Chapter 9/11 Introduction to Quality Total Quality Management Operations Management MBA105 Williams J. Srevenson 7th Edition

Learning Objectives Define quality. Importance of quality. Determinants of quality. Costs & quality. Quality awards. quality gurus TQM Quality tools

Quality Management What does the term quality mean? Quality is the ability of a product or service to consistently meet or exceed customer expectations. degree of excellence of a thing. Totality of features and characteristics that satisfy needs

Quality Cost and Productivity Vs. Quality USA Organizations Focus in Cost and productivity (2nd war – mid 1980s) WHY AMERICAN ORGANIZATIONS BEHAVIOR CHANGE TWARD QUALITY??

Evolution of Quality Management Fredrick Taylor (Scientific Management) 1924 - Statistical process control charts 1930 - Tables for acceptance sampling 1940’s - Statistical sampling techniques 1950’s - Quality assurance/TQC (DEMING) 1960’s - Zero defects 1970’s - Quality assurance in services

Quality Assurance vs. Strategic Approach Emphasis on finding and correcting defects before reaching market Strategic Approach Proactive, focusing on preventing mistakes from occurring Greater emphasis on customer satisfaction

Dimension of Quality Which type of fuel you prefer to your car MOMTAZ or GAID Which Car you prefer CAMRY OR LUMINA FULL OPTIONS OR NORMAL OPTION Did you prefer health centre or private clinic

Dimensions of Quality Performance Features Reliability basic operating characteristics of a product; how well a car is handled. Features “extra” items added to basic features, such as a stereo CD or a leather interior in a car Reliability probability that a product will operate properly within an expected time frame; that is, a TV will work without repair for about seven years

Dimensions of Quality (Cont’d) Conformance degree to which a product meets pre–established standards Durability how long product lasts before replacement Serviceability ease of getting repairs, speed of repairs, courtesy and competence of repair person

Dimensions of Quality (Cont’d) Aesthetics how a product looks, feels, sounds, smells, or tastes Safety assurance that customer will not suffer injury or harm from a product; an especially important consideration for automobiles Perceptions subjective perceptions based on brand name, advertising, and the like

Examples of Quality Dimensions

Examples of Quality Dimensions (Cont’d)

Dimensions of Quality: Service Time and Timeliness How long must a customer wait for service, and is it completed on time? Is an overnight package delivered overnight? Completeness: Is everything customer asked for provided? Is a mail order from a catalogue company complete when delivered?

Dimensions of Quality: Service Courtesy: How are customers treated by employees? Are catalogue phone operators nice and are their voices pleasant? Consistency Is the same level of service provided to each customer each time? Is your newspaper delivered on time every morning?

Dimensions of Quality: Service Accessibility and convenience How easy is it to obtain service? Does a service representative answer you calls quickly? Accuracy Is the service performed right every time? Is your bank or credit card statement correct every month?

Dimensions of Quality: Service Responsiveness How well does the company react to unusual situations? How well is a telephone operator able to respond to a customer’s questions?

Challenges with Service Quality Customer expectations often change Different customers have different expectations Each customer contact is a “moment of truth” Customer participation can affect perception of quality Fail-staffing must be designed into the system

Quality Gurus Walter Shewart W. Edwards Deming Joseph M. Juran In 1920s, developed control charts Introduced the term “quality assurance” W. Edwards Deming Developed courses during World War II to teach statistical quality-control techniques to engineers and executives of companies that were military suppliers After the war, began teaching statistical quality control to Japanese companies Joseph M. Juran Followed Deming to Japan in 1954 Focused on strategic quality planning

Quality Gurus (cont.) Armand V. Feigenbaum Philip Crosby In 1951, introduced concepts of total quality control and continuous quality improvement Philip Crosby In 1979, emphasized that costs of poor quality far outweigh the cost of preventing poor quality In 1984, defined absolutes of quality management—conformance to requirements, prevention, and “zero defects” Kaoru Ishikawa Promoted use of quality circles Developed “fishbone” diagram Emphasized importance of internal customer

Deming’s 14 Points Create constancy of purpose Adopt philosophy of prevention Cease mass inspection Select a few suppliers based on quality Constantly improve system and workers Institute worker training Instill leadership among supervisors Eliminate fear among employees Eliminate barriers between departments Eliminate slogans Remove numerical quotas Enhance worker pride Institute vigorous training and education programs Develop a commitment from top management to implement above 13 points

Determinants of Quality (cont’d) Quality of design Intension of designers to include or exclude features in a product or service: Different car models with different features size Appearance Roominess Fuel economy Comfort Material used

Determinants of Quality (cont’d) Quality of Conformance Making sure a product or service is produced according to design: if new tires do not conform to specifications, they wobble if a hotel room is not clean when a guest checks in, the hotel is not functioning according to specifications of its design

Determinants of Quality (cont’d) Ease of Use Instruction manuals Guide the customer for proper used good labeling Service after Delivery

The Consequences of Poor Quality Loss of business Liability Productivity Costs

Benefits of Good Quality Organizations will benefit in different way: Enhance reputation Increase market share Greater customer loyalty Lower liability Cost Fewer complains Lower production cost Higher profits

Responsibility for Quality Top management Design Procurement Production/operations Quality assurance Packaging and shipping Marketing and sales Customer service

Costs of Quality Failure Costs - costs incurred by defective parts/products or faulty services. Internal Failure Costs Costs incurred to fix problems that are detected during the production. Defective materials Incorrect machine setting Faulty equipment Carelessness Wrong procedure

Costs of Quality External Failure Costs All costs incurred to fix problems that are detected after the product/service is delivered to the customer. Warranty work Handling of complains Replacement Liability

Costs of Quality (continued) Appraisal Costs Costs of activities designed to ensure quality or uncover defects Cost of inspector Testing Test equipment Labs Field testing

Costs of Quality (continued) Prevention Costs Cost of preventing defects form occurring Planning and adminstration Working with vendors Training Quality control procedures

Total Quality Management A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction. Continuous Improvement Involvement of Everyone Customer Satisfaction

Elements of TQM Continual improvement (never ending) Competitive benchmarking Employee empowerment Team approach Decisions based on facts Knowledge of tools Supplier quality Champion Quality at the source Suppliers

Continuous Improvement Philosophy that seeks to make never-ending improvements to the process of converting inputs into outputs. Kaizen: Japanese word for continuous improvement.

Quality at the Source The philosophy of making each worker responsible for the quality of his or her work.

Process Improvement and Tools Process improvement - a systematic approach to improving a process Process mapping Analyze the process Redesign the process Tools There are a number of tools that can be used for problem solving and process improvement Tools aid in data collection and interpretation, and provide the basis for decision making

Basic Quality Tools Flowcharts Check sheets Histograms Pareto Charts Scatter diagrams Control charts Cause-and-effect diagrams Run charts

Quality Tools Flow Chart : Cause and Effect displays the steps in a process showing order and relationships helps in understanding of that process and identifies potential weaknesses i.e. poor performance Cause and Effect Also know as fishbone or Ishikawa

Quality Tools

Quality Tools

Quality Tools

Flow Chart Operation Decision Start/ Finish

Check Sheet COMPONENTS REPLACED BY LAB TIME PERIOD: 22 Feb to 27 Feb 2002 REPAIR TECHNICIAN: Bob TV SET MODEL 1013 Integrated Circuits |||| Capacitors |||| |||| |||| |||| |||| || Resistors || Transformers |||| Commands CRT |

Histogram 5 10 15 20 1 2 6 13 10 16 19 17 12 16 2017 13 5 6 2 1

Pareto Analysis NUMBER OF CAUSE DEFECTS PERCENTAGE Poor design 80 64 % Wrong part dimensions 16 13 Defective parts 12 10 Incorrect machine calibration 7 6 Operator errors 4 3 Defective material 3 2 Surface abrasions 3 2 125 100 %

Percent from each cause Causes of poor quality Machine calibrations Defective parts Wrong dimensions Poor Design Operator errors Defective materials Surface abrasions 10 20 30 40 50 60 70 (64) (13) (10) (6) (3) (2)

Scatter Diagram Y X

Control Chart 970 980 990 1000 1010 1020 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 UCL LCL

Cause-and-Effect Diagram Figure 9.12 Quality Problem Out of adjustment Tooling problems Old / worn Machines Faulty testing equipment Incorrect specifications Improper methods Measurement Poor supervision Lack of concentration Inadequate training Human Deficiencies in product design Ineffective quality management Poor process design Process Inaccurate temperature control Dust and Dirt Environment Defective from vendor Not to specifications Material- handling problems Materials

Run Chart Time (Hours) Diameter

Tracking Improvements Figure 9-18 UCL LCL Process not centered and not stable Process centered and stable Additional improvements made to the process

Methods for Generating Ideas Brainstorming Quality circles Interviewing Benchmarking 5W2H

Quality Circles Team approach List reduction Balance sheet Paired comparisons

Benchmarking Process Identify a critical process that needs improving Identify an organization that excels in this process Contact that organization Analyze the data Improve the critical process