Virtual and Innovative Quality Management Across the Value Chain

Quality and quality management (QM) are terms, which are used across the supply chain in enterprises and industry. Although the term quality is quite widely used by practitioners and academics, there is no generally agreed definition of it, since different definitions of quality are appropriate under different circumstances (Helmold, 2023). In the quality management system (QMS) ISO 9001, quality is defined as the international standard that specifies requirements for a quality management system (QMS). Organizations use the standard to demonstrate the ability to consistently provide products and services that meet customer and regulatory requirements (ISO, 2023). ISO 9001 sets out the criteria for a quality management system and is the only standard in the family that can be certified to (although this is not a requirement). It can be used by any organization, large or small, regardless of its field of activity. In fact, there are over one million companies and organizations in over 170 countries certified to ISO 9001. This standard is based on a number of quality management principles including a strong customer focus, the motivation and implication of top management, the process approach, and continual improvement (Brugger-Gebhardt, 2016). These principles are explained in more detail in ISO’s quality management principles. Using ISO 9001 helps ensure that customers get consistent, good-quality products and services, which in turn brings many business benefits (ISO, 2023).

Organizational complexity has increased dramatically in recent years (Company & Tollman 2014). The result is a lot of low value-adding activities and a high level of administrative tasks. In the medium term, this leads to lower employee motivation, which can set a dangerous downward spiral in motion. Management systems have been developed to better deal with these framework conditions. The term management system originally comes from the field of quality management. Basically, this is a methodically consistent approach by organizations to achieve their goals. The essential business processes and their interfaces are described. Management systems are described and standardized by management system standards (MSS). The description of the business processes also lays the foundation for an organizational culture that promotes continuous improvement. For this purpose, performance must be regularly evaluated and weaknesses corrected. This requires clear guidelines from management and a high level of employee commitment.

Extended reality (XR) is an umbrella term encapsulating augmented reality (AR), virtual reality (VR), mixed reality (MR), and everything in between. Although AR and VR offer a wide range of revolutionary experiences, the same underlying technologies are powering XR. XR applications are used in industries like healthcare, defense, education, construction, engineering, gaming, or manufacturing (Lang & Müller, 2020).

Total quality management (TQM) refers to the continuous, ongoing activity that covers, records, inspects, organizes, and controls all areas of an organization (company, institution, etc.) and serves to introduce quality as a system goal and guaranteed permanently (Oakland et al. (2020). Total quality management (TQM) is a management strategy that emphasizes a continuous, organization-wide effort to maintain quality customer service and satisfaction. The goal of TQM is to foster customer loyalty by delivering service levels that keep customers from coming back again. The strategy requires consistent feedback from employees and customers to determine how services and products can be improved across the organization and is designed to help companies find a path to strengthen their position in the market, increase productivity, improve customer loyalty and satisfaction, boost employee morale, and improve processes. Whereas many quality management strategies focus on specific departments, TQM includes every department in continually improving a company’s products and services. According to the TQM philosophy, the more you improve processes in every department, the easier it will be to deliver higher-quality products and services to customers. With TQM, everyone in the company should be focused on quality improvement with the shared goal of boosting customer loyalty and satisfaction. TQM is the approach to implement a customer-focused and centric quality mindset across all functions in the company and across all areas in the value chain as shown in Fig. 4.1.

The quality movement started with Shewhart control charts in the 1940s. But quality has always been present in our historical monuments, artwork, and literature. There are various aspects of quality such as consumer’s viewpoint of quality, producer’s viewpoint of quality, personal quality, behavioral quality, quality practices, and other tools. Reliability, education, training, teamwork, and management communication are other important aspects which are also included in quality discussions. Overall demand for most of the goods and services has been on the increase, year after year. Due to rise in the purchasing power of people, effective demand for many products and services has also been ever increasing. In many areas there is also scarcity of goods and services. Present-day consumer or the customer is better informed and enlightened. He is no longer prepared to accept things on their trace value or to take things for granted thanks to spread of general education and awareness, mass media, TV, radio, and other marketing and publicity techniques. He wants genuine return for the money he is prepared to part with. Consumers, today, have a wide variety of products and attractive to choose from among. People are interested in a better alternative of value and worth, for the money they are prepared to expend, rather than to compromise with cheap substitutes or products of inferior quality and standard. After the ravages of World War II, Japan was obsessed with the desire to rebuild the nation on the ashes of the war in general and of Hiroshima in particular. It was keenly felt by the Japanese that experts were the only hope for putting their tattered economy back on its feet. For this, they also realized that they must wipe out their earlier reputation for producing cheap and shoddy goods if at all they hope to find a place for their products in the international markets.

Strategy is the process of overseeing tasks and activities that should be executed to achieve the desired level of excellence in QM across the value chain. It involves developing a quality policy, quality control and improvement, and quality assurance throughout the organization. The proper QM strategy will help to ensure that all the organization’s stakeholders work together to improve processes, products, services, and culture. QM strategies are the techniques and standards that are aimed at following the set plan and achieving the desired outcome. Strategic management is the formulation and deployment of QM tools, procedures, and tools within the overall framework of strategic planning, in a way that is aligned with all the other initiatives such as process reengineering, cost management, inventory control, and target analysis. Quality management has therefore to be aligned with the corporate strategy on all levels and properly coordinated (Srinidhi, 1998).

A quality management system (QMS) is the combination of methods, principles, and processes of quality excellence applied in an organization. A QMS focuses always on meeting and overachieving customer requirements. The QMS has a set of guidelines that are defined by a collection of policies, processes, documented procedures, and records. This system defines how a company will achieve the creation and delivery of the product or service they provide to their customers. When implemented in your company, the QMS needs to be specific to the product or service you provide, so it is important to tailor it to your needs. However, in order to help ensure that you do not miss elements of a good system, some general guidelines exist in the form of ISO 9001 (Quality Management System—Requirements), which is intended to help standardize how a QMS is designed. ISO 9001 is the international standard for quality management systems (QMSs), published by ISO (the International Organization for Standardization). The standard was most recently updated in 2015 and is referred to as DIN EN ISO 9001:2015. In order to be released and updated, ISO 9001 had to be agreed upon by a majority of member countries so that it would become an internationally recognized standard, which means it is accepted by a majority of countries worldwide. ISO has a range of standards for quality management systems that are based on ISO 9001 and adapted to specific sectors and industries. QMs are accredited by globally applied standards. The advantages of a QMS can be outlined as follows:

The balanced scorecard (BSC) in Fig. 8.1 is a strategic planning and performance management tool and was first introduced by the accounting academic Dr. Robert Kaplan and business executive and theorist Dr. David Norton. It was first published in 1992 in a Harvard Business Review article (Helmold, 2022). Dr. Kaplan and Dr. Norton took previous metric performance measures and adapted them to include nonfinancial information. The BSC is the performance metric used in strategic management to identify and improve various internal functions of a business and their resulting external outcomes. It is used to measure and provide feedback to organizations. Data collection is crucial to providing quantitative results, as the information gathered is interpreted by managers and executives and used to make better decisions for the organization. The BSC system connects the strategic elements like mission, vision, core values, and strategic objectives with the more operational elements such as performance measures, key performance indicators, targets, and actions (projects that help you reach your targets) of the enterprise or organization (Kaplan & Norton, 1992, 1996). The BSC suggests that management views the organization from four perspectives in order to develop objectives, measures (KPIs), targets, and initiatives (actions) relative to each of these points of view:

Cost of quality (COQ) is defined as a methodology that allows an organization to determine the extent to which its resources are used for activities that prevent poor quality, that appraise the quality of the organization’s products or services, and that result from internal and external failures. The cost of quality consists of four categories such as prevention cost, appraisal cost, internal failure, and external failure (see Fig. 9.1). The cost of quality consists of two categories of cost of conformance and cost of nonconformance and four subcategories such as prevention cost, appraisal cost, internal failure, and external failure. Another purpose the cost of quality information can serve is to help management evaluate the relative importance of quality problems and identify opportunities for cost reduction. They can also aid in budgeting and cost control activities.

Added value can be defined as products, services, processes, and activities, which generate a certain value to the organization and enterprise. Value-added must be regarded from the customer viewpoint and is everything for which the customer is willing to pay for. It is important that value-added is recognized and perceived as value by the client (Bertagnolli, 2020). Many studies have shown that we only add value to a product for less than 5–15% of the time; the rest of the time is wasted (Helmold & Terry, 2021). The opposite is non-adding value or waste. Waste (Japanese: muda, 無駄) is anything which adds cost or time without adding any value or any activity which does not satisfy any of the above conditions. Value-added is a waste or a non-value-adding activity in a process. The focus of operations management must therefore be in eliminating such activities like waiting time or rework (Liker, 2020). Enterprise must target value-added process and eliminate or reduce waste, whereby waste can be visible (obvious) or invisible (hidden) as shown in Fig. 10.1 (Lehmann, 2021). The main idea of lean management is about highlighting the things that add value by reducing or eliminating everything else (waste) (Sahoo, 2019). As a proven consequence, when you eliminate waste, the quality of products improves, while production time and costs are reduced. Figure 10.2 illustrates that waste must be ideally eliminated or reduced.

The lean or Toyota Production System (TPS), the just-in-time production system or lean production system can be described as the ideal combination of four principles (Imai, 1986). These principles are the (1) zero defect principle, the pull principle, the tact principle, and the flow principle as displayed in Fig. 11.1 (Helmold & Samara, 2019). The TPS is an integrated socio-technical system, developed by Toyota, that comprises its management philosophy and practices. The TPS is a management system that organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers. The system is a major precursor of the more generic lean manufacturing (Bertagnolli, 2020).

The term supply management as key value-adding function replaces old definitions of procurement or purchasing (Helmold & Terry, 2021). This definition is in line with Porter’s description of value chains (Porter, 1996). A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes from business management and was first described and popularized by Michael E. Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance in the upstream supply management or the supply side. Figure 12.1 displays the operations, the upstream supply side (supply management) and the downstream supply side (customer or demand side side). In Porter’s value chain framework (see Fig. 12.2), inbound logistics, operations, outbound logistics, marketing and sales, and service are categorized as primary activities. Secondary activities include procurement, human resource management, technological development, and infrastructure. As many companies have external value chains (purchase of goods, services) of more than 80%, supply management has here the most significant role in any enterprise. In many enterprises, functions are still working independently from each other, leading to a large amount of waste and inefficiencies. Many industries are currently faced by fierce competition. This is forcing manufacturing companies to concentrate on core competencies and to transfer the production of components, goods, and services to external suppliers (Helmold, 2021). The number of value-adding activities has decreased constantly and now lies between 10% and 30% in this industry (Dyer, 1996). The company Apple has no production and decided to outsource the manufacturing of iPads or iPhones to the company FoxConn. Such a development has had a great influence on the structure of supply chains and supplier relationships. Supply chains (the terms “supply chains” and “supply networks” are used synonymously in the literature) have become more complex and international, as pointed out by several authors Christopher and Peck see the level of complexity increasing in the upstream supply chain management of manufacturing companies in many industries, a trend which is characterized by the growing transfer of activities to suppliers and supplier networks, high numbers of supply chain layers (tiers), and the ongoing globalization of supply chains (Christopher & Peck, 2004). As a consequence, vulnerability and risk exposure have risen significantly. The rapid increase in supplier activities therefore directly affects supply management, as emphasized by Emmett and Crocker (2009). In recent years, many companies have reduced their value-adding activities and implemented efficiency-oriented cost reductions, e.g., outsourcing, single sourcing, low-cost country sourcing, platform concepts, lean management, design-to-cost approaches (Gürtler & Spinler, 2010). Supply management has become more important in core and peripheral business areas and is aimed at building resilient supply chains. Resilience is based on being able to anticipate, manage, and prevent supply chain disruptions at an early stage (Christopher & Peck, 2004). On the other hand, supply risks have risen due to increased dependency on supplier networks (Kersten et al., 2008). Figure 12.1 depicts the supply chain including the supply management phases. Resilience means the optimum levels of quality, cost, delivery, and alpha objectives (Helmold & Terry, 2021).

Quality means providing value to the customer, that is, offering conditions of product use or service that meet or exceed customer’s expectations, yet are still affordable. Quality also takes into account the reduction of waste that a product may cause to the environment or human society, yet still allowing the manufacturing company to maintain customer satisfaction. Another interesting element within the concept of quality is the “wow” effect. Quality delivers to the customer not only what he wants, but also what he never imagined he wanted—and that once he has it, he realizes that this product was exactly what he always had wanted. However, this is still a very subjective judgment. In today’s world, companies are still struggling to be consistent in meeting basic customer needs. Quality is the degree to which an object or entity (e.g., process, product, or service) satisfies a specified set of attributes or requirements. The quality of something can be determined by comparing a set of inherent characteristics with a set of requirements. If those inherent characteristics meet all requirements, high or excellent quality is achieved. If those characteristics do not meet all requirements, a low or poor level of quality is achieved. Quality is the degree to which a set of inherent characteristics fulfils requirements, a subjective term for which each person or sector has its own definition. In technical usage, quality can have two meanings: In the end, quality is an outcome, a characteristic of a good or service provided to a customer, and the hallmark of an organization which has satisfied all of its stakeholders. Customer requirements are the core ideal behind all quality definitions. Other factors related to quality are exact and desired amount of the product to be manufactured and offered, pace of product distribution, speed of customer service, appropriate pricing in line with supply and demand pressures, degree of accuracy with which a product is manufactured concerning its design, ease of use and safety, reliability, impact the product has on the society and the environment, etc. Figure 13.1 depicts that quality is related to value, which customers expect to be delivered from a company as part of the input-transformation-output model (Helmold & Terry, 2021). Quality elements are demanded and expected in line with the optimal cost and on-time delivery. Additionally, customers have additional expectations (alpha) in terms of friendliness, competencies of personnel, or sustainability.

Leadership is defined as the way of motivating and directing a group of people to jointly work toward achieving common goals and objectives (Helmold & Samara, 2019; Fatma, 2015). The leader is the person in the group that possesses the combination of personality and leadership skills that makes others want to follow his or her direction. Leadership implies formal and informal power distribution. The Tannenbaum-Schmidt leadership continuum is a model showing the relationship between the level of authority you use as a leader and the freedom this allows your team (Tannenbaum & Schmidt, 2009). At one end of the continuum are managers who simply tell their employees what to do. At the other end of the continuum are managers who are completely hands off. As you move from one end of the continuum to the other, the level of freedom you give your team will increase and your use of authority will decrease. Most managers and leaders will lie somewhere in the middle between these two extremes (Fig. 14.1). The leadership continuum was developed by Robert Tannenbaum and Warren Schmidt in their 1958 Harvard Business Revie (HBR) article: “How to Choose a Leadership Pattern.” Tannenbaum was an organizational psychologist and professor at the UCLA Anderson School of Management. Schmidt was also a psychologist who taught at the UCLA Anderson School of Management. Most leadership models ring-fence a leadership style and analyze it in isolation from other leadership styles. However, in practice, a single leadership style is not appropriate for all situations. Sometimes you might want to borrow elements of another leadership style to use with an individual within your team. Other times you might completely change your style if the situation requires it. Tannenbaum and Schmidt argued that there are certain questions to be considered when selecting a leadership style (Fig. 14.2):

The permanent change and transformation of organizations is an important element in order to adapt to the environment. Change management can be defined as the sum of tasks, measures, and activities that are intended to bring about a comprehensive, cross-departmental, and far-reaching change in an enterprise or organization. Change management includes the implementation of new a mission, vision, strategies, structures, systems, processes, and behaviors in an organization. The ultimate goal of change is to obtain a long-term favorable position in the market and to gain a sustainable competitive advantage (Helmold, 2021). Synonyms for change management found in literature are business process reengineering, turnaround management, transformation management, lean management, innovation management, or total quality management (Vahs, 2019). Change is increasingly determining the everyday businesses and activities of companies. In order to manage change in the most optimal way, special change management techniques are required, which can be summarized under the term change management (Lauer, 2019, 2020). The human factor is at the forefront of all considerations, because the implementation of change depends on the active support of employees. Since everyone has their own needs, ideas, and experiences, some of which do not conform to the official company organization, there can be no simple recipe for how to successfully manage change. Rather, it is a complex process that has to start at three points: the organization and individuals concerned, the corporate structures, and the corporate culture (Lauer, 2019). Another important element in the context is the technological factor including systems, routines, methods, and instruments (Helmold, 2021). Figure 15.1 summarizes the elements of change management (Helmold & Terry, 2021).

With this understanding for climate change and carbon-free industry needs, green thinking, ESG is becoming a mainstream corporate initiative to save and maintain our resources. ESG is the abbreviation of environmental social governance and is seen as part of a further wording and familiar description of corporate social responsibility to evaluate one’s company’s social responsibility (Euramco, 2021). It is seen as voluntary efforts of corporate companies and not driven by country’s law or global regulations. Further, it is a part of the CSR setup for sustainability and ecological behaviors in connection with corporate values, etiquettes, and investment decisions (Euramco, 2021). An important baseline of the overall ESG discussion is the kind of products, what the respected company is offering to their customers, and how those products are manufactured in regard to climate and environmental protection; especially the carbon footprint is more and more a critical element in corporate evaluations. Many corporate companies and nonprofit organizations are targeting CO2-neutral operations in the next decade or even until 2030 with the reduction of plastic components; green efficient electricity like wind, water, or solar energy supply; and sol heating. Also, e-mobility like electric cars, using shared public transportation and avoiding petrol-based cars and kerosine-based planes, are part of this development of demonstrating ESG. Further items are to be considered are as follows:

QM activities involve negotiations with several stakeholders across the value chain. QM responsible employees face negotiations with internal colleagues, customers, suppliers, or stakeholders in the value chain. Therefore, it is necessary that employees receive negotiation training as part of the required competency profile. Negotiations in QM consist of negotiations and agreements of quality plans, quality criteria, control plans, deadlines, and many other aspects. There are many negotiation concepts on the market, whereby the sequence of negotiations is identical. Successful negotiations must start with a profound and detailed preparation and will always terminate with the agreement and contractual terms (Helmold et al., 2020).

Problem-solving consists of using generic or ad hoc methods in an orderly manner to find solutions to problems. Some of the problem-solving techniques developed and used in philosophy, artificial intelligence, computer science, engineering, mathematics, medicine, and societies in general are related to mental problem-solving techniques studied in psychology and cognitive sciences (Helmold, 2021). The term problem-solving has a slightly different meaning depending on the discipline. For instance, it is a mental process in psychology and a computerized process in computer science. There are two different types of problems—ill-defined and well-defined—and different approaches are used for each. Well-defined problems have specific end goals and clearly expected solutions, while ill-defined problems do not. Well-defined problems allow for more initial planning than ill-defined problems. Solving problems sometimes involves dealing with pragmatics, the way that context contributes to meaning, and semantics, the interpretation of the problem. The ability to understand what the end goal of the problem is and what rules could be applied represents the key to solving the problem. Sometimes the problem requires abstract thinking or coming up with a creative solution.

Brainstorming is an idea generation method developed by Alex F. Osborn in 1939 and modified by Charles Hutchison Clark, the purpose of which is to encourage the generation of new, unusual ideas in a group of people. He named it after the idea behind this method, namely, using the brain to storm a problem (literally: using the brain to storm a problem). In brainstorming, ideas and suggestions on a topic are freely expressed and collected. It does not matter how mature and high quality an idea is, but first of all that as many ideas as possible are collected. It is important that all participants collect and publish ideas.

Now the playbook is we build AI tools to go find these fake accounts, find coordinated networks of inauthentic activity, and take them down; we make it much harder for anyone to advertise in ways that they shouldn’t be. (Marc Zuckerberg)

In the future, the QM function will become more agile and adaptable in the VUCA world. VUCA is an acronym that stands for volatility, uncertainty, complexity, and ambiguity—qualities that make a situation or condition difficult to analyze, respond to, or plan for. Understanding how to mitigate these qualities can greatly improve the strategic abilities of a leader and lead to better outcomes (Helmold et al., 2023). Global trends, the ongoing globalization, and the COVID-19 pandemic have taught us that businesses need to be prepared for the unexpected (Veeva, 2021). When a crisis could be around the corner, the most effective strategy is adaptability based on thorough risk analysis. Businesses stand a better chance of maintaining their quality management obligations through a crisis when they have contingencies in place.