The People Factor in Operations Quality
Boyer and Gray

John Gray (left), Kenneth Boyer

From U.S. hospitals plagued by preventable medical errors that claim 100,000 lives each year, to pharmaceutical manufacturers that offshore production and face increased risk of quality problems, managing operational quality can be a daunting issue.

Two new Fisher operations management faculty members are tackling different aspects of the issue, yet they both contend that people and processes are vital.

“Culture matters, standardization matters, measurement matters,” Fisher Dean’s Distinguished Professor of Operations Kenneth Boyer recently wrote in a paper, “What Medicine Can Teach Operations: What Operations Can Teach Medicine.”

Prior to Fisher, Boyer was a professor at Michigan State University’s Broad College of Business.

Currently, he is examining the culture in medicine that creates an error-prone environment and how operations management could bring lasting quality improvements. Specifically, he is studying whether the culture in a hospital is open to examining errors instead of sweeping them under the rug, and whether staff can point out if someone is making a mistake and if it’s taken in a constructive spirit. This data is collected from a survey of quality directors and chief nursing officers at 271 hospitals across the United States and matched with the core process measures that the Centers for Medicare & Medicaid Services require every hospital to collect to assess the process of care for several common conditions including heart attack, heart failure and pneumonia.

“Our results show a strong correlation between error culture and quality practices. Clearly, developing a culture of inclusiveness and teamwork in medicine (versus a culture in which doctors are not questioned) is one of the first and most important steps in error reduction.”

There are more than 4,000 hospitals in the United States alone, and most employ a “quality director” or “director of patient safety.” While many of these positions focus on data gathering as mandated by Medicare reporting requirements, Boyer says what’s also needed are staff that can push for cultural change and quality practices.

John Gray, assistant professor of operations who studies manufacturing outsourcing and offshoring, says both practices are extremely widespread and seemingly successful in the toy, textile and electronics industries, while the pharmaceutical industry, which does less offshoring and outsourcing, struggles.

“I believe there are reasons for that. Drugs tend to be fairly process-sensitive—it’s very important that the finished product look like it should and the process be executed as it should. Further, finished-product tests are necessarily incomplete—only a small percentage of products are tested, and tests can only detect a small percentage of possible defects.”

Gray recently concluded a drug industry study in which he found that offshoring poses a “statistically significant risk to manufacturing quality.” While the probability of an off-quality drug causing severe harm to a consumer is low regardless of where it is produced, the consequences of such an incident or a recall are great, and can have ramifications for a company’s long-term competitiveness.

Cultural differences, rather than geographic distance, were a key factor in Gray’s findings. “If you dig deep into the Total Quality Management literature, it highlights the necessity of behavior-based management for success. You can’t just send procedures over and have them translated and expect things to work. “Distance”—cultural, in this case—between those setting expectations and those trying to follow them is known to be a concern when behavior-based management is necessary for success,” he says.

Government regulations can only do so much, says Gray, noting that the FDA’s decision to open an inspection office in China after the 2008 Heparin incident is encouraging, but there has been historically a very low rate of inspections in China.

“There were a total of about 150 inspections in all of China’s drug plants from 1994 to 2007; and only about 50 inspections of food plants from 1998 to 2005. I think companies that are setting up shop in or importing from, for example, China should be expected to help pay for the increased cost of the regulation, as presumably one of the drivers of operating there is cost savings.”

Gray spent eight years in operations management at Procter & Gamble, where, among other things, he greatly improved the quality performance of a 50-person, multi-million-unit division that he managed; much of this improvement was made through work with suppliers. He also was involved in some outsourcing decisions. “In my personal statement on my graduate school applications, I stated that I wanted to understand the hard-to-measure, long-term effects of outsourcing and offshoring on the firms that make those decisions.” He believes a firm’s competitiveness—not to mention U.S. competitiveness in key industries—is at stake.

Looking ahead, both Boyer and Gray are excited by what the future holds for the operations management field.

“We’ve got a great history in operations with 241 operations majors in the undergraduate program. They are very interested in operations because it’s often their first job,” Boyer says, noting that there are more specialized students at the MBA level. He hopes to teach in Fisher’s new Master of Business Operational Excellence in health care.

As co-editor in chief of The Journal of Operations Management, Boyer says service operations and supply chain relationships are both hot topics. In spite of supply chain IT advances, human beings are still critical to the process. Says Boyer, “There is no magical solution in a computer; you can buy the technology but you’ve got to train your people to utilize it the right way.”

Gray says, were he graduating from an undergraduate or MBA program today, he would pursue work in high-tech, manufacturing-focused industries such as the pharmaceutical and semiconductor industries. “I also think it would be interesting to be a supply chain consultant right now because there is so much going on in a lot of industries with these issues,” he concludes.

John Gray Interview

John Gray, assistant professor of operations, discusses how his professional experience impacts teaching and research.

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“Our results show a strong correlation between error culture and quality practices. Clearly, developing a culture of inclusiveness and teamwork in medicine (versus a culture where doctors are not questioned) is one of the first and most important steps in error reduction.”

Kenneth Boyer

Dean’s Distinguished Professor of Operation

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