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1
CHAPTER 2
Total Quality In Organizations
Teaching Notes
This chapter introduces the concept of quality in production and service systems and develops
the idea that quality is central to effective operation of these systems. Students should be
encouraged to develop an understanding of the fact that quality is not an "add-on" to
organizational processes, but that it is "a way of doing business." Key objectives should be:
• To understand and appreciate the contributions of W. Edwards Deming, Joseph Juran,
and Philip Crosby who are recognized as the most influential thinkers and leaders of
• To appreciate Deming’s key tenets, encompassed in The Deming Chain Reaction, his
14 Points representing the practices that Deming advocated for achieving quality
excellence, and the four simple elements that he called a System of Profound
Knowledge:
o Appreciation for a system
o Understanding variation
o Theory of knowledge
o Psychology
• To define a system as a set of functions or activities within an organization that work
Total Quality in Organizations 2
service that does not meet customers’ expectations. Statistical methods are the primary
• To know the concepts of Philip Crosby’s approach to quality, as summarized in his
Absolutes of Quality Management – conformance to requirements, no such thing as a
quality problem, doing the job right the first time, cost of quality measurement, and zero
defects as the only performance standard – and Basic Elements of Improvement –
determination, education, and implementation. He places more emphasis on behavioral
change rather than on the use of statistical techniques as advocated by Deming and Juran.
• To know the concepts of two global quality thinkers, A. V. Feigenbaum and Karou
Ishikawa. Feigenbaum, who views quality as a strategic business tool and coined the
phrase “total quality control,” developed cost of quality approaches and proposed Three
• To develop the capability to apply statistical thinking, which is is a philosophy of
learning based on principles of understanding that all work occurs in a system of
Total Quality in Organizations 3
• To learn that Common causes of variation are inherent to a process, generally account
for most observed variation, and cannot be identified on an individual basis or controlled.
Special (assignable) causes of variation are sporadic in nature and result from external
• To consider the requirements for a quality management system (QMS) which is defined
as a mechanism for managing and continuously improving core processes to "achieve
maximum customer satisfaction at the lowest overall cost to the organization." A quality
ANSWERS TO QUALITY IN PRACTICE KEY ISSUES
Bringing Quality Principles to Life at KARLEE.
1. Karlee seems to have a focus on their definition of quality from the user perspective.
This is evidenced by their practices of carefully selecting customers that support its
values—particularly a systematic approach to business and performance management,
Total Quality in Organizations 4
The three basic principles of quality management: customer focus, focus on quality
people at every level, and continuous improvement based on sound infrastructure, are
obviously very important at Karlee. The company’s quality focus starts with
Leadership, including the Senior Executive Leaders (SELs) and the KARLEE
Leadership Committee (KLC) who set the strategic direction of the company, and
2. Deming’s philosophy, based on improving products and services by reducing uncertainty
and variation in design, manufacturing, and service processes, driven by the leadership of
top management. Karlee exemplifies these qualities through their leadership system,
process design and improvement, systematic management, and employee involvement
and commitment.
Juran's "Quality Trilogy," consists of three parts: Quality planning--the process for
preparing to meet quality goals; quality control--the process for meeting quality goals
during operations; and quality improvement--the process for breaking through to
Total Quality in Organizations 5
• Production and delivery processes are designed around cell manufacturing.Teams
are empowered to change targets recommended during strategic planning if they
believe it will help them achieve higher performance, as well as to schedule work,
manage inventory, and design the layout of their work areas.
• Teams analyze defect data, customer-reported problems, and control charts
generated during production to identify problems and opportunities for
ISO 9000 and Sears’ Quality Management System
1. It is likely that Sears had to face a number of issues when it began to implement ISO
9000. The company wanted a consistent process for improving customer satisfaction and
enhancing service capabilities. It no doubt needed a way to develop process
Total Quality in Organizations 6
Principle 1: Customer Focus - understanding current and future customer needs, meeting
customer requirements, and striving to exceed customer expectations.
Principle 2: Leadership - leaders establishing unity of purpose and direction of the
organization.
Principle 3: Involvement of People - full involvement of people at all levels to enable
their abilities to be used for the organization’s benefit.
Principle 4: Process Approach – achieving desired results more efficiently by managing
activities and related resources as a process.
These principles were seen in operation as Sears made dramatic improvements in such
areas as calibrating the tools used for repairs and service calls. The company began 100-
percent tool calibration for safety purposes, which led to opening and registering its own
calibration lab to ISO/IEC 17025. Sears improved its existing hazardous-materials
program by implementing a comprehensive program on refrigerant handling. Efficiency
Total Quality in Organizations 7
environment to all affected employees has taken place as improvements have been
ANSWERS TO REVIEW QUESTIONS
1. Deming’s (assumed) definition of quality is perhaps closest to the user perspective and to
the definition of quality as “fitness for intended use.”
Unstated, but implied, is the fact that (as Deming spelled out in his 14 Points): quality is
the result of action taken by management, acting as leaders, with the willing cooperation
of knowledgeable workers, to constantly and forever improve products and services by
3. As will be explained in more detail in the answer to question 4, below, Deming's System
of Profound Knowledge consists of four interrelated parts: (1) appreciation for a system;
(2) understanding of variation; (3) theory of knowledge; and (4) psychology. There are a
number of ways to classify his 14 Points, which could include these as categories.
Under appreciation for a system, points 1, 2, 4, 5, 9, 13, and 14 are most oriented towards
systems. Numbers 1 and 2, relating to vision, commitment, and development of a new
philosophy of leadership require a “big picture” view of the organization and its place in
business and society. Number 4 relates to the requirement that total costs, not incremental
Total Quality in Organizations 8
take place by exhorting workers to do a better job, but by understanding the cause of poor
quality and eliminating them. Point 11 makes a similar point that quotas and management
by objectives are approaches that do not encourage improvement, but instead, create fear.
As Scholtes explained, when people don’t understand the theory of knowledge, they
don’t know how to plan, accomplish learning, improve, change, or solve problems,
4. Deming's System of Profound Knowledge consists of four interrelated parts: (1)
appreciation for a system; (2) understanding of variation; (3) theory of knowledge; and
(4) psychology. Appreciating a system involves understanding how each component of
the system works to produce the end product or service, and understanding how the
5. A system is the set of functions or activities within an organization that work together for
the aim of the organization. Systems thinking is critical to the application of quality,
Total Quality in Organizations 9
6. Variation exists in any production and service process, generally due to factors inherent
in the design of the system, which cannot easily be controlled. Today, modern technology
has improved our ability to produce many physical parts with very little variation;
however, the variation that stems from human behavior and performance continues to
hamper quality efforts. Deming suggested that management first understand, and then
work to reduce variation through improvements in technology, process design, and
7. As Scholtes explained, lack of understanding of the components of Profound Knowledge
can have a profound impact on the health of organizations. To briefly summarize the
multiple points that Scholtes made is difficult. However, he pointed out that when people
don’t understand systems, they basically don’t understand that incidents, interventions,
8. Juran's "Quality Trilogy," like most trilogies these days, consists of three parts: Quality
planning--the process for preparing to meet quality goals; quality control--the process for
meeting quality goals during operations; and quality improvement--the process for
breaking through to unprecedented levels of performance.
Total Quality in Organizations 10
9. According to Juran, all breakthroughs follow a commonsense sequence of discovery,
organization, diagnosis, corrective action, and control, which he formalized as the
breakthrough sequence, and which can be summarized as follows:
Proof of the need: Managers, especially top managers, need to be convinced that quality
improvements are simply good economics. Through data collection efforts, information
Total Quality in Organizations 11
10. Like Deming, Juran advocated company-wide quality management, with a never-ending
process of quality improvement, involving such activities as market research, product
development, production process control, inspection and testing, and customer feedback.
He emphasized the need for management commitment to quality improvement, and the
11. Crosby's Absolutes of Quality Management are:
(1) Quality means conformance to requirements, not elegance. Crosby sees requirements
as being ironclad; they are communication devices which must be clearly stated so that
Total Quality in Organizations 12
(5) The only performance standard is "Zero Defects." Zero Defects is a performance
standard, NOT a motivational program. The idea behind ZD is to do it right the first time,
to concentrate on preventing defects rather than just finding and fixing them.
(6) People are conditioned to believe that error is inevitable; thus they not only accept
error, they anticipate it. Each of us has limits within which we can accept errors.
12. A.V. Feigenbaum is primarily known for three contributions to quality -- his international
promotion of the quality ethic, his development of the concept of total quality control,
and his development of the quality cost classification.
Kaoru Ishikawa was instrumental in the development of the broad outlines of Japanese
13. Principles are the foundation of the philosophy, practices are activities by which the
principles are implemented, and techniques are tools and approaches that help managers
Total Quality in Organizations 13
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.
Principle 3: Involvement of People - People at all levels are the essence of an organization
15. Practices associated with quality principles include:
Principle 1: Customer Focus
• Researching and understanding customer needs and expectations.
• Ensuring that the objectives of the organization are linked to customer needs and
expectations.
Total Quality in Organizations 14
Principle 3: Involvement of People
• People understanding the importance of their contribution and role in the
organization.
• People identifying constraints to their performance.
Principle 4: Process Approach
• 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.
Principle 5: System Approach to Management
• 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.
Total Quality in Organizations 15
Principle 6: Continual Improvement
• Employing a consistent organization-wide approach to continual improvement of the
organization's performance.
Principle 7: Factual Approach to Decision Making
• Ensuring that data and information are sufficiently accurate and reliable.
Principle 8: Mutually Beneficial Supplier Relationships
• Establishing relationships that balance short-term gains with long-term
considerations.
• Pooling of expertise and resources with partners.
16. Statistical thinking is a philosophy of learning and action based on these principles:
1. All work occurs in a system of interconnected processes.
2. Variation exists in all processes.
17. Operational problems created by excessive variation include:
• Variation increases unpredictability: If we don’t understand the variation in a system,
Total Quality in Organizations 16
• Variation reduces capacity utilization: If a process has little variability, then
managers can increase the load on the process because they do not have to
incorporate slack into their production plans.
• Variation contributes to a “bullwhip” effect: This well-known phenomenon occurs in
18. Common causes of variation occur as a natural part of the process and are difficult to
change without making a major change in the system of which they are a part. Special
causes of variation arise from sources outside the system and can generally be traced
19. The two fundamental mistakes which managers can make in attempting to improve a
process are: (1) To treat as a special (or outside) cause any fault, complaint, mistake,
breakdown, accident, or shortage which is actually due to common causes, and (2) to
20. The Red Bead experiment emphasizes that little, if anything, can improve quality in a
poorly-managed production system. In the experiment, managers control incoming
material (white and red beads) and work procedures so rigidly that there is little room for
Total Quality in Organizations 17
Red Bead experiment is that all factors of a process must be examined to locate and
correct negative variations.
21. According to the ASQ online glossary, a quality management system (QMS) can be
considered a mechanism for managing and continuously improving core processes to
"achieve maximum customer satisfaction at the lowest overall cost to the organization."
It applies and synthesizes standards, methods and tools to achieve quality-related goals.
Thus, a quality management system represents a specific implementation of quality
22. The ISO 9000 family of standards are a set of standards and guidelines for quality
management systems that represents an international consensus on good quality
management practices. They provide a comprehensive framework for designing and
managing a quality management system and help organizations establish a process
orientation and the discipline to document and control key processes.
The original objectives of the ISO 9000 standards were to:
1. Achieve, maintain, and seek to continuously improve product quality (including
services) in relationship to requirements.
Total Quality in Organizations 18
23. The three principal benefits of ISO 9000 are:
• It provides discipline. The ISO 9001 requirement for audits forces an organization to
review its quality system on a routine basis. If it fails to maintain the quality system,
audits should recognize this and call for corrective action.
• It contains the basics of a good quality system. ISO 9001 includes basic requirements
In addition to improving internal operations, the most important reasons why companies
seek ISO 9000 certification include:
a. Meeting contractual obligations-- Some customers now require certification of all their
suppliers. Suppliers that do not pursue registration will eventually lose customers.
24. A primary reason why not all quality management systems are effective is, as one
practitioner has observed: many quality management systems focus more on compliance
Total Quality in Organizations 19
regulated by the Food and Drug Administration. The goals of the quality department
often become disconnected from the quality processes across the organization if the focus
evolves toward simply maintaining data and documentation to display an ISO certificate
or to meet regulatory requirements. For example, studies in the life-sciences industry
ANSWERS TO DISCUSSION QUESTIONS
1. When one compares the Deming Chain Reaction (Figure 2.1) with Figure 1.3, which
suggests the relationships between quality and profitability one can see that Deming’s
model emphasizes quality of conformance on the right-hand side of the quality and
profitability model (Figure 1.3). Although “the market” is mentioned in Deming’s
model, quality of design is not explicitly treated. Lower prices in his model also implies
cost reductions which are passed on to customers, as opposed to higher prices in Figure
2. Deming's 14 points are interrelated as part of a complete system. They support each other
as part of a complete system for managing. For example, Point #1 requires that managers
