Quality & Performance
Excellence, 8th Edition
Chapter 2
Frameworks for Quality
and Performance
Excellence
S
Outline
Describe the philosophies of Deming, Juran, and
Crosby
Provide an overview of the Malcolm Baldrige
National Quality Award and other related award
programs, ISO 9000, and Six Sigma
Understand the differences in scope, purpose, and
philosophy of these frameworks
2
Deming Philosophy
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.
3
Deming Chain Reaction
Improve quality
Costs decrease
Productivity improves
Increase market share with better
quality and lower prices
Stay in business
Provide jobs and more jobs
4
Deming’s System of Profound
Knowledge
Appreciation for a system
Understanding variation
Theory of knowledge
Psychology
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Systems
Most organizational processes are cross-
functional
Parts of a system must work together
Every system must have a purpose
Management must optimize the system as a
whole
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Variation
Many sources of uncontrollable variation exist
in any process
Excessive variation results in product failures,
unhappy customers, and unnecessary costs
Statistical methods can be used to identify
and quantify variation to help understand it
and lead to improvements
7
Theory of Knowledge
Knowledge is not possible without theory
Experience alone does not establish a theory,
it only describes
Theory shows cause-and-effect relationships
that can be used for prediction
8
Psychology
People are motivated intrinsically and
extrinsically; intrinsic motivation is the
most powerful
Fear is demotivating
Managers should develop pride and joy in
work
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Deming’s 14 Points (Abridged) (1 of 2)
1. Create and publish a company mission
statement and commit to it.
2. Learn the new philosophy.
3. Understand the purpose of inspection.
4. End business practices driven by price alone.
5. Constantly improve system of production
and service.
6. Institute training.
7. Teach and institute leadership.
8. Drive out fear and create trust.
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Deming’s 14 Points (2 of 2)
9. Optimize team and individual efforts.
10. Eliminate exhortations for work force.
11. Eliminate numerical quotas and M.B.O.
Focus on improvement.
12. Remove barriers that rob people of pride
of workmanship.
13. Encourage education and self-improvement.
14. Take action to accomplish the transformation.
www.deming.org
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Juran Philosophy
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.”
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Juran’s Quality Trilogy
Quality planning
Quality control
Quality improvement
www.juran.com
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Crosby Philosophy
Quality is free . . .
“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.”
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Crosby’s Absolutes of
Quality Management
Quality means conformance to requirements
Problems are functional in nature
There is no optimum level of defects
Cost of quality is the only useful measurement
Zero defects is the only performance standard
www.philipcrosby.com
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Malcolm Baldrige National
Quality Award
Help improve quality in U.S. companies
Recognize achievements of excellent
firms and provide examples to others
Establish criteria for evaluating quality
efforts Malcolm Baldrige,
former U.S. Secretary
Provide guidance for other American of Commerce
companies
16
Recent Developments
From 1987 until 2012, the Baldrige program was administered through
the National Institute of Standards and Technology, a division of the U.S.
Department of Commerce.
In 2012, the House Appropriations Committee of the U.S. Congress
eliminated funding for the Baldrige program
The Baldrige program reacted quickly and began a transition to a
sustainable, nongovernment-supported business model. In April 2012,
the Baldrige Foundation committed funds to sustain the program
through the fiscal year 2015.
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Criteria for Performance
Excellence
Leadership
Strategy
Customers
Measurement, Analysis, and Knowledge
Management
Workforce
Baldrige
Operations Award trophy
Results
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Criteria Structure
Each category consists of several items (numbered 1.1,
1.2, 2.1, etc.) or major requirements on which businesses
should focus.
Each item, in turn, consists of a small number of areas
to address (e.g., 6.1a, 6.1b) that seek specific
information on approaches used to ensure and improve
competitive performance, the deployment of these
approaches, or results obtained from such deployment.
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Core Values and Concepts
Systems Perspective Managing for Innovation
Visionary Leadership Management by Fact
Customer-Focused Societal Responsibility
Excellence
Ethics and Transparency
Valuing People
Delivering Value and
Organizational Learning Results
and Agility
Focus on Success
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Baldrige Award Evaluation Process
Examiner review of application to identify strengths and
opportunities for improvement and preliminary scores
Consensus review by examiner teams to reach agreement
on comments and scores
Judges’ selection of site-visited organizations
Judges’ recommendation of recipients
Feedback reports finalized for all applicants
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Scoring and Evaluation
Approach - the methods the company uses to achieve
the requirements addressed in each category
Deployment - the extent to which the approaches are
applied to all requirements of the item
Results - the outcomes and effects in achieving the
purposes given in the item
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Approach
Appropriateness of methods
Effectiveness of use of the methods. Degree to
which the approach is
Repeatable, integrated, and consistently applied
Embodies evaluation/improvement/learning cycles
Based on reliable information and data
Alignment with organizational needs
Evidence of innovation
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Deployment
Use of the approach in addressing item
requirements relevant to the organization;
Use of the approach by all appropriate work
units
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Results
Current performance
Performance relative to appropriate
comparisons and benchmarks
Rate, breadth, and importance of performance
improvements
Linkage of results measures to key customer,
market, process, and action plan performance
requirements
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Impacts of the Baldrige Program
Benefit/cost ratio on investment of 820:1
Changed the way organizations around the world manage
themselves
Use of self-assessment
State, local, and national awards around the world
Author Jim Collins: “I see the Baldrige process as a powerful set of
mechanisms for disciplined people engaged in disciplined thought
and taking disciplined action to create great organizations that
produce exceptional results.”
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International Quality Award Programs
Deming Prize
European Quality Award
Canadian Awards for Business Excellence
Australian Business Excellence Award
Chinese National Quality Award
Many others!
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Deming Prize
Instituted 1951 by Union of Japanese Scientists and
Engineers (JUSE)
Several categories including prizes for individuals,
factories, small companies, and Deming application
prize
American company winners include Florida Power &
Light and AT&T Power Systems Division
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Quality Management Systems
A quality management system (QMS) can be
considered a mechanism for managing and
continuously improving core processes to
“achieve maximum customer the lowest
overall cost to the organization.”
A quality manual serves as a permanent
reference for implementing and maintaining
the system.
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ISO 9000:2000
Quality system standards adopted by the International
Organization for Standardization in 1987; revised in
1994 and 2000 with minor updates in other years.
Technical specifications and criteria to be used as
rules, guidelines, or definitions of characteristics to
ensure that materials, products, processes, and
services are fit for their purpose.
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Rationale for ISO 9000
ISO 9000 defines quality system standards, based
on the premise that certain generic characteristics
of management practices can be standardized,
and that a well-designed, well-implemented, and
carefully managed quality system provides
confidence that the out-puts will meet customer
expectations and requirements.
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Objectives of ISO Standards (1 of 2)
Achieve, maintain, and continuously improve product
quality
Improve quality of operations to continually meet
customers’ and stakeholders’ needs
Provide confidence to internal management and other
employees that quality requirements are being fulfilled
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Objectives of ISO Standards (2 of 2)
Provide confidence to customers and other
stakeholders that quality requirements are
being achieved
Provide confidence that quality system
requirements are fulfilled
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Structure of ISO 9000 Standards
The standards consist of three documents
ISO 9000:2005— Fundamentals and
vocabulary
ISO 9001:2008— Requirements
ISO 9004:2009— Guidance for
performance improvement
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Benefits of ISO 9000
1. It provides discipline. The ISO 9001 requirement for audits forces an
organization to review its quality system on a routine basis. If it fails to
2. It contains the basics of a good quality system, such as understanding
customer requirements, ensuring the ability to meet them, ensuring
people resources capable of doing the work that affects quality, ensuring
physical resources and support services needed to meet product
requirements, and ensuring that problems are identified and corrected.
3. It offers a marketing program. ISO certified organizations can use
their status to differentiate themselves in the eyes of customers.
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Six Sigma
Six Sigma – a business improvement approach that seeks
to find and eliminate causes of defects and errors in
manufacturing and service processes by focusing on
outputs that are critical to customers and a clear
financial return for the organization.
Based on a statistical measure that equates to 3.4 or
fewer errors or defects per million opportunities
Pioneered by Motorola in the mid-1980s and
popularized by the success of General Electric
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Key Concepts of Six Sigma
(1 of 2)
Think in terms of key business processes, customer
requirements, and overall strategic objectives.
Focus on corporate sponsors responsible for
championing projects, support team activities, help to
overcome resistance to change, and obtaining resources.
Emphasize such quantifiable measures as defects per
million opportunities (dpmo) that can be applied to all
parts of an organization
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Key Concepts of Six Sigma
(2 of 2)
Ensure that appropriate metrics are identified early and focus on
business results, thereby providing incentives and accountability.
Provide extensive training followed by project team deployment
Create highly qualified process improvement experts (“green
belts,” “black belts,” and “master black belts”) who can apply
improvement tools and lead teams.
Set stretch objectives for improvement.
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Six Sigma as a Quality Framework
(1 of 2)
TQ is based largely on worker empowerment and
teams; Six Sigma is owned by business leader
champions.
TQ activities generally occur within a function,
process, or individual workplace; Six Sigma
projects are truly cross-functional.
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Six Sigma as a Quality Framework
(2 of 2)
TQ training is generally limited to simple improvement
tools and concepts; Six Sigma focuses on a more
rigorous and advanced set of statistical methods and a
structured problem-solving methodology DMAIC—
define, measure, analyze, improve, and control.
TQ is focused on improvement with little financial
accountability; Six Sigma requires a verifiable return on
investment and focus on the bottom line.
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Six Sigma in Services
The culture of services is usually less scientific and service
employees typically do not think in terms of processes,
measurements, and data. The processes are often invisible,
complex, and not well defined or well documented.
The work typically requires considerable human
intervention, such as customer interaction, underwriting
or approval decisions, or manual report generation.
Service measures differ from manufacturing: accuracy,
cycle time, cost, customer satisfaction
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Comparing Baldrige, ISO 9000,
and Six Sigma
Baldrige focuses on performance excellence for the entire
organization in an overall management framework, identifying
and tracking important organizational results
ISO focuses on product and service conformity for guaranteeing
equity in the marketplace and concentrates on fixing quality
system problems and product and service nonconformities
Six Sigma concentrates on measuring product quality and
driving process improvement and cost savings throughout the
organization.
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