Quality Is Free

1. Quality Is Free The Art of Making Quality Certain By Philip B. CrosbyMcGraw-Hill Book CompanyCopyright 1979 Presentation by Kristine Daynes

2. About the Author, Philip Crosby • Introduced the Zero Defects program at Martin-Marietta in the early 1970s • Published Quality Is Free in 1979 after fourteen years as a vice president at International Telephone & Telegraph (ITT) • Started the management consulting group Philip Crosby Associates, Inc. (PCA) in 1979

3. What Will Be Covered Quality Concepts and Principles Quality Management Maturity Grid Fourteen-Step Quality Improvement Program Real-Life Example Hands-On Exercise

4. What does “quality is free” mean? • A quality program can save a company more money than it costs to implement • Profitability is best accomplished by reducing the cost of poor quality and preventing defects • Cost savings include prevention, appraisal, and failure costs.

5. The Integrity Systems “Table” • Management participation and attitude • Professional quality management • Original programs • Recognition

6. Quality means goodness, elegance Quality is intangible, not measurable The “economics of quality” are prohibitive, not relevant Quality problems originate with the workers Quality is the responsibility of the quality department Quality is conformance to requirements Quality is measured by the cost of nonconformance It is cheaper to do things right the first time Most problems start in planning and development Quality is shared by every function and department The Five Erroneous Assumptions

7. Listening Cooperating Helping Transmitting Creating Implementing Learning Leading Following Pretending Essential Traits of a Quality Manager

8. How can Crosby’s concepts be put to use? • Evaluate your organization’s position on the Quality Management Maturity Grid • Implement the fourteen-step Quality Improvement Program

9. Quality Management Maturity Grid • Five stages of an organization’s maturity • Six measurement categories • Management understanding and attitude • Quality organization status • Problem handling • Cost of quality as a percent of sales • Quality improvement actions • Characteristic statement

10. Maturity Grid Stage I: Uncertainty • Quality is the responsibility of the quality department • Quality is hidden within manufacturing or engineering; no inspection • Problems are fought as they occur. • The cost of quality is unknown. In reality it is about 20%. • There are no organized quality improvement activities. • “We don’t know why we have problems with quality.”

11. Maturity Grid Stage II: Awakening • While quality management may be valuable, the organization is not willing to commit resources. • A quality leader is appointed, but the emphasis is on appraisal and moving the product. • Teams address major problems, but long-range solutions are not solicited. • The cost of quality is reported at 3%, but is actually 18%. • Activities are limited to short-range, motivational efforts. • “Why do we always have problems with quality?”

12. Maturity Grid Stage III: Enlightenment • Management adopts a supportive and helpful stance. • Quality is elevated to a functional level equivalent to engineering, marketing, etc. • Problems are resolved openly and in an orderly way. • The cost of quality is reported as 8%, though it is really about 12% of sales. • The fourteen-step quality improvement program is implemented. • “We are identifying and resolving our problems.”

13. Maturity Grid Stage IV: Wisdom • Top management participates in and understands quality. • The quality manager is an officer of the company. • Problems are identified in early development. • The cost of quality is reported as 6.5%. It may be 8%. • The quality improvement program is continual and accompanied by follow-up training. • “Defect prevention is a routine part of our operation.”

14. Maturity Grid Stage V: Certainty • Quality is an essential part of the organization. • A quality manager serves on the board of directors. • Problems are prevented. • The cost of quality is reported as 2.5%, which is what it really is. • Quality improvement is normal and continual. • “We know why we do not have problems with quality.”

15. Management Understanding and Attitude • “Improvement itself is never the real difficulty. Once individuals recognize and agree on their position, it is never difficult to improve.” • “What works in one industry to improve quality will work in others—if you take the time to understand quality and its content.”

16. Quality Organizational Status • “A lot of problems will be avoided if you lay out a clear policy covering the entire quality operation…Keep it simple, and you will have the reasonable expectation of having someone read it.” • “Quality operations should always report at the same level as those departments they are charged with evaluating.”

17. Handling Problems • “Operations that truly want to handle problems, for the purpose of solving them must create an open society within their walls that is imbued with the basic concepts of integrity and objectivity.” • “Objectivity comes with not placing the blame for problems on individuals. Aim the questions and probing at the job.”

18. Cost of Quality (COQ) • “Quality is free, but no one is ever going to know it if there isn’t some sort of agreed-on system of measurement.” • “The purpose of calculating COQ is really only to get management’s attention and to provide a measurement base for seeing how quality improvement is doing.”

19. Quality Improvement Activities • “Real improvement just plain takes a while to accomplish.” • Quality management is ballet, not hockey. “A ballet is deliberately designed, discussed, planned, examined, and programmed in detail before it is performed.”

20. Fourteen Steps to Quality Improvement • Management commitment with an emphasis on defect prevention and visibility • Quality improvement teams composed on members of each department or function—all the necessary tools • Quality measurement to monitor the status and improvement of activities

21. Fourteen Steps to Quality Improvement 4. Cost of quality evaluation by the comptroller for accurate figures • Quality awareness by communicating the cost of quality, encouraging discussion 6. Corrective action to ingrain a habit of identifying problems and correcting them

22. Fourteen Steps to Quality Improvement 7. An ad hoc committee to advocate “zero defects” • Supervisor training so that all managers understand the programs and can explain it • Zero Defects Day to establish “zero defects” as the organizational standard • Goal setting as teams, specific and measurable

23. Fourteen Steps to Quality Improvement • Removing the causes of defects, as described by individual workers, so that the people know their problems are heard and answered • Genuine recognition for achievement • Quality councils of quality professionals and team chairs for status information and ideas • Do it over again—repetition makes the program perpetual

24. A Real World Example • Alberto Wisbeck took the job of top manager at Siemens’ worst factory in Jinan, China. • Production capacity was low and the cost of raw materials was 67% of sales. • If efficiency did not improve, the factory would be closed.

25. What did Wisbeck do? • Wisbeck focused on improving quality and meeting customer needs • Following the 14-step quality improvement program, he encouraged workers and supervisors to identify the processes and procedures that were causing problems. • Following training, top managers implemented projects in their own work areas

26. What were the results? • By focusing on faulty work processes, the managers avoided reprimanding their workers—a critical cultural requirement. • Over 300 projects saved the company $604,000 annually and the plant rose to rank as Siemen’s #2 plant.

27. Practice Exercise • Cost of quality is a necessary measurement • To persuade management to address quality issues • To monitor the progress of improvement programs • Do you know the cost of quality in your unit or division? Can you calculate it as a percentage of sales?

28. Practice Exercise • Remember, the cost of quality includes prevention, appraisal, and failures. • If your organizations does not currently measure and report cost of quality, it may actually equal 20% of sales

29. Summary • Quality is free, but it is not a gift. It is hard work. • Quality improvement has as much to do with converting people as solving problems. • Managers can use Crosby’s Quality Management Maturity Grid and 14-Step Quality Improvement Program to help their people prevent and eliminate defects.

30. Publications by Philip Crosby 1967. Cutting the cost of quality. Boston, Industrial Education Institute. OCLC 616899.  1969. The strategy of situation management. Boston, Industrial Education Institute. OCLC 13761.  1979. Quality is Free. New York: McGraw-Hill. ISBM 0-07-014512-1. 1981. The Art of Getting Your Own Sweet Way. McGraw-Hill. ISBN 0-07-014527-X.  1984. Quality Without Tears. New York: McGraw-Hill. ISBN 0-07-014511-3.  1986. Running things. New York: McGraw-Hill. ISBN 0-07-014513-X.  1988. The Eternally Successful Organization. New York: McGraw-Hill. ISBN 0-07-014533-4.  1989. Let's talk quality. New York: McGraw-Hill. ISBN 0-07-014565-2.  1990. Leading, the art of becoming an executive. New York: McGraw-Hill. ISBN 0-07-014567-9.  1994. Completeness: Quality for the 21st Century. Plume. ISBN 0-452-27024-3.  1995. Philip Crosby's Reflections on Quality. McGraw-Hill. ISBN 0-07-014525-3.  1996. Quality is still free: Making Quality Certain in Uncertain Times. McGraw-Hill. ISBN 0-07-014532-6.  1997. The Absolutes of Leadership (Warren Bennis Executive Briefing). Jossey-Bass. ISBN 0-7879-0942-4.  1999. Quality and Me: Lessons from an Evolving Life. Jossey-Bass. ISBN 0-7879-4702-4.