QUALITY CONTROL

Quality control refers to the process, most often implemented in manufacturing, of monitoring the quality of finished products through statistical measures and an overall corporate commitment to producing defect-free products. Quality control principles can also be utilized in service industries.

DEMING'S FOURTEEN POINTS

The term "quality control" came into common use in the 1950s thanks to W. Edward Deming, whose "Fourteen Points" have become the bible for quality control proponents. With the post-war world returning to normal manufacturing patterns, Deming preached that inspecting products for quality after they were manufactured was unacceptable. Instead, he proposed a process known as "statistical quality control" that would use closely monitored performance measures to gauge quality as a product was being manufactured. The goal of statistical quality control was to gather data that would allow for the constant improvement of manufacturing processes, which would in turn improve quality control. Introducing such statistical controls could be expensive, but Deming argued that instituting quality measures ultimately saved companies money.

Another important tenet of Deming's beliefs was that upper management was largely to blame for quality failures. He firmly believed that, given the right tools and working environment, workers would strive to create the highest quality products possible. In Deming's own words, "the basic cause of sickness in American industry and resulting unemployment is failure of top management to manage." He believed that strong leadership led to an inspired work force that did not fear management and did not fear taking chances when seeking ways to improve quality.

If strong leadership is the buzzword for managers in a quality environment, then empowerment is the key concept for workers in Deming's system. Improved education and training are the key factors in reaching employees and making them believe that their increased participation in the work process is an essential part of improving quality. Involvement, participation, and teamwork are seen as absolute musts if a quality workplace is to be created.

The Japanese were the first to adopt Deming's Fourteen Points, and with great success. As an example, Deming learned of one Japanese factory that doubled production in just one year and was expecting to gain an additional 25 percent improvement the following year, with no increase in the amount of hours worked. All this occurred as a result of simply improving quality. What is most significant about this achievement is the year it happened—1951. Many American and European companies chose to ignore these dramatic results and nearly perished as a result. Critics contend that by the time American manufacturing plants realized that quality control was a significant issue, it was the late 1970s and Japanese firms such as Honda and Sony were taking over large portions of the American consumer market.

In the 1990s, most American firms have embraced quality control practices. Analysts indicate that when firms first began adopting these principles, many went too far, becoming bogged down in quality control charts and measurements of inconsequential operating factors. In too many cases, American industry went from ignoring statistical quality control to applying it to every single facet of a business, no matter how small. This overemphasis quickly disappeared, however, and has been replaced by a commitment to overall quality control that is unprecedented in the American workplace.

THE SCOPE OF JAPANESE INFLUENCE

Because they have been practicing quality management since the 1950s, the Japanese are still the leader in producing quality products in a number of industries and are still the role model for U.S. companies to emulate. For example, a study of the air conditioning industry in the early 1990s found that the worst Japanese air conditioning plant had an error rate that was less than one-half that of the best U.S. company.

This drastic difference is largely due to the Japanese adherence to one of Deming's most important ideas—that quality should be "designed in" to a product instead of "inspected out." Japanese firms treat suppliers as equals, sharing information with them as if the supplier was an internal department of the company. This ensures that quality is already a part of the product before it is even manufactured.

Another common practice in Japan that has found its way to the United States are "quality circles." Workers are brought together on a regular basis to brainstorm about quality and manufacturing processes, all with an eye towards improving quality. The circles are a success if management follows through on its end of the deal and incorporates the suggestions made in the quality circles into operations. When workers see their suggestions implemented, it increases their confidence in management and in the company as a whole, which in turn increases their commitment to the company and to producing high quality goods.

A highly trained work force is one of the keys to producing quality goods, and the training programs of many American companies reflect this recognition, for they are allocating more time and money to this area. Still, many U.S. companies lag behind in this respect. Researchers have stated that a higher commitment to training and lifelong learning are needed if the commitment to quality is to continue.

Today, the key components of quality control that were preached by Deming and practiced by the Japanese—including benchmarking, supplier partnering, and continuous improvement—have found their way into American industry. Each of these components demands a closer look.

BENCHMARKING

Benchmarking is a continuing process of measuring products, services, and practices against your strongest competitors. More simply stated, it means using the best companies as the yardstick against which your company measures itself. If your company comes up short, than improvements must be made to ensure that your products are just as high in quality as those of your competitor.

There are two types of benchmarking. The first, competitive benchmarking, entails benchmarking against direct competitors in the marketplace. This can include comparing specific numerical or statistical measurements—return on assets used, market share, etc. The more detailed information that can be obtained about a competitor, the better.

The second method, noncompetitive benchmarking, can take two forms. The first is measuring your company against the best companies in the world, regardless of industry. Companies such as 3M, Coca-Cola, and General Electric are considered to be trendsetters and leaders in quality, so companies from nearly every industry study them and copy their best practices. Business analysts note that noncompetitive benchmarking is a broader—and sometimes more useful—instrument of quality control. By only benchmarking against competitors, a company only ensures it will be as good as that competitor. By benchmarking against the best companies in the world, a company can aspire to be as good as those companies and can surpass the competition in its own industry. Additionally, companies may find it easier to gain access to information about companies they do not compete with because they are not seen as a threat to the well-being of the company.

The second type of noncompetitive benchmarking is internal benchmarking, which involves comparing functions or processes in different departments within the same organization. Internal benchmarking is often seen as a logical starting point for a business that is attempting to use benchmarking for the first time.

To successfully benchmark, a company must first look closely at its own practices and conduct a rigorous self-assessment. Once that self-assessment is completed, the company has a good idea of where it stands on each quality issue and can successfully compare itself to other companies. The self-assessment must be honest and thorough. It should identify weaknesses, but should also highlight strengths. Improving weaknesses that are identified should be tied to stated company strategic aims.

SUPPLIER PARTNERING

Supplier partnering is an increasingly common practice in the United States. Simply put, it means that manufacturers work directly with their parts and components suppliers to improve quality at the supplier's location. This can involve direct participation in the supplier's operations—that is, staff from the manufacturer might work on-site at the supplier's office or provide technical assistance and equipment—or simply a very close working relationship that more resembles a partnership rather than a simple business transaction between two unrelated companies.

One of the biggest methods of partnering with suppliers involves sharing the use of statistical controls. This is an underdeveloped area in the United States that should grow in the coming years. Most manufacturers have switched to outsourcing as a means of cutting the costs of production. This increased emphasis on outsourcing means that the companies that supply the parts or components must place just as much emphasis on quality as the manufacturer if the finished product is to be high quality.

Among the quality issues that still need to be addressed in the manufacturer-supplier relationship are:

* Inconsistent quality levels from suppliers, even from different plants of the same supplier.
* While most first-level, or Tier 1, suppliers have made a commitment to quality control, that commitment has yet to be made by Tier 2 suppliers (those companies that supply smaller parts or raw material to the Tier 1 supplier). The importance of quality must trickle all the way down the supply chain to be meaningful.
* In many industries, mergers are occurring at a record pace. Whenever a merger of two suppliers occurs, there is the chance that quality will suffer while the details of the merger are hammered out.

In many industries, especially the auto industry, manufacturers are overcoming these supplier problems by helping the suppliers meet quality standards.

The other facet of supplier partnering means that the manufacturer also actively seeks out feedback from the supplier on how the former's operations can be improved. Suppliers often have a unique perspective on the industry they work in and on the companies they supply and can provide valuable advice on how to make changes for the better. When this happens, it is important that the two companies have a framework in place to manage the partnering system. This can mean that the manufacturer's purchasing department would be deemed as the intermediary between the two companies, passing information from the supplier back to the appropriate internal customers.

CONTINUOUS IMPROVEMENT

Continuous improvement (CI) is a method for improving every facet of a company's operations and increasing competitiveness by developing a company's resources. The improvement can involve many goals—producing products with zero defects or achieving 100 percent customer satisfaction—but CI has the same basic principles no matter what the goal:

* Involve the entire company at all levels
* Find savings by improving existing processes, not by investing more money
* Gather data about company operations and quantify that data, which becomes the baseline against which improvements will be measured
* Do not forget that common sense is perhaps the most important component of CI
* Do not just give lip service to improvement—implement or practice ideas.

Continuous improvement most often involves creating a team that includes representatives from all areas of the company. The team first spends time learning—about the company they work for (looking at it in new ways) and about other companies (benchmarking is common during this phase). The necessary quantitative data is created. The team then proposes solutions to management and begins to implement those solutions. Once that is achieved, follow-up mechanisms must be put in place that seek additional improvements as time goes by. The team might change members with the passage of time, but hopefully it will become an established and accepted part of the company even as its roster changes. If the endeavor works as planned, the team will have improved quality to show as a result of its initial efforts. This can make even skeptical employees buy into the concept, which in turn leads to the continued search for even more improvements—hence the term continuous improvement. Follow-up mechanisms can include regular audits or regularly scheduled meetings to evaluate progress.

OTHER QUALITY BUZZWORDS

Quality control and literature about it have become a huge cottage industry in the business world. In addition to the terms outlined in this article, there are several other popular concepts and terms associated with quality control that are actually offshoots of the larger issue, or separate issues altogether. Among the most popular are:

* ISO 9000—This is a series of international standards that set out requirements and recommendations that specify how management operations are to be conducted at a company to ensure that quality is the end result. ISO 9000 is part of the "conformance to specifications" school of quality control that believes that, by setting standards for companies to follow that the consumer is aware of, and ensuring that those standards are never deviated from, then quality is achieved. Essentially, its goal is to prevent nonconformity. Companies must undergo a comprehensive program to apply for ISO 9000 certification, reviewing and documenting management procedures, creating job descriptions from the ground up, preparing a quality manual, and submitting to periodic standards checks by an external body. The process is not cheap, but it does give a company that qualifies for the certification a badge to demonstrate its commitment to quality.
* Six Sigma—This defect-reduction program was pioneered by General Electric's Jack Welch. A sigma is a mark on a bell curve that measures standard deviation. In American industry today, most companies average between 35,000 and 50,000 defects per million operations; GE followed this trend by averaging 35,000, or 3.5 sigma. Welch determined that this was unacceptable—he wanted the error rate reduced to an almost nonexistent 3.4 errors per million operations, or "Six Sigma," a concept first introduced by Motorola in the early 1990s. Motorola was able to achieve six sigma quality, but it took eight years to go from three to six. Welch mandated that GE reach the mark in five years. More and more companies are expected to follow the lead of GE and Motorola, since both companies are considered world leaders.
* Quality awards—As quality control grows in popularity, companies strive to prove to customers that quality is their most important concern. One way they do this is to compete for the plethora of quality awards that are now available. The most famous of these is the Malcolm Baldridge National Quality Award, but others such as the European Quality Award and the Deming Award also exist. Additionally, there are hundreds of state, regional, and local quality awards. The awards, which are given to both large and small companies, carry a rigorous set of quality standards that a company must meet or exceed before it can even be considered for an award. Some companies coincide the launch of new quality control programs with announcements that they will be seeking one of the awards as a means of giving employees an incentive to improve quality and as a means of demonstrating to customers their commitment to quality.
* Mistake-proofing, or poka-yoke—"Poka-yoke" is a Japanese term that comes from two words that mean "avoid error." The concept was created by a Toyota engineer who felt that workers should always strive to avoid making any mistakes. The concept most often refers to "designing in" methods of avoiding mistakes—for example, putting guards on drill presses that prevent the machine from drilling a hole too deep and ruining a part. As a result, poka-yoke has come to have a second meaning. In addition to referring to the broad concept, it refers to any tool or process used to prevent a mistakes. Mistake-proofing is one of the easiest ways for small companies to reduce errors. It is easy and relatively inexpensive to perform an audit of existing poka-yokes and to draw up a flow chart of a production process to identify where other poka-yokes might be installed. Once the initial work is done, adding new poka-yokes can be an ongoing and continuous process. One warning to business owners—using the terms "mistake-proofing" or "fool-proofing" can anger workers, who may view the terms as being disparaging.

Finally, there is one term associated with the quality control movement that is too broad and too important to cover here. Total quality management, or TQM, has become an important quality movement in its own right.

THE FUTURE OF QUALITY CONTROL

Despite the growing importance of quality control in the United States, there is still room for improvement in many areas. One of the most important is the attitude towards teams, especially cross-functional ones. Teams are recognized by quality experts as one of the best ways to increase speed to market and improve quality. Slowly, as American firms adopt other quality measures, they are also adopting the team philosophy. Still, improvements must be made. Too many firms still rely on the old styles of product development and production, handing off responsibility for a product from one department to the next with no interaction between the departments.

Another problem to be overcome in the future is downsizing. One of the key business principles of the 1990s, downsizing means improving technology and work processes so that the same amount of work can be done with fewer employees. While the move to downsize has improved the bottom line at many companies, it has also raised quality concerns. Some believe that there has been a marked reduction in the quality of some products because too many firms engaged in downsizing without making sure that their internal processes and infrastructure was adequately equipped to handle the loss of employees.

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