izing Quality Management at BBAM Master  of  Science  Thesis     in  the  Quality  and  Operations  Management  Programme   AZARAKHSH V. MIRFACIHI BOJAN BARIC Department of Technology Management and Economics Division of Operations Management CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden, 2013 Report No. E2013:076     MASTER’S THESIS E2013:076 Quality Management at BBAM AZARAKHSH V. MIRFACIHI BOJAN BARIC Academic Supervisor MAGNUS PERSSON Industrial Supervisor R. HALLBERG C. GRANQVIST Department of Technology Management and Economics Division of Operations Management CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2013   Quality Management at BBAM AZARAKHSH V. MIRFACIHI BOJAN BARIC © AZARAKHSH V. MIRFACIHI & BOJAN BARIC, 2013 Master’s Thesis E2013:076 Department of Technology Management and Economics Division of Operations Management Chalmers University of Technology SE-412 96 Gothenburg Sweden Telephone: + 46 (0) 31-772 1000 Chalmers Reproservice Gothenburg, Sweden 2013   Abstract This master thesis has been carried out at Chalmers University of Technology as well as at BBAM during the spring of 2013. BBAM is the fictive name of an actual company that is market leading in Europe and has over 40 sales operations worldwide. Recently, BBAM has reorganized due to the growth of the organization, where improvement potential within the management of quality has been revealed. A consequence of the current Quality Management is the high number of quality flaws of products, discovered both internally and externally in the form of customer complaints. This master thesis purposes to identify the root-causes of these quality flaws as well as recommend actions in order to improve quality within BBAM. This has been done by a mixed method research, utilizing both a quantitative and qualitative strategy. The data collection for this study is hence mainly a mix between statistics and semi-structured interviews as well as company documents and observations. The utilized theory of this thesis is mostly in the field of Quality Management with emphasis on Total Quality Management. Additional theories utilized in this thesis are within product development and organizational communication. The empirical data and analysis indicate on several gaps between theory and the quality management of BBAM and it is concluded that there are several causes to the quality issues. These causes are within the areas of corporate strategy, leadership, culture & communication, product development and the practical quality work at BBAM. Two root-causes have been identified - the revenue based strategy and the fact that the organization has been growing too fast, creating a large organization with a small business culture. Both root-causes prevent standardizations and the organizational learning of BBAM, which is essential for successful Quality Management. The authors of this master thesis recommend BBAM to focus on standardizing processes and communication channels as well as providing time for PDSA cycles and learning. Subsequent recommendations include consistency between strategy and Quality Management, meaning that BBAM should shift strategic focus from revenues to cost and incorporate quality earlier in the value chain. Keywords: Quality, Culture, Leadership, Standardization Azarakhsh V. Mirfacihi & Bojan Baric Chalmers, Gothenburg 2013     Table of contents 1. INTRODUCTION   1   1.1. BACKGROUND   2   1.2. PROBLEM DESCRIPTION   3   1.3. PURPOSE AND RESEARCH QUESTIONS   4   1.4. SCOPE AND DELIMITATIONS   4   1.5. OUTLINE   5   2. METHODOLOGY   7   2.1. RESEARCH STRATEGY   8   2.3. RESEARCH METHODS   9   2.3.1. LITERATURE REVIEW   9   2.3.2. COMPANY DOCUMENTS   9   2.3.3. SEMI-STRUCTURED INTERVIEWS   10   2.3.4. INTERNAL BENCHMARKING   11   2.4. ANALYSIS METHOD   11   2.5. VALIDITY   11   2.6. RELIABILITY   12   3.THEORETICAL FRAMEWORK   13   3.1. QUALITY MANAGEMENT   14   3.1.1. TOTAL QUALITY MANAGEMENT (TQM)   16   3.1.2. DEMING’S 14 POINTS FOR MANAGEMENT   20   3.1.3. LEARNING ORGANIZATION   23   3.2. PRODUCT DEVELOPMENT   24   3.2.1. THE PRODUCT DEVELOPMENT PROCESS   24   3.2.2. BENEFITS OF AN EFFICIENT PDP   25   3.2.3. ISSUES WITHIN THE PDP   26   3.2.4. LEAN PRODUCT DEVELOPMENT   26   3.3. ORGANIZATIONAL COMMUNICATION   27   4. EMPIRICAL FINDINGS   30   4.1. MAPPING   32   4.2. IDENTIFYING   34   4.2.1. CORPORATE STRATEGY   34   4.2.3. CULTURE & COMMUNICATION   36   4.2.4. PRODUCT DEVELOPMENT PROCESS   38   4.2.6. QUALITY IN PRACTICE   42   5. ANALYSIS   45   5.1. CORPORATE STRATEGY   46   5.1.1 REVENUE-BASED STRATEGY   46   5.1.2. LACK OF UNDERSTANDING OF PERFORMANCE OBJECTIVES   48   5.2. LEADERSHIP   49   5.2.1. DISTANCED LEADERSHIP   49   5.2.2. INCONSISTENT LEADERSHIP   50     5.3. CULTURE & COMMUNICATION   51   5.3.1. LARGE ORGANIZATION WITH A SMALL-BUSINESS CULTURE   51   5.3.2. UNSTRUCTURED COMMUNICATION CHANNELS   53   5.4. PRODUCT DEVELOPMENT PROCESS   54   5.4.1. LATE CROSS-FUNCTIONAL INVOLVEMENT   54   5.4.2. DISPERSED RESPONSIBILITY   56   5.5. QUALITY IN PRACTICE   57   5.5.1. QUALITY BY INSPECTION   58   5.5.2. LACK OF STANDARDIZATION AND LEARNING   59   5.6. ROOT-CAUSE ANALYSIS   60   6. CONCLUSION & RECOMMENDATIONS   63   6.1. CONCLUSIONS   64   6.2 RECOMMENDATIONS   65   REFERENCES   67   APPENDIX A. THE ERROR-CODE MANUAL   I   APPENDIX B. QUANTITATIVE DATA OF CUSTOMER COMPLAINTS   II   APPENDIX C. INTERVIEW TEMPLATE   VI   APPENDIX D. ORGANIZATIONAL DESCRIPTION OF THE INTERVIEWEES   VII   APPENDIX E. AFFINITY DIAGRAM   VIII     1   1. Introduction “The intention was never to get this big”. These are the words of one of the founders of BBAM1 (Anderson, 2002). His business legacy is now market leading in Europe at market that is valued to hundreds of billions SEK (BBAM, 2013). However, the existing number of quality flaws generates high costs as well as customer dissatisfaction, threatening their leading position as Europe's largest manufacturer.                                                                                                                 1  BBAM:  Fictive  organization  representing  an  actual  organization.     2   1.1. Background Since the foundation in middle of the 20th century, BBAM has been a family owned enterprise, where the ownership is today distributed among children and grandchildren of the founders of the company (Anderson, 2002). Today, BBAM is the market leader in Europe, with sales operations in about 40 countries worldwide. BBAM became the market leader in the fall of 2012 after a number of successful actions, where one large strategic action particularly stands out - the acquiring of the today known BBAM GmbH 2010 and their two trademarks, one of their competitors in Germany. This acquisition has meant an increase in the number of production plants from six (all located in Sweden, where three are under the trademark of BBAM) to eight (BBAM, 2013). The growing business has, according to the organization of BBAM itself, aroused the need for reorganization, which has been the fact these last years. The reorganization itself has revealed to a greater extent that potential improvement areas across the organization exist. For the Quality department specifically, which has been in its present shape only for almost two years, it has been a dynamic transformation where it has been clarified that changes regarding working mentality are needed. An additional reason is the high number of quality flaws that is existent within BBAM, which exemplifies why the “fire-fighting”-mentality currently used within the department is not efficient enough. BBAM’s concerns with the produced quality flaws are both discovered within the organization of BBAM as internal rejections and by their customers in form of customer complaints. The number of quality flaws is currently a major concern at BBAM and more specifically the Quality department. The costs of customer complaints as well as internal rejections are as high as a couple of percent of the entire turnover (see figure 1). This has been the case until now, when a more cost-efficient approach is being implemented across the entire organization of BBAM. Figure 1. The cost of customer complaints in proportion to the turnover, adapted from BBAM (2013).   3   The task is not simplified by the general spread of quality flaws across a variety of production processes. BBAM monitors their production processes according to the produced output, where a primary division of eight product groups is made, meaning that similar products are categorized in the same group. BBAM has therefore acquired external help in order to specifically clarify which quality improvements that are needed. BBAM and the Quality department have also become aware of the need to have a standardized way of working, based on current literature, in order to create company-specific routines applicable throughout the entire organization. 1.2. Problem description There exist sufficient information about the produced quality flaws within the production processes. The available information is however not transformed into relevant data and utilized to manage and improve quality-flawing areas. Quality analyses are made on faulty premises, where the cost of the produced quality flaws is presented as milder than it according to general theoretical perspective really is. Further, no greater control of the stability of the production processes is existent, since the statistics compiled with regard to the amount of quality flaws in proportion to the successfully produced products is merely used to monitor the costs of the quality flaws. It is therefore needed to initially map the quality issues, since there is no existent data within the organization of this sort. The produced quality flaws are presumably consequences of more complex causes, which are the actual problematic areas. To exemplify, it is not enough to merely eliminate the symptoms of a disease, since there needs to be an effort towards eliminating the disease itself. Hence, in order to decrease the number of produced quality flaws, the underlying root-causes need to be identified. Therefore, an elaborated investigation of the actual problems occurring within business processes needs to be done in order to find the primary roots of the different quality problems. In order for BBAM to take actions upon the identified root-causes, there is a need of guidance towards eliminating those issues. It is therefore necessary to find improvement opportunities around those root-causes.   4   1.3. Purpose and Research questions The purpose of this master thesis is to identify root-causes for the current quality issues and, with respect to the root-causes, suggest improvements for the quality management at BBAM. With respect to the problem analysis and purpose, the following research questions need to be answered in order to fulfill the purpose of this master thesis: ● What are the quality issues at BBAM? ● What are the primary root-causes for the quality issues? ● How can the root-causes be reduced/eliminated? 1.4. Scope and delimitations The business concept at BBAM is to have the responsibility of the entire value chain from order to cash, with the natural exception of some minor supplying activities, which means that they control the entire process from raw material to finished solutions (BBAM, 2013). The complexity and decentralization of the entire process makes it hard, if not impossible with consideration to the set time, to map and analyze the entire chain and its supporting processes. Also, the statistical data implies that it is not necessary to expand the scope beyond operations, since almost all quality costs are originating from operations. The master thesis will therefore be delimited from the sales subsidiaries and will only focus on the actual processing processes within BBAM, which means that only the eight product groups produced by BBAM Production will be considered. The actual contribution from the sales subsidiaries to the quality costs is basically nonexistent, since no actual processing is taking place. Further, the focus on BBAM means naturally that no consideration will be taken to the sister company of BBAM, since it is not producing under the trademark of BBAM. The sister company is a separate corporate group, which acts on different grounds and values than BBAM. Additionally, since BBAM GmbH is currently undergoing a restructuring as part of the integration project currently in action, it would be unwise to try to involve the German production plants at the time of present. The acquisition of their German competitor did not take place a long time ago, which is why differences in production are still existent. These differences are of crucial matter, which requires a finished integration across the entire organization before involving data from the production plants in Germany. Since the integration project is based on the premises of adapting the German plants to the Swedish ones, it will not be needed to involve data from BBAM GmbH either. Therefore, the main focus of this master thesis will be on the three production plants in Sweden. To summarize, all organizational and thereby also geographical delimitations are marked red in figure 2, which illustrates the organizational chart.   5   Figure 2. Illustration of the organizational delimitations adapted from BBAM (2013). The initial emphasis of this master thesis (see subchapter 4.1.) is further merely focused on the customer complaints, where the internal rejections are not taken in consideration. This was purposely done, since customer complaints affect the organization to a greater extent. Due to a limited amount of time, a choice between customer complaints and internal rejections needed to be made, where it was regarded as more suitable to map the actual quality flaws that were distributed to the customers of BBAM. This choice enabled, in the opinion of the authors, a greater understanding of the needed improvements, since the scope of the customer complaints is on a higher hierarchical level than the internal rejections that are specifically managed by manufacturing. 1.5. Outline The report of the master thesis at hand will be influenced by the actual outline of the practical approach of the master thesis. The three phases of the master thesis, mapping - identifying - improving, are complemented with theoretical research. The methodology of this thesis is presented in chapter 2. The specific approach in collecting and analyzing data for this research is presented, where the strategy as well as the design of this thesis is explained. Further the utilized research methods are described in detail explaining how the data was generated. The theoretical framework is compiled in chapter 3 and consists of major theories and concepts that are fundamental for the master thesis. Additional theories are existent, but due to their minor impact on the master thesis there is no actual need of referring to them as a framework for the master thesis at hand.   6   The result relevant information collected during the master thesis is presented in chapter 4 as empirical findings. Irrelevant and non-representative information was omitted in order to concretize the results and ease the understanding of the master thesis at hand. The collected data that is presented in the master thesis is then analyzed in chapter 5 as analysis. This chapter refers to a comparison of the theoretical framework and the empirical findings in order to identify problems and evaluate improvement areas. This is further on concluded and recommended upon in conclusion & recommendations in chapter 6, where more of a holistic perspective is used than in the actual analysis that is chapter 5. To summarize, the overall outline in correlation with the practical approach is graphically illustrated in figure 3. To clarify, the two phases of theory are not identical, where they aim at intertwining the phases of the practical approach. Figure 3. The overall structure of the report, where every chapter is connected to the practical approach of the master thesis.   7   2. Methodology This chapter describes the methodology of this master thesis. The utilized strategy of this research is initially presented. It explains why a combination of a qualitative and a quantitative strategy has been utilized and the unique settings of having such a strategy. The chapter continues by explaining the choice of a case study as a research design followed by explaining the applied research methods used to collect data. A discussion of the validity and reliability of this research is further conducted, specifically explaining why external validation is difficult for this research. The chapter ends with presenting the utilized methods of analysis, explaining the use of an Affinity diagram and an Interrelationship diagraph.   8   2.1. Research Strategy There are two main perspective of classifying research strategies. Bryman & Bell (2007) categorize these research strategies of having either a quantitative or a qualitative research nature. A quantitative research is characterized as a “linear series of steps moving from theory to conclusions as well as exhibiting certain preoccupations, the most central which are: measurement, causality, generalization and replication” (Bryman & Bell, 2007). On the contrary, qualitative research tends to be more open-ended by having an “...inductive view of the relationship between theory and research, whereby the former generated out of the latter” (Bryman & Bell, 2007). Qualitative research includes “fieldwork” where the researchers physically go to the investigating area to observe and collect data from its natural setting (Creswell, 1994). With respect to the research questions, the earlier mentioned practical approach of mapping, identifying and improving was established for this thesis. The purpose of the practical approach was to start by mapping the external symptoms of the quality issues and research backwards in the value chain of BBAM, where an iterative approach was used between the different phases. This was intentionally done in order to gain a deeper as well as a broader perspective of causes and effects of the quality issues. In order to initially map the quality flaws, a quantitative and deductive strategy was adapted through collection and analysis of numerical data. However, the second and third phase of identifying root-causes of the quality flaws and improving them required a qualitative and inductive approach. There was a need to closely examine and understand the internal world of the organization in order to answer to the last research question. Therefore, a close connection with the people of the organization was necessary and was the most effective way to analyze internal issues. For this purpose the authors of this master thesis were mostly situated at the BBAM office. Considering the approach, this research consists of both a quantitative and qualitative strategy and follows the mixed method research of facilitation (Bryman & Bell, 2007). 2.2. Research Design The design of this research follows the nature of a single case study, were BBAM as a single organization is examined. The purpose of this design intended to provide an in-depth elucidation of the quality issues at BBAM Production. A case study also enabled an investigation to retain the holistic and meaningful characteristics of organizational and managerial processes (Yin, 1994). In order to reach to the root-causes, people within the organization needed to actively collaborate and participate in this research. A research approach involving company representatives has therefore been utilized throughout this study, suitable for both qualitative and quantitative methods. Consequently, with some of the research methods, data has been collected in   9   collaboration with people within the organization and analytical thoughts of these people have been considered for the analysis of this thesis. 2.3. Research Methods A research method is a systematic technique for collecting data (Bryman & Bell, 2007). This subchapter describes all methods used for this research as well as explains how the techniques were performed. 2.3.1. Literature review With respect to the field of study and the background of the authors of this thesis within quality sciences, literature with quality perspectives were mainly reviewed. Also considering the problem area, which covers quality research throughout a whole organization, this literature study was much focused on Total Quality Management. However, the initial conditions of this research, referring to establishing the problem area and focusing, contributed to unsure conditions when choosing further fields of literature. Additional literature was therefore iteratively reviewed based on the initial results of this research. As the focus of this thesis became more clear, additional literature were examined in fields of product development, organizational communication and knowledge management. In addition, literature on research methodology was necessary in order to shape this study. Various sources of information were utilized for collecting data, such as books, articles, journals and internal literature from Chalmers University of Technology. In order to find useful literature, different databases were used and above all databases connected to Chalmers Library. In addition, approved master thesis’s within the field of this study was reviewed. 2.3.2. Company documents Company documents with statistics of customer complaints have been a major source of data in order to map the quality flaws. These statistics have been in forms of Excel sheets generated by the Quality department with data initially reported from the Helpdesk department. These sheets contain data from 2009 until present and had the need to initially being sorted out. This was done through a matrix where error-codes of customer complaints matched each product segment of BBAM (see Appendix B). The matrix cells were then plotted in diagrams in order to visually map the distribution of errors over the different product segments. With the help of the diagrams, the authors could find the main sources of quality flaws and apply further methods within those specific areas in order to identify the root-causes. In addition, other internal company documents have been a part of the initial data collection phase. These documents consists of useful company information such as structures, information channels, databases, process maps etc., which have been helpful in understanding internal processes, behaviors and cultures of BBAM.   10   2.3.3. Semi-structured interviews Semi-structured interviews are a qualitative-data-collection method with open-ended questions. The interviewer has a list of questions only as a guide, as the open-ended questions can generate unexpected data that could change the sequence of the questions. In response to the change in flow, the interviewer may ask for additional or explanatory information that is not initially listed in the guide. The flexibility of this type of interviews enables in-depth understanding of the qualitative nature (Bryman & Bell, 2007). In order to cover as much reliable data as possible, this thesis conducted a total of 16 semi- structured interviews with people at different levels and positions. The needed number of interviews was determined by the time where new data was no longer received, which occurred after the 12th interview. However, the authors continued with four more interviews just in case and determined that the amount of data collected was sufficient for answering the research questions. The categorization of the interviews was based on the organizational position of the interviewees (for further description, see Appendix D). Each interview started with the authors explaining the aim and purpose of this thesis for the interviewee, followed by questions (see Appendix C) divided into categories depending on the position and the organizational responsibility of the interviewee. If the interviewee did not understand the questions, deeper explanation of the questions was made followed by sub-questions. The answer of the sub-questions did then answer the original question. As a complementary question, all interviewees were asked to freely speak of whatever he or she thought was worth to mention considering the subject of the questions, which enabled additional input of data that was not considered before the interview. It is important to pinpoint that classified and sensitive information from BBAM was deliberately not directly presented in the report, with the purpose of not jeopardizing the reputation of the interviewees and the brand of the company, even if all relevant information was to some degree presented in order to ensure the correct foundation for the final recommendations. The semi-structured interviews resulted in a large amount of unorganized data, which needed to be organized to enable further analysis of the data. For this purpose, an Affinity diagram2 was used. The authors conducted the diagram by using visual components in forms of post it-notes. On these notes, data from the semi-structured interviews was written and the notes were then gradually structured from the bottom and up into meaningful categories. These categories became the structure of the empirical findings and the foundation for the analysis. A visual illustration of the results from the Affinity diagram conducted in this thesis is presented in subchapter 4.2 as well in Appendix E in an extended format.                                                                                                                 2 Affinity diagram: Brainstorming tool used to categorize ideas and data into groups, based on their natural relationship (see Appendix E).   11   2.3.4. Internal benchmarking Internal benchmarking refers to a local investigation within an organization, comparing similar operations, activities, departments or functions with the purpose to map the homogeneity of the organization. This gives the opportunity to identify improvement areas and best practices within a common environment (Reider, 2000). In this case, the internal benchmarking was realized through meetings and interviews with people at different levels in the hierarchy and people working in different geographical locations (different manufacturing plants). The purpose was to identify improvement opportunities by studying the different perspectives of the same organization with respect to the product development process and the Quality department. 2.4. Analysis method The analysis of this thesis is based on the collected data from the research, consisting of quantitative data from statistics as well as the qualitative data from semi-structured interviews. First, the quantitative data was screened and analyzed in order to effectively collect and analyze the qualitative data. For this purpose, a univariate analysis has been conducted and is presented in diagrams. The advantages of diagrams are that they are easy to interpret and understand (Bryman & Bell, 2007). A pie chart was specifically utilized as it displays the relative size of the different categories, which was a useful guidance towards the main problem area. The output from the quantitative analysis was then used to form the qualitative research and analysis. The structure from the Affinity diagram was used for the empirical chapter as well as the analysis chapter. However, the Affinity diagram does not identify any synergies between the data conducted. In order to analyze the data, the relationship between the discovered quality issues needed to be identified. For this purpose, an Interrelationship diagraph3 was used where the analyzed quality issues from the Affinity diagram were evaluated in correlation with each other in order to identify the root-causes of the problems. The result of this method is illustrated in subchapter 5.6. 2.5. Validity The definition of validity varies among different authors within research methodology. Bryman & Bell (2007) define validity in two perspectives, where the degree to which findings can be generalized is classed as external validity, and the degree of congruence between the researcher’s observations and theoretical ideas is internal validity. Mason (1996) means that validity is whether if you are observing, identifying or measuring what you say you are. As this research is a case study where the results are based on the organizational environment at BBAM it is difficult to generalize the results, hence external validity could be non-existent.                                                                                                                 3 Interrelationship diagraph: A tool that shows all the different relationships, which makes it easy to isolate the factors that are driving the other symptoms and factors (see figure 18).   12   However, there are some attributes that can be generalized for other contexts within the BBAM environment. The approach of this research and the utilized methods are adapted to fit other processes of BBAM. Hence, these methods can be transferred to other improvement areas within the organization, which is a transferability that could be considered as internal generalization. Furthermore, there is a risk of getting affected by the company environment when doing case studies. Bryman & Bell (2007) explain this, as “going native” and that it could be problematic to evaluate the degree of how much the authors have been influenced. In order to prevent this from happening, the authors have taken a professional approach when doing this research. This means that evaluations of the authors’ findings have been done in an objective environment in order to not be affected by the BBAM climate. 2.6. Reliability The reliability of this thesis can be discussed upon the literature base as well as the data collected. Regarding the literature, the authors of this thesis have been searching for multiple sources of information in books and articles in order to find valid facts. Information coming from only one source has hence been regarded as less valid and has not been utilized for the analysis of the collected data in order to not jeopardize with the verifiability. The internal reliability of this thesis is based upon the data collection and is considered to be high. Interview questions were understandable and all interviews followed similar guides. However, as the interviews were held at three different geographical locations, local factors such as culture and personal networks may have affected the interview outcome. In order to handle this, an “inter-observer consistency” approach have been followed, which refers to the authors’ agreeing on what they observe and together evaluate the current situation of the organizational environment. Finally, as this research is done within a unique organization at a specific period of time it is impossible to generate the same social settings at another time (Le Compte & Goetz, 1982). Hence, the external reliability of this study can be considered as non-existence.   13   3.Theoretical framework The theoretical framework consists of two major sections - Quality Management and Product Development - where Quality Management is the main part with Product Development bringing up complementary theories, due to empirical reasons, needed to include for the analysis. Within the Quality Management section there is first an introduction of the basic quality management approaches that exist. The introduction leads further on into a detailed description of Total Quality Management (TQM) and its cornerstones and finally into a graspable management approach in the form of Deming’s 14 points for Management. The general Quality Management framework was needed in order to acquire a greater understanding of the current quality issues at BBAM, which further on needed to be specified into a detailed methodology when a focus-area was identified. In order to do a well-detailed and accurate analysis, the detailed methodology needed to address the current underlying issues responsible for the quality issues, where the methodology of TQM was regarded as a good and sufficient match. To additionally be able to create more graspable and action-based suggestions, Deming’s 14 points for Management were chosen in order to show and inspire how a success-recipe is built.   14   3.1. Quality Management The concept of quality has through history been differently defined by gurus and experts in the field of Quality Management - from Juran’s “Fitness for use” (Juran & Godfrey, 1999) to Deming’s “Quality should be aimed at the needs of the customer, present and future” (Deming, 2000). The interrelation between the actual meaning of the word quality and the management of quality is by Juran & Godfrey (1999) described through two alternative paths towards higher quality: ● Features of products. The actual meaning of quality is oriented to income, where product features met customer needs and thereby provide customer satisfaction. In this sense, the purpose of such higher quality is to hopefully increase the income through higher customer satisfaction. This alternative however requires continuous investments in order to continuously be able to provide better and more quality. Higher quality means therefore in this sense “higher costs” (Juran & Godfrey, 1999). ● Freedom from deficiencies. Quality in the sense of freedom from deficiencies, means the freedom from errors that require rework or errors in customer dissatisfaction, customer claims etc. This alternative towards higher quality emphasizes on costs, where higher quality usually “costs less” (Juran & Godfrey, 1999). Quality as a concept has changed with consideration to time, which exemplifies the dynamics of the field at hand (Deming, 2000). Bergman & Klefsjö (2010) describe the dynamics of quality as the four phases of quality movement, where an organization’s quality working mentality is described through the alternative phases to ensure quality (see figure 4). This illustration is no historically absolute practice of how the perception of quality has changed, but more of a possible development path that is based on the historical development in western countries. Figure 4. The four phases of quality movement, adapted from Bergman & Klefsjö (2010).   15   Quality inspection is a compilation of activities that take place after the actual production, where finished products are checked and defective units either scrapped or reworked. Quality control on the other hand, focuses primarily on the production process rather than the actual product that is processed. The underlying idea behind quality control is that defects on products originate from specific production processes, which need to be improved in order for the defects to be avoided in the future. Another approach exists, where the actual focus of the approach is on the process before the production itself - Quality assurance. Quality assurance is somewhat of a quality management system that primarily focuses on realizing efforts before the actual products are started being produced. This is achieved through the formulation and gathering of routines for how to administer and manage the production in order to secure quality. The so far mentioned phases have different approaches of “managing” the actual manufacturing process, where the process before the actual manufacturing - understanding the needs of the customers - is not a primary focus. The final phase - Total Quality Management (TQM) - comprises quality inspection, quality control as well as quality assurance and adds an additional focus on the process of systematically understanding the needs of the customers (Bergman & Klefsjö, 2010). The four phases of quality movement correlate, in the opinion of the authors, directly to how quality costs increase with consideration of when changes to the design of the product are occurring. Defects that are discovered early on in the production process are less costly than those that are discovered during and after the actual production, which is illustrated in figure 5 (Bergman & Klefsjö, 2010). Figure 5. Relative cost of a design change, adapted from Bergman & Klefsjö (2010).   16   It is therefore wise to secure the quality of the product as early as possible in the production process. Quality is demanded from and eventually created for the customers, as Deming (2000) so cleverly states it in his definition of quality, and should preferable be managed through the organization’s entire production process. 3.1.1. Total Quality Management (TQM) There are, according to Bergman & Klefsjö (2010), many descriptions of the TQM concept, but few definitions. Deming (1994), hailed as one of the inventors of TQM, did himself never use the term TQM. In fact, Deming (1994) described TQM as merely a buzzword that carried no meaning, since it was merely an umbrella concept which all previous quality concepts were gathered under as. Bergman & Klefsjö (2010) define however TQM as “a constant endeavor to fulfill, and preferably exceed, customer needs and expectations at the lowest cost, by continuous improvement work, to which all involved are committed, focusing on the processes in the organization”. To concretize, TQM is a management philosophy that aims to continuously improve product or service quality (Ahire et. al, 1995), where an emphasis lays on a combination of values, tools and methodologies to attain higher customer satisfaction with less resource consumption. To succeed with TQM, there needs to be an improvement work that is based on the values illustrated in figure 6, where these values need to be interrelated as well as strive towards a comprehensive goal (Bergman & Klefsjö, 2010). The values, also known as the cornerstones, of TQM are hereby more in detail described: Figure 6. The cornerstones of TQM, adapted from Bergman & Klefsjö (2010).   17   Focus on customers. Focusing on customers emphasizes on understanding what customers want and need in order to systematically work towards fulfilling these needs and expectations when developing and manufacturing a product. This means as well that efforts are put on understanding customers’ subconscious needs, which means that customers’ actual needs are targeted and not only the needs the customers think of and try to communicate (Bergman & Klefsjö, 2010). It is important to not forget the dynamics of quality, where the management needs to be able to adapt and respond to changes in needs and expectations from customers (Deming, 2000). It is as well crucial to not forget the internal customers, even if TQM has a strong focus on the external customers. By providing the employees with better opportunities of performing at a good level, both for the organization and the individual, it creates a foundation for satisfying external customers in the long perspective (Bergman & Klefsjö, 2010). Base decisions on facts. Decisions need to be based on facts and information that is gathered, structured and analyzed, where there is no room for interpretation or random action. This requires knowledge of and the ability to distinguish between “natural” and causable variation (Bergman & Klefsjö, 2010). It is therefore important to have a general understanding of the organization and its processes in order to have the ability of determining what can and cannot be changed. Every decision needs to be based on factual data that, if requested, can be communicated to every stakeholder. The importance of having fact-based decisions means as well that old guidelines and routines need to be continuously reviewed in order for them to always be up to date. New findings or new insights could basically make the old guidelines and routines irrelevant, which could in the long perspective damage the organization if not discovered on time. Traditionally used guidelines and routines need to be compared to new information and new facts in order to examine their sustainability. Focus on processes. Most activities within an organization can be regarded as processes. Bergman & Klefsjö (2010) describe a process as “a network of interrelated activities that are repeated in time, whose objective is to create value to external or internal customers”, which basically means that a certain input, information or material, is transformed into a certain output. The process view increases awareness of how well specific operations satisfy the needs of the customers. It additionally regards issues and problems not as unique, but instead regards them as information of how stable a process is (Bergman & Klefsjö, 2010). Indications of how stable and how well a process is performing is crucial in order to have fact-based foundation of areas that need to be improved. Improve continuously. Deming (2000) describes the dynamic nature of quality, where expectations and needs of customers change over time. This pressures organizations and challenges their ability to adapt to new circumstances. It is therefore crucial to continuously work with quality, which is justifiable from a cost perspective as well (Bergman & Klefsjö, 2010). Higher quality can be achieved through cost-efficiency, which Juran & Godfrey (1999) as well state. The basic rule of continuous improvements is that “there is always a way to get   18   improved quality using less resources” (Bergman & Klefsjö, 2010). Further, a continuous evaluation of one’s performances, both good and bad, needs to be existent (Garvin, 1993). Mistakes occur, but organizations that manage to turn them into assets outperform competitors who do not. A competitive advantage is created if one’s quality is continuously evaluated and, when needed, improved. A suitable and often used tool of continuous improvement work is the PDSA cycle - Plan, Do, Study, Act (see figure 7). The PDSA cycle is usable both as a proactive and a reactive tool, where its usability is applicable to developments of processes as well as to processes in need of improvement (Bergman & Klefsjö, 2010). Figure 7. The PDSA cycle, adapted from Bergman & Klefsjö (2010). Let everybody be committed. To create the impression of the employees being a vital part of the organization, there needs to be an environment where opportunities for active participation in decision-making and improvement work exists (Bergman & Klefsjö, 2010). Carlzon (1987) pinpoints three major elements to stimulate participation - communication, delegation and training. This is exemplified, according to Carlzon (1987), through an anecdote where two stonemasons, with exactly the same work task, were asked about what they were doing. While one answered that he was squaring granite blocks, the other one answered that he was helping to build a cathedral. A sense of professional and personal pride needs to exist with one’s work in order for the employee to feel committed and as a vital individual for the organization. This requires that information is communicated to the employees as well as that responsibilities are delegated to them. Otherwise, an individual that does not have the needed information or authority cannot on personal initiative take responsibility (Carlzon, 1987). Bergman & Klefsjö (2010) describe the two possible scenarios - a vicious and a good circle - to exemplify the difference between a committed and uncommitted workforce, which is illustrated in figure 8.   19   Figure 8. A vicious (to the left) and a good (to the right) circle with commitment management, adapted from Bergman & Klefsjö (2010). Committed leadership. It cannot be emphasized enough how important it is to have a committed leadership, practiced at all levels of the organization, that strives towards a unifying goal that everybody within the organization can relate to (Bergman & Klefsjö, 2010). Spenley (1995) describes committed leadership as an absolute necessity when adopting quality improvement processes, where the quality of management directly affects the quality of the business (see figure 9). It is essential that the leadership radiates confidence and trust towards one’s organization and employees in order to inspire the employees to perform well and strive for more, something that figure 8 as well illustrates (Bergman & Klefsjö, 2010). Figure 9. Illustration of the importance of a committed leadership, adapted from Spenley (1995).   20   Golhar & Kiella (1997) mean that leadership starts with sharing the vision of the corporate business. It is essential to maintain homogeneous individual and organization goals at all operational levels. This phenomenon is illustrated in figure 10, which explains that top management is clearly unified with the corporate vision and further down in management levels the less understanding and commitment there will be of the corporate vision. A critical management concern is hence identifying the factors on each level that will align clarity and commitment at unity for all employees at all operational levels. Figure 10. Illustration of the diversified clarity and commitment to vision depending on the layer of management, adapted from Golhar & Kiella (1997). 3.1.2. Deming’s 14 points for Management Most of the central ideas of TQM originate from the first edition of Deming’s book “Out of the crisis” (1986), which deals with the transformation the US industry needed to go through to handle the fierce global competition in the 1980s (Deming, 2000). Deming (2000) revolutionized quality management by primarily emphasizing on the people within the organization instead of the products in order to create/assure quality. This is summarized as Deming’s 14 points for management, which is, in the opinion of the authors, a more graspable and action based form of TQM (Deming, 2000): 1. Create constancy of purpose for improvement of product and service. A short-term profitability focus and too much concentration on day-to-day problems are two of the biggest obstacles to succeed in the long perspective from the view of quality and profitability. Investments for the future in product and process development need to exist in order to secure for the future. The organization will otherwise head towards severe problems, even if the short-term requirements for profitability will easily be met (Bergman & Klefsjö, 2010).   21   2. Adopt the new philosophy. The view on quality needs to change from a reactive “fire- fighting”-mentality of work to a proactive concept built on systematic planning and continuous improvement of all processes (Bergman & Klefsjö, 2010). 3. Cease dependence on inspection to achieve quality. Eliminate the need for quality by building quality into the product in the first place (Deming, 2000). Only by performing inspections, the organization creates expectations of that quality problems could occur (Bergman & Klefsjö, 2010). 4. End the practice of awarding business on the basis of price tag alone. Instead, minimize total cost by working with a single supplier. Too often today, the Purchasing department of an organization makes the suppliers compete on price, where the selected supplier is the one who matched the requirements at the lowest price. However, this kind of selection is contradicting to the requirements of quality and dependability of today. The actual purchasing cost could be far exceeded by the total cost resulting from inferior goods from the supplier with the lowest price. Therefore is it favorable to build long-term relationships with single suppliers for every item, where a cross-organizational effectiveness could be achieved (Bergman & Klefsjö, 2010). 5. Improve constantly and forever every process for planning, production and service. The importance of continuous improvements cannot be emphasized enough in order to manage the dynamic nature of quality (Deming, 2000). 6. Institute training on the job. The possibility of mistakes occurring increases naturally with ignorance, which strongly should be worked against. If people within an organization are aware of what is expected and the outcome of actions, then mistakes could be avoided (Bergman & Klefsjö, 2010). 7. Adopt and institute leadership. The significance of leadership is unquestionably one of the most important parts of a successful transformation (Deming, 2000). 8. Drive out fear. An employee that fears that his employment is jeopardized, if he asks questions or pinpoints improvement areas, is a non-wanted employee since he is probably not doing a good job. Fear cripples improvement potential, since people do not want to take initiative due to fear of managers, colleagues etc. This leads to opportunities that are missed for the organization to utilize the know-how4 within the organization (Deming, 2000). 9. Break down barriers between functions. Many of the occurring quality defects of today are due to lack of communication within an organization, where no thorough identification of the                                                                                                                 4 Know-how: Knowledge and skills that are part of the human capital and are useful for the organization.   22   internal customers has been made (Deming, 2000). The process view however has the ability to prevent this happening, if it is properly utilized and used. To exemplify, a product is always developed to primarily meet the requirements of the external customers, which could be problematic for the actual manufacturing process if the needs of the internal customers are not as well taken in consideration. Different functions often strive to primarily optimize their own work, which could be contradicting to the comprehensive goal. Therefore is it crucial to have an open and encouraged communication across all functions of the organization, where the primary goal of is the overall and comprehensive goal (Bergman & Klefsjö, 2010). 10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Bergman & Klefsjö (2010) describe it literally as “less talk and more shop”. Ambitiously planned campaigns with pep talk and slogans are effective only for a short time, which rapidly changes when an obstacle occurs. Quality defects are mostly the cause of inferior processes and lacking systems, not employee’s lack of performing well at the job. It is therefore ineffective to try and boost the employees’ satisfaction through vague and too general slogans (Bergman & Klefsjö, 2010). 11. Eliminate numerical quotas for the work force and numerical goals for management. Numerical quotas and goals decrease productivity, since it only creates anxiety and pressures the employees. The actual measuring and controlling should be on the various processes within the organization and not on the employees (Bergman & Klefsjö, 2010). 12. Remove barriers that rob people of their right to pride of workmanship. It is the management’s role to create a work situation, where people are encouraged to take own initiative for continuous improvement and development. This requires that people are aware of the overall requirements from the customers, in order to understand one’s influence, and that own reflections of owns performance are encouraged (Bergman & Klefsjö, 2010). 13. Institute a vigorous program of education and self-improvement. Continuous improvements are needed, where room for personal development needs to always exist. Utilization of the know- how within the organization needs to be existent, but this means as well that the organization needs to create possibilities for individuals to advance on a personal level in order for the organization to continuously be able to develop internally (Bergman & Klefsjö, 2010). 14. Put everybody in the company to work to accomplish the transformation. An organizational culture can be a legacy that by tradition has become a synonym with the organization itself. This needs to be changed, where the management has to take vigorous steps to encourage work on changing the culture. To accomplish this there needs to be an overall organizational involvement and commitment that strives for change (Bergman & Klefsjö, 2010).   23   3.1.3. Learning Organization Another key point in TQM is for the organization to have a systematic way of learning. According to Golhar & Kiella (1997), learning is a process that requires actions to be analyzed and interpreted with respect to outcomes in order to synthesize appropriate and suitable response strategies. Garvin (1993) agrees and defines a learning organization as skilled at creating, acquiring and transferring knowledge as well as modifying its behavior with respect to new knowledge and insights. Garvin (1993) further on identified five characteristics of a learning organization: ● Systematic problem solving ● Experimentation with new approaches and ideas ● Learning from a company’s own experience and past history ● Learning from experiences and best practices of others ● Transferring knowledge quickly and efficiently throughout the organization In order to create a learning organization, leaders must not only be teachers, but also designers and stewards. Hence, top management has a crucial role in creating an organizational environment that enables learning (Senge, 1990). Garvin (1993) suggests some initial steps in order to create such an environment, emphasizing on providing time for the purpose. He means that learning is difficult when in a rush as it tends to be driven out by the pressure of the moment. Only if top management explicitly liberates time for employees to reflect and analyze upon experiences, organizational learning will occur on a frequency. Garvin (1993) continuous by explaining how internal boundaries prevents communication and consequently precludes learning. Top management should therefore put efforts in opening up boundaries in order to reinforce organizational learning. Once top management has created a more supportive and open environment, they can continue by creating learning forums. These forums are programs or events that can take different forms, but all intend to explicit learning: ● Strategic reviews. Examining the change in competitive environment as well as the product portfolio, technology and market positioning. ● Systems audits. Review the efficiency and health of cross-functional processes and delivery systems. ● Internal benchmarking reports. Identifying and compare best practices within the organization. ● Study missions. Examining leading organizations around the world in order to better understand market performance and distinctive skills. ● Jamborees or symposiums. Bringing together customers, suppliers, external experts and internal groups with the purpose to share ideas and learn from different collaborations. All these activities foster learning by having employees battle with new knowledge and consider its implications.   24   3.2. Product development This section refers to the understanding of what the Product Development Process (PDP) is, explaining its components and the way it works. It covers theories of problems within product development and consequences of not having an efficient PDP as well as the benefits of having one. Further on, it is essential for this thesis to understand the integration of TQM with the PDP and the benefits of such integration. The initial section of chapter 4 explains the importance and relevance of this section. 3.2.1. The Product Development Process Many authors and authors have defined the PDP and despite the differences in their explanation of PDP, the essence of PDP is universal. However, it is important to initially separate product development with the process of product development, as they mean different things. Product development refers to the activities that begins with the perception of a market opportunity and ends in production, sales and delivery of a product, whilst the PDP refers to the utilized activities in order to conceptualize, design and commercialize a product (Ulrich & Eppinger, 2000). Morgan & Liker (2006) further describes PDP as a knowledge work job shop that have to deal with an integrated network of queues, multiple centers and constraints. Ulrich and Eppinger (2000) continue by describing a way of the PDP, which they call the Generic Development Process. The six phases within this process give a good general overview of the PDP: 0. Planning. This phase precedes the project approval and launch of the PDP. The phase begins with corporate strategy and further includes assessment of technology development as well as market objectives. 1. Concept Development. The needs of the target market are identified in this phase, alternative product concepts are generated and assessed and finally one or several concepts are chosen for further development. 2. System-level design. This phase includes the definition of the product architecture as well as the decomposition of the product into components and subsystems. A final assembly plan for manufacturing should be defined as well. 3. Detail design. The detail design phase refers to the complete specification of the product physics (geometry, materials) as the tolerances of all the unique parts in the product as well as the identification of all the standard parts that needs to be purchase from suppliers. Hence, drawings and process plan shall be established as control documentation for the product.   25   4. Testing and refinement. This phase involves the construction and assessment of multiple reproduction versions of the product. 5. Production ramp-up. In this phase, the product is made using the intended production system. The purpose is to train the employees and to work out any remaining issues in the production processes. 3.2.2. Benefits of an efficient PDP The different phases of a PDP creates the base for the detailed activities that occurs in each phase. It is therefore very important to have a well-defined development process. Ulrich & Eppinger (2000) argues for such a PDP for the following reasons: ● Quality assurance. A PDP specifies the gates each project should pass in order to continue in the next phase. It is therefore important that these gates are chosen and specified very wisely as actually following the requirements of the PDP is a way of assuring the quality of the end product. ● Coordination. A well-defined PDP defines the roles of everyone involved. It articulates when they are needed in the process throughout all functions and what contributions will be needed. ● Planning. A PDP contains of natural milestones defining the completion of each phase. The timing of these milestones anchors the time schedule of the development projects. ● Management. A well-defined PDP enables managers to compare defined events to the ongoing process with purpose to identify possible issue areas. ● Improvement. Careful documentation of the PDP helps identifying opportunities for improvement. Morgan and Liker (2006) have a different view, meaning that a great PDP is becoming more of a strategic differentiator rather than excellent manufacturing capabilities. The opportunities for a competitive advantage in product development are hence more than anywhere else within a manufacturing company. Others say that customers needs gets more complex and competition increases, which is why an efficient PDP should be a crucial core competence in order to meet the needs and beat competition (Fiore, 2005). Hence, an efficient PDP is essential for the successes of any company. The success could be generated from the main benefits from an efficient PDP presented by Clausing (1994) together with Wheelwright & Clark (1992): ● Enhanced variety and flexibility ● Reducing time-to-market ● Decreased costs ● Increased customer satisfaction ● Overall organizational efficiency and satisfaction ● Early mover advantage in the market   26   3.2.3. Issues within the PDP Due to many issues that could arise during a development projects, a large majority of projects have a gap between the designed product and the generated output. In order to identify these issues and find opportunities for improvements it is crucial to investigate different problems in the PDP. Wheelwright & Clark (1992), Clausing (1994) and Fiore (2005) identifies the following problems as the main ones: ● Deficient attention to customer needs ● Company resources and employee workloads are not efficiently managed ● Process control and synchronization are inefficient ● Lack of cooperation and communication between design, marketing, suppliers and manufacturing departments ● Lack of explicitness in continuous improvements ● The development of achieving robust functionality is weak A prerequisite of preventing these issues is by connecting the corporate goals and visions with the purpose of the PDP. Product development managers have to develop mental models defined by the corporate vision and assist product development teams in clarifying and maintaining focus on the desired product outcome. Without this fundamental unity, the PDP are simply disconnected from the corporate vision and many of the above issues are to arise (Golhar & Kiella, 1997). The unity follows by top management committing them throughout the PDP. In order to tailor a qualitative and efficient PDP, focused management is required to define the nature of the product development environment and be committed to maximize the utility and the structure of the PDP (Shapiro & White, 1994). This requires making decisions on based on factual data and not based on the gut-feel. Top management need to be patient and not strive for short-term gains, which means that they cannot apply short-term financial measures in order to measure the efficiency of the PDP (Golhar & Kiella, 1997). Processes set in motion to produce a desired result on short terms will not only create a desired outcome but will also create a secondary side-effect that will slow down the growth of product development (Senge, 1994). 3.2.4. Lean Product Development Another concept that emphasizes on efficiency within PDP is Lean product development. Instead of identifying and solving specific problem areas within product development, Lean Product Development (LPD) refers to eliminating overall waste. Waste is defined as a process or activity that consumes resources without adding any value for the customer (Morgan & Liker, 2006). According to Ohno (1988), there are seven kinds of activities that is considered as the original wastes:   27   ● Transport - moving around products that do not add any value to the process ● Inventory - components within the process and in inventory not being processed ● Motion - people walking or equipment moving more than required by the process ● Overproduction - producing ahead of demand (push instead of pull) ● Over processing - consequence of poor tool or product design ● Defects - the energy and time wasted in inspecting and fixing defects However, these wastes have not been defined based on the PDP, but rather upon achieving excellence in manufacturing processes. Mascitelli (2006) have elaborated on these original wastes within different product development experiences. Consequently, he has developed a list of wastes specifically within LPD that follows this specific order of impact: ● Chaotic work environment (interruptions) ● Lack of available resources (bottlenecks of resources) ● Lack of clear prioritization of tasks/activities/projects ● Lack of communication across functions ● Badly defined requirements of product/disruptive changes to product requirement ● Poor early considerations of manufacturability ● Over designing, analysis paralysis and gold-plating ● To many meetings ● E-mail overload 3.3. Organizational communication Having function cooperation within the PDP is fundamental for TQM to work. Wheelwright & Clark (1992) state that the R&D function and the manufacturing function are often not completely integrated within product development projects. The design of the product and the process are therefore accomplished in isolation, which makes the overall development of a completed design and manufacturing process slow and often require a great deal of rework and significant resources. In addition, it causes a mismatch between the requirements of the design and the capabilities and availability of the suppliers. In order to prevent this separation, design choices of product need to get in contact with process capabilities, and process capabilities into contact with design requirements early in the initial planning phase of the PDP. This way, the two functions can influence and shape one another in an efficient way. However, it is not only the integration of manufacturing and R&D that matters, there is often a distance between marketing and R&D as well. The research of Griffin & Hauser (1996) emphasizes on this isolation, showing that there is a large correlation between the integration of marketing and R&D and the success of the company. Organizational obstacles, titled barriers,   28   often prevent the integration and cooperation of functions. Rieger (2011) states that barriers originate from five causes: ● Fear. Fear can create walls between functions, if functions’ are differently addressed where a struggle for attention needs to exist. This causes functions to focus on local goals and processes, in order to secure their own excellence, which could be contradicting to the organization as a whole. ● Information flow. There exists two types of information flow barriers - transmission and assimilation - which both address the importance of information management. Information should not be blocked (transmission) or overwhelming (assimilation), which could create issues of information management and hence conflicts and eventually barriers. ● Short-term thinking. There are two barriers originating from short-term thinking - sins of omission and sins of commission. Sins of omission occurs when decisions are made without consultation with the ones who have to live with the consequences of the decision being made, where sins of commission occurs when long term concerns are known about, but neglected and not acted upon. ● Misalignment. Misalignment barriers exist when unity is not created, where an overall understanding of the actions does not exist. Most commonly misalignment barriers occur when functions’ goals are in direct opposition. ● Money. Barriers of money can be either personal or departmental. The personal money barriers are results of a manipulative bonus system that differs individuals on base of money. The departmental money barriers are similar to the personal ones, but more general where the focus is to secure one’s share of the budget. The actual barriers are illustrated differently within organizations, where Griffin & Hauser (1996) name the following factors as differentiators: ● Personality. Often within a function there are a majority of people with the same personality, which often differs from the personalities of other functions. This causes barriers of stereotypes, which causes distance between the functions. ● Culture. Marketing staff often has humanistic backgrounds while R&D staff comes from a scientific background, which gives them different worldviews. This difference in organizational routines is reinforced in the cultures of a company’s functional departments. ● Language. As separate thought worlds develop, language barriers also arise. The two functions uses their own technical term where marketing speaks in words of product benefits and perceptual positions while R&D speak use a more quantitative language such as performance and specifications. When a misunderstanding occurs, customer needs and design solutions disconnect even if each function thinks they are talking about the same thing.   29   ● Organizational responsibilities. Different functions have different tasks and responsibilities, e.g. market share versus number of patents, and hence prioritizes differently. ● Physical barriers. Functions’ having headquarters on different geographical sites create huge barriers to communication and hence prevents integration of the functions. As the TQM philosophy provides a structure that allows both top-down and bottom up processes, it requires full organizational integration from CEO down to the bottom levels of management (Shepatuk, 1991). Hence, a total integration of all functions within organizations is fundamental for the TQM to work for the PDP. With the generic PDP, Ulrich & Eppinger (2000) show a way of integrating all functions within the PDP by demonstrating all tasks and responsibilities of every function within each phase as shown in figure 11. In order to enable these activities, all barriers to communication and cooperation have to be eliminated. Griffin & Hauser (1996) have through their research generated methods in order to remove these barriers and achieve functional integration: ● Relocation and physical facilities design ● Personnel movement ● Informal social systems ● Organizational structure ● Incentives and rewards ● Formal integrative management systems   30   Figure 11. Illustration of functional involvement in a generic PDP, adapted from Ulrich & Eppinger (2000).   31   4. Empirical findings The empirical findings are divided with consideration to the practical approach of the master thesis at hand - mapping and identifying - where data was differently collected depending on phase. The mapping phase consisted of a quantitative data collection, where the purpose was to be guided towards specific quality causes. To achieve this, data was collected through a qualitative investigation where dictums from the interviewees were combined and compared with the goal to find common denominators in order to qualitatively set the base to find the roots of the causes. However, additional causes aroused during the qualitative data collection, whose interrelation with the mapped quality issues further needed to be analyzed. All statements within this chapter are statements from the interviewees. Consequently, the structure of the chapter initially begins with the mapping of the specific quality causes. The findings of the mapping phase are further on examined in the identifying phase, where additional causes are as well identified.   32   4.1. Mapping The received data of the customer complaints is statistically conducted at BBAM with regard to cost instead of amount. Hence, new statistical data was conducted from the same initial database, in order to determine the stability of the processes. Further, to manage the diversified nature of the different quality flaws, there is an error-code manual at BBAM that is used to categorize all quality flaws. The error-code manual compiles all hypothetically possible quality flaws that could occur from order to cash, which can be visualized in Appendix A. The available amount of information at BBAM dated back to the financial year of 2010, where all customer complaints from that specific year until the month of January 2013 were used in order to determine the amount of specific error-codes as well as the total amount of error-codes within a specific group of products. The choice of using two variable specific paths was deliberately chosen in order to determine if some synergies could be found in the intersections of the different error-codes and product groups. Further, the total amount of specific error-codes was proportioned to the total number of customer complaints in order to determine the percentage share of every specific error-code. The results can be visualized in figure 12, where the nine most contributing error-codes are presented together with a total percentage share of the other error-codes (Others). Figure 12. Illustration of the distribution among the most contributing error-codes in descending order. A similar but more detailed approach was used with the product groups, in order to verify the findings in figure 12. Every product groups’ contribution to the total amount of customer complaints was calculated in percent. Additional compilations were however needed. Statistics   33   of the total production amount of the different product groups was used, where data from the financial year of 2011 until January 2013 was used in order to determine the different product groups’ percentage share of the total production amount. These two calculations were then compared in proportion to each other in order to determine the stability of the processes of the respective product groups. Product groups with results higher than one indicated these specific product groups were more unstable and thereby more alarming than others. This ratio clarifies which product groups’ processes are the most alarming ones by comparing them to the other product groups’. The results can be visualized in figure 13, where the process stability indicator of one is positioned at 50 % since the chosen chart type distributes the ratio in that matter between every product groups’ percentage of customer complaints and the percentage share of the total production amount. If the intersection of the distributions is on the upper side of the stability indicator, then clear indications exist of that specific product group’s processes being more unstable than others. For example, as can bee seen in figure 13, the product group that is the most alarming one is no. 4, since its contribution to the customer complaints is the highest one with consideration to its contribution to the total production quantity. Product group no. 8 is actually more alarming than product group no. 4, but its inferior contribution to the total production quantity implies that it is more relevant to regard no. 4 as the most alarming one. On the other hand, no. 5 has the most stable processes compared to the other product groups, since its customer complaints contribution is the lowest one with consideration to its contribution to the total production quantity. Figure 13. Process stability indicator, where every product group is presented separately. The combination of the results in figure 12 and figure 13 out crystallized the most contributing factor to the high number of quality flaws, since the most occurring error-code is actually the most occurring error-code in the most alarming product group (see Appendix B). That specific   34   factor - construction error5 - generated 28,51 % of the total amount of customer complaints and was therefore regarded and chosen as a guide towards identifying the quality issues. 4.2. Identifying In order to confirm the results from the quantitative research in the initial phase, a general opinion of the construction errors was created according to the interviewees’ statements. There is a general agreement of it being a consequence of a number of causes, but additional causes were as well highlighted as plausible interrelated effects or roots to the mapped causes. It was therefore important to further on describe all plausible causes in order to create valid foundation for the analysis. The categorization of the plausible causes, that were qualitatively conducted, was analytically selected with the help of the Affinity Diagram (see figure 14). The labels of the categories were the common denominators of the empirical data categorized in that specific group. It involves categories focusing on a broader organizational perspective - Corporate Strategy, Leadership, and Culture & Communication - as well as more detailed areas, such as the newly established Product Development Process and Quality in practice. Figure 14. Illustration of the Affinity Diagram, where a more extended and readable version is visual in Appendix E. 4.2.1. Corporate Strategy Cost-efficiency is becoming more of a prioritized performance objective at BBAM, which is a consequence of the unsatisfied yearly results the last couple of years. There is however a clear                                                                                                                 5  Construction  error:  Error  originating  from  Product  Development  (BBAM,  2013).     35   strategy of having delivery performance as the most important performance objective at BBAM, which is why quality is sometimes down prioritized if delivery performance is jeopardized. As customers order entire solutions, they expect complete deliveries at the agreed upon time. It is therefore, and due to logistical smoothness, a rule at BBAM not to send out finished products if the actual order is not completed. This is however sometimes hard to maintain at a sufficient level, and a not so desired decision needs to be taken - the choice between delivery performance and the possibility of flawing quality. The order is thereby hastened to delivery with the known possibility of some products of the order being returned and complained about, which BBAM due to their five-year guarantee is basically forced to accept. This has not been a significantly affecting issue at BBAM, since revenues increased more than costs where it was beneficial in the long run to accept the costs of rework in order to increase the customer satisfaction and consequently the profit. Delivery performance has however been proven as a competitive advantage for BBAM, together with their environmental focus, the closeness to their suppliers and the total combination of the offer of product and service. These values are the cornerstones of their main strategy, where BBAM today primarily focuses on changing the assortment and emphasizing on the design. Historically, BBAM’ products have been perceived as kind of “boring”, which is explained by many as why there is such a focus on design today. The results of this are higher volume sales, but to the expense of lower profitability, even if there is an outspoken prioritization order between projects where projects with the highest volumes and the highest profits are prioritized. This is contradicting to the long-term plan from the parent company of having a profit that is 10 % of the desired turnover, which is not where BBAM is today. “We sell more, but not to higher profitability” 4.2.2. Leadership The mentioned aspects of the corporate strategy set the frame within which the top management can act and consequently lead the organization. There is however a general opinion of the top management adopting more of a distanced management approach than desired, where their presence within operations is unnoticeable. There is a gap between the “operative reality” of the organization and the individuals on the group executive board, since the top management has taken upon them to lead from a higher level than desired within the organization. The consequences of this management approach are that managers on a lower level are not guided enough, since there is no guidance from the top management emphasizing the importance of communication and clarified responsibility areas. Managers lower in the hierarchy tend to overcompensate this by taking decisions on economic grounds that requires the knowledge of managers higher up in the hierarchy. One aspect that was frequently brought up was the clear division in the organizational chain between assortment and manufacturing, which was often exemplified through a power   36   domination struggle between these two functions. Many however as well desire this, since conflicts contribute to organizational and general development if kept on a constructive level. The current situation is perceived as a power domination struggle where assortment is currently favored by top management on the behalf of manufacturing. It is explained as a consequence of the previous product range being “boring”, where design was not as prioritized as today. However, the issue is not the focus on design itself, but more of an organizational issue of assortment and manufacturing understanding each other. The two functions are too far away from each other, where manufacturing is too far away from the customers and assortment is too far away from the manufacturing itself. This is an example of the distanced managerial approach that the top management has chosen, since no coordinating force is existent that works towards keeping this power domination struggle at a constructive level. 4.2.3. Culture & Communication There is, to exemplify the mentioned power domination struggle within the organization, a cultural disagreement of what quality should be defined as between the two major functions - assortment and manufacturing. This is an interpretation issue, which BBAM apparently have many of, since room has been created for actions based on interpretations. Actions taken by other functions and other individuals, at all levels and within all functions, are thereby often confusing to the single function, department or individual, which obstructs the overall communication of the organization and creates an inhomogeneous atmosphere where nobody understands no one. An underlying reason for the easiness to create room for interpretation is the unspecified distribution of responsibilities, which is an inherited effect of the previous leading structure. Previously, it was common for the members of the founding family to be involved in major decisions across the organization, since their know-how was invaluable for the development of the organization. Recently, the family members have taken upon themselves more of a lean- backed approach, where their impact possibilities end with the responsibilities of their respective employments. This has created confusion, where lack of clarity of one’s responsibilities exists across the entire organization. A visual consequence of the interpretation-based culture is the individual-based, instead of the employment-based, interactions that are standard for BBAM. Individuals tend to primarily interact with individuals that they have experience of working with instead of addressing individuals that are currently working with the needed information. “If information about materials is needed, then George at purchasing is called instead of the responsible constructor” (George is a fictive person) This approach could from case to case be both an advantage as well as a disadvantage, but it sends out the wrong signals of how to manage information. It has gone so far that it is perceived as something natural and as one of many shortcuts at BBAM that are available and taken by many in order to get things done.   37   The management of information could as mentioned be better, where there is an opinion of people searching for too much information. This is a plausible consequence of meetings primarily existing to deal with issues instead of sharing information. As previously mentioned, people want to be involved even if they maybe do not need to, but this creates however an unstructured nature of dealing with tasks. Information is often demanded from bottom and up in the hierarchy instead of being spread from the top management downwards in the organizational hierarchy, which, according to some, is crippling the development of the organization and the actual speed of the development. The impression of that information needs to be managed more carefully in the organization has been brought up, since it is presumed as being one of the main reasons for the mentioned issues concerning the culture and communication of the organization. Another plausible reason is the overall impression of communication not being an iterative process, where, in contrast to the experienced information processing, communication is processed downwards, but little communication is actually processed upwards in the process or organizational hierarchy. There is clearly an imprinted culture and communication practice that is presumably hard to try to affect/change for a new employee at BBAM. The organization’s not existing inclination to change does not ease the task. New employees are further on basically forced to by themselves find out which values that are the cornerstones of BBAM, since there is no existing welcome program where the employee is informed about the values of BBAM. A factor that additionally complicates the overall understanding of the organization is the differences between the production plants, where every production plant has through history basically been an organization of its own. It is therefore hard for employees at the different production plants to envision the size of the organization as a whole. Historically, BBAM has acquired their different production plants through previous collaborations with suppliers, which were then merged into the organization of BBAM. Every production plant is thereby specialized and responsible for the production of specific products/components, where collaboration across production plants is, depending on the product, needed to various extents. Something that all the production plants have in common however is the in general loyal workforce, which is presumably to some degree due to the experienced possibility of advancing within the organization. Loyalty has though come with an experienced downside at BBAM, where there is an opinion of individuals having a hard time thinking outside of the box that is BBAM. It is no wonder then that individuals’ experience that decisions are often made on faulty premises, since people tend to have a hard time of distancing themselves from their own experience and their own work. By having a decision-making approach where emotions overrule facts, it additionally complicates the understanding of each other’s actions and clarifies the overall need for structure, systematics and standardization.   38   4.2.4. Product Development Process People are in general agreeing that product development projects in the past were unstructured and poorly specified. Some describe it as being a consequence of too early product releases, which backfire in forms of high numbers of customer complaints. A general agreement on it being a resource and time issue exists, but some have pinpointed the lacking time planning as the main cause of the high number of construction errors. To exemplify, a specific product development project was mentioned in the interviews were a new type of task chair was hastened to launch. This specific product was supposed to be part of the largest product launch ever at BBAM, which is why it was forced to the great extent that testing and validating were neglected. The consequences are costly, where continuous construction modifications in the amount of millions SEK are needed every year. Mostly there is a need for a construction modification because of a deficient analysis of the actual manufacturability of the product or because of an insufficient compatibility between product and process. Sometimes it is even because of a trivial cause, such as correct drawings or follow-up documents not existing. Meanwhile, BBAM has tried to solve the previously unstructured PDP internally, by creating and implementing a standardized process (see figure 15) applicable to all projects. Figure 15. General overview of the PDP process at BBAM, recognized within BBAM as a launch process. The process is explicitly defined as a launch process, which was additionally confirmed by some as an important thing to keep in mind, where the actual product development is one of the phases in the process itself. The details of the process have not yet been fully out crystallized, since it is   39   still in the initial phases of its launch. The core phases and gates are however set since December 2012. In general, people agree on the launch process being a step in the right direction. Even if some however are skeptical and cautious and need to be persuaded about the launch process being more than just a graphically appealing illustration of how it should be from now on. “It looks very good on paper, but will we follow it?” The initial phase of the project is Assortment Council, which is a group of individuals from the eight national focus markets6 of BBAM coming from the Brand/Range/Design function, focuses on analyzing the market in order to determine what is needed and wanted by the customers. The requirements and needs of the customers that can be met are then specified as concept7 or product ideas, which are compiled as a five-year assortment plan. The Assortment Plan is first approved by the Assortment Council and then yearly approved by the Assortment management, which are responsible for the compilation in the first place. The actual concretization of the concept or product ideas occurs in the Product Brief phase, where a number of parameters need to be determined for a specific product. A product brief consists of analysis and determinations of the following parameters: ● Market needs ● Market segment ● Target group ● Competitors ● Contextualization ● Relation to other products in assortment ● Project size ● Lifecycle of product ● Substitutes which products ● Functionality ● Price The one responsible for the actual compilation of the product brief is the affected product manager. The brief is then evaluated in the following phase Pre-study, where a more sustainable approach is used in order to define the concrete possibilities and limitations with the product at hand. A project group manages the pre-study phase with a stated project leader that reports to the responsible product manager. It is somewhere in the end of the product brief that involvement from production and more specifically from the departments of Purchasing, Product Development and Production Engineering is explicitly determined. These departments are then supposed to be represented in the project group that is responsible for the pre-study itself. There                                                                                                                 6 Eight national focus markets: BBAM focuses on eight national markets in Europe, who are the foundation for the organization’s market analyses (BBAM, 2013). 7 Concept: A group of products, developed as a product family (BBAM, 2013).     40   has however been mentioned that some specific departments are, even with the explicit clarification of their needed involvement, purposely neglected in the Pre-study phase, since their working approach is more time-consuming than desired. The product brief is in the pre-study updated and further complemented with additional parameters, which are the following: ● Market analysis with volumes ● Pre-calculation for production ● Budget ● Risk analysis (FMEA light) ● Prototype sketch ● 3D model The approval of the specialized and final product brief is done by the product manager and afterwards handed over to product development, which is officially named Technical Design at BBAM. The product briefs are often, according to some interviews, not accurate enough when finalized. Especially two aspects have been mentioned as problematic, namely the written volumes and the lacking information of the different variations with the product. The written volumes are often overestimated, which creates additional problems and costs in the future since BBAM agrees upon the estimated volumes with their suppliers. The variation issue is due to the missing clarifying information of how many different variations of the product as well how many different colors that will be available. The pre-study is somewhat the initial phase of the stage-gate process that is used within product development with the new launch process in order to secure enough information and quality before the project is taken to the next stage. As mentioned, the Product Development Project phase starts when the product manager hands over the finalized product brief to the product development, where a new project group is established with a new project leader from product development. This establishment of the new project group occurs in the Start-up stage, which is the first of five stages (see figure 16), where the same departments from the pre-study phase are involved and represented in the project group. Additional tasks that need to be completed in this stage are a detailed start-up of the engineering needed as well as a unanimously agreed time schedule with milestones and a launch plan.   41   Figure 16. The launch process, where the five stages within the fifth phase are highlighted. If the project is with the help of the stage-gate checklist evaluated as final for the Start-up stage, the project goes in to the stage Prototype where the actual construction of a prototype is built, tested and approved. Other main activities during this stage are the finalization of a FMEA for the product, the clarification of a process map and the choice of suppliers, which Purchasing is responsible for. The actual prototype is then tested in the next stage Test series where the product-FMEA is supposed to be evaluated with respect to the FMEA for the process that is finalized in the Test series stage. There have however been some indications of the FMEA-s not being good and not being worthy of its name, where no accurate evaluation is done. This makes it hard to accurately examine the fit between product and process. This is further complicated by the fact that many projects are developing products with regard to not-yet-existing processes, where the actual manufacturability of a product is only forecasted and often in retrospect regarded as inaccurate. The mentioned scenario is experienced as more of a rule than exception, where the inaccurate definition of one product’s manufacturability and sustainability forces the design of the process to be continuously reworked. After the product is tested, approved and finally validated, the project is taken to the next stage 0-series, where the 0-series is built, tested, approved and validated. The organization is informed and prepared for the actual manufacturing of the product, where even the customer can for the first time examine and evaluate the product at exhibitions where the product is presented. The   42   project is then finalized in the final stage Completion, where the initial boot problems are corrected. The project is evaluated according to the initial goals targeted in the product brief as well as financially in order to determine the total cost and of the project. The Product Development department is with the implementation of the mentioned PDP going through a transformation in project management. The previously unstructured and shortcut- approving way of working is trying to be eliminated with the implementation of a standardized project systematics. There do however already exist cases of individuals trying to create modified gates in order to press through projects, where some departments have purposely been neglected even if the actual task is the specific department’s responsibility. It is addressed as a consequence of the PDP, and the stage-gates specifically, not being accurately time managed. Currently there is only the launch date as a milestone for the projects, where no specific time is set to the different stages. It has however also been mentioned by some that there is a common desire to deal with this issue by not explicitly communicating an absolute launch date in order to secure the quality of the product and its manufacturability and sustainability. The previously common approach of merely delaying or in worst cases pressuring through the projects is regarded as part of the past. To further facilitate a successful implementation of the PDP, there has been a reorganization of the Product Development d