1. 1 Chapter 1 Introduction to Quality

2. 2 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.” “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 October 1887

3. Key Idea Building—and maintaining—quality into an organization’s goods and services, and more importantly, into the infrastructure of the organization itself, is not an easy task.

4. The Importance of Quality Japanese success Japanese success Impact of quality on productivity and profit Impact of quality on productivity and profit Costs of quality Costs of quality Quality as a competitive advantage Quality as a competitive advantage

5. Quality and Productivity Improved: Performance Reliability Features etc. Improved reputation for quality Increased Market share Experience- based scale economies Higher Prices Increased Profits I. Market Gains

6. Quality and Productivity Improved reliability or conformance Increased productivity Lower manufacturing costs Lower service costs Lower warranty and product liability costs Increased Profits II. Cost Savings Lower rework and scrap costs

7. Relative Quality Boosts rates of return Relative quality (percentile) % 20406080

8. The Costs of Quality  Prevention Costs  Appraisal Costs  Internal Failure Costs  External Failure Costs

9. Costs of quality assurance Prevention Costs QC administration and systems planning QC administration and systems planning Quality training Quality training Quality planning (QC engineering work) Incoming, in- process, final inspection Quality planning (QC engineering work) Incoming, in- process, final inspection Special processes planning Special processes planning Quality data analysis Quality data analysis Procurement planning Procurement planning Vendor surveys Vendor surveys Reliability studies Reliability studies Quality measurement and control equipment Quality measurement and control equipment Qualification of material Qualification of material Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

10. Costs of quality assurance Appraisal Costs Testing Testing Inspection Inspection Quality audits Quality audits Incoming test and inspection and laboratory acceptance Incoming test and inspection and laboratory acceptance Checking labor Checking labor Laboratory or other measurement service Laboratory or other measurement service Setup for test and inspection Setup for test and inspection Test and inspection material Test and inspection material Outside endorsement Outside endorsement Maintenance and calibration Maintenance and calibration Product engineering review and shipping release Product engineering review and shipping release Field testing Field testing Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

11. Costs of quality assurance Internal Failure Costs Scrap, at full shop cost Scrap, at full shop cost Rework, at full shop cost Rework, at full shop cost Scrap and rework, fault of vendor Scrap and rework, fault of vendor Material procurement Material procurement Factory contact engineering Factory contact engineering QC investigations (of failures) QC investigations (of failures) Material review activity Material review activity Repair and troubleshooting Repair and troubleshooting Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

12. Costs of quality assurance External Failure Costs Complaints and loss of customer goodwill Complaints and loss of customer goodwill Warranty costs Warranty costs Field maintenance and product service Field maintenance and product service Returned material processing and repair Returned material processing and repair Replacement inventories Replacement inventories Strained distributor relations Strained distributor relations Source: Adapted form J. W. Gavett, Production and Operations Management (New York: Harcourt Brace Jovanovich

13. Costs of Detecting Defects Cost of detection and correction Process Final testing Customer Where defect is detected Figure 6.3

14. Percentage Cost Distribution by Category: Watches External failure 52% Internal failure 29% Appraisal 16% Prevention 3% Fourth-Quarter Indexes

15. Hidden costs of poor Quality

16. 16 Competitive Advantage Is driven by customer wants and needs Is driven by customer wants and needs Makes significant contribution to business success Makes significant contribution to business success Matches organization’s unique resources with opportunities Matches organization’s unique resources with opportunities Is durable and lasting Is durable and lasting Provides basis for further improvement Provides basis for further improvement Provides direction and motivation Provides direction and motivation Quality supports each of these characteristics

17. 17 History of Quality Assurance (1 of 3) Skilled craftsmanship during Middle Ages Skilled craftsmanship during Middle Ages Industrial Revolution: rise of inspection and separate quality departments Industrial Revolution: rise of inspection and separate quality departments Early 20 th Century: Scientific Management, statistical methods at Bell System, Walter Shewhart, MIL-STD Early 20 th Century: Scientific Management, statistical methods at Bell System, Walter Shewhart, MIL-STD Post-World War II. Japan’s success Post-World War II. Japan’s success The U.S. quality revolution The U.S. quality revolution

18. 18 History of Quality Assurance (2 of 3) Early successes: Baldrige award, 1987 Early successes: Baldrige award, 1987 Quality awareness in U.S. manufacturing industry during 1980s: from “Little Q” to “Big Q” - Total Quality Management Quality awareness in U.S. manufacturing industry during 1980s: from “Little Q” to “Big Q” - Total Quality Management Disappointments and criticism: Emergence of quality management in service industries, government, health care, and education, Disappointments and criticism: Emergence of quality management in service industries, government, health care, and education,

19. 19 History of Quality Assurance (3 of 3) Evolution of Six Sigma Current and future challenge: keep progress in quality management alive Current and future challenge: keep progress in quality management alive

20. Defining Quality Perfection Consistency Eliminating waste Fast delivery Compliance with policies and procedures Providing a good, usable product Doing it right the first time Delighting or pleasing customers Total customer service and satisfaction

21. 21 Formal Definitions of Quality Transcendent definition: excellence Transcendent definition: excellence Value-based definition: quality vs. price Value-based definition: quality vs. price User-based definition: fitness for intended use User-based definition: fitness for intended use Product-based definition: quantities of product attributes Product-based definition: quantities of product attributes Manufacturing-based definition: conformance to specifications Manufacturing-based definition: conformance to specifications

22. 22 Quality Perspectives Customer Distribution products and andservices needs needs transcendent & value-based user-based manufacturing- based based product-based Marketing Design Manufacturing Information flow Product flow

23. TOTAL QUALITY INTERFACES QUALITY QUALITY OF PERFORMANCE QUALITY OF DESIGN QUALITY OF CONFORMANCE CONSUMER NEEDS/REQUIREMENTS WORK PROCESS/SYSTEM

24. Quality as a Management Framework GE study GE study Quality as a “management discipline” and not just a “technical discipline”. Quality as a “management discipline” and not just a “technical discipline”. Total quality control, companywide quality control, total quality management, TQ Total quality control, companywide quality control, total quality management, TQ

25. 25 Principles of Total Quality Customer and stakeholder focus Customer and stakeholder focus Participation and teamwork Participation and teamwork Process focus supported by continuous improvement and learning Process focus supported by continuous improvement and learning … all supported by an integrated organizational infrastructure, a set of management practices, and a set of tools and techniques

26. 26 Customer and Stakeholder Focus Customer is principal judge of quality Customer is principal judge of quality Organizations must first understand customers’ needs and expectations in order to meet and exceed them Organizations must first understand customers’ needs and expectations in order to meet and exceed them Organizations must build relationships with customers Organizations must build relationships with customers Customers include employees and society at large Customers include employees and society at large

27. Key Idea To meet or exceed customer expectations, organizations must fully understand all product and service attributes that contribute to customer value and lead to satisfaction and loyalty.

28. 28 Participation and Teamwork Employees know their jobs best and therefore, how to improve them Employees know their jobs best and therefore, how to improve them Management must develop the systems and procedures that foster participation and teamwork Management must develop the systems and procedures that foster participation and teamwork Empowerment better serves customers, and creates trust and motivation Empowerment better serves customers, and creates trust and motivation Teamwork and partnerships must exist both horizontally and vertically Teamwork and partnerships must exist both horizontally and vertically

29. Key Idea In any organization, the person who best understands his or her job and how to improve both the product and the process is the one performing it.

30. 30 Process Focus and Continuous Improvement A process is a sequence of activities that is intended to achieve some result A process is a sequence of activities that is intended to achieve some result

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

32. Key Idea Major improvements in response time may require significant simplification of work processes and often drive simultaneous improvements in quality and productivity.

33. 33 Deming’s View of a Production System Suppliers of materials and equipment Receipt and test of materials Design and Redesign Consumer research ABCDABCD Production, assembly inspection Tests of processes, machines, methods Distribution Consumers INPUTS PROCESSES OUTPUTS Feedback

34. Learning The foundation for improvement … Understanding why changes are successful through feedback between practices and results, which leads to new goals and approaches The foundation for improvement … Understanding why changes are successful through feedback between practices and results, which leads to new goals and approaches Learning cycle: Learning cycle: –Planning –Execution of plans –Assessment of progress –Revision of plans based on assessment findings

35. 35 Infrastructure, Practices, and Tools Leadership Strategic HRM Process Information and knowledge Planning mgt. management Planning mgt. management Performance Training appraisal appraisal Trend chart Tools Practices Infrastructure

36. 36 TQ Infrastructure Customer relationship management Customer relationship management Leadership and strategic planning Leadership and strategic planning Human resources management Human resources management Process management Process management Information and knowledge management Information and knowledge management