DESIGNING ORGANIZATIONS FOR QUALITY:Customer focus, Leadership

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Total Quality Management MGT510

Lesson # 21

DESIGNING ORGANIZATIONS FOR QUALITY

For design, development and implementation of a QMS, the ISO 9000 approach is completely

compatible with the total quality philosophy, though it is not as all encompassing. ISO 9000 is

composed of three standards:

ISO 9000:2000

Quality Management Systems Fundamentals and Vocabulary

ISO 9001:2000

Quality Management Systems Requirements

ISO 9004:2000

Quality Management Systems Guidelines for Performance Improvements

ISO 9001 and ISO 9004 are known as Consistent Pair and are based and follow PDCA methodology.

ISO system is about standardizing the approach organizations everywhere take in managing and

improving the processes that ultimately result in producing better quality products and services.

Specifically, ISO 9001(2000) establishes the requirements for quality management systems (QMS) that

must be employed by all organizations registered to the standard. Registered organizations should enjoy:

Wider customer acceptance of products and services

Improved effectiveness and reliability of its processes

Improved quality of products and services

Improved organizational performance and competitiveness

By the time ISO 9000: 1987 was released, TQM was a mature management system, well understood by

many in the West. It is clear that ISO's Technical Committee 176 (TC 176), which was charged with

ISO 9000's development, borrowed some TQM elements, most notably its documentation requirements.

ISO 9000: 1994 moved a bit closer to TQM, at least mentioning (though not requiring) continual

improvement. ISO 9000:2000 made a giant leap in comparison, especially in the area of continual

improvement, which has gone from receiving just cursory treatment to becoming a firm requirement. In

addition, the standard now incorporates eight quality management principles that come directly from

TQM. They are:

Customer focus understanding customer's needs, striving to exceed their expectations.

Leadership establishing direction, unity of purpose, and a supportive work environment.

Involvement of people ensuring that all employees at all levels are able to fully use their

abilities for the organization's benefit.

Process approach recognizing that all work is done through processes, and managing

them accordingly.

System approach to management expands on the previous principle in that achieving

any objective requires a system of interrelated processes.

Continua improvement as a permanent organizational objective, recognizing and acting

on the fact that no process is so good that further improvement is impossible.

Factual approach to decision making acknowledging that sound decisions must be

based on analysis of factual data and information.

Mutually beneficial supplier relationships to take advantage of the synergy that can be

found in such relationships.

By design, as a result of ISO 9000, any organization supplying products or service is able to develop

and employ a quality management system that is recognized by customers worldwide. Customers

around the globe who deal with ISO 9000-registrered organizations can expect that purchased goods or

services will conform to a set o recognized standards.

ISO 9001's requirements for quality management systems are generic in nature, and are applicable to

organizations in any industry or economic sector. Whether the organization manufactures a product or

Total Quality Management MGT510

provides a service, whether it is a company or a governmental agency, whether it is large or small, ISO

9000 can apply, and be used to advantage.

To be registered the organization must go through a process that includes the following steps:

Develop (or upgrade) a quality manual that describes how the company will assure the

quality of its products or services.

Document procedures (or upgrade existing documentation) that describe how the various

processes for design, production, continual improvement, and so forth, will be operated.

This must include procedures for management review/audits and the like.

The organization must provide evidence of top management's commitment to the QMS and

its continual improvement.

The organization's top management must ensure that customer requirements are determined

and met.

The organization must hire an accredited registrar company to examine its systems,

processes, procedures, quality manual, and related items. If everything is in order,

registration will be granted. Otherwise, the registrar will inform the company of which areas

require work (but will not inform the company specifically what must be done), and a

second visit will be scheduled.

Once registration is accomplished, the company will conduct its own internal audits to

ensure that the systems, processes, and procedures are working as intended.

Also once registered, the outside registrar will make periodic audits for the same purpose.

These audits must be passed to retain registration.

An important point to understand about ISO 9000 is that the organization has to respond to all ISO 9000

requirements and tell the registrar specifically what it is going to do and how. ISO does not tell the

organization. Assuming the registrar agrees with the organization's plan, registration is awarded. To

retain that registration, the organization must do what it said it would do.

Before the advent of the year 2000 release, ISO 9000 was concerned only with the standards which an

organization could build its own version of a quality management system. ISO 9000:2000 has closed

much of the gap that existed with TQM. The primary remaining difference between ISO 9000 and TQM

is in the degree to which the total organization is involved, ISO 9000 does not require the QMS to

include functions and levels that do not play a direct role in the management and execution of the

product/service realization processes. Functions that are typically not involved under the QMS include

human resources, finance (accounting), sales, and marketing.

Characteristics of Total Quality Management

ISO 9000:2000

TQM

Customer focus (internal and external)

Obsession with quality

Scientific approach to problem solving

Long-term commitment

Partial

Teamwork

Continual process and product improvement

Education and training intensive

Freedom through control

Unity of purpose

Employee involvement and empowerment

Partial

Total Quality Management Characteristics Compared with ISO 9000

In comparison, the ISO 9000 quality management system is designed to "provide the framework for

continual improvement to increase the probability of enhancing customer satisfaction and the

satisfaction of other interested parties. It provides confidence to the organization and its customers that

Total Quality Management MGT510

it is able to provide products that consistently fulfill requirements." ISO claims that beyond customer

satisfaction, cost and risk-management benefits will also accrue to the organization. These benefits

translate to improved competitiveness the same as TQM's objective. ISO claim these benefits result

from emphasizing the eight quality management principles on which the standard is based. Following

table provides a comparison of ISO's eight quality management principles with Deming's Fourteen

Points and TQM.

ISO 9000's Eight Quality Management Principles

Deming's 14 Points

TQM

Customer focus

Leadership

#1, #2, #7

Involvement of people

Process approach

System approach to management

Continual improvement

Factual approach to decision making

Mutually beneficial supplier relationships

ISO 9000 is Compatible with, and can be viewed as a Subset of, TQM

Clearly, TQM and ISO 9000 is not quite the same thing. However, there is nothing inherent in ISO 9000

that would prevent it from becoming part of a larger Total Quality Management environment. There are

many examples today of companies that have

ISO 9000's Quality Management Principles versus Deming's Fourteen Points and TQM successfully

included ISO 9000 as part of a larger total quality effort. Organizations that are already at some level of

TQM maturity or CMMI level 3 maturities have typically found it easy to implement ISO 9000. This is

because a TQM environment with its infrastructure of top management commitment, documented

processes and procedures, continuous improvement, obsession with quality, and so on, easily supports

the requirements of ISO 9001(2000).

Designing an ISO 9000 QMS Can Improve Market Perception in Global Post WTO World

A traditional organizational environment is one which still operates according to the "old way of doing

things" rather than according to the principles of Total Quality Management and the technology based

networked post WTO world. In Pakistan, you might say, an organization being run as an autocratic,

non-participatory and "SAITH" like organization as many in Sialkot, Guranwala, Faisalabad, Lahore,

and Karachi etc.

When ISO 9000 is implemented by a traditional organization, in its real spirit but much depends on the

organization's reasons for adopting ISO 9000 and the degree of executive-level commitment to it. Let us

take a look from a different view, if ISO 9000 is designed and developed for the wrong reasons, it can

not become a good marketing tool, and the organization's functional departments especially operations

and QA , might develop even more problems than they had before ISO 9000. Once again QMS

principles are taken in its letter and spirit.

The eight quality management principles are defined and detailed in ISO 9004:2000, Quality

management systems Guidelines for performance improvements.

Principle 1 Customer focus

Principle 2 Leadership

Principle 3 Involvement of people

Principle 4 Process approach

Total Quality Management MGT510

Principle 5 System approach to management

Principle 6 Continual improvement

Principle 7 Factual approach to decision making

Principle 8 Mutually beneficial supplier relationships

Principle 1:

Customer focus:

Organizations depend on their customers and therefore should understand current and future customer

needs, should meet customer requirements and strive to exceed customer expectations

Key benefits:

Increased revenue and market share obtained through flexible and fast responses to market

opportunities.

Increased effectiveness in the use of the organization's resources to enhance customer

satisfaction.

Improved customer loyalty leading to repeat business.

Applying the principle of customer focus typically leads to:

Researching and understanding customer needs and expectations.

Ensuring that the objectives of the organization are linked to customer needs and expectations.

Communicating customer needs and expectations throughout the organization.

Measuring customer satisfaction and acting on the results.

Systematically managing customer relationships.

Ensuring a balanced approach between satisfying customers and other interested parties (such as

owners, employees, suppliers, financiers, local communities and society as a whole).

Principle 2:

Leadership:

Leaders establish unity of purpose and direction of the organization. They should create and maintain

the internal environment in which people can become fully involved in achieving the organization's

objectives.

Key benefits:

People will understand and be motivated towards the organization's goals and objectives.

Activities are evaluated, aligned and implemented in a unified way.

Miscommunication between levels of an organization will be minimized.

Applying the principle of leadership typically leads to:

Considering the needs of all interested parties including customers, owners, employees,

suppliers, financiers, local communities and society as a whole.

Establishing a clear vision of the organization's future.

Setting challenging goals and targets.

Creating and sustaining shared values, fairness and ethical role models at all levels of the

organization.

Establishing trust and eliminating fear.

Total Quality Management MGT510

Providing people with the required resources, training and freedom to act with responsibility

and accountability.

Inspiring, encouraging and recognizing people's contributions.

Principle 3:

Involvement of people:

People at all levels are the essence of an organization and their full involvement enables their abilities to

be used for the organization's benefit.

Key benefits:

Motivated, committed and involved people within the organization.

Innovation and creativity in furthering the organization's objectives.

People being accountable for their own performance.

People eager to participate in and contribute to continual improvement.

Applying the principle of involvement of people typically leads to:

People understanding the importance of their contribution and role in the organization.

People identifying constraints to their performance.

People accepting ownership of problems and their responsibility for solving them.

People evaluating their performance against their personal goals and objectives.

People actively seeking opportunities to enhance their competence, knowledge and experience.

People freely sharing knowledge and experience.

People openly discussing problems and issues.

Principle 4:

Process approach:

A desired result is achieved more efficiently when activities and related resources are managed as a

process.

Key benefits:

Lower costs and shorter cycle times through effective use of resources.

Improved, consistent and predictable results.

Focused and prioritized improvement opportunities.

Applying the principle of process approach typically leads to:

Systematically defining the activities necessary to obtain a desired result.

Establishing clear responsibility and accountability for managing key activities.

Analyzing and measuring of the capability of key activities.

Identifying the interfaces of key activities within and between the functions of the organization.

Focusing on the factors such as resources, methods, and materials that will improve key

activities of the organization.

Evaluating risks, consequences and impacts of activities on customers, suppliers and other

interested parties.

Total Quality Management MGT510

Principle 5:

System approach to management:

Identifying, understanding and managing interrelated processes as a system contributes to the

organization's effectiveness and efficiency in achieving its objectives.

Key benefits:

Integration and alignment of the processes that will best achieve the desired results.

Ability to focus effort on the key processes.

Providing confidence to interested parties as to the consistency, effectiveness and efficiency of

the organization.

Applying the principle of system approach to management typically leads to:

Structuring a system to achieve the organization's objectives in the most effective and efficient

way.

Understanding the interdependencies between the processes of the system.

Structured approaches that harmonize and integrate processes.

Providing a better understanding of the roles and responsibilities necessary for achieving

common objectives and thereby reducing cross-functional barriers.

Understanding organizational capabilities and establishing resource constraints prior to action.

Targeting and defining how specific activities within a system should operate.

Continually improving the system through measurement and evaluation.

Principle 6:

Continual improvement:

Continual improvement of the organization's overall performance should be a permanent objective of

the organization.

Key benefits:

Performance advantage through improved organizational capabilities.

Alignment of improvement activities at all levels to an organization's strategic intent.

Flexibility to react quickly to opportunities.

Applying the principle of continual improvement typically leads to:

Employing a consistent organization-wide approach to continual improvement of the

organization's performance.

Providing people with training in the methods and tools of continual improvement.

Making continual improvement of products, processes and systems an objective for every

individual in the organization.

Establishing goals to guide, and measures to track, continual improvement.

Recognizing and acknowledging improvements.

Principle 7 Factual approach to decision making:

Effective decisions are based on the analysis of data and information

Key benefits:

Informed decisions.

Total Quality Management MGT510

An increased ability to demonstrate the effectiveness of past decisions through reference to

factual records.

Increased ability to review, challenge and change opinions and decisions.

Applying the principle of factual approach to decision making typically leads to:

Ensuring that data and information are sufficiently accurate and reliable.

Making data accessible to those who need it.

Analyzing data and information using valid methods.

Making decisions and taking action based on factual analysis, balanced with experience and

intuition.

Principle 8:

Mutually beneficial supplier relationships:

An organization and its suppliers are interdependent and a mutually beneficial relationship enhances the

ability of both to create value

Key benefits:

Increased ability to create value for both parties.

Flexibility and speed of joint responses to changing market or customer needs and expectations.

Optimization of costs and resources.

Applying the principles of mutually beneficial supplier relationships typically leads to:

Establishing relationships that balance short-term gains with long-term considerations.

Pooling of expertise and resources with partners.

Identifying and selecting key suppliers.

Clear and open communication.

Sharing information and future plans.

Establishing joint development and improvement activities.

Inspiring, encouraging and recognizing improvements and achievements by suppliers.

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