1. Session
Managing Quality

2. Session Outline Continuous Improvement Employee Empowerment Six Sigma
Taguchi Concepts
Just-in-Time (JIT)
Benchmarking

3. This Session Weekly Activity: Leadership Style
In 1939, Professor Kurt Lewin undertook a study which identified three (3) major leadership styles:
Authorative (autocratic)
Participative (democratic)
Delegative (Laissez-Faire)
Answer the 18 questions at:
See what your predominant leadership style is.

4. Topic Example Video The following video explains what is quality.
Take note of the key points.

5. What Is Quality?
“The degree of excellence of a thing” (Webster’s Dictionary)
“The totality of features and characteristics that satisfy needs” (ASQ)
Fitness for use
Quality of design

6. Definitions of Quality
American Society of Quality: Product characteristics & features that affect customer satisfaction
User-Based: What consumer says it is
Manufacturing-Based: Degree to which a product conforms to design specification
Product-Based: Level of measurable product characteristic
Once you have introduced these definitions of quality, ask students to provide example of products that use them.

7. Takumi
A Japanese character that symbolizes a broader dimension than quality, a deeper process than education, and a more perfect method than persistence

8. Producer’s Perspective Consumer’s Perspective
The Meaning of Quality
Fitness for
Consumer Use
Producer’s Perspective
Consumer’s Perspective
Quality of Conformance
Conformance to criteria
Cost
Quality of Design
Quality characteristics
Price
Marketing
Production
The Meaning of Quality

9. Quality of Conformance
Ensuring product or service produced according to design
Depends on
Design of production process
Performance of machinery
Materials
Training

10. Service Quality The Operations Manager must recognize:
The tangible component of services is important
The service process is important
The service is judged against the customer’s expectations
Exceptions will occur

11. Goods Dimensions of Quality
Operation
Reliability & durability
Conformance
Serviceability
Appearance
Perceived quality
Quality
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.

12. UPS Service Specifications

13. Service Quality Attributes
Tangibles
Reliability
Communication
Credibility
Security
Responsiveness
Competence
Courtesy
Access
Under- standing
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.

14. Service Quality Determinants
Reliability – consistency and dependability
Responsiveness – willingness/readiness of employees to provide service; timeliness
Competence – possession of skills and knowledge required to perform service
Access – approachability and ease of contact
Courtesy – politeness, respect, consideration, friendliness of contact personnel

15. Service Quality Determinants
Communication – keeping customers informed in languages they understand
Credibility – trustworthiness, believability, honesty
Security – freedom from danger, risk or doubt
Understanding/knowing the customer – making the effort to understands the customer’s needs
Tangibles – the physical evidence of the service

16. International Standards
Information regarding International and Australian standards for quality management and quality system elements guidelines can be obtained from state and territory offices of Standards Australia .
A good starting point would be the state office: Standards Association of Australia.
Website:

17. Productivity Improvements
Sales Gains
Improved response
Higher Prices
Improved reputation
Costs & market share
Company’s reputation
Product liability
International implications
Increased Profits
Improved Quality
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.

18. Costs of Quality
Prevention costs - reducing the potential for defects through planning, design, process, training, information
Appraisal costs - evaluating products, inspection and testing, test equipment, operator suitability
Internal failure - of producing defective parts or service, scrap/wastage, rework, process failure, process down-time, price reduction
External costs - occur after delivery, customer complaints, product returns, warranty, product liability, lost sales

19. Costs of Quality Total Cost Total Cost Quality Improvement
External Failure
Internal Failure
Prevention
Appraisal

20. Quality Philosophers Walter Shewhart W. Edwards Deming Joseph Juran
Philip Crosby
Armand Feigenbaum

21. Topic Example Video
The following video discusses Total Quality Management.
Take note of the key points.

22. Encompasses entire organization, from supplier to customer
TQM
Encompasses entire organization, from supplier to customer
Stresses a commitment by management to have a continuing, company-wide, drive toward excellence in all aspects of products and services that are important to the customer.
A point to be made here is that TQM is not a program but a philosophy.

23. Intense Customer Focus Continual Improvement
Total quality management
Total quality management
This CTR corresponds to the discussion of TQM on pp and summarises the material in Table 2-4 on p. 65. TQM is also discussed in Chapters 8, 12, 14, 19, & 20.
Intense Customer Focus
Total quality management
TQM is a philosophy of management that is driven by customer needs and expectations.
TQM emphasises the use of statistics to analyse variability in production processes to produce uniform quality and predictable quantities of acceptable output.
The most prominent proponent of TQM is W. Edwards Deming who is largely credited with shaping the development of Japan’s approach to management and production.
TQM represents a turnabout in thinking about costs.
Although quality costs more, earlier management thinking did not factor in the costs of replacing usable goods or the cumulative effect of rising consumer expectations for better performance. By expanding the idea of what costs are, TQM has helped many of the highest quality manufacturers become the overall low cost producers as well.
TQM also expands the definition of customer. Under TQM, a ‘customer’ is anyone and everyone who interacts with the organisation’s products or services, either internally or externally. Thus suppliers and employees are customers.
Continual Improvement
Continual Improvement
Quality
Quality
Measurement
Measurement
Empowerment
Empowerment

24. 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

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

26. TQM Activity Flowmodel
Organizational Practices
Quality Principles
Employee Fulfillment
This slide simply introduces the four activities. Subsequent slides expand on each.
Customer Satisfaction

27. Organizational Practices
Leadership
Mission statement
Effective operating procedure
Staff support
Training
Yields: What is important and what is to be accomplished
One might begin discussion of this slide by introducing the difference between “leadership” and “management.”
The point should also be made, again, about the need for involvement and commitment throughout the organization.

28. Quality Principles Customer focus Continuous improvement
Employee empowerment
Benchmarking
Just-in-time
Tools of TQM
Yields: How to do what is important and to be accomplished
Some students may find the notion of “continuous improvement” (Why can’t we do it right the first time?) and “employee empowerment” (Doesn’t this reduce or abrogate the role of the manager?) the most difficult to accept. If you have not done so already, this might be a good time to discuss each in some depth.
The following slide may be used in a discussion of empowerment.

29. Employment Fulfillment
Empowerment
Organizational commitment
Yields: Employees’ attitudes that they can accomplish what is important and to be accomplished
This slide can be used to form the basis for a discussion of empowerment.
If you wish to discuss empowerment - begin by asking students to define the term. You may find students are already comfortable with the term, in which case the discussion can be rather short; or, you may find they have unrealistic expectations (or desires?) - in which case you may wish to pursue the discussion at greater length. It may be helpful to ask students to identify the benefits and pitfalls to both management and worker. (For example, empowerment requires workers to assume greater responsibility.)

30. Customer Satisfaction
Winning orders
Repeat customers
Yields: An effective organization with a competitive advantage
The main point that one might make with this slide is that the customer is, ultimately, the most important person in your business.

31. Deming:Productivity Improvements
Improving productivity
This CTR relates to the material on p and corresponds to the information on Table 19-1 on p This CTR summarises W. Edwards Deming’s 14 points for improving management productivity. If you are featuring TQM throughout the course, you may wish to integrate additional material here.
Deming:Productivity Improvements
14. Make top managers responsible
13. Train employees in new skills
12. Train employees in statistics
11. Require quality work
10. Avoid strictly numerical goals
9. Encourage cooperation
8. Drive out fear
7. Raise line supervisor quality
6. Train workers
5. Identify problems
4. Fewest suppliers
3. Statistical control
2. Continuous quality
1. Plan for future
Deming’s fourteen points
1. Plan for the long-term future. Productivity gains do not come in short-term plans. Only a continuing commitment to the future can make a real contribution to productivity.
2. Never be complacent concerning the quality of your product. Constant improvement must be the goal regardless of how good the product is already.
3. Establish statistical control over your production processes and require your suppliers to do so as well. Statistical analysis objectively identifies problems.
4. Deal with the fewest number of suppliers – the best ones.
5. Find out the extent of problems. Are they confined to particular parts of the production process or stem from the overall process itself?
6. Train workers for the job that you are asking them to perform.
7. Raise the quality of your line supervisors – constantly.
8. Drive out fear.
9. Encourage departments to work closely together rather than concentrate on departmental or divisional distinctions.
10. Do not be sucked into adopting strictly numerical goals, including “zero defect.”
11. Require your workers to do quality work, not just be present 9 to 5.
12. Train your employees to understand statistical methods.
13. Train your employees in new skills as the need arises.
14. Make top managers responsible for implementing these principles.

32. Concepts of TQM Continuous improvement Employee empowerment
Benchmarking
Just-in-time (JIT)
Taguchi concepts
Knowledge of TQM tools
This slide simply introduces concepts of TQM. These concepts are expanded upon in subsequent slides.

33. Topic Example Video
The following video outlines the Just-in-Time (JIT) concept as practiced by MacDonalds.
Take note of the key points.

34. Just-in-Time (JIT)
‘Pull’ system of production scheduling including supply management
Production only when signaled
Allows reduced inventory levels
Inventory costs money and hides process and material problems
Encourages improved process and product quality

35. Just-in-Time (JIT)
Reducing inventory reveals problems so they can be solved
Unreliable Vendors
Capacity Imbalances
Scrap

36. Taguchi Concepts
Engineering and experimental design methods to improve product and process design
Identify key component and process variables affecting product variation
Taguchi Concepts
Quality robustness
Quality loss function
Target-oriented quality

37. The Five Platforms of TQM
1. Customer focus
2. Work systems and processes
3. Continuous improvement
4. People working together
5. Systematic analytical tools and techniques

38. Customer Focus
External customers - identify who they are and exactly what they want from the organisation.
Internal customers - need to work together to satisfy external customers by integrating all internal operations into an interdependent ‘whole’. This adds value, achieves continuous improvement and better results.
Trading partnerships - forging co-operative relationships with customers and suppliers to so everyone ‘wins’.

39. Work Systems and Processes
Improving systems by simplifying and streamlining them to avoid unnecessary activities and duplication of effort and enable people to ‘get it right the first time”.
Four main focus areas:
Suppliers (inputs)
Process (ie. bottlenecks)
Transfer (prior to delivery/handover)
Customer service (post-purchase follow-up)

40. Continuous Improvement
Represents continual improvement of all processes
Involves all operations and work centers including suppliers and customers
People, Equipment, Materials, Procedures

41. Continuous Improvement
Japanese word for continuous incremental improvement is ‘Kaizen’.
The Kaizen approach is “to keep examining everything that is done so see how it can be done better”.
Incremental improvements are cost effective and add up to improved productivity and performance in the long run.

42. People Working Together
“When spider webs unite, they can tie up a lion” - Ethiopian Proverb.
To achieve ongoing improvements to processes, products, services and the organisation as a whole, people must work together.
This requires an attitude that places, quality, teamwork and continuous improvement at the very core of an organisation’s culture.
Cultures therefore need to be based on shared values and vision, commitment to goals, an empowered, creative workforce, willing to learn, change, develop and grow who operate in a team environment with supportive management.

43. Employee Empowerment
Getting employees involved in product and process improvements
85% of quality problems are due to process and material
Techniques
Build communication networks that include employees
Develop open, supportive supervisors
Move responsibility to employees
Build a high-morale organization
Create formal team structures

44. Systematic Tools & Techniques
Used to investigate and improve systems and procedures.
Provides objective and systematic ways to identify and resolve problems, streamline systems and process and build quality into those systems.

45. Topic Example Video
The following video explains the benefits of organisations using a six sigma approach.
Take note of the key points.

46. Normal Distribution
Approximate percentage of area within given standard deviations (empirical rule).
99.7%
95%
68%

47. Six Sigma
Two meanings
Statistical definition of a process that is % capable, 3.4 defects per million opportunities (DPMO)
A program designed to reduce defects, lower costs, and improve customer satisfaction

48. Six Sigma Lower limits Upper limits 2,700 defects/million ±3 Mean
±6
Figure 6.4

49. Six Sigma
Originally developed by Motorola, adopted and enhanced by Honeywell and GE
Highly structured approach to process improvement
A strategy
A discipline - DMAIC 6

50. Six Sigma Define critical outputs and identify gaps for improvement
Measure the work and collect process data
Analyze the data
Improve the process
Control the new process to make sure new performance is maintained
DMAIC Approach

51. Six Sigma
Emphasize defects per million opportunities as a standard metric
Provide extensive training
Focus on corporate sponsor support (Champions)
Create qualified process improvement experts (Black Belts, Green Belts, etc.)
Set stretch objectives
This cannot be accomplished without a major commitment from top level management

52. Topic Example Video
The following video explains the 7 quality control tools.
Take note of the key points.

53. Tools of TQM Tools for generating ideas Tools to organize data
Check sheet
Scatter diagram
Cause and effect diagram
Tools to organize data
Pareto charts
Process charts (Flow diagrams)
Tools for identifying problems
Histograms
Statistical process control chart

54. Seven Tools for TQM

55. Implementing TQM TQM TECHNOLOGY Flexible process
This CTR relates to the material on pp and corresponds to Figure 12-5 on p. 456.
Implementing TQM
TQM
Flexible process
Education and training
TECHNOLOGY
Key components for implementation
Technology TQM directs technological change toward developing flexible processes to support continuous improvement. Work processes are subject to continual change and fine tuning. Education and training must correspond to enhancing technological sophistication.
Structure TQM requires a structure that effectively decentralise decision making with reduced vertical differentiation, wider spans of control, and reduced divisions of labour, and increased use of cross-functional teams.
People TQM increases the responsibility the organisation places in its people at all levels. This requires not only technological training, but continual improvement and training in team-building skills, interpersonal communication, and analytical skills in problem-solving and decision making.
Change agent TQM requires and demands the support of top management – with the CEO as the head change agent. The risks of change and the reasons people resist it discussed earlier mean that the very top of the organisation must demonstrate its uncompromising commitment if TQM is to be successfully adopted.
STRUCTURE
Decentralisation
Reduced vertical differentiation
Reduced division of labour
Wider span of control
Cross-functional teams
PEOPLE
Education and training
Supportive Performance
Evaluation and reward
CHANGE AGENT
Active leadership from top
management

56. Inspection Many problems Cannot inspect quality into a product
Worker fatigue
Measurement error
Process variability
Cannot inspect quality into a product
Robust design, empowered employees, and sound processes are better solutions

57. Inspection At the supplier’s plant while the supplier is producing
At your facility upon receipt of goods from the supplier
Before costly or irreversible processes
During the step-by-step production process
When production or service is complete
Before delivery to your customer
At the point of customer contact

58. Source Inspection Also known as source control
The next step in the process is your customer
Ensure perfect product to your customer
Poka-yoke is the concept of foolproof devices or techniques designed to pass only acceptable product

59. Service Industry Inspection
Organization
What is Inspected
Standard
Arnold Palmer Hospital
Billing
Pharmacy
Lab
Nurses
Admissions
Accurate, timely, and correct format
Prescription accuracy, inventory accuracy
Audit for lab-test accuracy
Charts immediately updated
Data entered correctly and completely
Table 6.5

60. PDCA Cycle 3.Check: Is the plan working 4.Act: Implement the plan
Identify the improvement and make a plan
3.Check:
Is the plan working
2.Do:
Test the plan

61. 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
The Quality Circle Process

62. Use internal benchmarking if you’re big enough
Selecting best practices to use as a standard for performance
Use internal benchmarking if you’re big enough
Determine what to benchmark
Form a benchmark team
Identify benchmarking partners
Collect and analyze benchmarking information
Take action to match or exceed the benchmark

63. Website Benchmarking Factors
Use of meta tags
Yes: 70%, No: 30%
Meaningful homepage title
Yes: 97%, No: 3%
Unique domain name
Yes: 91%, No: 9%
Search engine registration
Above 96%
Average loading speed
28K: 19.31, 56K: 10.88, T1: 2.59
Average number of spelling errors
0.16
Visibility of contact information
Yes: 74%, No: 26%
Presence of search engine
Yes: 59%, No: 41%
Translation to multiple languages
Yes: 11%, No: 89%
Table 6.3

64. Best Practice Quality Checklist
Customer focus
Planning
Process improvement
Supplier relationships
Involvement and commitment
Communication
Leadership

65. Customer Focus
Do we define quality in terms of customer expectations and perceptions?
Do we clearly understand our customer’s expectations?
Do we strive to meet and exceed those expectations?
Do we have service-level agreement with our key customers that formalises expectations and reviews procedures?

66. Planning
Do we have a well tested strategic and quality plan that identifies our quality vision?
Do our employees know and support our quality plan?
Is our quality plan supported in day-to-day actions?
Do we set quantifiable targets for improvements?

67. Process Improvement
Have we documented and standardised our key business processes and evaluated them against customer expectations?
Do we continually improve these processes?

68. Supplier relationships
Do we select our suppliers based on best value for money and their commitment to continuous improvement?
Do we have well developed working relationships with our key suppliers?
Do we have partnership arrangements with key suppliers that set out our expectations, performance standards and procedures, and problem-solving processes?

69. Involvement and Commitment
Do our managers and employees know they are each responsible and accountable for quality?
Are they trained in TQM tools and techniques, including team building?
Do they have 'total quality attitudes' and behaviours?

70. Communication
Do we measure our results and communicate them to all employees?
Do we benchmark with other organisations?
Do people share information and contribute ideas?

71. Leadership
Is management fully committed to implementing total quality?
Do they take a strong and visible role in leading change?
Are they role models for total quality attitudes, actions and behaviours?

72. Recap Video
The following video recaps on the importance of quality for organisations.
Take note of the key points.

73. Next Session
Task 1:
Undertake Simulation Games: Heizer & Render – Managing Quality Ch. 6.
Task 2:
Undertake Chapter Self-study Quizz: Heizer & Render – Managing Quality Ch. 6.
Task 3:
Undertake Case Study – Westover Electric Inc.
Discuss the questions outlined in the case study.