Since their early years, when
they were known only as bastions of statisticians and inspectors,
quality departments have developed into some of the most
influential and integrated operations in international business.
How has this come about? How are the eye-popping expectations
demanded by today's CEOs met by successful quality leaders?
They all have similar approaches to building upon change
to develop both their individual values and their quality
operations' increasingly important roles in pursuing customer
satisfaction. Inherent in this process is the ability to
adapt quickly and advantageously to change.
You might compare organizational change to driftwood washing
onto the shore. With each new wave, expectations arise as
to where this driftwood (change) will land. If it's somewhere
expected, then someone skilled in the quality trade might
pick it up and transform it into something valuable. But
the driftwood might just as readily float back out to sea,
carried away by strong undertows of resistance. The business
world can be just as rough and unpredictable as the sea.
Organizations constantly face the need to change. New
organizational paradigms, supply chain management, customer-relationship
management and continuous strategic improvement initiatives
are just a few examples of corporate changes that have transformed
the way businesses operate.
One area that has grown significantly during
this change is the quality operation. No longer labeled
a department, quality is woven into every aspect of a business
and involves everyone from mail clerks to CEOs. It's not
unusual for one quality initiative to deliver tens of millions
of dollars in savings, which directly affects a company's
bottom line. That kind of success was unheard of in years
What makes quality professionals successful in today's
rapidly changing environment, where expectations flow and
resources ebb? They follow a simple operational excellence
equation that adds up to creating pure quality value. During
the past three years, we've studied a number of successful
quality professionals from international companies and discovered
that the secret of top performers lies in their methods
to harness change and implement innovative ideas. We've
identified six characteristics that add up to quality value.
By developing these characteristics, quality professionals
can realize significant gains in value for themselves, their
teams and their operations.
As the world changes, so does the quality professional's
role. Yesterday's standards for success are no longer relevant,
and current business models are replaced by tomorrow's ideas.
Markets are international, and the Internet has collapsed
the space-time "virtual business" continuum to
the point that operating
models are launched for future competitive states. Although
larger companies are no longer limited by previously defined
business boundaries, they're still catching up to their
smaller, more nimble competitors by optimizing the Internet's
full potential. Partnerships and mergers have complemented
product lines to provide customers with a "one-stop
shopping" experience. Because quality professionals
must monitor and report business-survival metrics while
implementing competitive advantage via improvement projects,
it's imperative that they maintain pace with this whirlpool
of constant change.
Quality professionals convert change into an opportunity
to develop personal value by aligning their skills and capabilities
to the changing organization. No longer spectators, they
must manage their own destinies by building on their strengths
and filling in the gaps that change creates.
Both education and certification are essential for developing
personal value, but neither happens on its own. In fact,
certification has become such an important conduit for business
optimization that some companies are developing their own
quality certification programs. In some cases, certification
is as important as a college degree, and employees are denied
promotion until they complete minimal certification requirements.
Such policies guarantee that a professional has reached
a level of expertise in an area that's critical to conducting
business. Process improvement, project management, certified
quality manager and Six Sigma Black Belt certifications
are strong opportunities for developing and maintaining
To maintain certification, the professional must continue
to improve by taking training classes between recertification
dates. Additional training and/or education offers an opportunity
to meet instructors who've researched areas of change. Discussions
and class exercises provide knowledge to those who are filling
the gaps caused by change. Knowledge enables new channels
of perception and discovery and is the only asset that can
be shared with a co-worker without depleting any personal
For example, one of the principal components of ISO 9001:2000
is a greater emphasis on management's role in enabling process
efficiency. The quality professional must understand how
the new standard affects the business initiative to avoid
tarnishing the company's reputation. The cost of this education
should be viewed as an investment in a critical asset of
the company: the quality professional.
In the virtual world, change is both inevitable and continuous.
Sales transactions are conducted at the speed of light,
and enterprises must focus on market opportunities over
the Web, cost-cutting through outsourcing and integrating
systems--whether they involve suppliers or customers. This
environment challenges organizations to turn change into
advantage as quickly as possible, which is why quality operations
pay such close attention to company strategy. Quality professionals
know that customers are demanding more personalized service.
In fact, process improvement projects usually begin by defining
how the tactical schedule will align with strategic goals.
However, companies must do more than focus on products
and services to meet their customers' day-to-day needs.
To strengthen the value equation and react quickly to market
changes, they must build very flexible business models.
Because business tactics align with corporate strategy,
misalignment can result from business models that don't
take change into account. With misalignment come negative
effects such as unproductive resources, nonvalue-added tasks
and expensive process steps, which contribute to misguided
team ventures, inordinate time constraints and budget overruns.
Turning Change Into Advantage
This phenomenon also tends to reflect unfavorably on the
production cycle, depleting revenue rather than generating
it and exposing competitive vulnerabilities. To provide
greater value, a business strategy should be broken down
into discrete project components that include both short-
and long-term elements. This way, the strategy is nimble
enough to transform change into tactics that reduce defects,
reduce cycle time and increase customer satisfaction. As
companies downsize into seamless models, strategy will be
based more on customer needs and individualized advantage.
Through industry benchmarking, the quality professional
is in an ideal position to notice change. The quality operation
can help the company develop strategic flexibility by identifying
where change should be used to enhance market position.
The quality operation has usurped the quality department
and consists of a dotted-line relationship between change
agents in the field and a quality leader who works with
the executive staff at corporate headquarters. Throughout
the company, sponsors champion process improvement initiatives
in their sphere of influence.
Organizations are also adapting to change by downsizing
their processes and structures. The seamless model is now
the norm for conducting business. The term "seamless"
derives from the concept that silo areas are minimized,
if not eliminated, and every process either touches the
customer or is otherwise outsourced. This lean, suppliers-input-process-output-customers
model is fully integrated and makes the most of data warehouse
knowledge, concept-through-customer cycle time, Web-based
transactional processes, and real-time feedback loops to
monitor customer suggestions and process innovation. Barriers
that prevent improvement are removed in this model. Fresh
ideas that improve products and services are part of everyday
The quality professional's role in a seamless business
model is to drive organizational value. He or she does this
by monitoring metrics, facilitating continuous improvement
sessions, auditing outsourcing partners and verifying supplier
performance. The quality feedback loop represents the organization's
pulse and nurtures innovative changes by analyzing the pace
of progress. The quality professional verifies that the
company fulfills customer requirements completely and profitably.
Whether it's dealing with government regulations, supplier
performance, input optimization, electronic process reviews,
manufacturing cost assessments, product and service evaluations,
or customer satisfaction, the quality organization operates
as a catalyst for success.
Every quality professional knows that the customer is
the cornerstone of the value equation. Therefore it's critical
to engage the customer in business strategy. The quality
organization must fully understand how the customer defines
both quality and value. Many customers consider these concepts
as separate entities with differing characteristics. For
example, quality can be based on product or service standards
and expectations, whereas value might be representative
of total customer satisfaction.
Together, the two components provide insight into how
well a company meets all of the customer's needs. Obtain
this essential information directly from the end-user, and
then compare it against the viewpoints of distributors,
independent agents and internal executives to analyze misalignment
between strategy and tactics. Value will usually change
from customer to customer, so there must also be a way to
maintain that information. A data warehouse usually fulfills
Once a customer's needs are understood and fulfilled, changes
in customer requirements can be easily absorbed into the
flexible, short-term strategic goals. In this way, the quality
professional creates a value relationship with the customer.
By blending the customer's short- and long-term requirements
business strategy and tactics, an organization improves
its chances of gaining the customer's commitment and loyalty.
Customer satisfaction measurements are important in maintaining
the gain. These measurements should be used to further refine
the company's direction of change.
Quality is the essence that provides competitive advantage;
change is the catalyst that promotes an opportunity to strive
for a higher level of team efficiency. Increasingly, companies
focus on streamlining and realigning processes explicitly
so that customer satisfaction drives every aspect of business.
The quality group has also undergone a transformation in
the way it operates. The responsibility for quality no longer
resides in one department but is evenly distributed across
the company. Because quality is everyone's job, quality
teams consist of transorganizational business members who
monitor measurements of success and address issues of variation
before they become serious.
Transorganizational quality teams have launched some of
the greatest and most innovative ideas. This new model for
team-member effectiveness encourages a cross-polarization
of creativity and helps the organization react quickly to
change. A team that comprises multiple contributors has
the advantage of understanding how change might be best
aligned within multiple areas of the business cycle.
To create maximum value for their efforts, members draw
upon the total strengths of their quality team. It's imperative
that teams have the knowledge and skills necessary to succeed
at their jobs. They should also understand their roles in
supporting exemplary performance. Meeting regularly to discuss
best practices and lessons learned enables teams to continuously
improve. When a process improvement leader draws upon so
many different strengths, the team's output is usually greater
than the sum of its parts.
In the past, only the purchasing department dealt directly
with suppliers. If there was a need for a product or service,
the procurement agent sent a stack of design details out
to a multitude of suppliers and established a deadline for
responses. The process was driven entirely by price, and
the relationship was based on power and struggle. Company
production forecasts were inaccurate, so inventory levels
remained high to avoid stock-outs.
That process has since changed into a partnership founded
on electronic data interchange, information-sharing, commitment
and vendor management. Streamlining the supply-chain process
can result in tremendous cost reductions. The new trend
toward supplier management is based on the total cost of
doing business, not simply the price of materials. A predetermined
list of selection criteria is used to determine which suppliers
are best suited for specific product areas and/or business
needs. In order for the effort to be successful, however,
there must be a certain amount of openness with production
data, a passion to deliver product and services when needed
and a commitment to getting quality right the first time.
Certainly, not all suppliers are candidates for a partnership
relationship, and in such cases the quality professional's
role becomes critical to the value assessment's success.
The quality team is involved in all aspects of supplier
analysis: selection, certification, performance ratings,
facility audits and product quality assessments. Value is
based on the supplier's ability to meet customer specifications.
Supplier audits are periodically required in order to maintain
a specific level of performance in meeting those specifications.
In the case of vendor-managed inventory, a long-term contract
based on a blanket purchase agreement is usually generated.
Certification is based on a generally accepted quality standard,
such as ISO 9001.
Once a supplier is certified, requirements should be met
without the need for constant inspection. Some certification
regimens, such as the Capability Maturity Model, are multitiered
so that the supplier can strive for a certain level of accomplishment
while providing a certain level of confidence to the customer.
This way, continuous improvement is built into the systems
as a supplier graduates from one level to the next.
Performance targets for cycle time, price, just-in-time
delivery, internal inventory reduction levels, quality,
and the ability to meet specifications and production requirements
are just a few of the criteria that make up a supplier scorecard.
These scorecards are posted online so that problems are
recognized quickly. Tough decisions can then be made to
either continue with a particular supplier or open the door
to a competitor. Throughout this process, the quality professional
leads the effort to eliminate waste.
Absolutely. Global competition, economic belt-tightening
and optimizing electronic business will force companies
to downsize and continue to cut costs. Customers will demand
the highest standards of quality at the lowest price. Within
successful organizations, quality will become the focal
point for every effort. And this means the quality team
will become an even more valuable asset than it is today.
The Seamless Model
H. James Harrington, CEO of the Harrington Institute,
is considered the leading guru in performance improvement.
He has written 23 books and hundreds of papers on the subject.
Visit his Web site at www.hjharrington.com.
Thomas McNellis is the dean of e-learning for the Harrington
Institute and is associated with research at a number of
universities. He currently teaches at Temple University
and the University of Phoenix. Letters to the editor regarding
this article can be sent to firstname.lastname@example.org.