hi I have 12 question and answer with 80 words each. It is very simple. I will provide learner guide as well.Thank you

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BSBMGT516A

Facilitate

continuous

improvement

Document Name: BSBMGT516A Facilitate continuous

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Created Date: 27 Dec. 12

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BSBMGT516A – Facilitate continuous improvement

Learner’s Guide

Author: John Bailey

Copyright

Text copyright © 2009 by John N Bailey.

Illustration, layout and design copyright © 2009 by John N Bailey.

Under Australia’s Copyright Act 1968 (the Act), except for any fair dealing
for the purposes of study, research, criticism or review, no part of this book
may be reproduced, stored in a retrieval system, or transmitted in any form
or by any means without prior written permission from John N Bailey

.

All
inquiries should be directed in the first instance to the publisher at the
address below.

Copying for Education Purposes

The Act allows a maximum of one chapter or 10% of this book, whichever
is the greater, to be copied by an education institution for its educational
purposes provided that that educational institution (or the body that
administers it) has given a remuneration notice to JNB Publications.

Disclaimer

All reasonable efforts have been made to ensure the quality and accuracy
of this publication. JNB Publications assumes no responsibility for any
errors or omissions and no warranties are made with regard to this
publication. Neither JNB Publications nor any authorized distributors shall
be held responsible for any direct, incidental or consequential damages
resulting from the use of this publication.

Published in Australia by:

JNB Publications

PO Box, 268,

Macarthur Square NSW 2560

Australia.

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BSBMGT516A – Facilitate continuous
improvement

Contents

Description: …………………………………………………………………………………………………………………………….. 6
Introduction ……………………………………………………………………………………………………………………………. 6
This Learning Guide covers: ………………………………………………………………………………………………………. 6

Learning Program

……………………………………………………………………………………………………………………. 6
Additional Learning Support ……………………………………………………………………………………………………… 7
Facilitation ……………………………………………………………………………………………………………………………… 7
Flexible Learning ……………………………………………………………………………………………………………………… 8
Space ……………………………………………………………………………………………………………………………………… 8
Study Resources ………………………………………………………………………………………………………………………. 8

Time

………………………………………………………………………………………………………………………………………. 8
Study Strategies ………………………………………………………………………………………………………………………. 9
Using this learning guide: …………………………………………………………………………………………………………. 9

THE ICON KEY………………………………………………………………………………………………………………………….. 10

How to get the most out of your learning guide …………………………………………………………………………. 11

PERFORMANCE CRITERIA ………………………………………………………………………………………………………….. 12

SKILLS AND KNOWLEDGE ………………………………………………………………………………………………………….. 13

Required knowledge ………………………………………………………………………………………………………………. 13
Required Skills ……………………………………………………………………………………………………………………….. 13

RANGE STATEMENT …………………………………………………………………………………………………………………. 14

EVIDENCE GUIDE ……………………………………………………………………………………………………………………… 16

1. LEAD CONTINUOUS IMPROVEMENT SYSTEMS AND PROCESSES ………………………………………………….. 17

Quality and continuous improvement ………………………………………………………………………………………. 17
Integration is the key ……………………………………………………………………………………………………………… 17
Continuous improvement requires the management of quality ……………………………………………………. 18
The evolution of quality thinking and philosophies …………………………………………………………………….. 18
Table 1: Transitioning continuous quality improvement (Derived from Francis 1991:12) …………………. 21
Table 2: Early quality ‘gurus’ compared …………………………………………………………………………………….. 22
Table 3: Quality ‘Gurus’ Compared (continued) ………………………………………………………………………….. 23
Total Quality Management……………………………………………………………………………………………………… 24
The search for quality …………………………………………………………………………………………………………….. 25
Figure 4: Deming PDCA Cycle (based on Shewhart Model) ………………………………………………………….. 25
Figure 5: Plan, Do, Check, Act Problem Solving Cycle for Continuous Improvement ………………………… 26
Continual Improvement ………………………………………………………………………………………………………….. 27
Table 6: The six quality principles …………………………………………………………………………………………….. 27
Implementing continuous quality improvement …………………………………………………………………………. 28
Improvement teams ……………………………………………………………………………………………………………….. 30
Breaking Down the “Them” and “Us”. ………………………………………………………………………………………. 30
Figure 7: Quality Triangle ……………………………………………………………………………………………………….. 30
Figure 8: Quality teams …………………………………………………………………………………………………………… 32
Examples of team processes that focus on quality ……………………………………………………………………… 33
Just-in-Time – On time every time improvement …………………………………………………………………………. 33
Figure 9: The Five Zeros of JIT ………………………………………………………………………………………………….. 35
Improvement by reducing complexity……………………………………………………………………………………….. 35
Figure 10: The Original Process ………………………………………………………………………………………………… 36

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Figure 11: The Improvements Suggested by Staff ……………………………………………………………………….. 36
Figure 12: The Improved (Re-engineered) Process ………………………………………………………………………. 37
Removing variation – A precondition to continuous improvement …………………………………………………. 37
Figure 13: Variation as a barrier to continuous improvement ………………………………………………………. 38
Documenting non-conformance ……………………………………………………………………………………………….. 39
Figure 14: Editions Register ……………………………………………………………………………………………………… 39
Figure 15: Page Amendments ………………………………………………………………………………………………….. 40
Figure 16: Distribution Register ………………………………………………………………………………………………… 40
Figure 17: Cross Referenced Index to Quality Criteria ………………………………………………………………….. 41
Figure 18: Procedures Listing……………………………………………………………………………………………………. 41
Documenting non-conformance ……………………………………………………………………………………………….. 42

2. MONITOR AND ADJUST PERFORMANCE STRATEGIES …………………………………………………………………. 43

Table 19: Six steps for quality analysis and improvement …………………………………………………………….. 43
Figure 20: Six Step Continuous Improvement Cycle ……………………………………………………………………… 44
Measuring quality ………………………………………………………………………………………………………………….. 44
The costs of quality …………………………………………………………………………………………………………………. 45
Figure 21: Costs of quality ………………………………………………………………………………………………………. 45
Measuring competitors and external quality – benchmarking for quality improvement …………………… 48
Benchmarking phases……………………………………………………………………………………………………………… 50
Measuring process improvement – The seven tools of quality ………………………………………………………. 51
Figure 22: Basic flowchart symbols …………………………………………………………………………………………… 51
Figure 23: Flowchart for order receipt and inventory placement process ……………………………………….. 52
Figure 24: Depiction of defects in production using Pareto diagram ……………………………………………… 52
Figure 25: Control chart …………………………………………………………………………………………………………… 53
Figure 26: Histogram ………………………………………………………………………………………………………………. 53
Figure 27:Scatter diagram ……………………………………………………………………………………………………….. 54
Figure 28: Check sheets …………………………………………………………………………………………………………… 54
Figure 29: Ishigawa’s ‘fish bone’ or ’cause and effect’ diagram …………………………………………………….. 55
Table 30: Using Measurement Tools for Quality Communication ………………………………………………….. 55

3. MANAGE OPPORTUNITIES FOR FURTHER IMPROVEMENT ………………………………………………………….. 56

QUALITY ASSURANCE AND QUALITY AUDITS ……………………………………………………………………………………………… 56
Auditing and reporting quality …………………………………………………………………………………………………. 56
Figure 31: Role of auditing quality in a continuous improvement process ………………………………………. 57
Quality assurance versus quality audits …………………………………………………………………………………….. 58
Table 32: Traditional Quality Assurance Checks versus Quality Auditing………………………………………… 59
Installing an internal quality audit ……………………………………………………………………………………………. 60
Completing the audit follow up processes ………………………………………………………………………………….. 60
Figure 33: Quality audit scorecard ……………………………………………………………………………………………. 62
Innovation …………………………………………………………………………………………………………………………….. 63
Types of change solutions and their impact ……………………………………………………………………………….. 64
Figure 34: Matrix of change solutions ……………………………………………………………………………………….. 64
Table 35: Alignment of change typologies to specific managerial approaches ……………………………….. 65
Innovation …………………………………………………………………………………………………………………………….. 66
Improvement …………………………………………………………………………………………………………………………. 66
Re-engineering ………………………………………………………………………………………………………………………. 67
Reinventing ……………………………………………………………………………………………………………………………. 67
Re-engineering ………………………………………………………………………………………………………………………. 68
Figure 36: 7 principles for reengineering ……………………………………………………………………………………. 69
Dangers ………………………………………………………………………………………………………………………………… 71
Identifying when to re-engineer processes …………………………………………………………………………………. 72
Reading…………………………………………………………………………………………………………………………………. 72
To evolve or to reengineer? ……………………………………………………………………………………………………… 74
The need for speed …………………………………………………………………………………………………………………. 74
Figure 37: S-curve of innovation in a service context …………………………………………………………………… 75
Figure 38: Reducing cycle time in traditional training and development (Fred, 2002:81) …………………. 76

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RESOURCE EVALUATION FORM …………………………………………………………………………………………………. 77

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BSBMGT516A – Facilitate
continuous improvement

Description:

This unit describes the performance outcomes, skills and knowledge
required to lead and manage continuous improvement systems and
processes. Particular emphasis is on the development of systems and the
analysis of information to monitor and adjust performance strategies, and
to manage opportunities for further improvements. No licensing, legislative,
regulatory or certification requirements apply to this unit at the time of
endorsement.

Employability skills:

This unit contains employability skills.

Application of unit:

This unit applies to managers who take an active role in managing the
continuous improvement process in order to achieve the organisation’s
objectives. Particularly where managers are closely associated with the
creation and delivery of products and services, they play an important part
in influencing the ongoing development and betterment of the organisation.

At this level, work will normally be carried out within complex and diverse
methods and procedures which require the exercise of considerable
discretion and judgement, using a range of problem solving and decision
making strategies.

Introduction

As a worker, a trainee or a future worker you want to enjoy your work
and become known as a valuable team member. This unit of
competency will help you acquire the knowledge and skills to work
effectively as an individual and in groups. It will give you the basis to
contribute to the goals of the organization which employs you.

It is essential that you begin your training by becoming familiar with the
industry standards to which organizations must conform.

This unit of competency introduces you to some of the key issues and
responsibilities of workers and organizations in this area. The unit also
provides you with opportunities to develop the competencies necessary
for employees to operate as team members.

This Learning Guide covers:

 Lead continuous improvement systems and processes

 Monitor and adjust performance strategies

 Manage opportunities for further improvement

Learning Program

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As you progress through this unit you will develop skills in locating and
understanding an organizations policies and procedures. You will build
up a sound knowledge of the industry standards within which
organizations must operate. You should also become more aware of
the effect that your own skills in dealing with people has on your
success, or otherwise, in the workplace.

Knowledge of your skills and capabilities will help you make informed
choices about your further study and career options.

Additional Learning Support

To obtain additional support you may:

 Search for other resources in the Learning Resource Centres of your
learning institution. You may find books, journals, videos and other
materials which provide extra information for topics in this unit.

 Search in your local library. Most libraries keep information about
government departments and other organizations, services and
programs.

 Contact information services such as Infolink, Equal Opportunity
Commission, and Commissioner of Workplace Agreements. Union
organizations, and public relations and information services provided
by various government departments. Many of these services are
listed in the telephone directory.

 Contact your local shire or council office. Many councils have a
community development or welfare officer as well as an information
and referral service.

 Contact the relevant facilitator by telephone, mail or facsimile.

Facilitation

Your training organization will provide you with a flexible learning
facilitator. Your facilitator will play an active role in supporting your
learning, will make regular contact with you and if you have face to face
access, should arrange to see you at least once. After you have
enrolled your facilitator will contact you by telephone or letter as soon as
possible to let you know:

 How and when to make contact

 What you need to do to complete this unit of study

 What support will be provided.

Here are some of the things your facilitator can do to make your study
easier.

 Give you a clear visual timetable of events for the semester or term
in which you are enrolled, including any deadlines for assessments.

 Check that you know how to access library facilities and services.

 Conduct small ‘interest groups’ for some of the topics.

 Use ‘action sheets’ and website updates to remind you about tasks
you need to complete.

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 Set up a ‘chat line”. If you have access to telephone conferencing or
video conferencing, your facilitator can use these for specific topics
or discussion sessions.

 Circulate a newsletter to keep you informed of events, topics and
resources of interest to you.

 Keep in touch with you by telephone or email during your studies.

Flexible Learning

Studying to become a competent worker and learning about current
issues in this area, is an interesting and exciting thing to do. You will
establish relationships with other candidates, fellow workers and clients.
You will also learn about your own ideas, attitudes and values. You will
also have fun – most of the time.

At other times, study can seem overwhelming and impossibly
demanding, particularly when you have an assignment to do and you
aren’t sure how to tackle it…..and your family and friends want you to
spend time with them……and a movie you want to watch is on
television….and…. Sometimes being a candidate can be hard.

Here are some ideas to help you through the hard times. To study
effectively, you need space, resources and time.

Space

Try to set up a place at home or at work where:

 You can keep your study materials

 You can be reasonably quiet and free from interruptions, and

 You can be reasonably comfortable, with good lighting, seating and
a flat surface for writing.

If it is impossible for you to set up a study space, perhaps you could use
your local library. You will not be able to store your study materials
there, but you will have quiet, a desk and chair, and easy access to the
other facilities.

Study Resources

The most basic resources you will need are:

 a chair

 a desk or table

 a reading lamp or good light

 a folder or file to keep your notes and study materials together

 materials to record information (pen and paper or notebooks, or a
computer and printer)

 reference materials, including a dictionary

Do not forget that other people can be valuable study resources. Your
fellow workers, work supervisor, other candidates, your flexible learning
facilitator, your local librarian, and workers in this area can also help
you.

Time

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It is important to plan your study time. Work out a time that suits you and
plan around it. Most people find that studying in short, concentrated
blocks of time (an hour or two) at regular intervals (daily, every second
day, once a week) is more effective than trying to cram a lot of learning
into a whole day. You need time to “digest” the information in one
section before you move on to the next, and everyone needs regular
breaks from study to avoid overload. Be realistic in allocating time for
study. Look at what is required for the unit and look at your other
commitments.

Make up a study timetable and stick to it. Build in “deadlines” and set
yourself goals for completing study tasks. Allow time for reading and
completing activities. Remember that it is the quality of the time you
spend studying rather than the quantity that is important.

Study Strategies

Different people have different learning ‘styles’. Some people learn best
by listening or repeating things out loud. Some learn best by doing,
some by reading and making notes. Assess your own learning style,
and try to identify any barriers to learning which might affect you. Are
you easily distracted? Are you afraid you will fail? Are you taking study
too seriously? Not seriously enough? Do you have supportive friends
and family? Here are some ideas for effective study strategies.

Make notes. This often helps you to remember new or unfamiliar
information. Do not worry about spelling or neatness, as long as you
can read your own notes. Keep your notes with the rest of your study
materials and add to them as you go. Use pictures and diagrams if this
helps.

Underline key words when you are reading the materials in this learning
guide. (Do not underline things in other people’s books). This also
helps you to remember important points.

Talk to other people (fellow workers, fellow candidates, friends, family,
your facilitator) about what you are learning. As well as helping you to
clarify and understand new ideas, talking also gives you a chance to find
out extra information and to get fresh ideas and different points of view.

Using this learning guide:

A learning guide is just that, a guide to help you learn. A learning guide
is not a text book. Your learning guide will

 describe the skills you need to demonstrate to achieve competency
for this unit

 provide information and knowledge to help you develop your skills

 direct you to other sources of additional knowledge and information
about topics for this unit.

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The Icon Key

Key Points

Explains the actions taken by a competent person.

Example

Illustrates the concept or competency by providing examples.

Chart

Provides images that represent data symbolically. They are
used to present complex information and numerical data in a
simple, compact format.

Intended Outcomes or Objectives

Statements of intended outcomes or objectives are descriptions
of the work that will be done.

Assessment

Strategies with which information will be collected in order to
validate each intended outcome or objective.

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How to get the most out of your learning guide

1. Read through the information in the learning guide carefully. Make
sure you understand the material.

Some sections are quite long and cover complex ideas and information.
If you come across anything you do not understand:

 talk to your facilitator

 research the area using the books and materials listed under
Resources

 discuss the issue with other people (your workplace supervisor,
fellow workers, fellow candidates)

 try to relate the information presented in this learning guide to your
own experience and to what you already know.

Ask yourself questions as you go: For example “Have I seen this
happening anywhere?” “Could this apply to me?” “What if….?” This
will help you to make sense of new material and to build on your existing
knowledge.

2. Talk to people about your study.

Talking is a great way to reinforce what you are learning.

3. Make notes.

4. Additional research, reading and note taking.

If you are using the additional references and resources suggested in
the learning guide to take your knowledge a step further, there are a few
simple things to keep in mind to make this kind of research easier.

Always make a note of the author’s name, the title of the book or article,
the edition, when it was published, where it was published, and the
name of the publisher. If you are taking notes about specific ideas or
information, you will need to put the page number as well. This is called
the reference information. You will need this for some assessment
tasks and it will help you to find the book again if needed.

Keep your notes short and to the point. Relate your notes to the
material in your learning guide. Put things into your own words. This
will give you a better understanding of the material.

Start off with a question you want answered when you are exploring
additional resource materials. This will structure your reading and save
you time.

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BSBMGT516A – Facilitate continuous improvement

Element Performance Criteria

1. Lead continuous improvement systems and processes

1.1

Develop strategies to ensure that team members are actively
encouraged and supported to participate in decision making
processes, and to assume responsibility and exercise initiative as
appropriate

1.2
Establish systems to ensure that the organisation’s continuous
improvement processes are communicated to all stakeholders

1.3

Develop effective mentoring and coaching processes to ensure
that individuals and teams are able to implement and support the
organisation’s continuous improvement processes

2. Monitor and adjust performance strategies

2.1
Develop strategies to ensure that systems and processes are
used to monitor operational progress and to identify ways in which
planning and operations could be improved

2.2
Adjust and communicate strategies to all stakeholders according
to organisational procedures

3. Manage opportunities for further improvement

3.1
Establish processes to ensure that team members are informed of
outcomes of continuous improvement efforts

3.2
Ensure processes include documentation of work team
performance to aid the identification of further opportunities for
improvement

3.3
Consider areas identified for further improvement when
undertaking future planning

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Skills and Knowledge

Required knowledge

 continuous improvement models
 quality systems.

Required Skills

 innovation and lateral thinking skills to design better ways for achieving work
outcomes

 leadership skills to gain the confidence and trust of others
 communication skills to communicate opportunities for improvement, and to coach

and mentor staff.

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Range Statement
The range statement relates to the unit of competency as a whole. It allows for
different work environments and situations that may affect performance. Bold
italicised wording, if used in the performance criteria, is detailed below. Essential
operating conditions that may be present with training and assessment (depending
on the work situation, needs of the candidate, accessibility of the item, and local
industry and regional contexts) may also be included.

Strategies may refer to:

 clarification of roles and expectations
 communication devices and processes, such as

intranet and email communication systems, to
facilitate input into workplace decisions

 long-term or short-term plans factoring in opportunities
for team input

 mentoring and ‘buddy’ systems to support team
members to participate in decision making

 performance plans
 reward/recognition programs for high performing staff
 training and development activities

Systems may refer to:

 forums, meetings
 newsletters and reports
 policies and procedures
 web-based communication devices

Continuous
improvement
processes may include:

 cyclical audits and reviews of workplace, team and
individual performance

 evaluations and monitoring of effectiveness
 modifications and improvements to systems,

processes, services and products
 policies and procedures which allow an organisation

to systematically review and improve the quality of its
products, services and procedures

 seeking and considering feedback from a range of
stakeholders

Stakeholders may
include:

 business or government contacts
 funding bodies
 individuals within the work team
 internal and external contacts
 organisation’s clients and customers
 professional associations
 senior management and board members
 unions/employee groups

Operational progress
may refer to:

 customer service

indicators

 occupational health and safety indicators
 productivity gains
 success in meeting agreed goals and performance

indicators

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Documentation of work
team performance may
include:

 annotated performance plans
 quantitative data such as production figures
 recommendations for improvement
 records and reports

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Evidence Guide
The evidence guide provides advice on assessment and must be read in conjunction with
the performance criteria, required skills and knowledge, range statement and the
Assessment Guidelines for the Training Package.

Critical aspects for
assessment and
evidence required to
demonstrate
competency in this unit

Evidence of the following is essential:

 examples of strategies and approaches to improve
work outcomes or organisational functioning

 methods for monitoring performance and customer
service

 knowledge of continuous improvement models.

Context of and specific
resources for
assessment

Assessment must ensure:

 access to appropriate documentation and resources
normally used in the workplace.

Method of assessment

A range of assessment methods should be used to assess
practical skills and knowledge. The following examples are
appropriate for this unit:

 analysis of responses to case studies and scenarios
 assessment of written reports
 direct questioning combined with review of portfolios

of evidence and third party workplace reports of on-
the-job performance by the candidate

 observation of presentations
 oral or written questioning to assess knowledge of

quality systems
 review of strategies developed to ensure that team

members are actively encouraged and supported to
participate in decision making processes, and to
assume responsibility and exercise initiative

 evaluation of how customer service strategies were
communicated to all stakeholders

 review of documentation outlining work team
performance.

Guidance information
for assessment

Holistic assessment with other units relevant to the industry
sector, workplace and job role is recommended, for example:

 other units from the Diploma of Management.

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1. Lead continuous improvement
systems and processes

1.1

Develop strategies to ensure that team members are actively
encouraged and supported to participate in decision making
processes, and to assume responsibility and exercise
initiative as appropriate

1.2
Establish systems to ensure that the organisation’s
continuous improvement processes are communicated to all
stakeholders

1.3

Develop effective mentoring and coaching processes to
ensure that individuals and teams are able to implement and
support the organisation’s continuous improvement
processes

Quality and continuous improvement

The world of quality and continuous improvement are filled with
acronyms. There are acronyms that represent fields of both academic
and professional endeavour that attempt to formalise approaches to
quality and improvement. Acronyms that represent such diverse
approaches as:

TQM – Total quality management

TQC – Total Quality Control

CQI – Continuous quality improvement

CQM – Continuous quality management

And so on.

This learner’s guide will visit the foundation concepts in quality through a
study of TQM. It will then extend this study to examine continuous
improvement. Along the way other aspects and fields of endeavour will
be introduced and studied to construct a large mosaic that has come to
represent different approaches to the management of quality and
continuous improvement in organisations

As we will come to examine, the implementation of continuous
improvement requires integration of quality processes and systems
across all facets of an organisation. This requires a significant shift in
management thinking and practices.

Integration is the key

Stand-alone measures in specific business functions such as process
quality improvement, internal customer service regimes or quality
information management will not achieve long-term results. Quality and
continuous improvement initiatives must be integrated and form part of
the overall corporate strategy.

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Continuous improvement requires the management of quality

Quality Management is an important ingredient within continuous
improvement. It was the early platform that gave genesis to many quality
theories and especially the focus on continuous improvement. Early
approaches such as TQM were aimed at achieving this ‘tie in’. TQM was
founded on three elements:

 Total employee involvement: all employees must be focused on
the pursuit of quality

 Fact based decision making: decisions must be made on facts not
on assumptions

 Leadership: TQM thinking requires all members of the organisation
to be on the same track and this can only occur if leaders
communicate this in an effective manner.

There are many quality experts who advocate different methods for
achieving quality and continuous improvement in an organisation.
However, there are several themes which are consistent:

 Plans must be based around systems thinking, not actions to be
conducted in isolation.

 Any quality initiative needs to be tied into overall corporate strategy
and then broken down into specific goals.

 Company-wide participation is essential.

 The organisational structure must reflect the desire for participation.

 Training and education are essential.

 A continuous improvement loop is needed so that problems can be
identified and corrective action taken.

 The process needs to be audited so that the cost of quality can be
accurately assessed.

The evolution of quality thinking and philosophies

During World War II, the United States had employed a young
statistician, W. Edwards Deming, in the manufacture of military
equipment. Deming applied statistical control to the manufacture of US
military equipment thereby eliminating waste and increasing productivity.
At the end of the war Deming’s statistical control methods were
dismissed in favour of a wave of industrial growth and renewed
industrial optimism. The fact the US piloted and then lost Deming’s
principles of statistical control of manufacturing was to its ultimate
disadvantage. Following World War II, the US provided economic aid to
Japan in the form of industrial advice. In the early 1950’s the US sent
Deming to Japan recognising his ability to improve manufacturing but
seeing no further advantage in a peace time context. Deming’s statistical
control had a seemingly incomprehensible vision – to build quality control
into production before a commodity was manufactured. Put simply,
Deming defied the paradigm that governed mass production in the
West. (Deming, 1986)

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Deming’s system of building quality control into an item before it was
manufactured thus provided the Japanese with an opportunity for
market gain which the US and the industrial West failed to see.
Deming’s methodology for pre-production quality control had three
essential components. First, he maintained that 80 percent of all product
faults were routine and could be eliminated by standardising input.
Second, the process of production could be broken into component
parts and improved continuously. Third, the re-orientation of the
workforce to accept responsibility for quality standards and continuous
process improvement would take a generation, which is about thirty
years. Deming’s notion of quality is not about high quality or low quality.
It is about a product performing to the standard to which it is designed –
first time, every time.

Deming’s eighty-twenty rule (eighty percent of impediments in
manufacturing are routine, twenty percent are special causes which
require a process focus but can still be eliminated) implies that items
manufactured to quality standards do not require routine checking
(resulting in cost reduction), do not require returns and repairs (resulting
in cost reduction) and do reinforce consumer confidence in brand
(resulting in increased profit). The increase in profit as the volume of
consumer purchase increases leads in turn to the ability of the
manufacturer to lower the unit cost. This in turn makes the product more
competitive on the market – consumers retain confidence in the reliability
of the product and are attracted to purchase more (or change from other
brand allegiance) based on the lower unit price.

Once quality management systems were implemented, Deming
believed, process improvement would continue to reduce the cost of
production. (Deming, 1982:12) The aim of the Deming method was to
find improvements continuously so that the cost of goods was reduced,
making them more affordable, at the same time as their reliability was
increased by building in the quality. When Motorola US adopted the
quality improvement method in the 1980s, they became the top cellular
phone telecommunications company in the world and the largest selling
manufacturer of mobile phones in Japan! This was a result of a
deliberate action by the President of Motorola, John Garvin, to send his
executives to Japan to learn how quality improvement could beat the
Japanese. So successful is quality improvement for Motorola that Garvin
established the Motorola University dedicated to teaching quality
methodologies. The concept of process improvement is best summed
up by Garvin who states that Motorola has shifted from the industrial
philosophy of “If it ain’t broke, don’t fix it!” to the quality improvement
concept of “If it ain’t broke, you haven’t looked hard enough!” implying
there is always a better way of doing something. There is no end to the
continuous quality improvement process because human values
(consumer priorities) change continuously, thereby creating the demand
for new products.

Measuring the performance of machines is easy, but measuring people,
in the industrial mindset, smacks of management supervision in which
unsatisfactory performance usually leads to dismissal. In order to
eradicate this connotation, leaders in Japanese quality businesses
introduced a non-dismissal policy in which redundancy in the job could
be no reason for dismissal. Then there was the difficulty of introducing
the radical shift from human control to human empowerment on which

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quality improvement is predicated. To an industrial workforce, the notion
of individual responsibility without supervision is almost absurd, but the
quality method required this and more – the contribution of each worker
to suggest ways to improve their processes of operation. Essentially this
requires a commitment to change continuously – a notion contrary to the
uniformity of labour established in the industrial west (and reinforced by
industrial awards in Australia). Workers operate in teams with managers
as members and together decide how they can improve their work.
Initially, workers were neither interested nor forthcoming with
suggestions, while managers were intent on dominating and controlling.
This process had to be eradicated via a structural methodology. Rules
were made to elicit suggestions and eventually responsibility from the
workforce for their actions and support and coaching from managers to
enhance worker responsibility.

Subsequent theorists have developed variations of Deming’s Total
Quality Management. Misaaki Imai (1986) crystallised a Japanese
variation known as Kaizen (ie. gradual, unending improvement) which
Toyota implemented to become the world’s leading car manufacturer.
This was achieved in a slow growing world economy using Just in Time
Production, Autonomous Defect Control, a flexible workforce and
creative thinking. Most recently, Karl Albrecht (1988) has promoted a
service variation called Total Quality Service which focuses on meeting
customer expectation via a quality methodology. All quality improvement
methodologies are premised on standards and measures, flexible work
structures, continuous improvement (involving rapid, constant change
which the British theorist Tom Peters refers to as “Thriving on Chaos”
(1990)), and creative thinking (involving autonomy, responsibility and
problem solving). These factors underpinning quality philosophies are
the anathema of western industrialism. It was the quality improvement
methodology, devised by an American, Deming, which significantly
shifted the industrial advantage of the western nations to the Japanese.
For it was the quality system which allowed the Japanese to maximise
their greatest natural strength, their manpower (Halberstam, 1986).

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Table 1: Transitioning continuous quality improvement (Derived from
Francis 1991:12)

Manufacturing and Operations Management

 Optimise tasks productivity

 Best practice direction from
management

 Employee compliance

 Improve evolving tasks

 Decision making at coal face

 Employee satisfaction

Role of the workforce

 Narrow job descriptions

 Physical effort

 Technical skills valued

 Jobs to fit structure

 Broad jobs with specific process
measures for individual/ team
activities

 Teams

 Mental effort

 Increased competencies with
Knowledge valued

Process quality and decisions based on data

 As required – when, where, what

 Clear sequence of actions
based on need to know

 Staff-centred

 Anticipate problems and change
through workplace feedback

 Cooperative communication

 Quality cycles

 Feedback at all stages of PDCA

Management control

 Boss-centred

 Direct control

 Hierarchy of decision making

 Boss supports team

 Management by
objectives/outcomes

Continuous improvement

 Customer-centred

 Distributed decision making

 Leadership ‘shared’/ delegated
to team focused on customer
outcomes

 Empower people and teams

 Agreed values

Regardless of the quality improvement theorist, the above
transformation in the general principles of management must be
addressed.

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Quality in recent times has been seen to be an important component in
any organisation’s attempt to achieve international competitiveness.
Fundamentally quality management systems attempt to minimise the
amount of variation from established process standards when products
or services are produced. This has required a significant shift in
management practices.

Table 2: Early quality ‘gurus’ compared

Factors Deming (1982,
1986)

Juran (1988) Crosby (1979)

Role of Top
Management

Leadership
participation

Varied Stress Zero
defects

Scope All activities Product Product

Program Motivation Long-term
competitive
position

Decrease cost of
quality

Decrease costs

Program Goal Improve
competitive
position

Short-term profits,
quality of life

Short-term profits

Management Style Participatory Varied Authoritarian

Use of Incentives Nil Varied Individual
recognition

Quality Goal Zero Defects Minimise cost of
quality

Zero defects

Definition of Quality Uniformity about a
correct target

Fitness for use Conformance to
specifications

Project Selection Pareto error
analysis

Cost analysis

Cost analysis

How to Measure
Improvement

Direct
Measurement

Cost of quality
data

COQ data & direct
measurement

Role of Quality
Control Department

Initially high
eventually low

Extremely high Moderate

Role of Workers Maintenance &

Improvement

Limited

Limited

Cost of Quality
emphasis

Low Very high Moderate

Statistical Analysis High use by all For lower
management

Mixed

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Table 3: Quality ‘Gurus’ Compared (continued)

Factors Taguchi (1986) Ishikawa (1985) Shingo (1986)

Role of Top
Management
Leadership
participation

Participate at all
levels

Leadership

Scope Initially process All activities All activities

Program Motivation Process & Product
insensitive to
variation

Competitive niche
– Respect for
humanity

Long-term
Competitive
position

Program Goal Continual
Improvement to
target

Continual,
incremental
improvement

“pokayoke” fail
safe prevention of
variation

Management Style Participatory Participatory Participatory

Use of Incentives Team recognition Team recognition Does vary

Quality Goal Quality through
design

Avoid waste and
Zero Defects

Zero Quality
Control – Just in
Time

Definition of Quality Variation incurs a
cost

Participation by
everyone (in
teams)

No variation
leaves plant or
recurs

Project Selection Cost analysis Begins with
customer

Cost analysis
How to Measure
Improvement

Direct measures Use of 7 Tools 100% Inspection

Role of Quality
Control Department

Low but off-line
testing used

Reduced by
Quality Circles

Low

Role of Workers Identify variation
from target

Great role at all
stages

Stop plant if error
detected

Cost of Quality
emphasis

Low Traded off in short
term against
participation

Low

Statistical Analysis High High – SPC by all For lower
managers

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Total Quality Management

TQM can be applied to any organisation, whether large or small, public
or private, profit or non-profit, or manufacturing or service oriented.
Because early practitioners of TQM emphasised the role of
management in 80 per cent of all errors and defects related to systems
and processes established by management (Crosby, 1979; Juran,
1988), the emphasis is placed on leadership for a total quality
management solution. This requires a systems level solution that spans
all employees, processes and instills a culture of quality.

Dr W Edwards Deming is widely acknowledged as a founder of the
quality management movement. He suggests:

“Quality does not necessarily mean high quality. It means a predictable
degree of uniformity and dependability at low cost with a quality suited to
the market. Quality provides important customer benefits while
increasing productivity. As quality goes up so does productivity, as
productivity goes up so costs come down “(1986).

Why does quality management mean to organisations? Let’s examine
organisational statements on quality and continuous improvement. We
have sorted them in a time chronology to give a sense as to how such
statements have evolved.

“Quality is defined as conformance to customer needs through
conceiving, designing, manufacturing and marketing products and
services with superior performance and reliability” (Kodak Australia,
1993)

“Quality focuses on impediment removal in processes to effect new and
better ways to produce goods and services “(Clive Graham in Bowles &
Graham, 1993:2).

“Quality is the degree of variation around a correctly defined target”
(BHP Steel, 1994)

“Meeting the requirements of our customers, both internal and external,
for defect-free products and services. No level of defect is acceptable”
(IBM Worldwide 1992-95).

“Excellence as determined by customers” (Government agency, 1999)

We recognise each employee and operation contributes to the quality of
our products and the satisfaction of our customers. (Tubing
manufacturer, 2003)

R.J. Schonberger stated that the words most often used in corporate
statements would seem to define TQM as:

… a set of concepts and tools for getting all employees focused on
continuous improvement, in the eyes of the customer – the next process
as well as the final consumer. It requires collection of data, and employs
multi-functional teams, brainstorming, the “seven basic tools”, advanced
experimental methods, and broadly based reward and recognition
(1992:17).

TQM was the most prominent quality management system in the 1990s
and concentrates on preventing defects in the production process. This
has caused the focus for management to alter from screening of

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defective products after the completion of the production process to the
implementation of preventative measures to ensure defects do not
occur.

The tools used have been based upon the statistical measurement of
product variation and this is assisted by the management of a culture of
quality and through employee involvement in developing strategies for
improvement.

TQM is still seen as a way of integrating the control of quality into the
production process so that everyone is responsible for the quality of
goods or services produced. However, the heart of quality control is now
more likely to be the search for continuous improvement, that is,
incremental change to bring about an improvement in the processes
used. The major focus is on the reduction in variability. As our study will
show, this builds upon and extends beyond the initial focus of the TQM
approach.

As we progress through this unit of study we will investigate the
foundations established by TQM and its evolution onto continuous
improvement approaches to quality and management. With all quality
systems, nevertheless, competitive advantage rests on the reputation of
the product or organisation and this is best measured by the ability of
the goods or services to satisfy customer expectations.

The search for quality

In 1954 W Edwards Deming shifted quality checks on manufactured
items from post-production to quality control of pre-production. Deming
became a leading ‘guru’ on quality. He and later colleagues placed a lot
of emphasis on decision making at both the individual level and the
corporate level being systematic. One such decision making or quality
implementation model is the Plan, Do, Check, and Act cycle.

Figure 4: Deming PDCA Cycle (based on Shewhart Model)

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The above model for decision making reflects the emphasis on
continually seeking to improve current processes and how we serve our
customers. Deming suggested quality improvement resided in fourteen
actions (Deming’s Fourteen Points):

1. There should be a consistent message about quality throughout the
enterprise

2. The new age of quality requires a commitment continuously to
improve

3. Focus on the process and work to reduce variations

4. Build partnerships with suppliers

5. Use the P-D-C-A Cycle

6. Make everyone responsible for their own work

7. Change management from chasing (control) to support and
coaching people

8. Drive out fear that quality somehow penalises employees

9. Remove barriers (physical partitions) that limit a total (holistic)
enterprise

10. Management has the power to make change

11. Measure

12. Remove barriers that prevent employees having pride in their work

13. Train

14. Create a quality culture and realise quality is a long-term philosophy

Figure 5: Plan, Do, Check, Act Problem Solving Cycle for Continuous
Improvement

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Continual Improvement

Continual Improvement is not about working harder, nor necessarily
smarter, it is about continually improving those things we do that
achieve better OUTCOMES for customers.

Success in business today is measured by a company’s ability to
achieve a competitive advantage over other organisations in the
marketplace. Further, this marketplace has expanded for most
companies to encompass global competition. Operating in this global
marketplace has also become more difficult as trade barriers are
reduced and new technology alters the factors determining
competitiveness.

In the past, performance in business was measured by the ability of a
specific organisation to provide its specialised product or service at a
competitive rate; that is at a competitive price where service was
measured by the availability of the product. Customers today have a
greater access than in the past and are not restricted by geographical
boundaries. This has meant that the focus for production has shifted
from volume and cost of production to the ability to build processes that
can continually satisfy individual customer’s needs and expectations.

Table 6: The six quality principles

1. Our Customer Comes First Customer satisfaction is our major
concern. We focus on the needs and expectations of our customers.

2. We Lead NOT Control We communicate a vision of how to work to
attain the enterprise goals and we are committed to these.

3. We Are Partners Management and employees work in teams and
discuss options and improvements in honest, open, two-way
communication to involve and empower people to assume
responsibility for their work.

4. We Measure Our Performance All decisions are based on facts
NOT opinion. Measures enable us to identify impediments
accurately and thereby make informed decisions to improve.

5. We Focus on Process We examine the relationship between
internal supplier and customer in order to improve the process by
which we achieve results.

6. We Continuously Improve There is no such thing as the “status
quo” because we are continuously improving. We add-value,
benchmark and follow “Best Practice”.

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Traditionally, achieving a competitive advantage for an organisation
meant the most efficient use of resources in the production of goods or
services. This has seen the use of scientific management principles in
the analysis of the way resources were used, e.g. businesses
endeavoured to find the most efficient way of serving the most
customers in the shortest period of time. Accounting principles that were
used focused on unit prices and attempted to reduce these. There was a
focus on each of the steps used in the production process, and it was
seen that if each step could be made efficient then this would bring
about an efficient production process. Quality management systems
have shifted the focus from the processes used to focus on the
outcomes that need to be achieved. The shift in our banking example is
from serving the most customers, to meeting customer requirements
from the service or product provided.

Quality systems therefore place an emphasis on the end users of
products and services and relate the ability of the processes used in
production to meet the expectations of the customer or end user.

In early attempts to improve quality certain measures and tools were
used such as quality assurance. These tools and measures have led to
a focus and an improvement in the outputs of organisations. Further, the
development of a focus on quality has led to the development of quality
programs that engender a whole management system. This is because
the development of quality is seen as a holistic process that involves the
interaction of all the steps in the production of goods and services to
achieve a quality result.

Implementing continuous quality improvement

A number of common phases that underpin the implementation of
quality management systems can be identified. They include the
following:

A. Diagnosis and Preparation

To gather data on where the organisation is now so that:

 Subsequent phases can be tailored to the organisation’s needs

 Senior management agrees there is a real problem/opportunity to be
tackled

 Commitment to improve is based on a real understanding of the size
of the problem/opportunity

 A basic level of understanding of the TQM process is achieved

B. Commitment and

Planning

 To develop commitment to an implementation plan based on the
vision

 To review the vision when necessary

 To develop the overall implementation plan

 To develop leadership improvement plans to support the
implementation plan.

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C. Implementation

 To develop local improvement plans and the promotion and
monitoring of these through the Quality Council

 To train in the new skills needed

 To get teams at various levels making improvement via the Quality
Improvement Process

 To communicate via the Commitment Cascade

D. Audit and Preparation

 To collect data to shape and plan the following year’s improvement

 To identify and understand the lessons from the current year’s
implementation

 To identify any external changes in the external environment that
may have an impact on the following year’s implementation plan.

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Improvement teams

Making quality work means breaking down the “Them” and “Us”
syndrome between management and employees that has arisen
because of the Top-Down method of Taylorist bureaucracy (divisive)
which resulted in the adversarial approach to industrial relations. In a
quality enterprise focus, both managers and employees are “Us”. “We”
are sustained by the enterprise and the enterprise sustains “Us”. The
enterprise is a living organism. The organisation is the lifeblood without
which neither managers nor employees can survive.

Breaking Down the “Them” and “Us”.

The Strategy – A Quality organisation will have a Total Quality strategy
that is a plan to make changes to the way we work in order to make
customers satisfied and therefore to generate more business.

The People – The organisation will be staffed by customer-oriented front-
line people who are backed by supporting staff and managers who all
focus on the customer output.

The Systems – Systems of work will be designed for the convenience of
the customer NOT the convenience of managers or for staff. Systems
will say to the customer “All our work processes are designed to meet
your needs!”

Figure 7: Quality Triangle

Because quality is now our number one driving force we must work as
“Us” rather than as rivals. This means we have to build a partnership
between managers and employees. This necessitates a fundamental
shift in the perceptions of both groups. The economic imperatives that
are currently forcing organisations and those who work in them either to

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do things differently or to perish require us to open our minds to the
possibility of a partnership between managers and employees.

As has been seen, teamwork, decision-making and participation are vital
to the success of an organisation in today’s competitive environment.

Within TQM the main dimensions of focus during implementation can be
distilled down to:

 Continuous improvement

 Total employee involvement & empowerment

 Decisions based on facts, not emotions

 Leadership

 Competitive benchmarking

 Team approach

 Knowledge of tools

 Supplier quality

Implementing quality requires that ALL people in the organisation to
know what the goal is and take responsibility for achieving it.
Fundamental to the achievement of this is that leaders in the
organisation communicate with and involve people in the decision
making process.

Quality Circles, as advocated by many of the gurus, need to be set up
and implemented by teams. However, these ‘Quality Teams’ need to
have the following characteristics:

1. They must be focused on specific quality standards – zero defects,
six sigma etc as defined by the senior management.

2. They must be cross functional and focus on quality not tasks derived
through the organisational structure.

3. They must have a clear communication line to decision makers high
in the organisation – preferably the Chief Executive Officer.

4. They must have permission to ‘get outside the box’.

Quality Improvement Teams can have a variety of functions including:

 To discuss issues of concern

 To provide feedback on change/transformation strategies

 To respond to current customer attitudes and changing needs

 To provide mutual support and dialogue

 To identify support needed by staff from management (resources,
training, etc.)

 To structure reviews on measures and targets

 To report to management on the improvement process and target
attainment

In addition to ‘Quality Teams’ all individuals must feel that they can
participate in the pursuit of quality.

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Figure 8: Quality teams

Teams should be value adding by being:

Strategically Oriented

 System Aware

 Improving to Achieve Future Targets

 Effect Driven

Organisationally Competent

 Know the Process

 Understand Financial Targets

 Integrate Business Plan Goals with Corporate Objectives

Impact and Outcome Focused

 Integrate Business Indicators with Individual of Performance
Standards

Data Driven

 Tangibles, Reliability, Timeliness, Responsiveness,

 Accuracy/Assurance, and Empathy

– (Modified from Jac Fitz-Enz, 1991)

Teams should own quality improvement. Therefore, teams must be able
to identify and resolve barriers to improvement. Teams should have the
authority to identify concerns and the power to initiate responses. There
also should be an ownership statement that reflects the process level
quality the team members ‘own’. A team leader should be able to
express a direct interest in the operations of members working towards
a process outcome and be able to use data to assist team activities.

In a larger organisation, or one undertaking a rapid transformation of
process, management may sit on Quality Management Councils or
Guidance Teams that are drawn from representatives of Project Teams.

When an artist creates a piece of art its intrinsic value is derived from
the unique talents and combination of circumstances that enables the

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individual to complete the piece. In many ways the concept of quality
improvement is about harnessing the unique talents and competitive
advantages an organisation possesses in its individual employees
through designing processes and teams that can bring to bear
everyone’s capabilities when transforming inputs into outputs that satisfy
customers.

Examples of team processes that focus on quality

General Electric

GE creates ‘internal discomfort’ through a process called ‘work out’.
Groups of employees meet to discuss opportunities for improvement
and make concrete proposals. Senior Management are not allowed to
participate in the discussions but must make on the spot decisions
regarding implementation (‘Built to Last’, p188).

Boeing

Boeing undergoes a planning process called ‘eyes of the enemy’ where
they encourage employees to develop a strategy as if they were
competing companies. They consider what aspects of Boeing they
would exploit. Other teams then determine how to overcome these
weaknesses and make improvements (‘Built to Last, p.188).

Just-in-Time – On time every time improvement

Just in Time (JIT) has as a core concept the reduction of inventory to
reduce the material investment in inventory at any given point in time
and this can be seen to be very different to the way inventory systems
were planned in the past. Simply stated Just In Time relies upon:

Producing the minimum number of units in the smallest possible
quantities at the latest possible time therefore reducing the need for
inventory (Hay, 1988, pp vi ).

In the past the identification that organisational performance has been
affected by fluctuations in factors external to them has led to an attempt
to control the level of uncertainty experienced through the accumulation
of raw materials and resources. The term that has been used to
describe traditional inventory management is the holding of insurance
stocks. In this case materials provide a backup in case of uncertainty or
to facilitate the protection and maintenance of production systems. In
such cases financial and operational plans centred on economies of
scale. Good examples of this process can be seen in the manufacture of
motor vehicles in the United States where the manufacturing process
was defined in relation to the optimum capacity of units in relation to the
production methods and organisational structures that were in place.

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The big U.S. car producers Chrysler, General Motors Holden and the
Ford motor company were characterised by large unwieldy centralised
structures, with costly systems of protection including factors as:

 Stockpiling large amounts of raw materials

 The involvement in the political process through lobbying

 Investment in technology to reduce the impact of the labour market
etc.

 These systems measured performance by cost per unit

What was wrong with this method and what were the underlying
assumptions that supported it?

There was an assumption that there has been an identification of the
most efficient way of producing products. This assumption is true up to a
point there has been an identification of the most efficient way of
producing resources given the organisation processes and the
organisational structures that exist. However, stockpiles cost money to
buy and hold. When sales dropped and volumes of production
decreased the efficient production processes were weighed down by
inefficient capacity plans and inventory management. The resulting
lesson was – large scale manufacturing firms that focuses on efficient
large scale batch production and centralised administration needed new
management solutions to control batch production and match capacity
to utilisation to effect more economical production. Yet press
announcements and stories still confirm these changes take time and
cannot cover all contingencies.

The figure below indicates the five factors JIT seeks to eliminate to
achieve zero variance from target. This basis then serves as a
‘launching point’ for continuous improvement exercises. This strategy
was employed by Japanese companies competing with larger US forms.
By controlling the five factors to a zero variance (i.e. planned targets
equalled achieved targets) ‘efficiency’ was achieved as well as quality
outputs.

With the increase in the pace of change and the change in
organisational structure the inventory management system of
developing a buffer to uncertainty that is ‘insurance stocks’ has given
way to an inventory management system that focuses on adaptability
and efficient small batch production.

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Figure 9: The Five Zeros of JIT

The second type of stock accumulation that causes problems is queuing
stocks; that is the buildup of stock during the production process caused
by bottlenecks. Two major causes of bottlenecks in the production
process can be due to the complexity of the processes being carried out
or through different levels of capacity throughout the process.

Improvement by reducing complexity

Delivery of precise standards of service and quality without variation is
not enhanced while processes have unnecessary complexity . Two
major impediments to quality that are most often a result of excessive
complexity are:

 Time (e.g. queuing, down time, wait time, start up lags); and

 Opportunity for variation (e.g. rework, human error, poor cycle time)

Examine the scenario outlined below. The medical imaging centre of a
pathology business handles claims in a process that is too complex. The
staff who had experience with the process (one of whom had actually
been a customer of the process as well) were asked to make it simpler
and reduce the number of complaints from customers over delays.

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Figure 10: The Original Process

Figure 11: The Improvements Suggested by Staff

Those completing the task undertook to eliminate complexity. They had
to address how best to ‘design out’ activities that were the ‘root cause’ of
complaints. This revolved around addressing how the forms were
processed and transmitted to each staff member in the service chain.
Once the most effective process was identified the team then sought the
technology and tools required to achieve the desired process. In this

case it required the purchase of an electronic scanner. The claims were
scanned and the individual completing the scan was then able to save
the file onto the main server accessible by both the processing and
administration areas. These claims had to be processed within a given
time frame by the medical processing area otherwise a reminder signal
was sent by the computer to the operator.

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Figure 12: The Improved (Re-engineered) Process

Improvement through reduction in complexity requires cooperation
between people who have an interest in working to benefit internal
customers while ultimately delivering better outcomes to the end-user of
their combined efforts.

Removing variation – A precondition to continuous improvement

The major barrier to achieving quality and thence continuous
improvement is variation from agreed targets. The quality system may
be implemented but progress forward is uncertain due to a lack of
process control. Variation may be simply defined as the undesired
deviation from specifications that result in error and a diminished ability
to attain improved customer satisfaction. Variation is usually grouped
into two forms:

Chance Variation – this is basically random in nature and has to be
managed by designing systems to prevent it, but it is virtually impossible
to remove.

Assignable Variation – this is non-random in nature and as such can
be identified, removed or at least reduced.

The forms of variation respectively parallel the two fundamental causes:

Common Causes – such as variations inherent in the process that are
basically chance or random and can only be eliminated through
improving the process design, tools or skills.

Special Causes – such as variations caused by identifiable or
assignable causes (seasonal, time or place, etc) that can be managed
through actions at the process level.

The process is under a quality regime, however, the process is
continuous subject to variations that cause uncertain conformance to
desired targets. The management of variation is one point where many
contemporary approaches to quality improvement diverge from past
TQM approaches. Under TQM the focus was more often upon a team
seeking to pull a process under quality control. In some regimes Total
Quality Control (TQC), the focus on process measurement and control,

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and later the evolution to Continuous Quality Management, in fact
supplanted TQM.

Figure 13: Variation as a barrier to continuous improvement

The sense of continuous quality improvement and the Japanese school
of thought called “Kaizen” extended the TQM approach by suggesting
teams could not address quality improvement until the organisation
introduced improvement policies and procedures which addressed
major causes of variation (Imai, 1986). Such strategies to improve on a
continuous basis meant locking in improvements across business
processes and throughout the supply chain (from suppliers to
distributors and customers). Using the image already introduced earlier
in the study guide the figure above depicts how the process may have a
target and be introducing process improvement (in this case the PDCA
cycle), but variation can impact the actual improvement process. The
aim of an organisation seeking to implement quality must be to remove
such variation.

To remove variation it is not sufficient just to have quality teams address
improvement at a process level. Variation must be addressed through
integrated effort of all staff, and especially through the planning and
management systems adopted and implemented by the organisation.
The causes of variation must be removed before the error rate in one
process can move to very high levels of quality.

One of the quality ‘schools of thought’ that predominated in the late
1980s through the 1990s was one promoting Statistical Process Control
(SPC). As we will see in the later section on the seven core quality
measurement tools, SPC argued in favour of establishing a target for an
‘acceptable quality level’ and then developing measurement systems,
tools and reporting mechanisms to ensure there existed no deviation
away from target (Variance). It also provided the means to identify
where critical variables were consistently impacting quality control and
had to be removed. Such schools of thought also led to specific
approaches to quality such as the Sigma approach where the aim was
to achieve zero variation from target (100% compliance) and bring

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processes under control by moving them into a Sigma 3 control limit (ie.
99.7% attainment of target at all times).

Managing variation ensures service and products are delivered to what
is termed ‘conformance’. Conformance is the delivery of product and
service to specification. It is dependent on control of variation in:

 Design of production process

 Performance of machinery

 Materials

 Training

Documenting non-conformance

Quality improvement system reports and documents

Below are some examples of document control forms within a Quality
Management Manual/ System. Such reports and how the data is
collected will vary across different quality management systems and the
quality regime.

Figure 14: Editions Register

Document No. ……….

Date
Authorised

Document

Name

Prepared By

Authorised
(Signature)

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Figure 15: Page Amendments

Document No. ………. Page No. ……….

Quality System Manual Edition

Section Reference/Title Amendments A B C D E

Figure 16: Distribution Register

Personnel issued with a Quality System Manual

Document Type ……………………………………………………………………

Edition
No.

Organisation Name/Address of
Holder

Pages Transmittal
Acceptance
Received

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Figure 17: Cross Referenced Index to Quality Criteria

Quality System Elements

Sect’n Heading/Item
in this Manual

Clause
No.

Corresponding
Quality Criteria

Comments

Figure 18: Procedures Listing

Procedure Listing

Sect’n

Quality System Element
Heading

Clause
No.

Related Procedures in the
Procedures Manual

Procedure
No.

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Documenting non-conformance

Put simply the aim of any quality audit system is to identify non-
conformance with required specifications and fix causes of the identified
problem. There are four critical steps to the control and removal of non-
conforming products, processes or services:

1. Identification

2. Documentation

3. Evaluation

4. Removal or segregation

To address these issues a rational, lock-step set of actions can be
documented to map and control non-conformance. These follow the
broad list of headings set out below.

1. Corrective and Preventative Action

2. Non-conformance

3. . Document what the non-conformance is with regard to the set
standards. Does it not conform to part or all of the standard?

4. Previous actions

5. Is this a problem which has been addressed previously? If so, what
action was taken and why?

6. Appraisal of actions

7. Did the action have a positive or a negative effect? Did the action
solve all or part of the problem?

8. Failure of actions

9. If the action failed, document why it failed.

10. Proposal for corrective action/ prevention

11. Develop new ideas for corrective actions and prevention.

Step 5 is critical. It is at the heart of any quality assurance component of
a quality management system. The corrective action involves eliminating
the causes of the problem, not just the focus on the problems
evidencing the non-conformance. However, in some cases the causes
may not be able to be removed (ie. supplier problems, technological
constraints, etc.). In such cases preventative actions need to be
completed to reduce the impact these problems have on product,
service and process variation.

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2. Monitor and adjust performance
strategies

2.1 Develop strategies to ensure that systems and processes
are used to monitor operational progress and to identify
ways in which planning and operations could be
improved

2.2
Adjust and communicate strategies to all stakeholders
according to organisational procedures

Measurement is fundamental to the introduction and continuous
improvement of quality management systems. Listed below are the key
steps in implementing a process improvement exercise.

Table 19: Six steps for quality analysis and improvement

1. Identify the product you create or the service you provide

2. Identify the customer(s) for your product or service,
and their expectations

3. Identify strategic target (to provide product/service so
that it satisfies the customer)

4. Define the process for providing service

5. Mistake-proof the process and eliminate waste

6. Ensure continuous improvement by measuring, analysing, and
controlling the improvement process

– (Motorola University, 1993)

Measurement is listed at the end of the above list but it underpins all
steps. We have to measure how the process is currently performing
before we can suggest improvements. When we implement quality as a
continuous improvement cycle, data collection and measurement tools
must underpin all actions.

While the element of study will confirm how to monitor and report quality
within the six-step process, the following sections will emphasise how to
measure and use tools such as the seven tools of quality. While the
notes provided will lend more detail to our analysis, this element of our
study will give a broad overview of the imperatives and the tools that
impact the implementation of a continuous improvement process.

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Figure 20: Six Step Continuous Improvement Cycle

Measuring quality

It may seem obvious but one should always ensure that the time, cost
and effort undertaken to improve process outcomes can be justified.
Often management interventions in a quality management system have
been accused of increasing management workload and interventions in
operations, but without subsequent improvements that warrant the
original effort.

Any organisation introducing continuous improvement should not wait
for somebody to come up with ideas for improving the quality of the
service, product or process. Waiting for improvement to occur can lead
to an organisation’s survival being threatened by a competitor
implementing a radical innovation. Therefore, management needs to set
and monitor targets for continuously improving the process of operation.

Improvement targets are usually integrated into business, strategic and
other forms of formal planning. Employees can then (depending on the
technology available), access the plans and work with managers to
confirm how they will meet the targets together within specified time
frames . Every member of staff is then allocated a role in the process,
trained for that role and takes responsibility for working to achieve the
targets. Management and staff monitor the progress and the process to
make sure everything is on target. Depending on technology (ie.
intranet, manual hardcopy reports, etc.), reports are published and
regularly up-dated so as to let all relevant individuals know how the
improved process is working. The constant up-dates help the
organisation maintain the improvement targets. We each may be
working in many teams to achieve many different improvement targets.
Of course, continuous improvement means there is no end to setting
and maintaining targets.

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The costs of quality

In addition to looking at quality from the perspective of what needs to be
right – it also has to be considered a long-term investment. Implementing
continuous improvement under any quality regime has associated costs.
Deming (1982) identified the four kinds of cost of quality:

1. Costs of appraisal, verification and inspection of work

2. Cost of internal failure – i.e. rework

3. Costs of external failure – i.e. errors that get to the customer and
results in investigations, loss of customers and penalties.

4. Cost of prevention – the systematic control of quality.

These ‘costs’ are depicted in the figure below. Other authors have their
own definition for the cost of quality but it is also worthwhile to note the
long term nature of quality programs, as pointed out by Ishikawa (1985),
who offers this advice:

“if executives seek only short term cost advantage, which Quality
Control cannot provide, and allow lowering of quality and reliability to
occur, it will result in the loss of long term customer trust in the
company” (Ishikawa, 1985:10).

As an investment the costs of quality need to derive a return and be
used to seize opportunities for further improvement and competitive
advantage.

Figure 21: Costs of quality

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The cost of not introducing quality improvement has also been
discussed and it will typically include:

 Loss of customers , (contract services, client base or market position
lost to efficient commercial provider)

 Inability to respond to changing customer needs
Failure to identify what you do and who are the customers

 Lack of focus in corporate training or cross-functional decision
making

 Decreased reliability and increased service variability.

When setting service and quality measures the measures relating to
product delivery therefore tend to focus on:

1. Performance – basic operating characteristics

2. Features – “extra” items added to basic features

3. Reliability – probability product will operate over time

4. Conformance – meeting pre-established standards

5. Durability – life span before replacement

6. Serviceability – speed, ease of access and competence of repairs

7. Aesthetics – look, feel, sound, smell or taste

8. Safety – freedom from injury or harm

9. Other perceptions – subjective perceptions based on brand name,
advertising, etc

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The measures relating to service delivery in turn tend to be differentiated
by a focus on:

 Friendliness of your service staff

 Speed

 Accuracy of information you provide

 Technical expertise and knowledge

 Quality of the equipment/service

 Access and control over dealings with you

 Being treated as an individual

 Being recognised as important

 Flexibility in responding to unusual requests

 Ability to communicate

 Accuracy of information provided

 Market price

 Supply cost

To build on progress made in quality programs, the advances made
need to be celebrated and reinforced. This is where some creative
thinking is required to reward excellence. Examples cited by Crosby
(1996) in ‘Quality is still free’ include:

 The Ring of Quality Program – ITT has a quality program which
involves managers nominating people who are recognised as
examples of quality performance. Each year the president presents
about 25 rings at a dinner in the United States (Crosby, 1996:112).

 The BAD Program – BAD stands for ‘Buck a Day’ and it is awarded
to anyone at ITT who comes up with a ‘BAD’ idea that will save the
company at least a buck a day (Crosby, 1996:116).

 The Zero Fingerprints Program – a telecommunications company
noticed that after some of their switches had been in use for a year
of more, fingerprints started showing up on them due to production
errors. As a result they started the ‘Zero Fingerprints’ program and
the operations manager became known as ‘Mr Fingerprints’ (Crosby,
1996:117).

 A campaign which rewards excellence and is visible to the people
within the organisation can have a lasting effect on the culture of the
organisation and this is where long term benefits can be reaped.

Other ways of changing the culture and consolidating progress include:

 Entering Best Practice awards; and

 Obtaining accreditation for ISO standards

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Many organisations pursue quality certification because it is a
requirement for them to conduct business, i.e. To supply or complete
transactions with another organisation. For any organisation the key is
to make it known to all within the organisation that quality is important
and quality progress will be recognised and rewarded. Formal
recognition through certification by quality bodies can also provide an
independent confirmation of that organisation’s success within a global
framework.

Measuring competitors and external quality – benchmarking for quality
improvement

One way of measuring quality is to compare the standards within the
organisation with the standards set by other organisations.
Benchmarking is the search for industry best practices that lead to
superior performance.

Best Practice is best defined as:

“The way in which leading-edge companies are able to manage and
organise their operations to deliver world class standards of
performance in such areas as cost, quality and timeliness” ( Report of
the Overseas Mission on International Best Practice , 1991:3).

Competition involves risk, including the risk of failure. Benchmarking has
been expanded from the recent concentration on just comparing the
organisation’s goods and services to a competitor, to include all aspects
of the leading competitor’s operations. While many early writers
suggested Benchmarking was a separate and distinct new management
approach it has increasingly become a scientific and systematic process
for increasing competitiveness within quality improvement systems. In
the mid-1990s benchmarking was beginning to be seen as a direct
adjunct to continuous improvement:

“Benchmarking is an external focus on internal activities, functions, or
operations in order to achieve continuous improvement” (McNair &
Leibfried, 1992:1).

The imperative to benchmark can be viewed as a means for managers
seeking process improvement to cheat. Although a simplification of a
complex exercise, benchmarking permits managers to ‘look around the
blind corner’ before undertaking change. As we have previously
established, innovation and continuous improvement involve a varying
degree of risk and uncertainty. Benchmarking can reduce this through
an organisation establishing how others have undertaken change and
how best practices have been achieved.

Benchmarking therefore involves the identification of standards of
quality, both internal and external and the determination of a company’s
competitive position. While Total Quality Management and other quality
management principles identify internal quality standards, benchmarking
promotes an external focus. It concentrates on the comparison of
externally identified standards with internal standards. This comparison
may be conducted internally to identify the ‘best approach’ or it may
reach as far as a comparison of internal standards with those
organisations that are identified as having the world’s best practices or

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performance in an area related to the organisation’s operations or range
of activities.

John Oakland (1995) identified four methods of benchmarking
processes used for production. These included Internal, Competitive,
Functional and Generic.

Internal benchmarking – involves a comparison of the performance of
different units of an organisation. One of the disadvantages of this
system is that internal competition may result in a deflection of focus
from achieving performance to acquisition and control of company
resources, hence reducing the sharing of information and
communication within business units of the organisation.

Competitive Benchmarking – focuses on competitors or those
competing in the same market, the advantages are that you have
measures of performance against those operating under the same
market conditions, eg. Coke vs. Pepsi. Some of the disadvantages of
benchmarking competitors are the difficulties in obtaining accurate
information and that it does not lead to innovative and creative solutions
to improving processes, you are merely following industry standard
practice.

Functional benchmarking – examines similar activities carried out
within your organisation and other organisations in the same industry,
e.g. financial management processes within organisations. Within this
benchmarking process you are not necessarily studying competitors
therefore information is easier to obtain as there may be no direct threat
to the market position of the company being benchmarked.

Generic benchmarking is an analysis along functional lines of any
organisation where processes may be adapted to provide for an
innovative way of carrying out processes that lead to a competitive
advantage. Some of the difficulties seen in using this process are that it
requires a greater effort to adapt processes from dissimilar
organisations and markets and it is harder to identify the processes that
it may be useful to benchmark.

Benchmarking focuses on those processes that provide a competitive
advantage for market leaders. This in turn helps to:

 Overcome complacency within an organisation initiating a process of
evaluation and change;

 Build and reinforce a commitment to the change process and resist
the acceptance of satisfactory performance;

 Engender a focus on developing an industry-leading position through
continual improvement; and

 Organisations to identify their position in relation to others in the
market.

The benchmarking process therefore can be seen to be a pro-active
rather than a reactive management strategy through the development of
industry best practices within an organisation.

Benchmarking then creates an awareness of competitive disadvantage
within an organisation. It establishes goals and objectives, and a
customer focus in the attempt to reduce the performance gaps between
the organisation’s performance and those organisations with the best

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performance in the industry. It provides a common focus for all those
involved in the process, developing in all those involved an
understanding of the competitive process.

Benchmarking phases

Planning

1. Determine the critical factors that yield sustainable market,
productivity or service delivery advantage (Subject)

2. Identify (competitors’) critical advantages (Data Collection and
Analysis)

Analysis

3. Identify best practices within the organisation

4. Identify gap to competitor and internal best practices

Response

5. Profile corporate vision and goals (especially critical Success
Factors or Key Result Areas)

6. Identify performance measures and indicators

7. Identify current capacity (especially training needs)

Monitor and Improve

8. Build understanding of the process in the organisation at all levels
(Develop and communicate Action Plan)

9. Implement Action Plan

10. Monitor and review process

11. Review and adjust Benchmark.

As mentioned earlier there has been a push worldwide for organisations
to raise the level of productivity in both manufacturing and the service
sector. For many the changes have been necessary if they are to be
able to compete in an international marketplace. Ensuring a competitive
business means matching and bettering performance of those who are
the best in the world, or achieving international best practice. Those
organisations seeking to compete in the world marketplace also demand
that local suppliers or public agencies achieve a standard of
performance that can support their efforts to be world competitive. This
often sees a cascade effect whereby those organisations associated
with companies seeking world’s best practice must themselves achieve
significant improvement. In countries across the globe (for instance
United States of America, United Kingdom, Korea, Singapore and
Australia), this has led to national programs to educate, support and
advance best practice programs that will make their countries ‘world
competitive’.

Benchmarking initiates a change process that can orientate the
organisation to an external focus. Benchmarking also identifies those
practices that, when adapted to the organisations specific situation, form
the basis for improvements in productivity. Benchmarking can provide a
basis to ensure that a continual comparison between the processes

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being improved within an organisation is still competitive with the
nominated industry leader.

Measuring process improvement – The seven tools of quality

A range of graphical representations is advocated to measure and
convey quality improvement. There are seven so-called ‘tools of quality’.
They include:

1. Process flow charting/analysis

2. Pareto analysis

3. Run/process control chart

4. Histograms

5. Scatter diagrams

6. Check sheets

7. Cause and effect diagrams

While the diagrams and charts may be adapted to suit particular
purposes we have provided examples below.

Figure 22: Basic flowchart symbols

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Figure 23: Flowchart for order receipt and inventory placement
process

Figure 24: Depiction of defects in production using Pareto diagram

Process charts and flow charts allow an organisation to analyse and
shorten supply chains hence improving delivery times.

Pareto diagrams are a simple way of identifying and sharing areas
where improvement is needed to reduce defects.

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Figure 25: Control chart

Control charts are widely used and especially prevalent in organisations
using statistical process controls. They can be used to monitor ongoing
process quality in service or manufacturing areas. They also give clear
indication of quality conformance to stated standards of quality. Examine
the report for event number 7. It falls below the Lower Control Limit. In
effect the event is out of control and warrants investigation. However, as
it occurs once, the variation is likely to be common cause or chance
variation – one that is not due to specific problems that can be eliminated
through intervention. They need to be mapped and controlled. But it is
where multiple events (say all 6, 7 and 8) fell outside the Lower or Upper
Control Limits that investigation would have to consider how to remove
such variations. Using such charts also enables cross comparison of
control charts for multiple periods. If the above was for the month of July
and in August and September we also found event 7 fell outside control
limits then the common cause may well be designed into the process. It
may, for instance be a rostered day off for skilled staff, a day when the
supplier delivers late, or such like. Investigation can, therefore, suggest
the problem is worth fixing even if the process has to be redesigned.

Figure 26: Histogram

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Histograms are similar to Pareto diagrams except that instead of
focusing on identifying specific problem areas, they identify the
frequency of specific problems.

Figure 27:Scatter diagram

Scatter diagrams can be used to map relationships between variables
and quality strategies. For instance the one above can be used to
illustrate the relationships between quality outcomes (error rate) and
training. Using the above chart, measurement seems to support the
conclusion that training improves quality – the more investment in
training, the better the individual or work group’s competence or
behaviours support quality targets.

Figure 28: Check sheets

The above figure represents two simple examples of check sheets for
the same activity – one a sheet of data, the other what is called a check
sheet with a ‘defects or spot’ diagram. Check sheets or defects-spot
diagrams are very simple means to collect data on services or products
and to keep track of defects. They can also offer a visual confirmation to
staff of what data to collect.

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Figure 29: Ishigawa’s ‘fish bone’ or ’cause and effect’ diagram

Fishbone diagrams allow for a graphic representation of the cause and
effect of inputs in a particular process – for instance manufacturing a
product or delivering a service.

Table 30: Using Measurement Tools for Quality Communication

Category Workplace Widely across
corporate site

Limited

Pareto X

Defect Charts or spots
charts

X X

Histogram X X

Ishikawa Diagram ( X ) X

Flowchart Diagram X

Control Charts ( X ) X

Scatter Charts X

Check Sheets X

Recognition (awards) for
individuals and teams

X X

Secondary Result Charts
(E.g. Output Rates)

X X

Bottom-Line Results (E.g.
Sales per employee)

X X

Brackets suggest some problems have been encountered in their use in
these ways in Australia.

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3. Manage opportunities for further
improvement

3.1
Establish processes to ensure that team members are
informed of outcomes of continuous improvement
efforts

3.2
Ensure processes include documentation of work team
performance to aid the identification of further
opportunities for improvement

3.3
Consider areas identified for further improvement when
undertaking future planning

Quality assurance and quality audits

Auditing and reporting quality

Any quality improvement initiative should target specific measurable
customer needs alongside the needs of employees and shareholders.
The most immediate step when establishing measures and indicators for
a quality improvement transformation is to review existing performance
measures that were used to establish current milestones and business
goals. The measures likely to be used would include customer indicators
of sales, service and repeat business, and financial performance figures.
There is less likelihood of the measures indicating employee satisfaction
than shareholder and consumer satisfaction.

Employee satisfaction indicators such as staff turnover, absenteeism, or
accident rate are not specific and provide information when it is too late
to do anything about identified problems. What is needed is a system of
measuring quality using a consistent set of established criteria that
directly relate to the attainment of the acceptable standard of quality.

Depicted below is the diagram previously used. Here the role of quality
audits is clearly positioned. Measurement and audit of existing process
improvement (depicted by the PDCA cycle) are being assured within the
overall improvement process. If the target is customer satisfaction then
the act of auditing is reporting on not just compliance with criteria and
conformance to standards of quality, it is also measuring systems-level
improvement.

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Figure 31: Role of auditing quality in a continuous improvement process

The control of quality records and all information that encompass the
Quality Management System (QMS) is part of a formal quality
assurance or improvement system. Documents measure what is
happening now, as well as predict and evaluate future improvements.

The control of documents involves:

 Record access systems;

 Mechanisms for comparing documentation (data, information,
knowledge, etc.);

 Codification and identification mechanisms;

 Indexing;

 Storage (including archiving);

 Storage (including back up); and

 Maintenance.

Requirements, criteria and means to report will vary under different
quality frameworks.

The preparation for an audit should be seen as an opportunity for the
organisation to present documents that support not just the QMS, but
also the core operations. The focus on completing the audit, whether
internal, by an external expert or a third party, must be on identifying
opportunities for improvement.

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A typical audit cycle is:

 Planning and scheduling;

 Complete and verify compliance;

 Identify and plan improvement (address non-compliance);

 Implement PDCA cycle; and

 Report and evaluation documentation kept.

Part of the QMS will identify the documentation to be kept and what has
to be prepared for an audit. This will vary under the prevailing quality
framework and principles being applied.

Internal quality audits or what have often been called self-assessment,
are on-going means for an organisation to identify opportunities for
improvement. They also assist gauge readiness for a full audit.

Internal audits also are excellent mechanisms for the manager and staff
to communicate issues, confirm shared understanding, coach and
generally gain ownership of the quality system.

There are formal training courses and various levels of audit certification
available to organisations and individuals under the major quality
regimes.

Under the International Standards Organisation (ISO) regime the
change in culture commences with a decision on how and who will
determine how the standards are being achieved. Auditing for instance
may be through:

First party: A firm audits itself against ISO 9000 standards

Second party: A customer audits its supplier.

Third party: A “qualified” national or international standards or
certifying agency serves as auditor

Quality assurance versus quality audits

A Quality Audit is not a Quality Assurance exercise. A Quality Audit is a
structured and scientific format for determining how a quality process or
system is functioning. Unlike quality assurance that may involve
measurement and improvement without due regard to what customers
value, this section promotes quality audits as a ‘customer-driven’
component of an effective continuous improvement system. Audits will
be shown to be as much about setting priorities, as they are about
measuring conformance to quality targets.

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Table 32: Traditional Quality Assurance Checks versus Quality Auditing

Traditional Quality Assurance Quality Audit (Underpinning Quality)

More appropriate for a consistent
product (manufacturing)

Quality relates to (Total) all business
functions and activities

Quality defined by specifications Quality defined by key observable
indicators in each process

Inspection will detect defects Quality becomes part of the
specification of a product

Errors reduced to acceptable minimum Everyone has a responsibility for quality
and feedback systems encourage
employee suggestions

Waste & inefficiency can be built into
price

Constantly attempt to reduce errors to a
minimum

Higher quality = higher cost Identify waste and inefficiency & use it
as an opportunity for improvement

Quality controlled by detecting and
deleting problems

Higher Quality means lower long-term
cost and higher productivity

Quality is a function (which reflects
greater problems if management is
functionally based)

Quality is planned as a positive and
constructive tool for those in the
workplace as well as senior
management

Highlights discrepancies in individual
and Section’s performance

Quality provides a focus for all and
clarifies the true nature of the problem
in the process (without individual
sanction)

Manuals describe procedures and
control factors to be checked

Continually raise the achieved minimum
standards

Unilaterally applied off check lists Emphasise better communication with
staff and use the Audit to confirm
decentralised capacity to apply Quality
Control in the Teams, Sections,
Branches etc

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Installing an internal quality audit

1. Define Output Requirements

 Well trained people

 Capable leaders

 See visible progress

 Identify parts of the team effort

 Return clientele

 Recovered clientele

2. Develop Process Measures

 I am well trained

 I can do my job to specified requirements

 My ideas are heard and do count

 There are enough resources (eg. ‘phone lines) to do my job

 I offer the same consistent service to clients

 I have no disgruntled clientele

 All customer requests are recorded and we respond immediately

 We consistently solicit complaints

3. Audit the Process

 Opportunity for improving the process

 Service quality gaps are identified

 Individual performance and team performance are differentiated

4. Take Action to Solve Problems or Improve the Process

 Techniques and tools are used to solicit and act upon individual
and team input

 Results form the base-line for improvement

5. Periodically Re-audit the Process and Tighten/Improve Measures

 Once is not enough so the review is on-going and undertaken
again at critical intervals

You may note that the sub-points can be framed for an Audit with
responses capable of being ranked on a 1 to 5 sliding scale.

Completing the audit follow up processes

Auditors, whether internal or external, will focus on compliance. They
may check for:

 Audit schedules and past activities

 Compliance reports and action documentation

 Corrective action reports

 Preventative action reports

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 Management reviews and reports on systems

 Data security, integrity and accuracy

Depending on the prevailing quality regime, auditors work to known lists
and against the quality principles or standards.

Generally, for a training provider audits tend to focus on:

 Identification of training needs (customer needs)

 Design and integrity of the product (training content, assessment,
etc.)

 Commitment of staff to deliver products to required standard

 Competence of staff to deliver products and services to required
standards

 Provision of service (training, coaching, assessment, recognition,
etc.)

 Maintenance of records

 Effectiveness of products and services (training and assessment,
etc.) to meet defined needs

All the above are nothing new in terms of well managed training
organisations. In those aspiring to become learning organisations we
would expect even greater emphasis upon the constant learning
between supplier, service provider and customer and their contribution
to continuous improvement of operational quality.

After an auditor or audit team has completed their review a report is
prepared. This identifies areas for immediate action, areas where
improvement is apparent and an overall suggestion of quality against
the benchmark quality standards/ principles or criteria being used.

A typical report will have a report on the areas examined (the standards)
and the rating against the relevant indicators (criteria). Noting that the
categories of standards and criteria will vary across quality systems
(while maintaining some sense of similarity) a reporting ‘score card’
could look like the one depicted below.

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Figure 33: Quality audit scorecard

The arrows mark scored positions on a continuum from very poor (never
complied) to a score where they are best in class (level 5 where they
always comply). In this case the organisation has best in class products
but weaknesses in leadership and strategic frameworks. While strategic
mechanisms are renewed, this audit report also identifies that the
people dimension is actually slipping (reverse arrow). Such reports give
the whole workforce non-conformance areas to target and also
immediately signals where success has been achieved. Most quality
certified organisations need to operate at level 3 and above.

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Innovation

The breadth, depth, velocity and persistency of change necessitates
organisations be able to not only manage responses to change, but be
proactive and shape change. Where it is related to systems, processes
or technology managers need to comprehend how innovation is both a
mechanism to response to rapid transformation and a trigger of change.
The secret is to know who is in control, innovation or the manager!

This topic explores the historical foundations for the study of innovation
within an organisation setting. We will establish a clear taxonomy for
defining and differentiating innovation from such activities as:

 Invention

 Improvement

 Reengineering; and

 Reinvention.

The definitional parameters are necessary as the boundaries between
these activities not only become blurred in the workplace, the
interrelationship between the professional and academic study of these
activities has increasingly become uncertain.

The purpose of this topic is therefore not to provide an exhaustive study
of innovation in all its guises. Rather it is to revisit historical and proven
definitions that permit the role of innovation within an organisation to be
studied. From this point the relationship and overlap with the
management of change can be defined. In addition, we will be able to
isolate the relationship between innovation, change and more recent
management ‘fads’/theories.

In the final section of this topic we will reconfirm how the speed of
business and supply cycles has accelerated. Cycles of planning and
responsiveness to changing customer demands have compressed. As
we will see compressed cycle times necessitates development of
appropriate capabilities to undertake organisational innovation,
especially the individual’s capacity to learn and respond to new
demands. People become assets not just for their skills but also for their
ability to embrace change and enable organisations to meet changing
customer and market needs. Adaptiveness or organisational agility is
about the capacity of the organisation to innovate and transfer
information to individuals and ensuring they have the capacity to quickly
absorbed this information and deploy it as knowledge that enhances
customer outcomes.

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Types of change solutions and their impact

The following section revisits the historical cornerstones that hold
together the diverse fields of study associated with innovation and
change within an organisational context. This will be completed to
ensure we can define and differentiate some key terms associated with
innovation.

As depicted below change can be managed using a mix of approaches
dependent on considerations revolving around the rate and type of
change. In each of the quadrants are placed broad styles of how
innovation can be approached by a manager.

Figure 34: Matrix of change solutions

The above matrix can be aligned to specific management approaches
(such as covered in other topics). This alignment is presented in the
table below.

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Table 35: Alignment of change typologies to specific managerial
approaches

Type Specific managerial approaches

Rapid-Top down  Business process re-engineering



Re-engineering

 Rapid development

Rapid-participatory 

Reinventing

 Participative team

 Mutual gains

Incremental-Top
down

 Project management

 Decision modelling

 Organizational redesign

 Benchmarking

 SPC or Quality Control

Incremental-
participatory

 Continuous improvement and quality
management approaches in their many forms
for both processes and services (TQM, CI, CQI,
TCS, TQC), Sigma-six, Kaizan, ..

 Learning organisation

 Organisational learning

It is interesting to note the move to organisational agility cuts across all
dimensions of the matrix (See the topic on change and agility). Agility
can be any mix of rapid, incremental, top-down or participatory. Agility
has evolved as a management focus because it emphasises the need to
design innovative practices into all levels and aspects of an
organisation.

Let us now extend our study to the component terminologies
surrounding the world of innovation. The following definitions cover the
‘everyday’ concept of innovation and related terms.

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Innovation

Innovation is classically defined as the “process that begins with an
inventor’s insight and ends with a new product or technique” being
created (Lundstedt & Colglazier, 1982: xiii). Innovation is not just the
practical improvement of hardware. It is also the reshaping of concepts
or ideas. The innovation process forms the basis for individuals to inject
ideas, insights, pure and applied research, scientific knowledge, and
technical “know-how”.

Innovation is not held within this topic to be the same as discovery or
invention where a new technical entity unlike any known previous
technology, is produced. Discovery is the production of new technical or
scientific knowledge. This is distinct from invention which is usually the
result of pure research discovery, or the unique combination of
established knowledge, to produce a novel technical entity.

Innovation involves the substantial change and development to
identified technology, ideas or techniques. On a continuum of change or
search for superior outcomes, innovation may be considered to sit below
the high risk, uncertain efforts of those seeking inventions or
discoveries, and above those undertaking improvements.

Improvement

Improvement is herein limited to focused change undertaken on an
existing or known entity, component, technique or idea that
incrementally generates superior outcomes.

A process may undergo cumulative evolution where the end process or
product adds value, relative to its immediate predecessors and
constitutes a major change from the starting point (Dawkins, 1986: 43).

The completed innovation or improvement produces a complex source
of change that does not stop with the alteration of an existing technical
entity. It may also provide a conceptual basis for addressing problems
that have a cumulative impact on both an organisation and even a
society. Thus the wider technological environment – social, political,
economic or organisational factors – may be influenced by technology
change and in turn produce secondary effects that are far from apparent
immediately after the original innovation’s introduction (Kranzberg,
1986:545).

The impact of change may therefore be spread over an extended period
of time with only minor incremental improvements to existing processes,
technology or ideas (Lundstedt & Colglazier, 1982: xxiii). The impact
and course of change may also be complicated by technical drift of the
introduction of innovations from other countries or other organisations.

The incremental change to technology can be overtaken on occasions
by radical or dynamic ‘breakthroughs’ in technology that quickly alter
existing products or processes and may swiftly alter existing
environmental conditions within which future technological innovation
occurs (Hughes, 1982: 32 and Landau, 1982:54). The more radical a
‘breakthrough’, the wider is the base for new or novel innovative effort to
accelerate technology change.

Because significant discoveries and technological change cannot be
ordered or pre-ordained, the innovation that changes technology may be
derived only long after the original ‘breakthrough’. Hence great periods

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of innovation can then be followed by stagnation. However, as
organisations recognise the competitive advantage in quickly identifying
and adopting conceptual breakthroughs, cross-fertilisation of ideas and
practical usage have seen a quantum leap in improvement and
innovation at an organisational level. Unlike the late Industrial Age, in
the Information or Knowledge Age the impact of a final innovation is
occurring sooner as organisations realise that the speed of converting
conceptual ideas into applied realities is in fact an area of competitive
advantage.

The search for a better product, procedure or idea is ongoing. As
correctly identified by Foster (1986:102) “… rarely does a single
technology meet all customer needs “.

In the area of competitive advantage in the Information Economy it is an
organisation’s capacity to search for, and apply innovations and
improvements made by others to their own processes, that can
accelerate effective change. Management of such incremental change
has become a far more complex practice as not only the hardware
(equipment), but the advancement of processes and practices have
profoundly impacted how organisations are structured and controlled.

Re-engineering

Process re-engineering is fundamentally the analysis of all activities
associated with a process that results in the radical changing of that
process to achieve breakthrough outcomes for the enterprise (Bowles,
1994:14). The change will generate results that are usually marked by a
higher risk factor due to their aim to achieve ‘breakthrough’ results.

In the late 1990s re-engineering texts and literature were as popular and
as numerous as Total Quality Management texts were in the late 1980s.
Our study in this section revolves around what re-engineering is about,
why it is seen as a valuable change management approach, and what
this means for frontline managers.

What we must appreciate is the belief held by those advocating process
re-engineering that organisations are failing to change rapidly enough.

Reinventing

While this topic will not cover it in depth, a concept called reinventing
has been loosely associated with the drive to re-engineer organisations.
Reinventing is a term often used in conjunction, or parallel with, re-
engineering. Reinventing has been used to underpin the need to
completely rethink how organisations operate. The concept has even
been used especially by David Osborne and Ted Gaebler (1993)
Reinventing Government: How the Entrepreneurial Spirit is
Transforming the Public Sector (Plume, New York) when arguing for the
United States’ public sector to be reinvented in an entrepreneurial spirit.

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Re-engineering

Process re-engineering necessitates escaping the conceptual
parameters imposed by past ideas and ways of ‘doing things’. Such an
approach is often termed a greenfields approach to reform or change. A
greenfields approach requires those involved in a re-engineering
exercise to rethink everything they do. Starting with a blank white board
their rethinking of a process must:

1. Suspend reference to existing practices and traditional concepts;

2. Start process design from the output service/product delivered and
the external customer requirements;

3. Define process relationships by mapping the ideal or optimal internal
customer relationships that can support external customer
requirements;

4. Derive ideal and optimal procedures and relationships without initial
regard as to ‘why we cannot do this’;

5. Frame new performance targets;

6. Review the new performance targets against corporate or strategic
targets; and

7. Establish priorities and responsibilities for implementing process re-
engineering.

In effect, re-engineering is about escaping the incremental and ad hoc
change exercises to promote a radical re think of how organisations
conduct operations. It is therefore more than a tool or adjunct to existing
management theories. It is both holistic in its consideration of
organisational management and in how we change operations. The
Phases in Process Re-engineering encompass all levels of
organisational operations.

Business Process Re-engineering (BPR) is a specific approach
coined to focus re-engineering effort on process level innovation.

Phases in Process Re-engineering

 Identify the corporate vision.

 Consolidate the Strategic Direction (Mission, Objectives and Key
Result Areas)

 Develop an ‘enabling’ culture to support changes

 Develop co-operative workplace partnerships

 Map the existing processes

 Re-engineer processes

 Redesign jobs

 Retool equipment and retrain staff

 Continually review, renew, reorganise, and redesign

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Marshall Romney (1995:3) reported the following seven principles for
successful reengineering. They are derived from Michael Hammer, co-
author of Reengineering the Corporation: A Manifesto for Business
Revolution .

Figure 36: 7 principles for reengineering

Principle Detail

Organize around
processes and
outcomes, not tasks.

Companies often divide business processes into
individual tasks and assign them to different people.
The documents used in the business process often
wait for hours or days at each desktop as they are
passed between the people involved in the process.
Delphi Consulting Group estimates that up to 90
percent of the time needed to complete typical office
tasks is a result of gathering and transferring paper
documents.

Centralize and
disperse data.

Some companies centralize operations to achieve
economies of scale. Others decentralize operations to
be more responsive to their customers and to provide
better service. With current technology, companies
can have the advantages of both approaches:
corporate-wide data bases centralize data, and
telecommunications technology disburses it.

Capture data once,
at its source.

Many organizations have a number of separate
information systems, such as an accounting system, a
management information system, a marketing system,
a production system, and so on. Each of these
systems collects, enters, and processes some of the
same information. Not only is this inefficient and
expensive, but redundant data exists that all too often
contains discrepancies. These problems can be
solved by capturing data once, at its source, storing it
in data bases, and making the data accessible to all
authorized users.

Information
producers process
information.

Most organizations process their acquisition/payment
information like Ford Motor used to do. Ford prepared
multicopy purchase orders and receiving reports.
Fourteen different data items on these two documents
had to be matched to a vendor’s invoice before a
payment could be made. Accounts payable had more
than 500 people who spent most of their time trying to
reconcile all the mismatches. The process was time
consuming and frustrating, and vendors were
unhappy because payments were delayed.

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Principle Detail

Output users perform
the processes.

Most organizations are split into separate departments
and each specializes in a specific task. Each
department completes its particular task and passes
its “product” off to another department. This principle
states that the people who use information from the
system should be those who perform the process that
produces that information.

Empower workers. Most organizations have a hierarchical structure with
one or more levels of management to supervise,
direct, and control those below them. Many
organizations have found that empowering workers
with decision-making responsibilities leads to a higher
quality product and service, faster responses to
problems, and fewer levels of management. Expert
systems and other newly developed information
technology helps workers make correct decisions and
avoid mistakes.

Integrate parallel
activities.

Many business processes are so complex that they
are divided up and assigned to independent teams.
These teams work in parallel with each other and then
integrate their tasks when they are done. For
example, when Chrysler designed a new car, they had
different teams designing the body, the interior, the
engine, the transmission. and other elements. When
they began assembling the cars, they often found that
the components did not fit together properly and had
to be redesigned.

The above phases and principles are not radical in concept. We have
seen in other topics that operations are often part of the strategic
planning process with cascading performance measures derived from
corporate mission, vision and objectives and performance targets and
indicators that move down to business and operational plans.

On the other hand, the phases suggest that the concept of re-
engineering is not inconsistent with quality management systems and
the concept of continuous improvement. Certainly continuous
improvement, the search for creative and innovative approaches to
operations management, suggests dynamic change focused on
achieving better ways to deliver products or services.

Theorists and practitioners within the field of re-engineering have
debated what exactly it entails. Writers like Michael Hammer and James
Champy suggest that organisations have not responded well to the
imperatives of the three “Cs” – customer, competition and change
(Hammer and Champy, 1994:24). Re-engineering, to be truly effective,
requires the corporation as an entity to be completely renewed. This
requires what has been called the “big-bang” approach to re-
engineering where all processes are considered as part of the
corporation re-engineering exercise.

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More conservative and slightly less risky approaches argue for process
re-engineering to be a cumulative approach to improvement. As such
process re-engineering seeks to maximise the corporate performance
while optimising competitive advantage by exceeding customer
expectations. The exercise will radically alter an operation defined by a
series of related input, transformation and output sequences.

For the purposes of this Unit process re-engineering will be considered
as part of a wider effort to expand a corporation’s capacity to undertake
change. As such the exercise of process re-engineering goes beyond a
limited reconsideration of a process in isolation from wider corporate
efforts to achieve an operational breakthrough. This also assists define
process re-engineering as distinct from a process ‘redesign’ such as
administrative or process cycle time reduction.

Hammer and Champy see the focus on re-engineering work through
information technology, and thus creating process innovation as in fact
limiting the definition of re-engineering. They argue:

… despite the prominent role played by information technology in
business reengineering, it should by now be clear that reengineering is
not the same as automation. Automating existing processes with
information technology is analogous to paving cow paths. Automation
simply provides more efficient ways of doing the wrong kinds of things
(Hammer and Champy, 1994:48).

It is beyond our scope here to discuss all the arguments but we need to
appreciate the nature of process re-engineering as a systematic effort to
stimulate process innovation and the total rethinking of corporate
operations.

Dangers

Reengineering will not succeed if you:

 Try to reinvent when it need to be replaced

 Repair instead of fix

 Focus on the problem not the business processes

 Change has no meaning to those currently and in future doing the
job

 Lack of systematic process for change

 Accepting minor results as a trade off for support

 Lack of executive support

 Trying to drive it from a staff-up, rather than collective exercise
orchestrated from the top

 Wrong priorities

 Loose or cannot secure capabilities to make it happen (all dressed
up but nowhere to go.)

 Right solution ,wrong culture

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 Backing major process change in the face of market upheaval or
higher priority (perceived or real) process changes in other parts of
the organisation

Identifying when to re-engineer processes

There is not one line of thought suggested by re-engineering experts on
when one should adopt a re-engineering approach to changing process
operations.

All re-engineering exercises involve risk. You may recall that the level of
risk involved in making decisions or solving problems often marks a
manager’s capacity to improve operations. The higher the risk the less
palatable a manager may find the solution. Depending on the scope of
the re-engineering exercise the level of risk will vary. However, in
comparison to traditional change and improvement exercises, re-
engineering is a high risk undertaking.

Given the success and current status awarded re-engineering there are
obvious reasons why the concept is appealing to corporations and
government.

In a Harvard Business Review article published in 1995, John Kotter
(March-April, 1995, 59-67) identified eight considerations for the
success of transformational change. Alignment to and delivery of these
considerations are often listed as reasons why re-engineering secured
so much initial support.

1. Create a sense of urgency.

2. Form a team of key stakeholders who support the initiative.

3. Form a vision: appealing & easy to understand & communicate.

4. Vision must be communicated.

5. Obstacles must be removed–identify barriers & deal with them.

6. Plan for short-term wins.

7. Don’t declare victory too soon–complete the process.

8. Anchor the changes in organizational culture.

Reading

Brynjolfsson, E, Renshaw, AA & van Alstyne, M ( Draft: January, 1997 )
The Matrix of Change: A Tool for Business Process Reengineering , MIT
Sloan School of Management, Cambridge, MA. Sourced February 2010
at http://ccs.mit.edu/papers/CCSWP189/ccswp189.html#ab

.

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Given that our working definition of process re-engineering involves an
organisation seeking operational breakthroughs, the time to use re-
engineering will depend on the priority concerns of the organisation. The
issue is to identify what imperatives drive the managers to consider re-
engineering in the first place?

Recently a manager and the large defence force technology design
team spent four months designing a computer simulation program that
could test design solutions for a new army weather proof rain coat. The
design effort was structured on reengineering grounds due to past
complaints from customers that the supplied equipment never worked to
their requirements and took too long to get to production.

To accelerate the concept to full trial the army instigated business
process re-engineering. They came to rely heavily upon computer
simulation and fast-track design teams. Having spent only 13 months
responding to the army design specification and producing the new
product the corporation was very keen to ensure that the customer
(hardened soldiers and their officers) that they had produced a product
which exceeded the specifications. The coat had triple stitching and
could survive the worst possible weather conditions.

The computer simulation that formed the basis for the design was
shown and the army agreed to field test a full production model.
Unfortunately the clothing turned out to be both too heavy and unable to
survive normal tropical monsoonal conditions. It turned out that the
product had never actually been worn in tropical conditions.

The moral of the above story is that reengineering or any other
technique is no substitute for common sense. The workplace of the
future must survive on managers and staff practising common sense
every day and openly responding to customer needs. Information
technology or the best change process in the world still rely on people
working within existing operations and the constraints impacting
customer satisfaction.

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Benchmarking could have told the design manager what had and had
not worked in the past; quality control could have identified better testing
and assurance techniques; or other methods could have improved the
product finally delivered. One has to ask though, what were the expert
managers and staff in the team doing? If the aim of a re-engineered
process is to provide systematic direction and efficient transformation of
inputs into output to meet customer requirements, then failures such as
the above should not be acceptable. Yet they occur daily. The level of
their occurrence and the difficulties in changing processes, procedures,
products or services, cultures, and organisations to alleviate such
problems lie at the root concern with traditional approaches to
management.

For those organisations wanting to achieve or maintain world
competitive best practices, the requirements for re-engineering are
simple:

 Management of incremental process improvement is useless if the
systems and people cannot satisfy either current or future demands;

 Continuous improvement is only valuable if the processes are
already competitive and future innovation or reengineering exercises
can create breakthrough changes; and

 In a world of rapid change the capacity to manage change in a
process context is as important as the management of the process
outcomes.

To evolve or to reengineer?

It would be fair to state that the purist approach to reengineering
advocated in the 1990s has been replaced in management thinking by
more evolutionary approaches. The concept of ‘blowing up’ processes
and rapid, radical surgery has been superseded by the realisation such
approaches are symptoms of wider problems. The need for re-
engineering has been replaced by an acknowledgement change need to
evolve. As such responsiveness and agility have to be built into how
businesses operate. Innovation and incremental change should
continuously enable processes to move with changing customer and
operational needs.

Re-engineering took so much time and effort to implement the core
business suffered. Now approaches such as agility, continuous
improvement and such like have gained more sway in management
thinking by emphasising innovation is part of how businesses and
managed.

The need for speed

In the New Economy speed is touted as one of the most critical
sustainable competitive advantages a business can acquire. It has also
been presented as a value proposition that online customers seek over
price (Meyer & Davis, 1998; Lemberg, 2000; Fred, 2002). It is against
this backdrop that learning becomes an enabler of not just performance
improvement but also the speed with which organisations can develop
staff capabilities to deliver their core value proposition. This emphasis
has placed people at the heart of modern service organisations. As

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stated by Charles Fred (2002:36), a new metric has emerged; this
centres on the cycle time to achieve performance proficiency, which:

. . . helps redefine the development of people in the context of the
delivery of value and of time – in this case the time it takes for individuals
to prepare themselves to perform.

Figure 37: S-curve of innovation in a service context

As depicted above, speed and competitiveness are realised by
advancing individuals rapidly along the learning curve to the point of
proficiency (Fred, 2002:95). The figure above also emphasises how the
learning curve extends beyond the point where proficiency is achieved
to build the mental models that promote continuous learning and the
acquisition of skills and knowledge necessary to assimilate new
information, to transfer knowledge or to accumulate the experience
necessary to deal with unexpected contingencies (Fred, 2002:67).

To accelerate the cycle time to proficiency, businesses have to:

 Establish the proficiency threshold;

 Accelerate the accumulation of experience; and

 Measure the cycle time to threshold proficiency (Fred, 2002:34).

According to Fred, these activities present a very good indicator of the
performance capacity of an organisation and set apart agile, responsive
and competitive organisations. The concept of a cycle time to
proficiency also reinforces the importance of moving developing
capabilities in the workforce for not only acquiring the skills to perform,
but also the capacity to learn and respond to new challenges.

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The acceleration of learning is also a ‘speed’-based issue. As illustrated
in the figure below real value to the organisation and its direct capacity
to achieve service proficiency can occur by reducing learning and
performance cycle times.

Figure 38: Reducing cycle time in traditional training and development
(Fred, 2002:81)

Fred also reinforces that the changing nature of staff capabilities and
expectations in relation to learning. This is also consistent with changing
customer expectations. Younger staff and those now familiar with
electronic service and work expect technology to be deployed to
enhance how they access content, information and knowledge to fit their
needs, when and where they want (Fred, 2002:125).

In the context of speed and organisational competitiveness, managers
need to be aware of any techniques, processes or tools that will permit
them to:

 Shorten the time taken to raise an individual’s performance to the
point of proficiency;

 Transfer the mental models and sense of identity that facilitate
assimilation of new information, transfer of knowledge or
accumulation of experience;

 Enhance the capabilities of the organisation to support how people
learn and respond to new challenges;

 Recognise and reward responsiveness;

 Provide real-time capability for individuals to control when, where
and how they can rapidly acquire knowledge and learning relevant to
immediate work performance (codified knowledge transfer);

 Enable collaboration, interaction and knowledge transfer with others
(uncodified knowledge transfer); and

 Support change processes that enhance the communication of
timely and accurate knowledge.

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