Vocabulary

• financials n

• augment v , to augment capital

• outfit n & v

• oust v, oust from office

• flounder, v

• to piggyback on smth

• reinvention n ,syn restructuring, turnaround, overhaul

• sensitivity n, price sensitivity

• sensitive a (products,information, market)

• yield-sensitive capital

• Income-sensitive goods

• ego-sensitive product

• also-ran n

• beneficiary n

• single-formula growth

• hubris n (comp arrogance, complacency)

• to put the company back on track

• to beat the market expectations

UNIT 5. QUALITY MANAGEMENT

Competencies ability to appreciate organizational culture, policies and processes developing translation skills enriching interdisciplinary knowledge critical evaluation of the outcomes of professional practice
	READING AND SPEAKING (1)

• What do you know about the relationship between quality and the customer loyalty?

• What is the difference between quality control and quality assurance?

• What methods of ensuring quality do you know?

• Can you name the three major stages in conventional inspection-based quality control?

• What is the essence of the philosophy of Total Quality Management (TQM)?

• What does “best practice benchmarking” involve?

• What are the basics of the Japanese quality control system?

• What is the Kaizen system?

Cross Cultural

1. Read the following text and explain the title of the article.

Delivering Two Kinds of Quality

By Keith McFarland

Success starts with making products that work. But appealing to a customer's aesthetic taste is also essential in today's marketplace

More than 20 years after the quality craze kicked off in the U.S., quality remains an elusive target for many American companies. Not that we haven't made progress. In 1980 the average car produced by Ford had twice as many product flaws (as measured by J.D. Power's survey of initial quality) as the average Japanese car.

By 1986 the Japanese auto industry lead over Ford had shrunk from 100% to about 20%, as Ford made quality "Job One." But since that impressive initial spurt of progress, many U.S. companies have struggled to keep up on quality, even as the Japanese began building more of their products in the U.S. with American workers.

Innovation curve.  The truth is, the Japanese have an unfair advantage. Japanese culture intrinsically values quality and appreciates the small details. In fact, the Japanese expression for quality isatarimae hinshitsu, which can be roughly translated as "taken-for-granted quality.

What do the Japanese take for granted when it comes to quality? They take for granted that things should work as they are supposed to, and they even see an elegance to things working properly — whether it's cars, subway schedules, traditional flower arranging, or the famous tea ceremony.

Japanese manufacturers were so obsessed with taken-for-granted quality that they created a constant stream of innovations that built on renowned quality-management consultant Ed Deming's original concepts: lean manufacturing, just-in-time industry, and design for quality. In today's competitive markets, manufacturers need to be very far along this quality innovation curve — or moving along it very quickly. If they are not, you can take for granted that they will go out of business.

This is true even for small, entrepreneurial companies. The ability to create products and services that work is no longer a source of long-term competitive advantage. It has become just the price of admission to most markets. If the stuff your competitors make works better, your customers aren't going to be customers for long.

Quality zealots. Though much improved, America's quality record still isn't what it might be. Here are some traps I've seen a lot of companies fall into on the road to quality.

1. Faking a commitment. There's no way around it. Whether you're adopting total quality management (TQM), continuous improvement, or Six Sigma, these techniques require everyone in a company to learn how to think and work differently. Too many senior executives grab onto the fad phrases as they come and go — from TQM to lean manufacturing and now Six Sigma — without taking the time to learn what these processes are and how they work. They leave the nitty gritty of quality to the folks below them — a sure way to have a quality program fail.

2. .Letting the quality zealots run wild. On the other extreme, some companies become so quality-process obsessed that quality-management techniques cease to be a tool to improve the company's performance and instead become an end in themselves. Statistical analysis should be used for questions for which a company doesn't readily have a "good enough" answer. Instead, organizations sometimes go through long analytical processes for problems that a little common sense could have solved.

3. Quality-management techniques work very well for certain processes and applications — but their efficacy is less clear in areas like sales. Nothing sours an organization on quality faster than meaningless quality busywork. Perhaps the biggest risk to companies engaged in statistical process-control methods, such as TQM and Six Sigma, is that they may lose sight of the fact that controlling errors is only part of the game.

Modern marvels. That brings us to the second of the two Japanese expressions for quality: miryoku teki hinshitsu, which means "bewitching" or "enchanting quality." This kind of quality appeals not to customer expectations and reliability (that things should do what they're supposed to), but rather to a person's aesthetic sense of beauty and elegance.

But with the hungry competitors in most markets today, taken-for-granted quality by itself may not get the job done.

BusinessWeek, February 15, 2006

2. Explain the following.

2. Why are the Japanese more receptive to quality programmes?

3. What do the Japanese add to the conventional notion of quality?

4. What is the American approach to quality?

5. What are possible snags on the way to quality?

READING AND SPEAKING (2)

3. Read the following article and speak on the importance of international standartization.

The Power of ISO

Yes, the name International Organization for Standardization is enough to put most people to sleep, so why is its acronym held dear?

It is amazing how much three letters can convey. Most people may have never heard of the International Organization for Standardization, but when they see ISO attached to a product or company, they feel more confident. They expect things to be up to standard — nothing shoddy and no cowboy service.

Marketers can only marvel at such "brand" penetration. Without any specific logo, colors or typeface, these three letters consistently give customers a feeling of confidence, even though most of them have no idea about the actual contents of any given standard. But standards are good, and that's all they need to know.

So how has ISO managed to achieve this remarkable penetration? Firstly, there is its heritage. ISO, as we know it today, was founded in 1947. However, although ISO has been around for more than half a century, it was the launching of the ISO 9000 series of standards in 1987 that heralded the evolution of ISO into a household name (or at least a "boardroom name"). Prior to ISO 9000, standards tended to be perceived as highly technical documents, the domain of engineers. ISO 9000 was the first standard of interest to all organizations, everywhere, from small companies to whole government departments.

So despite the 60-year history, it is really the organizations that have been "ISO 9000 certified" that are ISO's most effective marketing tool. Companies, keen to highlight their conformity to the latest version, ISO 9001:2000 (and more recently ISO 14001:2004 for environmental management), spread the word. You can see it on literature, websites, even letterheads. Indeed, the ISO 9000 series is now so well recognized it has become like a passport, the minimum a company must show before clients will even consider buying its products or services.

At the end of 2004, the worldwide total of certificates to the ISO 9001:2000 quality management systems standard was more than 670,000 in 154 countries, while over 90,000 ISO 14001 certificates had been issued in 127 countries.

Yet ISO's logo does not (or certainly should not) appear on any of these certificates; ISO guards its brand assets zealously. Indeed, the trademarked logo of the organization is rarely seen outside of the organization's own activities. Although you can find a plethora of logos on company websites that tell you they are certified to ISO 9001:2000 (or that their products are certified to other ISO standards), these logos should not resemble the ISO trademark. The certificates merely state that the company complies with ISO standards, and bears no seal from ISO itself. The organization's own brand identity is reserved for use by ISO and its members.

José Checa, legal adviser at the ISO Central Secretariat, comments, "ISO actively defends its logo and registered name. For example, we recently scored new successes, preventing the ISO name being misused on the Internet to mislead people into buying products or services that they believe are endorsed by ISO. Numerous actions are also being undertaken at a national level by ISO members, as they have realized the commercial value of the ISO brand and the fact that it is a powerful, additional asset that they can use to the full."

ISO is keen to outline the role it plays: It is "a network of the national standards bodies of 156 countries" that develops and publishes international standards. It does not audit organizations or products for compliance, nor does it issue certificates. This is the work of certification bodies, which can issue their own marks of approval independently of ISO for companies to use.

There are six major certification bodies with an international presence, which compete at a global level, along with hundreds of smaller organizations that tend to work more nationally.

Nicki Hirst, global marketing manager at certification body BSI Management Systems, says, "The BSI brand differentiates us from our competitors because we are synonymous with quality and expertise of service and with pioneering the certification of management systems standards. Even while our brand identity has evolved and been refreshed, our brand is always based on our heritage of independence, integrity, and innovation."

The experience of the European Union's Eco-label also demonstrates the importance of heritage. Created in 1992, this certification scheme aims to help European consumers distinguish greener, more environmentally friendly products and services. But the "Flower" — the symbol of the Eco-label — hasn't yet reached its full potential.

The aim of the EU Eco-label is to reduce environmental impacts of products and increase the environmental awareness of consumers.

Athina Koutroumani, desk officer for the European Eco-label in the European Commission, says that the idea was to develop a voluntary European-wide scheme that consumers would recognize, and understand that it meant a product or service had met rigorous environmental criteria.

But while heritage helps, it is not the only factor that influences the success of brands in the complicated world of certificates and standards. The European Foundation for Quality Management (EFQM) only began in 1989, yet its brand and the EFQM Excellence Award is fast becoming an international mark for excellence in business.

"ISO sets standards on how companies should do things — we look at how a company can surpass expectations," says Melissa Rancourt, head of operations at EFQM. "The EFQM complements ISO standards like ISO 9000.

By Edwin Colyer

Businessweek, March 17, 2006

4. Discuss the following questions.

1. Why are organizations and consumers interested in international standards?

2. What is the role of ISO?

3. Why is ISO trademark rarely seen on products or on corporate web sites?

4. How is the quality of the products certified?

5. What certification schemes were created within the European Union?

6. Are the quality standards mandatory or voluntary?

7. Which of the quality assurance schemes or standards are the most influential?

READING AND SPEAKING (3)

• What do you know about Six Sigma?

• Where does the system come from?

• Why is it described as “Six Sigma”?

• What companies were most successful in introducing and making it popular in the business world?

• Who supported and successfully applied this quality model?

5. Comment on the following quotes.

1. "We are going to shift the paradigm from fixing products to fixing and developing processes, so that they produce nothing but perfection or close to it.” — Jack Welch

2. “You can't know it all. No matter how smart you are, no matter how comprehensive your education, no matter how wide ranging your experience, there is simply no way to acquire all the wisdom you need to make your business thrive.” — Donald Trump

3. “Singleness of purpose is one of the chief essentials for success in life, no matter what may be one's aim.” — John D. Rockefeller

6. Consider the following.

The Nuts And Bolts of Six Sigma

What is it?

An analytical method aimed at achieving near-perfect results on a production line. In statistics, the Greek letter sigma denotes variation in a standard bell curve. One sigma equals 690,000 defects per 1 million. Most companies do not better than three sigma, or 66,000 errors per million. Six Sigma reduces that count to 3.4 defects per million. That saves money by preventing waste.

How does it work?

The tool achieves results by reducing subjective errors in the assessment of problems. First, auditors define a process where results are subpar. Then they measure the process to determine current performance, analyze this information to pinpoint where things are going wrong, and improve the process and eliminate the error. Last, controls are set up to prevent future bugs.

The language of Six Sigma

Black Belt — Leaders of team responsible for measuring, analyzing, improving and controlling key processes that influence customer satisfaction and/or productivity growth. Black Belts are full-time positions.

Green Belt— Similar to Black Belt but not a full-time position.

Master Black Belt — First and foremost teachers. They also review and mentor Black Belts. Selection criteria for Master Black Belts are quantative skills and the ability to teach and mentor. Master Black Belts are full-time positions.

Variance— A change in a process or business practice that may alter its expected outcome.

Process mapping— Illustrated description of how things get done, which enables participants to visualize the entire process and identify areas of strength and weaknesses. It helps reduce cycle time and defects while recognizing the value of individual contributions.

BusinessWeek, 2002

Note

bell curve — колоколообразная кривая, гауссова кривая, кривая нормального распределения

6. Scan the following text and explain the title.

Quality Isn’t Just For Widgets

Six Sigma, the quality-control and cost-cutting power tool, is proving its worth on the service side

By Michael Arndt

IN the world of manufacturing, Six Sigma has become something akin to a religion, with none other than John F. Welch as its charismatic apostle. The former chairman and CEO of General Electric Co. came late to this rigorous, statistical approach to quality control. But once he embraced it in 1996, he quickly assembled an unprecedented army of employees to pinpoint and fix problems throughout GE using the number-crunching skills they learned in Six Sigma training.

The results were awesome: In the past three years alone, these troops saved the company $8 billion, according to GE. Little wonder, then, that Welch has won so many converts preaching the cost-cutting power of this methodology.

So what is GE doing with Six Sigma under Welch's successor, Jeffrey R. Immelt? More than ever. The $126 billion conglomerate spent $600 million on Six Sigma projects in 2002 — mostly for the salaries of 4,000 full-time Six Sigma experts, plus 100,000 employees who've undergone, basic training. Altogether, they have a target of finding an additional $2.5 billion in savings in the company.

On top of that, GE is sending out its Six Sigma squads to customers such as Dell Computer and Wal-Mart Stores to help them root out what GE estimates to be more than $1 billion in inefficiencies and waste — and help GE win more business.

GE may be preeminent, but it's certainly not unique in pushing Six Sigma into new corners of its business. Originally conceived by Motorola Inc. as a quality-improvement device in the mid-1980s, Six Sigma soon morphed into a cost-cutting utensil for manufacturers of all stripes. Now, it's fast becoming the Swiss army knife of the business world. Goods producers still make up the bulk of users, who typically rely on statistics to uncover and then reduce product variance in order to boost quality and efficiency. But increasingly, manufacturers are applying Six Sigma to functions as varied as accounts receivable, sales, and research and development.

And their success in these non-factory domains has inspired Six Sigma projects at financial institutions, retailers, health-care concerns, and in other areas of the service sector. Says Gregory H. Watson, a consultant and past president of the American Society for Quality in Milwaukee: "Six Sigma might be the maturation of everything we've learned over the last 100 years about quality."

It's easy to see why Six Sigma works well in large-scale manufacturing. For one, factory processes tend to be both repetitive and easy to track as goods move along the line. Also, companies usually quantify what happens at each step. So, by measuring defects per output, they can quickly assess how a different way of doing things at any stage affects productivity or profits.

Generally the gains add up swiftly as Six Sigma squads discover ways to reduce personnel, capital spending, or overhead. Bosses can then re-deploy staff or take the gain to the bottom line. At Dow Chemical Co., for instance, each Six Sigma project has freed up an average of $500,000 in the first year. In one case the discovery that an additive was causing imperfections in packaging materials enabled Dow to reduce defective items on that line by 70%. Managers claim that in total, such improvements have saved the company more than $750 million since 1999.

Increasingly, however, manufacturers are racking up their big savings far from the factory floor. Dow Chemical, for example, projects it will save another $750 million by the end of next year as it applies Six Sigma to such areas as procurement and sales. And Six Sigma experts at 3M Co. have employed the methodology to reduce inventories and speed up R&D efforts at the company's headquarters. By judging how well employees run fix-it projects, company leaders are hoping to spot their successors.

Six Sigma isn't a cure-all, to be sure. In the first few months of a project, up-front training costs always outweigh any savings. And through the life of the project, the expense of compiling and analyzing data may also exceed what is saved, particularly in areas where a process cannot be easily standardized.

Even GE, which does thousands of Six Sigma projects a year, concedes it hasn't yet made much headway in applying Six Sigma to its legal operations. Companies also stand to lose if top management doesn't buy the program and implement the fixes recommended by its top Six Sigma analysts, known as “black belts."

But that said, GE is still pushing the envelope. Its GE Capital subsidiary recently dispatched a couple of black belts to Dell Computer Corp.'s headquarters in Round Rock, Тех., to analyze its accounts-payable process. After mapping the procedure step by step, they discovered that Dell was getting buried in paper invoices because its just-in-time manufacturing operations required that the company purchase some types of parts as often as 12 times a day. To solve the problem, the GE Capital team moved Dell from its slowpoke manual system to an Internet-based electronic filing setup. Estimated savings: $2.4 million a year.

Although Dell pockets the cash, GE can come out ahead, too. If GE customers are more productive and profitable, GE wagers that the goodwill generated through Six Sigma advice will translate directly into contracts. Jack Welch may have moved on. But to more and more companies, Six Sigma is gospel.

BusinessWeek, July 22, 2002

Note

Swiss army knife— швейцарские армейские ножи славятся качеством и обилием приспособлений, что позволяет с их помощью решать множество разнообразных задач

7. Read the text “Quality Isn’t Just For Widgets” and answer the following questions.

1. What group of quality assurance methods does Six Sigma belong to?

2. When and where was the method originally conceived?

3. What is the essence of Six Sigma methodology?

4. What are the possible gains?

5. What are the downsides of the method?

6. How did GE help its customers using its expertise in Six Sigma?

TRANSLATION

8. Translate the text “Quality Isn’t Just For Widgets”.

9. Translate the following into Russian paying attention to the words that make the statements more colourful and expressive.

1. Since the salad days of just 18 months ago, worldwide revenues from investment banking have fallen on average by 43% at the big firms, and profits by 49%, according to Boston Consulting Group (BCG).

2. Underwriting initial public offerings (IPOs) of shares is one of the juiciest bits of investment banking.

3. As they wield the axe, the heads of the biggest investment banks hope that they are merely chopping away the forced growth of the past two years, bringing a healthier cost structure back to the industry.

4. Alfa Bank, a leader of the Russian corporate-banking world, is treading water when it comes to individual accounts, growing no faster than the overall market.

5. The latest merger boom may turn out to be just a boomlet.

6. The uninspiring track record of some shipowners is but a squall compared with the storms that may be gathering over the horizon. The recent bumper returns from shipping have prompted a ship-building boom. As a result an armada of new ships is joining the world’s fleets just as the rate of growth of world trade may be slowing.

7. The bottom line, Ms Reid said, is that Coca-Cola wants to be as successful with marketing beverages geared toward kids as it is selling carbonated soft drinks to teens.

LANGUAGE FOCUS

10. Give the Russian for the following phrases from the text.

number crunching skills
to pinpoint and fix a problem
to make (much) headway in doing smth
to pocket the cash
to push the envelope

11. Translate the following into Russian.

to undergo basic training; a sales target; to make up the bulk of the users; capital spending; capital gains; public spending; consumer spending; large-scale manufacturing; economy of scale; to rack up profits; to rack up savings; sales reps; procurement and sales; to implement the recommended fixes; just-in-time manufacturing operations; to generate profit; chief quality officer; to spot one’s successor; for two successive years; to reduce inventories; to build up stocks of the goods; up-front costs; to outweigh advantages; to push the envelope; to pinpoint and fix a problem; gain in production; to gain ground; public procurement

12. Translate into English.

крупномасштабное производство; панацея (средство на все случаи); накапливать запасы; сокращать запасы; проводить корректировку товарных запасов; приносить прибыль; произвести оценку проблемы; расходы на капитал; отгрузить некий товар г-ну А; переводить работников на другое место; счета к оплате; счета к получению; накладные расходы; преимущество в конкуренции; назначить преемника; передать управление снабжением поставщику; рост производительности труда; прирост объема производства

BUSINESS SKILLS

13. Try to define quality objectives which might be set by

1. manufacturers of cheap clothes;

2. a big automaker;

3. a bus tour operator;

4. the head of a chain supermarket;

5. a shipping line which offers pleasure cruise voyages.

REFLECTION SPOT

Will you need knowledge of quality management systems in your future work and studies?