1. PowerPoint Presentation
DAVIS
AQUILANO
CHASE
PowerPoint Presentation by
Charlie
Cook
F O U R T H E D I T I O N
chapter 6
Quality Management
© The McGraw-Hill Companies, Inc., 2003

2. Chapter Objectives
Introduce those individuals, often referred to as quality gurus, who have played a significant role in the evolution of quality management, and describe their specific contributions.
Identify the different dimensions of quality as they relate to both good and services.
Define the various elements that comprise the cost of quality.
Describe the more successful management quality initiatives such as total quality management (TQM) and Six Sigma.
Fundamentals of Operations Management 4e

3. Chapter Objectives (cont’d)
Present the various quality awards and recognition that promote and encourage firms to provide high quality goods and services.
Fundamentals of Operations Management 4e

4. Managerial Issues Defining quality from the customer’s perspective.
Constant increases in the level of quality of today’s goods and services.
Difficulties encountered in managing service quality.
Identifying quality dimensions that are most important to customers.
Avoiding the costs of poor quality products and services.
Customer loyalty that is increasingly based on quality.
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5. The Quality Gurus Quality Gurus
Individuals who have been identified as making a significant contribution to improving the quality of goods and services.
Walter A. Shewhart
W. Edwards Deming
Joseph M. Juran
Armand Feigenbaum
Philip Crosby
Genichi Taguchi
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6. The Quality Gurus (cont’d)
Walter A. Shewhart
Statistician at Bell Laboratories
Developed statistical control process methods to distinguish between random and nonrandom variation in industrial processes to keep processes under control.
Developed the “plan-do-check-act” (PDCA) cycle that emphasizes the need for continuous improvement.
Strongly influenced Deming and Juran.
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7. Shewhart’s Plan-Do-Check-Act (PDCA) Cycle
Source: Mary Walton, Deming Management at Work (New York: Perigree Books, 1991), p. 22.
Exhibit 6.2
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8. The Quality Gurus (cont’d)
W. Edwards Deming
Advocated Statistical Process Control (SPC)
Methods which signal shifts in a process that will likely lead to products and/or services not meeting customer requirements.
Emphasized an overall organizational approach to managing quality.
Demonstrated that quality products are less costly than poor quality products.
Identified 14 points critical for improving quality.
The Deming Prize
Highest award for industrial excellence in Japan.
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9. Deming’s 14-Point Program for Improving Quality
Source: Mary Walton, Deming Management at Work (New York: Perigree Books, 1991), pp. 17–18.
Exhibit 6.3
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10. The Quality Gurus (cont’d)
Joseph M. Juran
Emphasized the importance of producing quality products through an approach focused on quality planning, control, and improvement.
Defined product quality as “fitness for use” as viewed by the customer in:
Quality of design • Quality of conformance
Availability • Safety • Field use
Categorized the cost of quality as:
Cost of prevention
Cost of detection/appraisal
Cost of failure
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11. The Quality Gurus (cont’d)
Armand Feigenbaum
Proposed the concept of “total quality control,” making quality everyone’s responsibility.
Stressed interdepartmental communication.
Philip Crosby
Preached that “quality is free.”
Genichi Taguchi
Emphasizes the minimization of variation.
Concerned with the cost of quality to society.
Extended Juran’s concept of external failure.
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12. Three of the Quality Gurus Compared
Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Profession Publishing Ltd., 1989), pp. 291–92.
Exhibit 6.1a
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13. Three of the Quality Gurus Compared (cont’d)
Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Profession Publishing Ltd., 1989), pp. 291–92.
Exhibit 6.1b
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14. Defining Quality Quality in Goods Quality in Services Performance
Features
Reliability
Durability
Conformance
Serviceability
Aesthetics
Perceived quality
Quality in Services
Tangibles
Reliability
Responsiveness
Competence
Courtesy
Credibility
Security
Access
Communication
Understanding the customer
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15. Additional Views of Quality in Services
Technical Quality versus Functional Quality
Technical quality—the core element of the good or service.
Functional quality—customer perception of how the good functions or the service is delivered.
Expectations and Perceptions
Customers’ prior expectations (generalized and specific service experiences) and perception of service performance affect their satisfaction with a service.
Satisfaction = (Perception of Performance) – (Expectation)
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16. The Cost of Quality Cost of Quality
Framework for identifying quality components that are related to producing both high quality products and low quality components, with the goal of minimizing the total cost of quality.
Costs of poor quality:
Detection/appraisal costs
Internal failure costs
External failure costs
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17. Typical Quality Cost Ratios
Source: A. V. Feigenbaum, Total Quality Control, 3rd ed. (New York: McGraw-Hill, 1983), p. 112; and Joseph M. Juran and F.M. Gryna, Quality Planning and Analysis (New York: McGraw-Hill, 1970), p. 60.
Exhibit 6.4
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18. Two Views of the Cost of Improved Quality
Exhibit 6.5
Source: Eric W. Skopec, Strategic Visions Inc. (used by permission).
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19. The Cost of Quality (Juran’s Model)
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20. Service Guarantees Effective Service Guarantees Unconditional
Easy to understand
Meaningful
Easy and painless to invoke
Easy and quick to collect on
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21. Organization-wide Quality Initiatives
Total Quality Management (TQM)
An approach for integrating quality at all levels of an organization
Organization-wide initiative encompassing all functional areas and levels within the organization.
Focuses on producing high quality goods and services.
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22. Elements of TQM Leadership Employee involvement
Top management vision, planning and support
Employee involvement
All employees assume responsibility for inspecting the quality of their work.
Product/Process Excellence
Involves product design quality and monitoring the process for continuous improvement.
Poka-yokes are devices that prevent defects from being produced.
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23. Elements of TQM (cont’d)
Continuous Improvement
A concept that recognizes that quality improvement is a journey with no end and that there is a need for continually looking for new approaches for improving quality.
Customer Focus on “Fitness for Use”
Design quality
Specific characteristics of a product that determine its value in the marketplace.
Conformance quality
The degree to which a product meets its design specifications.
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24. Implementing TQM Successful Implementation of TQM
Requires total integration of TQM into day-to-day operations.
Causes of TQM Implementation Failures
Lack of focus on strategic planning and core competencies
Obsolete, outdated organizational cultures.
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25. Obstacles to Implementing TQM
Lack of a company-wide definition of quality.
Lack of a formalized strategic plan for change.
Lack of a customer focus.
Poor inter-organizational communication.
Lack of real employee empowerment.
Lack of employee trust in senior management.
View of the quality program as a quick fix.
Drive for short-term financial results.
Politics and turf issues.
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26. Three Schools of Quality Management Programs
Exhibit 6.6a
Source: Eric W. Skopec, Strategic Visions Inc. (used by permission).
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27. Three Schools of Quality Management Programs
Exhibit 6.6b
Source: Eric W. Skopec, Strategic Visions Inc. (used by permission).
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28. Six Sigma Goals of Six Sigma Successful Implementation
To reduce process variation to the point where only 3.4 defects per million are produced by a process that involves a high volume of manufactured units or service transactions on a continuous basis.
Provide a framework and methodologies to analyze and evaluate business processes and reduce waste.
Successful Implementation
Training and selection of the workforce
Impressive cost savings of program
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29. Quality Performance Levels for Various Processes
Source: Dave Harold, “Designing for Six Sigma Capability,” Control Engineering, January, 1999.
Exhibit 6.7
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30. Recognizing and Rewarding Quality
Promotion of High Quality Goods and Services
Deming Prize (Japan)
European Quality Award (European Union)
Malcolm Baldrige National Quality Award (MBNQA) (United States)
ISO9000 certification
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31. Malcolm Baldrige National Quality Award
Background
Established in 1987 to recognize total quality management in American industry.
Purpose
Stimulate U.S. companies to improve quality and productivity.
Establish guidelines and criteria to evaluate quality.
Recognize those firms that improve their quality.
Provide guidance in how to achieve quality.
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32. Malcolm Baldrige National Quality Award Winners
Source: National Institute of Science and Technology (NIST) website:
Exhibit 6.8a
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33. Malcolm Baldrige National Quality Award Winners
Source: National Institute of Science and Technology (NIST) website:
Exhibit 6.8b
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34. The Integrated Framework of the Baldrige Award Criteria
Source: 1997 Criteria for Performance Excellence, U.S. Dept. of Commerce, National Institute of Standards and Technology.
Exhibit 6.9
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35. 2001 Award Criteria—Item Listing
Source: 2001 Criteria for Performance Excellence, U.S. Dept. of Commerce, National Institute of Standards and Technology.
Exhibit 6.10
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36. Benefits of the Baldrige Quality Criteria
Baldrige guidelines can be used to:
Help define and design a total quality system.
Evaluate ongoing internal relationships among department, divisions, and functional units within an organization.
Assess and assist outside suppliers of goods and services to a company.
Assess customer satisfaction.
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37. ISO 9000 The International Organization for Standardization (ISO)
ISO 9000 Series of Quality Standards
An international set of standards for documenting the processes that an organization uses to produce its goods and services.
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38. ISO 9000 (cont’d) ISO 9000 Certification
First party certification—A firm audits itself.
Second party certification—Customers audit their suppliers.
Third party assessment—Company is assessed by outside registrars from ASQ’s Registration Accreditation Board (RAB).
ISO 9000/Q90 Registration Process
Application to registrar
Preliminary assessment
Full audit
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39. European Quality Award (EQA)
European Foundation for Quality Management (EFQM)
Stimulate and assist European organizations in quality improvement activities.
Support managers in the adoption of TQM.
EFQM Excellence Model
A non-prescriptive frame work based on nine criteria that recognizes that there are many approaches to achieving sustainable excellence.
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40. Overview of the EFQM Excellence Model
Exhibit 6.11
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41. Recent Winners of the European Quality Award
Exhibit 6.12
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42. The Deming Prize Deming Prize
Initiated by Japan in 1951 to recognize the importance of high quality products.
Name after W. Edwards Deming
Categories of the Deming Prize:
The Deming Prize for Individuals
The Deming Application Prize
The Quality Control Award for Operations/ Business Units
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