What is quality? It is not easy to define quality, and a number of different definitions have been proposed. One definition that makes sense is fitness for use. Here the user of a product or service can be an individual, a manufacturer, a retailer, or the like. For instance, an individual who purchases a High Definition television set or a DVD recorder expects the unit to be defect free and to provide years of reliable, high-performance service. If the TV or DVD recorder performs as desired, it is fit for use. Another definition of quality that makes sense says that quality is the extent to which customers feel that a product or service exceeds their needs and expectations. For instance, if the DVD recorder’s purchaser believes the unit exceeds all the needs and expectations he or she had for the recorder when it was purchased, then the customer is satisfied with the unit’s quality.
Three types of quality can be considered: quality of design, quality of conformance, and quality of performance. Quality of design has to do with intentional differences between goods and services with the same basic purpose. For instance, all DVD recorders are built to perform the same function—record and play back DVDs. However, DVD recorders differ with respect to various design characteristics—picture sharpness, sound quality, digital effects, ease of use, and so forth. Agiven level of design quality may satisfy some consumers and may not satisfy others. The product design will specify a set of tolerances (specifications) that must be met. For example, the design of a DVD recorder sets forth many specifications regarding electronic and physical characteristics that must be met if the unit is to operate acceptably. Quality of conformance is the ability of a process to meet the specifications set forth by the design. Quality of performance is how well the product or service actually performs in the marketplace. Companies must find out how well customers’ needs are met and how reliable products are by conducting after-sales research.
The marketing research arm of a company must determine what the customer seeks in each of these dimensions. Consumer research is used to develop a product or service concept—a combination of design characteristics that exceeds the expectations of a large number of consumers. This concept is translated into a design. The design includes specifications that, if met, will satisfy consumer wants and needs. A production process is then developed to meet the design specifications. In order to do this, variables that can control the process must be identified, and the relationships between input variables and final quality characteristics must be understood. The manufacturer expresses quality characteristics as measurable variables that can be tracked and used to monitor and improve the performance of the process. Service call analysis often leads to product or service redesigns in order to improve the product or service concept. It is extremely important that the initial design be a good one so that excessive redesigns and customer dissatisfaction can be avoided.
History of the quality movement In the 1700s and 1800s, master craftsmen and their apprentices were responsible for designing and building products. Quantities of goods produced were small, and product quality was controlled by expert workmanship. Master craftsmen had a great deal of pride in their work, and quality was not a problem. However, the introduction of mass production in the late 1800s and early 1900s changed things. Production processes became very complex, with many workers (rather than one skilled craftsman) responsible for the final product. Inevitably, product quality characteristics displayed variation. In particular, Henry Ford developed the moving assembly line at Ford Motor Company. As assembly line manufacturing spread, quality became a problem. Production managers were rewarded for meeting production quotas, and quality suffered. To make mass-produced products more consistent, inspectors were hired to check product quality. However, 100 percent inspection proved to be costly, and people started to look for alternatives.
Much of the early work in quality control was done at Bell Telephone (now known as American Telephone and Telegraph or AT&T). The Bell System and Western Electric, the manufacturing arm of Bell Telephone, formed the Inspection Engineering Department to deal with quality problems. In 1924 Walter Shewhart of Bell Telephone Laboratories introduced the concept of statistical quality control—controlling quality of mass-produced goods. Shewhart believed that variation always exists in manufactured products, and that the variation can be studied, monitored, and controlled using statistics. In particular, Shewhart developed a statistical tool called the Control Chart. Such a chart is a graph that can tell a company when a process needs to be adjusted and when the process should be left alone. In the late 1920s Harold F. Dodge and Harold G. Romig, also of Bell Telephone Laboratories, introduced statistical acceptance sampling, a statistical sampling technique that enables a company to accept or reject a quantity of goods (called a lot) without inspecting the entire lot. By the mid-1930s, Western Electric was heavily using statistical quality control (SQC) to improve quality, increase productivity, and reduce inspection costs. However, these statistical methods were not widely adopted outside Bell Telephone.
During World War II statistical quality control became widespread. Faced with the task of producing large quantities of high-quality war matériel, industry turned to statistical methods, failure analysis, vendor certification, and early product design. The U.S. War Department required that suppliers of war matériel employ acceptance sampling, and its use became commonplace. Statistical control charts were also used, although not as widely as acceptance sampling.
In 1946 the American Society for Quality Control (ASQC) was established to encourage the use of quality improvement methods. The organization sponsors training programs, seminars, and publications dealing with quality issues. In spite of the efforts of the ASQC, however, interest in quality in American industry diminished after the war. American business had little competition in the world market—Europe and Japan were rebuilding their shattered economies. Tremendous emphasis was placed on increased production because firms were often unable to meet the demand for their products. Profits were high, and the concern for quality waned. As a result, postwar American managers did not understand the importance of quality and process improvement, and they were not informed about quality improvement techniques.
However, events in Japan took a different turn. After the war, Japanese industrial capacity was crippled. Productivity was very low, and products were of notoriously bad quality. In those days, products stamped “Made in Japan” were generally considered to be “cheap junk.” The man credited with turning this situation around is W. Edwards Deming. Deming, born in 1900, earned a Ph.D. in mathematical physics from Yale University in 1927. He then went to work in a Department of Agriculture–affiliated laboratory. Deming, who had learned statistics while studying physics, applied statistics to experiments conducted at the laboratory. Through this work, Deming was introduced to Walter Shewhart, who explained his theories about using statistical control charts to improve quality and productivity. During World War II, Deming was largely responsible for teaching 35,000 American engineers and technical people how to use statistics to improve the quality of war matériel. After the war, the Allied command sent a group of these engineers to Japan. Their mission was to improve the Japanese communication system. In doing so, the engineers employed the statistical methods they had learned, and Deming’s work was brought to the attention of the Union of Japanese Scientists and Engineers (JUSE). Deming, who had started his own consulting firm in 1946, was asked by the JUSE to help increase Japanese productivity. In July 1950 Deming traveled to Japan and gave a series of lectures titled “Elementary Principles of the Statistical Control of Quality” to a group of 230 Japanese managers. Deming taught the Japanese how to use statistics to determine how well a system can perform, and taught them how to design process improvements to make the system operate better and more efficiently. He also taught the Japanese that the more quality a producer builds into a product, the less it costs. Realizing the serious nature of their economic crisis, the Japanese adopted Deming’s ideas as a philosophy of doing business. Through Deming, the Japanese found that by listening to the wants and needs of consumers and by using statistical methods for process improvement in production, they could export high-quality products to the world market.
Although American business was making only feeble attempts to improve product quality in the 1950s and 1960s, it was able to maintain a dominant competitive position. Many U.S. companies focused more on marketing and financial strategies than on product and production. But the Japanese and other foreign competitors were making inroads. By the 1970s, the quality of many Japanese and European products (for instance, automobiles, television sets, and electronic equipment) became far superior to their American-made counterparts. Also, rising prices made consumers more quality conscious—people expected high quality if they were going to pay high prices. As a result, the market shares of U.S. firms rapidly decreased. Many U.S. firms were severely injured or went out of business.
Meanwhile, Deming continued teaching and preaching quality improvement. While Deming was famous in Japan, he was relatively unknown in the United States until 1980. In June 1980 Deming was featured in an NBC television documentary titled “If Japan Can, Why Can’t We?” This program, written and narrated by then–NBC correspondent Lloyd Dobyns, compared Japanese and American industrial productivity and credited Deming for Japan’s success. Within days, demand for Deming’s consulting services skyrocketed. Deming consulted with many major U.S. firms. Among these firms are The Ford Motor Company, General Motors Corporation, and The Procter & Gamble Company. Ford, for instance, began consulting with Deming in 1981. Donald Petersen, who was Ford’s chairman and chief executive officer at the time, became a Deming disciple. By following the Deming philosophy, Ford, which was losing 2 billion dollars yearly in 1980, attempted to create a quality culture. Quality of Ford products was greatly improved, and the company again became profitable. The 1980s saw many U.S. companies adopt a philosophy of continuous improvement of quality and productivity in all areas of their businesses—manufacturing, accounting, sales, finance, personnel, marketing, customer service, maintenance, and so forth. This overall approach of applying quality principles to all company activities is called Total Quality Management (TQM) or total quality control (TQC). It is becoming an important management strategy in American business. Dr. Deming taught seminars on quality improvement for managers and statisticians until his death on December 20, 1993. Deming’s work resulted in widespread changes in both the structure of the world economy and the ways in which American businesses are managed.
The fundamental ideas behind Deming’s approach to quality and productivity improvement are contained in his “14 points.” These are a set of managerial principles that, if followed, Deming believed would enable a company to improve quality and productivity, reduce costs, and compete effectively in the world market. We briefly summarize the 14 points in Table 17.1 on the next page. For more complete discussions of these points, see Bowerman and O’Connell (1996), Deming (1986), Walton (1986), Scherkenbach (1987), or Gitlow, Gitlow, Oppenheim, and Oppenheim (1989). Deming stressed that implementation of the 14 points requires both changes in management philosophy and the use of statistical methods. In addition, Deming believed that it is necessary to follow all of the points, not just some of them.
In 1988 the first Malcolm Baldrige National Quality Awards were presented. These awards, presented by the U.S. Commerce Department, are named for the late Malcolm Baldrige, who was Commerce Secretary during the Reagan administration. The awards were established to promote quality awareness, to recognize quality achievements by U.S. companies, and to publicize successful quality strategies. The Malcolm Baldrige National Quality Award Consortium, formed by the ASQC (now known as the ASQ) and the American Productivity and Quality Center, administers the award. The Baldrige award has become one of the most prestigious honors in American business. Annual awards are given in three categories—manufacturing, service, and small business. Winners include companies such as Motorola Inc., Xerox Corporation Business Products and Systems, the Commercial Nuclear Fuel Division of Westinghouse Electric Corporation, Milliken and Company, Cadillac Division, General Motors Corporation, Ritz Carlton Hotels, and AT&T Consumer Communications.
Finally, the 1990s saw the adoption of an international quality standards system called ISO 9000. More than 90 countries around the globe have adopted the ISO 9000 series of standards for their companies, as have many multinational corporations (including AT&T, 3M, IBM, Motorola, and DuPont). As a brief introduction to ISO 9000, we quote “Is ISO 9000 for You?” published by CEEM Information Systems:
What Is ISO 9000? ISO 9000 is a series of international standards for quality assurance management systems. It establishes the organizational structure and processes for assuring that the production of goods or services meets a consistent and agreed-upon level of quality for a company’s customers.
The ISO 9000 series is unique in that it applies to a very wide range of organizations and industries encompassing both the manufacturing and service sectors.
Why Is ISO 9000 Important?
ISO 9000 is important for two reasons. First . . . the discipline imposed by the standard for processes influencing your quality management systems can enhance your company’s quality consistency. Whether or not you decide to register your company to ISO 9000 standards, your implementing such discipline can achieve greater efficiency in your quality control systems.
Second . . . more and more companies, both here at home and internationally, are requiring their suppliers to be ISO 9000 registered. To achieve your full market potential in such industries, registration is becoming essential. Those companies who become registered have a distinct competitive advantage, and sales growth in today’s demanding market climate requires every advantage you can muster.
Clearly, quality has finally become a crucially important issue in American business. The quality revolution now affects every area in business. But the Japanese continue to mount new challenges. For years, the Japanese have used designed statistical experiments to develop new processes, find and remedy process problems, improve product performance, and improve process efficiency. Much of this work is based on the insights of Genichi Taguchi, a Japanese engineer. His methods of experimental design, the so-called Taguchi methods, have been heavily used in Japan since the 1960s. Although Taguchi’s methodology is controversial in statistical circles, the use of experimental design gives the Japanese a considerable advantage over U.S. competitors because it enables them to design a high level of quality into a product before production begins. Some U.S. manufacturers have begun to use experimental design techniques to design quality into their products. It will be necessary for many more U.S. companies to do so in order to remain competitive in the future—a challenge for the 21st century.