1. Total Quality Management

2. What is TQM? Meeting quality expectations as defined by the customer
Integrated organizational effort designed to improve quality of processes at every business level

3. Defining Quality – 5 Ways
1. Conformance to specs - designer based
Does product/service meet tolerances defined by designers? E.g. 20 min wait for pizza (average) + 10 min acceptable (?) delay. What about a customer? Is a 30 min. delay acceptable?
2. Fitness for use - user based definition
Evaluates performance for intended use. E.g. Jeep vs. Jaguar on mountain roads?
3. Value for price paid - user based def.
Evaluation of usefulness vs. price paid. E.g. receive the same value but at a lower price

4. Defining Quality – 5 Ways
4. Support services - user based def.
Quality of support after sale. E.g. excellent warranty service
5. Psychological criteria - user based definition
e.g. ambiance, prestige, friendly staff may leave the impression of higher quality
Case: Gold Coast Advertising

5. Evolution of TQM – New Focus

6. TQM Philosophy – What’s Different?
1. Focus on Customer
Identify and meet customer needs
Stay tuned to changing needs, e.g. fashion styles
96% of customers do not complain (stop buying and/or tell others 9-11 people); satisfied customers  1 person
Fixing the problem after the complaint  customers become more loyal than if they had not had the problem in the first place
It costs more to obtain a new customer than to retain one
Customers increase their spending the longer they buy from a company

7. TQM Philosophy – What’s Different?
2. Continuous Improvement
Continuous learning and problem solving
(jap.) Kaizen: requires that the company continually strive to do better through learning and problem solving (“small doses of medicine are better than one large dose”)
Perfection can NEVER be achieved

8. TQM Philosophy – What’s Different?
2. Continuous Improvement
Continuous learning and problem solving
6 sigma: 3.4 defects per one million. Example: If 20 mln passengers per year pass through London’s Heathrow Airport, only 68 passengers per year will have misplaced luggage
3 sigma: 2.6 defects per one thousand => 2,600 per million
52,000 passengers per year will have misplaced luggage

9. TQM Philosophy – What’s Different?
3. Quality at the Source
Inspection (before) vs. prevention & problem solving (now)
4. Employee Empowerment (they are expected to seek out, identify, and correct problems)
Employees no longer afraid of reporting problems
5. Focus on both external (who purchase company’s goods/services) and internal customers (e.g., packaging department is an internal customer of assembly department)

10. TQM Philosophy– What’s Different? (continued)
6. Team Approach – Quality Circles (“two heads are better than one”)
Teams formed around processes – 8 to 10 people
Meet weekly to analyze and solve problems
7. Benchmarking
Studying practices at “best in class” companies; e.g. many companies use Amex to benchmark conflict resolution
8. Managing Supplier Quality
Certifying suppliers vs. receiving inspection

11. TQM Philosophy– What’s Different? (continued)
9. Just-in-Time
‘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

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

13. Just-In-Time (JIT) Example
Reducing inventory reveals
problems so they can be solved.
Scrap
Unreliable Vendors
Capacity Imbalances

14. Cost of Quality – 4 Categories
I. Quality Control Costs (Prevention & Appraisal)
II. Quality Failure Costs (Internal & External Failure)
Early detection/prevention is less costly
May be less by a factor of 10
Case: Delta Plastics Inc. (A): Question 1. Identify the different costs of quality described in the case.

15. Ways of Improving Quality
1. Plan-Do-Study-Act Cycle (PDSA)
Also called the Deming Wheel after originator
Circular, never ending problem solving process
2. Quality Function Deployment
Used to translate customer preferences to design
3. Seven Tools of Quality Control
Tools typically taught to problem solving teams

16. Ad 1. PDSA Details Plan Do Study Act Evaluate current process
Collect procedures, data, identify problems
Develop an improvement plan, performance objectives Do
Implement the plan – trial basis
Study
Collect data and evaluate against objectives
Act
Communicate the results from trial
If successful, implement new process

17. PDSA (continued) Cycle is repeated
After act phase, start planning and repeat process

18. Ad 2. QFD Details
Process used to ensure that the product meets customer specifications (Example: Student’s backpack)
3. Voice of the
engineer
2. Customer-based
benchmarks
1. Voice
of the
customer

19. QFD - House of Quality
Adding trade-offs, targets & developing product specifications
4. Trade-offs
5. Technical
Benchmarks
6. Targets

20. Ad 3. Seven Problem Solving Tools
(i) Cause-and-Effect Diagrams
(ii) Flowcharts
(iii) Checklists
(iv) Control Charts
(v) Scatter Diagrams
(vi) Pareto Analysis
(vii) Histograms

21. Cause-and-Effect Diagrams
Called Fishbone Diagram
Focused on solving identified quality problem
Used to find problem sources/solutions
Steps
Identify the problem to correct
Draw main causes for problem as ‘bones’
Ask ‘What could have caused problems in these areas?’ Repeat for each sub-area.

22. Fishbone Chart - Problems with Airline Customer Service

23. Fishbone Chart - Problems with Getting to Work on Time
Consider the everyday task of getting to work on time or arriving at your first class on time in the morning. Draw a fish-bone chart showing reasons why you might arrive late in the morning.
4 M: Method, Material, Machinery, Manpower

24. Flowcharts Used to document the detailed steps in a process
Often the first step in Process Re-Engineering

25. Checklist
Simple data check-off sheet designed to identify type of quality problems at each work station; per shift, per machine, per operator

26. Control Charts Important tool used in Statistical Process Control
The UCL and LCL are calculated limits used to show when process is in or out of control

27. Scatter Diagrams
A graph that shows how two variables are related to one another
Data can be used in a regression analysis to establish equation for the relationship

28. Linear regression - example
No. of shipments:
Weeks 1 – 8:
All shipmnts: 23, 31, 28, 37, 35, 40, 41, 44
With defects: 5, 8, 6, 11, 10, 14, 12, 15
Employee turnover (new hires + terminations)
1, 3, 5, 2, 4, 6, 5, 5

29. Pareto Analysis
Technique that displays the degree of importance for each element
Named after the 19th century Italian economist
Often called the Rule
Principle is that quality problems are the result of only a few problems e.g. 80% of the problems caused by 20% of causes

30. Pareto Analysis
Develop a Pareto analysis of the following reasons of delay in a production process. What do you conclude?
Reason for Delay Frequency
Awaiting engineering decision 11
No schematic available 10
Test equipment down 22
Delay in inspection 15
Inadequate parts 40
Lack of personnel available 3

31. Pareto Analysis of Wine Glass Defects (Total Defects = 77)

32. Histograms
A chart that shows the frequency distribution of observed values of a variable like service time
at a bank drive-up window
Displays whether the distribution is symmetrical (normal) or skewed

33. Quality Awards and Standards
Malcolm Baldrige National Quality Award
The Deming Prize
ISO 9000 Certification
ISO Standards

34. MBNQA- What Is It?
Award named after the former Secretary of Commerce – Reagan Administration
Intended to reward and stimulate quality initiatives
Given to no more that two companies in each of three categories; manufacturing, service, and small business
Past winners; FedEx, 3M, IBM, Ritz-Carlton
Typical winners have scored around 700 points

35. The Deming Prize
Given by the Union of Japanese Scientists and Engineers since 1951
Named after W. Edwards Deming who worked to improve Japanese quality after WWII
Not open to foreign companies until 1984
Florida Power & Light was first US company winner

36. ISO Standards ISO 9000 Standards (published in 1987):
Certification developed by International Organization for Standardization
Set of internationally recognized quality standards
Companies are periodically audited & certified
ISO 9000:2000 Quality Management Systems (QMS) – Fundamentals and Standards
ISO 9001:2000 QMS – Requirements (customer)
ISO 9004:2000 QMS - Guidelines for Performance
ISO 14000: Focuses on a company’s environmental responsibility

37. ISO Standards
(1) Design/Development -> (2) Procurement -> (3) Production -> (4) Installation -> (5) Servicing
ISO 9001: 2000 (1)  (5)
ISO 9002, ISO 9003: withdrawn, incorporated into ISO 9001: 2000
ISO 10011: Guidelines for Auditing & Quality Management

38. Quality Gurus Walter A. Shewhart W. Edwards Deming Joseph M. Juran
Armand V. Feigenbaum
Phillip Crosby
Kaoru Ishikawa
Genichi Taguchi

39. Why TQM Efforts Fail Lack of a genuine quality culture
Lack of top management support and commitment
Over- and under-reliance on SPC methods