Operations Management 1-50

Quality Management for
Organizational Excellence
Lecture/Presentation Notes
By:
Dr. David L. Goetsch and
Stanley Davis
Based on the book
Quality Management for
Organizational Excellence
(Eighth Edition)
Quality Management, Eighth Edition Copyright © 2016, 2013, 2008 by Pearson Education, Inc.
Dr. David L. Goetsch All Rights Reserved
One: The Total Quality Approach
to Quality Management
• MAJOR TOPICS
 What is Quality?
 The Total Quality Approach Defined
 Two Views of Quality
 Key Elements of Total Quality
 Total Quality Pioneers
 Keys to Total Quality Success
 How is Six Sigma Achieved?
 The Future of Quality Management
• Quality has been defined in a number
of ways. When viewed from a
consumer’s perspective, it means
meeting or exceeding customer
expectations.
• Total quality is an approach to doing
business that attempts to maximize an
organization’s competitiveness through
the continual improvement of the
quality of its products, services, people,
processes, and environments.
• Key characteristics of the total quality
approach are as follows: strategically
based, customer focus, obsession with
quality, scientific approach, long-term
commitment, teamwork, employee
involvement and empowerment,
continual process improvement,
bottom-up education and training,
freedom through control, and unity of
purpose.
• The rationale for total quality can be
found in the need to compete in the
global marketplace. Countries that are
competing successfully in the global
marketplace are seeing their quality of
living improve. Those that cannot are
seeing theirs decline.
• W. Edward Deming is best known for
his Fourteen Points, the Deming Cycle,
and the Seven Deadly Diseases.
• Joseph M. Juran is best known for
Juran’s Three Basic Steps to Progress,
Juran’s Ten Steps to Quality
Improvement, the Pareto Principle, and
the Juran Trilogy.
• Common errors made when starting
quality initiatives include senior
management delegation and poor
leadership; team mania; the
deployment process; a narrow,
dogmatic approach; and confusion
about the differences among education,
awareness, inspiration, and skill
building.
• Trends affecting the future of quality
management include demanding global
customers, shifting customer
expectations, opposing economic
pressures, and new approaches to
management.
• The American Society for Quality (ASQ)
offers certifications in a variety of
disciplines including Manager of
Quality/Organizational Excellence,
Quality Engineer, Reliability Engineer,
Software Quality Engineer, Quality
Auditor, Six Sigma Black Belt, Six
Sigma Green Belt, Quality Technician,
Calibration Technician, Quality
Improvement Associate,…
• …Quality Inspector, Quality Process
Analyst, Hazard Analysis and Critical
Point Auditor, Biomedical Auditor, and
Pharmaceutical GMP Professional.
Two: Quality and Global
Competitiveness
• MAJOR TOPICS
 The Relationship between Quality and
Competitiveness
 Cost of Poor Quality
 Competitiveness and the U.S. Economy
 Factors Inhibiting Competitiveness
 Comparisons of International
Competitors
 Human Resources and Competitiveness
Competitiveness
 Characteristics of World-Class
Organizations
 Management by Accounting, Antithesis
of Total Quality
 U.S. Companies: Global Strengths and
Weaknesses
 Quality Management Practices in Asian
Countries.
Competitiveness
• The relationship between quality and
competitiveness can be summarized as
follows: In a modern global
marketplace, quality is the key to
competitiveness.
Competitiveness
• The costs of poor quality include the
following: waste, rejects, retesting,
rework, customer returns, inspection,
recalls, excessive overtime, pricing
errors, billing errors, excessive
turnover, premium freight costs,
development cost of the failed product,
field service costs, overdue receivables,
handling complaints, expediting,
system costs, planning delays,…
Competitiveness
• …late paperwork, lack of follow-up,
excess inventory, customer allowances,
and unused capacity.
• The United States came out of World
War II as the only major industrialized
nation with its manufacturing sector
completely intact. Germany and Japan
were devastated by damage during the
war.
Competitiveness
 They rebuilt their manufacturing bases
on the assumption that to compete
globally, they would have to produce
goods of world-class quality. That
strategy helped them recover and
become world leaders in manufacturing.
• Several factors can inhibit
competitiveness, including those
related to business and government,
family, and education.
Competitiveness
• When making comparisons among
internationally competing countries, the
following indicators are usually used:
standard of living, trade and export
growth, and manufacturing
productivity.
Competitiveness
• The most important key in maximizing
competitiveness is the human resource.
Following World War II, this was the
only resource that Germany and Japan
had to draw on. Consequently, they
built economic systems that encourage
private employers to make business
decisions that emphasize improved
productivity and quality, rather than
price.
Three: Strategic Management: Planning
and Execution for Competitive Advantage
• MAJOR TOPICS
 What is Strategic Management?
 Competitive Strategy
 Core Competencies and Competitive
Advantage
 Components of Strategic Management
 Strategic Planning Overview
 Creative Thinking in Strategic Planning
 Conducting the SWOT Analysis
 Developing the Vision

 Developing the Mission
 Developing the Guiding Principles
 Developing Broad Strategic Objectives
 Developing Specific Tactics (Action Plan)
 Executing the Strategic Plan
 Strategic Planning in Action: A “Real
World” Case
• Strategies that organizations can adopt

for gaining a sustainable competitive
advantage are cost leadership,
differentiation, and market-niche
strategies.
• Core competencies are things an
organization dose so well they can be
viewed as providing a competitive
advantage.
• Strategies are approaches adopted by

organizations to ensure successful
performance in the marketplace.
• Strategic management is management

that bases all actions, activities, and
decisions on what is most likely to
ensure successful performance in the
marketplace. The two major
components of strategic management
are strategic planning and strategic
execution.
• Part of strategic planning is thinking

creatively to eliminate “sacred cows”
that work against competitiveness.
• Strategic planning is the process
whereby organizations develop their
vision, mission, guiding principles,
broad objectives, and tactics for
accomplishing the broad objectives.
• An organization’s vision is its guiding

force, the dream of what it wants to
become and its reason for being.
• An organization’s mission describes
who an organization is, what it does,
and where it is going.
• An organization’s guiding principles

establish the framework within which it
will pursue its mission. Together, the
guiding principles summarize an
organization’s value system, the things
it believes are most important.
• An organization’s broad strategic

objectives translate its mission into
more specific terms that represent
actual targets at which the organization
aims. The objectives are more specific
than the mission, but they are still
broad.
• Tactics are well defined, finite projects

and activities undertaken for the
purpose of specific desired outcomes in
support of the broad objectives.
• Even the best strategic plan will serve
no purpose unless it is effectively
executed. To promote successful
execution of strategies, organizations
should undertake the following
activities:
 Communicate, build capabilities,

establish strategy-supportive stimuli,
eliminate administrative barriers,
identify advocates and resisters,
exercise strategic leadership, and
monitor and adjust as needed.
Four: Quality Management, Ethics,
and Corporate Social Responsibility
• MAJOR TOPICS
 Definition and Overview of Ethics
 Trust and Total Quality
 Values and Total Quality
 Integrity and Total Quality
 Responsibility and Total Quality
 Manager’s Role in Ethics
 Organization’s Role in Ethics
 Handling Ethical Dilemmas
 Ethics Training and Codes of Business
Conduct
 Models for Making Ethical Decisions
 Beliefs versus Behavior: Why the
Disparity?
 Ethical Dilemmas: Cases
 Corporate Social Responsibility Defined
• Ethics is about doing the right thing
within a moral framework. The most
common impediment to ethical conduct
is human nature because people tend
to behave according to perceived
personal interest.
• Trust is a critical element of ethics,
which, in turn, makes ethics critical in
total quality. Many of the fundamental
elements of total quality depend on
trust and ethical behavior, including
communication, interpersonal relations,
conflict management, problem solving,
teamwork, employee involvement and
empowerment, and customer focus.
 Trust can be built by being loyal to
those not present, keeping promises,
and sincerely apologizing when
necessary.
• Values are those core beliefs that guide
our behavior. Individuals and
organizations apply their knowledge
and skills most willingly to efforts in
which they believe.
 Managers should work to establish an
environment in which values that lead
to ethical behavior and values that lead
to peak performance are the same.
• Integrity requires honesty, but it is
more than just honest. Integrity is a
combination of honesty and
dependability. People with integrity
can be counted on to do the right thing,
do it correctly, and do it on time.
• Accepting responsibility is part of
ethical behavior. People who pass
blame are not behaving ethically. In a
total quality setting, people are
responsible for their performance.
When speaking of their organization,
ethical people say, “we” instead of
“they.”
• Managers play a key role in ethics in an
organization. They are responsible for
setting an example of ethical behavior,
helping employees make ethical
choices, and helping employees follow
through and behave ethically after
making an ethical choice.
 In carrying out these responsibilities,
managers can use the best-ratio
approach, black-and-white approach,
and full-potential approach.
• The organization’s role in fostering
ethical behavior includes creating an
ethical environment and setting an
ethical example. Key in creating an
ethical environment is having a
comprehensive ethics policy.
 Key in setting an example is following
the policy, expecting all employees to
follow the policy, and rewarding those
who do.
• In handling ethical dilemmas, managers
should select the option that is most
likely to build trust, integrity, and a
sense of responsibility and that is most
likely to pass the various ethics tests
(i.e., front-page, morning-after, etc.).
• People who believe in ethical values will
sometimes make unethical decisions
because of self-interest, self-protection,
conflicting values, or because they see
the benefits as being intangible or
deferred.
• Key elements of corporate social
responsibility include the ethical
aspects of the following issues: human
rights, safety and health, business
practice, governance, environmental
engagement, consumer relations,
marketplace activities, community
involvement and social development.
Five: Partnering and Strategic
Alliances
• MAJOR TOPICS
 Partnering or Strategic Alliances
 Innovative Alliances and Partnerships
 Internal Partnering
 Partnering with Suppliers
 Partnering with Customers
 Partnering with Potential Competitors
 Global Partnering
 Education and Business Partnerships
Alliances
• Partnering means working together for
mutual benefit. It involves pooling
resources, sharing costs, and
cooperating in ways that mutually
benefit all parties involved in the
partnership. Partnerships may be
formed internally (among employees)
and externally with suppliers,
customers, and potential competitors.
Alliances
 The purpose of partnering is to enhance
competitiveness. The formation of
partnerships should be a systematic
process involving such steps as
development of a partnering briefing,
identification of potential partners,
identification of key decision makers,
implementation of the partnership.
• Internal partnering operates on three
levels:
Alliances
 Management-to-employees, team-to-
team partnerships, and employee-to-
employee partnerships.
• The purpose of internal partnering is to
harness the full potential of the
workforce and focus it on the continuous
improvement of quality.
• Internal partnering is also called
employee involvement and employee
empowerment.
Alliances
 Successful internal partnering requires a
supportive environment, structured
mechanisms, and mutually supportive
alliances.
• The goal of a supplier partnership is to
create and maintain loyal, trusting
relationships that will allow both
partners to win while promoting the
continuous improvement of quality,
productivity, and competitiveness.
Alliances
 The requirements for success in supplier
partnerships include the following:
• Supplier personnel should interact with
employees who actually use their
products, the price-only criteria in the
buyer-supplier relationship should be
eliminated, the quality of products
delivered should be guaranteed by the
supplier, supplier should be proficient in
JIT, and both parties should be capable
of sharing information electronically.
Alliances
• Supplier partnerships typically develop
in the following stages: uncertainty and
tentativeness, short-term pressure,
realization of the need for new
approaches, adoption of new
paradigms, awareness of potential,
adoption of new values, and mature
partnering.
Alliances
• The rationale for forming customer
partnerships is customer satisfaction.
The best way to ensure customer
satisfaction is to involve customers as
partners in the product development
process. Doing so is, in turn, the best
way to ensure competitiveness.
Customer-defined quality is a
fundamental aspect of total quality.

Operations Management 1-50

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Quality Management for

 Developing the Vision

• Strategies that organizations can adopt

• Strategies are approaches adopted by

• Strategic management is management

• Part of strategic planning is thinking

• An organization’s vision is its guiding

• An organization’s guiding principles

• An organization’s broad strategic

• Tactics are well defined, finite projects

 Communicate, build capabilities,

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