Cyprus International University Institute of Social Sciences and Researches

Master of Business AdministrationFall 2012

PROJECT

TOTAL QUALITY MANAGEMENT (EMN 502)

Presented by: Jeannine Flore SIGNING M.Student Number: 20111956

Intructor : Asst. Prof. Dr. Ayşe Tansu Tunçbilek

1. Why is service quality more difficult to define than product quality?

Service and production share many attributes. However services have more diverse quality

attributes than products. For example, a product like a personal computer is typically

evaluated on its merits, and it makes little difference to the user whether the person that

assembled the computer was in a bad mood the day he made it. Service settings are more

complex; thus quality is more difficult to define. A customer of a restaurant, for example,

evaluates the quality of the restaurant not only on the merits of the food, but also on the

behavior of the employees, the speed of the service, the location of the restaurant, the

pleasantness of the surroundings,...

2. Review David Garvin’s contribution to our understanding of the role of quality in

business organizations.

David Garvin has helped articulate both the definitions and dimensions of quality. First,

Garvin found that most definitions of quality were either transcendent, product-based, user-

based,manufacturing based, or value based. Using these five definitions of quality, Garvin

developed a list of eight quality dimensions including performance, features, reliability,

conformance,durability, serviceability, aesthetics, and perceived quality. By articulating these

definitions and dimensions of quality, Garvin helped managers understanding the multifaceted

nature of quality and the importance of quality in business organizations.

3. Why are cross-functional teams becoming more common? What difficulties do they

experience?

The supply chain encompasses many differing functions and processes. It includes all of the

core activities from the raw materials stage to after-sale service. To execute all of these

processes correctly involves integrating differing functions, expertise, and dimensions of

quality.This need for integration increases the requirement for flexible, cross-functional

problem solving and employees who can adapt to rapidly changing markets.Communications

is a major issue for cross-functional teams. Typically,organizations doe not have very effective

networks of cross functional communication. Concurrent engineering requires cross-functional

teams.

4. Describe the relevance of the “systems view” to our understanding of quality

management.

Operations management utilizes the systems view that underlies modern quality management

thinking. The systems view involves the understanding that product quality is the result of the

interactions of several variables such as machines, labor, procedures, planning, and

management. As a result, managers need to understand that it is the “system” and the

interactions between the various components of the system that is responsible for quality,

rather than a single functional area, such as manufacturing, personnel, or marketing.

5. Discuss the origins and development of the Supply Chain perspective

Supply chain management grew out of the concept of the value chain.The value chain

includes: inbound logistics, core processes, and outbound logistics. Supply chain management

has moved to the forefront in recent years due to the opportunities for cost savings along with

quality and service improvements.

6. What is theory? Provide an example of the use of theory in a business organization.

According to the Random House Webster's College Dictionary (1996, p.1,384), theory is a

"coherent group of general propositions used as principles of explanation for a class of

phenomena."

Example of the theory used in a business organization: Taguchi method

Taguchi method was introduced by Dr. Genichi Taguchi in 1980. His approach emphasised

improving the quality of product and process prior to manufacture (that is, at the design stage)

rather than the more traditional approach of achieving quality through inspection.

Among the unique aspects of the Taguchi method are the Taguchi definition of quality, the

quality loss function and the concept of robust design.

Definition of Quality

According to Taguchi, ideal Quality is delivered if a product (r a service tangible) performs its

intended function throughout its projected life under reasonable operating conditions without

harmful side effects. In service, ideal Quality is a function of customer perceptions and

satisfaction.

Quality loss function

He developed a concept of quality loss occurring as soon as there is a deviation away from the

target value, and worked in terms of quality loss rather than just quality. He defined quality

loss as 'the loss imparted to society from the time the product is shipped', and this related the

loss to society as a whole. Thus, it included both company costs such as reworking, scrapping

and maintenance, and any loss to the customer through poor product performance and lowered

reliability.

Robust quality of design

The Taguchi concept of robust design states that products and services should be designed so

that they are inherently defect-free and of high quality. He divised a three-stage process that

achieves robust design through what he terms concept design, parameter design and tolerance Design.

7. Discuss the contributions of W. Edwards Deming to quality thinking?

Deming's theory of Total Quality Management rests on fourteen points of management he

identified, the system of profound knowledge, and the Shewart Cycle (Plan-Do-Check-Act).

He asserts that the adoption of appropriate principles of management, organizations can

increase quality and simultaneously reduce costs, reducing waste, rework, staff attrition and

litigation while increasing customer loyalty). The key is to practice continual improvement

and think of manufacturing as a system.

Deming offered fourteen key principles for managing quality for transforming business effectiveness. In

summary:

Create constancy of purpose toward improvement of a product and service with a plan to become

competitive and stay in business. Decide to whom top management is responsible.

Adopt the new philosophy. We are in a new economic age. We can no longer live with commonly

accepted levels of delays, mistakes, defective materials, and defective workmanship.

Cease dependence on mass inspection: Build quality into the product from the start. (prevent defects

instead of detect defects.)

End of the practice of awarding business on the basis of price tag alone. Instead, depend on meaningful

measures of quality along with price. Eliminate suppliers that cannot qualify with statistical evidence

of quality.

Improve constantly and forever the system of production and service, to improve quality and

productivity, and thus constantly reduce cost. Find Problems. It is a management's job to work

continually on the system (design, incoming materials, composition of material, maintenance,

improvement of machine, training, supervision, retraining)

Institute modern methods of training on the job

Institute leadership: The aim of supervision should be to lead and help people to do a better job. The

responsibility of the foreman must be to change from sheer numbers to quality [which] will

automatically improve productivity.

Drive out fear, so that everyone may work effectively for the company.

Break down barriers between departments. People in research, design, sales and production must work

as a team to foresee problems of production that may be encountered with various materials and

specifications.

Eliminate slogans, exhortations and targets for the workforce as they do not necessarily achieve their

aims if means and methods for achievement are not provided.

Eliminate numerical quotas in order to take account of quality and methods, rather than just numbers.

Remove barriers that stand between the hourly worker and his right of pride of workmanship.

Institute a vigorous program of education and self improvement.

Involve everyone in the accomplishment of the transformation: the total system to improving quality

should include everybody in the organization

Deming's system of profound knowledge consists of the following four points:

System Appreciation -an understanding of the way that the company's processes and

systems work

Variation Knowledge- an understanding of the variation occurring and the causes of the

variation

Knowledge Theory- the understanding of what can be known

Psychology Knowledge- the understanding of human nature

Plan-Do-Check-Act (PDCA) is a cycle created for continuous improvement. In the planning phase,

objectives and actions are outlined. then, you do your actions and implement the process improvements.

Next, you check to ensure quality against the original. finally acting requires that you determine where

changes need to occur for continued improvement before returning to the plan phase.

Moreover, Deming outlined seven most serious barriers that management faces in its current management

actions that he qualified as deadly diseases.

Lack of constancy of purpose.

Emphasis on short-term profits.

Evaluation by performance, merit rating, or annual review of performance.

Mobility of management.

Running a company on visible figures alone.

Excessive medical costs for employee healthcare

Excessive costs of warrantees

8. Describe Pareto Analysis.

In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the

unequal distribution of wealth in Milan, observing that twenty percent of the people owned

eighty percent of the wealth.

In the late 1940s, Quality Management pioneer, Dr. Joseph M. Juran applied the Pareto

Analysis or the 80/20 rule to quality problems. He called it the "vital few and trivial many". In

an early work, a lack of precision on Juran's part made it appear that he was applying Pareto's

observations about economics to a broader body of work. The name Pareto's Principle stuck,

probably because it sounded better than Juran's Principle.

As a result, Dr. Juran's observation of the "vital few and trivial many", the principle that 20

percent of something always are responsible for 80 percent of the results, became known as

Pareto's Principle or the 80/20 Rule.

The 80/20 Rule means that in anything a few (20 percent) are vital and many(80 percent) are

trivial. In Pareto's case it meant 20 percent of the people owned 80 percent of the wealth. In

Juran's initial work he identified 20 percent of the defects causing 80 percent of the problems.

The 80/20 Rule is also used in stock management. According to the rule, 20 percent of the

stock takes up 80 percent of the warehouse space and that 80 percent of the stock comes from

20 percent of the suppliers. Also 80 percent of the sales will come from 20 percent of the sales

staff. 20 percent of the staff will cause 80 percent of problems, but another 20 percent will

provide 80 percent of production. It works both ways.

9. Discuss the contributions of Armand Feigenbaum to quality thinking?

Armand Feigenbaum is the pioneer of the theory of Total Quality Control proposed in 1950s.

His contributions to the quality body of knowledge include:

Total quality control is an effective system for integrating the quality development, quality

maintenance, and quality improvement efforts of the various groups in an organization so

as to enable production and service at the most economical levels which allow full

customer satisfaction.

The concept of a "hidden" plant²the idea that so much extra work is performed in

correcting mistakes that there is effectively a hidden plant within any factory.

Accountability for quality: Because quality is everybody's job, it may become nobody's

job the idea that quality must be actively managed and have visibility at the highest levels

of management.

The concept of quality costs

Feigenbaum proposes the following three-step process to Improving Quality:

Quality Leadership: motivating force for quality improvement

Quality Technology: statistics and machinery used to improve technology

Organizational Commitment: includes everyone in the quality struggle

Feigenbaum's 4 Deadly Sins:

Hot House Quality: Quality programs that receive a lot of hoopla and no follow-through

Wishful Thinking: Those who would pursue protectionism to keep American firms from

having to compete on quality

Producing Overseas

Confining Quality to the Factory: When quality is viewed as a shop-floor concern, verses

the responsibility of everyone

The following nineteen steps outline his approach to the total quality control which emphasize

organizational involvement in improving quality.

Total quality control is defined as a system of improvement

Big Q quality (company-wide commitment to TQC) is more important than little quality

(improvement on the production line).

Control is a management tool with four steps.

Quality control requires integration of uncoordinated activities

Quality increases profits

Quality is expected not desired

Humans affect quality

TQC applies to all products and services

Quality is a total life cycle consideration

Control the process

A total quality system involves the entire company-wide operating work structure

There are many operating and financial benefits of quality

The costs of quality are a means for measuring quality control activities

Organize for quality control

Managers are quality facilitators, not quality cops.

Strive for continuous commitment

Use statistical tools

Automation is not a panacea

Control quality at the source.

10. Identify and briefly discuss the core quality management content variables.

The core quality management content variables include Leadership, Employee improvement,

Quality assurance, Customer role and Quality Philosophy.

Leadership: The role of the leader in being the champion and major force behind quality

improvement is critical.

Employee Improvement: Once the leader is enlightened and motivated to go forward in

the quality effort, employees must be trained and developed.

Quality Assurance: Quality experts agree that quality can be assured only during the

design phase. Therefore, effort must be invested in designing products, services, and

processes so that they are consistently of high quality.

Customer Focus: An understanding of the customer is key to quality management efforts.

Quality Philosophy: Adoption of a philosophy toward quality improvement is also

important. Establishing a clear message provides a company with a map to follow during

their quest for improvement.

11. Discuss a business example of one of Covey’s 7 practices. How does it relate to

quality?

Among covey's 7 practices, are Be proactive, Begin with the end in mind, Put first things first,

Think win-win, Seek first to understand and then to be understood, Synergize, and Sharpen the

saw.

We are focusing on Synergize that is the habit of creative cooperation-the principle that

collaboration often achieves more than could be achieved by individuals working

independently.

As an example of business, we are taking a merger of two companies that leads to one

company. The following advantages can lead to the improvement of the quality.

Economies of Scale

Reducing capacity (consolidation in the number of firms in the industry)

Spreading fixed costs (increase size of firm so fixed costs per unit are decreased)

Geographic synergies (consolidation in regional disparate operations to operate on a

national or international basis)

Economies of Scope

Combination of two activities reduces costs

Complementary Strengths

Combining the different relative strengths of the two firms creates a firm with both

strengths that are complementary to one another.

Efficiency Increases

New management team will be more efficient and add more value than what the target

now has.

The combined firm can make use of unused production/sales/marketing channel capacity

Reduction in average issuing costs

Fewer information problems

Strategic Realignments

Permits new strategies that were not feasible for prior to the acquisition because of the

acquisition of new management skills, connections to markets or people, and new

products/services.

12. Describe the difference between the task environment and the societal environment

of a firm.

The task environment includes sectors with which the organization interacts directly and

that have a direct impact on the organization's ability to achieve its goals. It comprises the

operating structures such as competitors, customers, regulators, technologies, suppliers,

raw materials, and the human resources that a firm encounters when globalizing.

Competitors are firms that are competing for resources, and customers are those that

purchase the firm’s products. Regulators have the potential to control, regulate, or influence an

organization’s policies and practices. Technologies include techniques of production. Suppliers

include any organizations or individuals that supply resources to the firm. Raw materials

are goods or any material needed for the production provided by suppliers. Human

resources include the workforce, their compensation structure, their behavior.

The social environment of a firm includes cultural factors such as language, business

customs, customer preferences and patterns of communication that faces a firm when

globalizing. The language of the new country might be different. So, the firm need to

learn or have a translator to communicate with others for the achievement of its goals. The

firm should know the preferences of customers in the country in order to design a product

that fit their desire and satisfy them since the satisfaction of the customer can guarantee

the improvement of quality that lead to the achievement of goals.

13. Describe the key characteristics of the Malcolm Baldrige National Quality Award.

The criteria focus on business results.Companies must show outstanding results in a

variety of areas to win. Those areas include financial performance, customer satisfaction,

customer retention, production performance, service performance, productivity, supplier

performance, and public citizenship. In order to win, applicants must show that they

consistently have performance levels at best-in-class and best-of-the-best.

The Baldrige criteria are nonprescriptive and adaptive. Although the focus on the Baldrige

award is on results, the means for obtaining these results are not prescribed. However, the

Baldrige criteria can be viewed as prescriptive at the strategic level. In explanation, a

company that doesn'r gather data from its customers, or the one which doesn't have an

effective benchmarking program won't qualified for the Baldrige Award.

The criteria support company-wide alignment of goals and processes. Once organizational

strategy is formulated, connecting and reinforcing measures are developed that support

and monitor strategic outcomes.

The criteria permit goal-based diagnosis. The criteria and scoring guidelines provide

assessment dimensions. These are approach (method or system for addressing a particular

performance objective), deployment (it implies that the approach has been implemented in

the organization), and results (outcomes of the approach and deployment).

14. Describe the meaning of quality circles. How does the use of quality circles improve

quality?

Quality circles: natural work teams made up of workers who are empowered to improve

work processes and are used by Japanese companies to involve employees in improving

processes and process capability. In other words, it is a group of employees who work on

similar tasks or share an area of responsibility‡They agree to meet on a regular basis to

discuss & solve problems related to work.‡

They operate on the principle that employee participation in decision-making and

problem-solving improves the quality of work. Using quality circles, employees share

ideas, help each other in understanding and solving quality problems which therefore

leads to the improvement of quality.

15. How does the ISO 14000 series differ from ISO 9000:2000?

The ISO 9000-2000 is an international consensus on good management practices with the aim of ensuring that the organization can continuously deliver the product or services that meet the client’s quality requirements. These good practices have been distilled into a set of standardized requirements for a quality management system, regardless of what your organization does, its size, or whether it is in the private, or public sector. ISO 9000 enables companies to demonstrate that they are in a position to provide products or services that meet customer expectations and are focused on total customer satisfaction.

ISO 14000 is an international standard for environmental management systems. It serves as a tool for defining and implementing activities that meet environmental business concerns. ISO 14000 provides for the framework for the Management System for an organization to meet its Environmental obligations reliably and consistently. It contains a set of requirements to define the operation of the Environmental Management System. Since the requirements are expressed in a general form, it has the flexibility to be applied to any organization.

16. What is an egalitarian culture? How does the development of an egalitarian culture

help a company become more quality minded?

Egalitarian culture: a culture where equality is favored in the way that people should get the same, or be

treated the same, or be treated as equals, in some respect. Egalitarian doctrines tend to express the idea that

all human persons are equal in fundamental worth or moral status.

The development of an egalitarian culture helps to facilitate the teamwork atmosphere that entails high

quality in the work leading the customer satisfaction. If employees feel to be equal, they invest themselves

totally in the work to improve their work.

17. Does quality lead to better business results?

The effects of quality on business results are mixed; some firms have been wildly successful

with their quality efforts and other companies have been unsuccessful in gaining bottom-line

results. There are two primary reasons for this.

First, there are many variables that affect profitability besides quality. The firm might produce

the highest-quality, obsolete product in the world. If the firm produces a high-quality product

or service that no one wants to buy, quality management systems likely will not save it. For

example, American Motors products of the early 1980s were given awards for outstanding

design. At the same time, these products were not well accepted by their customers and the

company went out of business despite its good quality.

Second, many companies implement quality incorrectly. Quality improvement takes a long

time, and many firms' desire quick returns on investment for quality training programs. When

these returns are slow in coming, the companies give up in midstream and wonder why their

quality efforts were ineffective. At the same time, quality programs have been shown to be

effective in a variety of cultures and industries when implemented correctly. Hence, the mixed

results. As a result, we need to understand the relationships between quality and other

variables.

Quality and Price : The relationship between price and quality has long been studied.

Indeed, the laws of supply and demand lead to a natural ordering of competing products

on a price scale such that a superior product would be the most highly priced.

Quality and Cost: A fundamental difference exists between a low-price strategy, which is

based on competitive pricing, and a low-cost orientation that is based on continual

learning and production competence.

Quality and Productivity: The relationship between quality and productivity is clearer and

has been demonstrated over time. The elimination of waste results in higher productivity.

Simplification of processes also results in flows that are simpler and of higher

productivity.

Quality and Profitability: Many quality enthusiasts have declared that quality will always

result in improved profitability. They will further state that those cases where quality does

not lead to improved profits are the fault of the offending implementer.

Quality and the Environment: Another strategic imperative receiving increasing attention

is the effect of business on the environment. Because of regulatory pressures both

domestic and international, firms realize they must integrate environmental concerns into

their strategic plans.

18. What are content variables? Provide examples of the content variables that are

considered in the strategic planning process?

Content variables represent what is to be contained in the strategic plan. The content variables are

the key considerations in the strategic plan itself. Among the strategy content variables are time,

leadership, quality costs, generic strategies(cost, differentiation, and focus), orders winners,

and quality as a core competency.

Time: There are two aspects of time including the time it takes to achieve business goals

as a result of quality and the speed at which companies improve.

Leadership: process by which a leader influences a group to move toward the attainment

of super-ordinate goals.

Quality costs: represent the summation of costs over the life of a product that includes

service, maintenance, and operating costs for the product. There are two broad categories

of quality costs including costs due to poor quality and costs associated with improving

quality.

Generic strategies(cost, differentiation, and focus): the Cost Leadership Strategy involves

the firm winning market share by appealing to cost-conscious or price-sensitive customers

that is achieved by having the lowest prices in the target market segment. Differentiation is

achieved by a competitor if the customer perceives the product or service to be unique in

an important way. Focus involves think of a product that is particularly regional or is

marked to a particular group.

orders winners: there is a relationship between winning orders and the generic strategies.

For example, a company can win orders based on differentiating its products (products

with high quality).

quality as a core competency: Prahalad Hamel defined core competence as consisting of

communication, involvement, and a deep commitment to working across organizational

boundaries. Quality, in and of itself, is probably not a core competency however, core

competency is built on the foundation of a long-term commitment to quality and continual

process improvement.

19. What is the relationship between quality and ethics?

Ethics and quality are intimately related to each other, as quality arises from moral attitudes as

a result of consciousness or awareness-raising, culture as a result of education and the use of

know-how and the application of standards as results of learning and training. Ethics include

Fairness, dependability, integrity, honesty, truthfulness. Good quality leads to the satisfaction

of customers. So, your customers can't be satisfy if you are not fair or honest. For example, it

is unethical to willingly ship defective products to your customers. Reliable products and low

defect rates reflect an ethical approach of management’s care for its customers. At the same time, you

are not satisfying them because the products are of bad quality. Quality is also good ethics.

Quality can not be improved without ethics. Good quality management is good ethics.

Otherwise, a firm not applying ethics rules (fairness, truthfulness, integrity, ...) will go out of

business because it would loose its customers and a firm without customers can't survive.

20. In developing its Excellence through Quality program, Ames initially benchmarked

against Xerox. Is benchmarking against another company’s quality program a good

idea? What are the potential hazards and benefits involved?

Yes, benchmarking against another company's quality program is a good idea because it

can lead to the improvement of the performance through many benefits:

Performance Improvement: Benchmarking allows the organization to define specific

gaps in performance and to select the processes to improve. These gaps provide objectives

and action plans for improvement at all levels of organization and promote improved

performance for individual and group participants.

Human Resources: Benchmarking provides basis for training. Employees begin to see

gap between what they are doing and what best-in-class are doing. Closing the gap points

out the need of personnel to be trained to learn techniques of problem solving and process

improvement.

The following benefits occurred with the benchmarking of Xerox by Ames.

Cultural Change was happening and being measured

Employee involvement groups were flourishing

Morale was at an all-time high because of involvement, improved communication, and improved

recognition.

A system for total quality and beyond was in place

The company had reorganized and decentralized

Prioritization of effort had become routine

Rejected products had been reduced by more than 50%

Financial results had improved

Potential hazards involved

Benchmarking is time-consuming and costly.

If your business strategy is simply to copy what others do, then by definition the best you can hope

for is to be a perfect imitation because if you are not a good imitator, you would fail.

There may be substantial difficulty obtaining cooperation from firms in your industry, unless you

happen to be a fortune 100 firm. To be effective, you should have something to offer to the target

firm. For example, a small firm may feel that it has little to offer a large firm. If the small firm is

flexible, the Goliath firm want to learn how to achieve that flexibility.

The predominance of functional benchmarking firms in noncompeting industries makes it difficult

to benchmark with these firms. Using tools as business process maps, it is possible to identify the

exact performance measures and metrics needed from the target firm.

Your efforts will be wasted unless you fully understand your own processes before you benchmark

someone else in order not to do mindless benchmarking. Something that helps one organization can

damage another.

21. Does quality lead to better business results?

The effects of quality on business results are mixed; some firms have been wildly successful

with their quality efforts and other companies have been unsuccessful in gaining bottom-line

results. There are two primary reasons for this.

First, there are many variables that affect profitability besides quality. The firm might produce

the highest-quality, obsolete product in the world. If the firm produces a high-quality product

or service that no one wants to buy, quality management systems likely will not save it. For

example, American Motors products of the early 1980s were given awards for outstanding

design. At the same time, these products were not well accepted by their customers and the

company went out of business despite its good quality.

Second, many companies implement quality incorrectly. Quality improvement takes a long

time, and many firms' desire quick returns on investment for quality training programs. When

these returns are slow in coming, the companies give up in midstream and wonder why their

quality efforts were ineffective. At the same time, quality programs have been shown to be

effective in a variety of cultures and industries when implemented correctly. Hence, the mixed

results. As a result, we need to understand the relationships between quality and other

variables.

Quality and Price : The relationship between price and quality has long been studied. Indeed,

the laws of supply and demand lead to a natural ordering of competing products on a price

scale such that a superior product would be the most highly priced.

Quality and Cost: A fundamental difference exists between a low-price strategy, which is

based on competitive pricing, and a low-cost orientation that is based on continual learning

and production competence.

Quality and Productivity: The relationship between quality and productivity is clearer and has

been demonstrated over time. The elimination of waste results in higher productivity.

Simplification of processes also results in flows that are simpler and of higher productivity.

Quality and Profitability: Many quality enthusiasts have declared that quality will always

result in improved profitability. They will further state that those cases where quality does not

lead to improved profits are the fault of the offending implementer.

Quality and the Environment: Another strategic imperative receiving increasing attention is

the effect of business on the environment. Because of regulatory pressures both domestic and

international, firms realize they must integrate environmental concerns into their strategic

plans.

22. What are content variables? Provide examples of the content variables that are

considered in the strategic planning process?

Content variables represent what is to be contained in the strategic plan. The content variables are

the key considerations in the strategic plan itself. Among the strategy content variables are time,

leadership, quality costs, generic strategies(cost, differentiation, and focus), orders winners,

and quality as a core competency.

Time: There are two aspects of time including the time it takes to achieve business goals as a

result of quality and the speed at which companies improve.

Leadership: process by which a leader influences a group to move toward the attainment of

super-ordinate goals.

Quality costs: represent the summation of costs over the life of a product that includes service,

maintenance, and operating costs for the product. There are two broad categories of quality

costs including costs due to poor quality and costs associated with improving quality.

Generic strategies(cost, differentiation, and focus): the Cost Leadership Strategy involves the

firm winning market share by appealing to cost-conscious or price-sensitive customers that is

achieved by having the lowest prices in the target market segment. Differentiation is achieved by a

competitor if the customer perceives the product or service to be unique in an important way.

Focus involves think of a product that is particularly regional or is marked to a particular

group.

orders winners: there is a relationship between winning orders and the generic strategies. For

example, a company can win orders based on differentiating its products (products with high

quality).

quality as a core competency: Prahalad Hamel defined core competence as consisting of

communication, involvement, and a deep commitment to working across organizational

boundaries. Quality, in and of itself, is probably not a core competency however, core

competency is built on the foundation of a long-term commitment to quality and continual

process improvement.

23. In developing its Excellence through Quality program, Ames initially benchmarked

against Xerox. Is benchmarking against another company’s quality program a good

idea? What are the potential hazards and benefits involved?

Yes, benchmarking against another company's quality program is a good idea

It can lead to the improvement of the performance through many benefits:

Performance Improvement: Benchmarking allows the organization to define specific gaps

in performance and to select the processes to improve. These gaps provide objectives and

action plans for improvement at all levels of organization and promote improved

performance for individual and group participants.

Human Resources: Benchmarking provides basis for training. Employees begin to see gap

between what they are doing and what best-in-class are doing. Closing the gap points out

the need of personnel to be trained to learn techniques of problem solving and process

improvement.

The following benefits occurred with the benchmarking of Xerox by Ames.

Cultural Change was happening and being measured

Employee involvement groups were flourishing

Morale was at an all-time high because of involvement, improved communication, and improved

recognition.

A system for total quality and beyond was in place

The company had reorganized and decentralized

Prioritization of effort had become routine

Rejected products had been reduced by more than 50%

Financial results had improved

Potential hazards involved

Benchmarking is time-consuming and costly.

If your business strategy is simply to copy what others do, then by definition the best you can hope for

is to be a perfect imitation because if you are not a good imitator, you would fail.

There may be substantial difficulty obtaining cooperation from firms in your industry, unless you

happen to be a fortune 100 firm. To be effective, you should have something to offer to the target firm.

For example, a small firm may feel that it has little to offer a large firm. If the small firm is flexible, the

Goliath firm want to learn how to achieve that flexibility.

The predominance of functional benchmarking firms in noncompeting industries makes it difficult to

benchmark with these firms. Using tools as business process maps, it is possible to identify the exact

performance measures and metrics needed from the target firm.

Your efforts will be wasted unless you fully understand your own processes before you benchmark

someone else in order not to do mindless benchmarking. Something that helps one organization can

damage another.

24. What is the PAF paradigm? Describe the three broad categories that comprise the

PAF paradigm.

The PAF paradigm translate costs into three broad categories including Prevention costs,

Appraisal costs and Failure costs.

Prevention costs are those costs associated with preventing defects and imperfections

from occurring. They include costs such as training , quality planning, process

engineering, and other costs associated with assuring quality

Appraisal costs are associated with the direct costs of measuring quality. These can

include a variety of activities such as lab testing, inspection, test equipment and materials,

losses because of destructive tests, and costs associated with assessments for ISO 9000 or

other awards

Failure costs are roughly categorized into two areas of costs. Internal failure costs are

those associated with on-line failure. External failure costs are associated with product

failure after the production process. This includes failure after the customer takes

possession of the products.

25. What sort of consequences can ensue if management sets numeric goals for quality

improvement?

According to Donald Wheeler at the University of Tennessee,when numeric goals for quality

improvement are set, one of three things will occur: people will achieve the goals and incur

positive results, people will distort the data and people will distort the system. The last ones

will mean that work standards are implemented improperly and that leads to the following

disadvantages:

Employees might be demotivated if they find standards difficult to achieve.

If quantity becomes the overriding concern, then quality suffers.

If work standards are in place, employees who perform at high levels might lose the

impetus to continually improve because they already will have satisfied standards.

The above consequences will not improve quality.

26. Discuss the leadership of (President Bush, Senator Hillary Clinton,, etc) in terms of

the quadrant model of the dimensions of leadership.

The four quadrants include:

Knowledge: it helps the leader accept risk and moderate the stress associated with the risk by

using coping mechanisms or healthy outlets.

Communication: the leader must be able to communicate with other leaders and subordinates.

Planning: the leader must be able plan and make decisions.

Vision: the leader must be able to formulate a coherent vision of the future toward which to

plan.

President Bush and Senator Hillary Clinton's leadership is the quadrant 4

27. Describe the difference between internal and external customers.

Internal customers are employees receiving goods or services from within the same firm.

For example, management information systems technicians and programmers view the

users within their company as internal customers.

External customers are the bill-paying receivers of our work. They are the ultimate people

we are trying to satisfy with our work.

The difference is that internal customers are inside the firm and don't pay the services or

goods received whereas external customers are outside the firm and pay for their services

or goods. Moreover, external customers are end users of goods and services.

28. What are the components and activities associated with the complaint resolution

process?

the complaint resolution process includes three components:

The first component of a complaint-resolution process is to compensate people for losses

The second component to complaint resolution is contrition. The firm should apologize to

the customer for the mistakes made and invoke the Marcy's mantra "The customer is

always right".

Third, the complaint-resolution process must be designed to make it easy for

complainants to reach resolution to simple complaints.

29. Describe the concept of sole sourcing. How are the concepts of sole sourcing and

strategic partnerships related?

Sole sourcing is a way to reduce the number of suppliers. It is a process for developing

relationships with a few suppliers for long contract terms.

Sole sourcing arrangements are developing into strategic partnerships where the suppliers

become de facto subsidiaries to their major customers. In these arrangements, not only are

suppliers single-source providers, but they also integrate information systems and quality

systems that allow close interaction at all levels.

30. Describe the difference between construct validity and content validity.

Construct validity refers to the use of certain terms and whether terms really measure what it

is we want to measure. For example, self-reported measures of percentage growth in sales may

not be a valid measure of success in customer satisfaction. Sales increases may instead reflect

favorable market conditions. Contend validity refers to whether the item really measure what

we want to measure.

31. Explain the various possibilities:

reliable and not valid: it means the responses are consistent but they are not measuring the

right thing they were supposed to measure.

valid and not reliable: it means the estimates are met that is the responses are measuring what

they were supposed to measure but there are not reliable, that means the responses are not

consistent.

not reliable and not valid: results are neither consistent nor measuring the right thing.

reliable and valid: it means the responses are both consistent and measuring the right thing

they were supposed to measure.

32. One of the problems encountered by universities is developing reliable and valid

course evaluation survey instruments. Choose a class you took last semester. For that

class, identify two dimensions relative to course delivery. Now, develop five valid

survey items for each of your two dimensions. Defend why you think these items are

valid.

An example of a class that I took last semester is Marketing Strategies

Dimensions: encouragement and openness, Clarty and undestandableness

Valid survey items per dimension

Clarty and undestandableness

I clearly understood the relevance of the assignments to the course objectives.

I think the evaluation (all graded material) clearly reflected the course content.

I clearly understood what I was expected to learn in this course.

The time I spent in class helped my understanding of difficult course content.

Examples and illustrations provided in this course aided my understanding.

encouragement and openness

I think the instructor communicated the course material clearly.

I think the instructor delivered the course material at a pace I could follow.

I felt comfortable participating in class activities.

I was engaged in learning the course content during class time

My interactions with the instructor encouraged me to learn.

The aim of the survey is to measure the course delivery about a class taking last semester. The

above items are valid because they are measuring what they were supposed to measure that is

the course delivery about a last semester class.

33. Describe the difference between an initiator firm and a target firm. Are these static

roles?

An initiator firm is the firm that initiates contact and studies another firm while a target

firm is the firm that is being studied also called a benchmarking partner.

These are not static roles. Often the target firm enters into a reciprocal agreement to

observe the initiator firm.

34. Describe the concept of performance benchmarking.

Performance benchmarking allows initiator firms to assess their competitive position by

comparing products and services with those of target firms. For example, an initiator firm may

be interested in identifying other firms that have implemented effective cost accounting

practices such as activity-based costing systems to observe and compare the performance of

various cost drivers.

35. Describe the concept of 5w2h. Where did the name “5w2h” come from?

Developed by Alan Robinson, the concept of 5w2h stands for five questions starting with w

(what: subject matter, why: purpose, where: location, when: sequence and who: people) and

two questions starting with h (how: methods and how much: cost). The 5w2h represents the

process to be followed that focuses the participants in the benchmarking process on the nuts

and bolts of what is being done. If the initiator firm can answer the 5w2h questions at the end

of a benchmarking process, then information will be in place that could, for instance, help a

company improve its customer satisfaction from a lower point to a higher one or beyond. The

5w2h is labeled as such because among the seven questions, five of them begin with w (what,

why, where, when and who) and two of them start with h (how and how).

36. What are some important principles to keep in mind to insure that your

benchmarking is efficient, effective, and ethical?

To contribute to efficient, effective, and ethical benchmarking, individuals agree for

themselves and their organization to abide by the following principles for benchmarking with

other organizations:

Principle of legality. Avoid discussion or actions that might lead to or imply an interest in

restraint of trade: market or customer allocation schemes, price fixing, dealing

arrangements, bid rigging, bribery, or misappropriation. Do not discuss costs with

competitors if costs are an element of pricing.

Principle of exchange. Be willing to provide the same level of information that you

request in any benchmarking exchange

Principle of Confidentiality. Treat benchmarking interchange as something confidential to

the individuals and organizations involved. Information obtained must not be

communicated outside the partnering organizations without prior consent of participating

benchmarking partners.

Principle of Use. Information obtained through benchmarking partnering should only be

used for the purpose of improving operations within the partnering companies themselves.

External use or communication of a benchmarking partner's name with their data or

observed practices requires permission of that partner. Do not, as a consultant or client,

extend one company's benchmarking study findings to another without the first company's

permission

37. How is a scrap efficiency ratio calculated? How should recycled scrap be handled in

the calculation? Give a numerical example.

Scrap efficiency = cost of goods sold/scrap

Lets consider two companies, A and B. Company A uses the equation above and computes

scrap by weighing discarded materials at a standard cost of $.15 per pound of scrap.

However, company B has a variation in its measures. Less $.03 per pound (the amount it

receives from a recycling company that purchases its scrap). Therefore, Company B's

account equation would be

Computed ratio for company B = cost of goods sold / (scrap-recovery)

The resulting equations are: Company A ratio = cost of goods sold/.15

Company B ratio = cost of goods sold/.12

If the cost of goods sold is the same for both companies, the ratio will be higher for company

B. In this case, company A is at a disadvantage because of the differences in the ways that

scrap is costed. These differences might be more apparent if a careful benchmarking study is

performed in which the participants know exactly what the numbers mean and what the

differences in accounting systems are. However, if a great number of data, ratios. Measures,

and numerical statistics are shared between the companies, the differences in accounting

methods might not be as obvious.

38. What are some pros and cons of benchmarking?

Benchmarking goes beyond competitive analysis to understanding the competitor’s output and

process of obtaining the output. It involves advantages and disadvantages.

Advantages

The advantages of benchmarking include enabling organizations to outperform competitors,

opening minds to new ideas, and placing organizations in a continuous improvement mode.

Performance Improvement: a primary advantage of benchmarking is that it sets the

foundation of performance improvement aimed at enhancing competitiveness. By

showing how to better competitors, benchmarking ensures the basic survival of the

business. Benchmarking identifies best practices in key business processes and determines

what constitutes superior performance. It then quantifies the gap between the expected

performance and the actual state; in the process it drives home uncomfortable facts and

harsh realities about the business. This provides the organization with both the reason to

improve and a definition of what constitutes improvement.

New Paradigms: A permanent benchmarking program forces organizations out of their

comfort zones and provides specific and measurable short-term improvement plans based

on current reality rather than historical performance. Very often, organizations set goals

based on past trends and established internal patterns. Benchmarking helps remove such

“paradigm blindness” and forces the organization to take a fresh approach to goal setting

based on a broader perspective, including the external perspective, the most critical factor

that drives customer expectations.

Change: Benchmarking help place organizational focus on change and provides the

direction for the change process. Benchmark heralds change by making explicit the

competitors' standards that provide the organization with minimum standards of

excellence and providing new ideas and better ways of doing things. Benchmarking opens

minds to new ideas, heralding a process of continuous learning that leads to a learning

organization.

Disadvantages

A major limitation of benchmarking is that while it helps organizations in measuring the

efficiency of their operational metrics, it remains inadequate to measure the overall

effectiveness of such metrics. Benchmarking reveals the standards attained by competitors

but does not consider the circumstances under which the competitors attained such

standards. If the competitor’s goals and visions were flawed or severely restricted due to

some specific factor, an organization by benchmarking such standards runs the risk of

trying to ape such flawed standards or settling for extremely low standards.

Another disadvantage of benchmarking is the danger of complacency and arrogance.

Many organizations tend to relax after excelling beyond competitors' standards, allowing

complacency to develop. The realization of having become the industry leader soon leads

to arrogance, when considerable scope for further improvements remains.

Many organizations make the mistake of undertaking benchmarking as a stand-alone

activity. Benchmarking is only a means to an end, and it is worthless if not accompanied

by a plan to change.

Finally, benchmarking is time-consuming and costly.

39. Describe what is meant by “computer-aided design.”

Computer-aided design (CAD) is the use of a wide range of computer-based tools that assist engineers,

architects and other design professionals in their design activities. It helps to develop more reliable and

robust designs. It simplifies the design process.

40. What is prototyping? What are the three types of prototypes?

Prototyping is an iterative approach to design in which a series of product mock-ups is

developed until the customer and the designer agree on the final design.

The three types of prototypes include

the basic prototype (nonworking mock-up of the product that can be reviewed by

customers prior to acceptance)

Paper prototypes consist of a series of drawings developed by the designer on CAD

systems and reviewed by decision makers prior to acceptance. It can also be an iterative

process

Working prototypes: fully working models of the final product.

41. What are FMEA and FMECA and what is the primary difference between the two?

FMEA (Failure modes and effects Analysis) is a reliability analysis tool that

systematically considers each component of a system, identifying, analyzing, and

documenting the possible failure modes within a system and the effects of each failure on

the system.

FMECA (Failure modes, effects, and criticality Analysis) is an extensive but simple

method for identifying ways in which an engineered system could fail.

Differences between the two

FMEA provides only qualitative information, whereas FMECA also provides limited

quantitative information, or information capable of being measured. FMEA is widely used in

industry as a "what if" process.

FMECA is effectively an extension of FMEA. In order to perform FMECA, analysts must

perform FMEA followed by critical analysis (CA). FMEA identifies failure modes of a

product or process and their effects, while CA ranks those failure modes in order of

importance, according to failure rate and severity of failure.

CA does not add information to FMEA. What it does, in fact, is limit the scope of FMECA to

the failure modes identified by FMEA as requiring reliability centered maintenance (RCM).

42. Describe the differences between design for reuse, design for disassembly, and design

for remanufacture.

Design for use refers to designing products so that they can be used in later generations of

products.

Design for remanufacture is a method for developing products so that the parts can be used in other

products. Associated with green manufacturing. Remanufacturing is a process where a particular

product is taken apart, cleaned, repaired, and then reassembled to be used again.

Design for disassembly include using fewer parts and fewer materials, using snap-fits

instead of screws, making assembly efficient and improving disposal, using design for

disassembly experts in concurrent design teams, and eliminating waste through better

design.

43. Discuss the importance of product traceability and recall procedures. Why is

product traceability considered an important consumer safety issue?

Product traceability and recall procedures are important aspects of product design.

Because companies are liable for the products they create., it is important to be able to

identify the origins of defective products or components through product traceability

procedures. They are able to trace products with a minimum of cost.

Product traceability is considered as an important consumer safety issue because it helps

limit product liability relating to safety hazards.

44. What is meant by the term “customer coproduction?”

Customer coproduction: it is the involvement of the customer in producing the services they

consume. For example, in many restaurant, it is not uncommon for the customer to fill their

own drinks.

45. Describe the difference between internal versus external services, and the role of

outsourcing in the provision of internal services.

External services are those whose customers pay the bills whereas Internal services are in-

house services such as data processing, printing, and email. Moreover, internal services

are separated from the external customer.

There is a trend in companies to outsource internal services. In a sense, this presents a

competitive pressure on internal services

46. What is the SERVQUAL instrument, how is it used, and what does it reveal?

SERVQUAL is a survey instrument for assessing quality along the five service quality

dimensions. It has been used by many firms and is an off-the-shelf approach that can be

used in many services situation. It is useful for performing what is called gap analysis.

Because services are often intangible, gaps in communication and understanding between

employees and customers have a serious negative affect on the perceptions of services

quality. It has two parts: customer expectations and customer perceptions.

It reveal the needs, the wants of the customers in order to produce the products or service

that fit them.

47. Explain Service Transaction Analysis (STA).

It a service improvement technique that allows managers to analyze their service processes at

a very detailed level. Crosby views service encounters as a series of transactions (or moments

of truth). Service Transaction Analysis is a method for identifying these transactions and

evaluating them from the customer's perspective to determine if there is a gap between service

design and what the customer perceives as the service.

48. What is services blueprinting?

A services blueprint is a flowchart that isolates potential fail points in a process. It includes

four steps (identify processes, isolate fail points, establish a time frame and analyze profits).

49. What are the advantages and disadvantages of customer coproduction for service

providers?

Disadvantages

Because customer are actively involved in producing the service they consume, they create

problems for service providers:

For example, the time required to serve different customers can vary widely, making it

difficult to plan capacity.

The varying demands of customers also contribute to process variability that makes

quality production of services difficult. Therefore, even though, customers are the reason

for the existence of services firms, they also make providing good service difficult.

Customer coproduction entails advantages for customers.

Advantages

By being actively involved in the production of the service, customers can exert great control

over the service provider and achieve great customization. For example, if you have never

visited the producer of a good product you purchase, you may not be aware of many issues

concerning the products such as sanitation or environmental pollution... However you are not

likely to remain a client of a restaurant that is unclean or creating environmental problems. As

a result of this greater control of customer, service facilities, processes, and interactions must

be designed in a way that promotes a positive encounter with the customer.