----------------------------------------------------Business Index & ASAP------ AUTHOR(s): Juran, J.M. TITLE(s): Quality woes: still more must be done to make "made in USA" a symbol of world-class quality. (chemical industry) (Chemical Strategies '94) Summary: US companies, including chemical companies, are still behind in quality control strategies. However, the US can resume its position as a top quality producer by adapting general Total Quality Management models to specific industries. The chemical process industry sometimes relies too heavily on statistical process control as a Total Quality Control technique. Fitness for use is not necessarily achieved through conforming to specifications. Improved relations with suppliers can be achieved through total organizational management. Chemical Marketing Reporter pSR6(1) July 18 1994 v246 n3 DESCRIPTORS: Chemical industry_Quality control Total quality management_Usage The United States still has a quality crisis. Despite all that has been written and discussed about quality, only a relative few companies, including chemical companies, have responded successfully to that crisis. While many companies have tried to attain world-class quality, most have failed. Yet, we can analyze the successes of the quality movement and learn from them. The US can again be synonymous with quality around the world. Many industries, such as the chemical process industries, require that the general Total Quality Management model be adapted to their specific environments. The CPI has some unique needs in that respect. The industry was among the first to apply statistical process control, using well-known mathematical techniques. The result is an often excessive reliance on SPC alone to define Total Quality. There is a general lack of understanding that conformance to specification does not necessarily equate to fitness for use. Meeting specifications is all too often accomplished by swinging the process to wide extremes within the lot-average control chart. Costs of poor quality remain hidden as a result of the ability to blend off-specification material ("rework") back into the process, or to sell off-specification product into a less-demanding use at virtually full price. The process industries' trend is to a highly educated work force with self-directed worker teams actually running the process. Chemical plants are rarely self-contained, autonomous divisions; thus, working cross-functionally for quality improvement becomes a major obstacle. Improvement projects tend to be operationally oriented--too narrow a focus for an organizational quality effort. In the chemical process industries, producers are accustomed to working with clients very closely, but traditionally, there is a general lack of working as closely with suppliers. Managing the organizational--or total--quality effort addresses that weakness. In general, Total Quality Management offers the chemical industry the unique opportunity to improve quality while lowering costs, thereby preserving markets. This enhances competitiveness in an industry where many chemical operations produce commodities, exerting a tremendous price pressure on products. In seeking to solve the specific quality problems of the CPI, it is useful to review the history and fundamentals of the loss in quality in US products. Several factors contributed to the US quality decline. Of course, there was the revolution in Japanese quality, which took Western competitors by surprise, reduced our market shares, contributed to a decline in our balance of trade and affected our job market. Among other factors is the general growth of international competition and the rise of multinational companies. A more subtle contributor has been the growth of industrialized society. Industrialized societies depend on technological products and so require failure-free performance to avoid disruption in their lives--a phenomenon I call "life behind the quality dikes." Each of the causes is here to stay. Each is irreversible. Yet, if we could create a massive counter-revolution in quality, we could reverse our loss of share-of-market and the associated export of jobs. At the outset of the Japanese challenge, our CEOs did not respond to the crises. The prevailing view was that Japanese competition was in price, not in quality. Our companies saw no need to change their ways of attaining quality. The affected companies typically directed their energies to restricting imports or establishing manufacturing in low-labor-cost areas. Our companies were slow to grasp the nature of the Japanese challenge. What is more, there was no executive reporting system that measured corporate performance relative to quality. Lacking such measure, our CEOs failed to see the essential early warning signals. Until the late 1980s, most of our CEOs were unaware that their loss of market share was due to a new level of competition in quality and an associated rise in customer expectations. So, the quality crisis deepened until losses in share of market demanded an explanation, as well as responsive action. At first, responsive action was limited to companies that had been severely hurt. During the 1980s, the response broadened. Most of those initiatives failed to reach their goals. A relative few companies, however, did attain world-class quality in the 1980's, and started a counter-revolution. What did those successful companies do that was different from prior practice? While there were some differences in company approaches, the commonalities were extensive: Revision of Priorities. Quality became the top priority. Customer satisfaction became the major focus in company relations. Top-down Management Training. The companies trained their entire management hierarchy in managing for quality: planning, quality control, and quality improvement. Quality-centered Goals. They enlarged their business plans to include quality-related goals--such as improving customer satisfaction, meeting competitive quality, reducing the cost of poor quality and improving key processes. This is critical for integrating the concept of managing for quality with managing the business. Benchmarking. They used benchmarking as a means of setting ambitious quality goals that were attainable. Deployment. They used a deployment process to identify the action needed to meet goals. They also assigned clear responsibility for taking those actions and provided the needed resources. Quality Improvement. They undertook to improve quality at a pace far beyond prior practice. This translated to thousands of improvement annually-- a revolutionary pace. The improvement extended to business processes as well as factory processes. Measures of Quality. They developed new measures to provide executives with essential information on quality. Financial measures--such as sales, profits, return-on-investment--have been commonplace in business, but other measures of customer satisfaction and competitive quality have been lacking. Management Review. The companies established regular executive review of performance against the quality goals, paralleling the review of performance against financial goals. Beyond these common responses, some companies adopted additional strategies: Self-Audits. Self-audits are usually conducted against the criteria of the Malcolm Baldrige National Quality Award. They can be used identify the strengths and weaknesses of division and support services and aid in decision-making. In some companies, internal awards are also based on the audit findings. Partnerships with Suppliers. They shrank their supplier base by about two-thirds. To make this almost exclusive reliance work, both buyer and seller must be willing to share information and participate in joint planning and improvement projects. Managing the Quality of Business Processes. Often, key business processes lack clear "ownership" of the overall process. Many quality problems can be traced to business, rather than factory processes. Dramatic improvements can be made in customer service, error rate, productivity, time cycle, costs, and the like. Form Self-directing Teams. This aims to train and empower workers to run processes with minimal need for supervisors or specialists such as process engineers. Among the consequences: Extensive training is required; jobs cross functional lines; jobs become team jobs; workers become team members. The most decisive element in the success or failure of quality initiatives is the extent to which the CEO provided personal leadership. But if we urge the CEO to lead, to be committed or involved, the stage is set for misunderstanding. To clearly grasp the CEO's role, look at CEOs of successful companies. Several characteristics emerge (1) The CEOs personally participated in the process of setting the quality goals and approved the final goals. (2) They participated in the deployment process and approved the resulting action plan. (3) They approved allocation of needed resources. (4) They assigned responsibility for establishing the new measures needed to quantify the quality goals and performance. (5) They participated in the review of quality performance. (6) They personally participated in recognition ceremonies. (7) They participated in revising the required system to make it responsive to the changes imposed by the quality initiative. In effect, the CEO's acted as though these roles were non-delegable. We can examine the lessons learned so far and adapt them to developing situations. Pricing and other competitive pressures are a fact of life for the chemical industry, as for all of business and industry. A rapid expansion of international competition in quality, attributable to a convergence of forces, is taking place. Multinational companies are proliferating, competing increasingly on a global basis. Quality is one form of this competition. Regional market areas are emerging. Each is a blow to protectionism and a spur to competition. The new emphasis on protecting the environment is an extension of life behind the quality dikes. From these trends, I suggest that as the twentieth century has been the century of productivity, the twenty-first century will be the century of quality. During the next century, the label "Made in the USA" will again become a symbol of unsurpassed quality. J. M. Juran is chairman emeritus of the Juran Institute, based in Wilton, Conn. He holds a bachelor's degree in electrical engineering from the University of Minnesota, a doctorate in law from Loyola University, and honorary doctorates from Stevens Institute of Technology, the University of Minnesota, Rochester Institute of Technology, and the University of New Haven. Frank M. Tedesco, vice-president and head of Juran Institute's Chemical Process Industries' Team, contributed to this article.