1. Quality Management

2. Definitions of Quality
Quality is the ability of a product or service to consistently meet or exceed customer expectations.
Quality is a service’s and product’s fitness for its intended use

3. Importance of Quality Sales Gains Improved response Higher Prices
Improved reputation
Increased volume
Improved Quality
Increased Profits
Reduced Costs
Increased productivity
Lower rework and scrap costs
Lower warranty costs
This slide not only looks at the impact of quality on productivity - it also enables you to begin a discussion as to the meaning of quality (or perhaps the differing meanings among different people). To many people, the notion of “high quality” carries with it the assumption of “high price.” This slide provides an initial point to challenge that assumption.

4. Dimensions of Quality (1 of 2)
Performance – basic operating characteristics of the product/service
Aesthetics - appearance, feel, sound, smell, taste
Special Features - extra items added to the basic characteristics
Conformance - how well product/service conforms to customer’s expectations, meeting preestablished standards
Reliability - consistency of performance, probability product will operate over time
It may be most helpful to provide, or ask you students to provide, examples of products for which the notion of quality is based upon one or more of the dimensions listed.
Quality

5. Dimensions of Quality (2 of 2)
Durability – useful life of the product/service. Life span before replacement
Safety- freedom from injury or harm
Perceived Quality – subjective perceptions based on brand name, advertising, etc. indirect evaluation of quality (e.g. reputation)
Serviceability – service after sale, ease of getting repairs, speed & competence of repairs

6. Examples of Quality Dimensions (1 of 2)

7. Examples of Quality Dimensions (2 of 2)

8. Dimensions of Service Quality
Consistency
Tangibles
Reliability
Communication
Credibility
Security
Responsiveness
Competence
Courtesy
Accessibility
© 1995 Corel Corp.
Under- standing
Completeness
Accuracy
Although the text considers service quality at the end of the chapter, you may wish, at this point, to contrast the notion of quality for goods with that for services. If not, skip this slide - it is repeated at the point at which the issues are raised in the text.
Time, timeliness
Convenience

9. Dimensions of Service Quality (examples)
1. Tangibles
Were the facilities clean, personnel neat?
2. Convenience
Was the service center conveniently located?
3. Reliability
Was the problem fixed?
4. Responsiveness
Were customer service personnel willing and able to answer questions?
5. Time
How long did the customer wait?
6. Assurance
Did the customer service personnel seem knowledgeable about the repair?
7. Courtesy
Were customer service personnel and the cashierfriendly and courteous?

10. Costs of Quality (1 of 2) Cost of achieving good quality
Appraisal Costs
Costs incurred to evaluate the products, costs of activities designed to uncover defects, inspection and testing, test equipment, operator
Prevention Costs
Costs incurred to reduce the potential for defects, all TQ training, planning, product design, customer assessment, process control, and quality improvement costs to prevent defects from occurring

11. Costs of Quality (2 of 2)
Cost of poor quality-failure costs - costs incurred by defective parts/products or faulty services.
Internal Failure Costs
Costs incurred to fix problems that are detected before the product/service is delivered to the customer. (eg. scrap, rework on the defective parts, process failure, process downtime, price downgrading)
External Failure Costs
All costs incurred to fix problems that are detected after the product/service is delivered to the customer.(customer complaints, product return, warranty, product liability, lost sales)

12. Quality–Cost Relationship
Increased prevention costs lead to decreased failure costs
Improved quality leads to increased sales and market share
Quality improvement at the design stage
Higher quality products can command higher prices

13. Quality and Productivity
output
input
Fewer defects increase output
Quality improvement reduces inputs

14. Determinants of Quality
Design (quality of)
Intention of designers to include or exclude features in a product or service
Conformance (quality of)
The degree to which goods or services conform to the intent of the designers, ensuring product or service produced according to design (degree to which the design specifications are met)
Depends on:
Design of production process
Performance of machinery
Materials
Training

15. Other Determinants That Affect Quality
Production/operations system
Packaging and shipping
Marketing and sales
Value-added services
Quality Systems
Top management

16. Evolution of Quality Management
Statistical process control charts
Tables for acceptance sampling
1940’s - Statistical sampling techniques
1950’s - Quality assurance/TQC
1960’s - Zero defects
1970’s - Quality assurance in services

17. 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

18. The Quality Gurus Walter Shewhart
“Father of statistical quality control”
W. Edwards Deming
Joseph M. Juran
Armand Feignbaum
Philip B. Crosby
Kaoru Ishikawa
Genichi Taguchi

19. Key Contributors to Quality Management

20. Total Quality Management

21. TQM Encompasses entire organization, from supplier to customer
Stresses a commitment by management to have a continuing, company-wide drive toward excellence on all dimensions of products and services that are important to the customer
Can be defined as a philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.
A point to be made here is that TQM is not a program but a philosophy.

22. TQM Throughout the Organization
Marketing, sales, research
Engineering
Purchasing
Human resources
Management
Packing, storing, shipping
After-sale support

23. Quality Principles (Elements of TQM)
Customer focus
Continuous improvement
Employee empowerment
Close relations with external suppliers
Team approach
Quality at the source
Supplier quality
Decision based on facts
Knowledge of TQM tools
Yields: How to do what is important and to be accomplished

24. Employee Fulfillment Empowerment Organizational commitment
Yields: Employees’ attitudes that they can accomplish what is important and to be accomplished

25. TQM and External Suppliers
Support of suppliers required to satisfy customer expectations
Single-sourcing
Partnering
Suppliers may be required to adopt quality programs or meet specific standards

26. Customer Satisfaction
Winning orders, loyal customers, repeated sales
Requires some form of measurement system
Customer surveys are widely used
Total customer satisfaction is often an organization’s overriding objective
Yields: An effective organization with a competitive advantage

27. Achieving Total Quality Management
Customer Satisfaction
Attitudes (e.g., Commitment)
Employee Fulfillment
How to Do
Quality Principles
Again, a point to be made here is the universality required to achieve TQM.
What to Do
Organizational Practices

28. Continuous Improvement
Philosophy that seeks to make never-ending improvements to the process of converting inputs into outputs to assure customer satisfaction
Involves all operations & work units
Other names
Kaizen (Japanese)
Zero-defects
Six sigma
Students may have a number of questions with respect to the notion of continuous improvement.
- Why do we need continuous improvement? Why can’t we do it right the first time?
- Doesn’t implementation of continuous improvement introduce a certain instability?
- Are we never “done”?
- Etc.

29. Continuous Improvement: Shewhart’s PDCA Model
4.Act
1.Plan
Institutionalize improvement, implement the plan
Identify the problem and develop the plan for improvement
3.Check
2.Do
Assess the plan; Is it working
Implement the pan on a test basis

30. The Process Improvement Cycle
Implement the
Improved process
Select a
process
Study/document
Seek ways to
Improve it
Design an
Evaluate
Document

31. Six Sigma Quality Statistically Conceptually
Having no more than 3.4 defects per million
Conceptually
A philosophy and set of methods companies use to eliminate defects in their products and processes
Seeks to reduce variation in the processes that lead to product defects
The name, “six sigma” refers to the variation that exists within plus or minus six standard deviations of the process outputs
Requires the use of certain tools and techniques

32. Six Sigma Process
Define
Measure
Analyze
Improve
Control
DMAIC

33. Employees and Quality Improvement
Employee involvement
Quality circles
Process improvement teams
Employee suggestions

34. Employee Empowerment
Getting employees involved in product & process improvements
85% of quality problems are due to process & material
Techniques of employee empowerment
Support workers
Let workers make decisions
Build teams & quality circles
© 1995 Corel Corp.
If you have not done so already, you might at this point discuss:
- why employee empowerment works
- the role of information technology in enabling employee empowerment
- the role of information technology in making employee empowerment a requirement

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

36. Employee Empowerment Technique: Quality Circles
Group of 6-12 employees from same work area
Meet regularly to solve work-related problems
4 hours/month
Facilitator trains & helps
with meetings
You might discuss:
- the benefits and the limitations of quality circles
- the impact of quality circles on workers
- requirements for quality circles to be successful
- implementation of quality circles in the U.S.
© 1995 Corel Corp.

37. The Quality Circle Process
Presentation
Implementation
Monitoring
Solution
Problem results
Problem Analysis
Cause and effect
Data collection and analysis
Problem Identification
List alternatives
Consensus
Brainstorming
Training
Group processes
Data collection
Problem analysis
Organization
8-10 members
Same area
Supervisor/moderator

38. The TQM Approach Find out what the customer wants
Design a product or service that meets or exceeds customer wants
Design processes that facilitates doing the job right the first time
Keep track of results
Extend these concepts to suppliers

39. Total Quality Management
Customer defined quality
Top management leadership
Quality as a strategic issue
All employees responsible for quality
Continuous improvement
Shared problem solving
Statistical quality control
Training & education for all employees

40. Deming’s Fourteen Points
Create consistency of purpose
Adapt 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
One point to make here is that this list represents a recent expression of Demings 14 points - the list is still evolving.
Students may notice that many of these fourteen points seem to be simply common sense. If they raise this issue - ask them to consider jobs they have held. Were these points emphasized or implemented by their employers? If not, why not? This part of the discussion can be used to raise again the issue that proper approaches to quality are not “programs,” with limited involvement and finite duration, but rather philosophies which must become ingrained throughout the organization.

41. Deming’s Points - continued
Eliminate fear among employees
Break down barriers between departments
Eliminate slogans
Remove numerical quotas
Enhance worker pride
Institute vigorous training and education programs
Develop commitment from top management to implement these 13 points

42. Tools of TQM
Tools for organizing data, identifying problems generating ideas and improving the processes
Check sheet
Scatter diagram
Cause and effect diagram
Pareto charts
Process charts (Flow charts)
Run charts
Histograms
Statistical process control chart 1 2 3 4
Dirt
Old
Temp
Fault x
UCL
LCL 5
Process

43. Check Sheet Integrated Circuits ||||
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 |

44. Histogram Number of Lots 1 2 3 4
Can be used to identify the frequency of quality defect occurrence and display quality performance
Number of Lots 1 2 3 4
Defects in lot

45. Pareto Chart 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 %

46. Percent from each cause
Pareto Chart
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)

47. Process Chart Shows sequence of events in process
Depicts activity relationships
Has many uses
Identify data collection points
Find problem sources
Identify places for improvement
Identify where travel distances can be reduced

48. Process Chart Example SUBJECT: Request tool purchase Dist (ft)
Time (min)
Symbol
Description
lðo D Ñ
Write order
¡ðo
D Ñ
On desk 75 è o
To buyer
¡ðn
Examine
¡ = Operation; ð = Transport; o = Inspect; D = Delay; Ñ = Storage

49. Flow Chart No, Continue… Yes Can be used to find quality problems
Material Received from Supplier
Inspect Material for Defects
Defects found?
Yes
Can be used to find quality problems
Return to Supplier for Credit

50. Scatter Diagram Y X

51. Cause and Effect Diagram
Used to find problem sources/solutions
Other names
Fish-bone diagram, Ishikawa diagram
Steps
Identify problem to correct
Draw main causes for problem as ‘bones’
Ask ‘What could have caused problems in these areas?’ Repeat for each sub-area.

52. Cause-and-Effect Diagram
Materials
Methods
Equipment
People
Environment
Cause
Can be used to systematically track backwards to find a possible
cause of a quality problem

53. Cause-and-Effect Diagram
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

54. Fishbone Chart - Problems with Airline Customer Service

55. 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
Can be used to monitor ongoing production process quality and
Quality conformance to stated standards of quality

56. Control Chart Number of defects Sample number 18 12 6 3 9 15 21 24 2710 14 16
Sample number
Number of defects
UCL = 23.35
LCL = 1.99
c = 12.67

57. Run Chart
Can be used to identify when equipment or processes are not
Behaving according to specifications
Time (Hours)
Diameter

58. Methods for Generating Ideas
Brainstorming
Quality circles
Benchmarking
5W2H

59. Applications That Facilitate TQM
Benchmarking
Just-in-time (JIT)
Quality Function Deployment (House of Quality)
Taguchi concepts and techniques (Quality Loss Function)

60. Benchmarking
Selecting best practices to use as a standard for performance
Identify a critical process that needs to be improved
Form a benchmark team
Identify benchmarking partners (an organization that excels in this process)
Contact the organization
Collect and analyze benchmarking information
Improve the critical process, ie. take action to match or exceed the benchmark
Ask student to identify firms which they believe could serve as benchmarks. If students are unable to identify any firms - ask them to identify a college or university whose registration system or housing selection system could serve as a benchmark. Most students have enough knowledge of, or friends at,other colleges and universities so as to be able to respond to this question.

61. Just-in-Time (JIT) Relationship to quality: JIT cuts cost of quality
JIT improves quality
Better quality means less inventory and better, easier-to-employ JIT system
This slide introduces a discussion about JIT.
Subsequent slides elaborate.

62. Quality Function Deployment (QFD)
Determines what will satisfy the customer
Translates those customer desires into the target design

63. Taguchi Techniques
Experimental design methods to improve product & process design
Identify key component & process variables affecting product variation
Taguchi Concepts
Quality robustness
Quality loss function
Target specifications

64. Taguchi Concepts – Quality Robustness
© T/Maker Co.
Ability to produce products uniformly regardless of manufacturing conditions
Put robustness in House of Quality matrices besides functionality

65. Taguchi Techniques: Quality Loss Function
Shows social cost ($) of deviation from target value
Assumptions
Most measurable quality characteristics (e.g., length, weight) have a target value
Deviations from target value are undesirable
Equation: L = D2C
L = Loss ($); D = Deviation; C = Cost
One question to pose to your students: “Of what value is the notion of a “social cost?” How might a manager use this in decision making?

66. Taguchi’s View of Variation
Traditional view is that quality within the LS and US is good and that the cost of quality outside this range is constant, where Taguchi views costs as increasing as variability increases, so seek to achieve zero defects and that will truly minimize quality costs.
Incremental
Cost of
Variability
High
Zero
Lower
Spec
Target
Upper
Traditional View
Incremental
Cost of
Variability
High
Zero
Lower
Spec
Target
Upper
Taguchi’s View

67. Quality Loss Function; Distribution of Products Produced
High loss
Quality Loss Function (a)
Unacceptable
Loss (to producing organization, customer, and society)
Target-oriented quality yields more product in the “best” category
Poor
Fair
Good
Best
Low loss
Target-oriented quality brings products toward the target value
Conformance-oriented quality keeps product within three standard deviations
Frequency
Distribution of specifications for product produced (b)
Lower
Target
Upper
Specification

68. TQM In Services
Service quality is more difficult to measure than for goods
Service quality perceptions depend on
Expectations versus reality
Process and outcome
Types of service quality
Normal: Routine service delivery
Exceptional: How problems are handled
At this point, you might consider going back to the slides illustrating the differences between goods and services. Those slides are provided next. If you do not wish to use them, simply skip to the final slide in the sequence.

69. TQM in Service Companies
Inputs similar to manufacturing
Processes & outputs are different
Services tend to be labor intensive
Quality measurement is harder
Timeliness is important measure
TQM principles apply to services

70. Obstacles to Implementing TQM
Lack of :
Company-wide definition of quality
Strategic plan for change
Customer focus
Real employee empowerment
Strong motivation
Time to devote to quality initiatives
Leadership

71. Obstacles to Implementing TQM
Poor inter-organizational communication
View of quality as a “quick fix”
Emphasis on short-term financial results
Internal political and “turf” wars

72. Criticisms of TQM Blind pursuit of TQM programs
Programs may not be linked to strategies
Quality-related decisions may not be tied to market performance
Failure to carefully plan a program

73. Quality Awards
Baldrige Award
Deming Prize
European Quality Award

74. Quality Certification
ISO 9000
Set of international standards on quality management and quality assurance, critical to international business
Adopted in 1987
ISO 9000 requires companies “to document everything they do that affects the quality of goods and services and than do as they documented”
ISO 14000
A set of international standards for assessing a company’s environmental performance

75. ISO 9000 Quality Management Principles
A systems approach to management
Continual improvement
Factual approach to decision making
Mutually beneficial supplier relationships
Customer focus
Leadership
People involvement
Process approach