Chapter 6 Quality Management

Name: Chapter 6 Quality Management
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Description: Chapter 6 Quality Management

Chapter 6 Quality Management

Overview Quality & Strategy What is quality?
Malcom Baldridge Quality Award Total quality management (TQM) Facets of TQM Tools of TQM Six Sigma

Definitions of Quality
ASQ: Product characteristics & features that affect customer satisfaction User-Based: What consumer says it is Manufacturing-Based: Degree to which a product conforms to design specification Once you have introduced these definitions of quality, ask students to provide example of products that use them.

Dimensions of Quality for Goods
Operation Reliability & durability Conformance Serviceability Appearance Perceived quality Quality It may be most helpful to provide, or ask you students to provide, examples of products for which the notion of quality is based upon one or more of the dimensions listed.

Service Quality Attributes
Tangibles Reliability Communication Credibility Security Responsiveness Competence Courtesy Access © 1995 Corel Corp. Under- standing Although the text considers service quality at the end of the chapter, you may wish, at this point, to contrast the notion of quality for goods with that for services. If not, skip this slide - it is repeated at the point at which the issues are raised in the text.

Malcom Baldrige National Quality Award
Established in 1988 by the U.S. government Designed to promote TQM practices You might make the point that companies actually do consider this a prestigious award. For further information, visit the web site:

Meet the Wallace Company 2005 Baldrige Awards Manufacturing
Sunny Fresh Foods Monticello, MN Meet the Wallace Company Service DynMcDermott Petroleum Operations Company New Orleans, LA Small Business Park Place Lexus Plano, TX Education Richland College Dallas, TX Jenks Public Schools Jenks, OK Health Care Bronson Methodist Hospital Kalamazoo, MI

2001 Baldrige Awards Education Chugach School District, AL
Chugach School District, AL Pearl River School District, NY U. Of Wisconsin - Stout Manufacturing Small Business Clarke American Checks, Inc. San Antonio, TX Pal’s Sudden Service Kingsport, TN

Manufacturing Category
The 2002 Baldridge Awards Health Care Category SSM Health Care, St. Louis, Mo. Manufacturing Category Motorola Inc. Commercial, Government and Industrial Solutions Sector, Schaumburg, Ill. Small Business Category Branch-Smith Printing Division, Fort Worth, Tx.

Why focus on Quality? For the sixth year in a row, a hypothetical stock index, made up of publicly traded U.S. companies that have received the Baldrige Award, has outperformed the Standard & Poor’s 500. In 2000, the “Baldrige Index” outperformed the S&P 500 by 4.8 to 1.

Criteria for Performance Excellence
Category 1—Leadership 120 points Category 2—Strategic Planning 85 points Category 3—Customer and Market Focus 85 points Category 4—Information and Analysis 90 points Category 5—Human Resource Focus 85 points Category 6—Process Management 85 points Category 7—Business Results 450 points This slide presents the award structure for It is important to note that the Baldrige Criteria are evaluated and improved annually. Through the life the textbook the details of the scoring scale and the criteria in the next slide are likely to change somewhat.

Costs of Detecting Defects
14

Process Final testing Customer Where defect is detected
Costs of Detecting Defects Cost of detection and correction Process Final testing Customer Where defect is detected This graph sets the stage for the cost of defectives at various stages of the process as shown in Figure 6.2. 14

Process Final testing Customer Where defect is detected
Costs of Detecting Defects Process Final testing Customer Where defect is detected Cost of detection and correction 15

TQM – Total Quality Management
Encompasses entire organization, from supplier to customer Stresses a commitment by management to have a continuing company-wide drive toward excellence in all aspects of products and services that are important to the customer. A point to be made here is that TQM is not a program but a philosophy.

Deming’s Fourteen Points
Create consistency of purpose Lead to promote change Build quality into the products Build long term relationships Continuously improve product, quality, and service Start training Emphasize leadership One point to make here is that this list represents a recent expression of Demings 14 points - the list is still evolving. Students may notice that many of these fourteen points seem to be simply common sense. If they raise this issue - ask them to consider jobs they have held. Were these points emphasized or implemented by their employers? If not, why not? This part of the discussion can be used to raise again the issue that proper approaches to quality are not “programs,” with limited involvement and finite duration, but rather philosophies which must become ingrained throughout the organization.

Deming’s Points - continued
Drive out fear Break down barriers between departments Stop haranguing workers Support, help, improve Remove barriers to pride in work Institute a vigorous program of education and self-improvement Put everybody in the company to work on the transformation

Concepts of TQM Continuous improvement Employee empowerment
Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of tools This slide simply introduces concepts of TQM. These concepts are expanded upon in subsequent slides.

Continuous Improvement
Represents continual improvement of process & customer satisfaction Involves all operations & work units Other names Kaizen (Japanese) Zero-defects Six sigma Students may have a number of questions with respect to the notion of continuous improvement. - Why do we need continuous improvement? Why can’t we do it right the first time? - Doesn’t implementation of continuous improvement introduce a certain instability? - Are we never “done”? - Etc.

Employee Involvement Cultural Change Teams Individual Development
Awards and Incentives This slide supports the topical section on employee involvement. The slide builds on advance. 4

Employee Empowerment Getting employees involved in product & process improvements 85% of quality problems are due to process & material Techniques Support workers Let workers make decisions Build teams & quality circles If you have not done so already, you might at this point discuss: - why employee empowerment works - the role of information technology in enabling employee empowerment - the role of information technology in making employee empowerment a requirement

Quality Circles Group of 6-12 employees from same work area
Meet regularly to solve work-related problems 4 hours/month Facilitator trains & helps with meetings You might discuss: - the benefits and the limitations of quality circles - the impact of quality circles on workers - requirements for quality circles to be successful - implementation of quality circles in the U.S. © 1995 Corel Corp.

Benchmarking This slide supports the discussion of benchmarking from the text. The slide builds on advance. 4

Benchmarking Selecting best practices to use as a standard for performance Determine what to benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking information Take action to match or exceed the benchmark Ask student to identify firms which they believe could serve as benchmarks. If students are unable to identify any firms - ask them to identify a college or university whose registration system or housing selection system could serve as a benchmark. Most students have enough knowledge of, or friends at,other colleges and universities so as to be able to respond to this question.

Benchmarking examples
Xerox Pioneered benchmarking 1989 Baldrige Award winner Benchmarked competitors. WHY? Benchmarked American Express. WHY? Benchmarked L.L. Bean. WHY?

Benchmarking examples
Granite Rock 1992 Baldrige Award winner produce aggregate and concrete Benchmarked companies in their industry Benchmarked Dominoes’ Pizza. WHY?

Taguchi Techniques Experimental design methods to improve product & process design Identify key component & process variables affecting product variation Taguchi Concepts Quality robustness Quality loss function Target specifications

Target Specification Example
A study found U.S. consumers preferred Sony TV’s made in Japan to those made in the U.S. Both factories used the same designs & specifications. The difference in quality goals made the difference in consumer preferences. Japanese factory (Target-oriented) This slide probably deserves some discussion. Some students will probably question whether consumers could tell the difference between the two. You should stress that they can tell the difference and that this will have an impact on their buying decisions. U.S. factory (Conformance-oriented)

Just-in-Time (JIT) Relationship to quality: JIT cuts cost of quality
JIT improves quality Better quality means less inventory and better, easier-to-employ JIT system This slide introduces a discussion about JIT. Subsequent slides elaborate.

Tools for TQM Check sheets (read) Scatter diagrams (read)
Histograms (read) Flow charts (read) Pareto charts Cause-and-effect diagrams Statistical process control (Chapter 6S) This slide simply enables you to introduce the tools of TQM. Particular tools are elaborated upon in subsequent slides.

Perroti’s Pizza Pareto Chart
The manager of Perroti’s Pizza collects data concerning customer complaints about delivery. He created a frequency distribution of the problems from a check sheet. Problem Frequency Topping stuck to box 17 Pizza is late 35 Wrong topping 9 Wrong crust 6 Wrong size 4 Partially eaten (?!) 3 Pizza didn’t show

Perroti’s Pareto Chart

What does the chart show? Worst problem? What is it? What percent of all problems? If you want to solve 80% of the problems, which problems should you solve?

Perrotti’s Pizza Pareto Chart
Sort frequency distribution from highest frequency to lowest frequency.

52 35+17 = 52 61 = 61 Create the cumulative frequency distribution.

Calculate the cumulative percent frequency distribution 43.8%

Checksheet: Airline Complaints
Type Wk 1 Wk 2 Wk 3 Wk 4 Total Lost Baggage | || Baggage Delay ||||| |||| ||| Missed connections Poor cabin service Ticketing error

Pareto Chart: Airline Complaints
Frequency Cumulative Percent Baggage delay 23 0.46 Poor cabin service 14 0.74 Missed connections 7 0.88 Lost Baggage 4 0.96 Ticketing error 2 1 50

Cause-and-Effect Diagrams
This section of the Chapter deals with some of the seven basic tools of quality, CE diagrams, Pareto charts, checksheets, and bar charts (histograms). This slide advances automatically. 1

Cause and Effect Diagram
Used to find problem sources/solutions Other names Fish-bone diagram, Ishikawa diagram Steps Identify problem to correct Draw main causes for problem as ‘bones’ Ask ‘What could have caused problems in these areas?’ Repeat for each sub-area. This slide introduces the Cause and Effect Diagram. The next several slide show the development of a simple example. If time is available, it would be helpful to ask students to develop their own examples.

Cause-and-Effect Diagrams
Personnel Machines Process Materials This section of the Chapter deals with some of the seven basic tools of quality, CE diagrams, Pareto charts, checksheets, and bar charts (histograms). This slide advances automatically. 1

Checker Board Airlines
The next series of slides presents Example 6.6. The series builds in steps to the conclusion of the Example showing the development of key components along the way. This slide advances automatically.

Delayed flight departures

Equipment Aircraft late to gate Mechanical failures Delayed flight departures

Equipment Personnel Aircraft late to gate Passenger processing at gate Mechanical failures Late cabin cleaners Unavailable cockpit crew Late cabin crew Delayed flight departures

Equipment Personnel Aircraft late to gate Passenger processing at gate Mechanical failures Late cabin cleaners Unavailable cockpit crew Late cabin crew Delayed flight departures Late baggage to aircraft Late fuel Late food service Contractor not provided updated schedule Materials

Equipment Personnel Aircraft late to gate Passenger processing at gate Mechanical failures Late cabin cleaners Unavailable cockpit crew Late cabin crew Delayed flight departures Late baggage to aircraft Poor announcement of departures Late fuel Weight/balance sheet late Late food service Delayed check-in procedure Contractor not provided updated schedule Waiting for late passengers Materials Procedures

Equipment Personnel Aircraft late to gate Passenger processing at gate Other Mechanical failures Late cabin cleaners Unavailable cockpit crew Weather Late cabin crew Air traffic delays Delayed flight departures Late baggage to aircraft Poor announcement of departures Late fuel Weight/balance sheet late Late food service Delayed check-in procedure Contractor not provided updated schedule Waiting for late passengers Materials Procedures Source: Adapted from D. Daryl Wyckoff, “New Tools for Achieving Service Quality.” The Cornell Hotel and Restaurant Administration Quarterly, November 1984, pg. 89. © 1984 Cornell H.R.A. Quarterly. Used by permission. All rights reserved.

Inspection Involves examining items to see if an item is good or defective Detect a defective product Does not correct deficiencies in process or product Issues When to inspect Where in process to inspect This slide introduces the concept of inspection. At this point, one should probably stress the role of inspection in the overall quality control process. Some students seem to have the notion that inspection is quality control.

When and Where to Inspect
At the supplier’s plant while the supplier is producing At your facility upon receipt of goods from the supplier Before costly or irreversible processes During the step-by-step production processes When production or service is complete Before delivery from your facility At the point of customer contact This slide can be used to frame a discussion about when to inspect. If your students have documented an actual production process from a local business, one of these documented processes can serve as an example.

Six Sigma Quality improvement and business strategy developed at Motorola in the 1980’s Goals Reduce defects to 4 defects per million Reduce cycle time Reduce costs Utilize an organization infrastructure and statistical tools to implement

Six Sigma at Motorola Motorola ROI 1987-1994
Reduced in-process defect levels by a factor of 200. Reduced manufacturing costs by $1.4 billion. Increased employee production on a dollar basis by 126%. Increased stockholders share value fourfold.

Six Sigma at GE GE is the current benchmark for Six Sigma success.
General Electric ROI Company wide savings of over $1 Billion. Estimated annual savings to be $6.6 Billion by the year 2000

Six Sigma Lessons Implement in BOTH manufacturing and non-manufacturing areas – Jack Welch, former CEO of GE

Achieving Total Quality Management
Customer Satisfaction Effective Business Attitudes (e.g., Commitment) Employee Fulfillment How to Do Quality Principles Again, a point to be made here is the universality required to achieve TQM. What to Do Organizational Practices

Baldrige Criteria Leadership—Leadership system, values, expectations, and public responsibilities Strategic Planning—The effectiveness of strategic and business planning and deployment of plans, focusing on performance requirements Customer and Market Focus—How the company determines customer and market requirements and achieves customers satisfaction Information and Analysis—The effectiveness of information systems to support customer driven performance excellence and marketplace success This slide defines the Categories in the Baldrige Award as described in the text.

Baldrige Criteria Human Resource Focus—The success of efforts to realize the full potential of the work force to create a high-performance organization Process Management—The effectiveness of systems and processes for assuring the quality of products and services Business Results—Performance results and competitive benchmarking in customer satisfaction, financials, human resources, suppliers, and operations

Statistical Process Control (SPC)
Uses statistics & control charts to tell when to adjust process Developed by Shewhart in 1920’s Involves Creating standards (upper & lower limits) Measuring sample output (e.g. mean wgt.) Taking corrective action (if necessary) Done while product is being produced This slide introduces the process of Statistical Process Control. Slides illustrating the mechanics will be found in the presentation for supplement 4S. At some point, you may wish to illustrate or discuss the connection between Statistical Process Control and the Target and Conformance-based quality control discussed earlier.

Process Control Chart

Patterns to Look for in Control Charts
This chart enables you to discuss some of the information which can be obtained from the Process Control Charts.

Inspection Points in Services
Some Points of Inspection Organization Issues to Consider Retail store Clean, uncluttered, organized, level of stockouts, amply supply, rotation of goods Stockrooms Display areas Sales counters Attractive, well-organized, stocked, visible goods, good lighting Neat, courteous knowledgeable personnel; waiting time; accuracy in credit checking and sales entry

Some Points of Inspection Issues to Consider Organization Restaurant Clean, proper storage, unadulterated food, health regulations observed, well-organized Kitchen Cashier station Dining areas Speed, accuracy, appearance Clean, comfortable, regular monitoring by personnel,

International Quality Standards
Industrial Standard Z (Japan) Specification for TQM ISO 9000 series (Europe/EC) Common quality standards for products sold in Europe (even if made in U.S.) ISO series (Europe/EC) Standards for recycling, labeling etc. ASQC Q90 series; MILSTD (U.S.) One of the most important points to be made from this slide is that quality standards are now international. Students might be asked to explain the benefits of international as opposed to national standards. They might also be asked to consider the limitations we would face if there were no such standards. The problems to be encountered in developing international standards also make for good discussion. Note to your students that Crosby has great reservations about the standard and the procedures building an effective quality program.

Quality Certification
ISO 9000 Set of international standards on quality management and Quality assurance, critical to international Business ISO 9000 series standards, briefly, require firms to document their quality-control systems at every step (incoming raw materials, product design, in-process monitoring and so forth) so that they’ll be able to identify those areas that are causing quality problems and correct them.

The ISO 9000 Series Standards
ISO 9000 requires companies to document everything they do that affects the quality of goods and services. Hierarchical approach to documentation of the Quality Management System

EC Environmental Standard ISO 14000
Core Elements: Environmental management Auditing Performance evaluation Labeling Life-cycle assessment

Resolving Customer Complaints Best Practices
Make it easy for clients to complain Respond quickly to complaints Resolve complaints on the first contact Use computers to manage complaints Recruit the best for customer service jobs One might ask students “Given that these suggestions seem to make intuitive sense, why would a company not wish to implement them?”

Just-in-Time (JIT) ‘Pull’ system of production/purchasing
Customer starts production with an order Involves ‘vendor partnership programs’ to improve quality of purchased items Reduces all inventory levels Inventory hides process & material problems Improves process & product quality This might be a good time to differentiate between “push”and “pull” systems. Subsequent slides elaborate on the role of JIT and inventory levels in hiding problems.

Just-In-Time (JIT) Example
Scrap Work in process inventory level (hides problems) Unreliable Vendors Capacity Imbalances

Just-In-Time (JIT) Example
Scrap Reducing inventory reveals problems so they can be solved. Unreliable Vendors Capacity Imbalances Note that reducing inventory enables problems to be seen - it does not necessarily fix them.

Flow of Activities Necessary to Achieve Total Quality Management
Organizational Practices Quality Principles Employee fulfillment This slide simply introduces the four activities. Subsequent slides expand on each. Customer Satisfaction

The Costs of Poor Quality
Prevention Costs Appraisal Costs Internal Failure Costs External Failure Costs This slide supports the discussion of the cost of poor quality. The slide builds on advance. 4

Quality Robustness Quality Loss Function
Ability to produce products uniformly regardless of manufacturing conditions Quality Loss Function Shows social cost ($) of deviation from target value

Organization Some Points of Inspection Issues to Consider Shortages, courtesy, speed, accuracy Bank Teller stations Loan accounts Checking Collateral, proper credit checks, rates, terms of loans, default rates, loan rates As you discuss inspection points in services, ask students how the use of inspection should differ between goods and services. Accuracy, speed of entry, rate of overdraws

PDCA Wheel Also called Demming cycle or the Shewhart cycle
Developed by Shewhart whom greatly influenced Demming The next five slides build the Deming Wheel (Figure 6.3) step-by-step allowing the discussion to focus on the type of activities and processes that occur at each step of the continual improvement process. This slide advances automatically. 5

Plan PDCA Wheel 5

PDCA Wheel Plan Do 9

PDCA Wheel Plan Do Check 9

PDCA Wheel Plan Act Do Check 9

Chapter 6 Quality Management

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