A national newspaper noted recently that "as a hot management trend,
quality has been pushed aside by re-engineering and a host of other ideas." The
article pointed out, for example, that the number of firms applying for the
Malcolm Baldrige National Quality Award had dropped from a high of 106 in 1991
to just 47 in 1995.
So, what's become of the quality movement? I put that question to Jack West, a Westinghouse manager and the immediate past chairman of the Milwaukee-based American Society for Quality Control (ASQC). His view: The quality movement is far from dead, but it is changing. What's more, companies are demanding to know what concrete returns they'll get for the dollars they spend on quality programs.
West says that there is evidence of such payoffs. For example, the Boston-based Profit Impact of Market Strategy has found that quality programs provide a greater return on investment than many other business steps, such as instituting greater economies of scale. The Government Accounting Office of Congress has studied Baldrige finalists and found that these companies offer higher returns for shareholders and enjoy greater productivity and lower employee turnover.
Equally significant, says West, is an analysis of the American Customer Satisfaction Index (ACSI), which tracks the experiences of 50,000 consumers. David Wharton, a finance professor at the University of Pennsylvania's Wharton School, has found that the stock of companies that rate in the top quartile in customer satisfaction outperforms the S&P 500 index by an average of 6%.
To a great extent, the quality movement has lost its glamour because the quest for world-class reliability has become second nature to many companies. "It's like the air; you don't notice it," says West. He adds that, while Baldrige applications may be dropping, thousands of companies have used the Baldrige application documents as a blueprint for revamping their operations. Similarly, ISO 9000, labelled by some as a "passing fad" five years ago, is now being embraced throughout U.S. manufacturing.
Interest in quality should again heat up this spring, when the National Science Foundation and the ASQC issue progress reports on 16 new studies, such as the relationship between quality programs and efforts to cut time to market. Meanwhile, watch for the March 4 Engineering Awards issue of Design News, in which we will profile our annual Engineering Quality Award Winner, sponsored by Schneeberger, Inc.