Process Management for Quality
Successfully producing products and delivering services requires adherence to some standard or level of quality. Quality is an attribute that can be measured and is equivalent to meeting or exceeding customer expectations. It can be built into the act of managing processes to design, produce, deliver, maintain and service products of all kinds. However, process complexity may impact the ability to continuously redesign processes for efficiency and quality. Quality tools are useful in determining current quality status and quality philosophies are valuable in order to approach business process management from a holistic view. A concern for quality determines how processes will be managed and controlled. Interaction with customers to collect feedback is essential in monitoring quality. Technology can help master the modification of processes and reduce complexity. But, technology is only one factor that affects process management success. People who use the processes must be included in the management and modification activity and can benefit from quality training. Senior management must set the tone for organizational emphasis on quality and the integration of quality into managing processes.
Keywords Business Process Management; Cost of Conformance; Cost of Nonconformance; Process Management; Quality; Quality Assurance; Quality Control; Total Cost of Quality; Total Quality Management; Total Quality Movement
Businesses of all types have processes that run operations, produce products and services and that communicate with customers. Processes can range from simple to complex. The more efficient the processes the more value a company can create and the faster a product can go to market. Efficient processes are clear and communication flows easily about them. An effective system of managing processes allows these processes to be modified and to easily adapt to the constantly changing environment. Effective process management can provide a benefit in the marketplace to a business because the business will be easily able to integrate information about the market into its operations (Cleaveland, 2006; Sly, 2004).
Businesses can attract customers by exceptional positioning of products, attractive advertising, and skillful promotion and pricing. However, the opportunity for a product to experience longevity depends on the true quality of the product and the ability of the company to keep quality high or improve quality over time. Introducing high levels of quality and maintaining those levels can be costly and time consuming, especially if the quality levels required mean product redesign and process redesign.
The hidden cost of redesign in production is the retraining workers and productivity loss when things have been done a certain way for a period of time and then are changed. The manner in which companies manage processes with quality in mind can help in meeting the challenges companies face today. Some of these challenges are demands from the marketplace for new products even faster and customers demanding new features and functionality (Huang & Stohr, 2007). In addition to market and customer demands, industry and government regulations require "proactive compliance" by companies and cause processes to become more complex. Proactive activities can help companies anticipate changes, become leaders in their market space and avoid the cost of reactionary activity. According to Huang & Stohr, once processes become complex, it becomes more difficult to manage them because the reasons processes are designed a certain way or even exist is lost. In addition, every layer of complexity requires new business rules that influence or even constrain the processes (Huang & Stohr, 2007). For example, a new government regulation may require tracking of information about the age of an applicant for insurance. To meet this requirement, a process may have to add a new business rule that says if age equals some value then move to another action.
Complexity also influences how companies can allocate resources. If a task of monitoring or managing a process is very complex, the level of knowledge of the worker assigned the task must be high; a factor that limits who can work on what task. In addition, there is natural turnover in companies and documentation of business processes and rules is needed since new workers may not understand the required flow of a particular process.
Business Process Management
Yu-Yuan Hung (2006) likened Business Process Management (BPM) to Total Quality Management (TQM). Both require a broad strategic view as well as a connection between internal processes and the external environment. An article about process management programs called TQM a "strategy" where the whole organization is consumed with continuous improvement. This strategy was an outgrowth of U.S. manufacturers trying to thwart Japanese competition by mimicking the Japanese emphasis on quality. Keck (2006) noted that the Total Quality Movement of late 1970s and 1980s inspired quality tools.
Tools for Total Quality Management
According to Keck, quality is meeting or exceeding customer expectations. The quality tools developed during the quality movement were used to help companies understand processes, what variability existed in these processes, and to help in measuring defects and deciding what to do about these situations. The initial quality tools were more concerned with the operational status of processes and the ability to identify and correct process issues. When quality tools are applied to business process management, there is an operational and strategic element to process design. Keck (2006) identified Six Sigma, a management philosophy that measures defects and improves quality as a key quality tool. Since the invention of Six Sigma in 1986 by Motorola, it has become much more comprehensive as a business improvement tool. Keck (2006) noted that Six Sigma involves:
- Understanding and managing customer requirements.
- Aligning key business processes to achieve those requirements.
- Utilizing rigorous data analysis to minimize variation in those processes.
- Driving rapid and sustainable improvement to business processes.
Applying Six Sigma to business process management starts with a comprehensive evaluation of current processes in order to identify what is not adding value or causing errors, etc. (Keck, 2006). Technology is also effective in the analysis required by Six Sigma. Hydrocarbon Processing compared and contrasted Six Sigma to TQM by noting the use of statistical methods and problem solving techniques for process improvement. However, TQM has a company wide focus with involvement by all employees while Six Sigma is the domain of experts called black belts.
Another popular quality program called ISO 9000 requires documented standard processes for everything a company does. The ISO 9000 approach requires organizations to ask questions about what is done, how accurate it is and why it is done. Activity like ISO 9000 preparation may result in process redesign as formerly unknown details are captured and scrutinized. With ISO 9000, everything you do must be documented. If you are doing something and it is not documented, this omission is picked up. ISO 9000 certification also has the cache` of having documented processes certified by a third party.
Importance of Consistency
Even measuring the quality of current processes is not enough to completely introduce quality into business process management. Consistency of delivery (Keck, 2006) is a critical factor to measure quality in business processes. Keck suggested the outsourcing of certain functions to ensure quality in business processes, especially those that aren't part of the organization's core skills. Quality product and service delivery is dependent on the following key principles (Keck, 2006):
- Management commitment.
- Understanding expertise in process management.
- Unwavering discipline in the organization to apply quality principles.
- Use of quality tools and methodology.
- Creating a quality culture.
Role of Top Management
Top management is the key to achieving these principles in a real world environment. Top management must understand the concepts of quality and business process management, value expertise in these areas of their organization, recognize the value of tools (technology and quality) and must value and support people. There appears to be limitations on the widespread use of process management improvement techniques ("Can process management," 2006). After some period of time, the gains in efficiency, cost and competitive advantage appear to dwindle. Strategic managers may need to take another view and look for new methods of achieving competitive advantage instead of using the same one over and over again.
What is Quality
Quality is an important concept in business and there are many measures of quality in various industries. Quality is dependent upon what the customer believes constitutes quality. Landryovà & Irgens (2006) defined product quality as "a product's fitness for purpose." Keck (2006) saw a direct relationship between quality and customer satisfaction and noted that even cheap prices do not cover up for poor quality. This is traditionally referred to in quality terminology as the total cost of quality.
The Cost of Quality
The total cost of quality is made up of two types of costs. The first is the cost of conformance (COC) and the second is the cost of nonconformance (CONC) (Keck, 2006). The cost of conformance is the price a company pays to adhere to quality standards. The cost of nonconformance is the price a company pays when a product is found to be not fit while in the hands of the customer. Nonconformance is costly because for any product or service, the farther into the process, the costlier the product or service. If a quality error is caught early and prevented from reaching the customer, the company saves money in processing and packaging a product and the multiple labor cycles in the case of a service.
Taguchi Principles of Quality
Landryovà & Irgens (2006) outlined four quality concepts devised by Taguchi called the Taguchi principles of quality and are often referred to as the most effective quality principles in the...
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