Module for Operations Management and Total Quality Management

Part 4

Kaizen: Concepts and Systems

OBJECTIVES:

 After reading, the student should be able to:

 Define Kaizen as a philosophy.
 Describe the different concepts of Kaizen.
 Explain the systems under Kaizen.
 Apply the philosophy of Kaizen in everyday activities.

Kaizen is a philosophy that calls for people and their organizations to experience ongoing
improvement at every level. Through focusing on small, incremental change rather than dramatic
innovation, Kaizen seeks to construct effective and efficient processes and quality outputs.

Kaizen at the workplace means continuing improvement involving everyone, managers and workers
alike. The Kaizen business strategy involves everyone in an organization working together to make
improvements without large capital investments

KAIZEN CONCEPTS

Kaizen is a Japanese word meaning continuous improvement. It is made up of two characters

which are "kai", meaning "change," and "zen," which meaning "good." It is used to describe a company
culture where everyone, from the CEO to the front desk clerk, regularly evaluates his work and thinks of
ways to improve it. The concept is that small steps on a customary basis will lead to large improvements
in due course. Kaizen entails relatively little expense.

Kaizen originated in Japan as a result of World War II. Ironically, it evolved in part from American
business leaders like Dr. W. Edwards Deming who came to help restore the country. It was first
introduced by a 1951 training film created by the American Economic and Scientific Section (ESS),
although Dr. Deming is largely credited for instituting the principles of Kaizen in Japan, Kaizen
elimination of waste through the maintenance and improvement-of processes became fundamental to
Japanese management philosophy. It has since stretch around the world to companies and
organizations wishing to follow the success of Japanese business.

Toyota has been known as the initial company that has started Kaizen. The application that
Toyota used was called "Toyota Production System", where all line personnel are expected to
discontinue their moving production line in the of any irregularity, and suggestions for improvement are
awarded reward. They succeeded eradicating all the wastes. Kaizen is used for placing the terms as
productivity, total quality control (TQC), zero defects (ZD), and just-in-time (JIT). Therefore, Kaizen is a
main concept for all these practices.

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 A lot of people have misunderstood about Kaizen. People have the stereotype that Kaizen can
make dramatically changed immediately, and bring the profits right away. However, this is not true!
Improvements under kaizen are small and incremental, but the kaizen will bring the huge results over
time. Japanese management and Western management are different from the concept of the
management. For Western management they are inclined to focus on the worship of innovations which
is pretty much relying on the changes in the technological breakthroughs. On the other hand, for the
Japanese management, kaizen is not usually remarkable incident. However innovation is one -shot
improvement, and its consequences are often problematic. While the kaizen process, which is based on
common sense, low-cost approaches and low risk approach, guarantees gradual progress that pays off
overtime.

There are two types of kaizen which are Gemba (actual workplace) kaizen and Teian (plan)
kaizen. Gemba and teian kaizen both intend to develop higher production and quality standards. Gemba
kaizen is an action-oriented approach and refers to improvement activities that are carried out in the
actual workplace, like on the shop floor or on the manufacturing line. Gemba kaizen involves all aspect
of daily work that can be improved. The heart of gemba kaizen lies in small changes that will transform
the overall success of the company not automatically night away but in the long run. Gemba kaizen
methods are quality circles and suggestion systems. In quality circles, a specialized team develops and
designs ideas concerning how to improve the company's performance. Suggestion systems encourage
employees to submit suggestions for improving work processes and customer satisfaction. Teian kaizen,
on the other hand, represents a theory based approach and refers to strategic improvements that are
prejudiced by top management Here, the implementation of latest processes and practices play the
most dominant role. The overall goals of tejan kaizen are improved business and manufacturing
practices. The most prominent teian kaizen methods include total quality control and just-in-time
management.

Kaizen and Management

It is also essential that management is trained and be behind the effort Kaizen will result in
many more suggestions for improvements and changes and will take way from a strict focus on moving
items quickly through the existing production process Management must be prepared to recognize
some time away from current work to focus on changes with longer-range impact

Management has two major components which are maintenance, and improvement. The
objective of the maintenance function is to maintain current - technological, managerial, and operating
standards. The improvement function is aimed at improving current standards. Under the maintenance
function, the management must first establish policies, rules, directives and standard operating
procedures (SOPs) and then work towards ensuring that everybody follows SOP The latter is achieved
through a combination of discipline and human resource development measures

Under the improvement function, management works constantly towards modifying the existing
standards, once they have been mastered, and establishing higher ones Improvement can be broken
down between innovation and Kaizen. Innovation involves a drastic improvement in the existing process
and requires large investments and big efforts Kaizen signifies small improvements as a result of
coordinated continuous efforts by all employees.

Initiating and implementing TQM programs need great quantity of planning and research.
Managers are required to acquire training in various TQM practices prior to implementing the same.

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There are costs involved with the whole process of TOM. It is the manager's responsibility to distribute
budgets for TQM at the beginning of every financial year.

A manager needs to work closely with the senior management human resource professionals to
develop perfect implementation strategies. A manager has to act as a bridge between the senior
management and the entire workforce.

1. The role of a manager is to act as a facilitator at the workplace. It is the duty of a manager to assist
employees in implementing TQM. As a manager, it is also his responsibility to choose and assign right
individuals who can work as line managers and take charge of the whole project. The employees to be
selected must be reliable and diligent and capable as much as necessary to handle a key project like
TQM. It is the manager's responsibility to allocate resources for TQM, schedule time for different
training programs and be grateful for employees who come up with a variety of improvement ideas and
strategies which would aid the organization bring better quality products. Further train subordinates to
guarantee smooth implementation of TOM without any obstacles.

2. A manager must communicate the benefits of total quality management to all- other members of
the organization. Call employees on a common platform and address the benefits and importance of
TOM. Make them understand how successful implementation of TOM programs would give way to high
quality products which would benefit the organization and the employees as well.

Manager is always a strong source of inspiration for other employees, He needs to practice TOM
himself before expecting others to believe in the same Principle. Customer feedbacks should be
cautiously screened and taken into sideration while creating company's major strategies, A manager
must also provide frequent reports to staff members stressing scope of improvement.

Process Vs Results

Press oriented thinking mostly centers on how processes are carried out through the
assessment of performance indicators generated by measuring or observing the process flow. Result-
oriented thinking basically disregards how processes flow and work Instead, process results/outcomes
are obtained, monitored and. evaluated systematically. For example, micro level performance indicators
include lead time cycle time throughput time and defective part ratio. While macro level performance
indicators consist of profit or customer satisfaction which would be monitored in result-oriented
thinking

Kaizen focuses at improving the process rather than at achieving certain results Such managerial
attitudes and process thinking formulate a major difference in the manner an organization masters
change and achieves improvements. This concept of process-oriented thinking indicates that there must
be some problems in a process if the outcomes are not encouraging to the firm.

Kaizen recognizes the connection between outcomes and processes. If the results from an
organization are of poor quality, the processes used to achieve those results necessitate concentration.
This understanding is a component of the framework of Japanese society even on the personal level,
and explains why Kaizen is so successful there.

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 The manner in which processes are addressed is a key element of Kaizen While in the West,
innovation or radical change is often sought, Kaizen hunts for constant incremental change, which
generates remarkable results eventually Since the changes in Kaizen are small, errors can effortlessly be
corrected with no involvement of much risk or expense. This is likely to make Kaizen processes less
wasteful than innovation, where error can have tremendous loss effects.

Quality gurus strongly note that a combination of process-oriented and result oriented
management should be implemented throughout the entire operational system instead of focusing on
just one orientation (either process or result) as this heightened focus may not be enough to generate
successful continuous improvement strategy. Continuous improvement can be either a team
management or top management initiative. In order to be able to utilize these two management
approaches appropriately, the basic features of process-oriented and result-oriented management
should be studied prior to getting on a continuous improvement journey. The distinctive features of
process-oriented and result oriented criteria are given in Table 2 .

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PDCA/SDCA Cycles

Central to the philosophy of Kaizen are two cycles that involve processes for improvement and
for maintenance: Plan-Do-Check-Act (PDCA) and Standardize Do Check Ad (SDCA). When improving
processes the following are the phases

1. Planning Phase - Planning is the most vital phase of total quality management. In this phase
employees have to come up with their problems and queries which need to be addressed. They need to
come up with the various challenges they face in their day to day operations and also analyze the
problem's root cause. Employees are required to do necessary research and collect relevant data which
would help them find solutions to all the problems.

2. Doing Phase - In the doing phase, employees develop a solution for the problems defined in planning
phase Strategies are devised and implemented to overcome the challenges faced by employees. The
effectiveness of solutions and strategies is also measured in this stage.

3. Checking Phase - Checking phase is the stage where people actually do a comparison analysis of
before and after data to confirm the effectiveness of the processes and measure the results.

4. Acting Phase - In this phase employees document their results and prepare themselves to address
other problems.

Maintenance cycle, SDCA is invoked when a failure occurs. Standardization seeks to stabilize
processes so they can be improved. Through understanding if a failure occurred because of a poor or
non-existent standard or because an existing Standard wasn't followed, managers can implement
specific actions to correct it. Once a standard is put into place and put into practice, it can become the
focus of the PDCA cycle

The SDCA cycle ensures that the improvements that have been done using Kaizen works well
and improvements do not slide back. SDCA prevents the deterioration and therefore it is extremely
important that both the SDCA and PDCA cycles are well established: Improvement without
standardization is stillborn to say the least.

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Standard is the best. safest and easiest way. to achieve and maintain a defined quality level.

Standards should be:

1. Be simple, clear and conspicuous

2. Be the best, easiest, safest way should all have one at a time
3. Preserve know how
4. Be guidelines that enable performance
5. Measurement of tasks delegated
6. Assure quality, cost delivery and safety
7. Show relationship between cause and effect

With Standards:

1. Management becomes possible

2. There is a basis for training
3. There is a basis for audit or diagnosis
4. Problems are prevented from recurring and control variability

Putting Quality First

Kaizen also talks about improving performance in terms of three dimensions which are quality,
cost, and delivery (OCD) Quality is typically among the most initial criteria customers use to make the
purchase Quality is usually customer defined and referred to as the perceived characteristics and
features of a product, This includes the quality of processes that go into it.

Kaizen requires that quality is a primary goal. There could be so many goals for the firms to
achieve such as goals of quality, cost and delivery. However, the firm should always put quality first
priority. Kaizen recognizes that without a quality product, organizations will not be able to compete. If
managers make some changes on delivery to make it cheaper or cutting costs somehow, and it ends up
making the quality worse, they risk sacrificing not only quality but the life of the business as well.

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 Cost is generally looked at coming from the manufacturer's viewpoint, as the overall cost of
making and selling a product. An important factor, here, is the elimination of waste in many aspects of
work, such as production, inventory, repair, rejects, motion, processing and so on.
Delivery refers to bringing the necessary quantity of products in the right place at the right time.
The company may offer better prices using reduced cost and attractive delivery terms. However this
does not guarantee competitiveness, if the quality of goods and services falls short of consumer
expectations. Some cost oriented managers do not resist the lure of cutting cost at the expense of
quality. This could work well in the short-term, but would likely to endanger not only profitability, but
also reputation and market position of the product in the long-term.

Speak with Data

Kaizen is a problem-solving process. Since Kaizen deals with addressing problems or limitations,
every situation must be correctly understood. Kaizen has no room for seat of the pants" operations. In
order to correct the problems In a process, detecting the problems is the first thing to do Sound data
must be gathered and evaluated for Kaizen to work for improvement. Without this data the company
will be like a flying blind. It will never be able to tell what is working and what needs to be improved.
Data is the lifeblood of kaizen.

The Next Process is Customer

The last concept of kaizen is that the next process is the customer. This means hat all workers
think that next process is the customer Se all workers in any process on no account pass on flawed parts
or imprecise pieces of information to hose in next process particularly when the organization has a
strong commitment to consumer satisfaction If all workers have to be cautious on what they are doing
the customers get the high-quality product and service as a result.

Kaizen promotes the concept of internal and extemal customers. Through grading every process
in a series as a customer of the preceding process error stage of production can be concentrated for a
quality result If each internal customer is delivered high quality goods, the external customer will have a
high quality product to purchase

Kaizen views the whole work in a specificorganization as a series of interrelated processes where
each consists of a supplier and a customer. The supplier provides the process with inputs such as
materials and or information The suppler can be another process within the organization or someone
outside the organization Same goes to the customer, the customer is either someone in the organization
(internal customer) or the final customer out in the market (external customer) The customer receives
or deals with the output of the process. Having this in mind all individuals within an organization deal
with customers either internal or external ones. That is, the next process is always regarded as a
custamer. Through this Kaizen tries to set up a natural commitment to on-going process improvement
throughout the organization to ensure that extemal customers will alwayS Marine high quality products.

KAIZEN SYSTEMS

Next, the systems of kaizen have to be understood. Kaizen encompasses many of the components of
Japanese businesses that have been seen as a part of their success. Total quality control total quality
management, just-in-time delivery total productive maintenance, suggestion system, policy

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development suggestion systems, and small-group activities are all included within the Kazin system of
running a business.

TQM Control

Total quality control (TQC) and total quality management (TQM) are widely used in
manufacturing education, government and service industry now. TQC! TOM have been developed as a
strategy to help management in becoming more competitive and profitable through helping it to
improve in all phases of business. TQM necessitates that the company uphold some quality standard in
all phases of its business. This needs ensuring that things are completed right the first time and that
defects and waste are removed from operations.

TQC is a management tool for improving total performance. TQC means organized Kaizen
activities involving everyone in a company. Managers and workers alike should be part of a totally
systemic and integrated effort toward improving performance at every level. It is geared towards
increased customer satisfaction through satisfying such corporate cross-functional goals as quality, cost,
scheduling, manpower development, and new product development.

In Japan, TQC activities are not limited to quality control alone. Elaborate system of Kaizen
strategies has been developed as management tools within the TOC approach. TQC in Kaizen is a
movement intended at improvement of managerial performance at all levels.

According to the Japan Industrial Standards, "implementing quality control effectively

necessitates the cooperation of all people in the company, including top management, managers,
supervisors, and workers in all areas of corporate activities such as market research and development,
product planning, design, preparation for production, purchasing vendor management, manufacturing
inspection, sales and after-sale services, as well as financial control, personnel administration, and
training & education Quality control carried out in this manner is called company wide quality control or
total quality control (TQC).

Quality control in Japan deals with quality of people. It is the fundamental concept of the
Kaizen-style TOC Building quality into its people brings a company a half way towards producing quality
products.

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Table 3 TQC of Japan vs West
Main Difference between TQC Practices in Japan and West
Japan West
Deals with Quality of people Deals with quality products
Customer-oriented Manufacturer-oriented
Upstream Downstream
Process-oriented aimed at improving the total Product-oriented, aimed at detecting and
performance eliminating defective parts
Company-wide, everybody’s responsibility Responsibility of quality control

Source: http:Madnessutinentures el business_guide/mgmt_kurzen_gc_main.html

JIT Production System

Many people have misconstrued Just-in-time (JIT) production. In one of most frequent
misunderstandings, a company expects its suppliers to deliver just-in time. However, JIT production has
something to do with internal process. JIT is a revolutionary way to trim down cost while at the same
time meeting the customer's delivery needs. For example, new stock will be ordered automatically when
stock reaches the re-order point level. So, this system ensures that the firm can maintain the minimum
required number of stock every day, which saves a lot of inventory costs. Also the firm can meet the
customer's delivery needs.

Elements of JIT

1. Make stable and level the Master Production Schedule (MPS) with uniform plant loading
create a uniform load on all work centers through regular daily production and mixed model
assembly.

2. Decrease or eliminate set up times. Aspire for single digit set up times less than 10 minutes or
one touch setup. This is done through better planning process, redesign, and product redesign.

3. Trim down lot sizes. Decreasing set up times allows economic production of smaller lots, close
cooperation with suppliers which is necessary to realize reduction

4. Shrink lead times Production lead times can be reduced by moving work stations closer
together applying group technology and cellular manufacturing concepts, reduce wait-in-line
length and improving the coordination and cooperation between successive processes. Delivery
lead times can be decreased through close cooperation with suppliers perhaps by inducing
suppliers to be located very near to the factory.

5. A Preventive maintenance. Use of machine and worker idle time to preserve equipment and
avoid breakdown.

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 6. Flexible work force Workers should be trained to work on several machines, to carry out
maintenance tasks, and to do quality inspections

7. Oblige supplier quality assurance and execute a zero defect quality program. Small lots (single
unit) conveyance. Make use of a control system like Kanban system (or other signaling system)
to transport parts between work stations in smaller quantities. In its better sense, JIT with
Material Requirements Planning (MRP) system is used to transport the parts between
workstations,

Reasons for a more from batch mode to Just-in-time (JIT)

1. Batch production system is the most inefficient way to make products.

2 Difficult to meet customer requirements, which come in varying orders, like varying volumes in
varying time frames and soon.

3. The batch system derives from the agricultural mentality. The batch system, purchase
material and produce in huge batches and there are many processes. At every process, gather
the batch and at the end collect the finished product in a batch, which is stocked up in the
warehouse.

4. This kind of production system is based on market projection, is good when there is demand.

5. End up with large inventory of unsold products and overload capacity, and then borrow
money to carry that inventory. By that time, got hold of too many people for every process.

Total Productive Maintenance

In industry, total productive maintenance (TPM) is a system of maintaining and improving the
integrity of production and quality systems through the machines, equipment, processes, and
employees that add business value to an organization. TPM focuses on maintaining all equipment in top
working condition to avoid breakdowns and delays in manufacturing processes.

The term total productive maintenance is attributed to Nippondenso, a company that created
parts for Toyota. However, Seiichi Nakajima is regarded ar the father of TPM because of his numerous
contributions to TPM.

One of the main objectives of TPM is to increase the productivity of plant and equipment with a
modest investment in maintenance, Total quality management (TOM) and total productive maintenance
(TPM) are considered as the ke operational activities of the quality management system. In order for
TPM to be effective, the full support of the total workforce is required. This should result in
accomplishing the goal of TPM: "Enhance the volume of the production, employee morale and job
satisfaction."

Total Productive Maintenance (TPM) is a modern Japanese concept. The origin of TPM can be
traced back to 1951 when preventive maintenance was initiated in Japan. However the concept of
preventive maintenance was taken from USA, Nippondenso was the first company to begin plant wide
preventive maintenance in 1960. Preventive maintenance is the concept wherein, operators produced

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goods using machines and the maintenance group was dedicated with work of maintaining those
machines. However with the automation of Nippondenso, maintenance became a problem as more
maintenance personnel were required. So the management decided that the routine maintenance of
equipment would be carried out by the operators which are termed as autonomous maintenance, one
of the features of TPM. Maintenance group took up only essential maintenance works.

Thus Nippondenso which already followed preventive maintenance also added autonomous
maintenance made by production operators. The maintenance crew went in the equipment
modification for improving reliability. The modifications were made or incorporated in new equipment
which leads to maintenance prevention. Thus preventive maintenance along with maintenance
prevention and maintainability improvement gave origin to productive maintenance. The intention of
productive maintenance was to get the most out of plant and equipment effectiveness to attain
optimum life cycle cost of production equipment.

By then Nippondenso had made quality circles, involving the employees input. Thus all
employees took part in implementing productive maintenance. Based on these developments
Nippondenso was awarded the distinguished plant prize for developing and implementing TPM, by the
Japanese Institute of Plant Engineers (JIPE). Thus Nippondenso of the Toyota group became the first
company to achieve the TPM certification.

Another objective of TPM is to increase the overall equipment effectiveness (OEE) of plant
equipment. TPM also addresses the causes for accelerated deterioration while creating the correct
environment between operators and equipment to create ownership.

OEE has three factors which are multiplied to give one measure called

OEE Performance x Availability x Quality = OEE

Each factor has two associated losses making 6 in total, these 6 losses are as follows:
1. Performance - running at reduced speed and minor tops
2. Availability - breakdowns and product changeover
3. Quality - startup rejects and running rejects

The objective finally is to identify then prioritize and eliminate the causes of the losses. This is
done by self managing teams that problem solve. Employing consultants to create this culture is
common practice.

The eight pillars of TPM are mostly focused on proactive and preventative techniques for
improving equipment reliability
1. Focused Improvement
2. Autonomous maintenance
3. Planned Maintenance
4. Quality Maintenance
5. Cost Deployment
6. Early Equipment Management
7. Training and Education
8. Safety Health Environment

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With the help of these pillars productivity can be increased.

Types of maintenance

1. Breakdown maintenance - It means that people waits until equipment fails and repair it. Such a thing
could be used when the equipment failure does not significantly affect the operation or production or
generate any significant loss other than repair cost.

2. Preventive maintenance - It is a daily maintenance (cleaning, inspection, oiling and re-tightening),

design to retain the healthy condition of equipment and prevent failure through the prevention of
deterioration, periodic inspection or equipment condition diagnosis, to measure deterioration. It is
further divided into periodic maintenance and predictive maintenance. Just like human life is extended
by preventive medicine, the equipment service life can be prolonged by doing preventive maintenance.

a. Periodic maintenance (Time based maintenance - TBM) - Time based maintenance consists of
periodically inspecting, servicing and cleaning equipment and replacing parts to prevent sudden
failure and process problems

b. Predictive maintenance - This is a method in which the service life of important part is
predicted based on inspection or diagnosis, in order to use the parts to the limit of their service
life. Compared to periodic maintenance, predictive maintenance is condition based
maintenance It manages trend values by measuring and analyzing data about deterioration and
employs a surveillance system, designed to monitor conditions through an on-line system.

3. Corrective maintenance. It improves equipment and its components so that preventive maintenance
can be carried out reliably. Equipment with design weakness must be redesigned to improve reliability
or improving maintainability

4. Maintenance prevention - It indicates the design of new equipment. Weakness of current machines
are sufficiently studied (on site information leading to failure prevention, easier maintenance and
prevents of defects, safety and ease of manufacturing) and are incorporated before commissioning a
new equipment

Policy Development

People follow policies, good or bad. The need, therefore, is for organizations in developing
countries to realize the importance of clear, well-defined policy statement's on quality, reflecting
management's commitment and orientation and to propagate them through various modes, such as
circulation of documents, newsletters, training meetings, pledge cards and personal contacts.

It needs to state the level of defects or errors that is acceptable. The policy also needs to state
the relationship between the company and the customer. The policy should be direct and concise and
should clearly define management's commitment to quality. The policy on quality has to be a statement
that will not be misunderstood. It has to cover conformance to requirements, time and money.

Once the policy is written, management needs to determine how to explain it to employees. The
best method is for top executives to meet personally with groups of employees to explain the policy.
This also ensures that the commitment and interest of top management is properly understood by all.

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Suggestion Systems

On the other hand, suggestion system is regarded as individual-oriented kaizen. Suggestion

system encourages all workers to talk about their suggestions orally with supervisors and put them into
action right away, even before submitting suggestion forms. However all the workers don't need to
expect to get economic benefits from each suggestion. The process to think and have the idea of each
worker is vital. This system is different from Western management which emphasis on the economic
benefits and financial incentives of suggestion systems.

The suggestion system is an integral part of an established management system that aims at
involving employees in Kaizen. The number of workers suggestions is regarded as important criteria in
reviewing the performance of the worker's supervisor and the manager of the supervisor The Japanese
management encourages employees to generate a great number of suggestions and works hard and
implement these suggestions, often incorporating them into the overall Kazin strategy Management also
gives due recognition to employee's efforts for improvement. An important aspect of the suggestion
system is that each suggestion, once implemented, leads to an upgraded standard,

Three Stages of the Suggestion System

A staff suggestion system is a formalized mechanism which encourages employees to contribute

constructive ideas for improving the organization in which they work. The overall aim is to gather,
analyze and implement ideas in order to create results that have a positive impact on the business
and/or deliver new value to customers. The following are the three stages of implementing suggestion
system

1. Encouragement. In the first stage, management should make every effort to help the workers provide
suggestions, no matter how primitive, for the betterment of the worker's job and the workshop. This will
help the workers look at the way they are doing their jobs

2. Education. In the second stage, management should stress employee education so that employees
can provide better suggestions. In order for the workers to provide better suggestions, they should be
equipped to analyze problems and the environment. This requires education.

3. Efficiency. Only in the third stage, after the workers are both interested and educated, should
management be concerned with the economic impact of the suggestions.

Benefits of a Suggestion System

Implementing an effective Staff Suggestion System that generates a sustainable flow of good
quality ideas is not impossible. In Toyota, 700,000 ideas are generated annually with a 99%
implementation rate.

Here are the benefits of a suggestion system, namely:

1. Improves one's own work and the working environment

2. Engages and empowers employees
3 Creates ownership and trust

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4. Improves motivation and morale
5. Improves customer satisfaction
6. Improves profitability

Many organizations have made the mistake of putting up suggestion boxes and expect
employees to participate and contribute good quality ideas to improve the products, services and the
working environment without creating a supporting infrastructure to manage the flow of suggestions.

More often than not these suggestion boxes are either empty or become collectors of trash.

For a suggestions system to be successful and effective the following factors have to be
considered:

1. Formation of a suggestions committee to plan and manage the suggestions system

2 Defining the suggestions process, including a feedback system
3. Promoting the suggestions system
4. Evaluation system
5. Award system
6. Sustaining the suggestions system

Why Suggestion System Stumbles and How to Avoid Them

Most suggestions remain to be suggestions because of:

1. Delays in approving ideas - Respond within the day to team member ideas whenever possible. The
approval may be a "go do it" or to give coaching to ideas that require further thought and development.
For complex or large ideas, respond within a week, or encourage the idea generator (person) to break
the problem down into several smaller parts.

2. Complex approval process (committees) - The approval process should undergo observation,
discussion and approval by the team leader or supervisor It's better to go see the actual issue in the
actual place than to discuss the issue in a conference room based on ideas written on a piece of paper

3. Backlog of suggestions needing approval or implementation. - Ironically, asking for quantity over
quality will force the identification of small problem that are Aster to solve. This reduces the backlog as
more of them are "just do it" ideas This increases the skill and confidence of people to go through the
problem solving process (thinking) as well as the action itself (experimentation).

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4. Less than 99% of ideas implemented - An idea should be nurtured and the idea generator (person)
should be coached so that basically every idea is approved Provide guidelines on what is a good kaizen
Track approval rating visually and have a management team problem solve the gap between current
condition and 99% implemented.

5. Inappropriate kaizen suggestions - Once again, clear guidelines for what is a good kaizen idea. Focus
on the customer, improve own work, and keep environmental targets from management policies in
mind. Process focus, not people issues, is appropriate.

6. Allowing anonymous suggestions - This defeats the purpose of kaizen as a people development tool
since the idea generator cannot be coached. It's alright to allow anonymous suggestions where people
feel need to "blow the whistle Except that this indicates that the workplace is not safe professionally,
emotionally or physically and is not a stable environment for kaizen. Fix that condition before launching
suggestion systems and anonymous suggestions would not be an issue.

7. Unfair rewards - Every idea should receive a small reward. Larger awards may be given based on
several categories like effort, creativity and impact of the kaizen idea. Encouraging kaizen idea
generation, development and implementation by teams, and giving team rewards also lessens the
possibility of unfair rewards being given to individuals.

8. Motivating by cash only - Since humans are at the heart of kaizen, and humans need both extrinsic
(cash) and intrinsic motivation. Sustained kaizen needs intrinsic motivation like recognition, self-
actualization, skill development, feeling fulfilled, or saving the environment through kaizen suggestions
Management attention and leadership is required.

9. Lack of promotion and support of the kaizen suggestion program - Endorse kaizen in all its forms in a
variety of ways. Take a long-term view of kaizen a people development and communication strategy.
Start by encouraging idea generation by teams, and aiming for quantity over quality. Hold periodic
"championships" or promotional events based on themes. 10. Lack of timely implementation -
Companies can do these entire well and still not get the ideas put in place quickly enough if resources.
Meaning time, money, materials, skills are not enough for the number of great ideas team members are
generating The skill matrix is a great enabler for suggestion systems. Once again the management
should evaluate the gaps in the 4Ms (manpower, material, machine, method) resources to keep
suggestions moving smoothly.

Small Group Activities

A kaizen includes small group activities-informal and voluntary groups organized to carry out
specific tasks in a workshop environment. The quality circles are the most popular type. Quality circles
are designed to address not only quality issues but also such issues as cost, safety, and productivity.
Quality circles are regarded as group-oriented kaizen activities.

Small Group Activity (SGA) is also known as focused or continuous improvement in English. SGA
finds its origin in the Japanese industry where it is called Quality Circles (QC). SGA is a method for
problem solving in teams by structurally searching for the root causes and eliminating them. After
standardization of the solution the reoccurrence of the problem is prevented. The feeling of ownership
is intensified because those who are directly involved solve the problem in a multifunctional team.

15
 The members of the team learn to use techniques (cause and effect diagram, Fishbone-diagram)
to find and eliminate root causes. The team is also taught communication skills, working in teams and
decision making, in order to use each other's knowledge and experience.

The structure of an SGA project is derived from the PDCA-circle from Dr. W. Edward Deming and
exists of 8 steps on the basis of the SGA circle. The SGA team works independently and reports the
progress by means of communication boards

The introduction of SGA leads to the following results:

1. Team-building
2. Improved communication
3. Higher involvement
4. Learn how to analyze and solve problems

16
Part 5
Good Housekeeping

OBJECTIVES
After reading this chapter, the student should be able to:
 Define 5S as a philosophy for improvement.
 Identify the 55 activities
 Apply 5S in everyday life

A dirty workplace cannot produce quality products. A chaotic workplace with mess around
everywhere is bound to produce poor quality products.

Everyone and all types of business benefit from having a well constructed 5S program. It is
usually manufacturing that comes to mind but any type of business from hospitals to professional
services and every area or department within the organisation will benefit from implementing a 5S
program..

THE 5S

5S which is a Japanese system to reduce costs, control inventory and reduce breakdowns and
accidents drastically resulting in increased profits. It is the starting point for any company who wants to
make improvements at the workplace by reducing waste and create better environment for its
employees to work in.

5S is a procedure that organizes individual workstations or departments and consequently

enhances efficiency at the micro-level by keeping the workplace neat, orderly and accessible and it is for
this reason that it is considered as the foundation of quality initiative in any organization

The 5S is a systematic approach and the key to total quality environment, a philosophy most
Japanese factories endorse and practice. It leads to foolproof systems, standard policies, rules and
regulations to give rise to a healthy work at the organization. Japanese factories are well known for their
cleanliness and orderliness, 55 is the philosophy that simplifies the work environment and reduces
waste and non-value activity while improving quality efficiency and safety.

Hardly anyone can find an individualrepresenting a Japanese company unhappy dissatisfied.

Japanese employees never speak ill about their organization. The process of Kaizen plays an important
role in employee satisfaction and customer Satisfaction through small continuous changes and
eliminating defects. Kaizen fools give rise to a well organized workplace which results in better
productivity and yield better results. It also leads to employees who strongly feel attached towards the

17
organization. Kaizen focuses on continuous small improvements and thus gives immediate results. The
name stands for five Japanese words, seiri (sort), seiton (set in order), seiso (shine), seiketsu
(systematize) and shitsuke (standardize).

5S adoption is different in every facility, depending the needs, processes, and culture of any
given workforce. However, no matter how it's done, businesses large and small can enjoy numerous
benefits from adopting the 5S methodology which includes:

1. Improved profitability - Companies can save labor hours, money, and other resources

2. More efficient workforce - With standard procedures in place, personnel can center on what's
important

3. Better service - With a more organized, cleaner, streamlined workplace, employees can use more
time providing exceptional service

4. Safer workplace - Employees are at less hazard and can feel protected in
clean, organized workspaces

5S process can increase morale, create positive impressions on customers, and increase
efficiency and organization. Not only will employees feel better about where they work, the effect on
continuous improvement can lead to less waste, better quality and faster lead times. 55 should become
part of the culture of the business and the responsibility of everyone in the organization.

Figure 13 The 5 Steps in 5S

SORT (Seiri)
In the first stage, sort, all tools and materials used in the work process are taken care of. Sort
refers to the sorting of the clutter from the other items within the ork area that are actually needed.
Sort connotes tidiness and structured organization.

During the sort process, all materials and tools are sorted, and only the necessary ones are kept
for continued use. In other words, this stage requires the team to remove all items that clearly do not
belong in the working area and only leave those that are required for the processes in question. Simply
keep the necessary in work area, dispose or keep in a distant storage area less trequently used items,
discard unneeded items. This process leads to fewer hazards and less clutter that might interfere with
productive work.

Since sort focuses on eliminating unnecessary items from the workplace employees should sort
out and organize things well. Label the items as Necessar "Critical", "Most Important", "Not needed

18
now", "Useless and so on. Throw what all is useless Keep aside what all is not needed at the moment
Items which are critical and most important should be kept at a safe place.

This stage has the following steps:

1. Separate needed items from unneeded items. Do a Red Tagging activity. It is a means of implementing
organization by labeling all unneeded items with conspicuous red tags.

2. Store the needed items in the following storage sites.

a. Ready-access storage (needed in 1-6 months)
b. Remote storage (needed in more than 6 months)

In this step, it is important to determine the storage periods in advance and should also have labels and
description on all storage sites containers.

3. Discard / dispose the red - tagged (unneeded items)

4. Discard remote storage items by the box load at the end of the storage period.

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SET IN ORDER (Seiton)

Set in order refers to straightening and orderliness. It is the process of taking the required items that are
remaining after the removal of clutter and arranging them in an efficient manner through the use of
ergonomic principles.

In this phase, all the materials and tools selected for the production process are organized. The focus is
on efficient and effective storage methods and the requirement for a tidy workplace In addition, the
process should be arranged in an order that makes best use of efficiency.

Research says that employees waste half of their precious time looking for tems and vital
documents. There should be a place for everything, and everything should be in its proper place. This is
also known as "demarcation and labeling of place." Keeping things in order plays an important role in
the efficient use of which will contribute to time saving The place for each item should be sbly labeled or
segregated.

Items should be arranged in a manner that support systematic workflow, with equipment used
most often being the most easily accessible. For instance, bwls, equipment and parts should be reserved
where they will be used in order to Straighten the flow path. Workers should not have to bend
repetitively to access materials using ergonomics.

Table 5 Setting Items in Order

Things on the floor
Factory Floor Office Home
Unlabelled tool crib Unlabelled file cabinet Clutter
Cluttered shelves lockers etc. Cluttered drawer, shelves, book
Stores - no clear location system cases, tables No orderly arrangement in the
Things on the floor Records & documents not rooms

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 arranged well
File heaps and papers

Source: Applying the Kaizen Method and the 5S Technique by Mihail Aurel Titu: Constantin Oprean and Daniel Grecu, 2010

For the items that have been sorted as needed item, they must be kept in the correct place to allow for
easy and immediate retrieval. The targets for orderliness could include any of the following:

1. Spaces - floors, walkways, operation areas, walls, shelves, warehouses .

2. Products - raw materials, procured parts, parts for machinery, in-process inventory, assembly parts,
semi-finished products, finished products

3. Equipment - machines, tools, jigs, gauges, carts, conveyance tools, work tables, cabinets, chairs

In this stage, the company may want to employ signboards and painting as forms of visual
methods of orderliness.

1. The Signboard Strategy - The signboard strategy is a method for clearly indicating where, what, and
how many necessary items go where to make the facility more orderly. The signboards should include
the following information:

a. specific places "where things go" via location indicators

b. specific items - "what things" via item indicators
c. specific amounts - "how many things" via amount indicators

2. The Painting Strategy - This strategy involves marking off the factory's walking areas ("walkways")
from its working areas ("operation areas") using any of the following:

a. divider lines
b. door range lines
c. markers for inventory, carts, worktables, and
d. tiger marks (yellow & black striped lines)

Consequences of not practicing Setting in Order:

 Things are rarely obtainable when needed.

 Items are misplaced in stores.
 Items that are defectives and good ones get mixed up.
 Accidents or near-accidents take place due to mess:
 Visual control of the shop floor is not feasible.
 At times, production is lost because an item necessary is available but cannot be seen.
 In some offices, important records may not be traceable. This can lead to loss, and
embarrassment.

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SHINE (Seiso)

Shine stands for sweeping and cleanliness. It means to clean all items used at work or all
materials used during a manufacturing process. The workplace, for example has to be clean and tidy all
the time. At the end of each shift, a work area is cleaned up and everything is restored to its place. This
makes it easy to know what goes where and to have confidence that everything is where it should be.
The key point is that maintaining cleanliness should be component of daily work It must not be a special
activity that is initiated only when things get too cluttered. It means clean everything removing stains,
spots and debris and eradicating sources of dirt. The workplace ought to be kept clean Workstation
should be de-cluttered. Necessary documents should be kept in proper folders and files. Use cabinets
and drawers to store items.

Shine is the comprehensive cleaning of the area, tools, machines and other equipment to make
certain that everything is returned to a "nearly new" status. This will ensure that any non-conformity
stands out like an oil leak from a machine onto a bright newly painted clean floor.

Clean the workspace and all equipment, and keep it clean, tidy and organized. After the first
thorough cleaning when implementing 5S, every day follow-up cleaning is compulsory in order to
maintain this improvement. A "Shining" work environment will lead to great efficiency gains.

22
 Shine should be integrated into daily maintenance tasks to combine cleaning checkpoints with
maintenance checkpoints. It involves the following phases:

1. Daily cleanliness
a. Determine cleanliness targets.
b. Determine cleanliness assignments.
c. Determine cleanliness methods and tools.
d. Implement cleanliness.

2. Cleanliness inspection

3. Maintenance

STANDARDIZE (Seiketsu)

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 Seiketsu, translates as standards." A standard refers to making all the cleaning, control, and
improvement processes a customary activity in the workplace, allowing for control and consistency.
Fundamental housekeeping standards apply everywhere in the facility. Everybody knows precisely what
his responsibilities are. Housekeeping duties are ingredient of normal work routines.

Standardize means keeping one's person clean, like wearing proper working clothes safety
glasses, gloves, and shoes, as well as maintaining a clean, healthy working environment. In addition,
standardize can be interpreted as continuing to work on the first three 5S continually and every day.

Employees need to respect organization's policies and adhere to rules and regulations. Self
discipline is indispensable. Do not report to office in casuals Follow work procedures and do not fail to
remember to carry ones identity cards to work. It gives an employee a sense of pride and respect for the
organization.

Work practices should be consistent and standardized. Work stations for a particular job should
be the same. All employees doing identical job should be able to work in any station with similar tools
that are in the same location in every station.

Table 7 Standardizing of items

Factory Floor Offices Home
Handling hazardous chemicals Free of pests Pest control
Control of fumes, hazardous dust Personal hygiene Personal hygiene
Disinfecting, Personal hygiene
Source: Applying the Kaizen Method and the 5S Technique by Mihail Aurel Titu; Constantin Oprean and Danneil Grecu, 2010

Consequences of not practicing Standardizing:

1. Good health and safety need the practice of standardizing

2. Harmful chemicals, dusty chemicals, fumes and the likes can make it an unsafe place to work in
3. Washing thoroughly and cleaning a place makes the workplace enjoyable
4. Personal hygiene is indispensable for healthy workforce.

SUSTAIN (Shitsuke)

Shitsuke, means maintaining the process to retain long-term kaizen goals and to retaining and
reviewing standards. This is to ensure that the firm has common standards and ways of working. As soon
as the previous four phases have been established, they become the latest way of operating the
organization. Maintaining a focus on this new way of operating is indispensable, and a gradual turn
down back to the old ways of operating should not be permitted. Except if an issue arises about
improvements in working a new way of doing things or a new requirement concerning output it typically
leads to an evaluation of the first four commandments.

Sustain makes certain that the company continue to continually improve using the previous
stages of 5S, maintain housekeeping and conduct audits and so forth.

24
Consequences of not practicing Standard

1. If standardizing is not practice, then the first 4S would backslide.

2. Lack of standards will affect all activities related to safety and quality.

Sustain involves the habit of maintaining and following specified and finlandize procedures, This
stage is best taught by example, and therefore, the IN ultimately responsible for any 55 backsliding is
not the individual worker Nit the manager /owner himself Given this critical role, the manager / owner
of business may employ the following measures:

1. The CFO must take ultimate responsibility in 5S adoption and implementation.

2. Explain the 5S's until everyone understands them Emphasize that 5S is the company's road to survival
due to its practical approach in minimizing wastes and generating savings.

3. Promote company-wide participation such as but not limited to the following:

a. 5S Poster making contest

b. 55 Badge making contest
c. 55 Slogan making contest
d. 55 Ideas contest
e. 5S Day
f. Plant tour of a 5S Practicing Company
g. 55 Snapshots

4. Make organization and orderliness activities as visual as possible. Be persistent, meticulous, quick and
ruthless when red-tagging and making signboards

5. Manage people's resistance to 5S

a. Provide encouragement at every opportunity.

b. Give and receive criticisms carefully. Be polite.
c. Immediately correct and slacking-off on 5S conditions.
d. Stick to hands-on, here-and-now approach.
e Improvement requires effort and effort requires enthusiasm

25
Part 6

Phases in TQM Implementation

OBJECTIVES:

After reading, the student should be able to:

 Recognize the different phases in TQM implementation;
 Identify some of the methods in generating ideas for the planning phase;
 Name the barriers in TQM implementation.

Jablonski offers a five-phase instruction for implementing total quality management namely
preparation, planning, assessment, implementation, and diversification. Each phase is intended to be
implemented as component of a long term goal of continually increasing quality and productivity.
Jablonski's approach is one of many that have been applied to reach TQM, but contains the key
elements commonly connected with other accepted total quality systems.

PREPARATION.

26
 It is during preparation when management decides whether or not to pursue a TQM program.
They undergo initial training identify needs for outside consultants, develop a specific vision and goals,
draft a corporate policy, commit the necessary resources, and communicate the goals throughout the
organization.

PLANNING

In the planning stage, a detailed plan of implementation is drafted (including budget and
schedule), the infrastructure that will support the program is established, and the resources necessary
to begin the plan are earmarked and secured.

Planning for quality starts with setting quantifiable and measurable targets. While doing this the
organization needs to keep customer's wants in mind. Once the quality objective is decided it is
important to think about the market feasibility of the product Once everything is planned the
organization needs to assess its capability to deliver the target quality. If there is gap in capability then
the organization needs to fill that gap by upgrading to the required technology and skill sets

A ranking chart should be developed to finalize the most important aspect of planning and more
focus should be given to that aspect. Communicating quiet and plan to frontline people is important
because they are the people "bo will implement everything in the real life situation. They should be
properly convinced before starting the new course. Plan to monitor the progress of quality program is
important This can be done by devising ways and means to monitor progress and finding and correcting
deviations.

The following are some of the methods in generating ideas for the planning phase, which are:

1. The 5 Whys' - asking Why?' at least five times to unearth the core cause of a problem

2. Benchmarking is a technique that measures a company's performance against the best in industry.
This technique can help in determining how the best companies achieve high performance and quality
levels. The following are types of benchmarking:
a. Internal benchmarking is a comparison between operations or parts of operations which are
within the same total organization. For example, a large motor vehicle manufacturer with
several factories might choose to benchmark each factory against the others.
b. External benchmarking is a comparison between an operation and other operations which
are part of a different organization.

c. Non-competitive benchmarking is benchmarking against external organizations which do not

compete directly in the same markets.

d. Competitive benchmarking is a comparison directly between competitors in the same, or

similar, markets.

e. Performance benchmarking is a comparison between the levels of achieved performance in

different operations. For example, an operation might compare its own performance in terms of
some or all of our performance objectives such as quality, speed, dependability, flexibility and
cost against other organizations performance in the same dimensions.

27
 f. Practice benchmarking is a comparison between an organization operation practices, or way
of doing things, and those adopted by another operation For example, large retail store might
compare its systems and procedure for controlling stock levels with those used by another
department store.

3. Brainstorming is a technique in which a group of people share ideas and thoughts in a relaxed
atmosphere on various problems in order to stimulate unrestrained collective thinking .

ASSESSMENT

This process requires a thorough self-assessment both from management and customers or
clients. The assessment will be on the qualities and characteristics of members of the company as well
as the company itself

There are three methods that can be used in making an assessment which are discussion group
methods, survey methods and award type. Each assessment method has advantages as well as
disadvantages. Discussion group method can yield some useful insights and facilitate effective
improvement activities. However, the scoring process is open to greater subjectivity and care should be
exercised when analyzing scores

Survey method is excellent for measuring employee perceptions of TOM in an organization.

However perceptions may or may not coincide with reality, Improvement activities should be based on
facts, not opinions. Perception studies require further verification through research.

Award type self-assessment is the most effective form. The organization gathers information,
generates a list of strengths and improvement opportunities and scores it. This process can be facilitated
by external experts who will generally speed up the process and help eliminate scoring bias.

IMPLEMENTATION

At this point, the organization can already begin to determine its return on its investment in
TOM. It is during this phase that support personnel are chosen and trained and managers and the
workforce are trained. Training entails raising workers' awareness of exactly what TOM involves and
how it can help them and the company. It also explains each worker's role in the program and explains
what is expected of all the workers.

The Barriers to TQM Implementation

1. Lack of management commitment -Inorder for any organizational effort to succeed. there must be a
substantial management commitment of management time and organizational resources. The purpose
must be clearly and continuously communicated to all personnel. Management must consistently apply
the principles of TQM.

2. Inability to charge organizational culture - Changing organization's culture is difficult and will require
as much as five years. Management must understand and utilize the basic concepts of change. They are:

a. People change when they want to and to meet their own needs.

28
 b. Never expect anyone to engage in behavior that serves the organization's values unless
adequate reason has been given.

c. For change to be accepted people must be moved from a state of fear to trust.

d. Improper planning: All constituents of the organization must be involved in the development
of the implementation plan and any modifications that occur as the plan evolves.

3. Lack of continuous training and education - Training and education is an ongoing process for
everyone in the organization. Needs must be determined and a plan developed to achieve those needs.
Training and education are most effective when senior management conducts the training on the
principles of TQM.

4. Incompatible organizational structure and isolated individuals and departments. Differences

between departments and individuals can create implementation problems. The use of multifunctional
teams will help to break down long standing barriers.

5. Ineffective measurement techniques and lack of access to data and results - Key characteristics of
the organization should be measured so that effective decisions can be made.

6. Paying inadequate attention to internal and external customer - Organizations need to understand
the changing needs and expectations of their customers. Effective feedback mechanisms that provide
data for decision making are necessary for this understanding.

7. Inadequate use of empowerment teamwork - Teams need to have the proper training and, at least in
the beginning a facilitator, whenever possible, the team's recommendation should be followed.
Individuals should be empowered to make decisions that affect the efficiency of their process or the
customer satisfaction

8. Failure to continually improve - It is tempting to sit back and fest on laurels. However, a lack of
continuous improvement of the processes, product, and/or Service will even leave the leader of the
pack in the dust.

If the top management takes quality as a form of window dressing the ie organization is not
going to attain the desired goal Companies which maniram quality only during the time of inspection by
ISO personnel can't achieve quality goals. It is difficult but important to change the culture of the
organization Paradigm change is needed to force people to strive for the new quality goal The way Jack
Welch managed change in GE is a very good example of people involvement in change management As
quality is a continuous and never ending process, so is the training Even the whole lifetime is not enough
for complete learning. So training should go on forever. This is important because customer preferences
keep on changing

Sony can be a good example of an organization keeping pace with customer's preference
change. Sony tape-recorder made the gramophone an obsolete product. Later on Walkman changed the
way for portable music. At present even Walkman is an obsolete product and Sony sells MP3 players by
the same brand name. People should not live in “silos”. They should come out to facilitate better
interactions to share knowledge. People should be empowered to sort out issues. This will reduce the

29
throughput time. Obviously accountability is important along with empowerment. If a frontline
personnel is empowered to sort out customer s problems then it will save precious time of the top
management.

DIVERSIFICATION

In this stage, managers utilize their TQM experiences and successes to bring groups outside the
organization (suppliers, distributors, and other companies that have an impact on the business's overall
health) into the quality process. Diversification activities include training rewarding, supporting and
partnering with groups that are embraced by the organization's TQM initiatives. These are all things that
will help in being successful with total quality management.

Part 7

TOM and Planning Tools

OBJECTIVES:

After reading, the student should be able to:

Identity quality tools for planning;
Illustrate application of each quality planning tools;
Apply planning tools in quality problems.

There are several basic tools of quality can be used singularly or in tandem to investigate a press and
identity areas for improvement although they do not all necessarily need to be used in a process is
simple enough or the solution obvious enough any one may be all that is needed for improvement. They
provide a means tor doing so based on facts, not just personal knowledge, which of course can be
tainted or inaccurate. Ishikawa advocated teaching these basic tools to every member of a company as a
means to making quality endemic throughout the organization, Different tools are used for different
problem solving opportunities and many of the tools can be used in different ways.

30
CAUSE AND EFFECT FISHBONE DIAGRAM

First used by Ishikawa in the 1940s a cause and effect diagram, also known as a h bone diagram
is employed to identify the underlying symptoms of a problem or "effect" as a means of finding the root
cause. The structured nature of the method forces the user to consider all the likely causes of a
problem, not just the obvious ones. Through the combination of brainstorming techniques with
graphical analysis it is also useful in sorting out the complicated relationships that may, in combination
drive the problem

It is called cause and effect diagrams after its function and fishbone diagram after its
appearance. Its function is to identify the factors that are causing an undesired effect (defects) for
improvement action or to identify the factors needed to bring about a desired result (a winning
proposal). The factors are identified by people familiar with the process involved. As a starting point,
major factors designated using the "four M's": Method, Manpower, Material, and Machinery or the
"four P's": Policies, Procedures, People, and Plant. Factors can Undivided, if useful, and the identification
of significant factors is often an introduction to the statistical design of experiments.

In order to use cause and effect diagram as a tool, there is a need to first identify the problem
one is trying to solve and simply write it in the box (head of the fish) to the right. Next, he will list the
major causes of the problem on the spine of the fish. Causes are then identified during brainstorming
with a group familiar with the problem.

Once all of the possible causes are identified, they can be used to develop an improvement plan
to help resolve the identified problem. The fishbone below identifies the possible causes of late lab
results:

On a fishbone diagram, the central problem, or effect, is on the far right Affinities, which are
categories of causes, branch from the spine of the central effect. The brainstormed causes branch from
the affinities.

PARETO CHART

31
Alfredo Pareto was an economist who noted that a few people controlled most of a nation's wealth.
"Pareto's Law" has also been applied to many other areas, including defects, where a few causes are
responsible for most of the problems.

The Pareto Principle is based upon the principle which states that 80% of a problem is
attributable to 20% of its causes or inputs. A Pareto chart organizes and displays information in order
to demonstrate the relative importance of various problems or causes of problems. It is a vertical bar
chart with items organized in order from the highest to the lowest relative to a measurable effect such
as frequency, cost and time.

The data in the Pareto chart may also show the largest number of frequencies to the smallest. In
Figure 16, the number of product defects in each of the listed categories is shown

It is simple to observe how to prioritize improvements efforts looking at the number of defects
from the largest to the smallest occurrences. The most major problems stand out and can be targeted
first.

Pareto charts can help prioritize quality problems and separate the vital few problems from the
trivial many" by plotting the frequencies and corresponding percentages of a categorical variable, which
shows how-to focus efforts and resources

CHÉCKSHEETS

Check sheets are also known as data collection sheets and tally charts. Check sheets are non-
statistical and comparatively easy. They are used to capture data in a manual, reliable, formalized way
so that decisions can be made based on facts. As the data is collected, it becomes a graphical
representation of itself. Areas for improvement can then be identified, either directly from the check
sheet, or by feeding the data into one of the other basic tools.

A check sheet is an organized way of collecting and structuring data, its purpose is to collect the
facts in the most efficient way. It ensures that the information that is collected is what was asked tor
and that everyone is doing it the same way Data is collected and ordered by adding tally or check marks
against predetermined categories of items or measurements. It simplifies the task of analysis.

32
 Check sheets are a simple way of gathering data so that decisions can be based on facts, rather
than anecdotal evidence. Table 8 shows a check sheet used to determine the causes of defects in a
hypothetical assembly process. It indicates that "not-to-print“ is the biggest cause of defects, and hence,
a good subject for improvement. Check sheet items should be selected to be mutually exclusive and to
cover all reasonable categories. If too many checks are made in the "other" category, a new set of
categories is needed.

Table 8 could also be used to relate the number of defects to the day of the week to see if there
is any considerable difference in the number of defects between workdays. Other likely column or row
entries could be production line, shift. product type, machine used, operator, and others, depending on
what factors are considered useful to examine. So long as each factor can be considered mutually
exclusive, the chart can provide useful data. An Ishikawa diagram may be helpful in selecting factors to
consider The data collected in a check sheet can be used as input to a Pareto chart for ease of analysis.
Note that the data does not directly give solutions. Knowing that "not-to-print" is the biggest cause of
defects only starts the search for the root cause of "not-to-print" situations.

HISTOGRAM

Histograms are a form of bar chart. They are used to measure the frequency distribution of data that is
normally grouped together in ranges or "bins". Most frequently they are used to tell the different
regularity of occurrence in long lists of data. For instance, in the list 2, 2, 3, 3, 3, 3, 4, 4, 5, 6, the number
3 occurs the most frequently. However, if that list comprises several hundred data points, or more, it
would be difficult to ascertain the frequency. Histograms provide an effective visual means of doing so.

Histograms shows patterns that fall within typical process conditions. Changes in a process
should trigger new collection of data.

A minimum of 50-75 data points should be collected to guarantee a sufficient number of data
points have been gathered. The patterns that are detected reveal an analysis that helps understand
variation.

33
 In this example, it shows that the receptionist received most phone calls about contribution
statements for that period.
One can use a histogram to evaluate the shape and central tendency of data, and to assess
whether or not the data w e re distribution such as the normal distribution.
Bars represent the number of observations falling within consecutive interval Because each bar
presents man nations a histograms most used with a large amount of data,

CONTROL CHARTS

Dating back to the work of Shewhart and Deming, there are several types of control chart. They
are practically complex statistical tools that measure how a process changes over time. Through plotting
this data against pre-defined upper and lower control limits, it can be determined whether the press is
steady and under control or if it is erratic and therefore out of control Simply these charts demonstrate
when data is consistent or when there are high or low outliers in the occurrences of data.

Control chart focuses on monitoring performance over time by looking at the variation in data
points and distinguishes even common cause and special cause variations The Dow Jones Industrial
Average is a good example of a control chart.

Control chart is used to monitor processes that are in control, using means and ranges. It
represents data, like sales, volume, customer complaints, in chronological onder, showing how the
values change with time. In a control chart each point is given individual significance and is joined to its
neighbors, Above and below the mean Upper and Lower Warning and Action lines (UWL, LWL, UAL, LAL)
are drawn. These act as signals or decision rules, and give operators information about the process and
its state of control. The charts are useful as a historical record of the process as it happens, and as an aid
to detecting and predicting change.

Control charts are the most complicated of the basic tools of TOM, but are based on simple
principles. The charts are made by plotting in sequence the measured values of samples taken from a
process. For example, the mean length sample of rods from a production line, the number of defects in
a sample of rods from a production line, the miles per gallon of automobiles tested sequentially in a
model year, so on. These measurements are expected to vary randomly about some mean with a known
variance. From the mean and variance, control limits can be established.

34
 Control limits are values that sample measurements are not expected to exceed unless some
special cause changes the process. A sample measurement outside the control limits therefore indicates
that the process is no longer stable, and is usually reason for corrective action.

Other causes for corrective action are non-random behavior of the measurements within the control
limits. Control limits are established by statistical methods depending on whether the measurements
are of a parameter, attribute or rate. A generic control chart is shown as Figure 18.

Control charts are used to monitor the stability of processes, and can turn time ordered data for
a particular characteristic such as product weight or hold time at a call center into a picture that is easy
to understand. These charts indicate when there are points out of control or unusual shifts in a process.

SCATTER DIAGRAMS

A scatter diagram is used to identify whether there is a relationship between two variables It
does not prove that one variable directly affects the other but is hughly effective in confirming that a
relationship exists between the two Variables often represent possible causes and effect s

A scatter diagram is a graphical representation of how one variable changes with respect to
another. The variables are plotted on axes at right angles to each father and the scatter in the points
gives a measure of confidence in any correlation shown

They show whether two variables are related or prove that they are not, the type of
relationship, if any, between the variables and how one variable might be controlled by suitably
controlling the other. They also make predictions of values lying outside the measured range.

35
 As an example, a scatter diagram might show the relationship between how satisfied volunteers
are that attend orientation training. The diagram shows the relationship between volunteer satisfaction
scores and volunteer orientation training.

FLOW CHART

A flow chart is a visual representation of a process. It is not statistical, but is used a piece
together the actual process as it is carried out, which quite often varies from how the process owner
imagines it is. Seeing it visually makes identifying both inefficiencies and potential improvements easier.

36
 This tool is used when trying to determine where the bottlenecks or breakdowns are in work
processes. Flow-charting the steps of a process provides a picture of what the process looks like and can
shed light on issues within the process, Flowcharts are also used to show changes in a process when
improvements are made or to show a new work flow process.

A flow chart, sometimes called a process map, can be used to help the company model its
process and understand and communicate all activities in the process, the relationships between inputs
and outputs in the process, and key decision points

A danger in flow charting is the use of assumed or desired steps rather than actual process steps
in making the chart. The utility of the chart will correlate directly to its accuracy. Another danger is that

37
the steps plotted may not be under the control of the user. If the analyst does not own the process the
chart may not be too helpful. It may, however, be quite useful to a process improvement team including
all the functions involved.

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Part 8

Customer Value Strategy

OBJECTIVES:

After reading, the student should be able to:

Differentiate between internal from external customer;
Describe customer satisfaction and its nature;
Define customer focus;
Explain customer service.

Total quality management ensures that employees understand their target customers well
before making any changes in the processes and systems to deliver superior quality products for better
customer satisfaction. In fact, organizations introduce total quality management or any other quality
management process to increase their customer base and levels of customer satisfaction. Total quality
management increases an organization's database of loyal customers who would not go anywhere, no
matter what. Without customers a business can't even exist.

IDENTIFYING CUSTOMERS

There are two distinct types of customers namely external and internal. Internal customers are
within the company. They are the colleagues working together for delivering a service or product for the
external customer. Every function, whether it is engineering, order processing, or production, has an
internal customer. Each internal customer receives a product or service, in exchange, provides a product
or service. Every person in a process is considered a customer of the preceding operation.

An internal customer can be anyone within an organization. It could be another department,

another branch or even a co-worker. Getting the internal relationships working is essential if external
customers are to be satisfied. Every single person in the organization has an effect on the external
customers. Internal cooperation needs to be stimulated to enhance organizational performance. The
most effective leadership style tends to give high importance to teams and employee participation

An external customer may be an individual or an enterprise that hires or purchases the product(s) or
services) from another person or business in exchange of money. An external customer is someone who
exists outside the organization. An external customer can be defined in many ways, such as

1. The one who use the product or service.

2. 2 The one who purchases the product or service.
3. 3. The one who influences the sale of the product or service

An external customer is one who isn't a part of an organization, rather is one who receives service or
product from the organization. They are the ones who pay for a service or product and can make or
break an organization. They have a choice. If a particular product or service does not please them, they
can easily find another company that offers a better product or services. Quality must be incorporated
into all activities with a clear customer focus. Customers usually compare perceptions of what they
actually received from the organization with their expectations (what they were expecting to get from
the organization).

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 One of the most important factors for the success of an enterprise is its customers. Without them, a
business cannot exist. In order to capture customers a business must try to find out what people want,
how much and how often they will buy and how their post-purchase satisfaction will be ensured.

CUSTOMER SATISFRCTION

Customer satisfaction is not an objectively measured but more of a feeling or attitude. It

enhances customer loyalty, which is the feeling of attachment to or affection for a company's people,
product or services. If a customer is pleased with a product or a service he has hired or purchased he will
pay his bills promptly. which greatly improves cash flow-the lifeblood of any organization. Customers
that are pleased will increase in number, buy more, and buy more often. Through delighting the
customer satisfied customers can be turned into loyal customers. Loyalty generates constant purchases
and increased revenues, therefore leading to organizational excellence. Employee satisfaction is needed
to maintain continuous improvement and external customer satisfaction. Delighted employees who feel
proud of their work have an outstanding performance, thus having a positive impact on business
excellence.

The customer will always be the judge of quality. Understanding customer needs, both current
and future and keeping pace with changing market require effective strategies for listening to and
learning from customers, measuring their satisfaction relative to competitors and building relationships.
Satisfaction and dissatisfactions information are important because understanding them leads to the
right improvements that can create satisfied customers who reward the company with loyalty.

Satisfaction can be expressed in many ways, like positive word-of-mouth, Giving compliments to
the service provider and brand loyalty to the service organization Quite often it is assumed that satisfied
consumers will be brand loyal. That is not be the case, especially even now entrants have come to the
assisted customers will show a higher repurchase rate than dissatisfactions of customers is an important
one Customer satisfaction leads to repeat purchases and repeat purchases lead to loyal customers. In
turn, customer's loyalty leads to enhanced brand equity and higher profits,

On the other hand the only measure of acceptable quality is customers satisfaction which takes
into account both objective and subjective interpretations S the needs and expectations of customers. If
the customers are satisfied with the products and services offered, the organization has not only
correctly interpreted customer needs and expectations but it is also providing products and services of
acceptable quality.

Organizations depend on their customers and therefore should understand Current and future
customer needs, meet customer requirements and strive to exceed customer expectations.

Customer satisfaction is defined as the number of customers, or percentage of total customers

whose reported experience with a firm, its products, or its services (ratings) exceeds specified
satisfaction goals. It is seen as a key performance Indicator within business and is often part of a
Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer
satisfaction is seen as a key differentiator and increasingly has become a key element of business
strategy.

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 Within organizations, customer satisfaction ratings can have powerful effects. They focus
employees on the importance of fulfilling customers expectations. Furthermore, when these ratings dip,
they warn of problems that can affect sales and profitability. When a brand has loyal customers, it gains
positive word-of mouth marketing which is both free and highly effective.

Therefore, it is essential for businesses to effectively manage customer satisfaction. Firms need
reliable and representative measures of satisfaction to do thus.

In searching satisfaction, firms generally ask customers whether their product or service has met or
exceeded expectations. Thus, expectations are a key factor behind satisfaction. When customers have
high expectations and the reality falls short, they will be disappointed and will likely rate their
experience as less than satisfying.

Customer delight arises when perceptions exceed expectations. External customer satisfaction
shows the extent to which the organization:

1. Uses methods for determining perceived quality and value,

2. Uses customer feedback to improve product/service quality

3. Handles complaints, resolves them and uses complaint information for quality improvement
and prevention of recurrence of problems.

4. Measures performance against customer targets,

5. Compares its customer satisfaction results with that of main competitors.

A summary of ways to improve internal customer satisfaction is given below:

1. Treat employees as the company would treat its customers - They are valuable members of
the organization and they must feel important for the organization.

2. Share the company vision - Communicating the company's vision with the employees will
make them feel a part of the company. It can help them align their goals with those of the
company.

3. Surpass their expectations - To make employees happy, offer unexpected gifts or bonuses,
arrange team parties, take them out for a team lunch or dinner, and other ways.

4. Take feedback and suggestions-To better understand employees; the company must know
what they feel about their jobs, or their work environment.

5. Show appreciation for good work - Appreciate a good work done.

Customer Satisfaction Methods

Here are some of the methods that could be used to satisfy customers:

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1. Encouraging face-to-face dealings with customers - This is the most discouraging and complete scary
part of interacting with a customer. If one is not used to this sort of thing it can be a pretty threatening
experience. Certainly, though, it does get easier over time. It's important to meet the customers face to
face at least once or even twice in the course of a project. In doing so, the client finds it easier to relate
to and work with someone they've actually met in person, rather than a voice on the phone or someone
typing into an email or messenger program. When one do meet them, be calm, confident and above all,
take time to ask them what they need.

2. Respond to messages promptly and keep the clients informed - This goes without saying really. All
people know how annoying it is to wait days for a response to an email or phone call It might not always
be practical to deal with all customers queries within the space of a few hours, but at least email or call
them back and let them know about the receipt of their message and contact them about it as soon as
possible Even if one is not able to solve a problem right away, let the customer know he is working on it.

3. Being friendly and approachable by customers - It's very important to be friendly courteous and to
make clients feel like a friend and one is there to help them out. There will be times when one wants to
beat clients over the head repeatedly with a blunt object It happens to all of us. It's vital that one keep a
clear head, respond to ones clients' wishes as best he can and at all times remain polite and courteous

4. Have clearly defined customer service policy - This may not be too important when one is just
startıng out, but a clearly defined customer service policy is going to save a lot of time and effort in the
long run. If a customer has a problem what should they do? If the first option doesn't work, then what?
Should they contact different people for billing and technical enquiries? if they're not satisfied with any
aspect of customer service, who should they tell?

Approaches of Customer Satisfaction

Here are some approaches to customer satisfaction:

1. Regular customer feedback system - This involves allowing communication from customers through
emails, suggestion boxes. One should keep all documents and send copies to the person who made the
complaint.

2. Market research - This is done to understand customers better. This can be done through sampling a
few customers using appropriate sampling techniques and a detailed study is conducted on their likes
and dislikes.

3. New or last customer survey - These are useful ways of finding out what attracts customers to the
organization and indeed why they left.

4. Focus groups - This is intended to know what customers are thinking. A group of customers is
assembled in a meeting to answer a series of questions

5. Customer visits - This involves making visits to the customer's premises to collect information. These
are meant to know how the product or service is performing

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6. Front line personnel - This is the use of employees who are in direct contact with customers to
understand the customers' expectations. These employees should be trained on how to carry out his
task.

7. Critical.incidents technique - This attempts to identify issues that delight the customer and those that
satisfy them.

Determinants of Customer Satisfaction

There are two key indicators of customer satisfaction, namely:

1. Key Indicators for Physical Products

a. Reliability
b. Aesthetics
b. Adaptability
d. Usability
e Functionality
f. Appropriateness

2. Key Indicators for Services

a. Friendliness/courteousness of employees
b. Safety/risk of service
c. Billing/invoicing procedure
d. Responsiveness to requests
e. Appearance of physical facilities
f. Approachability of the service provider
g. Willingness to listen to customer
h. Honesty and an ability to communicate in clear language

CUSTOMER FOCUS

Whatever companies do for quality improvement, it must always be remembered that only
customers determine the level of quality. Whatever they do o foster quality improvement such as
training employees and integrating quality into processes management, only customers determine
whether their efforts are worthwhile.

The customers are the valuable assets for any organization. The success of an organization
depends on the satisfied customer. The satisfied customer tends 1's purchase frequently and more. The
manufacturing and service organization use customer satisfaction as the measure of quality. Identifying
the customer expectation is the key to satisfy the customer.

Focusing on the customer involves designing products or services that met or exceed the
customer's expectations. This involves the product itself, its functionality, attributes, convenience and
even the means by which the information about a product is received by a client.

The marketing department is responsible to get the cyber-word out to potential clients.
Marketers use a wide variety of media sources, like social networking email and even texting. If they

43
notice traffic is not moving toward the website or that clients are not staying online long enough, they
will make strong suggestions to the IT department and the research and development department to
make changes immediately.

By having a strategic approach to improvement, processes are developed and tested to ensure
the product or service's quality. This also involves making sure suppliers offer quality supplies needed to
produce products.

The purchasing department monitors client reviews to determine whether the ratings on the
website are similar to those of actual past customers. This makes it possible for purchasing to add more
travel packages to the company's inventory.

Improving continuously means always analyzing the way work is being performed to determine
if more effective or efficient ways are possible, making improvements and striving for excellence all the
time.

The human resources department is interested in making sure employees are qualified to
perform their jobs. By having qualified and trained employees on the team, the website will run
effectively. Calls to the travel desk will be handled efficiently. Any interruption to the booking process
will be quickly fixed, and improvements will be made.

Encouraging mutual respect and teamwork is important because it fosters a single-

organizational culture of excellence by knowing that every employee from top to bottom of the
hierarchy holds the same TQM core principles at heart.

CUSTOMER SERVICE

Quality assurance means developing operational controls to ensure that the results match the desired
outcomes Customer service operations are designed to keep customers satisfied while protecting the
organization. To make sure customer service achieve these goals in business, the person responsible for
quality assurance must define the quality functions as they apply to how the company serves its
customers Once such definitions are in place, it can define the resources required to fulfill the defined
mandate and make sure customers experience quality service.

Customer Service Quality Goals

Customer service means helping customers solve problems. To carry out this function
effectively, customer service has to be easily accessible, knowledgeable, reliable and deliver results
Quality assurance identifies these requirements and measures how well customer service performs with
respect to each one. The company can define quality assurance in customer service as a means to
evaluate the characteristics that make customer service effective.

Reliability

The quality assurance system can compare what the company promises the customer to what
the customer expects and what the customer service delivers the delivered service matches customer
expectations and what it promised to deliver, quality with respect to this customer service element is

44
high. If there are gaps, it can use the quality assurance system to track improvements. The quality
assurance system must survey customers regularly to determine their expectations so the system can
match against promises and deliveries. Businesses usually implement such surveys in-house by asking
customers to rate their service when they call or when they complete a purchase. Email or web-based
forms that customers fill out when visiting the company website are alternatives. For use as a gauge of
reliability, the survey must specifically ask how well the company service met the customer's
expectations

Competence

Customers expect competent delivery of their services, and the definition quality assurance
includes tracking competence. Quality assurance systems evaluate competence by training and results.
The employee delivering customer service has to have the training that allows competent delivery, and
he actually has to supply competent service. The quality assurance system keeps records of training and
surveys customers to evaluate the competence of the delivery. It assigns scores for completed training
and for the degree of competence in service delivery compared to benchmarks based on industry
standards. It adds these scores to obtain an overall competency evaluation. A low score means
employees have less training or apply their training less competently than the rest of the industry. The
company can address such a problem through additional training.

Delivery

Customers expect reliable and competent service delivery in an easily accessible form. Customer
service delivery is typically over the phone or other means of electronic communication. Wait times,
busy signals, noise, call quality and call cost reduce the quality of delivery. The definition of quality
assurance includes tracking these parameters, defining reasonable levels and ensuring that those levels
are maintained over time.

Solutions

Customers are mainly interested in solutions to their problems. Quality assurance includes
documenting customer complaints, tracking the actions taken to resolve them and surveying customers
on their satisfaction with the result The quality assurance system compares high levels of reliability,
competence and delivery quality with the level of customer satisfaction. The system checks for
discrepancies.

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Part 9

Quality Standards
OBJECTIVES

After reading, the student should be able to:

 Recognize the quality using Malcolm Baldrige and International Organization for Standardization
(ISO);

 Differentiate between quality standards of Malcolm Baldrige and International Organization for
Standardization (ISO).

In essence, standard is an agreed way of doing something. It could be about making product
managing process, delivering a service or supplying materials Standards can cover a huge range of
activities undertaken by organizations and used by their customers.

Standards are important in international trade because incongruent standards can be barriers to
trade giving some organizations advantages in certain areas of the world Standards provide clear
identifiable references that are recognized internationally and encourage fair competition in free-market
economies. Standards facilitate trade through enhanced product quality and reliability, greater
interoperability and compatibility, greater ease of maintenance and reduced costs.

There are several quality awards and standards for organizations to strive towards. Most of the
organizations involved in these programs see them as tools to help improve their quality processes and
move toward implementing successful TOM

MALCOLM BALDRIDGE

The Malcolm Baldrige Award is a United States quality award that covers an extensive list of
criteria evaluated by independent judges. In many cases organizations use the Baldrige criteria as a
guide for their internal quality efforts rather than competing directly for the award.

History of Malcolm Baldrige Award

In October 1982 due to the declining of US productivity, President Ronald Reagan signed
legislation mandating a national conference on productivity. A seven computer networking conferences

46
in 1983 was prepared for the White House Conference on Productivity sponsored by the then American
Productivity Center now American Productivity and Quality Center). These conferences concluded in a
recommendation to have a National Quality Award just like the Deming Prize in Japan. The supposed
award shall be given annually to those companies that productively dare and meet the award
requirements. The requirements and the evaluation process should be very parallel to the Deming Prize
system to be successful.

Finally on August 20, 1987, the Baldrige Award was signed and became a law (Public Law 100-
107). The name of the award was taken after the Secretary of Commerce under the Reagan
administration Malcolm Baldrige was killed in an accident shortly prior to the action of the Senate to the
legislation. Baldrige a highly respected man by world leaders had a key role on the trade policy of the
Reagan's administration. He was able to provide solution to the technology transfer differences with
China and India. He successfully holds the first meeting with the Cabinets of Soviet Union in seven years.
These Cabinet-level talks made the way for an increased accessibility of US in the Soviet market.

Purposely the Baldrige Award was created to:

1. Assist encourage US firms to make quality and productivity improvement for pride of
recognition at the same time gain profit despite competition:

2. Distinguish the accomplishments of those firms that made quality improvements of their
goods and services and become an example for the rest,

3. Create guidelines and standards which business, industry, government and other enterprises
can use to assess their own quality efforts for improvements and

4. Offer definite guidance for other US firms that desire to learn how to manage for high quality
through making accessible specified information on how winners were able to transform their
cultures and achieve distinction.

Excellence in quality management practice and performance by US firms are recognized by the
Baldrige Award. The award however, does not exist plainly to recognize excellence in product nor for the
sake of winning: The main focus of the award is to encourage high-performance management practices
that lead to satisfied customer and good business outcomes. The awards are grouped into several
categories such as manufacturing, small business, service, nonprofit health care and non-profit
organizations.

Criteria to Become Baldrige Awardees

The evaluation for the award consist of a meticulous set of criteria named the Criteria for
performance Excellence with the intention to persuade firms to enhance their competitiveness using an
aligned approach to organizational performance management with the following outcomes

1. Delivery of increasingly improving vale, adding to market place success;

2. Enhancement of the general company performance and capabilities;
3. Learning on organization and personal level

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The criteria to address are categorized as:

1. Leadership - Examines how senior executives guide the organization and how the organization
addresses its responsibilities to the public and practices good citizenship

2. Strategic planning - Examines how the organization sets strategic directions and how it determines
key action plans.

3. Customer focus-Examines how the organization determines requirements and expectations of

customers and markets, builds relationships with customers, and acquires satisfies, and retains
customers.

4. Measurement, analysis, and knowledge management - Examines the management, effective use
analysis, and improvement of data and information to support Rey organization processes and the
organization's performance management system

5. Workforce focus - Examines how the organization enables its workforce to develop its full potential
and how the workforce is aligned with the organization's objectives

6. Process management - Examines aspects of how key production/delivery and support processes are
designed managed, and improved.

7. Results - Examines the organization's performance and improvement in its key business areas
customer satisfaction, financial and marketplace performance. human resources, supplier and partner
performance, operational performance and governance and social responsibility. The category also
examines how the organization performs relative to competitors.

The seven categories form an umbrella of an integrated management system which reflects the
concentration of organizations towards customers using their strategy and actions. The leadership triad
consisting of leadership, strategic planning and customer and market focus must be integrated. Human
resource focus and process management the manner the organizations perform their works to attain
business results. The entire framework is provided with fact-based System for improvement as
supported by measurement, analysis and knowledge management.

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Evaluation Process

The scoring of responses to Criteria Items and Award applicant feedback are based on two
evaluation dimensions namely process and results. Criteria users need to furnish information relating to
these dimensions. The specific factors for process are approach, deployment, learning, and integration
are described below.

1. Approach refers to the methods used by an organization to address the Baldrige Criteria Item
requirements in Categories 1-6. Features include:
a. Appropriateness of the methods to the Item requirements
b. Effectiveness of your use of the methods
c. Use of a systematic approach
d. Innovation

Questions to be asked in analyzing an approach are the following:

a. What approach or collection of approaches is discussed?
b. What Areas of the Criteria Item does the approach address?
c. Is the approach tematic (with repeatable steps, inputs, outputs, and time frames designed to
allow evaluation, improvement and sharing)?
d. Is there evidence that the approach is effective?
e. Is this approach (collection of approaches) a key organizational process? the approach
important to the applicant's overall performance? If yes, dearly state why it is important, and
cite the key factors used to support your position)
f. Are any of the multiple requirements of the Item that are not addressed (gaps) relevant and
important to the applicant?

2. Deployment refers to the extent to which an approach is applied in addressing the requirements of
the Baldrige Criteria Item Deployment is evaluated on the basis of the breadth and depth of application
of approach to relevant work units throughout the organization Features included are the following:

49
 a. Relevance
b. Complete coverage
c. Consistency
d. Breadth across all work units
e. Depth through multiple levels

Questions to be asked in analyzing deployment are the following:

a. What information is provided to show what is done in different parts of the organization
(early stages, well deployed but with some variation among areas/work units, well deployed
with no significant gaps, fully deployed)?

3. Learning refers to new knowledge or skills acquired through evaluation, study, experience, and
innovation. Organizational learning is achieved through research and development, evaluation and
improvement cycles, ideas and input from employees, customer ideas and input, faculty, staff, students.
patients, and other stakeholders; best practice sharing and benchmarking Personal learning (for
employees, faculty and staff) is achieved through education, training, and developmental opportunities.
To be effective, these types of learning should be embedded in the way an organization operates
Features included are the following:

a. Organizational learning and Personal learning

b. Embedded in operations

Questions to be asked in analyzing learning:

a. Has the approach been evaluated and improved? If yes, is the evaluation and improvement
conducted in a fact-based, systematic manner (e.g, regular, recurring, data driven)?

b. Is there evidence of organizational learning (ie, evidence that the learning from this approach
is shared with other organizational units/other work processes)? Is there evidence of innovation
and refinement from organizational analysis and sharing (eg, evidence the learning is actually
used to drive innovation and refinement)?

c. Are the measures, information, improvement systems complementary across processes and
work units?

4. Integration refers to the harmonization of plans, processes, information, resource decisions, actions,
results, and analysis to support key organization wide goals, Effective integration goes beyond alignment
and is achieved when the individual components of a performance management system operate as a
fully interconnected unit. Features are the following:
a. Begins with alignment
b. Culminates in interconnectivity

Questions to be asked in analyzing integration:

a. How well is the approach aligned with the applicant's organizational needs identified in the
other Criteria Items and the Organizational Profile? How well is the approach integrated with
these needs? (Examples of needs are strategic challenges, objectives, and related action plans;

50
 organizational mission, vision, and goals; key processes and measures; key customer/market
segments and requirements; and employee groups and requirements.)

Malcolm Baldrige Awardees for 2015

U.S. Commerce Secretary Penny Pritzker named four U.S. organizations as the 2015 recipients of the
Malcolm Baldrige National Quality Award, the nation's highest Presidential honor for performance
excellence. The honorees are recognized for their outstanding commitment to sustainable excellence
through innovation, Improvement and visionary leadership. This year's recipients represent four
different sectors and include a two-time winner for the seventh time in Baldrige history.

The 2015 Baldrige Award recipients listed with their category are:

Mi USA, Columbua. Moj (small business won in the same category in 2009)
MidwayUSA is an Internet retailer offering "Just About Everything for shooting hunting and the
outdoors. It is a world leader in its market sector, offering more than 110,000 products from more than
800 suppliers to 1.2 million iterative customers With gross sales in excess of $350 million, MidwayUSA
employs more than 350 at its facility in Columbia, Mo Many in the company's workforce have a deep
passion for shooting hunting and outdoor sports, which allows them to use personal knowledge and
insight to better serve their customers. Since first adopting the Baldrige Criteria for Performance
Excellence in 2006, MidwayUSA has pursued its vision to be the best-run, most respected business in
America, for the benefit of our customers.

This is the second Baldrige Award for MidwayUSA as the company was honored in the same
category in 2009.

As a result of MidwayUSA's focus on their number one operational goal, customer satisfaction,
and the integration of customer satisfaction data into MidwayUSA's Performance Improvement System,
customer approval ratings have topped 90 percent since 2006, and have exceeded the performance of
its
primary Internet retailing competitor for the past two years.

Since 2004, MidwayUSA has sustained a 43.8 percent average annual growth rate in net income
and a 21.3 percent average annual growth rate in gross sales making it one of the fastest-growing
companies in its industry.

MidwayUSA improved its employee satisfaction and engagement rate from 76 percent in 2004
to 83 percent in 2015.

MidwayUSA is a community leader in waste recovery and resource management, recycling

paper, plastic, cardboard, pallets, and metal. In 2008, the company replaced Styrofoam packing peanuts
with inflatable air pillows made of recycled plastic. MidwayUSA is virtually paperless; most marketing
and business transactions are done electronically and no "snail mail" orders are accepted.

Charter School of San Diego, San Diego, Calif. (education)

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 The Charter School of San Diego (CSSD), authorized by the public San Diego Unified School
District, states that it is committed to the development of a personalized instructional program with
intensive parental involvement that demonstrates positive outcomes for each student" Opened in 1994,
CSSD is specifically aimed at students whose futures are at risk because they were not successful at
conventional schooling. Students who enroll at CSSD are seeking an alternative educational environment
or fall into several at-risk categories. On average, 14 percent of the student population is designated as
gifted and 13 percent require special education CSSD provides free individualized education in Grades 7-
12 to engage graduate, or redirect these students.

CSSD is headquartered in San Diego, Calif, operates 21 instructional and educational resources
centers in San Diego County, and employs 187 workforce members.

CSSD maintained overall student and parent satisfaction levels of close to 100 percent trom
2010 to 2015 Furthermore. 95 percent of enrolled students for the past six years would recommend
CSSD to others, and 97 percent of students' parents would recommend the school to a friend or family
member.

CSSD's overall dropout rate of 24 percent in 2013-2014 outperformed the county rate of 2.7
percent and the statewide rate of 3.1 percent, even though CSSD students are on average two to three
grade levels behind peers in language arts and three to four grade levels behind peers in math
achievement when they enroll.

CSSD has retained between 80-90 percent of its instructional staff for the past six years. For four
years, CSSD has maintained a greater percentage of teachers with advanced degrees than two of its
charter school competitors and most recently outperformed its county school system on this measure in
the 2013-2014 academic year.

Despite a combined decrease of 43.14 percent in state funding in recent years, CSSD's positive
end-of-year fund balances have increased for the last six years. Additionally, CSSD's innovative approach
in evaluating the financial performance of each resource center demonstrates that the number of
resource centers with deficits fell over the past three years from seven of 20 in FY 2012-2013, to six in FY
2013-2014, and most recently, to three in FY 2014-2015.

Charleston Area Medical Center Health System, Charleston, W.V. (health caret

The Charleston Area Medical Center Health System (CAMCHS) in Charleston, W.Va., operates
four hospitals within the Charleston Area Medical Center (CAMC); CAMC General Hospital, CAMC
Memorial Hospital CAMC Women and Children's Hospital, and CAMC Teays Valley Hospital. The system
also includes the CAMC Foundation; the CAMC Health and Education Research Institute: document,
cancer, weight loss, and physical therapy centers; and the physician clinics of Integrated Health Care
Providers, Inc Services at CAMC include a Level 1 Trauma Center, top-level neonatal intensive care unit
and pediatric intensive care. West Virginia's only kidney transplant center, and subspecialists in every
service line. CAMCHS operates with a revenue of $956 million and a workforce of just under 7,000
employees (including nearly 800 physicians) and more than 300 volunteers.

For the past two years, the Charleston Area Medical Center Health System has ranked in the top
5 percent for quality inpatient service by Healthgrades, a national service that rates the performance of
physicians, hospitals and health care providers, and revived the group's Distinguished Hospital Award.

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CAMC ranks in the top 10 percent nationally for outpatient satisfaction in all areas including wat time
communication staff courtesy and respect, doctor time with patient and information given to patients
for self-care.

CAMC’s Sepsis Performance Improvement Team saved 1798 lives from 2011 to 2014 through increased
awareness and early identification, better than the national Top 10 percent level since 2012.

As West Virginia's largest provider of uncompensated care, CAMC exceeds ali national
benchmarks for such activity, reflecting its mission to provide the best health care to every patient every
day. CAMCHS's commitment to improving the health of its neighbors is demonstrated by community
benefit expenditures that exceed the national average by 76 percent and total over $115 million
annually.

Mid America Transplant Services, St. Louis. Mo. (nonprofit)

Mid America Transplant is a private, nonprofit organ procurement organízation and eye and
tissue bank serving a designated service area (DSA) of 84 counties in eastern Missouri, southern Illinois,
and Northeastern Arkansas. Mid-America Transplant works with its partner hospitals to procure
donated organs and tissues and then provide them to transplant centers and tissue processors, both in
the DSA and across the country. Mid-America Transplant also operates three stations at Department of
Motor Vehicles offices in the Greater St. Louis, Mo, area that support its mission by making it easy for
motorists to register as donors while renewing drivers' licenses or automobile registrations. With an
annual budget of $39 million and a workforce of 193 employees, Mid-America Transplant operates from
its headquarters in St. Louis, Mo., and a satellite location in Springfield, Mo, A unique concept is the
Mid-America Transplant Family House, which provides short and intermediate-term housing for
transplant patients and their families from outside the St Louis area and gives Mid-America Transplant
leaders and staff the opportunity to interact with them.

To facilitate organ and tissue donations, Mid-America Transplantstaff members are in residence
at the organization's key partner hospitals. This innovation has resulted in a 0.08 percent rate of missed
organ referrals since 2012 outperforming the reported best-in-class industry benchmark of 2 percent.

In 2001, Mid-America Transplant built the nation's first stand-alone organ recovery facility, a system that
has significantly reduced the expense of procuring organs compared to the cost of in-hospital organ
procurement. Since 2012, the cost-per-donor for in-house cases has decreased from approximately
$7,000 to under $4,000, compared to approximately $20,000 when completed in the hospital.

In 2015, Mid America Transplant was selected as a "top workplace by the St. Louis Post-Dispatch
newspaper. The overall employee retention rate approaches 90 percent and has exceeded the
Association of Organ Procurement Organizations industry average since 2012.

Mid-America Transplant uses customer data to determine their satisfaction with the donation
process. Customer complaints per case have been close to zero since 2013 for eye and tissue donations
and declined from approximately 7 percent in 2013 to approximately 3 percent in 2015 for organ
donations.

ISO STANDARDS

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 The International Organization for Standardization (ISO) is an international standard-setting
body composed of representatives from various national standards organizations. Founded on 23
February 1947, the organization promotes worldwide proprietary, industrial and commercial standards.

ISO International Standards ensure that products and services are safe, reliable and of good
quality. For business, they are strategic tools that reduce costs by minimizing waste and errors, and
increasing productivity. They help companies to access new markets, level the playing field for
developing countries and facilitate free and fair global trade.

History of ISO

In London, in 1946, 65 delegates from 25 countries meet to discuss the future of International
Standardization. In 1947, ISO officially comes into existence with 67 technical committees (groups of
experts focusing on a specific subject). In 1949, ISO moves into offices in a small, private house in
Geneva. In the early 1950s the Central Secretariat has 5 members of staff.

In 1951, the first ISO standard (called Recommendations at this time), ISO/R 1:1951 Standard
reference temperature for industrial length measurements, is published. Since then, the standard has
been updated numerous times and is now ISO 1:2002 Geometrical Product Specifications (GPS) -
Standard reference temperature for geometrical product specification.

Since its creation ISO has published monthly information about its technical committees, the
standards published and administrative changes to the organization and its members.

In 1955, ISO members gather in Stockholm for the 3rd General Assembly. At the beginning of
1955, ISO has 35 members and 68 standards (called recommendations) Henry St Leger is the Secretary
General.

In 1960, ISO publishes the standard ISO 31 on quantities and units (which has since been
replaced by ISO 80 000). ISO 31 is based on SI (Système international d'unites). The SI sets out one unit
for each quantity, for example, the meter fos distance and the second for time. The objective of the SI
system is to reach world wide uniformity in units of measurement. ISO 80 000 sets out these units and
how to use them.

During the 1960s ISO works to include more developing countries in its International
Standardization work. In 1961 it establishes DEVCO, a committee for developing country matters, and in
1968 introduces Correspondent membership This allows developing countries to be informed of
International Standardization work without the full costs of ISO membership. Correspondent
membership continues to be a popular option for many countries today. At the start of 2012 ISO had 49
correspondent members. Learn more about ISO and developing countries.

In 1968, ISO publishes its first standard on freight containers. Freight and packaging is one of the
areas where ISO has been particularly active changing the way goods travel across the world. In 1969
Olle Sturen becomes Secretary General of ISO. In one of his first speeches he says International
Standardization is the end of "technical nationalism".

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 In 1971, ISO creates its first two technical committees in the environmental field. Air quality and
Water quality. Today, these committees have been joined by other groups of environmental experts
focusing on many subjects including soil quality, environmental management and renewable energy.
During the 1970s, ISO's Secretary General Olle Sturen focuses on turning ISO into a truly international
organization.

While ISO's members come from all over the world, in the early 1970s relatively few are fully
active in the development of International Standards. Sturen's visits to members result in active
participation from countries such as Australia, Japan and China. The Central Secretariat also reflects this
international feel, with an average of 25 nationalities represented.

In 1986, Lawrence D. Eicher takes over as Secretary General. Sadly, Eicher passed away in 2002
while still serving as ISO Secretary General. The Lawrence D. Eicher award for excellence in
standardization has been set up in his memory.

In 1987, ISO publishes its first quality management standard. Standards in the ISO 9000 family
have gone on to become some of the most well known and best selling standards.

In 1995, ISO launches its first website. Five years later, in 2000, ISO starts selling its standards
online In 1996, ISO launches its environmental management system standard, ISO 14001. The standard
provides tools for companies and organizations to help them identify and control their environmental
impact.

In 2003, Alan Bryden is appointed Secretary General. Under his 5 year term ISO expands its work
to cover new technologies such as nanotechnology and biofuels. Bryden also actively supports ISO's
work on social responsibility, which leads to the launch of ISO 26000 in 2010.

In 2005, ISO and IEC's joint technical committee JICI launches ISO/IEC 27001, a management
system standard on information security. As businesses become increasingly reliant on information
technology, securing the system and minimizing risks is ever more important. ISO 27001:2005 has
become one of ISO's most popular standards.

In 2007, ISO moves to its current offices in La Voie Creuse, Geneva. Today the Central Secretariat
employs almost 150 people, a significant increase from the staff of 5 in the early 1950s.

In 2008, ISO, ITU and IEC are congratulated with an Emmy Award for their work in producing an
advanced video coding standard.

In 2009, ISO's current Secretary General Rob Steele is appointed. ISO takes on a new mission to
be simpler, faster, better to cut down standards development time and to better serve the needs of
today's society.

In 2010, ISO 26000, the International Standard providing guidelines for social responsibility, is
launched. The working group that developed ISO 26000 is one of the largest and most diverse groups to
develop an ISO standard. The resulting document is truly multi-stakeholder.

At the start of 2012, ISO has 163 members and has a total of over 19,000 standards. Today, ISO
International Standards cover almost all aspects of technology and business.

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Different Types of ISO

The International Organization For Standardization (ISO) is a non-govemmental nebwork of

national agencies whose purpose is the development of international standards for business and
goverment International standards are designed for trade between countries. They provide a
technological base and a system of best management practices. Standards ensure safe products and
organizational procedures that reduce environmental impact Standards benefit trade and business by
simplifying procedures and reducing an organization's environmental risk. Consumers benefit by the
knowledge that state-of-the-art practices are developed for global relevancy

Quality Management

The ISO 9000 family addresses various aspects of quality management and contains some of
ISO's best known standards. The standards provide guidance and tools for companies and organizations
who want to ensure that their products and services consistently meet customer's requirements, and
that quality is consistently improved.

Standards in the ISO 9000 family include:

ISO 9001:2015 - sets out the requirements of a quality management system

ISO 9000:2015 covers the basic concepts and language

ISO 9004:2009 focuses on how to make a quality management system more efficient and effective

ISO 19011:2011 - sets out guidance on internal and external audits of quality management systems

ISO 9001:2015. This ISO sets out the criteria for a quality management system and is the only standard
in the family that can be certified to (although this is not a requirement). It can be used by any
organization, large or small, regardless of its field of activity, In fact, there are over one million
companies and organizations in over 170 countries certified to ISO 9001. This standard is based on a
number of quality management principles including a strong customer focus, the motivation and
implication of top management, the process approach and continual improvement. Us ISO 9001:2015
helps ensure that customers get consistent, good quality products and services, which in turn brings
many business benefits.

Environmental Management

ISO 14001:2004. This ISO standard is the basis of development of an environmental management
system (EMS). An EMS is a set of guidelines and procedures developed by an organization to ensure
compliance. An EMS benefits an organization by increasing environmental awareness and investigating
ways to reduce its costs.

ISO 14004:2004. This ISO standard provides more specific information for implementation and
maintenance of an EMS, with the aim to continually improve the plan based on its performance. The
standard is applicable to any industry,

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ISO 5001. This yet-to-be-released standard will address energy management and ways to increase
energy efficiency and reduce environmental impact of organizations. It will consider technical and
topical issues, such as climate change and dependence on foreign oil.

Health and Safety

ISO 22000. This ISO standard sets global guidelines for food safety and handling. Major corporations
have embraced this standard, including Arla Foods and Kraft Foods. Its aim is to focus on the entire food
chain and reduce hazards and safety issues such as food-borne illnesses.

IWA 1:2005. This standard addresses issues in the healthcare sector. It provides guidelines for health
care organizations to respond to natural and manmade disasters. Specifically, the standard gives
recommendations for reducing error and organizational waste, while embracing a customer-centric
framework

ISO 9001:2000. This standard addresses quality management in the medical device industry-It
specifically provides suggestions and guidelines for industries involved in the development, production,
and installation of these devices. The standard also considers continual monitoring within the industry

Transportation

ISO/TS 16949. This standard reviews all areas of the automotive industry supply chain. It concentrates
on areas of training, monitoring, analysis and improvements within the industry. The standard also
focuses on ways for suppliers to reduce their costs and improve efficiency.

ISO/PAS 30003:2008. This standard looks specific oncerns within shipping and marine technology. It
focuses on areas, such as ship recycling management and other material handling that can have
potential environmental impacts. It addresses industry-specific concerns such as hazardous materials
and asbestos emission

Social Responsability

ISO 26000. This standard assures that business and organizations do not operate In A vacuum. Their
relationship to the society and environment in which they operate is a critical factor in their ability to
continue to operate effectively. It is also increasingly being used as a measure of their overall
performance ISO 20000 provides guidance on how businesses and organizations can operate in a socially
responsible way. This means aching in an ethical and transparent way that contributes to the health and
welfare of society.

ISO 26000:2010. This standard provides guidance rather than requirements, so it cannot be certified to
unlike some other well-known ISO standards. Instead, it helps clarify what social responsibility is helps
businesses and organizations translate principles into effective actions and shares best practices relating
to social responsibility, globally. It is aimed at all types of organizations regardless of their activity, size

57
or location. The standard was launched in 2010 following five years of negotiations between many
different stakeholders across the world. Representatives from government NGOs industry, consumer
groups and labor organizations around the world were involved in its development which means it
represents an international consensus.

Energy Management

ISO 50001. Using energy efficiently helps organizations save money as well as helping to conserve
resources and tackle climate change. ISO 50001 supports organizations in all sectors to use energy more
efficiently, through the development of an energy management system (EnMS).

ISO 50001:2011. This is based on the management system model of continual improvement also used
for other well-known standards such as ISO 9001 or ISO 14001. This makes it easier for organizations to
integrate energy management into their overall efforts to improve quality and environmental
management. ISO 50001:2011 provides a framework of requirements for organizations to:

1. Develop a policy for more efficient use of energy

2. Fix targets and objectives to meet the policy
3. Use data to better understand and make decisions about energy use
4. Measure the results
5. Review how well the policy works, and
6. Continually improve energy management.

Risk Management

ISO 31000. This standard is about the risks affecting organizations that can have consequences in terms
of economic performance and professional reputation, is well as envirorumental safety and societal
outcomes. Therefore, managing nick effectively helps organizations to perform well in an environment
full of uncertainty.

1S0 31000-2009. This standard offers principles and guidelines, provides principles, framework and a
process for managing risk. It can be used by any organization regardless of its size, activity or sector.
Using ISO 31000 can help organizations increase the likelihood of achieving objectives, improve the
identification of opportunities and threats and effectively allocate and use resources for risk treatment

However, ISO 31000 cannot be used for certification purposes, but does provide guidance for
internal or external audit programmes Organizations using it can compare their risk management
practices with an internationally recognized benchmark, providing sound principles for effective
management and corporate governance.

Food Safety Management

ISO 22000. The ISO 22000 family of International Standards addresses food safety management. The
consequences of unsafe food can be serious and ISOs food safety management standards help
organizations identify and control food safety hazards. As many of today's food products repeatedly
cross national boundaries.

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 International Standards are needed to ensure the safety of the global food supply chain. The ISO
22000 family contains a number of standards each focusing on different aspects of food safety
management.

ISO 22000:2005 contains the overall guidelines for food safety management

ISO 22004:2014 provides generic advice on the application of ISO 22000

ISO 22005:2007 focuses on traceability in the feed and food chain

ISO/TS 22002-1:2009 contains specific prerequisites for food manufacturing

ISO/TS 22002-2:2013 contains specific prerequisites for catering

ISO/TS 22002-3:2011 contains specific prerequisites for farming

ISO/TS 22002-4:2013 contains specific prerequisites for food packaging manufacturing

ISO/TS 22003:2013 provides guidelines for audit and certification bodies

ISO 22000:2005. This sets out the requirements for a food safety management system and can be
certified to. It maps out what an organization needs to do to demonstrate its ability to control food
safety hazards in order to ensure that food is safe. It can be used by any organization regardless of its
size or position in the food chain
Information Security Management

ISO/IEC 27001. The ISO 27000 family of standards helps organizations keep information assets secure.

Using this family of standards will help the organization manage the security of assets such as
financial information, intellectual property employee details or information entrusted to you by third
parties. ISO/IEC 27001 is the best-known standard in the family providing requirements for an
information security management system (ISMS). An ISMS is a systematic approach to managing
sensitive company information so that it remains secure. It includes people processes and IT systems by
applying a risk management process It can help small, medium and large businesses in any sector keep
information assets secure.

Occupational Health and Safety

ISO 45001. Over 6300 people die each day from work-related accidents or diseases that's nearly
23million every year. The burden of occupational injuries and diseases is significant both for employers
and the wider economy, resulting in losses from early retirements, staff absence and rising insurance
premiums. To combat the problem, ISO is developing a new standard ISO 45001 Occupational health
and safety management systems. The requirements here will help organizations reduce this burden by
providing a framework to improve employee safety, reduce workplace risks and create better, safer
working conditions, all over the world, The standard is currently being developed by a committee of
occupational health and safety experts, and will follow other generic management system approaches
such as ISO 14001 and ISO 9001.

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Anti-bribery Management Systems

ISO 37001. Bribery is one of the world's most destructive and challenging issues. With over US$ 1 trillion
paid in bribes each year, the consequences are catastrophic, reducing quality of life, increasing poverty
and eroding public trust. Yet despite efforts on national and international levels to tackle bribery, it
remains a significant issue Recognizing this, ISO is currently developing a new standard to help
organizations fight bribery and promote an ethical business culture.

ISO 37001. This is the future anti-bribery management systems, specifies a series of measures to help
organizations prevent, detect and address bribery. These include adopting an anti-bribery policy,
appointing a person to oversee anti bribery compliance, training, risk assessments and due diligence on
projects and business associates, implementing financial and commercial controls, and instituting
reporting and investigation procedures. ISO 37001 can be used by any organization, large or small,
whether it be in the public, private or voluntary sector, and in any country. It is a flexible tool, which can
be adapted according to the size and nature of the organization and the bribery risk it faces.

Madical Devices

ISO 13485. Safety and quality are non-negotiable in the medical devices industry. Regulatory
requirements are increasingly stringent throughout every step of a product's life cycle, including service
and delivery. More and more, organizations in the industry are expected to demonstrate their quality
management processes and ensure best practice in everything they do. Requirements for regulatory
purposes, is an internationally agreed standard that sets out the requirements for a quality management
system specific to the medical devices industry. A medical device is a product, such as an instrument,
machine, implant or in vitro reagent that is intended for use in the diagnosis, prevention and treatment
of diseases or other medical conditions. ISO 13485 is designed to be used by organizations involved in
the design production, installation and servicing of medical devices and related services. It can also be
used by internal and external parties, such as certification bodies, to help them with their auditing
processes.

Registration Steps to become ISO Certified

After the company made the plans, built the quality system and conducted the audit the next
step is the ISO Registration Process. The purpose of registering the company is to show that it met the
requirements. In order to do this effectively here are essential steps:

Finding an ISO 9001 Registrar

There is a need to begin searching for an ISO registrar during the 2 to 3 months the company is
still building its quality system. Search can be done in the ANSI-ASQ National Accreditation Board (ANAB)
to select the registrar right for the company. Registrars must meet the requirements of the ISO
Accreditation Bodies. These requirements include things such as independence. Registrars cannot
consult for instance. This system ensures uniformity in the registration process. Accreditation Bodies
maintain directories of the Registrar organizations that they accredit. These directories are available on
their websites. Any company can normally find these websites by doing a search on the Accreditation
Body's name or initials. All other countries except USA and Canada should consult the accreditation
authority or member body for their country. Any company applying for registration can consult the ISO
website for a complete list of ISO Member bodies.

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Selecting an ISO Registrar

A company applying for registration should select a registrar that has experience within the
scope category of its specific industry, which can be found also on the ANAB site. Accreditation,
scheduling issues, les and comfort level should be considered by the company when selecting for the
right registrar Registrar qualifications are a key consideration. There are registrars that have very limited
in scope just based on their names. Registrars must be accredited in a particular industrial sector in
order for them to be able to certify a company in that sector. Some registrars are accredited in several if
not all sectors. While, other registrars are specialized in certain sectors. The best approach to evaluating
a registrar's qualifications for a specific industrial sector is to contact the registrar:

After qualifications price is always a concern. In evaluating the total cost include expenses, fees and the
cost of surveillance. As important as price is the overall experience a client gets with a registrar
Important areas to consider are the interpersonal skills of the auditors the office support and ability to
get questions answered: are the audits a value added experience, will the registrar work with the
company. how flexible are they in adjusting dates and how many weeks notice.

Creating an ISO Application

A company and a registrar will agree on the application contract. This is an important step of the
ISO Registration Process because it defines the rights and obligations of both parties, and includes
liability issues, confidentiality and access rights.

Conducting a Quality Document Review

The registrar will require a copy of the company quality manual and procedures to verify that all
the requirements of the standard are addressed. The İSO Registration Process is not a quick process; the
registrar should be allowed around 2-4 weeks in advance to fully review all of the necessary documents.

Determining Pre-assessment Need

Though optional, this 24 week initial review of the system identifies any significant omissions or
weaknesses. It saves time and allows the registrar to assess any issues and resolve logistics before the
actual assessment audit.

The Pre-assessment is an initial review of the company's Quality Management System to identify
any significant omissions or weaknesses in the system and provide the organization an opportunity to
correct any deficiencies before the regular registration assessment is conducted.

During ISO 9001 Registration, only one pre-assessment may be conducted and Registrars cannot
provide quality consulting or advice on system implementation Evaluating the quality system and
documentation to meet ISO requirements is allowed but registrars cannot provide guidance on how to
implement a quality system.

Issuing an ISO Assessment

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 During the audit, or physical onsite inspection of procedures in action, the auditors will issue
findings if they assess anything that doesn't meet requirements or nonconformities. The length of this
step of the ISO Registration Process will depend on the scope of the audit and the size of the
organization.

In general, the flow of activities during the audit is as follows:

1. Opening Meeting - An introduction of the audit team and key personnel in the company. The scope
and general approach to the audit is discussed. This is also the time to question anything that is unclear
in the audit schedule and communicate any last minute changes to the system or schedule.

2. Brief tour of the facility - Keep it brief, the auditors just want to get a general feel for the layout and
processes involved. This may also be done at the pre assessment

3. Additional review of documents - Audit team members review documentation for areas they will
audit.

4. Examination - The audit is conducted, personnel are interviewed, and objective evidence is collected
to show the system has been effectively implemented.

5. Daily review - At the end of each day or the beginning of the next the audit team reviews any issues
identified during the assessment Potential findings or nonconformities may be clarified at this time.

6. Closing Meeting - The audit team states their conclusions regarding the audit and presents any
findings or nonconformities that were identified along with any observations they may have.

7. Audit Report issued - Within a few weeks of the audit, the Registrar issues the audit report. The
report generally restates what was discussed in the closing meeting

During the audit, if the auditors find anything that does not meet with the requirements of the
ISO standard or that does not meet the requirements of the procedures, they determine the severity
and issue a finding. Audit findings are usually called nonconformities and fall into one of two categories
depending on severity.

1. A Minor Nonconformance deals with minor infractions of procedures or minor failures of the system
in meeting the 150 9001:2008 requirements. These will not hold up the registration,

2. A Major Nonconformance deals with issues where nonconforming product is likely to reach the
customer or where there is a breakdown in the Quality System that results in the system not being
effective in meeting the requirements of the standard. This will hold up the registration

The primary differencetoacompany betweenamajorand minornonconformance is that the

registration cannot proceed until all major nonconformities are closed and verified by the Registrar. This
usually involves a re-audit of the involved areas and, of course, the associated costs. Minor
nonconformities require a corrective action plan and they are closed at the first surveillance.

Auditors work for or contract to Registrars to perform registration assessments and

surveillances. They are the "front line" in the process. The Registrars are responsible for ensuring

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Auditors meet qualification requirements. Their requirements include training in auditing ISO 9001
training, and at least one member of the audit team must have experience in the industrial sector of the
company being audited. Verify credentials. If a person claims to be certified as an ISO 9000 lead auditor,
ask to see proof of his certification. Make sure the certification is current by checking the expiration
date.

Auditors collect the objective evidence demonstrating the effectiveness (or lack thereof) of the
company's quality management system and make registration recommendations to the Registrar The
Registrar has the ultimate decision however

Completing IS0 9001 Registration

After all the findings are put into the 150 audit report and nonconformis are addressed, the
registering company has the option to register as 150 col conformant The company will receive a
certificate and can also be listed in a register which the company can use to publicize its registration and
use in advertising.

Checking with Surveillance Autos

To ensure that the system is maintained and that changes don't result in deficiencies in the
system, registrars perform regular surveillances of the system Over the three year period of the
certificate auditors will perform one full and two partial checks of the company's system.

Some ISO Certified Companies in the Philippines

SyCip Gorres Velayo & Co. (SGV & Co.)

SyCip Gorres Velayo & Co. (SGV & Co.) is the Philippines largest multidisciplinary professional
services firm with eight offices across the country. As of 2007, the company has employed over 1.800
professionals from various disciplines, including CPAs, lawyers, economists, HR experts, engineers,
statisticians financial analysts, and other business and technical experts.

Since 1996, it has been the only ISO 9002-certified professional services firm in the Philippines
since 1996. SGV & Co. became an affiliate of Ernst & Young International on June 6, 2002.

Mekeni Food Corporation (MFC) of Pampanga

The Mekeni Food Corporation (MFC) of Pampanga in the Philippines has come a long way since
1991 when the original Mekeni Meat Products company managed to survive the devastating Mount
Pinatubo volcanic eruption which killed 800 people, made 100 000 homeless and sent an ash cloud
around the world. While many companies closed shop or pulled out, Mekeni decided to ride out the
disaster and help rebuild the local community.

Today, despite being further challenged by a serious outbreak of foot and mouth disease in 1996
and the Asian financial crisis of 1997, MFC is now a major food processing organization, employing over

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1000 people on a 14.8 hectare site in Pampanga. The company produces local "longganisa" and tocino"
sausagés and hotdogs, and processes ham and bacon.

In 2006, MFC (Mekene) became reportedly one of the first meat processing plants in Asia to
implement and certify to ISO 22000:2005. Food safety management systems – Requirements for any
organization in the food chain. The company also holds Hazard Analysis & Critical Control Point (HACCP)
accreditation issued by the National Meat Inspection Service (NMIS) of the Republic of Philippines
Department of Agriculture.

MFC takes its corporate social responsibilities seriously, and has been involved in outreach
programmes for orphanages depressed communities and homes for the elderly. The company has also
invested in a wastewater plant to reduce the impact of its operations on the environment.

Food and Drug Administration (FDA)

International Standardization Organization (ISO)'quality management system standards (ISO

9001:2008) is awarded to organizations or companies that want to implement international standards to
improve the efficiency and effectiveness of its operations. The ISO certificate for Quality Management
System (OMS) has been awarded to the Food and Drug Administration (FDA) by the TUV Rheinland
Philippines. The FDA was able to achieve this notable accomplishment as a move towards good
governance and a belligerent fight against graft and corruption

FDA score transactions, which are licensing of health-concerned establishments and registration
of food, drugs, cosmetics, medical device, and household products, are in the scale of the ISO
accreditation.

This testament attests that the Philippine FDA has taken another step in facing a more complex
regulatory environment without compromising public health and awareness. This substantiates the
FDA's continuous process of developing new strategic plans to build a bridge connecting the
government authorities, the industry, and the market while ensuring that the safety, quality and efficacy
of these health products are still intact upon reaching the end users.

In view of that fact, the FDA spearheads the promotion of straight, righteous governance
towards excellence, practice of efficient and effective programs, and the openness to innovation using
advanced technologies. For that reason, transactions offered at the administration will be swiftly
attended to, without compromising client satisfaction in order to reach the market at no cost where the
increase of public demand for products and health commodities are to be achieved.

Philippine Long Distance Telephone Company (PLDT)

The Philippine Long Distance Telephone Company (PLDT) and its Information Communications
Technology (CD) arm, PLDT, were recently 1SO-certified, proving the comply with global standards

Both companies received the country's first ISO 22301:2012 Business Continuity Management
System (BCMS) standard certification for its VITRO Data Center trom Societe Generale de Surveillance
(SCS) - the world's leading inspection verification, testing and certification company

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 ISO 22301 2012 is the world's first international standard for Business Contingency Management
and was created to assist organizations in developing risk reduction measures in the event of business
disruptions, be these natural disasters or manmade srises

The standard outlines requirements that will guide an enterprise in planning implementing
monitoring and maintaining their Business Continuity Management System (BCMS), which will enable
them to better respond to unexpected and disruptive events

BCMS serves as a framework to build the organization's resiliency and ensure that it is able to continue
operations even in uncertain times.

The VITRO data center was also the first data center in the country to be certified for the ISO
14001:2004 Environmental Management System and ISO 9001:2008 Quality Management System
standards.

It has also been consistently recertified for the ISO 27001:2005 Information Security Management
System standard.

Thank you and God bless.

Keep safe and be healthy always.
January – May 2021

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