Managing Quality

Fourth

Edition

MANAGING QUALITY INTEGRATING THE SUPPLY CHAIN

GLOBAL EDITION

S. Thomas Foster Brigham Young University

Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

CONTENTS Preface 21

Part I Understanding Quality Concepts 27 Chapter 1 Differing Perspectives on Quality 28 Recognizing Different Perspectives on Quality 28 • A CLOSER LOOK AT QUALITY 1-1: Which Is Better, Digital or Analog? 29 What Is Quality? 29 Product Quality Dimensions 29 Service Quality Dimensions 32 Why Does It Matter That Different Definitions of Quality Exist? 33 Differing Functional Perspectives on Quality 34 A Supply Chain Perspective 34 An Engineering Perspective 35 An Operations Perspective 37 A Strategic Management Perspective 39 • QUALITY HIGHLIGHT 1-1: Quality Strategy at GE 41 A Marketing Perspective 42 A Financial Perspective 43 The Human Resources Perspective 45 Is Quality Management Its Own Functional Discipline? 46 The Three Spheres of Quality 47 • QUALITY HIGHLIGHT 1-2: Federal Express Corporation 49 Other Perspectives on Quality

50

The Value-Added Perspective on Quality

50

Cultural Perspectives on Quality 50 Arriving at a Common Understanding of Quality Using a Contingency Perspective of Quality 50 Summary 51 • Key Terms 51 • Discussion Questions 52 • CASE 1-1: FedEx: Managing Quality Day and Night 53 • CASE 1-2: Granite Rock Company: Achieving Quality through Employees 55

Chapter 2 Quality Theory What Is Theory?

56 56

Is There a Theory of Quality Management?

58

• A CLOSER LOOK AT QUALITY 2-1: The Product That Is Quality 58

8

Contents History of Quality Management

60

Leading Contributors t o Quality Theory: W. Edwards Dem ing 60 Deming's 14 Points for Management The Deadly Diseases

62

66

Leading Contributors t o Quality Theory: Joseph M. Juran 67 The Juran Trilogy

67

Control versus Breakthrough

68

Project-by-Project Improvement

68

• A CLOSER LOOK AT QUALITY 2-2: Juran on the Past Century of Quality 69 Pareto Analysis

70

Leading Contributors t o Quality Theory: Kaoru Ishikawa 71 The Basic Tools of Quality

71

Ishikawa's Quality Philosophy

71

Leading Contributors t o Quality Theory: Armand Feigenbaum 72 The 19 Steps of TQC

73

Leading Contributors t o Quality Theory: Philip Crosby

73

Leading Contributors t o Quality Theory: Genichi Taguchi 75 Definition of Quality

75

Quality Loss Function

75

Robust Design

76

Leading Contributors t o Quality Theory: The Rest of the Pack 76 Robert C. Camp

76

Stephen R Covey's " 8 " Habits Tom Peters

76

77

Michael Hammer and James Champy

78

• A CLOSER LOOK AT QUALITY 2-3: Hammer Recants (Sort of), or In Search of the Lost Product to Sell 78 Viewing Quality Theory f r o m a Contingency Perspective 79 Resolving the Differences in Quality Approaches: A n Integrative View 80 Leadership

81

Employee Improvement Quality Assurance Customer Focus

82 82

Quality Philosophy

82

82

Contents Information Analysis Strategic Planning

82

82

Environment or Infrastructure Team Approach

83

83

Focus of the Quality Department Breakthrough

83

83

Theoretical Framework for Quality Management

83

Summary 84 • Key Terms 85 • Discussion Questions 85 • CASE 2-1: Rheaco, Inc.: Making a Quality Turnabout by Asking for Advice 86 • CASE 2-2: Has Disney Developed a Theory of Quality Guest Services Management? 87

Chapter 3 Global Supply Chain Quality and International Quality Standards 89 Managing Quality for the Multinational Firm (MNF) •

90

QUALITY HIGHLIGHT 3-1: Supply Chain Quality in the Global Context 94

Quality Improvement: The American Way 95 The Malcolm Baldrige National Quality Award The Baldrige Process

95

99

• A CLOSER LOOK AT QUALITY 3-1: Who Was Malcolm Baldrige? 100 Baldrige Scoring

101

Being a Baldrige Examiner •

103

QUALITY HIGHLIGHT 3-2: Harland Clarke, Inc. 104

State Awards

105

Quality Improvement: The Japanese Way Deming Prize

106

106

Other Japanese Contributions t o Quality Thought Lean Production

107

Japanese Total Quality Control (TQC)

108

Quality Improvement: The European Way 110 European Quality Award ISO 9000:2008

110

111

Quality Management Principles Underlying ISO 9000:2008 115 Selecting a Registrar

116

The ISO 9000-2008 Process ISO 14000

116

117

Quality Improvement: The Chinese Way 119 Does Chinese Quality Management Exist?

119

• A CLOSER LOOK AT QUALITY 3-2: Outsourcing Woes 120

107

10

Contents Are Quality Approaches Influenced by Culture?

121

Summary 122 • Key Terms 123 • Discussion Questions 123 • CASE 3-1: University of Wolverhampton: Becoming an ISO 9000 University 124 • CASE 3-2: Wainwright Industries: An Entirely New Philosophy of Business Based on Customer Satisfaction and Quality 125

Part II Designing and Assuring Quality 127 Chapter 4 Strategic Quality Planning 128 Strategy Content

128

The Importance of Time in Quality Improvement

128

• A CLOSER LOOK AT QUALITY 4-1: Problems with Measuring Educational Performance 130 Leadership for Quality

131

Leadership Dimensions Quality and Ethics

132

133

• QUALITY HIGHLIGHT 4-1: Solectron Corporation 134 Quality as a Strategy Costs of Quality PAF Paradigm

135 135

136

Accounting for Quality-Related Costs Lundvall-Juran Quality Cost Model Differentiation through Quality Focus through Quality Order Winners

137

139

139

140

140

Quality as a Core Competency Quality Strategy Process

142

Forced-Choice Model

142

Deploying Quality (Hoshin Kanri)

141

143

• A CLOSER LOOK AT QUALITY 4-2: A Mature Strategic Planning Process 143 Does Quality Lead to Better Business Results? Quality and Price

146

Quality and Cost

146

Quality and Productivity

146

Quality and Profitability

147

Quality and the Environment Supply Chain Strategy

144

147

148

Summary 149 • Key Terms 150 • Discussion Questions 150 • Problems 151

Contents • CASE 4-1: Ames Rubber Corporation: Realizing Multiple Benefits through Improved Quality 152 • CASE 4-2: Make No Mistake—At Eastman Chemical, Quality Is a Strategic Issue 154

Chapter 5 The Voice of the Customer

156

Customer-Driven Quality 157 • A CLOSER LOOK AT QUALITY 5-1: Customer Service on the Internet 157 The Pitfalls of Reactive Customer-Driven Quality 158 Customer-Relationship Management Complaint Resolution Feedback

160

161

162

Guarantees

162

Corrective Action

163

The "Gaps" Approach to Service Design Segmenting Customers and Markets

163

165

Strategic Supply Chain Alliances between Customers and Suppliers 168 The Role of the Customer in the Supply Chain 168 Communicating Downstream

169

Actively Solicited Customer-Feedback Approaches 170 Telephone Contact Focus Groups

170

171

Customer Service Surveys

171

• A CLOSER LOOK AT QUALITY 5-2: Misusing Surveys 172 Passively Solicited Customer-Feedback Approaches 175 Customer Research Cards

176

Customer Response Lines 176 Web Site Inquiries

177

Managing Customer Retention and Loyalty

177

Customer-Relationship Management Systems (CRMS) 179 A Word on Excellent Design 181 Summary 182 • Key Terms 183 • Discussion Questions 183 • Problems 184 • CASE 5-1: Customer Quality Feedback at Apple Computer 185 • CASE 5-2: Chaparral Steel: Achieving High Quality through a Commitment to Both External and Internal Customers 186

11

12

Contents Chapter 6

The Voice of the Market

188

W h a t Do We Mean by t h e Voice o f t h e Market? 188 Gaining Insight through Benchmarking 189 Process Benchmarking 190 Financial Benchmarking 190 Performance Benchmarking 191 Product Benchmarking 191 Strategic Benchmarking 191 •

QUALITY HIGHLIGHT 6-1: Pal's Sudden Service 191

Functional Benchmarking 193 Purposes o f Benchmarking 193 Difficulties in Monitoring and Measuring Performance 193 Commonly Benchmarked Performance Measures 197 Why Collect All These Measures? 198 Key Business Factors 198 Business Process Benchmarking 199 Robert Camp's Business Process Benchmarking Process 200 Leading and Managing the Benchmarking Effort 202 • A CLOSER LOOK AT QUALITY 6-1: Toyota: Benchmarking American Auto Companies (Before It Was Called Benchmarking) 202 Training 203 Baselining and Reengineering 203 • A CLOSER LOOK AT QUALITY 6-2: The Legal Environment of Benchmarking 204 Problems w i t h Benchmarking 206 Summary Questions

Chapter 7

207 • Key Terms 207 • Problems

207 208

•

Discussion

•

CASE 6-1: Amgen Corporation: Using Benchmarking as a Means of Coping with Rapid Growth 211

•

CASE 6-2: At&TTeleholdings: Making Benchmarking a Part of the Process Improvement Tool Kit 213

Quality and Innovation in Product and Process Design 215 Designing Products for Quality 215 The Design Process 216 •

QUALITY HIGHLIGHT 7-1: A Turnaround at Kellogg's Cereals: Driven by Design 218

Quality Function Deployment (QFD) 220 Technology in Design 226 Other Design Methodologies 228 Organizing the Design Team 228 The Product Life Cycle 229

Contents Product Families and the Product Life Cycle

229

• A CLOSER LOOK AT QUALITY 7-1: Ski Design 229 Complementary Products

230

Designing Products That Work

231

• A CLOSER LOOK AT QUALITY 7-2: Why It Takes a Rocket Scientist to Design a Golf Ball 231 Design for Manufacture Method Design for Maintainability Designing for Reliability

233

234

235

Reliability Analysis Tools

235

Failure Modes and Effects Analysis •

235

QUALITY HIGHLIGHT 7-2: Designing Reliable Luxury at Vuitton 236

How FMEA Works

237

Fault-Tree Analysis

238

Failure Modes, Effects, and Criticality Analysis 240 Product Traceability and Recall Procedures Environmental Considerations in Design

240

241

Summary 242 • Key Terms 243 • Discussion Questions 243 • Problems 244 • CASE 7-1: Designing the Ford Taurus: Why Quality Had to Be Job 1 246 • CASE 7-2: Nucor Corporation: Producing Quality Steel by Stressing Sound Management Practices 248

Chapter 8 Designing Quality Services

250

Differences between Services and Manufacturing Internal versus External Services

250

252

Voluntary versus Involuntary Services

252

How Are Service Quality Issues Different f r o m Those of Manufacturing? 253 • A CLOSER LOOK AT QUALITY 8-1: Service Warranties: Profitable or a Rip-Off—You Decide 254 How Are Service Quality Issues Similar t o Manufacturing? 254 What Do Services Customers Want? •

254

QUALITY HIGHLIGHT 8-1: Ritz-Carlton Hotels 256

SERVQUAL

257

Expectations Perceptions Gap Analysis

257 259 259

Assessing Differences in Expectations and Perceptions by Using the Differencing Technique 262

13

14

Contents Designing and Improving the Services Transaction

265

Services Blueprinting 265 Moments of Truth

266

• A CLOSER LOOK AT QUALITY 8-2: Quality in Health Care 267 Poka-yoke

268

The Customer Benefits Package Service Transaction Analysis

269

271

Improving Customer Service in Government

273

• A CLOSER LOOK AT QUALITY 8-3: Government Service Quality: A Stop-and-Go Process 274 Quality in Health Care

275

Supply Chain Quality in Services

275

A Theory for Service Quality Management 276 Summary 277 • Key Terms 277 • Discussion Questions 278 • Problems 278 • CASE 8-1: Yahoo! Designs Quality Services with Customers in Mind 280 • CASE 8-2: UPS: Delivering the Total Package in Customer Service 281

Chapter 9 Managing Supplier Quality in the Supply Chain 283 The Value Chain

283

The Chain of Customers 284 Managing the Supply Chain

284

Supplier Partnering 286 • A CLOSER LOOK AT QUALITY 9-1: Supply Chains and Terrorism 287 Single-Source Examples

288

• QUALITY HIGHLIGHT 9-1: Supplier Partnerships at Mercedes-Benz 289 Supplier Development

290

<

• QUALITY HIGHLIGHT 9-2: Integrating Forward Along the Supply Chain: 3M Dental Products Division 291 Supplier Awards

292

Supplier Relationship Management Systems (SRMS) 293 Applying the Contingency Perspective to Supplier Partnering 293 A Supplier Development Program: \SOfTS 16949 294 ISO/TS 16949

294

Quality Management System Management Responsibility Resource Management

296

294 295

Contents Product Realization

296

Measurement, Analysis, and Improvement

296

Acceptance Sampling and Statistical Sampling Techniques 296 Is Acceptance Sampling Needed?

296

• A CLOSER LOOK AT QUALITY 9-2: For RFID to Take Hold, Reliability Needs to Improve 297 Building an Understanding of Supply Chain Quality Management 298 Summary 298 • Key Terms 299 • Discussion Questions 299 • CASE 9-1: AT&T: Setting High Standards for Suppliers and Rewarding Supplier Performance 300 •

CASE 9-2: Managing the Supply Chain at Honeywell 301

Appendix Acceptance Sampling Fundamentals

Part III Implementing Quality

303

315

Chapter 10 The Tools of Quality 316 Improving the System

316

Ishikawa's Basic Seven Tools of Quality Process Maps

317

318

• A CLOSER LOOK AT QUALITY 10-1: Extended Process Mapping of Supply Chains 322 Check Sheets Histograms

324 326

Scatter Diagrams Control Charts

327

329

Cause-and-Effect (Ishikawa) Diagrams Pareto Charts

329

331

The Seven New Tools for Improvement The Affinity Diagram

335

The Interrelationship Digraph Tree Diagrams

334

337

340

Prioritization Grid Matrix Diagram

340 344

Process Decision Program Chart Activity Network Diagram

345

346

Reflections on the Managerial N7 Tools

346

Other Tools for Performance Measurement Spider Charts

347

347

Balanced Scorecards

348

Dashboards 348 Summary 349 • Key Terms 350 Questions 350 • Problems 350

• Discussion

15

16

Contents •

CASE 10.1: Corporate Universities: Teaching the Tools of Quality 354

•

CASE 10.2: Lanier: Achieving Maximum Performance by Supporting Quality Products with Quality Services 356

Chapter 11 Statistically Based Quality Improvement for Variables 358 Statistical Fundamentals 358 What Is Statistical Thinking? 358 •

QUALITY HIGHLIGHT 11-1: Statistical Tools in Action 359

Why Do Statistics Sometimes Fail in the Workplace? 360 What Do We Mean by the Term Statistical Quality Control? 361 Understanding Process Variation 361 Process Stability 362 Sampling Methods 362 Random Samples 363 Systematic Samples 363 Sampling by Rational Subgroups 363 Planning for Inspection 364 Process Control Charts 364 Variables and Attributes Control Charts 364 A Generalized Procedure for Developing Process Charts 365 Understanding Control Charts 365 x and R Charts 367 Interpreting Control Charts 369 Using Excel to Draw x and R Charts 373 Xand Moving Range (MR) Charts for Population Data 374 Using Excel to DrawXand MR Charts 376 Median Charts 377 Using Excel to Draw Median Charts 380 x and s Charts 380 Using Excel to Draw s and x Charts 381 Other Control Charts 381 Moving Average Chart 381 Cusum Chart 382 Some Control Chart Concepts for Variables 383 Choosing the Correct Variables Control Chart 383 Corrective Action

383

Contents How Do We Use Control Charts to Continuously Improve? 385 Tampering with the Process 385 Process Capability for Variables 385 • A CLOSER LOOK AT QUALITY 11-1: A Justification for Meeting Standards in Software Quality 386 Population versus Sampling Distributions 387 Capability Studies 388 Ppk 389 The Difference between Capability and Stability 391 Other Statistical Techniques in Quality Management Summary 392 • Key Terms 392 Questions 392 • Problems 393 • CASE 11-1: Ore-Ida Fries 397

391

• Discussion

Chapter 12 Statistically Based Quality Improvement for Attributes 399 Generic Process for Developing Attributes Charts 400 Understanding Attributes Charts 400 p Charts for Proportion Defective 400 Using Excel to Draw p Charts 403 np Charts 403 ;

Using Excel to Draw np Charts 405 cand uCharts ,405 Using Excel to Draw c and u Charts 408 Attributes Charts Summary 408 Choosing the Right Attributes Chart 408 Reliability Models 408 Series Reliability 411 Parallel Reliability 412 Measuring Reliability 413 Mean Time to Failure (MTTF) 413 • A CLOSER LOOK AT QUALITY 12-1: Is Quality on the Decline? 414 System Availability 415 Summary 416 • Key Terms 416 • Discussion Questions 416 • Problems 417 • CASE 12-1: Decision Sciences Institute National Conference 421

Chapter 13 Six Sigma Management and Lean Tools 424 What Is Six Sigma? 424 Organizing Lean-Six Sigma 427 Packing Lean with Six Sigma 428

17

18

Contents DMAIC Overview

429

• A CLOSER LOOK AT QUALITY 13-1: DMAIC In Action 430 Define Phase

431

Developing the Business Case Project Evaluation Pareto Analysis

432

432

Problem Definition Measure Phase

432

435

Selecting Process Outcomes FMEA

431

435

437

Verifying Measurements Gauge R&R

437

439

Using Excel t o Perform Gauge R&R Analysis Analyze Phase

443

Defining Objectives Identifying Xs

443

443

Analyzing Sources of Variation Improve Phase Control Phase

442

443

444 444

Taguchi Design of Experiments Robust Design

445

445

Background of the Taguchi Method Taguchi Definition of Quality Quality Loss Function The Taguchi Process

446

446

447

448

Using Excel t o Solve Taguchi Experiments Design for Six Sigma

451

453

Lean-Six Sigma f r o m a Contingency Perspective 453 Summary 454 • Key Terms 454 • Discussion Questions 454 • Problems 455

• CASE 13-1: The Neiman-Marcus Cookie 459

Part IV Forever Improving the Quality System 461 Chapter 14 Managing Quality Improvement Teams and Projects 462 Why Employees Enjoy Teams

463

Leading Teams for Quality Improvement

463

Employee Empowerment and Involvement

463

Flattening Hierarchies for Improved Effectiveness

465

• A CLOSER LOOK AT QUALITY 14-1: Empowerment in Action 466 Team Leader Roles and Responsibilities Team Roles and Responsibilities

468

466

Contents Team Formation and Evolution

468

Team Rules 469 Types of Teams 470 Process Improvement Teams 470 Cross-Functional Teams 470 Tiger Teams 471 Natural Work Groups 471 Self-Directed Work Teams 471 Virtual Teams 471 • A CLOSER LOOK AT QUALITY 14-2: Lessons from Effective Teams Outside the Business World 472 Implementing Teams 473 Meeting Management

473

Conflict Resolution in Teams 475 Saving Quality Teams f r o m Failure: Diagnosing Problems and Intervening before It Is Too Late 478 Managing and Controlling Projects 478 Qualifying Projects 479 Project Charters 480 Force-Field Analysis 480 Work Breakdown Structure (WBS) 481 Identifying Precedence Relationships

483

Identifying Outcome Measures 483 Identifying Task Times 483 Activity Network Diagrams 484 A r r o w Gantt Charts 488 Managing Multiple Projects 488 Summary 489 • Key Terms 490 • Discussion Questions 491 • Problems 491 • CASE 14-1: Whole Foods: Using Teamwork as a Recipe for Success 494 • CASE 14-2: The Boeing 777: Designing and Building an Airplane Using Virtual Teams 496

Chapter 15 Implementing and Validating the Quality System 498 Building Blocks for the System of Quality Improvement 499 People

499

Organizational Learning and Knowledge Culture

501

Closeness to Customers Information and Finance

501 502

500

19

20

Contents The Three Spheres of Quality The Integrative Approach

503

503

Alignment between the Quality System and Strategy 503 Internal Validation: Documenting and Assessing t h e Quality System 504 •

QUALITY HIGHLIGHT 15-1: Back to Basics at Ford 504

• A CLOSER LOOK AT QUALITY 15-1: A Simple SelfAssessment Tool 507 Quality Audits

510

Quality Audit Process Types of Audits

512

Operational Audits Performance Audits •

511 512 512

A CLOSER LOOK AT QUALITY 15-2: Quality Audits in Action 514

Qualitative and Quantitative Elements in Audits Validating the Quality System 516 Summary 517 • Key Terms 518 Questions 518 • Problems 518 •

Appendix

521

Glossary 524 Index

536

516

• Discussion

CASE 15-1: Setting Priorities Using the Baldrige Criteria

518