The backwoods american company in problem 2 1

Chapter 2 Quality Management

Russell. Operations Management: Creating Value Along the Supply Chain, 7th Edition. John Wiley & Sons.

Quality Management AT MARS

Mars produces its chocolate candy products according to five principles that define a philosophy of its values that lead and guide the company. First among these principles is quality. At Mars “the consumer is the boss; quality is the work; and value is the goal.” Their commitment to quality guides their approach to delivering products that “delight their customers” while meeting uncompromising safety standards.

The Mars Quality Management Process (QMP) is applied to all aspects of its supply chain, from acquiring high-quality ingredients, to their manufacturing processes, to product distribution, and to measuring customer satisfaction. Mars QMP is maintained at the leading edge of quality management practices by benchmarking against the highest quality and food safety standards and best practices throughout the food industry. Continuous improvement is the foundation of Mars QMP and drives the company to continually raise its standards and learn how to do things more effectively and efficiently to bring value to its customers.

In effect, quality is an obsession at Mars. All Mars employees are committed to quality, are provided the technical skills to deliver quality excellence, and are accountable for providing their customers with the highest possible quality. An example is their fear of “incremental degradation,” a term they use to describe what can happen by using cheaper ingredients. Rather than replace a high-priced ingredient with a cheaper one, even if taste tests show that the customer wouldn't notice the difference, Mars will forego the extra profit to avoid risking incremental degradation in product quality. In spotlessly clean Mars plants, employees are constantly tasting products to make sure they are being made properly, and an entire production run of Snickers may be thrown out because of barely noticeable nicks in the chocolate coating. A Mars salesman at a supermarket will throw out a whole product display if it's getting too close to its freshness date. Mars considers each individual sale its most important one, and their goal is to build life-long relationships with its customers. They believe if they forget this they risk resting on their past and ignoring their future.

In this chapter we will discuss how other quality-conscious companies like Mars develop effective quality management [QM] programs.

Source: Mars Web site at www.mars.com; and Craig J. Cantoni, “Manager's Journal: Quality Control from Mars,” Wall Street Journal, January 27, 1992, pg. A12.

WHAT IS QUALITY?

Asked “What is quality?” one of our students replied “getting what you pay for.” Another student added that to her, quality was “getting more than you paid for!” The Oxford American Dictionary defines quality as “a degree or level of excellence.”

What is quality in the eye of the beholder?

The American Society for Quality (ASQ) defines quality as “a subjective term for which each person has his or her own definition. In technical usage, quality can have two meanings: (1) The characteristics of a product or service that bear on its ability to satisfy stated or implied needs and (2) A product or service free of deficiencies.” Obviously, quality can be defined in many ways, depending on who is defining it and the product or service it refers to. In this section we provide a perspective on what quality means to customers and companies.

QUALITY FROM THE CUSTOMER'S PERSPECTIVE

A business organization produces goods and services to meet its customers' needs. Customers want value and quality has become a major factor in the value of products and service. Customers know that certain companies produce better-quality products than others, and they buy accordingly. That means a firm must consider how the consumer defines quality. The customer can be a manufacturer purchasing raw materials or parts, a store owner or retailer purchasing products to sell, or someone who purchases retail products or services over the Internet. W. Edwards Deming, author and consultant on quality, says that “The consumer is the most important part of the production line. Quality should be aimed at the needs of the consumer, present and future.” From this perspective, product and service quality is determined by what the customer wants and is willing to pay for. Since customers have different product needs, they will have different quality expectations. This results in a commonly used definition of quality as a service's or product's fitness for its intended use, or fitness for use; how well does it do what the customer or user thinks it is supposed to do and wants it to do?

 Fitness for use:

is how well the product or service does what it is supposed to.

Products and services are designed with intentional differences in quality to meet the different wants and needs of individual consumers. A Mercedes and a Ford truck are equally “fit for use,” in the sense that they both provide automobile transportation for the consumer, and each may meet the quality standards of its individual purchaser. However, the two products have obviously been designed differently for different types of consumers. This is commonly referred to as the quality of design—the degree to which quality characteristics are designed into the product. Although designed for the same use, the Mercedes and Ford differ in their performance, features, size, and various other quality characteristics.

 Quality of design:

involves designing quality characteristics into a product or service.

DIMENSIONS OF QUALITY FOR MANUFACTURED PRODUCTS

The dimensions of quality for manufactured products a consumer looks for include the following1:

Dimensions of manufactured quality for which a consumer looks.

1. Performance : The basic operating characteristics of a product: for example, how well a car handles or its gas mileage.

2. Features : The “extra” items added to the basic features, such as a stereo CD or a leather interior in a car.

3. Reliability : The probability that a product will operate properly within an expected time frame: that is, a TV will work without repair for about seven years.

4. Conformance : The degree to which a product meets preestablished standards.

5. Durability : How long the product lasts; its life span before replacement. A pair of L.L. Bean boots, with care, might be expected to last a lifetime.

6. Serviceability : The ease of getting repairs, the speed of repairs, and the courtesy and competence of the repair person.

7. Aesthetics : How a product looks, feels, sounds, smells, or tastes.

8. Safety : Assurance that the customer will not suffer injury or harm from a product: an especially important consideration for automobiles.

9. Other perceptions : Subjective perceptions based on brand name, advertising, and the like.

These quality characteristics are weighed by the customer relative to the cost of the product. In general, customers will pay for the level of quality they can afford. If they feel they are getting what they paid for (or more), then they tend to be satisfied with the quality of the product.

DIMENSIONS OF QUALITY FOR SERVICES

The dimensions of quality for a service differ somewhat from those of a manufactured product. Service quality is more directly related to time, and the interaction between employees and the customer. Evans and Lindsay2 identify the following dimensions of service quality.

Dimensions of service quality.

1. Time and timeliness : How long must a customer wait for service, and is it completed on time? For example, is an overnight package delivered overnight?

2. Completeness : Is everything the customer asked for provided? For example, is a mail order from a catalogue company complete when delivered?

3. Courtesy : How are customers treated by employees? For example, are catalogue phone operators at L.L. Bean nice and are their voices pleasant?

4. Consistency : Is the same level of service provided to each customer each time? Is your newspaper delivered on time every morning?

5. Accessibility and convenience : How easy is it to obtain the service? For example, when you call L.L. Bean does the service representative answer quickly?

6. Accuracy : Is the service performed right every time? Is your bank or credit card statement correct every month?

7. Responsiveness : How well does the company react to unusual situations, which can happen frequently in a service company? For example, how well is a telephone operator at L.L. Bean able to respond to a customer's questions about a catalogue item not fully described in the catalogue?

A Mercedes and a Ford pickup truck are equally “fit for use,” but with different design dimensions for different customer markets that result in significantly different purchase prices.

1 Adapted from D. A. Garvin. “What Does Quality Really Mean?” Sloan Management Review 26(1: 1984). pp. 25-43.

2 J. R. Evans and W. M. Lindsay, The Management and Control of Quality, 3rd ed. (St. Paul, MN: West, 1996).

QUALITY FROM THE PRODUCER'S PERSPECTIVE

Now we need to look at quality the way a producer or service provider sees it: how value is created. We already know that product development is a function of the quality characteristics (i.e the product's fitness for use) the customer wants, needs, and can afford. Product or service design results in design specifications that should achieve the desired quality. However, once the product design has been determined, the producer perceives quality to be how effectively the production process is able to conform to the specifications required by the design referred to as the quality of conformance. What this means is quality during production focuses on making sure that the product meets the specifications required by the design.

 Quality of conformance:

is making sure the product or service is produced according to design.

Achieving quality of conformance involves design, materials and equipment, training, supervision, and control.

Examples of the quality of conformance: If new tires do not conform to specifications, they wobble. If a hotel room is not clean when a guest checks in, the hotel is not functioning according to the specifications of its design; it is a faulty service. From this producer's perspective, good-quality products conform to specifications—they are well made; poor-quality products are not made well—they do not conform to specifications.

Achieving quality of conformance depends on a number of factors, including the design of the production process (distinct from product design), the performance level of machinery, equipment and technology, the materials used, the training and supervision of employees, and the degree to which statistical quality-control techniques are used. When equipment fails or is maladjusted, when employees make mistakes, when material and parts are defective, and when supervision is lax, design specifications are generally not met. Key personnel in achieving conformance to specifications include the engineering staff, supervisors and managers, and, most important, employees.

An important consideration from the customer's perspective of product quality is product or service price. From the producer's perspective, an important consideration is achieving quality of conformance at an acceptable cost. Product cost is also an important design specification. If products or services cannot be produced at a cost that results in a competitive price, then the final product will not have acceptable value—the price is more than the consumer is willing to pay given the product's quality characteristics. Thus, the quality characteristics included in the product design must be balanced against production costs.

L.L. Bean's first product was the Maine Hunting shoe, developed in 1912 by company founder, Leon Leonwood Bean, a Maine outdoorsman. He initially sold 100 pairs to fellow sportsmen through the mail, but 90 pairs were sent back when the stitching gave way. However, true to his word L.L. Sean returned their money and started over with an improved boot. In years to come L.L. Bean operated his business according to the following belief: “Sell good merchandise at a reasonable profit, treat your customers like human beings, and they will always come back for more.” L.L. Bean also guarantees their products to “give 100% satisfaction in every way,” If they don't, L.L. Bean will replace the item or refund the purchase price “at any time.”

A FINAL PERSPECTIVE ON QUALITY

We approached quality from two perspectives, the customer's and the producer's. These two perspectives are dependent on each other as shown in Figure 2.1. Although product design is customer-motivated, it cannot be achieved without the coordination and participation of the production process. When a product or service is designed without considering how it will be produced, it may be impossible for the production process to meet design specifications or it may be so costly to do so that the product or service must be priced prohibitively high.

Figure 2.1 depicts the meaning of quality from the producer's and consumer's perspectives. The final determination of quality is fitness for use, which is the customer's view of quality. It is the consumer who makes the final judgment regarding quality, and so it is the customer's view that must dominate.

Figure 2.1 The Meaning of Quality

QUALITY MANAGEMENT SYSTEM

To make sure that products and services have the quality they have been designed for, strategy to achieve quality throughout the organization is required. This approach to the management of quality throughout the entire organization has evolved into what is generally referred to as a quality management system (QMS).

THE EVOLUTION OF QUALITY MANAGEMENT

A handful of prominent individuals summarized in Table 2.1 have had a dramatic impact on the importance of quality in the United States, Japan, and other countries. Of these “quality gurus” W. Edwards Deming has been the most prominent.

In the 1940s Deming worked at the Census Bureau, where he introduced the use of statistical process control to monitor the mammoth operation of key punching data from census questionnaires onto millions of punch cards. During World War II, Deming developed a national program of 8- and 10-day courses to teach statistical quality-control techniques to over 10.000 engineers at companies that were suppliers to the military during the war. By the end of World War II he had an international reputation.

In 1950 Deming began teaching statistical quality control to Japanese companies. As a consultant to Japanese industries and as a teacher, he was able to convince them of the benefits of statistical quality control. He is a major figure in the Japanese quality movement, and in Japan he is frequently referred to as the father of quality control

In the 1950s, W. E. Deming began teaching quality control in Japan.

Table 2.1 Quality Gurus

Quality Guru

Contribution

Walter Shewhart

Working at Bell Laboratories in the 1920s. he developed the technical tools such as control charts that formed the basis of statistical quality control; he and his colleagues at Bell Labs introduced the term quality assurance for their program to improve quality through the use of statistical control methods.

W. Edwards Deming

A disciple of Shewart, he developed courses during World War II to teach statistical quality-control techniques to engineers and executives of companies that were military suppliers; after the war he began teaching statistical quality control to Japanese companies, initiating their quality movement.