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

Information & Technology > Process Management for Quality

Overview

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 & Total Quality 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.

Six Sigma

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.

ISO 9000

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 & is it Important?

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 world. These principles are:

• Quality should be designed into products not inspected in.
• Quality is realized by minimizing deviations from specification and reducing uncontrolled factors as a cause for deviation.
• Quality measurements are not a result of the features or functional performance of a product.
• The cost of quality is measured by deviations in performance and life-cycle costs.

Reasons for Process & Quality Management

Like other quality guidelines, Taguchi's principles emphasize preventing loss where it occurs and not allowing deviation, variation and lack of control of tolerance to continue through the production process.

So why should companies manage processes and why should they manage them for quality? Hammer (2007) noted that focus on processes yields benefits and improvements in cost, quality, speed and profitability among other key areas where businesses need positive activity. Keck (2006) quoted quality guru Philip Crosby's view that investing in quality is less costly than the ramifications of poor quality. Companies need a balance between short term process management and investment in new opportunities for the future ("Can process management," 2006). Balance is difficult because of the tendency to focus on one process or the other and it is difficult to know when to make appropriate shifts. It is very difficult for an organization to keep the entire organization's focus on anything for a long period of time and once it is set in one direction, it is difficult to change it.

Quality is important because it emphasizes what the customer wants. If customer wants are not addressed, opportunities for competitors open up and the value of products and services is reduced. However, an organization's approach to addressing quality issues and integrating quality into business process management may not succeed in meeting customer expectations.

Sustainable Competitive Advantage

Yu-Yuan Hung (2006) describes business process management as a principle that helps companies "sustain competitive advantage." A sustainable competitive advantage is one that occurs when a company finds ways to continuously adapt to new demands. The key to this competitiveness is to make business processes strategic in importance and recognize the role that people play in business process management (Yu-Yuan Hung, 2006).

Dangers of Business Process Management & Quality Management Technology

There are dangers when engaging in business process management and using quality tools to manage the process. Professors from Wharton School of Business and Harvard have performed research which suggests that adhering to process management causes organizations to become stagnant and "dampens innovation" ("Can process management," 2006). The reasons for these problems are that an organization's focus is exclusively on efficiency at the expense of creative thinking. In addition, the method and pattern of process improvement can become entrenched and stale meaning that the previous ways gains were made no longer work. Companies can even apply the techniques they've learned and used to the wrong situation. This is especially true when discovering new products and when designs are impacted by new technology. Anything brand new can skew the equation in ways organizations may not be able to imagine.

Viewpoint

How Processes are Managed for Quality

Although it seems obvious that quality is important and managing processes is essential, transforming business processes with an eye on quality is not easy to do. Hammer (2007) found that executives responsible for these areas failed regardless of time, manpower and money spent. The reason is due to the difficulty in determining what should be changed, when and by how much. Process transformation is not an exact science.

Process & Enterprise Maturity Model

Hammer worked for five years on a model of how executives could measure progress on transforming processes. This model, called the Process and Enterprise Maturity Model (PEMM) has been used successfully in process management at companies including Michelin, CSAA, Tetra Pak, Shell, Clorox, and Schneider National (Hammer, 2007). PEMM identifies two groups of characteristics that help processes perform well over the long term. The first group of characteristics is called process enablers which affect how well individual processes function. Process enablers depend on each other and if any don't function well or are missing, it can affect the ability of the others to function well. The second group of characteristics is organizational capabilities that support high performance processes. Even if process enablers are in place, an organization can work against itself for effective process management, monitoring and improvement.

Process Enablers

Hammer (2007) identified five process enablers and four enterprise enablers. Process enablers are:

• Design — how comprehensive the process in making a product.
• Performers — who executes the processes as well as their skills and knowledge.
• Owner — the senior leader responsible for the process and results.
• Infrastructure — information and systems to support the process.
• Metrics — the measures a company uses to track the process's performance.

The companies that can identify these enablers are more likely to put actions in place to support the process management activities going on within a firm. However, management cannot be the only ones who possess the knowledge and ability to categorize the attributes that enable processes. The operational employees must understand the connection between these enablers and their daily work to be effective contributors to process management.

Enterprise Capabilities

The Enterprise Capabilities are:

• Leadership — senior executives who support process creation.
• Culture — organizational values: Customer focus, teamwork, personal accountability, and willingness to change.
• Expertise — process redesign capabilities.
• Governance — how complex projects and change initiatives are managed.

These enterprise capabilities are less tangible and harder to influence than the process enablers. Strategic leaders have to develop multiple ways to communicate these capabilities and to obtain information and feedback on them. Hammer (2007) tested these enablers and capabilities with several leading companies and found the PEMM model a successful way to guide, plan and evaluate process transformation. The biggest problem Hammer (2007) saw with the enablers and capabilities was that the intensity with which each was active in an organization varied and affected the outcomes. So, if a company was strong in the capability of leadership but weak in governance, problems would occur.

Importance of Process Design

Hammer (2007) felt that the way a process is designed impacts the performance of the process. The design of processes includes who is performing what task, when the task is done, where and how. Hammer recommended using quality tools to make sure processes are being executed the way they should, but promoted process redesign as the real way to transform processes and improve their performance. One company Hammer (2007) tested with the PEMM model was Schneider National, a large trucking company. Schneider's interest in process improvement was due to a decline in growth. Schneider identified the five core business processes important to the company. One process captured all activity related to sales from the identification of a lead to the ultimate purchase of a product. Schneider identified a key performance indicator that could reverse the decline in growth. This indicator was the time needed to respond to a request for a proposal from a customer. The redesign process reduced the time for a bid or response to the customer's proposal by 90% and increased the bid opportunities that resulted in sales by 70%. This is significant and could influence companies like Schneider to go further in business process transformation.

Tarí (2006) observed public sector integration of quality in operations and documented process management and business process reengineering used to improve public sector service quality in police services. Tarí pointed to TQM as being especially applicable to the public sector because it emphasizes the human component and service delivery is concerned with managing and deploying the appropriate human resources as needed. TQM has been used by police departments in Europe to improve police services. TQM emphasizes openness towards the community in service delivery.

Importance of Employee Support/Education

The literature has shown many examples of companies using quality tools to improve processes but doesn't show efforts by companies to help people adapt to the improved processes (Tarí, 2006). Hammer (2007) agreed noting that management is typically ready to pay for teaching people a new process but not ready to pay for helping people understand how the new process works or fits into the larger organizational processes. Another key mistake is changing processes without changing the associated management responsibility that is also likely to change. Other methods of improving police services for quality include process mapping and using the balanced scorecard. Niven (2003) described the balanced scorecard as a measurement system that comes from the organization's strategy and can also be used as a communication tool. The goal is to create balance between financial indicators of success, internal and external stakeholders, and performance indicators. Process mapping gives a clear, universal view of existing processes and how they relate to each other. Tarí's (2006) research ultimately showed that process management helps the service quality improvement process but is dependent upon the right kind of input from people. Improving the service quality of policing depended heavily on a positive relationship with citizens. In some cases, this means establishing a relationship in the first place before it is possible to move to a positive one.

Hammer (2007) argued that process management also means changing the way an organization looks at goals and rewards. These must also change with processes. People must be held accountable for a broader set of the objectives and held to a higher standard of understanding.

Tools to Manage Processes while Ensuring Quality

Part of the success of business process management (BPM) is becoming knowledgeable about BPM, BPM tools, strategies and processes. Yu-Yuan Hung (2006) defined twelve principles for successful business process management. Some of these principles include:

• Looking at BPM in a holistic way rather than piecemeal.
• Making BPM strategic.
• Using information technology to manage BPM.
• Recognizing that BPM has corporate-wide impact on every part of the organization.
• Cross functional managing of processes needed instead of specialization in managing processes.
• Aligning processes.
• Aligning structure.
• Executive commitment.
• Involving people.

The difficulty with building these success principles is that someone at the strategic level must understand the breadth and depth of them and must be willing to train and allocate the appropriate financial and people resources. Many companies are unwilling to take on a task this complex and end up only scratching the surface in BPM. Others may try to do too much too quickly.

Application of Technology to Business Process Management

Ross (1995) defined business process management (BPM) as "an integrated management philosophy and set of practices that includes incremental change and radical change in business process, and emphasizes continuous improvement, customer satisfaction, and employee involvement." Part of quality management is the selection of technology tools to manage the business process management activity. The demand for this technology is strong and expected to grow two and one half times in the next 5 — 7 years.

Oil Refineries & Business Process Management

Landryovà, & Irgens emphasized the support of product quality by the new generation of knowledge about processes (2006). The authors discussed how rule based expert systems combined with SCADA systems (supervisory control and data acquisition) were used in the oil refinery industry to generate information about processes and equipment and then used in process management activities. The reason process knowledge generation and data collection is important and difficult in the oil refinery industry is that the process industry, unlike discrete manufacturing, does not have clear and distinct processes or an easily identifiable design phase. Variations in manufacturing are costly and must be controlled. The ability to develop knowledge about manufacturing and variability assists in predicting and controlling quality issues. In this case, the tools that help manage processes are collaborative tools that work in concert to provide usable information on demand.

The Health Care Industry & Business Process Management Technology

Another application of technology to business process management is that of clinical decision intelligence (CDI). It has a goal of improving healthcare quality and reducing costs by discovering, managing and applying the multitude of data increasingly available from many sources (Wang, Nayda, & Dettinger, 2007). These sources can include the latest research, clinical observations, laboratory tests and so on. CDI changes healthcare processes by integrating important process components including:

• Business intelligence
• Business rule management and
• Business process management.

Conclusion

The concern with quality in healthcare was highlighted by several trade and non-profit organizations in the 1990s whose findings showed unnecessary medical errors that even ended in death. Errors, inconsistent and poor quality coupled with high costs indicated a need to take dramatic action. One of the ways to address the healthcare crisis was an attempt to utilize technology more effectively. CDI systems are unique because they combine knowledge discovery and acquisition, knowledge management, and decision support. No technology before CDI had this capability (Wang, Nayda, & Dettinger, 2007). These three subprocesses are challenging to integrate because the people who do them vary in skill, expertise, and what they are trying to achieve, but the ability to connect these processes can yield better care for the patient. The patient gets better care because instead of the traditional approach of dependence on the knowledge a physician has or has among colleagues, the latest research and techniques are also available. The ability to share the information with other clinicians and providers is also seamless. CDI systems also improve the quality of provider knowledge and allows for faster integration of new knowledge, improving overall healthcare provider skill. Hammer noted that improving processes is a dramatic way to improve performance because of the elimination of anything that is the source of cost or errors. In the case of healthcare quality, cost and errors can lead to serious consequences and even death. Every industry has reasons to improve processes and inject quality in the process transformation.

Freeing an organization from unnecessary steps can also lead to creativity and innovation which can lead to what the customer actually wants — new and better products and high quality service.

Terms & Concepts

Cost of Conformance: The investment made to ensure that processes are done correctly including quality initiatives, training and inspection (Keck, 2006).

Cost of Nonconformance: The money an organization wastes when processes are not done correctly the first time (Keck, 2006).

Quality: Fitness for use often defined by the customer.

Quality Assurance: Actions and processes to ensure products and services meet quality standards.

Quality Control: Systems to control quality in product design and manufacture.

Total Cost of Quality: A metric made up of two types of costs: The cost of nonconformance and the cost of nonconformance.

Total Quality Management: Management strategy to identify quality in every part of the organization and its processes.

Total Quality Movement: Management methods developed in the United States that occurred in the late 1970s and early 1980s. U.S. manufacturers attempted to adopt the quality principles of foreign manufacturers.

Bibliography

Asif, M., de Vries, H. J., & Ahmad, N. (2013). Knowledge creation through quality management. Total Quality Management & Business Excellence, 24(5/6), 664-677. Retrieved October 31, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=87821057&site=ehost-live

Can process management programs actually discourage innovation? (2006). Hydrocarbon Processing, 85, 23-25. Retrieved May 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=19644355&site=ehost-live

Cleaveland, P. (2006). Building a better manufacturing future. Product Design & Development, 61, 8-9. Retrieved May 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=21984500&site=ehost-live

Enterprise Service Bus switches into drive as markets reach $190M-plus. (2007). Manufacturing Business Technology, 25, 53-53. Retrieved May 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24855300&site=ehost-live

Hammer, M. (2007) The process audit. Harvard Business Review, 85, 111-123. Retrieved May 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24267684&site=ehost-live

Huang, W. & Stohr, E. A. (2007). Design and implementation of a business process rules engine. [Working Paper] Stevens Institute of Technology New Jersey. Retrieved August 2, 2007, from http://howe.stevens.edu/fileadmin/Files/publications/Huang%5fStohr%5fBPRE-DESRIST-Final%5f2%5f.doc

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Keck, C. (2006). Quality a cornerstone for success. Datrose Business Process Outsourcing. Retrieved May 18, 2007, from http://www.datrose.com/images/Quality%5fArticle.pdf

Landryovà, L. & Irgens, C. (2006). Process knowledge generation and knowledge management to support product quality in the process industry by supervisory control and data acquisition (SCADA) open systems. Production Planning & Control, 17, 94-98. Retrieved May 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=19821456&site=ehost-live

Niven, P. R. (2003). Balanced scorecard: step-by-step for government and nonprofit agencies. Hoboken, New Jersey: John Wiley & Sons.

Ross, J.E. (1995) Total Quality Management: Text, Cases and Readings. Delray Beach: St. Lucie Press.

Sly Ph.D., D. (2004). Manufacturing Process Management. Technology Trends in PLM by Collaborative Product Development Associates. Retrieved July 20, 2007, from http://www.proplanner.net/Product/Whitepapers/mpm.slycpd%5ftt040601.pdf

Tarí, J. (2006). Improving service quality in a Spanish police service. Total Quality Management & Business Excellence, 17, 409-424. Retrieved May 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=20219057&site=ehost-live

Yu-Yuan Hung, R. (2006). Business process management as competitive advantage: A review and empirical study. Total Quality Management & Business Excellence, 17, 21-40. Retrieved May 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=19216085&site=ehost-live

Wang, X. S., Nayda, L & Dettinger, R. (2007). Infrastructure for a clinical-decision-intelligence system. IBM Systems Journal, 46, 151-169. Retrieved May 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24478489&site=ehost-live

Zeng, J., Anh, P., & Matsui, Y. (2013). Shop-floor communication and process management for quality performance: An empirical analysis of quality management. Management Research Review, 36, 454-477. Retrieved October 31, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=88133586&site=ehost-live

Suggested Reading

Cleaveland, P. (2006). Building a better manufacturing future. Product Design & Development, 61, 8-9. Retrieved May 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=21984500&site=ehost-live

Slater, R. (1991). Integrated process management: A quality model. New York: McGraw-Hill.

Yu-Yuan Hung, R. (2006). Business process management as competitive advantage: A review and empirical study. Total Quality Management & Business Excellence, 17, 21-40. Retrieved May 18, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=19216085&site=ehost-live