From Product Quality to Organization Quality

Transcription

1 From Product Quality to Organization Quality Dr. Isaac Sheps Chief Executive Officer, Carlsberg- UK 140 Bridge Str. Nothampton, NN1 1PZ United Kingdom Abstract Since 1995 the American Society of Quality (ASQ)is conducting yearly studies on the future of Quality. The last study published recently concludes more explicitly then in the past that the future of Quality is moving from the single product quality dimension to a multi dimensional discipline which has to encompass the whole universe an organization is operating in and the different challenges it meets to satisfy the needs and expectations of all interested parties such as the society and its employees. In Nov 2009 the new ISO 9004 was published reflecting this new dimension as a basis for a sustainable success of an organization. (the author of this paper was a member of the ISO TC 176 working group that developed this new standard ) This move from Product Quality to Organization Quality is discussed in this paper through the development of the Quality definition, defining the new term of Organization Quality. Key Words Interested Parties Organization Quality Introduction Quality and Productivity, trace thousand of years back in the history of mankind. Quality emerged from the need to distinguish between good and bad nutrition, continuing as a basic need in the process of goods exchange as it emerged. Productivity although having more meaning of quantity output was and remained the basis for differentiation between wealthier societies to less wealthy ones. From the basics of agricultural productivity, or yield (a term that is used in today s quality management theories for good outputs), to the efficiency and in the last century effectiveness of craftsmen as individuals and manufacturing organizations as they developed, productivity became one of the basic performance indicator.

2 True, that the concept of effectiveness which was the missing building block in understanding and differentiating productivity from efficiency developed only in the last 50 years as Taylor s socio-technical theory for industrial efficiency, and worker s motivation started to fade out. Not mentioning the Bible as a source for quality examples, we can start the quality theory history with the Hamurabi Laws dated 1700 B.C. and ending with the ISO 9000 family of standards first published in 1994 and the more recent national excellence awards. The main Quality discipline developments started after the second world war leaded by the well known Quality "Gurus" : Juran, Deming, Crosby Feigenbaum, etc. But the truth is that the real success of quality started only when it was defined as: meeting customers needs and expectations. Moving Quality from the desk of the engineers to the customers turned it into a real competitive edge and therefore become a must on the managers agenda. As the competitive factors developed organizations faced the need to address the needs and expectations of all their interested parties and not just their customer's; to do so organizations have to move from Product Quality to Organization Quality. The development of the Quality definition We can t improve something we don t understand or we can t clearly define, as said by David A. Garvin : If quality is to be managed it must first be understood. Therefore the definition of quality is the first step in the journey of quality improvement. We could look up for Quality in dictionaries to find for example in Webster s: Quality = that which makes something what it is; characteristic; basic nature; kind; the degree of excellence of a thing; superiority, or we could refer to the philosophical definition of Aristo (300 B.C.) : Quality = The difference between things. Of course, such descriptive explanations for the word quality are useful only in understanding how should that word be used in a certain language, but are far from useful in grabbing the concept of quality in the business environment. The quality definitions we will elaborate in this chapter are based on the understanding of the role of this term in the business environment referring to the way and reasons it changed and developed along with the Quality theory in the last century. We should also be aware, as we will explicitly explain that quality of a product and quality of a system producing or providing that product are two distinct outcomes and therefore defined in different ways. The definition of quality evolved and changed in the last century years as an outcome of the changes in understanding the role of quality in gaining market share and as such it followed the development of the competitive factors as elaborated further on. As competition developed and quality became one of the competitiveness factors, producers, and later on, service providers too, had to change their focus from the engineering design board to the customers minds. Doing so they found out that the customer judges quality referred to his demands, needs, expectations, views of life and, in the last years, even by his social values. This new understanding is the basis for the new definitions of quality.

3 As described in Fig.1 below, it all started with defining quality as conformance to instructions meaning that no matter the future use of the product and/or the customers needs and expectations, quality was measured by answering the simple question: did the worker or did he not performed as instructed. In 1910 such definition was more than fit with the industrialization process, people having to change their behavior from craftsmen or non professional workers to industrial behavior. This is also the period in which Taylor s socio-technical theories flourished as enforcement to the same concept; if you do what you were told you will be awarded and if not, punished Quality = Conformance to instructions Quality = Conformance to standards Quality = Conformance to use Quality = Conformance to demands Quality = Conformance to needs Quality = Conformance to expectations Quality = Conformance to views of life Quality = Conformance to social values Fig. 1 - The Quality Evolution As presented in Fig 2 below competitive factors continuously developed in the last 50 years reflecting the developments in the needs and expectations of customers adding about every 10 years a new competitive dimension.for example in the 90 s the awareness of customers to environment protection raised and in the 2000 s the awareness to social responsibility joined the competitive factors list as presented in the following figure.

4 SOCIAL ENVIRONMENT ENVIRONMENT FLEXIBILITY AGILE AGILE QUALITY QUALITY QUALITY QUALITY EFFICIENCY EFFICIENCY EFFICIENCY EFFICIENCY EFFICIENCY INNOVATION INNOVATION INNOVATION INNOVATION INNOVATION Fig. 2-The Development of Competitive Factors The analysis of the competitive factors above is the basis for our understanding that we have to differ quality of products/services from the quality of the system/organization producing/providing them. Although all products/services have to meets all competitive factors we do understand that some of them are influenced not just by the product or service provided but also by the system/process producing/providing them and all other supporting functions of an organization. The quality of a product as perceived by its user was defined by Garvin as having 8 dimensions: 1. Performance 5. Durability 2. Features 6. Serviceability 3. Reliability 7. Aesthetics 4. Conformance 8. Perceived quality Each category is self-contained and distinct, as a product/service can be ranked high on one dimension while being low on another. However, in many cases the dimensions are interrelated. Tradeoffs among the various dimensions must be faced sometime, but all should be viewed from the customer s point of view. We can find very similar dimensions defined as product attributes by marketing professionals (e.g. Kotler). The New Quality In markets which are still in development, from the point of view of customers needs, the above definitions and quality understanding still prevails, but in most of the developed markets, those understanding aren t enough any more to compete, as so well

5 expressed by Horst Schultze, president and CEO of the Ritz-Carlton Hotel Company when in 1992 they won the Malcolm Baldrige National Quality Award (U.S.A.): Unless you have 100 % customer satisfaction and I don t mean that they are just satisfied, I mean that they are excited about what you are doing you have to improve. A new dimension had to be added. Some 15 years ago Prof. Norikai Kano developed that new dimension and called it Attractive Quality or Charming Quality. Kano s model (see Fig.3) is based on the concept of defining 3 main types of quality: 1. Must be Quality a quality attribute that if not existing in a product or if not well performing it will cause to a non satisfied customer, but when that attribute exists it won t add to the customers satisfaction. For example if a car has bad brakes the customer will be for sure unsatisfied, but when they exist it doesn t add to his satisfaction as this is the way it should be in any car. 2. One dimensional Quality - a quality attribute which by each increase of it the customer s satisfaction increases too. As example, with each improvement in the fuel consumption of our car our satisfaction will increase. 3. Attractive/Charming Quality - a quality attribute which doesn t cause dissatisfaction when not existing but when it exists it surprises the customer and ads to his satisfaction. The customer is delighted, charmed or, in other words, attracted to that product. As example, a car s air condition system that spreads pleasant odors in the car. Charmed Custom er C harm ing Q u a lity Satisfied Client Non- Satisfied Customer In s u ffic ie n t Quality R e g u la r Q u a lity S u ffic ie n t Q u a lity Charm ing Quality Fig.3 Attractive/Charming Quality of Prof. Kano Following Prof. Kano s theory there are 3 ways to create new products with inherent attractive quality: 1. Technology developing a new technology and adding it to the existing product/service. 2. Inspiration and Genuity depending on genius who will come up with original ideas.

6 3. Marketing research learning by marketing research methods about the product/service environment, the ways it is used and the values of it to the customers. The first two ways are the most popular ones, but Prof. Kano emphasized the need to use the third way as technology and genius are not always available while by understanding the product s usage environment a breakthrough can be easily reached. As a conclusion, we can state that, the first step in quality improvement is to understand that quality means to meet the customers needs, expectations, and values. To do that we must thoroughly research the customers environment and ways of judging and perceiving our product/service attributes, done that we can then reach beyond usual quality to achieve charming/attractive quality. It is encouraging to note that in a survey conducted in 2004 covering 600 top executives in four U.S.A markets, manufacturing, service, healthcare and education, conducted by the American Society of Quality when those managers were asked to define Quality the most common response was: customer satisfaction and other common answers included - Meeting or exceeding customer expectations through excellence in products and services; - Getting the product done right the first time; - Producing the highest quality product with the least expense company; - Implementing an ongoing process toward perfection (continuous improvement) within the organization; - Setting a goal of zero defects and zero rejects. Quality of an Organization Since 1995 the American Society of Quality (ASQ)is conducting yearly studies on the future of Quality. The last study published recently concludes more explicitly then in the past that the future of Quality is moving from the single product quality dimension to a multi dimensional discipline which has to encompass the whole universe an organization is operating in and the different challenges it meets to satisfy the needs and expectations of all its customers. When applying the above on the organization level, some difficulties are met in the process of understanding the expectations and needs of the customer. The difficulties origin from a preliminary step that is often overlooked by organizations. This step is the one of clearly defining the organization s customers. How could we understand and define customers needs and expectations if we have no clear idea who they are? As an example, let s ask ourselves who are the customers of a school? The students, the teachers, the students parents, the community, part of those all of them? Only after clearly defining who are our organization customers we can proceed to define their needs and expectation which, of course, will differ from one type of customer to the other.

7 The group of customers of an organization including the customers of its products/services are usually referred to as the organizations stakeholders or its interested parties. The concept of interested parties is used also in the ISO 9000 Quality Management family of standards and is defined in paragraph of ISO-9000 : 2005 as follows : "interested party - person or group having an interest in the performance or success of an organization. Example customers, owners, people in an organization, suppliers, bankers, unions, partners or society. NOTE A group can comprise an organization, a part thereof, or more than one organization." In a more descriptive language interested parties are described in ISO 9004 : 2009 (01/11/2009) as : "Interested parties are individuals and other entities that add value to the organization, or are otherwise interested in, or affected by, the activities of the organization." As a general model (see Fig 4) we can define 5 interested parties in each organization, Customers(Internal and External), Shareholders/Owners, Employees, Society, Suppliers/Partners, each of them having different needs and expectations and therefore having a different way to define the Quality of the organization : Of course interested parties differ between organizations, industries, nations, cultures and may change over time. Interested P ti Partners/Supplie Society Employees Shareholders Customers Sustainable Partnership Environment Management & Social Responsibility Quality of Work Life Control or autonomy Recognition Progress and development External rewards Decent working conditions Dignity Sustainable Growth and Profitability Quality of Product and Service ISO ISO OHSAS ISO 9001 ISO Fig.4 Interested Parties expectations from the organization and examples of related Management Systems Standards

8 In the above model we have examples of the main needs and expectations of each of the five interested parties. We also added to the model examples of international management standards which could assist an organization to meet the needs and expectations of its interested parties (ISO is not published yet). Actually the new ISO 9004: 2009 published in Nov 2009 is a guidance for companies which wish to implement the interested parties model to achieve sustainable success. Now that we have defined the customers of an organization we can easily proceed and define Organization Quality. To do so lets follow the following logic : If : Product Quality = to meet the needs and expectations of the customer, And : The customers of an organization = all interested parties Then : Organization Quality = meeting the needs and expectations of all interested parties. As some of the needs and expectations of the different parties may be in conflict and change constantly we should add the above definition the need of an organization to find the right balance between those needs and expectations. Therefore the complete definition should read: Organization Quality = meeting the needs and expectations of all interested parties in a balanced way over the long term. As an example, the society as one of the interested parties views the organization s quality through its behavior toward environment management and in the last years also its social behavior. That concept of organization s responsibility for the society was titled in recent years as Corporate Social Responsibility (CSR) or Corporate Citizenship and basically means that organizations shouldn t only produce quality products but they should also ensure that while doing so, they don t harm the environment or social codes of the society in which they operate,, as expressed by William Clay Ford Jr: I believe the distinction between a good company and a great one is this; A good company delivers excellent products and services; A great one delivers excellent products and services and strives to make the world a better place An organizations Quality isn't perceived,any more, by its customers solely through the way they perceive its products and/or services but through the way the organization meets the needs and expectations of all its interested parties. Following this concept and the new ISO 9004 model theopening statement in our company Quality Policy is as follows :

9 "Our understanding at Carlsberg UK is that sustainable success is a result of an organization s ability to achieve its objectives in the long term, with balanced consideration of the needs and expectations of all its interested parties customers, investors/shareholders, employees, suppliers, partners, and society." Looking at customer satisfaction following Prof. Kano's model ( Fig 5) we can state as an analogy that to meet the needs and expectations of customers/consumers only means for an organization to meet only the hygienic requirements. Fig.5 Relationship between various factors and customer satisfaction following Prof. Kano's model (ISO CD ) Those requirements of product quality are in today's competitive world a prerequisite, they are expected to be fulfilled and their fulfilment only avoids dissatisfaction but does not cause satisfaction. For an organization to be competitive and have a sustainable success it has to go beyond that and follow the factors defined as motivators and hidden opportunities in the above model, which on the organization level mean to fulfil needs and expectations of all its interested parties. Conclusion Following the first substantial change of the Quality discipline when it moved from the engineers desks to the customers perception field it is now is moving away from the single product quality dimension to the multi dimensional arena of the organization quality. Successful organizations have realized that sustainable success is a result of an organization s ability to achieve its objectives in the long term, with balanced consideration of the needs and expectations of all its interested parties customers, investors/shareholders, employees, suppliers, partners, and society.

10 Relating to all interested parties as customers which have different needs and expectations to be met in a balanced way, is the basis of the Quality of an Organization. To achieve Organization Quality organizations need to change their management systems and their processes. They will need inevitably to integrate all existing and new management systems, (such as, Quality Management System, Environment Management System, Safety and Health Management System etc), into one Integrated Management System having as an objective to reduce the risk of a negative impact on the organizations objective due to non conformance to needs and expectations of one or more of its interested parties. It goes without saying that the role of the Quality Manager will have to change too, to enable to embrace the interested parties' model. References 1. Garvin David A., Managing Quality, the Strategic and Competitive Edge, The Free Press, New York, ISO family of standards. 3. ISO family of standards. 4. Juran J.M., A History of Managing of Quality, ASQC Quality Press, Wisconsin, U.S.A., Kano. N., Business Strategies for the 21st Century and Attractive Quality Creation:, ASQC Annual Quality Convention, Yokohama, Japan, Sheps I. T.Q.p.M. Total Quality & Productivity Management From Theory to Practice, Proceedings of International Conference on Economic Cybernetics, Bucharest, Sheps I. QMS in Future- ISO TC 176 Perspective, Proceedings of Fourth International Working Conference " TQM Advanced and Intelligent Approaches", Belgrade (Serbia) 2007 and Proceedings of the 15th Industrial Engineering and Management Conference, Tel-Aviv, Sheps I. and Golijanin D. Would Sir Ernest Shackleton, Maybe The Greatest Leader Of All Times, Pass The Requirements of the ISO 9004 Standard?, Proceedings of the International Convention On Quality 2008, Belgrade, Sheps I. and Zonneshain A. Design for Sustainability The Challenge for Systems Engineering, Proceedings of 18th Annual International INCOSE Symposium, June 2008, Utrecht, The Nederland s. 10. Smith Larry R., The Triple Bottom Top Line, Quality Progress, Feb., Weiler Greg, What Do CEOs Think About Quality?, Quality Progress, April 2004.