Archive for the ‘The meaning of quality’ Category

How to define a problem

February 3, 2014

Problems tend to be defined in terms of the pain felt by the organization. Consequently the solutions may relieve the pain or embarrassment only to increase the hidden costs of nonconformity. For example, in order to reduce production costs we must have longer production runs thereby generating expensive inventory.

But system thinking and customer focus can change this for the benefit of customers and the organization’s other stakeholders.

Customer-focused-system-thinking organizations define their problems by describing how they as systems will fail or did fail to fulfill customer needs.

Their problem definitions comprise three parts:

A. The customers’ requirements;
B. The evidence of the system not being able to fulfill customers’ timeliness, affordability and performance requirements (perhaps including the PONC*); and
C. The nature of the problem to be solved.

Example:

A. Customers’ requirements fluctuate at short notice;
B. System resists changing its processes resulting in loss of business and customer loyalty (PONC approx $100k pm); and
C. Unable to fulfill frequent changes in customer requirements due to long lead times.

Note that it is better to blame the system than a person.

And, of course, the problem may be an opportunity.

In this case the system’s problem solving, or problem dissolving, processes result in the actions necessary to change their system. The changes may include mistake-proofed short-run processes that respond fast enough to satisfy customer demand for different products while continuing to deliver quality and value.

You can also define your problems in terms of how your system fails to fulfill customer needs. Not only your customers will benefit, you’ll also create more successful stakeholders.

Is quality the cheapest option?

November 1, 2013

Some of us instinctively think quality products should cost more. But by removing the costs of nonconformity, quality products actually cost less to produce. Nonconformity, by the way, is a failure to meet the requirements including the requirements of customers. Some managers pay the price of nonconformity instead of making quality a reality for employees and customers.

At the normal 2 or 3 sigma, the price of nonconformity is 40% of turnover. Many times the level of profit for most organizations. Leaders may not need to measure these avoidable costs to eliminate the causes of failures to meet requirements from their systems. They may even help their suppliers to remove these avoidable costs too.

But more product verification will not help because it is too late. Inspection or testing merely sorts bad product from good product. Therefore, verification of the product is part of the price paid for failing to design capable processes. Capable processes are validated to result in products that need no inspection or testing.

Accordingly, we work to make sure our organizational management systems help employees and suppliers to add value for each customer. Adding value faster while preventing loss sooner. Having prevented nonconformity in our goods, we should also design the service part of our products so we avoid paying the price of service nonconformity too.

Leaders, who choose to avoid paying the price of nonconformity, invest in their process-based organizational management systems so more work is right the first time. They discover that buying and delivering quality costs a lot less than the alternatives. What’s more, in markets, where quality rarely is delivered, customers may be willing to pay a little more to have their requirements fulfilled exactly.

Even so, “quality is free” because it is cheaper to buy and deliver quality than not. Here we see the cost of quality at its lowest when the product exactly meets the requirements of the customer:

Earlier versions of these cost of quality curves mistakenly showed costs tending to infinity with perfection. The old curves showed perfection is not quality. Thankfully, in 1999, these curves were corrected to accord with reality and Crosby’s 1979 definition of quality. Of course, by then Taguchi had also showed that any deviation from the requirement increases costs to society.

In summary, managers of quality prevent nonconforming products to assure quality and satisfy customers. They govern their organizational management systems for creating more successful customers by making and keeping more competitive promises. Tomorrow’s managers of quality will also be focused on sustainability for all by creating more successful stakeholders.

As we can see, designing and producing quality remains the cheapest sustainable option.

Serving the People to Lead the Organization

May 26, 2013

Live and work to serve the people. This is the vital but rarely mentioned part of any effective management system. Servant leaders live and work this way. They foster a community that shares commitment to the needs of others. Indeed, servant leaders are selfless. They put themselves last. They put first the interests of the community, so their organization can make a positive difference. Next, they put the well-being and interests of the people who rely on them. Last, and last all the time, they consider their own interests.

What are the other attributes of the leaders who serve to lead?

Servant leaders understand the power of their organization as a system. They take responsibility for their system. They ensure their organizational management system is responsive to the needs of stakeholders. They consider the needs of employees, customers, suppliers, owners and others affected by the organization. A servant leader does not blame others for the poor performance of their system. They make followers less fearful of speaking up; however unpopular the truth may be.

Servant leaders ensure departments collaborate effectively. Their management system is cross-functional or process-based. Such systems enable organizational learning of future opportunities. Such systems also reduce the associated adverse risks. Servant leaders persuade, monitor and coach users to show respect for the requirements. They also show their respect for the organizational management system. They ensure it is improved and changed as necessary to enable the organization to improve its performance for stakeholders.

Servant leaders know their strengths and weaknesses. They understand that their team members have innate strengths and weaknesses too. They ensure process teams blend the different strengths of individuals for shared success. They nurture the personal, professional and spiritual growth of individual team members so individuals can make the best use of their talents.

Servant leaders are able communicators. Their systems gather data. After data analysis, information helps with effective decisions. Servant leaders actively listen and encourage active listening by decision-makers. Servant leaders also observe and seek to understand the needs of any silent stakeholders.

Servant leaders see beyond the limits of their organization with respect for customer needs and the needs of other stakeholders. Servant leaders focus on long-term organizational change. They develop future leaders so their organization continues to enable success for the stakeholders.

Servant leaders exemplify, align and share the behaviors, ethics and values of their organization. Their inspirational organizational culture creates and sustains a healthy work environment. It is integral to the holistic management system that is conducive to quality in everything the organization does.

Is defect the same as nonconformity?

March 9, 2013

Defects adversely affect the functionality of the product; indeed the defective product may be dangerous. A product’s nonconformity is a failure of a characteristic to meet a requirement. Defective products are therefore more serious than other types of product nonconformity. The gap between the two (defect and nonconformity) is wasteful but a margin of safety is necessary because designers and customers seek assurance of safety, reliability and durability but both have limited information about the actual performance of materials, structures and subsystems in a wide variety of operating conditions.

Surely, because of these unknowns, we have to treat product nonconformity as if it were a defect? Therefore, defect and nonconformity may differ but we treat them the same way in that they must be corrected and that we should learn from them to improve our management systems.

In the continuum from an outcome being defective to perfect, we could usefully think along the following lines:

1. Defective – outcomes may injure or kill someone
2. Nonconforming – outcomes fail to meet a requirement
3. Quality – outcomes fulfill customer requirements
4. Excellent – outcomes exceed the needs of customers
5. Perfect – an ideal many choose to pursue

Meanwhile it is reasonable to expect designers to continue to improve their processes and product specifications based on their understanding of the actual performance of materials, structures and subsystems. This knowledge can be used to close the gap between defect and nonconformity.

Yes, designers must also address service quality or the customer’s feelings. Customer feelings are among the needs translated by designers into product requirements. Consequently, they appear in the product specification not as customer feelings but as product characteristics. We may prefer our tea served with love. The designer knows this but the service specification remains silent on this point so as not to sully the love characteristic of the service by specifying “serve with love”. This is why training is the key to excellent customer service. Designing the service part of the product remains an intriguing area of research. Of course, we continually learn more about product design and delivery by listening to the customer’s perceptions about how well their needs were fulfilled.

Differentiating clearly between an acceptance criterion (a requirement) and a blemish or deviation from perfection remains a difficult quest but we are on the other side of that continuum when we are talking about the difference between a defect and a nonconformity. From an engineering or design point of view, specifying the requirements that enable everyone to uniformly differentiate between 1, 2 and 3 are seen as the most important. Between 3 and 4 we have a point where customer needs become their new requirements. Some companies, such as Apple, anticipate or stimulate this transition point from hidden needs to requirements that drive customers to buy their products better than most. This may be due to the designers being very close to, if not the same as, the more futuristic customers.

What is the value of quality?

January 4, 2013

Some organizations survive by reducing their price of nonconformity from 40% to 20% of revenue. These organizations inspect and audit to stop bad quality from reaching the customer. Reducing the price of nonconformity (PONC) is their laudable quest. If the organization served no customers or delivered no product, PONC would be zero! Quality management therefore requires another metric.

The term “value of quality” makes us think about this. Customers pay for whatever they value. They buy when they are confident that what they buy will fulfill their needs. These needs include affordability. Therefore, we manage quality to deliver value. This includes preventing loss.

Organizations prosper by ensuring they add value faster than their competitors do. They ensure their organizational management systems enable employees to add value quickly. Organizations apply this thinking (summarized as $ per millisecond) when developing, using and optimizing their management systems to deliver more value even faster. Consequently, they can earn a lot more with services and products that are highly valued by more customers.

Leading organizations design, make and deliver services and products that exactly fulfill the needs of their intended customers. They avoid waste in hitting this target. They learn of new needs and new ways to add value – faster and perpetually. They know that sorting good product from bad (aka inspection) slows the velocity of adding value. They know that falling short of customer needs wastes valuable resources. They know that exceeding customer needs, in terms of what they value, increases costs without reward. They may reach a design dilemma: features that do not fulfill customer needs are a waste but delivering more features than customers initially say they require may expose needs not fulfilled by competitors.

The product and its outcomes may include the customers’ wider perceptions of value. Customers used not to care how well their favorite company treated its suppliers or paid its taxes. Increasingly even the most loyal customers care enough about any suffering in how the product is made. Imagine destroying a valuable brand by misusing it as a tax dodge. Customers and employees care about global organizations paying taxes where they work and live. They value social responsibility enough to influence their buying decisions and their career choices.

Hence, quality includes value as perceived by our customers as well as services and products free of nonconformity. Organizations develop, use and improve their management systems to enable employees to add value faster while preventing loss sooner.

Playing our part in value networks

December 22, 2012

Stakeholders may dream of having their requirements satisfied by the organizations that affect them. Some politicians and NGOs say the stakeholders have the right to have their requirements fulfilled. Others say that stakeholders, who can, should earn that right. It is intensely political as the forces for “equal opportunities” fight the forces for “equal outcomes”.

Organizations can understand themselves as systems and then develop their process-based organizational management systems to enable workers to add value faster and prevent loss sooner to benefit all stakeholders. They reward employees for working to benefit customers so employees can look after their families, their communities and themselves.

Businesses network and these networks comprise many different organizations so they are complex. Members may organize themselves to become a value network. Organizations are the nodes in the value network. Each node interfaces with other nodes that use contracts to govern their relationships as customers and as suppliers. Building, supporting and running a value network requires transparent, voluntary, consensus standards. Some of these standards specify more reliable management systems. Organizations develop and use their management systems to govern their work. They may even show they are ethical and competent enough to join and remain members of the value network. Once a supplier promises a standard, customers may use contracts to enforce even the voluntary standards. Organizations can and do impose strict selection and re-selection criteria on the members of their value networks.

Of course, the leaders and managers of the value networks and the organizations that comprise these networks should personally be transparent and accountable. However, to encourage risk taking to generate wealth, the individual decision makers are largely protected by their organization becoming the person accountable in the eyes of the law.

This separation of the organization from the people that run it creates mistrust. How then are customers confident enough to do business? Personal relationships count for a lot in making and accepting promises. The organizational management system helps salespeople and sales processes to make and keep competitive promises for their customers.

Customers and other stakeholders rely more and more on the law to protect them from poor decisions and broken promises. Organizations can see the rules are changing and want to stay ahead by broadening their duty of care to include customers, employees and communities. Indeed, the 2006 Companies Act in the UK reminds company directors of these wider duties.

Now we see companies climbing on the long bandwagon named “Sustainability for ALL Through Being Socially Responsible in Everything We Do”. Even if it were available, ISO 26000 certification would not “prove” social responsibility or sustainability credentials.

Instead, organizations have to perform to prove their heads, hearts, decisions and actions are socially responsible to their stakeholders. Stakeholder trust may then grow from websites that truth-check the social responsibility and sustainability claims of any organization. Indeed, stakeholders may fund these websites directly or indirectly.

Instead of publishing socially irresponsible versions of “greenwash”, may we see more leadership by global companies benefiting their stakeholders wherever they operate?

Trends in quality management

May 17, 2012

Quality management is evolving to deliver more successful customers.

In other words we are moving on to consider the outcomes of the products of our organizational management systems.

And the role of Quality Manager is changing to that of System Manager so he or she helps the leaders to ensure their organizational management system helps everyone to deliver quality.

Is a Lexus a higher quality car than a Honda?

April 19, 2012

Affordability is a key customer requirement that separates groups of customers. Both groups of customers of Honda and Lexus think they are buying a car that meets their requirements. Their long-term experience may prove otherwise because of failures to meet requirements. Such failures include the performance of the car, the running costs, the dealer’s customer service or the fact that their requirements change as customers.

Customers may not be thinking or saying quality at the time of making their buying decisions. They may experience quality but not call it that. Instead customers are trying to translate their understanding of their needs (and the needs of others who will use the car) into requirements. These requirements must be fulfilled by the cars they buy and the dealership that sells them.

Customers buying the Lexus will probably be more demanding of their dealership. Accordingly, they prepare to fulfill higher standards of discernment. But Honda owners probably would say they are no less discerning.

Affordability and availability are important customer requirements. If a customer perceives that the car does not or will not meet these and their other quality requirements they will go elsewhere.

Some customers find their car does not fulfill their requirements after they have made the purchase. This failure may be due to poor quality; that is the car not fulfilling its promises. It may be due to the salesperson not helping the customer to achieve the correct balance of needs. Quality salespersons work with the customer to balance their emotional and rational needs when helping them to understand their requirements for their car. Badly served customers may become loyal to another make of car.

Lexus and Honda are therefore careful to understand the needs of their customer groups. They do their best to design their products to fulfill those needs. Beyond cars, their products include the services inherent in selling cars carefully to exactly match the needs of buyers. They also ensure the after sales services continue to bring in the customers, their families and friends with similar needs. Sloppy sellers rely the ancient legal principle of ‘buyer beware’.

Quality is equally applicable to both groups of customers.

Many drivers cannot justify spending double on a Lexus so they buy Ford motor cars. Others will justify the expense and decide to spend the money on the car that best meets their deep psychological needs (perhaps to feel superior) and buy a Lexus. At Ford Quality is Job 1 while Lexus and their dealers pursue perfection. Both companies engage everyone in managing quality as does Honda.

All three companies invest in their systems, processes and products to make sure their quality cars are affordable and available to their customer groups.

Crosby’s Four Absolutes Updated

April 27, 2011

Before Phil Crosby most people thought quality had to cost more. Crosby revolutionized Quality Management by showing how zero defects can be delivered with many of his clients and in his book Quality Without Tears.

Others have now showed us that exactly fulfilling customer requirements is equal to lowest cost. A failure to fulfill requirements is now called a nonconformity.

Accordingly we have updated Phil’s four absolutes of QM here:

1. Quality means conformity to customer requirements (although this often was misheard as conformity to specifications)

2. Invest in prevention (the system helps people to understand customer requirements and get their work right the first time)

3. Never accept failure to meet requirements as inevitable (invest in prevention instead using 80:20 [or 50:4] to prioritize removal of root causes)

4. Measure the costs of appraisal and other consequences of not preventing nonconformity (known as PONC [the price management chooses to pay for nonconformity] then see 2 above)

Some say he upset statisticians when he said they could not spell zero!

Crosby’s message is simple and effective. It appeals to leaders and general managers and makes no attempt to keep quality professionals employed doing QA.

These days organizations eliminate the causes of nonconformity from their systems before (and occasionally after) making or delivering their services and other products.

Indeed our clients run their management systems to reduce the cost of poor quality while creating more successful customers.

Quality through the ages

March 9, 2011

Today, quality remains a way of life and quality results in more successful customers. Over the centuries, though, we have evolved from focusing mainly on products, then processes and now on systems and their outcomes.

Craftsmen and guild members were the original quality professionals focused on perfecting their work and their products. Craft skills changed to support mass production with independent inspectors of the product. Yes, sorting good products from bad products wasted a lot of resources.

So we isolated the processes directly responsible for the products and charted them to understand their behavior. We learned how to identify and facilitate the removal of certain causes of variation and bad products.

From these studies we appreciated the power and influence of the system on the variability of its processes and hence the quality of the products.

Today we are learning how to remove waste from the systems and processes of supply chains to eliminate work and inventory that does not add or enable value for customers. We are learning to apply the lessons of system thinkers so leaders know how to optimize their organizations as systems that add value faster and prevent loss sooner.

Imagine more and more organizations, increasingly appreciated as systems that nurture their people and processes to result in quality outcomes.

As quality professionals we have morphed into system professionals to influence the strategic plans of the organizations we serve. Now we work with leaders to enable organizations and their management systems to help employees to determine and fulfill current and future requirements…

…to result in our most important product: more successful customers.