitoring and to identify and prioritize weaknesses.
Strategic goals are linked to each employee via the performance planning and development
(PPD) process. This helps an employee understand his or her role, priorities, resources,
accomplishments and professional development as they relate to the companys vision,
mission, strategic drivers and departmental strategic goals. The employees also take part in
a profit sharing program, motivating and rewarding employees based on measured and
sustained improvements in cost, quality, cycle times, customer service and profits.
In addition, various improvement tools and techniques are used to support quality
implementation. For example, a quality toolbox provides templates, PowerPoint based
training, videos and other materials covering topics such as trade partner certification,
builder certification, NHQA criteria, Baldrige criteria; Six Sigma methodology, and other
improvement tools and techniques are available to all employees.
2.
NHQA is a quality award process, similar to the Baldrige Award. In support of their efforts
to win that award, Veridian attained NAHBRC builder certification status for quality and
safety management systems. The certification, based on ISO 9000, is third-party audited
and included Veridians construction, sales and customer relations departments. Since
earning certification, the land development, purchasing, estimating and design departments
have been incorporated into the certification. The company uses the Baldrige Express
report analysis to drive its annual strategic planning process (SPP). Veridians green
building practices address the corporate social responsibility aspect of quality management
and are reflected in the leadership criteria of the NHQA and the Baldrige award. Green
Built certified builders undergo reviews of building plans, specifications and on-site visits
to ensure the criteria are met. The criteria cover waste reduction, recycling and disposal of
materials, energy efficient insulation and air sealing, storm water management and water
conservation, landscape conservation, energy efficient mechanical systems, and use of
recycled materials and energy efficient materials and construction products. Veridien has
developed an integrated quality, environmental, health and safety (QEHS) management
system, which provides a tactical level methodology to structure, document, disseminate,
implement and manage Veridians those QEHS requirements. This integrated system has
led to measurable results in efficiency and cost effectiveness as noted in the case.
ANSWERS TO REVIEW QUESTIONS
1.
The Deming "chain reaction" theory states that by (a) improving quality, a firm can (b)
decrease costs because of less rework, fewer mistakes, delays, and snags, and better use of
time and materials, thus (c) improving productivity. The firm will therefore be able to (d)
capture the market with better quality and lower prices, and thus, not only (e) stay in
business, but also (f) provide and create more jobs. Student answers to the second part of
the question will vary, based on their readings.
2.
Deming never actually gave a definition of quality. However, if he had explicitly defined
quality, he might have said:
Quality is the result of action taken by management, acting as leaders, with the willing
cooperation of knowledgeable workers, to constantly and forever improve products and
services by reducing variability and uncertainty in processes, thereby remaining
competitive and providing profits and enough jobs for everyone.
3.
Deming's System of Profound Knowledge consists of four interrelated parts: (1)

appreciation for a system; (2) understanding of variation; (3) theory of knowledge; and (4)
psychology. Appreciating a system involves understanding how each component of the
system works to produce the end product or service, and understanding how the system
may be optimized for better or smoother performance. Understanding of variation involves
knowing and anticipating factors (i.e. increasing personnel, the wearing out of tools) that
may cause the system to change, for better or worse. Theory of knowledge involves
understanding the system and current and possible variations within, to the point where
past and present events and performance can suggest possible outcomes of future courses
of action within the system. Psychology involves understanding what motivates people,
including the facts that people must enjoy their work, be treated with respect, work within
a system that promotes dignity and self-esteem, receive adequate recognition, not just
financial remuneration, and feel that they are part of a winning, high quality team that
makes a difference.
4.
As Scholtes explained, lack of understanding of the components of Profound Knowledge

can have a profound impact on the health of organizations. To briefly summarize the
multiple points that Scholtes made is difficult. However, he pointed out that when people
dont understand systems, they basically dont understand that incidents, interventions,
and control are the net result of many actions and interdependent forces. When people
don't understand variation, they dont understand the difference between prediction,
forecasting, and guesswork, thus being unable to distinguish between fact and opinion.
When people dont understand psychology, they dont understand motivation or why
people do what they do, which causes them to misunderstand change and resistance to it.
When people dont understand the theory of knowledge, they dont know how to plan,
accomplish learning, improve, change, or solve problems, despite their best efforts.
5.
As explained in the answer to question 3, above, Deming's System of Profound

Knowledge consists of four interrelated parts: (1) appreciation for a system; (2)
understanding of variation; (3) theory of knowledge; and (4) psychology. There are a
number of ways to classify his 14 Points, which could include these as categories.
Under appreciation for a system, points 1, 2, 4, 5, 9, 13, and 14 are most oriented towards
systems. Numbers 1 and 2, relating to vision, commitment, and development of a new
philosophy of leadership require a big picture view of the organization and its place in
business and society. Number 4 relates to the requirement that total costs, not incremental
costs, must be optimized throughout an organizational system. Number 5 is a call to make
improvements continuously throughout the system. Number 9 requires the development of
teamwork and breaking down of artificial barriers between departments and organizational
units. Number 13 relates to broad education to benefit both the organization and society,
in the long run. Point 14 calls for a major cultural change within the organization, and is
similar to point 2.
To understand variation, Deming established points 3, 5, 10, and 11. Point 3 requires that
everyone understand inspection and use it to understand variation by avoiding mass
inspection. Point 5 advises to improve constantly and forever, thus eliminating the
causes of excessive variation and waste. Number 10 suggests that improvement does not
take place by exhorting workers to do a better job, but by understanding the cause of poor
quality and eliminating them. Point 11 makes a similar point that quotas and management
by objectives are approaches that do not encourage improvement, but instead, create fear.
As Scholtes explained, when people dont understand the theory of knowledge, they dont
know how to plan, accomplish learning, improve, change, or solve problems, despite their
best efforts. Thus points 1, 2, 5, 6, and 13 may be seen as falling under theory of
knowledge category. Demings concept in points 1 and 2 of constancy of purpose and
learning his new philosophy are needed in order to effectively plan, learn and change.
Point 5 relating to constant improvement is also essential to knowledge, as is point 6 on
instituting training, so that workers will be able to understand their work processes,
predict the result of changes, and actively participate in problem solving and improvement.
Point 13 is related in that it advises that education and self-improvement will assist the
organization in learning, changing, improving and reaching organizational goals.
An understanding and appreciation of psychology is a requirement for points 7 through
13. Each of these has leadership and motivational characteristics that are essential to
Demings new philosophy and to improved quality and productivity. Numbers 7 and 11 are
related to improving leadership; points 8, 9, 10, 11, and 12 advise removing barriers that
keep workers from doing their best, most effective work; and number 13 advises that
workers should be educated, not just trained.
6.
Juran's "Quality Trilogy," like most trilogies these days, consists of three parts: Quality
planning--the process for preparing to meet quality goals; quality control--the process for
meeting quality goals during operations; and quality improvement--the process for
breaking through to unprecedented levels of performance.
Quality planning begins with identifying customers, both external and internal, determining
their needs, and developing product features that respond to customer needs. Quality
goals are then established that meet the needs of customers and suppliers alike, and do so
at a minimum combined cost.
Quality control involves determining what to control, establishing units of measurement so
that data may be objectively evaluated, establishing standards of performance, measuring
actual performance, interpreting the difference between actual performance and the
standard, and taking action on the difference.
Juran specifies a program for quality improvement which involves proving the need for
improvement, identifying specific projects for improvement, organizing guidance for the
projects, diagnosing the causes, providing remedies for the causes, proving that the
remedies are effective under operating conditions, and providing control to maintain
improvements.
7.
Like Deming, Juran advocated company-wide quality management, with a never-ending

process of quality improvement, involving such activities as market research, product
development, production process control, inspection and testing, and customer feedback.
He emphasized the need for management commitment to quality improvement, and the
need for training of all employees in quality techniques. Juran also asked workers to get
to know their external and internal customers, and to identify and reduce causes of
variation by determining the difference between standard and actual performance and
taking action on the difference.
Unlike Deming, Juran did not propose major cultural changes in the organization, but
sought to improve quality within the system familiar to U.S. managers. His detailed plan
was based on identifying areas for improvement and acting accordingly. Juran also
recognized the different "languages," or trains of thought, which occupy different levels of
an organization, and advocated communication between these "languages," where Deming
proposed that statistics should be shared as a common language.
8.
Crosby's Absolutes of Quality Management are:

(1) Quality means conformance to requirements, not elegance. Crosby sees requirements
as being ironclad; they are communication devices which must be clearly stated so that
they cannot be misunderstood. Once this is done, a company can take measurements to
determine conformance to those requirements.
(2) Crosby maintains there is no such thing as a quality problem. Those individuals or
departments that cause them, so there are accounting problems, manufacturing problems,
logic problems, etc, must identify problems.
(3) There is no such thing as the economics of quality; it is always cheaper to do the job
right the first time. Most of us will remember this one as a frequent and sometime
annoying axiom, used by our mothers every time we had to perform some complicated
chore. Crosby supports the premise that "economics of quality" has no meaning. Quality is
free. What costs money are all actions that involve not doing jobs right the first time.
(4) The only performance measurement is the cost of quality. The cost of quality is the
expense of nonconformance. Crosby's program calls for measuring and publicizing the
cost of poor quality.
(5) The only performance standard is "Zero Defects." Zero Defects is a performance
standard, NOT a motivational program. The idea behind ZD is to do it right the first time,
to concentrate on preventing defects rather than just finding and fixing them.
(6) People are conditioned to believe that error is inevitable; thus they not only accept
error, they anticipate it. Each of us has limits within which we can accept errors.
Eventually we reach a point where the errors are unacceptable. This usually occurs when
the errors affect us personally, such as when you discover that your bank has made a $100
error in your account, in their favor.
Crosby's Basic Elements of Improvement include determination, education, and
implementation. According to Crosby, most human error is caused by lack of attention
rather than lack of knowledge. Lack of attention is created when we assume that error is
inevitable. By determination, Crosby means that top management must be serious about
quality improvement. Everyone must understand the Absolutes; this can be accomplished
only through education. Finally, every member of the management team must understand
the implementation process.
Like Deming, Crosby advocated interior searches by individual departments (i.e.
manufacturing, accounting) within a firm for sources of negative variation and acting to
reduce these. He also advocated the policy of doing the job right the first time. Unlike
Deming, Crosby's plan focuses on managerial thinking, calling for change within the
current system, holding employees, as well as management accountable for reducing
defects, and not requiring a complete organizational overhaul.
9.
A.V. Feigenbaum is primarily known for three contributions to quality -- his international
promotion of the quality ethic, his development of the concept of total quality control, and
his development of the quality cost classification.
Kaoru Ishikawa was instrumental in the development of the broad outlines of Japanese
quality strategy, the concept of CWQC, the audit process used for determining whether a
company will be selected to receive the Deming award, the quality control circle, and
cause-and-effect diagrams--a principle tool for quality management.
Taguchis contributions were centered on explaining the economic value of reducing

variation. He maintained that the manufacturing-based definition of quality as
conformance to specification limits is inherently flawed. He also contributed to improving
engineering approaches to product design. By designing a product that is insensitive to
variation in manufacture, specification limits become meaningless. Taguchi advocated
certain techniques of experimental design to identify the most important design variables in
order to minimize the effects of uncontrollable factors on product variation. Thus, his
approaches attacked quality problems early in the design stage rather than react to
problems that might arise later in production.
10.
Taguchi measured quality as the variation from the target value of a design specification,
and then translated that variation into an economic "loss function" that expresses the cost
of variation in monetary terms. In doing this, Taguchi offered a method of measuring the
monetary loss resulting from creation of products or services that do not conform to
quality standards. This method was used by Deming to compare the decreased costs of
producing products or services with quality values closer to those of standard quality
specifications.
11.
The purposes of the Malcolm Baldrige Award are to:
12.
Help stimulate American companies to improve quality and productivity for the pride
of recognition while obtaining a competitive edge through increased profits.
Recognize the achievements of those companies that improve the quality of their
goods and services and provide an example to others.
Establish guidelines and criteria that can be used by business, industrial, governmental,
and other enterprises in evaluating their own quality improvement efforts.
Provide specific guidance for other American enterprises that wish to learn how to
manage for high quality by making available detailed information on how winning
enterprises were able to change their cultures and achieve eminence.
The Baldrige Award framework (see the Baldrige Model and other details in the Bonus
Materials on the Premium website) has three basic elements, as part of an integrated
system:
Strategy and action plans: these yield the set of customer and market-focused
requirements, derived from short-term and long-term strategic planning, that must be
met or exceeded for an organizations strategy to succeed. They guide overall resource
decisions and alignment of measures for all work units to ensure customer satisfaction
and market success
The system: comprises a set of well-defined and well-designed processes and a human
resource focus for meeting the company's customer and performance requirements.
The system consists of the leadership triad and the results triad. Senior executive
leadership sets directions, creates values, goals, and systems, and guides the pursuit of
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organizational strategic planning and customer and market focus. The results triad
shows that the organization depends on its employees and process management to
yield business results. Business results are a composite of customer, financial, and
performance results, including human resource results and public responsibility.
Measurement, analysis and knowledge management: are critical to effective
management of the organization and to a fact-based system for improving performance
and competitiveness. Measurement, analysis and knowledge management serve as the
foundation for the performance management system.
The basic aims of the system are the delivery of ever-improving value to customers and
success in the marketplace, improvement of overall company performance and capabilities,
and organizational and personal learning.
13.
The seven categories in the Baldrige Criteria for Performance Excellence and the key
issues that are addressed include:
1. Leadership: This category examines how an organizations senior leaders personal
actions guide and sustain the organization. Also examined are an organizations
governance system and how the organization fulfills its ethical, legal, and societal
responsibilities, and supports its key communities.
2. Strategic Planning: This category examines how an organization develops strategic
objectives and action plans. Also examined is how the chosen objectives and plans are
deployed and changed if circumstances require, and how progress is measured.
3. Customer Focus: This category examines how an organization engages its customers for
long-term marketplace success and builds a customer-focused culture. Also examined is
how the organization listens to the voice of its customers and uses this information to
improve and identify opportunities for innovation.
4. Measurement, Analysis, and Knowledge Management: This category examines how an
organization selects, gathers, analyzes, manages, and improves its data, information, and
knowledge assets, and how it manages its information technology. Also examined is how
the organization reviews and uses reviews to improve its performance.
5. Workforce Focus: This category examines how an organization engages, manages, and
develops its workforce to utilize its full potential in alignment with the organizations
overall mission, strategy, and action plans. Also examined is the organizations ability to
assess workforce capability and capacity needs and to build a workforce environment
conducive to high performance.
6. Process Management: This category examines how an organization designs its work
systems, and how it designs, manages and improves its key processes for implementing
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those work systems to deliver customer value and achieve organizational success and
sustainability. It also examines an organizations readiness for emergencies.
7. Results: This category examines an organizations performance and improvement in key
business areas product outcomes, customer-focused outcomes, financial and market
outcomes, workforce-focused outcomes, process-effectiveness outcomes, and leadership
outcomes. Performance levels are examined relative to those of competitors and other
organizations providing similar products and services.
Details of these criteria are provided in the Bonus materials on the Premium website for
this chapter.
14.
Many companies use the Baldrige Award criteria to evaluate their own quality programs,
set up and implement TQ programs, communicate better with suppliers and partners, and
for education and training. Using the award criteria as a self-assessment tool provides an
objective framework, sets a high standard, and compares units that have different systems
or organizations. The award addresses the full range of quality issues and can help those
setting up new systems to obtain a complete picture of TQ. The award criteria assist
companies with internal communications, communications with suppliers, and
communications with other companies seeking to share information. Finally, the award
examination is being used for training and education, particularly for management, because
it summarizes major issues that managers must understand.
15.
The Baldrige Criteria support Demings 14 Points by emphasizing the central importance
of leadership, organization-wide quality management, customer focus and feedback,
attention to employee well-being, satisfaction, and teamwork through a human resource
focus, and continuous improvement of processes. The detailed explanation of the criteria
include the need for management commitment to quality improvement, and the need for
training of all employees in quality and other techniques in order to attain performance
excellence.
Unlike Deming, the Criteria did not propose that a specific philosophy be adopted in
organizations, except the philosophy of excellence in performance of every part of the
system. Perhaps the greatest difference that Deming would oppose is the emphasis on
measurable results of the Baldrige process.
16.
In comparing the frameworks of the European Quality Award with the framework of the
Baldrige award, several key differences are apparent.
For both the Baldrige and the European Quality Award, results -- including customer
satisfaction, people (employee) satisfaction, and impact on society -- are important, but
are treated somewhat differently. Enablers -- the means by which an organization
approaches its business responsibilities, drive results in the European Award. These are
roughly similar to the Baldrige criteria. The "impact on society" results category focuses
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on the perceptions of the company by the community at large and the company's approach
to the quality of life, the environment, and the preservation of global resources. The
European Quality Award criteria place greater emphasis on this category than is placed on
the public responsibility item in the Baldrige Award criteria.
17.
A study of national cultural differences can help to understand and explain why the
MBNQA has been adapted in various ways in various countries. Research has shown that
the Baldrige award is better suited to some national cultures than to others.
Receptiveness to change differs greatly among cultures, suggesting the need for countries
to adapt their quality award programs to local conditions to ensure effectively
implementing them. Perhaps surprisingly, Baldrige is a better fit to the national culture of
Japan than it is to the U.S. Some of the reasons for this are that the Baldrige framework
was initially influenced heavily by Japanese quality management practices, and that
changes to the criteria over the years are focused on changing U.S. management culture,
not reflecting its current practice. These results provide even more validation of Demings
observation related to the Theory of Knowledge, that best practices cannot be copied
blindly, but must be understood and adapted intelligently. This is an important lesson for
managing in todays global environment.
18.
ISO 9000:2000 was structurally changed and simplified versus the original ISO 9000
standard. It placed much more emphasis on quality management concepts, as contrasted
with procedural correctness of the previous standard.
The key requirements of ISO 9000 include:
Quality management system

Management responsibility
Resource management
Product realization
Measurement, analysis and improvement
Yes, every company should be involved in development and improvement of their quality
management system in each of these five areas. If not, how can performance management
take place?
19.
The ISO 9000 standards have evolved into criteria for companies (customer and supplier)
who wish to "certify" their quality management or achieve "registration" through a thirdparty auditor, usually a laboratory or some other accreditation agency (called a registrar).
Rather than a supplier being audited for compliance to the standards by each customer, the
register certifies the company, and the certification is accepted by all of the supplier's
customers.
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The registration process includes document review by the registrar of the quality system
documents or quality manual; preassessment, which identifies potential noncompliance in
the quality system or in the documentation; assessment by a team of two or three auditors
of the quality system and its documentation; and surveillance, or periodic re-audits to
verify conformity with the practices and systems registered. Recertification is required
every three years. Individual sites--not entire companies--must achieve registration
individually. All costs are borne by the applicant, so the process can be quite expensive.
In addition to improving internal operations, the most important reasons why companies
seek ISO 9000 certification include:
a. Meeting contractual obligations-- Some customers now require certification of all their
suppliers. Suppliers that do not pursue registration will eventually lose customers.
b. Meeting trade regulations-- Many products sold in Europe, such as telecommunication
terminal equipment, medical devices, gas appliances, toys, and construction products
require product certifications to assure safety. Often, ISO certification is necessary to
obtain product certification.
c. Marketing goods in Europe--ISO 9000 is widely accepted within the European
Community. It is fast becoming a de facto requirement for doing business in the region.
d. Gaining a competitive advantage--Many customers use ISO registration as a basis for
supplier selection. Companies without it may be at a market disadvantage.
20.
ISO 9000 has been controversial for a number of reasons. It was imposed by the
European Union as an attempt to provide standardization for all suppliers doing business
within any of the EU countries. However, it was complicated, expensive, and time
consuming to develop, qualify for, and maintain. Perhaps the most troubling drawback was
that an ISO 9000 organization could still produce poor quality products. They just do so
more consistently! Thus it was not a total quality system, nor did it provide the same
characteristics as the Malcolm Baldrige National Quality Award.
The ISO 9000:2000 revision addressed a number of the more controversial issues by
incorporating eight quality management principles, as follows:
Customer focus
Leadership
Involvement of people
Process approach
System approach to management
Continual improvement
Factual approach to decision making
Mutually beneficial supplier relationships
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Despite these much-needed improvements, ISO 9000:2000 still does not offer a
comprehensive business performance framework, nor does it provide the same
characteristics as the Malcolm Baldrige National Quality Award.
21.
Motorola pioneered the concept of Six Sigma as an approach to measuring product and
service quality. The late Bill Smith, a reliability engineer at Motorola, is credited with
originating the concept during the mid-1980s and selling it to Motorolas CEO, Robert
Galvin. Smith noted that system failure rates were substantially higher than predicted by
final product test, and suggested several causes, including higher system complexity that
resulted in more opportunities for failure, and a fundamental flaw in traditional quality
thinking. He concluded that a much higher level of internal quality was required and
convinced Galvin of its importance.
The core philosophy of Six Sigma is based on some key concepts:
Thinking in terms of key business processes and customer requirements with a

clear focus on overall strategic objectives.
Focusing on corporate sponsors responsible for championing projects, supporting
team activities, helping to overcome resistance to change, and obtaining resources.
Emphasizing such quantifiable measures as defects per million opportunities
(dpmo) that can be applied to all parts of an organization: manufacturing,
engineering, administrative, software, and so on.
Ensuring that appropriate metrics are identified early in the process and that they
focus on business results, thereby providing incentives and accountability.
Providing extensive training followed by project team deployment to improve
profitability, reduce non-value-added activities, and achieve cycle time reduction.
Creating highly qualified process improvement experts (green belts, black
belts, and master black belts) who can apply improvement tools and lead teams.
Setting stretch objectives for improvement.
The recognized benchmark for Six Sigma implementation is General Electric. The efforts
by General Electric, driven by former CEO Jack Welch, brought significant media
attention to the concept and made Six Sigma a very popular approach to quality
improvement. In the mid-1990s, quality emerged as a concern of many employees at GE.
Jack Welch invited Larry Bossidy, then CEO of AlliedSignal, who had phenomenal success
with Six Sigma, to talk about it at a Corporate Executive Council meeting. The meeting
caught the attention of GE managers and Welch. To ensure success, GE changed its
incentive compensation plan so that 60 percent of the bonus was based on financials and
40 percent on Six Sigma, and provided stock option grants to employees in Six Sigma
training. In their first year, they trained 30,000 employees at a cost of $200 million and got
back about $150 million in savings. From 1996 to 1997, GE increased the number of Six
Sigma projects from 3,000 to 6,000 and achieved $320 million in productivity gains and
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profits. By 1998, the company had generated $750 million in Six Sigma savings over and
above their investment, and would receive $1.5 billion in savings the next year.
22.
The three frameworks are all process-focused, data-based, and management-led, but each
offers a different emphasis in helping organizations improve performance and increase
customer satisfaction. The Baldrige framework focuses on performance excellence for the
entire organization in an overall management framework, identifying and tracking
important organizational results; ISO focuses on product and service conformity for
guaranteeing equity in the market place and concentrates on fixing quality system problem
and product and service nonconformities; and Six Sigma concentrates on measuring
product quality and driving process improvement and cost savings throughout the
organization.
ISO 9000 has incorporated many of the principles that the Baldrige criteria have had since
its inception, but it still is not a comprehensive business performance framework.
Implementing Six Sigma fulfills in part many of the elements of ISO 9000:2000, including
the Quality Management System, Resource Management, Product Realization, and
Measurement, Analysis, and Improvement sections of the standards. Both Baldrige and
Six Sigma provide much more comprehensive views of quality management.
ANSWERS TO DISCUSSION QUESTIONS

1.
Melissas job is to satisfy customers who are trying to obtain information or make
reservations, while she simultaneously attempts to satisfy her internal customers, the
supervisor and the account manager. Using Deming's principles, her supervisor (and the
supervisor's customer, the account manager) need to "adopt the new philosophy" of
quality, to remove the barriers in the system that are preventing Melissa from satisfying her
customers and to provide the encouragement and support that she needs so that she can
take pride in her work. These include analyzing the problems with the slow computer; the
missing information in the system; the quota that often prevents her from giving adequate
customer service; and the fact that she may need training on use of printed directories and
guides (if they must be used), as well as how to courteously handle customers.
2.
Theory of knowledge is the branch of philosophy concerned with the nature and scope of
knowledge, its presuppositions and basis, and its general reliability of claims to
knowledge. In Deming's system, this involves understanding the complete system and
current and possible variations within it to the point where past and present events and
performance can suggest possible outcomes of future courses of action within the system.
For the Wall Street analyst, the theory of knowledge raises severe questions as to whether
the Stock Market is a stable system whose operations are subject to "knowledge" about
what makes prices rise and fall. If the complete system and what drives it cannot be known
with a fairly high degree of certainty, then it is foolish to try to predict earnings of a
company or group of companies on a quarterly basis.
16
3.
Deming's 14 points are interrelated as part of a complete system. They support each other
as part of a complete system for managing. For example, Point #1 requires that managers
publish a statement of the aims and purposes of the organization. Point #9 states that
management must optimize the efforts of teams, groups, and staff areas toward meeting
the aims and purposes of the organization. Deming felt that a company - the whole
company - must commit to quality as a total effort, as published in their aims and
purposes. This means that all 14 points must be adopted as a package. You can't embrace
the quality philosophy in one area of work and ignore it in another. If each person is
responsible for their own quality, then you don't need many of the rules, regulations, and
external controls that have been the "norm" in many organizations for decades. This
suggests that management must take on a new leadership role to foster innovation,
change, improvement and high quality at every level in the organization.
4.
Deming's 14 points may be put into the six categories listed, but it should be realized that
some of his 14 points apply to more than one category.
a.
b.
c.
d.
e.
Organizational purpose and mission: Points 1, 7, 9, and 14. These relate the need
to develop a mission statement (aims and purposes), publish the statement, develop
leadership to carry out the purpose, focus the efforts of everyone on the mission,
and act to ensure that the transformation happens.
Quantitative goals: Points 3, 4, 8, 10, 11.a. & 11.b. These points may not be
chosen by everyone, but several have "hidden agendas" that relate to quantitative
goals. Inspection (point 3) is frequently used to develop quantitative goals and to
"catch" problems (and the people who supposedly caused them) after they have
occurred. Price tags (point 3), rather than overall quality levels, are the
quantitative goal used to measure the efficiency, rather than effectiveness of the
purchasing function. Fear (point 8) has been heightened, as workers are exhorted
(point 10) to "do better" and meet their quotas and goals (points 11a. and b.).
The revolution in management philosophy: Points 2, 7, and 14. These points are
keys to the change in management philosophy, but all 14 points really are needed
to encompass the philosophy. Deming said that leadership, training, appropriate
uses of inspection, purchasing based on quality (instead of cost, alone), selfdevelopment, and continuous improvement go hand-in-hand.
Elimination of seat-of-the-pants decisions. Points 3, 4, 5, and perhaps 11. Seat-ofthe-pants decisions seem to flow from faulty logic and the short-term pressure to
meet goals in order to make the "bottom line" look good. The best decisions seem
to be made when the system is thoroughly understood, workers are taught
personal responsibility and problem-solving skills, and the focus is on long-term
objectives and constant long-term commitment to quality.
Build cooperation. Points 1, 2, and 6-13. All of the development of a common
philosophy, leadership, training, and casting out fear is aimed toward improving
cooperation.

f.
17
Improve manager-worker relations. Points 7, 8, 9, 12, and 13. These points cover
management-worker relations in more detail, but building cooperation, as covered
by the points in part (e), above, also contributes to improved worker-manager
relations.
5.
See Review Question 3, above, for a definition from which to begin discussion. Answers
will vary, depending on the organization chosen. Optimization requires recognizing the
fact that there are interactions among the parts of a system and managers cannot manage
the system well by simply managing them in isolation; they must understand that processes
that cross functional boundaries, align these processes toward a common vision or goal,
and optimize their interactions. Suboptimization (doing the best for individual
components) results in losses to everybody in the system.
6.
Common causes of variation occur as a natural part of any process and are difficult to
change without making a major change in the system of which they are a part. Special
causes of variation arise from sources outside the system and can generally be traced back
to a specific change that has occurred and needs correction. For example, a process may
be stable and running well until the supplier of a critical material or information is
changed. An example of such a system that affects us all is the structure of health care
insurers in the U.S., today. A change in providers, which now happens very frequently in
many organizations, causes the process to go out of control (become unstable) almost
every year. A possible "solution" to the special cause is to have the organization work with
the vendor to correct deficiencies, and to provide incentives for the vendor to remain the
supplier via multi-year contracts and other strategies.
7.
Fear can become apparent in many ways in organizations. Workers will tend to do only
what they are told to do. They will be afraid to stick their necks out. Managers will be
the last to hear of a quality or production problem, because there is a tendency to shoot
the messenger, who brings bad news. Rules, both for managers and workers, will become
more important than producing a quality products or services. Turnover will be high and
morale will be low. If there is a union, grievances will probably be high, due to the lack of
union-management trust and cooperation. It is difficult to root out fear, once it has
become established. Trust must be rebuilt, and workers must be rewarded for bringing
problems forward before they become crises. Workers must also be encouraged and
rewarded for developing innovative ideas and improving processes.
8.
Deming's philosophy can be applied to an academic environment, but only with concerted
efforts on the part of faculty, administrators, and students. Professors obviously serve in a
key role in transforming the classroom to a "total quality" environment. Unless they
"adopt the new philosophy," change will never come about. Many classes operate on a
"control" model and the professor must work hard to "cast out fear." Administrators have
a long way to go in learning how to "Improve constantly and forever the system of
production and service." Students must learn to work together in teams to "Optimize
toward the aims and purposes of the [organization]..." Still, there are a number of
18
departments, colleges of business and engineering, and even universities that are trying and
succeeding in applying the Deming principles to improve classroom performance.
9.
Demings classic example of the woman on the airplane is an illustration of suboptimization -- optimizing goals of a sub-unit of an organization while undermining the
goals of the larger organization. It shows that the people in the Travel Department did not
understand the concept of the system in which they worked. Thus, the components of any
system must work together if the system is to be effective. As pointed out in the answer to
question 5, suboptimization results in losses to everybody in the system. The Travel
Department wins, the travelers department loses, etc. Management must have an aim, a
purpose toward which the system continually strives and must understand the
interrelationships among the systems components and among the people that work in it.
Deming believed that the aim of any system should be optimization for everybody
stockholders, employees, customers, communityand the environment to gain over the
long term.
This example also illustrates to danger of ignoring Demings Point 4 of the 14 Points: Stop
making decisions purely on the basis of cost. Purchasing departments have long been
driven by cost minimization without regard for quality. By tradition, the purchasing
managers (and probably the Travel Department managers) performance is evaluated by
cost. What is the true cost of purchasing substandard airline tickets? The direct costs of
poor quality performance of the executive when she arrived at her destination, as well as
the possible loss of customer goodwill, can far exceed the cost savings perceived by
purchasing. The Travel Department must understand its role as a supplier to the traveler.
This relationship should cause individuals to rethink the meaning of an organizational
boundary. It is not simply the four walls around the department. The supplier and traveler
must be considered as a macro organization.
10.
A comparison of Demings newer version of the 14 Points versus the original 14

Points shows more of a systems emphasis. For a number of points, Deming shortened
and simplified them, perhaps to eliminate the obvious duplications, and perhaps to make
them easier to remember.
1.
2.
3.
Create a Vision and Demonstrate Commitment. Originally, in Demings earlier

version, commitment to aims and purposes of the organization by senior leaders
was something that might or might not be made clear to employees throughout the
organization. In the newer version, Deming urged that it be published to all
employees.
Learn the New Philosophy. Again, the older version suggested that it was primarily
the job of management to adopt the new philosophy and provide leadership for
change. The new version emphasizes the need for communication of values,
expectations, customer focus, and learning as a key area for everyone.
Understand Inspection. In the old version, it appeared that Deming wanted to end
inspection (although a closer reading showed that he did not advocate ending all
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
11.
19
inspection). The newer version suggests the need to develop appropriate

measurement plans and to understand where measurement should and should not
be used.
End Price Tag Decisions. The new version makes the simple statement, without
prescribing how this should be done, as the old version did.
Improve Constantly. This statement is a simplification of his old version of this
point, as are the points 6, 7, 8, 10, 12, 13, and 14. He seemed to be willing to let
the statements speak for themselves, rather than drawing out their implications or
results. Thus it is obvious (he might say) that continuous improvement is to be
done so that it will increase quality and reduce costs.
Institute Training. Recognizes the critical importance of training.
Teach and Institute Leadership. The new version states that leadership should be
taught, as well as instituted.
Drive Out Fear and Innovate. The new version of this point expands the emphasis
to include developing trust and innovation, which is an interesting confluence.
Deming implies that when fear is driven out, it is replaced by trust, which then can
create a climate for innovation.
Optimize the Efforts of Teams and Staff. This point has been broadened
considerably to imply that teamwork is the activity required to deploy and optimize
the aims and purposes of the organization. The older version indicated that the
need for teamwork was related to removing barriers between departments so that
problems could be foreseen and solved. This is not negated in the new version, but
a vertical dimension is introduced, to complement the horizontal dimension.
Eliminate Exhortations. Once again, Deming simplifies the old wording, to
eliminate the (to him) obvious statements.
Eliminate Quotas and MBO; Institute Improvement; and Understand Processes.
Deming saw no need for work standards, quotas, and management by objectives
approaches. He assumed that if everyone was working constantly toward process
understanding and quality improvement, that there would be no need to exhort
workers to work harder to meet numerical goals.
Remove Barriers. This is a simplification of his previous point, which had two
parts to cover workers and managers.
Encourage Education. This point is similar to point 6, but takes a broader view
that education, as well as training, is essential for all employees.
Take Action. This is the role of leadership, but everyone has to be involved in the
transformation process.
a. How do senior leaders set organizational vision and values? When Horst Schulze
became president in 1983, he and his leadership team personally took charge of managing
for quality because they realized that managing for quality could not be delegated. They
personally established the Gold Standards, which are the foundation of The Ritz-Carlton
quality philosophy.
20
b. How do senior leaders deploy your organizations vision and values through your
leadership system, to all employees, to key suppliers and partners, and to customers and
other stakeholders, as appropriate? The Gold Standards, in their simplicity, represent an
easy-to-understand definition of service quality and are aggressively communicated and
internalized at all levels of the organization. The constant and continuous reinforcement
techniques of the Gold Standards, led by senior leaders, include lectures at new employee
orientation, developmental training, daily line-up meetings, administration of both positive
and negative reinforcement, mission statements displayed, distribution of Credo cards, the
Credo as first topic of internal meetings, and peer pressure. As a result, employees have an
exceptional understanding and devotion to the companys vision, values, quality goals, and
methods.
c. How do their personal actions reflect a commitment to the organizations values? Since
1984, all members of senior leadership have personally ensured that each new hotels
goods and services are characteristic of The Ritz-Carlton on opening day. An important
aspect of this quality practice takes place during the concentrated and intense seven-day
countdown when senior leaders work side-by-side with new employees using a
combination of hands-on behavior modeling and reinforcement. During these formative
sessions, which all new employees must attend, the president and COO personally
interacts with every new employee, both individually and in a group setting. He personally
creates the employeeguest interface image and facilitates each departments first vision
statement. Throughout the entire process, the senior leaders monitor work areas for startup, instill Gold Standards, model the companys relationship management, insist on 100
percent compliance to customers requirements, and recognize outstanding achievement.
d. Senior leaders set organizational vision and values through seven specific decisions:
10-Year Vision: To be the premier Worldwide Provider of Luxury Travel and Hospitality
Products and Services
5-Year Mission: Product and Profit Dominance
3-Year Objectives: The Vital Few Objectives
1-Year Tactics: Key Production and Business Processes
Strategy: Customer and Market Focus Strategy with Action Plans
Methods: Total Quality Management (TQM)Application of Quality Sciences; Malcolm
Baldrige National Quality Award Criteria; The GreenBook, 2nd Edition (the
companys handbook of quality processes and tools)
Foundation: Values and Philosophy, The Gold Standards, Credo; Motto, Three Steps of
Service, Basics, Employee Promise
Leadership effectiveness is evaluated on key questions of a semiannual employee
satisfaction survey and through audits on public responsibility. Gaps in leadership
effectiveness are addressed with development/training plans and extensive
12.
Baldrige
Category
1
Traditional
Management
Practices
Growing
Awareness of
Quality
21
Quality
Management
System
Senior leaders job is Senior leaders job is Senior leaders job is

to maintain the status to ensure that quality
to define and manage
quo by preventing
problems are brought change toward a
change
to mgt.s attention
quality mgt. system
Managers oversee
Managers oversee
Managers guide
departments or
dept./functions to stop departments/ funcfunctions.
external failures
tions toward quality
prevention/appraisal
Senior leaders
Senior leaders
Senior leaders and
develop goals and
develop goals in
lower level managers
pass down to lower
consultation with
develop goals and
levels
middle managers
resolve through give
and take.
Goals are zero-sum Goals are based on
game - loser for every incentives for highest Goals are based on
winner
individual performers mutual trust and team
efforts
World-Class
Quality
Management
Senior leaders job is

to develop vision and
encourage innovation
and change.
Managers facilitate
departments/ functions efforts to reach
stretch goals
Senior leaders
develop mission and
vision on which stretch
goals are based and
use a catchball
process to deploy
Goals are cascaded
with individual and
team rewards for
accomplishment
Customers are
Customers needs are Customers are
Customers are
outsiders in the
the focus of marketing surveyed to determine insiders in the domain
domain of marketing
and sales
satisfaction
of design, production,
and sales
and marketing
Customers have some Customers/suppliers
Customers have no
Customers have a
impact on product
are consulted in
impact on product
design
product design
major impact on
design
decisions
product design
Complaints are taken
Complaints are only
Complaints
are
Complaints are only a

as a signal of quality
reacted to
problems
handled systempart of a complete
atically and used for
customer
Customer/supplier
product/process
management process
dialogs on quality
improvement
sometimes occur
Control is achieved by Control is achieved by Control is achieved by Control is achieved by
pre-established
somewhat flexible
cooperative team
alignment with goals
inflexible responsive
responsive patterns
efforts to improve
Information is
patterns
processes
Information is
interlinked and is
Information is
generally considered Information is
considered to be
generally considered
to be confidential, but considered to be
openly available
to be secret
available
widely available to
unless proprietary or
those inside the
personally sensitive
organization
People are an
People often have
People should be
People should be
interchangeable
valuable unique skills encouraged to work in empowered to work
commodity
and should be
teams to solve
individually and in
rewarded for indiviproblems
teams to meet
Adversarial relationindividual and
Cooperative
ship between union (if dual contributions
Consultative
one exists) and
relationships between organizational goals
Baldrige
Category
13.
Traditional
Management
Practices
Growing
Awareness of
Quality
22
Quality
Management
System
World-Class
Quality
Management
management
relationship between
union and
Relationships between
management need to union and
Hierarchical chimney union and
management
be developed
structures prevent
management based
Chimney structures Chimney structures on full partnership
teamwork between
functions.
need to be reduced to virtually eliminated to Cross-functional
permit teamwork
enhance teamwork
Performance
teams and project
between functions.
appraisal and reward between functions.
structures virtually
Performance
systems place people Performance
eliminate hierarchy.
in a competitive
appraisal and reward appraisal and reward Performance appraisal
environment.
systems need modifi- systems modified by
and reward systems
cation to reduce
team and/or goalreplaced by team,
competitive environbased reward systems goal, and knowledgement
based reward systems
Processes are seen Processes are seen Reorganization of
Processes are seen
as a collection of
as a collection of
processes of some
as a system of
separate, specialized separate units, in a
separate units, out of interdependent subunits, in a functional
functional hierarchy,
the functional
processes linking the
hierarchy.
but cross-functional
hierarchy, is seen as
organization to
activities require a
advantageous
customers and
Suppliers are pitted
suppliers
Suppliers are
against each other to coordinative
obtain the lowest price mechanism.
consulted for critical Suppliers are partners
Suppliers are
design information
with their customers.
selected, based on
and given support in
Goal is to have few
performance to obtain efforts to develop
suppliers and establish
better quality and
improved products
long-term
service at an
and services
relationships
acceptable price
Results are primarily Results are primarily Results are stated in Results are stated as
stated financially
stated in financial and financial, market,
a balanced
market terms
operating, quality
scorecard
Any negative
metrics
Any
negative
Benchmarking and
deviation is a cause
Any
negative
for corrective action
historical comparisons
and search for a
for corrective action
deviation is a cause are used for setting
scapegoat
for correction after
goals, tracking, and
some investigation, improvement.
and development of a Any negative
new tracking
measure, if required
for investigation using
existing goals and
metrics before any
corrective action is
taken
In a sense, all of the Baldrige criteria pertain to the concept of sustainability. Within the
Baldrige framework, sustainability refers to an organizations ability to address current
business needs and to have the agility and strategic management to prepare successfully
23
for the future, and to prepare for real-time or short-term emergencies. Recently, concepts
of workforce and customer engagement have been integrated within the Baldrige criteria.
In particular, senior leaders are charged with the responsibility of developing a sustainable
organization. Thus, these Baldrige questions are relevant: How do senior leaders create a
sustainable organization? How do senior leaders create an environment for organizational
performance improvement, the accomplishment of your mission and strategic objectives,
innovation, competitive or role-model performance leadership, and organizational agility?
How do they create an environment for organizational and workforce learning? How do
they develop and enhance their personal leadership skills? How do they personally
participate in succession planning and the development of future organizational leaders?
14.
The Deming Prize is a nationwide Japanese (later extended to other countries) quality
award that recognizes individuals, factories, divisions, small businesses and individuals for
quality excellence. It has 10 measurement categories that are related to CWQC based on
statistical quality control concepts. Some of these are policy/objectives, organization,
information, analysis, quality assurance, effects, and future plans. The MBNQA has 7
criteria, including a number that are in the Deming Prize criteria. Some of these are
strategic quality planning, information and analysis, human resource (workforce)
utilization, quality assurance, and quality results. Interestingly, customer satisfaction and
leadership are included in the MBNQA criteria, but not in the Deming Prize requirements.
(See Bonus materials on the Premium website.)
15.
As in many areas or types of organization, the Baldrige process can be effective in

developing high-quality e-commerce organizations.
Leadership: Leaders (Category 1) such as Bill Gates, Michael Dell, and Jeff Bezos possess
strong corporate visions. They seem to have the ability to transform existing business
models into strategic frameworks that will create and deliver value. The real test will come
in determining whether those models have staying power during an economic downturn.
Innovation must be balanced with performance, and performance measures must be
developed and used to assess the quality of e-business results.
Strategic planning and strategy development (Category 2) are two areas in which ecommerce businesses have not generally excelled. A number of strategic factors in ecommerce have changed, but many more have remained the same. Among those that have
changed are lower per-customer marketing costs, higher cost of establishing brand
identity, a need to decide which e-commerce channels to compete in [e.g. B2B, B2C,
C2B, or C2C; B = business, C = consumer], and needs for extreme agility and speed.
Those that have not changed include the requirement to deliver value to the customer, the
requirement to develop a well-thought-out mission, vision, and business plan, the need for
cost-efficient operations, the requirement to have effective processes, the need to deliver
24
quality products and services, the need for production-oriented people, not just creative
nerds, and the need to make a profit.
Customer and market focus (Category 3) requires an understanding of the power of the
customer in the e-marketplace. Building relationships with customers is harder than ever in
e-commerce, but more vital to the health of the business. Mass customization, market
segmentation, value-added service, and customer relationship management are all essential
to healthy e-business.
Category 4, Information and analysis, is almost too obvious to mention in relation to ecommerce. The challenge is to turn data into information. It doesnt matter if an e-business
web site is getting 10,000 hits a week. What matters are the characteristics of the people
who are buying the organizations products or services. Thus, Amazon.com uses
sophisticated software to suggest items that may appeal to a customer, based on his/her
previous purchases, as well as purchases of others with similar interests.
Process management (Category 6) is necessary, because if an organization cant deliver its
product or service, it is doomed to failure. Yet, delivery is the weak link in many ebusiness plans. As Phillip Crosby said, companies should be willing to share their quality
successes, because only a handful of firms understand that its necessary to slog out
quality a yard at a time. Only a few e-businesses understand that its necessary to slog
out the nitty-gritty processes of delivering a quality product to the customer. Often that
takes use of old fashioned technology, like a UPS or FedEx delivery truck to get that
book, CD, or airline ticket ordered on-line to the customers door.
16.
In examining the ISO 9001 requirements of:

a. The organization shall determine requirements specified by the customer
b. Records from management reviews shall be maintained.
c. . . .documentation shall include . . . documents needed . . . to ensure the effective
planning, operation and control of its processes. . .
d. . . .shall determine the monitoring and measurement to be undertaken. . .to provide
evidence of conformity of product to determined requirements.
e. The quality management system. . .shall include a quality manual.
f. . . .establish and implement the inspection or other activities necessary for ensuring that
purchased product meets specified requirements.
It could be argued that only items d. and f., and perhaps c., are directly involved in quality
control. However that only addresses the issue of quality of conformance. To develop a
system of quality design and continuous improvement, the voice of the customer (item
25
a.), standardization of processes (item e.), and record-keeping for control and
improvement purposes (items b. and c.) must be implemented.
17.
The philosophy of Six Sigma quality design and improvement often proves to be
challenging to implement in almost any organization, initially. In some instances, there may
be unique barriers in educational organizations. Human issues include management
leadership, a sense of urgency, focus on results and customers, team processes, and culture
change; process issues include the use of process management techniques, analysis of
variation and statistical methods, a disciplined problem solving approach, management by
fact. However, it is more than simply a repackaging of older quality approaches, such as
the traditional notion of Total Quality Management. Some educational institutions have
implemented many of the traditional TQM approaches, but:
TQM is based largely on worker empowerment and teams; organizational leader

champions must own Six Sigma.
TQM activities generally occur within a function, process, or individual workplace; Six
Sigma projects are truly cross-functional.
TQM training is generally limited to simple improvement tools and concepts; Six
Sigma focuses on a more rigorous and advanced set of statistical and a structured
problem solving methodology DMAIC Define, Measure, Analyze, Improve, and
Control.
TQM is focused on improvement with little financial accountability; Six Sigma
requires a verifiable return on investment and focus on the bottom line.
In addition, Six Sigma has elevated the importance of statistics and statistical thinking
in quality improvement. Six Sigmas focus on measurable bottom line results, a
disciplined statistical approach to problem solving, rapid project completion, and
organizational infrastructure make it a powerful methodology for improvement.
Several of these characteristics could prove to have practical difficulties for hospitals,
governmental agencies, and non-profit organizations. These could appear in the areas of
cross-functional cooperation (professional vs. business staff in universities, and turf
issues in school systems); training and use of rigorous statistical tools (capability of
personnel and availability of funds to hire and maintain technical experts, such as Six
Sigma Black Belts); focus on financial accountability (many educational organizations
have difficulty maintaining financial systems and accountability); and rapid project
completion (most such organizations are not know for their speed in completion of
projects and studies, due to their collegial and bureaucratic environments that often exist
side by side).
Six Sigma may be implemented in a school or university if some of the
above issues can be addressed. However, resistance could be high
when speaking to liberal arts (or even engineering and business
faculty) about return on investment for classroom and departmental
26
improvement projects. Again, many projects and studies, while they

are often team-based, move at glacial speed towards completion in
the academic environment.
SUGGESTIONS FOR PROJECTS. ETC.
1.
This project is designed to allow students to determine for themselves if companies that
they are familiar with emphasize total quality. As can be seen from the Deere and
Company case (see Bonus materials on the Premium website), some companies have
continuing references to their total quality efforts. Others may mention it in passing or
not at all.
2.
Students could use principles from Chapter 5 (see information on survey design) to design
the questionnaire and content from Demings 14 Points to perform this project.
3.
This website is an excellent location for information about the Baldrige process, events,
and news items.
4.
This exercise is designed to involve students in assessing specific quality categories and
criteria in an organizational setting (their college or university) that most of them
understand, in general, but probably would not know how to start to assess the
particulars.
5.
This project permits students to discover how differences in terminology and approach in
education and health care differ from those in business. However, they can also see the
commonalities that are built into the Baldrige criteria that make them applicable to a wide
variety of organizations. The second part of the project asks students to address the
specific changes needed to tailor criteria to a type of organization within a sector.
Answers to discussion questions 14 and 15 may prove to be helpful in structuring this
project.
6.
Since approximately 45 out of the 50 states do have awards, most students will discover
that their state does have such an award. The majority of awards have their own web sites,
which can be used to obtain contact information, and in some cases, profiles of state
award winners.
7.
This exercise is designed to expose students to the use of ISO 9000:2000 in organizations.
Students may find that managers perceive that ISO 9000:2000 is going to be more costly
and difficult to attain and keep, based on the need for a more comprehensively deployed
system required by the new standards.
27
8.
This is an interesting source of information on the current ISO registrations. Now that the
ISO 9000:2000 requirements are fully in place, it will be interesting to see whether the
trend will be toward increasing or decreasing numbers of registrations.
9.
The results will vary, depending on the organizations chosen for study.
ANSWERS TO CASE QUESTIONS

I.
Santa Cruz Guitar Company

Based on the tour of Santa Cruz Guitar Company, it is easy to identify how the operations
and quality practices reflect Demings 14 points. Almost every point can be matched with a
specific practice followed by SCGC.
1.
Create a Vision and Demonstrate Commitment. This principle is exemplified in the

small staff of 14 craftsmen, known as luthiers, who apply care and attention to
detail while hand-crafting the major components of each instrument. Also, the
company recruits only those who desire to work in a team environment and have a
passion for guitar making.
2.
Learn the New Philosophy. Experienced luthiers, who are empowered to make
their own quality decisions, staff each station.
3.
Understand Inspection. The manufacturing department inspects what it produces.
4.
End Price Tag Decisions. This makes the simple statement, without prescribing
how this should be done. It seems obvious that SCGC does not cut corners
when it comes to using quality materials. This is shown by: The guitar body is
finished with 12 protective layers of a specially formulated lacquer composed
primarily of nitrocellulose and plasticizers to preserve the wood surfaces.
5.
Improve Constantly. These opportunities for training and improvement (reference

points 10. 11. And 14, below) allow the craftsmen to explore new techniques in
guitar building and become familiar with the entire guitar building process.
6. & 7. Institute Training and Teach and Institute Leadership. Teamwork and mentoring
of new and seasoned luthiers show how training, teraching and leadership through
mentoring is built in to the process. The guitar does not move to the next station
28
until the luthier and another more senior luthier are satisfied with the quality of the
work.
8.
Drive Out Fear and Innovate. Although modern computer numerical controlled
(CNC) equipment is used to manufacture minor parts of the guitar, the secret of
SCGCs success lies in the small staff of 14 craftsmen.
9.
Optimize the Efforts of Teams and Staff. The shop floor is divided into six
workstations at which the guitars are progressively assembled as they move from
station to station.
10. & 11. Eliminate Exhortations and Eliminate Quotas and MBO; Institute
Improvement; and Understand Processes. SCGC is a small-scale manufacturing
operation, producing fewer than 800 instruments a year. Since the true sound of
the instruments will not be fully realized until they are assembled, the luthiers write
down what they did while building the top. After final assembly, if a guitar
produces a sound so special it knocks the players socks off, the luthier who built
the top will immediately be notified and asked to check his notes to see how this
was accomplished so the sound can be duplicated in the future.
II.
12.
Remove Barriers. SCGC workers are even encouraged to go out on their own to
open a luthier business someday.
13.
Encourage Education. At SCGC, workers are encouraged to further enhance their

skills either by taking external courses or by a practice that allows them to build
two instruments a year for personal use.
14.
Take Action. This is the role of leadership, but everyone has to be (and appears to
be) involved in the transformation process at SCGC.
Can Six Sigma Work in Health Care?

As the old proverb says: The longest journey begins with the first step. Colin has taken
the first step by encouraging the executive management team at Southwest Louisiana
Regional Medical Center (SLRMC) to get involved in developing their quality process.
However, as a consultant, your first step is to educate and assess readiness for change. In
the initial agenda, you would want to concentrate on helping the executives to understand
that Six Sigma is not a program, but a process. That agenda might include:
Discussion of mission, vision, and values of SLRMC

Leadership activities
Strategic and operational planning approaches
29
Goals and goal-setting

Concepts of quality
Goals and expectations about Six Sigma
Willingness to commit personal and organizational time and money to develop a Six
Sigma process
From the chapter, the following would help lay the philosophical groundwork. A Six
Sigma process requires:
Thinking in terms of key business processes and customer requirements with a clear
focus on overall strategic objectives.
Focusing on corporate sponsors responsible for championing projects, supporting
team activities, helping to overcome resistance to change, and obtaining resources.
Emphasizing such quantifiable measures as defects per million opportunities (dpmo)
that can be applied to all parts of an organization: patient services, quality assessment,
financial management, human resources, and so on.
Ensuring that appropriate metrics are identified early in the process and that they focus
on health care results, thereby providing incentives and accountability.
Providing extensive training followed by project team deployment to improve
profitability, reduce non-value-added activities, and achieve cycle time reduction.
Creating highly qualified process improvement experts (green belts, black belts,
and master black belts) who can apply improvement tools and lead teams.
Setting stretch objectives for improvement.
Questions related to the above would be: where are you now in the quality journey?
Where would you expect to be in three years? What are you willing to commit to in order
to reach that goal?
The infrastructure design might revolve around the Baldrige criteria or ISO 9000-2000
requirements. So how should SLRMC choose? The correct answer is that is should not be
either/or, but rather, any appropriate combination of Baldrige, ISO, and/or Six Sigma.
III.
Novel Connect: Understanding the Organizational Environment

Note: The Novel Connect Case Study (see Baldrige Materials folder on the Premium
website for complete case) was prepared for use in the 2008 Malcolm Baldrige National
Quality Award Examiner Preparation Course. It used the 2008 Baldrige criteria, which
may have some key differences in the criteria questions as compared to later versions of
the criteria, however these differences are not relevant for this case.
Students are asked to:
30
Read the Organizational Profile, which is a description of the organizational environment,

relationships, and challenges that impact the companys performance excellence
approaches. In examining the scope of the first six categories (excluding results) in the
2008 Baldrige criteria (also available in the Baldrige Materials folder on the Premium
website), list the most relevant factors from the Organizational Profile that would affect
your assessment of the management practices for this organization.
Although more extensive than students might be expected to discover, the following are
comprehensive listings of the relevant factors that might apply to each of the six Baldrige
criteria, based on the organization profile.
Category 1. Leadership:
Purpose: Facilitates a world on the move. Vision: the most innovative company for mobile communication in
the world. Mission: leverages new and existing technology to advance mobile communication. Core values:
agility, valuing employees/partners, innovation, and sustainability
Culture promotes core competencies of agility and communication: working out of the home, flexible work
schedules, and maximizing technology (cell phones, virtual meetings, teleconferencing) to minimize travel.
4,188 employees make up a virtual, distributed workforce: 1,200 in innovation (sales, R&D, marketing, IT,
and product engineering), 2,738 in operations, and 250 in administration and support. There is no employee
union. Women compose 65% of the workforce; 50% of employees are under age 40; for 20%, English is
asecond language; and 15% are disabled.
Organizational structure: A nine-member Board of Directors (BOD) composed of eight independent members
and the CEO, four standing BOD committees, and a five-member Senior Leader Team (SLT). The relatively
flat organization has one rotating ethics officer, and the 11 pods have team leaders.
Key suppliers/partners: two offshore manufacturing suppliers (in China and India), a cell carrier, retailers,
transportation companies, integrated component/software manufacturers, universities, IT support, a security
company, and a law firm
Strategic challenges: communication, rapidly changing customer/market needs (volatility in niche markets),
volatility of the overseas environment
Category 2. Strategic Planning:
union.
Key customer requirements: allease of use, reliability; personal consumerstrendiness, convenience,
secure/encrypted data and transmission, personal/home safety and security, low cost, ruggedness; business
consumersruggedness, personal safety and security, data and voice capability, sustained signal/strength
across distances, secure/encrypted data and transmission; business/government consumerssecurity, data and
voice capability, secure/encrypted data and transmission, sustained signal/strength across distances
31
Key competitors: five of the largest cell phone manufacturers, two other niche market competitors, several
manufacturers of integrated communication devices, and several dozen competitors in the fragmented cell
phone component and ringtone markets
Strategic advantages: product/feature design innovation, business model innovation, lowered costs from
offshore supplier/partnership relationships
Strategic challenges: availability of a highly skilled workforce, communication, logistics, rapidly changing
customer/market needs (volatility in niche markets), protection of intellectual property, volatility of the
overseas environment, market forces driving the cost of cell phones and market penetration
Category 3. Customer Focus:
Five major product lines: Novel Complete, Novel Secure 1, Novel Free, Novel Bug, and Novel Aid
Serves only the U.S. market. Seventh-largest manufacturer of cell phones, with approximately a 3% market
share, and the fourth-largest supplier of ringtones. $3.25 billion in sales, with approximately 26.6 million
phones sold in 2007. The focus is on profit, rather than growth.
Key customer segments: personal consumers (students in Gen-Y, celebrities and sports stars, preteens, single
adult females, the elderly, the disabled); personal/business consumers (outdoors people); business
consumers(truckers, taxi drivers); business/government consumers (emergency services workers); and
government consumers (the Department of Homeland Security)
Key customer requirements: allease of use, reliability; personal consumerstrendiness, convenience,
secure/encrypted data and transmission, personal/home safety and security, low cost, ruggedness; business
consumersruggedness, personal safety and security, data and voice capability, sustained signal/strength
across distances, secure/encrypted data and transmission; business/government consumerssecurity, data and
voice capability, secure/encrypted data and transmission, sustained signal/strength across distances
Principal success factors: a strong relationship with carriers, ability to respond to rapid changes in the
marketplace with new product design and/or superior hardware/software quality, and collaborations with key
suppliers/partners
Strategic challenges: rapidly changing customer/market needs (volatility in niche markets), volatility of the
overseas environment, market forces driving the cost of cell phones and market penetration
Category 4. Measurement, Analysis, and Knowledge Management:
Strategic challenges: rapidly changing customer/market needs (volatility in niche markets), protection of
32
Comparative data sources: the QuEST Forum, the Association for Connecting Electronics Industries, PH and
Smell, the American Production and Inventory Control Society (APICS), the Best-of-the-Rest Freight
Carriers, Bloodred Orange, Rushed, Allegiance Survey data, the HDI, and SooperdooperSoft
Core value: innovation
and product engineering), 2,738 in operations, and 250 in administration and support.
Performance improvement system: Process Improvement Process (PIP), which is based on Design, Measure,
Analyze, Improve (DMAI); balanced scorecard; and Measuring, Action, and Performance (MAP) integrated
databases. Also starting to use Lean and Six Sigma methodologies.
Category 5. Workforce Focus:

union. Highly educated workforce: 25% with a postgraduate degree, 40% with an undergraduate degree, 25%
with some technical college, and 99% with a high school diploma. Women compose 65% of the workforce;
50% of employees are under age 40; for 20%, English is a second language; and 15% are disabled.
Workforce requirements for all: knowing what is expected, having the right materials and training, timely and
appropriate feedback and recognition, opportunities for growth and development, organizational flexibility to
accommodate diverse lifestyles, coworkers committed to excellence, connection with the companys values,
and the ability to contribute to its success.
Additional requirements for office and home workers: appropriate work space ergonomics, personal safety,
and security. Additional requirements for manufacturing workers: appropriate ergonomics, machine operation
safety, environmental safety, emergency preparedness, personal safety, and security
Culture promotes core competencies of agility and communication: working out of the home, flexible work
schedules, and maximizing technology (cell phones, virtual meetings, teleconferencing) to minimize travel.
Core values: valuing employees/partners and innovation
Strategic challenges: availability of a highly skilled workforce, communication
Category 6. Process Management:
Midsized manufacturer of cell phone hardware, software (including ringtones), cell phone accessories, and
other communication devices that integrate audio, text, and Global Positioning System (GPS) features. Basic
manufacturing (components and hardware) is done by offshore suppliers.
Principal success factors: ability to respond to rapid changes in the marketplace with new product design, and
process performance and its positive impact on margins
33
Strategic challenges: communication, logistics, rapidly changing customer/market needs (volatility in niche
markets)
Strategic advantages: product/feature design innovation and lowered costs from offshore supplier/partnership
relationships
Core values: agility and innovation
IV.
Share Foods
Note: The Share Foods Case Study (see the complete case study, a fictitious example of a
Baldrige application based on the 2007 criteria - essentially the same as the 2008 criteria
(found in the Baldrige Materials folder on the Premium website) was prepared for use in
the 2007 Malcolm Baldrige National Quality Award Examiner Preparation Course. The
case study describes a fictitious non-profit food bank organization.
Although more extensive than students might be expected to discover, the following are
comprehensive listings of the relevant factors that might apply to each of the six Baldrige
criteria, based on the organization profile.
Category 1. Leadership:
Mission, Vision, Values (MVV). Mission: A community-based food bank dedicated to feeding the hungry
residents of its communities. Vision: Iowa's heartland is hunger-free. Values: We work together, we do
what we say, everyone deserves respect, and we follow through.
10 full-time equivalent (FTE) employees (8 full-time and 5 part-time); 8 of 13 employees with
bachelor-level or above degrees, 5 employees with high school diplomas or associate degrees
More than 500 volunteers, including a core team of 20 volunteers, contributed 28,600 hours in 2006.
Volunteers include university nutrition and management students, government and foundation fellows,
and court-ordered community-service placements. Nearly half of volunteers are over age 55.
Governance by a 12-member Board of Directors, including a county commission representative and a
rotating member agency position, with 5 subcommittees linked to management functions
34
Major customer, stakeholder, and market segments and requirements:

Customers: member agencies. Requirements: timeliness; quality, variety, and quantity of food;
competency and consistency; access to nutritional food; and continuity of service
Stakeholders: county, city, state, and federal governments; Food Banks of America (FBA), the Food
Bank Learning Collaborative (FBLC), and the Iowa Food Bank Association (IFBA); the Regional
Network of Food Relief Agencies; and taxpayers. Requirements: accountability, cost efficiency,
administrative cost reduction, dependability, and flexibility
Community Segments: County residents, community groups, community leaders, the Chamber of
Commerce, businesses, education entities, and volunteers. Requirements: effective response to emergency
needs, cost efficiency, and meaningful opportunities to serve
Donors/Suppliers: charitable foundations; corporations, grocers, and restaurants; individuals; The
Emergency Food Assistance Program (TEFAP); and corporate contributors. Requirements:
accountability; impact and integrity; a single point of service for deliveries; predictability of operations;
coordinated management of donations; effective lead-time to meet requests; and proper food storage
Performance improvement system: Plan-Do-Check-Act (PDCA) Process
Category 2. Strategic Planning:

residents of its communities. Vision: Iowas heartland is hunger-free. Values: We work together, we do
Competes with other social services for funds and volunteers; collaborates with these organizations in
emergency and disaster relief
Key success factors (same as strategic advantages for this organization): its ability to feed the foodinsecure through member agencies, network of food suppliers, tight management of overhead costs
(12.1% of operating expenses), and volunteer base. Other success factors: food availability and quality;
fiscal agility; funding and food resources; organizational effectiveness; optimization of human, financial,
food, and other resources; organizational learning, collaboration, and innovation; dedicated, experienced
employees and volunteers; and the satisfaction of member agencies, donors/suppliers, and the community
Key changes: shifting groups of temporarily food-insecure persons, seasonal needs (e.g., related to school
vacation times and migrant populations), and the doubling of Hispanic and Hmong populations in the past
year. The nutritional quality of food, along with quantity, has become a key consideration in the past
decade.
Five strategic challenges: ensure food reaches those most in need when they need it most; optimize
human resources and partnerships; respond to member agency needs; obtain and maintain adequate
financial resources; recruit volunteers from a broad range of age segments
35
Category 3. Customer Focus:

Paid employees and volunteers acquire, warehouse, transport, and distribute food to the food-insecure
through partnerships with 58 member agencies.
residents of its communities. Vision: Iowas heartland is hunger-free. Values: We work together, we do
Customer/stakeholder/market segments, each with specific requirements: customers (member agencies),
stakeholders (governments, organizations, taxpayers), community segments, donors/suppliers
Serves a six-county metropolitan statistical area (MSA) population of 500,000, with 75,000 client
contacts annually. In this area, 8% of the residents are under age five (mostly urban), 13% are more than
65 years old (mostly rural), and 10% are below the federal poverty rate; there is a 13% unemployment
rate; a third of clients receive federal food assistance services; and two counties have a 9.5% foodinsecurity rate (above the state average)
Key changes: shifting groups of temporarily food-insecure persons, seasonal needs (e.g., related to
school vacation times and migrant populations), and the doubling of Hispanic and Hmong populations in
the past year. The nutritional quality of food, along with quantity, has become a key consideration in the
past decade.
Strategic challenges: ensure that food reaches those most in need, when they need it most; optimize
partnerships; respond to member agency needs
Category 4. Measurement, Analysis, and Knowledge Management:
Technologies: Uses FoodAnswers software from Food Banks of America (FBA) and Rapid Inventory
Control Enterprise (RICE); an information technology firm provides pro bono hardware and software
support
Governance by 12-member board, including a county commission representative and a rotating member
agency position, with five subcommittees linked to management functions
Comparative and competitive data sources: FBA national comparisons, IFBA state comparisons,
Assistance Now Finder, and collaborative FBLC regional data and best practice sharing
Five strategic challenges: Ensure food reaches those most in need when they need it most, optimize
human resources and partnerships, respond to member agency needs, obtain and maintain adequate
financial resources, recruit volunteers from a broad range of age segments
Category 5. Workforce Focus:
36
Workforce key requirements: security; food safety; training; honesty, integrity, and accountability;
regulatory and standards compliance; supervision/mentoring/guidance
Workforce expectations: focus on the MVV; respectful, nondiscriminatory communications and actions;
collaboration and teamwork; stewardship of resources
Employee benefits include health and dental insurance and flexible work schedules; other benefits, such as
in-kind gifts from donors, are shared equitably among employees and volunteers.
Strategic challenge: Optimize human resources and partnerships
Category 6. Process Management:
2. In 2002, organization exited food pantry and soup kitchen services to focus on food banking as core
competency. Aims to provide best foods, at the right time, to the right place.
Mission: A community-based food bank dedicated to feeding the hungry residents of its communities
Four major customer/stakeholder/market segments, each with specific requirements: customers (member
agencies), stakeholders (governments, organizations, taxpayers), community segments, donors/suppliers
Food suppliers and partners provide food, facilitate innovation, broaden the organizations reach, and
improve core processes; finances and services suppliers and partners provide funds for food and
activities, donate in-kind support, fund improved organizational capabilities, provide fiduciary controls,
and volunteer.
Key success factors: its ability to feed the food-insecure through member agencies, network of food
suppliers, tight management of overhead costs (12.1% of operating expenses), volunteer base, and food
availability and quality
Bonus Materials
Quality in Practice - Building Business Excellence in Hungary
1.
Latent needs are one of the challenging issues that Westel, and other telecommunications
companies, in general, must address. Customers and other stakeholders are often not
aware of their needs and the possibilities for use of technology because the technology
changes so rapidly. In order to manage this, Westel needs (and has developed) a systematic
process for determining shareholder needs, customer needs, and employee and partner
needs. This requires use of sophisticated customer/stakeholder surveys; help lines; and
tracking, information management, and data mining systems.
2.
It is doubtful if the results for these Hungarian firms could have been realized without
using self-assessment methods that were described in the case. Continuous improvement
requires integration of the firms strategic focus and plans with action planning and an ongoing process for improvement. Without the identification of opportunities for
37
improvement (OFIs), it is difficult to design, track, and complete projects needed for
systematic improvement.
3.
In small countries, such as Hungry, it is gratifying to see the results that can come out of a
national quality award system. After winning their national quality awards, all three of
these companies went on to higher levels of quality awards, including two that won the
EFQM, which is equivalent to the Baldrige Award. Thus it is very important to have such
country awards (which may be seen as similar to state awards in the U.S.) in order to
provide incentives and tangible evidence of excellence in the quality journey.
Quality in Practice - Six Sigma Integration at Samsung

1. Samsung Electronics Co. (SEC) was refocusing its strategy on developing internal
resources, especially its people, as well as putting innovation first in its development and
design of products and services. The difficulties that may have been encountered included:
leadership support for a Six Sigma initiative (possibly an attitude of: Why do we need
that? were already using numerous quality approaches successfully), changing from a
control structure to one with increasing reliance on teamwork and training, and rolling
out the new focus to a multinational workforce. SEC had used a number of quality tools
and techniques for process and product improvement, so the quality emphasis was already
a part of the corporate culture. Six Sigma was added to upgrade these techniques and
improve SEC's competitive position in world markets.
2. SEC obvious had a number of opportunities for Six Sigma projects within its supply chain.
These could include: design for Six Sigma in product development, improving
procurement processes to reduce costs, a variety of manufacturing process and quality
improvement projects, adopting approaches to speed delivery of parts and reduce logistics
costs, projects for design for Six Sigma in marketing campaigns, efforts to improve
customer focus and service for sales, and improvement of customer service and complaint
management processes in the customer service area.
Bonus Cases
Case - TecSmart Electronics
1. TecSmart Electronics strengths (abbreviated) may be numbered for identification, as
follows:
(1)
(2)
Senior leaders set company objectives and guide cross-functional teams to review
and develop individual plans.
Senior leaders participate in quarterly communication meetings with all employees
to discuss company issues and answer questions.

(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
38
Senior leaders teach courses in TecSmart University; meet with customers,

suppliers, and benchmarking partners; and are actively engaged in professional and
community organizations.
The company collects operational data in every department and evaluates its
information.
TecSmart has set Six Sigma goals for most of its processes.
All employees are trained in a 5-step problem solving process.
Inputs to the strategic planning process include customer feedback, market
research, and benchmarking information from customers, suppliers, competitors,
and industry leaders, etc. The CEO reviews progress every month.
TecSmart uses over a dozen different processes to gather customer information,
and validates the information.
All employees receive customer relationship training.
All complaints are handled by the Vice President of Sales and resolved within 2
days.
Customer satisfaction data is acquired from sales representatives, etc. and these
data are reviewed and compared by the executive team during the strategic
planning process.
TecSmart uses self-managed work groups where employees make most day-to-day
decisions while managers focus on coaching and process improvement.
The average employee receives 72 hours of internal quality/service-related training.
Employees have been surveyed each year to gauge how effectively the company
has implemented Demings 14 Points.
Cross-functional teams guide product development, which includes four interim
reviews by executive management.
New product introduction teams work with design engineers and customers to
ensure that design requirements are met and SPC is used to monitor variation,
provide a basis for corrective action, and optimize processes.
Quality is assessed through internal audits, employee opinion surveys, and
customer feedback.
Suppliers are involved in early stages of a product development program and
quality requirements for suppliers have been identified.
When related to Demings new version of his 14 points we can see:

1.
2.
Create a Statement of Purpose. TecSmart has a focus on quality, service, and

value. This is also reinforced by #1 and #2. By making plans (#1), and cascading
them down the organization, the leadership team can focus on the three key values.
By holding quarterly communication meetings (#2), senior leaders can reinforce
their statement of purpose.
Learn the New Philosophy. A dedication to learning is shown in #3, #7, and #13.
The best way to learn is to teach something, as the executives do in #3. They are
also learning as they gather inputs for the strategic planning process in #7. Finally,
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
39
in #13, provision is made not only for training, but learning through the
quality/service-related training sessions.
Understand Inspection. Inspection is not explicitly addresses, but items 4, 5, 6,
and 8, among others, show that decisions based on facts, which can involve
inspection, are routinely made.
End Price Tag Decisions. The basis on which decisions are made for purchasing
parts and services is not discussed. However, item #18 states that suppliers are
involved in early stages of a product development program. That implies that there
is a close working relationship between the company and suppliers, and that cost
concerns are discussed and worked out to minimize quality issues.
Improve Constantly. A process is in place to train employees in a 5-step problem
solving process (#6), and new processes are documented and variation in ongoing
processes is monitored for corrective action (#16).
Institute Training. As stated earlier, training and learning seem to be built into the
fabric of the company, such that executives teaching courses at TecSmart
University (#3). Customer relationship training is also required for all employees
(#9). Also, in #13, provision is made for 72 hours of training on service/quality
topics, and sales, engineers, office staff, and managers must all be trained.
Teach and Institute Leadership. Leadership is evident in objective-setting (#1),
communication and teaching (#2 and 3), planning (#7), complaint resolution (#10),
and middle management coaching (#12).
Drive Out Fear and Innovate. While driving out fear is not specifically addressed,
it seems likely that the quarterly communication sessions (#2) with top
management, employee empowerment (#12) through self-managed teams, and the
annual employee surveys (#14) would do a great deal to reduce or eliminate fear.
Optimize the Efforts of Teams and Staff. Teams and staff have been organized and
are used constantly as indicated by items 1, 4, 6, 7, 12, 15, 16, and 18.
Eliminate Exhortations. Goals are set (#5) and measurement processes are used
extensively (#8 and #11), but exhortations are never mentioned.
Eliminate Quotas and MBO; Institute Improvement; and Understand Processes.
Again, no mention is made of quotas or MBO. Understanding of the need for
improvement, and to know the characteristics of processes abounds.
Remove Barriers. #12 states that Hourly workers can make process changes with
the agreement of only one person, and sales people are authorized to travel
wherever they feel it necessary for customer service.
Encourage Education. Learning, training, and education seem to all be interrelated at TecSmart. Nothing was explicitly stated about education, however.
Take Action. The company has taken action to institute quality on a number of
fronts, already.
2. TecSmart Electronics strengths (abbreviated see above) can also be classified according
to the Baldrige criteria, as follows.
The seven categories in the Baldrige Criteria for Performance Management include:
40
1.
2.
3.
4.
Leadership. Items 1, 2, 3, and 7.

Strategic Planning. Items 1 and 7.
Customer and Market Focus. Items 8, 9, 10, 11, 15, and 17.
Measurement, Analysis, and Knowledge Management. Items 4, 5, 7, 8, 11, 16,
and 17.
5. Human Resource Focus. Items 1, 6, 9, 12, and 14.
6. Process Management. Items 4, 8, 16, and 18.
7. Business Results. Items 2, 3, 4, 7 and 17.
3. Its difficult to find obvious opportunities for improvement because TecSmart
Electronics has so many obvious strengths. However, strategic planning (Category 2)
appears to be an area where some improvement could take place. No mention is made of
how goals are set, benchmarks are chosen, or cycles of improvement in the planning
process take place. Also, other than managers who are involved in professional and
community organizations, no mention is made of how the company addresses social
responsibility obligations. In addition, goal setting for financial objectives is not
mentioned. In Business Results (Category 7), no mention is made of processes used to
track business results, or how they are compared with internal trends and external
benchmarks. Also, there are no references to measurement of social responsibility results
versus goals.
Case - Catalan Bar and Grille
1.
How do these practices fit into the Baldrige criteria?

Josh seems to have some good Baldrige-based ideas about how to begin building in quality
into his restaurant. Its not a bad start, as seen below.
2.
In what categories and items?

Note that some items appear more than once since they may relate to two or three
categories. The seven categories in the Baldrige Criteria for Performance Management and
Joshs ideas relating to each of them include:
1. Leadership.
Develop efficient methods for disposal of grease and recyclable goods, and
participate in programs such as Junior Achievement. (Social Responsibility)
2. Strategic Planning.
Design the menu and food presentation to clearly differentiate from competitors.
Have weekly shift meetings to relay information about current issues and generate
ideas for process improvements. Review this information at monthly management
meetings and quarterly planning sessions.
41
Incorporate all stakeholders into planning activities, including employees,

customers, investors, and suppliers.
3. Customer and Market Focus.
Use an Enterprise Resource Planning system to manage information, along with a

Customer Relationship Management module to process customer intelligence.
This system will help to generate accurate forecasts of demand and manage the
supply chain.
Give a small discount for customers who complete a comment card on selected
days.
Customize service a much as possible to develop customer loyalty.
Train hostesses, servers, bussers, and managers on customer relationship building.
Empower them to address problems such as wrong orders or late deliveries to the
table.
Incorporate all stakeholders into planning activities, including employees,
customers, investors, and suppliers.
Post performance measures in the lobby where all employees and customers can
see them.
Use marketing research to understand age, ethnicity, income, and marital factors of
customers. Hand out coupons at Junior Achievement functions.
4. Measurement, Analysis, and Knowledge Management.
Use an Enterprise Resource Planning system to manage information, along with a

Customer Relationship Management module to process customer intelligence.
This system will help to generate accurate forecasts of demand and manage the
supply chain.
Learn about industry best practices for supply chain management and work with
suppliers to reduce inventory requirements and costs.
Outsource accounting and legal processes.
5. Human Resource Focus.

Compensate performance based on teamwork.
Give employees who leave for school and find a replacement a bonus.
Train and empower the staff.
6. Process Management.
Have weekly shift meetings to relay information about current issues and generate
ideas for process improvements. Review this information at monthly management
meetings and quarterly planning sessions.
42
Make teams the central focus of all jobs and allow all staff to process customer
requests; for example, a busser can order an additional beverage without first
getting a server to process the transaction.
Develop efficient methods for disposal of grease and recyclable goods.
Learn about industry best practices for supply chain management and work with
suppliers to reduce inventory requirements and costs.
Train hostesses, servers, bussers, and managers on customer relationship building.
Empower them to address problems such as wrong orders or late deliveries to the
table.
see them.
Use wireless handheld computers to capture orders and send them to the kitchen.
Rotate duties for cleaning and sterilizing areas at the end of each shift, including
managers.
7. Business Results.
see them.
Outsource accounting and legal processes.
3.
What aspects of the Baldrige criteria are lacking?

The three areas that may initially need more work are leadership, strategic planning, and
business results. Josh needs some leadership assistance in the form of a board of directors
that should include people with expertise in as many of the criteria as possible. They can
give him good advice and help him to develop as a leader, as well as to perform strategic
planning and goal setting. In order to obtain and review business results, it is necessary to
know what specific goals need to be met. These are provided by the strategic planning
process, which has not yet been developed. The ERP system will help to provide the
information needed for tracking those goals, but the goals must be specified, first.
4.
What other things should he consider doing?

He should consider developing a focus group of customers so that he can test out
reactions to new recipes. He might also develop a system to benchmark competitors, as
well as join his local restaurant association so that he can keep up with industry best
practices and trends in all areas, not just supply chain management.
5.
Students should be encouraged to visit their local restaurant association for more
information. This will serve the dual purpose of raising their awareness that such trade
organizations exist and will also help them to gain a more in-depth understanding of a
growing field where they may find themselves a niche in the present or future.

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CHAPTER 3

Philosophies and Frameworks

To study Deming's philosophy, which was based on systems thinking, statistical

To appreciate how Crosby's approach to quality is summarized in the four "Absolutes of

Philosophies and Frameworks

quality improvement, and variation reduction in support of new engineering

Philosophies and Frameworks

Principle 4: Process Approach achieving desired results more

Philosophies and Frameworks

Integrating Quality Frameworks at Veridian Homes

Philosophies and Frameworks

Deming's System of Profound Knowledge consists of four interrelated parts: (1)

As Scholtes explained, lack of understanding of the components of Profound Knowledge

As explained in the answer to question 3, above, Deming's System of Profound

Philosophies and Frameworks

Philosophies and Frameworks

Like Deming, Juran advocated company-wide quality management, with a never-ending

Crosby's Absolutes of Quality Management are:

Philosophies and Frameworks

Philosophies and Frameworks

Taguchis contributions were centered on explaining the economic value of reducing

The purposes of the Malcolm Baldrige Award are to:

Philosophies and Frameworks

Philosophies and Frameworks

Philosophies and Frameworks

Quality management system

Philosophies and Frameworks

Philosophies and Frameworks

Thinking in terms of key business processes and customer requirements with a

Philosophies and Frameworks

ANSWERS TO DISCUSSION QUESTIONS

Philosophies and Frameworks

Philosophies and Frameworks

Philosophies and Frameworks

A comparison of Demings newer version of the 14 Points versus the original 14

Create a Vision and Demonstrate Commitment. Originally, in Demings earlier

Philosophies and Frameworks

inspection). The newer version suggests the need to develop appropriate

Philosophies and Frameworks

Philosophies and Frameworks

Senior leaders job is Senior leaders job is Senior leaders job is

Senior leaders job is

Complaints are only a

Philosophies and Frameworks

Philosophies and Frameworks

As in many areas or types of organization, the Baldrige process can be effective in

Philosophies and Frameworks

In examining the ISO 9001 requirements of:

Philosophies and Frameworks

TQM is based largely on worker empowerment and teams; organizational leader

Philosophies and Frameworks

improvement projects. Again, many projects and studies, while they

Philosophies and Frameworks

ANSWERS TO CASE QUESTIONS

Santa Cruz Guitar Company

Create a Vision and Demonstrate Commitment. This principle is exemplified in the

Understand Inspection. The manufacturing department inspects what it produces.

Improve Constantly. These opportunities for training and improvement (reference

Philosophies and Frameworks

Encourage Education. At SCGC, workers are encouraged to further enhance their

Can Six Sigma Work in Health Care?

Discussion of mission, vision, and values of SLRMC

Philosophies and Frameworks

Goals and goal-setting