Production, Operasi, SCM For Grando, Secchi

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PRODUCTION,OPERATIONS, AND SUPPLY CHAIN MANAGEMENT

(GRANDO,BELVEDERE,SECCHI,STABILINI
Total Quality Management

Total Quality Management (TQM) is a managerial approach that aims to achieve long-term business
success and profitability, to be obtained through customer satisfaction (Feigenbaum, 1991). This
implies the ability to manufacture products characterized by a high degree of quality, to be
understood from a dual perspective. On the one hand, the customer who buys an item implicitly
expresses the expectation not to find any defects or non-conformities with respect to the design
specifications. On the other hand, the decision to purchase (and subsequently repurchase) a
particular product also depends on its ability to “surprise” the customer by offering aesthetic and
functional characteristics that are not taken for granted. Therefore, to ensure the development and
production of a good quality product, it is necessary to involve several business functions. For
example, the phenomenon of product defects affects the Operations Department, which is
responsible for the production of items compliant with the specifications provided by the Design
Department.

However, the ability to give the product distinctive characteristics that make it different from those
offered by the competitors depends on the effectiveness of the new product development process,
which in turn entails the involvement of numerous other functions, such as Marketing, Design,
Process Engineering, Quality Assurance, and Logistics. This highlights two characteristic aspects of
TQM. The first concerns the need for the involvement and commitment of the whole organization in
the pursuit of quality. The second concerns the inherent complexity of the concept of quality, which
is well highlighted through the numerous definitions proposed over time by the leading scholars in
the field of quality management:

• conformance to specifications (Crosby, 1984);


• predictable degree of uniformity and dependability at a low cost with quality suited for the market
(Deming, 1989);
• fitness for use (Juran, 1988);
• bundle of commercial, design, production, and maintenance characteristics that allow a product to
meet customer expectations (Feigenbaum, 1991);
• satisfaction of customer needs (Ishikawa, 1986)

Each of these definitions highlights different characteristics of quality. For example, Crosby’s
approach is functional to the assessment of defects, understood as failure to comply with the design
specification. The other authors, however, despite the variety of definitions proposed, highlight the
need to adopt the customer’s perspective in order to judge the quality of the product, which may
vary according to the needs and subjective motivations of the client. The basic principles of TQM can
be traced back to the following (Dale et al., 2013; Feigenbaum, 1991):

• Customer Centricity: as already pointed out, according to the TQM approach, the success and long-
term profitability of the company depend on the ability to offer the customer products that can
satisfy his/her needs, which can be explicit and implicit. Furthermore, it is necessary to apply the
same principle to “internal customers,” or to the various entities of the organization that interact
with each other, ensuring the satisfaction of their requests. Over time, this approach can lead to the
improvement of the overall performance of business processes, which determines customer
satisfaction.
• Focus on processes: according to this Japanese approach, companies with an orientation toward
long-term success are characterized by the ability to focus their improvement efforts on processes.
This principle can lead to significant changes in quality management. For example, according to a
short-term approach, to avoid the delivery of defective products to the customer, quality control can
be carried out on all production volumes. While on the one hand this minimizes the risk of
immediate customer dissatisfaction, on the other, it does not allow for the causes of defects to be
identified and removed, and thus the company will continue to incur high quality costs. On the
contrary, focusing on processes means that the company will adopt a prevention-based approach,
aimed at identifying the main causes of defective products (for example, excessive complexity of the
product resulting in the assembly errors, obsolescence of machinery, poor training of production
workers, etc.) and at adopting appropriate corrective actions. In the medium to long term, this will
make it possible not only to minimize the quantity of defective products delivered to the customer,
but also to cut overall quality costs, thanks to the reduction of scraps and the downsizing of Quality
Control activities.
• Continuous Improvement: in the TQM approach, process improvement should be pursued
systematically, through the constant search for problems to be tackled and the planning and
implementation of appropriate corrective actions. The method adopted to achieve continuous
improvement is called Plan-Do-Check-Act (PDCA), developed by Deming. According to this approach,
depicted in Figure 17.5, the improvement of processes (and the related results) is the outcome of a
systematic planning activity (plan), implementation of corrective actions (do), control of results
(check) and implementation of new interventions (act), defined on the basis of the feedback
received in the previous phase. It follows that, especially in companies endowed with a Quality
System certified according to ISO standards, whose rationale is based on the PDCA cycle, the
performance measurement process is particularly important, since it constitutes the essential
requirement for assessing processes and planning actions.
• Staff involvement: the focus on continuous improvement determines the need for a high degree of
staff involvement. The experience of many companies demonstrates that only those who carry out
specific tasks on a daily basis, implementing procedures and using the necessary inputs (for example,
materials and machinery along the production lines), can identify specific opportunities for
improvement and propose appropriate corrective actions. To facilitate this process, an “ideas box” is
often set up in companies where the principles of TQM are adopted, where all employees can
submit their proposals for improvement, that are subsequently evaluated in order to identify those
worthy of being implemented based on the degree of relevance of the problem addressed and the
probability of success of the intervention. Generally, in situations where this tool is adopted, a bonus
is also awarded to the employee who has proposed the most deserving project. In order to make the
involvement of personnel effective, however, not only is a general awareness of the issue of quality
necessary, but training programs are also needed that allow workers to learn the principles of TQM
and the operational tools with which to implement those principles.
• Top Management Commitment: while the involvement and training of personnel allow processes
to be improved in a bottom-up manner, the most significant results of TQM are achieved when the
organization is able to focus its efforts on real improvement priorities through a top-down process.
This implies a high commitment by the management, which must include specific quality objectives
in the strategic planning process, to be pursued over the long term.
• Data Analysis: the continuous improvement of processes must start from the analysis of objective
data, which makes it possible to conduct a check-up on the current state and drive the identification
of the main criticalities. Therefore, in companies that adopt the TQM approach, the tools of
statistical process control, illustrated in section 17.3.1, are widely used
The spread of TQM during the 1980s and 1990s led, among other things, to the institution of awards
aimed at rewarding the organizations that most successfully implemented this methodology. The
best-known are the Malcom Baldrige National Quality Award and the EFQM Excellence Award. The
Malcolm Baldrige National Quality Award (MBNQA) was established in 1987 in the United States by
the National Institute of Standards and Technology in order to promote the spread of TQM and
reward the most deserving American companies. The MBNQA is awarded annually and includes
awards for six different categories:
• Manufacturing;
• Service;
• Small business;
• Education;
• Healthcare;
• Non-profit.
The criteria by which companies are evaluated fully reflect the key principles of TQM, namely: •
Leadership, understood as the ability of top management to guide the organization in the
application of the principles of TQM;
• Strategy, which refers to the capacity of the organization to draw up and implement strategic
plans;
• Customers, with a focus on the company’s ability to create lasting relationships with its customers;
• Measurement, analysis and knowledge management; this dimension concerns the use of data in
order to highlight areas of potential process improvement;
• Workforce, i.e. the extent of the effort made by the company in training and involving staff;
• Operations, to be understood as the ability to design, manage, and improve key processes;
• Results, understood as the performance achieved by the company (also in comparative terms with
respect to competitors) in relation to: i) products and processes; ii) customer satisfaction; iii)
employees; iv) leadership and governance; and v) financial, strategic, and market results. The EFQM
Excellence Award was established in 1991 by the European Foundation for Quality Management,
with the same aims as the MBNQA, and provides annual awards for the following categories of
companies: • Private large companies (over 1,000 employees);
• Private small to medium-sized companies (less than 1,000 employees);
• Large public companies (over 1,000 employees);
• Small to medium-sized public companies (less than 1,000 employees).

The assessment leading to formal recognition is based on an audit conducted in accordance with the
EFQM model, which over the years has undergone various updates. According to the latest version,
released in 2020 (see Figure 17.6 in this regard), the assessment of the degree of excellence
achieved by the company must be based on three important questions: 1. What is the purpose of
the company? Why does it intend to pursue a particular strategy? (Direction) 2. How does the
company intend to pursue its aims and implement its strategy? (Execution) 3. What are the results
achieved and what are the objectives for the future? (Results) In this case as well, there is overall
consistency between the logic of the model used and the principles of TQM, according to which the
achievement of excellent results depends on the ability of the company to develop action plans
focused on the most important objectives and to put them in place through appropriate initiatives

The EFQM Model is a registered trademark of EFQM


Quality Function Deployment
Quality Function Deployment (QFD) is a tool used to ensure alignment between the customer’s
needs (Voice of the Customer – VOC) and the technical characteristics of the product. The latter, as a
rule, are the result of an activity carried out by the Design Department staff, which often has little
knowledge of the market and of customer needs, and therefore is likely to develop inadequate
designs. This problem can be overcome by using tools and methodologies, such as QFD, which
require coordination with the Marketing Department, that on the contrary, knows the customer’s
needs and is able to guide the Design Department towards technical choices capable of guaranteeing
a greater probability of market success. Operationally, QFD involves the use of the so-called house of
quality, represented in Figure 17.12. The two key elements of the house of quality are customer
needs (whats) and technical requirements (hows). The former represent the bundle of the relevant
product attributes from the customer’s perspective (called the Voice of the Customer) and are
usually identified by the Marketing Department, which for each of them expresses an evaluation of
their degree of importance from the customer’s perspective (for example, a scale of 1 – very low, to
5 – very high). The latter, on the other hand, refer to the technical requirements of the product,
which are set by the Design Department. The upper part of the house of quality (co-relationships)
expresses the intensity of the correlation between pairs of technical requirements. The crucial
element of this tool is the relationship matrix, which indicates the correlations between pairs of
customer needs and technical requirements. For example, it can be decided that the correlation can
be expressed on a scale from 1 (weak), to 3 (medium), or 9 (strong). Using these pieces of
information, it is possible to assign a degree of importance to each technical requirement,
considering the customer needs that it can affect and the magnitude of its influence. This measure
helps in identifying those technical requirements that deserve more improvement actions. The
house of quality also allows for carrying out benchmarking with competitors, or even with earlier
versions of the product. To this end, surveys or focus groups with customers can be used to compare
the degree of satisfaction that the market expresses, for each product alternative, in relation to the
individual attributes reported in the house of quality (see Box 17.2).

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