Presentation on theme: "Modern Importance of Quality"— Presentation transcript:
1 Modern Importance of Quality “The first job we have is to turn out quality merchandise that consumers will buy and keep on buying. If we produce it efficiently and economically, we will earn a profit, in which you will share.”- William Cooper Procter
2 Definitions of Quality Transcendent definition: excellenceProduct-based definition: quantities of product attributesUser-based definition: fitness for intended useValue-based definition: quality vs. priceManufacturing-based definition: conformance to specifications
4 Customer-Driven Quality “Meeting or exceeding customer expectations”Customers can be...ConsumersExternal customersInternal customers
5 Total Quality People-focused management system Focus on increasing customer satisfaction and reducing costsA systems approach that integrates organizational functions and the entire supply chainStresses learning and adaptation to changeBased on the scientific method
6 Principles of Total Quality Customer and stakeholder focusParticipation and teamworkProcess focus and continuous improvement...supported by an integrated organizationalinfrastructure, a set of management practices,and a set of tools and techniques
7 Customer and Stakeholder Focus Customer is principal judge of qualityOrganizations must first understand customers’ needs and expectations in order to meet and exceed themOrganizations must build relationships with customersCustomers include employees and society at large
8 Participation and Teamwork Employees know their jobs best and therefore, how to improve themManagement must develop the systems and procedures that foster participation and teamworkEmpowerment better serves customers, and creates trust and motivationTeamwork and partnerships must exist both horizontally and vertically
9 Process Focus and Continuous Improvement A process is a sequence of activities that is intended to achieve some result
10 Competitive Advantage Is driven by customer wants and needsMakes significant contribution to business successMatches organization’s unique resources with opportunitiesIs durable and lastingProvides basis for further improvementProvides direction and motivationQuality supports each of these characteristics
11 Quality and Profitability Improved quality of designImproved quality of conformanceHigher perceived valueHigher pricesLower manufacturing and service costsIncreased market shareIncreased revenuesHigher profitability
12 Evidence that Quality Impacts Business Results General Accounting Office study of Baldrige Award applicantsBaldrige stock study (seeHendricks and Singhal study of quality award winnersPerformance results of Baldrige Award winners
13 GAO TQ Model Product and service quality Customer satisfaction Leadership forcontinuousimprovementQuality systems andemployee involvementCompetitivenessOrganizationbenefitsReliabilityOn-time deliveryError/defectsOverall satisfactionCustomer retentionComplaintsCostsCycle timeTurnoverSatisfactionSafety & healthProductivityMarket shareProfits
14 Three Levels of Quality Organizational level: meeting external customer requirementsProcess level: linking external and internal customer requirementsPerformer/job level: meeting internal customer requirements
15 Quality and Personal Values Personal initiative has a positive impact on business successQuality begins with personal attitudesQuality-focused individuals often exceed customer expectationsAttitudes can be changed through awareness and effort (e.g., personal quality checklists)
16 Definition: Total Quality Management Total Quality Management (TQ, QM or TQM) and Six Sigma (6) are sweeping “culture change” efforts to position a company for greater customer satisfaction, profitability and competitiveness.TQ may be defined as managing the entire organization so that it excels on all dimensions of products and services that are important to the customer.We often think of features when we think of the quality of a product or service; TQ is about conformance quality, not features.1980’s Long RangeEncompasses entire organization
17 4/20/2017Another meaning of TQMTotal 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.
18 4/20/2017What’s the goal of TQM?“Do the right things right the first time, every time.”
19 4/20/2017Another 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.
20 Total Quality also is… Meeting Our Customer’s Requirements Doing Things Right the First Time; Freedom from Failure (Defects)Consistency (Reduction in Variation)Continuous ImprovementQuality in Everything We Do
21 A Quality Management System is… A belief in the employee’s ability to solve problemsA belief that people doing the work are best able to improve itA belief that everyone is responsible for quality
22 Elements for Success Management Support Mission Statement Proper PlanningCustomer and Bottom Line FocusMeasurementEmpowermentTeamwork/Effective MeetingsContinuous Process ImprovementDedicated Resources
23 . . . The Continuous Improvement Process Measurement Measurement Empowerment/Shared LeadershipCustomer SatisfactionMeasurementBusiness ResultsMeasurementProcess Improvement/Problem SolvingTeam Management. . .Measurement
24 Modern History of Quality Management Frederick W. Taylor wrote Principles of Scientific Management in 1911.Walter A. Shewhart used statistics in quality control and inspection, and showed that productivity improves when variation is reduced (1924); wrote Economic Control of Manufactured Product in 1931.W. Edwards Deming and Joseph M. Juran, students of Shewhart, went to Japan in 1950; began transformation from “shoddy” to “world class” goods.In 1960, Dr. K. Ishikawa formalized “quality circles” - the use of small groups to eliminate variation and improve processes.In the late ‘70’s and early ‘80’s:Deming returned from Japan to write Out of the Crisis,and began his famous 4-day seminars in the United StatesPhil Crosby wrote Quality is FreeNBC ran “If Japan can do it, why can’t we?”Motorola began 6 Sigma
25 History of Quality Management Deming’s 14 Points1. Create constancy of purpose for improvement2. Adopt a new philosophy3. Cease dependence on mass inspection4. Do not award business on price alone5. Work continually on the system of production and service6. Institute modern methods of training7. Institute modern methods of supervision of workers8. Drive out fear9. Break down barriers between departments10. Eliminate slogans, exhortations, and targets for the work force11. Eliminate numerical quotas12. Remove barriers preventing pride of workmanship13. Institute a vigorous program of education and retraining14. Take action to accomplish the transformation
26 History of Quality Management Deming’s Concept of “Profound Knowledge”Understanding (and appreciation) of Systems- optimizing sub-systems sub-optimizes the total system- the majority of defects come from systems, the responsibility ofmanagement (e.g., machines not in good order, defective material, etc.Knowledge of Statistics (variation, capability, uncertainty in data, etc.)- to identify where problems are, and point managers and workerstoward solutionsKnowledge of Psychology (Motivation)- people are afraid of failing and not being recognized,so they fear how data will be used against themTheory of Knowledge- understanding that management in any form is a prediction, and isbased on assumptions
27 History of Total Quality According to Dr. Joseph M. Juran (1991):“On the assembly line at the Ford Motor Company in 1923, most of the workers producing Model T’s were immigrants and could not speak English. Many were also illiterate. Workers learned their trade by modeling the actions of other workers. They were unable to plan, problem-solve, and make decisions. As a result, the Taylor scientific school of management flourished, and MBAs and industrial engineers were invented to do this work. Today, however, the workforce is educated. Workers know what is needed to improve their jobs, and companies that do not tap into this significant source of knowledge will truly be at a competitive disadvantage.”
28 History of Total Quality According to Phil Crosby, Quality is . . .An attitude:- Zero Defects- Continuous ImprovementA measurement:- Price of Conformance, plus- Price of Nonconformance (defects)
29 TQ: Transforming an Organization Essential elements to business success include:Customer LoyaltyEmployee CommitmentOperating EfficiencySome interesting evidence to validate transitioning into a Customer Focused company:Customer perception of quality in the top 1/5….pretax ROI=32%Customer perception of quality in the bottom 2/5….pretax ROI=14%Almost 70% of why customers left companies had nothing to do with product qualityOnly 4% of customers complain65-90% of unhappy customers would never again buy from the companyWhen people did complain and their problems were resolved quickly, 82% would buy againIt costs five times as much to replace a typical customer as it does to take actions that would have kept the customer in the first placeOnly 4% of company problems or barriers to delighting the customer are known to top managers. (9% to managers, 74% to supervisors, 100% baseline employee)Truth: “Quality offers something to everyone…the customer, the employee, and the business. It stands for what most employees especially believe in…doing a job right the first time, being “the best” at what they do, and having everyone’s ideas treated with respect.”
30 What is Six Sigma?A goal of near perfection in meeting customer requirementsA sweeping culture change effort to position a company for greater customer satisfaction, profitability and competitivenessA comprehensive and flexible system for achieving, sustaining and maximizing business success; uniquely driven by close understanding of customer needs, disciplined use of facts, data, and statistical analysis, and diligent attention to managing, improving and reinventing business processes(Source:The Six Sigma Way by Pande, Neuman and Cavanagh)
31 Is 99% Quality Good Enough? 22,000 checks will be deducted from the wrong bank accounts in the next 60 minutes.20,000 incorrect drug prescriptions will be written in the next 12 months.12 babies will be given to the wrong parents each day.
32 Six Sigma QualityThe objective of Six Sigma quality is 3.4 defects per million opportunities!
33 But is Six Sigma Realistic? IRS – Tax Advice (phone-in)1011001K10K100K765432(66810 ppm)Restaurant BillsDoctor Prescription WritingPayroll ProcessingAverageCompanyOrder Write-upJournal VouchersWire TransfersAir Line Baggage HandlingDefects Per Million Opportunities (DPMO)Purchased MaterialLot Reject Rate(233 ppm)Best in ClassDomestic AirlineFlight Fatality Rate(3.4 ppm)(0.43 ppm)SIGMA
34 Six Sigma Improvement Methods DMAIC vs. DMADV DefineMeasureAnalyzeContinuous ImprovementReengineeringImproveDesignControlValidate
35 Six Sigma DMAIC Process ControlDefine: Define who your customers are, and what their requirements are for your products and services – Their expectations. Define your team goals, project boundaries, what you will focus on and what you won’t. Define the process you are striving to improve by mapping the process.ImproveDefineAnalyzeMeasure
36 Six Sigma DMAIC Process Measure: Eliminate guesswork and assumptions about what customers need and expect and how well processes are working. Collect data from many sources to determine speed in responding to customer requests, defect types and how frequently they occur, client feedback on how processes fit their needs, how clients rate us over time, etc. The data collection may suggest Charter revision.ControlImproveDefineAnalyzeMeasure
37 Six Sigma DMAIC Process Analyze: Grounded in the context of the customer and competitive environment, analyze is used to organize data and look for process problems and opportunities. This step helps to identify gaps between current and goal performance, prioritize opportunities to improve, identify sources of variation and root causes of problems in the process.ControlImproveDefineAnalyzeMeasure
38 Six Sigma DMAIC Process ControlImprove: Generate both obvious and creative solutions to fix and prevent problems. Finding creative solutions by correcting root causes requires innovation, technology and discipline.ImproveDefineAnalyzeMeasure
39 Six Sigma DMAIC Process Control: Insure that the process improvements, once implemented, will “hold the gains” rather than revert to the same problems again. Various control tools such as statistical process control can be used. Other tools such as procedure documentation helps institutionalize the improvement.ControlImproveDefineAnalyzeMeasure
40 Six Sigma DMADV Process Design: Develop detailed design for new process. Determine and evaluate enabling elements. Create control and testing plan for new design. Use tools such as simulation, benchmarking, DOE, Quality Function Deployment (QFD), FMECA analysis, and cost/benefit analysis.ValidateDesignDefineAnalyzeMeasure
41 Six Sigma DMADV Process ValidateValidate: Test detailed design with a pilot implementation. If successful, develop and execute a full-scale implementation. Tools in this step include: planning tools, flowcharts/other process management techniques, and work documentation.DesignDefineAnalyzeMeasure
42 History of Quality Assurance (1 of 2) Skilled craftsmanship during Middle AgesIndustrial Revolution: rise of inspection and separate quality departmentsStatistical methods at Bell SystemQuality control during World War IIQuality management in Japan
43 History of Quality Assurance (2 of 2) Quality awareness in U.S. manufacturing industry during 1980s: “Total Quality Management”Malcolm Baldrige National Quality Award (1987)Quality in service industries, government, health care, and educationCurrent and future challenge: keep progress in quality management alive
44 Productivity and TQM Traditional view: TQM view: 4/20/2017Productivity and TQMTraditional view:Quality cannot be improved without significant losses in productivity.TQM view:Improved quality leads to improved productivity.
45 4/20/2017Basic Tenets 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.
46 The three aspects of TQM 4/20/2017The three aspects of TQMTools, techniques, and training in their use for analyzing, understanding, and solving quality problemsCountingCustomersCultureQuality for the customer as adriving force and central concern.Shared values and beliefs, expressed by leaders, that define and support quality.
47 4/20/2017Quality 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.”
49 The TQM System Continuous Improvement Objective Principles Elements 4/20/2017The TQM SystemContinuousImprovementObjectivePrinciplesCustomerFocusProcessImprovementTotalInvolvementLeadershipEducation and Training Supportive structureCommunications Reward and recognitionMeasurementElements