QUALITY AND SYSTEMS

MANAGEMENT

3
 QUALITY AND SYSTEMS MANAGEMENT

For more than two decades “quality” and “quality management systems” have been leading

buzzwords in the business world. Numerous consultants have built their careers around these topics,

and quality issues in business have been responsible for the development of new organizations and

even industries, for instance, the American Society for Quality and Six Sigma consulting.

The notion of quality in business focuses on the savings and additional revenue that organizations

can realize if they eliminate errors throughout their operations and produce products and services at

the optimal level of quality desired by their customers. Errors can take almost any form—for

example, producing the wrong number of parts, sending bank statements to customers who have

already closed their accounts or sending an incorrect bill to a client. All of these errors are very

common, and the costs incurred seem minimal. But over time when mistakes are repeated the costs

add up to a significant amount, so eliminating errors can result in significant increases to the bottom

line of a business.

WHAT IS QUALITY?

According to the American Society for Quality, “quality” can be defined in the following ways:

✔ Based on customer’s perceptions of a product/service’s design and how well the

design matches the original specifications.

✔ The ability of a product/service to satisfy stated or implied needs.

✔ Achieved by conforming to established requirements within an organization.

What Is a Quality Management System?

A quality management system is a management technique used to communicate to employees what is

required to produce the desired quality of products and services and to influence employee actions to

complete tasks according to the quality specifications.

What Purpose Does a Quality Management System Serve?

✔ Establishes a vision for the employees.

 ✔ Sets standards for employees.

✔ Builds motivation within the company.

✔ Sets goals for employees.

✔ Helps fight the resistance to change within organizations.

✔ Helps direct the corporate culture.

Why Is Quality Important?

Business success may simply be the extent to which your organization can produce a higher-

quality product or service than your competitors are able to do at a competitive price. When

quality is the key to a company’s success, quality management systems allow organizations to

keep up with and meet current quality levels, meet the consumer’s requirement for quality, retain

employees through competitive compensation programs, and keep up with the latest technology.

HISTORY OF THE QUALITY MOVEMENT

As early as the 1950s, Japanese companies began to see the benefits of emphasizing quality

throughout their organizations and enlisted the help of an American, W. Edwards Deming, who

is credited with giving Japanese companies a massive head start in the quality movement. His

methods include statistical process control (SPC) and problem-solving techniques that were very

effective in gaining the necessary momentum to change the mentality of organizations needing

to produce high-quality products and services. Deming developed his 14 points (Appendix 14.1)

to communicate to managers how to increase quality within an organization.

Deming believed that 85 percent of all quality problems were the fault of management. In

order to improve, management had to take the lead and put in place the necessary resources and

systems. For example, consistent quality in incoming materials could not be expected when

buyers were not given the necessary tools to understand quality requirements of those products

and services. Buyers needed to fully understand how to assess the quality of all incoming

products and services, understand the quality requirements, as well as be able to communicate
these requirements to vendors. In a well-managed quality system, buyers should also be allowed

to work closely with vendors and help them meet or exceed the required quality requirements.

According to Deming, there were two different concepts of process improvement that

quality systems needed to address: (1) common (systematic) causes of error, and (2) special

causes of error. Systematic causes are shared by numerous personnel, machines, or products;

and special causes are associated with individual employees or equipment. Systematic causes of

error include poor product/service design, materials not suited for their use, improper bills of

lading, and poor physical conditions. Special causes of error include lack of training or skill, a

poor lot of incoming materials, or equipment out of order.

Another influential individual in the development of quality control was Joseph M. Juran, who,

like Deming, made a name for himself working in Japanese organizations focusing on improving

quality. Juran also established the Juran Institute in 1979; its goals and objectives were centered on

helping organizations improve the quality of their products and services.

Juran defined quality as “fitness for use,” meaning that the users of products or services should

be able to rely on that product or service 100 percent of the time without any worry of defects. If this

was true, the product could be classified as fit for use.

Quality of design could be described as what distinguishes a Yugo from a Mercedes-Benz and

involves the design concept and specifications. The quality of a product or service is only as good as

its design and intention. Thus, it is important to include quality issues in the design process, as well

as to have in mind during the design phase the difficulties one might have in replicating the product

or service with the intended quality level.

Quality of conformance is reflected in the ability to replicate each aspect of a product or

service with the same quality level as that intended in the design. This responsibility is held by

individuals to develop the processes for replication, the workforce and their training, supervision, and

adherence to test programs.

Availability refers to freedom from disruptive problems throughout the process and is

measured by the frequency or probability of defects—for example, if a process does not have a
steady flow of electricity and this causes defective parts, or when an employee must complete two

jobs at once and is therefore forced to make concessions on the quality of both products or services.

Safety is described by Juran as calculating the risk of injury due to product hazards. For

example, even if the product or service meets or exceeds all quality standards and expectations,

but there is a possibility that if it is not used properly it could injure someone, the product will

not be considered high-quality.

Field use refers to the ability of the product to reach the end user with the desired level of

quality. This involves packaging, transportation, storage and field service competence, and

promptness.

Juran also developed a comprehensive approach to quality that spanned a product or service’s entire

life cycle, from design to customer relations and all the steps in between. Juran preached that an

organization should dissect all processes and procedures from a quality perspective and analyze for a

“fitness for use.” Once this is completed the organization can begin to make changes based on the

“fitness for use” model.

The Quality Revolution

The push for increased quality began in American manufacturing companies in the 1980s,

following in the footsteps of Japanese manufacturers. Japanese companies found themselves

with a distinct competitive advantage over American companies with their ability to produce

much higher quality products with fewer defects.

The Ford Motor Company was the first to invite Deming to help the company transform

itself into a quality-oriented organization. As a result, Ford was able to achieve higher quality

standards than any other American automotive manufacturer and substantial sales growth in the

late 1980s even when the rest of the U.S. automotive market was declining. Ford attributes the

ability of its Taurus to overtake the Honda Accord in annual sales to the high quality standards

set by the company.

The U.S. Congress, seeing the need for American companies to strive for increased

quality, established the Malcolm Baldrige National Quality Award, modeled after Japan’s
Deming Prize. This spawned a substantial increase in the resources American businesses

allocated for quality improvement, and within 10 years an American organization, Florida Power

and Light, was able to capture Japan’s Deming Prize for quality.

Since the early 1980s and on into the twenty-first century, quality issues have surfaced in

every industry and almost every organization in the United States. The quality movement started

in manufacturing and then moved to service industries. Initially service organizations did not

feel quality systems would transfer very easily from manufacturing, but today service companies

are reaping substantial rewards from implementing quality programs.

Throughout the history of the quality movement there have been several approaches to

quality and even the development of several organizations dedicated solely to setting standards

for quality.

Standardized Systems

ISO 9000 is a series of quality management systems (QMS) standards created by the International

Organization for Standardization, a federation of 132 national standards bodies. The ISO 9000 QMS

standards are not specific to products or services, but apply to the processes that create them. The

standards are generic in nature so that they can be used by manufacturing and service industries

anywhere in the world.

An organization that would like to have ISO certification needs to meet all the criteria stated in

the ISO standards and pass a detailed audit performed by an ISO auditor. In some industries ISO

certification has become necessary; for example, some large manufacturers require all suppliers to be

ISO certified. While ISO certification is highly respected, if it is not a trend in your specific industry,

the additional cost of certification is a deterrent to most managers. It is very possible to reach the

desired quality level within an organization with a well-planned quality system and without going

through all the additional steps for ISO certification.

QS-9000, released in 1994, is the ISO 9000 derivative for suppliers to the automotive Big Three:

DaimlerChrysler, Ford, and General Motors. This quality management system standard contains all
of ISO 9001:1994, along with automotive sector-specific, Big Three, and other original equipment

manufacturer (OEM) customer specific requirements.

QUALITY DIMENSIONS AND CRITERIA FOR PRODUCTS

One popular model that explains this is that propounded by Garvin

Dr. David A Garvin, Ph.D professor of Business Administration at Harvard Business School wrote an

interesting article about “What does product quality really mean?” where: He built an 8-dimensional

framework to elaborate the concept of quality in products;

Each dimension is self-contained and distinct; a product can be ranked high on one dimension while

being low on another.

8 Dimensions of Quality (D. Garvin 1986)

# Dimension Definition

1. Performance The primary operating characteristics of a product. In other words it

refers to the efficiency with a product achieves its intended purpose. For

example, acceleration in an automobile in Km/Hr.

2. Features The “bells and whistles” of a product (i.e., those characteristics that

supplement the basic functions). For example, free drinks in a plane

flight.

3. Reliability The probability that a product will fail within a specified period of time.

In other words it reflects the propensity of a product to perform

 consistently over its useful designed life. For example, 4 wheel drive car

on slippery surface

4. Conformance The degree to which the design or operating characteristics of a product

meet pre-established standards. For example stationery of A4 paper size.

It involves:

Internal elements (within the factory): conformance is measured

commonly by the incidence of defects (proportion of all units that

fail to meet specifications and so required rework or repair).

External elements (in the field): conformance is measured

commonly by the quantity of repairs under warranty.

5. Durability The amount of use a product can sustain before it physically deteriorates

to the point where replacement is preferable to repair.

Technically: durability is the amount of use one gets from a product

before it physically deteriorates, and the repair is impossible (i.e.

after so many hours of use, the filament of a light bulb burns up and

the bulb must be replaced).

Economically: durability is the amount of use one gets from a

product before it breaks down, and the repair is possible. The

product’s life is determined by repair costs, personal valuations of

time and inconveniences, losses due to downtime and other

economic variables.

6. Serviceability The speed, courtesy, competence, and ease of repair.

7. Aesthetics The look, feel, taste, smell, and sound of a product. Quality is viewed as

the combination of these attributes that best match the consumer

 preferences.

8. Perceived Quality The impact of brand name, company image, and advertising. The manner

and feel the consumers’ experience using the product.

NB: Durability and Reliability are related: a product that fails frequently (low Durability), is likely

to be scrapped earlier than one that is more Reliable.

Quality Dimensions and Criteria for Services

Notably, regarding service quality, the focus has been very much on satisfying the customer. In

services, all additional complication is that the customer often needs to actively participate in the

production of the service and such participation needs to be encouraged and guided. Thus, it is

important to find what factors give rise to customer satisfaction. In this context, terms such as quality

dimensions are often used. Scholars have tried to define general quality dimensions, particularly

concerning services. The most well-known set of dimensions has been proposed by Parasuraman et

al. (1985) and they include the following:

 Reliability - the service is carried out in the way it is promised.

 Responsiveness - services are carried out promptly according to the needs of the customers.

 Competence - the staff of the service provider have the knowledge and skills required for

delivering the service in a proper way.

 Access - concerns, e.g. opening hours, physical location, etc.

 Courtesy - the staff are polite, friendly, respectful, etc.

 Communication - keeping the customers informed in a language that they can understand

and listening to them.

 Credibility - the service provider is trustworthy, believable and honest

 Security - freedom from danger, risk or doubt (product risk or facility risk)

 Understanding the customer - the service provider makes an effort to understand the needs

and wants of the individual customers.

 Tangibles - physical objects that are needed for carrying out the service such as facilities,

equipment, etc.
Approaches to Quality Control and Measurement

There are two broad approaches to quality management. These include,

1. The traditional approach and;

2. The modern approach

The Traditional Approach

The traditional approach was that the manufacturer or operations in view of design standards would

tolerate quality as long as the degree was acceptable.

(The manufactures point of view and product- based definitions).

i. Inspection schemes. Under this approach, one of cardinal measures is that manufacturers

employ large teams of inspectors (inspection schemes) who check samples, or in some cases

all the inputs received from suppliers. The inspection system has a number of inherent

drawbacks.

 It is expensive, time consuming and meant more storage space was required. In Some

extreme cases 20% of operations staff were inspectors

 There was little incentive for suppliers to improve quality or carry out checks if they

knew that their customer would do it for them.

 It is arguable that the best person to initially check for faults in a product is the person

who has made it. Suppliers should be experts in their own products after all and not

the buyers.

ii. Quality control is also dependent upon acceptance sampling for inbound material, W.I.P or

outbound (finished) products. The premise, under which the principle of acceptance sampling

works is that if you examine a representative sample and it passes the test, the whole lot is

deemed to be meeting quality requirements.

iii. Notably This approach also relies upon statistical process control in quality management

effort. Charts of different dimensions with respect to different variables (weight, length,

circumference etc.) are applied. The charts set upper and lower limits of acceptable range.
 Levels

Upper Level 20.2 cm

Expected Level 20 cm

Lower Level 19.8 cm

No. of products

The underlying disadvantages with acceptance sampling procedure are that;

 It does not necessarily lead to an improvement in quality, in many cases, particularly if

acceptable sampling was relied upon, defective products would filter through. Inspectors are

human and make errors, occasionally rejecting perfectly good parts while accepting defective

parts.

 There is a limit to extent to which quality can be inspected in at this stage. Some items can

only be partially tested or if they are not properly tested, they are destroyed.

 A few defective sampled products can lead to the destruction of otherwise a good lot and vice

versa.

The Approach is based upon quality control (Q.C) philosophy other than prevention of occurrence

of defective products. QC incorporates the activities and techniques used to maintain the quality of

a product, process or service. It includes inspection and monitoring processes, finding and

eliminating causes of quality problem. Defective items are separated out and discarded assuming

some allowance for failure was permitted.

Therefore, the traditional approach is inadequate and may lead to several quality costs including the

Following,

Prevention costs: Costs of making sure it is right the first time.

Cost of inspection of in-bound materials.

 Cost of inspection of work in progress and finished products.

Manpower training.

Supplier management costs aimed at improving relationships with the buyer to ensure high

quality inputs

Costs of improving technology.

Failure costs (internal and external): Costs of getting it wrong

Internal

Cost of scrap. Loss of revenue or opportunity cost. (Opportunity cost of scrap is the amount of

revenue that would have been generated from an alternative product if the resources had been

allocated and utilized effectively)

The cost of reworking a defective product so that it is acceptable to the market

Costs of monitoring and inspection during rework to prevent reoccurrence of defects.

Cost of storage.

Cost of time wasted

Costs of disposal

External

Damage to Organizational image and goodwill

Costs of recalling the defective product

Cots of guarantees and warrantees

Legal costs.

Loss of customers

Costs of handling complaints

The Modern Approach (The Japanese Approach)

Japanese manufacturers do not check, test or inspect inbound materials or components into their

factories including WIP and finished products. They rely upon their suppliers to provide inputs,

which are right the first time, every time -zero defects. Their suppliers in turn do the same with their
suppliers and so on up the supply chain, so the whole approach towards quality is built around

prevention, not inspection and detection.

Their philosophy is based upon defect free products through Quality assurance (QA).

Quality assurance is defined as all those planned and systematic activities implemented within the

quality system and demonstrated as needed to provide adequate confidence that an entity will

fulfill requirements for quality. In simpler terms QA is concerned with defect prevention unlike QC,

which is concerned with defect detection and correction. QA is associated with quality management

systems (QMS). The best-known QMS is the international QMS standard ISO 9000.

The modern approach looks at quality as a strategic issue for competitive advantage (market

focused). Hence, quality should be created but not simply inspected. The strategic processes to

quality control include:

Identifying the strategic role of quality in the overall strategic direction of organization. I.e. creation

of a market niche by providing high quality products or be a mass producer for low quality and price

items. The quality issue should be in line with organization mission. On the basis of the preferred

strategic direction, the organization would develop a quality theme such as “Value for money”.

Express the quality theme into specific quality objectives (confidentiality, service speed, durability

etc.)

Undertake the analysis of factors that affect quality e.g. (facilities, location, suppliers, etc.)

Establish quality standards that show quality performance e.g. Service time, customer response rate,

etc.

Analyze the actual quality in respect of planned quality

Take corrective action

Once you have set operational objectives, you have to consider factors that will enable the

organization achieve the planned quality. These include,

The right management with the right skills and support.

The right Employees within operations with the right skill and attitude

Facilities, equipment and machinery that can deliver the right quality
 The right material from reliable and dependable suppliers

Total Quality Management (TQM)

TQM is a management approach in which quality is emphasized in every aspect of the business and

organization. Its goals are aimed at long-term development of quality products and services. TQM

breaks down every process or activity and emphasizes that each contributes or detracts from the

quality and productivity of the organization as a whole.

Management’s role in TQM is to develop a quality strategy that is flexible enough to be adapted to

every department, aligned with the organizational business objectives, and based on customer and

stakeholder needs. Once the strategy is defined, it must be the motivating force to be deployed and

communicated for it to be effective at all levels of the organization.

Some degree of employee empowerment is also encompassed in the TQM strategy and usually

involves both departmental and cross functional teams to develop strategies to solve quality

problems and make suggestions for improvement.

Total quality management (TQM) is the process of redirecting organizational cultures towards

superior product quality. It is an approach that involves everyone in an organization, in

continuously improving products and processes to achieve on every occasion, quality that meets

customer satisfaction.

TQM has two major themes that is:-

 Get it right the first time (zero defect). This is important because the cost of preventing

mistakes is less than the cost of correcting them.

 Continuous improvement. It is always possible to improve quality, thus emphasizing the

issue of getting it right the first time.

PRINCIPLES OF TQM

 Create awareness of TQM

This can be done by holding meetings in quality management, with top management, suppliers, staff

and customers to create awareness of the concept, highlighting the benefits of the concept. It must

highlight the requirements for its success and emphasize that, it’s every body’s responsibility to

implement the concept of TQM.

 Ensure top management commitment and full involvement

This is a primary pillar towards the success of any organisation plan. Top management commitment

could be reflected in developing favorable policies like rewarding employees for excellence and

innovativeness.

 Designing product for quality

This could involve taking into account and defining dimensions of quality, like performance,

reliability, durability, appearance, etc.

 Functional Departments’ commitment

Ensure that all functional areas like marketing, accounting, purchasing etc, are committed to a culture

of getting it right the first time. This can be done through improved inter – functional committees

formal and informal meetings and discussions.

 Quality circles

This ensures that groups of employees meet regularly to discuss problems of quality and quality

control and come up with suggestions for improvement. This encourages the spirit of innovativeness

and team coherence

 Capacity building

This requires training staff to perfect the skills in quality implementations. It may involve training

staff into research skills of customer needs. Training should include everyone involved in quality

management.

 Use of quality assurance

This may include re-engineering and bench marking.

 Re-engineering refers to the overhaul of the production function process.

  Bench marking is the practice of establishing international standards of performance by

looking at how world-class companies run their businesses and carry out innovative activities.

 Quality management system. (QMS]

The ISO 9000 series standard consists of a number of clauses dealing with 20 specific core elements

of a basic quality system. The ISO 9000 series sets out the methods by which a management system,

covering all the activities associated with quality can be implemented in an organization to ensure

that all the specified performance requirements and needs of the customer are fully met.

Having developed a suitable quality system and obtained official certification, the company is then

regularly audited by an ISO-accepted independent assessment body to ensure continued acceptable

implementation and adherence to the particular standard.

 Supplier relationship.

This refers to responsibility for managing incoming quality i.e. (conformance to requirements of all

materials supplied to the company). This is done by such activities as supplier evaluation and

approval, supplier quality education, supplier auditing, receiving, inspection, non-conforming

material control, supplier quality measurement and rating, supplier feedback concerning

improvements and the provision of technical support wherever needed.

 In process quality control

Responsibility for assuring that all products manufactured and processes employed in house are

defect free. QC does this by such efforts as product inspection and verification, process certification

and equipment calibration, quality measurement and reporting, ensuring standards conformance,

initiating quality improvements, the provision of technical support and provision of reports to

production management.

 Benchmarking

This is an approach where an organization measures its performances against industry leaders

(competitors); in the areas of quality control and procedures.

CHALLENGES OF IMPLEMENTING TOTAL QUALITY MANAGEMENT IN

COMPANIES IN DEVELOPING COUNTRIES LIKE UGANDA.

  Inadequate management support & commitment

 Taking quality as a fad (fashionable)

 No visible communication system

 Lack of training of important stakeholders.

 Top management too preoccupied

 Physical & mental lack of support

 Empowerment of people is not practiced

 Changing targets.

 Weak customer relationship management

 It’s very costly

 Requires involvement of everyone which is very hard

 Requires constant improvement that may be very tasking and expensive

 Supplier partnerships may be impossible

 Requires innovativeness that may be very risky

QUALITY PHILOSOPHIES AND FRAMEWORKS

These are philosophies and frameworks postulated by several experts on quality management who

have advanced concepts in the discipline from which managers can draw experiences for quality

management in their organizations. Most notable of these quality gurus are Edwards Deming, Philip

B. Crosby and Joseph M. Juran. Others include;

Armand V. Feigenbaum

Kaoru Ishikawa

Genichi Taguchi

EDWARD DEMING

The Deming philosophy focuses on continual improvements in product and service quality by

reducing uncertainty and variability in design, manufacturing, and service processes, driven by the

leadership of top management.

Plan

1. Define the process: its start, end, and what it does.

2. Describe the process: list the key tasks performed and sequence of steps, people

involved, equipment used, environmental conditions, work methods, and materials

used.

3. Describe the players: external and internal customers and suppliers, and process

operators.

4. Define customer expectations: what the customer wants, when, and where, for both

external and internal customers.

5. Determine what historical data are available on process performance, or what data

need to be collected to better understand the process.

6. Describe the perceived problems associated with the process; for instance, failure to

meet customer expectations, excessive variation, long cycle times, and so on.

7. Identify the primary causes of the problems and their impacts on process performance.

8. Develop potential changes or solutions to the process, and evaluate how these changes

or solutions will address the primary causes.

9. Select the most promising solution(s).

Do
 1. Conduct a pilot study or experiment to test the impact of the potential solution(s).

2. Identify measures to understand how any changes or solutions are successful in

addressing the perceived problems.

Study

1. Examine the results of the pilot study or experiment.

2. Determine whether process performance has improved.

3. Identify further experimentation that may be necessary.

Act

1. Select the best change or solution.

2. Develop an implementation plan: what needs to be done, who should be involved, and

when the plan should be accomplished.

3. Standardize the solution, for example, by writing new standard operating procedures.

4. Establish a process to monitor and control process performance.

Deming’s 14 Points

# Point Implication

1. Create and publish a company mission Businesses should have definite strategic plans

statement and commit to it. concerning where they are going and how they

will get there. This will help create constancy of

purpose.

2. Learn the new philosophy of TQM. Management should embrace the philosophy

that mistakes, defects, and unsuitable materials

are not acceptable and should be eliminated.

3. Use inspection to improve design & The quality of supervision should be improved

processes. by allowing more time for supervisors to work

with employees and providing them with the

 tools they need to do the job.

4. End business practices driven by price Need to establish strong partnership with

alone. suppliers.

5. Constantly improve system of production At all levels, everyone should be involved in

and service. continuous improvement activities every single

day.

6. Institute training. Management has the responsibility to train

employees in new skills to keep pace with

changes in the workplace.

7. Teach and institute quality leadership Managers need to take responsibility to lead

(guidance). quality campaigns.

8. Drive out fear and create trust. Ask your associates what they fear and then do

whatever is necessary to get rid of it.

9. Optimize team and individual efforts. Support team building for quality improvement

10. Eliminate exhortations/slogans from work Value is placed on doing and demonstrating.

force— Work to improve the system.

11. Eliminate numerical quotas and Work standards should not be defined only as

Management by objective Focus on numbers of quotas but should include some

improvement. notion of quality to promote the production of

defect-free output.

12. Remove barriers that rob people of pride of Find ways to open communications between

workmanship. suppliers, customers and all employees.

13. Encourage education and self- Ask and plan now for an ongoing continuous

improvement. educational process to help everyone become

 the best that they possibly can be.

14. Take action to accomplish the Words must be followed by effective action.

transformation- Create a structure in top

management that will push everyday on the

above 13 points.

Joseph M. Juran

Juran’s Quality Trilogy

1. Quality planning

2. Quality control

3. Quality improvement

Juran’s Key Idea

Juran proposed a simple definition of quality: “fitness for use.” This definition of quality suggests

that it should be viewed from both external and internal perspectives; that is, quality is related to “(1)

product performance that results in customer satisfaction; (2) freedom from product deficiencies,

which avoids customer dissatisfaction.”

Juran's 'Quality Planning Road Map' consists of the following steps:

1. Identify who are the customers.

2. Determine the needs of those customers.

3. Translate those needs into our language.

4. Develop a product that can respond to those needs.

5. Optimize the product features so as to meet our needs as well as customer needs.

6. Develop a process which is able to produce the product.

7. Optimize the process.

8. Prove that the process can produce the product under operating conditions.

9. Transfer the process to Operations.

Phillip B. Crosby
“Quality is free. It’s not a gift, but it is free. What costs money are the unquality things -- all the

actions that involve not doing jobs right the first time.” Philip Crosby, who is recognized as one of

the top gurus of quality once said.

Crosby is best known for concepts like ‘Do It Right the First Time,’ and ‘Zero Defects.’

Philip B. Crosby: Absolutes of Quality Management:

Quality means conformance to requirements

Problems are functional in nature

Do the job right the first time

Cost of quality is the only useful measurement

Zero defects is the only performance standard

A.V. Feigenbaum

Feigenbaum's ideas are contained in his now famous book Total Quality Control, first published in

1951 under the title Quality Control: Principles, Practice, and Administration, and based on his

earlier articles and program installations in the field.

Feigenbaum is recognized as an innovator in the area of quality cost management. His was the first

text to characterize quality costs as the costs of prevention, appraisal, and internal and external

failure.

A.V. Feigenbaum: Three Steps to Quality

1. Quality Leadership, with a strong focus on planning

2. Modern Quality Technology, involving the entire work force

3. Organizational Commitment, supported by continuous training and motivation

Kaoru Ishikawa

The early origins of the now famous Quality Circles can be traced to the United States in the 1950s,

Professor Ishikawa is best known as a pioneer of the Quality Circle movement in Japan in the early

1960s, which has now been re-exported to the West.

Kaoru Ishikawa;
 Instrumental in developing Japanese quality strategy

Influenced participative approaches involving all workers

Advocated the use of simple visual tools and statistical techniques

At the simplest technical level, his work has emphasized good data collection and

presentation, the use of Cause-and-Effect (or Ishikawa or Fishbone) Diagrams.

Ishikawa sees the cause-and-effect diagram, like other tools, as a device to assist

groups or quality circles in quality improvement. As such, he emphasizes open group

communication as critical to the construction of the diagrams. Ishikawa diagrams are

useful as systematic tools for finding, sorting out and documenting the causes of

variation of quality in production and organizing mutual relationships between them.

Thus Ishikawa sees the Company-wide Quality Control movement as implying that quality does not

only mean the quality of product, but also of after sales service, quality of management, the company

itself and the human being. This has the effect that:

1. Product quality is improved and becomes uniform. Defects are reduced.

2. Reliability of goods is improved.

3. Cost is reduced.

4. Quantity of production is increased, and it becomes possible to make rational production

schedules.

5. Wasteful work and rework are reduced.

6. Technique is established and improved.

7. Expenses for inspection and testing are reduced.

8. Contracts between vendor and vendee are rationalized.

9. The sales market is enlarged.

10. Better relationships are established between departments.

11. False data and reports are reduced.

12. Discussions are carried out more freely and democratically.

13. Meetings are operated more smoothly.

 14. Repairs and installation of equipment and facilities are done more rationally.

15. Human relations are improved.

Genichi Taguchi

In the early 1970s Taguchi developed the concept of the Quality Loss Function.

Taguchi breaks down off-line quality control into three stages:

1. System design.

2. Parameter design.

3. Tolerance design.

Taguchi methodology is concerned with the routine optimization of product and process prior to

manufacture, rather than emphasizing the achievement of quality through inspection. Instead

concepts of quality and reliability are pushed back to the design stage where they really belong. The

method provides an efficient technique to design product tests prior to entering the manufacturing

phase. However, it can also be used as a troubleshooting methodology to sort out pressing

manufacturing problems.

ISO Standards

These are international standards which specify requirements that quality management systems

should meet in order to make products of an acceptable standard worldwide. These standards serve a

diversity of constituencies including:

 Organizations seeking advantage through the implementation of a quality management

system.

 Organizations seeking confidence from their suppliers.

 Users of products.

 Those internal or external to the organization who assess the quality management system or

audit it for conformity with the requirements of ISO 9001 (e.g. external auditors and

regulators who give advice or training on the quality management system appropriate to that

organization).

 Developers of related standards.

The ISO standards are based on the following standard quality management principles:

Customer focus

Organizations depend on their customers and therefore should understand current and future

customer needs, meet customer requirements and strive to exceed customer expectations.

Leadership

Leaders establish unity of purpose and the direction of the organization. They should create and

maintain the internal environment in which people can become fully involved in achieving the

organization's objectives.

Involvement of people

People at all levels are the essence of an organization and their full involvement enables their abilities

to be used for the organization's benefit.

Process approach

A desired result is achieved more efficiently when activities and related resources are managed as a

process.

System approach to management

Identifying, understanding and managing inter-related processes as a system contributes to the

organizational effectiveness and efficiency in achieving its objectives.

Continuous improvement

Continuous improvement of the organization's overall performance should be a permanent objective

of the organization.

Factual approach to decision-making

Effective decisions are based on its analysis of data and information.

Mutually beneficial supplier relationships

An organization and its suppliers are interdependent and a mutually beneficial relationship enhances

the ability of both to create value.

Framework of Quality Management Prize Schemes

Quality has become a national priority and different countries have sought to stimulate quality

improvement by establishing quality awards. Over time, these have been used to recognize the firm

considered to be the best in terms of quality management. Some of the prominent quality award

schemes as follows;

Deming Prize

The purpose of the Deming Prize was to recognize those who excelled in quality control and as a way

of driving quality control. It was also established to thank Dr. Deming for his accomplishments and

impact in the Japanese industry.

It concentrates on:

• Policy

• Organization and operations

• Collection and use of information

• Analysis

• Planning for future

• Education and training

• Quality assurance

• Quality effects

• Standardization

Instituted 1951 by Union of Japanese Scientists and Engineers (JUSE)

Several categories including prizes for individuals, factories, small companies, and Deming

application prize

CONTINUOUS QUALITY IMPROVEMENT (CQI)

Continuous quality improvement came into existence in manufacturing as a different approach

to quality and quality systems. It does not focus as much on creating a corporate quality culture,

but more on the process of quality improvement by the deployment of teams or groups who are

rewarded when goals and quality levels are reached. CQI allows individuals involved in the day-

to-day operations to change and improve processes and work flows as they see fit.
 CQI implementation attempts to develop a quality system that is never satisfied; it strives

for constant innovation to improve work processes and systems by reducing time-consuming,

low value-added activities. The time and resource savings can now be devoted to planning and

coordination.

CQI has been adapted in several different industries. For example, in health care and other

service sectors, it has taken on the acronym FOCUS-PDCA work:

Find a process to improve.

Organize to improve a process.

Clarify what is known.

Understand variation.

Select a process improvement.

Then move through the process improvement plan:

Plan—create a time line, including all resources, activities, dates, and personnel training.

Do—implement the plan and collect data.

Check—analyze the results of the plan.

Act—act on what was learned and determine the next steps.

The FOCUS-PDCA acronym is an easy system for management to communicate to teams, and

it helps them stay organized and on track with the end result in mind. The system has proven to

be very successful for the CQI team approach.

Six Sigma

Six sigma was developed at Motorola in the 1980s as a method to measure and improve high-

volume production processes. Its overall goal was to measure and eliminate waste by attempting

to achieve near perfect results. The term six sigma refers to a statistical measure with no more

than 3.4 defects per million. Numerous companies, including General Electric, Ford, and

DaimlerChrysler, have credited six sigma with saving them billions of dollars.

Six sigma is a statistically oriented approach to process improvement that uses a variety of

tools, including statistical process control (SPC), total quality management (TQM), and design
 of experiments (DOE). It can be coordinated with other major initiatives and systems, such as

new product development, materials requirement planning (MRP), and just-in-time (JIT)

inventory control.

Six sigma initially was thought of as a system that could be used only in manufacturing

operations, but more recently it has proven to be successful in nonmanufacturing processes as

well, such as accounts payable, billing, marketing, and information systems.

At first glance six sigma might seem too structured to be effective in analyzing processes

that are not standard and repetitive as in manufacturing situations, but the theory of six sigma is

flexible enough to suit any process. Nevertheless, many of the lessons learned on production

lines are very relevant to other processes as well.

The following is a brief description of the steps involved in the six sigma process:

1. Break down business process flow into individual steps.

2. Define what defects there are.

3. Measure the number of defects.

4. Probe for the root cause.

5. Implement changes to improve.

6. Remeasure.

7. Take a long-term view of goals.

ELEMENTS OF A QUALITY AMANAGEMNT SYSTEM

There are several elements to a quality system, and each organization is going to have a unique

system. The most important elements of a quality system include participative management,

quality system design, customers, purchasing, education and training, statistics, auditing, and

technology.

Participative Management

The entire quality process, once started, will be an ongoing dynamic part of the organization,

just like any other department such as marketing or accounting. It will also need the continuous
focus of management. The implementation and management of a successful quality system

involves many different aspects that must be addressed on a continuous basis.

Vision and Values. The starting point for the management and leadership process is the

formation of a well-defined vision and value statement. This statement will be used to establish

the importance of the quality system and build motivation for the changes that need to take

place, whether the organization plans to exceed customer expectations, commit to a defined

level of customer satisfaction, or commit to zero defects. The exact form of the vision and

values is not as important as the fact that it is articulated and known by everyone involved. This

vision and value statement is going to be a driving force to help mold the culture that is needed

throughout the organization in the drive for quality. It is not the words of the value statement

that produce quality products and services; it is the people and processes that determine if there

is going to be a change in quality. The vision and value will be very important statements to set

agendas for all other processes used to manage the quality system.

Developing the Plan. The plan for the quality system is going to be different for every

organization, but there are similar characteristics:

✔ There should be clear and measurable goals.

✔ There are financial resources available for quality.

✔ The quality plan is consistent with the organization’s vision and values.

The plan for the quality system might also include pilot projects that would entail setting

up small quality projects within the organization. This will allow management to understand

how well the quality system is accepted, learn from mistakes, and have greater confidence in

launching an organization-wide quality system. The plan should provide some flexibility for

employee empowerment, because, as has been demonstrated, the most successful quality

systems allow employees at all levels to provide input.

Communication. Change, especially a movement toward higher quality, is challenging to

communicate effectively, yet the communication process is essential for the company’s leaders

to move the organization forward. Communication is the vital link between management,
 employees, consumers, and stakeholders. These communication lines also bring about a sense of

camaraderie between all individuals involved and help sustain the drive for the successful

completion of long-term quality goals.

Communication systems also must allow for employees to give feedback and provide

possible solutions to issues the company must face. Management needs to allow for this in both

formal and informal ways, such as employee feedback slips and feedback roundtable meetings.

The responsibility for fostering a culture that values communication lies with senior

management. They alone have to ensure that goals and objectives are communicated to all. They

are also responsible for setting up the system for feedback from the employees.

Rewards and Acknowledgment. Rewards, compensation, and acknowledgment for

achievements in quality are very effective ways to motivate employees. They tell employees at

the end of the day exactly what management is trying to accomplish. Rewards, compensation,

and acknowledgment may also be seen as a form of communication— they are tangible methods

that senior management uses to let employees know that quality is important. This could come

in the form of individual rewards or team rewards. Rewards, compensation, and

acknowledgment take many forms, and it is up to management to ensure that this type of

program is in line with the goals and objectives of the quality system and the goals and

objectives of the organization. Organizations have found that the best and most cost-effective

reward, compensation, and acknowledgment programs are geared to meeting specific criteria.

These programs motivate managers who in turn motivate their employees to strive toward

predefined goals.

DESIGNING A QUALITY SYSTEM

A quality system is composed of the standards and procedures that are developed to ensure that

the level of quality desired is repeated in every unit of a product or service. This portion of the

quality system is very concrete and can be measured and managed. Before you start, your

organization should establish a core team to carry the performance system design process

forward.
 The eight steps of the design process are:

1. Understand and map all business structures and processes. This forces employees involved in
designing a performance measurement system to think through and understand the entire

organization, its competitive position, the environment in which it operates, and its business

processes. This will also allow for complete understanding of customer touch points and how the

different operations in the organization affect the customer’s perception of quality. See Figure 14.1

for an example of a process map.

2. Develop business performance priorities. The performance measurement system should support the
stakeholders’ requirements from the organization’s strategy through to its business processes. This

order of priorities must be in place well before the process enters the actual design phase.

3. Understand the current performance measurement system. Every organization has some kind of
measurement system in place. For this reason, there are basically two ways to approach the design

and implementation of a new performance measurement system. Either you can scrap the old system

and introduce a new one as a replacement, or you can redevelop the existing system. Both approaches

can work, but the former approach is more likely to lead to trouble. People will cling to the old

measurement system and either use both systems simultaneously or use the old one and simply go

through the motions of the new one. You can eliminate this outcome by taking the second approach.

4. Develop performance indicators. The most important element of a performance measurement system
is the set of performance indicators you will use to measure your organization’s performance and

business processes. This is the point in the design process where the top-down approach meets the

bottom-up design approach and where the broad masses of the organization become involved. The

purpose of this step is to develop the performance measurement system with an appropriate number

of relevant and accurate performance indicators.

5. Decide how to collect the required data. Developing perfect performance indicators that will tell you
everything you ever wanted to know about what goes on in your organization is one thing, but being

able to collect the data required to calculate these performance indicators is a completely different

matter. This issue must initially be addressed during the development of the performance indicators
 so that you avoid selecting those that can never actually be measured. There will be trade-offs of cost

and time versus the benefits of collecting data, but a likely middle ground between perfect data/high

cost and no data/no cost will be found.

6. Design reporting and performance data representation formats. In this step, you decide how the
performance data will be presented to the users; how the users should apply the performance data for

management, monitoring, and improvement; and who will have access to performance data. After

you finish, you should have a performance measurement system that has a solid place in your

organization’s overall measurement based management system.

7. Test and adjust the performance measurement system. Your first attempt at the performance
measurement system will probably not be perfect—there are bound to be performance indicators that

do not work as intended, conflicting indicators, undesirable behaviour, and problems with data

availability. This is to be expected. In this step you should extensively test the system and adjust the

elements that do not work as planned.

8. Implement the performance measurement system. Now it’s time to put your system to use. This is
when the system is officially in place and everyone can start using it. This step involves issues such

as managing user access, training, and demonstrating the system.

This is not an absolute process that needs to be followed to the letter in order for it to work. In

some cases, one or more steps may be unnecessary; in others, additional steps may be needed.

It’s up to you to make the necessary adjustments to the process to maximize the probability of

the system’s success.

Designing Part Two of the Qualitymanagement System

This portion of the quality system is conceptual. It is more about management’s role in

increasing motivation and the determination to make the first part run smoothly. It is rooted in
the communication between management and employees, which was discussed earlier. In most

cases, the employees who are performing the activities and process know how to improve the

quality. This part of the system should allow employees to make recommendations and motivate

them to want to improve quality.

Customers

The inclusion of customers in a quality program can take many different avenues, including the

cost of losing a customer, the customer’s perception of quality, and the satisfaction level of the

customers. The customer portion of a quality program is going to be unique for every industry

and organization, but it must capture how quality plays into the customer’s value system and

how quality drives the purchase decision.

In service industries, in particular, quality is measured in customer retention rates and the

cost of losing a customer. If typical accounting measures could capture the exact cost of losing a

customer it would be easy for managers to allocate the exact amount of resources needed to

retain customers. According to the Harvard Business Review, companies can increase profits by

almost 100 percent by retaining 5 percent more of their customers. Customers over time will

generate more profits the longer they stay with the same company.

Perceived quality by customers leads to referrals; in service industries, referrals can

equate to more than 60 percent of new business. If a company can increase the number of

referrals through increased quality, it is going to have a substantial effect on the bottom line of

the business.

Purchasing

Purchasing is an area in an organization where substantial gains in quality can be realized through the

implementation of just a few policies and procedures designed around quality. Today’s suppliers

need to be partners in the quality effort. A company’s products or services are only as good as the

combination of all the inputs.

The first step in moulding the purchasing system to collaborate with the entire quality system

is to take all the standards developed for all incoming materials that can be qualified as an input to
routine process or activity. If the quality system’s performance standards and procedures are

completed as described in the design phase these standards should already be established.

The second step is educating the purchasing personnel on how the standards are important to

the process flows of the organization. If standards are not upheld, the quality of the product or service

will be jeopardized. The employees should also be educated on how to measure and communicate the

required standards. This may involve materials or statistical process control education, and it could

even be as simple as cross-training the purchasing personnel so that they know exactly how the inputs

fit into the organization. Once the purchasing area knows how the products are used and what

problems can arise, they will have a better chance of procuring inputs that meet all the specifications.

Once steps one and two are complete it will be the purchasing department’s responsibility to

communicate the requirements to suppliers and hold them accountable for the quality. This

sometimes may not be a simple task and could involve finding new suppliers or working with current

suppliers to develop higher quality standards.

Education and Training

The education of employees for the purpose of reaching higher quality standards has many different

facets. For example, the quality education of management is going to be different than the quality

education of the general workforce, because they play different roles in the process.

Because most quality problems start at the top, so too should education. The education of

management on quality issues should start with a general discussion of quality systems and the roles

management plays in quality programs. With respect to general knowledge, management must

understand the history of the quality movement, who the major players were, and how quality

programs have affected the business world. More specifically, managers must know how quality

programs have affected their specific industry in the past, and they should have an idea of what role

quality programs play in the future of their industry. Management must also keep abreast of new

developments in quality. The discussion of the roles that management must play in a quality system

is the most important aspect of their education. Management must understand how employees view

their actions or inactions, how their individual actions and jobs impact quality, and the overall
importance of dedication to quality by management. Managers must understand that without strong

leadership and reinforcing dedication to quality, a quality program will not be meaningful.

The education of employees for a quality program will include a discussion of how these

programs will affect their jobs on a daily basis. It should also include a brief overview of quality as

well as the tools employees will use in order to ensure outputs and how their roles add to the overall

quality goals of the organization.

Data Development and Statistics

Statistical analysis is a very important aspect of quality systems. It could be considered a cornerstone

of the quality improvement process and is very closely tied to auditing a quality system, which is

discussed later in the chapter. Statistical process control (SPC) was what Duran taught as a decision

maker in quality systems. Statistical analysis is the measurement portion of quality systems and

allows it to be managed. A very common saying in management, which relates well to quality, is

“you cannot manage what you cannot measure,” and statistical analysis will give you the

measurements necessary to make management decisions.

Statistics was a key tool that Deming used to distinguish between systemic and special causes,

and the key to quality management in general was statistical process control. SPC was developed by

Walter Shewart while working at Bell Labs in the 1930s, and Deming took Shewart’s concept and

applied it to quality management. Deming believed that SPC was necessary because variation is a

fact of life in any process. Deming believed that it was very unlikely that two products/services when

produced by the same procedure and operator would be identical.

AUDITING VS QUALITY MANAGEMENT SYSTEM

Auditing a quality management system is just as important as any other aspect of the system. The

audit process allows everyone involved to see if the quality management system is working correctly

and if the goals and objectives are being reached. Auditing also plays major roles in motivating

employees and allows for rewards and acknowledgment measures to be assessed as well as possible

compensation.
 Auditing of quality management systems can take many forms, and each organization will

have a unique auditing process that fits its system. Service industries will have a very different

auditing system than a manufacturing organization, but the end result of the systems is going to be

the same.

Examples of auditing systems used in service organizations.

Mystery Shoppers. Shoppers are sent to businesses to interact with employees and assess the overall

service quality and report back to management. This is usually done on a regular basis, and reports

are produced for the employees.

Customer Surveys. Customer surveys are now well used as a means to find out how your business is

viewed by consumers. These surveys can range from mail-in forms to short forms the consumers

complete at the time of purchase or even having a salesperson or clerk asking the customer to rate the

product or service at the close of the purchase. Getting direct input from your customers is invaluable

and should be done in some form in every organization.

New Customer Measures. Measurement over time of the number of new customers can be a very

effective tool to assess quality levels. Customers who are very happy with your service are going to

tell others—60 percent of new customers in service organizations come from referrals. New

customers can be an important litmus test of quality.

Quality in Services. Quality in service industries has more recently come into the mainstream,

and the benefits reaped by service organizations initiating solid quality management programs

have been substantial. The basis for quality management systems in service organizations is to

proactively measure and manage the quality level of the services; some of the metrics applied as

the basis of service quality are:

✔ The “iceberg principle,” in other words, the average service company never hears
from more than 90 percent of customers who are not happy with the level of service

they received. For every legitimate complaint received there will be more than 20

customers who feel they have had problems, and at least 25 percent of those problems

could be considered serious enough to warrant investigation.

 ✔ Of the customers that make a complaint, more than half will do business again if the
complaint is addressed and resolved. If the complaint is resolved quickly, and the

customer feels the organization cares about its customers, the number will jump up to

almost 100 percent.

✔ If a complaint is not resolved, the average customer will tell more than eight other
individuals about the negative experience. If the complaint is resolved, the customer

will tell at least five others about the positive experience.

✔ On average it costs six times more to gain a new customer than to keep an existing
one.

As you can see, quality in service industries can have substantial influence on the bottom

line. A well-designed and managed quality system can be the key to providing the quality of

service desired.

SUMMARY

The quality movement and quality systems have had many different names or terms of reference

in the past few decades, and might look like a short-lived business management trend at first

glance. With ever increasing competition and consumer expectations, professionals and business

managers cannot ignore quality issues and expect to maintain or improve their competitive

position. Quality systems, time and again, have been responsible for substantial increases in the

bottom line of businesses in every industry and have given organizations the boost they need to

meet overall goals and objectives. Organizations that do not accept that quality improvement is

going to be ingrained into every part of their business are not going to be around to see what the

future brings.

QUALITY AND ETHICS

Ethics are a set of moral principles that guide personal or group behavior. Business ethics focuses on

the study of moral standards of right and wrong and how these standards are applied to the

production, distribution and utilization of goods and services

Quality is good ethics as well as good business. It’s an ethical to deliver defective products

knowingly to customers. Reliable products and services reflect ethical approach of management’s

care for its customers. As an example, if someone in the shop has to choose between two leading

brands of counter books, one of which is one picfare and the other of the budget and one is made

100% of quality materials such as wood. The good ethics of marketing revolution becomes a problem

when organizations and advertisers can’t teach us how to differentiate between what company with

good ethics and with quality products. If consumers demand more organizations to be ethical and

have better quality standards, then this will force the organization to become this way in order to

meet their customer demands.

Trust and quality management.

A fundamental requirement for good business is trust including trusting the employees and vice

versa. Trust means management does not have to watch over the employees like a hawker because it

understands the concept of human nature, in other words, everyone wants to make a positive

difference and value.

Displaying trust by management, it provides help to the people who need to make their jobs and

products better, people will make them better because management has publicly recognized the group

and individual efforts thus improvements. Similarly, individuals feel better about their jobs and spend

less time worrying around the water cooler when they trust that management cares and feel like part

of the team.

Integrity and quality management.

Integrity is the quality of being honest and having strong moral principles or moral uprightness, its

ones choice to hold one to consistent standards. It is one of the fundamental values that employers

seek in the employees that they hire since it’s a hall mark of a person who demonstrates sound morals

and ethical principles at work. Many organizations fail since they don’t follow the reality principle

meaning telling truth even if it’s ugly.

Relevance of integrity in quality management.

 It’s the most important quality of an organization for its long time survival.
  It also enhances the organization’s value to become suppliers of choice to a majority of

customers.

 It creates goodwill for the organization in the market thus helping in building trusting

relationships with customers and employees hence also seeing a surge in productivity and

sales.

Responsibility and quality management

A quality manager has the responsibility to assure that the products and processes met set standards,

he/she also has the authority to do all necessary to fulfill the objective since it has many aspects in the

organization and they are all foreseen by that manger responsible.

However, the whole team is responsible since quality is totality of characteristics every person doing

his part as per the scope add to quality produced by the organization, top management and the

manger have to give clear directive ,provide training and ensure availability of resources.

Manager’s roles in ethics.

The roles of the manager in ethics for quality management include;

 Managers must also ensure full understanding of the organization’s expectations for managers

in general specifically those placed within the assigned roles

 The managers are also obliged to set the expectation that any and all ethically unsound

practices aren’t accepted; as such anyone that conducts or witnesses an act has a responsibility

to report it through the appropriate channels.

 Keeping records of related documentation laying out the expectations and guidelines for

ethical behavior as well as ensuring that those who report to them understand the rules.

 Ensuring that both the top management and their subordinates behave ethically and in the best

interests of both primary and secondary stake holders.

Organizational roles in ethics.

It develops several different policies, rules and guidelines for governing the operations both for large

and sole proprietors though for sole they are fewer, these guidelines are used to manage employee

behavior. The roles are as below;

  Implementing the ethical values into business organizational mission or value statement thus

helps to provide organizations with a compass to guide through the business environment.

 Improving business relationships, it designs these ethical values to provide guidance when

working with other organizations and the general public.

 Prohibiting inappropriate behaviors through using a code of conduct to prohibit the employees

which may include lying to the managers, engaging in fraud or embezzlement, failing to meet

specific operational standards.

 Organizations often use refresher seminars to continually educate and inform employees

about the importance of ethical behavior since they provide information regarding new

business policies or past violations of the organizations code of conduct. This info helps

employees have a clear understanding about the importance of ethics.

Handling ethical dilemmas

In some instances, what is ethical and un ethical is rather un clear. This is what is known as an ethical

dilemma. Ethical dilemmas are very common in today’s work place. Most studies done on the topic

conclude that managers face these dilemmas on a frequent basis with competitors, customers,

subordinates, supervisors, regulators and suppliers.

Among the most common types of dilemmas faced by managers are truthfulness in communication

and agreements, pricing policy, perks and kickbacks, management of employees and employee

termination.

As managers, you can set a frame work that will help you responsibly make the right decision when

faced with an ethical dilemma. This frame work consists of three methodologies; the human rights,

justice and utilitarian methods.

 Management uses the human rights method base decisions on the premise that human beings

are entitled to moral rights. This method includes the entitlements of the most basic rights;

freedom, health, life, privacy and property rights. Denying these rights to anyone anywhere is

a violation of these rights and considered un ethical.

  Management also uses the utilitarian method in deciding what is ethical. This decision method

involves the manager gauging the overall amount of good that will result from a decision.

This method is unique in that it can include the evaluation of economic, human and social

costs or benefits. Many businesses classify this method as the Cost – Benefit Analysis. An

example of this would be when a company prepares a budget and decides what amounts

should be allocated to charitable causes, pension benefits, employee health benefits and so on.

 The third and final method used is the justice method. It focuses on the equitable and fair

distribution of costs and benefits among persons and groups. Managers have the responsibility

for their employees pay, benefits and work schedules are fair and balanced and also have a

responsibility to customers making sure that prices are fair and that their products do as

advertised reliably and safely.

Model for ethical decisions

An ethical decision making model is a frame work that leaders use to bring these principles to the

company and ensure they are followed.

Character – based Decision model

While this one is not widely used as PLUS model, it is still worth mentioning. This model was

created by the Josephson Institute of Ethics and has three main components leaders can use to make

an ethical decision.

i. All decisions must take into account the impact to all stake holders. It is similar to Utilitarian

approach, it seeks to do good for most and hopefully avoid harming others.

ii. Ethics always takes priority over non ethical values. Decisions should not be rationalized if it

in anyway violates ethical principles. In business, this can show up through deciding between

increasing productivity or profit or keeping an employee’s best interest at heart.

iii. It is okay to violate another ethical principle if it advances better ethical climate for others.

Leaders may find themselves in the un enviable position of having to prioritize ethical

decisions. They may have to choose between competing ethical choices and this model
 advises that leaders should always want the one that creates the most good for as many people

as possible.

The plus – ethical decisions model

The steps to plus ethical decisions model are:

1. Define the problem

2. Seek out relevant assistance , guidance and support

3. Identify alternatives

4. Evaluate the alternatives

5. Make the decision

6. Implement the decision

7. Evaluate the decision.

Organizations struggle to develop a simple set of guidelines that makes it easier for individual

employees regardless of position or level to be confident that his/her decisions meet all of the

competing standards for effective and ethical decision making.

This plus – ethical decision model takes into account two realities;

i. Every employee is called upon to make decisions on the normal course of doing his/her job.

ii. For the decision maker to be confident in the decision’s soundness, every decision should be

tested against the organization’s policies and values, applicable laws and regulations as well

as the individual employee’s definition of what is right, fair, good and acceptable.

The decision making process described has been carefully constructed to be;

 Fundamentally sound based on current theories and understandings of both decision making

processes and ethics.

 Simple and straight forward enough to be easily integrated into every employee’s thought

process.

 Descriptive (detailing how ethical decisions are made naturally) rather than prescriptive

defining un natural ways of making choices.

Ethics filters. The ethical component of the decision making process takes the form of a set of filters.

Their purpose is to surface the ethics considerations and implications of the decision at hand.

We group the considerations into the mnemonic PLUS.

P = Policies. Is it consisted with any organization’s policies, procedures and guidelines?

L = Legal. Is it acceptable under the applicable laws and regulations?

U = Universal. Does it conform to the universal principles or values my organization has adopted?

S = Self. Does it satisfy my personal definition of right, good and fair?

The PLUS filters work as an integral parts or steps 1, 4, 7 of the decision making process. The

decision made applies the four PLUS filters to determine if the ethical components of the decision are

being surfaced or addressed or satisfied. The PLUS filters do not guarantee an ethically sound

decision. They merely ensure that the ethics components of the situation will be surfaced so that they

might be considered.

Management challenges

Management challenges majorly include the following;

Communication is one of the might challenges where managers frequently are not aware of the

quality of their communication whereby maintaining good lines of communication is difficult making

the perception of their employees into personal styles.

Resolving conflict. Many managers ignore problems and do not directly address conflicts with their

employees or work team whether these are performance problems, conflicts team members, issues of

trust or personality clashes, managers are challenged to confront and address the problems head – on.

Manage performance. Many managers are ill – equipped to provide regular and constructive feedback

and may not understand the importance of documenting performance thus making managing

performance challenging.

Handling protected employees is also a challenge whereby most managers are not well versed in

administering ADA, FMLA and other laws that protect some or certain groups of employees but un

knowingly find themselves managing an employee who requires an accommodation leave of absence

or falls into a protected class.

Administering policies fairly and consistently is one of the most common challenges for managers in

treating employees.

Implications of management practices

Management practices refer to the working methods and innovations that managers use to improve of

the effectiveness of work systems. New research finds that certain types of management policies are

associated with higher levels of productivity, profitability, innovation and growth.

These practices include: training, rewards and incentives, compensations, extensive employee

involvement, increased motivation and retention of quality employees.

Implications include;

 Management practices encourage effective utilization of human resources.

 Management practices lead to desirable working relationships among all the members of the

organization.

 They also bring about team work among the employees and employers due to increased

motivation and extensive employee involvement.

 Firms emphasizing cooperation and dispute resolution have lower costs, less scrap, higher

productivity and a greater return to direct labour hours.

PARTNERING FOR COMPETITIVENESS

Partnering is a structured process designed to create an atmosphere of commitment, cooperation and

collegial problem solving among organizations and work together on a project. A partnership arises

whenever two or more people co-own a business and share in the profits and losses of the business.

Competition is a rivalry in which every seller tries to get what other sellers are seeking at the same

time for example sales, profits, market shares of price quality and so on. Competitiveness is the

ability of an economy to compete fairly and successfully in markets for internationally traded goods

and services that allows for rising standards of living over time.

TYPES OF PARTNERSHIPS
General partnerships, a general partnership involves two or more owners carrying out a business

purpose. General partners share equal rights and responsibilities in connection with management of

the business, and any individual partner can bind the entire group to a legal obligation. Each

individual partner assumes full responsibility for all of the business’s debts and obligations. Although

such personal liability is daunting, it comes with a tax advantage for example partnership profits are

not taxed to the business, but pass through to the partners who include the gains on their individual

tax returns at a lower rate

Limited partnerships, a limited partnership allows each partner to restrict his or her personal liability

to the amount of his or her business investment. Not every partner can benefit from this limitation at

least one participant must accept general partnership status, exposing himself or herself to full

personal responsibility for the business’s debts and obligations. The general partner retains the right

to control the business, while the limited partner does not participate in management decisions. Both

general and limited partners benefit from the business profits.

Limited Liability Partnerships (LLP), these give limited liability to every owner. This means that

each partner is protected from financial and legal mistakes of the other partners. As a result, a limited

liability partnership has some elements of both partnerships and corporations. Individual partners in a

limited liability partnership are not personally responsible for the wrongful acts of other partners or

for the debts or obligations of the business.

TYPES OF PARTNERS

 Active/ managing partner, is the person/ organization that takes active interest in the conduct and

management of the business. He or she is require to give a public notice of his or her retirement

and they will be liable to third parties for the acts done after their retirement.

 Sleeping /dormant partner, is a partner who ‘’sleeps’’ that is, he does not take active part in the

management of the business. Such a partner only contributes to the share capital of the firm and

is bound by the activities of other partners and also shares the profits and losses of the business.

A sleeping partner is not required to give a public notice of his retirement, as such, he will not be

liable to third parties for the acts done after his retirement.
 Nominal partner, is a partner who does not have any real interest in the business but lends his

name to the firm without any capital contributions and doesn’t share the profits of the business.

He also does not usually have a voice in the management of the business of the firm, but he is

liable to outsiders as an actual partner.

 Partner in profits, when a partner agrees with the others that he would only share profits of the

firm and would not be liable for its losses, he is in as a partner in sharing of only the profits of a

firm since he/she has into an agreement with the others

 Other partners, in partnership firms, several other types of partners are also found, namely secret

partner who does not want to disclose his relationship with the firm to the general public.

Outgoing partner, who retires voluntarily without causing dissolution of the firm, limited partner

who is liable only up to the value of his capital contributions in the firm, and the like.

IMPORTANCES OF PARTNERING FOR COMPETITIVENESS

Share common technology, every startup has a core competency that should be shared. Beyond that,

there may be a large percentage of common technology where they both need to minimize costs in

order to gain share from the big companies who already have advantage.

Expand the market for both companies, typically, the market opportunities that neither of you can

win alone, a strategic evolution of your combined strengths may be able to open up a new segment

that neither of you can do alone in the same timeframe or at that cost.

Up-sell related products, if your customers would benefit by having products from both companies,

you might negotiate the opportunity to include the other’s product as an add-on. Where your

competitor isn’t really competing with your direct market, you can refer business to each other

without losing customers anymore

Expand core competency and solidify strengths, by sharing and learning in non-competing areas, they

can focus their limited resources on solidifying their core competencies and expanding their unique

segment of the market.

Learn from each other, no entrepreneur has all the insights they need, and none should be so arrogant

as to assume they hold all the cards. Of course, it is important to start with a bounded agreement that

clearly lays out expectations and areas that are off-limits.

Think about the future, once you have established your credibility and value, a strategic partnership

may extend to a financial relationship. The other company may have the finances to invest in a

business area they know, where they have core competency.

DISADVANTAGES OF PARTNERING FOR COMPETITIVENESS

Liabilities, in addition to sharing profits and assets, a partnership also entails sharing any business

losses as well as the responsibility for any debts, even if they incurred by the other partner. This can

place a burden on your personal finances and assets.

Lack of stability, even if you have a solid exit strategy in your partnership agreement, the change

triggered by a partner’s situation can cause instability in the business is riding the wave of instability

one of your strengths

Future selling complications, as circumstances change in the future, you or your partner may wish to

sell the business. This could present difficulties if one of the partners isn’t interested in selling.

Loss of autonomy, while you likely enjoy being in total control of your business, in a partnership,

you would now share control with a partner and important decisions would be made jointly.

FORMS OF PARTNERING FOR COMPETITIVENESS

 Internal partnering

Is partnering effort developed between two or more departments within an organization that needs to

work together in order to accomplish a successful project for example design project management,

procurement e.t.c

BENEFITS OF INTERNAL PARTNERING

They develop mutual sensitivity, the two people/ departments help protect the owner’s interests and

can often lead to a good team relationship through the effective communication that is carried out.

It improves communication between people, and this also makes the payment process more

predictable and fair since both of the departments can easily come up with a solution to any problem.
Production of outstanding results, most organizations who have engaged in internal partnering have

had outstanding results through successful strategic planning efforts between the departments.

 Partnering with suppliers

This is the extended relationship between buyers and sellers based on confidence, credibility and

mutual benefit. The buyer on his part provides long term contracts and assurance of only a small

number of competing suppliers.

In reciprocation, the seller implements customer’s suggestions and commits to continuous

improvement in quality of a product and delivery.

IMPORTANCES OF PARTNERING WITH SUPPLIERS

Suppliers help companies build better products and services, this is through the production of very

high quality goods.

A partnership can give suppliers greater visibility into how you operate enabling you and your

suppliers to collaborate by reducing costs, improving service and quality and even innovating.

Suppliers lead to improved quality performance.

 Partnering with customers

This is a long term commitment to a business relationship on understanding each partner’s

expectations and dedication to common goals and trust. Being a partner can redefine the way you

interact with your customers.

IMPORTANCES OF PARTNERING WITH CUSTOMERS

It fosters communication, the best thing you can do is listen to your customers, then ask questions

about what you hear and increase face time with them by asking open ended what if and why

questions.

Displays leadership, leadership is trying to do the right thing. Your customer expects you to

understand their strategies, vision and goals and truly meet their needs. Develop alternatives to meet

their goals and always have courage to them the truth about a project.
Demonstrates consistency, predictability and reliability are the key to demonstrating consistency. A

sure way to build that trust is to deliver consistent project execution and results. Plan to provide

consistent customer experiences and let your partner see your progress.

Ensure transparency, transparency is the key to building trust. Provide honest timely communication

whether the news is good or bad. Set the expectation that customers must be actively be involved in

the decision making project.

HOW PARTNERING BRINGS ABOUT QUALITY IN A BUSINESS

Track mistakes, partners should involve in product specifications and then sampling a small number

of units from the production line to see how closely they measure up to the specifications. Standards

must be set and if too much deviation occurs, then the manufacturing process is altered.

Invest in training, partners should train their workers at all levels and this can be done through setting

up new employee initiation programs to train workers to focus on quality issues from the first day on

the job.

Organize quality circles, partners should do this in order to address problems. Quality circles are

groups of employees who are encouraged to assess processes and recommend improvements, all with

the goal of promoting quality, efficiency and productivity.

Make a commitment, a company’s commitment to quality has to come from the top, and it has to be

reinforced by the partners over and over again. All partners should make an effort and be consistent

and bring about quality decisions in their partnership

Set up key performance indicators (KPIs), partners should set the KPIs with proper values,

responsibilities, who measures when and how and make them part of your recurring reporting

( usually only financial figures there)

Communicate in a proper way and periodically, all partners should make sure that they communicate

with all their employees effectively as well as their customers and suppliers so that they all get to

understand what they need from each other.

MANAGEMENT CHALLENGES

Different management styles, some partnerships take on parental dynamic which involves being a

disciplinarian who is task-oriented, slightly distant and intent to get things done. The other is laissez-
faire, which is a ‘’chill’’ company culture over a well-oiled machine. In the best case scenario, one

lays down the law and keeps the ship on course, while the other keeps employees happy.

Personal habits, the rules for maintaining a work-life balance don’t apply for some partners for

example the nominal partner. There is a huge range of different vices and vulnerabilities that can

jeopardize a business partnership especially if there is no other employees e.g substance abuse,

alcohol, lapses in ethics and mental health issues.

Financial problems and equity, the founder might be willing to put up all the money and just

technology or business help to get it off the ground. In this case, there is no equity. How is the

secondary partner valued? Are the guidelines absolutely clear to both parties involved? These

questions should be addressed at the end of the courting period but it’s eminently important that there

are no lingering tensions going forward.

Setting boundaries, if partners become best friends, there’s a chance that decision or disagreement

could be taken personally. Best friends who become partners can face unexpected situations that

compromise their professional and personal relationship. On the other hand, best friends who know

each other really well might understand how to keep each other motivated and how to keep balance

of work and each other’s’ strengths and weaknesses while maintaining a unified vision.

Commitment levels, it’s necessary to be perfectly clear on what each partner is looking for. One

might just be in for the experience, but not willing to put in time and dedication required. Maybe they

want in but keep their day job, invest little money, or lack needed skills outside of their own

specialization.

Differences in skills and roles, entrepreneurs usually seek partners who are at least as experienced as

themselves to jumpstart the business but that doesn’t always happen. After all, they’re asking

someone to quit their day job, take a huge salary cut ( if they’re lucky enough to get a salary!) and

live on their savings to follow a vision that hasn’t been actualized yet. Few established professionals

are willing to take these risks. Then it becomes a matter of finding any more willing with the kind of

qualifications you’re looking for.

IMPLICATIONS ON MANAGEMENT PRACTICES

POSITIVE IMPLICATIONS

A partnership is a good business choice for many reasons. It helps you find the necessary skills and

resources without having to pay for it. It also improves your business’s decision-making process and

helps you make better decisions. Below are some of the most noticeable benefits of a business

partnership.

 More resources, more partners simply mean more money and resources for business. Capital

is one of the basic reasons why many businesses choose to go for a partnership. If you can

grow sufficient resources within partners, you won’t have to take a business loan or any other

credit in the name of business.

 Better decision making, partnerships increase your decision making capability as there are

more people to discuss with before a decision is made. A partnership usually involves people

with different skills, knowledge and experience level who can all contribute to come up with

best decision in any type of situation.

 New contacts, new partners bring new contacts and new potential customers to your business.

When two or more people come together to start a business, it is normal for them to use their

existing contacts for the growth of common business.

 Responsibility sharing, responsibilities are also shared between the partners of the business.

This allows them to make most of their time and abilities. This way all business

responsibilities and burden do not fall on a single person, and everyone can work best

according to their skills.

 Tax relaxation, partnership based businesses are usually not required to pay taxes, as each

partner mentions in his own personal tax return the profits and losses of his business. So, there

is no separate taxation for the business.

 Easy to form and change, business partnerships are easy to form as there are no special laws

for them, and these can be started with minimal paper work. It is also easy to change the rules

and terms of partnership in future. Or one of the partners decides to leave, it can also be

arranged easily.
NEGATIVE IMPLICATIONS

Not all business partnerships end well. Sometimes a partnership formed for the good of business may

end up destroying much more. Below are explained negative implications of partnerships.

 Profit sharing, profits of the business are supposed to be shared equally among all partners.

This may cause an issue when one or more partners are either not contributing or assumed to

be not contributing their share of efforts and time.

 Disagreements, it is common to have a difference in opinions and views of different partners

but this creates a major issue when there arises a disagreement between partners. No matter

the origin or the cause of the disagreement it is known to have destroyed several business

partnerships and can do the same to yours.

 One entity, a partnership business is treated as one entity for all business transactions,

irrespective of the number of partners. All partners of the business are liable for any actions,

debts, transactions and everything else within the business capabilities.

 The risk of dissolution, you can never be sure when one of your partners decides to leave the

business or to end the partnership for any reason. This dissolution of business effectively

ends the business partnership forcing you to value the business assets and divide them

accordingly.

 Freedom of choice, with a partnership business, you cannot make a company decision by

yourself. Each business decision is supposed to be made by consulting all partners. You are

still free to share your ideas but you cannot make a managerial decision unless all partners

agree to it.

 Business decisions, the decisions that are made by the company board are usually final and

everyone is required to accept them whether they like it or not. This also applies to the actual

owner of the company.

  More tax, a partnership business is usually not liable to tax but individual partners are

supposed to pay business taxes on their own. This may sometimes increase the overall tax

amount paid by the partnered entity.

CUSTOMER FOCUS;

It’s the orientation of an organization towards serving its clients’ needs. It’s one of the key

principles of quality management. Having a strong customer focus is usually a strong

contributor to the overall success of a business and involves ensuring that all aspects of the

company put its customers’ satisfaction first.

Who is a customer?

A customer is an individual or business that purchases the goods or services produced by a

business. They can be internal or external customers. External customers are those customers

who see your company mainly as a provider of something they buy. These can also use a

company’s products or services but are not part of the company. Internal customers on the other

hand, are those who participate in your business by actually being part of it. For example

engineers, accountants, managers, and others. Or are customers who are members of an

Organization who depend on the assistance of one another to accomplish their job and

responsibilities.

Characteristics of a customer focused business:

Are quick; their speed of response to enquiries, queries and complaints consistently surprise

their customers. For example attending to customers’ query about the new products on the

market. The speed at which the employees are responding to the customer, shows how focused

they are to the customers.

Are easy; that means easy to buy from and easy to do business with both online and offline. This

is not at the sales end of the business, it’s everywhere, even in the accounts department.

Exceed expectations; they go to that extra mile to exceed their customers ’expectations and

create delight. For example packaging for the customers, carrying for them to their vehicles.
Do it consistently; they consistently work to deliver against those raise expectations and keep

raising them. They continue to serve beyond their customers’ expectations.

Deal with disappointments; Things go wrong in all businesses, so they proactively and

consistently spot and deal with customer disappointments. Have you ever had estuation where a

customer has not been happy about something, but the way you have dealt with their

disappointment actually delights them? That’s what this is about.

Empower their people; Customer focused businesses encourage and empower their people to act

spontaneously and take the initiative to exceed their customers’ expectations. For example

allowing an employee to spend a specific amount of money without the manager’s permission.

Equip their people; As well as authority, Customer focused businesses ensure that their people

are equipped with the attitudes, skills, and tools to do the job. They train them, support them,

encourage them and help them to get better.

Spot and remove blockages; they proactively review their customer touch points and eliminate

blockages that undermine their customer experience. For example, making calls to your own

business.

Champion their customer champions; in a customer focused business, people are recognized and

rewarded for exceeding customer expectations not just for achieving sales targets. It’s done to

recognize internal customers and the contribution that every individual can and does have an

impact on customers.

Embed customer thinking at every level; in a customer focused business, customers are an

integral part of everything they do and on the agenda in all internal communications, team

meetings and discussions. They highlight great examples, they share customer feedback, they

encourage problem solving and ideas to improve the customer experience and they keep doing

it.

CUSTOMER VALUE;
Is the perception of what a product or service is worth to a customer versus the possible

alternatives. Or the difference between what a customer gets from a product and what he or she

has to give in order to get it.

HOW TO CREATE CUSTOMER VALUE;

Giving a price that makes the customer believe he is getting more than he pays for the

benefits he gets versus competitive offers. Products which are too expensive are not good and

those very cheap are not desirable.

Reducing the price, or keeping the same price and giving something extra over competition for

example, it could be service, better attention and add on to the product.

Making it convenient for the customer to buy and how he wants to buy and pay. For example

of a super market, products are organized in such way that customers can easily see them and

pick them conveniently.

The image of the company, including the brand and the trust in the company or when the

customer appreciates the valves of the company including sustainability. These create value for

the customer.

Giving the customer a product that works as it is meant to (as perceived by the customer) and

easy for him or her to understand and use. For example if you offering bakery products, they

should taste to expectations of your clients.

Making customers feel valued. For example ; smiling at and being attentive to a customer

creates value to him or her, making it easy for the customer to contact the company and

assurance that an answer will be given, receiving a call from a service person confirming his

visit, not answering queries destroy valve.

CUSTOMER SATISFACTION;

Is the measure of how products and services supplied by the company meet or surpass customer

expectations. Or it’s a metric used to quantify the degree to which a customer is happy with a

product, service or experience.

Determinants of customer satisfaction;

They keep coming back; learn his name, give him a perk from time to time and he will likely

do incredible word of mouth, free prize for you. Watch out for regulars and treat them like you

are trying to win them over the first time round.

If tipping is applicable, this is the most obvious way of a customer telling you” good job” For

tips that are at or above industry standards, reflect on what that person did to earn it. Showing

satisfaction with hard earned money is the most impressive of all, and you want to make sure

those result They tip well; keep happening.

You find out they have your app, follow you on social media or have another connection.

maybe they ask about the special you posted on face book or you see them tagging you in their

tweet. If customers have connected with you on social media, they have brought you into their

inner circle.

They bring their friends; if it’s clear that a customer has been to your business before, and this

time brought along friends or family, they are putting their reputation on the business for you.

They thought your business was good enough to warrant a trip with others to show you off.

Make sure that you treat everyone in the group like a very important person.

They write appositive review; it’s good idea to respond to all thought full review on every

platform, whether positive or negative. It’s disheartening to write and get no likes or comments

at all. Let customers and readers know your listening.

They linger; whether is person or on phone, people do not stay or linger where they are not happy. If

they stick around, it means they feel comfortable and perhaps like they have a strong connection with

the business or the customer service.

They ask for a business or punch card. Many customers will take a card offered to them to be

polite, but asking for one is a customer’s way of saying they plan to come back. It’s the best promise

you can snag as a customer service representative.

HOW TO ENSURE CUSTOMER SATISFACTION;

Customer focus: management should understand the customer needs and requirements and strive to

exceed customer expectations in meeting them.

Leadership; management should establish unity of purpose and direction and create and maintain an

environment in which everyone can participate in achieving the organizational objectives.

Involvement of people: management should involve all people at all levels so that they willingly

contribute their abilities in achieving the organizational goals

Process approach: management should recognize that an objective achieved more efficiently when

activities and associated resources are managed together as a process

Systems approach: management should recognize that identifying and understanding interrelated

processes and managing them as a system is more efficient and effective in achieving the

organizational objectives

Continual improvement: management should aim at steady incremental improvement in the

organizations’ overall performance as a permanent objective

Factual approach to decision making. Management should base its decisions solely on te analysis of

data and information

Mutually beneficial supplier relationships: management should embrace the interdependent

relationship with its suppliers for mutual benefits for the creation of values.

CUSTOMER RETENTION;

These are the activities and actions companies and organizations take to reduce the number of

customer defections. The goal of customer retention programs is to help companies retain as many

customers as possible, through customer royalty and brand royalty initiatives. It’s important to

remember that customer retention begins with the first contact a customer has with the company and

continues throughout the entire life time relationship.

I have compiled some of the more successful customer retention strategies and techniques as follows;
Set customer expectations; Set customer expectations early and a little lower than you can provide

to eliminate uncertainty about the level of your service and ensure you always deliver on your

promises.

Become customer trusted advisors; You need to be the expert in your particular field, so that you

can gain customers’ trust and build customer loyalty.

Use relationships to build trust; Build relationships with customers in a way that fosters trust. Do

this through shared values and fostering customer relationships. Customers should trust you in such a

way that your products are 100% with no defects.

Take a proactive approach to customer service .Implement anticipatory service so that you can

eliminate problems before they occur.

Use social media to build relationships; Use twitter, face book, and watsapp to connect and

communicate with customers and give them a space for sharing experience with your company, so

they can become brand ambassadors.

Make it personal; a personalized service improves customer experience and is something customers

are expecting and demanding. Make their experience personal to strengthen the bond with your

brand.

Regular discounts; whether you are a retailer or a service provider, offering discounts on goods and

services that are valuable will help.

Give gifts to your customers for example as MTN does ;sending birth day messages and other

companies give gifts like shopping vouchers ,birth day gifts, t-shirts with company name among

others.

interested in meeting the same employees whenever they come to your business.

Ensure customer value; Customers should be able to get what’s being paid for in terms quality

products and service and service. This is done through committed staff to offer best customer

service.

Ensure customer satisfaction; Customers should be satisfied in the way how they are being served

by the organization. This is also seen in the way how employees are treated. Happy employees give
appositive impression to customers. Protect employees; this helps in such a way that, customers get

used to employees so they are

Ensure quality; Quality is seen in various aspects such as branding, packaging, durability,

accessibility among others. If your products are of quality, customers will stick to your business.

Importance of Delivering Customer Value and Satisfaction

Means of achieving business goals. Essentially, customer satisfaction can be seen as a means of

achieving business goals as well as being a source of sustainable competitive advantage

Satisfied customers generates new customers for the organization. Satisfied customers will make a

great foundation for return business, and they may also bring in their friends and associates.

Customers are the heart of any business keeping them satisfied will encourage them to tell their

friends about their experiences with your business.

Shows Commitment to the Customer. Often customers like the idea that a company is soliciting their

feedback, because it shows that the company is committed to keeping them as a business. Far too

many companies take their clients for granted. Customer satisfaction surveys serve as a reminder to

customers that your company cares enough about them.

Customer value and satisfaction may act as a marketing tool to the organization. A benefit of creating

highly satisfied (delighted) customers who are loyal to the organization is that they also spread

positive word-of-mouth by, in essence, becoming a walking, talking advertisement for the firm. If

there are many delighted customers spreading positive word-of-mouth communication, this then

lowers the cost of promotion to attract new customers. This benefit is particularly important among

professional services firms such as lawyers and accountants where word-of-mouth and reputation are

key sources of information for new clients.

OTHER IMPORTANCES

 Creates a repeat buying which results into lower costs of production

  Customer satisfaction creates Price advantage

 Limits corporate crisis

 Customer satisfaction encourages one stop shopping

 Customer value encourages successful innovations

Tools and techniques of quality management

INTRODUCTION

Globalization, intense competitive environment, customer awareness etc. forces the

industries/organizations to offer higher product quality which is the main requirement to gain global

market share. Satisfying the customer with high quality products in the shortest time possible at

lowest cost is the key to success of any organization in the market. To cope up and retain the position

in this environment, it is a necessary requirement for any industry/organization to keep focusing on

quality management. Managing well quality management within the industry/organization is not

possible without adequate knowledge of quality tool and techniques. The main aim of this topic is to

highlight all major quality tools and techniques used for quality management in an

industry/organization.

Quality and systems management technique are used to communicate to employees what is

required to produce a desired quality of products and services and to influence employee actions to

complete tasks cording to the quality specifications.

Quality tools on the other hand are organization layouts for problem solving ad process

improvements. They are also displayed in there utilization for identification and analysis.

There are seven quality management tools such as the Pareto chart, fish bone diagram, the check

sheet, histograms, scatter diagram, run chats and control charts. Each of these seven quality tools

have particular purposes which they play in the quality management process which are jointly put

together as follows;

 They are used to improve quality in projects, products and processes.

  Some also help to identify problems or processes and provide a way to analyze negativity or

in effectiveness.

 Others are used to prioritize, this gives and clearly shows where ones area of specialty.

 They also list causes and effects of elements in a project or processes.

 They also list causes and effects

THE QUALITY TOOLS.

CHECK SHEET

Check Sheet: The check sheet is a simple document that is used for collecting data in real-time and

at the location where the data is generated. The document is typically a blank form that is designed

for the quick, easy, and efficient recording of the desired information, which can be either

quantitative or qualitative.

These are simple forms with certain formulates that can aid the user to record data in a form

systematically. Data is collected and tabulate and this is done to record the frequency of specific

events during a data collection period.

A check sheet is used to prepare a consistent, effective and economical approach that can be applied

in the auditing of quality assurance for reviewing and to follow the steps in a particular process. It

also helps the user to manage the data for the utilization later. They are easy to understand.

They make clear pictures of the situation and condition of the organization. On top of that they are

efficient ad powerful tools to identify frequency problems.

On the other hand it doesn’t have effective ability to analyze the quality problem into the system.

SAMPLE OF A CHECK SHEET.

Pepsi soda product line. Days of the week

Cause Saturday Sunday

Broken bottles

Carbonated water liters

Sugar k.gs
 Total 18 12

HISTOGRAM.

Histogram: One uses this graph to show frequency distributions. It looks very much like a bar chart.

This chart graphs data distributions. If you have numerical, variable, continuous data you can use this

chart. The chart organizes and sorts the data. It shows the data in a pictorial format.

A histogram is useful to describe what the frequency distribution of observed values of variables. It

visualizes both attribute and variable data of a product or process.

It helps users to in the distribution of data and the amount of variable with a process. They go on to

display different measures pf central tendency.

SAMPLE OF A HISTOGRAM.

Sample of Histogram
50

45

40

35

30

25

20

15

10

0
Monday Tuesday Wednesday Thursday Friday Saturday Sunday

PARETO ANALYSIS.
Pareto Diagram: A Pareto chart, named after Vilfredo Pareto, is a type of chart that contains both

bars and a line graph, where individual values are represented in descending order by bars, and the

cumulative total is represented by the line.

A simple rule, pareto, 20 % issues causes 80 % results.

This means, 80 % if problems come from 20 of reasons.

80 % of results come from 20% of work. 80% of cost comes from 20% of spent area...and so on.

Is a type of histogram used to find and prioritize quality problems, conditions of their causes. It is

mostly arranged from the most prioritized to the least.

Illustration of a Pareto chart.

Pareto analysis example.

Cause Number of defects percentage

Poor design 80 64

Wrong part dimensions 16 13

Defective parts 12 10

Operative errors 4 6

Surface abrasions 3 2

THE DRAFT OF THE PAREO CHART

30

25

20

15

10

0
2 4 6 8 10
FISHBONE DIAGRAMM. (Cause and effect diagram)

Also called the cause and effect diagram. It is basically used to identify quality problems based on degree of

importance. It also investigates and analyses systematically all the potential causes.

An illustration of the fish bone diagram.

Mach Method Materials

Wrong Incorrect
sequence material
Quality
Wrong Bad Excessive light
specification attitude Environment
Measuremen Personal
SCATTER DIAGRAMM.

Scatter diagram: It is used to determine if there is a relationship or correlation between two

variables. It is used to display what happens to one variable when another variable changes in order

to test a theory that the two variables are related. The data displayed on the scatter diagram clearly

show if there is a positive, negative or no relationship between the two variables.

It’s a powerful tool to draw the distribution of information in two dimensions. This helps to detect,

analyze and pattern relationship between two quality and compliance variables and understanding if

there is a relationship between them. The relationship can be positive, negative bleak or strong.

Positive correlation scatter diagram

X
 X

RUN, CONTROL OR SHEWHART CHART.

Control Charts and Their Role in Quality Systems. Control charts are the most widely used tool in

quality systems. Control charts communicate a lot of information effectively. Figure 14.2 shows a

process in which all the outcomes are within the specified limits. The upper control limit (UCL)

is .18 and the lower control limit (LCL) is .02, and all the points fall between these two limits. This

means the process is in control and operating correctly. If some of the points were to fall outside of

the UCL or LCL, it would signal that the process is not in control and action needs to be taken to

correct the problem.

We discussed earlier the two different types of errors, (1) systematic and (2) special causes.

Systematic errors will show up on a control chart as one or two points outside of the control limits

with the rest of the points within the limits. Special causes will show up on a control chart with

numerous points outside of the control limits.

The exact use of statistical measures is going to be different for each organization. Some

statistical analysis will be very easy to set up and use. For example, the length or weight of a

particular part can be measured and analysis can show if the parts are within the required

specifications. In service industries the statistical analysis will be more abstract, but is just as

valuable. For example, one could survey customers regularly and ask them on a scale of 1 to 10,

“How would you rate the service?”

Here are some common traits of statistical measures used in quality systems:

✔ Are driven by the customer.

✔ Reflect vision and values.

✔ Benchmarked to the competition.

 ✔ Are achievable.

0.2
0.18 UCL
0.16
0.14
0.10
0.1
0.08
0.06
0.04
0.02 LCL
0
0 5 10 15 20 25 30 35

FLOW CHART.

Flow chart: The Flow Chart provides a visual representation of the steps in a process or a diagram

that uses graphic symbols to depict the nature and flow of the steps in a process.

A flow chart shows a diagrammatic picture that indicates a series of symbols to describe the sequence

of steps that exist in an operation or process.

It also visualizes the inputs, activities, decision points and out puts for using and understanding easily

concerning the overall through process.

Receive client

Prepare a list to send

Client Approval Y Prepare detailed case

N Client Plan Execut

Re e the

TECHNIQUES
• Benchmarking: Benchmarking is a self-improvement tool for organisations. It allows them to

compare themselves with others, to identify their comparative strengths and weaknesses and learn

how to improve. Benchmarking is a way of finding and adopting best practices.

• Departmental Purpose Analysis: Department purpose analysis (DPA) is a process for applying the

concepts and principles of management in a practical way. It is designed to ensure that a department,

team or group is achieving goals that contribute to the company's strategy and overall goals, and that

the department's activities add value. A key step in the process is a clear focus on agreeing,

measuring and meeting customer (internal and external) requirements.

• Design of Experiments: DOE is a systematic approach to investigation of a system or process. A

series of structured tests are designed in which planned changes are made to the input variables of a

process or system. The effects of these changes on a pre-defined output are then assessed.

• Failure Mode Effect Analysis: Failure Modes and Effects Analysis (FMEA) is a systematic,

proactive method for evaluating a process to identify where and how it might fail and to assess the

relative impact of different failures, in order to identify the parts of the process that are most in need

of change.

• Fault Tree Analysis: Fault tree analysis (FTA) is a top down, deductive failure analysis in which

an undesired state of a system is analyzed using Boolean logic to combine a series of lower-level

events. This analysis method is mainly used in the field of safety engineering and Reliability

engineering to determine the probability of a safety accident or a particular system level (functional)

failure.

• Poka Yoke: Poka Yoke is any process that can stop mistakes being created, thereby ensuring that

there are no defects within the production process. So if a machine is designed to stop or at least

sound a warning signal if it is not aligned correctly then this is ‘Poka Yoke’ in action. The operator

will be alerted to the fact that the machine has not been correctly aligned and instead of faulty goods

being created, or the machine continuing and then perhaps breaking down the operator will take the
necessary steps to ensure that the problem is resolved before the faulty goods are created or before

the machine breaks down.

• Problem Solving Methodology: The process of working through details of a problem to reach a

solution. Problem solving may include mathematical or systematic operations and can be a gauge of

an individual's critical thinking skills.

• Quality Costing: Quality Costing provides pragmatic advice on how to set about introducing and

developing a quality costing system and using the data that emerges. Quality costs help to show the

importance of quality-related activities to management; they demonstrate the cost of nonquality to an

organization; they track the causes and effects of the problem, enabling the working out of solutions

using quality improvement teams, and then monitoring progress (Dale & Plunkett, 1999).

• Quality Function Deployment: Quality Function Deployment is a systematic approach to design

based on a close awareness of customer desires, coupled with the integration of corporate functional

groups. It consists in translating customer desires (for example, the ease of writing for a pen) into

design characteristics (pen ink viscosity, pressure on ball-point) for each stage of the product

development (Rosenthal, 1992).

• Quality Improvement Teams: Quality improvement teams provide a mean of participation for

employees in quality decision – making. They aids in employee development, leadership, problem

solving skills and lead to quality awareness which is essential for organizational change.

• Statistical Process Control: Statistical Process Control is a scientific visual method used to

monitor, control and improve processes by eliminating special cause variation from manufacturing,

service and financial processes. SPC is a key continuous improvement tool.

REFERENCES

American Society for Quality. www.asq.org, accessed February 15, 2004.

Biolos, Jim. Six Sigma Meets the Service Economy. Boston: Harvard Business School Press,

2002.

Garvin, David, and Artemis March. A Note on Quality: The Views of Deming, Juran, and

Crosby. Boston: Harvard Business School Press, 1981.

Reichheld, Fredrick F., and W. Earl Sasser Jr., “Zero Deflections: Quality Comes to Services,”

Harvard Business Review (September– October 1990).

Wolkins, D. Otis. Total Quality: A Framework for Leadership. Management Leadership Series.

New York: Productivity Press, 1995.