UNDERSTANDING THE IMPORTANT DIFFERENCES BETWEEN THE MALCOLM BALDRIGE NATIONAL QUALITY AWARD AND ISO 9000 REGISTRATION

Market globalization, higher requirements for improved quality, and tough, faster-pace, price-sensitive competition have led to two parallel and visible quality thrust: the Baldrige Award in the U.S. and, internationally, the ISO 9000 standards. The relationship between the Baldrige Award and ISO 9000 registration is widely confused. Two common misper-ceptions stand out: (1) that they both cover the same requirements and (2) that they both address improvement, relying on high quality results, and thus, are both forms of recognition. Many have concluded that the Baldrige Award and ISO 9000 are equivalent and that companies should choose one or the other. These conclusions are incorrect. The Baldrige Award and ISO 9000 registration differ fundamentally in focus, purpose, and content. The focus of the Baldrige Award is on enhanced competitiveness. The Award Criteria reflect two key competitiveness thrusts: (1) delivery of ever-improving value to customers and (2) improvement of overall operational performance. The Award's central purpose is educational-to encourage sharing knowledge and experience of competitiveness and to drive this learning, creating an evolving fund of knowledge. By contrast, the focus of ISO 9000 registration is on conformity to practices specified in the registrant's own quality systems. Its central purpose is to enhance and facilitate trade. The Baldrige Award addresses competitiveness factors either not addressed in ISO 9000 registration or addressed differently. These factors include a customer and market focus, results orientation, continuous improvement, competitive comparisons, a tie to business strategy, cycle time and responsiveness, integration via analysis, public responsibility, human resource development, and information sharing. Overall, ISO 9000 registration covers less than 10% of the scope of the Baldrige Award Criteria and does not fully address any of the 28 Criteria items. As a result, the national drive to improve competitiveness could be diminished. Companies required to or electing to seek ISO 9000 registration are encouraged to integrate their conformity efforts with the Baldrige Award competitiveness improvement framework.     

A TOTAL QUALITY MANAGEMENT-BASED INCENTIVE SYSTEM SUPPORTING TOTAL QUALITY MANAGEMENT IMPLEMENTATION

Although there have been many cases of total quality management (TQM) success, embracing TQM does not always lead to performance improvements. Many companies resist the changes in organizational processes such as compensation and performance appraisal systems that are required to link TQM efforts to bottom-line performance. We present the basic structure of a TQM-based compensation system that can provide incentives based on a variety of performance measures, including an explicit incentive for the reduction of variability in product variables. As a result, this approach encourages the continuous improvement central to the TQM philosophy, rather than serving as a disincentive for such improvement as do many traditional compensation systems. The set of performance measures can be adjusted periodically to focus on those measures deemed most likely to yield significant increases in customer satisfaction, further supporting the core elements of TQM. The approach is described using examples from the paper manufacturing operation where it has been successfully implemented. A longitudinal analysis of several performance measures is used to demonstrate the effectiveness of the new compensation system.     

PIECING TOGETHER SERVICE QUALITY: A FRAMEWORK FOR ROBUST SERVICE*

This paper addresses the issue of service design, specifically that of designing the service encounter for improved quality. We introduce a framework based on the three T's of task, treatment, and tangibles as a means of organizing the application of the diverse and growing body of service quality literature to encounter design. The framework is consistent with how successful service managers disaggregate the design problem. More importantly, we show that mutually supportive interrelationships between the three T's produce an opportunity for designing in a robustness to service failure. The framework is supported by case based evidence.     

AN EXAMINATION OF THE INDIRECT PRODUCTIVITY GAINS FROM QUALITY IMPROVEMENT

Recent theoretical work suggests that quality-improvement activities can yield significant indirect effects through process improvements and reduced factory congestion and confusion, benefits that are overlooked or hidden in most management accounting or cost of quality systems. Using time series data from two consumer durables manufacturing plants, I estimate the indirect productivity gains from quality improvement. The evidence from the plants indicates that the indirect effects from improved quality are at least two to three times the direct benefits attributable to lower scrap, rework, and inventory holding costs. An important implication of these findings is that companies that justify investments and measure performance based only on the direct costs of poor quality will motivate managers to make suboptimal decisions regarding quality-improvement activities.     

DEVELOPING SOPHISTICATED QUALITY IMPROVEMENT APPROACHES THROUGH BUSINESS-ACADEME COLLABORATIONS: INTRODUCTION TO THE SPECIAL ISSUE

The pursuit of better performance has led to a number of business-academe collaborations. These collaborators have developed a number of sophisticated approaches that go far beyond such traditional simple methods as benchmarking against the best company, Ishikawa diagrams on feedback and control, Pareto diagrams, incentive systems based solely on output or quality, standard process control charts, and separate treatment of control charts and product inspection. The authors in this special issue report on approaches like benchmarking industrial performance through industry studies; the use of an artificial-intelligence statistical-tree growing method to analyze complex customer service data; an incentive system based on the total quality management (TQM) concepts of continuous improvement, teamwork, adaptation to change, and a focus on customer satisfaction; and integration of product inspection and process control. Because of the continuing widespread interest in TQM, there is an opportunity to take stock of how successful TQM initiatives have been and how we should consolidate and further extend the knowledge in TQM. Two of the papers report on the gap between what organizations espouse as TQM and what they actually implement and on the literature on TQM.     

ON-LINE QUALITY MANAGEMENT: INTEGRATION OF PRODUCT INSPECTION AND PROCESS CONTROL

A growing recognition that quality management is an important factor in defining a firm's competitive position has led to renewed attention to this function and has resulted in implementation of elaborate systems for on-line quality control comprising product inspection and process control. Traditionally, these functions have been treated independently, with very little interaction. In this paper we examine, in detail, a scheme that integrates the two functions, and we demonstrate that such an approach can result in significant cost savings. The motivation for this work comes from our experience in a wafer fabrication facility that suggested that exchange of quality information between different stages of production could result in significant performance improvements. To illustrate this approach, we consider a specific environment characterized by a single-stage continuous production process whose status is monitored by an X̄ control chart. We assume that quality-related costs may be described as a function of the process output. This is analogous to Taguchi's quality loss function and may be interpreted as a generalization of conventional classification of process output as either acceptable or defective units. The integrative scheme essentially relies on utilization of the process status information (based on process control) in making product inspection decisions. For this system we derive a cost model and develop a solution procedure to determine optimal decision parameters. Limited computational results indicate that the scheme has significant potential for reducing quality-related costs.     

THE ROLE OF SUPPLY MANAGEMENT CAPABILITIES IN GREEN SUPPLY

Managers realize that they should avoid complex green supply initiatives when they do not have the capabilities to implement them. However, they have little guidance on how these capabilities can be developed. This paper provides an initial analysis of the role of supply management capabilities in green supply. We argue that the implementation of green supply is better explained by focusing on the development and deployment of an organization's specialized internal resources, rather than by the more usual focus on external environmental pressures on a firm. Further, we argue that capabilities appropriate for green supply are developed by a proactive corporate environmental stance and by a more strategic purchasing and supply management approach. We test our model using data from a two‐phase survey of 70 operating units within UK public limited companies. Our results indicate support for our conjecture that supply management capabilities are jointly developed by a proactive corporate environmental approach and a strategic purchasing and supply process. Our study results should be useful to business strategists, regulators, and researchers interested in the predictors of corporate green behavior. They should also assist future researchers in many branches of environmental management who are seeking to explore the role of the internal capabilities of firms in supporting environmental management.     

A LONGITUDINAL STUDY OF THE EFFECT OF A SERVICE GUARANTEE ON SERVICE QUALITY

This paper develops a theoretical framework that relates a service guarantee to service quality. The framework hypothesizes that a service guarantee can positively affect service quality through its positive effect on both learning through service failure and employee motivation and vision. A longitudinal, empirical study was conducted to test these hypotheses. Surprisingly, the service guarantee was not found to have a direct effect on learning through service failure. However, the service guarantee clearly had a positive effect on service quality primarily through its positive effect on employee motivation and vision. The research strongly supports using a service guarantee to improve service quality.     

PARTIAL QUALITY MANAGEMENT: AN ESSAY

A serious gap is emerging between what is espoused as total quality management and what is actually being implemented. Examples of actual implementation failures are given. In addition to affecting the offending firms, these gaps threaten the viability of the quality management movement in the United States. Their causes and appropriate counter measures are worthy topics for research.     

TEACHING SUPPLY CHAIN MANAGEMENT THROUGH GLOBAL PROJECTS WITH GLOBAL PROJECT TEAMS

In this article, we describe the Global Project Coordination Course, a course in which project teams composed of three students from each of two overseas universities execute company‐sponsored projects dealing with global supply chain management issues. The $75,000 to $100,00 contributed in total by the three to four sponsoring companies funds all course expenses. We assess the benefits and challenges of the use of cross‐cultural project teams with diverse educational backgrounds. We conclude that the course provides a unique and effective vehicle for furthering students' knowledge of Supply Chain Management and Information Systems, improving understanding of “soft” issues, and training students to work in diverse, global, cross‐cultural project teams.     

AN INTEGRATIVE SUMMARY OF DOCTORAL DISSERTATION RESEARCH IN QUALITY MANAGEMENT

Since 1980, practitioner interest in the field of quality management (qm) has grown significantly, resulting in academic researchers embracing QM as a legitimate discipline of study. One approach to evaluating the intellectual health of a discipline is an examination of doctoral dissertation research. This work both complements and extends other published reviews of the quality management discipline by analyzing doctoral dissertation research since 1981, categorizing this research, examining shifts in major research themes, evaluating data collection and analysis methodologies, and discussing general trends in this research area. Our findings suggest that the challenges in QM have become more interdisciplinary and integrated, and reveal an encouraging trend toward more rigorous research methodologies and the increased use of theories from other disciplines, leading to a more mature body of research in this field.     

QUALITY AND WORK FORCE MANAGEMENT PRACTICES: THE MANAGERIAL PERFORMANCE IMPLICATION

Quality has been in the limelight as organizations have sought to create a competitive advantage and theorists have sought to understand the implications of quality management. This paper examines the synergistic effects of the quality emphasis in the organizations, the use of appropriate work force management practices, and the managerial performance outcomes as interactive phenomena. Using data from multiple levels of employees in manufacturing units in various industries, we tested hypotheses regarding the managerial performance impact of the synergy in work force management practices and the quality emphasis. The results indicate that the effectiveness of work force management practices in enhancing managerial performance varies with the emphasis on quality that is manifested by meeting and exceeding customer needs and preferences through accurate, consistent, reliable, and durable products, and by making design changes in the products as desired by the customer.     

DYNAMIC INTERACTION OF PRICE AND DESIGN QUALITY FOR PRODUCTS WITH CONVEX PRODUCTION COSTS

Price and design quality define value for customers and are often used by firms to position products in the marketplace. Setting price and quality level on a new product for the first time and making appropriate changes over time to these variables to reflect changing conditions in the market requires careful coordination of design, manufacturing, and marketing variables. We present a control theoretic model to study the complex interaction among price, quality, and cost during the life cycle of a product. Our model considers the major design-manufacturing-marketing tradeoffs and helps determine optimal pricing, design quality, and production strategies in a dynamic environment with convex production costs.     

COMPUTER-INTEGRATED MANUFACTURING: A TAXONOMY OF INTEGRATION AND RESEARCH ISSUES

The past decade has seen an upsurgence in the number of manufacturing companies that are attempting to transform into computer-integrated enterprises. However, much of the computer-based integration efforts in these manufacturing organizations have been limited in scope and localized within certain areas of the organization (particularly, technology-intensive areas such as the shop floor). Such compartmentalized and myopic approaches to the development of computer-integrated manufacturing (CIM) systems undermine the ability of these systems to reach their fullest potential. CIM is much larger in scope and can impact an organization along various dimensions and at various levels. The fact that no completely integrated manufacturing enterprise has been developed to date can be attributed, in part, to a lack of understanding of the scope and implications of CIM. The purpose of this paper is, therefore, twofold. First, the paper presents a meta-schema (called TRIAD) for multidimensional and multilevel integration of a manufacturing system. Second, on the basis of the proposed meta-schema, the paper develops a taxonomical framework for defining key integration issues in CIM system design and discusses critical research needs that exist in this area. It is hoped that this paper will serve as a road map for research efforts that will enable the emergence of comprehensive CIM systems.     

BUILDING THE POM CURRICULUM FOR A PRIVATIZING ECONOMY: AN EVALUATION FROM MANUFACTURERS‘ PERSPECTIVES

Manufacturing in Eastern European countries is in transition to open-market competition. One transitional issue is university education for operations managers from the perspective of business practitioners. Survey responses by 203 manufacturing professionals from 83 companies provide recommendations for operations management education at the University of Sibiu in Romania. The recommendations substantially reorient curricula that traditionally prepared students for professions in centrally controlled economies rather than for open-market competition. The redesigned curriculum has an educational advantage in its integration of production, marketing, and engineering, all under one college of engineering. However, the curriculum is inconsistent with some tenets of quality management and just-in-time production. Also, survey data imply a need for coverage of competitive manufacturing strategy that, currently, is underrepresented in the curriculum.     

QUANTIFYING THE IMPACT OF INVENTORY HOLDING COST AND REACTIVE CAPACITY ON AN APPAREL MANUFACTURER'S PROFITABILITY

This paper was motivated by the operational problems faced by Northco, a school uniform manufacturer in the Northeastern United States. Northco was facing high working capital costs while also incurring high stockout and markdown costs. This paper models the impact of inventory holding cost and reactive capacity on Northco's targeted understocking and overstocking cost and offers a solution methodology for such problems. We quantify the impact of varying inventory carrying costs (and hence, high working capital costs) on stockout costs and the value of additional capacity. Our results illustrate that apparel manufacturers with high working capital costs, and hence high inventory carrying costs, should target higher stockout costs and achieve lower capacity utilization. The results presented have application beyond Northco because high working capital cost is endemic to many supply chains.     

TOTAL QUALITY MANAGEMENT: A LITERATURE REVIEW AND AN AGENDA FOR FUTURE RESEARCH

Total quality management (TQM) is a revolutionary approach to effective management. The research in TQM has emerged from practical needs of organizations embracing this philosophy, and the literature is mostly conceptual and practitioner-oriented. There is a lack of sound theoretical framework classifying past efforts and guiding future research. To fill the void, a study of the published TQM literature is undertaken. A review, classification, and analysis of the research in TQM spanning the last two decades is presented. A total of 226 TQM-related articles are identified from 44 refereed management journals published from 1970 to 1993. These articles are then classified and analyzed using the following two-dimensional scheme: (1) article orientation (conceptual, case study, empirical, analytical, simulation, and overview) and (2) article focus using the Malcolm Baldrige National Quality Award criteria. The analysis of the literature presents pertinent developments in each of the seven criteria. In addition, it provides future research directions as well as a ready reference of the TQM literature. The suggestions for research should guide future developments in the TQM field and help transform it into a formal discipline.     

DRIVERS OF INTERNET PURCHASING SUCCESS

The development of the Internet as a business tool over the past 5 years has been phenomenal, causing a period of chaos and creative destruction. E‐commerce has been hyped as a catalyst for vast streamlining of the supply chain. Yet, in a time of such phenomenal change, the focus tends to be on the large picture. Many details of how a new technology should be or is employed tend to be unknown or ignored. However, as the technology matures and stabilizes, one of the primary factors that separate winners from losers is the way in which the technology is implemented and operated on a daily basis. This study examines the ways in which companies utilize the Internet to streamline their purchasing process. A survey of 416 customers of a major Internet retailer of commodity office supplies reveals important relationships between web site design, employee work environments, Internet strategy, and purchasing performance. Our sample of companies consists of firms that have ordered office supplies at least once using the Internet. Our data indicate that companies do realize performance benefits from utilizing the Internet as a purchasing tool. Furthermore, the data suggest factors that facilitate purchasing process improvements. These factors can be utilized by both buying and selling companies to improve their proprietary processes to maximize the benefits of e‐commerce as a purchasing tool.     

An analytical tool for managing environmental risks strategically

In this article, Dr. Robert Repetto and Duncan Austin of the World Resources Institute present an approach for analyzing and communicating the financial implications of a company's environmental exposures through an empirical application to companies in the U.S. pulp and paper industry. The methodology is based on a sequence of steps: A) identifying salient impending environmental issues; B) developing multiple scenarios for each issues; C) assessing the company (or facility's) exposure under each scenario; D) estimating scenario-specific financial impacts; E) constructing overall risk measures; and F) analyzing options to minimize risks or maximize advantages.Within the pulp and paper industry there are varying levels of exposure and associated risk from environmental issues. For some companies, environmental issues will have little or no impact on financial performance, while for others, they could be a source of increased value. For others, environmental issues may entail costs that approach fifteen percent of a company's current valuation. In environmentally sensitive industries, the approach presented can help companies to benchmark themselves against rivals, identify major sources of environmental risk and opportunity, assign financial values to risk-mitigating options, and communicate their environmental strategies to the investment community and other stakeholders.     

WHY FIRMS SEEK ISO 9000 CERTIFICATION: REGULATORY COMPLIANCE OR COMPETITIVE ADVANTAGE?

Proponents of iso 9000 certification claim that it is a low-cost signal of a firm's commitment to quality and a meaningful component of total quality management (TQM). Critics claim that it has little relation to TQM and is a tariff on international trade. We test the hypothesis that firms obtain ISO 9000 certification to comply with government and customer demands by estimating a probit model of the certification decision. The results support the view of proponents of ISO 9000. After controlling for regulatory and customer pressures to obtain ISO 9000, other factors related to quality management and quality-based competition explain the adoption decision.