Chapter 2

Total Quality in
Organizations

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Growth of Modern Quality
Management

Service Performance
quality excellence
Improved
product designs

Manufacturing
quality

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Key Idea

As consumer expectations have risen, a

focus on quality has permeated other key
sectors of the economy, most notably
health care, education, not-for-profits,
and government.

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 Systems Thinking
 A system is a set of functions or activities
within an organization that work together for
the aim of the organization.
 Subsystems of an organization are linked
together as internal customers and
suppliers.
 A systems perspective acknowledges the
importance of the interactions of
subsystems, not the actions of them
individually.

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Key Idea

Successful management relies on a

systems perspective, one of the most
important elements of total quality.

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Manufacturing Systems (1 of 2)
 Marketing and sales
 Product design and engineering
 Purchasing and receiving
 Production planning and scheduling
 Manufacturing and assembly
 Tool engineering

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Manufacturing Systems (2 of 2)
 Industrial engineering and process
design
 Finished goods inspection and test
 Packaging, shipping, and
warehousing
 Installation and service

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Key Idea

Traditional quality assurance systems in

manufacturing focus primarily on technical
issues such as equipment reliability,
inspection, defect measurement, and
process control.

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Relationships in a Typical
Manufacturing System (Fig.2.1)

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Quality in Marketing

Marketing and sales personnel are

responsible for determining the needs
and expectations of consumers.

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Quality in Product
Design

Product design and engineering functions

develop technical specifications for
products and production processes to
meet the requirements determined by the
marketing function.

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Quality in Purchasing

A purchasing agent should not simply be

responsible for low-cost procurement, but
should maintain a clear focus on the
quality of purchased goods and materials.

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Quality in Production
Planning & Scheduling

Poor quality often results from time

pressures caused by insufficient planning
and scheduling.

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Quality in Manufacturing
and Assembly

Both technology and people are essential

to high-quality manufacturing.

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Quality in Production
Planning & Scheduling

Poor quality often results from time

pressures caused by insufficient planning
and scheduling.

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Quality in Process
Design

Manufacturing processes must be

capable of producing output that meets
specifications consistently.

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Quality in Finished Goods
Inspection and Testing

The purposes of final product inspection

are to judge the quality of manufacturing,
to discover and help to resolve production
problems that may arise, and to ensure
that no defective items reach the customer.

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Quality in Installation and
Service

Service after the sale is one of the most

important factors in establishing customer
perception of quality and customer
loyalty.

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Quality in Business Support
Functions for Manufacturing
 Finance and accounting
 Quality assurance
 Legal services

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Key Idea

Every manager is responsible for

studying and improving the quality of the
process for which he or she is
responsible; thus, every manager is a
quality manager.

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Quality in Services
 Service is defined as “any primary or
complementary activity that does not
directly produce a physical product – that
is, the non-goods part of the transaction
between buyer (customer) and seller
(provider).”

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Key Idea

The American Management Association

estimates that the average company
loses as many as 35 percent of its
customers each year, and that about two-
thirds of these are lost because of poor
customer service.

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Critical Differences Between
Service and Manufacturing (1 of 2)

 Customer needs and performance

standards are more difficult to identify
and measure
 Services requires a higher degree of
customization
 Output is intangible

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Critical Differences Between
Service and Manufacturing (2 of 2)

 Services are produced and consumed

simultaneously
 Customers are often involved in actual
process
 Services are more labor-intensive than
manufacturing
 Services handle large numbers of
transactions

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Key Idea

These differences make it difficult for

many service organizations to apply total
quality principles, and foster misguided
perceptions that quality management
cannot be effectively accomplished in
services.

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Components of Service
System Quality
 Employees
 Information technology

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Key Idea

Researchers have repeatedly

demonstrated that when service employee
job satisfaction is high, customer
satisfaction is high, and that when job
satisfaction is low, customer satisfaction is
low.

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Key Idea

Information technology is essential for

quality in modern service organizations
because of the high volumes of information
they must process and because customers
demand service at ever-increasing speeds.

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Quality in Health Care
 Joint Commission on Accreditation of
Healthcare Organizations (JCAHO)
 National Committee for Quality
Assurance (NCQA)
 Institute for Healthcare Improvement
(IHI)
 1999 expansion of the Baldrige Award
to nonprofit health care organizations

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Quality Issues in Health Care
 Avoidable errors
 Underutilization of services
 Overuse of services
 Variation in services

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Key Idea

Although the national health care system

as a whole may need a sweeping
overhaul, many individual providers have
turned toward quality as a means of
achieving better performance and
customer satisfaction.

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Quality in Education

 Koalaty Kid
 Activeinvolvement of whole school
community
 Committed leadership

 System for continuous improvement

 Environment that celebrates success

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Quality in Higher Education

Business plays an important role in

fostering quality improvement efforts in
higher education by transferring
knowledge and expertise on quality
processes and implementation practices.

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Academic Quality
Improvement Project (AQIP)
AQIP criteria focuses on institutional practices for
helping students learn, accomplishing other
distinct objectives, understanding student and
stakeholder needs, valuing people, leading and
communicating, supporting institutional
operations, measuring effectiveness, planning
continuous improvement, and building
collaborative relationships—all of which are key
elements of TQ.

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Quality in Small Business and
Not-for-Profits
 Slow to adopt quality approaches
 General lack of understanding and
knowledge about quality
 Focus on sales and market growth, cash

flow, and routine fire fighting

 Lack of resources for formal quality

systems

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Key Idea

Perhaps the most important factor in

successful quality initiatives in small
businesses is the recognition by the CEO
or president that a quality focus can be
beneficial and lead to achieving
organizational goals.

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Quality in the Public Sector
 Quality in the Federal Government
 FederalQuality Institute
 President’s Quality Award

 State and Local Quality Efforts

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Key Idea

Quality concepts and principles are

universal and can be applied in all types
of organizations. The difficulty, of
course, is developing an infrastructure
to make it happen and the discipline to
sustain efforts over time.

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