1. CORE CONCEPTS OF QUALITY

3. Definitions of Quality  What is quality?  Is important that we all agree on a definition of quality?

4. Why do definitions differ?  Engineering  Operations/Systems  Marketing  Finance

5. Why do definitions differ?  Engineering –Product design engineering –Concurrent engineering –Life testing –Redundancy –Statistical Process Control

6. Why do definitions differ?  Operations/Systems View –Quality is the base on which lasting improvements in other competitive dimensions are established Cost Speed Dependability Quality Sand Cone Model from Ferdows and Demeyer, J of Operating Mgt, Vol.9, 2, 1990)

7. Why do definitions differ?  Marketing –Relationship management –Customer focus—does it add value for the customer? –Facilitating interactions Organization Intermediary Customer payment product

8. Why do definitions differ?  Finance –Law of diminishing returns (below) –Deming’s chain reaction (next slide) Total Quality Costs Cost of improving quality Quality Cost Min. Cost Losses due to poor quality Optimal Quality

9. Deming Chain Reaction Improve quality Costs decrease Productivity improves Increase market share with better quality and lower prices Stay in business Provide jobs and more jobs

10. Definitions of Quality  Transcendent definition: excellence  Product-based definition: Quantities of product attributes  User-based definition: fitness for intended use  Value-based definition: quality vs. price  Manufacturing-based definition: Conformance to specifications  ISO 9000:2000 Definition: “The degree to which a set of inherent characteristics fulfils the requirement” Requirement : Need or expectations that is stated, generally implied or obligatory

11. Quality Characteristic A distinguishing feature is called a characteristic e.g. physical, sensory, behavioral, functional Permanent characteristic which is inherent in a product, process or system is called Quality Characteristic Assigned characteristic e.g. Price, owner, is not a quality characteristic of a process, product or system.

12. Product Quality Dimensions  Performance (basic operating characteristics)  Features (“extra” items added to basic features)  Reliability (probability product will operate over time)  Conformance (meeting pre-established standards)  Durability (life span before replacement)  Serviceability (ease of getting repairs, speed & competence of repairs)  Aesthetics (look, feel, sound, smell or taste)  Safety (freedom from injury or harm)  Perceived Quality (subjective perceptions based on brand name, advertising, etc)

13. What Quality is NOT Quality is not absolute Quality is not unique Quality is not static Quality is not by chance

14. In the era of Scientific age : Quality must be defined Should be measurable Should be achievable Should link to customer satisfaction

15. Six SigmaSix Sigma: "Number of defects per million opportunities." Philip B. CrosbyPhilip B. Crosby: "Conformance to requirements." The requirements may not fully represent customer expectations; Crosby treats this as a separate problem.customer Joseph M. JuranJoseph M. Juran: "Fitness for use." Fitness is defined by the customer. Noriaki KanoNoriaki Kano and others, present a two-dimensional model of quality: "must-be quality" and "attractive quality." The former is near to "fitness for use" and the latter is what the customer would love, but has not yet thought about. Supporters characterize this model more succinctly as: "Products and services that meet or exceed customers' expectations."Productsservices Robert PirsigRobert Pirsig: "The result of care." Other definitions of quality

16. Genichi TaguchiGenichi Taguchi, with two definitions: a."Uniformity around a target value." The idea is to lower the standard deviation in outcomes, and to keep the range of outcomes to a certain number of standard deviations, with rare exceptions. standard deviation b. "The loss a product imposes on society after it is shipped." This definition of quality is based on a more comprehensive view of the production system. American Society for QualityAmerican Society for Quality: "A subjective term for which each person has his or her own definition. In technical usage, quality can have two meanings: a.The characteristics of a product or service that bear on its ability to satisfy stated or implied needs; b. A product or service free of deficiencies." Other definitions of quality

17. Peter DruckerPeter Drucker: "Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for." W. Edwards DemingW. Edwards Deming: concentrating on "the efficient production of the quality that the market expects," and he linked quality and management: "Costs go down and productivity goes up as improvement of quality is accomplished by better management of design, engineering, testing and by improvement of processes." Gerald M. WeinbergGerald M. Weinberg: "Value to some person". Other definitions of quality

18. “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.” “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 Modern Importance of Quality

19. A Historical Perspective of Quality A Historical Perspective of Quality  Inspection  Statistical Quality Control  Quality Assurance  Strategic Quality Management

20. Historical Perspective PrimaryConcern View of QualityEmphasisMethods InspectionDetection A problem to be solved Product uniformity Gauging & measuring Statistical Quality Control Control A problem to be solved Product uniformity with fewer inspections Statistical tools QualityAssuranceCoordination Proactively solve problem Production chain designed to prevent failures Programs and systems Strategic Quality Management Strategic Impact Competitiveopportunity Market and consumer needs Strategic planning, goal setting

21. Quality Control...is based on the scientific method and includes analysis, relation, and generalization...is based on the scientific method and includes analysis, relation, and generalization  Monitoring process capability and stability  Measuring process performance  Reducing process variability  Optimizing process  Performing acceptance sampling  Developing and maintaining control charts

22. Quality Assurance...is any action directed toward providing customers with goods and services of appropriate quality....is any action directed toward providing customers with goods and services of appropriate quality. Failure mode and effect analysis Concurrent engineering Experimental design Process improvement Design team formation and management Off-line experimentation Reliability / durability product testing

23. Quality Management System...is the processes that tie together the control and assurance activities...is the processes that tie together the control and assurance activities Planning for quality improvement Creating a quality organizational culture Providing leadership and support Designing an organizational system that reinforces quality ideals Providing employee recognition Facilitating organization communication

24. Quality Control/Assurance/management Inspection Selection Detection Prevention Continuous improvement Quality Control Quality Assurance Quality Management

25. Quality Planning Part of Quality management focused on setting quality objectives and specifying necessary operational processes and related sources to fulfill the quality objectives Quality Improvement: Part of Quality Management focused on increasing the ability to fulfill quality requirements

26. Evolution of TQM – New Focus

27. Total Quality Management  People-focused management system  Focus on increasing customer satisfaction and reducing costs  A systems approach that integrates organizational functions and the entire supply chain  Stresses learning and adaptation to change  Based on the scientific method

28. Principles of Total Quality  Customer and stakeholder focus  Participation and teamwork  Process focus and continuous improvement...supported by an integrated organizational infrastructure, a set of management practices, and a set of tools and techniques

29. Customer and Stakeholder Focus  Customer is principal judge of quality  Organizations must first understand customers’ needs and expectations in order to meet and exceed them  Organizations must build relationships with customers

30. Barriers to TQM  Assuming that implementing TQM will quickly and completely cure all the organization’s ills  Top mgt’s failure to demonstrate its commitment  Middle mgt’s failure to recognize new leadership  Middle mgt threatened by perceived loss of power to employees  Obsession about internal quality activities  Failing to provide resources to improvement teams  Adopting “off-the-shelf” quality program without modification  Failure to link quality goals to financial returns and compensation

31. Participation and Teamwork  Employees know their jobs best and therefore, how to improve them  Management must develop the systems and procedures that foster participation and teamwork  Empowerment better serves customers, and creates trust and motivation  Teamwork and partnerships must exist both horizontally and vertically

32. Process Focus and Continuous Improvement Process Focus and Continuous Improvement  A process is a sequence of activities that is intended to achieve some result

33. Continuous Improvement  Enhancing value through new products and services  Reducing errors, defects, waste, and costs  Increasing productivity and effectiveness  Improving responsiveness and cycle time performance

34. 10-Steps to continuous quality improvement 10-Steps to continuous quality improvement 1. Create awareness of the need and opportunity for quality improvement 2. Set goals for continuous improvement 3. Build an organisation to achieve goals by establishing a quality council, identifying problems, selecting a project, appointing teams and choosing facilitators 4. Give everyone training 5. Carry out projects to solve problems 6. Report progress - enables experience and learning to be shared/sense of achievement 7. Show recognition 8. Communicate results 9. Keep a record of successes - for reference 10. Incorporate annual improvements into the company’s regular systems and processes and thereby maintain momentum

35. Competitive Advantage  Is driven by customer wants and needs  Makes significant contribution to business success  Matches organization’s unique resources with opportunities  Is durable and lasting  Provides basis for further improvement  Provides direction and motivation Quality supports each of these characteristics

36. Quality and Profitability Improved quality of design Higher perceived value Increased market share Higher prices Increased revenues Improved quality of conformance Lower manufacturing and service costs Higher profitability

37. QUALITY AND COMPETITIVENESS Remain in business Retain employees Active technical progress Reach and develop new market Make profit

38. QUALITY & COMPETITIVENESS

39. QUALITY AND COMPETITIVENESS When the % of sub standard items falls from 10% to 5% productivity increased by 5.5% unit cost is reduced by 5.5% production capacity increased by 5.5%. Competitiveness False True Quality When quality improves competitiveness improves.

40. Growth of Modern Quality Management Manufacturing quality Improved product designs Service quality Performance excellence

41. Quality in Services  Service is defined as “any primary or complementary activity that does not directly produce a physical product – that is, the non- goods part of the transaction between buyer (customer) and seller (provider).”

42. Critical Differences between Service and Manufacturing  Customer needs and performance standards are more difficult to identify and measure  Services requires a higher degree of customization  Output is intangible

43. Critical Differences between Service and Manufacturing  Services are produced and consumed simultaneously  Customers are often involved in actual process  Services are more labor-intensive than manufacturing  Services handle large numbers of transactions

44. Components of Service System Quality  Employees  Information technology

45. Leaders in the Quality Revolution  W. Edwards Deming  Joseph M. Juran  Philip B. Crosby  Armand V. Feigenbaum  Kaoru Ishikawa  Genichi Taguchi

46. This process of defining a customer-focused vision, stating the objectives and integrating quality goals into the company's strategic and annual business plans is often called strategic quality planning. For many years, it was one of the Malcolm Baldrige National Quality Award criteria as a model of business excellence, not just quality management. In some companies, this process is called hoshin kanri, or translated (poorly) as policy deployment, policy management or even hoshin planning. In the United States, this process is known as ‘Strategic Quality Management’

47. Elements of Strategic Quality Management Hideo Sugiura, former chairman of Honda Motor Co., described four elements or "sacred obligations" of management: Have a clear vision of where the company is going. This must be clearly stated and communicated to every member of the organization in language he or she understands. Define clearly the small number of key objectives that must be achieved for the company to realize its vision. Translate these key objectives throughout the entire organization so that each person knows how performing his or her job helps the company achieve objectives. Provide a fair and honest appraisal so that each and every employee knows how his or her performance has contributed to the organization's efforts to achieve the key objectives, accompanied by guidance on how the individual can improve this performance.

48. Strategic Quality Management 1.Define strategic goals in a few key areas: customer focus, operational efficiency (costs), new-product development, financial success, personnel development and environmental responsibility. 2. Specify measures for the goals, sub-goals, annual goals and supporting projects. 3. Use strategic quality planning as a tool, a means to an end, and not as the goal itself. It must be an endeavor that involves people throughout the organization. It must capture existing activities, not just add more activities to already overflowing plates. 4.Help senior managers face difficult decisions, set priorities and eliminate many current activities, not just start new ones. 5.Form a clear picture of where the organization is going (VISION), why it is going there (MISSION) and what activities are necessary to get there (GOALS)

49. Strategic Quality Management VISION: What the organisation wants to be in future MISSION: Statement of organisation direction to achieve vision QUALITY POLICY: Statement of principle to achieve vision, mission of an organisation QUALITY OBJECTIVES: This spells about specific task to be performed to achieve quality policy.

50. QUALITY POLICY

51. The overall intentions and direction of an organisation related to quality as formally expressed by top management Note: 1) Policy is a statement of principle 2) Top management: Person or group of people who directs & controls an organisation at the highest level.

52. Each objective will be : S-Specific M-Measurable A-Achievable R-Realistic T-Time frame Whereas policy provide broad guidelines, quality objectives define specific goals Goals forms the basis of detailed planning

53. ‘In Search of Excellence’ - by Tom Peters and Robert Waterman (1982) concluded 8 keys to excellence ‘that were shared by all 43 excellent companies (with above the 50% in 4 of the 6 performance metrics for 20 consecutive years). They are :Tom PetersRobert Waterman > A bias for action — Do it. Try it. Don’t waste time studying it with multiple reports and committees. > Customer focus — Get close to the customer. Know your customer. > Entrepreneurship — Even big companies act and think small by giving people the authority to take initiatives. > Productivity through people — Treat your people with respect and they will reward you with productivity. > Value oriented CEOs — The CEO should actively propagate corporate values throughout the organization. > Stick to the knitting — Do what you know well. > Keep things simple and lean — Complexity encourages waste and confusion. > Simultaneously centralized and decentralized — Have tight centralized control while also allowing maximum individual autonomy.

54. Arie de Geus Arie de Geus (1997) undertook a study of companies that had prospered for 50 years or more and identified four key traits. They are: Sensitivity to the business environment — the ability to learn and adjust Cohesion and identity — the ability to build a community with personality, vision, and purpose Tolerance and decentralization — the ability to build relationships Conservative financing

55. LEARNING ORGANISATION

56. Reasons why strategic plans fail Failure to understand the customercustomer why do they buy is there a real need for the product inadequate or incorrect marketing researchmarketing research Inability to predict environmental reactionenvironmental reaction what will competitors do fighting brandsbrands price wars will government intervene Over-estimation of resource competence can the staff, equipment, and processes handle the new strategy failure to develop new employee and management skills Failure to coordinate reporting and control relationships not adequate organizational structure not flexible enough Failure to obtain senior management commitment failure to get management involved right from the start failure to obtain sufficient company resources to accomplish task

57. Reasons why strategic plans fail  Failure to obtain employee commitment –new strategy not well explained to employees –no incentives given to workers to embrace the new strategy  Under-estimation of time requirements –no critical path analysis done critical pathcritical path  Failure to follow the plan –no follow through after initial planning –no tracking of progress against plan –no consequences for above  Failure to manage change –Inadequate understanding of the internal resistance to change –Lack of vision on the relationships between processes, technology and organization  Poor communications –Insufficient information sharing among stakeholders  Exclusion of stakeholders and delegates

58. Strategic Quality Management

59.  The quality movement can trace its roots back to medieval Europe, where craftsmen began organizing into unions called guilds in the late 13th century. guilds  Until the early 19th century, manufacturing in the industrialized world tended to follow this craftsmanship model. The factory system, with its emphasis on product inspection, started in Great Britain in the mid- 1750s and grew into the Industrial Revolution in the early 1800s. Industrial RevolutionIndustrial Revolution  In the early 20th century, manufacturers began to include quality processes in quality practices. early 20th centuryearly 20th century  After the United States entered World War II, quality became a critical component of the war effort: Bullets manufactured in one state, for example, had to work consistently in rifles made in another. World War IIWorld War II  The armed forces initially inspected virtually every unit of product; then to simplify and speed up this process without compromising safety, the military began to use sampling techniques for inspection, aided by the publication of military-specification standards and training courses in Walter Shewhart’s statistical process control techniques. Walter Shewhart’sWalter Shewhart’s  The birth of total quality in the United States came as a direct response to the quality revolution in Japan following World War II. total qualitytotal quality A BRIEF HISTORY OF QUALITY

60. A BRIEF HISTORY OF QUALITY (contd..)  The Japanese welcomed the input of Americans Joseph M. Juran and W. Edwards Deming and rather than concentrating on inspection, focused on improving all organizational processes through the people who used them. Joseph M. Juran W. Edwards DemingJoseph M. Juran W. Edwards Deming  By the 1970s, U.S. industrial sectors such as automobiles and electronics had been broadsided by Japan’s high-quality competition. The U.S. response, emphasizing not only statistics but approaches that embraced the entire organization, became known as total quality management (TQM). 1987 - The International Organization for Standardization (ISO) establishes ISO 9000 Series Quality System Standards.  By the last decade of the 20th century, TQM was considered a fad by many business leaders. But while the use of the term TQM has faded somewhat, particularly in the United States, its practices continue.  In the few years since the turn of the century, the quality movement seems to have matured beyond Total Quality. New quality systems have evolved from the foundations of Deming, Juran and the early Japanese practitioners of quality, and quality has moved beyond manufacturing into service, healthcare, education and government sectors. beyond Total Qualitybeyond Total Quality

61. Beyond Total Quality  By the end of the 1990s Total Quality Management (TQM) was considered little more than a fad by many American business leaders (although it still retained its prominence in Europe).  While use of the term TQM has faded somewhat, particularly in the United States, quality expert Nancy Tague says: “Enough organizations have used it with success that, to paraphrase Mark Twain, the reports of its death have been greatly exaggerated.”  As the 21st century begins, the quality movement has matured. Tague says new quality systems have evolved beyond the foundations laid by Deming, Juran and the early Japanese practitioners of quality.

62. Some examples of this maturation:  In 2000 the ISO 9000 series of quality management standards was revised to increase emphasis on customer satisfaction. ISO 9000ISO 9000  Beginning in 1995, the Malcolm Baldrige National Quality Award added a business results criterion to its measures of applicant success. Malcolm Baldrige National Quality AwardMalcolm Baldrige National Quality Award  Six Sigma, a methodology developed by Motorola to improve its business processes by minimizing defects, evolved into an organizational approach that achieved breakthroughs – and significant bottom-line results. When Motorola received a Baldrige Award in 1988, it shared its quality practices with others.  Quality function deployment was developed by Yoji Akao as a process for focusing on customer wants or needs in the design or redesign of a product or service.  Sector-specific versions of the ISO 9000 series of quality management standards were developed for such industries as automotive (QS-9000), aerospace (AS9000) and telecommunications (TL 9000 and ISO/TS 16949) and for environmental management (ISO 14000). ISO 9000 ISO 14000ISO 9000 ISO 14000  Quality has moved beyond the manufacturing sector into such areas as service, healthcare, education and government. servicehealthcareeducationgovernmentservicehealthcareeducationgovernment

63. Barry Goldwater said…. The pursuit of quality for the sake of quality is no virtue. The pursuit of quality for the sake of customer loyalty and profit is no vice.