Management of Quality McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All...

Management of Quality

Chapter 9

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 9: Learning ObjectivesYou should be able to:

1. Define the term quality as it relates to products and as it relates to services

2. Explain why quality is important and the consequences of poor quality

3. Identify the determinants of quality4. Distinguish the costs associated with quality5. Compare the quality awards6. Discuss the philosophies of quality gurus7. Describe TQM8. Give an overview of problem solving9. Give an overview of process improvement10. Describe and use various quality tools

Instructor Slides 9-2

Quality Management

What does the term quality mean? Quality is the ability of a product or

service to consistently meet or exceed customer expectations.

Good Quality/Bad QualityName 1 product you recently purchased that has good quality.

Why is it good quality?

___________________________________________

Name 1 product you recently purchased that has BAD quality? Why is it poor quality?

___________________________________________

Quality ManagementQuality: The ability of a product or service to

consistently meet or exceed customer expectationsFor a decade or so, quality was an important focal point in

business. After a while, this emphasis began to fade as other concerns took precedence Prior to the 1970s and 1980s, quality was not a focal point of U.S. companies Foreign competition, due in part to a focus on quality, was able to capture

significant shares of U.S. markets Since the 1980s, quality has been increasingly embraced by U.S. executives

There has been a recent resurgence in attention to quality given recent experiences with the costs and adverse attention associated with highly visible quality failures: Auto recalls Toys Produce Dog food Pharmaceuticals


Reactive vs. Proactive QualityQuality Assurance

Reactive Emphasis is on finding and correcting defects before

they reach the market

Strategic Approach Proactive Focuses on preventing mistakes from occurring Greater emphasis on customer satisfaction Involves all manager and workers in a continuing effort

to improve quality

Dimensions of Product QualityPerformance– main characteristics of the productAesthetics– appearance, feel, smell, tasteSpecial features– extra characteristicsConformance– how well the product conforms to design

specificationsReliability– consistency of performanceDurability– the useful life of the productPerceived quality– indirect evaluation of qualityServicebility– handling of complaints or repairs


Dimensions of Service Quality Convenience– the availability and accessibility of the service Reliability– ability to perform a service dependably, consistently,

and accurately Responsiveness– willingness to help customers in unusual

situations and to deal with problems Time– the speed with which the service is delivered Assurance– knowledge exhibited by personnel and their ability

to convey trust and confidence Courtesy– the way customers are treated by employees Tangibles– the physical appearance of facilities, equipment,

personnel, and communication materials Consistency– the ability to provide the same level of good

quality repeatedly


Determinants of Quality Quality of design

Intention of designers to include or exclude features in a product or service

Quality of conformance The degree to which goods or services conform to the intent

of the designers Ease-of-Use and user instructions

Increase the likelihood that a product will be used for its intended purpose and in such a way that it will continue to function properly and safely

After-the-sale service Taking care of issues and problems that arise after the sale


Responsibility for Quality

Top managementDesignProcurementProduction/operationsQuality assurancePackaging and

shippingMarketing and salesCustomer service

Everyone in the organization has some responsibility for quality, but certain areas of the organization are involved in activities that make them key areas of responsibility.


Benefits of Good QualityEnhanced reputation for qualityAbility to command premium pricesIncreased market shareGreater customer loyaltyLower liability costsFewer production or service problemsLower production costsHigher profits


The Consequences of Poor QualityLoss of businessLiabilityProductivityCosts


Costs of QualityAppraisal Costs

Costs of activities designed to ensure quality or uncover defects

Prevention CostsAll TQ training, TQ planning, customer

assessment, process control, and quality improvement costs to prevent defects from occurring


Costs of QualityFailure Costs - costs incurred by

defective parts/products or faulty services.Internal Failure Costs

Costs incurred to fix problems that are detected before the product/service is delivered to the customer.

External Failure CostsAll costs incurred to fix problems that are detected

after the product/service is delivered to the customer


Ethics and QualitySubstandard work

Defective productsSubstandard servicePoor designsShoddy workmanshipSubstandard parts and materials

Having knowledge of this and failing to correctand report it in a timely manner is unethical.


Quality Contributors

Contributor

Key Contributions

Shewart Control charts; variance reduction

Deming 14 points; special vs. common causes of variation

Juran Quality is fitness-for-use; quality trilogy

Feigenbaum Quality is a total field; the customer defines quality

Crosby Quality is free; zero defects

Ishikawa Cause-and-effect diagrams; quality circles

Taguchi Taguchi loss function

Ohno and Shingo

Continuous improvement


Deming’s 14 PointsDeming’s 14 Points

1. Create constancy of purpose toward improvement of product and service with a plan to become competitive and stay in business.

2. Adopt the new philosophy. We are in a new economic age. We can no longer live with commonly accepted levels of delays, mistakes, defective materials, and defective workmanship

3. Cease dependence on mass inspection. 4. End the practice of awarding on the basis of price tag.5. Find problems. It is management’s job to work continually on the system.6. Institute modern methods of training on the job7. The responsibility of foremen must be changed from sheer numbers to

quality.8. Drive out fear, so that everyone may work effectively for the company.9. Break down barriers between departments.10. Eliminate numerical goals, posters, and slogans for the workforce asking for

new levels of productivity without providing methods.11. Eliminate work standards that prescribe numerical quotas.12. Remove barriers that stand between the hourly worker and his right to pride

of workmanship.13. Institute a vigorous program of education and retraining.14. Create a structure in top management that will push every day on the above

13 points.Instructor Slides 9-16

Quality Awards and CertificationQuality Awards

Deming PrizeMalcolm Baldrige National Quality AwardEuropean Quality Award

Quality CertificationsISO 9000ISO 14000ISO 24700


http://www.juse.or.jp/e/deming/

http://www.nist.gov/baldrige/

http://www.efqm.org/

Benefits of the Baldrige Competition1. Winners achieve financial success2. Winners share their knowledge3. The process motivates employees4. The process requires obtaining data5. The process provides feedback

The Baldrige Competition


Award Categories1. Education2. Healthcare3. Manufacturing4. Nonprofit/Government5. Service6. Small Business

The Baldrige Competition


Baldrige Criteria


International Organization for Standardization

ISO 9000 Set of international standards on quality management

and quality assurance, critical to international business

ISO 14000 A set of international standards for assessing a

company’s environmental performance

ISO 24700 Pertains to the quality and performance of office

equipment that contains reused components

Quality Certification


http://www.iso.org/iso/home.html

http://www.iso.org/iso/home.html

Quality CertificationISO 9000: 2005

Quality Principles:Principle 1 Customer focus Principle 2 Leadership Principle 3 Involvement of people Principle 4 Process approach Principle 5 System approach to management Principle 6 Continual improvement Principle 7 Factual approach to decision making Principle 8 Mutually beneficial supplier relationships


http://www.iso.org/iso/iso_catalogue/management_and_leadership_standards/quality_management/qmp.htm

Quality and the Supply ChainBusiness leaders are increasingly recognizing

the importance of their supply chains in achieving their quality goalsRequires:

Measuring customer perceptions of qualityIdentifying problem areasCorrecting these problems

Supply chain quality management can benefit from a collaborative relationship with suppliersHelping suppliers with quality assurance effortsInformation sharing on quality-related matters


Total Quality Management

A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.

T Q M


Does TQM sound like Lean Manufacturing?Kaizen?

TQM Approach

1. Find out what the customer wants2. Design a product or service that meets or

exceeds customer wants3. Design processes that facilitate doing the job

right the first time4. Keep track of results5. Extend these concepts throughout the supply

chain


Ford Operating PhilosophyIs this TQM?

“The operating philosophy of Ford Motor Company is to meet customers needs and expectations by establishing and maintaining an environment which encourages all employees to pursue never-ending improvement in the quality and productivity of products and services throughout the corporation, its supply base, and its dealers organization.”

TQM Elements1. Continuous improvement

2. Competitive benchmarking

3. Employee empowerment

4. Team approach

5. Decision based on fact, not opinion

6. Knowledge of tools

7. Supplier quality

8. Champion

9. Quality at the source

10. Suppliers are partners in the process


Continuous ImprovementPhilosophy that seeks to make never-ending

improvements to the process of converting inputs into outputs

Kaizen Japanese word for continuous improvement.

Continuous Improvement


Benchmarking ProcessIdentify a critical process that needs

improvingIdentify an organization that excels in

this processContact that organizationAnalyze the dataImprove the critical process

The philosophy of making each worker responsible for the quality of his or her work“Do it right” and “If it isn’t right,

fix it”

Quality at the Source


Six SigmaSix Sigma

A business process for improving quality, reducing costs, and increasing customer satisfaction

StatisticallyHaving no more than 3.4 defects per million

ConceptuallyProgram designed to reduce defectsRequires the use of certain tools and techniques


Lean Six SigmaLean Six Sigma

A balanced approach to process improvement that integrates principles from lean operation and statistical tools for variation reduction from six sigma to achieve speed and quality

An approach that is equally applicable to products and servicesEarly application in service support functions of

General electric and Caterpillar Finance


Obstacles to Implementing TQMObstacles include:

1. Lack of company-wide definition of quality2. Lack of strategic plan for change3. Lack of customer focus4. Poor inter-organizational communication5. Lack of employee empowerment6. View of quality as a “quick fix”7. Emphasis on short-term financial results8. Inordinate presence of internal politics and “turf”

issues9. Lack of strong motivation10. Lack of time to devote to quality initiatives11. Lack of leadership


PDSA CyclePlan-Do-Study-Act (PDSA) Cycle

PlanBegin by studying and documenting the current

process.Collect data on the process or problemAnalyze the data and develop a plan for

improvementSpecify measures for evaluating the plan

DoImplement the plan, document any changes made,

collect data for analysis

Plan

DoStudy

Act


PDSA CyclePlan-Do-Study-Act (PDSA) Cycle

StudyEvaluate the data collection during the do phaseCheck results against goals formulated during the

plan phaseAct

If the results are successful, standardize the new method and communicate it to the relevant personnel

Implement training for the new methodIf unsuccessful, revise the plan and repeat the process

Plan

DoStudy

Act


Process ImprovementA systematic approach to improving a process

Process Improvement


Basic Quality Tools

FlowchartsCheck sheetsHistogramsPareto ChartsScatter diagramsControl chartsCause-and-effect diagramsRun charts

Flow Chart Example: Self-Serve Gas Before Improvement

Drive in check price self serve? to pumpshut offengine

walk to paystation

yes

no

check card transmit approved?turn onpump

yesno

backto car

pumpgas

walk tobooth

wait

employeetotalscharges

checkaccuracy

preparereceipt

signcopy

copy tofile

copy towallet

return to car

on the roadagain

Flow Chart Example:Self-Serve Gas After Improvement

Drive incheckprice self-serve?

no

yes

go topump

shut offengine insert

cardin pump

checkcredit card

wait

approved?

no

yes

wait forreceipt

store in system

copy towallet

on the roadagainpump gas

Check Sheet

Billing Errors

Wrong Account

Wrong Amount

A/R Errors

Wrong Account

Wrong Amount

Monday

Pareto Analysis

80% of the problems may be

attributed to 20% of the

causes.

80% of the problems may be

attributed to 20% of the

causes.

Smearedprint

Nu

mb

er o

f d

efec

ts

Offcenter

Missinglabel

Loose Other

Control Chart

970

980

990

1000

1010

1020

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

UCL

LCL

Cause-and-Effect Diagram Also called Ishikawa Diagram or Fishbone Diagram

Effect

MaterialsMethods

EquipmentPeople

Environment

Cause

Cause

Cause

Cause

Cause

CauseCause

Cause

CauseCause

Cause

Cause

Basic Quality Tools


Instructor Slides

Check Sheet

Quality Tools

Pareto Diagram

9-45

Methods for Generating Ideas

BrainstormingAffinity DiagramQuality circlesInterviewingBenchmarking5W2H


Quality CirclesQuality Circle

Groups of workers who meet to discuss ways of improving products or processesLess structured and more informal than teams

involved in continuous improvementQuality circle teams have historically had relatively

little authority to make any but the most minor changes


Operations StrategyQuality is a strategic imperative for

organizations Customers are very concerned with the quality of goods

and services they receive

Quality is a never-ending journey It is important that most organizational members

understand and buy into this idea

Customer satisfaction ≠ customer loyaltyQuality needs to be incorporated throughout

the entire supply chain, not just the organization itself


Homework

Practice using the very basic TQM tools:

Page 412-414Problem 2, make a check sheet. What is

the most common residential problem? Commercial problem? How will this knowledge help improve quality?

Problem 8(b), make a scatter gram for (b). What is the relationship between temp. and errors? How should this knowledge help improve quality?

Management of Quality McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All...

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Transcript of Management of Quality McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All...