The following interview with Nigel Grigg, Ph.D. was conducted with the CERM Risk Insights blog. Grigg has been involved with quality management for more than 30 years. He started at IBM’s PC manufacturing plant in Scotland and worked as a quality engineer for a major supplier to Rolls Royce and Boeing before becoming an ISO 9001 internal auditor. In 2016 he became a professor of quality at Massey University. He has written more than 260 articles and is a Fellow of the Chartered Quality Institute, a senior member of ASQ, a director and former president of the New Zealand Organisation for Quality, and an active supporter of the Australian Organisation for Quality. He is also the associate editor of Total Quality Management and Business Excellence and is a member of the New Zealand national reference group of ISO/TC 176, the technical committee responsible for the ISO 9001 standard.
Q: With your extensive involvement in quality how would you describe the status of the quality profession in New Zealand and Australia?
NG: It is always hard to generalize about countries, because there are always islands of good, excellent, poor, and downright bad practice within every country. The following are some observations and reflections based on the past 18 years that I have been based in New Zealand.
New Zealand and Australia engaged with quality very early, as pioneers in the supply of chilled and frozen meat to distant markets such as the UK. Quality control was a vital concern in supplying these markets. Other exported products including flax, wool, coal, iron, and gold played major roles in wealth creation in the earlier decades. As with other developed western countries, the manufacturing base has gradually dwindled, and the two economies are now characterized by service industries, tourism, construction, mining and agri-commerce (forestry, fisheries, dairy, other animal and plant-based products). In terms of business demographics, both countries have a high proportion of small and micro enterprises. These organizations which have organically grown tend to lack formalized management expertise or well-defined systems.
On the positive side, it also creates an environment where flexibility and innovation potential are high, and both countries are famed for their innovation. Both countries still export a lot of raw material (including animal, plant, and mineral-based products), and much more could be done to integrate the value-add operations closer to home to release more value from these raw materials.
The worldwide index on culture developed by Geert Hofstede has Australia and New Zealand scoring relatively high on the dimensions of masculinity individualism and indulgence, while scoring lower on power-distance and long-term orientation. Organizations typically have flat management structures, and employees are largely individualistic. There are OECD-recognized issues with workplace bullying, and many domineering CEOs, not properly challenged by their Boards, have led successful companies and other organizational entities down the wrong path. So I feel that governance and leadership are areas where I have observed that quality could play a greater role and offer much-needed guidance.
Use of ISO 9001 and related standards is low relative to nearby Southeast Asian countries, and a perception remains locally that ISO 9001 is “for manufacturing.” Some high-profile quality failures in recent decades can certainly be attributed to the lack of robust systems or adoption of standards. In New Zealand, the “leaky homes crisis” concerned timber-framed homes built between the late 1980s and early 2000s, which were not weather-tight and suffered from damp and condensation. The (avoidable) cost of this is reckoned to be more than NZ$11 billion.
Both countries have active professional quality organizations (respectively, the Australian and the New Zealand Organisations for Quality). They have each been in existence for more than four decades and provide information, training, certification, and professional networking for quality professionals. Collaboration between the organizations is healthy and high, and they run a joint trans-Tasman magazine, Quality Business. Both countries have hosted W. Edwards Deming seminars, and Australia also has an active College of Juran Medalists, having some extremely knowledgeable senior figures in the local quality field as inductees. The memberships of the organizations are relatively small, however, which is of continual concern.
I have found that the fundamentals of quality management are often overlooked, while the focus of management is on more fashionable methods such as lean, Six Sigma, agile, and others. Our research has shown that these methods often fail to be sustained, precisely because the basic culture, systems, and embedded improvement practices are missing. My view is that both countries need to focus on the basics, such as developing process and systems thinking, basic process control methods, and formalized quality systems.
Finally, it is important to mention that both countries have indigenous communities with very traditional and strongly developed cultures and practices. Many management and quality theories are highly generalized and developed from the United States and European perspectives, and so much more can be done to explore what quality, value, risk, people management, and governance mean for, and within, the Maori and Aboriginal cultural contexts.
Q: You just published a couple of articles, and both deal with quality and risk. One of these was in Quality Business entitled, “Introducing the QVR Model: Quality: Conceptualized as a Balance Between Value, Risk and Cost.” Would you summarize your article for the lay person and describe the importance of risk in quality management?
NG: I will answer this by describing the development of the model and articles. As a teacher and practitioner, I am always trying to find the essence of quality and quality management, so that I can create meaningful and useful courses for very varied groups of students. At Massey University, we teach quality to undergraduates and postgraduates, professional working managers, and government officials from the Association of Southeast Asian Nations (ASEAN) and China. The articles referred to are the result of this ongoing reflective process.
For example, while the Six Sigma methodology is very closely aligned to quality management and contains a lot of standard quality tools such as SPC, FMEA, QFD, and COQ, lean is less obviously a quality management methodology, and incorporates many tools that are wider operations management methods (such as just in time, Kanban scheduling, and inventory management models). It also utilizes quality circle improvement tools and methods based on the PDCA cycle. Thinking about what makes lean a relevant methodology within quality management led to me view lean as primarily oriented towards the delivery of customer value, which is something that quality has always aimed to do. Quality for the customer is defined by what they value in the product or service and are willing to pay for. Lean also looks to remove sources of waste, which detract from value flow and add cost, which the customer eventually pays for. Taking this further, quality control (including statistical process control) has always been oriented towards reducing unwanted variations that also detract from the quality that has been designed into the product or service. Things that adversely affect the delivery of value to the customer are forms of risk in the value stream, and quality management systems are aimed at ensuring that processes are well managed, and these risks are managed. If the processes and risks are well understood and controlled, then the flow of customer value can be achieved at minimum additional cost. I came to see value, risk, and cost as three corners of a triangle which is balanced on a fulcrum. We do not want excessive risk or excessive cost which will tip the triangle away from delivering value.
When I explored the literature, I noticed that this balancing act has been extensively written about in relation to customers’ perceptions of products and services. The customer will buy a product (or service) that they value, providing they do not perceive that excessive risk or cost might result from the purchase. The tipping point is unique for all customers, and for all products. Some customers are more risk averse and some are more price conscious than others. Putting the two together, it seems to me that the organization can carefully manage value, risk, and cost so as to achieve the right profile in the product or service. For example, highly visible safety checks help to reassure the customer that a product or service is safe and moves their perception towards value and away from risk.
Taking this further, this then led me to consider the tools and methods that are used in quality management. If we take a tool such as failure mode and effects analysis (FMEA), it is (arguably) oriented towards managing risk, because it analyzes failure modes, their outcomes, and probability of occurrence. Quality function deployment (QFD), on the other hand, is more about defining customer value through voice of customer (VOC) ratings, and then designing a process that can deliver those value requirements.
Q: What do you think the future of quality will be?
NG: This question is very hard to answer because the world is changing rapidly and disruptively.
We live in the era of Industry 4.0, where many writers are talking about Quality 4.0. This era is characterized by disruptive advances in information and computer technology (ICT), artificial intelligence (AI), and the Internet of Things (IoT); real-time big data providing multiple data points on the precise likes and dislikes of every individual consumer; 3D printing and mass customization; and vast, responsive supply networks that can supply almost anybody with almost anything. The age of the isolated “factory” is coming to an end, and with it the idea of “the customer” as an aggregate construct. Increasingly, products and services are tailored to the precise requirements of individual customers, who are ordering online and demanding increased transparency and traceability, not to mention sustainable, ethical, and legal practices.
For an organization that can access real-time, online quality control easily and cheaply with visual recognition systems linked to AI, there is less of a role for statistical quality control methods with associated sampling procedures.
A customer requiring a component will be able to download the blueprint for a 3D printed component and take that to a 3D printing bureau or print at home exactly as required (with regard to colors, materials, and specifications). This means less need for many of the tools and methods associated with high-volume production or auditing of production systems. This could even apply to future food products 3D printed from insect-based protein.
With the current lockdown and travel suppression, auditing is increasingly becoming remote-based. This may persist and change the way that audits are carried out, changing the skills requirements for auditors.
Despite these future possibilities, some existing quality practices are still prevalent and will remain so. Increasingly stretched-out supply chains create the need for multiple product handovers and involve many supply chain actors. This creates opportunity for adulteration, contamination, fraud, product switching, loss, unwanted variability, and/or plain incompetence. Examples have been seen in recent years, such as the European beef/horsemeat scandal of 2013, where oversight of the supply chain integrity was simply lost allowing fraud on a huge scale. Increasing reliance on IT is further increasing the risk of online fraud daily and cyberattacks are becoming more serious and prevalent. For example, the New Zealand stock exchange was recently brought down for several days by a cyberattack.
Our increasingly fragmented, stretched-out, and networked value chain context has the potential for positive and negative effects. A major challenge will be providing the consumers with individualized value while providing traceability and transparency, and assuring the effectiveness, integrity, and resilience of value chains and networks.
Q: Looking at the current quality environment, what skills do you think the quality professional will need in the future?
Along with colleagues from Malaysia and Australia, I recently undertook a study to identify the future educational requirements for ISO 9001 auditors. Many are not surprising, given the above comments, and I will integrate some of them into this answer.
Certain skills like verbal and written communication (both horizontal and vertical), analytical capability, interpersonal, and leadership skills have always been a requirement for quality professionals. These requirements have not changed.
In an age of supply chain risk and enhanced needs for corporate ethics, transparency, and visibility, quality professionals will need to understand organizational context and governance. Managing or improving a process will require a sound understanding of the supply chain context and the purpose and role of the process within it. Systems thinking has always been a core principle of quality management, it is just that now the systems are becoming more stretched, vulnerable, interdependent, and visible than ever before. A solid understanding of the supply chain and the role of a process within this will be essential.
IT familiarity is required of us all to operate in today’s context, but in the Industry 4.0 era, where much of quality control is real time, a good awareness of technology will become imperative for quality managers. Similarly, an awareness of data quality will be invaluable in the “big data” analytics era, since data drive the systems (human and IT) and represent the critical input factor to effective decisions.
Critical thinking and awareness are increasingly essential. We are living in a “soundbite” era, where many improvement methodologies are being promoted and sold to industry based on a few glib and well-polished but often unsupported assertions. For my own quality students, I try to encourage them to always think critically when presented with a model, tool, or method. This does not mean being critical; it means surfacing basic unspoken assumptions and looking for the positive and negative aspects before adopting. Every tool is effective within a certain context, but few if any are effective within every context. The informed quality manager must understand their own operational context, and then choose the supporting methodology that fits the context better than others.
The same can be said for culture. There is a lot of discussion about the need to “change culture” or achieve a “desirable culture.” But organizational culture is more complex and multi-layered than many realize. Changing an organizational culture is a gradual process, and I believe it is more useful to be able to work with the culture that exists, which is often more than one culture (there are usually organizational sub-cultures!) The critical manager recognizes that culture is not a light bulb with a simple switch and seeks to understand the positive and negative aspects of the culture that they are working within, applying practices and tools that work well within that culture.
International supply chains have only increased this complexity, whereby managers are managing across organizational and national cultures. I have observed many quality and improvement initiatives to fail because they did not fit the prevailing culture, and a week or two of immersion, training, or team building will not change that culture quickly.
Finally, the issue of supply chain vulnerability and risk is increasing. The quality manager needs an awareness of risk and an understanding of risk-based thinking to be effective in the contemporary environment. This means understanding risk as uncertainty, with outcomes that are both positive and/or negative and anticipating risks that were once unthinkable. In 2018, the Australian strawberry harvest was severely affected by a single disgruntled farm worker placing one or more needles into punnets of strawberries. Copycat incidents followed, and the result was devastating to the yield and reputation of the sector. It could easily have been far more serious and deadly. The industry was not prepared in terms of risk planning, simply because the attack was “unthinkable.”