1. Quality Management for Organizational Excellence
By:
Dr. David L. Goetsch and Stanley Davis
Based on the book
Quality 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 Participation
Final Exam
________________
TOTAL

4. One: The Total Quality Approach to Quality Management
MAJOR TOPICS
Quality Evolution
What is Quality?
The Total Quality Approach Defined
Two Views of Quality
Key Elements of Total Quality
Total Quality Pioneers

5. Quality Evolution

6. Evolution of Quality I Inspecting the past Finding mistakes/errors
External assessment/control
Culture of mistrust
Inspecting
the past

7. Evolution of Quality II
avoid mistakes
personal responsibility / ownership
culture of trust
Looking into
the past and
plan for the
future

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 lives
We all apply a number of criteria when making a purchase
To understand quality as a consumer-driven concept
How will you judge the quality of the restaurant?
Service
Response time
Food preparation
Atmosphere
Price
Selection

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 Quality
Fred 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 whole
Quality - degree of excellence a product or service provides
Management - 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 it
At 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 TQM
1. 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
Counting
Customers
Culture
Tools, techniques, and training in their use for analyzing, understanding, and solving quality problems
Quality for the customer as a
driving 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 focus
Cross-functional teams
Focus on “what” and “how”
Long-term focus
Continuous improvement
Process improvement focus
Incremental improvements
Problem solving
Market-share focus
Individuals
Focus on ‘who” and “why”
Short-term focus
Status quo focus
Product focus
Innovation
Fire 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
Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality
Service Dimensions
Reliability
Responsiveness
Assurance
Empathy
Tangibles

25. The TQM System Continuous Improvement Objective Principles Elements
Customer
Focus
Process
Improvement
Total
Involvement
Leadership
Education and Training Supportive structure
Communications Reward and recognition
Measurement
Elements

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 consultant
Widely credited with improving production in the United States during the Cold War
Best known for work in Japan
Taught top management (1950 onwards)

28. W. Edwards Deming Quality keys: Understanding customer needs
Process improvement
Statistical analysis
Expertise of workers
PDCA cycle

29. DEMING 14 POINTS Create constancy of purpose Adopt a new philosophy
Stop dependence on inspection
Don’t focus on price tag
Improve constantly & forever

30. DEMING 14 POINTS Institute training Institute leadership
Drive out fear
Break down barriers
Eliminate slogans, exhortations

31. DEMING 14 POINTS Eliminate quotas; use leadership
Remove barriers to workmanship
strong education program
Involve everybody

32. The Deming Cycle
The 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 Cycle
W. 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 step
Implement the solution or process change
Monitor results and collect data
The Check step
Review and evaluate the result of the change
Measure progress against milestones
Check for any unforeseen consequences
The Act step
If successful,
Standardize process changes
Communicate to all involved
Provide training in new methods

38. Problem Solving Tools
Check 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. definition
There 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) continue
It 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) continue
Many business executive adopt the attitude that ensuring quality is good thing to do until hard times set in and cost cutting is necessary.

48. Generic CoQ models Feigenbaum Model P-A-F models
Prevention ‏+ appraisal ‏+ failure
Crosby’s model
Conformance ‏+ non-conformance
Opportunity or intangible cost models
Prevention +‏ appraisal ‏+ failure + ‏opportunity
Conformance +‏ non-conformance +‏ opportunity
ABC models
Value-added +‏ non-value-added

49. Cost of Quality Cost of Achieving Good Quality Cost of Poor Quality
Prevention costs
costs incurred during product design
Appraisal costs
costs of measuring, testing, and analyzing
Cost of Poor Quality
Internal failure costs
include scrap, rework, process failure, downtime, and price reductions
External failure costs
include complaints, returns, warranty claims, liability, and lost sales

50. Prevention Costs Quality planning costs Product-design costs
costs of developing and implementing quality management program
Product-design costs
costs of designing products with quality characteristics
Process costs
costs expended to make sure productive process conforms to quality specifications
Training costs
costs of developing and putting on quality training programs for employees and management
Information costs
costs 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 process
Test equipment costs
costs of maintaining equipment used in testing quality characteristics of products
Operator costs
costs 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 costs
costs of poor-quality products that must be discarded, including labor, material, and indirect costs
Rework costs
costs of fixing defective products to conform to quality specifications
Process failure costs
costs of determining why production process is producing poor-quality products
Process downtime costs
costs of shutting down productive process to fix problem
Price-downgrading costs
costs of discounting poor-quality products—that is, selling products as “seconds”

53. External Failure Costs
Customer complaint costs
costs of investigating and satisfactorily responding to a customer complaint resulting from a poor-quality product
Product return costs
costs of handling and replacing poor-quality products returned by customer
Warranty claims costs
costs of complying with product warranties
Product liability costs
litigation costs resulting from product liability and customer injury
Lost sales costs
costs incurred because customers are dissatisfied with poor quality products and do not make additional purchases

54. Costs of Quality Prevention costs Appraisal costs
Internal failure costs
External failure costs

55. Costs of Quality Example
Vegas Photo Corporation made 10,000
photocopying machines last year.
Vegas Photo determines the costs of quality
of its photocopying machines using a 7-step
activity-based costing approach.

56. Costs of Quality (Steps 1 and 2)
Identify cost objects.
Identify the direct costs
of quality of the products.
10,000 photocopying
machines
No direct costs of
quality

57. Costs of Quality (Step 3)
Select the cost-allocation bases to use for
allocating indirect costs of quality to the products.
Prevention
Appraisal
Internal failure
External failure
Information on the total
quantities of each of these
cost-allocation bases used
in all of Vegas operations
is not provided.

58. Costs of Quality (Step 4)
Identify the indirect costs of quality
associated with each cost-allocation base.
Information about total (fixed and variable)
costs is not provided.

59. Costs of Quality (Step 5)
calculate the
rate per unit.
Inspection hours is one
cost-allocation base.

60. Costs of Quality (Step 5)
Prevention costs:
Design engineering (R&D) $80 per hour
Process engineering (R&D) $60 per hour
Appraisal costs:
Inspection (Manufacturing) $40 per hour

61. Costs of Quality (Step 5)
Internal failure costs:
Rework (Manufacturing) $100 per hour
External failure costs:
Customer support (Marketing) $ 50 per hour
Transportation (Distribution) $240 per load
Warranty repair (Customer Service) $110 per hour

62. Costs of Quality (Step 6)
calculate the indirect costs of quality
allocated to the product.

63. Costs of Quality (Step 6)
Prevention costs:
Design engineering (R&D) 20,000 hours
Process engineering (R&D) 22,500 hours
Appraisal costs:
Inspection (Manufacturing) 120,000 hours

64. Costs of Quality (Step 6)
Internal failure costs:
Rework (Manufacturing) ,000 hours
External failure costs:
Customer support (Marketing) ,000 hours
Transportation (Distribution) ,500 loads
Warranty repair (Customer Service) 60,000 hours

65. Costs of Quality (Step 6)
What is the total cost for design engineering?
20,000 hours × $80 = $1,600,000
What is the total cost for inspection?
120,000 hours × $40 = $4,800,000

66. Costs of Quality (Step 6)
Cost of Quality and
Value Chain Category Total Costs
Prevention costs:
Design engineering (R&D) $1,600,000
Process engineering (R&D) 1,350,000
Total $2,950,000
Appraisal costs:
Inspection $4,800,000

67. Costs of Quality (Step 6)
Cost of Quality and
Value Chain Category Total Costs
Internal failure costs:
Rework (Manufacturing) $5,000,000

68. Costs of Quality (Step 6)
Cost of Quality and
Value Chain Category Total Costs
External failure costs:
Customer support (Marketing) $ 300,000
Transportation (Distribution) ,000
Warranty repair (Customer Service) 6,600,000
Total $7,260,000

69. Costs of Quality (Step 7)
Compute the total costs of quality of the product.
Prevention costs $ 2,950,000
Appraisal costs ,800,000
Internal failure costs ,000,000
External failure costs ,260,000
Total $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.
Waste
Testing Costs
Rework
Customer Returns
Inspection Costs
Rejects
Recalls

71. Cost of Poor Quality
Cost of Poor Quality
As an organization gains a broader definition of poor quality, the hidden portion of the iceberg becomes apparent.
Late Paperwork
High Costs
Pricing or
Billing Errors
Excessive
Services Expenses
Incorrectly Completed
Sales Order
Lack of Follow-up on Current Programs
Employee Turnover
Planning Delays
late delivery
Complaint
Handling
Unused Capacity
Time with Dissatisfied Customer
Excessive Overtime
Waste
Testing Costs
Rework
Customer Returns
Inspection Costs
Rejects
Recalls
Development Cost of Failed Product
Hidden COPQ: The costs incurred to deal with these chronic problems
Premium cargo Costs
Customer Allowances
COPQ ranges
from 15-25%
of Sales

72. Malcolm Baldrige National Quality Award

73. MBNQA
In 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 survival
Helped draft early version of quality act
Resolved technology transfer differences with China and India
First Cabinet-level meetings with Soviet Union in 7 years
Paved way for increased access for US firms

75. Champion Roper National Cowboy Hall of Fame
July 25, 1987 N. California rodeo
Horse 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 companies
Vehicle for sharing success strategies
ISO covers less than 10 percent of the Baldrige award criteria
Many apply, few are selected
MBNQA not required for business

78. Each category has several items (18 total), and each item has several “areas to address”

80. Point Values

81. ADLI = Approach, Deployment, Learning, Integration

82. Categories Manufacturing Service Small Business Education (added 1999)
Health Care (added 1999)
Nonprofit (2005)

83. Leadership
Examines how senior executives guide the company and how the company addresses its responsibilities to the public and practices good citizenship. 1.1 Organizational Leadership
1.2 Social Responsibility

84. Strategic planning
Examines how the company sets strategic directions and how it determines key action plans.
2.1Strategy Development
2.2 Strategy Deployment

85. Customer and market focus
Examines how the company determines requirements and expectations of customers and markets.
3.1Customer and Market Knowledge
3.2 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 Performance
4.2 Information and Knowledge Management

87. Human resource focus
Examines 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 Systems
5.2 Employee Learning and Motivation
5.3 Employee Well-Being and Satisfaction

88. Process management
Examines aspects of how key production/delivery and support processes are designed, managed, and improved.
6.1V alue Creation Processes
6.2 Support Processes

89. Business results
Examines the company’s performance and improvement in its key business areas:
customer satisfaction,
financial and marketplace performance,
human resources,
supplier and partner performance, and
operational 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 project
Baldrige 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.