Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

18.1.3 Organizational Quality — Quality of Organizations

Intended learning outcomes: Identify organizational quality. Describe the concept of quality toward the stakeholders of an organization.

Interested and affected parties have a perception of an enterprise that goes beyond the company’s products or processes. This is the perceived quality of the company’s work as a whole. This is true for any type of organization, including organizations in the public sector.

Organizational qualityis the quality of organizations, meaning the quality of the organization as a whole.

Anyone who has an interest or stake in a business is a stakeholder (compare Figure 1 of the Introduction). Stakeholders include employees, suppliers, creditors, customers, shareholders, local communities, and anyone else who is affected by the operations of the business. Each stakeholder will have a subjective — frequently also self-centered — perception of the quality of an organization. Generally, the stakeholders described here define their requirements of the organization independently of one another.

Organizational quality also is judged according to certain subjective or objective characteristics of the quality of organizations. Figure assigns the various characteristics to meaningful groups.

Fig.       Quality toward the stakeholders of an organization.

  • Quality in view of business partners. What is the customer’s perception of the company’s performance? Some criteria of the processes are already listed in Figure Additio­nal criteria apply to the organization as a whole, such as responsive­ness, credibility, accessibility and communi­cation, and understanding the customer. The characteristics of products are mentioned in Section 18.1.2. Moreover, customer satis­faction is more than satis­faction with the products and processes offered; there is a higher level of customer satisfaction that is the perception of receiving total care. In sellers’ markets, the company must treat its suppliers similarly, attending to what is called “supplier satisfaction.”
  • Quality in view of employees in the organization. The summary criterion of “emplo­yee satisfaction” encompasses a whole host of characteris­tics, such as compensation, the type of leadership in the organiza­tion, executability of tasks, flexibility and options for creativity in plans-of-work and work hours, material safety, and so on.
  • Quality in view of shareholders. Certainly owners and share­holders will judge the quality of their company mainly according to financial results. On closer inspection, however, money also stands for deeper needs, such as owners’ individual financial security or independence.
  • Quality in view of society and the environment. Society as a whole places require­ments on an enterprise even if it is not the owner of the company in the literal sense. These requirements are often set down in laws or codes of conduct. The quality of a company is proportionate to how well its processes, products, and conduct fit into the given framework. The characteristics are, for example, the safety of society and the protection of the integrity and property of its citizens. In the general sense, the same holds for the environment, where laws are given as natural laws. In practice, the requirements of the environment become manifest only in the consciousness of the other stakeholders mentioned. The quality of an enterprise is then evaluated according to whether it adheres to these laws as society demands. Characteristics are, for example, protection of the environment and responsible use of resources.

Course section 18.1: Subsections and their intended learning outcomes

  • 18.1 Quality: Concept and Measurement

    Intended learning outcomes: Produce an overview on the quality of processes, products and organizations as well as its measurability. Present the concept of quality measurement and Six Sigma.

  • 18.1.1 Process Quality

    Intended learning outcomes: Produce an overview on process, service, and a service provided to dependents. Present the characteristics of the quality of processes. Identify process quality, process time, and process load.

  • 18.1.2 Product Quality

    Intended learning outcomes: Identify product quality. Differentiate between a simple product and a product in a broad sense. Present the characteristics of the quality of products.

  • 18.1.3 Organizational Quality — Quality of Organizations

    Intended learning outcomes: Identify organizational quality. Describe the concept of quality toward the stakeholders of an organization.

  • 18.1.4 Quality and Its Measurability

    Intended learning outcomes: Explain the problems of the measurability of indicators and the step from measurement to corrective actions. Describe the issue using the example of the measurement of customer satisfaction.

  • 18.1.5 Quality Measurement and Six Sigma (6σ)

    Intended learning outcomes: Describe the metric of six sigma (6σ) and the sigma conversion table. Identify Six Sigma Quality. Differentiate between three Sigma and Six Sigma process reliability.