Chapter 2

Strategic Quality Management and Operationalizing Quality

Objectives
Define strategic quality management Discuss the strategic management process Operationalize the dimensions of quality Discuss ways to develop quality measures and metrics Discuss ways in which customer input may be obtained

Strategic Quality Management (SQM)

The term and concept is credited to Garvin (1988). Juran (1988) defined SQM as a systematic approach for setting and meeting quality goals throughout the company with upper management participation in managing for quality to an unprecedented degree.

Strategic Quality Management (SQM)

Madu and Kuei (1993) define the term as an extension of TQM. SQM involves the incorporation of quality and continuous improvement as a strategic objective

Strategic Quality Management (SQM)

SQM is fully integrated into the three phases of the strategic management process:
strategic planning strategic deployment evaluation and control

The Strategic Planning Process

Begins with the organization s mission and vision statement. SWOT Analysis
Internal assessment (strengths and weaknesses) External assessment (opportunities and threats)

The Strategic Planning Process (Figure 2.2)

External factors compared to internal factors to determine strategic goals Strategies developed Deliberate strategies formed to realize planned intentions Emergent strategies emerge from unplanned events

Strategic Deployment
All members of organization are involved The strategic plan is shared with all members of the organization Projects and actions identify for implementation

Strategic Deployment (Figure 2.3)

Bronson Methodist Hospital
2005 Malcolm Baldrige National Quality Award Plan for Excellence Plan deployed beginning with the Bronson Leadership System

Evaluation and Control

Feedback System Systematic assessment system
Measures Metrics
What is important to the firm? How does the firm create value? Provide effective feedback Focus attention on gaps between current level of performance and desired level

Approaches to Monitoring Progress toward Strategic Goals

Cost of Quality
Measure of all costs Decline in costs indicates overall improvement in quality

Balanced Scorecard
A management control system Focused on mission, strategy, and goals Assesses progress (4 perspectives)
Financial Customer

Organizational learning and growth Internal business

Dimensions, Measures, and Metrics

Garvin s Eight Dimensions are often used as a framework
Metric has to be developed to operationalize the dimensions. Customer input

Service quality
Multidimensional Dimensions must be developed for each service industry Usually more qualitative than quantitative

Dimensions, Measures, and Metrics

Importance of each dimension must be considered Weight given to the dimension should reflect how vital it is to the product or service Customer input should be used to determine how vital the dimension is

Example: Operationalizing the Dimensions of Quality

Consider the case of a laser printer for use with a personal computer. Garvins eight dimensions of product quality might be operationalized as follows.

Example: Operationalizing the Dimensions of Quality

Performance: Pages per minute Print density Features: Multiple paper trays Color capability Reliability: Mean time between failures (MTBF)

Example: Operationalizing the Dimensions of Quality

Conformance: UL rated Crispness of print relative to competitors Durability: Estimated time to obsolescence Expected life of major components Serviceability: Availability of authorized repair centers Number of copies per print cartridge

Example: Operationalizing the Dimensions of Quality

Aesthetics: Control button layout Case style Perceived Quality: Brand name recognition Rating in Consumer Reports Rating in Byte magazine

Example: Operationalizing the Dimensions of Quality

The relative importance of each dimension could be established by assigning each dimension a weight between 0 and 1 with the total weights = 1.
Dimension Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived Quality TOTAL Weight 0.30 0.05 0.15 0.10 0.15 0.10 0.05 0.10 1.00

Example: Operationalizing the Dimensions of Quality

Each printer to be evaluated would be tested using the measures or metrics established for each dimension. Based on the test results a dimension score between 0 and 10 could be assigned where 10 indicates perfection and 0 indicates total absence of that dimension.

Example: Operationalizing the Dimensions of Quality

Dimension Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived Quality TOTAL

Weight 0.30 0.05 0.15 0.10 0.15 0.10 0.05 0.10 1.00

Brand X Score 8 6 5 8 9 6 7 9

Brand Y Score 7 2 6 7 8 9 9 6

Example: Operationalizing the Dimensions of Quality

Multiplying the dimension score by the dimension weight yields a weighted dimension score. Summing these weighted scores over the eight dimensions yields an overall relative quality rating for each copier.

NOTE: This process can be easily done using a spreadsheet such as Excel.

Example: Operationalizing the Dimensions of Quality

Dimension Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived Quality TOTAL Weight 0.30 0.05 0.15 0.10 0.15 0.10 0.05 0.10 1.00 Brand X Score Wtd. 8 2.40 6 0.30 5 0.75 8 0.80 9 1.35 6 0.60 7 0.35 9 0.90 7.45 Brand Y Score Wtd. 7 2.10 2 0.10 6 0.90 7 0.70 8 1.20 9 0.90 9 0.45 6 0.60 6.95

In this case, Brand X is determined to be superior overall to Brand Y.

Methods of Obtaining Input from Customers

Customers provide source of the dimensions used Validity and reliability Validity-what was intended to measured is being measured Reliability-how consistent is the method Focus Groups Surveys Combination (Focus Groups & Surveys)

Focus Group
Unstructured interview
Trained moderator Homogenous respondents

Provides more information than survey Analysis is more difficulty because much of the data is qualitative

Surveys
Questionnaires are given to a sample population Usually in a prearranged order with predetermined set of responses Concerns when using survey
Question design, presentation order, response scale, non-response bias, and data analysis

Focus Groups & Surveys in Combination

Focus groups can help determine key quality characteristics Information from focus group used to design survey that will yield desired information

Summary
Quality should be in strategic plan if it is used as a source of competitive advantage Strategic plans must be deployed and managed Input from many sources is vital

Summary
Input can be obtained from customer surveys and/or focus groups Validity and reliability should always be considered in data collection Cost of Quality and The Balanced Scorecard can be used to determine the effectiveness of strategic quality plan deployment