The topic I will be covering in this case study is the implementation of a quality management system in a small business environment. In many of the small businesses I have worked with in the past, I noticed an ongoing pattern. Many small business owners are relaxed in their quality control practices. It is easy to assume that some small businesses do not have a quality control system. This is due to the fact that some small business owners have a condensed quality management system such as a quick visual examination to look for obvious flaws. Small business owners do care about the quality of their products and services, but some lack the necessary guidance to implement a system that works for their environment. In this paper, I will offer a general guideline for small businesses to follow to implement a quality management system.

Background of the Manufacturing Firm

This paper will follow the small businesses owned by my current employer, Hugh Chau. Chau owns and operates two small businesses in Fremont, California. In 2005, Chau started his first company AVP Technology. Due to the growth and successes of AVP Technology, Chau decided to start another company in 2013 called MVP Machining. Both companies serve the semiconductor and disk drive industries. Chau is heavily involved in the semiconductor and disk drive industries because of his previous employment opportunities. At his last job, he was the senior operations manager for Hitachi Global Systems. In the past, he worked for other technology companies such as Toshiba, Read Rite, and Western Digital. Chau has maintained his relationships with all of his previous employers and continues to do business with them today. Because of his networking opportunities, Chau was able to keep steady workflow to AVP Technology and MVP Machining (H. Chau, personal interview, July 14, 2014).

AVP technology focuses on building custom thin film tools, refurbishing legacy thin film tools, and offers field service to repair thin film tools at customer sites. Since AVP Technology builds custom tools, they also have an in-house machine shop. Because of the success of AVP Technology and the increase of machining requests from customers, Chau decided to start MVP Machining. MVP Machining is a machine shop that will handle all machining tasks for the industries that AVP Technology is involved with. MVP Machining was started in December 2013 and its current focus is to serve current AVP Technology customers. Chau plans to grow MVP Machining in a similar fashion to AVP Technology. He believes that the greatest quality of the semiconductor and disk drive industries is that every key player knows each others’ name. Because of this belief, Chau is confident that word of mouth is enough for him to grow his two businesses. Chau has competitors in the United States of America and overseas. Although he has competitors, his customers continue to return to him because of the relationships that he established and the price for the tools, systems, and field service. Chau is trying to position AVP Technology and MVP Machining as a low price leader. There are many competitors that have lower prices, but Chau also offers value (H. Chau, personal interview, July 14, 2014).

 Overview of the Need of a Quality Management System

Although AVP Technology has received many recommendations and successes throughout the years, it took much work and rework to attain. AVP Technology is offering products and services to its customers that always meet customer expectations, but the staff usually have the experience of being overworked. What the customers receive does not really reflect the amount of man hours and material that was actually used (H. Chau, personal interview, July 14, 2014). For example, when a customer receives a custom system, they receive exactly what was outlined in the contract. Included in the contract is a list of all materials, components, expected costs, and a due date. According to our customers, they are satisfied with what they have received and request more projects or offer a referral. It is a great compliment to have a satisfied customer. However, on AVP Technology’s end of the contract, there are many times when parts need to be redone because of fitment issues or there are design flaws that are so serious that an entire sub-assembly needs to be replaced (T. Tran, personal interview, July 11, 2014). Some issues are quickly fixed such as improper soldering techniques, but these incidents consume several hours throughout the production cycle. There are often times when staff is asked to work overtime to perform rework to ship systems or tools on time which increases the costs. There are also times when AVP Technology will need to send out parts to an outside vendor to complete part of the production process (S. Tran, personal interview, July 11, 2014). Generally, the outside vendors that are involved have minimal problems and are deemed reliable enough to skip an additional quality inspection. If a part that was worked on by an outside vendor has failed and it is determined that the vendor is at fault, the customer blames AVP Technology for the incident (R. Cordero, personal interview, July 11, 2014).

MVP Machining also has similar issues regarding rework. Due to the amount of work that Chau has at AVP Technology, he decided to hire an operations manager for MVP Machining. Chau still has decision making power at MVP Machining, but he needs someone that has the time to be there everyday. Since this new operations manager makes the majority of the decisions at MVP Machining, the operations manager is essentially shaping the culture. It is this culture that is being created that is producing the result of low quality goods (H. Chau, personal interview, July 14, 2014). An example of the culture is an incident involving the production of ten power distribution racks. The ten power distribution racks are expected to be completed in one month. Two weeks into production, MVP Machining has only produced four power distribution racks. The operations manager harasses the employees and demands a response for the slow production. The employees are telling the operations manager that the power distribution racks are taking more time to produce because they are waiting for the power distribution racks to pass inspection. The operations manager’s response was that he did not care if the power distribution racks passed inspection or not. His goal was to get the quantity to the customer. He also believed that customers will not notice flaws in the final product. The operations manager places more emphasis on quantity instead of quality. Because of this ingrained culture, MVP Machining continuously receives requests for rework. The never ending cycle of rework takes away time for employees to focus on other projects and sacrifices Chau’s reputation.

A positive note about both companies is that they each have someone present to inspect parts and products for quality. Although there is someone that inspects parts and products, most people in the company rely on the quality inspections to catch mistakes in the production process (O. Hovorka, personal interview, July 11, 2014). In a sense, quality products are the sole responsibility of the quality department. There are few to no checks during the production process. Some employees take their role very seriously and inspect their own work as they go. Although some employees are more proactive in their work, they will not be able to catch their own mistakes every time. There is also no formal quality management system in place. As a part or product goes down the production line, the very last part of the production cycle is the quality inspection. Accountability is also not clear in the production process (O. Hovorka, personal interview, July 11, 2014). Since there are no formal sign off sheets or quality inspections between each process, it is difficult to determine which departments are at fault for rework issues. Assumptions are made and finger pointing is used to bring mistakes to light, but this is not the most accurate way to pinpoint problem areas.

Quality Management System Research and Data Collection Methodology

AVP Technology and MVP Machining maintains their own logs to track parts that did not pass quality inspections, parts that have failed prematurely, customer tools and systems that did not perform as expected, and equipment maintenance logs. The inventory manager, operations manager, quality control manager, and design engineers at AVP Technology consistently work together to track parts that failed inspections and parts that have failed prematurely. The customer service manager at AVP Technology manages the log for customer tools and systems that do not perform as expected. Last but not least, the facilities manager at AVP Technology manages the log for in-house equipment maintenance. MVP Machining has a very similar structure for maintaining logs with the exception of records related to customer tools and systems. Since MVP Machining does not build tools or systems for customers, they do not need to keep track of these logs (S. Tran, personal interview, July 11, 2014). Due to privacy concerns, AVP Technology and MVP Machining have requested that I do not publish spreadsheets or raw data into my research paper. Both companies have granted permission to post failure and success rates.

AVP Technology and MVP Machining both have traceable issues related to parts that do not pass quality inspections. According to the quality control manager at AVP Technology, there is approximately 20% failure rate. MVP Machining has a much higher failure rate for parts that do not pass quality inspections. According to the quality control manager at MVP Machining, the failure rate is approximately 60% (O. Hovorka, personal interview, July 11, 2014). Parts that have failed prematurely are parts that are meant to replaced on a predetermined schedule, but failed before their schedule. An example of a part that has failed prematurely is when shielding needs to be changed at two months instead its rated six month interval. Such parts include shielding, power supplies, gas lines, and liquid lines. Parts that have failed prematurely must fail on its own. If it is determined that a part has failed prematurely due to customer error or customer equipment malfunctions, then the part has not failed prematurely. At AVP Technology, our design engineers stated that there are about 12% of parts that have failed prematurely. MVP Machining has a premature failure rate of approximately 14% (T. Tran, personal interview, July 11, 2014).

AVP Technology is required to send field service engineers to a customer site when customers report a failure with the tools or systems that are custom built or repaired previously. Customers report issues to the customer service manager and sends the appropriate field service engineer. After the field service engineer resolves reported issues, the results and findings are logged by the customer service manager. AVP Technology receives calls regarding poor system performance on a daily basis. According to the customer service manager, the reasons that customers report a tool or system that is not performing as expected is usually due to user error. An event that truly defines a tool or system that does not perform as expected is when user error is not considered an issue. The tools and systems that AVP Technology produces requires users that have experience with thin film equipment and standard software applications used in the industry. These tools and systems follow “recipes” that users create and input to achieve a desired result. Along with having experience with thin film equipment and software, users must also be knowledgeable with the application they are using the tool for. When a field service engineer determines that the tool or system is not performing as expected due to user error, the reported issues will not be logged as related to poor performance. The approximate rate for tools and systems that do not perform as expected is 8%. The general causes that lead to a tool or system that has poor performance is the result issues that happen during the assembly process such as misaligned gaskets or improper torquing specifications (R. Cordero, personal interview, July 11, 2014).

The facilities manager for both companies collects all maintenance information for in-house equipment. Equipment such as computer numeric control (CNC) machines, air compressors, gas and fluid coolers, mills, coordinate measuring machine (CMM) inspection systems, and major power supplies. Approximately 5% of failed parts or parts that did not pass quality inspections are due to issues with equipment maintenance. Of that 5% the most common maintenance issues was linked to overdue maintenance procedures (S. Alichich, personal interview, July 18, 2014). For example, our quality control manager thought some parts were not passing quality inspections, but the reality was that the tool he uses to measure parts was not re-calibrated when it needed to be. Another incident was when the facilities manager changed the fluids for the machining tools about four months past the due date. Neglecting to change the fluids lead to the machining tools performing poorly.

Given that there is no formal quality management system in place, AVP Technology and MVP Machining will need to implement a quality management system from the beginning. The following steps that I am suggesting that both companies follow can be applied to different small business settings. The first step that AVP Technology and MVP Machining should take is reviewing their business model and process flowcharts. Next, both companies need to review all of the products and services that they offer and compare themselves to their competitors. Afterward, both companies need to review employee job responsibilities and daily routines. The next step would be for both companies to get feedback to try to capture the voice of the customer. From here, both companies can identify the areas that they need to improve. After understanding more about themselves and their customers, AVP Technology and MVP Machining can then create a plan to improve their quality practices accordingly.

Write Up and Analysis of the Elements of a QMS

The first step I suggest both companies take to implement a QMS is reviewing the business model and creating process flowcharts. A business model consists of four interlocking elements that create and deliver value (Johnson, M., Christensen, C., & Kagermann, H., 2008). These elements are customer value proposition, profit formula, key resources, and key processes. The customer value proposition represents the value that can be provided to customers. A profit formula defines how a company creates value for itself and for customers. Key assets are resources such as people, equipment, and technologies that are required to deliver value to customers. Key processes are operational and managerial processes that help deliver value to customers in a way that is repeatable and scalable (Johnson, M., Christensen, C., & Kagermann, H., 2008). Reviewing the business model gives companies an opportunity to understand how profits are made and who their ideal or target customers are. After reviewing the business model, both companies can clearly focus on how they can create more value for customers and themselves. In the event that either companies have determined that they need a new business model, this stage of the process is an ideal time to start creating their desired business model. Creating value not only helps the companies generate more profit. It can impact their reputation in a positive manner. Since customers will gain more value, it is likely that the products and services will earn an increase in perceived value and quality. Creating process flowcharts, or process mapping, describes the sequence of events to complete a process. For example, when AVP Technology is asked to send a field service technician, the process would start with an inquiry, a report is generated, then a field service technician is sent. Aside from describing the list of events in a process, the goal of process mapping is to help the company find ways to improve the process. Through process mapping, we can take away unessential steps or find ways to integrate automation when possible. Reviewing the business model and creating process flowcharts can help guide AVP Technology and MVP Machining toward areas that need improvement.

The second step is for AVP Technology and MVP Machining is to review their products and services. At this step both companies should also take advantage of competitive and process benchmarking. Competitive benchmarking is studying product or business results against competitors. Process benchmarking identifies key work processes in companies that perform similar functions regardless of industry (Evans, J.R., & Lindsay, W.M., 2014). By reviewing their products and services, both companies can determine how the products and services create value. As they review their products and services, both companies can think about their competitors. By studying their competitors, both companies can learn more about what delivery practices work and how to improve their own products and services.

The third step is for both companies to review the job responsibilities and daily routines for all employees. Similar to the previous step, the goal of this step is to find ways to improve on how employees perform their work. Ideally, the benefit that would come from understanding the responsibilities and daily routines is recognizing waste. As shown in the video America Revealed, Albert Grazer uses a training exercise that results in teaching employees to recognize waste. In this exercise, Grazer has employees building toy cars. This exercise teaches employees that some parts of a process are better suited for automation and other parts of the process are done by humans. When employees are trained to recognize waste, they are more likely to improve on their own.

The fourth step is for both companies to attempt to capture the voice of the customer. In order to improve the quality of products and services, it is an advantage to know what the target customers are looking for. AVP Technology and MVP Machining may have their own vision of what customers are looking for, but what customers are actually looking for may be different. If both companies can identify what their customers consider as valuable, then both companies can tailor their processes accordingly. Since AVP Technology and MVP Machining have a smaller number of customers compared to larger companies, they may be able to take a more personal approach to capturing the voice of the customer instead of a more automated route such as electronic surveys sent through email.

Both companies need to complete the previous steps before continuing to the fifth step. In the fifth step, both companies can use the information that was gathered in the previous steps to identify all areas that need improvement. After identifying the areas of improvement, the final step is to create a plan to address each area of concern. Although both companies may complete all steps in this process, the process of improvement does not end at the final step. These steps are meant to be repeated regularly. Quality management systems are an evolving process. Competitors are also evolving as well. What has been determined as optimal in the present may not be optimal in the future.

QMS Implementation Plans

Without buy-in from key stakeholders, any kind of project or endeavor will most likely fail. In order to implement the quality management system successfully, we will need to communicate the plan to all key stakeholders in each company. As with any kind of disruptive change both companies will need the support of C-level executives. Since AVP Technology and MVP Machining are considered small business environments, both companies lack executives that hold formal C-level job titles. The key stakeholders that need to support the implementation of the QMS are Hugh Chau, the operations manager, the quality control manager, the head design engineer, the inventory manager, the customer service manager, and the facilities manager. After receiving support for the QMS from all key stakeholders, we can then proceed to implementation.

The first step, which includes reviewing the business model and creating process flowcharts is a collaborative effort between Chau and the other key stakeholders. Unfortunately, other personnel within both companies cannot provide enough input to help create the business model or process flowcharts. This is due to the fact that all of the processes have been created by the key stakeholders. Other personnel within both companies can help brainstorm for a new desired state. In the second step, both companies will need to review the products and services offered. As mentioned earlier, this is the step when both companies should engage in competitive benchmarking. Since the industry that both companies target have many competitors that are similar, examples of competitive benchmarking methods that can be utilized are SWOT analysis and product performance. A SWOT analysis is a tool that helps companies create a strategy based on their strengths, weaknesses, opportunities, and threats. AVP Technology and MVP Machining can use a SWOT analysis from multiple perspectives against their competitors. A couple of perspectives include the production and business processes. Analyzing their competitors from the production process perspective allows both companies to learn more about how their competitors are able to create the tools and systems that they are marketing. The business process perspective allows both companies to gain more knowledge of the systems that other competitors have in place to support the value creation process.

The third step focuses on understanding the employees’ job responsibilities and daily routines. Employees and supervisors must be involved in creating the list of job responsibilities and daily routines. When possible, it is ideal if flowcharts are made to represent how employees perform their tasks. This step gives employees and supervisors the opportunity to scrutinize how work is being done. Through the process of understanding how employees perform their tasks, both companies can find ways to either improve how work is done, remove or add responsibilities and tasks, or determine if more manpower is necessary.

The fourth step to implementing the QMS is to capture the voice of the customer. There are various ways that AVP Technology and MVP Machining capture the voice of their customers. Due to the nature of the semiconductor and disk drive industries, there is no reliable review website such as Yelp to make capturing the voice of the customer easier. Throughout the many years of Chau’s business experience and experience in these industries, he has a mental note of the voice of the customer. Although he does have a mental note, he has not formalized or expressed to his employees what the voice of the customer entails. To collect this information, both companies can research the complaints that they received from customers. Both companies will need to collect complaints from a product and service point of view. Another area that both companies can explore to capture the voice of the customer is to speak directly with customers to get feedback. Speaking directly with customers is a daily task for the customer service manager and field service engineers. These people have more first hand knowledge about the customer experience and can provide valuable information about the voice of the customer. Unfortunately, surveys conducted through email is not the best way to gather information from Chau’s customers. Although many of the customers that Chau works with have email accounts, the preferred method of contact for his customers are physical meetings or phone calls.

After successfully completing the first four steps, both companies should be ready to move on to the fifth step. In the fifth step, both companies can use all of the information they gathered to identify areas of improvement. The act of identifying areas of improvement is crucial to the QMS. Identifying problem areas helps create a clear understanding of the underlying problems instead of finger pointing. All key stakeholders should agree on each area of improvement. Because areas of improvement will be revealed, both companies can create accountability when moving onto step six. In the sixth step, both companies can now create a plan to address each area of improvement. The plan to address the areas of improvement should be communicated to all employees and supervisors. Employees and supervisors may have questions about the plan and the QMS. At this moment, both companies need to offer clear information to everyone to ensure that everyone understands the urgency of the QMS. Both companies need to understand that implementing a QMS is not a process that is rushed. Ideally, addressing the areas of improvement starts with the easiest areas to improve. Multiple smaller successes help encourage the team to move forward with the QMS. Attempting to succeed in the most difficult area of improvement as the first task may discourage efforts if they experience failure.

 The Organizational Implications of Having a QMS

Having a QMS in an environment that previously did not have a formal QMS represents a disruptive change. Although the QMS is a disruptive change, it is a risk that both companies should take because of the positive results that await. To further increase the likelihood of success, the key stakeholders need to learn more about change management. Marcia Ruben, a professor at Golden Gate University, defines change management as the proactive process of anticipating and preparing for the organizational impacts of large-scale change in a way that ensures desired outcomes. There are several signs that the key stakeholders need to be aware of that insists that the implementation of the QMS is failing. These signs include the following:

  • The culture is not prepared for change.
  • Key stakeholders have not thought about the impact of change on the people and processes.
  • Project sponsors or other key stakeholders do not demonstrate support.
  • Key stakeholders are pessimistic about the plan.
  • Reliance on information technology instead of business leadership to implement the QMS.
  • Low communication between key stakeholders, supervisors, and other employees.
  • Reward system reinforces old behaviors instead of the desired behaviors.

In order to avoid all of the listed issues, open communication is key. Since not all employees are familiar with basic quality control principles, it is advantageous to train employees so that they can properly support the QMS. The correct reward systems need to also be present. Currently, AVP Technology and MVP Machining does not have a formal reward system. According to Chau, employees receive increases in salary depending on their length of employment. Although increasing salary based on length of employment is great for senior employees, it does not motivate newer employees.

Another issue that can hinder the implementation of a QMS is company culture. With all initiatives that introduces change to the current culture, employees are expected to feel different types of losses. According to Gareth Jones and Jennifer George, the types of losses that employees may feel when a change is introduced include turf, structure, and control. Losses of turf include physical locations, fields of expertise, and responsibilities. Attachment losses include relationships between other employees or stakeholders. Losses of structure represent changes in authority, policy, or schedules and deadlines. Loss of control are the result of the other losses. By implementing a QMS in an organization that did not have one before is considered a disruptive change. The new QMS system will create a chain of command and create accountability for actions. Because the QMS will reduce the number of quality issues, certain employees may feel turf loss. Turf loss will present itself since the QMS will make it appear that employees were not performing their job as well as the organization thought. The QMS is not meant to make employees appear as if they are not performing their duties correctly. It is meant to help employees perform their duties in a more favorable manner. Losses in structure will most likely occur since policies in how work is performed and quality standards are changed. Due to how processes or organized in the QMS, employees may feel some form of control loss. Since employees will be required to follow proper guidelines and procedures, they may feel that they have no control of how they perform their work. To help employees cope with changes to their work environment, it is ideal if key stakeholders not only change how employees think about the QMS, but also how they feel about the QMS.

The majority of the employees at AVP Technology and MVP Machining are of Asian descent. The employees that are of Asian descent tend to adopt eastern behaviors that match the research conducted by Geert Hofstede. Hofstede defines four cultural dimensions: power distance, individualism, masculinity, and uncertainty avoidance. According to Hofstede’s and Nisbett’s research, eastern cultures, which include people of Asian descent, tend to be more adverse to risk, prefer collectivism over individualism, display more femininity rather than masculinity, and are more likely to adhere to a hierarchy. The employees that represent the minority are people that are not of Asian descent or are of Asian descent, but have assimilated into Western culture early in life. Examples of employees that are of Asian descent that have assimilated into Western culture are employees that are between the ages of 18 and 35. To implement the QMS successfully with respect to culture, the QMS must be presented by all key stakeholders. The key stakeholders represent a group of people instead of an individual. The reward and punishment systems must also apply uniformly to all employees. If employees notice other employees receiving exceptions to the processes, the entire process will degrade. Since people of eastern cultures are more likely to follow a hierarchy, key stakeholders and supervisors need to reinforce leadership instead of relying on employees to lead themselves. Since people of eastern cultures are more adverse to risk than westerners, they are more likely to protest against change. Key stakeholders at both companies need to assure the employees that the risks involved with the QMS will help everyone involved in the company. Because of the collective mentality, eastern cultures are more likely to favor changes that benefit all employees instead of only one person, (Nisbett, R., 2004).

The employees that represent the minority at both companies have difficulties communicating with the majority for a couple of reasons. Due to language barriers between employees, it is difficult to ensure that all employees understand the key stakeholders. For example, the quality control manager and facilities manager at both companies are not of Asian descent. These people use English as their primary language, but they must communicate with people that use English as either their second or third language. Since both companies cannot discriminate against certain languages, the best alternative is to have interpreters. There are employees that speak English as a second language fluently enough to serve as interpreters. By using interpreters, we risk the quality of the messages between parties. An interpreter may not fully understand a message and translate the message improperly. If an interpreter translates a message improperly, we may unintentionally offend another employee.

Works Cited

Alichich, S. (2014, July 18). Personal interview.

Chau, H. (2014, July 18). Personal interview.

Chau, C. (2014, July 18). Personal interview.

Cordero, R. (2014, July 11). Personal interview.

Evans, J.R., & Lindsay, W.M. Managing for Quality and Performance Excellence (9th ed.), Cengage Learning. (2014)

Hofstede, Geert. (2001).Culture’s Consequences: Comparing Values, Behaviors, and Organizations Across Nations. 2Nd edition. Sage Publications.

Hovorka, O. (2014, July 11). Personal interview.

Johnson, M., Christensen, C., & Kagermann, H. (2008). Reinventing Your Business Model. Harvard Business Review, 59-68.

Jones, G.R., & George, J.M. (2011). Contemporary Management (7th ed.), McGraw Hill/Irwin, New York, NY.

Nisbett, Richard. (2004). The Geography of Thought: How Asians and Westerners Think Differently and Why. New York, New York, Free Press.

Ruben, M. (2011, February). Change Management. MGT 210. Golden Gate University, San Francisco, CA.

Streeter, S. (Director). (2012). America Revealed: Made In The USA [Documentary]. USA: Lion Television.

Tran, T. (2014, July 11). Personal interview.

Tran, S. (2014, July 11). Personal interview.

*IMPORTANT NOTE CONCERNING PLAGIARISM: Please do not plagiarize this case study. This original work was produced by Dennis Nguyen and has also been submitted to turnitin.com. If you use information from this case study, remember to reference Dennis Nguyen. If you have more questions, you are welcome to contact us.

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