Presentation on theme: "Quality Management for Organizational Excellence"— Presentation transcript:
1 Quality Management for Organizational Excellence By:Dr. David L. Goetsch and Stanley DavisBased on the bookQuality Management for Organizational Excellence (Sixth Edition)
2 Instructor Info. Dr. Mohammed A. Nasseef Website:Contact Number:( SMS and whatsApp)note: mobile number is for urgent calls, please if you call consider a appropriate time.
3 Grading Policy case study Project 20 Quiz 1 10 Quiz 2 10 Class ParticipationFinal Exam________________TOTAL
4 One: The Total Quality Approach to Quality Management MAJOR TOPICSQuality EvolutionWhat is Quality?The Total Quality Approach DefinedTwo Views of QualityKey Elements of Total QualityTotal Quality Pioneers
6 Evolution of Quality I Inspecting the past Finding mistakes/errors External assessment/controlCulture of mistrustInspectingthe past
7 Evolution of Quality II avoid mistakespersonal responsibility / ownershipculture of trustLooking intothe past andplan for thefuture
8 Evolution of Quality III Systematic fulfillment of customer requirements
9 Evolution of Quality IV Participation of all members of an organization
10 Quality is Everywhere people deal with the issue of quality continually in their daily livesWe all apply a number of criteria when making a purchaseTo understand quality as a consumer-driven conceptHow will you judge the quality of the restaurant?ServiceResponse timeFood preparationAtmospherePriceSelection
11 What is Quality* Quality must be defined comprehensively. It is not enough to say the product is of high quality; we must focus attention on the quality of every facet of the organization.* Consumers' needs and requirements change. Therefore, the definition of quality is ever changing.shikawa's
12 What is QualityFred Smith. CEO of FedEx defines quality as “ performance to the standard expected by customer “Boeing “ providing our customer with products and services that consistently meet their needs and expectations”
13 So Quality Is …Although there is no universally accepted definition of quality. There are some similarity among among quality definition:Quality involves meeting or exceeding customer expectations.Quality applies to products, services, people, processes, and environments.Quality is ever changing state (i.e., what consider quality today may not good enough to be considered quality tomorrow).
14 Why TQM?Ford Motor Company had operating losses of $3.3 billion between 1980 and 1982.Xerox market share dropped from 93% in 1971 to 40% in 1981.Attention to quality was seen as a way to combat the competition.
15 Therefore, TQM is the art of managing the whole to achieve excellence. Total - made up of the wholeQuality - degree of excellence a product or service providesManagement - act, art or manner of planning, controlling, directing,….Therefore, TQM is the art of managing the whole to achieve excellence.
16 What does TQM mean?Total Quality Management means that the organization's culture is defined by and supports the constant attainment of customer satisfaction through an integrated system of tools, techniques, and training. This involves the continuous improvement of organizational processes, resulting in high quality products and services.
17 What’s the goal of TQM?“Do the right things right the first time, every time.”
18 Another way to put itAt it’s simplest, TQM is all managers leading and facilitating all contributors in everyone’s two main objectives:(1) total client satisfaction through quality products and services; and(2) continuous improvements to processes, systems, people, suppliers, partners, products, and services.
19 Basic belief of TQM1. The customer makes the ultimate determination of quality.2. Top management must provide leadership and support for all quality initiatives.3. Preventing variability is the key to producing high quality.4. Quality goals are a moving target, thereby requiring a commitment toward continuous improvement.5. Improving quality requires the establishment of effective metrics. We must speak with data and facts not just opinions.
20 The three aspects of TQM CountingCustomersCultureTools, techniques, and training in their use for analyzing, understanding, and solving quality problemsQuality for the customer as adriving force and central concern.Shared values and beliefs, expressed by leaders, that define and support quality.
21 Total Quality Management and Continuous Improvement TQM is the management process used to make continuous improvements to all functions.TQM represents an ongoing, continuous commitment to improvement.The foundation of total quality is a management philosophy that supports meeting customer requirements through continuous improvement.
22 Continuous Improvement versus Traditional Approach Customer focusCross-functional teamsFocus on “what” and “how”Long-term focusContinuous improvementProcess improvement focusIncremental improvementsProblem solvingMarket-share focusIndividualsFocus on ‘who” and “why”Short-term focusStatus quo focusProduct focusInnovationFire fighting
23 Quality Throughout“A Customer’s impression of quality begins with the initial contact with the company and continues through the life of the product.”Customers look to the total package - sales, service during the sale, packaging, deliver, and service after the sale.Quality extends to how the receptionist answers the phone, how managers treat subordinates, how courteous sales and repair people are, and how the product is serviced after the sale.“All departments of the company must strive to improve the quality of their operations.”
24 Value-based Approach Manufacturing Dimensions Service Dimensions PerformanceFeaturesReliabilityConformanceDurabilityServiceabilityAestheticsPerceived qualityService DimensionsReliabilityResponsivenessAssuranceEmpathyTangibles
25 The TQM System Continuous Improvement Objective Principles Elements CustomerFocusProcessImprovementTotalInvolvementLeadershipEducation and Training Supportive structureCommunications Reward and recognitionMeasurementElements
26 The Total Quality Approach to Quality Management Trends affecting the future of quality management include demanding global customers, shifting customer expectations, and opposing economic pressures
27 W. Edwards Deming Total Quality Pioneers: Born on October 14, 1900 Was an American statistician, professor, author, lecturer, and consultantWidely credited with improving production in the United States during the Cold WarBest known for work in JapanTaught top management (1950 onwards)
28 W. Edwards Deming Quality keys: Understanding customer needs Process improvementStatistical analysisExpertise of workersPDCA cycle
29 DEMING 14 POINTS Create constancy of purpose Adopt a new philosophy Stop dependence on inspectionDon’t focus on price tagImprove constantly & forever
30 DEMING 14 POINTS Institute training Institute leadership Drive out fearBreak down barriersEliminate slogans, exhortations
31 DEMING 14 POINTS Eliminate quotas; use leadership Remove barriers to workmanshipstrong education programInvolve everybody
32 The Deming CycleThe Deming cycle, or PDSA cycle, is a continuous quality improvement model consisting of a logical sequence of four repetitive steps for continuous improvement and learning:Plan, Do, Study (Check) and Act.It is also known as the Deming circle/cycle/wheel, Shewhartcycle, control circle/cycle, or plan–do–study–act (PDSA)
33 The Deming CycleW. Edwards Deming in the 1950's proposed that business processes should be analyzed and measured to identify sources of variations that cause products to deviate from customer requirements.He recommended that business processes be placed in a continuous feedback loop so that managers can identify and change the parts of the process that need improvements.
34 The Deming Cycle Example : At Toyota this is also known as "Building people before building cars.“ Toyota and other Lean companies propose that an engaged, problem solving workforce, using PDCA, is better able to innovate and stay ahead of the competition through rigorous problem solving and the subsequent innovations. This also creates a culture of problem solvers using PDCA and creating a culture of critical thinkers.
35 Foundations of the PDCA Cycle The foundations of the PDCA cycle and Deming’s teachings consist of the following three principles:Customer Satisfaction: Satisfying customers’ needs should be paramount for all workers in the organization.Management by Fact. Decision making must be made on data collected from operations and analyzed using statistical tools. Decision makers must practice and encourage a scientific approach to problem solving.Respect for People. A sustainable problem solving and continuous improvement approach should be based on the belief that employees are self-motivated and are capable of coming up with effective and creative ideas.
36 Steps of PDCA: The Plan step Recognize the problem and establish priorities.Form the problem solving team.Interdisciplinary teams of individuals close to the problem are best.Define the problem and its scope clearly.Who,What,Where and When.Pareto Analysis can be useful in defining the problem.Analyze the problem/process.Process flowcharts can be useful a useful tool.Determine possible causes.Cause-and-effect diagrams are helpful in identifying root causes of a problem. Data from the diagrams can be organized using check sheets, scatter diagrams, histograms, and run charts.Identify possible solutions.Brainstorm to find solutions. Avoid the temptation to propose quick, immediate fixes. Goals should be specific, measurable, achievable, and realistic.Evaluate potential solutions.Focus on solutions that address root causes and prevention of problem occurrence. Solutions should be cost-effective; achieving group consensus is important.
37 Steps of PDCA (continued) The Do stepImplement the solution or process changeMonitor results and collect dataThe Check stepReview and evaluate the result of the changeMeasure progress against milestonesCheck for any unforeseen consequencesThe Act stepIf successful,Standardize process changesCommunicate to all involvedProvide training in new methods
38 Problem Solving ToolsCheck Sheet. A simple tool for collecting data about problems or complaints.Example 1.
39 Problem Solving Tools (continued) 2. Histogram. A graph which presents the collected data as a frequency distribution in bar-chart form. Example 1
40 Problem Solving Tools (continued) Pareto Chart. Orders problems by their relative frequency in decreasing order. Focus and priority should be given to problems that offer the largest potential improvement.
41 Problem Solving Tools (continued) 4. Scatter Diagram. A graphical tool to check if two relationships exist between two variables.
42 Problem Solving Tools (continued) 5. Flowchart. A visual representation of a process which can help in identifying points where failures may occur and intervention is useful. Example 2
43 Problem Solving Tools (continued) 6. Cause-and-effect diagram (fishbone diagram). Offers a structured approach for identifying all possible causes of a problem. The classic diagram is as shown:In retail, a better representation is the 5S (Pal & Byron 2003):
44 Cost of Quality (CoQ)Any serious attempt to improve quality must take into account the costs associated with achieving quality since the objective of continuous improvement programs is not only to meet customer requirements, but also to do it at the lowest cost.This can only happen by reducing the costs needed to achieve quality, and the reduction of these costs is only possible if they are identified and measured.Therefore, measuring and reporting the cost of quality(CoQ) should be considered an important issue for managers.
45 definitionThere is no general agreement on a single broad definition of quality costs (Machowski and Dale, 1998).However, CoQ is usually understood as the sum of conformance plus non-conformance costs, where cost of conformance is the price paid for prevention of poor quality (for example, inspection and quality appraisal) and cost of non-conformance is the cost of poor quality caused by product and service failure(for example, rework and returns).
46 Cost of Poor Quality(COQ) continueIt was Armand Feigenbaum, who in 1943 first devised a quality costing analysis when he and his team developed a dollar-based reporting system.later proposed the now widely accepted quality cost categorization of prevention, appraisal and failure (internal and external) costs
47 (COQ) continueMany business executive adopt the attitude that ensuring quality is good thing to do until hard times set in and cost cutting is necessary.
49 Cost of Quality Cost of Achieving Good Quality Cost of Poor Quality Prevention costscosts incurred during product designAppraisal costscosts of measuring, testing, and analyzingCost of Poor QualityInternal failure costsinclude scrap, rework, process failure, downtime, and price reductionsExternal failure costsinclude complaints, returns, warranty claims, liability, and lost sales
50 Prevention Costs Quality planning costs Product-design costs costs of developing and implementing quality management programProduct-design costscosts of designing products with quality characteristicsProcess costscosts expended to make sure productive process conforms to quality specificationsTraining costscosts of developing and putting on quality training programs for employees and managementInformation costscosts of acquiring and maintaining data related to quality, and development of reports on quality performance
51 Appraisal Costs Inspection and testing Test equipment costs costs of testing and inspecting materials, parts, and product at various stages and at the end of a processTest equipment costscosts of maintaining equipment used in testing quality characteristics of productsOperator costscosts of time spent by operators to gar data for testing product quality, to make equipment adjustments to maintain quality, and to stop work to assess quality
52 Internal Failure Costs Scrap costscosts of poor-quality products that must be discarded, including labor, material, and indirect costsRework costscosts of fixing defective products to conform to quality specificationsProcess failure costscosts of determining why production process is producing poor-quality productsProcess downtime costscosts of shutting down productive process to fix problemPrice-downgrading costscosts of discounting poor-quality products—that is, selling products as “seconds”
53 External Failure Costs Customer complaint costscosts of investigating and satisfactorily responding to a customer complaint resulting from a poor-quality productProduct return costscosts of handling and replacing poor-quality products returned by customerWarranty claims costscosts of complying with product warrantiesProduct liability costslitigation costs resulting from product liability and customer injuryLost sales costscosts incurred because customers are dissatisfied with poor quality products and do not make additional purchases
55 Costs of Quality Example Vegas Photo Corporation made 10,000photocopying machines last year.Vegas Photo determines the costs of qualityof its photocopying machines using a 7-stepactivity-based costing approach.
56 Costs of Quality (Steps 1 and 2) Identify cost objects.Identify the direct costsof quality of the products.10,000 photocopyingmachinesNo direct costs ofquality
57 Costs of Quality (Step 3) Select the cost-allocation bases to use forallocating indirect costs of quality to the products.PreventionAppraisalInternal failureExternal failureInformation on the totalquantities of each of thesecost-allocation bases usedin all of Vegas operationsis not provided.
58 Costs of Quality (Step 4) Identify the indirect costs of qualityassociated with each cost-allocation base.Information about total (fixed and variable)costs is not provided.
59 Costs of Quality (Step 5) calculate therate per unit.Inspection hours is onecost-allocation base.
60 Costs of Quality (Step 5) Prevention costs:Design engineering (R&D) $80 per hourProcess engineering (R&D) $60 per hourAppraisal costs:Inspection (Manufacturing) $40 per hour
61 Costs of Quality (Step 5) Internal failure costs:Rework (Manufacturing) $100 per hourExternal failure costs:Customer support (Marketing) $ 50 per hourTransportation (Distribution) $240 per loadWarranty repair (Customer Service) $110 per hour
62 Costs of Quality (Step 6) calculate the indirect costs of qualityallocated to the product.
65 Costs of Quality (Step 6) What is the total cost for design engineering?20,000 hours × $80 = $1,600,000What is the total cost for inspection?120,000 hours × $40 = $4,800,000
66 Costs of Quality (Step 6) Cost of Quality andValue Chain Category Total CostsPrevention costs:Design engineering (R&D) $1,600,000Process engineering (R&D) 1,350,000Total $2,950,000Appraisal costs:Inspection $4,800,000
67 Costs of Quality (Step 6) Cost of Quality andValue Chain Category Total CostsInternal failure costs:Rework (Manufacturing) $5,000,000
68 Costs of Quality (Step 6) Cost of Quality andValue Chain Category Total CostsExternal failure costs:Customer support (Marketing) $ 300,000Transportation (Distribution) ,000Warranty repair (Customer Service) 6,600,000Total $7,260,000
69 Costs of Quality (Step 7) Compute the total costs of quality of the product.Prevention costs $ 2,950,000Appraisal costs ,800,000Internal failure costs ,000,000External failure costs ,260,000Total $20,010,000
70 Traditional Cost of Poor Quality (4-5% of Sales)When quality costs are initially determined, the categories included are the visible ones as depicted in the iceberg below.WasteTesting CostsReworkCustomer ReturnsInspection CostsRejectsRecalls
71 Cost of Poor QualityCost of Poor QualityAs an organization gains a broader definition of poor quality, the hidden portion of the iceberg becomes apparent.Late PaperworkHigh CostsPricing orBilling ErrorsExcessiveServices ExpensesIncorrectly CompletedSales OrderLack of Follow-up on Current ProgramsEmployee TurnoverPlanning Delayslate deliveryComplaintHandlingUnused CapacityTime with Dissatisfied CustomerExcessive OvertimeWasteTesting CostsReworkCustomer ReturnsInspection CostsRejectsRecallsDevelopment Cost of Failed ProductHidden COPQ: The costs incurred to deal with these chronic problemsPremium cargo CostsCustomer AllowancesCOPQ rangesfrom 15-25%of Sales
73 MBNQAIn the 1980s, many industry and government leaders saw that a renewed emphasis on quality was no longer an option for American organisations, rather, it was a necessity for doing business in an ever expanding, and more demanding competitive global market. The Baldrige Award was therefore envisaged as a standard of excellence that would help US organisations achieve world-class quality
74 Malcolm Baldrige 1981-87 secretary of Commerce. supporter of quality management as key to US economic survivalHelped draft early version of quality actResolved technology transfer differences with China and IndiaFirst Cabinet-level meetings with Soviet Union in 7 yearsPaved way for increased access for US firms
75 Champion Roper National Cowboy Hall of Fame July 25, 1987 N. California rodeoHorse threw him, fell on him, and crushed him
76 WHY Baldrige ? Purpose of MBNQA to enhance US competitivenes Promotes quality awareness, recognizes achievements of US companiesVehicle for sharing success strategiesISO covers less than 10 percent of the Baldrige award criteriaMany apply, few are selectedMBNQA not required for business
82 Categories Manufacturing Service Small Business Education (added 1999) Health Care (added 1999)Nonprofit (2005)
83 LeadershipExamines how senior executives guide the company and how the company addresses its responsibilities to the public and practices good citizenship. 1.1 Organizational Leadership1.2 Social Responsibility
84 Strategic planningExamines how the company sets strategic directions and how it determines key action plans.2.1Strategy Development2.2 Strategy Deployment
85 Customer and market focus Examines how the company determines requirements and expectations of customers and markets.3.1Customer and Market Knowledge3.2 Customer Relationships and Satisfaction
86 Information and analysis Examines the management, effective use, and analysis of data and information to support key company processes and the company’s performance management system.4.1Measurement and Analysis of Organizational Performance4.2 Information and Knowledge Management
87 Human resource focusExamines how the company enables its workforce to develop its full potential and how the workforce is aligned with the company’s objectives.5.1 Work Systems5.2 Employee Learning and Motivation5.3 Employee Well-Being and Satisfaction
88 Process managementExamines aspects of how key production/delivery and support processes are designed, managed, and improved.6.1V alue Creation Processes6.2 Support Processes
89 Business resultsExamines the company’s performance and improvement in its key business areas:customer satisfaction,financial and marketplace performance,human resources,supplier and partner performance, andoperational performance.The category also examines how the company performs relative to competitors.better market performance, gains in market share, and customer retention and satisfaction
90 Baldrige Award Recipients Group projectBaldrige Award Recipients
92 MidwayUSA - customer focus MidwayUSA, a 2009 Baldrige Award winner in the small business category, utilizes a customer-first culture and many customer-focused approaches to building trust, confidence, and loyalty at all stages of the customer relationship.MidwayUSA’s commitment to the customer is hard-wired into the company’s vision, purpose, mission, and values; Company Goals; and Code of Conduct . The vision itself says it all: “To be the best-run business in America for the benefit of our Customers.”—
93 MidwayUSA - customer focus cont. This customer-focused philosophy is carried out in many different approaches, including the following:- All salaried employees (including senior leaders) spend at least one hour each week on the phone taking orders and answering customer requests.- Employees are selected for leadership development based on their support of the company’s core value of “Customer-Driven Excellence” in addition to other performance-based criteria. Employees also are encouraged to participate in industry-related events.
94 MidwayUSA - customer focus cont. - Employees’ performance reviews are aligned with key customer requirements. For example, customer service representatives are evaluated on their performance in relation to the requirement for “Friendly, Courteous, Respectful, and Ethical Service.”- Direct access is provided to the company’s founder and CEO, Larry Potterfield, via the Larry Line. Potterfield also role-models the customer-first philosophy by being very visible and accessible(“The Face of MidwayUSA”) to customers at industry and other public events.
95 MidwayUSA - customer focus cont. Customer input on improving operations is solicited via the company’s Web site by regularly featuring online surveys, posting customer reviews of the company’s products, and providing an “I’m Having Trouble Finding” option so customers can suggest additions to product lines.