Total Quality Management

The way of managing organization to achieve

excellence

Total – everything

Quality – degree of excellence

Management – art, act or way of organizing,

controlling, planning, directing to achieve certain

goals.

Definition of quality

The concept and vocabulary of quality are elusive. Different

people interpret quality differently.

The banker will answer” service”

The healthcare worker will answer “quality health care”

The hotel employee will answer “customer satisfaction”

The manufacturer will simply answer “quality product”

Service Industries are particularly Difficult

Reasons:

High volume of transaction

Immediate consumption

Difficult to measure and control

More labor intensive

High degree of customization required

Image is a quality characteristic

Behavior is a quality characteristic

Why care about quality

increase productivity

expand market share

raise customer loyalty

enhance competitiveness of the firm

at a minimum, serve as a price of entry

Effects of poor Quality• Low customer satisfaction

• Low productivity, sales and profit

• Low morale of workforce

• More re-work, material and labor costs

• High inspection costs

• Delay in shipping

• High repair costs

• Higher inventory costs

• Greater waste of material

Benefits of Quality Higher customer satisfaction Reliable products/services Better efficiency of operations More productivity and profit Better morale of work force Less wastage costs Less inspection costs Improved process More market share Spread of happiness and prosperity Better quality of life for all.

Continuous Improvement

Inputs – processing – outputs

InputMaterialsInfo, DataPeopleMoney

ProcessWork methodsProceduresToolsProduction – Cutting, Welding, etc.Bank – deposit/withdrawal process, Kad Pintar Application Process at NRD

Outputs

Products

Delivered service

In-process jobs – forms signed, drawing completed

Others

Also by-products, wastes

Conditions

feedback

Issues for customer satisfaction

Checklist for both internal and external customers1. Who are my customers?2. What do they need?3. What are their measures and expectations?4. Does my product/service exceed their

expectations?5. How do I satisfy their needs?6. What corrective action is necessary?

Characteristics of TQM Leader

Visible, committed and knowledgeableA missionary zealAggressive targetsCommunication of valuesOrganizationCustomers contact

Indicators for Customer Satisfaction

Excellent hiring, training, attitude and morale for front line

employees (…direct contact with public)

Proactive customer service system

Proactive management of relationship with customers

Use of all listening posts

Quality requirements of market segment

Commitment to customers

Understanding customer requirements

Service standards meeting customers requirements

Types of Quality Costs

The cost of quality is generally classified into four categories

1. Cost of Prevention

2. Cost of Appraisal

3. Cost of Internal Failure

4. Cost of External Failure

Quality Costs

Cost of Prevention Prevention costs include those activities which remove and

prevent defects from occurring in the production process.

Included are such activities as quality planning, production reviews, training, and engineering analysis, which are incurred to ensure that poor quality is not produced.

Appraisal

Those costs incurred to identify poor quality products after

they occur but before shipment to customers. e.g. Inspection

activity.

Internal Failure

Those incurred during the production process.

Include such items as machine downtime, poor quality materials,

scrap, and rework.

External Failure

Those incurred after the product is shipped.

External failure costs include returns and allowances, WARRANTY

costs, and hidden costs of customer dissatisfaction and lost market

share.

Quality Tools To improve Process Quality

Cause and effects Charts: fishbone diagrams are used to identify the root causes of a problem

Fishbone Diagram (introduced by Kaoru Ishikawa in 1968)

A Fishbone Diagram Template can help you understand cause and effect.

Fishbone Diagrams are also known as Cause and Effect Graphic Organizers or Ishikawa Diagrams.

Fishbone Diagram is often used to diagnosis product malfunctions.

Fig. Fish bone diagram of a missed deadline

Fish bone diagram of a missed deadline

The causes are grouped into six categories: people, method, measurement, machine, environment, and materials

The category “people” refers to any humans that may have contributed to the undesired outcome.

“Method” refers to any complications in process or policy. “Measurement” relates to data collection and time. “Machine” encompasses errors caused by technology or

computers. “Environment” covers problems with surroundings.

“Materials” explains any issues caused by software.

Processing Delays

Teller Processes

Computers

Sequenceof activities

Too many steps

Controlfunctions

Not user friendly

Too muchdowntime

Slow response time

Training

Attitude

Fatigue

Fishbone Diagram akaCause and Effect Diagram

Fig. Fishbone diagram

Fig. Fishbone diagram of medication error

Scatter Diagrams: Plot data on a chart – no attempt is made to classify the data or massage it

Pareto Charts: Organize data on a histogram based on frequency from most prevalent to least. Help identify major causes or occurrences (80:20 rule)

Check Sheets: Easy way to count frequency of occurrence by front line workers

Histograms: Categorize data is cells and plot (see if any patterns emerge)

Run Charts: Plot data as a function of timeControl Charts: are statistical tools used to determine

if the variation in results is caused by common or special events

Assignment - 1