1. Quality Management Basics of QM Customer focus
Gábor Árva
PhD Student
Dept. of Management and Corporate Economics
Faculty of Economic and Social Sciences
Budapest University of Technology and Economics
13 October 2017

2. About Gábor Árva PhD Student
Research field: Forecasting empirical time series by soft-computational techniques
I’m a statistican! 

3. Requirements Midterm test 03. Nov 2017. 35 points:
10 point true/false = 10 points
4 definitions / short questions (usually 1 or 2 sentences required) = 12 points
SPC: establishing control charts, process capability assesment = 13 point
Bring a calculator!
5 extra points for active participation

4. Aims and objectives
Getting students acquainted with the basics of quality management and forming their attitude towards (quality) management topics
Main topics to be covered:
Defining quality, evolution of quality management, Principles of Total Quality Management: customer focus and empowerment
6 steps to process improvement and quality management tools
Statistical Process Control

5. How can we define quality?
1972: Starting to build the first nuclear power plant in Austria developed by SIEMENS
Costs: 5.2 billion ATS ~ 1.4 billion EUR
1978: A referendum prohibits the commercial use of nuclear power in the country
50.47 % (!) against start-up

6. The end of the story Solar plant installed in 2009
Solar plant: 180 MWh/year vs.
Nuclear plant: MWh/year

7. The importance of quality
Do not hear much about it except when something goes wrong
Medical errors
Software glitches
Quality problems in the food supply chain
Product recalls
Zwentendorf

8. Some quality definitions
″Conformance to requirements″ (Crosby, 1979)
″The degree of conformance to a standard” (Wayne, 1983)
″Products and services that meet or exceed customers’ expectations” (Kano, 1984)
″Fitness for use″ (Juran, Gryna, 1988)
″Value to some person” (Weinberg, 1994)

9. Quality definitions
A subjective term for which each person has his or her own definition”
″The degree to which a set of inherent characteristics fulfills requirements″ (ISO 9000:2005)
″The characteristics of a product or service that bear on its ability to satisfy stated or implied needs” (American Society for Quality)

10. The development of the interpretation of quality
E= compliance with corporate culture, environmental and social expectations
D= compliance with the customer’s hidden expectations
C= compliance with the customer’s needs
B= compliance with practical needs
A= compliance with the standard

11. Quality management
A set of coordinated activities to direct and control an organization in order to continually meet customers’ requirements, improve the effectiveness and efficiency of its performance.
NOT ONLY some feature of a product/service

12. QM activities Analyzing customers’ needs Designing to meet them
Clear and precise instructions
Reliable bought-in equipment and materials
Ensuring punctual delivery
Defectfree production
Effective support services (internal & external)
Feedback of customer satisfaction

13. As requested by SALES
As analyzed by MARKETING
As ENGINEERING designed it
As produced by the FACTORY
As installed by FIELD ENGINEERS
As CUSTOMER wanted

14. Q Quality=meeting the customers’ requirements each and every time
Quality management=actions taken to offer quality

15. Origins of quality Egypt: Pyramids
Julian and Claudian reigns: Stated goals for their networks of roads
Middle ages: Cathedral builders
XVIII. and XIX. Century: skilled craftsmen

16. Evolution of QM systems
Total Quality Management (TQM)
Quality assurance and quality management systems
(Statistical) quality control
Quality inspection

17. Quality inspection Beginning of XIX. Century
Taylor: Scientific management
Dedicated staff to judge each and every product (100% inspection)
Improving quality by stricter inspection
Disadvantages
End-of-the event
Without feedback
Extra costs, time consuming
Disagreement between workers and inspectors
Lack of management attention

18. Quality Inspection Feature Quality inspection Primary concern
Detection of defects
View of quality
A problem to be solved
Emphasis
Product uniformity
Methods
Gauging and measurement
Role of quality professionals
Inspection, sorting, counting, grading
Responsible for quality
Inspection department
Philosophy
Good quality can be inspected into the product

19. (Statistical) quality control
1924 Walter A. Shewart
Measures were put through the manufacturing process
Random sample instead controlling every product
Preventing the nonconformities
Controlling and regulating the processes
Production and engineering departments are responsible for quality

20. Quality control Feature Statistical quality control Primary concern
View of quality
A problem to be solved
Emphasis
Product uniformity with reduced inspection
Methods
Statistical tools and techniques
Role of quality professionals
Troubleshooting, application of statistical methods
Responsible for quality
Manufacturing and engineering departments

21. Quality assurance and quality management systems
Broader scope
Co-operation between several departments
Managing the whole QMS and reaching an operational optimum
Co-working with other organizations
The emphasis is on the design and manufacturing
Preventive actions
ISO 9001
Third-party certification

22. Some industrial QMS GMP, GHP, GLP: pharmaceutical
Good manufacturing / hygiene / laboratory Practices
ISO-TS/IATF 16949, QS 9000, VDA 6.3: automotive
HACCP/ISO 22000: food
Hazard Analysis and Critical Control Points
IRIS: railway
AS 9000: aerospace

23. QA & QMS Feature Quality management systems Primary concern
Coordination
View of quality
A problem to be solved but one that is attacked proactively
Emphasis
The entire production chain, from design to market, and the contribution of all functional groups, especially designers, to prevent quality failures
Methods
Programs and systems
Role of quality professionals
Planning, program designing
Responsible for quality
All departments, top management is only peripherally involved in designing, planning and executing quality policies

24. Origins of TQM USA after World War II: Other countries (Japan, Korea):
Increasing demand for consumer goods: focus on quantity instead of quality
Other countries (Japan, Korea):
Economic revolution
More innovative, cost-effective
By 1980: US lost its domination as world supplier, appearance of foreign competitors
Better cost-efficiency, better understanding of customers’ needs

25. How to get quality back to US?
Management must change the way if they are to survive
Consumer-oriented economy
TQM’s quality definition: A basic business strategy that provides goods and services that completely satisfy both internal and external customers by meeting their explicit and implicit expectations

26. TQM Goal Principles Supporting elements Process improvement
Total involvement
Customer focus
Principles
Supportive structure
Leadership
Communication
Supporting elements
Education and training
Reward and recognitions
Measurement

27. TQM- the core principles
Customer focus:
Concept of internal and external customer
Collection, understanding, analysis and fulfillment of customer requirements
Process improvement:
Work is the result of a series of interrelated steps and activities that result in an output.
Reduce the variability of the output and improve the reliability of the process
Total involvement:
Active leadership of senior management
Utilizing the talents of all employees
Building long-term partnerships with suppliers

28. TQM system – supporting elements 1. Leadership: role of senior
managers as advocates,
teachers, and leaders
Education and training: quality is based on the skills of every employee and his or her understanding of what is required
Supportive structure: senior managers may require support to bring about the change necessary to implement a quality strategy
Consultants, small support staff

29. TQM system – supporting elements 2.
Communication: communicate to all employees a sincere commitment to change
Bottom-up flow of information
Reward and recognition: teams and individuals who successfully apply the quality process must be recognized and possibly rewarded
Provides role model for others
Measurement: the use of data becomes
topmost in installing a quality
management process

30. Product versus process focus
Traditional method
Product management
Work process
Suppliers
Customers
INPUT
OUTPUT I N S P E C T
WASTE

31. Work process
Process measures
Outcome measures
Output measures

32. Measurement at three levels
Process measures: activities, variables, and operations of the work process itself
Help to predict the characteristics of the outputs before delivered to customers.
Output measures: specific features, values, characteristics, and attributes of each product or service.
Voice of the customer: Requirements
Voice of the process: Capability
Outcome measures: ultimate impact of the process on the customer and are dependent on what the customer does with the product or service
Customer satisfaction

33. Measurement at 3 levels Example: Pizza delivery
Process
Number of orders
Distance
Output
Delivery time
Outcome
Customer satisfaction
How often does she or he orders from the firm?

34. Customer focus Key questions: Internal vs. External customers
Who your customers are?
What customers expect from the organization?
How well do organizations provide the services customers have requested?
Internal vs. External customers
90%*90%*90%=73%

35. Customer focus
Output: The specific products or services that you produce as part of your work process, and that you pass to others, who use them in their work process.
Internal customer: uses your output as an input in her/his work process
External customer: final user

36. Understanding customers’s expectations
Key questions
What product/service characteristics do customers want?
Faster, better, cheaper
What performance level is needed to satisfy their expectations?
What is the relative importance of each characteristic?
How satisfied are customers with the current level of performance?

37. Garvin’s 8 dimensions Quality dimensions of products Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality

38. Garvin’s 8 dimensions Performance: Features
Primary operating characteristics
Features
Secondary aspects of performance
Accessories

39. Garvin’s 8 dimensions Reliability: Conformance: Durability:
Performing the functions
Conformance:
Meeting established standards
Durability:
Product life
Serviceability:
Ease of repair

40. Garvin’s 8 dimensions- the subjective elements
Aesthetics
Perceived quality:
Brand name&reputation

41. SERVice QUAlity
Reliability: Performing the promised service dependably and accurately
Assurance: Knowledge and courtesy, inspiring trust and confidence
Tangibles: Physichal facilities, equipment and appearance of the personnel
Empathy: Caring, individualized attention
Responsiveness: Willingness to help and providing prompt services

42. Implicit, explicit and latent requirements
Hidden level: compensation for dissatisfied customer

43. Implicit, explicit and latent requirements
Customers’ base expectations
Always assumed to be present
If missing, customers will always be dissatisfied
Explicit
Specifications and requirements
Involved in the selection process
Trade offs and negotiation

44. Implicit, explicit and latent requirements
Value-added features that the customer did not even know about, but is delighted to receive
Hidden: Solving problems
Solving problems in a prompt, effective, courteous way

45. Application of the expectations levels
Clarifies which characteristics should be discussed
Explicit requirements (level 2)
Predicts how the level of customer satisfaction might respond to a change in characteristics
Indicates possible future trends in expectations
Expectations migrate down through the hierarchy over time

46. Leadership&empowerment
Total involvement
Build loyal employees and suppliers
Active leaderhip of senior management
Empowerment
Utilize the talent of all employees
Employees are empowered to improve their output

47. Leadership
Leaders are the people who do the right thing, managers are those who do the things right.
(Warren Bennis)

49. Our Mission Our Vision To refresh the world...
To inspire moments of optimism and happiness...
To create value and make a difference.
Our Vision
People: Be a great place to work where people are inspired to be the best they can be.
Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.
Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.
Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.
Productivity: Be a highly effective, lean and fast-moving organization.

51. The „new” workforce High-educated, competent
Traditional hierarchical approach is not working any more
How to motivate them?
Achievements of Japanese firms build on participation

52. Empowerment Alignment Capability Mutual trust
Knowledge and support of the vission, values, policy by employees
Capability
Ability, skills, knowledge to do the job
Mutual trust
Employees need to trust management and feel that management trusts them

53. Game !!! Open https://kahoot.it/ Enter the game PIN EXTRA POINTS!!!
Nickname:
Family Name+Neptun code!!!

54. Midterm questions-examples
To which type of requirements should a product of high quality conform?
What are the main features of the Statistical Quality Control?
Which dimensions are to be achieved to empower the workforce?
What are customers’ implicit expectations?
Which expectations levels do customers have? What are the main characteristics of this levels? (pyramid)
How You can measure the performance of a process? Give short definitions and an example, too!

55. Thank You for Your kind attention!
Gábor Árva
Dept. of Management and Corporate Economics
Faculty of Economic and Social Sciences
Budapest University of Technology and Economics
13 October 2017