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Medieval Europe: craftsmen organized into unions
called guilds in the late 13th century developed strict
rules for product and service quality. Quality products
carried inspection marks and often master craftsmen
marks that served as proof of quality for customers.
The industrial revolution gave birth to the factory
system which, with its emphasis on productivity,
started in Great Britain in the mid-1750s. American
followed suit in the 1800s and later developed the
Taylor System (scientific management). An inspection
function was added to ensure quality before the
products reached customers.
A Brief History of Quality (I)
During World War II, quality became a critical and an
important safety issue. The U.S. armed forces inspected
virtually every unit produced to ensure that it met the
standards. They soon realized that sampling inspection was
a more feasible alternative to unit-by-unit inspection. The
military standard, Mil-Std-105, was adopted for all contracts
until late 1990s.
After the war, America helped Japan rebuild and sent two
quality experts: W. Edwards Deming and Joseph M. Juran.
Japan took a new “total quality” approach, focusing on
improving all organizational processes through the people
who used them instead of inspecting products in the end of
the manufacturing process. This was the beginning of the
Total Quality Management or TQM.
A Brief History of Quality (II)
A parachute rigger is a person who is trained or licensed to
pack, maintain or repair parachutes.
From the US Army job description MOS 92R: As a Parachute
Rigger, you’ll ensure the safety of every paratrooper you
work with. You’ll inspect, test, and pack parachutes, their
extraction and release systems, and all the associated
components of the parachute system. You’ll be responsible
for the safety and repair of all parachute equipment before,
during, and after an airdrop operation.
Riggers are required to jump: “If I’m not willing to jump my
own chute, why should any other soldier jump my chute?“
Parachute Rigger
The official
motto of the
U.S. Army
parachute
rigger is: “I
will be sure
always.”
Kaizen, aka continuous improvement: a long-term
approach to work that systematically seeks to
achieve small, incremental changes to improve
efficiency and quality.
People live by the mantra to “Get 1% better each
day.”
Pursuit of perfection examples: Japanese Metro
Subway driver’s precision driving, Lexus cars, Seiko
Spring Drive watch.
Meaning of Being Exact and the
Pursuit of Excellence: Japan
The Metro runs like clockworks and is an example of
how the Japanese train their employees for safety and
high quality standards.
Japanese Subway System: Metro
Lexus (Toyota) challenged the luxury market…and succeeded!
Another Example of Japanese
Quality Manufacturing
Seiko Spring Drive
Seventy years of research & development and technological
breakthroughs created this Seiko Spring Drive watch,
breaking away from Swiss dominance in watch making.
Just when you think that everything from Japan is good
with their pursuit of perfection, think again!
The Amagasaki rail crash in 2005, caused by driver
rushing to make up the 90 seconds delay earlier.
Remember the Takata airbag recall? Google it if you
don’t.
However…
Recent Cheating
Scandals Kobe Steel:
nuclear plants,
Airbus, Daimler
Toray: carbon
fiber to Boeing
Mitsubishi
Materials: supply
to Japan military
Nissan and
Subaru
Why does Germany make so many quality products?
Quality Products from Germany
The quality and extent of their vocational training to
prepare young people for skilled manufacturing jobs.
99% of companies are family owned small and medium
sized companies (mittlestand) for generations and focus
on one tiny bit of business but do it on a world scale.
Co-determination: the workers and management work
together from bottom to board level.
Germans strive for perfection and precision in all
aspects of their lives and there is great emphasis on
making sure that “the trains run on time.”
German people embrace the values of efficiency,
thriftiness, hard work and industriousness.
The Secrets of German Quality
Germany’s
Dual
Education
System
The German education system is
much more geared to vocational
training than many of its
economic competitors
The quality and extent of their
vocational training to prepare
young people for skilled
manufacturing jobs
The young men and women go
through the (paid)
apprenticeship system and learn
that the goal is excellence
The Secrets of
German Quality
The Mittelstand
commonly refers to
small and medium-
sized enterprises in
German speaking
countries,
especially in
Germany, Austria
and Switzerland.
Mittelstand firms
are usually defined
as enterprises with
annual revenues of
up to 50 million
Euro and a
maximum of 500
employees.
Family ownership or family-
like corporate culture with
generational continuity
Long-term focus
Investment into the
workforce
Lean hierarchies
Innovativeness
Customer focus
Social responsibility
Strong regional ties
The German Mittlestand
They are companies that produce inconspicuous
products and dominate in the markets they compete.
Most of their products are used in the manufacturing
process or subsumed by the end product therefore
unknown to consumers.
Common characteristics according to Hermann Simon:
• Combine strategic focus with geographic diversity.
• Emphasize factors like customer value.
• Blend technology and closeness to customers.
• Rely on their own technical competence.
• Create mutual interdependence between the company and
its employees.
Germany’s Hidden Champions
Germans Are Not
Perfect! Siemens: $1.3B bribes to gov’t
officials
VW: falsified
diesel emissions
test, $25B recall
in the U.S.
Deutsche Bank:
rigged interest-
rate benchmarks
Discussion Questions
Please research the following questions and provide
evidence to support your answers.
Everyone: Watch Steve Jobs’ interview on quality and
relate our course materials to his discussions.
Everyone: What does it mean to be exact in your everyday
activities? Do you practice it? Why or why not?
Everyone: Why did quality scandals happen in
Japan/Germany?
Everyone: What can we learn from the quality philosophy
and practice of Japan and Germany? Is it something that
can be duplicated in other countries/companies or is it
deeply embedded in their cultures?
Group Discussion
Be sure your group is ready to lead and/or
discuss the following question in class, with
research or facts-based evidence.
We did not mention American quality. If you were
to lecture on American quality, what would you
characterize it? What makes American products
good? Give at least two iconic examples that
showcase genuine American quality. Be sure to
provide references and evidence to back it up.
• Quality management refers to systematic policies,
methods, and procedures used to ensure that goods
and services are designed, created, and delivered to
meet customer expectations.
• Dr. Joseph Juran and Dr. W. Edwards Deming
introduced quality to the Japanese after WWII, who
then created a renewed interest in quality in the U.S.
• Quality is a relentless pursuit and many
organizations adopt Six Sigma – a customer-focused
and results-oriented quality tool for continuous
improvement.
Quality Management
• Total Quality Management (TQM) refers to
management methods used to enhance quality
and productivity in business organizations.
• Statistical Quality Control (SQC) refers to the use of
statistical methods in the monitoring and
maintaining of the quality of products and services.
A method referred to as statistical process control
uses graphical displays (control charts) to
determine whether a process should be continued
or should be adjusted to achieve the desired
quality. It is part of TQM.
TQM and SQC
Quality means different things to different people. It’s
all about “customer perceptions”:
• Perfection
• Consistency
• Speed of delivery
• Compliance with policies and procedures
• Providing a good usable product
• Doing it right the first time
• Delighting or pleasing customers
• Total customer service and satisfaction
Understanding Quality
Understanding
Quality:
User
Education
Understanding Quality:
Measuring Tangibles
• Fitness for use is the ability of a good or service to
meet customer needs. (Ziploc bags are air tight.)
• Quality of conformance is the ability to deliver output
that conforms to design specifications, targets and
tolerances . (This LED light bulb has 750 lumens and
consumes 6 watts of power.)
• Service Quality is consistently meeting or exceeding
customer expectations (external focus) and service
delivery system performance criteria (internal focus)
during all service encounters.
Quality of Goods and Services
Specs, Conformance, Fitness
Specs, Conformance, Fitness
The Best iPhone 12/13 Features
How do you measure the new features below?
SERVQUAL: Reliability, Assurance, Tangibles,
Empathy, Responsiveness (RATER)
Mystery shopper
Survey (during and after service encounter)
Customer Effort Score (CES)
Social media
Customer retention/loyalty
Service Quality Measurement
Quality
Assurance
QA is part of the quality
management program, focusing on
the technical aspects.
• Quality control (QC):
– inspection to ensure
conformance to standards:
consistency, usability, grade
– technical role to managerial
role
• Total quality control (TQC):
– zero defects
– everyone’s job
– quality at the source
– Deming’s 14 principles
Quality Management Methods
• ISO 9000 standards
•
Quality Circles
• Taguchi methods (L=D2C)
• Cause and effect diagrams
• Pareto chart (80-20, ABC): wide applications of
this principle in everything we do. For example:
20% of players score 80% of points, 20% of
customers bring 80% of revenues, etc.
• Statistical process control (SPC)
Cost of quality refers to the costs associated with
designing better products, purchasing quality materials,
ensuring high standard production process, and
avoiding poor quality or subsequent results of it.
• Prevention costs prevent bad designs or
nonconforming goods and services from being made
and reaching the customer.
• Appraisal costs are costs of implementing quality
control through measurement and analysis of data.
Cost of Quality: Prevention
• Internal-failure costs are costs incurred as a result of
unsatisfactory quality that is found before delivery
of good or service to the customer. (e.g. the video
clip of the movie Red Violin, students failed before
graduation, broken Oreo cookies in factory, etc.)
• External-failure costs are incurred after poor-quality
goods or services reach the customer. (e.g. frequent
recalls of cars, car seats, contaminated spinach, etc.)
Cost of Quality: Internal vs. External
There is a cost for quality management. Is there a cost
for not having a quality management program?
Cost of doing something
vs.
Cost of NOT doing something!
Cost of Quality: Do Nothing?
Cost of Doing Nothing
ISO 9000
Standards
It is a set of international
standards on quality
management and quality
assurance developed to
help companies
effectively document the
quality system elements.
“ISO certified” means
that an organization has
developed, maintains and
continuously improves its
business processes.
Quality Circles
• A quality circle is for a group of
workers who do similar work to
get together to identify, analyze
and solve work-related problems.
• Advantages of Quality Circles are
improved communication,
personal growth and
development, increased
individual power, enhanced
decision-making skills, improved
motivation, management
awareness of employee
concerns, and better quality
products and processes.
Taguchi Methods
• The Taguchi method involves reducing the variation
in a process through robust design of experiments.
The overall objective of the method is to produce
high quality product at low cost to the
manufacturer.
• Philosophy: Quality should be designed into a
product, not inspected into it.
• Quality is best achieved by minimizing the deviation
from a target. It is not the larger the better (for
example, agricultural yield), nor is it the smaller the
better (for example, CO2 emissions), but the closer
to the target the better (for example,
interchangeable parts in an assembly, Subway foot-
long sandwiches).
The Taguchi Loss Function
• It is a graph that
shows how much it
costs as your
product varies from
the target value.
• The goal is to
minimize the
Taguchi loss
function.
Taguchi Methods
Too much, one loses profit; too little, customers complain.
Pareto
Analysis
Joseph Juran applied
the Pareto Principle to
management: 80% of
consequences often
came from 20% of the
causes. Managers
need to pay attention
to the 20% causes to
reap the most
benefits of their
efforts.
Pareto Example
Fix these!
QC Tool: Cause & Effect Analysis
Cause & Effect Analysis (fish bone chart) is a diagram-
based technique that helps you identify all of the
likely causes of the problems you’re facing.
QC Tool: Control Chart
Control charts, or process-behavior charts, are a
statistical process control tool used to determine if a
manufacturing or business process is in a state of
control or compliance.
Survivor Bias During World War II, American military
personnel noticed
that some parts of
planes were hit by
enemy fire more
often than other
parts. They analyzed
the bullet holes in the
returning planes and
launched a program
to have these areas
reinforced so that
they could withstand
enemy fire better.
Study Successes or Failures?
By studying the returned planes, one
actually missed all the ones that did not
return! Those were the ones that
needed to be studied!
Tom Peters, In Search of Excellence:
eight common attributes of 43
“excellent” companies.
Jim Collins, Good to Great: 11
outstanding performers out of 1435
companies.
Six Sigma
Six Sigma is a method that
provides organizations tools to
improve the capability of their
business processes. This
increase in performance and
decrease in process variation
helps lead to defect reduction
and improvement in profits,
employee morale, and quality
of products or services.
Six Sigma focuses on reducing process variation and
enhancing process control.
Six Sigma in Practice
Six Sigma got its start in manufacturing at Motorola
in the 1980s, and later spread to companies like
AlliedSignal, General Electric and Honeywell.
If you control the processes, you can achieve
consistent quality.
Six Sigma means less than 3.4 defects per million.
Preventing
Medical
Mistakes
Discussion Questions
Please research the following questions and
provide evidence to support your answers.
Everyone: Why would companies have quality
programs even though they cost money to
implement?
Everyone: what can be done to systematically
minimize medical mistakes? Reference to course
materials, please.
Group Discussion
Be sure your group is ready to lead and/or
discuss the following question in class, with
research or facts-based evidence.
Expand on the cost of doing something vs. the
cost of doing nothing and the survivor bias, are we
prone to using factors that can be measured vs.
factors that cannot? What are the perils of such
bias in management? Any benefits? Use your line
of work if possible and discuss ways that can help
you become more comprehensive and unbiased in
managing your operations.
