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FIGURE 1-3.
Financial and QualityTrilogies. ( Juran, 1998.)
CHAPTER ONE
the model offers no system to change the course (except to change the executives or the salespeople). Furthermore, the Financial Trilogy does not include all employees, relate to operational performance, or drive internal improvement. In addition, when the market forces change in the presence of ever-increasing competition, such a model creates chaos, stress, and poor performance because it leaves many workers out of the loop rather than encouraging the intellectual involvement of all workers across departmental boundaries. The Quality Trilogy elements of planning, control, and improvement involve strategic quality planning, process controls, and product improvement. The Quality Trilogy is typically the responsibility of the quality manager or equivalent, who plans for quality through data analysis; controls the quality through inspection, test, and repair; and improves product quality through programs such as Total Quality Management (TQM). All aspects of the Quality Trilogy are managed by the quality department in a subservient relationship to management. Because the quality manager is held responsible for defective products, one challenge with the quality trilogy is that it points blame to the quality department for production problems. In other words, it lacks accountability and leadership. In addition, history has shown that conventional quality programs do not show a significant impact on profitability; hence they often look like investments without meaningful results.
BUSINESS TRILOGY
In the 1970s and 1980s, we saw a tremendous shift in the role of the quality department with the advent of ISO 9000, the Malcolm Baldrige National Quality Award, and Six Sigma. Customer expectations about product quality changed from simply looking for a good warranty program to completely rejecting (with penalty) any supplier who could not provide quality products. Suppliers were held responsible for damage caused by their poor performance. Customer expectations for feature-rich and innovative products, extraordinary customer service, and the lowest available price brought about the Business Trilogy model. In the Business Trilogy (as shown in Fig.1.3), executives
TRENDS IN PERFORMANCE MEASUREMENTS
plan based on input from employees, the management team exercises control over processes, and improvement occurs when all minds in the company work toward it. But leadership more than management is what s needed to create a superior company. Leadership inspires employees toward a common goal, defining their purpose, communicating the consequences of low performance, and rewarding excellence rather than mediocrity. We ve all seen executives who created several multimilliondollar problems and were rewarded because they then solved those problems! Examples abound of leadership teams that implement poorly planned, controlled, and executed decisions, yet who still receive incentives in hopes of better results next time. Without new systems and processes, the second time around is not going to be any better than the first. Any business has three segments: leadership, operations, and support. The business theater of operations must include superior leadership, excellent management, and committed employees. In such a model, the leadership plans to become a superior company through proper goal setting for higher profit margins. The management team manages processes for dramatic improvement (highest quality in the shortest time). Employees produce innovative products or deliver services with love and care. Of course, what goes around comes around. Employees will only care when they are cared for by the leadership.
ISO 9000 QUALITY MANAGEMENT SYSTEM
The ISO 9000 system evolved when the European Union (EU) was forming in the mid-1980s. Its main purpose was to provide standards that would facilitate trade between EU member countries. Later it became an international standard for quality management under the auspices of the International Organization for Standardization (ISO). In reality, the ISO 9000 system is a business management system. As products and services became complex and customer requirements became stringent, the responsibility for business performance moved from the quality department to all departments. Today,
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