{"id":10432,"date":"2017-03-01T20:19:22","date_gmt":"2017-03-01T20:19:22","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/masterybusiness2xngcxmasterspring2016\/?post_type=chapter&#038;p=10432"},"modified":"2024-05-07T16:42:55","modified_gmt":"2024-05-07T16:42:55","slug":"quality-assurance","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/chapter\/quality-assurance\/","title":{"raw":"Quality Assurance","rendered":"Quality Assurance"},"content":{"raw":"<div>\r\n<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Differentiate between statistical process control, benchmarking, lean manufacturing, and Six Sigma.<\/li>\r\n \t<li>Explain the benefits of national and international quality standards in the production of goods and services.<\/li>\r\n<\/ul>\r\n<\/div>\r\n<img class=\"alignright wp-image-10436\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/03\/01215525\/471705233_0e61e39263_b.jpg\" alt=\"decorative image\" width=\"350\" height=\"270\" \/>\r\n\r\nWhat is <em>quality<\/em>? According to the American Society for Quality, quality refers to \u201cthe characteristics of a product or service that bear on its ability to satisfy stated or implied needs.\u201d[footnote] \u201cBasic Concepts, Definitions,\u201d American Society of Quality,\u00a0(accessed November 3, 2011). http:\/\/asq.org\/glossary\/q.html[\/footnote]\r\n\r\nAs a customer, you\u2019re constantly assured that when products and services make it to market, they\u2019re of the highest quality, and if they aren't\u2014if they fail to meet your expectations\u00a0or to live up to claims\u2014you may decide to avoid certain brands or give up on those products\/services altogether. When companies can't deliver quality goods or services, they risk losing trust, loyalty, and business.\r\n\r\nNowhere are the high stakes of quality more evident than in the case of a product recall\u2014when a company requests the return of a product after the discovery of safety issues or product defects that might endanger the consumer.\r\n\r\n<\/div>\r\nConsider Samsung's\u00a0recent recall on its popular tablet computer, the Galaxy Note7, in October 2016:\r\n<div>\r\n<blockquote>Samsung has announced an expanded voluntary recall on all original and replacement Galaxy Note7 devices sold or exchanged in the United States in cooperation with the U.S. Consumer Product Safety Commission and in partnership with carriers and retailers. Since the affected devices can overheat and pose a safety risk, we are asking consumers with a Galaxy Note7 to power it down and contact the carrier or retail outlet where they purchased their device.\u201d[footnote]Galaxy Note7 Safety Recall and Exchange Program. (n.d.). Retrieved March 01, 2017, from <a href=\"http:\/\/www.samsung.com\/us\/note7recall\/\" target=\"_blank\" rel=\"noopener\">http:\/\/www.samsung.com\/us\/note7recall\/<\/a>[\/footnote]<\/blockquote>\r\nIf you bought a Galaxy Note7, you probably weren't expecting that it might catch fire during regular use! If you held shares of Samsung in your stock portfolio, you probably weren't expecting that the company's stock price would plummet practically overnight, either. After all, Samsung was the number one manufacturer of smartphones in the world, and as of September 30, 2016, it\u00a0had sold 2.5 million Galaxy Note7 devices worldwide. Yet this is exactly what happened. Besides affecting millions of\u00a0customers and taking a toll on shareholders, the recall meant lost income for retailers, who had to pull the device from their shelves, and for many of Samsung's suppliers. The entire supply chain was impacted by this quality debacle.\r\n\r\nGiven the devastating financial and, in some cases, legal consequences of selling inferior goods or services, how do companies actually ensure that they're\u00a0producing products and offering services that meet customer expectations for quality? We will examine just a few of the ways that companies manage the production of\u00a0quality goods and services.\r\n<h2><strong>Statistical Process Control<\/strong><\/h2>\r\n<strong>Statistical process control<\/strong> (<strong>SPC<\/strong>) is a method of quality control that\u00a0uses statistical or mathematical methods to monitor and control a process. The goal of SPC is to ensure that production operates at its full potential. \"Full potential\" indicates the point where the process produces as much conforming product as possible with a minimum (if not the total elimination) of defective parts, rework, or scrap. SPC can be applied to any process in which\u00a0the product can be measured. Key tools used in SPC include control charts with a focus on continuous improvement.\r\n\r\nExample: Margie is the production manager at Wanda\u2019s Widgets. The company uses\u00a0SPC as their approach to quality assurance. Several times per day, the quality-assurance team comes to the production floor and takes a sample of widgets from the production line. These widgets are closely inspected to be certain that they meet the company standards. Everything from their weight to the uniformity of the paint is closely inspected and entered into the SPC software program. When the data are analyzed, if the output from the SPC software indicates that the widgets do not meet the standard, Margie is alerted that there is an issue, and production may be stopped until the process is producing as many perfect widgets as possible.\r\n<h2><strong>Benchmarking<\/strong><\/h2>\r\n<strong>Benchmarking<\/strong>\u00a0involves comparing one's business processes and performance metrics to industry bests and best practices from other companies. Dimensions typically measured are quality, time, and cost. In the process of best-practice benchmarking, management identifies the best firms in their industry\u2014or in another industry where similar processes exist\u2014and compares the results and processes of those studied (the \"targets\") to one's own results and processes. In this way, management\u00a0learns how well the targets perform and, more importantly, the business processes that explain why those\u00a0firms are successful.\r\n\r\nBenchmarking is used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others. Benchmarking may be a one-time event but is often treated as a continuous process in which organizations continually seek to improve their practices.\r\n<h2><strong>Lean Manufacturing<\/strong><\/h2>\r\nThe central\u00a0idea of <strong>lean manufacturing<\/strong> is actually quite simple: Work relentlessly to eliminate waste from the manufacturing process. In this context, \"waste\" is defined as any activity that doesn't\u00a0add value from the customer\u2019s perspective. Almost every company has a tremendous opportunity to improve by using lean manufacturing techniques. Lean principles were developed by\u00a0the Japanese manufacturing industry\u2014by Toyota and the Toyota Production System (TPS) specifically. Lean manufacturing is based on the following goals and assumptions:\r\n<ul>\r\n \t<li>Continuous improvement<\/li>\r\n \t<li>Respect for people<\/li>\r\n \t<li>Long-term approach to process improvement<\/li>\r\n \t<li>The right process will produce the right results<\/li>\r\n \t<li>Add value to the organization by developing your people and partners<\/li>\r\n \t<li>Continuously solving root problems<\/li>\r\n<\/ul>\r\n<div class=\"textbox shaded\">\r\n<h3>Did You Know . . . ?<\/h3>\r\nToyota originally began sharing the TPS with its parts suppliers in the 1990s. Because of interest in the program from other organizations, Toyota began offering instruction in the methodology to others. Toyota has even \"donated\" its system to charities, providing its engineering staff and techniques to nonprofits in an effort to increase their efficiency and thus ability to serve people. For example, Toyota assisted the <a href=\"https:\/\/en.wikipedia.org\/wiki\/Food_Bank_For_New_York_City\" target=\"_blank\" rel=\"noopener\">Food Bank For New York City<\/a> to significantly decrease waiting times at soup kitchens, packing times at a food distribution center, and waiting times in a food pantry.[footnote]El-Naggar, Mona (26 July 2013). \"In Lieu of Money, Toyota Donates Efficiency to New York Charity\". The New York Times. Retrieved 1 September 2013. https:\/\/www.nytimes.com\/2013\/07\/27\/nyregion\/in-lieu-of-money-toyota-donates-efficiency-to-new-york-charity.html?_r=0[\/footnote]\r\n\r\n<\/div>\r\n<h2>Six Sigma<\/h2>\r\nIn the United States, another approach to quality management was formulated at Motorola in 1986 and was named <strong>Six Sigma<\/strong>.\u00a0Six Sigma is a company-wide process that focuses on measuring the number of defects that occur and systematically eliminating them in order to get as close to \u201czero defects\u201d as possible. In fact, Six Sigma quality aims to have every process produce no more than 3.4 defects per million. Six Sigma focuses on designing products that not only have fewer defects but that also satisfy customer needs.\r\n\r\nA key process of Six Sigma is called <em>DMAIC<\/em>. This stands for Define, Measure, Analyze, Improve, and Control. Employees at all levels define what needs to be done to ensure quality, then measure and analyze production results using statistics to see if standards are met. They are also charged with finding ways to improve and control quality.\u00a0The following features also set Six Sigma apart from other quality-improvement initiatives:\r\n<ul>\r\n \t<li>Focus on measurable financial returns<\/li>\r\n \t<li>Emphasis on good management<\/li>\r\n \t<li>Commitment to making data-driven decisions<\/li>\r\n<\/ul>\r\nGeneral Electric was one of the first companies to institute Six Sigma throughout the organization. GE employees are trained in Six Sigma concepts, and many analysts believe this has given GE a competitive manufacturing advantage. Service firms and government entities have applied Six Sigma to their quality initiatives as well.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/3b7038d9-ef43-41cd-89fe-71e3ba0a05d5\r\n\r\n<\/div>\r\n<h2><strong>International Quality Standards<\/strong><\/h2>\r\nAs a consumer, wouldn\u2019t you like to know which companies ensure that their products meet quality specifications? Or, might you want to know which companies take steps to protect the environment? Some consumers want to know which companies continuously improve their performance in both of these areas\u2014that is, practice both quality management and environmental management. By the same token, if you were a company doing a good job in these areas, wouldn\u2019t you want potential customers to be aware of your achievements? It might also be worthwhile to find out whether your suppliers were being conscientious in these areas\u2014and even your suppliers\u2019 suppliers.\r\n\r\nThrough the International Organization for Standardization (ISO), a nongovernmental agency based in Switzerland, it is possible to learn which companies are making efforts to comply with quality and environmental standards. The resources of this organization will enable you to identify those organizations that have people and processes in place for delivering products that satisfy customers\u2019 quality requirements. You can also find out which organizations work to reduce the negative impact of their activities on the environment. Working with representatives from various countries, the organization has established the ISO 9000 family of international standards for quality management and the ISO 14000 family of international standards for environmental management.\r\n\r\nISO standards focus on the way a company does its work, not on its output (though there\u2019s certainly a strong correlation between the way in which a business functions and the quality of its products). Compliance with ISO standards is voluntary, and the certification process is time-consuming and complex. Even so, hundreds of thousands of organizations around the world are ISO 9000 and ISO 14000 certified.[footnote] \u201cISO Survey of Certifications,\u201d 2009 International Organization for Standardization,\u00a0(accessed November 2, 2011).[\/footnote] ISO certification has become an internationally recognized symbol of quality management and is increasingly\u00a0essential to being competitive in the global marketplace.\r\n<h2><strong>Malcolm Baldrige National Quality Award<\/strong><\/h2>\r\nTo provide encouragement and a consistent standard, the U.S. government created the Malcolm Baldrige National Quality Award in 1987 to encourage companies to improve quality. The award was named for Malcolm Baldrige, who was the U.S. secretary of commerce from 1981 to 1987.[footnote]National Institute of Standards and Technology, \u201cFrequently Asked Questions about the Malcolm Baldrige National Quality Award,\u201d November 25, 2008,\u00a0(accessed August 14, 2009).[\/footnote] The Commerce Department\u2019s National Institute of Standards and Technology (NIST) manages the Baldrige Award in cooperation with the private sector. An organization may compete for the award in one of six categories: manufacturing, service, small business, health care, education, and nonprofit (including government agencies). An independent board of examiners recommends the Baldrige Award recipients after evaluating them in the following seven areas defined by the Baldrige Excellence Framework:\r\n\r\n<\/div>\r\n<ul>\r\n \t<li>leadership<\/li>\r\n \t<li>strategy<\/li>\r\n \t<li>customers<\/li>\r\n \t<li>measurement<\/li>\r\n \t<li>analysis and knowledge management<\/li>\r\n \t<li>workforce<\/li>\r\n \t<li>operations<\/li>\r\n \t<li>results<\/li>\r\n<\/ul>\r\nPast recipients of the Baldridge Award include the following:\r\n<ul>\r\n \t<li>Price-Waterhouse-Coopers Public Sector Practice, McLean, VA<\/li>\r\n \t<li>Pewaukee School District, Pewaukee, WI<\/li>\r\n \t<li>Concordia Publishing House, St. Louis, MO<\/li>\r\n \t<li>City of Irving, Irving, TX<\/li>\r\n \t<li>Lockheed Martin Missiles and Fire Control, Grand Prairie, TX<\/li>\r\n \t<li>Nestl\u00e9 Purina PetCare Co., St. Louis, MO<\/li>\r\n<\/ul>\r\n<blockquote>No one knows the cost of a defective product\u2014don't tell me you do. You know the cost of replacing it, but not the cost of a dissatisfied customer.\r\n<p style=\"text-align: right;\">\u2014W. Edwards Deming<\/p>\r\n<\/blockquote>\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/c97d6b2c-95cc-48d3-adc2-7788b1a179bc\r\n<\/div>","rendered":"<div>\n<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Differentiate between statistical process control, benchmarking, lean manufacturing, and Six Sigma.<\/li>\n<li>Explain the benefits of national and international quality standards in the production of goods and services.<\/li>\n<\/ul>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-10436\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/03\/01215525\/471705233_0e61e39263_b.jpg\" alt=\"decorative image\" width=\"350\" height=\"270\" \/><\/p>\n<p>What is <em>quality<\/em>? According to the American Society for Quality, quality refers to \u201cthe characteristics of a product or service that bear on its ability to satisfy stated or implied needs.\u201d<a class=\"footnote\" title=\"\u201cBasic Concepts, Definitions,\u201d American Society of Quality,\u00a0(accessed November 3, 2011). http:\/\/asq.org\/glossary\/q.html\" id=\"return-footnote-10432-1\" href=\"#footnote-10432-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a><\/p>\n<p>As a customer, you\u2019re constantly assured that when products and services make it to market, they\u2019re of the highest quality, and if they aren&#8217;t\u2014if they fail to meet your expectations\u00a0or to live up to claims\u2014you may decide to avoid certain brands or give up on those products\/services altogether. When companies can&#8217;t deliver quality goods or services, they risk losing trust, loyalty, and business.<\/p>\n<p>Nowhere are the high stakes of quality more evident than in the case of a product recall\u2014when a company requests the return of a product after the discovery of safety issues or product defects that might endanger the consumer.<\/p>\n<\/div>\n<p>Consider Samsung&#8217;s\u00a0recent recall on its popular tablet computer, the Galaxy Note7, in October 2016:<\/p>\n<div>\n<blockquote><p>Samsung has announced an expanded voluntary recall on all original and replacement Galaxy Note7 devices sold or exchanged in the United States in cooperation with the U.S. Consumer Product Safety Commission and in partnership with carriers and retailers. Since the affected devices can overheat and pose a safety risk, we are asking consumers with a Galaxy Note7 to power it down and contact the carrier or retail outlet where they purchased their device.\u201d<a class=\"footnote\" title=\"Galaxy Note7 Safety Recall and Exchange Program. (n.d.). Retrieved March 01, 2017, from http:\/\/www.samsung.com\/us\/note7recall\/\" id=\"return-footnote-10432-2\" href=\"#footnote-10432-2\" aria-label=\"Footnote 2\"><sup class=\"footnote\">[2]<\/sup><\/a><\/p><\/blockquote>\n<p>If you bought a Galaxy Note7, you probably weren&#8217;t expecting that it might catch fire during regular use! If you held shares of Samsung in your stock portfolio, you probably weren&#8217;t expecting that the company&#8217;s stock price would plummet practically overnight, either. After all, Samsung was the number one manufacturer of smartphones in the world, and as of September 30, 2016, it\u00a0had sold 2.5 million Galaxy Note7 devices worldwide. Yet this is exactly what happened. Besides affecting millions of\u00a0customers and taking a toll on shareholders, the recall meant lost income for retailers, who had to pull the device from their shelves, and for many of Samsung&#8217;s suppliers. The entire supply chain was impacted by this quality debacle.<\/p>\n<p>Given the devastating financial and, in some cases, legal consequences of selling inferior goods or services, how do companies actually ensure that they&#8217;re\u00a0producing products and offering services that meet customer expectations for quality? We will examine just a few of the ways that companies manage the production of\u00a0quality goods and services.<\/p>\n<h2><strong>Statistical Process Control<\/strong><\/h2>\n<p><strong>Statistical process control<\/strong> (<strong>SPC<\/strong>) is a method of quality control that\u00a0uses statistical or mathematical methods to monitor and control a process. The goal of SPC is to ensure that production operates at its full potential. &#8220;Full potential&#8221; indicates the point where the process produces as much conforming product as possible with a minimum (if not the total elimination) of defective parts, rework, or scrap. SPC can be applied to any process in which\u00a0the product can be measured. Key tools used in SPC include control charts with a focus on continuous improvement.<\/p>\n<p>Example: Margie is the production manager at Wanda\u2019s Widgets. The company uses\u00a0SPC as their approach to quality assurance. Several times per day, the quality-assurance team comes to the production floor and takes a sample of widgets from the production line. These widgets are closely inspected to be certain that they meet the company standards. Everything from their weight to the uniformity of the paint is closely inspected and entered into the SPC software program. When the data are analyzed, if the output from the SPC software indicates that the widgets do not meet the standard, Margie is alerted that there is an issue, and production may be stopped until the process is producing as many perfect widgets as possible.<\/p>\n<h2><strong>Benchmarking<\/strong><\/h2>\n<p><strong>Benchmarking<\/strong>\u00a0involves comparing one&#8217;s business processes and performance metrics to industry bests and best practices from other companies. Dimensions typically measured are quality, time, and cost. In the process of best-practice benchmarking, management identifies the best firms in their industry\u2014or in another industry where similar processes exist\u2014and compares the results and processes of those studied (the &#8220;targets&#8221;) to one&#8217;s own results and processes. In this way, management\u00a0learns how well the targets perform and, more importantly, the business processes that explain why those\u00a0firms are successful.<\/p>\n<p>Benchmarking is used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others. Benchmarking may be a one-time event but is often treated as a continuous process in which organizations continually seek to improve their practices.<\/p>\n<h2><strong>Lean Manufacturing<\/strong><\/h2>\n<p>The central\u00a0idea of <strong>lean manufacturing<\/strong> is actually quite simple: Work relentlessly to eliminate waste from the manufacturing process. In this context, &#8220;waste&#8221; is defined as any activity that doesn&#8217;t\u00a0add value from the customer\u2019s perspective. Almost every company has a tremendous opportunity to improve by using lean manufacturing techniques. Lean principles were developed by\u00a0the Japanese manufacturing industry\u2014by Toyota and the Toyota Production System (TPS) specifically. Lean manufacturing is based on the following goals and assumptions:<\/p>\n<ul>\n<li>Continuous improvement<\/li>\n<li>Respect for people<\/li>\n<li>Long-term approach to process improvement<\/li>\n<li>The right process will produce the right results<\/li>\n<li>Add value to the organization by developing your people and partners<\/li>\n<li>Continuously solving root problems<\/li>\n<\/ul>\n<div class=\"textbox shaded\">\n<h3>Did You Know . . . ?<\/h3>\n<p>Toyota originally began sharing the TPS with its parts suppliers in the 1990s. Because of interest in the program from other organizations, Toyota began offering instruction in the methodology to others. Toyota has even &#8220;donated&#8221; its system to charities, providing its engineering staff and techniques to nonprofits in an effort to increase their efficiency and thus ability to serve people. For example, Toyota assisted the <a href=\"https:\/\/en.wikipedia.org\/wiki\/Food_Bank_For_New_York_City\" target=\"_blank\" rel=\"noopener\">Food Bank For New York City<\/a> to significantly decrease waiting times at soup kitchens, packing times at a food distribution center, and waiting times in a food pantry.<a class=\"footnote\" title=\"El-Naggar, Mona (26 July 2013). &quot;In Lieu of Money, Toyota Donates Efficiency to New York Charity&quot;. The New York Times. Retrieved 1 September 2013. https:\/\/www.nytimes.com\/2013\/07\/27\/nyregion\/in-lieu-of-money-toyota-donates-efficiency-to-new-york-charity.html?_r=0\" id=\"return-footnote-10432-3\" href=\"#footnote-10432-3\" aria-label=\"Footnote 3\"><sup class=\"footnote\">[3]<\/sup><\/a><\/p>\n<\/div>\n<h2>Six Sigma<\/h2>\n<p>In the United States, another approach to quality management was formulated at Motorola in 1986 and was named <strong>Six Sigma<\/strong>.\u00a0Six Sigma is a company-wide process that focuses on measuring the number of defects that occur and systematically eliminating them in order to get as close to \u201czero defects\u201d as possible. In fact, Six Sigma quality aims to have every process produce no more than 3.4 defects per million. Six Sigma focuses on designing products that not only have fewer defects but that also satisfy customer needs.<\/p>\n<p>A key process of Six Sigma is called <em>DMAIC<\/em>. This stands for Define, Measure, Analyze, Improve, and Control. Employees at all levels define what needs to be done to ensure quality, then measure and analyze production results using statistics to see if standards are met. They are also charged with finding ways to improve and control quality.\u00a0The following features also set Six Sigma apart from other quality-improvement initiatives:<\/p>\n<ul>\n<li>Focus on measurable financial returns<\/li>\n<li>Emphasis on good management<\/li>\n<li>Commitment to making data-driven decisions<\/li>\n<\/ul>\n<p>General Electric was one of the first companies to institute Six Sigma throughout the organization. GE employees are trained in Six Sigma concepts, and many analysts believe this has given GE a competitive manufacturing advantage. Service firms and government entities have applied Six Sigma to their quality initiatives as well.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"assessment_practice_3b7038d9-ef43-41cd-89fe-71e3ba0a05d5\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/3b7038d9-ef43-41cd-89fe-71e3ba0a05d5?iframe_resize_id=assessment_practice_id_3b7038d9-ef43-41cd-89fe-71e3ba0a05d5\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n<h2><strong>International Quality Standards<\/strong><\/h2>\n<p>As a consumer, wouldn\u2019t you like to know which companies ensure that their products meet quality specifications? Or, might you want to know which companies take steps to protect the environment? Some consumers want to know which companies continuously improve their performance in both of these areas\u2014that is, practice both quality management and environmental management. By the same token, if you were a company doing a good job in these areas, wouldn\u2019t you want potential customers to be aware of your achievements? It might also be worthwhile to find out whether your suppliers were being conscientious in these areas\u2014and even your suppliers\u2019 suppliers.<\/p>\n<p>Through the International Organization for Standardization (ISO), a nongovernmental agency based in Switzerland, it is possible to learn which companies are making efforts to comply with quality and environmental standards. The resources of this organization will enable you to identify those organizations that have people and processes in place for delivering products that satisfy customers\u2019 quality requirements. You can also find out which organizations work to reduce the negative impact of their activities on the environment. Working with representatives from various countries, the organization has established the ISO 9000 family of international standards for quality management and the ISO 14000 family of international standards for environmental management.<\/p>\n<p>ISO standards focus on the way a company does its work, not on its output (though there\u2019s certainly a strong correlation between the way in which a business functions and the quality of its products). Compliance with ISO standards is voluntary, and the certification process is time-consuming and complex. Even so, hundreds of thousands of organizations around the world are ISO 9000 and ISO 14000 certified.<a class=\"footnote\" title=\"\u201cISO Survey of Certifications,\u201d 2009 International Organization for Standardization,\u00a0(accessed November 2, 2011).\" id=\"return-footnote-10432-4\" href=\"#footnote-10432-4\" aria-label=\"Footnote 4\"><sup class=\"footnote\">[4]<\/sup><\/a> ISO certification has become an internationally recognized symbol of quality management and is increasingly\u00a0essential to being competitive in the global marketplace.<\/p>\n<h2><strong>Malcolm Baldrige National Quality Award<\/strong><\/h2>\n<p>To provide encouragement and a consistent standard, the U.S. government created the Malcolm Baldrige National Quality Award in 1987 to encourage companies to improve quality. The award was named for Malcolm Baldrige, who was the U.S. secretary of commerce from 1981 to 1987.<a class=\"footnote\" title=\"National Institute of Standards and Technology, \u201cFrequently Asked Questions about the Malcolm Baldrige National Quality Award,\u201d November 25, 2008,\u00a0(accessed August 14, 2009).\" id=\"return-footnote-10432-5\" href=\"#footnote-10432-5\" aria-label=\"Footnote 5\"><sup class=\"footnote\">[5]<\/sup><\/a> The Commerce Department\u2019s National Institute of Standards and Technology (NIST) manages the Baldrige Award in cooperation with the private sector. An organization may compete for the award in one of six categories: manufacturing, service, small business, health care, education, and nonprofit (including government agencies). An independent board of examiners recommends the Baldrige Award recipients after evaluating them in the following seven areas defined by the Baldrige Excellence Framework:<\/p>\n<\/div>\n<ul>\n<li>leadership<\/li>\n<li>strategy<\/li>\n<li>customers<\/li>\n<li>measurement<\/li>\n<li>analysis and knowledge management<\/li>\n<li>workforce<\/li>\n<li>operations<\/li>\n<li>results<\/li>\n<\/ul>\n<p>Past recipients of the Baldridge Award include the following:<\/p>\n<ul>\n<li>Price-Waterhouse-Coopers Public Sector Practice, McLean, VA<\/li>\n<li>Pewaukee School District, Pewaukee, WI<\/li>\n<li>Concordia Publishing House, St. Louis, MO<\/li>\n<li>City of Irving, Irving, TX<\/li>\n<li>Lockheed Martin Missiles and Fire Control, Grand Prairie, TX<\/li>\n<li>Nestl\u00e9 Purina PetCare Co., St. Louis, MO<\/li>\n<\/ul>\n<blockquote><p>No one knows the cost of a defective product\u2014don&#8217;t tell me you do. You know the cost of replacing it, but not the cost of a dissatisfied customer.<\/p>\n<p style=\"text-align: right;\">\u2014W. Edwards Deming<\/p>\n<\/blockquote>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"assessment_practice_c97d6b2c-95cc-48d3-adc2-7788b1a179bc\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/c97d6b2c-95cc-48d3-adc2-7788b1a179bc?iframe_resize_id=assessment_practice_id_c97d6b2c-95cc-48d3-adc2-7788b1a179bc\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-10432\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Quality Assurance. <strong>Authored by<\/strong>: Linda Williams and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Practice Questions. <strong>Authored by<\/strong>: Robert Danielson. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Six Sigma. <strong>Provided by<\/strong>: OpenStax CNX. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/cnx.org\/contents\/4e09771f-a8aa-40ce-9063-aa58cc24e77f@8.5\">http:\/\/cnx.org\/contents\/4e09771f-a8aa-40ce-9063-aa58cc24e77f@8.5<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em>. <strong>License Terms<\/strong>: Download for free at http:\/\/cnx.org\/contents\/4e09771f-a8aa-40ce-9063-aa58cc24e77f@8.5<\/li><li>Cut Diamond. <strong>Authored by<\/strong>: Neil Rickards. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/neilrickards\/471705233\/\">https:\/\/www.flickr.com\/photos\/neilrickards\/471705233\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section><hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-10432-1\"> \u201cBasic Concepts, Definitions,\u201d American Society of Quality,\u00a0(accessed November 3, 2011). http:\/\/asq.org\/glossary\/q.html <a href=\"#return-footnote-10432-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><li id=\"footnote-10432-2\">Galaxy Note7 Safety Recall and Exchange Program. (n.d.). Retrieved March 01, 2017, from <a href=\"http:\/\/www.samsung.com\/us\/note7recall\/\" target=\"_blank\" rel=\"noopener\">http:\/\/www.samsung.com\/us\/note7recall\/<\/a> <a href=\"#return-footnote-10432-2\" class=\"return-footnote\" aria-label=\"Return to footnote 2\">&crarr;<\/a><\/li><li id=\"footnote-10432-3\">El-Naggar, Mona (26 July 2013). \"In Lieu of Money, Toyota Donates Efficiency to New York Charity\". The New York Times. Retrieved 1 September 2013. https:\/\/www.nytimes.com\/2013\/07\/27\/nyregion\/in-lieu-of-money-toyota-donates-efficiency-to-new-york-charity.html?_r=0 <a href=\"#return-footnote-10432-3\" class=\"return-footnote\" aria-label=\"Return to footnote 3\">&crarr;<\/a><\/li><li id=\"footnote-10432-4\"> \u201cISO Survey of Certifications,\u201d 2009 International Organization for Standardization,\u00a0(accessed November 2, 2011). <a href=\"#return-footnote-10432-4\" class=\"return-footnote\" aria-label=\"Return to footnote 4\">&crarr;<\/a><\/li><li id=\"footnote-10432-5\">National Institute of Standards and Technology, \u201cFrequently Asked Questions about the Malcolm Baldrige National Quality Award,\u201d November 25, 2008,\u00a0(accessed August 14, 2009). <a href=\"#return-footnote-10432-5\" class=\"return-footnote\" aria-label=\"Return to footnote 5\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":26,"menu_order":19,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Quality Assurance\",\"author\":\"Linda Williams and Lumen Learning\",\"organization\":\"\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Six Sigma\",\"author\":\"\",\"organization\":\"OpenStax CNX\",\"url\":\"http:\/\/cnx.org\/contents\/4e09771f-a8aa-40ce-9063-aa58cc24e77f@8.5\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"Download for free at http:\/\/cnx.org\/contents\/4e09771f-a8aa-40ce-9063-aa58cc24e77f@8.5\"},{\"type\":\"cc\",\"description\":\"Cut Diamond\",\"author\":\"Neil Rickards\",\"organization\":\"\",\"url\":\"https:\/\/www.flickr.com\/photos\/neilrickards\/471705233\/\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"original\",\"description\":\"Practice Questions\",\"author\":\"Robert Danielson\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"af74ecb5-cff5-4bc2-84f1-86a51158db1a, fb701fc4-abf8-46ca-9095-1eccc2f096af, 217c1d7f-6ed8-4d5e-818c-d41f5d7aabc4","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-10432","chapter","type-chapter","status-publish","hentry"],"part":91,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/10432","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/wp\/v2\/users\/26"}],"version-history":[{"count":27,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/10432\/revisions"}],"predecessor-version":[{"id":15504,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/10432\/revisions\/15504"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/parts\/91"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/10432\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/wp\/v2\/media?parent=10432"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/pressbooks\/v2\/chapter-type?post=10432"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/wp\/v2\/contributor?post=10432"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/wp-json\/wp\/v2\/license?post=10432"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}